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: May 2015

Commission file number 001-36898

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: May 29, 2015	/s/ John B. Friedrichsen
	Name: John B. Friedrichsen
	Title: Senior Vice President and Chief Financial Officer

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EXHIBIT INDEX

Exhibit Description of Exhibit

99.1   Interim Carve-out Combined Financial Statements of New FSV for the three month period ended March 31, 2015.

99.2   New FSV Management’s Discussion and Analysis for the three month period ended March 31, 2015.

99.3   Pro forma Combined Financial Statements of New FSV for the year ended December 31, 2014 and three month period ended March 31, 2015.

99.4   Pro forma Consolidated Financial Statements of FirstService Corporation (to be renamed Colliers International Group Inc.) for the year ended December 31, 2014 and the three month period ended March 31, 2015.

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EX-99.1

EXHIBIT 99.1

NEW FSV

INTERIM CARVE-OUT COMBINED FINANCIAL STATEMENTS

First Quarter

March 31, 2015

NEW FSV

CARVE-OUT COMBINED STATEMENTS OF EARNINGS (LOSS)

(Unaudited)

(in thousands of US dollars)

	Three months
	ended March 31
	2015			2014
Revenues	$	272,189		$	245,594
Cost of revenues		197,307			178,690
Selling, general and administrative expenses		66,230			59,343
Depreciation		4,448			3,858
Amortization of intangible assets		2,550			2,093
Acquisition-related items		247			(17	)
Operating earnings		1,407			1,627
Interest expense		1,868			1,733
Other expense (income), net		202			(63	)
Loss before income tax		(663	)		(43	)
Income tax recovery(note 5)		(229	)		(1,010	)
Net earnings (loss)		(434	)		967
Non-controlling interest share of earnings (note 8)		1,119			872
Non-controlling interest redemption increment (note 8)		1,758			1,289
Net loss attributable to New FSV	$	(3,311	)	$	(1,194	)

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

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NEW FSV

CARVE-OUT COMBINED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

(Unaudited)

(in thousands of US dollars)

	Three months
	ended March 31
	2015			2014
Net earnings (loss)	$	(434	)	$	967
Foreign currency translation gain (loss)		3,129			(1,516	)
Comprehensive earnings (loss)		2,695			(549	)
Less: Comprehensive earnings attributable to non-controlling interests		2,877			2,161
Comprehensive loss attributable to New FSV	$	(182	)	$	(2,710	)

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

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NEW FSV

CARVE-OUT COMBINED BALANCE SHEETS

(Unaudited)

(in thousands of US dollars)

	March 31, 2015		December 31, 2014
Assets
Current assets
Cash and cash equivalents	$	45,142	$	66,790
Restricted cash		2,762		3,657
Accounts receivable, net of allowance of $9,236 (December 31, 2014 - $9,581)
		106,315		115,143
Income tax recoverable		12,704		16,262
Inventories		11,128		9,489
Prepaid expenses and other current assets		19,086		20,715
Deferred income tax		18,644		18,667
		215,781		250,723
Other receivables		3,757		4,581
Other assets		154		155
Fixed assets		54,627		55,203
Deferred income tax		3,621		4,572
Intangible assets		85,493		82,877
Goodwill		214,902		217,433
		362,554		364,821
	$	578,335	$	615,544
Liabilities and shareholders' equity
Current liabilities
Accounts payable	$	14,660	$	24,687
Accrued liabilities		58,329		55,563
Income tax payable		4,988		5,650
Unearned revenues		19,475		16,079
Long-term debt - current (note 6)		16,965		17,725
Contingent acquisition consideration - current (note 7)		5,037		4,586
Deferred income tax		1,803		1,804
		121,257		126,094
Long-term debt - non-current (note 6)		230,009		221,632
Contingent acquisition consideration (note 7)		2,053		1,509
Other liabilities		13,037		12,398
Deferred income tax		14,143		14,236
		259,242		249,775
Redeemable non-controlling interests (note 8)		75,071		80,926
Net investment
FirstService's net investment		118,385		157,498
Accumulated other comprehensive earnings		4,380		1,251
Total net investment		122,765		158,749
	$	578,335	$	615,544

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

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NEW FSV

CARVE-OUT COMBINED STATEMENTS OF NET INVESTMENT

(in thousands of US dollars)

				Accumulated other
	FirstService's net			comprehensive		Total net
	invesment			earnings		investment
Balance, December 31, 2014	$	157,498		$	1,251	$	158,749
Net distributions to FirstService		(36,471	)		-		(36,471	)
Stock option expense		669					669
Net loss attributable to New FSV		(3,311	)				(3,311	)
Other comprehensive earnings					3,129		3,129
Balance, March 31, 2015	$	118,385		$	4,380	$	122,765

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

Page 5 of 12

NEW FSV

CARVE-OUT COMBINED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands of US dollars)

	Three months ended
	March 31
	2015			2014
Cash provided by (used in)
Operating activities
Net earnings (loss)	$	(434	)	$	967
Items not affecting cash:
Depreciation and amortization		6,998			5,951
Deferred income tax		880			6,133
Other		666			363
Changes in non-cash working capital:
Accounts receivable		9,695			3,254
Inventories		(1,638	)		273
Prepaid expenses and other current assets		1,629			(504	)
Payables and accruals		(3,162	)		(30,939	)
Unearned revenues		3,396			2,844
Other liabilities		640			(1,421	)
Net cash provided by (used in) operating activities		18,670			(13,079	)
Investing activities
Acquisitions of businesses, net of cash acquired (note 4)		(4,202	)		(376	)
Purchases of fixed assets		(3,586	)		(4,321	)
Other investing activities		941			429
Net cash used in investing activities		(6,847	)		(4,268	)
Financing activities
Increase in long-term debt, net		7,617			16,427
Net distributions to FirstService		(29,911	)		(13,694	)
Distributions to redeemable non-controlling interests		(1,550	)		(1,617	)
Purchases of redeemable non-controlling interests		(7,636	)		(8,484	)
Contingent acquisition consideration paid		(1,618	)		(1,774	)
Net cash used in financing activities		(33,098	)		(9,142	)
Effect of exchange rate changes on cash		(373	)		14
Decrease in cash and cash equivalents		(21,648	)		(26,475	)
Cash and cash equivalents, beginning of period		66,790			86,366
Cash and cash equivalents, end of period	$	45,142		$	59,891

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

Page 6 of 12

NEW FSV

NOTES TO CARVE-OUT COMBINED FINANCIAL STATEMENTS

March 31, 2015

(Unaudited)

(in thousands of US dollars)

1.           BACKGROUND AND BASIS OF PRESENTATION – On March 11, 2015, the Board of Directors of FirstService Corporation (“FirstService”) unanimously approved a proposal to split FirstService into two independent companies, being: (i) a Commercial Real Estate Services company operating principally as Colliers International; and (ii) a Residential Real Estate Services and Property Services company operating principally as FirstService Residential and several franchising companies operating under brands including California Closets, Paul Davis Restoration and CertaPro Painters.

The proposed corporate reorganization (the “Arrangement”) would be implemented through a court approved plan of arrangement and remains subject to certain conditions. The Arrangement received shareholder approval at an annual and special meeting of shareholders of FirstService held on April 21, 2015.  The reorganization would result in two publicly traded entities with the Residential Real Estate Services and Property Services company to be named FirstService Corporation, and FirstService renamed as Colliers International Group Inc. FirstService’s shareholders would receive one New FSV Multiple Voting Share or Subordinate Voting Share for each FirstService Multiple Voting Share or Subordinate Voting Share held, respectively.

The carve-out business is comprised of the legal entities within the Residential Real Estate Services and Property Services operations (“New FSV”). The New FSV Carve-out Combined Financial Statements, prepared in connection with the Arrangement, present the historical carve-out combined financial position, results of operations, changes in net investment and cash flows of New FSV. The New FSV Carve-out Combined Financial Statements have been derived from the accounting records of FirstService on a carve-out basis and should be read in conjunction with FirstService’s unaudited interim consolidated financial statements and the notes thereto for the three months ended March 31, 2015. The New FSV Interim Carve-out Combined Financial Statements have been prepared on a carve-out basis and the results do not necessarily reflect the results of operations, financial position, or cash flows of New FSV as a separate entity or future results in respect of FirstService Corporation as it is expected to exist on completion of the Arrangement.

FirstService’s investment in New FSV, presented as Total Net Investment in the New FSV Interim Carve-out Combined Financial Statements, includes the accumulated net earnings, accumulated other comprehensive earnings, and accumulated net contributions or distributions to FirstService. New FSV’s results are comprised of the historical operations, assets, liabilities and cash flows of the Residential Real Estate Services and Property Services operations, which include a portion of the corporate function of FirstService.  Assets and liabilities are reflected at FirstService’s historical carrying amounts.

The operating results of New FSV have been specifically identified based on FirstService’s existing operating segments. Certain other expenses presented in the Carve-out Combined Statements of Earnings represent allocations and estimates of the cost of services historically performed by FirstService. These allocations and estimates were based on methodologies that Management believes to be reasonable and include administrative costs, net interest, foreign exchange gains and losses and income tax expense. The majority of the assets and liabilities of New FSV have been identified based on the historical divisional structure, with the most significant exceptions being income taxes and long-term debt (see note 6).

