A N NU A L
R E PO R T
2023
££££££ Financial Highlights
Total Revenue:
In Millions
$25.0
$30.6
$67.5
$82.0
2020
2021
2022
2023
21 %
Year Over Year
Total Assets:
In Millions
$85.8
$103.0
$125.5
$132.0
2020
2021
2022
2023
5%
Year Over Year
All amounts in this report are stated in USD and are based on fiscal year end unless otherwise noted.
Corporate Customers and Transacting Locations
Revenue by Business Segment
83%
Banknotes
17%
Payments
Revenue by Geography
79%
United States
21%
Canada
2020
2021
2022
2023
Company-Owned Branch Locations
States OnlineFX Operates In
Airport Agent Locations
Non-Airport Agent Locations
35
22
7
47
35
31
18
62
37
38
23
161
Wholesale Company Relationships*
Transacting Locations*
1,667
14,787
2,481
15,202
2,586
22,170
38
40
45
235
2,658
22,551
*These numbers show the companies and locations that transacted within the period specified.
Shareholder’s Equity
$ millions
Quarterly Stock Price (TSX:CXI)
TSX stock prices are quoted in Cdn$
Key Ratios
2022
2023
October 31, 2020
October 31, 2021
October 31, 2022
October 31, 2023
$58.2
$58.0
$69.3
$79.2
Q1 (Ended 1/31/2023)
Q2 (Ended 4/30/2023)
Q3 (Ended 7/31/2023)
Q4 (Ended 10/31/2023)
$25.18
$25.49
$26.40
$20.50
Earnings Per Share
$1.83
$1.59
Return On Assets
9.4%
7.7%
Return On Equity
17.0%
12.9%
Operating Margin
27.7%
22.9%
Currency Exchange International, Corp - Annual Report 2023
1 Message from the CEO
Dear CXI Shareholders, Clients, Employees, and Friends, I
am pleased to present the progress and achievements of
Currency Exchange International, Corp. for our year ended
October 31, 2023.
Randolph W. Pinna
President and Chief Executive Officer
Fiscal year 2023 was marked by significant achievements for the CXI
group. CXI generated remarkable growth with record revenues during
the fiscal year and advanced its strategic priorities. Established in
2020, our strategic priorities have strengthened our competitive
position each of the past four years. Again, our priorities have
been reconfirmed and refined. This has enabled accountability and
agility when making key investments within our infrastructure and
product development, resulting in significant returns in business unit
performance. Our strategic plan has prioritized revenue diversification
through innovative solutions that expand our market share and
improve the return on capital deployed. The accomplishments of CXI
are a testament to our passionate employees’ commitment, skill, and
ability to execute for our customers and shareholders. This year’s
strong performance across our business units is sustainable and
foundational to CXI’s future growth.
Sustainable Diversification
The macroeconomic backdrop for 2023 was disjointed in its impact
on our business units. Rising interest rates and persistent inflation
brought challenges to consumers and businesses. Additionally, the
escalation in geopolitical crises brings a level of unknown to the
global economy.
At the same time, international travel has been returning with vigor,
especially with US outbound international travelers. The US National
Travel and Tourism Office reported that US outbound international
travel in October 2023 exceeded the monthly travel levels when
compared to the same month in 2019 for the first time since travel
restrictions were lifted. Consumers have repeatedly prioritized
international travel in their budgets, and we continue to see their
excitement to travel and experience the world growing.
In a year of global and economic crosswinds, CXI has completed nine
profitable quarters in a row, and in 2023, each quarter was record
revenue for that quarter. CXI has never had a stronger foundation
for growth as it continues to capture more market share across
its business units and win loyal clients with its innovative foreign
exchange solutions and client-first approach to relationship building.
The results in 2023 showed progress in both its banknote and
payments businesses as the Company generated $82.0 million in
total revenue for fiscal year 2023 compared to $67.5 million in 2022.
The resulting $14.5 million increase in revenue was a 21% jump from
the previous year.
CXI’s revenue growth was primarily driven by a $12.6 million increase
in revenue from its banknotes product line and a $1.9 million increase
in its payments product line. However, CXI’s revenue growth was
accompanied by a corresponding increase in operating expenses.
The increased operating expenses were due to investments in
strategic initiatives, software infrastructure, and human resources.
These investments support CXI’s long-term growth objectives and
have resulted in a more efficient operating environment.
CXI’s payments business has two core models: servicing financial
institutions in the US and Exchange Bank of Canada (EBC) servicing
businesses in Canada. In fiscal year 2023, the payments business
generated $14.3 million in revenue, up from $12.5 million in 2022, a
15% increase. After EBC led the way in payment product line growth
for the past few years, CXI generated 76% of the payment product line
growth in 2023. This increase is a direct result of our investments in
banking integrations, enabling the Company to win multiple lines of
business with our financial institution clients. The revenue growth in
both product lines demonstrates the success of our diversification
strategy and has been a significant factor in CXI’s resilience.
EBC’s payments business was a more challenging environment
even as the number of payment clients and payments processed
increased. Business clients have been affected by the higher interest
rate environment. This impacted EBC’s margin per payment and
the number of payments businesses sent. As a result, winning new
business has been even more critical to the product line’s growth.
Our team has made payment process enhancements that have
streamlined client and internal operations. CXI will continue to scale
the international payments business by investing in more system
integrations and experienced, customer-centric traders.
EBC’s banknotes product line experienced slower activity in 2023
than the previous year. The bank was challenged by the impact of
the regional bank failures in the US on trades associated with its
participation in the Federal Reserve’s Foreign Bank International Cash
Currency Exchange International, Corp - Annual Report 2023
2
Message from the CEO
Services (FBICS) program. Through FBICS, EBC receives access to
the Federal Reserve’s International Cash Services (ICS) program. The
US regional bank failures put significant impediments on onboarding
new financial institutions around the world and limited the appetite
for existing clients’ trade volume as EBC requires prepayment for its
trades. EBC is confident it has a resolution to overcome the perceived
credit risk challenge this causes by opening a trust account with a
large financial institution. With this solution, EBC will look to expand
its onboarding of foreign financial institutions in North America,
Europe, and South America through a rigorous country-by-country
risk-based approach.
CXI continues to generate significant new business with its “One
Provider. One Platform.” strategic priority. The investments in system
integrations have opened opportunities that were previously not
accessible to the Company. Processing payments with financial
line,
institutions was the fastest growing payments product
increasing by $6.9 million during 2023 when compared to 2022. The
addressable bank and credit union market for our solutions is larger
than ever, and we are seeing more existing banknote clients switch to
CXI as their international payment provider. CXI’s internal processes
have also benefited from its system integrations as it can straight-
through-process more payments, resulting in more automation and
less intervention of people.
International Travel on the Rise
The international travel industry underwent significant changes during
CXI’s 2023 fiscal year. First, travel demand steadily improved from
the beginning of the fiscal year to the end. The US National Travel
and Tourism Office reported that 161.4 million people traveled to and
from the US during CXI’s 2023 fiscal year. This represents 91% of the
travelers compared to 2019.
The US outbound traveler has rebounded the quickest with Europe,
Mexico, and Japan being popular destinations. Japan was one of the
last countries to remove travel restrictions, finally doing so in early
2023. Inbound international travelers to the US have been slower to
recover but are progressing. With international travel trade groups
predicting both inbound and outbound US international travel to grow
next year, our is committed to expanding the FX service points for
these travelers through our retail and wholesale network.
In fiscal year 2023, CXI’s banknote business generated $67.6 million
in revenue, up from $55 million in 2022, a 23% increase. The Direct-
To-Consumer (DTC) banknote business contributed $6.1 million, or
48%, of the $12.6 million increase in 2023 when compared to the
previous year.
More travelers than ever are utilizing CXI’s brand across its service
points, and we are dedicated to creating a loyal, repeat client base.
CXI had 318 DTC locations, including 38 company-owned branch
Currency Exchange International, Corp - Annual Report 2023
locations, 45 airport agent locations, and 235 non-airport agent
locations in fiscal year 2023. The most recognizable CXI locations
include its branded airport agents that millions of travelers see
annually before boarding their flights. CXI has no lease commitments
or payroll for these locations. The agent operators and locations are
supported by CXI’s branding, marketing, FX inventory, transaction
processing, CXIFX platform, and compliance regime.
CXI’s transformational omni-channel growth plan for its DTC business
made foreign currency more accessible for travelers. OnlineFX, CXI’s
consumer e-commerce platform, expanded services from 38 to 40
states across the US in 2023. The platform saw a 47% increase in
its active consumer client base in fiscal year 2023 compared to
2022, and more than 90% of its users said they would recommend
it to a friend. CXI added three new company-owned locations during
the year, including its first company-owned airport location. Two
company-owned locations closed during the same time.
in
invested
its corporate
Strong Leadership in Place
CXI has
infrastructure across the
organization, which has led to enhanced business insights and a
deeper understanding of our clients. These investments have also
enabled more agile decision-making, which is benefiting all the
business units and support teams.
its
increased
team has
improvement
Our process
impact
throughout the organization with internal business automation and
democratization of data. The results are a powerful enablement tool
for our Managing Directors. It’s evident that the Managing Director
roles are being led by strong leaders and have promoted direct
accountability for each business unit. This strategy is designed
to improve performance, streamline decision-making for greater
flexibility, and enable the growth of our teams.
Moving forward, it is essential for CXI to invest in our compliance and
anti-money laundering functions through personnel and technology.
These investments may not always be noticeable, but they are
necessary to fulfill the regulatory and business requirements of today
and the future. While we have invested in people and technology, we
are also focusing on finding ways to reduce operating expenses. We
have made progress in both adjusting prices to account for the impact
of inflation in postage and shipping and expenses are decreasing
when compared to the increased activity during the fourth quarter of
fiscal year 2023.
At the 2023 Annual General & Special Meeting of Shareholders, we
added a new member to our board of directors. Carol Poulsen was
elected to the Board of Directors, replacing Johanne Brossard, who
retired at the same meeting. Ms. Carol Poulsen is a retired Executive
Vice President and CIO at The Co-operators Financial Group. In her
prior role, she was Senior Vice President of Group Architecture,
3
Mission and Purpose
employees across the US and Canada who embodies our core values
in all the work we do, as well as to our loyal customers, shareholders,
and friends for their continued support of Currency Exchange
International. As always, I remain available for feedback and to
discuss our Company and its business with you personally.
Applied Innovation, IT Strategy, and IT Operational Risk for RBC
globally.
Positioned for Continued Growth
I am pleased with the past year’s accomplishments as we stay
focused on innovation, customer experience, and the sustainable
growth of revenues and profits. CXI is uniquely positioned to reach
even greater diversified growth through its strategic priorities. Our
board of directors and executive team are confident in our plan and
the team’s ability to execute it.
I extend my gratitude and thanks to our team of more than 400
Randolph W. Pinna
President and Chief Executive Officer
Strategic Priorities and Values
Our Mission
Our Vision
Make foreign exchange simple and
secure by combining technology, industry
expertise, and highly personal service.
Be the preferred financial services
provider of foreign exchange solutions
tailored to client needs.
Expand FX with US Banks
and Credit Unions
Be the best solution for all the foreign exchange needs of banks and credit unions.
One Provider. One Platform.
Global Expansion of
Wholesale Banknotes
Be the foreign banknote provider of choice for leading banks around the world.
Build Scale in Corporate
International Payments
Make foreign exchange easy for businesses with personalized service backed by the expertise
and security of Exchange Bank of Canada. Canada’s Foreign Exchange BankTM.
Maximize Direct-to-
Consumer Offering
Deliver convenient, cost-effective ways to exchange foreign currency for US residents and
international travelers visiting the US.
Strengthen and Optimize
Corporate Infrastructure
Enable the business to scale to support growth and manage risk.
Customer First
Collaborative
Innovative
Integrity
Passionate
Earn the right to be
our customer’s first
choice.
Win as a team.
Find new methods to
deliver change and
advance technology
to the industry.
Hold ourselves to the
highest standard to
build trust.
Driven to be the best
in class.
Currency Exchange International, Corp - Annual Report 2023
4 Strategic Priorities
Expanding Banking System Integrations
In 2023, CXI’s primary focus with US banks and credit unions was expanding CXIFX’s
banking system integrations. Working with well-established banking system providers
Fiserv, Q2, Jack Henry, and Finastra has accelerated CXI’s automation initiatives. Building
integrations with key banking platforms has significantly enhanced CXI’s service level
offering by connecting core banking, digital banking, and branch banking with FX services
to provide a seamless experience for banks and credit unions. In turn, both existing client
financial institutions and those who haven’t worked with CXI before are committing to the
value of the “One Provider. One Platform”.
Surging Travel Supports Foreign Banknotes
CXI once again processed record levels of banknote orders throughout 2023. International
travel’s ongoing recovery made huge strides in 2023. Outbound travel approached its
2019 levels, while inbound travel to the US has been slower to return. There is no shortage
of excitement for US outbound travel for 2024 based on consumer travel surveys. For
inbound traveler counts, the US International Trade Administration sees surpassing 2019
levels within two years forecasting 77.7 million travelers in 2024 and reaching 85.2 million
in 2025. CXI is strengthened by the growing demand for travel and cash’s position as the
second most used payment method while traveling.
*Travelers listed in millions
FY2019
FY2021
FY2022
FY2023
International Arrivals to US
US Outbound to the World
Total
79.1
98.8
177.9
17.8
44.0
61.8
47.9
64.8
77.0
96.6
124.9
161.4
Steady Growth Through Relationship Management
EBC’s corporate payments business grew in active customers, the volume of payments
processed, and revenue generated. An active customer is one that transacted with EBC
during the fiscal year. EBC did see a negative impact on its margin per payment and
number of payments per client due to a slowdown in ordering habits based on the higher
interest rate environment and improvements in the global supply chain. As EBC builds
out its client payment channels, relationship managers will focus on higher-value client
relationships, while lower-volume clients are able to be serviced through more automated
solutions.
Diversifying Payment Acquisition Channels
EBC has been exploring the payment ecosystem for additional channels for new client
acquisition. The focus for 2024 will be rolling out the US-based “One Provider. One
Platform.” strategy to its Canadian financial institution clients and integrating with
corporate payment systems to power their FX payment flows. Integrating with banking
platforms and corporate payment systems opens new opportunities to generate payment
flows that can be scaled without hiring more staff and creates a strong cross-selling value
proposition.
Currency Exchange International, Corp - Annual Report 2023
Expand FX with US Banks
and Credit Unions
$3+
Billion Notional Value
of Financial Institution
Payments Processed
161
Million International
Travelers To and From US
Build Scale in Corporate
International Payments
18%
Increase in Corporate
Payments Processed
1,000+
Active Corporate Payment
Customers
5
Maximize Direct-to-
Consumer Offering
22
New Airport Branches
291+
Million People Eligible for
OnlineFX
Strategic Priorities
CXI’s Brand Larger Than Ever with Travelers
CXI has never been more visibly present to international travelers than in 2023. In the
last four years, CXI’s brand went from zero airport exposure to becoming a well-known
US foreign currency provider with more than 156 million passengers boarding planes in
airports with CXI branded airport locations. CXI is proud to bring its level of service and client
care to 11 airports including three of the top five busiest international airports in the US.
CXI’s position as the preferred foreign currency provider to AAA clubs enabled its agent
relationship locations to grow to 235 service points, with more clubs continuing to join
CXI each year. Additionally, CXI opened three company-owned branches in New Jersey,
Pennsylvania, and Florida. The network of CXI agent locations has never been stronger.
OnlineFX Accelerates the DTC Digital Ecosystem
OnlineFX, CXI’s e-commerce platform, has been instrumental in enhancing its client
acquisition, experience, and lifetime value. The digital ecosystem is transformative to
CXI, knowing its clients’ trends and engagement lifecycle. CXI now has more connections
with its clients and is engaging with greater personalization and targeted timing. This
has grown its active consumer client base on the platform by 47% in 2023 compared to
2022. The digital ecosystem is just scratching the surface of its value in its DTC strategy.
In 2023, the OnlineFX home delivery services added two new states, bringing its total to 40
states or 87% of the US population. OnlineFX continues to make foreign exchange faster
and easier for everyday international travelers.
Global Expansion of
Wholesale Banknotes
1
Canadian Bank
Participating in FBICS
10+
Countries
Credit Impacts Financial Institutions Around the World
EBC’s global expansion of wholesale banknotes faced significant headwinds in 2023. EBC
found it a challenging environment to onboard new financial institutions and experienced
limited orders from its existing clients, which was predicated by the failure of a few
regional US banks. The US regional bank failures meant credit risk departments of financial
institutions across the world tightened their deal requirements. Due to EBC requiring
prepayment on its trades, the risk departments of prospects and existing clients focused
on EBC’s size compared to the trade size for the average USD deal. As the trade values
can be worth tens of millions of dollars, they became an ongoing point in conversations
throughout the year.
Clear Resolution for a Path Forward
EBC is addressing the credit risk challenge presented by the current market conditions.
EBC is in the final stages of establishing a trust account that will demonstrate clear credit
risk mitigation for counterparties and allow EBC to maintain its prepayment requirement.
EBC’s solution creates a strong value to the foreign financial institutions with its attractive
pricing, vendor resiliency, and security. The trust account is expected to launch in 2024.
Currency Exchange International, Corp - Annual Report 2023
6
Currency Exchange International, Corp.
Management’s Discussion and Analysis
For the Years and Three-Month Periods Ended October 31, 2023 and 2022
Currency Exchange International, Corp - Annual Report 2023 7 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Scope of Analysis
This Management Discussion and Analysis (MD&A) covers the results of operations and the financial condition of Currency
Exchange International, Corp. (CXI or the Company) and its subsidiaries for the years and three-month periods ended October
31, 2023 and 2022, including the notes thereto. This document is intended to assist the reader in better understanding and
assessing operations and the financial results of the Company.
This MD&A was prepared as at January 24, 2024 and should be read in conjunction with the audited consolidated financial
statements of the Company for the years ended October 31, 2023 and 2022, and the notes thereto. A detailed summary of
the Company's significant accounting policies is included in Note 2 of the Company's audited consolidated financial
statements for the years ended October 31, 2023 and 2022. The functional currency of the Company and its wholly owned
subsidiary eZforex.com, Inc. (eZforex) is the U.S. Dollar. The functional currency of the Company’s wholly owned Canadian
subsidiary, Exchange Bank of Canada (EBC or the Bank), is the Canadian Dollar. The Company’s presentation currency is the
U.S. Dollar. Unless otherwise noted, all references to currency in this MD&A refer to U.S. Dollars. The audited consolidated
financial statements and the MD&A have been reviewed by the Company’s audit committee and approved by its board of
directors.
In this document “Company,” and "CXI" refer to Currency Exchange International, Corp. collectively with its wholly owned
subsidiaries, eZforex and EBC.
Additional Information
Additional information relating to the Company, including annual financial statements, and the Company’s annual information
form, is available on the Company’s SEDAR+ profile at www.sedarplus.ca and on the Company’s website at www.cxifx.com.
Forward-Looking Statements
This MD&A contains certain “forward-looking information” as defined in applicable securities laws. These statements relate
to future events or the Company’s future performance. All statements other than statements of historical fact are forward-
looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”,
“expects”, “budgeted”, “scheduled”, “estimates”, “continues”, “fo recasts”, “projects”, “predicts”, “intends”, “anticipates” or
“believes”, variations or the negatives of such words and phrases, or state that certain actions, events , or results “may”,
“could”, “would”, “should”, “might” or “will” be taken, occur, or be achieved. The forward-looking information in this MD&A is
based on the date of this MD&A or based on the date(s) specified in such statements. The following table outlines certain
significant forward-looking information contained in this MD&A and provides the material assumptions used to develop such
forward-looking information and material risk factors that could cause actual results to differ materially from the forward -
looking information.
Forward-Looking Information
Assumptions
Risk factors
Sensitivity analyses relating to
foreign currencies and interest
rates
All factors other than the variable in question remain
unchanged; CXI’s entire unhedged balance of foreign
currency holdings is affected uniformly by changes
in exchange rates; CXI’s interest-bearing instruments
and obligations were constant during the period
Fluctuations of exchange rates and
interest rates
Currency Exchange International, Corp - Annual Report 2023 8 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Inherent in the forward-looking information are risks, uncertainties, and other factors beyond the Company’s ability to predict
or control. Please refer to the Financial Risk Factors section beginning on page 22. Readers are cautioned that the above
table does not contain an exhaustive list of the factors or assumptions that may affect the forward -looking information in
this MD&A, and the assumptions underlying such statements may prove to be incorrect. Actual results and developments
are likely to differ, and may differ materially from those expressed or implied by the forward -looking information contained
in this MD&A.
Forward-looking information involves known and unknown risks, uncertainties, and other factors that may cause the
Company’s actual results, performance, or achievements to be materially different from any of its future results,
performance, or achievements expressed or implied by the forward-looking information. All forward-looking information
herein is qualified by this cautionary statement. Accordingly, readers should not place undue reliance on forward -looking
information. The Company undertakes no obligation to update publicly or otherwise revise any forward-looking information,
whether as a result of new information, future events, or otherwise, except as may be required by applicable securities laws.
If the Company does update any forward-looking information, no inference should be drawn that it will make additional
updates with respect to that or other forward-looking information, unless required by applicable securities laws.
Overview
The Company is a publicly traded company (TSX: CXI; OTCBB: CURN) with its head office in Orlando, Florida, and is a reporting
issuer in the provinces of British Columbia, Alberta, and Ontario. It specializes in providing currency exchange and related products
to financial institutions, money service businesses, travel companies, other commercial and retail clients through its proprietary
software platform, company-owned branches and vaults, and inventory on consignment locations throughout the United States
and in Canada, through its wholly owned subsidiary, Exchange Bank of Canada. EBC, located in Toronto, Ontario, is a non-deposit-
taking, non-lending Schedule 1 Canadian bank that participates in the Federal Reserve Bank of New York’s (FRBNY) Foreign Bank
International Cash Services (FBICS) program, a competitive advantage in the Canadian and global markets for the trade of U.S.
