SOLUTIONS THAT FIT Investor Presentation May 11, 2015 1
Forward-Looking Statements This presentation contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ( forward-looking statements ). Statements concerning D+H s objectives, goals, strategies, priorities, intentions, plans, beliefs, expectations and estimates, and the business, operations, financial performance and condition of D+H are forward-looking statements. The words believe, expect, anticipate, estimate, intend, may, will, would, could, should, continue, goal, objective, and similar expressions and the negative of such expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. D+H has also made certain macroeconomic and general industry assumptions in the preparation of such forward-looking statements. While D+H considers these factors and assumptions to be reasonable based on information currently available, there can be no assurance that actual results will be consistent with these forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause D+H s actual results, performance or achievements, or developments in its industry, to differ materially from the anticipated results, performance, achievements or developments expressed or implied by such forward-looking statements. Risks related to forward-looking statements include, among other things, increased pricing pressures and competition which could lead to loss of contracts or reduced margins; the Company s ability to comply with regulations; the Company s ability to deliver products and services in line with the changes in the United States of America ( U.S. ) and Canadian banking and financial services industry; the Company s ability to avoid inherent risks in the technology industry related to cyber-security threats and breaches; the Company s dependence on a limited number of large financial institution customers in Canada and dependence on their acceptance of new programs; declines in the use of personal and business cheques; strategic initiatives being undertaken to grow our business and increase profitability; stability and growth in the real estate, mortgage and other lending markets; the Company s ability to generate cash to invest in the business and at the same time be able to pay dividends and debt repayments; as well as general market conditions, including economic, foreign exchange and interest rate dynamics. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The documents referred to herein also identify additional factors that could affect the operating results and performance of the Company. Forward-looking statements are based on management s current plans, estimates, projections, beliefs and opinions, and D+H does not undertake any obligation to update forwardlooking statements should assumptions related to these plans, estimates, projections, beliefs and opinions change except as required by applicable securities laws. All of the forward-looking statements made in this presentation are qualified by these cautionary statements and other cautionary statements or factors contained herein and there can be no assurance that the actual results or developments will be realized or, even if substantially realized, that they will have the expected consequences to, or effects on, the Company. 2
A Global FinTech Leader Our Vision: To be the leading FinTech provider to the financial services industry Providing financial institutions with software and technology to serve their customers, compete, optimize and grow their business Client base of nearly 8,000 financial institutions with addition of Fundtech Solid track record of long-term performance and growth Executing on a global growth strategy 2014 Pro Forma Adjusted Revenues of C$1.45B 1,2 Business Segment Diversification Geographic Diversification Fundtech 20% 21% Payments Solutions EMEA APAC 3% 8% Canada Lending Solutions 43% 16% Enterprise Solutions U.S. 44% 45% 1) Non-IFRS measure. See Appendix A for details. 2) See Prospectus Supplement dated April 1, 2015. 3
Investment Thesis - DH Corporation (TSX:DH) High Demand for FinTech Products Well-positioned for FinTech Market Opportunities Proven Business Model and Strategies Increasing regulatory complexity Consumerization of banking technology Legacy IT updating and replacement Banks investing in FinTech for competitive advantage Addressable market ~13,000 U.S. banks and credit unions and the world s largest global banks Market-leading in-demand products Cross selling opportunities with 8,000 clients Long-term contracts Highly recurring revenues with attractive margins Strong cash flows to support growth, deleveraging, and dividend Expecting medium term synergies and accretion from Fundtech acquisition 4
