AECON GROUP INC 7 The following discussion and analysis of the consolidated results of operations and fnanc ial condition of Aecon Group Inc Aecon or the Company should be read in conjunction with the Companys December 31 2012 consolidated fnancial statements and n otes This MDA has been prepared as of March 12 2013 Additional information on Aecon is available through the System for Electronic Document Analysis and Retriev al SEDAR at wwwsedarcom and includes the Companys Annual Information Form and other securities and continuous disclosure flings INTRODUCTION For the year ended December 31 2012 Aecon operated in three principal segments within the construction and infrastructure development industry Infrastructure Industrial and Concessions The Infrastructure segment includes all aspects of the construction of both public and private infrastructure including roads and highways as well as toll highways hydroelectric power projects and dams tunnels bridges airports marine facilities and transit systems primarily in Canada and on a selected basis internationally This segment includes the mining manufacture and supply of asphalt and aggregate products and the construction andor installation of utility distribution systems for natural gas telecommunications and electrical networks as well as water and sewer mains traffc signals and highway lighting The Infrastructure segment also includes the operations of Aecon Mining a large mining and reclamation contractor operating in the oil sands and resource sectors as well as the design and construction of the new Quito Airport project Aecon Buildings which specializes in the construction and renovation of commercial and institutional buildings is also included in the Infrastructure segment and commencing in 2012 was combined with Lockerbie Hole Contracting which provides mechanical construction management and complete mechanical construction services including the design and build of water and waste water facilities as well as mechanical and electrical installations in hospitals schools and institutional buildings to serve the social infrastructure market sector This realignment of Lockerbie Hole Contracting which was previously included in the Industrial segment to the Infrastructure segment builds on the Companys One Aecon business strategy and is expected to more fully capitalize on the combined strengths and potential synergies of the Aecon Buildings and Lockerbie Hole Contracting operations in the social infrastructure sector In addition commencing in 2012 the operating units within the Infrastructure segment were reorganized to align with Infrastructures operating management structure into the following subcategories Transportation Heavy Civil Utilities Mining and Social Infrastructure Prior year comparative fgures have been restated to conform to the presentation adopted in the current year The Industrial segment encompasses all of Aecons industrial construction and manufacturing activities including inplant construction site construction and module assembly in the energy manufacturing petrochemical steel automotive and commodities mining sectors Activities in this segment include the construction of alternative fossil fuel and cogeneration power plants inplant construction and refurbishment activities at nuclear power plants the fabrication and module assembly of small diameter specialty pipe mechanical construction at petrochemical plants and commodities mining facilities and the design and manufacture of oncethrough heat recovery steam generators HRSGs for industrial and power plant applications and enhanced oil recovery boilers for use in the oil sands Although activities in this segment are concentrated primarily in Canada Aecon through its subsidiary Innovative Steam Technologies Inc IST sells HRSGs throughout the world Activities within the Concessions segment include the development fnancing construction and operation of infrastructure projects by way of buildoperatetransfer buildown operatetransfer and other public private partnership contract structures This segment focuses primarily on the operation management maintenance and enhancement of investments held by Aecon in infrastructure concessions which is currently comprised of an investment in the Quito Airport concession company and also includes the operations of the Highway 104 toll plaza in Atlantic Canada In addition this segment has a development function whereby it monitors and where appropriate brings together the unique capabilities and strengths of Aecon where the Company can play a role beyond being a contractor but rather as a developer operator and investor in build fnance and design build fnance projects The construction industry in Canada is seasonal in nature for companies like Aecon who perform a signifcant portion of their work outdoors particularly road construction and utilities work As a result less work is performed in the winter and early spring months than in the summer and fall months Accordingly Aecon has historically experienced a seasonal pattern in its operating results with the frst half of the year and particularly the frst quarter typically generating lower revenue and profts than the second half of the year Therefore results in any one quarter are not necessarily indicative of results in any other quarter or for the year as a whole FORWARDLOOKING INFORMATION The information in this MDA includes certain forwardlooking statements Although these forwardlooking statements are based on currently available competitive fnancial and economic data and operating plans they are subject to risks and uncertainties In addition to general global events outside Aecons control there are factors which could cause actual results performance or achievements to vary from those expressed or inferred herein including risks associated with an investment in the common shares of Aecon and the risks related to Aecons business including large project risk and contractual factors Risk factors are discussed in greater detail in the section on Risk Factors in this MDA Forwardlooking statements include information concerning possible or assumed future results of Aecons operations and fnancial position as well as statements preceded by followed by or that include the words believes expects anticipates estimates projects intends should or similar expressions Other important factors in addition to those discussed in this document could affect the future results of Aecon and could cause its results to differ materially from those expressed in any forwardlooking statements