LETTER TO SHAREHOLDERS

The third quarter of 2010 was our first quarter as a much larger entity, with the Seacliff acquisition complete and the integration of our operations proceeding successfully. The acquisition of Seacliff has significantly accelerated our strategy of focused geographic expansion, targeting larger project contracts and product service line diversification. We are now the third largest publicly-listed Canadian construction and industrial services company, with a backlog as at September 30, 2010 of $1.8 billion, a market capitalization approaching $500 million and a significant presence in each of the four Western Canadian provinces.

As a larger enterprise, we have gained several competitive advantages. We are now better able to source and secure projects from clients, owner groups and consultants. We are also better able to secure capital to fund continued growth and expansion, both organically and by acquisition. And we have gained additional capacity that will enable us to execute substantial projects, including the project managers and site superintendents who make up the project execution teams.

Our operating companies are run as independent, stand-alone businesses, where the leadership teams have profit and loss responsibility. With the Seacliff acquisition we acquired three new companies: Dominion, Canem and Broda.

Dominion was a Western Canadian general contractor in the institutional and commercial sector and had become a key player in Western Canada’s building markets. We have integrated Dominion’s operations with Stuart Olson to form a much larger general contractor – Stuart Olson Dominion – with the critical mass required to take on larger projects and with expanded geographic coverage in Saskatchewan and Manitoba. The goal of the combined entity is to serve all of the construction needs of its predominantly repeat client base across the four Western Canadian provinces and to focus on relationship-driven, construction management contracting. Stuart Olson Dominion is able to complete large scale, technologically complex projects, on-time and on-budget, and meet client’s needs for Leadership in Energy and Environment Design (LEED) environmental sustainability accreditation. Stuart Olson Dominion’s success results from strong construction management methodology, highly skilled people with the tools, training and professional development necessary to be successful on challenging construction projects, and the first-class expertise of the subcontractors they have worked with for years. Stuart Olson Dominion’s focus includes renovation and new construction in the light industrial, educational, healthcare, government and institutional sectors.

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Canem designs, builds, maintains and services electrical and data communication systems for institutional, commercial, light industrial and multi-family residential customers. Canem will continue to operate completely separate from Stuart Olson Dominion so that it is able to maximize opportunities to partner with competing general contractors. Canem is one of the few electrical contractors that can provide data communication systems installations alongside more traditional electrical contracting services. One of Canem’s key differentiators is its production management module which allows it to track productivity, reduce labour risk and identify potential cost overruns. Canem is also developing a standalone prefabrication facility which will enable more of their work to be completed in a controlled setting. This is a well-run company with consistently high margins and an excellent reputation in the institutional and commercial construction sector.

Broda provides aggregate processing, earthwork, civil construction, concrete production and related services mainly in the province of Saskatchewan. Broda has an extensive 400-unit fleet of well-maintained, specialized earthmoving equipment, with high uptime and availability due to its in-house maintenance program, including an 18,000 square foot maintenance facility. Historically, this has been a highly weather-related business with the majority of its cash flow generated between April and October. Going forward, Broda’s strategy is to pursue more projects that straddle the winter season, in order to augment the backlog and improve its financial performance. While we have kept Broda independent from our other two industrial companies, Laird and IHI, we have begun looking for opportunities for these three companies to bundle their services and take advantage of their relationships with a diverse client base.

The Seacliff acquisition provided Churchill with an opportunity to optimize and reorganize the Corporation’s capital structure. Our company is now well financed and has substantial financial flexibility due to a $200 million senior debt revolver which is less that 40% drawn. We expect to pay down this senior debt over the next 1½ to two years with cash flow from operations. We also issued $86 million of convertible unsecured debt to fund the acquisition. At closing, Churchill also received net proceeds of $106 million from the issuance of common shares. As well, $110 million of Churchill and Seacliff’s combined cash at closing was utilized to complete the transaction. This left us with approximately $93 million of working capital, including $88 million of cash, at the end of the third quarter to meet our operational needs.

Churchill’s two legacy industrial subcontractors, IHI and Laird, have been executing record workloads, producing exceptional performance and outstanding third quarter results. We expect IHI to generate record earnings this year as they work on several large oilsands-related projects. Laird, in spite of growing manpower from about 540 in July to 700 in September, had no recordable safety incidents in the first nine months of 2010. That’s about one million consecutive safe work hours. With such an impeccable record, we are confident that Laird will continue to be well positioned for substantial contracts with its repeat customers in the oilsands sector.

An important part of our strategic plan is to hire the best people and ensure that they have the best tools available. For this reason we have undertaken the implementation of a new Enterprise Resource

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Planning system, to enable us to run our business more efficiently and enhance productivity. Extensive training is currently underway with the expectation of having the first phase of the new system fully functional by the first quarter of 2011.

This is a very exciting time at Churchill. Infrastructure investment at both the federal and provincial levels continues to provide our institutional/commercial businesses with growth opportunities. Oil prices are holding steady in the 80 to 90 dollars per barrel range, providing our industrial electric and insulation companies the opportunity to generate record revenues and earnings. Significant capital spending associated with potash and uranium mining activity is providing significant growth opportunities in the Saskatchewan and Manitoba industrial markets. We now have the size and breadth to take advantage of all of these opportunities as we remain diligently focused on value creation for our shareholders.

November 9, 2010 James C. Houck, B.Sc., MBA President and Chief Executive Officer

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MANAGEMENT’S DISCUSSION AND ANALYSIS

The following Management’s Discussion and Analysis (“MD&A”) of the operating performance and financial condition of The Churchill Corporation (“Churchill” or the “Corporation”), dated November 9, 2010, should be read in conjunction with the unaudited interim Consolidated Financial Statements and related notes thereto, as well as the Corporation’s annual MD&A for the year ended December 31, 2009, audited Consolidated Financial Statements and related notes. Unless otherwise specified all amounts are expressed in Canadian dollars.

This MD&A contains forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “propose”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes that the expectations reflected in these forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon by investors as actual results may vary. See “Forward-Looking Statements” at the end of this MD&A.

Throughout this MD&A certain measures are used that while common in the construction industry are not recognized measures under Canadian Generally Accepted Accounting Principles (“GAAP”). The measures used are “Contract income margin percentage”, “Work-in-hand”, “Backlog”, “Delayed Backlog”, “Working capital”, “EBITDA” and “Book value per share”. Please review the discussion of these measures in the “Terminology” section of this MD&A.

Overview of Business and Strategy

The Churchill Corporation constructs buildings, and provides institutional, commercial and industrial construction and maintenance services.

Vision

To be the most admired construction and industrial services company in Canada.

Core Values

� Acting with integrity by respecting and trusting PEOPLE; � Striving for EXCELLENCE in an exciting TEAM environment; � Demonstrating INNOVATION and ENTREPRENEURIAL spirit; and � Being conscious of SAFETY, HEALTH and the ENVIRONMENT in all we do.

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Mission

� Creating value for our clients, employees, partners and ultimately, our shareholders; � Attracting, retaining and developing the best people; � Exceeding customer expectations by being results driven; � Achieving sustainable growth through continuous improvement; � Delivering consistently superior operating and financial results; and � Contributing positively to the community in which we work, live and play.

Strategy

� Emphasize value added construction and other partnering methods of project delivery; � Target contracts for larger projects; � Focused geographic expansion; � Hire the best people and ensure that they have the best tools; � Product and service line diversification; and � Building a strong balance sheet to support growth objectives.

Seacliff Construction Corp. Acquisition

On July 13, 2010, the Corporation acquired, by way of a plan of arrangement, all of the issued and outstanding shares of Seacliff Construction Corp. (“Seacliff”) for total consideration of $387.2 million, including the assumption of liabilities. This acquisition was financed by drawing down $80 million of the Corporation’s $200 million syndicated revolving credit facility, applying net proceeds from the issuance of 6,324,500 common shares for proceeds of $105.9 million and from a convertible debenture financing of $86.3 million, and utilizing $109.6 million of Churchill and Seacliff’s combined cash. Transaction costs incurred to complete the acquisition were $5.3 million.

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Selected Interim Financial Information

Set out below is selected interim financial information.

Three Months Ended September 30

Nine Months Ended September 30

($millions, except per share amounts) 2010 2009 2010 2009

Contract revenue $386.0 $161.5 $785.7 $427.3

Contract income 48.3 27.1 97.1 67.2

EBITDA from continuing operations (1) 29.0 17.3 54.7 38.9

Earnings from continuing operations before income taxes 18.4 16.2 41.6 35.4

Net earnings from continuing operations 13.3 11.7 29.4 25.4

EPS from continuing operations - basic 0.57 0.66 1.51 1.44

Net earnings per share - basic 0.57 0.86 1.52 1.54

Work-in-hand (1) 1,317.1 770.2 1,317.1 770.2

Backlog (1) 1,835.7 1,517.5 1835.7 1,517.5

Note: (1) Refer to the Terminology section for definitions of non-GAAP measures.

Reporting by Segment

This is the first quarter that the Corporation will report its results under the four business segments General Contracting, Commercial Systems, Industrial Services, and Corporate and Other. Stuart Olson Dominion Construction Ltd. (“SODCL”), Churchill’s largest operating company, forms the General Contracting segment and Canem Holdings Ltd. (“Canem”) forms the Commercial Systems segment. Both of these companies, with revenue and earnings in excess of 10% of the combined revenue and earnings of the Corporation, are of a size that justifies separate disclosure under CICA Section 1701, Segment Disclosures. Although they both serve the institutional / commercial construction market, they operate independently because much of Canem’s business involves subcontracting to general contractors. Laird Electric Inc. (“Laird”), Insulation Holdings Inc. (“IHI”) and Broda Construction Group (“Broda”) form the Industrial Services segment. These companies have similar and often the same customers, particularly in the case of Laird and IHI. Broda’s customer group is expected to become more similar to that of Laird and IHI in the future, as the three companies work to bundle their services on a go-forward basis.

The Corporation regularly analyzes the results of these categories independently as they serve different end-markets, generate different gross margin yields and have different risk profiles. The evaluation of results by segment and by individual operating entity is consistent with the way in which management performance is assessed. In order to understand more clearly the operating results for the Corporation, the discussion within this MD&A will be focused at the business segment level.

General Contracting

General Contracting consists of SODCL. Following the Seacliff acquisition closing, Stuart Olson Constructors Inc. (“Stuart Olson”) and The Dominion Company Inc. (“Dominion”) were combined to

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form SODCL. SODCL constructs commercial, institutional, light-industrial and multi-unit residential buildings. Stuart Olson and Dominion have been general contractors since 1939 and 1911, respectively, and during the last several years both have become key players in Western Canada’s building markets. In 2009, Stuart Olson comprised approximately 80% of Churchill’s consolidated revenues and earnings from continuing operations before income taxes (excluding the expenses of the Corporate and Other segment) and 92% of total backlog. Similarly, SODCL is expected to comprise the majority of the Corporation’s revenues, earnings and backlog in 2010 and 2011.

Commercial Systems

Commercial Systems is made up of Canem, which designs, builds, maintains and services electrical and data communication systems for commercial, institutional, light industrial and multi-family residential customers. With its head office located in Richmond, B.C., its services include the design of electrical distribution systems within a building or complex; procurement and installation of electrical equipment and materials; on-call service for electrical maintenance and troubleshooting; preventative and scheduled maintenance for critical component installations; budgeting and pre-construction services; and management of regional and national contracts for multi-site installations.

Industrial Services

Industrial Services consists of Laird, IHI and Broda. Laird is headquartered in Edmonton, Alberta and provides electrical, instrumentation and power-line construction and maintenance services to resource and industrial clients, primarily in the Fort McMurray and greater Edmonton regions. IHI is also headquartered in Edmonton, serving industrial clients with insulation, asbestos abatement, siding application, HVAC and plant maintenance services. Its clients are in the oilsands, oil and gas, petrochemical, forest products, power utilities and mining industries. Broda is headquartered in Prince Albert, Saskatchewan, providing aggregate processing, earthwork, civil construction, concrete production and related services. It serves a broad range of organizations, including Canada’s two major railway corporations and Saskatchewan’s major potash, uranium and infrastructure organizations.

Corporate and Other

The Corporate and Other business segment includes corporate centre staff functions of finance, accounting, human resources, information services and the office of the Chief Executive Officer. It is a cost centre for functions not allocated directly to other business segments as well as any miscellaneous investments. It provides strategic direction, operating advice, financing, infrastructure services and management of public company requirements to each of the operating business segments.

Additionally, the Corporation reports the results of its previously divested Industrial General Contracting (“Triton”) segment and certain assets and liabilities of the Corporate and Other segment collectively as discontinued operations of the Corporation. Agricultural land adjacent to a Lamont, Alberta fabrication facility and the Triton office building located in Edmonton, Alberta are included in the assets held for sale on the balance sheet as at September 30, 2010.

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Overall Performance

The Corporation has historically generated virtually all of its revenues from the four Western Canada provinces of Manitoba, Saskatchewan, Alberta and British Columbia.

For the third quarter of 2010, consolidated contract revenue was $386.0 million, compared to $161.5 million in the same period in 2009, a 139% increase. For the first nine months of the year, revenues of $785.7 million were $358.4 million greater than the $427.3 million of revenue generated in the corresponding period of 2009, as increases were reported in all operating segments. Revenue increased due to higher levels of contracting activity within Churchill’s legacy operations on a year-over-year basis, and due to the addition of the Seacliff legacy companies, which contributed $137.0 million of this increase.

Contract income increased from $27.1 million, or 16.8% of revenue, in the third quarter of 2009 to $48.3 million, or 12.5% of revenue, in Q3 2010. Of the $21.2 million quarterly year-over-year increase in contract income in the third quarter, General Contracting, Commercial Systems and Industrial Services segments reported increases of $7.5 million, $7.8 million and $6.2 million, respectively (intercompany elimination of $(0.3) million). The respective increases in contract income are due to increased revenue, as contract income margins have declined on a year-over-year basis in all business segments due to competitive market conditions and a changing project mix. See the discussion of segmented results which follows.

For the first nine months of 2010, contract income was $97.1 million, or 12.4% of revenue, compared to $67.2 million, or 15.7% of revenue, in the first nine months of 2009. Of the $29.8 million increase in contract income, the General Contracting, Commercial Systems and Industrial Services segments reported increases of $12.7 million, $7.8 million and $9.6 million, respectively (intercompany elimination of $(0.3) million).

Indirect and administrative expenses for 2010 amounted to $20.2 million in the third quarter, or 5.2% of revenue, compared to $10.1 million or 6.3% of revenue in the comparable period of 2009. Indirect and administrative expenses increased by $4.7 million and $0.4 million in the General Contracting and Corporate segments, respectively, while the Commercial Systems and Industrial Services segments increased by $3.7 million and $1.3 million, respectively (intercompany elimination of nil). For the nine months ended September 30, 2010, indirect and administrative expenses amounted to $43.7 million (5.6% of revenue) compared to $29.3 million (6.8% of revenue) in the first nine months of 2009. Of the $14.4 million increase in indirect and administrative expenses, the General Contracting, Commercial Systems, Industrial Services and Corporate segments reported increases of $6.7 million, $3.7 million, $1.6 million and $3.6 million, respectively (intercompany elimination of $(1.2) million). The year-over-year increases in General Contracting, Commercial Systems and Industrial Services were primarily due to the inclusion of Dominion, Canem and Broda, respectively, in the Corporation’s financial results for the first time this quarter. The year-over-year increase in the Corporate segment was due largely to Seacliff integration costs, corporate development activities, and the inclusion of legacy Seacliff management in the executive incentive compensation plan.

