6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of: November 2016

Commission file number 001-36897

FIRSTSERVICE CORPORATION

(Translation of registrant’s name into English)

1140 Bay Street, Suite 4000

Toronto, Ontario, Canada

M5S 2B4

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F [ ] Form 40-F [X]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]

Indicate by check mark whether by furnishing the information contained in this Form, the Registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes [ ] No [X]

If “Yes” is marked, indicate the file number assigned to the Registrant in connection with Rule 12g3-2(b): N/A

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	FIRSTSERVICE CORPORATION
Date: November 2, 2016	/s/ Jeremy Rakusin
	Name:  Jeremy Rakusin
	Title:  Chief Financial Officer

EXHIBIT INDEX

Exhibit	Description of Exhibit
99.1	Interim consolidated financial statements and management’s discussion & analysis for the three and nine month periods ended September 30, 2016.

EX-99.1

EXHIBIT 99.1

FIRSTSERVICE CORPORATION

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Third Quarter

September 30, 2016

FIRSTSERVICE CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

(in thousands of US dollars, except per share amounts) - in accordance with accounting principles generally accepted in the

United States of America

	Three months						Nine months
	ended September 30						ended September 30
	2016			2015			2016			2015
Revenues	$	409,083		$	349,525		$	1,101,773		$	947,965
Cost of revenues		292,389			241,048			781,329			662,497
Selling, general and administrative expenses		70,609			69,895			223,003			206,387
Depreciation		5,573			4,645			16,256			13,837
Amortization of intangible assets		4,475			2,334			9,700			7,275
Acquisition-related items		(541	)		186			(148	)		469
Spin-off transaction costs		-			-			-			740
Operating earnings		36,578			31,417			71,633			56,760
Interest expense, net		2,284			2,453			6,739			7,044
Other expense (income), net		(71	)		(10	)		(172	)		109
Earnings before income tax		34,365			28,974			65,066			49,607
Income tax (note 5)		11,427			10,057			22,539			19,316
Net earnings		22,938			18,917			42,527			30,291
Non-controlling interest share of earnings (note 8)		2,863			2,421			5,179			4,834
Non-controlling interest redemption increment (note 8)		4,311			2,431			10,534			7,326
Net earnings attributable to Company	$	15,764		$	14,065		$	26,814		$	18,131
Net earnings per common share (note 9)
Basic	$	0.44		$	0.39		$	0.75		$	0.50
Diluted		0.43		$	0.39		$	0.74		$	0.50

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

Page 2 of 12

FIRSTSERVICE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(Unaudited)

(in thousands of US dollars) - in accordance with accounting principles generally accepted in the United States of America

	Three months						Nine months
	ended September 30						ended September 30
	2016			2015			2016		2015
Net earnings	$	22,938		$	18,917		$	42,527	$	30,291
Foreign currency translation gain (loss)		(348	)		(3,081	)		1,114		(3,850	)
Comprehensive earnings		22,590			15,836			43,641		26,441
Less: Comprehensive earnings attributable to non-controlling
interests		7,174			4,852			15,713		12,160
Comprehensive earnings attributable to Company	$	15,416		$	10,984		$	27,928	$	14,281

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

Page 3 of 12

FIRSTSERVICE CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands of US dollars) - in accordance with accounting principles generally accepted in the United States of America

	September 30, 2016		December 31, 2015
Assets
Current Assets
Cash and cash equivalents	$	49,180	$	45,560
Restricted cash		13,217		3,769
Accounts receivable, net of allowance of $7,995 (December 31, 2015 -
$7,182)		150,221		114,521
Income tax recoverable		8,586		9,628
Inventories		28,352		16,155
Prepaid expenses and other current assets		22,738		21,749
Deferred income tax		18,935		18,840
		291,229		230,222
Other receivables		3,431		3,833
Other assets		1,391		2,176
Fixed assets		69,623		57,575
Deferred income tax		6,293		6,553
Intangible assets		113,802		79,478
Goodwill		257,293		220,646
		451,833		370,261
	$	743,062	$	600,483
Liabilities and shareholders' equity
Current Liabilities
Accounts payable	$	31,728	$	24,143
Accrued liabilities		109,157		77,900
Income taxes payable		6,684		1,553
Unearned revenues		20,275		18,474
Long-term debt - current (note 6)		1,143		4,041
Contingent acquisition consideration - current (note 7)		2,805		2,206
Deferred income tax		1,794		1,782
		173,586		130,099
Long-term debt - non-current (note 6)		242,363		197,158
Contingent acquisition consideration (note 7)		1,498		1,110
Other liabilities		16,673		13,560
Deferred income tax		28,501		13,971
		289,035		225,799
Redeemable non-controlling interests (note 8)		95,190		77,559
Shareholders' equity		185,251		167,026
	$	743,062	$	600,483

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

Page 4 of 12

FIRSTSERVICE CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(Unaudited)

(in thousands of US dollars, except share information)

	Common shares												Accumulated
	Issued and												other
	outstanding						Contributed			Retained			comprehensive
	shares			Amount			surplus			Earnings			earnings			Total
Balance, December 31, 2015		35,939,011		$	136,071		$	43,980		$	(10,152	)	$	(2,873	)	$	167,026
Net earnings		-			-			-			26,814			-			26,814
Other comprehensive earnings		-			-			-			-			1,114			1,114
Subsidiaries’ equity transactions		-			-			(977	)		-			-			(977	)
Subordinate Voting Shares:
Stock option expense		-			-			2,223			-			-			2,223
Stock options exercised		80,000			1,453			(358	)		-			-			1,095
Tax benefit on options exercised		-			-			1,182			-			-			1,182
Dividends		-			-			-			(11,877	)		-			(11,877	)
Purchased for cancellation		(30,000	)		(118	)		-			(1,231	)		-			(1,349	)
Balance, September 30, 2016		35,989,011		$	137,406		$	46,050		$	3,554		$	(1,759	)	$	185,251

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

Page 5 of 12

FIRSTSERVICE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of US dollars) - in accordance with accounting principles generally accepted in the United States of America

