A N N U A L R E P O R T
2 0 2 3
Table of
Contents
Year in Review ....................................................................................................................................................................3
2023 Highlights ..................................................................................................................................................................5
President and CEO's Annual Letter to Shareholders ................................................................................................6
Our Strategy ..................................................................................................................................................................... 12
Our Customers ................................................................................................................................................................ 15
A History in the Making ................................................................................................................................................. 18
Financial Summary ........................................................................................................................................................ 20
Future Forward ............................................................................................................................................................... 24
Environmental, Social and Governance .................................................................................................................... 26
Management’s Discussion and Analysis of Financial Condition and Results of Operations ....................... 42
Management’s Responsibility for Financial Reporting ......................................................................................... 98
Independent Auditor's Report ..................................................................................................................................... 99
Audited Consolidated Financial Statements ......................................................................................................... 102
Corporate Information ................................................................................................................................................. 145
2
We produced strong loan growth
and stable credit performance.
These record results further
solidified our position as a leader
in the Canadian non-prime
consumer credit market.
3
Over 9.3 million Canadians
have non-prime credit, of
which approximately 72%
have been denied credit by
banks and other traditional
institutions, highlighting the
essential role goeasy plays
in the financial system.
In 2023 alone, we issued over 250,000 loans
30% today, passing on the benefits of our
to help everyday Canadians tackle their
scale directly to our customers. Having
household financial needs. This included
helped over 200,000 customers graduate
paying for bills and emergency expenses,
to prime credit to date, there is no doubt we
repairing their homes, covering health and
are just getting started. Over time, we will
dental expenses, purchasing a vehicle to
continue to build our suite of lending products
get to work and paying for life’s unexpected
and expand our channels of distribution to
circumstances. With originations exceeding
create an unparalleled customer experience
$12.8 billion in loans, we have now proudly
for the millions of Canadians with non-prime
served over 1.3 million Canadians with
credit that turn to us as a trusted source for
responsible and
transparent
lending
all of their financial needs.
products that help our customers build their
credit for the future.
Although we are proud of the millions of
Canadians we have been able to help through
our diverse portfolio of lending products and
services, it is our on-going commitment to
About goeasy
executing our mission of providing everyday
goeasy is one of Canada’s leading non-prime consumer lenders, focused on delivering a
Canadians a path to a better tomorrow
full suite of financial services to Canadians with non-prime credit. For 33 years, goeasy
today, that we are most proud of. Through
has provided financial solutions designed to meet the needs of individuals navigating credit
our robust product suite, risk adjusted
challenges. With a retail distribution footprint of over 400 stores and branches across
rates, financial education platforms and the
Canada, a robust digital lending platform, and partnerships with over 9,500 dealer and
deep relationships we have built with our
merchant partners nationwide, goeasy strives to deliver convenient and accessible credit
customers, we continue to provide millions
options to help meet the everyday financial needs of our customers. With a team of over
of Canadians a path to reduce their cost of
2,400 dedicated employees that have supported over 1.3 million Canadians by extending
borrowing over time. Since 2017, we have
over $12.8 billion in consumer credit, we remain steadfast in our commitment to our
reduced the weighted average interest rate
mission of helping Canadians on a path to a better tomorrow.
we charge our borrowers to approximately
4
2023
Highlights
$2.7B
Annual loan
originations
$851M
Total loan
book growth
8.9%
Net charge-off
rate
22.6%
Total revenue
growth
26.5%
Adjusted net
income growth1
23.0%
Adjusted diluted
eps growth1
25.4%
Adjusted return
on equity1
1 Adjusted net income is a non-IFRS measure, and adjusted diluted EPS and adjusted return on equity are non-IFRS ratios. Refer to “Key Performance Indicators and
Non-IFRS Measures” section on page 43 of the Company’s MD&A year ended December 31, 2023.
5
2023 Annual
Letter to
Shareholders
Amidst a world of change and disruption,
2023 marked another year of demonstrating
the strength and resilience of our business,
combined with the passion and performance
of our team, leading to record results.
Our industry continues to evolve just as rapidly
as the world around us. The affordability
impact of inflation on consumers, heightened
levels of credit risk due to economic concerns,
and pending regulatory changes, have all put
pressure on lenders within the non-prime sector,
leading to consolidation and reduced competition.
As we look forward, we remain confident that
goeasy is well positioned to navigate the evolving
landscape and capture the significant market
opportunity that lies ahead.
The business today has grown to become a
diverse multi-billion-dollar enterprise, but is
still grounded in the core principles that have
been embedded into our culture for for nearly
three decades; passionately taking care of our
customers, and providing our team members
with challenging and fulfilling work that rewards
them for the essential role they play in the
success of our Company. After all these years,
including the many learnings, records and
milestones, it still feels like the beginning.
Jason Mullins
President & Chief Executive Officer
6
Financial
Results
2023 was another record year for the Company.
We proudly issued over 250,000 loans to
everyday hard-working Canadians, extending
them over $2.7 billion in credit, an increase
of 14% from the prior year. Our consumer
loan portfolio grew by a record $851 million,
finishing the year at $3.65 billion, up 30%.
The growth in our consumer loan portfolio
led to record revenue of $1.25 billion, up 23%
compared to 2022. In addition to the robust
portfolio and revenue growth, we produced
stable credit performance despite a challenging
and deteriorating economic environment. The
net charge off rate in 2023 was 8.9%, down
from 9.1% in 2022, demonstrating the impact of
disciplined credit risk management, pro-active
credit adjustments and the benefit of a shift in
product mix.
During the year, we also continued to focus on
generating more operating leverage through
scale and productivity gains, producing an
improvement in the efficiency ratio, which was
30.2% in the year, or 340 bps better than 2022.
Adjusted operating income for the year was a
record $491 million, 33% higher compared to
$369 million in the prior year. Net income for
the year was $248 million and diluted earnings
per share was $14.48, compared with $140
million or $8.42 per share in 2022. Adjusted net
income for the year was a record $243 million
and adjusted diluted earnings per share was a
record $14.21 compared with $192 million or
$11.55 per share, increases of 27% and 23%,
respectively. Reported return on equity and
adjusted return on equity was above our target
level of return at 25.9% and 25.4%, respectively.
Managing
Credit Risk
Amidst
Economic
Uncertainty
We consider managing credit performance to
be our highest priority order of business, as this
is also a symbol of ensuring our customers are
set up for financial success. Producing stable
credit performance can build confidence from
all stakeholders and improve access to funding,
while volatile credit performance can damage
confidence and affect the terms upon which
we can obtain capital. In the non-prime lending
industry, managing credit performance
is
paramount. If managed well, the level of volatility
in credit performance can be greatly reduced.
Monitoring &
Pro-active Response
We employ a wide range of monitoring tools to
carefully study vintage level loan performance
at a granular level of segmentation. We also
carefully study macro-economic and societal
trends that could influence our business.
Together, we use the information to make
calculated and pro-active adjustments to our
credit strategy. While this may sound straight
forward,
it
is challenging and complex.
Moreover, it requires immense discipline to
tighten credit tolerance and underwriting
standards at the expense of lending volume,
often long before it is necessary. The only way
to position a credit portfolio for stability in bad
times, is to apply sound judgement and make
calculated decisions in good times.
Credit & Underwriting
The primary way we manage credit risk is
through the development of custom proprietary
scorecards and algorithms that segment risk.
The more sources of data and history that
we accumulate, and the more sophisticated
the tools and technology used for statistical
modeling become, the more accurate and
predictive the models are. Today, we utilize over
2,000 external data points and rapidly evolving
machine
learning software
to constantly
develop challenger models to the ones we use
in our business. Every time a customer applies
for credit, we then augment those models
with the assessment of affordability, which
evaluates and assigns a loan amount that the
customer can safely afford. Lastly, we conduct
rigorous underwriting,
including collecting
and validating the information provided by the
borrower. Just as important as the models
and scorecards themselves, is the tolerance
level we set for accepting risk. As our risk
appetite or outlook evolves, we can modify the
tolerance level, change our affordability logic,
or enhance our underwriting criteria, all of
which become tools we can use on-demand to
influence the risk level of our portfolio.
Product Mix
One of the benefits to diversification in any
business, is the reduction of concentration,
which reduces risk. In the context of credit risk,
our multi-product strategy has provided the
capacity to shift our product mix toward lower
risk products, such as secured loans, which
have risen from 10% of our portfolio in 2018
to over 40% today. By allocating marketing
spend, promotions, technology
investment
and internal resources purposefully, we can
influence the mix of our product portfolio,
which in turn can improve the overall credit
risk performance of the portfolio.
Jason Mullins
President & Chief Executive Officer
7
Our Culture as
a Competitive
Advantage
At goeasy, we believe that our company culture
is a key point of differentiation and a distinct
competitive advantage. While most corporate
leaders imply the same, we are very convinced
that our culture makes a material difference.
As there are many individual elements that
make up the culture of a company, we have
aimed to codify the characteristics that drive
our success. As I reflect on the past few
years, there are a few attributes that stand
out as relevant to the performance of our
organization during this period.
Purpose Driven
We are a purpose driven business, with a deep
passion to help millions of Canadians access
the financial products that power their lives, in a
responsible and transparent manner. The pride
that our people have for this mission helps create
a winning spirit and resilience that enables our
business to drive ahead in the face of challenge
and adversity. It keeps us focussed on the greater
good. It binds us together toward a common and
worthy goal. No matter what is in front of us.
Alignment
Power to Pivot
Changing direction is hard, especially if it's
sudden or unexpected.
It's disruptive,
it's
emotional, and it requires very humble, nimble
and willing team members. Yet we are living in
a rapidly changing world that requires more
flexibility than ever before. Over the years, we've
Young, and the Ontario Association of Chiefs of
Police, all of whom have sounded alarm bells.
At the time of this letter, we still expect the
Government to proceed with implementation
of the lower allowable rate, however, they have
yet to publish the date upon which the new law
will come into effect.
come to pride ourselves on the ability to pivot,
We would also argue that the marketplace has
to react quickly to changes in the environment
worked efficiently on its own accord without
and adjust course, whether
that means
government intervention. Since 2016, we have
reprioritizing projects, shifting our focus, or
brought down the average rate of interest
seizing a new opportunity that has emerged. At
on the products we offer from 46% to 30%.
goeasy we embrace the power of the pivot.
We’ve done this because it is good business.
State of
Regulations
in Canada
In the 2023 Federal Budget, the Government
of Canada announced that they intended to
lower the maximum allowable rate of interest
that a lender can change from the existing
rate of 47% APR to a 35% APR. Following
this announcement, we have individually, and
in partnership with the Canadian Lenders
Association (“CLA”), spent considerable time
educating regulators and politicians on the
unfortunate consequences of this change.
A robust and competitive marketplace is good
for consumers and allows them to choose who
they want to do business with, which improves
experience, quality and prices.
When the maximum allowable rate reduces,
there will unfortunately be a segment of
borrowers that we can no longer serve due to
an inability to price the loan commensurate with
the credit risk. However, we also believe that
the reduction in competition and the increased
barrier to entry, will ultimately drive more
market share toward those with scale, creating
a net benefit to goeasy and the small handful
of large market participants. In fact, we are
already experiencing a greater level of demand
caused, in part, by the anticipation of a more
difficult operating environment. Unfortunately,
this is at the expense of millions of Canadians
The CLA estimates that up to 4.7 million
right to freely access regulated credit, and a
We have worked very hard to ensure alignment
Canadians may be adversely affected, cutting
reduction in innovation and competition. In our
between team members on the front line,
these borrowers off from access to credit and
view, the change represents a step backwards
and every level of leadership up to the CEO.
pushing them to more expensive payday loans,
for many non-prime borrowers.
The way a company designs its goals and
or loan illegal sources. Concerns regarding
incentives play a major role in creating, or
the loss of access to licensed credit for non-
interfering, with alignment. We have carefully
prime borrowers, and the risk of an increase in
crafted both short and long-term rewards that
crime, loss of jobs and impact to the economy,
aim to achieve this alignment. Most notably,
have been confirmed by several independent
is our share-based incentive program, which
sources, including C.D. Howe Institute, Ernst &
applies to our leadership team. In this program
the number of shares that vest and the criteria
upon which vesting is determined, is identical
across the enterprise, and for every position.
This allows our entire leadership team across
all business units to openly share how we
are tracking and performing, as everyone
is measured on the same outcomes. This
alignment is incredibly powerful.
8
Our Target
Return
The Flywheel
The concept of a “flywheel” was developed
in the book Good to Great, by Jim Collins.
The design of our loan products and our
The idea was constructed to convey that no
material investment decisions are based on
matter how dramatic the end result, good-
delivering a desired rate of return for equity
to-great transformations never happen
in
holders. Given the risk profile of our business
one fell swoop. There is no single defining
within the broader financial services sector,
action or miracle moment, but rather the
we believe it is necessary to produce a target
process resembles relentlessly pushing a
return on equity of 20%. We presently fund
giant, heavy flywheel, turn upon turn, building
approximately 30% of our business with
momentum and picking up speed. The concept
equity, and 70% through a variety of forms
of the flywheel envisions a giant wheel where
of debt. As a result, we require an after-tax
the spokes represent a series of business
return on our loan receivables of at least 6%.
activities executed in sequential order, where
Put another way, for every $100 of outstanding
one begets the next. Each one powering the
loan throughout the year, we fund $30 of
wheel to turn and move the business forward.
those loan balances during the year with
equity and $70 with debt, requiring that we
generate at least $6 of after-tax profit on an
annualized basis. Note this is an annualized
in-period view, assuming a pool of loans
outstanding over the course of a year. We also
carefully measure vintage unit economics and
customer lifetime value, which all conspire to
produce these ultimate return levels.
I recently heard Jim speak at the World
Business Forum
in New York
last year,
during which he discussed the concept of the
flywheel. In his words, a flywheel is operating
effectively when upon executing one spoke of
the wheel, “you can't help but execute the next
spoke in the wheel”. Since 2017 we have been
executing a flywheel strategy to pass along the
benefits of scale to customers in the form of
Every product in our suite is designed to
lower cost products.
As we have offered lower cost loans, it has
led to acquiring and retaining better credit
quality borrowers. As we've acquired and
retained better credit quality borrowers, we've
produced improving credit performance. As
we've produced improving credit performance,
we've be able to obtain lower cost sources of
funding. As we've obtained lower cost sources
of financing, we've been able to invest in
expansion efforts and accelerate our growth.
As we've accelerated our growth, we've
benefited from scale and increased operating
leverage with lower relative operating costs.
As we've achieved more scale and operating
leverage, we've then passed on the benefit of
the lower relative operating costs to the non-
prime market in the form of lower cost loans
(lower APR products and reduced rates). As
the flywheel has progressively turned, it has
gained momentum.
Offer
Lower
Cost
Loans
meet our desired rate of return, however,
the geography of the income and variable
expenses related to each product varies
significantly. Certain products
targeted
toward customers with better credit, or
those secured by hard assets, generally
have lower rates of interest and gross yields,
but also incur less acquisition and servicing
costs, and lower loan losses. Other products
like unsecured personal loans or products
issued to customers with lower credit scores,
generally have higher rates of interest and
gross yields, but incur greater expenses
to underwrite and service, and experience
higher loan losses.
Developing the capability to measure returns,
and the rigour to monitor and manage the
financial performance of our portfolio has
become a key strength, yet there still remains
further opportunity to optimize this discipline
as the business scales.
Scale &
Operating
Leverage
Accelerate
Growth &
Expansion
Acquire
& Retain
Better Credit
Customers
Lower
Credit
Losses
Access
Lower Cost
of Capital
9
Next
Acquisitions
Three years post our acquisition of LendCare,
Every year we provide a refreshed outlook on
with
the business having been
largely
the business underpinned by a commercial
integrated
into our culture, we are very
forecast containing our view on growth and
pleased with the benefits and value that
financial performance. These forecasts are built
has been produced, which well exceeds
bottom up, assuming we execute an organic
the targeted level of earnings accretion we
expansion plan with the existing products
forecasted. Not only have the business lines
and channels we have in our suite today. The
we acquired continue to scale, we were able to
forecast is then based on a down-the-fairway
leverage the combined platform to accelerate
set of assumptions that we have consistently
growth and product expansion, such as the
met, or exceeded, over the past 10 years. The
launch of our automotive financing program,
one remaining question is always, what’s next?
which is on track to be our second largest
As evidenced best by the launch of the
easyfinancial business
in 2006, we are
consistent practitioners of building, testing
and learning from new initiatives – introduced
specifically when the business is performing
well. The worst time to pursue a major
business initiative is when the business is
underperforming. This leads to rushed and
undisciplined decisions. When a business is
performing well and has attractive organic
growth prospects from its existing products and
services, a business is far more disciplined and
patient. With our current business performing
well, we have begun to turn our attention to a
combination of acquisition opportunities, both
domestic and international, as well as the
development and test of a new lending product,
a revolving general purpose credit card.
product. Over the last 20 year period, we
have now made nine strategic investments or
acquisitions, that have produced a combined
return of over 90%, providing confidence that
we can allocate capital toward select strategic
investments that can generate meaningful
value for shareholders. We are now in a
position to explore additional acquisitions,
either domestic or in new markets, where we
can add new sources of growth and leverage
our existing capabilities. With a strong organic
growth profile in front of us, we are naturally
a disciplined buyer with high standards and
a very clear criteria for what qualifies as a
strategic fit. We constantly assess our choices
for capital allocation, which is first prioritized
toward organic growth and steady investment
in our core business, before then assessing
new
strategic
investments
alongside
returning capital to shareholders through
share repurchases. Should we identify an
acquisition that makes strategic sense, we will
apply the same disciplined approach and the
appropriate patience necessary to build and
expand it properly, leading to a material source
of growth in the future.
Product Expansion
There is presently a unique opportunity in the
$40 billion Canadian non-prime general purpose
credit card market. With limited competition
focussed on our target segment of borrowers,
we believe we can build a credit card that not
only provides access to a critical financial
product for consumers, but provides them an
attractive rewards and benefits program. Today,
approximately 70% of our current customers
have a credit card, most of which are issued the
most basic level cards by their primary financial
institution, with limited benefits. Meanwhile the
other 30% of our customers are seeking a way
to access this mainstream financial product
to manage everyday expenses that a larger
instalment loan may not be suitable for. In 2024
we will begin to design and build a product, with
a plan to carefully test and learn how the market
and consumers respond and perform before we
begin to scale. This period is critical and may
reveal another billion-dollar product opportunity.
10
Closing
I could not be more proud of the work our
team of over 2,400 across goeasy do each
and every day. They battle relentlessly to
offer our customers access to financial
products that fuel their
lives, while
providing them a chance to rebuild their
credit and reduce their cost of borrowing
over time. It is their spirit and passion that
recently earned goeasy the recognition
of being named on of the top 50 Best
Workplaces in Canada.
2023 was not just another record year for
the Company, it was a year that further
strengthened and galvanized us around
the critical role we play in the financial
services industry. It added fuel to our fire
and passion for wanting to serve the over
9.3 million Canadians with non-prime
credit. As we have always said, despite the
scale and success we’ve enjoyed to date,
we still view ourselves as a dynamic and
entrepreneurial company in a large and
underserved market. To this day, we still
believe we are just getting started!
Jason Mullins
11
Our
Strategy
We continue to focus on building
Canada’s leading non-prime
consumer lender, supported by a
strategy that is deeply connected
to our purpose driven mission of
helping our customers improve
their financial future. Our mission
of helping our customers achieve
better financial outcomes is executed
through our four key strategic pillars,
an approach that truly sets us apart
from the competition.
12
Point-of-Sale Financing
Leasing
LendCare, goeasy’s point-of-sale financing
easyhome, Canada’s largest lease-to-own
brand, operates through a network of
retailer, has been in operation since 1990 and
over 6,200 merchants to help customers
offers customers brand name household
finance the purchase of powersports
furniture, appliances, and electronics
products, everyday retail purchases and
through
lease-to-own agreements. The
healthcare procedures and equipment.
brand is supported by 144 retail locations,
Our goal is to provide our partners with
which includes 34 franchise stores and an
competitive approval rates, attractive
e-commerce platform. Canadians turn to
financing offers for their consumers,
easyhome as an alternative to purchasing or
and an overall best-in-class financing
financing their goods, or when they simply
experience to help drive and increase their
want the flexibility to return or upgrade
sales volume. Powered by our leading-
items in their home with ease. With no
edge technology platform, the merchant
down payment or credit check required,
can obtain an instant credit decision and
easyhome offers a flexible solution that helps
automated loan solution, enabling the
consumers get access to the goods they
customer to buy what they want today and
need, with the flexibility to terminate their
pay for it over time.
Automotive Financing
lease at any time without penalty. In 2019,
easyhome began reporting customers’
lease payments to the credit reporting
Through LendCare, we also offer
agencies to further support our customers’
automotive financing through a robust
ability to secure access to credit and improve
auto dealer network that includes over
their credit profile. With every on-time
3,300 dealer partners. With a fast and
lease payment, easyhome customers can
easy application process, we provide
build their credit and ultimately use the
instant credit decisions to help minimize
easyhome transaction as a stepping-
friction and get customers on the road
stone to access other financial
quickly and efficiently with flexible
products
and
services
financing options. With large ambitions
offered by easyfinancial
to become Canada’s leading non-prime,
and LendCare.
non-bank auto lender, we are well on
our way with 2023 auto originations
exceeding $370 million.
Product
Range
With a Canadian market size of over $218
billion
in non-prime consumer credit,
goeasy has consistently executed against
a product roadmap and strategy that
positions the company as the leading
single source of credit for Canadians with
non-prime credit. By offering one of the
widest ranges of consumer credit products
available in the market, including leasing
for everyday household items, unsecured
personal
loans, home equity
loans,
automotive financing, and financing for
everyday purchases in the powersports,
healthcare and general retail categories,
consumers come to goeasy as their trusted
lender for all their credit needs.
Unsecured Personal Loans
easyfinancial offers unsecured personal
loans up to $20,000 with personalized
rates and payment terms that are designed
to help our customers find a solution that
fits their unique needs. Our customers can
apply without impacting their credit score
and all payments made by borrowers are
reported to credit reporting agencies,
which in turn helps our customers rebuild
their credit and graduate to lower rates on
future loans.
Secured Personal Loans
For our customers that are homeowners,
we offer home equity loans up to $100,000
with rates starting at 9.9%. By using the
equity in their home, customers can
access our highest loan amounts at our
lowest rates for home renovations, debt
consolidation and emergency expenses.
Both our unsecured and secured loans
are supported by an omni-channel model
that includes a branch network of 300
locations from coast-to-coast, a digital
lending platform, and a mobile app
that enables customers to conveniently
transact with us.
13
Channel
Expansion
Geographic
Diversification
Our strategy is focused on delivering
Canada continues to provide goeasy a
our products and services through the
substantial runway for growth, with over
widest channels of distribution
that
9.3 million Canadians with non-prime credit
enable us to meet our customers’ needs
needing alternative options for credit. With
for credit, anywhere and everywhere
an expansive footprint in Canada that
they are. Through three distinct and
includes 300 easyfinancial locations, our
complementary channels of distribution
community-based branch locations cover
that include a national retail and branch
over 85% of the population, providing
network of over 400 locations, a digital
Canadians with easy and convenient
platform and newly launched mobile
access to credit. As goeasy continues to
app, and a merchant and dealer network
explore additional avenues for growth, we
with over 9,500 partners, our omni-
believe that international markets, where
channel model enables customers to
the easyfinancial business model can be
transact with us simply and conveniently.
replicated, present significant opportunity.
In 2023, we made significant progress
The two markets that are particularly
in the digitalization of the customer
attractive include the United States with
journey as we launched a new all-in-
over 100 million consumers with non-prime
one digital platform and mobile app,
credit scores, and the United Kingdom with
goeasy ConnectTM. This transformational,
over 12 million consumers with non-prime
industry-first digital solution provides
credit scores.
goeasy customers with one-stop access
to all our credit products across our
brands through a simple and easy to
use digital customer experience. Over
time, we will continue to build additional
features and functionality that enhance
the experience and make it even easier
for our customers to access the credit
products they need.
Financial
Wellness
goeasy is committed to improving the
to customers from 46% to 30.3% today.
financial wellness of our customers by
At goeasy, we have always set ourselves
providing responsible and transparent
apart from the competition by looking
financial products and services that are
beyond the initial transaction with the
tailored to their individual needs. With 72%
customer and focusing on building long-
of easyfinancial customers disclosing that
term personalized relationships based on
they have been denied credit by banks or
trust and respect. During discussions with
other traditional lenders, our focus is not
customers, we aim to help them understand
only to provide them with the credit they
their credit profile, how credit works, and
need today, but the tools to improve their
what steps they can take to ensure they
financial health for tomorrow. For many
protect and build their credit rating. In
borrowers with non-prime credit, we
addition, goeasy provides free financial
serve as an important stepping-stone to
literacy resources for all Canadians through
help rebuild credit by reporting each loan
goeasy Academy, a dedicated portal that
payment to the credit reporting agencies.
includes hundreds of articles and tools
As our customers demonstrate consistent
to help Canadians better understand and
on-time payment behaviour, we are able to
manage their personal finances. Over time,
gradually reduce their cost of borrowing
we will continue to invest in building unique
over time by qualifying them for other
tools and programs that will help drive
lending products at a lower interest rate.
meaningful progress for our customers
Between 2017 and 2023, we have reduced
on their path to a better tomorrow and an
the weighted average interest rate charged
improved financial future.
14
Our
Customers
With 33 years of experience serving over 1.3 million
These consumers, many of which are unable to access
Canadians with non-prime credit, we have developed a
credit from banks and traditional financial institutions,
deep understanding of our customers’ financial needs
turn to goeasy as a reliable source of credit for everyday
to help them achieve their long-term financial goals.
basic financial needs and large ticket discretionary
Our
customers are everyday hard-working
Canadians in a variety of industry sectors including
manufacturing, retail, financial services, healthcare,
technology, and public sector jobs. The typical
customer is 43 years old, supporting an average of
1.9 dependents, with an individual income of $60,000
per year, residing at their current place of residence
for almost four years and working with their current
employer for 3.7 years. Canadians with non-prime
credit, carry 53% less total consumer debt than the
typical prime consumer, due primarily to a lower
level of home ownership, at approximately 20%,
versus the Canadian home ownership rate of ~67%.
purchases. 80% of easyfinancial customers report
that they rely on access to credit when a financial
emergency arises, turning to goeasy as a trusted
and reliable alternative to a traditional bank. From
financing a vehicle or buying a powersports product
for their family's enjoyment, to financing a healthcare
expense such as uninsured dental work or a veterinary
bill, or purchasing household items such as furniture
or appliances, we help Canadians with non-prime
credit finance all of their life needs. We are proud of
the role we play in our customers’ lives, meeting their
needs for credit today, while helping them graduate
to progressively lower rates and ultimately, prime
lending products over time.
15
43
Average
customer age
$60k
Average individual
income
1.9
Average number
of dependents
3.7
Average years at
current residence
3.7
Average years at
current employer
580
Median
credit score
Source: goeasy direct-to-consumer loan data (December 2023)
16
Provide everyday
Canadians a
path to a better
tomorrow, today.
33 $1.3M
Years of leasing &
lending experience
Canadians
served
$3.6B
Consumer
loan portfolio
$12.8B
Total loan
originations
17
A History in
the Making
"For 33 years, goeasy has proudly helped over 1.3 million Canadians with non-prime credit. Our passion
to support our customers and put them on a path to a better tomorrow, has enabled the organization to
consistently produce record results. As we reflect on our journey and milestones over the past three
decades, we understand the importance of preserving the Company’s core values, while continuing to
innovate and evolve as we look to meet the changing needs of our customers. With a market of over
9.3 million non-prime Canadians, we have never been more excited about the opportunities ahead and
recognize that we are truly just getting started.”
Jason Mullins
President & CEO
2016
• Risk
adjusted
interest
rate loans
launched
• Corporate
name
changed to
goeasy ltd.
2011
2015
• First
easyfinancial
stand alone
branch opens
• Centralized
credit
adjudication
introduced
• David Ingram
appointed
CEO and
company
returns to
profitability
1990
• RTO
Enterprises
founded
2001
2003
• easyfinancial
launches
2006
• easyhome
is born,
consolidated
from 6
brands
18
• David Ingram
transitions
to Executive
Chairman,
Jason Mullins
assumes role
of President
& CEO
• $1 Billion
loan portfolio
milestone
• Strategic
partnership &
investment in
PayBright
• Recapitalized
the business
with C$728
Million in
financing
• Reached
$1 Billion
market
capitalization
2019
• Completed
strategic
acquisition of
LendCare
• C$2 Billion
loan portfolio
milestone
• Completed
C$173 Million
equity
offering
& US$320
Million senior
unsecured
notes
issuance
• Strategic
investment &
partnership
with Brim
• Launched
automotive
financing
2021
• $3 Billion
loan portfolio
milestone
• 300th
easyfinancial
branch opening
• 9,500+
merchant &
dealer partners
• Launch of
new mobile
app - goeasy
Connect
• Increased
total funding
capacity to
C$900M+
• Certified as a
Great Place to
Work®
2023
• 100th
easybites
kitchen at BGC
Canada clubs
completed
bringing to a
close our 10
year, $1.2M
commitment
• Launch of
Feed their
Future a $1.4M
Commitment
to BGC
Canada’s
Food Fund
2022
• Increased
securitization
facility from
C$900 Million
to C$1.4 Billion
• C$57.9 Million
bought deal
offering of
common
shares
• Launch of
new corporate
intranet
• Launch of new
goeasy.com
corporate
website
• Placed on the
2022 Report
on Business
Women Lead
Here list
2020
• goeasy and
PayBright
launched
e-commerce
platform
• Launch of
soft credit
inquiry
• Launch of
banking
models
for credit
adjudication
• Established
C$200 Million
revolving
securitization
warehouse
facility
19
• Expanded
into Quebec
• Home Equity
product
launched
• Recapitalized
the business
with C$530
Million in
financing
2017
2018
• Next
generation
proprietary
online loan
application
launched
Annual
Revenue
(In dollar millions)
19.0%
CAGR SINCE 2013
$1,250
9
1
0
1
$
,
7
2
8
$
3
5
6
$
9
0
6
$
6
0
5
$
2
0
4
$
8
4
3
$
4
0
3
$
9
5
2
$
9
1
2
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
20
Annual
Net Income
(In dollar millions)
Reported Net Income
33.3%
CAGR SINCE 2013
0
2
$
4
2
$
4
1
$
1
3
$
6
3
$
7
3
1
$
4
6
$
3
5
$
5
4
2
$
$248
0
4
1
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Adjusted Net Income1
33.0%
CAGR SINCE 2013
8
1
1
0 $
8
$
4
1
$
9
1
$
4
2
$
3
3
$
2
4
$
3
5
$
$243
2
9
1
$
5
7
1
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
1 Adjusted net income is a non-IFRS measure. It is not determined in accordance with IFRS, does not have standardized meanings and may not be comparable to similar financial measures presented
by other companies. Refer to 1) “Key Performance Indicators and Non-IFRS Measures” section on page 43 of the Company’s MD&A year ended December 31, 2023 for FY 23 metric, 2) “Key Performance
Indicators and Non-IFRS Measures” section on page 43 of the Company’s MD&A year ended December 31, 2022 for FY 22 metric, 3) “Key Performance Indicators and Non-IFRS Measures” section
on page 50 of the Company’s MD&A year ended December 31, 2021 for FY 21 and FY 20 metrics, 4) “Key Performance Indicators and Non-IFRS Measures” section on page 39 of the Company’s MD&A
year ended December 31, 2019 for FY 19 and FY18 metrics, 5) “Key Performance Indicators and Non-IFRS Measures” section on page 39 of the Company’s MD&A year ended December 31, 2017 for
FY 17 and FY 16 metrics, 6) “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A year ended December 31, 2015 for FY 15 and FY 14 metrics, and 7) “Key
Performance Indicators and Non-IFRS Measures” section on page 23 of the Company’s MD&A year ended December 31, 2013 for FY 13 metric.
21
Annual
EPS
(Earnings per Share)
Reported Diluted EPS
28.8%
CAGR SINCE 2013
.
5
1
1
$
2
4
1
$
.
9
6
1
$
.
.
3
2
2
$
.
6
5
2
$
.
6
5
3
$
.
7
1
4
$
.
2
6
4
1
$
$14.48
.
6
7
8
$
2
4
8
$
.
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Adjusted Diluted EPS1
28.6%
CAGR SINCE 2013
.
7
1
5
$
8
3
2
$
.
.
7
9
2
$
.
6
5
3
$
.
5
1
1
$
4
3
1
$
.
9
6
1
$
.
$14.21
.
5
5
1
1
$
.
3
4
0
1
7 $
5
7.
$
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
1 Adjusted diluted EPS is a non-IFRS measure. It is not determined in accordance with IFRS, does not have standardized meanings and may not be comparable to similar financial measures presented
by other companies. Change this to: Refer to 1) “Key Performance Indicators and Non-IFRS Measures” section on page 43 of the Company’s MD&A year ended December 31, 2023 for FY 23 metric,
2) “Key Performance Indicators and Non-IFRS Measures” section on page 43 of the Company’s MD&A year ended December 31, 2022 for FY 22 metric, 3) “Key Performance Indicators and Non-IFRS
Measures” section on page 50 of the Company’s MD&A year ended December 31, 2021 for FY 21 and FY 20 metrics, 4) “Key Performance Indicators and Non-IFRS Measures” section on page 39 of
the Company’s MD&A year ended December 31, 2019 for FY 19 and FY18 metrics, 5) “Key Performance Indicators and Non-IFRS Measures” section on page 39 of the Company’s MD&A year ended
December 31, 2017 for FY 17 and FY 16 metrics, 6) “Key Performance Indicators and Non-IFRS Measures” section on page 31 of the Company’s MD&A year ended December 31, 2015 for FY 15 and FY
14 metrics, and 7) “Key Performance Indicators and Non-IFRS Measures” section on page 23 of the Company’s MD&A year ended December 31, 2013 for FY 13 metric.
22
Financial Summary
(in $000s except per share amounts, store counts, employee counts, percentages and ratios)
2023
2022
2021
2020
2019
INCOME STATEMENT
Revenue
Operating income
Net income
Diluted earnings per share
BALANCE SHEET
Cash
1,250,069
1,019,336
476,518
247,898
14.48
332,407
140,161
8.42
826,722
281,003
244,943
14.62
652,922
216,436
136,505
8.76
609,383
168,793
64,349
4.17
144,577
62,654
102,479
93,053
46,341
Gross consumer loans receivable
3,645,202
2,794,694
2,030,339
1,246,840
1,110,633
Lease assets
Total assets
External debt3
Shareholders’ equity
FINANCIAL METRICS
Revenue growth
Operating margin
Adjusted operating margin1
Efficiency ratio1,4
Adjusted net income2
Adjusted diluted earnings per share1
Return on receivables4
Adjusted return on receivables1,4
Return on assets
Adjusted return on assets1
Return on equity
Adjusted return on equity1
Return on tangible common equity1,4
Adjusted return on tangible common equity1,4
Net debt to net capitalization3
Annual dividend per share
OPERATING METRICS
Gross loan originations
45,187
48,437
47,182
49,384
48,696
4,164,167
3,302,889
2,596,153
1,501,916
1,318,622
2,819,665
2,229,260
1,552,679
1,054,077
869,688
789,913
887,749
443,512
854,768
332,421
22.6%
38.1%
39.3%
30.2%
23.3%
32.6%
36.2%
33.6%
26.6%
34.0%
38.3%
37.2%
7.1%
33.1%
33.1%
-
243,175
192,261
174,759
117,646
14.21
7.6%
7.5%
6.7%
6.5%
25.9%
25.4%
36.7%
34.6%
0.72
3.84
11.55
5.8%
8.0%
4.8%
6.6%
17.6%
24.2%
28.4%
36.4%
0.71
3.64
10.43
7.57
-
-
11.5%
8.2%
36.7%
26.2%
50.7%
35.3%
0.65
2.64
-
-
9.8%
8.5%
36.1%
31.1%
38.3%
33.0%
0.64
1.80
20.4%
27.7%
27.7%
-
80,315
5.17
-
-
5.5%
6.8%
20.2%
25.3%
-
-
0.71
1.24
2,709,194
2,377,606
1,594,480
1,033,130
1,095,375
Growth in gross consumer loans receivable
850,508
764,355
783,499
136,207
276,854
Net charge-offs as a percentage of average gross consumer loans receivable
8.9%
9.1%
8.8%
10.0%
13.3%
Free cash flows from operations before net growth in gross
consumer loans receivable2
377,291
258,474
260,104
210,619
120,985
OPERATIONS
Total store count:
easyfinancial
easyhome
Employees
300
144
302
154
2,463
2,492
294
158
2,394
266
161
2,024
256
163
2,024
Notes:
1 These are non-IFRS ratios. Refer to 1) “Key Performance Indicators and Non-IFRS Measures” section on page 43 of the Company’s MD&A year ended December 31, 2023 for FY 23 metric, 2) “Key Performance Indicators
and Non-IFRS Measures” section on page 43 of the Company’s MD&A year ended December 31, 2022 for FY 22 and FY 21 metrics, 3) “Key Performance Indicators and Non-IFRS Measures” section on page 42 of the
Company’s MD&A year ended December 31, 2020 for FY 20 and FY 19 metrics
2 These are non-IFRS measures. Refer to 1) “Key Performance Indicators and Non-IFRS Measures” section on page 43 of the Company’s MD&A year ended December 31, 2023 for FY 23 metric, 2) “Key Performance
Indicators and Non-IFRS Measures” section on page 43 of the Company’s MD&A year ended December 31, 2022 for FY 22 and FY 21 metrics, 3) “Key Performance Indicators and Non-IFRS Measures” section on page 42
of the Company’s MD&A year ended December 31, 2020 for FY 20 and FY 19 metrics.
3 This is a capital management measure. Refer to 1) “Financial Condition” section on page 55 of the Company’s MD&A year ended December 31, 2023 for FY 23 metric, 2) “Financial Condition” section on page 54 of the
Company’s MD&A year ended December 31, 2022 for FY 22 and FY 21 metrics, 2) “Financial Condition” section on page 49 of the Company’s MD&A year ended December 31, 2020 for FY 20 and FY19 metrics
4 Comparable efficiency ratio measure for the years 2019 and 2020 were not published; comparable reported and adjusted return on receivables financial ratios for the years 2019 to 2021 were not published; and
comparable reported and adjusted return on tangible common equity financial ratios for the year 2019 were not published
Note: Non-IFRS ratios, non-IRFS measures and capital management measures are not determined in accordance with IFRS, do not have standardized meanings and may not be comparable to similar financial measures
presented by other companies
23
Future
Forward
Investing
in the Digital
Experience
As we accelerate our digital lending
capabilities, goeasy was excited to launch
goeasy ConnectTM, an
industry-first,
transformational digital solution
that
provides goeasy customers with one-
stop access to our credit products across
all of our consumer lending brands.
This simple and easy to use digital platform
provides our customers with real-time
access to their account details, payment
information and pre-approved offers.
Through the platform, they know how much
they can borrow and at what rates, to help
them meet all of their borrowing needs.
Since the launch of goeasy ConnectTM, over
100,000 customers have downloaded the
mobile app through the Apple app store and
Google Play. The future roadmap includes
new feature enhancements that will be
added over time, as we continue to build a
leading digital experience for our customers.
Download the
FREE goeasy
Connect™ App
24
Building the
Branch of
the Future
In 2023, we opened our 300th branch, a
revolutionary, state-of-the-art branch located
on the iconic Yonge Street in downtown
Toronto. The new branch design is centered
around creating a seamless omni-channel
experience for our customers that merges
digital technologies with personalized service
delivered at the branch level.
Over the next several years, we will look
to retrofit our existing branch network
with variations of our flagship model to
provide our customers with an unparalleled
customer experience that sets easyfinancial
apart as one of Canada’s leading non-prime
consumer lenders.
Enhancing
the Employee
Experience
In addition to supporting our customers
through the acceleration of our digital
roadmap, we also continue to focus on
investing in technology and infrastructure
to unlock efficiency and productivity
for our employees. This past year, we
invested
in several new platforms
including a microlearning solution to
drive frontline knowledge and a modern
full omni-channel capabilities. Over time,
the backbone of our data infrastructure, AI
we will continue to invest in our employee
will help fuel our personalization strategy
experience as we support our frontline with
as we create customized content and offers
digital technologies that help them deliver
based on the unique credit profiles of our
impactful experiences for our customers.
customers. We currently have several AI-
AI and Machine
Learning
driven “Proof of Concepts” running across
a number of areas in the business as we
continue to build our next generation data
models to be more agile in accommodating
our new and expanding channels.
In
Although we have been employing AI and
addition, we continue to actively build and
machine learning for many years to help
test a variety of AI chatbots, to use for
automate complex processes and support
customer service inquiries and financial
our best-in-class credit risk capabilities,
education, as we look to deliver a superior
we see significant opportunities
for
customer experience that is fast, engaging
cloud-based contact centre solution with
continued investments in AI. Leveraging
and convenient for our customers.
25
Environmental,
Social and
Governance
Strategy
Our commitment to shaping a better
tomorrow extends beyond helping to
improve the lives of our customers and
employees, as it serves to guide our
teams' actions and underpins the values
and policies that govern our organization.
As we extend our purpose beyond profit,
we strive to relentlessly focus on our
Environmental, Social and Governance
(ESG) practices as we look to generate
long-term value for our stakeholders
Sustainable
Paper Policies
To reduce our paper consumption, we have
worked to eliminate paper-based billing
and statements and have invested heavily
in multiple digital platforms, including an
Enterprise Resource Platform, a Human
Resources Information System, and an
Intranet Portal.
and ensure a sustainable tomorrow for
For the paper that we do use, including
generations to come.
Environment
Over the past several years, we have put
new environmental initiatives into practice
as we continue to seek opportunities to
reduce our carbon footprint and minimize
our use of natural resources. We are
committed to supporting a greener future
by managing our environmental impacts
and prioritizing sustainable environmental
practices which include reducing our paper
and plastic usage, as well as reducing our
energy and emission consumption.
printed posters and brochures across our
retail network, we have partnered with
PrintReleaf, a global platform that uses
technology to measure our paper footprint
based on our cumulative printing volume. In
turn, PrintReleaf calculates how many trees
have been harvested to produce the paper
used and reforests them through sustainable
reforestation sites around the world.
In 2023, we reforested 2,224 standard trees
which is a 418% increase year-over-year.
Since joining PrintReleaf in January 2021, we
are proud to have offset the equivalent of 27
million letter pages of paper consumption by
reforesting 3,304 trees.
26
2,224
Reforested trees
in 2023
27M
Letter pages of paper
consumption offset
3,304
Trees reforested
since 2021
CERTIFIED REFORESTED
Environmental,
Social and
Governance
Strategy
Reducing
Plastic
In 2023, we installed water coolers in our
branches and stores to provide employees
with access to water and reduce single-
use plastics. As a result, we have reduced
waste by eliminating the use of more than
80,000 plastic water bottles. In addition,
we eliminated the use of suction cups for
point-of-sale materials in our stores and
branches, reducing 500 lbs. of plastic.
Energy and
Emission
Reduction
We continuously strive to reduce our
carbon footprint and energy consumption
through programs that include the use
of LED lighting across our 400+ retail
locations. Over the past year, we have
selection of furniture and incorporated
retrofitted energy-efficient LED lighting
designs made
from
low-emitting
in 40 stores and branches. Additionally,
materials
that
are GREENGUARD
we are engaging suppliers to minimize
Certified. This certification demonstrates
shipping distance and waste associated
that the materials used have undergone
with packaging materials to help reduce
scientific
testing
to meet chemical
our impact on the environment.
emission
requirements.
In addition,
Expanding
Use of Recycled
Materials
Throughout
Retail Network
As we developed our new branch design,
leveraging opportunities to incorporate
furniture made from low-emitting and
recycled materials was core to our
approach. We were deliberate in our
all tables and chairs within our new
branch design have been created with
10% to 65% pre-consumer and post-
consumer recycled content, a calculation
provided by Leadership in Energy and
Environmental Design (LEED).
-7.15%
YOY total energy
consumption
decrease
27
Social
Our enduring commitment to social responsibility guides the ways in which we operate, as we
aim to benefit society at large. This includes making decisions that consider the impact on all of
our key stakeholders, including our employees, customers, and communities so we can create
a workplace and world where everyone thrives.
People and Culture
Our goeasy team members are the
unique culture prioritizes investing in our
meaningful work, so that we attract and
foundation of our success and at the
people and creating an environment that
retain the best and brightest through a
heart of the customer-centric culture
puts the success and well-being of our
culture that champions ambition, growth,
we have built over the past 33 years.
employees first.
respect, and integrity.
Throughout the past three decades, our
culture has been built around our Values
and Leadership Principles that include
dreaming big, having heart, and operating
with a purpose beyond a profit. goeasy’s
Our goal is to make work matter for
our employees through challenging and
Leadership Principles
1
2
3
4
5
We put goeasy first.
We are obsessed
with the front-line.
We do what’s right,
even when it’s not easy.
We are humble
and hungry.
We dream big.
28
6
7
8
4
10
We test and
learn.
We make it
simple.
We have heart.
We have a purpose
beyond a profit.
We play hard.
84%
Overall engagement
score in 2023
of employees are proud to tell
others they work for goeasy
of employees agree that they
are doing meaningful work
of employees agree they
can be themselves at work
81%
82%
84%
86%
86%
90%
of employees would recommend
their manager to others
employees agree that they use
their strengths everyday at work
of employees agree that goeasy values
diversity of culture, backgrounds, person
styles, and lifestyles among its employees
To help guide our progress and continue
• We know that great talent knows great
to find opportunities
to enhance our
talent, so our Employee Referral Program
high-performance culture, our annual
is designed for employees to recommend
Engagement Survey, now in its eighth
colleagues who share their commitment
year, measures a variety of engagement
to achieve high standards of delivering
metrics that indicate employee satisfaction
top-quality work. Employees can earn
in key areas. Annually, our leaders share
a monetary award for each candidate
the results and plans to address any gaps
hired into a Permanent Full-Time or Part-
or opportunities to improve the goeasy
Time position. In 2023, our employees
workplace culture.
