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, 2023
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 reports, indicate by check mark the information filed with this form:
☒ Annual Information Form ☒ Audited Annual Financial Statements
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:
87,871,568 Class A subordinate voting shares and 7,324,248 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 (§232.405 of this chapter) 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: ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial
statements of the registrant included in the filing reflect the correction of an error to previously issued financial
statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of
incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery
period pursuant to §240.10D-1(b). ☐
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 or incorporates by reference 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, 2023 and March 31, 2022, 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 mainly in accordance with Canadian disclosure requirements, which are different from those of
the United States. The Registrant also prepares its consolidated financial statements 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, 2023 (the “2023 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, 2023 and
March 31, 2022, including the report of independent registered public accounting firm, KPMG LLP, Montréal,
Canada (Auditor Firm ID: 85), 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, 2023 and March 31,
2022 (the “2023 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 2023 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
Management is responsible for establishing and maintaining adequate 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” 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 2023 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 2023 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
Effective May 1, 2023, the Registrant adopted a new code of business conduct (the “Code”) applicable to its
principal executive officer, principal financial officer, principal accounting officer or controller and persons
performing similar functions. This Code, which is a general, comprehensive update to the Registrant’s prior code of
business conduct, is intended to qualify as a “code of ethics” within the meaning of the applicable SEC rules. The
Code has been filed as Exhibit 99.9 to this Annual Report and is available on the Registrant’s website at
www.alithya.com/investors/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 years ended March 31, 2023 and 2022. See section titled “Auditors– Service
Fees” in the Registrant’s 2023 AIF, for the amounts billed to the Registrant by KPMG for services performed in the
last two fiscal years by category of service (audit fees, audit-related fees, tax fees and all other fees), and section
titled “Audit and Risk Management Committee – Pre-approval Policy and Procedures” in the Registrant’s 2023 AIF,
for a description of the Registrant’s pre-approval policies and procedures and the services approved thereunder,
which sections are incorporated herein by reference.
OFF -BALANCE SHEET ARRANGEMENTS
The information provided under the heading “Off-Balance Sheet Arrangements” in the Registrant’s 2023 MD&A
attached as Exhibit 99.3 is incorporated by reference herein.
DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The information provided under the heading “Contractual Obligations” in the Registrant’s 2023 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 that a compensation committee or a
nomination committee 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 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 shares 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 8, 2023
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, 2023
Audited Annual Consolidated Financial Statements for the fiscal years ended March 31, 2023 and
March 31, 2022
Management’s Discussion and Analysis of Financial Position and Results of Operations for the fiscal
years ended March 31, 2023 and March 31, 2022
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
Code of Business Conduct
Interactive Data File
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
Annual Information Form
of Alithya Group inc.
For the year ended March 31, 2023
June 7, 2023
TABLE OF CONTENTS
TABLE OF CONTENTS
GENERAL INFORMATION
FORWARD-LOOKING STATEMENTS
CORPORATE STRUCTURE
Name, Address and Incorporation
Intercorporate Relationships
GENERAL DEVELOPMENT OF THE BUSINESS
Fiscal 2023 Developments
Fiscal 2022 Developments
Fiscal 2021 Developments
DESCRIPTION OF THE BUSINESS
Corporate Overview
Business Offerings
Business Structure
Competitive Environment
Strategic Business Plan
Clients by Market Sectors
Client Approach Philosophy
Sales, Marketing and Strategic Partners
Human Capital
Specialized Skills and Knowledge
Principal Offices Locations
Intellectual Property
RISK AND UNCERTAINTIES
CAPITAL STRUCTURE
Description of Securities
Voting Rights
Rights to Dividends and Rights upon Winding-up
and Dissolution
Conversion Rights
Restrictions on Transfer
DIVIDENDS
I
2
2
3
3
3
4
4
4
5
5
5
5
6
6
7
7
7
8
8
8
8
8
9
10
10
10
10
10
10
10
MARKET FOR SECURITIES
Trading Price and Volume
Normal Course Issuer Bid and Share Purchase for
Cancellation
Prior Sales
DIRECTORS AND OFFICERS
Board of Directors
Executive Officers
Directors’ and Executive Officers’ Share Ownership
11
11
11
11
11
11
13
13
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
13
Conflicts of Interest
AUDIT AND RISK MANAGEMENT COMMITTEE
Relevant Education and Experience
Pre-approval Policy and Procedures
EXTERNAL AUDITOR SERVICE FEE
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS
TRANSFER AGENTS AND REGISTRARS
MATERIAL CONTRACTS
INTERESTS OF EXPERTS
ADDITIONAL INFORMATION
APPENDIX A - AUDIT AND RISK MANAGEMENT COMMITTEE
CHARTER
14
14
14
14
15
15
16
16
16
16
16
17
ALITHYA - Annual Information Form i
GENERAL INFORMATION
This Annual Information Form is dated June 7, 2023. Unless otherwise indicated, all information disclosed herein is provided
as at March 31, 2023, references to “Alithya”, “we”, “our”, “us”, “the Company” or similar terms refer to Alithya Group inc.
and its consolidated subsidiaries, references to the “Board” refer to the board of directors of Alithya Group inc., references
to “subordinate voting shares” and “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 Group inc., respectively, and all monetary amounts are in
Canadian dollars.
FORWARD-LOOKING STATEMENTS
This Annual Information Form contains or incorporates by reference 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 contained or incorporated by reference 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 maintain and develop its business, including by broadening the scope of its service offerings,
entering into new contracts and penetrating new markets; (iv) the Company’s strategy, future operations, and prospects,
including its expectations regarding future revenue resulting from bookings and backlog; (v) the Company’s ability to
service its debt and raise additional capital 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 potential
return to pre-COVID-19 pandemic operations.
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, 2023 and 2022, 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
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.
laws of Delaware and previously
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, 2023, 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, 2023,
based on the Company’s annual audited consolidated financial statements for the fiscal year ended March 31, 2023, 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, 2023.
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.
Datum Consulting Group, LLC
Delaware, USA
Delaware, USA
Indiana, USA
Datum Consulting Group Australia Pty Limited
Australia
Datum Cybertech India Pvt Ltd.
India
DCG Team UK Limited
Vitalyst, LLC
United Kingdom
Delaware, USA
PERCENTAGE OWNERSHIP
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
ALITHYA - Annual Information Form 3
GENERAL DEVELOPMENT OF THE BUSINESS
Fiscal 2023 Developments
On April 1, 2022, the Company acquired, through Alithya Consulting Inc., all the issued and outstanding shares of Trafic 3W
Inc., an IT consulting firm specialized in the digital transformation of public and parapublic services in Québec, for total
consideration of approximately $2 million, paid in cash and through the issuance of 83,449 subordinate voting shares.
Immediately following the acquisition, Trafic 3W Inc. was amalgamated with Alithya Consulting Inc.
On July 1, 2022, the Company acquired, 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, a leader in IP
digital transformation services for data-rich insurers and other regulated entities such as state governments and which
specializes in application modernization and data migration, for a purchase price of approximately up to US$45.5 million,
consisting of (i) US$13.6 million paid in cash at closing, net of working capital adjustment; (ii) US$4.3 million paid by the
issuance of 1,867,262 subordinate voting shares at closing; (iii) US$10.3 million of deferred cash consideration, payable
over three years on July 1, 2023, 2024 and 2025; (iv) deferred share consideration of 1,867,261 subordinate voting shares
with a value of US$4.3 million; and (v) a potential earn-out consideration of up to US$13 million, payable over three years
on July 1, 2023, 2024 and 2025, based on annual gross profit increases, also payable in cash (75%) and shares (25%).
The consideration payable in cash at closing was 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”).
On September 14, 2022, the Company announced the renewal of its normal course issuer bid (“NCIB”) to purchase for
cancellation up to 2,491,128 subordinate voting shares, representing 5% of the Company’s public float as of the close of
markets on September 8, 2022. Purchases for cancellation under the NCIB commenced on September 20, 2022 and will end
on the earlier of September 19, 2023 and the date on which 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 January 30, 2023, Mr. Bernard Dockrill joined the Company as Chief Operating Officer and Mr. Claude Rousseau, the
former Chief Operating Officer, was appointed Special Advisor to the President and Chief Executive Officer, a position he
held until his retirement on March 31, 2023. Mr. Dockrill is a senior technology and business transformation executive with
more than 25 years of experience in managed services, systems integration and IT consulting.
On September 29, 2022 and February 13, 2023, the Company’s Credit Agreement was amended to, among others, include
an accordion provision pursuant to which the maximum amount of the Credit Facility was increased from $125 million to
$140 million during a period ending no later than January 31, 2023 (the “Bulge Period”), and to change applicable margins
during the Bulge Period.
During the year ended March 31, 2023, the Company purchased for cancellation 378,425 subordinate voting shares for
approximately $1 million at a weighted average price of $2.77 under the previous and current NCIB. As at March 31, 2023,
the Company could still purchase up to 2,396,589 subordinate voting shares for cancellation under the current NCIB.
Fiscal 2022 Developments
On April 1, 2021, the Company acquired all the issued and outstanding shares of R3D Consulting Inc. (“R3D Consulting”),
whose name was thereafter amended for 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 totaling approximately $600 million in combined revenues during the 10-year term commercial
agreements entered into with 9429-1143 Québec Inc. (a subsidiary of Quebecor Media Inc.) (“Quebecor”) and La Capitale
Civil Service Insurer Inc. (which was amalgamated with SSQ, Life Insurance Company Inc. to form Beneva Inc. on
January 1, 2023) (“Beneva”), two of R3D Consulting's principal shareholders. Following the closing of the R3D Transaction,
Beneva and Quebecor became principal shareholders of the Company, and each held 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 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 then current NCIB commenced on September 20, 2021 and ended on September
19, 2022. Purchases could 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.
ALITHYA - Annual Information Form 4
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 approximately US$45.4 million, including working capital and other adjustments, comprised of the
assumption of certain accounts payable and accrued liabilities of US$2.3 million and of long-term debt of US$30.2 million
and a payment in cash of US$12.9 million. The transaction also included a potential earnout of up to US$1 million payable
by March 31, 2023, but it was determined that no such earnout would be payable. 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 indirectly controlled by a director then in office 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 then current NCIB. As at March 31, 2022, the
Company could still purchase up to 5,113,172 subordinate voting shares for cancellation under the then current 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 “PPP Notes”) in the aggregate principal amount
of US$6.3 million. The PPP 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 PPP 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.
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 PPP loans certain of its U.S. subsidiaries received, a temporary
minimum availability test, certain COVID-19 considerations, as well as other administrative clarifications.
DESCRIPTION OF THE BUSINESS
Corporate Overview
Alithya advises in strategy and digital transformation with more than 3,600 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,
healthcare, government, renewable energy, manufacturing, telecommunications, transportation and logistics, and
professional services sectors.
Business Offerings
Alithya’s business offerings in each of its reportable segments 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-
ALITHYA - Annual Information Form 5
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 U.S. and internationally, providing a full spectrum of strategy
and digital technology services with deep expertise in a range of technologies and business domains.
Business Structure
While in prior years, Alithya had determined that it had only one single reportable segment, as a result of organic growth
and the integration of recent acquisitions, Alithya reassessed its conclusion and determined that, as at April 1, 2023, it had
three reportable segments based on the regional geographic areas in which we operate: Canada, the U.S. and International.
The following table presents Alithya’s revenues, in total and by reportable segment, for the fiscal years ended March 31,
2023 and 2022:
Reportable Segments
Canada
U.S.
International
Total
FISCAL YEAR ENDED MARCH 31
2023
2022
$
$
$
$
312,349,000 $
284,614,000
189,883,000 $
139,519,000
20,469,000 $
13,752,000
522,701,000 $
437,885,000
For additional information on our reportable segments and the Company’s revenues from customers for each major service
categories (i.e. consulting services - time and material arrangements, consulting services - fixed fee arrangements, and
subscription, software and other revenues) per reportable segments, please refer to note 22 “Segment and Geographical
Information” of the Company’s annual consolidated financial statements for the fiscal year ended March 31, 2023, which is
incorporated herein by reference.
Competitive Environment
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 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 in each of its reportable segments 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 - Annual Information Form 6
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, 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;
•
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, healthcare, government, renewable energy,
manufacturing, telecommunications, transportation and logistics, and professional services 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 the 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 - Annual Information Form 7
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. and internationally.
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. Such
partnerships are generally terminable at will by either party. 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 more than 3,600 professionals as at March 31, 2023, 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.
Specialized 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 the 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 international recruitment, an employee referral bonus program, a skilled
recruitment team, participation at career fairs and widespread job postings.
Principal Offices 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
Hyderabad, India
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 - Annual Information Form 8
Alithya’s intellectual property portfolio includes the following solutions:
•
•
•
•
•
•
Adaptive LearningTM. This on-demand, subscription-based platform 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.
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: 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.
RapidCAPTURETM. This is an intelligent document processing solution that provides the ability to ingest commercial
documents and efficiently extract key information to correctly store and launch appropriate workflows, a key in
driving down costs for organizations while reducing errors. With artificial intelligence and machine learning powered
cognitive modules, RapidCAPTURETM helps organizations to empower their lines of business with efficiency gains
found by leveraging document capturing techniques that allows for structured, semi-structured and unstructured
document analysis, image clean-up, document assembly and data extraction for all types of documents both
machine printed and handwritten documents.
//SIDERTM . This secure solution 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 healthcare professionals, health clinics and laboratory managers involved in monitoring medical results.
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, 2023 and 2022,
incorporated herein by reference, and in the Company’s other materials that are 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.
ALITHYA - Annual Information Form 9
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, except that no further multiple voting shares can
be issued, except pursuant to the exercise of options to purchase multiple voting shares that were issued and outstanding
as at November 1, 2018, and (iii) an unlimited number of preferred shares, without par value, issuable in series. As at
March 31, 2023, 87,871,568 subordinate voting shares and 7,324,248 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, 2023, 54.54% 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.
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.
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.
ALITHYA - Annual Information Form 10
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. As required by securities regulation, 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, the Canadian marketplace on which the
greatest volume of trading occurs, for the fiscal year ended March 31, 2023. As such, the table below does not include
NASDAQ trading data.
MONTH
April 2022
May 2022
June 2022
July 2022
August 2022
September 2022
October 2022
November 2022
December 2022
January 2023
February 2023
March 2023
HIGH ($)
LOW ($)
MONTHLY VOLUME
3.27
3.00
3.54
3.16
3.15
2.88
2.74
2.61
2.41
2.52
2.51
2.79
2.94
2.56
2.90
2.69
2.71
2.45
2.32
2.24
1.95
2.03
2.22
2.42
559,326
700,611
803,409
526,203
578,331
405,885
408,771
497,741
1,242,341
652,617
876,707
869,488
Normal Course Issuer Bid and Share Purchases for Cancellation
On September 14, 2022, the Company announced that it was renewing its NCIB to purchase for cancellation up to
2,491,128 subordinate voting shares, representing 5% of the Company’s public float as of the close of markets on
September 8, 2022. Please refer to the section titled “General Development of the Business – Fiscal 2023 Developments”
earlier in this Annual Information Form for more information on the Company’s NCIB.
Prior Sales
On March 22, 2023, an aggregate of 152,632 multiple voting shares of Alithya were issued pursuant to the exercise of
152,632 options to purchase multiple voting shares that were set to expire on March 31, 2023 by Mr. Paul Raymond, the
Company’s President and Chief Executive Officer (the “Exercise”). The options originate from options granted prior to the
date Alithya went public and which were converted, on substantially the same terms and conditions as were applicable
under the amended and restated 2011 stock option plan, into options to acquire multiple voting shares of Alithya on
November 1, 2018. 100,000 multiple voting shares were issued at a price of $2.46 and 52,632 multiple voting shares were
issued at a price of $1.90. Before completion of the Exercise, a total of 7,171,616 multiple voting shares were issued and
outstanding. Following completion of the Exercise, 152,632 multiple voting shares, representing 2.08% of the issued and
outstanding multiple voting shares, were issued.
DIRECTORS AND OFFICERS
Board of Directors
The articles of the Company provide that the Board shall consist of a minimum of 3 and a maximum of 15 directors. As at
March 31, 2023, the Board was comprised of 10 directors. The following table lists the name and place of residence of the
directors, as well as their current principal occupation and other positions they have held over the past five years, if any.
NAME AND PLACE
OF RESIDENCE
POSITION WITH
THE COMPANY
PRINCIPAL OCCUPATION
DIRECTOR
SINCE(1)
OTHER POSITIONS HELD
OVER THE PAST FIVE YEARS
Dana Ades-Landy
Québec (Canada)
Director
André P. Brosseau
Québec (Canada)
Director
Contract Position in the Special
Loans Group, National Bank of
Canada (Canadian chartered
bank)
President and Chief Executive
Officer, Du Musée Investments
Inc. (family office)
November 2016 Chief Executive Officer, Heart
& Stroke Foundation of
Canada (Québec)
September 2022 -
ALITHYA - Annual Information Form 11
NAME AND PLACE
OF RESIDENCE
POSITION WITH
THE COMPANY
PRINCIPAL OCCUPATION
DIRECTOR
SINCE(1)
OTHER POSITIONS HELD
OVER THE PAST FIVE YEARS
Robert Comeau
Québec (Canada)
Lead Director
Corporate Director and Lead
Director of the Company
May 2018
-
Mélissa Gilbert
Québec (Canada)
Director
Executive Vice President and
Lead, Finance, Beneva Inc.
(Canadian insurance company)
Lucie Martel
Québec (Canada)
Director
Corporate Director
September 2021 Executive Vice President,
Finance, Corporate Actuarial
and Risk Management, La
Capitale Insurance and
Financial Services Inc.
Vice President and Chief
Financial Officer, Optel Group
September 2019 Senior Vice President and
Chief Human Resources
Officer, Intact Financial
Corporation
Paul Raymond
Québec (Canada)
James B. Renacci
Ohio (USA)
President and Chief
Executive Officer
Director
Director
Ghyslain Rivard
Québec (Canada)
C. Lee Thomas
Ohio (USA)
Director
Director
President and Chief Executive
Officer of the Company
June 2011
-
Founder and President, LTC
Management Services, Inc.
(management and financial
consulting services company)
November 2019 -
Founder of the Company and
Corporate Director
April 1992
-
Corporate Director and Chair of
the Board of Trustees of
Baldwin Wallace University
November 2018 Executive in Residence of the
School of Business of Baldwin
Wallace University
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. Mr. André P. Brosseau and Ms. Mélissa Gilbert were elected as directors at the annual meetings of shareholders of
the Company which were held on September 14, 2022 and September 15, 2021, respectively. They were proposed as
nominee directors in accordance with the terms of the Investor Rights Agreements entered into between the Company and
each of Quebecor and La Capitale Civil Service Insurer Inc. (now known as Beneva) on April 1, 2021. In accordance with
such agreements, the Company shall propose for election a candidate designated by each of Quebecor and Beneva until
each of them ceases to beneficially own at least 10% of the issued and outstanding subordinate voting shares of the
Company. Notwithstanding the foregoing, each of Quebecor and Beneva shall be entitled to such nomination right until
April 1, 2024 as long as they each hold no less than 9,983,276 subordinate voting shares, which corresponds to the number
of shares issued to each of them upon closing of the R3D Transaction.
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 U.S. 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, who is not independent as she is an executive officer of an organization
from which Alithya receives significant revenues. All other directors of the Company, namely Mses. Dana Ades-Landy and
Lucie Martel and Messrs. André P. Brosseau, Robert Comeau, James B. Renacci, Ghyslain Rivard, C. Lee Thomas, Pierre
Turcotte, have no material relationship with the Company and are, in the reasonable opinion of the Board, independent
directors within the meaning of 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 12
Executive Officers
The following table lists the name and place of residence of the executive officers of the Company as at June 7, 2023, as
well as their current position with the Company and other positions they have held over the past five years, if any.
NAME
CURRENT POSITION
EXECUTIVE OFFICER
SINCE (1)
OTHER POSITIONS HELD OVER THE
PAST FIVE YEARS
Amar Bukkasagaram
Indiana (USA)
Senior Vice President, Data
Solutions
June 2023
President, Datum Consulting Group, LLC
Giulia Cirillo
Québec (Canada)
Bernard Dockrill
New Hampshire (USA)
Chief Human Capital Officer
April 2023
Chief Operating Officer
January 2023
Senior Vice President and Chief Human
Resources and Global Communications
Officer, PSP Investments
Senior Vice President, CGI Information
Technologies & Solutions Inc.
Nigel Fonseca
Ontario (Canada)
Senior Vice President, Ontario
and Western Canada
June 2018
Regional Vice President, Ontario and
Western Canada, Alithya
Nathalie Forcier
Québec (Canada)
Robert Lamarre
Québec (Canada)
Dany Paradis
Québec (Canada)
Chief Legal Officer and
Corporate Secretary
September 2018
Chief Information Officer
April 2016
-
-
Senior Vice President, Québec
November 2018
Senior Vice President, Québec and Oracle
Practices Canada, Alithya
Vice President, Integrated Management
Solutions, Alithya
Vice President, Oracle Consulting
Services, Alithya
Paul Raymond
Québec (Canada)
President and Chief Executive
Officer and Director
April 2011
-
Russell Smith
Alabama (USA)
Claude Thibault
Québec (Canada)
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 7, 2023, the directors and executive officers of the Company, as a group, beneficially owned, directly or
indirectly, or exercised control or direction over 4,158,981 subordinate voting shares and 7,324,248 multiple voting shares,
representing respectively 4.73% 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
Other than as disclosed below, 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) 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 while the director or executive officer was acting in that
capacity; or (b) 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 that was issued after the director
or executive officer ceased to act in that capacity, but which resulted from an event that occurred while the director or
executive officer was acting in that capacity. Mr. Brosseau was a director of Aptilon Corporation (now known as DMD Digital
Health Connections Group Inc.) (“DMD”) from December 2006 to August 2021. On May 4, 2012, a management cease trade
order was issued by the Autorité des marchés financiers followed by a cease trade order on all of DMD’s securities on July 5,
2012 as a result of the failure to file annual audited financial statements, related management’s discussion and analysis and
certification of annual filings for the fiscal year ended December 31, 2011. From July 2012 to February 2013, similar cease
trade orders were issued by the securities regulatory authorities of British Columbia, Manitoba, Alberta and Ontario. In
August 2014, the cease trade orders were lifted and DMD resumed trading on the NEX stock exchange in October 2014.
Other than as disclosed below, 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
ALITHYA - Annual Information Form 13
instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee
appointed to hold their assets. Mr. Brosseau was a director of Virtutone Networks Inc. (“Virtutone”) from September 2013 to
November 2014. On January 23, 2015, Virtutone filed a notice of intention to make a proposal under the Bankruptcy and
Insolvency Act (Canada). Mr. Rivard, was a director of Facilis Inc. (“Facilis”) from November 1, 2021 to March 8, 2023. On
March 8, 2023, Facilis initiated bankruptcy proceedings and a trustee was appointed to hold its assets.
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: Mr. Robert Comeau (Chair), Ms. Dana Ades-Landy and
Mr. C. Lee Thomas, who have been members of the Audit Committee since at least the Company’s annual meeting of
shareholders held on September 14, 2022. Each member of the Audit Committee is “independent” and “financially literate”
within the meaning of the 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, including executive leadership positions at Scotiabank, Laurentian Bank and National Bank of
Canada, she currently works in the Special Loans Group of National Bank of Canada which she had run for over
seven years in her previous time at this institution. Ms. Ades-Landy also serves as director and member of the
Audit Committee of First Lion Holdings Inc. and Sagen MI Canada Inc. since 2018 and 2021, respectively. She
previously acted as Chair of the Audit Committee of First Lion Holdings Inc. until 2022 and director and Chair of the
Audit Committee of the Canada Mortgage and Housing Corporation from 2017 to 2020. Ms. Ades-Landy 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 held various roles at Ernst & Young
LLP from 1976 to 2014, including that of Managing Partner of its Cleveland office, Leader of its Northeast Ohio
Market Segment, and global client serving audit partner. Mr. Thomas currently acts as Chair of the Board of
Trustees of Baldwin Wallace University and as financial consultant for Regional Brands Inc. He previously served as
director and Chair of the Audit Committee of Technical Consumer Products International. Mr. Thomas holds a
Bachelor’s degree in accounting from Baldwin Wallace University and is a Certified Public Accountant (CPA).
Pre-approval Policy and Procedures
The Audit Committee has adopted a policy and procedures for the pre-approval of engagement for services of its external
auditor, which list prohibited services that the external auditor may not provide and require pre-approval of all audit and
non-audit services provided by the external auditor.
For all permitted services, a request for pre-approval must be submitted to the Audit Committee through the Chief Financial
Officer prior to engaging the external auditor to perform the services. The Audit Committee considers such requests, if
applicable, on a quarterly basis, and, if acceptable, pre-approves such audit and non-audit services. During its deliberations,
the Audit Committee assesses, among other factors, whether the services requested are prohibited and whether they, and
the fees related thereto, could impair the independence of the Company's external auditor.
In the interest of efficiency:
•
The Audit Committee has delegated to the Chair of the Audit Committee the authority to effect such pre-approval
from time to time. The Chair must, however, present all pre-approvals of non-audit services to the Audit
Committee at the first meeting of the Audit Committee subsequent to such pre-approval.
ALITHYA - Annual Information Form 14
•
•
Certain permitted services are pre-approved with an envelope by the Audit Committee and thereafter only require
approval by the Chief Financial Officer prior to the engagement. For services not covered by the pre-approved
envelopes and costs in excess of the pre-approved amounts, separate requests for pre-approval must be submitted
to the Audit Committee.
At each meeting of the Audit Committee, a consolidated summary of all fees by service type is presented including
a breakdown of fees incurred within each of the pre-approved envelopes.
Since the implementation of the Audit Committee pre-approval procedures in 2019, all audit and non-audit services
rendered by the external auditor have been pre-approved in accordance therewith.
The Board, upon recommendation of the Audit Committee, also approves, on an annual basis, the fees charged to the
Company by the external auditors during the preceding year.
EXTERNAL AUDITOR SERVICE FEE
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 fiscal year ended March 31, 2023
and notes thereto, presented under the International Financial Reporting Standards.
The fees billed by KPMG beginning on September 15, 2021 for the fiscal year ended March 31, 2022 and the fees billed by
KPMG for the fiscal year ended March 31, 2023 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
2023
2022
$
$
$
951,300 $
839,200
— $
101,600
12,800 $
12,800
—
—
964,100 $
953,600
The fees billed by RCGT until 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:
FISCAL YEAR ENDED MARCH 31
Audit fees(1)
Audit-related fees(2)
Tax fees(3)
All other fees(4)
Total
$
$
$
$
2022
42,500
31,000
6,350
—
79,850
(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 and additional audit procedures related to accounting and internal control matters. For KPMG, fees amounting to $59,800
were reclassified from “Audit-Related Fees” to “Audit Fees” for the fiscal year ended March 31, 2022 due to the nature of the services.
“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 KPMG, for the fiscal
year ended March 31, 2022, financial and tax due diligence related to the acquisition of Vitalyst, 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.
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.
ALITHYA - Annual Information Form 15
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.
Beneva and Quebecor 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. Beneva and Quebecor are parties to commercial
contracts pursuant to which Alithya receives significant revenues.
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, 2023 and are still in effect as of the date hereof:
•
The Amending Agreements No. 6 and 7 dated September 29, 2022 and February 13, 2023 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. Please refer to
the section titled “General Development of the Business – Fiscal 2023 Developments” earlier in this Annual
Information Form for more information on the content of these amending agreements.
INTERESTS OF EXPERTS
KPMG is the auditor of the Company and has prepared the report relating to the audit of the Company’s annual consolidated
financial statements for the fiscal year ended March 31, 2023 and notes thereto, presented under the International Financial
Reporting Standards. KPMG has confirmed that it is independent with respect to the Company under Rule 3520 of the Public
Company Accounting and Oversight Board (PCAOB) and all other relevant professional and regulatory standards.
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
14, 2022.
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 and analysis for the fiscal years ended March 31, 2023 and 2022 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
Email: investorrelations@alithya.com
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 16
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 auditor;
(c) oversee the work of the Company's financial management, internal auditors, if any, and external auditor in these
areas; and
(d) provide an open avenue of communication between the external auditor, the internal auditors, if any, the Board
and management, as applicable.
2.
3.
4.
In addition, the Committee shall review disclosure on matters related to the Committee and the external auditor to be
made in the Company’s annual management information circular and other annual and period disclosure documents, in
accordance with applicable rules and regulations. The Committee is also responsible for assisting the Board in fulfilling
its responsibilities relating to any 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 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 auditor is 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
The Committee shall have the following procedures:
5.
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 NASDAQ).
6.
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
the Committee, the remaining members may exercise all its power as long as a quorum remains in office. Subject to
ALITHYA - Annual Information Form 17
7.
8.
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
notifying the Committee Chair of such conflict. If the Committee Chair faces a potential or actual conflict of interest,
the Committee Chair shall advise the Chair of the Board (or the Lead Director if the Committee Chair and the Chair of
the Board are the same person). If the Committee Chair, the Chair of the Board or the Lead Director, 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.
9.
Service on Multiple Audit Committees – Members of the Committee may not serve on the audit committee of more
than two other publicly-traded companies unless the Board has first determined that such simultaneous service would
not impair the ability of the applicable director to serve on the Committee.
10. 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.
11. 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. Meetings may be held at any time deemed appropriate by the Committee.
The Committee may meet in person and by telephone or electronic means.
(a) 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 24 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. The notice of meeting does not, however, need to state the
purpose for which the meeting is being held.
(b) Quorum - A majority of the members constitute a quorum for the transaction of the Committee business.
(c) 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 meeting of the Committee. The agenda of the Committee
meeting will be prepared by the Chair of the Committee, working with the Corporate Secretary and, whenever
reasonably practicable, circulated to each member prior to each meeting.
(d) 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.
12. 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 auditor 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 at every regular meeting.
13. Professional Assistance - The Committee may require the external auditor and internal auditors, if any, to perform
such supplemental reviews or audits as the Committee may deem desirable. In addition, the Committee may, at the
Company’s expense, retain special legal, accounting, financial or other consultants to advise the Committee in
discharging itself of its duties.
14. 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 auditor
ALITHYA - Annual Information Form 18
as to any information technology, audit and other non-audit services provided by the external auditor to the Company
and its subsidiaries.
15. 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.
16. 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 auditor will have direct access to the Committee at their
own initiative.
Powers
17. 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.
RESPONSIBILITIES
Selection and Oversight of the External Auditor
18. The external auditor is ultimately accountable to the Committee and the Board as the representative of the
shareholders of the Company and shall report directly to the Committee and the Committee shall so instruct the
external auditor. The Committee shall annually evaluate the performance of the external auditor and propose the
appointment of the external auditor 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 auditor, 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 auditor, and enquire on the qualifications of
the proposed external auditor before approving or rejecting the proposed change in external auditor.
19. The Committee shall approve in advance the terms of engagement and the compensation to be paid by the Company
to the external auditor 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 auditor, 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 auditor 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.
20. The Committee shall annually review the independence of the external auditor 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 auditor. In connection with such review, the Committee shall:
(a) actively engage in a dialogue with the external auditor about all relationships or services that may impact the
objectivity and independence of the external auditor;
(b) require that the external auditor submit to it, at least annually, a formal written statement delineating all
relationships between the Company and its subsidiaries, on one hand, and the external auditor, on the other
hand, that may reasonably be considered to bear on the external auditor’s independence;
(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.
21. The Committee may approve any permissible non-audit engagements of the external auditor and its affiliates to the
Company and its affiliates in accordance with applicable laws.