	Three months ended						Nine months ended
	September 30						September 30
	2016			2015			2016			2015
Cash provided by (used in)
Operating activities
Net earnings	$	22,938			18,917		$	42,527		$	30,291
Items not affecting cash:
Depreciation and amortization		10,048			6,980			25,955			21,113
Deferred income tax		4,473			(4,535	)		3,379			(4,312	)
Other		49			(1,345	)		585			(1,165	)
Changes in non-cash working capital:
Accounts receivable		7,768			(150	)		(13,083	)		469
Inventories		(2,150	)		(2,992	)		(3,473	)		(4,528	)
Prepaid expenses and other current assets		1,755			192			(635	)		1,831
Payables and accruals		12,845			28,469			32,411			28,811
Unearned revenues		(10,989	)		(11,715	)		1,769			2,345
Other liabilities		2,091			189			(313	)		1,033
Contingent acquisition consideration		(122	)		-			(122	)		-
Net cash provided by operating activities		48,706			34,010			89,000			75,888
Investing activities
Acquisitions of businesses, net of cash acquired (note 4)		(3,353	)		(3,502	)		(80,434	)		(12,002	)
Purchases of fixed assets		(6,101	)		(3,884	)		(20,079	)		(14,291	)
Other investing activities		(2,656	)		(1,262	)		(10,104	)		(2,735	)
Net cash used in investing activities		(12,110	)		(8,648	)		(110,617	)		(29,028	)
Financing activities
Net repayment of long-term debt prior to spin-off		-			-			-			(220,953	)
Debt allocated under spin-out		-			-			-			208,690
Repayment of long-term debt after spin-out		-			(23,497	)		-			(28,497	)
Net distributions to Old FSV		-			-			-			1,995
Increase in long-term debt		-			-			87,030			-
Repayment of long-term debt		(17,156	)		-			(44,812	)		-
Sale (purchases) of non-controlling interests, net		(218	)		(29	)		41			(17,415	)
Contingent acquisition consideration		(1,033	)		(668	)		(2,368	)		(2,481	)
Proceeds received on exercise of options		-			144			1,095			187
Incremental tax benefit on stock options exercised		100			2,047			1,182			2,048
Financing fees paid		-			(4	)		-			(1,090	)
Dividends paid to common shareholders		(4,092	)		(3,597	)		(11,513	)		(3,597	)
Distributions paid to non-controlling interests		(1,180	)		(412	)		(4,244	)		(2,699	)
Repurchases of Subordinate Voting Shares		-			-			(1,349	)		-
Net cash provided by (used in) financing activities		(23,579	)		(26,016	)		25,062			(63,812	)
Effect of exchange rate changes on cash		(122	)		(1,578	)		175			(232	)
Increase (decrease) in cash and cash equivalents		12,895			(2,232	)		3,620			(17,184	)
Cash and cash equivalents, beginning of period		36,285			51,838			45,560			66,790
Cash and cash equivalents, end of period	$	49,180			49,606		$	49,180		$	49,606

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

Page 6 of 12

FIRSTSERVICE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2016

(Unaudited)

(in thousands of US dollars, except per share amounts)

1.       DESCRIPTION OF THE BUSINESS – FirstService Corporation (the “Company”) is a North American provider of residential property management and other essential property services to residential and commercial customers. The Company’s operations are conducted in two segments: FirstService Residential and FirstService Brands. The segments are grouped with reference to the nature of services provided and the types of clients that use those services.

FirstService Residential is a full-service property manager and in many markets provides a full range of ancillary services primarily in the following areas: on-site staffing, including building engineering and maintenance, full-service amenity management, security, concierge and front desk personnel, and landscaping; proprietary banking and insurance products; and energy conservation and management solutions.

FirstService Brands provides a range of essential property services to residential and commercial customers in North America through franchise networks and company-owned locations. The principal brands in this division include Paul Davis Restoration, California Closets, Certa Pro Painters, Pillar to Post Home Inspectors, Floor Coverings International, College Pro Painters, Century Fire Protection, and Service America.

2.       SUMMARY OF PRESENTATION – These condensed consolidated financial statements have been prepared by the Company in accordance with the disclosure requirements for the presentation of interim financial information pursuant to applicable Canadian securities law. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles (“GAAP”) in the United States of America have been condensed or omitted in accordance with such disclosure requirements, although the Company believes that the disclosures are adequate to make the information not misleading. These interim financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2015.

These interim financial statements follow the same accounting policies as the most recent audited consolidated financial statements. In the opinion of management, the condensed consolidated financial statements contain all adjustments necessary to present fairly the financial position of the Company as at September 30, 2016 and the results of operations and its cash flows for the three and nine month periods ended September 30, 2016 and 2015. All such adjustments are of a normal recurring nature. The results of operations for the three and nine month periods ended September 30, 2016 are not necessarily indicative of the results to be expected for the year ending December 31, 2016.

3.       RECENTLY ISSUED ACCOUNTING STANDARDS NOT YET ADOPTED – In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This ASU clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”) and is effective for the Company on January 1, 2018. The Company is currently assessing the impact of this ASU on its financial position and results of operations.

In November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. This ASU simplifies the presentation of all tax assets and liabilities by no longer requiring an allocation between current and non-current. All deferred tax assets and liabilities, along with any related valuation allowance are to be classified as non-current on the balance sheet. While this change conforms to US GAAP and reduces complexity in financial reporting, it may have a significant impact on working capital and the related ratios. The change will be effective on January 1, 2017. The Company is currently assessing the impact of this ASU on its financial position.  

In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU affects all aspects of lease accounting and has a significant impact to lessees as it requires the recognition of a right-of use asset and a lease liability for virtually all leases including operating leases. In addition to balance sheet recognition, additional quantitative and qualitative disclosures will be required. The standard will be effective on January 1, 2019, at which time it must be adopted using a modified retrospective transition. The Company is currently assessing the impact of this ASU on its financial position and results of operations.

Page 7 of 12

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This ASU simplifies how share-based payments are accounted for and presented. Income tax expense is expected to be impacted as entities are required to record all of the tax effects related to share-based payments at settlement through the income statement. This change in guidance removes the requirement to delay recognition of a windfall tax payment until it reduces taxes payable and instead records the benefit when it arises. The ASU also permits entities to make an accounting policy election for the impact of forfeitures by allowing them to be estimated, as required today, or recognized when they occur. The guidance will be effective on January 1, 2017 with either prospective or retrospective transition permitted. The Company is currently assessing the impact of this ASU on its financial position and results of operations.

4.       ACQUISITIONS – During the nine months ended September 30, 2016, the Company completed nine acquisitions, four in the FirstService Residential segment and five in the FirstService Brands segment. In the FirstService Residential segment, the Company acquired controlling interests in regional firms operating in California, South Carolina, Maryland, and Massachusetts. In the FirstService Brands segment, the Company acquired two California Closets franchises operating in California and Washington DC, and two Paul Davis Restoration franchises operating in Florida and Connecticut, all four of which will be operated as company-owned locations. In the FirstService Brands segment, the Company also acquired Century Fire Protection, a full-service fire protection firm headquartered in Atlanta, Georgia. The acquisition date fair value of consideration transferred for these transactions were as follows: cash of $80,434 (net of cash acquired of $474), notes payable of $3,434, and contingent consideration of $3,716 (2015 - cash of $12,002 and contingent consideration of $4,383). The purchase price allocations are not yet complete, pending final determination of the fair value of assets acquired. These acquisitions were accounted for by the purchase method of accounting for business combinations and accordingly, the consolidated statements of earnings do not include any revenues or expenses related to these acquisitions prior to their respective closing dates.