Investing in career
development, growth,
and engagement
Guided by our Leadership Principles
and core to our culture, is a strong
focus on talent development and career
management that is supported by a
variety of training programs including
job-specific training, career coaching,
leadership development, mentorship,
tuition assistance, and support
for
external courses. These programs are
supported by semi-annual performance
reviews and comprehensive succession
planning with a priority focus on mission
critical roles.
were successful in referring 353 new
employees and we paid out almost
$95,000 in referral rewards.
• Annually, we bring together all of our store
and branch managers, as well as leaders
from our National Sales and Service
Centre, LendCare, and our Support
Centre for our National Conference. This
unique event is centered on learning and
development as our leaders from across
the business hear from our Leadership
Team on our successes and learnings
from the previous year, and look ahead at
our strategic roadmap for the future.
Supporting all aspects of
employee health & wellbeing
In keeping with our mission to create
• “goforum” is a series of developmental
better
tomorrows
for our employees,
programs
for
frontline
to senior
each year goeasy commits to enhancing
management that is designed for high
our total rewards offering. This includes
performers, providing career and
modifying and enhancing our incentives,
life experiences to our top talent. The
benefits, and rewards to align with what
program focuses on cross-functional
is most important to our employees and
collaboration to solve real business
reflective of the current economic and
issues, participation
in
external
social conditions. In 2023, we made one of
courses, personal career coaching,
the most significant changes to our benefits
psychometric and 360 assessments
plan as we transitioned to a modular benefit
and the opportunity to learn from
plan, giving employees the option to choose
senior leaders who participate in the
which benefit coverage is right for them to
program as mentors.
• The Manager Essentials Training Program
is designed to support new managers as
they embark on their leadership journey
at goeasy. 76% of management positions
were filled by internal promotions in
2023, highlighting the effectiveness of
the work that is done to prepare the next
generation of leaders at goeasy.
help support their unique needs. In 2023,
we also rolled out our Compassionate
Care leave program, providing employees
with extended coverage to take care of an
immediate family member with a serious
medical condition. We also
launched
Carepath’s Chronic Disease program, which
connects employees to personalized health
support for chronic diseases from the time
of diagnosis to treatment and recovery.
29
Recognizing outstanding
contributions
Recognition is central to goeasy’s culture
as we strive to create a workplace that
motivates employees, shares
in each
other's successes, and rewards employees
for their meaningful contributions to
company performance. We recognize
2023 Investments
• Modular benefits with SunLife so
In addition to these new benefits, we
employees can choose the coverage
also continue to invest in a highly robust
plan that suits their individual needs
employee benefits program which
• Compassionate Care leave which
includes eight weeks of paid leave
employees for their outstanding efforts
• Carepath’s Chronic Disease program
through our Employee of the Month
program, Quarterly Leadership Awards,
and our annual awards which include
to connect employees and their
families
to personalized health
support from diagnosis through to
Value Awards, Employees of the Year,
treatment and recovery
includes competitive base pay, monthly
bonus plans, quarterly and annual
performance incentives, maternity and
paternity top-up benefits, RRSP matching
program, virtual medical and mental
health access, employee assistance
program
(EAP), company matched
charitable donations, a
sabbatical
and the David Ingram Leadership Award.
We also recognize employees with high
tenure through our Service Awards, which
allows employees to choose from a wide
range of gift options to thank and reward
them for their years of service.
• Employee loan program with rates
program, tuition assistance programs,
lower than our cost of borrowing to
reading assistance programs for children
help support employees that need
of employees and access to free financial
access to credit
literacy webinars through Sun Life.
Attracting and
Retaining World
Class Talent
As a proudly Canadian Company, we pride ourselves
on a diverse employee base that very much reflects
the Canadian population with employees from over
70 Nationalities. Beyond our commitment to having
a workforce as diverse as the Country itself, we have
actively created a variety of programs to embrace and
integrate new Canadians from various international
backgrounds to enrich our culture and support
employees starting their new chapter in Canada.
Pilot for New Canadian support
program launched
35%
260+ 10%
Of external hires in 2023
were new to Canada
Of promotions in 2023
were new Canadians
Employees progressed from
new to Canada to Permanent
Resident in the past 3 years
30
New to Canada
support program
Designed in 2022 and launched in 2023, our
New to Canada support program assists
employees on an active work permit who are
not yet permanent residents, navigate the
permanent resident application process. The
program covers up to $2,000 of legal fees
associated with the process for eligible talent.
Inclusive hiring practices
We recognize that many new Canadians arrive
with a wealth of qualifications and experience
from their home countries, however, they often
face the challenge of not having Canadian
work experience which can be a significant
barrier to achieving their professional goals.
Understanding this, goeasy places a strong
emphasis on recognizing the inherent value
and qualifications these
individuals bring
to the table. In 2023, goeasy welcomed 344
employees to the organization that were
employed on a work permit, representing their
first professional services role in Canada.
Career advancement
goeasy not only offers critical first
employment opportunities in the Canadian
labour market, but also emphasizes career
advancement as a core aspect of our culture.
In 2023, a notable 10% of all employees
who
received promotions were new
Canadians. Our commitment to equitable
and performance-based talent development
enriches the Company workforce with diverse
leadership perspectives and demonstrates
goeasy's commitment to having a team that
reflects the communities we serve.
Pathway to permanent
residency
Through our programs and dedicated effort
to support new Canadians, over 260 of our
employees have successfully transitioned
from a Temporary Work Permit to Permanent
Resident (PR) status in the past three years,
demonstrating
the effectiveness of our
support in their journey towards long-term
settlement in Canada.
31
Creating an
Inclusive
Workplace
Through
Diversity,
Equity, and
Inclusion (DEI)
At goeasy, we prioritize cultivating a
work culture where we celebrate who
we are as individuals, while ensuring
every employee can reach their full
potential. We are proud to have employee
representation from over 70 different
countries of origin, and above-average
Canadian representation of members of
racialized groups (visible minorities) and
Indigenous people.
Since
forming our Diversity, Equity,
and Inclusion Council in 2021, we have
created a forum to listen to employees
and learn from subject matter experts
as we continue to improve the ways in
which we foster an inclusive workplace.
Additional programs that have emerged
as a result include diversity training
for all employees and Anti-Racism and
microaggression training for the Senior
Leadership Team in partnership with Dr.
Leland Harper, a well-regarded expert in
Corporate DEI practices.
Annually, we conduct an "I am goeasy"
self-identification survey. This survey is
used to measure our progress towards
being an
inclusive organization by
helping us understand representation
and any potential gaps that may exist in
our current DEI practices. This survey
helps
inform how the organization
develops action plans to further drive
our commitment to Diversity, Equity,
and Inclusion.
Core to our DEI strategy are our employee-
supported the women of goeasy through
led, Employee Resource Groups (ERGs).
a variety of programs including a speaker
Since 2015, they have helped create safe
series, full-day summit events, panels, book
spaces for our employees, fostering an
clubs and social networking events.
environment of support and understanding
to help marginalized groups feel connected.
Today, we are proud to have four ERGs
formed by employees for employees that
include:
Women in Leadership (WIL)
WIL, our first ERG, launched in 2015 and was
created to provide female leaders at goeasy
the opportunity to advance their careers
through growth and learning opportunities,
networking, and exposure to senior female
leaders. Now in our ninth year, WIL has
In 2022, WIL launched a mentorship program
for women throughout the organization.
Over the past two years, the program has
grown significantly with participation from
more than 100 mentees, and mentors, who
are looking for an opportunity to build their
professional network and grow their skills
through a more personalized program.
This past year, in an effort to continuously
expand the reach of this very important
platform, WIL published our first ever
book, WOVEN.
Stories of Strength and Courage, is the first-
ever goeasy Women in Leadership (WIL)
book. This 100-page hardcover book is a
collection of inspiring personal stories, told
by the women of goeasy in their own words.
Proceeds from the book will be donated to
the Mariam Society, a charity that supports
girls living in poverty in rural India through
education, scholarships, and financial
literacy workshops.
Learn
More
Of all management positions are held
by women-identifying employees
49%
38%
Of non-executive board
positions held by women-
identifying leaders
Of internal promotions in 2023 were
filled by women-identifying employees
46%
3100+
Women have participated in
goeasy’s Women in Leadership
events since inception
32
Afro-Canadian Development
and Empowerment (ADE)
CIRCLE
PRIDE
Our CIRCLE ERG was developed in 2022
Our newest ERG, PRIDE, aims to create
Established in 2020, our ADE committee
to uplift our Indigenous community by
a safe and inclusive environment and
strives to develop and empower goeasy’s
building a safe space with opportunities
culture where all employees, regardless
Black talent and allies through the
for growth and support within goeasy.
of sexual orientation, gender identity
promotion of racial equity within our
With 4% of goeasy’s employees identifying
or expression, feel
included, valued,
organization. The committee has led to
as
Indigenous, CIRCLE supports our
and empowered to achieve their full
impactful
initiatives,
including Black
Indigenous employees and communities
potential.PRIDE was created to promote
History Month education and observation,
through a variety of programs and events
awareness, advocate for equality, and
formal racial sensitivity training
for
to build awareness and allyship.
provide a platform for education and
leaders and has spearheaded meaningful
changes to goeasy's policies, including
the Business Code of Conduct, reinforcing
goeasy’s commitment to a diverse and
inclusive workplace.
ADE also actively supports the career
development of Black talent through
increased mentorship and access to
career-development programs. Through
partnerships with the Onyx
Initiative
and Freshstarthub,
there has been
This year, CIRCLE introduced the first
Annual CIRCLE
in Action community
donation program. The program solicits
nominations
from
employees
for
Indigenous community programs or
charities that need financial support.
The nominees selected for 2023 include
the Native Canadian Centre of Toronto
and the Red Cross for wildfire relief in
impacted Indigenous communities.
an increase in representation across
To mark the 2023 Day of National Truth
management levels and an increased
and Reconciliation, CIRCLE supplied
support for those within and connected
to the 2SLGBTQIA+ community. To foster
inclusivity and acceptance, our PRIDE
ERG
focuses on education,
training,
awareness and advocacy to promote
inclusivity and acceptance.
hiring of early-stage Black talent.
8%
20%
Of goeasy
employees
identify as black
Of Quebec goeasy
employees
identify as black
Over the past three years, ADE also
proudly raised over $25,000 through
fundraising
initiatives and branded
apparel in support of Black businesses,
the Black Youth Helpline, and the Black
Opportunity Fund.
employees with orange shirts and ran
an
internal campaign
that
included
support materials, panels, and spotlights
on notable Indigenous figures to raise
awareness and encourage education.
33
Our Customer
Commitment
We’re here
for
the hard-working,
everyday Canadians who are unable to
access credit from banks and traditional
lenders. Often challenged with a life
event or financial speed bump, they turn
to us for financial products that can give
them the relief they need today, so they
can rebuild their credit for tomorrow.
Having served more than 1.3 million
Canadians over three decades, we have
a deep understanding of our customers
and their financial needs.
With more than 400 locations across
Canada and over 2,400 employees, the
trusted relationships our front-line teams
develop with our customers are what truly
sets us apart. Through these relationships,
providing financial education and our full
suite of financial products and services,
our goal is to help our customers graduate
to prime lending rates so they can achieve
the promise of a better financial future.
Of customers
graduate to prime credit1
1IN3
60%
Of customers improve
their credit score2
"My experience was great.
I wanted to start building
my credit after completing
a consumer proposal and
even my own bank said no,
easyfinancial said yes."
"easyfinancial makes
building credit back
up literally so easy."
"Process was
quick and easy
to get my loan."
"Application was easy and a
response was immediate. The
representative explained the
contract and answered all
questions. This is a service
I will use again to help gain
positive credit. Thank you!”
1 Prime credit is defined as opening a trade with a prime bank lender within 12 months of borrowing from our easyfinancial brand.
2 As measured by an increase in TransUnion Risk Score within 12 months of borrowing from our easyfinancial brand.
34
Responsible Lending
goeasy plays a critical role in the Canadian
financial system
for
the millions of
This level of graduation is a direct reflection
of the critical role we play in improving the
long-term financial health of Canadians.
Credit Optimizer
At easyfinancial, we also offer an optional
service to help our customers improve their
Canadians with non-prime credit that have
Supporting our customers’ journey toward
credit faster called Credit Optimizer. This
been denied access to financial products
financial health through:
and services
from banks and other
traditional lenders. Our customers come to
us to help pay for everyday household bills,
manage emergency expenses, consolidate
debt, finance vehicles, healthcare services
and automobiles through a fixed-payment
installment loan that fits their budget. Our
• Employee training to help customers
understand their credit report and the
steps to improve their credit score.
• Robust affordability calculations to
ensure a customer’s payments can fit
within their monthly budget.
unique data-driven tool provides customers
with a customized plan that enables them
to set a target credit score and provides the
steps to help get there. Exclusively available
through easyfinancial, this product includes
features that go well beyond a basic credit
monitoring solution so customers can
get real-time recommendations and a
branches are in communities throughout
• Lower rates of interest offered as
personalized debt analysis that can help
Canada that reflect where the average
customers improve their credit through
them stay in control of their credit.
middle-class consumer often lives and
on-time payments.
works. Based on a demographic analysis,
the average household income within a 10
km radius of our easyfinancial branches
is $109,000, approximately 10% above the
Canadian average household income. Our
• Financial literacy tools through goeasy
Academy.
• 14-day cooling off period on all
unsecured direct-to-consumer loans.
merchant and dealer network are also
• Optional ancillary products including:
expansive, including over 9,500 partners
from coast-to-coast
that provide our
customers with access to a large range of
products and services.
- Loan protection plans to protect
a customer’s loan payments in the
case of unforeseen events such as
unemployment or critical illness.
Our
lending products employ
risk-
- Warranty and gap
insurance to
based pricing to calculate
interest for
protect the value of the goods being
our customers. Recognizing that not all
financed by our customers.
- Screening and audit processes for
all merchant partners to ensure the
highest levels of service and integrity
for our customers.
• A suite of borrower assistance tools
designed to help customers through
difficult financial periods
including
payment deferrals or term modifications.
customers have the same credit profiles,
this lending strategy helps ensure access
to credit to the widest group of consumers,
while rewarding those customers with
higher creditworthiness,
lower rates.
As we establish relationships with these
customers and they make regular on-
time payments, we can then reward them
with lower rates of interest on subsequent
loans. Through this strategy, along with
an expanded product suite that enables
customers to access lower-rate products,
60% of our customers improve their credit
scores and over 30% of them successfully
graduate to prime credit within one year
of borrowing from us. By the third year
of borrowing, over 50% of our customers
have seen their credit improve sufficiently,
allowing them to open a prime credit trade.
35
Financial Empowerment
In addition to our suite of products and
services, we also offer free financial
literacy materials through our proprietary
financial education platform, goeasy
Academy. The platform offers hundreds
of articles and videos across a variety of
topics including building credit, saving
and debt management, as well as tools
and calculators to help all Canadians
improve their financial health.
This past year, we made a significant
investment to empower new Canadians
through financial
literacy. Research
conducted by goeasy in November of
2023, revealed that more than 80% of
Newcomers are not confident in their
understanding of the Canadian financial
system and 49% of Newcomers wish
they better understood
their credit
score and how to build credit in Canada.
These statistics revealed that many new
Canadians feel ill-prepared to succeed
in our financial system as they feel shut
out of the financial sector, both from an
education standpoint and in their limited
access to everyday financial products
that help build their credit.
To help close this gap during Financial
Literacy Month,
goeasy partnered
with Credit Canada to sponsor a free-
eLearning program, Building Credit from
again for their customers and recognizes
the Ground Up: A Program for Newcomers
businesses
that consistently deliver
that was available in eight languages.
a world-class customer experience.
The
program
provided
essential
In addition, we were also awarded
information on how to build credit in
Feefo’s exclusive “10 Years of Proven
Canada and included access to other
Trusted Service” award for consistently
educational articles,
tools, webinars,
delivering excellence in customer service
and resources throughout the month. As
for ten years. This prestigious award is
part of the campaign, we featured our
presented to businesses that have won
own employees who are new Canadians
a Trusted Service Award ten years in a
in a “Newcomer series” that was hosted
row, representing our dedication and
through our social media channels. They
commitment to giving customers the best
provided real life stories of how they have
experience consistently over a decade.
navigated the financial system in Canada
by building healthy credit profiles.
goeasy is also accredited by the Better
Business Bureau and is proud of our A+
As we look ahead to other ways we can
BBB Rating.
continue to support the financial journeys
of new Canadians, goeasy is exploring a
partnership with Nova Credit to access
international credit history for potential
customers. This would help Newcomers
get a head start on building their credit
in Canada, by enabling them to use their
international credit history to qualify for a
loan in Canada sooner.
Superior Customer Service
We are proud to have once again been
awarded the Platinum Trusted Service
Award from Feefo for both easyhome and
easyfinancial. This coveted award is given
to companies that deliver time and time
36
Investing
in Our
Communities
goeasy is deeply committed to making
a positive impact on society through our
strong emphasis on giving back to the
communities in which we live and work.
With a retail footprint that serves over 85%
of the Canadian population, our connection
to these communities is defined by more
than our physical locations. By donating our
time, talents, and resources, we’re working
to make a difference at home and abroad
through our long-standing local and global
charitable partnerships.
Investing In
Tomorrow’s Leaders
Through BGC Canada
For almost two decades, goeasy has
partnered with BGC Canada (formerly
Boys & Girls Clubs) to help support their
mission of empowering young people
and providing them with opportunities
for a brighter future. Since 2004, we
have donated over $4.7 million to BGC
Canada to support their efforts to provide
children and youth with safe spaces
to develop life skills, confidence, and a
sense of community.
Donated to charities throughout
our Company’s history
$5.5M+
$750k+
Donated in 2023
37
Giving Back Locally
We believe
that providing everyday
Canadians a better tomorrow,
includes
making a positive impact in the local
communities we serve by investing in
education, people, and resources. During
times of need, including unexpected events
and natural crises, goeasy consistently
steps up to ensure our employees and their
local community members are supported.
During 2023, we responded to the wildfire
crisis across Canada by donating over
$25,000 to the Red Cross Appeals to assist
with the fires in British Columbia, Northwest
Territories, Alberta, Northern Quebec, and
Nova Scotia. In addition, we also supported
several
local
food banks with non-
perishable food donations raised during
our annual Thanksgiving Food Drive. As
part of our Annual Toy Drive, we were also
proud to have donated 1,300 toys that were
distributed to children in need through BGC
to help make their holidays brighter.
biggest impact. With the rising costs of
food and food insecurity a growing concern
for many of the families that use the clubs,
goeasy was proud to launch “Feed Their
Future” in support of BGC Canada’s Food
Fund. This initiative marks the evolution of
our partnership, as goeasy and BGC Canada
find new and impactful ways to improve the
lives of children in their communities.
Through Feed their Future, goeasy will
donate $1.4 million over three years to
BGC Canada’s Food Fund, which will
provide 350,000 meals and snacks to
children across the country who attend
the BGC Clubs.
IN SUPPORT OF
$1.4M
Commitment
3
Year
300k
Meals & snacks
“Partnerships, like the one we have with goeasy,
are essential to BGC Canada's ability to serve
communities. We support 150,000 children and
youth across Canada, providing over six million
healthy meals and snacks a year. goeasy's support
will help make all the difference in determining
outcomes for these youth, empowering the next
generation, and creating a brighter future.”
Owen
Charters
President & CEO
of BGC Canada
38
$4.7M
Donated to BGC Canada
This past year, we were thrilled to complete
our easybites program, a 10-year, $2.5
million commitment to remodel 100
kitchens across the BGC network of
clubs nationwide. Launched in 2014, this
program was created to ensure every
club had a functioning and modern
kitchen that could serve as the heart
of the community. These kitchens also
enable the club staff to prepare healthy
meals for the youth while teaching them
healthy eating habits and independence.
$2.5M
Commitment
10
Years
100
Kitchens
The successful completion of this program
was in part driven by the generous support
of our employees who committed to actively
donating to BGC Canada through our
employee match program, and our partners
including Whirlpool Canada, who have
supported the program by donating new
appliances to help complete the kitchens.
With the completion of the easybites
program, goeasy worked with BGC to
assess where the clubs had the biggest
need and where goeasy could make the
goVolunteer
goeasy’s commitment to giving back is
not just a corporate responsibility, but a
core value that helps foster a culture of
compassion and generosity amongst our
employees. To help support our employees’
volunteer pursuits, we offer employees three
dedicated volunteer days, which is paid time
off so they can contribute their time to the
causes that are most meaningful to them.
In addition, we run an annual ‘goVolunteer’
day through our Mississauga Support
Centre and LendCare Head Office, where
we organize a full day for employees to
volunteer their time at a variety of charities.
In 2023, over 150 employees participated
in the program, giving their time to the
Food Bank of Mississauga, Feed the Need
Durham, and The Good Shepherd Venture
Centre Food Bank.
DK Johnson Award
In honour of Don Johnson, a legendary
Canadian philanthropist and goeasy’s
Chairman Emeritus, we created an
annual award that enables employees to
nominate a local charity or community
project to receive $10,000. Established in
2019, this award empowers employees
to create meaningful and lasting change
by nominating organizations that play a
critical role in the local communities of our
employees. Through this award, we have
donated $50,000 to local charities from
coast-to-coast including The Joshua Group
In addition, we support the Mariam Society,
in Saint John, New Brunswick, Janeway
an important charity that endeavours to
Children’s Hospital Foundation in St. John’s,
empower girls in India who are living in
Newfoundland, and the Operation Friendship
poverty by providing them with education
Senior’s society in Edmonton, Alberta.
and access to financial literacy resources.
David Lewis
Scholarship Fund
Aligned to our core values of education,
financial literacy and helping those that need
support in overcoming life’s challenges, we
As we continuously look for meaningful
are proud to have donated over $35,000 to
ways to give back to our communities,
send 125 girls to school.
ensuring we can support our employees
and their families through our giving
programs is equally important. In 2016, we
established a scholarship fund in memory
of David Lewis, a long-standing goeasy
board member. This award is donated
annually and supports the children of
our goeasy employees through a $10,000
donation to help with their post-secondary
education. Through
this meaningful
award, we have donated $90,000 to
support our employees’ children and help
our future leaders pursue their passions
and interests through higher education.
Giving Back Globally
Beyond our local communities, goeasy has
always looked for ways to make a difference
at a global scale to support our employees
and all Canadians with diverse backgrounds.
This past year, we donated $35,000 to the
Red Cross during several world crises
including supporting humanitarian relief
efforts in the Middle East, Turkey, and Syria.
39
Over the years, our teams have also
contributed to Habitat for Humanity Global
Village with over 125 goeasy employees
travelling across five countries to help
build 45 homes and infrastructures in
countries around the world. Our teams have
traveled to countries including, Nicaragua,
India, Guatemala, Cambodia, and Bolivia
where they have had the opportunity to
help make a significant impact to those in
underdeveloped countries.
$35k
Donated
to date
125
Girls sent
to school
Governance
Maintaining strong governance practices
across goeasy is essential to the effective
and sustainable operation of the Company.
goeasy strives to maintain a comprehensive
together a board that will support
for directors and executive officers,
set of policies, controls and procedures
goeasy in achieving the highest level of
having regard to associated risks and
designed to keep the Company secure, while
performance for its shareholders.
responsibilities. Compensation
includes
also enhancing disclosure to all shareholders.
Ethical Business Conduct
The Board has adopted a written Code
Board of Director
Committees
The Board has established three committees
of Business Conduct (the “Code”) for
to assist with
its responsibilities: the
the Company’s directors, officers and
Audit Committee, the Human Resources
employees that sets out the Board’s
Committee, and the Corporate Governance,
expectations for the conduct of such
Nominating and Risk Committee.
persons
in their dealings on behalf
of the Company. The Board has also
established an independent confidential
hotline
to
encourage
employees,
directors, and officers to raise concerns
regarding matters addressed by the
Code on a confidential basis, free from
discrimination, retaliation, or harassment.
Board Composition
and Diversity
goeasy believes
in
the benefits of
Audit Committee
The Audit Committee oversees
the
accounting and financial
reporting
practices of the Company and the audits
of the Company’s financial statements
and exercises the responsibilities and
duties set out in its mandate. The Audit
Committee is currently comprised of five
directors of the Corporation, Karen Basian
(Chair), David Appel, Sean Morrison, Hon.
James Moore, and Jonathan Tétrault, all
diversity, both on the Board and at
of whom are independent. Each member
the executive
level. The Company
of the Audit Committee is considered by
has committed to a board that
is
the Board of Directors to be financially
diverse in a variety of ways, including:
literate within the meaning of applicable
experience,
perspective,
education,
securities laws by way of their business
and gender. Through the Company’s
experience and educational background.
policy of supporting and promoting
diversity, it looks to identify and select
board members based not only on
the qualifications, personal qualities,
business background and experience of
the candidates, but also the composition
of the group of nominees to bring
Human Resources
Committee
The Human Resources Committee
is
responsible
for, among other
things,
reviewing and recommending the form and
adequacy of compensation arrangements
40
but is not limited to salary, bonuses,
benefits, equity-based incentives, share
purchases and other compensation, as
appropriate. Additionally, the Committee
reviews and makes recommendations to
the full Board on all matters pertaining to
bonus plans, salary policy, equity-based
incentives, and share purchase plans
for all other employees. The Committee
annually
reviews
its
compensation
practices by comparing them to surveys
of relevant competitors and sets objective
compensation based on
this review.
Also, as part of its mandate, the Human
Resources Committee
is responsible
for developing and monitoring executive
talent management plans, ensuring
that succession plans are in place for
key executive roles. The Committee will
advise to ensure that management has
effective processes in place to retain key
employees, identify and reward high-
potential talent, and adequately address
the organization’s diversity and inclusion
needs in efforts to align the capabilities
of talent with the current and forward-
facing business goals and strategy.
The Human Resources Committee
is
currently comprised of four directors
of the Corporation, Tara Deakin (Chair),
Karen Basian, Sean Morrison, and Susan
Doniz, all of whom are independent.
Corporate Governance,
Nominating and Risk
Committee
The Corporate Governance, Nominating
and Risk Committee is responsible for,
among other things, assisting the Board in
establishing and maintaining a sound system
of corporate governance through a process of
continuing assessment and enhancement, as
well as enterprise risk management, which
includes matters such as: Environmental
Social and Governance (ESG) and information
security. The Committee is also responsible
for reviewing any related-party transactions
and implementing yearly Material Interest
Attestations for all Board Members. The
Corporate Governance, Nominating and Risk
Committee is currently comprised of five
directors of the Corporation, Hon. James
Moore (Chair), David Appel, Susan Doniz, Tara
Deakin, and Jonathan Tétrault, all of whom
are independent.
Executive Compensation
Governance and Philosophy
The Human Resources Committee of
the Board has the mandate to establish
and implement the Company’s executive
compensation policies and monitor its
compensation practices, with the objective
that executive compensation be aligned
to shareholders, market competitive and
fair. The Human Resources Committee is
responsible for reviewing and approving
all officers’ compensation and equity-
based compensation plans. The Company’s
of the President and Chief Executive
executive compensation policy is designed
Officer. Performance targets are based on
to
incorporate a pay-for performance
financial measurements agreed to by the
philosophy. The philosophy has been
Board. Each of these elements fits into the
established to encourage and reward
Company’s overall compensation strategy
executive officers on the basis of individual
by aligning
individual and corporate
and business performance. Elements of
performance to business strategies.
executive officer compensation includes
competitive base wages, short
term
incentives such as bonus plans, and
long-term equity-based incentives such
as share options, restricted share units,
and executive deferred share units. The
Company’s objective with respect to its
compensation program
is
to attract,
retain and motivate employees at all
levels to achieve corporate and individual
performance goals. The Company’s
compensation programs are designed to
reward individual performance based on
predetermined individual goals as well as
the Company’s financial targets, such as
profitability, and adherence to corporate
values. The Company’s strategy is to align
compensation with corporate objectives
including appropriate risk management and
strategic execution. The Company chooses
to pay each element of its compensation
program in order to attract, retain and
motivate employees as well as to remain
competitive within the Canadian and U.S.
financial services and retail industries,
and to encourage long-term employment.
Equity awards, as determined by the
Board, are based on the recommendations
Enterprise Risk
Management Framework
The Company has adopted an Enterprise
Risk Management Framework to identify
risks across its business operations, rank
risks against a 25-point scale (impact and
likelihood) and formulate mitigation plans
for risk that are deemed to be outside the
Company accepted risk tolerance. The
formal process occurs quarterly and is
reported to the Board on a frequent basis.
Information Technology
and Cybersecurity
The Company’s business model is dependent
upon the successful and uninterrupted
functioning of its computer, internet, and
data processing systems and, thus,
it
allocates appropriate resources to support
its ongoing function and enhancement. It
also relies heavily on the secure processing,
storage and transmission of confidential and
sensitive customer and other information
through its information technology network.
The Chief Information Officer of the Company
oversees information security, and the Chief
Privacy Officer oversees privacy matters.
41
Management’s
discussion
and analysis
of financial
condition
and results
of operations
For the year ended
December 31, 2023
42
Management’s discussion and analysis of
financial condition and results of operations
Date: February 13, 2024
The following Management’s Discussion and Analysis (“MD&A”) presents an analysis of the consolidated financial condition of goeasy Ltd.
and its subsidiaries (collectively referred to as “goeasy” or the “Company”) as at December 31, 2023 compared to December 31, 2022, and
the consolidated results of operations for the three-month period and year ended December 31, 2023, compared with the corresponding
periods of 2022. This MD&A should be read in conjunction with the Company’s audited consolidated financial statements and the
related notes for the year ended December 31, 2023. The financial information presented herein has been prepared in accordance with
International Financial Reporting Standards (“IFRS”), unless otherwise noted. All dollar amounts are in thousands of Canadian dollars
unless otherwise indicated.
This MD&A is the responsibility of management. The Board of Directors has approved this MD&A after receiving the recommendations
of the Company’s Audit Committee, which is comprised exclusively of independent directors, and the Company’s Disclosure Committee.
This MD&A refers to certain financial measures that are not determined in accordance with IFRS. Although these measures do not have
standardized meanings and may not be comparable to similar measures presented by other companies, these measures are defined
herein or can be determined by reference to our consolidated financial statements. The Company discusses these measures because it
believes that they facilitate the understanding of the results of its operations and financial position.
Additional information is contained in the Company’s filings with Canadian securities regulators, including the Company’s Annual
Information Form. These filings are available on SEDAR at www.sedarplus.ca and on the Company’s website at www.goeasy.com.
Caution Regarding Forward-Looking Statements
This MD&A includes forward-looking statements about goeasy, including, but not limited to, its business operations, strategy and
expected financial performance and condition. Forward-looking statements include, but are not limited to, statements with respect to
forecasts for growth of the consumer loans receivable, annual revenue growth forecasts, strategic initiatives, new product offerings
and new delivery channels, anticipated cost savings, planned capital expenditures, anticipated capital requirements and the Company’s
ability to secure sufficient capital, liquidity of the Company, plans and references to future operations and results, critical accounting
estimates, expected future yields and net charge off rates on loans, the dealer relationships, the size and characteristics of the Canadian
non-prime lending market and the continued development of the type and size of competitors in the market. In certain cases, forward-
looking statements that are predictive in nature, depend upon or refer to future events or conditions, and/or can be identified by the use
of words such as “expect”, “continue”, “anticipate”, “intend”, “aim”, “plan”, “believe”, “budget”, “estimate”, “forecast”, “foresee”, “target” or
negative versions thereof and similar expressions, and/or state that certain actions, events or results “may”, “could”, “would”, “might” or
“will” be taken, occur or be achieved.
Forward-looking statements are based on certain factors and assumptions, including expected growth, results of operations and
business prospects and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company’s
operations, economic factors and the industry generally. There can be no assurance that forward-looking statements will prove to be
accurate as actual results and future events could differ materially from those expressed or implied by forward-looking statements
made by the Company. Some important factors that could cause actual results to differ materially from those expressed in the forward-
looking statements include, but are not limited to, goeasy’s ability to enter into new lease and/or financing agreements, collect on existing
lease and/or financing agreements, open new locations on favourable terms, offer products which appeal to customers at a competitive
rate, respond to changes in legislation, react to uncertainties related to regulatory action, raise capital under favourable terms, compete,
manage the impact of litigation (including shareholder litigation), control costs at all levels of the organization and maintain and enhance
the system of internal controls.
The Company cautions that the foregoing list is not exhaustive. These and other factors could cause actual results to differ materially from
our expectations expressed in the forward-looking statements, and further details and descriptions of these and other factors are disclosed
in this MD&A, including under the section entitled “Risk Factors”.
The reader is cautioned to consider these, and other factors carefully and not to place undue reliance on forward-looking statements, which
may not be appropriate for other purposes. The Company is under no obligation (and expressly disclaims any such obligation) to update or
alter the forward-looking statements whether as a result of new information, future events or otherwise, unless required by law.
43
Overview of the Business
goeasy Ltd. is one of Canada’s leading non-prime consumer lenders offering a full suite of leasing and lending products to the non-prime
consumer. Founded in 1990 and headquartered in Mississauga, Ontario, goeasy operates under its easyhome, easyfinancial and LendCare
operating segments. Supported by over 2,400 employees, the Company offers a wide variety of financial products and services including
unsecured and secured instalment loans, merchant financing through a variety of verticals and lease-to-own merchandise. Customers can
transact seamlessly through an omnichannel model that includes online and mobile platforms, over 400 locations across Canada, and point-
of-sale financing offered in the retail, powersports, automotive and healthcare verticals, through over 9,500 merchant partners across Canada.
Throughout the Company’s history, it has acquired and organically served over 1.3 million Canadians and originated over $12.8 billion in loans.
With 33 years of leasing and lending experience, goeasy has developed a deep understanding of the non-prime Canadian consumer. Of the
31.8 million Canadians with an active credit file as at December 31, 2023, 9.3 million had credit scores less than 720 and are deemed to
be non-prime, up from 8.5 million in 2022 due to the normalization of consumer credit scores following the end of government-supported
stimulus and the onset of generally weaker macroeconomic conditions over the last 12-18 months. Collectively, these Canadians carry $217.9
billion in non-mortgage credit balances, up from $193.6 billion in 2022, and represent the Company’s target market. These consumers, many
of which are unable to access credit from banks and traditional financial institutions, turn to goeasy as a reliable source of consumer credit
for everyday financial needs. goeasy aspires to help non-prime customers rebuild their credit and put them on a path to a better financial
future. By graduating customers to progressively lower rates of interest in recognition of on-time payment behaviour, and eventually helping
them graduate back to prime lending, goeasy is uniquely positioned to deliver on its vision of providing everyday Canadians a path to a better
tomorrow, today.
goeasy funds its business through a combination of equity and a variety of debt instruments, including US$870 million senior unsecured notes,
$150 million secured borrowings and a $370 million revolving credit facility. In addition, the Company has a revolving securitization warehouse
facility of $1.4 billion collateralized by unsecured personal loans and home equity loans and another $500 million revolving securitization
warehouse facility collateralized by automotive consumer loans. The Company remains confident that capacity available under its existing
funding facilities, and its ability to raise additional debt financing, is sufficient to fund its organic growth plans. goeasy’s senior unsecured notes
payable are rated BB- and Ba3, with a stable trend, by the Standard and Poors and Moody’s rating agencies, respectively. goeasy’s common
shares (“Common Shares”) are listed for trading on the Toronto Stock Exchange (“TSX”) under the trading symbol “GSY”.
Accredited by the Better Business Bureau, goeasy is the proud recipient of several awards in recognition of its exceptional culture and continued
business growth including 2023 Best Workplaces™ in Financial Services & Insurance, Waterstone Canada’s Most Admired Corporate Cultures,
ranking on the 2022 Report on Business Women Lead Here executive gender diversity benchmark, placing on the Report on Business ranking
of Canada’s Top Growing Companies, ranking on the TSX30, Greater Toronto Top Employers Award and has been certified as a Great Place
to Work®. The Company is represented by a diverse group of team members from 78 nationalities who believe strongly in giving back to
communities in which it operates. To date, goeasy has raised and donated over $5.5 million to support its long-standing partnerships with BGC
Canada and many other local charities. In 2023, the Company announced a 3-year, $1.4 million commitment to BGC Canada’s Food Fund to help
address the rising issue of food insecurity amongst Canadian households.
Reportable segments
For management reporting purposes, the Company has two reportable segments: easyfinancial and easyhome. The Company
aggregates the operations of its easyfinancial and LendCare operating segments into one reportable segment called easyfinancial,
on the basis of their similar economic characteristics, customer profile, nature of products, and regulatory environment. Refer to the
Company’s audited consolidated financial statements and the related notes for the year ended December 31, 2023, for further details.
Overview of easyfinancial
easyfinancial is goeasy’s consumer lending arm that provides instalment loans with the goal of bridging the gap between traditional financial
institutions and costly payday lenders. To further serve customers’ needs and diversify its product offerings, goeasy acquired LendCare,
a Canadian point-of-sale consumer finance and technology company, in 2021. The addition of LendCare accelerated goeasy’s point-of-sale
channel into relatively new untapped verticals, such as powersports and healthcare financing. Shortly after, the company launched an
automotive financing program designed to help non-prime consumer purchase and finance a vehicle. easyfinancial and LendCare operating
segments now comprise goeasy’s consumer lending segment, which is a leading provider of non-prime credit in Canada.
44
Prior to 2010, consumer demand for non-prime loans in Canada was satisfied by the consumer-lending arms of several large, international
financial institutions. Today, traditional financial institutions are generally unwilling or unable to offer credit solutions to consumers that are
deemed to be a higher credit risk due to the consumer’s financial situation or less-than-perfect credit history. As this shift in supply for non-
prime consumer lending has taken place, a range of industry participants who offer diverse products including auto lending, credit cards,
instalment loans, retail finance programs, small business lending and real estate secured lending have emerged. Generally, these industry
participants have tended to focus on a single product rather than providing consumers with a broad integrated suite of financial products
and services. As a result, easyfinancial has emerged as one of a number of national companies focused on serving the entire non-prime
credit spectrum.
easyfinancial’s product offering consists of secured and unsecured installment loans available to Canadian consumers who are generally
unable to access credit from traditional sources such as major banks. The Company originates loans up to $100,000 with rates between
9.9% and 46.9%, which are fixed payment instalment products. When a loan is secured, the collateral provided by the borrower may include
residential property, an automobile, a recreational vehicle or personal property. Unsecured installment loans typically range in size from $500
to $27,500 with repayment periods from 9 to 84 months, while secured installment loans typically range in size from $15,000 to $100,000 with
repayment periods of 48 to 120 months. The required regular installment payments on these loans from customers include both principal and
interest and result in the entire principal balance being repaid over the stated amortization period, provided all contractual payments are made
as scheduled. All payments made by borrowers are reported to credit reporting agencies to help customers rebuild their credit.
easyfinancial also offers a number of optional ancillary products including a customer protection program that provides creditor insurance,
a home and auto benefits product which provides roadside assistance, a gap insurance product which covers buyer and lender from any
shortfall in cases of total loss insurance claims, warranty coverage on select financial products, and a credit monitoring and optimization
tool that helps customers understand the steps to take to rebuild their credit. The Company also charges its customers interest on the
money it lends and may also receive a commission for the sale of optional ancillary products offered through third party providers. The
interest, additional commissions and various fees, collectively produce the total portfolio yield the Company generates on its loan book. The
Company’s total portfolio yield, relative to its cost of capital and loan losses, is a key driver of profitability.
As a lender, the Company expects to incur credit losses related to those customers who are unable to repay their loans. Given the higher
credit risk of non-prime borrowers, credit losses are reflective of the higher rates of interest charged. The Company’s custom credit and
underwriting models allow it to set the level of risk it is willing to accept. The Company could take less credit risk and reduce its loan
losses, but it would come at the expense of profitable volume. Likewise, the Company could accept more risk to drive greater growth and
profitability, but it would come with higher credit losses and have potential impacts on the cost and availability of access to capital. Ultimately,
the Company’s objective is to optimize investment returns and operating margins by striking the right balance between origination velocity
(the applicants it approves) and the loss rate of the portfolio.
The Company offers its products and services through an omnichannel business model, including a retail branch network, digital platform,
merchant partners and indirect lending partnerships. The Company had 300 easyfinancial locations (including two kiosks within easyhome
stores and three operations centres) in 10 Canadian provinces as at December 31, 2023. In addition to its retail branch network, customers
can also transact online, which remains a key source of new customer acquisition. The Company also originates loans through its point-of-
sale and dealership channel, which includes over 9,500 merchant partners across Canada.
Although the Company leverages multiple acquisition channels to attract new customers, approximately half of its loans are managed
through its local branches. Through many years of experience in non-prime lending, the Company believes that an omnichannel model
optimizes customer acquisition, loan performance and profitability, while providing a high-touch and personalized customer experience.
The customer loyalty developed through these direct personal relationships with higher risk borrowers, extends the length of the customer
relationship and improves the repayment of loans, which ultimately leads to lower charge offs and higher lifetime value.
In addition to its unique omnichannel model, the Company also differentiates itself through its customer experience and specifically the
journey of providing customers a path to improving their credit and graduating back to prime borrowing. This is accomplished through the
Company’s broad product range, which provides customers with progressively lower interest rates, free financial literacy literature and
tools and services that help them better understand and manage their credit profile. Whether a customer is looking to establish, repair,
build or strengthen their credit profile by borrowing funds, purchase an automobile or recreational vehicle or using the equity in their home
to secure a larger loan for a home renovation or repair, easyfinancial can provide a lending solution that best serves their individual needs.
45
Through its many years of experience and a disciplined approach to growth and managing risk, easyfinancial has demonstrated a history
of stable and consistent credit performance. Since implementing centralized credit adjudication in 2011 in easyfinancial, the Company
has successfully managed annualized net charge off rates within its stated target range consistently during each year of its operations.
Lending decisions are made using custom credit and underwriting models or scorecards that are constructed using the latest statistical
and machine learning techniques and data sources to optimize the balance between loan volumes and credit losses. These models and
scorecards have been developed and refined over time by leveraging the accumulation of extensive customer application, demographic,
borrowing, repayment and consumer banking data that determines a customer’s creditworthiness, lending limit and interest rate. The
use of custom models improve the accuracy of predicting default risk for the non-prime customer and are 200% more predictive when
compared to a traditional credit score. Credit risk is further enhanced by industry-leading underwriting practices that include pre-
qualification, credit adjudication, affordability calculations, centralized loan and document verification, and repayment by the customer
via electronic pre-authorized debit directly from the customer’s bank account, often on the day they receive their regularly scheduled
income. The Company also requires supporting documentation for all of its successful applicants who take out a direct-to-consumer
loan. Through the Company’s proprietary custom scoring models and scorecards, coupled with the personal relationships its employees
develop with customers at its branch locations, the Company believes it has found an optimal balance between growth and prudent risk
management and underwriting.
Overview of easyhome
easyhome is Canada’s largest lease-to-own company by store count, offering customers brand-name household furniture, appliances
and electronics through flexible lease agreements. easyhome operates through both corporately owned stores located across Canada
and through a network of franchised locations and has been in operation since 1990. In 2023, easyhome accounted for 12% of consolidated
revenue (2022 – 15%) and leasing revenue accounted for 69% of easyhome revenue (2022 – 73%).
Through its 144 locations, which includes 34 franchise stores or through its eCommerce platform, Canadians turn to easyhome as an
alternative to purchasing or financing their goods. With no down payment or credit check required, easyhome offers a flexible solution
that helps consumers get access to the goods they need, with the flexibility to terminate their lease at any time without penalty. These
consumers may not be able to purchase merchandise due to a lack of credit or insufficient cash resources, may have a short-term
or otherwise temporary need for the merchandise, or may simply want to use the merchandise, with no long-term obligation, before
making a purchase decision.
In 2017, easyhome began offering unsecured lending products. As at December 31, 2023, there are 108 easyhome locations offering
unsecured loans to its customers. This expansion allowed the Company to further increase its distribution footprint for its financial
services products by leveraging its existing real estate and employee base. This transition has enabled easyhome stores to diversify its
product offering and meet the broader financial needs of its customers.
easyhome also offers a number of optional ancillary products to its customers including a customer protection program. This product is
designed to give its customers peace of mind by waiving the customer’s payments for a period of time should they be met with unexpected
circumstances, including involuntary loss of employment, accident and illness and critical illness or death. easyhome also offers its
customers a liability damage waiver product when entering into a lease agreement. The product provides protection to a customer from the
obligation to make any additional payments in the event that merchandise is damaged, destroyed or lost while on lease.
In 2019, easyhome began reporting customer’s lease payments to the credit reporting agencies as a way to further support its
customers’ ability to secure access to credit and improve their credit profile. With every on-time lease payment, easyhome customers
can now build their credit and ultimately use the easyhome transaction as a steppingstone into other financial products and services
offered by easyfinancial.
Corporate Strategy
goeasy is committed to being a leading full-service provider of financial products and services that provide everyday Canadians a path to a better
tomorrow, today. To achieve its long-term goals, the Company has developed a strategy based on four key strategic pillars. These priorities have
remained consistent since 2017 and align to the Company’s strategic initiatives, as it furthers its vision of becoming the one stop shop for credit
for non-prime consumers. In addition to providing access to a wide range of responsible financial products, the Company also aims to help their
customers improve their credit and gradually lower their borrowing costs.
46
The Company’s four strategic pillars include developing a wide range of credit products, expanding its channels and points of distribution,
diversifying its geographic footprint and lastly, focusing on improving the customer’s financial wellness through its products and services, interest
rate graduation offers, transparency, financial education and customer relationships.
Product Range
The Company’s objective is to build a full suite of non-prime consumer credit products, which includes unsecured and secured lending
products at various risk-adjusted interest rates, along with a broad suite of value-add ancillary services. As of December 31, 2023, the
Company’s specific product offering includes traditional unsecured instalment loans, home equity loans, automotive vehicle financing, and
loans to finance the purchase of retail goods, powersports and recreational vehicles, home improvement projects and healthcare related
products and services. Over time, the Company will continue to expand and grow the products it offers to provide non-prime consumers
with the same type of choices and options available to prime consumers through a traditional bank. As the Company brings new products
to market, it will explore existing conventional products as well as develop new forms of credit that meet the unique needs of its customers.
