A N N U A L
R E P O R T
20
24
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Table of
contents
Empowering Canadians, driving record growth...........................................................................3
Our 2024 highlights.....................................................................................................................4
2024 Annual letter to shareholders............................................................................................6
Shareholder returns..................................................................................................................10
Risk and analytics......................................................................................................................11
Our mission................................................................................................................................12
Our leaders................................................................................................................................13
Our brands.................................................................................................................................14
Our strategy...............................................................................................................................15
Our customer commitment........................................................................................................17
Our products..............................................................................................................................19
Our channels .............................................................................................................................20
Our employee experience .........................................................................................................21
Our environmental, social & governance strategy ...................................................................25
Financial summary....................................................................................................................32
Management’s discussion and analysis of financial condition and results of operations .......36
Management’s responsibility for financial reporting ...............................................................94
Independent auditor's report.....................................................................................................95
Audited consolidated financial statements ............................................................................98
Corporate information....................................................................................... 142
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Empowering
Canadians,
driving record
growth
2024 was another breakthrough year for goeasy.
We produced record loan growth, delivered
consistently stable credit performance and
improved operating leverage, further solidifying
our position as one of Canada's leading non-
prime consumer lenders.
In 2024 alone, we issued over 315,000 loans to
support our customers in achieving the quality
of life they deserve. We did this by providing
the resources to pay for an unplanned or
unexpected bill to lowering their borrowing costs
by consolidating their debts; from fi nancing a
vehicle or powersports product for their family's
enjoyment to paying for healthcare expenses
such as uninsured dental work or a veterinary
bill; and by helping them purchase household
items such as furniture or appliances. With
originations of $3.2 billion in the year, goeasy
has now proudly served approximately 1.5
million Canadians through our easyfi nancial,
easyhome and LendCare brands.
We are proud of the essential role we play in the
fi nancial system, empowering the 9.6 million
hard-working everyday Canadians, with near
to non-prime credit scores, that encounter
systemic barriers due to their credit challenges.
We do this by providing transparent products and
services that allow our customers to lower their
interest rates and improve their credit scores as
they work their way towards eventually moving
on to banks or other traditional lenders for their
fi nancing needs.
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Our 2024
highlights
OUR 2024 HIGHLIGHTS
1 These are non-IFRS measure and ratios. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 42 of the Company’s MD&A year
ended December 31, 2024.
25.3%
$4.6B
21.9%
$3.2B
$951M
41.2%
Loan book growth
Effi ciency ratio1
Ending loan book
Total revenue growth
Loan originations
Adjusted operating margin1
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17.6%
$16.71
Adjusted diluted earnings
per share growth1
Adjusted diluted earnings
per share1
$290M
Adjusted net income1
6.2%
7.0%
25.5%
Adjusted return on asset1
Adjusted return on
receivable1
Adjusted return on equity1
OUR 2024 HIGHLIGHTS
$1.9B
$481M
Total funding capacity as of
December 31, 2024
Free cash fl ows from
operations1
$4.68
Annual dividend per
share
1 These are non-IFRS measure and ratios. Refer to “Key Performance Indicators and Non-IFRS Measures” section on page 42 of the Company’s MD&A year
ended December 31, 2024.
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2024 Annual
letter to
shareholders
2024 ANNUAL LETTER TO SHAREHOLDERS
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2024 ANNUAL LETTER TO SHAREHOLDERS
As I refl ect on 2024, we must begin by
acknowledging a signifi cant leadership
transition. After 14 years with goeasy,
including six as CEO, Jason Mullins
has moved on to his next chapter,
leaving behind an excellent foundation
of team engagement and fi nancial
success. Jason’s leadership guided us
through pivotal moments, including an
era of strategic expansion and digital
transformation, guiding our strength
during the Pandemic, a transformational
acquisition of LendCare, and considered
judgement
amid
shifting
economic
and regulatory landscapes. We are
grateful for his many contributions and
his commitment to continue serving as
a member of our Board of Directors,
providing the Company with continuity
and support. On behalf of the Board, I
wish to thank Jason for the signifi cant
achievements and the industry-leading
results he drove during his tenure.
As we look forward to our next phase of
signifi cant growth, I am thrilled that we
have appointed Dan Rees as goeasy’s
Chief Executive Offi cer. Dan is the fi rst
external CEO to lead our organization
in 25 years, and his appointment is
an exciting milestone and signal of
our ambition. He brings a depth of
experience in fi nancial services to
goeasy following a successful 25-year
career with Scotiabank. From 2019 to
2024, Dan served as Scotiabank's Group
Head of Canadian Banking where he
demonstrated a track record of driving
impressive results while leading the
largest revenue portfolio of $13 billion and
a lending portfolio of approximately $450
billion. Dan stood out above all the other
candidates as a leader who understands
the requirement to be obsessed with
our frontline employees and has already
demonstrated a deep connection to the
importance of preserving our unique
culture that works hard, celebrates the
wins, and has a deeply rooted empathy
and connection to all the customers we
serve. He is exceptionally positioned to
lead our business through its next stage
of growth. His entrepreneurial approach
aligns well with our culture, and his
addition strengthens the executive team
on their journey to expand our existing
products and channels of distribution to
become the largest and best performing
non-prime lender in Canada and beyond.
We also made important strategic
enhancements to our Company including
the appointment of Patrick Ens as
President of easyfi nancial in July 2024.
Patrick joined goeasy from a successful
tenure
with
Capital
One
Canada,
where he acquired over 17 years of
experience in consumer credit, including
serving as President of Capital One
Canada, between 2021-2024. Patrick’s
appointment balances the organizational
structure with the role of Ali Metel, who
has served as President of the LendCare
brand since 2021, when it was acquired
by goeasy.
Additionally, to support the maturation
and evolution of the company’s matrixed
structure, we established an Executive
Leadership Team to drive decision-
making and effi ciency. Together, these
initiatives have strengthened our ability
to navigate complexity and accelerate
growth.
"This past year, like so many
before it, was defi ned by the rapid
evolution of our business as we
continued to empower Canadians
and drive record growth."
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Build a revolving card product
First, we are completing our build of a revolving credit card product that we intend to pilot
later in the year. There remains a material void in the marketplace for general purpose credit
cards for the Canadians that we serve. Occupied by only a couple of major market participants,
non-prime borrowers that are unable to get a card product from a traditional bank are often
left with few options. We believe we can build a superior solution, one that will eventually have
a loyalty and rewards component. The card product integrates well in our existing strategy of
supporting customers on their credit building journey.
Introduce auto title and auto refi nance products
Second, we are investing in introducing both auto title and auto refi nance products. Auto
fi nance continues to represent the largest segment of the Canadian non-prime credit market.
A majority of Canadians own a vehicle with equity in it, which can be used to access a secured
loan at a lowered interest rate, which means we can look to off er fi nancing alternatives to
consumers who either own their vehicle outright or have an existing auto loan.
A year of evolution & prioritization
2025
In 2025 we will execute three key strategic initiatives that will deliver strong growth while optimizing cost savings:
2024 ANNUAL LETTER TO SHAREHOLDERS
A year of resilience and growth
2024
This past year is a testament to our
unique ability to adapt and thrive in
an
ever-evolving
macroeconomic
environment. Persistent infl ation, rising
interest rates and higher costs placed
increased fi nancial pressure on all
Canadians, particularly those with non-
prime credit ratings. Throughout 2024,
our teams remained deeply committed
to expanding access to credit for those
who are unable to access products or
services from banks, and who rely on us
for a responsible and reliable source of
fi nancing for their life essentials.
Our
disciplined
approach
to
credit
management and operational execution
allowed us to deliver another year of
record-breaking performance:
•
Record loan originations of over
$3.2 billion
•
Record
portfolio
growth
exceeding $950 million, closing
the year at $4.6 billion
•
Record Adjusted Diluted Earnings
Per Share of $16.71
•
Record Adjusted Net Income of
$290M
•
Actively
participated
in
consultation with Federal Finance
Minister’s offi ce and prepared
credit models to successfully
manage
the
implementation
of 35% max allowable rate of
interest
•
Continued
investments
in
technology, customer experience,
and operational effi ciency
•
Award winning corporate culture
recognized
through
multiple
workplace culture awards
•
Record
2024
employee
engagement score of 85%
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Continuing to invest in operating effi ciency
Lastly, we are continuing to prioritize investments in technology to enable greater effi ciency.
Through automating and streamlining business processes, as well as leveraging advancements
in AI and technology to enhance existing workforce capabilities, we can continue to scale the
business and drive cost savings.
2024 ANNUAL LETTER TO SHAREHOLDERS
David Ingram
EXECUTIVE CHAIRMAN
LOOKING AHEAD
Our expectation is to organically grow
the loan portfolio to between $7.35
billion and $7.75 billion in 2027, driven by
the growth and execution of our planned
suite of products and channels. Our
outlook provides a range of guidance to
account for unanticipated headwinds at
one end, and the benefi t of our initiatives
performing better than planned at the
other.
After assessing the potential impacts to
our business, if the US moves forward
with their threat of broad tariff s, our
initial calculations based on stress
testing our credit models on various
assumptions have been reassuring. As
non-prime customers carry 53% lower
debt than prime customers, they are
less volatile with lower delinquency
degradation during times of economic
crisis. The quality of our loan originations
and performance of the overall portfolio
provide confi dence in future stable
credit performance and overall results.
We have demonstrated since 2001 a
consistency of managing through a
variety of changes to our environment
and have proven that our resilience
allows us to persevere and continue to
off er a path to a better fi nancial future
for our customers.
Additionally, we have embedded the
implementation of the 35% maximum
allowable rate of interest, alongside
our own strategy to reduce the cost of
borrowing for our customers by passing
along rate reductions as we scale. As
such, our interest yield currently at 29%
will continue its intended decline to
approximately 26% over the next 3 years.
I remain grateful to the entire goeasy
team for their drive and passion that
helped produce another record year for
our Company. Our team genuinely cares
deeply about delivering high quality
fi nancial products to our customers and
merchant partners, in a transparent and
frictionless manner. Together we are on
a mission to put everyday Canadians on
the path to a better tomorrow.
We
are
excited
about
what
lies
ahead. The resilience, innovation, and
dedication of our 2,500 team members
gives me full confi dence that goeasy
will continue to deliver a signifi cant
return for our shareholders in 2025 and
beyond, with industry-leading results
while supporting hundreds of thousands
of Canadians in their fi nancial journeys.
Thank you for your continued trust
and confi dence. It's been a privilege to
once again lead the goeasy team and I
look forward to another year of shared
success and record beating results.
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Track record of producing industry leading returns for shareholders
Our business generates superior returns, having delivered an average ROE of 26.40% over the last 5 years. We have established credit
and underwriting practices to prudently manage risk, resulting in long term stable credit performance. We maintain a strong balance
sheet with diversifi ed sources of funding, resulting in signifi cant funding capacity to execute on our growth initiatives.
$1.9B
>21%
11
24,570%
Target ROE
Years of dividend increase
Total Shareholder Return
(2001 - December 2024)
Liquidity to fund organic
growth forecast
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SHAREHOLDER RETURNS
Shareholder
returns
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goeasy has established ourselves as one of Canada’s most disciplined lenders. At the
heart of our long-term success lies a robust credit adjudication framework, advanced
risk analytics, and a data-driven culture that prioritizes prudent lending without
compromising growth. We have consistently demonstrated our ability to balance
strong loan originations with sound underwriting practices, resulting in consistent
performance and resilient portfolio quality.
Our proprietary credit models leverage decades of lending data, enabling dynamic
adjustments to risk thresholds and pricing strategies based on borrower profiles,
macroeconomic conditions, and evolving consumer behaviours. This precision in risk
segmentation has been key to delivering low and stable charge-off rates even during
periods of economic uncertainty, such as the pandemic or the recent inflationary
environment. We continue to outperform expectations, and consistently maintain net
charge-offs within our long-term target range of 8% to 10%, even as we’ve scaled to
$4.6 billion in gross consumer loan receivables. We've achieved this while growing our
originations and expanding into new lending verticals, demonstrating the scalability of
our credit infrastructure and the repeatability of our underwriting success.
Our ability to manage credit is further underpinned by a robust collections infrastructure
and highly disciplined account management strategies. We apply a tailored approach
that reflects the unique needs of our customer base which enables us to maintain
strong repayment performance while fostering long-term relationships. We've also
made significant investments in technology, enabling real-time monitoring of credit
performance and early identification of potential delinquencies. These capabilities
translate into faster response times, better customer engagement, and ultimately,
stronger credit outcomes.
RISK AND ANALYTICS
Risk and
analytics
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Provide everyday
Canadians a
path to a better
tomorrow, today
OUR MISSION
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Our executive
leadership team
FARHAN ALI KHAN
EXECUTIVE VICE-PRESIDENT & CHIEF STRATEGY
AND CORPORATE DEVELOPMENT OFFICER
HAL KHOURI
EXECUTIVE VICE-PRESIDENT
& CHIEF FINANCIAL OFFICER
DAVID COOPER
EXECUTIVE VICE-PRESIDENT & CHIEF PEOPLE OFFICER
SABRINA ANZINI
EXECUTIVE VICE-PRESIDENT & CHIEF LEGAL OFFICER
PATRICK ENS
PRESIDENT, EASYFINANCIAL & EASYHOME
JASON APPEL
EXECUTIVE VICE-PRESIDENT & CHIEF RISK OFFICER
MICHAEL EUBANKS
EXECUTIVE VICE-PRESIDENT
& CHIEF INFORMATION OFFICER
ALI METEL
DAN REES
PRESIDENT, LENDCARE
CHIEF EXECUTIVE OFFICER
OUR LEADERS
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Our
brands
Launched in 1990, easyhome is Canada’s largest lease-to-
own retailer. It provides everyday Canadians with brand-name
household furniture, appliances, and electronics. The brand is
supported by 134 retail locations and an e-commerce platform.
Launched in 2006, easyfinancial is the consumer lending division
of goeasy. It offers a full suite of lending products including
unsecured personal loans and home equity installment loans.
Customers can transact seamlessly through an omni-channel
model that includes online and mobile platforms, as well as 295
locations across Canada.
Launched in 2004, and acquired in 2021, LendCare is the
point-of-sale financing division of goeasy. It allows over 10,800
merchants to offer a full spectrum of consumer lending for
Automotive, Powersports, Retail, Healthcare, Medical, Dental
and Veterinary financing.
goeasy Ltd. is a Canadian company, headquartered
in Mississauga, Ontario, that provides non-prime
leasing and lending services through its easyhome,
easyfinancial and LendCare brands. Supported
by over 2,500 employees, the Company offers a
wide variety of financial products and services
including unsecured personal loans and home equity
instalment loans, point-of-sale financing through a
large network of merchant partners and lease-to-own
merchandise. Customers can transact seamlessly
through an omni-channel model that includes online
and mobile platforms, over 400 locations across
Canada, and more than 10,800 merchant partners
across Canada. Throughout the Company's history, it
has acquired and organically served approximately
1.5 million Canadians and originated over $16.0 billion
in loans.
OUR BRANDS
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OUR STRATEGY
Our strategy
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We continue to focus on building Canada’s
leading non-prime consumer lender, supported
by a strategy that is deeply connected to helping
our customers improve their fi nancial future
and achieve the quality of life they deserve.
Guided by the strategic pillars that have driven
our business priorities since 2017, our approach
empowers customers to access fi nancing, build
stronger credit, reduce their cost of borrowing
over time and achieve better fi nancial outcomes.
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OUR STRATEGY
Product
range
Through our three brands - easyfinancial, LendCare, and
easyhome - we offer a full suite of non-prime consumer
credit products, which include unsecured personal loans,
home equity loans, lease-to-own, automotive financing,
and point-of-sale financing for powersports, retail and
health care verticals, along with a broad suite of value-add
ancillary services. Over time, we will continue to expand and
grow the products we offer to provide customers with near
to non-prime credit scores with the same type of borrowing
options available to prime consumers through banks or other
traditional lenders.
Market
diversification
As goeasy continues to explore additional avenues for growth,
including future international market expansion, we believe that
Canada continues to provide a substantial runway for growth,
with a $230+ billion non-prime consumer credit market. We
remain focused on adding new dealer and merchant partners
across Canada to increase the distribution of our products to
make them accessible to more Canadians, as well as exploring
new verticals yet to be launched.
Financial
wellness
We aim to help customers understand their credit profile, how
credit works, and what steps they can take to ensure they protect
their credit scores as they work their way towards improving their
credit profile, and eventually moving on to banks for their financing
needs. We provide free financial literacy resources through
goeasy Academy, a dedicated portal that includes hundreds of
articles and tools on how to manage personal finances.
Channel
expansion
We operate three distinct and complementary distribution and
acquisition channels including over 400 retail lending outlets (295
easyfinancial branches and 134 easyhome stores), a robust digital
platform (web and mobile) and point-of-sale financing available
through over 10,800 merchant partners. We will continue to pursue
new opportunities that include expanding our retail network,
developing more dynamic and personalized digital experiences
supported by our mobile app, adding new merchant partners, and
seeking new third-party lending and referral relationships.
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OUR STRATEGY
Our
customer
commitment
In 2024, we continued to put our
customers on a path to a better financial
future. We are proud of the essential
role we play in the financial system,
empowering the 9.6 million Canadians,
who have near to non-prime credit scores
and encounter systemic barriers due to
their credit challenges, by enabling them
to access credit for leasing and lending
products as they work their way towards
improving their credit profile, and being
in a position to eventually move on to
banks and other traditional lenders for
their financing needs.
Our
customers
are
hard-working
everyday Canadian families who work in
a wide range of industries that include
hospitality, public sector, leisure and
retail. On average, they are 43 years old,
with an individual income of approximately
$60,000 per year, 2 children, ~4 years at
their current employer and ~4 years at
their current residence.
Our customers turn to us as a reliable
source of credit to pay for an unplanned
or unexpected bill to lowering their
borrowing costs through consolidating
their debts, from financing a vehicle or
powersports product for their family's
enjoyment to paying for healthcare
expenses such as uninsured dental
work or a veterinary bill, or purchasing
household items such as furniture or
appliances, we provide the resources to
help them finance the quality of life they
deserve.
2
$60K
43
Average age
Average individual income
Average number of children
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We have adjusted our services to support
customers by tailoring lending solutions
and off ering fl exible loan products, such
as adjustable repayment terms to help
customers manage their payments in times
of uncertainty.
As our customers demonstrate consistent
on-time payment behaviour, we have
been able to gradually reduce their cost
of borrowing, qualifying them for lending
products at lower interest rates.
Over time, we have been able to reduce the
weighted average interest rate of our lending
products from 46% to approximately 29%,
passing on the benefi ts of our scale directly
to our customers.
Supporting
Canadians
at every step
1 As measured by an increase in TransUnion Risk Score within 12 months of borrowing from our easyfi nancial brand. 2 Prime credit
is defi ned as opening a trade with a prime bank lender within 12 months of borrowing from our easyfi nancial brand..
1IN3
60%
315K
Loans issued to
enable Canadians to meet
their fi nancial needs
Of our customers
improved their credit score
within the fi rst 12 months of
borrowing from us1
Customers were able to
qualify and obtain fi nancing
from a Schedule 1 or 2 bank
within the fi rst 12 months of
borrowing with us2
OUR STRATEGY
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Our
products
OUR STRATEGY
Furniture and
appliance leasing
Automotive
fi nancing
Powersports
fi nancing
Unsecured
personal loans
Home equity
installment loan
Home
improvement
loan
Retail
fi nancing
Healthcare, medical, veterinary
and dental fi nancing
g
Autom
fi nan
s
imp
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Our
channels
OUR STRATEGY
Established go-to-market
strategy comprised of
multiple channels to connect
with customers
Partner &
3rd party
websites
Online
goeasy
Connect
Call
Centre
>400 Retail
Locations
6,900+ Dealership
Partners
3,900+ Retail
Merchant Partners
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OUR EMPLOYEE EXPERIENCE
Our employee
experience
Our team members are the foundation of our success and the heart of the customer-centric culture we have
built over the last 34 years. Throughout the past three decades, our culture has been built around our Leadership
Principles that include dreaming big, having heart, and operating with a purpose beyond a profit.
Our unique culture prioritizes investing in our people and creating an environment that puts the success
and well-being of our employees first. Our goal is to make work matter for our employees through
challenging and meaningful work, so that we attract and retain the best and brightest through a culture
that champions ambition, growth, respect, and integrity.
Each year, we ask our employees to give feedback on their experience through our Employee Engagement
Survey so that we can direct meaningful investments in their future. In 2024, we achieved a record-high
employee engagement score of 85% reflecting a culture where our people feel valued and supported to
grow their careers.
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OUR EMPLOYEE EXPERIENCE
We invest in career development, growth and engagement:
• Job-specific training, career coaching, leadership development, sponsorships,
tuition assistance and support for external courses
• Semi-annual performance reviews
• Comprehensive succession planning with priority for mission critical roles
• Annual employee engagement survey
• Competitive base pay, monthly bonus plans
• Quarterly and annual performance and leadership awards
• Tuition assistance programs
We support all aspects of employee health and wellbeing:
• Hybrid work for corporate office roles
• Paid leave
• Compassionate care leave
• A chronic disease program
• Maternity and parental top-up benefits
• A RRSP matching program
• Virtual medical access
• Mental health support and financial wellness tools
88%
Believe everyone at goeasy can
succeed to their full potential
86%
Believe they have the opportunity
to use their strengths at work
88%
Believe goeasy has an
outstanding future ahead
85%
Record engagement score
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goeasy commits to enhancing our total rewards off ering on an ongoing basis. This includes modifying and enhancing our incentives,
benefi ts, and rewards to align with what is most important to our employees and refl ective of the current economic and social conditions.
1. Expanding Maternity and Paternity Leave:
Increased maternity leave top-up from 8 weeks to 12 weeks, and increased paternity leave top up from 4 weeks to 8 weeks.
2. Employee Loan Program:
We know this program is very important to our employees, so we continue to off er below market loan rates to employees.
3. Group RRSP Program:
To ensure our employees can take advantage of our Group RRSP program earlier, the waiting period has been lowered from
1 year to 3 months.
4. Cultural Observance Day:
As a Canadian Company, we pride ourselves on a diverse employee base from over 90 nationalities. Eff ective on Monday, June 3,
2024, goeasy employees are able to use one of the fi ve (5) personal days for a cultural observance.
OUR EMPLOYEE EXPERIENCE
Our award-winning culture
2024 Investments
Our award-winning culture refl ects our commitment to employee
growth, inclusion, and excellence, earning recognition for its outstanding
workplace environment and leadership in the industry.
OUR EMPLOYEE EXPERIENCE
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Women In Leadership (WIL) supports female leaders through mentorship, networking
and development programs including speaker series, book clubs and more
OUR EMPLOYEE EXPERIENCE
Annually, we conduct an "I am goeasy" self-identifi cation survey. This survey
helps inform how the organization develops action plans to further drive our
commitment to Diversity, Equity, and Inclusion.
Afro-Canadian Development and Empowerment (ADE) promotes racial equity
by supporting Black talent through mentorship, career development, and policy
changes
CIRCLE fosters a safe and supportive space through programs, events, and
initiatives to support employees who identify as Indigenous
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. Additionally, four Employee Resource Groups have been formed,
by employees for employees.
PRIDE fosters a safe, inclusive workplace by promoting awareness, advocacy, and
education to support and empower employees, regardless of sexual orientation,
gender identity, or expression
We create an inclusive workplace through
Diversity, Equity, and Inclusion
49%
Of management
positions are held by
women
90
Diff erent employee
countries of origin
29%
Of employees
identify as a visible
minority
Diversity in action
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OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY
Our
environmental,
social &
governance
strategy
We are a proud Canadian company dedicated
to fi nancial inclusion. Our ESG approach is a
natural extension of our mission - Providing
Everyday Canadians a Path to a Better
Tomorrow, Today. Through responsible lending,
community investment, sustainable practices,
and good governance, we are working to create
lasting impact.
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OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY
We’re focused on reducing our carbon
footprint
and
resource
use
through
sustainable practices, including minimizing
paper, energy, and emissions, to support a
greener future.
Reducing energy consumption
We continuously strive to reduce our
carbon footprint and energy consumption.
Over the past year, we retrofitted energy-
efficient LED lighting in 30 of our more
than 400 retail locations, a step toward
lowering energy consumption across
retail locations. By collaborating with
suppliers to optimize shipping distances
and cut down on packaging waste, we’re
taking meaningful steps to lower our
overall carbon footprint.
Building with purpose
Our new branch designs incorporate
sustainability at every level, using furniture
made
from
GREENGUARD
Certified
materials that meet rigorous emission
standards. With designs containing up
to 65% recycled content, our spaces
reflect a thoughtful approach to reducing
environmental impact while maintaining
functionality and modern appeal.
Pilot program with Recycle Your
Batteries Canada!
In 2024, we launched a pilot program in
partnership with Recycle Your Batteries
Canada! to promote responsible battery
recycling through convenient collection
points and awareness initiatives. This
initiative successfully diverted batteries
from landfills, reinforcing our commitment
to
environmental
stewardship
and
sustainable waste management.
584
4.8M+
-1%
Reforested trees
in 2024
Paper
consumption offset
YOY total energy
consumption decrease
Our environment
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OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY
Feed Their Future:
goeasy will donate $1.4 million between
2023-2025 to BGC Canada’s Food Fund,
which will provide 350,000 meals and
snacks to children across the country
who attend the BGC Clubs.