Certain vendors, at the time of acquisition, are entitled to receive a contingent consideration payment if the acquired businesses achieve specified earnings levels during the one- to three-year periods following the dates of acquisition. The ultimate amount of payment is determined based on a formula, the key inputs to which are (i) a contractually agreed maximum payment; (ii) a contractually specified revenue or earnings level; and (iii) the actual revenue or earnings for the contingency period. If the acquired business does not achieve the specified revenue or earnings level, the maximum payment is reduced for any shortfall, potentially to nil.

Contingent consideration is recorded at fair value each reporting period. The fair value recorded on the consolidated balance sheet as at September 30, 2016 was $4,303 (see note 7). The estimated range of outcomes (undiscounted) for these contingent consideration arrangements is $3,982 to a maximum of $4,685. The contingencies will expire during the period extending to September 2017. During the nine months ended September 30, 2016, $2,490 was paid with reference to such contingent consideration (2015 - $2,481).

5.       INCOME TAX – The provision for income tax for the nine months ended September 30, 2016 reflected an effective tax rate of 35% (2015 - 39%) relative to the statutory rate of approximately 27% (2015 - 27%). The difference between the effective rate and the statutory rate relates to the differential between tax rates in Canada and the US. The prior year tax rate was impacted by discrete charges attributable to the spin-off.

6.       LONG-TERM DEBT – The Company has $150,000 of senior secured notes (the “Senior Notes”) bearing interest at a rate of 3.84%. The Senior Notes are due on January 16, 2025, with five annual equal repayments beginning on January 16, 2021.

The Company has a credit agreement with a syndicate of banks to provide a committed multi-currency credit facility (the “Facility”) of $200,000. The Facility matures on June 1, 2020 and bears interest at 0.25% to 2.50% over floating reference rates, depending on certain leverage ratios. The Facility requires a commitment fee of 0.25% to 0.50% of the unused portion, depending on certain leverage ratios. At any time during the term, the Company has the right to increase the Facility by up to $50,000, on the same terms and conditions as the original Facility. The Facility is available to fund working capital requirements and other general corporate purposes.

Page 8 of 12

The Facility and the Company’s Senior Notes rank equally in terms of seniority. The Company has granted the lenders and Noteholders various collateral including an interest in all of the assets of the Company. The covenants require the Company to maintain certain ratios including financial leverage, interest coverage and net worth. The Company is limited from undertaking certain mergers, acquisitions and dispositions without prior approval.

7.       FAIR VALUE MEASUREMENTS – The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis as of September 30, 2016:

			Fair value measurements at September 30, 2016
	Carrying value at
	September 30, 2016		Level 1		Level 2		Level 3
Contingent consideration liability	$	4,303	$	-	$	-	$	4,303

The inputs to the measurement of the fair value of contingent consideration related to acquisitions are Level 3 inputs. The fair value measurements were made using a discounted cash flow model; significant model inputs were expected future operating cash flows (determined with reference to each specific acquired business) and discount rates (which range from 8% to 10%). The range of discount rates is attributable to level of risk related to economic growth factors combined with the length of the contingent payment periods; and the dispersion was driven by unique characteristics of the businesses acquired and the respective terms for these contingent payments. Within the range of discount rates, there is a data point concentration at 9%. A 2% increase in the weighted average discount rate would reduce the fair value of contingent consideration by $52.

Changes in the fair value of the contingent consideration liability are comprised of the following:

	2016
Balance, January 1	$	3,316
Amounts recognized on acquisitions		3,716
Fair value adjustments		(621	)
Resolved and settled in cash		(2,490	)
Other		382
Balance, September 30	$	4,303
Less: Current portion		2,805
Non-current portion	$	1,498

The carrying amounts for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair values due to the short maturity of these instruments, unless otherwise indicated. The inputs to the measurement of the fair value of long term debt are Level 3 inputs. The fair value measurements were made using a net present value approach; significant model inputs were expected future cash outflows and discount rates (which range from 1.5% to 2.0%).

	September 30, 2016				December 31, 2015
	Carrying		Fair		Carrying		Fair
	amount		value		amount		value
Other receivables	$	3,431	$	3,431	$	3,833	$	3,833
Long-term debt		243,506		262,736		201,199		216,788

Page 9 of 12

8.       REDEEMABLE NON-CONTROLLING INTERESTS – The minority equity positions in the Company’s subsidiaries are referred to as redeemable non-controlling interests (“RNCI”). The RNCI are considered to be redeemable securities. Accordingly, the RNCI is recorded at the greater of: (i) the redemption amount; or (ii) the amount initially recorded as RNCI at the date of inception of the minority equity position. This amount is recorded in the “mezzanine” section of the balance sheet, outside of shareholders’ equity. Changes in the RNCI amount are recognized immediately as they occur. The following table provides a reconciliation of the beginning and ending RNCI amounts:

	2016
Balance, January 1	$	77,559
RNCI share of earnings		5,179
RNCI redemption increment		10,534
Distributions paid to RNCI		(4,244	)
Sale of interests to RNCI, net		41
RNCI recognized on business acquisitions		6,157
Other		(36	)
Balance, September 30	$	95,190

The Company has shareholders’ agreements in place at each of its non-wholly owned subsidiaries. These agreements allow the Company to “call” the non-controlling interest at a price determined with the use of a formula price, which is usually equal to a fixed multiple of trailing two-year average earnings before extraordinary items, income taxes, interest, depreciation, and amortization, less debt. The agreements also have redemption features which allow the owners of the RNCI to “put” their equity to the Company at the same price subject to certain limitations. The formula price is referred to as the redemption amount and may be paid in cash or in the Company’s Subordinate Voting Shares. The redemption amount as of September 30, 2016 was $93,303. The redemption amount is lower than that recorded on the balance sheet as the formula prices of certain RNCI are lower than the amount initially recorded at the inception of the minority equity position. If all put or call options were settled with Subordinate Voting Shares as at September 30, 2016, approximately 1,900,000 such shares would be issued; this would be accretive to net earnings per common share.

Increases or decreases to the formula price of the underlying shares are recognized in the statement of earnings as the NCI redemption increment.