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Earnings before interest, taxes, depreciation and amortization (“EBITDA”) from continuing operations in the quarter were $29.0 million, compared to $17.3 million in Q3 2009. EBITDA from continuing operations for the nine months ended September 30, 2010 was $54.7 million, compared to $38.9 million for the nine months ended September 30, 2009.

In accounting for the Seacliff acquisition, Churchill used the fair value method to account for the intangible assets acquired on closing. The impact of amortizing these intangible assets resulted in a $5.0 million amortization charge for the period ended September 30, 2010. The unamortized balance of this asset as at September 30, 2010 was $68.8 million, of which $5.8 million is expected to be amortized in Q4 2010, and $3.7 million is expected to be amortized in each quarter throughout 2011.

Earnings from continuing operations before income tax (“EBT”) for Q3 2010 increased by $2.2 million to $18.4 million compared to $16.2 million reported in Q3 2009. For the nine months ended September 30, 2010, EBT increased by $6.2 million to $41.6 million compared to $35.4 million reported in the first nine months of 2009.

The Corporation’s consolidated net earnings from continuing operations for the three months ended September 30, 2010 were $13.3 million compared to net earnings of $11.7 million in Q3 2009. Consolidated net earnings from continuing operations for the nine months ended September 30, 2010 were $29.4 million compared to $25.4 million in the corresponding period of 2009.

Churchill’s total backlog, including work-in-hand, at September 30, 2010 was $1,835.7 million compared to $1,517.5 million at September 30, 2009, a $318.2 million increase. The Corporation’s backlog consists of work-in-hand of $1,317.1 million and active backlog of $518.6 million. On a segmented basis, backlog at September 30, 2010 was $1,516.1 million in General Contracting, $155.1 million in Commercial Systems (Canem) and $164.5 million in the Industrial Services segment ($39.3 million due to the addition of Broda). New contract awards of $120.4 million were added to work-in-hand in the current quarter.

Discontinued Operations

Tables that set out the net assets held for sale, net earnings (loss) and cash flows from discontinued operations for the period ending September 30, 2010 and related details are included in Note 4 of the interim unaudited consolidated financial statements. These amounts are associated with assets held for sale and the resolution of certain outstanding matters with respect to the sale of Triton, announced on August 12, 2009.

Results of Operations

General Contracting (SODCL)

For the three month period ending September 30, 2010, General Contracting’s revenue was $263.5 million, compared to $135.0 million in the prior year. Of this $263.5 million, $171.9 million is attributable to Stuart Olson legacy operations, and $91.6 million is due to the addition of Dominion’s operations from July 14, 2010 to September 30, 2010. Increased revenue from the Stuart Olson legacy

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operations was a result of higher levels of activity from all branches throughout Alberta and British Columbia. Revenue for the nine months ended September 30, 2010, was $554.5 million compared to $346.4 million in the first nine months of 2009.

General Contracting’s contract income in the third quarter of 2010 increased 36% to $28.3 million, from $20.8 million for the same period in 2009. The Q3 2010 contract income margin percentage was 10.7% compared to 15.4% in Q3 2009. Contract income for the nine months ended September 30, 2010 increased by 25.2% to $63.6 million from $50.8 million for the same period in 2009. General Contracting’s nine-month contract income margin was 11.5% compared to 14.7% year-over-year. Decreased contract income margin resulted partly from the inclusion of Dominion’s operations in the quarter, which had a contract income margin of 8.4%. As well, a decline in legacy Stuart Olson margin to 12.0% from 15.4% in the comparable period of 2009 was due to lower margins on projects won in the more competitive market of 2008 and 2009, lower amounts of self-perform work, and being in the early phases of construction on several new projects.

EBT from General Contracting was $19.6 million in Q3 2010, compared to $15.7 million in Q3 2009. EBT for the nine month period ended September 30, 2010 was $43.2 million compared to $36.1 million in the prior year. Of this 19.7% or $7.1 million increase, $5.5 million resulted from the inclusion of Dominion’s operations from July 14 to September 30, 2010, and $1.6 million resulted from growth in the Stuart Olson legacy operations.

General Contracting had total backlog of $1,516.1 million as at September 30, 2010, compared to total backlog of $1,396.6 million at September 30, 2009. The September 30, 2010 backlog consisted of $1,000.1 million of work-in-hand and $516.0 million of active backlog, whereas the September 30, 2009 backlog was made up of $653.6 million of work-in hand, $626.0 million of active backlog and $117.0 million of delayed backlog. General Contracting expects to execute $195.4 million of work-in-hand during the remainder of 2010.

The institutional spending outlook remains strong and the non-residential private sector spending outlook is continuing to improve as a result of favourable financing and construction costs.

Commercial Systems (Canem)

Because Canem was purchased by the Corporation in July 2010, no comparable amounts for Commercial Systems are disclosed for the 2009 periods. For the three and nine months ended September 30, 2010, Commercial Systems’ revenue was $34.1 million. Activity levels within this segment are expected to remain high for the remainder of 2010.

Commercial Systems’ contract income for the three and nine months ended September 30, 2010 was $7.8 million or 22.9% of revenue.

Commercial Systems reported EBT for the three and nine months ended September 30, 2010 of $3.7 million or 11.0% of revenue.

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Backlog for this segment was $155.1 million at the end of Q3 2010, consisting entirely of work-in-hand. The segment started the quarter with $168.9 million of work-in-hand, contracted $9.5 million of additional work-in-hand during Q3 2010 and executed $23.2 million of construction activity. Work-in-hand of $37.8 million is expected to be executed during the remainder of 2010.

As with General Contracting, Commercial Systems’ outlook and margin profile are expected to remain strong as a result of continued institutional spending and increasing private sector spending.

Industrial Services (Laird, IHI and Broda)

Revenue for the three months ended September 30, 2010 increased 258% to $94.5 million, compared to $26.4 million for the same period of 2009. For the nine months ended September 30, 2010, Industrial Services reported revenue of $204.9 million compared to $81.0 million for the same period of 2009. Exceptional revenue increases at Laird and IHI resulted from greater activity levels associated with several oilsands projects and maintenance turnaround projects in the Fort McMurray and Edmonton areas. The revenue increase associated with the addition of Broda from July 14 to September 30, 2010 is $11.3 million. Broda’s operations were negatively impacted by unusually wet weather conditions in Saskatchewan and Manitoba.

Contract income in the current quarter increased to $12.6 million from $6.3 million for the comparable period in 2009. Contract income margins were lower at 13.3% in Q3 2010 versus 23.9% in Q3 2009, as a result of weather-related work delays at Broda, which lowered productivity, and the combination of competitive market conditions and changing project mix at Laird and IHI. Contract income for the nine month period ended September 30, 2010 was $26.0 million compared to $16.4 million for the comparable period in 2009. The contract income increase associated with the addition of Broda from July 14 to September 30, 2010 is $3.6 million.

EBT increased to $7.5 million during the three month period ending September 30, 2010, compared to earnings before tax of $3.6 million in the third quarter of 2009. EBT increased 86% year-to-date to $14.9 million in the period ending September 30, 2010, compared to $8.0 million in the first nine months of 2009. The increase in EBT resulted from the strong activity levels at Laird and IHI on oilsands projects in Northern Alberta and the addition of Broda for 2.5 months, partially offset by higher indirect and administrative expenses for the period. The EBT increase associated with the addition of Broda in the quarter is $1.6 million.

Industrial Services had total backlog of $164.5 million as at September 30, 2010, compared to total backlog of $120.9 million at September 30, 2009. The September 30, 2010 backlog consisted of $161.9 million of work-in-hand and $2.6 million of active backlog, whereas the September 30, 2009 backlog was made up of $113.6 million of work-in hand and $4.3 million of active backlog. Laird and IHI started the quarter with $164.9 million of work-in-hand, contracted $40.0 million of additional work-in-hand during Q3 2010 and executed $82.4 million of construction activity, ending the quarter with $122.6 million of work-in-hand, of which $59.6 million is expected to be executed during the remainder of 2010. Broda started the quarter with $30.1 million of work-in-hand, contracted $20.5 million of additional work-in-

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hand during Q3 2010 and executed $11.3 million of construction activity, ending the quarter with $39.3 million of work-in-hand, of which $7.8 million is expected to be executed during the remainder of 2010.

Laird and IHI continue to perform exceptionally well in a competitive environment. Downward pressure on bid margins is resulting from several competitors not operating at full capacity and the project mix shifting to larger projects with lower margins. However, with work-in-hand and backlog at high levels, 2010 has been a very successful year for Laird and IHI. IHI is once again on target for a record year for earnings. Success for these businesses is driven by many factors, not the least of which is their reputation for safety and quality. Laird and IHI both have very strong safety records, and Laird recently reached the milestone of 1 million man hours with no recordable safety incidents. Going forward, Laird and IHI are expecting growth to flatten in 2011, with a resurgence expected in 2012.

Broda has successfully secured several new projects during the quarter. However, business operations have been negatively impacted by unusually wet weather conditions during its peak season of operations. Broda’s growth strategy will include working with Laird and IHI to offer its services to their oilsands customer group. Assuming a return to normal weather conditions, Broda’s results are expected to improve in 2011.

Corporate and Other

In the third quarter of 2010, the Corporate and Other segment incurred a loss before tax of $11.7 million compared to a loss before tax of $4.3 million in Q3 2009. For the nine months ended September 30, 2010 and 2009 the Corporate and Other segment incurred a loss before tax of $19.9 million and $9.8 million, respectively. The increase in 2010 Corporate and Other expenses was attributable to costs associated with the acquisition of Seacliff, indirect and administrative expenses associated primarily with at risk, equity based compensation expenses, increased resources at the corporate centre and additional professional fees required to support corporate development initiatives.

Capital Resources and Liquidity

Cash and Debt Balances

Cash and cash equivalents at September 30, 2010 were $88.2 million, compared to $184.4 million at December 31, 2009. Restricted cash at September 30, 2010, was $4.6 million, compared to $2.6 million at December 31, 2009. Restricted cash is held as support for the Corporation’s Subguard program, which is an alternative to performance bonding.

Long-term indebtedness at September 30, 2010, excluding the current portion of $1.9 million, amounted to $153.1 million compared to $0.2 million at December 31, 2009. This amount consisted of $73.9 million of the debt portion of convertible debentures and $79.1 million drawn on Churchill’s $200 million senior revolving credit facility. On June 15, 2010, to support the Seacliff acquisition, the Corporation closed its previously announced financing of convertible debentures. The Corporation issued convertible debentures in the principal amount of $86.3 million including the exercise by the underwriters of the overallotment option. Upon closing, the debentures became an obligation of the

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Corporation. For accounting purposes, the equity conversion rights were assigned a value of $9.5 million (net of transaction costs) which is included in shareholders’ equity, and $73.4 million was assigned to the long-term debt component (net of transaction costs and interest accretion). In Q3 2010, $0.5 million of interest accretion was added to the long-term debt component, and $0.1 million of future taxes were added to the equity conversion rights of the debentures, making the debt and equity portions of the debentures $73.9 million and $9.7 million, respectively.

Summary of Cash Flows

Cash flow from operating activities before changes in non-cash working capital balances for Q3 2010 increased by $22.8 million to $33.3 million, compared to $10.5 million of cash provided from operations during the third quarter of 2009. The increase in cash flow is largely due to the inclusion of results from the legacy Seacliff operating companies and record activity in Churchill’s legacy Industrial Services operating companies, Laird and IHI. Cash flow from operations was $12.5 million after accounting for a change in working capital of $(20.9) million resulting from an increase in accounts receivable, costs in excess of billings and future tax assets, only partially offset by an increase in accounts payable, inventories and prepaid expenses year-over-year, all caused by the acquisition of Seacliff and increased activity levels in the industrial businesses.

Cash from operating activities before changes in non-cash working capital balances of $48.3 million in the first nine months of 2010 contrasts with $9.9 million in first three quarters of 2009. Cash used in operations was $23.3 million after accounting for increasing working capital requirements associated with a growing business, primarily in the Industrial Services segment as expanding operations have caused receivables to grow faster than payables.

Investing activities resulted in a use of cash of $332.1 million during the third quarter of 2010, which compares with cash used of $0.6 million in Q3 2009. Cash was invested primarily for the acquisition of Seacliff.

Investing activities resulted in a use of cash of $338.1 million during the nine months ended September 30, 2010, which compares with cash used of $2.1 million in the same period of 2009. In addition to the third quarter Seacliff acquisition mentioned above, the cash was invested in the acquisition of construction equipment for long term projects under contract and the implementation of a new computer system for Enterprise Resource Planning (“ERP”), which is expected to be ready for use by the first quarter of 2011 for SODCL, Laird and IHI. The system will be expanded to include Canem and Broda in 2011.

During the third quarter of 2010, cash received from financing activities amounted to $180.2 million, compared to cash used in financing of $0.2 million in Q3 2009. The majority of the 2010 Q3 financing activities arose from the Seacliff acquisition, which necessitated drawing down $80 million of the Corporation’s new $200.0 million syndicated revolving credit facility and applying proceeds from the issuance of 6,324,500 common shares of $105.9 million. Net repayments of long-term debt in Q3 2010

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amounted to $27.9 million, compared to net repayments of $0.2 million in Q3 2009. Financing costs in the quarter were $9.0 million.

For the nine months ended September 30, 2010, cash received from financing amounted to $262.7 million, compared to cash used in financing of $7.8 million in 2009. In addition to the third quarter items mentioned above, in Q2 2010 Churchill issued $86.3 million of convertible debentures, partially offset by $3.4 million of financing costs, in support of the Seacliff acquisition. Stock options exercised by directors, officers and employees of the Corporation contributed $1.3 million to the cash generated from financing in the first three quarters of 2010 compared to $0.2 million in same period of 2009. Net repayments of long-term debt in the nine month period ended September 30, 2010 amounted to $28.3 million, compared to net repayments of $7.0 million in the comparable period of 2009. The Corporation expended $1.0 million in the first nine months of 2009 under its Normal Course Issuer Bid, which expired in Q4 2009.

As at September 30, 2010, Churchill had working capital of $93.2 million, compared to its working capital position of $109.1 million at December 31, 2009.

Information on Churchill’s contractual obligations and capital expenditure plans for 2010 is described in the Corporation’s 2009 MD&A dated March 11, 2010. There have been no material changes to Churchill’s contractual obligations and capital expenditure plans. However, as a result of the acquisition of Seacliff, the Corporation is undertaking a review of its combined capital expenditures and the timing of these expenditures for the remainder of 2010 and into 2011. Capital expenditures for the fourth quarter of 2010 are expected to be $4.2 million.

Management believes that the Corporation has the capital resources and liquidity necessary to meet its commitments, support its operations, finance capital expenditures and support growth strategies. In addition to the Corporation’s cash and cash equivalents, ability to generate cash from operations, and its $200.0 million credit facility; the Corporation believes that it has access to further debt and/or equity through the capital markets.

The Corporation remains a partner in three joint ventures. In each instance the Corporation has provided a joint and several guarantee, increasing the maximum potential exposure to the full value of the work remaining under the contract. Public-Private Partnership (“P3”) infrastructure projects may expose the Corporation to financial penalties and/or liquidated damages for project delays. P3 projects also require security in the form of letters of credit to support the Corporation’s obligations.

