Investor presentation March 2016 Business. Needs. People. Health - PowerPoint PPT Presentation

Investor presentation March 2016 Business. Needs. People. Health • Benefits • Employee Assistance • Retirement Health • Benefits • Employee Assistance • Retirement Confidential – Not for Distribution

Forward-looking statements This document contains “ forward-looking statements ” within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance ,or expectations that are not historical facts. The use of words such as “ may, ” “ will, ” “ expect, ” “ believe, ” or other words of similar effect may indicate a forward-looking statement. These statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including those described in the firm’s publicly filed documents (available on SEDAR at sedar.com) and in Morneau Shepell (the firm's) MD&A under the heading “ Risks and Uncertainties. ” Those risks and uncertainties include current economic conditions, income tax matters, the ability to maintain profitability and manage growth, reliance on information systems and technology, reputational risk, dependence on key clients, and reliance on key professionals. Many of these risks and uncertainties can affect the firm ’ s actual results and could cause the firm’s actual results to differ materially from those expressed or implied in any forward-looking statement made by the firm or on the firm’s behalf. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. All forward- looking statements in this document are qualified by these cautionary statements. These statements are made as of the current date and, except as required by applicable law, the firm undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Additionally, the firm undertakes no obligation to comment on analyses, expectations, or statements made by third parties in respect of the firm, its financial or operating results, or its securities. 2 Confidential – Not for Distribution

Our Purpose To be recognized as essential to Our Values the financial security, health and productivity of our clients and • We value long-term their people. relationships. • We treat others the way we want to be treated. • We are innovative and entrepreneurial. Confidential – Not for Distribution 3

Morneau Shepell is a leading provider of HR services and technology 50 years $567M $106M TSX: MSI of experience annual revenue annual EBITDA Fastest 4,000 87% 20+ years ~4x growing employees revenue average revenue DC/CAP in Canada client tenure since 2007 provider Confidential – Not for Distribution 4

Our shareholders continue to be rewarded at a pace that exceeds the broader market Total Return – From IPO to March 10, 2016 300% S&P/TSX Index 63.1% 250% 246.6% Morneau Shepell 246.6% S&P 500 Index 102.3% 200% 150% 102.3% 100% 63.1% 50% 0% (50%) Confidential – Not for Distribution

Our history includes several successful acquisitions 1962 Sobeco was founded and helped launch the Québec Pension Plan 1966 W.F. Morneau & Associates was established 1992 Morneau acquires Coopers & Lybrand’s pension consulting and actuarial business 1996 Morneau launches its administrative outsourcing practice 1997 W.F. Morneau & Associates and Sobeco merge to form Morneau Sobeco 1998 Morneau acquires the Canadian pension consulting practice of Deloitte & Touche 2005 The firm completes an IPO and becomes an income trust: Morneau Sobeco Income Fund (MSIF) 2006 MSIF acquires Heath Benefits Consulting MSIF acquires the defined benefit pension business of Cowan Benefits Consulting; and acquires 2008 the actuarial firm Leong & Associates MSIF becomes a leader in workplace health and productivity solutions with its acquisition of 2008 Shepell·fgi 2010 Conversion to Morneau Shepell Inc. (MSI) 2011 MSI acquires Jacques Lamarre & Associates to expand Employee Assistance presence in Quebec MSI acquires SBC Systems to enhance benefits administration platform; and acquires Mercer 2012 Canada’s pension and benefits outsourcing, business MSI acquires Dion Durrell’s workers’ compensation business to strengthen Absence Management 2013 Solutions practice 2014 MSI acquires Group AST, the largest workers’ compensation business in Quebec MSI acquires Ceridian’s US Health and Welfare Administration business and Bennsinger, Dupont & 2015 Associates to enhance US EAP capability 6 Confidential – Not for Distribution

We have a long successful history of growth 600 $567 $536 $471 500 $419 400 $365 $335 (million) $332 Acquisition Growth 300 Organic Growth $249 Recurring Revenue 200 $147 100 99% 99% 99% 97% 98% 98% 98% 98% 97% 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 Percentage indicates proportion of total revenue that is recurring from prior year 7 Confidential – Not for Distribution

We offer a balanced mix of services Sources of revenue (2015) 38% 31% Administrative Employee Assistance Solutions Programs 11% 20% Absence Management Solutions Retirement and Benefit Consulting 8 Confidential – Not for Distribution

Market trends drive demand for our services Enabling companies Increased complexity to focus on their core Improving productivity and businesses employee engagement Rising health benefit costs Pension shortfalls and reform The future of retirement Changing demographics and technology Workplace mental health needs 9 Confidential – Not for Distribution

2015 results deliver revenue growth of 6% (6% organic) and EBITDA growth of 7% Revenue Adjusted EBITDA +6% +7% 600 120 567.3 535.9 105.8 98.9 500 100 400 80 ($million) ($million) 300 60 200 40 100 20 0 0 2014 2015 2014 2015 EBITDA Payout 18.5% 18.7% 74.1% 60.8% margin ratio 10 Confidential – Not for Distribution

Capital structure 48.3 million common shares ~$780 million 45% institutional, 5% management, 50% retail Convertible debenture $75 million Due March 2017, 5.75% rate, $15 conversion price Bank debt $242 million Additional details on next page 11 Confidential – Not for Distribution

Bank debt financing has flexibility Current bank debt facility (matures Nov 29, 2017) Debt available Q4 2015 Balance ($m) $300 million $242 million Revolving debt facility Financial covenants Bank debt to EBITDA Currently 2.4: 1 ≤ 3.0:1 EBITDA to interest expense Currently 6.8: 1 ≥ 3.0:1 12 Confidential – Not for Distribution

Investment summary Significant recurring revenue base with strong margins, cash flow and low capital requirements Consistent performance and returns to investors over time – current yield ~5% Customer base of large, blue-chip companies Unique integrated provider of human resource services 13 Confidential – Not for Distribution

Investor Relations contacts: Scott Milligan Alan Torrie atorrie@morneaushepell.com smilligan@morneaushepell.com 14 Confidential – Not for Distribution