Our social
impact
$1.4M
With a strong focus on providing better tomorrows, not only for our customers, but also for our local communities and beyond, goeasy
has contributed over $6.3 million in charitable support to date. This includes total contributions of more than $5 million through our
dedicated 20-year partnership with BGC Canada to help the clubs with their mission of providing safe, supportive places where children
and youth can experience a positive and healthy learning and social environment. Refl ecting on 2024, goeasy, its employees, along with
its merchant and vendor partners, made a meaningful diff erence in many communities across Canada and abroad.
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OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY
goeasy Cares:
Launched in 2024, goeasy Cares is a
powerful initiative that allows us to join
forces and give back to the communities
our employees live and work in, every day.
Each quarter, employees can nominate any
local registered charity that needs help
fundraising for a goal. The inaugural group of
organizations supported included Welcome
Center Shelter (Windsor, ON), Windsor
Humane Society (Windsor, ON), Brockville
Food Bank (Brockville, ON), Operation
Friendship Seniors Society (Edmonton, AB),
The Joyriders (Hunter River, PEI), The Open-
Door Square One (Mississauga, ON).
DK Johnson Award:
To provide our employees an opportunity
to give back to local organizations that
matter most to them, we proudly launched
the D.K. Johnson Community Award. This
award allows employees to nominate
community
projects
or
charitable
organizations that are deserving and close
to their hearts. The winning nomination
is awarded $10,000 to help support
meaningful change.
The Award was created in honour of
Donald K. Johnson - an extraordinary
Canadian philanthropist and goeasy
Ltd. Board Member for over 10 years.
His dedication to philanthropic efforts is
reflected in our mission, and values and
is a crucial part of our DNA.
David Lewis Scholarship Fund:
We are committed to supporting our
employees in meaningful ways that have
a positive impact on their lives and their
families. Every August, we offer the David
Lewis Scholarship Fund to support the
child of an employee who is pursuing a
post-secondary education. This esteemed
scholarship provides the winning student
with $10,000 to assist them in financing their
higher education.
The David Lewis Scholarship Fund was
established in honour of David Lewis, a
goeasy Board Member who faithfully served
our Company for over two decades. Over
the years, we have received hundreds of
applications and have contributed more
than $100,000 to this program.
$90K
$100K
goVolunteer Program:
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 2024, goeasy achieved the
highest participation yet in this initiative.
Community awards
granted to date
Scholarships
granted to date
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Our Board
of Directors
OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY
JONATHAN TÉTRAULT
INDEPENDENT DIRECTOR
KAREN BASIAN
LEAD DIRECTOR
JASON MULLINS
DIRECTOR
INDEPENDENT DIRECTOR
TARA DEAKIN
HONOURABLE JAMES MOORE
INDEPENDENT DIRECTOR
INDEPENDENT DIRECTOR
RADHIKA KAKKAR
INDEPENDENT DIRECTOR
SEAN MORRISON
DONALD K. JOHNSON
DAVID INGRAM
INDEPENDENT DIRECTOR
DAVID APPEL
CHAIRMAN EMERITUS
EXECUTIVE CHAIRMAN
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Ethical business
conduct
The Board has adopted a written Code
of Business Conduct (the “Code”) for the
Company’s directors, officers and employees
that sets out the Board’s expectations for the
conduct of such 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 diversity
and has committed to a Board that is
diverse in a variety of ways, including:
experience, perspective, education, and
gender. Through the Company’s 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 together a board that will support
goeasy in achieving the highest level of
performance for its shareholders.
Board of Director
committees
The Board has established three committees
to assist with its responsibilities: the
Audit Committee, the Human Resources
Committee, and the Corporate Governance,
Nominating and Risk Committee.
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 of whom are
independent. Each member of the Audit
Committee is considered by the Board of
Directors to be financially literate within
the meaning of applicable securities laws
by way of their business experience and
educational background.
Human Resources
committee
The Human Resources Committee is
responsible for, among other things,
reviewing and recommending the form and
adequacy of compensation arrangements
for
directors
and
executive
officers,
having regard to associated risks and
responsibilities. Compensation includes 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
OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY
Our
governance
Maintaining strong
governance practices
across goeasy is essential
to the effective and
sustainable operation
of the Company. goeasy
strives to maintain a
comprehensive set of
policies, controls
and procedures designed
to keep the Company
secure, while also
enhancing disclosure
to all shareholders.
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| 2024 ANNUAL REPORT
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 Radhika Kakkar,
all of whom are independent.
Corporate
governance,
nominating & 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 four directors of the Corporation, Hon.
James Moore (Chair), David Appel, Tara
Deakin, and Jonathan Tétrault, all of whom
are independent.
Executive
compensation
governance &
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
executive compensation policy is designed
to incorporate a pay-for performance
philosophy. The philosophy has been
established to encourage and reward
executive officers on the basis of individual
and business performance. Elements of
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 of the Chief
Executive Officer. Performance targets are
based on financial measurements agreed
to by the Board. Each of these elements fits
into the Company’s overall compensation
strategy by aligning individual and corporate
performance to business strategies.
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 &
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.
OUR ENVIRONMENTAL, SOCIAL AND GOVERNANCE STRATEGY
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| 2024 ANNUAL REPORT
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| 2024 ANNUAL REPORT
Annual
revenue
(In dollar millions)
19.4%
CAGR SINCE 2014
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
$609
$653
$827
$1,019
$506
$402
$348
$304
$259
$1,523
FINANCIAL SUMMARY
2024
$1,250
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| 2024 ANNUAL REPORT
Annual
net income
(In dollar millions)
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 42 of the Company’s MD&A year ended December 31, 2024 for FY 24 and FY 23 metrics, 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, 4) “Key Performance Indicators and Non-IFRS Measures” section on page 51 of the Company’s MD&A year ended
December 31, 2018 for FY 18 and FY17 metrics, 5) “Key Performance Indicators and Non-IFRS Measures” section on page 35 of the Company’s MD&A year ended December 31, 2016 for FY 16 and FY 15 metrics,
and 6) “Key Performance Indicators and Non-IFRS Measures” section on page 29 of the Company’s MD&A year ended December 31, 2014 for FY 14 metrics.
Reported Net Income
Adjusted Net Income1
30.3%
CAGR SINCE 2014
31.3%
CAGR SINCE 2014
$80
$118
$175
$192
$53
$42
$33
$24
$19
$64
$137
$245
$140
$53
$36
$31
$24
$20
$283
$290
2023
2023
2022
2022
2021
2021
2020
2020
2019
2019
2018
2018
2017
2017
2016
2016
2015
2015
2014
2014
FINANCIAL SUMMARY
2024
$248
2024
$243
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Annual
EPS
(Earnings per Share)
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 42 of the Company’s MD&A year ended December 31, 2024 for FY 24 and FY 23 metrics, 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, 4) “Key Performance Indicators
and Non-IFRS Measures” section on page 51 of the Company’s MD&A year ended December 31, 2018 for FY 18 and FY17 metrics, 5) “Key Performance Indicators and Non-IFRS Measures” section on page 35 of the Company’s MD&A year ended December
31, 2016 for FY 16 and FY 15 metrics, and 6) “Key Performance Indicators and Non-IFRS Measures” section on page 29 of the Company’s MD&A year ended December 31, 2014 for FY 14 metrics.
Reported Diluted EPS
27.6%
CAGR SINCE 2014
$8.76
$4.17
$14.62
$8.42
$3.56
$2.56
$2.23
$1.69
$1.42
$16.30
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
Adjusted Diluted EPS1
28.7%
CAGR SINCE 2014
$5.17
$7.57
$10.43
$11.55
$3.56
$2.97
$2.38
$1.69
$1.34
$16.71
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
FINANCIAL SUMMARY
2024
$14.48
2024
$14.21
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| 2024 ANNUAL REPORT
Notes:
1 These are non-IFRS ratios. Refer to 1) “Key Performance Indicators and Non-IFRS Measures” section on page 42 of the Company’s MD&A year ended December 31, 2024 for FY 24 metric, 2) “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 and FY 22 metrics, 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.
2 These are non-IFRS measures. Refer to 1) “Key Performance Indicators and Non-IFRS Measures” section on page 42 of the Company’s MD&A year ended December 31, 2024 for FY 24 metric, 2) “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 and FY 22 metrics, 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.
3 This is a capital management measure. Refer to 1) “Financial Condition” section on page 54 of the Company’s MD&A year ended December 31, 2024 for FY 24 metric, 2) “Financial Condition” section on page 55 of the Company’s MD&A year ended December 31, 2023 for FY 23 and FY 22
metrics, 2) “Financial Condition” section on page 61 of the Company’s MD&A year ended December 31, 2021 for FY 21 and FY20 metrics
4 Comparable efficiency ratio measure for the year 2020 was not published; comparable reported and adjusted return on receivables financial ratios for the years 2020 to 2021 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
FINANCIAL SUMMARY
(in $000s except per share amounts, store counts, employee counts, percentages and ratios)
2024
2023
2022
2021
2020
INCOME STATEMENT
Revenue
1,523,289
1,250,069
1,019,336
826,722
652,922
Operating income
609,657
476,518
332,407
281,003
216,436
Net income
283,110
247,898
140,161
244,943
136,505
Diluted earnings per share
16.30
14.48
8.42
14.62
8.76
BALANCE SHEET
Cash
251,381
144,577
62,654
102,479
93,053
Gross consumer loans receivable
4,596,115
3,645,202
2,794,694
2,030,339
1,246,840
Lease assets
40,973
45,187
48,437
47,182
49,384
Total assets
5,194,536
4,164,167
3,302,889
2,596,153
1,501,916
External debt3
3,629,803
2,819,665
2,229,260
1,552,679
887,749
Shareholders’ equity
1,201,063
1,054,077
869,688
789,913
443,512
FINANCIAL METRICS
Revenue growth
21.9%
22.6%
23.3%
26.6%
7.1%
Operating margin
40.0%
38.1%
32.6%
34.0%
33.1%
Adjusted operating margin1
41.2%
39.3%
36.2%
38.3%
33.1%
Efficiency ratio1,4
25.3%
30.2%
33.6%
37.2%
-
Adjusted net income2
290,142
243,175
192,261
174,759
117,646
Adjusted diluted earnings per share1
16.71
14.21
11.55
10.43
7.57
Return on receivables4
6.8%
7.6%
5.8%
-
-
Adjusted return on receivables1,4
7.0%
7.5%
8.0%
-
-
Return on assets
6.1%
6.7%
4.8%
11.5%
9.8%
Adjusted return on assets1
6.2%
6.5%
6.6%
8.2%
8.5%
Return on equity
24.9%
25.9%
17.6%
36.7%
36.1%
Adjusted return on equity1
25.5%
25.4%
24.2%
26.2%
31.1%
Return on tangible common equity1,4
32.8%
36.7%
28.4%
50.7%
38.3%
Adjusted return on tangible common equity1,4
32.5%
34.6%
36.4%
35.3%
33.0%
Net debt to net capitalization3
0.74
0.72
0.71
0.65
0.64
Annual dividend per share
4.68
3.84
3.64
2.64
1.80
OPERATING METRICS
Gross loan originations
3,166,227
2,709,194
2,377,606
1,594,480
1,033,130
Growth in gross consumer loans receivable
950,913
850,508
764,355
783,499
136,207
Net charge-offs as a percentage of average gross consumer loans receivable
9.2%
8.9%
9.1%
8.8%
10.0%
Free cash flows from operations before net growth in gross
consumer loans receivable2
481,467
377,291
258,474
260,104
210,619
OPERATIONS
Total store count:
easyfinancial
295
300
302
294
266
easyhome
134
144
154
158
161
Employees
2,500
2,463
2,492
2,394
2,024
FINANCIAL SUMMARY
36
36
| 2024 ANNUAL REPORT
Management’s
discussion
and analysis
of financial
condition
and results
of operations
For the year ended
December 31, 2024
37
| 2024 ANNUAL REPORT
Date: February 13, 2025
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, 2024 compared to December 31, 2023, and
the consolidated results of operations for the three-month period and year ended December 31, 2024, compared with the corresponding
periods of 2023. 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, 2024. 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.
Management’s discussion and analysis of
financial condition and results of operations
38
| 2024 ANNUAL REPORT
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 2,500 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, more than 400 locations across Canada, and point-of-sale financing
offered in the retail, powersports, automotive and healthcare verticals, through over 10,800 merchant partners across Canada. Throughout the
Company’s history, it has acquired and organically served approximately 1.5 million Canadians and originated over $16.0 billion in loans.
As at December 31, 2024, the Company operated 295 easyfinancial locations (including 2 kiosks within easyhome stores and 3 operation
centres) and 134 easyhome stores (including 34 franchises).
With 34 years of leasing and lending experience, goeasy has developed a deep understanding of the non-prime Canadian consumer. Of the
32.6 million Canadians with an active credit file as at December 31, 2024, 9.6 million had credit scores less than 720 and are deemed to be
non-prime. Collectively, these Canadians carry $231.4 billion in non-mortgage credit balances, up from $217.9 billion in 2023, 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$1.61 billion senior unsecured notes,
$150 million senior unsecured notes, $125 million secured borrowings and a $550 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 $700
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 & Poor’s 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 2024 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 2024 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 over 70 nationalities who believe strongly in giving
back to communities in which it operates. To date, goeasy has raised and donated over $6.3 million to support its long-standing partnerships
with BGC Canada and many other local charities.
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, 2024, 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.
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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 $125,000 with rates between
9.9% and 35.0%, 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 $27,600 with repayment periods from 9 to 84 months, while secured installment loans typically range in size from $15,000 to $125,000 with
repayment periods of 48 to 240 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 295 easyfinancial locations (including 2 kiosks within easyhome
stores and 3 operations centres) in 10 Canadian provinces as at December 31, 2024. 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 10,800 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.
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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 improves 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 2024, easyhome accounted for 10% of consolidated revenue and
leasing revenue accounted for 66% of easyhome revenue.
Through its 134 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, 2024, there are 134 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.
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.
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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, 2024, 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 429 retail lending outlets (295
easyfinancial branches and 134 easyhome stores where loans are offered as of December 31, 2024), a robust digital platform (web
and mobile) and point-of-sale financing available through over 10,800 merchant partners. Based on the unit volume of applications and
originations in the most recent quarter, the retail branch channel represented 11% of application volume and 36% of loan originations,
online represented 67% of application volume and 35% of originations and point-of-sale financing represented 22% applications and 29% of
originations. 50% of loan originations were funded and/or serviced in a branch location, 40% were funded and/or serviced through a point-
of-sale channel, with the remaining 10% 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 goeasy Connect 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 9.6 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.
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 9.6 million non-prime Canadians, 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 2024, the company has reduced the weighted average
interest charged on its loans from approximately 46% to approximately 29.3%.
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.
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
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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 2024 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 $1.87 billion in total
liquidity and funding capacity, along with a conservative financial leverage position. The business also continued to prove its
strength and resilience amidst economic volatility.
The Company’s 2024 forecasts, assumptions and risk factors were disclosed in its December 31, 2024 MD&A. The Company has
revised its forecasts in its June 30, 2024 MD&A. The Company’s actual performance against its forecast for fiscal 2024 is as follows:
ACTUAL RESULTS
FOR 2024
UPDATED FORECASTS
FOR 2024
OUTCOME
Gross consumer loans receivable at year-end
$4.60 billion
$4.55 - $4.65 billion
Consistent with forecast
Total Company revenue
$1.52 billion
$1.50 - $1.60 billion
Consistent with forecast
Total yield on consumer loans (including ancillary products)1
34.1 %
33.0% - 35.0%
Consistent with forecast
Net charge offs as a percentage of average
gross consumer loans receivable
9.2%
8.0% - 10.0%
Consistent with forecast
Total Company operating margin (reported/adjusted1,2)
40.0%/41.2%
39% +
Consistent with forecast
Return on equity (reported/adjusted1,2)
24.9%/25.5%
21% +
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, which management believes are not reflective of underlying business performance. These adjusting items include non-recurring advisory costs,
integration costs and amortization of intangible assets related to the acquisition of LendCare, net investment income, refinancing costs and discount related to the repurchase of 2026 Notes, and fair value change on prepayment options related Notes
Payable. 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 2025 through 2027. The periods of 2025 and 2026 have been updated
to reflect the most recent outlook.
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FORECASTS
FOR 2025
FORECASTS
FOR 2026
FORECASTS
FOR 2027
Gross consumer loans receivable at year end
$5.40 - $5.70 Billion
$6.40 - $6.70 Billion
$7.35 - $7.75 Billion
Total Company revenue
$1.62 - $1.82 Billion
$1.80 - $2.00 Billion
$2.00 - $2.20 Billion
Total yield on consumer loans (including ancillary
products)1
31.0% - 32.5%
29.0% - 31.0%
29.0% - 31.0%
Net charge offs as a percentage of average gross
consumer loans receivable
7.75% - 9.75%
7.5% - 9.5%
7.5% - 9.5%
Total Company operating margin
41% +
42.5% +
43% +
Return on equity
23% +
23% +
23% +
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.
• 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.
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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, 2024
Financial Highlights and Accomplishments
• In 2024, 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, while staggering maturities to ensure that future refinancings are not
concentrated in any fiscal year, thereby mitigating any interest rate repricing risk.
• On February 23, 2024, the Company issued US$400 million of 7.625% senior unsecured notes payable maturing on July 1,
2029 (the “2029 Notes”) with interest payable semi-annually on January 1 and July 1 of each year. The 2029 Notes include
certain prepayment options which are derivatives embedded in the notes. Concurrent with the issuance of 2029 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 2029 Notes at a fixed exchange rate of US$1.000 = CAD1.353, thereby
hedging the 2029 Notes at a CAD interest rate of 7.195% until July 1, 2028.
• On July 25, 2024, the Company issued an additional US$200 million of 2029 Notes (the “Additional 2029 Notes”) at a price
of US$1,018.75 per US$1,000 principal amount. Concurrent with the issuance of the Additional 2029 Notes, the Company
entered into derivative financial instruments 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 Additional 2029
Notes until July 1, 2028, at a fixed exchange rate of US$1.000 = CAD1.3758, thereby hedging the Additional 2029 Notes at
a CAD interest rate of 6.936% until July 1, 2028.
• On May 28, 2024, the Company amended its Secured Borrowings to provide for $125 million of incremental funding
through the sale of consumer loans until May 31, 2025. The facility continues to bear an interest equal to an interpolated
Government of Canada Bonds (“GOCB”) rate plus an initial spread of 310 bps.
• On July 19, 2024, the Company amended its Revolving Credit Facility to increase the size of the facility from $370 million
to $550 million, with the maturity extended to July 18, 2027. The Company also has an ability to exercise the accordion
feature under its Revolving Credit Facility to add an additional $150 million in borrowing capacity.
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• On October 21, 2024, the Company announced its commencement of a cash tender offer to repurchase any and all of its
outstanding 4.375% senior unsecured notes payable maturing on May 1, 2026 (“2026 Notes”). The tender offer expired
on October 30, 2024. On November 4, 2024, the Company extinguished a total of US$255.4 million of 2026 Notes that
were validly tendered and accepted for repurchase at a price of US$999.58 per US$1,000 principal amount, resulting to a
$1.5 million discount recognized in finance costs in the consolidated statements of income. In addition, the Company de-
designated US$255.4 million of the related cross-currency swaps as cash flow hedges and immediately unwound them.
As a result of repurchasing these notes and the unwinding of the related cross-currency swaps, the Company incurred
tender offer fees, recognized the remaining unamortized deferred financing costs related to these notes, realized
derivative loss, and reclassified the net change in cash flow hedge from OCI to the consolidated statements of income
resulting in a total refinancing cost of $9.4 million recognized in finance costs in the consolidated statements of income.
• On November 4, 2024, the Company issued US$400 million of 6.875% senior unsecured notes payable (the “2030 USD
Notes”) and $150 million of 6.000% senior unsecured notes payable (the “2030 CAD Notes”) (the 2030 USD Notes and 2030
CAD Notes are collectively referred to as the “2030 Notes”) with interest payable semi-annually on May 15 and November
15 of each year and mature on May 15, 2030. The 2030 Notes include certain prepayment options, which are derivatives
embedded in the notes. Concurrent with the issuance of 2030 USD 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 2030 USD Notes at a fixed exchange rate of US$1.000 = CAD1.3843, thereby hedging the 2030 USD Notes at
a CAD interest rate of 5.977% until May 15, 2029.
• On December 18, 2024, the Company increased its Revolving Securitization Warehouse Facility II from $500 million to
$700 million and extended the maturity date to December 15, 2026. 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, 2024, the Company had a cash position of $251.4 million, which included $83.5 million in restricted
cash related to its Revolving Securitization Warehouse Facilities and Secured Borrowings, and had borrowing capacities
of $1.62 billion under its existing revolving credit facilities, bringing its total liquidity to $1.87 billion. The current total
liquidity, excluding future enhancements or diversification of funding sources, provides adequate growth capital for the
Company to execute its organic growth plans.
• The Company reported record revenue for the year ended December 31, 2024 of $1.52 billion, an increase of $273.2 million, or
21.9% compared to 2023. The increase was primarily driven by record organic growth of the Company’s consumer loan portfolio.
• Gross consumer loans receivable increased to $4.60 billion as at December 31, 2024 from $3.65 billion as at December 31, 2023,
an increase of $950.9 million, or 26.1%. The increase in consumer loans receivable was driven by strong volume of applications
for credit, leading to strong loan growth across several product and acquisition channels, including unsecured lending, home
equity loans, automotive financing and point-of-sale financing.
• Net charge offs for the year as a percentage of average gross consumer loans receivable were 9.2%, 30 bps higher compared to
2023 of 8.9%, primarily due to a relatively weaker macroeconomic environment, partially moderated by the implementation of
tighter credit & underwriting and enhanced collection measures and an increase in the proportion of the consumer loan portfolio
secured by physical assets. The Company’s net charge off rate was in line with the targeted range for 2024 of 8.0% to 10.0%.
• During the year, the net change in allowance for future credit losses was $84.3 million, compared to $52.3 million in 2023, an
increase of $32.0 million. This increase was primarily driven by higher growth in consumer loans receivable and an adjustment
in the rate of allowance for expected credit losses due to unfavourable changes in the macroeconomic forecast data used in the
Company’s allowance model under IFRS 9, which resulted in a provision rate of 7.61%, up from 7.28% as at December 31, 2023.
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• Total Company reported record total operating income of $609.7 million, up $133.1 million, or 27.9% compared to 2023.
The Company also reported a record operating margin of 40.0%, up from the 38.1% in 2023. During the year, the Company
incurred adjusting items that are outside of its normal business activities, which management believes are not reflective of the
Company’s underlying business performance. These adjusting items include non-recurring advisory costs, 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 $628.2 million, up $137.0 million, or 27.9%, compared to 2023. The increase in adjusted
operating income was mainly driven by higher revenue associated with the record loan growth in the year and continued
improvement in operating leverage. The Company also reported a record adjusted operating margin1 of 41.2%, up from 39.3%
in 2023.
• During the year, the Company recognized net investment income of $3.1 million, mainly due to fair value changes on the
Company’s investments and realized fair value gain from the disposal of its investment in listed and actively traded companies,
compared to $9.8 million of net investment income in 2023.
• The Company reported record net income of $283.1 million, or $16.30 per share on a diluted basis, up 14.2% and 12.6%,
respectively, compared to 2023. During the year, the Company incurred adjusting items including non-recurring advisory costs,
integration costs and amortization of intangible assets related to the acquisition of LendCare, net investment income, refinancing
costs and discount related to the repurchase of 2026 Notes, and fair value change on prepayment options related Notes Payable.
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 $290.1 million and $16.71 per share on a diluted basis, respectively. On this basis, adjusted net income and adjusted diluted
earnings per share increased by 19.3% and 17.6%, respectively. The increase in adjusted net income was primarily driven by
record adjusted operating income, partially offset by incremental finance costs due to higher borrowing levels to fund growth of
the Company’s lending business and a higher cost of borrowing due to an increasing rate environment.
• Return on equity was 24.9%, down from 25.9% in 2023, primarily due to the higher level of shareholders’ equity. Adjusted return
on equity1 was 25.5%, relatively consistent with 2023. Excluding goodwill and acquired intangible assets, the adjusted return
on tangible common equity1 was 32.5%, down from 34.6% in 2023. The decline in adjusted return on tangible common equity
was mainly driven by a higher level of tangible common equity and improved debt leverage position, partially offset by higher
adjusted net income, as discussed above.
• In consideration of the improved earnings achieved in 2024 and the Company's confidence in its continued growth and access
to capital going forward, the Board of Directors approved a 24.8% increase to the annual dividend from $4.68 per share to $5.84
per share in 2025.
1 Adjusted operating income and adjusted net income are non-IFRS measures. Adjusted operating margin, adjusted diluted earnings per share, adjusted return on equity and adjusted tangible common equity are non-IFRS ratios. Non-IFRS measures and non-IFRS
ratios are not determined in accordance with IFRS, do not have standardized meanings and may not be comparable to similar financial measures presented by other companies. See descriptions in section “Key Performance Indicators and Non-IFRS Measures”.