Dollar banknotes. At October 31, 2023, the Company had 409 employees, 102 of which were employed on a part-time basis.
The Company has developed CXIFX, its proprietary, customizable, web-based software, as an integral part of its business
and believes that it represents an important competitive advantage. CXIFX is also an online compliance and risk
management tool that integrates with core bank processing platforms to allow a seamless transaction experience. This
includes an OnlineFX platform that allows it to market foreign exchange products directly to consumers that operate in 40
States. The trade secrets associated with CXIFX are protected via copyright, restricted access to both the software and its
source code, and secure maintenance of source code by a team of software engineers employed by the Company.
Background
The Company has the following revenue streams which it reports in its financial documents as commissions or fees revenue:
Commissions revenue comprises the difference (spread) between the cost and selling price of foreign currency products,
including banknotes, wire payments, cheque collections and draft issuances (foreign currency margin), together with the net
(realized or unrealized) gain or loss from foreign currency forward contracts with customers, and the commissions paid on
the sale and purchase of currencies. The amount of this spread is based on competitive conditions and the convenience and
value-added services offered.
Fees revenue comprises the following:
i.
ii.
Fees generated at the Company’s branch locations and certain inventory on consignment locations from foreign currency
(banknote) exchange, traveler’s cheques, currency price protection, and fees collected on payroll cheque cashing; and
Fees collected on foreign-denominated wire transfers, drafts, and cheque-clearing transactions.
The following are some of the characteristics of the Company’s revenue streams:
The Company operates five vaults serving the Company’s operations in Canada and the United States that serve as
distribution centers for its branch network, as well as order fulfillment centers for its clients including financial institutions,
Currency Exchange International, Corp - Annual Report 2023 9 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
money-service businesses, and other corporate clients. Revenues generated from vaults have greater scale as the Company
maintains a sales force to increase its geographic customer base. Exchange rate margins vary from customer to customer
and are dependent on criteria such as exchange volumes and customer setup. Onboarding of new clients, specifically
banking clients, normally requires an upfront investment, such as training, and currency signage, as well as additional one -
time shipping costs to distribute start-up materials. The Company also normally absorbs information technology costs to
customize the CXIFX software for specific client use during the customer implementation phase. There are two common
customer setups:
i.
ii.
Centralized setup - for customers with a high volume of foreign currency exchange who maintain and manage their own
inventory in central vault facilities. The Company offers bulk wholesale banknote trading. Trades of this nature are generally
executed at lower margins, as the cost per transaction is low and the average value is high. The customer implementation
phase is normally shorter, and the costs of onboarding clients is low; and
Decentralized setup - many customers have determined that it is advantageous to avoid a currency inventory and allow their
locations to buy and sell directly from CXI. Transactions in a decentralized setup typically are executed at a higher margin,
as the average transaction is low and the cost to fulfill each trade is higher than that of a centralized setup. Several of the
Company's financial institutions outsource their currency needs in return for a commission, based upon exchange volume.
When a customer outsources their currency needs, the Company is granted access to the entire branch network, thus,
immediately increasing its geographic footprint and expanding its customer base. The customer implementation phase is
normally longer in a decentralized setup and the cost of client onboarding is higher as these clients normally require
additional training and support.
CXI and EBC maintain inventory in the form of domestic and foreign banknotes in financial institutions and other high-traffic
locations. These locations can be very profitable as there are no occupancy costs or payroll. Foreign exchange currency is
placed in these locations on a consignment basis. On October 31, 2023, the Company had inventory on consignment in 654
locations, primarily located inside financial institutions across the United States and Canada. To encourage inventory
turnover, the Company offers commission as a percentage on volumes generated by these locations. The table below lists
the number of wholesale customer relationships and total number of unique active locations that transacted during each of
the previous five fiscal years.
FY 2019
FY 2020
FY 2021
FY 2022
Wholesale customer relationships
1,878
1,667
2,481
2,586
Number of transacting locations
21,595
14,787
15,202
22,170
FY 2023
2,658
22,551
The Company’s strategy includes an omni-channel, direct-to-consumer approach that allows it to build its brand as a premier
provider of foreign currencies in the United States. This includes operating a number of company-owned branch locations
that are located in typically high-traffic areas in key tourism markets across the United States, staffed by CXI employees.
These locations hold domestic and foreign currencies to buy and sell on demand. The currency exchange margins associated
with the transactions occurring at these locations are generally higher in order to recapture costs of deployed capital in the
form of domestic and foreign currencies, rent, payroll, and other general and administrative costs. Company-owned branch
locations generate a significant amount of revenue from the exchange of foreign currency, whereas CXI is generally a net
seller of currencies to its bank and non-bank clients. Excess currency collected via the branch network can be redeployed to
financial institutions and non-bank clients, which reduces the need to source currency through wholesale sources at a
greater cost, thus increasing currency margins.
As of October 31, 2023, the Company had 38 company-owned branch locations across the United States (37 locations as of
October 31, 2022). During the current fiscal year, the Company has opened the Mills at Jersey Gardens in Elizabeth, New
Jersey in December 2022, the King of Prussia Mall in Pennsylvania in July 2023, and most recently the first company-owned
airport branch at the Orlando International Airport (MCO) in August 2023. This newest airport location marks CXI’s
groundbreaking steps to expand its foreign currency exchange services to airports across the United States. During the
fiscal year, the Company also closed the Apple Bank – Union Square location in New York in May 2023 and the Berkeley at
Mechanics Bank in August 2023.
Currency Exchange International, Corp - Annual Report 2023 10 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The table below lists the individual company-owned branch locations operating in the United States as of October 31, 2023:
Locations
Florida Mall Booth #1
Ontario Mills Mall
Potomac Mills Mall
City
Orlando
Ontario
Woodbridge
Sawgrass Mills Mall Booth #1
Sunrise
State
FL
CA
VA
FL
Aventura Mall
Copley Place Mall
Dadeland Mall
Dolphin Mall
MacArthur Mall
Apple Bank - Avenue of Americas
Apple Bank - Grand Central
San Francisco City Center
San Jose Great Mall
Arundel Mills Mall
Santa Monica Place
SouthCenter
Apple Bank - Penn Station
Mainplace at Santa Ana
Montgomery at Bethesda
FL
Aventura
MA
Boston
FL
Miami
FL
Miami
VA
Norfolk
NY
New York
New York
NY
San Francisco CA
CA
San Jose
MD
Hanover
CA
Santa Monica
WA
Tukwila
NY
New York
CA
Santa Ana
MD
Bethesda
Opened
2007
2007
2007
2007
2008
2009
2009
2009
2009
2011
2011
2011
2011
2012
2012
2012
2013
2013
2013
Locations
Shops at Northbridge
Apple Bank - Upper East Side New York
Cherry Creek
City
Chicago
Denver
State
IL
NY
CO
Opened
2013
2014
2014
Citadel Outlets
Tyson's Corner Center
Garden State Plaza
Mission Valley
The Orlando Eye (Icon Park)
International Market Place
North County
Alderwood Mall
Pearl Ridge
South Coast Plaza
Stanford Shopping Center
Century City Mall
Town Center at Boca Raton
Jersey Gardens
King of Prussia Mall
Orlando International Airport
Los Angeles
Tyson’s Corner
Paramus
San Diego
Orlando
Honolulu
Escondido
Lynnwood
Aiea
Costa Mesa
Palo Alto
Los Angeles
Boca Raton
New Jersey
Pennsylvania
Orlando
CA
VA
NJ
CA
FL
HI
CA
WA
HI
CA
CA
CA
FL
NJ
PA
FL
2014
2014
2015
2015
2015
2016
2017
2019
2019
2020
2022
2022
2022
2023
2023
2023
The Company has focused on growing its retail presence in the United States through agent locations with operators that
bear the responsibility for the fixed costs, including lease commitments and other obligations associated with physical
stores. In exchange for exclusive rights to supply and purchase foreign currencies to these agents, CXI consigns inventory
to each location and licenses the right to use its name, thereby increasing its brand exposure. All agents are required to
meet all of CXI’s compliance and operational requirements under their agency agreements. CXI categorizes its agents
between airport and non-airport locations, as airports have unique requirements. Through these relationships, CXI maintains
a presence at some of the busiest airports in the United States for international traffic, including Charlotte, Chicago, Fort
Lauderdale, Minneapolis, Newark, New York, Pittsburgh, Portland and Raleigh-Durham. CXI also has an agency relationship
with Duty Free Americas for 29 locations at the busiest ports of entry across the border between the United States and
Canada. This adds to the Company’s prolific agent relationship with the American Automobile Association, which includes
more than 200 locations across 17 States and the District of Columbia.
CXI launched its proprietary OnlineFX platform in 2020 to enable it to reach American consumers outside of its branch and
agent network. The platform allows consumers to purchase foreign currency banknotes easily and securely, prior to their
international travel. The platform enables consumers to buy more than 90 foreign currencies with direct shipment to their
homes or for pick up at one of the Company’s branches across the United States. OnlineFX is a core strategic initiative as
adoption rates for online purchases are expected to continue to grow.
The following table lists the number of retail locations by category and the number of States in which the Company’s
OnlineFX platform operated as at October 31, 2023 and over the end of each of the four preceding fiscal years:
Company-owned branch locations
Airport agent locations
Non-airport agent locations
States in which OnlineFX operates
2019
2020
2021
2022
2023
46
-
38
-
35
7
47
22
35
18
62
31
37
23
161
38
38
45
235
40
The Company’s largest asset is cash. The cash position consists of local currency banknotes, both in U.S. and Canadian
Dollars, held in inventory at its branch and consignment locations as well as bank accounts to facilitate the buying and
selling of foreign currency, as well as foreign currency banknotes held at the Company’s vaults, branch locations,
Currency Exchange International, Corp - Annual Report 2023 11 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
consignment locations, or cash inventory in transit between Company locations. The Company also has traditional bank
deposits to maintain operations and as settlement accounts to facilitate currency transactions at various financial
institutions.
Accounts receivable consist primarily of bulk wholesale transactions where the Company is awaiting collection. The credit
risk associated with accounts receivable is limited, as the Company’s accounts receivables consist primarily of bulk currency
trades with a settlement cycle of 24 to 48 hours. The counterparty risk is generally low, as the majority of the Company’s accounts
receivable reside with financial institutions and money service business customers. The Company has longstanding relationships
with most of its customers and has a strong repayment history.
Accounts payable consist mainly of foreign currency transactions and commissions payable at period end where the Company
receives currency from a customer and then remits payment at a subsequent date.
Selected Financial Data
The following table summarizes the performance of the Company over the last eight fiscal quarters .
Three-months
ended
Revenue
Net operating
income
Net income
Total assets
Total equity
Earnings per
share (diluted)
$
10/31/2023
22,786,072
7/31/2023
23,363,600
4/30/2023
18,345,342
1/31/2023
16,468,402
10/31/2022
19,800,463
7/31/2022
21,145,189
4/30/2022
14,071,953
1/31/2022
12,450,282
$
5,818,667
6,437,153
3,743,075
2,734,159
5,401,678
7,321,521
2,888,757
3,111,368
$
$
$
2,303,822
132,049,444
79,232,981
4,055,276
129,643,409
77,590,126
2,243,714
134,697,253
73,104,851
1,589,499
133,072,968
71,448,732
4,383,876
125,528,832
69,305,509
4,585,808
155,757,016
65,598,381
1,308,445
150,804,096
60,821,752
1,504,999
129,297,226
59,332,997
$
0.34
0.60
0.33
0.24
0.66
0.70
0.19
0.23
While seasonality is generally not a consideration for the Payments product line, seasonality for the Banknotes product line
is reflected in the timing when foreign currencies are in greater or lower demand. In a normal operating year, there is
seasonality to the Company’s operations with higher commission revenue generally from March through September and
lower commissions revenue from October through February. This coincides with peak tourism seasons in North America
when there are generally more travelers entering and leaving the United States and Canada.
The Company developed a strategy of consolidation and diversification to mitigate the risk of financial losses associated
with significant volatility in the domestic consumer driven banknote market. The strategy has five pillars, as follows:
i.
ii.
iii.
iv.
Increase its penetration of the financial institution sector in the United States through its “One Provider, One Platform” multi-
product approach through integration of its proprietary software system with the leading core processing platforms for
banks;
Develop scale in global payments for small and medium enterprises in Canada by leveraging strategic counterparty
relationships through its subsidiary, Exchange Bank of Canada;
Increase its penetration in the global trade of banknotes by leveraging Exchange Bank of Canada’s participation in the
Federal Reserve Bank of New York’s (FRBNY) Foreign Bank International Cash Services program (FBICS);
Maximize profitability in the direct-to-consumer business by leveraging the agency model, OnlineFX platform and driving
revenue growth at company-owned branches; and
v.
Develop the infrastructure to support significant growth in transactional volumes and a matrix organizational structure.
Currency Exchange International, Corp - Annual Report 2023 12 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The Company has refined the strategy since it was first developed and monitors its execution against key performance
indicators. The diversification strategy has been a significant factor in the Company’s resilience and return to profitability.
Geopolitical and macroeconomic factors also influence consumer demand for travel.
The following is a summary of the results of operations for the three-month periods ended October 31, 2023 and 2022:
Revenue
Operating expenses
Net operating income
Other income , net
EBITDA*
Net earnings
Basic earnings per share
Diluted earnings per share
Three-months ended
Three-months ended
October 31, 2023
October 31, 2022
$
22,786,072
16,967,405
5,818,667
124,699
5,943,366
2,303,822
0.36
0.34
$
19,817,284
14,415,675
5,401,609
44,059
5,445,668
4,383,878
0.68
0.65
Change
Change
$
2,968,788
2,551,730
417,058
%
15%
18%
8%
80,640
>100%
497,698
9%
(2,080,056)
-47%
(0.32)
(0.31)
-47%
-48%
*Earnings before interest, taxes, depreciation and amortization
The Company generated revenue of $22,786,072 for the three-month period ended October 31, 2023, a 15% increase from
the same period last year. The last year saw a significant emergence from the travel restrictions related to the COVID-19
virus. Since travel restrictions progressively eased over the course of 2022, there has been a sustained progressive
improvement in the demand for international travel between North America and Europe, the Caribbean and certain Central
American destinations. Generally, South American and Asian currencies have shown steady demand compared to last year,
while there was a notable increase related to certain exotic foreign currencies which has contributed to an increased volume
over the same period last year. The revenue increase over the comparable period in the prior year also reflects the acquisition
of new customers in both the Banknotes and Payments product lines, while trade with foreign financial institutions by
Exchange Bank of Canada declined due to a decline in demand for USD volumes compared to the same time last year.
Compared to the three-month period ended July 31, 2023, revenue decreased $577,528 or 2%, as demand for foreign currency
slightly decreased which is consistent with the seasonality associated with the Company’s operations. The top five
currencies by revenue for the three-month period ended October 31, 2023 were the US Dollar (USD), Euro (EUR), Canadian
Dollar (CAD), Mexican Peso (MXN), and British Pound Sterling (GBP).
The 15% growth in revenues for the three-month period ended October 31, 2023 from last year amounted to $2,968,788 and
was primarily due to the growth in the retail market by $2,486,328. Revenue in the United States increased by $4,059,506, or
28% over the same period last year, while in Canada it declined by $1,090,718, or 21%. Corresponding with the revenue
growth, operating expenses increased by $2,551,730, or 18%, primarily attributable to an increase in salaries and benefits in
addition to certain amounts of operational losses that were incurred in the current period, as discussed further below. The
Company recorded net operating income of $5,818,667 in the three-month period ended October 31, 2023, 8% higher than
the same period in the prior year. Overall, the growth in revenues surpassed the increase in operating expenses and the
Company generated $2,303,822 in net income during the three-month period ended October 31, 2023, $2,080,056, or 47%
lower than the same period last year, primarily attributed to the Canadian region as discussed below.
The Company continued its progression along its three-year strategic plan in the three-month period ended October 31, 2023
that included the following highlights:
i.
Continued its growth in the International Payments product line in both Canada and the U.S. EBC initiated trades with 63
new corporate clients, representing an active trading client base of 761 during the same period. The Company processed
34,467 payment transactions, representing $3.189 billion in volume in the three-month period ended October 31, 2023. This
compares to 28,845 transactions on $3.190 billion of volume in the three-month period ending October 31, 2022;
Currency Exchange International, Corp - Annual Report 2023 13 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
ii.
iii.
Increased its penetration of the financial institution sector in the United States with the addition of 126 new clients,
representing 177 transaction locations;
Continued its growth in the direct-to-consumer banknotes market with the addition of 45 new non-airport locations during
the three-months ended October 31, 2023, and the addition of its latest company-owned branch at Orlando International
Airport which opened in August 2023; and
iv.
Added the State of Ohio, making it the 40th State in which the Company provides its services through its OnlineFX platform.
The Company’s capital base has grown to $80 million. The Company’s credit facility, with its primary lender, increased to
$40 million from $20 million during the prior year, and this further strengthens the Company’s liquidity position to support
its strategic plan. During the three-month period ended July 31, 2023, the Company received an additional $10 million
accordion with its primary lender, effective through August 31, as a contingency to accommodate a seasonal increase in
banknote volumes during the peak summer season. Refer to the Liquidity and Capital Resources section. The combination
of a growing capital base and debt capacity provide sufficient liquidity to the Company to continue to meet its financial
obligations. CXI is well-positioned to support its strategic initiatives that include the organic and inorganic acquisition of
new clients in both the Banknotes and Payments product lines.
Total assets
Total long-term financial liabilities
Total equity
October 31, 2023
October 31, 2022
$
$
132,049,444
125,528,832
2,719,288
79,232,981
4,163,543
69,305,509
The following shows a breakdown of the three-month revenues by geographic location and product line:
Revenues by Product Line
Three-months ended
Three-months ended
October 31, 2023
October 31, 2022
$
19,192,642
3,593,430
22,786,072
$
16,375,179
3,442,105
19,817,284
Revenues by Geography
Three-months ended
Three-months ended
October 31, 2023
October 31, 2022
$
18,745,521
4,040,551
22,786,072
$
14,686,015
5,131,269
19,817,284
Change
Change
$
2,817,463
151,325
2,968,788
%
17%
4%
15%
Change
Change
$
4,059,506
(1,090,718)
2,968,788
%
28%
-21%
15%
Banknotes
Payments
Total
United States
Canada
Total
Revenues in the Banknotes product line increased by 17% in the three-months period ended October 31, 2023, from the same
period in 2022. The growth is attributable to two main drivers. Firstly, consumer demand for foreign currencies has
significantly improved as restrictions on international travel have substantially eased over the past year. Between August
Currency Exchange International, Corp - Annual Report 2023 14 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
and October 2023, approximately 220 million travelers passed through TSA check points in United States airports,
approximately 104% of pre-pandemic levels, this is an increase of 11% from the same time last year. Secondly, the Company
was successful at increasing its market share, as indicated by the increase in new wholesale clients and developing its
direct-to-consumer footprint through new locations, including agents and its OnlineFX platform. Relative to the three-month
period ended July 31, 2023, Banknotes revenue decreased by $337,134 or 2%, which coincides with the typical seasonal
reduction in tourism in North America as demand for foreign currencies decline with the school year’s commencement.
Relative to the most comparable period prior to the pandemic, the three-months ended October 31, 2019, Banknotes revenue
has increased by 78%, reflecting the impact of increased market penetration and expansion of international trade.
Revenues in the Payments product line increased by 4% in the three-month period ended October 31, 2023, compared to the
same period in 2022. This demonstrates the Company’s success in acquiring new client relationships. The Company
processed 34,467 payment transactions, representing $3.189 billion in volume in the three-month period ended October 31,
2023. This compares to 28,845 transactions on $3.190 billion of volume in the same period in 2022. Payments represented
a 16% share of revenue in the current three-month period, consistent with the same period in 2022.
Revenues in the United States grew by 28% during the three-months period ended October 31, 2023 when compared to the
same period in 2022, led primarily by $2,486,328, or 49%, growth in retail banknotes and $966,979, or 12%, in wholesale
banknotes, with the remainder amount of $606,199, or 38%, reflecting growth in the Payments product line. In Canada,
revenues declined by 21% from the same period last year primarily due to decline in international demand for US Dollar
volumes following the banking crisis that unfolded early in 2023. Accordingly, revenues in the Banknotes product line
declined by $635,843, or 19%, with the remainder of the decline was in the Payments product line of $454,875, or 24%,
compared to the same period in the prior year.
During the three-month period ended October 31, 2023, operating expenses increased 18% compared to the same period
last year. The 18% increase is slightly higher than the 15% growth in revenues and that was due to certain non-recurring
operational losses incurred during the current period, to which the Company responded by reviewing its procedures around
certain operational areas and strengthened controls to improve effectiveness of its operating environment. Further, variable
costs within operating expenses, represented mostly by postage and shipping as well as sales commissions, incentive
compensation and bank fees increased 10% to $5,642,758 compared to $5,132,219 in the three-month period ended October
31, 2022, largely due to the increase in the number of transactions. The ratio of total operating expenses to total revenue
for the three-month period ended October 31, 2023 was 74% compared to 73% for the three-month period ended October 31,
2022. The major components of operating expenses are presented in the table below, with commentary on some of the
significant variances.
