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, 2024
Commission file number 001-38705
ALITHYA GROUP INC.
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English (if applicable))
Québec, Canada
(Province or other jurisdiction of incorporation or organization)
7370
(Primary Standard Industrial Classification Code Number (if applicable))
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 Registrant’s principal executive offices)
CT Corporation System
28, Liberty Street
New York, New York, USA 10005
+1 (212) 590-9200
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
None
Securities registered or to be registered to Section 12(g) of the Act:
Class A subordinate voting shares
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:
88,141,000 Class A subordinate voting shares and 7,274,248 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 reports); 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). ☐
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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. The Registrant’s class A subordinated shares started
trading on the Toronto Stock Exchange and the Nasdaq Stock Market LLC (“Nasdaq”) on November 2, 2018, but
were voluntarily delisted from Nasdaq on February 19, 2024. Accordingly, section 12(b) of the Exchange Act does
not apply to the Registrant, but sections 12(g) and 15(d) of the Exchange Act will continue to apply so long as the
class A subordinate voting shares remain registered with the U.S. Securities Exchange Commission.
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, 2024 and March 31, 2023, 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.sedarplus.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
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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.
PRINCIPAL DOCUMENTS
A. Annual Information Form
The Registrant’s Annual Information Form for the fiscal year ended March 31, 2024 (the “2024 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, 2024 and
March 31, 2023, including the reports of the independent registered public accounting firm, KPMG LLP, Montréal,
Canada (Auditor Firm ID: 85) (“KPMG”), 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, 2024 and March 31,
2023 (the “2024 MD&A”) is attached as Exhibit 99.3 to this Annual Report and incorporated herein by reference.
CONTROLS AND PROCEDURES
A. Certifications
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 Disclosure Controls and Procedures and
Internal Control over Financial Reporting – Disclosure Controls and Procedures” and “Management’s Evaluation of
Disclosure Controls and Procedures and Internal Control over Financial Reporting – Limitations on Effectiveness of
Disclosure Control and Procedures and Internal Control over Financial Reporting” in the Registrant’s 2024 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 headings “Management’s Evaluation of Disclosure Controls and Procedures and
Internal Control over Financial Reporting – Internal Control over Financial Reporting”, “Management’s Evaluation
of Disclosure Controls and Procedures and Internal Control over Financial Reporting – Remediation Plan” and
“Management’s Evaluation of Disclosure Controls and Procedures – Limitations on Effectiveness of Disclosure
Control and Procedures and Internal Control over Financial Reporting” in the Registrant’s 2024 MD&A attached as
Exhibit 99.3 to this Annual Report is incorporated by reference herein.
D. Attestation Report of the Registered Public Accounting Firm
The effectiveness of the Registrant's internal control over financial reporting as of March 31, 2024 has been audited
by KPMG, the independent registered public accounting firm who also audited the Registrant’s audited annual
consolidated financial statements for the fiscal years ended March 31, 2024 and 2023. KPMG’s report is included as
part of the Registrant’s audited annual consolidated financial statements attached as Exhibit 99.2 to this Annual
Report and is incorporated by reference herein.
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E. Changes in Internal Control over Financial Reporting
The information provided under the heading “Management’s Evaluation of Disclosure Controls and Procedures and
Internal Control over Financial Reporting – Changes in Internal Control over Financial Reporting” in the
Registrant’s 2024 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(b) of General Instruction B to Form 40-F) serving on its Audit and Risk
Management Committee (the “Audit Committee”). The Board has determined that 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 Nasdaq Stock Market LLC rules.
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
director and Chair of the Audit Committee of H2O Innovation Inc. from 2017 to 2021 as well as Special Committee
Member of Groupe Conseil FXInnovation Inc. from 2014 to 2017. Mr. Comeau was a Chartered Professional
Accountant (CPA) from 2013 to 2021. He holds a Bachelor’s degree in accounting from HEC Montréal.
Form 40-F rules indicate that the designation of Mr. Comeau as an audit committee financial expert does not
(i) result in him being deemed an “expert” including without limitation for purposes of Section 11 of the Securities
Act of 1933, as amended, (ii) impose on him any duties, obligations or liability that are greater than the duties,
obligations and liability imposed on him as a member of the Audit Committee and of the Board in absence of such
designation, or (iii) affect the duties, obligations or liability of any other member of the Audit Committee or the
Board.
CODE OF ETHICS
The Registrant has adopted a code of business conduct (the “Code”) applicable to its principal executive officer,
principal financial officer, principal accounting officer or controller and persons performing similar functions. This
Code is intended to qualify as a “code of ethics” within the meaning of Form 40-F rules. The Code is available on
the Registrant’s website at www.alithya.com/investors/governance. No waivers (i.e. a material departure from a
provision) or implicit waivers to the Code were granted in favor of the principal executive officer, principal financial
officer, principal accounting officer or controller and persons performing similar functions. 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, Montréal, Canada (Auditor Firm ID: 85), acted as the Registrant’s independent registered public accounting
firm for the fiscal years ended March 31, 2024 and 2023. See section titled “External Auditor Service Fee” in the
Registrant’s 2024 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 2024 AIF, for a
description of the Registrant’s pre-approval policy 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 2024 MD&A
attached as Exhibit 99.3 is incorporated by reference herein.
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DISCLOSURE OF CONTRACTUAL OBLIGATIONS
The information provided under the heading “Contractual Obligations” in the Registrant’s 2024 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.
INTERACTIVE DATA FILE
The Registrant is submitting its Interactive Data File as Exhibit 101 to this Annual Report.
MINE SAFETY DISCLOSURE
Not applicable.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
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.
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SIGNATURE
Pursuant to the requirements of the Exchange Act, 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.
By: /s/ Nathalie Forcier
Name: Nathalie Forcier
Title: Chief Legal Officer and Corporate
Secretary
Date: June 13, 2024
EXHIBIT INDEX
97.1
Clawback Policy
99.1
Annual Information Form for the fiscal year ended March 31, 2024
99.2
Audited Annual Consolidated Financial Statements for the fiscal years ended March 31, 2024 and
March 31, 2023
99.3
Management’s Discussion and Analysis of Financial Position and Results of Operations for the fiscal
years ended March 31, 2024 and March 31, 2023
99.4
Certification of the Registrant’s Chief Executive Officer required pursuant to Rule 13a-14(a)
99.5
Certification of the Registrant’s Chief Financial Officer required pursuant to Rule 13a-14(a)
99.6
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
99.7
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
99.8
Consent of KPMG LLP
101.1
Interactive Data File
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.1)
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Exhibit 97.1
CLAWBACK POLICY
1.
Objective
Alithya Group inc. (the “Company” or “Alithya”) has adopted this clawback policy (the “Policy”) in order
to allow the Board of Directors (the “Board”) to require, in specific circumstances, the reimbursement of
short-term and long-term incentive compensation by certain Covered Persons (as defined below) and
thereby discourage them from engaging in activities that may expose Alithya to financial and reputational
risk. The Policy has been adopted in compliance with the requirements of Section 10D of the Securities
Exchange Act of 1934 and the listing standards of the NASDAQ Stock Market (“NASDAQ”) and applies
while the Company continues to have a class of securities listed on NASDAQ.
2.
Definitions
For purposes of this Policy:
“Amended and Restated Date” has the meaning set out in Section 8 of this Policy.
“Applicable Laws” has the meaning set out in Subsection 3.3 of this Policy.
“Committee” means the Human Capital and Compensation Committee of the Board or, in the absence of
such committee, a majority of independent directors serving on the Board.
“Covered Person” means, with respect to the Company, (i) its President and Chief Executive Officer, (ii)
its Chief Financial Officer, (iii) its principal accounting officer (or if there is no such accounting officer, its
controller), (iv) its executive officers, (v) any vice-president in charge of a principal business unit, division
or function (such as sales, administration, accounting or finance), (vi) any other officer who performs a
policy-making function for the Company or any of its subsidiaries, and (vii) any other person who performs
similar policy-making functions for the Company.
“Effective Date” has the meaning set out in Section 8 of this Policy.
“Financial Reporting Measure” means any (i) measure that is determined and presented in accordance
with the accounting principles used in preparing the Company’s financial statements, (ii) stock price, (iii)
total shareholder return, and (iv) any measures that are derived wholly or in part from any measure
referenced in (i), (ii) or (iii). Such measures need not be presented within the Company’s financial
statements or included in a filing with the U.S. Securities and Exchange Commission to constitute a
Financial Reporting Measure.
“Financial Restatement” means an accounting restatement of any of the interim quarterly or annual
consolidated financial statements of the Company due to the material non-compliance of the Company
with any financial reporting requirement under securities laws, including any required accounting
restatement to correct:
(a) an error in previously issued financial statements that is material to the previously issued financial
statements, or
(b) that would result in a material misstatement if the error were corrected in the current period or left
uncorrected in the current period,
but does not include (1) an out-of-period adjustment (i.e., the correction of an immaterial error in
previously-issued financial statements, provided that such correction is immaterial to the current period),
(2) an accounting restatement pursuant to an order issued by an applicable securities regulatory authority
(provided such order is unrelated to any material non-compliance of the Company with any financial
reporting requirement under securities laws), (3) the retrospective application of a change in accounting
principles, (4) the retrospective revision to reportable segment information due to a change in the
structure of the Company’s internal organization, (5) a retrospective reclassification due to a discontinued
operation, (6) the retrospective application of a change in reporting entity, such as from a reorganization
of entities under common control, (7) retrospective adjustments to provisional amounts in connection with
a prior business combination, and (8) retrospective revision for stock splits, stock dividends, or other
changes in the Company’s capital structure.
“Incentive Compensation” means any compensation that is:
(a) granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting
Measure; or
(b) determined based on (or otherwise calculated by reference to) compensation in (a) above (this
may include, without limitation, amounts under any severance plan or agreement, any notional
account that is based thereon, as well as any earnings or dividend equivalents accrued thereon).
“Misconduct” means: (i) fraud; or (ii) intentional and/or reckless non-compliance with applicable laws,
rules or regulations, or the Company’s Code of Business Conduct; or (iii) any failure to report or take
action to stop the same of another individual in respect of which the Board reasonably determines the
Covered Person had actual knowledge or was willfully blind.
“Received”, with respect to Incentive Compensation, occurs in the Company’s fiscal period during which
the Financial Reporting Measure specified in the Incentive Compensation award is attained, even if the
grant or payment of the Incentive Compensation occurs after the end of that period.
“Recoupment Amount” means the amount determined under Subsection 4.1 of this Policy.
“Recoupment Period” means the three fiscal years completed immediately preceding any applicable
Restatement Date, plus any transition period (that results from a change in the Company’s fiscal year)
within or immediately following those three completed fiscal years, provided that a transition period
between the last day of the Company’s previous fiscal year end and the first day of its new fiscal year that
comprises a period of nine (9) to twelve (12) months would be deemed a completed fiscal year.
“Restatement Date” has the meaning set out in Subsection 3.1 of this Policy.
3.
Recoupment Events
3.1 Recoupment Due to Financial Restatement
In the event of a Financial Restatement, Incentive Compensation shall be subject to recoupment under
this Policy as of the date (the “Restatement Date”) which is the earlier to occur of:
(a) the date the Board, a committee of the Board, or the officer or officers of the Company authorized
to take such action if Board action is not required, concludes, or reasonably should have
concluded, that the Company is required to prepare a Financial Restatement; or
(b) the date a court, regulator, or other legally authorized body directs the Company to prepare a
Financial Restatement.
Notwithstanding the foregoing, recoupment in connection with a Financial Restatement under this Policy
as amended and restated on the Amended and Restated Date will not apply to Incentive Compensation
Received (i) by a person prior to October 2, 2023, (ii) prior to the date the person became a Covered
Person, or (iii) by a person if they were not a Covered Person during the performance period applicable to
such Incentive Compensation. With respect to Incentive Compensation Received by a person prior to
October 2, 2023, any recoupment in connection with a Financial Restatement will be made, if at all, under
the terms of this Policy in effect prior to the Amended and Restated Date.
