SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 40-F
☐ Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934
or
☒ Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended March 31, 2022
Commission file number 001-38705
ALITHYA GROUP INC.
(Translation of Registrant’s name into English)
Québec, Canada
(Province or other jurisdiction of incorporation or organization)
7370
(Primary Standard Industrial Classification Code Number)
N/A
(I.R.S. Employer Identification Number)
1100, Robert-Bourassa Boulevard, Suite 400
Montréal, Québec, Canada H3B 3A5
+1 (514) 285-5552
(Address and telephone number of principal executive offices)
CT Corporation System
28, Liberty Street
New York, New York, USA 10005
+1 (212) 590-9200
(Name, address and telephone number of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class:
Trading symbol:
Name of each exchange on which
registered:
Class A subordinate voting shares
ALYA
The Nasdaq Stock Market LLC
Securities registered or to be registered to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
For annual report, indicate by check mark the information filed with this form:
☒ Annual Information Form ☒ Audited Annual Financial Statement
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close
of the period covered by the annual report:
85,554,000 Class A subordinate voting shares and 7,171,616 Class B multiple voting shares
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file
such report); and (2) has been subject to such filing requirements for the past 90 days:
Yes ☒
No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be
submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or such shorter period that the
registrant was required to submit such files):
Yes ☒
No ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the
Exchange Act:
Emerging growth company ☒
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by
check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised accounting standards† provided pursuant to Section 13(a) of the Exchange Act: ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting
Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of
the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15
U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report: ☐
EXPLANATORY NOTE
Alithya Group inc. (“Alithya”, the “Company” or the “Registrant”) is a Canadian issuer eligible to prepare and file
this annual report on Form 40-F (collectively with the exhibits filed herein, the “Annual Report”) pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Registrant is a “foreign
private issuer” as defined in Rule 3b-4 under the Exchange Act and Rule 405 under the Securities Act of 1933, as
amended. Accordingly, equity securities of the Registrant are exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16
of the Exchange Act pursuant to Rule 3a12-3 thereunder.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report contains statements that may constitute “forward-looking information” within the meaning of
applicable Canadian securities laws and “forward-looking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 and other applicable U.S. safe harbours (collectively “forward-looking
statements”). Statements that do not exclusively relate to historical facts, as well as statements relating to
management’s expectations regarding the future growth, results of operations, performance and business prospects
of the Company, and other information related to the Company’s business strategy and future plans or which refer to
the characterizations of future events or circumstances represent forward-looking statements. Such statements often
contain the words “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,”
“would,” “will,” “may,” “can,” “continue,” “potential,” “should,” “project,” “target,” and similar expressions and
variations thereof, although not all forward-looking statements contain these identifying words.
Forward-looking statements are presented for the sole purpose of assisting investors and others in understanding the
Company’s objectives, strategies and business outlook as well as its anticipated operating environment and may not
be appropriate for other purposes. Although management believes the expectations reflected in the Company’s
forward-looking statements were reasonable as at the date they were made, forward-looking statements are based on
the opinions, assumptions and estimates of management and, as such, are subject to a variety of risks and
uncertainties and other factors, many of which are beyond the Company’s control, and which could cause actual
events or results to differ materially from those expressed or implied in such statements. Such risks and uncertainties
include but are not limited to those discussed in the section titled “Risk and Uncertainties” of our Management’s
Discussion and Analysis for the fiscal years ended March 31, 2022 and March 31, 2021, included in and
incorporated into this Annual Report as Exhibit 99.3, and in the Company’s other materials made public, including
documents filed with Canadian and U.S. securities regulatory authorities from time to time and which are available
on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Additional risks and uncertainties not currently known
to the Company or that the Company currently deems to be immaterial could also have a material adverse effect on
its financial position, financial performance, cash flows, business or reputation.
Forward-looking statements contained or incorporated by reference in this Annual Report are qualified by these
cautionary statements. Forward-looking statements contained herein are made only as of the date of this Annual
Report and those contained in other documents incorporated by reference are made only as of the date of such other
documents. The Company expressly disclaims any obligation to update or alter forward-looking statements, or the
factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except
as required by applicable law. Investors are cautioned not to place undue reliance on forward-looking statements
since actual results may vary materially from them.
DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES
The Registrant is permitted, under the multijurisdictional disclosure system adopted by the United States, to prepare
this Annual Report in accordance with Canadian disclosure requirements, which are different from those of the
United States. The Registrant also prepares its consolidated financial statements, which are filed with this Annual
Report, in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board. IFRS differ in some significant respects from United States generally accepted
accounting principles (“U.S. GAAP”) and thus the Registrant’s financial statements may not be comparable to
financial statements of United States companies. In addition, differences may arise in subsequent periods related to
changes in IFRS or U.S. GAAP or due to new transactions that the Registrant enters into. The Registrant is not
required to prepare a reconciliation of its consolidated financial statements and related footnote disclosures between
IFRS and U.S. GAAP and has not quantified such differences.
A. Annual Information Form
PRINCIPAL DOCUMENTS
The Registrant’s Annual Information Form for the fiscal year ended March 31, 2022 (the “2022 AIF”) is attached as
Exhibit 99.1 to this Annual Report and incorporated herein by reference.
B. Audited Annual Financial Statements
The Registrant’s audited annual consolidated financial statements for the fiscal years ended March 31, 2022 and
March 31, 2021, including the reports of independent registered public accounting firms KPMG LLP, Montréal,
Canada (Auditor Firm ID: 85) and Raymond Chabot Grant Thornton LLP, Montréal, Canada (Auditor Firm ID:
1232), is attached as Exhibit 99.2 to this Annual Report and incorporated herein by reference.
C. Management’s Discussion and Analysis
The Registrant’s Management’s Discussion and Analysis for the fiscal years ended March 31, 2022 and March 31,
2021 (the “2022 MD&A”) is attached as Exhibit 99.3 to this Annual Report and incorporated herein by reference.
A. Certifications
CONTROLS AND PROCEDURES
The certifications required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act are attached as Exhibits 99.4,
99.5, 99.6 and 99.7 to this Annual Report and incorporated herein by reference.
B. Disclosure Control and Procedures
The information provided under the headings “Management’s Evaluation of our Disclosure Controls and
Procedures - Disclosure Controls and Procedures” and “Management’s Evaluation of our Disclosure Controls and
Procedures – Limitations on Effectiveness of Disclosure Control and Procedures and Internal Control over Financial
Reporting” in the Registrant’s 2022 MD&A attached as Exhibit 99.3 to this Annual Report is incorporated by
reference herein.
C. Management’s Annual Report on Internal Control over Financial Reporting
The information provided under the heading “Management’s Evaluation of our Disclosure Controls and Procedures -
Internal Control over Financial Reporting” in the Registrant’s 2022 MD&A attached as Exhibit 99.3 to this Annual
Report is incorporated by reference herein.
D. Changes in Internal Control over Financial Reporting
The information provided under the heading “Management’s Evaluation of our Disclosure Controls and Procedures -
Changes in Internal Control over Financial Reporting” in the Registrant’s 2022 MD&A attached as Exhibit 99.3 to
this Annual Report is incorporated by reference herein.
AUDIT COMMITTEE FINANCIAL EXPERT
The Registrant’s board of directors (the “Board”) has determined that it has at least one “audit committee financial
expert” (as such term is defined in item 8(a) of General Instruction B to Form 40-F) serving on its Audit and Risk
Management Committee (the “Audit Committee”). The Board has determined that Mr. Robert Comeau is an audit
committee financial expert and is independent within the meaning of applicable U.S. Securities and Exchange
Commission (“SEC”) regulations and of the corporate governance standards of the Nasdaq Stock Market
(“NASDAQ”).
Mr. Comeau is a corporate director who serves as lead director of the Registrant. Before becoming a corporate
director in 2018, he acted as a consultant between 2015 and 2018, and served as Chief Financial Officer of both
public and private companies, including Lumenpulse Inc., from 2012 to 2015, Aveos Fleet Performance Inc., from
2009 to 2011, and Emergis Inc., from 2005 to 2008. Mr. Comeau also held various positions over 17 years at Nortel
Networks Corporation, including as Vice-President, Finance and Operations. Mr. Comeau previously served as a
director and Chair of the Audit Committee of H2O Innovation Inc. from 2017 to 2021 as well as a Special
Committee Member of Groupe Conseil FXInnovation Inc. from 2014 to 2017. Mr. Comeau is a former Chartered
Professional Accountant (CPA, CA). He holds a Bachelor’s degree in accounting from HEC Montréal.
The SEC rules indicate that the designation of Mr. Comeau as an audit committee financial expert does not make
him an “expert” for any purpose, impose on him any duties, obligations or liability that are greater than the duties,
obligations or liability imposed on him as a member of the Audit Committee and of the Board in absence of such
designation, or affect the duties, obligations or liability of any other member of the Audit Committee or the Board.
CODE OF ETHICS
The Registrant has adopted a code of business conduct and ethics (the “Code”) applicable to its principal executive
officer, principal financial officer, principal accounting officer or controller and persons performing similar
functions. This Code is intended to qualify as a “code of ethics” within the meaning of the applicable SEC rules. The
Code is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov, as well as on the Registrant’s
website at https://www.alithya.com/en/who-we-are/governance. All amendments to the Code and waivers, if any, for
executive officers will be disclosed on the Registrant’s website. Unless specifically referred to herein, information
on the Registrant’s website shall not be deemed to be incorporated by reference in this Annual Report.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
KPMG LLP (“KPMG”), Montréal, Canada (Auditor Firm ID: 85), acted as the Registrant’s independent registered
public accounting firm for the fiscal year ended March 31, 2022 and Raymond Chabot Grant Thornton LLP
(“RCGT”), Montréal, Canada (Auditor Firm ID: 1232), acted as the Registrant’s independent registered public
accounting firm for the fiscal year ended March 31, 2021. See section “Auditors - Service Fees” in the Registrant’s
2022 AIF, which section is incorporated herein by reference, for the amounts billed to the Registrant by KPMG and
RCGT for services performed in the last two fiscal years by category of service (audit fees, audit-related fees, tax
fees and all other fees).
OFF -BALANCE SHEET ARRANGEMENTS
The information provided under the heading “Off-Balance Sheet Arrangements” in the Registrant’s 2022 MD&A
attached as Exhibit 99.3 is incorporated by reference herein.
TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The information provided under the heading “Contractual Obligations” in the Registrant’s 2022 MD&A attached as
Exhibit 99.3 is incorporated by reference herein.
IDENTIFICATION OF THE AUDIT COMMITTEE
The Registrant has a separately designated standing audit committee, named the Audit and Risk Management
Committee, established in accordance with section 3(a)(58)(A) of the Exchange Act. The members of the Audit and
Risk Management Committee are Dana Ades-Landy, Robert Comeau and C. Lee Thomas.
CORPORATE GOVERNANCE
The Registrant is a “foreign private issuer” under the Exchange Act, as amended, and its Class A subordinate shares
are listed on the Toronto Stock Exchange and on NASDAQ. Pursuant to NASDAQ Stock Market Rule 5615(a)(3),
the Registrant is allowed to follow its home country practice in lieu of certain NASDAQ corporate governance
standards, provided that it discloses and describes the same.
A description of the significant ways in which the Registrant’s governance practices currently differ from those
followed by domestic companies pursuant to the Rule 5600 series of the NASDAQ Stock Market Rules is set out
below:
•
Composition of Compensation and Nomination Committees. NASDAQ Stock Market Rules 5605(d)(2)
and 5605(e)(1) provide that each member of a company’s compensation committee and nomination
committee must be an independent director, as defined in NASDAQ Stock Market Rule 5605(a)(2). The
Registrant follows applicable Canadian laws, which do not mandate a compensation committee or a
nomination committee to be comprised entirely of independent directors. The Corporate Governance and
Nominating Committee and the Human Capital and Compensation Committee of the Registrant are
currently comprised of a majority of independent directors;
• Quorum Requirements. NASDAQ Stock Market Rule 5620(c) provides that the minimum quorum
requirement for a meeting of shareholders is 33⅓% of the outstanding common voting shares. The
Registrant is governed by the Business Corporations Act (Québec) which permits the Registrant to specify
a quorum requirement in its by-laws. Under the Registrant’s by-laws, a quorum for the transaction of
business at any meeting of shareholders is of at least two persons present in person or by proxy and
representing at least 25% of the issued and outstanding shares of the Registrant carrying the right to vote at
the meeting. The rules of the Toronto Stock Exchange, upon which the Registrant’s class A subordinate
voting shares are also listed, do not contain specific quorum requirements; and
•
Shareholder Approval. NASDAQ Stock Market Rule 5635(a) requires shareholder approval prior to the
issuance of securities in connection with the acquisition of the stock or assets of another company in certain
circumstances, including where the common stock to be issued will have voting power equal to or in excess
of 20% of the voting power outstanding before the issuance, or the number of shares to be issued will be
equal to or in excess of 20% of the number of shares outstanding before the issuance. The Registrant
complies with the applicable requirements of the Toronto Stock Exchange, which requires shareholder
approval for the issuance of securities in connection with an acquisition where the number of securities
issued or issuable in payment of the purchase price for the acquisition exceeds 25% of the number of
securities of the issuer which are outstanding.
INTERACTIVE DATA FILE
The Registrant is submitting its Interactive Data File as Exhibit 101 to this Annual Report.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
UNDERTAKING AND CONSENT TO SERVICE OF PROCESS
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made
by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to: the
securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an annual report
on Form 40-F arises; or transactions in said securities. The Registrant has previously filed with the SEC a Form F-X
in connection with the class of securities in relation to which the obligation to file this annual report on Form 40-F
arises.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the
requirements for filing on Form 40-F and has duly caused this annual report to be signed on its behalf by the
undersigned, thereto duly authorized.
ALITHYA GROUP INC.
/s/ Nathalie Forcier
Name: Nathalie Forcier
Title: Chief Legal Officer
Date: June 17, 2022
EXHIBIT INDEX
99.1
99.2
99.3
99.4
99.5
99.6
99.7
99.8
99.9
101.1
104
Annual Information Form for the fiscal year ended March 31, 2022
Audited Annual Consolidated Financial Statements for the fiscal years ended March 31, 2022 and
March 31, 2021
Management’s Discussion and Analysis of Financial Position and Results of Operations for the fiscal
years ended March 31, 2022 and March 31, 2021
Certification of the Registrant’s Chief Executive Officer required pursuant to Rule 13a-14(a)
Certification of the Registrant’s Chief Financial Officer required pursuant to Rule 13a-14(a)
Certification of the Registrant’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of the Registrant’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Consent of KPMG LLP
Consent of Raymond Chabot Grant Thornton LLP
Interactive Data File
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
Exhibit 99.1
ALITHYA GROUP INC.
Annual Information Form
for the year ended
March 31, 2022
June 16, 2022
TABLE OF CONTENTS
TABLE OF CONTENTS
GENERAL INFORMATION
FORWARD-LOOKING STATEMENTS
CORPORATE STRUCTURE
Name, Address and Incorporation
Intercorporate Relationships
GENERAL DEVELOPMENT OF THE BUSINESS
Recently Announced Developments
Fiscal 2022 Developments
Fiscal 2021 Developments
Fiscal 2020 Developments
DESCRIPTION OF THE BUSINESS
Corporate Overview
Business Offerings
Competitive Environment
Strategic Business Plan
Clients by Market Sectors
Client Approach Philosophy
Sales, Marketing and Strategic Partners
Human Capital
Special Skills and Knowledge
Principal Office Locations
Intellectual Property
RISK AND UNCERTAINTIES
DIVIDENDS
CAPITAL STRUCTURE
Description of Securities
Voting Rights
Rights to Dividends and Rights upon Winding-up
and Dissolution
Multiple Voting Shares Conversion Rights
I
2
2
3
3
3
3
3
4
4
5
5
5
5
6
6
7
7
7
7
7
8
8
9
9
9
9
9
9
9
Restrictions on Transfer
10
MARKET FOR SECURITIES
Trading Price and Volume
Normal Course Issuer Bid and Share Purchase for
Cancellation
DIRECTORS AND OFFICERS
Board of Directors
Executive Officers
Director’s and Executive Officers’ Share Ownership
10
10
10
10
10
12
12
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
12
Conflicts of Interest
AUDIT AND RISK MANAGEMENT COMMITTEE
Relevant Education and Experience
Pre-approval Policies and Procedures
AUDITORS
Independence
Service Fees
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS
TRANSFER AGENTS AND REGISTRARS
MATERIAL CONTRACTS
ADDITIONAL INFORMATION
APPENDIX A - AUDIT AND RISK MANAGEMENT COMMITTEE
CHARTER
13
13
13
13
13
13
14
14
14
15
15
15
16
ALITHYA - Annual Information Form i
GENERAL INFORMATION
This Annual Information Form is dated June 16, 2022 and, unless otherwise indicated, all information disclosed herein is
provided as at March 31, 2022.
Unless otherwise indicated, all references in this Annual Information Form to “Alithya”, “we”, “our”, “us”, “the Company” or
similar terms refer to Alithya Group inc. and its consolidated subsidiaries and references to the “Board” refers to the board
of directors of the Company. Unless otherwise indicated, all monetary amounts are in Canadian dollars, all references to “$”,
“C$” and “dollars” mean Canadian dollars and all references to “US$” mean U.S. dollars.
References to the “Edgewater Transaction” refer to, collectively, on November 1, 2018, (i) the Company’s acquisition of
Alithya Canada Inc. (formerly Alithya Group Inc.) (“Pre-IPO Alithya”), by way of a statutory plan of arrangement under the
Business Corporations Act (Québec), and (ii) the merger of 9374-8572 Delaware Inc., a wholly-owned subsidiary of the
Company, with and into Alithya USA, Inc. (formerly Edgewater Technology, Inc.) (“Edgewater”), a Delaware corporation,
with Edgewater being the surviving corporation. As a result of the Edgewater Transaction, both Pre-IPO Alithya and
Edgewater became wholly-owned subsidiaries of Alithya.
References to the “subordinate voting shares” and the “multiple voting shares” refer to the Class A subordinate voting
shares, no par value, and the Class B multiple voting shares, no par value, of Alithya, respectively.
FORWARD-LOOKING STATEMENTS
This Annual Information Form contains statements that may constitute “forward-looking information” within the meaning of
applicable Canadian securities laws and “forward-looking statements” within the meaning of the U.S. Private Securities
Litigation Reform Act of 1995 and other applicable U.S. safe harbours (collectively “forward-looking statements”).
Statements that do not exclusively relate to historical facts, as well as statements relating to management’s expectations
regarding the future growth, results of operations, performance and business prospects of the Company, and other
information related to the Company’s business strategy and future plans or which refer to the characterizations of future
events or circumstances represent forward-looking statements. Such statements often contain the words “anticipates,”
“expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,”
“potential,” “should,” “project,” “target,” and similar expressions and variations thereof, although not all forward-looking
statements contain these identifying words.
Forward-looking statements in this Annual Information Form include, among other things, information or statements about:
(i) the Company’s ability to generate sufficient earnings to support its operations; (ii) the Company’s ability to take
advantage of business opportunities and meet its goals set in its three-year strategic plan; (iii) the Company’s ability to
develop new business and broaden the scope of its service offerings and enter into new contracts; (iv) the Company’s
strategy, future operations, and prospects; (v) the Company’s need for additional financing and its estimates regarding its
future financing and capital requirements; (vi) the Company’s expectations regarding its financial performance, including its
revenues, profitability, research and development, costs and expenses, gross margins, liquidity, capital resources, and
capital expenditures; (vii) the Company’s ability to realize the expected synergies or cost savings relating to the integration
of its business acquisitions; and (viii) the impact of the COVID-19 pandemic and related response measures on the
Company’s business operations, financial results and financial position and those of its clients and on the economy in
general.
Forward-looking statements are presented for the sole purpose of assisting investors and others in understanding the
Company’s objectives, strategies and business outlook as well as its anticipated operating environment and may not be
appropriate for other purposes. Although management believes the expectations reflected in the Company’s forward-looking
statements were reasonable as at the date they were made, forward-looking statements are based on the opinions,
assumptions and estimates of management and, as such, are subject to a variety of risks and uncertainties and other
factors, many of which are beyond the Company’s control, and which could cause actual events or results to differ materially
from those expressed or implied in such statements. Such risks and uncertainties include but are not limited to the factors
discussed under the section titled “Risks and Uncertainties” of the Company’s management’s discussion and analysis for the
fiscal years ended March 31, 2022 and 2021, incorporated by reference into this Annual Information Form under the section
titled “Risks and Uncertainties”, and the Company’s other materials made public, including documents filed with Canadian
and U.S. securities regulatory authorities from time to time and which are available on SEDAR at www.sedar.com and
EDGAR at www.sec.gov. Additional risks and uncertainties not currently known to the Company or that the Company
currently deems to be immaterial could also have a material adverse effect on its financial position, financial performance,
cash flows, business or reputation.
Forward-looking statements contained or incorporated by reference in this Annual Information Form are qualified by these
cautionary statements. Unless otherwise indicated, forward-looking statements contained herein are made only as of the
date of this Annual Information Form and those contained in other documents incorporated by reference are made only as
of the date of such other documents. The Company expressly disclaims any obligation to update or alter forward-looking
statements, or the factors or assumptions underlying them, whether as a result of new information, future events or
otherwise, except as required by applicable law. Investors are cautioned not to place undue reliance on forward looking
statements since actual results may vary materially from them.
ALITHYA - Annual Information Form 2
CORPORATE STRUCTURE
Name, Address and Incorporation
Alithya Group inc. (formerly 9374-8572 Québec Inc.) was incorporated on March 8, 2018 under the Business Corporations
Act (Québec) (the “QBCA”). The Company was created for the purpose of the business combination between Alithya Canada
Inc. (formerly Alithya Group Inc.) (“Pre-IPO Alithya”), incorporated on April 2, 1992 under the Companies Act (Québec),
Alithya USA, Inc. (formerly Edgewater Technology, Inc.) (“Edgewater”), a corporation incorporated on March 12, 1996
under the laws of Delaware and previously listed on the NASDAQ Global Market, and 9374-8572 Delaware Inc. (“U.S.
Merger Sub”), a corporation governed under the laws of Delaware and a wholly-owned subsidiary of the Company.
On March 15, 2018, the Company, Pre-IPO Alithya, Edgewater, and U.S. Merger Sub entered into an arrangement
agreement, which was amended on September 10, 2018 and October 17, 2018 (the “Arrangement Agreement”). On
November 1, 2018, and pursuant to the terms of the Arrangement Agreement, among other things, (i) the Company
acquired Pre-IPO Alithya, by way of a statutory plan of arrangement under the QBCA (the “Arrangement”), and (ii) U.S.
Merger Sub merged with and into Edgewater, with Edgewater being the surviving corporation (the “Merger”). The
Arrangement and the Merger are collectively referred to herein as the “Edgewater Transaction”. Following completion of the
Edgewater Transaction, shareholders of Pre-IPO Alithya and Edgewater became shareholders of the Company, and each of
Pre-IPO Alithya and Edgewater became wholly owned subsidiaries of the Company. On November 2, 2018, the Company’s
subordinate voting shares commenced trading on the Toronto Stock Exchange (“TSX”) and on the NASDAQ Capital Market
(“NASDAQ”) under the symbol “ALYA.”
Alithya’s head and registered office is located at 1100, Robert-Bourassa Boulevard, Suite 400, Montréal, Québec, Canada,
H3B 3A5.
Intercorporate Relationships
Below is the list of the Company’s principal subsidiaries as at March 31, 2022, each of which is directly or indirectly
wholly-owned by it. Certain subsidiaries whose total assets did not represent more than 10% of the Company’s consolidated
assets or whose revenues did not represent more than 10% of the Company’s consolidated revenues as at March 31, 2022,
based on the Company’s annual audited consolidated financial statements, have been omitted. These omitted subsidiaries
represented as a group less than 20% of the consolidated assets and revenues of the Company as at March 31, 2022.
ENTITY
Alithya Canada Inc.
Alithya Consulting Inc.
JURISDICTION
Québec, Canada
Québec, Canada
Alithya Digital Technology Corporation
Ontario, Canada
Alithya Financial Solutions, Inc.
Delaware, USA
Alithya France SAS
France
Alithya Fullscope Solutions, Inc.
Delaware, USA
Alithya Numérique Maroc SARLAU
Morocco
Alithya Ranzal LLC
Alithya USA, Inc.
Vitalyst, LLC
Delaware, USA
Delaware, USA
Delaware, USA
PERCENTAGE OWNERSHIP
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
GENERAL DEVELOPMENT OF THE BUSINESS
Recently Announced Developments
On June 1, 2022, the Company entered into a binding agreement to acquire, through Alithya USA, Inc. and 9466-6997
Québec inc., two wholly-owned subsidiaries, all the issued and outstanding equity interests of Datum Consulting Group, LLC
and its affiliates (the “Datum Group”), a leader in IP digital transformation services for data rich insurers and other
regulated entities such as state governments and which specializes in application modernisation and data migration, for a
purchase price of US$45.5 million, including estimated IFRS 16 lease liabilities of US$0.5 million. Subject to the conditions
and adjustments set out in the purchase agreement, the purchase price consists of the following (i) an upfront cash
consideration of approximately US$13.7 million; (ii) an upfront consideration of US$4.0 million payable by the issuance of
1,867,262 subordinate voting shares, (iii) deferred cash consideration of approximately US$10.3 million and deferred share
consideration of US$4.0 million, both payable over three years, and (iv) potential earnout payments of up to US$13 million,
based on annual gross profit increases, also payable in cash (75%) and shares (25%) over three years.
ALITHYA - Annual Information Form 3
The consideration payable in cash at closing is expected to be financed by a C$2.5 million draw on the Company’s
subordinate unsecured loan with Investissement Québec (the “IQ Loan”), and the remainder through available funds under
the Company’s amended and restated credit agreement (the “Credit Agreement”) which provides for a senior secured
revolving credit facility (the “Credit Facility”). The closing of the acquisition is expected to take place on July 1, 2022 and is
subject to customary conditions for a transaction of this nature, including approval from the TSX.
Fiscal 2022 Developments
On April 1, 2021, the Company acquired all the issued and outstanding shares of R3D Consulting Inc. (“R3D Consulting”),
now known as Alithya IT Services Inc., a digital solutions firm specialized in consulting and digital application development
in the insurance, finance, government services, healthcare and telecommunications sectors (the “R3D Transaction”), in
consideration for the issuance of 25,182,676 subordinate voting shares to R3D Consulting's shareholders, which represented
approximately 30% of the Company's issued and outstanding shares immediately following the closing of the R3D
Transaction, as well as payments in cash totaling approximately $978,000. The R3D Transaction, evaluated at
approximately $75 million (excluding the assumption of approximately $8.5 million in debt), included commercial
commitments totalling approximately $600 million in combined revenues during the 10-year term commercial agreements
entered into with Québecor Media Inc. (“Québecor”) and La Capitale Civil Service Insurer Inc. (a subsidiary of Beneva Inc.)
(“La Capitale”), two of R3D Consulting's indirect principal shareholders. Following the closing of the R3D Transaction,
Beneva Inc. and Québecor became indirect principal shareholders of the Company, and each held, through their respective
subsidiary, more than 10% of the Company’s share capital as at April 1, 2021.
On September 15, 2021, the Company announced the launch of a normal course issuer bid (“NCIB”) to purchase for
cancellation up to 5,462,572 subordinate voting shares, representing 10% of the Company’s public float as of the close of
markets on September 8, 2021. Purchases for cancellation under the NCIB commenced on September 20, 2021 and will end
on the earlier of September 19, 2022 and the date when the Company will have acquired the maximum number of
subordinate voting shares allowable under the NCIB or otherwise decided not to make any further purchases. Purchases
may be made on the open market through the facilities of the TSX and NASDAQ, or through alternative trading systems, if
eligible, or outside the facilities of the TSX pursuant to exemption orders issued by securities regulatory authorities.
On each of June 30, 2021, September 28, 2021, September 30, 2021 and January 27, 2022, the Company’s Credit
Agreement was amended to, among others, change applicable margins, increase the maximum amount of the Credit Facility
from $60 million to $125 million, and change the maturity date to April 1, 2024.
On January 31, 2022, the Company acquired all the issued and outstanding membership interests of Vitalyst, LLC
(“Vitalyst”), a US-based learning, employee experience and transformative change enablement business, for a total
consideration of US$50.2 million, including the assumption of the estimated IFRS 16 lease liabilities of US$3.2 million, with
US$46.0 million paid in cash, subject to working capital and other adjustments, plus a potential earnout of up to
US$1 million payable by May 31, 2023. The purchase price and related transaction costs were funded through a combination
of (i) a private placement of 6,514,658 subordinate voting shares to a company controlled by a director and 1,628,664
subordinate voting shares to Investissement Québec, in both cases at an issue market price of C$3.07 per share, for
aggregate gross proceeds of C$25 million, (ii) a C$7.5 million draw on the Company’s IQ Loan, and (iii) available funds
under the Credit Facility.
During the year ended March 31, 2022, the two remaining PPP Notes (as defined below) that were still under review for
forgiveness as at June 9, 2021 and which amounted to US$4.8 million were forgiven by the U.S. Small Business
Administration (“SBA”).
During the year ended March 31, 2022, the Company purchased for cancellation 349,400 subordinate voting shares for
approximately $1.2 million at a weighted average price of $3.31 under the NCIB. As at March 31, 2022, all of the 349,400
subordinate voting shares purchased for cancellation had been paid for and been cancelled. As at March 31, 2022, the
Company could still purchase up to 5,113,172 subordinate voting shares for cancellation under the NCIB.
Fiscal 2021 Developments
On May 5, 2020, as a result of the COVID-19 pandemic, certain U.S. subsidiaries of the Company received funding under
the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”)
administered by the SBA and entered into unsecured promissory notes (the “Notes”) in the aggregate principal amount of
US$6.3 million. The Notes had a term of five years at an interest rate of 1% per annum, with a deferral of payments until
the date on which the applicable forgiveness would be determined, with respect to any portion of the Notes which would not
be forgiven. Under the terms of the CARES Act, PPP loan recipients could apply for forgiveness for all or a portion of loans
granted under the PPP, such forgiveness being determined, subject to limitations and ongoing rule making by the SBA,
based on the necessity of the loan at the time of application and the timely use of loan proceeds for payroll costs and the
maintenance of employee and compensation levels. During the year ended March 31, 2021, PPP loans in an aggregate
amount of US$1.5 million were forgiven by the SBA for the Company’s U.S. subsidiaries. As at June 9, 2021, two remaining
PPP loans, which amounted to US$2.5 million and US$2.3 million respectively, were still under review for forgiveness.
ALITHYA - Annual Information Form 4
On June 18, 2020, the Company’s Credit Agreement was amended and restated, and further amended on March 25, 2021,
to among others reflect new covenant definitions, the Paycheck Protection Program loans certain of its U.S. subsidiaries
received on or about May 5, 2020, a temporary minimum availability test, certain COVID-19 considerations, as well as other
administrative clarifications.
Fiscal 2020 Developments
On October 1, 2019, the Company acquired all the issued and outstanding shares of Matricis Informatique Inc. (“Matricis”),
a Canadian consulting firm specialized in advanced applications and systems using techniques derived from the Internet of
Things (IoT), Artificial Intelligence (AI), a combination of the aforementioned (AIoT), as well as operational intelligence in
the healthcare, industrial and financial sectors. The acquisition of Matricis was completed for a total consideration of
$7.2 million, payable in cash and subordinate voting shares.
On October 2, 2019, Alithya Zero2Ten, Inc. an indirect wholly-owned subsidiary of the Company, sold all the issued and
outstanding shares of its wholly-owned subsidiary Zero2Ten EMEA Limited, for a total cash consideration of GBP£800,000.
On December 13, 2019, the Company acquired, through Alithya Financial Solutions, Inc., an indirect wholly-owned
subsidiary, all the issued and outstanding membership interests of Travercent LLC, a US-based cloud-focused Enterprise
Resource Planning (ERP) consulting group specialized in the healthcare sector, now known as Alithya Travercent LLC
(“Alithya Travercent”), for a total consideration of US$19.5 million, payable in cash and subordinate voting shares. Alithya
Travercent's competencies include implementing Oracle's cloud ERP, Human Capital Management (HCM), Enterprise
Performance Management (EPM) and Business Intelligence (BI) applications.
On February 1, 2020, the Company acquired all the issued and outstanding shares of Groupe Askida Inc. and Askida
Consulting Services Inc., a Canadian group with expertise in software quality assurance tools and services, as well as in
development and modernization of custom applications, for a total consideration of $16 million, payable in cash and
subordinate voting shares.
DESCRIPTION OF THE BUSINESS
Corporate Overview
Alithya advises in strategy and digital transformation with more than 3,700 professionals in Canada, the U.S. and
internationally. The Company assists its clients in their pursuit of innovation and excellence and the achievement of their
business objectives through the optimal use of digital technologies.
Alithya deploys solutions, services, and expert consultants to design, build and implement innovative and efficient solutions
for the complex business challenges of its clients, tailored to their business needs in the financial services, insurance,
renewable energy, manufacturing, telecommunications, transportation and logistics, professional services, healthcare and
government sectors.
Business Offerings
Alithya’s business offerings include a comprehensive range of digital technology services to address client needs:
•
•
•
•
Business Strategy. Alithya leads clients through essential decision-making processes regarding strategic
planning, change management, systems evolution, operational processes, employee experience and transformative
change enablement and more. Applying the most recurrent methodologies, we help our clients optimize efficiency
and successfully navigate the digital transformation age. We achieve results by leveraging an array of Business
Strategy services, including strategic consulting, digital transformation, organizational performance and enterprise
architecture.
Application Solutions Services. Alithya’s experts guide clients through all facets of Application Solutions
Services, from migration of legacy systems into future-ready digital solutions, to the development of completely
new solutions using state-of-the-art technologies. Our experts assist our clients in the choice between cloud, on-
premise, and hybrid hosting strategies and solutions. Alithya’s Application Solutions Services include digital
applications DevOps, legacy systems modernization, control and software engineering, cloud infrastructure, quality
assurance and automated testing.
Enterprise Solutions. Working with key industry partners, including some of the world’s largest vendors of cloud-
based Enterprise Solutions, Alithya’s experts help clients deploy company-wide systems to improve the efficiency of
their finance, human capital, operations, and marketing functions. Alithya’s Enterprise Solutions services include
Enterprise Resource Planning (ERP), Corporate Performance Management (CPM/EPM), Customer Relationship
Management (CRM/CXM) and Human Capital Management (HCM).
Data and Analytics. Data analysis plays a critical role in the optimization of business processes. Leveraging
specialized IT systems and software, Alithya’s data scientists help clients gain business insight and drive better
decision-making through enhanced data collection, big data analytics, machine learning automation and reporting.
ALITHYA - Annual Information Form 5
Alithya’s Data and Analytics services include business intelligence, data management, artificial intelligence and
machine learning, as well as Internet of Things (IoT).
Geographically, Alithya’s operations span across Canada, the United States and internationally, providing a full spectrum of
strategy and digital technology services with deep expertise in a range of technologies and business domains.
Competitive Environment
Today, for many companies, digital systems and infrastructures are among their most important and strategic assets. Not
only do these assets require significant investments, but they increasingly serve as key differentiators and drivers of growth
for customers.
Accordingly, businesses are seeking solutions that allow them to maintain their ability to differentiate themselves from
competitors with proprietary business processes, combined with product customization. That is where digital transformation
comes into play, inviting companies to make a shift in their approach and to evolve from traditional information technologies
to flexible digital technologies.
As businesses’ technology spending continues to increase, digital technology firms such as Alithya are striving to deliver
innovative thinking and in-depth vertical industry expertise, while facilitating business process transformation through the
use of the most optimal technologies.
Alithya believes it is well positioned to respond to these trends in clients’ investments in digital technology. Alithya’s
business model is built on a philosophy of offering flexible and creative solutions, enabling clients to realize maximum
benefits from their digital technology investments. Alithya positions itself as an agile trusted advisor and consulting partner
capable of delivering rapid results for its clients.
Alithya’s competitors include systems integration firms, contract programming companies, application software companies,
cloud computing service providers, large or traditional consulting firms, professional services groups of computer equipment
companies, infrastructure management and outsourcing companies and boutique digital companies. In addition, Alithya
competes with numerous smaller local companies in the various geographic markets in which it operates.
Alithya competes based on the following principal differentiating factors: vision and strategic advisory ability, digital services
capabilities, performance and reliability, quality of technical support, training and services, responsiveness to client needs,
reputation and experience, financial stability and strong corporate governance and competitive pricing of services.
Alithya also relies on the following measures to compete effectively: (a) investments to scale its services practice areas; (b)
a well-developed recruiting, training and retention model; (c) a successful service delivery model; (d) intrapreneurial culture
and approach; (e) a broad referral base; (f) continual investment in process improvement and knowledge capture; (g)
investment in infrastructure and research and development; (h) continued focus on responsiveness to client needs, quality
of services and competitive prices; and (i) project management capabilities and technical expertise.
Strategic Business Plan
Alithya has adopted a three-year strategic plan which sets as a goal to consolidate its position as to become a North
American digital transformation leader.
According to this plan, Alithya's consolidated scale and scope should allow it to leverage its geographies, expertise,
integrated offerings and position on the value chain to target the fastest growing IT services segments. Alithya's
specialization in digital technologies and the flexibility to deploy enterprise solutions and deliver solutions tailored to specific
business objectives responds directly to client expectations. More specifically, Alithya has established a three-pronged plan
focusing on:
•
Increasing scale through organic growth and strategic acquisitions by:
◦
◦
Generating profitable organic growth through innovation, higher-value offerings and client-relationships based
on trust;
Completing value enhancing business acquisitions by way of a North American geographic expansion to
complement current market presence, including geography, while progressively adding major integrated
enterprise solutions offerings and selected specialized expertise;
•
Achieving best-in-class employee engagement by:
◦
◦
◦
Fostering a culture of collaboration, diversity and ownership;
Cultivating employee well-being and personal growth;
Investing in the development of its leaders and employees;
ALITHYA - Annual Information Form 6
•
Providing its investors, partners and stakeholders with long-term growing return on investment by:
◦
◦
◦
Strengthening its existing relationships with clients, as a key trusted advisor, by generating long-term value;
Investing in innovation and higher value service offerings;
Acting responsibly, with a sustainable and respectful vision for its stakeholders and articulating its
Environmental, Social and Governance framework and priorities.
Clients by Market Sectors
Alithya’s clients are mainly concentrated in the financial services, insurance, renewable energy, manufacturing,
telecommunications, transportation and logistics, professional services, healthcare and government sectors. The majority
are large to mid-size companies. Alithya seeks to cultivate collaborative and flexible service engagements that are designed
to adapt to clients’ evolving priorities and challenges.
Client Approach Philosophy
With a client-centric and flexible service delivery philosophy, Alithya focuses on diligently supporting its clients in identifying
and achieving their evolving objectives through exceptional communications and by developing tailor-made solutions that
take into account their specific business realities. Alithya strives to sustain high levels of client satisfaction and exceed client
expectations which is key to renewal of existing contracts and entry into new ones. Alithya’s agile approach ensures optimal
alignment with clients, enabling them to overcome their challenges and attain their goals with seamless technology
integration. Alithya’s goal is to become its clients’ trusted advisor by developing long-term relationships that extend beyond
just project delivery.
Alithya also seeks to be an active participant in the ongoing consolidation of the digital technology industry and to leverage
its expertise and solutions to offer clients an alternative to larger traditional digital technology solution providers. Alithya is
continually looking to expand its capacity and broaden the scope of its service offerings through targeted business
acquisitions. Growth through business acquisitions can offer Alithya opportunities to better serve existing clients with
additional talent, technology, complementary services and greater scale. Through such business acquisitions, Alithya aims at
expanding its existing client relationships by adding capacity in new geographic locations, while opening doors for existing
capabilities into new client relationships.
Alithya believes that its growth strategy through business acquisitions also helps to provide an opportunity to achieve the
scale that is increasingly required for mandates awarded by government and private organizations, and to attract potential
business acquisition candidates which are poised to benefit from Alithya’s established relationships, better access to market
and preferred supplier status.
Sales, Marketing and Strategic Partners
Alithya markets and sells its services directly through its professional staff, senior management and direct sales personnel
operating out of its offices, which are strategically located in Canada, the U.S., France and Morocco.
In order to provide its clients with the solutions best suited to their needs, Alithya has established strategic partnerships
with a number of companies, including Microsoft, Oracle and Amazon Web Services (AWS). These partnerships entail joint
marketing efforts, making joint client presentations, and negotiating discounts on license fees, among other benefits. Where
such partnerships are formalized in written agreements, those agreements are either terminable at will by either party or
are for terms of one year or less. Alithya believes it has been successful in establishing strategic partnerships with a strong
group of companies who are either industry leaders or well-regarded new entrants.
Human Capital
With approximately 3,700 professionals as at March 31, 2022, none of which were covered by collective bargaining
agreements, Alithya views its professionals as its greatest asset and an important competitive advantage and therefore
strives on offering them a world-class work experience. As such, as part of its three-year strategic plan, Alithya has set to
achieve best-in-class employee engagement by fostering a culture of collaboration, diversity and ownership, by cultivating
employee well-being and personal growth and by investing in the development of its leaders and employees.
Alithya also prides itself on offering to its permanent professionals the right to acquire subordinate voting shares of Alithya
pursuant to its Employee Share Purchase Plan (“ESPP”). The ESPP allows Alithya’s professionals to participate in the success
they create, instills the ownership culture envisioned by Alithya and ensures strong dedication to offering quality services to
clients.
Special Skills and Knowledge
Alithya operates in an industry where the skills and knowledge required to serve its clients are constantly evolving and are
in high demand from market competitors. Alithya relies on a threefold approach to ensure it always lines-up the right team
to meet its clients’ needs. Firstly, to retain and maintain highly-skilled professionals, Alithya offers its professionals
competitive compensation packages and leadership and core competencies development programs, including through the
ALITHYA - Annual Information Form 7
Alithya Leadership Academy. Secondly, Alithya is always on the lookout for opportunities to complement its team’s expertise
and industry knowledge through targeted business acquisitions. Thirdly, Alithya actively seeks talented and skilled
professionals through various recruitment strategies, including an employee referral bonus program, a skilled recruitment
team, participation at career fairs and widespread job postings.
Principal Office Locations
Alithya has a presence in Canada, the U.S. and internationally and services its clients from its principal offices in the
locations listed in the table below.
CANADA
UNITED STATES
INTERNATIONAL
Gatineau, Québec
Montréal, Québec
Québec, Québec
Pickering, Ontario
Toronto, Ontario
Intellectual Property
Alpharetta, GA
Athens, AL
Bala Cynwyd, PA
Independence, OH
Aix-en-Provence, France
Sophia-Antipolis, France
Tanger, Morocco
Through its practices and expertise, Alithya leverages its proprietary innovations, methodologies and other intellectual
property when providing strategic advice to its clients. Alithya actively protects its intellectual property rights and maintains
relevant intellectual property protection measures, which include the registration, and application for registration of,
Canadian, U.S. and international intellectual property rights, including trademarks, and domain names. Alithya also owns
licenses in a number of trademarks, copyrights, and other intellectual property rights relating to its solutions and services.