Currency Exchange International, Corp - Annual Report 2023 15 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Three-months ended
Three-months ended
Change
Change
October 31, 2023
October 31, 2022
Salaries and benefits
Postage and shipping
Losses and shortages
Legal and professional
Information technology
Bank service charges
Rent
Insurance, taxes and licensing
Travel and entertainment
Foreign exchange losses
Stock based compensation
Other general and administrative
Operating expenses
$
9,304,785
2,820,228
1,506,621
949,052
826,245
646,391
454,219
294,567
197,131
6,665
(380,146)
341,647
16,967,405
$
7,475,094
2,792,016
209,037
$
1,829,691
28,212
%
24%
1%
1,297,584
>100%
1,057,052
(108,000)
653,506
640,854
303,355
284,739
218,296
248,369
258,090
275,267
172,739
5,537
150,864
9,828
(21,165)
(241,704)
66,380
-10%
26%
1%
50%
3%
-10%
-97%
24%
18%
(638,236)
>(100%)
14,415,675
2,551,730
Salaries and benefits increased when compared to the prior year, mostly driven by incremental growth in headcount, which
increased to 409 in the year ended October 31, 2023, from 344 in the same period last year, in addition to a partial increase
in cost driven by inflation in base salaries and wages.
Postage and shipping had a 1% increase when compared to the same period last year despite the 17% growth in Banknotes
product line which reflects the Company’s implementation of price increases that were adopted during the current year to
compensate for the higher shipping costs levied, these strategies proved to be successful in absorbing some of the large
shipping costs increases incurred by the Company and the remedial actions resulted in containing cost drivers that the
Company saw last year and resulted in the significant shipping cost incurred during the same period last year.
Losses and shortages increased from the same period last year mostly due to non-recurring losses associated with stale-
dated items and higher costs related to lost shipments. The Company has strengthened certain procedures within its control
environment that aim at improving operational control effectiveness.
Legal and professional costs showed a relative reduction when compared to last year, while the Company continued to
benefit from outsourced professional services, the trend during the current period showed a reduction as the same period
last year showed a significant amount of services incurred during the implementation of the new accounting system that
went live in May 2023.
Information technology expenses include non-capital expenditures on software and related service contracts that do not
meet the capitalization criteria. The majority of the increased costs during the period was associated with the Company’s
increased reliance on third-party technology service providers to deliver its products, including accounting and treasury
management systems, in addition to the continuous improvement to its proprietary CXIFX software, the Company’s
proprietary system and other technology related costs that the Company incurs in the normal course of business.
Rent expenses increased due to the expansion in branches in which the Company operates its retail business. The current
period reflects two new locations that were opened during the year in addition to certain increases resulting from rent
agreements renewed at higher prices.
Currency Exchange International, Corp - Annual Report 2023 16 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Foreign exchange losses include the revaluation of outstanding foreign currency balances to market value, together with the
net gain or loss from foreign currency forward and option contracts used to offset the revaluation of foreign currency
exposures.
Stock-based compensation includes the amortization related to the vesting of issued and outstanding stock option s,
Restricted Stock Unit (RSU) and Deferred Stock Unit (DSU) awards, net of revaluation of the liability for the vested portion
during the period. The decrease in the current period relative to the same time last year is due to the significant decline in
the revaluation of the financial liability of the DSU and RSU awards as the market value of the stock price between the July
31, 2023 and October 31, 2023 declined resulting in a recovery of the amortization. This recovery offsets most of the expense
incurred in the second and third quarter of the year when the market value of the stock price appreciated.
The increase in other general and administrative expenses is attributable to higher referral commissions paid to third parties,
marketing, office supplies, and other administrative expenses.
Other income and expenses are comprised of the following:
Interest expense
Interest on lease liabilities
Depreciation and amortization
Depreciation of right-of-use-assets
Interest revenue
Other income (loss)
Gain on sale of assets
Income tax (expense) benefit
Total other expenses
Three-months ended
Three-months ended
October 31, 2023
October 31, 2022
$
(173,401)
(38,087)
(398,478)
(456,562)
96,666
26,889
1,144
(2,573,017)
(3,514,846)
$
(324,529)
(61,347)
(345,642)
(515,520)
45,294
(1,235)
-
185,246
(1,017,733)
The interest expense has declined in the current period compared to the same period last year and that was primarily related
to a decrease in borrowings utilized to fund short-term working capital needs and foreign currency inventory, despite an
increase in banknote volumes. At October 31, 2023, the Company had $14,679,991 drawn on its lines of credit, with
$35,680,577 available for use. This compares to $5,929,847 drawn on October 31, 2022, and $55,538,042 available. However,
there was overall decline in interest expense due the fact that the average outstanding borrowings by the Company for the
three-month period ended October 31, 2023 was $6,894,606, versus $21,124,843 for the three-month period ended October
31, 2022, notwithstanding a higher average interest rate on borrowings of 8.6% versus 5.2% during the same period last
year. Refer to Liquidity and Capital Resources on page 16.
The decline in the right-of-use (ROU) assets depreciation is primarily driven by the change in the ROU branch locations
opened and closed during the current period compared to the prior period, the Company had one less location that qualifies
for IFRS 16 in the current period compared to the prior period.
Interest revenue for the period was favorably impacted by the increased balances in interest bearing accounts in the normal
course of business.
The Company recorded an income tax expense amount of $2,573,017 in the three-month period ended October 31, 2023, in
comparison to an income tax benefit of $185,246 in the prior period. The benefit in the prior period was due to EBC’s
recognition of certain tax benefit related to periods prior to the three-month period ended October 31, 2022 which reduced
income tax expense at the end of the prior period.
Currency Exchange International, Corp - Annual Report 2023 17 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The following is a summary of the results of operations for the year ended October 31, 2023 and 2022:
Revenue
Operating expenses
Net operating income
Other income
Other expenses
EBITDA*
Net earnings
Basic earnings per share
Diluted earnings per share
Year ended
Year ended
October 31, 2023
October 31, 2022
$
81,954,769
63,220,520
$
67,498,673
48,777,200
18,734,249
18,721,473
494,368
(30,527)
19,198,090
10,193,507
1.59
1.52
111,684
(1,814)
18,831,343
11,783,124
1.83
1.78
Change
Change
$
14,456,096
14,443,320
12,776
382,684
(28,713)
%
21%
30%
-
>100%
>100%
366,747
2%
(1,589,617)
-13%
(0.24)
(0.26)
-13%
-15%
*Earnings before interest, taxes, depreciation, and amortization
Revenue increased $14,456,096 and 21% from last year. Last year saw a significant emergence from the travel restrictions
related to the COVID-19 virus. The first half of the prior year was largely impacted by the Omicron variant of the COVID-19
virus. Since travel restrictions progressively eased over the course of 2022, there has been a sustained steady increase in
demand for international travel between North America and Europe, the Caribbean and certain Central American destinations
such as Costa Rica. Some South American and Asian currencies have been slow to recover, however, with Japan relaxing
its travel restrictions on foreign nationals in early 2023, these markets have seen increased travel demand in 2023, in
addition, certain exotic foreign currencies also showed increased volume from the same period last year.
The 21% growth in revenues for the year was primarily driven by the Banknotes product line which grew by $12,602,328, or
23% with the rest of the growth resulting from the Payments product line as discussed below in detail. The Company
recorded net operating income of $18,734,249 in the year ended October 31, 2023, slightly higher than the prior year. The
growth in revenues was accompanied by a corresponding increase in operating expenses, as the Company’s variable
expenses increased in addition to investments made in certain strategic initiatives and software infrastructure that aim to
sustain the long-term growth objectives of the Company’s strategic plan, in addition to the increase in headcount as the
Company continues to invest in its people, as result of the revenue growth during the current year. The Company generated
$10,193,507 in net income during the year ended October 31, 2023, lower than the prior year by $1,589,617 or 13%.
Currency Exchange International, Corp - Annual Report 2023 18 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The following shows a breakdown of revenues by geographic location and product line for the years ended October 31, 2023
and 2022:
Revenues by Product Line
Year ended
Year ended
Change
Change
October 31, 2023
October 31, 2022
$
67,624,421
14,330,348
81,954,769
$
55,022,093
12,476,580
$
12,602,328
1,853,768
67,498,673
14,456,096
%
23%
15%
21%
Revenues by Geography
Year ended
Year ended
Change
Change
October 31, 2023
October 31, 2022
$
64,531,245
17,423,524
81,954,769
$
50,184,406
17,314,267
$
14,346,839
109,257
67,498,673
14,456,096
%
29%
1%
21%
Banknotes
Payments
Total
United States
Canada
Total
Revenues in the Banknotes product line increased by 23%, or $12,602,328 in the year ended October 31, 2023. This
demonstrates the Company’s success at increasing its market share, as indicated by the increase in new wholesale clients
and developing its direct-to-consumer footprint through new locations in the United States, including agents and its OnlineFX
platform. The Company further continued its penetration into the global banknote trade, partially driven by EBC’s
participation in the Foreign Bank International Cash Services (FBICS) program. Revenues from the Payments product line
increased by $1,853,768, or 15% in the year ended October 31, 2023. This demonstrates the Company’s success in focusing
on the growth of Payments product line through key client relationships in both the United States and Canada. The
diversification strategy has been a significant factor in the Company’s resilience.
Revenues in the United States grew by $14,346,839, or 29%, during the year ended October 31, 2023 when compared to the
same period in 2022, led primarily by $6,861,966, or 31%, growth in wholesale banknotes, and $6,070,621, or 28%, in direct-
to-consumer banknotes, with the remainder amount of $1,414,252, or 22%, reflecting growth in the Payments product line.
In Canada, revenues grew by $109,257, or 1%, during the year ended October 31, 2023, driven by the steady growth in the
Payments product line which contributed $439,517, or 7%, while the Banknotes product line in Canada showed slower activity
compared to the same time last year and had a decline of $330,260, or 3% compared to the year ended October 31, 2022.
This decline is partially attributed to the US Dollar appreciation relative to certain foreign currencies that curtailed exchange
patterns seen in the prior year and the decline in international demand for US Dollar volumes following the banking crisis
that unfolded early in 2023. For the current year, Canada’s domestic growth driven by the ongoing recovery in international
travel demand largely mitigated the decline in international volume.
During the year ended October 31, 2023, operating expenses increased 30% compared to the prior year, and is higher than
the 21% growth in revenues, primarily due to the higher shipping costs earlier in the year in addition to certain operational
losses incurred during the current year. Variable costs within operating expenses, including postage and shipping, sales
commissions, incentive compensation and bank fees increased 28% to $21,203,278 compared to $16,568,412 for the year
ended October 31, 2022, largely due to the increase in transaction volume and the higher costs associated with shipments.
Shipping costs contributed to increased $3,750,021. In response to the increased cost of shipping due to inflation, CXI has
implemented price increases to compensate for the higher shipping costs. These strategies were successful in absorbing
Currency Exchange International, Corp - Annual Report 2023 19 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
some of the large shipping costs increases this year, and the Company anticipates seeing the full impact of these strategies
in 2024. Other fixed operating costs incurred during the year from losses and shortages were largely offset by an increase
in foreign exchange gains as outlined below. The major components of operating expenses are presented in the table below,
with commentary for some of the significant variances. The ratio of total operating expenses to total revenue for the year
ended October 31, 2023 was 77% compared to 72% for the year ended October 31, 2022. The major components of operating
expenses are presented in the table below, with commentary on some of the significant variances.
Year ended
Year ended
October 31, 2023
October 31, 2022
Change
Change
Salaries and benefits
Postage and shipping
Losses and shortages
Legal and professional
Information technology
Bank service charges
Rent
Insurance, taxes and licensing
Stock-based compensation
Travel and entertainment
Foreign exchange (gains) losses
Other general and administrative
$
33,935,281
12,137,881
3,215,773
3,204,240
3,009,268
2,450,353
1,702,594
1,179,383
1,017,823
884,357
(711,763)
1,195,330
$
26,371,728
8,387,860
628,468
2,832,135
2,199,775
2,171,586
1,132,490
1,012,225
1,093,647
658,896
1,472,299
816,091
$
7,563,553
3,750,021
2,587,305
372,105
809,493
278,767
570,104
167,158
(75,824)
225,461
%
29%
45%
>100%
13%
37%
13%
50%
17%
-7%
34%
(2,184,062)
>(100%)
379,239
46%
30%
Operating expenses
63,220,520
48,777,200
14,443,320
Salaries and benefits increased when compared to the same period last year, mostly driven by the incremental growth in
headcount, which increased to 409 in the period ended October 31, 2023, from 344 in the comparative period. The increase
was required to manage growth in the business as the Company continued to recover from the COVID-19 pandemic during
the year and to backfill some of the vacant roles that were cut as part of the Company’s restructuring plans during the
pandemic. Salaries were also affected by the full year impact of the broad-based salary increases in mid-2022 to maintain
the Company’s competitiveness in the labor market due to the inflationary environment.
Postage and shipping increased from the same period last year due to higher volumes of shipments associated with the
Banknotes product line. The balance is due primarily to product mix between domestic and international banknotes, as the
international banknote trade involves air freight and third-party processing fees. The Company recovers some of these costs
from its customers. During the year 2023, CXI applied certain price adjustments to account for the impact of inflation and
anticipates the impact from these pricing strategies be fully in effect in 2024.
Losses and shortages increased from the same period last year mostly due to non-recurring losses associated with stale-
dated items and higher costs related to lost shipments. The Company has strengthened certain procedures within its control
environment that aim at improving operational control effectiveness.
The increase in legal and professional fee is primarily attributable to consultin g costs, which are expensed as incurred,
related to the implementation of the new accounting system which accounted for $451,692 for the year ended October 31,
2023 compared to $225,489 for the year ended October 31, 2022 with the remainder related to regulatory compliance
programs at EBC. Other variances to professional fees included increased legal fees, and inflationary increases on audit
and tax services.
Information technology expenses include non-capital expenditures on software and related service contracts that do not
meet the capitalization criteria. The majority of the increase during the period was associated with the Company’s increased
Currency Exchange International, Corp - Annual Report 2023 20 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
reliance on third-party technology service providers to deliver its products, including accounting and treasury management
systems, in addition to the continuous improvement to its proprietary CXIFX software, the Company’s proprietary system
and other technology related costs that the Company incurs in the normal course of business .
Bank service charges are comprised of fees incurred for processing wire transactions as part of the Payments product line
in addition to fees incurred by the banks for banknote deposits. The yearly increase is related primarily to a combined
increase in both the Payments number of transactions and Banknotes deposit fees.
Rent expenses increased during the year due to the expansion in locations in which the Company operate its retail business.
The current year reflects two new locations that were opened during the year in addition to certain increases resulting from
rent agreements renewed at higher prices.
Insurance, taxes and licensing increased in the current year compared to last year as a result of price increases of general
liability insurance policies tied to the ongoing inflation.
Travel and entertainment expenses increased as conferences, trade shows, and in-person business meetings continued a
progressive recovery.
Foreign exchange (gains) losses are primarily attributable to modest gains of a broad range of currencies against the U.S.
Dollar throughout the year, whereas in the same period last year the U.S. Dollar strengthened considerably across currencies.
The increase for other general and administrative expenses is attributable to higher marketing, office supplies, and other
administrative expenses.
Other income and expenses are comprised of the following:
Interest expense
Depreciation of right-of-use-assets
Depreciation and amortization
Interest on lease liabilities
Interest revenue
Other income (expense)
Loss on sale of assets
Income tax expense
Total other expenses
Year ended
October 31, 2023
$
(1,088,161)
(1,895,566)
(1,509,674)
(179,904)
435,903
58,465
(30,527)
(4,331,278)
(8,540,742)
Year ended
October 31, 2022
$
(1,180,026)
(1,816,307)
(1,456,649)
(165,804)
111,684
(1,814)
-
(2,429,433)
(6,938,349)
The interest expense is primarily associated with borrowings to fund short-term working capital needs and foreign currency
inventory to support banknote volumes. The average outstanding borrowings by the Company was $12,803,230 for the year
ended October 31, 2023, versus $22,121,344 for the year ended October 31, 2022, however, the average interest rate in the
current period increased to 7.62% versus 4.64% for the same period last year. Despite an increase in average interest rates
compared to the same period last year, the interest expense is slightly lower due to reduction in overall borrowing. Refer to
Liquidity and Capital Resources on page 16.
Depreciation of right-of-use assets increased slightly in the current year over the prior year. At October 31, 2023, the
Company had one less location that qualified as a right-of-use asset, when compared to the prior year, however, new
locations were financed at a higher rate during this year, resulting in a slightly higher expense.
Currency Exchange International, Corp - Annual Report 2023 21 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The loss on sale of assets primarily represents the disposal of a legacy compliance platform; it has been replaced with
another platform that satisfies the ongoing regulatory requirements for Exchange Bank of Canada.
Interest revenue for the period was favorably impacted by $54,255 received in December 2022 from the IRS related to an
expected refund of Employee Retention Credits (ERC) from 2021. Also, the increased balances in interest bearing accounts
that the Company maintains in the normal course of business, combined with the significant increase in both Canada’s Prime
Rate and US Funds rate further increased interest revenue.
The Company recorded an income tax expense amount of $4,331,278 in the year ended October 31, 2023, in comparison to
an income tax expense of $2,429,434 in the prior period. These represented an effective tax rate of 29.82% in the current
period versus 17.09% in the comparative period. The variance with the statutory tax rate this year was attributed to certain
permanent differences related to stock options in the effective tax rate during the period in addition to certain R&D tax
credits recognized in the United States, further, taxes paid in Canada for the purpose of offsetting certain GILTI taxes in the
United States. The income tax expense for this year was higher than last year since the income tax expense in the year ended
October 31, 2022 was reduced by the application of previously unrecognized non-capital losses from periods prior to 2022
in Canada.
Cash Flows
Cash flows from operating activities during the year ended October 31, 2023, resulted in an outflow of $365,575 compared
to an inflow of $25,518,520 during the year ended October 31, 2022. The accounts receivable and accounts payable balances
fluctuate from period to period due to the volume of activity and timing of transaction settlement. In most instances,
accounts receivable and accounts payable have a settlement cycle of 24 to 48 hours. Excluding the changes in balance
sheet accounts, operating cash flow, which is generated by commission and fee income and is offset by operating expenses,
was $14,586,041 for the year ended October 31, 2023, versus an operating cash flow of $16,193,542 in the prior year’s
comparative period.
Cash flows from investing activities during the year ended on October 31, 2023, resulted in an outflow of $1,280,023
compared to an outflow of $1,291,015 during the year ended on October 31, 2022. Cash outflows from investing activities
this year mainly resulted from the cost of leasehold improvements paid for new retail locations , while last year’s cash
outflows were primarily due to the final consideration payment on the Denarius acquisition, therefore, cash outflows from
investing activity remained the same year over year.
Cash flows from financing activities during the year ended October 31, 2023, resulted in an inflow of $6,173,393 compared
to an inflow of $214,147 during the year ended October 31, 2022. This was primarily the result of the Company’s increase in
its usage of lines of credit to $8,852,591 on October 31, 2023, compared to a balance of $2,044,955 on October 31, 2022,
which the Company used to fund the Company’s working capital requirements during the year.
Currency Exchange International, Corp - Annual Report 2023 22 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Liquidity and Capital Resources
On October 31, 2023, the Company had net working capital of $70,146,433 compared to $60,378,879 at October 31, 2022.
The Company maintains lines of credit to meet borrowing needs during peak business periods. On June 15, 2022, the
Company entered into an Amended and Restated Credit Agreement with BMO Harris Bank, N.A. The Amended and Restated
Credit Agreement increased the revolving line of credit limit from $20,000,000 to $30,000,000 and provide an accordion
feature for up to an additional $10,000,000 with the lender’s approval. The Amended and Restated Credit Agreement provides
a term of two years (maturity date on June 15, 2024). The Amended and Restated Credit Agreement was updated on July
18, 2022, in the form of a Second Amended and Restated Credit Agreement, to reflect the exercised accordion feature, which
increased the line of credit to $40,000,000, and a reduced margin spread in the borrowing rate by 25 bps. The form of the
Second Amended and Restated Credit Agreement was further amended on July 12, 2023, to provide a seasonal increase in
the borrowing capacity by $10,000,000 to $50,000,000, effective through August 31, 2023, and to extend the maturity on the
facility to June 15, 2025. The credit line is secured against the Company’s cash and other assets. The form of the Second
Amended and Restated Credit Agreement, as further amended on July 12, 2023, bears interest at the one month Secured
Overnight Financing Rate (SOFR) plus 2.25% (5.31% at October 31, 2023 and 4.12% at October 31, 2022). At October 31,
2023, the balance outstanding was $11,074,308 (October 31, 2022, $5,929,847).
On October 19, 2020, the Company’s wholly owned Canadian subsidiary, EBC, established a fully collateralized revolving line
of credit with Desjardins Group (Desjardins) with a limit of CAD 2,000,000 ($1,442,273), payable on demand, and being
secured against cash collateral of CAD 2,000,000 ($1,442,273). On April 25, 2023, EBC amended this facility reducing the
revolving line of credit to CAD 500,000 ($360,568), payable on demand, and being secured against cash collateral of CAD
500,041 ($360,598). The line of credit bears interest at the Canadian Prime Rate plus 0.25% (7.20% at October 31, 2023 and
5.95% at October 31, 2022). At October 31, 2023, the balance outstanding was $Nil (October 31, 2022, $Nil)
On April 7, 2021, EBC entered into a $20,000,000 USD Revolving Credit Facility (RCF) with a private lender. On July 18, 2022,
EBC amended this facility through a Third Amended and Restated Revolving Loan Agreement, whereby $10,000,000 of this
facility was moved from EBC to CXI. On January 19, 2023, the Company entered into a Moratorium Agreement (CXI facility)
where the Company will not utilize the $10,000,000 without prior written consent from the lender. Additionally, the Company
will not incur any standby charges or fees during the period of the Moratorium. Pursuant to the January 19, 2023, amended
agreement, the interest rate on the $10,000,000 facility granted to EBC increased from 6% to a floating rate with a floor of
8%, and a standby charge of $1,500 USD per month if the total interest in the month is less than $20,000 USD. The entire
$20,000,000 facility is guaranteed by the Company and is subordinated to the Company’s and EBC’s obligations to primary
lenders. These facilities are used for working capital purposes and for daily operational activity and have a term of three
years (maturity date January 19, 2026); however, these facilities may be terminated on 90-days’ notice by either party. The
total outstanding balance for the Company at October 31, 2023, was $3,605,683 (October 31, 2022, $Nil).