22. The Committee shall establish and monitor clear policies for the hiring by the Company of employees or former
employees of the external auditor.
ALITHYA - Annual Information Form 19
23. The Committee shall require the external auditor to provide to the Committee, and the Committee shall review and
discuss with the external auditor, all reports which the external auditor is required to provide to the Committee or the
Board under rules, policies or practices of professional or regulatory bodies applicable to the external auditor, and any
other reports which the Committee may require. Such reports shall include:
(a) a description of the external auditor’s internal quality-control procedures, any material issues raised by the most
recent internal quality-control review, or peer review, of the external auditor, 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 auditor, 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 auditor and (iii) other material written communication between the
external auditor and management, such as any management letter or schedule of unadjusted differences.
24. The Committee shall review the performance of the external auditor, including assessing their effectiveness and quality
of service, annually and, every 5 years, perform a comprehensive review of the performance of the external auditor
over multiple years to provide further insight on the audit firm, its independence and application of professional
skepticism.
25. The Committee is responsible for resolving disagreements between management and the external auditor regarding
financial reporting.
Appointment and Oversight of Internal Auditors
26. The appointment, terms of engagement, compensation, replacement or dismissal of internal auditors, if any, 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.
27. The Committee shall obtain from the internal auditors, if any, and shall review summaries of 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.
28. The Committee shall, as it deems necessary and applicable, communicate with the internal auditors, if any, 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.
29. The Committee shall, annually or more frequently as it deems necessary and applicable, evaluate the internal auditors,
if any, including their activities, organizational structure and qualifications and effectiveness.
Oversight and Monitoring of Audits
30. The Committee shall review with the external auditor, the internal auditors, if any, 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 auditor,
the audit procedures to be used and the timing and estimated budgets of the audits.
31. The Committee shall meet periodically or as it deems necessary and applicable, with the internal auditors, if any, 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.
32. The Committee shall discuss with the external auditor any difficulties or disputes that arose with management or the
internal auditors, if any, during the course of the audit and the adequacy of management’s responses in correcting
audit-related deficiencies.
33. The Committee shall review with management the results of internal and external audits.
34. 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
35. The Committee shall, as it deems necessary, oversee, review and discuss with management, the external auditor and
the internal auditors, if any:
ALITHYA - Annual Information Form 20
(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 auditor or the internal auditors, if any, 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 part of the
Company’s ordinary course of business;
(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.
36. The Committee will review and resolve disagreements between management and the external auditor regarding
financial reporting or the application of any accounting principles or practices.
Oversight and Monitoring of Internal Controls
37. The Committee shall, as it deems necessary, exercise oversight of, review and discuss with management, the external
auditor and the internal auditors, if any:
(a) the adequacy and effectiveness of the Company’s internal accounting and financial controls and the
recommendations of management, the external auditor and the internal auditors, if any, 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
38.
In accordance with the Company’s Whistleblower Policy, the Committee shall maintain 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, if
any, these procedures and any significant complaints received.
Oversight and Monitoring of the Company’s Financial Disclosures
39. The Committee shall:
(a) review with the external auditor and management and recommend to the Board for approval the annual audited
financial statements and notes relating thereto and management’s 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 21
(b) review with the external auditor and management each set of interim unaudited financial statements and notes
related thereto and management’s 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.
40. 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, if applicable, 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.
41. The Committee shall review the disclosure with respect to its pre-approval of audit and non-audit services provided by
the external auditor.
Oversight of Finance Matters
42. Appointments of 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.
43. 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.
44. 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.
45. 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
46. 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 auditor’ opinion
of management’s assessment of significant financial risks facing the Company and how effectively such risks are being
managed or controlled.
47. 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.
48. 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.
49. The Committee shall review the findings of any examination by regulatory agencies.
Committee Reporting
50.
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, where applicable,
state whether it has:
(a) reviewed and discussed the audited or unaudited financial statements with management, the external auditor and
the internal auditors, if any;
ALITHYA - Annual Information Form 22
(b) received from the external auditor all reports and disclosures required under legal, listing and regulatory
requirements and this Charter and have discussed such reports with the external auditor, including reports with
respect to the independence of the external auditor; 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
51. 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, dividends and the issuance and/or
repurchase of shares.
52. The Committee shall maintain and review, as necessary, policies and procedures with respect to the delegation of
authority by the Board to employees of the Company and its subsidiaries for day-to-day management.
53. 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, November 10, 2021 and November 9, 2022.
ALITHYA - Annual Information Form 23
Annual Consolidated
Financial Statements
of Alithya Group inc.
For the years ended March 31, 2023
and 2022
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm ............................................................................
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. Share-based payments ...........................................................................................................................
14. Commitments and contingencies ..........................................................................................................
15. Related parties .........................................................................................................................................
16. Earnings per share ..................................................................................................................................
17. Reconciliation of liabilities arising from financing activities ...............................................................
18. Additional information on consolidated loss ........................................................................................
19. Business acquisition, integration and reorganization costs ..............................................................
20. Net financial expenses ............................................................................................................................
21. Supplementary cash flow information ..................................................................................................
22. Segment and geographical information ................................................................................................
23. Remaining performance obligations ......................................................................................................
24. Financial instruments ...............................................................................................................................
25. Capital disclosures ...................................................................................................................................
2
4
5
6
7
8
8
27
35
36
36
38
39
41
42
44
47
50
55
56
57
57
58
58
59
59
60
62
62
67
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, 2023 and March 31, 2022, the related consolidated statements of operations and
comprehensive loss, changes in shareholders’ equity, and cash flows, for each of the years in the two-year
period ended March 31, 2023, and the related notes (collectively, the "consolidated financial statements"). In our
opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the
Company as of March 31, 2023 and March 31, 2022, and results of its operations and its cash flows for each of
the years in the two-year period ended March 31, 2023, 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 these consolidated financial statements based on our audits. 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 audits 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 audits, 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, 2023 and 2022.
| 2
Page 2
Our audits 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 audits 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 audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2021.
Montréal, Canada
June 7, 2023
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Notes
22
18
18
19
18
7
20
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
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,
2023
$
2022
$
522,701
370,927
151,774
126,522
18,079
6,536
27,497
159
178,793
(27,019)
9,335
(36,354)
569
(6,826)
(6,257)
(30,097)
5,557
5,557
(24,540)
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)
Basic and diluted loss per share
16
(0.32)
(0.18)
The accompanying notes are an integral part of these consolidated financial statements.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 4
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at
(in thousands of Canadian dollars)
Assets
Current assets
Cash
Restricted cash
Accounts receivable and other receivables
Unbilled revenues
Tax credits receivable
Prepaids
Non-current assets
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
Contingent consideration
Long-term debt
Lease liabilities
Deferred tax liabilities
Shareholders' equity
Share capital
Deficit
Accumulated other comprehensive income (loss)
Contributed surplus
Commitments and contingencies
March 31,
March 31,
Notes
2023
$
2022
$
22,583
—
92,453
23,420
9,944
7,680
156,080
12,108
1,111
8,724
9,353
104,335
5,997
166,393
464,101
91,263
22,275
3,873
12,808
130,219
9,157
114,382
14,643
8,632
277,033
311,967
(141,481)
4,610
11,972
187,068
464,101
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
4
5
6
7
11
8
9
6
10
3
10
6
11
12
14
The accompanying notes are an integral part of these consolidated financial statements.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 5
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the year ended March 31,
(in thousands of Canadian dollars, except share data)
Notes
Shares
outstanding
Share capital
Deficit
Number
$
$
92,725,616
305,222
(111,654)
Accumulated other
comprehensive
income (loss)
$
Contributed
surplus
$
Total
$
(947)
—
5,557
5,557
—
—
—
—
—
—
—
—
—
—
—
—
—
1,708
5,528
276
(1,303)
536
6,745
(30,097)
—
(30,097)
—
—
—
—
—
270
—
270
Balance as at March 31, 2022
Net loss
Other comprehensive income
Total comprehensive income (loss)
Share-based compensation
Share-based compensation granted on business acquisition
Issuance of Subordinate Voting Shares pursuant to vesting of share-based
compensation granted on business acquisitions
—
—
—
—
—
738,382
13
13
12
Issuance of Subordinate Voting Shares in consideration of the acquisition
of Datum, net of share issuance costs
3, 12
1,867,262
Issuance of Subordinate Voting Shares in consideration of the acquisition
of Trafic 3W inc., net of share issuance costs
Shares purchased for cancellation
Issuance of Multiple Voting Shares from exercise of stock options
Total contributions by, and distributions to, shareholders
Balance as at March 31, 2023
Balance as 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 pursuant to vesting of share-based
compensation granted on business acquisitions
3, 12
12
12
83,449
(371,525)
152,632
2,470,200
95,195,816
58,695,438
197,537
—
—
—
—
—
—
—
—
—
—
834,324
2,935
13
13
12
Issuance of Subordinate Voting Shares in consideration of the acquisition
of R3D Consulting Inc.
3, 12
25,182,676
Issuance of Subordinate Voting Shares under a private placement
Shares purchased for cancellation
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
12
12
12
12
8,143,322
(349,400)
155,382
63,874
34,030,178
92,725,616
80,585
24,686
(1,244)
528
195
107,685
305,222
The accompanying notes are an integral part of these consolidated financial statements.
311,967
(141,481)
4,610
(96,190)
(15,548)
—
(15,548)
—
—
—
—
—
84
—
—
84
(508)
—
(439)
(439)
—
—
—
—
—
—
—
—
—
(111,654)
(947)
7,130
7,130
199,751
—
—
—
3,745
2,995
(30,097)
5,557
(24,540)
3,745
2,995
(1,708)
—
—
—
—
(190)
4,842
11,972
5,528
276
(1,033)
346
11,857
187,068
7,173
108,012
—
—
—
1,792
1,524
(15,548)
(439)
(15,987)
1,792
1,524
(2,935)
—
—
—
—
(229)
(195)
(43)
80,585
24,686
(1,160)
299
—
107,726
199,751
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 6
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars)
Operating activities
Net loss
Items not affecting cash
Depreciation and amortization
Contingent consideration
Net financial expenses
Share-based compensation
Unrealized foreign exchange (gain) loss
Realized foreign exchange loss (gain) on repayment of long-term debt
Forgiveness of PPP loans
Impairment of property and equipment and right-of-use assets
Loss on disposal of intangibles
Other
Deferred taxes
Changes in non-cash working capital items
Net cash from operating activities
Investing activities
Additions to property and equipment
Additions to intangibles
Restricted cash
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
Share issue costs
Shares purchased for cancellation
Financial expense paid
Net cash (used in) from financing activities
Effect of exchange rate changes on cash
Net change in cash
Cash, beginning of year
Cash, end of year
3
20
13
18
5, 6
7
11
21
5
7
3
17
17
12
6
12
12
12
20
Cash paid (included in cash flow from operating activities)
Income taxes paid (recovered)
The accompanying notes are an integral part of these consolidated financial statements
For the years ended March 31,
Notes
2023
$
2022
$
(note 2)
(30,097)
(15,548)
34,033
9,157
9,335
6,740
(318)
861
—
3,697
—
—
(6,826)
26,582
2,300
28,882
(1,736)
(849)
3,254
(14,397)
—
(13,728)
98,682
(97,518)
346
(3,653)
—
(29)
(1,033)
(8,121)
(11,326)
1,100
4,928
17,655
22,583
411
19,720
—
4,579
3,316
299
(250)
(5,868)
—
262
(533)
(3,007)
2,970
(1,120)
1,850
(1,719)
(1,361)
(21)
(15,705)
(132)
(18,938)
156,768
(146,509)
299
(2,688)
24,686
—
(1,160)
(3,479)
27,917
(77)
10,752
6,903
17,655
(354)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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 strategy, application solutions services, enterprise solutions, 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,
telecommunications,
insurance, healthcare, government,
transportation and logistics, and professional services sectors.
renewable energy, manufacturing,
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 7, 2023.
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 resulting from 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;
• Equity classified share-based payment arrangements which are measured at fair value at grant date pursuant
to IFRS 2, Share-Based Payment; and
• Derivatives, which are initially recognized at fair value on the date the derivative contract is entered into and
are subsequently re-measured at their fair value at the end of each reporting period.
Certain figures have been reclassified to conform to the current year presentation.
CHANGE IN ACCOUNTING POLICY
IAS 7 Statement of Cash Flows
IAS 7 prescribes that interest paid is to be classified as operating cash flows (the Group’s previous
classification), or alternatively, interest paid may be classified as financing cash flows. As at October 1, 2022, as
a result of recent business acquisitions financed through its senior revolving credit facility and balance of
purchase price payable, the Group changed its cash flow presentation to present interest paid as financing cash
flows instead of operating cash flows. This presentation provides more relevant information regarding the cash
flows of the Group.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
This change in accounting policy has been applied retrospectively. Changes to the comparative amounts in the
Group’s consolidated statements of cash flows are as follows:
For the year ended March 31, 2022
As previously
reported
$
Adjustment
Restated amount
$
$
(1,629)
31,396
3,479
(3,479)
1,850
27,917
Net cash from (used in) operating activities
Net cash from financing activities
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.
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. The Company’s principal subsidiaries are as follows:
Entity
Jurisdiction
Percentage Ownership
Percentage Ownership
2023
2022
Alithya Canada Inc.
Alithya Consulting Inc.
9466-6997 Québec Inc.
Alithya Digital Technology Corporation
Alithya USA, Inc.
Alithya Financial Solutions, Inc.
Alithya Ranzal LLC
Alithya Zero2Ten, Inc.
Alithya Fullscope Solutions, Inc.
Vitalyst, LLC
Datum Consulting Group, LLC
Alithya France SAS
DCG Team UK Limited
Datum Consulting Group Australia Pty Limited
Alithya Numérique Maroc SARLAU
Datum Cybertech India Pvt Ltd.
Quebec, Canada
Quebec, Canada
Quebec, Canada
Ontario, Canada
Delaware, USA
Delaware, USA
Delaware, USA
Delaware, USA
Delaware, USA
Delaware, USA
Indiana, USA
France
United Kingdom
Australia
Morocco
India
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%
—
On April 1, 2022, Alithya Consulting Inc. acquired all of the shares of Trafic 3W Inc. (note 3). Immediately following such acquisition, Trafic
3W Inc. was amalgamated with Alithya Consulting Inc.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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. Any contingent consideration to be transferred by the
acquirer is recognized at fair value at the acquisition date. Contingent consideration classified as equity is
not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration
classified as a financial liability is remeasured at fair value with the changes in fair value recognized in the
consolidated statements of operations and comprehensive loss.
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 twelve 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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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.
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 transactions with any of the
Group’s other segments. An entity shall disclose separately information about each operating segment, and can
combine operating segments, with similar economic characteristics or that do not meet quantitative thresholds,
into one reportable segment.
As at April 1, 2022, as a result of organic growth and the integration of recent business acquisitions, the Group
determined that it has three reportable segments based on geography: Canada, U.S. and International.
Information for the comparative period has been restated to also present segment information for the three
reportable segments (note 22).
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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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 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.
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.
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
from consulting and support services and systems
implementations under time and materials arrangements is recognized as the services are rendered.
Contractual billings of such arrangements correspond with the value provided to the client, and therefore
revenues are recognized when amounts become billable.
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. For certain contracts, the Group recognizes revenue based on its right to consideration when such
amount corresponds to the entity’s performance completed to date.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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.
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.
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.
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.
Group created software, and the associated maintenance, is reported on a gross basis and revenue is
recognized point in time when it is distinct from the maintenance and support, otherwise it is recognized over
time. Revenue from the sale of Group created software from software as a service ("SaaS") is recognized over
time, on a straight line basis as the Group stands ready to provide customers with continuous access to its
software over the contractual term.
For a SaaS arrangement with a fee structure based upon customer usage and priced at a fixed rate for usage,
the Group recognizes revenue based on its right to consideration when such amount corresponds to the entity’s
performance completed to date.
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, material and an
allocation of other costs that relate directly to fulfilling contracts 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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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.
Subsequent measurement of 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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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.
Impairment of 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.
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, contingent consideration 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.
Accounts payable and accrued liabilities, and long-term debt are financial liabilities which are subsequently
measured at amortized cost using the effective interest method.
Financial liabilities designated at FVTPL which include contingent consideration, 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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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-interest bearing vendor financing arising from business combinations, amortization of the
unwinding of the discount on provisions, amortization of finance costs and other interest and bank charges.
DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES
The Group enters into derivative financial instruments to manage its exposure to interest rate risks.
The resulting gain or loss on re-measurement at the fair value of the derivatives is recognized in the
consolidated statements of operations, unless the derivative is designated and is effective as a hedging
instrument, in which event the timing of the recognition in the consolidated statements of operations depends on
the nature of the hedge relationship. The cash flows of the hedging instruments are classified in the same
manner as the cash flows of the item being hedged.
The Group documents at the inception of the transaction the relationship between hedging instruments and
hedged items, as well as its risk management objectives and strategy for undertaking various hedging
transactions. The documentation includes the identification of the nature of the risk being hedged, the economic
relationship between the hedged items and the hedging instruments which should not be dominated by credit
risk, the hedge ratio consistent with the risk management strategy pursued and how the Company will assess
the effectiveness of the hedging relationship on an ongoing basis. Management evaluates hedge effectiveness
at inception of the hedge instrument and quarterly thereafter. Hedge effectiveness is measured prospectively as
the extent to which changes in the fair value or cash flows of the derivative offsets the changes in the fair value
or cash flows of the underlying hedged item or risk when there is a significant mismatch between the terms of
the hedging instrument and the hedged item.
Cash flow hedge
The effective portion of the change in the fair value of the derivatives that are designated and qualify as cash
flow hedges is recognized in other comprehensive income. It is reclassified out of other comprehensive income
into the consolidated statements of operations when the hedged item is recognized in the consolidated
statements of operations.
The gain or loss relating to the ineffective portion, if any, is recognized immediately in the consolidated
statements of operations.
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge
accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognized when
the forecasted transaction is ultimately recognized in net loss. When a forecasted transaction is no longer
expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to net loss.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
EARNINGS PER SHARE
Basic earnings (loss) per share is calculated by dividing the net earnings (loss) attributable to the holders of
Shares (as defined further herein) by the weighted average number of Shares outstanding during the period.
The net earnings (loss) attributable to the holders of 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 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 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.
“Shares” include the Subordinate Voting Shares and Multiple Voting Shares (as defined further herein).
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
Straight line
20 %
30 %
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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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.
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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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, software licenses and tradenames. 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, non-compete agreements, internal-use business
solutions, software licenses and tradenames acquired through business combinations are initially recorded at
their fair value. The Group amortizes its intangible assets using the straight-line method as follows :
Customer relationships
Non-compete agreements
Software
Tradenames
Method
Period
Straight line
Straight line
Straight line
-
3 - 10 years
3 - 10 years
3 years
Indefinite
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. Goodwill and intangible assets that have indefinite useful lives
or that are not yet available for use, are tested for impairment at least annually as at March 31.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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 and which
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, impairment of right-of-use assets from previous business combinations, gains
or losses on disposal of non-core assets, transition costs relating to system integrations, contingent
consideration (note 3), including changes in fair value as well as employee compensation related to business
acquisitions and severance resulting from integrations and significant changes in management structure.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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.
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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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 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 13.
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 as 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 RSUs and PSUs in cash. The Company accounts for the RSUs and PSUs as equity-settled awards as the
Board intends to settle these awards through the issuance of share capital.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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 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 as at the grant date.
The terms and conditions of each grant of PSUs, 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 as 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 are made by the Board.
Forfeitures, which are estimated at the time of grant, 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 share capital.
Share unit plan (“SUP”)
The Company operates a SUP for eligible employees of the Company and its subsidiaries. Under this plan,
eligible employees can elect to receive up to 50% of their annual bonus in DSUs and/or RSUs (“Bonus DSUs/
RSUs”) with the Company granting additional DSUs/RSUs equal to 25% of the Bonus DSUs/RSUs. The Board,
at its discretion, may elect to settle DSUs and RSUs in cash. The Company accounts for DSUs and RSUs as
equity-settled awards as the Board intends to settle these awards through Subordinate Voting Shares purchased
on the TSX or NASDAQ.
The fair value of the share-based expense is based on 125% of the fair value of the bonus elected to be settled
as DSUs and/or RSUs, with a corresponding adjustment through contributed surplus. An expense is recognized
over the vesting period as employee benefits expense within general and administrative expenses, with a
corresponding amount recognized in contributed surplus. The amount recognized as an expense is adjusted to
reflect the number of units for which the related service and performance conditions are expected to be met,
such that the amount ultimately recognized as an expense is based on the units of awards that do meet the
related service and non-market performance conditions at the vesting date.
When DSUs and/or RSUs are settled, the recorded fair value of the award is removed from contributed surplus
and credited to share capital.
The SUP also provides for the grant of discretionary DSUs and/or RSUs. The compensation cost is measured at
the fair value of the underlying Subordinate Voting Share as at the grant date.
Forfeitures, which are estimated at the time of grant, are included in the measurement of the expense and are
subsequently adjusted to reflect actual events.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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.
The following are critical judgements that management has made in applying accounting policies and that have
the most significant effect on the amounts recognized in the consolidated financial statements:
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, ERP and Data Solutions.
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 three reportable segments based on geography: Canada, U.S. and International.
The following are assumptions and estimation uncertainties that have 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 generally 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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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 of long-lived assets – The Group’s impairment test for goodwill is based on internal estimates of
either the value-in-use calculations using valuation models such as the discounted cash flow model or the fair
value less costs of disposal calculations using valuation models such as a multiple applied to Adjusted EBITDA.
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 pre-tax value weighted average cost of capital (“WACC”). Key assumptions used in the fair value less
cost of disposal calculations include estimated revenues and EBITDA margin in determining forecasted Adjusted
EBITDA, as well as the multiple applied to forecasted Adjusted EBITDA. 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.
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.
ACCOUNTING STANDARD AMENDMENTS EFFECTIVE FOR THE YEAR ENDING MARCH 31, 2023
The following amendment to existing standards was adopted by the Group on April 1, 2022 and had no
significant impact on the Group’s consolidated financial statements.
Onerous Contracts, Cost of Fulfilling a Contract
In May 2020, the IASB issued Onerous Contracts - Cost of Fulfilling a Contract, which includes amendments to
IAS 37. The amendments specify which costs a company should include as the cost of fulfilling a contract when
assessing whether a contract is onerous. The full cost approach considers that the 'cost of fulfilling' a contract
comprises the 'costs that relate directly to the contract'. Costs that relate directly to a contract include
incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling
contracts.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
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:
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. 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. After reconsidering certain aspects of the 2020 amendments, the IASB reconfirmed that only covenants
with which a company must comply on or before the reporting date affect the classification of a liability as
current or non-current. Additional disclosure will be required to help users understand the risk that those
liabilities could become repayable within twelve months after the reporting date. 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. The amendments to IAS 1 apply retrospectively and are effective for annual periods
beginning on or after January 1, 2024, with earlier application permitted. Management is currently evaluating the
impact of the amendment on its 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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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 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.
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.
3. BUSINESS COMBINATIONS
Business combinations realized in the fiscal year ended March 31, 2023
Datum
Overview
On July 1, 2022, the Company acquired 100% of the issued and outstanding equity interests of U.S.-based
Datum Consulting Group, LLC and its international affiliates (“Datum”) (the “Datum Acquisition”), a leader in IP
enabled digital transformation services for data-rich insurers and other regulated entities such as governments.
Management expects that its modernization practice and cloud-based software as a service (SaaS) offering will
be complementary to Alithya's existing offerings and will allow for cross-selling opportunities.
The Datum Acquisition was completed for purchase consideration and other consideration of up to
US$45,488,000 ($58,550,000), in aggregate.
The purchase consideration of US$27,200,000 ($35,010,000), in aggregate, consisted of: (i) US$13,542,000
($17,430,000) paid in cash, net of working capital adjustment; (ii) US$4,313,000 ($5,552,000) paid by the
issuance of 1,867,262 Subordinate Voting Shares; and (iii) US$9,345,000 ($12,028,000) of balance of sale,
payable over three years on July 1, 2023, 2024 and 2025 (the "Anniversary Dates") (note 10).
The other consideration of up to US$18,288,000 ($23,540,000), consisted of: (i) deferred cash consideration of
US$975,000 ($1,255,000); (ii) deferred share consideration of 1,867,261 Subordinate Voting Shares with a
value of US$4,313,000 ($5,552,000); and (iii) potential earn-out consideration of up to US$13,000,000
($16,733,000), all payable over three years on the Anniversary Dates.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 27
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATIONS (CONT’D)
The deferred cash consideration will be recognized as employee compensation on business acquisition, over
three years (note 19).
The deferred share consideration will be recognized as share-based compensation to an employee, over three
years (note 13).
The potential earn-out consideration is payable in cash (75%) and by Subordinate Voting Shares (25%), with a
maximum of 1,517,151 Subordinate Voting Shares available for issuance with a value of US$3,505,000
($4,511,000). The potential earn-out consideration has earn-out periods ending on each of the Anniversary
Dates.
On March 31, 2023, an amending agreement to the equity purchase agreement was executed wherein the
condition for employment for the payment of the potential earn-out was removed (The “Earn-out Amendment”).
From the acquisition date to the Earn-out Amendment date, the potential earn-out consideration payable in cash
was treated as employee compensation, and was to be expensed over three years as the related services were
to be provided, at the best estimate of the payout amount required to settle the present obligation at the end of
the reporting period. The potential earn-out consideration payable in shares was treated as share-based
compensation, which was to be expensed over the three-year vesting period.
As a result of the Earn-out Amendment, a contingent consideration liability and expense, in the amount of
$9,157,000 was recorded as at March 31, 2023, representing the present value of the expected payout amount
for the potential earn-out over the next three years. The contingent consideration expense is recorded in
business acquisition, integration and reorganization costs.
The portion of the contingent consideration to be settled in shares is adjusted to reflect the number of awards for
which the non-market performance conditions are expected to be met, such that the amount ultimately
recognized as an expense is based on the number of awards that do meet the non-market performance
conditions at the vesting dates.
The fair value of the assets acquired, liabilities assumed, and the purchase consideration’s valuation have been
completed.
For the year ended March 31, 2023, the Company incurred acquisition-related costs pertaining to the Datum
Acquisition of approximately $1,369,000. 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, 2023 and 2022.
| 28
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATIONS (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 Datum
$
Current assets
Cash
Accounts receivable and other receivables
Unbilled revenue
Prepaids
Non-current assets
Other assets
Property and equipment
Right-of-use assets
Intangibles (note 7)
Goodwill (note 8)
Total assets acquired
Current liabilities
Accounts payable and accrued liabilities
Deferred revenue
Current portion of lease liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Total liabilities assumed
Net assets acquired
2,798
3,552
1,301
159
7,810
2
55
135
24,070
13,696
45,768
4,255
945
71
5,271
64
6,398
11,733
34,035
As at March 31, 2023, upon final determination of the fair values, the intangibles value was increased by
$1,545,000, goodwill value was reduced by $1,134,000 and deferred tax liabilities value was increased by
$411,000. The effects of the adjustments to the purchase price were not material to the financial statements for
the period from the acquisition date to March 31, 2023.
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 Datum into the
Group's existing business. The Company does not expect the goodwill to be deductible for income tax purposes.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATIONS (CONT'D)
Consideration paid
The following table summarizes the acquisition date fair value of each class of consideration as follows:
Acquisition of Datum
Consideration transferred settled in cash
Issuance of 1,867,262 Subordinate Voting Shares (note 12)
Balance of purchase payable with a nominal value of
US$9,345,000 ($12,028,000) (note 10)
Total consideration transferred
$
17,430
5,552
11,053
34,035
Datum's contribution to the Group results
For the year ended March 31, 2023, the Datum business contributed revenues of approximately $16,326,000
and a loss before income taxes in the amount of $15,762,000, including amortization, primarily related to the
acquired customer relationships, of $5,658,000, contingent consideration of $9,157,000, share-based
compensation granted on business acquisitions of $2,644,000, and acquisition and integration costs of
$2,099,000.
If the acquisition had occurred on April 1, 2022, pro-forma consolidated revenues and loss before income taxes
for the year ended March 31, 2023 would have been $526,492,000 and $38,991,000, respectively. These
amounts have been calculated using Datum’s results and adjusting for:
• differences in accounting policies between the Group and Datum;
• the removal of transaction costs incurred by Datum from April 1, 2022 to June 30, 2022; and
• the additional amortization that would have been charged assuming the fair value adjustments to intangibles
had been applied from April 1, 2022.
Trafic 3W inc.
On April 1, 2022, the Company acquired all of the issued and outstanding shares of Trafic 3W inc. (the “Trafic3W
Acquisition”) for total consideration of $2,005,000, comprised of cash, in the amount of $900,000, and a balance
of purchase price payable in the amount of $1,105,000.
The actual amount paid at acquisition, net of the cash acquired in the amount of $86,000, was $814,000, for a
total consideration transferred of $1,919,000. The purchase price was mostly allocated to intangible assets and
goodwill, in the amount of $455,000 and $1,270,000 respectively. Intangible assets acquired at the date of
acquisition consisted of customer relationships and goodwill, allocated to the Canada CGU.
The balance of purchase price payable was settled in October 2022 with the issuance of 83,449 Subordinate
Voting Shares, for a total value of $281,000, and the balance, in the amount of $824,000, was paid cash.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 30
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATIONS (CONT'D)
Business combinations realized in the prior fiscal year ended March 31, 2022
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.
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, 2023 and 2022.
| 31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATIONS (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 (note 7)
Deferred tax assets
Goodwill (note 8)
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
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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 32
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATIONS (CONT'D)
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 (note 12)
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 originally 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
was subject to working capital and other adjustments, and included an additional potential earn-out of up to
US$1,000,000 ($1,270,000) payable before May 31, 2023. As at March 31, 2023, it was determined that no
earn-out would be payable.
The fair value of the assets acquired, the liabilities assumed, and the purchase consideration’s valuation have
been completed during the year ended March 31, 2023. As a result of working capital and other adjustments, the
total purchase consideration was reduced by US$830,000 ($1,049,000) during the year ended March 31, 2023,
resulting in decrease in goodwill in the amount of $1,049,000 (note 8). The effects of the adjustments to the
purchase price were not material to the financial statements for the year ended March 31, 2022.
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, 2023 and 2022.
| 33
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATIONS (CONT'D)
Purchase Price Allocation
As at March 31, 2022, the preliminary allocation of the fair value of the assets acquired and the liabilities
assumed is detailed as follows:
Acquisition of Vitalyst
Current assets
Cash
Accounts receivable and other receivables
$
Unbilled revenues
Prepaids
Non-current assets
Other assets
Property and equipment
Right-of-use assets
Intangibles (note 7)
Goodwill (note 8)
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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 34
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
3. BUSINESS COMBINATIONS (CONT'D)
Consideration paid
The following table summarizes the acquisition date fair value of each class of consideration as follows as
disclosed as at March 31, 2022:
Acquisition of Vitalyst
Cash paid
Earn-out
Total consideration transferred
$
16,420
—
16,420
During the year ended March 31, 2023, the consideration paid in cash was reduced by $1,049,000.
Vitalyst's contribution to the Group results
For the year ended March 31, 2022, the Vitalyst business contributed revenues of approximately $4,980,000,
and a loss before income taxes 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.