47
| 2024 ANNUAL REPORT
Summary of financial results and key performance indicators
YEAR ENDED
($ IN 000’S EXCEPT EARNINGS PER SHARE AND PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2023
VARIANCE
$ / BPS
VARIANCE
% CHANGE
Summary Financial Results
Revenue
1,523,289
1,250,069
273,220
21.9%
Bad debts
467,764
341,639
126,125
36.9%
Other operating expenses
361,973
345,581
16,392
4.7%
EBITDA1
667,202
539,085
128,117
23.8%
EBITDA margin1
43.8%
43.1%
70 bps
1.6%
Depreciation and amortization
83,895
86,331
(2,436)
(2.8%)
Operating income
609,657
476,518
133,139
27.9%
Operating margin
40.0%
38.1%
190 bps
5.0%
Other income
3,132
9,771
(6,639)
(67.9%)
Finance costs
225,492
149,334
76,158
51.0%
Effective income tax rate
26.9%
26.4%
50 bps
1.9%
Net income
283,110
247,898
35,212
14.2%
Diluted earnings per share
16.30
14.48
1.82
12.6%
Return on receivables
6.8%
7.6%
(80 bps)
(10.5%)
Return on assets
6.1%
6.7%
(60 bps)
(9.0%)
Return on equity
24.9%
25.9%
(100 bps)
(3.9%)
Return on tangible common equity1
32.8%
36.7%
(390 bps)
(10.6%)
Adjusted Financial Results1,2
Other operating expenses
386,017
377,574
8,443
2.2%
Efficiency ratio
25.3%
30.2%
(490 bps)
(16.2%)
Operating income
628,195
491,160
137,035
27.9%
Operating margin
41.2%
39.3%
190 bps
4.8%
Net income
290,142
243,175
46,967
19.3%
Diluted earnings per share
16.71
14.21
2.50
17.6%
Return on receivables
7.0%
7.5%
(50 bps)
(6.7%)
Return on assets
6.2%
6.5%
(30 bps)
(4.6%)
Return on equity
25.5%
25.4%
10 bps
0.4%
Return on tangible common equity
32.5%
34.6%
(210 bps)
(6.1%)
Key Performance Indicators
Segment Financials
easyfinancial revenue
1,370,414
1,096,817
273,597
24.9%
easyfinancial operating margin
48.6%
48.7%
(10 bps)
(0.2%)
easyhome revenue
152,875
153,252
(377)
(0.2%)
easyhome operating margin
29.2%
24.1%
510 bps
21.2%
Portfolio Indicators
Gross consumer loans receivable
4,596,115
3,645,202
950,913
26.1%
Growth in consumer loans receivable
950,913
850,508
100,405
11.8%
Gross loan originations
3,166,227
2,709,194
457,033
16.9%
Total yield on consumer loans (including ancillary products)1
34.1%
35.3%
(120 bps)
(3.4%)
Net charge offs as a percentage of average gross consumer loans receivable
9.2%
8.9%
30 bps
3.4%
Free cash flows from operations before net growth in gross consumer loans receivable1
481,467
377,291
104,176
27.6%
Potential monthly leasing revenue1
6,875
7,654
(779)
(10.2%)
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.
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| 2024 ANNUAL REPORT
Summary of financial results by reporting segment
YEAR ENDED DECEMBER 31, 2024
($ IN 000'S EXCEPT EARNINGS PER SHARE)
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
Revenue
Interest income
1,081,843
39,979
-
1,121,822
Lease revenue
-
95,407
-
95,407
Commissions earned
261,630
14,096
-
275,726
Charges and fees
26,941
3,393
-
30,334
1,370,414
152,875
-
1,523,289
Operating expenses
Bad debts
452,558
15,206
-
467,764
Other operating expenses
212,451
54,987
94,535
361,973
Depreciation and amortization
38,995
38,096
6,804
83,895
704,004
108,289
101,339
913,632
Operating income (loss)
666,410
44,586
(101,339)
609,657
Other income
3,132
Finance costs
(225,492)
Income before income taxes
387,297
Income taxes
104,187
Net income
283,110
Diluted earnings per share
16.30
YEAR ENDED DECEMBER 31, 2023
($ IN 000'S EXCEPT EARNINGS PER SHARE)
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
Revenue
Interest income
853,228
35,700
-
888,928
Lease revenue
-
99,848
-
99,848
Commissions earned
220,363
14,122
-
234,485
Charges and fees
23,226
3,582
-
26,808
1,096,817
153,252
-
1,250,069
Operating expenses
Bad debts
327,196
14,443
-
341,639
Other operating expenses
197,358
59,610
88,613
345,581
Depreciation and amortization
37,747
42,259
6,325
86,331
562,301
116,312
94,938
773,551
Operating income (loss)
534,516
36,940
(94,938)
476,518
Other income
9,771
Finance costs
(149,334)
Income before income taxes
336,955
Income taxes
89,057
Net income
247,898
Diluted earnings per share
14.48
49
| 2024 ANNUAL REPORT
Portfolio performance
Consumer Loans Receivable
The gross consumer loans receivable portfolio increased to $4.60 billion as at December 31, 2024, from $3.65 billion as at December
31, 2023, an increase of $950.9 million, or 26.1%. Loan originations for the year were $3.17 billion, up 16.9% from the same period of
2023. The increase in consumer loans receivable was driven by strong volume of applications for credit, leading to strong loan growth
across several product and acquisition channels, including unsecured lending, home equity loans, automotive financing and point-of-
sale financing.
The total annualized yield, including loan interest, fees and ancillary products, realized by the Company on its average consumer loans
receivable was 34.1%, down 120 bps from the same period of 2023. Total annualized yield decreased due to: i) the strong organic
growth of secured loan products which carry lower rates of interest such as home equity loans, automotive financing, and point-of-sale
financing; and ii) a higher proportion of larger dollar value loans which have reduced pricing on certain ancillary products.
Bad debt expense increased to $467.8 million for the year ended December 31, 2024, from $341.6 million in 2023, an increase of $126.1
million, or 36.9%. The following table details the components of bad debt expense:
YEAR ENDED
($ IN 000’S)
DECEMBER 31, 2024
DECEMBER 31, 2023
Provision required due to net charge offs
383,494
289,321
Impact of loan book growth
60,808
57,466
Impact of change in allowance for expected credit losses rate
23,462
(5,148)
Net change in allowance for credit losses
84,270
52,318
Bad debt expense
467,764
341,639
Bad debt expense increased by $126.1 million due to the following factors:
(i) Net charge offs increased from $289.3 million for the year ended December 31, 2023 to $383.5 million in 2024, an increase of
$94.2 million. Net charge offs in the year as a percentage of the average gross consumer loans receivable on an annualized
basis were 9.2%, up from 8.9% in 2023, primarily due to a relatively weaker macroeconomic environment, partially moderated
by the implementation of tighter credit & underwriting and enhanced collection measures and an increase in the proportion
of the consumer loan portfolio secured by physical assets. The Company’s net charge off rate was in line with the targeted
range for 2024 of 8.0% to 10.0%.
(ii) The net change in allowance for credit losses was $84.3 million, compared to $52.3 million in 2023, an increase of $32.0 million.
This increase was primarily driven by higher growth in consumer loans receivable and an adjustment in the rate of allowance
for expected credit losses due to unfavourable changes in the macroeconomic forecast data used in the Company’s allowance
model under IFRS 9, which resulted in a provision rate of 7.61%, up from 7.28% as at December 31, 2023.
easyhome Leasing Portfolio
The leasing portfolio, as measured by potential monthly leasing revenue as at December 31, 2024, was $6.9 million, down from $7.7
million as at December 31, 2023. The easyhome leasing business is a mature business that has experienced a gradual decline in sales
volume, as some consumer demand has shifted to alternate forms of financing purchases of everyday household items.
Revenue
Revenue for the year was $1.52 billion, compared to $1.25 billion in 2023, an increase of $273.2 million, or 21.9%. Revenue growth was
mainly driven by the strong organic growth of the Company’s consumer loan portfolio.
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| 2024 ANNUAL REPORT
easyfinancial – Revenue was $1.37 billion, an increase of $273.6 million, or 24.9%, compared to 2023. Components of the change in
revenue include:
(i) Interest income increased by $228.6 million, or 26.8%, driven by the strong growth in the loan portfolio, which includes growth of
unsecured lending, home equity loans, automotive financing and point-of-sale financing, partially offset by slightly lower interest
yields due to improved product mix;
(ii) Commissions earned from sales of ancillary products and services increased by $41.3 million, or 18.7%, due to the larger
consumer loan portfolio; and
(iii) Charges and fees increased by $3.7 million, due to the larger consumer loan portfolio.
easyhome – Revenue was $152.9 million, a decrease of $0.4 million, or 0.2%, compared to 2023. Lending revenue within the easyhome
stores increased by $4.4 million, compared to 2023. Traditional leasing revenue, including fees, was $4.8 million lower compared to 2023.
Components of the change in revenue include:
(i) Interest income increased by $4.3 million, or 12.0%, driven by the growth in the loan portfolio related to the easyhome business;
(ii) Leasing revenue decreased by $4.4 million, or 4.4%, due to a smaller lease asset portfolio; and
(iii) Commissions earned on the sale of ancillary products, charges and fees decreased by $0.2 million, when compared to 2023.
Other Operating Expenses
Other operating expenses for the year were $362.0 million, an increase of $16.4 million, or 4.7%, compared to 2023. The increase in other
operating expenses was mainly driven by higher operating costs to support the growing loan portfolio, moderated by the continued
improvement in operating efficiency. The efficiency ratio for the year was 25.3%, an improvement of 490 bps from 30.2% in 2023,
reflecting an increase in operating leverage.
easyfinancial – Other operating expenses for the year were $212.5 million, an increase of $15.1 million, or 7.6%, compared to 2023. 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 for the year were $55.0 million, a decrease of $4.6 million, or 7.8%, compared to 2023. The
decrease in other operating expenses was driven by lower store costs due to continued improvement in operating efficiency.
Corporate – Other operating expenses for the year were $94.5 million, an increase of $5.9 million, or 6.7% compared to 2023. The increase in
other operating expenses was primarily due to non-recurring advisory costs and 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 5.8% of revenues, compared to 7.0% of revenues in 2023.
Depreciation and Amortization
Depreciation and amortization was $83.9 million, a decrease of $2.4 million, or 2.8%, when compared to 2023, driven primarily by smaller lease
asset portfolio, resulting in lower depreciation of lease assets, offset by higher depreciation of property and equipment and amortization of
intangible assets. Overall, depreciation and amortization represented 5.5% of revenues for the year, compared to 6.9% of revenues in 2023.
easyfinancial – Total depreciation and amortization was $39.0 million, an increase of $1.2 million, or 3.3%, when compared to 2023, driven primarily
by higher depreciation of property and equipment.
easyhome – Total depreciation and amortization expense was $38.1 million, a decrease of $4.2 million, or 9.9%, when compared to 2023, mainly
due to a smaller lease asset portfolio.
Corporate – Total depreciation and amortization was $6.8 million, an increase of $0.5 million, or 7.6%, when compared to 2023, driven by higher
amortization of intangible assets.
51
| 2024 ANNUAL REPORT
Operating Income (Income before Finance Costs and Income Taxes)
Operating income was $609.7 million, up $133.1 million, or 27.9%, compared to 2023. The Company’s operating margin was 40.0%, up
from 38.1% in 2023. Excluding the effects of the adjusting items discussed in “Key Performance Indicators and Non-IFRS Measures”, the
Company reported an adjusted operating income of $628.2 million, up $137.0 million, or 27.9%, when compared to 2023. The increase in
adjusted operating income was mainly driven by higher revenue associated with the strong loan growth and continued improvement in
operating leverage. The Company also reported an adjusted operating margin of 41.2%, up from 39.3% in 2023.
easyfinancial – Operating income was $666.4 million, an increase of $131.9 million, or 24.7%, when compared to 2023. The improved
operating income was mainly driven by higher revenue associated with strong loan growth and continued improvement in operating
leverage. easyfinancial revenue increased by $273.6 million, partially offset by an increase of $125.4 million in bad debt expense and an
increase of $16.3 million in other costs to support the growing customer base and enhanced product offerings. easyfinancial’s operating
margin was 48.6%, compared to 48.7% in 2023.
easyhome – Operating income was $44.6 million, compared to $36.9 million in 2023, an increase of $7.6 million, or 20.7%. The increase was mainly
driven by higher lending revenues associated with the larger consumer loan portfolio and continued improvement in operating leverage, partially
offset by lower leasing revenues. easyhome’s operating margin was 29.2%, compared to 24.1% in 2023.
Other Income
During the year, the Company recognized a net investment income of $3.1 million, mainly due to fair value changes in the Company’s investments
and realized fair value gain from the disposal of its investment in listed and actively traded companies, compared to $9.8 million of net investment
income in 2023.
Finance Costs
Finance costs were $225.5 million, an increase of $76.2 million, compared to 2023. The increase was mainly driven by higher borrowing levels
to fund growth of the Company’s lending business and a higher cost of borrowing due to an increasing rate environment. The Company utilizes
derivative financial instruments as cash flow hedges to assist in the management of interest rate volatility. As at December 31, 2024, 99% of the
Company’s drawn debt balances effectively bear fixed rates of interest due to the type of debt and the interest rate swap agreements on Revolving
Securitization Warehouse Facilities.
Income Tax Expense
The effective income tax rate for the year was 26.9%, higher than the 26.4% in 2023, mainly due to lower net investment income, which were taxed
at a lower capital gains effective tax rate.
Net Income and EPS
The Company’s net income was $283.1 million, or $16.30 per share on a diluted basis, up 14.2% and 12.6%, respectively, compared
to 2023. Excluding the effects of the adjusting items discussed in “Key Performance Indicators and Non-IFRS Measures” section, the
Company reported adjusted net income and adjusted diluted earnings per share of $290.1 million, or $16.71 per share on a diluted basis,
an increase of 19.3% and 17.6%, respectively, compared to 2023. The increase in adjusted net income was primarily driven by record
operating income, partially offset by incremental finance costs due to higher borrowing levels to fund growth of the Company’s lending
business and a higher cost of borrowing due to an increasing rate environment.
52
| 2024 ANNUAL REPORT
Selected annual information
($ IN 000’S EXCEPT PERCENTAGES AND PER SHARE AMOUNTS)
20243
20233
20223
20213
2020
Gross Consumer Loans Receivable
4,596,115
3,645,202
2,794,694
2,030,339
1,246,840
Revenue
1,523,289
1,250,069
1,019,336
826,722
652,922
Net income
283,110
247,898
140,161
244,943
136,505
Adjusted net income1
290,142
243,175
192,261
174,759
117,646
Return on receivables2
6.8%
7.6%
5.8%
-
-
Adjusted return on receivables1,2
7.0%
7.5%
8.0%
-
-
Return on assets
6.1%
6.7%
4.8%
11.5%
9.8%
Adjusted return on assets1
6.2%
6.5%
6.6%
8.2%
8.5%
Return on equity
24.9%
25.9%
17.6%
36.7%
36.1%
Adjusted return on equity1
25.5%
25.4%
24.2%
26.2%
31.1%
Return on tangible common equity1
32.8%
36.7%
28.4%
50.7%
38.3%
Adjusted return on tangible common equity1
32.5%
34.6%
36.4%
35.3%
33.0%
Net income as a percentage of revenue
18.6%
19.8%
13.8%
29.6%
20.9%
Adjusted net income as a percentage of revenue1
19.0%
19.5%
18.9%
21.1%
18.0%
Dividends declared on Common Shares
78,401
63,614
58,338
42,312
26,103
Cash dividends declared per Common Share
4.68
3.84
3.64
2.64
1.80
Earnings per share
Basic
16.56
14.70
8.61
15.12
9.21
Diluted
16.30
14.48
8.42
14.62
8.76
Adjusted diluted1
16.71
14.21
11.55
10.43
7.57
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, 2023 MD&A, page 43 of the December 31, 2022 MD&A, page 50 of December 31, 2021 MD&A and page 42 of the December 31, 2020 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 years 2020 and 2021 were not published.
3 Selected annual information above for years 2021 to 2024 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 the strong growth of the Company’s
consumer loan portfolio. The increasing adjusted net income and adjusted diluted earnings per share was driven by the increasing revenue, stable
credit performance of the loan book and continued improvement in operating leverage. The adjusted net income as a percentage of revenue
was stable over the five-year period. Adjusted return on receivables, adjusted return on assets, adjusted return on equity and adjusted return
of tangible common equity decreased over the past years, driven by a continued shift in credit and product mix toward higher-credit-quality
borrowers, lower loan rates, and a higher level of assets and shareholders' equity.
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| 2024 ANNUAL REPORT
Assets and Liabilities
($ IN 000’S)
AS AT
DECEMBER 31,
2024
AS AT
DECEMBER 31,
2023
AS AT
DECEMBER 31,
2022
AS AT
DECEMBER 31,
2021
AS AT
DECEMBER 31,
2020
Total assets
5,194,536
4,164,167
3,302,889
2,596,153
1,501,916
Consumer loans receivable, net
4,366,533
3,447,588
2,627,357
1,899,631
1,152,378
Cash
251,381
144,577
62,654
102,479
93,053
Total liabilities
3,993,473
3,110,090
2,433,201
1,806,240
1,058,404
Notes payable
2,413,795
1,120,826
1,168,997
1,085,906
689,410
Revolving securitization warehouse facilities
1,073,876
1,364,741
805,825
292,814
-
Secured borrowings
120,335
143,177
105,792
173,959
-
Revolving credit facility
21,797
190,921
148,646
-
198,339
Total assets have been increasing due primarily to the strong 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 2024, the Company’s ratio of net debt to net capitalization was 74%, 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, 2024
Fourth Quarter Highlights
• The Company reported record revenue of $405.2 million during the three-month period ended December 31, 2024, an increase
of $67.1 million, or 19.8%, when compared to the same period of 2023. Revenue growth was mainly driven by the strong organic
growth of the Company’s consumer loan portfolio.
• Gross consumer loans receivable increased to $4.60 billion as at December 31, 2024 from $3.65 billion as at December 31, 2023, an
increase of $950.9 million, or 26.1%. The increase in consumer loans receivable was driven by strong volume of applications for credit,
leading to strong loan growth across several product and acquisition channels, including unsecured lending, home equity loans,
automotive financing and point-of-sale financing, partially moderated by the implementation of tighter credit and collection measures.
• Net charge offs for the three-month period ended December 31, 2024, as an annualized percentage of average gross consumer
loans receivable were 9.1%, up from 8.8% in the same period of 2023, primarily due to a relatively weaker macroeconomic
environment, partially moderated by the implementation of tighter credit & underwriting and enhanced collection measures and
an increase in the proportion of the consumer loan portfolio secured by physical assets. The Company’s net charge off rate was in
line with the targeted range for 2024 of 8.0% to 10.0%.
• For the three-month period ended December 31, 2024, the net change in allowance for credit losses was $25.2 million, compared
to $12.6 million in the same period of 2023, an increase of $12.6 million. This increase was primarily driven by higher growth in
consumer loans receivable and an adjustment in the rate of allowance for expected credit losses due to unfavourable changes in the
macroeconomic forecast data used in the Company’s allowance model under IFRS 9, which resulted in a provision rate of 7.61%, up
from 7.38% in the third quarter of 2024. 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.
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| 2024 ANNUAL REPORT
• The Company reported record total operating income for the three-month period ended December 31, 2024 of $165.1 million,
up $27.8 million, or 20.3%, when compared to the same period of 2023. The Company also reported operating margin of 40.7%,
slightly up from 40.6% in the same period of 2023. During the three-month period ended December 31, 2024, the Company incurred
adjusting items that are outside of its normal business activities, 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, 2024 of $168.4 million, up $27.8 million, or 19.8%, when compared to the same period of 2023. The
increase in adjusted operating income was mainly driven by higher revenue during the period associated with the larger consumer
loan portfolio and continued improvement in operating leverage. The Company reported an adjusted operating margin1 of 41.6%,
consistent with the same period of 2023.
• During the quarter, the Company recognized a net investment income of $6.1 million, mainly due to fair value changes on the
Company’s investments and realized fair value gain from the disposal of its investment in listed and actively traded companies,
compared to $1.3 million in the same period of 2023.
• The three-month period ended December 31, 2024 was the 94th consecutive quarter of positive net income and diluted earnings per share.
The Company’s net income for the three-month period ended December 31, 2024 was $73.8 million, or $4.25 per share on a diluted basis,
down 1.0% and 2.1%, respectively, compared to the same period of 2023. 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 and
discount related to the repurchase of 2026 Notes and fair value change on prepayment options related to Notes Payable. 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 during the three-month period ended
December 31, 2024 of $77.4 million and $4.45 per share on a diluted basis, respectively. Adjusted net income and adjusted diluted earnings
per share increased by 12.2% and 11.0%, respectively, when compared to the same period of 2023. The increase in adjusted net income was
primarily driven by record adjusted operating income, partially offset by incremental finance costs due to higher borrowing levels to fund
growth of the Company’s lending business and a higher cost of borrowing due to an increasing rate environment.
• Return on equity was 24.7% for the three-month period ended December 31, 2024, down from 28.9% in the same period of 2023. Adjusted
return on equity1 for the three-month period ended December 31, 2024 was 25.9%, down from 26.7% in the same period of 2023, driven by
a higher level of shareholders’ equity, partially offset by higher adjusted net income, as discussed above. Excluding goodwill and acquired
intangible assets, the adjusted return on tangible common equity1 for the three-month period ended December 31, 2024 was 32.5%, down
from 35.3% in the same period of 2023. The decline in adjusted return on tangible common equity was mainly driven by a higher level of
tangible common equity and improved debt leverage position, partially offset by higher adjusted net income, as discussed above.
1 Adjusted operating income and adjusted net income are non-IFRS measures. Adjusted operating margin, adjusted diluted earnings per share, adjusted return on equity and reported and adjusted tangible common equity are non-IFRS ratios. Non-IFRS measures
and non-IFRS ratios are not determined in accordance with IFRS, do not have standardized meanings and may not be comparable to similar financial measures presented by other companies. See descriptions in section “Key Performance Indicators and Non-IFRS
Measures”.
Summary of financial results and key performance indicators
THREE MONTHS ENDED
($ IN 000’S EXCEPT EARNINGS PER SHARE AND PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2023
VARIANCE
$ / BPS
VARIANCE
% CHANGE
Summary Financial Results
Revenue
405,185
338,112
67,073
19.8%
Bad debts
128,978
91,570
37,408
40.9%
Other operating expenses
90,355
87,734
2,621
3.0%
EBITDA1
184,335
151,911
32,424
21.3%
EBITDA margin1
45.5%
44.9%
60 bps
1.3%
Depreciation and amortization
20,797
21,571
(774)
(3.6%)
Operating income
165,055
137,237
27,818
20.3%
Operating margin
40.7%
40.6%
10 bps
0.2%
Other income
6,105
1,310
4,795
366.0%
Finance costs
71,645
36,580
35,065
95.9%
Effective income tax rate
25.8%
26.8%
(100 bps)
(3.7%)
Net income
73,825
74,602
(777)
(1.0%)
Diluted earnings per share
4.25
4.34
(0.09)
(2.1%)
Return on receivables
6.5%
8.3%
(180 bps)
(21.7%)
Return on assets
5.9%
7.4%
(150 bps)
(20.3%)
Return on equity
24.7%
28.9%
(420 bps)
(14.5%)
Return on tangible common equity1
32.0%
39.5%
(750 bps)
(19.0%)
Adjusted Financial Results1,2
Other operating expenses
97,885
95,810
2,075
2.2%
Efficiency ratio
24.2%
28.3%
(410 bps)
(14.5%)
Operating income
168,422
140,643
27,779
19.8%
Operating margin
41.6%
41.6%
-
-
Net income
77,399
68,961
8,438
12.2%
Diluted earnings per share
4.45
4.01
0.44
11.0%
Return on receivables
6.8%
7.7%
(90 bps)
(11.7%)
Return on assets
6.1%
6.8%
(70 bps)
(10.3%)
Return on equity
25.9%
26.7%
(80 bps)
(3.0%)
Return on tangible common equity
32.5%
35.3%
(280 bps)
(7.9%)
Key Performance Indicators
Segment Financials
easyfinancial revenue
367,344
299,465
67,879
22.7%
easyfinancial operating margin
47.4%
50.2%
(280 bps)
(5.6%)
easyhome revenue
37,841
38,647
(806)
(2.1%)
easyhome operating margin
26.4%
24.3%
210 bps
8.6%
Portfolio Indicators
Gross consumer loans receivable
4,596,115
3,645,202
950,913
26.1%
Growth in consumer loans receivable
202,762
214,926
(12,164)
(5.7%)
Gross loan originations
813,689
704,875
108,814
15.4%
Total yield on consumer loans (including ancillary products)1
33.6%
34.9%
(130 bps)
(3.7%)
Net charge offs as a percentage of average gross consumer loans receivable
9.1%
8.8%
30 bps
3.4%
Free cash flows from operations before net growth in gross consumer loans receivable1
185,177
85,142
100,035
117.5%
Potential monthly leasing revenue1
6,875
7,654
(779)
(10.2%)
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.
55
| 2024 ANNUAL REPORT
56
| 2024 ANNUAL REPORT
Summary of financial results by reporting segment
THREE MONTHS ENDED DECEMBER 31, 2024
($ IN 000'S EXCEPT EARNINGS PER SHARE)
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
Revenue
Interest income
294,150
10,213
-
304,363
Lease revenue
-
23,213
-
23,213
Commissions earned
67,498
3,594
-
71,092
Charges and fees
5,696
821
-
6,517
367,344
37,841
-
405,185
Operating expenses
Bad debts
124,334
4,644
-
128,978
Other operating expenses
59,413
13,499
17,443
90,355
Depreciation and amortization
9,408
9,697
1,692
20,797
193,155
27,840
19,135
240,130
Operating income (loss)
174,189
10,001
(19,135)
165,055
Other income
6,105
Finance costs
(71,645)
Income before income taxes
99,515
Income taxes
25,690
Net income
73,825
Diluted earnings per share
4.25
THREE MONTHS ENDED DECEMBER 31, 2023
($ IN 000'S EXCEPT EARNINGS PER SHARE)
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
Revenue
Interest income
235,142
9,526
-
244,668
Lease revenue
-
24,691
-
24,691
Commissions earned
58,015
3,495
-
61,510
Charges and fees
6,308
935
-
7,243
299,465
38,647
-
338,112
Operating expenses
Bad debts
87,076
4,494
-
91,570
Other operating expenses
52,533
14,330
20,871
87,734
Depreciation and amortization
9,614
10,419
1,538
21,571
149,223
29,243
22,409
200,875
Operating income (loss)
150,242
9,404
(22,409)
137,237
Other income
1,310
Finance costs
(36,580)
Income before income taxes
101,967
Income taxes
27,365
Net income
74,602
Diluted earnings per share
4.34
57
| 2024 ANNUAL REPORT
Portfolio performance
Consumer Loans Receivable
Loan originations in the three-month period ended December 31, 2024 were $813.7 million, up 15.4% compared to the same period of 2023. Gross
consumer loans receivable grew by $202.8 million during the quarter, compared to $214.9 million in the same period of 2023. Gross consumer
loans receivable increased to $4.60 billion as at December 31, 2024, from $3.65 billion as at December 31, 2023, an increase of $950.9 million, or
26.1%. The increase in consumer loans receivable was driven by strong volume of applications for credit, leading to strong loan growth across
several product and acquisition channels, including unsecured lending, home equity loans and automotive financing, partially moderated by the
implementation of tighter credit and collection measures.
