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D+H Reports First Quarter 2012 Results

Stock Exchange Symbol: DH

TORONTO, May 8, 2012 /CNW/ - Davis + Henderson Corporation ("D+H") today reported its financial results for the three months ended March 31, 2012 that were consistent with expectations in the context of our strategic agenda and reflected year-over-year growth in revenues and EBITDA¹ primarily due to the inclusion of Mortgagebot LLC ("Mortgagebot"), acquired on April 12, 2011, partially offset by higher spending to benefit future periods.

First Quarter Highlights

Revenue was $181.6 million compared to $169.5 million for the same quarter in 2011.
EBITDA was $40.8 million compared to $37.5 million for the same quarter in 2011. EBITDA for the first quarter of 2012 was impacted by acquisition-related costs of $0.7 million compared to acquisition-related costs of $1.8 million for the same period in 2011.
Adjusted net income¹ was $22.0 million ($0.3709 per share) for the first quarter of 2012 compared to $22.8 million ($0.4275 per share) for the same quarter in 2011. Adjusted net income per share for the first quarter of 2012 was impacted by the issuance of 6 million shares in April 2011 to partially fund the Mortgagebot acquisition.
Net income was $14.9 million ($0.2521 per share) compared to $36.0 million ($0.6769 per unit) for the same quarter in 2011. Net income for the first quarter of 2011 benefited from tax recoveries of $14.3 million compared to a tax expense of $4.9 million in the first quarter of 2012. Net income per share for the first quarter of 2012 was additionally impacted by the issuance of 6 million shares in April 2011.
On March 30, 2012, D+H paid a dividend of $0.31 per share to its shareholders of record on March 16, 2012. For the same period in 2011, D+H paid $0.3033 per share which comprised of a $0.1533 per unit distribution that was paid on January 31, 2011 (declared on December 31, 2010 when D+H was an income trust) and a $0.15 per share special dividend paid on March 31, 2011.

____________________________
¹ _{D+H financial results are prepared in accordance with IFRS. D+H reports
several non-IFRS financial measures, including EBITDA and Adjusted net
income used above. Adjusted net income is calculated as net income,
adjusted to remove certain non-cash items and certain items of note
such as acquisition-related expenses and discontinued operations and
the related tax effects of these adjustments including tax effects of
corporate conversions. These items are excluded in calculating Adjusted
net income as they are not considered indicative of the financial
performance of D+H for the period being reviewed. 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 net income or cash flows.
Further, D+H's measures may be calculated differently from similarly
titled measures of other companies. See Non-IFRS Financial Measures for
a more complete description of these terms.}

D+H's unaudited consolidated financial statements for the first quarter of 2012, accompanying notes to the financial statements and management's discussion & analysis (MD&A) along with the supplementary financial information will be available tomorrow on www.sedar.com and at www.dhltd.com.

For a more detailed discussion of the results and management's outlook, please see Management's Discussion and Analysis below.

Caution Concerning Forward-Looking Statements

This press release 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, 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" 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. These forward-looking statements are subject to important assumptions, including the following specific assumptions: the ability of D+H to meet its revenue, EBITDA and Adjusted net income targets; general industry and economic conditions; changes in D+H's relationship with its customers and suppliers; pricing pressures and other competitive factors; the anticipated effect of acquisitions on the financial performance of D+H; and the expected benefits arising as a result of acquisitions. 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 the actual results, performance or achievements of D+H, or developments in D+H's 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, challenges presented by declines in the use of personal and business cheques; D+H's dependence on a limited number of large financial institution customers and dependence on their acceptance of new programs; strategic initiatives being undertaken to meet D+H's financial objective; stability and growth in the real estate, mortgage and lending markets; as well as general market conditions, including economic and interest rate dynamics. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The documents incorporated by reference herein also identify additional factors that could affect the operating results and performance of D+H. 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 forward-looking 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 press release and the documents incorporated by reference herein 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, D+H.

Conference Call

D+H will discuss its financial results for the three months ended March 31, 2012 via conference call at 10:00 a.m. EST (Toronto time) on Wednesday, May 9, 2012. The number to use for this call is 647-427-7450 for Local / International callers or 1-888-231-8191 for US / Canada callers. The conference call will be hosted by Gerrard Schmid, Chief Executive Officer and by Brian Kyle, Chief Financial Officer. The conference call will also be available on the web by accessing CNW Group's website www.newswire.ca/en/event. For anyone unable to listen to the scheduled call, the rebroadcast number will be: 416-849-0833 for Toronto area callers, or 1-855-859-2056 for all other callers, with Encore Password 75732471. The rebroadcast will be available until Wednesday, May 23, 2012. An archive recording of the conference call will also be available at the above noted web address for one month following the call and a text version of the call will be available at www.dhltd.com.

ADDITIONAL INFORMATION

Additional information relating to D+H, including D+H's most recently filed Annual Information Form, is available on SEDAR at www.sedar.com.

MANAGEMENT'S DISCUSSION AND ANALYSIS

Management's Discussion and Analysis ("MD&A") for the first quarter of 2012 for Davis + Henderson Corporation (the "Company" or the "Corporation" or the "Business" or "Davis + Henderson" or "D+H" or "we" or "our"), which was formerly known as Davis + Henderson Income Fund (the "Fund"), has been prepared with an effective date of May 8, 2012 and should be read in conjunction with the MD&A in the Annual Report for the year ended December 31, 2011, dated March 6, 2012, and the unaudited condensed interim consolidated financial statements for the three months ended March 31, 2012. External economic and industry factors remain substantially unchanged from those described in the annual MD&A and the Corporation's most recently filed Annual Information Form, except as described herein.

NON-IFRS FINANCIAL MEASURES

The information presented within the tables in this MD&A include certain adjusted financial measures such as "EBITDA" (Earnings before interest, taxes, depreciation and amortization; EBITDA also excludes fair value adjustments of interest-rate swaps which are directly related to interest expense), "Adjusted net income" (net income before certain non-cash charges such as amortization of intangibles from acquisitions and fair value adjustments of interest-rate swaps and certain items of note such as acquisition-related expenses and discontinued operations), and "Adjusted net income per share", all of which are not defined terms under IFRS. These non-IFRS financial measures should be read in conjunction with the Consolidated Statements of Income. See the reconciliation of EBITDA and Adjusted net income to the most directly comparable IFRS measure, "Net income", in the "Operating Results" section of this MD&A.

Management believes these supplementary measures provide useful additional information related to the operating results of the Corporation. Management uses these subtotals as measures of financial performance and as a supplement to the Consolidated Statements of Income. Investors are cautioned that these measures should not be construed as an alternative to using net income as a measure of profitability or as an alternative to the IFRS Consolidated Statements of Income or other IFRS statements. Further, these measures do not have any standardized meaning and D+H's method of calculating each balance may not be comparable to calculations used by other companies bearing the same description.

EBITDA

In addition to its use by management as an internal measure of financial performance, EBITDA is used to measure (with adjustments) compliance with certain financial covenants under the Company's credit facility and bonds. EBITDA is also widely used by D+H in assessing performance and value of a business. EBITDA has limitations as an analytical tool, and the reader should not consider it in isolation or as a substitute for analysis of results as reported under IFRS.

Adjusted Net Income and Adjusted Net Income per Share

Effective January 1, 2011, as a result of the conversion from an income trust structure to a corporate structure, the Business commenced using Adjusted net income and Adjusted net income per share as a measure for evaluating its results. Periods prior to January 1, 2011, do not have a comparable measure.

Adjusted net income is used as a measure of internal performance similar to net income, but is calculated after removing the impacts of certain items such as acquisition-related expenses, discontinued operations and certain non-cash items such as amortization of intangibles from acquisitions and fair value adjustments of interest-rate swaps. Also excluded from Adjusted net income are the tax effects of corporate conversion and acquisitions. These items are excluded in calculating Adjusted net income as they are not considered indicative of the financial performance of the Business for the period being reviewed.