Channel Expansion
The Company operates three distinct and complementary distribution and acquisition channels including 405 retail lending outlets (297
easyfinancial branches and 108 easyhome stores where loans are offered as of December 31, 2023), a robust digital platform (web and
mobile) and point-of-sale financing available through over 9,500 merchant partners. Based on the unit volume of applications and originations
in the most recent quarter, the retail branch channel represented 13% of application volume and 39% of loan originations, online represented
64% of application volume and 34% of originations and point-of-sale financing represented 23% applications and 27% of originations. 53% of
loan originations were funded and/or serviced in a branch location, 36% were funded and/or serviced through a point-of-sale channel, with the
remaining 11% serviced in the Company’s national shared services centre. The Company will continue to pursue new opportunities that include
expanding its retail network, developing more dynamic and personalized digital experiences supported by its new mobile app, adding new
automotive and powersports dealerships, adding new merchant partnerships and seeking new third-party lending and referral partnerships.
Geographic Diversification
The Company believes Canada will continue to provide strong growth for goeasy with over 9.3 million non-prime Canadians facing limited
options for credit. The Company also remains focused on adding new dealer and merchant partners across Canada to increase the
distribution of its products and make them more accessible to all Canadians.
Additionally, the Company believes there is a future opportunity to consider international markets where the easyfinancial business model
can be replicated. The two markets the Company considers to be attractive include the United States and the United Kingdom. In the United
States it is estimated that there are over 100 million non-prime consumers and in the United Kingdom it is estimated that there are over 12
million non-prime consumers. The consumers in these markets utilize credit products similar to those offered by the Company in Canada.
The Company remains active in exploring potential acquisition opportunities within the domestic Canadian financial services industry, as
well as in these international markets.
Financial Wellness
The Company competes on a unique point of differentiation, which is a focus on its customers’ financial wellness and more specifically, the
journey of providing customers a path to gradually reduce their rate of interest, improve their credit and graduate back to prime lending
rates. With 9.3 million non-prime Canadians, of which 72% have been denied credit by banks and other financial institutions, goeasy plays an
extremely important role in the financial system. By providing access to credit and a second chance for its customers, the Company serves
as a key steppingstone in helping them rebuild their credit through products that report each payment to the credit reporting agencies. The
Company is also focused on providing its customers a path to reducing their cost of borrowing over time by progressively offering those
customers that demonstrate positive payment behaviour, access to products with lower rates of interest. Between 2017 and 2023, the
company has reduced the weighted average interest charged on its loans from approximately 46% to approximately 30.3%.
The Company has always set itself apart from the competition by seeing beyond the initial transaction with the customer and instead,
focusing on building one-to-one personalized relationships that are based on trust and respect for every customer’s unique situation.
The Company is proud to provide free financial literacy resources for all Canadians, which includes hundreds of articles and tools to help
empower its customers to better understand and manage their personal finances.
47
As the Company continues to evolve, ensuring its suite of products and services are designed to meet its customer’s needs across the
entire credit spectrum is critically important. goeasy views its business as a lending ecosystem for non-prime Canadians, a one-stop
shop where they can get access to all the financial products and services, they need to meet their borrowing needs from a single trusted
provider. In 2023, the Company brought this ecosystem to life as it launched its industry leading mobile app, ‘goeasy Connect’, to provide
customers with access to their account information as well as goeasy’s entire range of products and services directly from their mobile
device. The digital portal provides customers with seamless access to build their credit, borrow money and shop for the products they
need through a best-in-class customer experience. Through the app, customers can also access pre-approved loan offers tailored to
their credit profile and borrowing needs so that they know exactly how much they have been approved for and at what rates.
Outlook
The discussion in this section is qualified in its entirety by the cautionary language regarding forward-looking statements found in the
“Caution Regarding Forward-Looking Statements” of this MD&A.
Updates on 2023 Forecasts
The Company experienced strong commercial performance, including stable credit performance, improved operating leverage,
and record adjusted operating income, adjusted net income and adjusted earnings per share. The Company ended the year in a
strong financial position, driven by record organic growth and improvements in the credit quality of the Company’s consumer
loan portfolio. Furthermore, the Company remained well capitalized throughout the year, with approximately $900.6 million in
total liquidity and funding capacity, along with an appropriate level of financial leverage. The business also continued to prove its
strength and resilience amidst economic volatility.
The Company’s 2023 forecasts, assumptions and risk factors were disclosed in its December 31, 2022 MD&A. The Company has
revised its forecasts in its March 31, 2023 MD&A. The Company’s actual performance against its forecast for fiscal 2023 is as follows:
ACTUAL RESULTS
FOR 2023
UPDATED FORECASTS
FOR 2023
OUTCOME
Gross consumer loans receivable at year-end
$3.65 billion
$3.40 - $3.60 billion
Exceeded the forecast
Total Company revenue
$1.25 billion
$1.20 - $1.25 billion
Consistent with forecast
Total yield on consumer loans (including ancillary
products) 1
Net charge offs as a percentage of average gross
consumer loans receivable
35.3%
8.9%
34.5% - 36.5%
Consistent with forecast
8.0% - 10.0%
Consistent with forecast
Total Company operating margin (reported/adjusted1,2)
38.1%/39.3%
Return on equity (reported/adjusted1,2)
25.9%/25.4%
36% +
22% +
Consistent with forecast
Consistent with forecast
1 Total yield on consumer loans (including ancillary products), adjusted total Company operating margin and adjusted return on equity are non-IFRS ratios. Non-IFRS ratios are not determined in
accordance with IFRS, do not have standardized meanings and may not be comparable to similar financial measures presented by other companies. See description in sections “Portfolio Analysis”
and “Key Performance Indicators and Non-IFRS Measures”.
2 During the year, the Company incurred adjusting items that were outside of its normal business activities and are significant in amount and scope, which management believes are not reflective
of underlying business performance. These adjusting items include LendCare integration costs, amortization of intangible assets acquired through the acquisition, one-time refinancing costs
related to notes payable, one-time contract exit fee and investment income. These adjusting items are discussed in the “Key Performance Indicators and Non-IFRS Measures” section.
Three Year Forecasts
The Company continues to pursue a long-term strategy that includes expanding its product range, developing its channels of
distribution and leveraging risk-based pricing to reduce the cost of borrowing for its consumers and extend the life of its customer
relationships. As such, the total yield earned on its consumer loan portfolio and net charge off rates will gradually decline, while
operating margins expand.
The Company’s strong financial profile positions it well to continue on its long-track record of achieving its corporate growth objectives.
The Company has provided a new 3-year forecast for the years 2024 through 2026. The periods of 2024 and 2025 have been updated to
reflect the most recent outlook.
48
FORECASTS
FOR 2024
FORECASTS
FOR 2025
FORECASTS
FOR 2026
Gross consumer loans receivable at year end
$4.35 - $4.55 Billion
$5.10 - $5.40 Billion
$5.80 - $6.20 Billion
Total Company revenue
$1.45 - $1.55 Billion
$1.55 - $1.75 Billion
$1.70 - $1.90 Billion
Total yield on consumer loans (including ancillary
products)1
Net charge offs as a percentage of average gross
consumer loans receivable
33.0% - 35.0%
31.0% - 33.0%
29.5% - 31.5%
8.0% - 10.0%
7.5% - 9.5%
7.25% - 9.25%
Total Company operating margin
Return on equity
39% +
21% +
40% +
21% +
41% +
21% +
1 Total yield on consumer loans (including ancillary products) is a non-IFRS ratio. Non-IFRS ratios are not determined in accordance with IFRS, do not have standardized meanings and may not be
comparable to similar financial measures presented by other companies. See description in section “Portfolio Analysis”.
These forecasts are inherently subject to material assumptions used to develop such forward-looking statements and risk factors as identified below.
KEY ASSUMPTIONS
In formulating the guidance provided above, the Company makes a series of assumptions, which include, but are not limited to:
Environmental Conditions
• Stability in the macroeconomic environment.
• Continued demand for non-prime credit.
Portfolio Growth
• The Company executes on growth initiatives outlined in its strategic plan and increased penetration of its indirect point of-sale and
secured lending products.
• Stable revenue generated by the Company’s easyhome business, coupled with growth of consumer lending at easyhome.
Liquidity & Funding
• The Company continues to be able to access growth capital and at reasonable rates.
Revenue Yield
• The Company expects the total portfolio yield to moderate over the outlook period, due to a shift in product mix, growth in indirect
point-of-sale financing and secured lending products.
• The effective yield earned on the sale of ancillary products gradually reduces as the average loan size increases.
• The total yield on consumer loans include the impact of the reduced maximum allowable rate of interest to an annual percentage
rate (“APR”) of 35% that the Government of Canada announced through the Federal Budget on March 28, 2023.
• Total portfolio yield and net loss rates of its lending products are as estimated in the Company’s budget and strategic plan.
Credit Performance
• Net charge offs perform in line with the Company’ budget and the forecasts generated through the use of its proprietary custom
credit and scoring models.
• The mixture of customers acquired through each of the Company’s acquisition channels and the mixture of new and existing
borrowers are as estimated in the Company’s forecast.
Investment Performance
• The fair value of investments are assumed to remain static, as no forecast is made on changes in carrying value or timing of realization
of the investment portfolio.
Mergers and Acquisitions
• No mergers and acquisitions were contemplated in the forecasts.
49
KEY RISK FACTORS
These forecasts are inherently subject to risks as identified in the following, as well as those risks, which are referred to in the section
entitled “Risk Factors” as described in this MD&A.
Environmental & Market Conditions
• Uncertainty around overall consumer demand during times of business disruption.
• Increased levels of unemployment or economic instability that may adversely affect the Company’s forward-looking indicators that
contribute to credit risk and losses within the Company’s loan portfolio.
• Business conditions are within acceptable parameters with respect to consumer demand, competition and margins.
Real Estate
• The Company’s ability to renew existing leases and secure new locations.
Access to Capital & Funding
• Continued access to required capital and funding.
Regulatory Environment
• Changes to regulations governing the products offered by the Company.
Credit Performance
• Material increase of net charge off rates.
Merchant Partnerships and Point-of-Sale Channel
• The Company’s ability to continue to secure and maintain merchant partnerships in its automotive financing and point-of-sale channel.
Analysis of Results for the Year Ended December 31, 2023
Financial Highlights and Accomplishments
• In 2023, the Company continued strengthening its balance sheet and liquidity position by expanding its borrowing capacity
and extending facility maturity dates. These enhancements to the Company’s funding sources facilitate its long-term growth
plan and contemplated strategic business initiatives.
• On March 13, 2023, the Company exercised the accordion feature of its existing senior secured revolving credit facility
(“Revolving Credit Facility”) through its existing syndicate of banks and increased the maximum amount available under
the facility by $100 million to $370 million, while maintaining the current interest rate payable on advances at the
Canadian Bankers’ Acceptance rate (“BA”) plus 225 bps or the lender’s prime rate (“Prime”) plus 75 bps, at the option of
the Company.
• On April 30, 2023, the Company amended its securitization facility with a leading Canadian insurance company, to provide
for $150 million (“$150 million Securitization Facility”) of funding through the sale of consumer loans until April 30, 2024.
The funding rate is equal to an interpolated Government of Canada Bond (“GOCB”) rate plus an initial spread of 310 bps.
• On June 15, 2023, the Company amended its $1.4 billion revolving securitization warehouse facility (“Revolving
Securitization Warehouse Facility I”) to extend the maturity date to October 31, 2025, and the applicable interest rate on
advances was changed from 1-month Canadian Dollar Offered Rate (“CDOR”) plus 185 bps to 1-month CDOR plus 195 bps,
an increase of 10 bps. The Company continues to utilize an interest rate swap agreement to generate fixed rate payments
on the amounts drawn to mitigate the impact of increase in interest rate.
• On September 28, 2023, the Company increased its $200 million revolving securitization warehouse facility (“Revolving
Securitization Warehouse Facility II”) (the Revolving Securitization Warehouse Facility I and Revolving Securitization
Warehouse Facility II are collectively referred to as “Revolving Securitization Warehouse Facilities”), which is collateralized
by automotive consumer loans, from $200 million to $375 million and continues to be underwritten by the same lender, with
the addition of a new lender to the syndicate. The facility continues to bear interest equal to the 1-month CDOR plus 185 bps.
50
• On November 28, 2023, the Company issued US$550 million of 9.250% senior unsecured notes payable (the “2028
Notes”) with interest payable semi-annually on June 1 and December 1 of each year. The 2028 Notes mature on
December 1, 2028. The 2028 Notes include certain prepayment options which are derivatives embedded in the notes.
Concurrent with the issuance of the 2028 Notes, the Company entered into cross-currency swaps to fix the foreign
exchange rate for the proceeds from the offering and for payments of principal and interest under these 2028
Notes at a fixed exchange rate of USD1.000 = CAD1.3832, thereby hedging the US$550.0 million 2028 Notes at a
CAD interest rate of 8.79% until December 1, 2027. goeasy used the proceeds from the issuance of the 2028 Notes
to fund the extinguishment of its US$550.0 million of 5.375% senior unsecured notes payable (the “2024 Notes”).
For the year ended December 31, 2023, the Company recognized a fair value change on prepayment options related to
2028 Notes amounting to $19.0 million.
• On December 1, 2023, the Company extinguished its 2024 Notes and unwound the related cross-currency swaps. As a
result of repaying these notes, the Company recognized the remaining unamortized deferred financing costs related
to these notes, realized derivative loss on the settlement of the related cross-currency swaps, and reclassified the net
change in cash flow hedge from other comprehensive income (loss) to the consolidated statement of income resulting in
a total refinancing cost of $9.5 million.
• On December 20, 2023, the Company further increased its Revolving Securitization Warehouse Facility II to $500 million
and extended the maturity date to December 16, 2025. The facility continues to be underwritten by the same syndicate
of lenders. The Company continues to utilize an interest rate swap agreement to generate fixed rate payments on the
amounts drawn to mitigate the impact of increase in interest rate.
• As at December 31, 2023, the Company had a cash position of $144.6 million, which included $24.2 million of restricted
cash related to its cross-currency swaps and $67.5 million in restricted cash related to its revolving securitization
warehouse facility and secured borrowings reserve. As at December 31, 2023, the Company has borrowing capacities
of $756 million under its existing revolving credit facilities. The Company’s total liquidity as at December 31, 2023 was
$900.6 million. The current total liquidity, excluding future enhancements or diversification of funding sources, provide
adequate growth capital for the Company to execute its organic growth plans.
• The Company reported record revenue for the year ended December 31, 2023 of $1.25 billion, an increase of $230.7 million, or
22.6% compared to 2022. The increase was primarily driven by record organic growth of the Company’s consumer loan portfolio.
• Gross consumer loans receivable increased to $3.65 billion as at December 31, 2023 from $2.79 billion as at December 31,
2022, an increase of $850.5 million, or 30.4%. The increase in consumer loans receivable was driven by a strong volume
of applications for credit, leading to a record loan originations across several product and acquisition channels, including
unsecured lending, point-of-sale lending and automotive financing.
• Net charge offs for the year as a percentage of average gross consumer loans receivable were 8.9%, 20 bps lower compared
to 2022 of 9.1%. The stable credit performance reflects the improved credit and product mix of the loan portfolio and the
proactive credit and underwriting enhancements made since the fourth quarter of 2021. The Company’s net charge off rate
was in line with the Company’s targeted range for 2023 of 8.0% to 10.0%.
• During the year, the net change in allowance for future credit losses was $52.3 million, compared to $53.3 million in 2022, a
decrease of $1.0 million due primarily to lower provision rate in the year. The provision rate for the year decreased to 7.28%
from 7.62% in 2022, primarily due to the continued improvement in the product and credit mix of the loan portfolio.
51
• Total Company reported record total operating income of $476.5 million, up $144.1 million, or 43.4% compared to 2022. The
Company also reported a record operating margin of 38.1%, up from the 32.6% in 2022. During the year, the Company incurred
adjusting items that are outside of its normal business activities and are significant in amount and scope, which management
believes are not reflective of the Company’s underlying business performance. These adjusting items include a one-time
contract exit fee, and integration costs and amortization of intangible assets related to the acquisition of LendCare. These
adjusting items are discussed in the “Key Performance Indicators and Non-IFRS Measures” section. Excluding the effects of
these adjusting items, the Company reported record adjusted operating income1 of $491.2 million, up $121.8 million, or 33.0%,
compared to 2022. The increase in adjusted operating income was mainly driven by higher revenue associated with the
record loan growth in the year, stable credit performance of the loan book and continued improvement in operating leverage.
The Company also reported a record adjusted operating margin1 of 39.3%, up from the 36.2% in 2022.
• The easyfinancial reportable segment reported record operating income of $534.5 million, compared to $394 million in 2022,
an increase of $140.5 million, or 35.7%. The improved operating income was mainly driven by higher revenue associated
with the record loan growth in the year, stable credit performance of the loan book and continued improvement in operating
leverage. easyfinancial’s operating margin was 48.7%, 340 bps higher compared to 45.3% in 2022.
• The easyhome reportable segment operating income was $36.9 million, compared to $34.6 million in 2022, an increase of
$2.4 million, or 6.8%. The increase was mainly driven by higher lending revenues associated with the larger consumer loan
portfolio, stable credit performance of the loan book and continued improvement in operating leverage, partially offset by
lower leasing revenues. easyhome’s operating margin was 24.1%, compared to 23.1% in 2022.
• During the year, the Company recognized net investment income of $9.8 million, mainly due to fair value changes on the
Company’s investments, compared to $28.7 million of net investment loss in 2022.
• The Company’s net income was $247.9 million, or $14.48 per share on a diluted basis, up 76.9% and 72.0%, respectively,
compared to $140.2 million, or $8.42 per share on a diluted basis in 2022. During the year, the Company incurred adjusting
items including a one-time contract exit fee, integration costs and amortization of intangible assets related to the acquisition
of LendCare, net investment income, refinancing costs related to notes payable and fair value change on prepayment options
related to 2028 Notes. These adjusting items are discussed in the “Key Performance Indicators and Non-IFRS Measures”
section. Excluding the effects of these adjusting items, the Company achieved record adjusted net income1 and record
adjusted diluted earnings per share1 of $243.2 million and $14.21 per share on a diluted basis, respectively. On this basis,
adjusted net income and adjusted diluted earnings per share increased by 26.5% and 23.0%, respectively. The increase in
adjusted net income was primarily driven by the record operating income, partially offset by incremental finance costs driven
by higher borrowing levels to fund growth of the Company’s lending business and a higher cost of borrowing.
• Return on equity was 25.9%, up from 17.6% in 2022, primarily due to the higher net income discussed above. Adjusted return
on equity1 was 25.4%, up from 24.2% in 2022, mainly driven by the record net income, partially offset by the higher level of
shareholders’ equity. Excluding goodwill and acquired intangible assets, the adjusted return on tangible common equity1 was
34.6%, down from 36.4% in 2022. The decline in adjusted return on tangible common equity was mainly driven by a higher
level of tangible common equity, partially offset by record adjusted net income, as discussed above.
• In consideration of the improved earnings achieved in 2023 and the Company's confidence in its continued growth and access
to capital going forward, the Board of Directors approved a 21.9% increase to the annual dividend from $3.84 per share to
$4.68 per share in 2024.
1 Adjusted operating income and adjusted net income are non-IFRS measures. Adjusted operating margin, adjusted diluted earnings per share, adjusted return on equity and adjusted tangible
common equity are non-IFRS ratios. Non-IFRS measures and non-IFRS ratios are not determined in accordance with IFRS, do not have standardized meanings and may not be comparable to similar
financial measures presented by other companies. See descriptions in section “Key Performance Indicators and Non-IFRS Measures”.
52
Summary of Financial Results and Key Performance Indicators
($ IN 000’S EXCEPT EARNINGS PER SHARE AND PERCENTAGES)
YEAR ENDED
DECEMBER 31,
2023
DECEMBER 31,
2022
VARIANCE
$ / BPS
VARIANCE
% CHANGE
Summary Financial Results
Revenue
Bad debts
Other operating expenses
EBITDA1
EBITDA margin1
Depreciation and amortization
Operating income
Operating margin
Other income (loss)
Finance costs
Effective income tax rate
Net income
Diluted earnings per share
Return on receivables
Return on assets
Return on equity
Return on tangible common equity1
Adjusted Financial Results1,2
Other operating expenses
Efficiency ratio
Operating income
Operating margin
Net income
Diluted earnings per share
Return on receivables
Return on assets
Return on equity
Return on tangible common equity
Key Performance Indicators
Segment Financials
easyfinancial revenue
easyfinancial operating margin
easyhome revenue
easyhome operating margin
Portfolio Indicators
Gross consumer loans receivable
Growth in consumer loans receivable
Gross loan originations
Total yield on consumer loans (including ancillary products)1
Net charge offs as a percentage of average gross consumer loans receivable
Free cash flows from operations before net growth in gross consumer loans receivable1
Potential monthly lease revenue1
1,250,069
1,019,336
230,733
341,639
345,581
539,085
43.1%
86,331
476,518
38.1%
9,771
149,334
26.4%
247,898
14.48
7.6%
6.7%
25.9%
36.7%
377,574
30.2%
491,160
39.3%
243,175
14.21
7.5%
6.5%
25.4%
34.6%
272,893
332,730
351,507
34.5%
81,306
332,407
32.6%
(28,659)
107,972
68,746
12,851
187,578
860 bps
5,025
144,111
550 bps
38,430
41,362
28.4%
(200 bps)
140,161
107,737
8.42
5.8%
4.8%
17.6%
28.4%
6.06
180 bps
190 bps
830 bps
830 bps
369,362
36.2%
192,261
11.55
8.0%
6.6%
24.2%
36.4%
121,798
310 bps
50,914
2.66
(50 bps)
(10 bps)
120 bps
(180 bps)
1,096,817
48.7%
153,252
24.1%
869,528
45.3%
149,808
227,289
340 bps
3,444
23.1%
100 bps
3,645,202
2,794,694
850,508
850,508
764,355
86,153
2,709,194
2,377,606
331,588
35.3%
8.9%
377,291
7,654
37.7%
(240 bps)
9.1%
258,474
7,868
(20 bps)
118,817
(214)
22.6%
25.2%
3.9%
53.4%
24.9%
6.2%
43.4%
16.9%
134.1%
38.3%
(7.0%)
76.9%
72.0%
31.0%
39.6%
47.2%
29.2%
33.0%
8.6%
26.5%
23.0%
(6.3%)
(1.5%)
5.0%
(4.9%)
26.1%
7.5%
2.3%
4.3%
30.4%
11.3%
13.9%
(6.4%)
(2.2%)
46.0%
(2.7%)
342,422
35,152
33.6%
(340 bps)
10.3%
(10.1%)
1 EBITDA, adjusted other operating expenses, adjusted operating income, adjusted net income and free cash flows from operations before net growth in gross consumer loans receivable are non-IFRS
measures. EBITDA margin, efficiency ratio, adjusted operating margin, adjusted diluted earnings per share, adjusted return on receivables, adjusted return on equity, adjusted return on assets, reported
and adjusted return on tangible common equity and total yield on consumer loans (including ancillary products) are non-IFRS ratios. See description in sections “Portfolio Analysis”, “Key Performance
Indicators and Non-IFRS Measures” and “Financial Condition”.
2 Adjusting items are discussed in the “Key Performance Indicators and Non-IFRS Measures” section.
53
Locations Summary
easyfinancial
Kiosks (in store)
Stand-alone locations
Operations Centers
Total easyfinancial locations
easyhome
Corporately owned stores
Franchise stores
Total easyhome stores
Corporate
Corporate office
Total corporate office
LOCATIONS AS
AT DECEMBER 31,
2022
LOCATIONS
OPENED IN
THE YEAR
LOCATIONS
CLOSED
IN THE YEAR
CONVERSIONS
LOCATIONS AS
AT DECEMBER 31,
2023
2
297
3
302
120
34
154
1
1
-
4
-
-
-
-
-
-
-
-
(6)
-
-
(10)
-
(10)
-
-
-
-
-
-
-
-
-
-
-
2
295
3
300
110
34
144
1
1
In 2023, the Company closed six easyfinancial locations and 10 easyhome stores as part of its continued efforts to optimize its geographic
footprint. The Company continued to offer its products and services through an omnichannel business model, that includes retail
locations, online and mobile platforms, and indirect lending partnerships.
Summary of Financial Results by Reporting Segment
($ IN 000'S EXCEPT EARNINGS PER SHARE)
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
YEAR ENDED DECEMBER 31, 2023
Revenue
Interest income
Lease revenue
Commissions earned
Charges and fees
Operating expenses
Bad debts
Other operating expenses
Depreciation and amortization
Operating income (loss)
Other income
Finance costs
Income before income taxes
Income taxes
Net income
Diluted earnings per share
853,228
-
220,363
23,226
35,700
99,848
14,122
3,582
1,096,817
153,252
327,196
197,358
37,747
562,301
534,516
14,443
59,610
42,259
116,312
36,940
-
-
-
-
-
-
88,613
6,325
94,938
(94,938)
888,928
99,848
234,485
26,808
1,250,069
341,639
345,581
86,331
773,551
476,518
9,771
(149,334)
336,955
89,057
247,898
14.48
54
($ IN 000'S EXCEPT EARNINGS PER SHARE)
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
YEAR ENDED DECEMBER 31, 2022
Revenue
Interest income
Lease revenue
Commissions earned
Charges and fees
Operating expenses
Bad debts
Other operating expenses
Depreciation and amortization
Operating income (loss)
Other loss
Finance costs
Income before income taxes
Income taxes
Net income
Diluted earnings per share
Portfolio Performance
Consumer Loans Receivable
668,779
-
184,013
16,736
869,528
261,997
180,867
32,668
475,532
393,996
29,371
103,414
13,146
3,877
149,808
10,896
61,748
42,586
115,230
34,578
-
-
-
-
-
-
90,115
6,052
96,167
(96,167)
698,150
103,414
197,159
20,613
1,019,336
272,893
332,730
81,306
686,929
332,407
(28,659)
(107,972)
195,776
55,615
140,161
8.42
The gross consumer loans receivable portfolio increased to $3.65 billion as at December 31, 2023, from $2.79 billion as at December
31, 2022, an increase of $850.5 million, or 30.4%. Loan originations for the year were $2.71 billion, up 13.9% from 2022. The increase in
consumer loans receivable was driven by a strong volume of applications for credit, leading to a record loan originations across several
product and acquisition channels, including unsecured lending, point-of-sale lending and automotive financing. Loan originations for the
year has an increased proportion of secured loans with longer payment terms, compared to 2022.
The total annualized yield, including loan interest, fees and ancillary products, realized by the Company on its average consumer loans
receivable was 35.3%, down 240 bps from 2022. Total annualized yield decreased due to: i) organic growth of certain products which
carry lower rates of interest such as home equity loans, automotive financing, point-of-sale financing in the powersports, and healthcare
and retail categories; ii) increased lending activity in the province of Quebec, where loans have lower rates of interest; iii) a higher
proportion of larger dollar value loans which have reduced pricing on certain ancillary products; iv) a modest reduction in penetration
rates on ancillary products; and v) the Company’s strategy to reward borrowers for on-time payment behaviour, by gradually reducing
the rate of interest charged.
Bad debt expense increased to $341.6 million for the year ended December 31, 2023, from $272.9 million in 2022, an increase of $68.7
million, or 25.2%. The following table details the components of bad debt expense:
($ IN 000’S)
Provision required due to net charge offs
Impact of loan book growth
Impact of change in allowance for expected credit losses rate
Net change in allowance for credit losses
Bad debt expense
YEAR ENDED
DECEMBER 31, 2023
DECEMBER 31, 2022
289,321
57,466
(5,148)
52,318
341,639
219,614
53,617
(338)
53,279
272,893
55
Bad debt expense increased by $68.7 million due to the following factors:
• Net charge offs increased from $219.6 million for the year ended December 31, 2022 to $289.3 million in 2023, an increase of
$69.7 million. Net charge offs as a percentage of the average gross consumer loans receivable on an annualized basis were 8.9%,
compared to 9.1% in 2022. The stable credit performance reflects the resilience of the non-prime consumer, coupled with improved
product mix of the loan portfolio and the proactive credit and underwriting enhancements made since the fourth quarter of 2021.
The net charge off rate was in line with the Company’s targeted range for 2023 of 8.0% to 10.0%.
• The net change in allowance for credit losses was $52.3 million, compared to $53.3 million in 2022, a decrease of $1.0 million.
For the year ended December 31, 2023, the provision rate decreased to 7.28% from 7.62% in 2022, primarily due to the continued
improvement in the product and credit mix of the loan portfolio and the proportion of loans secured by assets.
easyhome Leasing Portfolio
The leasing portfolio as measured by potential monthly leasing revenue as at December 31, 2023 was $7.7 million, down from $7.9 million
in 2022. The easyhome leasing business is a mature business that has experienced a gradual decline in sales volume, as consumer
demand has shifted to alternate forms of financing purchases of everyday household items.
Revenue
Revenue for the year was $1.25 billion, compared to $1.02 billion in the same period of 2022, an increase of $230.7 million, or 22.6%.
Revenue growth was mainly driven by the organic growth of the Company’s consumer loan portfolio.
easyfinancial – Revenue in 2023 was $1.10 billion, an increase of $227.3 million, or 26.1%, compared to the same period of 2022. The
components of the increased revenue include:
(i) Interest income increased by $184.4 million, or 27.6%, driven by the growth in the loan portfolio, which includes growth of unsecured
lending, automotive financing, home equity loans, point-of-sale financing and cross-selling activity across its consumer base,
partially offset by lower interest yields due to improved product mix;
(ii) Commissions earned from sales of ancillary products and services increased by $36.4 million, or 19.8%, due to the larger
consumer loan portfolio; and
(iii) Charges and fees increased by $6.5 million, or 38.8%, due to the larger consumer loan portfolio.
easyhome – Revenue in 2023 was $153.3 million, an increase of $3.4 million, or 2.3%, compared to the same period of 2022. Lending
revenue within the easyhome stores increased by $7.5 million, compared to the same period of 2022. Traditional leasing revenue,
including fees, was $4.1 million lower compared to the same period of 2022. Components of the increased revenue include:
(i) Interest revenue increased by $6.3 million, or 21.5%, driven by the growth in the loan portfolio related to the easyhome business;
(ii) Leasing revenue decreased by $3.6 million, or 3.4%, due to a smaller lease portfolio; and
(iii) Commissions earned on the sale of ancillary products, charges and fees increased by $0.7 million.
Other Operating Expenses
Other operating expenses for the year were $345.6 million, an increase of $12.9 million, or 3.9%, compared to the same period in 2022.
The increase in other operating expenses was mainly driven by higher operating costs to support the growing loan portfolio, moderated
by a one-time intangible asset write off in 2022 and the continued improvement in operating efficiency.
easyfinancial – Other operating expenses were $197.4 million, an increase of $16.5 million, or 9.1%, compared to 2022. The increase in
other operating expenses was driven by incremental volume related costs to operate and manage the growing loan portfolio, partially
offset by improved operating efficiency.
easyhome – Other operating expenses were $59.6 million, a decrease of $2.1 million, or 3.5%, compared to the same period of 2022. The
decrease in other operating expenses was driven by lower store costs due to the continued improvement in operating efficiency.
56
Corporate – Total other operating expenses for the year ended December 31, 2023 were $88.6 million, a decrease of $1.5 million, or 1.7%, from
2022. The decrease in other operating expenses was primarily due to a one-time intangible asset write off in 2022, partially offset by incremental
volume related costs to support the growing loan portfolio. Excluding the effects of the adjusting items discussed in “Key Performance Indicators
and Non-IFRS Measures”, corporate expenses before depreciation and amortization represented 7.0% of revenues in 2023, compared to 6.5% of
revenues in 2022.
Depreciation and Amortization
Depreciation and amortization for the year was $86.3 million, an increase of $5.0 million, or 6.2%, from the same period in 2022, driven primarily
by higher amortization of intangible assets and depreciation of right-of-use assets. Overall, depreciation and amortization represented 6.9% of
revenue, a decline from 8.0% in 2022.
easyfinancial – Total depreciation and amortization was $37.7 million, an increase of $5.1 million, or 15.5%, when compared to 2022, driven primarily
by higher amortization of intangible assets and depreciation of right-of-use assets due to new and renewal of lease agreements for retail locations
since December 31, 2022.
easyhome – Total depreciation and amortization expense was $42.3 million, relatively flat from 2022.
Corporate – Depreciation and amortization was $6.3 million, relatively flat from 2022.
Operating Income (Income before Finance Costs and Income Taxes)
Operating income was $476.5 million, up $144.1 million, or 43.4%, when compared to 2022. The Company’s operating margin was 38.1%,
up from 32.6% reported in 2022. Excluding the effects of the adjusting items discussed in “Key Performance Indicators and Non-IFRS
Measures”, the Company reported record adjusted operating income of $491.2 million, up $121.8 million, or 33.0%, when compared to
2022. The increase in adjusted operating income was mainly driven by higher revenue associated with the record loan growth in the
year, stable credit performance of the loan book and continued improvement in operating leverage. The Company also reported a record
adjusted operating margin of 39.3%, up from 36.2% in 2022.
easyfinancial – Operating income was $534.5 million, compared to $394.0 million in 2022, an increase of $140.5 million, or 35.7%. The improved
operating income was mainly driven by higher revenue associated with record loan growth in the year, stable credit performance of the loan
book and continued improvement in operating leverage. easyfinancial revenue increased by $227.3 million, partially offset by an increase of $65.2
million in bad debt expense and an increase of $21.6 million in other costs to support the growing customer base and enhanced product offerings.
easyfinancial’s operating margin was 48.7%, 340 bps higher compared to 45.3% in 2022.
easyhome – Operating income was $36.9 million, compared to $34.6 million in 2022, an increase of $2.4 million, or 6.8%. The increase was mainly
driven by higher lending revenues associated with the larger consumer loan portfolio, stable credit performance of the loan book and continued
improvement in operating leverage, partially offset by lower leasing revenues. easyhome’s operating margin was 24.1%, compared to 23.1% in 2022.
Other Income
During the year, the Company recognized net investment income of $9.8 million, mainly due to fair value changes on the Company’s investments,
compared to $28.7 million of net investment loss in 2022.
Finance Costs
Finance costs were $149.3 million, an increase of $41.4 million from 2022. The increase was mainly driven by one-time refinancing costs related to
notes payable, higher borrowing levels to fund growth of the Company’s lending business and a higher cost of borrowing, partially offset by the fair
value change on prepayment options related to 2028 Notes. The Company utilizes derivative financial instruments as cash flow hedges to assist
in the management of interest rate volatility. As at December 31, 2023, 93% of the Company’s drawn debt balances effectively bear fixed rates due
to the type of debt and the interest rate swap agreements on Revolving Securitization Warehouse Facilities. The average blended interest rate on
drawn balances for the Company’s debt as at December 31, 2023 was 6.4%, up from 5.2% as at December 31, 2022.
Income Tax Expense
The effective income tax rate for the year was 26.4%, lower than the 28.4% in 2022. The decrease was mainly due to net investment gains in 2023,
compared to net investment losses in 2022, which were taxed at a lower capital gains effective tax rate.
57
Net Income and EPS
The Company’s net income was $247.9 million, or $14.48 per share on a diluted basis, up 76.9% and 72.0%, respectively, against the $140.2
million, or $8.42 per share on a diluted basis reported in 2022. Excluding the effects of the adjusting items discussed in “Key Performance
Indicators and Non-IFRS Measures” section, the Company achieved record adjusted net income and record adjusted diluted earnings
per share of $243.2 million, or $14.21 per share on a diluted basis, an increase of 26.5% and 23.0%, respectively, compared to 2022. The
increase in adjusted net income was primarily driven by record operating income, partially offset by incremental finance costs driven by
higher borrowing levels to fund growth of the Company’s lending business and a higher cost of borrowing.
Selected Annual Information
($ IN 000’S EXCEPT PERCENTAGES AND PER SHARE AMOUNTS)
20233
20223
20213
2020
2019
Gross Consumer Loans Receivable
3,645,202
2,794,694
2,030,339
1,246,840
1,110,633
Revenue
Net income
Adjusted net income1
Return on receivables2
Adjusted return on receivables1,2
Return on assets
Adjusted return on assets1
Return on equity
Adjusted return on equity1
Return on tangible common equity1,2
Adjusted return on tangible common equity1,2
Net income as a percentage of revenue
Adjusted net income as a percentage of revenue1
Dividends declared on Common Shares
Cash dividends declared per Common Share
Earnings per share
Basic
Diluted
Adjusted diluted1
1,250,069
1,019,336
247,898
243,175
140,161
192,261
826,722
244,943
174,759
652,922
136,505
117,646
609,383
64,349
80,315
7.6%
7.5%
6.7%
6.5%
25.9%
25.4%
36.7%
34.6%
19.8%
19.5%
63,614
3.84
14.70
14.48
14.21
5.8%
8.0%
4.8%
6.6%
17.6%
24.2%
28.4%
36.4%
13.8%
18.9%
58,338
3.64
8.61
8.42
11.55
-
-
11.5%
8.2%
36.7%
26.2%
50.7%
35.3%
29.6%
21.1%
42,312
2.64
15.12
14.62
10.43
-
-
9.8%
8.5%
36.1%
31.1%
38.3%
33.0%
20.9%
18.0%
26,103
1.80
9.21
8.76
7.57
-
-
5.5%
6.8%
20.2%
25.3%
-
-
10.6%
13.2%
17,855
1.24
4.40
4.17
5.17
1 Adjusted net income is a non-IFRS measure. Adjusted diluted earnings per share, adjusted return on equity, adjusted return on receivables, adjusted return on assets and reported and adjusted
return on tangible common equity are non-IFRS ratios. See description in section “Key Performance Indicators and Non-IFRS Measures”. Please refer to page 43 of the December 31, 2022 MD&A,
page 50 of December 31, 2021 MD&A, page 42 of the December 31, 2020 MD&A, and page 39 of the December 31, 2019 MD&A, for the respective “Key Performance Indicators and Non-IFRS
Measures” section for those years. These MD&As are available on www.sedarplus.ca.
2 Comparable reported and adjusted return on receivables financial measures for the years 2019 to 2021 and reported and adjusted return on tangible common equity financial measures for the
year 2019 were not published.
3 Selected annual information above for years ended December 31, 2023, 2022 and 2021 include financial information related to LendCare.
Key financial measures for each of the last five years are summarized in the table above and include gross consumer loans receivable, revenue,
net income, earnings per share, return on receivables, return on assets, return on equity, return on tangible common equity and net income as
a percentage of revenue over this time frame. Revenue growth over this time frame was primarily related to growth of gross consumer loans
receivable. The increase in the Company’s adjusted net income and adjusted diluted earnings per share was driven by higher revenue due to the
larger consumer loan portfolio, stable credit performance of the loan book and continued improvement in operating leverage. The increased scale
of the business resulted in adjusted net income as a percentage of revenue also increasing, declining in the prior year mainly due to the shift in
product mix towards a higher proportion of secured loans, which carry lower rates of interest. Adjusted return on assets, adjusted return on equity
and adjusted return of tangible common equity decreased in the past years, mainly driven by the shift in credit and product mix to higher credit
quality borrowers, lower rates on its loans, and incremental financing costs, combined with the higher level of assets and shareholders’ equity.
58
Assets and Liabilities
($ IN 000’S)
Total assets
Consumer loans receivable, net
Cash
Total liabilities
Revolving credit facility
Secured borrowings
Revolving securitization warehouse facility
Notes payable
Convertible debentures
AS AT
DECEMBER 31,
2023
AS AT
DECEMBER 31,
2022
AS AT
DECEMBER 31,
2021
AS AT
DECEMBER 31,
2020
AS AT
DECEMBER 31,
2019
4,164,167
3,447,588
144,577
3,302,889
2,627,357
62,654
2,596,153
1,899,631
102,479
1,501,916
1,152,378
93,053
3,110,090
2,433,201
1,806,240
1,058,404
190,921
143,177
1,364,741
1,120,826
-
148,646
105,792
805,825
-
198,339
173,959
292,814
-
-
1,168,997
1,085,906
689,410
-
-
-
1,318,622
1,040,552
46,341
986,201
112,563
-
701,549
40,656
Total assets have been increasing due primarily to the organic growth of the Company’s consumer loans receivable portfolio.
The Company finances the growth of its consumer loans receivable through a combination of external debt, common shares and retained
earnings. The Company’s external debt includes Revolving Credit Facility, Revolving Securitization Warehouse Facilities, secured borrowings and
notes payable. At the end of 2023, the Company’s ratio of net debt to net capitalization was 72%, a level that is conservative against several of the
Company’s peers and consistent with the Company’s desired leverage position.
Analysis of Results for the Three Months Ended December 31, 2023
Fourth Quarter Highlights
• The Company reported record revenue of $338.1 million during the three-month period ended December 31, 2023, an increase of $64.8
million, or 23.7%, when compared to the same period of 2022. Revenue growth was mainly driven by the strong organic growth in the
Company’s consumer loan portfolio
• Gross consumer loans receivable increased to $3.65 billion as at December 31, 2023 from $2.79 billion as at December 31, 2022, an increase of
$850.5 million, or 30.4%. The increase in consumer loans receivable was driven by a strong volume of applications for credit, leading to a strong
performance across several product and acquisition channels, including unsecured lending, point-of-sale lending and automotive financing.
• Net charge offs for the three-month period ended December 31, 2023 as an annualized percentage of average gross consumer loans
receivable were 8.8%, 20 bps lower compared to 9.0% in the same period of 2022, and in line with the Company’s targeted range for 2023 of
8.0% to 10.0%. The stable credit performance reflects the improved credit and product mix of the loan portfolio and the proactive credit and
underwriting enhancements made since the fourth quarter of 2021.
• For the three-month period ended December 31, 2023, the net change in allowance for credit losses was $12.6 million, compared to $16.7
million in the same period of 2022, a decrease of $4.1 million due to the continued improvement in the product and credit mix of the loan
portfolio and the proportion of loans secured by assets. The provision rate for the three-month period ended December 31, 2023 decreased
to 7.28% from 7.37% in the third quarter of 2023, primarily due to continued improvement in the product and credit mix of the loan portfolio.
• The Company reported record total operating income for the three-month period ended December 31, 2023 of $137.2 million, up
$61.4 million, or 80.9%, when compared to the same period of 2022. The Company also reported a record operating margin of 40.6%,
up from 27.8% reported in the same period of 2022. During the year, the Company incurred adjusting items that are outside of its
normal business activities and are significant in amount and scope, which management believes are not reflective of the Company’s
underlying business performance. These adjusting items include integration costs and amortization of intangible assets related to the
acquisition of LendCare. These adjusting items are discussed in the “Key Performance Indicators and Non-IFRS Measures” section.
Excluding the effects of the adjusting items, the Company reported record adjusted operating income1 for the three-month period
ended December 31, 2023 of $140.6 million, up $40.9 million, or 41.0%, when compared to the same period of 2022. The increase in
adjusted operating income was mainly driven by higher revenue during the period associated with the larger consumer loan portfolio,
stable credit performance of the loan book and continued improvement in operating leverage. The Company reported record adjusted
operating margin1 of 41.6% in the quarter, up from 36.5% in the same period of 2022.
59
• The easyfinancial segment reported record operating income of $150.2 million for the three-month period ended December
31, 2023, an increase of $44.0 million, or 41.4%, when compared to the same period of 2022. The improved operating income
was mainly driven by higher revenue during the period associated with the larger consumer loan portfolio, stable credit
performance of the loan book and continued improvement in operating leverage. easyfinancial’s operating margin was
50.2%, 510 bps higher compared to 45.1% in the same period of 2022.
• The easyhome segment reported operating income for the three-month period ended December 31, 2023 of $9.4 million, an
increase of $0.7 million, or 8.3%. The increase was mainly driven by higher lending revenues during the period associated
with the larger consumer loan portfolio, stable credit performance of the loan book and continued improvement in operating
leverage, partially offset by lower leasing revenues. easyhome’s operating margin was 24.3%, compared to 23.2% in the same
period of 2022.
• During the quarter, the Company recognized net investment income of $1.3 million, mainly due to fair value changes on the
Company’s investments, compared to $5.6 million of net investment loss in the same period of 2022.
• The three-month period ended December 31, 2023 was the 90th consecutive quarter of positive net income and diluted earnings
per share. The Company’s net income for the three-month period ended December 31, 2023 was $74.6 million, or $4.34 per
share on a diluted basis, up 161.1% and 153.8%, respectively, compared to $28.6 million, or $1.71 per share on a diluted basis
reported in the same period of 2022. During the period, the Company incurred adjusting items including integration costs and
amortization of intangible assets related to the acquisition of LendCare, net investment income, refinancing costs related
to notes payable and fair value change on prepayment options related to 2028 Notes. These adjusting items are discussed
in the “Key Performance Indicators and Non-IFRS Measures” section. Excluding the effects of these adjusting items, goeasy
achieved record adjusted net income1 and record adjusted diluted earnings per share1 during the three-month period ended
December 31, 2023 of $69.0 million and $4.01 per share on a diluted basis, respectively. Adjusted net income and adjusted
diluted earnings per share increased by 35.1% and 31.5%, respectively, when compared to the same period of 2022. The
increase in adjusted net income was primarily driven by the record operating income, partially offset by incremental finance
costs driven by higher borrowing levels to fund growth of the Company’s lending business and a higher cost of borrowing.
• Return on equity was 28.9% for the three-month period ended December 31, 2023, up from 13.8% reported in the same period
of 2022, primarily due to the higher net income discussed above. Adjusted return on equity1 for the three-month period
ended December 31, 2023 was 26.7%, up from the 24.6% reported in the same period of 2022, mainly driven by the record
net income, partially offset by the higher level of shareholders’ equity. Excluding goodwill and acquired intangible assets, the
adjusted return on tangible common equity1 for the three-month period ended December 31, 2023 was 35.3%, slightly down
from 35.9% in the same period of 2022. The decline in adjusted return on tangible common equity was mainly driven by a
higher level of tangible common equity, partially offset by record adjusted net income, as discussed above.