Alithya’s intellectual property portfolio includes the following solutions:
•
AI-FITM solutions. These solutions leverage Alithya’s range of proprietary applications using artificial intelligence,
machine learning and deep learning techniques. A play on the term hi-fi, short for high fidelity, the AI-FITM brand
integrates the concepts of artificial intelligence (and its acronym AI) and fidelity (FI). Alithya’s AI-FITM solutions
include:
◦
◦
◦
◦
AI-FITM Connect: a plugin-based data connector that enables integration between various data sources,
designed to receive data from a source, structure it, replicate the structure to a destination, and automatically
send new data to the destination as it becomes available.
AI-FITM Ultrasonic: detects wear-induced flaws in a nuclear plant’s fuel channels, a critical aspect of the
operation and regulation of these plants.
AI-FITM Suitability Assessment: offers companies looking to leverage machine learning an in-depth review
of their data and business processes to determine an AI strategy that’s right for them.
AI-FITM Enablement: allows organizations to adapt a swift deployment and integration of AI analytics.
•
•
Alithya GoTestTM. This solution allows clients to test the functionality of applications on all platforms and in any
programming language by running a series of systematic and repeatable tests and presents the results and status
through sophisticated dashboards. Alithya offers a version of this solution which allows to automate test for Oracle
modules.
CASSITM Analytics and KPIs. These solutions help nuclear plants reduce the work needed to generate and
distribute maintenance performance reports and provide insight into opportunities to streamline maintenance.
CASSITM software drives accountability and tracks progress against corporate and site-based performance goals for
work week leaders, planners, schedulers, operations and maintenance staff. CASSITM Analytics and KPIs include:
◦
◦
◦
◦
CASSITM Analytics for Online Weekly Maintenance: supports the continuous improvement of nuclear
online preparation, execution, backlog and reliability-centered activities.
CASSITM Analytics for Outage Management: automates the generation of KPIs and objectively tracks and
trends corporate targets.
CASSITM Analytics for PetroChem Turnarounds: delivers key performance indicators in support of
continuous improvement, essential to a successful turnaround.
CASSITM Analytics for Maintenance and Reliability: supports the continuous improvement of preparation,
execution, backlog and reliability-centered activities for value-based maintenance organizations.
ALITHYA - Annual Information Form 8
•
•
//SIDERTM is a secure solution that facilitates distribution of medical results to healthcare facilities and to
centralized electronic health records. It acts as an integrated system for the electronic distribution of results,
facilitating the work of all the healthcare professionals, health clinics and laboratory managers involved in
monitoring medical results.
Adaptive LearningTM is an on-demand, subscription-based platform that drives usage and awareness of Microsoft
applications, allowing organizations to achieve the maximum return on their investment by enhancing user
proficiency and productivity and creating transformative change enablement.
While its proprietary intellectual property is important to its success, Alithya believes its business as a whole is not currently
materially dependent on any particular intellectual property right, as its expertise spans from its practices and from
providing high-end consulting advice to its client base.
RISK AND UNCERTAINTIES
A discussion of the risks and uncertainties to which the Company is subject is presented in the section titled “Risks and
Uncertainties” of the Company’s management’s discussion and analysis for the fiscal years ended March 31, 2022 and 2021,
incorporated herein by reference, and in the Company’s other materials made public from time to time, all of which are
available on SEDAR at www.sedar.com and EDGAR at www.sec.gov and on the Company’s website at www.alithya.com
under the “Investors” section. Additional risks and uncertainties not currently known to the Company or that the Company
currently deems to be immaterial could also have a material adverse effect on its financial position, financial performance,
cash flows, business or reputation. Please refer to the section titled “Forward-Looking Statements” of this Annual
Information Form for a discussion of the risks associated with forward-looking statements.
DIVIDENDS
The Company does not currently expect to pay dividends on the subordinate voting shares or the multiple voting shares in
the foreseeable future. The Company anticipates that it will retain all earnings, if any, to support its operations. Any future
determination as to the payment of dividends will, subject to Canadian legal requirements and the Company’s articles, be at
the sole discretion of the Board and will depend on the Company’s financial condition, results of operations, capital
requirements and other factors the Board deems relevant. Currently, the provisions of the Company’s Credit Facility place
certain limitations on the amount of cash dividends that the Company could pay.
CAPITAL STRUCTURE
Description of Securities
The authorized share capital of the Company consists of (i) an unlimited number of subordinate voting shares, without par
value, which are listed under the symbol ALYA on both the TSX and NASDAQ, (ii) an unlimited number of multiple voting
shares, without par value, which are held by a limited number of holders, and (iii) an unlimited number of preferred shares,
without par value, issuable in series, of which, as at March 31, 2022, 85,554,000 subordinate voting shares and 7,171,616
multiple voting shares were issued and outstanding.
The following summary of the material features of the Company’s authorized share capital is given subject to the detailed
provisions of its articles.
Voting Rights
Each subordinate voting share entitles its holder to one vote per share, and each multiple voting share entitles its holder to
ten votes per share at any meeting of shareholders, other than meetings at which only the holders of a particular class or
series of shares are entitled to vote due to statutory provisions or the specific attributes of this class or series. If and when
issued, preferred shares will have such voting rights as may be determined by the Board at the time of issuance thereof.
The subordinate voting shares are “restricted securities” within the meaning of such term under applicable Canadian
securities laws in that they do not carry equal voting rights with the multiple voting shares. In the aggregate, all of the
voting rights associated with the subordinate voting shares represented, as at March 31, 2022, 54.40% of the voting rights
attached to all of the issued and outstanding shares.
Rights to Dividends and Rights upon Winding-up and Dissolution
Subject to the prior rights of holders of preferred shares which rank prior to subordinate voting shares and multiple voting
shares, if and when issued, holders of subordinate voting shares and multiple voting shares are entitled to receive pari
passu any dividends and the remainder of the Company’s property in the event of a voluntary or involuntary winding up or
dissolution, or any other distribution of assets among shareholders for the purposes of winding up the Company’s affairs.
ALITHYA - Annual Information Form 9
Multiple Voting Shares Conversion Rights
Multiple voting shares are, at the holder’s entire discretion, convertible into subordinate voting shares on a share for share
basis and shall be automatically converted upon their transfer to a person who is not a Permitted Holder (as defined below)
or upon the death of a Permitted Holder, unless acquired by any of the remaining Permitted Holders in accordance with the
terms of the voting agreement dated November 1, 2018 entered into between the Permitted Holders (the “Voting
Agreement”), a copy of which is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. The multiple voting
shares are not convertible into any other class of shares. Under applicable Canadian laws, an offer to purchase multiple
voting shares would not necessarily require that an offer be made to purchase subordinate voting shares. However, as
indicated above, multiple voting shares shall be automatically converted into subordinate voting shares on a share for share
basis upon their transfer to a person who is not a Permitted Holder. If and when issued, preferred shares will have such
conversion rights as may be determined by the Board at the time of issuance thereof.
For purposes of the above and below paragraphs, a “Permitted Holder” means each of Messrs. Paul Raymond, Ghyslain
Rivard, and Pierre Turcotte, and the entities over which they have control.
Restrictions on Transfer
Subject to the terms of the Voting Agreement, Permitted Holders cannot sell or otherwise transfer multiple voting shares to
a person who is not a Permitted Holder, unless they first convert those shares into subordinate voting shares on a share for
share basis, and then transfer such subordinate voting shares.
MARKET FOR SECURITIES
Trading Price and Volume
Alithya’s subordinate voting shares are traded on the TSX and on NASDAQ under the symbol “ALYA” since November 2,
2018. The table below shows the monthly range of high and low prices per share and the total monthly volumes for Alithya’s
subordinate voting shares on the TSX for the fiscal year ended March 31, 2022.
MONTH
April 2021
May 2021
June 2021
July 2021
August 2021
September 2021
October 2021
November 2021
December 2021
January 2022
February 2022
March 2022
HIGH ($)
LOW ($)
MONTHLY VOLUME
3.67
3.10
3.50
4.22
3.88
3.67
3.67
3.79
3.40
3.36
3.95
3.79
2.61
2.53
2.90
3.40
3.11
3.13
3.16
3.08
3.02
2.94
3.30
3.15
1,488,297
1,203,599
2,102,355
1,804,665
1,332,558
963,908
765,742
1,233,976
987,698
981,247
1,429,058
1,141,361
Normal Course Issuer Bid and Share Purchases for Cancellation
On September 15, 2021, the Company announced the launch of a normal course issuer bid (“NCIB”) to purchase for
cancellation up to 5,462,572 subordinate voting shares, representing 10% of the Company’s public float as of the close of
markets on September 8, 2021. Please refer to the section titled “General Development of the Business – Fiscal 2022
Developments” earlier in this Annual Information Form for more information on the Company’s NCIB.
DIRECTORS AND OFFICERS
Board of Directors
The articles of the Company provide for the Board to consist of a minimum of 3 and a maximum of 15 directors. As at
June 16, 2022, the Board was comprised of 10 directors. The following table lists the name and place of residence of the
current directors of the Company, as well as their principal occupation and their previously held positions during the last five
years, if any.
ALITHYA - Annual Information Form 10
NAME AND PLACE
OF RESIDENCE
POSITION WITH THE
COMPANY
PRINCIPAL OCCUPATION
DIRECTOR
SINCE(1)
PREVIOUS HELD
POSITIONS
Dana Ades-Landy
Québec (Canada)
Director
Corporate Director and Contract
Position in the Special Loans
Group, National Bank of Canada
Robert Comeau
Québec (Canada)
Lead Director
Corporate Director and Lead
Director of the Company
May 2018
November 2016 Chief Executive Officer,
Heart & Stroke
Foundation of Canada
(Québec)
-
Mélissa Gilbert
Québec (Canada)
Director
Executive Vice President and
Lead, Finance, Beneva Inc.
Lucie Martel
Québec (Canada)
Director
Corporate Director
Pierre Karl
Péladeau
Québec (Canada)
Director
President and Chief Executive
Officer, Québecor inc., President
and Chief Executive Officer,
Videotron Ltd., and Interim
President and Chief Executive
Officer, TVA Group inc.
September 2021 Executive Vice
President, Finance,
Corporate Actuarial and
Risk Management, La
Capitale Insurance and
Financial Services Inc.
September 2019 Senior Vice President
and Chief Human
Resources Officer, Intact
Financial Corporation
September 2021 -
Paul Raymond
Québec (Canada)
James Renacci
Ohio (USA)
President and Chief
Executive Officer
Director
Director
Ghyslain Rivard
Québec (Canada)
Director
C. Lee Thomas
Ohio (USA)
Director
President and Chief Executive
Officer of the Company
June 2011
-
Founder and President of LTC
Management Services, Inc.
Founder of the Company and
Corporate Director
Corporate Director and Executive
in Residence of the School of
Business of Baldwin Wallace
University
November 2019 -
April 1992
-
November 2018 -
Pierre Turcotte
Québec (Canada)
Chair of the Board
Director
Corporate Director and Chair of
the Board of the Company
June 2011
-
(1) Includes periods during which certain directors served as directors of Pre-IPO Alithya.
The directors of the Company are elected annually at the Company’s annual meeting of shareholders. They hold office until
their term expires at the following annual meeting of shareholders, subject to re-election, retirement, resignation or earlier
vacancy.
The mandate for the Board provides that the Board shall be constituted at all times of a majority of individuals who are
independent directors within the meaning of applicable Canadian and United States securities laws and the NASDAQ
corporate governance standards (the “Independence Rules”). Based on the information received from each director and
having taken into account the independence criteria set forth in the Independence Rules, the Board concluded that all
directors are independent, with the exception of Mr. Paul Raymond, who is not independent as he is the President and Chief
Executive Officer of the Company, and Ms. Mélissa Gilbert and Mr. Pierre Karl Péladeau, who are not independent as they
are executive officers of organizations from which Alithya receives significant revenues.
All other directors of the Company, namely Mses. Dana Ades-Landy and Lucie Martel and Messrs. Robert Comeau, James
Renacci, Ghyslain Rivard, C. Lee Thomas and Pierre Turcotte are independent directors within the meaning of the
Independence Rules. Each of them has no material relationship with the Company and is, in the reasonable opinion of the
Board, independent under the Independence Rules.
The Board has an Audit and Risk Management Committee, a Corporate Governance and Nominating Committee and a
Human Capital and Compensation Committee. The table below sets out the composition of each committee.
AUDIT & RISK MANAGEMENT
COMMITTEE
CORPORATE GOVERNANCE AND
NOMINATING COMMITTEE
HUMAN CAPITAL AND COMPENSATION
COMMITTEE
Dana Ades-Landy
Lucie Martel
Lucie Martel (Chair)
Robert Comeau (Chair)
Ghyslain Rivard
C. Lee Thomas
Pierre Turcotte (Chair)
Ghyslain Rivard
Pierre Turcotte
ALITHYA - Annual Information Form 11
Executive Officers
The following table lists the name and place of residence of the current executive officers of the Company, as well as their
current position with the Company and their previously held positions during the last five years, if any.
NAME
CURRENT POSITION
EXECUTIVE OFFICER SINCE (1) PREVIOUSLY HELD POSITION
Nigel Fonseca
Ontario (Canada)
Senior Vice President, Ontario and
Western Canada
June 2018
Nathalie Forcier
Québec (Canada)
Chief Legal Officer and Corporate
Secretary
September 2018
Michel Lacasse
Québec (Canada)
Senior Vice President, Canadian
Sales
July 2021
Robert Lamarre
Québec (Canada)
Dany Paradis
Québec (Canada)
Chief Information Officer
April 2016
Senior Vice President, Québec
November 2018
Paul Raymond
Québec (Canada)
President and Chief Executive
Officer and Director
April 2011
Regional Vice President,
Ontario and Western Canada,
Alithya
Chief Executive Officer,
Systemware Innovation
Corporation
Vice-President, Legal affairs,
CGI Inc.
Senior Vice President, Sales
Vice President, Business
Development and Marketing,
Groupe Askida Inc.
-
Senior Vice President,
Québec and Oracle Practices
Canada, Alithya
Vice President, Integrated
Management Solutions,
Alithya
Vice President, Oracle
Consulting Services, Alithya
-
Claude Rousseau
Florida (USA)
Russell Smith
Alabama (USA)
Claude Thibault
Québec (Canada)
Chief Operating Officer
January 2015
-
President, Alithya USA
November 2018
President, Fullscope, Inc.
Chief Financial Officer
August 2018
Chief Financial Officer,
DCM Group Inc.
(1)
Includes periods during which certain executive officers served as executive officers of Pre-IPO Alithya.
Directors’ and Executive Officers’ Share Ownership
As at June 16, 2022, the directors and executive officers of the Company, as a group, beneficially owned, directly or
indirectly, or exercised control or direction over 18,324,770 subordinate voting shares and 7,171,616 multiple voting
shares, representing respectively 21.46% of the issued and outstanding subordinate voting shares and 100% of the issued
and outstanding multiple voting shares.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
To the knowledge of the Company and based upon information provided to it by the Company’s directors and executive
officers, no such person (including any personal holding company), is or has been, in the last ten years, a director, chief
executive officer or chief financial officer of a company, including Alithya, that: (a) while such person was acting in that
capacity, was the subject of a cease trade or similar order or an order that denied the relevant company access to any
exemption under securities legislation, for a period of more than 30 consecutive days; or (b) was subject to an event that
occurred while such person was acting in that capacity which resulted, after that person ceased to act in that capacity, in
the company being the subject of a cease trade or similar order or an order that denied the relevant company access to any
exemption under securities legislation, for a period of more than 30 consecutive days.
To the knowledge of the Company and based upon information provided to it by the Company’s directors, executive officers
and shareholders holding sufficient securities to affect materially the control of the Company, as applicable, no such person
(including any personal holding company): (a) is, or has been in the last ten years, a director or executive officer of any
company (including Alithya) that, while that person was acting in that capacity, or within a year of that person ceasing to
act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was
subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or
trustee appointed to hold its assets; or (b) has, in the last ten years, become bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold their assets.
ALITHYA - Annual Information Form 12
To the knowledge of the Company and based upon information provided to it by the Company’s directors, executive officers
and shareholders holding sufficient securities to affect materially the control of the Company, as applicable, no such person
(including any personal holding company) has been subject to: (a) any penalties or sanctions imposed by a court relating to
securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities
regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be
considered important to a reasonable investor making an investment decision.
Conflicts of Interest
To the knowledge of the Company, no director or officer of the Company has any existing or potential material conflicts of
interest with the Company or any of its subsidiaries, other than as disclosed under the section titled “Interest of
Management and Others in Material Transactions”.
AUDIT AND RISK MANAGEMENT COMMITTEE
The Audit and Risk Management Committee (the “Audit Committee”), of which the charter is attached as Appendix “A” to
this Annual Information Form, is currently composed of 3 members: Ms. Dana Ades-Landy and Messrs. Robert Comeau and
C. Lee Thomas, who have been members of the Audit Committee since at least the Company’s annual meeting of
shareholders held on September 15, 2021. Each member of the Audit Committee is “independent” and “financially literate”
within the meaning of Independence Rules.
Relevant Education and Experience
The education and experience of each Audit Committee member that is relevant to the performance of his or her
responsibilities as an Audit Committee member is as follows:
•
•
•
Robert Comeau brings significant financial expertise to the Audit Committee. He served as Chief Financial Officer of
both public and private companies from 2005 to 2015 and acted as Chair of the Audit Committee of H2O
Innovation Inc., from 2017 to 2021. Mr. Comeau holds a Bachelor’s degree in accounting from HEC Montreal and is
a former Chartered Professional Accountant (CPA, CA).
Dana Ades-Landy has extensive financial expertise. With more than 25 years of experience as an executive in the
banking industry, she currently holds a contract position in the Special Loans Group of the National Bank of Canada
and serves as Chair of the Audit Committee of First Lion Holdings Inc. since 2018 and member of the Audit
Committee of Sagen MI Canada Inc. since 2021. She also acted as Chair of the Audit Committee of the Canada
Mortgage and Housing Corporation from 2017 to 2020. She holds a Master of Business Administration in Finance
and Accounting from Concordia University.
C. Lee Thomas brings valuable financial expertise to the Audit Committee. He has held various roles at Ernst &
Young LLP from 1976 to 2014, including that of Managing Partner. He holds a Bachelor’s degree in accounting from
Baldwin Wallace University and is a Certified Public Accountant (CPA). He also currently teaches at Baldwin Wallace
University.
Pre-approval Policies and Procedures
The Audit Committee has adopted procedures for the pre-approval of engagement for services of its external auditors, which
require pre-approval of all audit and non-audit services provided by the external auditors. Moreover, the Board, upon
recommendation of the Audit Committee, approves, on an annual basis, the fees charged to the Company by the external
auditors during the preceding year.
AUDITORS
Independence
On September 15, 2021, the shareholders of the Company appointed KPMG LLP (“KPMG”) as successor auditor in
replacement of Raymond, Chabot, Grant Thornton LLP (“RCGT”). KPMG is the external auditor who prepared the report
relating to the audit of the Company’s annual consolidated financial statements for the year ended March 31, 2022 and
notes thereto, presented under the International Financial Reporting Standards. KPMG has confirmed that it is independent
with respect to the Company within the meaning of the relevant rules and related interpretations prescribed by the relevant
professional bodies in Canada and any applicable legislation or regulation as of the date hereof.
ALITHYA - Annual Information Form 13
Service Fees
The fees billed by RCGT until September 15, 2021 for each of the years ended March 31, 2022 and 2021 for audit, audit-
related, tax and all other services provided to the Company were as follows:
Audit fees(1)
Audit-related fees(2)
Tax fees(3)
All other fees(4)
Total
FISCAL YEAR ENDED MARCH 31
2022
2021
42,500 $
602,032
31,000 $
6,350 $
—
20,606
11,311
—
79,850 $
633,949
$
$
$
$
The fees billed by KPMG beginning on September 15, 2021 for the fiscal year ended March 31, 2022 for audit, audit-related,
tax and all other services provided to the Company were as follows:
Audit fees(1)
Audit-related fees(2)
Tax fees(3)
All other fees(4)
Total
$
$
$
$
FISCAL YEAR ENDED MARCH 31
2022
775,200
165,600
12,800
—
953,600
(1)
(2)
(3)
(4)
“Audit fees” means the aggregate fees billed for each of the fiscal years for professional services rendered by the auditor for the audit of
the Company’s annual consolidated financial statements and review of the Company’s interim condensed consolidated financial
statements.
“Audit-related fees” includes assurance and related services reasonably related to the audit of the Company’s annual consolidated
financial statements not included in audit services which are included in the “Audit fees” category. This includes, for RCGT, for the fiscal
year ended March 31, 2021, financial accounting and reporting matters, and for KPMG, for the fiscal year ended March 31, 2022,
financial and tax due diligence related to the acquisition of Vitalyst, consultation concerning financial accounting and reporting matters,
and a CSRS 4400 agreed upon procedures engagement.
“Tax fees” means the aggregate fees billed for each of the fiscal years for professional services rendered by the auditor for tax
compliance and tax advice.
“All other fees” includes the aggregate of all other fees billed for each of the fiscal years. There were no other fees incurred in either
fiscal year.
Pursuant to the terms of its mandate, the Audit Committee reviews and approves all audit and audit-related services, audit
engagement fees and terms, and all non-audit engagements performed by the external auditors.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
During the ordinary course of conducting its business, Alithya may be threatened with or become subject to legal
proceedings initiated by third parties or Alithya’s clients or regulatory proceedings from the authorities. Alithya currently has
no material legal or regulatory proceedings pending.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS
To the knowledge of the Company and based upon information provided to it by the Company’s directors and executive
officers, there were no (a) directors or executive officers, (b) persons that beneficially own, or control or direct, directly or
indirectly, more than 10% of Alithya’s subordinate voting shares or multiple voting shares, or (c) any associate or affiliate of
persons referred to in (a) and (b), with a material interest in any transaction within the three most recently completed
financial years that has materially affected the Company or is reasonably expected to materially affect the Company, other
than as disclosed below.
La Capitale and Québecor each beneficially own, or control or direct, directly or indirectly, more than 10% of Alithya’s
subordinate voting shares as a result of the acquisition of R3D Consulting. La Capitale and Québecor are parties to
commercial contracts pursuant to which Alithya receives significant revenues. Mr. Pierre Karl Péladeau was nominated as a
director of Alithya pursuant to an Investor Rights Agreement entered into by the Company and Québecor on April 1, 2021.
Mr. Péladeau is also the controlling shareholder of Québecor.
ALITHYA - Annual Information Form 14
TRANSFER AGENTS AND REGISTRARS
The Company’s transfer agent for the Company’s subordinate voting shares and multiple voting shares is TSX Trust
Company (“TSX Trust”), whose head office is located in Toronto, Ontario. Share transfer service is available at TSX Trust’s
Montréal, Québec and Toronto, Ontario offices in Canada as well as at the offices of American Stock Transfer & Trust
Company, LLC in Brooklyn, NY, USA.
MATERIAL CONTRACTS
Except for those contracts entered into in the ordinary course of business, the following material contracts of the Company
were entered into during the year ended March 31, 2022 and are still in effect as of the date hereof:
•
•
•
The Investor Rights Agreement entered into on April 1, 2021 among the Company and La Capitale Civil Service
Insurer Inc.;
The Investor Rights Agreement entered into on April 1, 2021 among the Company, 9429-1143 Québec inc. and
Québecor Media Inc.; and
The Amending Agreements No. 2 to 5 dated June 30, 2021, September 28, 2021, September 30, 2021 and January
27, 2022 to the Amended and Restated Credit Agreement entered into on June 18, 2020 among the Company, The
Bank of Nova Scotia, as Administrative Agent, the other lenders named therein and each of the guarantors party
thereto.
ADDITIONAL INFORMATION
Additional information, including, without limitation, directors’ and officers’ remuneration and indebtedness, principal
shareholders of the Company, and securities authorized for issuance under equity compensation plans is contained in the
Company’s management information circular prepared in respect of its annual meeting of shareholders held on September
15, 2021.
Additional information regarding the Company, including financial information, can also be found on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov, including the Company’s annual audited consolidated financial statements
and management’s discussion & analysis for the fiscal years ended March 31, 2022 and 2021 and the aforementioned
management information circular. Those documents may also be obtained from the Company at no charge upon request at:
Investor Relations
Alithya Group inc.
1100, Robert-Bourassa Boulevard
Suite 400
Montréal, Québec, H3B 3A5
Tel.: 1-844-985-5552
Those documents, as well as all of the Company’s news releases, are also available on the Company’s website at
www.alithya.com. Information contained in or otherwise accessible through the Company’s website is not incorporated by
reference into this Annual Information Form.
ALITHYA - Annual Information Form 15
APPENDIX A - AUDIT AND RISK MANAGEMENT COMMITTEE
CHARTER
PURPOSE
1.
The Audit and Risk Management Committee (the “Committee”) is a standing committee appointed by the board of
directors (the “Board”) of Alithya Group inc. (the “Company”). The Committee is established to fulfil applicable public
company obligations relating to audit committees and to assist the Board in fulfilling its oversight responsibilities with
respect to financial reporting including responsibility to:
(a) oversee the integrity of the Company’s financial statements and financial reporting process, including the audit
process and the Company’s internal accounting controls and procedures and compliance with related legal and
regulatory requirements;
(b) oversee the qualifications and independence of the external auditors;
(c) oversee the work of the Company's financial management, internal auditors and external auditors in these areas;
and
(d) provide an open avenue of communication between the external auditors, the internal auditors, the Board and
management, as applicable.
2.
3.
4.
In addition, the Committee shall prepare, if required, an audit committee report for inclusion in the Company’s annual
management information circular, in accordance with applicable rules and regulations. The Committee is also
responsible for assisting the Board in fulfilling its responsibilities relating to pension matters.
The function of the Committee is oversight. It is not the duty or responsibility of the Committee or its members (i) to
plan or conduct audits, (ii) to determine that the Company’s financial statements are complete and accurate and are in
accordance with generally accepted accounting principles or (iii) to conduct other types of auditing or accounting
reviews or similar procedures or investigations. The Committee, its Chair and its audit committee financial expert
members are members of the Board of the Company, appointed to the Committee to provide broad oversight of the
financial, risk and control related activities of the Company, and are specifically not accountable or responsible for the
day-to-day operation or performance of such activities.
Management is responsible for the preparation, presentation and integrity of the Company’s financial statements.
Management is also responsible for maintaining appropriate accounting and financial reporting principles and policies
and systems of risk assessment and internal controls and procedures designed to provide reasonable assurance that
assets are safeguarded and transactions are properly authorized, recorded and reported and to assure the
effectiveness and efficiency of operations, the reliability of financial reporting and compliance with accounting
standards and applicable laws and regulations. Management is also responsible for monitoring and reporting on the
adequacy and effectiveness of the system of internal controls. The external auditors are responsible for planning and
carrying out an audit of the Company’s annual financial statements in accordance with generally accepted auditing
standards to provide reasonable assurance that, among other things, such financial statements are in accordance with
generally accepted accounting principles.
PROCEDURES AND POWERS
General
The Committee shall have the following procedures and powers:
1.
Composition – The Committee shall be composed of a minimum of three members. None of the members of the
Committee shall be an officer or employee of the Company or any of its subsidiaries and each member of the
Committee shall be an independent director within the meaning of applicable Canadian and United States securities
laws and the NASDAQ corporate governance standards.
All members of the Committee must be able to read and understand fundamental financial statements, including the
Company’s balance sheet, income statement, and cash flow statement and be “financially literate” (as that term is
defined from time to time under the requirements or guidelines for audit committee service under applicable Canadian
and United States securities laws and the rules of the Toronto Stock Exchange). At least one member of the
Committee must also be an audit committee financial expert (as that term is defined from time to time under the
requirements or guidelines for audit committee service under applicable Canadian and United States securities laws
and the rules of the Toronto Stock Exchange and the NASDAQ).
2.
Appointment and Replacement of Committee Members – Any member of the Committee may be removed or replaced
at any time by the Board and shall automatically cease to be a member of the Committee upon ceasing to be a
director. The Board may fill vacancies on a Committee by appointing another director to the Committee. The Board
shall fill any vacancy if the membership of the Committee is less than three directors. Whenever there is a vacancy on
ALITHYA - Annual Information Form 16
the Committee, the remaining members may exercise all its power as long as a quorum remains in office. Subject to
the foregoing, the members of the Committee shall be appointed by the Board annually and each member of a
Committee shall remain on the Committee until the next annual meeting of shareholders after his or her appointment
or until his or her successor shall be duly appointed and qualified.
Committee Chair – The Board shall designate the Chair by majority vote. If the Chair is absent from a meeting, the
members shall select a Chair from those in attendance to act as Chair of the meeting. The Chair of the Committee
shall be responsible for leadership of the Committee assignments and reporting to the Board.
Conflicts of Interest – If a Committee member faces a potential or actual conflict of interest relating to a matter before
the Committee, other than matters relating to the compensation of directors, that member shall be responsible for
alerting the Committee Chair. If the Committee Chair faces a potential or actual conflict of interest, the Committee
Chair shall advise the Chair of the Board. If the Committee Chair, or the Chair of the Board, as the case may be,
concurs that a potential or actual conflict of interest exists, the member faced with such conflict shall disclose to the
Committee his or her interest and shall not participate in consideration of the matter and shall not vote on the matter.
Service on Multiple Audit Committees – If a Committee member serves on the audit committee of more than three
public companies, including the Company, the Board must determine that such service would not impair the ability of
the member to effectively serve on the Committee.
Compensation of Committee Members - The members of the Committee shall be entitled to receive such remuneration
for acting as members of the Committee as the Board may from time to time determine.
Meetings - The Committee shall meet regularly at times necessary to perform the duties described herein in a timely
manner, but not less than four times a year and any time the Company proposes to issue a press release with its
quarterly or annual earnings information. The Committee shall also meet without management present at every
meeting. Meetings may be held at any time deemed appropriate by the Committee.
(1) Calling of Meetings - The Committee shall meet as often as it deems appropriate to discharge its responsibilities.
Notice of the time and place of every meeting shall be given in writing, by any means of transmitted or recorded
communication, including facsimile, email or other electronic means that produces a written copy, to each
member of the Committee at least 48 hours prior to the time fixed for such meeting, with a copy to the Chair of
the Board, the Chief Executive Officer and the Corporate Secretary of the Company. However, a member may in
any manner waive a notice of a meeting. Attendance of a member at a meeting constitutes a waiver of notice of
the meeting, except where a member attends a meeting for the express purpose of objecting to the transaction of
any business on the grounds that the meeting is not lawfully called. Whenever practicable, the agenda for the
meeting and the meeting materials shall be provided to members before each Committee meeting in sufficient
time to provide adequate opportunity for their review.
(2) Quorum - A majority of the members constitute a quorum for the transaction of the Committee business.
(3) Secretary of Meeting - The Chair of the Committee shall designate a person who need not be a member of the
Committee to act as secretary or, if the Chair of the Committee fails to designate such a person, the Corporate
Secretary of the Company shall be secretary of the meetings of the Committee. The agenda of the Committee
meeting will be prepared by the secretary of the Committee and, whenever reasonably practicable, circulated to
each member prior to each meeting.
(4) Minutes - Minutes of the proceedings of the Committee shall be kept in a minute book provided for that purpose.
The minutes of the Committee meetings shall accurately record the discussions of and decisions made by the
Committee, including all recommendations to be made by the Committee to the Board and shall be distributed to
all Committee members.
Separate Executive and In-Camera Meetings - The Committee shall meet periodically with the Chief Financial Officer,
the head of the internal audit function (if other than the Chief Financial Officer) and the external auditors in separate
executive sessions to discuss any matters that the Committee or each of these groups believes should be discussed
privately and such persons shall have access to the Committee to bring forward matters requiring its attention. The
Committee shall also meet periodically without management present.
Professional Assistance - The Committee may require the external auditors and internal auditors to perform such
supplemental reviews or audits as the Committee may deem desirable. In addition, the Committee may retain such
special legal, accounting, financial or other consultants as the Committee may determine to be necessary to carry out
the Committee’s duties at the Company’s expense.
3.
4.
5.
6.
7.
8.
9.
10. Reliance - Absent actual knowledge to the contrary (which shall be promptly reported to the Board), each member of
the Committee shall be entitled to rely on (i) the integrity of those persons or organizations within and outside the
Company from which it receives information, (ii) the accuracy of the financial and other information provided to the
Committee by such persons or organizations and (iii) representations made by management and the external auditors
as to any information technology, audit and other non-audit services provided by the external auditors to the Company
and its subsidiaries.
ALITHYA - Annual Information Form 17
11. Reporting to the Board - The Committee will report through the Committee Chair to the Board following meetings of
the Committee on matters considered by the Committee, its activities and compliance with this Charter.
12. Outsiders May Attend Meetings - The Committee may invite members of management or others to attend meetings or
provide information as necessary. The Company’s external auditors will have direct access to the Committee at their
own initiative.
Powers
13. The Committee shall have the following powers:
(a) Access - The Committee is entitled to full access to all books, records, facilities, and personnel of the Company
and its subsidiaries. The Committee may require such officers, directors and employees of the Company and its
subsidiaries and others as it may see fit from time to time to provide any information about the Company and its
subsidiaries it may deem appropriate and to attend and assist at meetings of the Committee.
(b) Delegation - The Committee may delegate from time to time to any person or committee of persons any of the
Committee’s responsibilities that lawfully may be delegated.
(c) Adoption of Policies and Procedures - The Committee may adopt policies and procedures for carrying out its
responsibilities.
AUDIT RESPONSIBILITIES OF THE COMMITTEE
Selection and Oversight of the External Auditors
1.
2.
3.
4.
5.
6.
The external auditors are ultimately accountable to the Committee and the Board as the representatives of the
shareholders of the Company and shall report directly to the Committee and the Committee shall so instruct the
external auditors. The Committee shall annually evaluate the performance of the external auditors and propose the
appointment of the external auditors of the Company in the Company's management information circular for
shareholder approval. If the Committee deems it in the best interest of the Company to proceed with a change in
external auditors, the Committee shall report to the Board the reasons for the change and any other significant issues
related to the change, including the response of the incumbent external auditors, and enquire on the qualifications of
the proposed external auditors before approving or rejecting the proposed change in external auditors.
The Committee shall approve in advance the terms of engagement and the compensation to be paid by the Company
to the external auditors with respect to the conduct of the annual audit. The Committee may approve policies and
procedures for the pre-approval of services to be rendered by the external auditors, which policies and procedures
shall include reasonable detail with respect to the services covered. All non-audit services to be provided to the
Company or any of its affiliates by the external auditors or any of their affiliates which are subject to pre-approval by
the Committee shall be approved by the Committee or the Chair of the Committee, in accordance with the
Committee’s Pre-Approval Policies and Procedures.
The Committee shall annually review the independence of the external auditors and shall make recommendations to
the Board on appropriate actions to be taken which the Committee deems necessary to protect and enhance the
independence of the external auditors. In connection with such review, the Committee shall:
(a) actively engage in a dialogue with the external auditors about all relationships or services that may impact the
objectivity and independence of the external auditors;
(b) require that the external auditors submit to it on a periodic basis, and at least annually, a formal written
statement delineating all relationships between the Company and its subsidiaries, on the one hand, and the
external auditors and their affiliates on the other hand;
(c) ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the
audit partner responsible for reviewing the audit as required by applicable law;
(d) consider whether there should be a regular rotation of the external audit firm itself; and
(e) consider the external auditor independence standards promulgated by applicable auditing regulatory and
professional bodies.
The Committee shall prohibit the external auditors and its affiliates from providing certain non-audit services to the
Company and its affiliates.
The Committee shall establish and monitor clear policies for the hiring by the Company of employees or former
employees of the external auditors.
The Committee shall require the external auditors to provide to the Committee, and the Committee shall review and
discuss with the external auditors, all reports which the external auditors are required to provide to the Committee or
ALITHYA - Annual Information Form 18
the Board under rules, policies or practices of professional or regulatory bodies applicable to the external auditors, and
any other reports which the Committee may require. Such reports shall include:
(a) a description of the external auditors’ internal quality-control procedures, any material issues raised by the most
recent internal quality-control review, or peer review, of the external auditors, or by any inquiry or investigation
by governmental or professional authorities, within the preceding five years, respecting one or more audits carried
out by the external auditors, and any steps taken to deal with any such issues; and
(b) a report describing (i) all critical accounting policies and practices to be used in the annual audit, (ii) all alternative
treatments of financial information within generally accepted accounting principles related to material items that
have been discussed with management, ramifications of the use of such alternative disclosures and treatments,
and the treatment preferred by the external auditors and (iii) other material written communication between the
external auditors and management, such as any management letter or schedule of unadjusted differences.
7.
8.
The Committee shall review the performance of the external auditors, including assessing their effectiveness and
quality of service, annually and, every 5 years, perform a comprehensive review of the performance of the external
auditors over multiple years to provide further insight on the audit firm, its independence and application of
professional skepticism.
The Committee is responsible for resolving disagreements between management and the external auditors regarding
financial reporting.
Appointment and Oversight of Internal Auditors
9.
The appointment, terms of engagement, compensation, replacement or dismissal of internal auditors shall be subject
to prior review and approval by the Committee. When the internal audit function is performed by employees of the
Company, the Committee may delegate responsibility for approving the employment, term of employment,
compensation and termination of employees engaged in such function other than the head of the Company’s internal
audit function.
10. The Committee shall obtain from the internal auditors and shall review summaries of the significant reports to
management prepared by the internal auditors, or the actual reports if requested by the Committee, and
management’s responses to such reports, as applicable.
11. The Committee shall, as it deems necessary and applicable, communicate with the internal auditors with respect to
their reports and recommendations, the extent to which prior recommendations have been implemented and any other
matters that the internal auditors bring to the attention of the Committee. The head of the internal audit function shall
have unrestricted access to the Committee.
12. The Committee shall, annually or more frequently as it deems necessary and applicable, evaluate the internal auditors
including their activities, organizational structure and qualifications and effectiveness.
Oversight and Monitoring of Audits
13. The Committee shall review with the external auditors, the internal auditors and management, as applicable, the audit
function generally, the objectives, staffing, locations, co-ordination, reliance upon management and internal audit and
general audit approach and scope of proposed audits of the financial statements of the Company and its subsidiaries,
the overall audit plans, the responsibilities of management, the internal auditors and the external auditors, the audit
procedures to be used and the timing and estimated budgets of the audits.
14. The Committee shall meet periodically or as it deems necessary and applicable, with the internal auditors to discuss
the progress of their activities and any significant findings stemming from internal audits and any difficulties or
disputes that arise with management and the adequacy of management’s responses in correcting audit related
deficiencies.
15. The Committee shall discuss with the external auditors any difficulties or disputes that arose with management or the
internal auditors during the course of the audit and the adequacy of management’s responses in correcting audit-
related deficiencies.
16. The Committee shall review with management the results of internal and external audits.
17. The Committee shall take such other reasonable steps as it may deem necessary to satisfy itself that the audit was
conducted in a manner consistent with all applicable legal requirements and auditing standards of applicable
professional or regulatory bodies.
Oversight and Review of Accounting Principles and Practices
18. The Committee shall, as it deems necessary, oversee, review and discuss with management, the external auditors and
the internal auditors:
ALITHYA - Annual Information Form 19
(a) the quality, appropriateness and acceptability of the Company’s accounting principles and practices used in its
financial reporting, changes in the Company’s accounting principles or practices and the application of particular
accounting principles and disclosure practices by management to new transactions or events;
(b) all significant financial reporting issues and judgments made in connection with the preparation of the financial
statements, including the effects of alternative methods within generally accepted accounting principles on the
financial statements and any “second opinions” sought by management from another external auditor with respect
to the accounting treatment of a particular item;
(c) any material change to the Company’s auditing and accounting principles and practices as recommended by
management, the external auditors or the internal auditors or which may result from proposed changes to
applicable generally accepted accounting principles;
(d) the effect of regulatory and accounting initiatives on the Company’s financial statements and other financial
disclosures;
(e) any reserves, accruals, provisions, estimates or management programs and policies, including factors that affect
asset and liability carrying values and the timing of revenue and expense recognition, that may have a material
effect upon the financial statements of the Company;
(f) the use of special purpose entities and the business purpose and economic effect of off-balance sheet
transactions, arrangements, obligations, guarantees and other relationships of the Company and their impact on
the reported financial results of the Company;
(g) any legal matter, claim or contingency that could have a significant impact on the financial statements, the
Company’s compliance policies and any material reports, inquiries or other correspondence received from
regulators or governmental agencies and the manner in which any such legal matter, claim or contingency has
been disclosed in the Company’s financial statements;
(h) the treatment for financial reporting purposes of any significant transactions which are not a normal part of the
Company’s normal operations;
(i) the use of any “pro forma” or “adjusted” information not in accordance with generally accepted accounting
principles; and
(j) management’s determination of goodwill impairment, if any, as required by applicable accounting standards.
19. The Committee will review and resolve disagreements between management and the external auditors regarding
financial reporting or the application of any accounting principles or practices.
Oversight and Monitoring of Internal Controls
20. The Committee shall, as it deems necessary, exercise oversight of, review and discuss with management, the external
auditors and the internal auditors:
(a) the adequacy and effectiveness of the Company’s internal accounting and financial controls and the
recommendations of management, the external auditors and the internal auditors for the improvement of
accounting practices and internal controls;
(b) any significant deficiency and material weakness in the design or operation of internal control over financial
reporting, including with respect to computerized information system controls and security; and
(c) management’s compliance with the Company’s processes, procedures and internal controls.
Oversight and Monitoring of Reported Unethical Conduct
21.
In accordance with the Company’s Whistleblower Policy, the Committee shall establish and monitor procedures for the
receipt and treatment of complaints received by the Company regarding accounting, internal accounting controls or
audit matters and the anonymous submission by employees of concerns regarding questionable accounting or auditing
matters and review periodically or as it deems necessary and applicable, with management and the internal auditors
these procedures and any significant complaints received.
Oversight and Monitoring of the Company’s Financial Disclosures
22. The Committee shall:
(a) review with the external auditors and management and recommend to the Board for approval the annual audited
financial statements and notes relating thereto and managements’ Discussion and Analysis accompanying such
financial statements, the Company’s annual report and any financial information of the Company contained in any
prospectus or information circular of the Company; and
ALITHYA - Annual Information Form 20
(b) review with the external auditors and management each set of interim unaudited financial statements and notes
related thereto and managements’ Discussion and Analysis accompanying such financial statements and any other
disclosure documents or regulatory filings of the Company containing or accompanying financial information of the
Company.
Such reviews shall be conducted prior to the release of any summary of the financial results or the filing of such
reports with applicable regulators.
23. Prior to their distribution, the Committee shall discuss earnings press releases, as well as financial information and
earnings guidance provided to analysts and any ratings agencies, it being understood that such discussions may, in
the discretion of the Committee, be done generally (i.e., by discussing the types of information to be disclosed and the
type of presentation to be made) and that the Committee need not discuss in advance each earnings release or each
instance in which the Company gives earning guidance.
24. The Committee shall review the disclosure with respect to its pre-approval of audit and non-audit services provided by
the external auditors.