Salaries, benefits and incentive compensation have been reflected in these carve-out combined financial statements based on employee services that are specifically identifiable with New FSV, as well as Management’s best estimate to allocate shared employee costs.  These costs are reflected in the Corporate segment (see note 11).  Net interest expense has been allocated using the long-term debt balance allocated to New FSV.

Income taxes have been recorded as if New FSV and its subsidiaries had been separate tax paying legal entities, each filing a separate tax return in its local jurisdiction, consistent with the carve-out allocations described above.

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Goodwill has been allocated to New FSV based on FirstService’s historical goodwill allocation by operating segment.

A discontinued operation, the REO Rental operation (sold April 18, 2014), was previously reported in FirstService’s Consolidated Financial Statements in the Residential Real Estate Services segment. This operation has not been included in the New FSV Interim Carve-out Combined Financial Statements, as FirstService will retain obligations for indemnification liabilities.

Management believes the assumptions underlying the New FSV Interim Carve-out Combined Financial Statements are reasonable. However, the New FSV Carve-out Combined Financial Statements may not reflect New FSV’s results of operations, financial position, and cash flows in the future or what New FSV’s operations, financial position and cash flows would have been if New FSV had been operating as a stand-alone company. FirstService’s direct investment in New FSV is shown as Net Investment in place of Shareholders’ Equity because a direct ownership by shareholders in New FSV does not exist at March 31, 2015 or December 31, 2014.

2.           SUMMARY OF PRESENTATION – The carve-out combined financial statements have been prepared 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 New FSV believes that the disclosures are adequate to make the information not misleading.  These interim carve-out combined financial statements should be read in conjunction with the audited carve-out combined financial statements for the year ended December 31, 2014.

These interim carve-out combined financial statements follow the same accounting policies as the most recent audited carve-out combined consolidated financial statements, except as noted below.  In the opinion of management, the interim carve-out combined consolidated financial statements contain all adjustments necessary to present fairly the financial position of New FSV as at March 31, 2015 and the results of operations and its cash flows for the three month periods ended March 31, 2015 and 2014.  All such adjustments are of a normal recurring nature.  The results of operations for the three month period ended March 31, 2015 are not necessarily indicative of the results to be expected for the year ending December 31, 2015.

3.           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 New FSV on January 1, 2017. New FSV is currently assessing the impact of this ASU on its financial position and results of operations.

In April 2015, FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. This ASU is effective for New FSV on January 1, 2016, at which time the guidance will be applied retrospectively.

4.           ACQUISITIONS – During the three months quarter ended March 31, 2015, New FSV completed three acquisitions, all in the RRE segment. In the RRE segment, the Company acquired controlling interests in regional firms operating in Texas and New York. The acquisition date fair value of consideration transferred was as follows: cash of $4,202 (net of cash acquired of $56), and contingent consideration of $2,608 (2014 - cash of $376).

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 four-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 earnings level and (iii) the actual earnings for the contingency period. If the acquired business does not achieve the specified earnings level, the maximum payment is reduced for any shortfall, potentially to nil.

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Unless it contains an element of compensation, contingent consideration is recorded at fair value each reporting period. The fair value recorded on the consolidated balance sheet as at March 31, 2015 was $7,090 (see note 10).  The estimated range of outcomes (undiscounted) for these contingent consideration arrangements is $6,389 to a maximum of $7,517. The contingencies will expire during the period extending to January 2017. During the three months ended March 31, 2015, $1,618 was paid with reference to such contingent consideration (2014 - $1,774).

5.           INCOME TAX – The provision for income tax for the three months ended March 31, 2015 reflected a tax recovery of 35% (2014 - recovery of 2349%) relative to the combined statutory rate of approximately 28% (2014 - 28%). The difference between the effective rate and the statutory rate is related to the geographic mix of taxable earnings and losses in each period, the impact of discrete items, and the impact of non-controlling interests. 

6.           LONG-TERM DEBT – As of March 31, 2015, FirstService had an amended and restated credit agreement with a syndicate of banks to provide a $500,000 committed senior revolving credit facility.  On April 2, 2015, the borrowing capacity of the revolving credit facility was increased by $75,000 to $575,000 under the same terms.  The revolving credit facility has a five year term ending March 1, 2017 and bears interest at 1.25% to 3.00% over floating reference rates, depending on certain leverage ratios.

The revolving credit facility and FirstService’s three outstanding issues of Senior Notes rank equally in terms of seniority.  FirstService has granted the lenders and Note-holders 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.

Allocation of debt to carve-out

FirstService monitors its capital structure and short-term financing requirements using non-GAAP financial metrics including net debt to adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), pro forma for earnings of recent acquisitions. This metric is used to monitor FirstService’s overall debt position and to measure its financial strength. Net debt is defined as the current and non-current portions of long-term debt less cash and cash equivalents.

For the purpose of preparing the New FSV Carve-out Combined Financial Statements, it was determined that New FSV should maintain a net debt to adjusted EBITDA (pro forma for earnings of recent acquisitions) leverage ratio of 2.0 to 2.5, which is higher than the ratio targeted by FirstService of 1.5 to 2.5.  New FSV has a more stable revenue base and lower seasonality than FirstService, which allows for slightly greater leverage. As at December 31, 2014, New FSV has been allocated current and long-term debt of $246,974 (2014 - $239,357) representing approximately 44.4% (2014 - 48.7%) of FirstService’s consolidated long-term debt.

Net interest expense has been calculated primarily using the debt balance allocated to New FSV. The weighted average interest rate was based on historical rates on the allocated debt and was 3.2% (2014 - 3.1%).

If the Arrangement is approved, the allocated debt will be replaced with inter-company debt payable to FirstService. New FSV’s long-term debt balance at the time of the Arrangement is subject to amendment in accordance with any adjustments arising from the transition agreement to achieve New FSV’s new capital structure post-split.

7.           FAIR VALUE MEASUREMENTS – The following table provides the financial assets and liabilities carried at fair value measured on a recurring basis as of March 31, 2015:

				Fair value measurements at March 31, 2015
		Carrying value at March 31, 2015		Level 1		Level 2		Level 3
Contingent consideration liability	$	7,090	$	-	$	-	$	7,090

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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 8.0% to 10.0%).  Changes in the fair value of the contingent consideration liability are comprised of the following:

	2015
Balance, January 1	$	6,095
Amounts recognized on acquisitions		2,608
Fair value adjustments		78
Resolved and settled in cash		(1,618)
Other		(73)
Balance, March 31	$	7,090
Less: Current portion		5,037
Non-current portion	$	2,053

The carrying amounts for cash and cash equivalents, 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 0.1% to 1.9%).  The following are estimates of the fair values for other financial instruments:

	March 31, 2015						December 31, 2014
	Carrying			Fair			Carrying			Fair
	amount			value			amount			value
Other receivables		$	3,757		$	3,757		$	4,581		$	4,581

8.           REDEEMABLE NON-CONTROLLING INTERESTS – The minority equity positions in New FSV’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 FirstService’s Net investment.  Changes in the RNCI amount are recognized immediately as they occur.  The following table provides a reconciliation of the beginning and ending RNCI amounts:

	2015
Balance, January 1	$	80,926
RNCI share of earnings		1,119
RNCI redemption increment		1,758
Distributions paid to RNCI		(1,550)
Purchase of interests from RNCI, net		(7,636)
RNCI recognized on business acquisitions		746
Other		(292)
Balance, March 31	$	75,071

New FSV has shareholders’ agreements in place at each of its non-wholly owned subsidiaries.  These agreements allow New FSV 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 average annual net earnings before extraordinary items, income taxes, interest, depreciation, and amortization.  The agreements also have redemption features which allow the owners of the RNCI to “put” their equity to New FSV 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 Subordinate Voting Shares.  The redemption amount as of March 31, 2015 was $74,402.  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.

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9.           STOCK-BASED COMPENSATION

Company stock option plan

FirstService has a stock-based compensation plan for certain directors, officers and key full-time employees.  For the purposes of preparing these care-out combined financial statements, New FSV has been allocated a proportionate share of the stock-based compensation based on the revenue of New FSV relative to FirstService, which was determined to approximate the proportionate service of the employees.

FirstService options are granted at the market price for the underlying shares on the date of grant.  Each FirstService option vests over a four-year term, expires five years from the date granted and allows for the purchase of one FirstService Subordinate Voting Share.  All FirstService Subordinate Voting Shares issued are new shares.  Grants under FirstService’s stock option plan are equity-classified awards.

New FSV incurred stock-based compensation expense related to these awards of $669 during the quarter ended March 31, 2015 (2014 - $372).

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

11.           SEGMENTED INFORMATION – NEW FSV 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.  Each segment’s performance is assessed based on operating earnings or operating earnings before depreciation and amortization.  RRE provides property management and related property services to residential communities in North America.  Property Services provides Company-owned and franchised property services to customers in North America. Corporate includes the costs of operating the corporate head office which are not allocated to New FSV’s reportable segments.