D+H FinTech Journey and Transformation 2006 2008 2009 2011 2012 2013 2014 2015 Debt/EBITDA 1 1.58X 1.26X 1.38X 2.08X 2.03X 3.05X 2.11X 2 2.34x 2 Equity Market Capitalization $4.4B 3 $3.2B Adjusted revenues (C$ millions, unaudited) $2.4B $1,450 PF 1 $923M $901M $679M $738M $318 $370 $367 $445 $1.3B $1.1B $1.0B $584 $656 $695 $866 $291 $1,159 $297 2006 2007 2008 2009 2010 2011 2012 2013 2014 PF Q1 2015 90% Payments solutions % of Adj. revenues 1 Revenue Growth and Diversification 25% Payments solutions % of Adj. revenues 1 1) Non-IFRS measure. See Appendix A for details. 2) Debt to EBITDA ratio, net of up to C$40M cash in bank. 3) As of market close May 6, 2015 4) See Prospectus Supplement dated April 1, 2015 5
D+H Strategy Strategy: - Establish leading positions in growing markets in the financial services industry - Reinforce these positions with integrated technology solutions - Deliver increasing value to our clients and shareholders Leveraging Strengths Objectives Canada U.S. Global EPS growth True trusted supplier with deep bank relationships Broad client base for cross-sell strategy Leading single global transaction platform Margin expansion Deeply entrenched in client base Multiple growth vectors Entrenched relationships with top global banks High recurring revenues Lending and Payments domain experience Leading lending origination and compliance solutions Leading in-demand solutions Partnerships and Acquisitions Leadership in all service areas Strong enterprise solutions Positioned for global banking tailwinds Strategic global expansion 6
Further Diversifies our Business Prior to HFS December 31, 2012 (1) Adjusted Revenues 1 Going Forward Pro Forma 2014 (1)(2) Lending Processing Solutions 38% 19% Banking Technology Solutions Canada 92% 43% U.S. 8% Payments Solutions Lending Solutions Fundtech U.S. Canada 20% 43% 44% 45% 21% 16% 11% Payments Solutions Enterprise Solutions International C$695M C$1.45B ~1,700 clients ~8,000 clients 1) Non-IFRS measure. See Appendix A for details. 2) Fundtech s financial results for 2014 were converted from U.S. dollars to Canadian dollars using the following exchange rate: US$1.00 = CDN$1.1046 7
Strategic and Accretive Acquisition Complementary FinTech pillars Leading provider of Global Payment and Transaction Banking Solutions Leading provider of Lending and Integrated Core Solutions 8
Strategic and Accretive Acquisition - Synergy New clients plus new products for existing clients LaserPro Mortgagebot POS Mortgagebot LOS Commercial Lending Integrated Core Channel Solutions Optimization Increased cross-selling potential Payment Technology Wire Services Cash Management Merchant Services Financial Messaging Payables/Receivables Automation 9
Product Offerings Lending Solutions U.S. Lending Service Areas Canadian Mortgage Technology Canadian Collateral Management Solutions Canadian Student Lending Key Business Drivers Regulatory changes / Bank demand for lending products Residential mortgage activity Economic growth, particularly in the auto sector Post-secondary university and college enrolment levels Payments Solutions Enterprise Solutions Global Transaction Banking Solutions Cheque program Enhancement Services U.S. Core banking platforms U.S. Channel Solutions U.S. Cloud Solutions Global payments technology Cash Management Financial Messaging Merchant Services Cheque usage Large Canadian banks income strategies Banks embracing new consumer product offerings Core technology spend Demand for self-service (e.g. online and mobile) Migration to cloud hosting Proliferation of payment types, channels, and volumes Bank focus on fee-based transaction banking Replacement of outdated payment systems Demand for technology solutions for regulatory compliance Growth & electronification of corporate payments Increasing bank spending on 3rd party technology 10
Product Offerings Lending Solutions Service Areas U.S. Lending Canada: Mortgage Technology Collateral Management Student Lending Products LaserPro compliant loan documentation solution POS - SaaS loan application - mortgage / consumer / commercial LOS - SaaS loan origination processing / compliance / closing CreditQuest and CreditPath commercial lending solutions Expert and Express broker-originated mortgage platform Lien registration and collateral recovery management Canada Student Loans Program and provincial programs Payments Solutions Canada: Cheque programs Enhancement Services Personal and business cheques Credit Monitoring, Identity Protection, and Payment Management subscription services for bank cheque and credit card customers Enterprise Solutions Global Transaction Banking Solutions U.S. Core Banking Channel Solutions Cloud Hosting U.S. and Global Global payments technology Cash Management Financial Messaging Merchant Services PhoenixEFE and UltraData core banking platforms Bank branch and customer self-service channel products including teller/online/mobile. Compushare C3 full service cloud hosting Global PAYplus integrated global payments solution PAYplus and ACHplus U.S. wire transfer solutions Global Messaging Plus financial messaging e.g. SWIFT Global CASHplus cash management solution NetDeposit remote deposit capture and e-billing 11