Oversight of Finance Matters
25. Appointments of the key financial executives involved in the financial reporting process of the Company, including the
Chief Financial Officer, shall require the prior review of the Committee.
26. The Committee shall receive and review:
(a) periodic reports on compliance with requirements regarding statutory deductions and remittances;
(b) material policies and practices of the Company respecting cash management and material financing strategies or
policies or proposed financing arrangements and objectives of the Company; and
(c) material tax policies and tax planning initiatives, tax payments and reporting and any pending tax audits or
assessments.
27. The Committee shall meet periodically with management to review and discuss the Company’s major financial risk
exposures and the policy steps management has taken to monitor and control such exposures, including the use of
financial derivatives and hedging activities.
28. The Committee shall receive and review the financial statements and other financial information of material
subsidiaries of the Company and any auditor recommendations concerning such subsidiaries.
29. The Committee shall meet with management to review the process and systems in place for ensuring the reliability of
public disclosure documents that contain audited and unaudited financial information and their effectiveness.
Risk Oversight and Compliance
30. The Committee shall assess risk tolerance of the Company, management’s program of risk assessment and steps
taken to address significant risks or exposures, including insurance coverage, and obtain the external auditors’ opinion
of management’s assessment of significant financial risks facing the Company and how effectively such risks are being
managed or controlled.
31. The Committee shall (A) review and monitor (i) management’s practices and policies with respect to the Company’s
major security risks, including physical, information, and cybersecurity risks, and control thereof, in accordance with
applicable legal and regulatory requirements, (ii) security trends that may impact the Company’s operations and
business and evolving environment, (iii) contingency plans in the event of a security threat or breach, and (iv)
initiatives in terms of development and implementation of appropriate communications and trainings, and (B) report to
the Board on the Company’s compliance with such practices and policies and progress in remedying any significant
deficiencies related thereto and, where appropriate, make recommendations.
32. The Committee shall obtain regular updates from management and others, including internal and external auditors and
legal counsel, concerning the Company’s compliance with financial related laws and regulations such as tax and
financial reporting laws and regulations and legal withholding requirements.
33. The Committee shall review the findings of any examination by regulatory agencies.
Committee Reporting
34.
If required by applicable laws or regulations or stock exchange requirements, the Committee shall prepare, review and
approve a report to shareholders and others (the “Report”). In the Report, the Committee shall state whether it has:
(a) reviewed and discussed the audited or unaudited financial statements with management, the external auditors
and the internal auditors, where applicable;
ALITHYA - Annual Information Form 21
(b) received from the external auditors all reports and disclosures required under legal, listing and regulatory
requirements and this Charter and have discussed such reports with the external auditors, including reports with
respect to the independence of the external auditors; and
(c) based on the reviews and discussions referred to in clauses (a) and (b) above, recommended to the Board that
the audited financial statements be included in the Company’s annual report.
Additional Responsibilities
35. The Committee shall review and make recommendations to the Board concerning the financial structure, condition and
strategy of the Company and its subsidiaries, including with respect to annual budgets, long-term financial plans,
corporate borrowings, investments, capital expenditures, long-term commitments and the issuance and/or repurchase
of stock.
36. The Committee shall review and/or approve any other matter specifically delegated to the Committee by the Board
and undertake on behalf of the Board such other activities as may be necessary or desirable to assist the Board in
fulfilling its oversight responsibilities with respect to financial reporting.
THE CHARTER
The Committee shall review and reassess the adequacy of this Charter at least annually and otherwise as it deems
appropriate and recommend changes to the Board. The performance of the Committee shall be evaluated with reference to
this Charter annually.
The Committee shall ensure that this Charter is disclosed on the Company’s website and that this Charter or a summary of
it which has been approved by the Committee is disclosed in accordance with all applicable securities laws or regulatory
requirements in the management information circular or annual report of the Company.
DATED November 1, 2018, as amended on November 11, 2020 and on November 10, 2021.
ALITHYA - Annual Information Form 22
Exhibit 99.2
Annual Consolidated Financial
Statements of Alithya Group inc.
For the years ended March 31, 2022
and 2021
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firms ..........................................................................
Consolidated Statements of Operations and Comprehensive Loss ..............................................................
Consolidated Statements of Financial Position .................................................................................................
Consolidated Statements of Changes in Shareholders’ Equity ......................................................................
Consolidated Statements of Cash Flows ...........................................................................................................
1. Governing statutes and nature of operations ......................................................................................
2. Summary of significant accounting policies .........................................................................................
3. Business combinations ...........................................................................................................................
4. Accounts receivable and other receivables .........................................................................................
5. Property and equipment .........................................................................................................................
6. Leases .......................................................................................................................................................
7.
Intangibles .................................................................................................................................................
8. Goodwill .....................................................................................................................................................
9. Accounts payable and accrued liabilities .............................................................................................
10. Long-term debt .........................................................................................................................................
11. Income taxes ............................................................................................................................................
12. Share capital .............................................................................................................................................
13. Commitments and contingencies ..........................................................................................................
14. Related parties .........................................................................................................................................
15. Earnings per share ..................................................................................................................................
16. Reconciliation of liabilities arising from financing activities ...............................................................
17. Additional information on consolidated loss ........................................................................................
18. Business acquisition, integration and reorganization costs ..............................................................
19. Net financial expenses ............................................................................................................................
20. Supplementary cash flow information ..................................................................................................
21. Segment and geographical information ................................................................................................
22. Financial instruments ...............................................................................................................................
23. Capital disclosures ...................................................................................................................................
24. Subsequent event ....................................................................................................................................
2
6
7
8
9
10
10
27
31
32
32
34
34
36
36
38
40
47
48
49
49
50
51
51
52
52
53
58
60
KPMG LLP
600 de Maisonneuve Blvd. West
Suite 1500, Tour KPMG
Montréal (Québec) H3A 0A3
Canada
Telephone (514) 840-2100
Fax
(514) 840-2187
Internet
www.kpmg.ca
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Alithya Group inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of financial position of Alithya Group inc. (the
"Company") as of March 31, 2022, the related consolidated statements of operations and comprehensive loss,
changes in shareholders’ equity, and cash flows, for the year then ended, and the related notes (collectively, the
"consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Company as of March 31, 2022, and its consolidated
results of operations and its consolidated cash flows for the year then ended, in conformity with International
Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility
is to express an opinion on the Company's consolidated financial statements based on our audit. We are a
public accounting firm registered with the Public Company Accounting Oversight Board (United States)
("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express
no such opinion.
KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with
KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 2
Page 2
Our audit included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audit also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Company’s auditor since 2021.
Montréal, Canada
June 16, 2022
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 3
Report of Independent Registered
Public Accounting Firm
Raymond Chabot Grant Thornton LLP
Suite 2000
National Bank Tower
600 De La Gauchetière Street West
Montréal, Quebec
H3B 4L8
T 514-878-2691
To the Board of Directors and Shareholders of
Alithya Group inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statement of financial position of Alithya Group inc. (hereafter
“the Company”) as of March 31, 2021, the related consolidated statements of operations and comprehensive
loss, changes in shareholders’ equity, and cash flows, for the year ended March 31, 2021, and the related notes
(collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Company as of March 31, 2021, and the results of its consolidated operations and its
consolidated cash flows for the year ended March 31, 2021, in conformity with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility
is to express an opinion on the Company’s consolidated financial statements based on our audit. We are a
public accounting firm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express
no such opinion.
Member of Grant Thornton International Ltd
rcgt.com
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 4
Our audit included performing procedures to assess the risks of material misstatement of the consolidated
financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audit also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Company’s auditor from 2012 to 2021.
Montréal, Canada
June 9, 2021
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 5
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Notes
21
17
17
18
17
7
19
11
11
(in thousands of Canadian dollars, except per share data)
Revenues
Cost of revenues
Gross margin
Operating expenses
Selling, general and administrative expenses
Business acquisition, integration and reorganization costs
Depreciation
Amortization of intangibles
Foreign exchange loss (gain)
Operating loss
Net financial expenses
Gain on recovery of note receivable
Loss before income taxes
Income tax expense (recovery)
Current
Deferred
Net loss
Other comprehensive loss
Items that may be classified subsequently to profit or loss
Cumulative translation adjustment on consolidation of foreign
subsidiaries
Comprehensive loss
For the years ended March 31,
2022
$
2021
$
437,885
321,732
116,153
98,838
11,617
5,435
14,285
(26)
130,149
(13,996)
4,579
—
(18,575)
(20)
(3,007)
(3,027)
(15,548)
(439)
(439)
(15,987)
287,643
204,626
83,017
81,723
2,321
3,767
11,739
473
100,023
(17,006)
3,274
(660)
(19,620)
1,515
(3,797)
(2,282)
(17,338)
(6,631)
(6,631)
(23,969)
Basic and diluted loss per share
15
(0.18)
(0.30)
The accompanying notes are an integral part of these consolidated financial statements.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 6
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
March 31,
March 31,
Notes
2022
$
2021
$
As at
(in thousands of Canadian dollars)
Assets
Current assets
Cash
Restricted cash
Accounts receivable and other receivables
4
Income taxes receivable
Unbilled revenues
Tax credits receivable
Prepaids
Non-current assets
Restricted cash
Tax credits receivable
Other assets
Property and equipment
Right-of-use assets
Intangibles
Deferred tax assets
Goodwill
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities
Deferred revenues
Current portion of lease liabilities
Current portion of long-term debt
Non-current liabilities
Long-term debt
Lease liabilities
Deferred tax liabilities
Shareholders' equity
Share capital
Deficit
Accumulated other comprehensive loss
Contributed surplus
Commitments and contingencies
Subsequent event
5
6
7
11
8
9
6
10
10
6
11
12
13
24
17,655
3,254
100,867
—
17,272
8,515
6,162
153,725
—
11,873
1,303
10,412
15,146
101,927
7,247
146,088
447,721
89,660
20,409
3,510
19,316
132,895
87,360
17,753
9,962
247,970
305,222
(111,654)
(947)
7,130
199,751
447,721
6,903
—
69,363
642
9,924
4,936
3,923
95,691
3,233
7,809
—
8,449
11,118
36,590
7,465
72,906
243,261
51,571
10,288
1,923
35,134
98,916
19,817
13,536
2,980
135,249
197,537
(96,190)
(508)
7,173
108,012
243,261
The accompanying notes are an integral part of these consolidated financial statements.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 7
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the years ended March 31,
(in thousands of Canadian dollars, except share data)
Balance at March 31, 2021
Net loss
Other comprehensive loss
Total comprehensive loss
Share-based compensation
Share-based compensation granted on business acquisition
Issuance of Subordinate Voting Shares in consideration of the acquisition
of R3D Consulting Inc.
3, 12
25,182,676
Issuance of Subordinate Voting Shares for private placement
Shares purchased for cancellation
Issuance of Subordinate Voting Shares pursuant to vesting of share-
based compensation granted on business acquisitions
Issuance of Multiple Voting Shares and Subordinate Voting Shares from
exercise of stock options
Issuance of Subordinate Voting Shares from settlement of DSUs
Total contributions by, and distributions to, shareholders
Balance as at March 31, 2022
Balance as at March 31, 2020
Net loss
Other comprehensive loss
Total comprehensive loss
Share-based compensation
Share-based compensation granted on business acquisition
Issuance of Multiple Voting Shares and Subordinate Voting Shares from
exercise of stock options
Issuance of Subordinate Voting Shares pursuant to vesting of share-
based compensation granted on business acquisitions
Issuance of Subordinate Voting Shares from settlement of DSUs
Repurchase of equity interests issued on business acquisition
Total contributions by, and distributions to, shareholders
12
12
12
12
12
12
12
12
12
12
12
Notes
Shares
outstanding
Share capital
Deficit
Accumulated other
comprehensive
income (loss)
Contributed
surplus
Number
$
$
$
$
Total
$
58,695,438
197,537
(96,190)
(508)
7,173
108,012
—
—
—
—
—
12
12
—
—
—
—
—
80,585
24,686
8,143,322
(349,400)
(1,244)
834,324
2,935
155,382
63,874
34,030,178
92,725,616
528
195
107,685
305,222
(15,548)
—
(15,548)
—
(439)
(439)
—
—
—
—
84
—
—
—
84
—
—
—
—
—
—
—
—
—
—
—
—
1,792
1,524
—
—
—
(2,935)
(229)
(195)
(15,548)
(439)
(15,987)
1,792
1,524
80,585
24,686
(1,160)
—
299
—
(43)
107,726
(111,654)
(947)
7,130
199,751
58,073,517
195,335
(78,780)
—
—
—
—
—
—
—
—
—
—
156,132
484
458,071
1,686
7,718
—
32
—
621,921
2,202
(17,338)
—
(17,338)
—
—
—
—
—
(72)
(72)
6,123
—
(6,631)
(6,631)
—
—
—
—
—
—
—
4,691
127,369
—
—
—
1,537
4,051
(17,338)
(6,631)
(23,969)
1,537
4,051
(184)
300
(1,686)
(32)
(1,204)
2,482
7,173
—
—
(1,276)
4,612
108,012
Balance as at March 31, 2021
58,695,438
197,537
(96,190)
(508)
The accompanying notes are an integral part of these consolidated financial statements.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 8
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended March 31,
Notes
2022
$
2021
$
(15,548)
(17,338)
(in thousands of Canadian dollars)
Operating activities
Net loss
Items not affecting cash
Depreciation and amortization
Amortization of finance costs
Share-based compensation
Unrealized foreign exchange loss
Foreign exchange gain on repayment of long-term debt
Forgiveness of PPP loan
Interest accretion on balances of purchase payable
Loss on disposal of property and equipment
Loss on disposal of intangibles
Other
Deferred taxes
Changes in non-cash working capital items
Net cash used in operating activities
Investing activities
Additions to property and equipment
Additions to intangibles
Restricted cash
Repurchase of equity interests issued on business acquisitions
Business acquisitions, net of cash acquired
Right-of-use assets
Net cash used in investing activities
Financing activities
Increase in long-term debt, net of related transaction costs
Repayment of long-term debt
Exercise of stock options
Repayment of lease liabilities
Share issuance, net of share issue costs
Shares purchased for cancellation
Lease incentives
Net cash from financing activities
Effect of exchange rate changes on cash
Net change in cash
Cash, beginning of year
Cash, end of year
19
12
10
19
7
11
20
5
7
12
3
16
16
12
6
12
12
6
Cash paid (included in cash flow (used in) from operating
activities)
Interest paid
Income taxes (recovered) paid
The accompanying notes are an integral part of these consolidated financial statements.
19,720
277
3,316
299
(250)
(5,868)
823
—
262
(533)
(3,007)
(1,120)
13,919
(1,629)
(1,719)
(1,361)
(21)
—
(15,705)
(132)
(18,938)
156,768
(146,509)
299
(2,688)
24,686
(1,160)
—
31,396
(77)
10,752
6,903
17,655
3,148
(354)
15,506
242
5,588
1,291
(879)
(1,898)
835
218
—
(138)
(3,797)
(86)
16,882
(456)
(2,104)
(166)
(1,021)
(1,276)
—
—
(4,567)
53,471
(49,867)
300
(1,397)
—
—
917
3,424
(308)
(1,907)
8,810
6,903
1,831
574
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
1. GOVERNING STATUTES AND NATURE OF OPERATIONS
Alithya Group inc. (“Alithya” or the “Company”) and its subsidiaries (collectively with Alithya, the “Group”) are
leaders in strategy and digital transformation. Alithya's integrated offer is based on four pillars of expertise:
business strategies, enterprise cloud solutions, application services, and data and analytics. The Group deploys
solutions, services, and expert consultants to design, build and implement innovative and efficient solutions for
the complex business challenges of its clients, tailored to their business needs in the financial services,
insurance, renewable energy, manufacturing, telecommunications, transportation and logistics, professional
services, healthcare and government sectors.
The Company’s Class A subordinate voting shares (the “Subordinate Voting Shares”) trade on the Toronto Stock
Exchange (“TSX”) and on the NASDAQ Capital Market (“NASDAQ”) under the symbol “ALYA”.
The Company is the Group’s ultimate parent company and its head office is located at 1100, Robert-Bourassa
Boulevard, Suite 400, Montréal, Québec, Canada, H3B 3A5.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PREPARATION
Statement of Compliance
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”).
These consolidated financial statements were approved and authorized for issue by the Board of Directors (the
“Board”) on June 16, 2022.
Basis of Measurement
These consolidated financial statements have been prepared under the historical cost basis except for
• Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination which
are generally measured initially at their fair values at the acquisition date;
• Lease obligations, which are initially measured at the present value of the lease payments that are not paid at
the lease commencement date; and
• Equity classified share-based payment arrangements which are measured at fair value at grant date pursuant
to IFRS 2, Share-Based Payment.
PRINCIPLES OF CONSOLIDATION
Subsidiaries
Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed or has
the right to variable returns from its relationship with the entity and is able to affect those returns through its
power over the activities of the entity. The subsidiaries’ financial statements are included in these consolidated
financial statements from the date of commencement of control until the date that control ceases.
Subsidiaries’ accounting policies have been adjusted, when necessary, to align with the policies adopted by the
Group.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
All intercompany balances and transactions, and any unrealized income and expenses arising from intra
company transactions, are eliminated on consolidation.
These consolidated financial statements include the accounts of the Company and the accounts of its wholly-
owned subsidiaries. All subsidiaries have a reporting date of March 31. The Company’s principal subsidiaries
are as follows:
Entity
Jurisdiction
Percentage Ownership Percentage Ownership
2022
2021
Alithya Canada Inc.
Alithya Consulting Inc.
Alithya Digital Technology Corporation
Alithya France SAS
Alithya USA, Inc.
Alithya Financial Solutions, Inc.
Alithya Ranzal LLC
Alithya Zero2Ten, Inc.
Alithya Fullscope Solutions, Inc.
Matricis Informatique Inc. (a)
Alithya Travercent LLC (a)
Alithya Askida Consulting Services Inc. (a)
Alithya Askida Solutions Inc. (a)
Pro2p Services Conseils Inc. (a)
Alithya Solutions Canada Inc. (a)
Alithya IT Services Inc. (a)
Vitalyst, LLC
Alithya Numérique Maroc SARLAU
Quebec, Canada
Quebec, Canada
Ontario, Canada
France
Delaware, USA
Delaware, USA
Delaware, USA
Delaware, USA
Delaware, USA
Quebec, Canada
Texas, USA
Quebec, Canada
Quebec, Canada
Canada
Canada
Canada
Delaware, USA
Maroc
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
—
—
—
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
-
-
(a)As at March 31, 2022, those subsidiaries were either liquidated, dissolved, amalgamated or transferred all of their assets and liabilities to
other companies of the Group.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
BUSINESS COMBINATIONS
The Group accounts for its business combinations using the acquisition method. Under this method the
consideration transferred is measured at fair value. Acquisition-related and integration costs associated with the
business combination are expensed as incurred. The Group recognizes goodwill as the excess of the cost of the
acquisition over the net identifiable tangible and intangible assets acquired and liabilities assumed at their
acquisition date fair values and any non-controlling interest in the acquiree. The fair value allocated to tangible
and intangible assets acquired and liabilities assumed are based on management’s assumptions, including
assumptions that would be made by market participants, acting in their economic best interest. These
assumptions include the future expected cash flows arising from the intangible assets identified. The goodwill
recognized is composed of the future economic value associated to acquired work force and any identified
synergies with the Group’s operations which are primarily due to reduction of costs and new business
opportunities. The determination of fair value involves making estimates relating to acquired intangible assets,
property and equipment, litigation, provision for estimated losses on revenue-generating contracts, other
onerous contracts, tax and other contingency reserves. Estimates include the forecasting of future cash flows
and discount rates. Subsequent changes in fair values are adjusted against the cost of acquisition, if they qualify
as measurement period adjustments. The measurement period is the period between the date of acquisition and
the date where all significant information necessary to determine the fair values is available, not to exceed 12
months. All other subsequent changes are recognized in the consolidated statements of operations.
TRANSLATION OF FOREIGN CURRENCIES
The Group’s consolidated financial statements are presented in Canadian dollars, which is also the parent
company’s functional currency. Each entity in the group determines its own functional currency and items
included in the consolidated financial statements of each entity are measured using that functional currency.
Functional currency is the currency of the primary economic environment in which the entity operates.
Foreign currency transactions and balances
Revenue, expenses and non-monetary assets and liabilities denominated in foreign currencies are recorded at
the rate of exchange prevailing at the transaction date, except for non-monetary items measured at fair value,
which are translated using the exchange rates at the date when the fair value was determined. Monetary assets
and liabilities denominated in foreign currencies are translated at exchange rates prevailing at the reporting
date. Unrealized and realized translation gains and losses, resulting from the settlement of such transactions
and from the remeasurement of monetary items denominated in foreign currency, are reflected in the
consolidated statements of operations.
Foreign operations
In the Group’s consolidated financial statements, all assets, liabilities and transactions of Group entities with a
functional currency other than the Canadian dollar are translated into Canadian dollars upon consolidation. The
functional currencies of entities within the Group have remained unchanged during the reporting period. Upon
consolidation, assets and liabilities have been translated into Canadian dollars at the closing rate at the
reporting date. Goodwill and fair value adjustments arising from the acquisition of a foreign entity have been
treated as assets and liabilities of the foreign entity and translated into Canadian dollars at the closing rate.
Revenue and expenses have been translated into Canadian dollars at the average rate over the reporting
period. Exchange differences are charged or credited to other comprehensive income and recognized in the
currency translation reserve in equity. On disposal of a foreign operation, the related cumulative translation
differences recognized in equity are reclassified to the consolidated statements of operations and are
recognized as part of the gain or loss on disposal.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
SEGMENTED REPORTING
An operating segment is a component of the Group that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to the transactions with any of the
Group’s other segments. An entity shall disclose separately information about each operating segment or can
combine operating segments, with similar economic characteristics or that do not meet quantitative thresholds to
produce a reportable segment, into one reportable segment.
The Group has examined its activities and has determined that it has one single reportable segment due to
similar characteristics of its operating segments, including similar economic characteristics, the nature of
services provided to its customers and types of customers comprising its customer base and the regulatory
environment in which the Group operates.
REVENUE RECOGNITION, UNBILLED REVENUES AND DEFERRED REVENUES
The Group generates revenue principally through the provision of consulting services in the areas of information
technology including systems implementation and strategy. These services are provided under arrangements
with varying pricing mechanisms.
To determine whether to recognize revenue, the Group follows a 5-step process:
• Identifying the contract with a customer;
• Identifying the performance obligations;
• Determining the transaction price;
• Allocating the transaction price to the performance obligations; and
• Recognizing revenue when/as performance obligation(s) are satisfied.
The total transaction price for a contract is allocated amongst the various performance obligations based on
their relative standalone selling prices. Revenue is recognized either at a point in time or over time, when (or as)
the Group satisfies performance obligations by transferring the promised goods or services to its customers,
including variable consideration, such as, discounts, volume rebates, service-level penalties, and incentives.
Variable consideration is estimated using either the expected value method or most likely amount method and is
included only to the extent it is highly probable that a significant reversal of cumulative revenue recognized will
not occur. In making this judgement, management will mostly consider all information available at the time, the
Group’s knowledge of the client or the industry, the type of services to be delivered and the specific contractual
terms of each arrangement.
The Group recognizes contract liabilities for consideration received in respect of unsatisfied performance
obligations and reports these amounts as deferred revenues in the statement of financial position. Similarly, if
the Group satisfies a performance obligation before it receives the consideration, the Group recognizes either an
unbilled revenues or a receivable in its statement of financial position, depending on whether something other
than the passage of time is required before the consideration is due.
Certain of the Group’s arrangements may include client acceptance clauses. Each clause is analyzed to
determine whether the earnings process is complete when the service is performed. Formal client sign-off is not
always necessary to recognize revenue, provided that the Group objectively demonstrates that the criteria
specified in the acceptance provisions are satisfied. Some of the criteria reviewed include historical experience
with similar types of arrangements, whether the acceptance provisions are specific to the client or are included
in all arrangements, the length of the acceptance term and historical experience with the specific client.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Contract modifications are changes in scope and/or price that are approved by the parties to the contract.
Approval may be written, oral or implied by customary business practices, and are legally enforceable. The
Group accounts for modifications as a separate contract if the modifications add distinct goods or services that
are priced commensurate with standalone selling prices or if the remaining goods or services are distinct from
those already transferred, otherwise modifications are accounted for as part of the original contract.
Time and materials arrangements – Revenue
implementations under time and materials arrangements is recognized as the services are rendered.
from consulting and support services and systems
Fixed-fee arrangements – Revenue from consulting services and systems implementations under fixed-fee
arrangements where the outcome of the arrangements can be estimated reliably is recognized over time based
on the measure of progress determined by the Group's efforts or inputs towards satisfying the performance
obligation relative to the total expected inputs. The Group primarily uses labour costs or labour hours to
measure the progress towards completion. This method relies on estimates of total expected labour costs or
total expected labour hours to complete the service, which are compared to labour costs or labour hours
incurred to date, to arrive at an estimate of the percentage of revenue earned to date. Management regularly
reviews underlying estimates of total expected labour costs or hours. If the outcome of an arrangement cannot
be estimated reliably, revenue is recognized to the extent of arrangement costs incurred that are likely to be
recoverable.
Service based arrangements – The client pays a recurring fee in exchange for a monthly recurring service
(typically support). The revenue for these arrangements is recognized over time.
Software revenue – Software revenue is generated from the resale of certain third-party off-the-shelf software
and maintenance. The majority of the software sold by the Group is delivered electronically. For software that is
delivered electronically, the Group considers transfer of control to have occurred when the customer either (a)
takes possession of the software via a download (that is, when the customer takes possession of the electronic
data on its hardware), or (b) has been provided with access codes that allow the customer to take immediate
possession of the software on its hardware pursuant to an agreement or purchase order for the software. In all
instances, the resale of third-party software and maintenance is recorded on a net basis. Group created
software, and the associated maintenance, is reported on a gross basis, however it is immaterial in all periods
presented.
Third party software and maintenance revenue are recognized upon delivery of the software, as all related
warranty and maintenance is performed by the primary software vendor and not the Group.
Subscriptions to learning services, which are available to customers at any times with unlimited use, are
recognized over time, on a straight-line basis over the contract term.
The Group enters into arrangements with multiple performance obligations which typically include software,
post-contract support (or maintenance), and consulting services. Contracts that contain multiple performance
obligations require an allocation of the transaction price to each performance obligation based on a relative
standalone selling price basis. The Group has determined standalone selling prices for each of the performance
obligations in connection with the evaluation of arrangements with multiple performance obligations. The Group
has determined standalone selling prices for consulting services based on a stated and consistent rate per hour
range in standalone transactions. The Group has determined standalone selling prices for software through
consistent stated rates for software components. The Group has determined standalone selling prices for
maintenance based on observable prices for standalone renewals.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Estimated losses on revenue-generating contracts – Estimated losses on revenue-generating contracts may
occur due to additional contract costs which were not foreseen at the inception of the contract. Contract losses
are measured at the amount by which the estimated incremental costs, including direct labour and material,
exceed the estimated total revenue from the contract. The estimated losses on revenue-generating contracts
are recognized in the period when it is determined that a loss is probable. The expected loss is first applied to
impair the related capitalized contract costs, if any, with the excess recorded under performance obligations in
customer contracts in accounts payable and accrued liabilities. Management regularly reviews arrangement
profitability and underlying estimates.
Unbilled revenues and deferred revenues – Amounts recognized as revenue in excess of billings are classified
as unbilled revenues. Amounts received in advance of the performance of services are classified as deferred
revenues.
FINANCIAL INSTRUMENTS
Recognition and Derecognition
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire,
or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is
derecognized when it is extinguished, discharged, cancelled or expires.
Classification and Initial Measurement of Financial Assets
Except for those accounts receivables and other receivables that do not contain a significant financing
component and are measured at the transaction price in accordance with IFRS 15, all financial assets are
initially measured at fair value adjusted for transaction costs (where applicable).
Financial assets, other than those designated and effective as hedging instruments, are classified into the
following categories:
• amortized cost;
• fair value through profit or loss (FVTPL); and
• fair value through other comprehensive income (FVOCI).
The classification is determined by both:
• the entity’s business model for managing the financial asset; and
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognized in profit or loss are presented within
financial expense, except for impairment of accounts receivables and other receivables, which is presented
within selling, general and administrative expenses.
In the years presented, the Group does not have any financial assets categorized as FVOCI or FVTPL.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Subsequent measurement of financial assets
Financial assets at amortized cost
Financial assets are measured at amortized cost if the assets meet the following conditions (and are not
designated as FVTPL):
• they are held within a business model whose objective is to hold the financial assets and collect its contractual
cash flows; and
• the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
After initial recognition, these are measured at amortized cost using the effective interest method. Discounting is
omitted where the effect of discounting is immaterial. The Group’s cash, restricted cash and accounts receivable
and other receivables fall into this category of financial instruments.
Impairment of financial assets and unbilled revenues
IFRS 9’s impairment requirements use forward-looking information to recognize expected credit losses – the
‘expected credit loss (ECL) model’. Instruments within the scope of IFRS 9’s impairment requirements included
loans and other debt-type financial assets measured at amortized cost and FVOCI, accounts receivables and
other receivables and unbilled revenues recognized and measured under IFRS 15 and loan commitments and
some financial guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
Expected credit losses are not significant for the Group.
The Group considers a range of information when assessing credit risk and measuring expected credit losses,
including past events, current conditions, reasonable and supportable forecasts that affect the expected
collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
•
•
financial instruments that have not deteriorated significantly in credit quality since initial recognition or that
have low credit risk (‘Stage 1’) and
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose
credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognized for the first category while ‘lifetime expected credit losses’ are
recognized for the second category. Measurement of the expected credit losses is determined by a probability-
weighted estimate of credit losses over the expected life of the financial instrument.
The maximum period considered when estimating ECLs is the maximum contractual period over which the
Group is exposed to credit risk.
Accounts Receivable and Other Receivables and Unbilled Revenues
The Group makes use of the simplified approach in accounting for accounts receivable and other receivables
and unbilled revenues and records the loss allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of
the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-
looking information to calculate the expected credit losses using a provision matrix.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
The Group assesses impairment of accounts receivables and other receivables and unbilled revenues based on
days past due on a collective basis as customers with similar payment delays possess shared credit risk
characteristics. The Group also assesses impairment of accounts receivables and other receivables and
unbilled revenues on a customer-by-customer basis based on specific risks identified.
Classification and measurement of financial liabilities
The Group’s financial liabilities include accounts payable and accrued liabilities and long-term debt.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction costs
unless the Group designated a financial liability at fair value through profit or loss.
Subsequently, financial liabilities are measured at amortized cost using the effective interest method and
financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses
recognized in profit or loss.
All interest-related charges and, if applicable, changes in an instrument’s fair value are reported in the
consolidated statements of operations within financial expenses.
Transaction Costs
Transaction costs related to loans and receivables and liabilities are considered as part of the carrying value of
the asset or liability and are then amortized over the expected life of the instrument using the effective interest
rate method.
Financial Income and Expenses
Financial income includes interest income on cash. Interest income is recognized as it accrues in earnings,
using the effective interest method. Financial expenses include interest expense on borrowings, effective
interest on non-interesting bearing vendor financing arising from business combinations, amortization of
unwinding of the discount on provisions and other interest and bank charges.
EARNINGS PER SHARE
Basic earnings (loss) per share is calculated by dividing the net earnings (loss) attributable to the holders of
Common Shares (as defined further herein) by the weighted average number of Common Shares outstanding
during the period. The net earnings (loss) attributable to the holders of Common Shares corresponds to the net
earnings (loss) adjusted by deducting earnings allocated to preferred shares.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into
account the weighted average number of additional Common Shares that would have been outstanding
assuming the conversion of all potential equity instruments, including deferred, restricted and performance share
units, if dilutive.
Dilutive potential outstanding stock options include the total number of additional Common Shares that would
have been issued by the Company assuming stock options with exercise prices below the average market price
for the year were exercised and reduced by the number of shares that the Company could have repurchased if it
had used the assumed proceeds from the exercise of stock options to repurchase them on the open market at
the average share price for the period.
“Common Shares” include the Subordinate Voting Shares and Multiple Voting Shares (as defined further herein).
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
RESTRICTED CASH
Restricted cash represents amounts held in trust as required by contractual obligations arising from a business
acquisition. Restricted cash that is not expected to become unrestricted within the next twelve months is
included in non-current assets on the statements of financial position.
GOVERNMENT ASSISTANCE
Certain subsidiaries are eligible for government assistance programs, in the different jurisdictions, in the form of
grants, loans and tax credits for the development of e-business. Government assistance is recorded when there
is reasonable assurance that the assistance will be received and that the subsidiary will comply with all relevant
conditions. Assistance is treated as a reduction in the cost of the related item.
In preparing claims, judgment is required in interpreting the regulations related to these programs, determining if
the operations of the subsidiaries qualify and identifying and quantifying eligible expenses. These claims are
subject to examination and audit by local authorities, who may disagree with interpretations made by the Group.
Management estimates the amounts to be received or forgiven under these programs. Final settlements
following examinations and audits could be different from amounts recorded and could have a material effect on
the financial position or operating results of the Group.
PROPERTY AND EQUIPMENT (“P&E”)
Property and equipment are recorded at cost and amortized over their estimated useful lives, using the following
methods:
Furniture, fixtures and equipment
Computer equipment
Leasehold improvements
Method
Rates
Declining balance
Declining balance
20 %
30 %
Straight line
Over the term of the lease
The residual value, depreciation method and useful life of each asset are reviewed at least once a year, at the
reporting date.
LEASES
The Group as a lessee
For any new contracts entered into, the Group considers whether a contract is, or contains a lease. A lease is
defined as a “contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a
period of time in exchange for consideration”. To apply this definition, the Group assesses whether the contract
meets three key evaluations which are whether:
•
•
•
the contract contains an identified asset, which is either explicitly identified in the contract or implicitly
specified by being identified at the time the asset is made available to the Group;
the Group has the right to obtain substantially all of the economic benefits from use of the identified asset
throughout the period of use, considering its rights within the defined scope of the contract; and
the Group has the right to direct the use of the identified asset throughout the period of use. The Group
assesses whether it has the right to direct “how and for what purpose” the asset is used throughout the period
of use.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Measurement and recognition of leases as a lessee
At lease commencement date, the Group recognizes a right-of-use asset and a lease liability on the statement
of financial position. The right-of-use asset is measured at cost, which is made up of the initial measurement of
the lease liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and
remove the asset at the end of the lease, and any lease payments made in advance of the lease
commencement date (net of any incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also
assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the
Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in-
substance fixed payments), variable payments based on an index or rate, amounts expected to be payable
under a residual value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It
is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed
payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or net
loss if the right-of-use asset is already reduced to zero.
The Group has elected to account for short-term leases and leases of low-value assets using the practical
expedients. Instead of recognizing a right-of-use asset and lease liability, the payments in relation to these are
recognized as an expense in the consolidated statements of operations on a straight-line basis over the lease
term.
The Group as a lessor
As a lessor, the Group classifies its leases as either operating or finance leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to
ownership of the underlying asset, and classified as an operating lease if it does not.
When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease
separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising
from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which
the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
INTANGIBLES
Intangible assets consist mainly of customer relationships, non-compete agreements and internal-use business
solutions and software licenses. Internal use business solutions and software licenses (“Software”) are recorded
at cost. In addition, internal-use business solutions developed internally are capitalized when they meet specific
capitalization criteria related to technical and financial feasibility and when the Group demonstrates its ability
and intention to use them. Amortization of internal-use business solutions commences once the solution is
available for use. Customer relationships, internal-use business solutions and software licenses acquired
through business combinations are initially recorded at their fair value. The Group amortizes its intangible assets
using the straight-line method, or a method that reflects the pattern in which the asset’s future economic benefits
are expected to be consumed, over their estimated useful lives, as follows :
Customer relationships
Non-compete agreements
Software
Method
Period
Straight line/
Economic consumption
3 - 10 years or based on the
term of the underlying
contracts
Straight line
Straight line
3 - 10 years
3 years
The residual value, depreciation method and useful life of each asset are reviewed at least once a year, at the
reporting date.
GOODWILL
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the net
identifiable assets of the acquired subsidiary at the date of acquisition and it is measured net of accumulated
impairment losses. Goodwill is not amortized, but instead tested for impairment annually, or more frequently,
should events or changes in circumstances indicate that the goodwill may be impaired.
IMPAIRMENT OF P&E, RIGHT-OF-USE ASSETS, INTANGIBLES AND GOODWILL
Timing of impairment testing
The carrying amounts of the Group's P&E, right-of-use assets, intangible assets and goodwill are reviewed for
impairment when events or changes in circumstances indicate that the carrying value may be impaired. At each
reporting date, the Group assesses whether there is any indication of impairment. If any such indication exists,
then the asset's recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful
lives or that are not yet available for use, the impairment is tested at least annually, typically as at March 31.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Impairment testing
The recoverable amount of an asset or cash-generating unit ("CGU") is the greater of its value in use and its fair
value less costs of disposal. For the purpose of impairment testing, assets that cannot be tested individually are
grouped together into the smallest group of assets that generates cash inflows from continuing use that are
largely independent of the cash inflows of other assets or groups of assets (the "CGU"). For the purposes of
goodwill impairment testing, goodwill acquired in a business combination is allocated to the CGU, or the group
of CGUs, that is expected to benefit from the synergies of the combination. This allocation is subject to an
operating segment ceiling test and reflects the lowest level at which that goodwill is monitored for internal
reporting purposes. An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its
estimated recoverable amount. Impairment losses are recognized in consolidated statement of operations.
Impairment losses recognized in respect of CGUs that include goodwill are allocated first to reduce the carrying
amount of any goodwill allocated to the CGUs, and then to reduce the carrying amounts of the other assets in
the CGUs (group of CGUs) on a pro rata basis not beyond the highest of:
• The fair value less costs of disposal; and
• Value in use of the individual asset, if determinable.
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses
recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased
or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying
amount does not exceed the carrying amount that would have been determined, net of depreciation or
amortization, if no impairment loss had been recognized.
BUSINESS ACQUISITION, INTEGRATION AND REORGANIZATION COSTS
Business acquisition, integration and reorganization costs are comprised of transaction costs related to business
acquisitions, whether successful or not, costs of integrating acquired businesses including redundant rent, gains
or losses on lease modifications, disposal of non-core assets and transition costs relating to system integrations
as well as severance resulting from integrations and significant changes in management structure.
PROVISIONS
Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation. The Group’s provisions may
consist of litigation and claim provisions arising in the ordinary course of business and decommissioning
liabilities for operating leases of office buildings. The Group may record restructuring provisions related to
business combinations and termination of employment costs incurred as part of the Group's productivity
improvement initiatives. The amount recognized as a provision is the best estimate of the consideration required
to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties
surrounding the obligation. Provisions are discounted using a current pre-tax rate when the impact of the time
value of money is material. The increase in the provision due to the passage of time is recognized as a finance
cost. The accrued litigation and legal claim provisions are based on historical experience, current trends and
other assumptions that are believed to be reasonable under the circumstances. Estimates include the period in
which the underlying cause of the claim occurred and the degree of probability of an unfavorable outcome.
In the case of decommissioning liabilities pertaining to operating leases of buildings where certain arrangements
require premises to be returned to their original state at the end of the lease term, the provision is determined
using the present value of the estimated future cash outflows.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Restructuring provisions, consisting primarily of severance, are recognized when a detailed formal plan identifies
the business or part of the business concerned, the location and number of employees affected, a detailed
estimate of the associated costs, appropriate timelines and has been communicated to those affected by it.
INCOME TAXES
Income taxes are accounted for using the liability method of accounting.
Current income taxes are recognized with respect to the amounts expected to be paid or recovered under the
tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred income tax
assets and liabilities are determined based on deductible or taxable temporary differences between the amounts
reported for financial statement purposes and tax values of the assets and liabilities using enacted or
substantively enacted tax rates that will be in effect for the year in which the differences are expected to be
recovered or settled. Deferred income tax assets and liabilities are recognized in earnings, other comprehensive
income or in equity based on the classification of the item to which they relate.
Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or
liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit
or loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not
reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences
arising on the initial recognition of goodwill.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
SHARE CAPITAL
Subordinate Voting Shares, Multiple Voting Shares and preferred shares that are not redeemable or are
redeemable only at the Group's option are classified as equity. Incremental costs directly attributable to the issue
of Subordinate Voting Shares, Multiple Voting Shares, preferred shares and stock options are recognized as a
deduction from equity, net of any tax effects. Dividends payable by the Company to its shareholders, which are
determined at the discretion of the Board and in accordance with the terms of each category of shares (note 12),
are recorded when declared. Dividends on Subordinate Voting Shares, Multiple Voting Shares and preferred
shares are recognized as distributions within equity. When share capital recognized as equity is purchased for
cancellation, the amount of the consideration paid, which includes directly attributable costs, net of any tax
effects, is recognized as a deduction from share capital for the shares' assigned value, any excess being
allocated to contributed surplus to the extent that contributed surplus was created by a net excess of proceeds
over cost on cancellation or resale of shares of the same class (charged to retained earnings if no contributed
surplus for the same class of shares exists), and any discount being assigned to contributed surplus. Eligible
employees can purchase Subordinate Voting Shares at the price (fair value) then in effect, in the context of the
share purchase plan described in note 12.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
SHARE-BASED COMPENSATION PLANS
Share purchase plan
The Company operates a share purchase plan for eligible employees of the Company and its subsidiaries.
Under this plan, the Group matches the contributions made by employees up to a maximum percentage of the
employee's gross salary. The Group’s contributions to the plan are recognized in salaries within cost of revenues
and selling, general and administrative expenses.
Normal course issuer bid (“NCIB”)
When the Company purchases its own shares for cancellation through its NCIB, the consideration paid,
including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to
the Company’s equity holders until the shares are cancelled. When the shares are cancelled, the excess of the
consideration paid over the average stated value of the shares purchased for cancellation is charged to the
deficit.
Long-term incentive plan ("LTIP")
The Company operates a LTIP for eligible employees and directors of the Company and its subsidiaries which
provides for various types of awards, including equity-settled stock options, deferred share units (“DSUs”),
restricted share units (“RSUs”) and performance share units (“PSUs”). The Board, at its discretion, may elect to
settle the RSUs and PSUs in the form of a cash payment. The Company accounts for the RSUs and PSUs as
equity-settled awards as the Board intends to settle these awards through the issuance of capital stock.
The fair value of the share-based expense is based on the grant date fair value of the award expected to vest
over the vesting period with a corresponding adjustment through contributed surplus. For stock options the
compensation cost is measured using the Black-Scholes option pricing model. For RSUs and DSUs the
compensation cost is measured at the fair value of the underlying Subordinate Voting Share at the grant date.
The terms and conditions of each PSUs grant, including market and non-market performance goals, are
determined by the Board. For the portion of PSUs that are issuable based on market performance conditions,
the amount of PSUs recognized as an expense is adjusted based on an estimate of fair value measured using a
Monte Carlo model considering market performance conditions at grant date. For the portion of the PSUs that
are issuable based on non-market conditions, the amount recognized as an expense is adjusted to reflect the
number of awards for which the related service and non-market performance conditions are expected to be met,
such that the amount ultimately recognized is based on the number of awards that meet the related service and
non-market performance conditions at the vesting date. The determination as to whether the performance goals
have been achieved will have been made by the Board.