The Company had a total available balance of unused lines of credit of $35,680,577 at October 31, 2023 (October 31, 2022,
$55,538,042).
The Company has leases for corporate offices as well as its retail store locations. With the exception of short-term leases
and leases of low value underlying assets, each lease, meeting the definition under IFRS 16, is reflected on the consolidated
statements of financial position as a right-of-use asset and a lease liability. Variable lease payments which do not depend
on an index or a rate, such as lease payments based on a percentage of Company sales, are excluded from the initial
measurement of the lease liability and asset. The Company classifies its right -of-use assets in a consistent manner to its
property and equipment (see Notes 7 and 9 to the audited consolidated financial statements).
Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to
another party, the right-of-use asset can only be used by the Company. Leases are either non-cancelable or may only be
canceled by incurring a substantial termination fee. Some leases contain an option to extend the lease for a further term.
The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over corporate
offices and retail store locations, the Company must keep those properties in a good state of repair and return the properties
in their original condition at the end of the lease.
Currency Exchange International, Corp - Annual Report 2023 23 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The table below describes the nature of the Company’s leasing activities by the type of right-of-use asset recognized on the
consolidated statements of financial position:
Right-of-use asset
No of right-of-
use assets
leased
Range of
remaining term
Average
remaining lease
term
No of leases
with extension
options
No of lease
with options to
purchase
No of leases
with variable
payments linked
to an index
No of
leases with
termination
options
Equipment
Corporate offices
Retail store locations
Total
1
9
23
33
0 years
0-5 years
0-4 years
0-5 years
1
1
2
1
1
5
1
7
-
-
-
-
-
-
-
-
-
-
-
-
The lease liabilities are secured by the related underlying assets. Future minimum lease payments at October 31, 2023, were
as follows:
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
After 5 years
Total
Lease payments
Finance charges
1,677,768
673,201
394,239
223,669
169,749
23,733
3,162,359
100,010
48,900
27,721
14,365
4,591
53
195,640
Net present values
1,577,758
624,301
366,518
209,304
165,158
23,680
2,966,719
Selected Annual Financial Information
The following tables set out selected consolidated financial information of the Company for the periods indicated. Each
investor should read the following information in conjunction with those audited consolidated financial statements for the
relevant period and notes related thereto. The operating results for any past period are not necessarily indicative of result s
for any future period.
The selected financial information set out below has been derived from the audited consolidated financial statements of
the Company.
Year ended
Year ended
Year ended
Year ended
Year ended
October 31, 2023
October 31, 2022
October 31, 2021 October 31, 2020 October 31, 2019
Revenues
Net operating income
Net earnings (losses)
Basic earnings per share
Diluted earnings per share
Total assets
Total liabilities
Non-current financial liabilities
Working capital
$
81,954,769
18,734,249
10,193,507
1.59
1.52
$
67,498,673
18,721,473
$
$
$
30,565,660
25,013,423
41,784,043
(48,929)
(3,985,791)
11,783,124
(1,131,684)
(8,524,029)
1.83
1.78
(0.18)
(0.18)
(1.33)
(1.33)
6,152,042
2,924,720
0.46
0.46
132,049,444
125,528,832
102,982,531
85,758,518
82,729,716
52,816,463
2,719,288
70,146,433
56,223,323
44,966,732
27,528,783
16,400,679
4,163,543
3,679,493
4,065,164
-
60,378,879
49,880,879
47,755,694
58,932,941
Currency Exchange International, Corp - Annual Report 2023 24 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Off-Balance Sheet Arrangements
There are currently no off-balance sheet arrangements.
Foreign Currency Forward and Option Contracts
The Company enters into foreign currency forward and purchases put option contracts with non-client counterparties to
mitigate the risk of fluctuations in the exchange rates of exposures in certain major currencies related to its Banknotes
product line. Forward contracts are entered into daily, with maturities up to 30 days. Option contracts are entered into
selectively once per quarter, with a maturity up to 90 days.
Foreign currency forward and option contracts are recognized in the Company's consolidated statements of financial
position when the Company becomes a party to the contractual provisions of the instrument. The instrument is derecognized
from the consolidated statements of financial position when the contractual right s or obligations expires or are
extinguished.
These non-client counterparty foreign currency forward and option contracts, as referred to above, are recognized at fair
value and changes in fair value are included in operating expenses in the consolidated statements of income and
comprehensive income and are recorded as either contract assets or contract liabilities at the end of the reporting period.
The fair value of forward and option contract assets at October 31, 2023, was $1,066,467 (October 31, 2022, $911,443).
As at October 31, 2023 the Company had cash collateral balances that include daily margin requirements related to forward
contracts being held of $3,119,888 (October 31, 2022, $2,335,298). They are reflected as restricted cash held in escrow in
the consolidated statements of financial position.
Critical Accounting Estimates
When preparing the consolidated financial statements, management undertakes several judgments, estimates, and
assumptions about recognition and measurement of assets, liabilities, income, and expenses. The actual results may differ
from judgments, estimates, and assumptions made by management, and will seldom equal the estimated results. For an
expanded narrative on considering critical accounting estimates, please refer to Note 3 in the audited consolidated financial
statements for the years ended October 31, 2023 and 2022.
Transactions with Related Parties
The remuneration of directors and key management personnel during the three-month periods and years ended October 31,
2023 and 2022 were as follows:
Year ended
Year ended
Three-months
ended
Three-months
ended
October 31, 2023
October 31, 2022
October 31, 2023
October 31, 2022
Short-term benefits
Post-employment benefits
Stock-based compensation
Restricted and Deferred Share Units
$
$
4,316,361
3,726,865
161,385
83,532
920,386
81,682
391,787
691,971
Total
5,481,666
4,892,305
$
983,615
18,923
12,832
(395,187)
620,183
$
1,170,345
30,384
137,323
112,256
1,450,308
The Company incurred legal and professional fees in the aggregate of $139,594 and $20,702 for the year and three-month
periods ended October 31, 2023 (October 31, 2022, $179,417 and $38,878) charged by entities controlled by directors or
officers of the Company.
Currency Exchange International, Corp - Annual Report 2023 25 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The Company has clients that are considered related parties through one of its directors. The Company generated $288,128
and 47,028 in revenue from these clients’ activities for the year and three-month periods ended October 31, 2023 (October
31, 2022, $188,502 and $54,256). As at October 31, 2023, accounts receivable included $Nil from related parties (October
31, 2022, $74,205).
On October 1, 2011, the Company entered into an employment agreement with the President and CEO of the Company. Such
agreement contains clauses requiring additional payments of a minimum of $450,000 to be made upon the occurrence of
certain events, such as a change of control of the Company or termination for reasons other than cause. As the likelihood
of a change of control of the Company is not determinable, the contingent payments have not been reflected in the
consolidated financial statements.
The Company supports EBC through a $20,000,000 revolving Line of Credit, renewed on July 18, 2022, which attracts interest
commensurate with interest charged on the Company’s primary line of credit with BMO Harris N.A., are repayable on demand,
and are unsecured. At October 31, 2023, the intercompany loan balance was $10,642,528 (October 31, 2022, $2,498,270)
and was eliminated upon consolidation.
Key management personnel and directors occasionally conduct transactions with the Company as individuals. Such
transactions are immaterial individually and in total, including for the year and three-month periods ended October 31, 2023
and 2022, and are conducted pursuant to the Company’s policies.
All transactions with related parties as noted above are carried out in the normal course of business and at prevailing marke t
rates.
Stock Option Grants
The Company offers an incentive stock option plan (the Plan) which was established on April 28, 2011 and was amended
most recently March 23, 2023. The Plan is a rolling stock option plan, under which 15% of the outstanding shares at any
given time are available for issuance thereunder. The purpose of the Plan is to promote the profitability and growth of the
Company by facilitating the efforts of the Company to attract and retain directors, senior officers, employees, and
management. Under the terms of the Plan, vesting for the Company’s directors and management will occur 1/3 upon the
first anniversary, 1/3 upon the second anniversary, and 1/3 upon the third anniversary of the grant. All the options have a
five-year term, unless otherwise specified by the Board of Directors. During the year ended October 31, 2023, the Company
recognized $97,436 of stock-based compensation expense in relation to employees’ stock option awards that have vested
during the year ended October 31, 2023 (October 31, 2022, $401,677).
Currency Exchange International, Corp - Annual Report 2023 26 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The following table sets out the information related to each option grant that has not expired and, or cancelled at the end of
the reporting period:
Date of
grant
Expiry
date
Share price at
grant date
(CAD$)
Amount granted
Risk-free interest
rate
Expected
volatility
Exercise
price
(CAD$)*
Fair value of
option at grant
date ($)
4-Mar-19
4-Mar-24
23-Oct-19
4-Jun-24
23-Oct-19
23-Oct-24
23-Oct-19
23-Oct-24
23-Oct-19
4-Mar-24
24-Jun-20
24-Jun-25
29-Jul-20
29-Jul-25
29-Oct-20
29-Oct-25
28-Jan-21
28-Jan-26
28-Oct-21
28-Oct-26
28-Apr-22
28-Apr-27
25-Jul-22
25-Jul-27
21-Sep-22
21-Sep-27
31-Oct-22
31-Oct-27
30-Oct-23
29-Oct-28
25.98
17.03
17.03
17.03
17.03
12.50
10.98
10.00
11.00
14.49
17.44
16.96
19.65
19.35
18.20
13,316
5,837
72,376
170,540
30,000
29,955
18,000
239,922
3,873
134,668
20,000
4,493
5,748
117,459
94,678
2.50%
1.58%
1.58%
1.58%
1.58%
0.33%
0.26%
0.37%
0.41%
1.16%
2.81%
2.87%
3.57%
3.73%
4.37%
27%
24%
24%
24%
24%
23%
23%
23%
23%
22%
21%
20%
37%
37%
36%
25.83
17.36
17.36
17.36
17.36
12.74
10.83
10.83
11.02
14.35
18.10
16.23
18.93
18.37
20.07
5.65
3.07
3.07
3.07
3.07
1.87
1.76
1.33
2.55
2.57
3.16
3.17
4.45
4.34
4.70
*Exercise price is determined by the volume-weighted average share price for the previous 20 trading days
The outstanding options at October 31, 2023, and the respective changes during the periods are summarized as follows:
Outstanding at October 31, 2022
Granted
Exercised
Forfeited/cancelled/expired
Outstanding at October 31, 2023
Number of options
Weighted average price
#
820,762
94,678
(54,734)
(3,222)
857,484
CDN$
15.13
20.07
17.27
16.75
15.53
Currency Exchange International, Corp - Annual Report 2023 27
Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The following options were outstanding and exercisable at October 31, 2023:
Grant Date
Exercise price (CAD$)
Number outstanding
Average remaining
contractual life (years)
Number exercisable
4-Mar-19
23-Oct-19
23-Oct-19
23-Oct-19
24-Jun-20
29-Jul-20
29-Oct-20
28-Jan-21
28-Oct-21
28-Apr-22
25-Jul-22
21-Sep-22
31-Oct-22
30-Oct-23
Total
$25.83
$17.36
$17.36
$17.36
$12.74
$10.83
$10.83
$11.02
$14.35
$18.10
$16.23
$18.93
$18.37
$20.07
13,316
30,000
3,512
177,882
29,955
18,000
220,368
3,873
118,200
20,000
4,493
5,748
117,459
94,678
857,484
0.34
0.98
0.98
0.98
1.65
1.75
2.00
2.25
2.99
3.49
3.73
3.89
4.00
5.00
13,316
30,000
3,512
177,882
29,955
18,000
220,368
2,582
79,019
6,668
1,498
1,917
39,157
-
623,874
Out of the total number of outstanding options, the Company had 124,170 options outstanding and granted on October 23,
2019 that were made outside of the Company’s stock option plan, and in accordance with the policies of TSX and were
approved by the shareholders on March 25, 2020.
Restricted Stock Unit and Deferred Stock Unit Plans
On November 1, 2020 the Company made its inaugural cash-settled grants under the DSU Plan and RSU Plan (the Plans).
The awards that may be granted under each of the Plans can be realized in cash only and may not be converted into common
shares of the Company. The purpose of these Plans is to promote the profitability and growth of the Company by facilitating
the efforts of the Company to attract and retain directors, senior officers, employees, and management. Under the terms of
the Plans, vesting of the awards that may be granted under the Plans for management occurs on a one-third (1/3) basis
upon the first, the second, and the third anniversary of the grant date, while awards that may be granted under the Plans for
directors will vest fully on a quarterly basis in the first year after the grant. All the awards have a three-year term unless
otherwise specified by the Board of Directors.
On November 1, 2022, the Company made its third grants under the Deferred Share Unit (DSU) Plan and Restricted Stock
Unit (RSU) Plan. The Company granted 37,664 RSU and 22,553 DSU awards in the amount of $300,000 and $500,995,
respectively. On January 24, 2023, the Company granted 595 awards in the amount of $12,500. On October 30, 2023, the
Company also made an annual grant of RSU awards in the amount of 36,505 for an amount of $517,210. In the year-ended
October 31, 2023, the Company recognized stock-based compensation expenses of $920,387 (October 31, 2022, $691,970)
in relation to RSU and DSU awards that have vested during the year, out of which $517,377 was recognized for RSU awards
and $403,010 was recognized for DSU awards, (October 31, 2022, $353,624 and $338,346, for RSU and DSU awards,
respectively).
Share Capital
As of October 31, 2023, the Company had 6,443,397 common shares outstanding, 623,874 vested, and 233,610 unvested
stock options, and no warrants outstanding.
Currency Exchange International, Corp - Annual Report 2023 28 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Subsequent Events
The Company evaluated subsequent events through January 24, 2024, the date this MD&A was prepared, and there were no
material subsequent events that required recognition or additional disclosure in the consolidated financial statements.
Accounting Standards and Policies
A summary of significant accounting policies is described in Note 2 to the Company's audited consolidated financial
statements for the years ended October 31, 2023 and 2022.
Financial Risk Factors
International Conflict
International conflict and other geopolitical tensions and events, including war, military action, terrorism, trade disputes,
and international responses thereto have historically led to, and may in the future lead to, uncertainty or volatility in glo bal
commodity, energy, and financial markets.
Russia’s invasion of Ukraine has led to sanctions being levied against Russia by the international community and may result
in additional sanctions or other international action, any of which may have a destabilizing effect on commodity prices and
global economies more broadly. Volatility in commodity prices may adversely affect our business, financial condition, and
results of operations. Changes in commodity prices may affect oil and natural gas activity levels and the costs of energy in
the jurisdiction in which the Company operates. In addition, an escalation in the Ukraine conflict may have an adverse effect
on global travel conditions and/or consumer sentiment on travel and tourism, which may adversely impact our business.
The extent and duration of the current Russian-Ukrainian conflict and related international action cannot be accurately
predicted at this time and the effects of such conflict may magnify the impact of the other risks identified in this MD&A,
including those relating to commodity price volatility and global financial conditions. The situation is rapidly changing , and
unforeseeable impacts may materialize and may have an adverse effect on our business, results of operation , and financial
condition.
Network Security Risks
Despite the implementation of network security measures by the Company, its infrastructure is potentially vulnerable to
computer intrusions and similar disruptive problems. Concerns over Internet security have been, and will continue to be, a
barrier to commercial activities requiring consumers and businesses to send confide ntial information over the Internet.
Computer viruses, intrusions or other security problems could lead to misappropriation of confidential or proprietary
information, and cause interruptions, delays or cessation in service to the Co mpany’s customers. Any such intrusion could
have a negative reputational impact on the Company which could affect its revenues and ability to raise capital. Any such
intrusion could also compromise the privacy of the Company’s proprietary CXIFX software which is integral to its business.
In such a case, the Company may be required to spend significant resources to monitor and protect its intellectual property
rights. Litigation brought to protect and enforce those rights could be costly, time-consuming and distracting to management
and could result in the impairment or loss of portions of the Company’s intellectual property. Any failure to secure, protect
and enforce its intellectual property rights could seriously harm the Company and adversely affect its business. Moreover,
the security and privacy concerns of existing and potential customers may inhibit the growth of the Internet as a medium
for commerce. Any actual or perceived breach of customers’ privacy and security could harm the Company ’s business.
Risk of Downturn in International Travel
International travel is the main driver of a significant part of the Company’s business. Uncertainty and negative trends in
general economic conditions in the United States, Canada and abroad, including significant tightening of markets and rising
costs of living, have the potential to create a difficult environment for companies operating in the travel industry. Many
factors, including factors that are beyond the control of the Company, could have a detrimental impact on its performance
by causing a significant decrease in international travel. These factors include general economic conditions, unemployment
levels, energy costs and interest rates, as well as events such as natural disasters, acts of war, terrorism and catastrophes .
Currency Exchange International, Corp - Annual Report 2023 29 Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Outbreak of Infectious Diseases
The Company’s Banknotes product line, which represents a significant portion of commissions revenue, is highly correlated
to international travel patterns by consumers. The Company’s business has been and may continue to be adversely affected
by the effects of the widespread outbreak of respiratory illnesses (like COVID-19) and other infectious diseases in its primary
North American market, as well as by travel restrictions imposed by governments to limit the effects of these on the health
of the local and global population, including restrictions on air travel to and from North America. The impacts of the COVID-
19 pandemic have largely stabilized, however, it is not possible to reliably estimate the potential impact of this, or future
global disruptions or infectious disease, on the financial position and results of future periods.
Credit Risk
Credit risk is the risk of financial loss associated with a counterparty’s inability to fulfill its payment obligations. The
Company’s credit risk is primarily attributable to cash in bank accounts, accounts receivable , and forward and option
contracts from hedging counterparties.
All banking relationships are negotiated by senior management. The Company maintains accounts in high-quality financial
institutions. At various times, the Company's bank balances exceed insured limits.
The credit risk associated with accounts receivable is limited, as the Company's receivables consist primarily of bulk
currency trades with a settlement cycle of 24 to 48 hours. The majority of the Company's receivables reside with banks,
money service business customers, and other financial institutions. The Company has longstanding relationships with most
of its money service business customers and a strong repayment history.
A breakdown of accounts receivable by category is below:
Customer type
Domestic and international financial institutions
Money-service businesses
Other
Total
October 31, 2023
October 31, 2022
$
18,339,600
2,171,215
614,731
21,125,546
$
7,823,948
5,227,752
1,221,828
14,273,528
The maximum exposure to credit risk is represented by the carrying amount of each financial asset on the consolidated
statements of financial position. There are no commitments that could increase this exposure to more than the carrying
amount.
Financial Instruments and Risk Management
IFRS 9 requires that financial statements include certain disclosures about the fair value of financial instruments as set ou t
in IFRS 13 and IFRS 7. These disclosures include the classification of fair values within a three-level hierarchy. The three
Levels are defined based on the observation of significant inputs to the measurement, as follows:
•
•
•
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
or indirectly; and
Level 3 - unobservable inputs for the asset or liability.
The fair value determination is the estimated amount that the Company would receive to sell a financial asset or pay to
transfer a financial liability in an orderly transaction between market participants at the measurement date.
There were no transfers between Level 1 and Level 2 during the years ended October 31, 2023 and 2022.
Currency Exchange International, Corp - Annual Report 2023 30
Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
The following table shows the Levels within the hierarchy of financial assets and liabilities measured at fair value :
Financial assets
Cash
Forward and option contract assets
Total assets
Financial liabilities
Restricted and deferred share units
Total liabilities
Financial assets
Cash
Forward and option contract assets
Total assets
Financial liabilities
Restricted and deferred share units
Total liabilities
Foreign Currency Risk
October 31, 2023
Level 1
$
92,720,293
-
92,720,293
-
-
October 31, 2022
Level 1
$
88,559,268
-
88,559,268
-
-
Level 2
Level 3
$
-
1,066,467
1,066,467
1,328,582
1,328,582
$
-
-
-
-
-
Level 2
Level 3
$
-
911,443
911,443
1,174,226
1,174,226
$
-
-
-
-
-
Total
$
92,720,293
1,066,467
93,786,760
1,328,582
1,328,582
Total
$
88,559,268
911,443
89,470,711
1,174,226
1,174,226
The volatility of the Company's foreign currency holdings may increase as a result of the political and financial environment
of the corresponding issuing country. Several currencies have a limited exchange rate exposure as they are pegged to the
U.S. Dollar, the reporting currency of the Company. Management believes its exposure to foreign currency fluctuations is
mitigated by the short-term nature and rapid turnover of its foreign currency inventory, as well as the use in certain instances
of forward and option contracts to offset these fluctuations. Due to their nature, some minor and exotic foreign currencies
cannot be hedged or are too cost prohibitive to hedge. Foreign currency exposure, in the form of exchange gains and losses
arising from normal trading activities and business operations, are included in operating expenses for the period.
In order to further mitigate the risks associated with holding these foreign currencies, the Company assigns wider bid/ask
spreads and maintains specific inventory targets to minimize the impact of exchange rate fluctuations. These targets are
reviewed regularly and are increased or decreased to accommodate demand within acceptable risk tolerances. The amount
of unhedged inventory held in tills, vaults, on consignment, and in transit on October 31, 2023, was $9,361,900 (October 31,
2022, $5,520,430). The amount of currency that is unhedged and that is not pegged to the U.S. Dollar is $7,833,228 (October
31, 2022, $4,594,080). A 2% increase/reduction in the market price for the aggregate of the Company's unhedged/un -pegged
foreign currencies would result in an exchange gain/loss of approximately +$157,000/-$157,000 (October 31, 2022 gain/loss
of approximately +$92,000/-$92,000).
On a consolidated basis, the Company is also exposed to foreign currency fluctuations between the U.S. Dollar and the
Canadian Dollar, being the functional currency of its Canadian subsidiary. The Company does not hedge its net investment
in its Canadian subsidiary and the related foreign currency translation of its earnings.