If the acquisition had occurred on April 1, 2021, consolidated pro-forma revenue and loss before incomes taxes
for the year ended March 31, 2022 would have been $464,327,000 and $13,457,000, 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,
2023
$
2022
$
90,007
2,446
92,453
98,289
2,578
100,867
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 35
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
5. PROPERTY AND EQUIPMENT
As at
March 31, 2023
March 31, 2022
Furniture,
fixtures &
equipment
Computer
equipment
Leasehold
improvements
Total
Furniture,
fixtures &
equipment
Computer
equipment
Leasehold
improvements
Total
8,081
16,598
1,874
4,925
8,494
15,293
Disposals / retirements
(325)
(13)
(758) (1,096)
Opening cost
Additions
Additions through business
acquisitions (note 3)
$
1,874
89
—
$
4,925
1,321
55
Foreign currency translation
adjustment
Ending cost
Opening accumulated
depreciation
Depreciation expense
Impairment
87
1,725
448
280
164
504
6,792
2,083
1,344
5
$
$
$
8,494
15,293
1,738
326
1,736
—
55
19
610
2,350
4,881
1,183
2,807
605
774
Disposals / retirements
(325)
(13)
(758) (1,096)
84
410
14
508
651
1,074
3,829
2,963
3,394
7,874
4,687
8,724
448
1,426
Foreign currency translation
adjustment
Ending accumulated
depreciation
Net carrying amount
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
Impairment (a)
Reassessments (b)
Exchange rate effect
Net carrying amount
56
79
—
1
111
337
—
—
—
$
2,889
1,444
591
—
1
$
$
6,149
10,776
219
1,719
2,120
2,790
—
6
—
8
1,100
996
—
—
(13)
2,083
2,842
1,116
2,327
1,235
2,568
—
—
—
—
(1)
(14)
2,350
4,881
6,144
10,412
March 31,
2023
$
2022
$
15,146
428
(3,729)
(2,923)
—
431
9,353
11,118
7,117
(2,867)
—
(161)
(61)
15,146
(a) During the year ended March 31, 2023, the Group recorded impairment charges against certain real estate right-of-use assets, in the
context of on-going review of its real estate strategy following the integration of acquisitions and changes in working conditions in order to
reduce the Group's footprint, realize synergies and improve the cost structure of the combined business. As a result, an impairment charge
of $939,000 is presented in integration costs and the balance, in the amount of $1,984,000, is presented in selling, general and
administrative expenses.
(b) During the year ended March 31, 2022, 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 a long-term lease
receivable, included in other assets, in the amounts of $849,000.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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 interest
Reassessments
Exchange rate effect
Ending balance
Current portion
March 31,
2023
$
2022
$
21,263
428
(4,478)
825
—
478
18,516
3,873
14,643
15,459
8,647
(3,413)
725
(88)
(67)
21,263
3,510
17,753
Contractual lease payments under the lease liabilities as at March 31, 2023 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
Common area maintenance
March 31, 2023
$
4,545
5,219
7,197
3,538
20,499
March 31,
2023
$
2022
$
825
2,323
3,148
725
2,766
3,491
Total cash outflow for leases for the years ended March 31, 2023 and 2022 was $6,801,000 and $6,179,000,
respectively.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
7. INTANGIBLES
As at
March 31, 2023
March 31, 2022
Customer
relationships
Software
Tradenames
(a)
Non-
compete
agreements
$
$
$
$
Total
$
Customer
relationships
Software
Non-
compete
agreements
$
$
$
Total
$
Opening cost
145,966
4,989
—
93
—
—
6,886
157,841
67,836
4,338
6,911
79,085
—
93
—
22
—
22
Additions,
purchased
Additions
through
business
acquisition
(note 3)
Additions,
internally
generated
Disposals /
retirements
Foreign
currency
translation
adjustment
Opening
accumulated
amortization
Amortization
Disposals /
retirements
Foreign
currency
translation
adjustment
Ending
accumulated
amortization
Net carrying
amount
Ending cost
163,208
15,812
11,525
9,782
2,703
515
24,525
78,804
296
—
79,100
—
—
756
(454)
5,717
646
49,958
22,183
2,741
3,843
—
(454)
—
—
138
2,841
—
—
—
—
—
756
(454)
—
—
1,339
(999)
—
—
1,339
(999)
332
6,833
(674)
(7)
(25)
(706)
7,733
189,594
145,966
4,989
6,886
157,841
3,215
1,471
55,914
27,497
38,149
11,925
2,476
1,007
1,871
1,353
42,496
14,285
—
(454)
—
(737)
—
(737)
1,994
149
—
159
2,302
(116)
(5)
(9)
(130)
74,135
6,279
—
4,845
85,259
49,958
2,741
3,215
55,914
89,073
9,533
2,841
2,888
104,335
96,008
2,248
3,671
101,927
(a) Tradenames are allocated to Data Solutions CGU for the purpose of impairment testing.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
8. GOODWILL
As at
Canada
France
Beginning balance
Business acquisition (note 3)
Allocation (a)
Foreign currency translation
adjustment
$
77,135
1,270
—
—
Net carrying amount
78,405
$
128
—
—
8
136
March 31, 2023
EPM
$
ERP
$
Data
Solutions (b)
Not
allocated
$
$
Total
$
8,852
29,005
—
30,968
146,088
—
—
740
9,592
—
13,696
(1,049)
13,917
29,919
4,943
63,867
—
(29,919)
—
697
14,393
—
—
6,388
166,393
As at
Beginning balance
Business acquisition (note 3)
Foreign currency translation
adjustment
Net carrying amount
Canada
France
$
34,644
42,491
—
77,135
$
137
—
(9)
128
March 31, 2022
EPM
$
ERP
$
8,915
—
29,210
—
(63)
(205)
8,852
29,005
$
—
—
—
—
Data
Solutions
Not
allocated
Total
$
72,906
73,989
$
—
31,498
(530)
(807)
30,968
146,088
(a) During the year ended March 31, 2023, upon completion of the purchase price allocation, the Group allocated the goodwill from the
Vitalyst Acquisition to the ERP CGU for the purpose of impairment testing.
(b) Data Solutions is the CGU that relates to the goodwill from the Datum Acquisition for the purpose of impairment testing.
The Group completed an annual impairment test as at March 31, 2023 and March 31, 2022 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 the CGU is based on the higher of the value in use and fair value less costs
of disposal.
Recoverable amount of ERP CGU for the year ended March 31, 2023
For the year ended March 31, 2023, the Group determined the recoverable amount of the ERP CGU based on
the fair value less costs of disposal method. The fair value of the ERP CGU was based on a multiple applied to
Adjusted EBITDA (as defined in note 25) for the next year, which considers financial forecasts approved by
management (level 3 of the fair value hierarchy as per note 24). The key assumptions for the fair value less
costs of disposal method include estimated revenues, and EBITDA margin in determining forecasted Adjusted
EBITDA, as well as the multiple of 11 applied to forecasted Adjusted EBITDA. The Adjusted EBITDA multiple
was obtained by using market comparables as a reference. The values assigned to the key assumptions
represent management’s assessment of the future Adjusted EBITDA and have been based on historical data
from external and internal sources.
For the year ended March 31, 2023, the key assumptions related to ERP CGU, 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, 2023, assuming all other
variables remain constant, would result in the recoverable amount being equal to the carrying amount.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
8. GOODWILL (CONT’D)
ERP
Incremental decrease
in Adjusted EBITDA
margin
Incremental decrease
in Adjusted EBITDA
multiple
Basis points
Multiple
231
2.4
For the year ended March 31, 2022, the Group determined the recoverable amount of the ERP CGU based on
the value-in-use calculation, as described below.
Recoverable amount of other CGUs, including ERP CGU for the year ended March 31, 2022
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
operating cash flows of each CGU is determined by applying a suitable 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
March 31, 2023
Before tax WACC
Long-term growth rate of net operating cash
flows (a)
Canada
France
%
14.3
1.9
%
20.2
1.5
EPM
%
18.4
1.8
(a) The long-term growth rate is based on published industry research.
As at
March 31, 2022
Before tax WACC
Long-term growth rate of net operating cash
flows (a)
Canada
France
%
11.9
3.4
%
16.7
2.6
EPM
%
15.2
2.7
ERP
%
N/A
N/A
ERP
%
15.3
2.7
Data
Solutions
%
19.1
1.8
Data
Solutions
%
—
—
(a) The long-term growth rate is based on published industry research.
For the year ended March 31, 2023, no reasonable possible change in any of the above key assumptions would
cause the carrying value of the France and Data Solutions CGUs to exceed their recoverable amount.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
8. GOODWILL (CONT’D)
For the year ended March 31, 2023, two key assumptions related to the Canada and EPM CGUs were identified
that, if changed, could have caused the carrying amounts to exceed their recoverable amounts. Varying the
assumptions in the values of the recoverable amount calculations, individually as indicated below, for the year
ended March 31, 2023, assuming all other variables remain constant, would result in the recoverable amounts
being equal to the carrying amounts.
Canada
EPM
Incremental increase in before
tax WACC
Incremental decrease in long-
term growth rate of net
operating cash flows
Basis points
Basis points
165
98
218
146
9. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at
Trade payable
Accrued compensation
Consumption taxes payable
Performance obligations in customer contracts
Provision
March 31,
2023
$
2022
$
53,145
33,835
4,071
212
—
91,263
53,507
31,396
3,694
1,013
50
89,660
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
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 loans (c)
Balance of purchase payable with a nominal value of $3,100,000, non-interest bearing
(5.8% effective interest rate), paid in April 2022
Balance of purchase payable with a nominal value of $1,800,000, non-interest bearing
(6.0% effective interest rate), paid in October 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), paid in December 2022
Balance of purchase price payable with a nominal value of $12,641,000
(US$9,345,000), non-interest bearing (4.4% effective interest rate), payable in annual
installments of $4,214,000 (US$3,115,000), maturing on July 1, 2025
Deferral of employment tax payments (March 31, 2022 - US$1,219,000)
Other
Unamortized transaction costs (net of accumulated amortization of $1,184,000 and
$754,000)
Current portion of long-term debt
March 31,
2023
$
2022
$
82,512
13,192
20,000
—
—
—
11,993
—
—
(507)
127,190
12,808
114,382
66,631
8,596
17,500
3,100
1,748
8,178
—
1,521
120
(718)
106,676
19,316
87,360
(a) The Credit Facility is available to a maximum amount of $125,000,000 which can be increased under an
accordion provision to $140,000,000, under certain conditions, 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.
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.
As at March 31, 2023, the amount outstanding under the Credit Facility includes $82,512,000 (March 31, 2022 -
$48,377,000) payable in U.S. dollars (US$61,000,000; March 31, 2022 - US$38,755,000).
On October 27, 2022, the Group entered into an additional operating credit facility available to a maximum
amount of $2,705,000 (US$2,000,000), bearing interest at U.S. prime rate plus 1.00%, with the same security
and financial covenants as the Credit Facility. This operating credit facility can be terminated by the lender at any
time. There was no amount outstanding under this additional operating credit facility as at March 31, 2023.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
10. LONG-TERM DEBT (CONT’D)
(b) The secured loans issued by Investissement Québec to finance the Group’s refundable tax credits have the
following terms and conditions:
As at
Year of related Refundable
Tax Credit
Repayable on the earlier of
the date of receipt of the
refundable tax credits
receivable and
2021
2022
2023
March 31, 2023
March 31, 2024
March 31, 2025
Bearing interest at
Prime rate + 1,00%
Prime rate + 1,00%
Prime rate + 1,25%
March 31,
2023
$
2022
$
—
8,719
4,473
13,192
4,670
3,926
—
8,596
The maximum amount that can be financed for the 2022 and 2023 refundable tax credits is the lesser of 90% of
the eligible refundable tax credits and $8,776,000 for 2022 and $10,670,000 for 2023. The loans are secured by
a first ranking hypothec on the universality of the Group’s financed refundable tax credits receivable and a
subordinated ranking hypothec on accounts receivable and other receivables.
(c) The subordinated unsecured loans with Investissement Québec, in the amount of $20,000,000, mature on
October 1, 2025. The first $10,000,000 bears fixed interest rates ranging between 6.00% and 7.25% and the
additional $10,000,000 bears interest ranging between 7.10% and 8.35%, determined and payable quarterly,
based on threshold limits for certain financial ratios. Under the terms of the loans, the Group is required to
maintain compliance with certain financial covenants which are measured on a quarterly basis.
(a)(c) The Group was in compliance with all of its financial covenants as at March 31, 2023 and 2022.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
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
Deferred tax recovery:
Recognition of previously unrecognized tax benefits related to tax losses
Origination and reversal of temporary differences
Total deferred tax recovery
Total income tax recovery
March 31,
2023
$
2022
$
569
(20)
(6,470)
(356)
(6,826)
(6,257)
—
(3,007)
(3,007)
(3,027)
The Group’s effective income tax rate differs from the combined statutory tax rate as follows:
Year ended
March 31,
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
2023
2022
%
$
%
$
26.5
(3.1)
(8.8)
0.7
1.9
17.2
(36,354)
(9,634)
1,112
3,198
(247)
(686)
(6,257)
26.5
(3.6)
1.3
(7.2)
(0.7)
16.3
(18,575)
(4,922)
663
(238)
1,340
130
(3,027)
The Group’s applicable statutory tax rate is the Canadian combined rates applicable in the jurisdictions in which
the Group operates.
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,
2023
$
2022
$
(8,632)
5,997
(2,635)
(9,962)
7,247
(2,715)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
11. INCOME TAXES (CONT’D)
Movements in temporary differences during the year were as follows:
As at
March 31, 2023
Opening
balance
Recognized
in earnings
Recognized in
equity
Business
acquisition
Foreign
currency
translation
adjustment
$
$
$
$
$
Losses available for
carryforward and other tax
deductions
Deferred financing costs
Total deferred tax assets
Intangibles and goodwill
Tax credits and other
Total deferred tax liability
Net carrying amount
17,268
576
17,844
(15,439)
(5,120)
(20,559)
(2,715)
972
(102)
870
6,055
(99)
5,956
6,826
—
10
10
—
—
—
10
—
—
—
(6,519)
—
(6,519)
(6,519)
—
—
—
(237)
—
(237)
(237)
As at
March 31, 2022
Opening
balance
Recognized
in earnings
Recognized in
equity
Business
acquisition
Foreign
currency
translation
adjustment
$
$
$
$
$
Losses available for
carryforward and other tax
deductions
Deferred financing costs
Total deferred tax assets
Intangibles and goodwill
Tax credits and other
Total deferred tax liability
Net carrying amount
13,116
558
13,674
(6,129)
(3,060)
(9,189)
4,485
2,804
(110)
2,694
2,373
(2,060)
313
3,007
—
113
113
—
—
—
113
1,348
15
1,363
(11,683)
—
(11,683)
(10,320)
—
—
—
—
—
—
—
Total
$
18,240
484
18,724
(16,140)
(5,219)
(21,359)
(2,635)
Total
$
17,268
576
17,844
(15,439)
(5,120)
(20,559)
(2,715)
During the year ended March 31, 2023, the Group recognized a deferred tax asset in the amount of $6,470,000
that was probable of being realized as a result of the deferred tax liability recognized pursuant to the Datum
Acquisition (note 3). The recognized deferred tax asset relates to previous years' net operating losses of the
Group in the U.S. available for carryforwards as at July 1, 2022 in the amount of approximately $24,359,000 that
was previously not recognized.
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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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
2039
2040
2041
2042
2043
Losses available for carryforward for which no deferred tax asset was recognized
Expiry date (a)
2037
Indefinite
Canada
$
922
390
2,075
3,516
5,471
12,374
13,328
16,387
29,715
USA
$
(a)
Net operating losses amounting to $20,292,000 of which $13,328,000 will expire in 2037, 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 $53,274,000 (with
expiry dates ranging from 2024 to 2043) and ii) net deductible temporary differences totaling approximately $20,834,000 for which no
deferred tax benefit has been recognized.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL
AUTHORIZED
As at March 31, 2023 and 2022, 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, 2023 and 2022.
| 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(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, 2023, the issued share capital of the Company is as follows:
Beginning balance
85,554,000
300,901
7,171,616
4,321
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 Datum (note 3)
Shares issued in consideration of the
acquisition of Trafic 3W inc. (note 3)
Shares purchased for cancellation
Exercise of stock options
Ending balance
738,382
1,867,262
83,449
(371,525)
—
1,708
5,528
276
(1,303)
—
87,871,568
307,110
—
—
—
—
—
—
—
—
152,632
7,324,248
536
4,857
During the year ended March 31, 2023, the following transactions occurred:
• As part of the acquisition of Matricis Informatique Inc., 157,882 Subordinate Voting Shares, with a total value
of $600,000, reclassified from contributed surplus, were issued as settlement of the third anniversary share
consideration.
• As part of the acquisition of Travercent LLC, 580,500 Subordinate Voting Shares, with a total value of
US$819,000 ($1,108,000), reclassified from contributed surplus, were issued as settlement of the third
anniversary share consideration.
• As part of the Datum Acquisition (note 3), 1,867,262 Subordinate Voting Shares, with a total fair value of
$5,552,000, were issued. The Company incurred share issue costs in the amount of $32,000, net of deferred
income tax of $8,000, for net consideration of $5,528,000.
• As part of the Trafic3W Acquisition (note 3), 83,449 Subordinate Voting Shares, with a total fair value of
$281,000, were issued. The Company incurred share issue costs in the amount of $7,000, net of deferred
income tax of $2,000, for net consideration of $276,000.
• The purchase for cancellation of 371,525 Subordinate Voting Shares under the Company's NCIB for a total
cash consideration of $1,033,000 and a carrying value of $1,303,000. The excess of the carrying value over
the purchase price in the amount of $270,000 was recorded to retained earnings.
• 152,632 stock options were exercised and 152,632 Multiple Voting Shares were issued with a value of
$536,000, for cash consideration of $346,000, with $190,000 reclassified from contributed surplus.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL (CONT’D)
As at March 31, 2022, the issued share capital of the Company is as follows:
Beginning balance
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
Ending balance
834,324
2,935
25,182,676
8,143,322
(349,400)
2,750
302,632
63,874
80,585
24,686
(1,244)
10
182
195
85,554,000
300,901
—
—
—
152,632
(302,632)
—
7,171,616
—
—
—
518
(182)
—
4,321
During the year ended March 31, 2022, the following transactions occurred:
• As part of the acquisition of Matricis Informatique Inc., 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 acquisition of Travercent LLC, 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.
• As part of the acquisition of Groupe Askida Inc. and Askida Consulting Services Inc., 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 fair 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. As at March 31, 2023, the entity was
no longer a related party as its controlling shareholder ceased to be a director of the Group on
September 14, 2022.
• The purchase for cancellation of 349,400 Subordinate Voting Shares under the Company's NCIB 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 recorded 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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
12. SHARE CAPITAL (CONT’D)
• 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.
13. SHARE-BASED PAYMENTS
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
employee’s 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.
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 was 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 plan authorized the Company to make purchases for cancellation during the period between
September 20, 2021 and the earlier of September 19, 2022 and the date on which the Company would have
acquired the maximum number of Subordinate Voting Shares allowable under the NCIB or would otherwise
have decided not to make any further purchases.
On September 14, 2022, the Company’s Board of Directors authorized and subsequently the TSX approved the
renewal of its NCIB. Under the NCIB, the Company is allowed to purchase for cancellation up to 2,491,128
Subordinate Voting Shares, representing 5% of the Company’s public float as of the close of markets on
September 8, 2022.
The NCIB plan commenced on September 20, 2022 and will end on the earlier of September 19, 2023 and the
date on which the Company will have acquired the maximum number of Subordinate Voting Shares allowable
under the NCIB or will otherwise decide 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.
In connection with the NCIB, the Company entered into an automatic share purchase plan (“ASPP”) with a
designated broker. 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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
13. SHARE-BASED PAYMENTS (CONT’D)
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. Until February 13, 2023, the
LTIP provided that stock options 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. On February 13, 2023, the
Board amended the LTIP to provide that stock options be issued with an exercise price equal to the volume
weighted average price of the Subordinate Voting Shares on the TSX for the five trading days ending on and
including the day that is 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 shall be exercised by the tenth
anniversary of the grant date, except in the event of death, disability, retirement or termination of employment, in
which case the LTIP provides earlier terms. 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.
The following tables present information concerning outstanding stock options issued by currency:
Year ended
March 31, 2023
March 31, 2022
Beginning balance
Granted
Forfeited
Expired
Exercised
Ending balance
Exercisable at year end
Number of stock
options
Weighted
average exercise
price (CAD)
Number of stock
options
Weighted
average exercise
price (CAD)
$
$
3,079,598
626,230
(67,500)
(85,000)
(152,632)
3,400,696
1,464,014
3.19
3.25
3.60
3.65
2.27
3.23
3.42
2,607,528
774,202
(148,000)
—
(154,132)
3,079,598
1,289,896
3.10
3.23
3.20
—
(1.92)
3.19
3.22
Year ended
March 31, 2023
March 31, 2022
Beginning balance
Granted
Forfeited
Expired
Exercised
Ending balance
Exercisable at year end
Number of stock
options
Weighted
average exercise
price (USD)
Number of stock
options
Weighted
average exercise
price (USD)
$
$
1,004,484
265,125
(94,475)
(90,959)
—
1,084,175
284,400
2.63
2.50
2.91
2.92
—
2.55
2.81
917,653
299,100
(44,167)
(166,852)
(1,250)
1,004,484
237,909
3.08
2.66
3.80
4.84
1.67
2.63
3.00
Included in the 1,464,014 (2022 - 1,289,896) stock options exercisable issued in Canadian dollars, 505,264
(2022 - 657,896) stock options are available to purchase Multiple Voting Shares as at March 31, 2023.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
13. SHARE-BASED PAYMENTS (CONT’D)
On June 21, 2022, Alithya issued 626,230 and 265,125 stock options, to purchase a total of 891,355
Subordinate Voting Shares, at a grant date fair value of $1.38 and US$1.06, 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 $1.20 and US$0.99, respectively.
During the year ended March 31, 2023, the weighted average share price at the date of exercise of stock
options was $2.66. (2022 - $3.40).
The assumptions used to determine the 2023 and 2022 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,
2023
2022
$3.25
$3.25
3.50 %
35.0 %
—
6.6
3.3
$3.23
$3.23
1.25 %
34.7 %
—
6.6
3.2
(a) Determined on the basis of observed volatility in publicly traded companies operating in similar industries.
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, 2023
March 31, 2022
Exercise price range (CAD)
Number of stock
options
Weighted average
remaining exercise
period – in years
Number of stock
options
Weighted average
remaining exercise
period – in years
$
1.90 to 2.55
2.56 to 2.96
2.97 to 3.30
3.31 to 3.95
3.96 to 4.55
735,264
295,000
1,366,432
564,000
440,000
3,400,696
5.44
2.63
8.15
5.48
5.59
6.31
892,896
298,500
760,202
673,000
455,000
3,079,598
5.52
3.64
8.26
5.71
6.59
6.21
As at
March 31, 2023
March 31, 2022
Exercise price range (USD)
Number of stock
options
Weighted average
remaining exercise
period – in years
Number of stock
options
Weighted average
remaining exercise
period – in years
$
1.67 to 2.25
2.26 to 2.75
2.76 to 3.85
3.86 to 5.45
175,000
665,425
243,750
—
1,084,175
7.23
8.20
5.96
—
7.54
180,000
513,525
305,000
5,959
1,004,484
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
8.23
7.22
6.94
0.81
7.28
| 52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
13. SHARE-BASED PAYMENTS (CONT’D)
DSUs
a) DSUs under the LTIP
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 eligible 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.
The following table presents information concerning the outstanding number of DSUs for the respective years:
Year ended
Beginning balance
Granted to non-employee directors
Settled
Ending balance
March 31,
2023
2022
439,521
227,453
—
666,974
330,246
173,149
(63,874)
439,521
The DSUs issued by the Company are fully vested at the grant date and the fair value of $579,000 (2022 -
$576,000) has been recorded in share-based compensation expense.
b) DSUs under the SUP
Under the SUP, eligible employees of the Company may elect annually to receive up to 50% of their annual
bonus in DSUs (“Bonus DSUs”). The Company also grants additional DSUs (“Matching DSUs”) equal to 25% of
the Bonus DSUs.
The number of Bonus DSUs to be received by an eligible employee is determined by dividing the amount of the
eligible employee’s bonus to be paid in the form of Bonus DSUs on the date on which the bonus is payable to
the eligible employee (the “Award Date”) by the volume weighted average price of the Subordinate Voting
Shares on the TSX for the five trading days ending on and including the date that is immediately prior to the
Award Date. Bonus DSUs vest as of the Award Date. Matching DSUs vest one year following the Award Date.
For the year ended March 31, 2023, no Bonus DSUs or Matching DSUs have been awarded. Share-based
compensation expense has been recorded in the amount of $671,000 (2022 - nil), as the related service and
performance conditions are expected to be met.
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 eligible employees and directors of the Company and its
subsidiaries. RSUs vest on the third anniversary of the date of grant and settle as soon as practicable following
the expiry of the vesting period, unless otherwise specified by the Board at the time of grant.
As at March 31, 2023 and 2022, there was 181,498 fully-vested RSUs outstanding, in aggregate, which were
granted on June 23, 2020. When those RSUs were issued, the Board determined that they would vest on the
first anniversary date of the grant date and settle as soon as practicable following the third anniversary of the
grant date.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
13. SHARE-BASED PAYMENTS (CONT’D)
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 eligible 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.
The following table presents information concerning the outstanding number of PSUs for the respective years:
Year ended
Beginning balance
Granted
Forfeited
Ending balance
March 31,
2023
2022
332,263
528,120
(5,000)
855,383
—
332,263
—
332,263
On June 21, 2022, 528,120 PSUs, in aggregate, vesting three years from the date of grant were granted at a
grant date fair value of $3.25, per PSU, for an aggregate fair value of $1,716,000.
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.
Share-Based Compensation expense
Total share-based compensation expense for the years ended March 31, 2023 and 2022 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,
2023
$
2022
$
1,262
1,372
2,995
1,250
—
1,233
8,112
851
1,138
1,524
576
92
273
4,454
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
13. SHARE-BASED PAYMENTS (CONT’D)
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 acquisition of Matricis Informatique
Inc., an amount of $100,000 (2022 - $350,000);
• In relation to the Subordinate Voting Shares, to be issued as part of the acquisition of Groupe Askida Inc. and
Askida Consulting Services Inc., an amount of nil (2022 - $453,000);
• In relation to the Subordinate Voting Shares, to be issued as part of the acquisition of Travercent LLC, an
amount of $251,000 (2022 - $721,000); and
• In relation to the Subordinate Voting Shares, to be issued as part of the Datum Acquisition, an amount of
$2,644,000 (2022 - nil).
14. 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
2024
2025
2026
2027
Thereafter
March 31, 2023
Total
9,176
3,299
1,355
1,367
4,119
19,316
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
15. RELATED PARTIES
Ultimate controlling party
As at March 31, 2023, the holders of Multiple Voting Shares, directly or indirectly, collectively owned or
exercised control over Subordinate Voting Shares and Multiple Voting Shares representing approximately
45.84% 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 (a)
Share-based compensation
Termination benefits
March 31,
2023
$
2022
$
4,101
3,081
—
7,182
4,312
1,325
317
5,954
(a) 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 $6,624,000 (2022 - $5,122,000) 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. As at March 31, 2023, the entity was no longer a
related party as its controlling shareholder ceased to be a director of the Group on September 14, 2022.
Year ended
Revenues (a)
March 31,
2023
$
2022
$
6,811
21,100
(a) Under a ten-year commercial agreement, ending in April 2031, an entity controlled by a former 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 March 31, 2023, trade accounts receivable in the amount of nil (March 31, 2022 - $4,287,000) were
receivable from an entity controlled by a director that ceased to be a director of the Group on
September 14, 2022.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 56
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
16. EARNINGS PER SHARE
Year ended
Net loss
Weighted average number of Shares outstanding
Basic and diluted loss per share
March 31,
2023
$
2022
$
(30,097)
(15,548)
94,178,549
(0.32)
85,297,843
(0.18)
The potentially dilutive outstanding equity instruments, which are DSUs, RSUs and vested options in the money
mentioned in Note 13, 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.
17. 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
Beginning balance
Repayment
Proceeds
Total cash flow
Business acquisition
(note 3)
Amortization of finance
costs
Interest accretion on
balances of purchase
payable
PPP loan forgiveness
Impacts of foreign
exchange
Reclassification other
long-term debt
Total non cash
Ending balance
Contingent
consideration
$
—
—
—
—
March 31, 2023
Current
portion of
long-term
debt
Long-term
debt
$
19,316
(20,362)
—
(20,362)
$
87,360
(77,156)
98,682
21,526
March 31, 2022
Current
portion of
long-term
debt
$
Long-term
debt
$
Total
$
35,134
19,817
54,951
(42,590)
(103,919)
(146,509)
—
(42,590)
156,768
52,849
156,768
10,259
Total
$
106,676
(97,518)
98,682
1,164
9,157
3,684
7,369
20,210
38,584
8,887
47,471
—
—
—
—
—
9,157
9,157
—
393
—
430
391
—
430
784
—
—
—
—
277
277
823
(5,868)
823
(5,868)
1,250
5,833
7,083
(9)
(1,228)
(1,237)
8,527
13,854
12,808
(8,527)
5,496
114,382
—
(11,803)
28,507
136,347
26,772
19,316
11,803
14,694
87,360
—
41,466
106,676
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 57
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
18. ADDITIONAL INFORMATION ON CONSOLIDATED LOSS
The following table provides additional information on the consolidated loss:
Year ended
Expenses by Nature
March 31,
2023
$
2022
$
Employee compensation and subcontractor costs
469,210
411,669
Government assistance
–
–
tax credits (a)
grants and loan forgiveness (b)
Licenses and telecommunications
Professional fees
Other expenses
Impairment of property and equipment and right-of-use assets (note 5, 6)
Depreciation of property and equipment
Depreciation of right-of-use assets
Expenses by Function
Cost of revenues
Selling, general and administrative expenses
Depreciation
(10,686)
—
9,789
7,496
18,882
2,758
2,807
3,729
503,985
370,927
126,522
6,536
503,985
(10,870)
(6,234)
6,848
5,911
13,246
—
2,568
2,867
426,005
321,732
98,838
5,435
426,005
(a) Tax credits are included in cost of revenues, except for an amount of $189,000 (2022 - $239,000) that was included in selling, general and
administrative expenses.
(b) Grants and loan forgiveness are included in cost of revenues, except for an amount of $1,324,000 that was included in selling, general
and administrative expenses for the year ended March 31, 2022. Included in grants and loan forgiveness for the year ended March 31, 2022
was $5,868,000 related to the forgiveness of two loans received under the Paycheck Protection Program ("PPP") of the Coronavirus Aid,
Relief, and Economic Security Act (the "CARES Act").
19. BUSINESS ACQUISITION, INTEGRATION AND REORGANIZATION COSTS
Year ended
Acquisition costs (a)
Integration costs (b)
Reorganization costs related to modifications to cost structure (c)
Employee compensation on business acquisition (note 3) (d)
Contingent consideration (note 3)
March 31,
2023
$
2022
$
1,554
2,189
4,582
597
9,157
18,079
3,964
6,808
845
—
—
11,617
(a) The acquisition costs consisted mainly of professional fees incurred in relation to business acquisitions (note 3).
(b) For the year ended March 31, 2023, integration costs consisted mostly of $939,000 for impairment of right-of-use assets previously
acquired as part of business combinations (note 6) (2022 - $2,820,000 for employee termination and benefits costs and the balance mostly
related to professional fees incurred in relation to business integration).
(c) Reorganization costs related to modifications to cost structure consisted of employee termination and benefits costs.
(d) Employee compensation on business acquisition included deferred cash consideration from the Datum Acquisition (note 3).
