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TSX:ISV November 4, 2015

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Page 1: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

TSX:ISV November 4, 2015

Page 2: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Provider of Key Search

and Registry Solutions

Page 3: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

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Forward-Looking Statements

This presentation contains forward-looking information within the meaning of applicable Canadian securities legislation. The words ‘‘may’’, ‘‘will’’, ‘‘would’’, ‘‘should’’, ‘‘could’’, ‘‘expect’’, ‘‘plan’’, ‘‘intend’’, ‘‘trend’’, ‘‘indicate’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘estimate’’, ‘‘predict’’, ‘‘project’’, ‘‘targets’’, ‘‘strive’’, ‘‘strategy’’, ‘‘continue’’, ‘‘likely’’ or ‘‘potential’’ or the negative or other variations of these words or other comparable words or phrases are intended to identify forward-looking statements. By their nature, these statements involve assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Certain assumptions with respect to the Saskatchewan economy, the impact of commodity prices, such as agricultural commodities, oil and potash and the value of the Canadian dollar on the Saskatchewan economy , consumer confidence, interest rates, level of unemployment, inflation, real estate market in Saskatchewan, claim liabilities, income taxes, our ability to attract and retain skilled staff, the compensation and benefits that will be paid or provided to employees and our level of customer service, as well as, goodwill and intangibles are material factors in preparing forward-looking statements and management’s expectations. Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those expressed or implied by such forward-looking information. Although ISC believes the forward-looking information contained in this presentation is based upon reasonable assumptions, readers are cautioned not to place undue reliance on forward-looking information as it is inherently uncertain and no assurance can be given that the expectations reflected in such information will prove to be correct. Many factors and risks could cause our actual results to differ materially from those expressed or implied by forward-looking information including those detailed in ISC’s Annual Information Form, dated March 17, 2015, ISC’s unaudited Condensed Consolidated Interim Financial Statements and Notes and Management’s Discussion and Analysis for the period ended September 30, 2015 as well as other documents filed by ISC with Canadian securities regulators through SEDAR (www.sedar.com) from time to time. Investors and others should carefully consider the above-noted factors and risks and other uncertainties and potential events. The forward-looking information in this presentation is made as of the date hereof and, except as required under applicable securities legislation, ISC assumes no obligation to update or revise such information to reflect new events or circumstances.

Page 4: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

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• Saskatchewan’s exclusive provider of key search and registry information services.

• Transformed from Crown corporation to publicly traded business corporation in July 2013 (Government retained 31% shareholding) to provide a better business model for the Province and customers.

• Providing customers with safe, secure services necessary to transact property, corporate and personal property searches and registrations.

• Solid balance sheet and cash flow generation.

• ~5.5% dividend yield

• Ticker symbol TSX: ISV

• Acquisition of ESC Corporate Services Ltd. in October 2015.

Corporate Profile

Page 5: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Consistent Expansion of Alternative Registry Delivery Model 5

History of Transitioning, Delivering,

Integrating and Modernizing

Registries

Personal Property Registry Added from Ministry of Justice

Land Titles Registry Online submissions launched

Corporate Registry Added from Ministry of Justice

Enhanced Mineral Cadastral Formed base to transform how government develops mineral leases and production agreements

Vital Statistics Registry Completed process improvement, paper conversion to digital and new system enabling online applications

Mineral Administration Registry Developed and implemented 24/7 online system for issuing mineral claims

Land Titles Registry Converted paper titles into digital titles for surface and mineral parcels

Land Survey Directory Web-based portal enables access to maps and geographic information

Vital Statistics Registry Added from Ministry of Health

Business Registrations Saskatchewan Web-based portal Integrated with Corporate Registry, CRA business number hub, Workers Compensation Board and Saskatchewan Finance PST

ISC Established as Crown corporation

2000 2001 2003 2005 2010 2011 2012 2008 2013

ISC Transformation Privatization of ISC with subsequent IPO on the TSX under the symbol “ISV”

