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Stock Exchange Symbol: DH
Website: www.dhltd.com
TORONTO, July 29, 2014 /CNW/ - DH Corporation ("D+H" or the "Company")
(TSX: DH), a leading provider of technology solutions to domestic and
global financial institutions, today reported its financial results for
the three and six months ended June 30, 2014.
"In both reporting periods, D+H generated strong growth in our key
financial metrics" said Gerrard Schmid, Chief Executive Officer. "In
addition to funding our dividend, our solid cash flows allowed us to
increase investments in targeted new product developments and
technology integration, and contributed to another voluntary debt
repayment, consistent with our goal for leverage reduction. Results to
date are on plan and we are encouraged by positive customer reception
to our unified brand and integrated sales activities which will help us
to advance our standing in the financial technology ("FinTech")
market."
As expected, recent strategic acquisitions continued to positively
diversify D+H's business. In the second quarter, the U.S. Segment
accounted for 42% of Adjusted revenues1, versus 14% in the same period a year ago, while lending processing and
banking technology service areas represented 74% of second quarter
Adjusted revenues compared to 60% a year ago.
Second Quarter Highlights
-
Revenues from continuing operations increased 45.1% to $286.0 million
from $197.1 million compared to the same quarter in 2013, reflecting
the inclusion of Harland Financial Solutions' ("HFS") revenues in the
U.S. Segment. After eliminating the impacts of foreign exchange,
revenues increased by 40.1%.
-
Adjusted revenues of $292.2 million were $95.0 million, or 48.2%, higher than the same
quarter in 2013, or 42.9% higher excluding impacts of foreign exchange.
-
Adjusted EBITDA1 increased 59.4% to $93.0 million (31.8% margin) from $58.3 million
(29.6% margin) compared to the same quarter in 2013. After eliminating
the impacts of foreign exchange, Adjusted EBITDA increased by 53.2%.
-
Net income increased to $29.9 million ($0.3697 per share, basic and
$0.3687 per share, diluted), from $13.6 million ($0.2298 per share,
basic and diluted) in the same quarter last year, reflecting higher
EBITDA, offset by higher amortization of intangible assets from
acquisitions and increased interest expense attributable to the HFS
acquisition. Net income in the second quarter of 2013 was impacted by a
loss from discontinued operations of $8.8 million.
-
Adjusted net income1 increased 50.4% to $51.5 million from $34.2 million mainly due to the
addition of HFS. Adjusted net income per share1 increased 10.3% year-over-year to $0.6369, from $0.5774 and reflects
the additional common shares issued in connection with the HFS
acquisition.
-
Net debt repayments during the second quarter of 2014 were $5.0 million,
resulting in a June 30, 2014 Debt to EBITDA ratio of 2.79. This ratio,
after eliminating the impacts of non-cash foreign exchange volatility,
was 2.75.
-
D+H paid $0.32 per share in dividends to shareholders.
-
As part of a broader strategy to unify the D+H brand and increase brand
recognition across North America and globally, D+H announced that it
has changed its name to "DH Corporation" from "Davis + Henderson
Corporation". The Company will continue to operate as "D+H" in the
market.
-
Effective September 2, 2014, Karen Weaver assumes the role of Executive
Vice President and Chief Financial Officer of D+H, replacing Brian
Kyle, whose resignation was previously announced. Ms. Weaver has more
than 30 years of related experience with leading U.S. and Canadian
public companies.
Six-Month Highlights
-
Revenues from continuing operations increased 49.7% to $552.2 million
from $368.8 million a year ago, or 44.4%, after eliminating the impact
of foreign exchange, primarily reflecting the inclusion of HFS in the
U.S. Segment.
-
Adjusted revenues of $567.9 million were higher by $199.1 million, or
54.0%, compared to the same period a year ago and increased 48.3% after
eliminating the impact of foreign exchange.
-
Adjusted EBITDA increased by 69.4% to $171.7 million (30.2% margin) from
$101.4 million (27.5% margin) and increased 62.2% after eliminating the
impact of foreign exchange.
-
Net income was $41.9 million ($0.5186 per share, basic and $0.5173 per
share, diluted), an increase of $22.5 million, or 116.5%, compared to
$19.4 million ($0.3267 per share, basic and diluted) for the first six
months in 2013, reflecting higher EBITDA, partially offset by higher
amortization of intangible assets from acquisitions and increased
interest expense attributable to the HFS acquisition. Net income in the
same period of 2013 was impacted by a loss from discontinued operations
of $19.5 million.
-
Adjusted net income increased 57.5% year-over-year to $90.3 million from
$57.3 million mainly due to the addition of HFS. Adjusted net income
per share increased 15.5% to $1.1177 from $0.9675, and was impacted by
the additional shares in connection with the acquisition of HFS.
-
Net debt repayments during the first six months of 2014 were $10.0
million.
-
D+H paid $0.64 per share in dividends to shareholders.
-
D+H reaffirmed its leadership position in the FinTech marketplace by
being ranked the top Canadian Software-as-a-Service company in the
Branham300 rankings for the second year in a row.
D+H's unaudited condensed interim consolidated financial statements for
the second quarter of 2014, accompanying notes to the financial
statements and management's discussion & analysis ("MD&A") along with
the supplementary financial information will be available today at www.dhltd.com and tomorrow on www.sedar.com.
For a more detailed discussion of the results and management's outlook,
please see the MD&A below.
1D+H's financial results are prepared in accordance with International
Financial Reporting Standards ("IFRS"). D+H reports several non-IFRS
financial measures, including EBITDA, EBITDA Margin, Adjusted revenues,
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted net income and
Adjusted net income per share used above. See Non-IFRS Financial
Measures in D+H's Management Discussion and Analysis for the three and
six months ended June 30, 2014 for a more complete description of these
terms. 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. Further, D+H's measures may be calculated
differently from similarly titles measures of other companies.
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.
D+H has also made certain macroeconomic and general industry assumptions
in the preparation of such forward-looking statements. While D+H
considers these factors and assumptions to be reasonable based on
information currently available, there can be no assurance that actual
results will be consistent with these forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause D+H's actual results,
performance or achievements, or developments in its industry, to differ
materially from the anticipated results, performance, achievements or
developments expressed or implied by such forward-looking statements.
Risks related to forward-looking statements include, among other things,
challenges presented by declines in the use of personal and business
cheques; the Company's dependence on a limited number of large
financial institution customers in Canada and dependence on their
acceptance of new programs; strategic initiatives being undertaken to
meet the Company's financial objective; stability and growth in the
real estate, mortgage and lending markets; increased pricing pressures
and competition which could lead to loss of contracts or reduced
margins; the Company's ability to successfully integrate acquisitions;
changes in the U.S. banking and financial services industry and demand
for D+H's products and services; the Company's ability to comply with
government regulations; 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 referenced 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 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 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.
Conference Call
D+H will discuss its financial results for the three and six months
ended June 30, 2014 via conference call at 10:00 a.m. EST (Toronto
time) on Wednesday, July 30, 2014. The number to use for this call is
647-427-7450 (Local/Int'l) or 1-888-231-8191 (toll-free within North
America). 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 http://www.newswire.ca/en/webcast/detail/1383001/1534113. For anyone unable to listen to the scheduled call, the rebroadcast
number will be: 416-849-0833 (Local/Int'l), or 1-855-859-2056 for all other callers, with Encore
Password 45027673. The rebroadcast will be available until Wednesday
August 13, 2014. 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 the Company, including the Company's
most recently filed Annual Information Form, is available on SEDAR at www.sedar.com.
MANAGEMENT'S DISCUSSION AND ANALYSIS
This Management's Discussion and Analysis ("MD&A") of financial
condition and results of operations of DH Corporation (the
"Corporation" or the "Company" or "D+H" or the "Business"), previously
Davis + Henderson Corporation, has been prepared with an effective date
of July 29, 2014 and should be read in conjunction with D+H's MD&A in
the annual report for the year ended December 31, 2013, dated February
25, 2014, and the unaudited condensed interim consolidated financial
statements for the three and six months ended June 30, 2014. 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 this MD&A include certain financial
measures such as "Adjusted revenues", "EBITDA", "EBITDA margin" (EBITDA
divided by revenues), "Adjusted EBITDA", "Adjusted EBITDA margin"
(Adjusted EBITDA divided by Adjusted revenues), "Adjusted net income",
and "Adjusted net income per share", all of which are not defined terms
under International Financial Reporting Standards ("IFRS").
These non-IFRS financial measures should be read in conjunction with the
Consolidated Statements of Income, prepared in accordance with IFRS.
See the reconciliations of "Adjusted revenues", "EBITDA", "Adjusted
EBITDA" and "Adjusted net income" to the most directly comparable IFRS
measures, "revenues" and "net income", in the 'Operating Results'
section of this MD&A.
Management believes these supplementary financial measures provide
useful additional information related to the operating results of the
Corporation. Management uses these measures to assess 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 measure may not be comparable to
calculations used by other companies bearing the same description.
Adjusted Revenues
The Company uses Adjusted revenues as a measure of performance which
eliminates the impact of applying acquisition accounting on the
acquisition of HFS. Adjusted revenues is also used in calculating
Adjusted EBITDA and Adjusted EBITDA margin.
Upon acquisition, the acquired deferred revenue balances were adjusted
to reflect the fair value based on estimated costs of future delivery
of the related services. These fair value adjustments to deferred
revenues, recorded as of the acquisition date in accordance with the
business combination accounting standard, will reduce revenues
recognized post-acquisition under IFRS. Adjusted revenues exclude
these acquisition accounting effects.
Management expects to use Adjusted revenues as a measure to the extent
that the amortization impacts of the fair value adjustment to the
acquired deferred revenues at the time of the HFS acquisition are
significant to the Consolidated Statements of Income.
Management believes that this non-IFRS measure provides investors with
useful information regarding the underlying performance of the business
operations and facilitates meaningful comparisons of pre-acquisition
operations to post-acquisition revenues. Without considering these
non-IFRS adjustments, acquisition accounting adjustments made in
accordance with IFRS may deem it difficult to make meaningful
comparisons of the underlying operations of the business between
periods.
EBITDA
EBITDA is defined as income from continuing operations excluding
interest, taxes, depreciation and amortization, other non-cash finance
charges and fair value adjustments of interest-rate swaps which are
directly related to interest expense, income from investment in an
associate and gain on re-measurement of previously held equity interest
in the Compushare investment. EBITDA is also described as income from
operating activities before depreciation and amortization in the
Consolidated Statements of Income.
In addition to its use by management as an internal measure of financial
performance, EBITDA (with certain adjustments) is used to measure
compliance with certain financial covenants under the Company's Credit
Facility (as defined in the 'Hedges' section) and bonds. EBITDA is also
used by D+H as a factor in assessing the performance and the 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 EBITDA
Adjusted EBITDA is also used by D+H in assessing the performance of its
businesses.
Adjusted EBITDA excludes: (i) acquisition-related expenses such as
transaction costs, business integration costs and certain retention and
incentive costs incurred in connection with acquisitions; (ii) other
charges such as corporate development costs related to strategic
acquisition initiatives; and (iii) costs incurred in connection with
cost-realignment initiatives, all of which are not considered to be
part of the normal course of operations. Beginning in the third quarter
of 2013, the Company's calculation of Adjusted EBITDA also excluded
effects of acquisition accounting on the fair value of deferred
revenues and deferred costs acquired from the acquisition of HFS.
These items are excluded in calculating Adjusted EBITDA as they are not
considered indicative of the underlying business performance for the
period being reviewed and management believes that excluding these
adjustments is more reflective of ongoing operating results.
As described above, upon acquisition of HFS, the acquired deferred
revenue balances were adjusted to reflect the fair value based on
estimated costs of future delivery of the related services. Similarly,
deferred costs, which include sales commissions and implementation
costs, were adjusted to reflect their fair values of these items at the
acquisition date. These fair value adjustments to deferred revenue and
deferred costs recorded as of the acquisition date will reduce revenues
and expenses recognized post-acquisition under IFRS primarily over the
next two years following the acquisition, after which the impact to the
consolidated results would not be significant. Adjusted EBITDA excludes
the effects of these adjustments from the results in the periods
reported.
Similar to EBITDA, Adjusted EBITDA also 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, Basic
Adjusted net income is used as a measure of internal performance similar
to net income, but is calculated by adjusting for the impacts of
certain non-cash items and certain items of note on an after-tax
basis. These adjustments include the after-tax impacts of: the effects
of acquisition accounting on fair value of deferred revenue and
deferred costs acquired from HFS; acquisition-related and other
charges; gains and losses on sales resulting from sale of non-strategic
assets; expenses associated with cost-realignment initiatives;
discontinued operations; all of which are not considered to be part of
normal course of operations; and, certain non-cash items such as
amortization of intangible assets from acquisitions, gain on
re-measurement of the previously held equity interest in Compushare,
non-cash finance charges such as deferred financing fees associated
with D+H's previous credit facility written off upon the refinancing in
connection with the acquisition of HFS, amortization of other deferred
financing charges, accretion of the Debentures (as defined in the
'Convertible Debentures' section), fair value adjustments of
interest-rate swaps and tax effects of these items. These items are
excluded in calculating Adjusted net income as they are not considered
indicative of the financial performance of the Company for the periods
being reviewed.
Basic Adjusted net income per share is calculated by dividing Adjusted
net income for the period by the weighted average number of shares
outstanding during the period.
ADDITIONAL IFRS MEASURES
Income from Operating Activities
D+H provides as part of its Consolidated Statements of Income an
additional IFRS measure for "Income from Operating Activities".
Management believes that this measure provides relevant information to
understand the Corporation's financial performance. This additional
IFRS measure is representative of activities that would normally be
regarded as "operating" for the Company.
STRATEGY
D+H's goal is to be a leading financial technology ("FinTech") provider
to the financial services marketplace. FinTech companies develop and
deliver technology and technology-enabled products and services to
banks, credit unions and other leading financial services customers who
use these solutions to drive growth, improve customer convenience,
streamline operations and efficiencies, reduce infrastructure costs and
enhance compliance requirements.
D+H's strategy is to establish market-leading positions within
well-defined and growing service areas in the financial services
marketplace, and to reinforce these positions with integrated
technology solutions that deliver increasing value to our customers and
shareholders. We expect to advance this strategy through organic
initiatives and selective acquisitions. By growing revenue while
maintaining efficient operations, D+H intends to achieve its long-term
financial objective of growing earnings.
In 2013, D+H significantly advanced its FinTech goal and strategy by
acquiring HFS. This acquisition substantially increased D+H's combined
customer count and added a suite of market-leading FinTech products to
its current offering. Management believes the addition of HFS provides
D+H with revenue synergies in the U.S. banking and credit union
marketplace and will improve the Company's value proposition as a
single-source FinTech provider.
In January 2014, the Company began operating under its single, signature
D+H brand in North America and globally, following the retirement of
our legacy HFS, Mortgagebot and Compushare brands. All of our leading
technology products and solutions now include the D+H brand in addition
to their existing product names. We believe rebranding is a strategic
enabler that will allow us to unlock synergies and create tangible
benefits for our businesses and clients.
Going forward, management will remain focused on executing its growth
strategy with emphasis on: (i) developing an integrated operating model
in the United States that will support efficient and effective growth;
(ii) cross-selling D+H's suite of FinTech solutions including its SaaS
products, cloud-based infrastructure technology, lending and lending
compliance and core bank technology primarily within the U.S.
marketplace to existing bank and credit union customers as well as
approximately 7,000 other U.S. community banks and credit unions that
could benefit from these offerings; (iii) enhancing services,
capabilities and cost effectiveness across all service lines in Canada
and the U.S. as a means of enhancing customer value, expanding margins,
and creating additional free cash flow; (iv) building new
subscription-based offerings in its payments solutions service area
where it won a number of Canadian financial institution mandates in
recent years; (v) extending the integrated D+H brand into the U.S.
market; and (vi) expanding its offering through strategic partnerships.
In carrying out its cross-selling strategy, D+H will work to achieve
synergies in a number of areas including integrating sales activities
to better serve customers, and focusing on creating tighter linkages
between our technologies to enhance customer satisfaction as D+H grows.
The Company is committed to reducing leverage while continuing to
support its current dividend payments. Without taking into account any
future acquisitions or strategic investment initiatives, the Company
expects to reduce its Total Funded Debt/EBITDA ratio, as defined in the
'Long-term indebtedness' section, to below 2.5 in 2015, on a foreign
exchange normalized basis, from 3.05 on the date of acquisition of HFS.