1 Adjusted operating income and adjusted net income are non-IFRS measures. Adjusted operating margin, adjusted diluted earnings per share, adjusted return on equity and reported and adjusted
tangible common equity are non-IFRS ratios. Non-IFRS measures and non-IFRS ratios are not determined in accordance with IFRS, do not have standardized meanings and may not be comparable
to similar financial measures presented by other companies. See descriptions in section “Key Performance Indicators and Non-IFRS Measures”.
60
Summary of Financial Results and Key Performance Indicators
($ IN 000’S EXCEPT EARNINGS PER SHARE AND PERCENTAGES)
Summary Financial Results
THREE MONTHS ENDED
DECEMBER 31,
2023
DECEMBER 31,
2022
VARIANCE
$ / BPS
VARIANCE
% CHANGE
338,112
273,326
64,786
13,313
23.7%
17.0%
(12,209)
(12.2%)
Revenue
Bad debts
Other operating expenses
EBITDA1
EBITDA margin1
Depreciation and amortization
Operating income
Operating margin
Other income
Finance costs
Effective income tax rate
Net income
Diluted earnings per share
Return on receivables
Return on assets
Return on equity
Return on tangible common equity1
Adjusted Financial Results1,2
Other operating expenses
Efficiency ratio
Operating income
Operating margin
Net income
Diluted earnings per share
Return on receivables
Return on assets
Return on equity
Return on tangible common equity
Key Performance Indicators
Segment Financials
easyfinancial revenue
easyfinancial operating margin
easyhome revenue
easyhome operating margin
Portfolio Indicators
Gross consumer loans receivable
Growth in consumer loans receivable
Gross loan originations
Total yield on consumer loans (including ancillary products)1
Net charge offs as a percentage of average gross consumer loans receivable
Free cash flows from operations before net growth in gross consumer loans receivable1
Potential monthly lease revenue1
91,570
87,734
151,911
44.9%
21,571
137,237
40.6%
1,310
36,580
26.8%
74,602
4.34
8.3%
7.4%
28.9%
39.5%
95,810
28.3%
140,643
41.6%
68,961
4.01
7.7%
6.8%
26.7%
35.3%
78,257
99,943
81,001
70,910
29.6%
1,530 bps
19,245
75,881
2,326
61,356
27.8%
1,280 bps
(5,609)
31,551
26.2%
28,576
1.71
4.2%
3.6%
6,919
5,029
60 bps
46,026
2.63
410 bps
380 bps
13.8%
1,510 bps
21.8%
1,770 bps
99,738
36.5%
51,026
3.05
7.5%
6.3%
24.6%
35.9%
40,905
510 bps
17,935
0.96
20 bps
50 bps
210 bps
(60 bps)
299,465
235,886
63,579
50.2%
38,647
24.3%
45.1%
37,440
23.2%
510 bps
1,207
110 bps
3,645,202
2,794,694
850,508
214,926
704,875
34.9%
8.8%
85,142
7,654
206,038
632,355
8,888
72,520
36.2%
(130 bps)
9.0%
(20 bps)
66,040
7,868
19,102
(214)
87.5%
51.7%
12.1%
80.9%
46.0%
123.4%
15.9%
2.3%
161.1%
153.8%
97.6%
105.6%
109.4%
81.2%
41.0%
14.0%
35.1%
31.5%
2.7%
7.9%
8.5%
(1.7%)
27.0%
11.3%
3.2%
4.7%
30.4%
4.3%
11.5%
(3.6%)
(2.2%)
28.9%
(2.7%)
87,877
7,933
9.0%
32.2%
(390 bps)
(12.1%)
1 EBITDA, adjusted other operating expenses, adjusted operating income, adjusted net income and free cash flows from operations before net growth in gross consumer loans receivable are non-IFRS measures. EBITDA
margin, efficiency ratio, adjusted operating margin, adjusted diluted earnings per share, adjusted return on receivables, adjusted return on equity, adjusted return on assets, reported and adjusted return on tangible common
equity and total yield on consumer loans (including ancillary products) are non-IFRS ratios. See description in sections “Portfolio Analysis”, “Key Performance Indicators and Non-IFRS Measures” and “Financial Condition”.
2 Adjusting items are discussed in the “Key Performance Indicators and Non-IFRS Measures” section.
61
Locations Summary
easyfinancial
Kiosks (in store)
Stand-alone locations
Operations Centers
Total easyfinancial locations
easyhome
Corporately owned stores
Franchise stores
Total easyhome stores
Corporate
Corporate office
Total corporate office
LOCATIONS AS AT
SEPTEMBER 30,
2023
LOCATIONS OPENED
IN THE PERIOD
LOCATIONS
CLOSED IN THE
PERIOD
CONVERSIONS
LOCATIONS AS AT
DECEMBER 31,
2023
2
295
3
300
110
34
144
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
295
3
300
110
34
144
1
1
Summary of Financial Results by Reporting Segment
($ IN 000'S EXCEPT EARNINGS PER SHARE)
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
THREE MONTHS ENDED DECEMBER 31, 2023
Revenue
Interest income
Lease revenue
Commissions earned
Charges and fees
Operating expenses
Bad debts
Other operating expenses
Depreciation and amortization
Operating income (loss)
Other income
Finance costs
Income before income taxes
Income taxes
Net income
Diluted earnings per share
235,142
-
58,015
6,308
299,465
87,076
52,533
9,614
149,223
150,242
9,526
24,691
3,495
935
38,647
4,494
14,330
10,419
29,243
9,404
-
-
-
-
-
-
20,871
1,538
22,409
(22,409)
244,668
24,691
61,510
7,243
338,112
91,570
87,734
21,571
200,875
137,237
1,310
(36,580)
101,967
27,365
74,602
4.34
62
($ IN 000'S EXCEPT EARNINGS PER SHARE)
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
THREE MONTHS ENDED DECEMBER 31, 2022
Revenue
Interest income
Lease revenue
Commissions earned
Charges and fees
Operating expenses
Bad debts
Other operating expenses
Depreciation and amortization
Operating income (loss)
Other loss
Finance costs
Income before income taxes
Income taxes
Net income
Diluted earnings per share
Portfolio Performance
Consumer Loans Receivable
183,345
-
48,023
4,518
235,886
75,224
47,539
6,846
129,609
106,277
7,975
25,219
3,366
880
37,440
3,033
14,948
10,772
28,753
8,687
-
-
-
-
-
-
37,456
1,627
39,083
(39,083)
191,320
25,219
51,389
5,398
273,326
78,257
99,943
19,245
197,445
75,881
(5,609)
(31,551)
38,721
10,145
28,576
1.71
Loan originations in the three-month period ended December 31, 2023 were $704.9 million, up 11.5% compared to the same period of 2022. The
consumer loan portfolio grew by $214.9 million during the quarter, compared to $206.0 million in the same period of 2022. Gross consumer loans
receivable increased to $3.65 billion as at December 31, 2023, from $2.79 billion as at December 31, 2022, an increase of $850.5 million, or 30.4%.
The increase in consumer loans receivable was driven by a strong volume of applications for credit, leading to a strong performance across
several product and acquisition channels, including unsecured lending, point-of-sale lending and automotive financing. Loan originations for the
three-month period ended December 31, 2023 has an increased proportion of secured loans with longer payment terms, compared to the same
period of 2022.
Total annualized yield, including loan interest, fees and ancillary products, realized by the Company on its average consumer loans receivable was
34.9% in the three-month period ended December 31, 2023, down 130 bps from the same period of 2022. Total annualized yield decreased due to:
i) organic growth of certain products which carry lower rates of interest such as home equity loans, automotive financing, point-of-sale financing
in the powersports, and healthcare and retail categories; ii) increased lending activity in the province of Quebec, where loans have lower rates
of interest; iii) a higher proportion of larger dollar value loans which have reduced pricing on certain ancillary products; iv) a modest reduction in
penetration rates on ancillary products; and v) the Company’s strategy to reward borrowers for on-time payment behavior by gradually reducing
the rate of interest charged.
Bad debt expense increased to $91.6 million for the three-month period ended December 31, 2023, from $78.3 million during the same period of
2022, an increase of $13.3 million, or 17.0%. The following table details the components of bad debt expense.
($ IN 000’S)
Provision required due to net charge offs
Impact of loan book growth
Impact of change in allowance for expected credit losses rate
Net change in allowance for credit losses
Bad debt expense
THREE MONTHS ENDED
DECEMBER 31, 2023
DECEMBER 31, 2022
79,006
14,472
(1,908)
12,564
91,570
61,511
14,346
2,400
16,746
78,257
63
Bad debts expense increased by $13.3 million due to the following factors:
i) Net charge offs increased from $61.5 million in the fourth quarter of 2022 to $79.0 million in the current quarter, an increase of
$17.5 million. Net charge offs in the quarter as a percentage of average gross consumer loans receivable on an annualized basis
were 8.8%, 20 bps lower compared to 9.0% in the same period of 2022. The stable credit performance reflects the resilience of
the non-prime consumer, coupled with improved product mix of the loan portfolio and the proactive credit and underwriting
enhancements made since the fourth quarter of 2021. The net charge off rate was in line with the Company’s targeted range for
2023 of 8.0% to 10.0%.
ii) The net change in allowance for credit losses was $12.6 million, compared to $16.7 million in the same period of 2022, a decrease
of $4.2 million. The provision rate for the three-month period ended December 31, 2023 decreased to 7.28% from 7.37% in the
third quarter of 2023, primarily due to continued improvement in the product and credit mix of the loan portfolio.
easyhome Leasing Portfolio
The leasing portfolio as measured by potential monthly leasing revenue as at December 31, 2023 was $7.7 million, down from $7.9 million in
the same period of 2022. The easyhome leasing business is a mature business that has experienced a gradual decline in sales volume, as
consumer demand has shifted to alternate forms of financing purchases of everyday household items.
Revenue
Revenue for the three-month period ended December 31, 2023 was $338.1 million, an increase of $64.8 million, or 23.7%, when compared
to the same period of 2022. Revenue growth was mainly driven by the record organic growth of the Company’s consumer loan portfolio.
easyfinancial – Revenue for the three-month period ended December 31, 2023 was $299.5 million, an increase of $63.6 million, when
compared to the same period of 2022. Components of the increased revenue include:
(i) Interest income increased by $51.8 million, or 28.3%, driven by growth in the loan portfolio, which includes growth of unsecured
lending, automotive financing, home equity loans, point-of-sale financing and cross-selling activity across its consumer base,
partially offset by lower interest yields due to improved product mix;
(ii) Commissions earned on the sale of ancillary products and services increased by $10.0 million, or 20.8%, due to the larger
consumer loan portfolio; and
(iii) Charges and fees increased by $1.8 million.
easyhome – Revenue for the three-month period ended December 31, 2023 was $38.6 million, an increase of $1.2 million, when compared
to the same period of 2022. Lending revenue within the easyhome stores increased by $1.7 million, when compared to the same period of
2022. Traditional leasing revenue, including fees, was $0.5 million lower compared to the same period of 2022. Components of the increased
revenue include:
(i) Interest income increased by $1.6 million, driven by the growth in the loan portfolio related to the easyhome business;
(ii) Leasing revenue decreased by $0.5 million due to a smaller lease portfolio; and
(iii) Commissions earned on the sale of ancillary products, charges and fees increased by $0.2 million.
Other Operating Expenses
Other operating expenses were $87.7 million for the three-month period ended December 31, 2023, a decrease of $12.2 million, or 12.2%, when
compared to the same period of 2022. The decrease in other operating expenses was mainly driven by a one-time intangible asset write off in
2022 and continued improvement in operating efficiency, moderated by higher operating costs to support the growing loan portfolio.
easyfinancial – Other operating expenses were $52.5 million for the three-month period ended December 31, 2023, an increase of $5.0
million, or 10.5%, when compared to the same period of 2022. The increase in other operating expenses was driven by incremental
volume related costs to operate and manage the growing loan portfolio, partially offset by improved operating efficiency.
easyhome – Other operating expenses were $14.3 million for the three-month period ended December 31, 2023, a decrease of $0.6
million, or 4.1%, when compared to the same period of 2022. The decrease in other operating expenses was driven by lower store costs
due to the continued improvement in operating efficiency.
64
Corporate – Other operating expenses were $20.9 million for the three-month period ended December 31, 2023, a decrease of $16.6 million,
or 44.3%, when compared to the same period of 2022. The decrease in other operating expenses was primarily due to a one-time intangible
asset write off in 2022, partially offset by incremental volume related costs to support the growing loan portfolio. Excluding the effects
of the adjusting items discussed in “Key Performance Indicators and Non-IFRS Measures”, corporate expenses before depreciation and
amortization represented 6.1% of revenues in the fourth quarter of 2023, compared to 6.2% of revenues in the same period of 2022.
Depreciation and Amortization
Depreciation and amortization for the three-month period ended December 31, 2023 was $21.6 million, an increase of $2.3 million, or
12.1%, when compared to the same period of 2022, driven primarily by higher amortization of intangible assets and depreciation of right-
of-use assets. Overall, depreciation and amortization represented 6.4% of revenues for the three-month period ended December 31,
2023, compared to 7.0% in the same period of 2022.
easyfinancial – Depreciation and amortization was $9.6 million for the three-month period ended December 31, 2023, an increase of $2.8
million, or 40.4%, when compared to the same period of 2022. The increase was primarily due to the reversal of an impairment reserve
recognized on the existing core loan management software in the fourth quarter of 2022.
easyhome – Depreciation and amortization was $10.4 million for the three-month period ended December 31, 2023, a decrease of $0.4
million, or 3.3%, when compared to the same period of 2022, mainly due to a smaller lease asset portfolio.
Corporate – Depreciation and amortization was $1.5 million in the three-month period ended December 31, 2023, relatively flat from the
comparable period of 2022.
Operating Income (Income before Finance Costs and Income Taxes)
The Company reported record total operating income for the three-month period ended December 31, 2023 of $137.2 million, up $61.4
million, or 80.9%, when compared to the same period of 2022. The Company also reported a record operating margin of 40.6%, up from
27.8% reported in the same period of 2022. Excluding the effects of the adjusting items, the Company reported record adjusted operating
income1 for the three-month period ended December 31, 2023 of $140.6 million, up $40.9 million, or 41.0%, when compared to the same
period of 2022. The increase in adjusted operating income was mainly driven by higher revenue during the period associated with the
larger consumer loan portfolio, stable credit performance of the loan book and continued improvement in operating leverage. The
Company reported an adjusted operating margin of 41.6% in the quarter, up from 36.5% in the same period of 2022.
easyfinancial – Operating income for the three-month period ended December 31, 2023 was $150.2 million, an increase of $44.0 million,
or 41.4%, when compared to the same period of 2022. The improved operating income was mainly driven by higher revenue during the
period associated with the larger consumer loan portfolio, stable credit performance of the loan book and continued improvement in
operating leverage. easyfinancial revenue increased by $63.6 million, partially offset by an increase of $11.9 million in bad debt expense
and an increase of $7.7 million in other costs to support the growing customer base and enhanced product offerings. easyfinancial’s
operating margin was 50.2%, 510 bps higher compared to 45.1% in the same period of 2022.
easyhome – Operating income for the three-month period ended December 31, 2023 was $9.4 million, an increase of $0.7 million, or
8.3%. The increase was mainly driven by higher lending revenues during the period associated with the larger consumer loan portfolio,
stable credit performance of the loan book and continued improvement in operating leverage, partially offset by lower leasing revenues.
easyhome’s operating margin was 24.3%, compared to 23.2% in the same period of 2022.
Other Income
During the three-month period ended December 31, 2023, the Company recognized net investment income of $1.3 million, mainly due to
fair value changes on the Company’s investments, compared to $5.6 million of net investment loss in the same period of 2022.
Finance Costs
Finance costs for the three-month period ended December 31, 2023 were $36.6 million, an increase of $5.0 million, or 15.9%, when compared
to the same period of 2022. The increase was mainly driven by one-time refinancing costs related to notes payable, higher borrowing levels to
fund growth of the Company’s lending business and a higher cost of borrowing partially offset by the fair value change on prepayment options
related to 2028 Notes. The Company utilizes derivative financial instruments as cash flow hedges to assist in the management of interest rate
volatility. As at December 31, 2023, 93% of the Company’s drawn debt balances effectively bear fixed rates due to the type of debt and the
interest rate swap agreements on Revolving Securitization Warehouse Facilities. The average blended interest rate on drawn balances for the
Company’s debt as at December 31, 2023 was 6.4%, up from 5.2% as at December 31, 2022.
65
Income Tax Expense
The effective income tax rate for the three-month period ended December 31, 2023 was 26.8%, higher than the 26.2% reported in the same
period of 2022. The increase was mainly due to higher non-deductible expenses and lower adjustments in respect of prior years.
Net Income and Diluted Earnings Per Share
The Company’s net income for the three-month period ended December 31, 2023 was $74.6 million, or $4.34 per share on a diluted basis, up
161.1% and 153.8%, respectively, compared to $28.6 million, or $1.71 per share on a diluted basis reported in the same period of 2022. Excluding
the effects of adjusting items discussed in the “Key Performance Indicators and Non-IFRS Measures” section, the Company achieved record
adjusted net income and record adjusted diluted earnings per share during the three-month period ended December 31, 2023 of $69.0 million
and $4.01 per share on a diluted basis, respectively. Adjusted net income and adjusted diluted earnings per share increased by 35.1% and
31.5%, respectively, when compared to the same period of 2022. The increase in adjusted net income was primarily driven by record operating
income, partially offset by incremental finance costs driven by higher borrowing levels to fund growth of the Company’s lending business and
a higher cost of borrowing.
Selected Quarterly Information
($ IN MILLIONS EXCEPT PERCENTAGES
AND PER SHARE AMOUNTS)
DECEMBER
2023
SEPTEMER
2023
JUNE
2023
MARCH
2023
DECEMBER
2022
SEPTEMBER
2022
JUNE
2022
MARCH
2022
DECEMBER
2021
Gross consumer loans
receivable
Revenue
Net income
Adjusted net income1
Return on receivables3
Adjusted return on
receivables1,3
Return on assets
Adjusted return on assets1
3,645.2
3,430.3
3,200.2
2,990.7
2,794.7
2,588.7
2,369.8
2,154.3
2,030.3
338.1
321.7
302.9
287.3
273.3
262.2
251.7
232.1
234.4
74.6
69.0
8.3%
7.7%
7.4%
6.8%
66.3
65.2
55.6
56.0
-
-
-
-
7.0%
6.9%
6.2%
6.2%
51.4
52.9
-
-
6.1%
6.2%
23.2%
23.9%
28.6
51.0
4.2%
7.5%
3.6%
6.3%
47.2
48.6
38.3
46.8
26.1
45.8
-
-
-
-
-
-
6.3%
6.5%
5.5%
6.7%
4.0%
6.9%
13.8%
24.6%
24.2%
20.2%
13.5%
24.9%
24.7%
23.8%
50.0
47.6
-
-
7.9%
7.5%
25.0%
23.9%
Return on equity
Adjusted return on equity1
28.9%
26.7%
27.0%
26.6%
24.0%
24.2%
Return on tangible
common equity1
Adjusted return on
tangible common equity1
Net income as a percentage of
revenue
Adjusted net income as a
percentage of revenue1
Earnings per share2
Basic
Diluted
Adjusted diluted1
39.5%
37.8%
34.6%
34.4%
21.8%
38.5%
33.0%
22.8%
39.8%
35.3%
35.9%
33.4%
33.8%
35.9%
37.7%
38.0%
36.5%
36.2%
22.1%
20.6%
18.3%
17.9%
10.5%
18.0%
15.2%
11.2%
21.3%
20.4%
20.3%
18.5%
18.4%
18.7%
18.5%
18.6%
19.7%
20.3%
4.41
4.34
4.01
3.93
3.87
3.81
3.29
3.26
3.28
3.06
3.01
3.10
1.74
1.71
3.05
2.92
2.86
2.95
2.37
2.32
2.83
1.59
1.55
2.72
3.00
2.90
2.76
1 Adjusted net income is a non-IFRS measure. Adjusted diluted earnings per share, adjusted return on equity, adjusted return on receivables, adjusted return on assets and reported and adjusted
return on tangible common equity are non-IFRS ratios. See descriptions in “Key Performance Indicators and Non-IFRS Measures” section. Please refer to page 31 of the September 30, 2023
MD&A, page 32 of the June 30, 2023 MD&A, page 26 of the March 31, 2023 MD&A, page 43 of the December 31, 2023 MD&A, page 38 of the September 30, 2022 MD&A, page 37 of the June 30, 2022
MD&A, page 27 of the March 31, 2022 MD&A, and page 50 of the December 31, 2022 MD&A for the respective “Key Performance Indicators and Non-IFRS Measures” section for those periods.
These MD&As are available on www.sedarplus.ca.
2 Quarterly earnings per share are not additive and may not equal the annual earnings per share reported. This is due to the effect of shares issued or repurchased during the period on the basic
weighted average number of common shares outstanding together with the effects of rounding.
3 Comparable reported and adjusted return on receivables financial measures for the three-months periods ended September 30, 2023 and 2022, June 30, 2023 and 2022, March 31, 2023 and
2022, and December 31, 2021 were not published.
66
Key financial measures for each of the last nine quarters are summarized in the table above and include the gross consumer loans
receivable, revenue, net income, earnings per share, return on receivables, return on assets, return on equity, return on tangible
common equity, and net income as a percentage of revenue over this timeframe. Revenue growth over this timeframe was primarily
related to the growth of the Company’s consumer loan portfolio. The larger revenue base together with operating expense management,
increased the Company’s adjusted net income and adjusted earnings per share. Adjusted return on assets, adjusted return on equity
and adjusted return on tangible common equity increased in the most recent quarters due to the increase in earnings driven by the
larger consumer loan portfolio, stable credit performance of the loan book and continued improvement in operating leverage.
Portfolio Analysis
The Company generates its revenue from portfolios of consumer loans receivable and lease agreements. To a large extent, the Company’s
financial results are determined by the performance of these portfolios. The composition of these portfolios at the end of a period is a
significant indicator of future financial results.
The Company measures the performance of its portfolios during a period and their make-up at the end of a period using a number of
key performance indicators as described in more detail below. Several of these indicators are not measurements in accordance with
IFRS and should not be considered as an alternative to net income or any other measure of performance under IFRS. The discussion in
this section refers to certain financial measures that are not determined in accordance with IFRS. Although these measures do not have
standardized meanings and may not be comparable to similar measures presented by other companies, these measures are defined
herein or can be determined by reference to the Company’s consolidated financial statements. The Company discusses these measures
because it believes they facilitate the understanding of the results of its operations and financial position.
Consumer Loans Receivable
Loan Originations and Net Principal Written
Gross loan originations are the value of all consumer loans receivable advanced to the Company’s customers during a period where new credit
underwritings have been performed. Included in gross loan originations are loans to new customers and new loans to existing customers,
a portion of which may be applied to eliminate prior borrowings. When the Company extends additional credit to an existing customer, a
centralized credit analysis or full credit underwriting is performed using up-to-date information. Additionally, the loan repayment history of
that customer throughout their relationship with the Company, along with their other borrowing and repayment activities, are considered
in the credit decision. As a result, the quality of the credit decision made when evaluating an existing or prior customer is improved and has
historically resulted in better performance.
Net principal written is a non-IFRS measure capturing the Company’s gross loan originations during a period, excluding the portion of the
originations used to repay prior borrowings. The Company uses net principal written, among other measures, to assess the operating
performance of its lending business. Non-IFRS measures are not determined in accordance with IFRS, do not have standardized meanings
and may not be comparable to similar financial measures presented by other companies.
Gross loan originations and net principal written during the period were as follows:
($ IN 000’S)
Gross loan originations
THREE MONTHS ENDED
YEAR ENDED
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
704,875
632,355
2,709,194
2,377,606
Loan originations to new customers
345,339
299,458
1,354,907
1,117,146
Loan originations to existing customers
Less: Proceeds applied to repay existing loans
Net advance to existing customers
359,536
(191,978)
167,558
332,897
(177,848)
155,049
1,354,287
(724,702)
629,585
1,260,460
(649,509)
610,951
Net principal written
512,897
454,507
1,984,492
1,728,097
67
Gross Consumer Loans Receivable
The Company measures the size of its lending portfolio in terms of gross consumer loans receivable. Gross consumer loans receivable
reflects the period-end balance of the portfolio before provisioning for potential future charge offs. Growth in gross consumer loans
receivable is driven by several factors including the number of customers and average loan value per customer. Changes in gross
consumer loans receivable during the periods were as follows:
($ IN 000’S)
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
THREE MONTHS ENDED
YEAR ENDED
Opening gross consumer loans receivable
3,430,276
2,588,656
2,794,694
2,030,339
Gross loan originations
Gross principal payments and other adjustments
Gross charge offs before recoveries
Net growth in gross consumer loans receivable
during the period
704,875
(398,774)
(91,175)
632,355
(355,334)
(70,983)
2,709,194
(1,528,306)
(330,380)
2,377,606
(1,359,667)
(253,584)
214,926
206,038
850,508
764,355
Ending gross consumer loans receivable
3,645,202
2,794,694
3,645,202
2,794,694
The scheduled principal repayment aging analyses of the gross consumer loans receivable portfolio as at December 31, 2023 and 2022
are as follows:
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL
$
% OF TOTAL
DECEMBER 31, 2022
DECEMBER 31, 2021
0 – 6 months
6 – 12 months
12 – 24 months
24 – 36 months
36 – 48 months
48 – 60 months
60 months+
Gross consumer loans receivable
273,572
172,645
380,715
510,311
567,582
557,254
1,183,123
3,645,202
7.5%
4.7%
10.4%
14.0%
15.6%
15.3%
32.5%
236,026
161,441
363,437
433,895
480,990
346,560
772,345
8.4%
5.8%
13.0%
15.5%
17.2%
12.4%
27.7%
100.0%
2,794,694
100.0%
Gross consumer loans receivable with principal repayments beyond 60 months as at December 31, 2023 increased by 480 bps, when
compared to December 31, 2022, primarily due to the shift in product mix towards a higher proportion of secured loans, which have
longer payment terms.
The gross consumer loans receivable portfolio categorized by the contractual time to maturity as at December 31, 2023 and 2022 are
summarized as follows:
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL
$
% OF TOTAL
DECEMBER 31, 2023
DECEMBER 31, 2022
0 – 1 year
1 – 2 years
2 – 3 years
3 – 4 years
4 – 5 years
5 years +
Gross consumer loans receivable
72,892
144,303
277,715
529,764
554,585
2,065,943
3,645,202
2.0%
4.0%
7.6%
14.5%
15.2%
56.7%
100.0%
65,485
139,143
312,612
573,567
493,336
1,210,551
2,794,694
2.3%
5.0%
11.2%
20.5%
17.7%
43.3%
100.0%
Gross consumer loans receivable with contractual times to maturity beyond 5 years as at December 31, 2023 increased by 1,340 bps, when
compared to December 31, 2022, primarily due to the shift in product mix towards a higher proportion of secured loans, which have longer
payment terms.
68
Loans are originated and serviced by both the easyfinancial and easyhome reportable segments. A breakdown of gross consumer loans
receivable between these segments is as follows:
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL
$
% OF TOTAL
Gross consumer loans receivable, easyfinancial
Gross consumer loans receivable, easyhome
Gross consumer loans receivable
3,538,943
106,259
3,645,202
97.1%
2.9%
100.0%
2,705,943
88,751
2,794,694
96.8%
3.2%
100.0%
DECEMBER 31, 2023
DECEMBER 31, 2022
Financial Revenue and Net Financial Income
Financial revenue, a non-IFRS measure, is generated by both the easyfinancial and easyhome reportable segments. Financial revenue
includes interest and various other ancillary fees generated by the Company’s gross consumer loans receivable. Financial revenue is
calculated as total Company revenue less leasing revenue from the easyhome reportable segment.
Net financial income is a non-IFRS measure that details the profitability of the Company’s gross consumer loans receivable before costs to originate
or administer. Net financial income is calculated by deducting interest expense, amortization of deferred financing charges and bad debt expense
from financial revenue. Net financial income is impacted by the size of gross consumer loans receivable, portfolio yield, amount and cost of the
Company’s debt, the Company’s leverage ratio and bad debt expense incurred in the period. The Company uses net financial income, among other
measures, to assess the operating performance of its loan portfolio. Non-IFRS measures are not determined in accordance with IFRS, do not have
standardized meanings and may not be comparable to similar financial measures presented by other companies.
($ IN 000’S)
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
THREE MONTHS ENDED
YEAR ENDED
Total Company revenue
Less: Leasing revenue
Financial revenue
Less: Financial costs
Add: Interest expense on lease liabilities
Less: Bad debt expense
Net financial income
338,112
(26,236)
311,876
(36,580)
951
(91,570)
184,677
273,326
(26,772)
246,554
(31,551)
991
(78,257)
137,737
1,250,069
(105,925)
1,144,144
(149,334)
3,822
(341,639)
656,993
1,019,336
(110,053)
909,283
(107,972)
3,577
(272,893)
531,995
Total Yield on Consumer Loans as a Percentage of Average Gross Consumer Loans Receivable
Total yield on consumer loans as a percentage of average gross consumer loans receivable is a non-IFRS ratio and is calculated as the
financial revenue generated, including revenue generated on the sale of ancillary products, on the Company’s gross consumer loans
receivable, divided by the average of the month-end loan balances for the indicated period. For interim periods, the rate is annualized. The
Company uses total yield on gross consumer loans as a percentage of average gross consumer loans receivable, among other measures,
to assess the operating performance of its loan portfolio.
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
THREE MONTHS ENDED
YEAR ENDED
Total Company revenue
Less: Leasing revenue
Financial revenue
Multiplied by number of periods in year
Divided by average gross consumer loans
receivable
Total yield on consumer loans as a percentage
of average gross consumer loans receivable
(annualized)
338,112
(26,236)
311,876
X 4
273,326
(26,772)
246,554
X 4
1,250,069
(105,925)
1,144,144
X 4/4
1,019,336
(110,053)
909,283
X 4/4
3,577,393
2,726,446
3,245,686
2,409,890
34.9%
36.2%
35.3%
37.7%
69
Net Charge Offs
In addition to loan originations, gross consumer loans receivable are impacted by charge offs. Unsecured customer loan balances
that are delinquent greater than 90 days and secured customer loan balances that are delinquent greater than 180 days are charged
off. In addition, customer loan balances are charged off upon notification that the customer is insolvent, following a detailed review
of the filing. Subsequent collections of previously charged off accounts are netted against gross charge offs during a period to arrive
at net charge offs.
Average gross consumer loans receivable has been calculated based on the average of the month-end loan balances for the
indicated period. This metric is a measure of the collection performance of gross consumer loans receivable. For interim periods,
the rate is annualized.
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
THREE MONTHS ENDED
YEAR ENDED
Net charge offs against allowance
Multiplied by number of periods in year
Divided by average gross consumer loans
receivable
Net charge offs as a percentage of average gross
consumer loans receivable (annualized)
Allowance for Credit Losses
79,006
X 4
61,511
X 4
289,321
X 4/4
219,614
X 4/4
3,577,393
2,726,446
3,245,686
2,409,890
8.8%
9.0%
8.9%
9.1%
The allowance for expected credit losses is a provision that is reported on the Company’s statement of financial position that is netted
against gross consumer loans receivable to arrive at net consumer loans receivable. The allowance for expected credit losses provides
for credit losses that are expected to transpire in future periods. Customer loans for which we have received a notification of bankruptcy,
unsecured customer loan balances that are delinquent greater than 90 days and secured customer loan balances that are delinquent
greater than 180 days are charged off against the allowance for loan losses.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
Allowance for credit losses, beginning of period
Net charge offs against allowance
Bad debt expense
Allowance for credit losses, end of period
Allowance for credit losses as a percentage of
the ending gross consumer loans receivable
252,795
(79,006)
91,570
265,359
7.28%
196,295
(61,511)
78,257
213,041
7.62%
213,041
(289,321)
341,639
265,359
159,762
(219,614)
272,893
213,041
7.28%
7.62%
IFRS 9 requires that Forward Looking Indicators (“FLIs”) be considered when determining the allowance for credit losses. Historically, the
four key macroeconomic variables contributing to credit risk and losses within the Company’s loan portfolio have been: unemployment
rates, inflation rates, gross domestic product (“GDP”) growth and the price of oil. Analysis performed by the Company determined that
a forecasted increase in the rates of unemployment and inflation, a decrease in the expected future price of oil from current rates or
a decrease in the rate of GDP growth has historically tended to increase charge offs. Conversely, a forecasted decrease in the rate of
unemployment, rate of inflation, an increase in the expected future price of oil from the rates or an increase in the GDP growth rate has
historically tended to decrease charge offs.
In calculating the allowance for credit losses, internally developed models were used, which factor in credit risk related parameters
including probability of default, exposure at default, loss given default and other relevant risk factors. As part of the process, the Company
employed five distinct forecast scenarios, derived from FLI forecasts produced by Moody’s Analytics, which include neutral, moderately
optimistic, extremely optimistic, moderately pessimistic and extremely pessimistic scenarios. These scenarios use a combination of four
interrelated macroeconomic variables, being unemployment rates, GDP, inflation rates and oil prices, to determine a probability weighted
allowance. Management judgment is then applied to the recommended probability weightings to these scenarios to determine a probability
weighted allowance for credit losses.
70
The following table shows the key macroeconomic variables used in the determination of the probability weighted allowance during the
forecast periods as at December 31, 2023 and 2022, respectively.
12-MONTH FORWARD-LOOKING
MACROECONOMIC VARIABLES
(AVERAGE ANNUAL)
NEUTRAL
MODERATELY
OPTIMISTIC
EXTREMELY
OPTIMISTIC
MODERATELY
PESSIMISTIC
EXTREMELY
PESSIMISTIC
December 31, 2023
Unemployment rate1
GDP growth rate2
Inflation growth rate3
Oil prices4
December 31, 2022
Unemployment rate1
GDP growth rate2
Inflation growth rate3
Oil prices4
6.18%
0.53%
2.11%
$79.35
6.07%
0.15%
4.08%
$86.85
5.39%
1.57%
2.12%
$81.93
5.28%
1.20%
3.78%
$89.40
4.70%
2.38%
2.15%
$84.05
4.59%
2.08%
3.46%
$91.49
8.41%
(1.51%)
2.09%
$62.73
8.30%
(1.88%)
4.95%
$71.65
9.83%
(2.71%)
1.93%
$52.79
9.72%
(3.08%)
5.31%
$60.58
1 An average of the projected monthly unemployment rates over the next 12-month forecast period.
2 A projected year-over-year GDP growth rate.
3 A projected year-over-year inflation growth rate.
4 An average of the projected monthly oil prices over the next 12-month forecast period.
The assignment of the probability weighting for the various scenarios using these variables involves management judgment
through a robust internal review and analysis to arrive at a collective view on the likelihood of each scenario taking into account
current economic conditions and the implications for near-term macroeconomic performance. If management were to assign
100% probability to the extremely pessimistic scenario forecast, the allowance for credit losses would have been $295.2 million,
$29.8 million or 11.2% higher than the reported allowance for credit losses as at December 31, 2023 (December 31, 2022 – $244.4
million, $31.4 million or 14.7% higher than the reported allowance for credit losses). This sensitivity above does not consider the
migration of exposure and/or changes in credit risk that would have occurred in the loan portfolio due to risk mitigation actions
or other factors.
Aging of Gross Consumer Loans Receivable
An aging analysis of gross consumer loans receivable at the end of the periods is as follows:
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL
$
% OF TOTAL
DECEMBER 31, 2023
DECEMBER 31, 2022
Current
Days past due
1 - 30 days
31 - 44 days
45 - 60 days
61 - 90 days
91 - 120 days
121 - 150 days
151 - 180 days
Gross consumer loans receivable
3,434,390
94.2%
2,628,884
94.1%
3.4%
0.7%
0.6%
0.6%
0.2%
0.2%
0.1%
5.8%
100.0%
86,687
22,027
18,245
25,285
6,157
5,020
2,389
165,810
2,794,694
3.1%
0.8%
0.6%
0.9%
0.2%
0.2%
0.1%
5.9%
100.0%
125,229
24,280
20,354
22,797
7,687
6,422
4,043
210,812
3,645,202
71
A large portion of the Company’s gross consumer loans receivable operates on a bi-weekly rather than monthly repayment cycle.
As such, the aging analysis between different fiscal periods may not be comparable depending upon the day of the week on which
the fiscal period ends. An alternate aging analysis prepared as of the last Saturday of the fiscal periods may present a more
relevant comparison.
Aging analysis of the gross consumer loans receivable as of the last Saturday of the periods is as follows:
Current
Days past due
1 - 30 days
31 - 44 days
45 - 60 days
61 - 90 days
91 - 120 days
121 - 150 days
151 - 180 days
SATURDAY,
DECEMBER 30, 2023
SATURDAY,
DECEMBER 31, 2022
% OF TOTAL
% OF TOTAL
94.3%
94.1%
3.4%
0.6%
0.6%
0.6%
0.2%
0.2%
0.1%
5.7%
3.1%
0.8%
0.6%
0.9%
0.2%
0.2%
0.1%
5.9%
Gross consumer loans receivable
100.0%
100.0%
Gross Consumer Loans Receivable by Geography
As at December 31, 2023 and 2022, the Company’s gross consumer loans receivable were allocated among the following geographic regions:
($ IN 000’S EXCEPT PERCENTAGES)
Newfoundland & Labrador
Nova Scotia
Prince Edward Island
New Brunswick
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
Territories
DECEMBER 31, 2023
DECEMBER 31, 2022
$
% OF TOTAL
$
% OF TOTAL
99,581
173,536
21,968
148,529
447,714
1,408,224
150,319
162,038
627,148
375,916
30,229
2.7%
4.8%
0.6%
4.1%
12.3%
38.6%
4.1%
4.4%
17.2%
10.3%
0.9%
82,931
137,746
18,027
123,635
349,936
1,059,314
113,146
129,596
465,297
290,711
24,355
3.0%
4.9%
0.6%
4.4%
12.5%
37.9%
4.0%
4.6%
16.7%
10.4%
1.0%
Gross consumer loans receivable
3,645,202
100.0%
2,794,694
100.0%
Gross Consumer Loans Receivable by Loan Type
As at December 31, 2023 and 2022, the allocation of the Company’s gross consumer loans receivable based on loan type is as follows:
($ IN 000’S EXCEPT PERCENTAGES)
Unsecured Instalment Loans
Secured Instalment Loans1
DECEMBER 31, 2023
DECEMBER 31, 2022
$
% OF TOTAL
$
% OF TOTAL
2,116,869
1,528,333
58.1%
41.9%
1,703,593
1,091,101
61.0%
39.0%
Gross consumer loans receivable
3,645,202
100.0%
2,794,694
100.0%
1 Secured instalment loans include loans secured by real estate, personal property or a Notice of Security Interest.
72
Leasing Portfolio Analysis
Potential Monthly Leasing Revenue
Potential monthly leasing revenue is a supplementary financial measure. The Company measures its leasing portfolio and the performance of its
easyhome business through potential monthly leasing revenue. Potential monthly leasing revenue reflects the lease revenue that the Company’s
portfolio of leased merchandise would generate in a month providing it collected all lease payments contractually due in that period, but excludes
revenue generated by certain ancillary products. Potential monthly leasing revenue is an important indicator of the future revenue generating
potential of the Company’s lease portfolio. Potential monthly leasing revenue is calculated as the number of lease agreements outstanding,
multiplied by the average required monthly lease payment per agreement.
Potential monthly leasing revenue is calculated as follows:
Total number of lease agreements
Multiplied by the average required monthly lease
payment per agreement
Potential monthly leasing revenue ($ in 000’s)
DECEMBER 31,2023
DECEMBER 31, 2022
70,733
108.21
7,654
73,895
106.47
7,868
Changes in potential monthly leasing revenue during the periods was as follows:
($ IN 000’S)
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
THREE MONTHS ENDED
YEAR ENDED
Opening potential monthly lease revenue
Increase due to store openings or acquisitions during the
period
Decrease due to store closures or sales during the period
Increase (decrease) due to ongoing operations
Net change
Ending potential monthly leasing revenue
7,411
133
(38)
148
243
7,654
Potential Monthly Leasing Revenue by Product Category
7,623
-
(24)
269
245
7,868
7,868
133
(196)
(151)
(214)
7,654
8,193
-
(111)
(214)
(325)
7,868
At the end of the periods, the Company’s leasing portfolio, as measured by potential monthly leasing revenue was allocated among the
following product categories:
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL
$
% OF TOTAL
DECEMBER 31, 2023
DECEMBER 31, 2022
Furniture
Electronics
Appliances
Computers
Potential monthly leasing revenue
42.6%
32.4%
14.5%
10.5%
100.0%
3,238
2,626
1,119
885
7,868
41.2%
33.4%
14.2%
11.2%
100.0%
3,259
2,478
1,110
807
7,654
73
Potential Monthly Leasing Revenue by Geography
As at December 31, 2023 and 2022, the Company’s leasing portfolio as measured by potential monthly leasing revenue, was allocated
among the following geographic regions:
($ IN 000’S EXCEPT PERCENTAGES)
Newfoundland & Labrador
Nova Scotia
Prince Edward Island
New Brunswick
Quebec
Ontario
Manitoba
Saskatchewan
Alberta
British Columbia
DECEMBER 31, 2023
DECEMBER 31, 2022
$
% OF TOTAL
$
% OF TOTAL
671
763
128
646
550
2,310
294
320
1,230
742
7,654
8.7%
10.0%
1.7%
8.4%
7.2%
30.2%
3.8%
4.2%
16.1%
9.7%
100.0%
688
753
136
642
552
2,442
233
356
1,217
849
7,868
8.7%
9.6%
1.7%
8.2%
7.0%
31.0%
3.0%
4.5%
15.5%
10.8%
100.0%
Potential monthly leasing revenue
Leasing Charge Offs as a Percentage of Leasing Revenue
The Company’s leasing charge offs as a percentage of leasing revenue is a non-IFRS ratio. When easyhome enters into a leasing transaction with a
customer, a sale is not recorded as the Company retains ownership of the related asset under the lease. Instead, the Company recognizes its leasing
revenue over the term of the lease as payments are received from the customer. Periodically, the lease agreement is terminated by the customer
or by the Company prior to the anticipated end date of the lease and the assets are returned by the customer to the Company. In some instances,
the Company is unable to regain possession of the assets which are then charged off. Net charge offs (charge offs less subsequent recoveries of
previously charged off assets) are included in the depreciation of lease assets expense for financial reporting purposes. easyhome leasing revenue
is a non-IFRS measure and is calculated as total Company revenue less financial revenue. The Company uses leasing charge offs as a percentage
of leasing revenue, among other measures, to assess the operating performance of its leasing portfolio. Non-IFRS ratios are not determined in
accordance with IFRS, do not have standardized meanings and may not be comparable to similar financial measures presented by other companies.
($ IN 000’S EXCEPT PERCENTAGES)
Depreciation of lease assets
Less: Lease asset amortization excluding net charge offs
Net charge offs
Total Company revenue
Less: Financial revenue
Leasing revenue
Net charge offs as a percentage
of leasing revenue
THREE MONTHS ENDED
YEAR ENDED
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
8,207
(7,257)
950
338,112
(311,876)
26,236
8,516
(7,678)
838
273,326
(246,554)
26,772
33,535
(29,939)
3,596
1,250,069
(1,144,144)
105,925
33,547
(29,992)
3,555
1,019,336
(909,283)
110,053
3.6%
3.1%
3.4%
3.2%
Key Performance Indicators and Non-IFRS Measures
In addition to the reported financial results under IFRS and the metrics described in the Portfolio Analysis section of this MD&A, the
Company also measures the success of its strategy using a number of key performance indicators as described in more detail below.
Several of these key performance indicators are not measurements in accordance with IFRS and should not be considered as an
alternative to net income or any other measure of performance under IFRS.
The discussion in this section refers to certain financial measures that are not determined in accordance with IFRS. Although these
measures do not have standardized meanings and may not be comparable to similar measures presented by other companies, these
measures are defined herein or can be determined by reference to the Company’s consolidated financial statements. The Company
discusses these measures because it believes that they facilitate the understanding of the results of its operations and financial position.
74
Several non-IFRS measures that are used throughout this discussion are defined as follows:
Adjusted Net Income and Adjusted Diluted Earnings Per Share
At various times, net income and diluted earnings per share may be affected by adjusting items that have occurred in the period and impact
the comparability of these measures with other periods. Adjusting items include items that are outside of normal business activities and are
significant in amount and scope, which management believes are not reflective of underlying business performance. Adjusted net income and
adjusted diluted earnings per share are non-IFRS measures. The Company defines: i) adjusted net income as net income excluding such adjusting
items; and ii) adjusted diluted earnings per share as diluted earnings per share excluding such adjusting items. The Company believes that adjusted
net income and adjusted diluted earnings per share are important measures of the profitability of operations.
Items used to calculate adjusted net income and adjusted diluted earnings per share for the three-month periods and years ended
December 31, 2023 and 2022 include those indicated in the chart below:
($ IN 000'S EXCEPT EARNINGS PER SHARE)
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
THREE MONTHS ENDED
YEAR ENDED
Net income as stated
Impact of adjusting items
Other operating expenses
Contract exit fee1
Integration costs2
Write off of an intangible asset1
Corporate development costs4
Depreciation and amortization
Amortization of acquired intangible assets3
Other (income) loss5
Finance costs
Refinancing costs related to notes payable6
Fair value change on prepayment options
related to 2028 Notes7
Total pre-tax impact of adjusting items
Income tax impact of above adjusting items
After-tax impact of adjusting items
Adjusted net income
Weighted average number of
diluted shares outstanding
Diluted earnings per share as stated
Per share impact of adjusting items
Adjusted diluted earnings per share
74,602
28,576
247,898
140,161
-
131
-
-
3,275
(1,310)
9,501
(19,035)
(7,438)
1,797
(5,641)
68,961
17,207
4.34
(0.33)
4.01
-
122
20,460
-
3,275
5,609
-
-
29,466
(7,016)
22,450
51,026
16,753
1.71
1.34
3.05
934
608
-
-
13,100
(9,771)
9,501
(19,035)
(4,663)
(60)
(4,723)
243,175
17,117
14.48
(0.27)
14.21
-
1,081
20,460
2,314
13,100
28,659
-
-
65,614
(13,514)
52,100
192,261
16,650
8.42
3.13
11.55
Adjusting items related to the write off of an intangible asset
1 In the fourth quarter of 2022, the Company decided to terminate its agreement with a third-party technology provider that was contracted in 2020 to develop a new loan management system. After
careful evaluation, the Company determined that the performance to date was unsatisfactory, and the additional investment necessary to complete the development was no longer economical, relative
to the anticipated business value and other available options. As such, the Company elected to write off capitalized software costs in 2022 in the amount of $20.5 million, associated with this loan
management system being developed by the third-party. In the first quarter of 2023, the Company settled its dispute with the third-party technology provider for $0.9 million.