3.2
Recoupment Due to Misconduct
In the event a Covered Person committed or was involved in any Misconduct not giving rise to a Financial
Restatement, Incentive Compensation paid, granted, awarded to, or received or earned, or vested in
favour of, the Covered Person during the 24 months preceding the date on which the Board determined
that the Misconduct occurred and any award that was exercised, settled or paid after the Misconduct shall
be subject to recoupment under this Policy.
3.3
Recoupment Required under Applicable Law
Incentive compensation shall be subject to recoupment as may be required by any applicable law, rule or
regulation, stock exchange rule or regulatory body having jurisdiction over the Company from time to time
(“Applicable Laws”), in which case, in the event of any inconsistency, conflict or ambiguity, Applicable
Laws shall govern and supersede any limitations, rights, terms or discretion set out in this Policy.
4.
Recoupment Process for Incentive Compensation
4.1
Determination of Recoupment Amount
In the case of recoupment due to Financial Restatement, subject to Section 5, the “Recoupment
Amount” shall be the amount by which the Incentive Compensation Received by the Covered Person
during the Recoupment Period exceeds the amount the Covered Person would have Received during that
period had it been determined based on the restated amounts in the Financial Restatement, measured on
a before-tax basis, as determined by the Committee. Where the Recoupment Amount is not subject to
mathematical recalculation directly from the information in the Financial Restatement (such as if it is
based on stock price or total shareholder return), then (i) the amount will be based on a reasonable
estimate of the effect of the Financial Restatement on the applicable Financial Reporting Measure, (ii) the
Company will maintain documentation related to that determination, and (iii) the Company will provide
such documentation to NASDAQ.
In the case of recoupment due to a Covered Person’s Misconduct that does not involve a Financial
Restatement, the Recoupment Amount shall be the amount which the Board in its sole discretion
determines to be appropriate. In determining that Recoupment Amount, the Board may take into account
any factors it deems relevant, including, without limitation:
(a) the individual’s position and degree of responsibility for the Misconduct;
(b) the availability of other remedies to the Company;
(c) any actual or potential penalties or punishments that regulators or third parties may impose on
the relevant individual or the Company;
(d) the cost and likely outcome of any potential litigation relating to the recoupment, and whether
recoupment may prejudice any other interests of the Company, including its interest in any related
proceeding or investigation; and
(e) taxes paid or payable by the individual on compensation subject to recoupment.
Any such determination by the Board under this Policy will be final and binding on all interested parties
and any successors thereto.
4.2
Procedure for Recoupment
The Company will reasonably promptly recover the Recoupment Amount. Except as set forth in Section 5,
the Company may not accept an amount that is less than the Recoupment Amount in satisfaction of the
Covered Person’s obligations under this Policy.
To the extent that a Covered Person has already reimbursed the Company for any Recoupment Amount
received under any duplicative recovery obligations established by the Company or applicable law, such
reimbursed amount shall be credited to the Recoupment Amount that is subject to recovery under this
Policy.
5.
Exceptions to Recoupment Requirement
Notwithstanding anything to the contrary in this Policy, the Company may elect not to recover some or all
of the Recoupment Amount in the case of recoupment due to Financial Restatement to the extent the
Committee determines that recovery would be impracticable and one or more of the following conditions,
and any other requirements of applicable law, are met:
(a) the direct expense paid to a third party to assist in enforcing the Policy would exceed the
Recoupment Amount, and the Company (i) has made a reasonable attempt to recover the
Recoupment Amount, (ii) documented such attempt, and (iii) provided such documentation to
NASDAQ;
(b) recovery of the Recoupment Amount by the Company would violate applicable laws in Canada
that were adopted prior to November 28, 2022, and the Company (i) has obtained an opinion of
Canadian counsel that recovery would result in a violation of such laws, and (ii) has provided
such opinion to NASDAQ; or
(c) recovery of the Recoupment Amount would likely cause an otherwise tax-qualified retirement
plan, under which benefits are broadly available to employees of the Company, to fail to meet the
requirements of Sections 401(a)(13) or 411(a) of the U.S. Internal Revenue Code of 1986, as
amended.
6.
No Impairment of Other Remedies
Each award agreement or other document setting forth the terms and conditions of any Incentive
Compensation granted to a Covered Person shall be deemed to include the provisions of this Policy. The
remedy specified in this Policy shall not be exclusive and shall be in addition to every other right or
remedy that may be available to Alithya, including termination of employment and institution of any
proceedings. Notwithstanding any provision of the Articles or By-laws of the Company or of any
agreement between the Company and a Covered Person, Covered Persons are not entitled to be
indemnified for any portion of any Incentive Compensation which is recouped or cancelled under this
Policy or any taxes previously paid or other costs associated with the receipt of such Incentive
Compensation or application of this Policy and no employee will be entitled to any compensation or
damages in respect of any portion of any Incentive Compensation which is recouped pursuant to this
Policy. Recoupment under this Policy shall not be considered to be or give rise to an event or action of the
Company constituting “good reason” for resignation (or any similar concept) under any agreement,
incentive plan or award of the Company.
7.
Policy Review and Oversight
The Committee shall have overall responsibility for this Policy, including the periodic review, monitoring of
the effectiveness and compliance thereof, and make appropriate recommendations to the Board. All
determinations, decisions and interpretations to be made under this Policy shall be approved by the
Board, on the recommendation of the Committee. Subject to Section 10D of the Securities Exchange Act
of 1934 and the listing standards of NASDAQ, as applicable, this Policy may be amended or terminated at
any time by the Board.
8.
Approval of this Policy and Effective Date
On the recommendation of the Committee, this Policy was first approved by the Board on June 9, 2021
(the “Effective Date”) and was subsequently amended and restated on November 13, 2023 (the
“Amended and Restated Date”).
Annual Information Form
of Alithya Group inc.
For the year ended March 31, 2024
June 12, 2024
Exhibit 99.1
TABLE OF CONTENTS
TABLE OF CONTENTS
I
MARKET FOR SECURITIES
10
GENERAL INFORMATION
2
Trading Price and Volume
10
FORWARD-LOOKING STATEMENTS
2
Normal Course Issuer Bid and Share Purchases for
Cancellation
10
CORPORATE STRUCTURE
3
DIRECTORS AND OFFICERS
11
Name, Address and Incorporation
3
Board of Directors
11
Intercorporate Relationships
3
Executive Officers
12
GENERAL DEVELOPMENT OF THE BUSINESS
4
Directors’ and Executive Officers’ Share Ownership
12
Fiscal 2024 Developments
4
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
12
Fiscal 2023 Developments
4
Conflicts of Interest
13
Fiscal 2022 Developments
5
AUDIT AND RISK MANAGEMENT COMMITTEE
13
DESCRIPTION OF THE BUSINESS
5
Relevant Education and Experience
13
Corporate Overview
5
Pre-approval Policy and Procedures
14
Business Offerings
6
EXTERNAL AUDITOR SERVICE FEE
14
Business Structure
6
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
14
Competitive Environment
6
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL
TRANSACTIONS
15
Strategic Business Plan
7
TRANSFER AGENT AND REGISTRAR
15
Clients by Market Sectors
7
MATERIAL CONTRACTS
15
Client Approach Philosophy
7
INTERESTS OF EXPERTS
15
Sales, Marketing and Strategic Partners
8
ADDITIONAL INFORMATION
15
Human Capital
8
APPENDIX A - AUDIT AND RISK MANAGEMENT COMMITTEE
CHARTER
16
Specialized Skills and Knowledge
8
Principal Offices Locations
8
Intellectual Property
8
RISK AND UNCERTAINTIES
9
CAPITAL STRUCTURE
9
Description of Securities
9
Voting Rights
9
Rights to Dividends and Rights upon Winding-up
and Dissolution
9
Conversion Rights
10
Restrictions on Transfer
10
DIVIDENDS
10
ALITHYA - Annual Information Form i
GENERAL INFORMATION
This Annual Information Form is dated June 12, 2024. Unless otherwise indicated, all information disclosed herein is
provided as at March 31, 2024, references to “Alithya”, “we”, “our”, “us”, “the Company” or similar terms refer to Alithya
Group inc. and its 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 and the Class B
multiple voting shares 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,
leveraging artificial intelligence (“AI”) and machine learning technologies, entering into new contracts and penetrating new
markets; (iv) the Company’s growth strategy, future operations, and prospects, including its expectations regarding future
revenue resulting from bookings and backlog and providing stakeholders with long-term growing return on investment;
(v) the Company’s ability to service its debt and raise additional capital; (vi) the Company’s estimates 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 identify suitable acquisition targets and realize the
expected synergies or cost savings relating to the integration of such acquisitions; and (viii) the Company’s intention to
deregister its subordinate voting shares from the U.S. Securities and Exchange Commission (“SEC”), the estimated benefits
of a deregistration as well as the anticipated duration of time the Company will continue to file period reports with the SEC.
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, 2024 and 2023, 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.sedarplus.com and
EDGAR at www.sec.gov. Additional risks and uncertainties not currently known to the Company or that the Company
currently deems to be immaterial could also have a material adverse effect on its financial position, financial performance,
cash flows, business or reputation.
Forward-looking statements contained or incorporated by reference in this Annual Information Form are qualified by these
cautionary statements. Unless otherwise indicated, forward-looking statements contained herein are made only as of the
date of this Annual Information Form and those contained in other documents incorporated by reference are made only as
of the date of such other documents. The Company expressly disclaims any obligation to update or alter forward-looking
statements, or the factors or assumptions underlying them, whether as a result of new information, future events or
otherwise, except as required by applicable law. Investors are cautioned not to place undue reliance on forward looking
statements since actual results may vary materially from them.
ALITHYA - Annual Information Form 2
CORPORATE STRUCTURE
Name, Address and Incorporation
Alithya Group inc. (formerly 9374-8572 Québec Inc.) was incorporated on March 8, 2018 under the Business Corporations
Act (Québec) (the “QBCA”). The Company was created for the purpose of the business combination between
Alithya Canada Inc. (formerly Alithya Group Inc.) (“Pre-IPO Alithya”), incorporated on April 2, 1992 under the Companies
Act (Québec), Alithya USA, Inc. (formerly Edgewater Technology, Inc.) (“Edgewater”), a corporation incorporated on
March 12, 1996 under the laws of Delaware and previously listed on the Nasdaq Stock Market LLC (“Nasdaq”), and
9374-8572 Delaware Inc. (“U.S. Merger Sub”), a corporation governed under the laws of Delaware and a wholly-owned
subsidiary of the Company.
On March 15, 2018, the Company, Pre-IPO Alithya, Edgewater and U.S. Merger Sub entered into an arrangement
agreement, which was amended on September 10, 2018 and October 17, 2018 (the “Arrangement Agreement”). On
November 1, 2018, and pursuant to the terms of the Arrangement Agreement, among other things, (i) the Company
acquired Pre-IPO Alithya, by way of a statutory plan of arrangement under the QBCA (the “Arrangement”), and (ii) U.S.
Merger Sub merged with and into Edgewater, with Edgewater being the surviving corporation (the “Merger”). The
Arrangement and the Merger are collectively referred to herein as the “Edgewater Transaction”. Following completion of the
Edgewater Transaction, shareholders of Pre-IPO Alithya and Edgewater became shareholders of the Company, and each of
Pre-IPO Alithya and Edgewater became wholly owned subsidiaries of the Company. On November 2, 2018, the Company’s
subordinate voting shares commenced trading on the Toronto Stock Exchange (“TSX”) and on the Nasdaq under the symbol
“ALYA”. The subordinate voting shares of the Company were subsequently voluntarily delisted from Nasdaq on February 19,
2024.
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, 2024, 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, 2024,
based on the Company’s annual audited consolidated financial statements for the fiscal year ended March 31, 2024, 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, 2024.
ENTITY
JURISDICTION
PERCENTAGE OWNERSHIP
Alithya Canada Inc.
Québec, Canada
100%
Alithya Consulting Inc.