9.       NET EARNINGS (LOSS) PER COMMON SHARE – Earnings per share calculations cannot be anti-dilutive, therefore diluted shares are not used in the denominator when the numerator is in a loss position. The following table reconciles the basic and diluted common shares outstanding:

	Three months ended				Nine months ended
(in thousands)	September 30				September 30
	2016		2015		2016		2015
Basic shares		35,989		35,974		35,986		35,973
Assumed exercise of Company stock options		460		483		407		608
Diluted shares		36,449		36,457		36,393		36,581

Page 10 of 12

10.       STOCK-BASED COMPENSATION

Company stock option plan

The Company has a stock option plan for certain directors, officers and full-time employees of the Company and its subsidiaries, other than its Founder and Chairman. The stock option plan came into existence on June 1, 2015 upon completion of the spin-off. Options are granted at the market price for the underlying shares on the date of grant. Each option vests over a four-year term, expires five years from the date granted and allows for the purchase of one Subordinate Voting Share. All Subordinate Voting Shares issued are new shares. Grants under the Company’s stock option plan are equity-classified awards. As at September 30, 2016, there were 1,138,750 options available for future grants.

Grants under the Company’s stock option plan are equity-classified awards. There were no stock options granted during the three months ended September 30, 2016 (2015-nil). Stock option activity for the nine months ended September 30, 2016 was as follows:

						Weighted average
				Weighted		remaining
	Number of			average		contractual life		Aggregate
	options			exercise price		(years)		intrinsic value
Shares issuable under options -
Beginning of period		1,211,250		$	18.51
Granted		323,500			35.96
Exercised		(80,000	)		13.41
Forfeited		(40,000	)		20.69
Shares issuable under options -
End of period		1,414,750		$	22.73		2.71	$	33,844
Options exercisable - End of period		550,600		$	17.04		1.74	$	16,321

The amount of compensation expense recorded in the statement of earnings for the nine months ended September 30, 2016 was $2,223 (2015 - $1,629). As of September 30, 2016, there was $3,188 of unrecognized compensation cost related to non-vested awards which is expected to be recognized over the next 5 years. During the nine month period ended September 30, 2016, the fair value of options vested was $7,811 (2015 - $3,361).

11.       CONTINGENCIES – In the normal course of operations, the Company is subject to routine claims and litigation incidental to its business. Litigation currently pending or threatened against the Company includes disputes with former employees and commercial liability claims related to services provided by the Company. The Company believes resolution of such proceedings, combined with amounts set aside, will not have a material impact on the Company’s financial condition or the results of operations.

Pursuant to a restated management services agreement with the Company effective as of the 1st day of June, 2015, the Company agreed that it will make payments to a company (“FC Co”) indirectly owned by its Founder and Chairman that are contingent upon an arm’s length sale of control of the Company or upon a distribution of the Company’s assets to its shareholders. The payment amounts will be determined with reference to the consideration per Subordinate Voting Share received or deemed received by shareholders upon an arm’s length sale or upon a distribution of assets. The right to receive the payments may be transferred to person(s) who are not at arm’s length to FC Co. The agreement provides for FC Co to receive the following two payments. The first payment is an amount equal to 5% of the product of: (i) the total number of Subordinate and Multiple Voting Shares outstanding on a fully diluted basis at the time of the sale or distribution; and (ii) the per share consideration received or deemed received by holders of Subordinate Voting Shares minus a base price of C$2.351. The second payment is an amount equal to 5% of the product of: (i) the total number of Subordinate and Multiple Voting Shares outstanding on a fully diluted basis at the time of the sale or distribution; and (ii) the per share consideration received or deemed received by holders of Subordinate Voting Shares minus a base price of C$4.578. Assuming an arm’s length sale of control of the Company took place on September 30, 2016, the aggregate amount required to be paid to FC Co, based on a market price of C$61.02 (being the closing price per Subordinate Voting Share on the Toronto Stock Exchange on September 30, 2016), would be US$164,129.

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12.       SEGMENTED INFORMATION – The Company has two reportable operating segments. The segments are grouped with reference to the nature of services provided and the types of clients that use those services. The Company assesses each segment’s performance based on operating earnings or operating earnings before depreciation and amortization. FirstService Residential provides property management and related property services to residential communities in North America. FirstService Brands provides franchised and company-owned essential property services to residential and commercial customers in North America. Corporate includes the costs of operating the Company’s corporate head office.

OPERATING SEGMENTS
	FirstService		FirstService
	Residential		Brands		Corporate			Consolidated
Three months ended September 30
2016
Revenues	$	299,920	$	109,163	$	-		$	409,083
Depreciation and amortization		5,207		4,836		5			10,048
Operating earnings		23,484		16,219		(3,125	)		36,578
2015
Revenues	$	277,938	$	71,587	$	-		$	349,525
Depreciation and amortization		5,073		1,878		28			6,979
Operating earnings		20,298		14,524		(3,405	)		31,417

	FirstService		FirstService
	Residential		Brands		Corporate			Consolidated
Nine months ended September 30
2016
Revenues	$	838,384	$	263,389	$	-		$	1,101,773
Depreciation and amortization		15,785		10,112		59			25,956
Operating earnings		50,973		30,666		(10,006	)		71,633
2015
Revenues	$	766,535	$	181,430	$	-		$	947,965
Depreciation and amortization		15,529		5,508		75			21,112
Operating earnings		38,655		25,897		(7,792	)		56,760

GEOGRAPHIC INFORMATION
	United States		Canada		Consolidated
Three months ended September 30
2016
Revenues	$	384,716	$	24,367	$	409,083
Total long-lived assets		400,456		40,262		440,718
2015
Revenues	$	327,548	$	21,977	$	349,525
Total long-lived assets		321,333		37,850		359,183

	United States		Canada		Consolidated
Nine months ended September 30
2016
Revenues	$	1,034,301	$	67,472	$	1,101,773
2015
Revenues	$	884,973	$	62,992	$	947,965

Page 12 of 12

FIRSTSERVICE CORPORATION

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE nine MONTH PERIOD ENDED September 30, 2016

(in US dollars)

November 2, 2016

The following Management’s Discussion and Analysis (“MD&A”) should be read together with the unaudited interim consolidated financial statements of FirstService Corporation (the “Company” or “FirstService”) for the three and nine month periods ended September 30, 2016 and the Company’s audited consolidated financial statements, and MD&A, for the year ended December 31, 2015. The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). All financial information herein is presented in United States dollars.

The Company has prepared this MD&A with reference to National Instrument 51-102 – Continuous Disclosure Obligations of the Canadian Securities Administrators (the "CSA"). Under the U.S./Canada Multijurisdictional Disclosure System, the Company is permitted to prepare this MD&A in accordance with the disclosure requirements of Canada, which requirements are different from those of the United States. This MD&A provides information for the three and nine month periods ended September 30, 2016 and up to and including November 2, 2016.

Additional information about the Company, including the Company’s Annual Information Form, which is included in FirstService’s Annual Report on Form 40-F, can be found on SEDAR at www.sedar.com and on the US Securities and Exchange Commission website at www.sec.gov.