Shareholders’ equity was $285.6 million at September 30, 2010, as compared to $141.5 million at December 31, 2009. Retained earnings increased from $116.3 million at December 31, 2009 to $145.9 million in Q3 2010, reflecting the cumulative addition of $29.6 million of net earnings year-to-date.

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Share Data

The Corporation has an Employee Share Purchase Plan (the “ESPP”) available to all full-time employees. At September 30, 2010, the ESPP held 655,387 common shares for employees. Under the ESPP, common shares are acquired in the open market.

Following the closing of the Seacliff acquisition on July 13, 2010, the net proceeds from the subscription receipts financing were released from escrow and the subscription receipts were converted into 6,324,500 common shares of the Corporation and the $102.7 million net value of the subscription receipts was included in Share Capital.

As at November 9, 2010, the Corporation had 24,133,727 common shares issued and outstanding and 1,132,604 options convertible into common shares upon exercise (December 31, 2009 - 17,619,259 common shares and 1,213,243 options).

Stock-based Compensation

Stock-based compensation is a non-cash expense driven in part by the number, fair value and vesting rights of options granted. The stock-based compensation expense was $2.3 million during the third quarter of 2010 and $0.5 million for the comparable period in 2009. Stock-based compensation for the nine months ended September 30, 2010 was $3.5 million compared to $1.1 million in the same period of 2009.

Other Compensation Expenses

The Corporation has a Deferred Share Unit (“DSU”) plan that received board approval on November 3, 2009. During the quarter and nine months ended September 30, 2010, the Corporation granted 9,209 and 28,902, respectively, of Deferred Share Units (“DSU’s”) to directors as part of their annual remuneration. In addition, during the quarter and nine months ended September 30, 2010, directors and employees voluntarily elected to purchase 1,322 DSU’s and 19,104 DSU’s, respectively, by deferring compensation related to retainers, meetings fees, salary or cash bonus, as applicable. These DSU grants and elections resulted in $0.3 million and $0.6 million of stock-based compensation expense for the third quarter and first nine months of 2010, respectively. The DSU’s are structured under the current plan to be settled in cash, upon ceasing service with the Corporation.

During the quarter and nine months ended September 30, 2010, the Corporation recorded compensation expenses for performance share units (“PSU’s”) granted to employees of $0.5 million and $1.2 million, respectively, compared to $0.3 million and $0.5 million for the comparable three and nine month periods in 2009. As at September 30, 2010 the Corporation had 291,291 PSUs outstanding, compared to 227,979 PSU’s at September 30, 2009. The PSU’s are structured under the current plan to be settled in cash at the time of vesting, if certain shareholder value creation performance objectives are met. The first vesting and payout, if any, is expected to be in March 2011 for PSU’s granted in 2008.

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Supplemental Disclosures

Off-Balance Sheet Arrangements

The Corporation had no off-balance sheet arrangements in place at September 30, 2010.

Related Party Transactions

The Corporation incurred legal fees during the quarter ended September 30, 2010, with a law firm of which a director of the Corporation is also a partner. The fees were for services rendered in the ordinary course of business. The amount incurred during the third quarter of 2010 was $0.2 million (Q3 2009 - $0.3 million). Legal fees of $0.3 million (September 30, 2009 - $0.5 million) were incurred with this law firm for the nine months ended September 30, 2010. At September 30, 2010, nil was included in accounts payable (Q3 2009 – $50 thousand).

During the third quarter of 2010, the Corporation incurred facility costs of $35 thousand (Q3 2009 - $35 thousand) relating to the rental of a building owned by a director of the Corporation. Facility costs of $0.1 million (September 30, 2009 - $0.1 million) for this building were incurred for the nine months ended September 30, 2010. The rented building is Laird’s operations base in Fort McMurray and the rental charge is comparable to the market rate of similar properties. The current lease arrangement expires on December 31, 2012. At September 30, 2010, there was nil included in accounts payable (Q3 2009 - $12 thousand).

Outlook

Churchill, pursuant to its acquisition of Seacliff, is a larger, more diversified entity that is ultimately better positioned to compete for projects within its various business segments. The Seacliff acquisition completed in July has contributed to increasing Churchill’s backlog to $1.8 billion. The Corporation incurred some debt to complete the acquisition, but given the significant cash flow expected to be generated in future periods, the Corporation’s focus will be on paying down this debt from operating cash flow in the short-term and assessing the appropriateness of instituting a dividend. With the exception of the integration of Stuart Olson and Dominion, which were combined to create Stuart Olson Dominion Construction Ltd., there is little overlap among the remainder of the business units. Third quarter 2010 EBITDA of $29.0 million or 7.5% of revenue was negatively impacted by some lower margin backlog of Dominion and margins are expected to improve as existing backlog is worked through and new projects are added.

General Contracting

The integration of Stuart Olson and Dominion, forming SODCL, is essentially complete, expanding SODCL’s market presence across the four Western Canada provinces and capitalizing on the strengths of each company in its geographic and client markets, where they were already well positioned. SODCL’s $1.5 billion backlog remains institutionally levered, and there are many project opportunities in the pipeline. Going forward, the focus will be on optimizing and building this backlog and the segment is

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currently bidding on several large scale projects. After including the impact of the integration of Dominion’s lower margin backlog into the segment, profit margins are expected to improve in late 2011 and into 2012 as the company works through Dominion’s backlog and as the legacy Dominion operations target higher margin projects. Current SODCL projects include: Terwillegar Community Recreation Centre in Edmonton, Alberta, a $135 million, 34,000 square meter complex scheduled for completion in December 2010; the Edmonton Remand Centre, a $523 million, 57,000 square meter facility in Edmonton, Alberta scheduled for completion of the capital construction phase in the fall of 2012; and the Fort St. John Hospital, a $298 million, 15,000 square meter P3 project in Fort St. John, British Columbia scheduled for completion in the spring of 2012.

Commercial Systems

The outlook for Canem during the remainder of 2010 is positive. Near-term earnings are expected to be strong as some major projects are nearing completion in 2010, thus allowing for increased fee recognition. With a backlog of $155.1 million, the segment is expected to continue to generate healthy revenue and margins for 2011. The institutional spending outlook remains positive and the non-residential private sector spending outlook continues to show signs of improvement as a result of favorable financing and construction costs. Current projects include: Eighth Avenue Place in Calgary, Alberta, a $1 billion, 177,000 square meter office-retail development scheduled for completion in fall 2011; the Edmonton Remand Centre, a $523 million ($80 million electrical budget), 57,000 square meter facility in Edmonton, Alberta scheduled for completion of the capital construction phase in the fall of 2012; the Centennial Centre for Interdisciplinary Studies in Edmonton, Alberta, a $315 million ($29 million electrical budget), 49,000 square meter signature building located on the main campus of the University of Alberta expected to be completed in Q4 2010; and Taylor Family Digital Library in Calgary, Alberta, a $144 million ($10 million electrical budget), 25,000 square meter building scheduled for completion in Q4 2010.

Industrial Services

The economic outlook for the oilsands remains strong. The players in this market are evolving to more senior exploration and development companies, foreign national oil companies and integrated oil companies. With the stability in commodity prices, and numerous project restarts and sanctioning announcements (e.g. Kearl, Firebag, Sunrise, Surmont, Jackfish 2, Christina Lake Phase 2), the outlook has brightened considerably for our industrial operations. In addition, planned turnarounds are expected to continue to provide opportunities for additional work. The $125.2 million backlog at Laird and IHI is expected to result in record revenue and profitability in 2010. The focus is now on securing backlog for 2011 and execution of strategic plans to expand market share. The record revenue growth of 2010 is expected to moderate in 2011 and margins are expected to remain under pressure as competition is keen from other firms with unused capacity and the work mix continues to shift to large volume / lower margin projects.

Broda had a slow start to the year and financial results have been impacted by tendering delays and difficult work conditions associated with heavy rain in Saskatchewan in the spring and summer.

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Additionally, the unevenness of the economic recovery has led to the deferral of several industrial opportunities; hence the backlog within Broda is relatively low at $39.3 million. Broda is currently focused on building its backlog for 2011 and leveraging its corporate relationship with IHI and Laird to bundle its services with theirs for industrial customers in the oilsands and related industries.

Critical Accounting Estimates

The key assumptions and basis for the estimates that management has made under GAAP, and their impact on the amounts reported in the interim consolidated financial statements and notes, remain substantially unchanged from those described in the Company’s 2009 Annual Report.

The following are the more significant estimates that have an impact on our financial condition and the results of our operations:

� Revenue recognition and contract cost estimates;

� Goodwill impairment assessment;

� Depreciation and amortization;

� Income tax provisions;

� Accounts receivable collectability; and

� Valuation of defined benefit pension plans.

These estimates are discussed more thoroughly in Churchill’s annual MD&A and the notes to the annual audited consolidated financial statements, along with a discussion of accounting policies adopted in the 2009 financial year.

Effective January 1, 2010, the Corporation changed its method of depreciating certain classes of property and equipment from declining-balance to straight-line in order to reflect the true consumption of the asset. The effect of this change did not have a material impact on the consolidated financial statements. See Note 7 of the interim unaudited consolidated financial statements for further detail.

Financial Instruments

Financial instruments consist of recorded amounts of receivables and other like amounts that will result in future cash receipts, as well as accounts payable, short-term borrowings and any other amounts that will result in future cash outlays. The fair value of Churchill’s short term financial assets and liabilities approximates their respective carrying amounts on the balance sheet because of the short-term maturity of those instruments. The fair value of the Corporation’s interest-bearing financial liabilities, including capital leases, financed contracts, the revolving credit facility and convertible debentures, also approximates their respective carrying amounts due to the floating rate nature of the debt. The carrying value of the convertible debentures approximates fair value due to the recent issuance of the debentures.

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The Corporation has exposure to credit, interest rate and liquidity risks. The Corporation’s Board of Directors has overall responsibility for the establishment and oversight of the Corporation’s risk management framework and reviews corporate policies on an ongoing basis.

The Corporation is exposed to credit risk through accounts receivable. This risk is minimized by the number of customers in diverse industries and geographic centers. The Corporation further mitigates this risk by performing an assessment of its customers as part of its work procurement process, including an evaluation of financial capacity.

Allowances are provided for potential losses as at the balance sheet date. Accounts receivable are considered for impairment on a case-by-case basis when they are past due or when objective evidence is received that a customer will default. The Corporation takes into consideration the customer’s payment history, credit worthiness and the current economic environment in which the customer operates to assess impairment.

The Corporation accounts for a specific bad debt provision when management considers that the expected recovery is less than the actual account receivable. The provision for doubtful accounts has been included in operating expenses in the consolidated statements of earnings, comprehensive income and retained earnings, and is net of any recoveries that were provided for in a prior period. Allowance for doubtful accounts as at September 30, 2010 was $3.4 million (December 31, 2009 - $1.1 million).

The Corporation had $14.2 million of trade receivables which were greater than 90 days past due as at the end of the quarter (December 31, 2009 - $2.5 million). Of the total, $4.9 million (32%) of the 90 days past due trade receivables as of September 30, 2010 were concentrated in two oil sands customer accounts, but only $1.4 million of these two accounts remains outstanding as of November 9 and another $0.5 million payment is expected in November. There were no other concentrations of credit risk by geography or customer as at September 30, 2010.

Fluctuations in the valuation of the Corporation’s defined benefit pension plans exposes the Corporation to additional risk. Economic factors such as expected long-term rate of return on plan assets, discount rates and future salary and bonus increases will cause volatility in the accrued benefit obligation.

Financial risk is the risk to the Corporation’s earnings that arises from fluctuations in interest rates and the degree of volatility of these rates. The Corporation does not use derivative instruments to reduce its exposure to this risk. At September 30, 2010, the increase or decrease in annual net earnings for each 1.0% change in interest rates on floating rate debt would be approximately $0.6 million.

The Corporation invests its cash with the objective of maintaining safety of principal and providing adequate liquidity to meet all current payment obligations. The Corporation invests its cash and cash equivalents with counterparties that are of high credit quality as assessed by reputable rating agencies. Given these high credit ratings, the Corporation does not expect any counterparties to these cash equivalents to fail to meet their obligations.

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Other than the new risks related to the defined benefit pension plans, there have not been any changes in the type of risks arising from financial instruments during the period.

Changes in Accounting Policies

The Corporation’s unaudited interim financial statements have been prepared in accordance with Canadian GAAP and incorporate the same accounting principles and methods used in the preparation of the Corporation’s annual audited consolidated financial statements. See Note 2 of the Corporation’s annual audited consolidated financial statements for more information regarding the significant accounting principles used to prepare the financial statements.

Future Changes in Accounting Standards

International Financial Reporting Standards (“IFRS”)

The Canadian Accounting Standards Board has confirmed the changeover date for Canadian publicly accountable enterprises to start using International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, to be for fiscal years beginning on or after January 1, 2011. IFRS uses a conceptual framework similar to Canadian GAAP; however, there are significant differences in recognition, measurement and disclosures.

The following discussion of the Corporation’s strategy and status regarding its conversion to IFRS is set out below in two parts. Part one reflects the strategy and progress in respect of Churchill as it existed prior to the July 13, 2010 acquisition of Seacliff. Part two of our IFRS discussion sets out the strategy we will be undertaking to include the Seacliff operating companies in our overall IFRS strategy.

Part One: Churchill as at June 30th 2010

Churchill’s IFRS implementation project was designed around three principal phases:

Phase 1: Preliminary Scope and Diagnostic

This phase included performing a high-level impact assessment to identify key areas that may be impacted by the adoption of IFRS. This analysis resulted in the prioritization of areas to be evaluated in the next phase of the project plan. The information obtained from the assessment was also used to develop a detailed plan for convergence and implementation. This phase was completed in the first quarter of 2009.

Phase 2: Detailed Design and Evaluation

In this phase, further evaluation of the financial statement areas impacted by IFRS was completed. This involved a more detailed, systematic gap analysis of accounting and disclosure differences between Canadian GAAP and IFRS. This detailed assessment will form the basis of the final decisions around accounting policies and overall conversion strategy.

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During this phase, an analysis was performed to assess information technology systems, changes to business processes and training:

� Information Technology

The Corporation launched a project in 2009 to implement SAP as its new ERP system. The Corporation is targeting the end of 2010 to complete the transition and achieve full utilization of the system. The IFRS project team is analyzing all areas of IFRS change that will impact the ERP system to ensure that the structure is adequate for IFRS reporting needs.

� Business Processes

Process changes needed to sustain SAP and IFRS implementation have been identified, and during 2010 process design and training will be completed. The impacts to internal controls over financial reporting and disclosure controls and procedures.

� Training

A professional services firm has been engaged since the outset of the project to provide technical accounting advice and project management guidance. Key members of the project team have completed, and will continue to receive, IFRS specific training courses to maintain up to date knowledge of best practices and changes in standards. This team meets frequently to discuss the progress of the project and plan next step activities. The Corporation has a comprehensive plan to train internal personnel who will be impacted by the conversion to IFRS. The Corporation has completed its plans to roll out consistent training across the organization to legacy Churchill employees to ensure that all relevant staff understand the new standards and the impact it has on their current processes. Legacy Seacliff staff will continue to obtain IFRS training in the fourth quarter of 2010.