Recent Development Acquisition of Fundtech 12
Strategic Expansion into Global Payments High growth market - payment technology is top priority for bank IT spend Mission-critical payment solutions for banks Profitable growth for D+H Extends and broadens our relevancy to U.S. banks, including the largest U.S. banks Value for D+H Shareholders 13
The Right Transaction at the Right Time Continuation of D+H growth strategy Aligned with D+H Acquisition Strategy Leverages the strategic advances realized by our 2013 acquisition of HFS Leader in global payments technology meeting the competitive imperatives of banks Strong macro tailwinds driving top and bottom-line growth Combined cash flow will enable deleveraging, support dividend payments and fund investment for future growth Attractive Growth Profile Growth company with strong fundamentals Historical top-line growth in the high single-digit range with attractive and expanding margins Purchase price of US$1.25 billion consistent with growth potential Value for Shareholders Expected to be accretive within the first twelve months following closing Attractive medium-term synergies through cross-selling opportunities and cost savings 14
Strategic and Accretive Acquisition Increases our exposure to the U.S. and international markets Increases Size of Our Available Market Diversifies Client Base Fundtech serves 9 of the Top 10 U.S. banks Fundtech serves 32 of the Top 50 global banks 15
Megatrends Challenge Banks, Strategically Position D+H Increasing Proliferation of Payment Types and Channels Increasing global transaction volumes and new payment channels drive need for versatile payment systems architecture Multiple customer types, origination channels, software platforms, and regulatory and reporting requirements demand integrated solutions Real-Time Settlement and Straight-Through-Processing will become essential offerings Focus on High Margin Transaction Banking Revenue Transaction-based revenue is outpacing interest-based revenue at many financial institutions Competitive edge in payments technology is vital to growing revenues / customers and maximizing efficiency Legacy Systems Often Unable to Meet Evolving Business Requirements Consolidation in banking has led to multiple, disparate and often outdated systems Complicates the adoption and integration of new payment origination channels Unless addressed, forces higher operating expenses for banks and limits opportunities to expand scale and efficiency Increased Spending on Regulatory Compliance Regulatory environment and scrutiny continues to broaden (Basel 3, Dodd-Frank, SEPA), driving cost and complexity for banks Technology widely identified as a key solution to cost-effective compliance Fundtech s integrated solutions are aligned with major secular tailwinds 16
Legacy Banking Exceptionally Complex The Current Infrastructural Landscape: A Complex Problem CUSTOMER GLOBAL CASH MANAGEMENT EDI/DIRECT TRANSMISSION DOMESTIC CASH MANAGEMENT CUSTOMER CLIENT SERVICE RISK/AML DOMESTIC LOW-VALUE PAYMENTS SYSTEM LOCAL ACH INTERNATIONAL PAYMENTS SWIFT ACCOUNT SYSTEM WIRES INFORMATION REPORTING DOMESTIC HIGH-VALUE PAYMENTS SYSTEM CHECK PROCESSING 1) Source: Celent 17
Fundtech Simplifies the Banking Ecosystem Fundtech enables a single solution across a bank s entire global organization Online Channels Tablet Bank Operations and Branches Mobile Suppliers and Customers Internet Banking Corporates New York London Geneva Prague Hong Kong Financial Networks CASH MANAGEMENT Paris PAYMENTS Clearing and Settlement MERCHANT SERVICES Denver FINANCIAL MESSAGING MERCHANT SERVICES CASH MANAGEMENT New York SaaS Origination Execution $ 18
Provides Deep Capability Set into Banking Ecosystem Payments Allows financial institutions to consolidate multiple payment applications onto one platform and process payments across the globe Financial Messaging Enables the efficient exchange of standardized transaction messages over a secure electronic network Cash Management Enables financial institutions to offer their customers the functionality to effectively manage their cash and liquidity while optimizing their working capital Merchant Services Modern payment solutions for merchant customers such as Remote Deposit Capture and Electronic Invoicing Estimated annual bank IT spend on all of Fundtech s markets is ~US$5-6B (1) 1) Source D+H Management. 19