Consolidated review

Each of our two service lines reported strong revenue growth for the third quarter ended September 30, 2016, due to a combination of organic growth and recent acquisitions. Consolidated revenue growth was 17% relative to the same quarter in the prior year, resulting in growth in adjusted EBITDA, operating earnings, and adjusted earnings per share.

During the first three quarters of 2016, we acquired controlling interests in nine businesses, including four in our FirstService Residential segment and five in our FirstService Brands segment. The total initial cash consideration for these acquisitions was $80.4 million. During the past year, we also completed several other acquisitions in our two divisions, which provided additional revenue growth for the third quarter of 2016. These acquisitions increase the geographic footprint and our service offering at FirstService Residential and are part of the execution of our company-owned strategy at FirstService Brands to acquire California Closets and Paul Davis Restoration franchises in selected key markets. In addition, we acquired Century Fire Protection, a full-service fire protection firm headquartered in Atlanta.

Results of operations - three months ended September 30, 2016

Revenues for our third quarter were $409.1 million, 17% higher than the comparable prior year quarter on a reporting and local currency basis. On an organic basis, revenues were up 5% with the balance coming from recent acquisitions.

Adjusted EBITDA (see “Reconciliation of non-GAAP measures” below) for the third quarter was $46.7 million versus $39.1 million reported in the prior year quarter. Our Adjusted EBITDA margin was 11.4% of revenues versus 11.2% of revenues in the prior year quarter, reflecting an increased margin from continued operating efficiencies in our FirstService Residential segment, offset by a lower margin in our FirstService Brands segment due to an increased mix of lower margin company-owned operations. Operating earnings for the third quarter were $36.6 million, up from $31.4 million in the prior year period. The operating earnings margin was 8.9% versus 9.0% in the prior year quarter, with the decrease primarily attributable to increased amortization in the current period.

Depreciation and amortization expense totalled $10.0 million for the quarter relative to $7.0 million for the prior year quarter, with the increase related primarily to the amortization of backlog and other intangible assets recognized in connection with recent business acquisitions.

Net interest expense was $2.3 million, versus $2.4 million recorded in the prior year quarter. The average interest rate on debt during the quarter was 3.6%, down from 4.7% in the prior year quarter. The lower average interest rate was due to a decrease in the rate of interest on our Senior Notes.

The consolidated income tax rate for the quarter was 33%, relative to 35% of earnings before income tax in the prior year quarter.

Net earnings for the quarter were $22.9 million, versus $18.9 million in the prior year quarter. The increase was primarily attributable to growth in operating earnings in both the FirstService Residential and FirstService Brands segments.

The non-controlling interest (“NCI”) share of earnings was $2.9 million for the third quarter, relative to $2.4 million in the prior period, with the increase due to higher earnings from non-wholly owned operations. The NCI redemption increment for the third quarter was $4.3 million, versus $2.4 million in the prior period, and was attributable to changes in the trailing two-year average of earnings of non-wholly owned subsidiaries.

The FirstService Residential segment reported revenues of $299.9 million for the third quarter, up 8% (in both reported and local currencies) versus the prior year quarter. Excluding the impact of recently completed acquisitions, revenues were up 5%. Adjusted EBITDA was $28.9 million, versus $25.3 million in the prior year quarter. The results for our FirstService Residential division was driven by balanced property management fee and ancillary services growth, together with continued margin expansion from further streamlining our operations. Operating earnings for the third quarter were $23.5 million, versus $20.3 million for the third quarter of last year.

Third quarter revenues at our FirstService Brands segment were $109.2 million, up 53% (in both reported and local currencies) relative to the prior year period. Organic revenue growth was 7% and the balance from recent acquisitions. Adjusted EBITDA for the quarter was $20.3 million, up from $16.6 million in the prior year period. Results for the third quarter included strong growth from our franchise systems at California Closets, Pillar to Post Home Inspectors and Floor Coverings International, together with solid contribution from Paul Davis Restoration. The FirstService Brands division margin was lower during the third quarter versus the prior year primarily due to increased mix and strong performance from our lower margin company-owned operations, including Century Fire, California Closets and Paul Davis. Operating earnings for the third quarter were $16.2 million, versus $14.5 million in the prior year quarter.

Corporate costs, as presented in Adjusted EBITDA, were $2.4 million for the quarter, relative to $2.9 million in the prior year period. On a GAAP basis, corporate costs for the quarter were $3.1 million, relative to $3.4 million in the prior period.

Results of operations - nine months ended September 30, 2016

Revenues for the nine months ended September 30, 2016 were $1.10 billion, 16% higher than the comparable prior year (or 17% on a local currency basis). Revenues on an organic basis were up 6% with the balance of growth coming from acquisitions.

Year-to-date Adjusted EBITDA (see “Reconciliation of non-GAAP measures” below) was $99.7 million versus $80.7 million reported in the comparable prior year period. Our Adjusted EBITDA margin was 9.0% of revenues versus 8.5% of revenues in the prior year period, primarily due to improved profitability in the FirstService Residential segment. Operating earnings for the period were $71.6 million, up from $56.8 million in the prior year period, with the difference attributable to increased profitability at FirstService Residential in 2016 and the recent acquisition of Century Fire. Our operating earnings margin was 6.5% versus 6.0% in the prior year period.

Page 2 of 10

We recorded depreciation and amortization expense of $26.0 million for the nine month period relative to $21.1 million for the prior year period, with the increase due to amortization of intangible assets in connection with recent business acquisitions as well as increased depreciation in our FirstService Brands segment, including the impact of the Century Fire acquisition.

Net interest expense for the nine month period was $6.7 million, down from $7.0 million recorded in the prior year period. The average interest rate on debt during the period was 4.0%, versus 4.3% in the prior year period. The prior year period included allocated interest related to the pre-spin-off period. Net indebtedness (defined as current and non-current long-term debt less cash and cash equivalents) at the end of the quarter was $194.3 million versus $149.0 million a year ago.

Our consolidated income tax rate for the nine month period was 35%, relative to 39% of earnings before income tax in the prior year-to-date period. The prior year tax rate was affected by a discrete tax charge related to the pre-spin-off period, which impacted the rate by approximately 3%.

Net earnings for the nine month period were $42.5 million, versus $30.3 million in the prior year period. The increase was primarily attributable to current year growth in operating results from FirstService Residential and the recent acquisition of Century Fire.

Our FirstService Residential segment reported revenues of $838.4 million for the nine month period, up 9% (in both reported and local currencies) over the prior year period. Organic revenue growth was 6% and resulted from strong and diversified growth balanced across most markets. Tuck-under acquisitions accounted for the balance of revenue growth. Adjusted EBITDA was $67.0 million relative to $55.1 million in the prior year period. Year-to-date margin expansion reflects the further realization of operating efficiencies. Operating earnings were $51.0 million for the nine month period, relative to $38.7 million in the prior year period.