Phase 3: Implementation and Embedding

This phase includes execution of changes to business processes impacted by Churchill’s transition to IFRS and formal approval of recommended accounting policy changes. Also included in this phase is the delivery of necessary IFRS training to Churchill’s Audit Committee of the Board, Board of Directors and staff. This phase will culminate with the collection of financial information necessary to compile IFRS compliant financial statements and audit committee approval of IFRS financial statements commencing in 2011. This phase is currently underway. The work that has been completed to date is the accumulation of data from the existing operating companies for Q1 2010. A review of the opening balance sheet adjustments has also been conducted to ensure that the adjustments are consistent between the opening balance sheet and Q1 2010. These submissions are being reviewed to ensure that each of the operating company finance teams have interpreted the requirements in a consistent manner. We are currently in the process of consolidating the data for inclusion in the consolidated financial statements.

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A draft opening balance sheet for January 1, 2010 has been prepared in accordance with IFRS and is being updated for new IFRS pronouncements issued in 2010.

Based on the analysis performed, the major differences between Canadian GAAP and IFRS that are likely to impact Churchill include, but are not limited to the accounting standards noted below:

IFRS 1 First-time adoption of International Financial Accounting Standards – IFRS 1 provides entities with a number of optional and mandatory exemptions in the application of the standards. The Corporation has analyzed the following exemptions:

IFRS 1 First-time adoption of International Financial Accounting Standards

Election

Discussion

Expected Treatment

Fair value election as deemed cost

IFRS 1 provides a choice between measuring property, plant and equipment at its fair value at the date of transition or using the historical valuation under Canadian GAAP.

Churchill will value its long term real estate assets using the fair value option. The revaluation will not be applied to those real estate assets held for sale. The impact of this election will be an increase in the deemed cost of these assets at the transition date in the range of $2.0 to $2.5 million. Churchill estimates that for its remaining individual assets, the current net asset value under Canadian GAAP approximates the associated fair value of the asset, and therefore we will not be electing to apply the fair value option.

Determining whether an arrangement contains a lease

IFRIC 4 contains an option whereby a first time adopter may evaluate an arrangement existing at the date of transition to IFRS for the reclassification of leases on the basis of facts and circumstances existing at that date, versus using the circumstances that existed at the inception of the arrangement.

Churchill has reviewed a number of arrangements based on the facts and circumstances existing at the transition date and reclassified a number of operating leases to finance leases. These arrangements are mostly in respect of vehicle leases.

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IFRS 1 First-time adoption of International Financial Accounting Standards

Election

Discussion

Expected Treatment

Business Combinations

IFRS 1 provides that Business Combinations under IFRS 3 may be applied retrospectively or prospectively. The retrospective basis would require restatement of all business combinations that occurred prior to the transition date.

Churchill has elected to apply IFRS 3 prospectively (i.e. transactions occurring after January 1, 2010).

IFRS Standards –There are a number of IFRS standards that have been assessed as having a high impact on Churchill. Since the second quarter, further analysis has been performed to assess policy choices that are required in respect of joint ventures, provisions, contingent liabilities and contingent assets. Those standards have been added to this table in the current quarter. All of the relevant standards are discussed in the table below.

Other IFRS Standards Impacting Churchill

Section

IFRS requirement

Expected Treatment

Presentation of Financial Statements

IAS 1 requires significantly more disclosure than Canadian GAAP. In addition, classification and presentation may be different for some balance sheet and income statement items.

The Corporation is currently in the process of converting to IFRS its previously prepared GAAP Q1 2010 and Q2 2010 Financial Statements and related notes. There is a significant amount of effort left to finalize these IFRS prepared statements and to draft the significant related note disclosure.

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Other IFRS Standards Impacting Churchill

Section

IFRS requirement

Expected Treatment

Contract Revenue – Construction Contracts

IAS 11 includes specific and mandatory criteria for determining whether construction contracts should be segmented or if multiple construction contracts should be combined. The standard addresses variations to original contract terms or claims for reimbursement that are not included in the contract price.

The requirement to segregate or combine contracts will impact the calculation of revenue using the percentage complete method.

IAS 11 requires that Time and Material contracts also use the percentage of completion method.

The Corporation’s current practice is to recognize revenues from Time & Material contracts as the service is performed. IAS 11 requires that Time and Material contracts also use the percentage of completion method. In aggregate, a $3 million to $4 million reduction to retained earnings at January 1, 2010 is anticipated, with an equal amount being recognized as revenue over the remaining lives of the impacted contracts.

Business processes to assess the appropriate method of revenue recognition based on project specific conditions are being designed and evaluated.

Impairment of Assets

Intangibles with indefinite lives, intangible assets not yet available for use and goodwill acquired in a business combination must be tested annually for impairment. IAS 36 utilizes a one step approach for both testing and measurement of impairment.

While the requirements for IAS 36 are not anticipated to have an impact on the Corporation at transition to IFRS, the internal processes to evaluate the impairment of goodwill and intangibles will need to be assessed and revised accordingly.

The Corporation will be required to assess impairment indicators in respect of goodwill and intangibles at the end of each reporting period and test for impairment if any of the indicators are present.

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Other IFRS Standards Impacting Churchill

Section

IFRS requirement

Expected Treatment

Leases IAS 17 provides guidance on assessing the classification of leases as either finance leases or operating leases, however, there are no prescriptive measurements on lease contracts and consequently there is more emphasis on the substance of the lease versus its form.

Lease contracts will have to be assessed by the Corporation as to their proper classifications based on whether or not management believes that substantially all of the risks and rewards incidental to ownership have been transferred.

Existing lease agreements were examined against the requirement of IAS 17 to determine if any change in classification was required. It was determined for a number of vehicle leases that substantially all of the risks and rewards incidental to ownership have been transferred, and therefore a reclassification of the arrangement to finance leases was appropriate.

The impact of this reclassification is expected to increase the value of Property, Plant & Equipment by $0.5 million to $1 million, with a corresponding increase in Long Term Debt.

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Other IFRS Standards Impacting Churchill

Section

IFRS requirement

Expected Treatment

Provisions IAS 37 Provisions, Contingent Liabilities and Contingent Assets provides guidance on recognition criteria, measurement bases, and disclosure requirements.

A provision exists when there is a liability of uncertain timing or amount. A provision will be recognized when a present obligation has arisen as a result of a past event, when payment is more likely than not, and the amount of the liability can be reliably estimated.

Provisions are required to be disclosed as a separate line item on the Statement of Financial Position.

A review of contingency amounts included in job costs is in the process of being conducted to establish whether or not they met the criteria of a provision and therefore are required to be recorded on the balance sheet. Liabilities related to known deficiencies on projects are recorded separately on the balance sheet as a provision.

Anticipated work during the warranty period, usually one year, must also be removed from job costs and be recognized as a liability in the Statement of Financial Position.

Joint Ventures IAS 31 Interest in Joint Ventures currently provides a policy choice between equity accounting and proportionate consolidation accounting for jointly controlled entities. Proportionate consolidation is a method of accounting where a venturer’s share of each of the assets, liabilities, income and expenses of a jointly controlled entity is combined line by line with similar items in the venturer’s financial statements. As an alternative, equity accounting records an interest in the jointly controlled entity at the original cost and adjusts it for changes in the venturer’s share of net assets; the venturer’s share of net profit or loss is included in the venturer’s consolidated financial statements.

Churchill expects to continue with proportionate consolidation to account for its joint ventures, similar to the current accounting policy.

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Part Two: Churchill’s July 13, 2010 Acquisition of Seacliff Construction

As a result of the acquisition by Churchill of Seacliff Construction on July 13, 2010, the Corporation is in the process of developing a strategy to identify and evaluate the financial statement areas of the Seacliff operating companies that will be impacted by IFRS. This strategy will closely follow the three principal phases undertaken by Churchill of its existing operating companies (i.e. Phase 1 Scope & Diagnostic, Phase 2 Design & Evaluation, Phase 3 Implementation). The Corporation has completed Phase 1 Scope and Diagnostic and most of Phase 2 Design and Evaluation. Further work is required on assessing the transition plan of the new operating companies and their transition to IFRS. The project team has commenced the calculations related to Phase 3 implementation for the Seacliff operating companies. It is expected that by 2010 year end, comparative first, second and third quarters and the opening balance sheet will be presented to the Audit Committee for their review. The Audit Committee will then confirm the elections and decisions that the Corporation will make with regard to its implementation of IFRS.

Given the similarities between the Churchill and Seacliff operating companies, many of the areas of the Seacliff operating company financial statements impacted by IFRS are similar to those areas impacting the Corporation. However, there are a few areas that are unique to the legacy Seacliff operating companies. These are described below:

� One area of Seacliff that analysis is required is in respect of IAS 16 Property Plant and Equipment. This standard requires the componentization of assets where a component is significant in respect of the total cost of the asset. Broda Construction, one of the Seacliff operating companies, had approximately $35.4 million net book value of construction capital equipment on its balance sheet at September 30, 2010. An evaluation was undertaken in the quarter to determine whether componentization would result in a material change to depreciation and net book value. As a result of this evaluation the company set a cost threshold on the value of equipment and percentage of value of the component to be considered for componentization. We have concluded that that componentization of the Broda assets would not result in a material change to depreciation.

� Churchill has elected to apply IFRS 3 Business Combinations prospectively (i.e. only for transactions occurring after January 1, 2010), and accordingly the Corporation will not be adopting this standard early. Transaction costs incurred in respect of the Seacliff acquisition between $4.5 million and $5.5 million have been capitalized as part of the acquisition for Canadian GAAP purposes. However, the comparative amounts to be set out in the Q3 2011 Consolidated Statement of Earnings will reflect the transaction costs as an expense.

� Legacy Dominion and Legacy Canem business units have defined benefit plans and accordingly IAS 19 Employee Benefits will need to be evaluated. Accounting for defined benefit plans is complex because actuarial assumptions are required to measure the obligation and the expense and there is a possibility of actuarial gains and losses. The accounting implications of pensions will continue to be analyzed and are expected to be concluded late in the year.

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� Revenue recognition at Broda is being examined to evaluate the implications of Broda’s ballast operations (crushing rock into ballast). We are assessing the requirement to change the way revenue is recognized to reflect the production of the ballast versus the consumption of the ballast. The contracts with the railway companies are being examined to ensure that the proper revenue recognition treatment is determined. The company expects to conclude on the accounting treatment of ballast revenue by the end of the year.

Risks and Uncertainties

Risks and uncertainties are described in the Corporation’s 2009 Annual Report, under the Management’s Discussion and Analysis, and in the Corporation’s Annual Information Form. Risks and uncertainties along with risk management practices have not materially changed for the third quarter of 2010.

On May 1, 2010, all of the building trades labour agreements in Saskatchewan expired. The existing agreement continues in force and effect until a new agreement is negotiated and ratified by the various unions. There can be no guarantee that contract negotiations will be concluded in a timely manner. Any work stoppages or labour disruptions could materially affect the financial results from our Saskatchewan-based insulation operations. The maximum impact of this risk is estimated to be less than $1 million of EBT per quarter.

On April 30, 2011, all of the building trades labour agreements in Alberta will expire. There can be no guarantee that contract negotiations will be concluded in a timely manner. Work stoppages may occur if negotiations are unsuccessful, which could materially affect the financial results from Laird Electric and Fuller Austin Inc. related to construction projects active in Alberta. The maximum impact of this risk is estimated to be approximately $5 million of EBT per quarter.

Quarterly Financial Information

The following table sets forth selected quarterly information of the Corporation for the last eight quarters:

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($millions except per share data and percentages) 2010 2009 2008

Sep. 30 Jun. 30 Mar. 30 Dec. 31 Sep. 30 Jun. 30 Mar. 30 Dec. 31

Contract revenue $ 386.0 $ 223.1 $ 176.5 $ 173.9 $ 161.5 $ 136.7 $ 129.1 $ 185.5 Contract income 48.3 25.8 23.0 24.7 27.1 21.6 18.6 27.9 Contract income 12.5% 11.6% 13.0% 14.2% 16.8% 15.8% 14.4% 15.0% From continuing operations:

EBITDA $ 29.0 $ 14.0 $ 11.7 $ 12.5 $ 17.3 $ 12.3 $ 9.3 $ 17.7 EBT 18.4 12.8 10.3 11.3 16.2 11.0 8.1 16.4 Net earnings 13.3 9.0 7.1 8.1 11.7 8.0 5.7 11.2 EPS - basic 0.57 0.51 0.40 0.46 0.66 0.45 0.32 0.63 EPS – fully diluted 0.53 0.49 0.38 0.44 0.65 0.44 0.32 0.62 Net earnings $ 13.3 $ 9.1 $ 7.2 $ 7.7 $ 15.2 $ 7.4 $ 4.6 $ 11.2 EPS - basic 0.57 0.52 0.41 0.44 0.86 0.42 0.26 0.63 EPS – fully diluted 0.53 0.50 0.39 0.42 0.85 0.41 0.26 0.62 Work-in-hand $ 1,319.3 $ 857.1 $ 790.0 $ 784.2 $ 767.2 $ 600.6 $ 528.4 $ 565.3 Backlog 1,835.7 1,182,2 1,314.4 1,388.6 1,514.5 1,344.2 1,327.5 1,390.3 Working Capital 93.2 205.8 115.5 109.1 103.9 84.4 77.5 78.3 Shareholders’ equity 285.6 168.6 149.3 141.5 133.0 117.3 109.8 105.6

Book value ($ per basic share) 11.84 9.57 8.47 8.03 7.56 6.67 6.23 5.92

Please refer to the Corporation’s 2009 and 2008 Annual Reports and 2010 and 2009 interim reports to Shareholders for a discussion and analysis of the results of the quarters preceding September 30, 2010.

Controls and Procedures

All of the controls and procedures set out below encompass all legacy Churchill companies and scope out controls for legacy Seacliff entities, as permitted by National Instrument 52-109 for 365 days following the acquisition.

Disclosure Controls & Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the CEO and CFO, on a timely basis, so that appropriate decisions can be made regarding public disclosure. The CEO and CFO together are responsible for establishing and maintaining the Corporation’s disclosure controls and procedures. They are assisted in this responsibility by the Disclosure Committee which is composed of senior management of the Corporation.

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During the three months ended September 30, 2010, an evaluation of the effectiveness of the design and of the Corporation’s disclosure controls and procedures was carried out under the supervision of Churchill’s management, including the CEO and CFO, with oversight by the Audit Committee and the Board of Directors. Based on this evaluation, the CEO and CFO have concluded that the design of the Corporation’s disclosure controls and procedures as defined in National Instrument 52-109 (“NI 52-109”), Certification of Disclosure in Issuers Annual and Interim Filings, was effective as at September 30, 2010.

Internal Controls over Financial Reporting

Internal controls over financial reporting (“ICFR”) are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. Because of inherent limitations in all control systems, absolute assurance cannot be provided that all misstatements have been detected. Management is responsible for establishing and maintaining adequate internal controls appropriate to the nature and size of the business, to provide reasonable assurance regarding the reliability of financial reporting for the Corporation.

Under the oversight of the Audit Committee and Board of Directors, management with the participation of the Corporation’s CEO and CFO, evaluated the design of the Corporation’s internal controls over financial reporting using the control framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated Framework (“COSO”). The evaluation included documentation review, enquiries, testing and other procedures considered by management to be appropriate in the circumstances. As at the end of the period covered by this management discussion and analysis, the CEO and CFO have concluded that the design of the internal controls over financial reporting were effective.