Fundtech Business Summary Business Overview Financial summary (1) (US$ millions) Founded in 1993 brings deep domain expertise in payment solutions with approximately 1,500 employees in 19 offices worldwide, including development centers in the U.S., Israel, India, and the UK $242 $263 Adj. Revenues Adj. EBITDA Diverse and growing client base of global money center banks, mid-size banks and credit unions, non-bank FIs, sovereigns and corporates, with limited client concentration risk Approximately 1,200 clients including: 190 of the top 300 U.S. banks 9 of the top 10 U.S. banks 32 of the top 50 global banks Products support high margin transaction banking revenue at a lower total cost of ownership than disparate legacy systems Fundtech product suite built on contemporary Service-Oriented Architecture (SOA) principles APAC 14% EMEA 39% $59 $68 2013 2014 2014 Revenue by Geography Americas 47% 2014 Revenue by Type Hardware 1% License 8% Services 35% SaaS 33% Maintenance 23% ~56% Recurring Revenue 1) Non-IFRS measure. See Appendix A for details. 20
Financial 21
Enhanced Growth Profile from Strategic Acquisition Adjusted revenues (1,2) Adjusted EBITDA (1) Enhanced Growth Profile (C$ Millions) (C$ Millions) $1,450 3 Adj. EBITDA Margin Fundtech will accelerate D+H growth 291 28% 29% 30% $428 3 Fundtech s margins support D+H margin profile $866 508 $695 227 57 639 639 651 76 $247 181 $197 82 29 168 165 171 Well-positioned to benefit from the secular trends in global transaction banking Upside opportunity to crosssell our comprehensive suite of solutions, including with existing North American clients 2012 2013 2014PF Canada U.S. Fundtech 2012 2013 2014PF Canada U.S. Fundtech International growth opportunities At US$1.00 = CDN$1.10464 At US$1.00 = CDN$1.1046 4 1) Non-IFRS measure. See Appendix A for details. 2) Totals may not add due to rounding. 3)See Prospectus Supplement dated April 1, 2015. 4) Exchange rates are in reference to the 2014 Pro Forma figures and represent the average exchange rate for the period of January 1 to December 31, 2014 22
Long Term D+H Financial Objectives Adjusted revenues 5-7% Adjusted EBITDA 8-10% Adjusted EBITDA Margin 30% Adj. Net Income per share 8-10% 23
Solid Financial Performance Adjusted revenues 1 (All figures in C$ millions) Adjusted EBITDA 1 Adjusted net income per share 1 (All figures in C$ millions) (All figures in C$) 1,159 Adj. EBITDA Margin 27% 28% 29% 30% 29% 866 508 352 656 29 695 57 227 247 181 $2.34 179 14 197 29 82 $1.80 $1.82 $2.02 627 639 639 651 297 139 166 168 165 171 87 48 $0.55 157 39 2011 2012 2013 2014 Q1 2015 2011 2012 2013 2014 Q1 2015 2011 2012 2013 2014 Q1 2015 Canada US Canada US 1) Non-IFRS measure. See Appendix A for details. 2) Totals may not add due to rounding. 24
Strong and Flexible Capital Structure - Q1 2015 (All figures in C$ unless otherwise indicated, unaudited) Enterprise Value = $4.4B 1 $505 M $346 M $230 M $3,350 M Secured Credit Facilities Non-Revolver: C$339M (US$ Denominated debt) Revolver: C$7M Revolver-Undrawn: C$443M Secured Bonds C$100M and C$405M (US$ Denominated debt) Convertible Debentures C$230M 6% Convertible Unsecured Subordinated Debentures maturing September 30, 2018 Conversion price of C$28.90 Bonds Convertible Debentures Common Equity Credit Facility Equity Capitalization 86,591,242 Shares Outstanding Book Value $1.32B Note: Excludes committed financing for Fundtech acquisition 1) Share price as at March 31, 2015. 25
Financing Strategy and Current Debt Structure Diversified funding sourcing Mix of fixed and floating rate debt Well staggered debt maturities Diversified institutional / retail investor base Debt Structure 1 Term to Interest Maturity Rate (Years) (C$M) Weighted Average Debt Balance BA/LIBOR Credit Facility + 1.70%; PRIME 4.4 346 +0.70% Bond 5.68% 2.3 80 Bond (US$63 M) 5.59% 6.0 80 Bond (US$32 M) 3.94% 7.2 40 Bond 5.76% 8.4 20 Bond (US$225 M) 5.51% 8.4 285 Bonds 5.44% 7.0 505 Convertible Debentures 6.00% 3.5 230 Total Debt 5.51% 4 5.4 1,081 Historical Debt Balance and Leverage Ratio 2 Debt Balance (C$ Millions) 1.90x Debt / EBITDA 1.75x 2.87x 2.76x 2.75x 2.64x 2.11x 2.34x 934 960 926 961 781 850 352 346 3 3 3 5 2011 2012 2013 Q1 2014 3 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Reasonable Cost of Capital and Low Refinancing Risk 5 1) As at March 31, 2015 before deferred financing costs 2) Excludes convertible debentures 3) Debt/EBITDA ratio adjusted to remove the impacts of foreign exchange fluctuations 4) The weighted average interest rate includes the effect of deferred financing fees. 5) Debt to EBITDA ratio, net of up to C$40M cash in bank. 26
Appendices Product/Service Profiles Management Team 27