Adjusting items related to the LendCare Acquisition
2 Integration costs related to advisory and consulting costs, employee incentives, representation and warranty insurance costs, and other integration costs related to the acquisition of LendCare.
3 Amortization of the $131 million intangible asset related to the acquisition of LendCare with an estimated useful life of ten years.
Adjusting items related to the corporate development costs
4 Corporate development costs in the first quarter of 2022 were related to the exploration of a strategic acquisition opportunity, which the Company elected to not pursue, including advisory, consulting and legal costs.
Adjusting item related to other income (loss)
5 For the three-month periods and years ended December 31, 2023 and 2022, net investment income (losses) were mainly due to fair value changes on the Company’s investments.
Adjusting item related to the refinancing of 2024 Notes
6 During the fourth quarter of 2023, the Company repaid its 2024 Notes that would have matured on December 1, 2024, incurring a $9.5 million refinancing costs, which included the recognition of the
remaining unamortized deferred financing costs, realized derivative loss on the settlement of the cross-currency swaps associated to 2024 Notes, and the net change in cash flow hedge that was
reclassified from other comprehensive income to consolidated statement of income.
Adjusting item related to prepayment options embedded in the 2028 Notes
7 For the three-month period and year ended December 31, 2023, the Company recognized a fair value change on the prepayment options related to 2028 Notes amounting to $19.0 million.
75
Adjusted Net Income as a Percentage of Revenue
Adjusted net income as a percentage of revenue is a non-IFRS ratio. The Company believes that adjusted net income as a percentage of
revenue is an important measure of the profitability of the Company’s operations.
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
After-tax impact of adjusting items1
Adjusted net income
Divided by revenue
Net income as a percentage of revenue
THREE MONTHS ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
74,602
-
74,602
338,112
22.1%
74,602
(5,641)
68,961
338,112
20.4%
28,576
-
28,576
273,326
10.5%
28,576
22,450
51,026
273,326
18.7%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
After-tax impact of adjusting items1
Adjusted net income
Divided by revenue
Net income as a percentage of revenue
YEAR ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
247,898
-
247,898
1,250,069
19.8%
247,898
(4,723)
243,175
1,250,069
19.5%
140,161
-
140,161
1,019,336
13.8%
140,161
52,100
192,261
1,019,336
18.9%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
Adjusted Other Operating Expenses and Efficiency Ratio
Adjusted other operating expenses is a non-IFRS measure. The Company defines adjusted other operating expenses as other operating expenses
including depreciation of lease assets but excluding other operating expenses that are outside of normal business activities and are significant in
amount and scope. Efficiency ratio is a non-IFRS ratio. The Company defines efficiency ratio as adjusted other operating expenses divided by total
revenue. The Company believes efficiency ratio is an important measure of the profitability of the Company’s operations.
($ IN 000’S EXCEPT EARNINGS PER SHARE)
DECEMBER 31, 2023
DECEMBER 31, 2022
DECEMBER 31, 2023 DECEMBER 31, 2022
Other operating expenses as stated
87,734
99,943
345,581
332,730
THREE MONTHS ENDED
YEAR ENDED
Impact of adjusting items1
Other operating expenses
Contract exit fee
Integration costs
Write off of an intangible asset
Corporate development costs
Depreciation and amortization
Depreciation of lease assets
Total impact of adjusting items
Adjusted other operating expenses
-
(131)
-
-
8,207
8,076
95,810
-
(122)
(20,460)
-
8,516
(12,066)
(934)
(608)
-
-
33,535
31,993
-
(1,081)
(20,460)
(2,314)
33,547
9,692
87,877
377,574
342,422
Total revenue
338,112
273,326
1,250,069
1,019,336
Efficiency ratio
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
28.3%
32.2%
30.2%
33.6%
76
Adjusted Operating Margin
Adjusted operating margin is a non-IFRS ratio. The Company defines adjusted operating margin as adjusted operating income divided
by revenue for the Company as a whole and for its reporting segments: easyfinancial and easyhome. The Company defines adjusted
operating income as operating income excluding adjusting items. The Company believes adjusted operating margin is an important
measure of the profitability of its operations, which in turn assists it in assessing the Company’s ability to generate cash to pay interest
on its debt and to pay dividends.
($ IN 000’S EXCEPT PERCENTAGES)
easyfinancial
Operating income
Divided by revenue
easyfinancial operating margin
easyhome
Operating income
Divided by revenue
easyhome operating margin
Total
Operating income
Other operating expenses1
Integration costs
Write off of an intangible asset
Depreciation and amortization1
Amortization of acquired intangible assets
Adjusted operating income
Divided by revenue
Total operating margin
THREE MONTHS ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
150,242
299,465
50.2%
9,404
38,647
24.3%
150,242
299,465
50.2%
9,404
38,647
24.3%
106,277
235,886
45.1%
8,687
37,440
23.2%
137,237
137,237
75,881
-
-
-
137,237
338,112
40.6%
131
-
3,275
140,643
338,112
41.6%
-
-
-
75,881
273,326
27.8%
106,277
235,886
45.1%
8,687
37,440
23.2%
75,881
122
20,460
3,275
99,738
273,326
36.5%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
77
($ IN 000’S EXCEPT PERCENTAGES)
easyfinancial
Operating income
Divided by revenue
easyfinancial operating margin
easyhome
Operating income
Divided by revenue
easyhome operating margin
Total
Operating income
Other operating expenses1
Contract exit fee
Integration costs
Write off of an intangible asset
Corporate development costs
Amortization of intangible assets1
Amortization of acquired intangible assets
Adjusted operating income
Divided by revenue
YEAR ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
534,516
1,096,817
48.7%
36,940
153,252
24.1%
534,516
1,096,817
48.7%
36,940
153,252
24.1%
393,996
869,528
45.3%
34,578
149,808
23.1%
393,996
869,528
45.3%
34,578
149,808
23.1%
476,518
476,518
332,407
332,407
-
-
-
-
-
476,518
1,250,069
934
608
-
-
13,100
491,160
1,250,069
-
-
-
-
-
332,407
1,019,336
-
1,081
20,460
2,314
13,100
369,362
1,019,336
Total operating margin
38.1%
39.3%
32.6%
36.2%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”) and EBITDA Margin
EBITDA is a non-IFRS measure and EBITDA margin is a non-IFRS ratio. The Company defines EBITDA as earnings before interest, taxes,
depreciation and amortization, excluding depreciation of lease assets. EBITDA margin is calculated as EBITDA divided by revenue. The
Company uses EBITDA and EBITDA margin, among other measures, to assess the operating performance of its ongoing businesses.
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2023
DECEMBER 31, 2022
DECEMBER 31, 2023 DECEMBER 31, 2022
THREE MONTHS ENDED
YEAR ENDED
Net income as stated
Finance costs
Income tax expense
Depreciation and amortization
Depreciation of lease assets
EBITDA
Divided by revenue
EBITDA margin
28,576
31,551
10,145
19,245
(8,516)
81,001
247,898
149,334
89,057
86,331
(33,535)
539,085
140,161
107,972
55,615
81,306
(33,547)
351,507
273,326
1,250,069
1,019,336
29.6%
43.1%
34.5%
74,602
36,580
27,365
21,571
(8,207)
151,911
338,112
44.9%
78
Free Cash Flows from Operations before Net Growth in Gross Consumer Loans Receivable
Free cash flows from operations before net growth in gross consumer loans receivable is a non-IFRS measure. The Company
defines free cash flows from operations before net growth in gross consumer loans receivable as cash provided by (used in)
operating activities, adjusted for the costs of investments made to grow gross consumer loans receivable. The Company believes
free cash flows from operations before net growth in gross consumer loans receivable is an important performance indicator to
assess the cash generating ability of its existing loan portfolio.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2023
DECEMBER 31, 2022
DECEMBER 31, 2023 DECEMBER 31, 2022
Cash used in operating activities
(129,784)
(139,998)
(473,217)
(505,881)
Net growth in gross consumer loans
receivable during the period
Free cash flows from operations before net
growth in gross consumer loans receivable
214,926
85,142
206,038
850,508
66,040
377,291
764,355
258,474
Adjusted Return on Receivables
Adjusted return on receivables is a non-IFRS ratio. The Company defines adjusted return on receivable as annualized adjusted net
income divided by average gross consumer loans receivable for the period. The Company believes adjusted return on receivables
is an important measure of how gross consumer loans receivable are utilized in the business.
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
After-tax impact of adjusting items1
Adjusted net income
Multiplied by number of periods in a year
Divided by average gross consumer
loans receivable
Return on receivables
THREE MONTHS ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
74,602
-
74,602
X 4
74,602
(5,641)
68,961
X 4
28,576
-
28,576
X 4
3,577,393
8.3%
3,577,393
7.7%
2,726,446
4.2%
28,576
22,450
51,026
X 4
2,726,446
7.5%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
After-tax impact of adjusting items1
Adjusted net income
Divided by average gross consumer loans
receivable
Return on receivables
YEAR ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
247,898
-
247,898
3,245,686
7.6%
247,898
(4,723)
243,175
3,245,686
7.5%
140,161
-
140,161
2,409,890
5.8%
140,161
52,100
192,261
2,409,890
8.0%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
79
Adjusted Return on Assets
Adjusted return on assets is a non-IFRS ratio. The Company defines adjusted return on assets as annualized adjusted net income
divided by average total assets for the period. The Company believes adjusted return on assets is an important measure of how
total assets are utilized in the business.
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
After-tax impact of adjusting items1
Adjusted net income
Multiplied by number of periods in a year
Divided by average total assets for the period
Return on assets
THREE MONTHS ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
74,602
-
74,602
X 4
4,050,068
7.4%
74,602
(5,641)
68,961
X 4
4,050,068
6.8%
28,576
-
28,576
X 4
3,216,403
3.6%
28,576
22,450
51,026
X 4
3,216,403
6.3%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
After-tax impact of adjusting items1
Adjusted net income
Divided by average total assets for the year
Return on assets
YEAR ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
247,898
-
247,898
3,715,531
6.7%
247,898
(4,723)
243,175
3,715,531
6.5%
140,161
-
140,161
2,922,605
4.8%
140,161
52,100
192,261
2,922,605
6.6%
1For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
Adjusted Return on Equity
Adjusted return on equity is a non-IFRS ratio. The Company defines adjusted return on equity as annualized adjusted net income in
the period, divided by average shareholders’ equity for the period. The Company believes adjusted return on equity is an important
measure of how shareholders’ invested capital is utilized in the business.
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
After-tax impact of adjusting items1
Adjusted net income
Multiplied by number of periods in a year
Divided by average shareholders’ equity for the period
Return on equity
THREE MONTHS ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
74,602
-
74,602
X 4
1,033,259
28.9%
74,602
(5,641)
68,961
X 4
1,033,259
26.7%
28,576
-
28,576
X 4
830,820
13.8%
28,576
22,450
51,026
X 4
830,820
24.6%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
80
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
After-tax impact of adjusting items1
Adjusted net income
Divided by average shareholders’ equity for the year
Return on equity
YEAR ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
247,898
-
247,898
958,322
25.9%
247,898
(4,723)
243,175
958,322
25.4%
140,161
-
140,161
794,269
17.6%
140,161
52,100
192,261
794,269
24.2%
1For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
Reported and Adjusted Return on Tangible Common Equity
Reported and adjusted return on tangible common equity are non-IFRS ratios. The Company defines return on tangible common
equity as net income, adjusted for the after-tax amortization of acquisition-related intangible assets, which are treated as adjusting
items, as a percentage of average tangible common equity. Tangible common equity is calculated as shareholders’ equity for the
period, less goodwill and acquisition-related intangible assets, net of related deferred tax liabilities. Adjusted net income before
after-tax amortization of intangible assets excludes the impact of adjusting items. The Company believes adjusted return on
tangible common equity is an important measure of how shareholders’ invested tangible capital is utilized in the business.
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
Amortization of acquired intangible assets
Income tax impact of the above item
Net income before amortization of acquired
intangible assets, net of income tax
Impact of adjusting items1
Other operating expenses
Integration costs
Write off of an intangible asset
Other (income) loss
Finance costs
Refinancing costs related to notes payable
Fair value change on prepayment options related
to 2028 Notes
Total pre-tax impact of adjusting items
Income tax impact of above adjusting items
After-tax impact of adjusting items
Adjusted net income
Multiplied by number of periods in year
Average shareholders’ equity
Average goodwill
Average acquired intangible assets2
Average related deferred tax liabilities
Divided by average tangible common equity
Return on tangible common equity
THREE MONTHS ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
74,602
3,275
(868)
77,009
-
-
-
-
-
-
-
-
77,009
X 4
1,033,259
(180,923)
(97,704)
25,892
780,524
39.5%
74,602
3,275
(868)
77,009
131
-
(1,310)
9,501
(19,035)
(10,713)
2,665
(8,048)
68,961
X 4
1,033,259
(180,923)
(97,704)
25,892
780,524
35.3%
28,576
3,275
(868)
30,983
-
-
-
-
-
-
-
-
30,983
X 4
830,820
(180,923)
(110,804)
29,363
568,456
21.8%
28,576
3,275
(868)
30,983
122
20,460
5,609
-
-
26,191
(6,148)
20,043
51,026
X 4
830,820
(180,923)
(110,804)
29,363
568,456
35.9%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
2 Excludes intangible assets relating to software.
81
($ IN 000’S EXCEPT PERCENTAGES)
Net income as stated
Amortization of acquired intangible assets
Income tax impact of the above item
Net income before amortization of acquired
intangible assets, net of income tax
Impact of adjusting items1
Other operating expenses
Contract exit fee
Integration costs
Write off of an intangible asset
Corporate development costs
Other (income) loss
Finance costs
Finance costs
Transaction costs
Total pre-tax impact of adjusting items
Income tax impact of above adjusting items
After-tax impact of adjusting items
Adjusted net income
Average shareholders’ equity
Average goodwill
Average acquired intangible assets2
Average related deferred tax liabilities
Divided by average tangible common equity
Return on tangible common equity
YEAR ENDED
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
DECEMBER 31,
2022
DECEMBER 31,
2022
(ADJUSTED)
247,898
13,100
(3,471)
247,898
13,100
(3,471)
257,527
257,527
140,161
13,100
(3,471)
149,790
-
-
-
-
-
-
-
-
-
-
257,527
958,322
(180,923)
(102,617)
27,194
701,976
36.7%
934
608
-
-
(9,771)
9,501
(19,035)
(17,763)
3,411
(14,352)
243,175
958,322
(180,923)
(102,617)
27,194
701,976
34.6%
-
-
-
-
-
-
-
-
-
-
149,790
794,269
(180,923)
(115,717)
30,665
528,294
28.4%
140,161
13,100
(3,471)
149,790
-
1,081
20,460
2,314
28,659
-
-
52,514
(10,043)
42,471
192,261
794,269
(180,923)
(115,717)
30,665
528,294
36.4%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
2 Excludes intangible assets relating to software.
82
Financial Condition
The following table provides a summary of certain information with respect to the Company’s capitalization and financial position as at
December 31, 2023 and 2022.
($ IN 000’S, EXCEPT FOR RATIOS)
Consumer loans receivable, net
Cash
Accounts receivable
Prepaid expenses
Income taxes recoverable
Investments
Lease assets
Derivative financial assets
Property and equipment, net
Right-of-use assets, net
Intangible assets, net
Goodwill
Total assets
Notes payable
Revolving securitization warehouse facilities
Revolving credit facility
Secured borrowings
External debt
Accounts payable and accrued liabilities
Income taxes payable
Dividends payable
Unearned revenue
Accrued interest
Deferred tax liabilities, net
Lease liabilities
Derivative financial liabilities
Total liabilities
Shareholders’ equity
Total capitalization (external debt plus total shareholders’ equity)
Capital management measures
External debt to shareholders’ equity1
Net debt to net capitalization2
DECEMBER 31, 2023
DECEMBER 31, 2022
3,447,588
144,577
30,762
9,462
-
61,464
45,187
21,904
35,382
61,987
124,931
180,923
4,164,167
1,120,826
1,364,741
190,921
143,177
2,819,665
72,409
24,691
15,960
26,965
12,875
24,259
70,809
42,457
3,110,090
1,054,077
3,873,742
2.68
0.72
2,627,357
62,654
25,697
8,334
2,323
57,304
48,437
49,444
35,856
65,758
138,802
180,923
3,302,889
1,168,997
805,825
148,646
105,792
2,229,260
51,136
-
14,965
28,661
10,159
24,692
74,328
-
2,433,201
869,688
3,098,948
2.56
0.71
1 External debt to shareholders’ equity is a capital management measure that the Company uses to assess the ability of its net assets to cover outstanding debts. It is calculated as external debt
divided by shareholders’ equity.
2 Net debt to net capitalization is a leverage metric the Company uses to ensure it is operating within its target leverage range. Net debt is calculated as external debt less cash. Net debt to net
capitalization is net debt divided by the sum of net debt and shareholders’ equity.
Total assets were $4.16 billion as at December 31, 2023, an increase of $861.3 million or 26.1%, compared to December 31, 2022. The
increase was related primarily to an $820.2 million increase in net consumer loans receivable driven by record loan originations and an
$81.9 million increase in cash driven by increase in cash held back as a reserve for the Revolving Securitization Warehouse Facilities and
Secured Borrowings, partially offset by a $27.5 million decrease in derivative financial assets and the decrease in intangible assets of $13.9
million mainly due to the amortization of intangible asset related to the acquisition of LendCare.
83
The $861.3 million of growth in total assets was primarily financed by: i) a $590.4 million increase in external debt mainly from Revolving
Securitization Warehouse Facilities and Revolving Credit Facility; and ii) a $184.4 million increase in total shareholders’ equity, which was
driven by the earnings generated by the Company, partially offset by dividends paid. While the Company has continued to pay a dividend to
its shareholders, a large portion of the Company’s earnings have been retained to fund growth of its consumer lending business.
Liquidity and Capital Resources
Cash Flow Review
The table below provides a summary of cash flow components for the three-month periods and years ended December 31, 2023 and 2022.
($ IN 000’S)
DECEMBER 31, 2023 DECEMBER 31, 2022 DECEMBER 31, 2023 DECEMBER 31, 2022
THREE MONTHS ENDED
YEAR ENDED
Cash provided by operating activities before
net issuance of consumer loans receivable and
purchase of lease assets
Net issuance of consumer loans receivable
Purchase of lease assets
Cash used in operating activities
Cash used in investing activities
Cash provided by financing activities
Net increase (decrease) in cash for the period
183,338
(302,947)
(10,175)
(129,784)
(2,763)
193,062
60,515
141,600
(270,167)
(11,431)
(139,998)
(32,653)
161,296
(11,355)
718,767
(1,161,870)
(30,114)
(473,217)
(11,749)
566,889
81,923
529,528
(1,000,619)
(34,790)
(505,881)
(42,491)
508,547
(39,825)
The Company provides loans to non-prime borrowers. The Company obtains capital and funding which is treated as cash flows from
financing activities and then advances funds to borrowers as loans which are treated as cash used in operating activities. When a borrower
makes a loan payment, it generates cash flow from operating activities and income. As such when the Company is growing its portfolio of
consumer loans it will tend to use cash in operating activities.
Cash Flow Analysis for the Three Months Ended December 31, 2023
Cash used in operating activities for the three-month period ended December 31, 2023 was $129.8 million, compared with $140.0 million in the
same period of 2022. Included in cash used in operating activities for the three-month period ended December 31, 2023 were: i) a net issuance of
consumer loans receivable of $302.9 million; and ii) the purchase of lease assets of $10.2 million. If the net issuance of consumer loans receivable
and the purchase of lease assets were treated as cash flows from investing activities, the cash flows generated by operating activities would
have been $183.3 million for the three-month period ended December 31, 2023, up from $141.6 million in the same period of 2022. The increase
of $41.7 million was mainly driven by higher earnings.
During the three-month period ended December 31, 2023, cash used in investing activities was $2.8 million, mainly due to purchases of property
and equipment and investments in intangible assets, partially offset by the proceeds on sale of investments. During the three-month period
ended December 31, 2022, cash used in investing activities was $32.7 million, mainly due to a $25 million increase in the Company’s investments,
purchases of property and equipment and investments in intangible assets.
During the three-month period ended December 31, 2023, the Company generated $193.1 million in cash flow from financing activities, compared to
$161.3 million in the same period of 2022. The increase was mainly from higher net borrowings on the Company’s credit facilities in the current period.
Cash Flow Analysis for the Year Ended December 31, 2023
Cash used in operating activities during the year was $473.2 million, compared with $505.9 million in the same period of 2022. Included in cash
used in operating activities for the year ended December 31, 2023 were: i) a net issuance of consumer loans receivable of $1.16 billion; and ii)
the purchase of $30.1 million of lease assets. If the net issuance of consumer loans receivable and the purchase of lease assets were treated as
cash flows from investing activities, the cash flows generated by operating activities would have been $718.8 million for the year, up from $529.5
million in the same period of 2022. The increase of $189.2 million was mainly driven by higher earnings and favourable changes in working capital.
During the year, the Company used $11.7 million in investing activities, mainly due to purchases of property and equipment and investments in
intangible assets, partially offset by proceeds from the sale of investments. During the year ended December 31, 2022, the Company used $42.5
million in investing activities, mainly due to the $40 million increase in the Company’s investments, purchases of property and equipment and
investments in intangible assets, partially offset by $25.4 million proceeds from the sale of investments.
84
During the year, the Company generated $566.9 million in cash flow from financing activities, compared to $508.5 million in the
same period of 2022. The increase was mainly due to repurchases of common shares through the Company’s NCIB in the prior
period and the higher net borrowings on the Company’s credit facilities in the year.
Capital and Funding Resources
goeasy funds its business through a combination of equity and debt instruments. goeasy’s Common Shares are listed for trading on
the TSX under the trading symbol “GSY”. goeasy is rated BB- with a stable trend from S&P and Ba3 with a stable trend from Moody’s.
On March 22, 2021, goeasy’s Common Shares were added by Dow Jones to the S&P/TSX Composite Index. The Company’s inclusion in
the benchmark Canadian index reflects the value that has been created for the Company’s shareholders over the years.
As at December 31, 2023, the Company’s external debt consisted of 2028 Notes with a net carrying value of $699.9 million, 2026 Notes
with a net carrying value of $421 million, $1.37 billion drawn against the Company’s Revolving Securitization Warehouse Facilities, $192
million drawn against the Company’s Revolving Credit Facility and $143.2 million drawn against the Company’s secured borrowings.
Borrowings under the 2026 Notes bore a US$ coupon rate of 4.375%. Through a cross-currency swap agreement arranged concurrently
with the US$320 million offering of the 2026 Notes in April 2021, the Company hedged the risk of changes in the foreign exchange
rate for payments of principal and interest, effectively hedging the obligation at a Canadian dollar interest rate of 4.818%. These 2026
Notes mature on May 1, 2026.
Borrowings under the 2028 Notes bore a US$ coupon rate of 9.250%. Through a cross-currency swap agreement arranged concurrently
with the US$550 million offering of the 2028 Notes in November 2023, the Company hedged the risk of changes in the foreign exchange
rate for payments of principal and interest until December 1, 2027, effectively hedging the obligation at a Canadian dollar interest rate
of 8.79%. These 2028 Notes mature on December 1, 2028.
Borrowings under the Company’s Revolving Securitization Warehouse Facility I bear interest at the rate of 1-month CDOR plus 195
bps and has a maturity date of October 31, 2025. Borrowings under the Company’s Revolving Securitization Warehouse Facility II bear
interest at the rate of 1-month CDOR plus 185 bps and has a maturity date of December 16, 2025. Concurrent with the establishment
of the Revolving Securitization Warehouse Facilities, the Company entered into interest rate swap agreements as cash flow hedges to
protect against the risk of changes in the variability of future interest rates by paying a fixed rate on each draw based on the weighted
average life of the securitized loans and receiving a variable rate equivalent to 1-month CDOR.
Borrowings under the Company’s Revolving Credit Facility bear interest at either the BA rate plus 225 bps or Prime plus 75 bps, at
the option of the Company.
The Company has two secured borrowing facilities as follows:
• A $105 million securitization facility (“$105 million Securitization Facility”), which bears interest at the Government of Canada
Bonds (“GOCB”) rate (with a floor rate of 0.95%) plus 395 bps. The loan sale agreement to sell loans into the facility expired
on July 31, 2021. The balance of the loans that were sold into the facility will amortize down based on their contractual time
to maturity; and
• An $85 million securitization facility (“$85 million Securitization Facility”), which bears interest at the GOCB rate (with a floor
rate of 0.25%) plus 325 bps. The loan sale agreement to sell loans into the facility expired on November 30, 2021. On April
30, 2023, the Company amended this securitization facility to provide for $150 million funding (“$150 million Securitization
Facility”) through the sale of consumer loans until April 30, 2024, but can be extended to a specified period agreed by both
parties. The facility bears interest equal to an interpolated GOCB rate plus an initial spread of 310 bps.
The average blended coupon interest rate for the Company’s debt as at December 31, 2023 was 6.4%, up from 5.2% as at December
31, 2022.
Including the cash position of $144.6 million, the Company’s total liquidity as at December 31, 2023 was $900.6 million.
85
The table below summarizes the maturity profile of the Company's financial liabilities based on contractual undiscounted payments:
($ IN 000’S)
December 31, 2023
Accounts payable and accrued liabilities
Accrued interest
Revolving credit facility
Revolving securitization warehouse facilities
Secured borrowings
Derivative financial liabilities
Notes payable
December 31, 2022
Accounts payable and accrued liabilities
Accrued interest
Revolving credit facility
Revolving securitization warehouse facilities
Secured borrowings
Notes payable
Less than
1 Year
1 to 3
Years
4 to 5
Years
5 Years +
Total
72,409
12,875
-
-
-
-
192,000
1,370,000
-
-
-
-
67,925
4,166
5,224
38,291
424,064
709,825
69,450
-
-
51,136
10,159
-
-
-
-
150,000
810,000
-
-
-
-
-
-
-
-
578
-
-
-
-
-
-
72,409
12,875
192,000
1,370,000
143,177
42,457
1,133,889
51,136
10,159
150,000
810,000
105,792
30,901
53,996
16,205
4,690
-
745,195
433,568
-
1,178,763
Outstanding Shares and Dividends
As at February 13, 2024, there were 16,627,755 Common Shares, 345,043 Board deferred share units, 241,521 share options, 294,308
restricted share units, 94,636 Executive deferred share units and no warrants outstanding.
Normal Course Issuer Bid
On December 19, 2023, the Company announced the acceptance by the TSX of the Company’s Notice of Intention to make an NCIB (the
“2023 NCIB”). Pursuant to the 2023 NCIB, the Company proposed to purchase, from time to time, up to an aggregate of 1,270,245 common
shares being approximately 10% of goeasy’s public float as of December 13, 2023. As at December 13, 2023, goeasy had 16,603,531
common shares issued and outstanding, and the average daily trading volume for the six months prior to November 30, 2023, was 29,210.
Under 2023 NCIB, daily purchases will be limited to 7,302 common shares, representing 25% of the average daily trading volume, other
than block purchase exemptions. The purchases were permitted to commence on December 21, 2023, and will terminate on December
20, 2024, or on such earlier date as the Company may complete its purchases pursuant to the 2023 NCIB. The 2023 NCIB will be conducted
through facilities of the TSX or alternative trading systems, if eligible and will conform to their regulations. Purchases under the 2023
NCIB will be made by means of open market transaction or other such means as a security regulatory authority may permit, including
pre-arranged crosses, exempt offers and private agreements under an issuer bid exemption order issued by a securities regulatory
authority. The price that goeasy will pay for any Common Shares will be the market price of such shares at the time of acquisition, unless
otherwise permitted under applicable rules. For the year ended December 31, 2023, the Company has not purchased and cancelled any
common shares, under the 2023 NCIB.
On December 16, 2022, the Company announced the acceptance by the TSX of the Company’s Notice of Intention to make an NCIB (the
“2022 NCIB”). Pursuant to the 2022 NCIB, the Company proposed to purchase, from time to time, up to an aggregate of 1,252,730 common
shares being approximately 10% of goeasy’s public float as of December 9, 2022. As at December 9, 2022, goeasy had 16,438,926 common
shares issued and outstanding, and the average daily trading volume for the six months prior to November 30, 2022, was 49,253. Under
2022 NCIB, daily purchases will be limited to 12,313 common shares, representing 25% of the average daily trading volume, other than
block purchase exemptions. The purchases were permitted to commence on December 21, 2022, and terminated on December 20, 2023.
For the year ended December 31, 2023, the Company has not purchased and cancelled any common shares, under the 2022 NCIB.
86
On December 14, 2021, the Company announced the acceptance by the TSX of the Company’s Notice of Intention to Make an NCIB (the
“2021 NCIB”). Pursuant to the 2021 NCIB, the Company proposed to purchase, from time to time, if considered advisable, up to an
aggregate of 1,243,781 Common Shares being approximately 10% of goeasy’s public float as of December 7, 2021. As at December 7,
2021, goeasy had 16,254,135 Common Shares issued and outstanding, and the average daily trading volume for the six months prior to
November 30, 2021, was 62,825. Under the 2021 NCIB, daily purchases were limited to 15,706 Common Shares, representing 25% of the
average daily trading volume, other than block purchase exemptions. Purchases were permitted to commence on December 21, 2021,
and terminated on December 20, 2022. The purchases made by goeasy pursuant to the 2021 NCIB were effected through facilities of the
TSX, as well as alternative trading systems and in accordance with the rules of the TSX. The price the Company paid for repurchased
Common Shares was the market price of such shares at the time of acquisition. The Company did not purchase any Common Shares
other than by open-market purchases. For the year ended December 31, 2022, the Company completed the purchase for cancellation
through the facilities of the TSX of 450,058 of its Common Shares for a total cost of $61.0 million, under the 2021 NCIB.
Dividends
During the quarter ended December 31, 2023, the Company declared a $0.96 per share quarterly dividend on outstanding Common
Shares. This dividend was paid on January 12, 2024.
The Company reviews its dividend distribution policy on a regular basis, evaluating its financial position, profitability, cash flow and other
factors the Board of Directors considers relevant. However, no dividends can be declared in the event there is a default of a loan facility,
or where such payment would lead to a default.
On February 14, 2024, the Company increased the quarterly dividend rate by 21.9% from $0.96 to $1.17 per share. 2024 marks the 20th consecutive
year of paying a dividend to shareholders and the 10th consecutive year of an increase in the dividend rate per share to shareholders.
In February 2020, the Company was added to the S&P/TSX Canadian Dividend Aristocrats Index with a 42% compound annual growth
rate in the dividend over the prior 5 years.
The following table sets forth the quarterly dividends paid by the Company in the third quarter of the years indicated:
2023
2022
2021
2020
2019
2018
2017
Quarterly dividend per share
Percentage increase
$0.960
5.5%
$0.910
37.9%
$0.660
46.7%
$0.450
45.2%
$0.310
37.8%
$0.225
25.0%
$0.180
44.0%
Commitments, Guarantees and Contingencies
Commitments
The Company is committed to software maintenance, development and licensing service agreements, and operating leases for premises
and vehicles. Some of the Company’s lease contracts for premises include extension options. Management exercises significant judgement
in determining whether these extension options are reasonably certain to be exercised. As at December 31, 2023, no extension option for
lease contracts for premises is expected to be exercised.
The undiscounted potential future lease payments for operating leases for premises and vehicles and the estimated operating costs
related to technology commitments required for the next five years and thereafter are as follows:
($ IN 000’S)
Premises
Technology commitments
Vehicles
Total contractual obligations
WITHIN 1 YEAR
AFTER 1 YEAR, BUT NOT
MORE THAN 5 YEARS
MORE THAN 5 YEARS
47,251
30,646
965
78,862
5,928
-
-
5,928
23,610
20,289
607
44,506
87
Contingencies
The Company was involved in various legal matters arising in the ordinary course of business. The resolution of these matters is not
expected to have a material adverse effect on the Company’s financial position, financial performance or cash flows.
The Company has agreed to indemnify its directors and officers and particular employees in accordance with the Company’s policies.
The Company maintains insurance policies that may provide coverage against certain claims.
Risk Factors
Overview
The Company’s activities are exposed to a variety of commercial, operational, financial and regulatory risks. The Company’s overall risk
management program focuses on the unpredictability of financial and economic markets and seeks to minimize potential adverse effects
on the Company’s financial performance. The Board has overall responsibility for the establishment and oversight of the Company’s
risk management framework. The Corporate Governance, Nominating and Risk Committee of the Board reviews the Company’s risk
management program and policies on an annual basis.
Strategic Risk
Strategic risk is the risk from changes in the business environment, fundamental changes in demand for the Company’s products or
services, improper implementation of decisions, execution of the Company’s strategy or inadequate responsiveness to changes in the
business environment, including changes in the competitive and regulatory landscapes.
The Company’s growth strategy is focused on consumer lending through its easyfinancial and LendCare operating segments. The
Company’s ability to increase its customer and revenue base is contingent, in part, on its ability to grow its consumer loans receivable
portfolio, to access customers through new delivery channels, to secure and maintain merchant partnerships for LendCare, to
successfully develop and launch new products to meet evolving customer demands, to secure growth financing at a reasonable cost and
to execute with efficiency and effectiveness.
The impact of poor execution by management or an inadequate response to changes in the business environment could have a material
adverse effect on the Company’s financial condition, liquidity and results of operations.
Market Risk
Macroeconomic Conditions
Certain changes in macroeconomic conditions, many of which are beyond the Company’s control, can have a negative impact on
its customers and its performance. The Company’s primary customer segment is the non-prime consumer. These cash and credit
constrained customers are affected by adverse macroeconomic conditions such as higher unemployment rates and/or costs of living,
which can result in lower collection rates and higher charge off rates and adversely affect the Company’s performance, financial condition
and liquidity. The Company can neither predict the impact of the current economic conditions will have on its future results, nor predict
when the economic environment will change.
There can be no assurance that economic conditions will remain favorable for the Company’s business or that demand for loans or
default rates by customers will remain at current levels. Reduced demand for loans would negatively impact the Company’s growth and
revenues, while increased default rates by customers may inhibit the Company’s access to capital, hinder the growth of its loan portfolio
and negatively impact its profitability. Either such result could have a material adverse effect on the Company’s business, prospects,
results of operations, financial condition and/or cash flows.
Interest Rate Risk
Interest rate risk measures the Company’s risk of financial loss due to adverse movements in interest rates. The Company maintains
diversified funding sources and utilizes derivative financial instruments as cash flow hedges to assist in the management of interest
rate volatility.
The 2026 Notes and 2028 Notes maturing on May 1, 2026 and December 1, 2028, respectively, have fixed rates of interest.
88
The Revolving Securitization Warehouse Facility I and Revolving Securitization Warehouse Facility II have variable interest rates at 1-month
CDOR plus 195 bps and at 1-month CDOR plus 185 bps, respectively. The Company entered into interest rate swap agreements as cash flow
hedges to protect itself against the variability of future interest payments by paying a fixed rate based on the weighted average life of the
securitized loans and receiving variable rate equivalent to 1-month CDOR. As such, each incremental swap that is taken on has a hedge
implemented that results in interest rates becoming fixed for the duration of that swap.
The $105 million Securitization Facility bears interest at the GOCB rate (with a floor rate of 0.95%) plus 395 bps and the $85 million Securitization
Facility bears interest at the GOCB (with a floor rate of 0.25%) plus 325 bps. The loan sale agreements to sell loans into these facilities expired
in 2021. The balance of the loans that were sold into the facility will amortize down based on their contractual time to maturity. The $150
million Securitization Facility bears interest at an interpolated GOCB rate plus 310 bps. The interpolated rate is determined using the remaining
maturity of each loan sold into the facility, and the rate remains fixed for the life of the loan.
As at December 31, 2023, 93% of the Company’s drawn debt balances effectively bear fixed rates due to the type of debt and the aforementioned
interest rate swap agreement on the Revolving Securitization Warehouse Facilities.
The Company cannot predict the impact of the changing economic conditions will have on its future results, nor predict when interest rates
will change.
Foreign Currency Risk
The 2026 Notes and 2028 Notes are United States dollar denominated. In connection with the offering of these notes, the Company
entered into cross-currency swap agreements to hedge the risk of changes in the foreign exchange rate for the proceeds from the
offerings and for payments of principal and interest under these notes, effectively hedging the obligation. The hedge is designed
to match the cash flow obligations of the Company under the notes payable over the expected term that the Company expects it to
be at risk of changes in the foreign currency exchange rate.
The Company sources some of its merchandise and services out of the United States and, as such, its Canadian operations have
some United States dollar denominated cash and payable balances. As a result, the Company has both foreign exchange transaction
and translation risk. Although the Company has United States dollar denominated purchases, it has historically been able to price
its lease transactions to compensate for the impact of foreign currency fluctuations on its purchases. However, in periods of rapid
change in the Canadian to United States dollar exchange rate, the Company may not be able to pass on such changes in the cost of
purchased products to its customers, which may negatively impact its financial performance.
Competition
The Company estimates the size of the Canadian market for non-prime consumer lending, excluding mortgages, is approximately $217.9
billion. This demand is currently being met by a wide variety of industry participants that offer diverse products, including auto lending, credit
cards, installment loans, retail finance programs, small business lending and real estate secured lending. Generally, industry participants
have tended to focus on a single product offering rather than providing consumers with multiple alternatives. As a result, the suppliers to
the marketplace are quite diverse.
Competition in the non-prime consumer lending market is based primarily on access, flexibility and cost (interest rates). Consumers are
generally able to transition between different types of lending products that are available in the marketplace to satisfy their need for
these different characteristics. While traditional financial institutions are likely to decrease their risk tolerance and move farther away
from non-prime lending, regional financial institutions such as credit unions, payday lenders, marketplace lenders and online lenders may
consider expansion into the non-prime market. In addition, the change to the maximum allowable rate of interest in Canada may impact the
competitiveness of the Canadian non-prime market in the near term.
The Company also faces direct competition in the Canadian market from other merchandise leasing companies. Other factors that may
adversely affect the performance of the leasing business are increased sales of used furniture and electronics online and at retail stores
that offer a non-prime point-of-sale purchase financing option. Additional competitors, both domestic and international, may emerge since
barriers to entry are relatively low.
The Company may be unable to compete effectively with new and existing competitors, which could adversely affect its revenues and results
of operations. In addition, investments required to adjust to changing market conditions may adversely affect the Company’s business and
financial performance.
89
Credit Risk
Credit risk is the risk of loss that arises when a customer or counterparty fails to pay an amount owing to the Company.
The maximum exposure to credit risk is represented by the carrying amount of the accounts receivable, consumer loans receivable and lease
assets with customers under merchandise lease agreements. The Company provides consumer loans and leases products to thousands of
customers pursuant to policies and procedures that are intended to ensure that there is no concentration of credit risk with any particular
individual, company or other entity. The Company is subject to a higher level of credit risk due to the credit constrained nature of many of the
Company’s customers and in circumstances where its policies and procedures are not complied with.
Credit risk related to the Company’s consumer loans receivable is impacted by both the Company’s credit policies and the lending practices
which are overseen by the Company’s Credit Committee, comprised of members of senior management. Credit quality of the customer is
assessed using proprietary credit models and individual credit limits are defined in accordance with this assessment. The Company evaluates
the concentration of risk with respect to customer loans receivable as low, as its customers are located in several jurisdictions and operate
independently. The Company continuously updates its underwriting models based on the historical performance of groups of customer loans,
which guide its lending decisions. To the extent such historical data used to develop its underwriting models is not representative or predictive
of current loan book performance, the Company could suffer increased loan losses.
The Company maintains an allowance for credit losses as prescribed by IFRS 9 and as described fully in the notes to the Company’s consolidated
financial statements for the year ended December 31, 2023. The process for establishing an allowance for loan losses is critical to the Company’s
results of operations and financial conditions and is based on historical data, the underlying health and quality of the consumer loan portfolio at a
point in time, and forward-looking indicators. To the extent that such inputs used to develop its allowance for credit losses are not representative or
predictive of current loan book performance, the Company could suffer increased loan losses greater than those provided for on its consolidated
financial statements.
The Company cannot guarantee that delinquency and loss levels will correspond with historical levels experienced, and there is a risk that
delinquency and loss rates could increase significantly and have a material adverse effect on the financial results of the Company.
Credit risk related to lease assets with customers results from the possibility of customer default with respect to agreed upon payments or in not
returning the lease assets. The Company has a standard collection process in place in the event of payment default, which includes the recovery
of the lease asset if satisfactory payment terms cannot be worked out with the customer, as the Company maintains ownership of the lease
assets until payment options are exercised.
For accounts receivable from third parties, credit risk relates to the possibility of default on amounts owing to the Company. The Company deals
with credible companies, performs ongoing credit evaluations of counterparties and consumers and creates an allowance for uncollectible
amounts when determined to be appropriate.
The Company has established a Credit Committee and created processes and procedures to identify, measure, monitor and mitigate significant
credit risks. However, to the extent that such risks go unidentified or are not adequately or expeditiously addressed by senior management, the
Company and its financial performance could be adversely affected.
Liquidity and Funding Risk
Liquidity Risk
The Company has been funded through various sources, including the Revolving Credit Facility, the Revolving Securitization Warehouse
Facilities, secured borrowings, the 2026 Notes and 2028 Notes, and public market equity offerings. The availability of additional financing will
depend on a variety of factors, including the availability of credit and equity financing to the financial services industry and the Company’s
financial performance and credit ratings.
The Company has publicly stated that it intends to continue to expand its consumer lending business. To achieve this goal, the Company
may require additional funds which can be obtained through various sources, including debt or equity financing. There can be no assurance,
however, that additional funding will be available when needed or will be available on terms favorable to the Company. The inability to
access adequate sources of financing, or to do so on favorable terms, may adversely affect the Company’s capital structure and ability to
fund operational requirements and satisfy financial obligations. If additional funds are raised by issuing equity securities, shareholders may
incur dilution.
90
Liquidity risk is the risk that the Company’s financial condition is adversely affected by an inability to meet funding obligations and support
the Company’s business growth. The Company manages its capital to maintain its ability to continue as a going concern and to provide
adequate returns to shareholders by way of share appreciation and dividends. The Company’s capital structure consists of external debt
and shareholders’ equity, which comprises issued capital, contributed surplus and retained earnings.
All of the Company’s debt facilities must be renewed on a periodic basis. These facilities contain restrictions on the Company’s ability to,
among other things, pay dividends, sell or transfer assets, incur additional debt, repay other debt, make certain investments or acquisitions,
repurchase or redeem shares and engage in alternate business activities. The facilities also contain a number of covenants that require
the Company to maintain certain specified financial ratios. Failure to meet any of these covenants could result in an event of default under
these facilities which could, in turn, allow lenders to declare all amounts outstanding to be immediately due and payable. In such a case, the
financial condition, liquidity and results of the Company’s operations could materially suffer.
The Company has strengthened its banking relationships and diversified its funding sources over the past years. In 2023, the Company
extended the term of its Revolving Securitization Warehouse Facility I to October 2025 and added an additional major bank to the Revolving
Securitization Warehouse II, extended its term to December 2025, and increased the size of such facility from $200 million to $500 million.
The Company also exercised the accordion facility under its Revolving Credit Facility, increasing the size of such facility from $270 million
to $370 million. In addition, the Company amended its securitization facility with a leading Canadian insurance company, to provide for $150
million of funding through the sale of consumer loans. If the Company is unable to renew these facilities on acceptable terms when they
become due, there could be a material adverse effect on the Company’s financial condition, liquidity and results of operations.
Debt Service
The Company’s ability to make scheduled payments on, or refinance its debt obligations, depends on its financial condition and operating
performance, which are subject to a number of factors beyond its control. The Company may be unable to maintain a level of cash flows
from operating activities sufficient to permit it to repay the principal and interest on its indebtedness.
If the Company’s cash flows and capital resources are insufficient to fund its debt service obligations, it could face substantial liquidity
problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations,
reduce its growth plans, seek additional debt or equity capital or restructure or refinance its indebtedness. The Company may not be
able to obtain such alternative measures on commercially reasonable terms, or at all and, even if successful, those alternative actions
may not allow it to meet its scheduled debt service obligations. The Company’s credit agreements restrict its ability to dispose of assets
and use the proceeds from those dispositions and may also restrict its ability to raise debt or equity capital to be used to repay other
indebtedness when it becomes due. The Company may not be able to consummate any such dispositions or to obtain proceeds in an
amount sufficient to meet any debt service obligations when due.
The Company’s inability to generate sufficient cash flows to satisfy its debt obligations, or to refinance its indebtedness on commercially reasonable
terms, or at all, would materially and adversely affect its business, results of operations and financial condition. Failure to meet its debt obligations
could result in default under its lending agreements. In the event of such default, the holders of such indebtedness could elect to declare all of the
funds borrowed thereunder to be immediately due and payable, together with accrued and unpaid interest, and the Company could, among other
remedies that may be available, be forced into bankruptcy, insolvency or liquidation. If the Company’s operating performance declines, it may
need to seek waivers from the holders of such indebtedness to avoid being in default under the instruments governing such indebtedness. If the
Company breaches its covenants under its indebtedness, it may not be able to obtain a waiver from the holders of such indebtedness on terms
acceptable to the Company or at all. If this occurs, the Company would be in default under such indebtedness, and the holders of such indebtedness
could exercise their rights as described above and the Company could, among other remedies that may be available, be forced into bankruptcy,
insolvency or liquidation. A default under the agreements governing certain of the Company’s existing or future indebtedness and the remedies
sought by the holders of such indebtedness could make the Company unable to pay principal or interest on the debt.