Material Changes to the Internal Controls Over Financial Reporting

As at September 30, 2010, there has been no change to the Corporation’s internal controls over financial reporting that occurred during the most recent interim period that has materially affected or is reasonably likely to materially affect the Corporation’s internal controls over financial reporting.

Terminology

Throughout this third quarter MD&A, management refers to certain terms when explaining its financial results that do not have any standardized meaning under Canadian GAAP as set out in the CICA Handbook. Specifically, the terms “contract income margin percentage”, “work-in-hand”, “backlog”, “delayed backlog”, “working capital”, “EBITDA” and “book value per share” have been defined as:

Contract income margin percentage is the percentage derived by dividing contract income by contract revenue. Contract income is calculated by deducting all associated direct and indirect costs from contract revenue in the period.

31

Work-in-hand is the unexecuted portion of work that has been contractually awarded for construction to the Corporation. It includes an estimate of the revenue to be generated from maintenance contracts during the shorter of (a) twelve months, or (b) the remaining life of the contract.

Backlog means the total value of work including work-in-hand that has not yet been completed that; (a) is assessed by the Corporation as having high certainty of being performed by the Corporation or its subsidiaries by either the existence of a contract or work order specifying job scope, value and timing; or (b) has been awarded to the Corporation or its subsidiaries, as evidenced by an executed binding or non-binding letter of intent or agreement, describing the general job scope, value and timing of such work, and with the finalization of a formal contract respecting such work currently assessed by the Corporation as being reasonably assured. All projects within backlog are classified as active unless the Company has received written or verbal notification from the client that a job/project/contract has been delayed, at which point the backlog is classified as Delayed Backlog. The Corporation provides no assurance that additional clients will not choose to defer or cancel their projects in the future. There can be no assurance that the client will resume the project or that the delayed backlog will not be retendered. Jobs or projects subsequently retendered and not awarded to the Corporation or its subsidiaries would at that time be removed from the Corporation’s backlog.

As at September 30, 2010 ($ millions)

Work-in-hand Active Backlog Delayed Backlog Total Backlog

$1,317.1 $ 518.6 $ - $1,835.7

As at September 30, 2009

($ millions)

Work-in-hand Active Backlog Delayed Backlog Total Backlog

$ 770.2 $ 630.3 $ 117.0 $1,517.5

Working capital is current assets less current liabilities. The calculation of working capital is provided in the table below:

32

As at ($ millions)

September 30, 2010 December 31, 2009

Current Assets $ 524.0 $ 330.3

Less: Current Liabilities 430.8 221.2

Working capital $ 93.2 $ 109.1

EBITDA is a common financial measure widely used by investors to facilitate an “enterprise level” valuation of an entity. The Corporation follows the standardized definition of EBITDA. Standardized EBITDA represents an indication of the Corporation’s capacity to generate income from operations before taking into account management’s financing decisions and costs of consuming tangible and intangible capital assets, which vary according to their vintage, technological currency, and management’s estimate of their useful life. Accordingly, standardized EBITDA comprises revenues less operating cost before interest expense, capital asset amortization and impairment charges, and income taxes. This measure as reported by the Corporation may not be comparable to similar measures presented by other reporting issuers. The following is a reconciliation of net earnings to EBITDA for each of the periods presented in this MD&A in accordance with GAAP.

($millions) Three months ended September 30 Nine months ended September 30

2010 2009 2010 2009

Net earnings from continuing operations $ 13.2 $ 11.7 $ 29.4 $ 25.4

Add:

Income tax 5.1 4.5 12.2 10.0

Depreciation and amortization 7.1 1.1 9.3 3.3

Interest expense 3.5 - 3.9 0.2

EBITDA from continuing operations $ 29.0 $ 17.3 $ 54.7 $ 38.9

33

Book value per share is the value of shareholders’ equity less value of preferred stock divided by basic shares outstanding at the end of the period.

Forward-Looking Statements

Certain statements contained in this MD&A may constitute forward-looking statements. These statements relate to future events or the Corporation’s future performance. All statements, other than statements of historical fact, may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may", "will”, “project”, “predict”, “propose”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Corporation believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon by investors as actual results may vary. These statements speak only as of the date of this MD&A and are expressly qualified, in their entirety, by this cautionary statement.

In particular, this MD&A contains forward-looking statements, pertaining to the following:

� disclosures made under the heading “Outlook”;

� 2010 growth of business and operations;

� the performance of Seacliff’s subsidiaries for the remainder of 2010;

� business strategies and plans for implementing them;

� future cash flow, cash requirements and long-term obligations;

� the demand for the Corporation’s services; and

� the changeover to IFRS.

With respect to forward-looking statements listed above and contained in this MD&A, the Corporation has made assumptions regarding, among other things:

� the expected performance of the Canadian economy and the effect to the Corporation’s businesses;

� the impact of increasing competition;

� the global demand for oil and the effect on oil and gas projects in Western Canada; and

� government policies to stimulate the economy.

34

The Corporation’s actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this MD&A:

� general global economic and business conditions including the effect, if any, of a economic slowdown in the U.S. and/or Canada;

� weak capital and/or credit markets;

� fluctuations in currency and interest rates;

� changes in laws and regulations;

� timing of completion of capital or maintenance projects;

� competition and pricing pressures; and

� unpredictable weather conditions.

The forward-looking statements contained in this MD&A are made as of the date hereof and the Corporation undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable securities laws.

Additional information regarding Churchill including the Corporation’s 2009 Annual Information Form and other required securities filings are available on our website at www.churchillcorporation.com and on the Canadian Securities Administrators’ website at www.sedar.com; the System for Electronic Document Analysis and Retrieval (“SEDAR”).

Unaudited Interim Consolidated Financial Statements September 30, 2010 and 2009

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Corporation

is disclosing that its auditors have not reviewed the unaudited interim consolidated financial statements for the period ended September 30, 2010

the

Churchill Corporation

35

THE CHURCHILL CORPORATION

Consolidated Statements of Earnings, Comprehensive Income and Retained Earnings

(unaudited, $ thousands, except share and per share amounts)

2010 2009 2010 2009

Contract revenue 386,020$ 161,453$ 785,683$ 427,301

Contract costs 337,715 134,352 688,626 360,084

Contract income 48,305 27,101 97,057 67,217

Interest income 378 133 729 480

Sundry income 526 241 669 504

Indirect and administrative expenses (20,200) (10,146) (43,730) (29,315)

Depreciation and amortization (Note 7 and 8) (7,066) (1,075) (9,276) (3,302)

Interest expense (Note 12) (3,518) (30) (3,893) (210)

Earnings before income taxes 18,425 16,224 41,556 35,374

Income tax (expense) recovery

Current income tax 3,470 (7,215) (8,386) (29,854)

Future income tax (8,619) 2,680 (3,819) 19,885

(5,149) (4,535) (12,205) (9,969)

Net earnings from continuing operations and comprehensive income 13,276 11,689 29,351 25,405

Net earnings (loss) from discontinued operations (Note 4) (29) 3,484 269 1,722

Net earnings and comprehensive income 13,247 15,173 29,620 27,127

Retained earnings, beginning of period 132,652 93,416 116,279 83,132 Adjustment arising from shares purchased under a normal course issuer bid - - - (1,670)

Retained earnings, end of period 145,899$ 108,589$ 145,899$ 108,589$

Net earnings per common share:

Basic from continuing operations 0.57$ 0.66$ 1.51$ 1.44$

Basic from discontinued operations (0.00)$ 0.20$ 0.01$ 0.10$

Basic net earnings per share 0.57$ 0.86$ 1.52$ 1.54$

Diluted from continuing operations 0.53$ 0.65$ 1.45$ 1.42$

Diluted from discontinued operations (0.00)$ 0.19$ 0.01$ 0.10$

Diluted net earnings per share 0.53$ 0.84$ 1.46$ 1.52$

Weighted average common shares:

Basic 23,092,254 17,599,491 19,467,427 17,627,519

Diluted 27,272,135 17,943,969 21,335,344 17,856,303

The accompanying notes are an integral part of these consolidated financial statements

Nine months endedThree months endedSeptember 30 September 30

36

THE CHURCHILL CORPORATIONConsolidated Balance Sheets

(unaudited, $ thousands)

September 30, December 31,

2010 2009

ASSETSCurrent Assets

Cash and cash equivalents (Note 5) 88,205$ 184,402$

Accounts receivable 363,978 116,592

Inventories and prepaid expenses 4,071 949

Costs in excess of billings 47,515 19,013

Income taxes recoverable 17,376 56

Future income tax assets 1,223 7,813

Current portion of long-term receivable 1,612 1,500

523,980 330,325

Restricted cash (Note 6) 4,555 2,642

Long-term receivable 486 1,500

Future income tax assets 8,477 399

Property and equipment (Note 7) 61,299 17,063

Assets held-for-sale (Note 4) 2,449 4,778

Intangible assets (Note 8) 77,945 3,395

Goodwill (Note 8) 233,622 7,315

912,813$ 367,417$

LIABILITIESCurrent Liabilities

Accounts payable and accrued liabilities 310,954$ 137,249$

Contract advances and unearned income 117,863 71,897

Income taxes payable - 11,528

Current portion of long-term debt (Note 9) 1,935 559

430,752 221,233

Long-term deferred warranty claims (Note 6) 4,555 2,642

Long-term debt (Note 9) 79,139 229

Long-term stock based compensation liability (Note 13 and 21) 3,184 1,727

Convertible debentures (Note 10) 73,924 -

Accrued pension obligation (Note 11) 9,302 -

Future income tax liabilities 26,401 79

627,257 225,910

SHAREHOLDERS' EQUITYShare capital (Note 13) 120,698 16,732

Contributed surplus 9,296 8,496

Convertible debentures (Note 10) 9,663 -

Retained earnings 145,899 116,279

285,556 141,507

912,813$ 367,417$

The accompanying notes are an integral part of these consolidated financial statements 37

THE CHURCHILL CORPORATION

Consolidated Statements of Cash Flow

(unaudited, $ thousands)

2010 2009 2010 2009

OPERATING ACTIVITIESNet earnings from continuing operations and comprehensive income 13,276$ 11,689$ 29,351$ 25,405$

Depreciation and amortization (Note 7 and 8) 7,066 1,075 9,276 3,302

Gain on disposal of equipment (79) (22) (110) (40)

Net change in accrued pension obligation (Note 11) 87 - 87 -

Stock based compensation (Note 13) 2,293 469 3,454 1,103

Non-cash component of interest expense (Note 12) 2,070 - 2,374 -

Future income taxes 8,619 (2,680) 3,819 (19,885) 33,332 10,531 48,251 9,885

Change in non-cash working capital balances relating to operations (Note 19) (20,875) 1,683 (71,520) 34,886

12,457 12,214 (23,269) 44,771

INVESTING ACTIVITIESAcquisition, net of cash and cash equivalents acquired (Note 3) (329,598) - (329,598) -

Proceeds from long-term receivable 1,500 - 1,500

Proceeds on disposal of equipment 132 73 215 225

Additions to intangible assets (Note 8) (2,727) - (5,722) -

Additions to property and equipment (1,411) (677) (4,483) (2,334)

(332,104) (604) (338,088) (2,109)

FINANCING ACTIVITIESIssuance of long-term debt (Note 9) 109,936 - 109,936 -

Issue costs of long-term debt (Note 9) (3,327) - (3,327) -

Repayment of long-term debt (Note 9) (27,924) (201) (28,260) (6,953)

Issuance of convertible debentures (Note 10) - - 86,250 -

Issue costs of convertible debentures (Note 10) (119) - (3,520) -

Issuance of common shares (Note 13) 107,230 - 107,243 158

Issue costs of common shares (Note 13) (5,580) - (5,580) -

Share purchase under a normal course issuer bid - - - (970)

180,216 (201) 262,742 (7,765)

Cash provided by (used in) continuing operations (139,431) 11,409 (98,615) 34,897

Cash provided by discontinued operations (Note 4) 342 13,887 2,418 21,448

Increase (decrease) in cash and cash equivalents during the period (139,089)$ 25,296$ (96,197)$ 56,345$

Cash and cash equivalents, beginning of period 227,294 131,817 184,402 100,768

Cash and cash equivalents, end of period 88,205 157,113 88,205 157,113

SUPPLEMENTAL CASH FLOW INFORMATION

Cash received (paid) during the period for:

Interest (1,069)$ 57$ (789)$ 251$

Income taxes (9,283)$ 931$ (30,927)$ (7,511)$

The accompanying notes are an integral part of these consolidated financial statements

Nine months endedSeptember 30

Three months endedSeptember 30

38

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

1. BASIS OF PRESENTATION These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the fiscal year ended December 31, 2009 and notes thereto. These unaudited interim consolidated financial statements are prepared in accordance with generally accepted accounting principles for interim financial information in Canada; however, they do not conform in all respects to the disclosure requirements of generally accepted accounting principles for annual financial statements. The same accounting policies and principles were followed in respect of the preparation of these unaudited interim consolidated financial statements as were followed in the preparation of the audited annual consolidated financial statements for the year ended December 31, 2009, with the exception of the policies discussed below.

2. SIGNIFICANT ACCOUNTING POLICIES (i) Business Combinations

CICA Handbook Section 1582, Business Combinations replaces Section 1581, Business Combinations and establishes new standards for the accounting of a business combination. This Section constitutes the Canadian GAAP equivalent to the corresponding provision under IFRS. This Section shall be applied prospectively to business combinations for which the acquisition date is on or after the commencing of the first annual reporting period beginning on or after January 1, 2011 and the Corporation will adopt this new Section as of such date upon its conversion to IFRS. As a result, the transaction fees incurred in relation to the acquisition of Seacliff Construction Corp. (“Seacliff”) have been included as part of the purchase price consideration (Note 3). Upon conversion to IFRS, the accounting for these transaction fees will be reassessed.

(ii) Pension Costs and Obligations

With the acquisition of Seacliff on July 13th, 2010 (Note 3), the Corporation inherited the legacy Seacliff pension plans of two of its subsidiaries: Dominion Company Inc (“Dominion”) and Canem Holdings Ltd (“Canem”). These plans are comprised of two non-contributory defined benefit pension plans (“DB”) that cover salaried employees who did not convert to Seacliff’s two defined contribution pension plans (“DC”), which came into effect in 2005. Once the DC pension plans began, new members were no longer accepted into the DB pension plans. Upon acquisition, the Corporation halted new membership to the DC pension plan in Dominion, however the DC pension plan in Canem continues to accept the entrance of new employees. In Canem’s DC pension plan, employees are automatically enrolled following completion of one year of service for employees hired after April 4, 2004. The DB pension plans in both Dominion and Canem have a flexi-benefit whereby active members may make flexi-contributions, which must be used to provide benefit enhancements at retirement, termination, or death. Current service costs for the DB pension plans are expensed as they accrue based on services recorded by employees during the year. Pension benefit obligations are determined by independent actuaries using the projected benefit method pro-rated on service, whereby management’s best estimates are used, and accrued benefits are pro-rated on service. Future salaries and cost escalation are considered in the benefit. For the purposes of calculating the expected return on plan assets, the plan assets are valued at fair value. Adjustments arising from plan amendments, changes in assumptions, experience gains and losses and the difference between the actuarial present value of accrued benefits and the market value of the pension fund assets are amortized over the expected average remaining service life of the employee group. Cumulative actuarial gains or losses in excess of 10% of the greater of the accrued benefit obligation and the fair value of the plan assets are deferred and amortized over the expected average remaining service life of the plan participants.