OPERATING SEGMENTS
	Residential
	Real Estate		Property
	Services		Services			Corporate			Consolidated
Three months ended March 31
2015
Revenues	$	225,802	$	46,387		$	-		$	272,189
Operating earnings (loss)		3,977		(471	)		(2,099	)		1,407
2014
Revenues	$	204,797	$	40,797		$	-		$	245,594
Operating earnings (loss)		3,177		(7	)		(1,543	)		1,627

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GEOGRAPHIC INFORMATION
	United States			Canada		Consolidated
Three months ended March 31
2015
Revenues		$	253,954	$	18,235	$	272,189
Total long-lived assets			314,605		40,417		355,022
2014
Revenues		$	227,809	$	17,785	$	245,594
Total long-lived assets			293,089		42,955		336,044

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EX-99.2

EXHIBIT 99.2

NEW FSV

MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE THREE MONTH PERIOD ENDED MARCH 31, 2015

(in US dollars)

May 29, 2015

The following management’s discussion and analysis (“MD&A”) has been prepared in respect of the Residential Real Estate Services and Property Services businesses of FirstService Corporation (“FirstService”) to be owned and operated by FirstService Corporation (currently named New FSV Corporation) (“New FSV”) and its subsidiaries upon completion of a proposed court approved Plan of Arrangement involving FirstService, New FSV and others (the “Arrangement”). This MD&A should be read together with the unaudited carve-out combined financial statements and the accompanying notes (the “Carve-out Combined Financial Statements”) of New FSV for the three months ended March 31, 2015 and New FSV’s audited carve-out combined financial statements and MD&A for the year ended December 31, 2014, as well as FirstService’s Management Information Circular dated March 16, 2015 (the “Circular”). The Carve-out Combined Financial Statements have been prepared in accordance with U.S. GAAP. All financial information herein is presented in United States dollars.

New FSV 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, New FSV 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 months ended March 31, 2015 and up to and including May 29, 2015.

This MD&A includes references to “adjusted EBITDA”, which is a financial measure not calculated in accordance with U.S. GAAP. For a reconciliation of this non-U.S. GAAP measure to the most directly comparable U.S. GAAP financial measure, see “Reconciliation of non-U.S. GAAP financial measures” herein.

Unless the context otherwise permits, indicates or requires, all references in this MD&A to “we”, “our”, “us” and similar expressions are references to New FSV and the Residential Real Estate Services and Property Services businesses of FirstService as they have been proposed to be carved out under the Arrangement into New FSV.

Proposed arrangement

On March 11, 2015, the Board of Directors of FirstService unanimously approved a proposal to separate FirstService into two independent publicly traded companies: (i) a Commercial Real Estate Services company operating principally as Colliers International and (ii) a Residential Real Estate Services and Property Services company operating principally as FirstService Residential and under several franchise brands including California Closets, Paul Davis Restoration and CertaPro Painters.

The proposed spin-off will be implemented through the Arrangement and remains subject to certain conditions. The Arrangement received shareholder approval at an annual and special meeting of shareholders of FirstService held on April 21, 2015. The Arrangement is expected to be completed on June 1, 2015.

The Arrangement would result in two publicly traded entities with the Residential Real Estate Services and Property Services company named “FirstService Corporation”, and FirstService renamed as “Colliers International Group Inc.”, which will retain the Commercial Real Estate Services business. Under the Arrangement, a FirstService shareholder will receive one New FSV Subordinate Voting Share or New FSV Multiple Voting Share for each FirstService Subordinate Voting Share or FirstService Multiple Voting Share held, respectively.

Additional information about the Arrangement can be found in the Circular that can be accessed under FirstService’s public filings at www.sedar.com.

Basis of presentation

The Carve-out Combined Financial Statements, which are discussed below and have been prepared in connection with the Arrangement, present the historical carve-out combined financial position, results of operations, changes in net investment and cash flows of the Residential Real Estate Services and Property Services businesses of FirstService as they have been proposed to be carved out under the Arrangement into New FSV and as if operated as a stand-alone entity for the periods presented. The New FSV Carve-out Combined Financial Statements have been derived from the accounting records of FirstService on a carve-out basis. The Carve-out Combined Financial Statements have been prepared on a combined basis and the results do not necessarily reflect what New FSV’s results of operations, financial position, or cash flows would have been had New FSV been a separate entity or future results in respect of New FSV as it is expected to exist on completion of the Arrangement. The basis of presentation is more fully described in Note 1 to the Carve-out Combined Financial Statements.

Unless otherwise expressly provided, the historical financial information presented herein does not give effect to the Arrangement and associated transactions. Detailed information as to these proposed transactions and certain effects of these proposed transactions are included in the Circular under the heading “The Arrangement”.

Combined review

Our operating results for the seasonally slow first quarter were strong. Combined revenue growth was 12% measured in local currencies (11% measured in the reporting currency).

During the first quarter of 2015, we completed two business acquisitions in our Residential Real Estate Services segment. During the past year, we also completed several other acquisitions in our two divisions, which provided additional revenue growth for the first quarter of 2015. These acquisitions, which are in the process of being integrated into our operations, increase the geographic footprint of our existing service lines.

Results of operations - three months ended March 31, 2015

Revenues for our first quarter were $272.2 million, 12% higher than the comparable prior year quarter measured in local currencies. Internally generated revenues were up 8%, while recent acquisitions contributed 4% to revenue growth.

Adjusted EBITDA (see “Reconciliation of non-GAAP measures” below) for the first quarter was $9.3 million versus $7.9 million reported in the prior year quarter. Our Adjusted EBITDA margin was 3.4% of revenues versus 3.2% of revenues in the prior year quarter, primarily as a result of improvements in operating results in the Residential Real Estate Services operations. The operating earnings for the quarter were $1.4 million, versus $1.6 million in the prior year period.

Depreciation and amortization expense totalled $7.0 million for the quarter relative to $6.0 million for the prior year quarter, with the increase related equally to (i) depreciation of fixed assets related to recent investments in IT systems and leasehold improvements and (ii) amortization of intangible assets recognized in connection with recent business acquisitions.

Net interest expense was $1.9 million versus $1.7 million recorded in the prior year quarter. The average interest rate on debt during the quarter was 3.2%, relative to 2.8% in the prior year quarter. The increase in interest expense was primarily attributable to higher average borrowings on FirstService’s revolving credit facility in the current quarter related to acquisitions completed in the past year.

The combined income tax rate for the current quarter was a recovery of 35%. In the prior year quarter, the recovery percentage was not meaningful given the break-even loss before income tax. The statutory rate in both periods was 28%. The current and prior quarter tax rates were affected by the geographic mix of earnings and losses in the seasonally slow first quarter. The effective tax rate for the full year is expected to approximate 35%.

The net loss for the quarter was $0.4 million, versus net earnings of $1.0 million in the prior year quarter. The change was driven by the lower recovery of income tax in 2015.

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The non-controlling interest (“NCI”) share of earnings was $1.1 million for the first quarter, relative to $0.9 million in the prior period, and was attributable to the mix of earnings from non-wholly owned operations. The NCI redemption increment for the first quarter was $1.8 million, versus $1.3 million in the prior period, and resulted from increases in the trailing two-year average earnings of non-wholly owned subsidiaries.

The Residential Real Estate Services segment reported revenues of $225.8 million for the first quarter, up 11% versus the prior year quarter measured in local currencies (10% measured in the reporting currency). Excluding the impact of recently completed acquisitions, revenues were up 8%. Internal revenue growth resulted primarily from property management contract wins, particularly in South Florida, the Mid-Atlantic region and Toronto. Adjusted EBITDA was $9.3 million relative to $7.6 million in the prior year quarter. Margins in both periods reflect continued investments in our operating infrastructure to integrate back-office and IT functions across the business; this integration will continue to impact margins until it is completed in 2016. The margin expectation for the full year 2015 is 6.5% to 7.0% and reflects the non-recurrence of the incremental US employee medical benefits costs incurred in 2014.

Revenues from Property Services in the seasonally slow first quarter were $46.4 million, up 15% relative to the prior year period measured in local currencies (14% measured in the reporting currency). Internal growth was 10% as a result of higher system-wide sales at several of our franchise brands as well as strong corporate store revenues at our California Closets operations. Adjusted EBITDA for the quarter was $1.3 million, relative to $1.5 million in the prior year period. The margin for the first quarter was impacted by start-up and staffing costs for a western US regional production center which will supply 6 of our 11 California Closets corporate stores. The regional production center, which is expected to be operational in June 2015, is expected to provide significant economies of scale and improved quality.

Corporate costs were $1.3 million for the quarter, versus $1.2 million in the prior year period.

Carve-out corporate costs

For the purposes of the Carve-out Combined Financial Statements, a portion of the corporate costs including salaries, stock-based compensation, costs associated with FirstService being a public company, and other administrative expenses were allocated to New FSV. These costs are shown under the “Corporate” heading in operating segment reporting (see note 11 to the Carve-out Combined Financial Statements) and totalled $1.3 million for the three months ended March 31, 2015 (2014 - $1.2 million). The allocation was based on costs specifically identifiable with New FSV, and for shared resources such as employees the allocation was based on management’s best estimate. The allocated corporate costs are not necessarily indicative of corporate costs to be incurred by New FSV after completion of the Arrangement.

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Summary of quarterly results

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

Quarter		Q1			Q2			Q3		Q4
YEAR ENDING DECEMBER 31, 2015
Revenues	$	272,189
Operating earnings		1,407
Net earnings (loss)		(434	)
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		967			19,420			13,602		(7,797	)
YEAR ENDED DECEMBER 31, 2013
Revenues	$	229,250		$	267,603		$	282,761	$	258,473
Operating earnings		3,004			524			24,901		8,654
Net earnings		683			(204	)		12,395		5,578
OTHER DATA
Adjusted EBITDA - 2015	$	9,321
Adjusted EBITDA - 2014		7,934		$	25,362		$	28,310	$	13,391
Adjusted EBITDA - 2013		9,141			21,867			31,913		15,992

Seasonality and quarterly fluctuations

Certain segments of the operations of New FSV 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 Residential Real Estate Services segment generates peak revenues and earnings in the third quarter, as seasonal ancillary swimming pool management revenues are earned. These operations reach a seasonal low point in the first quarter.