STRATEGY

D+H is a leading solutions provider to the financial services marketplace. We have several market-leading service offerings within Canada, including: payment solutions (reported as programs to chequing accounts in prior periods); the provision of registration, recovery and related services for secured loan products; the servicing of student loans; and the delivery of lending technology solutions. Additionally, through Mortgagebot LLC ("Mortgagebot"), D+H is a market-leading provider of Software-as-a-Solution ("SaaS"), point-of-sale mortgage and consumer loan solutions in the United States for over 1,070 banks and credit unions. In Canada, we also offer leading technology solutions in the commercial lending, small business lending and leasing area, as well as servicing solutions within the credit card market and in a number of other specialty areas.

D+H's strategy is to establish market-leading positions within well defined and growing service areas in the financial services marketplace and to further expand our service offerings by enhancing the activities that we perform on behalf of our customers. We expect to advance this strategy through organic initiatives, as well as by partnering with third parties and by way of selective acquisitions. D+H's long-term financial objective is to deliver sustainable and growing earnings through continued organic revenue growth and by way of strategic acquisitions.

Over the past several years, D+H has executed this strategy by evolving payment solutions, completing several acquisitions, including Resolve Business Outsourcing Income Fund ("Resolve") in 2009, ASSET Inc. ("ASSET") in January 2011, and Mortgagebot in April 2011, and by further enhancing our services and capabilities. As a result, we offer a diverse range of market-leading services.

Consistent with its strategy, on a go-forward basis, management is working to: (i) evolve and enhance the value of payment solutions (specifically chequing and credit card programs); (ii) extend our technology supported services related to personal, student and commercial lending and leasing markets; and (iii) grow in other areas within the financial services marketplace.

As well, on May 3, 2012, D+H announced the acquisition of 100% equity interest in Avista Solutions, Inc. ("Avista") of Charleston, South Carolina, for a purchase price of approximately US$ 40 million. Avista is a leading provider of SaaS mortgage loan origination software for community and regional banks, credit unions and mortgage bankers in the United States. Additionally, on April 24, 2012, we announced the completion of a strategic minority investment in Santa Ana, California-based Compushare, Inc. ("Compushare"), a technology management and cloud computing provider to financial institutions, for US$ 9.8M. Both of these transactions strengthen our capability to deliver on our goal of being a leading solutions provider to the North American financial services industry.

For a detailed discussion of the results for the first quarter 2012 and management's outlook, please see below. For a detailed discussion of risk factors, please refer to the most recent Annual Information Form and the 2011 Annual Report filed on SEDAR.

ACCOUNTING PRINCIPLES AND FINANCIAL INFORMATION PRESENTATION

The Company's consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"). Prior to January 1, 2011, the consolidated financial statements were reported in accordance with Canadian generally accepted accounting principles ("Canadian GAAP").

Results from continuing operations include the performance of acquired businesses from the respective dates of acquisition and exclude results from businesses classified as discontinued operations.

Comparative information presented for periods prior to January 1, 2011 relate to those of the Fund, and the results for the periods subsequent to January 1, 2011 are those of the Corporation. Consequently, throughout this MD&A, any references to distributions, unitholders, and per unit amounts relate to periods prior to January 1, 2011, and any references to dividends, shareholders and per share amounts relate to periods subsequent to January 1, 2011.

All amounts are in Canadian dollars, unless otherwise specified.

Segment Reporting

Commencing in the first quarter of 2012, D+H reports its results by its reportable segments based on its two strategic business units, the "Canadian Segment" and the "U.S. Segment". Comparatives have been presented to conform to the current period disclosure.

The Canadian Segment includes payment solutions, loan registration and recovery services, loan servicing, technology solutions in commercial lending, small business lending and leasing area, lending technology services to the Canadian mortgage market and other business service solutions. The U.S. Segment consists of lending technology services to the U.S. mortgage market, including Mortgagebot, a leading SaaS provider of mortgage point-of-sale offerings in the United States and provider of a range of consumer direct, loan officer, branch and call centre mortgage and consumer loan origination solutions.

The results reported under each of these segments do not include certain items such as interest expense, income taxes and fair value adjustments related to derivative instruments, as these items are considered to be of a corporate nature and as such, have been reported as part of Corporate.

CONSOLIDATED OPERATING RESULTS - FIRST QUARTER OF 2012

Consolidated Operating Results - Overview

Growth in consolidated revenues and EBITDA in the first quarter of 2012, compared to the same period in 2011, was driven primarily by the inclusion of the Mortgagebot business acquired on April 12, 2011. The Business also experienced modest increases in three of its five service areas in the Canadian Segment as more fully described in the discussion of business results. Consolidated EBITDA for both quarters were additionally impacted by acquisition-related costs incurred in connection with the acquisitions of ASSET and Mortgagebot.

The following table is derived from, and should be read in conjunction with, the Consolidated Statements of Income and includes non-IFRS financial measures. Management believes this supplementary disclosure provides useful additional information. See Non-IFRS Financial Measures section for a description of non-IFRS terms used.

The consolidated results include those of ASSET, effective January 18, 2011, and Mortgagebot effective April 12, 2011. Operating results of ASSET have been included as part of the Canadian Segment and the operating results of Mortgagebot have been included as part of the U.S. segment.

Consolidated Operating and Financial Results¹
(in thousands of Canadian dollars, except per share amounts, unaudited)

			Quarter ended March 31,
			2012	2011
Revenue			$ 181,613	$ 169,548
Expenses ²			140,780	132,045
EBITDA^{2, 3}			40,833	37,503

Depreciation of capital assets and amortization of non-acquisition intangibles			6,837	5,504
Amortization of intangibles from acquisitions			10,939	8,092
Interest expense			4,821	3,989
Amortization and fair value adjustment of derivative instruments⁴			(1,645)	(1,687)
Income tax expense (recovery)			4,947	(14,290)
Income from continuing operations			14,934	35,895
Income from discontinued operations, net of tax ⁵			-	140
Net income			14,934	36,035

Adjustments:
	Non-cash items:
		Amortization of intangibles from acquisitions	10,939	8,092
		Amortization and fair value adjustment of derivative instruments ⁴	(1,645)	(1,687)
	Other items of note:
		Acquisition-related items²	737	1,799
		Discontinued operations, net of tax ⁵	-	(140)
	Tax effect of above adjustments (excluding discontinued operations) ⁶		(2,998)	(2,133)
	Tax effect of corporate conversion ⁷		-	(19,209)
Adjusted net income³			$ 21,967	$ 22,757


Adjusted net income per share, basic and diluted ^{3, 8, 9}			$ 0.3709	$ 0.4275
Income from continuing operations per share, basic and diluted ^{8, 9}			$ 0.2521	$ 0.6743
Net income per share, basic and diluted ^{8, 9}			$ 0.2521	$ 0.6769


			Quarter ended March 31,
			2012 vs. 2011
			% change

Revenue				7.1%
EBITDA ^{2, 3}				8.9%
Adjusted net income per share ^3,^{7, 8}				(13.2%)

¹_{The consolidated results include those of ASSET and Mortgagebot,
effective from the respective dates of acquisition of January 18, 2011
and April 12, 2011.}

² _{Consolidated expenses for the first quarter of 2011 include
acquisition-related costs pertaining to certain transaction costs.
Results for the first quarter of 2012 also include certain retention
and incentive costs related to the acquisition of Mortgagebot.}

³_{EBITDA and Adjusted net income are non-IFRS terms. See Non-IFRS
Financial Measures for a more complete description of these terms.}