Québec, Canada
100%
Alithya Digital Technology Corporation
Ontario, Canada
100%
Alithya Financial Solutions, Inc.
Delaware, USA
100%
Alithya France SAS
France
100%
Alithya Fullscope Solutions, Inc.
Delaware, USA
100%
Alithya Numérique Maroc SARLAU
Morocco
100%
Alithya Ranzal LLC
Delaware, USA
100%
Alithya USA, Inc.
Delaware, USA
100%
Alithya Zero2Ten, Inc.
Delaware, USA
100%
Datum Consulting Group, LLC
Indiana, USA
100%
Datum Consulting Group Australia Pty Limited
Australia
100%
Datum Cybertech India Pvt Ltd.
India
100%
DCG Team UK Limited
United Kingdom
100%
Vitalyst, LLC
Delaware, USA
100%
ALITHYA - Annual Information Form 3
GENERAL DEVELOPMENT OF THE BUSINESS
Fiscal 2024 Developments
On September 13, 2023, the Company announced the renewal of its normal course issuer bid (“NCIB”) to purchase for
cancellation up to 2,411,570 subordinate voting shares, representing 5% of the Company’s public float as of the close of
markets on September 7, 2023. Purchases for cancellation under the NCIB commenced on September 20, 2023 and will end
on the earlier of September 19, 2024 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, through alternative trading systems, if eligible, or
outside the facilities of the TSX pursuant to exemption orders issued by securities regulatory authorities. Purchases could
also be made on the Nasdaq until February 9, 2024.
On December 22, 2023, the Company entered into a second amended and restated credit agreement to, among others,
extend its maturity date from April 1, 2024 to April 1, 2026 and allow for annual extensions, and increase the principal
amount of the Company’s credit facility (the “Credit Facility”) to $140 million and the accordion to $50 million.
On January 30, 2024, the Company announced it was consolidating the trading of its subordinate voting shares on the TSX
and that it was voluntarily delisting from the Nasdaq. On February 9, 2024, the subordinate voting shares ceased trading on
the Nasdaq and were officially delisted on February 19, 2024.
During the year ended March 31, 2024, the Company purchased for cancellation 500,560 subordinate voting shares for
approximately $1 million at a weighted average price of $1.91 under the previous and current NCIB. As at March 31, 2024,
the Company could still purchase up to 2,007,049 subordinate voting shares for cancellation under the current NCIB.
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 information technology (“IT”) consulting firm specialized in the digital transformation 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
specialized 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 earnout consideration of up to US$13 million, payable over three years in
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 Credit
Facility.
On September 14, 2022, the Company announced the renewal of 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.
Purchases for cancellation under the then current NCIB commenced on September 20, 2022 and ended on September 19,
2023. 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.
On January 30, 2023, Bernard Dockrill joined the Company as Chief Operating Officer and 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.
On September 29, 2022 and February 13, 2023, the Company’s amended and restated 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 then current NCIB. As at March 31, 2023, the
Company could still purchase up to 2,396,589 subordinate voting shares for cancellation under the then current NCIB.
ALITHYA - Annual Information Form 4
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 its first 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.
On each of June 30, 2021, September 28, 2021, September 30, 2021 and January 27, 2022, the Company’s amended and
restated 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 remaining two unsecured promissory notes entered into in connection with
funding received by certain U.S. subsidiaries under the Paycheck Protection Program of the Coronavirus Aid, Relief, and
Economic Security Act that were then still under review for forgiveness and which amounted to US$4.8 million were forgiven
by the U.S. Small Business Administration.
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.
DESCRIPTION OF THE BUSINESS
Corporate Overview
With professionals in Canada, the U.S. and internationally, Alithya provides technology advisory services based on deep
expertise in strategy and digital transformation. The Company guides and supports its clients in the pursuit of their business
objectives, leveraging innovation and delivery excellence in the application of digital technologies.
Alithya’s collective intelligence and expertise targets three main pillars: strategic consulting, enterprise transformation, and
business enablement. With collaboration at the core of its business model, Alithya professionals deliver practical IT services
and solutions to help solve complex business challenges for clients in the financial services, healthcare, manufacturing,
government, energy, higher education, telecommunications, transportation and logistics, and other sectors. The Company
has developed industry-specific solutions and services for many of these industries that aim at solving sector-specific
business challenges and helping expedite the time to value of technology investments.
ALITHYA - Annual Information Form 5
Business Offerings
Alithya's expertise with respect to its main pillars, offered in each reportable segment, includes:
•
Strategic Consulting: Alithya provides advisory services for digital strategy, organization performance,
cybersecurity, enterprise architecture, and change management. Business outcomes in this area include refining
business processes to reflect real-world scenarios; boosting systems security from cyberattacks; migrating critical
applications and data to the cloud; understanding the optimal enterprise architecture approach; defining change
management strategies; and facilitating project planning activities for software selections, strategic roadmaps, or
agile/scrum delivery teams.
•
Enterprise Transformation: Alithya has more than 20 years of business transformation and enterprise applications
implementation experience with enterprise resource planning (ERP), supply chain management (SCM), enterprise
performance management (EPM), customer relationship management (CRM), and human capital management
(HCM). Also, leveraging AI and machine learning technologies as a foundation, the Company provides
transformational solutions and services for cloud infrastructure, custom applications development, legacy systems
modernization, control/software engineering, data and analytics, and intelligent document processing. Alithya not
only helps clients modernize enterprise applications through upgrades and the consolidation of multiple systems,
but also helps to define overall technology ecosystems, to envision the use and impact of AI throughout an
organization, and to build custom applications to address unique client needs.
•
Business Enablement: Alithya offers ongoing paths to drive value through the provision of digital adoption and
training, managed services, change enablement, and quality engineering. This practice area enables Alithya to
move beyond advisory, implementations and project go-lives to provide ongoing value, including using AI to mine
data for important insights for making faster, smarter business decisions; realizing a return on investment on
digital projects by driving adoption and consumption of technology; helping clients to train and retain their
workforce; bookending a change management strategy with a change enablement plan that converts visions into
reality; and providing a routine, consistent way to test updates and fixes before deploying any new software
products.
Business Structure
Alithya has three operating and reportable segments based on the regional geographic areas in which it operates: 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,
2024 and 2023:
FISCAL YEAR ENDED MARCH 31
Reportable Segments
2024
2023
Canada
$
277,544,000 $
312,349,000
U.S.
$
192,493,000 $
189,883,000
International
$
21,088,000 $
20,469,000
Total
$
491,125,000 $
522,701,000
For additional information on our operating and reportable segments and the Company’s revenues from customers for each
category of services per reportable segments, please refer to note 23 “Segment and Geographical Information” of the
Company’s annual consolidated financial statements for the fiscal years ended March 31, 2024 and 2023, which is
incorporated herein by reference. The annual consolidated financial statements for the fiscal years ended March 31, 2024
and 2023 are available on SEDAR+ at www.sedarplus.com and EDGAR at www.sec.gov and on the Company’s website at
www.alithya.com under the “Investors” section.
Competitive Environment
For many companies, digital systems and infrastructures are among their most important and strategic assets. These assets
require significant investments and 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.
ALITHYA - Annual Information Form 6
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 focusing on our clients’ complex business challenges, 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 partner capable of delivering rapid results for its clients.
Alithya’s competitors in each of its operating and reportable segments include systems integration firms, 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, global presence, 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 embarked on a journey to be recognized as the trusted technology advisor of its clients. By the end of the fiscal year
ending March 31, 2027, management believes that the achievement of its new scale and scope would allow it to leverage its
industry knowledge, geographic presence, expertise, integrated offerings, and its position on the value chain to target
higher value IT segments.
Alithya’s strategic process begins with its agile approach to aligning its offerings with the most pressing challenges being
experienced within the sectors that it services, and in its ability to continuously reinforce the building blocks of trusted
relationships with its clients, employees, investors and partners. To ensure that it remains innovative and relevant, Alithya
strives to meet or exceed the expectations of its stakeholders, including optimizing employee experiences, assisting its
clients in achieving their missions, and creating greater value for its investors.
Clients by Market Sectors
Alithya’s clients are mainly concentrated in the financial services, healthcare, manufacturing, government, energy, higher
education, telecommunications, and transportation and logistics 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 aims at
providing an optimal alignment with clients, in order to enable them to overcome their challenges and attain their goals with
strategic consulting, enterprise transformation and business enablement services. Alithya’s goal is to become its clients’
trusted advisor by developing long-term relationships that extend beyond just project delivery.
Alithya also seeks to be an active participant in the ongoing consolidation of the digital technology industry and to leverage
its expertise and solutions to offer clients an alternative to larger traditional digital technology solution providers. Alithya is
continually looking to expand its capacity and broaden the scope of its service offerings through targeted business
acquisitions. Growth through business acquisitions can offer Alithya opportunities to better serve existing clients with
additional talent, technology, complementary services and greater scale. Through such business acquisitions, Alithya aims at
expanding its existing client relationships by adding capacity in new geographic locations, while opening doors for existing
capabilities into new client relationships.
Alithya believes that its growth strategy through business acquisitions also represents an opportunity to achieve the scale
that is increasingly required for mandates awarded by government and private organizations, as well as an opportunity for
potential business acquisition candidates to benefit from Alithya’s established relationships, access to market and preferred
supplier status.
ALITHYA - Annual Information Form 7
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 who are either industry leaders, including Microsoft, Oracle and Amazon Web Services (AWS),
or well-regarded new entrants. Such partnerships are, however, generally terminable at will by either party.
Human Capital
With more than 3,000 professionals as at March 31, 2024, 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 programs such
as the Alithya Leadership Academy and Leading@Alithya as a People Manager, programs offered in collaboration with the
Executive Institute of McGill University. Secondly, 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. Thirdly, Alithya is always on the lookout for opportunities to
complement its team’s expertise and industry knowledge through targeted business acquisitions.
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
Montréal, Québec
Alpharetta, GA
Aix-en-Provence, France
Québec, Québec
Austin, TX
Sophia-Antipolis, France
Pickering, Ontario
Bala Cynwyd, PA
Tangier, Morocco
Toronto, Ontario
Hyderabad, India
Intellectual Property
Through its practices and expertise, Alithya leverages its proprietary innovations, accelerators, methodologies and other
intellectual property when providing strategic advice to its clients. Alithya relies on a combination of trademarks, laws that
protect intellectual property rights, regardless of whether such rights are registered, as well as contractual restrictions, such
as confidentiality agreements, assignment of rights and licenses, to protect its intellectual property rights. Alithya also owns
licenses in a number of trademarks, copyrights, and other intellectual property rights relating to its solutions and services.
Alithya’s intellectual property portfolio includes the following solutions:
•
Alithya Adaptive LearningTM: This on-demand, subscription-based platform helps drive usage and awareness of
Microsoft applications, allowing organizations to improve the return on their investment by enhancing user
proficiency and productivity and creating transformative change enablement.
•
Alithya AI-FITM solutions: These solutions leverage Alithya’s range of proprietary applications using AI and machine
learning technologies. A play on the term hi-fi, short for high fidelity, the Alithya AI-FITM solutions brand integrates
the concepts of AI and fidelity (FI). The Alithya AI-FITM solutions include a variety of solutions for the trading
industry, the energy industry and others.
•
Alithya Rapid QATM: 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 versions of this solution designed to automate testing of Oracle
modules and Microsoft D365 applications.
ALITHYA - Annual Information Form 8
•
CASSITM Analytics and KPIs: These solutions help nuclear plants and the energy sector reduce the work needed to
generate and distribute maintenance performance reports and provide insight into opportunities to streamline
maintenance. The CASSITM software drives accountability and tracks progress against corporate and site-based
performance goals for work week leaders, planners, schedulers, operations and maintenance staff.
•
Alithya Rapid CaptureTM: This solution is the primary component of the Alithya Rapid Suite. It 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 AI and machine learning powered cognitive modules, Alithya Rapid CaptureTM 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, including both machine printed and
handwritten documents.
•
Alithya 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.
