Mr. Bill Morneau reports

MORNEAU SHEPELL REPORTS 2011 FINANCIAL RESULTS

Morneau Shepell Inc. has provided its financial results for 2011 (all amounts are in Canadian dollars, unless noted otherwise).

Highlights:

• Record revenue of $365-million and $97.4-million for the year and quarter ended Dec. 31, 2011;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $70.1-million for full year and $18-million for the fourth quarter;
• Reflects 9-per-cent growth year over year.

"In 2011, we benefited from the initiatives we put in place this year and last, which drove record growth in revenue and earnings," said Bill Morneau, executive chairman of Morneau Shepell. "This momentum is carrying on in 2012 and we expect continued growth in line with our longer term historical trends."

"In 2011 we had significant achievements in both winning large mandates and positioning ourselves for success in the future," added Alan Torrie, president and chief executive officer. "These include our disability management contract with Canada Post, our retainer to provide the pension administration technology platform for the government of Alberta, and the white-label pension administration services we are delivering to the small and mid-size clients of TD Bank. As well, we introduced of a number of innovative new client services including our new MyEAP smart phone app, and introduction of video counselling."

                         2011 FINANCIAL REVIEW
                       (in thousands of dollars)

                              Fourth       Fourth       Twelve       Twelve 
                             quarter      quarter       months       months 
                               ended        ended        ended        ended 
                            Dec. 31,     Dec. 31,     Dec. 31,     Dec. 31, 
                                2011         2010         2011         2010 

Revenue                      $97,477      $87,018     $364,988     $335,194 
Adjusted EBITDA              $17,995      $16,494     $ 70,088     $ 64,268 
Adjusted EBITDA margin         18.5%        19.0%        19.2%        19.2%
Profit                         5,925          473       24,903       21,418 

For the 12 months ended Dec. 31, 2011 (fiscal 2011), the company reported $365.0-million in revenue, an 8.9-per-cent increase from $335.2-million for the 12 months ended Dec. 31, 2010. Total operating expenses (excluding depreciation and amortization) totalled $295.5-million in fiscal 2011, compared with $278.9-million in F2010. Profit in fiscal 2011 was $24.9-million, compared with $21.4-million in fiscal 2010.

Adjusted EBITDA of $70.1-million increased by 9.1 per cent over $64.3-million in F2010 due to increased revenue. Adjusted EBITDA margin was 19.2 per cent, consistent with F2010.

Normalized free cash flow

For fiscal 2011, the company generated cash provided by operating activities of $54.9-million compared with $42.4-million in fiscal 2010. Normalized free cash flow for fiscal 2011 decreased to $40.8-million, compared with $44.6-million in fiscal 2010. The normalized payout ratio for fiscal 2011 was 91.7 per cent compared with 101.1 per cent for fiscal 2010. The payout ratio for fiscal 2011 was 108.2 per cent, which compares with 129.4 per cent in 2010.

Annual meeting of shareholders

Morneau Shepell announced that it will hold its 2012 annual general meeting on May 15, 2012, in Vancouver, B.C., and it established a record date of March 19, 2012, for the meeting.

Notice of conference call

Management of Morneau Shepell will host a conference call today, Wednesday, March 7, 2012, at 2 p.m. EST. The conference call is open to all those wishing to attend, with a question and answer period to follow the presentation. In order to participate in the live conference call, please call 416-695-7806 (participant code 8508656) in the Toronto area, or 1-888-789-9572 (participant code 8508656) throughout the rest of Canada. A replay of the call will be available via the Morneau Shepell website.

We seek Safe Harbor.