The DC pension plans are registered pension plans regulated by provincial pension legislation and are also non-contributory plans. Current service costs are expensed as incurred based on a contribution schedule where employee age, length of continuous service and pensionable earnings determine the contribution. The plan assets are held by a third party custodian who invests the contributions on behalf of the participating employees.

39

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

3. ACQUISITION OF SEACLIFF CONSTRUCTION CORP.

On July 13, 2010, the Corporation completed the acquisition of 100% of the issued and outstanding shares of Seacliff , pursuant to an arrangement under the Business Corporations Act (British Columbia). Under the terms of the arrangement, Seacliff shareholders received $17.14 in cash for each Seacliff common share, resulting in total cash consideration of $381,833. Seacliff was a diversified construction company providing general contracting construction, electrical contracting and earthmoving services to a wide array of clients in both the public and private sectors. Seacliff operated through three operating units: i) Dominion ii) Canem and iii) Broda Construction Group (“Broda”). Dominion offers diversified general contracting, construction management and design-build services in Western Canada, primarily to institutional, commercial and light industrial clients. Canem provides a broad range of electrical contracting services including designing, building, maintain and servicing electrical and data communication systems for institutional, commercial, light industrial and multi-family residential customers. Broda provides heavy construction and specializes in aggregate processing, earth work, civil construction and concrete production. The acquisition was accounted for using the purchase method and the results of the operations are included from the date of the acquisition. The total purchase price of the acquisition was $387,155, including the assumption of Seacliff's indebtedness. Details of the acquisition are as follows:

Each intangible asset acquired will be amortized over its estimated useful life. The major intangible asset classes and estimated lives are set out in Note 8. Based upon the final valuations disclosed above, goodwill recognized on the acquisition amounted to $226,307 and that amount is not expected to be deductible for tax purposes.

Net assets acquired, at fair value Cash and cash equivalents 57,557$ Accounts receivable 119,226 Costs in excess of billings 7,445 Prepaid expenses and other assets 24,292 Ballast inventory 10,580 Long-term receivables 598 Property and equipment 44,152 Intangible assets (Note 8) 73,810 Goodwill (Note 8) 226,307

563,967 Less: Accrued pension obligation (Note 11) 9,413 Accounts payable and accrued liabilities 106,599 Income taxes payable 6,247 Contract advances and unearned revenue 26,132 Capital lease obligations 4,191 Long-term debt 1,691 Future income tax liabilities 22,539

387,155$

Purchase price Cash consideration 109,648$ Revolving credit facility (Note 9) 80,000 Convertible debentures (Note 10) 86,250 Subscription receipts (Note 13) 105,935 Transaction fees 5,322

387,155$

40

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

During the second quarter, the Corporation entered an equity bridge facility from a Canadian chartered bank for the purpose of financing the acquisition. Prior to the completion of the arrangement, the Corporation replaced the equity bridge facility with a $200,000, 3-year senior secured revolving credit facility with a syndicate of chartered banks (Note 9). The remainder of the financing for the acquisition was obtained through a prospectus filed on June 8, 2010, which included an equity financing of 6,000,000 subscription receipts for gross proceeds of $100,500, and an aggregate of $75,000 principal amount of 6.0% convertible extendible unsecured subordinated debentures. On June 15, 2010, the equity and debenture financing closed and an additional $11,250 of convertible debentures were issued pursuant to the exercise of the underwriters’ over-allotment option (Note 10). On July 8, 2010, the underwriters completed a partial exercise of their over-allotment option on the subscription receipts for 324,500 additional subscription receipts. Concurrent with the closing of the acquisition, the subscription receipts were automatically exchanged on a one-to-one basis for common shares of the Corporation for a total of 6,324,500 shares and total gross proceeds of $105,935 (Note 13).

4. ASSETS HELD-FOR-SALE AND DISCONTINUED OPERATIONS

Assets held-for-sale includes agricultural lands and commercial buildings. The results of operations attributable to these assets and liabilities have been retrospectively reported as discontinued operations for the year ended December 31, 2009. Previously, these amounts were included in continuing operations in the Corporate and Other, and the Triton segments. Commencing on the date of disposition, the operations and cash flows of this segment have been eliminated from the ongoing operations of the Corporation. During the first quarter, the Corporation sold the land, equipment and buildings of the Bonnyville property, which was included in assets held-for-sale at December 31, 2009. The Corporation received cash proceeds on the sale of $2,195. Net earnings from discontinued operations for the nine months ending September 30, 2010 of $269 are net of asset carrying costs, future tax adjustments and transaction costs (September 30, 2009 - $1,722). For the quarter ended September 30, 2010, net loss from discontinued operations was $29 (net earnings of September 30, 2009 - $3,484). The following table presents summary balance sheets, statements of earnings and statements of cash flows of the discontinued operations included in the consolidated financial statements:

Statements of Earnings

2010 2009 2010 2009Revenue -$ 4,779$ -$ 27,954$ Contract income - 445 - 1,308 Net earnings (loss) from discontinued operations (29)$ 3,484 269$ 1,722

Balance SheetsSeptember, 2010 December 31, 2009

Property and equipment 2,279$ 2,691$ Future income tax assets 170 2,087 Net assets held-for-sale 2,449$ 4,778$

Three months ended September 30, Nine months ended September 30,

Statements of Cash Flows

2010 2009 2010 2009Operating activities 332$ 3,132$ 340$ 10,700$ Financing activities - (7) - 17 Investing activities 10 10,762 2,078 10,731 Cash provided by discontinued operations 342$ 13,887$ 2,418$ 21,448$

Three months ended September 30, Nine months ended September 30,

41

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

5. CASH AND CASH EQUIVALENTS

Included in the cash and cash equivalents balance is $25,246 (December 31, 2009 - $15,502) held in joint venture bank accounts.

6. RESTRICTED CASH AND LONG -TERM DEFERRED WARRANTY CLAIMS

Restricted cash relates to the general contracting segment’s Subguard Program representing an agreement with Zurich Insurance Company (“Zurich”) that establishes a pre-funded deductible/co-pay insurance program. The funds provided to Zurich as at September 30, 2010 amounted to $4,555 (December 31, 2009 – $2,642) and are presented as restricted cash on the consolidated balance sheets with a corresponding offset to long-term deferred warranty claims.

7. PROPERTY AND EQUIPMENT

During the first quarter, the Corporation re-evaluated the estimated useful lives of its depreciable assets and adjusted buildings and improvements to 25 years, construction and automotive equipment to 5 to 7 years and office furniture and equipment to 5 years, all on a straight-line basis. The estimated impact of this change for the nine months ended September 30, 2010 is a $350 increase in depreciation expense. In the third quarter a further adjustment has been made due to the Seacliff acquisition as follows: buildings and improvements 10 to 25 years, construction and automotive equipment 5 to 20 years, and office furniture and computer hardware 3 to 5 years. There is no accounting impact of this adjustment on prior periods.

8. GOODWILL AND INTANGIBLE ASSETS

Accumulated Net BookSeptember 30, 2010 Cost Depreciation ValueLand and improvements 709$ 24$ 685$ Buildings and improvements 2,780 2,116 663 Leasehold improvements 10,205 4,034 6,171 Construction and automotive equipment 65,192 16,898 48,294 Office furniture and equipment 7,954 5,008 2,946 Computer hardware and software 11,065 8,879 2,187 Assets under construction 353 - 353

98,258$ 36,959$ 61,299$

Accumulated Net BookDecember 31, 2009 Cost Depreciation ValueLand and improvements 709$ 24$ 685$ Buildings and improvements 1,921 1,475 446 Leasehold improvements 5,655 1,249 4,406 Construction and automotive equipment 16,123 7,228 8,895 Office furniture and equipment 1,737 837 900 Computer hardware and software 5,734 4,416 1,318 Assets under construction 413 - 413

32,292$ 15,229$ 17,063$

Goodwill September 30, 2010 December 31, 2009General Contracting Segment 116,413$ -$ Industrial Services Segment 18,982 7,315 Commercial Systems Segment 98,227 -

233,622$ 7,315$

42

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

Goodwill consists of $7,315 related to the acquisition of Laird Electric Inc. in 2003 and the remaining $226,307 relates to the Seacliff acquisition (Note 3).

The intangible assets, aside from the enterprise resource planning assets, are all related to the acquisition of Seacliff (Note 3). The intangible assets are amortized based on their estimated useful lives. The enterprise resource planning asset is expected to be ready for use in 2011, at which time amortization will begin. Backlog and agency intangibles are amortized based on management’s expectation of when the related revenues will be earned. The contracts, customer relationships and tradename are all straight-line amortized over 5 to 15 years. The related intangible amortization of $4,982 is included in depreciation and amortization on the consolidated statements of earnings for the three and nine months ended September 30, 2010.

9. LONG-TERM DEBT

`

On July 12, 2010, the Corporation obtained a $200,000, 3-year senior secured revolving credit facility with a syndicate of chartered banks. The facility matures on July 12, 2013, however during the 90 day period before each anniversary date, the Corporation may extend the revolving credit facility for an additional year. As such, there is no current portion of long-term debt related to the revolving credit facility. The revolving credit facility is secured by comprehensive security over all assets of the Corporation. Interest is charged at a rate per annum equal to the Canadian prime rate, Libor rate or Bankers’ Acceptance rate as applicable and in effect during the interest period, plus additional interest based on a pricing rate schedule. The additional interest per the pricing rate schedule depends upon

Intangible assets Accumulated Net BookSeptember 30, 2010 Cost Amortization ValueEnterprise Resource Planning Assets 9,117$ -$ 9,117$ Backlog and Agency 23,500 3,490 20,010 Contracts, Customer Relationships and Tradename 50,310 1,492 48,818

82,927$ 4,982$ 77,945$

Intangible assets Accumulated Net BookDecember 31, 2009 Cost Amortization ValueEnterprise Resource Planning Assets 3,395$ -$ 3,395$ Backlog and Agency - - - Contracts, Customer Relationships and Tradename - - -

3,395$ -$ 3,395$

September 30, 2010 December 31, 2009Senior secured revolving credit facility, interest at prime plus 2.0% depending on certain financial ratios, secured by all present and future assets. 80,000$ -$

Financing fees, net of amortization (Note 12) (3,081) - 76,919 -

Finance contracts, secured by construction and automotive equipment with an aggregate carrying value of $4,021, interest varying from 0.0% to 8.4%, blended monthly repayments of $494, maturing between October 2010 and September 2013. 2,408 752

Capital leases, secured by construction and automotive equipment with an aggregate carrying value of $5,441, interest varying from 0.0% to 10.0%, blended monthly repayments of $290, maturing between October 2010 and January 2014. 1,747 36

81,074 788 Less current portion (1,935) (559)

79,139$ 229$

43

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

the debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) ratio and ranges from a low of 200 basis points for Canadian prime rate loans to a high of 450 basis points for Libor and Bankers’ Acceptances. The revolving credit facility contains provisions for stamping fees on Bankers’ Acceptances and Libor loans and standby fees on unutilized credit lines that vary depending on certain consolidated financial ratios. Total interest expense for the three and nine months ended September 30, 2010 on the revolving credit facility is $1,435 representing the interest paid on the debt and amortization of the deferred financing fees of $246 (Note 12). Additions to property and equipment by way of capital leases and finance contracts have been treated as non-cash items and as such have not been reflected on the consolidated statements of cash flow. For the nine months ended September 30, 2010, there were no new capital leases or finance contracts (September 30, 2009 - $48).

10. CONVERTIBLE DEBENTURES

On June 15, 2010, the Corporation issued an aggregate of $75,000 principal amount of 6.0% convertible extendible unsecured subordinated debentures of the Corporation at a price of one thousand dollars per debenture. On June 15, 2010, an additional $11,250 of the convertible debentures were issued pursuant to the exercise of the underwriters’ over-allotment option. Total gross proceeds from the offering amounted to $86,250. Net proceeds of the offering, after payment of the underwriters’ fee and other expenses of the offering of $3,401, were $82,849.

The maturity date of the debentures is June 30, 2015. The debentures bear interest at an annual rate of 6.0% payable in equal installments semi-annually in arrears on December 31 and June 30 in each year, commencing December 31, 2010. Each debenture is convertible into common shares of the Corporation at the option of the holder at any time after the acquisition closing date (Note 3) and prior to the earlier of the maturity date and the date of redemption of the debenture, at an initial conversion price of $22.75 per common share, or a conversion rate of approximately 43.9560 common shares per one thousand dollar principal amount of debentures. The Corporation has reserved 3,791,205 common shares for issuance upon conversion of the debentures.

From June 30, 2013, or in the event of a change of control, and at any time prior to the final maturity date, the Corporation may, at its option, redeem the debentures, in whole or in part from time to time, provided that the current market price is at least 125.0% of the conversion price or $28.44 per common share, at a redemption price equal to the principal amount thereof plus accrued and unpaid interest. The Corporation may, at its option, elect to satisfy its obligation to pay the principal amount of the debentures by issuing and delivering common shares. The Corporation may also elect to satisfy its obligations to pay interest on the debentures by delivering common shares. The Corporation does not expect to exercise these options to settle the obligations through the issuance of common shares and as a result the potentially dilutive impact has been excluded from the calculation of fully diluted earnings per share (Note 15). The number of any shares issued will be determined based on market prices at the time of issuance. The Corporation presents and discloses its financial instruments in accordance with the substance of its contractual arrangement. Accordingly, upon issuance of the debentures, the Corporation recorded a liability of $76,250, less

September 30, 2010 December 31, 2009Principal amount - debt component 76,250$ -$ Accretion (Note 12) 478 - Financing fees, net of amortization (Note 12) (2,804) - Convertible unsecured subordinated debentures - debt component 73,924$ -$

September 30, 2010 December 31, 2009Principal amount - equity component 10,000$ -$ Financing fees (1) (337) - Convertible unsecured subordinated debentures - equity component 9,663$ -$ (1) Financing fees are net of future income taxes of $119.

44

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

related offering fees of $2,945. Total interest expense for the nine months ended September 30, 2010 on $86,250 of debentures is $2,128 representing the 6.0% coupon on the debentures, accretion related to the portion of the debentures recorded in equity and amortization of deferred financing fees calculated using the effective interest method. The estimated fair value of the holder's option to convert debentures to common shares in the amount of $10,000 has been separated from the fair value of the liability and is included in shareholders' equity, net of its pro rata share of financing fees of $456.