Canadian Mortgage Technology D+H is the leader in broker-originated mortgage technology solutions start D+H Expert is a web-based residential mortgage origination solution that connects brokers with more than 70 banks/lenders and processes $80B+ of transactions annually Application creation and submission, compliance, marketing and reporting D+H Express automates the mortgage underwriting process Bank sales specialists Expert Mortgage brokers Provides clients with credit risk, cross-portfolio exposure, and portfolio trends D+H Exchange provides flexible and secure document management Banks/Lenders Brokers originate 25-30% of all residential mortgages (40% of first-time home buyers) 1 Express Recurring Revenue Model Blend of value and number of mortgages funded on our platform Credit bureaus Insurance companies Mortgage Insurers D+H paid by banks/lenders on basis of mortgages funded 1. Canadian Association of Accredited Mortgage Professionals (CAAMP), Mortgage Insight Report, December 2013. 28
Collateral Management Solutions - Canada D+H is Canada s leading provider of search and lien registration management and technology-based asset recovery, remarketing and insolvency solutions Public Registries Banks/Lenders Recovery Suppliers Bankruptcy Trustees Registry Services Canada s leading provider of technology and services for search and lien registration management Automated links to all provincial and federal government registries to facilitate PPSA, Corporate, land, and Bank Act security transactions 4M+ lien-related transactions processed per year D+H esearch is a web-based solution that fully meets global KYC standards Provides a managed service for the registration of Mortgage Discharges Revenue Model Flat fee per transaction type (search, registration, amendment) Typically paid by bank customer at time of sale (e.g., contract for auto purchase) Recurring revenue based on term contracts and continuing volumes year-over-year Recovery Services Market-leading integrated process and technology solutions for: Location, recovery, transportation, appraisal, and remarketing of automotive, marine and RVs Insolvency management Unsecured recoveries Real property recovery Leverage technology to link hundreds of independent recovery organizations across Canada Revenue Model Fees based on percentage of value of recovered or remarketed assets plus a file management or workflow fee Volumes growing due to higher lending activity 29
Canadian Student Lending D+H is the largest provider of student loan program administration solutions to governments and financial institutions across Canada 1 Origination Maintenance Repayment Discharge Document gathering and validation Adjudication Funds disbursement Customer service Product accounting Payment processing Statement issuance Borrower communications Customer service Repayment counseling Campaign strategy and management Portfolio management Loan restructuring Discharge of fullyamortized loans Recurring Revenue Model A monthly servicing fee per student based on status Servicing incentives Professional services Contract Renewal The Federal government has issued an RFP for a new contract D+H has submitted its application in January 2015 in accordance with the terms of the RFP Federal Govt Provincial Govts Banks 1.7M post-secondary students serviced Customer loan portfolio of $22B 1) Includes Federal Government and certain Provincial governments. 30
Canadian Payments Solutions Banks Credit Unions Enhancement Services / Payment Manager Enhancement Services Subscription-based value-added solutions that banks use to drive loyalty, increase acquisitions and enhance revenue from their core banking customers Credit Rating Agencies Optional (customer-paid) credit monitoring solution Optional ID theft solution Cheques: Cheques Payment Manager Enhancement Services Bank and Credit Union Customers Enables new bank customers to easily transfer their existing pre-authorized payments to their new account or credit card Market leader in Canadian cheque-based payments solutions 20 Million personal accounts 2 Million small business accounts Supplier to all major Canadian banks Reliable source of revenue and cash flow Recurring Revenue Model Subscription revenue is monthly from banks customers Additional revenue opportunity through increased deposit account customers, lending and insurance customers 31
U.S. Lending Solutions The combination of LaserPro and other lending products together with the POS and LOS solutions positions D+H as the leading Lending Solutions provider to U.S. banks, community banks, credit unions and specialty lenders Our offerings enable the origination, compliance, and management of consumer, mortgage and commercial loans LaserPro loan documentation compliance solution LaserPro is the Number 1 loan documentation and compliance solution in the U.S. with over 3,300 clients Nearly 25% of U.S. Fl s use LaserPro 1 50 of the top 100 U.S. banks use LaserPro Mortgagebot POS Point of Sale and LOS Loan Origination System lending solutions serving U.S. banks, credit unions and mortgage lenders CreditQuest and CreditPath commercial lending underwriting, risk management, and portfolio management Revenue Model Subscription Maintenance License Professional Services & Other Transaction Revenue 1) Internal data as at April 2014, FDIC / NCVA is March 2014. 32