Forfeitures are estimated at the time of the grant and are included in the measurement of the expense and are
subsequently adjusted to reflect actual events. For awards with graded vesting, the fair value of each tranche is
recognized on a straight-line basis over its vesting period.
Any consideration paid by participants on exercise of stock options is credited to share capital together with any
related share-based compensation expense originally recorded in contributed surplus.
When DSUs, RSUs and PSUs are settled, the recorded fair value of the award is removed from contributed
surplus and credited to capital stock.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION
UNCERTAINTY
The preparation of these consolidated financial statements in conformity with IFRS requires management to
make judgments, estimates and assumptions that affect the application of accounting policies and the amounts
reported as assets, liabilities, income and expenses in the consolidated financial statements. Actual results
could differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which they occur and in any future periods affected.
Assessment of COVID-19 impact
As a result of measures enacted during fiscal 2022 and 2021 to combat the COVID-19 pandemic, increased
uncertainty surrounding global economic conditions and business impacts have occurred. The Group has
reviewed its estimates, judgments and assumptions used in the preparation of its consolidated financial
statements, including the determination of whether indicators of impairment exist for its tangible and intangible
assets, including goodwill, estimated losses on revenue from fixed-fee arrangement contracts, the credit risk of
its counterparties, and the estimates and judgments used for the measurement of its deferred tax assets.
The potential impacts of the surrounding global economic uncertainties on the Group’s operations and financial
conditions and on overall customer demand, may require revisions in future periods to estimates and
assumptions. Although management expects COVID-19 related disruptions to continue beyond fiscal 2022, it
believes that the Group’s long-term estimates and assumptions do not require further revisions, however
management continues to monitor and evaluate the situation and its impact on the Group’s business.
Information related to critical judgements required in applying accounting policies that have the most significant
effect on the amounts recognized in the consolidated financial statements is included in the following note:
Determination of cash generating units – the identification of CGUs and grouping of assets into the respective
CGUs is based on currently available information about actual utilization experience and expected future
business plans. Management has taken into consideration various factors in identifying its CGUs. These factors
include how the Group manages and monitors its operations, the nature of each CGU’s operations, and the
major customer markets they serve. As such, the Group has identified its CGUs for purposes of testing the
recoverability and impairment of non-financial assets to be: Canada, France, EPM US and ERP US.
Determination of the aggregation of operating segments – the Group uses judgment in the aggregation of
operating segments for financial reporting and disclosure purposes. The Group has examined its activities and
has determined that it has one single reportable segment due to similar economic characteristics including the
nature of services provided to its customers, types of customers comprising its customer base and the
regulatory environment in which the Group operates.
Grants, loans and tax credits – the Group is eligible for government assistance programs, in different
jurisdictions, which are recorded as a reduction in the cost of the related item when there is reasonable
assurance that the assistance will be received and that the Group will comply with all relevant conditions. The
Group interprets the regulations related to these programs, determines if the operations of the Group qualify and
identifies and quantifies eligible expenses. These claims are subject to examination and audit by local
authorities, who may disagree with interpretations made by the Group. These interpretations are used to
determine the amounts to be received or forgiven under the programs and are subject to examinations and
audits which could reach conclusions that are materially different from amounts recorded by the Group.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Information related to assumptions and estimation uncertainties described below with a significant risk of
resulting in material adjustments within the next year are included within the following notes:
Revenue recognition of fixed-fee arrangements – the Group recognizes revenues from fixed-fee arrangements
which can extend over more than one reporting period. Revenue from these fixed-fee arrangements is
recognized over time based on a measure of progress using the Group’s best estimate of the total expected
labour costs or total expected labour hours, and the related risks associated with completing the projects. In
addition, the determination of anticipated costs for completing a contract is based on estimates that can be
affected by a variety of factors, including the cost of materials and labour, as well as potential claims from
customers. As risks and uncertainties are different for each project, the sources of variations between
anticipated costs and actual costs incurred will also vary by project. The determination of estimates is based on
the Group's business practices as well as its historical experience, and is tightly linked to detailed project
management processes and controls. The information provided by the project managers combined with a
knowledgeable assessment of technical complexities and risks are used in estimating the percentage complete.
Impairment of long-lived assets – the Group’s impairment test for goodwill is based on internal estimates of the
value-in-use calculations and uses valuation models such as the discounted cash flow model. Key assumptions
on which the Group has based its determination of the individual CGUs’ value-in-use include discounted future
expected net operating cash flows, estimated long-term growth rates of net operating cash flows and after tax
value Weighted Average Cost of Capital (“WACC”). Changes in these estimates can have a material impact on
the recoverable amount calculations and ultimately the amount of any goodwill impairment recognized. Refer to
note 8 for additional information on the assumptions used.
Business combinations – the Group accounts for business combinations using the acquisition method. The
consideration transferred and the acquiree’s identifiable assets, liabilities and contingent liabilities are measured
at their fair value. The Group develops the fair value by using appropriate valuation techniques which are
generally based on discounted future expected cash flows. These evaluations are linked closely to the
assumptions made by the Group and can consist of the future performance of the related assets, the discount
rate and the attrition rate. Contingent consideration is measured at fair value using a discounted cash flow
model.
Deferred tax assets – the Group exercises judgment in the assessment of the probability of future taxable
income, to estimate the extent to which deferred income tax assets can be realized. Estimates are based on the
Group’s most recent approved budget, which is adjusted for significant non-taxable income and expenses and
specific limits to the use of any unused tax loss or credit. The tax rules and tax planning strategies in the
numerous jurisdictions in which the Group operates are carefully taken into consideration. The Group uses
judgment to assess specific facts and circumstances to evaluate legal, economic or other uncertainties.
FUTURE ACCOUNTING STANDARDS
At the date of authorization of these consolidated financial statements, certain new standards, amendments and
interpretations, and improvements to existing standards have been published by the IASB but are not yet
effective and have not been adopted early by the Group. Management anticipates that all the relevant
pronouncements will be adopted in the first reporting period following the date of application. Information on new
standards, amendments and interpretations, and improvements to existing standards, which could potentially
impact the Group’s consolidated financial statements, are detailed as follows:
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
New Standards and Interpretations Issued but Not Yet Effective
IAS 1 - Presentation of Financial Statements
On January 23, 2020, the IASB issued amendments to IAS 1 - Presentation of Financial Statements, to clarify
the classification of liabilities as current or non-current. In July 2020, the IASB issued final amendments to defer
the effective date to annual periods beginning on or after January 1, 2023. Early adoption is permitted. For the
purposes of non-current classification, the amendments removed the requirement for a right to defer settlement
or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must have substance
and exist at the end of the reporting period. The amendments also clarify how a company classifies a liability
that includes a counterparty conversion option. The amendments state that: settlement of a liability includes
transferring a company’s own equity instruments to the counterparty; and when classifying liabilities as current
or non-current, a company can ignore only those conversion options that are recognized as equity. Management
is currently assessing, but has not yet determined, the impact of this new standard on the Group’s consolidated
financial statements.
Amendments to IAS 1 and IFRS Practice Statement 2, Disclosure of Accounting Policy Information
In February 2021, the IASB issued amendments to IAS 1 - Presentation of Financial Statements and IFRS
Practice Statement 2 - Making Materiality Judgements. The amendments help entities provide accounting policy
disclosures that are more useful to primary users of financial statements by:
• Replacing the requirement to disclose “significant” accounting policies under IAS 1 with a requirement to
disclose “material” accounting policies. Under this, an accounting policy would be material if, when considered
together with other information included in an entity’s financial statements, it can reasonably be expected to
influence decisions that primary users of general purpose financial statements make on the basis of those
financial statements.
• Providing guidance in IFRS Practice Statement 2 to explain and demonstrate the application of the four-step
materiality process to accounting policy disclosures.
The amendments shall be applied prospectively. The amendments to IAS 1 are effective for annual periods
beginning on or after January 1, 2023. Earlier application is permitted. Once an entity applies the amendments
to IAS 1, it is also permitted to apply the amendments to IFRS Practice Statement 2. Management is currently
evaluating the impact of the amendment on its consolidated financial statements.
Amendments to IAS 8, Definition of Accounting Estimates
In February 2021, the IASB amended IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
to introduce a new definition of “accounting estimates” to replace the definition of “change in accounting
estimates” and also include clarifications intended to help entities distinguish changes in accounting policies
from changes in accounting estimates. This distinction is important because changes in accounting policies
must be applied retrospectively while changes in accounting estimates are accounted for prospectively. The
amendments are effective for annual periods beginning on or after January 1, 2023. Earlier application is
permitted. Management is currently evaluating the impact of the amendment on its consolidated financial
statements.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Amendments to IAS 37 - Onerous Contracts, Cost of Fulfilling a Contract
On May 14, 2020, the IASB published Onerous Contracts – Cost of Fulfilling a Contract (Amendments to
IAS 37), which specifies which costs a company includes when assessing whether a contract will be loss-
making. The amendments are effective for annual periods beginning on or after January 1, 2022 and applicable
to contracts existing at the date when the amendments are first applied. At the date of the initial application, the
cumulative effect of applying the amendments is recognized as an opening balance adjustment to retained
earnings or other components of equity as appropriate. The comparatives are not restated. The Group is
currently applying the incremental cost method approach in calculating the costs of fulfilling a contract, however,
application of the full cost approach is not expected to have a material impact on the financial statements.
Amendments to IAS 12 - Income Taxes
On May 7, 2021, the IASB issued amendments to IAS 12 – Income Taxes to narrow the scope of the initial
recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary
differences. As a result, companies will be required to recognize a deferred tax asset and a deferred tax liability
for temporary differences arising on initial recognition of a lease and a decommissioning provision. The
amendments apply for annual reporting periods beginning on or after January 1, 2023. Earlier application is
permitted. Management is currently evaluating the impact of this standard on its consolidated financial
statements.
Certain other new standards and interpretations have been issued but are not expected to have a material
impact on the Group’s consolidated financial statements.
3. BUSINESS COMBINATIONS
Alithya IT Services Inc.
Overview
On April 1, 2021, the Company acquired all of the outstanding shares of R3D Consulting Inc. (now Alithya IT
Services Inc.) ("Alithya IT" or "R3D") (the “R3D Acquisition”), a private Québec firm that specializes in digital
solutions.
The purchase price was paid by the issuance of 25,182,676 Subordinate Voting Shares of the Company, at a
value of $3.20 per share, which was the closing share price on the TSX on April 1, 2021, cash of $978,000 and
assumption of accounts payable and accrued liabilities and long-term debt of $45,000 and $8,887,000,
respectively, on the closing date.
The fair value of the assets acquired, liabilities assumed, and the purchase consideration’s valuation have been
completed. The R3D Acquisition is being accounted for using the acquisition method of accounting.
For the year ended March 31, 2022, the Company incurred acquisition-related costs of approximately
$1,646,000. These costs have been recorded in the consolidated statement of operations in business
acquisition, integration and reorganization costs.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATION (CONT'D)
Purchase Price Allocation
The allocation of the fair value of the assets acquired and the liabilities assumed is detailed as follows:
Acquisition of Alithya IT Services Inc.
$
Current assets
Cash
Accounts receivable and other receivables
Unbilled revenues
Prepaids
Non-current assets
Tax credits receivable
Property and equipment
Right-of-use assets
Intangibles
Deferred tax assets
Goodwill
Total assets acquired
Current liabilities
Accounts payable and accrued liabilities
Income taxes payable
Deferred revenues
Current portion of lease liabilities
Current portion of long-term debt
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Total liabilities assumed
Net assets acquired
577
9,985
7,169
91
17,822
2,053
2,207
2,982
52,777
763
42,491
121,095
15,069
155
125
592
8,887
24,828
3,620
11,084
39,532
81,563
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATION (CONT'D)
Goodwill
The goodwill recognized consists mainly of the future economic value attributable to the profitability of the
acquired business, as well as its workforce and expected synergies from the integration of Alithya IT into the
Group's existing business. The Company does not expect the goodwill to be deductible for income tax purposes.
Consideration paid
The following table summarizes the acquisition date fair value of each class of consideration as follows:
Acquisition of Alithya IT Services Inc.
$
Cash paid
Issuance of 25,182,676 Subordinate Voting Shares
Total consideration transferred
978
80,585
81,563
Alithya IT 's contribution to the Group results
For the period from April 1, 2021 to December 31, 2021, the date of Alithya IT’s administrative integration within
the acquired legal entity, it contributed revenues of approximately $51,002,000, a loss in the amount of
$4,595,000, including amortization, primarily related to the acquired customer relationships, of $3,805,000, and
business acquisition and integration costs of $3,683,000. Since the R3D Acquisition, all new contracts and all
new employees related to the acquired business were recorded in other Canadian entities of the Group, in
preparation for its administrative integration.
Vitalyst, LLC
Overview
On January 31, 2022, the Company acquired all of the issued and outstanding membership interest of
Vitalyst, LLC (“Vitalyst”) ("Vitalyst Acquisition"), a US-based learning, employee experience and transformative
change enablement business.
The Vitalyst Acquisition was completed for total consideration of US$45,362,000 ($57,592,000), comprised of
certain accounts payable and accrued liabilities assumed of US$2,279,000 ($2,893,000), long-term debt of
US$30,150,000 ($38,279,000), and US$12,933,000 ($16,420,000) paid in cash. The consideration is subject to
working capital and other adjustments, and includes an additional potential earn-out of up to US$1,000,000
($1,270,000) payable before May 31, 2023.
The fair value of the assets acquired and the liabilities assumed, and the purchase consideration is preliminary
pending the completion of their valuation. Should new information, obtained within one year of the date of
acquisition, about the facts and circumstances that existed at the date of the Vitalyst Acquisition, result in
adjustments to the below amounts, or require additional provisions for conditions that existed at the date of the
Vitalyst Acquisition, the fair value will then be revised. The Vitalyst Acquisition is being accounted for using the
acquisition method of accounting.
For the year ended March 31, 2022, the Company incurred acquisition-related costs of approximately
$1,652,000. These costs have been recorded in the consolidated statement of operations in business
acquisition, integration and reorganization costs.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATION (CONT'D)
Purchase Price Allocation
The preliminary allocation of the fair value of the assets acquired and the liabilities assumed is detailed as
follows:
Acquisition of Vitalyst, LLC
Current assets
Cash
Accounts receivable and other receivables
Unbilled revenues
Prepaids
Non-current assets
Other assets
Property and equipment
Right-of-use assets
Intangibles
Goodwill
Total assets acquired
Current liabilities
Accounts payable and accrued liabilities
Deferred revenues
Current portion of lease liabilities
Current portion of long-term debt
Non-current liabilities
Lease liabilities
Total liabilities assumed
Net assets acquired
$
1,116
6,301
1,101
1,403
9,921
157
583
3,975
26,323
31,498
72,457
5,237
7,936
1,007
38,584
52,764
3,273
56,037
16,420
Goodwill
The goodwill recognized consists mainly of the future economic value attributable to the profitability of the
acquired business, as well as its workforce and expertise. The Company does not expect the goodwill to be
deductible for income tax purposes.
Consideration paid
The following table summarizes the acquisition date fair value of each class of consideration as follows:
Acquisition of Vitalyst, LLC
$
Cash paid
Earn-out
Total consideration transferred
16,420
—
16,420
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATION (CONT'D)
Vitalyst's contribution to the Group results
For the year ended March 31, 2022, the Vitalyst business contributed revenues of approximately $4,980,000, a
loss in the amount of $1,219,000, including amortization, primarily related to the acquired customer
relationships, of $569,000, and acquisition and integration costs of $1,693,000, respectively.
If the acquisition had occurred on April 1, 2021, pro-forma revenue and earnings before incomes taxes for the
Vitalyst Acquisition for the year ended March 31, 2022 would have been $31,427,000 and $5,715,000,
respectively. These amounts have been calculated using Vitalyst’s results and adjusting for:
• differences in accounting policies between the Group and Vitalyst;
• the removal of transaction costs incurred by Vitalyst from April 1, 2021 to January 31, 2022; and
• the additional amortization that would have been charged assuming the fair value adjustments to intangibles
had been applied from April 1, 2021.
4. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
As at
Trade accounts receivable, net
Other receivables
March 31,
2022
$
2021
$
98,289
2,578
100,867
67,049
2,314
69,363
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
5. PROPERTY AND EQUIPMENT
As at
March 31, 2022
March 31, 2021
Furniture,
fixtures &
equipment
$
1,738
56
79
—
1
1,874
111
337
—
—
448
Cost
Additions
Additions through business
acquisitions (note 3)
Disposals / retirements
Foreign currency translation
adjustment
Subtotal
Accumulated depreciation
Depreciation expense
Disposals / retirements
Foreign currency translation
adjustment
Subtotal
Net carrying amount
1,426
Computer
equipment
Leasehold
improvements
Total
Furniture,
fixtures &
equipment
Computer
equipment
Leasehold
improvements
Total
$
2,889
1,444
591
—
1
4,925
1,100
996
—
$
$
6,149
10,776
219
1,719
$
2,333
553
$
3,190
1,195
$
$
5,611
11,134
1,682
3,430
2,120
2,790
—
—
—
—
—
6
—
8
(1,150)
(1,217)
(1,106) (3,473)
2
(279)
(38)
(315)
8,494
15,293
1,738
1,116
2,327
1,235
2,568
699
381
2,889
1,752
765
6,149
10,776
1,511
3,962
715
1,861
—
—
(964)
(1,188)
(1,103) (3,255)
(13)
(1)
(14)
(5)
(229)
(7)
(241)
2,083
2,842
2,350
4,881
6,144
10,412
111
1,627
1,100
1,789
1,116
2,327
5,033
8,449
6. LEASES
Right-of-use assets
The following right-of-use assets relate to right-of-use real estate:
As at
Beginning balance
Additions
Depreciation
Reassessments (a)
Lease inducement allowance
Exchange rate effect
Net carrying amount
March 31, 2022
March 31, 2021
$
$
11,118
7,117
(2,867)
(161)
—
(61)
15,146
11,492
2,611
(1,906)
(830)
28
(277)
11,118
(a) During the year, the Group entered into an agreement to sublease a portion of its office space to a subtenant. The sublease resulted in the
derecognition of the right-of-use asset associated with the office space and the recognition of short-term lease receivable, included in other
receivables, and long-term lease receivable, included in other assets, in the amounts of nil and $849,000, respectively.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
6. LEASES (CONT’D)
Lease liabilities
As at
Beginning balance
Additions
Lease payments
Lease incentives
Lease interest
Reassessments
Concession
Exchange rate effect
Ending balance
Current portion
March 31, 2022
March 31, 2021
$
$
15,459
8,647
(3,413)
—
725
(88)
—
(67)
21,263
3,510
17,753
13,232
2,611
(1,992)
2,243
595
(830)
(110)
(290)
15,459
1,923
13,536
Contractual lease payments under the lease liabilities as at March 31, 2022 are as follows:
As at
Less than one year
One to two years
Two to five years
More than five years
Total undiscounted lease payments at period end
Amounts recognized in net loss
Year ended
Interest on lease liabilities
Variable lease payments
March 31, 2022
$
4,302
4,270
10,244
5,229
24,045
March 31, 2022
March 31, 2021
$
$
725
2,766
3,491
595
2,487
3,082
Total cash outflow for leases for the years ended March 31, 2022 and 2021 was $6,179,000 and $4,479,000,
respectively.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
7. INTANGIBLES
As at
Cost
March 31, 2022
March 31, 2021
Customer
relationships
Software
Non-
compete
agreements
Customer
Total
relationships Software
Non-
compete
agreements
$
$
$
$
$
$
$
Total
$
67,720
4,334
6,902
78,956
73,722
4,377
7,530
85,629
Additions, purchased
Additions through business
acquisition (note 3)
—
22
—
22
78,804
296
—
79,100
Additions, internally generated
—
1,339
—
1,339
—
—
—
7
—
159
—
—
—
7
—
159
Disposals / retirements
Foreign currency translation
adjustment
—
(999)
—
(999)
(2,933)
(29)
(237) (3,199)
(558)
(3)
(16)
(577)
(3,069)
(180)
(391) (3,640)
Subtotal
145,966
4,989
6,886
157,841
67,720
4,334
6,902
78,956
Accumulated amortization
38,033
2,471
1,862
42,366
31,970
1,242
613
33,825
Amortization
11,925
1,007
1,353
14,285
8,996
1,258
1,485
11,739
Disposals / retirements
—
(737)
—
(737)
(2,933)
(29)
(236) (3,198)
Subtotal
49,958
2,741
3,215
55,914
38,033
2,471
1,862
42,366
Net carrying amount
96,008
2,248
3,671
101,927
29,687
1,863
5,040
36,590
8. GOODWILL
The Group completed the annual impairment test as at March 31, 2022 for its CGUs, which are categorized as
follows:
As at
March 31, 2022
Canada
France
EPM US
ERP US
Beginning balance
Business acquisition (note 3)
Foreign currency translation adjustments
Net carrying amount
$
34,644
42,491
—
77,135
$
$
$
137
—
(9)
128
8,915
29,210
—
(63)
—
(205)
Not
allocated(a)
$
—
31,498
(530)
Total
$
72,906
73,989
(807)
8,852
29,005
30,968
146,088
As at
March 31, 2021
Beginning balance
Foreign currency translation adjustments
Net carrying amount
Canada
$
26,950
—
26,950
ADT
$
7,694
—
7,694
France
EPM US
ERP US
$
150
(13)
137
$
10,012
(1,097)
8,915
$
32,802
(3,592)
29,210
Total
$
77,608
(4,702)
72,906
(a) As at March 31, 2022, the Vitalyst purchase price allocation was preliminary resulting in $30,968,000 of goodwill which has not yet been
allocated to a CGU.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
8. GOODWILL (CONT’D)
As at the March 31, 2022 measurement date, the Group has changed its aggregation of assets for identifying
CGUs from the prior year by merging the Canada CGU with the Alithya Digital Technology Corporation (‘’ADT’’)
CGU to form one single Canada CGU. The CGUs were merged as a result of increased integration, selling
synergies and resource sharing across both CGUs.
The Group completed an annual impairment test as at March 31, 2022 and March 31, 2021 and concluded no
impairment occurred.
In assessing whether goodwill is impaired, the carrying amount of the CGU was compared to its recoverable
amount. The recoverable amount of each CGU was determined based on the value-in-use calculations,
covering a three-year forecast, followed by an extrapolation of future expected net operating cash flows for the
remaining useful lives using the long-term growth rate determined by management. The present value of the
future expected net operating cash flows of each CGU is determined by applying a suitable after tax value
Weighted Average Cost of Capital (“WACC”) reflecting current market assessments of the time value of money
and the CGU-specific risks.
Key assumptions used in impairment testing by CGU are as follows:
As at
Canada
France
EPM US
ERP US
March 31, 2022
After tax WACC
Long-term growth rate of net operating cash flows*
* The long-term growth rate is based on published industry research.
As at
After tax WACC
Long-term growth rate of net operating
cash flows*
Canada
%
10.8
3.4
* The long-term growth rate is based on published industry research.
%
11.9
3.4
ADT
%
11.2
3.4
%
16.7
2.6
%
15.2
2.7
%
15.3
2.7
March 31, 2021
France
EPM US
ERP US
%
14.6
4.5
%
13.2
3.4
%
13.4
3.4
No reasonably possible change in any of the above key assumptions would cause the carrying value of the
France, EPM US and ERP US CGUs to exceed its recoverable amount.
For the year ended March 31, 2022, two key assumptions related to Canada were identified that, if changed,
could have caused the carrying amount to exceed its recoverable amount. Varying the assumptions in the
values of the recoverable amount calculation, individually as indicated below, for the year ended March 31,
2022, assuming all other variables remain constant, would result in the recoverable amount being equal to the
carrying amount.
Canada
Incremental increase in
after tax WACC
Incremental decrease in
long-term growth rate of
net operating cash flows
Basis points
Basis points
170
240
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at
Trade accounts payable
Accrued liabilities
Accrued compensation
Consumption taxes payable
Performance obligations in customer contracts
Provision
March 31,
2022
$
2021
$
26,604
26,903
31,396
3,694
1,013
50
89,660
15,196
11,130
22,020
2,662
563
—
51,571
10. LONG-TERM DEBT
The following table summarizes the Group’s long-term debt:
As at
Senior secured revolving credit facility (the "Credit Facility") (a)
Secured loans (b)
Subordinated unsecured loan (c)
Balance of purchase payable with a nominal value of $3,100,000, non-interest bearing (5.8%
effective interest rate) payable April 3, 2022
Balance of purchase payable with a nominal value of $1,800,000, non-interest bearing (6.0%
effective interest rate), payable on October 1, 2022
Balance of purchase payable with a nominal value of $8,519,000 ($6,825,000 US), non-interest
bearing (6.0% effective interest rate), payable on December 13, 2022
Balance of purchase payable with a nominal value of $3,259,000, non-interest bearing (5.7%
effective interest rate) payable on February 1, 2022
Unsecured promissory notes (2021 - US$4,800,000) (d)
Deferral of employment tax deposits and payments (US$1,219,000 ; 2021 - US$1,878,000) (e)
Other
Unamortized transaction costs (net of accumulated amortization of $754,000 and $477,000)
Current portion of long-term debt
March 31,
2022
$
2021
$
66,631
8,596
17,500
3,100
1,748
8,178
—
—
1,521
120
(718)
106,676
19,316
87,360
31,023
—
—
2,988
1,649
7,770
3,112
6,034
2,361
213
(199)
54,951
35,134
19,817
(a) The Credit Facility is available to a maximum amount of $125,000,000 and can be drawn in Canadian and the
equivalent amount in U.S. dollars. It is available in prime rate advances, SOFR advances, bankers’ acceptances
and letters of credit up to $2,500,000.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
10. LONG-TERM DEBT (CONT’D)
The advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.25% to
1.00%, or bankers’ acceptances or SOFR rates, plus an applicable margin ranging from 1.50% to 2.25%, as
applicable for Canadian and U.S. advances, respectively. The applicable margin is determined based on
threshold limits for certain financial ratios.
As security for the Credit Facility, Alithya provided a first ranking hypothec on the universality of its assets
excluding any leased equipment and Investissement Québec’s first ranking lien on tax credits receivable for the
financing related to refundable tax credits. Under the terms of the agreement, the Group is required to maintain
certain financial covenants which are measured on a quarterly basis. The Credit Facility matures on
April 1, 2024 and is renewable for additional one-year periods at the lender’s discretion.
(b) On November 24, 2021, the Group entered into secured loans with Investissement Québec to finance its 2021
and 2022 refundable tax credits to a maximum of the lesser of 90% of the eligible refundable tax credit or
$4,670,000 and $5,832,000, for 2021 and 2022, respectively. The secured loans bear interest at the Canadian
prime rate plus 1.00% and are secured by a first ranking hypothec on the universality of the financed refundable
tax credits and a subordinated ranking hypothec on accounts receivable and other receivables. The secured
loans are repayable on the earlier of the date of receipt of the refundable tax credits receivable and the maturity
dates of March 31, 2023 for the 2021 financed refundable tax credits, in the amount of $4,670,000 and
March 31, 2024 for the 2022 financed refundable tax credits, in the amount of $3,926,000.
(c) On September 28, 2021, the Group entered into a subordinated unsecured loan, with Investissement Québec,
in the amount of $10,000,000, bearing interest ranging between 6.00% and 7.25%, determined and payable
quarterly, based on threshold limits for certain financial ratios. Under the terms of the loan, the Group is required
to maintain certain financial covenants which are measured on a quarterly basis.
On January 28, 2022, the subordinated unsecured loan was amended and increased to $20,000,000, bearing
interest ranging between 7.10% and 8.35%, on the additional $10,000,000, determined and payable quarterly,
based on threshold limits for certain financial ratios. An amount of $7,500,000 was drawn on the loan availability
with the remaining $2,500,000 available based on certain conditions. The maturity date was also extended to
October 1, 2025.
(a)(c) The Group was in compliance with all of its financial covenants as at March 31, 2022 and 2021.
(d) As a result of the COVID-19 pandemic, on May 5, 2020, five U.S. subsidiaries of the Group received funding
under the Paycheck Protection Program ("PPP") of the Coronavirus Aid, Relief, and Economic Security Act (the
"CARES Act") administered by the U.S. Small Business Administration ("SBA") and entered into unsecured
promissory notes (the "Notes") in the aggregate principal amount of US$6,300,000 ($7,932,000). The Notes
have a term of five years at an interest rate of 1.00% per annum, with a deferral of payments until the date on
which the applicable forgiveness is decisioned, with respect to any portion of the Notes which may not be
forgiven.
Under the terms of the CARES Act, PPP loan recipients can apply for forgiveness for all or a portion of loans
granted under the PPP, which the Group applied for between November 17, 2020 and January 5, 2021. The
Group accounts for the forgiveness as government assistance with a corresponding reduction in the cost of the
related item (note 17). Such forgiveness is to be determined, subject to limitations and ongoing rule making by
the SBA, based on the necessity of the loan at the time of application and the timely use of loan proceeds for
payroll costs, including payments required to continue group health care benefits, and certain rent, utility, and
mortgage interest costs and the maintenance of employee and compensation levels. The PPP loans, even after
notice of forgiveness by the SBA, are subject to subsequent audit by the SBA, for a period of six years after
receiving such notice.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
10. LONG-TERM DEBT (CONT'D)
During the year ended March 31, 2022, the Group recognized an aggregate amount of $5,868,000
(US$4,800,000), and $1,898,000 (US$1,500,000) for the year ended March 31, 2021, as government assistance
for the PPP loans. The Group has received full loan forgiveness decisions for all five PPP loans obtained in May
2020.
(e) The CARES Act allows employers to defer the payments of the employer share of social security taxes during
the period beginning on March 27, 2020 and ending on the earlier of December 31, 2020 or the date the
Company receives a decision from the lender that the PPP loan is forgiven. The payment of the deferred social
security taxes was paid fifty percent on December 31, 2021, with the remaining amount due on
December 31, 2022.
11. INCOME TAXES
Income tax expense (recovery) for the year is as follows:
Year ended
Current tax expense (recovery)
Current tax expense (recovery) for the year
Total current tax expense (recovery)
Deferred tax recovery
Origination and reversal of temporary differences
Total deferred tax recovery
Total income tax recovery
March 31,
2022
$
2021
$
(20)
(20)
(3,007)
(3,007)
(3,027)
1,515
1,515
(3,797)
(3,797)
(2,282)
The Group’s effective income tax rate differs from the combined Federal and Provincial Canadian statutory tax
rate as follows:
Year ended
Loss before income taxes
Company's statutory tax rate
Non-deductible share-based compensation expense
Other non-deductible and tax exempt items
Change in unrecognized deferred tax assets
Other
Effective income tax rate
March 31,
2022
2021
%
$
%
$
26.5
(3.6)
1.3
(7.2)
(0.7)
16.3
(18,575)
(4,922)
663
(238)
1,340
130
(3,027)
26.5
(4.2)
(2.8)
(10.6)
2.7
11.6
(19,620)
(5,199)
815
549
2,076
(523)
(2,282)
The Group’s applicable tax rate is the Canadian combined rates applicable in the jurisdictions in which the
Group operates.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
11. INCOME TAXES (CONT’D)
Deferred income tax assets and liabilities
The amounts recognized in the consolidated statement of financial position consist of:
As at
Deferred tax liabilities
Deferred tax assets
March 31,
2022
$
2021
$
(9,962)
7,247
(2,715)
(2,980)
7,465
4,485
Movements in temporary differences during the year were as follows:
As at
March 31, 2022
March 31, 2021
Opening
balance
Recognized
in earning
Recognized
in equity
Business
acquisition
Total
Opening
balance
Recognized
in earning
Recognized
in equity
Total
$
$
$
$
$
$
$
$
$
13,116
2,804
—
1,348
17,268
11,052
2,064
—
13,116
Losses available for
carryforward and
other tax deductions
Deferred financing
costs
Total deferred tax
assets
Intangibles and
goodwill
558
(110)
13,674
2,694
(6,129)
2,373
Tax credits and other
(3,060)
(2,060)
Total deferred tax
liability
(9,189)
313
113
113
—
—
—
15
576
700
(142)
—
558
1,363
17,844
11,752
1,922
—
13,674
(11,683) (15,439)
(7,873)
1,744
—
(5,120)
(3,284)
131
(11,683) (20,559) (11,157)
1,875
—
93
93
93
(6,129)
(3,060)
(9,189)
4,485
Net carrying amount
4,485
3,007
113
(10,320)
(2,715)
595
3,797
As at March 31, 2022, net deferred tax assets of $1,127,000 were recognized with respect to entities that
incurred losses this fiscal year or the preceding fiscal year. Based upon the level of historical taxable income or
projections for future taxable income, management believes it is probable that the Company will realize the
benefits of these net deferred tax assets.
Losses available for carryforward for which no deferred tax asset was recognized
Expiry date
2041
2042
Canada
$
663
1,256
1,919
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
11. INCOME TAXES (CONT’D)
Losses available for carryforward for which no deferred tax asset was recognized
Expiry date (a)
2036
2037
Indefinite
USA
$
1,981
15,739
22,957
40,677
(a)
Net operating losses amounting to $24,147,000 of which $15,739,000 will expire in 2037 and $1,981,000 in 2036, are limited due to the
U.S. tax rules applicable on the acquisition of Edgewater Technology Inc. In addition, the Company has i) state losses amounting to
approximately $29,551,000 (with expiry dates ranging from 2023 to 2042) and ii) net deductible temporary differences totaling approximately
$18,884,000 for which no deferred tax benefit has been recognized.
12. SHARE CAPITAL
AUTHORIZED
As at March 31, 2022 and 2021, the Company had an unlimited number of shares without par value as follows:
• Subordinate Voting Shares, carrying one vote per share, ranking pari passu with the Multiple Voting Shares as
to the right to receive dividends and the remainder of the Company’s property in the event of a voluntary or
involuntary winding-up or dissolution, or any other distribution of assets among shareholders for the purposes
of winding up the Company’s affairs;
• Multiple Voting Shares, carrying ten votes per share, ranking pari passu with the Subordinate Voting Shares
as to the right to receive dividends and the remainder of the Company’s property in the event of a voluntary or
involuntary winding-up or dissolution, or any other distribution of assets among shareholders for the purpose
of winding-up the Company’s affairs, each share being convertible at the holder’s entire discretion into
Subordinate Voting Shares on a share for share basis, and being automatically converted upon their transfer
to a person who is not a permitted holder or upon the death of a permitted holder, unless otherwise acquired
by any of the remaining permitted holders in accordance with the terms of the voting agreement entered into
between permitted holders; and
• Preferred Shares, issuable in series, each series ranking pari passu with other series but prior to any class
ranking junior thereto, as well as prior to Subordinate Voting Shares and Multiple Voting Shares as to the right
to receive dividends, and the remainder of the Company’s property in the event of a voluntary or involuntary
winding-up or dissolution, or any other distribution of assets among shareholders for the purposes of winding
up the Company’s affairs. If and when issued, preferred shares will have such voting rights and conversion
rights as may be determined by the Company’s Board at the time of issuance thereof.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL (CONT’D)
ISSUED
As at March 31, 2022, the issued share capital of the Company is as follows:
Beginning balance as at April 1, 2021
51,373,822
193,552
7,321,616
3,985
Subordinate Voting Shares
Multiple Voting Shares
Number of shares
$
Number of shares
$
Shares issued pursuant to vesting of share-
based compensation granted on business
acquisitions
Shares issued in consideration of the acquisition
of R3D (note 3)
Shares issued under a private placement
Shares purchased for cancellation
Exercise of stock options
Conversion of shares
Settlement of DSUs
834,324
2,935
25,182,676
80,585
8,143,322
24,686
(349,400)
(1,244)
2,750
302,632
63,874
10
182
195
—
—
—
152,632
(302,632)
—
—
—
—
518
(182)
—
Ending balance as at March 31, 2022
85,554,000
300,901
7,171,616
4,321
During the year ended March 31, 2022, the following transactions occurred:
• As part of the Matricis Acquisition, 157,882 Subordinate Voting Shares, with a total value of $600,000,
reclassified from contributed surplus, were issued as settlement of the second anniversary share
consideration.
• As part of the Travercent Acquisition, 376,250 Subordinate Voting Shares, with a total value of US$975,000
($1,249,000), reclassified from contributed surplus, were issued as settlement of the second anniversary
share consideration rights.
• As part of the Askida Acquisition, 300,192 Subordinate Voting Shares, with a total value of $1,086,000,
reclassified from contributed surplus, were issued as settlement of the second anniversary share
consideration.
• As part of the R3D Acquisition (note 3), 25,182,676 Subordinate Voting Shares, with a total value of
$80,585,000, were issued.
• Through a private placement that closed on January 31, 2022, a total of 8,143,322 Subordinate Voting Shares
were issued at market price of $3,07 per share for cash consideration of $25,000,000, of which 6,514,658
Subordinate Voting Shares were issued to an entity controlled by a director and the balance of 1,628,664 were
issued to Investissement Québec. The Company incurred share issue costs in the amount of $427,000, net of
deferred income tax of $113,000, for net cash proceeds of $24,686,000.
• The purchase for cancellation of 349,400 Subordinate Voting Shares under the Company's normal course
issuer bid for a total cash consideration of $1,160,000 and a carrying value of $1,244,000. The excess of the
carrying value over the purchase price in the amount of $84,000 was credited to retained earnings.
• 155,382 stock options were exercised and 2,750 Subordinate Voting Shares and 152,632 Multiple Voting
Shares were issued with a value of $528,000, for cash consideration of $299,000, with $229,000 reclassified
from contributed surplus.
• 302,632 Multiple Voting Shares with a carrying value of $182,000 were converted into 302,632 Subordinate
Voting Share by two directors of the Company;
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL (CONT’D)
• 63,874 DSUs were settled and 63,874 Subordinate Voting Shares were issued with a value of $195,000,
reclassified from contributed surplus.
As at March 31, 2021, the issued share capital of the Company is as follows:
Beginning balance as at April 1, 2020
50,904,533
191,820
7,168,984
3,515
Subordinate Voting Shares
Multiple Voting Shares
Number of shares
$
Number of shares
$
Shares issued pursuant to vesting of share-
based compensation granted on business
acquisitions
Exercise of stock options
Settlement of DSUs
458,071
1,686
3,500
7,718
14
32
—
152,632
—
—
470
—
Ending balance as at March 31, 2021
51,373,822
193,552
7,321,616
3,985
During the year ended March 31, 2021, the following transactions occurred:
• As part of the Matricis Acquisition, 157,882 Subordinate Voting Shares, with a total value of $600,000,
reclassified from contributed surplus, were issued as settlement of the first anniversary share consideration;
• As part of the Travercent Acquisition, the Company elected not to convert the first anniversary share
consideration rights into Subordinate Voting Shares but rather to settle for total cash consideration of
US$975,000 ($1,276,000). This resulted in a repurchase of a vested equity instrument, which has been
recorded as a reduction of retained earnings and contributed surplus in the amounts of $72,000 and
$1,204,000, respectively. The Company continued to account for the December 13, 2021 and 2022
anniversary share consideration rights as equity instruments;
• As part of the Askida Acquisition, 300,189 Subordinate Voting Shares, with a total value of $1,086,000,
reclassified from contributed surplus, were issued as settlement of the first anniversary share consideration;
• 156,132 stock options were exercised and 3,500 Subordinate Voting Shares and 152,632 Multiple Voting
Shares were issued with a value of $484,000, for cash consideration of $300,000, with $184,000 reclassified
from contributed surplus; and
• 7,718 DSUs were settled and 7,718 Subordinate Voting Shares were issued with an approximate value of
$32,000, reclassified from contributed surplus.
Share purchase plan
Under the Company’s share purchase plan, the Group contributes an amount equal to a percentage of the
employee’s basic contribution, depending on the position held by the employee. The employee may make
additional contributions, for total employee contributions, including basic contributions, of up to 10% of the
annual gross salary. However, the Group does not match contributions in the case of such additional
contributions. The employee and the Group’s contributions are remitted to an independent administrative agent
who purchases Subordinate Voting Shares on the open market on behalf of the employee through either the
TSX or NASDAQ. The Group's contribution expense is recognized as share-based compensation.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL (CONT’D)
NCIB
On September 14, 2021, the Company’s Board of Directors authorized and subsequently the TSX approved the
implementation of a NCIB. Under the NCIB, the Company is allowed to purchase for cancellation up to
5,462,572 Subordinate Voting Shares, representing 10% of the Company’s public float as of the close of
markets on September 8, 2021.
the NCIB commenced on September 20, 2021 and will end on
Purchases under
the earlier of
September 19, 2022 and the date on which the Company will have acquired the maximum number of
Subordinate Voting Shares allowable under the NCIB or will otherwise have decided not to make any further
purchases. All purchases of Subordinate Voting Shares are made by means of open market transactions at their
market price at the time of acquisition. Concurrently, the Company entered into an automatic share purchase
plan (“ASPP”) with a designated broker in connection with its NCIB. The ASPP allows for the designated broker,
to purchase for cancellation Subordinate Voting Shares, on behalf of the Company, subject to certain trading
parameters established, from time to time, by the Company.
LTIP
The Company operates a LTIP which provides for awards of stock options, restricted shares, RSUs, PSUs,
DSUs, and share appreciation rights to eligible employees and directors of the Company and its subsidiaries, all
of which once exercised or settled result in the issuance of Subordinate Voting Shares.
Stock options
Under the Company’s LTIP, the Board may grant, at its discretion, stock options to purchase Subordinate Voting
Shares to eligible employees and directors of the Company and its subsidiaries. The Board establishes the
exercise price at the time the stock options are granted. For the year ended March 31, 2021, the Board issued
stock options having an exercise price equal to the greater of the closing price of such shares on the TSX and
NASDAQ on the business day immediately prior to the grant date. The LTIP was, however, amended by the
Board on June 9, 2021 to provide that from thereon stock options would be issued with an exercise price equal
to the closing price of the Subordinate Voting Shares on the TSX on the business day immediately prior to the
grant date. Stock options vest, as set out in the applicable award agreement between the participant and the
Company, which may include performance-based vesting conditions. Vesting is generally four years from the
date of grant and the stock options may generally be exercised by the tenth anniversary of the grant date,
except in the event of death, disability, retirement or termination of employment. The LTIP provides that the
aggregate number of Subordinate Voting Shares issuable pursuant to any type of awards under the LTIP shall
not exceed 10% of the aggregate number of Subordinate Voting Shares and Multiple Voting Shares issued and
outstanding from time to time.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL (CONT’D)
The following table presents information concerning stock option activity for the respective years:
Year ended
March 31, 2022
March 31, 2021
Beginning balance as at April 1
Granted
Forfeited
Expired
Exercised
Ending balance as at March 31
Exercisable at year end
Number of stock
options
Weighted average
exercise price
Number of stock
options
Weighted average
exercise price
$
$
3,525,181
1,073,302
(192,167)
(166,852)
(155,382)
4,084,082
1,527,805
3.37
3.23
3.57
6.13
1.92
3.23
3.31
3,172,289
755,000
(130,163)
(115,813)
(156,132)
3,525,181
1,580,444
3.72
2.26
4.93
5.93
1.92
3.37
3.44
Included in the 1,527,805 and 1,580,444 stock options exercisable as at March 31, 2022 and 2021, respectively,
657,896 and 810,528 stock options are available to purchase Multiple Voting Shares as at March 31, 2022 and
2021, respectively.