Total annualized yield, including loan interest, fees and ancillary products, realized by the Company on its average consumer loans receivable was
33.6% in the three-month period ended December 31, 2024, down 130 bps from the same period of 2023. Total annualized yield decreased due to:
i) the strong organic growth of secured loan products which carry lower rates of interest such as home equity loans, automotive financing, and
point-of-sale financing; and ii) a higher proportion of larger dollar value loans which have reduced pricing on certain ancillary products.
Bad debt expense increased to $129.0 million for the three-month period ended December 31, 2024, from $91.6 million during the same period of
2023, an increase of $37.4 million, or 40.9%. The following table details the components of bad debt expense.
THREE MONTHS ENDED
($ IN 000’S)
DECEMBER 31, 2024
DECEMBER 31, 2023
Provision required due to net charge offs
103,748
79,006
Impact of loan book growth
14,967
14,472
Impact of change in the rate of allowance for expected credit losses
10,263
(1,908)
Net change in allowance for credit losses
25,230
12,564
Bad debt expense
128,978
91,570
Bad debts expense increased by $37.4 million due to the following factors:
(i) Net charge offs increased from $79.0 million in the fourth quarter of 2023 to $103.7 million in the current quarter, an increase of
$24.7 million. Net charge offs in the quarter as an annualized percentage of average gross consumer loans receivable were 9.1%,
up from 8.8% in the same period of 2023, primarily due to a relatively weaker macroeconomic environment, partially moderated
by the implementation of tighter credit & underwriting and enhanced collection measures and an increase in the proportion of
the consumer loan portfolio secured by physical assets. The Company’s net charge off rate was in line with the targeted range for
2024 of 8.0% to 10.0%.
(ii) The net change in allowance for credit losses in the fourth quarter of 2024 was $25.2 million, compared to $12.6 million in the same
period of 2023, an increase of $12.6 million. This increase was primarily driven by higher growth in consumer loans receivable
and an adjustment in the rate of allowance for expected credit losses due to unfavourable changes in the macroeconomic forecast
data used in the Company’s allowance model under IFRS 9, which resulted in a provision rate of 7.61%, up from 7.38% in the third
quarter of 2024. 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, 2024, was $6.9 million, down from $7.7 million
as at December 31, 2023. The easyhome leasing business is a mature business that has experienced a gradual decline in sales volume, as
some consumer demand has shifted to alternate forms of financing purchases of everyday household items.
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| 2024 ANNUAL REPORT
Revenue
Revenue for the three-month period ended December 31, 2024 was $405.2 million, an increase of $67.1 million, or 19.8%, when compared
to the same period of 2023. Revenue growth was mainly driven by the strong organic growth of the Company’s consumer loan portfolio.
easyfinancial – Revenue for the three-month period ended December 31, 2024 was $367.3 million, an increase of $67.9 million, when
compared to the same period of 2023. Components of the change in revenue include:
(i) Interest income increased by $59.0 million, or 25.1%, driven by the strong growth in the loan portfolio, which includes growth of
unsecured lending, home equity loan and automotive financing, partially offset by slightly lower interest yields due to improved
product mix; and
(ii) Commissions earned from sales of ancillary products and services increased by $9.5 million, or 16.3%, due to the larger consumer
loan portfolio.
easyhome – Revenue for the three-month period ended December 31, 2024 was $37.8 million, a decrease of $0.8 million, when compared
to the same period of 2023. Lending revenue within the easyhome stores increased by $0.8 million, when compared to the same period of
2023. Traditional leasing revenue, including fees, was $1.6 million lower compared to the same period of 2023. Components of the change
in revenue include:
(i) Interest income increased by $0.7 million, driven by the growth in the loan portfolio related to lending activities in the easyhome business;
(ii) Leasing revenue decreased by $1.5 million due to a smaller lease asset portfolio; and
(iii) Commissions earned on the sale of ancillary products, charges and fees were relatively flat from the comparable period of 2023.
Other Operating Expenses
Other operating expenses were $90.4 million for the three-month period ended December 31, 2024, an increase of $2.6 million, or 3.0%, when
compared to the same period of 2023. The increase in other operating expenses was mainly driven by higher operating costs to support the
growing loan portfolio, moderated by the continued improvement in operating efficiency. The efficiency ratio for the fourth quarter of 2024 was
24.2%, an improvement of 410 bps from 28.3% in the fourth quarter of 2023, reflecting an increase in operating leverage.
easyfinancial – Other operating expenses were $59.4 million for the three-month period ended December 31, 2024, an increase of $6.9
million, or 13.1%, when compared to the same period of 2023. 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 $13.5 million for the three-month period ended December 31, 2024, a decrease of $0.8
million, or 5.8%, when compared to the same period of 2023. The decrease in other operating expenses was driven by lower store costs
due to continued improvement in operating efficiency.
Corporate – Other operating expenses were $17.4 million for the three-month period ended December 31, 2024, a decrease of $3.4 million,
or 16.4%, when compared to the same period of 2023. The decrease in other operating expenses was primarily due to adjustments in share-
based compensation. Excluding the effects of the adjusting items discussed in “Key Performance Indicators and Non-IFRS Measures”,
corporate expenses before depreciation and amortization represented 4.3% of revenues in the fourth quarter of 2024, compared to 6.1%
of revenues in the same period of 2023.
Depreciation and Amortization
Depreciation and amortization for the three-month period ended December 31, 2024 was $20.8 million, a decrease of $0.8 million, or
3.6%, when compared to the same period of 2023, driven primarily by smaller lease asset portfolio, resulting in lower depreciation of
lease assets. Overall, depreciation and amortization represented 5.1% of revenues for the three-month period ended December 31, 2024,
compared to 6.4% in the same period of 2023.
easyfinancial – Depreciation and amortization was $9.4 million for the three-month period ended December 31, 2024, a decrease of $0.2
million, or 2.1%, when compared to the same period of 2023, driven primarily by lower amortization of intangible assets.
easyhome – Depreciation and amortization was $9.7 million for the three-month period ended December 31, 2024, a decrease of $0.7
million, or 6.9%, when compared to the same period of 2023, mainly due to a smaller lease asset portfolio.
Corporate – Depreciation and amortization was $1.7 million in the three-month period ended December 31, 2024, an increase of $0.2
million, or 10%, from the comparable period of 2023, driven by higher amortization of intangible assets.
59
| 2024 ANNUAL REPORT
Operating Income (Income before Finance Costs and Income Taxes)
The Company reported total operating income for the three-month period ended December 31, 2024 of $165.1 million, up $27.8 million,
or 20.3%, when compared to the same period of 2023. The Company also reported operating margin of 40.7%, slightly up from 40.6% in
the same period of 2023. Excluding the effects of the adjusting items, the Company reported record adjusted operating income for the
three-month period ended December 31, 2024 of $168.4 million, up $27.8 million, or 19.8%, when compared to the same period of 2023.
The increase in adjusted operating income was mainly driven by higher revenue during the period associated with the larger consumer
loan portfolio and continued improvement in operating leverage. The Company reported record adjusted operating margin of 41.6%,
consistent with the same period of 2023.
easyfinancial – Operating income for the three-month period ended December 31, 2024 was $174.2 million, an increase of $23.9 million,
or 15.9%, when compared to the same period of 2023. The improved operating income was mainly driven by higher revenue during the
period associated with the larger consumer loan portfolio and continued improvement in operating leverage. easyfinancial revenue
increased by $67.9 million, partially offset by an increase of $37.3 million in bad debt expense and an increase of $6.7 million in other
costs to support the growing customer base and enhanced product offerings. easyfinancial’s operating margin was 47.4%, compared to
50.2% in the same period of 2023.
easyhome – Operating income for the three-month period ended December 31, 2024 was $10.0 million, an increase of $0.6 million, or
6.3%. The increase was mainly driven by higher lending revenues during the period associated with the larger consumer loan portfolio
and continued improvement in operating leverage, partially offset by lower leasing revenues. easyhome’s operating margin was 26.4%,
compared to 24.3% in the same period of 2023.
Other Income
During the three-month period ended December 31, 2024, the Company recognized a net investment income of $6.1 million, mainly due
to the realized fair value gain from the disposal of its investment in listed and actively traded companies, compared to $1.3 million in the
same period of 2023.
Finance Costs
Finance costs for the three-month period ended December 31, 2024 were $71.6 million, an increase of $35.1 million, when compared to the
same period of 2023. The increase was mainly driven by higher borrowing levels to fund growth of the Company’s lending business and a
higher cost of borrowing due to an increasing rate environment. The Company utilizes derivative financial instruments as cash flow hedges to
assist in the management of interest rate volatility. As at December 31, 2024, 99% of the Company’s drawn debt balances effectively bear fixed
rates of interest due to the type of debt and the interest rate swap agreements on Revolving Securitization Warehouse Facilities.
Income Tax Expense
The effective income tax rate for the three-month period ended December 31, 2024 was 25.8%, lower than the 26.8% in the same period of
2023, mainly due to higher net investment income, which were taxed at a lower capital gains effective tax rate.
Net Income and Diluted Earnings Per Share
The Company’s net income for the three-month period ended December 31, 2024 was $73.8 million, or $4.25 per share on a diluted basis, down
1.0% and 2.1%, respectively, compared to the same period of 2023. Excluding the effects of the adjusting items discussed in “Key Performance
Indicators and Non-IFRS Measures” section, the Company reported adjusted net income and adjusted diluted earnings per share of $77.4
million, or $4.45 per share on a diluted basis, an increase of 12.2% and 11.0%, respectively, compared to the same period of 2023. The increase
in adjusted net income was primarily driven by record operating income, partially offset by incremental finance costs due to higher borrowing
levels to fund growth of the Company’s lending business and a higher cost of borrowing due to an increasing rate environment.
60
| 2024 ANNUAL REPORT
Selected quarterly information
($ IN MILLIONS EXCEPT PERCENTAGES
AND PER SHARE AMOUNTS)
DECEMBER
2024
SEPTEMER
2024
JUNE
2024
MARCH
2024
DECEMBER
2023
SEPTEMBER
2023
JUNE
2023
MARCH
2023
DECEMBER
2022
Gross consumer loans
receivable
4,596.1
4,393.4
4,138.2
3,852.1
3,645.2
3,430.3
3,200.2
2,990.7
2,794.7
Revenue
405.2
383.2
377.8
357.1
338.1
321.7
302.9
287.3
273.3
Net income
73.8
84.9
65.4
58.9
74.6
66.3
55.6
51.4
28.6
Adjusted net income1
77.4
75.1
71.3
66.3
69.0
65.2
56.0
52.9
51.0
Return on receivables
6.5%
7.9%
6.5%
6.2%
8.3%
7.9%
7.1%
7.0%
4.2%
Adjusted return on
receivables1
6.8%
7.0%
7.1%
7.0%
7.7%
7.8%
7.2%
7.2%
7.5%
Return on assets
5.9%
7.1%
5.8%
5.5%
7.4%
7.0%
6.2%
6.1%
3.6%
Adjusted return on assets1
6.1%
6.3%
6.3%
6.2%
6.8%
6.9%
6.2%
6.2%
6.3%
Return on equity
24.7%
29.1%
23.3%
21.9%
28.9%
27.0%
24.0%
23.2%
13.8%
Adjusted return on equity1
25.9%
25.7%
25.4%
24.6%
26.7%
26.6%
24.2%
23.9%
24.6%
Return on tangible
common equity1
32.0%
37.8%
31.0%
29.6%
39.5%
37.8%
34.6%
34.4%
21.8%
Adjusted return on
tangible common equity1
32.5%
32.5%
32.6%
32.0%
35.3%
35.9%
33.4%
33.8%
35.9%
Net income as a percentage of
revenue
18.2%
22.2%
17.3%
16.5%
22.1%
20.6%
18.3%
17.9%
10.5%
Adjusted net income as a
percentage of revenue1
19.1%
19.6%
18.9%
18.6%
20.4%
20.3%
18.5%
18.4%
18.7%
Earnings per share2
Basic
4.32
4.95
3.82
3.46
4.41
3.93
3.29
3.06
1.74
Diluted
4.25
4.88
3.76
3.40
4.34
3.87
3.26
3.01
1.71
Adjusted diluted1
4.45
4.32
4.10
3.83
4.01
3.81
3.28
3.10
3.05
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, adjusted net income as percentage of revenue 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, 2024 MD&A, page 31 of the June 30, 2024 MD&A, page 23 of the March 31, 2024 MD&A,
43 of the December 31, 2023 MD&A, 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 and page 43 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.
Key financial measures for each of the last nine quarters are summarized in the table. Revenue growth over this period was primarily
related to the strong growth of the Company’s consumer loan portfolio. The larger revenue base together with efficient operating
expense management, increased the Company’s adjusted net income and adjusted earnings per share. The increasing adjusted net
income and adjusted diluted earnings per share was driven by the increasing revenue, stable credit performance of the loan book and
continued improvement in operating leverage. The adjusted net income as a percentage of revenue was stable over the past quarters.
Adjusted return on receivables, adjusted return on assets, adjusted return on equity and adjusted return on tangible common equity
increased in prior quarters due to increasing earnings generated by the business. These ratios declined in the first quarter of 2024,
driven by a continued shift in credit and product mix toward higher-credit-quality borrowers, lower loan rates, and a higher level of
assets and shareholders' equity and remained stable throughout 2024.
61
| 2024 ANNUAL REPORT
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:
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024
DECEMBER 31, 2023
Gross loan originations
813,689
704,875
3,166,227
2,709,194
Loan originations to new customers
428,753
345,339
1,701,171
1,354,907
Loan originations to existing customers
384,936
359,536
1,465,056
1,354,287
Less: Proceeds applied to repay existing loans
(207,416)
(191,978)
(766,764)
(724,702)
Net advance to existing customers
177,520
167,558
698,292
629,585
Net principal written
606,273
512,897
2,399,463
1,984,492
62
| 2024 ANNUAL REPORT
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:
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024
DECEMBER 31, 2023
Opening gross consumer loans receivable
4,393,353
3,430,276
3,645,202
2,794,694
Gross loan originations
813,689
704,875
3,166,227
2,709,194
Gross principal payments and other adjustments
(492,516)
(398,774)
(1,769,252)
(1,528,306)
Gross charge offs before recoveries
(118,411)
(91,175)
(446,062)
(330,380)
Net growth in gross consumer loans receivable
during the period
202,762
214,926
950,913
850,508
Ending gross consumer loans receivable
4,596,115
3,645,202
4,596,115
3,645,202
The scheduled principal repayment aging analyses of the gross consumer loans receivable portfolio as at December 31, 2024 and 2023
are as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
0 – 6 months
299,017
6.4%
273,572
7.5%
6 – 12 months
201,270
4.4%
172,645
4.7%
1 – 2 years
427,797
9.3%
380,715
10.4%
2 – 3 years
549,491
12.0%
510,311
14.0%
3 – 4 years
681,909
14.8%
567,582
15.6%
4 – 5 years
770,066
16.8%
557,254
15.3%
5 – 6 years
706,122
15.4%
509,651
14.0%
6 – 7 years
560,655
12.2%
361,083
9.9%
7 years +
399,788
8.7%
312,389
8.6%
Gross consumer loans receivable
4,596,115
100.0%
3,645,202
100.0%
The gross consumer loans receivable portfolio categorized by the contractual time to maturity as at December 31, 2024 and 2023 are
summarized as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
0 – 1 year
90,964
2.0%
72,892
2.0%
1 – 2 years
162,681
3.5%
144,303
4.0%
2 – 3 years
244,382
5.3%
277,715
7.6%
3 – 4 years
486,768
10.6%
529,764
14.5%
4 – 5 years
670,433
14.6%
554,585
15.2%
5 – 6 years
893,893
19.4%
651,882
17.9%
6 – 7 years
1,150,622
25.0%
724,442
19.9%
7 years +
896,372
19.6%
689,619
18.9%
Gross consumer loans receivable
4,596,115
100.0%
3,645,202
100.0%
63
| 2024 ANNUAL REPORT
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:
DECEMBER 31, 2024
DECEMBER 31, 2023
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
easyfinancial
4,479,940
97.5%
3,538,943
97.1%
easyhome
116,175
2.5%
106,259
2.9%
Gross consumer loans receivable
4,596,115
100.0%
3,645,202
100.0%
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.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024
DECEMBER 31, 2023
Total Company revenue
405,185
338,112
1,523,289
1,250,069
Less: Leasing revenue
(24,612)
(26,236)
(101,129)
(105,925)
Financial revenue
380,573
311,876
1,422,160
1,144,144
Less: Finance costs
(71,645)
(36,580)
(225,492)
(149,334)
Add: Interest expense on lease liabilities
893
951
3,616
3,822
Less: Bad debt expense
(128,978)
(91,570)
(467,764)
(341,639)
Net financial income
180,843
184,677
732,520
656,993
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.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024
DECEMBER 31, 2023
Total Company revenue
405,185
338,112
1,523,289
1,250,069
Less: Leasing revenue
(24,612)
(26,236)
(101,129)
(105,925)
Financial revenue
380,573
311,876
1,422,160
1,144,144
Multiplied by number of periods in a year
X 4
X 4
X 4/4
X 4/4
Divided by average gross consumer loans
receivable
4,536,022
3,577,393
4,167,684
3,245,686
Total yield on consumer loans as a percentage
of average gross consumer loans receivable
(annualized)
33.6%
34.9%
34.1%
35.3%
64
| 2024 ANNUAL REPORT
Net Charge Offs
In addition to loan originations, gross consumer loans receivable is 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 where no further
collection measures are deemed practicable are written off against the allowance for loan losses. 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.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024
DECEMBER 31, 2023
Net charge offs against allowance
103,748
79,006
383,494
289,321
Multiplied by number of periods in year
X 4
X 4
X 4/4
X 4/4
Divided by average gross consumer loans
receivable
4,536,022
3,577,393
4,167,684
3,245,686
Net charge offs as a percentage of average gross
consumer loans receivable (annualized)
9.1%
8.8%
9.2%
8.9%
The increase in net charge offs for the year ended December 31, 2024, as an annualized percentage of average gross consumer loans
receivable from the same period of 2023 was primarily due to a relatively weaker macroeconomic environment, partially moderated by the
implementation of tighter credit & underwriting and collection measures and an increase in the proportion of the consumer loan portfolio
secured by physical assets. The Company’s net charge off rate was in line with the targeted range for 2024 of 8.0% to 10.0%.
Allowance for Credit Losses
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 the Company has 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 where no further collection measures are deemed practicable are charged off against the allowance
for loan losses.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024
DECEMBER 31, 2023
Allowance for credit losses, beginning of period
324,399
252,795
265,359
213,041
Net charge offs against allowance
(103,748)
(79,006)
(383,494)
(289,321)
Bad debt expense
128,978
91,570
467,764
341,639
Allowance for credit losses, end of period
349,629
265,359
349,629
265,359
Allowance for credit losses as a percentage of
the ending gross consumer loans receivable
7.61%
7.28%
7.61%
7.28%
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.
65
| 2024 ANNUAL REPORT
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. 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, 2024 and 2023, respectively.
FORECAST SCENARIOS
12-MONTH FORWARD-LOOKING MACROECONOMIC
VARIABLES (AVERAGE ANNUAL)
NEUTRAL
MODERATELY
OPTIMISTIC
EXTREMELY
OPTIMISTIC
MODERATELY
PESSIMISTIC
EXTREMELY
PESSIMISTIC
December 31, 2024
Unemployment rate1
6.79%
6.54%
6.29%
8.51%
9.12%
GDP growth rate2
1.33%
2.16%
2.94%
(1.96%)
(3.27%)
Inflation growth rate3
2.05%
2.35%
2.55%
2.64%
2.88%
Oil prices4
$72.66
$77.32
$79.28
$56.99
$48.10
December 31, 2023
Unemployment rate1
6.18%
5.39%
4.70%
8.41%
9.83%
GDP growth rate2
0.53%
1.57%
2.38%
(1.51%)
(2.71%)
Inflation growth rate3
2.11%
2.12%
2.15%
2.09%
1.93%
Oil prices4
$79.35
$81.93
$84.05
$62.73
$52.79
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.
3A 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 $398.9 million, $49.2 million or 14.1% higher
than the reported allowance for credit losses as at December 31, 2024 (December 31, 2023 – $295.2 million, $29.8 million or 11.2% higher
than the reported allowance for credit losses). The sensitivity above does not consider the migration of exposure and/or changes in credit
risk that would have occurred in the loan portfolio due to risk mitigation actions or other factors.
Aging of Gross Consumer Loans Receivable
An aging analysis of gross consumer loans receivable at the end of the periods is as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
Current
4,250,730
92.5%
3,434,390
94.2%
Days past due
1 - 30 days
123,035
2.7%
125,229
3.4%
31 - 44 days
21,379
0.5%
24,280
0.7%
45 - 60 days
21,447
0.5%
20,354
0.6%
61 - 90 days
22,614
0.5%
22,797
0.6%
91 - 120 days
16,499
0.3%
7,687
0.2%
121 - 150 days
35,244
0.7%
6,422
0.2%
151+ days
105,167
2.3%
4,043
0.1%
345,385
7.5%
210,812
5.8%
Gross consumer loans receivable
4,596,115
100.0%
3,645,202
100.0%
66
| 2024 ANNUAL REPORT
The aging analysis between different fiscal periods may not be comparable depending upon the day of the week on which the fiscal
period ends considering not all loans are on a monthly repayment cycle.
Gross consumer loans receivable past due as at December 31, 2024 increased from 5.8% to 7.5%, compared to December 31, 2023. The
increase in delinquency was primarily due to: i) the continued shift in product mix toward secured loans, which have a longer period to
charge off at 180 days post initial delinquency, compared to unsecured loans which charge off 90 days post initial delinquency; ii) the
continued maturation of the secured consumer loan portfolio which resulted in a larger proportion of loans entering the peak period
of potential default; iii) the implementation of tighter collection practices, which increased the number of accounts rolling to later stage
delinquencies; iv) weaker macroeconomic conditions; and v) unfavourable day weighting in that the end of the quarter occurred on a day
where a lower number of payments were received as compared to the same quarter of the previous year.
Gross consumer loans receivable, defined as late-stage delinquent (over 90 days past due) as at December 31, 2024, increased by
280 bps, compared to December 31, 2023, primarily driven by a delay in repossession turnaround times for certain secured assets
stemming from third parties (including bailiffs, towing companies, auction houses, etc.) having to accommodate an increasingly
larger volume of units out for repossession from lenders across the industry. To date, the lengthening of the repossession timeframes
has not had any negative impact on collection results (the ratio of assets collected to those out for repossession) or resale values
realized on collected assets. As a result of the temporary delay in asset recoveries for certain secured loans where additional collection
measures are deemed practicable and there is an expectation to derive net realizable value, in accordance with the Company’s charge off
policy, these loans have not been charged off and remain part of the gross consumer loans receivable. The Company expects recoveries
of these loans to be completed within the next 90 days.
Gross consumer loans receivable, defined as early-stage delinquent (less than 90 days past due) as at December 31, 2024,
decreased by 110 bps compared to December 31, 2023, primarily driven by tighter credit and underwriting measures implemented
during the course of the year as well as the tighter collection measures implemented as described above.
Gross Consumer Loans Receivable by Geography
As at December 31, 2024 and 2023, the Company’s gross consumer loans receivable was allocated among the following geographic regions
DECEMBER 31, 2024
DECEMBER 31, 2023
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL
$
% OF TOTAL
Newfoundland & Labrador
119,093
2.6%
99,581
2.7%
Nova Scotia
212,757
4.6%
173,536
4.8%
Prince Edward Island
23,641
0.5%
21,968
0.6%
New Brunswick
172,490
3.8%
148,529
4.1%
Quebec
558,925
12.2%
447,714
12.3%
Ontario
1,815,504
39.5%
1,408,224
38.6%
Manitoba
192,964
4.2%
150,319
4.1%
Saskatchewan
191,765
4.2%
162,038
4.4%
Alberta
796,416
17.3%
627,148
17.2%
British Columbia
476,317
10.4%
375,916
10.3%
Territories
36,243
0.7%
30,229
0.9%
Gross consumer loans receivable
4,596,115
100.0%
3,645,202
100.0%
67
| 2024 ANNUAL REPORT
Gross Consumer Loans Receivable by Loan Type
As at December 31, 2024 and 2023, the allocation of the Company’s gross consumer loans receivable based on loan type is as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL
$
% OF TOTAL
Unsecured Instalment Loans
2,514,260
54.7%
2,116,869
58.1%
Secured Instalment Loans1
2,081,855
45.3%
1,528,333
41.9%
Gross consumer loans receivable
4,596,115
100.0%
3,645,202
100.0%
1 Secured instalment loans include loans secured by real estate, personal property or a Notice of Security Interest.
The Company continued to experience strong organic growth of its secured loan products such as home equity loans, automotive
financing, and point-of-sale financing.