U.S. Cross-Selling Opportunity Lending Lifecycle MORTGAGE APPLICATION UNDERWRITING ORIGINATION COMPLIANCE LOAN CLOSING Market leading loan documentation compliance software used by 3,300+ U.S. financial institutions 33
U.S. Enterprise Solutions Enterprise includes core banking and channel solutions such as Teller, Online and Mobile Banking, Payments, and Cloud computing PhoenixEFE UltraData Core Banking Sparak Intrieve Bankway Teller Platform Encore, EZTeller Cloud Solutions / IaaS - Compushare Business Intelligence - Touche Online and Mobile Banking Cavion, ubanking Payments DPXPay, EFT, EBPP Innovative channel solutions support self-service, business intelligence and branch automation Cloud and Infrastructure solutions move mission critical data and systems to private cloud and provide lower cost to clients, with higher security and technology currency Online and Mobile banking provides key capabilities for retail bank customers Core processing platforms enable Transaction recording / posting Financial accounting Content management Payments solutions Business Intelligence 34
Cross-Selling Opportunity - Enterprise Solutions Channels Core Cloud Online Banking Mobile Banking Teller Applications Client Management Deposit Transactions Customer information Payments Financial accounting Top Four U.S. Provider of Core Banking Technology 35
Fundtech Payments Overview Flagship Product: Global PAYplus Fundtech s next-generation transaction banking software that allows FIs the ability to consolidate multiple payment applications onto one platform and process payments across the globe in a single-instance, globally extensible solution. Captures, manages and processes payments in local and international environments sourced from multiple initiating channels and settled to multiple clearing networks globally. Within the FinTech industry, this type of solution is commonly referred to as a payment hub. Global Payments Centralizes payment systems and activity Supports high value, low value and realtime payments PAYMENTS U.S. Payments Fedwire and ACHplus Focus on mid to small size U.S. banks Competitive Differentiation: Multi-payment / channel / currency / entity capabilities, functionally rich, rulesbased environment, high performance and scalability Target clients: Tier 1 and 2 banks for GPP; Tier 3 and 4 banks for U.S. Payments Delivery mode: Tier 1 and 2 banks On-site. Tier 3 and 4 banks SaaS delivery. Multi-currency, multilingual, mutli-entity payments End-to-End straight through processing Revenue Model Subscription Maintenance License Services 36
Fundtech Global Payments Global PAYplus Customer Channels Corporate Clients Bank Clients Branches Electronic Banking Internet Banking Mobile Channel Management Order Management Clearing & Settlement Messaging & Advising Origination Validation Audit & Authorization ISO20022 Validation Routing Workflow STP Fed/NACHA Advising & Statement Enrichment & Mapping Routing, Fees & Validation SWIFT Validation & Enrichment FX Warehouse Dashboard Core Payment Functionality Straight Through Processing Compliance Routing Posting Value-Added Capabilies Liquidity & Risk Management Transformation Account Derivation Fees Monitoring Reporting & Analytics Clearing Channels Check Clearing Networks ACH Networks Wire Networks Card Networks Interbank Networks Immediate Payment Networks O r c h e s t r a t i o n / C o n n e c t i v i t y 37
Fundtech Cash Management Overview Drivers and Value Proposition Flagship Product: Global CASHplus Cash, liquidity, and working capital management solution for banks and corporate clients. Supports straight-through processing. Comprehensive payment initiation, both wire and ACH; Integrated payables and receivables management; Supply chain finance; Cash forecasting and balance reporting; and Mobile banking. Target clients: Tier 1-3 banks Delivery mode: On-Premises Target Geographies: APAC, EMEA, and Americas Market demand driven by geographic expansion, increased client demand for innovation, revenue growth Value proposition: Improves operational efficiency with a multi-region, multi-currency cash management solution Revenue Model Subscription Maintenance License Services 38