Alithya also offers a range of accelerators and intellectual property designed to bolster Microsoft and Oracle business
application implementations. Alithya’s Microsoft intellectual property caters to distinct requirements across various sectors,
such as the manufacturing sector (including the dairy and poultry industries). Similarly, Alithya’s Oracle accelerators
encompass intellectual property, methodologies and add-ons tailored to address specific needs within sectors like
manufacturing or professional services, supporting various facets of operations.
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, 2024 and 2023,
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.sedarplus.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.
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 the TSX, (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, 2024,
88,141,000 subordinate voting shares and 7,274,248 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, 2024, 54.79% of the voting rights
attached to all of the issued and outstanding shares.
ALITHYA - Annual Information Form 9
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.sedarplus.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 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.
MARKET FOR SECURITIES
Trading Price and Volume
Alithya’s subordinate voting shares started trading on the TSX and Nasdaq under the symbol “ALYA” on November 2, 2018,
but were voluntarily delisted from the Nasdaq on February 19, 2024. 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 for the fiscal year ended March 31, 2024.
MONTH
HIGH ($)
LOW ($)
MONTHLY VOLUME
April 2023
2.86
2.42
435,423
May 2023
2.62
2.28
375,560
June 2023
3.00
2.16
1,056,989
July 2023
2.77
2.15
401,570
August 2023
2.57
2.26
435,736
September 2023
2.61
2.05
551,824
October 2023
2.34
1.89
483,555
November 2023
1.96
1.50
1,068,781
December 2023
1.78
1.34
1,650,234
January 2024
2.05
1.50
742,012
February 2024
2.05
1.45
1,125,178
March 2024
2.40
1.80
521,355
ALITHYA - Annual Information Form 10
Normal Course Issuer Bid and Share Purchases for Cancellation
On September 13, 2023, the Company announced that it was renewing its NCIB to purchase for cancellation up to
2,411,570 subordinate voting shares, representing 5% of the Company’s public float as of the close of markets on
September 7, 2023. Please refer to the section titled “General Development of the Business – Fiscal 2024 Developments”
earlier in this Annual Information Form for more information on the Company’s NCIB.
DIRECTORS AND OFFICERS
Board of Directors
The articles of the Company provide that the Board shall consist of a minimum of 3 and a maximum of 15 directors. As at
March 31, 2024, the Board was comprised of 9 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.
Dana Ades-Landy
Québec (Canada)
Director
Contract Position in the Special
Loans Group, National Bank of
Canada (Canadian chartered
bank)
November 2016
Chief Executive Officer, Heart
& Stroke Foundation of
Canada (Québec)
André P. Brosseau
Québec (Canada)
Director
President and Chief Executive
Officer, Du Musée Investments
Inc. (family office)
September 2022
-
Robert Comeau
Québec (Canada)
Lead Director
Corporate Director and Lead
Director of the Company
May 2018
-
Ines Gbegan
Québec (Canada)
Director
Vice President of Finance, Biron
Health Group Inc. (company
offering medical laboratory
expertise)
March 2024
Senior Director, Finance,
Biron Health Group Inc.
Vice President, Finance,
Quebec and Maritimes,
Transdev Canada Inc.
Manager, Corporate
Accounting, Enerkem Inc.
Lucie Martel
Québec (Canada)
Director
Corporate Director
September 2019
Senior Vice President and
Chief Human Resources
Officer, Intact Financial
Corporation
Paul Raymond
Québec (Canada)
President and Chief
Executive Officer,
and Director
President and Chief Executive
Officer of the Company
June 2011
-
Ghyslain Rivard
Québec (Canada)
Director
Founder of the Company and
Corporate Director
April 1992
-
C. Lee Thomas
Ohio (USA)
Director
Corporate Director and Chair of
the Board of Trustees of
Baldwin Wallace University
November 2018
Executive in Residence at the
School of Business of Baldwin
Wallace University
Pierre Turcotte
Québec (Canada)
Chair of the Board,
and Director
Corporate Director and Chair of
the Board of the Company
June 2011
-
NAME AND PLACE
OF RESIDENCE
POSITION WITH
THE COMPANY
PRINCIPAL OCCUPATION
DIRECTOR
SINCE(1)
OTHER POSITIONS HELD
OVER THE PAST FIVE YEARS
(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. Quebecor and Beneva are each party to an Investor Rights Agreement entered into with the Company on April 1,
2021 and pursuant to which 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. André P. Brosseau was proposed by Quebecor and Ines Gbegan was proposed by Beneva for appointment
to the Board.
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 (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 Paul Raymond, who
is not independent as he is the President and Chief Executive Officer of the Company. All other directors of the Company,
namely Dana Ades-Landy, André P. Brosseau, Robert Comeau, Ines Gbegan, Lucie Martel, Ghyslain Rivard, C. Lee Thomas
ALITHYA - Annual Information Form 11
and 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 AND 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
Ghyslain Rivard
C. Lee Thomas
Pierre Turcotte (Chair)
Pierre Turcotte
Executive Officers
The following table lists the name and place of residence of the executive officers of the Company as at June 12, 2024, as
well as their current position with the Company and other positions they have held over the past five years, if any.
Amar Bukkasagaram
Indiana (USA)
Senior Vice President, Data
Solutions
June 2023
President, Datum Consulting Group, LLC
Giulia Cirillo
Québec (Canada)
Chief Human Capital Officer
April 2023
Senior Vice President and Chief Human
Resources and Global Communications
Officer, PSP Investments
Bernard Dockrill
New Hampshire (USA)
Chief Operating Officer
January 2023
Senior Vice President, CGI Information
Technologies & Solutions Inc.
Nigel Fonseca
Ontario (Canada)
Senior Vice President, Ontario
and Western Canada
June 2018
-
Nathalie Forcier
Québec (Canada)
Chief Legal Officer and
Corporate Secretary
September 2018
-
Robert Lamarre
Québec (Canada)
Chief Information Officer
April 2016
-
Dany Paradis
Québec (Canada)
Senior Vice President, Québec
November 2018
Senior Vice President, Québec and Oracle
Practices Canada, Alithya
Senior Vice President, Integrated
Management Solutions, Alithya
Paul Raymond
Québec (Canada)
President and Chief Executive
Officer, and Director
April 2011
-
Russell Smith
Alabama (USA)
President, Alithya USA
November 2018
-
Claude Thibault
Québec (Canada)
Chief Financial Officer
August 2018
-
NAME
CURRENT POSITION
EXECUTIVE OFFICER
SINCE (1)
OTHER POSITIONS HELD OVER THE
PAST FIVE YEARS
(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 12, 2024, the directors and executive officers of the Company, as a group, beneficially owned, directly or
indirectly, or exercised control or direction over 4,887,711 subordinate voting shares and 7,274,248 multiple voting shares,
representing respectively 5.55% 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 (“Aptilon”) from
December 2006 to August 2021. On May 4, 2012, a management cease trade order was issued by the Autorité des marchés
ALITHYA - Annual Information Form 12
financiers followed by a cease trade order on all of Aptilon’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 Aptilon, then known as DMD Digital Health Connections Group Inc., 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
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.
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: Robert Comeau (Chair), Dana Ades-Landy and C. Lee
Thomas, who have been members of the Audit Committee since at least the Company’s annual meeting of shareholders held
on September 13, 2023. 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
was a Chartered Professional Accountant (CPA) from 2013 to 2021.
•
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. from 2018 to 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).
ALITHYA - Annual Information Form 13
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.
Notwithstanding the foregoing, 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.
•
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 Audit Committee also approves, on an annual basis, the fees charged to the Company by the external auditor for the
current and following year.
EXTERNAL AUDITOR SERVICE FEE
KPMG LLP (“KPMG”) is the external auditor of the Company. The fees billed by KPMG in the fiscal years ended March 31,
2024 and 2023 for audit, audit-related, tax and all other services provided to the Company were as follows:
FISCAL YEAR ENDED MARCH 31
2024
2023
Audit fees(1)
$
1,887,250 $
951,300
Audit-related fees(2)
—
—
Tax fees(3)
— $
12,800
All other fees(4)
$
45,000
—
Total
$
1,932,250 $
964,100
(1)
“Audit fees” means the aggregate fees billed for professional services rendered by the auditor for the audit of the Company’s annual
consolidated financial statements and internal control over financial reporting, the review of the Company’s interim condensed
consolidated financial statements, and fees for additional audit procedures related to accounting and internal control matters. The fees
billed in the fiscal year ended March 31, 2024 include audit fees billed for the first year audit of internal controls over financial reporting.
For the fiscal year ended March 31, 2023, the Company was exempt from such requirement as it qualified as an emerging growth
company in the U.S.
(2)
“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.
(3)
“Tax fees” means the aggregate fees billed for professional services rendered by the auditor for tax compliance and tax advice. For the
fiscal year ended March 31, 2023, tax fees consisted of fees billed in connection with tax compliance services assisting in the preparation
of T2200 forms for filing with the Canadian taxation authorities.
(4)
“All other fees” includes the aggregate of all other fees. For the fiscal year ended March 31, 2024, other fees consisted of fees billed in
connection with information technology advisory services.
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 14
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, 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 AGENT AND REGISTRAR
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.
MATERIAL CONTRACTS
Except for those contracts entered into in the ordinary course of business, the following material contract of the Company
was entered into during the year ended March 31, 2024 and is still in effect as of the date hereof:
•
Second Amended and Restated Credit Agreement entered into on December 22, 2023 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 2024 Developments”
earlier in this Annual Information Form for more information on the content of this agreement.
INTERESTS OF EXPERTS
KPMG is the external auditor of the Company and has prepared (i) the report relating to the audit of the Company’s annual
consolidated financial statements for the fiscal years ended March 31, 2024 and 2023 and notes thereto, presented under
the International Financial Reporting Standards as issued by the International Accounting Standards Board, and (ii) the
report relating to the audit of the Company’s internal controls over financial reporting as at March 31, 2024, both of which
are included with the Company’s annual consolidated financial statements for the fiscal year ended March 31, 2024. KPMG
has confirmed that it is independent with respect to the Company within the meaning of the relevant rules and related
interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulations and
also that it is an independent accountant with respect to the Company under all relevant U.S. 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 13, 2023.
Additional information regarding the Company, including financial information, can be found on SEDAR+ at
www.sedarplus.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, 2024 and 2023 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 15
APPENDIX A - AUDIT AND RISK MANAGEMENT COMMITTEE
CHARTER
PURPOSE
1.
The Audit and Risk Management Committee (the “Committee”) is a standing committee appointed by the board of
directors (the “Board”) of Alithya Group inc. (the “Company”). The Committee is established to fulfil applicable public
company obligations relating to audit committees and to assist the Board in fulfilling its oversight responsibilities with
respect to financial reporting including responsibility to:
(a) oversee the integrity of the Company’s financial statements and financial reporting process, including the audit
process and the Company’s internal accounting controls and procedures and compliance with related legal and
regulatory requirements;
(b) oversee the qualifications and independence of the external 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.
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.
3.
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.
4.
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
5.
Composition – The Committee shall be comprised of at least 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 the 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 of the Committee’s powers as long as a quorum remains in
office. Subject to the foregoing, the members of the Committee shall be appointed by the Board annually and each
ALITHYA - Annual Information Form 16
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 is duly appointed and qualified.
7.
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.
8.
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 execute 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
such meeting, except where a member attends a meeting for the express purpose of objecting to the transaction
of any business on the ground that the meeting has not been 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 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
executing 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
as to any information technology, audit and other non-audit services provided by the external auditor to the Company
and its subsidiaries.
ALITHYA - Annual Information Form 17
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
Policy 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.
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
ALITHYA - Annual Information Form 18
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.
ALITHYA - Annual Information Form 19
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:
(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.
ALITHYA - Annual Information Form 20
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
(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’s 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.
ALITHYA - Annual Information Form 21
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;
(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, November 9, 2022 and November 13,
2023.
ALITHYA - Annual Information Form 22
Annual Consolidated
Financial Statements
of Alithya Group inc.