Debt Covenants
The agreements governing the Company’s credit facilities contain restrictive covenants that may limit its discretion with respect to
certain business matters. These covenants may place significant restrictions on, among other things, the Company’s ability to create
liens or other encumbrances, to pay distributions or make certain other payments, investments, loans and guarantees, and to sell or
otherwise dispose of assets. In addition, the agreements governing the Company’s credit facilities may contain financial covenants
that require it to meet certain financial ratios and financial condition tests.
91
If the Company fails to maintain the requisite financial ratios under the agreement governing its credit facilities, it will be unable to draw
any amounts under the credit facilities until such default is waived or cured as required. In addition, such a failure could constitute an
event of default under the Company’s lending agreements entitling the lenders to accelerate the outstanding indebtedness thereunder
unless such event of default is cured as required by the agreement. The Company’s ability to comply with these covenants in future
periods will depend on its ongoing financial and operating performance, which in turn will be subject to economic conditions and to
financial, market and competitive factors, many of which are beyond its control.
The restrictions in the agreements governing the Company’s credit facilities may prevent the Company from taking actions that it
believes would be in the best interest of its business and may make it difficult for it to execute its business strategy successfully or
effectively compete with companies that are not similarly restricted. The Company may also incur future debt obligations that might
subject it to additional restrictive covenants that could affect its financial and operational flexibility.
The Company’s ability to comply with the covenants and restrictions contained in the agreement governing the Company’s credit
facilities may be affected by economic, financial and industry conditions beyond its control. The breach of any of these covenants or
restrictions could result in a default under the agreements that would permit the applicable lenders to declare all amounts outstanding
thereunder to be due and payable (including terminating any outstanding hedging arrangements), together with accrued and unpaid
interest, or cause cross-defaults under the Company’s other debts. If the Company is unable to repay its secured debt, lenders could
proceed against the collateral securing the debt. This could have serious consequences to the Company’s financial condition and
results of operations and could cause it to become bankrupt or insolvent.
Credit Ratings
The Company received credit ratings in connection with the issuance of its 2026 Notes and 2028 Notes. Any credit ratings applied to
the 2026 Notes and 2028 Notes are an assessment of the Company’s ability to pay its obligations. The Company is under no obligation
to maintain any credit rating with credit rating agencies and there is no assurance that any credit rating assigned to the 2026 Notes
and 2028 Notes will remain in effect for any given period of time or that any rating will not be lowered or withdrawn entirely by the
relevant rating agency. A lowering, withdrawal or failure to maintain any credit ratings applied to the 2026 Notes and 2028 Notes may
have an adverse effect on the market price or value and the liquidity of the 2026 Notes and 2028 Notes and, in addition, any such action
could make it more difficult or more expensive for the Company to obtain additional debt financing in the future.
Possible Movement of Stock Price
The market price of the Common Shares, similar to that of other public companies, has been subject to significant fluctuation in
response to numerous factors, including significant shifts in the availability of global credit, changes in macro-economic performance
due to volatile shifts in oil prices and unexpected natural disasters, concerns about the global economy and potential recession,
economic shocks, as well as variations in the annual or quarterly financial results of the Company, timing of announcements of
acquisitions or material transactions by the Company or its competitors, other conditions in the economy in general or in the industry
in particular, changes in applicable laws and regulations and other factors. Moreover, from time to time, the stock markets experience
significant price and volume volatility that may affect the market price of the Common Shares for reasons unrelated to the Company’s
performance. No prediction can be made as to the effect, if any, that future sales of Common Shares or the availability of shares
for future sale (including shares issuable upon the exercise of stock options) will have on the market price of the Common Shares
prevailing from time to time. Sales of substantial numbers of such shares or the perception that such sales could occur may adversely
affect the prevailing price of the Common Shares. Significant changes in the stock price could jeopardize the Company’s ability to
raise growth capital through an equity offering without significant dilution to existing shareholders.
Operational Risk
Operational risk, which is inherent in all business activities, is the potential for loss as a result of external events, human behaviour
(including error and fraud, non-compliance with mandated policies and procedures or other inappropriate behaviour) or inadequacy, or
the failure of processes, procedures or controls. The impact may include financial loss, loss of reputation, loss of competitive position or
regulatory and civil penalties. While operational risk cannot be eliminated, the Company takes reasonable steps to mitigate this risk by
putting in place a system of oversight, policies, procedures and internal controls.
92
Dependence on Key Personnel
One of the significant limiting factors in the Company’s performance and expansion plans will be the hiring and retention of the best people
for the job. Over the past few years, the Company has strengthened its hiring competencies and training programs.
In particular, the Company is dependent upon the abilities, experiences and efforts of its senior management team and other key employees.
The loss of these individuals without adequate replacement could have a material adverse impact on its business and operations.
As a consequence of its growth strategy and relatively high employee turnover at the store and branch level, the Company requires a
growing number of qualified managers and other store or branch personnel to successfully operate its expanding branch and store network.
There is competition for such personnel, and there can be no assurances that the Company will be successful in attracting and retaining
the personnel it may require. If the Company is unable to attract and retain qualified personnel or its costs to do so increase dramatically,
its operations would be materially adversely affected.
Outsource Risk
The Company outsources certain business functions to third-party service providers, which increases its operational complexity and
decreases its control. The Company relies on these service providers to provide a high level of service and support, which subjects
it to risks associated with inadequate or untimely service. In addition, if these outsourcing arrangements were not renewed or were
terminated or the services provided to the Company were otherwise disrupted, the Company would have to obtain these services from
an alternative provider. The Company may be unable to replace, or be delayed in replacing, these sources and there is a risk that it would
be unable to enter into a similar agreement with an alternate provider on terms that it considers favorable or in a timely manner. In the
future, the Company may outsource additional business functions. If any of these or other risks relating to outsourcing were realized, the
Company’s financial position, liquidity and results of operations could be adversely affected.
Fraud Risk
Employee and customer misconduct could subject the Company to financial losses or regulatory sanctions and seriously harm the
Company’s reputation. Misconduct by its employees could include hiding unauthorized activities, improper or unauthorized activities on
behalf of customers or improper use of confidential information. It is not always possible to prevent employee error and misconduct, and
the precautions the Company takes to prevent and detect this activity may not be effective in all cases. Employee error could also subject
the Company to financial claims for negligence.
If the Company’s internal controls fail to prevent or detect an occurrence, or if any resulting loss is not insured, exceeds applicable
insurance limits or if insurance coverage is denied or not available, it could have a material adverse effect on the Company’s business,
financial condition and results of operations.
Technology Risk
The Company is dependent upon the successful and uninterrupted functioning of its computer, internet and data processing systems.
The failure of these systems could interrupt operations or materially impact the Company’s ability to enter into new lease or lending
transactions and service or collect customer accounts. Although the Company has extensive information technology security and
disaster recovery plans, such a failure, if sustained, could have a material adverse effect on the Company’s financial condition, liquidity
and results of operations.
Breach of Information Security
The Company’s operations rely heavily on the secure processing, storage and transmission of confidential and sensitive customer
and other information through its information technology network. Other risks include the Company’s use of third-party vendors
with access to its network that may increase the risk of a cyber security breach. Third-party breaches or inadequate levels of cyber
security expertise and safeguards may expose the Company, directly or indirectly, to security breaches.
A breach, unauthorized access, computer virus, or other form of malicious attack on the Company’s information security may result
in the compromise of confidential and/or sensitive customer or employee information, destruction or corruption of data, reputational
harm affecting customer and investor confidence, and a disruption in the management of customer relationships or the inability
to originate, process and service the Company’s leasing or lending portfolios which could have a material adverse effect on the
Company’s financial condition, liquidity and results of operations.
93
To mitigate the risk of an information security breach, the Company regularly assesses such risks, has a disaster recovery plan in
place and has implemented reasonable controls over unauthorized access. The store network and corporate administrative offices,
including centralized operations, takes reasonable measures to protect the security of its information systems (including against
cyber-attacks). The Chief Information Officer of the Company oversees information security. However, such a cyber-attack or data
breach could have a material adverse effect on the Company and its financial condition, liquidity and results of operations.
Privacy, Information Security, and Data Protection Regulations
The Company is subject to various privacy and information security laws and takes reasonable measures to ensure compliance with
all requirements. Legislators and regulators are increasingly adopting new privacy and information security laws which may increase
the Company’s cost of compliance. While the Company has taken reasonable steps to protect its data and that of its customers, a
breach in the Company’s information security may adversely affect the Company’s reputation and also result in fines or penalties
from governmental bodies or regulators.
Risk Management Processes and Procedures
The Company has established a Risk Oversight Committee and created regular and ongoing processes and procedures to identify,
measure, monitor and mitigate significant risks to the organization. However, to the extent such risks go unidentified or are not
adequately or expeditiously addressed by management, the Company could be adversely affected.
Compliance Risk
Internal Controls Over Financial Reporting
The effective design of internal controls over financial reporting is essential for the Company to prevent and detect fraud or material
errors that may have occurred. The Company is also obligated to comply with the Form 52-109F2 Certification of interim filings
and 52-109F1 Certification of annual filings of the Ontario Securities Commission, which requires the Company’s CEO and CFO to
submit a quarterly and annual certificate of compliance. The Company and its management have taken reasonable steps to ensure
that adequate internal controls over financial reporting are in place. However, there is a risk that a fraud or material error may go
undetected and that such material fraud or error could adversely affect the Company.
Government Regulation and Compliance
The Company takes reasonable measures to ensure compliance with governing statutes, regulations and regulatory policies. A failure
to comply with such statutes, regulations or regulatory policies could result in sanctions, fines or other settlements that could
adversely affect both its earnings and reputation. Changes to laws, statutes, regulations or regulatory policies could also change
the economics of the Company’s merchandise leasing and consumer lending businesses including the salability or pricing of certain
ancillary products which could have a material adverse effect on the Company.
Section 347 of the Criminal Code prohibits the charging of an effective annual rate of interest that exceeds sixty percent for an
agreement or arrangement for credit advanced. The Company believes that easyfinancial is subject to section 347 of the Criminal
Code and closely monitors any legislative activity in this area, including the changes noted above. The application of additional capital
requirements or a reduction in the maximum cost of borrowing could have a material adverse effect on the Company’s financial
condition, liquidity and results of operations. The Company believes that the changes announced by the federal government in March
of 2023 will not impact the projected annual increase in its adjusted diluted earnings per share going forward. At present, additional
provincial regulation in certain geographic areas focusing on high-cost credit loans have been adopted, but do not materially impact
the Company’s business operations.
While management of the Company is of the view that its merchandise leasing business does not involve the provision of
credit, it could be determined that aspects of easyhome’s merchandise leasing business are subject to the Criminal Code. The
Company has implemented measures to ensure that the aggregate of all charges and expenses under its merchandise lease
agreement do not exceed the maximum interest rate allowed by law. Where aspects of easyhome’s business are subject to the
Criminal Code, and the Company has not complied with the requirements thereof, the Company could be subject to either or both
(1) civil actions for nullification of contracts, rebate of some or all payments made by customers, and damages; and (2) criminal
prosecution for violation of the Criminal Code, any of which outcomes could have a material adverse effect on the Company.
94
Numerous consumer protection laws and related regulations impose substantial requirements upon lenders involved in consumer
finance, including leasing and lending. Also, federal and provincial laws impose restrictions on consumer transactions and require
contract disclosures relating to the cost of borrowing and other matters. These requirements impose specific statutory liabilities
upon creditors who fail to comply with their provisions.
easyfinancial is subject to minimal regulatory capital requirements in connection with its operations in Saskatchewan. Otherwise, the
Company operates in an unregulated environment with regard to capital requirements.
Accounting Standards
From time to time the Company may be subject to changes in accounting standards issued by accounting standard-setting bodies, which
may affect the Company’s consolidated financial statements, reduce its reported profitability and change the calculation of its financial
covenant measures.
Legal and Reputational Risk
Reputation
The Company’s reputation is very important to attracting new customers to its platform, securing repeat lending to existing customers,
hiring the best employees and obtaining financing to facilitate the growth of its business. While the Company believes that it has a good
reputation and that it provides customers with a superior experience, there can be no assurance that the Company will continue to
maintain a good relationship with customers or avoid negative publicity, given the higher risk industry, generally subject to an above-
average level of scrutiny.
In recent years, consumer advocacy groups and some media reports have advocated governmental action to prohibit or place severe
restrictions on non-bank consumer loans, not making the proper distinction between payday loans and non-prime loans. Such consumer
advocacy groups and media reports generally focus on the annual percentage rate for this type of consumer loan, which is compared
unfavorably to the interest typically charged by banks to consumers with top-tier credit histories. The finance charges the Company
assesses can attract media publicity about the industry and be perceived as controversial. Customer’s acceptance of the interest
rates the Company charges on its consumer loans receivable could impact the future rate of the growth. Additionally, if the negative
characterization of these types of loans is accepted by legislators and regulators, the Company could become subject to more restrictive
laws and regulations applicable to consumer loan products that could have a material adverse effect on the Company’s business,
prospects, results of operations, financial condition or cash flows.
The Company’s ability to attract and retain customers is highly dependent upon the external perceptions of its level of service,
trustworthiness, business practices, financial condition and other subjective qualities. Negative perceptions or publicity regarding these
matters — even if related to seemingly isolated incidents, or even if related to practices not specific to short-term loans, such as debt
collection — could erode trust and confidence and damage the Company’s reputation among existing and potential customers, which
would make it difficult to attract new customers and retain existing customers, significantly decrease the demand for the Company’s
products, result in increased regulatory scrutiny, and have a material adverse effect on the Company’s business, prospects, results of
operations, financial condition, ability to raise growth capital or cash flows.
Litigation
From time to time and in the normal course of business, the Company may be involved in material litigation or may be subject to
regulatory actions. There can be no assurance that any litigation or regulatory action in which the Company may become involved in
the future will not have a material adverse effect on the Company’s business, financial condition or results of operations. Lawsuits or
regulatory actions could cause the Company to incur substantial expenditures, generate adverse publicity and could significantly impair
the Company’s business, force it to cease doing business in one or more jurisdictions or cause it to cease offering one or more products.
The Company is also likely to be subject to further litigation and communications with regulators in the future. An adverse ruling or a
settlement of any current or future litigation or regulatory actions against the Company or another lender could cause the Company
to have to refund fees and/or interest collected, forego collections of the principal amount of loans, pay multiple damages, pay
monetary penalties and/or modify or terminate its operations in particular jurisdictions. Defense of any lawsuit or regulatory action,
even if successful, could require substantial time and attention of the Company’s management and could require the expenditure of
significant amounts for legal fees and other related costs.
95
Insurance Risk
The Company’s insurance policies may not comprehensively cover all risks and liabilities because appropriate coverage may not be
available (or may not adequately cover all losses) or the Company may elect not to insure against certain risks. It may elect not to do
so, for example, where it considers the applicable premiums to be excessive in relation to the perceived risks and benefits that may
accrue. As a result, the Company may be held liable for material claims beyond its insurance coverage limits that could materially and
adversely impact financial performance and reputation. In addition, any significant claim against such policies may lead to increased
premiums on renewal and/or additional exclusions to the terms of future policies. If insurance (including cyber insurance) is not
available to cover a claim or the quantum of a claim exceeds policy limits, the Company will be exposed to the financial impact of the
event which could have an adverse impact on the Company’s business, financial performance and operations.
Financial Instruments
The Company’s assets and liabilities include financial instruments.
The Company’s financial assets consist of accounts receivable, consumer loans receivable, derivative financial instruments and
investments, which are initially measured at fair value plus transaction costs. Accounts receivable and consumer loans receivable
are subsequently measured at amortized cost. Investments are subsequently measured at fair value.
The Company’s financing activities expose it to the financial risks of changes in foreign exchange and interest rate volatility. The
Company utilizes derivative financial instruments as cash flow hedges to assist in the management of these risks. Derivative financial
instruments are initially measured at fair value on the trade date and subsequently remeasured at fair value at each reporting date
using observable market inputs.
The Company’s financial liabilities include a Revolving Credit Facility, notes payable, Revolving Securitization Warehouse Facilities,
secured borrowings, derivative financial instruments and accounts payable and accrued liabilities. Financial liabilities are initially
recognized at fair value. After initial recognition, the Company’s interest-bearing debt is subsequently measured at amortized cost
using the effective interest rate method. Non-interest-bearing financial liabilities, such as accounts payable and accrued liabilities,
are subsequently carried at the amount owing.
Critical Accounting Estimates
The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue
and expenses during the year. Actual amounts could differ from these estimates.
Significant changes in assumptions, including those with respect to future business plans and cash flows, could change the recorded
amounts by a material amount.
The Company’s critical accounting estimates are as described in the December 31, 2023 notes to the consolidated financial statements.
Changes in Accounting Policy and Disclosures
(a) New standards, interpretations and amendments adopted by the Company
There were no new standards, interpretations or amendments that had a material impact on the Company’s consolidated financial
statements. The Company has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
(b) Standards issued but not yet effective
There are no new standards issued but not yet effective as at January 1, 2023 that have a material impact on the Company’s consolidated
financial statements.
96
Internal Controls
Disclosure Controls and Procedures (“DC&P”)
DC&P are designed to provide reasonable assurance that information required to be disclosed by the Company in reports filed with
or submitted to various securities regulators are recorded, processed, summarized and reported within the time periods specified
in applicable Canadian securities laws and include controls and procedures designed to ensure that information required to be
disclosed in the Company’s filings or other reports is accumulated and communicated to the Company’s management, including the
Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), so that timely decisions can be made regarding required disclosure.
The Company’s management, under supervision of, and with the participation of, the CEO and CFO, have designed and evaluated the
Company’s DC&P, as required in Canada by National Instrument 52-109, “Certification of Disclosure in Issuers’ Annual and Interim
Filings”. Based on this evaluation, the CEO and CFO have concluded that the design of the system of the Company’s disclosure controls
and procedures were effective as at December 31, 2023.
Internal Controls over Financial Reporting (“ICFR”)
ICFR is a process designed by, or under the supervision of, senior management, and effected by the Board of Directors, management
and other personnel, to provide reasonable assurances regarding the reliability of financial reporting and preparation of the Company’s
consolidated financial statements in accordance with IFRS.
The Company’s internal controls over the financial reporting framework include those policies and procedures that:
(i) Pertain to the maintenance of records that, in reasonable details, accurately and fairly reflect the transactions and dispositions of
the assets of the Company;
(ii) Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial
statements in accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and
(iii) Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the Company’s consolidated financial statements.
Management is responsible for establishing and maintaining ICFR and designs such controls to attempt to ensure that the required
objectives of these internal controls have been met. Management uses the Internal Control – Integrated Framework (2013) to evaluate
the effectiveness of internal control over financial reporting, which is a recognized and suitable framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”).
In designing and evaluating such controls, it should be recognized that due to inherent limitations, any controls, no matter how well designed
and operated, can provide only reasonable assurance and may not prevent or detect all misstatements as a result of, among other things, error
or fraud. Projections of any evaluations of effectiveness to future periods are subject to the risk that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies and/or procedures may deteriorate.
Changes to ICFR during 2023
No changes were made in the Company’s internal controls over financial reporting during the year ended December 31, 2023 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Evaluation of ICFR as at December 31, 2023
As at December 31, 2023, under the direction and supervision of the CEO and CFO, the Company has evaluated the effectiveness
of the Company’s ICFR. The evaluation included a review of key controls, testing and evaluation of such test results. Based on
this evaluation, the CEO and CFO have concluded that the design and operation of the Company’s internal controls over financial
reporting were effective as at December 31, 2023.
97
Management’s Responsibility for Financial Reporting
The accompanying consolidated financial statements and the information in this Annual Report are the responsibility of management
and have been approved by the Board of Directors.
The consolidated financial statements have been prepared by management in accordance with International Financial Reporting
Standards [“IFRS”] and include some amounts based on management’s best estimates and judgments. When alternative accounting
methods exist, management has chosen those it considers most appropriate in the circumstances. Management has prepared the
financial information presented elsewhere in the Annual Report and has ensured that it is consistent with the financial statements.
goeasy Ltd. maintains a system of internal controls to provide reasonable assurance that transactions are properly authorized, financial
records are accurate and reliable, and the Company’s assets are properly accounted for and adequately safeguarded. These controls
include quality standards in the hiring and training of employees, written policies and procedures related to employee conduct, risk
management, external communication and disclosure of material information, and review and oversight of the Company’s policies,
procedures and practices. Management has assessed the effectiveness of this system of internal controls and determined that, as at
December 31, 2023, the Company’s internal control over financial reporting is effective.
The Board of Directors is responsible for ensuring that management fulfills its responsibility for financial reporting and is ultimately
responsible for reviewing and approving the financial statements. The Board of Directors carries out its responsibility for the financial
statements through its Audit Committee. The Audit Committee is composed entirely of independent directors. The Audit Committee is
responsible for the quality and integrity of the Company’s financial information, the effectiveness of the Company’s risk management,
internal controls and regulatory compliance practices, reviewing and approving applicable financial information and documents prior to
public disclosure and for selecting the Company’s external auditors. The Audit Committee meets periodically with management and the
external auditors to review the financial statements and the annual report and to discuss audit, financial and internal control matters.
The Company’s external auditors have full and free access to the Audit Committee.
The financial statements have been subject to an audit by the Company’s external auditors, Ernst & Young LLP, in accordance with
Canadian generally accepted auditing standards on behalf of the shareholders.
Jason Mullins
President & Chief Executive Officer
Hal Khouri
Executive Vice-President & Chief Financial Officer
98
INDEPENDENT AUDITOR’S REPORT
To the shareholders of goeasy Ltd.
Opinion
We have audited the consolidated financial statements of goeasy Ltd. and its subsidiaries (the Company), which comprise the consolidated
statements of financial position as at December 31, 2023 and 2022, and the consolidated statements of income, consolidated statements
of comprehensive income, consolidated statements of changes in shareholders’ 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 Company as at December 31, 2023 and 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 Company 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 judgment, were of most significance in the audit of the consolidated financial
statements of the current period. These matters were addressed in the context of the audit of the consolidated financial statements as a
whole, and in forming the auditor’s opinion thereon, and we do not provide a separate opinion on these matters. For each matter below,
our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of
our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures
performed to address the matters below, provide the basis for our audit opinion on the accompanying consolidated financial statements.
Key audit
matter
Allowance for credit losses
As more fully described in Notes 2 and 6 of the consolidated financial statements, goeasy has used expected credit loss
(ECL) models to recognize $265.4 million in allowances for credit losses on its consolidated balance sheet. The ECL is
an unbiased and probability-weighted estimate of credit losses expected to occur in the future, which is determined by
evaluating a range of possible outcomes incorporating the time value of money and reasonable and supportable information
about past events, current conditions and future economic forecasts.
The allowance for credit losses is a significant estimate for which variations in model methodology, assumptions and
judgements can have a material effect on the measurement of expected credit losses.
Auditing the allowance for credit losses was complex, involved auditor judgement and required the involvement of Credit
Risk Specialists due to the inherent complexity of the models, assumptions, judgements and the interrelationship of these
variables in measuring the ECL. Significant assumptions and judgments with respect to the estimation of the allowance
for credit losses included the calculation of both 12-month and lifetime expected credit losses, the determination of when
a loan has experienced a significant increase in credit risk and the determination of relevant forward looking multiple
economic scenarios and the probability weighting of those scenarios.
How our
audit
addressed
the key audit
matter
To test the allowance for credit losses, among other procedures, with the assistance of our Credit Risk Specialists we
assessed whether the methodology and assumptions used in the ECL models are consistent with IFRS. We independently
recalculated the ECL using source data. With the assistance of our Credit Risk Specialists, we evaluated the accuracy
and related application of the programming code which records loans in each of the appropriate stages. We evaluated
the reasonability of macroeconomic inputs used by comparing the information to third party sources and recalculated
the effect of the inputs on the ECL models. We tested the completeness and accuracy of a sample of data used in the
measurement of ECL by agreeing back to appropriate source systems or loan origination documents.
99
Goodwill impairment for LendCare
Key audit
matter
As more fully described in Notes 2 and 11 of the consolidated financial statements, goeasy has recognized $180.9 million
in goodwill as a result of past business combinations, of which $159.6 million relates to the LendCare cash-generating
unit (CGU). Goodwill is tested, at least annually, for impairment. Goodwill is also required to be tested for impairment
whenever there are indicators that it may be impaired. Goodwill is tested by comparing the recoverable amount of
the CGU to which it has been allocated, with the carrying amount of the total CGU. The recoverable amount of a CGU is
defined as the higher of its estimated fair value less costs to sell and its value in use.
Auditing goeasy’s goodwill impairment test for the LendCare CGU was complex, required the application of auditor
judgement and involved the use of our Valuation Specialists due to the significant estimation required to determine the
recoverable amount of the CGU. In particular, the estimate of recoverable amount is sensitive to significant assumptions,
such as forecasted growth rates, discount rate, and terminal growth rate, which are affected by expectations about
future market or economic conditions.
How our
audit
addressed
the key audit
matter
With the assistance of our Valuation Specialists, we tested management’s estimate of the recoverable amount of the CGU.
We performed a sensitivity analysis over the significant assumptions to evaluate the changes in the recoverable amount
of the CGU that would result from changes in the assumptions. We performed audit procedures that included, among
others, assessing the methodologies applied, and testing the significant assumptions discussed above and the underlying
data used by goeasy in its assessment. With the assistance of our Valuation Specialists, we evaluated the discount rate
by considering the cost of capital of comparable businesses and other industry factors. We evaluated the reasonability of
the forecasted earnings and terminal growth rate by comparing to historical results and our current understanding of the
business as well as current economic trends. We assessed the historical accuracy of management’s prior year estimates
by performing a comparison of management’s prior year projections to actual results.
Other information
Management is responsible for the other information. The other information comprises:
• Management’s Discussion & Analysis
• The information, other than the consolidated financial statements and our auditor’s report thereon, in the Annual Report.
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.
We obtained Management’s Discussion & Analysis prior to the date of this auditor’s report. 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.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If based on the work we will perform on
this other information, we conclude there is a material misstatement of other information, we are required to report that fact to those
charged with governance.
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 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 Company’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 Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
100
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.
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 Company’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 Company’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 Company 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
Company 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 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 David Tedesco.
Toronto, Canada
February 13, 2024
101
Audited
Consolidated
Financial
Statements
For the years ended
December 31,
2023 and 2022
102
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
AS AT
DECEMBER 31, 2023
AS AT
DECEMBER 31, 2022
ASSETS
Cash (note 4)
Accounts receivable (note 5)
Prepaid expenses
Income taxes recoverable
Consumer loans receivable, net (note 6)
Investments (note 7)
Lease assets (note 8)
Derivative financial assets (note 15)
Property and equipment, net (note 9)
Right-of-use assets, net (note 10)
Intangible assets, net (note 11)
Goodwill (note 11)
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Revolving credit facility (note 14)
Accounts payable and accrued liabilities
Income taxes payable
Dividends payable (note 16)
Unearned revenue
Accrued interest
Deferred income tax liabilities, net (note 20)
Lease liabilities (note 10)
Secured borrowings (note 13)
Revolving securitization warehouse facilities (note 12)
Derivative financial liabilities (notes 12 and 15)
Notes payable (note 15)
TOTAL LIABILITIES
SHAREHOLDERS' EQUITY
Share capital (note 16)
Contributed surplus (note 17)
Accumulated other comprehensive (loss) income
Retained earnings
TOTAL SHAREHOLDERS' EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
See accompanying notes to the consolidated financial statements.
On behalf of the Board:
144,577
30,762
9,462
-
3,447,588
61,464
45,187
21,904
35,382
61,987
124,931
180,923
4,164,167
190,921
72,409
24,691
15,960
26,965
12,875
24,259
70,809
143,177
1,364,741
42,457
1,120,826
3,110,090
428,328
24,817
(9,721)
610,653
1,054,077
4,164,167
62,654
25,697
8,334
2,323
2,627,357
57,304
48,437
49,444
35,856
65,758
138,802
180,923
3,302,889
148,646
51,136
-
14,965
28,661
10,159
24,692
74,328
105,792
805,825
-
1,168,997
2,433,201
419,046
21,499
2,776
426,367
869,688
3,302,889
David Ingram
Director
Karen Basian
Director
103
Consolidated Statements of Income
(Expressed in thousands of Canadian dollars, except earnings per share)
REVENUE
Interest income
Lease revenue
Commissions earned
Charges and fees
OPERATING EXPENSES
BAD DEBTS (NOTE 6)
OTHER OPERATING EXPENSES
Salaries and benefits
Share-based compensation (note 17)
Advertising and promotion
Occupancy
Technology costs
Underwriting and collections
Loss on sale or write off of assets (note 11)
Other expenses (note 18)
DEPRECIATION AND AMORTIZATION
Depreciation of lease assets (note 8)
Amortization of intangible assets (note 11)
Depreciation of right-of-use assets (note 10)
Depreciation of property and equipment (note 9)
TOTAL OPERATING EXPENSES
OPERATING INCOME
OTHER INCOME (LOSS) (NOTE 7)
FINANCE COSTS (NOTE 19)
INCOME BEFORE INCOME TAXES
INCOME TAX EXPENSE (RECOVERY) (NOTE 20)
Current
Deferred
NET INCOME
BASIC EARNINGS PER SHARE (NOTE 21)
DILUTED EARNINGS PER SHARE (NOTE 21)
See accompanying notes to the consolidated financial statements.
104
YEAR ENDED
DECEMBER 31, 2023
DECEMBER 31, 2022
888,928
99,848
234,485
26,808
1,250,069
698,150
103,414
197,159
20,613
1,019,336
341,639
272,893
200,917
12,938
31,020
25,405
28,402
16,564
-
30,335
345,581
33,535
21,999
21,260
9,537
86,331
773,551
476,518
9,771
(149,334)
336,955
90,809
(1,752)
89,057
247,898
14.70
14.48
174,236
10,053
34,069
25,234
23,463
13,930
20,549
31,196
332,730
33,547
18,406
20,160
9,193
81,306
686,929
332,407
(28,659)
(107,972)
195,776
65,659
(10,044)
55,615
140,161
8.61
8.42
Consolidated Statements of Comprehensive Income
(Expressed in thousands of Canadian dollars)
Net income
Other comprehensive income (loss) to be reclassified to the consolidated statement of
income in subsequent periods
Reclassification of cash flow hedge to the consolidated statement of income, net of taxes
Change in costs of hedging, net of taxes
Change in fair value of cash flow hedge, net of taxes
Change in foreign currency translation reserve
YEAR ENDED
DECEMBER 31, 2023
DECEMBER 31, 2022
247,898
140,161
4,188
2,440
(19,125)
-
(12,497)
-
2,055
(7,842)
(4)
(5,791)
Comprehensive income
235,401
134,370
See accompanying notes to the consolidated financial statements.
Consolidated Statements of Changes in Shareholders' Equity
(Expressed in thousands of Canadian dollars)
SHARE
CAPITAL
CONTRIBUTED
SURPLUS
TOTAL
CAPITAL
RETAINED
EARNINGS
ACCUMULATED
OTHER
COMPREHENSIVE
(LOSS) INCOME
TOTAL
SHAREHOLDERS'
EQUITY
Balance, December 31, 2022
419,046
21,499
440,545
426,367
2,776
Common shares issued
9,282
(2,446)
6,836
Share-based compensation (note 17)
Repurchase of equity interest related to
restricted share units, net of tax (note 17)
Comprehensive income (loss)
Dividends
-
-
-
-
12,938
12,938
(7,174)
(7,174)
-
-
-
-
-
-
-
-
-
-
247,898
(63,612)
(12,497)
-
Balance, December 31, 2023
428,328
24,817
453,145
610,653
(9,721)
1,054,077
22,583
386,097
395,249
8,567
869,688
6,836
12,938
(7,174)
235,401
(63,612)
789,913
63,296
10,053
(8,605)
(60,999)
134,370
(58,340)
869,688
-
-
-
-
(5,791)
-
2,776
Balance, December 31, 2021
Common shares issued
Share-based compensation (note 17)
Repurchase of equity interest related to
restricted share units, net of tax (note 17)
363,514
65,828
-
-
Shares purchased for cancellation (note 16)
(10,296)
Comprehensive income (loss)
Dividends
-
-
(2,532)
63,296
10,053
10,053
(8,605)
(8,605)
-
-
-
-
-
-
(10,296)
(50,703)
-
-
140,161
(58,340)
Balance, December 31, 2022
419,046
21,499
440,545
426,367
See accompanying notes to the consolidated financial statements.
105
Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
OPERATING ACTIVITIES
Net income
Add (deduct) items not affecting cash
Bad debts (note 6)
Depreciation of lease assets (note 8)
Amortization of intangible assets (note 11)
Depreciation of right-of-use assets (note 10)
Share-based compensation (note 17)
Depreciation of property and equipment (note 9)
Refinancing costs related to notes payable (note 15)
Amortization of deferred financing charges
Loss on sale or write off of assets (note 11)
Deferred income tax recovery (note 20)
Other (income) loss (note 7)
Fair value change on prepayment options (note 15)
Net change in other operating assets and liabilities (note 22)
Net issuance of consumer loans receivable
Purchase of lease assets
Cash used in operating activities
INVESTING ACTIVITIES
Proceeds on sale of investment
Investments in intangible assets
Purchase of property and equipment
Purchase of investments
Cash used in investing activities
FINANCING ACTIVITIES
Issuance of notes payable, net of finance charges (note 15)
Advances from revolving securitization warehouse facilities, net of financing charges
Advances from revolving credit facilities, net of financing charges
Advances from secured borrowings
Issuance of common shares, net of issuance costs (note 16)
Lease incentive received (note 10)
Payment of restricted share units (note 17)
Payment of lease liability (note 10)
Payment of advances from revolving securitization warehouse facilities
Payment of loan from secured borrowings
Payment of common share dividends (note 16)
Payment of advances from revolving credit facilities
Payment of notes payable (note 15)
Purchase of common shares for cancellation
Cash provided by financing activities
Net increase (decrease) in cash during the year
Cash, beginning of year
Cash, end of year
See accompanying notes to the consolidated financial statements.
106
YEAR ENDED
DECEMBER 31, 2023
DECEMBER 31, 2022
247,898
140,161
341,639
272,893
33,535
21,999
21,260
12,938
9,537
9,501
7,543
-
(1,752)
(9,771)
(19,035)
675,292
43,475
33,547
18,406
20,160
10,053
9,193
-
6,202
20,549
(10,044)
28,659
-
549,779
(20,251)
(1,161,870)
(30,114)
(473,217)
(1,000,619)
(34,790)
(505,881)
5,611
(8,128)
(9,232)
-
(11,749)
751,797
616,218
563,347
98,008
5,703
873
(8,691)
(21,881)
(60,000)
(60,654)
(60,946)
(522,000)
(734,885)
-
566,889
81,923
62,654
144,577
25,395
(18,015)
(9,871)
(40,000)
(42,491)
-
511,468
514,840
-
60,564
888
(10,692)
(20,945)
-
(68,167)
(51,610)
(366,800)
-
(60,999)
508,547
(39,825)
102,479
62,654
Notes To
Consolidated
Financial
Statements
(Expressed in thousands of Canadian
dollars, except where otherwise indicated)
December 31,
2023 and 2022
107
1. Corporate Information
goeasy Ltd. (the “Parent Company”) was incorporated under the laws of the Province of Alberta, Canada by Certificate and Articles of
Incorporation dated December 14, 1990, and was continued as a corporation in the Province of Ontario pursuant to Articles of Continuance
dated July 22, 1993. The Parent Company has common shares listed on the Toronto Stock Exchange (the “TSX”) under the symbol “GSY”
and its head office is in Mississauga, Ontario, Canada.
The Parent Company and all of the companies that it controls (collectively referred to as “goeasy” or the “Company”) are a leading full-
service provider of goods and alternative financial services that provide everyday Canadians with a path for a better tomorrow, today. The
principal operating activities of the Company include: i) providing loans and other financial services to consumers; and ii) leasing household
products to consumers. Customers can transact seamlessly through an omnichannel model that includes online and mobile platforms,
over 400 locations across Canada, and point-of-sale financing offered in the retail, powersports, automotive, home improvement and
healthcare verticals, through over 9,500 merchant partners across Canada.
The Company operates in two reportable segments: easyfinancial and easyhome. As at December 31, 2023, the Company operated 300
easyfinancial locations (including 2 kiosks within easyhome stores and 3 operation centres) and 144 easyhome stores (including 34
franchises). As at December 31, 2022, the Company operated 302 easyfinancial locations (including 2 kiosks within easyhome stores and
3 operation centres) and 154 easyhome stores (including 34 franchises).
The consolidated financial statements were authorized for issue by the Board of Directors on February 13, 2024.
2. Accounting Policies
Basis of Preparation
The consolidated financial statements of the Company for the year ended December 31, 2023 have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The policies applied in
these consolidated financial statements were based on IFRS issued and outstanding as at December 31, 2023.
Basis of Consolidation
The consolidated financial statements include the financial statements of the Parent Company and all of the companies that it controls.
goeasy Ltd. controls an entity when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee. This includes all wholly owned subsidiaries and structured entities (note 12)
where goeasy Ltd. has control but does not have ownership of a majority of the voting rights.
As at December 31, 2023, the Parent Company’s principal subsidiaries were:
• RTO Asset Management Inc.
• easyfinancial Services Inc.
• LendCare Capital Inc. (“LendCare”)
All intra-group transactions and balances were eliminated on consolidation.
Presentation Currency
The consolidated financial statements are presented in Canadian dollars (“CAD”), which is the Parent Company's functional currency.
Foreign Currency Translation
Each entity in the Company determines its own functional currency and items included in the financial statements of each entity are
measured using that functional currency.
Foreign currency transactions are initially recorded at the rate prevailing at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated into the functional currency at the spot rate on the reporting date. Non monetary items that
are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.
108
Revenue Recognition
Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be
reliably measured. Revenue is measured at the fair value of the consideration received or receivable, excluding promotional discounts,
rebates and sales taxes. The Company assesses its revenue arrangements against specific criteria in order to determine if it is acting
as principal or agent. The Company has concluded that it is acting as principal in all of its revenue arrangements except for the sale of
certain ancillary products where it acts as an agent and, therefore, recognizes such revenue on a net basis.
i) Interest Income
Interest income from consumer loans receivable is recognized when earned using the effective interest rate method.
ii) Lease Revenue
Merchandise is leased to customers pursuant to agreements that provide for periodic lease payments collected in advance. The lease
agreements can be terminated by the customer at the end of the periodic lease period without any further obligation or cost to the customer.
Lease revenue consists of lease payments, product damage liability waivers and processing and other fees. Revenue from lease agreements
is recognized when earned. Lease revenue also consists of revenue from the ultimate sale of goods to customers, which represents the
culmination of the lease asset life cycle and occurs when title passes to the customer. Such revenue is measured at the fair value of the
consideration received or receivable.
iii) Commissions Earned and Charges and Fees
Commissions earned are recognized when, or as, a performance obligation is satisfied by providing a service to a customer, in the
amount of the consideration to which the Company expects to receive. Charges and fees are recognized as revenue at a point in time
upon when the transaction is completed.
Cash
Cash consists of bank balances and cash on hand, adjusted for in-transit items such as outstanding cheques and deposits.
Financial Assets
Initial Recognition and Measurement
Financial assets are classified at initial recognition at: i) fair value through profit or loss (“FVTPL”); ii) amortized cost; iii) debt financial
instruments measured at fair value through other comprehensive income (“FVOCI”); iv) equity financial instruments designated at
FVOCI; or v) financial instruments designated at FVTPL, based on the contractual cash flow characteristics of the financial assets and
the business model under which the financial assets are managed. All financial assets are measured at fair value with the exception of
financial assets measured at amortized cost. Financial assets are reclassified when and only when the business model under which
they are managed has changed. All reclassifications are to be applied prospectively from the reclassification date.
All debt instrument financial assets that do not meet a “solely payment of principal and interest” (“SPPI”) test, including those that contain
embedded derivatives are classified at initial recognition as FVTPL. For debt instrument financial assets that meet the SPPI test, classification
at initial recognition is determined based on the business model under which these instruments are managed. Debt instruments that are
managed on a “held for trading” or “fair value” basis are classified as FVTPL. Debt instruments that are managed on a “hold to collect and for
sale” basis are classified as FVOCI for debt. Debt instruments that are managed on a “hold to collect” basis are classified as amortized cost.
Financial assets consist of accounts receivable, consumer loans receivable, derivative financial instruments and investments, and are
initially measured at fair value plus transaction costs.
Accounts receivable and consumer loans receivable are subsequently measured at amortized cost. Amortized cost is determined using the
effective interest rate method, factoring in acquisition costs paid to third parties, and allowances for loan losses. The effective interest rate is
the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to the carrying amount. When
calculating the effective interest rate, the Company estimates future cash flows considering all contractual terms of the financial instrument.
The Company does not have any financial assets that are subsequently measured at fair value except for investments and the derivative
financial instruments which may be in an asset or liability position (see section “Derivative Financial Instruments and Hedge Accounting”).
Financial assets are derecognized when the rights to receive cash flows from the asset have expired or the Company has transferred
its rights to receive cash flows from an asset.
109
Impairment of Financial Assets
The Company applies an expected credit loss (“ECL”) model, where credit losses that are expected to transpire in future years irrespective
of whether or not a loss event has occurred as at the statements of financial position date, are provided for. The Company assesses and
segments its loan portfolio into performing (Stage 1), under-performing (Stage 2) and non-performing (Stage 3) categories as at each
statements of financial position date. Loans are categorized as under-performing if there has been a significant increase in credit risk. The
Company utilizes an internal risk rating methodology that incorporates changes in delinquency and other identifiable risk factors based on
data obtained from monthly refreshes of a customer’s credit profile, and any substantive adjustments to a loan’s terms. Under-performing
loans are recategorized to performing only if there is deemed to be a substantial decrease in credit risk. Loans are categorized as non-
performing if there is objective evidence that such loans will likely charge off in the future, which the Company has determined to be when
loans are delinquent for greater than 30 days. For performing loans, the Company is required to record an allowance for loan losses equal to
the expected losses on that group of loans over the ensuing twelve months. For under-performing and non-performing loans, the Company
is required to record an allowance for loan losses equal to the expected losses on those groups of loans over their remaining life.
In order for additional credit to be advanced to a borrower, they must be current on their pre-existing loan and meet the Company’s credit and
underwriting requirements. In limited situations, the Company may amend the terms of a loan, typically through deferring payments and extending
the loan amortization period, for customers that are current or are in arrears as a means to ensure the customer remains able to repay the loan.
The key inputs in the measurement of ECL allowances are as follows:
• The probability of default is an estimate of the likelihood of default over a given time horizon;
• The exposure at default is an estimate of the exposure at a future default date;
• The loss given default is an estimate of the loss arising in the case where a default occurs at a given time; and
• Forward-looking indicators (“FLIs”).
Ultimately, the ECL is calculated based on the probability weighted expected cash collected shortfall against the carrying value of
the loan and considers reasonable and supportable information about past events, current conditions and forecasts of future events
and economic conditions that may impact the credit profile of the loans. Forward-looking information is considered when determining
significant increases in credit risk and measuring expected credit losses. Forward-looking macroeconomic factors are incorporated
in the risk parameters as relevant. From an analysis of historical data, management has identified and reflected in the Company’s ECL
allowance those relevant FLI variables that contribute to credit risk and losses within the Company’s loan portfolio. Within the Company’s
loan portfolio, the most highly correlated variables are unemployment rates, inflation, oil prices, and gross domestic product (“GDP”).
Unsecured customer loan balances that are delinquent greater than 90 days and secured customer loan balances that are delinquent
greater than 180 days are written off against the allowance for loan losses.
Consumer loan balances, together with the associated allowances, are written off when there is no realistic prospect of further recovery.
If, in a subsequent year, the amount of the estimated impairment loss decreases because of an event occurring after the impairment was
recognized, the previously recognized impairment loss is reduced by adjusting the allowance account. If a write off is later recovered,
the recovery is credited to bad debt expense.
For accounts receivable, the Company applies a simplified approach in calculating ECLs recognizing a loss allowance based on lifetime
ECLs at each reporting date.
Modified Loans
In cases where a borrower experiences financial difficulty, the Company may grant certain concessionary modifications to the terms
and conditions of a loan. Modifications may include payment deferrals, extension of amortization periods, rate reductions and other
modifications intended to minimize the economic loss. The Company has policies in place to determine the appropriate remediation
strategy based on the individual borrower.
If the Company determines that a modification results in the expiry of cash flows, the original asset is derecognized while a new asset
is recognized based on the new contractual terms. Significant increase in credit risk is assessed relative to the risk of default on the
new financial instrument at the date of derecognition. A gain or loss is assessed at the date of modification or derecognition equal to the
difference between the fair value of the cash flows under the original and modified terms.
110
If the Company determines that a modification does not result in derecognition, significant increase in credit risk is assessed based on the
risk of default at initial recognition of the original asset. Expected cash flows arising from the modified contractual terms are considered
when calculating the ECL for the modified asset. For loans that were modified while having lifetime ECLs, the loans can revert to having
twelve-month ECLs after a period of performance and improvement in the borrower’s financial condition.
Lease Assets
Lease assets are stated at cost net of accumulated depreciation and accumulated impairment losses, if any. Vendor volume rebates are
recorded as a reduction of the cost of lease assets.
As the leases are effectively cancellable by the customer with a week’s notice, and there are no bargain purchase options provided to
the customer, the customer leases are considered operating in nature. Lease agreements entitle customers to buy out a lease asset in
accordance with conditions stipulated in the lease agreements.
The residual value, useful life and depreciation method of the lease assets are reviewed at each financial year-end. If expectations differ
from previous estimates, they are adjusted and the changes are accounted for prospectively as a change in accounting estimates. In the
event management determines that the Company can no longer lease or sell certain lease assets, they are written off. The residual value
of lease assets is nominal.