On June 14, 2021, Alithya issued 774,202 and 299,100 stock options, to purchase a total of 1,073,302
Subordinate Voting Shares, at a grant date fair value of $3.23 and US$2.66, respectively. On June 23, 2020,
Alithya issued 570,000 and 185,000 stock options, to purchase a total of 755,000 Subordinate Voting Shares at
an exercise price of $2.26 and US$1.67, respectively.
During the year ended March 31, 2022, the weighted average share price at the date of exercise of stock
options was $3.40. (2021 - $3.10).
The assumptions used to determine the 2022 and 2021 stock options grant date fair values using the Black-
Scholes stock option pricing model were as follows:
Year ended
Weighted average assumptions
Share price
Exercise price
Risk-free interest rate
Expected volatility (a)
Dividend yield
Expected option life (years)
Vesting conditions – time (years)
March 31,
2022
2021
$3.23
$3.23
1.25 %
34.7 %
—
6.6
3.2
$2.26
$2.26
0.46 %
34.9 %
—
6.6
3.3
(a) Determined on the basis of observed volatility in publicly traded companies operating in similar industries.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL (CONT’D)
The following tables summarize the number of stock options outstanding by currency, exercise price and the
weighted average remaining exercise period, expressed in number of years:
As at
March 31, 2022
March 31, 2021
Exercise price range
(CAD)
Number of options
Weighted average
remaining exercise
period – in years
Number of options
Weighted average
remaining exercise
period – in years
$
1.85 to 2.55
2.56 to 2.95
2.96 to 3.30
3.31 to 3.95
3.96 to 4.55
892,896
120,000
938,702
673,000
455,000
3,079,598
5.52
3.09
7.45
5.71
6.59
6.21
1,095,528
120,000
182,500
750,500
459,000
2,607,528
5.88
4.09
5.01
6.81
7.59
6.30
As at
March 31, 2022
March 31, 2021
Exercise price range
(USD)
Number of options
Weighted average
remaining exercise
period – in years
Number of options
Weighted average
remaining exercise
period – in years
$
1.67 to 2.25
2.26 to 3.85
3.86 to 4.45
4.59 to 4.85
4.90 to 5.45
DSUs
180,000
818,525
—
—
5,959
1,004,484
8.23
7.12
—
—
0.81
7.28
185,000
532,550
20,856
47,672
131,575
917,653
9.24
6.98
0.89
0.49
1.00
6.09
Under the LTIP, the Board, subject to the provisions of the LTIP and such other terms and conditions, may grant
DSUs to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its
subsidiaries. The DSUs shall be settled on the date as set out in the applicable award agreement, between the
participant and the Company, however not earlier than the participant’s termination date. If the agreement does
not establish a settlement date then it shall be the 90th day following the participant’s termination date for
eligible Canadian participants and not earlier than the date that is six months after the termination date for
eligible U.S. participants.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL (CONT’D)
The following table presents information concerning DSU activity for the respective years:
Year ended
Beginning balance as at April 1
Granted to non-employee directors
Settled
Ending balance as at March 31
March 31,
2022
2021
330,246
173,149
(63,874)
439,521
140,885
197,079
(7,718)
330,246
The DSUs issued by the Company were fully vested at the grant date and the fair value of $576,000 (2021 -
$523,000) has been recorded in share-based compensation expense.
RSUs
Under the LTIP, the Board, subject to the provisions of the LTIP and such other terms and conditions, may grant
RSUs to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its
subsidiaries. The RSUs shall vest on the third anniversary of the date of grant and will settle as soon as
practicable following the expiry of the vesting period, unless otherwise specified by the Board at the time of
grant.
On June 23, 2020, 181,498 RSUs, in aggregate, vesting one year from the date of grant, were granted to
employees of the Company subject to the terms set out in the award agreement at a fair value of $2.26, per
RSU, for an aggregate fair value of $410,000. Shares will be issued in settlement of the RSUs as soon as
practical following the third anniversary of the date of grant. As at March 31, 2022, those RSUs are fully vested.
Share-based compensation expense for the year ended March 31, 2022 amounted to $92,000 (2021 -
$314,000).
PSUs
Under the LTIP, the Board, subject to the provisions of the LTIP and such other terms and conditions, may grant
PSUs to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its
subsidiaries. The terms and conditions of each PSUs grant, including market and non-market performance
goals, are determined by the Board.
On June 14, 2021, 332,263 PSUs, in aggregate, vesting three years from the date of grant were granted at a
grant date fair value of $3.24, per PSU, for an aggregate fair value of $1,077,000 and will settle as soon as
practicable following the expiry of the vesting period, but not later than December 15, 2024. Share-based
compensation expense for the year ended March 31, 2022 amounted to $273,000 (2021 - nil).
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL (CONT’D)
Share-Based Compensation expense
Total share-based compensation expense for the years ended March 31, 2022 and 2021 is summarized as
follows:
Year ended
Stock options
Share purchase plan – employer contribution
Share-based compensation granted on business acquisitions
DSUs
RSUs
PSUs
March 31,
2022
$
2021
$
851
1,138
1,524
576
92
273
4,454
700
653
4,051
523
314
—
6,241
The share-based compensation granted on business acquisitions includes the following:
•
•
•
In relation to the Subordinate Voting Shares, to be issued as part of the Matricis Acquisition, an amount of
$350,000 (2021 - $800,000);
In relation to the Subordinate Voting Shares, to be issued as part of the Travercent Acquisition, an amount of
$722,000 (2021 - $1,803,000); and
In relation to the Subordinate Voting Shares, to be issued as part of the Askida Acquisition, an amount of
$453,000 (2021 - $1,448,000).
13. COMMITMENTS AND CONTINGENCIES
Contingencies
From time to time, the Group may become involved in various claims and litigation as part of its normal course
of business. While the final outcome thereof cannot be predicted, based on the information currently available,
management believes the resolution of current pending claims and litigation will not have a material impact on
the Group’s financial position and results of operations. Claims for which there is a probable unfavorable
outcome are recorded in provisions.
Operating commitments
Operating expenditures contracted for at the end of the reporting period but not yet incurred are as follows:
Year ended
Technology licenses, infrastructure and other
March 31, 2022
Total
2023
2024
2025
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
3,975
2,351
1,073
7,399
| 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
14. RELATED PARTIES
Ultimate controlling party
As at March 31, 2022, the holders of Multiple Voting Shares, directly or indirectly, collectively owned or
exercised control over Subordinate Voting Shares and Multiple Voting Shares representing approximately
45.81% of the total voting rights of Alithya. The holders entered into a voting agreement on November 1, 2018,
pursuant to which they agreed to, among other things, vote all of the Subordinate Voting Shares and Multiple
Voting Shares under their control in accordance with decisions made by a majority of them, subject to certain
exceptions.
Transactions with directors and key management personnel
Key management includes members of the Group’s Executive Committee. Certain key management of Alithya
participate in the share purchase plan and the stock options plan. The compensation paid or payable to directors
and to key management for services is shown below:
Year ended
Director compensation, and key management salaries and benefits*
Share-based compensation
Termination benefits
March 31,
2022
2021
4,312
1,325
317
5,954
4,427
1,273
—
5,700
* Salaries and benefits include short-term incentive compensation.
In addition to the above amounts, the Group is committed to pay incremental benefits to certain members of key
management up to $5,122,000 (2021 - $5,450,000) in the event of change of control and/or termination without
cause.
Operating transactions with key management personnel
In the normal course of operations, the Group incurred the following transactions with an entity controlled by a
director. The transactions have been recorded at the contractual amount of the consideration established, which
represents market rates, as agreed by the related parties.
Year ended
Revenues*
March 31,
2022
$
2021
$
21,100
—
* Under a ten-year commercial agreement, ending in April 2031, an entity controlled by a director has committed to minimum annual gross
margin, resulting from the procurement of consulting services, with annual surpluses and/or deficiencies thereof eligible to certain carryover
provisions. Should the minimum contracted amounts not be met, the entity will make compensating payments based on a formula as defined
in the commercial agreement. The commercial agreement may be extended to April 2034, however the minimum annual gross margin
requirements will not be applicable to the extension period.
As at
Trade accounts receivable
March 31,
2022
$
2021
$
4,287
—
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
15. EARNINGS PER SHARE
Year ended
Net loss
Weighted average number of Common Shares outstanding
Basic and diluted loss per share
March 31,
2022
$
2021
$
(15,548)
(17,338)
85,297,843
(0.18)
58,209,375
(0.30)
The potentially dilutive outstanding equity instruments mentioned in Note 12 were not included in the calculation
of diluted earnings per share since the Company incurred losses and the inclusion of these equity instruments
would have an antidilutive effect.
16. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The changes in the Group’s liabilities arising from financing activities can be classified as follows:
As at
March 31, 2022
March 31, 2021
Beginning balance
Repayment
Proceeds
Total cash flow
Acquisitions
Amortization of finance costs
Interest accretion on balances of purchase
payable
PPP loan forgiveness
Impacts of foreign exchange
Reclassification Credit Facility (note 10)
Reclassification other long-term debt
Total non cash
Ending balance
Current
portion of
long-term
debt
$
Long-term
debt
$
Total
$
Current
portion of
long-term
debt
$
Long-term
debt
$
Total
$
35,134
19,817
54,951
1,143
52,086
53,229
(42,590)
(103,919)
(146,509)
—
156,768
156,768
(42,590)
52,849
38,584
—
—
—
8,887
277
823
10,259
47,471
277
823
(5,868)
(5,868)
—
—
—
—
—
—
—
(9)
(1,228)
(1,237)
—
(11,803)
26,772
19,316
—
11,803
14,694
87,360
—
—
41,466
106,676
270
31,023
2,698
33,991
35,134
(49,867)
(49,867)
53,471
3,604
53,471
3,604
—
242
835
(1,898)
(1,331)
(31,023)
(2,698)
—
242
835
(1,898)
(1,061)
—
—
(35,873)
(1,882)
19,817
54,951
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
17. ADDITIONAL INFORMATION ON CONSOLIDATED LOSS
The following table provides additional information on the consolidated loss:
Year ended
Expenses by Nature
March 31,
2022
$
2021
$
Employee compensation and subcontractor costs
411,669
277,980
Government assistance
- tax credits (a)
- grants and loan forgiveness (b)
Other miscellaneous expenses
Depreciation of property and equipment
Depreciation of right-of used assets
Expenses by Function
Cost of revenues
Selling, general and administrative expenses
Depreciation
(a) Included in cost of revenues.
(10,870)
(6,234)
26,005
2,568
2,867
426,005
321,732
98,838
5,435
426,005
(6,924)
(6,530)
21,823
1,861
1,906
290,116
204,626
81,723
3,767
290,116
(b) For the year ended March 31, 2022, $4,910,000 and $1,324,000 (2021 - $5,363,000 and $1,167,000) were included in cost of revenues
and selling, general and administrative expenses, respectively.
Certain subsidiaries within the Group have applied for COVID-19 financial relief in Canada under the Canada
Emergency Wage Subsidy (“CEWS”) program. The CEWS program is a wage subsidy program launched by the
Canadian federal government to qualifying employers to subsidize payroll costs during the COVID-19 pandemic.
The qualified subsidy amounts received under the CEWS program are non-repayable. During the year ended
March 31, 2022, the subsidiaries recorded, as government grants, subsidies in the amount of $239,000 (2021 -
$4,001,000).
During the year ended March 31, 2021, Alithya France SAS (formerly Alithya Consulting SAS), a subsidiary
located in France, received €410,600 ($632,000), as government grants, pursuant to the French government’s
partial activity program. The program is subject to certain annual limits per employee.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
18. BUSINESS ACQUISITION, INTEGRATION AND REORGANIZATION COSTS
Year ended
Acquisition costs
Integration costs
Reorganization costs related to modifications to cost structure
March 31,
2022
$
2021
$
3,964
6,808
845
11,617
381
1,940
—
2,321
The acquisition related costs consisted mainly of professional fees incurred in relation to business acquisitions.
Included in integration and reorganization costs related to modifications to cost structure are employee
termination and benefits costs of $2,820,000 and $845,000, respectively (2021 - $688,000 and nil).
19. NET FINANCIAL EXPENSES
The following table summarizes financial expenses:
Year ended
Interest on long-term debt
Interest and financing charges
Interest on lease liabilities
Amortization of finance costs
Interest accretion on balances of purchase payable
Interest income
March 31,
2022
$
2021
$
2,402
432
725
277
823
(80)
4,579
1,185
448
595
242
835
(31)
3,274
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
20. SUPPLEMENTARY CASH FLOW INFORMATION
Net change in non-cash working capital items is as follows :
As at
Accounts receivable and other receivables
Income taxes receivable
Unbilled revenues
Tax credits receivable
Prepaids
Accounts payable and accrued liabilities
Deferred revenues
March 31,
2022
$
2021
$
(15,894)
628
865
(5,688)
(765)
17,651
2,083
(1,120)
(5,289)
1,450
(2,154)
28
(944)
5,504
1,319
(86)
During the year ended March 31, 2022, non-cash investing and financing activities included the acquisition of
leasehold improvements from the lessor as lease incentives in an amount of nil (2021 - $1,326,000) and
additions to right-of used assets and lease liabilities in the amount of $67,000 (2021 - nil).
During the year ended March 31, 2022, $305,000 included in accounts receivable and other receivables and
$849,000 included in right-of-use assets were reclassified to other assets for a total amount of $1,154,000
(2021 - nil).
21. SEGMENT AND GEOGRAPHICAL INFORMATION
Revenues by geographic location
The following table presents total external revenues by geographic location based on location of the external
customers:
Year ended
Canada
U.S.
International
March 31,
2022
2021
$
%
$
%
280,633
142,200
15,052
437,885
64.1
32.5
3.4
100.0
162,764
114,608
10,271
287,643
56.6
39.8
3.6
100.0
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
21. SEGMENT AND GEOGRAPHICAL INFORMATION (CONT’D)
Long-lived assets by geographic location
The following table presents the total net book value of the Group’s long-lived assets by geographic location:
As at
Canada
U.S.
International
2022
2021
$
%
$
%
March 31,
154,251
118,023
1,299
273,573
56.4
43.1
0.5
100.0
62,172
65,784
1,107
129,063
Information about revenues and deferred revenues
An analysis of the Group’s revenues from customers for each major service category is as follows:
Year ended
March 31,
Consulting and support services - time and
materials arrangements
Consulting and support services - fixed-fee
arrangements
Other revenue
2022
2021
$
%
$
%
382,143
45,539
10,203
437,885
87.3
10.4
2.3
100.0
254,155
24,099
9,389
287,643
48.2
51.0
0.8
100.0
88.3
8.4
3.3
100.0
During the year ended March 31, 2022 and 2021, significantly all amounts included in the opening balance of
deferred revenues were recognized as revenue.
Major customer
During the year ended March 31, 2022 one client generated more than 10% of total revenue for $63,391,000
(one client generated more than 10% of total revenue for $30,297,000 in 2021). As at March 31, 2022, accounts
receivable and other receivables from one major customer amounted to $19,771,000 or 19.6% of total accounts
receivable and other receivables (March 31, 2021 - one major customer amounted to $11,011,000 or 15.9%).
22. FINANCIAL INSTRUMENTS
The Group's financial instruments consist of cash, restricted cash, accounts receivable and other receivables,
trade accounts payable and accrued liabilities and long-term debt. The Group, through its financial assets and
liabilities, has exposure to the following risks from its use of financial instruments: interest rate risk, credit risk,
liquidity risk and currency risk. Senior management and the Board are responsible for setting risk levels and
reviewing risk management activities as they determine necessary.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
22. FINANCIAL INSTRUMENTS (CONT’D)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in market interest rates. The Group is exposed to fluctuations in interest rates with respect to its
variable rate on long-term debts. The interest rate risk profile of the Group's interest-bearing financial
instruments was as follows:
As at
Variable rate financial instruments
Credit Facility (note 10)
Secured loans (note 10)
Other long-term debt (note 10)
March 31,
2022
$
2021
$
66,631
8,596
120
75,347
31,023
—
213
31,236
For the year ended March 31, 2022, the Group has determined that a reasonably possible increase or decrease
of 100 basis point in interest rates of the above variable-rate financial liabilities would not have a significant
impact on equity and profit or loss. This analysis assumes that all other variables remain constant, in particular
foreign currency exchange rates. It has been performed on the same basis for the year ended March 31, 2021.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The Group’s activities are
financed through a combination of cash flows from operations, borrowings under existing Credit Facility,
issuance of debt and issuance of equity instruments. In order to manage its exposure to liquidity risk, the
Group’s primary goal is to maintain an optimal level of liquidity through an active management of assets and
liabilities as well as cash flows. As at March 31, 2022, the Group has an unused capacity of $58,369,000 (2021 -
$23,976,000) under its authorized secured senior revolving credit facility of $125,000,000 (2021 - $60,000,000).
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
22. FINANCIAL INSTRUMENTS (CONT’D)
The following table summarizes the carrying amount and the contractual maturities of both the interest and
principal portion of significant financial liabilities.
As at
March 31, 2022
Accounts payable and accrued
liabilities
Credit Facility
Secured loans
Subordinated unsecured loans
Balances of purchase payable,
non-interest bearing
Other liabilities (included in long-
term debt)
Lease liabilities
Carrying
amount
$
Total
$
Less than 1
year
1-2 years
2-5 years
More than 5
years
$
$
$
$
53,507
66,631
8,596
17,500
53,507
70,775
9,060
21,773
53,507
2,072
4,988
1,221
13,026
13,419
13,419
120
21,263
180,643
120
24,045
192,699
120
4,302
79,629
—
2,072
4,072
1,221
—
—
4,270
11,635
—
66,631
—
19,331
—
—
10,244
96,206
—
—
—
—
—
—
5,229
5,229
As at
March 31, 2021
Accounts payable and accrued
liabilities
Credit Facility
Balances of purchase payable,
non-interest bearing
Other liabilities (included in long-
term debt)
Lease liabilities
Carrying
amount
$
Total
$
Less than 1
year
1-2 years
2-5 years
More than 5
years
$
$
$
$
26,326
31,023
26,326
32,008
26,326
32,008
—
—
15,519
16,739
3,259
13,480
213
15,459
88,540
213
17,866
93,152
213
2,482
64,288
—
2,602
16,082
—
—
—
—
—
—
—
—
6,756
6,756
6,026
6,026
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
22. FINANCIAL INSTRUMENTS (CONT’D)
Credit risk
Credit risk is the risk of loss due to a counterparty's inability to meet its obligations. At March 31, 2022 and 2021,
the Group's credit risk exposure consists mainly of the carrying amount of cash held with major Canadian banks,
accounts receivable and other receivables, and unbilled revenues. The carrying amounts of financial assets and
unbilled revenues represent the maximum credit exposure.
Impairment losses recognized in profit or loss is not significant both in 2022 and 2021.
The credit risk in respect of cash balances is minimal as they are held with reputable financial institutions.
With respect to trade accounts receivable and unbilled revenues, the Group is exposed to a concentration of
credit risk on significant customers. However, this credit risk exposure is mitigated by the relative size and
nature of the business carried on by such customers. Also, the Group has a large and diversified client base
from clients engaged in various industries, including banks with high credit-rating, government agencies,
telecommunications and retails. Historically, the Group has not made any significant write-offs.
In order to manage its exposure to credit risk and assess credit quality, the Group established a credit policy
under which collection of trade accounts receivable is a priority. Each new customer is analyzed individually for
creditworthiness before the Group enters into a contract. The financial stability and liquidity of customers are
assessed on a regular basis, which included the review of default risk associated with the industry in which
customers operate. No significant adjustments were made to allowance for doubtful accounts in connection with
this assessment.The Group also limits its exposure by setting credit limits when deemed necessary.
The Group recognizes an impairment loss allowance for expected credit losses (“ECLs”) on trade accounts
receivable and unbilled revenues, using an estimate of credit losses. The Company establishes an impairment
loss allowance on a collective and individual assessment basis, by considering its historical experience, external
indicators and forward- looking information. If actual credit losses differ from estimates, future earnings would be
affected. In its assessment of the impairment loss allowance, the Group considered the economic impact
resulting from the COVID-19 pandemic on its ECL assessment, including the risk of default of its customers
given the continued economic uncertainty. As at March 31, 2022 and 2021, allowance for ECLs was not
significant.
The following table provides information about the exposure to credit risk for trade accounts receivable:
As at
Current
0-30 days
31-60 days
61-90 days
Over 90 days
The unbilled revenues are substantially all current in nature.
March 31,
2022
$
2021
$
70,039
21,600
3,072
1,071
2,507
98,289
44,375
17,290
2,281
632
2,471
67,049
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
22. FINANCIAL INSTRUMENTS (CONT’D)
Currency risk
The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the
currencies in which cash, accounts receivables and other receivables, accounts payables and accrued liabilities
and borrowings are denominated and the respective functional currencies of Group’s companies. The currencies
in which these financial instruments are mainly denominated is USD. Other currencies have no significant
impact on the Group’s exposure to currency risk.
The summary quantitative data about the Group’s exposure to currency risk for the significant exchange rates is
as follow, expressed in Canadian dollars:
As at
Cash
Accounts receivable and other receivables
Accounts payable and accrued liabilities
Credit Facility
Net statement of financial position exposure
March 31,
2022
$
2021
$
1,428
34
(1,599)
(48,377)
(48,514)
681
243
(1,609)
(4,023)
(4,708)
The following table illustrates the sensitivity of profit and equity in regards to the Group’s financial assets and
financial liabilities and the USD/Canadian dollars exchange rate ‘all other things being equal’. It assumes a
+/-7% change of the USD/Canadian dollars exchange rate for the year ended March 31, 2022 (2021: +/-17%).
This percentage has been determined based on the average market volatility in exchange rate in the previous
twelve months. The sensitivity analysis is based on the Group’s foreign currency financial instruments held at
each reporting date.
Effect in Canadian dollar
As at March 31, 2022
USD
As at March 31, 2021
USD
Fair Value of Financial Instruments
Profit or loss
Strengthening
Weakening
7%
17%
Movement
(2,638)
2,638
Movement
(631)
631
Financial instruments recorded at fair value on the consolidated statements of financial position are classified
using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The
fair value hierarchy has the following levels:
•
•
•
Level 1 - Valuation based on quoted prices observed in active markets for identical assets or liabilities.
Level 2 - Valuation techniques based on inputs that are quoted prices of similar instruments in active
markets; quoted prices for identical or similar instruments in markets that are not active; inputs other than
quoted prices used in a valuation model that are observable for that instrument; and inputs that are derived
principally from or corroborated by observable market data by correlation or other means.
Level 3 - Valuation techniques with significant unobservable market inputs. A financial instrument is
classified at the lowest level of the hierarchy for which a significant input has been considered in measuring
fair value.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
22. FINANCIAL INSTRUMENTS (CONT’D)
The carrying amount of cash, restricted cash, accounts receivable and other receivables, accounts payables
and accrued liabilities is a reasonable approximation of fair value.
The fair value of the long-term debt is estimated by discounting expected cash flows at rates that would be
currently offered to the Group for debts of the same remaining maturities and conditions (level 2). For both 2022
and 2021, the Group has determined that the fair value of the Credit Facility, the secured loans, the
subordinated unsecured loan and the balances of purchase payable are not significantly different than their
carrying amount.
The following table summarizes their carrying amount.
As at
Credit Facility
Secured loans
Subordinated unsecured loans
Balances of purchase payable, non-interest bearing
March 31,
2022
$
2021
$
66,631
8,596
17,500
13,026
105,753
31,023
—
—
15,519
46,542
23. CAPITAL DISCLOSURES
The Group's capital consists of cash, restricted cash, long-term debt and total shareholders’ equity. The Group's
main objectives when managing capital are:
• to provide a strong capital base in order to maintain shareholder, creditor and stakeholder confidence and to
sustain future growth development of the business;
• to maintain a flexible capital structure that optimizes the cost of capital at acceptable risk and preserves the
ability to meet financial obligations;
• to ensure sufficient liquidity to pursue its organic growth strategy and undertake selective acquisitions; and
• to provide a rewarding return on investment to shareholders.
In managing its capital structure, the Group monitors performance throughout the year to ensure anticipated
working capital requirements and maintenance capital expenditures are funded from operations, available cash
and availability under the Credit Facility. Alithya manages its capital structure and may make adjustments to it, in
order to support the broader corporate strategy or in response to changes in economic conditions and risk. In
order to maintain or adjust its capital structure, the Group may purchase shares from existing shareholders,
issue new shares, issue new debt, issue new debt to replace existing debt (with different characteristics), or
reduce the amount of existing debt.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
23. CAPITAL DISCLOSURES (CONT’D)
Total capital as at March 31, 2022 and 2021 is calculated as follows:
As at
Cash
Restricted cash
Current portion of long-term debt
Long-term debt
Share capital
Deficit
Accumulated other comprehensive loss
Contributed surplus
March 31,
2022
$
2021
$
(17,655)
(3,254)
19,316
87,360
305,222
(111,654)
(947)
7,130
285,518
(6,903)
(3,233)
35,134
19,817
197,537
(96,190)
(508)
7,173
152,827
The Group monitors capital using a number of financial metrics, including but not limited to:
• the senior debt to Adjusted EBITDA (defined as earnings before income tax expense (recovery) net financial
expenses, foreign exchange, depreciation, amortization, share-based compensation and non-recurring costs)
ratio, defined as senior debt to 12-month trailing Adjusted EBITDA (as defined in the Credit Facility);
• the total debt to Adjusted EBITDA ratio, defined as total debt to 12-month trailing Adjusted EBITDA; and
• the fixed charge coverage ratio, defined as Adjusted EBITDA minus taxes, distributions and capital
expenditures to aggregate interest expense and regular scheduled principal repayments.
The Group uses operating income, Adjusted EBITDA and cash flow from operations as measurements to
monitor operating performance. Adjusted EBITDA and Adjusted EBITDA ratio, as presented, are not recognized
for financial statement presentation purposes under IFRS, and do not have a standardized meaning. Therefore,
they are not likely to be comparable to similar measures presented by other entities.
The continued availability of the Credit Facility is subject to the Group’s ability to maintain certain debt service
and fixed charge coverage covenants, as well as other affirmative and negative covenants, including certain
limitations of distributions in the form of dividends or equity repayments in any given fiscal year, as set out in the
credit agreement.
The Group is subject to financial covenants pursuant to the credit facility agreement, which are measured on a
quarterly basis. The covenants are senior debt to Adjusted EBITDA, total debt to Adjusted EBITDA and fixed
charge coverage ratios. The Group was in compliance with all such covenants at March 31, 2022 and 2021.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2022 AND 2021
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
24. SUBSEQUENT EVENT
On June 1, 2022, the Company entered into a binding agreement to acquire all of the outstanding shares of the
US-based Datum Consulting Group, LLC and its affiliates (“Datum)”(“Datum Acquisition”). The closing of the
transaction is expected to take place on July 1, 2022 and is subject to customary conditions for a transaction of
this nature, including approval from the Toronto Stock Exchange.
The Datum Acquisition will be completed for total consideration of up to US$45,500,000 ($57,500,000), including
the assumption of estimated IFRS 16 lease liabilities of US$500,000 ($600,000), subject to working capital and
other adjustments. The consideration will consist of: (i) approximately US$13,700,000 ($17,300,000) in cash; (ii)
US$4,000,000 ($5,100,000) payable by the issuance of 1,867,262 Subordinate Voting Shares, (iii) deferred cash
consideration of approximately US$10,300,000
($13,000,000) and deferred share consideration of
US$4,000,000 ($5,100,000), both payable over three years and (iv) potential earn-out consideration of up to
US$13,000,000 ($16,400,000), payable in cash (75%) and shares (25%), based on annual gross profit
increases, available over three years.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2022 and 2021.
| 60
Exhibit 99.3
Management’s Discussion
and Analysis of Financial
Condition and Results of
Operations of Alithya Group inc.
For the year ended March 31, 2022
Table of Contents
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
8.1
8.2
8.3
8.4
8.5
8.6
8.7
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
11.1
11.2
11.3
11.4
11.5
11.6
Basis of Presentation
Forward-Looking Statements
Business Overview
Strategic Business Plan
Non-IFRS and Other Financial Measures
Financial Highlights
Business Combinations
Results of Operations
Revenues
Gross Margin
Segment Reporting
Operating Expenses
Other Income and Expenses
Net Loss and Loss per Share
EBITDA and Adjusted EBITDA
Bookings
Liquidity and Capital Resources
Consolidated Statements of Cash Flows
Cash Flows - Operating Activities
Cash Flows - Investing Activities
Cash Flows - Financing Activities
Capital Resources
Long-Term Debt and Net Bank Borrowing
Contractual Obligations
Off-Balance Sheet Arrangements
Share Capital
Issued
Normal Course Issuer Bid
Stock Options
Deferred Share Units
Restricted Share Units
Performance Share Units
Related Parties
Subsequent Event
Selected Annual Information
Eight Quarter Summary
Critical Accounting Estimates
New Standards and Interpretations Issued but Not Yet Effective
Risks and Uncertainties
Management’s Evaluation of our Disclosure Controls and Procedures
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
Page
1
1
2
5
6
8
10
14
15
16
17
18
21
21
22
23
24
24
24
25
25
26
26
29
29
30
30
32
32
33
33
33
33
35
36
37
38
40
41
57
1. Basis of Presentation
This Management’s Discussion and Analysis (“MD&A”) provides a review of the results of operations, financial
condition and cash flows for Alithya Group inc. for the three months and twelve months ended March 31, 2022.
References to “Alithya”, the “Company”, the “Group”, “we”, “our” and “us” in this MD&A refer to Alithya Group
inc. and its subsidiaries or any one or more of them, unless the context requires otherwise. This document
should be read in conjunction with the information contained in the Company’s annual audited consolidated
financial statements and accompanying notes for the years ended March 31, 2022 and 2021. The Company's
MD&A, financial statements, Annual Information Form, Annual Report on Form 40-F, and additional information
regarding the business of the Company, are available under the Company’s profile on the System for Electronic
Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and the Electronic Data Gathering, Analysis
and Retrieval system (“EDGAR”) at www.sec.gov.
For reporting purposes, the Company prepared the consolidated financial statements in Canadian dollars in
accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting
Standards Board (“IASB”). Unless otherwise indicated, all dollar (“$”) amounts and references in this MD&A are
in Canadian dollars and references to “US$” are to US dollars. Variances, ratios and percentage changes in this
MD&A are based on unrounded numbers.
This MD&A contains both IFRS and non-IFRS financial measures. See the section 5 titled “Non-IFRS and Other
Financial Measures”.
Unless otherwise stated, in preparing this MD&A, the Company has considered information available to it up to
June 16, 2022, the date the Company’s Board of Directors (“Board”) approved this MD&A and the consolidated
financial statements for the year ended March 31, 2022.
2. Forward-Looking Statements
This MD&A contains statements that may constitute “forward-looking information” within the meaning of
applicable Canadian securities laws and “forward-looking statements” within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995 and other applicable U.S. safe harbours (collectively “forward-looking
statements”). Statements that do not exclusively relate to historical facts, as well as statements relating to
management’s expectations regarding the future growth, results of operations, performance and business
prospects of Alithya, and other information related to Alithya’s business strategy and future plans or which refer
to the characterizations of future events or circumstances represent forward-looking statements. Such
statements often contain the words “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,”
“estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should,” “project,” “target,” and similar
expressions and variations thereof, although not all forward-looking statements contain these identifying words.
Forward-looking statements in this MD&A include, among other things, information or statements about: (i) our
ability to generate sufficient earnings to support our operations; (ii) our ability to take advantage of business
opportunities and meet our goals set in our three-year strategic plan; (iii) our ability to develop new business,
broaden the scope of our service offerings and enter into new contracts; (iv) our strategy, future operations, and
prospects; (v) our need for additional financing and our estimates regarding our future financing and capital
requirements; (vi) our expectations regarding our financial performance, including our revenues, profitability,
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 1
research and development, costs and expenses, gross margins, liquidity, capital resources, and capital
expenditures; (vii) our ability to realize the expected synergies or cost savings relating to the integration of our
business acquisitions, and (viii) the impact of the COVID-19 pandemic and related response measures on our
business operations, financial results and financial position and those of our clients and on the economy in
general.
Forward-looking statements are presented for the sole purpose of assisting investors and others in
understanding Alithya’s objectives, strategies and business outlook as well as its anticipated operating
environment and may not be appropriate for other purposes. Although management believes the expectations
reflected in Alithya’s forward-looking statements were reasonable as at the date they were made, forward-
looking statements are based on the opinions, assumptions and estimates of management and, as such, are
subject to a variety of risks and uncertainties and other factors, many of which are beyond Alithya’s control, and
which could cause actual events or results to differ materially from those expressed or implied in such
statements. Such risks and uncertainties include but are not limited to those discussed in the section titled
“Risks and Uncertainties” of this MD&A, as well as in Alithya’s other materials made public, including documents
filed with Canadian and U.S. securities regulatory authorities from time to time and which are available on
SEDAR at www.sedar.com and EDGAR at www.sec.gov. Additional risks and uncertainties not currently known
to Alithya or that Alithya currently deems to be immaterial could also have a material adverse effect on its
financial position, financial performance, cash flows, business or reputation.
Forward-looking statements contained in this MD&A are qualified by these cautionary statements and are made
only as of the date of this MD&A. Alithya expressly disclaims any obligation to update or alter any forward-
looking statements, or the factors or assumptions underlying them, whether as a result of new information,
future events or otherwise, except as required by applicable law. Investors are cautioned not to place undue
reliance on forward-looking statements since actual results may vary materially from them.
3. Business Overview
Alithya advises in strategy and digital transformation, with more than 3,700 professionals in Canada, the U.S.,
and internationally and assists clients in their pursuit of innovation and excellence and the achievement of their
business objectives through the optimal use of digital technologies.
Alithya deploys solutions, services, and expert consultants to design, build and implement innovative and
efficient solutions for the complex business challenges of its clients, tailored to their business needs in the
financial services, insurance, renewable energy, manufacturing, telecommunications, transportation and
logistics, professional services, healthcare and government sectors.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 2
Business Offerings
Alithya's business offerings include a comprehensive range of digital technology services to address client
needs:
•
•
•
•
Business Strategy. Alithya leads clients through essential decision-making processes regarding
strategic planning, change management, systems evolution, operational processes, employee
the most recurrent
experience and
methodologies, we help our clients optimize efficiency and successfully navigate the digital
transformation age. We achieve results by leveraging an array of Business Strategy services, including
strategic consulting, digital transformation, organizational performance and enterprise architecture.
transformative change enablement and more. Applying
Application Solutions Services. Alithya’s experts guide clients through all facets of Application
Solutions Services, from migration of legacy systems into future-ready digital solutions, to the
development of completely new solutions using state-of-the-art technologies. Our experts assist our
clients in the choice between cloud, on-premise, and hybrid hosting strategies and solutions. Alithya’s
Application Solutions Services include digital applications DevOps, legacy systems modernization,
control and software engineering, cloud infrastructure, quality assurance and automated testing.
Enterprise Solutions. Working with key industry partners, including some of the world’s largest
vendors of cloud-based Enterprise Solutions, Alithya’s experts help clients deploy company-wide
systems to improve the efficiency of their finance, human capital, operations, and marketing functions.
Alithya’s Enterprise Solutions services include Enterprise Resource Planning (ERP), Corporate
Performance Management (CPM/EPM), Customer Relationship Management (CRM/CXM) and Human
Capital Management (HCM).
Data and Analytics. Data analysis plays a critical role in the optimization of business processes.
Leveraging specialized IT systems and software, Alithya’s data scientists help clients gain business
insight and drive better decision-making through enhanced data collection, big data analytics, machine
learning automation and reporting. Alithya’s Data and Analytics services include business intelligence,
data management, artificial intelligence and machine learning, as well as Internet of Things (IoT).
Geographically, Alithya’s operations span across Canada, the United States and internationally, providing a full
spectrum of strategy and digital technology services with deep expertise in a range of technologies and
business domains.
Competitive Environment
Today, for many companies, digital systems and infrastructures are among their most important and strategic
assets. Not only do these assets require significant investments, but they increasingly serve as key
differentiators and drivers of growth for customers.
Accordingly, businesses are seeking solutions that allow them to maintain their ability to differentiate themselves
from competitors with proprietary business processes, combined with product customization. That is where
digital transformation comes into play, inviting companies to make a shift in their approach and to evolve from
traditional information technologies to flexible digital technologies.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 3
As businesses’ technology spending continues to increase, digital technology firms such as Alithya are striving
to deliver innovative thinking and in-depth vertical industry expertise, while facilitating business process
transformation through the use of the most optimal technologies.
Alithya believes it is well positioned to respond to these trends in clients’ investments in digital technology.
Alithya’s business model is built on a philosophy of offering flexible and creative solutions, enabling clients to
realize maximum benefits from their digital technology investments. Alithya positions itself as an agile trusted
advisor and consulting partner capable of delivering rapid results for its clients.
Alithya’s competitors include systems integration firms, contract programming companies, application software
companies, cloud computing service providers, large or traditional consulting firms, professional services groups
of computer equipment companies, infrastructure management and outsourcing companies and boutique digital
companies. In addition, Alithya competes with numerous smaller local companies in the various geographic
markets in which it operates.
Alithya competes based on the following principal differentiating factors: vision and strategic advisory ability,
digital services capabilities, performance and reliability, quality of technical support, training and services,
responsiveness to client needs, reputation and experience, financial stability and strong corporate governance
and competitive pricing of services.
Alithya also relies on the following measures to compete effectively: (a) investments to scale its services
practice areas; (b) a well-developed recruiting, training and retention model; (c) a successful service delivery
model; (d) intrapreneurial culture and approach; (e) a broad referral base; (f) continual investment in process
improvement and knowledge capture; (g) investment in infrastructure and research and development; (h)
continued focus on responsiveness to client needs, quality of services and competitive prices; and (i) project
management capabilities and technical expertise.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 4
4. Strategic Business Plan
Alithya has adopted a three-year strategic plan which sets as a goal to consolidate its position as to become a
North American digital transformation leader.
According to this plan, Alithya's consolidated scale and scope should allow it to leverage its geographies,
expertise, integrated offerings, and position on the value chain to target the fastest growing IT services
segments. Alithya's specialization in digital technologies and the flexibility to deploy enterprise solutions, and
deliver solutions tailored to specific business objectives, responds directly to client expectations.
More specifically, Alithya has established a three-pronged plan focusing on:
•
Increasing scale through organic growth and strategic acquisitions by:
◦ Generating profitable organic growth through innovation, higher-value offerings and client
relationships based on trust;
◦
Completing value enhancing business acquisitions by way of a North American geographic
expansion to complement current market presence, including geography, while progressively
adding major integrated enterprise solutions offerings and selected specialized expertise;
•
Achieving best-in-class employee engagement by:
◦
◦
◦
Fostering a culture of collaboration, diversity, and ownership;
Cultivating employee well-being and personal growth;
Investing in the development of its leaders and employees;
•
Providing its investors, partners and stakeholders with long-term growing return on investment by:
◦
◦
◦
Strengthening its existing relationships with clients, as a key trusted advisor, by generating
long-term value;
Investing in innovation and higher value service offerings;
Acting responsibly, with a sustainable and respectful vision for its stakeholders and articulating
its Environmental, Social and Governance framework and priorities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 5
5. Non-IFRS and Other Financial Measures
Alithya reports its financial results in accordance with IFRS. This MD&A includes certain non-IFRS and
supplementary financial measures and ratios to assess Alithya's financial performance. These measures do not
have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar
measures presented by other companies. These measures should be considered as supplemental in nature
and not as a substitute for the related financial information prepared in accordance with IFRS.
The non-IFRS measures used by Alithya are described below:
EBITDA and EBITDA Margin
“EBITDA” refers to net income before adjusting for income tax expense (recovery), net financial expenses,
amortization of intangibles, depreciation of property and equipment and right-of-use assets, and impairment of
intangibles and goodwill.
“EBITDA Margin” refers to the percentage of total revenue that EBITDA represents for a given period.
Management believes that EBITDA and EBITDA Margin are useful measures for investors as they provide an
indication of the results generated by Alithya’s main business activities prior to taking into consideration how
those activities are financed and taxed and also prior to taking into consideration non-cash depreciation,
amortization, and impairment. For a reconciliation of net loss to EBITDA, see section 8.7 titled “EBITDA and
Adjusted EBITDA”.
Adjusted EBITDA and Adjusted EBITDA Margin
"Adjusted EBITDA” refers to net income before adjusting for income tax expense (recovery), net financial
expenses, foreign exchange, amortization of intangibles, depreciation of property and equipment and right-of-
use assets, impairment of intangibles and goodwill, share-based compensation, business acquisition,
integration and reorganization costs, internal ERP systems implementation, and other redundant and non-
recurring items.
“Adjusted EBITDA Margin” refers to the percentage of total revenue that Adjusted EBITDA represents for a
given period.
Management believes that Adjusted EBITDA and Adjusted EBITDA Margin are useful measures for investors as
they allow comparability of operating results from one period to another. These measures provide an indication
of the results generated by Alithya’s main business activities prior to taking into consideration how those
activities are financed and taxed and also prior to taking into consideration the non-cash and other items listed
above. For a reconciliation of net loss to Adjusted EBITDA, see section 8.7 titled “EBITDA and Adjusted
EBITDA”.
Constant Dollar Revenue and Constant Dollar Growth
"Constant Dollar Revenue" is a measure of revenue and revenue by geographic location before foreign
currency translation impacts. This measure is calculated by translating current period revenue and revenue by
geographic location in local currency using the exchange rates in the equivalent period from the prior year.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 6
"Constant Dollar Growth" is a measure of revenue growth and revenue growth by geographic location before
foreign currency translation impacts. This measure is calculated by comparing constant dollar revenue as
described above with prior period revenue.
Management believes that constant dollar revenue and constant dollar growth are useful measures for investors
as they allow revenue to be adjusted to exclude the impact of currency fluctuations to facilitate period-to-period
comparisons of business performance. For a reconciliation of revenues to Constant Dollar Revenue by
geographic location, see section 8.1 titled “Revenues”.
Net Bank Borrowing
“Net Bank Borrowing” refers to long-term debt, including the current portion, less balances of purchase payable,
the subordinated unsecured loan, the secured loans, unsecured promissory notes under the Paycheck
Protection Program ("PPP"), deferral of employment tax payments under the Coronavirus Aid, Relief, and
Economic Security Act (the "CARES Act"), unamortized transaction costs, cash, and restricted cash. For the
calculation of Net Bank Borrowing, see section 10.6 titled “Long-Term Debt and Net Bank Borrowing”.
Management believes that Net Bank Borrowing is a useful measure for investors as it provides an indication of
the liquidity of the Company.
The other financial measures used by Alithya are described below:
Other Financial Measures
"Gross Margin as a Percentage of Revenues" is calculated by dividing gross margin by revenues.