For the years ended March 31, 2024
and 2023
Exhibit 99.2
TABLE OF CONTENTS
Reports of Independent Registered Public Accounting Firm ..........................................................................
2
Consolidated Statements of Operations and Comprehensive Loss ..............................................................
7
Consolidated Statements of Financial Position .................................................................................................
8
Consolidated Statements of Changes in Shareholders’ Equity ......................................................................
9
Consolidated Statements of Cash Flows ...........................................................................................................
10
Notes to Consolidated Financial Statements .....................................................................................................
1.
Governing statutes and nature of operations ......................................................................................
11
2.
Basis of preparation ................................................................................................................................
11
3.
Material accounting policies ...................................................................................................................
11
4.
Business combinations ...........................................................................................................................
25
5.
Accounts receivable and other receivables .........................................................................................
29
6.
Property and equipment .........................................................................................................................
29
7.
Leases .......................................................................................................................................................
30
8.
Intangibles .................................................................................................................................................
32
9.
Goodwill .....................................................................................................................................................
33
10. Accounts payable and accrued liabilities .............................................................................................
35
11. Long-term debt .........................................................................................................................................
36
12. Income taxes ............................................................................................................................................
38
13. Share capital .............................................................................................................................................
41
14. Share-based payments ...........................................................................................................................
44
15. Commitments and contingencies ..........................................................................................................
48
16. Related parties .........................................................................................................................................
49
17. Earnings (loss) per share .......................................................................................................................
50
18. Reconciliation of liabilities arising from financing activities ...............................................................
51
19. Additional information on consolidated loss ........................................................................................
52
20. Business acquisition, integration and reorganization costs ..............................................................
52
21. Net financial expenses ............................................................................................................................
53
22. Supplementary cash flow information ..................................................................................................
53
23. Segment and geographical information ................................................................................................
54
24. Remaining performance obligations ......................................................................................................
56
25. Financial instruments ...............................................................................................................................
56
26. Capital disclosures ...................................................................................................................................
60
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Alithya Group inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of Alithya Group inc. (the
"Company") as of March 31, 2024 and 2023, the related consolidated statements of operations and
comprehensive loss, changes in shareholders’ equity, and cash flows for the years ended March 31, 2024 and
2023, and the related notes (collectively, the "consolidated financial statements"). In our opinion, the
consolidated financial statements present fairly, in all material respects, the consolidated financial position of the
Company as of March 31, 2024 and 2023, and its consolidated results of operations and its consolidated cash
flows for the years ended March 31, 2024 and 2023, in conformity with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2024, based
on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated June 12, 2024 expressed an adverse opinion
on the effectiveness of the Company’s internal control over financial reporting.
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 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. 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.
Page 2
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the
consolidated financial statements that were communicated or required to be communicated to the audit
committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial
statements and (2) involved our especially challenging, subjective, or complex judgments. The communication
of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
Impairment test of goodwill
As discussed in Note 9 of the consolidated financial statements, the goodwill balance as of March 31, 2024 was
$166.5 million. As discussed in Note 3 of the consolidated financial statements, goodwill is tested for impairment
annually as of March 31, or more frequently, should events or changes in circumstances indicate that it may be
impaired. An impairment loss is recognized if the carrying amount of the CGU exceeds its estimated recoverable
amount. The recoverable amount of a CGU is the greater of its value in use and its fair value less cost of
disposal. Key assumptions of the individual CGUs’ value-in-use include forecasted revenues, cost of revenues
and selling, general and administration expenses ("SG&A") applied in the determination of the Company’s three
year net operating cash flow forecast, the estimated long-term growth rate used to extrapolate the three year net
operating cash flow forecast, and the pre-tax value weighted average cost of capital ("WACC") applied in the
determination of the present value of the net operating cash flow forecast. Key assumptions of the individual
CGUs’ fair value less cost of disposal include forecasted revenues, cost of revenues, SG&A expenses and other
non-cash adjustments applied in the determination of forecasted Adjusted EBITDA, and an implied market
multiple applied to forecasted Adjusted EBITDA.
We identified the impairment test of goodwill as a critical audit matter. There was a higher degree of auditor
judgment required to evaluate the above noted assumptions used in determining the individual CGUs’ value-in-
use. The sensitivity of reasonably possible changes to those assumptions could have a significant impact on the
determination of the recoverable amount of the CGUs and the valuation of goodwill.
The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls related to the Company’s valuation of
goodwill process, including controls related to (1) determining the three-year net operating cash flow forecast
and estimated long-term growth rate used to extrapolate the three year net operating cash flow forecast; and, (2)
determining the WACC applied in the determination of the present value of the net operating cash flow forecast.
We evaluated each year of the three-year net operating cash flow forecast by comparing them to historical
actual results and assessed adjustments made to historical actual results through independent corroboration.
We involved valuation professionals with specialized skills and knowledge, who assisted in (1) evaluating
revenue growth rates applied in the determination of the Company’s three year net operating cash flow forecast
to publicly available growth rate estimates for comparable companies; (2) evaluating estimated long-term growth
rates of net operating cash flows compared to economic data; and, (3) evaluating the WACC assumption by
comparing it against discount rate ranges that were independently developed using publicly available market
data for comparable companies.
Page 3
Revenue recognition for fixed-fee and time and material arrangements applying the input method
As discussed in Note 23 of the consolidated financial statements, revenue from fixed fee arrangements and
time and material arrangements applying the input method for the year ended March 31, 2024 were $63.5
million and $106.8 million, respectively. As discussed in Note 3 of the consolidated financial statements,
revenues from fixed fee arrangements, and time and material arrangements where contractual billings do not
correspond with the value provided to the client and where the outcome of the arrangements can be estimated
reliably, are recognized over time based on the measure of progress towards completion. The measure of
progress towards completion is determined by comparing labour costs incurred to date to total expected labor
costs to complete the service, to arrive at an estimate of the percentage of revenue earned to date. The
determination of total expected labor costs to complete a service is based on estimates that can be affected by a
variety of factors, including but not limited to, changes in the scope of the contract, delays in reaching
milestones, changes in labor mix and rates, previously unidentified complexities in service delivery, or potential
claims from customers.
We identified revenue recognition for fixed-fee and time and material arrangements applying the input method
as a critical audit matter. There was a higher degree of auditor judgment required to evaluate the total expected
labor costs to complete estimates applied to arrive at an estimate of the percentage of revenue earned to date
because of the subjective nature of the estimate.
The following are the primary procedures we performed to address this critical audit matter. For a sample of
contracts which are uncompleted at the reporting date, we (1) obtained and read customer arrangements and
change orders, when applicable, to understand the contract scope and key terms; (2) evaluated the identification
of factors that can affect total expected labor costs to complete, including, but not limited to, changes in the
scope of the contract, delays in reaching milestones, changes in labor mix and rates, previously unidentified
complexities in service delivery, or potential claims from customers; (3) interviewed operational personnel as to
the status of projects to evaluate progress to date, the estimate of total labour costs to complete, and factors
that can affect total expected labor costs to complete; (4) performed a comparison of total labor costs incurred
and the total expected labor costs to complete at the reporting date, to the originally estimated labour costs; and,
(5) performed a comparison of actual labor costs incurred for the month subsequent to year-end to expected
labor costs to complete estimates as at period end.
/s/ KPMG LLP
We have served as the Company’s auditor since 2021.
Montréal, Canada
June 12, 2024
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of Alithya Group inc.
Opinion on Internal Control Over Financial Reporting
We have audited Alithya Group inc.’s (the "Company") internal control over financial reporting as of March 31,
2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, because of the effect of the material
weakness, described below, on the achievement of the objectives of the control criteria, the Company has not
maintained effective internal control over financial reporting as of March 31, 2024, based on criteria established
in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) ("PCAOB"), the consolidated statements of financial position of the Company as of March 31,
2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in
shareholders’ equity, and cash flows for the years ended March 31, 2024 and 2023, and the related notes
(collectively, the "consolidated financial statements"), and our report dated June 12, 2024 expressed an
unqualified opinion on those consolidated financial statements.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of the company’s annual or interim
financial statements will not be prevented or detected on a timely basis. A material weakness related to the
control activities in the Company’s revenue processes has been identified and included in management’s
assessment. The material weakness was considered in determining the nature, timing, and extent of audit tests
applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report on
those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and
for its assessment of the effectiveness of internal control over financial reporting, included in the "Management’s
Evaluation of Disclosure Controls and Procedures and Internal Control over Financial Reporting" section of the
Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the
year ended March 31, 2024. Our responsibility is to express an opinion on the Company’s internal control over
financial reporting based on our audit. We are a public accounting firm registered with the 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.
Page 2
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk. Our audit also included performing such other procedures as we considered necessary in the
circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
/s/ KPMG LLP
Montréal, Canada
June 12, 2024
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
For the years ended March 31,
(in thousands of Canadian dollars, except per share data)
2024
2023
Notes
$
$
Revenues
23
491,125
522,701
Cost of revenues
19
341,815
370,927
Gross margin
149,310
151,774
Operating expenses
Selling, general and administrative expenses
19
121,558
126,522
Business acquisition, integration and reorganization costs
20
3,384
18,079
Depreciation
19
5,913
6,536
Amortization of intangibles
8
23,095
27,497
Foreign exchange loss
102
159
154,052
178,793
Operating loss
(4,742)
(27,019)
Net financial expenses
21
11,857
9,335
Loss before income taxes
(16,599)
(36,354)
Income tax expense (recovery)
Current
12
317
569
Deferred
12
(256)
(6,826)
61
(6,257)
Net loss
(16,660)
(30,097)
Other comprehensive loss
Items that may be classified subsequently to profit or loss
Cumulative translation adjustment on consolidation of foreign subsidiaries
(4)
5,557
(4)
5,557
Comprehensive loss
(16,664)
(24,540)
Basic and diluted loss per share
17
(0.17)
(0.32)
The accompanying notes are an integral part of these consolidated financial statements.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 7
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at
March 31,
March 31,
(in thousands of Canadian dollars)
2024
2023
Notes
$
$
Assets
Current assets
Cash
8,859
22,583
Accounts receivable and other receivables
5
98,808
92,453
Unbilled revenues
14,937
23,420
Tax credits receivable
9,942
9,944
Prepaids
7,069
7,680
139,615
156,080
Non-current assets
Tax credits receivable
10,938
12,108
Other assets
2,267
1,111
Property and equipment
6
4,590
8,724
Right-of-use assets
7
5,606
9,353
Intangibles
8
81,273
104,335
Deferred tax assets
12
5,715
5,997
Goodwill
9
166,493
166,393
416,497
464,101
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities
10
74,917
91,263
Deferred revenues
25,293
22,275
Current portion of lease liabilities
7
4,136
3,873
Current portion of long-term debt
11
12,687
12,808
117,033
130,219
Non-current liabilities
Contingent consideration
4
4,082
7,037
Long-term debt
11
104,695
114,382
Lease liabilities
7
7,384
14,643
Deferred tax liabilities
12
8,099
8,632
241,293
274,913
Shareholders' equity
Share capital
13
312,409
311,967
Deficit
(157,370)
(141,481)
Accumulated other comprehensive income
4,606
4,610
Contributed surplus
15,559
14,092
175,204
189,188
416,497
464,101
Commitments and contingencies
15
The accompanying notes are an integral part of these consolidated financial statements.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 8
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the years ended March 31,
(in thousands of Canadian dollars, except share data)
Notes
Shares
outstanding
Share capital
Deficit
Accumulated other
comprehensive
income (loss)
Contributed
surplus (a)
Total
Number
$
$
$
$
$
Balance as at March 31, 2023
95,195,816
311,967
(141,481)
4,610
14,092
189,188
Net loss
—
—
(16,660)
—
—
(16,660)
Other comprehensive loss
—
—
—
(4)
—
(4)
Total comprehensive loss
—
—
(16,660)
(4)
—
(16,664)
Share-based compensation
14
—
—
—
—
2,764
2,764
Share-based compensation granted on business acquisitions
14
—
—
—
—
2,099
2,099
Share-based compensation related to contingent consideration, granted on
business acquisition, to be settled in shares
20
—
—
—
—
(865)
(865)
Issuance of Subordinate Voting Shares pursuant to vesting of share-based
compensation granted on business acquisitions
13
622,421
1,924
—
—
(1,924)
—
Shares purchased for cancellation
13
(493,878)
(1,724)
771
—
—
(953)
Issuance of Subordinate Voting Shares from exercise of stock options
13,14
2,500
8
—
—
(2)
6
Issuance of Subordinate Voting Shares from settlement of DSUs
13,14
73,682
201
—
—
(201)
—
Issuance of Subordinate Voting Shares from settlement of RSUs
13,14
14,707
33
—
—
(33)
—
Cash settlement of RSUs issued as share-based compensation
14
—
—
—
—
(371)
(371)
Total contributions by shareholders
219,432
442
771
—
1,467
2,680
Balance as at March 31, 2024
95,415,248
312,409
(157,370)
4,606
15,559
175,204
Balance as at March 31, 2022
92,725,616
305,222
(111,654)
(947)
7,130
199,751
Net loss
—
—
(30,097)
—
—
(30,097)
Other comprehensive income
—
—
—
5,557
—
5,557
Total comprehensive income (loss)
—
—
(30,097)
5,557
—
(24,540)
Share-based compensation
14
—
—
—
—
3,745
3,745
Share-based compensation granted on business acquisitions
14
—
—
—
—
2,995
2,995
Share-based compensation related to contingent consideration, granted on
business acquisition, to be settled in shares (a)
4, 20
—
—
—
—
2,120
2,120
Issuance of Subordinate Voting Shares pursuant to vesting of share-based
compensation granted on business acquisitions
13
738,382
1,708
—
—
(1,708)
—
Issuance of Subordinate Voting Shares in consideration of the acquisition of
Datum, net of share issuance costs
4, 13
1,867,262
5,528
—
—
—
5,528
Issuance of Subordinate Voting Shares in consideration of the acquisition of
Trafic 3W inc., net of share issuance costs
4, 13
83,449
276
—
—
—
276
Shares purchased for cancellation
13
(371,525)
(1,303)
270
—
—
(1,033)
Issuance of Multiple Voting Shares from exercise of stock options
13,14
152,632
536
—
—
(190)
346
Total contributions by shareholders
2,470,200
6,745
270
—
6,962
13,977
Balance as at March 31, 2023
95,195,816
311,967
(141,481)
4,610
14,092
189,188
(a) The Company reclassified comparative figures as at March 31, 2023 in order to correct an immaterial balance sheet presentation misstatement resulting in an increase in contributed surplus
and a decrease in contingent consideration in the amount of $2,120,000.