The Property Services segment includes outdoor painting franchise operations, which generate the majority of their revenues during the second and third quarters. These operations reach a seasonal low point in the first quarter.

Reconciliation of non-GAAP financial measures

In this MD&A, we make reference to “adjusted EBITDA”, which is a financial measure not calculated in accordance with GAAP.

Adjusted EBITDA is defined as net earnings (loss), adjusted to exclude: (i) income tax; (ii) other (income) expense; (iii) interest expense; (iv) depreciation and amortization; (v) acquisition-related items; and (vi) stock-based compensation expense. New FSV uses adjusted EBITDA to evaluate its own operating performance, its ability to service debt, and as an integral part of its planning and reporting systems. Additionally, this measure is used in conjunction with discounted cash flow models to determine New FSV’s overall enterprise valuation and to evaluate acquisition targets. Adjusted EBITDA is presented as a supplemental measure because New FSV believes such a measure is useful to investors as a reasonable indicator of operating performance, due to the low capital intensity of its service operations. New FSV believes 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. New FSV’s 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.

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	Three months ended
(in thousands of US dollars)	March 31
	2015			2014
Net earnings (loss)	$	(434	)	$	967
Income tax		(229	)		(1,010	)
Other (income) expense		202			(63	)
Interest expense, net		1,868			1,733
Operating earnings		1,407			1,627
Depreciation and amortization		6,998			5,951
Acquisition-related items		247			(17	)
Stock-based compensation expense		669			373
Adjusted EBITDA	$	9,321		$	7,934

We believe that the presentation of adjusted EBITDA, which is a non-U.S. GAAP financial measure, provides important supplemental information to management and investors regarding financial and business trends relating to the financial condition and results of operations of New FSV. We use this non-U.S. GAAP financial measure 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 New FSV. Adjusted EBITDA is not calculated in accordance with U.S. GAAP, and should be considered supplemental to, and not as a substitute for, or superior to, financial measures calculated in accordance with U.S. GAAP. Non-U.S. 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 U.S. GAAP. As a result, investors should not consider these measures in isolation or as a substitute for analysis of our results as reported under U.S. GAAP.

Liquidity and capital resources

Historically, the liquidity requirements of the business which will form New FSV have been met through debt financing from FirstService and through cash generated from operations. At March 31, 2015, current and non-current debt allocated to us from FirstService totalled $247.0 million (December 31, 2014 - $239.4 million).

Under the Arrangement, New FSV has agreed to repay, immediately after the effectiveness of the Arrangement, all of the allocated debt that it owes to FirstService at that time. In conjunction with the completion of the Arrangement, it is expected that New FSV will enter into a new revolving credit facility with a syndicate of lenders and will draw on this facility in order to repay a portion the allocated debt. It is expected that this new revolving credit facility will have a committed amount of $200 million, a 5 year term and bear interest at 1.25% to 2.50% over floating reference rates, depending on leverage ratios, and, in addition to funding the allocated debt, will be available to fund working capital requirements and other general corporate purposes.

In January 2013, FirstService completed a private placement of $150 million in 3.84% Senior Notes with a twelve year term, due January 16, 2025 with a group of US institutional investors. The 3.84% Senior Notes are repayable in 5 equal annual instalments beginning on January 16, 2021. The full principal amount of these 3.84% Senior Notes will be assumed by New FSV under the Arrangement, and the interest rate will be 3.84% to 4.84%, depending on leverage ratios.

We generated cash flow from operating activities of $18.7 million for the three months ended March 31, 2015, relative to a usage of $13.1 million in the prior year. Operating cash flow increased in 2015 primarily as result of a significant reduction in cash usage on accrued liabilities, in particular the timing of payroll accruals, and improved collection of accounts receivable. We expect that cash flows from operations in 2015, together with cash on hand and availability under the new revolving credit facility, will be more than sufficient to fund New FSV’s requirements for investments in working capital, fixed assets, business acquisitions and dividend payments.

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During the first quarter of 2015, we invested cash in acquisitions as follows: an aggregate of $4.2 million (net of cash acquired) in three new business acquisitions, $1.6 million in contingent consideration payments related to previously completed acquisitions, and $7.6 million in acquisitions of redeemable non-controlling interests (“RNCI”).

In relation to acquisitions completed during the past three years, we have outstanding contingent consideration, assuming all contingencies are satisfied and payment is due in full, totalling $7.5 million as at March 31, 2015 (December 31, 2014 - $6.7 million). 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 after the end of the contingency period, which extends to January 2017. We estimate that, based on current operating results, approximately 90% of the contingent consideration outstanding as of December 31, 2014 will ultimately be paid.

Capital expenditures for the first quarter were $3.6 million (2014 - $4.3 million), which consisted primarily of service vehicles in both operating segments as well as production equipment for the California Closets regional production center in the Property Services segment.

Net indebtedness allocated by FirstService for purposes of the Carve-out Combined Financial Statements as at March 31, 2015 was $201.8 million (December 31, 2014 - $172.6 million). Net indebtedness is calculated as the current and non-current portions of long-term debt less cash and cash equivalents. FirstService was in compliance with the covenants of its financing agreements as at March 31, 2015. New FSV expects to remain in compliance with such covenants going forward (being the new revolving credit facility described above and Senior Notes being assumed under the Arrangement).

The following table summarizes our contractual obligations as at March 31, 2015:

Contractual obligations	Payments due by period
(in thousands of US dollars)			Less than						After
	Total		1 year		1-3 years		4-5 years		5 years
Long-term debt	$	245,514	$	16,359	$	79,155	$		$	150,000
Capital lease obligations		1,460		606		711		143		-
Contingent acquisition consideration		7,090		5,037		2,053		-		-
Operating leases		87,737		18,005		28,344		20,137		21,251
Total contractual obligations	$	341,801	$	40,007	$	110,263	$	20,280	$	171,251

At March 31, 2015, we had commercial commitments totaling $7.7 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 Notes at a weighted average interest rate of 3.8%.

Redeemable non-controlling interests

In operations where managers or employees are also non-controlling owners, New FSV 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. Non-controlling owners may also “put” their interest to New FSV at the same price, with certain limitations including (i) the inability to “put” more than 50% 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 non-controlling shareholder acquired the stock, as the case may be. The total value of the RNCI (the “redemption amount”), as calculated in accordance with shareholders’ agreements, was as follows.

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	March 31		December 31
(in thousands of US dollars)	2015		2014
Residential Real Estate Services		55,448		59,466
Property Services		18,954		20,605
	$	74,402	$	80,071

The amount recorded on our balance sheet under the caption “redeemable non-controlling interests” is the greater of: (i) the redemption amount (as above) or (ii) the amount initially recorded as RNCI at the date of inception of the minority equity position. As at March 31, 2015, the RNCI recorded on the balance sheet was $75.1 million. The purchase prices of the RNCI may be paid in cash or in Subordinate Voting Shares, at the option of New FSV.

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 New FSV on January 1, 2017. We are currently assessing the impact of this ASU on our financial position and results of operations.

In April 2015, FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendments in this ASU require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. This ASU is effective for New FSV on January 1, 2016, at which time the guidance will be applied retrospectively.

Impact of IFRS

On January 1, 2011, many Canadian companies were required to adopt IFRS. Under the rules of the CSA, New FSV is permitted to prepare its financial statements in accordance with U.S. GAAP and, as a result, did not adopt IFRS on January 1, 2011.

Risks and risk management

In the normal course of business, we will be exposed to operating and financial risks that may potentially impact our operating results. We employ risk management strategies with a view to mitigating certain of these risks. These risk management strategies, and the associated risks, are summarized below. For a further discussion of these and certain other risks affecting our business, see “Risk Factors” in Appendix “I” to the Circular.

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

During periods of economic slowdown or contraction, our business is impacted directly. Consumer spending directly impacts our Property Services operations businesses because as consumers spend less on property services, our revenues decline. These factors could also negatively impact the timing or the ultimate collection of accounts receivable, which would negatively impact our operating revenues, profitability and cash flow.

Our Property Services business is primarily conducted using a franchising operating model, which has low fixed operating costs. In the event of an economic contraction, steps can be quickly taken to reduce variable costs to adjust to lower revenues.

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

We provide various services at residential properties. Property values and consumer confidence are strongly correlated with demand for our services, including painting, closet installation, general maintenance, collections and resale processing.

Our business is diversified across several market segments and geographic territories across North America, serving to temper the effects of residential real estate cycles on our combined results. Continued diversification strategies such as expanding our customer base, broadening product offerings and expanding our geographic reach are expected to moderate residential real estate cycle impacts.

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Extreme weather conditions impact demand for our services or our ability to perform those services

Natural disasters, such as hurricanes, can have a direct impact on our operations. These events damage property, which require various services that our companies offer such as restoration and large-scale landscaping. They may also harm our employees, systems, facilities and franchisees, resulting in an inability to serve clients and generate revenues.

