Q1 Investor Presentation

SOLUTIONS
THAT FIT
Investor Presentation
May 6, 2016
1
Forward-Looking Statements
This presentation contains certain statements that constitute forward-looking information within the meaning of applicable securities laws ("forwardlooking 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.
Risks related to forward-looking statements include, among other things, those outlined in section 13 – Business Risks of the Company's MD&A for
the three months and year ended December 31, 2015.
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.
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 available at that time, 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.
All of the forward-looking statements made in this press release 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
Gerrard Schmid
Chief Executive Officer and Director
CEO of D+H since 2009, and previously served at CIBC as Chief Operating Officer of their retail
bank, led transaction banking at Lloyds TSB Bank, and at McKinsey focusing on financial
services and e-commerce.
Karen
Weaver
William W.
Neville
Duncan
Hannay
Edward
Ho
Kellie
Bickenbach
Young
Park
David
Caldwell
Yves
Denommé
Chief
Financial
Officer.
Previously
CFO at
Brookfield
Properties
Canada and
First Capital
Realty.
President,
Lending and
Integrated
Core.
Former D+H
Board
Member.
Previously
Head of Citi
North Am
Hedge Fund
Services.
President,
Canada.
Previously
held senior
executive
positions at
Scotiabank
and ETrade.
President,
Global
Transaction
Banking.
Former
President of
Fundtech and
EVP Misys
Capital
Markets
Division.
Chief Risk
Officer.
Previously
Chief Risk
Officer,
Technology, at
Bancorp and
senior
leadership
positions at
Bank of
America.
Chief
Information
Officer.
Previously
Senior VP at
CGI Group
and held
senior
positions in
other
technology
companies.
Head of
Talent &
Corporate
Strategy.
Previously
Managing
Director of
Corporate
Development
at CIBC
World
Markets.
EVP, Shared
Services &
Global
Delivery.
Previously
held key
management
positions at
Kraft and
P&G prior to
joining D+H
on 2000.
3
Board of Directors: Experienced, Independent, Dedicated
Paul Damp
Board Chair
Managing Partner,
Kestrel Capital Partners,
Director since 2001
Gerrard
Schmid
CEO of D+H
since 2009,
Previously
served at CIBC
(COO of retail
bank) and at
Lloyds TSB
Bank
Ellen
Costello
Michael
Foulkes
Cara
Heiden
Deborah
Kerr
Ron
Lalonde
Retired CEO of
BMO Financial
Group, Director
of Citigroup Inc.,
D+H Director
since 2014
Retired
President &
CEO of TD
Waterhouse UK,
D+H Director
since 2007
Retired CoPresident of
Wells Fargo
Home Mortgage,
D+H Director
since 2014
Chief Product
and Technology
Officer of Sabre,
Past Senior
Executive at
FICO, D+H
Director since
2013
Retired Chief
Administrative
Officer of CIBC,
D+H Director
since 2016
Bradley
Nullmeyer
President,
Element
Financial
Corporation,
D+H Director
since 2001
4
Serving the Banking World
Our Vision: To be the leading FinTech provider to the financial services industry
1
Enjoy privileged client access
1)
2)
Based on D+H management determination.
Relbanks – Top Banks in the World, 2015 ranked by asset size.
55
D+H Products and Solutions – What We Do….
Global Transaction
Banking
Lending
Solutions
Integrated
Core
Canadian
Payments
Payment
technologies that
modernize a bank’s
payment processing
systems
Software and
technology solutions
that streamline loan
origination,
management and
compliance for
financial institutions
Core banking and
channel technologies
that allow banks to
process and manage
data and serve their
customers needs
Cheque production
and subscriptionbased consumer
financial products
Providing financial institutions with software and solutions to serve their customers,
compete, optimize and grow their business
Solid track record of long-term performance and growth
Executing on a global growth strategy
5,500 team members globally
6
Solid and Established Business Model
Positioned In
Key Growth Markets1
Recurring
Contracts
Geographically
Diversified1
Global
Payments
18%
Integrated
Core
59%
U.S. and RoW
23%
≈8,000
clients
19%
Canadian
Payments
Solutions
40%
Lending
Solutions
Solid Free
Cash Flow
41%
Canada
21%
Q1 2016 Adjusted revenues1
1) Adjusted revenues for the quarter ended March 31, 2016. Non-IFRS measure, see Appendix A for details.