Currency Exchange International, Corp - Annual Report 2023 31
Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Interest Rate Risk
At October 31, 2023, the Company had access to interest-bearing financial instruments in cash and its lines of credit. A
significant amount of the Company’s cash is held as foreign currency bank notes in tills, on consignment, and in its own
vaults. These amounts are not subject to interest rate risk. Cash held in some of the Company’s accounts are interest-
bearing. The Company is subject to a small amount of cash flow interest rate risk from the borrowings on its lines of credit,
however, as borrowings have remained steady and within policy limits, the risk is low. Borrowings bear interest at variable
rates. Currently, the interest rate exposure is unhedged.
If interest rates had been 50 basis points higher/lower with all other variables held constant, after-tax profit for the year
ended October 31, 2023 would have been approximately +$52,000/-$52,000 higher/lower as a result of credit lines held at
variable interest rates.
Liquidity Risk
Liquidity risk is the risk of the Company incurring losses resulting from the inability to meet payment obligations in a timely
manner when they become due or from being unable to do so at a sustainable cost. To effectively manage liquidity risk, the
Company has implemented preventative risk monitoring measures, including setting a liquidity risk ratio target of 120% or
greater, which measures the proportion of unencumbered highly liquid assets to short -term net cash outflows, and setting
a minimum liquidity balance requirement of total available cash or undrawn lines of credit to be greater than $ 5,000,000
notional daily. As required, the Treasurer and CFO report any liquidity issues to the Chief Executive Officer (CEO), Chief Risk
Officer (CRO), and the audit committee in accordance with established policies and guidelines. Management has assessed
the Company’s cash position at October 31, 2023 and determined that it is sufficient to meet its financial obligations.
The following are non-derivative contractual financial liabilities:
October 31, 2023
Non-derivative financial liabilities
Carrying amount Estimated contractual amount
This fiscal year Future fiscal years
Accounts payable
Holding accounts
Lines of credit
$
21,021,910
5,909,235
14,679,991
$
21,021,910
5,909,235
14,679,991
$
21,021,910
5,909,235
14,679,991
$
Nil
Nil
Nil
October 31, 2022
Non-derivative financial liabilities
Carrying amount Estimated contractual amount
Next fiscal year Future fiscal years
Accounts payable
Holding accounts
Lines of credit
$
27,839,239
9,137,046
5,929,847
$
27,839,239
9,137,046
5,929,847
$
27,839,239
9,137,046
5,929,847
$
Nil
Nil
Nil
Currency Exchange International, Corp - Annual Report 2023 32
Management’s Discussion and Analysis
(All amounts are expressed in U.S. Dollars unless otherwise noted)
For the years and three-month periods ended October 31, 2023 and 2022
Capital Management
The Company manages capital through its financial and operational forecasting processes. The Company defines working
capital as total current assets less total current liabilities. The Company reviews its working capital and forecasts its cash
flows based on operating expenditures, and other investing and financing activities related to its daily operations.
Current assets
Current liabilities
Working capital
October 31, 2023
October 31, 2022
$
120,243,608
(50,097,175)
70,146,433
$
112,438,659
(52,059,780)
60,378,879
The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its
objectives given the current outlook of the business and industry in general. The Company may manage its capital structure
by issuing new shares, obtaining loan financing, adjusting capital spending, or disposing of assets. The capital structure is
reviewed by management and the board of directors on an ongoing basis.
Currency Exchange International, Corp - Annual Report 2023 33
Currency Exchange International, Corp.
Consolidated Financial Statements
For the years ended on October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Currency Exchange International, Corp - Annual Report 2023 34 TABLE OF CONTENTS
Independent Auditor’s Report
36-38
Consolidated Statements of Financial Position
Consolidated Statements of Income and Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
39
40
41
42
Notes to the Consolidated Financial Statements
43 – 71
Currency Exchange International, Corp - Annual Report 2023 35 Independent auditor’s report
Grant Thornton LLP
11th Floor
200 King Street West
Toronto, ON
M5H 3T4
T +1 416 366 0100
F +1 416 360 4949
To the shareholders of
Currency Exchange International, Corp.
Opinion
We have audited the consolidated financial statements of Currency Exchange International, Corp. and its
subsidiaries (“the Group”), which comprise the consolidated statements of financial position as at October 31,
2023, and October 31, 2022 and the consolidated statements of income and comprehensive income, consolidated
statements of changes in equity and consolidated statements of cash flows for the years then ended, and notes
to the consolidated financial statements, including material accounting policy information.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidated financial position of the Group as at October 31, 2023 and October 31, 2022, and its consolidated
financial performance and its consolidated cash flows for the years then ended in accordance with International
Financial Reporting Standards (“IFRSs”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements section of our report. We are independent of the Group in accordance with the ethical
requirements that are relevant to our audit of the consolidated financial statements in Canada, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Assessment of the recoverable amount of cash generating units (“CGU”) to which goodwill has been
allocated
Refer to Notes 2, 3 and 8 of the consolidated financial statements.
IAS 36 – Impairment of Assets (“IAS 36”) requires indefinite life intangible assets to be tested for impairment at
least annually, and whenever there is an indication that the asset may be impaired. The Group has recorded
goodwill of $2.172 million as at October 31, 2023.
The recoverable amount of a CGU (or group of CGUs), which is a significant estimate, is the higher of its value in
use and its fair value less costs of disposal. In determining the recoverable amount of the CGU (or group of
CGUs) on a value in use basis, the Group uses significant assumptions including projected future revenues,
income, terminal growth rate and discount rate.
Audit | Tax | Advisory
© Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd
36
Given the significance of management’s judgements and estimates in determining the value in use of each CGU,
we have identified the assessment of the recoverable amount of CGU’s to which goodwill has been allocated as
a key audit matter.
Our audit procedures included, amongst other procedures:
• We evaluated the reasonableness of management’s cash flow projections used to establish the
recoverable amount of the CGUs by comparing them to the Group’s historical cash flows
• We compared management’s historical forecasts of cash flow projections with actual results to assess
management’s ability to accurately predict cash flows
• We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating
the reasonableness of the terminal growth rates and discount rates used by management. This included
an assessment of the reasonableness of the required inputs into the two rates
• We assessed how management addressed estimation uncertainty by obtaining support
for
management’s sensitivity analysis of their calculations of each CGU’s value in use, future cash flows and
terminal growth and discount rates.
Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon
Management is responsible for the other information. The other information comprises the Management
Discussion and Analysis but does not include the consolidated financial statements and our auditor's report
thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with International Financial Reporting Standards (“IFRSs”), and for such internal control as
management determines is necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with Canadian generally accepted auditing standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these consolidated financial statements.
Audit | Tax | Advisory
© Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd
37 As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional
judgment and maintain professional skepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence
that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management's use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible
for the direction, supervision and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because of the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The engagement partner on the audit resulting in this independent auditor's report is Grant Cuylle.
Toronto, Canada
January 24, 2024
Chartered Professional Accountants
Licensed Public Accountants
Audit | Tax | Advisory
© Grant Thornton LLP. A Canadian Member of Grant Thornton International Ltd
38 Consolidated Statements of Financial Position
As of October 31, 2023 and 2022
(Expressed in U.S Dollars)
ASSETS
Current assets
Cash (Note 5)
Restricted cash held in escrow (Note 6)
Accounts receivable (Note 14)
Forward and option contract assets (Note 15)
Other current assets (Note 20)
Total current assets
Property and equipment (Note 7)
Right-of-use assets (Note 9)
Intangible assets (Note 8)
Goodwill (Note 8)
Deferred tax asset, net (Note 10)
Other assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Lines of credit (Note 12)
Accounts payable
Accrued expenses
Holding accounts
Deferred revenues
Income taxes payable
Lease liabilities (Note 9)
Total current liabilities
Long term liabilities
Lease liabilities (Note 9)
Other long term liabilities
Total long term liabilities
Total liabilities
Equity
Share capital (Note 16)
Equity reserves
Retained earnings
Total equity
Total liabilities and equity
The accompanying notes are an integral part of these consolidated financial statements
October 31, 2023
October 31, 2022
$
92,720,293
3,480,485
21,125,546
1,066,467
1,850,817
$
88,559,268
3,803,129
14,273,528
911,443
4,891,291
120,243,608
112,438,659
1,033,948
2,558,715
3,668,740
2,172,180
2,266,114
106,139
711,447
4,095,509
4,282,626
2,187,445
1,692,004
121,142
132,049,444
125,528,832
14,679,991
21,021,910
5,624,280
5,909,235
648,818
635,183
1,577,758
50,097,175
1,388,961
1,330,327
2,719,288
5,929,847
27,839,239
4,933,897
9,137,046
507,887
2,166,087
1,545,777
52,059,780
2,985,282
1,178,261
4,163,543
52,816,463
56,223,323
6,443,397
30,080,623
42,708,961
6,429,489
30,360,566
32,515,454
79,232,981
69,305,509
132,049,444
125,528,832
Currency Exchange International, Corp - Annual Report 2023 39 Consolidated Statements of Income and Comprehensive Income
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Revenues
Commissions revenue
Fee revenue
Total revenues (Note 4)
Operating expenses (Note 18)
Net operating income
Other income (loss)
Interest revenue
Loss on sale of assets
Other income (expense), net
Total other income
Earnings before interest, taxes, depreciation and amortization
Interest expense (Note 12)
Interest on lease liabilities (Note 9)
Depreciation and amortization
Depreciation of right-of-use assets (Note 9)
Income before income taxes
Income tax expense (Note 10)
Net income for the period
Other comprehensive income, after tax
Net income for the period
Items that may subsequently be reclassified to profit or loss
Exchange differences on translating foreign operations
Total comprehensive income
Earnings per share (Note 17)
- Basic
- Diluted
Weighted average number of common shares outstanding (Note 17)
- Basic
- Diluted
The accompanying notes are an integral part of these consolidated financial statements.
Year ended
Year ended
October 31, 2023 October 31, 2022
$
$
77,043,358
62,698,853
4,911,411
4,799,820
81,954,769
67,498,673
63,220,520
48,777,200
18,734,249
18,721,473
435,903
(30,527)
58,465
463,841
19,198,090
1,088,161
179,904
1,509,674
1,895,566
111,684
-
(1,814)
109,870
18,831,343
1,180,026
165,804
1,456,649
1,816,307
14,524,785
14,212,557
4,331,278
2,429,433
10,193,507
11,783,124
10,193,507
11,783,124
(340,045)
(962,986)
9,853,462
10,820,138
1.59
1.52
1.83
1.78
6,424,751
6,696,942
6,429,489
6,635,412
Currency Exchange International, Corp - Annual Report 2023 40 Consolidated Statements of Changes in Equity
For the years ended October 31, 2023 and 2022
(Expressed in U.S Dollars)
Share Capital
Equity Reserves
Shares
Amount
Share
premium
Accumulated
Other
Comprehensive
Loss
Retained
Earnings
Total
Equity
Stock Options
Amount
Amount
#
$
$
$
#
$
$
$
Balance at November 1, 2022
6,429,489 6,429,489
32,698,075
(6,244,766)
820,762
3,907,257
32,515,454
69,305,509
Stock-based compensation (Note 16)
Issue of share capital and share premium on exercise of stock
options (Note 16)
Loss on foreign currency translation
Net income
Balance, October 31, 2023
-
-
-
13,908
13,908
129,554
-
-
91,456
97,436
(54,734)
(166,888)
-
-
-
-
-
-
(340,045)
-
-
-
-
-
-
-
-
97,436
(23,426)
(340,045)
10,193,507
10,193,507
6,443,397 6,443,397
32,827,629
(6,584,811)
857,484
3,837,805
42,708,961
79,232,981
Balance at November 1, 2021
6,414,936 6,414,936
32,588,617
(5,281,780)
813,677
3,561,696
20,732,330
58,015,799
Stock-based compensation (Note 16)
Issue of share capital and share premium on exercise of stock
options (Note 16)
Loss on foreign currency translation
Net income
Balance, October 31, 2022
-
-
-
14,553
14,553
109,458
-
-
40,075
401,676
(32,990)
(56,115)
-
-
-
-
-
-
(962,986)
-
-
-
-
-
-
-
-
401,676
67,896
(962,986)
11,783,124
11,783,124
6,429,489 6,429,489
32,698,075
(6,244,766)
820,762
3,907,257
32,515,454
69,305,509
The accompanying notes are an integral part of these consolidated financial statements.
Currency Exchange International, Corp - Annual Report 2023 41 Consolidated Statements of Cash Flows
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash flows from operating activities
October 31, 2023
October 31, 2022
$
10,193,507
$
11,783,124
Depreciation and amortization
Depreciation of right-of-use assets
Stock-based compensation
Revaluation of contingent consideration
(Gain) loss on disposal of assets
Increase (decrease) in cash due to change in:
Accounts receivable
Restricted cash held in escrow
Change in forward and option contract positions
Income taxes receivable
Other assets
Net deferred tax assets
Deferred revenues
Accounts payable, accrued expenses, holding accounts and other liabilities
Net cash (outflows) inflows from operating activities
Cash flows from investing activities
Purchase of property and equipment
Purchase of intangible assets
Contingent consideration payments related to acquisition
Proceeds from the sale of long-term assets
Net cash outflows from investing activities
Cash flows from financing activities
(Payments) proceeds related to stock-based compensation, net (Note 16)
Repayment of leasing liabilities
Interest on leasing liabilities
Net borrowing on lines of credit (Note 12)
Net cash inflows from financing activities
Net change in cash
Cash, beginning of period
Exchange difference on foreign operations
Cash, end of period
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for income taxes
Cash paid during the period for interest
Cash received during the period for interest
The accompanying notes are an integral part of these consolidated financial statements
1,509,674
1,895,566
1,017,823
-
(30,527)
(6,916,030)
262,364
(175,830)
(229)
3,050,288
(599,021)
143,629
(10,716,789)
(365,575)
(761,214)
(528,809)
-
10,000
1,456,649
1,816,307
1,093,647
32,635
11,180
1,541,946
(2,382,843)
(481,019)
931,541
(304,186)
(1,509,800)
234,097
11,295,242
25,518,520
(563,619)
(354,373)
(373,023)
-
(1,280,023)
(1,291,015)
(766,032)
(2,093,022)
179,856
8,852,591
6,173,393
4,527,795
88,559,268
(366,770)
92,720,293
3,417,935
920,787
435,903
80,999
(2,077,990)
166,183
2,044,955
214,147
24,441,652
66,527,690
(2,410,074)
88,559,268
1,218,406
1,345,830
111,684
Currency Exchange International, Corp - Annual Report 2023 42 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
1. Nature of Operations and Basis of Presentation
Nature of Operations
Currency Exchange International, Corp. (the Company) was originally incorporated under the name Currency Exchange
International, Inc. under the Florida Business Corporation Act on April 7, 1998. The Company changed its name to Currency
Exchange International, Corp. on October 19, 2007 and commenced its current business operations at that time. The
Company is a public corporation whose shares are listed and posted for trading on the Toronto Stock E xchange (TSX) under
the symbol “CXI“ and the over-the-counter market (OTCBB) in the United States under the symbol “CURN.” The Company
operates as a money service and payments business that provides currency exchange, wire transfer, and cheque cashing
services from its locations in the United States and Canada. The Company maintains a head office and 5 main vaults as well
as 38 branch locations and 409 employees. The Company’s registered head office is located at 6675 Westwood Boulevard,
Suite 300, Orlando, Florida, 32821, United States of America. The Company’s wholly owned Canadian subsidiary, Exchange
Bank of Canada (EBC) is a non-deposit-taking, non-lending Schedule 1 bank engaged in foreign exchange services.
Basis of Presentation
The presentation currency of the Company’s consolidated financial statements is the U.S. Dollar. The accounting policies
set out in Note 2 of the consolidated financial statements have been applied consistently to all periods presented in these
consolidated financial statements. These consolidated financial statements have been prepared on a historical cost basis,
except for the following assets and liabilities, which are stated at their fair value: financial instruments classified as Fair
Value Through Profit or Loss (FVTPL), foreign currency forward and option contracts, and share-based payment plans. In
addition, these consolidated financial statements have been prepared using the accrual basis of accounting, except for cash
flow information.
Statement of Compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards
(IFRS) as issued by the International Accounting Standards Board (IASB).
These consolidated financial statements were authorized for issue and approved by the board of directors on January 24,
2024.
Comparative Figures
Certain comparative figures have been reclassified to conform to the presentation in the current period.
2. Summary of Significant Accounting Policies
Recently Adopted Accounting Standards and Future Accounting Pronouncements
Certain pronouncements were issued by the IASB or International Financial Reporting Interpretations Committee (IFRIC) and
have been adopted in the current period or are applicable for future periods. None of these pronouncements have, or are
expected to have, a significant impact on the Company.
-
-
-
Amendments to References to Conceptual Framework in IFRS Standards;
Definition of a Business (Amendments to IFRS 3); and
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37)
Currency Exchange International, Corp - Annual Report 2023 43 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Future Accounting Pronouncements
Certain pronouncements were issued by the IASB or the IFRIC. Many are not applicable or do not have a significant impact to the
Bank and have been excluded.
The following amended standards and interpretations have not yet been adopted and are not expected to have a significant impact
on the Bank’s financial statements:
-
-
-
-
-
-
-
-
Classification of Liabilities as Current or Non-current (Amendments to IAS 1);
Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS
28);
Lease Liability in a Sale and Leaseback (Amendment to IFRS 16);
Non-current Liabilities with Covenants (Amendments to IAS 1);
Deferred Tax Related to Assets and Liabilities from a Single Transaction;
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
Definition of Accounting Estimates (Amendments to IAS 8); and
IFRS 17 Insurance Contracts.
Principles of Consolidation
The consolidated financial statements comprise the financial statements of the Company and its wholly owned subsidiaries,
EBC, a Schedule 1 bank in Canada and eZforex.com, Inc. (eZforex) - a Texas-based money service business. Subsidiaries
are entities over which the Company has control, where control is defined as the power to govern financial and operating
policies of an entity to obtain benefit from its activities. Subsidiaries are fully consolidated from the date control is
transferred to the Company and are de-consolidated from the date control ceases. All material intercompany transactions
are eliminated on consolidation.
Cash
Cash includes, but is not limited to local and foreign currencies:
•
•
•
•
•
held in tills and vaults;
in transit;
at customer locations on consignment;
in branches or distribution centers; and
in bank accounts.
Foreign cash is recorded at fair value based on foreign exchange rates as at October 31, 2023 and 2022, respectively.
Accounts Receivable
Trade accounts receivable are stated net of an allowance for doubtful accounts. Accounts receivable balances consist
primarily of bulk currency trades with a settlement cycle of 24 to 48 hours. The amount of accounts receivable varies widely
from period to period due to the volume of activity and timing differences. The Company applies a simplified approach in
accounting for the allowance for doubtful accounts based on lifetime expected credit losses in accordance with IFRS 9 ,
Financial Instruments (IFRS 9). These consider the potential for default during the life of the financial instrument and are the
expected shortfalls in contractual cash flows. To estimate the expected shortfall, the Company considers specific
customers, historical information, external indicators, and forward-looking information. There is minimal counter-party risk
as the majority of the Company's receivables reside with banks, money service business customers , and other financial
institutions. The Company has longstanding relationships with most of its customers and has a strong repayment history.
The Company does not accrue interest on past due receivables. Management determined that the allowance for doubtful
accounts was $400,000 as of October 31, 2023 (October 31, 2022, $Nil).
Currency Exchange International, Corp - Annual Report 2023 44 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Revenue Recognition
IFRS 15, Revenue from Contracts with Customers (IFRS 15) provides a comprehensive framework for the recognition,
measurement, and disclosure of revenue from contracts with customers. To determine whether to recognize revenue, the
Company follows a five-step process whereby the Company: (i) identifies the contract with the customer; (ii) identifies the
performance obligations; (iii) determines the transaction price; (iv) allocates the transaction price to the performance
obligations; and (v) recognizes revenue when or as performance obligations are satisfied.
Commission revenues are the difference (spread) between the cost and the selling price of foreign currency products,
including banknotes, wire payments, cheque collections and draft issuances (foreign currency margin), together with the net
(realized or unrealized) gain or loss from foreign currency forward contracts with customers, and commissions paid on the
sale and purchase of currencies. The amount of this spread is based on competitive conditions and the convenience and
value-added services offered. These revenue contracts are short term in nature and generally have a single pe rformance
obligation. Revenue is recognized when each transaction occurs, the performance obligation is satisfied, the currency is
delivered, or at the end of each reporting period when revaluations of foreign exchange positions take place . For contracts
whose performance obligations are not satisfied (or partially not satisfied) at the end of the reporting period, amounts as
such are not recognized in the statements of income and comprehensive income and are recorded in the statements of
financial position as deferred revenues until the performance obligation is satisfied.
Fee income includes fees collected on cheque cashing, wire transfers, cheque collections, and currency exchange
transactions. These revenue contracts are short term in nature and generally have a single performance obligation with
revenue being recognized when the transaction occurs, the performance obligation is satisfied, and when the currency is
delivered.
Foreign Currency Translation
Transactions denominated in foreign currencies are translated to the functional currency at the exchange rate at the date
of the transaction. Monetary assets and liabilities denominated in foreign currencies at the consolidated statement s of
financial position date are translated at rates as at that date. The functional currency of EBC is the Canadian Dollar and the
functional currency of the Company and eZforex is the United States Dollar.
In situations where the functional currency is not the same as the presentation currency, foreign currency -denominated
assets and liabilities are translated to their presentation currency equivalents using foreign exchange rates in effect at th e
consolidated statements of financial position date. Revenues and expenses are translated at average rates of exchange
during the period. Exchange gains or losses arising from the consolidation of the Canadian subsidiary are included in
accumulated other comprehensive income. On disposal of a foreign operation, the related cumulative translation differences
recognized in equity reserves are reclassified to profit or loss and are recognized as part of the gain or loss on disposal.