The accompanying notes are an integral part of these consolidated financial statements.
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 9
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended March 31,
(in thousands of Canadian dollars)
2024
2023
Notes
$
$
Operating activities
Net loss
(16,660)
(30,097)
Items not affecting cash
Depreciation and amortization
29,008
34,033
Contingent consideration
20
(3,827)
9,157
Net financial expenses
21
11,857
9,335
Share-based compensation
14
4,863
6,740
Unrealized foreign exchange loss (gain)
153
(318)
Realized foreign exchange (gain) loss on repayment of long-term debt
(26)
861
Impairment of property and equipment and right-of-use assets
19, 20
1,462
3,697
Settlement of RSUs
14
(371)
—
Other
(290)
—
Deferred taxes
12
(256)
(6,826)
25,913
26,582
Changes in non-cash working capital items
22
(10,244)
2,300
Net cash from operating activities
15,669
28,882
Investing activities
Additions to property and equipment
6
(746)
(1,736)
Additions to intangibles
8
(41)
(849)
Restricted cash
—
3,254
Business acquisitions, net of cash acquired
4
—
(14,397)
Net cash used in investing activities
(787)
(13,728)
Financing activities
Increase in long-term debt, net of related transaction costs
18
148,340
98,682
Repayment of long-term debt
18
(159,110)
(97,518)
Exercise of stock options
13
6
346
Repayment of lease liabilities, including lease termination costs
7
(5,813)
(3,653)
Share issue costs
13
—
(29)
Shares purchased for cancellation
13
(953)
(1,033)
Financial expense paid
21
(11,047)
(8,121)
Net cash used in financing activities
(28,577)
(11,326)
Effect of exchange rate changes on cash
(29)
1,100
Net change in cash
(13,724)
4,928
Cash, beginning of year
22,583
17,655
Cash, end of year
8,859
22,583
Cash paid (included in cash flow from operating activities)
Income taxes paid
601
411
The accompanying notes are an integral part of these consolidated financial statements
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 10
1. GOVERNING STATUTES AND NATURE OF OPERATIONS
Alithya Group inc. (together with its subsidiaries, “Alithya” or the “Company”) is a professional services firm
providing IT services and solutions through the optimal use of digital technologies in the areas of strategic
consulting, enterprise transformation and business enablement.
The Company’s Class A subordinate voting shares (the “Subordinate Voting Shares”) trade on the Toronto Stock
Exchange (“TSX”) under the symbol “ALYA”.
The Company’s head office is located at 1100, Robert-Bourassa Boulevard, Suite 400, Montréal, Québec,
Canada, H3B 3A5.
2. 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 12, 2024.
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; and
• Equity classified share-based payment arrangements which are measured at fair value at grant date pursuant
to IFRS 2, Share-Based Payment.
3. MATERIAL ACCOUNTING POLICIES
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.
All intercompany balances and transactions, and any unrealized income and expenses arising from
intracompany transactions, are eliminated on consolidation.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 11
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
The Company’s principal subsidiaries are as follows:
2024
2023
Entity
Jurisdiction
Percentage Ownership
Percentage Ownership
Alithya Canada Inc.
Quebec, Canada
100%
100%
Alithya Consulting Inc.
Quebec, Canada
100%
100%
Alithya Digital Technology Corporation
Ontario, Canada
100%
100%
Alithya USA, Inc.
Delaware, USA
100%
100%
Alithya Financial Solutions, Inc.
Delaware, USA
100%
100%
Alithya Ranzal LLC
Delaware, USA
100%
100%
Alithya Zero2Ten, Inc.
Delaware, USA
100%
100%
Alithya Fullscope Solutions, Inc.
Delaware, USA
100%
100%
Vitalyst, LLC
Delaware, USA
100%
100%
Datum Consulting Group, LLC
Indiana, USA
100%
100%
Alithya France SAS
France
100%
100%
DCG Team UK Limited
United Kingdom
100%
100%
Datum Consulting Group Australia Pty Limited
Australia
100%
100%
Alithya Numérique Maroc SARLAU
Morocco
100%
100%
Datum Cybertech India Pvt Ltd.
India
100%
100%
TRANSLATION OF FOREIGN CURRENCIES
The Company’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. 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 are reflected in the consolidated statements of operations.
Foreign operations
Assets and liabilities of each entity with a functional currency other than the Canadian dollar are translated into
Canadian dollars upon consolidation at the closing rate at the reporting date. Revenue and expenses have been
translated into Canadian dollars at average exchange rates over the reporting period. Exchange differences are
recognized in other comprehensive income in the currency translation reserve in equity.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 12
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
SEGMENTED REPORTING
Segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing the
performance of the reportable segments.
A company 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.
The Company has three operating and reportable segments based on geography: Canada, U.S. and
International.
REVENUE RECOGNITION, UNBILLED REVENUES AND DEFERRED REVENUES
The Company generates revenue in the areas of information technology, principally through strategic consulting,
enterprise transformation and business enablement services. These services are provided under various
arrangements as defined below.
Revenue is recognized either at a point in time or over time, when (or as) the Company satisfies performance
obligations by transferring the promised 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 in the transaction price 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 Company’s
knowledge of the client or the industry, the type of services to be delivered and the specific contractual terms of
each arrangement.
The Company enters into arrangements with multiple performance obligations which typically include consulting
services, post-contract support (including maintenance), and software. 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 Company has determined standalone selling prices for:
• consulting services based on a stated and consistent rate per hour range in standalone transactions;
• post-contract support based on observable prices for standalone renewals; and
• software through consistent stated rates for software components.
Certain of the Company’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 Company 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 13
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
Contract modifications are changes in scope and/or price that are approved by the parties to the contract.
Approvals may be written, oral or implied by customary business practices, and are legally enforceable. The
Company accounts for modifications as a separate contract if the modifications add distinct services that are
priced commensurate with standalone selling prices or if the remaining services are distinct from those already
transferred, otherwise modifications are accounted for as part of the original contract. When the contract
modification is not accounted for as a separate contract, the Company recognizes an adjustment to revenue on
the existing contract on a cumulative catch-up basis as at the date of the contract modification or, if the
remaining services are distinct performance obligations, the Company recognizes the remaining consideration
prospectively.
Time and materials arrangements
Revenue from strategic consulting and enterprise transformation services, including enterprise applications
implementation, 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 on an hourly basis.
Time and materials arrangements where contractual billings do not correspond with the value provided to the
client are recognized based on the accounting policies for fixed-fee arrangements as defined below.
Fixed-fee arrangements
Revenue from enterprise transformation services, including enterprise applications implementation, 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 Company's efforts or inputs towards satisfying the
performance obligation relative to the total expected inputs (the "Input Method") as it fulfills its performance
obligations in line with contracted terms. The Company primarily uses labour costs to measure the progress
towards completion. This method relies on estimates of total expected labour costs to complete the service,
which are compared to labour costs 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. 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 Company recognizes revenue based
on its right to consideration when such amount corresponds to the entity’s performance completed to date.
Business enablement services
Managed services revenue is generated through a recurring fee in exchange for a monthly recurring service
(typically support). The revenue for these arrangements is recognized over the contract term, either on a
straight-line basis or based on usage.
Subscriptions to learning services, which are available to customers at any time with unlimited use, are
recognized over time, on a straight-line basis, over the contract term.
Software revenue is generated in part from the resale of certain third-party off-the-shelf software and
maintenance. The majority of the software sold by the Company is delivered electronically. For software that is
delivered electronically, the Company 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 14
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
Third party software and maintenance revenue is recognized upon delivery of the software, as all related
warranty and maintenance is performed by the primary software vendor and not the Company.
Company created software, and the associated maintenance, is reported on a gross basis and revenue is
recognized at the point in time when it is distinct from the maintenance and support, otherwise it is recognized
over the contractual term. Revenue from the sale of Company created software from software as a service
("SaaS") is recognized on a straight-line basis as the Company 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 Company recognizes revenue over the
contractual term 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 when the Company has an
unconditional right to invoice.
FINANCIAL INSTRUMENTS
Recognition and derecognition
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual
provisions of the financial instrument.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire,
or when the financial asset and substantially all the risks and rewards are transferred. A financial liability is
derecognized when it is extinguished, discharged, cancelled or expires.
Classification and initial measurement of financial assets
All financial assets of the Company are classified into the amortized cost category. 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.
Except for those accounts receivable 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 15
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
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 receivable and other receivables, which is presented within
selling, general and administrative expenses.
Subsequent measurement of financial assets at amortized cost
After initial recognition, all financial assets are measured at amortized cost using the effective interest method,
less any impairment. Discounting is omitted where the effect of discounting is immaterial.
Impairment of accounts receivable and other receivables and unbilled revenues
The Company uses the simplified approach to measure the estimated credit loss for accounts receivable and
other receivables and unbilled revenues and accordingly 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. The Company uses its historical experience, external indicators
and forward-looking information to calculate the expected credit losses using a provision matrix.
The Company assesses impairment of accounts receivable 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 Company also assesses impairment of accounts receivable and other receivables and
unbilled revenues on a customer-by-customer basis based on specific risks identified.
The Company considers a financial asset in default when contractual payments are considered past due and at
risk depending on the various economic and asset-specific factors, or if it becomes probable that a customer will
enter bankruptcy or other insolvency proceedings.