7
Drivers of Bank Investment In Technology
Large And Expanding Market
$90B
External
Software/Service
Growing at
8%
per annum1
$200B
IT Spending
1. Celent
Key Drivers
Globalization of commerce
Consumerization
Regulatory and compliance
Evolution of real time payments
Disruptive attackers
SaaS delivery models
8
Well Positioned to Take Advantage Of Trends
Based on differentiated lending and payment products
Global
Payments
U.S.
Commercial Lending
U.S.
Lending Compliance
Canada
Lending, Enhancement
Services & Cheques
U.S.
Mortgage Lending
U.S.
Core Banking
Approximately 70% of Adjusted revenues from products where we hold market leading positions1
1) Adjusted revenues for the quarter ended March 31, 2016. Non-IFRS measure, see Appendix A for details.
99
Relative Weighting of Business Segments
Q1 2016 Adjusted revenues1
%
100%
Global Payments
23%
Canadian Payment
Solutions
19%
Integrated Core
18%
Canadian Lending
22%
U.S. Lending
Lending
Solutions
18%
~8%
LaserPro
~6%
~4%
POS/LOS Other U.S.
Lending
1) For the quarter ended Mar. 31, 2016. Non-IFRS measure. See Appendix A for details.
10
Solid Financial Performance
Adjusted revenues1,2
Adjusted EBITDA1,2
Adjusted Net Income per Share1
(All figures in C$ millions)
(All figures in C$ millions)
(All figures in C$)
Adj. EBITDA Margin
1,528
28%
27%
29%
30%
31%
25%
249
475
1,159
69
352
595
866
508
$2.56
$2.34
218
656
29
695
212
247
$1.80
179
414
627
$2.02
181
57
639
655
651
684
14
197
82
29
95
150
$1.82
103
168
166
165
171
189
22
$0.43
41
169
2011
2012
GTBS
2013
L&IC
2014
2015
Q1
2016
40
2011
Canada
1) Non-IFRS measure. See Appendix A for details.
2) Totals may not add due to rounding.
2012
GTBS
2013
L&IC
2014
Canada
2015
Q1
2016
2011
2012
2013
2014
2015
Q1
2016
11
Solid Organic Revenue Growth - 2015
Global Transaction
Banking Solutions
Lending &
Integrated Core
Canadian
Segment
8.1%
1.2%
5.0%
Constant Currency Organic Growth1,2,3,4
$1.5B
D+H Total 2015 Adjusted revenues4
1) GTBS segment Adjusted revenues include the period of April 30, 2015 - December 31, 2015
2) GTBS segment organic growth is proforma, constant currency and includes the period prior to the acquisition on April 30, 2015