⁴_{Includes: (i) mark-to-market adjustments of interest-rate swaps that are
not designated as hedges for hedge accounting purposes, and for which
any change in the fair value of these contracts is recorded through the
Consolidated Statement of Income; and (ii) amortization of the
mark-to-market adjustment of interest-rate swaps relating to cumulative
net gains and losses that were deferred prior to January 1, 2007 when
hedge accounting was discontinued for these swaps.}

⁵_{The Business sold a non-strategic component of its contact centre
business in October 2010 and entered into a transition agreement with
the buyer which ended on April 1, 2011. The results of these
operations are presented as discontinued operations in the comparative
periods presented.}

⁶_{The following adjustments to net income are tax effected at their
respective tax rates: (i) amortization of acquisition intangibles; (ii)
amortization and fair value adjustment of derivative instruments; and,
(iii) acquisition-related items.}

⁷_{Adjustments for first quarter of 2011 related to non-cash income tax
recoveries recorded in connection with the conversion from an income
trust structure to a corporation in January 2011. Compared to an
adjustment of $13.5 million related to tax recoveries reported in the
first quarter of 2011, Adjusted net income for the first quarter of
2011 has been amended to reflect the identification of a further
one-time non-cash tax recovery of $5.7 million related to tax changes
in connection with the corporate conversion in January 2011.}

⁸_{Diluted net income per share and Diluted Adjusted net income per share
(non-IFRS term) reflect impacts of outstanding options. If the average
market price during the period is below the option price plus the fair
market value of the option, then the options are not included in the
dilution calculation. The options outstanding were not dilutive for the
periods presented.}

⁹_{Weighted average number of shares outstanding during the first quarter
of 2012 was 59,233,373 shares (Q1 2011 - 53,233,373 shares).}

Consolidated Revenue

Consolidated revenue for the first quarter of 2012 was $181.6 million, an increase of $12.1 million, or 7.1%, compared to the same period in 2011. This increase was primarily due to the inclusion of Mortgagebot, acquired on April 12, 2011, and to a lesser extent, organic growth in certain other service areas. Services delivered by the Business are subject to seasonality, including fees earned in connection with mortgage origination services and automobile loan registration services, which are typically stronger in the second and third quarters than in the first and fourth quarters. See Operating Results by Segment section for a more detailed discussion of revenue by service area.

The following table reflects the relative size of each of the major service areas as a percentage of consolidated revenue based on a rolling twelve-month period:

		Rolling twelve-months ended March 31,
		2012	2011
Revenue - Consolidated
	Payment solutions ³	40%	44%
	Loan registration and recovery services	22%	21%
	Loan servicing	18%	20%
	Lending technology services ¹	15%	9%
	Business service solutions ²	5%	6%

		100%	100%

¹_{Includes revenue reported as part of the U.S. segment.}

²_{Previously reported as Other.}

³_{Previously reported as Programs to the chequing account.}

Payment solutions include: (i) the cheque supply program which serves the personal and small business account holders of our financial services customers; and (ii) various other subscription fee based enhancement services and other service offerings directed towards account opening activities. These service offerings (excluding the component of enhancement and identity protection services that are integrated in the cheque order) currently represent a small component of revenues within this revenue category. In general, cheque order volumes in this area have historically been declining as consumers and small businesses choose other payment methods. Revenue related to payment solutions is reported as part of the Canadian Segment for segment reporting purposes.

Loan registration and recovery services support the personal and commercial lending activities of our financial services customers. Services include the registration and management of data related to secured lending for both personal and real property loans as well as recovery services related to both secured and unsecured lending activities. The largest service areas within this revenue category are search and registration services, which currently account for approximately 50% to 60% of revenue, and recovery services accounting for approximately 25% to 35% of revenue. In both instances, loans relating to vehicle purchases are a significant driver of activity and as such can be variable. In general, registration services are impacted by both economic cyclicality and seasonality, while recovery services are, in general, counter-cyclical. Other services within this revenue category include mortgage discharge services and various search-related services, both of which we deliver on behalf of our financial institution customers. Revenue related to the loan registration and recovery services are reported as part of the Canadian Segment for segment reporting purposes.

Loan servicing programs include student loans administration services offered to financial institutions and governments and credit card servicing offered to card issuers. The student loans administration services currently account for approximately 70% to 80% of revenues within this revenue category. In general, student loan servicing volumes have been stable and modestly growing as student loans balances have been increasing and the term of the loans extended. Recent integration of two lending portfolios into a single managed portfolio will reduce the fees we earn on a net basis. Volumes related to credit card servicing can be more variable and are primarily impacted by customer initiatives. Revenues related to the loan servicing programs are reported as part of the Canadian Segment for segment reporting purposes.

Lending technology services include services directed towards mortgage markets in both Canada and, recently with the acquisition of Mortgagebot in April 2011, the United States. As well, we offer technology products and services in both countries directed towards leasing, commercial lending and small business lending. Revenues related to the mortgage markets currently represent approximately 85% to 95% of revenues within this category, with approximately 50% to 60% attributable to transaction-based fees earned in connection with Canadian mortgage originations and 40% to 50% representing fees related to the U.S. SaaS loan origination services. Mortgage origination fees can be variable and are impacted by many factors including the economy, the housing market and interest rates, among others. For segment reporting purposes, revenues from the lending technology services to the Canadian mortgage markets and the products and technology solutions for leasing, commercial lending and small business lending offered in both Canada and U.S. are reported as part of the Canadian Segment. Revenues related to the U.S. SaaS loan origination services are reported as part of the U.S. Segment.

Business service solutions (previously reported as Other), include a number of smaller service offerings that are primarily outsourced activities we perform on behalf of a variety of customers including non-financial services customers. Revenues from these activities are reported as part of the Canadian Segment for segment reporting purposes.

Consolidated Expenses

Consolidated expenses of $140.8 million for the first quarter of 2012 increased by $8.7 million or, 6.6% compared to the same quarter in 2011. The increase primarily reflects the inclusion of Mortgagebot expenses within the U.S. Segment. The Canadian Segment also contributed to the increase in consolidated expenses as a result of costs associated with technology-related transformation and integration activities. On a consolidated basis, these increases were partially offset by lower acquisition-related expenses in the first quarter of 2012, compared to the same period in 2011. Consolidated expenses for the first quarter of 2012 included $0.7 million of acquisition-related costs ($1.8 million for the same period in 2011).

Consolidated EBITDA

Consolidated EBITDA during the first quarter of 2012 was $40.8 million, an increase of $3.3 million, or 8.9%, compared to the same quarter in 2011. The majority of the increase in the first quarter of 2012 was attributable to the acquisition of Mortgagebot as part of the U.S. Segment, partially offset by a decrease in EBITDA in the Canadian Segment. To a lesser degree, consolidated EBITDA for the first quarter of 2012 benefited from lower acquisition-related costs of $0.7 million in the current quarter, compared to $1.8 million for same period in 2011.

Consolidated Net Income

Consolidated net income of $14.9 million for the first quarter of 2012 decreased by $21.1 million, or 58.6%, compared to the same period in 2011. Net income for the first quarter of 2011 benefited from tax recoveries of $14.3 million which included tax recoveries of $19.2 million related to the changes in the tax status of the Business as a result of the conversion from an income trust to a corporation. This was compared to an income tax expense of $4.9 million for the first quarter of 2012. Net income for the first quarter of 2012 was additionally impacted by an increase in expenses related to integration initiatives in the Canadian Segment, partially offset by the positive contribution from the U.S. Segment as a result of the inclusion of the results from Mortgagebot.