Classification and measurement of financial liabilities
All financial liabilities of the Company are initially measured at fair value, and where applicable, adjusted for
transaction costs and subsequently measured at amortized cost using the effective interest method.
All interest-related charges are reported in the consolidated statements of operations within financial expenses.
EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is calculated by dividing the net earnings (loss) attributable to the holders of the
Subordinate Voting Shares and Class B multiple voting shares (the “Multiple Voting Shares“) (together the
“Shares”) by the weighted average number of Shares outstanding during the period.
Diluted earnings (loss) per share is determined using the treasury stock method to evaluate the dilutive effect of
stock options and deferred, restricted and performance share units.
GOVERNMENT ASSISTANCE
Certain subsidiaries are eligible for government assistance programs, in different jurisdictions, in the form of
grants 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. The government assistance is treated as a reduction in the cost of the qualifying expenditure.
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
Company. Management estimates the amounts to be received under these programs. Final government
assistance received following examinations and audits could be different from amounts recorded.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 16
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
PROPERTY AND EQUIPMENT (“P&E”)
Property and equipment are recorded at cost and amortized over their estimated useful lives, using the following
methods:
Method
Rates
Furniture, fixtures and equipment
Declining balance
20 %
Computer equipment
Declining balance
30 %
Leasehold improvements
Straight line
Over the term of the lease
The residual value, depreciation method and useful life of each asset are reviewed at least once a year, at the
reporting date.
LEASES
The Company as a lessee
For any new contracts entered into, the Company 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 identified asset (the underlying
asset) for a period of time in exchange for consideration”.
Measurement and recognition of leases as a lessee
At lease commencement date, the Company 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 Company, 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 Company 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 lease term
includes consideration of an option to renew or to terminate if the Company is reasonably certain to exercise
that option. The Company also assesses the right-of-use asset for impairment when such indicators exist.
At the commencement date, the Company 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 Company’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.
Payments related to non-lease components, mostly made of common area maintenance fees, are excluded
from the lease liabilities and are recorded as an expense over the lease term.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest,
which are recorded as part of net financial expenses. 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 17
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
The Company 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.
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 Company
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 Company amortizes its intangible assets using the straight-line method as follows :
Method
Period
Customer relationships
Straight line
3 - 10 years
Non-compete agreements
Straight line
3 - 10 years
Software
Straight line
3 years
Tradenames
-
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 arises on business acquisitions accounted for under the acquisition method and represents the excess
of consideration transferred over the fair value of the Company's share of the net identifiable assets acquired
and liabilities assumed of the acquired entity 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 Company'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 Company 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 18
3. MATERIAL 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.
Reversal of Impairment
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 as well as employee compensation related to business acquisitions and severance resulting from
integrations and significant changes in management structure.
Reorganization costs, 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.
PROVISIONS
Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past
event, it is probable that an outflow of 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 Company’s provisions may
consist of litigation and claim provisions arising in the ordinary course of business.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 19
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
INCOME TAXES
Income taxes are accounted for using the liability method of accounting.
Current income taxes are recognized with respect to the amounts expected to be paid or recovered under the
tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred income tax
assets and liabilities are determined based on deductible or taxable temporary differences between the amounts
reported for financial statement purposes and tax values of the assets and liabilities using enacted or
substantively enacted tax rates that will be in effect for the year in which the differences are expected to be
recovered or settled. Deferred income tax assets and liabilities are recognized in earnings, other comprehensive
income or in equity based on the classification of the item to which they relate.
Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or
liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit
or loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not
reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences
arising on the initial recognition of goodwill.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on
different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets
and liabilities will be realized simultaneously.
A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the
extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
SHARE CAPITAL
Subordinate Voting Shares and Multiple Voting Shares are classified as equity. Incremental costs directly
attributable to the issuance of shares are recognized as a deduction from equity, net of any tax effects.
Normal course issuer bid (“NCIB”)
When the Company purchases its Subordinate Voting 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.
SHARE-BASED COMPENSATION PLANS
Share purchase plan
The Company operates a share purchase plan for eligible employees of the Company. Under this plan, the
Company matches the contributions made by employees up to a maximum percentage of the employee's gross
salary. The Company’s contributions to the plan are recognized as salaries within cost of revenues and selling,
general and administrative expenses.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 20
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
Long-term incentive plan ("LTIP") and share unit plan (“SUP”), (together the “Incentive Plans”)
The Company operates a LTIP for eligible employees and directors of the Company 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 also operates a SUP for eligible employees of the Company. Under this plan, eligible employees
may 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 SUP also provides for
the grant of discretionary DSUs and/or RSUs. The Board, at its discretion, may elect to settle DSUs and RSUs
in cash.
The Company accounts for all grants as equity-settled awards as the Board intends to settle awards issued
under the LTIP through the issuance of share capital and under the SUP through Subordinate Voting Shares
purchased on the TSX.
The share-based payment expense is recognized in selling, general and administrative expenses with a
corresponding adjustment through contributed surplus over the vesting period based on the grant date fair value
of the award. 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 respective vesting period.
For stock options, the grant date fair value is measured using the Black-Scholes option pricing model. 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.
For RSUs and DSUs, the grant date fair value is measured at the fair value of the underlying Subordinate Voting
Share as at the grant date. For bonus DSUs/RSUs under the SUP, 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 share-based
payments within selling, 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.
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 is made by the Board.
When DSUs, RSUs and PSUs are settled, the recorded fair value of the award is removed from contributed
surplus and credited to share capital.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 21
3. MATERIAL 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 Company manages and monitors its operations, the nature of each CGU’s operations, and the
major customer markets they serve. As such, the Company 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 operating segments – The Company uses judgment in the determination of operating
segments for financial reporting and disclosure purposes. The Company 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 for fixed-fee and time and material arrangements applying the input method – The
Company recognizes revenues from arrangements applying the input method which can extend over more than
one reporting period. Revenue from these fixed-fee arrangements is recognized over time based on a measure
of progress using the Company’s best estimate of the total expected labour costs, and the related risks
associated with completing the service. The determination of total expected labour costs to complete a service is
based on estimates that can be affected by a variety of factors, including but not limited to, changes in the scope
of the contract, delays in reaching milestones, changes in labour mix and rates, previously unidentified
complexities in service delivery, or 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 Company's
business practices as well as its historical experience, and is tightly linked to detailed project management
processes and controls. The information provided by the project managers combined with a knowledgeable
assessment of technical complexities and risks are used in estimating the percentage complete.
Impairment of long-lived assets – The Company’s impairment test for goodwill is based on internal estimates of
its individual CGUs’ recoverable amounts determined as the greater of value in use and fair value less costs of
disposal. Value in use represents the present value of the future cash flows expected to be derived from the
CGU from its continued use. The fair value less cost of disposal represents the price that would be received to
sell the CGU in an orderly transaction between market participants at the measurement date under current
market conditions, less incremental costs directly attributable to disposing of the CGU, excluding finance costs
and income tax expense.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 22
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
Key assumptions of the individual CGUs’ value-in-use include forecasted revenues, cost of revenues, SG&A
expenses and other non-cash adjustments applied in the determination of the Company’s three year net
operating cash flow forecast, estimated long-term growth rates used to extrapolate the three year net operating
cash flow forecast and the pre-tax value weighted average cost of capital (“WACC”) applied in the determination
of the present value of the net operating cash flow forecast.
Key assumptions of the individual CGUs’ fair value less cost of disposal include estimated revenues, cost of
revenues, SG&A expenses and other non-cash adjustments applied in the determination of the Company’s
forecasted Adjusted EBITDA (as defined in note 26) and an implied market multiple applied to forecasted
Adjusted EBITDA.
Changes in these key assumptions can have a material impact on the recoverable amount calculated and
ultimately the amount of any goodwill impairment recognized. Refer to note 9 for additional information on the
assumptions used.
Business acquisitions – The fair values allocated to identifiable intangible assets acquired as part of a business
acquisition are based on management assumptions, including assumptions that would be made by market
participants acting in their economic best interest. The Company develops the fair value of identifiable intangible
assets acquired by using appropriate valuation techniques which are generally based on discounted future
expected cash flows. Key assumptions applied in the determination of the acquisition date fair values of
identifiable intangible assets acquired as part of a business acquisition include forecasted cash flows attributable
to the asset, discount rates and, when applicable, attrition 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.
ACCOUNTING STANDARD AMENDMENTS EFFECTIVE FOR THE YEAR ENDED MARCH 31, 2024
The following amendments to existing standards were adopted by the Company on April 1, 2023:
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 Company has updated its accounting policy information disclosures in these annual consolidated financial
statements for the year ended March 31, 2024.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 23
3. MATERIAL 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
amendment of IAS 8 had no impact on the Company’s annual consolidated financial statements for the year
ended March 31, 2024.
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
Company has updated its disclosures in these annual consolidated financial statements for the year ended
March 31, 2024. The adoption of these amendments resulted in a $4,907,000 gross-up presentation of the lease
liability deferred tax asset and right-of-use deferred tax liability as at March 31, 2023, for note disclosure
purposes, with no impact on the net amount of deferred tax liability recognized.
FUTURE ACCOUNTING STANDARDS CHANGES
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 Company. 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 Company’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. On October 31, 2022, the IASB issued Non-current liabilities with covenants (Amendment to IAS 1) to
clarify 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 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 24
3. MATERIAL ACCOUNTING POLICIES (CONT’D)
IFRS 18 - Presentation and Disclosures in Financial Statements
On April 9, 2024, the IASB published the new IFRS 18 – Presentation and Disclosures in Financial Statements
that will replace IAS 1 – Presentation of Financial statements.
IFRS 18 covers four main areas:
• Introduction of defined subtotals and categories in the statement of profit or loss
• Introduction of requirements to improve aggregation and disaggregation
• Introduction of disclosures about management-defined performance measures (MPMs) in the notes to the
financial statements
• Targeted improvements to the statement of cash flows by amending IAS 7 – Statement of Cash Flows
IFRS 18 applies retrospectively and is effective for annual periods beginning on or after January 1, 2027, with
earlier application permitted. Management is currently evaluating the impact of the amendment on its
consolidated financial statements.
4. 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 11).
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 is recognized as employee compensation on business acquisition, over three
years (note 20).
The deferred share consideration is recognized as share-based compensation to an employee, over three years
(note 14).
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 25
4. BUSINESS COMBINATIONS (CONT'D)
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”).
As a result of the Earn-out Amendment, a contingent consideration liability in the amount of $7,037,000
(US$5,202,000), representing the portion payable in cash, and contributed surplus in the amount of $2,120,000,
representing the portion to be settled in shares, for a total expense 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 (note 20).
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 and liabilities assumed, and the purchase consideration’s valuation were
completed on March 31, 2023.
On March 31, 2024, management’s best estimate of the earn-out settlement amount was reviewed, resulting in
a recovery of $3,827,000, in aggregate, which was recorded in business acquisition, integration and
reorganization costs (note 20), with a corresponding adjustment to contingent consideration liability and
contributed surplus.