11. ACCRUED PENSION OBLIGATION

With the acquisition of Seacliff on July 13th, 2010, the Corporation inherited the legacy Seacliff pension plans at Canem and Dominion (Note 2 and 3). These plans are comprised of two non-contributory defined benefit pension plans (“DB”) and two non-contributory defined contribution pension plans (“DC”). Annual employer contributions to the DB pension plans, which are actuarially determined, are made on the basis of being not less than the minimum amounts required by federal pension supervisory authorities. The benefits provided by the defined benefit provision of the pension plans are based on years of service and final average earnings of the employees who are members of the plans. The DC pension plans cover salaried employees and provide participants with an annual contribution of 3.0% to 7.0% of annual base salary based on a participant’s age and service. At July 13, 2010, the Corporation had recognized the fair value of the pension obligation of $9,413 (Note 3) for the DB pension plans. The Corporation has included the long-term liability on the consolidated balance sheets as an accrued pension obligation of $9,302 as at September 30, 2010 (December 31, 2009 – nil). Information about the DB pension plans as at the date of acquisition and September 30, 2010 is as follows:

September 30, 2010Accrued benefit obligationsBalance, July 13, 2010 28,258$ Current service cost 277 Interest cost 368 Benefits paid (175) Employee contributions 53 Balance, September 30, 2010 28,781$

September 30, 2010Plan assetsFair value, July 13, 2010 18,845$ Employee and employer contributions 482 Actual return on plan assets 327 Benefits paid (175) Fair value, September 30, 2010 19,479$

Funded status - plan deficit (9,302) Accrued pension obligation, September 30, 2010 (9,302)$

45

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

The measurement date used to determine the plan assets and the accrued benefit obligation was July 13, 2010. Included in the amounts above are individual DB pension plans with accrued benefit obligations in excess of the fair value of plan assets as follows:

The most recent actuarial valuations for pension funding purposes were performed on July 13, 2010. The next actuarial valuations for both Dominion and Canem for pension funding purposes will be performed as of December 31, 2010. The significant actuarial assumptions adopted in measuring the Corporation’s accrued benefit obligations and net pension plan expense under the DB pension plans are as follows:

A summary of the elements of defined benefit cost for the DB pension plans is as follows:

The Corporation’s pension plan asset allocation and the current weighted average permissible range for each major asset class are as follows:

The Corporation’s investment strategy is to achieve a long-term (5 to 10 year period) real rate of return of 7.5% net of all fees and expenses. In identifying the asset allocation ranges, consideration was given to the long-term nature of the underlying plan liabilities, the solvency and going concern financial position of the plan, long-term return expectations

Canem September 30, 2010Accrued benefit obligation 10,135$ Fair value of plan assets 7,257 Funded status - plan deficit, September 30, 2010 (2,878)$ Dominion September 30, 2010Accrued benefit obligation 18,647$ Fair value of plan assets 12,223 Funded status - plan deficit, September 30, 2010 (6,424)$

September 30, 2010Discount rate on benefit obligations 5.7%Discount rate on benefit costs 7.5%Rate of compensation increase for 15 years 5.0%Expected long term rate of return on plan assets 7.5%Inflation rate 2.5%Average remaining service period of active employees 9 - 11 years

September 30, 2010Current service cost 277$ Interest cost 368 Expected return on plan assets (327) Net defined benefit pension plan expense 318$

September 30, 2010Asset allocation (percentage)Equity securities 70.0%Debt securities 30.0%

46

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

and the risks associated with key asset classes, as well as the relationships of their returns with each other, inflation and interest rates. For the period ending September 30, 2010, the Corporation funded the DB pension plans by $482 (December 31, 2009 - nil), and the DC pension plans by $54 (December 31, 2009 - nil).

12. INTEREST EXPENSE

Interest expense includes the following:

13. SHARE CAPITAL

(i) Stock options: The Corporation amended its stock option plan on March 10, 2010 to permit unexercised vested options to be surrendered in exchange of the aggregate fair market value of the common shares. There is no accounting impact of this amendment on prior periods. During the quarter 219,446 options were surrendered for a total of 105,468 common shares (September 30, 2009 - nil). As at September 30, 2010, the Corporation had 1,162,604 options outstanding (December 31, 2009 – 1, 213,243), of which 273,399 are currently exercisable (December 31, 2009 –262,074).

For the three months ended September 30, 2010, the Corporation recognized stock based compensation expense of $731 (September 30, 2009 - $469) over the period that the related employee services were rendered. Stock based compensation for the nine months ended September 30, 2010, was $1,892 (September 30, 2009 - $1,103). During the nine months ended September 30, 2010, 253,916 options were issued with a weighted average grant date fair value of $8.15. The fair value of options granted in the nine months ended September 30, 2010 by the Corporation was estimated using the Black-Scholes option-pricing model with the following assumptions: no dividends are paid on common shares, a weighted average risk-free interest rate of 2.3%, an average life of 4 years, and a weighted average

2010 2009 2010 2009Interest expense on revolving credit facility (Note 9) 1,189$ -$ 1,189$ -$ Other interest expense 259 30 330 210 Non-cash interest expense: Amortization of deferred financing fees on revolving credit facility (Note 9) 246 - 246 - Interest expense on convertible debentures (Note 10) 1,293 - 1,509 - Accretion on convertible debentures (Note 10) 410 - 478 - Amortization of deferred financing fees on convertible debentures (Note 10) 121 - 141 - Total non-cash interest expense 2,070 - 2,374 - Total interest expense 3,518$ 30$ 3,893$ 210$

Three months ended September 30, Nine months ended September 30,

IssuedShares Share Capital Shares Share Capital

Common Shares: Issued, beginning of year 17,619,259 16,732$ 17,822,091 16,663$ Shares repurchased - - (272,600) (257) Subscription receipts exercised (1) 6,324,500 102,658 - - Stock options exercised / surrendered 174,968 1,308 69,768 326 Issued, end of period 24,118,727 120,698$ 17,619,259 16,732$ (1) Subscription receipts are net of transaction fees of $4,429 and future income taxes of $1,152.

Twelve months ended December 31, 2009Nine months ended September 30, 2010

47

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

volatility of 52.9%. The amounts computed, according to the Black-Scholes pricing model, may not be indicative of the actual values realized upon the exercise of these options by the holders.

(ii) Performance share units:

The Corporation has a Performance Share Unit (“PSU”) Plan. Under the PSU Plan, participants are eligible to receive an equivalent cash value of the common shares, at a future date, subject to certain performance vesting conditions. The original cost of the PSU is equal to the fair market value at the date of grant. Compensation expense is recognized in earnings on a straight line basis over a vesting period of three years adjusted for the performance based vesting conditions. Changes in the amount of the liability due to stock price changes after the initial grant date are recognized as a compensation expense of the period in which the changes occur. During the quarter ended September 30, 2010, the Corporation recognized compensation expense of $545 (September 30, 2009 – $290) in respect of the PSU Plan. Stock based compensation for the nine months ended September 30, 2010 was $1,176 (September 30, 2009 - $474). As at September 30, 2010, the Corporation had 291,291 PSUs outstanding (September 30, 2009 – 227,979), of which none are vested. The first vesting and payout, if any, is expected to be in March 2011 for PSUs granted in 2008. These are included as current payables in accounts payable and accrued liabilities on the consolidated balance sheets. The long-term portion of PSUs and DSUs of $3,184 (December 31, 2010 - $1,727) is classified as long-term stock based compensation liability on the consolidated balance sheets (Note 21).

(iii) Deferred share units:

The Corporation has a Deferred Share Unit (“DSU”) plan which received board approval on November 3, 2009. Under the DSU plan, participants are eligible to receive DSUs in lieu of a portion of their annual remuneration, retainer and meeting fees (non-employee directors), or the Corporation’s short term incentive plan (employees). Each DSU is equal to the fair market value of one common share and is paid out in cash upon resignation, retirement, disability, termination or death. Compensation expense is recognized in earnings upon grant and subsequent changes in the amount of the liability, due to stock price changes after the initial grant date, are recognized in the period in which the change occurs. During the nine months ended September 30, 2010, the Corporation granted 28,902 DSU’s to directors as part of their annual remuneration. In addition, directors and employees voluntarily elected to purchase 19,104 DSUs deferring compensation related to retainer and meeting fees, salary or cash bonuses, as applicable. As at September 30, 2010, the Corporation had 80,940 DSUs outstanding (September 30, 2009 – nil). These DSU grants and elections resulted in $635 (September 30, 2009 – nil) of stock based compensation expense for the nine months ended September 30, 2010. For the quarter ended September 30, 2010, the stock based compensation was $341 (September 30, 2009 – nil).

(iv) Normal course issuer bid:

On October 15, 2008, the Corporation commenced a Normal Course Issuer Bid (“NCIB”) which was effective for one year, expiring on October 14, 2009. Under this NCIB, the Corporation was authorized to repurchase and cancel up to 1,391,000 common shares, of which 432,500 were actually repurchased from the inception of the program.

14. MANAGEMENT OF CAPITAL

The Corporation’s objective in managing capital is to ensure sufficient liquidity to pursue its growth and expansion strategy, while taking a prudent approach towards financial leverage and management of financial risk. The Corporation’s capital is composed of shareholders’ equity and long-term indebtedness. The Corporation’s primary uses of capital are to finance its growth strategies and capital expenditure programs. The Corporation does not currently pay a dividend so that it has maximum flexibility to finance growth and expansion, and is able to take advantage of acquisition opportunities. The merits of introducing a dividend are evaluated by the Corporation’s Board of Directors from time to time.

48

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

The Corporation intends to maintain a flexible capital structure consistent with the objectives stated above and to respond to changes in economic conditions and the risk characteristics of underlying assets. In order to maintain or adjust its capital structure, the Corporation may issue new shares, raise debt or refinance existing debt. The primary non-GAAP measures used by the Corporation to monitor its financial leverage are its ratios of long-term indebtedness to book capitalization and long-term indebtedness to EBITDA. For the purposes of capital management, long-term indebtedness includes long-term debt and the debt component of convertible debentures, both net of deferred financing fees. EBITDA is not a measure that has any standardized meaning prescribed by Canadian GAAP and is considered to be a non-GAAP measure. Therefore, this measure may not be comparable to similar measures presented by other companies. This measure has been described and presented in the manner in which the chief operating decision maker assesses performance. These metrics are indicative of the Corporation’s overall financial strength. The Corporation has changed its capital management strategy to reflect the increased size of the Corporation and the related capital structure put in place to finance the Seacliff transaction (Note 3). Over the long-term, the Corporation strives to maintain a target long-term indebtedness to book capitalization percentage in the range of 20 to 40 percent, calculated as follows:

The Corporation targets a long-term indebtedness to EBITDA ratio of 2x to 3x over a three to five year planning horizon. At September 30, 2010, the long-term indebtedness to EBITDA was 2.28x (December 31, 2009 - 0.0x) calculated on a trailing twelve-month basis as follows:

The Corporation also manages its capital through a rolling forecast of financial position and expected operating results. In addition, the Corporation establishes and reviews operating and capital budgets and cash flow forecasts in order to manage overall capital with respect to financial covenants. The Corporation’s revolving credit facility and surety programs changed due to the acquisition (Note 3 and 9) and were subject to the following covenants. The covenants that were applicable at December 31, 2009 were based on the former credit facility and surety programs. The Corporation was in full compliance with the debt covenants at September 30, 2010.

- Debt to EBITDA - Tangible Net Worth - Senior Debt to EBITDA - Interest Coverage - Working Capital

September 30, 2010 December 31, 2009Long-Term Indebtedness: Long-term debt, net of deferred financing fees 79,139$ 229$ Convertible debentures - debt component, net of deferred financing fees 73,924 - Total Long-Term Indebtedness 153,063 229 Total Shareholders' Equity 285,556 141,507

Total Capitalization 438,619$ 141,736$ Indebtedness to Capitalization Percentage 35% 0%

September 30, 2010 December 31, 2009Total Long-Term Indebtedness 153,063$ 229$

Net earnings and comprehensive income 37,310$ 34,817$ Add: Interest 3,923 240 Income tax expense 15,404 13,168 Depreciation and amortization 10,409 4,435

EBITDA 67,046$ 52,660$ Long-Term Indebtedness to EBITDA Ratio 2.28x 0.0x

49

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

15. EARNINGS PER SHARE

Basic earnings per share is computed on the basis of the weighted average number of common shares outstanding. Fully diluted earnings per share is computed on the basis of the weighted average number of common shares outstanding, plus the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. These include the outstanding stock options and the convertible debentures, assuming that all of the debenture holders converted at time of issuance. For the dilutive earnings per share calculation, the interest expense, accretion and amortization of deferred financing fees has been tax effected and added back to net earnings in order to calculate the diluted net earnings. For the three months ended September 30, 2010 the adjustment is $1,295 and for the nine months ended September 30, 2010 the adjustment is $1,511 (three and nine months ended September 30, 2009 - nil).

16. FINANCIAL INSTRUMENTS

Financial instruments consist of recorded amounts of receivables and other like amounts that will result in future cash receipts, as well as accounts payable, short-term borrowings, and any other amounts that will result in future cash outlays. The Corporation has determined that the fair value of its financial assets, including cash and cash equivalents, accounts receivable, and financial liabilities, including accounts payable and accrued liabilities, approximates their respective carrying amounts as at the balance sheet dates because of the short-term maturity of those instruments. The fair values of the Corporation’s interest-bearing financial liabilities, including capital leases and financed contracts, and the revolving credit facility, also approximates their respective carrying amounts due to the floating rate nature of the debt. The carrying value of the convertible debentures approximates fair value due to the recent issuance of the debentures.

(i) Financial instruments – carrying values

Weighted average common shares: 2010 2009 2010 2009Basic 23,092,254 17,599,491 19,467,427 17,627,519

Effect of dilutive securities: Incremental shares - stock options 388,676 344,478 368,100 228,784 Incremental shares - convertible debentures 3,791,205 - 1,499,817 -

Diluted 27,272,135 17,943,969 21,335,344 17,856,303

Three months ended September 30, Nine months ended September 30,

September 30, 2010 December 31, 2009Financial assets: Cash and cash equivalents 88,205$ 184,402$ Accounts receivable 363,978 116,592 Restricted cash 4,555 2,642 Long-term receivable, including current portion 2,098 3,000 Financial liabilities: Accounts payable and accrued liabilities 310,954$ 137,249$ Convertible debentures 73,924 - Long-term debt, including current portion 81,074 788

50

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

(ii) Financial income and expense

(iii) Financial risk management

The Corporation has exposure to credit, interest rate and liquidity risks. The Corporation is not exposed to any direct foreign currency risk. The Corporation’s Board of Directors has overall responsibility for the establishment and oversight of the Corporation’s risk management framework and reviews the corporate policies on an ongoing basis. The Corporation is exposed to credit risk through accounts receivable. This risk is minimized by the number of customers in diverse industries and geographic centers. The Corporation performs an assessment of its customers as part of its work procurement process, including an evaluation of financial capacity. Allowances are provided for potential losses that have been incurred at the balance sheet date. Accounts receivable are considered for impairment on a case-by-case basis when they are past due or when objective evidence is received that a customer will default. The Corporation takes into consideration the customer’s payment history, credit worthiness and the current economic environment in which the customer operates to assess impairment. The Corporation accounts for a specific bad debt provision when management considers that the expected recovery is less than the actual account receivable. The provision for doubtful accounts has been included in operating expenses in the consolidated statements of earnings, comprehensive income and retained earnings, and is net of any recoveries that were provided for in a prior period. Allowance for doubtful accounts as at September 30, 2010 is $3,369 (December 31, 2009 - $1,117). The Corporation had $14,232 trade receivables which were greater than 90 days past due as at the end of the quarter (December 31, 2009 - $2,534). Of the total, $4,865 (29%) of the 90 days past due trade receivables as at September 30, 2010 were concentrated in two oil sands customer accounts, but only $1,368 of these two accounts remains outstanding as of November 10, 2010 and another $500 payment is expected later in November. There were no other concentrations of credit risk in geographical area, customer markets or other areas as at September 30, 2010. Fluctuations in the valuation of the DB pension plans exposes the Corporation to additional risk. Economic factors such as expected long-term rate of return on plan assets, discount rates and future salary and bonus increases will cause volatility in the accrued benefit obligation.