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:
DECEMBER 31,2024
DECEMBER 31, 2023
Total number of lease agreements
64,104
70,733
Multiplied by the average required monthly lease
payment per agreement
107.24
108.21
Potential monthly leasing revenue ($ in 000’s)
6,875
7,654
Changes in potential monthly leasing revenue during the periods was as follows:
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024 DECEMBER 31, 2023
Opening potential monthly leasing revenue
6,989
7,411
7,654
7,868
Increase due to store openings or acquisitions
during the period
-
133
-
133
Decrease due to store closures or sales during the period
(111)
(38)
(143)
(196)
Decrease due to ongoing operations
(3)
148
(636)
(151)
Net change
(114)
243
(779)
(214)
Ending potential monthly leasing revenue
6,875
7,654
6,875
7,654
Potential Monthly Leasing Revenue by Product Category
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:
DECEMBER 31, 2024
DECEMBER 31, 2023
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL
$
% OF TOTAL
Furniture
2,962
43.1%
3,259
42.6%
Electronics
2,155
31.3%
2,478
32.4%
Appliances
1,066
15.5%
1,110
14.5%
Computers
692
10.1%
807
10.5%
Potential monthly leasing revenue
6,875
100.0%
7,654
100.0%
68
| 2024 ANNUAL REPORT
Potential Monthly Leasing Revenue by Geography
As at December 31, 2024 and 2023, the Company’s leasing portfolio as measured by potential monthly leasing revenue, was allocated
among the following geographic regions:
DECEMBER 31, 2024
DECEMBER 31, 2023
($ IN 000’S EXCEPT PERCENTAGES)
$
% OF TOTAL
$
% OF TOTAL
Newfoundland & Labrador
660
9.6%
671
8.7%
Nova Scotia
704
10.2%
763
10.0%
Prince Edward Island
120
1.8%
128
1.7%
New Brunswick
612
8.9%
646
8.4%
Quebec
495
7.2%
550
7.2%
Ontario
2,118
30.8%
2,310
30.2%
Manitoba
265
3.9%
294
3.8%
Saskatchewan
290
4.2%
320
4.2%
Alberta
1,020
14.8%
1,230
16.1%
British Columbia
591
8.6%
742
9.7%
Potential monthly leasing revenue
6,875
100.0%
7,654
100.0%
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.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024
DECEMBER 31, 2023
Depreciation of lease assets
7,622
8,207
29,482
33,535
Less: Lease asset depreciation excluding net charge offs
(6,714)
(7,257)
(25,979)
(29,939)
Net charge offs
908
950
3,503
3,596
Total Company revenue
405,185
338,112
1,523,289
1,250,069
Less: Financial revenue
(380,573)
(311,876)
(1,422,160)
(1,144,144)
Leasing revenue
24,612
26,236
101,129
105,925
Net charge offs as a percentage
of leasing revenue
3.7%
3.6%
3.5%
3.4%
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.
69
| 2024 ANNUAL REPORT
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,
2024 and 2023 include those indicated in the chart below:
THREE MONTHS ENDED
YEAR ENDED
($ IN 000'S EXCEPT EARNINGS PER SHARE)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024 DECEMBER 31, 2022
Net income as stated
73,825
74,602
283,110
247,898
Impact of adjusting items
Other operating expenses
Advisory costs1
-
-
4,941
-
Integration costs2
92
131
497
608
Contract exit fee4
-
-
-
934
Depreciation and amortization
Amortization of acquired intangible assets3
3,275
3,275
13,100
13,100
Other income 5
(6,105)
(1,310)
(3,132)
(9,771)
Finance costs
Refinancing costs related to notes payable6,7
9,429
9,501
9,429
9,501
Discount on the repurchase of Notes Payable6
(1,487)
-
(1,487)
-
Fair value change on prepayment options
related to Notes Payable8
761
(19,035)
(13,216)
(19,035)
Total pre-tax impact of adjusting items
5,965
(7,438)
10,132
(4,663)
Income tax impact of above adjusting items
(2,391)
1,797
(3,100)
(60)
After-tax impact of adjusting items
3,574
(5,641)
7,032
(4,723)
Adjusted net income
77,399
68,961
290,142
243,175
Weighted average number of
diluted shares outstanding
17,383
17,207
17,366
17,117
Diluted earnings per share as stated
4.25
4.34
16.30
14.48
Per share impact of adjusting items
0.20
(0.33)
0.41
(0.27)
Adjusted diluted earnings per share
4.45
4.01
16.71
14.21
Adjusting items related to the advisory costs
1 Advisory costs for the three-month period and year ended December 31, 2024 were related to non-recurring advisory, consulting and legal costs.
Adjusting items related to the LendCare acquisition
2 Integration costs related to 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 a contract exit fee
4 In the first quarter of 2023, the Company settled its dispute with the third-party technology provider that was contracted in 2020 to develop a new loan management system.
Adjusting item related to other income
5 For the three-month periods and years ended December 31, 2024 and 2023, net investment income were mainly due to fair value changes in the Company’s investments.
Adjusting item related to the refinancing of Notes Payable
6 In the fourth quarter of 2024, the Company the Company extinguished a total of US$255.4 million of 2026 Notes that were validly tendered and accepted for repurchase at a price of US$999.58 per US$1,000 principal amount, resulting in a $1.5 million discount. As
a result of repurchasing these notes and the unwinding of the related cross-currency swaps, the Company incurred tender offer fees, recognized the remaining unamortized deferred financing costs related to these notes, realized derivative loss, and reclassified
the net change in cash flow hedge from OCI to the consolidated statements of income resulting in a total refinancing cost of $9.4 million.
7 In the fourth quarter of 2023, the Company repaid its 5.375% senior unsecured notes payable maturing on December 1, 2024 (“2024 Notes”) that would have matured on December 1, 2024 and unwound the related cross currency swaps, incurring a $9.5 million
refinancing costs, which included the recognition of the remaining unamortized deferred financing costs, realized derivative loss on the settlement of the cross-currency swaps associated to 2024 Notes, and the net change in cash flow hedge that was reclassified
from other comprehensive income to consolidated statement of income.
Adjusting item related to prepayment options embedded in the Notes Payable
8 For the three-month periods and years ended December 31, 2024 and 2023, the Company recognized a fair value change on the prepayment options related to Notes Payable.
70
| 2024 ANNUAL REPORT
Adjusted Net Income as a Percentage of Revenue
Adjusted net income as a percentage of revenue is a non-IFRS ratio. The Company believes that adjusted net income as a percentage of
revenue is an important measure of the profitability of the Company’s operations.
THREE MONTHS ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
73,825
73,825
74,602
74,602
After-tax impact of adjusting items1
-
3,574
-
(5,641)
Adjusted net income
73,825
77,399
74,602
68,961
Divided by revenue
405,185
405,185
338,112
338,112
Net income as a percentage of revenue
18.2%
19.1%
22.1%
20.4%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
283,110
283,110
247,898
247,898
After-tax impact of adjusting items1
-
7,032
-
(4,723)
Adjusted net income
283,110
290,142
247,898
243,175
Divided by revenue
1,523,289
1,523,289
1,250,069
1,250,069
Net income as a percentage of revenue
18.6%
19.0%
19.8%
19.5%
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.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S EXCEPT EARNINGS PER SHARE)
DECEMBER 31, 2024
DECEMBER 31, 2023
DECEMBER 31, 2024 DECEMBER 31, 2023
Other operating expenses as stated
90,355
87,734
361,973
345,581
Impact of adjusting items1
Other operating expenses
Integration costs
(92)
(131)
(497)
(608)
Advisory costs
-
-
(4,941)
-
Contract exit fee
-
-
-
(934)
Depreciation and amortization
Depreciation of lease assets
7,622
8,207
29,482
33,535
Total impact of adjusting items
7,530
8,076
24,044
31,993
Adjusted other operating expenses
97,885
95,810
386,017
377,574
Total revenue
405,185
338,112
1,523,289
1,250,069
Efficiency ratio
24.2%
28.3%
25.3%
30.2%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
71
| 2024 ANNUAL REPORT
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.
THREE MONTHS ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
easyfinancial
Operating income
174,189
174,189
150,242
150,242
Divided by revenue
367,344
367,344
299,465
299,465
easyfinancial operating margin
47.4%
47.4%
50.2%
50.2%
easyhome
Operating income
10,001
10,001
9,404
9,404
Divided by revenue
37,841
37,841
38,647
38,647
easyhome operating margin
26.4%
26.4%
24.3%
24.3%
Total
Operating income
165,055
165,055
137,237
137,237
Other operating expenses1
Integration costs
-
92
-
131
Depreciation and amortization1
Amortization of acquired intangible assets
-
3,275
-
3,275
Adjusted operating income
165,055
168,422
137,237
140,643
Divided by revenue
405,185
405,185
338,112
338,112
Total operating margin
40.7%
41.6%
40.6%
41.6%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
72
| 2024 ANNUAL REPORT
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
easyfinancial
Operating income
666,410
666,410
534,516
534,516
Divided by revenue
1,370,414
1,370,414
1,096,817
1,096,817
easyfinancial operating margin
48.6%
48.6%
48.7%
48.7%
easyhome
Operating income
44,586
44,586
36,940
36,940
Divided by revenue
152,875
152,875
153,252
53,252
easyhome operating margin
29.2%
29.2%
24.1%
24.1%
Total
Operating income
609,657
609,657
476,518
476,518
Other operating expenses1
Advisory costs
-
4,941
-
-
Integration costs
-
497
-
608
Contract exit fee
-
-
-
934
Depreciation and amortization1
Amortization of acquired intangible assets
-
13,100
-
13,100
Adjusted operating income
609,657
628,195
476,518
491,160
Divided by revenue
1,523,289
1,523,289
1,250,069
1,250,069
Total operating margin
40.0%
41.2%
38.1%
39.3%
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.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31, 2024
DECEMBER 31, 2023
DECEMBER 31, 2024 DECEMBER 31, 2023
Net income as stated
73,825
74,602
283,110
247,898
Finance cost
71,645
36,580
225,492
149,334
Income tax expense
25,690
27,365
104,187
89,027
Depreciation and amortization
20,797
21,571
83,895
86,331
Depreciation of lease assets
(7,622)
(8,207)
(29,482)
(33,535)
EBITDA
184,335
151,911
667,202
539,085
Divided by revenue
405,185
338,112
1,523,289
1,250,069
EBITDA margin
45.5%
44.9%
43.8%
43.1%
73
| 2024 ANNUAL REPORT
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, 2024
DECEMBER 31, 2023
DECEMBER 31, 2024 DECEMBER 31, 2023
Cash used in operating activities
(17,585)
(129,784)
(469,446)
(473,217)
Net growth in gross consumer loans
receivable during the period
202,762
214,926
950,913
850,508
Free cash flows from operations before net
growth in gross consumer loans receivable
185,177
85,142
481,467
377,291
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.
THREE MONTHS ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
73,825
73,825
74,602
74,602
After-tax impact of adjusting items1
-
3,574
-
(5,641)
Adjusted net income
73,825
77,399
74,602
68,961
Multiplied by number of periods in a year
X 4
X 4
X 4
X 4
Divided by average gross consumer
loans receivable
4,536,022
4,536,022
3,577,393
3,577,393
Return on receivables
6.5%
6.8%
8.3%
7.7%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
283,110
283,110
247,898
247,898
After-tax impact of adjusting items1
-
7,032
-
(4,723)
Adjusted net income
283,110
290,142
247,898
243,175
Divided by average gross consumer loans
receivable
4,167,684
4,167,684
3,245,686
3,245,686
Return on receivables
6.8%
7.0%
7.6%
7.5%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
74
| 2024 ANNUAL REPORT
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.
THREE MONTHS ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
73,825
73,825
74,602
74,602
After-tax impact of adjusting items1
-
3,574
-
(5,641)
Adjusted net income
73,825
77,399
74,602
68,961
Multiplied by number of periods in a year
X 4
X 4
X 4
X 4
Divided by average total assets for the period
5,043,428
5,043,428
4,050,068
4,050,068
Return on assets
5.9%
6.1%
7.4%
6.8%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
283,110
283,110
247,898
247,898
After-tax impact of adjusting items1
-
7,032
-
(4,723)
Adjusted net income
283,110
290,142
247,898
243,175
Divided by average total assets for the year
4,658,528
4,658,528
3,715,531
3,715,531
Return on assets
6.1%
6.2%
6.7%
6.5%
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.
THREE MONTHS ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
73,825
73,825
74,602
74,602
After-tax impact of adjusting items1
-
3,574
-
(5,641)
Adjusted net income
73,825
77,399
74,602
68,961
Multiplied by number of periods in a year
X 4
X 4
X 4
X 4
Divided by average shareholders’ equity for the
period
1,196,902
1,196,902
1,033,259
1,033,259
Return on equity
24.7%
25.9%
28.9%
26.7%
1 For explanation of adjusting items, refer to the corresponding “Adjusted Net Income and Adjusted Diluted Earnings Per Share” section.
75
| 2024 ANNUAL REPORT
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
283,110
283,110
247,898
247,898
After-tax impact of adjusting items1
-
7,032
-
(4,723)
Adjusted net income
283,110
290,142
247,898
243,175
Divided by average shareholders’ equity for the period
1,139,198
1,139,198
958,322
958,322
Return on equity
24.9%
25.5%
25.9%
25.4%
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
annualized 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 for the period. 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 return on tangible common equity is
calculated using annualized adjusted net income in the period, divided by average tangible common equity for the period. The Company believes
adjusted return on tangible common equity is an important measure of how shareholders’ invested tangible capital is utilized in the business.
THREE MONTHS ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
73,825
73,825
74,602
74,602
Amortization of acquired intangible assets
3,275
3,275
3,275
3,275
Income tax impact of the above item
(868)
(868)
(868)
(868)
Net income before amortization of acquired
intangible assets, net of income tax
76,232
76,232
77,009
77,009
Impact of adjusting items1
Other operating expenses
Integration costs
-
92
-
131
Other income
-
(6,105)
-
(1,310)
Finance costs
Refinancing costs related to Notes Payable
-
9,429
-
9,501
Discount on the repurchase of Notes Payable
-
(1,487)
-
-
Fair value change on prepayment options
related to Notes Payable
-
761
-
(19,035)
Total pre-tax impact of adjusting items
-
2,690
-
(10,713)
Income tax impact of above adjusting items
-
(1,523)
-
2,665
After-tax impact of adjusting items
-
1,167
-
(8,048)
Adjusted net income
76,232
77,399
77,009
68,961
Multiplied by number of periods in a year
X 4
X 4
X 4
X 4
Average shareholders’ equity
1,196,902
1,196,902
1,033,259
1,033,259
Average goodwill
(180,923)
(180,923)
(180,923)
(180,923)
Average acquired intangible assets2
(84,604)
(84,604)
(97,704)
(97,704)
Average related deferred tax liabilities
22,420
22,420
25,892
25,892
Divided by average tangible common equity
953,795
953,795
780,524
780,524
Return on tangible common equity
32.0%
32.5%
39.5%
35.3%
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.
76
| 2024 ANNUAL REPORT
YEAR ENDED
($ IN 000’S EXCEPT PERCENTAGES)
DECEMBER 31,
2024
DECEMBER 31,
2024
(ADJUSTED)
DECEMBER 31,
2023
DECEMBER 31,
2023
(ADJUSTED)
Net income as stated
283,110
283,110
247,898
247,898
Amortization of acquired intangible assets
13,100
13,100
13,100
13,100
Income tax impact of the above item
(3,471)
(3,471)
(3,471)
(3,471)
Net income before amortization of acquired
intangible assets, net of income tax
292,739
292,739
257,527
257,527
Impact of adjusting items1
Other operating expenses
Advisory costs
-
4,941
-
-
Integration costs
-
497
-
608
Contract exit fee
-
-
934
Other income
-
(3,132)
-
(9,771)
Finance costs
Refinancing costs related to Notes Payable
-
9,429
-
9,501
Discount on the repurchase of Notes Payable
-
(1,487)
-
-
Fair value change on prepayment options
related to Notes Payable
-
(13,216)
-
(19,035)
Total pre-tax impact of adjusting items
-
(2,968)
-
(17,763)
Income tax impact of above adjusting items
-
371
-
3,411
After-tax impact of adjusting items
-
(2,597)
-
(14,352)
Adjusted net income
292,739
290,142
257,527
243,175
Average shareholders’ equity
1,139,198
1,139,198
958,322
958,322
Average goodwill
(180,923)
(180,923)
(180,923)
(180,923)
Average acquired intangible assets2
(89,517)
(89,517)
(102,617)
(102,617)
Average related deferred tax liabilities
23,722
23,722
27,194
27,194
Divided by average tangible common equity
892,480
892,480
701,976
701,976
Return on tangible common equity
32.8%
32.5%
36.7%
34.6%
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.
77
| 2024 ANNUAL REPORT
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, 2024 and 2023.
($ IN 000’S, EXCEPT FOR RATIOS)
DECEMBER 31, 2024
DECEMBER 31, 2023
Consumer loans receivable, net
4,366,533
3,447,588
Cash
251,381
144,577
Accounts receivable
42,438
30,762
Prepaid expenses
9,488
9,462
Investments
41,918
61,464
Lease assets
40,973
45,187
Derivative financial assets
60,675
21,904
Property and equipment, net
35,004
35,382
Right-of-use assets, net
54,224
61,987
Intangible assets, net
110,979
124,931
Goodwill
180,923
180,923
Total assets
5,194,536
4,164,167
Notes payable
2,413,795
1,120,826
Revolving securitization warehouse facilities
1,073,876
1,364,741
Secured borrowings
120,335
143,177
Revolving credit facility
21,797
190,921
External debt
3,629,803
2,819,665
Accounts payable and other liabilities
156,903
72,409
Income taxes payable
24,567
24,691
Dividends payable
19,519
15,960
Unearned revenue
25,864
26,965
Accrued interest payable
49,003
12,875
Deferred income tax liabilities, net
4,184
24,259
Lease liabilities
62,164
70,809
Derivative financial liabilities
21,466
42,457
Total liabilities
3,993,473
3,110,090
Shareholders’ equity
1,201,063
1,054,077
Total capitalization (external debt plus total shareholders’ equity)
4,830,866
3,873,742
Capital management measures
External debt to shareholders’ equity1
3.02
2.68
Net debt to net capitalization2
0.74
0.72
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 $5.19 billion as at December 31, 2024, an increase of $1.03 billion or 24.7%, compared to December 31, 2023. The increase
was related primarily to a $918.9 million increase in net consumer loans receivable driven by strong loan originations and a $106.8 million
increase in cash, mainly driven by cash generated from operations and the cash proceeds from net borrowings from the Company’s debt
facilities, partially offset by repurchases of Common Shares through the Company’s Normal Course Issuer Bid (“NCIB”) during the current
period and higher dividends paid.
The $1.03 billion of growth in total assets was primarily financed by: i) a $810.1 million increase in external debt mainly from the issuance
of 2029 Notes, Additional 2029 Notes and 2030 Notes; and ii) a $147.0 million increase in total shareholders’ equity, which was driven
by the earnings generated by the Company, partially offset by dividends paid. While the Company has continued to pay a dividend to its
shareholders, a large portion of the Company’s earnings have been retained to fund growth of its consumer lending business.
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Liquidity and capital resources
Cash Flow Review
The table below provides a summary of cash flow components for the three-month periods and years ended December 31, 2024 and 2023.
THREE MONTHS ENDED
YEAR ENDED
($ IN 000’S)
DECEMBER 31, 2024 DECEMBER 31, 2023 DECEMBER 31, 2024
DECEMBER 31, 2023
Cash provided by operating activities before
net issuance of consumer loans receivable and
purchase of lease assets
305,993
183,338
942,431
718,767
Net issuance of consumer loans receivable
(316,342)
(302,947)
(1,386,709)
(1,161,870)
Purchase of lease assets
(7,236)
(10,175)
(25,168)
(30,114)
Cash used in operating activities
(17,585)
(129,784)
(469,446)
(473,217)
Cash provided by (used) in investing activities
14,222
(2,763)
3,518
(11,749)
Cash provided by financing activities
103,688
193,062
572,732
566,889
Net increase in cash for the period
100,325
60,515
106,804
81,923
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, 2024
Cash used in operating activities for the three-month period ended December 31, 2024 was $17.6 million, compared with $129.8 million in the
same period of 2023. Included in cash used in operating activities were: i) a net issuance of consumer loans receivable of $316.3 million; and ii)
the purchase of lease assets of $7.2 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 $306.0 million, up from $183.3 million in
the same period of 2023, mainly driven by higher non-cash expenses and favourable changes in working capital.
During the three-month period ended December 31, 2024, cash generated in investing activities was $14.2 million, compared to $2.8 million used
in investing activities in the same period of 2023, mainly due to the proceeds on sale of investments in listed and actively traded companies.
During the three-month period ended December 31, 2024, the Company generated $103.7 million in cash flow from financing activities,
compared to $193.1 million in the same period of 2023. The decrease was mainly due to lower net borrowings on the Company’s debt facilities
and repurchases of Common Shares through the Company’s NCIB during the current period.
Cash Flow Analysis for the Year Ended December 31, 2024
Cash used in operating activities during the year was $469.4 million, compared with $473.2 million in 2023. Included in cash used in operating
activities for the year were: i) a net issuance of consumer loans receivable of $1.39 billion; and ii) the purchase of $25.2 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 $942.4 million, up from $718.8 million in 2023. The increase was mainly driven by higher
earnings and higher non-cash expenses, partially offset by unfavourable changes in working capital.
During the year, the Company generated $3.5 million in investing activities, compared to $11.7 million used in investing activities in the same period
of 2023, mainly due to the larger proceeds on sale of investments in listed and actively traded companies.
During the year, the Company generated $572.7 million in cash flow from financing activities, compared to $566.9 million in the same period of
2023. The increase was mainly due to higher net borrowings on the Company’s debt facilities, partially offset by repurchases of Common Shares
through the Company’s NCIB during the current period and higher dividends paid.
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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, 2024, the Company’s external debt consisted of Notes Payable with a net carrying value of $2.41 billion, $1.08 billion
drawn against the Company’s Revolving Securitization Warehouse Facilities, $25.0 million drawn against the Company’s Revolving
Credit Facility and $120.3 million drawn against the Company’s Secured Borrowings.
Borrowings under the 2026 Notes bore a USD coupon rate of 4.375%. Through a cross-currency swap agreement arranged concurrently
with the issuance of 2026 Notes, 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 US$550 million senior unsecured notes payable maturing on December 1, 2028 (“2028 Notes”) bore a USD
coupon rate of 9.250%. Through a cross-currency swap agreement arranged concurrently with the issuance of 2028 Notes, 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%.
Borrowings under the 2029 Notes bore a USD coupon rate of 7.625%. Through a cross-currency swap agreement arranged concurrently
with the issuance of the 2029 Notes, the Company hedged the risk of changes in the foreign exchange rate for payments of principal
and interest until July 1, 2028, effectively hedging the obligation at a Canadian dollar interest rate of 7.195%. These 2029 Notes mature
on July 1, 2029.
Borrowings under the Additional 2029 Notes bore a USD coupon rate of 7.625%. Through a cross-currency swap agreement arranged
concurrently with the issuance of the Additional 2029 Notes, the Company hedged the risk of changes in the foreign exchange rate for
payments of principal and interest until July 1, 2028, effectively hedging the obligation at a Canadian dollar interest rate of 6.936%.
Borrowings under the 2030 USD Notes bore a USD coupon rate of 6.875% and 2030 CAD Notes bore a CAD coupon rate of 6.000%.
Through a cross-currency swap with the issuance of the 2030 USD Notes, the Company hedge the risk of changes in the foreign
exchange rate for payments of principal and interest until May 15, 2029, effectively hedging the obligation at a Canadian dollar interest
rate of 5.977%. These 2030 Notes mature on May 15, 2030.
The Company’s Revolving Securitization Warehouse Facility I and Revolving Securitization Warehouse Facility II have maturity dates
of October 31, 2025 and December 15, 2026, respectively. Borrowings on Revolving Securitization Warehouse Facility I bear interest
at the rate of the daily compounded CORRA plus (a) a market standard CORRA spread adjustment of 29.547 bps, and (b) 195 bps;
provided further that the interest rate shall not fall below 195 bps. Borrowings on Revolving Securitization Warehouse Facility II
bear interest at the rate of the daily compounded CORRA plus (a) a market standard CORRA spread adjustment of 29.547 bps, and
(b) 185 bps; provided further that the interest rate shall not fall below 185 bps. 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 the daily compounded CORRA plus a market standard CORRA spread
adjustment of 29.547 bps.
Borrowings under the Company’s Revolving Credit Facility bear interest at 225 bps plus either (i) the forward-looking Term CORRA
for the applicable period plus a market standard CORRA spread adjustment of (a) 29.547 bps for a one-month interest period, or (b)
32.138 bps for a three-month interest period; or (ii) the daily compounded CORRA for the applicable period plus a market standard
CORRA spread adjustment of (a) 29.547 bps for a one-month interest period, or (b) 32.138 bps for a three month interest period;
providedxsfurther that the interest rate shall not fall below 225 bps.
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The Company has the following Secured Borrowings with non-structured third parties:
• A $105 million securitization facility (“$105 million Securitization Facility”), which bears interest at the 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.
• 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. The
balance of the loans that were sold into the facility will amortize down based on their contractual time to maturity.