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 58
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
20. NET FINANCIAL EXPENSES
The following table summarizes net 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
21. SUPPLEMENTARY CASH FLOW INFORMATION
Changes in non-cash working capital items are as follows :
As at
Accounts receivable and other receivables
Income taxes receivable
Other assets
Unbilled revenues
Tax credits receivable
Prepaids
Accounts payable and accrued liabilities
Deferred revenues
March 31,
2023
$
2022
$
7,087
558
825
430
784
(349)
9,335
March 31,
2023
$
2022
$
15,750
—
103
(4,482)
(1,606)
(940)
(6,159)
(366)
2,300
2,402
432
725
277
823
(80)
4,579
(15,894)
628
—
865
(5,688)
(765)
17,651
2,083
(1,120)
During the year ended March 31, 2023, non-cash investing and financing activities included additions to right-of-
use assets and lease liabilities in the amount of $293,000 (2022 - $67,000) and $103,000 (2022 - nil) of other
assets were reclassified to accounts receivable and other receivables.
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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 59
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
22. SEGMENT AND GEOGRAPHICAL INFORMATION
The Group has three reportable segments: Canada, U.S. and International.
The Group's chief operating decision maker assesses the performance of the reportable segments based on
revenues and operating income by segment. Operating income by segment refers to operating income before
head office general and administrative expenses and business acquisition, integration and reorganization costs,
which are not considered when assessing the underlying financial performance of the reportable segments.
Head office general and administrative expenses are expenses and salaries related to centralized functions,
such as global finance, legal, human resources and technology teams, which are not allocated to segments.
This measure also excludes the effects of depreciation, amortization and foreign exchange loss (gain).
The accounting policies of each reportable segment are the same as described in Note 2. The revenues and
operating income by segment exclude intersegmental revenues and cost of revenues.
The following tables present the Group's operations based on reportable segments:
Year ended
March 31, 2023
Canada
$
U.S.
$
International
$
Total
$
Revenues
Operating income by segment
Head office general and administrative expenses
Business acquisition, integration and
reorganization costs
Foreign exchange loss (gain)
Operating income before depreciation and
amortization
Depreciation and amortization
Operating loss
312,349
35,964
189,883
26,736
20,469
2,953
522,701
65,653
40,401
18,079
159
7,014
34,033
(27,019)
Year ended
March 31, 2022
Canada
$
U.S.
$
International
$
Total
$
Revenues
Operating income by segment
Head office general and administrative expenses
Business acquisition, integration and
reorganization costs
Foreign exchange loss (gain)
Operating income before depreciation and
amortization
Depreciation and amortization
Operating loss
284,614
25,420
139,519
18,996
13,752
1,253
437,885
45,669
28,354
11,617
(26)
5,724
19,720
(13,996)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
22. 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
March 31,
2023
2022
$
%
$
%
138,450
148,316
2,039
288,805
47.9
51.4
0.7
100.0
154,251
118,023
1,299
273,573
56.4
43.1
0.5
100.0
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, 2023
Consulting services - time and materials
arrangements
Consulting services - fixed-fee arrangements
Subscription, software and other revenues
Canada
$
U.S.
$
International
$
Total
$
264,542
34,062
13,745
312,349
115,145
25,834
48,904
189,883
18,263
2,201
5
20,469
397,950
62,097
62,654
522,701
Year ended
March 31, 2022
Consulting services - time and materials
arrangements
Consulting services - fixed-fee arrangements
Subscription, software and other revenues
Canada
$
U.S.
$
International
$
Total
$
240,043
34,802
9,769
284,614
105,722
14,098
19,699
139,519
13,343
409
—
13,752
359,108
49,309
29,468
437,885
During the year ended March 31, 2023 and 2022, significantly all amounts included in the opening balance of
deferred revenues were recognized as revenue.
Major customer
During the year ended March 31, 2023, two clients generated individually more than 10% of total revenues for
$109,743,000 (2022 - one client generated more than 10% of total revenues for $63,391,000). As at March 31,
2023, accounts receivable and other receivables from one major customer amounted to $10,777,000 or 11.7%
of total accounts receivable and other receivables (2022 - one major customer amounted to $19,771,000 or
19.6%).
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 61
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
23. REMAINING PERFORMANCE OBLIGATIONS
Remaining performance obligations relates to the Group’s performance obligations that are partially or fully
unsatisfied under signed time and material contracts with ceilings and fixed-fee arrangements. When estimating
minimum transaction prices allocated to the remaining unsatisfied, or partially unsatisfied, performance
obligations, the Group applied the practical expedient to not disclose information about remaining performance
obligations if the underlying contract has an original expected duration of one year or less and for those
contracts where we bill the same value as that which is transferred to the customer.
The amount of the selling price allocated to remaining performance obligations as at March 31, 2023 is
$30,989,000 (2022 - $42,337,000) and is expected to be recognized as revenue within a weighted average of
1.6 years (2022 - 1.3 years).
24. FINANCIAL INSTRUMENTS
The Group's financial instruments consist of cash, restricted cash, accounts receivable and other receivables,
other assets, accounts payable and accrued liabilities, contingent consideration 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.
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 Group's financial instruments bearing interest at variable rates are as
follows:
As at
Credit Facility (note 10)
Secured loans (note 10)
Other long-term debt
March 31,
2023
$
2022
$
82,512
13,192
—
95,704
66,631
8,596
120
75,347
On August 30, 2022, the Group entered into and designated as an effective hedging instrument, an interest rate
swap for a nominal amount of $30,000,000 maturing on August 30, 2025 to fix the variability in interest rates on
a designated portion of borrowings under its Credit Facility. Under the interest rate swap agreement, the Group
pays interest based on a fixed rate of 3.97%, and receives interest based on the actual one-month BA/CDOR
rate.
For the year ended March 31, 2023, 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, 2022.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 62
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
24. FINANCIAL INSTRUMENTS (CONT’D)
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, 2023, the Group has an unused capacity of $37,449,000 (2022 -
$58,369,000) under its Credit Facility of $125,000,000 (2022 - $125,000,000).
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, 2023
Trade payable
Contingent consideration
Credit Facility
Secured loans
Subordinated unsecured loans
Balance of purchase price
payable
Lease liabilities
As at
Trade payable
Credit Facility
Secured loans
Subordinated unsecured loans
Balances of purchase price
payable
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
$
$
$
$
53,145
9,157
82,512
13,192
20,000
11,993
18,516
53,145
9,565
88,436
14,226
23,275
12,642
20,499
208,515
221,788
53,145
—
5,924
9,398
1,310
4,214
4,545
78,536
—
8,826
82,512
4,828
1,310
4,214
5,219
106,909
—
739
—
—
20,655
4,214
7,197
32,805
—
—
—
—
—
—
3,538
3,538
March 31, 2022
Less than 1
year
1-2 years
2-5 years
Carrying
amount
$
Total
$
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
More than 5
years
$
—
—
—
—
—
—
5,229
5,229
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 63
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
24. FINANCIAL INSTRUMENTS (CONT’D)
Credit risk
Credit risk is the risk of loss due to a counterparty's inability to meet its obligations. As at March 31, 2023 and
2022, 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 2023 and 2022.
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 expected credit losses 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 rising levels of inflation and increased borrowing rates on its ECL assessment, including the
risk of default of its customers given the continued economic uncertainty. As at March 31, 2023 and 2022,
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,
2023
$
2022
$
65,682
19,544
1,690
852
2,239
90,007
70,039
21,600
3,072
1,071
2,507
98,289
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 64
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
24. FINANCIAL INSTRUMENTS (CONT’D)
Currency risk
The Group is exposed to foreign currency risk on financial instruments denominated in currencies which are
different from the respective functional currencies of the 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
Contingent consideration
Credit Facility
Balance of purchase price payable
Net statement of financial position exposure
March 31,
2023
$
2022
$
3,662
325
(1,449)
(2,120)
(759)
(2,525)
(2,866)
1,428
34
(1,599)
—
—
—
(137)
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
+/-13% change of the USD/Canadian dollars exchange rate for the year ended March 31, 2023 (2022: +/-7% ).
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, 2023
USD
As at March 31, 2022
USD
Fair Value of Financial Instruments
Profit or loss
Strengthening
Weakening
13%
7%
Movement
Movement
(278)
(26)
278
26
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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
24. FINANCIAL INSTRUMENTS (CONT’D)
• 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.
The carrying amount of cash, restricted cash, accounts receivable and other receivables, other assets, accounts
payable and accrued liabilities and long-term debt bearing interest at variable rates is a reasonable
approximation of fair value.
The fair value of derivatives instruments is estimated by discounting expected cash flows using one month BA/
CDOR forward rates (level 2). The fair market value of the interest rate swap agreement as at March 31, 2023 is
insignificant.
The contingent consideration related to business combination is payable based on the achievement of growth in
excess of the trailing twelve months gross margin for earn-out periods ending on the Anniversary Dates (note 3)
and is included in Level 3 of the fair value hierarchy. The fair value was determined considering the expected
earn-out payments, discounted to present value using a risk-adjusted discount rate of 4.4%. If projected cash
flows were 10% higher, the fair value would have increased by $5,192,000. No reasonable possible change in
the discount rate used in the valuation would result in a significant change in the estimated fair value of this
Level 3 financial instruments.
The fair value of the long-term debt bearing interest at fixed rates 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 2023 and 2022, the Group has determined that the fair value of the Credit Facility,
the secured loans, the subordinated unsecured loan and the balances of purchase price payable are not
significantly different than their carrying amount.
The following table summarizes their carrying amount.
As at
Credit Facility (a)
Secured loans (a)
Subordinated unsecured loans (b)
Balances of purchase price payable (c)
March 31,
2023
$
2022
$
82,512
13,192
20,000
11,993
127,697
66,631
8,596
17,500
13,026
105,753
(a) The fair values of the Credit Facility and secured loans, bearing interest at variable rates, approximate their respective carrying amounts
because the interest rates applied approximate current market interest rate.
(b) As at March 31, 2023, the fair value of the subordinated unsecured loans, bearing interest at fixed rates, was approximately $19,038,000
(March 31, 2022 - $16,982,000).
(c) As at March 31, 2023, the fair value of the balance of purchase price payable approximate its carrying amounts given the recent fair
market value assessment at the time of acquisition. As at March 31, 2022, the fair value of the balances of purchase price payable
approximate their carrying amounts given the short-term maturity of the balances of purchase price payable.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 66
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
25. CAPITAL DISCLOSURES
The Group's capital consists of 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 (including issuing new debt to replace existing debt with different
characteristics), or reduce the amount of existing debt.
Total capital as at March 31, 2023 and 2022 is calculated as follows:
As at
Cash
Restricted cash
Current portion of long-term debt
Contingent consideration
Long-term debt
Share capital
Deficit
Accumulated other comprehensive income (loss)
Contributed surplus
March 31,
2023
$
2022
$
(22,583)
—
12,808
9,157
114,382
311,967
(141,481)
4,610
11,972
300,832
(17,655)
(3,254)
19,316
—
87,360
305,222
(111,654)
(947)
7,130
285,518
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, impairment, 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.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 67
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2023 AND 2022
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
25. CAPITAL DISCLOSURES (CONT’D)
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 statements 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, 2023 and 2022.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2023 and 2022.
| 68
Management’s Discussion and Analysis
of Financial Condition and Results of
Operations of Alithya Group inc.
For the year ended March 31, 2023
Table of Contents
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
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
Operating Expenses
Other Income and Expenses
Net Loss and Loss per Share
Adjusted Net Earnings and Adjusted Net Earnings per Share
Segment Reporting
EBITDA and Adjusted EBITDA
Bookings and Backlog
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 Debt
Contractual Obligations
Off-Balance Sheet Arrangements
Share Capital
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
11.1
Normal Course Issuer Bid
Related Parties
Selected Annual Information
Eight Quarter Summary
Critical Accounting Estimates
Change in Accounting Policy
Accounting Standard Amendments Effective for the Year Ending March 31, 2023
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, 2023
Page
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60
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, 2023.
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, 2023 and 2022. 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 7, 2023, the date the Company’s Board of Directors (“Board”) approved this MD&A and the consolidated
financial statements for the year ended March 31, 2023.
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 maintain and develop our
business, including by broadening the scope of our service offerings, entering into new contracts and
penetrating new markets; (iv) our strategy, future operations, and prospects, including our expectations
regarding future revenue resulting from bookings and backlog; (v) our ability to service our debt and raise
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 1
additional capital and our estimates regarding our future financing and capital requirements; (vi) our
expectations regarding our
including our revenues, profitability, 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 potential return to pre-COVID-19 pandemic operations.
financial performance,
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 3,600 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, healthcare, government, renewable energy, manufacturing, telecommunications,
transportation and logistics, and professional services sectors.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 2
Business Offerings
Alithya’s business offerings in each of its reportable segments 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 U.S. 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
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, 2023
| 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 in each of its reportable segments 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.
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;
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 4
•
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.
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 (loss) before adjusting for income tax expense (recovery), net financial
expenses, amortization of intangibles, and depreciation of property and equipment and right-of-use assets.
“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 and
amortization. For a reconciliation of net loss to EBITDA, see section 8.8 titled “EBITDA and Adjusted EBITDA”.
Adjusted Net Earnings and Adjusted Net Earnings per Share
"Adjusted Net Earnings” refers to net income (loss) before adjusting for amortization of intangibles, impairment
of intangibles and goodwill, impairment of property and equipment and right-of-use assets, share-based
compensation, business acquisition, integration and reorganization costs, and the income tax effects of these
items.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 5
“Adjusted Net Earnings per Share” is calculated by dividing Adjusted Net Earnings by the weighted average
number of outstanding Class A Subordinate Voting Shares ("Subordinate Voting Shares") and Class B Multiple
Voting Shares ("Multiple Voting Shares"), excluding potentially dilutive outstanding equity instruments, during
the period.
Management believes that Adjusted Net Earnings and Adjusted Net Earnings per Share are useful measures for
investors as they allow comparability of operating results from one period to another, prior to taking into
consideration non-cash items and business acquisition, integration and reorganization costs, which can vary
significantly from period to period. These measures provide an indication of the results generated by Alithya’s
main business activities prior to taking into consideration the non-cash and other items listed above which have
resulted primarily from acquisitions and their subsequent integrations. For a reconciliation of net loss to Adjusted
Net Earnings, see section 8.6 titled “Adjusted Net Earnings and Adjusted Net Earnings per Share”.
Adjusted EBITDA and Adjusted EBITDA Margin
"Adjusted EBITDA” refers to net income (loss) 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, impairment of property and equipment and right-of-use
assets, 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 8.8 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.
"Constant Dollar Growth" is a measure of revenue growth and revenue growth by geographic location,
expressed as a percentage, before foreign currency translation impacts. This measure is calculated by dividing
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”.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 6
Net Debt
“Net Debt” refers to long-term debt, including the current portion, less cash and restricted cash. For the
calculation of Net Debt, see section 10.6 titled “Long-Term Debt and Net Debt”. Management believes that Net
Debt is a useful measure for investors as it provides an indication of the liquidity of the Company.
Other Financial Measures
The other financial measures used by Alithya are described below:
"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.
“Backlog” refers to the amount of future revenue stemming from signed revenue agreements, which includes
new contracts, including those acquired through acquisitions, as well as renewals, extensions and changes to
existing contracts, expressed as a number of months of trailing twelve-month revenue, as at a given date.
Backlog differs from the IFRS definition of unfilled performance obligations, as disclosed in the Company's
consolidated financial statements, as backlog also includes time and materials arrangements without stated
ceilings and contracts with original expected durations exceeding one year. Management believes that backlog
information can provide useful trend insight to investors regarding changes in management’s best estimate of
future revenue stemming from signed revenue agreements.
“Days Sales Outstanding” (“DSO”) refers to the average number of days it takes for the Company to convert its
accounts receivable and other receivables (net of sales taxes) and unbilled revenues, less deferred revenues,
into cash. Management believes this measure provides useful insight to investors regarding the Company's
liquidity.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 7
6. Financial Highlights
Results of Operations
(in $ thousands)
Revenues
Gross Margin
Gross Margin as a Percentage of Revenues (1)
Selling, General and Administrative Expenses
Selling, General and Administrative Expenses as a
Percentage of Revenues (1)
Net Loss
Basic and Diluted Loss per Share
Adjusted Net Earnings (2)
Adjusted Net Earnings per Share (2)
Adjusted EBITDA (3)
Adjusted EBITDA Margin (3)
Other
(in $ thousands, except Backlog and DSO)
Total Assets
Non-Current Financial Liabilities (4)
Total Long-Term Debt
Net Debt (5)
Backlog (1)
DSO (1)
Shares, Stock Options and Share Units Outstanding
Subordinate Voting Shares
Multiple Voting Shares
Options (6)
Deferred Share Units ("DSUs")
Restricted Share Units ("RSUs")
Performance Share Units ("PSUs")
Three months ended March 31,
Year ended March 31,
2023
$
136,224
40,732
29.9 %
35,978
26.4 %
(19,993)
(0.21)
4,060
0.04
10,463
2022
$
119,974
31,083
25.9 %
26,204
2023
$
522,701
151,774
29.0 %
126,522
2022
$
437,885
116,153
26.5 %
98,838
21.8 %
24.2 %
22.6 %
(7,253)
(0.08)
2,238
0.02
6,048
(30,097)
(0.32)
14,742
0.16
36,122
(15,548)
(0.18)
10,590
0.12
22,609
7.7 %
5.0 %
6.9 %
5.2 %
March 31,
March 31,
2023
$
464,101
129,025
127,190
104,607
16 months
54 days
2022
$
447,721
105,113
106,676
85,767
N/A
66 days
June 6,
2023
87,864,668
7,324,248
4,411,771
666,974
181,498
840,783
1 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.
2 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 8.6 titled “Adjusted Net Earnings and Adjusted Net Earnings
per Share” for a quantitative reconciliation to the most directly comparable IFRS measures.
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 8.8 titled “EBITDA and Adjusted EBITDA” for a quantitative
reconciliation to the most directly comparable IFRS measures.
4 Non-current financial liabilities include the long-term portion of the long-term debt and the long-term portion of lease liabilities.
5 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 Debt” for a quantitative
reconciliation to the most directly comparable IFRS measures.
6 Includes 505,264 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, 2023
| 8
For the three months ended March 31, 2023
•
•
•
•
•
•
•
•
•
Revenues increased 13.5% to $136.2 million, compared to $120.0 million for the same quarter last year.
80.6% of revenues were generated from clients which we had in the same quarter last year.
Gross margin increased 31.0% to $40.7 million, compared to $31.1 million for the same quarter last year.
Gross margin as a percentage of revenues increased to 29.9%, compared to 25.9% for the same quarter
last year.
Adjusted EBITDA increased 73.0% to $10.5 million, or 7.7% of revenues, compared to $6.0 million, or
5.0% of revenues, for the same quarter last year.
Net loss was $20.0 million, or $0.21 per share, compared to a net loss of $7.3 million, or $0.08 per share,
for the same quarter last year. The increased net loss is in large part due to specific, non-cash elements,
namely $9.2 million in contingent consideration relating to the acquisition of Datum Consulting, LLC and its
international affiliates ("Datum") (the "Datum Acquisition") and an impairment of property and equipment
and right-of use assets of $3.7 million, as part of an ongoing review of our real estate strategy following the
integration of acquisitions and changes in working conditions.
Adjusted Net Earnings increased $1.9 million, or 81.3%, to $4.1 million, compared to $2.2 million for the
same quarter last year. This translated into Adjusted Net Earnings per Share of $0.04, compared to $0.02
for the same quarter last year.
Net cash from operating activities was $4.4 million, representing an increase of $8.1 million,
from $3.7 million of cash used for the same quarter last year.
Q4 bookings(1) reached $124.0 million, which translated into a book-to-bill ratio(1) of 0.91. The book-to-bill
ratio would be 1.06 if revenues from the two long-term contracts signed as part of an acquisition in the first
quarter of last year were excluded.
1 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, 2023
| 9
For the twelve months ended March 31, 2023
•
•
•
•
•
•
•
•
•
•
Revenues increased 19.4% to $522.7 million, compared to $437.9 million last year.
Gross margin increased 30.7% to $151.8 million, compared to $116.2 million last year.
Gross margin as a percentage of revenues increased to 29.0%, compared to 26.5% last year.
Adjusted EBITDA increased 59.8% to $36.1 million, or 6.9% of revenues, from $22.6 million, or 5.2% of
revenues, last year.
Net loss was $30.1 million, or $0.32 per share, compared to a net loss of $15.5 million, or $0.18 per share
last year. The increased net loss is in large part due to specific, non-cash elements, namely $9.2 million in
contingent consideration relating to the Datum Acquisition and an impairment of property and equipment
and right-of use assets of $3.7 million, as part of an ongoing review of our real estate strategy following the
integration of acquisitions and changes in working conditions.
Adjusted net earnings increased $4.1 million, or 39.2%, to $14.7 million, compared to $10.6 million last
year. This translated into Adjusted Net Earnings per Share of $0.16, compared to $0.12 last year.
Net cash from operating activities was $28.9 million, representing an increase of $27.0 million, or
1,461.2%, from $1.9 million last year.
Fiscal 2023 bookings reached $525.4 million, which translated into a book-to-bill ratio of 1.01. The book-to-
bill ratio would be 1.15 if revenues from the two long-term contracts signed as part of an acquisition in the
first quarter of last year were excluded.
DSO as at March 31, 2023 was 54 days, an improvement from 66 days as at March 31, 2022.
Backlog represented approximately 16 months of trailing twelve-month revenues as at March 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 10
7. Business Combinations
Business combinations realized in the fiscal year ended March 31, 2023
Datum Consulting Group, LLC and its Affiliates
Overview
On July 1, 2022, the Company acquired 100% of the issued and outstanding equity interests of Datum, a leader
in IP enabled digital transformation services for data-rich insurers and other regulated entities such as
governments. Management expects that its modernization practice and cloud-based software as a service
(SaaS) offering will be complementary to Alithya's existing offerings and will allow for cross-selling opportunities.
The Datum Acquisition was completed for purchase consideration and other consideration of up to
US$45,488,000 ($58,550,000), in aggregate.
The purchase consideration of US$27,200,000 ($35,010,000), in aggregate, consisted of: (i) US$13,542,000
($17,430,000) paid in cash, net of working capital adjustment; (ii) US$4,313,000 ($5,552,000) paid by the
issuance of 1,867,262 Subordinate Voting Shares; and (iii) US$9,345,000 ($12,028,000) of balance of sale,
payable over three years on July 1, 2023, 2024 and 2025 (the "Anniversary Dates").
The other consideration of up to US$18,288,000 ($23,540,000), consisted of: (i) deferred cash consideration of
US$975,000 ($1,255,000); (ii) deferred share consideration of 1,867,261 Subordinate Voting Shares with a
value of US$4,313,000 ($5,552,000); and (iii) potential earn-out consideration of up to US$13,000,000
($16,733,000), all payable over three years on the Anniversary Dates.
The deferred cash consideration will be recognized as employee compensation on business acquisition, over
three years.
The deferred share consideration will be recognized as share-based compensation to an employee, over three
years.
The potential earn-out consideration is payable in cash (75%) and by Subordinate Voting Shares (25%), with a
maximum of 1,517,151 Subordinate Voting Shares available for issuance with a value of US$3,505,000
($4,511,000). The potential earn-out consideration has earn-out periods ending on each of the Anniversary
Dates.
On March 31, 2023, an amending agreement to the equity purchase agreement was executed wherein the
condition for employment for the payment of the potential earn-out was removed (The “Earn-out Amendment”).
From the acquisition date to the Earn-out Amendment date, the potential earn-out consideration payable in cash
was treated as employee compensation, and was to be expensed over three years as the related services were
to be provided, at the best estimate of the payout amount required to settle the present obligation at the end of
the reporting period. The potential earn-out consideration payable in shares was treated as share-based
compensation, which was to be expensed over the three-year vesting period.
As a result of the Earn-out Amendment, a contingent consideration liability and expense, in the amount of
$9,157,000 was recorded as at March 31, 2023, representing the present value of the expected payout amount
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 11
for the potential earn-out over the next three years. The contingent consideration expense is recorded in
business acquisition, integration and reorganization costs.
The portion of the contingent consideration to be settled in shares is adjusted to reflect the number of awards
for which the non-market performance conditions are expected to be met, such that the amount ultimately
recognized as an expense is based on the number of awards that do meet the non-market performance
conditions at the vesting dates.
The fair value of the assets acquired, liabilities assumed, and the purchase consideration’s valuation have been
completed.
For the year ended March 31, 2023, the Company incurred acquisition-related costs pertaining to the Datum
Acquisition of approximately $1,369,000. These costs have been recorded in the consolidated statement of
operations in business acquisition, integration and reorganization costs.
Purchase Price Allocation
The allocation of the fair value of the assets acquired and the liabilities assumed is detailed as follows:
Acquisition of Datum (in $ thousands)
$
Current assets
Cash
Accounts receivable and other receivables
Unbilled revenue
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 revenue
Current portion of lease liabilities
Non-current liabilities
Lease liabilities
Deferred tax liabilities
Total liabilities assumed
Net assets acquired
2,798
3,552
1,301
159
7,810
2
55
135
24,070
13,696
45,768
4,255
945
71
5,271
64
6,398
11,733
34,035
As at March 31, 2023, upon final determination of the fair values, the intangibles value was increased by
$1,545,000, goodwill value was reduced by $1,134,000 and deferred tax liabilities value was increased by
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 12
$411,000. The effects of the adjustments to the purchase price were not material to the financial statements for
the period from the acquisition date to March 31, 2023.
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 Datum 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 Datum (in $ thousands)
Consideration transferred settled in cash
Issuance of 1,867,262 Subordinate Voting Shares
Balance of purchase payable with a nominal value of US$9,345,000 ($12,028,000)
Total consideration transferred
$
17,430
5,552
11,053
34,035
Datum's contribution to the Group results
For the year ended March 31, 2023, the Datum business contributed revenues of approximately $16,326,000
and a loss before income taxes in the amount of $15,762,000, including amortization, primarily related to the
acquired customer relationships, of $5,658,000, contingent consideration of $9,157,000, share-based
compensation granted on business acquisitions of $2,644,000, and acquisition and integration costs of
$2,099,000.
If the acquisition had occurred on April 1, 2022, pro-forma consolidated revenues and loss before income taxes
for the year ended March 31, 2023 would have been $526,492,000 and $38,991,000, respectively. These
amounts have been calculated using Datum’s results and adjusting for:
• differences in accounting policies between the Group and Datum;
• the removal of transaction costs incurred by Datum from April 1, 2022 to June 30, 2022; and
• the additional amortization that would have been charged assuming the fair value adjustments to intangibles
had been applied from April 1, 2022.
Trafic 3W inc.
On April 1, 2022, the Company acquired all of the issued and outstanding shares of Trafic 3W inc. (the
“Trafic3W Acquisition”) for total consideration of $2,005,000, comprised of cash, in the amount of $900,000, and
a balance of purchase price payable in the amount of $1,105,000.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 13
The actual amount paid at acquisition, net of the cash acquired in the amount of $86,000, was $814,000, for a
total consideration transferred of $1,919,000. The purchase price was mostly allocated to intangible assets and
goodwill, in the amount of $455,000 and $1,270,000 respectively. Intangible assets acquired at the date of
acquisition consisted of customer relationships and goodwill, allocated to the Canada CGU.
The balance of purchase price payable was settled in October 2022 with the issuance of 83,449 Subordinate
Voting Shares, for a total value of $281,000, and the balance, in the amount of $824,000, was paid cash.
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
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,
2023
$
136,224
95,492
40,732
2022
$
119,974
88,891
31,083
2023
$
522,701
370,927
151,774
2022
$
437,885
321,732
116,153
35,978
12,166
1,721
8,693
96
58,654
(17,922)
2,577
(20,499)
362
(868)
(506)
(19,993)
(0.21)
26,204
6,128
1,235
4,017
(25)
37,559
(6,476)
1,352
(7,828)
114
(689)
(575)
(7,253)
(0.08)
126,522
18,079
6,536
27,497
159
178,793
(27,019)
9,335
(36,354)
569
(6,826)
(6,257)
(30,097)
(0.32)
98,838
11,617
5,435
14,285
(26)
130,149
(13,996)
4,579
(18,575)
(20)
(3,007)
(3,027)
(15,548)
(0.18)
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 14
8.1
Revenues
The following table reconciles Constant Dollar Revenue(1) to revenues by geographic location:
(in $ thousands, except for percentages)
2023
2022
% (2)
2023
2022
%
For the three months ended March 31,
For the twelve months ended March 31,
Total Alithya revenue as reported
136,224
119,974
13.5 % 522,701
437,885
19.4 %
Variation prior to foreign currency impact
Foreign currency impact
Variation over previous period
10.9 %
2.6 %
13.5 %
17.4 %
2.0 %
19.4 %
Canada
Constant dollar revenue
Foreign currency impact
Canada revenue as reported
U.S.
Constant dollar revenue
Foreign currency impact
U.S. revenue as reported
International
Constant dollar revenue
Foreign currency impact
International revenue as reported
81,158
—
81,158
46,193
3,096
49,289
5,663
114
5,777
75,484
7.5 % 312,349
284,614
9.7 %
—
75,484
7.5 % 312,349
284,614
9.7 %
40,417
14.3 % 180,037
139,519
29.0 %
9,846
40,417
22.0 % 189,883
139,519
36.1 %
4,073
39.0 %
21,649
13,752
57.4 %
4,073
41.8 %
20,469
13,752
48.8 %
(1,180)
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.
2 Constant Dollar Growth, which is a 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 $136.2 million for the three months ended March 31, 2023, of which 80.6% was
generated from clients which we had in the same quarter last year, and including $11.9 million from Vitalyst,
LLC ("Vitalyst") (the "Vitalyst Acquisition") and Datum, following their acquisitions by the Company on
January 31, 2022 and July 1, 2022, respectively, representing an increase of $16.2 million, or 13.5%, from
$120.0 million for the three months ended March 31, 2022. On a sequential basis, revenues also increased by
$5.4 million, or 4.2%, from $130.8 million for the third quarter of this year.
Revenues in Canada increased by $5.7 million, or 7.5%, to $81.2 million for the three months ended
March 31, 2023, from $75.5 million for the three months ended March 31, 2022. The increase in revenues was
due to organic growth in all areas.
U.S. revenues increased by $8.9 million, or 22.0%, to $49.3 million for the three months ended March 31, 2023,
from $40.4 million for the three months ended March 31, 2022, due primarily to increased revenues of
$6.1 million from the acquisitions of Vitalyst, which contributed an additional month of revenues in the fourth
quarter compared to the prior year, and Datum's U.S. business, and organic growth in all areas. The increased
revenues include a favorable US$ exchange rate impact of $3.1 million between the two periods.
International revenues increased by $1.7 million, or 41.8%, to $5.8 million for the three months ended
March 31, 2023, from $4.1 million for the three months ended March 31, 2022, due to revenues of $0.9 million
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 15
from the acquisition of Datum's international business and organic growth in activity levels. The increased
revenues include a favorable foreign exchange rate impact of $0.1 million between the two periods.
Revenues amounted to $522.7 million for the twelve months ended March 31, 2023, including $45.9 million from
the acquisitions of Vitalyst and Datum, representing an increase of $84.8 million, or 19.4%, from $437.9 million
for the twelve months ended March 31, 2022.
Revenues in Canada increased by $27.7 million, or 9.7%, to $312.3 million for the twelve months ended
March 31, 2023, from $284.6 million for the twelve months ended March 31, 2022. The increase in revenues
was due to organic growth in all areas, including growth from the two long-term contracts signed as part of an
acquisition in the first quarter of last year.