Fundtech Financial Messaging Overview Flagship Product: Global Messaging Plus Single-instance platform which enables the exchange of standard transaction messages over secure networks with capacity for up to 7 million messages per hour. Provides financial institutions and corporate clients with connectivity to interbank services, such as the SWIFT messaging network. Target clients: Tier 1-3 banks and multinational corporations Delivery mode: Primarily SaaS but available on premises Target Geographies: Europe, Americas and APAC Drivers and Value proposition Market demand driven overall growth in payment transaction volumes, growth in corporate SWIFT access (a product that is highly relevant for any multi-national corporation), and implementation within smaller banks seeking to offer electronic payment products. Value proposition: cost reduction, increased operational efficiency, easy integration with existing systems, improved usability and transparency Ability to handle multiple formats, integrated payment logic, integrated compliance, work flow management, performance/scalability Provides connectivity to networks employing SWIFT and non-swift formats; Interfaces with many banking applications Supports advanced straight-through payment processing Revenue Model Primarily SaaS Subscription 39
Fundtech Merchant Services Overview Flagship Product: NetDeposit Merchant Services is a platform which primarily provides white-label remote deposit capture, e- billing products and internet payments solutions for banks and corporate customers Secure and scalable remote deposit capture solutions scan cheques and transmit scanned images and/or ACH data to financial institutions for clearing, and settlement Electronic invoice presentment and payment, which enables corporate clients to receive invoices and make or receive payments online; and Target clients: Tier 2 through Tier 4 banks and corporate clients Delivery Model: Primarily SaaS Target Geographies: Asia Pacific, Americas, Europe, Middle East and Africa Drivers and Value Proposition Market Drivers: Market demand driven by regulatory requirement to process checks electronically, competitive pressures to provide the offering, and quick processing of receivables, reduced errors and fraud Value proposition: security, risk mitigation and control, compliance and scalability Centralized control of risk management, user management and system management; Flexible tools for fraud monitoring, deposit review and reporting; and Out-of-the-box compliance with security standards and regulatory requirements. Revenue Model SaaS Subscription Maintenance License Services 40
Appendix A - Non-IFRS Financial Measures This presentation makes reference to certain non-ifrs financial measures. These non-ifrs financial measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement IFRS measures by providing further understanding of operations from management s perspective. Accordingly, non-ifrs measures should never be considered in isolation nor as a substitute to using net income as a measure of profitability or as an alternative to the IFRS consolidated statements of income or other IFRS statements. Management presents non-ifrs measures, specifically Adjusted revenues, EBITDA, EBITDA margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, and Adjusted net income per share, Debt to EBITDA, and interest coverage ratio as it believes these supplementary disclosures provide useful additional information related to the operating results of D+H and uses these measures of financial performance as a supplement to the consolidated statements of income of D+H. The definitions of the non-ifrs measures contained in this presentation are as follows: (i) Adjusted revenues, which is calculated as revenue after removing the effect of purchase accounting on the fair value of acquired deferred revenue; (ii) EBITDA is calculated as income from continuing operations excluding interest, taxes, depreciation and amortization, other non-cash finance charges and fair value adjustments of interest-rate swaps which are directly related to interest expense, income from investment in an associate and gain on re-measurement of the previously-held equity interest in the Compushare Inc. ( Compushare ) investment. (iii) EBITDA margin calculated as EBITDA divided by revenue; (iv) Adjusted EBITDA excludes: (a) acquisition-related expenses such as transaction costs, business integration costs and certain retention and incentive costs incurred in connection with acquisitions; (b) other charges such as corporate development costs related to strategic acquisition initiatives; and (c) costs incurred in connection with cost-realignment initiatives, all of which are not considered to be part of the normal course of operations. Beginning in the third quarter of 2013, the Company s calculation of Adjusted EBITDA also excluded effects of acquisition accounting on the fair value of deferred revenues and deferred costs acquired from the acquisition of HFS; (v) Adjusted EBITDA margin calculated as Adjusted EBITDA divided by Adjusted revenues; (vi) Adjusted net income which is calculated as net income after removing the impacts of acquisition accounting on fair value of deferred revenues and deferred costs acquired from the HFS acquisition; acquisition-related and other charges; gains and losses on sales