Year-to-date revenues at FirstService Brands were $263.4 million, an increase of 45% (in both reported and local currencies) relative to the prior year period. Organic growth was 7%, while acquisitions, including Century Fire, contributed the remaining balance. Organic revenue growth resulted primarily from higher system-wide sales at several of our franchised brands, as well as strong revenues at our California Closets company-owned operations. Adjusted EBITDA for the period was $40.2 million, versus $31.7 million for the prior year period. The year-to-date margin was impacted by the increased revenue mix from our lower margin company-owned operations. Operating earnings were $30.7 million, versus $25.9 million in the prior year period.

Corporate costs, as presented in Adjusted EBITDA, for the nine month period were $7.5 million, relative to $6.1 million in the prior year period. The prior year period included pre-spin-off allocations. On a GAAP basis, corporate costs were $10.0 million versus $7.8 million in the prior year period.

Page 3 of 10

Summary of quarterly results (unaudited)

The following table sets forth FirstService’s unaudited quarterly consolidated results of operations data for each of the eleven most recent quarters. The information in the table below has been derived from FirstService’s unaudited interim consolidated financial statements that, in management’s opinion, have been prepared on a consistent basis and include all adjustments necessary for a fair presentation of information. The information below is not necessarily indicative of results for any future quarter.

Quarter	Q1			Q2		Q3		Q4
(in thousands of US$, except per share amounts)
YEAR ENDING DECEMBER 31, 2016
Revenues	$	307,586		$	385,104	$	409,083
Operating earnings (loss)		4,261			30,794		36,578
Net earnings (loss) per share
Basic		(0.05	)		0.35		0.44
Diluted		(0.05	)		0.35		0.43
YEAR ENDED DECEMBER 31, 2015
Revenues	$	272,189		$	326,251	$	349,525	$	316,112
Operating earnings (loss)		1,407			23,936		31,417		13,987
Net earnings (loss) per share
Basic		(0.09	)		0.21		0.39		0.09
Diluted		(0.09	)		0.20		0.39		0.09
YEAR ENDED DECEMBER 31, 2014
Revenues	$	245,594		$	292,205	$	312,029	$	282,174
Operating earnings		1,627			19,118		20,004		4,872
Net earnings per share
Basic		(0.06	)		0.28		0.24		(0.10	)
Diluted		(0.06	)		0.28		0.24		(0.10	)
OTHER DATA
Adjusted EBITDA - 2016	$	12,716		$	40,245	$	46,703
Adjusted EBITDA - 2015		9,321			32,312		39,077	$	22,328
Adjusted EBITDA - 2014		7,934			25,362		28,310		13,391
Adjusted EPS - 2016		0.08			0.52		0.62
Adjusted EPS - 2015		0.02			0.40		0.50		0.28
Adjusted EPS - 2014		0.02			0.29		0.39		0.13

Seasonality and quarterly fluctuations

Certain segments of the operations of FirstService are subject to seasonal variations. The seasonality of the service lines results in variations in quarterly revenues and operating margins. Variations can also be caused by acquisitions or dispositions, which alter the combined service mix.

The FirstService Residential segment generates peak revenues and earnings in the third quarter, as seasonal ancillary swimming pool management revenues are earned.

The FirstService Brands segment includes outdoor painting and other franchised operations, which generate the majority of their revenues during the second and third quarters.

Page 4 of 10

Reconciliation of non-GAAP measures

In this MD&A, we make reference to “adjusted EBITDA” and “adjusted earnings per share”, which are financial measures that are not calculated in accordance with GAAP.

Adjusted EBITDA is defined as net earnings, adjusted to exclude: (i) income tax; (ii) other expense (income); (iii) interest expense; (iv) depreciation and amortization; (v) acquisition-related items; and (vi) stock-based compensation expense. We use adjusted EBITDA to evaluate our own operating performance and our ability to service debt, as well as an integral part of our planning and reporting systems. Additionally, we use this measure in conjunction with discounted cash flow models to determine the Company’s overall enterprise valuation and to evaluate acquisition targets. We present adjusted EBITDA as a supplemental measure because we believe such measure is useful to investors as a reasonable indicator of operating performance because of the low capital intensity of the Company’s service operations. We believe this measure is a financial metric used by many investors to compare companies, especially in the services industry. This measure is not a recognized measure of financial performance under GAAP in the United States, and should not be considered as a substitute for operating earnings, net earnings or cash flow from operating activities, as determined in accordance with GAAP. Our method of calculating adjusted EBITDA may differ from other issuers and accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted EBITDA appears below.

	Three months ended						Nine months ended
(in thousands of US$)	September 30						September 30
	2016			2015			2016			2015
Net earnings	$	22,938		$	18,917		$	42,527		$	30,291
Income tax		11,427			10,057			22,539			19,316
Other income, net		(71	)		(10	)		(172	)		109
Interest expense, net		2,284			2,453			6,739			7,044
Operating earnings		36,578			31,417			71,633			56,760
Depreciation and amortization		10,048			6,979			25,956			21,112
Acquisition-related items		(541	)		186			(148	)		469
Stock-based compensation expense		618			495			2,223			1,629
Spin-off transaction costs		-			-			-			740
Adjusted EBITDA	$	46,703		$	39,077		$	99,664		$	80,710

Adjusted earnings per share is defined as diluted net earnings (loss) per share, adjusted for the effect, after income tax, of: (i) the non-controlling interest redemption increment; (ii) acquisition-related items; (iii) amortization expense related to intangible assets recognized in connection with acquisitions; and (iv) stock-based compensation expense. We believe this measure is useful to investors because it provides a supplemental way to understand the underlying operating performance of the Company and enhances the comparability of operating results from period to period. Adjusted earnings per share is not a recognized measure of financial performance under GAAP, and should not be considered as a substitute for diluted net earnings per share, as determined in accordance with GAAP. Our method of calculating this non-GAAP measure may differ from other issuers and, accordingly, this measure may not be comparable to measures used by other issuers. A reconciliation of net earnings to adjusted net earnings and of diluted net earnings (loss) per share to adjusted earnings per share appears below.