U.S. revenues increased by $50.4 million, or 36.1%, to $189.9 million for the twelve months ended
March 31, 2023, from $139.5 million for the twelve months ended March 31, 2022, due primarily to increased
revenues of $38.0 million from the acquisitions of Vitalyst, which provided an additional ten months of revenues
in fiscal 2023 compared to the prior year, and Datum's U.S. business, and organic growth in all areas. The
increased revenues include a favorable US$ exchange rate impact of $9.8 million,
International revenues increased by $6.7 million, or 48.8%, to $20.5 million for the twelve months ended
March 31, 2023, from $13.8 million for the twelve months ended March 31, 2022, due to revenues of $3.2
million from the acquisition of Datum's international business, which had been recorded in the U.S. segment in
previous quarters, and organic growth in activity levels, partially offset by an unfavorable foreign exchange rate
impact of $1.2 million between the two periods.
8.2
Gross Margin
Gross margin increased by $9.6 million, or 31.0%, to $40.7 million for the three months ended March 31, 2023,
from $31.1 million for the three months ended March 31, 2022. Gross margin as a percentage of revenues
increased to 29.9% for the three months ended March 31, 2023, from 25.9% for the three months ended
March 31, 2022.
In Canada, gross margin as a percentage of revenues increased, compared to the same quarter last year, due
to increased revenues from permanent employees relative to subcontractors and higher margin offerings. Gross
margin as a percentage of revenues also increased on a sequential basis, mainly due to increased revenues
from permanent employees relative to subcontractors compared to the third quarter of this year.
In the U.S., gross margin as a percentage of revenues increased, compared to the same quarter last year, as a
result of a positive margin impact from the acquisition of Datum's U.S. business, higher average revenue per
employee, improved project performance in other areas of the business, and a favorable US$ exchange rate
impact between the two periods. Gross margin as a percentage of revenues also increased on a sequential
basis, mainly due to improved project performance in certain areas of the business, compared to the third
quarter of this year.
International gross margin as a percentage of revenues decreased compared to the same quarter last year,
mainly as a result of inflationary pressures on salary costs and more non-billable hours.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 16
Gross margin increased by $35.6 million, or 30.7%, to $151.8 million for the twelve months ended
March 31, 2023, from $116.2 million for the twelve months ended March 31, 2022. Gross margin as a
percentage of revenues increased to 29.0% for the twelve months ended March 31, 2023, from 26.5% for the
twelve months ended March 31, 2022, despite annual salary increases which came into effect in the first quarter
of this year and the non-recurrence of the forgiveness of the $4.6 million in Paycheck Protection Program
(“PPP”) loans recorded to cost of revenues in the first quarter of last year.
In Canada, gross margin as a percentage of revenues increased for the twelve months ended March 31, 2023,
compared to the same period last year, due to increased revenues from permanent employees relative to
subcontractors, higher average revenue per employee, and increased subscription, software and other
revenues, which carry higher margins, partially offset by inflationary pressures on salary costs.
In the U.S., gross margin as a percentage of revenues increased for the twelve months ended March 31, 2023,
compared to the same period last year, as a result of the positive margin impact from the acquisitions of Vitalyst
and Datum's U.S. business, higher average revenue per employee, improved project performance in other
areas of the business, and a favorable US$ exchange rate impact between the two periods. This increase was
partially offset by reduced governmental wage subsidies, mainly the forgiveness of the PPP loans recorded in
the first quarter of last year, as explained above, and market pressures on salary costs.
International gross margin as a percentage of revenues increased for the twelve months ended March 31, 2023,
compared to the same period last year, mainly as a result of the positive margin impact from the acquisition of
Datum's international business, which had been recorded in the U.S. segment in previous quarters.
8.3
Operating Expenses
8.3.1
Selling, General and Administrative Expenses
Selling, general and administrative expenses include salary, wages and other benefits for selling and
administrative employees, occupancy costs, information technology and communications costs, share-based
compensation, professional fees, public listing and investor fees, and other administrative expenses.
Selling, general and administrative expenses totaled $36.0 million for the three months ended March 31, 2023,
representing an increase of $9.8 million, or 37.3%, from $26.2 million for the three months ended
March 31, 2022. Selling, general and administrative expenses, as a percentage of revenues, amounted to
26.4% for the three months ended March 31, 2023, compared to 21.8% for the same period last year, driven
mostly by the higher historical selling, general and administrative expense percentage of Vitalyst, a $2.8 million
impairment of property and equipment and right-of-use assets, as part of Alithya's ongoing review of its real
estate strategy following the integration of acquisitions and changes in working conditions in order to reduce the
Company's footprint, realize synergies and improve the cost structure of the combined business, and an
unfavorable US$ exchange rate impact of $0.9 million, partially offset by reductions in other expense categories.
On a sequential basis, expenses increased by $4.8 million, from $31.2 million for the third quarter, driven mainly
by the impairment charge described above and sequential increases in employee compensation costs in the
U.S., non-cash share-based compensation, and professional fees, partially offset by reductions in other
expense categories.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 17
In Canada, expenses increased by $5.5 million, or 37.3%, to $20.2 million for the three months ended
March 31, 2023, from $14.7 million for the three months ended March 31, 2022, due primarily to a $2.8 million
impairment of property and equipment and right-of-use assets, as discussed above, and increases of
$1.3 million in non-cash share-based compensation, $1.1 million in employee training costs, $0.5 million in
information technology and communications costs, $0.4 million in employee compensation costs, and
$0.4 million in professional fees. These increases were partially offset by decreases of $0.5 million in occupancy
costs and $0.3 million in recruiting fees.
U.S. expenses increased by $4.2 million, or 39.9%, to $14.8 million for the three months ended March 31, 2023,
from $10.6 million for the three months ended March 31, 2022. The increase was due primarily to increased
expenses of $1.5 million from Vitalyst and Datum, and increases of $1.2 million in employee compensation
costs, $0.4 million in information technology and communications costs, $0.7 million in non-cash share-based
compensation, $0.2 million in professional fees, and $0.2 million in travel costs, partially offset by reductions in
other expense categories. The increased expenses include an unfavorable US$ exchange rate impact of
$0.9 million.
International expenses amounted to $0.9 million for the three and twelve months ended March 31, 2023.
totaled $126.5 million
twelve months ended
Selling, general and administrative expenses
March 31, 2023, representing an increase of $27.7 million, or 28.0%, from $98.8 million for the twelve months
ended March 31, 2022. Selling, general and administrative expenses, as a percentage of revenues, amounted
to 24.2% for the twelve months ended March 31, 2023, compared to 22.6% for the twelve months ended
March 31, 2022 driven mostly by the higher historical selling, general and administrative expense percentage of
Vitalyst, a $2.8 million impairment of property and equipment and right-of-use assets, as discussed above,and
an unfavorable US$ exchange rate impact of $2.7 million, partially offset by reductions in other expense
categories.
the
for
In Canada, expenses increased by $9.3 million, or 15.0%, to $70.9 million for the twelve months ended
March 31, 2023, from $61.6 million for the twelve months ended March 31, 2022, due primarily to a $2.8 million
impairment of property and equipment and right-of-use assets, as discussed above, and increases of
$2.7 million in information technology and communications costs, including $2.4 million related to specific
discretionary projects, $2.6 million in non-cash share-based compensation, $1.9 million in employee training
costs, $0.6 million in professional fees, $0.6 million in travel costs and $0.6 million in business development
costs, as these activities are returning to pre-Covid-19 levels. These increases were partially offset by
decreases of $1.4 million in occupancy costs and $0.4 million in employee compensation costs.
U.S. expenses increased by $18.0 million, or 52.2%, to $52.4 million for the twelve months ended
March 31, 2023, from $34.4 million for the twelve months ended March 31, 2022. The increase was due
primarily to increased expenses of $11.5 million from Vitalyst and Datum, and increases of $4.4 million in
employee compensation costs, as salaries and variable compensation increased with revenues, and as
governmental wage subsidies decreased, mainly the forgiveness of $1.3 million in PPP loans recorded in the
first quarter of last year, $0.6 million in travel costs, $0.5 million in information technology and communications
costs, $0.9 million in non-cash share-based compensation, and $0.4 million in professional fees, partially offset
by a $0.4 million decrease in recruiting fees. The increased expenses include an unfavorable US$ exchange
rate impact of $2.7 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 18
International expenses increased by $0.5 million, or 14.8%, to $3.3 million for the twelve months ended
March 31, 2023, from $2.8 million for the twelve months ended March 31, 2022, primarily due to increased
travel and occupancy costs.
8.3.2
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,
2023
$
2022
$
2023
$
2022
$
525
347
734
818
—
527
2,951
217
313
181
135
—
91
937
1,262
1,372
2,995
1,250
—
1,233
8,112
851
1,138
1,524
576
92
273
4,454
Share-based compensation amounted to $3.0 million for the three months ended March 31, 2023, representing
an increase of $2.1 million, from $0.9 million for the three months ended March 31, 2022. The increase in share-
based compensation was driven primarily by increased expenses related to share-based compensation granted
on business acquisitions and increased expenses related to DSUs.
Share-based compensation amounted to $8.1 million for the twelve months ended March 31, 2023,
representing an increase of $3.6 million, from $4.5 million for the twelve months ended March 31, 2022. The
increase in share-based compensation was driven primarily by increased expenses related to share-based
compensation granted on business acquisitions, increased expenses related to DSUs and PSUs, and increased
employer contributions to the share purchase plan.
8.3.3 Business Acquisition, Integration and Reorganization Costs
Having reached a certain critical mass through acquisitions and continued organic growth, Alithya initiated a
review of its cost structure in the fourth quarter of last year and has incurred certain reorganization costs in the
current year.
Business acquisition, integration and reorganization costs amounted to $12.2 million for the three months ended
March 31, 2023, representing an increase of $6.1 million, from $6.1 million for the three months ended
March 31, 2022, driven primarily by an increase of $9.2 million in employee compensation on business
acquisition, consisting mainly of contingent consideration related to the Datum Acquisition as a result of the
amending agreement, as described in section 7 titled “Business Combinations”, an increase of $1.0 million in
reorganization costs related to modifications to Alithya's cost structure during the three months ended
March 31, 2023, consisting entirely of employee termination and benefits costs, and an impairment charge of
$0.9 million on property and equipment and right-of-use assets, recorded under integration costs. These
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 19
increases were partially offset by $2.4 million in decreased acquisition costs, related mainly to professional fees
in connection with the acquisitions of Vitalyst and Datum, and $1.7 million in decreased integration costs,
related mainly to the integration of R3D Consulting Inc. (“R3D”) (the “R3D Acquisition”) in the fourth quarter of
last year.
Business acquisition, integration and reorganization costs amounted to $18.1 million for the twelve months
ended March 31, 2023, representing an increase of $6.5 million, from $11.6 million for the twelve months ended
March 31, 2022, driven primarily by an increase of $9.8 million in employee compensation on business
acquisition, consisting mainly of $9.2 million of contingent consideration related to the Datum Acquisition as a
result of the amending agreement, as described in section 7 titled “Business Combinations”, an increase of
$3.8 million in reorganization costs related to modifications to Alithya's cost structure during the twelve months
ended March 31, 2023, consisting entirely of employee termination and benefits costs, and an impairment
charge of $0.9 million on property and equipment and right-of-use assets, included in integration costs. These
increases were partially offset by $4.6 million in decreased integration costs, related mainly to the integration of
R3D last year, and $2.4 million in decreased acquisition costs, related mainly to professional fees in connection
with the acquisitions of Vitalyst and Datum.
8.3.4 Depreciation
Depreciation totaled $1.7 million for the three months ended March 31, 2023, compared to $1.2 million for the
three months ended March 31, 2022. These costs consisted primarily of depreciation of Alithya’s property and
equipment, which increased by $0.1 million, and right-of-use assets, which increased by $0.4 million.
Depreciation totaled $6.5 million for the twelve months ended March 31, 2023, compared to $5.4 million for the
twelve months ended March 31, 2022. These costs consisted primarily of depreciation of Alithya’s property and
equipment, which increased by $0.2 million, and right-of-use assets, which increased by $0.9 million.
8.3.5 Amortization of Intangibles
Amortization of intangibles totaled $8.7 million for the three months ended March 31, 2023, compared to
$4.0 million for the three months ended March 31, 2022. These costs consisted primarily of amortization of
customer relationships recognized on acquisitions, which increased by $3.5 million, and amortization of
software, which increased by $1.2 million. The increases resulted primarily from the amortization of intangibles
recognized on the acquisitions of Vitalyst and Datum.
Amortization of intangibles totaled $27.5 million for the twelve months ended March 31, 2023, compared to
$14.3 million for the twelve months ended March 31, 2022. These costs consisted primarily of amortization of
customer relationships recognized on acquisitions, which increased by $10.3 million, and amortization of
software, which increased by $2.7 million. The increases resulted primarily from the amortization of intangibles
recognized on the acquisitions of Vitalyst and Datum.
8.3.6
Foreign Exchange Loss (Gain)
Foreign exchange gain amounted to $0.1 million for the three months ended March 31, 2023, compared to a
gain of $0.02 million for the three months ended March 31, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 20
Foreign exchange loss amounted to $0.2 million for the twelve months ended March 31, 2023, compared to a
gain of $0.03 million for the twelve months ended March 31, 2022.
8.4
Other Income and Expenses
8.4.1 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,
2023
$
2022
$
2023
$
2022
$
2,127
96
194
149
127
(116)
2,577
741
158
208
66
188
(9)
1,352
7,087
2,402
558
825
430
784
(349)
9,335
432
725
277
823
(80)
4,579
Net financial expenses amounted to $2.6 million for the three months ended March 31, 2023, representing an
increase of $1.2 million, or 91.1%, from $1.4 million for the three months ended March 31, 2022, driven mainly
by the increase in long-term debt, as described in section 10.6, and increased variable interest rates, which
accounted for the increase in interest on long-term debt.
Net financial expenses amounted to $9.3 million for the twelve months ended March 31, 2023, representing an
increase of $4.7 million, or 103.8%, from $4.6 million for the twelve months ended March 31, 2022, driven
mainly by the increase in long-term debt, as described in section 10.6, and increased variable interest rates,
which accounted for the increase in interest on long-term debt.
8.4.2
Income Taxes
Income tax recovery was $0.5 million for the three months ended March 31, 2023, representing a decrease of
$0.1 million, from a recovery of $0.6 million for the three months ended March 31, 2022, due primarily to
increased current tax expense, as a result of increased taxable income in certain jurisdictions, and increased
deferred tax recovery.
Income tax recovery was $6.3 million for the twelve months ended March 31, 2023, representing an increase of
$3.3 million, from $3.0 million for the twelve months ended March 31, 2022, due primarily to an increase in
deferred tax recovery, partially offset by an increase in current tax expense, as a result of increased taxable
income in certain jurisdictions. During the twelve months ended March 31, 2022, the Group recognized a
deferred tax asset in the amount of $6.0 million that was probable of being realized as a result of the deferred
tax liability recognized pursuant to the Datum Acquisition. The recognized deferred tax asset relates to previous
years' net operating losses of the Group in the U.S. available for carryforwards as at July 1, 2022 in the amount
of approximately $22.8 million that was previously not recognized.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 21
8.5
Net Loss and Loss per Share
Net loss for the three months ended March 31, 2023 was $20.0 million, representing an increase
of $12.7 million, from $7.3 million for the three months ended March 31, 2022. The increased loss was driven by
increased selling, general and administrative expenses, including an impairment charge of $2.8 million on
property and equipment and right-of-use assets, increased business acquisition, integration and reorganization
costs, including contingent consideration of $9.2 million related to the Datum Acquisition and an impairment
charge of $0.9 million on property and equipment and right-of-use assets, 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, 2023, compared to the three months ended March 31, 2022.
On a per share basis, this translated into a basic and diluted net loss per share of $0.21 for the three months
ended March 31, 2023, compared to a net loss of $0.08 per share for the three months ended March 31, 2022.
Net loss for the twelve months ended March 31, 2023 was $30.1 million, representing an increase of
$14.6 million, from $15.5 million, including the forgiveness of $5.9 million in PPP loans, for the twelve months
ended March 31, 2022. The increased loss was driven by increased selling, general and administrative
expenses, including an impairment charge of $2.8 million on property and equipment and right-of-use assets,
increased business acquisition, integration and reorganization costs, including contingent consideration of
$9.2 million related to the Datum Acquisition and an impairment charge of $0.9 million on property and
equipment and right-of-use assets, increased depreciation and amortization, decreased governmental wage
subsidies, mainly the forgiveness of the PPP loans recorded in the first quarter of last year, and increased net
financial expenses, partially offset by increased gross margin and increased income tax recovery in the twelve
months ended March 31, 2023, compared to the twelve months ended March 31, 2022. On a per share basis,
this translated into a basic and diluted net loss per share of $0.32 for the twelve months ended March 31, 2023,
compared to a net loss of $0.18 per share for the twelve months ended March 31, 2022.
8.6
Adjusted Net Earnings and Adjusted Net Earnings per Share
The following table reconciles net loss to Adjusted Net Earnings:
(in $ thousands)
Net loss
Business acquisition, integration and
reorganization costs
Amortization of intangibles
Share-based compensation
Impairment of property and equipment and right-
of-use assets
Income tax related to deferred tax asset
recognized on purchase price allocation
Income tax expense related to above items
Adjusted Net Earnings (1)
Basic and diluted loss per share
Adjusted Net Earnings per Share (1)
For the three months ended March 31,
For the year ended March 31,
2023
$
2022
$
2023
$
2022
$
(19,993)
(7,253)
(30,097)
(15,548)
12,166
8,693
2,951
2,758
—
(2,515)
4,060
(0.21)
0.04
6,128
4,017
937
—
—
(1,591)
2,238
(0.08)
0.02
18,079
27,497
8,112
2,758
(6,026)
(5,581)
14,742
(0.32)
0.16
11,617
14,285
4,454
—
—
(4,218)
10,590
(0.18)
0.12
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 22
Adjusted Net Earnings amounted to $4.1 million for the three months ended March 31, 2023, representing an
increase of $1.9 million, or 81.3%, from $2.2 million for the three months ended March 31, 2022. As explained
above, increased gross margin and the contribution from the acquisition of Datum were partially offset by
increased selling, general and administrative expenses, increased depreciation of property and equipment and
right-of-use assets, increased net financial expenses, and decreased income tax recovery. This translated into
Adjusted Net Earnings per Share of $0.04 for the three months ended March 31, 2023, compared to $0.02 for
the three months ended March 31, 2022.
Adjusted Net Earnings amounted to $14.7 million for the twelve months ended March 31, 2023, representing an
increase of $4.1 million, or 39.2%, from $10.6 million for the twelve months ended March 31, 2022. As explained
above, increased gross margin, the contributions from the acquisitions of Vitalyst and Datum, and increased
income tax recovery were partially offset by increased selling, general and administrative expenses, decreased
governmental wage subsidies, mainly the forgiveness of the PPP loans recorded in the first quarter of last year,
increased depreciation of property and equipment and right-of-use assets, and increased net financial
expenses. This translated into Adjusted Net Earnings per Share of $0.16 for the twelve months ended
March 31, 2023, compared to $0.12 for the twelve months ended March 31, 2022.
8.7
Segment Reporting
As at April 1, 2022, as a result of organic growth and the integration of recent business acquisitions, the Group
determined that it has three reportable segments based on geography: Canada, U.S. and International.
Information for the comparative period has been restated to also present segment information for the three
reportable segments.
Operating income by segment refers to operating income before head office general and administrative
expenses and business acquisition, integration and reorganization costs, which are not considered when
assessing the underlying financial performance of the reportable segments. Head office general and
administrative expenses are expenses and salaries related to centralized functions, such as global finance,
legal, human resources and technology teams, which are not allocated to segments. This measure also
excludes the effects of depreciation, amortization and foreign exchange loss (gain).
The following tables present the Group's operations based on reportable segments:
(in $ thousands)
Revenues
Operating income by segment
Head office general and administrative expenses
Business acquisition, integration and reorganization
costs
Foreign exchange loss (gain)
Operating income before depreciation and amortization
Depreciation and amortization
Operating loss
For the three months ended March 31, 2023
Canada
$
U.S.
$
International
$
Total
$
81,158
10,490
49,289
7,572
5,777
688
136,224
18,750
13,996
12,166
96
(7,508)
10,414
(17,922)
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 23
(in $ thousands)
Revenues
Operating income by segment
Head office general and administrative expenses
Business acquisition, integration and reorganization
costs
Foreign exchange loss (gain)
Operating income before depreciation and amortization
Depreciation and amortization
Operating loss
(in $ thousands)
Revenues
Operating income by segment
Head office general and administrative expenses
Business acquisition, integration and reorganization
costs
Foreign exchange loss (gain)
Operating income before depreciation and amortization
Depreciation and amortization
Operating loss
(in $ thousands)
Revenues
Operating income by segment
Head office general and administrative expenses
Business acquisition, integration and reorganization
costs
Foreign exchange loss (gain)
Operating income before depreciation and amortization
Depreciation and amortization
Operating loss
For the three months ended March 31, 2022
Canada
$
U.S.
$
International
$
Total
$
75,484
7,684
40,417
3,714
4,073
472
119,974
11,870
6,991
6,128
(25)
(1,224)
5,252
(6,476)
For year ended March 31, 2023
Canada
$
U.S.
$
International
$
Total
$
312,349
35,964
189,883
26,736
20,469
2,953
522,701
65,653
40,401
18,079
159
7,014
34,033
(27,019)
For year ended March 31, 2022
Canada
$
U.S.
$
International
$
Total
$
284,614
25,420
139,519
18,996
13,752
1,253
437,885
45,669
28,354
11,617
(26)
5,724
19,720
(13,996)
For a discussion of revenue variances by segment, refer to section 8.1 titled “Revenues”.
Operating income by segment in Canada increased by $2.8 million, or 36.5%, to $10.5 million for the three
months ended March 31, 2023, from $7.7 million for the three months ended March 31, 2022. The increase in
operating income by segment was due to increased revenues and gross margin, partially offset by increased
selling, general and administrative expenses, as described above.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 24
Operating income by segment in the U.S. increased by $3.9 million, or 103.9%, to $7.6 million for the three
months ended March 31, 2023, from $3.7 million for the three months ended March 31, 2022. The increase in
operating income by segment was due to increased revenues and gross margin, partially offset by increased
selling, general and administrative expenses, all stemming primarily from the acquisitions of Vitalyst and
Datum's U.S. business, as described above.
Operating income by segment internationally increased by $0.2 million, or 45.8%, to $0.7 million for the three
months ended March 31, 2023, from $0.5 million for the three months ended March 31, 2022. The increase in
operating income by segment was due to increased revenues and gross margin, stemming primarily from the
acquisition of Datum's international business, as described above.
Operating income by segment in Canada increased by $10.6 million, or 41.5%, to $36.0 million for the twelve
months ended March 31, 2023, from $25.4 million for the twelve months ended March 31, 2022. The increase in
operating income by segment was due to increased revenues and gross margin, partially offset by increased
selling, general and administrative expenses, as described above.
Operating income by segment in the U.S. increased by $7.7 million, or 40.7%, to $26.7 million for the twelve
months ended March 31, 2023, from $19.0 million for the twelve months ended March 31, 2022. The increase in
operating income by segment was due to increased revenues and gross margin, partially offset by increased
selling, general and administrative expenses, all stemming primarily from the acquisitions of Vitalyst and
Datum's U.S. business, as described above.
Operating income by segment internationally increased by $1.7 million, or 135.7%, to $3.0 million for the twelve
months ended March 31, 2023, from $1.3 million for the twelve months ended March 31, 2022. The increase in
operating income by segment was due to increased revenues and gross margin, partially offset by increased
selling, general and administrative expenses, stemming primarily from the acquisition of Datum's international
business, as described above.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 25
8.8
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:
For the three months ended March 31,
For the year ended March 31,
2023
$
136,224
(19,993)
2,577
(506)
1,721
8,693
(7,508)
2022
$
119,974
(7,253)
1,352
(575)
1,235
4,017
(1,224)
2023
$
522,701
(30,097)
9,335
(6,257)
6,536
27,497
7,014
2022
$
437,885
(15,548)
4,579
(3,027)
5,435
14,285
5,724
(5.5) %
(1.0) %
1.3 %
1.3 %
Foreign exchange loss (gain)
Share-based compensation
Business acquisition, integration and
reorganization costs
Impairment of property and equipment and right-
of-use assets
Internal ERP systems implementation
Adjusted EBITDA (1)
Adjusted EBITDA Margin (1)
96
2,951
12,166
2,758
—
10,463
(25)
937
6,128
—
232
6,048
159
8,112
18,079
2,758
—
36,122
7.7 %
5.0 %
6.9 %
(26)
4,454
11,617
—
840
22,609
5.2 %
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 $7.5 million for the three months ended March 31, 2023, representing an
increase of $6.3 million, from a loss of $1.2 million for the three months ended March 31, 2022. EBITDA Margin
was equal to (5.5)% for the three months ended March 31, 2023, compared to (1.0)% for the three months
ended March 31, 2022.
Adjusted EBITDA amounted to $10.5 million for the three months ended March 31, 2023, representing an
increase of $4.5 million, or 73.0%, from $6.0 million for the three months ended March 31, 2022. As explained
above, increased gross margin and the contribution from the acquisition of Datum were partially offset by
increased selling, general and administrative expenses. Adjusted EBITDA Margin was 7.7% for the three
months ended March 31, 2023, compared to 5.0% for the three months ended March 31, 2022.
EBITDA amounted to $7.0 million for the twelve months ended March 31, 2023, representing an increase of
$1.3 million, from $5.7 million for the twelve months ended March 31, 2022. EBITDA Margin was equal to 1.3%
for the twelve months ended March 31, 2023, compared to 1.3% for the twelve months ended March 31, 2022.
Adjusted EBITDA amounted to $36.1 million for the twelve months ended March 31, 2023, representing an
increase of $13.5 million, or 59.8%, from $22.6 million, which included the forgiveness of $5.9 million in PPP
loans, for the twelve months ended March 31, 2022. As explained above, increased gross margin and the
contributions from the acquisitions of Vitalyst and Datum were partially offset by increased selling, general and
administrative expenses and decreased governmental wage subsidies, mainly the forgiveness of the PPP loans
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 26
recorded in the first quarter of last year. Adjusted EBITDA Margin was 6.9% for the twelve months ended
March 31, 2023, compared to 5.2% for the twelve months ended March 31, 2022.
9. Bookings and Backlog
Bookings during the three months ended March 31, 2023 were $124.0 million, which translated into a book-to-
bill ratio of 0.91 for the quarter. The book-to-bill ratio would be 1.06 if revenues from the two long-term contracts
signed as part of an acquisition in the first quarter of last year were excluded.
For the twelve months ended March 31, 2023, bookings were $525.4 million, which translated into a book-to-bill
ratio of 1.01. The book-to-bill ratio would be 1.15 if revenues from the two long-term contracts signed as part of
an acquisition in the first quarter of last year were excluded.
Management believes information regarding bookings can provide useful trend insight to investors regarding
changes in the volume of new business over time. However, contracts typically provide termination clauses at
the option of the customer. Furthermore, modifications of the scope of work and demand-driven usage may
occur. As such, the amount of the contract actually realized could materially differ from the initial bookings
amount.
As at March 31, 2023, backlog represented approximately 16 months of trailing twelve-month revenues. The
backlog includes revenue agreements for projects which may extend beyond twelve months.
Management believes that backlog information can provide useful trend insight to investors regarding changes
in management’s best estimate of future revenue stemming from signed revenue agreements. However,
contracts typically provide termination clauses at the option of the customer. Furthermore, modifications of the
scope of work and demand-driven usage may occur. There can be no assurance that subsequent cancellations
or scope adjustments will not occur, that the backlog will ultimately result in earnings, or when the related
revenues and earnings from such backlog will be recognized. As such, the amount of the contract actually
realized could materially differ from the amount included in backlog at a given date.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 27
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, 2023 and 2022:
(in $ thousands)
Net cash from (used in) operating activities
Net cash used in investing activities
Net cash (used in) 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,
2023
$
2022
$
2023
$
2022
$
4,431
(326)
(5,633)
92
(1,436)
24,019
22,583
(3,682)
(17,336)
30,042
(48)
8,976
8,679
17,655
28,882
(13,728)
(11,326)
1,100
4,928
17,655
22,583
1,850
(18,938)
27,917
(77)
10,752
6,903
17,655
10.2
Cash Flows - Operating Activities
For the three months ended March 31, 2023, net cash from operating activities was $4.4 million, representing
an increase of $8.1 million, from $3.7 million of cash used for the three months ended March 31, 2022. The
cash flows for the three months ended March 31, 2023 resulted primarily from the net loss of $20.0 million, plus
$28.0 million of non-cash adjustments to the net loss, consisting primarily of depreciation and amortization,
contingent consideration, impairment of property and equipment and right-of-use assets, net financial expenses,
and share-based compensation, partially offset by deferred taxes, and $3.6 million in unfavorable changes in
non-cash working capital items. In comparison, the cash flows for the three months ended March 31, 2022
resulted primarily from the net loss of $7.3 million, plus $6.1 million of non-cash adjustments to the net loss,
consisting primarily of depreciation and amortization, net financial expenses, and share-based compensation,
partially offset by deferred taxes and other items, and $2.5 million in unfavorable changes in non-cash working
capital items.
Unfavorable changes in non-cash working capital items of $3.6 million during the three months ended
March 31, 2023 consisted primarily of a $4.5 million increase in unbilled revenues, a $1.3 million increase in
prepaids, a $0.5 million increase in tax credits receivable, and a $0.4 million decrease in deferred revenues,
partially offset by a $2.8 million increase in accounts payable and accrued liabilities and a $0.5 million decrease
in accounts receivable and other receivables. For the three months ended March 31, 2022, unfavorable
changes in non-cash working capital items of $2.5 million 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, and a $2.1 million increase in prepaids,
partially offset by a $9.6 million increase in accounts payable and accrued liabilities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 28
For the twelve months ended March 31, 2023, net cash from operating activities was $28.9 million, representing
an increase of $27.0 million, or 1,461.2%, from $1.9 million for the twelve months ended March 31, 2022. The
cash flows for the twelve months ended March 31, 2023 resulted primarily from the net loss of $30.1 million,
plus $56.7 million of non-cash adjustments to the net loss, consisting primarily of depreciation and amortization,
net financial expenses, contingent consideration, share-based compensation, impairment of property and
equipment and right-of-use assets, and foreign exchange loss on repayment of long-term debt, partially offset
by deferred taxes and unrealized foreign exchange gain, and $2.3 million in favorable changes in non-cash
working capital items. In comparison, the cash flows for the twelve months ended March 31, 2022 resulted
primarily from the net loss of $15.5 million, plus $18.5 million of non-cash adjustments to the net loss, consisting
primarily of depreciation and amortization, net financial expenses, 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.
Favorable changes in non-cash working capital items of $2.3 million during the twelve months ended
March 31, 2023 consisted primarily of a $15.8 million decrease in accounts receivable and other receivables
and a $0.1 million decrease in other assets, partially offset by a $6.2 million decrease in accounts payable and
accrued liabilities, a $4.5 million increase in unbilled revenues, a $1.6 million increase in tax credits receivable,
a $0.9 million increase in prepaids, and a $0.4 million decrease in deferred revenues. For the twelve months
ended March 31, 2022, unfavorable changes in non-cash working capital items of $1.1 million 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.
10.3
Cash Flows - Investing Activities
For the three months ended March 31, 2023, net cash used in investing activities was $0.3 million, representing
a decrease of $17.0 million, from $17.3 million for the three months ended March 31, 2022. The cash used in
the three months ended March 31, 2023 resulted primarily from 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, 2022 resulted primarily from the Vitalyst Acquisition and purchases of property and equipment and
intangibles as part of the ordinary course of business.