20-year Master Service Agreement with Saskatchewan Government

Vital Statistics Registry Transferred to eHealth Saskatchewan

Corporate Registry Led integration for New West Partnership

2006

Personal Property Registry Online system with B2B interface launched

2014

Corporate Registry Initiating process and system modernization

2015

Asbestos Registry Development and administration of registry

Acquisition of ESC Corporate Services Expansion of portfolio of services in alignment with ISC’s core registry business

Page 6: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Our

Business

Page 7: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Providing Critical Support to Economic Activity 7

Essential Registry and

Information Services

Maintenance Authentication

Collection Verification ISC Property and land ownership

Resource claims

Business registrations and

annual returns

Personal property registrations

Other land-based information

Accessibility

Page 8: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Full-Service Registry Expertise 8

Unique Approach to Registry

Management and Administration

Government

• ISC manages and delivers full-service registry service operations.

• Government retains oversight, traditional public policy accountability and data ownership.

• ISC acts as the customer interface either online, in person or by telephone.

• Ongoing customer support, training and consultation through customer forums and committees.

Process customer requests

Analyze, interpret and apply existing policy

Maintain system integrity through record keeping and upgrades

Initiate product development and product planning

Customer

FULL-SERVICE REGISTRY MANAGEMENT

Page 9: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Positive Customer Ratings for Service Quality and Delivery 9

Customers

End-Use Customers

Individuals or businesses who directly benefit from ISC’s services

• Municipalities

• Real estate agents

• Home builders

• Insurance companies

• Car dealers

Channel Customers

Intermediaries who manage a relationship with an end-user but are typically the beneficiary of our service

• Law firms

• Surveyors

• Engineering firms

Page 10: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Service Delivery Relationship with Province of Saskatchewan 10

ISC – Alternative Registry Service

Delivery Model

Land and Land Survey Personal Property Corporate Land and Land Survey Personal Property Corporate

• Full-service provider of search and registry services for Government

• Twenty-year exclusive service agreement, including registry data licence

• Service relationship with Government oversight

Page 11: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Generating Stable Cash Flows 11

Revenue Model

Transaction Service Revenue Type

Searches Online or in person

Customized Flat fees (standard searches)

Registrations Online or in person Value-based fees (land registry)

Flat fees (other registries)

Maintenance and Related Services

Online or in person

Customized Flat or negotiated fees

Page 12: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Financial

Overview

Page 13: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Experienced Provider of Registry and Information Services 13

Multiple Lines of Business

75.2 79.1 80.5

2012 2013 2014

Land Titles Registry Personal Property Registry Corporate Registry Geomatics Land Surveys Directory Other

Revenue by Line of Business1 ($M)

1Excludes Vital Statistics Registry.

Page 14: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Secure Core Business 14

Revenue – Second Quarter 2015

$19.7 M Total revenue for Q3 2015

41.5 % EBITDA margin for Q3 2015

Page 15: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Consistent EBITDA 15

Earnings

30.2

34.0

30.2

2012 2013 2014

Adjusted EBITDA1 ($M)

1EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin and free cash flow are not recognized as measures under IFRS and do not have

a standardized meaning prescribed by IFRS and therefore, are not comparable to similar measures by other corporations. See section name “Non-IFRS Measures” in the Management’s Discussion & Analysis for the year ended December 31, 2014

Page 16: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Results Continue to Support Dividend and Growth 16

Q3 2015 Financial Highlights

(thousands of CAD dollars, except for dividends declared and earnings per share )