At June 30, 2014, debt repayments had reduced this ratio to 2.79. After
removing the impacts of foreign exchange fluctuations, this ratio was
2.75.
For a detailed discussion of the operating results for the three and six
months ended June 30, 2014 and management's outlook, please see below.
ACCOUNTING PRINCIPLES AND FINANCIAL INFORMATION PRESENTATION
The Company's unaudited condensed interim consolidated financial
statements have been prepared in accordance with IFRS, specifically IAS
34, Interim Financial Reporting, as issued by the International Accounting Standards Board ("IASB").
Results from continuing operations include the performance of acquired
businesses from the respective dates of acquisition and exclude results
from operations classified as discontinued operations for all
comparative periods presented.
Effective January 1, 2014, the Company modified its basis of reporting
such that the results from our technology products and services
supporting leasing, commercial lending and small business lending,
which have been experiencing growth in the U.S., are reported as part
of the U.S. Segment. Prior to January 1, 2014, the results from these
operations were reported as part of the Canadian Segment. This revised
view allows management to better evaluate its cross-selling strategies
in the U.S. that were implemented after the HFS acquisition and is
consistent with how this part of our business is managed and reviewed
by the Company's senior management.
Comparative periods have been conformed to the current period
classification, where applicable.
All amounts are in Canadian dollars, unless otherwise specified.
OPERATING RESULTS - SECOND QUARTER AND YEAR-TO-DATE 2014
The following discussion should be read in conjunction with the
unaudited condensed interim consolidated financial statements for the
three and six months ended June 30, 2014 and includes non-IFRS
financial measures. Management believes these supplementary disclosures
provide useful additional information. See 'Non-IFRS Financial
Measures' and 'Additional IFRS Measures' sections for a description of
non-IFRS and additional IFRS measures used.
Consolidated Operating Results - Overview
D+H delivered solid operating performance in the second quarter and
first six months of 2014 that was consistent with its strategic agenda
of becoming a leading FinTech provider to the financial services
marketplace. Year-over-year growth in revenues, Adjusted revenues and
Adjusted EBITDA was primarily attributable to the U.S. Segment and
reflected the inclusion of HFS. Consolidated EBITDA was higher for the
second quarter of 2014 and was inclusive of $1.8 million of
acquisition-related expenses and acquisition accounting adjustments of
$3.4 million related to the fair value of deferred revenues and
deferred costs acquired from the acquisition of HFS. Consolidated net
income for the second quarter and first six months of 2014 was higher
compared to the same periods in 2013 primarily due to EBITDA growth,
partially offset by the impacts of higher interest and amortization
expense as a result of the HFS acquisition. Consolidated Adjusted net
income and Adjusted net income per share, which exclude non-cash and
non-normal course items, were also higher than the same periods in 2013
primarily as a result of the HFS acquisition.
(in thousands of Canadian dollars, except per share amounts, unaudited)
|
|
|
|
|
|
|
Quarter ended June 30
|
|
Six months ended June 30
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
Revenues
|
$
|
285,955
|
|
$
|
197,134
|
|
$
|
552,246
|
|
$
|
368,795
|
|
Expenses
|
|
198,149
|
|
|
144,551
|
|
|
395,440
|
|
|
274,215
|
|
EBITDA 1
|
|
87,806
|
|
|
52,583
|
|
|
156,806
|
|
|
94,580
|
Depreciation of capital assets and amortization of
non-acquisition intangibles
|
|
10,599
|
|
|
6,657
|
|
|
20,055
|
|
|
13,176
|
|
Amortization of intangible assets from acquisitions
|
|
28,320
|
|
|
11,060
|
|
|
56,902
|
|
|
21,974
|
|
Income from operating activities
|
|
48,887
|
|
|
34,866
|
|
|
79,849
|
|
|
59,430
|
|
Interest expense
|
|
15,048
|
|
|
4,516
|
|
|
30,297
|
|
|
8,987
|
|
Income from investment in an associate, net of tax 2
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(130)
|
Gain on re-measurement of previously-held equity
interest 3
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,587)
|
|
Gain on sale of assets 4
|
|
(984)
|
|
|
-
|
|
|
(984)
|
|
|
-
|
|
Fair value adjustment of derivative instruments 5
|
|
(284)
|
|
|
(1,203)
|
|
|
(488)
|
|
|
(1,310)
|
|
Income tax expense
|
|
5,238
|
|
|
9,158
|
|
|
8,291
|
|
|
14,638
|
|
Income from continuing operations
|
|
29,869
|
|
|
22,395
|
|
|
42,733
|
|
|
38,832
|
|
Loss from discontinued operations, net of tax 6
|
|
-
|
|
|
(8,786)
|
|
|
(846)
|
|
|
(19,481)
|
|
Net income
|
$
|
29,869
|
|
$
|
13,609
|
|
$
|
41,887
|
|
$
|
19,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations per share,
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic 7
|
$
|
0.3697
|
|
$
|
0.3781
|
|
$
|
0.5291
|
|
$
|
0.6556
|
|
Diluted 8
|
$
|
0.3687
|
|
$
|
0.3781
|
|
$
|
0.5278
|
|
$
|
0.6556
|
|
Loss from discontinued operations per share, net of tax 6
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic 7
|
$
|
-
|
|
$
|
(0.1483)
|
|
$
|
(0.0105)
|
|
$
|
(0.3289)
|
|
Diluted 8
|
$
|
-
|
|
$
|
(0.1483)
|
|
$
|
(0.0105)
|
|
$
|
(0.3289)
|
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic 7
|
$
|
0.3697
|
|
$
|
0.2298
|
|
$
|
0.5186
|
|
$
|
0.3267
|
|
Diluted 8
|
$
|
0.3687
|
|
$
|
0.2298
|
|
$
|
0.5173
|
|
$
|
0.3267
|
|
|
|
|
1
|
EBITDA is a non-IFRS term. See Non-IFRS Financial Measures for a more
complete description of this term.
|
|
2
|
Income from investment in an associate consists of D+H's share of income
from Compushare, a minority investment prior to D+H acquiring 100%
control in January 2013.
|
|
3
|
Upon acquisition of the remaining interest in Compushare in January
2013, a gain related to re-measurement of the previously held equity
interest was recognized in the first quarter of 2013, in accordance
with IFRS standards.
|
|
4
|
Gain realized in the second quarter of 2014 upon the sale of certain
non-strategic assets.
|
|
5
|
Represents 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 Statements of Income.
|
|
6
|
Loss relates to D+H's divesture of its non-strategic business processing
operations on May 10, 2013.
|
|
7
|
Weighted average number of shares outstanding during the second quarter
of 2014 was 80,790,585 shares (second quarter of 2013 - 59,233,373
shares). For the first six months of 2014, weighted average number of
shares outstanding was 80,765,001 shares (first six months of 2013 -
59,233,373 shares).
|
|
8
|
Diluted per share measures reflect the impacts of outstanding stock
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 for income from operating
activities per share. Weighted average number of shares outstanding, on
a diluted basis, during the second quarter of 2014 was 81,013,068
(second quarter of 2013 - 59,233,373 shares). For the first six months
of 2014, weighted average number of shares outstanding, on a diluted
basis, was 80,968,308 shares (first six months of 2013 - 59,233,373
shares).
|
(in thousands of Canadian dollars, unaudited)
|
|
Quarter ended June 30
|
Six months ended June 30
|
|
|
2014
|
2013
|
2014
|
2013
|
|
Revenues
|
$
|
285,955
|
$
|
197,134
|
$
|
552,246
|
$
|
368,795
|
|
Acquisition accounting adjustments 1
|
|
6,203
|
|
-
|
|
15,660
|
|
-
|
|
Adjusted revenues 2
|
$
|
292,158
|
$
|
197,134
|
$
|
567,906
|
$
|
368,795
|
|
|
|
|
1
|
Fair value of the deferred revenue balance acquired with the acquisition
of HFS was adjusted to reflect estimated costs of future delivery of
services. This add-back represents the amortization of the deferred
revenue that was written-off on acquisition.
|
|
2
|
Adjusted revenues is a non-IFRS term. See 'Non-IFRS Financial Measures'
for a more complete description of this term.
|
(in thousands of Canadian dollars, unaudited)
|
|
Quarter ended June 30
|
|
Six months ended June 30
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
Revenues
|
$
|
285,955
|
$
|
197,134
|
|
$
|
552,246
|
$
|
368,795
|
|
Expenses
|
|
198,149
|
|
144,551
|
|
|
395,440
|
|
274,215
|
|
EBITDA 1
|
|
87,806
|
|
52,583
|
|
|
156,806
|
|
94,580
|
|
EBITDA Margin 1
|
|
30.7%
|
|
26.7%
|
|
|
28.4%
|
|
25.6%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition accounting adjustments 2
|
|
3,404
|
|
-
|
|
|
9,654
|
|
-
|
|
|
Acquisition-related and other charges 3
|
|
1,773
|
|
5,764
|
|
|
5,263
|
|
6,792
|
|
Adjusted EBITDA 1
|
$
|
92,983
|
$
|
58,347
|
|
$
|
171,723
|
$
|
101,372
|
|
Adjusted EBITDA Margin 1
|
|
31.8%
|
|
29.6%
|
|
|
30.2%
|
|
27.5%
|
|
|
|
|
1
|
EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are
non-IFRS terms. See 'Non-IFRS Financial Measures' for a more complete
description of these terms.
|
|
2
|
Acquisition accounting adjustments relate to the amortization of fair
value adjustments on deferred revenues and deferred costs acquired in
connection with the acquisition of HFS. See "Adjusted revenues" and
"Adjusted EBITDA" in the 'Non-IFRS Financial Measures' section for a
more complete description of these terms.
|
|
3
|
Acquisition-related and other charges for the second quarter and first
six months of 2014 included business integration costs related to the
acquisition of HFS and retention and incentive costs in connection with
the acquisition of businesses. Acquisition-related and other charges
for the second quarter of 2013 included corporate development costs
related to strategic acquisition initiatives, certain retention and
incentive costs in connection with the acquisition of businesses,
business integration costs and expenses related to cost-realignment
initiatives. For the first six months of 2013, these charges also
included transaction costs.
|
(in thousands of Canadian dollars, except per share amounts, unaudited)
|
|
|
|
Quarter ended June 30,
|
Six months ended June 30,
|
|
|
|
|
2014
|
2013
|
2014
|
2013
|
|
Net income
|
$
|
29,869
|
$
|
13,609
|
$
|
41,887
|
$
|
19,351
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Non-cash items:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition accounting adjustments 1
|
|
3,404
|
|
-
|
|
9,654
|
|
-
|
|
|
|
Non-cash interest expense 2
|
|
1,367
|
|
-
|
|
2,891
|
|
-
|
|
|
|
Amortization of intangible assets from acquisitions
|
|
28,320
|
|
11,060
|
|
56,902
|
|
21,974
|
|
|
|
Gain on re-measurement of previously-held equity interest 3
|
|
-
|
|
-
|
|
-
|
|
(1,587)
|
|
|
|
Gain on sale of assets 4
|
|
(984)
|
|
-
|
|
(984)
|
|
-
|
|
|
|
Fair value adjustment of derivative instruments 5
|
|
(284)
|
|
(1,203)
|
|
(488)
|
|
(1,310)
|
|
|
Other items of note:
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related and other charges 6
|
|
1,773
|
|
5,764
|
|
5,263
|
|
6,792
|
|
|
Tax effect of above adjustments 7
|
|
(12,009)
|
|
(3,814)
|
|
(25,697)
|
|
(7,392)
|
|
|
Loss from discontinued operations, net of tax 8
|
|
-
|
|
8,786
|
|
846
|
|
19,481
|
|
Adjusted net income 9
|
$
|
51,456
|
$
|
34,202
|
$
|
90,274
|
$
|
57,309
|
|
Adjusted net income per share, basic 9, 10
|
$
|
0.6369
|
$
|
0.5774
|
$
|
1.1177
|
$
|
0.9675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30
2014 vs. 2013
% change
|
|
|
|
Six months ended June 30
2014 vs. 2013
% change
|
|
Adjusted net income 9
|
|
50.4%
|
|
|
|
57.5%
|
|
Adjusted net income per share, basic 9, 10
|
|
10.3%
|
|
|
|
15.5%
|
|
|
|
|
|
1
|
|
Acquisition accounting adjustments relate to the amortization of the
fair value adjustments on deferred revenues and deferred costs acquired
in connection with the acquisition of HFS.
|
|
2
|
|
Non-cash interest charges relate to the accretion of Debentures issued
to partially fund the acquisition of HFS and amortization of deferred
financing charges incurred in connection with the Company's financing
arrangements.
|
|
3
|
|
Upon acquisition of the remaining interest in Compushare in January
2013, a gain related to re-measurement of the previously held equity
interest was recognized in the first quarter of 2013, in accordance
with IFRS standards.
|
|
4
|
|
Gain realized in the second quarter of 2014 upon the sale of certain
non-strategic assets.
|
|
5
|
|
Amounts include mark-to-market adjustments to 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 Statements of Income.
|
|
6
|
|
Acquisition-related and other charges for the second quarter and first
six months of 2014 included business integration costs related to the
acquisition of HFS and retention and incentive costs in connection with
the acquisition of businesses. Acquisition-related and other charges
for the second quarter of 2013 included corporate development costs
related to strategic acquisition initiatives, certain retention and
incentive costs in connection with the acquisition of businesses,
business integration costs and expenses related to cost-realignment
initiatives. For the first six months of 2013, these charges also
included transaction costs.
|
|
7
|
|
The adjustments to net income are tax effected at their respective tax
rates.
|
|
8
|
|
Loss relates to D+H's divesture of its non-strategic business processing
operations on May 10, 2013.
|
|
9
|
|
Adjusted net income and Adjusted net income per share are non-IFRS
terms. See 'Non-IFRS Financial Measures' for a more complete
description of these terms.
|
|
10
|
|
Weighted average number of shares outstanding during the second quarter
of 2014 was 80,790,585 shares (second quarter of 2013 - 59,233,373
shares). For the first six months of 2014, weighted average number of
shares outstanding was 80,765,001 shares (first six months of 2013 -
59,233,373 shares).
|
|
|
|
|
|
OPERATING RESULTS BY SEGMENT
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30,
|
|
|
|
|
Canadian
Segment
|
|
|
U.S.
Segment
|
|
|
Corporate
|
|
|
|
Consolidated
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
Revenues
|
$
|
168,763
|
$
|
169,842
|
|
$
|
117,192
|
$
|
27,292
|
|
$
|
-
|
$
|
-
|
|
$
|
285,955
|
$
|
197,134
|
|
Acquisition accounting adjustments 1
|
|
-
|
|
-
|
|
|
6,203
|
|
-
|
|
|
-
|
|
-
|
|
|
6,203
|
|
-
|
|
Adjusted revenues 2
|
$
|
168,763
|
$
|
169,842
|
|
$
|
123,395
|
$
|
27,292
|
|
$
|
-
|
$
|
-
|
|
$
|
292,158
|
$
|
197,134
|
|
|
|
|
1
|
Fair value of the deferred revenue balance acquired with the acquisition
of HFS was adjusted to reflect estimated costs of future delivery of
services. This add-back represents the amortization of the deferred
revenue that was written-off on acquisition.
|
|
2
|
Adjusted revenues is a non-IFRS term. See 'Non-IFRS Financial Measures'
for a more complete description of this term.
|
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30,
|
|
|
|
|
Canadian
Segment
|
|
|
|
U.S.