For the twelve months ended March 31, 2023, net cash used in investing activities was $13.7 million,
representing a decrease of $5.2 million, from $18.9 million for the twelve months ended March 31, 2022. The
cash used in the twelve months ended March 31, 2023 resulted primarily from the Datum Acquisition, net of the
working capital adjustment, and purchases of property and equipment and intangibles as part of the ordinary
course of business, partially offset by a decrease in restricted cash. In comparison, the cash used in the twelve
months ended March 31, 2022 resulted primarily from the Vitalyst Acquisition and purchases of property and
equipment as part of the ordinary course of business.
10.4 Cash Flows - Financing Activities
For the three months ended March 31, 2023, net cash used in financing activities was $5.6 million, representing
an increase of $35.6 million, from $30.0 million of cash generated for the three months ended March 31, 2022.
The cash flows for the three months ended March 31, 2023 resulted primarily from $30.9 million in long-term
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 29
debt repayments, $2.3 million in net financial expenses paid, and $0.9 million in repayments of lease liabilities,
partially offset by $28.2 million in proceeds from long-term debt, net of related transaction costs, as described in
section 10.6, and $0.3 million from the exercise of stock options. In comparison, 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 from the issuance of shares, net of share issue costs, and $0.3 million
from the exercise of stock options, partially offset by $87.7 million in long-term debt repayments, $1.1 million in
net financial expenses paid, $0.9 million in repayments of lease liabilities, and $0.4 million in shares purchased
for cancellation.
For the twelve months ended March 31, 2023, net cash used in financing activities was $11.3 million,
representing an increase of $39.2 million, from $27.9 million of cash generated for the twelve months ended
March 31, 2022. The cash flows for the twelve months ended March 31, 2023 resulted primarily from
$97.5 million in long-term debt repayments, $8.1 million in net financial expenses paid, $3.7 million in
repayments of lease liabilities, and $1.0 million in shares purchased for cancellation, partially offset by
$98.7 million in proceeds from long-term debt, net of related transaction costs, and $0.3 million from the
exercise of stock options. In comparison, 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
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, $3.5 million in net financial expenses paid,
$2.7 million in repayments of lease liabilities, and $1.2 million in shares purchased for cancellation.
10.5
Capital Resources
Alithya’s capital consists of 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 30
10.6
Long-Term Debt and Net Debt
The following table summarizes the Group’s long-term debt:
As at
(in $ thousands)
Senior secured revolving credit facility (the "Credit Facility") (a)
Secured loans (b)
Subordinated unsecured loans (c)
Balance of purchase payable with a nominal value of $3,100,000, non-interest bearing (5.8%
effective interest rate), paid in April 2022
Balance of purchase payable with a nominal value of $1,800,000, non-interest bearing (6.0%
effective interest rate), paid in October 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), paid in December 2022
Balance of purchase price payable with a nominal value of $12,641,000 (US$9,345,000), non-
interest bearing (4.4% effective interest rate), payable in annual installments of $4,214,000
(US$3,115,000), maturing on July 1, 2025
Deferral of employment tax payments (March 31, 2022 - US$1,219,000)
Other
Unamortized transaction costs (net of accumulated amortization of $1,184,000 and $754,000)
Current portion of long-term debt
March 31,
March 31,
2023
$
2022
$
82,512
13,192
20,000
—
—
—
11,993
—
—
(507)
127,190
12,808
114,382
66,631
8,596
17,500
3,100
1,748
8,178
—
1,521
120
(718)
106,676
19,316
87,360
a) The Credit Facility is available to a maximum amount of $125,000,000 which can be increased under an
accordion provision to $140,000,000, under certain conditions, 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.
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.
As at March 31, 2023, the amount outstanding under the Credit Facility includes $82,512,000 (March 31, 2022 -
$48,377,000) payable in U.S. dollars (US$61,000,000; March 31, 2022 - US$38,755,000).
On October 27, 2022, the Group entered into an additional operating credit facility available to a maximum
amount of $2,705,000 (US$2,000,000), bearing interest at U.S. prime rate plus 1.00%, with the same security
and financial covenants as the Credit Facility. This operating credit facility can be terminated by the lender at
any time. There was no amount outstanding under this additional operating credit facility as at March 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 31
(b) The secured loans issued by Investissement Québec to finance the Group’s refundable tax credits have the
following terms and conditions:
As at
(in $ thousands)
Year of related Refundable
Tax Credit
Repayable on the earlier of
the date of receipt of the
refundable tax credits
receivable and
2021
2022
2023
March 31, 2023
March 31, 2024
March 31, 2025
Bearing interest at
Prime rate + 1,00%
Prime rate + 1,00%
Prime rate + 1,25%
March 31,
March 31,
2023
$
2022
$
—
8,719
4,473
13,192
4,670
3,926
—
8,596
The maximum amount that can be financed for the 2022 and 2023 refundable tax credits is the lesser of 90% of
the eligible refundable tax credits and $8,776,000 for 2022 and $10,670,000 for 2023. The loans are secured by
a first ranking hypothec on the universality of the Group’s financed refundable tax credits receivable and a
subordinated ranking hypothec on accounts receivable and other receivables.
(c) The subordinated unsecured loans are with Investissement Québec, in the amount of $20,000,000, mature on
October 1, 2025. The first $10,000,000 bears fixed interest rates ranging between 6.00% and 7.25% and the
additional $10,000,000 bears interest ranging between 7.10% and 8.35%, determined and payable quarterly,
based on threshold limits for certain financial ratios. Under the terms of the loans, the Group is required to
maintain compliance with certain financial covenants which are measured on a quarterly basis.
(a)(c) The Group was in compliance with all of its financial covenants as at March 31, 2023 and 2022.
Total long-term debt as at March 31, 2023 increased by $20.5 million, to $127.2 million, from $106.7 million as
at March 31, 2022, due primarily to an increase of $15.9 million in drawings under the Credit Facility in order to
fund the Datum Acquisition and to fund operations, the addition of a $12.0 million balance of purchase price
payable as part of the Datum Acquisition, an increase of $2.5 million in the subordinated unsecured loan, an
increase of $4.6 million in the secured loans, and a general increase due to the foreign exchange rate impact on
long-term debt denominated in U.S. dollars, partially offset by payments of $13.0 million in balances of sale
related to previous acquisitions and $1.5 million in deferred employment taxes. The increase in total long-term
debt resulted in a $4.9 million increase in cash as at March 31, 2023 compared to March 31, 2022.
As at March 31, 2023, cash amounted to $22.6 million and $82.5 million was drawn under the Credit Facility
and classified as long-term debt. In comparison, 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 32
The following table reconciles long-term debt to Net Debt(1):
As at
(in $ thousands)
Current portion of long-term debt
Non-current portion of long-term debt
Total long-term debt
Less:
Cash
Restricted cash
Net Debt
March 31,
March 31,
2023
$
2022
$
12,808
114,382
127,190
22,583
—
22,583
104,607
19,316
87,360
106,676
17,655
3,254
20,909
85,767
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, 2023, Alithya's Net Debt increased primarily as a result of the
increased borrowing under the Credit Facility, as explained above, and the decrease in restricted cash, partially
offset by the increase in cash.
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)
Trade payable
Contingent consideration
Credit Facility
Secured loans
Subordinated unsecured loans
Balance of purchase price payable
Lease liabilities
Operating commitments
Carrying
amount
$
Total
$
53,145
9,157
82,512
13,192
20,000
11,993
18,516
—
53,145
9,565
88,436
14,226
23,275
12,642
20,499
19,316
March 31, 2023
Less than 1
year
1-2 years
2-5 years
More than 5
years
$
53,145
—
5,924
9,398
1,310
4,214
4,545
9,176
$
$
$
—
8,826
82,512
4,828
1,310
4,214
5,219
3,299
—
739
—
—
20,655
4,214
7,197
6,841
—
—
—
—
—
—
3,538
—
3,538
208,515
241,104
87,712
110,208
39,646
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 14 of the consolidated financial statements, there have been no material changes with respect to off-
balance sheet arrangements since March 31, 2022 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, 2023
| 33
11. Share Capital
In the context of the discussion on share capital, Alithya Group inc. will be referred to as the “Company”. The
details of Alithya's share capital are fully described in Note 12 of Alithya's annual audited consolidated financial
statements.
11.1
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 was 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 plan authorized the Company to make purchases for cancellation during the period between
September 20, 2021 and the earlier of September 19, 2022 and the date on which the Company would have
acquired the maximum number of Subordinate Voting Shares allowable under the NCIB or would otherwise
have decided not to make any further purchases.
On September 14, 2022, the Company’s Board of Directors authorized and subsequently the TSX approved the
renewal of its NCIB. Under the NCIB, the Company is allowed to purchase for cancellation up to 2,491,128
Subordinate Voting Shares, representing 5% of the Company’s public float as of the close of markets on
September 8, 2022.
The NCIB plan commenced on September 20, 2022 and will end on the earlier of September 19, 2023 and the
date on which the Company will have acquired the maximum number of Subordinate Voting Shares allowable
under the NCIB or will otherwise decide 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.
In connection with the NCIB, the Company entered into an automatic share purchase plan (“ASPP”) with a
designated broker. 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.
12. Related Parties
Ultimate controlling party
As at March 31, 2023, the holders of Multiple Voting Shares, directly or indirectly, collectively owned or
exercised control over Subordinate Voting Shares and Multiple Voting Shares representing approximately
45.84% 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, 2023
| 34
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
a) Salaries and benefits include short-term incentive compensation.
March 31,
March 31,
2023
$
2022
$
4,101
3,081
—
7,182
4,312
1,325
317
5,954
In addition to the above amounts, the Group is committed to pay incremental benefits to certain members of key
management up to $6,624,000 (2022 - $5,122,000) 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. As at March 31, 2023, the entity was no longer a
related party as its controlling shareholder ceased to be a director of the Group on September 14, 2022.
Year ended
(in $ thousands)
Revenues*
March 31,
March 31,
2023
$
2022
$
6,811
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 March 31, 2023, trade accounts receivable in the amount of nil (March 31, 2022 - $4,287,000) were
receivable from an entity controlled by a director that ceased to be a director of the Group on
September 14, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 35
13. 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,
2023
$
2022
$
2021
$
522,701
(30,097)
(0.32)
464,101
129,025
437,885
(15,548)
(0.18)
447,721
105,113
287,643
(17,338)
(0.30)
243,261
33,353
Revenues increased from March 31, 2022 to March 31, 2023 primarily due to the acquisitions of Vitalyst, which
provided an additional ten months of revenues in fiscal 2023 compared to the prior year, and Datum, as well as
organic growth in all areas and the positive impact of foreign exchange variations between the periods.
Revenue growth from March 31, 2021 to March 31, 2022 was 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.
Net loss and basic and diluted loss per share increased from March 31, 2022 to March 31, 2023 primarily due to
increased selling, general and administrative expenses, including decreased governmental wage subsidies,
increased business acquisition, integration and reorganization costs, including the potential earn-out
consideration related to the Datum Acquisition, increased depreciation and amortization, and increased net
financial expenses, partially offset by increased gross margin and increased income tax recovery. 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.
The increase in total assets from March 31, 2022 to March 31, 2023 was due primarily to the acquisition of
Datum, which resulted in the recognition of intangible assets and goodwill, partially offset by the amortization of
intangible assets that occurred during the year ended March 31, 2023. 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.
Non-current long-term debt and lease liabilities increased from March 31, 2022 to March 31, 2023 primarily due
to the increase in long-term debt, as described in section 10.6. 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, in order to
fund the Vitalyst Acquisition, and lease liabilities recognized on the acquisitions of R3D and Vitalyst.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 36
14. 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,
2021
2021
2021
2022
2022
2022
2022
2023
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)
102,921
105,277
109,713
119,974
126,764
128,933
130,780
136,224
74,581
76,804
81,456
88,891
92,700
91,173
91,562
95,492
28,340
28,473
28,257
31,083
34,064
37,760
39,218
40,732
27.5 %
27.0 %
25.8 %
25.9 %
26.9 %
29.3 %
30.0 %
29.9 %
22,747
24,885
25,002
26,204
28,927
30,421
31,196
35,978
3,943
1,553
3,380
68
689
1,247
3,450
857
1,400
3,438
6,128
1,235
4,017
1,882
1,579
4,699
(42)
(27)
(25)
(164)
2,741
1,602
6,708
64
1,290
12,166
1,634
7,397
163
1,721
8,693
96
31,691
30,229
30,670
37,559
36,923
41,536
41,680
58,654
Operating loss
(3,351)
(1,756)
(2,413)
(6,476)
(2,859)
(3,776)
(2,462)
(17,922)
Net financial expenses
Loss before income taxes
Income tax recovery
Net loss
Basic and diluted loss per share
(4,300)
(2,268)
(2,032)
(0.02)
949
1,075
1,203
1,352
1,793
(2,831)
(3,616)
(7,828)
(4,652)
(54)
(130)
(575)
(488)
2,301
(6,077)
(5,642)
2,664
2,577
(5,126)
(20,499)
379
(506)
(2,777)
(3,486)
(7,253)
(4,164)
(435)
(5,505)
(19,993)
(0.03)
(0.04)
(0.08)
(0.04)
—
(0.06)
(0.21)
Quarterly variances in Alithya's results are due primarily to the timing of acquisitions. Quarterly variations can
also be attributed 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.
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 and the acquisitions of Vitalyst and
Datum on January 31, 2022 and July 1, 2022, respectively, offset by the negative impacts of the COVID-19
pandemic, net of government subsidies received, and the April 1, 2021 acquisition of R3D, whose revenues
historically show a higher proportion from billable subcontractors. Selling, general and administrative expenses
have increased mainly from business acquisitions, net of 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 increased moderately as certain
business activities return to pre-Covid-19 levels and due to the higher historical selling, general and
administrative expense percentage of Vitalyst. Other expenses, such as business acquisition, integration and
reorganization costs, depreciation, amortization of intangibles, and income tax recovery, have also varied as a
result of business acquisitions and the subsequent integration activities and requirements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 37
15. 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.
The following are critical judgements that management has made in applying accounting policies and that have
the most significant effect on the amounts recognized in the consolidated financial statements:
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, ERP and Data Solutions.
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 three reportable segments based on geography: Canada, U.S. and International.
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.
The following are assumptions and estimation uncertainties that have 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 generally 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’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 38
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
either the value-in-use calculations using valuation models such as the discounted cash flow model or the fair
value less costs of disposal calculations using valuation models such as a multiple applied to Adjusted EBITDA.
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 pre-tax value weighted average cost of capital (“WACC”). Key assumptions used in the fair value less
cost of disposal calculations include estimated revenues and EBITDA margin in determining forecasted
Adjusted EBITDA, as well as the multiple applied to forecasted Adjusted EBITDA. 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.
16. Change in Accounting Policy
IAS 7 Statement of Cash Flows
IAS 7 prescribes that interest paid is to be classified as operating cash flows (the Group’s previous
classification), or alternatively, interest paid may be classified as financing cash flows. As at October 1, 2022, as
a result of recent business acquisitions financed through its senior revolving credit facility and balance of
purchase price payable, the Group changed its cash flow presentation to present interest paid as financing cash
flows instead of operating cash flows. This presentation provides more relevant information regarding the cash
flows of the Group.
This change in accounting policy has been applied retrospectively. Changes to the comparative amounts in the
Group’s consolidated statements of cash flows are as follows:
(in $ thousands)
Net cash (used in) from operating activities
Net cash from (used in) financing activities
For the three months ended
March 31, 2022
For the year ended
March 31, 2022
As
previously
reported
Adjustment
Restated
amount
As
previously
reported
Adjustment
Restated
amount
$
(4,780)
31,140
$
1,097
(1,097)
$
(3,683)
30,043
$
(1,629)
31,396
$
3,479
(3,479)
$
1,850
27,917
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 39
17. Accounting Standard Amendments Effective for the Year Ending
March 31, 2023
The following amendment to existing standards was adopted by the Group on April 1, 2022 and had no
significant impact on the Group’s consolidated financial statements.
Onerous Contracts, Cost of Fulfilling a Contract
In May 2020, the IASB issued Onerous Contracts - Cost of Fulfilling a Contract, which includes amendments to
IAS 37. The amendments specify which costs a company should include as the cost of fulfilling a contract when
assessing whether a contract is onerous. The full cost approach considers that the 'cost of fulfilling' a contract
comprises the 'costs that relate directly to the contract'. Costs that relate directly to a contract include
incremental costs of fulfilling that contract and an allocation of other costs that relate directly to fulfilling
contracts.
18. 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. 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. After reconsidering certain aspects of the 2020 amendments, the IASB reconfirmed that only covenants
with which a company must comply on or before the reporting date affect the classification of a liability as
current or non-current. Additional disclosure will be required to help users understand the risk that those
liabilities could become repayable within 12 months after the reporting date. 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. The amendments to IAS 1 apply retrospectively and are effective for annual periods
beginning on or after January 1, 2024, with earlier application permitted. Management is currently evaluating the
impact of the amendment on its consolidated financial statements.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 40
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.
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 41
19. Risks and Uncertainties
19.1
Risks Related to the Market
19.1.1 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, labor or social unrest, rising 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, but there is no assurance that such initiatives would be successful.
With the current high levels of inflation, Alithya may become subject to significant cost pressures, which may
result in market volatility. Governments of countries, states or provinces where Alithya has direct or indirect
business activities may adopt initiatives to combat inflation, such as raising interest rate, thus increasing the
Company’s cost of borrowing and decreasing the liquidity of capital markets. High levels of inflation may also
lead to increased costs of labor and the Company’s employee compensation expenses. If Alithya’s costs were
to become subject to significant inflationary pressures, there is no assurance that Alithya would be able to fully
offset such higher costs through price increases, which could have a material adverse effect on its business
financial condition or results of operations.
Also, although the Company has no operations in the Ukraine, the current armed conflict in the Ukraine could
affect its customers and therefore indirectly affect Alithya. Similarly, as the Company continues to expand its
operations in North America and internationally, in particular through acquisitions, 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.
Additionally, the potential impacts of climate change are unpredictable and natural disasters, sea-level rise,
floods, droughts or other weather-related events present additional risks, as they could disrupt Alithya’s internal
operations or its client’s operations, impact our professional’s health and safety and increase insurance and
other operating costs. Climate risks can arise from physical risks (risks related to the physical effects of climate
change), transition risks (risks related to regulatory, legal, technological and market changes from a transition to
a low-carbon economy), as well as reputational risks related to the Company’s management of climate-related
issue and our level of disclosure related to such matters. Such risks could affect the Company or affect the
financial viability of its customers, leading to a reduction of demand and loss of business from such customers
and each of these risks could negatively impact Alithya’s business, results of operation and financial condition.
19.1.2 Pandemics
A pandemic, such as the COVID-19 pandemic, can create significant volatility and uncertainty and disrupt the
industries and markets in which Alithya operates and poses the risk that our professionals, customers,
subcontractors and business partners may be prevented from, or restricted in, conducting business activities as
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 42
per pact practice or as expected for an indefinite period, including due to the virus itself or as a result of
emergency measures and restrictions that may be recommended or imposed by governmental authorities to
combat any such pandemic. Such governmental emergency measures may include 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 policies, curfews,
social distancing measures and the temporary closure of non-essential businesses, all of which may cause
material disruptions and significant pressure on businesses in general and have an adversely impact Alithya’s
business and results of operations.
While most of the restrictions adopted by governments and businesses to combat the COVID-19 pandemic
have now been lifted, the COVID-19 pandemic still raises uncertainties and there is no assurance that there will
be no resurgences of a new strain of COVID-19 or outbreak of another virus. The resurgence of the COVID-19
pandemic or the emergence of a new pandemic could 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 may experience an increase in demand for
digital technologies and services in certain industry segments during a pandemic, which could ultimately benefit
Alithya, there is no assurance that Alithya would experience such a demand or that, if it does, it would be able to
respond to such demand while observing government recommendations.
As a result of the COVID-19 pandemic, the Company adopted a hybrid work program. While this new reality
provides professionals the benefit from both remote and on-premises working environments, it exposes the
Company to increased risks of cybersecurity incidents, which if materialized could affect Alithya’s business,
financial condition and results of operations. Also, with the COVID-19 pandemic, 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 benefited from governmental financial assistance programs in
Canada, the U.S. and France, including PPP loans in the U.S. for which the Company received forgiveness.
While Alithya successfully benefitted from such fundings and loans, should a pandemic arise and the global
economy be affected, 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. Although Alithya has a business
continuity plan, there is no assurance that the implementation of such business continuity plan would be
successful. The COVID-19 pandemic has shown us that no one can predict the duration or scope of a pandemic
or emergence or resurgence of a pandemic and, although some impacts may materialize themselves, it remains
challenging for the Company to accurately estimate or quantify the severity of a pandemic and the full scope
and magnitude of its impacts and consequences on the Company, its business, financial condition and
prospects.
19.2
Risks Related to Alithya's Industry
19.2.1 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. In many cases,
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 43
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 the
digital technology consulting services market. 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
internationally 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, international providers and larger integrators and
that 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.
19.2.2 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. The
demand for qualified employees and inflation continues to be high, 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 retain its existing employees and
attract new employees, Alithya may be unable to complete existing projects or bid on new projects, which could
adversely affect its revenues. Even if Alithya is able to grow and expand its employee base, the resources
required to attract new employees and retain existing employees may adversely affect its operating margins.
19.2.3 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’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
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
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successful in developing any such services and solutions, that it will be able to do it in a timely or cost-effective
manner or that any such services and solutions it develops 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.
19.2.4 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 be successful in 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 require Alithya to devote
additional resources to, among others, create, roll-out, advertise and market 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
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, the U.S. or other countries with more developed intellectual property protection rights.
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.
Furthermore, there is no assurance that competitors will not infringe Alithya’s intellectual property rights, or that
Alithya will have the necessary resources to enforce its intellectual property rights. If Alithya attempts to enforce
its intellectual property rights through litigation, there is no assurance that Alithya would be successful and such
legal proceedings could result in substantial costs and diversion of resources and management attention.
Our solutions may also incorporate and be dependent to a certain extent on the use and development of open
source code. Such open source code is generally licensed by its authors or other third parties under open
source licenses and is typically freely accessible, usable and modifiable. Pursuant to such open source
licenses, we may be subject to certain conditions, including requirements that we offer our proprietary software
that incorporates the open source software for no cost, that we make available source code for modifications or
derivative works we create based upon, incorporating or using the open source code and that we license such
modifications or derivative works under the terms of the particular open source license. If an author or other
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
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third party that uses or distributes such open source software were to allege that we had not complied with the
conditions of one or more of these licenses, we could be required to incur significant legal expenses defending
against such allegations, to pay significant damage awards and to dispose of our solutions that contained or are
dependent upon the open source code which could disrupt the distribution and sale of some of our solutions.
Litigation, if any, could be onerous, have a negative effect on our financial condition and results or operation or
require us to devote additional research and development resources to implement any required changes to our
solutions. Any requirement to disclose our proprietary source code, termination of open source license rights or
payments of damages for breach of contract could have a material adverse effect on our business, financial
condition and results of operations, and could help our competitors develop products and services that are
similar to or better than ours. Although we believe that we comply with our obligations under the licenses for
open source code that we use, it is possible that we may not be aware of all instances where open source code
has been incorporated into our solutions or used in connection with our solutions.
19.2.5 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 customers 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 could exceed
the revenues Alithya generates under the contracts or the coverage provided by Alithya’s insurance policies.
Intellectual property claims or litigation against Alithya could incur substantial costs, divert management’s
attention, harm Alithya’s reputation, require Alithya to enter into additional licensing arrangements or even
restrict Alithya from providing its services and solutions as it has in the past or as it intended to. Any limitation on
Alithya’s ability to offer 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.
19.2.6 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 that such programs 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.
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19.2.7 Regulatory, ethical and ESG risks
Alithya’s global operations require compliance with laws and regulations in several jurisdictions on many
matters of increasing levels of complexity, 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. Laws and regulations frequently change and some may also
impose conflicting requirements as well as restrictions on the movement of cash, currency fluctuation and other
assets and on the repatriation of Alithya’s net earnings.
Our professionals, officers, directors and subcontractors are expected to comply with applicable laws,
regulations and ethical standards and Alithya has put in place measures and controls to ensure compliance
therewith, including through the adoption a Code of Business Conduct that sets out uniform foundations for the
way such persons are expected to conduct themselves. Despite Alithya’s best efforts, there is, however, no
assurance that such measures and controls will be sufficient to prevent violations and failure to do so could
expose Alithya to significant penalties, harm its reputation or even disqualify it from bidding on contracts. This
risk also increases as we continue to expand our business internationally.
Furthermore, over the past few years, stakeholders have started to voice their expectations with respect to
environmental, social and governance (“ESG”) matters and certain customers may have criteria to observe
when selecting a service provider. The ESG initiatives that we choose to implement, and our ability to achieve
and report on such initiatives, could therefore have an impact on our growth and results of operations. Failure to
effectively manage and sufficiently and accurately report on ESG matters could also lead to legal and regulatory
consequences for the Company.
19.2.8 Foreign private issuer pursuant to U.S. securities laws and rules
Alithya is a “foreign private issuer” as such term is defined in Rule 405 under the Securities Act of 1933, as
amended and, as a result, is not subject to the same requirements that are imposed upon U.S. domestic issuers
by the SEC. Under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the Company is
exempt from certain rules and regulations under the U.S. securities laws related to the furnishing and content of
proxy statements and, as such, its reporting obligations are, in certain respects, less detailed and less frequent
than those of U.S. domestic reporting companies. As a result, we do not file the same reports that a U.S.
domestic issuer would file with the SEC, despite the fact that we are required to file or furnish to the SEC the
continuous disclosure documents that we are required to file in Canada under Canadian securities laws. In
addition, our officers, directors and principal shareholders are exempt from the reporting and short-swing profit
recovery provisions contained in Section 16 of the Exchange Act. Accordingly, these exemptions and regulatory
reliefs may reduce the frequency and scope of information that the Company, its officers, directors and principal
shareholders disclose relative to the information generally provided by U.S. domestic companies.
19.2.9 Enforcement of civil liabilities under U.S. securities laws and rules
Although we do business in the U.S., the Company is governed by the Business Corporations Act (Quebec), our
headquarters are located in Canada, the majority of our directors and officers are based principally in Canada,
and a substantial portion of our assets are located outside of the United States. It may therefore be difficult for
investors who reside in the U.S. to effect service of process in the U.S., or to enforce court judgments
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
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predicated upon the civil liability provisions of the U.S. federal securities laws against Alithya or any such
persons. There is also substantial doubt regarding whether an action could be brought in Canada in the first
instance predicated solely upon U.S. federal securities laws. Canadian courts may refuse to hear a claim based
on an alleged violation of U.S. securities laws against us or such persons on the grounds that Canada is not the
most appropriate forum in which to bring such a claim. Even if a Canadian court agrees to hear a claim, it may
determine that Canadian law and not U.S. law is applicable to the claim.
19.3
Risks Related to Alithya's Business
19.3.1 Changes in the nature of revenues
Alithya generates revenues principally through the provision of 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
fixed-fee
materials arrangements, which
arrangements, and (iii) subscription, software and other revenues. Alithya also sometimes enters into
arrangements with multiple performance obligations as well as payrolling service to certain customers through
which contractor candidates recruited and selected by customers are hired by Alithya and then assigned to
client projects. Any change in the mix of Alithya's arrangements with its customers could have an impact upon
its periodic operating performance, including gross margin.
includes service-based arrangements (typically support), (ii)
19.3.2 Customer concentration
Alithya derives a significant portion of its revenues from certain major customers and expects this to continue in
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. Such major customers may
not be easily replaced, and 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 relationships with these customers or to keep providing high-quality
services that meet their expectations 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.
19.3.3 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.
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19.3.4 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 cash on hand and available financing 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.
19.3.5 Growth through acquisitions
Alithya’s ability to grow through acquisitions requires that it identifies suitable acquisition targets that meet
Alithya’s financial and operational objectives and fit Alithya's culture and strategy. There can be no assurance
that Alithya will be able to identify suitable acquisition candidates and consummate additional acquisitions that
meet its economic thresholds and create value for shareholders, 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 possible resulting pressure on the revenues and net 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 smooth, timely and
cost-effective manner, it could have difficulty achieving expected synergies, which could as a result affect its
growth and profitability objectives. Additional risks and uncertainties relating to acquisitions and other strategic
transactions include: (i) difficulties in retaining key employees and integrating new professionals joining from
acquired businesses into Alithya’s team and culture, (ii) difficulties in maintaining and building on relationships
with present and potential customers, subcontractors and business partners of an acquired business or the
Company; (iii) difficulties managing and integrating operations in geographically dispersed locations; (iv) the risk
that the targeted markets do not evolve as anticipated and that technologies acquired prove to be inferior to
Alithya’s expectations; (v) potential deficiencies in the internal controls and procedures at acquired companies;
(vi) cybersecurity and compliance related issues; and (vii) exposure to unanticipated liabilities.
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
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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.
19.3.6 International operations
We operate in several jurisdictions around the world. As such, the scope of our operations subjects us to a
variety of financial, regulatory, political, cultural and social challenges. These include: (i) currency fluctuations,
(ii) risks related to, and the burden of, complying with a wide variety of local, national and international laws,
regulations and policies; (iii) changes in regulatory practices and taxes, (iv) difficulties or expenses in enforcing
contractual rights or intellectual property rights in certain jurisdictions; (v) exchange controls and other funding
restrictions and limitations on the Company’s ability to repatriate cash, funds or capital invested or held in
certain jurisdictions in which the Company operates, (vi) cultural, logistical and communications challenges; (vii)
general social, economic and political conditions or instability in one or more specific jurisdictions and/or
globally, including recessions, political changes or disruptions and other economic crises in one or more
jurisdictions in which Alithya operates, and (viii) the risks that foreign ownership restrictions with respect to
operations in certain jurisdictions could be adopted. Any one or more of these factors could have a material
adverse impact on Alithya’s business, financial condition and results of operations.
19.3.7 Dependence on certain key personnel
Alithya believes that its success depends on the continued employment of its senior management team and
other key personnel, the loss of which could have a material adverse effect on its business and results of
operations, in addition to resulting in increased expenses to cover such persons’ functions until a successor is
appointed and is fully operational. This dependence is particularly important to Alithya’s business because
personal relationships are a critical element in obtaining and maintaining customer engagements. As our
business grows, including through acquisitions, we may also implement changes in our management structure,
which we believe to be appropriate in the circumstances at the time they are implemented, but which could
differ from the views or expectations of some. 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 could attempt and successfully hire away certain of Alithya’s key personnel.
19.3.8 History of losses
Alithya generated a net loss of $30.1 million and $15.5 million for the fiscal years ended March 31, 2023 and
2022, 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 revenues 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
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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’s
shareholders’ equity and working capital.
19.3.9 Early termination, modification, delay and suspension risks
Most of Alithya’s customer contracts contain “termination for convenience” or termination upon short notice
provisions, which permit the client to terminate or cancel the contract at its convenience upon providing Alithya
with notice of a specified period of time before the termination date and/or paying a penalty, depending on the
specific contract terms. Customers may elect to terminate their contracts before their agreed expiry date, or
even modify, delay or suspend it, for a variety of reasons, including a failure by Alithya to deliver its services in
accordance with the terms and conditions of its contractual agreements, a slow-down in business activity or any
other reason whatsoever, which could result in a reduction of Alithya’s net earnings and cash flow and may
impact the value of its backlog. In cases of early termination, Alithya may also not be able to eliminate ongoing
costs incurred to support the contract.