Three months ended Sept 30,

2015

Three months ended Sept 30,

2014

Nine months ended Sept 30,

2015

Nine months ended Sept 30,

2014

Revenue $ 19,675 $ 21,278 $ 55,740 $ 60,700

Net Income and total comprehensive income $ 4,656 $ 6,239 $ 11,350 $ 14,346

EBITDA1 $ 8,164 $ 9,665 $ 20,176 $ 23,206

Adjusted EBITDA1 $ 9,570 $ 9,796 $ 21,762 $ 24,522

EBITDA margin1 41.5% 45.4% 36.2% 38.2%

Adjusted EBITDA margin2 48.6% 46.0% 39.0% 40.4%

Free cash flow1 $ 2,806 $ 7,711 $ 11,500 $ 18,047

Dividends declared per share $ 0.20 $ 0.20 $ 0.60 $ 0.60

Earnings per share, basic2 $ 0.27 $0.36 $ 0.65 $ 0.82 1For a reconciliation of EBITDA, adjusted EBITDA and free cash flow, refer to the section “Financial Measures and Key Performance Indicators” in the Management’s Discussion & Analysis for the three months ended September 30, 2015. EBITDA, EBITDA margin, adjusted EBITDA and adjusted EBITDA margin are not recognized as measures under IFRS and do not have a standardized meaning prescribed by IFRS and, therefore, are not comparable to similar measures by other corporations. Refer to the section “Non-IFRS Measures” in the Management’s Discussion & Analysis for the three months ended September 30, 2015. 2The calculation of earnings per share is based on net income after tax and the weighted average number of shares outstanding during the period.

Page 17: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Balance Sheet Provides Financial Stability And Flexibility 17

Use of Balance Sheet

Balance sheet remains strong with ability

to fund growth opportunities

Continues to support dividend

Re-investing into business

$39.8 M Amount of cash on hand

as at Sep 30, 2015

$10.5 M Amount of 2015 dividends

paid to shareholders*

$4 – 6 M CapEx expected in 2015

$9.9 M Long-term debt

as of Sep 30, 2015

*dividends paid as at Sep 30, 2015

Page 18: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Growth

Objectives

Page 19: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Prudent and Measured Approach to Growth 19

Growth Strategy

Replication • Replicate core service

offerings in other provinces.

• Approaches and models include acquisition of a registry, long-term outsourcing contract and shared subsidiary model.

Enhancement • Opportunities with SK e.g.

providing additional services on behalf of the Province and adding features to existing products.

• Possible enhancements in SK could be leveraged for out of province growth.

Acquisition and

Diversification • New business lines,

industries, sectors and segments.

• Potential expansion into appraisal and valuation, legal services, real estate transactions and transaction processing.

Page 20: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Execution on Growth Strategy 20

ESC

Oct 1, 2015 ISC COMPLETES ACQUISITION OF ESC CORPORATE SERVICES LTD.

Transaction Overview

• ISC successfully completed the acquisition of ESC Corporate Services Ltd. (“ESC”).

• ISC completed the transaction through a wholly owned subsidiary using a combination of

cash and debt

• ISC expects the transaction to be immediately accretive to the Company’s EPS (earnings

per share) in 2015.

Page 21: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Company

Highlights

Page 22: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

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Saskatchewan Economy

Land Titles Registry - Housing starts and building permits CMHC Housing Market Outlook currently forecasts a decrease of 10.6 % in existing home sales volume in Saskatchewan for 2015 with an increase of 1.6 % in 2016. Similarly, average home resale prices are forecast to decrease by 0.5 % in 2015 and increase by 1.3 % in 2016.

Personal Property Registry – Employment and new motor vehicle sales The employment rate, as shown in the percentage of Saskatchewan people ages 15-64 employed in January and February 2015 was lower than during the same period in 2014, while March through May 2015 was higher.

New motor vehicle sales (units) for Saskatchewan are expected to be lower in 2015 compared to 2014 volumes.

Sources: CMHC Housing Market Outlook – Canadian Edition – Second Quarter 2015. Scotiabank Global Economics – Provincial Forecast Update – October 5, 2015. Statistics Canada Table 282-0087 – Labour force survey estimates (LFS), by sex and age group, monthly (persons unless otherwise noted), Canada, provinces and territories, CANSIM (database), accessed July 8, 2015.