On April 30, 2023, the Company amended this securitization facility to provide for $150 million of incremental funding (“$150
million Securitization Facility”), bearing an interest equal to an interpolated GOCB rate plus an initial spread of 310 bps. The
loan sale agreement to sell loans into the facility expired on April 30, 2024. The balance of the loans that were sold into the
facility will amortize down based on their contractual time to maturity.
On May 28, 2024, the Company further amended this securitization facility to provide for $125 million of incremental funding
(“$125 million Securitization Facility”) through the sale of consumer loans until May 31, 2025. The facility continues to bear an
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, 2024 was 6.8%, up from 6.4% as at December
31, 2023.
Including the cash position of $251.4 million, the Company’s total liquidity as at December 31, 2024 was $1.87 billion.
The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments:
($ IN 000’S)
Less than
1 Year
1 to 3
Years
4 to 5
Years
5 Years +
Total
December 31, 2024
Accounts payable and other liabilities
156,903
-
-
-
156,903
Accrued interest payable
49,003
-
-
-
49,003
Revolving credit facility
-
25,000
-
-
25,000
Revolving securitization warehouse facilities
-
1,077,500
-
-
1,077,500
Secured borrowings
65,471
32,813
21,772
279
120,335
Derivative financial liabilities
-
21,466
-
-
21,466
Notes payable
-
849,954
1,441,198
149,884
2,441,036
December 31, 2023
Accounts payable and other liabilities
72,409
-
-
-
72,409
Accrued interest payable
12,875
-
-
-
12,875
Revolving credit facility
-
192,000
-
-
192,000
Revolving securitization warehouse facilities
-
1,370,000
-
-
1,370,000
Secured borrowings
69,450
67,925
5,224
578
143,177
Derivative financial liabilities
-
4,166
38,291
-
42,457
Notes payable
-
424,064
709,825
-
1,133,889
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| 2024 ANNUAL REPORT
Outstanding shares and dividends
As at February 13, 2025, there were 16,470,723 Common Shares, 363,777 Board deferred share units, 108,168 share options, 252,579
restricted share units, 69,375 Executive deferred share units and no warrants outstanding.
Normal Course Issuer Bid
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 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 the 2022 NCIB, daily purchases were 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.
On December 19, 2023, the Company renewed its 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 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 the 2023 NCIB, daily purchases were 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 terminated on December 20, 2024.
On December 19, 2024, the Company renewed its NCIB (the “2024 NCIB”). Pursuant to the 2024 NCIB, the Company proposed to purchase, from
time to time, up to an aggregate of 1,293,283 common shares being approximately 10% of goeasy’s public float. As at December 10, 2024, goeasy
had 16,728,495 common shares issued and outstanding, and the average daily trading volume for the six months prior to November 30, 2024, was
56,453. Under 2024 NCIB, daily purchases will be limited to 14,113 common shares, representing 25% of the average daily trading volume, other
than block purchase exemptions. The purchases were permitted to commence on December 23, 2024, and will terminate on December 22, 2025,
or on such earlier date as the Company may complete its purchases pursuant to the 2024 NCIB. The 2024 NCIB will be conducted through facilities
of the TSX or alternative trading systems, if eligible and will conform to their regulations. Purchases under the 2024 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, 2024, the Company purchased and cancelled 163,061 of its Common Shares on the open market at an average
price of $165.51 per share, for a total cost of $27.0 million. For the year ended December 31, 2023, the Company did not purchase and cancel any
common shares.
Dividends
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 13, 2025, the Company increased the quarterly dividend rate by 24.8% from $1.17 to $1.46 per share. 2025 marks the 21st consecutive
year of paying a dividend to shareholders and the 11th consecutive year of an increase in the dividend rate per share to shareholders.
For the quarter ended December 31, 2024, the Company declared a $1.17 per share quarterly dividend on outstanding Common Shares.
This dividend was paid on January 10, 2024.
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 fourth quarter of the years indicated:
2024
2023
2022
2021
2020
2019
2018
Quarterly dividend per share
$1.170
$0.960
$0.910
$0.660
$0.450
$0.310
$0.225
Percentage increase
21.9%
5.5%
37.9%
46.7%
45.2%
37.8%
25.0%
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| 2024 ANNUAL REPORT
Commitments, guarantees and contingencies
Commitments
The Company is committed to software maintenance, development and licensing service agreements, and operating leases for premises
and vehicles. Some of the Company’s lease contracts for premises include extension options. Management exercises significant judgement
in determining whether these extension options are reasonably certain to be exercised. As at December 31, 2024, no extension option for
lease contracts for premises is expected to be exercised.
The undiscounted potential future lease payments for operating leases for premises and vehicles and the estimated operating costs
related to technology commitments required for the next five years and thereafter are as follows:
($ IN 000’S)
WITHIN 1 YEAR
AFTER 1 YEAR, BUT NOT
MORE THAN 5 YEARS
MORE THAN 5 YEARS
Premises
22,799
39,883
4,521
Technology commitments
22,601
23,151
3,538
Vehicles
753
1,406
-
Total contractual obligations
46,153
64,440
8,059
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.
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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, 2028 Notes, 2029 Notes, Additional 2029 Notes and 2030 Notes maturing on May 1, 2026, December 1, 2028, July 1, 2029,
July 1, 2029, and May 15, 2030, respectively, have fixed rates of interest.
The Revolving Credit Facility has variable interest rates at either the lender’s prime rate plus 75 bps or 225 bps plus either (i) the forward-
looking Term CORRA for the applicable period plus a market standard CORRA spread adjustment of (a) 29.547 bps for a one-month
interest period, or (b) 32.138 bps for a three month interest period; or (ii) the daily compounded CORRA for the applicable period plus a
market standard CORRA spread adjustment of (a) 29.547 bps for a one-month interest period, or (b) 32.138 bps for a three month interest
period; provided further that the interest rate shall not fall below 225 bps. 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, 2024, the Company’s has drawn $25 million
against its $550 million Revolving Credit Facility.
The Revolving Securitization Warehouse Facility I has variable interest rates at the rate of the daily compounded CORRA plus (a) a market
standard CORRA spread adjustment of 29.547 bps, and (b) 195 bps; provided further that the interest rate shall not fall below 195 bps. The
Revolving Securitization Warehouse Facility II has variable interest rates at the rate of the daily compounded CORRA plus (a) a market
standard CORRA spread adjustment of 29.547 bps, and (b) 185 bps; provided further that the interest rate shall not fall below 185 bps.
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 the
daily compounded CORRA plus a market standard CORRA spread adjustment of 29.547 bps. 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 and $125 million Securitization Facility bear 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, 2024, 99% (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.
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Foreign Currency Risk
The 2026 Notes, 2028 Notes, 2029 Notes, Additional 2029 Notes and 2030 USD Notes were issued in USD. 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 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 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 $231.4
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 recent change to the maximum allowable rate of interest in Canada
may result in corresponding impacts to the competitiveness of the Canadian non-prime market.
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.
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 lease 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, 2024. 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
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| 2024 ANNUAL REPORT
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, the 2028 Notes, the 2029 Notes, the Additional 2029 Notes, the 2030 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.
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 2024, the Company
increased its Revolving Securitization Warehouse Facility II from $500 million to $700 million and extended the maturity date to December
15, 2026, increased its Revolving Credit Facility from $370 million to $550 million and extended the maturity date to July 18, 2027, and
amended its securitization facility with a leading Canadian insurance company, to provide for $125 million of funding through the sale of
consumer loans until May 31, 2025. In the year, the Company issued 2029 Notes, Additional 2029 Notes and 2030 Notes. 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.
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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.
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
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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 Notes Payable. Any credit ratings applied to these 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 these 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 these notes may have an adverse effect on the market price or value and the liquidity of these 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 macroeconomic 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.
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 alternate 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.
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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, communications 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 or its vendors 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.
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 Company 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 of 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.
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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 thirty- five 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 this change to the maximum allowable rate of interest, effective January
1, 2025, 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.
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.
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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. Customers’ 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.
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.
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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 (including prepayment options embedded therein),
Revolving Securitization Warehouse Facilities, Secured Borrowings, Derivative financial instruments and Accounts payable and other
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 other liabilities, are subsequently carried at the amount owing. Prepayment options embedded in Notes Payable
are subsequently measured at fair value.
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, 2024 notes to the consolidated financial statements.
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Changes in accounting policy and disclosures
(i) 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.
(ii) Standards issued but not yet effective
The new and amended standards that are issued, but not yet effective, up to the issuance date of the Company’s consolidated financial
statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable,
when they become effective.
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, the International Accounting Standards Board (“IASB”) issued IFRS 18, which replaces IAS 1, Presentation of Financial
Statements. IFRS 18 introduces new requirements for presentation within the statement of profit or loss, including specified totals and
subtotals. Furthermore, entities are required to classify all income and expenses within the statement of profit or loss into one of five
categories: operating, investing, financing, income taxes and discontinued operations, whereof the first three are new.
It also requires disclosure of newly defined management-defined performance measures, subtotals of income and expenses, and
includes new requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary
financial statements and the notes.
In addition, narrow-scope amendments have been made to IAS 7, Statement of Cash Flows, which include changing the starting point
for determining cash flows from operations under the indirect method, from ‘profit or loss’ to ‘operating profit or loss’ and removing the
optionality around classification of cash flows from dividends and interest. In addition, there are consequential amendments to several
other standards.
IFRS 18, and the amendments to the other standards, is effective for reporting periods beginning on or after January 1, 2027, but earlier
application is permitted and must be disclosed. IFRS 18 will apply retrospectively.
The Company is currently working to identify all impacts the amendments will have on its consolidated financial statements.
(iii) Interest Rate Benchmark Reform
In December 2021, Canadian Alternative Reference Rate working group (“CARR”) recommended that the Canadian Dollar Offered Rate
(“CDOR”) should cease calculation and publication after June 2024 with the Canadian Overnight Repo Rate Average (“CORRA”) suggested
as the replacement benchmark rate. On May 16, 2022, the CDOR administrator announced the cessation of CDOR consistent with the
recommendations outlined by CARR. Additionally, on January 11, 2023, CARR announced the development of a forward-looking term
CORRA rate (“Term CORRA").
All of the Company’s existing credit facilities that reference CDOR or BAs have transitioned to CORRA as administered by the Bank of
Canada or the Term CORRA administered and published by CanDeal Benchmark Solutions and TMX Datalinx on or before June 28, 2024.
The transition from CDOR to CORRA had no impact to the Company’s consolidated financial statements.
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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, 2024.
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) (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 2024
No changes were made in the Company’s internal controls over financial reporting during the three-month period and year ended
December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Evaluation of ICFR as at December 31, 2024
As at December 31, 2024, 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, 2024.
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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, 2024, 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.
David Ingram
Executive Chairman
Hal Khouri
Executive Vice-President & Chief Financial Officer
Management’s
responsibility for
financial reporting
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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, 2024 and 2023, 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, 2024 and 2023, 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.
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 $349.6 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.
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
Key audit
matter
How our
audit
addressed
the key audit
matter
96
| 2024 ANNUAL REPORT
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.
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.
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.
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| 2024 ANNUAL REPORT
•
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 eff ectiveness 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 signifi cant 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 fi nancial 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 fi nancial statements, including the disclosures, and
whether the consolidated fi nancial statements represent the underlying transactions and events in a manner that achieves fair
presentation.
•
Obtain suffi cient appropriate audit evidence regarding the fi nancial information of the entities or business activities within the
Company to express an opinion on the consolidated fi nancial 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
signifi cant audit fi ndings, including any signifi cant defi ciencies 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 signifi cance in the
audit of the consolidated fi nancial 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 benefi ts of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Kathryn Gardiner.
Toronto, Canada
February 13, 2025
98
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Audited
consolidated
financial
statements
For the years ended
December 31, 2024 and 2023
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| 2024 ANNUAL REPORT
Consolidated Statements of Financial Position
(Expressed in thousands of Canadian dollars)
AS AT
DECEMBER 31, 2024
AS AT
DECEMBER 31, 2023
ASSETS
Cash (note 4)
251,381
144,577
Accounts receivable (note 5)
42,438
30,762
Prepaid expenses
9,488
9,462
Consumer loans receivable, net (note 6)
4,366,533
3,447,588
Investments (note 7)
41,918
61,464
Lease assets (note 8)
40,973
45,187
Derivative financial assets (note 15)
60,675
21,904
Property and equipment, net (note 9)
35,004
35,382
Right-of-use assets, net (note 10)
54,224
61,987
Intangible assets, net (note 11)
110,979
124,931
Goodwill (note 11)
180,923
180,923
TOTAL ASSETS
5,194,536
4,164,167
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Revolving credit facility (note 14)
21,797
190,921
Accounts payable and other liabilities
156,903
72,409
Income taxes payable
24,567
24,691
Dividends payable (note 16)
19,519
15,960
Unearned revenue
25,864
26,965
Accrued interest payable
49,003
12,875
Deferred income tax liabilities, net (note 19)
4,184
24,259
Lease liabilities (note 10)
62,164
70,809
Secured borrowings (note 13)
120,335
143,177
Revolving securitization warehouse facilities (note 12)
1,073,876
1,364,741
Derivative financial liabilities (notes 12 and 15)
21,466
42,457
Notes payable (note 15)
2,413,795
1,120,826
TOTAL LIABILITIES
3,993,473
3,110,090
SHAREHOLDERS' EQUITY
Share capital (note 16)
438,302
428,328
Contributed surplus (note 17)
26,942
24,817
Accumulated other comprehensive loss
(56,938)
(9,721)
Retained earnings
792,757
610,653
TOTAL SHAREHOLDERS' EQUITY
1,201,063
1,054,077
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
5,194,536
4,164,167
See accompanying notes to the consolidated financial statements.
On behalf of the Board:
David Ingram
Director
Karen Basian
Director
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| 2024 ANNUAL REPORT
Consolidated Statements of Income
(Expressed in thousands of Canadian dollars, except earnings per share)
YEAR ENDED
DECEMBER 31, 2024
DECEMBER 31, 2023
REVENUE
Interest income
1,121,822
888,928
Lease revenue
95,407
99,848
Commissions earned
275,726
234,485
Charges and fees
30,334
26,808
1,523,289
1,250,069
OPERATING EXPENSES
BAD DEBTS (NOTE 6)
467,764
341,639
OTHER OPERATING EXPENSES
Salaries and benefits
201,791
200,917
Share-based compensation (note 17)
13,534
12,938
Technology costs
38,088
28,402
Advertising and promotion
32,979
31,020
Underwriting and collections
21,251
16,564
Occupancy
20,632
25,405
Other expenses
33,698
30,335
361,973
345,581
DEPRECIATION AND AMORTIZATION
Depreciation of lease assets (note 8)
29,482
33,535
Amortization of intangible assets (note 11)
22,788
21,999
Depreciation of right-of-use assets (note 10)
21,349
21,260
Depreciation of property and equipment (note 9)
10,276
9,537
83,895
86,331
TOTAL OPERATING EXPENSES
913,632
773,551
OPERATING INCOME
609,657
476,518
OTHER INCOME (NOTE 7)
3,132
9,771
FINANCE COSTS (NOTE 18)
(225,492)
(149,334)
INCOME BEFORE INCOME TAXES
387,297
336,955
INCOME TAX EXPENSE (RECOVERY) (NOTE 19)
Current
113,370
90,809
Deferred
(9,183)
(1,752)
104,187
89,057
NET INCOME
283,110
247,898
BASIC EARNINGS PER SHARE (NOTE 20)
16.56
14.70
DILUTED EARNINGS PER SHARE (NOTE 20)
16.30
14.48
See accompanying notes to the consolidated financial statements.
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Consolidated Statements of Comprehensive Income
(Expressed in thousands of Canadian dollars)
YEAR ENDED
DECEMBER 31, 2024
DECEMBER 31, 2023
Net income
283,110
247,898
Other comprehensive income (loss) to be reclassified to the consolidated statement of
income in subsequent periods
Change in costs of hedging, net of taxes
6,395
2,440
Reclassification of cash flow hedge to the consolidated statement of income, net of taxes
3,982
4,188
Change in fair value of cash flow hedge, net of taxes
(57,594)
(19,125)
(47,217)
(12,497)
Comprehensive income
235,893
235,401
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, 2023
428,328
24,817
453,145
610,653
(9,721)
1,054,077
Common shares issued
14,359
(5,548)
8,811
-
-
8,811
Share-based compensation (note 17)
-
13,534
13,534
-
-
13,534
Repurchase of equity interest related to
deferred share units, net of tax (note 17)
-
(1,190)
(1,190)
-
-
(1,190)
Repurchase of equity interest related to
restricted share units, net of tax (note 17)
-
(4,671)
(4,671)
-
-
(4,671)
Shares purchased for cancellation
(4,385)
-
(4,385)
(22,604)
-
(26,989)
Comprehensive income (loss)
-
-
-
283,110
(47,217)
235,893
Dividends (note 16)
-
-
-
(78,402)
-
(78,402)
Balance, December 31, 2024
438,302
26,942
465,244
792,757
(56,938)
1,201,063
Balance, December 31, 2022
419,046
21,499
440,545
426,367
2,776
869,688
Common shares issued
9,282
(2,446)
6,836
-
-
6,836
Share-based compensation (note 17)
-
12,938
12,938
-
-
12,938
Repurchase of equity interest related to
restricted share units, net of tax (note 17)
-
(7,174)
(7,174)
-
-
(7,174)
Comprehensive income (loss)
-
-
-
247,898
(12,497)
235,401
Dividends (note 16)
-
-
-
(63,612)
-
(63,612)
Balance, December 31, 2023
428,328
24,817
453,145
610,653
(9,721)
1,054,077
See accompanying notes to the consolidated financial statements.
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Consolidated Statements of Cash Flows
(Expressed in thousands of Canadian dollars)
YEAR ENDED
DECEMBER 31, 2024
DECEMBER 31, 2023
OPERATING ACTIVITIES
Net income
283,110
247,898
Add (deduct) items not affecting cash
Bad debts (note 6)
467,764
341,639
Depreciation of lease assets (note 8)
29,482
33,535
Amortization of intangible assets (note 11)
22,788
21,999
Depreciation of right-of-use assets (note 10)
21,349
21,260
Share-based compensation (note 17)
13,534
12,938
Depreciation of property and equipment (note 9)
10,276
9,537
Refinancing costs related to notes payable (note 15)
8,805
9,501
Amortization of deferred financing charges
8,457
7,543
Loss on sale or write off of assets (note 11)
322
-
Discount on the repurchase of notes payable (note 15)
(1,487)
-
Other income (note 7)
(3,132)
(9,771)
Amortization of premium on notes payable
(3,442)
-
Deferred income tax recovery (note 19)
(9,183)
(1,752)
Fair value change on prepayment options (note 15)
(13,216)
(19,035)
835,427
675,292
Net change in other operating assets and liabilities (note 21)
107,004
43,475
Net issuance of consumer loans receivable
(1,386,709)
(1,161,870)
Purchase of lease assets
(25,168)
(30,114)
Cash used in operating activities
(469,446)
(473,217)
INVESTING ACTIVITIES
Proceeds on sale of investment
22,678
5,611
Investments in intangible assets
(9,158)
(8,128)
Purchase of property and equipment
(10,002)
(9,232)
Cash provided by (used in) investing activities
3,518
(11,749)
FINANCING ACTIVITIES
Issuance of notes payable, net of financing charges (note 15)
1,505,807
751,797
Advances from revolving credit facilities, net of financing charges
495,737
563,347
Advances from revolving securitization warehouse facilities, net of financing charges
128,677
616,218
Advances from secured borrowings, net of financing charges
72,685
98,008
Issuance of common shares
6,942
5,703
Lease incentive received
69
873
Payment of deferred share units (note 17)
(882)
-
Payment of restricted share units (note 17)
(5,151)
(8,691)
Payment of lease liability (note 10)
(22,300)
(21,881)
Purchase of common shares for cancellation
(26,989)
-
Payment of common share dividends
(72,772)
(60,946)
Payment of loan from secured borrowings
(95,551)
(60,654)
Payment of notes payable (note 15)
(325,040)
(734,885)
Payment of advances from revolving securitization warehouse facilities
(422,500)
(60,000)
Payment of advances from revolving credit facilities
(666,000)
(522,000)
Cash provided by financing activities
572,732
566,889
Net increase in cash during the year
106,804
81,923
Cash, beginning of year
144,577
62,654
Cash, end of year
251,381
144,577
See accompanying notes to the consolidated financial statements.
103
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| 2024 ANNUAL REPORT
Notes to
consolidated
financial
statements
(Expressed in thousands of Canadian
dollars, except where otherwise indicated)
December 31, 2024 and 2023
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| 2024 ANNUAL REPORT
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,
more than 400 locations across Canada, and point-of-sale financing offered in the retail, powersports, automotive, home improvement and
healthcare verticals, through over 10,800 merchant partners across Canada.
The Company operates in two reportable segments: easyfinancial and easyhome. As at December 31, 2024, the Company operated 295
easyfinancial locations (including 2 kiosks within easyhome stores and 3 operation centres) and 134 easyhome stores (including 34
franchises).
The consolidated financial statements were authorized for issue by the Board of Directors on February 13, 2025.
2. Material accounting policy information
Basis of Preparation
The consolidated financial statements of the Company for the year ended December 31, 2024 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, 2024.
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, 2024, 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.
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| 2024 ANNUAL REPORT
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.
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| 2024 ANNUAL REPORT
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.
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
statement 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,
extending the loan amortization period and reducing rates, 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. FLI 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 where no further collection measures are deemed practicable 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.
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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.
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 annually. 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.
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
7 years
Computer
5 years
Office equipment
7 years
Signage
7 years
Leasehold improvements
5 to 10 years depending on the lease term
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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.
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
5 years
Websites and digital properties
3 years
Software (excluding websites and digital properties)
5 years
Merchant networks
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.
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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.
i) 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.
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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.
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 other 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 other liabilities, are carried at the amount owing.
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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.
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.
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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.
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 accounts receivable or accounts
payable and other 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:
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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 includes 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.
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.
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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.
3. Changes in accounting policy and disclosures
i) 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.
ii) Standards Issued but Not Yet Effective
The new and amended standards that are issued, but not yet effective, up to the issuance date of the Company’s consolidated financial
statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable,
when they become effective.
IFRS 18, Presentation and Disclosure in Financial Statements
In April 2024, the International Accounting Standards Board (“IASB”) issued IFRS 18, which replaces IAS 1, Presentation of Financial
Statements. IFRS 18 introduces new requirements for presentation within the statement of profit or loss, including specified totals and
subtotals. Furthermore, entities are required to classify all income and expenses within the statement of profit or loss into one of five
categories: operating, investing, financing, income taxes and discontinued operations, whereof the first three are new.
It also requires disclosure of newly defined management-defined performance measures, subtotals of income and expenses, and
includes new requirements for aggregation and disaggregation of financial information based on the identified ‘roles’ of the primary
financial statements and the notes.
In addition, narrow-scope amendments have been made to IAS 7, Statement of Cash Flows, which include changing the starting point
for determining cash flows from operations under the indirect method, from ‘profit or loss’ to ‘operating profit or loss’ and removing the
optionality around classification of cash flows from dividends and interest. In addition, there are consequential amendments to several
other standards.
IFRS 18, and the amendments to the other standards, is effective for reporting periods beginning on or after January 1, 2027, but earlier
application is permitted and must be disclosed. IFRS 18 will apply retrospectively.
The Company is currently working to identify all impacts the amendments will have on its consolidated financial statements.
iii) Interest Rate Benchmark Reform
In December 2021, the Canadian Alternative Reference Rate working group (“CARR”) recommended that the Canadian Dollar Offered Rate
(“CDOR”) should cease calculation and publication after June 2024 with the Canadian Overnight Repo Rate Average (“CORRA”) suggested
as the replacement benchmark rate. On May 16, 2022, the CDOR administrator announced the cessation of CDOR consistent with the
recommendations outlined by CARR. Additionally, on January 11, 2023, CARR announced the development of a forward-looking term
CORRA rate (“Term CORRA").
All of the Company’s existing credit facilities that reference CDOR or the Canadian Bankers’ Acceptance rate (“BAs”) have transitioned to
CORRA as administered by the Bank of Canada or the Term CORRA administered and published by CanDeal Benchmark Solutions and
TMX Datalinx on or before June 28, 2024. The transition from CDOR to CORRA had no impact to 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, 2024, the fair value of the cash pledged by the Company as cash collateral in respect of its cross-currency swap contracts was nil
(2023 – $24.2 million).
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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, 2024, the cash held back as a reserve for
the Revolving Securitization Warehouse Facilities and Secured Borrowings were $57.9 million and $25.6 million, respectively (2023 –
$52.3 million and $15.2 million, respectively). Cash includes a total of $83.5 million (2023 – $91.7 million) of cash collateral pledged by the
Company where access to the cash is restricted.
5.Accounts receivable
Accounts receivable include the following:
DECEMBER 31, 2024
DECEMBER 31, 2023
Commissions receivable
20,998
18,754
Charges and fees receivable
11,512
6,311
Other
9,928
5,697
42,438
30,762
All accounts receivable for the years ended December 31, 2024 and 2023 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 48 to 240 months.