"Selling, General and Administrative Expenses as a Percentage of Revenues" is calculated by dividing selling,
general and administrative expenses by revenues.
‘’Bookings’’ refers to the amount of signed revenue agreements during the period, which includes new contracts,
including those acquired through acquisitions, as well as renewals, extensions and changes to existing
contracts. Management believes information regarding bookings can provide useful trend insight to investors
regarding changes in the volume of new business over time.
‘’Book-to-Bill Ratio’’ is calculated by dividing Bookings by revenues, for the same period. Management believes
this measure allows for the monitoring of the Company’s backlog and offers useful insight to investors on how
the business varies and evolves over time. This measure is best used over a long period as it could fluctuate
significantly from one quarter to the other.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 7
6. Financial Highlights
Results of Operations
(in $ thousands)
Revenues
Net Loss
Basic and Diluted Loss per Share
EBITDA (1)
EBITDA Margin (1)
Adjusted EBITDA (1)
Adjusted EBITDA Margin (1)
Other
(in $ thousands)
Total Assets
Non-Current Financial Liabilities (2)
Total Long-Term Debt
Net Bank Borrowing (3)
Shares, Stock Options and Share Units Outstanding
Class A Subordinate Voting Shares ("Subordinate Voting Shares")
Class B Multiple Voting Shares ("Multiple Voting Shares")
Options (4)
Deferred Share Units ("DSUs")
Restricted Share Units ("RSUs")
Performance Share Units ("PSUs")
Three months ended March 31,
Year ended March 31,
2022
$
119,974
(7,253)
(0.08)
(1,224)
(1.0) %
6,048
5.0 %
2021
$
77,971
(2,525)
(0.04)
922
1.2 %
3,262
4.2 %
2022
$
437,885
(15,548)
(0.18)
5,724
1.3 %
22,609
5.2 %
2021
$
287,643
(17,338)
(0.30)
(840)
(0.3) %
9,645
3.4 %
March 31,
March 31
2022
$
2021
$
447,721
105,113
106,676
45,840
243,261
33,353
54,951
21,100
June 15,
2022
85,404,570
7,171,616
4,067,207
439,521
181,498
332,263
1 This is a non-IFRS financial measure. Refer to section 5 titled “Non-IFRS and Other Financial Measures” for an explanation of the
composition and usefulness of this non-IFRS financial measure and to section 8.7 titled "EBITDA and Adjusted EBITDA" for a quantitative
reconciliation to the most directly comparable IFRS measures.
2 Non-current financial liabilities include the long-term portion of the long-term debt and the long-term portion of the lease liabilities.
3 This is a non-IFRS financial measure. Refer to section 5 titled “Non-IFRS and Other Financial Measures” for an explanation of the
composition and usefulness of this non-IFRS financial measure and to section 10.6 titled "Long-Term Debt and Net Bank Borrowing" for a
quantitative reconciliation to the most directly comparable IFRS measures.
4 Includes 657,896 stock options to purchase Multiple Voting Shares.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 8
For the three months ended March 31, 2022
•
•
•
•
•
•
•
Revenues increased 53.9% to $120.0 million, compared to $78.0 million for the same quarter last year.
Adjusted EBITDA increased 85.5% to $6.0 million, or 5.0% of revenues, compared to $3.3 million, or 4.2%
of revenues, for the same quarter last year.
Gross margin increased 32.5% to $31.1 million, compared to $23.5 million for the same quarter last year.
Gross margin as a percentage of revenues(5) was 25.9%, compared to 30.1% for the same quarter last
year, a decrease explained in part by the R3D Acquisition.
Selling, general and administrative expenses as a percentage of revenues(5) decreased to 21.8%, from
27.9% for the same quarter last year.
Net loss of $7.3 million, or $0.08 per share, compared to a net loss of $2.5 million, or $0.04 per share, for
the same quarter last year.
Q4 bookings(5) reached $107.2 million, which translated into a book-to-bill ratio(5) of 0.89.
For the twelve months ended March 31, 2022
•
•
•
•
•
•
•
Revenues increased 52.2% to $437.9 million, compared to $287.6 million last year.
Adjusted EBITDA increased 134.4% to $22.6 million, or 5.2% of revenues, from $9.6 million, or 3.4% of
revenues, last year.
Gross margin increased 39.9% to $116.1 million, compared to $83.0 million last year.
Gross margin as a percentage of revenues was 26.5%, compared to 28.9% last year, a decrease
explained in part by the R3D Acquisition.
Selling, general and administrative expenses as a percentage of revenues decreased to 22.6%, from
28.4% last year.
Net loss of $15.5 million, or $0.18 per share, compared to a net loss of $17.3 million, or $0.30 per share
last year.
Fiscal 2022 bookings reached $1,031.8 million, which translated into a book-to-bill ratio of 2.36.
5 This is an other financial measure. Refer to section 5 titled “Non-IFRS and Other Financial Measures” for an explanation of the
composition of this other financial measure.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 9
7. Business Combinations
Alithya IT Services Inc.
Overview
On April 1, 2021, the Company acquired all of the outstanding shares of R3D Consulting Inc. (now Alithya IT
Services Inc.) ("Alithya IT" or "R3D") (the “R3D Acquisition”), a private Québec firm that specializes in digital
solutions.
The purchase price was paid by the issuance of 25,182,676 Subordinate Voting Shares of the Company, at a
value of $3.20 per share, which was the closing share price on the TSX on April 1, 2021, cash of $978,000 and
assumption of accounts payable and accrued liabilities and long-term debt of $45,000 and $8,887,000,
respectively, on the closing date.
The fair value of the assets acquired, liabilities assumed, and the purchase consideration’s valuation have been
completed. The R3D Acquisition is being accounted for using the acquisition method of accounting.
For the year ended March 31, 2022, the Company incurred acquisition-related costs of approximately
$1,646,000. These costs have been recorded in the consolidated statement of operations in business
acquisition, integration and reorganization costs.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 10
Purchase Price Allocation
The allocation of the fair value of the assets acquired and the liabilities assumed is detailed as follows:
Acquisition of Alithya IT Services Inc. (in $ thousands)
$
Current assets
Cash
Accounts receivable and other receivables
Unbilled revenues
Prepaids
Non-current assets
Tax credits receivable
Property and equipment
Right-of-use assets
Intangibles
Deferred tax assets
Goodwill
Total assets acquired
Current liabilities
Accounts payable and accrued liabilities
Income taxes payable
Deferred revenues
Current portion of lease liabilities
Current portion of long-term debt
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Total liabilities assumed
Net assets acquired
Goodwill
577
9,985
7,169
91
17,822
2,053
2,207
2,982
52,777
763
42,491
121,095
15,069
155
125
592
8,887
24,828
3,620
11,084
39,532
81,563
The goodwill recognized consists mainly of the future economic value attributable to the profitability of the
acquired business, as well as its workforce and expected synergies from the integration of Alithya IT into the
Group's existing business. The Company does not expect the goodwill to be deductible for income tax
purposes.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 11
Consideration paid
The following table summarizes the acquisition date fair value of each class of consideration as follows:
Acquisition of Alithya IT Services Inc. (in $ thousands)
Cash paid
Issuance of 25,182,676 Subordinate Voting Shares
Total consideration transferred
Alithya IT 's contribution to the Group results
$
978
80,585
81,563
For the period from April 1, 2021 to December 31, 2021, the date of Alithya IT’s administrative integration within
the acquired legal entity, it contributed revenues of approximately $51,002,000, a loss in the amount of
$4,595,000, including amortization, primarily related to the acquired customer relationships, of $3,805,000, and
business acquisition and integration costs of $3,683,000. Since the R3D Acquisition, all new contracts and all
new employees related to the acquired business were recorded in other Canadian entities of the Group, in
preparation for its administrative integration.
Vitalyst, LLC
Overview
On January 31, 2022, the Company acquired all of the issued and outstanding membership interest of
Vitalyst, LLC (“Vitalyst”) ("Vitalyst Acquisition"), a US-based learning, employee experience and transformative
change enablement business.
The Vitalyst Acquisition was completed for total consideration of US$45,362,000 ($57,592,000), comprised of
certain accounts payable and accrued liabilities assumed of US$2,279,000 ($2,893,000), long-term debt of
US$30,150,000 ($38,279,000), and US$12,933,000 ($16,420,000) paid in cash, subject to working capital and
other adjustments, plus a potential earnout of up to US$1,000,000 ($1,270,000) payable before May 31, 2023.
The fair value of the assets acquired and the liabilities assumed, and the purchase consideration is preliminary
pending the completion of their valuation. Should new information, obtained within one year of the date of
acquisition, about the facts and circumstances that existed at the date of the Vitalyst Acquisition, result in
adjustments to the below amounts, or require additional provisions for conditions that existed at the date of the
Vitalyst Acquisition, the fair value will then be revised. The Vitalyst Acquisition is being accounted for using the
acquisition method of accounting.
For the year ended March 31, 2022, the Company incurred acquisition-related costs of approximately
$1,652,000. These costs have been recorded in the consolidated statement of operations in business
acquisition, integration and reorganization costs.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 12
Purchase Price Allocation
The preliminary allocation of the fair value of the assets acquired and the liabilities assumed is detailed as
follows:
Acquisition of Vitalyst, LLC (in $ thousands)
$
Current assets
Cash
Accounts receivable and other receivables
Unbilled revenues
Prepaids
Non-current assets
Other assets
Property and equipment
Right-of-use assets
Intangibles
Goodwill
Total assets acquired
Current liabilities
Accounts payable and accrued liabilities
Deferred revenues
Current portion of lease liabilities
Current portion of long-term debt
Non-current liabilities
Lease liabilities
Total liabilities assumed
Net assets acquired
Goodwill
1,116
6,301
1,101
1,403
9,921
157
583
3,975
26,323
31,498
72,457
5,237
7,936
1,007
38,584
52,764
3,273
56,037
16,420
The goodwill recognized consists mainly of the future economic value attributable to the profitability of the
acquired business, as well as its workforce and expertise. The Company does not expect the goodwill to be
deductible for income tax purposes.
Consideration paid
The following table summarizes the acquisition date fair value of each class of consideration as follows:
Acquisition of Vitalyst, LLC (in $ thousands)
Cash paid
Earn-out
Total consideration transferred
$
16,420
—
16,420
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 13
Vitalyst's contribution to the Group results
For the year ended March 31, 2022, the Vitalyst business contributed revenues of approximately $4,980,000, a
loss in the amount of $1,219,000, including amortization, primarily related to the acquired customer
relationships, of $569,000, and acquisition and integration costs of $1,693,000, respectively.
If the acquisition had occurred on April 1, 2021, pro-forma revenue and earnings before incomes taxes for the
Vitalyst Acquisition for the year ended March 31, 2022 would have been $31,427,000 and $5,715,000,
respectively. These amounts have been calculated using Vitalyst’s results and adjusting for:
• differences in accounting policies between the Group and Vitalyst;
• the removal of transaction costs incurred by Vitalyst from April 1, 2021 to January 31, 2022; and
• the additional amortization that would have been charged assuming the fair value adjustments to intangibles
had been applied from April 1, 2021.
8. Results of Operations
(in $ thousands, except for per share data)
Revenues
Cost of revenues
Gross margin
Operating expenses
Selling, general and administrative expenses
Business acquisition, integration and reorganization costs
Depreciation
Amortization of intangibles
Foreign exchange loss (gain)
Operating loss
Net financial expenses
Gain on recovery of note receivable
Loss before income taxes
Income tax expense (recovery)
Current
Deferred
Net loss
Basic and diluted loss per share
For the three months ended
March 31,
For the year ended
March 31,
2022
$
437,885
321,732
116,153
2021
$
287,643
204,626
83,017
2022
$
119,974
88,891
31,083
26,204
6,128
1,235
4,017
(25)
37,559
(6,476)
1,352
—
(7,828)
114
(689)
(575)
(7,253)
(0.08)
2021
$
77,971
54,517
23,454
21,740
718
1,058
2,490
74
26,080
(2,626)
849
—
98,838
11,617
5,435
14,285
(26)
130,149
(13,996)
4,579
—
(3,475)
(18,575)
465
(1,415)
(950)
(2,525)
(0.04)
(20)
(3,007)
(3,027)
(15,548)
(0.18)
81,723
2,321
3,767
11,739
473
100,023
(17,006)
3,274
(660)
(19,620)
1,515
(3,797)
(2,282)
(17,338)
(0.30)
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 14
8.1
Revenues
The following table reconciles Constant Dollar Revenue to revenues by geographic location:
(in $ thousands, except for percentages)
2022
2021
%
2022
2021
%
For the three months ended March 31,
For the twelve months ended March 31,
Total Alithya revenue as reported
119,974
77,971
53.9 % 437,885
287,643
52.2 %
Variation prior to foreign currency impact
Foreign currency impact
Variation over previous period
54.3 %
(0.4) %
53.9 %
55.2 %
(3.0) %
52.2 %
Canada
Constant dollar revenue (1)
Foreign currency impact
Canada revenue as reported
U.S.
Constant dollar revenue (1)
Foreign currency impact
U.S. revenue as reported
International
Constant dollar revenue (1)
Foreign currency impact
International revenue as reported
74,176
—
74,176
41,317
13
41,330
4,798
(330)
4,468
45,429
63.3 % 280,633
162,764
72.4 %
—
45,429
63.3 % 280,633
162,764
72.4 %
29,655
39.3 % 149,960
114,608
30.8 %
29,655
39.4 % 142,200
114,608
24.1 %
(7,760)
2,887
66.2 %
15,920
10,271
55.0 %
(868)
2,887
54.8 %
15,052
10,271
46.5 %
1 Non-IFRS measure. See section 5 titled “Non-IFRS and Other Financial Measures” for an explanation of the composition and usefulness
of this non-IFRS financial measure.
Revenues amounted to $120.0 million for the three months ended March 31, 2022, including revenues from the
R3D Acquisition, recorded in other Canadian entities of the Group following its administrative integration at the
end of the third quarter of this year, and $5.0 million from the Vitalyst Acquisition, representing a $42.0 million
increase, or 53.9%, from $78.0 million for the three months ended March 31, 2021.
Revenues in Canada increased by $28.8 million, or 63.3%, to $74.2 million for the three months ended
March 31, 2022, from $45.4 million for the three months ended March 31, 2021. The increase in revenues was
due to organic growth in all areas, the general recovery of activity levels, revenues from the R3D Acquisition,
and growth from the two long-term contracts signed as part of the R3D Acquisition. On a sequential basis,
revenues in Canada increased by $2.1 million, from $72.1 million for the third quarter of this year.
U.S. revenues increased by $11.6 million, or 39.4%, to $41.3 million for the three months ended
March 31, 2022, from $29.7 million for the three months ended March 31, 2021, due primarily to organic growth
in all areas, the general recovery of activity levels, and revenues of $5.0 million from the Vitalyst Acquisition. On
a sequential basis, revenues in the U.S. increased by $7.6 million, from $33.7 million for the third quarter of this
year, despite an unfavorable US$ exchange rate impact of $0.2 million.
International revenues increased by 54.7%, to $4.5 million, from $2.9 million for the same quarter last year, due
primarily to a general recovery of activity levels, partially offset by the negative impact of foreign exchange
variations between the two periods. In local currency, this represents a record quarter for revenues. On a
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 15
sequential basis, international revenues increased by $0.7 million, from $3.8 million for the third quarter of this
year.
Revenues amounted to $437.9 million for the twelve months ended March 31, 2022, including $51.0 million from
the R3D Acquisition and $5.0 million from the Vitalyst Acquisition, representing a $150.3 million increase, or
52.2%, from $287.6 million for the twelve months ended March 31, 2021.
Revenues in Canada increased by $117.8 million, or 72.4%, to $280.6 million for the twelve months ended
March 31, 2022, from $162.8 million for the twelve months ended March 31, 2021. The increase in revenues
was due to organic growth in all areas, the general recovery of activity levels, revenues of $51.0 million from the
R3D Acquisition prior to its administrative integration at the end of the third quarter of this year, and additional
revenues subsequently recorded in other Canadian entities of the group, and growth from the two long-term
contracts signed as part of the R3D Acquisition.
U.S. revenues increased by $27.6 million, or 24.1%, to $142.2 million for the twelve months ended
March 31, 2022, from $114.6 million for the twelve months ended March 31, 2021. Organic growth in most
areas, the general recovery of activity levels, and revenues of $5.0 million from the Vitalyst Acquisition were
partially offset by the negative impact of foreign exchange variations between the periods. Revenues would
have been $150.0 million with a constant US$ exchange rate, resulting in an increase in constant currency of
30.8%.
International revenues increased by 46.5%, to $15.1 million for the twelve months ended March 31, 2022, from
$10.3 million for the twelve months ended March 31, 2021, due primarily to a general recovery of activity levels,
partially offset by the negative impact of foreign exchange variations between the two periods.
8.2
Gross Margin
Gross margin increased by $7.6 million, or 32.5%, to $31.1 million for the three months ended March 31, 2022,
from $23.5 million for the three months ended March 31, 2021. Gross margin as a percentage of revenues
decreased to 25.9% for the three months ended March 31, 2022, from 30.1% for the three months ended
March 31, 2021.
The percentage decrease was driven in part by decreased gross margin in Canada from the R3D Acquisition,
whose operations are now recorded in other Canadian entities of the Group following its administrative
integration at the end of the third quarter of this year, and whose revenues historically show a higher proportion
from billable subcontractors, resulting in lower margins. Gross margin percentage also decreased in other areas
of the business due to an increase in subcontractor revenues relative to revenues from permanent employees.
The high demand for Alithya's services, as evidenced by its strong revenue growth, coupled with a tightening
labour market, have resulted in this increased reliance on subcontractors. Finally, increased costs in certain
customer projects in Canada and the U.S., partly due to market pressures on salary costs, and decreased
governmental wage subsidies in Canada were partially offset by increased gross margins internationally and a
positive margin impact from the Vitalyst Acquisition.
On a sequential basis, gross margin as a percentage of revenues increased slightly, from 25.8% in the third
quarter of this year, despite the seasonal employer benefits reset which always causes an increase in labor
costs in the fourth quarter.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 16
Gross margin increased by $33.1 million, or 39.9%, to $116.1 million for the twelve months ended
March 31, 2022, from $83.0 million for the twelve months ended March 31, 2021. Gross margin as a percentage
of revenues decreased to 26.5% for the twelve months ended March 31, 2022, from 28.9% for the twelve
months ended March 31, 2021. However, excluding the impact of the R3D Acquisition prior to its administrative
integration at the end of the third quarter of this year, gross margin as a percentage of revenues would have
been 1.7% higher for the twelve months ended March 31, 2022.
The percentage decrease was driven primarily by decreased gross margin in Canada from the R3D Acquisition,
whose revenues historically show a higher proportion from billable subcontractors, increased subcontractor
revenues in other areas of the business relative to revenues from permanent employees as a result of the
tightening labour market, decreased governmental wage subsidies in Canada, as well as increased costs in
certain customer projects, including a $2.2 million impact from one large customer project involving the
development of some highly complex, bespoke digital transformation software which may have further
commercial applications. The project is nearing completion and no further cost increases or losses are expected
going forward. This decrease was partially offset by increased gross margin in the U.S. and internationally, due
to some U.S. governmental wage subsidies, namely the forgiveness of the $4.6 million in PPP loans in the first
quarter of this year, increased utilization rates, and a positive margin impact from the Vitalyst Acquisition.
As with previous acquisitions, and despite the tightening labour market, the Company’s objective is to gradually
transform R3D's revenue mix by increasing revenues from permanent employees relative to subcontractor
revenues, which would result in higher gross margins.
8.3
Segment Reporting
An operating segment is a component of a company that engages in business activities from which it may earn
revenues and incur expenses, including revenues and expenses that relate to transactions with any of Alithya’s
other segments. An entity shall disclose separately information about each operating segment or can combine
operating segments, with similar economic characteristics or that do not meet quantitative thresholds to produce
a reportable segment, into one reportable segment.
The Group has examined its activities and has determined that it has one single reportable segment due to
similar characteristics of its operating segments, including similar economic characteristics, the nature of
services provided to its customers and types of customers comprising its customer base and the regulatory
environment in which the Group operates.
The following table presents total external revenues by geographic location:
(in $ thousands)
2022
2021
2022
2021
For the three months ended March 31,
For the year ended March 31,
Canada
U.S.
International
$
74,176
41,330
4,468
%
61.8
34.5
3.7
119,974
100.0
$
45,429
29,655
2,887
77,971
%
58.3
38.0
3.7
$
280,633
142,200
15,052
%
64.1
32.5
3.4
$
162,764
114,608
10,271
%
56.6
39.8
3.6
100.0
437,885
100.0
287,643
100.0
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 17
8.4
Operating Expenses
8.4.1
Selling, General and Administrative Expenses
Selling, general and administrative expenses include salary, wages and other benefits for selling and
administrative employees, professional fees, occupancy costs, information technology and communications
costs, share-based compensation, public listing and investor fees, and other administrative expenses.
Selling, general and administrative expenses totaled $26.2 million for the three months ended March 31, 2022,
an increase of $4.5 million, or 20.5%, from $21.7 million for the three months ended March 31, 2021. As a
percentage of consolidated revenues, total selling, general and administrative expenses amounted to 21.8% for
the three months ended March 31, 2022, compared to 27.9% for the same period last year.
Expenses in Canada increased by $1.1 million, or 8.2%, to $14.7 million, for the three months ended
March 31, 2022, from $13.6 million for the three months ended March 31, 2021. This increase was primarily due
to an increase of $0.8 million in employee compensation costs, as headcount and salaries increased, and an
increase of $0.3 million in information technology and communications costs, partially offset by a decrease of
$0.3 million in mostly non-cash share-based compensation from fully vested shares.
U.S. and international expenses increased by $3.4 million, including $1.7 million related to Vitalyst, due to
increased employee compensation costs, as headcount and salaries increased and variable compensation
increased with revenues, and increased information technology and communications costs.
Selling, general and administrative expenses totaled $98.8 million for the twelve months ended March 31, 2022,
an increase of $17.1 million, or 20.9%, from $81.7 million for the twelve months ended March 31, 2021. As a
percentage of consolidated revenues, total selling, general and administrative expenses amounted to 22.6% for
the twelve months ended March 31, 2022, compared to 28.4% for the twelve months ended March 31, 2021.
Expenses in Canada increased by $12.5 million, or 25.4%, including $4.5 million related to R3D prior to its
administrative integration at the end of the third quarter of this year, to $61.6 million, for the twelve months
ended March 31, 2022, from $49.1 million for the twelve months ended March 31, 2021. This increase was due
primarily to an increase of $11.9 million in employee compensation costs, as headcount and salaries increased
and variable compensation increased with revenues, an increase of $1.0 million in recruiting fees, as the
Company continued to invest in hiring, an increase of $1.3 million in information technology and
communications costs, an increase of $0.5 million in professional fees, and an increase of $0.3 million in
insurance costs. These expenses were partially offset by decreases of $2.2 million in mostly non-cash share-
based compensation from fully vested shares, $0.6 million in employee training costs due to government grants
received, and $0.4 million in occupancy costs.
U.S. and international expenses increased by $4.5 million, including $1.7 million related to Vitalyst, due to
increased employee compensation costs, as headcount and salaries increased and variable compensation
increased with revenues, and recruiting costs as the Company continued to invest in hiring for future revenue
growth. These expenses were partially offset by a favorable US$ exchange rate impact of $1.9 million, cost-
saving measures implemented in response to the COVID-19 pandemic, and government subsidies recorded
against compensation costs, namely the forgiveness of $1.3 million in PPP loans recorded in the first quarter of
this year.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 18
8.4.2
Share-Based Compensation
Share-based compensation is included in cost of revenues and selling, general and administrative expenses
and is detailed in the table below:
(in $ thousands)
Stock options
Share purchase plan – employer contribution
Share-based compensation granted on business
acquisitions
DSUs
RSUs
PSUs
For the three months ended March 31,
For the year ended March 31,
2022
$
2021
$
2022
$
2021
$
217
313
181
135
—
91
937
167
224
576
115
101
—
1,183
851
1,138
1,524
576
92
273
4,454
700
653
4,051
523
314
—
6,241
Share-based compensation amounted to $0.9 million for the three months ended March 31, 2022, representing
a decrease of $0.3 million, from $1.2 million for the three months ended March 31, 2021. The decrease in
share-based compensation was driven primarily by decreased expenses related to RSUs and decreased
expenses related to share-based compensation granted on business acquisitions. These grants ceased to
generate share-based compensation once fully vested. The decrease was partially offset by increased employer
contributions under the Company's share purchase plan and increased expenses related to PSUs.
Share-based compensation amounted to $4.5 million for the twelve months ended March 31, 2022,
representing a decrease of $1.7 million, from $6.2 million for the twelve months ended March 31, 2021. The
decrease in share-based compensation was driven primarily by decreased expenses related to RSUs and
decreased expenses related to share-based compensation granted on business acquisitions. These grants
ceased to generate share-based compensation once fully vested. The decrease was partially offset by
increased employer contributions under the Company's share purchase plan and increased expenses related to
grants of PSUs and stock options.
8.4.3 Business Acquisition, Integration and Reorganization Costs
Having reached a certain critical mass through acquisitions and continued organic growth, Alithya has initiated a
review of its cost structure in this quarter and has incurred certain reorganization costs.
Business acquisition, integration and reorganization costs amounted to $6.1 million for the three months ended
March 31, 2022, representing an increase of $5.4 million, from $0.7 million for the three months ended
March 31, 2021. The increase was driven primarily by $2.2 million in increased acquisition costs, related mainly
to the Vitalyst Acquisition, $2.4 million in increased integration costs, related mainly to the R3D Acquisition, and
$0.8 million in reorganization costs related to modifications to Alithya's cost structure, consisting entirely of
employee termination and benefits costs.
Business acquisition, integration and reorganization costs amounted to $11.6 million for the twelve months
ended March 31, 2022, representing an increase of $9.3 million, from $2.3 million for the twelve months ended
March 31, 2021. The increase was driven primarily by $3.6 million in increased acquisition costs, related mainly
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 19
to the Vitalyst Acquisition, $4.9 million in increased integration costs, related mainly to the R3D Acquisition, and
$0.8 million in reorganization costs related to modifications to Alithya's cost structure, consisting entirely of
employee termination and benefits costs.
8.4.4 Depreciation
Depreciation totaled $1.2 million for the three months ended March 31, 2022, compared to $1.1 million for the
three months ended March 31, 2021. These costs consisted primarily of depreciation of Alithya’s property and
equipment and right-of-use assets.
Depreciation related to property and equipment amounted to $0.6 million for the three months ended
March 31, 2022 and 2021. Depreciation related to right-of-use assets amounted to $0.6 million for the three
months ended March 31, 2022, representing an increase of $0.1 million, from $0.5 million for the three months
ended March 31, 2021, primarily due to depreciation on right-of-use assets acquired as part of the Vitalyst
Acquisition.
Depreciation totaled $5.4 million for the twelve months ended March 31, 2022, compared to $3.8 million for the
twelve months ended March 31, 2021. These costs consisted primarily of depreciation of Alithya’s property and
equipment and right-of-use assets.
Depreciation related to property and equipment amounted to $2.6 million for the twelve months ended
March 31, 2022, representing an increase of $0.7 million, from $1.9 million for the twelve months ended
March 31, 2021. Depreciation related to right-of-use assets amounted to $2.9 million for the twelve months
ended March 31, 2022, representing an increase of $1.0 million, from $1.9 million for the twelve months ended
March 31, 2021. The increases were primarily due to depreciation on assets acquired as part of the acquisitons
of R3D and Vitalyst.
8.4.5 Amortization of Intangibles
Amortization of intangibles totaled $4.0 million for the three months ended March 31, 2022, compared to
$2.5 million for the three months ended March 31, 2021. These costs consisted primarily of amortization of
customer relationships recognized on acquisitions, which increased by $1.5 million.
Amortization of intangibles totaled $14.3 million for the twelve months ended March 31, 2022, compared to
$11.7 million for the twelve months ended March 31, 2021. These costs consisted primarily of amortization of
customer relationships recognized on acquisitions, which increased by $2.9 million due to the acquisitions of
R3D and Vitalyst, partially offset by decreases in the amortization of software and non-compete agreements of
$0.4 million and $0.1 million, respectively.
8.4.6
Foreign Exchange Loss (Gain)
Foreign exchange gain amounted to $0.02 million for the three months ended March 31, 2022, compared to a
loss of $0.1 million for the three months ended March 31, 2021.
Foreign exchange gain amounted to $0.03 million for the twelve months ended March 31, 2022, compared to a
loss of $0.5 million for the twelve months ended March 31, 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 20
8.5
Other Income and Expenses
8.5.1 Net Financial Expenses
Net financial expenses are summarized in the table below:
(in $ thousands)
Interest on long-term debt
Interest and financing charges
Interest on lease liabilities
Amortization of finance costs
Interest accretion on balances of purchase payable
Interest income
For the three months ended
March 31,
For the year ended March 31,
2022
$
2021
$
2022
$
2021
$
741
158
208
66
188
(9)
1,352
321
119
150
63
208
(12)
849
2,402
1,185
432
725
277
823
(80)
4,579
448
595
242
835
(31)
3,274
Net financial expenses amounted to $1.4 million for the three months ended March 31, 2022, representing an
increase of $0.6 million, or 59.2%, from $0.8 million for the three months ended March 31, 2021, driven mainly
by the increase in long-term debt, as described in section 10.6, which accounted for the increased interest on
long-term debt.
Net financial expenses amounted to $4.6 million for the twelve months ended March 31, 2022, representing an
increase of $1.3 million, or 39.9%, from $3.3 million for the twelve months ended March 31, 2021, driven mainly
by the increase in long-term debt, as described in section 10.6, which accounted for the increased interest on
long-term debt.
8.5.2
Income Taxes
Income tax recovery was $0.6 million for the three months ended March 31, 2022, representing a decrease of
$0.3 million, from a recovery of $0.9 million for the three months ended March 31, 2021, due primarily to a
decrease in deferred tax recovery in certain entities.
Income tax recovery was $3.0 million for the twelve months ended March 31, 2022, representing an increase of
$0.7 million, from a recovery of $2.3 million for the twelve months ended March 31, 2021, due primarily to a
decrease in current tax expense in certain entities, partially offset by a decrease in deferred tax recovery in
certain entities.
8.6
Net Loss and Loss per Share
Net loss for the three months ended March 31, 2022 was $7.3 million, an increase of $4.8 million, from
$2.5 million for the three months ended March 31, 2021. The increased loss was driven by increased selling,
general and administrative expenses, increased business acquisition, integration and reorganization costs,
increased depreciation and amortization, increased net financial expenses, and decreased income tax recovery,
partially offset by increased gross margin in the three months ended March 31, 2022, compared to the three
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 21
months ended March 31, 2021. On a per share basis, this translated into a basic and diluted net loss per share
of $0.08 for the three months ended March 31, 2022, compared to a net loss of $0.04 per share for the three
months ended March 31, 2021.
Net loss for the twelve months ended March 31, 2022 was $15.5 million, an improvement of $1.8 million, from
$17.3 million for the twelve months ended March 31, 2021. The decreased loss was driven by increased gross
margin, partially offset by increased selling, general and administrative expenses, increased business
acquisition, integration and reorganization costs, increased depreciation and amortization, increased net
financial expenses, and increased income tax recovery in the twelve months ended March 31, 2022, compared
to the twelve months ended March 31, 2021. On a per share basis, this translated into a basic and diluted net
loss per share of $0.18 for the twelve months ended March 31, 2022, compared to a net loss of $0.30 per share
for the twelve months ended March 31, 2021.
8.7
EBITDA and Adjusted EBITDA
The following table reconciles net loss to EBITDA and Adjusted EBITDA:
(in $ thousands)
Revenues
Net loss
Net financial expenses
Income tax recovery
Depreciation
Amortization of intangibles
EBITDA (1)
EBITDA Margin (1)
Adjusted for:
Foreign exchange loss (gain)
Share-based compensation
Business acquisition, integration and
reorganization costs
Gain on recovery of note receivable
Premise relocation expenses
Severance
Internal ERP systems implementation
Adjusted EBITDA (1)
Adjusted EBITDA Margin (1)
For the three months ended March 31,
For the year ended March 31,
2022
$
119,974
(7,253)
1,352
(575)
1,235
4,017
(1,224)
2021
$
77,971
(2,525)
849
(950)
1,058
2,490
922
2022
$
437,885
(15,548)
4,579
(3,027)
5,435
14,285
5,724
(1.0) %
1.2 %
1.3 %
(25)
937
6,128
—
—
—
232
6,048
5.0 %
74
1,183
718
—
155
3
207
3,262
4.2 %
(26)
4,454
11,617
—
—
—
840
22,609
5.2 %
2021
$
287,643
(17,338)
3,274
(2,282)
3,767
11,739
(840)
(0.3) %
473
6,241
2,321
(660)
933
154
1,023
9,645
3.4 %
1 Non-IFRS measure. See section 5 titled “Non-IFRS and Other Financial Measures” for an explanation of the composition and usefulness
of this non-IFRS financial measure.
EBITDA amounted to a loss of $1.2 million for the three months ended March 31, 2022, representing a
decrease of $2.1 million, from EBITDA of $0.9 million for the three months ended March 31, 2021. EBITDA
Margin was equal to (1.0)% for the three months ended March 31, 2022, compared to 1.2% for the three
months ended March 31, 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 22
Adjusted EBITDA amounted to $6.0 million for the three months ended March 31, 2022, representing an
increase of $2.7 million, from $3.3 million for the three months ended March 31, 2021. As explained above, the
contribution from the Vitalyst Acquisition and increased gross margin were partially offset by increased selling,
general and administrative expenses. Adjusted EBITDA Margin was 5.0% for the three months ended
March 31, 2022, compared to 4.2% for the three months ended March 31, 2021.
EBITDA amounted to $5.7 million for the twelve months ended March 31, 2022, representing an increase of
$6.5 million, from an EBITDA loss of $0.8 million for the twelve months ended March 31, 2021. EBITDA Margin
was equal to 1.3% for the twelve months ended March 31, 2022, compared to (0.3)% for the twelve months
ended March 31, 2021.
Adjusted EBITDA amounted to $22.6 million for the twelve months ended March 31, 2022, representing an
increase of $13.0 million, from $9.6 million for the twelve months ended March 31, 2021.
As explained above, the contribution from the R3D and Vitaliyst acquisitions, increased gross margin, and the
forgiveness of $5.9 million in PPP loans, recorded in the first quarter of this year, were partially offset by
increased selling, general and administrative expenses and the $2.2 million impact from increased costs on one
large customer project. Adjusted EBITDA Margin was 5.2% for the twelve months ended March 31, 2022,
compared to 3.4% for the twelve months ended March 31, 2021.
9. Bookings
Bookings during the three months ended March 31, 2022 were $107.2 million, which translated into a book-to-
bill ratio of 0.89 for the quarter. For the twelve months ended March 31, 2022, new bookings were
$1,031.8 million, which translated into a book-to-bill ratio of 2.36. Included in bookings for the trailing twelve
months is the $600.0 million estimated value of the two long-term contracts which were signed as part of the
R3D Acquisition.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 23
10. Liquidity and Capital Resources
10.1
Consolidated Statements of Cash Flows
Alithya’s ongoing operations and growth are financed through a combination of operating cash flows,
borrowings under its existing credit facility, secured loans and a subordinated unsecured loan, and the issuance
of equity. Alithya seeks to maintain an optimal level of liquidity through the active management of its assets and
liabilities, as well as its cash flows. The following table summarizes Alithya’s cash flow activities for the three
and twelve months ended March 31, 2022 and 2021:
(in $ thousands)
Net cash used in operating activities
Net cash used in investing activities
Net cash from financing activities
Effect of exchange rate changes
Net change in cash
Cash at the beginning of the period
Cash at the end of the period
For the three months ended March 31,
For the year ended March 31,
2022
$
2021
$
2022
$
2021
$
(4,780)
(17,336)
31,140
(48)
8,976
8,679
17,655
(2,021)
(365)
1
(141)
(2,526)
9,429
6,903
(1,629)
(18,938)
31,396
(77)
10,752
6,903
17,655
(456)
(4,567)
3,424
(308)
(1,907)
8,810
6,903
10.2
Cash Flows - Operating Activities
For the three months ended March 31, 2022, net cash used in operating activities was $4.8 million, representing
an increase of $2.8 million, from $2.0 million of cash used for the three months ended March 31, 2021. The
cash flows for the three months ended March 31, 2022 resulted primarily from the net loss of $7.3 million, plus
$5.0 million of non-cash adjustments to the net loss, consisting primarily of depreciation and amortization and
share-based compensation, partially offset by deferred taxes, and $2.6 million in unfavorable changes in non-
cash working capital items. In comparison, the cash flows for the three months ended March 31, 2021 resulted
primarily from the net loss of $2.5 million, plus $3.5 million of non-cash adjustments to the net loss, consisting
primarily of depreciation and amortization, unrealized foreign exchange loss, and share-based compensation,
partially offset by the forgiveness of PPP loans and deferred taxes, and $3.0 million in unfavorable changes in
non-cash working capital items.
Unfavorable changes in non-cash working capital items of $2.6 million during the three months ended
March 31, 2022 consisted primarily of a $3.1 million increase in tax credits receivable, a $2.5 million decrease in
deferred revenues, a $2.3 million increase in unbilled revenues, a $2.1 million increase in accounts receivable
and other receivables, a $2.1 million increase in prepaids, and a $0.2 million decrease in income taxes payable,
partially offset by a $9.8 million increase in accounts payable and accrued liabilities. For the three months
ended March 31, 2021, unfavorable changes in non-cash working capital items of $3.0 million consisted
primarily of a $12.0 million increase in accounts receivable and other receivables, a $1.4 million decrease in
deferred revenues, and a $0.9 million increase in tax credits receivable, partially offset by a $7.7 million
increase in accounts payable and accrued liabilities, a $2.1 million decrease in unbilled revenues, a $1.0 million
decrease in prepaids, and a $0.5 million decrease in income taxes receivable.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 24
For the twelve months ended March 31, 2022, net cash used in operating activities was $1.6 million,
representing an increase of $1.1 million, from $0.5 million of cash used for the twelve months ended
March 31, 2021. The cash flows for the twelve months ended March 31, 2022 resulted primarily from the net
loss of $15.5 million, plus $15.0 million of non-cash adjustments to the net loss consisting primarily of
depreciation and amortization and share-based compensation, partially offset by the forgiveness of PPP loans
and deferred taxes, and $1.1 million in unfavorable changes in non-cash working capital items. In comparison,
the cash flows for the twelve months ended March 31, 2021 resulted primarily from the net loss of $17.3 million,
plus $17.0 million of non-cash adjustments to the net loss including depreciation and amortization, unrealized
foreign exchange loss, and share-based compensation, partially offset by the forgiveness of PPP loans and
deferred taxes, and $0.1 million in unfavorable changes in non-cash working capital items.
Unfavorable changes in non-cash working capital items of $1.1 million during the twelve months ended
March 31, 2022 consisted primarily of a $15.9 million increase in accounts receivable and other receivables, a
$5.7 million increase in tax credits receivable, and a $0.8 million increase in prepaids, partially offset by a
$17.7 million increase in accounts payable and accrued liabilities, a $2.1 million increase in deferred revenues,
a $0.9 million decrease in unbilled revenues, and a $0.6 million decrease in income taxes receivable. For the
twelve months ended March 31, 2021, unfavorable changes in non-cash working capital items of $0.1 million
consisted primarily of a $5.3 million increase in accounts receivable and other receivables, a $2.2 million
increase in unbilled revenues, and a $0.9 million increase in prepaids, partially offset by a $5.5 million increase
in accounts payable and accrued liabilities, a $1.5 million decrease in income taxes receivable, and a
$1.3 million increase in deferred revenues.
10.3
Cash Flows - Investing Activities
For the three months ended March 31, 2022, net cash used in investing activities was $17.3 million,
representing an increase of $16.9 million, from $0.4 million of cash used for the three months ended
March 31, 2021. The cash used in the three months ended March 31, 2022 resulted primarily from the Vitalyst
Acquisition, and purchases of property and equipment and intangibles as part of the ordinary course of
business. In comparison, the cash used in the three months ended March 31, 2021 resulted primarily from
purchases of property and equipment mainly related to leasehold improvements.
For the twelve months ended March 31, 2022, net cash used in investing activities was $18.9 million,
representing an increase of $14.3 million, from $4.6 million of cash used for the twelve months ended
March 31, 2021. The cash used in the twelve months ended March 31, 2022 resulted primarily from the R3D
and Vitalyst acquisitions, and purchases of property and equipment and intangibles as part of the ordinary
course of business. In comparison, the cash used in the twelve months ended March 31, 2021 resulted primarily
from purchases of property and equipment mainly related to the relocation of certain office premises and
computer equipment acquired to facilitate working remotely due to the COVID-19 pandemic, the repurchase of
equity interests issued on business acquisitions, and an increase in restricted cash.
10.4 Cash Flows - Financing Activities
For the three months ended March 31, 2022, net cash from financing activities was $31.1 million, representing
an increase of $31.1 million, from nil for the three months ended March 31, 2021. The cash flows for the three
months ended March 31, 2022 resulted primarily from $95.1 million in proceeds from long-term debt, net of
related transaction costs, $24.7 million in net proceeds from the issuance of shares, net of share issue costs,
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 25
and $0.3 million from the exercise of stock options, partially offset by $87.7 million in long-term debt
repayments, $0.9 million in repayments of lease liabilities, and $0.4 million in shares purchased for cancellation
under the normal course issuer bid ("NCIB"). In comparison, the cash flows for the three months ended
March 31, 2021 resulted primarily from $9.0 million in proceeds from long-term debt, net of related transaction
costs, and $0.3 million from the exercise of stock options, partially offset by $8.7 million in long-term debt
repayments and $0.5 million in repayments of lease liabilities.
For the twelve months ended March 31, 2022, net cash from financing activities was $31.4 million, representing
an increase of $28.0 million, from $3.4 million for the twelve months ended March 31, 2021. The cash flows for
the twelve months ended March 31, 2022 resulted primarily from $156.8 million in proceeds from long-term
debt, net of related transaction costs, $24.7 million in net proceeds from the issuance of shares, net of share
issue costs, and $0.3 million from the exercise of stock options, partially offset by $146.5 million in long-term
debt repayments, $2.7 million in repayments of lease liabilities, and $1.2 million in shares purchased for
cancellation under the NCIB. In comparison, the cash flows for the twelve months ended March 31, 2021
resulted primarily from $53.5 million in proceeds from long-term debt, net of related transaction costs, lease
incentives of $0.9 million, and $0.3 million from the exercise of stock options, partially offset by $49.9 million in
long-term debt repayments and $1.4 million in repayments of lease liabilities.
10.5
Capital Resources
Alithya’s capital consists of cash, restricted cash, long-term debt and total equity. Alithya’s main objectives when
managing capital are to provide a strong capital base in order to maintain shareholders’, creditors’ and other
stakeholders’ confidence and to sustain future growth and development of the business, to maintain a flexible
capital structure that optimizes the cost of capital at an acceptable risk level and preserves the ability to meet its
financial obligations, to ensure sufficient liquidity to pursue its organic growth strategy and undertake selective
acquisitions, and to provide returns on investment to shareholders.