Depreciation on lease assets is charged to net income as follows:
• Lease assets, excluding game stations, computers and related equipment, are depreciated using the units of activity method over
the expected lease agreement term.
• Game stations, computers and related equipment are depreciated on a straight-line basis over 24 months.
• Depreciation for all lease assets includes the remaining book values at the time of disposition of the lease assets that have been
sold and amounts that have been charged off as stolen, lost or no longer suitable for lease.
The Company records a provision against the carrying value of lease assets for estimated losses from theft and/or damage.
Property and Equipment
Property and equipment are stated at cost net of accumulated depreciation and accumulated impairment losses, if any.
Subsequent costs are included in an asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable
that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other
expenses are charged to net income as repairs and maintenance expense when incurred.
Depreciation on property and equipment is charged to net income.
Property and equipment are depreciated on a straight-line basis over the estimated useful lives of the assets as follows:
Asset Category
Estimated Useful Lives
Furniture and fixtures
Computer
Office equipment
Signage
Leasehold improvements
7 years
5 years
7 years
7 years
5 to 10 years depending on the lease term
Property and equipment are derecognized upon disposal or when no future economic benefits are expected from their use or disposal. Any
gains or losses arising on derecognition of the assets (calculated as the difference between the net disposal proceeds and the carrying
amount of the assets) are included in net income in the period the assets are derecognized.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost. The costs of intangible assets acquired in a business
combination are their estimated fair values at the date of acquisition. Following initial recognition, intangible assets are carried at cost less
any accumulated amortization and accumulated impairment losses, if any. Internally generated intangible assets, excluding capitalized
development costs, are not capitalized and the expenditure is reflected in net income in the period in which the expenditure is incurred.
111
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortized over their estimated useful lives and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortization period and the amortization method for an intangible asset with
a finite useful life is reviewed at least at the end of each reporting period for potential impairment indicators. Changes in the expected
useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing
the amortization period or method, as appropriate, and are treated as changes in accounting estimates. The amortization expense for
intangible assets with finite lives is recognized in net income.
Intangible assets are amortized on a straight-line basis over the estimated useful lives of the assets as follows:
Asset Category
Estimated Useful Lives
Customer lists
Websites and digital properties
Software (excluding websites and digital properties)
Merchant networks
5 years
3 years
5 to 10 years
10 years
Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually. The assessment of indefinite life
is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite
to finite is made on a prospective basis.
The Company’s trademarks have been assessed to have an indefinite life.
Gains or losses arising from the derecognition of intangible assets are measured as the difference between the net disposal proceeds and
the carrying amounts of the asset and are recognized in net income when the assets are derecognized.
Research and Development Costs
Research costs are expensed as incurred. Development costs, including those related to the development of software, are recognized as
an intangible asset when the Company can demonstrate:
• The technical feasibility of completing the intangible asset so that it will be available for use or sale;
•
Its intention to complete and its ability to use or sell the asset;
• How the asset will generate future economic benefits;
• The availability of resources to complete the asset; and
• The ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as an asset, the cost model is applied, requiring the asset to be carried at
cost less any accumulated amortization and accumulated impairment losses, if any. Amortization of the asset begins when development
is complete, and the asset is available for use. It is amortized over the period of the expected future benefit.
Leases
The Company assesses contracts at inception, whether a contract is or contains a lease.
A. Company as a Lessee
The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets.
The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.
i) Right-of-use Assets
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use).
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses and adjustments for any remeasurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized at the inception of the lease, initial direct
costs incurred, and lease payments made at or before the lease commencement date less any lease incentives received. Unless the Company
is reasonably certain to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated
on a straight-line basis over the shorter of their estimated useful life and the lease term. Right-of-use assets are subject to impairment.
112
ii) Lease Liabilities
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to
be made over the lease term. Lease payments include fixed payments (including in-substance fixed payments) less any lease incentives
receivable, plus variable lease payments that depend on an index or a rate and amounts expected to be paid under residual value
guarantees. Lease payments also include the exercise price of purchase options reasonably certain to be exercised by the Company and
payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. Variable lease
payments that do not depend on an index or a rate are recognized as expense in the period on which the event or condition that triggers
the payment occurs.
In determining a lease component, the Company does not separate the non-lease components from the lease component and instead
accounts for each lease component and any associated non-lease components as a single lease component.
In calculating the present value of lease payments, the Company uses the incremental borrowing rate on leases at the lease commencement
date, if the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is
increased to reflect the accretion of interest and reduced for lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term, a change in the in-substance fixed lease payments or a change in the
assessment to purchase the underlying asset.
iii) Short-term Leases and Leases of Low-Value Assets
The Company applies the short-term lease recognition exemption to its short-term leases (i.e., those leases that have a lease term of
12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets
recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and leases
of low-value assets are recognized as expense on a straight-line basis over the lease term.
B. Company as a Lessor
Leases in which the Company does not transfer substantially all the risks and rewards incidental to ownership of an asset are classified
as operating leases. Lease revenue recognition is discussed above.
Business Combinations and Goodwill
Business combinations are accounted for using the purchase method. The cost of an acquisition is measured at the fair value of the
assets given, equity instruments and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at fair value at the date of acquisition, irrespective of
the extent of any non-controlling interest.
Goodwill is initially measured at cost being the excess of the cost of the business combination over the Company’s share in the net fair
value of the acquiree’s identifiable assets, liabilities and contingent liabilities. If the fair values of the assets, liabilities and contingent
liabilities can only be calculated on a provisional basis, the business combination is recognized initially using provisional values. Any
adjustments resulting from the completion of the measurement process are recognized within twelve months of the date of acquisition.
After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any. Goodwill is not amortized. For the purpose
of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Company’s cash-
generating units (“CGU”) or group of CGUs that are expected to benefit from the synergies of the combination, irrespective of whether other
assets and liabilities of the acquiree are assigned to those segments.
Impairment of Non-Financial Assets
The Company assesses at each reporting date, whether there is an indication that an asset or a CGU may be impaired.
The Company regularly reviews lease assets that are idle for more than 90 days for indicators of impairment. Such assets deemed not leasable
or saleable are discarded and their net carrying value reduced to nil.
For the easyhome business unit, a CGU was determined to be at the individual store level, as the cash inflows of an individual store are largely
independent of the cash inflows of other assets in the Company. For the easyfinancial and LendCare business units, a CGU was determined to
be at the business unit level, as the cash inflows are largely dependent on their centralized loan and collection centres.
113
If an indication of impairment exists, or when annual testing for an asset is required, the Company estimates the asset or CGU’s recoverable
amount. The recoverable amount is the higher of the asset or CGU’s fair value less costs to sell and its value in use. The recoverable
amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from
other assets or groups of assets, in which case it is determined for the CGU to which the asset belongs. Where the carrying amount of an
asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset or CGU. In determining fair value less costs to sell, an
appropriate valuation model is used. Impairment losses are recognized in net income.
The impairment test calculations are based on detailed budgets and forecasts, which are prepared annually for each CGU to which the
assets are allocated. These budgets and forecasts generally cover a period of three years with a long-term growth rate applied after
the third year.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s
or CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions
used to determine the asset’s or CGU’s recoverable amount since the last impairment loss was recognized. The reversal is limited so
that the carrying amount of the asset or CGU does not exceed its recoverable amount, nor exceed the carrying amount that would have
been determined, net of amortization, had no impairment loss been recognized for the asset or CGU in prior years. Such reversals are
recognized in net income.
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired. Impairment is
determined by assessing the recoverable amount of each group of CGUs to which the goodwill relates. Where the recoverable amount
of a CGU is less than its carrying amount, an impairment loss is recognized. Impairment losses relating to goodwill cannot be reversed
in subsequent periods.
Intangible assets with indefinite useful lives are tested for impairment annually at the CGU level and when circumstances indicate the
carrying value may be impaired.
Financial Liabilities
Financial liabilities are initially recognized at fair value. In the case of certain loans and borrowings, the fair value at initial recognition
includes the value of proceeds received net of directly attributable transaction costs. The Company’s financial liabilities include
a revolving credit facility, United States dollar (“USD”) denominated notes payable, revolving securitization warehouse facilities,
secured borrowings, derivative financial instruments and accounts payable and accrued liabilities.
After initial recognition, the Company’s interest-bearing debt is subsequently measured at amortized cost using the effective
interest rate method. Amortized cost is calculated by taking into account fees or costs related to the interest-bearing debt. Interest
expense and the amortization of deferred financing charges are included in finance costs.
Non-interest-bearing financial liabilities, such as accounts payable and accrued liabilities, are carried at the amount owing.
A financial liability is derecognized when the obligation under the liability is settled, discharged, cancelled or expired. Any gains or
losses are recognized in net income when liabilities are derecognized.
Derivative Financial Instruments and Hedge Accounting
The Company’s financing activities expose it to the financial risks of changes in foreign exchange and interest rate volatility. The
Company utilizes derivative financial instruments as cash flow hedges to assist in the management of these risks.
Derivative financial instruments are initially measured at fair value on the trade date and subsequently remeasured at fair value
at each reporting date using observable market inputs.
The Company designates derivative financial instruments as cash flow hedges to hedge the change due to foreign exchange risk
or interest rate risk when the derivative financial instruments meet the criteria for hedge accounting in accordance with IFRS 9,
Financial Instruments.
114
In order to qualify for hedge accounting, formal documentation must include identification of the hedging instrument, the hedged
item, the nature of the risk being hedged and how the Company will assess whether the hedging relationship meets the hedge
effectiveness requirements (including the analysis of sources of hedge ineffectiveness and how the hedge ratio is determined). A
hedging relationship qualifies for hedge accounting if it meets all the following effectiveness requirements:
• There is an economic relationship between the hedged item and the hedging instrument.
• The effect of credit risk does not dominate the change in values that result from that economic relationship.
• The hedge ratio of the hedging relationship is consistent with management’s risk strategy.
Where an effective hedge exists, the change in the fair value of the derivative instrument is recognized in other comprehensive
income (loss) (“OCI”) and reclassified to profit or loss as a reclassification adjustment in the same period or periods during which
the hedged cash flows affect profit or loss. As such, there is no net impact on net income.
Hedge effectiveness is assessed at the inception of the hedge and on an ongoing basis. Should a hedge cease to be effective, any
changes in fair value related to movements in foreign currency or interest rates would be recognized in net income at that time.
Taxes
i) Current Income Taxes
Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to taxation authorities. Income
tax rates and tax laws used to compute the amount are those enacted or substantively enacted by the end of the reporting period.
Current income tax assets and liabilities are only offset if a legally enforceable right exists to offset the amounts and the Company intends
to settle on a net basis, or to realize the asset and settle the liability simultaneously.
Current income taxes relating to items recognized directly in equity are also recognized in equity and not in net income.
ii) Deferred Income Taxes
Deferred income taxes are provided for using the liability method on temporary differences at the reporting date between the
tax basis of assets and liabilities and their carrying amount for financial reporting purposes. Deductible income tax liabilities
are recognized for all taxable temporary differences. Deferred income tax assets are recognized for all deductible temporary
differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable income will
be available against which the deductible temporary differences and the carry forward of unused tax credits and unused tax
losses can be utilized.
The following temporary differences do not result in deferred income tax assets or liabilities:
• The initial recognition of assets or liabilities, not arising in a business combination, that does not affect accounting or
taxable profit;
• The initial recognition of goodwill; and
•
Investment in subsidiaries, associates and jointly controlled entities where the timing of reversal of the temporary
differences can be controlled and reversal in the foreseeable future is not probable.
The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent
that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred income tax asset
to be realized. Unrecognized deferred income tax assets are reassessed at the end of each reporting period and are recognized
to the extent that it has become probable that future taxable income will be available to allow the deferred income tax asset to
be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the
asset is realized, or the liability is settled, based on tax rates that have been enacted or substantively enacted by the end of the
reporting period.
Deferred income tax assets and liabilities are offset if a legally enforceable right exists to set off current income tax assets against
current income tax liabilities and the deferred income taxes relate to the same taxable entity and the same taxation authority.
115
iii) Sales Tax
Revenue, expenses and assets are recognized net of the amount of sales tax except where the sales tax incurred on a purchase
of assets or services is not recoverable from the taxation authority, in which case the sales tax is recognized as part of the cost
of acquisition of the asset or as part of the expense item as applicable.
The net amount of sales tax recoverable from, or payable to, taxation authorities is included as part of amounts receivable or
accounts payable and accrued liabilities in the consolidated statements of financial position.
Share-Based Payment Transactions
The Company has share-based compensation plans, such as, share options, Executive Share Units (“ESUs”) in the form of
restricted share units (“RSUs”) or executive deferred share units (“Executive DSUs”), and Board deferred share units (“Board
DSUs”), which are accounted for as equity-settled transactions. The cost of such equity-settled transactions is measured by
reference to the fair value determined using the market value on the grant date or the Black-Scholes option pricing model, as
appropriate. The inputs into this model are based on management’s judgments and estimates.
The cost of equity-settled transactions is charged to net income, with a corresponding increase in contributed surplus over the
vesting period. The cumulative expense recognized for equity-settled transactions at each reporting date reflects the extent to
which the vesting period has elapsed and the Company’s best estimate of the number of equity instruments that will ultimately
vest. The expense for a period is recognized in share-based compensation expense in the consolidated statements of income.
No expense is recognized for awards that do not ultimately vest.
Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the year.
Diluted earnings per share is calculated using the treasury share method, which assumes that cash received from the exercise of options
and warrants is applied to purchase shares at the average price during the period and that the difference between the shares issued
upon exercise of the options and the number of shares obtainable under this computation, on a weighted average basis, is added to the
number of shares outstanding.
Significant Accounting Judgements, Estimates and Assumptions
The preparation of the consolidated financial statements in conformity with IFRS requires management to make accounting judgements,
estimates and assumptions that affect the reported amounts of assets, liabilities and contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods.
These accounting judgements, estimates and assumptions are continuously evaluated and are based on management’s historical
experience, best knowledge of current events and conditions and other factors that are believed to be reasonable under the circumstances.
As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates,
which could materially impact the consolidated financial statements. Changes in estimates will be reflected in the consolidated financial
statements in future periods.
Key areas of estimation where management has made difficult, complex or subjective judgments often in respect of matters that are
inherently uncertain are as follows:
i) Allowance for Credit Losses and Allowance for Loan Losses
The ECL method is applied in determining the allowance for credit losses on gross consumer loans receivable. The key inputs in
the measurement of ECL allowances, all of which are subject to accounting judgments, estimates and assumptions are discussed
in note 2, under “Financial Assets”.
In addition, consumer loans receivable include accrued interest earned from consumer loans that is expected to be received
in future periods. Interest receivable from consumer loans is determined based on the amounts the Company believes will be
collected in future periods.
116
ii) Depreciation of Lease Assets
Certain assets on lease (excluding game stations, computers and related equipment) are depreciated based on the time on lease against
the lease agreement term, which is estimated by management for each product category. Other assets on lease such as game stations,
computers and related equipment, are depreciated on a straight-line basis over their estimated useful lives.
iii) Impairment Assessment of Non-Financial Assets
Indicators of impairment are based on management’s judgment. If an indication of impairment exists, or when annual testing for an asset is
required, the Company estimates the asset’s or CGU’s recoverable amount. Where the carrying amount of an asset or CGU exceeds its recoverable
amount, the asset is considered impaired and is written down to its recoverable amount. In assessing the recoverable amount, management
estimates the asset’s or CGU’s value in use. Value in use is based on the estimated future cash flows of the asset or CGU, discounted to their present
value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Impairment test calculations are based on detailed budgets and forecasts, which are prepared for each CGU to which the assets are allocated.
These budgets and forecasts generally cover a period of three years with a long-term growth rate applied after the third year. Key areas of
management judgment include the cash flow forecast, the growth rate applied to cash flows subsequent to the third year and the discount rate.
iv) Impairment Assessment of Goodwill and Indefinite-Life Intangible Assets
In assessing the recoverable amount, management estimates the group of CGU’s value in use. Value in use is based on estimated future
cash flows of the asset or CGU, discounted to their present value using a discount rate that reflects current market assessments of the
time value of money and the risks specific to the asset. The impairment test calculations are based on detailed budgets and forecasts,
which are prepared for each CGU to which the assets are allocated. These budgets and forecasts generally cover a period of three years
with a long-term growth rate applied after the third year. Key areas of management judgment involve the cash flow forecast, the growth
rate applied to cash flows subsequent to the third year and the discount rate.
v) Fair Value of Share-Based Compensation
The fair value of equity-settled share-based compensation plan grants are measured at the grant date using either the related market
value or the Black-Scholes option pricing model, as appropriate. The Black-Scholes option pricing model was developed for estimating the
fair value of traded options that are fully transferable and have no vesting restrictions. In addition, option pricing models require the input
of highly subjective assumptions, including expected share price volatility. The Company’s share options have characteristics significantly
different from those of freely traded options and because changes in subjective input assumptions can materially affect the fair value
estimate, the existing models do not necessarily provide a single reliable measure of the fair value of the unit options granted.
The vesting of the Company’s share-based compensation plans is based on the expected achievement of long-term targets and management
retention rates, the assessment of which are subject to management’s judgment.
vi) Taxation Amounts
Tax provisions, including current and deferred income tax assets and liabilities, may require estimates and interpretations of federal
and provincial income tax rules and regulations and judgments as to their interpretation and application to the Company’s specific
situation. Therefore, it is possible that the ultimate value of the tax assets and liabilities could change in the future and that changes
to these amounts could have a material effect on the Company’s consolidated financial statements.
vii) Fair Value Measurement of Investments
When the fair values of investments recorded in the consolidated statements of financial position cannot be measured based on
quoted prices in active markets, their fair value is measured using alternative valuation techniques, including financial models. The
inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgement
is required in establishing fair values. Judgements include considerations of inputs such as liquidity risk, credit risk and volatility.
Changes in assumptions relating to these factors could affect the reported fair value of financial instruments.
117
3. Changes In Accounting Policy And Disclosures
(a) New standards, interpretations and amendments adopted by the Company
There were no new standards, interpretations or amendments that had a material impact on the Company’s consolidated
financial statements. The Company has not early adopted any standard, interpretation or amendment that has been issued but
is not yet effective.
(b) Standards issued but not yet effective
There are no new standards issued but not yet effective as at January 1, 2023 that have a material impact on the Company’s
consolidated financial statements.
4. Cash
Certain cash on deposit at banks earns interest at floating rates based on daily bank deposit rates.
The Company has pledged a portion of its cash to fulfill collateral requirements under its cross-currency swap contracts. As at December
31, 2023, the fair value of the cash pledged by the Company as cash collateral in respect of its cross-currency swap contracts was $24.2
million (2022 – $30.2 million cash pledged by the counterparties).
Related to its Revolving Securitization Warehouse Facilities and Secured Borrowings, the Company holds back an amount from the
proceeds of loan transfers as a reserve against future customer defaults. As at December 31, 2023, the cash held back as a reserve for
the Revolving Securitization Warehouse Facilities and Secured Borrowings were $52.3 million and $15.2 million, respectively (2022 –
$26.2 million and $13.5 million, respectively).
5. Accounts Receivable
Commissions receivable
Charges and fees receivable
Vendor rebates receivable
Due from franchisees
Other
DECEMBER 31, 2023
DECEMBER 31, 2022
18,754
6,311
430
281
4,986
30,762
18,266
3,303
613
282
3,233
25,697
All accounts receivable for the years ended December 31, 2023 and 2022 are due within 12 months.
6. Consumer Loans Receivable
Consumer loans receivable represents amounts advanced to customers and includes both unsecured and secured loans. Unsecured
loan terms generally range from 9 to 84 months while secured loan terms generally range from 3.5 to 10 years.
DECEMBER 31, 2023
DECEMBER 31, 2022
Gross consumer loans receivable
Interest receivable from consumer loans
Unamortized deferred acquisition costs
Unamortized deferred revenue
Allowance for credit losses
3,645,202
53,545
50,342
(36,142)
(265,359)
3,447,588
2,794,694
32,457
33,026
(19,779)
(213,041)
2,627,357
118
The allocation of the Company’s gross consumer loans receivable based on loan type is as follows:
Unsecured instalment loans
Secured instalment loans
DECEMBER 31, 2023
DECEMBER 31, 2022
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
2,116,869
1,528,333
3,645,202
58.1%
41.9%
100.0%
1,703,593
1,091,101
2,794,694
61.0%
39.0%
100.0%
The scheduled principal repayment aging analyses of the gross consumer loans receivable portfolio as at December 31, 2023 and 2022
are as follows:
0 - 6 months
6 - 12 months
12 - 24 months
24 - 36 months
36 - 48 months
48 - 60 months
60 months +
DECEMBER 31, 2023
DECEMBER 31, 2022
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
273,572
172,645
380,715
510,311
567,582
557,254
1,183,123
3,645,202
7.5%
4.7%
10.4%
14.0%
15.6%
15.3%
32.5%
236,026
161,441
363,437
433,895
480,990
346,560
772,345
8.4%
5.8%
13.0%
15.5%
17.2%
12.4%
27.7%
100.0%
2,794,694
100.0%
The gross consumer loans receivable portfolio categorized by the contractual time to maturity as at December 31, 2023 and 2022 are
summarized as follows:
0 - 1 year
1 - 2 years
2 - 3 years
3 - 4 years
4 - 5 years
5 years +
DECEMBER 31, 2023
DECEMBER 31, 2022
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
72,892
144,303
277,715
529,764
554,585
2,065,943
3,645,202
2.0%
4.0%
7.6%
14.5%
15.2%
56.7%
100.0%
65,485
139,143
312,612
573,567
493,336
1,210,551
2,794,694
2.3%
5.0%
11.2%
20.5%
17.7%
43.3%
100.0%
An aging analysis of gross consumer loans receivable past due is as follows:
DECEMBER 31, 2023
DECEMBER 31, 2022
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
1 - 30 days
31 - 44 days
45 - 60 days
61 - 90 days
91 - 120 days
121 - 150 days
151 - 180 days
3.4%
0.7%
0.6%
0.6%
0.2%
0.2%
0.1%
5.8%
86,687
22,027
18,245
25,285
6,157
5,020
2,389
165,810
3.1%
0.8%
0.6%
0.9%
0.2%
0.2%
0.1%
5.9%
125,229
24,280
20,354
22,797
7,687
6,422
4,043
210,812
119
The following tables provide the gross consumer loans receivable segregated by the Company’s risk ratings and staging classification. The
classification of loans into low, normal and high risk categories is based on the Company’s custom behaviour credit scoring model and/or third-
party credit scores. The Company’s scoring model has been built and refined using analytical techniques and statistical modelling tools for
predicting future losses among certain customer segments rather than traditional credit scores available from credit reporting agencies. Loans
categorized as low risk have expected future losses that are lower than the average expected loss rate of the overall portfolio. Loans categorized
as normal risk have expected future losses that are approximately equal to the average expected loss rate of the overall loan portfolio. Loans
categorized as high risk have expected future losses that are higher than the average expected loss rate of the overall loan portfolio. The median
TransUnion Risk Score for those borrowers categorized as low, normal and high risk is presented as a reference.
MEDIAN TRANSUNION
RISK SCORE
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-PERFORMING)
STAGE 3
(NON-PERFORMING)
TOTAL
AS AT DECEMBER 31, 2023
635
548
498
580
2,025,764
1,046,233
286,405
3,358,402
2,914
12,576
191,068
206,558
150
279
79,813
80,242
2,028,828
1,059,088
557,286
3,645,202
MEDIAN TRANSUNION
RISK SCORE
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-PERFORMING)
STAGE 3
(NON-PERFORMING)
TOTAL
AS AT DECEMBER 31, 2022
634
551
498
579
1,531,982
814,108
217,305
2,563,395
1,471
8,032
145,032
154,535
239
679
75,846
76,764
1,533,692
822,819
438,183
2,794,694
Low Risk
Normal Risk
High Risk
Total
Low Risk
Normal Risk
High Risk
Total
An analysis of the changes in the classification of gross consumer loans receivable is as follows:
Balance as at January 1, 2023
Gross loans originated
Principal payments and other adjustments
Transfers to (from)
Stage 1 (Performing)
Stage 2 (Under-Performing)
Stage 3 (Non-Performing)
Gross charge offs
Net growth in gross consumer loans receivable during the year
STAGE 1
(PERFORMING)
2,563,395
2,709,194
(1,520,436)
533,757
(603,359)
(262,949)
(61,200)
795,007
YEAR ENDED DECEMBER 31, 2023
STAGE 2
(UNDER-
PERFORMING)
STAGE 3
(NON-
PERFORMING)
TOTAL
154,535
76,764
2,794,694
-
-
2,709,194
29,699
(37,569)
(1,528,306)
(419,432)
(114,325)
623,181
(150,138)
(31,287)
52,023
(19,822)
413,087
(237,893)
3,478
-
-
-
(330,380)
850,508
Balance as at December 31, 2023
3,358,402
206,558
80,242
3,645,202
120
STAGE 1
(PERFORMING)
YEAR ENDED DECEMBER 31, 2022
STAGE 2
(UNDER-
PERFORMING)
STAGE 3
(NON-
PERFORMING)
Balance as at January 1, 2022
Gross loans originated
Principal payments and other adjustments
Transfers to (from)
Stage 1 (Performing)
Stage 2 (Under-Performing)
Stage 3 (Non-Performing)
Gross charge-offs
Net growth in gross consumer loans receivable during the year
1,868,306
2,377,606
(1,350,018)
391,106
(478,115)
(197,577)
(47,913)
695,089
112,810
-
49,223
-
TOTAL
2,030,339
2,377,606
24,141
(33,790)
(1,359,667)
(314,537)
501,668
(147,010)
(22,537)
41,725
(76,569)
(23,553)
344,587
(183,134)
27,541
-
-
-
(253,584)
764,355
Balance as at December 31, 2022
2,563,395
154,535
76,764
2,794,694
The changes in the allowance for credit losses are summarized below:
Balance, beginning of year
Net charge offs against allowance
Increase due to lending and collection activities
Balance, end of year
DECEMBER 31, 2023
DECEMBER 31, 2022
213,041
(289,321)
341,639
265,359
159,762
(219,614)
272,893
213,041
An analysis of the changes in the classification of the allowance for credit losses is as follows:
YEAR ENDED DECEMBER 31, 2023
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-
PERFORMING)
STAGE 3
(NON-
PERFORMING)
TOTAL
Balance as at January 1, 2023
Gross loans originated
Principal payments and other adjustments
Transfers to (from) including remeasurement
Stage 1 (Performing)
Stage 2 (Under-Performing)
Stage 3 (Non-Performing)
Net charge offs against allowance
Balance as at December 31, 2023
53,381
42,691
213,041
-
(264)
(87,083)
170,030
(41,646)
(27,114)
67,304
-
(60,008)
(61,921)
(13,869)
350,468
(209,166)
48,195
119,537
(141,166)
(17,657)
101,059
279,866
(289,321)
265,359
116,969
119,537
(80,894)
131,347
(55,102)
(28,956)
(53,041)
149,860
121
Balance as at January 1, 2022
Gross loans originated
Principal payments and other adjustments
Transfers to (from) including remeasurement
Stage 1 (Performing)
Stage 2 (Under-Performing)
Stage 3 (Non-Performing)
Net charge offs against allowance
Balance as at December 31, 2022
YEAR ENDED DECEMBER 31, 2022
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-
PERFORMING)
STAGE 3
(NON-
PERFORMING)
TOTAL
89,665
93,821
(44,689)
92,536
(47,003)
(22,817)
(44,544)
116,969
40,680
29,417
-
2,922
(68,338)
141,948
(42,875)
(20,956)
53,381
-
(44,134)
(46,353)
(16,672)
274,547
(154,114)
42,691
159,762
93,821
(85,901)
(22,155)
78,273
208,855
(219,614)
213,041
In calculating the allowance for credit losses, internally developed models were used which factor in credit risk related parameters
including probability of default, exposure at default, loss given default and other relevant risk factors. As part of the process, the
Company employed five distinct forecast scenarios, derived from FLIs forecasts produced by Moody’s Analytics, which include
neutral, moderately optimistic, extremely optimistic, moderately pessimistic and extremely pessimistic scenarios. These scenarios
use a combination of four inter-related macroeconomic variables, being unemployment rates, GDP growth rates, inflation growth
rates and oil prices, to determine a probability weighted allowance. Management judgment is then applied to the recommended
probability weightings to these scenarios to determine a probability weighted allowance for credit losses.
The following table shows the key macroeconomic variables used in the determination of the probability weighted allowance during
the forecast periods as at December 31, 2023 and 2022, respectively:
12-MONTH FORWARD-LOOKING
MACROECONOMIC VARIABLES
(AVERAGE ANNUAL)
FORECAST SCENARIOS
NEUTRAL
MODERATELY
OPTIMISTIC
EXTREMELY
OPTIMISTIC
MODERATELY
PESSIMISTIC
EXTREMELY
PESSIMISTIC
December 31, 2023
Unemployment rate1
GDP growth rate2
Inflation growth rate3
Oil prices4
December 31, 2022
Unemployment rate1
GDP growth rate2
Inflation growth rate3
Oil prices4
6.18%
0.53%
2.11%
$79.35
6.07%
0.15%
4.08%
$86.85
5.39%
1.57%
2.12%
$81.93
5.28%
1.20%
3.78%
$89.40
4.70%
2.38%
2.15%
$84.05
4.59%
2.08%
3.46%
$91.49
8.41%
(1.51%)
2.09%
$62.73
8.30%
(1.88%)
4.95%
$71.65
9.83%
(2.71%)
1.93%
$52.79
9.72%
(3.08%)
5.31%
$60.58
1 An average of the projected monthly unemployment rates over the next 12-month forecast period.
2 A projected year-over-year GDP growth rate.
3 A projected year-over-year inflation growth rate.
4 An average of the projected monthly oil prices over the next 12-month forecast period.
Historically, the rates of inflation and unemployment are positively correlated with the Company’s loss rates while oil prices and the rate of GDP
growth are negatively correlated. The assignment of the probability weighting for the various scenarios using these variables involves management
judgment to arrive at a collective view of the likelihood of each scenario taking into account current economic conditions and implications for near-
term macroeconomic performance. If management were to assign 100% probability to the extremely pessimistic scenario forecast, the allowance
for credit losses would have been $295.2 million, $29.8 million or 11.2% higher than the reported allowance for credit losses as at December 31,
2023 (2022 – $244.4 million, $31.4 million or 14.7% higher than the reported allowance for credit losses). This sensitivity does not consider the
migration of exposure and/or changes in credit risk that would have occurred in the loan portfolio due to risk mitigation actions or other factors.
122
7. Investments
Investments include the following:
Listed and actively traded companies
Unlisted companies
DECEMBER 31, 2023
DECEMBER 31, 2022
19,546
41,918
61,464
6,226
51,078
57,304
Changes in the holdings, fair values of investments and the related total return swaps (“TRS”), and investment income (loss) recorded in
other income (loss) (including interest income and realized and unrealized gains and losses) in the consolidated statements of income are
summarized below:
For the year ended December 31, 2023
Listed and actively traded companies
Unlisted companies
Investments
For the year ended December 31, 2022
Listed and actively traded companies
Unlisted companies
Investments
Total return swaps
Investments including total return swaps
FAIR VALUE,
BEGINNING OF YEAR
ADDITIONS
SALES/
SETTLEMENTS
INVESTMENT
INCOME (LOSS)
FAIR VALUE,
END OF YEAR
6,226
51,078
57,304
53,941
10,500
64,441
6,979
71,420
-
-
-
-
40,000
40,000
-
40,000
(5,556)
(55)
(5,611)
-
-
-
(25,395)
(25,395)
18,876
(9,105)
9,771
(47,715)
578
(47,137)
18,416
(28,721)
19,546
41,918
61,464
6,226
51,078
57,304
-
57,304
Listed and Actively Traded Companies
The Company’s investments in listed and actively traded companies were classified at initial recognition at FVTPL. Investments in listed
and actively traded companies were subsequently measured based on quoted prices in active markets.
For the year ended December 31, 2023, the Company sold certain investments in listed and actively traded companies with a total
consideration of $5.6 million (2022 – nil) and realized a fair value gain of $1.2 million (2022 – nil) included in other income (loss) in the
consolidated statements of income.
For the year ended December 31, 2023, the Company has recognized an investment income on its investments in listed and actively
traded companies of $18.9 million (2022 – investment loss of $47.7 million), included in other income (loss) in the consolidated statements
of income.
The Company had TRS agreements to partially hedge its market exposure related to its investment in a listed and actively traded
company. The TRS were settled in June 2022 for $25.4 million. For the year ended December 31, 2022, the Company recognized an
investment income on TRS on listed and actively traded companies of $18.4 million, included in other income (loss) in the consolidated
statements of income.
123
Unlisted Companies
The Company’s investments in unlisted companies were classified at initial recognition at FVTPL. For the year ended December 31, 2023,
the Company has recognized an investment loss on its investments in unlisted companies of $9.1 million (2022 – investment income of
$0.6 million), included in other income (loss) in the consolidated statements of income.
Set out below are the significant unobservable inputs to valuation as at December 31, 2023:
Unlisted companies
VALUATION
TECHNIQUES
Public company
comparables
SIGNIFICANT
UNOBSERVABLE
INPUTS
RANGE
SENSITIVITY OF THE INPUT TO FAIR VALUE
Revenue multiples
1.2x – 4.9x
Public company
comparables
Enterprise value to
gross profit multiples
3.5x – 26.6x
0.3x increase (decrease) in the revenue
multiples would result in an increase
(decrease) in fair value by $1.2 million
1x increase (decrease) in the enterprise
value to gross profit multiples would result
in an increase (decrease) in fair value by $1.9
million
Recent transactions
Price per share
Not applicable
Not applicable
8. Lease Assets
Cost
Balance, beginning of year
Additions
Disposals
Balance, end of year
Accumulated Depreciation
Balance, beginning of year
Depreciation
Disposals
Balance, end of year
Net book value
DECEMBER 31, 2023
DECEMBER 31, 2022
58,508
30,285
(32,403)
56,390
(10,071)
(33,535)
32,403
(11,203)
45,187
47,712
34,802
(24,006)
58,508
(530)
(33,547)
24,006
(10,071)
48,437
During the years ended December 31, 2023 and 2022, the net book value of the lease assets sold or disposed of were nil.
124
9. Property And Equipment
FURNITURE AND
FIXTURES
COMPUTER AND
OFFICE EQUIPMENT
SIGNAGE
LEASEHOLD
IMPROVEMENTS
TOTAL
Cost
December 31, 2021
Additions
Disposals
December 31, 2022
Additions
Disposals
December 31, 2023
Accumulated Depreciation
December 31, 2021
Depreciation
Disposals
December 31, 2022
Depreciation
Disposals
December 31, 2023
Net Book Value
December 31, 2022
December 31, 2023
11,825
521
(95)
12,251
1,017
(639)
12,629
(7,077)
(1,084)
88
(8,073)
(993)
575
(8,491)
4,178
4,138
13,878
1,844
(59)
15,663
2,005
(304)
17,364
(6,737)
(2,246)
50
(8,933)
(2,183)
290
(10,826)
6,730
6,538
4,589
475
(38)
5,026
385
(210)
5,201
(2,832)
(442)
36
(3,238)
(438)
195
(3,481)
1,788
1,720
39,498
7,031
(200)
46,329
5,825
(818)
51,336
(17,859)
(5,421)
111
(23,169)
(5,923)
742
69,790
9,871
(392)
79,269
9,232
(1,971)
86,530
(34,505)
(9,193)
285
(43,413)
(9,537)
1,802
(28,350)
(51,148)
23,160
22,986
35,856
35,382
As at December 31, 2023, the amount of property and equipment classified as under construction or development and not being
depreciated was $1.4 million (2022 – $3.8 million).
Regarding the easyhome group of CGUs, various impairment indicators were used to determine the need to test the CGU for impairment.
Examples of impairment indicators include a significant decline in revenue, performance significantly below budget and expectations of
negative CGU operating income. Where these impairment indicators exist, the carrying value of the assets within a CGU was compared
with its estimated recoverable value, which was generally considered to be the CGU’s value in use. When determining the value in use of
a CGU, the Company developed a discounted cash flow model for the individual CGU. Revenue and cost forecasts were based on actual
operating results, three-year operating budgets consistent with strategic plans presented to the Company’s Board of Directors and a
1% (2022 – 1%) long-term growth rate. The pre-tax discount rate used on the forecasted cash flows was 15.3% (2022 – 15.3%). As at
December 31, 2023 and 2022, no impairment on property and equipment was recognized.
For the easyfinancial and LendCare CGUs, it was determined that no indicators of impairment existed that would require an impairment
test on property and equipment.
For the years ended December 31, 2023 and 2022, no net impairment of property and equipment was recognized by the Company.
125
10. Right-Of-Use Assets And Lease Liabilities
December 31, 2021
Additions
Depreciation
Interest
Interest payment
Lease inducement received
Principal payment
December 31, 2022
Additions
Depreciation
Interest
Interest payment
Lease inducement received
Principal payment
December 31, 2023
RIGHT-OF-USE ASSETS
PREMISES
VEHICLES
TOTAL
LEASE LIABILITIES
55,304
27,935
(19,450)
-
-
-
-
63,789
16,628
(20,612)
-
-
-
-
1,836
843
(710)
-
-
-
-
1,969
861
(648)
-
-
-
-
57,140
28,778
(20,160)
-
-
-
-
65,758
17,489
(21,260)
-
-
-
-
59,805
2,182
61,987
65,607
28,778
-
3,577
(3,577)
888
(20,945)
74,328
17,489
-
3,821
(3,821)
873
(21,881)
70,809
For the year ended December 31, 2023, the Company recognized rent expense from short-term leases of $1,996 (2022 – $2,485) and
variable lease payments of $14,719 (2022 – $13,694).
For the year ended December 31, 2023 and 2022, it was determined that no indicators of impairment existed that would require an
impairment test on right-of-use assets.
11. Intangible Assets And Goodwill
Intangible Assets
MERCHANT NETWORK
SOFTWARE
OTHER
TOTAL
Cost
December 31, 2021
Additions
Disposals or write off
December 31, 2022
Additions
December 31, 2023
Accumulated Amortization
December 31, 2021
Amortization
December 31, 2022
Amortization
December 31, 2023
Net Book Value
December 31, 2022
December 31, 2023
131,000
-
-
131,000
-
131,000
(8,733)
(13,089)
(21,822)
(13,111)
(34,933)
109,178
96,067
68,292
18,015
(20,458)
65,849
8,128
73,977
(31,125)
(5,206)
(36,331)
(8,841)
(45,172)
29,518
28,805
3,342
-
-
3,342
-
3,342
(3,125)
(111)
(3,236)
(47)
(3,283)
106
59
202,634
18,015
(20,458)
200,191
8,128
208,319
(42,983)
(18,406)
(61,389)
(21,999)
(83,388)
138,802
124,931
Other intangible assets include trademarks and customer lists. Trademarks are considered indefinite-life intangible assets as there is
no foreseeable limit to the period over which the assets are expected to generate net cash flows.
126
Included in additions for the year ended December 31, 2023 were $8.1 million (2022 – $18.0 million) of internally developed software
application and website development costs.
During the fourth quarter of 2022, the Company decided to terminate its agreement with a third-party technology provider that was
contracted in 2020 to develop a new loan management system. After careful evaluation, the Company determined that the performance
to date was unsatisfactory, and the additional investment necessary to complete the development was no longer economical, relative to
the anticipated business value and other available options. As such, the Company elected to write off capitalized software costs in 2022
in the amount of $20.5 million, associated with this loan management system being developed by the third party.
For the year ended December 31, 2023 and 2022, it was determined that no indicators of impairment existed that would require an
impairment test on intangible assets.
Goodwill
Goodwill was $180.9 million as at December 31, 2023 and 2022. Goodwill and indefinite-life intangible assets are attributed to the group
of CGUs to which they relate. As at December 31, 2023 and 2022, the carrying value of goodwill attributed to the easyhome group of CGUs
was $21.3 million and $159.6 million was attributed to the LendCare CGU. Impairment testing was performed as at December 31, 2023
and 2022. The impairment test consisted of comparing the carrying value of assets within the CGU to the recoverable amount of that CGU
as measured by discounting the expected future cash flows using a value in use approach. When determining the value in use of a CGU,
the Company developed a discounted cash flow model for the individual CGU. Revenue and cost forecasts were based on actual operating
results, three-year operating budgets consistent with strategic plans presented to the Company’s Board of Directors and a long-term
growth rate of 1.0% for easyhome (2022 – 1.0%) and 2.0% for LendCare (2022 – 3.0%). The pre-tax discount rate used on the forecasted
cash flows was 15.3% (2022 – 15.3%) for easyhome and 22.5% (2022 – 24.0%) for LendCare.
No impairment charges of goodwill or indefinite-life intangible assets were recorded in the years ended December 31, 2023 and 2022.
12. Revolving Securitization Warehouse Facilities
goeasy Securitization Trust
goeasy Securitization Trust (“Trust I”) is a securitization vehicle controlled and consolidated by the Company. The Company’s activities
include transactions with Trust I, a structured entity, which has been designed to achieve a specific business objective. A structured entity
is one that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, such as when
any voting rights relate to administrative tasks only and the relevant activities are directed by means of contractual arrangements.
The primary purpose of Trust I is to provide the Company with funding for its operational needs. Trust I has a $1.4 billion revolving securitization
warehouse facility (“Revolving Securitization Warehouse Facility I”) with a syndicate of lenders, and as collateral for the drawn amount, consumer
loans are sold from easyfinancial Services Inc. and LendCare Capital Inc. into Trust I. As the economic exposure associated with the rights related to
these consumer loans is controlled by easyfinancial Services Inc. and LendCare Capital Inc., these consumer loans do not qualify for derecognition
in the Company’s consolidated statements of financial position. The Revolving Securitization Warehouse Facility I bears interest equal to the
1-month Canadian Dollar Offered Rate (“CDOR”) plus 185 basis points (“bps”) and had a maturity date of August 30, 2024.
On June 15, 2023, the Company amended its Revolving Securitization Warehouse Facility I to extend the maturity date to October 31, 2025, and
the applicable interest rate on advances was changed from 1-month CDOR plus 185 bps to 1-month CDOR plus 195 bps, an increase of 10 bps.
Concurrent with the establishment of the Revolving Securitization Warehouse Facility I, the Company entered into an interest rate swap as
a cash flow hedge to protect against the variability of future interest payments by paying a fixed rate based on the weighted average life of
the securitized loans and receiving a variable rate equivalent to 1-month CDOR.
The following table summarizes the details of the Revolving Securitization Warehouse Facility I:
Drawn amount
Unamortized deferred financing costs
DECEMBER 31, 2023
DECEMBER 31, 2022
1,125,000
(3,968)
1,121,032
810,000
(4,175)
805,825
As at December 31, 2023, $1.81 billion (2022 – $1.34 billion) of consumer loans receivable were pledged by the Company as
collateral against its Revolving Securitization Warehouse Facility I.
127
goeasy Securitization Trust II
On October 24, 2022, the Company established goeasy Securitization Trust II (“Trust II”), a securitization vehicle controlled and
consolidated by the Company. The Company’s activities include transactions with Trust II, a structured entity, which has been
designed to achieve a specific business objective.
The primary purpose of Trust II is to provide the Company with funding for automotive consumer loans. On December 16, 2022,
Trust II entered into a $200 million revolving securitization warehouse facility (the “Revolving Securitization Warehouse Facility
II”) (the Revolving Securitization Warehouse Facility I and Revolving Securitization Warehouse Facility II are collectively referred
to as “Revolving Securitization Warehouse Facilities”) and as collateral for the drawn amount, automotive consumer loans are
sold from easyfinancial Services Inc. and LendCare Capital Inc. into Trust II. As the economic exposure associated with the rights
related to these automotive consumer loans is controlled by easyfinancial Services Inc. and LendCare Capital Inc., these consumer
loans do not qualify for derecognition in the Company’s consolidated statements of financial position. The Revolving Securitization
Warehouse Facility II matures on December 16, 2024 and bears interest equal to the 1-month CDOR plus 185 bps.
On September 28, 2023, the Company increased its Revolving Securitization Warehouse Facility II to $375 million and continued to
be underwritten by the same lender, with the addition of a new lender to the syndicate.
On December 20, 2023, the Company further increased its Revolving Securitization Warehouse Facility II to $500 million and
extended the maturity date to December 16, 2025. The facility continues to be underwritten by the same syndicate of lenders.
Concurrent with the establishment of the Revolving Securitization Warehouse Facility II, the Company also entered into an interest
rate swap as a cash flow hedge to protect against the variability of future interest payments by paying a fixed rate based on the
weighted average life of the securitized loans and receiving a variable rate equivalent to 1-month CDOR.
The following table summarizes the details of the Revolving Securitization Warehouse Facility II:
Drawn amount
Unamortized deferred finance costs
DECEMBER 31, 2023
DECEMBER 31, 2022
245,000
(1,291)
243,709
-
-
-
As at December 31, 2023, $439.3 million of automotive consumer loans were pledged by the Company as collateral against its Revolving
Securitization Warehouse Facility II.
The financial covenant of the Revolving Securitization Warehouse Facilities is as follows:
FINANCIAL COVENANT
REQUIREMENTS
DECEMBER 31, 2023
DECEMBER 31, 2022
Minimum consolidated fixed charge coverage ratio
> 2.0
3.81
4.11
As at December 31, 2023, the Company was in compliance with its financial covenant under the Revolving Credit Warehouse Facilities.
The following table summarizes the total carrying value of the Revolving Securitization Warehouse Facilities:
Revolving Credit Warehouse Facility I
Revolving Credit Warehouse Facility II
DECEMBER 31, 2023
DECEMBER 31, 2022
1,121,032
243,709
1,364,741
805,825
-
805,825
The Company has elected to use hedge accounting for the Revolving Securitization Warehouse Facilities and their related interest
rate swaps (i.e., the same notional amount, maturity date, and interest payment dates). The Company has established a hedge
ratio of 1:1 for its hedging relationships. To test the hedge effectiveness, the Company uses the hypothetical derivative method
and compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items
attributable to the hedged risks. There are no significant sources of hedge ineffectiveness between the Revolving Securitization
Warehouse Facilities and their related interest rate swaps. There was no hedge ineffectiveness recognized in net income for the
years ended December 31, 2023 and 2022.