Segment
|
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
Revenues
|
$
|
168,763
|
$
|
169,842
|
|
$
|
117,192
|
$
|
27,292
|
|
$
|
-
|
$
|
-
|
|
$
|
285,955
|
$
|
197,134
|
|
Expenses
|
|
119,964
|
|
122,732
|
|
|
76,412
|
|
16,055
|
|
|
1,773
|
|
5,764
|
|
|
198,149
|
|
144,551
|
|
EBITDA 1
|
|
48,799
|
|
47,110
|
|
|
40,780
|
|
11,237
|
|
|
(1,773)
|
|
(5,764)
|
|
|
87,806
|
|
52,583
|
|
EBITDA Margin 1
|
|
28.9%
|
|
27.7%
|
|
|
34.8%
|
|
41.2%
|
|
|
-
|
|
-
|
|
|
30.7%
|
|
26.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition accounting adjustments 2
|
|
-
|
|
-
|
|
|
3,404
|
|
-
|
|
|
-
|
|
-
|
|
|
3,404
|
|
-
|
|
|
Acquisition-related and other charges 3
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
|
1,773
|
|
5,764
|
|
|
1,773
|
|
5,764
|
|
Adjusted EBITDA 1
|
$
|
48,799
|
$
|
47,110
|
|
$
|
44,184
|
$
|
11,237
|
|
$
|
-
|
$
|
-
|
|
$
|
92,983
|
$
|
58,347
|
|
Adjusted EBITDA Margin 1
|
|
28.9%
|
|
27.7%
|
|
|
35.8%
|
|
41.2%
|
|
|
-
|
|
-
|
|
|
31.8%
|
|
29.6%
|
|
|
|
|
1
|
EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are
non-IFRS terms. See (Non-IFRS Financial Measures) for a more complete
description of these terms.
|
|
2
|
Acquisition accounting adjustments relate to the amortization of the
fair value adjustments on deferred revenues and deferred costs acquired
in connection with the acquisition of HFS. See 'Adjusted revenues' and
'Adjusted EBITDA' in the 'Non-IFRS Financial Measures' section for a
more complete description of these terms.
|
|
3
|
Acquisition-related and other charges for the second quarter of 2014
included business integration costs related to the acquisition of HFS
and retention and incentive costs in connection with the acquisition of
businesses. Acquisition-related and other charges for the second
quarter of 2013 included corporate development costs related to
strategic acquisition initiatives, certain retention and incentive
costs in connection with the acquisition of businesses, business
integration costs and expenses related to cost-realignment initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30,
|
|
|
|
|
|
|
|
|
|
|
Canadian
Segment
|
|
U.S.
Segment
|
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
2014 vs. 2013
% change
|
|
2014 vs. 2013
% change
|
|
2014 vs. 2013
% change
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
(0.6%)
|
|
329.4%
|
|
45.1%
|
|
Adjusted revenues 1
|
|
|
|
|
|
|
|
|
|
(0.6%)
|
|
352.1%
|
|
48.2%
|
|
Adjusted EBITDA 1
|
|
|
|
|
|
|
|
|
|
3.6%
|
|
293.2%
|
|
59.4%
|
|
|
|
|
1
|
Adjusted revenues and Adjusted EBITDA are non-IFRS terms. See Non-IFRS
Financial Measures for a more complete description of these terms.
|
|
|
|
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
Canadian
Segment
|
|
|
U.S.
Segment
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
2013
|
2012
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
Revenues
|
$
|
318,856
|
$
|
318,482
|
|
$
|
233,390
|
$
|
50,313
|
|
$
|
-
|
$
|
-
|
|
$
|
552,246
|
$
|
368,795
|
|
Acquisition accounting adjustments 1
|
|
-
|
|
-
|
|
|
15,660
|
|
-
|
|
|
-
|
|
-
|
|
|
15,660
|
|
-
|
|
Adjusted revenues 2
|
$
|
318,856
|
$
|
318,482
|
|
$
|
249,050
|
$
|
50,313
|
|
$
|
-
|
$
|
-
|
|
$
|
567,906
|
$
|
368,795
|
|
|
|
|
1
|
Fair value of the deferred revenue balance acquired with the acquisition
of HFS was adjusted to reflect estimated costs of future delivery of
services. This add-back represents the amortization of the deferred
revenue that was written-off on acquisition.
|
|
2
|
Adjusted revenues is a non-IFRS term. See Non-IFRS Financial Measures
for a more complete description of this term.
|
|
|
|
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
Canadian
Segment
|
|
|
|
U.S.
Segment
|
|
|
Corporate
|
|
Consolidated
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
Revenues
|
$
|
318,856
|
$
|
318,482
|
|
$
|
233,390
|
$
|
50,313
|
|
$
|
-
|
$
|
-
|
|
$
|
552,246
|
$
|
368,795
|
|
Expenses
|
|
236,136
|
|
237,622
|
|
|
154,041
|
|
29,801
|
|
|
5,263
|
|
6,792
|
|
|
395,440
|
|
274,215
|
|
EBITDA 1
|
|
82,720
|
|
80,860
|
|
|
79,349
|
|
20,512
|
|
|
(5,263)
|
|
(6,792)
|
|
|
156,806
|
|
94,580
|
|
EBITDA Margin 1
|
|
25.9%
|
|
25.4%
|
|
|
34.0%
|
|
40.8%
|
|
|
-
|
|
-
|
|
|
28.4%
|
|
25.6%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition accounting adjustments 2
|
|
-
|
|
-
|
|
|
9,654
|
|
-
|
|
|
-
|
|
-
|
|
|
9,654
|
|
-
|
|
|
Acquisition-related and other charges 3
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
|
5,263
|
|
6,792
|
|
|
5,263
|
|
6,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA 1
|
$
|
82,720
|
$
|
80,860
|
|
$
|
89,003
|
$
|
20,512
|
|
$
|
-
|
$
|
-
|
|
$
|
171,723
|
$
|
101,372
|
|
Adjusted EBITDA Margin 1
|
|
25.9%
|
|
25.4%
|
|
|
35.7%
|
|
40.8%
|
|
|
-
|
|
-
|
|
|
30.2%
|
|
27.5%
|
|
|
|
|
1
|
EBITDA, EBITDA Margin, Adjusted EBITDA and Adjusted EBITDA Margin are
non-IFRS terms. See Non-IFRS Financial Measures for a more complete
description of these terms.
|
|
2
|
Acquisition accounting adjustments relate to the amortization of the
fair value adjustments on deferred revenues and deferred costs acquired
in connection with the acquisition of HFS. See "Adjusted revenues" and
"Adjusted EBITDA" in the 'Non-IFRS Financial Measures' section for a
more complete description of these terms.
|
|
3
|
Acquisition-related and other charges for the first six months of 2014
included business integration costs related to the acquisition of HFS
and retention and incentive costs in connection with the acquisition of
businesses. Acquisition-related and other charges for the first six
months of 2013 included transaction costs, corporate development costs
related to strategic acquisition initiatives, certain retention and
incentive costs in connection with the acquisition of businesses,
business integration costs and expenses related to cost-realignment
initiatives.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
|
|
|
|
|
Canadian
Segment
|
|
U.S.
Segment
|
|
Consolidated
|
|
|
|
|
|
|
|
|
2014 vs. 2013
% change
|
|
2014 vs. 2013
% change
|
|
2014 vs. 2013
% change
|
|
Revenues
|
|
|
|
|
|
|
|
0.1%
|
|
363.9%
|
|
49.7%
|
|
Adjusted revenues 1
|
|
|
|
|
|
|
|
0.1%
|
|
395.0%
|
|
54.0%
|
|
Adjusted EBITDA 1
|
|
|
|
|
|
|
|
2.3%
|
|
333.9%
|
|
69.4%
|
1 Adjusted revenues and Adjusted EBITDA are non-IFRS terms. See Non-IFRS
Financial Measures for a more complete description of these terms.
REVENUES AND ADJUSTED REVENUES
The following table reflects the relative size of each of the major
service areas as a percentage of consolidated Adjusted revenues based
on a rolling twelve-month period:
|
|
|
|
|
|
|
Twelve months ended June 30,
|
|
|
|
|
|
|
|
2014
|
|
2013
|
|
Adjusted Revenues - Consolidated
|
|
|
|
|
|
|
|
|
|
|
Payments solutions
|
|
|
|
|
|
28.4%
|
|
42.1%
|
|
|
Lending processing solutions
|
|
|
|
|
|
26.7%
|
|
37.9%
|
|
|
Banking technology solutions
|
|
|
|
|
|
|
|
|
|
|
|
Lending
|
|
|
|
|
|
26.9%
|
|
18.8%
|
|
|
|
Enterprise
|
|
|
|
|
|
18.0%
|
|
1.2%
|
|
|
|
|
|
|
|
100.0%
|
|
100.0%
|
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30
|
|
|
|
Canadian
Segment
|
|
U.S.
Segment
|
|
Consolidated
|
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
Revenues
|
|
Revenues
|
|
|
Revenues
|
|
Adjustment 1
|
|
|
Adjusted
revenues 2
|
|
Revenues
|
|
|
Revenues
|
|
Adjustment 1
|
|
|
Adjusted
revenues 2
|
|
|
Revenues
|
|
Payments solutions
|
|
$
|
76,238
|
$
|
78,591
|
|
$
|
-
|
$
|
-
|
|
$
|
-
|
$
|
-
|
|
$
|
76,238
|
$
|
-
|
|
$
|
76,238
|
|
$
|
78,591
|
|
Lending processing solutions
|
|
|
76,922
|
|
76,145
|
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
|
76,922
|
|
-
|
|
|
76,922
|
|
|
76,145
|
|
Banking technology solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lending
|
|
|
15,603
|
|
15,106
|
|
|
61,747
|
|
5,524
|
|
|
67,271
|
|
22,375
|
|
|
77,350
|
|
5,524
|
|
|
82,874
|
|
|
37,481
|
|
|
Enterprise
|
|
|
-
|
|
-
|
|
|
55,445
|
|
679
|
|
|
56,124
|
|
4,917
|
|
|
55,445
|
|
679
|
|
|
56,124
|
|
|
4,917
|
|
Total Revenues
|
|
$
|
168,763
|
$
|
169,842
|
|
$
|
117,192
|
$
|
6,203
|
|
$
|
123,395
|
$
|
27,292
|
|
$
|
285,955
|
$
|
6,203
|
|
$
|
292,158
|
|
$
|
197,134
|
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30,
|
|
|
|
Canadian
Segment
|
|
U.S.
Segment
|
|
Consolidated
|
|
|
|
2014
|
2013
|
|
|
|
|
2014
|
2013
|
|
|
|
|
2014
|
2013
|
|
|
|
|
Revenues
|
|
Revenues
|
|
|
Revenues
|
|
Adjustment 1
|
|
|
Adjusted
revenues 2
|
|
Revenues
|
|
|
Revenues
|
|
Adjustment 1
|
|
|
Adjusted
revenues 2
|
|
Revenues
|
|
Payments solutions
|
|
$
|
150,941
|
$
|
152,270
|
|
$
|
-
|
$
|
-
|
|
$
|
-
|
$
|
-
|
|
$
|
150,941
|
$
|
-
|
|
$
|
150,941
|
$
|
152,270
|
|
Lending processing solutions
|
|
|
143,200
|
|
141,268
|
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
|
143,200
|
|
-
|
|
|
143,200
|
|
141,268
|
|
Banking technology solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lending
|
|
|
24,715
|
|
24,944
|
|
|
122,186
|
|
13,846
|
|
|
136,032
|
|
41,883
|
|
|
146,901
|
|
13,846
|
|
|
160,747
|
|
66,827
|
|
|
Enterprise
|
|
|
-
|
|
-
|
|
|
111,204
|
|
1,814
|
|
|
113,018
|
|
8,430
|
|
|
111,204
|
|
1,814
|
|
|
113,018
|
|
8,430
|
|
Total Revenues
|
|
$
|
318,856
|
$
|
318,482
|
|
$
|
233,390
|
$
|
15,660
|
|
$
|
249,050
|
$
|
50,313
|
|
$
|
552,246
|
$
|
15,660
|
|
$
|
567,906
|
$
|
368,795
|
|
|
|
|
1
|
Adjustment is related to non-cash fair value adjustment to deferred
revenues acquired in connection with the acquisition of HFS. Fair value
of the deferred revenue balance was adjusted to reflect estimated costs
of future delivery of the services. This add-back represents the
amortization of the deferred revenue that was written-off on
acquisition.
|
|
2
|
Adjusted revenues is a non-IFRS term. See Non-IFRS Financial Measures
for a more complete description of this term.
|
Revenues and Adjusted Revenues - Consolidated
Consolidated revenues for the second quarter of 2014 were $286.0
million, a year-over-year increase of $88.8 million, or 45.1%. For the
first six months of 2014, consolidated revenues of $552.2 million,
increased by $183.5 million, or 49.7%, compared to the same period in
2013. After eliminating the impacts of foreign exchange volatility,
revenues increased by 40.1% and 44.4% in the second quarter and first
six months of 2014, respectively. Revenues in 2014 were impacted by the
fair value adjustment to deferred revenues acquired from HFS.
Consolidated Adjusted revenues for the second quarter of 2014 were
$292.2 million, an increase of $95.0 million, or 48.2%, compared to the
same period in 2013. For the first six months of 2014, consolidated
Adjusted revenues of $567.9 million, increased by $199.1 million, or
54.0%, compared to the same period in 2013. After eliminating the
impacts of foreign exchange volatility, Adjusted revenues increased by
42.9% in the second quarter of 2014, and by 48.3% for the first six
months of 2014 (see U.S. Segment discussion below for further details).
These increases were primarily due to the inclusion of HFS, and to a
lesser extent, organic growth mainly in recovery services and
subscription fee-based enhancement services offerings.
Revenues - Canadian Segment
Total revenues in the Canadian Segment for the second quarter of 2014
were $168.8 million, $1.1 million, or 0.6%, lower than a year ago
reflecting the factors noted below. For the first six months in 2014,
Canadian Segment revenues were $318.9 million, an increase of $0.4
million, or 0.1%, compared to the same period in 2013. Adjusted
revenues are the same as revenues for the Canadian Segment as this
segment was not subject to acquisition accounting adjustments.
Payments Solutions
Payments solutions include: (i) the cheque supply program which serves
the personal and small business account holders of our financial
services customers; and (ii) various subscription fee-based enhancement
services and other service offerings directed towards chequing and
credit card programs.
As a result of growth in alternative payments, the number of cheques
written has declined and is expected to continue to decline. Management
believes that the downward trend in cheque order volumes is in the
mid-single digits annually. In recent years, there has been more
volatility in personal cheque order volumes, while the decline in
business cheque order volumes continues to be in the low single digits
with comparatively less volatility. Management expects that these
trends will continue through 2014. D+H continues to develop service
enhancements to offset this impact and to generate future growth within
this category. Revenues in this area are not significantly impacted by
seasonality.
Revenues from payments solutions for the second quarter of 2014 were
$76.2 million, a decrease of $2.4 million, or 3.0%, compared to the
same quarter in 2013. For the first six months in 2014, revenues were
$150.9 million, a decrease of $1.3 million, or 0.9%, compared to the
same period in 2013. Revenues for the second quarter of 2014 were lower
than a year ago as a result of having one less business day of sales
available in our chequing service area and also due to timing of
revenues earned in our enhancement services offerings. Revenues from
payments solutions for the three and six-month periods were also
impacted by volume declines in cheque orders, partially offset by
higher average order values due to product and service enhancements in
the chequing and credit card programs and higher volumes in
subscription fee-based enhancement services offerings.
Lending Processing Solutions
Lending processing solutions consist of two distinct sets of customer
solutions: loan registration and recovery and student loan
administration services.
Loan registration and recovery services, which account for approximately
60% to 70% of the revenues within this category, support the personal
and commercial lending activities of our customers with 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. Loans relating to vehicle
purchases, new and resale, are a significant driver of activity and are
variable. In general, registration services are affected by both
economic cyclicality and seasonality, while recovery services are, in
general, counter-cyclical.
In our student loans administration services area, which accounts for
approximately 30% to 40% of revenues within the lending processing
solutions category, we manage a $21 billion student loan portfolio
servicing 1.7 million students on behalf of the Canadian federal and
provincial governments and lenders. Services include student
enrollment, management of funds disbursement, loan tracking, student
support services, reporting and collections. Revenues from this program
are primarily earned based upon the number of student loans serviced
while enrolled in school and the number of loans serviced while
students are in the repayment cycle. D+H also earns revenue from
professional services work connected to program enhancements requested
by the lenders. Revenues in this area are not significantly impacted by
seasonality.
D+H and the Government of Canada are parties to a contract pursuant to
which D+H provides financial and related services in support of the
Canada Student Loans and Grants Program ("CSLP") as well as the student
loan and grant programs of certain Canadian provinces. The contract
with the Government of Canada will expire on March 31, 2016 after which
the Government of Canada has the right to renew for one-year terms up
to a maximum of two such terms. In line with government procurement
policy, the Government of Canada has initiated consultations with the
industry regarding the requirements for administering the CSLP after
the expiry of the existing contract and we expect a request for
proposals will be issued in the summer of 2014. D+H intends to
aggressively defend its incumbency and believes the quality of our
delivery thus far will help us remain competitive in the bid process.