Consolidated Adjusted Net Income

Adjusted net income for the first quarter of 2012 and for the same period in 2011 excluded: (i) non-cash impacts of items such as amortization of intangibles from acquisitions and gains and losses related to fair value adjustment of derivative instruments; and (ii) other items of note such as acquisition-related costs referred to below and tax recoveries related to the changes in the tax status of the Business as a result of the conversion from an income trust to a corporation. Net income is also adjusted for the tax impact of these adjustments to arrive at Adjusted net income.

For the first quarter of 2012, consolidated Adjusted net income was $22.0 million ($0.3709 per share), a decrease of $0.8 million, or 3.5%, compared to $22.8 million ($0.4275 per share) for the same period in 2011. Adjusted net income per share for the first quarter of 2012 was impacted by the issuance of 6 million shares in April 2011 to partially fund the Mortgagebot acquisition. Consolidated Adjusted net income excluded tax recoveries of $19.2 million ($0.3608 per share) related to the changes in the tax status of the Business as a result of the conversion from an income trust to a corporation. Compared to an adjustment of $13.5 million related to tax recoveries originally reported in the first quarter of 2011, Adjusted net income for the first quarter of 2011 has been amended to reflect the identification of a further one-time non-cash tax recovery of $5.7 million related to tax changes in connection with the corporate conversion in January 2011.

OPERATING RESULTS BY SEGMENT¹
(in thousands of Canadian dollars, except per share amounts, unaudited)

	Quarter ended March 31,
	Canadian Segment		U.S. Segment		Corporate		Consolidated
	2012	2011	2012	2011	2012	2011	2012	2011
Revenue	$ 170,022	$ 169,548	$ 11,591	$ -	$ -	$ -	$ 181,613	$ 169,548
Expenses ²	134,491	130,445	6,289	1,600	-	-	140,780	132,045

EBITDA^{2, 3}	35,531	39,103	5,302	(1,600)	-	-	40,833	37,503

Amortization of capital assets and non-acquisition intangibles	6,504	5,504	333	-	-	-	6,837	5,504
Amortization of intangibles from acquisitions	8,131	8,092	2,808	-	-	-	10,939	8,092
Interest expense	-	-	-	-	4,821	3,989	4,821	3,989
Amortization and fair value adjustment of derivative instruments⁴	-	-	-	-	(1,645)	(1,687)	(1,645)	(1,687)
Income tax expense (recovery)	-	-	-	-	4,947	(14,290)	4,947	(14,290)

Income (loss) from continuing operations	20,896	25,507	2,161	(1,600)	(8,123)	11,988	14,934	35,895
Income from discontinued operations, net of tax ⁵	-	140	-	-	-	-	-	140

Net income (loss)	$ 20,896	$ 25,647	$ 2,161	$ (1,600)	$ (8,123)	$ 11,988	$ 14,934	$ 36,035

¹_{The results include those of ASSET (included as part of the Canadian
Segment) and Mortgagebot (included as part of the U.S. segment),
effective from the dates of acquisition of January 18, 2011 and April
12, 2011, respectively.}

² _{Expenses include acquisition-related items such as transaction costs
related to acquisitions and certain retention and incentive payments
related to the Mortgagebot acquisition.}

³_{EBITDA is a non-IFRS term. See Non-IFRS Financial Measures for a more
complete description of this term.}

⁵ _{The Business sold a non-strategic component of its contact centre
business in October 2010 and entered into a transition agreement with
the buyer which ended on April 1, 2011. The results of these operations
are presented as discontinued operations for the first quarter of 2011.}

OPERATING RESULTS - CANADIAN SEGMENT

Operating results from the following service areas are included in the Canadian Segment: (i) payment solutions; (ii) loan registration and recovery services; (iii) loan servicing; (iv) lending technology services in Canada; and (v) business service solutions.

Overall, in the first quarter of 2012, revenue growth in certain service areas of the Canadian Segment was offset by decreases in revenue in other service areas combined with higher spending to benefit future periods. For a more detailed discussion on revenues and expenses in this segment, see the comments below.

Revenue
(in thousands of Canadian dollars, unaudited)

Quarter ended March 31,

2012

2011

Revenue - Canadian Segment

Payment solutions

$ 74,781

$ 74,211

Loan registration and recovery services ¹

37,954

36,374

Loan servicing

34,111

33,272

Lending technology services ²

14,548

15,499

Business service solutions ³

8,628

10,192

$ 170,022

$ 169,548

¹ _{Includes revenue from ASSET from the acquisition date of January 18,
2011.}

² _{Excludes revenue from Mortgagebot.}

³_{Excluded from reported revenue are the discontinued operations for the
comparative period presented.}

Revenue from payment solutions for the first quarter of 2012 was $74.8 million, an increase of $0.6 million, or 0.8%, compared to the same quarter in 2011. Revenue for the first quarter of 2012 benefited from the positive impact of higher average order values attributable to program changes and product and service enhancements in the chequing and credit card programs, partially offset by volume decreases in cheque orders. Management believes that the long-term historical trend related to current cheque order decline is relatively unchanged and continues to be in the low single digit range. In recent periods, there has been greater volatility in order volumes, including higher personal order volume reductions.

Loan registration and recovery services revenue for the first quarter of 2012 was $38.0 million, an increase of $1.6 million, or 4.3%, compared to the same quarter in 2011. This increase was mainly due to higher transaction volumes in registration services reflecting a modest recovery within the auto and auto lending markets. Volumes in this area can be variable due to changes in the economy, changes in the auto and auto lending markets and seasonality. Typically, this service area experiences stronger volumes during the second and third quarters as compared to the first and fourth quarters as consumers more frequently purchase and finance cars in the spring and summer. The increase in revenue related to registration volumes during the first quarter of 2012 was partially offset by a decline in recovery services related to ASSET, a counter-cyclical business, in line with our expectations.

Loan servicing programs revenue for the first quarter was $34.1 million, an increase of $0.8 million, or 2.5%, compared to the same quarter in 2011. As described earlier, loan servicing programs consist of student loan administration services, which comprises the largest portion of revenues within this service area, and credit card servicing. The increase during the first quarter of 2012 was primarily attributable to an increase in professional fees, partially offset by contractual price declines, within the student loans program. Volumes in this area are expected to be relatively stable and modestly growing in the short-term, as described earlier. Cost management activities are being directed towards lowering the impact of reduced pricing and fees related to particular customers, including reduced fees we will earn as one of our customers integrates the servicing of their portfolio into that of another one of our customers. The increase in revenue within the student loan administration services was partially offset by a decrease in the credit card servicing area, where prior periods reflected specific customer initiatives that increased both revenues and expenses with minimal impact on profitability in those periods.

Revenue from the lending technology services related to the Canadian Segment for the first quarter of 2012 was $14.5 million, a decrease of $1.0 million, or 6.1%, compared to the same quarter in 2011. The decrease was mainly due to a reduction in transaction-based fees in this service area, specifically, an anticipated decrease in origination fees for the quarter driven by the repatriation by a customer of certain services we historically performed for them that we announced previously, and to a lesser extent, from the changes announced by the Department of Finance on January 17, 2011 to tighten mortgage rules, including reductions in mortgage amortization periods, maximum refinancing amounts and amounts that can be drawn on home equity loans. These changes become effective in the first quarter of the prior year and the Company believes contributed to an acceleration of origination activities in the first quarter of 2011. In general, industry analysts expect the Canadian housing market to continue to moderate with some potential for cooling of prices in major urban areas through 2012.

Revenues from business service solutions, which consists of other smaller service areas for the first quarter of 2012 were $8.6 million, compared to $10.2 million for the same period in 2011. In general, we expect to continue to experience some reductions in this area as a result of program repatriation by certain customers. On October 7, 2010, the Business sold a non-strategic component of its contact centre business and entered into a transition agreement with the buyer, which expired on April 1, 2011. The results of these operations were previously reported in this revenue category and have been presented as discontinued operations for the comparative periods presented.