3) L&IC segment organic growth is in US dollars
4) Non-IFRS measure – See Appendix A
12
Strategic Uses of Cash
Adjusted Net Cash From Operating Activities1
C$ millions
282
247
214
50
204
188
27
181
Decision Drivers
Effect on cost of capital
51
103
58
Growth velocity
Risk
40
Current opportunities/costs
103
90
94
2015
2014
2013
Shareholder returns
Adjusted Net Cash
From Operating Activities1
Capital Expenditures
Net Debt Repayment
Cash Dividends
1. Non-IFRS measure. See Appendix A for details.
13
Long Term D+H Financial Objectives
Long Term Growth Objectives
Adjusted revenue and Adjusted EBITDA growth of 5% to 7%
Mid to high single-digit growth in Adjusted net income per share
Consolidated Adjusted EBITDA margins of 30%
Balanced reinvestment of cash in future business growth, debt repayments and risk
management
Achieving an optimal capital allocation
14
Strategic Objectives
Focused on growing and sustainable earnings
• Build on market-leading position in global payment technologies
• Build on capabilities in lending and integrated core solutions
• Defend market positions in Canada while expanding into
additional customer segments and value propositions
• Invest in our business to promote long-term revenue growth and
increase operating efficiency
• Continue to align the Company around a common brand
• Effective use of capital resources
15
Investment Thesis - DH Corporation (TSX:DH)
• Banks investing in FinTech for competitive advantage
Solid Demand for
Our Products
• “Consumerization” of banking technology
• Increasing regulatory complexity
• Legacy IT updating and replacement
• Payment technology is a top priority IT spend for banks
Well-positioned
for FinTech
Market
Opportunities
• Addressable market of over 12,000 U.S. banks and credit unions
and the world’s largest global banks
• Market-leading in-demand products in payments and lending
• Cross-selling opportunities with nearly 8,000 clients
• Deep technical capability
• Long-term contracts
Proven
Business Model
and Strategies
• Highly recurring revenues with attractive margins
• Strong cash flows to support growth, deleveraging, and dividend
• Expecting medium term synergies and accretion from Fundtech
acquisition
16
D+H Financial
17
D+H FinTech Journey and Transformation
2004
2006
2008
2009
2011
1.26X
1.38X
2012
2013
2014
2015
2.03X
3.05X
2.11X2
3.19X2
Q1 2016
AVS
Debt/EBITDA1
1.58X
2.08X
3.02X2
Equity Market Capitalization
$4.1B3
$3.4B
$3.2B
Adjusted revenues1
$2.4B
(C$ millions, unaudited)
$679M
$923M
$738M
$901M
$318
$370
$367
$445
2006
2007
2008
2009
$1.1B
$1.0B
$1.3B
$1,528
$584
$656
$695
2010
2011
2012
$866
$1,159
$414
2013
2014
2015
Q1 2016
90%
19%
Payments solutions % of
Adj. revenues 1
Payments solutions
% of Adj. revenues 1
Revenue Growth and Diversification
1) Non-IFRS measure. See Appendix A for details.
2) Debt to EBITDA ratio, net of up to cash in bank of C$40M in 2014 and Q1 2015, C$50M thereafter.
3) As of market close March 31, 2016.
18
Business Structure Overview
$1.5B ANNUAL ADJ. REVENUES1
$475M ADJUSTED EBITDA1
31% ADJUSTED EBITDA MARGIN1
3%+ DIVIDEND YIELD
D+H Global Scope
8,000 customers
70 countries
29 of the top 50 global banks
8 of top 10 U.S. banks
C$ Mil.
Lending &
Integrated Core
Global Transaction Banking Solutions
Adj. Rev.1
2015
% of
Total
2015
YoY
Growth
$249
16%
8%
Service Area
Adj. Rev. 1
2015
% of
Total
2015
YoY
Growth
$326
21%
17%
Service Area
Lending
GTBS Segment
Canadian Segment
LaserPro
- Compliant Loan Documentation Solution
Payments
- Global PAYplus
- U.S. Payments
CreditQuest/CreditPath
- Commercial Lending Software
Financial Messaging
- Global Messaging Plus
- All financial messaging types including “SWIFT”
Integrated Core
$269
18%
$249
16%
8%
Total Adj. EBITDA1
$69
14%
na
Total Adj. EBITDA1
1)
2)
28%
Non-IFRS measure. See Appendix A for details.
As at May 4, 2016.