Lending processing solutions revenues for the second quarter of 2014
were $76.9 million, an increase of $0.8 million, or 1.0%, compared to
the same quarter in 2013. For the first six months of 2014, revenues
were $143.2 million, a year-over-year increase of $1.9 million, or
1.4%. The increases in both periods were mainly due to higher
transaction volumes in recovery services and, to a lesser extent,
higher volumes in the student loans program and higher average order
values in registration services. The rate of year-over-year growth was
muted by a reduction in project-related and professional services
revenues in the student loan program compared to 2013.
Banking Technology Solutions - Lending
In the Canadian Segment, banking technology solutions, reported within
the lending category, are directed towards mortgage markets in Canada.
Revenues within this category are attributable to transaction-based
fees earned in connection with Canadian mortgage originations. These
fees can be variable and are impacted by many factors including the
economy, the housing market, interest rates and changes in government
regulations among others. Revenues in this area are subject to some
seasonality as the second and third quarters have historically
experienced a higher level of origination activity, consistent with the
overall housing market in Canada. As described earlier, revenues
pertaining to our technology products and services supporting leasing,
commercial lending and small business lending are now reported as part
of the U.S. Segment.
Canadian banking technology solutions revenues in the second quarter of
2014 were $15.6 million, an increase of $0.5 million, or 3.3%, compared
to the same quarter in 2013. Revenues for the first six months of 2014
were $24.7 million, a year-over-year decrease of $0.2 million, or 0.9%.
Revenues for the second quarter of 2014 benefited from higher
professional services fees earned in connection with our mortgage
origination business and from strong housing market activity. The
impact of price modifications from previous periods was fully accounted
for in the second quarter of 2014, however revenues in the first six
months of 2014 reflected lower mortgage origination fees resulting from
these price modifications.
Revenues and Adjusted Revenues - U.S. Segment
Revenues from U.S. banking technology solutions are classified into
lending solutions and enterprise solutions categories, as further
described below. With the acquisition of HFS, we expect higher levels
of seasonality in revenues from our U.S. banking technology service
area, as revenues have historically been stronger in the second and
fourth quarters, with the latter being the busiest period.
Total revenues in the U.S. Segment for the second quarter of 2014
increased by $89.9 million year-over-year, or 329.4%, of $117.2
million. For the first six months in 2014, total revenues were $233.4
million, an increase of $183.1 million, or 363.9%, compared to the same
period in 2013. Second quarter Adjusted revenues for the U.S. Segment
of $123.4 million were $96.1 million, or 352.1%, ahead of the same
period in 2013. For the first six months of 2014, Adjusted revenues of
$249.1 million, were $198.7 million, or 395.0%, ahead of the previous
year. The sharp increases in revenues and Adjusted revenues were
primarily due to the inclusion of HFS.
A strong U.S. dollar in the second quarter of 2014 compared to the same
period in 2013 benefited revenues and Adjusted revenues in the U.S.
Segment by $9.9 million and $10.5 million, respectively. After
eliminating these foreign exchange impacts, revenues and Adjusted
revenues increased by 293.3% and 313.5%, respectively. For the first
six months of 2014, the strong U.S. dollar benefited revenues and
Adjusted revenues by $19.7 million and $21.2 million, respectively.
After eliminating foreign exchange impacts, revenues increased by
324.8% and Adjusted revenues by 353.0% for the first six months. These
foreign exchange impacts were calculated as the difference between the
current period's actual results and the current period's results in
local currency converted at the foreign exchange rates in effect during
the same period of the prior year.
Lending Solutions
Lending solutions primarily consist of loan origination and mortgage
compliance offerings for a wide variety of loan types, including
consumer, mortgage and commercial loans, and also market offerings
related to commercial lending risk management, underwriting and
portfolio management solutions. Within the U.S. lending solutions
revenue categories, approximately 50% to 60% comes from recurring
subscription fees which generally are market resilient; 15% to 25%
comes from sales of software and associated professional services,
which can be variable due to timing; 15% to 25% are attributable to
post-contract maintenance services, and less than 5% to transaction
based revenues which are sensitive to changes in market conditions.
Effective January 1, 2014, also included in this category are the
technology products and services supporting leasing, commercial lending
and small business lending, which were previously reported as part of
the Canadian Segment.
U.S. lending solutions revenue for the second quarter of 2014 was $61.7
million, an increase of $39.4 million, or 176.0%, compared to $22.4
million for the same period in 2013. For the first six-month period,
revenues were $122.2 million, an increase of $80.3 million, or 191.7%,
compared to the same period in 2013. Revenues in 2014 primarily
benefited from the inclusion of HFS and were impacted by
acquisition-accounting adjustments related to fair value of deferred
revenue acquired through the acquisition of HFS. Adjusted revenues of
$67.3 million, which removed these acquisition accounting impacts,
increased by $44.9 million compared to the same quarter in 2013 due to
the inclusion of HFS. For the first six months of 2014, Adjusted
revenues were $136.0 million, a year-over-year increase of $94.1
million.
Enterprise Solutions
Enterprise solutions primarily consist of revenues from core processing
systems including content management, financial accounting and payments
solutions, a number of innovative channel solutions related to
self-service, business intelligence and branch automation solutions and
cloud-based infrastructure technology solutions offerings.
U.S. enterprise solutions revenues for the second quarter of 2014 were
$55.4 million, an increase of $50.5 million, compared to the same
period in 2013. For the six months ended June 30, 2014, revenues were
$111.2 million, an increase of $102.8 million, compared to the same
period in 2013. Revenues recorded under IFRS for the second quarter and
first six months of 2014 benefited from the acquisition of HFS.
Adjusted revenues, which are calculated after removing the impacts of
purchase accounting adjustments related to fair value of deferred
revenues, were $56.1 million for the second quarter of 2014, an
increase of $51.2 million. For the first six months of 2014, Adjusted
revenues were $113.0 million, an increase of $104.6 million. Adjusted
revenues were higher than last year due to the inclusion of HFS.
EXPENSES
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter ended June 30,
|
|
|
|
|
Canadian
Segment
|
|
|
U.S.
Segment
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
Employee compensation and benefits 1, 4
|
|
$
|
38,528
|
$
|
38,958
|
|
$
|
48,672
|
$
|
10,663
|
|
$
|
729
|
$
|
2,417
|
|
$
|
87,929
|
$
|
52,038
|
|
Non-compensation direct expenses 2
|
|
|
67,376
|
|
65,509
|
|
|
8,596
|
|
619
|
|
|
-
|
|
-
|
|
|
75,972
|
|
66,128
|
|
Other operating expenses 3, 4
|
|
|
14,060
|
|
18,265
|
|
|
19,144
|
|
4,773
|
|
|
1,044
|
|
3,347
|
|
|
34,248
|
|
26,385
|
|
Total Expenses
|
|
$
|
119,964
|
$
|
122,732
|
|
$
|
76,412
|
$
|
16,055
|
|
$
|
1,773
|
$
|
5,764
|
|
$
|
198,149
|
$
|
144,551
|
|
|
|
|
|
|
|
|
|
|
|
|
Six-months ended June 30,
|
|
|
|
|
Canadian
Segment
|
|
|
U.S.
Segment
|
|
|
Corporate
|
|
|
Consolidated
|
|
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
2014
|
2013
|
|
Employee compensation and benefits 1, 4
|
|
$
|
81,282
|
$
|
79,287
|
|
$
|
96,989
|
$
|
19,557
|
|
$
|
1,717
|
$
|
3,309
|
|
$
|
179,988
|
$
|
102,153
|
|
Non-compensation direct expenses 2
|
|
|
126,603
|
|
122,978
|
|
|
17,551
|
|
1,192
|
|
|
-
|
|
-
|
|
|
144,154
|
|
124,170
|
|
Other operating expenses 3, 4
|
|
|
28,251
|
|
35,357
|
|
|
39,501
|
|
9,052
|
|
|
3,546
|
|
3,483
|
|
|
71,298
|
|
47,892
|
|
Total Expenses
|
|
$
|
236,136
|
$
|
237,622
|
|
$
|
154,041
|
$
|
29,801
|
|
$
|
5,263
|
$
|
6,792
|
|
$
|
395,440
|
$
|
274,215
|
|
|
|
|
1
|
Employee compensation and benefits on a consolidated basis includes
retention and incentive expenses related to acquisition of businesses
and share-based compensation expenses and are net of apprenticeship tax
credits and amounts capitalized related to software product
development.
|
|
2
|
Non-compensation direct expenses include materials, shipping, selling
expenses, royalties and third party direct disbursements.
|
|
3
|
Other operating expenses include occupancy costs, communication costs,
professional fees, transaction costs related to acquisition of
businesses and expenses not included in other categories. Other
operating expenses in the Canadian Segment are net of management fees
charged to the U.S. segment by the Canadian Segment.
|
|
4
|
Compensation costs for contractors are now included as part of employee
compensation and benefits, whereas in prior periods they were recorded
as other operating expenses. Prior periods have also been adjusted to
conform to current period presentation. For the second quarter of 2013,
these costs were $2.5 million in the Canadian Segment and $0.4 million
in U.S. Segment. For the first six months of 2013, these costs were
$5.4 million in the Canadian Segment and $0.6 million in the U.S.
Segment.
|
|
|
|
Expenses - Consolidated
Consolidated expenses of $198.2 million for the second quarter of 2014
increased by $53.6 million, or 37.1%, compared to the same quarter in
2013. For the first six months of 2014, consolidated expenses were
$395.4 million, an increase of $121.2 million, or 44.2%, compared to
the same period in 2013. The increase was mainly attributable to the
inclusion of HFS expenses. Consolidated expenses also included
acquisition-related and other charges of $1.8 million and $5.3 million
for the second quarter and first six months of 2014, respectively,
which are not considered reflective of normal course operations and are
disclosed as part of Corporate. Acquisition-related and other charges
of $5.8 million and $6.8 million were recorded in the second quarter
and first six months of 2013, respectively.
Expenses - Canadian Segment
Total Canadian Segment expenses for the second quarter of $120.0
million, decreased by $2.8 million, or 2.3%, compared to the same
quarter in 2013. Expenses for the first six months of 2014 were $236.1
million, a decrease of $1.5 million, or 0.6%. The decreases in total
expenses were mainly driven by higher management fees, discussed below.
Employee compensation and benefits costs of $38.5 million for the second
quarter of 2014 for the Canadian Segment were lower by $0.4 million, or
1.1%, compared to the same quarter in 2013. For the first six months of
2014, these costs increased year-over-year by $2.0 million, or 2.5%, to
$81.3 million. The decrease in expenses for the second quarter was as a
result of decreased share based compensation reflecting a revaluation
of the related liability. This decrease was partially offset by
inflationary salary increases. The increase in expenses for the first
six-month period of 2014 was due to higher severance payments in the
normal course of operations and an increase in share-based compensation
expense reflecting a higher stock price. Increases in 2014 were offset
by benefits realized from cost savings initiatives implemented in prior
periods.
Non-compensation direct expenses for the Canadian Segment were $67.4
million for the second quarter of 2014, an increase of $1.9 million, or
2.8%, compared to the same quarter in 2013. For the six-month period in
2014, non-compensation direct expenses of $126.6 million, increased by
$3.6 million, or 2.9%, compared to the same period in 2013. In general,
these expenses directionally change with revenue changes. This increase
in non-compensation direct expenses for the second quarter and first
six months of 2014 reflected higher volumes in our subscription
fee-based enhancement services offerings within our payments solutions
service area and an increase in direct costs associated with lending
processing solutions, consistent with the increase in revenues. The
increase noted in the second quarter of 2014 was partially offset by
reduced costs as a result of lower cheque volume within our payments
solutions business.
Other operating expenses of $14.1 million for the second quarter of 2014
decreased by $4.2 million, or 23.0%, compared to the same quarter in
2013. For the first six months of 2014, other operating expenses of
$28.3 million were lower by $7.1 million, or 20.1%, compared to the
same period in 2013. In both periods, the decrease was due to a higher
management fee charged by the Canadian Segment to the U.S. Segment
since the acquisition of HFS, lower consulting costs and by benefits
realized from cost savings initiatives implemented in prior periods.
The management fee charged to the U.S. Segment was $3.0 million for the
second quarter of 2014 and $6.0 million for the first six months of
2014, compared to $1.0 and $2.0 million charged for the second quarter
and first six months of 2013, respectively. Total management fees are
expected to be $12.0 million for 2014, compared to $6.9 million for
2013 reflecting the increased size of U.S. operations.
Expenses - U.S. Segment
Total expenses for the U.S. Segment for the second quarter of 2014 were
$76.4 million, an increase of $60.4 million, or 375.9%, compared to the
same quarter in 2013. For the first six months of 2014, total expenses
for the U.S. Segment were $154.0 million, an increase of $124.2
million, or 416.9%, compared to the same period last year. The increase
in total expenses for the 2014 periods was primarily attributable to
the inclusion of HFS.
Employee compensation and benefits costs of $48.7 million in the second
quarter increased by $38.0 million compared to the same period in 2013.
For the first six months of 2014, costs of $97.0 million, increased by
$77.4 million, compared to the same periods in 2013. Non-compensation
direct expenses for the U.S. Segment of $8.6 million for the second
quarter of 2014 were higher by $8.0 million compared to the same period
in 2013. For the first six months of 2014, costs of $17.6 million,
increased by $16.4 million, compared to the same period in 2013. Other
operating expenses of $19.1 million for the second quarter of 2014 were
higher by $14.4 million, compared to the same quarter in 2013. For the
six months ended June 30, 2014, other operating expenses of $39.5
million, increased by $30.4 million, compared to the same period in
2013.
As noted above, these increases were primarily attributable to the
inclusion of HFS. Employee compensation and benefits expenses and other
operating expenses also benefited by cost synergies realized between
our other SaaS businesses and HFS. Other operating expenses also
included a management fee, as further described above, for
corporate-related services, charged to the U.S. Segment by the Canadian
Segment.
Expenses - Corporate
Employee compensation and benefits
Employee compensation and benefits expenses recorded as corporate
expenses for the second quarter and first six months of 2014 primarily
consisted of retention and incentive expenses incurred in connection
with the acquisitions. For the second quarter in 2013 these expenses
consisted of charges relating to retention and incentive expenses in
connection with acquisitions, and for the first six months of 2013,
these expenses also included severances related to cost-realignment
initiatives.
Other expenses
Other expenses in the second quarter and first six months of 2014 mainly
consisted of business integration costs incurred in connection with the
acquisition of HFS. Other expenses in the second quarter of 2013
primarily related to transaction costs related to strategic acquisition
initiatives. Other expenses in 2013 also included transaction costs in
connection with the acquisition of Compushare and business integration
costs.
EBITDA AND EBITDA MARGIN
Consolidated EBITDA for the second quarter of 2014 was $87.8 million, an
increase of $35.2 million, or 67.0%, compared to $52.6 million for the
same quarter in 2013. Second quarter 2014 EBITDA margin of 30.7% was
higher than the 26.7% margin for the same period in 2013. For the first
six months of 2014, consolidated EBITDA of $156.8 million, increased
$62.2 million, or 65.8%, from $94.6 million for the same period in
2013. For the six-month period of 2014, consolidated EBITDA margin of
28.4% increased from 25.6% for the same period in 2013.
Canadian Segment
Canadian Segment EBITDA for the second quarter of 2014 was $48.8
million, an increase of $1.7 million, or 3.6%, compared to the same
quarter in 2013. EBITDA margin for the Canadian Segment for the second
quarter of 2014 was 28.9%, compared to 27.7% for the same period in
2013. Canadian Segment EBITDA for the first six months of 2014 was
$82.7 million, an increase of $1.9 million, or 2.3% compared to the
same period in 2013. EBITDA margin for the Canadian Segment for the
first six months of 2014 was 25.9%, compared to 25.4% for the same
period in 2013.
See Adjusted EBITDA for the Canadian Segment for further discussion of
the Canadian Segment results.
U.S. Segment
U.S. Segment EBITDA for the second quarter of 2014 was $40.8 million, an
increase of $29.5 million, compared to the same quarter in 2013. EBITDA
margin was 34.8% for the second quarter of 2014 compared to 41.2% a
year ago. U.S. Segment EBITDA for the first six months of 2014 was
$79.3 million, an increase of $58.8 million, or 286.8%. U.S. Segment
EBITDA margin for the first six months of 2014 of 34.0%, was lower than
the 40.8% during the same period in 2013.
See Adjusted EBITDA for the U.S. Segment for further discussion of the
U.S. Segment results.
ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN
Consolidated Adjusted EBITDA during the second quarter of 2014 was $93.0
million, an increase of $34.6 million, or 59.4%, compared to the same
quarter in 2013. For the first six months of 2014, consolidated
Adjusted EBITDA of $171.7 million, increased by $70.4 million, or
69.4%, compared to the same period in 2013. After eliminating the
impacts of foreign exchange volatility, consolidated Adjusted EBITDA
increased by 53.2% in the first quarter of 2014, and by 62.2% in the
first six months of 2014. These increases in consolidated Adjusted
EBITDA were primarily due to the inclusion of HFS.
Second quarter 2014 consolidated Adjusted EBITDA was calculated by
removing: (i) $3.4 million of acquisition accounting adjustments to
fair value of deferred revenues and deferred costs associated with the
acquisition of HFS; and (ii) acquisition-related and other charges of
$1.8 million, consisting of business integration costs incurred in
connection with the acquisition of HFS and retention and incentive
costs.
On a consolidated basis, Adjusted EBITDA margin for the second quarter
and the first six months of 2014 was 31.8% and 30.2% respectively,
compared to 29.6% and 27.5% for the same periods in 2013. Margins in
2014 were higher mainly due to the inclusion of HFS in the U.S.
Segment. Although HFS has lower margins than our other U.S. Segment
offerings, it has a higher margin than the Canadian Segment.
Canadian Segment
Adjusted EBITDA is the same as EBITDA in the Canadian Segment. Canadian
Segment Adjusted EBITDA for the second quarter of 2014 was $48.8
million, an increase of $1.7 million, or 3.6%, compared to the same
quarter in 2013. Adjusted EBITDA for the first six months of 2014 was
$82.7 million, a year-over-year increase of $1.9 million, or 2.3%.
Adjusted EBITDA in both periods was higher primarily due to increased
revenues in lending processing solutions and a higher management fee
charged by the Canadian Segment. Adjusted EBITDA for the second quarter
of 2014 also benefited from higher mortgage origination revenues.
Canadian Segment Adjusted EBITDA margin for the second quarter and the
six-month period of 2014 was 28.9% and 25.9% respectively, compared to
27.7% and 25.4% for the same periods in 2013. Adjusted EBITDA margin
was higher primarily due to the higher management fee charged to the
U.S. Segment, lower consulting fees and benefits realized from cost
savings initiatives implemented in prior periods.
U.S. Segment
Adjusted EBITDA for the U.S. Segment during the second quarter of 2014
was $44.2 million, an increase of $32.9 million, or 293.2%, compared to
the same quarter in 2013. For the first six months of 2014, U.S.
Segment Adjusted EBITDA of $89.0 million, increased by $68.5 million,
or 333.9%, compared to the same period in 2013. The increase in U.S.
Segment Adjusted EBITDA was mainly due to the inclusion of HFS, and to
a lesser extent, cost synergies realized between our other SaaS
businesses and HFS. A strong U.S. dollar in the second quarter and the
first six months of 2014 compared to the same periods in 2013 benefited
Adjusted EBITDA in the U.S. Segment by $3.6 million and $7.3 million
respectively. After eliminating these foreign exchange impacts,
Adjusted EBITDA for the second quarter and the first-half of 2014
increased by 261.0% and 298.2%, respectively.
Adjusted EBITDA in the U.S. Segment for the second quarter of 2014
excluded the impacts of $3.4 million attributable to acquisition
accounting adjustments related to fair value of deferred revenues and
deferred costs on D+H's acquisition of HFS, in accordance with IFRS.
These adjustments consisted of $6.2 million of fair value adjustments
related to deferred revenues and $2.8 million related to deferred
costs.
Adjusted EBITDA margin for the U.S. Segment for the second quarter and
first six months of 2014 was 35.8% and 35.7%, compared to 41.2% and
40.8% for the same periods in 2013. The change in both periods reflects
the fact that HFS margins are lower than those earned by our SaaS
offerings which comprised the majority of our U.S. Segment in the
comparative periods of 2013.
DEPRECIATION OF CAPITAL ASSETS AND AMORTIZATION OF NON-ACQUISITION
INTANGIBLE ASSETS
Consolidated depreciation of capital assets and amortization of
non-acquisition intangible assets of $10.6 million in the second
quarter of 2014 increased by $3.9 million, or 59.2%, compared to the
same period in 2013. For the first six months of 2014, depreciation and
amortization was $20.1 million, an increase of $6.9 million, or 52.2%,
compared to the same period in 2013. The increase in depreciation and
amortization in 2014 was mainly due to the inclusion of HFS.
AMORTIZATION OF INTANGIBLE ASSETS FROM ACQUISITIONS
Consolidated amortization of acquisition intangible assets for the
second quarter of 2014 was $28.3 million, an increase of $17.3 million,
compared to the same period in 2013. For the six months ended June 30,
2014, amortization was $56.9 million, an increase of $34.9 million, or
159.0%, compared to the same period in 2013. These increases were
mainly attributable to the amortization of intangibles resulting from
the acquisition of HFS.
GAIN ON SALE OF ASSETS
During the second quarter of 2014, D+H sold certain non-strategic assets
and recognized a gain of $1.0 million.
INCOME FROM OPERATING ACTIVITIES
Consolidated income from operating activities was $48.9 million for the
second quarter of 2014, an increase of $14.0 million, or 40.2%,
compared to $34.9 million for the same quarter in 2013. For the six
months ended June 30, 2014, income from operating activities was $79.8
million, an increase of $20.4 million, or 34.4%, compared to $59.4
million for the same period in 2013. These increases reflected growth
in EBITDA as described above. Income from operating activities was
impacted by higher depreciation of capital assets and amortization of
intangible assets, primarily driven by the inclusion of HFS.
INTEREST EXPENSE
Interest expense of $15.0 million for the second quarter of 2014
increased by $10.5 million compared to the same quarter in 2013. This
reflected incremental debt financing through the Credit Facility
bearing a higher credit spread and bonds and Debentures issued to
partially fund the HFS acquisition in August 2013. Interest expense
for the second quarter of 2014 also included a non-cash interest charge
of $1.4 million consisting of accretion expense of $0.9 million related
to the Debentures and $0.5 million related to amortization of deferred
financing charges incurred in connection with the Company's financing
arrangements. For the first six-month period in 2014, interest expense
of $30.3 million increased by $21.3 million compared to the same period
in 2013 for the same reasons described above.
FAIR VALUE ADJUSTMENT OF DERIVATIVE INSTRUMENTS
An unrealized gain of $0.3 million related to fair value changes on
derivative instruments was recognized in the second quarter of 2014,
compared to an unrealized gain of $1.2 million in the second quarter of
2013. For the first six months of 2014, the unrealized gain was $0.5
million, compared to $1.3 million for the same period in 2013. These
changes are related to our interest-rate swaps that are not designated
as hedges for accounting purposes.
For the interest-rate swaps that are not designated as hedges for
accounting purposes, these unrealized gains and losses are recognized
in the Consolidated Statements of Income. 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 the
Consolidated Statements of Income as the related swaps mature. D+H has
historically held its derivative contracts to maturity. The Company is
a fixed-rate payer on all of its interest-rate swaps.
INCOME TAX EXPENSE
An income tax expense of $5.2 million was recorded in the second quarter
of 2014 compared to an income tax expense of $9.2 million recognized
for the same period in 2013. Income tax expense for the first six
months of 2014 was $8.3 million compared to $14.6 million for the same
period in 2013. The income tax expense in the second quarter and first
six months of 2014 was lower as a result of the geographic mix of
income from continuing operations as well as the increased amortization
of intangible assets from acquisitions.
INCOME FROM CONTINUING OPERATIONS
Income from continuing operations for the second quarter of 2014 was
$29.9 million, up $7.5 million, or 33.4%, from $22.4 million in the
same period in 2013. Income from continuing operations reflected higher
EBITDA of $35.2 million resulting from the acquisition of HFS,
partially offset by higher amortization expense of $17.3 million
relating to acquisition intangible assets and higher interest expense
of $10.5 million on debt drawn to fund the HFS acquisition. Income from
continuing operations for the first six months of 2014 increased 10.0%
to $42.7 million from $38.8 million for the same period in 2013. Income
from continuing operations for the first six months in 2014 was higher
for the same reasons noted above.
NET INCOME
Consolidated net income of $29.9 million for the second quarter of 2014
was higher by $16.3 million, compared to consolidated net income of
$13.6 million for the same quarter in 2013. Net income in the second
quarter of 2014 benefited from an increase in EBITDA of $35.2 million
resulting from the acquisition of HFS, partially offset by higher
amortization expense of $17.3 million relating to acquisition
intangible assets, and higher interest expense of $10.5 million on debt
drawn to fund the HFS acquisition. Net income for the same period in
2013 was impacted by a loss from discontinued operations of $8.8
million.
For the first six-month period in 2014, consolidated net income of $41.9
million was higher by $22.5 million, or 116.5%, compared to $19.4
million for the same period in 2013. Net income for the first six
months in 2014 was higher for the same reasons noted above.
NET INCOME PER SHARE
Net income per share, basic
Consolidated basic net income per share in the second quarter of 2014
increased to $0.3697 from $0.2298 for the same quarter in 2013, on
account of acquisition accretion even though additional common shares
were issued in August 2013 in connection with the acquisition of HFS.
For the six-month period ended June 30, 2014, basic net income per
share of $0.5186 was also higher compared to $0.3267 per share for the
same period in 2013, mainly due to the HFS acquisition.
Net income per share, diluted
For the second quarter of 2014, the inclusion of additional potential
shares related to stock options had a dilutive effect on net income
while additional potential shares related to the Debentures had an
anti-dilutive effect on net income. Net income per share for the second
quarter of 2014, on a diluted basis, was $0.3687 per share, compared to net income per share of $0.2298 for the same
period in 2013. For the six-month period, net income per share on a
diluted basis was $0.5173, compared to $0.3267 for the same period in
2013. Per share amounts, on a diluted basis, were also impacted by the
additional common shares issued in August 2013 to fund the HFS
acquisition.
ADJUSTED NET INCOME AND ADJUSTED NET INCOME PER SHARE
Consolidated Adjusted net income of $51.5 million ($0.6369 per share)
for the second quarter of 2014 was higher by $17.3 million, or 50.4%,
compared to the $34.2 million ($0.5774 per share) for the same period
in 2013. Consolidated Adjusted net income for the first six months of
2014 was $90.3 million ($1.1177 per share), an increase of $33.0
million, or 57.5%, compared to $57.3 million ($0.9675 per share) for
the same period in 2013. These increases were mainly due to a higher
Adjusted EBITDA resulting from the inclusion of HFS results, partially
impacted by higher depreciation of capital assets, amortization of
non-acquisition intangible assets and higher cash interest expense on
debt drawn to fund the HFS acquisition. Adjusted net income per share
in 2014 was also impacted by the additional shares issued in August
2013 to fund the acquisition of HFS.
CONSOLIDATED CASH FLOW, LIQUIDITY AND CAPITAL RESOURCES
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 June 30,
|
|
Six months ended June 30,
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Cash and cash equivalents provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
29,869
|
$
|
22,395
|
|
$
|
42,733
|
$
|
38,832
|
|
Depreciation and amortization of assets
|
|
|
38,919
|
|
17,717
|
|
|
76,957
|
|
35,150
|
|
Fair value adjustment of derivative instruments
|
|
|
(284)
|
|
(1,203)
|
|
|
(488)
|
|
(1,310)
|
|
Interest expense, including amortization of deferred finance fees and
accretion
|
|
|
15,048
|
|
4,516
|
|
|
30,297
|
|
8,987
|
|
Non-cash income tax and options expenses
|
|
|
5,058
|
|
9,200
|
|
|
8,149
|
|
14,791
|
|
Income from investment in an associate, net of tax
|
|
|
-
|
|
-
|
|
|
-
|
|
(130)
|
|
Gain on re-measurement of previously held equity interest
|
|
|
-
|
|
-
|
|
|
-
|
|
(1,587)
|
|
Gain on sale of assets
|
|
|
(984)
|
|
-
|
|
|
(984)
|
|
-
|
|
Increase in non-cash working capital and other items
|
|
|
(20,563)
|
|
(6,618)
|
|
|
(24,191)
|
|
(24,705)
|
|
Cash generated from operating activities
|
|
|
67,063
|
|
46,007
|
|
|
132,473
|
|
70,028
|
|
Interest paid
|
|
|
(10,716)
|
|
(4,175)
|
|
|
(29,973)
|
|
(8,218)
|
|
Income tax paid
|
|
|
(17,621)
|
|
(779)
|
|
|
(37,455)
|
|
(2,123)
|
|
Net cash from operating activities
|
|
|
38,726
|
|
41,053
|
|
|
65,045
|
|
59,687
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Net change in long-term indebtedness
|
|
|
(5,000)
|
|
(20,481)
|
|
|
(10,000)
|
|
5,568
|
|
Proceeds from exercise of share options
|
|
|
1,907
|
|
-
|
|
|
1,907
|
|
-
|
|
Dividends paid
|
|
|
(25,864)
|
|
(18,955)
|
|
|
(51,701)
|
|
(37,910)
|
|
Net cash from financing activities
|
|
|
(28,957)
|
|
(39,436)
|
|
|
(59,794)
|
|
(32,342)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(13,293)
|
|
(6,635)
|
|
|
(24,686)
|
|
(12,921)
|
|
Acquisition of subsidiaries
|
|
|
-
|
|
(456)
|
|
|
-
|
|
(24,849)
|
|
Proceeds from sale of assets
|
|
|
1,219
|
|
-
|
|
|
1,219
|
|
-
|
|
Sale of discontinued operations
|
|
|
-
|
|
8,500
|
|
|
-
|
|
8,500
|
|
Net cash from (used in) investing activities
|
|
|
(12,074)
|
|
1,409
|
|
|
(23,467)
|
|
(29,270)
|
|
Increase (decrease) in cash and cash equivalents for the period
|
|
|
(2,305)
|
|
3,026
|
|
|
(18,216)
|
|
(1,925)
|
|
Cash and cash equivalents, beginning of period
|
|
|
16,487
|
|
768
|
|
|
32,398
|
|
5,719
|
|
Cash and cash equivalents, end of period
|
|
$
|
14,182
|
$
|
3,794
|
|
$
|
14,182
|
$
|
3,794
|
As at June 30, 2014, cash and cash equivalents totalled $14.2 million,
compared to $32.4 million at December 31, 2013.
Operating Activities
Operating activities provided $38.7 million during the quarter ended
June 30, 2014, compared to $41.1 million for the same period in 2013.
Net cash from operating activities was lower year-over-year mainly due
to income tax installment payments that commenced beginning 2014,
increased interest payments reflecting the HFS acquisition and changes
in non-cash working capital and other items, further described below.
Lower net cash from operating activities in the second quarter of 2014
was partially offset by higher EBITDA. For the first six months of
2014, operating activities provided $65.0 million, compared to $59.7
million for the same period in 2013. Net cash from operating activities
for the first six months was also reflective of the factors noted in
the three month change, however net cash from operating activities for
the first six months of 2014 was primarily higher due to a lesser
impact from non-cash working capital and other items.
Changes in Non-Cash Working Capital and Other Items
(in thousands of Canadian dollars, unaudited)
|
|
|
Quarter ended June 30,
|
|
Six months ended June 30,
|
|
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
2013
|
|
Changes in non-cash working capital items
|
|
$
|
(14,926)
|
$
|
5
|
|
$
|
(9,954)
|
$
|
(15,143)
|
|
Changes in other operating assets and liabilities
|
|
|
(5,637)
|
|
(1,355)
|
|
|
(13,419)
|
|
437
|
|
Cash flows used in discontinued operations
|
|
|
-
|
|
(5,268)
|
|
|
(818)
|
|
(9,999)
|
|
Increase in non-cash working capital and other items
|
|
$
|
(20,563)
|
$
|
(6,618)
|
|
$
|
(24,191)
|
$
|
(24,705)
|
Change in non-cash working capital in the second quarter of 2014 was
primarily due to increased accounts receivables, reflecting accruals
related to certain incentive payments in our student lending business
and timing of receipts in HFS. The net increase was also due to
increased prepayments. The change for the first six months of 2014 also
reflected an increase in current deferred revenues relating to HFS,
which was partially offset by a decrease in accrued and other
liabilities, mainly reflecting short term deferred compensation
payments.