Expenses

Total expenses for the Canadian Segment for the first quarter of 2012 were $134.5 million, an increase of $4.0 million, or 3.1%, compared to the same quarter in 2011. This increase was primarily attributable to costs associated with technology transformation and integration activities. Expenses for the first quarter 2011 for the Canadian Segment included acquisition-related costs of $0.2 million. No such costs were incurred in the first quarter of 2012.

Canadian Segment

Quarter ended March 31,

(in thousands of Canadian dollars, unaudited)

2012

2011

Employee compensation and benefits ¹

$ 53,257

$ 50,381

Non-compensation direct expenses²

56,708

55,939

Other operating expenses ³

24,526

24,125

$ 134,491

$ 130,445

¹_{Employee compensation and benefits are net of apprenticeship tax credits
and amounts capitalized related to software product development.}

²_{Non-compensation direct expenses include materials, shipping, selling
expenses and third party direct disbursements.}

³ _{Other operating expenses include occupancy costs, communication costs,
licensing fees, professional fees, contractor fees, transaction costs
related to acquisitions of businesses and expenses not included in
other categories. Other operating expenses are net of inter-segment
management fees received from the U.S. segment.}

Employee compensation and benefits costs of $53.3 million for the first quarter of 2012 for the Canadian Segment increased by $2.9 million, or 5.7%, compared to the same quarter in 2011. The increase was primarily related to the replacement of contract labour (recorded as other operating expenses) with full-time staff, partially offset by tax credits associated with a government apprenticeship program.

Non-compensation direct expenses for the Canadian Segment were $56.7 million for the first quarter of 2012, an increase of $0.8 million, or 1.4%, compared to the same quarter in 2011. In general, these expenses directionally change with revenue changes.

Other operating expenses for the first quarter of 2012 of $24.5 million increased by $0.4 million, or 1.7%, compared to the same quarter in 2011. The increase in other operating expenses was attributable to costs associated with technology transformation and integration activities. The increase was partially offset by replacement of contract labour with full-time staff as discussed above and inter-segment management fees charged to Mortgagebot for shared services.

EBITDA

EBITDA for the first quarter of 2012 for the Canadian Segment was $35.5 million, a decrease of $3.6 million, or 9.1%, compared to the same quarter in 2011, mainly due to an increase in expenses as a result of the costs associated with transformation and integration activities. EBITDA was additionally impacted by integration and program repatriation by customers as previously described. Cost management activities are being directed towards reducing the impact of integration and repatriation by customers as described above.

Depreciation of Capital Assets and Amortization of Non-acquisition Intangibles

Depreciation of capital assets and amortization of non-acquisition intangible assets of $6.5 million during the first quarter of 2012 for the Canadian Segment increased by $1.0 million, or 18.2%, compared to the first quarter of 2011, primarily related to capital additions.

Amortization of Intangibles from Acquisitions

Amortization of acquisition-related intangibles for the first quarter of 2012 in the Canadian Segment of $8.1 million was consistent with the same period in 2011.

OPERATING RESULTS - U.S. SEGMENT

The U.S. Segment consists of the operating results of Mortgagebot since the acquisition date of April 12, 2011.

Revenue

U.S. Segment revenue for first quarter of 2012 of $ $11.6 million related to online mortgage origination revenue from Mortgagebot.

Expenses

U.S. Segment

Quarter ended March 31,

(in thousands of Canadian dollars, unaudited)

2012

2011

Employee compensation and benefits ¹

$ 3,770

$ -

Non-compensation direct expenses

257

Other operating expenses ²

2,262

1,600

$ 6,289

$ 1,600

¹_{Employee compensation and benefits expenses include retention and
incentive costs related to the acquisition of Mortgagebot.}

² _{Other operating expenses include inter-segment management fees,
occupancy costs, transaction costs related to acquisitions of
businesses and expenses not included in other categories. Amounts
reported for the first quarter of 2011 relate to transaction costs
incurred in connection with the acquisition of Mortgagebot.}

Expenses for the U.S. Segment included acquisition-related costs of $0.7 million for the first quarter of 2012 ($1.6 million for the same period in 2011). These consisted of retention and incentive costs related to the acquisition of Mortgagebot and transaction costs incurred in connection with acquisitions of businesses that are required to be expensed under IFRS.

EBITDA

EBITDA for the U.S. Segment for the first quarter of 2012 was $5.3 million, which included acquisition-related costs of $0.7 million for the first quarter of 2012 and $1.6 million for the same period in 2011 described above. Expenses for the first quarter of 2011 include transaction costs incurred in connection with the acquisition of Mortgagebot.

Depreciation of Capital Assets and Amortization of Non-acquisition Intangibles

Depreciation of capital assets and amortization of non-acquisition intangible assets during the first quarter of 2012 for the U.S. Segment was $0.3 million.

Amortization of Intangibles from Acquisitions

Amortization of acquisition-related intangibles for the first quarter of 2012 for the U.S. Segment was $2.8 million and related to the intangibles from the Mortgagebot acquisition on April 12, 2011.

OPERATING RESULTS - CORPORATE

The following items are reported as part of the Corporate segment: interest expense, amortization and fair value adjustments of derivative instruments and income tax expense (recovery).

Interest Expense

Interest expense for the first quarter of 2012 increased by $0.8 million, compared to the same quarter in 2011, due to increased borrowings in relation to the acquisitions of ASSET and Mortgagebot.

Amortization and Fair Value Adjustment of Derivative Instruments

Interest-rate swaps

A net unrealized gain of $1.6 million on interest-rate swaps was recognized in the first quarter of 2012 (Q1 2011 - net unrealized gain of $1.7 million) reflecting fair value adjustments related to changes in market interest rates at March 31, 2012 compared to December 31, 2011.

These unrealized gains and losses are recognized in income because these interest-rate swaps are not designated as hedges for accounting purposes. In general, a loss on interest-rate swaps is recorded when interest rates decrease as compared to certain previous periods and a gain is recorded when interest rates increase. Provided the Company does not cancel its interest-rate swaps, the unrealized amounts represent a non-cash unrealized gain or loss that will subsequently reverse through income as the related swaps mature. The Company has historically held its derivative contracts to maturity.

Income Tax Expense (Recovery)

In the first quarter of 2012, an income tax expense of $4.9 million was recorded (Q1 2011 - $14.3 million recovery), which included tax expenses related to the utilization of loss carry-forwards and book income not taxable until a future period. The income tax recovery in the first quarter of 2011 included a tax recovery due to the recognition of a previously unrecognized deferred tax asset related to intangible assets. The benefit of this deferred tax asset was expected to be realized as a consequence of the corporate conversion. Additional recoveries related to the conversion were also recognized in Q1 2011.

Due to the corporate structure, certain available tax losses, and no expected requirements to pay 2012 tax instalments, the Company does not expect to pay any significant cash taxes in 2012.