Foreign Currency Forward and Option Contracts
The Company enters into foreign currency forward and option contracts with non-client counterparties, to mitigate the risk
of fluctuations in exchange rates of its exposure to certain major currencies related to its Banknotes product line. Forward
contracts are entered into daily, with maturities up to 30 days. Option contracts are entered into selectively once per quar ter,
with a maturity up to 90 days.
Foreign currency forward and option contracts are recognized on the Company's consolidated statement s of financial
position when the Company becomes a party to the contractual provisions of the instrument. The instrument is derecognized
from the consolidated statements of financial position when the contractual rights or obligations expires or are
extinguished.
These non-client counterparty foreign currency forward and option contracts, as referred to above, are recognized at fair
value and changes in fair value are included in operating expenses in the consolidated statements of income and
comprehensive income and are recorded as either contract assets or contract liabilities at the end of the reporting period.
Currency Exchange International, Corp - Annual Report 2023 45 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Property and Equipment
Property and equipment are initially recorded at its cost and depreciated over its estimated useful life. Cost includes
expenditures which are directly attributable to bringing the asset into working condition for its intended use. Depreciation
is calculated on a straight-line basis, as follows:
•
•
•
•
Vehicles
Computer equipment
Furniture and equipment
Leasehold improvements
3 years
3 years
3 years
the lesser of the lease term or useful life
When parts of an asset have different useful lives, depreciation is calculated on each separate part. In determining the
useful lives of the component parts, the Company considers both the physical condition of the parts as well as technological
life limitations. Estimates of remaining useful lives and residual values are reviewed annually. Changes in estimates are
accounted for prospectively.
Goodwill and Intangible Assets
Goodwill, representing the excess of the purchase price over the fair value of the net assets acquired in a business
combination, is carried at its original value based on the acquisition, less impairment losses determined subsequent to the
acquisition.
Intangible assets are comprised of the Company's internally developed software (CXIFX) and its related modules, as well as
software and customer trading relationships acquired through business combinations or asset purchase transactions.
Costs that are directly attributable to a project’s development phase are recognized as intangible assets, provided they have
met the following recognition requirements:
•
•
•
•
•
the development costs can be measured reliably;
the project is technically and commercially feasible;
the Company intends to and has sufficient resources to complete the project;
the Company has the ability to use or sell the software; and
the software will generate probable future economic benefits.
Development costs not meeting these criteria for capitalization are expensed as incurred.
Amortization for intangibles is computed on an individual basis over the estimated economic life using the straight -line
method as follows:
•
•
•
•
Internally developed software
Acquired software
Customer trading relationships
Trade name, non-competition agreements
5 years
2 years
5 –10 years
5 years
Residual values and useful lives are reviewed at each reporting date.
Business Combinations
Business combinations are accounted for by applying the acquisition method. The acquisition method involves the
recognition of the acquiree’s identifiable assets and liabilities, including contingent liabilities, regardless of whether th ey
were recorded in the financial statements prior to acquisition. The acquiree’s identifiable assets and liabilities that meet the
conditions for recognition under IFRS 3, Business Combinations (IFRS 3) are recognized at their fair value at the acquisition
date.
The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition
date fair value. Transaction costs related to the acquisition are expensed as they are incurred.
Currency Exchange International, Corp - Annual Report 2023 46 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is determined to be a financial asset or liability
will be recognized in accordance with IFRS 9, at FVTPL. Contingent consideration that is classified as equity is not re‐
measured, and its subsequent settlement is accounted for within equity.
Goodwill arising on acquisition is recognized as an asset that represents the excess of acquisition cost over the fair value
of the Company’s share of the identifiable net assets of the acquiree on the date of the acquisition. Any excess of identifia ble
net assets over the acquisition cost is recognized in net income immediately after acquisition.
Where goodwill forms part of a cash-generating unit (CGU), and part of the operation within that unit is disposed of, it is
included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill
disposed of in this circumstance is measured based on the relative fair value of the operation disposed of and the portion
of the CGU retained.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combinatio n
occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new
information obtained about facts and circumstances that existed at the acquisition date that, if known , would have affected
the amounts recognized at that time.
The measurement period may be up to one year from the acquisition date. Upon conclusion of the measurement period or
final determination of the values of assets acquired and liabilities assumed , whichever occurs first, any subsequent
adjustments are recorded to income within the consolidated statement s of income and comprehensive income.
For a given acquisition, the Company may identify certain pre‐acquisition contingencies as of the acquisition date and may
extend its review and evaluation of these pre‐acquisition contingencies throughout the measurement period to obtain
sufficient information to assess these contingencies as part of acquisition accounting, as applicable.
Impairment Testing of Goodwill; Other Intangible Assets; and Property and Equipment
For impairment assessment purposes, assets are grouped at the lowest levels for which there are largely independent cash
inflows, referred to as CGU’s. As a result, some assets are tested individually for impairment, and some are tested at the
CGU level. Except for goodwill arising from business acquisitions, IAS 36, Impairment of Assets (IAS 36) requires that an
entity performs an assessment for impairment of assets if, at the end of the year, there is an objective indication of
impairment for the individual assets or the identified CGU. Goodwill is allocated to those CGUs that are expected to benefit
from synergies of a related business combination and represent the lowest level within the Company at which management
monitors goodwill. CGUs to which goodwill has been allocated are tested for impairment at least annually. All other individual
assets or CGUs are tested for impairment whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable.
An impairment loss is recognized for the amount by which the asset’s (or CGU’s) carrying amount exceeds its recoverable
amount, which is the higher of fair value less costs of disposal and value-in-use. To determine the value-in-use, management
estimates expected future cash flows from each CGU and determine a suitable discount rate in order to calculate the present
value of those cash flows. The data used for impairment testing procedures are directly linked to the Company’s latest
approved budget and are adjusted as necessary to exclude the effects of future reorganizations and asset enhancements.
Discount factors are determined individually for each CGU and reflect current market assessments of the Time Value of
Money (TVM) and asset-specific risk factors. Impairment losses for CGUs first reduce the carrying amount of any goodwill
allocated to that CGU. Any remaining impairment loss is charged pro rata to the other assets in the CGU. With the exception
of goodwill, all assets are subsequently reassessed for indications that an impairment loss previously recognized may no
longer exist. An impairment loss is reversed if the asset’s or CGU’s recoverable amount exceeds it carrying amount.
Currency Exchange International, Corp - Annual Report 2023 47 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Provisions
Provisions are recognized when, (i) the Company has a present obligation (legal or constructive) as a result of a past event,
and (ii) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and
a reliable estimate can be made of the amount of the obligation. Where the Company expects some or all of a provision to
be reimbursed for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only
when the reimbursement is virtually certain. The expense relating to any provision is presented in the consolidated
statements of income and comprehensive income, net of any reimbursement. If the effect of the TVM is material, provisions
are discounted using a current pretax rate that reflects, where appropriate, the risks specific to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
No liability is recognized if an outflow of economic resources as a result of present obligations is not probable. Such
situations are disclosed as contingent liabilities unless the outflow of resources is remote.
Provisions for legal disputes, onerous contracts, or other claims are recognized when the Company has a present legal or
constructive obligation as a result of a past event, it is probable that an outflow of economic resources will be required fr om
the Company and amounts can be estimated reliably. The timing or amount of the outflow may still be uncertain.
Restructuring provisions are recognized only if a detailed formal plan for the restructuring exists and management has either
communicated the plan’s main features to those affected or started implementation. Provisions are not recognized for future
operating losses.
Holding Accounts
Holding accounts represent funds received from customers that are held by the Company in the customer’s transactional
currency on behalf of the customer, who has the unilateral right to transfer out or convert the funds at any time. Amounts
are initially measured at fair value, net of any transaction costs directly attributable to the issuance of the financial
instrument.
Holding accounts are subsequently measured at amortized cost, using the effective interest rate method.
Share-Based Payments
The Company's Deferred Share Unit (DSU) Plan and Restricted Stock Unit (RSU) Plan (collectively the Plans) allow certain
employees and directors to receive restricted and deferred share units (Units) of the Company. The Units are cash -settled
only and are, therefore, classified as a financial liability. The Units are measured at the fair value of the Company’s equity
instruments at the grant date as a financial liability in the consolidated statements of financial position. The fair value
determined at the grant date of the cash-settled, share-based payments is expensed on a straight-line basis over the period
during which the employees and directors become unconditionally entitled to the instrument. At the end of each reporting
period, the Company revises its estimate of the Unit’s liability based on the fair value of the Company’s equity instruments.
The impact of the revision of the original estimates, if any, is recognized in profit or loss , such that the cumulative expense
reflects the revised estimate, with a corresponding adjustment to the liability.
Financial Instruments
Financial assets and financial liabilities are recognized on the consolidated statement s of financial position when the
Company becomes a party to the contractual provisions of the financial instrument. The Company is required to initially
recognize all of its financial assets and liabilities, including derivatives and embedded derivatives in certain contracts, at
fair value. Subsequent measurement of financial assets and financial liabilities is described below.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the
financial asset and substantially all the risks and rewards are transferred. A financial liability is derecognized when it is
extinguished, discharged, canceled, or expired.
Currency Exchange International, Corp - Annual Report 2023 48 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Classification and Measurement of Financial Assets
IFRS 9 provides guidance on the classification and measurement of financial assets and prescribes an Expected Credit Loss
(ECL) model for the impairment of financial assets. IFRS 9 also contains requirements on the application of a hedging model
to align hedge accounting more closely with entities’ risk management activities.
IFRS 9 includes a classification and measurement approach for financial assets that considers the business model in which
the assets are managed and their cash flow characteristics. Subsequent to initial recognition, financial assets are not
reclassified unless the Company adopts changes in its business model for managing those assets. Financial assets, other
than those designated and effective as hedging instruments, are classified into the following categories: amortized cost;
Fair Value Through Profit or Loss (FVTPL); or Fair Value Through Other Comprehensive Income (FVTOCI).
Classification and Measurement of Financial Liabilities
Subsequent to initial recognition, financial liabilities are measured at amortized cost using the effective interest method,
except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains
or losses recorded in the consolidated statements of income and comprehensive income.
The Company’s financial assets and liabilities are classified and measured as follows:
•
•
•
•
•
•
•
Cash
Accounts receivable
Restricted cash held in escrow
Forward and option contract assets
Accounts payable
Holding accounts
Lines of credit
Fair value through profit or loss
Amortized cost
Amortized cost
Fair value through profit or loss
Amortized cost
Amortized cost
Amortized cost
Transaction costs, other than those related to financial instruments classified as FVTPL or FVTOCI, which are expensed as
incurred are added to, or deducted from, the fair value of the financial asset or financial liability, as appropriate, on initial
recognition and amortized using the effective interest method.
Financial Instruments Recorded at Fair Value
Financial instruments recorded at fair value in the consolidated statement s of financial position are classified using a fair
value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has
the following levels:
•
•
•
Level 1— quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2— inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly; and
Level 3— unobservable inputs for the asset or liability.
Derivative Financial Instruments and Hedge Accounting
Derivative financial instruments are accounted for at FVTPL, except for derivatives designated as hedging instruments in
cash flow hedge relationships, of which the Company has none.
Impairment of Financial Assets
IFRS 9’s impairment requirements use the Expected Credit Loss (ECL) model uses forward-looking information to recognize
expected credit losses. Instruments within the scope of IFRS 9 includes loans and other debt-type financial assets measured
at amortized cost and FVTOCI, trade receivables, contract assets recognized and measured under IFRS 15 , and loan
commitments and some financial guarantee contracts that are not measured at FVTPL.
Currency Exchange International, Corp - Annual Report 2023 49 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Under IFRS 9, the Company considers a wider range of information when assessing credit risk and measuring expected
credit losses, including past events, current conditions, and reasonable projections that impact the collectability of the
future cash flows of the instrument.
Leases
At the inception of a lease contract, the Company assesses whether the contract is or contains a lease. A contract is, or
contains a lease if the contract conveys that right of control of the use of an identified asset for a period of time in exch ange
for consideration. In assessing whether a contract conveys the right to control the use of an identified asset, the Company
assess whether: (i) the contract involves the use of an identified asset; (ii) the Company has the right to obtain substantia lly
all of the economic benefits from the use of the asset throughout the period, and/or; (iii) the Company has the right to direct
the use of the asset.
The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset
is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made
at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove
the underlying asset or to restore the underlying asset or the site in which it is located, less any lease incentives receive d.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term plus expected renewal options which
are available to the Company. In addition, the right-of-use asset is reduced by impairment losses, if any identified, and
adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that have not been paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined,
the Company’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability may be comprised of: (i) fixed payments; (ii) variable
lease payments that depend on an index rate, initially measured using the index as the commencement date; (iii) amounts
expected to be payable under a residual value guarantee; (iv) the exercise price under purchase option that the Company is
reasonably certain to exercise; (v) lease payments in an optional renewal period if the Company is reasonably certain to
exercise an extension option, and (vi) penalties for early termination of a lease unless the Company is reasonably certain
not to terminate early.
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a chang e
in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the
amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it
will exercise a purchase, extension or termination option. When the lease liability is remeasured, a corresponding adjustment
is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-
of-use has been reduced to zero. The Company recognizes a depreciation charge for the right -of-use assets and interest
expense on lease liabilities in the consolidated statements of income and comprehensive income. Lease payments for short-
term leases and for leases of low-value assets that are not included in the measurement of the lease liability are classified
as cash flows from operating activities.
The remeasurement of the lease liability beyond the COVID-19 practical expedient that was permitted by the IASB in 2021,
is dealt with by a reduction in the carrying amount of the right-of-use asset to reflect the full or partial termination of the
lease for lease modifications that reduce the scope of the lease. Any gain or loss relating to the partial or full termination
of the lease is recognized in profit or loss. The right-of-use asset is adjusted for all other lease modifications.
Accounts Receivable
The Company applies a simplified approach in accounting for the loss allowance for receivables and contract assets as
lifetime expected credit losses. These consider the potential for default during the life of the financial instrument and are
the expected shortfalls in contractual cash flows. To estimate the expected shortfall, the Company considers specific
customers, historical information, external indicators, and forward-looking information.
Currency Exchange International, Corp - Annual Report 2023 50 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Earnings per Share
The Company presents basic and diluted earnings per share data for its common shares, calculated by dividing the earnings
attributable to common shareholders of the Company by the weighted average number of common shares outstanding during
the period. Diluted earnings per share is determined by adjusting the earnings attributable to common shareholders and the
weighted average number of common shares outstanding for the effects of all dilutive warrants and options outstanding
that may add to the total number of common shares.
Income Taxes
Current income tax assets and liabilities comprise those obligations to, or claims from, fiscal authorities relating to the
current or prior reporting period, that are unpaid at the consolidated statement s of financial position date.
Deferred income taxes are calculated using the liability method on temporary differences. Tax losses available to be carried
forward as well as other income tax credits are assessed for recognition as deferred tax assets.
Deferred tax assets and liabilities are calculated at tax rates that are expected to apply to their respective period of
realization, provided they are enacted or substantively enacted at the consolidated statement s of financial position date.
This provision is not discounted. Deferred tax liabilities are generally recognized in full, although Income Taxes (IAS 12)
specifies limited exemptions. Deferred tax assets are recognized to the extent that it is probable that they will be able to be
offset against future taxable income.
Management bases its assessment of the probability of future taxable income on the Company's latest approved forecasts,
which are adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or
credit. The specific tax rules in the numerous jurisdictions in which the Company operates are also carefully taken into
consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, that deferred tax
asset is recognized in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or
uncertainties is assessed individually by management based on specific facts and circumstances.
Changes in deferred tax assets and liabilities are recognized as a component of tax expense in the consolidated statement s
of income and comprehensive income, except where they relate to items that are charged or credited directly to equity in
which case the related deferred tax is also charged or credited directly to equity.
3. Significant Management Judgment in Applying Accounting Policies and Estimation
Uncertainty
When preparing the consolidated financial statements, management undertakes several judgments, estimates, and
assumptions about the recognition and measurement of assets, liabilities, income, and expenses. The actual results may
differ from judgments, estimates, and assumptions made by management, and will seldom equal the estimated results.
The judgments, estimates, and assumptions applied in the consolidated financial statements, including the key sources of
estimation uncertainty, have been updated based on information at October 31, 2023 and with particular respect to the
analysis of potential impairment of the Company’s assets, including goodwill, and its ability to continue as a going concern.
Significant Management Judgment
The following are significant management judgments in applying the accounting policies of the Company and have the most
significant effect on the consolidated financial statements:
Currency Exchange International, Corp - Annual Report 2023 51 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Carrying Value of Internally Developed Software
The Company makes significant judgments about the value of its proprietary software, CXIFX. Once the scope of a project
is deemed technologically feasible, the Company capitalizes costs incurred for the planning, development, and testing
phases of modules developed within its software. Subsequent to the completion of the software development cycle, each
module is amortized over its estimated useful economic life, which has been assessed as a period of five years. Costs
relating to software maintenance, regular software updates, and minor software customizations are expensed as incurred.
The Company reviews completed software modules within CXIFX for impairment on an ongoing basis.
Income Taxes and Recoverability of Potential Deferred Tax Assets
In assessing the probability of realizing income tax assets recognized, management make s estimates related to
expectations of future taxable income, applicable tax planning opportunities, intercompany allocations in accordance with
its transfer pricing policy, expected timing of reversals of existing temporary differences , and the likelihood that tax
positions taken will be sustained upon examination by applicable tax authorities. In making its assessments, management
gives additional weight to positive and negative evidence that can be objectively verified. Estimates of future taxable income
are based on forecasted cash flows from operations and the application of existing tax laws in each jurisdiction. The
Company considers whether relevant tax planning opportunities are (1) within the Company’s control, (2) feasible, and (3)
within management’s ability to implement. Examination by applicable tax authorities is supported based on individual facts
and circumstances of the relevant tax position examined in light of all available evidence. Where applicable tax laws and
regulations are either unclear or subject to ongoing varying interpretations, it is reasonably possible that changes in these
estimates can occur that materially affect the amounts of income tax assets recognized. Also, future changes in tax laws
could limit the Company from realizing the tax benefits from the deferred tax assets. The Company reassesses unrecognized
income tax assets at each reporting period.
Impairment of Financial Assets
All financial assets except for those at FVTPL are reviewed for impairment at least at each reporting date to identify whethe r
there is any objective evidence that a financial asset or group of financial assets is impaired.
Impairment of Non-financial Assets
In the determination of carrying values and impairment charges, management looks at the recoverable amount, which is the
higher of the value-in-use or fair value less costs of disposal and at objective evidence for a significant or prolonged decline
of fair value on financial assets indicating impairment. These determinations and their individual assumptions require that
management make a decision based on the best available information at each reporting period. The Company reviews
property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate that
the carrying value may not be recoverable.
Goodwill is tested for impairment at least annually, in the fourth quarter, and at other times when such indicators exist.
Estimation Uncertainty
Estimates and underlying assumptions are reviewed on an ongoing basis. Information about estimates and assumptions
that have the most significant effect on recognition and measurements of assets, liabilities, income, and expenses is
provided below. Actual results may be substantially different.
Share-Based Payments
Management determines the overall expense for share-based payments using market-based valuation techniques. The fair
value of the market-based and performance-based share awards are determined at the date of grant using generally
accepted valuation techniques. The determination of the most appropriate valuation model is dependent on the terms and
conditions of the grant. Assumptions are made and judgments are used in applying valuation techniques. These
assumptions and judgments include estimating the future volatility of the stock price, expected dividend yield, future
employee turnover rates, future employee stock option exercise behaviors, and corporate performance. The assumptions
Currency Exchange International, Corp - Annual Report 2023 52 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
and models used for estimating fair value for share-based payment transactions are disclosed in Note 16. Such judgments
and assumptions are inherently uncertain. Changes in these assumptions affect the fair value estimates.
Depreciation and Amortization Expenses
The Company's property and equipment and intangible assets are depreciated and amortized over their estimated useful
economic lives. Useful lives are based upon management's best estimates of the length of time that the assets will generate
revenue, which is reviewed at least annually for appropriateness. Changes to these estimates can result in variations in the
amounts charged for depreciation or amortization and in the assets' carrying amounts.
Fair Value Measurement
Management uses valuation techniques to determine the fair value of certain financial instruments (where active market
quotes are not available). This involves developing estimates and assumptions consistent with how market participants
would price the instrument. Management bases its assumptions on observable data as much as possible, but this data is
not always available. In that case, management uses the best information available. Estimated fair values may vary from
the actual prices that would be achieved in an arm’s length transaction at the reporting date.
Contingencies
The Company is subject to contingencies that are not recognized as liabilities because they are either:
•
•
possible obligations that have yet to be confirmed whether the Company has a present obligation that could lead
to an outflow of resources embodying economic benefits; or
present obligations that do not meet recognition criteria because either it is not probable that an outflow of
resources embodying economic benefits will be required to settle the obligation, or a sufficiently reliable estimate
of the amount of the obligation cannot be made.
