Lindsey Morden Group Inc.

Lindsey Morden Group Inc.

October 27, 2005 17:02 ET

Lindsey Morden Announces Third Quarter Financial Results

TORONTO, ONTARIO--(CCNMatthews - Oct. 27, 2005) - Lindsey Morden Group Inc. (TSX:LM.SV) -

Financial results for the three and nine months ended September 30,
2005 (unaudited)
Third Quarter Year-to date
(in $000's except per share
amounts) 2005 2004 2005 2004
Canada 14,056 13,949 39,543 38,226
United States 13,528 13,096 41,956 37,887
United Kingdom 48,572 48,975 148,076 144,730
Europe 14,710 16,810 47,186 54,095
International 10,661 12,859 41,451 36,470
101,527 105,689 318,212 311,408

Operating earnings (loss) from
continuing operations: (1)
Canada 668 1,478 779 1,951
United States 454 265 1,503 (721)
United Kingdom 4,943 3,708 12,826 9,589
Europe (370) 402 297 3,355
International 932 1,977 11,791 5,679
Corporate (2,390) (238) (5,575) (5,186)
4,237 7,592 21,621 14,667
Interest expense 4,796 4,858 14,726 12,692
Gain on disposal - - (2,944) -
Provision for income taxes 924 1,366 6,191 5,273
Net earnings (loss) from
continuing operations (1,483) 1,368 3,648 (3,298)
Net earnings (loss) from
operations, net of tax - (4,894) (2,918) (28,213)
Reimbursement for costs - 1,932 566 5,932
Net earnings (loss) (1,483) (1,594) 1,296 (25,579)
Basic and diluted net earnings
(loss) per share
from continuing operations $(0.09) $0.10 $0.25 $(0.24)
Basic and diluted net earnings
(loss) per share $(0.09) $(0.11) $0.09 $(1.85)
Total shares outstanding (000)(2) 22,093 14,301 22,093 14,301
Weighted average shares (000) 16,591 13,873 14,826 13,837

(1) Operating earnings (loss) from continuing operations is defined as revenue from continuing operations less cost of service and selling, general and administration expenses relating to continuing operations. Operating earnings (loss) from continuing operations does not have a standard meaning prescribed by generally accepted accounting principles and may not be comparable to similar measures used by other companies.

(2) As at October 27,2005, there were 19,919,968 subordinate voting and 2,172,829 multiple voting shares outstanding. On August 30, 2005 the Company issued 7,791,712 subordinate voting shares upon completion of a rights offering.

Revenue from continuing operations for the third quarter of 2005 was $101.5 million, a decrease of $4.2 million from third quarter 2004. United Kingdom, Europe and International operations reported declines in revenue compared to third quarter 2004, which were partially offset by increases in revenue reported by Canada and the United States operations.

During the third quarter, the Canadian dollar strengthened compared to the US dollar, British pound, and the Euro. Excluding the exchange rate fluctuation, our third quarter revenue increase would have been 4.5% compared to 2004 and our year-to-date revenue increase would have been 8.5% compared to 2004 on a constant dollar basis.

Operating earnings from continuing operations for third quarter 2005 were $4.2 million compared to $7.6 million for third quarter 2004, a decrease of 44%. This decrease was primarily due to a positive currency adjustment of $1.8 million recorded in the third quarter of 2004, and also due to reductions of earnings in the Canadian and International operations and a loss in the European operations partially offset by the continued improvement in earnings in the United States and United Kingdom operations.

The Company's net loss from continuing operations for third quarter 2005 was $1.5 million ($0.09 loss per share) compared to net earnings from continuing operations of $1.4 million ($0.10 earnings per share) in the third quarter 2004. The year-to-date 2005 gain on disposal of $2.9 million was due to the sale of a European subsidiary on March 31, 2005. The loss of $25.6 million ($1.85 loss per share) for the first nine months of 2004 was primarily due to the loss from discontinued operations in the U.S. of $24.6 million.

Year-to-date revenue was $318.2 million, an increase of $6.8 million compared to the first nine months of 2004. Year-to-date operating earnings from continuing operations were $3.6 million compared to a loss of $3.3 million in the first nine months of 2004. Year-to-date net earnings were $1.3 million in 2005 compared to a loss of $25.6 million for the same period in 2004.

On August 30, 2005 the Company completed a rights offering, issuing a total of 7,791,712 subordinate voting shares at $4.25 per share for net proceeds, after offering expenses, of approximately $32,245,000. The full net proceeds of the offering were used to partially repay the $105 million borrowings under an unsecured non-revolving term credit facility. Maturity of the remaining amounts outstanding under the credit facility has been extended to March 31, 2006.

Mr. Jan Christiansen, President & CEO of Lindsey Morden Group Inc. stated, "Our relatively slow quarter was due primarily to revenue shortfalls in our Europe and International operations, and is attributed to an uneventful summer period. The quarter was also impacted by the impact of a strong Canadian dollar and severance costs of $ 1.4 million recorded by our Canadian and head office operations. The third quarter results reflect continued strong performance by our United States and United Kingdom operations. Particularly encouraging are the market gains made during a time when the overall market conditions are difficult.

The hurricane season in North America is expected to be as significant as the 2004 season for our U.S. operations. Cunningham Lindsey US and Cunningham Lindsey Axis are fully engaged in the recovery process and have further expanded their market reach, as a result."

The Company's unaudited consolidated financial information has been prepared in accordance with Canadian generally accepted accounting principles and, unless otherwise stated, is in Canadian dollars.

Lindsey Morden Group Inc. is a holding company which, through its Cunningham Lindsey subsidiaries, provides a wide range of independent insurance claims services, including claims adjusting, appraisal and claims and risk management services. It has a worldwide network of branches in Canada, the United States, the United Kingdom, continental Europe, the Far East, Latin America and the Middle East. Lindsey Morden also provides claims appraisal training courses in the United States.

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