EIGHT QUARTER CONSOLIDATED STATEMENT OF INCOME - SUMMARY ¹
(in thousands of Canadian dollars, except per share amounts, unaudited)


			2012	2011				2010
			Q1	Q4	Q3	Q2	Q1	Q4	Q3	Q2

Revenue			$ 181,613	$ 183,777	$ 186,275	$ 185,120	$ 169,548	$ 162,474	$ 164,319	$ 167,093
Expenses²			140,780	138,202	140,050	137,023	132,045	133,018	128,147	123,319

EBITDA^{2, 3}			40,833	45,575	46,225	48,097	37,503	29,456	36,172	43,774

Depreciation of capital assets and amortization of non-acquisition
intangibles			6,837	6,749	5,820	5,827	5,504	5,643	5,030	4,962
Amortization of intangibles from acquisitions			10,939	11,009	11,040	10,590	8,092	7,108	6,925	7,158
Interest expense			4,821	4,909	4,792	5,272	3,989	3,405	3,517	3,692
Amortization and fair value adjustment
of derivative instruments⁴			(1,645)	(145)	3,991	1,227	(1,687)	(2,796)	1,566	1,797
Income tax expense (recovery)			4,947	7,684	5,522	1,717	(14,290)	3,448	(1,447)	395

Income from continuing operations			14,934	15,369	15,060	23,464	35,895	12,648	20,581	25,770
Income (loss) from discontinued operations, net of tax ⁵			-	-	-	-	140	(620)	(1,886)	(531)

Net income			$ 14,934	$ 15,369	$ 15,060	$ 23,464	$ 36,035	$ 12,028	$ 18,695	$ 25,239

Adjustments:
	Non-cash items:
		Amortization of intangibles from acquisitions	$ 10,939	$ 11,009	$ 11,040	$ 10,590	$ 8,092
		Amortization and fair value adjustment of derivative instruments ⁴	(1,645)	(145)	3,991	1,227	(1,687)
	Other items of note:
		Acquisition-related items²	737	637	610	707	1,799
		Discontinued operations, net of tax ⁵	-	-	-	-	(140)
	Tax effect of above adjustments (excluding discontinued operations) ⁶		(2,998)	(3,391)	(4,465)	(3,256)	(2,133)
	Tax effect of corporate conversion and acquisitions ⁷		-	2,080	-	(3,628)	(19,209)

Adjusted net income³			$ 21,967	$ 25,559	$ 26,236	$ 29,104	$ 22,757



Adjusted net income per share, basic and diluted ^{3, 8}			$ 0.3709	$ 0.4315	$ 0.4429	$ 0.4974	$ 0.4275	n/m	n/m	n/m
Income from continuing operations per share, basic and diluted ⁸			$ 0.2521	$ 0.2595	$ 0.2542	$ 0.4010	$ 0.6743	$ 0.2376	$ 0.3866	$ 0.4841
Net income per share, basic and diluted ⁸			$ 0.2521	$ 0.2595	$ 0.2542	$ 0.4010	$ 0.6769	$ 0.2260	$ 0.3512	$ 0.4741

n/m = not measurable

¹_{Results include those of ASSET, effective from the date of acquisition
of January 18, 2011 and those of Mortgagebot effective from the date of
acquisition of April 12, 2011.}

²_{Expenses for 2012 include acquisition-related items including
transaction costs incurred in connection with acquisition of businesses
as well as certain retention and incentive costs related to the
Mortgagebot acquisition.}

³_{EBITDA and Adjusted net income are non-IFRS terms. See Non-IFRS
Financial Measures for a more complete description of these terms.
Periods prior to January 1, 2011, do not have a comparable measure for
Adjusted net income due to the differences in taxation for D+H as an
income trust prior to January 1, 2011 and as a corporation subsequent
to that date.}

⁵_{The Business sold a non-strategic component of its contact centre
business in October 2010 and entered into a transition agreement with
the buyer, which expired on April 1, 2011. The results of these
operations are presented as discontinued operations.}

⁶_{The following adjustments to net income are tax effected at their
respective tax rates: (i) amortization of acquisition intangibles; (ii)
amortization and fair value adjustment on derivative instruments; and
(iii) acquisition-related costs.}

⁷_{Adjustments for the first and second quarters of 2011 included non-cash
income tax recoveries recorded in connection with the conversion to a
corporation and acquisitions. Adjustments for the fourth quarter of
2011 related to derecognition of previously recognized tax attributes.}

⁸_{Diluted Net income per share and Diluted Adjusted net income per share
(non-IFRS term) reflect impacts of outstanding options. If the average
market price during the period is below the option price plus the fair
market value of the option, then the options are not included in the
dilution calculation. The options outstanding are not dilutive for the
periods presented.}

The Business has generally reported quarterly revenues that are relatively stable and growing when measured on a year-over-year basis, however more recent changes in the economic environment generally, the housing and mortgage markets and the auto lending markets specifically, have increased volatility. Measured on a sequential quarter-to-quarter basis, revenues can also vary due to seasonality and are generally stronger in the second and third quarters. The acquisition of ASSET on January 18, 2011 and the acquisition of Mortgagebot on April 12, 2011 increased revenues and expenses. Per share amounts were also impacted by the issuance of 6,000,000 additional shares of the Corporation in April 2011 to partially fund the acquisition of Mortgagebot.

Effective January 1, 2011, as a result of the conversion from an income trust structure to a corporate structure, the Business commenced using Adjusted net income as a measure for evaluating its results. Adjusted net income is a non-IFRS financial measure. See Non-IFRS Financial Measures for a more complete description of this term. Periods prior to January 1, 2011, do not have a comparable measure for Adjusted net income.

Net income has been more variable as it has been affected by the variability in non-cash items such as fair value adjustments of interest-rate swaps, amortization of intangibles from acquisitions and changes in other non-cash tax items.

CONSOLIDATED CASH FLOW AND LIQUIDITY

The following table is derived from, and should be read in conjunction with, the Consolidated Statements of Cash Flows. Management believes this disclosure provides useful additional information related to the cash flows of the Corporation, repayment of debt and other investing activities.

Consolidated Summary of Cash Flows
(in thousands of Canadian dollars, unaudited)

Quarter ended March 31,

2012

2011

Cash and cash equivalents provided by (used in):

OPERATING ACTIVITIES

Net income from continuing operations

$ 14,934

$ 35,895

Depreciation and amortization of assets

17,776

13,596

Amortization and fair value adjustment of derivative instruments

(1,645)

(1,687)

Difference in interest expense and cash interest paid

600

(196)

Non-cash income tax and options expenses

6,865

(14,290)

38,530

33,318

Increase in non-cash working capital items

(14,640)

(15,674)

Changes in other operating assets and liabilities and discontinued operations

683

104

Net cash from operating activities

24,573

17,748

FINANCING ACTIVITIES

Net change in long-term indebtedness

5,000

81,000

Issuance costs, equity and debt

(1,305)

Distributions and dividends paid during the period

(18,362)

(16,146)

Net cash from (used in) financing activities

(13,362)

63,549

INVESTING ACTIVITIES

Capital expenditures

(10,536)

(9,721)

Acquisitions

(70,734)

Net cash used in investing activities

(10,536)

(80,455)

Increase in cash and cash equivalents for the period

675

842

Cash and cash equivalents, beginning of period

2,213

1,144

Cash and cash equivalents, end of period

$ 2,888

$ 1,986

Consolidated Capital Expenditures

Consolidated capital expenditures were $10.5 million for the first quarter of 2012, $0.8 million higher than the same period in 2011.

Higher capital expenditures in the first quarter of 2012 primarily reflected integration and upgrade activities, and investing in the building of technology products and capability.

Dividends

During the first quarter of 2012, the Corporation paid $0.31 per share to its shareholders. For the same period in 2011, $0.3033 per share was paid to the shareholders, which comprised of a $0.1533 per unit distribution that was paid on January 31, 2011 (declared on December 31, 2010 when D+H was an income trust) and a $0.15 per share special dividend paid on March 31, 2011.

Shares Outstanding

As at March 31, 2012, and May 8, 2012, common shares outstanding were 59,233,373, reflecting the additional 6 million common shares issued in April 2011 to fund the Mortgagebot acquisition (as at March 31, 2011 - 53,233,373 shares outstanding; December 31, 2011 - 59,233,373 shares outstanding).