Adj. EBITDA Margin1
Lending
$367
24%
5%
Student Lending
- Canada Student Loans Program Administration
17.0%
Total Adj. revenues1
Adj. EBITDA Margin1
% of
Total
Canadian Mortgage Technology
- Broker Mortgage Origination Platform
PhoenixEFE & UltraData
- Core Banking Technology Solutions
Channel Products
- Online, Mobile, Branch, Client Solutions
Total Adj. revenues1
$596
39%
Merchant Services
- eBilling and Remote Deposit Capture
2015
2015
YoY
Growth
Service Area
Collateral Management Solutions
- Lien Registry & Collateral Recovery
Mortgagebot POS / LOS
- Loan Application and Origination Software
Cash Management
- Global CASHplus
- CashPLUS
Adj. Rev. 1
$218
46%
37%
Payments
$317
21%
4.6%
Cheque supplier to Canada’s banks
Enhancement Services
17%
Total Adj. revenues1
$684
45%
5%
20%
Total Adj. EBITDA1
$189
40%
10%
Adj. EBITDA Margin1
28%
19
Strong and Flexible Capital Structure – Q1 2016
(All figures in C$ unless otherwise indicated, unaudited)
Secured Credit Facilities
Enterprise Value = $6.1B 1
•
•
•
Non-Revolver: C$666M (US$ Denominated debt)
Revolver: C$251M
Revolver-Undrawn: C$299M
$619 M
Secured Bonds
$917 M
•
$459 M
Convertible Debentures
•
•
•
$4,125 M
C$100M and C$519M (US$ Denominated debt)
C$459M
6% Convertible Unsecured Subordinated
Debentures maturing September 30, 2018
Conversion price of C$28.90
5% Convertible Unsecured Subordinated
Debentures maturing September 30, 2020
Conversion price of C$52.75
Equity Capitalization
•
Bonds
Credit Facility
Convertible Debentures
Common Equity
1) Share price as at March 31, 2016 of C$38.63
106.8 Million Shares Outstanding
20
Financing Strategy and Current Debt Structure - Q1 2016
Weighted Average
Debt Structure1
•
Diversified funding sources
•
Mix of fixed and floating rate debt
•
Well staggered debt maturities
•
Diversified institutional / retail investor base
•
Q1 leverage ratio positively impacted by FX
on USD denominated debt
Interest
Rate
BA/LIBOR
+ 2.50%;
Credit Facility
PRIME
+2.50%
Bond
6.68%
Bond (US$63M)
6.59%
Bond (US$32M)
4.94%
Bond
6.01%
Bond (US$225M)
5.76%
Bond (US$80M)
4.32%
Bonds
5.70%
Convertible Debentures
5.50%
Total Debt
4.76%1
Debt Balance
Term to
Maturity
(Years)
(C$M)
4.1
917
1.2
5.0
6.2
7.4
7.4
6.1
6.0
3.5
4.71
80
82
41
20
292
104
619
459
1,9951
Historical Debt Balance and Leverage Ratio 2
Debt Balance
Debt / EBITDA
(C$ Millions)
3.39x
3.44x
3.19x
1,552
1,624
1,648
1,536
Q2 2015 4
Q3 2015 4
Q4 2015 4
Q1 2016 4
3.02x
2.87x
2.34x
2.11x
1.90x
1.75x
934
352
346
2011
2012
1)
2)
2013 3
As at March 31, 2016 before deferred financing costs
Excludes convertible debentures
851
781
2014
4
Q1 2015
4
3) Debt/EBITDA ratio adjusted to remove the impacts of foreign exchange fluctuations
4) Debt to EBITDA ratio, net of up to cash in bank of C$40M in 2014 and Q1 2015, C$50M thereafter.
21
Appendices
Corporate
Product/Service Profiles
22
Product Offerings
Service Areas
Global
Transaction
Banking
Solutions
(GTBS)
Products
GTBS Segment:
• Global Payment Technology
• Cash Management
• Financial Messaging
• Merchant Services
•
•
•
•
•
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
L&IC Segment
• Mortgage Lending
• Consumer Lending
• Commercial Lending
•
•
•
•
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
Canadian Segment:
• Mortgage Technology
• Collateral Management
• Student Lending
• Expert and Express broker-originated mortgage platform
• Lien registration and collateral recovery management
• Canada Student Loans Program and provincial programs
Integrated
Core
L&IC Segment
• Core
• Channel
• Optimization
• PhoenixEFE and UltraData core banking platforms
• Bank branch and customer self-service channel products including
teller/online/mobile.