We have disaster recovery plans in place at our operations to protect employees and computer systems. Our geographic diversification reduces the expected impact of any given extreme weather event on the business overall.

Unexpected increases in operating costs, such as insurance, workers' compensation, and health care

As a services company, the costs of providing services to our customers can fluctuate. Certain operating costs, such as insurance, workers’ compensation and health care are based on market rates which we cannot control and, absent an offsetting price increase in our services, have a direct impact on our operating margins.

We endeavor to closely monitor increases in these operating costs, such that changes are considered when contemplating pricing on client contracts. We also endeavor to obtain the most cost-effective pricing and plan design for these items, which may include self-insurance.

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

Adverse changes in claims experience could increase our insurance costs and/or increase the risk of being unable to renew insurance coverage at our operations. In each of our operating segments, we effectively self-insure certain risks, with a layer of third-party insurance for catastrophic claims. An increase in the frequency or severity of claims in these areas could materially affect our financial position and results of operations. There can be no assurance that we will be able to obtain insurance coverage on favourable economic terms in the future.

We have risk management protocols in place that are designed, among other things, to ensure safe workplace practices for our employees and to ensure our client contracts provide equitable limits on our exposure to claims. We engage insurance consultants to assist us in obtaining appropriate insurance coverage at cost-effective rates.

Financial instruments

We use financial instruments as part of our strategy to manage the risk associated with interest rates and currency exchange rates.  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 outstanding.

Transactions with related parties

The Arrangement provides that New FSV and FirstService enter into a transitional services and separation agreement that will take effect if the Arrangement is completed. Among other things, this agreement will outline the settlement of carve-out balances that become third party balances at the date of the completion of the Arrangement. Outstanding balances between New FSV and FirstService (other than long-term debt) have been reflected in the Net Investment account in the Carve-out Combined Financial Statements.

During the three months ended March 31, 2015, New FSV paid its Commercial Real Estate Services affiliates fees for leasing advisory services totalling $0.1 million (2014 - $0.2 million).

Off-balance sheet arrangements

New FSV does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on its results of operations or financial condition.

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Legal and other contingencies

Due to the size, complexity and nature of our operations, various legal matters are pending. Exposure to these claims is mitigated through levels of insurance coverage considered appropriate by management and by active management of these matters. In the opinion of management, none of these matters will have a material effect on combined financial position or results of operations of New FSV.

Outstanding share data

Immediately following the completion of the Arrangement, the authorized capital of New FSV will consist 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. New FSV will have the same number of outstanding Subordinate Voting Shares and Multiple Voting Shares as FirstService immediately prior to the completion of the Arrangement. On the date hereof, there are 34,644,911 Subordinate Voting Shares and 1,325,694 Multiple Voting Shares of FirstService outstanding. In addition, the same number of Subordinate Voting Shares of New FSV will be issuable upon exercise of options granted under the New FSV Stock Option Plan as are currently issuable under the FirstService Stock Option Plan (being, at the date hereof, 1,656,250Subordinate Voting Shares of FirstService).

Responsibility of management and the board of directors

Management is responsible for the information disclosed in this MD&A and the accompanying Carve-out Combined Financial Statements, and has in place appropriate information systems, procedures and controls to ensure that information used internally by management and disclosed externally is materially complete and reliable. In addition, FirstService’s Audit Committee, on behalf of the Board of Directors of FirstService, provides an oversight role with respect to all public financial disclosures made by FirstService and its related entities, and has reviewed and approved this MD&A and the accompanying Carve-out Combined Financial Statements. The Audit Committee of FirstService is also responsible for determining that management fulfills its responsibilities in the financial control of operations, including disclosure controls and procedures and internal control over financial reporting.

Note to readers

Until the Arrangement is effected, New FSV will have no assets or liabilities, will conduct no operations and will not issue any shares in its capital stock. Pursuant to the Arrangement, FSV Holdco ULC will become a wholly-owned subsidiary of New FSV, FSV Holdco ULC will be wound-up into New FSV and New FSV will change its name to “FirstService Corporation”, which will be a public corporation independent from FirstService.

Unless otherwise indicated, the disclosure in this MD&A has been prepared assuming that the Arrangement has been effected and that New FSV was a stand-alone entity for all historical periods described. Where reference is made to historical financial information of New FSV in this MD&A, it is the historical financial information of the Residential Real Estate Services and Property Services businesses of FirstService as they have been proposed to be carved out under the Arrangement into New FSV and as if operated as a stand-alone entity for the periods presented. The historical financial information included in this MD&A does not necessarily reflect what New FSV’s results of operations, financial position or cash flows would have been had New FSV been a stand-alone entity during the periods presented. See “Risk Factors” in Appendix “I” to the Circular.

Forward-looking information

This MD&A contains information that constitutes “forward-looking information” within the meaning of applicable securities laws. Information included in this MD&A that is not a statement of historical fact is forward-looking information. When used in this MD&A, words such as “plans”, “intends”, “outlook”, “expects”, “anticipates”, “estimates”, “believes”, “likely”, “should”, “could”, “will”, “may” and similar expressions are intended to identify statements containing forward-looking information. In developing the forward-looking information in this MD&A, we have made certain assumptions with respect to general economic and industry growth rates, currency exchange and interest rates, competitive intensity and shareholder and regulatory approvals. As noted under “Note to readers”, we have also assumed, unless the context otherwise requires, that the Arrangement has been effected and that New FSV has become an independent, public corporation for all historical periods described.

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Forward-looking information involves known and unknown risks and uncertainties and other factors, which may cause or contribute to actual results of New FSV that are materially different from any future results, performance or achievements expressed or implied by such forward-looking information, including, but not limited to, risks and uncertainties related to: the unreliability of historical financial information of FirstService as an indicator of historical or future results of New FSV; potential tax liabilities if the requirements of the tax-deferred spinoff rules are not met; obtaining financing on a stand-alone basis; there being no market for our shares and the potential for any market that may develop being volatile; sales of a substantial number of our shares; economic conditions, especially as they relate to credit conditions and consumer spending; 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 New FSV; 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 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; and changes in government policies at the federal, state/provincial or local level that may adversely impact our businesses.

The foregoing factors should not be considered as exhaustive. The reader is cautioned that these factors and risks are difficult to predict and that the assumptions used in the preparation of such information, although considered reasonably accurate at the time of preparation, may prove to be incorrect. For a further discussion of factors that could cause actual results to differ materially from the forward-looking information, see the risk factors discussed under “Risk Factors” in the Circular and under “Risk Factors” in Appendix “I” to the Circular as well as “Forward-Looking Information” in the Circular. Readers are cautioned that the actual results achieved will vary from the information provided herein and that such variations may be material. Consequently, there are no representations by either FirstService or New FSV that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the statements containing forward-looking information that are included in this MD&A are made as of the date specified above, and neither FirstService nor New FSV undertakes any obligation, except as required by applicable securities legislation, to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. All forward-looking statements are made pursuant to the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. The forward-looking information contained herein is expressly qualified by this cautionary statement.

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EX-99.3

EXHIBIT 99.3

NEW FSV

PRO FORMA COMBINED FINANCIAL STATEMENTS

(unaudited)

Year ended December 31, 2014 and

Quarter ended March 31, 2015

NEW FSV
PRO FORMA COMBINED STATEMENT OF EARNINGS
(Unaudited)
(in thousands of US dollars, except per share amounts)
	Year ended December 31, 2014
		New		Add(deduct)				New
		FSV		pro forma				FSV
		carve-out		adjustments		Note 2		pro forma
Revenues		$	1,132,002	$	-			$	1,132,002
Cost of revenues			800,046		-				800,046
Selling, general and administrative expenses			258,678		-				258,678
Depreciation			17,730		-				17,730
Amortization of intangible assets			8,744		-				8,744
Acquisition-related items			1,183		-				1,183
Operating earnings			45,621		-				45,621
Interest expense, net			6,932		-				6,932
Other income, net			255		-				255
Earnings before income tax			38,434		-				38,434
Income tax			12,242		-				12,242
Net earnings			26,192		-				26,192
Non-controlling interest share of earnings			3,105		-				3,105
Non-controlling interest redemption increment			10,117		-				10,117
Net earnings attributable to New FSV		$	12,970	$	-			$	12,970
Net earnings per common share							A
Basic		$	0.36					$	0.36
Diluted			0.36						0.36
Weighted average common shares outstanding
Basic			35,917						35,917
Dilutive effect of stock options			392						392
Diluted			36,309						36,309

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NEW FSV
PRO FORMA COMBINED STATEMENT OF EARNINGS
(Unaudited)
(in thousands of US dollars, except per share amounts)
	Three months ended March 31, 2015
		New			Add(deduct)				New
		FSV			pro forma				FSV
		carve-out			adjustments		Note 2		pro forma
Revenues		$	272,189		$	-			$	272,189
Cost of revenues			197,307			-				197,307
Selling, general and administrative expenses			66,230			-				66,230
Depreciation			4,448			-				4,448
Amortization of intangible assets			2,550			-				2,550
Acquisition-related items			247			-				247
Operating earnings			1,407			-				1,407
Interest expense, net			1,868			-				1,868
Other income, net			202			-				202
Earnings before income tax			(663	)		-				(663	)
Income tax			(229	)		-				(229	)
Net earnings			(434	)		-				(434	)
Non-controlling interest share of earnings			1,119			-				1,119
Non-controlling interest redemption increment			1,758			-				1,758
Net earnings attributable to New FSV		$	(3,311	)	$	-			$	(3,311	)
Net earnings per common share								A
Basic		$	(0.09	)					$	(0.09	)
Diluted			(0.09	)						(0.09	)
Weighted average common shares outstanding
Basic			35,871							35,871
Dilutive effect of stock options			392							392
Diluted			36,263							36,263