Consolidated Changes in Non-Cash Working Capital and Other Items

Quarter ended March 31,

(in thousands of Canadian dollars, unaudited)

2012

2011

Increase in non-cash working

capital items

$ (14,640)

$ (15,674)

Changes in other operating assets and

liabilities and discontinued operations

683

104

Increase in non-cash working capital and

other items

$ (13,957)

$ (15,570)

The net increase in non-cash working capital items for the first quarter of 2012 was attributable mainly to decreases in accrued payables due to normal course timing differences reflecting payments made during the first quarter of 2012.

The Company expects to experience continued variability of non-cash working capital due to the nature and timing of services rendered in connection with the businesses recently acquired.

Consolidated Cash Balances and Long-Term Indebtedness

At March 31, 2012, cash and cash equivalents totalled $2.9 million, compared to $2.2 million at December 31, 2011.

The long-term indebtedness is recorded on the Consolidated Statement of Financial Position, net of unamortized deferred financing fees. The long-term indebtedness as at March 31, 2012, before deducting unamortized deferred finance fees of $5.8 million, was $355.8 million, compared to $352.1 million at December 31, 2011. During the first quarter of 2012, on a net basis, the Business drew $5.0 million on its credit facilities.

The long-term indebtedness includes drawings under a Seventh Amended and Restated Credit Agreement ("Credit Agreement") dated April 12, 2011 of $213.0 million. Total committed senior secured credit facilities under this Credit Agreement as at March 31, 2012 were $355.0 million, consisting of a revolving credit facility that matures on April 12, 2016. The Business is permitted to draw on the revolving facility's available balance of $142.0 million to fund capital expenditures or for other general purposes. The Credit Agreement contains a number of covenants and restrictions, including the requirement to meet certain financial ratios and financial condition tests. The financial covenants include a leverage test, a fixed charge coverage ratio test and a limit on the maximum amount of distributions by the Corporation to its shareholders during each rolling four-quarter period. The Company was in compliance with all of its financial covenants and financial condition tests as of the end of its latest quarterly period. A copy of the Credit Agreement is available at www.sedar.com.

As at March 31, 2012, and May 8, 2012, long-term indebtedness also consists of fixed-rate Bonds of $80 million issued under a Second Amended and Restated Note Purchase and Private Shelf Agreement dated April 12, 2011 ("Note Purchase Agreement"), which include a $50.0 million Bond issued under the senior secured Note Purchase Agreement at a fixed-interest rate of 5.99% and a $30.0 million Bond at 5.17%, both maturing on June 30, 2017. In addition, the Business entered into a Note Purchase and Private Shelf Agreement pursuant to which the Company issued US$ 63 million of senior secured guaranteed notes at 5.59%, maturing on April 12, 2021 to partially fund the acquisition of Mortgagebot.

The Note Purchase Agreements and the Note Purchase and Private Shelf Agreement are available at www.sedar.com.

As at March 31, 2012, and as at May 8, 2012, the Credit Agreement provides for an additional uncommitted credit arrangement of up to $150.0 million and the Note Purchase and Private Shelf Agreement provides for an additional uncommitted arrangement of up to US$ 37 million with the use of these arrangements subject to the prior approval of the relevant lenders with any fees, spreads and other additional terms to be negotiated at that time.

The Company has historically hedged against increases in market interest rates on certain of its debt by utilizing interest-rate swaps and more recently by issuing fixed rate long-term bonds as described above.

As at March 31, 2012, the average effective interest rate on the Corporation's total indebtedness was approximately 4.8%.

Hedge Contracts

Interest-rate swaps

In respect of interest-rate swap contracts with its lenders, as of March 31, 2012, the Company's borrowing rates on 44.6% of outstanding long-term indebtedness under the Credit Agreement are effectively fixed at the interest rates and for the time periods ending as outlined in the following table:

(in thousands of Canadian dollars, unaudited)
		Fair value of interest-rate swaps
Maturity Date	Notional amount	Asset	Liability	Interest Rate ¹
December 18, 2014	$ 25,000	$ -	$ 809	2.720%
March 18, 2015	25,000	-	1,013	2.940%
March 18, 2017	25,000	-	1,789	3.350%
March 20, 2017	20,000	-	1,447	3.366%
	$ 95,000	$ -	$ 5,058

¹ _{The listed interest rates exclude bankers' acceptance fees and
prime-rate spreads currently in effect. Such fees and spreads could
increase or decrease depending on the Company's financial leverage
compared to certain levels specified in the Credit Agreement. As at
March 31, 2012, the Company's long-term bank indebtedness was subject
to bankers' acceptance fees of 2.25% over the applicable BA rate and
prime rate spreads of 1.25% over the prime rate.}

As at March 31, 2012, the Company would have to pay the fair value of $5.1 million if it were to close out all of its interest-rate swap contracts as set out in the Consolidated Statement of Financial Position. It is not the present intention of management to close out these contracts and the Company has historically held its derivative contracts to maturity.

Foreign exchange forward contracts

The Company enters into foreign exchange contracts to fix foreign exchange rates on its foreign currency transactions, which are relatively minor. As at March 31, 2012, the Company had foreign exchange forward contracts aggregating US $10.0 million with two of its lenders, as follows:

(in thousands of Canadian dollars, unless otherwise noted, unaudited)


	Notional	Fair value of foreign exchange contracts
Maturity date	amount (USD)	Asset	Liability	Exchange rate

June 15, 2012	$ 3,000	$ 105	$ -	1.0339
June 15, 2012	2,000	47	-	1.0221
September 14, 2012	3,000	101	-	1.0347
September 14, 2012	2,000	44	-	1.0231

	$ 10,000	$ 297	$ -

Under these contracts, the Company is required to deliver the agreed US dollar amount and in return receive the contracted Canadian dollar amount set forth in each contract. It is not the present intention of management to close out these contracts. The Company has historically held its derivative contracts to maturity.

These foreign exchange contracts have been designated as hedges in accordance with IFRS, for hedge accounting purposes to hedge a set amount of forecasted cash inflows. The Company accounts for these hedges as cash flow hedges as per IAS 39. The change in fair value of the hedging instrument (foreign exchange forward contracts), to the extent it is effective, is recorded in Other Comprehensive Income ("OCI"). The ineffective portion of the gain or loss on the hedging instrument is recognized in profit or loss. The fair value changes are recorded in OCI, as the hedging relationship was considered to be effective both at inception of these hedges and at the reporting date.

BUSINESS RISKS

A comprehensive discussion of the risks that impact the Business can be found on the Corporation's most recently filed Annual Information Form and the most recently filed annual MD&A, available on SEDAR at www.sedar.com. Risks and uncertainties related to the Corporation have not changed since the filing of the 2011 annual MD&A and the 2011 Annual Information Form.

OUTLOOK

D+H's long-term financial objective is to deliver sustainable and growing earnings through continued organic revenue growth and by way of strategic acquisitions. In January and April 2011, respectively, the Company completed the acquisitions of ASSET and Mortgagebot. In April and May 2012, respectively, D+H announced the completion of the minority interest investment in Compushare, and the acquisition of Avista. These acquisitions continue to strengthen our ability to deliver on our goal of being a leading solutions provider to the North American financial services industry, provide further revenue diversification, and support our long-term strategy.

Going forward, we will focus on executing our organic growth initiatives, integrating the Business and continuing to diligently manage costs through our transformational and integration initiatives. Beyond the immediate term, we believe that our market leadership and combined capabilities will solidly position D+H in the markets we serve and allow us to grow consistent with our long-term objectives.

As set out in our statement of strategy, we look to grow our Business through a combination of organic initiatives, partnering with third parties and by way of selective acquisitions. Our organic initiatives are many and include: (i) the ongoing advancement of payment solutions through the addition of value-added service enhancements; (ii) the expansion of our current services within the student lending, commercial and personal lending areas (including the mortgage, credit card and personal property markets); (iii) selling and delivering our lending technology services to new customers; and (iv) combining the capabilities of D+H together with those of the recently acquired businesses to develop new service offerings for our financial institution customers. Our acquisition strategy focuses on acquiring companies that extend or add to the services that we provide within the financial services marketplace. Our acquisition plans may continue to involve extending beyond the Canadian market.