• Compushare C3 full service cloud hosting
Payments
Solutions
Canadian Segment:
• Cheque programs
• Enhancement Services
• Personal and business cheques
• Credit Monitoring, Identity Protection, and Payment Management
subscription services for bank cheque and credit card customers
Lending
Solutions
23
Product Offerings
Service Areas
Global
Transaction
Banking
Solutions
Lending
Solutions
GTBS Segment:
• Global Payment Technology
• Cash Management
• Financial Messaging
• Merchant Services
L&IC Segment:
• Mortgage Lending
• Consumer Lending
• Commercial Lending
Canadian Segment:
• Canadian Mortgage Technology
• Collateral Management Solutions
• Canadian Student Lending
Key Business Drivers
•
•
•
•
•
•
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
•
•
•
•
Regulatory changes / Bank demand for lending products
Residential mortgage activity
Economic growth, particularly in the auto sector
Post-secondary university and college enrolment levels
Integrated
Core
L&IC Segment:
• Core banking platforms
• Channel Solutions
• Optimization
• Core technology spend
• Demand for self-service (e.g. online and mobile)
• Migration to cloud hosting
Payments
Solutions
Canadian Segment:
• Cheque program
• Enhancement Services
• Cheque usage
• Large Canadian banks’ revenue strategies
• Banks embracing new consumer product offerings
24
Global Transaction Banking
Solutions Segment
25
Fundtech - 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
26
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
27
Legacy Banking Exceptionally Complex
The Current Infrastructural Landscape: A ‘Complex Problem’
CUSTOMER
GLOBAL CASH
MANAGEMENT
EDI/DIRECT
TRANSMISSION
CUSTOMER
DOMESTIC CASH
MANAGEMENT
ACCOUNT
SYSTEM
CLIENT
SERVICE
RISK/AML
INTERNATIONAL
PAYMENTS
INFORMATION
REPORTING
WIRES
CHECK
PROCESSING
DOMESTIC LOW-VALUE
PAYMENTS SYSTEM LOCAL ACH
Source: Celent
SWIFT
DOMESTIC HIGH-VALUE
PAYMENTS SYSTEM
28
Simplifying the Banking Ecosystem
Enables a single solution across a bank’s entire global organization
Online
Channels
Tablet
Bank Operations and Branches
Mobile
Suppliers
and
Customers
New York
Internet
Banking
London
Geneva
Prague
Hong Kong
Financial
Networks
Corporates
Clearing and Settlement
PAYMENTS
CASH
MANAGEMENT
Paris
Denver
MERCHANT
SERVICES
FINANCIAL
MESSAGING
CASH
MANAGEMENT
MERCHANT
SERVICES
€
$
¥
New York
SaaS
Source – D+H Management.
Origination
Execution
£
29
Historical Business Summary - Fundtech
Business Overview
Financial summary(1)
(US$ millions)
Founded in 1993 – Fundtech, now referred to as
Global Transaction Banking Solutions (“GTBS”), in
D+H reporting, 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
Adj. Revenues
$242
Diverse and growing client base of global money
center banks, mid-size banks and credit unions,
non-bank financial institutions, sovereigns and
corporates, with limited client concentration risk
Approximately 1,200 clients including:
59 of the top 100 U.S. banks
7 of the top 10 U.S. banks
29 of the top 50 global banks
Products support high margin transaction banking
revenue at a lower total cost of ownership than
disparate legacy systems
Product suite built on contemporary ServiceOriented Architecture (SOA) principles
Acquired by D+H April 30, 2015
$59
$68
2013
2014
2014 Revenue by Geography
Adj. EBITDA
$263
2014 Revenue by Type
Hardware
1%
APAC
14%
License
8%
Americas
47%
EMEA
39%
SaaS
33%
Services
35%
Maintenance
23%
~56% Recurring Revenue
1) Non-IFRS measure. See Appendix A for details.
30
Payment Technology’s Critical Role in Global Banking
Banks must capture, manage, process and clear multiple payment types
Multi-Currency
₹
Payment Technology
€
£
$
¥
Multi-Channel
BRANCHES
SWIFT
₨
₩
Banks
ATM
DIRECT
BANK OPS
MOBILE
INTERNET
BANKING
TABLET
Banks need payment technology to compete, grow and manage
31
Immediate Payments Poised To Transform Banking
Transaction
Initiated
Transaction
Completed
$
¥
5 Seconds
Time to
Settlement
Early stage of payment modernization trend expected to impact most banks
32
Payment Hub Penetration in the Banking Industry
Banks by asset size in US$1
33%
Over $100
billion
10%
$50 to $100
billion
2%
$10 to $50
billion
Significant opportunity for D+H across all asset tiers
1) Based on D+H Management estimate.