Change in other operating assets and liabilities for the second quarter
and first six months of 2014 was primarily attributable to increased
non-current accounts receivable reflecting growth in our HFS business.
Financing Activities
Net cash used in financing activities was $29.0 million during the
second quarter of 2014, compared to $39.4 million for the same period
in 2013. For the first six months of 2014, net cash used in financing
activities was $59.8 million, compared to $32.3 million for the same
period in 2013. Net cash used in 2014 was primarily due to debt
repayments and dividend payments. D+H made net debt repayments of $5.0
million and $10.0 million during the second quarter and first six
months of 2014, respectively, compared to repayments of $20.5 million
and $21.5 million in the second quarter and first six months of 2013,
respectively. Net drawdown for the first six months of 2013 included
$27.1 million drawn to fund the Compushare acquisition.
Dividends
During the second quarter of 2014, D+H paid a dividend of $0.32 per
share ($25.9 million) to its shareholders of record as of May 30,
2014. For the same quarter in 2013, $0.32 per share ($19.0 million)
was paid to shareholders. For the first six months of 2014, D+H paid
dividends of $0.64 per share ($51.7 million), compared to dividends of
$0.64 per share ($37.9 million) for the same period in 2013. The
increase in total dividends paid during the second quarter of 2014 is
due to the additional common shares issued to partially fund the
acquisition of HFS in August 2013.
Investing Activities
Net cash of $12.1 million and $23.5 million was used in investing
activities during the second quarter and first six months of 2014,
respectively, reflecting capital expenditures. Net cash for the second
quarter of 2014 also reflected proceeds from sale of certain
non-strategic assets, described previously.
Net cash of $1.4 million was provided by investing activities in the
second quarter of 2013 which primarily reflected capital expenditures
and proceeds from the sale of non-strategic business processing
operations. Net cash used in the first six months of 2013 of $29.3
million also reflected the acquisition of the remaining ownership in
Compushare.
EIGHT QUARTER CONSOLIDATED STATEMENTS OF INCOME - SUMMARY
(in thousands of Canadian dollars, except per share amounts, unaudited)
|
|
|
|
|
2014
|
|
|
|
|
|
|
|
2013
|
|
|
|
2012
|
|
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
Q4
|
|
Q3
|
|
Revenues
|
$
|
285,955
|
$
|
266,291
|
$
|
259,075
|
$
|
209,223
|
$
|
197,134
|
$
|
171,661
|
$
|
172,457
|
$
|
176,689
|
|
Acquisition accounting adjustments 1
|
|
6,203
|
|
9,457
|
|
13,058
|
|
16,107
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Adjusted revenues 2
|
$
|
292,158
|
$
|
275,748
|
$
|
272,133
|
$
|
225,330
|
$
|
197,134
|
$
|
171,661
|
$
|
172,457
|
$
|
176,689
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
285,955
|
$
|
266,291
|
$
|
259,075
|
$
|
209,223
|
$
|
197,134
|
$
|
171,661
|
|
172,457
|
$
|
176,689
|
|
Expenses 3
|
|
198,149
|
|
197,291
|
|
190,876
|
|
172,539
|
|
144,551
|
|
129,664
|
|
131,082
|
|
129,405
|
|
EBITDA 2, 3
|
|
87,806
|
|
69,000
|
|
68,199
|
|
36,684
|
|
52,583
|
|
41,997
|
|
41,375
|
|
47,284
|
|
EBITDA Margin 2
|
|
30.7%
|
|
25.9%
|
|
26.3%
|
|
17.5%
|
|
26.7%
|
|
24.5%
|
|
24.0%
|
|
26.8%
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquistion accounting adjustments 1
|
|
3,404
|
|
6,250
|
|
9,217
|
|
15,030
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Acquisition-related and other charges 3
|
|
1,773
|
|
3,490
|
|
3,842
|
|
13,126
|
|
5,764
|
|
1,028
|
|
6,558
|
|
3,265
|
|
Adjusted EBITDA 2
|
$
|
92,983
|
$
|
78,740
|
$
|
81,258
|
$
|
64,840
|
$
|
58,347
|
$
|
43,025
|
$
|
47,933
|
$
|
50,549
|
|
Adjusted EBITDA Margin 2
|
|
31.8%
|
|
28.6%
|
|
29.9%
|
|
28.8%
|
|
29.6%
|
|
25.1%
|
|
27.8%
|
|
28.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA 2, 3
|
$
|
87,806
|
$
|
69,000
|
$
|
68,199
|
$
|
36,684
|
$
|
52,583
|
$
|
41,997
|
$
|
41,375
|
$
|
47,284
|
|
Depreciation of capital assets and amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of non-acquisition intangibles
|
|
10,599
|
|
9,456
|
|
10,937
|
|
7,532
|
|
6,657
|
|
6,519
|
|
7,568
|
|
6,648
|
|
Amortization of intangible assets from acquisitions
|
|
28,320
|
|
28,582
|
|
27,631
|
|
19,182
|
|
11,060
|
|
10,914
|
|
11,292
|
|
10,597
|
|
Income from operating activities 2
|
|
48,887
|
|
30,962
|
|
29,631
|
|
9,970
|
|
34,866
|
|
24,564
|
|
22,515
|
|
30,039
|
|
Interest expense
|
|
15,048
|
|
15,249
|
|
15,509
|
|
11,251
|
|
4,516
|
|
4,471
|
|
4,629
|
|
4,943
|
|
Other finance charges 4
|
|
-
|
|
-
|
|
-
|
|
3,224
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Loss (income) from investment in an associate, net of tax
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(130)
|
|
23
|
|
(53)
|
|
Gain on re-measurement of previously held equity interest 5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,587)
|
|
-
|
|
-
|
|
Gain on sale of assets 9
|
|
(984)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Fair value adjustment of derivative instruments 6
|
|
(284)
|
|
(204)
|
|
(138)
|
|
(4,759)
|
|
(1,203)
|
|
(107)
|
|
(542)
|
|
(445)
|
|
Income tax expense (recovery)
|
|
5,238
|
|
3,053
|
|
(975)
|
|
(7,383)
|
|
9,158
|
|
5,480
|
|
4,165
|
|
5,987
|
|
Income from continuing operations
|
|
29,869
|
|
12,864
|
|
15,235
|
|
7,637
|
|
22,395
|
|
16,437
|
|
14,240
|
|
19,607
|
|
Income (loss) from discontinued operations, net of tax 7
|
|
-
|
|
(846)
|
|
2,133
|
|
(704)
|
|
(8,786)
|
|
(10,695)
|
|
(529)
|
|
(2)
|
|
Net income
|
|
29,869
|
|
12,018
|
|
17,368
|
|
6,933
|
|
13,609
|
|
5,742
|
|
13,711
|
|
19,605
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition accounting adjustments 1
|
|
3,404
|
|
6,250
|
|
9,217
|
|
15,030
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Non-cash interest expense 8
|
|
1,367
|
|
1,524
|
|
1,349
|
|
709
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Other finance charges 4
|
|
-
|
|
-
|
|
-
|
|
3,224
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Amortization of intangible assets from acquisitions
|
|
28,320
|
|
28,582
|
|
27,631
|
|
19,182
|
|
11,060
|
|
10,914
|
|
11,292
|
|
10,597
|
|
Gain on re-measurement of previously held equity interest 5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(1,587)
|
|
-
|
|
-
|
|
Gain on sale of assets 9
|
|
(984)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Fair value adjustment of derivative instruments 6
|
|
(284)
|
|
(204)
|
|
(138)
|
|
(4,759)
|
|
(1,203)
|
|
(107)
|
|
(542)
|
|
(445)
|
|
Other items of note:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition-related and other charges 3
|
|
1,773
|
|
3,490
|
|
3,842
|
|
13,126
|
|
5,764
|
|
1,028
|
|
6,558
|
|
3,265
|
|
Tax effect of above adjustments 10
|
|
(12,009)
|
|
(13,688)
|
|
(15,100)
|
|
(15,715)
|
|
(3,814)
|
|
(3,578)
|
|
(5,543)
|
|
(3,962)
|
|
Loss (income) from discontinued operations, net of tax 7
|
|
-
|
|
846
|
|
(2,133)
|
|
704
|
|
8,786
|
|
10,695
|
|
529
|
|
2
|
|
Tax effect of acquisitions 11
|
|
-
|
|
-
|
|
-
|
|
(1,726)
|
|
-
|
|
-
|
|
-
|
|
(1,156)
|
|
Adjusted net income 2
|
$
|
51,456
|
$
|
38,818
|
$
|
42,036
|
$
|
36,708
|
$
|
34,202
|
$
|
23,107
|
$
|
26,005
|
$
|
27,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income per share, basic 2, 13
|
$
|
0.6369
|
$
|
0.4808
|
$
|
0.5206
|
$
|
0.5245
|
$
|
0.5774
|
$
|
0.3901
|
$
|
0.4390
|
$
|
0.4711
|
|
Income from continuing operations per share, 12, 13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.3697
|
$
|
0.1593
|
$
|
0.1887
|
$
|
0.1091
|
$
|
0.3781
|
$
|
0.2775
|
$
|
0.2404
|
$
|
0.3310
|
|
Diluted
|
$
|
0.3687
|
$
|
0.1589
|
$
|
0.1883
|
$
|
0.1089
|
$
|
0.3781
|
$
|
0.2775
|
$
|
0.2404
|
$
|
0.3310
|
|
Income (loss) from discontinued operations per share, 12, 13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
-
|
$
|
(0.0105)
|
$
|
0.0264
|
$
|
(0.0101)
|
$
|
(0.1483)
|
$
|
(0.1806)
|
$
|
(0.0089)
|
$
|
-
|
|
Diluted
|
$
|
-
|
$
|
(0.0105)
|
$
|
0.0264
|
$
|
(0.0100)
|
$
|
(0.1483)
|
$
|
(0.1806)
|
$
|
(0.0089)
|
$
|
-
|
|
Net income per share, 12, 13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.3697
|
$
|
0.1488
|
$
|
0.2151
|
$
|
0.0991
|
$
|
0.2298
|
$
|
0.0969
|
$
|
0.2315
|
$
|
0.3310
|
|
Diluted
|
$
|
0.3687
|
$
|
0.1484
|
$
|
0.2147
|
$
|
0.0989
|
$
|
0.2298
|
$
|
0.0969
|
$
|
0.2315
|
$
|
0.3310
|
|
|
|
|
1
|
Acquisition accounting adjustments consisted of fair value adjustments
related to deferred revenues and deferred costs acquired in connection
with the acquisition of HFS.
|
|
2
|
Adjusted revenues, EBITDA, EBITDA Margin, Adjusted EBITDA, Adjusted
EBITDA Margin, Adjusted net income and Adjusted net income per share
are non-IFRS terms. See Non-IFRS Financial Measures for a more complete
description of these terms. Income from operating activities is an
additional IFRS term. See Additional IFRS Measures for a more complete
description of this term.
|
|
3
|
Acquisition-related and other charges for the second quarter of 2014
consisted of business integration costs incurred in connection with the
acquisition of HFS and certain retention and incentive costs in
connection with the recent acquisitions. Acquisition-related and other
charges for the other periods included certain retention and incentive
costs related to the acquisitions, expenses related to cost-realignment
initiatives and corporate development expenses related to strategic
acquisition initiatives.
|
|
4
|
Upon acquisition of HFS, the current Credit Facility replaced a previous
credit facility entered into in 2011, resulting in a write-off of the
unamortized deferred debt issuance costs related to the previous credit
facility.
|
|
5
|
Upon acquisition of the remaining interest in Compushare in January
2013, a non-cash gain related to re-measurement of the previously held
equity interest was recognized in accordance with IFRS standards.
|
|
6
|
Gain in the third quarter of 2013 was mainly attributable to the fair
value changes of the foreign exchange forward contracts entered into by
D+H to economically hedge the foreign exchange risk arising from the
proceeds denominated in U.S. dollar to fund the acquisition of HFS.
Gains and losses in the other periods included 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
Statements of Income.
|
|
7
|
Income/(loss) relates to D+H's divesture of its non-strategic business
processing operations on May 10, 2013.
|
|
8
|
Non-cash interest charges relate to accretion of Debentures issued to
partially fund the acquisition of HFS and amortization of deferred
financing charges incurred in connection with the Company's financing
arrangements.
|
|
9
|
Gain realized in the second quarter of 2014 upon the sale of certain
non-strategic assets.
|
|
10
|
The adjustments to net income are tax effected at their respective tax
rates.
|
|
11
|
Adjustments for the third quarters of 2013 and 2012 included a non-cash
tax recovery related to liabilities recognized in connection with the
acquisition of Mortgagebot. Adjustment for the third quarter of 2013
also includes a one-time income tax expense arising from the
revaluation of the Company's deferred taxes to reflect the change in
future U.S. income tax rates resulting from the acquisition of HFS.
|
|
12
|
Diluted per share reflects the impacts of outstanding stock 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 for income from operating
activities per share. Weighted average number of shares outstanding on
a diluted basis during the second quarter of 2014 was 81,013,068
shares.
|
|
13
|
Weighted average number of shares outstanding during the second quarter
of 2014 was 80,790,585 shares.
|
|
|
|
D+H has generally reported quarterly revenues that are relatively stable
and growing when measured on a year-over-year basis. More recently,
acquisitions and changes in the economic environment, specifically the
housing and mortgage markets and the auto lending markets, have
increased volatility. As well, there has been increased volatility in
personal cheque order volumes. Measured on a sequential
quarter-to-quarter basis, revenues can vary due to seasonality. Revenue
for certain service offerings can also vary based on the timing of work
performed. Fees earned in connection with mortgage origination services
and automobile loan registration services are typically stronger in the
second and third quarters than in the first and fourth quarters. The
acquisition of HFS is also expected to impact seasonality of D+H's
revenues as, historically, HFS has experienced stronger revenues in the
second and fourth quarters.
Acquisitions in the prior periods increased revenues and expenses and
EBITDA was impacted by acquisition-accounting adjustments related to
fair value of deferred revenues and deferred costs, acquisition-related
and other charges that were not part of the normal course of
operations. Adjusted EBITDA removes the impacts of these items as these
are not indicative of underlying business performance and management
believes that excluding these items is more reflective of ongoing
operating results.
Net income is variable as it has been affected by increased revenues and
expenses from acquisitions and non-cash items such as acquisition
accounting adjustments, fair value adjustments of derivative
instruments, amortization of intangible assets from acquisitions, gain
on re-measurement of the equity-interest held in Compushare and other
items such as acquisition-related and other charges, loss from
discontinued operations, and changes in other non-cash interest and tax
items.
Common Shares, Debentures and Stock Options
As at June 30, 2014 and July 29, 2014, D+H had:
-
80,839,510 common shares issued and outstanding (as at December 31, 2013
- 80,738,373). The increase in the number of shares during the first
six months of 2014 is attributable to the exercise of stock options and
the conversion of some Debentures by the Debenture-holders into common
shares.
-
$229.9 million principal amount of Debentures outstanding (as at
December 31, 2013 - $230.0 million). These Debentures are convertible
at the option of the holder to common shares at a conversion price of
$28.90 per common share, representing 34.6021 common shares per $1,000
principal amount of the Debenture, for a total of 7,953,915 shares.
-
1,191,168 stock options outstanding (as at December 31, 2013 - 916,028).
Each stock option is exercisable into one common share of the
Corporation.
Hedges
The Company utilizes interest-rate swaps to hedge interest rate exposure
and foreign exchange forward contracts to hedge foreign currency risk.