Page 3 of 9

NEW FSV
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
(in thousands of US dollars)
	December 31, 2014
		New		Add(deduct)					New
		FSV		pro forma					FSV
		carve-out		adjustments			Note 2		pro forma
Assets
Current Assets
Cash and cash equivalents		$	66,790	$	-			D	$	66,790
Restricted cash			3,657		-					3,657
Accounts receivable, net of allowance			115,143		-					115,143
Income tax recoverable			16,262		-					16,262
Inventories			9,489		-					9,489
Prepaid expenses and other current assets			20,715		-					20,715
Deferred income tax			18,667		-					18,667
			250,723		-					250,723
Other receivables			4,581		-					4,581
Other assets			155		-					155
Fixed assets			55,203		-					55,203
Deferred income tax			4,572		-					4,572
Intangible assets			82,877		-					82,877
Goodwill			217,433		-					217,433
			364,821		-					364,821
		$	615,544	$	-				$	615,544
Liabilities and shareholders' equity
Current Liabilities
Accounts payable		$	24,687	$	1,000			B	$	25,687
Accrued liabilities			55,563		-					55,563
Income taxes payable			5,650		-					5,650
Unearned revenues			16,079		-					16,079
Long-term debt - current			17,725		-			D		17,725
Contingent acquisition consideration - current			4,586		-					4,586
Deferred income tax			1,804		-					1,804
			126,094		1,000					127,094
Long-term debt - non-current			221,632		-			D		221,632
Contingent acquisition consideration			1,509		-					1,509
Other liabilities			12,398		-					12,398
Deferred income tax			14,236		-					14,236
			249,775		-					249,775
Redeemable non-controlling interests			80,926		-					80,926
Shareholders' equity
Contributed surplus			-		157,498			C		157,498
Retained earnings (deficit)			-		(1,000	)		B		(1,000	)
FirstService's net investment			157,498		(157,498	)		C		-
Accumulated other comprehensive earnings			1,251		-					1,251
Total shareholders' equity			158,749		(1,000	)				157,749
		$	615,544	$	-				$	615,544

Page 4 of 9

NEW FSV
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
(in thousands of US dollars)
	March 31, 2015
		New		Add(deduct)					New
		FSV		pro forma					FSV
		carve-out		adjustments			Note 2		pro forma
Assets
Current Assets
Cash and cash equivalents		$	45,142	$	-			D	$	45,142
Restricted cash			2,762		-					2,762
Accounts receivable, net of allowance			106,315		-					106,315
Income tax recoverable			12,704		-					12,704
Inventories			11,128		-					11,128
Prepaid expenses and other current assets			19,086		-					19,086
Deferred income tax			18,644		-					18,644
			215,781		-					215,781
Other receivables			3,757		-					3,757
Other assets			154		-					154
Fixed assets			54,627		-					54,627
Deferred income tax			3,621		-					3,621
Intangible assets			85,493		-					85,493
Goodwill			214,902		-					214,902
			362,554		-					362,554
		$	578,335	$	-				$	578,335
Liabilities and shareholders' equity
Current Liabilities
Accounts payable		$	14,660	$	1,000			B	$	15,660
Accrued liabilities			58,329		-					58,329
Income taxes payable			4,988		-					4,988
Unearned revenues			19,475		-					19,475
Long-term debt - current			16,965		-			D		16,965
Contingent acquisition consideration - current			5,037		-					5,037
Deferred income tax			1,803		-					1,803
			121,257		1,000					122,257
Long-term debt - non-current			230,009		-			D		230,009
Contingent acquisition consideration			2,053		-					2,053
Other liabilities			13,037		-					13,037
Deferred income tax			14,143		-					14,143
			259,242		-					259,242
Redeemable non-controlling interests			75,071		-					75,071
Shareholders' equity
Contributed surplus			-		118,385			C		118,385
Retained earnings (deficit)			-		(1,000	)		B		(1,000	)
FirstService's net investment			118,385		(118,385	)		C		-
Accumulated other comprehensive earnings			4,380		-					4,380
Total shareholders' equity			122,765		(1,000	)				121,765
		$	578,335	$	-				$	578,335

Page 5 of 9

NEW FSV
PRO FORMA COMBINED STATEMENT OF CASH FLOW FROM OPERATING ACTIVITIES
(Unaudited)
(in thousands of US dollars)
	Year ended December 31, 2014
		New			Add(deduct)			New
		FSV			pro forma			FSV
		carve-out			adjustments		Note 2	pro forma
Cash provided by (used in)
Operating activities
Net earnings		$	26,192		$	-		$	26,192
Items not affecting cash:
Depreciation and amortization			26,474			-			26,474
Deferred income tax			(2,479	)		-			(2,479	)
Other			2,056			-			2,056
Changes in non-cash working capital:
Accounts receivable			3,231			-			3,231
Inventories			72			-			72
Prepaid expenses and other current assets			(3,327	)		-			(3,327	)
Payables and accruals			(8,164	)		-			(8,164	)
Unearned revenues			741			-			741
Other liabilities			660			-			660
Contingent acquisition consideration			(279	)		-			(279	)
Net cash provided by operating activities		$	45,177		$	-		$	45,177

Page 6 of 9

NEW FSV
PRO FORMA COMBINED STATEMENT OF CASH FLOW FROM OPERATING ACTIVITIES
(Unaudited)
(in thousands of US dollars)
	Three months ended March 31, 2015
		New			Add(deduct)			New
		FSV			pro forma			FSV
		carve-out			adjustments		Note 2	pro forma
Cash provided by (used in)
Operating activities
Net earnings		$	(434	)	$	-		$	(434	)
Items not affecting cash:
Depreciation and amortization			6,998			-			6,998
Deferred income tax			880			-			880
Other			666			-			666
Changes in non-cash working capital:
Accounts receivable			9,695			-			9,695
Inventories			(1,638	)		-			(1,638	)
Prepaid expenses and other current assets			1,629			-			1,629
Payables and accruals			(3,162	)		-			(3,162	)
Unearned revenues			3,396			-			3,396
Other liabilities			640			-			640
Net cash provided by operating activities		$	18,670		$	-		$	18,670

Page 7 of 9

NEW FSV

NOTES TO PRO FORMA COMBINED FINANCIAL STATEMENTS

(Unaudited)

(in thousands of US dollars)

1.             Background and basis of presentation

On March 11, 2015, the Board of Directors of FirstService Corporation (“FirstService”) unanimously approved a proposal to split FirstService into two independent public companies, being (i) a Commercial Real Estate Services company operating principally as Colliers International and (ii) a Residential Real Estate Services and Property Services company operating principally as FirstService Residential and several franchise brand companies including California Closets, Paul Davis Restoration and CertaPro Painters.

The proposed corporate reorganization (the “Arrangement”) would be implemented through a court approved plan of arrangement. Shareholder approval for the Arrangement was obtained on April 21, 2015, but the Arrangement remains subject to certain conditions. The reorganization would result in two publicly traded entities with the Residential Real Estate Services and Property Services company named FirstService Corporation (“New FSV”), and FirstService renamed as Colliers International Group Inc. FirstService shareholders would receive one New FSV Multiple Voting Share or Subordinate Voting Share for each FirstService Multiple Voting Share or Subordinate Voting Share held, respectively.

The unaudited pro forma combined financial statements for the year ended December 31, 2014 have been prepared from the audited New FSV Carve-out Combined Financial Statements for the year ended December 31, 2014. The unaudited pro forma combined financial statements for the three months ended March 31, 2015 have been prepared from the unaudited New FSV Carve-out Combined Financial Statements for the three months ended March 31, 2015. The carve-out combined financial statements were derived from the historical accounting records of FirstService on a carve-out basis and therefore include allocations of certain expenses. These allocated costs may not be representative of the costs that may be incurred in the future as an independent, publicly-traded company.

These unaudited pro forma combined financial statements should be read in conjunction with the FirstService audited Consolidated Financial Statements for the year ended December 31, 2014 and unaudited Consolidated Financial Statements for the three months ended March 31, 2015 and the related Management’s Discussion and Analysis as well as the New FSV audited Carve-out Combined Financial Statements for the year ended December 31, 2014 and the unaudited Carve-out Combined Financial Statements for the three months ended March 31, 2015 and the related Management’s Discussion and Analysis.

These unaudited pro forma combined financial statements are for illustrative and information purposes only and may not be indicative of the results that actually would have occurred if the Arrangement had been in effect on the dates indicated or of the results that may be obtained in the future. In addition to the pro forma adjustments to the historical carve-out combined financial statements, various other factors may have an effect on the financial condition and results of operations after the completion of the Arrangement.