33
Growth Catalysts in Our Available Markets
Expected Spend on
Payment Hubs1
Primary Reason for Investing in Payments
Capabilities1
Percentage of Respondents
Percentage of Respondents
43%
Competitive Advantage
31%
Process Improvement
Functionality Benefits
19%
No Change
23%
Significant
Increase
32%
Decrease
13%
Moderate
Increase
32%
Estimated annual bank spend for our product types is $5-6 billion3
1)
2)
Source: CEB TowerGroup Technology Adoption and Investment Survey, 2013.
Based on D+H management estimation.
34
Recurring Revenue and High Customer Retention
Adding a payment hub customer means a multi-year revenue stream
98%
renewal rate on payment hub contracts
~ 80%
of payment hub revenue growth is from existing customers
14%
average annual revenue growth following initial deployment1
Add-on licenses, maintenance for existing clients increases revenue stream
1. Based on 2010 client cohort for period from 2010 through 2014. Source D+H Management.
35
GTBS Provides Deep Capability Set in 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 in all of GTBS markets is ~US$5-6B(1)
1. Source – Prospectus Supplement dated April 1, 2015.
36
GTBS Segment - Payments
Overview
Flagship Product: Global PAYplus
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.
PAYMENTS
Global
Payments
U.S.
Payments
Centralizes payment
systems and activity
Fedwire and
ACHplus
Within the FinTech industry, this type of solution is
commonly referred to as a payment hub.
Supports high value,
low value and realtime payments
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
Multi-currency, multilingual, mutli-entity
payments
Delivery mode: Tier 1 and 2 banks On-site. Tier 3 and 4
banks SaaS delivery.
End-to-End straight
through processing
Revenue Model
• Subscription
• Maintenance
• License
• Professional Services
37
GTBS Segment - Payments
Customer
Channels
Global
PAYplus
Corporate
Clients
Core Payment Functionality
Channel
Management
Origination
Validation
Advising & Statement
Bank
Clients
Branches
Electronic
Banking
Clearing &
Settlement
Validation
Routing
Enrichment & Mapping
Messaging &
Advising
Audit & Authorization
Workflow STP
Routing, Fees & Validation
ISO20022
Fed/NACHA
SWIFT
Validation &
Enrichment
Compliance
Account
Derivation
FX
Routing
Fees
Warehouse
Posting
Monitoring
Liquidity & Risk
Management
Transformation
Wire
Networks
Card
Networks
Interbank
Networks
Value-Added Capabilies
Dashboard
Check
Clearing
Networks
ACH
Networks
Straight Through Processing
Internet
Banking
Mobile
Order
Management
Clearing
Channels
Reporting &
Analytics
Immediate
Payment
Networks
Orchestration/Connectivity
38
GTBS Segment - Cash Management
Overview
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;
Drivers and Value Proposition
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
Integrated payables and receivables
management;
Supply chain finance;
Cash forecasting and balance reporting; and
Mobile banking.
Target clients: Tier 1 - 3 banks
• Maintenance
Delivery mode: On-Premises
• License
Target Geographies: APAC, EMEA, and
Americas
• Professional Services
Revenue Model
• Subscription
39
GTBS Segment - 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
40
GTBS Segment - Merchant Services
Overview
Drivers and Value Proposition
Flagship Product: NetDeposit
Merchant Services is a platform which primarily
provides white-label remote deposit capture, ebilling 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
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
• Professional Services
41
Lending & Integrated Core
Segment
Lending
42
L&IC Segment - 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 - the Number 1 loan documentation
compliance solution in the U.S.
•
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
43
Deep Subject Matter Expertise Across Lending Types
Serving the broader commercial, consumer and mortgage lending marketplace
Consumer
Loans
Commercial
Loans
Small
Business
Mortgages
The market’s most comprehensive lending solutions provider1
1) Based on D+H management estimation
44
44
Leader in Compliant Loan Documentation Technology
Meets federal and state regulations for all loan and collateral types
̴ 3,300 clients
Complete,
Compliant
Loan Documentation
and Origination
Solution
̴ 25% of all U.S.