DECEMBER 31, 2024
DECEMBER 31, 2023
Gross consumer loans receivable
4,596,115
3,645,202
Interest receivable from consumer loans
96,113
53,545
Unamortized deferred acquisition costs
77,885
50,342
Unamortized deferred revenue
(53,951)
(36,142)
Allowance for credit losses
(349,629)
(265,359)
4,366,533
3,447,588
The allocation of the Company’s gross consumer loans receivable based on loan type is as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
Unsecured instalment loans
2,514,260
54.7%
2,116,869
58.1%
Secured instalment loans
2,081,855
45.3%
1,528,333
41.9%
4,596,115
100.0%
3,645,202
100.0%
The scheduled principal repayment aging analyses of the gross consumer loans receivable portfolio as at December 31, 2024 and 2023
are as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
0 – 6 months
299,017
6.4%
273,572
7.5%
6 – 12 months
201,270
4.4%
172,645
4.7%
1 – 2 years
427,797
9.3%
380,715
10.4%
2 – 3 years
549,491
12.0%
510,311
14.0%
3 – 4 years
681,909
14.8%
567,582
15.6%
4 – 5 years
770,066
16.8%
557,254
15.3%
5 – 6 years
706,122
15.4%
509,651
14.0%
6 – 7 years
560,655
12.2%
361,083
9.9%
7 years +
399,788
8.7%
312,389
8.6%
4,596,115
100.0%
3,645,202
100.0%
116
| 2024 ANNUAL REPORT
The gross consumer loans receivable portfolio categorized by the contractual time to maturity as at December 31, 2024 and 2023 are
summarized as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
0 – 1 year
90,964
2.0%
72,892
2.0%
1 – 2 years
162,681
3.5%
144,303
4.0%
2 – 3 years
244,382
5.3%
277,715
7.6%
3 – 4 years
486,768
10.6%
529,764
14.5%
4 – 5 years
670,433
14.6%
554,585
15.2%
5 – 6 years
893,893
19.4%
651,882
17.9%
6 – 7 years
1,150,622
25.0%
724,442
19.9%
7 years +
896,372
19.6%
689,619
18.9%
4,596,115
100.0%
3,645,202
100.0%
An aging analysis of gross consumer loans receivable past due is as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
$
% OF TOTAL LOANS
$
% OF TOTAL LOANS
1 – 30 days
123,035
2.7%
125,229
3.4%
31 – 44 days
21,379
0.5%
24,280
0.7%
45 – 60 days
21,447
0.5%
20,354
0.6%
61 – 90 days
22,614
0.5%
22,797
0.6%
91 – 120 days
16,499
0.3%
7,687
0.2%
121 – 150 days
35,244
0.7%
6,422
0.2%
151+ days
105,167
2.3%
4,043
0.1%
345,385
7.5%
210,812
5.8%
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.
AS AT DECEMBER 31, 2024
MEDIAN TRANSUNION
RISK SCORE
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-PERFORMING)
STAGE 3
(NON-PERFORMING)
TOTAL
Low Risk
626
2,890,988
7,846
137
2,898,971
Normal Risk
546
1,054,488
20,534
222
1,075,244
High Risk
490
240,471
168,791
212,638
621,900
585
4,185,947
197,171
212,997
4,596,115
117
| 2024 ANNUAL REPORT
AS AT DECEMBER 31, 2023
MEDIAN TRANSUNION
RISK SCORE
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-PERFORMING)
STAGE 3
(NON-PERFORMING)
TOTAL
Low Risk
635
2,025,764
2,914
150
2,028,828
Normal Risk
548
1,046,233
12,576
279
1,059,088
High Risk
498
286,405
191,068
79,813
557,286
580
3,358,402
206,558
80,242
3,645,202
An analysis of the changes in the classification of gross consumer loans receivable is as follows:
YEAR ENDED DECEMBER 31, 2024
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-
PERFORMING)
STAGE 3
(NON-
PERFORMING)
TOTAL
Balance as at January 1, 2024
3,358,402
206,558
80,242
3,645,202
Gross loans originated
3,166,227
-
-
3,166,227
Principal payments and other adjustments
(1,753,153)
8,478
(24,577)
(1,769,252)
Transfers to (from)
Stage 1 (Performing)
798,516
(639,293)
(159,223)
-
Stage 2 (Under-Performing)
(823,145)
846,458
(23,313)
-
Stage 3 (Non-Performing)
(490,050)
(190,325)
680,375
-
Gross charge offs
(70,850)
(34,705)
(340,507)
(446,062)
Net growth in gross consumer loans receivable during the year
827,545
(9,387)
132,755
950,913
Balance as at December 31, 2024
4,185,947
197,171
212,997
4,596,115
YEAR ENDED DECEMBER 31, 2023
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-
PERFORMING)
STAGE 3
(NON-
PERFORMING)
TOTAL
Balance as at January 1, 2023
2,563,395
154,535
76,764
2,794,694
Gross loans originated
2,709,194
-
-
2,709,194
Principal payments and other adjustments
Transfers to (from)
(1,520,436)
29,699
(37,569)
(1,528,306)
Stage 1 (Performing)
533,757
(419,432)
(114,325)
-
Stage 2 (Under-Performing)
(603,359)
623,181
(19,822)
-
Stage 3 (Non-Performing)
(262,949)
(150,138)
413,087
-
Gross charge-offs
(61,200)
(31,287)
(237,893)
(330,380)
Net growth in gross consumer loans receivable during the year
795,007
52,023
3,478
850,508
Balance as at December 31, 2023
3,358,402
206,558
80,242
3,645,202
The changes in the allowance for credit losses are summarized below:
YEAR ENDED
DECEMBER 31, 2024
YEAR ENDED
DECEMBER 31, 2023
Allowance for credit losses, beginning of year
265,359
213,041
Net charge offs against allowance
(383,494)
(289,321)
Increase due to lending activities
467,764
341,639
Allowance for credit losses, end of year
349,629
265,359
118
| 2024 ANNUAL REPORT
An analysis of the changes in the classification of the allowance for credit losses is as follows:
YEAR ENDED DECEMBER 31, 2024
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-
PERFORMING)
STAGE 3
(NON-
PERFORMING)
TOTAL
Balance as at January 1, 2024
149,860
67,304
48,195
265,359
Gross loans originated
133,244
-
-
133,244
Principal payments and other adjustments
Transfers to (from) including remeasurement
(65,145)
(667)
(96,247)
(162,059)
Stage 1 (Performing)
154,012
(145,826)
(89,008)
(80,822)
Stage 2 (Under-Performing)
(76,738)
247,962
(15,673)
155,551
Stage 3 (Non-Performing)
(42,820)
(59,484)
524,154
421,850
Net charge offs against allowance
(61,239)
(29,981)
(292,274)
(383,494)
Balance as at December 31, 2024
191,174
79,308
79,147
349,629
YEAR ENDED DECEMBER 31, 2023
STAGE 1
(PERFORMING)
STAGE 2
(UNDER-
PERFORMING)
STAGE 3
(NON-
PERFORMING)
TOTAL
Balance as at January 1, 2023
116,969
53,381
42,691
213,041
Gross loans originated
119,537
-
-
119,537
Principal payments and other adjustments
Transfers to (from) including remeasurement
(80,894)
(264)
(60,008)
(141,166)
Stage 1 (Performing)
131,347
(87,083)
(61,921)
(17,657)
Stage 2 (Under-Performing)
(55,102)
170,030
(13,869)
101,059
Stage 3 (Non-Performing)
(28,956)
(41,646)
350,468
279,866
Net charge offs against allowance
(53,041)
(27,114)
(209,166)
(289,321)
Balance as at December 31, 2023
149,860
67,304
48,195
265,359
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. Management
judgment is then applied to the recommended probability weightings to these scenarios to determine a probability weighted allowance
for credit losses.
119
| 2024 ANNUAL REPORT
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, 2024 and 2023, respectively:
12-MONTH FORWARD-LOOKING
MACROECONOMIC VARIABLES
(AVERAGE ANNUAL)
FORECAST SCENARIOS
NEUTRAL
MODERATELY
OPTIMISTIC
EXTREMELY
OPTIMISTIC
MODERATELY
PESSIMISTIC
EXTREMELY
PESSIMISTIC
December 31, 2024
Unemployment rate1
6.79%
6.54%
6.29%
8.51%
9.12%
GDP growth rate2
1.33%
2.16%
2.94%
(1.96%)
(3.27%)
Inflation growth rate3
2.05%
2.35%
2.55%
2.64%
2.88%
Oil prices4
$72.66
$77.32
$79.28
$56.99
$48.10
December 31, 2023
Unemployment rate1
6.18%
5.39%
4.70%
8.41%
9.83%
GDP growth rate2
0.53%
1.57%
2.38%
(1.51%)
(2.71%)
Inflation growth rate3
2.11%
2.12%
2.15%
2.09%
1.93%
Oil prices4
$79.35
$81.93
$84.05
$62.73
$52.79
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’s 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 $398.9 million, $49.2 million or 14.1% higher than the
reported allowance for credit losses as at December 31, 2024 (2023 – $295.2 million, $29.8 million or 11.2% 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.
7. Investments
Investments include the following:
DECEMBER 31, 2024
DECEMBER 31, 2023
Unlisted companies
41,918
41,918
Listed and actively traded companies
-
19,546
41,918
61,464
Changes in the holdings, fair values of investments, and net investment income (loss) recorded in other income (loss) (including realized and
unrealized gains and losses) in the consolidated statements of income are summarized below:
FAIR VALUE,
BEGINNING OF YEAR
ADDITIONS
SALES/
SETTLEMENTS
INVESTMENT
INCOME (LOSS)
FAIR VALUE,
END OF YEAR
For the year ended December 31, 2024
Unlisted companies
41,918
-
-
-
41,918
Listed and actively traded companies
19,546
-
(22,678)
3,132
-
61,464
-
(22,678)
3,132
41,918
For the year ended December 31, 2023
Unlisted companies
51,078
-
(55)
(9,105)
41,918
Listed and actively traded companies
6,226
-
(5,556)
18,876
19,546
57,304
-
(5,611)
9,771
61,464
120
| 2024 ANNUAL REPORT
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, 2024, the Company sold its investments in listed and actively traded companies with a total consideration
of $22.7 million (2023 – $5.6 million). For the year ended December 31, 2024, the Company has recognized net investment income on
its investments in listed and actively traded companies of $3.1 million (2023 – net investment income of $18.9 million), included in other
income (loss) in the consolidated statements of income.
Unlisted Companies
The Company’s investments in unlisted companies were classified at initial recognition at FVTPL. For the year ended December 31, 2024,
the Company has recognized investment income or loss on its investments in unlisted companies of nil (2023 – investment loss of $9.1
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, 2024:
VALUATION
TECHNIQUES
SIGNIFICANT
UNOBSERVABLE
INPUTS
RANGE
SENSITIVITY OF THE INPUT TO FAIR VALUE
Unlisted companies
Public company
comparables
Revenue multiples
2.5x – 20.2x
0.7x increase (decrease) in the revenue
multiples would result in an increase
(decrease) in fair value by $0.9 million
Public company
comparables
Enterprise value to
gross profit multiples
5.4x – 18.8x
1.1x increase (decrease) in the enterprise
value to gross profit multiples would result
in an increase (decrease) in fair value by $0.9
million
Recent transactions
Price per share
Not applicable
Valuation was based on private recent
transactions
8. Lease assets
DECEMBER 31, 2024
DECEMBER 31, 2023
Cost
Balance, beginning of year
56,390
58,508
Additions
25,268
30,285
Disposals
(33,992)
(32,403)
Balance, end of year
47,666
56,390
Accumulated Depreciation
Balance, beginning of year
(11,203)
(10,071)
Depreciation
(29,482)
(33,535)
Disposals
33,992
32,403
Balance, end of year
(6,693)
(11,203)
Net book value
40,973
45,187
During the years ended December 31, 2024 and 2023, the net book value of the lease assets sold or disposed of were nil.
121
| 2024 ANNUAL REPORT
9. Property and equipment
FURNITURE AND
FIXTURES
COMPUTER AND
OFFICE EQUIPMENT
SIGNAGE
LEASEHOLD
IMPROVEMENTS
TOTAL
Cost
December 31, 2022
12,251
15,663
5,026
46,329
79,269
Additions
1,017
2,005
385
5,825
9,232
Disposals
(639)
(304)
(210)
(818)
(1,971)
December 31, 2023
12,629
17,364
5,201
51,336
86,530
Additions
2,100
3,194
300
4,410
10,004
Disposals
(410)
(121)
(239)
(970)
(1,740)
December 31, 2024
14,319
20,437
5,262
54,776
94,794
Accumulated Depreciation
December 31, 2022
(8,073)
(8,933)
(3,238)
(23,169)
(43,413)
Depreciation
(993)
(2,183)
(438)
(5,923)
(9,537)
Disposals
575
290
195
742
1,802
December 31, 2023
(8,491)
(10,826)
(3,481)
(28,350)
(51,148)
Depreciation
(970)
(2,278)
(459)
(6,569)
(10,276)
Disposals
390
111
223
910
1,634
December 31, 2024
(9,071)
(12,993)
(3,717)
(34,009)
(59,790)
Net Book Value
December 31, 2023
4,138
6,538
1,720
22,986
35,382
December 31, 2024
5,248
7,444
1,545
20,767
35,004
As at December 31, 2024, the amount of property and equipment classified as under construction or development and not being
depreciated was $2.9 million (2023 – $1.4 million).
For the year ended December 31, 2024 and 2023, no impairment was recognized, and it was determined that no indicators of impairment
existed that would require an impairment test on property and equipment.
10. Right-of-use assets and lease liabilities
RIGHT-OF-USE ASSETS
PREMISES
VEHICLES
TOTAL
LEASE LIABILITIES
December 31, 2022
63,789
1,969
65,758
74,328
Additions
16,628
861
17,489
17,489
Depreciation
(20,612)
(648)
(21,260)
-
Interest
-
-
-
3,821
Interest payment
-
-
-
(3,821)
Lease inducement received
-
-
-
873
Principal payment
-
-
-
(21,881)
December 31, 2023
59,805
2,182
61,987
70,809
Additions
13,045
541
13,586
13,586
Depreciation
(20,635)
(714)
(21,349)
-
Interest
-
-
-
3,617
Interest payment
-
-
-
(3,617)
Lease inducement received
-
-
-
69
Principal payment
-
-
-
(22,300)
December 31, 2024
52,215
2,009
54,224
62,164
122
| 2024 ANNUAL REPORT
For the year ended December 31, 2024, the Company recognized rent expense from short-term leases of $2,238 (2023 – $1,996) and
variable lease payments of $15,001 (2023 – $14,719).
For the year ended December 31, 2024 and 2023, no impairment was recognized, and 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, 2022
131,000
65,849
3,342
200,191
Additions
-
8,128
-
8,128
December 31, 2023
131,000
73,977
3,342
208,319
Additions
-
9,158
-
9,158
Disposals or write off
-
(322)
-
(322)
December 31, 2024
131,000
82,813
3,342
217,155
Accumulated Amortization
December 31, 2022
(21,822)
(36,331)
(3,236)
(61,389)
Amortization
(13,111)
(8,841)
(47)
(21,999)
December 31, 2023
(34,933)
(45,172)
(3,283)
(83,388)
Amortization
(13,100)
(9,686)
(2)
(22,788)
December 31, 2024
(48,033)
(54,858)
(3,285)
(106,176)
Net Book Value
December 31, 2023
96,067
28,805
59
124,931
December 31, 2024
82,967
27,954
57
110,979
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.
Included in additions for the year ended December 31, 2024 were $9.2 million (2023 – $8.1 million) of internally developed software
application and website development costs.
For the year ended December 31, 2024 and 2023, no impairment was recognized, and 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, 2024 and 2023. Goodwill and indefinite-life intangible assets are attributed to the group
of CGUs to which they relate. As at December 31, 2024 and 2023, 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, 2024
and 2023. 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% for easyhome (2023 – 1.0%) and 2% for LendCare (2023 – 2.0%). The pre-tax discount rate used on the forecasted cash
flows was 15.3% (2023 – 15.3%) for easyhome and 22.5% (2023 – 22.5%) for LendCare.
No impairment charges of goodwill or indefinite-life intangible assets were recorded in the years ended December 31, 2024 and 2023.
123
| 2024 ANNUAL REPORT
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 matures on October 31, 2025 and bears interest equal to the one-month CDOR plus 195 basis points
(“bps”).
Following CARR’s recommendation to transition from CDOR to CORRA as a benchmark rate, as disclosed in Note 3, on June 15, 2024, the
Company amended its Revolving Securitization Warehouse Facility I to change its benchmark rate from CDOR to CORRA. The Revolving
Securitization Warehouse Facility I bears interest on drawn amounts at the rate of the daily compounded CORRA plus (a) a market
standard CORRA spread adjustment of 29.547 bps, and (b) 195 bps; provided further that the interest rate shall not fall below 195 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 one-month CDOR.
On May 9, 2024, the Company amended its existing interest rate swap to change the benchmark rate for the variable interest rate from
one-month CDOR to the daily compounded CORRA plus a market standard CORRA spread adjustment of 29.547 bps.
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. Trust II has a $500 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”)
with a syndicate of lenders, and as collateral for the drawn amount, automotive consumer loans can be 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,
2025 and bears interest equal to the one-month CDOR plus 185 bps.
Following CARR’s recommendation to transition from CDOR to CORRA as a benchmark rate, as disclosed in Note 3, on May 15, 2024,
the Company has amended its Revolving Securitization Warehouse Facility II to change its benchmark rate from CDOR to CORRA. The
Revolving Securitization Warehouse Facility II bears interest on drawn amounts at the rate of the daily compounded CORRA plus (a) a
market standard CORRA spread adjustment of 29.547 bps, and (b) 185 bps; provided further that the interest rate shall not fall below 185
bps.
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 one-month CDOR.
On May 16, 2024, the Company amended its existing interest rate swap to change the benchmark rate for the variable interest rate from
one-month CDOR to the daily compounded CORRA plus a market standard CORRA spread adjustment of 29.547 bps.
On December 18, 2024, the Company increased its Revolving Securitization Warehouse Facility II to $700 million and extended the
maturity date to December 15, 2026. The facility continues to be underwritten by the same syndicate of lenders.
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| 2024 ANNUAL REPORT
The following table summarizes the details of the Revolving Securitization Warehouse Facilities as at December 31, 2024 and 2023:
DECEMBER 31, 2024
DECEMBER 31, 2023
REVOLVING
SECURITIZATION
WAREHOUSE
FACILITY I
REVOLVING
SECURITIZATION
WAREHOUSE
FACILITY II
TOTAL
REVOLVING
SECURITIZATION
WAREHOUSE
FACILITY I
REVOLVING
SECURITIZATION
WAREHOUSE
FACILITY II
TOTAL
Drawn amount
826,000
251,500
1,077,500
1,125,000
245,000
1,370,000
Unamortized
deferred finance
costs
(1,839)
(1,785)
(3,624)
(3,968)
(1,291)
(5,259)
824,161
249,715
1,073,876
1,121,032
243,709
1,364,741
As at December 31, 2024, $1.54 billion (2023 – $1.81 billion) of consumer loans receivable were pledged by the Company as collateral
against its Revolving Securitization Warehouse Facility I.
As at December 31, 2024, $598.5 million (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, 2024
DECEMBER 31, 2023
Minimum consolidated fixed charge coverage ratio
> 2.0
3.17
3.81
As at December 31, 2024 and 2023, the Company was in compliance with its financial covenant under the Revolving Securitization
Warehouse Facilities.
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, 2024 and 2023.
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:
DECEMBER 31, 2024
DECEMBER 31, 2023
Derivative financial liabilities
Revolving Securitization Warehouse Facility I
(15,705)
(2,496)
Revolving Securitization Warehouse Facility II
(5,761)
(1,670)
13. Secured borrowings
The Company also securitizes consumer loans through non-structured third parties. The economic exposure associated with the rights
related to these consumer loans is 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.
•
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’
125
| 2024 ANNUAL REPORT
Acceptance rate (“BA”) plus 400 bps. The loan sale agreement to sell loans into the facility expired on November 30, 2021. The
balance of the loans that were sold into the facility will amortize down based on their contractual time to maturity.
On April 30, 2023, the Company amended this securitization facility to provide for $150 million of incremental funding (“$150 million
Securitization Facility”), bearing an interest equal to an interpolated GOCB rate plus an initial spread of 310 bps. The loan sale agreement
to sell loans into the facility expired on April 30, 2024. The balance of the loans that were sold into the facility will amortize down based on
their contractual time to maturity.
On May 28, 2024, the Company further amended this securitization facility to provide for $125 million of incremental funding (“$125
million Securitization Facility”) through the sale of consumer loans until May 31, 2025. The facility continues to bear an interest equal to an
interpolated GOCB rate plus an initial spread of 310 bps.
As at December 31, 2024, $120.3 million (2023 – $143.2 million) was drawn against the Secured Borrowings and $233.7 million (2023 –
$216.9 million) of consumer loans receivable were pledged by the Company as collateral for these Secured Borrowings. As at December
31, 2024, the Company had a borrowing capacity of $74.6 million (2023 – $50.0 million) from the Secured Borrowings.
As at December 31, 2024 and 2023, the Company was in compliance with its financial covenants for the $105 million Securitization Facility,
which are based on the tangible net worth of the LendCare Capital Inc. legal entity.
As at December 31, 2024 and 2023, the Company was in compliance with its financial covenants for the $85 million Securitization Facility,
$150 million Securitization Facility and $125 million Securitization Facility, which are based on the Company’s tangible net worth and
leverage ratio.
14. Revolving credit facility
The Company’s Revolving Credit Facility consists of a $370 million senior secured revolving credit facility that matures on January 27,
2025. The Revolving Credit Facility is provided by a syndicate of banks. Interest on advances was payable at either the BA plus 225 bps or
the lender’s prime rate plus 75 bps, at the option of the Company.
Following CARR’s recommendation to transition from CDOR to CORRA as a benchmark rate, as disclosed in Note 3, on May 31, 2024, the
Company amended its Revolving Credit Facility to change the interest rate on advances payable, at the option of the Company, from either
the lender’s prime rate plus 75 bps or BA plus 225 bps to either the lender’s prime rate plus 75 bps or 225 bps plus either (i) the forward-
looking Term CORRA for the applicable period plus a market standard CORRA spread adjustment of (a) 29.547 bps for a one-month interest
period, or (b) 32.138 bps for a three month interest period; or (ii) the daily compounded CORRA for the applicable period plus a market
standard CORRA spread adjustment of (a) 29.547 bps for a one-month interest period, or (b) 32.138 bps for a three month interest period;
provided further that the interest rate shall not fall below 225 bps.
On July 19, 2024, the Company amended its Revolving Credit Facility to increase the size of the facility from $370 million to $550 million,
with the maturity extended to July 18, 2027. The Company also has an ability to exercise the accordion feature under its Revolving Credit
Facility to add an additional $150 million in borrowing capacity.
The following table summarizes the details of the Revolving Credit Facility:
DECEMBER 31, 2024
DECEMBER 31, 2023
Drawn amount
25,000
192,000
Unamortized deferred financing costs
(3,203)
(1,079)
21,797
190,921
The financial covenants of the Revolving Credit Facility were as follows:
FINANCIAL COVENANT
REQUIREMENTS
DECEMBER 31, 2024
DECEMBER 31, 2023
Maximum consolidated leverage ratio
< 4.50
3.90
3.72
Minimum consolidated fixed charge coverage ratio
> 1.25
1.85
2.27
Minimum consolidated asset coverage ratio
> 1.75
17.83
3.03
Maximum net charge off ratio
< 15.0%
9.2%
8.9%
As at December 31, 2024 and 2023, the Company was in compliance with all of its financial covenants under its Revolving Credit Facility
agreement.
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| 2024 ANNUAL REPORT
15. Notes payable
US$320 Million of 4.375% Senior Unsecured Notes
On April 29, 2021, the Company issued US$320 million of 4.375% senior unsecured notes payable maturing on May 1, 2026 (“2026 Notes”)
with interest payable semi-annually on May 1 and November 1 of each year. The 2026 Notes 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 million 2026 Notes at a CAD interest rate of 4.818%. The 2026 cross-currency swaps fully hedge the obligation under
the 2026 Notes.
On October 21, 2024, the Company announced its commencement of a cash tender offer to repurchase any and all of its outstanding
2026 Notes. The tender offer expired on October 30, 2024. On November 4, 2024, the Company extinguished a total of US$255.4 million
of 2026 Notes that were validly tendered and accepted for repurchase at a price of US$999.58 per US$1,000 principal amount, resulting
in a $1.5 million discount recognized in finance costs in the consolidated statements of income. In addition, the Company de-designated
US$255.4 million of 2026 cross-currency swaps as cash flow hedges and immediately unwound them. As a result of repurchasing these
notes and the unwinding of the related 2026 cross-currency swaps, the Company incurred tender offer fees, recognized the remaining
unamortized deferred financing costs related to these notes, realized derivative loss, and reclassified the net change in cash flow hedge
from OCI to the consolidated statements of income resulting in a total refinancing cost of $9.4 million recognized in finance costs in the
consolidated statements of income.
The following table summarizes the details of the 2026 Notes:
DECEMBER 31, 2024
DECEMBER 31, 2023
2026 Notes in CAD at issuance
80,700
400,032
Foreign exchange movement in the 2026 Notes since issuance
12,124
24,032
92,824
424,064
Unamortized deferred financing costs
(363)
(3,094)
92,461
420,970
US$550 Million of 9.250% Senior Unsecured Notes
On November 28, 2023, the Company issued US$550 million of 9.250% senior unsecured notes payable maturing on December 1, 2028 (the
“2028 Notes”) with interest payable semi-annually on June 1 and December 1 of each year.
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
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 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:
DECEMBER 31, 2024
DECEMBER 31, 2023
2028 Notes in CAD at issuance
760,760
760,760
Prepayment options related to 2028 Notes at issuance
(7,469)
(7,469)
Foreign exchange movement in the 2028 Notes since issuance
30,085
(31,900)
Change in fair value of prepayment options since issuance
(32,360)
(19,035)
751,016
702,356
Unamortized premium
6,114
7,469
Unamortized deferred financing costs
(8,295)
(9,969)
748,835
699,856
127
| 2024 ANNUAL REPORT
US$400 Million and Additional US$200 Million of 7.625% Senior Unsecured Notes
On February 23, 2024, the Company issued US$400 million of 7.625% senior unsecured notes payable maturing on July 1, 2029 (the “2029
Notes”) with interest payable semi-annually on January 1 and July 1 of each year.