Interest-rate swaps
At June 30, 2014, the Company's outstanding interest rate swaps were as
follows:
(in thousands of Canadian dollars, unaudited)
|
|
|
Fair value of interest-rate swaps
|
|
|
Maturity date
|
Notional amount
|
Asset
|
Liability
|
Interest rate ¹
|
|
December 18, 2014 2
|
$ 25,000
|
$ -
|
$ 181
|
2.720%
|
|
March 18, 2015 2
|
25,000
|
-
|
310
|
2.940%
|
|
March 18, 2017 2
|
25,000
|
-
|
1,212
|
3.350%
|
|
March 20, 2017 2
|
20,000
|
-
|
978
|
3.366%
|
|
October 17, 2016 (US$25,000) 3
|
26,675
|
-
|
123
|
0.835%
|
|
October 17, 2016 (US$25,000) 3
|
26,675
|
-
|
123
|
0.835%
|
|
October 17, 2016 (US$25,000) 3
|
26,675
|
-
|
89
|
0.784%
|
|
October 17, 2016 (US$25,000) 3
|
26,675
|
-
|
105
|
0.820%
|
|
October 17, 2018 (US$25,000) 3
|
26,675
|
-
|
279
|
1.645%
|
|
|
$ 228,375
|
$ -
|
$ 3,400
|
|
|
1
|
The listed interest rates offset BA rate/LIBOR and prime-rates currently
in effect by way of fixed rate paying swaps. Spreads could increase or
decrease depending on the Company's financial leverage compared to
certain levels specified in the Credit Facility agreement. Based on
the financial leverage as at June 30, 2014, the Company's long-term
bank indebtedness will be subject to spreads of 2.25% on BA rate/LIBOR
rate loans and 1.25% on prime rate loans.
|
|
2
|
Not-designated as hedges for the purposes of hedge accounting. Fair
value changes on these swaps impact the Consolidated Statements of
Income.
|
|
3
|
Designated as hedges for the purposes of hedge accounting. Fair value
changes on these swaps impact other comprehensive income.
|
As at June 30, 2014, the Company would have to pay $3.4 million if it
were to close out all of its interest-rate swap contracts as set out in
the Consolidated Statements of Financial Position. It is not
management's present intention to close out these contracts and the
Company has historically held its derivative contracts to maturity.
In respect of interest-rate swap contracts with its lenders, as of June
30, 2014, the Company's borrowing rates on 47.0% of outstanding
long-term indebtedness under the Eighth Amended and Restated Credit
Agreement ("Credit Facility") are effectively fixed at the interest
rates and for the time periods ending as outlined above. As a result of
these swaps, 77.8% of the Company's total indebtedness, including
Debentures, is effectively fixed.
Foreign exchange contracts
For the Company's foreign exchange contracts, the Company is required to
deliver the agreed U.S. dollar amount and in return receive the
contracted Canadian dollar amount set forth in each contract. The
Company has historically held its derivative contracts to maturity.
These foreign exchange contracts are designated as hedges of the
Corporation's net investment in foreign operations for which the U.S.
dollar is the functional currency, in accordance with IAS 39 with 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.
At June 30, 2014, the Company's foreign exchange forward contracts
aggregating US$31.0 million was as follows:
(in thousands of Canadian dollars, unaudited)
|
|
|
Fair value of foreign exchange contracts
|
|
|
Maturity date
|
Notional amount (USD)
|
Asset
|
Liability
|
Exchange rate
|
|
September 29, 2014
|
$ 7,000
|
$ 306
|
$ -
|
1.1128
|
|
December 23, 2014
|
7,000
|
305
|
-
|
1.1150
|
|
August 29, 2014
|
1,500
|
58
|
-
|
1.1070
|
|
November 28, 2014
|
7,000
|
271
|
-
|
1.1094
|
|
December 22, 2014
|
3,500
|
131
|
-
|
1.1088
|
|
March 30, 2015
|
5,000
|
186
|
-
|
1.1113
|
|
|
$ 31,000
|
$ 1,257
|
$ -
|
|
Long-term indebtedness
As at June 30, 2014 and December 31, 2013, the Company's long-term
indebtedness was as follows:
(in thousands of Canadian dollars, unaudited)
|
|
|
Interest rate
|
Maturity
|
June 30, 2014
|
December 31, 2013
|
|
Credit Facility (secured)
|
|
|
|
|
|
|
|
Revolver (US$25,000; C$32,000)
|
|
BA/LIBOR + 2.25%
|
Aug 2018
|
$ 58,675
|
$ 68,590
|
|
|
Non-revolver (US$400,000)
|
|
LIBOR + 2.25%
|
Aug 2018
|
426,800
|
425,440
|
|
Credit facilities
|
|
|
|
485,475
|
494,030
|
|
|
|
|
|
|
|
|
Bond (secured)
|
|
5.99%
|
Jun 2017
|
50,000
|
50,000
|
|
Bond (secured)
|
|
5.17%
|
Jun 2017
|
30,000
|
30,000
|
|
Bond (secured) (US$63,000)
|
|
5.59%
|
Apr 2021
|
67,221
|
67,007
|
|
Bond (secured) (US$16,500)
|
|
3.94%
|
Jun 2022
|
17,606
|
17,549
|
|
Bond (secured) (US$15,000)
|
|
3.94%
|
Jun 2022
|
16,005
|
15,954
|
|
Bond (secured)
|
|
5.76%
|
Aug 2023
|
20,000
|
20,000
|
|
Bond (secured) (US$100,000)
|
|
5.51%
|
Aug 2023
|
106,700
|
106,360
|
|
Bond (secured) (US$75,000)
|
|
5.51%
|
Aug 2023
|
80,025
|
79,770
|
|
Bond (secured) (US$50,000)
|
|
5.51%
|
Aug 2023
|
53,350
|
53,180
|
|
Bonds
|
|
|
|
440,907
|
439,820
|
|
|
|
|
|
926,382
|
933,850
|
|
Deferred finance costs
|
|
|
|
(8,829)
|
(9,721)
|
|
|
|
|
|
$ 917,553
|
$ 924,129
|
The table below lists committed and uncommitted arrangements available
to D+H. Uncommitted arrangements are subject to the prior approval of
the relevant lenders with any fees, spreads and other additional terms
to be negotiated at that time:
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
As at June 30, 2014
|
|
|
|
Committed
|
Uncommitted
|
Outstanding
|
Available
|
|
Currency denominated in:
|
|
CAD
|
USD
|
CAD
|
USD
|
CAD
|
USD
|
CAD
|
USD
|
|
Revolver
|
|
$
|
255,000
|
$
|
100,000
|
$
|
-
|
|
-
|
$
|
32,000
|
|
26,675
|
$
|
223,000
|
$
|
73,325
|
|
Non-revolver
|
|
|
-
|
|
426,800
|
|
-
|
|
-
|
|
-
|
|
426,800
|
|
-
|
|
-
|
|
Uncommitted arrangements
|
|
|
-
|
|
-
|
|
100,000
|
|
-
|
|
-
|
|
-
|
|
100,000
|
|
-
|
|
Credit Facility
|
|
|
255,000
|
|
526,800
|
|
100,000
|
|
-
|
|
32,000
|
|
453,475
|
|
323,000
|
|
73,325
|
|
Bonds
|
|
|
100,000
|
|
340,907
|
|
30,000
|
|
64,020
|
|
100,000
|
|
340,907
|
|
30,000
|
|
64,020
|
|
|
|
$
|
355,000
|
$
|
867,707
|
$
|
130,000
|
$
|
64,020
|
$
|
132,000
|
$
|
794,382
|
$
|
353,000
|
$
|
137,345
|
Covenants
The Company's indebtedness is subject to a number of covenants and
restrictions including the requirement to meet certain financial ratios
and financial condition tests. One such ratio is the Total Funded Debt
/ EBITDA Ratio ("Debt to EBITDA ratio"), as defined in the Company's
annual MD&A for the year-end December 31, 2013. As at June 30, 2014,
this ratio was calculated at 2.79 (December 31, 2013 - 2.93).
Debt to EBITDA ratio - foreign exchange impact
The Debt to EBITDA ratio is impacted by volatility in foreign exchange
fluctuations as the Company's U.S. dollar denominated borrowings are
translated at the period-end exchange rate while EBITDA (as it pertains
to this ratio), denominated in local currencies, is translated at
average exchange rates for the period. The acquisition of HFS in the
third quarter of 2013 significantly changed the Company's debt
structure. Therefore, in order to assess management's capital
management efforts post the HFS acquisition, as an internal measure,
management eliminates the impact of foreign exchange from this ratio by
calculating it using the applicable rates for the period ended
September 30, 2013. As such, the Debt to EBITDA ratio, after removing
the impacts of foreign exchange fluctuations, was 2.75 (December 31,
2013 - 2.87).
Convertible Debentures
As at June 30, 2014, the Company had $229.9 million principal amount of
6.00% convertible unsecured subordinated debentures ("Debentures")
outstanding. During the second quarter of 2014, a total of 57
Debentures were converted into 1,972 common shares of the Corporation.
For the first six months of 2014, a total of 132 Debentures were
converted into 4,567 common shares of the Corporation.
Effective interest rate
As at June 30, 2014, the average effective interest rate on the
Company's total indebtedness, including the Debentures, was 4.7%,
compared to 4.8% at December 31, 2013.
OUTLOOK
D+H's long-term financial objective is to deliver sustainable and
growing earnings through continued organic revenue growth, partnering
with third parties and, over time, by way of strategic acquisitions.
Management believes the acquisition of HFS will continue to: (i)
strengthen our ability to deliver on our goal of being a leading
FinTech provider to the financial services industry; (ii) provide
enhanced revenue diversification; (iii) deliver strong and sustainable
cash flows to fund future growth, dividends and deleveraging; and (iv)
support our long-term strategy. Going forward, we will continue to
execute our organic growth initiatives including cross-selling our
suite of FinTech solutions and developing product innovations and
functionalities that meet the needs of our customers, differentiate D+H
and achieve our financial goals. Simultaneously across all operations,
we will continue to diligently identify and realize on efficiency
opportunities to better serve customers, improve our competitiveness
and enhance margins. 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 through a
combination of organic initiatives, partnering with third parties and,
over time, by way of selective additional acquisitions. Our organic
initiatives include: (i) cross-selling our expanded FinTech suite of
lending and enterprise solutions including SaaS offerings, cloud-based
offerings, lending compliance, core technology and channel products to
our now larger customer base and approximately 7,000 other U.S.
financial institutions that could benefit from our technology
portfolio; (ii) advancing our payments solutions through growth in
value-added consumer and business services to financial institution
customers; (iii) expanding our current technology-enabled offerings
within the mortgage, auto, personal, student lending, commercial and
leasing markets; and (iv) exploring opportunities to provide our
expanded solutions to customers in selected international markets and
to Canada's credit unions.
We also look to add to our organic growth through partnerships with
other leading providers. We have established a number of such
partnerships in the U.S. and Canada over the years and we intend to
capitalize on our expanded customer base to build on these mutually
beneficial relationships as we move forward.
The acquisition strategy executed by D+H over the past number of years
has advanced our FinTech leadership position within the North American
market and has strengthened our operating model by diversifying revenue
and reducing our risk profile by lowering our customer concentration
and product dependency. Following past acquisitions, D+H has focused on
reducing leverage used for acquisition purposes. Consistent with our
approach, we intend to repay debt used to partially fund the HFS
acquisition and expect to reduce our Debt to EBITDA ratio to below 2.5
in 2015, on a foreign exchange normalized basis, while supporting our
current dividends.
With the inclusion of several new service areas arising from
acquisitions made over the last several years, we expect to continue to
experience some increase in variability in quarterly revenues, EBITDA,
net income and cash flows, due to, among other items: (i) personal
cheque order volume declines; (ii) dynamics in the Canadian and U.S.
lending environments; (iii) volume variances within the mortgage
origination and lien registration markets; (iv) timing and variability
in sales activity, including professional services work, and cash
receipts; and (v) fees and expenses associated with acquisitions and
related integration activities.
Historically, for the legacy D+H businesses, the second and third
quarters are typically stronger whereas HFS experiences stronger sales
in the second and fourth quarters. The impact of these differences in
seasonality between D+H's legacy businesses and HFS may result in
continued volatility in year-over-year growth until the fourth quarter
of 2014. As such, growth seen in the second quarter and first-half of
2014 may not reflect growth in future periods.
Canadian Segment
Within the Canadian Segment, the downward trend in cheque order volumes
is expected to continue to be in the mid-single digits through 2014,
with ongoing volatility in personal cheque order volumes coupled with
comparatively less volatility in business cheque order volumes. In
order to offset this decline, management will continue to focus on
growing the various subscription fee-based enhancement services
offerings.
In the Canadian banking technology service area, analysts are expecting
the Canadian housing market to enter a moderating phase in the latter
half of 2014. The broker market will continue to experience competition
from internal mobile sales force at lending institutions. Revenue
changes from pricing modifications in our Canadian banking technology
solutions have stabilized and the introduction of new products and
product extensions for various areas in the lending value chain has and
is expected to continue to contribute to organic growth and align us
with the transformation of the sales process used in Canadian Banking.
Volumes in the student loan administration service area are expected to
be relatively stable and modestly growing in the short term. In light
of the expected CSLP request for proposals by the Government of Canada,
management's focus in this area will be to successfully obtain renewal
of the contract. Within the auto and auto lending markets, modest
growth in new and resold car sales is expected to continue through
2014, while increases in lender portfolio values and the strong auto
recovery from the last few years should continue to drive strong
repossession activity.
In addition, within our Canadian Segment, EBITDA and margins may be
impacted from the timing of customer adoption of new products and
services, which may cause pressure on overall Canadian Segment EBITDA
and margins until these new offerings generate sufficient volume to
deliver operational leverage.
U.S. Segment
In the U.S. Segment, we expect to benefit from the recovery of the U.S.
economy and banking sector, increased need for lending technology
products that can meet regulatory and compliance requirements and
anticipated growth in spending by community banks and credit unions on
core banking technology and additional FinTech solutions. Recovering
housing market activity is also expected to be a positive driver for
our businesses that serve the U.S. mortgage markets, partially offset
by lower consumer refinancing activity on account of higher interest
rates compared to a year ago. We also anticipate revenue synergies from
cross selling our multiple product offerings into our existing client
base. Additionally, community banks are expected to increase technology
investment on new core systems over the next few years. There are
currently over 13,000 financial institutions in the U.S., of which we
currently serve about 6,000. Our technology suite allows us to offer
products to large and small financial institutions alike and we are
reaching into the available markets to gain a foothold among
approximately 7,000 banks and credit unions who have not used D+H
before. We believe we are well-positioned to capture our share of
market expansion through our strategies.
Capital spend
For 2014, we anticipate total capital spending of approximately $50
million to $55 million, with a focus on new growth opportunities.
Capital spending may vary based on spending in support of new growth
opportunities if and as they arise.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This MD&A 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.
D+H has also made certain macroeconomic and general industry assumptions
in the preparation of such forward-looking statements. While D+H
considers these factors and assumptions to be reasonable based on
information currently available, there can be no assurance that actual
results will be consistent with these forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause D+H's actual results,
performance or achievements, or developments in its industry, to differ
materially from the anticipated results, performance, achievements or
developments expressed or implied by such forward-looking statements.
Risks related to forward-looking statements include, among other things,
challenges presented by declines in the use of personal and business
cheques; the Company's dependence on a limited number of large
financial institution customers in Canada and dependence on their
acceptance of new programs; strategic initiatives being undertaken to
meet the Company's financial objective; stability and growth in the
real estate, mortgage and lending markets; increased pricing pressures
and competition which could lead to loss of contracts or reduced
margins; the Company's ability to successfully integrate acquisitions;
changes in the U.S. banking and financial services industry and demand
for D+H's products and services; the Company's ability to comply with
government regulations; 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 referenced 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 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 MD&A 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.
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.