1
financial institutions
50 U.S. States
LaserPro serves nearly 25% of all U.S. financial institutions
1) Based on D+H management estimation.
45
45
Lending & Integrated Core
Segment
Integrated Core
46
L&IC Segment - Integrated Core Solutions
Core banking and channel solutions - Teller, Online and Mobile Banking, Payments, and Cloud
Core Banking
Channel Solutions
•
Innovative channel solutions support selfservice, business intelligence and branch
automation
•
Online and Mobile banking provides key
capabilities for retail bank customers
•
Core processing platforms enable
Teller Platform –
Encore, EZTeller
Payments
DPXPay, EFT, EBPP
− Transaction recording / posting
Business Intelligence Touche
− Financial accounting
− Content management
Online and Mobile
Banking
Cavion, uBanking
Cloud Solutions / IaaS
- Compushare
− Payments solutions
− Business Intelligence
•
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
47
Contemporary Integrated Core Products
Customer data
Deposit/loan transactions
Interest calculations
Interface to general ledger
Comprehensive reporting tools
Detailed view of customer
Fast product integration
SaaS or license
48
Product Matrix: Integrated Core
Consolidates & records all transaction & customer information
Integrates all other applications, calculates interest, ensures transactions are
processed to the right customer accounts.
Value
Proposition
Customer oriented (vs. transaction oriented)
360 degree view of bank’s customer at the click of button
Enables easier launch &integration of new products & applications
Pricing Model
Subscription, license and services
Competitive
Advantage
Modern architecture; integrated applications
Description
49
Product Matrix: Channel Solutions
Branch
Description
Software for teller line, account servicing and call center
Value
Proposition
Enhanced customer experience, reduced costs and increased
efficiencies for the bank
Pricing Model Subscription based; per user/seat; transaction based
Competitive
Advantage
Best of breed; easily integrated into core
Description
Software for mobile and online banking
Value
Proposition
Enhanced customer experience, reduced costs and increased
efficiencies for the bank
Self-Service
Pricing Model Subscription based; per user/seat; transaction based
Competitive
Advantage
Best of breed; easily integrated into core
50
Integrated Core - Cross-Sell Opportunity
Channels
Online Banking
Mobile Banking
Teller Applications
Client Management
Core
Cloud
Deposit
Transactions
Customer
information
Payments
Financial
accounting
Top Four U.S. Provider of Core Banking Technology
51
Canadian Segment
52
Canada’s FinTech Leader
̴ Serving 1,000 clients
Regional
Credit Union
Automotive
Finance
Mono-line
Lenders
D+H
Meeting future needs of Big Five drives growth
53
53
Lending Solutions Leadership
D+H serves Canada’s lending ecosystem from front to back
17,000 mortgage broker
desktops connect to over 70
lenders
00
4.3M lien registrations and
560,000 recovery
assignments annually
$22B of student loans
administered for 1.7 million
students
Market-leading positions in Canadian lending
54
54
Payments Solutions Leadership
Canada’s Go-to Provider
Banks
Credit Unions
Provide direct services to clients’