Page 5 of 10

	Three months ended						Nine months ended
(in thousands of US$)	September 30						September 30
	2016			2015			2016			2015
Net earnings	$	22,938		$	18,917		$	42,527		$	30,291
Non-controlling interest share of earnings		(2,863	)		(2,421	)		(5,179	)		(4,834	)
Acquisition-related items		(541	)		186			(148	)		469
Amortization of intangible assets		4,475			2,334			9,700			7,275
Stock-based compensation expense		618			495			2,223			1,629
Spin-off transaction costs		-			-			-			740
Spin-off tax charge		-			-			-			1,646
Income tax on adjustments		(2,006	)		(1,107	)		(4,658	)		(3,628	)
Non-controlling interest on adjustments		(78	)		(44	)		(173	)		(133	)
Adjusted net earnings	$	22,543		$	18,360		$	44,292		$	33,455

	Three months ended					Nine months ended
(in US$)	September 30					September 30
	2016			2015		2016		2015
Diluted net earnings per share	$	0.43		$	0.39	$	0.74	$	0.50
Non-controlling interest redemption increment		0.12			0.07		0.29		0.20
Acquisition-related items		(0.01	)		-		-		0.01
Amortization of intangible assets, net of tax		0.07			0.03		0.15		0.11
Stock-based compensation expense, net of tax		0.01			0.01		0.04		0.03
Spin-off transaction costs, net of tax		-			-		-		0.02
Spin-off tax charge		-			-		-		0.05
Adjusted earnings per share	$	0.62		$	0.50	$	1.22	$	0.92

We believe that the presentation of adjusted EBITDA and adjusted earnings per share, which are non-GAAP financial measures, provides important supplemental information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations. We use these non-GAAP financial measures when evaluating operating performance because we believe that the inclusion or exclusion of the items described above, for which the amounts are non-cash or non-recurring in nature, provides a supplemental measure of our operating results that facilitates comparability of our operating performance from period to period, against our business model objectives, and against other companies in our industry. We have chosen to provide this information to investors so they can analyze our operating results in the same way that management does and use this information in their assessment of our core business and the valuation of the Company. Adjusted EBITDA and adjusted earnings per share are not calculated in accordance with GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP. Non-GAAP financial measures have limitations in that they do not reflect all of the costs or benefits associated with the operations of our business as determined in accordance with GAAP. As a result, investors should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP.

Liquidity and capital resources

Net cash provided by operating activities for the nine month period ended September 30, 2016 was $89.0 million, versus $75.9 million in the prior year period. The increase in operating cash flow was primarily attributable to increased earnings in both our FirstService Residential and FirstService Brands segments, together with increased depreciation and amortization of intangible assets arising from recent acquisitions, partially offset by changes in non-cash working capital. We believe that cash from operations and other existing resources will continue to be adequate to satisfy the ongoing working capital needs of the Company.

For the nine months ended September 30, 2016, capital expenditures were $20.1 million. Significant purchases include service vehicles in both operating segments as well as information technology system investments in the FirstService Brands segment.

Page 6 of 10

In October 2016, we paid a quarterly dividend of $0.11 per share on the Subordinate Voting Shares and Multiple Voting Shares in respect of the quarter ended September 30, 2016.

Net indebtedness as at September 30, 2016 was $194.3 million, versus $155.6 million at December 31, 2015. Net indebtedness is calculated as the current and non-current portion of long-term debt less cash and cash equivalents. We are in compliance with the covenants contained in our financing agreements as at September 30, 2016 and, based on our outlook for the balance of the year, we expect to remain in compliance with these covenants. We had $104.8 million of available un-drawn credit as of September 30, 2016.

In relation to acquisitions completed during the past two years, we have outstanding contingent consideration totalling $4.3 million as at September 30, 2016 ($3.3 million as at December 31, 2015) assuming all contingencies are satisfied and payment is due in full. Such payments, if any, are due during the period extending to September 2017. The contingent consideration liability is recognized at fair value upon acquisition and is updated to fair value each quarter, unless it contains an element of compensation, in which case such element is treated as compensation expense over the contingency period. The contingent consideration is based on achieving specified earnings levels, and is paid or payable at the end of the contingency period. We estimate that, based on current operating results, approximately 85% of the contingent consideration outstanding as of September 30, 2016 will ultimately be paid.

The following table summarizes our contractual obligations as at September 30, 2016:

Contractual obligations	Payments due by period
(in thousands of US$)			Less than						After
	Total		1 year		1-3 years		4-5 years		5 years
Long-term debt	$	242,470	$	695	$	858	$	90,060	$	150,857
Interest on long-term debt		46,506		7,912		15,854		15,533		7,207
Capital lease obligations		1,036		448		462		126		-
Contingent acquisition consideration		4,303		2,805		1,498		-		-
Operating leases		80,426		18,787		30,027		20,786		10,826
Total contractual obligations	$	374,741	$	30,647	$	48,699	$	126,505	$	168,890

At September 30, 2016, we had commercial commitments totaling $6.0 million comprised of letters of credit outstanding due to expire within one year. We are required to make semi-annual payments of interest on our senior secured notes at an interest rate of 3.8%.

Redeemable non-controlling interests

In most operations where managers or employees are also minority owners, the Company is party to shareholders’ agreements. These agreements allow us to “call” the minority position at a value determined with the use of a formula price, which is in most cases equal to a multiple of trailing two-year average earnings, less debt. Minority owners may also “put” their interest to the Company at the same price, with certain limitations including: (i) the inability to “put” more than one-third to one-half of their holdings in any twelve-month period; and (ii) the inability to “put” any holdings for at least one year after the date of our initial acquisition of the business or the date the minority shareholder acquired the stock, as the case may be. The total value of the minority shareholders’ interests (the “redemption amount”), as calculated in accordance with shareholders’ agreements, was as follows.

	September 30		December 31
(in thousands of US$)	2016		2015
FirstService Residential	$	64,515	$	53,548
FirstService Brands		28,787		22,784
	$	93,302	$	76,332

Page 7 of 10

The amount recorded on our balance sheet under the caption “Redeemable non-controlling interests” (“RNCI”) is the greater of: (i) the redemption amount (as above); and (ii) the amount initially recorded as RNCI at the date of inception of the minority equity position. As at September 30, 2016, the RNCI recorded on the balance sheet was $95.2 million. The purchase prices of the RNCI may be satisfied in cash or in Subordinate Voting Shares of FirstService. If all RNCI were redeemed with cash on hand and borrowings under our Facility, the pro forma estimated accretion to diluted net earnings per share for the nine months ended September 30, 2016 would be $0.39 and the accretion to adjusted EPS would be $0.10.

Off-balance sheet arrangements

We do not have any material off-balance sheet arrangements other than those disclosed in note 11 to the September 30, 2016 interim consolidated financial statements.

Critical accounting policies and estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions with respect to the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. These estimates and assumptions are based upon management’s historical experience and are believed by management to be reasonable under the circumstances. Such estimates and assumptions are evaluated on an ongoing basis and form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ significantly from these estimates. Our critical accounting policies and estimates have been reviewed and discussed with our Audit Committee. There have been no material changes to our critical accounting policies and estimates from those disclosed in the Company’s MD&A for the year ended December 31, 2015.