In managing its capital structure, Alithya monitors performance throughout the year to ensure anticipated
working capital requirements and maintenance capital expenditures are funded from operations, available cash
and, where applicable, bank borrowings.
10.6
Long-Term Debt and Net Bank Borrowing
Alithya has a senior secured revolving credit facility (the “Credit Facility”) which is available to a maximum
amount of $125.0 million and can be drawn in Canadian and the equivalent amount in U.S. dollars. It is
available in prime rate advances, SOFR advances, bankers’ acceptances and letters of credit up to $2.5 million.
The advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.25%
to 1.00%, or bankers’ acceptances or SOFR rates, plus an applicable margin ranging from 1.50% to 2.25%, as
applicable for Canadian and U.S. advances, respectively. The applicable margin is determined based on
threshold limits for certain financial ratios.
As security for the Credit Facility, Alithya provided a first ranking hypothec on the universality of its assets
excluding any leased equipment and Investissement Québec’s first ranking lien on tax credits receivable for the
financing related to refundable tax credits. Under the terms of the agreement, the Group is required to maintain
certain financial covenants which are measured on a quarterly basis. The Credit Facility matures on
April 1, 2024 and is renewable for additional one-year periods at the lender’s discretion.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 26
On November 24, 2021, the Group entered into secured loans with Investissement Québec to finance its 2021
and 2022 refundable tax credits to a maximum of the lesser of 90% of the eligible refundable tax credit or
$4.7 million and $5.8 million, for 2021 and 2022, respectively. The secured loans bear interest at the Canadian
prime rate plus 1.00% and are secured by a first ranking hypothec on the universality of the financed refundable
tax credits and a subordinated ranking hypothec on accounts receivable and other receivables. The secured
loans are repayable on the earlier of the date of receipt of the refundable tax credits receivable and the maturity
dates of March 31, 2023 for the 2021 financed refundable tax credits, in the amount of $4.7 million and
March 31, 2024 for the 2022 financed refundable tax credits, in the amount of $3.9 million.
On September 28, 2021, the Group entered into a subordinated unsecured loan, with Investissement Québec,
in the amount of $10.0 million, bearing interest ranging between 6.00% and 7.25%, determined and payable
quarterly, based on threshold limits for certain financial ratios. Under the terms of the loan, the Group is required
to maintain certain financial covenants which are measured on a quarterly basis.
On January 28, 2022, the subordinated unsecured loan was amended and increased to $20.0 million, bearing
interest ranging between 7.10% and 8.35%, on the additional $10.0 million, determined and payable quarterly,
based on threshold limits for certain financial ratios. An amount of $7.5 million was drawn on the loan availability
with the remaining $2.5 million available based on certain conditions.The maturity date was also extended to
October 1, 2025.
The Group was in compliance with all of its financial covenants as at March 31, 2022 and 2021.
As a result of the COVID-19 pandemic, on May 5, 2020, five U.S. subsidiaries of the Group received funding
under the PPP of the CARES Act administered by the U.S. Small Business Administration ("SBA") and entered
into unsecured promissory notes (the "Notes") in the aggregate principal amount of US$6.3 million
($7.9 million). The Notes have a term of five years at an interest rate of 1.00% per annum, with a deferral of
payments until the date on which the applicable forgiveness is decisioned, with respect to any portion of the
Notes which may not be forgiven.
Under the terms of the CARES Act, PPP loan recipients can apply for forgiveness for all or a portion of loans
granted under the PPP, which the Group applied for between November 17, 2020 and January 5, 2021. The
Group accounts for the forgiveness as government assistance with a corresponding reduction in the cost of the
related item. Such forgiveness is to be determined, subject to limitations and ongoing rule making by the SBA,
based on the necessity of the loan at the time of application and the timely use of loan proceeds for payroll
costs, including payments required to continue group health care benefits, and certain rent, utility, and mortgage
interest costs and the maintenance of employee and compensation levels. The PPP loans, even after notice of
forgiveness by the SBA, are subject to subsequent audit by the SBA, for a period of six years after receiving
such notice.
During the year ended March 31, 2022, the Group recognized an aggregate amount of $5.9 million
(US$4.8 million), and $1.9 million (US$1.5 million) for the year ended March 31, 2021, as government
assistance for the PPP loans. The Group has received full loan forgiveness decisions for all five PPP loans
obtained in May 2020.
The CARES Act allows employers to defer the payments of the employer share of social security taxes during
the period beginning on March 27, 2020 and ending on the earlier of December 31, 2020 or the date the
Company receives a decision from the lender that the PPP loan is forgiven. The payment of the deferred social
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 27
security taxes was paid fifty percent on December 31, 2021, with the remaining amount due on
December 31, 2022.
Total long-term debt as at March 31, 2022 increased by $51.7 million, to $106.7, million from $55.0 million as at
March 31, 2021, due primarily to an increase of $35.6 million in drawings under the Credit Facility, the
$17.5 million subordinated unsecured loan and the $8.6 million secured loans for the financing of refundable tax
credits, partially offset by the recording of forgiveness of $6.0 million of the unsecured promissory notes under
the PPP and the payment of a $3.1 million balance of sale related to a previous acquisition. The increase in
total long-term debt was used to fund operations and the Vitalyst Acquisition, and resulted in a $10.8 million
increase in cash.
As at March 31, 2022, cash amounted to $17.7 million, restricted cash held in trust as required by contractual
obligations arising from business acquisitions was $3.3 million, and $66.6 million was drawn under the Credit
Facility and classified as long-term debt. In comparison, as at March 31, 2021, cash amounted to $6.9 million,
restricted cash held in trust as required by contractual obligations arising from business acquisitions was
$3.2 million, and $31.0 million was drawn under the Credit Facility and classified as current portion of long-term
debt.
The following table reconciles long-term debt to Net Bank Borrowing:
As at
(in $ thousands)
Current portion of long-term debt
Non-current portion of long-term debt
Total long-term debt
Less:
Balances of purchase payable
Subordinated unsecured loan
Secured loans
Unsecured promissory notes under the PPP
Deferral of employment tax payments under the CARES Act
Unamortized transaction costs
Cash
Restricted cash
Net Bank Borrowing (1)
March 31,
March 31,
2022
$
2021
$
19,316
87,360
106,676
13,028
17,500
8,596
—
1,521
(718)
17,655
3,254
60,836
45,840
35,134
19,817
54,951
15,519
—
—
6,034
2,361
(199)
6,903
3,233
33,851
21,100
(1) Non-IFRS measure. See section 5 titled “Non-IFRS and Other Financial Measures” for an explanation of the composition and usefulness
of this non-IFRS financial measure.
During the twelve months ended March 31, 2022, Alithya's Net Bank Borrowing increased primarily as a result
of the increased borrowing under the Credit Facility in order to fund the acquisitions of R3D and Vitalyst,
partially offset by the subordinated unsecured loan, the secured loans, and the increase in cash.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 28
10.7 Contractual Obligations
The following table summarizes the carrying amounts and the contractual maturities of both the interest and
principal portions of significant financial liabilities and contracted expenditures for operating commitments:
As at
(in $ thousands)
Accounts payable and accrued
liabilities
Credit Facility
Secured loans
Subordinated unsecured loans
Balances of purchase payable, non-
interest bearing
Other liabilities (included in long-term
debt)
Lease liabilities
Operating commitments
March 31, 2022
Carrying
amount
$
Total
$
Less than 1
year
1-2 years
2-5 years
More than 5
years
$
$
$
$
53,507
66,631
8,596
17,500
53,507
70,775
9,060
21,773
53,507
2,072
4,988
1,221
13,026
13,419
13,419
120
21,263
—
120
24,045
7,399
120
4,302
3,975
180,643
200,098
83,604
—
2,072
4,072
1,221
—
—
4,270
2,351
13,986
—
66,631
—
19,331
—
—
10,244
1,073
97,279
—
—
—
—
—
—
5,229
—
5,229
10.8
Off-Balance Sheet Arrangements
Alithya uses off-balance sheet financing for operating commitments for technology licenses and infrastructure,
as disclosed in the section above titled "Contractual Obligations". Other than as disclosed in the section above
and Note 13 of the consolidated financial statements, there have been no material changes with respect to off-
balance sheet arrangements since March 31, 2021 outside of Alithya’s ordinary course of business.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 29
11. Share Capital
In the context of the discussion on share capital, Alithya Group inc. will be referred to as “Alithya” or the
“Company”, and the Company and its subsidiaries will be referred to as the “Group”.
11.1
Issued
As at March 31, 2022, the issued share capital of the Company is as follows:
(in $ thousands)
Number of shares
$
Number of shares
$
Beginning balance as at April 1, 2021
51,373,822
193,552
7,321,616
3,985
Subordinate Voting Shares
Multiple Voting Shares
Shares issued pursuant to vesting of share-based
compensation granted on business acquisitions
Shares issued in consideration of the acquisition
of R3D
Shares issued under a private placement
834,324
25,182,676
8,143,322
2,935
80,585
24,686
Shares purchased for cancellation
(349,400)
(1,244)
—
—
—
Exercise of stock options
Conversion of shares
Settlement of DSUs
2,750
302,632
63,874
10
182
195
152,632
(302,632)
—
Ending balance as at March 31, 2022
85,554,000
300,901
7,171,616
—
—
—
518
(182)
—
4,321
During the year ended March 31, 2022, the following transactions occurred:
• As part of the Matricis Acquisition, 157,882 Subordinate Voting Shares, with a total value of $600,000,
reclassified from contributed surplus, were issued as settlement of the second anniversary share
consideration.
• As part of the Travercent Acquisition, 376,250 Subordinate Voting Shares, with a total value of US$975,000
($1,249,000), reclassified from contributed surplus, were issued as settlement of the second anniversary
share consideration rights.
• As part of the Askida Acquisition, 300,192 Subordinate Voting Shares, with a total value of $1,086,000,
reclassified from contributed surplus, were issued as settlement of the second anniversary share
consideration.
• As part of the R3D Acquisition, 25,182,676 Subordinate Voting Shares, with a total value of $80,585,000,
were issued.
• Through a private placement that closed on January 31, 2022, a total of 8,143,322 Subordinate Voting Shares
were issued at market price of $3,07 per share for cash consideration of $25,000,000, of which 6,514,658
Subordinate Voting Shares were issued to an entity controlled by a director and the balance of 1,628,664
were issued to Investissement Québec. The Company incurred share issue costs in the amount of $427,000,
net of deferred income tax of $113,000, for net cash proceeds of $24,686,000.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 30
• The purchase for cancellation of 349,400 Subordinate Voting Shares under the Company's normal course
issuer bid for a total cash consideration of $1,160,000 and a carrying value of $1,244,000. The excess of the
carrying value over the purchase price in the amount of $84,000 was credited to retained earnings.
• 155,382 stock options were exercised and 2,750 Subordinate Voting Shares and 152,632 Multiple Voting
Shares were issued with a value of $528,000, for cash consideration of $299,000, with $229,000 reclassified
from contributed surplus.
• 302,632 Multiple Voting Shares with a carrying value of $182,000 were converted into 302,632 Subordinate
Voting Share by two directors of the Company;
• 63,874 DSUs were settled and 63,874 Subordinate Voting Shares were issued with a value of $195,000,
reclassified from contributed surplus.
As at March 31, 2021, the issued share capital of the Company is as follows:
(in $ thousands)
Number of shares
$
Number of shares
$
Beginning balance as at April 1, 2020
50,904,533
191,820
7,168,984
Subordinate Voting Shares
Multiple Voting Shares
Shares issued pursuant to vesting of share-based
compensation granted on business acquisitions
Exercise of stock options
Settlement of DSUs
458,071
3,500
7,718
1,686
14
32
—
152,632
—
Ending balance as at March 31, 2021
51,373,822
193,552
7,321,616
3,515
—
470
—
3,985
During the year ended March 31, 2021, the following transactions occurred:
• As part of the Matricis Acquisition, 157,882 Subordinate Voting Shares, with a total value of $600,000,
reclassified from contributed surplus, were issued as settlement of the first anniversary share consideration;
• As part of the Travercent Acquisition, the Company elected not to convert the first anniversary share
consideration rights into Subordinate Voting Shares but rather to settle for total cash consideration of
US$975,000 ($1,276,000). This resulted in a repurchase of a vested equity instrument, which has been
recorded as a reduction of retained earnings and contributed surplus in the amounts of $72,000 and
$1,204,000, respectively. The Company continued to account for the December 13, 2021 and 2022
anniversary share consideration rights as equity instruments;
• As part of the Askida Acquisition, 300,189 Subordinate Voting Shares, with a total value of $1,086,000,
reclassified from contributed surplus, were issued as settlement of the first anniversary share consideration;
• 156,132 stock options were exercised and 3,500 Subordinate Voting Shares and 152,632 Multiple Voting
Shares were issued with a value of $484,000, for cash consideration of $300,000, with $184,000 reclassified
from contributed surplus; and
• 7,718 DSUs were settled and 7,718 Subordinate Voting Shares were issued with an approximate value of
$32,000, reclassified from contributed surplus.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 31
11.2
Normal Course Issuer Bid
On September 14, 2021, the Company’s Board of Directors authorized and subsequently the TSX approved the
implementation of a NCIB. Under the NCIB, the Company is allowed to purchase for cancellation up to
5,462,572 Subordinate Voting Shares, representing 10% of the Company’s public float as of the close of
markets on September 8, 2021. Shareholders may obtain a copy of the notice of NCIB approved by the TSX,
free of charge, by contacting the Company.
the NCIB commenced on September 20, 2021 and will end on
Purchases under
the earlier of
September 19, 2022 and the date on which the Company will have acquired the maximum number of
Subordinate Voting Shares allowable under the NCIB or will otherwise have decided not to make any further
purchases. All purchases of Subordinate Voting Shares are made by means of open market transactions at their
market price at the time of acquisition. Concurrently, the Company entered into an automatic share purchase
plan (“ASPP”) with a designated broker in connection with its NCIB. The ASPP allows for the designated broker,
to purchase for cancellation Subordinate Voting Shares, on behalf of the Company, subject to certain trading
parameters established, from time to time, by the Company.
11.3
Stock Options
The following table presents information concerning stock option activity for the respective years:
Year ended
March 31, 2022
March 31, 2021
Beginning balance as at April 1
Granted
Forfeited
Expired
Exercised
Ending balance as at March 31
Exercisable at year end
Number of stock
options
Weighted average
exercise price
Number of stock
options
Weighted average
exercise price
$
$
3,525,181
1,073,302
(192,167)
(166,852)
(155,382)
4,084,082
1,527,805
3.37
3.23
3.57
6.13
1.92
3.23
3.31
3,172,289
755,000
(130,163)
(115,813)
(156,132)
3,525,181
1,580,444
3.72
2.26
4.93
5.93
1.92
3.37
3.44
Included in the 1,527,805 and 1,580,444 stock options exercisable as at March 31, 2022 and 2021, respectively,
657,896 and 810,528 stock options are available to purchase Multiple Voting Shares as at March 31, 2022 and
2021, respectively.
On June 14, 2021, Alithya issued 774,202 and 299,100 stock options, to purchase a total of 1,073,302
Subordinate Voting Shares, at a grant date fair value of $3.23 and US$2.66, respectively. On June 23, 2020,
Alithya issued 570,000 and 185,000 stock options, to purchase a total of 755,000 Subordinate Voting Shares at
an exercise price of $2.26 and US$1.67, respectively.
During the year ended March 31, 2022, the weighted average share price at the date of exercise of stock
options was $3.40. (2021 - $3.10).
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 32
11.4
Deferred Share Units
The following table presents information concerning DSU activity for the respective years:
Year ended
Beginning balance as at April 1
Granted to non-employee directors
Settled
Ending balance as at March 31
March 31,
2022
2021
330,246
173,149
(63,874)
439,521
140,885
197,079
(7,718)
330,246
The DSUs issued by the Company were fully vested at the grant date and the fair value of $576,000 (2021 -
$523,000) has been recorded in share-based compensation expense.
11.5
Restricted Share Units
On June 23, 2020, 181,498 RSUs, in aggregate, vesting one year from the date of grant, were granted to
employees of the Company subject to the terms set out in the award agreement at a fair value of $2.26, per
RSU, for an aggregate fair value of $410,000. Shares will be issued in settlement of the RSUs as soon as
practical following the third anniversary of the date of grant. As at March 31, 2022, those RSUs are fully vested.
Share-based compensation expense for the year ended March 31, 2022 amounted to $92,000 (2021 -
$314,000).
11.6
Performance Share Units
On June 14, 2021, 332,263 PSUs, in aggregate, vesting three years from the date of grant were granted at a
grant date fair value of $3.24, per PSU, for an aggregate fair value of $1,077,000 and will settle as soon as
practicable following the expiry of the vesting period, but not later than December 15, 2024. Share-based
compensation expense for the year ended March 31, 2022 amounted to $273,000 (2021 - nil).
12. Related Parties
Ultimate controlling party
As at March 31, 2022, the holders of Multiple Voting Shares, directly or indirectly, collectively owned or
exercised control over Subordinate Voting Shares and Multiple Voting Shares representing approximately
45.81% of the total voting rights of Alithya. The holders entered into a voting agreement on November 1, 2018,
pursuant to which they agreed to, among other things, vote all of the Subordinate Voting Shares and Multiple
Voting Shares under their control in accordance with decisions made by a majority of them, subject to certain
exceptions.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 33
Transactions with directors and key management personnel
Key management includes members of the Group’s Executive Committee. Certain key management of Alithya
participate in the share purchase plan and the stock options plan. The compensation paid or payable to
directors and to key management for services is shown below:
Year ended
(in $ thousands)
Director compensation, and key management salaries and benefits*
Share-based compensation
Termination benefits
* Salaries and benefits include short-term incentive compensation.
March 31,
2022
2021
4,312
1,325
317
5,954
4,427
1,273
—
5,700
In addition to the above amounts, the Group is committed to pay incremental benefits to certain members of key
management up to $5,122,000 (2021 - $5,450,000) in the event of change of control and/or termination without
cause.
Operating transactions with key management personnel
In the normal course of operations, the Group incurred the following transactions with an entity controlled by a
director. The transactions have been recorded at the contractual amount of the consideration established, which
represents market rates, as agreed by the related parties.
Year ended
(in $ thousands)
Revenues*
March 31,
2022
$
2021
$
21,100
—
* Under a ten-year commercial agreement, ending in April 2031, an entity controlled by a director has committed to minimum annual gross
margin, resulting from the procurement of consulting services, with annual surpluses and/or deficiencies thereof eligible to certain carryover
provisions. Should the minimum contracted amounts not be met, the entity will make compensating payments based on a formula as
defined in the commercial agreement. The commercial agreement may be extended to April 2034, however the minimum annual gross
margin requirements will not be applicable to the extension period.
As at
(in $ thousands)
Trade accounts receivable
March 31,
2022
$
2021
$
4,287
—
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 34
13. Subsequent Event
On June 1, 2022, the Company entered into a binding agreement to acquire all of the outstanding shares of the
US-based Datum Consulting Group, LLC and its affiliates (“Datum)”(“Datum Acquisition”). The closing of the
transaction is expected to take place on July 1, 2022 and is subject to customary conditions for a transaction of
this nature, including approval from the Toronto Stock Exchange.
The Datum Acquisition will be completed for total consideration of up to US$45.5 million ($57.5 million),
including the assumption of estimated IFRS 16 lease liabilities of US$0.5 million ($0.6 million), subject to
working capital and other adjustments. The consideration will consist of: (i) approximately US$13.7 million
($17.3 million) in cash; (ii) US$4.0 million ($5.1 million) payable by the issuance of 1,867,262 Subordinate
Voting Shares, (iii) deferred cash consideration of approximately US$10.3 million ($13.0 million) and deferred
share consideration of US$4.0 million ($5.1 million), both payable over three years and (iv) potential earn-out
consideration of up to US$13.0 million ($16.4 million), payable in cash (75%) and shares (25%), based on
annual gross profit increases, available over three years.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 35
14. Selected Annual Information
(in $ thousands)
Revenues
Net loss
Basic and diluted loss per share
Total assets
Non-current long-term debt and lease liabilities
For the years ended March 31,
2022
$
2021
$
2020
437,885
(15,548)
(0.18)
447,721
105,113
287,643
(17,338)
(0.30)
243,261
33,353
279,007
(39,667)
(0.70)
257,816
63,759
Revenues increased from March 31, 2021 to March 31, 2022 primarily due to the acquisitions of R3D and
Vitalyst, as well as organic growth in all areas, partially offset by the negative impact of foreign exchange
variations between the periods. Revenue growth from March 31, 2020 to March 31, 2021 was primarily due to
general organic growth and additional months of revenue from the acquisitions of Matricis Informatique Inc. and
the Askida group of companies.
Net loss and basic and diluted loss per share decreased from March 31, 2021 to March 31, 2022 primarily due
to the increased gross margin, partially offset by increased selling, general and administrative expenses,
increased business acquisition, integration and reorganization costs related to the acquisitions of R3D and
Vitalyst, and decreased income tax recovery. Net loss and basic and diluted loss per share decreased from
March 31, 2020 to March 31, 2021 primarily due to a significant impairment loss of $28.0 million recorded in the
year ended March 31, 2020, decreased business acquisition and integration costs in fiscal 2021, and the gain
on recovery of note receivable, partially offset by increased selling, general, and administrative expenses and
decreased income tax recovery.
The increase in total assets from March 31, 2021 to March 31, 2022 was due primarily to the acquisitions of
R3D and Vitalyst, which resulted in increased trade accounts receivable and unbilled revenues and the
recognition of intangible assets and goodwill. The decrease in total assets from March 31, 2020 to
March 31, 2021 related primarily to the amortization of intangible assets that occurred during the year ended
March 31, 2021.
Non-current long-term debt and lease liabilities increased from March 31, 2021 to March 31, 2022 primarily due
to the increase in long-term debt, as described in section 10.6, and lease liabilities recognized on the
acquisitions of R3D and Vitalyst. The decrease in non-current long-term debt and lease liabilities from
March 31, 2020 to March 31, 2021 was primarily due to the reclassification of the Credit Facility to current
portion of long-term debt, which, as at March 31, 2022, has been reclassified back to long-term.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 36
15. Eight Quarter Summary
(in $ thousands, except for per
share data)
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
2020
2020
2020
2021
2021
2021
2021
2022
For the three months ended
Revenues
Cost of revenues
Gross margin
Operating expenses
Selling, general and
administrative expenses
Business acquisition, integration
and reorganization costs
Depreciation
Amortization of intangibles
Foreign exchange loss (gain)
70,711
68,355
70,606
77,971
102,921
105,277
109,713
119,974
50,308
49,623
50,178
54,517
74,581
76,804
81,456
88,891
20,403
18,732
20,428
23,454
28,340
28,473
28,257
31,083
28.9 %
27.4 %
28.9 %
30.1 %
27.5 %
27.0 %
25.8 %
25.9 %
19,416
20,146
20,421
21,740
22,747
24,885
25,002
26,204
913
882
3,654
8
190
927
2,892
344
500
900
2,703
47
718
1,058
2,490
74
3,943
1,553
3,380
68
689
1,247
3,450
857
1,400
3,438
6,128
1,235
4,017
(42)
(27)
(25)
24,873
24,499
24,571
26,080
31,691
30,229
30,670
37,559
Operating loss
(4,470)
(5,767)
(4,143)
(2,626)
(3,351)
(1,756)
(2,413)
(6,476)
728
827
870
849
949
1,075
1,203
1,352
—
(660)
—
—
Loss before income taxes
(5,198)
(5,934)
(5,013)
(3,475)
Income tax recovery
(669)
(443)
(220)
(950)
Net loss
(4,529)
(5,491)
(4,793)
(2,525)
Basic and diluted loss per share
(0.08)
(0.09)
(0.08)
(0.04)
—
(4,300)
(2,268)
(2,032)
(0.02)
—
—
—
(2,831)
(3,616)
(7,828)
(54)
(130)
(575)
(2,777)
(3,486)
(7,253)
(0.03)
(0.04)
(0.08)
Net financial expenses
Gain on recovery of note
receivable
Quarterly variances in Alithya's results are due primarily to seasonality. The revenues generated by Alithya's
consultants are impacted by the number of working days in a particular quarter, which can vary as a result of
vacations and other paid time off and statutory holidays. Similarly, customer information technology investment
cycles are also affected by the seasonality of their own operations. Finally, quarterly variations can be attributed
to the timing of acquisitions.
Over the eight-quarter period, revenues have increased mainly due to business acquisitions, and organic
growth in most areas of the Company’s business. Fluctuations in gross margin over the previous eight quarters
can be attributed to a steady migration towards higher value-added services, offset by the negative impacts of
the COVID-19 pandemic and the R3D Acquisition. Selling, general and administrative expenses have increased
mainly from business acquisitions, net of possible synergies, and additional costs associated with carrying out
the strategic business plan and increased recruiting in order to grow revenues. As a percentage of consolidated
revenues, total selling, general and administrative expenses have trended downward over the period. Other
expenses, such as business acquisition, integration and reorganization costs and depreciation and amortization
of intangibles, have also varied as a result of business acquisitions.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 37
16. Critical Accounting Estimates
The preparation of Alithya’s consolidated financial statements in conformity with IFRS requires management to
make judgments, estimates and assumptions that affect the application of accounting policies and the amounts
reported as assets, liabilities, income and expenses in the consolidated financial statements. Actual results
could differ from those estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which they occur and in any future periods affected. Alithya's significant
accounting policies are fully described in Note 2 of Alithya's annual audited consolidated financial statements.
Assessment of COVID-19 impact
As a result of measures enacted during fiscal 2022 and 2021 to combat the COVID-19 pandemic, increased
uncertainty surrounding global economic conditions and business impacts have occurred. The Group has
reviewed its estimates, judgments and assumptions used in the preparation of its consolidated financial
statements, including the determination of whether indicators of impairment exist for its tangible and intangible
assets, including goodwill, estimated losses on revenue from fixed-fee arrangement contracts, the credit risk of
its counterparties, and the estimates and judgments used for the measurement of its deferred tax assets.
The potential impacts of the surrounding global economic uncertainties on the Group’s operations and financial
conditions and on overall customer demand, may require revisions in future periods to estimates and
assumptions. Although management expects COVID-19 related disruptions to continue beyond fiscal 2022, it
believes that the Group’s long-term estimates and assumptions do not require further revisions, however
management continues to monitor and evaluate the situation and its impact on the Group’s business.
The following are critical judgements required in applying accounting policies that have the most significant
effect on the amounts recognized in the consolidated financial statements:
Determination of cash generating units ("CGUs") – the identification of CGUs and grouping of assets into the
respective CGUs is based on currently available information about actual utilization experience and expected
future business plans. Management has taken into consideration various factors in identifying its CGUs. These
factors include how the Group manages and monitors its operations, the nature of each CGU’s operations, and
the major customer markets they serve. As such, the Group has identified its CGUs for purposes of testing the
recoverability and impairment of non-financial assets to be: Canada, France, EPM US and ERP US.
Determination of the aggregation of operating segments – the Group uses judgment in the aggregation of
operating segments for financial reporting and disclosure purposes. The Group has examined its activities and
has determined that it has one single reportable segment due to similar economic characteristics including the
nature of services provided to its customers, types of customers comprising its customer base and the
regulatory environment in which the Group operates.
Grants, loans and tax credits – the Group is eligible for government assistance programs, in different
jurisdictions, which are recorded as a reduction in the cost of the related item when there is reasonable
assurance that the assistance will be received and that the Group will comply with all relevant conditions. The
Group interprets the regulations related to these programs, determines if the operations of the Group qualify
and identifies and quantifies eligible expenses. These claims are subject to examination and audit by local
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 38
authorities, who may disagree with interpretations made by the Group. These interpretations are used to
determine the amounts to be received or forgiven under the programs and are subject to examinations and
audits which could reach conclusions that are materially different from amounts recorded by the Group.
The following are assumptions and estimation uncertainties with a significant risk of resulting in material
adjustments within the next year:
Revenue recognition of fixed-fee arrangements – the Group recognizes revenues from fixed-fee arrangements
which can extend over more than one reporting period. Revenue from these fixed-fee arrangements is
recognized over time based on a measure of progress using the Group’s best estimate of the total expected
labour costs or total expected labour hours, and the related risks associated with completing the projects. In
addition, the determination of anticipated costs for completing a contract is based on estimates that can be
affected by a variety of factors, including the cost of materials and labour, as well as potential claims from
customers. As risks and uncertainties are different for each project, the sources of variations between
anticipated costs and actual costs incurred will also vary by project. The determination of estimates is based on
the Group's business practices as well as its historical experience, and is tightly linked to detailed project
management processes and controls. The information provided by the project managers combined with a
knowledgeable assessment of technical complexities and risks are used in estimating the percentage complete.
Impairment of long-lived assets – the Group’s impairment test for goodwill is based on internal estimates of the
value-in-use calculations and uses valuation models such as the discounted cash flow model. Key assumptions
on which the Group has based its determination of the individual CGUs’ value-in-use include discounted future
expected net operating cash flows, estimated long-term growth rates of net operating cash flows and after tax
value Weighted Average Cost of Capital (“WACC”). Changes in these estimates can have a material impact on
the recoverable amount calculations and ultimately the amount of any goodwill impairment recognized.
Business combinations – the Group accounts for business combinations using the acquisition method. The
consideration transferred and the acquiree’s identifiable assets, liabilities and contingent liabilities are measured
at their fair value. The Group develops the fair value by using appropriate valuation techniques which are
generally based on discounted future expected cash flows. These evaluations are linked closely to the
assumptions made by the Group and can consist of the future performance of the related assets, the discount
rate and the attrition rate. Contingent consideration is measured at fair value using a discounted cash flow
model.
Deferred tax assets – the Group exercises judgment in the assessment of the probability of future taxable
income, to estimate the extent to which deferred income tax assets can be realized. Estimates are based on the
Group’s most recent approved budget, which is adjusted for significant non-taxable income and expenses and
specific limits to the use of any unused tax loss or credit. The tax rules and tax planning strategies in the
numerous jurisdictions in which the Group operates are carefully taken into consideration. The Group uses
judgment to assess specific facts and circumstances to evaluate legal, economic or other uncertainties.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 39
17. New Standards and Interpretations Issued but Not Yet Effective
At the date of authorization of the consolidated financial statements, certain new standards, amendments and
interpretations, and improvements to existing standards have been published by the IASB but are not yet
effective and have not been adopted early by the Group. Management anticipates that all the relevant
pronouncements will be adopted in the first reporting period following the date of application. Information on
new standards, amendments and interpretations, and improvements to existing standards, which could
potentially impact the Group’s consolidated financial statements, are detailed as follows:
IAS 1 - Presentation of Financial Statements
On January 23, 2020, the IASB issued amendments to IAS 1 - Presentation of Financial Statements, to clarify
the classification of liabilities as current or non-current. In July 2020, the IASB issued final amendments to defer
the effective date to annual periods beginning on or after January 1, 2023. Early adoption is permitted. For the
purposes of non-current classification, the amendments removed the requirement for a right to defer settlement
or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must have substance
and exist at the end of the reporting period. The amendments also clarify how a company classifies a liability
that includes a counterparty conversion option. The amendments state that: settlement of a liability includes
transferring a company’s own equity instruments to the counterparty; and when classifying liabilities as current
or non-current, a company can ignore only those conversion options that are recognized as equity.
Management is currently assessing, but has not yet determined, the impact of this new standard on the Group’s
consolidated financial statements.
Amendments to IAS 1 and IFRS Practice Statement 2, Disclosure of Accounting Policy Information
In February 2021, the IASB issued amendments to IAS 1 - Presentation of Financial Statements and IFRS
Practice Statement 2 - Making Materiality Judgements. The amendments help entities provide accounting policy
disclosures that are more useful to primary users of financial statements by:
• Replacing the requirement to disclose “significant” accounting policies under IAS 1 with a requirement to
disclose “material” accounting policies. Under this, an accounting policy would be material if, when considered
together with other information included in an entity’s financial statements, it can reasonably be expected to
influence decisions that primary users of general purpose financial statements make on the basis of those
financial statements.
• Providing guidance in IFRS Practice Statement 2 to explain and demonstrate the application of the four-step
materiality process to accounting policy disclosures.
The amendments shall be applied prospectively. The amendments to IAS 1 are effective for annual periods
beginning on or after January 1, 2023. Earlier application is permitted. Once an entity applies the amendments
to IAS 1, it is also permitted to apply the amendments to IFRS Practice Statement 2. Management is currently
evaluating the impact of the amendment on its consolidated financial statements.
Amendments to IAS 8, Definition of Accounting Estimates
In February 2021, the IASB amended IAS 8 - Accounting Policies, Changes in Accounting Estimates and Errors
to introduce a new definition of “accounting estimates” to replace the definition of “change in accounting
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 40
estimates” and also include clarifications intended to help entities distinguish changes in accounting policies
from changes in accounting estimates. This distinction is important because changes in accounting policies
must be applied retrospectively while changes in accounting estimates are accounted for prospectively. The
amendments are effective for annual periods beginning on or after January 1, 2023. Earlier application is
permitted. Management is currently evaluating the impact of the amendment on its consolidated financial
statements.
Amendments to IAS 37 - Onerous Contracts, Cost of Fulfilling a Contract
On May 14, 2020, the IASB published Onerous Contracts – Cost of Fulfilling a Contract (Amendments to
IAS 37), which specifies which costs a company includes when assessing whether a contract will be loss-
making. The amendments are effective for annual periods beginning on or after January 1, 2022 and applicable
to contracts existing at the date when the amendments are first applied. At the date of the initial application, the
cumulative effect of applying the amendments is recognized as an opening balance adjustment to retained
earnings or other components of equity as appropriate. The comparatives are not restated. The Group is
currently applying the incremental cost method approach in calculating the costs of fulfilling a contract, however,
application of the full cost approach is not expected to have a material impact on the financial statements.
Amendments to IAS 12 - Income Taxes
On May 7, 2021, the IASB issued amendments to IAS 12 - Income Taxes to narrow the scope of the initial
recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary
differences. As a result, companies will be required to recognize a deferred tax asset and a deferred tax liability
for temporary differences arising on initial recognition of a lease and a decommissioning provision. The
amendments apply for annual reporting periods beginning on or after January 1, 2023. Earlier application is
permitted. Management is currently evaluating the impact of this standard on its consolidated financial
statements.
Certain other new standards and interpretations have been issued but are not expected to have a material
impact on the Group’s consolidated financial statements.
18. Risks and Uncertainties
18.1
Risks Related to the Market
18.1.1 Economic risks and political uncertainty
Alithya’s results of operations are affected by the level of business activity of its customers, which in turn is
affected by the level of economic activity in the industries and markets that they serve as well as political
uncertainty, including armed conflict, labour or social unrest, inflation, recession, climate change, and diseases
or health emergencies. Economic conditions and political uncertainty could cause some customers to reduce or
defer their expenditures for digital technology consulting services and a significant prolonged decline in the level
of business activity of Alithya’s customers could have a material adverse effect on its revenues and profit
margin. Alithya has implemented and will continue to implement cost-savings initiatives to manage its expenses
as a percentage of revenues.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 41
Although the Company has no operations in the Ukraine, the current armed conflict in the Ukraine could affect
its clients and therefore indirectly affect Alithya. Similarly, while Alithya’s international operations were limited as
at March 31, 2022, as the Company continues to expand its operations in North America and internationally,
through acquisitions among others, the level of economic activity in such other jurisdictions, in which it may
expand and develop more business with time, and the political uncertainty that could affect such jurisdictions
could have a more significant footprint on Alithya’s operations and business, financial condition and results of
operations.
18.1.2 COVID-19 pandemic
The COVID-19 pandemic resulted in governments and businesses worldwide adopting and maintaining
emergency measures and restrictions to combat the spread of the coronavirus, and continued to impact to a
certain extent the markets in which Alithya operates throughout Alithya’s fiscal year ended March 31, 2022. The
COVID-19 pandemic and the measures taken in response to it since 2020, including travel bans and
restrictions, border closures, self-imposed quarantine or isolation periods, mandated business closures, vaccine
mandates or passports, social distancing, testing requirements, stay-at-home and work-from-home, curfews and
social distancing measures, as well as unprecedented uncertainty in the global economy, imposed significant
pressure on businesses in general and had and may continue to have an adverse impact on the global
economy in the short and long term, especially if these were to reoccur, which poses the risk that Alithya’s
customers, contractors and partners may still, temporarily or permanently, be prevented from conducting
business as they historically had or previously or currently expect to, which could in turn have an adverse
impact on Alithya’s business and results of operations, even if at the present time the situation appears to have
improved. Since 2020, the COVID-19 outbreak had impacts on Alithya’s business, with disruptions to its
operations including temporary office closures, reduced activity and certain pricing adjustments with a limited
number of clients, slower procurement decisions in some cases, and possible changes to customers’ spending
and investment priorities. The gradual easing of certain emergency measures and restrictions allowed many
businesses to resume some level of, or increase, commercial activities, resulting in a sequential improvement in
our financial performance. However, there is no assurance that there will be no resurgences of new COVID-19
cases and new variants and related strengthening or reintroduction of emergency measures and restrictions, or
a more prolonged duration of the COVID-19 pandemic, and which may result in: (i) reduced customer demand
for Alithya’s services and solutions; (ii) customer pressure on pricing and payment terms; (iii) difficulty in invoice
collection; (iv) demands from customers to change or terminate existing contracts or work orders; (v) the non-
renewal of expiring customer contracts; (vi) reduction in budgets for government programs that may be used by
Alithya to support its research and growth; (vii) delays and disruptions in services from Alithya’s third party
service providers; and (viii) devotion of substantial amount of management time and resources and increased
operating costs to mitigate the impact of the pandemic. Also, while Alithya could experience an increase in
demand for digital technologies and services in certain industry segments caused by the COVID-19 pandemic,
which could benefit Alithya, there is no assurance that Alithya will be able to respond to such demand while
providing services remotely or observing government recommendations.
Since the beginning of the COVID-19 pandemic, the Company has taken and continues to take measures to
protect the health and safety of its employees, work with its customers to minimize potential disruptions and
address the challenges and opportunities posed by this global pandemic. The Company and its employees who
had transitioned to working remotely at the beginning of the COVID-19 pandemic, relatively seamlessly,
allowing us to continue supporting our customers without material disruption are now gradually starting to adopt
a hybrid work program, allowing them the flexibility to benefit from both remote and on-premises working
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 42
environments. The Company had also implemented several measures to protect its financial position and
preserve liquidity, and strict cost containment measures including temporary management salary reductions,
and reduced work weeks and temporary layoffs for a limited number of employees, all of which have returned to
normal as of today. To ensure business continuity and retain existing highly trained and experienced technical
consultants on which Alithya’s success depends in large part, certain subsidiaries of the Company also
benefited from governmental financial assistance programs in Canada, the US and France. Certain subsidiaries
received fundings and loans, including PPP loans in the US of which the Company received forgiveness during
the years ended March 31, 2021 and 2022. While Alithya successfully benefitted from such fundings and loans,
should the COVID-19 pandemic and the global economy worsen, there is no assurance that governments would
put in place similar programs nor that the Company would qualify and be able to successfully benefit from them.
As governments and businesses worldwide are optimistically seeing a potential chance of emerging out of the
COVID-19 pandemic and try to get back to a new normal, the Company continues to monitor the issues raised
by the COVID-19 pandemic, and may take further actions that alter its business operations as may be required
or that it determines are in the best interests of its employees, clients, partners and shareholders, and the
Company cannot predict the potential effects any such alterations or modifications may have on its business,
including the impact on its financial results. The extent to which the COVID-19 pandemic may further adversely
impact Alithya’s business and results of operations depends on numerous evolving factors that are highly
uncertain, difficult to predict and outside of Alithya’s control, including: (i) the continued duration and scope of
the pandemic; (ii) actions taken by governments and other parties in response to the pandemic; (iii) the
availability and effective distribution of approved vaccines and treatments, and the potential development and
distribution of new vaccines and treatments; (iv) the impact of the pandemic on the level of general economic
activity; (v) the effect of the pandemic on Alithya’s customers and customer demand for its services and
solutions; (vi) the ability of Alithya’s customers to pay for its services and solutions on time or at all; (vii) Alithya’s
ability to sell and provide its services and solutions to existing and prospective clients; and (viii) new information
which may emerge concerning the COVID-19 pandemic and the actions required to contain the coronavirus or
remedy its impacts. Also, although Alithya has a business continuity plan in the event the health of any of its key
employees would become at risk as a result of contracting COVID-19, there is no assurance that the
implementation of such business continuity plan would be successful. While Alithya closely monitors the
COVID-19 pandemic situation as this unprecedented pandemic continues to evolve and as long as measures
adopted in response to the COVID-19 pandemic remain in place or are reintroduced, and potentially upon and
after their gradual or complete removal, it could affect Alithya’s business and results of operations in a manner
that is not presently known or in a manner that Alithya does not currently consider will present significant risks to
its operations. At the present time, no person, entity or expert can accurately predict the duration or scope of the
pandemic or emergence or resurgence of the pandemic and, although some impacts have materialized, it
remains challenging for the Company to accurately estimate or quantify the full scope and magnitude of the
pandemic’s impacts and consequences on the Company, its business, financial condition and prospects.
Furthermore, the trading price for Alithya’s Subordinate Voting Shares and the securities of other companies in
the industry has been volatile as a result of the COVID-19 pandemic, inflation, a recession, a slowdown or other
sustained adverse market event resulting from the COVID-19 pandemic could materially and adversely affect
the financial markets, the value of Alithya’s Subordinate Voting Shares and Alithya’s ability to obtain equity or
debt financing on favorable or acceptable terms or at all.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 43
18.2
Risks Related to Alithya's Industry
18.2.1 Competition in the digital technology consulting services market
Competition in the digital technology consulting services market is intense and Alithya may lose projects to, or
face pricing pressure from, its competitors or prospective customers’ internal IT departments. The market for
digital technology consulting services providers is highly competitive. In many cases, Alithya competes for
specialty digital technology consulting services work with in-house technical staff, and other international digital
technology consulting firms. In addition, there are many small, boutique digital technology consulting firms that
have developed services similar to those offered by Alithya. Alithya believes that competition will continue to be
strong and may increase in the future, especially if Alithya’s competitors continue to reduce their price for digital
technology consulting services. Any pricing pressure could have a material adverse impact on Alithya’s
revenues and margins and limit its ability to provide competitive services.
Alithya’s target market is rapidly evolving and is subject to continuous technological change. While Alithya
strives to remain competitive, Alithya’s competitors may be better positioned to address technological changes
or may react more favorably to these changes, which could have a material adverse effect on Alithya’s
business. Alithya competes on the basis of a number of factors, many of which may be beyond its control.
Existing or future competitors may develop or offer digital technology consulting services that provide significant
technological, creative, performance, price or other advantages over the services Alithya offers.