19.3.10 Changes to Backlog
As Alithya’s revenues depends on the level of activities of its customers, Alithya cannot guarantee that the
revenues projected in its backlog will be realized or, if realized, will result in profits. Projects may remain in the
backlog for an extended period of time. Also, in the event a significant number of customers were to avail
themselves of such “termination for convenience” provisions, or if one or more significant customer contracts
were terminated for convenience, Alithya’s reported backlog would be adversely affected with a corresponding
adverse impact on Alithya’s expected financial conditions and results of operations.
19.3.11 Utilization rates
In order to maintain and grow revenues levels, Alithya has to maintain an appropriate level of availability of
professional resources 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.
19.3.12 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
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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 still
represent a minority of Alithya’s revenues, Alithya is increasingly contracting under a fixed-fee basis. If Alithya is
unsuccessful in accurately estimating its labour costs or labour hours 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.
19.3.13 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 competitors or choose to offer the services
themselves 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.
19.3.14 Business 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 business 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.
19.3.15 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
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
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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.
19.3.16 Insurance Limits
The Company maintains comprehensive insurance coverage to provide indemnity for its losses and liabilities in
connection with various aspects of its business and operations. The Company’s insurance programs are,
however, subject to varying coverage limits as well as retentions and exclusions that are customary or
reasonable given the cost of procuring insurance, 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.
19.3.17 IT systems and infrastructure and use of the cloud
To deliver its services and solutions to its customers and 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, Alithya relies upon high speed networks, including, but not limited to, satellite, fiber
optic and land lines operated by third parties. 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. Alithya delivers its solutions and services to customers through the use of
third-party cloud computing services, such as AWS cloud services. If, for any reason, such services were
discontinued or we were required to migrate Alithya’s computing towards other cloud service providers, such a
transition could require significant time and expense and Alithya’s business could be adversely impacted.
Although contractual agreements with such third-party cloud computing services contain minimum service
levels, there is no assurance that Alithya’s business will not be affected by an interruption of service or
incidents. Any damage to, or failure of, our providers' systems could result in interruptions of our services, which
could have an impact on Alithya’s revenues, subject Alithya to potential liability and adversely affect its ability to
retain our customers or attract new customer. The performance, reliability and availability of Alithya’s services is
critical to its reputation and ability to attract and retain customers.
In addition, the costs for our cloud services have increased over time, and may increase further as Alithya’s
business grows and as it continues to require more computing or storage capacity. There is also no assurance
that such capacity will be available on the same terms or with the same costs or at all. These costs could
therefore adversely impact its business, financial condition and results of operations.
19.3.18 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
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 53
misconduct or negligence and human or technological error, all of which may be increased as a result of
Alithya’s professionals working remotely. 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. Geopolitical instability and tension could also
exacerbate 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, subcontractors, business 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 are generally 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 itself 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 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 the 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.
The Company and certain of its customers, subcontractors and business partners may also use open source
code, which can entail security risks. Vulnerabilities discovered in open source code could be exploited by
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 54
attackers, which could compromise our system infrastructure and/or lead to a loss or breach of personal and
proprietary information, financial loss, and other irreversible harm.
19.3.19 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, subcontractors
and business 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 U.S. (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.
19.3.20 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, 2023
| 55
provide services could materially harm Alithya’s continued performance or limit the award of additional
contracts.
19.3.21 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.
19.3.22 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, net earnings and net assets is denominated in foreign
currencies, including in U.S. dollars, Euros, British pounds and Australian dollars, 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.
19.3.23 Legal claims
During the ordinary course of conducting its business, Alithya may be threatened with or become subject to
legal proceedings initiated by Alithya’s customers or other third parties. 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 adequate 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 require Alithya to incur significant
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 56
attorney fees or pay damage awards and fines or 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.
19.3.24 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
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.
19.3.25 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 vision, 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.
19.3.26 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 net earnings, which could
materially adversely affect Alithya’s results of operations and shareholders’ equity in future periods.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 57
19.4
Risks Related to Subordinate Voting Shares and Liquidity
19.4.1 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.
19.4.2 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 Alithya’s 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 divert management’s attention and resources.
19.4.3 Inability to service debt
Alithya uses its Credit Facility and other debt arrangements to fund its activities, including acquisitions.
Accordingly, depending on its level of indebtedness, which may, from time to time, be substantial and involve
significant interest payment requirements, Alithya may be required to dedicate an important part of its cash flow
to make interest and capital payments on its debt. Alithya’s ability to generate sufficient cash flow to service its
debt depends upon future performance, which is subject to prevailing economic conditions as well as financial,
competitive and other factors, many of which are outside of its control. There is no assurance that Alithya will be
able to generate sufficient cash flow to meet its obligations under its outstanding debt. If Alithya is unable to do
so, Alithya may be required to refinance, restructure or otherwise amend some or all of its obligations, sell
assets, raise additional cash through issuances of equity or convertible debt securities, or be forced to reduce or
delay investments that are important to Alithya’s growth, thereby placing it at a disadvantage compared to
competitors that may have less debt or making it more vulnerable in a downturn in general economic conditions.
In addition, Alithya’s Credit Facility and other debt arrangements contain financial and other covenants,
including covenants that require that certain financial ratios and/or other financial or other covenants be
maintained. If Alithya were to breach these covenants, it could be required to repay or refinance its existing debt
obligations prior to their scheduled maturity and its ability to do so could be restricted or limited by prevailing
economic conditions, available liquidity and other factors. Alithya’s inability to service its debt or its inability to
fulfill its financial or other covenants in its Credit Facility and other debt arrangements could have an adverse
effect on Alithya’s business, financial condition and results of operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 58
Also, a significant portion of Alithya’s debt bears interest at variable interest rates and is therefore subject to
interest rate fluctuations. Although Alithya enters into derivative financial instruments to reduce its exposure to
interest rate risks, there is no assurance that such instruments will be sufficient to adequately protect Alithya
against this risk. If interest rates increase, debt service obligations would increase even though the amount
borrowed would remain the same, and net income and cash flows would decrease accordingly, which could
have an adverse effect on Alithya’s business, financial condition and results of operations.
19.4.4 Raising additional capital and maintaining credit
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. Interest rate fluctuations, financial market
volatility, including volatility in Alithya’s share price, credit market disruptions 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 necessary funding, it may be unable to achieve its growth objectives. Alithya’s financial condition and
results of operation is also contingent on its ability to maintain the credit it requires. Should Alithya have to
obtain additional credit or renew its outstanding credit, there is no assurance that Alithya will be able to obtain
such additional credit or renew its outstanding credit upon the same, or more advantageous, terms.
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 additional
indebtedness would result in increased payment obligations and could involve additional or increased financial
and other 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.
19.4.5 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.
19.4.6 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
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 59
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.
20. 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, 2023. 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, 2023.
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, 2023 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, 2023.
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, 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 60
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2023
| 61
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 8, 2023
/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 8, 2023
/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, 2023
(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 8, 2023
/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, 2023
(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 8, 2023
/s/ Claude Thibault
Claude Thibault
Chief Financial Officer
Exhibit 99.8
KPMG LLP
600 de Maisonneuve Blvd. West
Suite 1500, Tour KPMG
Montréal (Québec) H3A 0A3
Canada
Telephone
(514) 840-2100
Fax
Internet
(514) 840-2187
www.kpmg.ca
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Alithya Group inc.
We consent to the use of our report dated June 7, 2023 on the consolidated financial statements of
Alithya Group inc. (the "Entity"), which comprise the consolidated statements of financial position as of
March 31, 2023 and March 31, 2022, the related consolidated statements of operations and
comprehensive loss, changes in shareholders’ equity and cash flows for the years ended March 31,
2023 and March 31, 2022, and the related notes, which are included in the Annual Report on
Form 40-F of the Entity for the year ended March 31, 2023.
We also consent to the incorporation by reference of such reports in the Registration Statements
(Nos. 333-228487 and 333-265666) on Form S-8 of the Entity.
/s/ KPMG LLP
Montréal, Canada
June 8, 2023
Code of Business
Conduct
Acting responsibly and with integrity
May 1st, 2023
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Table Of Contents
Message from our President and CEO .............................................................................................................................. 4
About this Code of Business Conduct............................................................................................................................... 5
Who is subject to this Code of Business Conduct ............................................................................................ 6
How to use this Code of Business Conduct ............................................................................................................ 7
Non-exhaustive guidelines ..................................................................................................................................................... 8
Client Code of Conduct ............................................................................................................................................................. 8
An evolving document ................................................................................................................................................................ 8
Our trusted way of working .......................................................................................................................................................... 9
Act responsibly and with integrity.................................................................................................................................... 11
Ask for advice ..................................................................................................................................................................................... 13
Report all violations or concerns ..................................................................................................................................... 14
No retaliation ...................................................................................................................................................................................... 15
Non-compliance ............................................................................................................................................................................ 15
Exceptions and waivers ............................................................................................................................................................ 15
Complying with the law ................................................................................................................................................................. 16
Legal compliance ...........................................................................................................................................................................17
International laws .......................................................................................................................................................................... 18
Our workplace ......................................................................................................................................................................................... 19
Respect, inclusiveness and fairness ........................................................................................................................... 20
Health and safety .......................................................................................................................................................................... 23
Drugs, alcohol and impairment ...................................................................................................................................... 25
Privacy ......................................................................................................................................................................................................26
Environment ....................................................................................................................................................................................... 27
Our reputation .......................................................................................................................................................................................28
Conflicts of interest......................................................................................................................................................................29
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Outside activities and employment ...........................................................................................................................34
Gifts and other benefits ......................................................................................................................................................... 36
Anti-corruption and anti-bribery .................................................................................................................................. 39
Fair competition and anti-trust ........................................................................................................................................ 41
Money laundering, criminal activities, and economic sanctions ...................................................43
Representing Alithya ..................................................................................................................................................................43
Our assets ................................................................................................................................................................................................. 46
Protecting Alithya’s and our client’s assets.......................................................................................................... 47
Dealing on behalf of Alithya ............................................................................................................................................... 49
Intellectual property .................................................................................................................................................................. 50
Responsible use of data and new technologies ............................................................................................ 52
Cybersecurity ....................................................................................................................................................................................53
Confidentiality ................................................................................................................................................................................. 55
Insider trading ................................................................................................................................................................................. 59
Corporate disclosure .................................................................................................................................................................62
Document management, and books and records .................................................................................... 64
Above and beyond .......................................................................................................................................................................... 66
Community engagement..................................................................................................................................................... 67
Political activities .......................................................................................................................................................................... 68
Lobbying ................................................................................................................................................................................................ 69
Policies ........................................................................................................................................................................................................... 70
How to reach out ........................................................................................................................................................................... 72
Acknowledgment and attestations form .................................................................................................................... 74
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Message from our President and CEO
At Alithya, our mission is to advise, guide and support our clients in their pursuit
of innovation, excellence and the achievement of their business objectives
through the optimal use of technologies.
We will achieve this by leveraging our reputation as a trusted advisor in
consulting and digital technology services, by employing skilled people who
demonstrate integrity and deliver extraordinary performance, and by
developing long-standing partnerships.
Critical to maintaining and enhancing our reputation as a trusted advisor is
our commitment to six core values which drive how we work together and
conduct our business: trust, respect, well-being, passion, integrity and
creativity. These principles underpin our behaviours and guide us to act
responsibly and with integrity in everything that we do.
Reflecting our core values, this Code of Business Conduct sets the behaviours
that we expect of all Alithya employees and subcontractors, who form an
integral part of acting as trusted advisors to our clients. We also want to
provide support to anyone who is faced with a situation which may affect their
time at work, or the reputation of our company. As such, we expect everyone
to foster an ethical, respectful and collaborative work environment.
Our core values have guided our decisions and actions so far. Together, let’s
continue to make a positive difference in support to our long-term success.
Paul Raymond
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About this Code of
Business Conduct
/ 5
In this document, the expressions “Alithya”, “the/this company”, “we”, “us”, “our”
or “ours” refer to Alithya Group inc. and any and all of its subsidiaries
worldwide. Alithya employees, directors and subcontractors are sometimes
referred to as “you”.
Who is subject to this Code of Business
Conduct
This Code of Business Conduct applies to you if you are:
/ A member of the board of directors;
/ An officer
/ An employee; or
/ A subcontractor.
This Code of Business Conduct has no borders: it applies at all times and in all
contexts, worldwide. Even after your employment, mandate or contract with
Alithya ends, you must remain committed to preserving the integrity of
Alithya’s information, assets and resources.
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How to use this Code of Business
Conduct
This Code of Business Conduct sets out the foundations for the way you
should conduct yourself in your day-to-day life at Alithya. You must read this
Code of Business Conduct in its entirety to better understand Alithya’s
expectations and standards regarding ethics and business practices. This
document is meant to be used as a general guidance and it cannot
anticipate every type of situation that you may encounter. Whenever you are
about to make a decision, you should ask yourself the following questions:
Is it Legal?
Does it comply with our
values, our policies and
the Code of Business
Conduct?
Would I be comfortable if
this situation was reported
to my manager or the
Company’s leadership, or
if it was made public?
Would I be able to justify
my actions?
If the answer to any of these questions is “no”, “maybe not” or “I don’t know”, do
not proceed without asking us for advice (see the “Ask for Advice” section of
this Code of Business Conduct). The same goes if you have any concern or
doubt regarding the application of this Code of Business Conduct.
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Non-exhaustive guidelines
While this Code of Business Conduct applies in all circumstances, it is not
meant to replace any of Alithya’s policies. It is important that you read and
understand each policy individually, which may be amended by Alithya from
time to time. Alithya’s policies are accessible on the company’s intranet (see
the “Policies” section at the end of this Code of Business Conduct).
In addition, this Code of Business Conduct does not replace other provisions
and obligations otherwise applicable under individual contracts, local laws or
regulations.
Client Code of Conduct
If you are working at a client site, there may be a client code of conduct or
other client policies and procedures which you must adhere to, in addition to
this Alithya Code of Conduct and Alithya’s policies. Make sure you carefully
review and understand all of them. If one is more restrictive than the other,
always obey the more restrictive one.
An evolving document
Alithya’s business standards and practices are constantly evolving. So does
this Code of Business Conduct. It is periodically reviewed by the Corporate
Governance and Nominating Committee and changes are approved by the
board of directors on recommendation by the Corporate Governance and
Nominating Committee. You are expected to be familiar with the current
version of this Code of Business Conduct. The latest version can be found on
Alithya’s intranet and in the Governance section of Alithya’s website.
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Our trusted way of
working
/ 9
Alithya’s blueprint is based on six core values:
Trust
We do everything in our power to build long-term trusted relationships with
our clients, employees and stakeholders.
Respect
We are committed to treating all our stakeholders with respect. This also
includes our communities and the environment in which we work and live.
Passion
We believe that to succeed, our employees have to be passionate about what
they do. Strong motivation and quality projects make work enjoyable, leading
to success on an individual and group basis.
Well-being
We are committed to using organizational practices that promote healthy
work environments and communities.
Integrity
Alithya is Ancient Greek for truth, and that is reflected in our relationships, our
engagements, and our commitment. We believe integrity, transparency, and
straightforward communications are paramount.
Creativity
Our approach is evolving all the time. We constantly pursue excellence and
work to innovate and improve every part of our business to better meet our
clients’ needs.
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Act responsibly and with integrity
Everyone has a role to play. Alithya’s six core values guide Alithya’s actions and
the way we operate in the workplace and with others. These values provide the
framework to ensure we maintain and enhance Alithya’s reputation as a
trusted advisor. Act Responsibly and With Integrity is all about dealing
professionally with issues as they arise, ensuring we make the right choices
and bringing integrity in all aspects of Alithya’s business.
Our trusted way of working
Whether you are a director, an officer, an employee, a director or a
subcontractor, you are expected to:
/ Read, understand and comply with Alithya’s policies and this Code of
Business Conduct;
/ Comply with all applicable laws, rules and regulations;
/ Not allow any personal interest to compromise Alithya’s or your own
integrity;
/ Strive to create a diverse, safe and supportive work environment;
/ Treat others with respect and dignity;
/ Seek advice and guidance when in doubt (see “Ask for Advice” section of
this Code of Business Conduct);
/ Report promptly and in good faith, any actual or potential violation of this
Code of Business Conduct or any other Alithya policy that you may
become aware of, including any illegal or unethical behaviour (see the
“Reporting all Violations or Concerns” section of this Code of Business
Conduct);
/ Cooperate in internal investigations; and
/ Support others in doing the right thing and in making the right choices.
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If you manage and lead others, you are also expected to act as a role-model.
You are responsible for creating and maintaining an environment that
encourages compliance with this Code of Business Conduct within your team.
Managers must accommodate ethical considerations in business planning
and decision-making, empowering employees to make responsible decisions,
and creating a safe environment to speak up when ethical challenges arise.
This means that you are expected to:
/ Lead by example by demonstrating your commitment to Alithya’s policies
and this Code of Business Conduct. Show what it means to act with
integrity in your everyday decisions and actions. Take responsibility and
be accountable for your conduct and that of your team.
/ Help your peers understand their responsibilities under Alithya’s policies
and this Code of Business Conduct;
/ Create an environment where everyone feels they can voice their
opinions or concerns. This means listening, supporting and responding to
anyone who has questions or wishes to report an actual or potential
violation of this Code of Business Conduct;
/ Monitor compliance of the people you manage.
/ Enforce Alithya’s standards and rules of conduct consistently and fairly;
and
/ Report and follow up with management whenever appropriate.
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Ask for advice
While you are responsible for putting Alithya’s rules and business practices to
work, you are never alone. This Code of Business Conduct provides useful
guidelines to help you make the right decisions. But grey areas will always
exist. When you find yourself in a difficult or ambiguous situation, you should
always seek the necessary advice before taking action.
If you have any doubt about a situation or if you wish to obtain further
guidance on Alithya’s expectations, policies and/or this Code of Business
Conduct, you should promptly consult the person who best understands your
work: your manager. You can also contact Alithya’s Human Capital
Department or the other departments or individuals specifically referred to in
a given section of this Code of Business Conduct using the contact
information provided for in the “How to Reach Out” section at the end of this
Code of Business Conduct.
Speak up
You will never be penalized for seeking guidance on this Code of
Business Conduct, or any of Alithya’s policies. Alithya encourages a
culture of openness and dialogue where you can raise any concern you
may have. If you have questions or concerns, raise them.
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Report all violations or concerns
It is everyone’s duty to protect the reputation, people and assets of Alithya by
promptly reporting any violation or potential violation to this Code of Business
Conduct to their manager or Alithya’s Human Capital Department or Legal
Department. See the “How to Reach Out” section at the end of this Code of
Business Conduct and Alithya’s Whistleblower Policy. Potential violations
include any activity by a director, an officer, an employee or a subcontractor
that may constitute:
/ A violation of laws, rules or regulations, or of this Code of Conduct or an
Alithya policy;
/ Theft or fraud;
/ An accounting irregularity;
/ A conflict of interest;
/ A risk to health and safety;
/ Workplace violence.
Speak up
If something does not feel right, speak up.
Your reports, complaints and discussions will remain confidential unless
disclosure is authorized by you, required by law or necessary to conduct
a review or investigation.
Alithya will investigate every potential violation of this Code of Business
Conduct with care and discretion. Your cooperation may also be
requested as part of the investigation, in which case you will be expected
to cooperate.
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No retaliation
Anyone who comes forward with concerns plays an essential role in helping us
address problems early. You will never be penalized for reporting in good faith
a potential violation of this Code of Business Conduct. In fact, it is Alithya’s
promise that we will not tolerate retaliation against any person for reporting in
good faith any misconduct, or for filing a complaint, testifying, assisting, or
participating in any internal or external investigation, proceeding or hearing.
If you believe you have experienced retaliation, you must report this just as any
other violation of this Code of Business Conduct would be reported.
Non-compliance
Compliance with this Code of Business Conduct is mandatory. Failing to
comply with this Code of Business Conduct can lead to serious consequences
for Alithya, your peers and yourself. If you contravene the rules contained in
this Code of Business Conduct, you expose yourself to administrative and
disciplinary measures, which can include termination of employment,
mandate or contract. Some violations may also result in civil or criminal legal
proceedings.
Exceptions and waivers
Any exception or waiver for directors or executive officers (as defined in
securities law) may be made only by the Board of Directors of Alithya Group
inc., upon recommendation from the Corporate Governance and Nominating
Committee. Any exception or waiver of the provisions of this Code of Business
Conduct for Alithya’s employees and subcontractors may be made only by
the Chief Legal Officer and Corporate Secretary.
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Complying with the law
/ 16
Legal compliance
Obeying the law, both in letter and in spirit, is the foundation of this Code. Our
success depends upon everyone operating within legal guidelines and
cooperating with local, national and international authorities. It is therefore
essential that you understand the legal and regulatory requirements
applicable to your business unit and area of responsibility.
We will disseminate this Code and as we deem necessary hold training
sessions to ensure that all directors, officers, employees and subcontractors
comply with the relevant laws, rules and regulations associated with their
engagement, including laws prohibiting insider trading (which are discussed in
further detail below). While we do not expect you to memorize every detail of
these laws, rules and regulations, we want you to be able to determine when
to seek advice from others. If you do have a question in the area of legal
compliance, it is important that you not hesitate to seek answers from your
manager or the Legal Department.
Disregard of the law will not be tolerated. Violation of domestic or foreign laws,
rules and regulations may subject an individual, as well as Alithya, to civil
and/or criminal penalties. You should be aware that conduct and records,
including emails, are subject to internal and external audits, and to discovery
by third parties in the event of a government investigation or civil litigation. It is
in everyone’s best interests to know and comply with our legal and ethical
obligations.
/ 17
International laws
Our directors, officers, employees and subcontractors are expected to comply
with applicable laws in all countries to which they travel relating on Alithya’s
behalf and where we otherwise do business, including laws prohibiting bribery,
corruption or the conduct of business with specified individuals, companies or
countries. The fact that in some countries certain laws are not enforced or that
violation of those laws is not subject to public criticism will not be accepted as
an excuse for non-compliance.
If you have a question as to whether an activity is restricted or prohibited, seek
assistance from the Legal Department before taking any action.
Our trusted way of working
You are expected to:
/ Comply with all applicable laws, rules and regulations; and
/ Seek advice from your manager or the Legal Department if you have any
question or doubt in the area of compliance with the law before taking
any action.
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Our workplace
/ 19
Respect, inclusiveness and fairness
Alithya is committed to embracing inclusion and to providing a non-
discriminatory and harassment-free work environment. The responsibility for
maintaining a fair, professional, open and safe workplace free from violence,
discrimination or harassment belongs to everyone at Alithya.
Diversity and inclusion are two essential pillars of the way we work. Violence,
discrimination and harassment will not be tolerated at Alithya.
Harassment in the workplace can take many forms, from very obvious to more
subtle. Harassment means behaviour or communications, whether written or
oral, which a reasonable person would consider to cause humiliation or affect
the dignity of a person and, in the context of employment, results in an
intimidating, hostile or offensive environment.
Alithya is an equal opportunity employer in hiring and promoting practices,
wages and benefits. We will not tolerate discrimination against any person in
employment-related decisions and business dealings based on a person’s
race, colour, sex, gender identity or expression, pregnancy, sexual orientation,
civil status, age (except as provided by law), religion, political convictions,
language, ethnic or national origin, social condition, a disability or any other
status protected by law.
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Our trusted way of working
Remember that you are expected to:
/ Interact with your peers in a professional and respectful manner;
/ Read, understand and comply with Alithya’s Prevention of Harassment in
the Workplace Policy;
/ Not take part in and be on the lookout to prevent violence, discrimination
or harassment in Alithya’s workplace or a client’s workplace; and
/ Report any such incident to your manager.
Speak up
If you believe you have been subjected to violence, harassment, or
discrimination of any kind (or witness such behaviour), you should
report the incident to your manager or to Alithya’s Human Capital
Department.
Alithya will investigate and respond to every complaint to resolve them
promptly and fairly. You may also report through Alithya’s Whistleblower
Policy.
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/ Situation
Your manager regularly comments about how attractive your co-worker
is. Your co-worker does not seem to mind. What should you do?
/ What to do
This behaviour is out of place. We encourage you to tell your manager to
stop. If you are uncomfortable or if your manager does not stop, you
must promptly report the issue to the Human Capital Department or
report through Alithya’s Whistleblower Policy.
/ 22
Health and safety
Alithya cares about the health and safety of its directors, officers, employees
and subcontractors. Each of us shares a responsibility to promote a healthy,
safe and secure working environment, whether at an Alithya workplace or a
client workplace.
Our trusted way of working
You are expected to:
/ Follow all applicable laws and regulations, and Alithya’s policies and
procedures on health, safety and security at work and, where applicable,
Alithya’s clients’ policies and procedures;
/ Take every reasonable precaution to maintain a safe working
environment; and
/ Report any potential safety hazard or any health or safety concern
regarding our working environment or a client’s working environment.
Speak up
If you have concerns about health and safety speak to your manager or
to Alithya’s Human Capital Department.
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/ Situation
You work on a client’s premises, and you notice what you believe is a
potential safety hazard. Your work has already been delayed and you
have an important deadline to meet by the end of the day. Reporting
this relatively minor hazard would probably cause additional delays.
Should you prioritize your work for the client?
/ What to do
No. However important and urgent your work is, you should always
report safety issues immediately.
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Drugs, alcohol and impairment
This section should be read together with Alithya’s policy named: Fit for Duty:
Drugs, Prescription Drugs and/or Alcohol Use at Work Policy.
Use of drugs or prescribed or over-the-counter medications may affect your
ability to perform your duties. You must be fit to carry out your duty when you
report for work and remain fit while working.
Use of drugs (including cannabis and its derivatives)
Alithya is committed to a zero-tolerance policy regarding the possession,
consumption, distribution or sale of drugs in the workplace and on the client’s
premises. At all times when working, you must be fit to carry out your duties
and must remain fit for the entire duration of your service. Intoxication or
impairment due to the use of drugs will not be tolerated during work, on the
clients’ premises and/or during activities outside the workplace where you are
representing the company.
Consuming alcohol
Being under the influence of alcohol or consuming alcohol in the workplace or
on clients’ premises is not permitted, except in certain circumstances
approved by management, such as company or client sponsored social
events. When so approved, alcohol consumption must be done responsibly to
avoid misconduct.
Always remember, when working at clients’ premises, you represent Alithya
and must comply with the policies of the clients in addition to Alithya’s.
Therefore, if a client has a zero-tolerance policy for alcohol, you must comply
with such policy when working on its premises.
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Privacy
For a number of employment, tax and other legal reasons, Alithya collects
certain information about you. We respect your privacy and have developed
practices to ensure the protection of your personal data.
Personal data means any factual or subjective information about an
identifiable individual (such as age, gender, province or State of residence,
preferences, opinions), that can directly identify an individual (for example an
individual’s name), or that could identify an individual once the information is
combined (for example the elements of a physical description). Examples of
such are your date of birth, your social insurance number, your banking
information, and your performance evaluations.
We use and share your personal data strictly for the reasons it was collected.
In fact, accessing, using, or sharing your personal data is only permitted on a
“need-to-know” basis and we apply this principle rigorously. If we need to
access, use, or share your personal data for other purposes, we will inform you
and we will not share your personal data without your consent, unless we are
legally permitted to do so.
Furthermore, we will only retain your personal data for as long as it is
necessary and will destroy it once it is no longer required.
For further details in this regard, please refer to Alithya’s Employee Privacy
Policy.
Alithya considers personal data as “confidential information”. If, as part of your
duties, you have access to personal data, it must be treated as confidential
information. Please refer to the “Confidentiality” section of this Code of
Business Conduct.
/ 26
Environment
By the nature of Alithya’s operations, we have a relatively limited impact on the
environment. However, this should not stop us from adopting smart and
responsible practices. We strive to minimize Alithya’s environmental footprint.
Our trusted way of working
You are expected to:
/ Comply with applicable environmental laws and regulations;
/ Conserve resources and reduce use of energy resources where practical;
/ Reduce or eliminate waste and recycle or reuse materials when possible;
and
/ Promptly report to your manager any spill or discharge of hazardous
substances.
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Our reputation
/ 28
Conflicts of interest
Integrity is the cornerstone of Alithya’s reputation. You must never allow your
personal interests to compromise Alithya’s or your own integrity and
reputation. In other words, you must avoid placing yourself in a situation where
there is a conflict between Alithya’s interests and your own (or those of
someone close to you). If a potential or actual conflict of interest should arise,
you must report it promptly to your manager or to Alithya’s Human Capital
Department.
A conflict of interest can mean many different things. Generally, it is any
situation in which your personal interests or those of someone with whom you
have a family relationship (for example, a child, a sibling, parent or spouse), a
proximity relationship (for example, a friend or a co-tenant) and/or a business
relationship (for example, a business partner), can interfere with your
professional judgment, your objectivity, your independence and your loyalty to
the interests of Alithya. It is also any situation in which Alithya’s interests may
conflict with those of a legal person related to you (for example, a company of
which you are a director, officer or relatively important shareholder). In
addition, even it if is not intentional, the appearance of a conflict of interest
may be just as damaging to Alithya’s reputation.
/ 29
You can generally identify a potential conflict of interest by asking yourself the
following questions:
Will I personally gain
from my action /
inaction?
Would I be uncomfortable or
embarassed if this situation
were reported to my manager
or the Company's leadership, or
made public?
Will someone close to
me benefit from my
action / inaction?
If the answer to any of these questions is “yes” or “maybe”, then a conflict of
interest probably exists. If you have doubts, ask for advice before proceeding
(see the “Ask for Advice” section of this Code of Business Conduct).
/ 30
Here are a few examples of situations that may create conflicts of interest:
/ You work for Alithya and, at the same time, for one of Alithya’s suppliers or
clients.
/ You have (or a member of your family or a friend has) a financial interest
in a company over which you have a direct or indirect influence in your
role at Alithya (for example, you are invited to participate in the decision
to mandate a company as Alithya’s supplier or to bid for a new client).
/ You recruit or supervise a family member, or intervene to have a family
member hired by Alithya, a client or a supplier.
/ You use non-public information for your personal advantage (or for the
personal advantage of a family member or friend).
/ You have a personal relationship with a representative of a client or
supplier.
Our trusted way of working
You are expected to:
/ Take all requisite measures to avoid any conflict of interest or any
appearance of a conflict of interest;
/ Promptly report to your manager or to Alithya’s Human Capital
Department any situation of conflict of interest that arises, whether it is
real, potential or apparent;
/ Be fair and impartial in all dealings with clients, suppliers and business
partners;
/ Be truthful and accurate in statements made to prospective clients and
suppliers and, in bids for government projects, strictly comply with the
rules of any public procurement process; and
/ Disclose to your manager or to Alithya’s Human Capital Department any
personal relationship between yourself and someone in a direct or
/ 31
indirect hierarchical relationship with you, including if this relationship
develops after the beginning of your employment or service at Alithya.
During your employment or mandate, you must not:
/ Participate in business discussions or decisions if this is susceptible of
placing you in a situation of conflict of interest.
/ Take advantage of any corporate opportunity that becomes available to
you because of your position at Alithya without Alithya’s prior approval.
/ Compete with Alithya.
/ Place yourself in situations that could create personal obligations that
other individuals could exploit to obtain preferential treatment from
Alithya.
/ Participate in any employment or contract decision involving a person
with whom you have a personal relationship.
Speak up
If you believe you or someone else may be in a potential conflict of
interest, discuss the situation with your manager to ensure appropriate
measures are taken to manage any concerns which may arise.
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/ Situation
Your brother acts from time to time as a subcontractor at Alithya. Your
manager is aware of this fact and measures have been put in place to
ensure that your brother does not report to you when performing his
mandates. Recently your brother decided to continue acting as a
subcontractor for Alithya but through a corporation to be formed, and
asked you to invest and become a shareholder in his business, offering
you 50% of the shares. Should you discuss with your manager before
accepting to invest in your brother’s business?