resulting from sale of non-strategic assets; expenses associated with cost-realignment initiatives; discontinued operations; all of which are not considered to be part of the normal course of operations; and, certain non-cash items such as amortization of intangible assets from acquisitions, gain on re-measurement of the previously-held equity interest in Compushare, non-cash finance charges such as deferred financing fees associated with D+H s previous credit facility written off upon the refinancing in connection with the acquisition of HFS, amortization of other deferred financing charges, accretion of the convertible debentures, fair value adjustments of interest-rate swaps, tax effects of these items and tax effects of acquisitions; and (vii) Adjusted net income per share which is calculated as Adjusted net income divided by the weighted average number of issued and outstanding common shares during the relevant financial period. For further details on these measures and for a reconciliation to the closest IFRS measure, see D+H s most recent Management Discussion and Analysis ( MD&A ), copy of which is available on SEDAR at www.sedar.com. 41
Disclaimer This documentation is a presentation of general background information about D+H s activities and is current as of the date of the presentation. It is information in a summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is appropriate. The information contained in this presentation is derived solely from otherwise publicly available information concerning D+H and does not purport to be allinclusive or to contain all the information that an investor may desire to have in evaluating whether or not to make an investment in D+H. The information has not been independently verified and is subject to material updating, revision and further amendment, and is qualified entirely by reference to the D+H s publicly disclosed information. Without limiting the generality of the foregoing, the selected financial information included in this presentation is qualified in its entirety by, and should be read together with D+H s Consolidated Audited Financial Statements for the year ended December 31, 2014 and Unaudited Condensed Interim Consolidated Financial Statements for the three months ended March 31, 2015 on SEDAR at www.sedar.com. No representation or warranty, express or implied, is made or given by or on behalf of D+H or any of its affiliates or subsidiary undertakings or any of the directors, officers or employees of any such entities as to the accuracy, completeness or fairness of the information or opinions contained in this presentation and no responsibility or liability is accepted by any person for such information or opinions. In furnishing this presentation, D+H does not undertake or agree to any obligation to provide the attendees with access to any additional information or to update this presentation or to correct any inaccuracies in, or omissions from, this presentation that may become apparent. No person has been authorised to give any information or make any representations other than those contained in this presentation and, if given and/or made, such information or representations must not be relied upon as having been so authorised. The information and opinions contained in this presentation are provided as at the date of this presentation. The contents of this presentation are not to be construed as legal, financial or tax advice. Each prospective investor should contact his, her or its own legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice. The securities of D+H have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws. This presentation does not constitute or form part of any offer or invitation for the sale or purchase of securities or any of the assets, business or undertaking described herein nor shall it or any part of it form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever. Recipients of this presentation who are considering acquiring securities of D+H are reminded that any such purchase or subscription must not be made on the basis of the information contained in this presentation but are referred to the entire body of publicly disclosed information regarding D+H. This Presentation is being supplied to you solely for your information and may not be reproduced, further distributed or published in whole or in part by any other person. Distribution of this presentation may be restricted or prohibited by law. Recipients are required to inform themselves of, and comply with, all such restrictions or prohibitions and D+H does not accept liability to any person in relation thereto. 42
Investor Relations Contacts: investorrelations@dh.com 416 696 7700 www.dh.com Karen H. Weaver Executive Vice President and Chief Financial Officer Richard Colgan Senior Investor Relations Manager 43