Some of Alithya’s competitors have longer operating histories and benefit from significantly greater financial,
technical, marketing and managerial resources than Alithya. There are relatively low barriers to entry in Alithya’s
business. Alithya currently has no patented technology that would preclude or inhibit competitors from entering
its digital technology consulting services market. Therefore, Alithya must rely on the skill of its personnel and the
quality of its customer service. In addition, as the costs to start a digital technology consulting services firm are
relatively low and the general use of professionals located offshore at lower costs continues to increase, Alithya
expects that it will continue to face additional competition from new entrants into the market in the future,
offshore providers and larger integrators and it is subject to the risk that its employees may leave and start
competing businesses. Any one or more of these factors could have a material adverse impact on Alithya’s
business, financial condition and results of operations.
18.2.2 Reliance on highly-trained and experienced personnel
Alithya’s success depends in large part on its ability to attract new qualified employees and retain existing
highly-trained and experienced technical consultants, project management consultants, business analysts and
sales and marketing professionals of various experience levels. The markets that Alithya serves are highly
competitive and competition for skilled employees in the digital technology consulting industry is intense. During
the year ended March 31, 2022, the demand for qualified employees and inflation have significantly increased,
resulting in upward pressure on remuneration. While Alithya’s management believes its measures to attract and
retain qualified employees are competitive, if such measures prove to be insufficient and Alithya fails to attract
new employees or retain its existing employees, Alithya may be unable to complete existing projects or bid for
new projects of similar size, which could adversely affect its revenues. Even if Alithya is able to grow and
expand its employee base, the additional resources required to attract new employees and retain existing
employees may adversely affect its operating margins.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 44
18.2.3 Failure to enhance existing services and solutions and to develop new services and solutions
The markets for technology, digital and outsourcing services are characterized by rapid technological change,
evolving industry standards, changing customer preferences and new services and solutions introductions.
Alithya is currently in the midst of a shift towards increasing customer demand for digital technologies and
services. Alithya’s future success depends on its ability to develop digital and other services and solutions that
keep pace with changes in the markets in which it operates. Although Alithya strives at developing digital and
other new services and solutions addressing evolving technologies and client needs, there is no assurance that
it will be successful in developing any such services and solutions, that it will be able to do it in a timely or cost-
effective manner and that any such services and solutions it does develop will be successful once offered in the
marketplace. Alithya’s failure to address the demands of the rapidly evolving technological environment could
have a material adverse effect on its ability to retain and attract customers and on its competitive position, which
could in turn have a material adverse effect on its business, financial condition and results of operations.
18.2.4 Government sponsored programs
Alithya benefits from government sponsored programs designed to support research and development, labor
and economic growth. Government programs reflect government policies and depend on various political and
economic factors. There can be no assurance that such government programs will continue to be available to
Alithya in the future, or will not be reduced, amended or eliminated. Any future government program reduction,
elimination or other amendment to the government sponsored programs from which Alithya benefits could
increase operating or capital expenditures incurred by Alithya and have a material adverse effect on its net
earnings or cash flow.
18.2.5 Intellectual property rights
Our success depends in part on our ability to protect our proprietary methodologies, processes, know-how,
techniques, tools and other intellectual property that we use to provide our services. Alithya actively protects its
intellectual rights and maintains relevant intellectual property protection measures, which include the
registration, and application for the registration of, relevant intellectual property rights, including trademarks and
domain names. Alithya also holds licenses in a number of trademarks, copyrights, and other intellectual property
rights relating to its solutions and services, which vary in duration. Existing trade secret and copyright laws,
however, only afford Alithya limited protection. Third parties may directly or indirectly attempt to disclose, obtain
or use Alithya’s solutions or technologies. Others may also independently develop and obtain patents or
copyrights for technologies that are similar or superior to Alithya’s technologies and, should that happen, there
is no assurance that Alithya’s intellectual property protection measures would be sufficient to allow it to take
action against such third parties, nor successfully win any litigation undertaken to protect its intellectual property
rights. If Alithya is unsuccessful in any intellectual property litigation, it may be forced to do one or more of the
following: (i) cease selling or using technology that incorporates the challenged intellectual property; (ii) obtain a
license, which may not be available on reasonable terms or at all, to use the relevant technology; (iii) rebrand
Alithya’s services and solutions, which could result in a loss of brand recognition and could require Alithya to
devote additional resources to advertising and marketing its new brands; (iv) configure services to avoid
infringement; and (v) refund license fees or other payments that were previously received.
As Alithya develops software applications for specific customer engagements, issues relating to the ownership
of, and the rights to use of, software applications and frameworks could arise. Alithya relies on a combination of
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 45
copyright, trademark, unfair competition and trade secret laws, as well as intellectual property assignment and
confidentiality agreements and other methods to protect Alithya’s intellectual property rights. Protection of
intellectual property rights and confidentiality in some countries in which Alithya operates may not be as
effective as in Canada or other countries with more developed intellectual property protections. Also, Alithya
may have to pay economic damages in the event of lost disputes or to prevent litigation relating to intellectual
property rights, which could adversely affect its results of operations and financial condition. Further, Alithya
cannot provide assurance that competitors will not infringe Alithya’s intellectual property rights, or that Alithya
will have adequate resources to enforce its intellectual property rights. If Alithya does enforce its intellectual
property rights through litigation, Alithya may not be successful and the litigation may result in substantial costs
and diversion of resources and management attention.
18.2.6 Infringing on the intellectual property rights of others
When developing solutions and providing services for its customers, Alithya utilizes its own, and may also enter
into licensing agreements with third parties for the right to use patents, trademarks, copyrights, trade secrets
and other intellectual property rights. Alithya may also develop intellectual property rights on its own or together
with its customers when developing solutions and providing services for such customers. Although Alithya uses
reasonable efforts to ensure that no intellectual property rights of others are infringed, third parties or even
Alithya’s customers may assert claims against Alithya. In addition, certain agreements to which Alithya is a party
may contain indemnity clauses pursuant to which Alithya would be required to indemnify its clients against
liability and damages arising from third-party claims of intellectual property right infringement as part of its
service contracts with its customers and, in some instances, the amount of these indemnity claims may exceed
the revenues Alithya generates under the contracts or the coverage provided by Alithya’s insurance.
Any intellectual property claims or litigation against Alithya could incur substantial costs, consume the time and
energy of Alithya’s management, harm Alithya’s reputations, require Alithya to enter into additional licensing
arrangements or prevent Alithya from providing some solutions or services. Any limitation on Alithya’s ability to
sell or use solutions or services that utilize intellectual property rights that are the subject of a claim could cause
Alithya to lose revenues or incur additional expenses to modify its solutions and services for future projects.
18.2.7 Regulatory risks
Alithya’s operations require compliance with laws on many matters in different jurisdictions, including anti-
corruption, intellectual property, trade restrictions, immigration, taxation, antitrust, data privacy, labor relations,
environment and securities. Complying with these diverse requirements is a challenge and consumes significant
resources, especially as it relates to the laws of jurisdictions other than Canada and the U.S. Also, some of
these laws may impose conflicting requirements or restrictions on the movement of cash, currency fluctuation
and other assets and on the repatriation of Alithya’s earnings and thereby reduce its earnings. These legal
requirements may also expose Alithya to potential penalties for non-compliance and harm its reputation.
18.3
Risks Related to Alithya's Business
18.3.1 Changes in the nature of revenues
Any change in the mix of Alithya's arrangements with its customers could have an impact upon its periodic
operating performance, including gross margin. Alithya generates revenues principally through the provision of
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 46
consulting services in the areas of digital technology. These services are provided under arrangements with
varying pricing mechanisms. Alithya's revenues-generating customer contracts generally fall into one of the
following three categories: (i) time and materials arrangements for which revenues are recognized as the
services are rendered and which represent the majority of Alithya's revenues and which includes service-based
arrangements for which customers pay a recurring fee in exchange for a monthly service (typically support) for
which revenues are recognized over time using an hours-based input method, (ii) fixed-fee arrangements where
the outcome can be estimated reliably and for which revenues are recognized using the percentage-of-
completion method over the service periods and labor costs or labor hours are used to measure the progress
towards completion, and (iii) others, including resale of third-party off-the-shelf software and maintenance for
which revenues are recognized on a net basis and resale of Alithya-created software and maintenance for
which revenues are reported on a gross basis.
Alithya also sometimes enters into arrangements with multiple performance obligations, which typically include
software, post-contract support and consulting services and which require an allocation of the transaction price
to each performance obligation based on a relative standalone selling price basis, and Alithya also provides a
payrolling service to certain clients through which contractor candidates recruited and selected by clients are
hired by Alithya and then assigned to client projects. Alithya assumes all administrative responsibilities related to
these candidates and invoices the client for time and materials. The sale of payrolling services is recognized on
a net basis. As Alithya’s overall business volume increases, management intends to continue to gradually
phase-out this relatively low margin business.
18.3.2 Customer concentration
Alithya derives a significant portion of its revenues from its major customers and expects this to continue for the
foreseeable future. The increased breadth of Alithya’s services and solutions offerings has also resulted and
may continue to result in larger and more complex projects and contracts with these major customers. Retaining
these customers requires Alithya to foster close relationships with them and achieve a thorough understanding
of their operations and needs in order to continue to provide high-quality services. Alithya’s ability to maintain
such relationships depends on a number of factors, including the proficiency of its professionals and its
management personnel. There can be no assurance that each such customer will continue to be satisfied with
Alithya’s services and utilize Alithya on the same terms, or at all, in the future. Failure to maintain close
relationship with these customers could result in termination of customer contracts and potential liability for
significant penalties or damages, any of which could have a material adverse effect on Alithya’s business,
financial condition and results of operations.
18.3.3 Fluctuation of business and financial results
Alithya’s ability to maintain and increase its revenues is affected not only by its success in implementing its
strategy, but also by a number of other factors, which could cause Alithya’s financial results to fluctuate. These
factors include: (i) its ability to introduce and deliver new services and business solutions; (ii) its potential
exposure to a lengthened sales cycle; (iii) the cyclicality of the purchases of its technology services; and (iv) the
nature of its customer’s business (for example, if a customer encounters financial difficulty, it may be forced to
cancel, reduce or defer existing contracts with Alithya). These, and other factors, make it difficult to predict
financial results for any given period.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 47
18.3.4 Commitment of substantial resources for growth
Growing the Alithya business over the longer-term may require commitment of continued investment in the
operations of Alithya. Alithya’s future capital requirements will depend on many factors, including many of those
discussed above, such as: (i) the results of Alithya’s operations and the rate of its revenues growth; (ii) the
development of new service offerings; (iii) the successful integration of its acquisitions; (iv) hiring and retaining
key personnel; (v) maintaining customer relationships; and (vi) the identification of suitable future acquisition
opportunities.
Alithya’s funds may not be sufficient to fund these activities if opportunities arise, and Alithya may be unable to
expand its business if it does not have sufficient capital or cannot borrow or raise additional capital on attractive
terms.
18.3.5 Implementation of the strategy of growing through acquisitions
Alithya’s ability to grow through acquisitions requires that it identifies suitable acquisition targets and that it
correctly evaluates their potential as transactions that will meet Alithya’s financial and operational objectives.
There can be no assurance that Alithya will be able to identify suitable acquisition candidates and consummate
additional acquisitions that meet its economic thresholds, or that future acquisitions will be successfully
integrated into its operations and yield the tangible accretive value that had been expected. If Alithya is unable
to implement its strategy, it will likely be unable to maintain its historic or expected growth rates.
The successful integration of new operations arising from Alithya’s acquisition strategy requires that a
substantial amount of management time and attention be focused on integration activities and management
time that is devoted to integration activities may divert management’s normal operations focus on growing the
business organically with resulting pressure on the revenues and earnings from its existing operations. In
addition, Alithya may face complex and potentially time-consuming challenges in implementing its uniform
standards, controls, procedures and policies across new operations when harmonizing their activities with those
of its existing business units. Integration activities can result in unanticipated operational problems, expenses
and liabilities. If Alithya is not successful in executing its integration strategies in a timely and cost-effective
manner, it will have difficulty achieving its growth and profitability objectives. Additional risks and uncertainties
relating to acquisitions and other strategic transactions include: (i) difficulties in the assimilation and retention of
key employees and in maintaining relationships with present and potential customers, contractors and partners;
(ii) difficulties managing and integrating operations in geographically dispersed locations; (iii) the risk that the
targeted markets do not evolve as anticipated and that technologies acquired prove to be inferior to Alithya’s
expectations; (iv) difficulties in combining or managing different corporate cultures; (v) potential deficiencies in
internal controls at acquired companies; (vi) cybersecurity and compliance related issues; and (vii) exposure to
unanticipated liabilities of acquired companies.
In connection with acquisitions, Alithya may incur debt, issue equity securities, assume contingent liabilities or
have amortization expenses and write-downs of acquired assets, which could cause Alithya’s earnings to
decline.
Alithya’s growth depends on its ability to achieve its three-year strategic plan which focuses on increasing
through organic growth, but also through strategic acquisitions. If Alithya expands into new jurisdictions, it will
face risks associated with entering into such new markets in which it has limited or no experience. Such new
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 48
markets may also present additional complexity and Alithya may have limited or no brand recognition in such
markets. It could be costly to establish, develop and maintain international operations, as well as promoting
Alithya’s brand internationally. Furthermore, expanding into new jurisdictions, including where the main
language is not English or French, may require substantial expenditures and take considerable time and
attention, and there is no assurance that Alithya would be successful enough in these new markets to build on
its investments in a timely manner, or at all.
18.3.6 Dependence on certain key personnel
Alithya depends on certain key personnel, and the loss of their services may adversely affect Alithya’s business.
Alithya believes that its success depends on the continued employment of its senior management team and
other key personnel. This dependence is particularly important to Alithya’s business because personal
relationships are a critical element in obtaining and maintaining customer engagements. While management
and the Board has established and regularly review a succession plan for Alithya’s senior management team, if
one or more members of Alithya’s senior management team or other key personnel were unable or unwilling to
continue in their present positions, Alithya’s business could be adversely affected. Furthermore, other
companies seeking to develop in-house business capabilities may hire away some of Alithya’s key personnel.
18.3.7 History of losses
Alithya generated a net loss of $15.5 million and $17.3 million for the fiscal years ended March 31, 2022 and
2021, respectively. Alithya expects to continue to record significant depreciation and amortization expenses, and
to expend significant funds to increase its capability to win new contracts, expand and improve its existing
operations and make additional acquisitions. As it continues to grow, Alithya expects the aggregate amount of
these expenses will also continue to grow. Alithya’s efforts to grow its business may, however, be more costly
than expected and Alithya may not be able to increase its revenue enough to offset higher operating expenses.
Alithya may also incur significant losses in the future for a number of reasons, including as a result of
unforeseen expenses, difficulties, complications and delays, the other risks described herein and other unknown
events. The amount of future net losses, if any, will depend, in part, on the growth of Alithya’s future expenses
and its ability to generate revenue. Any future net losses of Alithya or its inability to maintain profitability and
positive cash flows from operating activities, among other things, may have an adverse effect on Alithya
shareholders’ equity and working capital.
18.3.8 Early termination risk
If Alithya fails to deliver its services in accordance with the terms and conditions of its contractual agreements or
as a result of other circumstances, which may be beyond Alithya’s or its customers’ control, some of its
customers could elect to terminate their contracts before their agreed expiry date, which would result in a
reduction of Alithya’s earnings and cash flow and may impact the value of its backlog of orders. Early contract
termination can result from the exercise of a legal right or when circumstances that are beyond Alithya’s or its
customers’ control prevent the contract from continuing. In cases of early termination, Alithya may not be able to
eliminate ongoing costs incurred to support the contract.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 49
18.3.9 Costs of services
In order to generate acceptable margins, Alithya’s pricing for services depends on its ability to accurately
estimate the costs and timing for completing projects, which can be based on a customer’s bid specification,
sometimes in advance of the final determination of the full scope and design of the contract. In addition, a
portion of Alithya’s project-oriented contracts are performed on a fixed-fee basis. Billing for fixed-fee
arrangements is carried out in accordance with the contractual terms agreed upon with Alithya’s customers, and
revenues are recognized based on the percentage of effort incurred to date in relation to the total estimated
efforts to be incurred over the duration of the respective contract. These estimates reflect Alithya’s best
judgment regarding the efficiencies of its methodologies and professionals as it plans to apply them to the
contracts in accordance with Alithya’s standards of contract management. Although fixed-fee arrangements
represent a minority of Alithya’s revenues, Alithya is increasingly contracting under a fixed-fee basis. If Alithya is
unsuccessful in accurately estimating the time or resources required to fulfill its obligations under a contract, or
if unexpected factors, including those outside of its control, arise, there may be an impact on costs or the
delivery schedule which could have a material adverse effect on Alithya’s expected net earnings.
18.3.10 Teaming agreements and subcontracts
Alithya derives revenues from contracts where it enters into teaming agreements with other providers. In some
teaming agreements, Alithya is the primary contractor, whereas in others, Alithya acts as a subcontractor. In
both cases, Alithya relies upon its relationships with other providers to generate business and expects to
continue to do so in the foreseeable future. Where Alithya acts as the primary contractor, if it fails to maintain its
relationships with other providers, Alithya may have difficulty attracting suitable participants in its teaming
agreements. Similarly, where it acts as subcontractor, if its relationships are impaired, other providers might
reduce the work they award to Alithya, award that work to Alithya’s competitors or choose to offer the services
directly to the customers in order to compete with Alithya’s business. In either case, if Alithya fails to maintain its
relationship with these providers or if its relationship with these providers is otherwise impaired, Alithya’s
business, prospects, financial condition and results of operations could be materially adversely affected.
18.3.11 Partners’ ability to deliver on their commitments
Increasingly large and complex contracts may require Alithya to rely upon third party subcontractors, including
software and hardware suppliers, to help Alithya fulfill its commitments. Under such circumstances, Alithya’s
success depends on the ability of third parties to perform their obligations within agreed upon budgets and time
frames. If Alithya’s partners fail to deliver, Alithya’s ability to complete ongoing contracts may be adversely
affected, which could have an unfavorable impact on its profitability. In addition, Alithya may not be able to
replace the functions provided by these third parties if their software components or solutions become obsolete,
defective or incompatible with future versions of Alithya’s solutions and services, or if they are not adequately
maintained or updated. Third-party suppliers of software or other intellectual property assets could also be
unwilling to permit Alithya to use or to continue to use their intellectual property and this could impede or disrupt
the use of their solutions or services by Alithya’s customers and Alithya.
18.3.12 Guarantee and indemnification risks
In the normal course of business, Alithya enters into agreements that may provide for indemnification and
guarantees to counterparties in transactions such as consulting services, business divestitures, lease
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 50
agreements and financial obligations. These indemnification undertakings and guarantees may require Alithya
to compensate counterparties for costs and losses incurred as a result of various events, including breaches of
representations and warranties, intellectual property right infringement, claims that may arise while providing
services or as a result of litigation that may be suffered by counterparties. If Alithya is required to compensate
counterparties due to such arrangements and its insurance does not provide adequate coverage, its business,
prospects, financial condition and results of operations could be materially adversely affected.
18.3.13 Insurance Limits
The Company maintains comprehensive insurance coverage for various aspects of its business and operations,
to provide indemnity for its losses and liabilities. The Company’s insurance programs are, however, subject to
varying coverage limits, retentions as well as exclusions that are customary or reasonable given the cost of
procuring insurance, and current operating conditions, and other relevant considerations. As a result, the
Company may be subject to future liability for which it is only partially insured, or completely uninsured. The
Company believes that its insurance programs address all material insurable risks and provides coverage that is
in accordance with what would be maintained by a prudent operator of a similar business (including in terms of
retentions, limits and exclusions). However, there can be no assurance that such insurance will continue to be
offered on economically feasible terms, that all events that could give rise to a loss or liability are or will be
insurable, or that the amounts of insurance will be sufficient to cover every loss or claim that may arise.
18.3.14 Utilization rates
In order to maintain and grow revenues levels, Alithya has to maintain an appropriate level of availability of
professional resources in each of its geographic regions by having a high utilization rate while still being able to
assign additional resources to new work.
Maintaining an efficient utilization rate, however, requires Alithya to forecast its need for professional resources
accurately and to manage recruitment activities, professional training programs, attrition rates and restructuring
activities appropriately. To the extent that it fails to do so, Alithya’s utilization rates may be reduced and thereby
adversely affect its revenues and profitability. In addition, Alithya may find that it does not have sufficient
resources to deploy against new business opportunities, in which case its ability to grow its revenues would
suffer.
18.3.15 Services for government departments and agencies
Changes in government spending policies or budget priorities could directly affect Alithya’s financial
performance. Among the factors that could harm Alithya’s government contracting business are: (i) the
curtailment of governments’ use of consulting and IT services firms; (ii) a significant decline in spending by
governments in general, or by specific departments or agencies in particular; (iii) the adoption of new legislation
and/or actions affecting companies that provide services to governments; (iv) delays by governments in the
payment of its invoices; and (v) general economic and political conditions.
These and other factors could cause government departments and agencies to reduce their purchases under
contracts, to exercise their right to terminate contracts, to issue temporary stop work orders, or not to exercise
options to renew contracts, any of which would cause Alithya to lose future revenues. Government spending
reductions or budget cutbacks at departments or agencies to which Alithya provides services or expects to
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 51
provide services could materially harm Alithya’s continued performance or limit the award of additional
contracts.
18.3.16 Tax obligations
In estimating its income tax payable, Alithya uses accounting principles to determine income tax positions that
are likely to be sustained by applicable tax authorities. However, there is no assurance that Alithya’s tax benefits
or tax liability will not materially differ from its estimates or expectations. The tax legislation, regulation and
interpretation that apply to Alithya’s operations are continually changing. In addition, future tax benefits and
liabilities are dependent on factors that are inherently uncertain and subject to change, including future
earnings, future tax rates, and anticipated business mix in the various jurisdictions in which Alithya operates.
Moreover, Alithya’s tax returns are continually subject to review by applicable tax authorities, which determine
the actual amounts of taxes payable or receivable, of any future tax benefits or liabilities and of income tax
expense that Alithya may ultimately recognize and such determinations may become final and binding on
Alithya.
Any of the aforementioned factors could have a material adverse effect on Alithya’s net income or cash flow by
affecting its operations and profitability, the availability of tax credits, the cost of the services it provides, and the
availability of deductions for operating losses as it develops its international service delivery capabilities.
18.3.17 Foreign exchange
Foreign exchange risk is the risk that the fair value of assets or liabilities, or future cash flows, will fluctuate
because of changes in foreign exchange rates. Alithya’s functional and reporting currency is the Canadian
dollar. As a significant portion of Alithya’s revenues, earnings and net assets is denominated in foreign
currencies, including in US dollars and Euros, fluctuations in exchange rates between the Canadian dollar and
such currencies could have an adverse effect on its financial condition and results of operations. This risk is
partially mitigated by a natural hedge in matching Alithya’s costs with revenues denominated in the same
currency.
Future events that may significantly increase or decrease the risk of future movement in the exchange rates for
these currencies cannot be predicted. Although Alithya does not currently have an exchange rate risk policy that
would materially affect its results of operations, it is still subject to foreign exchange risk.
18.3.18 Legal claims
During the ordinary course of conducting its business, Alithya may be threatened with or become subject to
legal proceedings initiated by third parties or Alithya’s customers. For instance, Alithya’s solutions may suffer
from defects that adversely affect their performance, may not meet its customers’ requirements or may fail to
perform in accordance with applicable service levels. Such problems could subject Alithya to legal liability.
Alithya uses reasonable efforts to include provisions in its contracts which are designed to limit its exposure to
legal claims relating to its services and the applications it develops and obtain liability insurance coverage.
However, Alithya may not always be able to include such provisions or obtain sufficient insurance coverage and,
where it is successful in doing so, they may not protect Alithya adequately or may not be enforceable under
some circumstances or under the laws of some jurisdictions. Defending lawsuits against Alithya could require
substantial amounts of management’s attention and incur significant attorney fees, damage awards and fines or
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 52
penalties for which Alithya may not be fully insured and which could harm its reputation and adversely affect its
business, financial condition and results of operations.
18.3.19 IT systems and infrastructure
To deliver its services and solutions to its customers, Alithya relies upon high speed networks, including, but not
limited to, satellite, fiber optic and land lines operated by third parties, to provide reliable communications
between its operating offices and other locations, other global delivery centers and the offices of its customers
and other collaborators worldwide. Any systems failure or outage or a significant disruption in such
communications or in Alithya’s IT systems and infrastructure could result in curtailed operations, a loss of
customers and reputational damage, which would have an adverse effect on Alithya’s business, financial
condition and results of operations.
18.3.20 Security and cybersecurity risks
In the current environment, there are numerous and evolving security risks, especially from cybersecurity
threats, including criminal hackers, ransomware, denial of service and other form of malicious attacks, computer
viruses, phishing, hacktivists, state sponsored organizations, industrial espionage, insider or employee
misconduct or negligence and human or technological error. Alithya’s business could be negatively impacted by
these physical and cybersecurity threats, which could affect its current contracts and future sales, financial
position and competitive position in the market or increase its costs and expenses. The current geopolitical
instability and tension have exacerbated these threats, which could lead to increased risk and frequency of
security and cybersecurity incidents. These security threats to Alithya include potential attacks not only on its
own solutions, services and systems, but also those of its customers, contractors, partners, suppliers and other
third parties. Alithya seeks to detect and investigate all security incidents and to prevent their occurrence or
recurrence by continuously investing in security infrastructure, data security and privacy controls, threat
protections, detection and mitigation policies, procedures and controls, and employee security awareness and
trainings. However, because of the ever evolving nature and sophistication of these security threats, Alithya may
be unable to detect or prevent all of these threats. Techniques used to obtain unauthorized access to, or to
sabotage, systems or networks, are constantly evolving and generally are not recognized until launched against
a target. Therefore, Alithya may be unable to anticipate these techniques, react in a timely manner, or
implement adequate preventive measures, and may face delays in the detection or remediation of, or other
responses to, security breaches and other security-related incidents. Additionally, with advances in computer
capabilities and data protection requirements to address ongoing threats, Alithya may be required to expend
significant capital and other resources to protect against potential security breaches or to alleviate problems
caused by security breaches. Any failure by Alithya to adequately maintain and enhance its systems and
networks could require Alithya to incur substantial remediation costs, including costs associated with repairing
its information systems, implementing further data protection measures, engaging third-party experts and
consultants, and increased insurance premiums. Alithya’s Chief Information Security Officer is responsible for
overseeing its security measures, the prevention of security incidents and the detection and investigation of
incidents in the event of the occurrence of threats by implementing security measures to ensure an appropriate
level of control based on the nature of the information and the inherent risks attached thereto. Alithya’s security
management framework provides a foundation for a risk-based approach to the development, review and
regular improvements of policies, processes, standards and controls related to information security, data
privacy, physical security and business continuity. In addition, while Alithya selects third-party suppliers carefully
and includes safeguards in its contractual terms, it does not control their actions. Any security breaches caused
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 53
by the negligence or misconduct of these third parties could adversely affect Alithya’s ability to safeguard its
information technology infrastructure and deliver solutions and services to its customers and otherwise conduct
business. Furthermore, while Alithya’s liability insurance policy covers cyber risks, there is no assurance that
such insurance coverage will be sufficient in type or amount to cover the costs, damages, liabilities or losses
that could result from security breaches, cyber-attacks and other related breaches, that insurance will continue
to be available to Alithya on economically reasonable terms, or at all, or that any insurer will not deny coverage
as to any future claim. The occurrence of any of these aforementioned security threats could expose Alithya, its
customers or other third parties to potential liability, litigation, and regulatory action, could materially
compromise or disrupt Alithya’s business operations, and could cause the loss of customer confidence, loss of
existing or potential customers, loss of sensitive government contracts, damage to brand and reputation and
other financial loss.
18.3.21 Risks from security breaches or disclosure of sensitive data or failure to comply with data
protection laws and regulations
Alithya is dependent on IT networks and systems to process, transmit, host and securely store electronic
information and to communicate among its locations around the world and with its customers, contractors and
partners. Security breaches, employee negligence or malfeasance or human or technological error could lead to
shutdowns or disruptions of Alithya’s operations and potential unauthorized disclosure of sensitive data, which
in turn could jeopardize projects that are critical to the operations of Alithya’s customers’ businesses. The theft
and/or unauthorized use or disclosure of Alithya’s or its customers’ and their customers’ confidential information
or other proprietary business information as a result of such an incident could adversely affect Alithya’s
competitive position and reduce marketplace acceptance of its services. Any failure in the networks or computer
systems used by Alithya or its customers could also result in a claim for substantial damages against Alithya
and significant reputational harm, and may cause Alithya’s current and prospective customers to lose
confidence in the effectiveness of our data security measures, regardless of Alithya’s responsibility for the
failure.
In addition, as a global service provider with customers in a broad range of industries, Alithya often has access
to or is required to collect, process and store personal data and sensitive data, subject to various regulatory
regimes, including but not limited to US (federal and state), or Canadian (federal and provincial) laws governing
the protection of personal information and the European Union’s General Data Protection Regulation (GDPR).
Alithya’s Privacy Officer oversees its compliance with the laws that protect the privacy of personal information. If
unauthorized access to or disclosure of personal information in Alithya’s possession or control occurs or it
otherwise fails to comply with applicable laws and regulations in this regard, Alithya could be exposed to civil or
criminal enforcement actions and penalties, as well as lawsuits brought by its customers, its customers’
customers, or third parties for breaching contractual confidentiality and security provisions or data protection
laws. Laws and expectations relating to data protections continue to evolve in ways that may limit Alithya’s
access, use and disclosure of sensitive data, and may require increased expenditures by Alithya or may dictate
that it no longer continues to offer certain types of services.
18.3.22 Reputational risks
Alithya’s reputation as a capable and trustworthy service provider and long-term business partner is key to its
ability to compete effectively in the market for IT services. The nature of Alithya’s operations exposes it to the
potential loss, unauthorized access to, or destruction of its customers’ information, as well as temporary service
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 54
interruptions. Depending on the nature of the information or services, such events may have a negative impact
on how Alithya is perceived in the marketplace. Under such circumstances, Alithya’s ability to obtain new
customers and retain existing customers could suffer with a resulting impact on its revenues and net earnings.
18.3.23 Operational, financial and other internal controls and systems
Alithya’s historic and anticipated growth places significant demands on its management and other resources,
and requires Alithya to continue to develop and improve its operational, financial and other internal controls. In
particular, Alithya’s growth has presented and will continue to present challenges with respect to: (i) recruiting,
training and retaining technical, finance, marketing and management personnel with the knowledge, skills and
experience that its business model requires; (ii) maintaining high levels of customer satisfaction; (iii) developing
and improving its internal administrative infrastructure, particularly its operational, financial and other internal
control systems; (iv) preserving its culture, values and entrepreneurial environment; and (v) effectively
managing its personnel and operations and effectively communicating to its personnel worldwide its core
values, strategies and goals.
In addition, the increasing size and scope of Alithya’s operations increases the possibility that a member of its
personnel will engage in unlawful or fraudulent activity, breach its contractual obligations, or otherwise expose
Alithya to unacceptable business risks, despite its efforts to train its personnel and maintain internal controls to
prevent such instances. If Alithya does not continue to develop and implement the right processes and tools to
manage its enterprise, its business, results of operations and financial condition could be adversely affected.
Due to the inherent limitations of internal controls including the circumvention or overriding of controls or fraud,
there can, however, only be reasonable assurance that Alithya’s internal controls will detect and prevent a
misstatement. If Alithya is unable to design, implement, monitor and maintain effective internal controls
throughout its different business environments, the efficiency of its operations might suffer, resulting in a decline
in revenues and profitability, and the accuracy of its financial reporting could be impaired.
18.3.24 Goodwill
Alithya recognizes an accounting value for goodwill and other intangible assets in connection with its
acquisitions. Under IFRS, goodwill must be assessed at least annually and potentially more frequently, in the
event the value of goodwill and other indefinite-lived intangible assets has been impaired. Amortizing intangible
assets will be assessed for impairment in the event of an impairment indicator. Any reduction or impairment of
the value of goodwill or other intangible assets will result in a charge against earnings, which could materially
adversely affect Alithya’s results of operations and shareholders’ equity in future periods.
18.4
Risks Related to Subordinate Voting Shares
18.4.1 Limited voting rights
Alithya’s Multiple Voting Shares are similar to its Subordinate Voting Shares except that each Multiple Voting
Share has ten times the voting rights of each Subordinate Voting Share. As a result, holders of Multiple Voting
Shares have a disproportionate level of control over matters submitted to Alithya shareholders for approval,
which may reduce the ability of holders of Subordinate Voting Shares to influence corporate matters and, as a
result, Alithya may take actions that they do not view as beneficial.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 55
18.4.2 Market price of Subordinate Voting Shares
Alithya cannot predict the price of Subordinate Voting Shares. The stock market may experience significant
price and volume fluctuations that are often unrelated or disproportionate to the operating performance of
companies. These broad market and industry factors, together with other economical circumstances, may
materially harm the market price of Alithya’s Subordinate Voting Shares, regardless of Alithya’s operating
performance. In addition, the price of Alithya’s Subordinate Voting Share may be dependent upon the valuations
and recommendations of the analysts who cover the Alithya business, and if Alithya’s results do not meet the
analysts’ forecasts and expectations, Alithya’s share price could decline as a result of analysts lowering their
valuations and recommendations or otherwise. In the past, following periods of volatility in the market, securities
class-action litigations have often been instituted against companies. Such litigations, if instituted against
Alithya, could result in substantial costs and diversion of management’s attention and resources.
18.4.3 Raising additional capital
Alithya’s future growth is contingent on the execution of its business strategy, which, in turn, is dependent on its
ability to grow the business organically as well as through acquisitions. In the event Alithya would need to fund
any currently unidentified or unplanned future acquisitions and other growth opportunities, Alithya may have to
raise additional capital through a combination of public and private equity offerings and debt financings and
there can be no assurance that such funding will be available in amounts and on terms acceptable to Alithya.
Alithya’s ability to raise the required funding depends on the capacity of the capital markets to meet Alithya’s
equity and/or debt financing needs in a timely fashion and on the basis of interest rates and/or share prices that
are reasonable in the context of Alithya’s commercial objectives. Increasing interest rates, volatility in Alithya’s
share price, and the capacity of Alithya’s current lenders to meet Alithya’s additional liquidity requirements are
all factors that may have a material adverse effect on any acquisitions or growth activities that Alithya may, in
the future, identify or plan. If Alithya is unable to obtain the necessary funding, it may be unable to achieve its
growth objectives.
To the extent that Alithya raises additional capital through the sale of equity or convertible debt securities, the
ownership interests of Alithya’s shareholders will be diluted, and the terms may include liquidation or other
preferences that could adversely affect the rights of Alithya’s shareholders. The incurrence of indebtedness
would result in increased fixed payment obligations and could involve certain restrictive covenants, such as
limitations on Alithya’s ability to incur additional debt and other operating restrictions that could adversely impact
its ability to conduct its business.
18.4.4 Active market
If an active market for Alithya’s Subordinate Voting Shares is not sustained, holders of Subordinate Voting
Shares may be unable to sell their investments on satisfactory terms. Declines in the value of Subordinate
Voting Shares may adversely affect the liquidity of the market for Subordinate Voting Shares. Factors unrelated
to Alithya’s performance may also have an effect on the price and liquidity of Subordinate Voting Shares
including the extent of analyst coverage of Alithya, lower trading volume and general market interest in
Subordinate Voting Shares, the size of Alithya’s public float and any event resulting in a delisting of Subordinate
Voting Shares from the TSX or NASDAQ.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 56
18.4.5 Dividends
Alithya does not expect to pay dividends in the immediate future and anticipates that it will retain all earnings, if
any, to support its operations. Any future determination as to the payment of dividends will, subject to Canadian
legal requirements and Alithya’s articles of incorporation, be at the sole discretion of Alithya’s Board and will
depend on Alithya’s financial condition, results of operations, capital requirements and other factors the Board
deems relevant. Holders of Subordinate Voting Shares must therefore rely on potential increases in the trading
price of their shares for returns on their investment in the foreseeable future.
19. Management’s Evaluation of Our Disclosure Controls and
Procedures
Disclosure Controls and Procedures
The Company has established and maintains disclosure controls and procedures designed to provide
reasonable assurance that the material information relating to the Company is made known to the Chief
Executive Officer and Chief Financial Officer by others, particularly during the period in which annual and
interim filings are prepared and that information required to be disclosed by the Company in its annual, interim
filings or other reports filed or submitted by the Company under Canadian and U.S. securities laws is recorded,
processed, summarized and reported within the time periods specified under those laws and the related rules.
The effectiveness of these disclosure controls and procedures, as defined under National Instrument 52-109 –
Issuers’ annual and interim filings (“NI 52-109”) adopted by Canadian securities regulators and in Rule
13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934, as amended, was evaluated under
the supervision of and with the participation of the Company’s Chief Executive Officer and Chief Financial
Officer as at the end of the Company’s most recently completed financial year ended March 31, 2022. Based on
such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s
disclosure controls and procedures were effective as at March 31, 2022.
Internal Control over Financial Reporting
The Company has also established and maintains adequate internal control over financial reporting, as defined
under NI 52-109 adopted by Canadian securities regulators and in Rule 13a-15(f) and 15d-15(f) under the U.S.
Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is a
process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer,
and effected by management and other key employees, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance
with IFRS as issued by the IASB. The effectiveness of the Company’s internal control over financial reporting
was evaluated under the supervision of and with the participation of the Company’s Chief Executive Officer and
Chief Financial Officer as at the end of the Company’s most recently completed financial year ended
March 31, 2022 based on the criteria established in Internal Control – Integrated Framework (2013) issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on such evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over
financial reporting was effective as at March 31, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 57
Changes in Internal Control over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the year ended
March 31, 2022, that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Auditor’s Report on Internal Control over Financial Reporting
This report does not include an attestation report on the effectiveness of the Company’s internal controls over
financial reporting from an independent registered public accounting firm as the Company is an emerging
growth company under the rules of the US Securities and Exchange Commission.
Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control over Financial
Reporting
The Company’s management recognizes that any disclosure controls and procedures and internal control over
financial reporting, no matter how well designed and operated, can provide only reasonable assurance of
achieving their objectives. Because of their inherent limitations, disclosure controls and procedures and internal
control over financial reporting may not prevent or detect all errors or misstatements on a timely basis.
Limitations on Scope of design of Disclosure Controls and Procedures and Internal Control over Financial
Reporting
The Company’s management has excluded from its assessment of the scope of the disclosure controls and
procedures and internal control over financial reporting the controls, policies and procedures of Vitalyst, which
was acquired on January 31, 2022, the operating results of which are included in the annual audited
consolidated financial statements of the Company for the year ended March 31, 2022. The scope limitation is in
accordance with NI 52-109 adopted by Canadian securities regulators and existing SEC guidance, which allow
an issuer to limit its design of internal controls over financial reporting and disclosure controls and procedures to
exclude the controls, policies and procedures of a company acquired not more than 365 days before the end of
the financial period to which the certificate relates.
Since the acquisition date, Vitalyst has contributed revenues of $5.0 million and generated a net loss of
$1.2 million. In addition, Vitalyst’s current assets and current liabilities represented approximately 7.4% and
9.0%, respectively, of consolidated current assets and current liabilities, and non-current assets, which exclude
intangible assets and goodwill from the acquisition, and non-current liabilities represented approximately 1.6%
and 2.6%, respectively, of consolidated non-current assets and non-current liabilities. The amounts recognized
for the assets acquired and liabilities assumed as at the date of the acquisition are described in Note 3 of the
annual audited consolidated financial statements of the Company for the year ended March 31, 2022 and
section 7 of this MD&A.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2022
| 58
SECTION 302 CERTIFICATION
I, Paul Raymond, certify that:
1.
I have reviewed this annual report on Form 40-F of Alithya Group inc.;
Exhibit 99.4
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the issuer as of, and for, the periods presented in this report;
4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the issuer, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the issuer’s internal control over financial reporting
that occurred during the period covered by the annual report that has materially affected, or
is reasonably likely to materially affect, the issuer’s internal control over financial
reporting; and
5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the issuer’s auditors and the audit committee of the
issuer’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the issuer’s
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the issuer’s internal control over financial reporting.
Date: June 17, 2022
/s/ Paul Raymond
Paul Raymond
President and Chief Executive Officer
SECTION 302 CERTIFICATION
I, Claude Thibault, certify that:
1.
I have reviewed this annual report on Form 40-F of Alithya Group inc.;
Exhibit 99.5
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the issuer as of, and for, the periods presented in this report;
4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information
relating to the issuer, including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented
in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the issuer’s internal control over financial reporting
that occurred during the period covered by the annual report that has materially affected, or
is reasonably likely to materially affect, the issuer’s internal control over financial
reporting; and
5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the issuer’s auditors and the audit committee of the
issuer’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the issuer’s
ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the issuer’s internal control over financial reporting.
Date: June 17, 2022
/s/ Claude Thibault
Claude Thibault
Chief Financial Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 99.6
In connection with the filing of the Annual Report on Form 40-F for the fiscal year ended March 31, 2022
(the “Report”) by Alithya Group inc. (the “Company”), the undersigned, as the Chief Executive Officer of
the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that, to his knowledge:
•
•
the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: June 17, 2022
/s/ Paul Raymond
Paul Raymond
President and Chief Executive
Officer
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 99.7
In connection with the filing of the Annual Report on Form 40-F for the fiscal year ended March 31, 2022
(the “Report”) by Alithya Group inc. (the “Company”), the undersigned, as the Chief Financial Officer of
the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002, that, to his knowledge:
•
•
the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934; and
the information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: June 17, 2022
/s/ Claude Thibault
Claude Thibault
Chief Financial Officer
Exhibit 99.8
KPMG LLP
Tour KPMG, Suite 1500
600 de Maisonneuve Blvd. West
Montréal (Québec) H3A 0A3
Tel. 514-840-2100
Fax 514-840-2187
www.kpmg.ca
CONSENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
We consent to the use of our report dated June 16, 2022 on the consolidated financial
statements of Alithya Group inc. (the “Entity”) which comprise the consolidated statements
of financial position as of March 31, 2022, the related consolidated statements of
operations and comprehensive loss, changes in equity and cash flows for the year ended
March 31, 2022, and the related notes, which report is included in the annual report on
Form 40-F of the Entity for the year ended March 31, 2022.
We also consent to the incorporation by reference of such report in the Registration
Statement (File No. 333-228487) on Form S-8 of the Entity.
June 17, 2022
Montréal, Canada
© 2022 KPMG LLP, an Ontario limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG
International Limited, a private English company limited by guarantee. All rights reserved.
Exhibit 99.9
Raymond Chabot
Grant Thornton LLP
Suite 2000
National Bank Tower
600 De La Gauchetière Street West
Montréal, Quebec
H3B 4L8
T 514-878-2691
Consent of Independent Registered
Public Accounting Firm
We have issued our report dated June 9, 2021, with respect to the consolidated financial
statements of Alithya Group inc. (the “Company”) for the year ended March 31, 2021,
included as an Exhibit to the Annual Report of the Company. on Form 40-F for the fiscal year
ended March 31, 2022.
We consent to the inclusion of said report in the Annual Report of Alithya Group inc. on Form
40-F for the fiscal year ended March 31, 2022.
We also consent to the incorporation by reference of said report in the Registration
Statement of Alithya Group inc. on Form S-8 (File No. 333-228487).
Montréal, Canada
June 17, 2022
Member of Grant Thornton International Ltd
rcgt.com