The unaudited pro forma combined balance sheets give effect to the Arrangement as if it had taken place on December 31, 2014 and March 31, 2015. The unaudited pro forma combined statements of earnings give effect to the Arrangement as if it had taken place on January 1, 2014 and January 1, 2015. Note 2 outlines the pro forma assumptions and adjustments that have been made. Pro forma adjustments to the carve-out combined statement of earnings give effect to events that are directly attributable to the Arrangement, expected to have a continuing impact on New FSV, and are factually supportable. Pro forma adjustments to the carve-out combined balance sheet are based on the best information available as of the date of this Circular.

For the year ended December 31, 2014, FirstService allocated corporate general and administrative expenses of $10,680 to New FSV (three months ended March 31, 2015 – $2,101). Corporate general and administrative expenses include costs related to finance, legal, treasury, insurance, corporate development and costs associated with being a public company. Effective with the Arrangement, New FSV will assume responsibility for all of these functions and related costs.

Page 8 of 9

New FSV expects that its annual corporate general and administrative expenses will increase approximately $900 in 2015 compared to 2014 on account of additional costs required to function as an independent public company. No pro forma adjustments have been made to the statement of earnings to reflect the incremental expenses described in this paragraph.

2.             Pro forma assumptions and adjustments

A.   Pro forma net basic and diluted earnings per common share is calculated using the same weighted average number of pre-arrangement FirstService basic and diluted common shares (Multiple Voting Shares and Subordinate Voting Shares) outstanding as at December 31, 2014 and March 31, 2015 because the New FSV shares will be issued on a one-for-one basis.

B.   Adjustment to increase accounts payable to accrue for the New FSV share of the estimated transaction costs to complete the Arrangement. This results from the pro forma combined balance sheet as of December 31, 2014 giving effect to the Arrangement as of December 31, 2014. The pro forma consolidated balance sheet as of March 31, 2015 gives effect to the Arrangement as of March 31, 2015.

C.   The amount of the FirstService net investment in New FSV, which was recorded by New FSV as FirstService’s net investment in its Carve-out Combined Financial Statements, is reclassified to contributed surplus. FirstService’s net investment in New FSV is subject to amendment in accordance with any adjustments arising from the transition agreement to achieve New FSV’s new capital structure post-split.

D.   The New FSV long-term debt balance is subject to amendment at the time of the Arrangement in accordance with any adjustments arising from the transition agreement to achieve New FSV’s new capital structure post-split.

Page 9 of 9

EX-99.4

EXHIBIT 99.4

FIRSTSERVICE CORPORATION

(to be renamed COLLIERS

INTERNATIONAL GROUP INC.)

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Year ended December 31, 2014 and

Quarter ended March 31, 2015

FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS

(Unaudited)

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

	Year ended December 31, 2014
		FirstService			Deduct New		Add (deduct)
		pre-			FSV		pro forma					Colliers
		arrangement			carve-out		adjustments			Note 2		pro forma
Revenues		$	2,714,273		$	1,132,002	$	-				$	1,582,271
Cost of revenues			1,747,175			800,046		-					947,129
Selling, general and administrative expenses			758,436			258,678		-					499,758
Depreciation			38,117			17,730		-					20,387
Amortization of intangible assets			24,293			8,744		-					15,549
Acquisition-related items			11,825			1,183		-					10,642
Operating earnings			134,427			45,621		-					88,806
Interest expense, net			14,237			6,932		-					7,305
Other income, net			(1,008	)		255		-					(1,263	)
Earnings before income tax			121,198			38,434		-					82,764
Income tax			31,799			12,242		5,700			A		25,257
Net earnings from continuing operations			89,399			26,192		(5,700	)				57,507
Net earnings from discontinued operations,
net of income tax			1,537			-		-					1,537
Net earnings			90,936			26,192		(5,700	)				59,044
Non-controlling interest share of earnings			28,200			3,105		-					25,095
Non-controlling interest redemption increment			19,420			10,117		-					9,303
Net earnings attributable to Company		$	43,316		$	12,970	$	(5,700	)			$	24,646
Net earnings per common share											C
Basic
Continuing operations		$	1.16									$	0.64
Discontinued operations			0.04										0.04
		$	1.20									$	0.69
Diluted
Continuing operations		$	1.15									$	0.64
Discontinued operations			0.04										0.04
		$	1.19									$	0.68
Weighted average common shares outstanding
Basic			35,917										35,917
Dilutive effects of stock options			392										392
Diluted			36,309										36,309

Page 2 of 9

FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)

PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS

(Unaudited)

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

	Three months ended March 31, 2015
		FirstService			Deduct New			Add(deduct)
		pre-			FSV			pro forma					Colliers
		arrangement			carve-out			adjustments			Note 2		pro forma
Revenues		$	607,951		$	272,189		$	-				$	335,762
Cost of revenues			405,428			197,307			-					208,121
Selling, general and administrative expenses			180,114			66,230			-					113,884
Depreciation			9,589			4,448			-					5,141
Amortization of intangible assets			5,977			2,550			-					3,427
Acquisition-related items			993			247			-					746
Operating earnings			5,850			1,407			-					4,443
Interest expense, net			4,203			1,868			-					2,335
Other income, net			686			202			-					484
Earnings before income tax			961			(663	)		-					1,624
Income tax			(18	)		(229	)		1,600			A		1,811
Net earnings from continuing operations			979			(434	)		(1,600	)				(187	)
Net earnings from discontinued operations,
net of income tax			-			-			-					-
Net earnings			979			(434	)		(1,600	)				(187	)
Non-controlling interest share of earnings			2,518			1,119			-					1,399
Non-controlling interest redemption increment			(7,583	)		1,758			-					(9,341	)
Net earnings attributable to Company		$	6,044		$	(3,311	)	$	(1,600	)			$	7,755
Net earnings per common share												C
Basic
Continuing operations		$	0.17										$	0.22
Discontinued operations			-											-
		$	0.17										$	0.22
Diluted
Continuing operations		$	0.17										$	0.21
Discontinued operations			-											-
		$	0.17										$	0.21
Weighted average common shares outstanding
Basic			35,871											35,871
Dilutive effects of stock options			392											392
Diluted			36,263											36,263

Page 3 of 9

FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)

PRO FORMA CONSOLIDATED BALANCE SHEET

(Unaudited) (in thousands of US dollars)

	December 31, 2014
		FirstService			Deduct New		Add (deduct)
		pre-			FSV		pro forma					Colliers
		arrangement			carve-out		adjustments			Note 2		pro forma
Assets
Current Assets
Cash and cash equivalents		$	156,793		$	66,790	$	-				$	90,003
Restricted cash			3,657			3,657		-					-
Accounts receivable, net of allowance			409,317			115,143		-					294,174
Income tax recoverable			29,303			16,262		-					13,041
Inventories			18,950			9,489		-					9,461
Prepaid expenses and other current assets			44,176			20,715		-					23,461
Deferred income tax			45,623			18,667		-					26,956
			707,819			250,723		-					457,096
Other receivables			6,845			4,581		-					2,264
Other assets			19,487			155		-					19,332
Fixed assets			120,394			55,203		-					65,191
Deferred income tax			83,639			4,572		-					79,067
Intangible assets			197,689			82,877		-					114,812
Goodwill			503,554			217,433		-					286,121
			931,608			364,821		-					566,787
		$	1,639,427		$	615,544	$	-				$	1,023,883
Liabilities and shareholders' equity
Current Liabilities
Accounts payable		$	107,349		$	24,687	$	9,000			B	$	91,662
Accrued liabilities			434,819			55,563		-					379,256
Income taxes payable			15,249			5,650		-					9,599
Unearned revenues			23,571			16,079		-					7,492
Long-term debt - current			36,396			17,725		-			E		18,671
Contingent acquisition consideration - current			10,971			4,586		-					6,385
Deferred income tax			1,804			1,804		-					-
			630,159			126,094		9,000					513,065
Long-term debt - non-current			456,952			221,632		-			E		235,320
Contingent acquisition consideration			16,165			1,509		-					14,656
Other liabilities			35,739			12,398		-					23,341
Deferred income tax			36,205			14,236		-					21,969
			545,061			249,775		-					295,286
Redeemable non-controlling interests			230,992			80,926		-					150,066
Shareholders' equity
Common shares			310,401			-		-					310,401
Contributed surplus			46,931			-		-					46,931
Deficit			(118,242	)		-		(9,000	)		B		(284,740	)
								(157,498	)		D
FirstService's net investment			-			157,498		157,498			D		-
Accumulated other comprehensive earnings			(13,887	)		1,251		-					(15,138	)
Total Company shareholders' equity			225,203			158,749		(9,000	)				57,454
Non-controlling interests			8,012			-		-					8,012
Total shareholders' equity			233,215			158,749		(9,000	)				65,466
		$	1,639,427		$	615,544	$	-				$	1,023,883

Page 4 of 9

FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)

PRO FORMA CONSOLIDATED BALANCE SHEET

(Unaudited) (in thousands of US dollars)