Financial risk is the risk to the Corporation’s earnings that arises from fluctuations in the interest rates and the degree

of volatility of these rates. The Corporation does not use derivative instruments to reduce its exposure to this risk. At September 30, 2010, the increase or decrease in annual net earnings for each 1.0% change in interest rates on floating rate debt would be approximately $575(September 30, 2009 – nil).

The Corporation invests its cash with the objective of maintaining safety of principal and providing adequate liquidity

to meet all current payment obligations. The Corporation invests its cash and cash equivalents with counterparties that are of high credit quality as assessed by reputable rating agencies. Given these high credit ratings, the Corporation does not expect any counterparties to these cash equivalents to fail to meet their obligations.

2010 2009 2010 2009

Interest income - cash and cash equivalents 307$ 135$ 669$ 460$

Interest expense - revolving credit facility (1,435) (23) (1,435) (82) Interest expense - long-term debt (259) (7) (330) (128) Interest expense - convertible debentures (1,824) - (2,128) - Bad debt recovery, net - 68 12 833

(3,211)$ 173$ (3,212)$ 1,083$

Six months ended September 30, Three months ended September 30,

51

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

Other than the new risks related to the DB pension plans (Note 11), there have not been any changes in the type of risks arising from financial instruments during the period.

17. COMMITMENTS AND GUARANTEES The Corporation has a non-discretionary five year commitment totaling $1,000 to SAIT Polytechnic, of which $400 is

remaining. The Corporation is a participant in joint ventures for which it has provided joint and several guarantees, increasing the maximum potential payment to the full value of the work remaining under the contract. The Corporation has issued several parental guarantees in support of significant projects being undertaken by the general contracting and industrial services segments. The cost of completing the contracts cannot reasonably be determined, and may be greater or less than the unbilled portion of the contracts. In addition, the Corporation has provided several letters of credit in the amount of $23,951 in connection with various projects and joint ventures (September 30, 2009 - $11,787). These letters of credit are issued utilizing the credit facilities of the Corporation and reduce the maximum availability under the revolving credit facility. Furthermore, there are various outstanding parental guarantees provided by the Corporation in respect of the obligations and performance of the Corporation’s operating segments.

18. RELATED PARTY TRANSACTIONS

The Corporation incurred legal fees of $182 (September 30, 2009 - $325) during the quarter for services related to various legal matters with a law firm of which a director of the Corporation is also a partner. Legal fees of $311 (September 30, 2009 - $522) were incurred with this law firm for the nine months ended September 30, 2010. At September 30, 2010, nil (September 30, 2009 - $50) is included in accounts payable. During the three months ended September 30, 2010, the Corporation incurred facility costs of $35 (September 30, 2009 - $35) related to rental of a building which is owned by a director of the Corporation. Facility costs of $111 (September 30, 2009 - $110) for this building were incurred for the nine months ended September 30, 2010. At September 30, 2010 there was nil (September 30, 2009 - $12) included in accounts payable. Related party transaction costs were incurred in the ordinary course of business where normal trade terms apply.

19. CHANGE IN NON-CASH WORKING CAPITAL BALANCES RELATING TO OPERATIONS

2010 2009 2010 2009Accounts receivable (36,352)$ (31,977)$ (119,041)$ (50,795)$ Inventories and prepaid expenses 8,479 362 (700) (4) Costs in excess of billings (11,979) (1,048) (10,477) 11,175 Income taxes recoverable (11,069) - (11,013) - Accounts payable and accrued liabilities 26,849 10,363 61,405 (4,228) Contract advances and unearned income 4,881 16,363 19,834 56,976 Income taxes payable (1,684) 7,620 (11,528) 21,762

(20,875)$ 1,683$ (71,520)$ 34,886$

Three months ended September 30, Nine months ended September 30,

52

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

20. SEGMENTED INFORMATION

The Corporation operates as a construction and maintenance services provider, primarily in western Canada. The Corporation divides its operations into four business segments and reports its results under the categories of: General Contracting, Industrial Services, Commercial Systems, and Corporate and Other. The accounting policies and practices of the reportable segments are the same as those described in Note 1 of the audited consolidated financial statements for the year ended December 31, 2009. General Contracting - General Contracting consists of Stuart Olson Dominion Construction Ltd. (“SODCL”). SODCL constructs commercial, institutional, light-industrial and multi-unit residential buildings. Following the Seacliff transaction closing, Stuart Olson Constructors Inc. (“Stuart Olson”) and Dominion Company Inc. (“Dominion”) were combined to form SODCL. Stuart Olson and Dominion have been general contractors since 1939 and 1911 respectively and during the last several years both have become key players in Western Canada’s building markets. Industrial Services - Industrial Services consists of Laird Electric Inc. (“Laird”), Insulation Holdings Inc. (“IHI”) and Broda Construction Group (“Broda”). Laird is headquartered in Edmonton, and provides electrical, instrumentation and power-line construction and maintenance services to resource and industrial clients, primarily in the Fort McMurray and greater Edmonton regions. IHI is also headquartered in Edmonton, serving industrial clients with insulation, asbestos abatement, siding application, HVAC and plant maintenance services. Its clients are in the oil sands, oil and gas, petrochemical, forest products, power, utilities and mining industries. Broda is headquartered in Prince Albert, Saskatchewan, providing aggregate processing, earthwork, civil construction, concrete production and related services. It serves a broad range of organizations, including two major Canadian railway corporations and a number of Saskatchewan’s major potash, uranium, and infrastructure. Commercial Systems - Commercial Systems consists of Canem Holdings Ltd. (“Canem”). Canem, with its head office located in Richmond, B.C., designs, builds, maintains and services electrical and data communication systems for institutional, commercial, light industrial and multi-family residential customers. Its services include the design of electrical distribution systems within a building or complex; procurement and installation of electrical equipment and materials; on-call service for electrical maintenance and troubleshooting; preventative and scheduled maintenance for critical component installations; budgeting and pre-construction services; and management of regional and national contracts for multi-site installations. Corporate and Other - includes corporate costs not allocated directly to another business segment as well as any miscellaneous investments. It provides strategic direction, operating advice, financing, infrastructure services and management of public company requirements to each of its business segments.

53

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22)

3,51

8

Earn

ings

(los

s) b

efor

e tax

19,5

79$

7,49

5$

3,73

1$

(11,

655)

$

(725

)$

18

,425

$

In

com

e tax

es(5

,149

)

Net

earn

ings

from

cont

inui

ng o

pera

tions

13,2

76$

Goo

dwill

11

6,41

3$

18

,982

$

98

,227

$

-

$

-$

23

3,62

2$

To

tal a

sset

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5,41

3$

15

1,60

1$

76

,470

$

14

6,10

6$

(6

,777

)$

912,

813

$

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tal e

xpen

ditu

res

624

$

681

$

93$

5$

8

$

1,41

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Inte

rsegm

ent

Thre

e mon

ths e

nded

Sep

tem

ber 3

0, 2

009

Elim

inat

ions

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tal

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nues

134,

977

$

26,4

65$

-$

-

$

11$

161,

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$

EBIT

DA

from

con

tinui

ng o

pera

tions

(1)

16,2

67

3,96

8

-

(3

,876

)

970

17,3

29

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reci

atio

n an

d am

ortiz

atio

n54

0

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ense

(rec

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y)2

11

-

22

7

(2

10)

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ings

(los

s) b

efor

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15,7

25$

3,60

5$

-$

(4

,285

)$

1,17

9$

16,2

24$

Inco

me t

axes

(4,5

35)

N

et ea

rnin

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om co

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uing

ope

ratio

ns11

,689

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dwill

-

$

7,31

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-$

-

$

-$

7,

315

$

To

tal a

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s30

7,38

1$

57

,679

$

-

$

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(10,

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$

403,

171

$

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tal e

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ditu

res

414

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369

$

-$

(8

4)$

(2

2)$

67

7$

Gen

eral

Co

ntra

ctin

g In

dustr

ial

Serv

ices

Com

mer

cial

Syste

ms

Cor

pora

te an

d O

ther

Gen

eral

C

ontr

actin

g In

dust

rial

Se

rvic

es

Com

mer

cial

Sy

stem

s C

orpo

rate

and

O

ther

54

N

OTE

S TO

TH

E C

ON

SOLI

DA

TED

FIN

ANC

IAL

STA

TEM

EN

TS

(u

naud

ited,

in th

ousa

nds o

f dol

lars

, exc

ept s

hare

and

per

shar

e am

ount

s)

Th

e se

gmen

ted

info

rmat

ion

for t

he n

ine

mon

ths e

ndin

g an

d as

at S

epte

mbe

r 30,

201

0 an

d 20

09 is

as f

ollo

ws:

(1)

EBIT

DA

rep

rese

nts

earn

ings

or

loss

bef

ore

inte

rest

, in

com

e ta

xes,

dep

reci

atio

n an

d am

ortiz

atio

n. E

BIT

DA

is

not

a m

easu

re t

hat

has

any

stan

dard

ized

mea

ning

pr

escr

ibed

by

Can

adia

n G

AA

P an

d is

cons

ider

ed to

be

a no

n-G

AA

P m

easu

re. T

here

fore

, thi

s m

easu

re m

ay n

ot b

e co

mpa

rabl

e to

sim

ilar m

easu

res

pres

ente

d by

oth

er

com

pani

es.

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mea

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has

bee

n de

scrib

ed a

nd p

rese

nted

in

the

man

ner

in w

hich

the

chi

ef o

pera

ting

deci

sion

mak

er m

akes

ope

ratin

g de

cisio

ns a

nd a

sses

ses

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orm

ance

.

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rseg

men

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limin

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ns

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l

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554,

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204,

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34,0

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ng o

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tions

(1)

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34

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87

4,10

8

(11,

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(636

)

54

,725

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epre

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1,98

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ings

(los

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e tax

43,1

58$

14,8

50$

3,73

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(19,

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(332

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41

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e tax

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om co

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oodw

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116,

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18,9

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98,2

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-

$

233,

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l ass

ets

545,

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$

151,

601

$

76,4

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146,

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(6,7

77)

$

91

2,81

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Ca

pita

l exp

endi

ture

s1,

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538

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93

$

33

7$

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26)

$

4,48

3$

Inte

rsegm

ent

Nin

e mon

ths e

nded

Sep

tebe

r 30,

200

9 E

limin

atio

ns

Tota

l

Reve

nues

346,

628

$

80,9

95$

-$

-

$

(322

)$

42

7,30

1$

EBIT

DA

from

con

tinui

ng o

pera

tions

(1)

37,8

96

9,06

0

-

(8

,394

)

324

38,8

86

Dep

reci

atio

n an

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ortiz

atio

n1,

651

1,

038

-

606

7

3,

302

In

teres

t exp

ense

(rec

over

y)34

36

-

768

(628

)

21

0

Earn

ings

(los

s) b

efor

e tax

36,2

11$

7,98

6$

-$

(9

,768

)$

945

$

35,3

74$

Inco

me t

axes

(9,9

69)

N

et ea

rnin

gs fr

om co

ntin

uing

ope

ratio

ns25

,405

$

G

oodw

ill

-$

7,

315

$

-

$

-$

-

$

7,31

5$

Tota

l ass

ets

307,

381

$

57,6

79$

-$

48

,137

$

(1

0,02

6)$

40

3,17

1$

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pita

l exp

endi

ture

s1,

285

$

83

6$

-

$

283

$

(70)

$

2,33

4$

Gen

eral

Co

ntra

ctin

g In

dustr

ial

Serv

ices

Com

mer

cial

Syste

ms

Cor

pora

te an

d O

ther

Nin

e m

onth

s end

ed S

epte

mbe

r 30,

201

0 G

ener

al

Con

trac

ting

Indu

stri

al

Serv

ices

C

omm

erci

al

Syste

ms

Cor

pora

te a

nd

Oth

er

55

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited, in thousands of dollars, except share and per share amounts)

For the purposes of presentation, capital expenditures for the nine months ended September 30, 2010 of nil (September 30, 2009 - $48) relating to capital leases and finance contracts have been treated as non-cash transactions and as such have not been reflected on the consolidated statements of cash flow (Note 9). For the nine months ended September 30, 2010, revenue from a significant customer was $107,067 (September 30, 2009 - $79,113), which represented greater than 10% of contract revenue earned. This revenue was earned in the general contracting segment.

21. COMPARATIVE FIGURES

The comparative amounts reflect a retrospective reclassification of the long-term portion of PSUs and DSUs of $1,727, previously included in accounts payable and accrued liabilities, to long-term stock based compensation liability on the consolidated balance sheets. This reclassification did not have any effect on net income, shareholders’ equity, cash flows, or externally imposed financial covenants to which the Corporation was subject to for the year ended December 31, 2009.

56

Offi cers

James C. Houck, B.Sc., MBA,President and Chief Executive Offi cer

Daryl E. Sands, B.Comm., CA.Executive Vice President Finance and Chief Financial Offi cer

Andrew Y. L. Apedoe, B.Comm.Vice President, Investor Relations and Corporate Secretary

Don P. Pearson B.Sc., P.Eng.President and Chief Operating Offi cer, Stuart Olson Construction Ltd.

Ronald L. MartineauPresident and Chief Operating Offi cer, Insulation Holdings Inc.

David J. LeMayPresident and Chief Operating Offi cer, Laird Electric Inc.

Directors

Albrecht W.A. Bellstedt, B.A., J.D., Q.C.Chairman

Wendy L. Hanrahan (1) (2)

James C. Houck, B.Sc., MBA

Harry A. King, B.A., CA (1)

Carmen R. Loberg (2) (4)

Allister J. McPherson, B.Sc., M.Sc. (1) (3)

Henry R. Reid, B.ASc., MBA, P.Eng. (4)

Ian M. Reid, B.Comm. (1) (3)

George M. Schneider (2) (4)

Brian W. L. Tod, B.A., LL.B., Q.C. (2) (3)

(1) Member of the Audit Committee

(2) Member of the Human Resources & Compensation Committee

(3) Member of the Corporate Governance & Nominating Committee

(4) Member of the Health, Safety and Environment Committee

Executive Offi ces

400, 4954 Richard Road SW

Calgary, AB T3E 6L1

Phone: (403) 685-7777

Fax: (403) 685-7770

Email: inquiries@churchill-cuq.com

Website: www.churchillcorporation.com

Auditors

Deloitte & Touche LLPEdmonton, Alberta

Legal Counsel

Miller Thomson LLP

Macleod Dixon LLP

Principal Bank

HSBC Bank Canada

Bonding and Insurance

Aviva Insurance Company of Canada

AXA Pacifi c Insurance Company

Aon Reed Stenhouse Inc.

Travelers Guarantee Company

Registrar and Transfer AgentsInquiries regarding change of address, registered shareholdings, share transfers, duplicate mailings and lost certifi cates should be directed to:

CIBC Mellon Trust Company600 The Dome Tower333 Seventh Avenue SWCalgary, Alberta T2P 2Z1Phone: (403) 232-2400Fax: (403) 264-2100Email: inquiries@cibcmellon.caWebsite: www.cibcmellon.caAnswerline: 1-800-387-0825

corporate & shareholder information

CAG59646-Churchill AR_10.cover.c2 2

Phone: 403.685.7777Fax: 403.685.7770

www.churchillcorporation.com

400, 4954 Richard Road SWCalgary , AB T 3E 6L1