/ What to do
You should disclose ahead of time and discuss this opportunity with
your manager. This way, both of you will be able to implement
measures, as possible and applicable, to make sure that you continue to
have no direct or indirect influence over your brother’s company, as a
subcontractor, in your position at Alithya. Your manager and you will also
be able to discuss if and how this investment could conflict with the
performance of your duties at Alithya or Alithya’s interests.
/ 33
Outside activities and employment
Although they are, by definition, external to Alithya, outside activities such as
having a secondary employment, operating a business, sitting on a board
(including on the board of a not-for-profit organization), or even participating
in an event, can have a major impact on Alithya’s reputation. At times, your
activities can be incompatible with Alithya’s interests.
Our trusted way of working
You are expected to:
/ Always act in Alithya’s best interest.
/ Consider the consequences of your actions before acting.
/ Prioritize your duties for Alithya during working hours.
/ Always be professional when you take part in outside activities as part of
your responsibilities.
/ Obtain an authorization from your manager before accepting a job or a
position outside of Alithya that could conflict with the performance of
your duties or Alithya’s interests.
You must not:
/ Participate in outside activities that could create a conflict of interest or
prejudice Alithya’s interests, reputation or image.
/ Involve Alithya’s name or image in your outside activities, unless you are
authorized to do so in advance.
/ Participate in outside activities that could interfere with the performance
of your duties.
/ 34
/ Situation
You open your own restaurant with a friend. At first, you only help out
with accounting and, on busy weekends, with service. However, your
restaurant becomes quite successful, and some weeknights are now
quite busy. Your friend needs your help for a few hours every day. What
should you do?
/ What to do
You must discuss this situation with your manager as there is no simple
answer. You are generally allowed to have a job outside of Alithya, as
long as it is approved by your manager and it does not affect your
ability to perform your duties at Alithya. This depends on a variety of
factors.
/ 35
Gifts and other benefits
Offering or accepting gifts or other benefits may put Alithya and yourself in
uncomfortable situations and, in some situations, may violate the law. Using
your best judgment is key, but you are allowed to accept a gift or other types
of benefit if it meets all of the following nine criteria:
/ It is infrequent;
/ It is worth less than Cdn$150 (or the equivalent) and is objectively
reasonable in the circumstances;
/ It does not include cash, gift cards or discount coupons, regardless of
their value;
/ It is offered in a neutral context, without explicit or implicit expectations
from the offeror;
/ It is offered openly rather than secretly;
/ It is not the result of your solicitation;
/ It does not affect or appear to affect your ability to remain objective and
independent;
/ It would not be embarrassing for you or Alithya if made public; and
/ It does not create or appear to create a situation of conflict of interest
(see the “Conflict of Interest” section of this Code of Business Conduct).
Our trusted way of working
You are expected to:
/ Obtain approval from your manager before offering any gift or other
benefit for business purposes;
/ Decline any gift, entertainment service, discount or any other benefit that
does not meet all of the nine criteria above;
/ 36
/ Return and report to your manager any inappropriate gift received or
accepted by mistake; and
/ Not solicit or accept gifts or other benefits that are offered because of
your position at Alithya.
Of course, offering or receiving any gift or advantage in the nature of a bribe is
strictly prohibited (see the “Anti-corruption & anti-bribery” section of this Code
of Business Conduct).
Speak up
If you have doubts on whether a gift or other benefit may be accepted,
you are encouraged to ask for advice before acting (see the “Ask for
Advice” section of this Code of Business Conduct).
/ Situation
You receive a “thank you note” and a $20 gift card from a client who is
particularly satisfied with your work. Can you accept this gift?
/ What to do
Accepting a gift card is the equivalent of accepting cash, which is
prohibited. You must return the gift card to Alithya’s client and report this
event to your manager.
------------------------------------------------------------------------------------------------
/ 37
/ Situation
You receive an invitation from a supplier to attend a professional tennis
tournament. You do not readily know the value of the ticket. Can you
accept?
/ What to do
Obtain more information about the invitation, and the current business
relationship with the supplier, and discuss the criteria with your manager
before determining whether you can accept.
------------------------------------------------------------------------------------------------
/ Situation
You and your manager are invited with your partners to an outfitter to
fish by a representative of a client, food and alcohol included. Can you
accept this invitation?
/ What to do
No. The value of such invitation would exceed $150, which is prohibited.
You and your manager must refuse such invitation, and it must be
reported to your manager’s manager.
------------------------------------------------------------------------------------------------
/ 38
/ Situation
You receive a food and wine basket from a client just before a Holiday.
You look on-line for the value of the basket, and it is publicized at $95.
Can you accept this gift?
/ What to do
Yes, assuming the other criteria are met, including the fact that you
must not have solicited such gift.
Anti-corruption and anti-bribery
Alithya is subject to the anti-corruption and anti-bribery laws of Canada, the
United States and other jurisdictions where we operate. Alithya believes in fair,
free and open markets, and has no tolerance for corruption. Offering or
receiving bribes (including making any “facilitation payments”) is strictly
prohibited.
Bribery refers to the act of directly or indirectly offering anything of value to a
third party to obtain or preserve business, or for any other corrupt purpose
that is to the benefit of Alithya or yourself.
Facilitation Payments refer to payments that increase the speed at which a
government official performs their function (or facilitate or alter the outcome).
/ 39
Our trusted way of working
You are expected to:
/ Obtain approval from the Legal Department before making any payment
to, or providing any gift or benefit to, a government official or hiring a
former public official or a relative of a current public official; and
/ Ensure amounts are properly reported and documented to record all
payments made to a third party in Alithya’s books and records and avoid
“handshake” deals.
You must not:
/ Offer, promise or authorize the giving of a bribe;
/ Solicit or accept a bribe;
/ Make facilitation payments (including through an intermediary) to a
government official; and
/ Behave in a way that could lead others to believe that you could accept
or offer a bribe.
Speak up
It is never acceptable to make improper payments to obtain or preserve
business. If you witness corrupt behaviour, you must promptly report it to
your manager or to Alithya’s Chief Legal Officer and Corporate Secretary.
/ 40
Fair competition and anti-trust
Alithya is committed to engaging in fair, competitive practices that comply
with competition and anti-trust legislation in Canada, the United States and
other jurisdictions where Alithya does business. These laws are designed to
preserve and promote fair competition in the industry and violations may lead
to severe consequences, including fines and imprisonment. Understanding the
requirements of anti-trust and unfair competition laws of the various
jurisdictions where we do business can be difficult, and you are urged to seek
assistance from your manager or the Legal Department whenever you have a
question relating to these laws.
We strive to outperform our competition fairly and honestly. Advantages over
our competitors are to be obtained through superior performance of our
products and services, not through unethical or illegal business practices.
You are expected to deal fairly with our clients, suppliers and anyone else with
whom you have contact in the course of performing your job. You may not
take unfair advantage of anyone through misuse of confidential information,
misrepresentation of material facts or any other unfair dealing practice.
Our trusted way of working
Except as permitted in applicable legislation and as expressly approved by
your manager on a case-by-case basis, you may not:
/ Discuss or exchange competitively sensible information such as past,
present or future prices, pricing policies, costs, profits, discounts or terms
and conditions of service, or market prices or trends, with a competitor;
/ Make arrangements with a competitor to fix prices, agree not to deal with
or solicit each other’s clients or employees, divide clients or territories,
limit output or agree to boycott a third party’s products or services;
/ Share confidential information with a competitor;
/ 41
/ Exchange bid information or discuss requests for proposals with a
competitor;
/ Threaten a competitor of retaliation; and
/ Use language that may suggest anti-competitive practices.
Speak up
Report to your manager or to Alithya’s Chief Legal Officer and Corporate
Secretary any situation that creates or appears to create a situation of
unfair competition practices.
/ Situation
You learn that your manager has obtained proprietary information
about a competitor, which provides Alithya with an advantage in a
bidding process. What should you do?
/ What to do
You must report the matter to Alithya’s Chief Legal Offer and Corporate
Secretary.
/ 42
Money laundering, criminal activities,
and economic sanctions
We must take all requisite measures to avoid being involved in money
laundering or other criminal activities, as these may have a major impact on
Alithya’s reputation (even if we have nothing to do with them). We also must
take measures to ensure that Alithya complies with any applicable economic
sanctions and anti-terrorism legislation which prohibits dealing with certain
countries or persons. This means that you must apply the appropriate level of
diligence before entering into a relationship with a new client or other third
parties.
Representing Alithya
This section should be read together with Alithya’s Disclosure Policy, IS-IT
Acceptable Use Policy, and Social Media Policy and Guidelines.
Whether in the course of your duties or during your own time, you are the face
and voice of Alithya. You must therefore act with Alithya’s best interests at
heart. Alithya’s reputation depends on your behaviour.
Our trusted way of working
As a general rule, your behaviour should always be guided by the following
principles:
/ Use Alithya’s letterhead or e-mails for authorized purposes only (see the
“Cybersecurity” section of this Code of Business Conduct);
/ Ensure that there is no ambiguity between your personal opinions and
those of Alithya; and
/ 43
/ Do not identify yourself as a representative or spokesperson of Alithya
unless you are expressly authorized to do so (see the “Corporate
Disclosure” section of this Code of Business Conduct).
When using social media platforms and tools, whether for business purposes
or personal purposes, you are expected to:
/ Obtain authorization from the Communications Department before
posting or commenting anything on Alithya’s behalf;
/ Obtain authorization from the Communications Department before using
other companies’ brands, logos or symbols;
/ Be honest and respectful when expressing ideas and opinions. Never
insult others;
/ Post appropriate content only; and
/ Keep in mind that everything you post on the Internet is not secret or
anonymous and is most likely permanent.
Speak up
Never engage in public discussions that could be perceived as
expressing Alithya’s views unless you are expressly authorized to do so.
/ 44
/ Situation
You own a blog on new technologies and wish to publish an article on
Alithya’s business. Can you do it?
/ What to do
Only if you follow a few rules. First, you must obtain the prior permission
from your manager. Second, you must not disclose any confidential or
non-public information. Third, you must include a disclaimer that the
views are your own and not those of Alithya. Fourth, the content of your
article must be true, accurate and respectful.
/ 45
Our assets
/ 46
Protecting Alithya’s and our client’s
assets
It is everyone’s responsibility to protect and make proper use of Alithya’s
assets. Alithya’s assets include your professional time, as well as documents,
books, records, equipment, supplies, buildings, information technology, and
intellectual property. See also the “Outside Activities & Employment”,
“Intellectual Property”, “Cybersecurity” and “Confidentiality” sections of this
Code of Business Conduct.
The nature of your duties may mean that you are often required to work on
Alithya’s clients’ premises and/or to use their assets and resources. You must
always treat Alithya’s clients’ property with the same respect and degree of
care as you would treat Alithya’s own. The trust of Alithya’s clients depends on
it.
Our trusted way of working
You are expected to:
/ Devote your work time to carrying out your duties;
/ Use Alithya’s assets with care, only for the purposes for which they are
intended;
/ Ask for advice from your manager if you are unsure about how Alithya’s
assets should be used;
/ Protect Alithya’s assets from damage, loss, vandalism, theft and
unauthorized use and disposal;
/ Protect Alithya’s assets from being used for improper, illegal or illicit
purposes;
/ Keep Alithya’s physical assets on Alithya’s premises unless you are
authorized to do otherwise to perform your duties;
/ 47
/ Apply the same rules to protect Alithya’s clients’ assets as if they were
Alithya’s assets;
/ Comply with Alithya’s clients’ practices and procedures related to the use
of their resources, systems, services and infrastructures; and
/ Return all company documents or other assets to Alithya when you stop
working for us or earlier if requested by Alithya.
Speak up
Report to your manager any real or suspected threat to or any
unauthorized use of Alithya’s assets or our clients’ assets.
/ Situation
For specific portions of a project, a client instructed you to use a
software that is very similar to one that we frequently use at Alithya. You
notice a slight difference when it comes to password-protecting files,
but you hesitate to ask Alithya’s client for guidance because, after all,
you are the expert. Should you simply keep going?
/ What to do
No. Whenever you are unsure about how to use Alithya’s clients’ assets,
you must promptly contact your manager, who will either be able to
guide you or ask the right people for further instructions, when
appropriate.
/ 48
Dealing on behalf of Alithya
In the course of your duties, you may need to accomplish a variety of actions
on behalf of Alithya, such as negotiating and entering into contracts,
committing Alithya funds and approving various transactions.
Our trusted way of working
You are expected to:
/ Ensure that you have proper authorization before dealing on behalf of
Alithya or making any commitment on behalf of Alithya (whether orally or
in writing, including by e-mail);
/ Understand the scope of each authorization and the scope of the
commitment you are making; and
/ Ensure that all contracts and documents are executed/signed
adequately and in accordance with your level of authorization.
Speak up
If you have doubts on whether you have the proper authorization for the
commitment being made on Alithya’s behalf, ask your manager or
Alithya’s Legal Department for advice before acting or signing any
contract or document.
/ 49
/ Situation
You are in the process of renewing a contract with a client. You have
been authorized to negotiate the price, but not the duration of the
contract. Alithya’s standard is a one-year term, but the client is ready to
offer a higher price for a six-month agreement. Considering the
potential benefits for Alithya, can you accept this offer?
/ What to do
No. You must never make contractual commitments that exceed your
delegation of authority, even if it seems to be a “good deal” for the
company.
Intellectual property
Alithya has many intellectual property assets and rights, which can include
ideas, copyrights, patents, trademarks, logos, computer programs, source
code, creative materials, inventions, data and know-how. All intellectual
property that is created by employees in the course of employment and by
subcontractors in the course of their mandate is owned by Alithya. Alithya’s
use of licenced intellectual property is subject to the requirements of such
licenses.
Our trusted way of working
You are expected to:
/ Use Alithya’s intellectual property rights with care, for the purposes for
which they are intended;
/ Protect Alithya’s intellectual property from unauthorized use or disclosure;
/ 50
/ Discuss with your manager to obtain proper authorization before copying,
altering or distributing Alithya’s intellectual property or incorporating it in
the intellectual property of others;
/ Make sure that you have all required permissions and licenses and that
you do not infringe on any third party’s intellectual property rights;
/ Discuss with your manager to obtain proper authorization (and ensure
Alithya adheres to any restrictions) before incorporating open source
software to make sure that you are not impairing Alithya’s intellectual
property rights;
/ Protect Alithya’s intellectual property by putting copyright notices on all
materials intended for public circulation;
/ Disclose to your manager any method, idea, design, system,
improvement or invention that you discover or develop; and
/ Apply the same rules to protect our clients’ intellectual property as if it
were Alithya’s intellectual property.
/ Situation
You identify an open-source software you have never used before that
would easily solve a client issue on a big project you are working on, with
the deadline fast approaching. You look quickly at the terms of use and
it looks like boilerplate you have seen before. Can you proceed to use
the software?
/ What to do
No. Use of open-source software requires careful analysis before
proceeding, and can involve navigating complex legal issues and
business terms. We also need to ensure that this software does not
introduce security risks. You must discuss this with your manager before
proceeding, who will either be able to guide you or ask the right people
for further instructions, when appropriate.
/ 51
Responsible use of data and new
technologies
We use data and new technologies responsibly and ethically, including when
we deploy artificial intelligence. When we use artificial intelligence, we apply a
governance framework to ensure that decisions and actions taken by those
systems are honest and fair and consistent with our core values, this Code of
Business Conduct, and any applicable law.
/ 52
Cybersecurity
This section should be read together with Alithya’s IS–IT Acceptable Use Policy
and Teleworking Policy, if applicable.
Information technology is central to the conduct of Alithya’s business. We all
have a role to play in the prevention of disruptions and misuses of Alithya’s
information technology resources. See also the “Protecting Our Assets and Our
Client’s Assets”, “Intellectual Property” and “Confidentiality” sections of this
Code of Business Conduct.
Our trusted way of working
You are expected to:
/ Read, understand and comply with Alithya’s IS-IT Acceptable Use Policy
and Teleworking Policy;
/
Lock Alithya’s electronic resources (for example, computers, tablets and
phones) when unattended;
/ Store confidential information in appropriate, secure locations;
/ Be aware of and report cybersecurity threats (for example, “phishing”
attempts);
/ Promptly report to Alithya’s Helpdesk or the Chief Information Security
Officer any failure in the integrity of Alithya’s information technology
systems, including as a result of succumbing to (or receiving) phishing
attempts;
/ Complete all required cybersecurity trainings;
/ Comply with Alithya’s policies, standards, processes and procedures
related to information security and privacy; and
/ Comply with our clients’ practices and procedures relating to the use of
their systems, service and infrastructure.
/ 53
You must not:
/ Share your usernames and passwords with anyone, including your
colleagues or manager;
/ Use Alithya’s electronic resources improperly;
/ Copy, save, store or record confidential information on any unsecured
server or device that cannot be remotely wiped (such as a USB key);
/ Access or store inappropriate information on Alithya’s electronic
resources; and
/ Leave Alithya’s electronic resources at a client’s or other third party’s
premises, unless authorized to do so by your manager.
Remember that while you may be allowed to make limited personal use of
Alithya’s electronic resources on your own time and always in accordance
with Alithya’s IS-IT Acceptable Use Policy, it should never incur costs to Alithya,
interfere with your work, or threaten the security, integrity or availability of
Alithya’s systems and networks. Electronic resources made available to you
remain Alithya’s property. In using Alithya's resources you consent to all
information being monitored, inspected, checked, collected, or deleted without
prior notice and no expectation of privacy is provided by Alithya.
Speak up
If you misplace your electronic resources or they are compromised in
any way, contact Alithya’s Helpdesk immediately.
/ 54
Confidentiality
We receive and store a vast number of documents and communications on a
daily basis. During the course of your duties at Alithya, you will most probably
have access to personal data and confidential information which may be
owned by Alithya or third parties, including clients. Inappropriate use or
disclosure of personal data and confidential information can lead to serious
commercial and legal consequences.
Confidential information is all non-public, confidential or proprietary
information relating to the respective businesses and operations of Alithya, or
any personal data of Alithya's directors, officers, employees, subcontractors, or
clients, regardless of the form of disclosure and whether or not identified as
confidential. Confidential information includes:
/ Personal data on directors, officers, employees, subcontractors, suppliers,
clients and business partners;
/ Account numbers;
/ Client and supplier information, including list of customers and suppliers;
/ Information relating to the Company’s business policies, processes and
templates, strategies, operations, finances, plans or opportunities
/ Sensitive commercial or financial information;
/ Intellectual property; and
/ Legal matters.
It is everyone’s responsibility to preserve the confidentiality of confidential
information. You are personally responsible for what you do with your access
codes and for any access you grant to your colleagues.
/ 55
Our trusted way of working
You are expected to:
/ Read, understand and comply with Alithya’s Employee Privacy Policy,
Information Classification Policy, the related policies, processes,
standards, procedures and guidelines, as well as any Privacy or Security
notices, and our clients’ instructions on the processing of their personal
data and confidential information, where applicable;
/ Participate in Alithya’s awareness and training activities concerning the
protection of privacy and security, including webinars and information
sessions;
/ Use confidential information only as intended;
/ Obtain specific authorization from your manager or Alithya’s Legal
Department before sharing or using any confidential information, and
when so authorized, on a “need-to-know” basis only;
/ Make sure that confidentiality agreements are in place when needed;
/ Inquire if specific confidentiality obligations apply with respect to a
specific project, client or supplier;
/ Obtain all required consents before processing confidential information;
/ Protect confidential information from theft or unauthorized access, use or
disclosure, including when using mobile devices or external networks;
/ Label confidential information assets and documents as “Confidential”;
/ Promptly report to your manager or Alithya’s Privacy Officer any event
that threatens confidential information; and
/ Return any confidential information you may have in your possession at
the end of your employment or contract with Alithya.
/ 56
You must not:
/ Access confidential information unless it is necessary to carry out your
duties;
/ Leave confidential information unsecured or in plain view;
/ Discuss confidential information with your colleagues in public places;
/ Discuss confidential information with your colleagues that do not need to
have access to the confidential information to carry out their duties;
/ Discuss or share confidential information with anyone outside of Alithya
(including family and friends), unless you are specifically authorized to do
so;
/ Use confidential information for your personal gain; and
/ Use a third party’s confidential information without its express
authorization.
Speak up
Protecting confidential information is one of Alithya’s highest priorities. If
you have doubts on whether certain information is confidential or
already publicly known and/or with who you can share it or not, speak
with your manager or Alithya’s Privacy Officer before acting.
/ 57
/ Situation
While you are away for a long weekend, one of your colleagues is
helping you on a project. Your colleague realizes after you left that he
does not have access to one of the folders containing documents
required for him to work, and you do not have access to Internet while
away. Can you give your password to your colleague to allow him to
access this specific folder?
/ What to do
You should never give your passwords to a colleague. By doing so your
colleague would get access to all of the data you have access to which
may contain information he is not authorized to have access to and/or
does not need to have access to. Your colleague should contact
Alithya’s IT department to be granted access to the specific
folder/documents.
/ 58
Insider trading
It is illegal to trade in shares or other securities (e.g. buy or sell shares or
exercise options) of a publicly traded corporation when you are in possession
of material information that has not been publicly disclosed, and to
communicate to another person (including a spouse, relative or friend) non-
public material information (except in the “necessary course of business”),
regardless of whether such person intends to use or trade with such
information. Such illegal activities are commonly referred to as “insider tipping”
and “tipping”. Insider trading and insider tipping are strictly prohibited under
Alithya’s Insider Trading Policy.
Material information is information that, if publicly known, is likely to have an
impact on the market price or value of Alithya securities or the investment
decision of a reasonable investor to buy or sell Alithya securities; it generally
includes changes in corporate structure, capital structure, financial results,
business and operations, acquisitions and dispositions, credit arrangements,
new developments, ongoing negotiations, threatened litigation against Alithya
and intended reorganizations. Please refer to Schedule A of Alithya’s Insider
Trading Policy for a more comprehensive list of examples of events or
information that may be considered material information. Please also refer to
Schedule B of such policy for examples of permitted disclosure under the
“necessary course of business” exception.
These prohibitions apply to Alithya securities and also extend to the securities
of Alithya’s clients or suppliers when you possess non-public material
information about them.
/ 59
Our trusted way of working
You are expected to:
/ Read, understand and comply with Alithya’s Disclosure Policy and Insider
Trading Policy;
/ Ensure that you do not use non-public material information for your
personal gain, whether directly or indirectly; and
/ Avoid passing along non-public material information, except to a
colleague who needs to know such information and who is authorized to
obtain it.
Speak up
Insider trading and tipping are serious offences that can lead to criminal
prosecution and severe monetary fines. If you have any doubts as to
whether you are in possession of material information, we strongly
encourage you to consult the Chief Legal Officer and Corporate
Secretary at secretariat@alithya.com before trading Alithya securities.
/ 60
/ Situation
You are working on a confidential new project that you understand to be
a significant growth opportunity for Alithya. During a family dinner your
brother-in-law asks whether Alithya would be a good investment for
him. How do you respond?
/ What to do
You cannot tell him anything about the project you are working on as
that would be insider tipping. While you can describe your enthusiasm
for Alithya, you should not make any recommendation to him on
whether or not to buy or sell Alithya securities.
/ 61
Corporate disclosure
This section should be read together with Alithya’s Disclosure Policy.
As a public company, Alithya is required by law to file certain corporate
information with Canadian and U.S. securities regulators. This information is
also key to some of Alithya’s stakeholders. It is essential that this information
be consistently complete and accurate, while being filed in due time.
It is important that Alithya communicates with one voice. As such, Alithya has
adopted a Disclosure Policy and established a Disclosure Committee. You
cannot speak with the press or any third party (for example, shareholders) on
behalf of Alithya, unless you are a designated spokesperson for Alithya or have
obtained an authorization from a designated spokesperson. This is to ensure
the accuracy, fairness and consistency of public disclosures made on Alithya’s
behalf.
In order to protect Alithya’s and our clients’ confidential information and
comply with prohibitions on insider trading and tipping, you should not discuss
non-public affairs outside of Alithya, except if necessary in the course of
Alithya’s business and by limiting the disclosed information to that information
that is necessary to be disclosed.
Our trusted way of working
You are expected to:
/ Read, understand and comply with Alithya’s Disclosure Policy;
/ Ensure that confidential information remains undisclosed unless
permitted (see the “Confidentiality” section of this Code of Business
Conduct);
/ 62
/ Refer anyone (for example, investors or the media) who has questions
regarding Alithya’s affairs to Investor Relations at:
investorrelations@alithya.com;
/ Report to your manager or the Disclosure Committee any new
information that you believe may constitute material information
regarding Alithya that has not been publicly disclosed;
/ Report to your manager or the Disclosure Committee any disclosure that
you believe may have been made in violation of the Code of Business
Conduct or the Disclosure Policy, so that we may determine whether
prompt public disclosure is required; and
/ Verify that information Alithya proposes to disclose is complete and
accurate, if you are involved in the preparation of Alithya’s corporate
disclosure (for example, financial statements and press releases) or are
requested to do so by someone who is.
You must not:
/ Speak to anyone on Alithya’s behalf unless you are properly authorized to
do so; and
/ Discuss non-public company affairs with anyone outside Alithya, except if
you are an authorized spokesperson.
Speak up
If you become aware of a potential wrongdoing concerning accounting
or auditing matters, you must contact the Chair of the Audit and Risk
Management Committee. Please refer to Alithya’s Whistleblower Policy
for further information on such circumstances.
/ 63
Document management, and books
and records
As part of our operations, we deal with a vast quantity of documents and
records. As a priority, we must comply with all legal requirements that govern
the recording, processing, retention and destruction of our corporate
documents and records, whether electronic, digital or physical. These
requirements can vary depending on the type of document and record. If you
have doubts, you should consult your manager or Alithya’s Legal Department
or Chief Information Security Officer.
The integrity of our records and public disclosure depends on the validity,
accuracy and completeness of the information supporting the entries to our
books of account. Therefore, our corporate and business records should be
completed accurately and honestly. The making of false or misleading entries,
whether they relate to financial results or test results, is strictly prohibited. Our
records serve as a basis for managing our business and are important in
meeting our obligations to customers, suppliers, creditors, employees and
others with whom we do business. As a result, it is important that our books,
records and accounts accurately and fairly reflect, in reasonable detail, our
assets, liabilities, revenues, costs and expenses, as well as all transactions and
changes in assets and liabilities.
Our trusted way of working
You are expected to:
/ Properly save and store documents to ensure their permanence and
ease of access;
/ Ensure that confidential documents and records remain confidential (see
the “Confidentiality” section of this Code of Business Conduct);
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/ Ensure that all entries in Alithya’s records are accurate, complete and
recorded on time; and
/ Read, understand and comply with Alithya’s policies on document
retention and destruction.
You must not:
/ Destroy or alter any Alithya records in anticipation of a request for those
documents from any government, law enforcement or regulatory agency
or a court; and
/ Make any misleading statements to any governmental, law enforcement
or regulatory investigator.
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Above and beyond
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Community engagement
This section should be read together with Alithya’s Charitable Giving Policy.
Alithya seeks to be an active and contributing member of each community it
does business in. Alithya believes in giving back to the community in a
concrete way, not only via financial support, but also through the donation of
time and resources and the personal involvement of its employees.
Our trusted way of working
You are expected to:
/ Transfer all requests for charitable donations to Alithya’s
Communications Department;
/ Obtain authorization from Alithya’s Communications Department before
using Alithya’s name in an activity or communication; and
/ Obtain authorization from your manager before soliciting your colleagues
or any Alithya clients and business partners for charitable donations.
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Political activities
Alithya does not usually intervene in the political arena, nor make political
contributions of any kind. We respect, however, your right to participate in
politics, as an individual, as long as you do not suggest that your activities
represent or involve Alithya, and your participation (whether you are
compensated or not for such participation by a non-Alithya party) does not
create a conflict of interest or prejudice Alithya’s interests, reputation or image.
Our trusted way of working
If you choose to get involved in political activities, you are expected to:
/ Be consistently clear about the fact that you are not representing Alithya
in any respect;
/ Comply with Alithya’s rules regarding gifts, entertainment and bribery
prevention (see the “Gifts & other benefits” and “Anti-corruption & Anti-
bribery” sections of this Code of Business Conduct); and
/ Inform your manager if you believe that your participation could interfere
with your duties at Alithya and/or create conflicts of interest (see the
“Outside activities & employment” and “Conflict of interest” sections of
this Code of Business Conduct).
You must not:
/ Use the workplace as a tribune to promote political activities or view;
/ Use Alithya’s assets and resources, including working hours, to work or
solicit for political activities; and
/ Contribute Alithya’s funds to candidates or political organizations.
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Lobbying
Lobbying rules are complex, constantly evolving and vary in each country,
Province, State, county or municipality. They sometimes require various levels
of registration and disclosure. If you have doubts, ask Alithya’s Legal
department for advice before acting (see the “Ask for Advice” section of this
Code of Business Conduct).
Our trusted way of working
You must not:
/ Attempt to influence any government officials or employees (legislative
or executive branch government officials or agencies, whether at the
federal, provincial, state or local level) through any type of
communication without prior authorization from Alithya’s Legal
Department and, if necessary, being properly registered as a lobbyist.
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Policies
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This Code of Business Conduct is to be read with all of Alithya’s policies
including the following, which may be amended from time to time.
/ Charitable Giving Policy
/ Disclosure Policy
/ Employee Privacy Policy
/ Fit for Duty: Drugs, Prescription Drugs and /or Alcohol Use at Work Policy
/
Information Classification Policy
/
/
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Information Security Policy
Insider Trading Policy
IS-IT Acceptable Use Policy
/ Prevention of Harassment in the Workplace
/ Physical Security Policy
/ Social Media Policy and Guidelines
/ Teleworking Policy
/ Whistleblower Policy
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How to reach out
Whether you are looking for guidance or want to report a concern or an actual
or potential violation under this Code of Business Conduct, you can contact
any one of the following resources:
Alithya’s Human Capital Department
/ Canada: human.capital@alithya.com
/ United States: us.humancapital@alithya.com
Alithya’s Privacy Officer
/ +1 438-802-4983
/ privacy@alithya.com
Alithya’s Chief Information Security Officer
/ +1 438-798-0135
/ security@alithya.com
Alithya’s Communications Department
/ communications@alithya.com
Alithya’s Investor Relations
/ investorrelations@alithya.com
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Alithya’s Legal Department
/ legal@alithya.com
Alithya’s Chief Legal Officer and Corporate Secretary
/ secretariat@alithya.com
Alithya’s Chair of the Audit and Risk Management
Committee
/ +1 844-879-4778
/ ethics.committee@deontol.com
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Acknowledgment and
attestations form
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As a condition of your employment or mandate at Alithya, you are required to
complete this form when you begin working for us or serving on Alithya’s board
of directors. Thereafter, you will be asked to make periodic attestations,
confirm past compliance and agree to your ongoing compliance with Alithya’s
Code of Business Conduct and policies.
I, the undersigned, acknowledge that I have received, read and understood
the meaning and scope of Alithya’s Code of Business Conduct, and undertake
to comply with its requirements. I understand that my signature below entails
an undertaking to comply with all policies in effect at Alithya, as they may be
amended from time to time.
I also acknowledge my obligation to promptly report any actual or potential
violation to Alithya’s Code of Business Conduct or any other policy.
I confirm that, to the moment of signing this form, I have fully complied with
Alithya’s Code of Business Conduct and all policies.
Signature
Date
Once completed, please send this form to Alithya’s Human Capital
Department at human.capital@alithya.com (Canada) or
us.humancapital@alithya.com (United States).
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