128
As the Revolving Securitization Warehouse Facilities and their related interest rate swaps are in effective hedging relationships,
changes in the fair value of the related interest rate swaps are recorded in OCI and, subsequently, reclassified into net income
upon settlement.
Interest rate swaps have aggregated notional amounts equal to the aggregated principal outstanding of the hedged Revolving
Securitization Warehouse Facilities. Fair values of interest rate swaps are determined from swap curves adjusted for credit risks.
Swap curves are obtained directly from market sources. Fair values of interest rate swaps are as follows:
Derivative financial (liabilities) assets
Revolving Credit Warehouse Facility I
Revolving Credit Warehouse Facility II
13. Secured Borrowings
DECEMBER 31, 2023
DECEMBER 31, 2022
(2,496)
(1,670)
(4,166)
10,894
-
10,894
The Company also securitizes consumer loans through non-structured third parties. The economic exposure associated with the rights
related to these consumer loans are retained by the Company. As a result, these consumer loans do not qualify for derecognition in the
Company’s consolidated statements of financial position and Secured Borrowings are recognized for the cash proceeds received.
The Company has the following securitization facilities with non-structured third parties:
• A $105 million securitization facility (“$105 million Securitization Facility”), which bears interest at the Government of Canada
Bonds (“GOCB”) rate (with a floor rate of 0.95%) plus 395 bps. The loan sale agreement to sell loans into the facility expired on
July 31, 2021. The balance of the loans that were sold into the facility will amortize down based on their contractual time to
maturity; and
• An $85 million securitization facility (“$85 million Securitization Facility”), which bears interest at the GOCB rate (with a floor
rate of 0.25%) plus 325 bps. In addition to the securitization loan facility, there was a $6 million accumulation loan agreement
which advances 85% of the face value of consumer loans for up to a 90-day period, bearing interest at the Canadian Bankers’
Acceptance rate (“BA”) plus 400 bps. The loan sale agreement to sell loans into the facility expired on November 30, 2021. On
April 30, 2023, the Company amended this securitization facility to provide for $150 million funding (“$150 million Securitization
Facility”) through the sale of consumer loans until April 30, 2024, but can be extended to a specified period agreed by both parties.
The facility bears interest equal to an interpolated GOCB rate plus an initial spread of 310 bps.
As at December 31, 2023, the drawn amount against the Secured Borrowings was $143.2 million (2022 – $105.8 million).
As at December 31, 2023, $216.9 million (2022 – $126.5 million) of consumer loans receivable were pledged by the Company as collateral
for these Secured Borrowings.
As at December 31, 2023 and 2022, the Company was in compliance with its financial covenants for the $105 million Securitization
Facility, which are based on the tangible net worth and leverage ratio of the LendCare Capital Inc. legal entity.
As at December 31, 2023, the Company was in compliance with its financial covenants for the $150 million Securitization Facility, which
are based on the Company’s tangible net worth and leverage ratio. As at December 31, 2022, the Company was in compliance with
its financial covenants for the $85 million Securitization Facility, which are based on the tangible net worth and leverage ratio of the
LendCare Capital Inc. legal entity.
129
14. Revolving Credit Facility
The Company’s Revolving Credit Facility consisted of a $270 million senior secured revolving credit facility that matures on January 27,
2025. The Revolving Credit Facility was provided by a syndicate of banks. The Company also had the ability to exercise the accordion
feature under its Revolving Credit Facility to add an additional $100 million in borrowing capacity. Interest on advances is payable at
either the BA plus 225 bps or the lender’s prime rate (“Prime”) plus 75 bps, at the option of the Company.
In March 2023, the Company exercised the accordion feature under its Revolving Credit Facility and increased the maximum borrowing
capacity by $100 million to $370 million.
The following table summarizes the details of the Revolving Credit Facility:
Drawn amount
Unamortized deferred financing costs
The financial covenants of the Revolving Credit Facility were as follows:
DECEMBER 31, 2023
DECEMBER 31, 2022
192,000
(1,079)
190,921
150,000
(1,354)
148,646
FINANCIAL COVENANT
Maximum consolidated leverage ratio
Minimum consolidated fixed charge coverage ratio
Minimum consolidated asset coverage ratio
Maximum net charge off ratio
REQUIREMENTS AS AT
DECEMBER 31,
2023 AND 2022
DECEMBER 31, 2023
DECEMBER 31, 2022
< 4.50
> 1.25
> 1.75
< 15.0%
3.72
2.27
3.03
8.9%
3.87
2.08
4.68
9.2%
As at December 31, 2023 and 2022, the Company was in compliance with all of its financial covenants under its Revolving Credit Facility agreement.
15. Notes Payable
On November 27, 2019, the Company issued US$550.0 million of 5.375% senior unsecured notes payable (the “2024 Notes”) with interest
payable semi-annually on June 1 and December 1 of each year. The 2024 Notes would have matured on December 1, 2024 and include
certain prepayment features.
Concurrent with the issuance of the 2024 Notes, the Company entered into derivative financial instruments (the “2024 cross-currency swaps”)
as cash flow hedges to hedge the risk of changes in the foreign currency exchange rate for the proceeds from the offering and for all required
payments of principal and interest under the 2024 Notes at a fixed exchange rate of US$1.000 = CAD1.3242, thereby fully hedging the US$550.0
million 2024 Notes at a CAD interest rate of 5.65%. The 2024 cross-currency swaps fully hedge the obligation under the 2024 Notes.
On December 1, 2023, the Company extinguished its 2024 Notes and unwound the related 2024 cross-currency swap. As a result of
repaying these notes, the Company recognized the remaining unamortized deferred financing costs related to these notes, realized
derivative loss on the settlement of the 2024 cross-currency swaps, and reclassified the net change in cash flow hedge from OCI to the
consolidated statements of income resulting in a total refinancing cost of $9.5 million.
The following table summarizes the details of the 2024 Notes:
2024 Notes in CAD at issuance
Change in fair value of the 2024 Notes since the issuance date due
to changes in the foreign exchange rate
Unamortized deferred financing costs
DECEMBER 31, 2023
DECEMBER 31, 2022
-
-
-
-
-
728,310
16,885
745,195
(5,454)
739,741
130
On April 29, 2021, the Company issued US$320.0 million of 4.375% senior unsecured notes payable (“2026 Notes”) with interest payable
semi-annually on May 1 and November 1 of each year, commencing November 1, 2021. The 2026 Notes mature on May 1, 2026 and include
certain prepayment features.
Concurrent with the issuance of the 2026 Notes, the Company entered into derivative financial instruments (the “2026 cross-currency
swaps”) as cash flow hedges to hedge the risk of changes in the foreign currency exchange rate for the proceeds from the offering and
for all required payments of principal and interest under the 2026 Notes at a fixed exchange rate of US$1.000 = CAD1.2501, thereby fully
hedging the US$320.0 million 2026 Notes at a CAD interest rate of 4.818%. The 2026 cross-currency swaps fully hedge the obligation
under the 2026 Notes.
The following table summarizes the details of the 2026 Notes:
2026 Notes in CAD at issuance
Change in fair value of the 2026 Notes since the issuance date due
to changes in the foreign exchange rate
Unamortized deferred financing costs
DECEMBER 31, 2023
DECEMBER 31, 2022
400,032
24,032
424,064
(3,094)
420,970
400,032
33,536
433,568
(4,312)
429,256
On November 28, 2023, the Company issued US$550.0 million of 9.250% senior unsecured notes payable (the “2028 Notes”) (the 2024 Notes,
2026 Notes and 2028 Notes are collectively referred to as “Notes Payable”) with interest payable semi-annually on June 1 and December 1 of
each year and mature on December 1, 2028. The proceeds of the 2028 Notes was used to extinguish the Company’s 2024 Notes.
The 2028 Notes include certain prepayment options which are derivatives embedded in the notes. These embedded derivatives are
presented within the 2028 Notes and are measured at FVTPL with changes in fair value recognized in finance costs in the consolidated
statements of income.
Concurrent with the issuance of the 2028 Notes, the Company entered into derivative financial instruments (the “2027 cross-currency rate
swaps”) (the 2024 cross-currency swaps, 2026 cross-currency swaps and 2027 cross-currency swaps are collectively referred to as the
“cross-currency swaps”) as cash flow hedges to hedge the risk of changes in the foreign currency exchange rate for the proceeds from the
offering and for payments of principal and interest under the 2028 Notes until December 1, 2027, at a fixed exchange rate of US$1.000 =
CAD1.3832, thereby hedging the US$550.0 million 2028 Notes at a CAD interest rate of 8.79% until December 1, 2027.
The following table summarizes the details of the 2028 Notes:
2028 Notes in CAD at issuance
Change in fair value of prepayment options
Change in fair value of the 2028 Notes since the issuance date due to changes in the foreign exchange rate
Unamortized deferred financing costs
The following table summarizes the total carrying value of the Notes Payable:
DECEMBER 31, 2023
760,760
(19,035)
(31,900)
709,825
(9,969)
699,856
2024 Notes
2026 Notes
2028 Notes
DECEMBER 31, 2023
DECEMBER 31, 2022
-
420,970
699,856
1,120,826
739,741
429,256
-
1,168,997
131
The Company has elected to use hedge accounting for the Notes Payable and the cross-currency swaps (i.e., the same notional
amount, interest rate, and interest payment dates, covering either full or partial term). The Company has elected to designate the
foreign currency basis as a cost of hedging, thereby excluding foreign currency basis spreads from the designation of the hedging
relationship and has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange
contracts is identical to the hedged risk components. To test the hedge effectiveness, the Company uses the hypothetical derivative
method and compares the changes in the fair value of the hedging instruments against the changes in fair value of the hedged items
attributable to the hedged risks. There are no significant sources of hedge ineffectiveness between the Notes Payable and cross-
currency swaps. There was no hedge ineffectiveness recognized in net income for the years ended December 31, 2023 and 2022.
As the Notes Payable and the cross-currency swaps are in an effective hedging relationship, changes in the fair value of the
cross-currency swaps are recorded in OCI and subsequently reclassified into net income to offset the effect of foreign currency
exchange rates related to the Notes Payable recognized in net income. The amount of the foreign currency basis spread at inception,
designated as a cost of hedging, is amortized in net income on a straight-line basis over the life of the Notes Payable.
The cross-currency swaps have an aggregated notional amount equal to the aggregated principal outstanding of the hedged Notes Payable.
The fair value of cross-currency swaps is determined using swap curves adjusted for credit risks. Swap curves are obtained directly from
market sources. Fair values of cross-currency swaps are as follows:
Derivative financial assets (liabilities)
2024 cross-currency swaps
2026 cross-currency swaps
2027 cross-currency swaps
16. Share Capital
Authorized Capital
DECEMBER 31, 2023
DECEMBER 31, 2022
-
21,904
(38,291)
7,872
30,678
-
The authorized capital of the Company consisted of an unlimited number of common shares with no par value and an unlimited
number of preference shares.
Each common share represents a shareholders’ proportionate undivided interest in the Company. Each common share confers to its
holder the right to one vote at any meeting of shareholders and to participate equally and rateably in any dividends of the Company.
The common shares are listed for trading on the TSX.
Common Shares Issued and Outstanding
The changes in common shares issued and outstanding are summarized as follows:
Balance, beginning of year
Exercise of share options
Dividend reinvestment plan
Exercise of restricted share units
Share issuance
Share issuance costs, net of tax
Shares purchased for cancellation
Other
Balance, end of year
DECEMBER 31, 2023
DECEMBER 31, 2022
# OF SHARES
(IN 000S)
$
# OF SHARES
(IN 000S)
$
16,445
419,046
16,199
363,514
7,227
1,673
923
-
-
-
(541)
428,328
161
21
25
489
-
(450)
-
16,445
6,821
2,457
1,096
57,917
(2,014)
(10,296)
(449)
419,046
143
15
22
-
-
-
-
16,625
132
$57.9 Million Bought Deal Equity Offering
On November 21, 2022, the Company issued 488,750 common shares including 63,750 common shares issued pursuant to the exercise
in full by the syndicate of underwriters of the over-allotment option granted by the Company, at a price of $118.50 per common share,
for gross aggregate proceeds of $57.9 million. The Company used the net proceeds to support the growth of the Company’s consumer
loan portfolio and for general corporate purposes.
Dividends on Common Shares
For the year ended December 31, 2023, the Company paid cash dividends of $60.9 million (2022 - $51.6 million) or $3.79 per share
(2022 – $3.39 per share). On November 7, 2023, the Company declared a dividend of $0.96 per share to shareholders of record on
December 29, 2023, payable on January 12, 2024. The dividend paid on January 12, 2024 was $16.0 million.
Shares Purchased for Cancellation
On December 14, 2021, the Company announced the acceptance by the TSX of the Company’s Notice of Intention to Make a Normal
Course Issuer Bid (“NCIB”) (the “2021 NCIB”) and expired on December 20, 2022. For the year ended December 31, 2022, the Company
purchased and cancelled 450,058 of its common shares on the open market at an average price of $135.52 per share, for a total cost
of $61.0 million, pursuant to the 2021 NCIB.
On December 16, 2022, the Company renewed its NCIB, which allows for a total purchase of up to 1,252,730 common shares (the “2022
NCIB”) and expired on December 20, 2023. For the year ended December 31, 2023, the Company has not purchased and cancelled any
common shares, pursuant to the 2022 NCIB.
On December 19, 2023, the Company renewed its NCIB, which allows for a total purchase of up to 1,270,245 common shares (the “2023
NCIB”) and expires on December 20, 2024.
17. Stock-Based Compensation
Share Option Plan
Under the Company’s share option plan, options to purchase common shares may be granted by the Board of Directors to officers and
employees. Options are generally granted at exercise prices equal to the fair market value at the grant date, vest at the end of a three-
year period based on earnings per share targets and have exercise lives of two to four years from the date of vesting.
Outstanding balance, beginning of year
Options granted
Options exercised
Outstanding balance, end of year
Exercisable balance, end of year
DECEMBER 31, 2022
DECEMBER 31, 2021
# OF OPTIONS
(IN 000s)
WEIGHTED AVERAGE
EXERCISE PRICE
$
# OF OPTIONS
(IN 000s)
WEIGHTED AVERAGE
EXERCISE PRICE
$
345
42
(143)
244
113
63.35
130.22
39.92
88.66
37.98
477
29
(161)
345
70
47.20
163.13
33.42
63.35
40.55
Outstanding options to officers and employees as at December 31, 2023 were as follows:
OUTSTANDING
EXERCISABLE
RANGE OF
EXERCISE
PRICES
$
33.56 – 49.99
50.00 – 99.99
100.00 – 149.99
150.00 – 163.13
33.56 – 163.13
# OF OPTIONS
(IN 000s)
WEIGHTED AVERAGE
REMAINING
CONTRACTUAL LIFE IN
YEARS
WEIGHTED AVERAGE
EXERCISE PRICE
$
# OF OPTIONS
(IN 000s)
WEIGHTED AVERAGE
EXERCISE PRICE
$
111
2
92
39
244
37.46
64.07
120.29
161.44
88.66
1.14
1.12
3.99
2.97
2.50
133
111
2
-
-
113
37.46
64.07
-
-
37.98
The Company uses the fair value method of accounting for share options granted to employees. During the year ended December 31,
2023, the Company recorded an expense of $1.3 million (2022 – $1.6 million) in share-based compensation expense related to its share
option plan in the consolidated statements of income, with a corresponding adjustment to contributed surplus.
Options granted in 2023 and 2022 were determined using the Black-Scholes option pricing model with the following assumptions:
Risk-free interest rate (% per annum)
Expected hold period to exercise (years)
Volatility in the price of the Company’s shares (%)
Dividend yield (%)
Executive Share Unit Plan
2023
2022
3.70
4.40
53.54
2.95
1.59
4.55
51.62
2.00
Under the terms of the ESU Plan, the Company’s Board of Directors may grant RSUs and Executive DSUs to officers and employees.
Restricted Share Units
RSUs are granted at fair market value at the grant date and generally vest at the end of a three-year period based on achieving long-term
financial targets. RSUs are paid to officers and employees upon vesting.
Outstanding balance, beginning of year
RSUs granted
RSU dividend reinvestments
RSUs exercised
RSUs forfeited
Outstanding balance, end of year
DECEMBER 31, 2023
DECEMBER 31, 2022
# OF RSUs
(IN 000s)
WEIGHTED AVERAGE
FAIR VALUE AT
GRANT DATE
$
# OF RSUs
(IN 000s)
WEIGHTED AVERAGE
FAIR VALUE AT
GRANT DATE
$
316
65
8
(90)
(6)
293
108.94
129.98
108.11
40.95
119.54
134.25
263
150
5
(92)
(10)
316
76.33
123.32
119.02
42.59
82.23
108.94
For the year ended December 31, 2023, the Company repurchased the equity interest related to a portion of fully vested RSUs amounting to
$8.7 million or $7.2 million, net of tax (2022 – $10.7 million or $8.6 million, net of tax).
For the year ended December 31, 2023, the Company recorded an expense of $6.1 million (2022 – $4.8 million) in share-based compensation
expense related to the Company’s RSUs in the consolidated statements of income, with a corresponding adjustment to contributed surplus.
Executive Deferred Share Units
Executive DSUs are granted at fair market value at the grant date and generally vest at the end of a three-year period based on achieving
long-term financial targets. Executive DSUs are paid to officers and employees upon termination of their employment with the Company.
Outstanding balance, beginning of year
Executive DSUs granted
Executive DSU dividend reinvestments
Outstanding balance, end of year
DECEMBER 31, 2023
DECEMBER 31, 2022
# OF
EXECUTIVE
DSUS
(IN 000s)
WEIGHTED AVERAGE
FAIR VALUE AT
GRANT DATE
$
# OF
EXECUTIVE
DSUS
(IN 000s)
WEIGHTED AVERAGE
FAIR VALUE AT
GRANT DATE
$
60
30
2
92
124.73
127.24
107.94
125.17
-
59
1
60
-
124.74
110.00
124.73
For the year ended December 31, 2023, the Company recorded an expense of $2.0 million (2022 – $0.4 million) in share-based compensation expense
related to the Company’s Executive DSUs in the consolidated statements of income, with a corresponding adjustment to contributed surplus.
134
Board of Directors Deferred Share Unit Plan
Under the terms of the Board DSU Plan, the Company may grant DSUs to Board Directors. DSUs are granted at fair market value at the
grant date and vest immediately upon grant.
During the year ended December 31, 2023, the Company granted 20,715 Board DSUs (2022 – 16,274 Board DSUs) to Board Directors
under its DSU Plan. Additionally, for the year ended December 31, 2023, an additional 11,236 Board DSUs (2022 – 8,395 Board DSUs)
were granted for dividends announced during the year. For the year ended December 31, 2023 and 2022, no Board DSUs were settled.
For the year ended December 31, 2023, $3.5 million (2022 – $3.3 million) were recorded as share-based compensation expense under
the Board DSU Plan in the consolidated statements of income, with a corresponding adjustment to contributed surplus.
Share-based Compensation Expense
Share-based compensation expense for the year ended December 31, 2023 was $12.9 million (2022 – $10.1 million).
Contributed Surplus
The following is a continuity of the activity in the contributed surplus account:
DECEMBER 31, 2023
DECEMBER 31, 2022
Contributed surplus, beginning of year
Equity-settled share-based compensation expense
Restricted share units
Board deferred share units
Share options
Executive deferred share units
Reductions due to exercise in shares of stock-based compensation
Restricted share units
Share options
Repurchase of equity interest related to restricted share units, net of tax
Contributed surplus, end of year
18. Other Expenses
21,499
6,157
3,477
1,316
1,988
(923)
(1,523)
(7,174)
24,817
22,583
4,771
3,291
1,619
372
(1,097)
(1,435)
(8,605)
21,499
In 2022, the Company incurred corporate development costs of $2.3 million, including advisory, consulting, and legal costs, in connection
with the exploration of a strategic acquisition opportunity, which the Company elected to not pursue. These corporate development costs
were reported under other expenses in the consolidated statements of income.
19. Finance Costs
Finance costs include the following:
Interest expense
Notes payable
Revolving securitization warehouse facilities
Revolving credit facility
Secured borrowings
Amortization of deferred financing costs and accretion expense
Refinancing costs related to notes payable (note 15)
Interest expense on lease liabilities
Interest income on cash in bank, net
Fair value change on prepayment options (note 15)
DECEMBER 31, 2023
DECEMBER 31, 2022
62,659
64,800
17,144
6,105
7,543
9,501
3,822
(3,205)
(19,035)
149,334
60,423
27,194
5,955
6,144
6,234
-
3,577
(1,555)
-
107,972
135
20. Income Taxes
The Company’s income tax expense was determined as follows:
Combined basic federal and provincial income tax rates
Expected income tax expense
Non-deductible expenses
Effect of capital (gains) losses on sale of assets and investments
Adjustments in respect of prior years
Other
DECEMBER 31, 2023
DECEMBER 31, 2022
26.5%
89,294
1,949
(1,371)
(319)
(496)
89,057
The significant components of the Company’s income tax expense are as follows:
DECEMBER 31, 2023
DECEMBER 31, 202
Current income tax:
Current income tax charge
Adjustments in respect of prior years and other
Deferred income tax:
Relating to origination and reversal of temporary differences
Adjustments in respect of prior years and other
91,699
(890)
90,809
(2,323)
571
(1,752)
89,057
Deferred income tax related to items recognized in OCI during the year are summarized below:
DECEMBER 31, 2023
DECEMBER 31, 2022
Change in fair value of cash flow hedge
Change in costs of hedging
Reclassification of cash flow hedge to the consolidated statements
of income
Deferred income tax expense (recovery) charged to OCI
The changes in deferred income tax liabilities are as follows:
(1,516)
797
1,510
791
DECEMBER 31, 2023
DECEMBER 31, 2022
Balance, beginning of year
Tax recovery during the year recognized in profit or loss
Tax (expense) recovery during the year recognized in OCI
Tax on share issuance costs
Balance, end of year
(24,692)
1,752
(791)
(528)
(24,259)
26.5%
51,881
1,607
3,874
(1,202)
(545)
55,615
68,609
(2,950)
65,659
(11,792)
1,748
(10,044)
55,615
(4,168)
533
-
(3,635)
(38,648)
10,044
3,635
277
(24,692)
136
The significant components of the Company’s deferred income tax liabilities are as follows:
DECEMBER 31, 2023
DECEMBER 31, 2022
Accounts receivable and allowance for credit losses
Share-based compensation
Revaluation of notes payable and derivative financial instruments
Right-of-use assets, net of lease liabilities
Financing fees
Loss carry forwards
Unrealized fair value change on investments
Fair value change on prepayment options
Lease assets and property and equipment
Intangible asset arising from business acquisition
Other
13,096
2,746
1,976
1,424
1,222
623
(827)
(5,044)
(14,359)
(25,458)
342
(24,259)
7,660
2,107
2,767
1,303
1,640
-
233
-
(11,974)
(28,929)
501
(24,692)
As at December 31, 2023 and 2022, there were no recognized deferred income tax liabilities for taxes that would be payable on the
undistributed earnings of the Company’s subsidiaries.
21. Earnings Per Share
Basic Earnings Per Share
Basic earnings per share amounts were calculated by dividing the net income for the year by the weighted average number of
outstanding common shares and Board DSUs. Board DSUs granted to Board Directors are included in the calculation of the weighted
average number of common shares outstanding as they vest upon grant.
Net income
Weighted average number of common shares outstanding (in 000s)
Basic earnings per common share
247,898
16,867
14.70
140,161
16,275
8.61
For the year ended December 31, 2023, 325,493 Board DSUs (2022 – 294,025 Board DSUs) were included in the weighted average
number of common shares outstanding.
DECEMBER 31, 2023
DECEMBER 31, 2022
Diluted Earnings Per Share
Diluted earnings per share reflect the potential dilutive effect that could occur if additional common shares were assumed to be issued
under securities or instruments that may entitle their holders to obtain common shares in the future. Dilution could occur through the
exercise of share options, the exercise of RSUs, or the exercise of unvested Executive DSUs. The number of additional shares for inclusion
in the diluted earnings per share calculation was determined using the treasury share method.
Net income
Weighted average number of common shares outstanding (in 000s)
Dilutive effect of share-based compensation (in 000s)
Weighted average number of diluted shares outstanding (in 000s)
Dilutive earnings per common share
DECEMBER 31, 2023
DECEMBER 31, 2022
247,898
16,867
250
17,117
14.48
140,161
16,275
375
16,650
8.42
137
The following share-based compensation grants were considered anti-dilutive using the treasury share method and therefore were
excluded in the calculation of diluted earnings per share:
Share options (in 000s)
Restricted share units (in 000s)
Executive deferred share units (in 000s)
DECEMBER 31, 2023
DECEMBER 31, 2022
131
68
28
227
88
150
60
298
22. Net Change In Other Operating Assets And Liabilities
The net change in other operating assets and liabilities is as follows:
DECEMBER 31, 2023
DECEMBER 31, 2022
Accounts receivable
Prepaid expenses
Accounts payable and accrued liabilities
Income taxes recoverable (payable)
Unearned revenue
Accrued interest
(5,065)
(1,128)
20,115
28,533
(1,696)
2,716
43,475
(4,866)
(316)
(6,304)
(28,096)
17,307
2,024
(20,251)
Supplemental disclosures in respect of the consolidated statements of cash flows consist of the following:
Income taxes paid
Income taxes refunded
Interest paid
Interest received
DECEMBER 31, 2023
DECEMBER 31, 2022
70,478
8,202
147,990
882,192
95,592
1,837
97,697
690,779
23. Commitments And Guarantees
The Company has technology commitments and operating leases for premises and vehicles. Some of the Company’s lease contracts for
premises include extension options. Management exercises significant judgement in determining whether these extension options are
reasonably certain to be exercised. As at December 31, 2023, no extension option for lease contracts for premises is expected to be exercised.
The undiscounted potential future lease payments for operating leases for premises and vehicles and the estimated operating costs related
to technology commitments required for the next five years and thereafter are as follows:
Premises
Technology commitments
Vehicles
24. Contingencies
WITHIN 1 YEAR
AFTER 1 YEAR, BUT NOT
MORE THAN 5 YEARS
MORE THAN 5 YEARS
23,610
20,289
607
44,506
47,251
30,646
965
78,862
5,928
-
-
5,928
The Company was involved in various legal matters arising in the ordinary course of business. The resolution of these matters is not
expected to have a material adverse effect on the Company’s financial position, financial performance or cash flows.
The Company has agreed to indemnify its directors and officers and particular employees in accordance with the Company’s policies.
The Company maintains insurance policies that may provide coverage against certain claims.
138
25. Capital Risk Management
The Company manages its capital to maintain its ability to continue as a going concern and to provide adequate returns to shareholders
by way of share appreciation and dividends. The capital structure of the Company consists of debt facilities (Revolving Credit Facility,
Revolving Securitization Warehouse Facilities and Secured Borrowings), Notes Payable and Shareholders’ equity, which includes
share capital, contributed surplus, accumulated OCI and retained earnings.
The Company manages its capital structure and adjusts it in response to changing economic conditions. The Company, upon approval
from its Board of Directors, will balance its overall capital structure through new share issuances, share repurchases, the payment
of dividends, increasing or decreasing drawn amounts against the Company’s debt facilities, issuance or payment of Notes Payable or
by undertaking other activities as deemed appropriate under specific circumstances. The Company’s strategy, objectives, measures,
definitions and targets have not changed significantly in the past year.
The Company has externally imposed capital requirements as governed through its financing facilities. These requirements are to
ensure the Company continues to operate in the normal course of business and to ensure the Company manages its debt relative to
net worth. The capital requirements are congruent with the Company’s management of capital.
The Company monitors capital on the basis of the financial covenants of its financing facilities.
For the years ended December 31, 2023 and 2022, the Company was in compliance with all of its externally imposed financial covenants.
26. Financial Risk Management
Overview
The Company’s activities are exposed to a variety of financial risks: credit risk, liquidity risk, interest rate risk and currency risk.
The Company’s overall risk management program focuses on the unpredictability of financial and economic markets and seeks to
minimize potential adverse effects on the Company’s financial performance.
Credit Risk
Credit risk is the risk of loss that arises when a customer or counterparty fails to pay an amount owing to the Company.
The maximum exposure to credit risk is represented by the carrying amount of the accounts receivable, consumer loans receivable and lease
assets with customers under merchandise lease agreements. The Company provides consumer loans and leases products to thousands of
customers pursuant to policies and procedures that are intended to ensure that there is no concentration of credit risk with any particular
individual, company or other entity, although the Company is subject to a higher level of credit risk due to the credit constrained nature of
many of the Company’s customers and in circumstances where its policies and procedures are not complied with.
The credit risk on the Company’s consumer loans receivable made in accordance with policies and procedures is impacted by FLIs.
The analysis performed by the Company determined that the rate of inflation and rate of unemployment were positively correlated
with the Company’s historic loss rates while oil prices and the rate of GDP were negatively correlated with the Company’s historic
loss rates. In calculating the allowance for credit losses, internally developed models were used, which factor in credit risk related
parameters including the probability of default, the exposure at default, the loss given default, and other relevant risk factors. As
part of the process, for the years ended December 31, 2023 and 2022, five forward-looking scenarios were generated – 1) neutral,
2) moderately optimistic, 3) extremely optimistic, 4) moderately pessimistic, and 5) extremely pessimistic – based on forecasting
degrees of change in the macroeconomic variables (GDP, unemployment rates, inflation rates, and oil prices) within a 12-month
period. Judgment is then applied by management to assign probabilistic weightings to these scenarios to determine a probability
weighted allowance for credit losses as at the reporting date. The proposed macroeconomic forecasts and probability weightings are
then subject to robust internal review and analysis by management to arrive at a collective view on the likelihood for each scenario.
Refer to note 6 for additional details on the allowance for credit losses. As at December 31, 2023, the Company’s gross consumer
loans receivable portfolio was $3.65 billion (2022 – $2.79 billion). Net charge offs expressed as a percentage of the average loan book
were 8.9% for the year ended December 31, 2023 (2022 – 9.1%).
139
The credit risk related to lease assets with customer’s results from the possibility of customer default with respect to agreed upon
payments or in not returning the lease assets. The Company has a standard collection process in place in the event of payment
default, which includes the recovery of the lease asset if satisfactory payment terms cannot be worked out with the customer, as
the Company maintains ownership of the lease assets until payment options are exercised. As at December 31, 2023, the Company’s
lease assets were $45.2 million (2022 – $48.4 million). Lease asset losses for the year ended December 31, 2023 represented 3.4%
(2022 – 3.2%) of total leasing revenue for the easyhome reportable segment.
For accounts receivable from third parties, the risk relates to the possibility of default on amounts owing to the Company. The
Company deals with credible companies, performs ongoing credit evaluations of counterparties and consumers and creates an
allowance for uncollectible amounts when determined to be appropriate.
Liquidity Risk
The Company addresses liquidity risk management by maintaining sufficient availability of funding through its financing facilities.
The Company manages its cash resources based on financial forecasts and anticipated cash flows, which are periodically reviewed
with the Company’s Board of Directors.
The Company believes that the cash flows provided by operations and funds available from the credit facilities will be sufficient in
the near term to meet operational requirements, purchase lease assets, meet capital spending requirements and pay dividends.
The Company remains confident that the capacity available under its existing funding facilities, and its ability to raise additional debt
financing, is sufficient to fund its organic growth forecast.
The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:
DECEMBER 31, 2023
Accounts payable and accrued liabilities
Accrued interest
Revolving credit facility
Revolving securitization warehouse facilities
Secured borrowings
Derivative financial liabilities
Notes payable
DECEMBER 31, 2022
Accounts payable and accrued liabilities
Accrued interest
Revolving credit facility
Revolving securitization warehouse facilities
Secured borrowings
Notes payable
Interest Rate Risk
LESS THAN 1
YEAR
1 TO 3
YEARS
4 TO 5
YEARS
5 YEARS +
TOTAL
72,409
12,875
-
-
69,450
-
-
-
-
192,000
1,370,000
67,925
4,166
424,064
-
-
-
-
5,224
38,291
709,825
51,136
10,159
-
-
30,901
-
-
-
150,000
810,000
53,996
745,195
-
-
-
-
16,205
433,568
-
-
-
-
72,409
12,875
192,000
1,370,000
578
143,177
-
-
-
-
-
-
42,457
1,133,889
TOTAL
51,136
10,159
150,000
810,000
105,792
4,690
-
1,178,763
LESS THAN 1
YEAR
1 TO 3
YEARS
4 TO 5
YEARS
5 YEARS +
Interest rate risk measures the Company’s risk of financial loss due to adverse movements in interest rates. The Company maintains diversified
funding sources and utilizes derivative financial instruments as cash flow hedges to assist in the management of interest rate volatility.
The 2026 Notes and 2028 Notes maturing on May 1, 2026 and December 1, 2028, respectively, have fixed rates of interest.
The Revolving Credit Facility has variable interest rates at either the BA rate plus 225 bps or the Prime rate plus 75 bps, at the option of
the Company. The Company does not hedge interest rates on the Revolving Credit Facility. Accordingly, future changes in interest rates
will affect the amount of interest expense payable by the Company to the extent draws are made on the variable rate Revolving Credit
Facility. As at December 31, 2023, the Company’s has drawn $192 million against its $370 million Revolving Credit Facility.
140
The Revolving Securitization Warehouse Facility I and Revolving Securitization Warehouse Facility II have variable interest rates at
1-month CDOR plus 195 bps and at 1-month CDOR plus 185 bps, respectively. The Company entered into interest rate swap agreements
as cash flow hedges to protect itself against the variability of future interest payments by paying a fixed rate based on the weighted
average life of the securitized loans and receiving variable rate equivalent to 1-month CDOR. As such, each incremental swap that is
taken on has a hedge implemented that results in interest rates becoming fixed for the duration of that swap.
The $105 million Securitization Facility bears interest at the GOCB rate (with a floor rate of 0.95%) plus 395 bps and the $85 million
Securitization Facility bears interest at the GOCB (with a floor rate of 0.25%) plus 325 bps. The loan sale agreements to sell loans into
these facilities expired in 2021. The balance of the loans that were sold into the facility will amortize down based on their contractual
time to maturity. The $150 million Securitization Facility bears interest at an interpolated GOCB rate plus 310 bps. The interpolated rate
is determined using the remaining maturity of each loan sold into the facility, and the rate remains fixed for the life of the loan.
As at December 31, 2023, 93% (2022 – 93%) of the Company’s drawn debt balances effectively bear fixed rates due to the type of debt and
the aforementioned interest rate swap agreement on the Revolving Securitization Warehouse Facilities.
The Company cannot predict the impact of the changing economic conditions will have on its future results, nor predict when interest
rates will change.
Currency Risk
Currency risk measures the Company’s risk of financial loss due to adverse movements in currency exchange rates.
On April 29, 2021, the Company issued the 2026 Notes with a USD coupon rate of 4.375% and on November 13, 2023, the Company
issued the 2028 Notes with a USD coupon rate of 9.250%. Concurrent with these offerings, the Company entered into cross-
currency swap agreements to hedge the risk of changes in the foreign exchange rate for the proceeds from the offerings and for all
required payments of principal and interest under these notes effectively hedging the obligation. The hedge is designed to match
the cash flow obligations of the Company under the Notes Payable, covering either full or partial term.
The Company sources a portion of the assets it leases in Canada from U.S. suppliers. As a result, the Company has foreign
exchange transaction exposure. These purchases are funded using the spot rate prevailing at the date of purchase. Pricing to
customers can be adjusted to reflect changes in the CAD landed cost of imported goods and, as such, the Company does not have
a material foreign currency transaction exposure.
27. Financial Instruments
Recognition and Measurement of Financial Instruments
The Company classified its financial instruments as follows:
FINANCIAL INSTRUMENTS
Cash
Accounts receivable
Consumer loans receivable, net
Investments
Derivative financial assets
Revolving credit facility
Accounts payable and accrued liabilities
Accrued interest
Secured borrowings
Revolving securitization warehouse facilities
Derivative financial liabilities
Notes payable
MEASUREMENT
Fair value
Amortized cost
Amortized cost
Fair value
Fair value
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Amortized cost
Fair value
Amortized cost
DECEMBER 31, 2023
DECEMBER 31, 2022
144,577
30,762
3,447,588
61,464
21,904
190,921
72,409
12,875
143,177
1,364,741
42,457
1,120,826
62,654
25,697
2,627,357
57,304
49,444
148,646
51,136
10,159
105,792
805,825
-
1,168,997
141
Fair Value Measurement
All assets and liabilities for which fair value was measured or disclosed in the consolidated financial statements were categorized within
the fair value hierarchy, described as follows, based on the lowest level input that was significant to the fair value measurement as a whole:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
• Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or
indirectly observable.
• Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
The hierarchy required the use of observable market data when available. The following tables provide the fair value measurement
hierarchy of the Company’s financial assets and liabilities measured as at December 31, 2023 and 2022:
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
DECEMBER 31, 2023
Cash
Accounts receivable
Consumer loans receivable, net
Investments
Derivative financial assets
Revolving credit facility
Accounts payable and accrued liabilities
Accrued interest
Secured borrowings
Revolving securitization warehouse facilities
Derivative financial liabilities
Notes payable
DECEMBER 31, 2022
Cash
Accounts receivable
Consumer loans receivable, net
Investments
Derivative financial assets
Revolving credit facility
Accounts payable and accrued liabilities
Accrued interest
Secured borrowings
Revolving securitization warehouse facilities
Notes payable
144,577
30,762
3,447,588
61,464
21,904
190,921
72,409
12,875
143,177
1,364,741
42,457
1,120,826
144,577
-
-
19,546
-
-
-
-
-
-
-
-
62,654
25,697
2,627,357
57,304
49,444
148,646
51,136
10,159
105,792
805,825
1,168,997
62,654
-
-
6,226
-
-
-
-
-
-
-
-
-
-
-
21,904
-
-
-
-
-
42,457
-
-
-
-
-
49,444
-
-
-
-
-
-
-
30,762
3,447,588
41,918
-
190,921
72,409
12,875
143,177
1,364,741
-
1,120,826
LEVEL 3
-
25,697
2,627,357
51,078
-
148,646
51,136
10,159
105,792
805,825
1,168,997
TOTAL
LEVEL 1
LEVEL 2
There were no transfers between Level 1, Level 2, or Level 3 for the years ended December 31, 2023 and 2022.
28. Related Party Transactions
Key management personnel includes all Board Directors and corporate officers. The following summarizes the expenses related to key
management personnel during the year.
Short-term employee benefits including salaries
Share-based payment transactions
DECEMBER 31, 2023
DECEMBER 31, 2022
6,362
9,135
15,497
6,642
6,880
13,522
142
29. Segmented Reporting
For management reporting purposes, the Company has two reportable segments:
• The easyfinancial reportable segment lends out capital in the form of unsecured and secured consumer loans to non-prime borrowers.
easyfinancial’s product offering consists of unsecured and real estate secured instalment loans. The LendCare operating segment specializes
in financing consumer purchases in the powersports, automotive, retail, healthcare, and home improvement categories. The majority of loans
in LendCare are secured by personal property or a Notice of Security Interest. The Company aggregates operations of easyfinancial and
LendCare into one reportable segment called easyfinancial, on the basis of their similar economic characteristics, customer profile, nature of
products, and regulatory environment. This aggregation most accurately reflects the nature and financial results of the business activities in
which the Company engages, and the broader economic and regulatory environment in which it operates.
The Company’s chief operating decision maker (“CODM”), which has been determined by the Company to be the Chief Executive Officer, utilizes
the same key performance indicators to allocate resources and assess the performance of the operating segments. The CODM uses several
metrics to evaluate the performance of the operating segments, including but not limited to, the volume of consumer loan originations and
the risk-adjusted margin of the businesses (comprising the yield on the consumer loan portfolios net of the annualized loss rates). These
key financial and performance indicators, which are used to assess results, manage trends and allocate resources to each of the operating
segments, have been, and are expected to remain, similar. In addition, the Company has centralized some of the common functions such as
finance and human resources.
Customers served by the easyfinancial and LendCare operating segments are Canadian consumers, the majority of whom are classified as
non-prime borrowers and seeking alternative financial solutions to those of a traditional bank. These consumers actively use a wide range
of financial products and will migrate across the products offered in each segment. Furthermore, the nature of products sold by each of the
operating segments and the distribution methods of those products are similar. Both the easyfinancial and LendCare operating segments
offer unsecured and secured instalment loans, which are offered through a retail network of branches or merchant partnerships, and
complemented by an online digital platform. In addition, both operating segments are subject to the same federal and provincial legislations
and regulations applicable to the consumer lending industry.
• The easyhome reportable segment provides leasing services for household furniture, appliances and electronics and unsecured lending
products to retail consumers.
The Company’s business units generate revenue in four main categories: i) interest generated on the Company’s gross consumer loans receivable
portfolio; ii) lease payments generated by easyhome lease agreements; iii) commissions and other revenues generated by the sale of various
ancillary products; and iv) charges and fees.
General and administrative expenses directly related to the Company’s business segments were included as operating expenses for those
segments. All other general and administrative expenses were reported separately as part of the Corporate segment. Management assesses
performance based on segment operating income (loss).
The following tables summarize the relevant information for the years ended December 31, 2023 and 2022:
YEAR ENDED DECEMBER 31, 2023
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
Revenue
Interest income
Lease revenue
Commissions earned
Charges and fees
Operating expenses
Bad debts
Other operating expenses
Depreciation and amortization
Segment operating income (loss)
Other income
Finance costs
Income before income taxes
35,700
99,848
14,122
3,582
153,252
14,443
59,610
42,259
116,312
36,940
-
-
-
-
-
-
88,613
6,325
94,938
(94,938)
888,928
99,848
234,485
26,808
1,250,069
341,639
345,581
86,331
773,551
476,518
9,771
(149,334)
336,955
853,228
-
220,363
23,226
1,096,817
327,196
197,358
37,747
562,301
534,516
143
YEAR ENDED DECEMBER 31, 2022
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
Revenue
Interest income
Lease revenue
Commissions earned
Charges and fees
Operating expenses
Bad debts
Other operating expenses
Depreciation and amortization
Segment operating income (loss)
Other loss
Finance costs
Income before income taxes
668,779
-
184,013
16,736
869,528
261,997
180,867
32,668
475,532
393,996
29,371
103,414
13,146
3,877
149,808
10,896
61,748
42,586
115,230
-
-
-
-
-
-
90,115
6,052
96,167
34,578
(96,167)
698,150
103,414
197,159
20,613
1,019,336
272,893
332,730
81,306
686,929
332,407
(28,659)
(107,972)
195,776
As at December 31, 2023 and 2022, the Company's goodwill was comprised of $21.3 million related to its easyhome reportable
segment and $159.6 million related to the LendCare operating segment within the easyfinancial reportable segment.
In scope under IFRS 15, Revenue from Contracts with Customers (“IFRS 15”) are revenues relating to commissions earned and
charges and fees. Lease revenue is covered under IFRS 16, Leases. Included in lease revenue is certain additional services provided
by the Company related to the lease, but which fall under the scope of IFRS 15. These revenues totalled $11.0 million for the year
ended December 31, 2023 (2022 - $11.8 million).
The Company's easyhome business consisted of four major product categories: furniture, electronics, appliances and computers.
Lease revenue generated by these product categories as a percentage of total lease revenue for the years ended December 31, 2023
and 2022 were as follows:
Furniture
Electronics
Appliances
Computers
DECEMBER 31, 2023
(%)
DECEMBER 31, 2022
(%)
41
33
16
10
100
40
34
15
11
100
144
Corporate Information
Head Office
33 City Centre Drive
5th Floor
Mississauga, Ontario
L5B 2N5
Tel:
(905) 272-2788
Bankers
Bank of Montreal
Toronto, Ontario
Wells Fargo Canada
Toronto, Ontario
Investor Relations
Jason Mullins
President & Chief Executive Officer
Tel:
(905) 272-2788
David Ingram
Executive Chairman of the Board
Tel:
(905) 272-2788
Hal Khouri
Executive Vice-President
& Chief Financial Officer
(905) 272-2788
Tel:
Farhan Ali Khan
Senior Vice President and Chief
Corporate Development Officer
Tel:
(905) 272-2788
Canadian Imperial Bank
of Commerce
Toronto, Ontario
Royal Bank of Canada
Toronto, Ontario
The Toronto-Dominion Bank
Toronto, Ontario
National Bank of Canada
Toronto, Ontario
Transfer Agent
TSX Trust Company
Toronto, Ontario
Listed
Toronto Stock Exchange
Trading Symbol: GSY
Solicitors
Blake, Cassels & Graydon LLP
Toronto, Ontario
Auditors
Ernst & Young LLP
Toronto, Ontario
Website
www.goeasy.com
Board of Directors
David Ingram
Executive Chairman of the Board
Corporate Officers
Jason Mullins
President & Chief Executive Officer
Donald K. Johnson
Chairman Emeritus
Karen Basian
Lead Director
David Appel
Corporate Director
Susan Doniz
Corporate Director
Sean Morrison
Corporate Director
Honourable James Moore
Corporate Director
Tara Deakin
Corporate Director
Jason Mullins
Corporate Director
Jonathan Tétrault
Corporate Director
Hal Khouri
Executive Vice-President & Chief Financial Officer
Ali Metel
President, LendCare
Jason Appel
Executive Vice-President & Chief Risk Officer
Andrea Fiederer
Executive Vice-President & Chief Marketing Officer
Jackie Foo
Executive Vice-President & Chief Operating Officer
Mark Schell
Chief Operating Officer, LendCare
David Cooper
Senior Vice-President & Chief Talent Officer
Sabrina Anzini
Senior Vice-President & Chief Legal Officer
Michael Eubanks
Senior Vice-President & Chief Information Officer
Farhan Ali Khan
Senior Vice-President & Chief Corporate Development Officer
145