Page 23: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Focus on Delivering Stable, Predictable Returns 23

Outlook 2015

• Continued focus on delivering stable, predictable returns.

• Current economic slowdown continues to impact revenue in 2015.

• Expected EBITDA margin between 34% and 36%.

• Expected CapEx of $4 - $6 million.

Page 24: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Solid Business 24

Investment Proposition

Strong Market Position

• 20-year exclusive Master Service Agreement, including data licence

• Unique service offering - “full-service”

Capacity To Support Sector Demand

• Higher levels of customer service and convenience

• Outsourcing of business processes and services

• Reliability and security of information

Start of Execution on Growth Opportunities

• Investment in OneMove Technologies Inc.

• Acquisition of ESC Corporate Service Ltd.

Solid Balance Sheet

• Strong cash flow supporting continuation of dividend

• Unleveraged

Page 25: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Diversified Shareholder Base 25

Ownership

Institutional Shareholder % O/S

Sentry Investments 14.74%

Burgundy Asset Management Ltd. 3.93%

IA Clarington 3.08%

I.A. Michael Investment Counsel Ltd. 2.17%

QV Investors Inc. 2.07%

Standard Life Assurance 2.06%

Mawer Investment Management Ltd. 1.94%

Northwest & Ethical Investment 1.94%

IG Investment Management Ltd 1.61%

Mackenzie Institutional 1.37%

TOP 10 Institutional Holders

Institution Analyst Cover Initiated on

RBC Steve Arthur, CFA August 7, 2013

GMP Securities Michael Urlocker, CFA February 3, 2014

CIBC Stephanie Price July 15, 2014

Analyst Coverage

Institutional Investors

37%

Government of

Saskatchewan 31%

Retail Investors

32%

Ownership Distribution

As at Oct 27, 2015

Page 26: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

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TSX: ISV

Shares outstanding 17.5 million Class A Limited Voting Shares

Listing TSX: ISV

Market Cap $255,675,000

52 Week High $19.14

52 Week Low $13.21

Dividend $0.80 per share annually (paid quarterly)

Contact [email protected] or call toll free: 1 855 341 8363

As at October 30, 2015

Page 27: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Appendix

Page 28: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Experienced Executive Team 28

Appendix A: Management

Jeff Stusek - President and Chief Executive Officer

Mr. Stusek was appointed President & CEO of ISC in 2008. He spent 13 years with the City of Regina, including three years as Director of Transit prior to joining ISC in 2006. He holds an MBA from the University of Regina.

Kathy Hillman-Weir – VP Corporate Affairs & General Counsel, Chief Privacy Officer

Mrs. Hillman-Weir is responsible for leading the company strategy and stakeholder relations, investor relations, compliance and legal functions. She joined ISC in 2000 and previously held positions in the Saskatchewan Ministry of Justice.

Kenneth W. Budzak – VP Operations & Customer Experience

Mr. Budzak joined ISC in 2001. He previously spent 15 years of senior leadership with the Saskatchewan Wheat Pool and holds a Bachelor of Science in Agricultural Economics from the University of Saskatchewan.

Shawn B. Peters - Vice-President, Finance & Technology and Chief Financial Officer

Before joining ISC in 2012, Mr. Peters held positions at Group Medical Services, Crown Investments Corporation of Saskatchewan and Ernst & Young.

Page 29: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate

Strong and Independent Board 29

Appendix B: Board of Directors

Joel Douglas Teal ,

Board Chair

Tom Christiansen

Anthony Robert Guglielmin Douglas Allen Emsley Michelle Ouellette, Q.C.

Bradley S. Sylvester Dion E. Tchorzewski William Scott Musgrave

Jess Huan Chua

Page 30: TSX:ISV · 04/11/2015  · “ISV” 20-year Master Service Agreement with Saskatchewan Government Vital Statistics Registry portfolio of Transferred to eHealth Saskatchewan Corporate