	March 31, 2015
		FirstService			Deduct New		Add(deduct)
		pre-			FSV		pro forma					Colliers
		arrangement			carve-out		adjustments			Note 2		pro forma
Assets
Current Assets
Cash and cash equivalents		$	120,702		$	45,142	$	-				$	75,560
Restricted cash			2,762			2,762		-					-
Accounts receivable, net of allowance			354,500			106,315		-					248,185
Income tax recoverable			28,706			12,704		-					16,002
Inventories			25,581			11,128		-					14,453
Prepaid expenses and other current assets			49,494			19,086		-					30,408
Deferred income tax			43,198			18,644		-					24,554
			624,943			215,781		-					409,162
Other receivables			6,001			3,757		-					2,244
Other assets			20,622			154		-					20,468
Fixed assets			116,123			54,627		-					61,496
Deferred income tax			82,461			3,621		-					78,840
Intangible assets			190,303			85,493		-					104,810
Goodwill			482,356			214,902		-					267,454
			897,866			362,554		-					535,312
		$	1,522,809		$	578,335	$	-				$	944,474
Liabilities and shareholders' equity
Current Liabilities
Accounts payable		$	86,294		$	14,660	$	9,000			B	$	80,634
Accrued liabilities			332,344			58,329		-					274,015
Income taxes payable			4,209			4,988		-					(779	)
Unearned revenues			23,579			19,475		-					4,104
Long-term debt - current			38,171			16,965		-			E		21,206
Contingent acquisition consideration - current			6,745			5,037		-					1,708
Deferred income tax			1,806			1,803		-					3
			493,148			121,257		9,000					380,891
Long-term debt - non-current			517,526			230,009		-			E		287,517
Contingent acquisition consideration			15,740			2,053		-					13,687
Other liabilities			33,358			13,037		-					20,321
Deferred income tax			32,068			14,143		-					17,925
			598,692			259,242		-					339,450
Redeemable non-controlling interests			213,892			75,071		-					138,821
Shareholders' equity
Common shares			315,125			-		-					315,125
Contributed surplus			49,658			-		-					49,658
Deficit			(115,798	)		-		(9,000	)		B		(243,183	)
								(118,385	)		D
FirstService's net investment			-			118,385		118,385			D		-
Accumulated other comprehensive earnings			(40,551	)		4,380		-					(44,931	)
Total Company shareholders' equity			208,434			122,765		(9,000	)				76,669
Non-controlling interests			8,643			-		-					8,643
Total shareholders' equity			217,077			122,765		(9,000	)				85,312
		$	1,522,809		$	578,335	$	-				$	944,474

Page 5 of 9

FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)

PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOW FROM OPERATING ACTIVITIES

(Unaudited)

(in thousands of US dollars)

	Year ended December 31, 2014
		FirstService			Deduct New			Add(deduct)
		pre-			FSV			pro forma			Colliers
		arrangment			carve-out			adjustments		Note 2	pro forma
Cash provided by (used in)
Operating activities
Net earnings		$	90,936		$	26,192		$	-		$	64,744
NCI share of earnings from discontinued operations			321			-						321
Items not affecting cash:
Depreciation and amortization			62,516			26,474			-			36,042
Deferred income tax			(991	)		(2,479	)		-			1,488
Other			(1,999	)		2,056			-			(4,055	)
Changes in non-cash working capital:
Accounts receivable			(22,052	)		3,231			-			(25,283	)
Inventories			(3,415	)		72			-			(3,487	)
Prepaid expenses and other current assets			(4,704	)		(3,327	)		-			(1,377	)
Payables and accruals			55,792			(8,164	)		-			63,956
Unearned revenues			3,625			741			-			2,884
Other liabilities			(897	)		660			-			(1,557	)
Contingent acquisition consideration			(20,064	)		(279	)		-			(19,785	)
Net cash provided by operating activities		$	159,068		$	45,177		$	-		$	113,891

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FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)

PRO FORMA CONSOLIDATED STATEMENT OF CASH FLOW FROM OPERATING ACTIVITIES

(Unaudited)

(in thousands of US dollars)

	Three months ended March 31, 2015
		FirstService			Deduct New			Add(deduct)
		pre-			FSV			pro forma			Colliers
		arrangment			carve-out			adjustments		Note 2	pro forma
Cash provided by (used in)
Operating activities
Net earnings		$	979		$	(434	)	$	-		$	1,413
Items not affecting cash:
Depreciation and amortization			15,566			6,998			-			8,568
Deferred income tax			(451	)		880			-			(1,331	)
Other			759			666			-			93
Changes in non-cash working capital:
Accounts receivable			53,381			9,695			-			43,686
Inventories			(6,631	)		(1,638	)		-			(4,993	)
Prepaid expenses and other current assets			(5,543	)		1,629			-			(7,172	)
Payables and accruals			(129,404	)		(3,162	)		-			(126,242	)
Unearned revenues			8			3,396			-			(3,388	)
Other liabilities			(2,379	)		640			-			(3,019	)
Net cash provided by operating activities		$	(73,715	)	$	18,670		$	-		$	(92,385	)

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FIRSTSERVICE CORPORATION (to be renamed COLLIERS INTERNATIONAL GROUP INC.)

NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(in thousands of US dollars)

1.           Background and basis of presentation

On March 11, 2015, the Board of Directors of FirstService Corporation (“FirstService”) unanimously approved a proposal to split FirstService into two independent companies, being (i) a Commercial Real Estate Services company operating principally as Colliers International and (ii) a Residential Real Estate Services and Property Services company operating principally as FirstService Residential and several franchise brand companies including California Closets, Paul Davis Restoration and CertaPro Painters.

The proposed corporate reorganization (the “Arrangement”) received shareholder approval on April 21, 2015. The Arrangement would be implemented through a court approved plan of arrangement and remains subject to certain conditions. The reorganization would result in two publicly traded entities with the Residential Real Estate Services and Property Services company named FirstService Corporation (“New FSV”), and FirstService renamed as Colliers International Group Inc. (“Colliers”). FirstService shareholders would receive one New FSV Multiple Voting Share or Subordinate Voting Share for each FirstService Multiple Voting Share or Subordinate Voting Share held, respectively.

The unaudited pro forma consolidated financial statements for the year ended December 31, 2014 have been prepared from the FirstService audited Consolidated Financial Statements for the year ended December 31, 2014, as well as the audited New FSV Carve-out Combined Financial Statements for the year ended December 31, 2014. The unaudited pro forma consolidated financial statements for the three months ended March 31, 2015 have been prepared from the FirstService unaudited Consolidated Financial Statements for the three months ended March 31, 2015 as well as the unaudited New FSV Carve-out Combined Financial Statements for the three months ended March 31, 2015. The New FSV Carve-out Combined Financial Statements were derived from the accounting records of FirstService on a carve-out basis and therefore include allocated costs, which may not be representative of the costs that may be incurred in the future as an independent, publicly-traded company.

These unaudited pro forma consolidated financial statements should be read in conjunction with the FirstService audited Consolidated Financial Statements for the year ended December 31, 2014 and unaudited Consolidated Financial Statements for the three months ended March 31, 2015 and related Management’s Discussion and Analysis, as well as the audited New FSV Carve-out Combined Financial Statements for the year ended December 31, 2014 and unaudited Carve-out Combined Financial Statements for the three months ended March 31, 2015 and related Management’s Discussion and Analysis.

These unaudited pro forma consolidated financial statements are for illustrative and information purposes only and may not be indicative of the results that actually would have occurred if the Arrangement had been in effect on the dates indicated or of the results that may be obtained in the future. In addition to the pro forma adjustments to the historical carve-out combined financial statements, various other factors may have an effect on the financial condition and results of operations after the completion of the Arrangement.

The unaudited pro forma consolidated balance sheets give effect to the Arrangement as if it had taken place on December 31, 2014 and March 31, 2015. The unaudited pro forma consolidated statements of earnings give effect to the Arrangement as if it had taken place on January 1, 2014 and January 1, 2015, the beginning of the most recent fiscal periods for which New FSV Carve-out Combined Financial Statements are available. Note 2 outlines the pro forma assumptions and adjustments that have been made.

For the year ended December 31, 2014 New FSV was allocated corporate general and administrative expenses of $10,680 (three months ended March 31, 2015 - $2,101). Corporate general and administrative expenses include costs related to finance, legal, treasury, insurance, corporate development and costs associated with being a public company. Effective with the Arrangement, New FSV will assume responsibility for all of these functions and related costs.

Colliers expects that its annual corporate general and administrative expenses will increase approximately $1,300 in 2015 compared to 2014 on account of incremental costs required to function as an independent public company. No pro forma adjustments have been made to the statement of earnings to reflect the incremental expenses described in this paragraph.

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2.           Pro forma assumptions and adjustments

A.   Pro forma adjustment to income tax expense to reflect new legal and corporate structure after completion of the Arrangement.

B.   Adjustments to increase accounts payable to accrue for the Colliers share of the estimated transaction costs to complete the Arrangement. This results from the pro forma consolidated balance sheet as of December 31, 2014 giving effect to the Arrangement as of December 31, 2014. The pro forma consolidated balance sheet as of March 31, 2015 gives effect to the Arrangement as of March 31, 2015.

C.   Pro forma net basic and diluted earnings per common share is calculated using the same weighted average number of pre-arrangement FirstService basic and diluted common shares (Multiple Voting Shares and Subordinate Voting Shares) outstanding as at December 31, 2014 and March 31, 2015

D.   The amount of the FirstService net investment in New FSV, which was recorded by New FSV as FirstService’s net investment in its Carve-out Combined Financial Statements, is reclassified to retained earnings. FirstService’s net investment in New FSV is subject to amendment in accordance with any adjustments arising from the transition agreement to achieve New FSV’s new capital structure post-split.

E.   The long-term debt attributed to New FSV is subject to amendment at the time of the Arrangement in accordance with any adjustments arising from the transition agreement to achieve New FSV’s new capital structure post-split.

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