customers
20M personal accountholders
2M business accountholders
Personal
Cheques
Enhancement
Services
Business
Cheques
Payment
Manager
Strong cash flow business
Recurring revenue model
Deep client engagement creates new growth opportunities
55
55
Canadian Segment - Canadian Mortgage Technology
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
•
start
‒
D+H Express automates the mortgage underwriting
process
•
Bank sales
specialists
Expert
Mortgage
brokers
Banks/Lenders
Insurance
companies
‒
Provides clients with credit risk, cross-portfolio
exposure, and portfolio trends
•
D+H Exchange provides flexible and secure document
management
•
Brokers originate 25-30% of all residential mortgages
(40% of first-time home buyers)1
Recurring Revenue Model
Express
Credit
bureaus
Application creation and submission, compliance,
marketing and reporting
Mortgage
Insurers
•
Blend of value and number of mortgages funded on our
platform
•
D+H paid by banks/lenders on basis of mortgages funded
1. Canadian Association of Accredited Mortgage Professionals (CAAMP), Mortgage Insight Report, December 2013.
56
Canadian Segment - Collateral Management Solutions
D+H is Canada’s leader in Lien Registration Management and Asset Recovery Technology
Public Registries
Recovery Suppliers
Banks/Lenders
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
–
Recovery Services
•
•
Provides a managed service for the registration of Mortgage
Discharges
Revenue Model
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
•
Flat fee per transaction type (search, registration, amendment)
•
•
Typically paid by bank customer at time of sale (e.g., contract
for auto purchase)
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
•
Recurring revenue based on term contracts and continuing
volumes year-over-year
57
Canadian Segment - Student Lending
Exclusive program administrator for the Canada Students Loans Program1
Origination
• Document gathering and
validation
• Adjudication
• Funds disbursement
• Customer service
Maintenance
• Product accounting
• Payment processing
• Statement issuance
• Borrower communications
• Customer service
Repayment
Discharge
• Repayment counseling
• Campaign strategy and
management
• Portfolio management
• Loan restructuring
• Discharge of fullyamortized loans
Recurring Revenue Model
Contract Renewal
• A monthly servicing fee per student
based on status
• D+H has been awarded the new
Canada Student Loans Program
contract.
• Servicing incentives
• Professional services
Federal
Govt
Provincial
Govts
Banks
• 1.7M post-secondary students
serviced
• Customer loan portfolio of $22B
1) Includes Federal Government and certain Provincial governments.
• D+H expects to continue under the
current terms, which were recently
extended, until the new system
becomes operational which is
expected to be in by April 2018
• Eight year initial term with a further
seven years at the Government’s
option
58
Canadian Segment - Payments Solutions
Leading supplier of cheques to Canada’s Financial Institutions
Banks
Cheques
Credit Unions
•
Market leader in Canadian cheques supply
− 20 Million personal accounts
− 2 Million small business accounts
Credit Rating
Agencies
Cheques
Payment
Manager
•
Supplier to all major Canadian banks
•
Reliable source of revenue and cash flow
Enhancement
Services
Bank and Credit Union Customers
Enhancement Services
− Subscription-based value-added solutions that
banks use to drive loyalty, increase acquisitions and
enhance revenue from their banking customers
− Enables new bank customers to easily transfer their
existing pre-authorized payments to their new
account or credit card
Recurring Revenue Model
•
Subscription revenue is monthly from banks’ customers
•
Additional revenue opportunity through increased
deposit account customers, lending and insurance
customers
59
Appendix A - Non-IFRS Financial Measures
This presentation is prepared in accordance with International Financial Reporting Standards ("IFRS"). D+H reports several non-IFRS financial
measures, including "Adjusted revenues", "Constant Currency", “Proforma Adjusted revenues”, "EBITDA", "EBITDA margin" (EBITDA divided by
revenues), "Adjusted EBITDA", "Adjusted EBITDA margin" (Adjusted EBITDA divided by Adjusted revenues), "Adjusted net income", "Adjusted net
income per share" and "Adjusted net cash from operating activities". D+H also reports "Debt to EBITDA ratio", which is also not a defined term
under IFRS. See "Non-IFRS financial measures and key performance indicators" in D+H's MD&A for the year ended December 31, 2015 for a
more complete description of these terms and for reconciliations to their most directly comparable IFRS measure, where applicable. Any non-IFRS
financial measures should be considered in context with the IFRS financial statement presentation and should not be considered in isolation or as a
substitute for IFRS revenues, net income or cash flows. Furthermore, D+H's financial measures may be calculated differently from similarly titled
financial measures of other companies.
60
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 from otherwise publicly available information concerning D+H and does not purport to be all-inclusive 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 Financial Statements for the year ended December 31, 2015 as well as all accompanying Management’s Discussion
and Analysis, all of which are available 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.
61
Investor Relations Contacts:
[email protected]
416 696 7700
www.dh.com
Karen H. Weaver
Executive Vice President and Chief Financial Officer
Richard Colgan
Senior Investor Relations Manager
62