Impact of recently issued accounting standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. This ASU clarifies the principles for recognizing revenue and develops a common revenue standard for U.S. GAAP and International Financial Reporting Standards (“IFRS”) and is effective for the Company on January 1, 2018. We are currently assessing the impact of this ASU on our financial position and results of operations.

In November 2015, FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. This ASU simplifies the presentation of all tax assets and liabilities by no longer requiring an allocation between current and non-current. All deferred tax assets and liabilities, along with any related valuation allowance are to be classified as non-current on the balance sheet. While this change conforms to US GAAP and reduces complexity in financial reporting, it may have a significant impact on working capital and the related ratios. The change will be effective on January 1, 2017. The Company is currently assessing the impact of this ASU on its financial position.

In February 2016, the FASB issued ASU No. 2016-02, Leases. This ASU affects all aspects of lease accounting and has a significant impact to lessees as it requires the recognition of a right-of use asset and a lease liability for virtually all leases including operating leases. In addition to balance sheet recognition, additional quantitative and qualitative disclosures will be required. The standard will be effective on January 1, 2019, at which time it must be adopted using a modified retrospective transition. The Company is currently assessing the impact of this ASU on its financial position and results of operations.

In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting. This ASU simplifies how share-based payments are accounted for and presented. Income tax expense is expected to be impacted as entities are required to record all of the tax effects related to share-based payments at settlement through the income statement. This change in guidance removes the requirement to delay recognition of a windfall tax payment until it reduces taxes payable and instead records the benefit when it arises. The ASU also permits entities to make an accounting policy election for the impact of forfeitures by allowing them to be estimated, as required today, or recognized when they occur. The guidance will be effective on January 1, 2017 with either prospective or retrospective transition permitted. The Company is currently assessing the impact of this ASU on its financial position and results of operations.

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Financial instruments

We use financial instruments as part of our strategy to manage the risk associated with interest rates and currency exchange rates from time to time. We do not use financial instruments for trading or speculative purposes. As of the date of this MD&A, we have no such financial instruments in place.

Transactions with related parties

The Company has entered into office space rental arrangements and property management contracts with senior managers of certain subsidiaries. These senior managers are usually also minority shareholders of the subsidiaries. The business purpose of the transactions is to rent office space for the Company and to generate property management revenues for the Company. The recorded amount of the rent expense for the nine months ended September 30, 2016 was $0.4 million (2015 - $0.3 million).

As at September 30, 2016, the Company had $2.3 million of loans receivable from minority shareholders (December 31, 2015 - $2.3 million). The business purpose of the loans receivable was to finance the sale of non-controlling interests in subsidiaries to senior managers. The loan amounts are measured based on the formula price of the underlying non-controlling interests, and interest rates are determined based on the Company’s cost of borrowing plus a spread. The loans generally have terms of 5 to 10 years, but are open for repayment without penalty at any time.

In conjunction with the spin-off transaction on June 1, 2015, the Company entered into transition services agreement with Colliers which sets out the terms under which certain administrative services, rent and other expenses will be allocated. During the nine month period ended September 30, 2016, the Company paid $0.2 million in rent to Colliers (2015 - $0.1 million).

Outstanding share data

The authorized capital of the Company consists of an unlimited number of preference shares, issuable in series, an unlimited number of Subordinate Voting Shares and an unlimited number of Multiple Voting Shares. The holders of Subordinate Voting Shares are entitled to one vote in respect of each Subordinate Voting Share held at all meetings of the shareholders of the Company. The holders of Multiple Voting Shares are entitled to twenty votes in respect of each Multiple Voting Share held at all meetings of the shareholders of the Company. Each Multiple Voting Share is convertible into one Subordinate Voting Share at any time at the election of the holders thereof.

As of the date hereof, the Company has outstanding 34,663,317 Subordinate Voting Shares and 1,325,694 Multiple Voting Shares. In addition, as at the date hereof, 1,454,750 Subordinate Voting Shares are issuable upon exercise of options granted under the Company’s stock option plan.

Canadian tax treatment of dividends

For the purposes of the enhanced dividend tax credit rules contained in the Income Tax Act (Canada) and any corresponding provincial and territorial tax legislation, all dividends (and deemed dividends) paid by us to Canadian residents on our Subordinate Voting Shares and Multiple Voting Shares are designated as “eligible dividends”. Unless stated otherwise, all dividends (and deemed dividends) paid by us hereafter are designated as “eligible dividends” for the purposes of such rules.

Changes in internal controls over financial reporting

There have been no changes in our internal controls over financial reporting during the three and nine month periods ended September 30, 2016 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

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Forward-looking statements

This MD&A contains forward-looking statements with respect to expected financial performance, strategy and business conditions. The words “believe,” “anticipate,” “estimate,” “plan,” “expect,” “intend,” “may,” “project,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risk and uncertainties. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Factors which may cause such differences include, but are not limited to those set out below and those set out in detail in the “Risk Factors” section of the Company’s Annual Information Form, which is included in the Company’s Annual Report on Form 40-F:

· Economic conditions, especially as they relate to commercial and consumer credit conditions and consumer spending.

· Commercial real estate property values, vacancy rates and general conditions of financial liquidity for real estate transactions.

· Residential real estate property values, resale rates and general conditions of financial liquidity for real estate transactions.

· Extreme weather conditions impacting demand for our services or our ability to perform those services.

· Competition in the markets served by the Company.

· Labour shortages or increases in wage and benefit costs.

· The effects of changes in interest rates on our cost of borrowing.

· Unexpected increases in operating costs, such as insurance, workers’ compensation, health care and fuel prices.

· Changes in the frequency or severity of insurance incidents relative to our historical experience.

· The effects of changes in foreign exchange rates in relation to the US dollar on the Company’s Canadian dollar denominated revenues and expenses.

· Our ability to make acquisitions at reasonable prices and successfully integrate acquired operations.

· Political conditions, including any outbreak or escalation of terrorism or hostilities and the impact thereof on our business.

· Changes in government policies at the federal, state/provincial or local level that may adversely impact our businesses.

We caution that the foregoing list is not exhaustive of all possible factors, as other factors could adversely affect our results, performance or achievements. The reader is cautioned against undue reliance on these forward-looking statements. Although we believe that the assumptions underlying our forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in such forward-looking statements will be realized. The inclusion of such forward-looking statements should not be regarded as a representation by the Company or any other person that the future events, plans or expectations contemplated by the Company will be achieved. We note that past performance in operations and share price are not necessarily predictive of future performance. We disclaim any intention and assume no obligation to update or revise any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.

Additional information

Additional information regarding the Company, including our Annual Information Form, is available on SEDAR at www.sedar.com.

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