With the inclusion of several new service areas over the last several years, we expect to continue to experience some increase in variability in year-over-year quarterly revenues, earnings and cash flows, due to, among other items: (i) volume variances within the lien registration and mortgage origination service areas; (ii) variability in professional services work; and (iii) fees and expenses incurred in connection with acquisitions and related business integration activities. In the Canadian Segment, the Company believes that lending technology services revenues in 2012 will reflect the impact of a previously announced customer repatriation and more moderate housing and real estate activity compared to the previous year. In the U.S. Segment, a slight recovery within the U.S. housing market is expected combined with a reduction in refinancing activity in 2012.

For 2012, we anticipate that our capital spending will be approximately $35 million, although additional spending will be incurred in support of growth opportunities if and as they surface.

As described earlier, the Corporation does not expect to pay any significant cash taxes in 2012.

ADDITIONAL INFORMATION

Additional information relating to the Company, including the Company's most recently filed Annual Information Form, is available on SEDAR at www.sedar.com.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands of Canadian dollars, unaudited)

March 31, 2012

December 31, 2011

ASSETS

Cash and cash equivalents

2,888

2,213

Trade and other receivables

79,972

79,753

Prepayments

11,794

12,821

Inventories

4,743

4,946

Derivative assets held for risk management

297

126

Total current assets

99,694

99,859

Deferred tax assets

36,456

39,987

Property, plant and equipment

33,569

32,169

Intangible assets

432,880

444,575

Goodwill

664,356

666,735

Total non-current assets

1,167,261

1,183,466

Total assets

1,266,955

1,283,325

LIABILITIES

Trade payables and accrued liabilities

81,153

93,131

Deferred revenue

11,434

10,216

Provisions

811

3,480

Current tax liabilities

341

Total current liabilities

93,739

106,827

Deferred revenue

9,327

9,492

Derivative liabilities held for risk management

5,058

6,703

Loans and borrowings

350,027

345,921

Deferred tax liabilities

97,689

97,350

Other long-term liabilities

7,704

7,334

Total non-current liabilities

469,805

466,800

Total liabilities

563,544

573,627

EQUITY

Share capital

673,352

673,163

Retained earnings

24,021

27,449

Accumulated other comprehensive income

6,038

9,086

Total equity

703,411

709,698

Total liabilities and equity

1,266,955

1,283,325

CONSOLIDATED STATEMENTS OF INCOME
(in thousands of Canadian dollars, except per share amounts, unaudited)


		Three months ended
		March 31, 2012		March 31, 2011
Revenue	$	181,613	$	169,548
Employee compensation and benefits		57,027		50,381
Other expenses		83,753		81,664
Income from operating activities before depreciation and amortization		40,833		37,503

Depreciation of property, plant and equipment		2,265		2,339
Amortization of intangible assets		15,511		11,257
Income from operating activities		23,057		23,907

Finance expenses:
Amortization and fair value adjustment of derivative instruments		(1,645)		(1,687)
Interest expense		4,821		3,989
Income from continuing operations before income tax		19,881		21,605

Income tax expense (recovery)		4,947		(14,290)
Income from continuing operations		14,934		35,895

Income from discontinued operations, net of taxes		-		140
Net income	$	14,934	$	36,035

Net income per share from continuing operations, basic and diluted	$	0.2521	$	0.6743
Net income per share from discontinued operations, basic and diluted	$	-	$	0.0026
Net income per share, basic and diluted	$	0.2521	$	0.6769

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of Canadian dollars, unaudited)


			Three months ended
			March 31, 2012		March 31, 2011

Net income		$	14,934	$	36,035

Cash flow hedges:
	Amortization of mark-to-market adjustment
	of derivative instruments		-		52
	Effective portion of changes in fair value of cash flow hedges		170		-
	Net amount transferred to profit or loss		(281)		-
Foreign currency translation			(2,937)		-
Total comprehensive income		$	11,886	$	36,087

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands of Canadian dollars, unaudited)

		Three months ended March 31, 2012

		Accumulated other comprehensive income (loss)
	Share capital	Foreign currency translation reserve	Hedging reserve	Retained earnings / (deficit)	Total equity

Balance at January 1, 2012	$673,163	$9,326	$(240)	$27,449	$709,698
Net Income for the period	-	-	-	14,934	14,934
Cash flow hedges	-	-	(111)	-	(111)
Foreign currency translation	-	(2,937)	-	-	(2,937)
Dividends	-	-	-	(18,362)	(18,362)
Options	189	-	-	-	189
Balance at March 31, 2012	$673,352	$6,389	$(351)	$24,021	$703,411

		Three months ended March 31, 2011

		Accumulated other comprehensive income (loss)
	Share capital	Foreign currency translation reserve	Hedging reserve	Retained earnings / (deficit)	Total equity

Balance at January 1, 2011	$595,859	$-	$(86)	$(40,623)	$555,150
Net Income for the period	-	-	-	36,035	36,035
Amortization of mark-to-market adjustment of derivative instruments	-	-	52	-	52
Capital reduction pursuant to the arrangement	(40,623)	-	-	40,623	-
Dividends	-	-	-	(7,985)	(7,985)
Balance at March 31, 2011	$555,236	$-	$(34)	$28,050	$583,252

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars, unaudited)

Three months ended

March 31, 2012

March 31, 2011

Cash and cash equivalents provided by (used in):

OPERATING ACTIVITIES

Net income from continuing operations

14,934

35,895

Adjustments for:

Depreciation of property, plant and equipment

2,265

2,339

Amortization of intangible assets

15,511

11,257

Amortization of mark-to-market adjustment

of derivative instruments

Fair value adjustment of derivative instruments

(1,645)

(1,739)

Finance costs

4,821

3,989

Deferred taxes

6,335

(14,290)

Current taxes

341

Options expense

189

Changes in non-cash working capital items

(14,640)

(15,674)

Changes in other operating assets and liabilities

683

(85)

Cash generated from operating activities

28,794

21,744

Interest paid

(4,221)

(4,185)

Cash flows from discontinued operations

189

Net cash from operating activities

24,573

17,748

FINANCING ACTIVITIES

Repayment of long-term indebtedness

(5,000)

(81,000)

Proceeds from long-term indebtedness

10,000

162,000

Payment of issuance costs of long-term indebtedness

(1,305)

Dividends paid

(18,362)

(16,146)

Net cash from (used in) financing activities

(13,362)

63,549

INVESTING ACTIVITIES

Acquisition of property, plant and equipment

(3,685)

(2,810)

Acquisition of intangible assets

(6,851)

(6,911)

Acquisition of subsidiaries and acquisition adjustments

(70,734)

Net cash used in investing activities

(10,536)

(80,455)

Increase in cash and cash equivalents

for the period

675

842

Cash and cash equivalents, beginning of period

2,213

1,144

Cash and cash equivalents, end of period

2,888

1,986

About D+H

D+H is a leading solutions provider to the financial services marketplace. Founded in 1875, the Company today provides innovative technology-based programs, products and business services tailored to our customers' needs. We embrace thought leadership and are continuously expanding our capabilities to better anticipate the needs of our customers, build trust and deliver on our promises. Davis + Henderson Corporation is listed on the Toronto Stock Exchange under the symbol DH. Further information can be found in the disclosure documents filed by Davis + Henderson Corporation with the securities regulatory authorities, available at www.sedar.com.

For further information:

Brian Kyle, Chief Financial Officer, (416) 696-7700, extension 5690 or visit our website at www.dhltd.com