4. Segments
The Company operates in the United States and Canada. The Company’s revenue from external customers and information
about its assets by geographical location and product line are detailed below:
Year ended October 31, 2023
Year ended October 31, 2022
Year ended October 31, 2023
Year ended October 31, 2022
Revenues by Geography
United States
64,531,245
50,184,406
Canada
17,423,524
17,314,267
Total
81,954,769
67,498,673
Revenues by Product Line
Banknotes
67,624,421
55,022,093
Payments
14,330,348
12,476,580
Total
81,954,769
67,498,673
Currency Exchange International, Corp - Annual Report 2023 53 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Assets
Cash
October 31, 2023
October 31, 2022
United States
Canada
Total
United States
Canada
$
$
$
$
$
Total
$
58,238,107
34,482,186
92,720,293
58,269,740
30,289,528
88,559,268
Restricted cash held in escrow
-
3,480,485
3,480,485
135,515
3,667,614
3,803,129
Accounts receivable
16,927,524
4,198,022
21,125,546
9,023,859
5,249,669
14,273,528
Forward and option contract assets
Other current assets
Property and equipment
Right-of-use assets
Intangible assets
Goodwill
Deferred tax asset, net
Other assets
Total assets
5. Cash
160,654
1,491,564
938,501
2,144,912
2,109,849
1,309,701
858,709
106,139
905,813
359,253
95,447
413,803
1,558,891
862,479
1,407,405
-
1,066,467
1,850,817
1,033,948
2,558,715
3,668,740
2,172,180
2,266,114
106,139
443,102
4,414,263
553,559
2,511,838
2,366,446
1,309,700
259,796
121,142
468,341
477,028
157,888
1,583,671
1,916,180
877,745
1,432,208
-
911,443
4,891,291
711,447
4,095,509
4,282,626
2,187,445
1,692,004
121,142
84,285,660
47,763,784
132,049,444
79,408,960
46,119,872
125,528,832
Included within cash of $92,720,293 at October 31, 2023 (October 31, 2022 - $88,559,268) are the following cash balances:
Cash held in transit, vaults, tills and consignment locations
Cash deposited in bank accounts in jurisdictions in which the Company operates
Total
6. Restricted Cash Held in Escrow
October 31, 2023
October 31, 2022
$
65,714,489
27,005,804
92,720,293
$
61,436,163
27,123,105
88,559,268
Certain of the Company's secured transactions and derivative contracts require the Company to post cash collateral or
maintain minimum cash balances in escrow. The foreign currency forward contracts can be closed immediately resulting in
the collateral being liquidated. The Company has also been required to post the collateral associated with its credit facility
with Desjardins Group (see Note 12). At October 31, 2023, the Company had cash collateral balances of $3,480,485 (October
31, 2022 - $3,803,129), represented by $3,119,888 (October 31, 2022 - $2,335,298) being held as collateral on forward
contracts and $360,597 (October 31, 2022 - $1,467,831) being held as collateral for the Desjardins credit facility. These
balances are reflected as restricted cash held in escrow in the consolidated statements of financial position.
Currency Exchange International, Corp - Annual Report 2023 54 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
7. Property and Equipment
Property and equipment for the period consist of the following:
Cost
Balance, October 31, 2021
Additions
Items moved to intangible assets (reclasses)
Net exchange differences
Balance, October 31, 2022
Additions
Disposals
Net exchange differences
Balance, October 31, 2023
Depreciation
Balance, October 31, 2021
Items moved to intangible assets (reclasses)
Additions
Net exchange differences
Balance, October 31, 2022
Additions
Disposals
Net exchange differences
Balance, October 31, 2023
Carrying amounts
Balance, October 31, 2022
Balance, October 31, 2023
(31,646)
(281,035)
Computer
equipment
Furniture and
equipment
Leasehold
improvements
$
792,679
29,190
(229,722)
(14,460)
577,687
147,742
(3,692)
440,702
$
703,413
(175,912)
19,911
-
547,412
38,320
$
1,139,094
72,613
-
(36,602)
1,175,105
256,058
(142,948)
(7,231)
$
2,729,783
461,816
-
(68,892)
3,122,707
307,378
(412,553)
(12,078)
$
$
1,047,323
2,396,091
-
-
18,988
154,238
-
1,066,311
58,150
-
2,550,329
325,939
(412,553)
(12,874)
Total
$
4,709,807
563,619
(229,722)
(119,954)
4,923,750
761,214
(868,182)
(23,001)
Total
$
4,195,078
(175,912)
193,137
-
4,212,303
437,698
(868,182)
(21,986)
1,280,984
3,005,454
4,793,781
Computer
equipment
Furniture and
equipment
Leasehold
improvements
(31,646)
(281,035)
(142,948)
(2,760)
301,937
(6,352)
975,161
2,450,841
3,759,833
Computer
equipment
Furniture and
equipment
Leasehold
improvements
$
30,275
138,765
$
108,794
305,823
$
572,378
554,613
Total
$
711,447
1,033,948
Vehicles
$
48,251
-
-
-
48,251
50,036
-
66,641
Vehicles
$
48,251
-
-
-
48,251
15,289
-
31,894
Vehicles
$
-
34,747
Currency Exchange International, Corp - Annual Report 2023 55 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
8. Goodwill and Intangible Assets
Intangible assets comprise the Company's internally developed software (CXIFX) and its related modules, as well as
software and customer trading relationships acquired through various business combinations.
Goodwill and intangible assets for the period consist of the following:
Internally
developed
software
Acquired
software
Customer
trading
relationships
Trade name,
non-compete
& unpatented
tech cost
Goodwill
Total
Cost
$
$
$
$
$
$
Balance, October 31, 2021
3,442,612
574,596
7,597,031
1,046,292
2,275,463
14,935,994
Additions
Items moved from property and
equipment
Net exchange differences
Balance, October 31, 2022
Additions
Disposals
327,357
-
-
229,722
-
-
-
-
-
-
327,357
229,722
(2,221)
3,767,748
523,772
(254,180)
-
(218,618)
(34,295)
(88,018)
(343,152)
804,318
5,038
-
7,378,413
1,011,997
2,187,445
15,149,921
-
-
-
-
-
-
528,810
(254,180)
Net exchange differences
8,850
(6,900)
(259,555)
(5,948)
(15,265)
(278,818)
Balance, October 31, 2023
4,046,190
802,456
7,118,858
1,006,049
2,172,180 15,145,733
Amortization
Balance, October 31, 2021
Items moved from property and
equipment
Amortization
Net exchange differences
Balance, October 31, 2022
Amortization
Disposals
Net exchange differences
Internally
developed
software
Acquired
software
Customer
trading
relationships
Trade name,
non-compete
& unpatented
tech cost
Goodwill
Total
$
$
$
$
$
$
2,449,101
571,838
3,876,761
519,531
-
175,912
-
-
654,117
(293,831)
2,809,387
415,532
(207,580)
(35,214)
1,810
(891)
748,669
6,509
-
426,685
216,816
4,520,262
456,308
-
180,900
(98,899)
601,532
193,627
-
36,813
(236,256)
(4,776)
-
-
-
-
-
-
-
-
-
7,417,231
175,912
1,263,512
(176,805)
8,679,850
1,071,976
(207,580)
(239,433)
9,304,813
Balance, October 31, 2023
2,982,125
791,991
4,740,314
790,383
Carrying amounts
Balance, October 31, 2022
Balance, October 31, 2023
Internally
developed
software
$
958,361
1,064,065
Acquired
software
Customer
trading
relationships
Trade name,
non-compete
& unpatented
tech cost
Goodwill
Total
$
55,649
10,465
$
$
$
$
2,858,151
2,378,544
410,465
2,187,445
6,470,071
215,666
2,172,180
5,840,920
Currency Exchange International, Corp - Annual Report 2023 56 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Impairment Testing
The Company performs an annual impairment test by comparing the carrying amount of each CGU to its recoverable amount.
The recoverable amount of each CGU is determined based on the estimated value-in-use. Except for goodwill arising from
business acquisitions, IAS 36 requires that an entity performs an assessment of impairment for its assets if, at the end of
the year, there is an objective indication of impairment for the individual assets or the identified CGU. There were no
indicators of impairment at October 31, 2023 or at October 31, 2022. Goodwill arising in a business acquisition cannot be
tested individually for impairment and shall be allocated to the CGU expected to benefit from the synergies of the business
combinations in which the goodwill arises, and is assessed for impairment annually, or more frequently if there are objective
indications of impairment.
In determining the CGUs to which assets will be allocated to for the purpose of the impairment review, management has
reviewed the sources of revenues and the usage of its assets in generating those revenues including product lines, regions,
and individual locations. Additionally, management reviews how the Company makes decisions about continuing or
disposing its assets and operations.
Based on this analysis as at October 31, 2023, management has determined that, for the purposes of the allocation of
goodwill and the annual impairment assessment, there are two separately identifiable CGUs, being Denarius and CXI
Banknotes (including eZforex).
Below are the carrying amounts and recoverable amounts of goodwill allocated to the respective CGUs:
Carrying amount of goodwill allocated to cash generating units
Denarius
eZforex (allocated to CXI Banknotes)
Total
Recoverable amount of each cash generating unit
Denarius
CXI Banknotes
October 31, 2023
October 31, 2022
$
862,479
1,309,701
2,172,180
$
877,744
1,309,701
2,187,445
October 31, 2023
October 31, 2022
$
2,996,082
34,684,734
$
3,027,584
30,621,056
The recoverable amount of each CGU is represented by its estimated value-in-use. In assessing the value-in-use, estimated
future cash flows based on the Company’s internal forecast are discounted using an appropriate pre -tax discount rate.
The following were the key assumptions applied in the goodwill impairment testing:
Discount Rates
The discount rates are pre-tax rates and reflect appropriate adjustments relating to current market assessments of the risks
specific to each CGU.
Terminal Growth Rates
The earnings included in the goodwill impairment testing were based on the Company’s internal forecast, which projects
expected cash flows over the next three years. Beyond the initial cash flow projection period, cash flows were assumed to
increase at a steady rate using a nominal long-term growth rate (terminal growth rate). Terminal growth rates reflect
management’s best estimate of the expected long-term growth rates for the product mix and industry of the CGUs. The
growth rates are in-line with general standards and are conservative in nature when compared to historical growth rates due
to potential uncertainty.
Currency Exchange International, Corp - Annual Report 2023 57 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
The Company’s expected cash flows have been developed based on the expected margins of each CGU, which have been
determined based on a combination of past experience in the markets in which the Company operates, as well as historical
information and the expected growth in the forecast period. The Company’s ma nagement believes that this is the best
available input for forecasting these markets.
Other than the considerations described in determining the recoverable amount of the CGUs described above, there are no
other key assumptions.
In considering the sensitivity of the key assumptions used, management determined that a reasonable change in any of the
above would not result in the recoverable amounts of CGUs to be less than their carrying amount.
Terminal growth rate
Denarius
CXI Banknotes
Discount rate
Denarius
CXI Banknotes
October 31, 2023
October 31, 2022
2%
2%
22%
22%
2%
2%
20%
20%
9. Right-of-use Assets and Lease Liabilities
Lease liabilities are presented in the statements of financial position as follows:
Current lease liabilities
Non-current lease liabilities
Total
October 31, 2023
October 31, 2022
$
1,577,758
1,388,961
2,966,719
$
1,545,777
2,985,282
4,531,059
The Company has leases for corporate offices as well as its retail store locations. With the exception of short-term leases
and leases of low-value underlying assets, each lease, meeting the definition under IFRS 16, is reflected on the consolidated
statements of financial position as a right-of-use asset and a lease liability. Variable lease payments which do not depend
on an index or a rate, such as lease payments based on a percentage of Company sales, are excluded from the initial
measurement of the lease liability and asset. During the year certain leases for corporate offices were modified based on
their amended lease agreements, with any gains or losses being recognized in profit or loss. The Company classifies its
right-of-use assets in a consistent manner to its property and equipment (see Note 7).
Each lease generally imposes a restriction that, unless there is a contractual right for the Company to sublet the asset to
another party, the right-of-use asset can only be used by the Company. Leases are either non-cancellable or may only be
canceled by incurring a substantial termination fee. Some leases contain an option to extend the lease for a further term.
The Company is prohibited from selling or pledging the underlying leased assets as security. For leases over corporate
offices and retail store locations, the Company must keep those properties in a good state of repair and return the properties
in their original condition at the end of the lease.
Currency Exchange International, Corp - Annual Report 2023 58 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
The table below describes the nature of the Company’s leasing activities by the type of right-of-use asset recognized on the
consolidated statements of financial position:
Right-of-use asset
No of right-
of-use assets
leased
Range of
remaining term
Average
remaining
lease term
No of leases
with extension
options
No of leases
with options
to purchase
No of leases
with variable
payments
linked to an
index
No of
leases with
termination
options
Equipment
Corporate offices
Retail store locations
Total
1
9
23
33
0 years
0-5 years
0-4 years
0-5 years
1
1
2
1
1
5
1
7
-
-
-
-
-
-
-
-
-
-
-
-
The lease liabilities are secured by the related underlying assets. Future minimum lease payments at October 31, 2023 were
as follows:
Within 1 year
1-2 years
2-3 years
3-4 years
4-5 years
After 5 years
Total
Lease payments
Finance charges
1,677,768
673,201
394,239
223,669
169,749
23,733
3,162,359
100,010
48,900
27,721
14,365
4,591
53
195,640
Net present values
1,577,758
624,301
366,518
209,304
165,158
23,680
2,966,719
The Company has elected not to recognize a lease liability for short-term leases (leases with an expected term of 12 months
or less) or for leases of low-value assets. In addition, the Company has not recognized a right-of-use asset or lease liability
with respect to leases identified where the lessor was determined to have substantive substitution rights. Payments made
under such leases are expensed on a straight-line basis. In addition, certain variable lease payments are not permitted to be
recognized as lease liabilities and are expensed as incurred.
The expense relating to payments not included in the measurement of the lease liability is as follows:
Leases with substantial substitution rights
Short-term leases
Variable lease payments
Total
Year ended
Year ended
October 31, 2023
October 31, 2022
$
584,540
115,826
790,544
$
509,510
116,575
437,815
1,490,910
1,063,900
At October 31, 2023, the Company was committed to short-term leases and the total commitment at that date was $103,126
(October 31, 2022, $90,574).
The total cash outflow for leases for the year ended October 31, 2023, was $2,093,022 (October 31, 2022, $2,077,990). For
the year ended October 31, 2023, the Company incurred interest expense on lease liabilities in the amount of $179,904
(October 31, 2022, $165,804) and recognized as interest expense on lease liabilities in the consolidated statements of
income and comprehensive income.
Currency Exchange International, Corp - Annual Report 2023 59 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Additional information on the right-of-use assets by class of assets is as follows:
Year ended October 31, 2023
Carrying amount
Depreciation expense
Impairment
$
282
777,085
1,781,348
2,558,715
$
1,395
623,586
1,270,585
1,895,566
$
-
-
-
-
Year ended October 31, 2022
Carrying amount
Depreciation expense
Impairment
$
1,666
1,903,186
2,190,657
4,095,509
$
1,520
590,492
1,224,295
1,816,307
$
-
-
-
-
Equipment
Corporate offices
Retail store locations
Total right-of-use assets
Equipment
Corporate offices
Retail store locations
Total right-of-use assets
10. Income Taxes
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities as of
October 31, 2023 and 2022 consist of the following:
Deferred tax assets
Accrued expenses
Stock-based compensation
Other
Net property and equipment
Software costs
Net intangible assets
Non-capital loss benefits
Right-of-use assets, net
Total deferred tax assets
Deferred tax liabilities
Net property and equipment
Net intangible assets
Other
Total deferred tax liabilities
Net deferred tax asset
Year ended
Year ended
October 31, 2023
October 31, 2022
$
539,393
539,361
111,712
277,367
383,720
298,448
891,640
38,953
3,080,594
(213,014)
(265,901)
(335,565)
(814,480)
2,266,114
$
364,822
310,806
4,826
246,324
-
235,972
1,001,149
114,548
2,278,447
(138,051)
(198,259)
(250,133)
(586,443)
1,692,004
Currency Exchange International, Corp - Annual Report 2023 60 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
Reconciliation of the provision for income taxes to the amount calculated using the Company’s statutory tax rate for the
years ended October 31, 2023 and 2022 are as follows:
Income before taxes
Statutory tax rate
Tax expense at statutory rate
Permanent items
Research and development (R&D) credit
Other non-deductible differences
Non-capital loss (benefit) & timing differences recognized
Income tax expense
Year ended
Year ended
October 31, 2023
October 31, 2022
$
14,524,785
25.91%
3,763,893
(112,802)
(69,936)
155,582
594,541
4,331,278
$
14,212,557
25.46%
3,618,081
323,516
(12,500)
163,190
(1,662,854)
2,429,433
The statutory rate is a weighted average that is based on the enacted Federal tax rates in 202 3 for both the United States of
21% (2022, 21%) and Canada of 15% (2022, 15%) plus the rates for the states and provinces where the Company operates,
based on the proportional allocation of taxable income as defined by each jurisdiction.
In the year ended October 31, 2023, the Company incurred an income tax expense of $4,331,278, which was at the statutory
tax rate and adjusted for permanent items, R&D credits and other non-deductible differences. In the year ended October 31,
2022, the Company recognized a benefit related to non-capital (operating) losses incurred in prior years by its Canadian
subsidiary, EBC, of $1,662,854, of which $453,286 was used to reduce its current income tax liability in Canada for the year
ended October 31, 2022 to $Nil and $1,209,568 is available to apply against income tax liabilit ies in future periods. The
Company has a rigorous budgeting process and has forecasted future taxable profits in the Bank over the next five years
which are sufficient to utilize the non-capital loss benefits recorded within the net deferred tax asset. The expected
profitability is a result of organic growth as well as targeted initiatives to increase both Payments and Banknotes revenues.
The non-capital losses of the Bank may be carried forward for up to twenty years and the non-capital losses will completely
expire in the year ending October 31, 2044.
The provision for income taxes for the years ended October 31, 2023 and 2022 consists of the following:
Current tax expense
Deferred tax benefit
Income tax expense
11. Seasonality of Operations
Year ended
Year ended
October 31, 2023
October 31, 2022
$
4,930,189
(598,911)
4,331,278
$
3,922,152
(1,492,719)
2,429,433
While seasonality is generally not a consideration for the Payments product line, seasonality of Banknotes product line is
reflected in the timing of when foreign currencies are in greater or lower demand. In a normal operating year, there is some
seasonality to the Company’s operations with higher commissions generally from March until September and lower
commissions from October to February. This coincides with peak tourism seasons in North America when there are generally
more travelers entering and leaving the United States and Canada.
Currency Exchange International, Corp - Annual Report 2023 61 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
12. Lines of Credit
The Company maintains lines of credit to meet borrowing needs during peak business periods. On June 15, 2022, the
Company entered into an Amended and Restated Credit Agreement with BMO Harris Bank, N.A. The Amended and Restated
Credit Agreement increased the revolving line of credit limit from $20,000,000 to $30,000,000 and provide an accordion
feature for up to an additional $10,000,000 with the lender’s approval. The Amended and Restated Credit Agreement provides
a term of two years (maturity date on June 15, 2024). The Amended and Restated Credit Agreement was updated on July
18, 2022, in the form of a Second Amended and Restated Credit Agreement, to reflect the exercised accordion feature, which
increased the line of credit to $40,000,000, and a reduced margin spread in the borrowing rate by 25 bps. The form of Second
Amended and Restated Credit Agreement was further amended on July 12, 2023, to provide a seasonal increase in the
borrowing capacity by $10,000,000 to $50,000,000, effective through August 31, 2023, and to extend the maturity on the
facility to June 15, 2025. The credit line is secured against the Company’s cash and other assets. The form of Second
Amended and Restated Credit Agreement, as further amended on July 12, 2023, bears interest at the one month Secured
Overnight Financing Rate (SOFR) plus 2.25% (5.31% at October 31, 2023 and 4.12% at October 31, 2022). At October 31,
2023, the balance outstanding was $11,074,308 (October 31, 2022, $5,929,847).
On October 19, 2020, the Company’s wholly owned Canadian subsidiary, EBC, established a fully collateralized revolving line
of credit with Desjardins Group (Desjardins) with a limit of CAD 2,000,000 ($1,442,273), payable on demand, and being
secured against cash collateral of CAD 2,000,000 ($1,442,273). On April 25, 2023, EBC amended this facility reducing the
revolving line of credit to CAD 500,000 ($360,568), payable on demand, and being secured against cash collateral of CAD
500,041 ($360,598). The line of credit bears interest at the Canadian Prime Rate and plus 0.25% (7.20% at October 31, 2023
and 5.95% at October 31, 2022). At October 31, 2023, the balance outstanding was $Nil (October 31, 2022, $Nil)
On April 7, 2021, EBC entered into a $20,000,000 USD Revolving Credit Facility (RCF) with a private lender. On July 18, 2022,
EBC amended this facility through an Amended and Restated Revolving Loan Agreement, whereby $10,000,000 of this facility
was moved from EBC to CXI. On January 19, 2023, the Company entered into a Moratorium Agreement (CXI facility) where
the Company will not utilize the $10,000,000 without prior written consent from the lender. Additionally, the Company will
not incur any standby charges or fees during the period of the Moratorium. Pursuant to the January 19, 2023 amended
agreement, the interest rate on the $10,000,000 facility granted to EBC increased from 6% to a floating rate with a floor of
8%, with a standby charge of $1,500 USD per month if the total interest in the month is less than $20,000 USD. The entire
$20,000,000 facility is guaranteed by the Company and is subordinated to the Company’s and EBC’s obligations to primary
lenders. These facilities are used for working capital purposes and for daily operational activity and have a term of three
years (maturity date January 19 ,2026); however, these facilities may be terminated on 90 -days’ notice by either party. The
total outstanding balance for the Company at October 31, 2023, was $3,605,683 (October 31, 2022, $Nil).
Interest expense primarily relates to interest payments on lines of credit. Interest expense for the year ended October 31,
2023 was $1,088,161 (October 31, 2022, $1,180,026).
13. Fair Value Measurement of Financial Instruments
The fair value determination is the estimated amount that the Company would receive to sell a financial asset or pay to
transfer a financial liability in an orderly transaction between market participants at the measurement date.
There were no transfers between Level 1 and Level 2 during the year ended October 31, 2023. The following table shows the
levels within the hierarchy of financial assets and liabilities measured at fair value.