The 2029 Notes include certain prepayment options, which are derivatives embedded in the notes. These embedded derivatives are
presented within the 2029 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 2029 Notes, the Company entered into derivative financial instruments (the “2028 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 2029 Notes until July 1, 2028, at a fixed exchange rate of US$1.000 = CAD1.353, thereby
hedging the US$400 million 2029 Notes at a CAD interest rate of 7.195% until July 1, 2028.
On July 25, 2024, the Company issued an additional US$200 million of 2029 Notes (the “Additional 2029 Notes”) at a price of US$1,018.75
per US$1,000 principal amount. Concurrent with the issuance of the Additional 2029 Notes, the Company entered into derivative financial
instruments (the “Additional 2028 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 Additional 2029 Notes until July 1,
2028, at a fixed exchange rate of US$1.000 = CAD1.3758, thereby hedging the Additional 2029 Notes at a CAD interest rate of 6.936% until
July 1, 2028.
The following table summarizes the details of the 2029 Notes and Additional 2029 Notes:
DECEMBER 31, 2024
2029 Notes and Additional 2029 Notes in CAD at issuance
816,360
Prepayment options related to 2029 Notes and Additional 2029 Notes at issuance
(12,065)
Foreign exchange movement in the 2029 Notes and Additional 2029 Notes since issuance
46,380
Change in fair value of prepayment options since issuance
70
850,745
Unamortized premium
15,358
Unamortized deferred financing costs
(9,644)
856,459
US$400 Million of 6.875% Senior Unsecured Notes and $150 Million of 6.000% Senior Unsecured Notes
On November 4, 2024, the Company issued US$400 million of 6.875% senior unsecured notes payable (the “2030 USD Notes”) and $150
million of 6.000% senior unsecured notes payable (the “2030 CAD Notes”) (the 2030 USD Notes and 2030 CAD Notes are collectively
referred to as the “2030 Notes”) with interest payable semi-annually on May 15 and November 15 of each year and mature on May 15,
2030.
The 2030 Notes include certain prepayment options, which are derivatives embedded in the notes. These embedded derivatives are
presented within the 2030 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 2030 USD Notes, the Company entered into derivative financial instruments (the “2029 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 2030 USD Notes until May 15, 2029, at a fixed exchange rate of US$1.000 =
CAD1.3843, thereby hedging the US$400 million 2030 USD Notes at a CAD interest rate of 5.977% until May 15, 2029.
The following table summarizes the details of the 2030 USD Notes:
DECEMBER 31, 2024
2030 USD Notes in CAD at issuance
553,720
Prepayment options related to 2030 USD Notes at issuance
(7,750)
Foreign exchange movement in the 2030 USD Notes since issuance
21,440
Change in fair value of prepayment options since issuance
127
567,537
Unamortized premium
7,558
Unamortized deferred financing costs
(7,013)
568,082
128
| 2024 ANNUAL REPORT
The following table summarizes the details of the 2030 CAD Notes:
DECEMBER 31, 2024
2030 CAD Notes at issuance
150,000
Prepayment options related to 2030 CAD Notes at issuance
(1,140)
Change in fair value of prepayment options since the issuance date
(87)
148,773
Unamortized premium
1,111
Unamortized deferred financing costs
(1,926)
147,958
The following table summarizes the total carrying value of the Notes Payable:
DECEMBER 31, 2024
DECEMBER 31, 2023
2026 Notes
92,461
420,970
2028 Notes
748,835
699,856
2029 Notes and Additional 2029 Notes
856,459
-
2030 USD Notes
568,082
-
2030 CAD Notes
147,958
-
2,413,795
1,120,826
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, 2024 and 2023.
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:
DECEMBER 31, 2024
DECEMBER 31, 2023
Derivative financial assets (liabilities)
2026 cross-currency swaps
10,754
21,904
2027 cross-currency swaps
11,718
(38,291)
2028 cross-currency swaps and Additional 2028 cross-currency swaps
27,353
-
2029 cross-currency swaps
10,850
-
As at December 31, 2024, the fair value of the cash pledged by the counterparties as cash collateral in respect of its cross-currency swap
contracts was $69.3 million (2023 – nil). This balance is recognized under Accounts payable and other liabilities.
16. Share capital
Authorized Capital
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
129
| 2024 ANNUAL REPORT
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:
DECEMBER 31, 2024
DECEMBER 31, 2023
# OF SHARES
(IN 000S)
$
# OF SHARES
(IN 000S)
$
Balance, beginning of year
16,625
428,328
16,445
419,046
Exercise of share options
137
9,016
143
7,227
Exercise of restricted share units
31
3,491
22
923
Dividend reinvestment plan
12
2,070
15
1,673
Exercise of deferred share units
4
309
-
-
Shares purchased for cancellation
(163)
(4,385)
-
-
Other
-
(527)
-
(541)
Balance, end of year
16,646
438,302
16,625
428,328
Dividends on Common Shares
For the year ended December 31, 2024, the Company declared dividends of $78.4 million (2023 – $63.6 million) or $4.68 per share (2023
– $3.84 per share). On November 7, 2024, the Company declared a quarterly dividend of $1.17 per share or $19.5 million to shareholders
of record on December 27, 2024, payable on January 10, 2025.
Shares Purchased for Cancellation
On December 16, 2022, the Company announced the acceptance by the TSX of the Company's notice of intention to make a normal course
issuer bid ("NCIB"), which allowed for a total purchase of up to 1,252,730 common shares and expired on December 20, 2023.
On December 19, 2023, the Company renewed its NCIB, which allowed for a total purchase of up to 1,270,245 common shares (the “2023
NCIB”) and expired on December 20, 2024.
On December 19, 2024, the Company renewed its NCIB, which allows for a total purchase of up to 1,293,283 common shares (the “2024
NCIB”) and expires on December 22, 2025.
For the year ended December 31, 2024, the Company purchased and cancelled 163,061 of its common shares on the open market at an
average price of $165.51 per share, for a total cost of $27.0 million. For the year ended December 31, 2023, the Company did not purchase
and cancel any common shares.
17. Share-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 achieving long-term financial targets and have exercise lives of two to four years from the date of vesting.
DECEMBER 31, 2024
DECEMBER 31, 2023
# OF OPTIONS
(IN 000s)
WEIGHTED AVERAGE
EXERCISE PRICE
$
# OF OPTIONS
(IN 000s)
WEIGHTED AVERAGE
EXERCISE PRICE
$
Outstanding balance, beginning of year
244
88.66
345
63.35
Options granted
36
159.46
42
130.22
Options exercised
(137)
50.75
(143)
39.92
Options forfeited or expired
(32)
134.65
-
-
Outstanding balance, end of year
111
145.13
244
88.66
Exercisable balance, end of year
23
127.03
113
37.98
130
| 2024 ANNUAL REPORT
Outstanding share options as at December 31, 2024 were as follows:
OUTSTANDING
EXERCISABLE
RANGE OF
EXERCISE
PRICES
$
# OF OPTIONS
(IN 000s)
WEIGHTED AVERAGE
REMAINING
CONTRACTUAL LIFE IN
YEARS
WEIGHTED AVERAGE
EXERCISE PRICE
$
# OF OPTIONS
(IN 000s)
WEIGHTED AVERAGE
EXERCISE PRICE
$
100.00 – 149.99
48
3.89
124.42
15
111.83
150.00 – 191.79
63
1.09
161.01
8
156.60
100.00 – 191.79
111
3.89
145.13
23
127.03
The Company uses the fair value method of accounting for share options granted to employees. During the year ended December 31,
2024, the Company recorded an expense of $1.0 million (2023 – $1.3 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 2024 and 2023 were determined using the Black-Scholes option pricing model with the following assumptions:
2024
2023
Risk-free interest rate (% per annum)
3.50
3.70
Expected hold period to exercise (years)
4.62
4.40
Volatility in the price of the Company’s shares (%)
52.65
53.54
Dividend yield (%)
2.99
2.95
Executive Share Unit (“ESU”) Plan
Under the terms of the ESU Plan, the Company’s Board of Directors may grant restricted share units (“RSUs”) and executive deferred share
units (“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.
DECEMBER 31, 2024
DECEMBER 31, 2023
# OF RSUs
(IN 000s)
WEIGHTED AVERAGE
FAIR VALUE AT
GRANT DATE
$
# OF RSUs
(IN 000s)
WEIGHTED AVERAGE
FAIR VALUE AT
GRANT DATE
$
Outstanding balance, beginning of year
293
134.25
316
108.94
RSUs granted
94
166.22
65
129.98
RSU dividend reinvestments
7
173.02
8
108.11
RSUs exercised
(60)
126.54
(90)
40.95
RSUs forfeited
(74)
130.10
(6)
119.54
Outstanding balance, end of year
260
149.78
293
134.25
For the year ended December 31, 2024, the Company repurchased the equity interest related to a portion of fully vested RSUs amounting
to $5.2 million (2023 – $8.7 million).
For the year ended December 31, 2024, the Company recorded an expense of $7.4 million (2023 – $6.1 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.
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DECEMBER 31, 2024
DECEMBER 31, 2023
# OF
EXECUTIVE
DSUS
(IN 000s)
WEIGHTED AVERAGE
FAIR VALUE AT
GRANT DATE
$
# OF
EXECUTIVE
DSUS
(IN 000s)
WEIGHTED AVERAGE
FAIR VALUE AT
GRANT DATE
$
Outstanding balance, beginning of year
92
125.17
60
124.73
Executive DSUs granted
27
160.93
30
127.24
Executive DSU dividend reinvestments
3
173.41
2
107.94
Executive DSU Forfeited
(54)
87.27
-
-
Outstanding balance, end of year
68
171.79
92
125.17
For the year ended December 31, 2024, the Company recorded an expense of $1.3 million (2023 – $2.0 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.
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, 2024, the Company granted 13,565 Board DSUs (2023 – 20,715 Board DSUs), to Board Directors
under its DSU Plan. Additionally, for the year ended December 31, 2024, an additional 8,825 Board DSUs (2023 – 11,236 Board DSUs),
were granted for dividends announced during the period.
For the year ended December 31, 2024, 9,064 Board DSUs (2023 – nil) were settled, of which, 4,212 Board DSUs were settled in shares.
The Company repurchased the equity interest related to the remaining 4,852 Board DSUs amounting to $1.2 million.
For the year ended December 31, 2024, $3.8 million (2023 – $3.5 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, 2024 was $13.5 million (2023 – $12.9 million).
Contributed Surplus
The following is a continuity of the activity in the contributed surplus account:
DECEMBER 31, 2024
DECEMBER 31, 2023
Contributed surplus, beginning of year
24,817
21,499
Equity-settled share-based compensation expense
Restricted share units
7,466
6,157
Board deferred share units
3,782
3,477
Share options
995
1,316
Executive deferred share units
1,291
1,988
Reductions due to exercise in shares of share-based compensation
Restricted share units
(3,474)
(923)
Share options
(2,074)
(1,523)
Repurchase of equity interest related to restricted share units, net of tax
(4,671)
(7,174)
Repurchase of equity interest related to deferred share units, net of tax
(1,190)
-
Contributed surplus, end of year
26,942
24,817
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18. Finance costs
Finance costs include the following:
DECEMBER 31, 2024
DECEMBER 31, 2023
Interest expense
Notes Payable
132,439
62,659
Revolving securitization warehouse facilities
81,645
64,800
Secured borrowings
8,884
6,105
Revolving credit facility
6,344
17,144
Refinancing costs related to Notes Payable (note 15)
9,429
9,501
Amortization of deferred financing costs and accretion expenses
8,435
7,543
Interest expense on lease liabilities
3,617
3,822
Discount on the repurchase of 2026 Notes (note 15)
(1,487)
-
Amortization of premium on Notes Payable
(3,442)
-
Interest income on cash in bank, net
(7,156)
(3,205)
Fair value change on prepayment options
(13,216)
(19,035)
225,492
149,334
19. Income taxes
The Company’s income tax expense was determined as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
Combined basic federal and provincial income tax rates
26.5%
26.5%
Expected income tax expense
102,633
89,294
Non-deductible expenses
1,846
1,949
Effect of capital losses (gains) on sale of assets and investments
(153)
(1,371)
Adjustments in respect of prior years
(242)
(319)
Other
103
(496)
104,187
89,057
The significant components of the Company’s income tax expense are as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
Current income tax:
Current income tax charge
114,920
91,699
Adjustments in respect of prior years and other
(1,550)
(890)
113,370
90,809
Deferred income tax:
Relating to origination and reversal of temporary differences
(11,201)
(2,323)
Adjustments in respect of prior years and other
2,018
571
(9,183)
(1,752)
104,187
89,057
Deferred income tax related to items recognized in OCI during the year are summarized below:
DECEMBER 31, 2024
DECEMBER 31, 2023
Change in fair value of cash flow hedge
13,480
(1,516)
Change in costs of hedging
(1,951)
797
Reclassification of cash flow hedge to the consolidated statements of income
(608)
1,510
Deferred income tax (recovery) expense charged to OCI
(10,921)
791
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| 2024 ANNUAL REPORT
The changes in deferred income tax liabilities are as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
Balance, beginning of year
(24,259)
(24,692)
Tax recovery during the year recognized in profit or loss
9,183
1,752
Tax recovery (expense) during the year recognized in OCI
10,921
(791)
Tax expense during the year recognized in equity
(29)
(528)
Balance, end of year
(4,184)
(24,259)
The significant components of the Company’s deferred income tax liabilities are as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
Accounts receivable and allowance for credit losses
18,674
13,096
Revaluation of notes payable and derivative financial instruments
12,897
1,976
Loss carry forwards
3,010
623
Share-based compensation
2,706
2,746
Right-of-use assets, net of lease liabilities
1,427
1,424
Financing fees
819
1,222
Unrealized fair value change on investments
(1,433)
(827)
Fair value change on prepayment options
(8,523)
(5,044)
Lease assets and property and equipment
(11,992)
(14,359)
Intangible asset arising from business acquisition
(21,986)
(25,458)
Other
217
342
(4,184)
(24,259)
As at December 31, 2024 and 2023, there were no recognized deferred income tax liabilities for taxes that would be payable on the
undistributed earnings of the Company’s subsidiaries.
20. Earnings per share
Basic Earnings Per Share
Basic earnings per share amounts were calculated by dividing the net income for the period by the weighted average number of outstanding
common shares and vested Board and Executive 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. Executive DSUs granted to officers generally vest at
the end of a three-year period based on achieving long-term financial targets.
DECEMBER 31, 2024
DECEMBER 31, 2023
Net income
283,110
247,898
Weighted average number of common shares outstanding (in 000s)
17,094
16,867
Basic earnings per common share
16.56
14.70
For the year ended December 31, 2024, 349,878 vested Board and Executive DSUs (2023 – 325,493 Board and Executive DSUs) were
included in the weighted average number of common shares outstanding.
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, RSUs, or Executive DSUs. The number of additional shares for inclusion in the diluted earnings per share
calculation was determined using the treasury share method.
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DECEMBER 31, 2024
DECEMBER 31, 2023
Net income
283,110
247,898
Weighted average number of common shares outstanding (in 000s)
17,094
16,867
Dilutive effect of share-based compensation (in 000s)
272
250
Weighted average number of diluted shares outstanding (in 000s)
17,366
17,117
Diluted earnings per common share
16.30
14.48
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:
DECEMBER 31, 2024
DECEMBER 31, 2023
Share options (in 000s)
56
131
Restricted share units (in 000s)
37
68
Executive deferred share units (in 000s)
4
28
97
227
21. Net change in other operating assets and liabilities
The net change in other operating assets and liabilities is as follows:
DECEMBER 31, 2024
DECEMBER 31, 2023
Accounts receivable
(11,676)
(5,065)
Prepaid expenses
(26)
(1,128)
Accounts payable and other liabilities
83,803
20,115
Income taxes recoverable/payable
(124)
28,533
Unearned revenue
(1,101)
(1,696)
Accrued interest payable
36,128
2,716
107,004
43,475
Supplemental disclosures in respect of the consolidated statements of cash flows consist of the following:
DECEMBER 31, 2024
DECEMBER 31, 2023
Income taxes paid
118,580
70,478
Income taxes refunded
5,086
8,202
Interest paid
194,586
147,990
Interest received
1,103,021
882,192
22. 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, 2024, 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:
WITHIN 1 YEAR
AFTER 1 YEAR, BUT NOT
MORE THAN 5 YEARS
MORE THAN 5 YEARS
Premises
22,799
39,883
4,521
Technology commitments
22,601
23,151
3,538
Vehicles
753
1,406
-
46,153
64,440
8,059
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| 2024 ANNUAL REPORT
23. 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.
24. 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, 2024 and 2023, the Company was in compliance with all of its externally imposed financial covenants.
25. 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, 2024 and 2023, 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
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| 2024 ANNUAL REPORT
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, 2024, the Company’s gross consumer loans receivable portfolio was $4.60 billion
(2023 – $3.65 billion). Net charge offs expressed as a percentage of the average loan book were 9.2% for the year ended December 31,
2024 (2023 – 8.9%).
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, 2024, the Company’s lease assets were
$41.0 million (2023 – $45.2 million). Lease asset losses for the year ended December 31, 2024 represented 3.7% (2023 – 3.4%) 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, 2024
LESS THAN 1
YEAR
1 TO 3
YEARS
4 TO 5
YEARS
5 YEARS +
TOTAL
Accounts payable and other liabilities
156,903
-
-
-
156,903
Accrued interest payable
49,003
-
-
-
49,003
Revolving credit facility
-
25,000
-
-
25,000
Revolving securitization warehouse facilities
-
1,077,500
-
-
1,077,500
Secured borrowings
65,471
32,813
21,772
279
120,335
Derivative financial liabilities
-
21,466
-
-
21,466
Notes payable
-
849,954
1,441,198
149,884
2,441,036
DECEMBER 31, 2023
LESS THAN 1
YEAR
1 TO 3
YEARS
4 TO 5
YEARS
5 YEARS +
TOTAL
Accounts payable and other liabilities
72,409
-
-
-
72,409
Accrued interest payable
12,875
-
-
-
12,875
Revolving credit facility
-
192,000
-
-
192,000
Revolving securitization warehouse facilities
-
1,370,000
-
-
1,370,000
Secured borrowings
69,450
67,925
5,224
578
143,177
Derivative financial liabilities
-
4,166
38,291
-
42,457
Notes payable
-
424,064
709,825
-
1,133,889
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.
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The 2026 Notes, 2028 Notes, 2029 Notes, Additional 2029 Notes and 2030 Notes maturing on May 1, 2026, December 1, 2028, July 1, 2029,
July 1, 2029, and May 15, 2030, respectively, have fixed rates of interest.
The Revolving Credit Facility has variable interest rates at either the lender’s prime rate plus 75 bps or 225 bps plus either (i) the
forward-looking Term CORRA for the applicable period plus a market standard CORRA spread adjustment of (a) 29.547 bps for a one-
month interest period, or (b) 32.138 bps for a three month interest period; or (ii) the daily compounded CORRA for the applicable period
plus a market standard CORRA spread adjustment of 29.547 bps; provided further that the interest rate shall not fall below 225 bps.
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, 2024, the Company’s has drawn $25 million against its $550 million Revolving Credit Facility.
The Revolving Securitization Warehouse Facility I and Revolving Securitization Warehouse Facility II have variable interest rates at the
rate of the daily compounded CORRA plus (a) a market standard CORRA spread adjustment of 29.547 bps, and (b) 195 bps; provided
further that the interest rate shall not fall below 195 bps. 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 the daily compounded CORRA plus a market standard CORRA spread
adjustment of 29.547 bps. 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 and $125 million Securitization Facility bear 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, 2024, 99% (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.
Currency Risk
Currency risk measures the Company’s risk of financial loss due to adverse movements in currency exchange rates.
The 2026 Notes, 2028 Notes, 2029 Notes, Additional 2029 Notes and 2030 USD Notes were issued in USD. 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 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 United States 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.
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| 2024 ANNUAL REPORT
26. Financial instruments
Recognition and Measurement of Financial Instruments
The Company classified its financial instruments as follows:
FINANCIAL INSTRUMENTS
MEASUREMENT
DECEMBER 31, 2024
DECEMBER 31, 2023
Cash
Fair value
182,121
144,577
Accounts receivable
Amortized cost
42,438
30,762
Consumer loans receivable, net
Amortized cost
4,366,533
3,447,588
Investments
Fair value
41,918
61,464
Derivative financial assets
Fair value
60,675
21,904
Revolving credit facility
Amortized cost
21,797
190,921
Accounts payable and other liabilities
Amortized cost
156,903
72,409
Accrued interest payable
Amortized cost
49,003
12,875
Secured borrowings
Amortized cost
120,335
143,177
Revolving securitization warehouse facilities
Amortized cost
1,073,876
1,364,741
Derivative financial liabilities
Fair value
21,466
42,457
Notes payable
Amortized cost
2,413,795
1,120,826
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, 2024 and 2023:
DECEMBER 31, 2024
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
Cash
182,121
182,121
-
-
Accounts receivable
42,438
-
-
42,438
Consumer loans receivable, net
4,366,533
-
-
4,366,533
Investments
41,918
-
-
41,918
Derivative financial assets
60,675
-
60,675
-
Revolving credit facility
21,797
-
-
21,797
Accounts payable and other liabilities
156,903
-
-
156,903
Accrued interest payable
49,003
-
-
49,003
Secured borrowings
120,335
-
-
120,335
Revolving securitization warehouse facilities
1,073,876
-
-
1,073,876
Derivative financial liabilities
21,466
-
21,466
-
Notes payable
2,413,795
-
-
2,413,795
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| 2024 ANNUAL REPORT
DECEMBER 31, 2023
TOTAL
LEVEL 1
LEVEL 2
LEVEL 3
Cash
144,577
144,577
-
-
Accounts receivable
30,762
-
-
30,762
Consumer loans receivable, net
3,447,588
-
-
3,447,588
Investments
61,464
19,546
-
41,918
Derivative financial assets
21,904
-
21,904
-
Revolving credit facility
190,921
-
-
190,921
Accounts payable and other liabilities
72,409
-
-
72,409
Accrued interest payable
12,875
-
-
12,875
Secured borrowings
143,177
-
-
143,177
Revolving securitization warehouse facilities
1,364,741
-
-
1,364,741
Derivative financial liabilities
42,457
-
42,457
-
Notes payable
1,120,826
-
-
1,120,826
There were no transfers between Level 1, Level 2 or Level 3 for the years ended December 31, 2024 and 2023.
27. 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.
DECEMBER 31, 2024
DECEMBER 31, 2023
Short-term employee benefits including salaries
9,872
6,362
Share-based payment transactions
8,143
9,135
18,015
15,497
28. 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 legislation and regulations applicable to the consumer lending industry.
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• 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 year ended December 31, 2024 and 2023:
YEAR ENDED DECEMBER 31, 2024
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
Revenue
Interest income
1,081,843
39,979
-
1,121,822
Lease revenue
-
95,407
-
95,407
Commissions earned
261,630
14,096
-
275,726
Charges and fees
26,941
3,393
-
30,334
1,370,414
152,875
-
1,523,289
Operating expenses
Bad debts
452,558
15,206
-
467,764
Other operating expenses
212,451
54,987
94,535
361,973
Depreciation and amortization
38,995
38,096
6,804
83,895
704,004
108,289
101,339
913,632
Segment operating income (loss)
666,410
44,586
(101,339)
609,657
Other income
3,132
Finance costs
(225,492)
Income before income taxes
387,297
YEAR ENDED DECEMBER 31, 2023
EASYFINANCIAL
EASYHOME
CORPORATE
TOTAL
Revenue
Interest income
853,228
35,700
-
888,928
Lease revenue
-
99,848
-
99,848
Commissions earned
220,363
14,122
-
234,485
Charges and fees
23,226
3,582
-
26,808
1,096,817
153,252
-
1,250,069
Operating expenses
Bad debts
327,196
14,443
-
341,639
Other operating expenses
197,358
59,610
88,613
345,581
Depreciation and amortization
37,747
42,259
6,325
86,331
562,301
116,312
94,938
773,551
Segment operating income (loss)
534,516
36,940
(94,938)
476,518
Other income
9,771
Finance costs
(149,334)
Income before income taxes
336,955
As at December 31, 2024 and 2023, the Company's goodwill consisted 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.
141
| 2024 ANNUAL REPORT
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 $10.3 million for the year ended
December 31, 2024 (2023 - $11.0 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, 2024 and 2023
were as follows:
DECEMBER 31, 2024
(%)
DECEMBER 31, 2023
(%)
Furniture
42
41
Electronics
31
33
Appliances
17
16
Computers
10
10
100
100
142
| 2024 ANNUAL REPORT
Corporate
information
Head Office
33 City Centre Drive
5th Floor
Mississauga, Ontario
L5B 2N5
Tel: (905) 272-2788
Investor Relations
David Ingram
Executive Chairman of the Board
Tel: (905) 272-2788
Hal Khouri
Executive Vice-President
& Chief Financial Officer
Tel: (905) 272-2788
Farhan Ali Khan
Executive Vice-President & Chief
Strategy and Corporate Development
Officer
Tel: (905) 272-2788
Bankers
Bank of Montreal
Toronto, Ontario
Wells Fargo Canada
Toronto, Ontario
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
The Bank of Nova Scotia
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