July 29, 2014
|
Consolidated Statements of Financial Position
|
|
|
|
|
|
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
|
ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
14,182
|
|
$
|
32,398
|
|
Trade and other receivables
|
|
|
124,704
|
|
|
111,156
|
|
Prepayments and other current assets
|
|
|
28,766
|
|
|
25,370
|
|
Inventories
|
|
|
2,645
|
|
|
3,059
|
|
Total current assets
|
|
|
170,297
|
|
|
171,983
|
|
Non-current trade receivable
|
|
|
33,505
|
|
|
22,179
|
|
Deferred tax assets
|
|
|
2,431
|
|
|
4,327
|
|
Property, plant and equipment
|
|
|
43,602
|
|
|
44,913
|
|
Intangible assets
|
|
|
1,109,004
|
|
|
1,156,170
|
|
Goodwill
|
|
|
1,509,822
|
|
|
1,508,430
|
|
Other assets
|
|
|
8,930
|
|
|
5,815
|
|
Total non-current assets
|
|
|
2,707,294
|
|
|
2,741,834
|
|
Total assets
|
|
$
|
2,877,591
|
|
$
|
2,913,817
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Trade payables, accrued and other liabilities
|
|
$
|
123,990
|
|
$
|
129,728
|
|
Deferred revenue
|
|
|
97,552
|
|
|
86,885
|
|
Current tax liabilities
|
|
|
16,061
|
|
|
24,780
|
|
Total current liabilities
|
|
|
237,603
|
|
|
241,393
|
|
Non-current deferred revenue
|
|
|
21,213
|
|
|
22,048
|
|
Derivative liabilities held for risk management
|
|
|
2,909
|
|
|
3,029
|
|
Loans and borrowings
|
|
|
917,553
|
|
|
924,129
|
|
Convertible debentures
|
|
|
211,354
|
|
|
209,647
|
|
Deferred tax liabilities
|
|
|
344,067
|
|
|
366,856
|
|
Other long-term liabilities
|
|
|
10,209
|
|
|
9,182
|
|
Total non-current liabilities
|
|
|
1,507,305
|
|
|
1,534,891
|
|
Total liabilities
|
|
|
1,744,908
|
|
|
1,776,284
|
|
EQUITY
|
|
|
|
|
|
|
|
Capital
|
|
|
1,120,072
|
|
|
1,117,785
|
|
Reserves
|
|
|
46,196
|
|
|
43,519
|
|
Retained deficit
|
|
|
(33,585)
|
|
|
(23,771)
|
|
Total equity
|
|
|
1,132,683
|
|
|
1,137,533
|
|
Total liabilities and equity
|
|
$
|
2,877,591
|
|
$
|
2,913,817
|
|
Consolidated Statements of Income
|
|
|
|
|
|
|
|
|
|
|
(in thousands of Canadian dollars, except per share amounts, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
Six months
ended
|
|
|
|
|
June 30, 2014
|
|
|
June 30, 2013
|
|
|
June 30, 2014
|
|
|
June 30, 2013
|
|
Revenues
|
|
$
|
285,955
|
|
$
|
197,134
|
|
$
|
552,246
|
|
$
|
368,795
|
|
Employee compensation and benefits
|
|
|
87,929
|
|
|
52,038
|
|
|
179,988
|
|
|
102,153
|
|
Other expenses
|
|
|
110,220
|
|
|
92,513
|
|
|
215,452
|
|
|
172,062
|
|
Income from operating activities before
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation and amortization
|
|
|
87,806
|
|
|
52,583
|
|
|
156,806
|
|
|
94,580
|
|
Depreciation of property, plant and equipment
|
|
|
4,022
|
|
|
2,273
|
|
|
7,797
|
|
|
4,209
|
|
Amortization of intangible assets
|
|
|
34,897
|
|
|
15,444
|
|
|
69,160
|
|
|
30,941
|
|
Income from operating activities
|
|
|
48,887
|
|
|
34,866
|
|
|
79,849
|
|
|
59,430
|
|
Finance expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value adjustment of derivative instruments
|
|
|
(284)
|
|
|
(1,203)
|
|
|
(488)
|
|
|
(1,310)
|
|
Interest expense
|
|
|
15,048
|
|
|
4,516
|
|
|
30,297
|
|
|
8,987
|
|
Gain on remeasurement of previously held
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity interest
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,587)
|
|
Income from investment in an associate,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income tax
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(130)
|
|
Gain on sale of assets
|
|
|
(984)
|
|
|
-
|
|
|
(984)
|
|
|
-
|
|
Income from continuing operations before
|
|
|
|
|
|
|
|
|
|
|
|
|
|
income tax
|
|
|
35,107
|
|
|
31,553
|
|
|
51,024
|
|
|
53,470
|
|
Income tax expense
|
|
|
5,238
|
|
|
9,158
|
|
|
8,291
|
|
|
14,638
|
|
Income from continuing operations
|
|
|
29,869
|
|
|
22,395
|
|
|
42,733
|
|
|
38,832
|
|
Loss from discontinued operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income tax
|
|
|
-
|
|
|
(8,786)
|
|
|
(846)
|
|
|
(19,481)
|
|
Net income
|
|
$
|
29,869
|
|
$
|
13,609
|
|
$
|
41,887
|
|
$
|
19,351
|
|
Earnings per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share from continuing operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.3697
|
|
$
|
0.3781
|
|
$
|
0.5291
|
|
$
|
0.6556
|
|
Diluted
|
|
$
|
0.3687
|
|
$
|
0.3781
|
|
$
|
0.5278
|
|
$
|
0.6556
|
|
Loss per share from discontinued operations,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
-
|
|
$
|
(0.1483)
|
|
$
|
(0.0105)
|
|
$
|
(0.3289)
|
|
Diluted
|
|
$
|
-
|
|
$
|
(0.1483)
|
|
$
|
(0.0105)
|
|
$
|
(0.3289)
|
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.3697
|
|
$
|
0.2298
|
|
$
|
0.5186
|
|
$
|
0.3267
|
|
Diluted
|
|
$
|
0.3687
|
|
$
|
0.2298
|
|
$
|
0.5173
|
|
$
|
0.3267
|
|
Consolidated Statements of Comprehensive Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
Six months
ended
|
|
(in thousands of Canadian dollars, unaudited)
|
|
|
June 30, 2014
|
|
|
June 30, 2013
|
|
|
June 30, 2014
|
|
|
June 30, 2013
|
|
Net income
|
|
$
|
29,869
|
|
$
|
13,609
|
|
$
|
41,887
|
|
$
|
19,351
|
|
The following items may be reclassified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
subsequently to profit or loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flow hedges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective portion of changes in fair value
|
|
|
866
|
|
|
-
|
|
|
758
|
|
|
-
|
|
Foreign currency translation
|
|
|
(27,871)
|
|
|
5,962
|
|
|
2,069
|
|
|
9,508
|
|
Total comprehensive income
|
|
$
|
2,864
|
|
$
|
19,571
|
|
$
|
44,714
|
|
$
|
28,859
|
|
Consolidated Statements of Changes in Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2014
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
Equity-settled
share based
compensation
|
|
|
Equity
component
of
Convertible
debentures
|
|
|
Foreign
currency
translation
reserve
|
|
|
Hedging
reserve
|
|
|
Retained
earnings
(deficit)
|
|
|
Total
equity
|
|
Balance at April 1, 2014
|
|
$
|
1,117,860
|
|
$
|
1,407
|
|
$
|
8,883
|
|
$
|
63,421
|
|
$
|
(328)
|
|
$
|
(37,590)
|
|
$
|
1,153,653
|
|
Net income for the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
29,869
|
|
|
29,869
|
|
Foreign currency translation
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(27,871)
|
|
|
-
|
|
|
-
|
|
|
(27,871)
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
866
|
|
|
|
|
|
866
|
|
Share issuance
|
|
|
2,210
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,210
|
|
Equity component of convertible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
debentures, net of tax
|
|
|
2
|
|
|
-
|
|
|
(2)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Dividends
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(25,864)
|
|
|
(25,864)
|
|
Stock options
|
|
|
-
|
|
|
(180)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(180)
|
|
Balance at June 30, 2014
|
|
$
|
1,120,072
|
|
$
|
1,227
|
|
$
|
8,881
|
|
$
|
35,550
|
|
$
|
538
|
|
$
|
(33,585)
|
|
$
|
1,132,683
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2014
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
Equity-settled
share based
compensation
|
|
|
Equity
component
of
convertible
debentures
|
|
|
Foreign
currency
translation
reserve
|
|
|
Hedging
reserve
|
|
|
Retained
earnings
(deficit)
|
|
|
Total
equity
|
|
Balance at January 1, 2014
|
|
$
|
1,117,785
|
|
$
|
1,369
|
|
$
|
8,889
|
|
$
|
33,481
|
|
$
|
(220)
|
|
$
|
(23,771)
|
|
$
|
1,137,533
|
|
Net income for the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
41,887
|
|
|
41,887
|
|
Foreign currency translation
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,069
|
|
|
-
|
|
|
-
|
|
|
2,069
|
|
Cash flow hedges
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
758
|
|
|
-
|
|
|
758
|
|
Share issuance
|
|
|
2,279
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,279
|
|
Equity component of convertible
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
debentures, net of tax
|
|
|
8
|
|
|
-
|
|
|
(8)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Dividends
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(51,701)
|
|
|
(51,701)
|
|
Stock options
|
|
|
-
|
|
|
(142)
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(142)
|
|
Balance at June 30, 2014
|
|
$
|
1,120,072
|
|
$
|
1,227
|
|
$
|
8,881
|
|
$
|
35,550
|
|
$
|
538
|
|
$
|
(33,585)
|
|
$
|
1,132,683
|
|
Consolidated Statements of Changes in Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2013
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
Equity-settled
share based
compensation
|
|
|
Equity
component
of
Convertible
debentures
|
|
|
Foreign
currency
translation
reserve
|
|
|
Hedging
reserve
|
|
|
Retained
earnings
|
|
|
Total
equity
|
|
Balance at April 1, 2013
|
|
$
|
672,853
|
|
$
|
938
|
|
$
|
-
|
|
$
|
9,430
|
|
$
|
-
|
|
$
|
8,946
|
|
|
692,167
|
|
Net income for the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
13,609
|
|
|
13,609
|
|
Foreign currency translation
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
5,962
|
|
|
-
|
|
|
-
|
|
|
5,962
|
|
Dividends
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(18,955)
|
|
|
(18,955)
|
|
Stock options
|
|
|
-
|
|
|
42
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
42
|
|
Balance at June 30, 2013
|
|
$
|
672,853
|
|
$
|
980
|
|
$
|
-
|
|
$
|
15,392
|
|
$
|
-
|
|
$
|
3,600
|
|
$
|
692,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2013
|
|
|
|
|
|
|
|
Reserves
|
|
|
|
|
|
|
|
|
|
|
Share
capital
|
|
|
Equity-settled
share based
compensation
|
|
|
Equity
component
of
convertible
debentures
|
|
|
Foreign
currency
translation
reserve
|
|
|
Hedging
reserve
|
|
|
Retained
earnings
|
|
|
Total
equity
|
|
Balance at January 1, 2013
|
|
$
|
672,853
|
|
$
|
827
|
|
$
|
-
|
|
$
|
5,884
|
|
$
|
-
|
|
$
|
22,544
|
|
$
|
702,108
|
|
Impact of transition to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IAS 19R
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(385)
|
|
|
(385)
|
|
Net income for the period
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
19,351
|
|
|
19,351
|
|
Foreign currency translation
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9,508
|
|
|
-
|
|
|
-
|
|
|
9,508
|
|
Dividends
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(37,910)
|
|
|
(37,910)
|
|
Stock options
|
|
|
-
|
|
|
153
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
153
|
|
Balance at June 30, 2013
|
|
$
|
672,853
|
|
$
|
980
|
|
$
|
-
|
|
$
|
15,392
|
|
$
|
-
|
|
$
|
3,600
|
|
$
|
692,825
|
|
Consolidated Statements of Cash Flows
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of Canadian dollars, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
|
|
|
|
Six months
ended
|
|
|
|
|
June 30, 2014
|
|
|
June 30, 2013
|
|
|
June 30, 2014
|
|
|
June 30, 2013
|
|
Cash and cash equivalents provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations
|
|
$
|
29,869
|
|
$
|
22,395
|
|
$
|
42,733
|
|
$
|
38,832
|
|
Adjustments for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation of property, plant
|
|
|
4,022
|
|
|
2,273
|
|
|
7,797
|
|
|
4,209
|
|
and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangible assets
|
|
|
34,897
|
|
|
15,444
|
|
|
69,160
|
|
|
30,941
|
|
Fair value adjustment of derivative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
instruments
|
|
|
(284)
|
|
|
(1,203)
|
|
|
(488)
|
|
|
(1,310)
|
|
Interest expense
|
|
|
13,681
|
|
|
4,164
|
|
|
27,406
|
|
|
8,281
|
|
Amortization of deferred financing fees
|
|
|
498
|
|
|
352
|
|
|
1,063
|
|
|
706
|
|
Interest accretion expense
|
|
|
869
|
|
|
-
|
|
|
1,828
|
|
|
-
|
|
Income tax expense
|
|
|
5,238
|
|
|
9,158
|
|
|
8,291
|
|
|
14,638
|
|
Stock options
|
|
|
(180)
|
|
|
42
|
|
|
(142)
|
|
|
153
|
|
Income from investment in an associate,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
net of income tax
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(130)
|
|
Gain on remeasurement of previously
|
|
|
|
|
|
|
|
|
|
|
|
|
|
held equity interest
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,587)
|
|
Gain on sale of assets
|
|
|
(984)
|
|
|
-
|
|
|
(984)
|
|
|
-
|
|
Changes in non-cash working capital items
|
|
|
(14,926)
|
|
|
5
|
|
|
(9,954)
|
|
|
(15,143)
|
|
Changes in other operating assets and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
liabilities
|
|
|
(5,637)
|
|
|
(1,355)
|
|
|
(13,419)
|
|
|
437
|
|
Cash flows used in discontinued
|
|
|
|
|
|
|
|
|
|
|
|
|
|
operations
|
|
|
-
|
|
|
(5,268)
|
|
|
(818)
|
|
|
(9,999)
|
|
Cash generated from operating activities
|
|
|
67,063
|
|
|
46,007
|
|
|
132,473
|
|
|
70,028
|
|
Interest paid
|
|
|
(10,716)
|
|
|
(4,175)
|
|
|
(29,973)
|
|
|
(8,218)
|
|
Income taxes paid
|
|
|
(17,621)
|
|
|
(779)
|
|
|
(37,455)
|
|
|
(2,123)
|
|
Net cash from operating activities
|
|
|
38,726
|
|
|
41,053
|
|
|
65,045
|
|
|
59,687
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repayment of long-term indebtedness
|
|
|
(10,000)
|
|
|
(20,481)
|
|
|
(15,000)
|
|
|
(21,497)
|
|
Proceeds from long-term indebtedness
|
|
|
5,000
|
|
|
-
|
|
|
5,000
|
|
|
27,065
|
|
Proceeds from exercise of share options
|
|
|
1,907
|
|
|
-
|
|
|
1,907
|
|
|
-
|
|
Dividends paid
|
|
|
(25,864)
|
|
|
(18,955)
|
|
|
(51,701)
|
|
|
(37,910)
|
|
Net cash used in financing activities
|
|
|
(28,957)
|
|
|
(39,436)
|
|
|
(59,794)
|
|
|
(32,342)
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition of property, plant and equipment
|
|
|
(4,428)
|
|
|
(2,770)
|
|
|
(6,611)
|
|
|
(4,693)
|
|
Acquisition of intangible assets
|
|
|
(8,865)
|
|
|
(3,865)
|
|
|
(18,075)
|
|
|
(8,228)
|
|
Acquisition of subsidiaries
|
|
|
-
|
|
|
(456)
|
|
|
-
|
|
|
(24,849)
|
|
Proceeds from sale of assets
|
|
|
1,219
|
|
|
-
|
|
|
1,219
|
|
|
-
|
|
Sale of discontinued operations
|
|
|
-
|
|
|
8,500
|
|
|
-
|
|
|
8,500
|
|
Net cash from (used in) investing activities
|
|
|
(12,074)
|
|
|
1,409
|
|
|
(23,467)
|
|
|
(29,270)
|
|
Increase (decrease) in cash and cash
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equivalents for the period
|
|
|
(2,305)
|
|
|
3,026
|
|
|
(18,216)
|
|
|
(1,925)
|
|
Cash and cash equivalents, beginning of period
|
|
|
16,487
|
|
|
768
|
|
|
32,398
|
|
|
5,719
|
|
Cash and cash equivalents, end of period
|
|
$
|
14,182
|
|
$
|
3,794
|
|
$
|
14,182
|
|
$
|
3,794
|
About D+H
D+H is a leading provider of secure and reliable technology solutions to
domestic and global financial institutions with a reputation for being
a trusted partner that helps clients build deeper, more profitable
relationships with their customers based on rich industry and market
insight, and consumer knowledge. Today, approximately 7,000 banks,
speciality lenders, community banks and credit unions rely on D+H to
deliver solutions across three broad service areas: Banking Technology
Solutions, Lending Processing Solutions, and Payments Solutions. Our
integrated, compliant technology solutions enable clients to grow,
compete, and optimize their operations, while our forward looking
approach helps them stay ahead of the market and anticipate changing
consumer needs. D+H is one of the world's top FinTech companies as
measured on the FinTech 100 list.
DH Corporation is listed on the Toronto Stock Exchange under the symbol DH. Further
information can be found at www.dhltd.com and in the disclosure documents filed by DH Corporation with the
securities regulatory authorities at www.sedar.com.
SOURCE DH Corporation
 For further information: Brian Kyle, Executive Vice President and Chief Financial Officer, DH Corporation, (416) 696-7700, investorrelations@dhltd.com or visit our website at www.dhltd.com.
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|