Currency Exchange International, Corp - Annual Report 2023 62 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
October 31, 2023
Level 1
$
92,720,293
-
92,720,293
-
-
October 31, 2022
Level 1
$
88,559,268
-
88,559,268
-
-
Level 2
Level 3
$
-
1,066,467
1,066,467
1,328,582
1,328,582
$
-
-
-
-
-
Level 2
Level 3
$
-
911,443
911,443
1,174,226
1,174,226
$
-
-
-
-
-
Total
$
92,720,293
1,066,467
93,786,760
1,328,582
1,328,582
Total
$
88,559,268
911,443
89,470,711
1,174,226
1,174,226
Financial assets
Cash
Forward and option contract assets
Total assets
Financial liabilities
Restricted and deferred share units
Total liabilities
Financial assets
Cash
Forward and option contract assets
Total assets
Financial liabilities
Restricted and deferred share units
Total liabilities
Cash (Level 1)
The Company’s cash balances consisting of local and foreign currency notes held in tills, vaults, bank accounts, and in
transit are based upon foreign exchange rates quoted in active markets as of October 31, 2023 and 2022.
Forward and Option Contract Positions, and Long-term Liability from Restricted and Deferred Share
Units (Level 2)
Other long-term liabilities include the Company’s liability for restricted and deferred share unit awards which are valued
using a volume-weighted average price for the five days that precede the date of grant. The cost of the awards is recorded
on a straight-line basis over the vesting period. At each reporting date, the vested portion of the awards are remeasured at
the current fair value using the same approach as at initial recognition (see Note 16).
The Company’s forward contract positions are not traded in active markets. The fair value of these instruments has been
determined using observable forward exchange rates. The effects of non-observable inputs are not significant for foreign
contract positions.
Due to their short-term nature, the carrying value of the following financial instruments approximates their fair value at the
dates of the consolidated statements of financial position:
•
•
•
•
•
Accounts receivable;
Restricted cash held in escrow;
Lines of credit;
Accounts payable; and
Holding accounts.
Currency Exchange International, Corp - Annual Report 2023 63 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
14. Risk Management
The Company's activities expose it to a variety of financial risks: credit risk, foreign currency risk, interest rate risk, and
liquidity risk. The Company's risk management policies are designed to minimize the potential adverse effects on the
Company's financial performance.
Financial risk management is carried out by the Chief Financial Officer (CFO) under policies approved by senior management
and the board of directors. Policies are in place to evaluate and monitor risk and in some cases, prescribe that the Company
hedge its financial risks.
The analysis below presents information about the Company's exposure to each of these financial risks arising from
financial instruments and the Company's objectives, policies, and processes for measuring and managing these risks.
Credit Risk
Credit risk is the risk of financial loss associated with the counterparty’s inability to fulfill its payment obligations. The
Company’s credit risk is primarily attributable to cash in bank accounts, accounts receivable , and forward contracts from
hedging counterparties.
All banking relationships are negotiated by senior management. The Company maintains accounts in high-quality financial
institutions. At various times, the Company's bank balances exceed insured limits.
The credit risk associated with accounts receivable is limited, as the Company's receivables consist primarily of bulk
currency trades with a settlement cycle of 24 to 48 hours. The majority of the Company's receivables reside with banks,
money service business customers, and other financial institutions.
For the purpose of risk control, the customers are grouped as follows: domestic and international banks, money service
businesses, and other customers. Credit limits are established for each customer, whereby the credit limit represents the
maximum open amount without requiring payments in advance. These limits are reviewed regularly by senior management.
A breakdown of accounts receivable by category is below:
Customer type
Domestic and international financial institutions
Money-service businesses
Other
Total
October 31, 2023
October 31, 2022
$
18,339,600
2,171,215
614,731
21,125,546
$
7,823,948
5,227,752
1,221,828
14,273,528
The maximum exposure to credit risk is represented by the carrying amount of each financial asset on the consolidated
statements of financial position. There are no commitments that could increase this exposure to more than the carrying
amount.
Foreign Currency Risk
The volatility of the Company's foreign currency holdings may increase as a result of the political and financial environment
of the corresponding issuing country. Several currencies have a limited exchange rate exposure as they are pegged to the
U.S. Dollar, the reporting currency of the Company. Management believes its exposure to foreign currency fluctuations is
mitigated by the short-term nature and rapid turnover of its foreign currency inventory, as well as the use in certain instances
of forward and option contracts to offset these fluctuations. Due to their nature, some minor and exotic foreign currencies
cannot be hedged or are too cost prohibitive to hedge. Foreign currency exposure, in the form of exchange gains and losses
arising from normal trading activities and business operations, are included in operating expenses for the period.
Currency Exchange International, Corp - Annual Report 2023 64 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
In order to further mitigate the risks associated with holding these foreign currencies, the Company assigns wider bid/ask
spreads and maintains specific inventory targets to minimize the impact of exchange rate fluctuations. These targets are
reviewed regularly and are increased or decreased to accommodate demand within acceptable risk tolerances. The amount
of unhedged inventory held in tills, vaults, on consignment, and in transit on October 31, 2023, was $9,361,900 (October 31,
2022, $5,520,430). The amount of currency that is unhedged and that is not pegged to the U.S. Dollar is $7,833,228 (October
31, 2022, $4,594,080). A 2% increase/reduction in the market price for the aggregate of the Company's unhedged/un-pegged
foreign currencies would result in an exchange gain/loss of approximately +$157,000/-$157,000 (October 31, 2022 gain/loss
of approximately +$92,000/-$92,000).
On a consolidated basis, the Company is also exposed to foreign currency fluctuations between the U.S. Dollar and the
Canadian Dollar, being the functional currency of its Canadian subsidiary. The Company does not hedge its net investment
in its Canadian subsidiary and the related foreign currency translation of its earnings.
Interest Rate Risk
At October 31, 2023, the Company had access to interest-bearing financial instruments in cash and lines of credit. A
significant amount of the Company's cash is held as foreign currency bank notes in tills, on consignment, and its own vaults.
These amounts are not subject to interest rate risk. Cash held in some of the Company’s accounts are interest-bearing. The
Company is subject to a small amount of cash flow interest rate risk from the borrowings on its lines of credit; however, as
borrowings have remained steady and within policy limits, this risk is low. Borrowings bear interest at variable rates.
Currently, the interest rate exposure is unhedged. For the interest rate profile of the Company's interest-bearing financial
liabilities, refer to Note 12.
If interest rates had been 50 basis points higher/lower with all other variables held constant, after-tax profit for the year
ended October 31, 2023 would have been approximately +$52,000/-$52,000 higher/lower as a result of credit lines held at
variable interest rates.
Liquidity Risk
Liquidity risk is the risk of the Company incurring losses resulting from the inability to meet payment obligations in a timely
manner when they become due or from being unable to do so at a sustainable cost. To effectively manage liquidity risk, the
Company has implemented preventative risk monitoring measures, including setting a Liquidity Risk Ratio target of 120% or
greater, which measures the proportion of unencumbered highly liquid assets to short -term net cash outflows, and setting
a minimum liquidity balance requirement of total available cash or undrawn lines of credit to be greater than $5,000,000
notional daily. As required, the Treasurer and CFO report any liquidity issues to the Chief Executive Officer (CEO), Chief Risk
Officer (CRO), and the audit committee in accordance with established policies and guidelines. Management has assessed
the Company’s cash position at October 31, 2023 and determined that it is sufficient to meet its financial obligations.
Currency Exchange International, Corp - Annual Report 2023 65 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
The following are non-derivative contractual financial liabilities:
October 31, 2023
Non-derivative financial liabilities
Carrying amount
Estimated
contractual amount
This fiscal year
Future fiscal
years
Accounts payable
Holding accounts
Lines of credit
$
21,021,910
5,909,235
14,679,991
$
21,021,910
5,909,235
14,679,991
$
21,021,910
5,909,235
14,679,991
$
Nil
Nil
Nil
October 31, 2022
Non-derivative financial liabilities
Carrying amount
Estimated
contractual amount
Next fiscal year
Future fiscal
years
Accounts payable
Holding accounts
Lines of credit
$
27,839,239
9,137,046
5,929,847
$
27,839,239
9,137,046
5,929,847
$
27,839,239
9,137,046
5,929,847
$
Nil
Nil
Nil
The Company had available unused lines of credit amounting to $35,680,577 at October 31, 2023 (October 31, 2022,
$55,538,042).
Capital Management
The Company manages capital through its financial and operational forecasting processes. The Company defines working
capital as total current assets less current liabilities. The Company reviews its working capital and forecasts its cash flows
based on operating expenditures, and other investing and financing activities related to its daily operations.
Current assets
Current liabilities
Working capital
October 31, 2023
October 31, 2022
$
120,243,608
(50,097,175)
70,146,433
$
112,438,659
(52,059,780)
60,378,879
The Company monitors its capital structure and makes adjustments according to market conditions in an effort to meet its
objectives, given the current outlook of the business and industry in general. The Company may manage its capital structure
by issuing new shares, obtaining loan financing, adjusting capital spending, or disposing of assets . The capital structure is
reviewed by management and the board of directors on an ongoing basis.
15. Foreign Currency Forward and Option Contracts
The Company enters into foreign currency forward and purchases put option contracts with non-client counterparties to
mitigate the risk of fluctuations in the exchange rates of exposures in certain major currencies. Changes in fair value of
these contracts and the corresponding gains or losses are included in operating expenses in the consolidated statements
of income and comprehensive income. The Company’s management strategy is to reduce the risk of fluctuations associated
with foreign exchange rate changes.
Currency Exchange International, Corp - Annual Report 2023 66 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
The foreign currency forward contracts can be closed immediately resulting in the collateral being liquidated. The foreign
currency option contracts are held to maturity and are either exercised for a net gain or expire at no obligation to the
Company.
The fair value of forward and option contracts, which represents the amount that would be received by the Company if the
contracts were terminated at October 31, 2023 was $1,066,467 (October 31, 2022, $911,443).
At October 31, 2023 the Company had cash collateral balances related to forward contracts being held of $ 3,119,888
(October 31, 2022, $2,335,298). They are reflected as restricted cash held in escrow in the consolidated statements of
financial position (see Note 6).
16. Equity
Share Capital
The authorized share capital consists of 100,000,000 common shares. The common shares have a par value of $1.00. As of
October 31, 2023, the Company had 6,443,397 common shares outstanding (October 31, 2022, 6,429,489).
During the year ended October 31, 2023, the Company recorded total stock-based compensation expense of $1,017,823
(October 31, 2022, $1,093,647), out of which $97,436 was recognized for stock option grants (October 31, 2022, $401,677)
and $920,387 was related to RSU and DSU awards (October 31, 2022, $691,970), as described below.
Stock Options
The Company offers an incentive stock option plan (the Plan) which was established April 28, 2011 and was amended most
recently March 23, 2023. The Plan is a rolling stock option plan, under which 15% of the outstanding shares at any given
time are available for issuance thereunder. The purpose of the Plan is to promote the profitability and growth of the Company
by facilitating the efforts of the Company to attract and retain directors, senior officers, employees, and management. Under
the terms of the Plan, vesting for the Company’s directors and management will occur 1/3 upon the first anniversary, 1/3
upon the second anniversary, and 1/3 upon the third anniversary of the grant. All the options have a five-year term, unless
otherwise specified by the Board of Directors.
The outstanding options at October 31, 2023 and the respective changes during the periods are summarized as follows:
Outstanding at October 31, 2022
Granted
Exercised
Forfeited/cancelled/expired
Outstanding at October 31, 2023
Number of options
Weighted average price
#
820,762
94,678
(54,734)
(3,222)
857,484
CDN$
15.13
20.07
17.27
16.75
15.53
Currency Exchange International, Corp - Annual Report 2023 67 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
The following options are outstanding and exercisable at October 31, 2023:
Grant Date
Exercise price (CAD$)
Number outstanding
Average remaining
contractual life (years)
Number exercisable
4-Mar-19
23-Oct-19
23-Oct-19
23-Oct-19
24-Jun-20
29-Jul-20
29-Oct-20
28-Jan-21
28-Oct-21
28-Apr-22
25-Jul-22
21-Sep-22
31-Oct-22
30-Oct-23
Total
$25.83
$17.36
$17.36
$17.36
$12.74
$10.83
$10.83
$11.02
$14.35
$18.10
$16.23
$18.93
$18.37
$20.07
13,316
30,000
3,512
177,882
29,955
18,000
220,368
3,873
118,200
20,000
4,493
5,748
117,459
94,678
857,484
0.34
0.98
0.98
0.98
1.65
1.75
2.00
2.25
2.99
3.49
3.73
3.89
4.00
5.00
13,316
30,000
3,512
177,882
29,955
18,000
220,368
2,582
79,019
6,668
1,498
1,917
39,157
-
623,874
During the year ended October 31, 2023, the Company granted 94,678 stock option awards at a fair value of Canadian $20.07.
Also a total number of 54,734 stock options were exercised, out of which 40,826 options were cancelled as consideration
in lieu of cash by participants who elected to exercise their options without paying cash proceeds . In total, the Company
had $22,663 of proceeds from all stock options exercised and issued 13,908 shares on settlement.
Restricted Stock Unit and Deferred Stock Unit Plans
On November 1, 2022, the Company made its third grant under the Deferred Share Unit (DSU) Plan and Restricted Stock Unit
(RSU) Plan. The Company granted 37,664 RSU and 22,553 DSU awards in the amount of $300,000 and $500,995, respectively.
On January 24, 2023, the Company granted 595 awards in the amount of $12,500. On October 30, 2023, the Company also
made an annual grant of RSU awards in the amount of 36,505 for an amount of $517,210. In the year-ended October 31,
2023, the Company recognized stock-based compensation expenses of $920,387 (October 31, 2022, $691,970) in relation
to RSU and DSU awards that have vested during the year. The amounts related to the vested portions of granted RSU and
DSU awards are recorded within other long-term liabilities in the consolidated statements of financial position. The liability
from these awards as of October 31, 2023 amounted to $1,328,582 (October 31, 2022, $1,174,226). The awards that may be
granted under each of the Plans can be realized in cash only and may not be converted into common shares of the Company.
The Units awarded are issued based upon the market value equal to the price of the Company’s stock price as at the date of
the grant and vest over one-year or three-year periods.
The purpose of these Plans is to promote the profitability and growth of the Company by facilitating the efforts of the
Company to attract and retain directors, senior officers, employees, and management. Under the terms of the plans, vesting
of the awards that may be granted under the Plans for management will occur 1/3 upon the first anniversary, 1/3 upon the
second anniversary, and 1/3 upon the third anniversary of the grant, while awards that may be granted under the plans for
directors will vest on a quarterly basis in the first year after the grant. All the management awards have a three-year term,
unless otherwise specified by the board of directors. The directors’ awards cannot be redeemed until the director retires
from the board.
Currency Exchange International, Corp - Annual Report 2023 68 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
17. Earnings per Share
The calculation of basic and diluted earnings per share is presented below. Equity instruments that are anti-dilutive, such
as various stock options granted, are not included in the calculation of the weighted average number of shares outstanding.
Basic
Net earnings
Weighted average number of shares outstanding
Basic earnings per share
Diluted
Net earnings
Weighted average number of shares outstanding
Diluted earnings per share
18. Operating Expenses
Year ended
Year ended
October 31, 2023
October 31, 2022
$
$
10,193,507
6,424,751
1.59
10,193,507
6,696,942
1.52
11,783,124
6,429,489
1.83
11,783,124
6,635,412
1.78
The table below identifies the composition of the nature and amounts included within the operating expenses presented in
the consolidated statements of income and comprehensive income for the years ended on October 31, 2023 and 2022.
Salaries and benefits
Postage and shipping
Losses and shortages
Legal and professional
Information technology
Bank service charges
Rent
Insurance, taxes and licensing
Stock-based compensation
Travel and entertainment
Foreign exchange (gains) losses
Other general and administrative
Operating expenses
Year ended
Year ended
October 31, 2023
October 31, 2022
$
33,935,281
12,137,881
3,215,773
3,204,240
3,009,268
2,450,353
1,702,594
1,179,383
1,017,823
884,357
(711,763)
1,195,330
$
26,371,728
8,387,860
628,468
2,832,135
2,199,775
2,171,586
1,132,490
1,012,225
1,093,647
658,896
1,472,299
816,091
63,220,520
48,777,200
Currency Exchange International, Corp - Annual Report 2023 69 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
19. Compensation of Key Management Personnel and Related Party Transactions
In accordance with Related Party Disclosures (IAS 24), key management personnel are those persons having authority and
responsibility for planning, directing, and controlling activities of the Company directly or indirectly, including any direc tors
(executive and non-executive) of the Company. The remuneration of directors and other members of key management
personnel during the years ended on October 31, 2023 and 2022 was as follows:
Short-term benefits
Post-employment benefits
Stock-based compensation
Restricted and Deferred Share Units
Total
Year ended
Year ended
October 31, 2023
October 31, 2022
$
4,316,361
161,385
83,532
920,387
5,481,666
$
3,726,865
81,682
391,787
671,971
4,892,305
The Company incurred legal and professional fees in the aggregate of $139,594 for the year ended October 31, 2023 (October
31, 2022, $179,417) charged by entities controlled by directors or officers of the Company.
The Company has clients that are considered related parties through one of its directors. The Company generated $288,128
in revenue from these clients’ activities for the year ended October 31, 2023 (October 31, 2022, $188,502). As at October 31,
2023, accounts receivable included $Nil from related parties (October 31, 2022, $74,205).
On October 1, 2011, the Company entered into an employment agreement with the President and CEO of the Company. Such
agreement contains clauses requiring additional payments of a minimum of $450,000 to be made upon the occurrence of
certain events, such as a change of control of the Company or termination for reasons other than cause. As the likelihood
of a change of control of the Company is not determinable, the contingent payments have not been reflected in the
consolidated financial statements.
The Company supports EBC through a $20,000,000 revolving line of credit, renewed July 1 8, 2018, which attracts interest
commensurate with interest charged on the Company’s primary line of credit with BMO Harris N.A., are repayable on demand,
and are unsecured. At October 31, 2023, the intercompany loan balance was $10,642,528 (October 31, 2022, $2,498,270)
and was eliminated upon consolidation.
Key management personnel and directors occasionally conduct transactions with the Company as individuals. Such
transactions are immaterial individually and in total including for the years ended on October 31, 2023 and 2022 and are
conducted pursuant to the Company’s policies.
All transactions with related parties as noted above are carried out in the normal course of business and at prevailing marke t
rates.
Currency Exchange International, Corp - Annual Report 2023 70 Notes to the Consolidated Financial Statements
For the years ended October 31, 2023 and 2022
(Expressed in U.S. Dollars)
20. Other Current Assets
Prepaid rent
Prepaid personnel
Prepaid computer software
Prepaid insurance
Prepaid advertising
Government grants
Other current assets
Total
21. Subsequent Events
October 31,2023
October 31, 2022
$
6,527
6,600
687,216
856,992
15,898
-
277,584
1,850,817
$
7,261
16,182
458,642
600,285
26,881
3,249,262
532,778
4,891,291
The Company evaluated subsequent events through January 24, 2024, the date these consolidated financial statements
were issued.
There were no material subsequent events that required recognition or additional disclosure in the se consolidated financial
statements.
Currency Exchange International, Corp - Annual Report 2023 71 Board of Directors
Joseph August
Chirag Bhavsar
Chitwant Kohli
Director of CXI
Director of EBC
Committees: Governance Committee
Member, Risk Committee Member
Independent board member since 2011
Chair of the Board of CXI
Director of EBC
Committees: Audit Committee Member,
Governance Committee Member, Risk
Committee Member
Independent board member since 2012
Director of CXI
Chair of the Board of EBC
Committees: Chair of the Audit Committee,
Governance Committee Member
Independent board member since 2018
Mark D. Mickleborough
Stacey Mowbray
Director of CXI
Director of EBC
Board member since 2007
Director of CXI
Director of EBC
Committees: Chair of the Governance
Committee Member, Risk Committee
Member
Independent board member since 2019
Randolph W. Pinna
Director of CXI
Director of EBC
President and CEO of CXI
President and CEO of EBC
Board member since 2007
Carol Poulsen
V. James Sardo
Daryl Yeo
Director of CXI
Director of EBC
Committees: Audit Committee Member, Risk
Committee Member
Independent board member since 2023
Director of CXI
Director of EBC
Committees: Audit Committee Member,
Governance Committee Member
Independent board member since 2012
Director of CXI
Director of EBC
Committees: Chair of the Risk Committee,
Audit Committee Member
Independent board member since 2019
Shareholder Information
Annual General Meeting of Shareholders
Shareholders are invited to attend the annual meeting of
Currency Exchange International, Corp. to be held on March
20, 2024 at 3:00 p.m. (EST).
including dividends, changes of address or ownership, lost
certificates, to eliminate duplicate mailings or to receive
shareholder material electronically, please contact our
Transfer Agent in Canada.
Details on how to attend will be listed on CXI’s investor
relations webpage:
www.ceifx.com/investor-relations
Transfer Agent
Computershare Investor Services
100 University Ave, 8th Floor, South Tower
Toronto, Ontario Canada M5J 2Y1
Investor Relations
Financial analysts, portfolio managers and other investors
requiring financial information may contact our Investor
Relations department:
Telephone: (800) 564 6253 (Toll Free)
Facsimile: (888) 453 0330 (Toll Free)
Web Site: www.computershare.com
(USA) Telephone: (407) 240 0224
(USA) Toll-Free: (888) 998 3948
(USA) Email: InvestorRelations@cxifx.com
(CANADA) Telephone: (416) 479 9547
(CANADA) Email: bill.mitoulas@cxifx.com
Shareholder Services
For information or assistance regarding your share account,
Currency Exchange International, Corp - Annual Report 2023
Computershare offices are also located in Calgary, Halifax,
Montreal, Richmond Hill and Vancouver.
Auditors
Grant Thornton LLP
Chartered Professional Accountants
Licensed Professional Accountants
Mississauga, Canada
Currency Exchange International, Corp.
6675 Westwood Boulevard, Suite 300
Orlando, Florida 32821
U.S.A.
www.ceifx.com
U.S.A. (888) 998 3948
Exchange Bank of Canada
390 Bay Street
Toronto, Ontario M5H 2Y2
Canada
www.ebcfx.com
Canada (888) 223 3934
¥€$£¥€¥£$€$