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 26
4. 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
2,798
Accounts receivable and other receivables
3,552
Unbilled revenue
1,301
Prepaids
159
7,810
Non-current assets
Other assets
2
Property and equipment
55
Right-of-use assets
135
Intangibles (note 7)
24,070
Goodwill (note 8)
13,696
Total assets acquired
45,768
Current liabilities
Accounts payable and accrued liabilities
4,255
Deferred revenue
945
Current portion of lease liabilities
71
5,271
Non-current liabilities
Lease liabilities
64
Deferred tax liabilities
6,398
Total liabilities assumed
11,733
Net assets acquired
34,035
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
Company's existing business. The Company does not expect the goodwill to be deductible for income tax
purposes.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 27
4. 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
17,430
Issuance of 1,867,262 Subordinate Voting Shares (note 13)
5,552
Balance of purchase payable with a nominal value of
US$9,345,000 ($12,028,000) (note 11)
11,053
Total consideration transferred
34,035
Datum's contribution to the Company’s 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 Company 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 28
5. ACCOUNTS RECEIVABLE AND OTHER RECEIVABLES
As at
March 31,
2024
2023
$
$
Trade accounts receivable, net of allowance for estimated credit loss
98,346
90,007
Other receivables
462
2,446
98,808
92,453
6. PROPERTY AND EQUIPMENT
As at
March 31, 2024
March 31, 2023
Furniture,
fixtures &
equipment
Computer
equipment
Leasehold
improvements
Total
Furniture,
fixtures &
equipment
Computer
equipment
Leasehold
improvements
Total
$
$
$
$
$
$
$
$
Opening cost
1,725
6,792
8,081
16,598
1,874
4,925
8,494
15,293
Additions
174
550
22
746
89
1,321
326
1,736
Additions through business
acquisitions (note 4)
—
—
—
—
—
55
—
55
Disposals / retirements
(325)
—
(2,125) (2,450)
(325)
(13)
(758) (1,096)
Foreign currency translation
adjustment
(2)
17
4
19
87
504
19
610
Ending cost
1,572
7,359
5,982
14,913
1,725
6,792
8,081
16,598
Opening accumulated
depreciation
651
3,829
3,394
7,874
448
2,083
2,350
4,881
Depreciation expense
448
1,884
1,006
3,338
280
1,344
1,183
2,807
Impairment
260
—
1,296
1,556
164
5
605
774
Disposals / retirements
(325)
—
(2,125) (2,450)
(325)
(13)
(758) (1,096)
Foreign currency translation
adjustment
1
4
—
5
84
410
14
508
Ending accumulated
depreciation
1,035
5,717
3,571
10,323
651
3,829
3,394
7,874
Net carrying amount
537
1,642
2,411
4,590
1,074
2,963
4,687
8,724
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 29
7. LEASES
Right-of-use assets
The following right-of-use assets relate to right-of-use real estate:
As at
March 31,
2024
2023
$
$
Beginning balance
9,353
15,146
Additions
557
428
Depreciation
(2,575)
(3,729)
Impairment (a)
(1,272)
(2,923)
Derecognition (b)
(448)
—
Exchange rate effect
(9)
431
Net carrying amount
5,606
9,353
(a) During the year ended March 31, 2024, the Company recorded impairment charges against certain real estate right-of-use assets, in the
context of an on-going 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. As a result, an impairment
charge of $1,272,000 (2023 - $1,984,000) is presented in selling, general and administrative expenses and nil (2023 - $939,000) is
presented in integration costs.
(b) During the year ended March 31, 2024, the Company 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 short-term and
a long-term lease receivable, included in accounts receivable and other receivables and other assets, respectively, in the aggregate amount
of $1,033,000 (2023 - $103,000).
Lease liabilities
As at
March 31,
2024
2023
$
$
Beginning balance
18,516
21,263
Additions
557
428
Lease payments
(5,617)
(4,478)
Lease interest
664
825
Remeasurement
(2,593)
—
Exchange rate effect
(7)
478
Ending balance
11,520
18,516
Current portion
4,136
3,873
7,384
14,643
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 30
7. LEASES (CONT’D)
Contractual lease payments under the lease liabilities as at March 31, 2024 are as follows:
As at
March 31, 2024
$
Less than one year
4,559
One to two years
2,750
Two to five years
3,981
More than five years
1,325
Total undiscounted lease payments at period end
12,615
Amounts recognized in net loss
Year ended
March 31,
2024
2023
$
$
Interest on lease liabilities
664
825
Total cash outflows for leases, including non-lease components, for the years ended March 31, 2024 and 2023
were $7,209,000 and $6,801,000, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 31
8. INTANGIBLES
As at
March 31, 2024
March 31, 2023
Customer
relationships
Software
Tradenames (a)
Non-compete
agreements
Total
Customer
relationships
Software
Tradenames (a)
Non-compete
agreements
Total
$
$
$
$
$
$
$
$
$
$
Opening cost
163,208
15,812
2,841
7,733
189,594
145,966
4,989
—
6,886
157,841
Additions,
purchased
—
41
—
—
41
—
93
—
—
93
Additions
through
business
acquisition
(note 4)
—
—
—
—
—
11,525
9,782
2,703
515
24,525
Additions,
internally
generated
—
—
—
—
—
—
756
—
—
756
Disposals /
retirements
—
—
—
—
—
—
(454)
—
—
(454)
Foreign
currency
translation
adjustment
89
13
3
5
110
5,717
646
138
332
6,833
Ending cost
163,297
15,866
2,844
7,738
189,745
163,208
15,812
2,841
7,733
189,594
Opening
accumulated
amortization
74,135
6,279
—
4,845
85,259
49,958
2,741
—
3,215
55,914
Amortization
17,304
4,279
—
1,512
23,095
22,183
3,843
—
1,471
27,497
Disposals /
retirements
—
—
—
—
—
—
(454)
—
—
(454)
Foreign
currency
translation
adjustment
91
20
—
7
118
1,994
149
—
159
2,302
Ending
accumulated
amortization
91,530
10,578
—
6,364
108,472
74,135
6,279
—
4,845
85,259
Net carrying
amount
71,767
5,288
2,844
1,374
81,273
89,073
9,533
2,841
2,888
104,335
(a) Tradenames are allocated to the Data Solutions CGU for the purpose of impairment testing.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 32
9. GOODWILL
As at
March 31, 2024
Canada
France
EPM
ERP
Data
Solutions (b)
Not
allocated
Total
$
$
$
$
$
$
$
Beginning balance
78,405
136
9,592
63,867
14,393
—
166,393
Foreign currency translation
adjustment
—
(1)
11
74
16
—
100
Net carrying amount
78,405
135
9,603
63,941
14,409
—
166,493
As at
March 31, 2023
Canada
France
EPM
ERP
Data
Solutions (b)
Not
allocated
Total
$
$
$
$
$
$
$
Beginning balance
77,135
128
8,852
29,005
—
30,968
146,088
Business acquisition (note 4)
1,270
—
—
—
13,696
(1,049)
13,917
Allocation (a)
—
—
—
29,919
—
(29,919)
—
Foreign currency translation
adjustment
—
8
740
4,943
697
—
6,388
Net carrying amount
78,405
136
9,592
63,867
14,393
—
166,393
(a) During the year ended March 31, 2023, upon completion of the purchase price allocation, the Company 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 Company completed annual impairment tests as at March 31, 2024 and 2023 and concluded that 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.
The recoverable amount of each CGU was determined based on the value-in-use calculations, with the
exception of the ERP CGU, whose recoverable amount, for the year ended March 31, 2023, was determined
based on the fair value less costs of disposal method. The value-in-use calculations covered 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 pre-tax WACC reflecting current market
assessments of the time value of money and the CGU-specific risks.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 33
9. GOODWILL (CONT’D)
Key assumptions used in impairment testing by CGU are as follows:
As at
March 31, 2024
Canada
France
EPM
ERP
Data
Solutions
%
%
%
%
%
Pre-tax WACC
13.8
19.4
17.7
17.8
18.9
Long-term growth rate of net operating cash
flows (c)
1.8
1.4
1.9
1.9
1.9
As at
March 31, 2023
Canada
France
EPM
ERP
Data
Solutions
%
%
%
%
%
Pre-tax WACC
14.3
20.2
18.4
N/A
19.1
Long-term growth rate of net operating cash
flows (c)
1.9
1.5
1.8
N/A
1.8
(c) The long-term growth rate is based on published industry research.
Varying the key assumptions in the values of the recoverable amount calculations, individually, as indicated
below, for the years ended March 31, 2024 and 2023, assuming all other variables remain constant, would result
in the recoverable amounts being equal to the carrying amounts.
As at
March 31, 2024
Incremental increase
in pre-tax WACC
Incremental
decrease in long-
term growth rate of
net operating cash
flows
Basis points
Basis points
Canada
228
296
France
444
711
EPM (d)
4,078
—
ERP
323
458
Data Solutions
285
386
(d) The recoverable amount of the EPM CGU is not sensitive to its long-term growth rate assumption.
As at
March 31, 2023
Incremental increase
in pre-tax WACC
Incremental
decrease in long-
term growth rate of
net operating cash
flows
Basis points
Basis points
Canada
165
218
France
2,224
5,839
EPM
98
146
ERP (e)
N/A
N/A
Data Solutions
1,795
3,335
(e) Excluding the ERP CGU, whose recoverable amount, for the year ended March 31, 2023, was determined based on the fair value less
costs of disposal method.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 34
9. GOODWILL (CONT’D)
Furthermore, a decrease of 18% in the three year net operating cash flows would result in the recoverable
amounts being equal to the carrying amounts for the Canada and ERP CGUs (March 31, 2023 - 13% for the
Canada CGU).
Recoverable amount of the ERP CGU for the year ended March 31, 2023
For the year ended March 31, 2023, the Company 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 26), which considers financial forecasts approved by management (level
3 of the fair value hierarchy as per note 25). The key assumptions of the individual CGUs’ fair value less cost of
disposal include estimated revenues, cost of revenues, SG&A expenses and other non-cash adjustments
applied in the determination of forecasted Adjusted EBITDA, and an implied market 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 were 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.
Incremental decrease
in Adjusted EBITDA
margin
Incremental decrease
in Adjusted EBITDA
multiple
Basis points
Multiple
ERP
231
2.4
10. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
As at
March 31,
2024
2023
$
$
Trade payable
41,751
53,357
Accrued compensation
27,458
33,835
Consumption taxes payable
5,708
4,071
74,917
91,263
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 35
11. LONG-TERM DEBT
The following table summarizes the Company’s long-term debt:
As at
March 31,
2024
2023
$
$
Senior secured revolving credit facility (the "Credit Facility") (a)
81,073
82,512
Secured loans (b)
8,537
13,192
Subordinated unsecured loans (c)
20,000
20,000
Balance of purchase price payable with a nominal value of $8,436,000 (US$6,230,000)
(March 31, 2023 - $12,641,000 (US$9,345,000)), non-interest bearing (4.4% effective
interest rate), payable in annual installments of $4,218,000 (US$3,115,000), maturing
on July 1, 2025
8,172
11,993
Unamortized transaction costs (net of accumulated amortization of $215,000 and
$1,184,000)
(400)
(507)
117,382
127,190
Current portion of long-term debt
12,687
12,808
104,695
114,382
(a) On December 22, 2023, the Company entered into an Amended and Restated Credit Agreement (the
“Agreement”). The Agreement increased the existing available Credit Facility to a maximum amount of
$140,000,000 which can be increased under an accordion provision to $190,000,000, under certain conditions,
and can be drawn in Canadian dollars and the equivalent amount in U.S. dollars. It is available in prime rate
advances, CORRA advances, SOFR advances and letters of credit of up to $2,500,000.
The advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.75% to
1.75%, or CORRA or SOFR rates, plus an applicable margin ranging from 2.00% to 3.00%, 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
Company is required to maintain certain financial covenants which are measured on a quarterly basis.
The Credit Facility now matures on April 1, 2026 and is renewable for additional one-year periods at the lender’s
discretion, but the term of the Credit Facility cannot exceed three years.
As at March 31, 2024, the amount outstanding under the Credit Facility includes $71,773,000 (March 31, 2023 -
$82,512,000) payable in U.S. dollars (US$53,000,000; March 31, 2023 - US$61,000,000).
The Company has an additional operating credit facility available to a maximum amount of $2,708,000
(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, 2024 and 2023.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 36
11. LONG-TERM DEBT (CONT’D)
(b) The secured loans issued by Investissement Québec to finance the Company’s refundable tax credits have
the following terms and conditions:
As at
March 31,
2024
2023
$
$
Year of related Refundable
Tax Credit
Repayable on the earlier of
the date of receipt of the
refundable tax credits
receivable and
Bearing interest at
2022
March 31, 2024
Prime rate + 1,00%
—
8,719
2023
March 31, 2025
Prime rate + 1,25%
8,537
4,473
8,537
13,192
The maximum amount that can be financed for the 2023 refundable tax credits is the lesser of 90% of the
eligible refundable tax credits and $10,670,000. The loans are secured by a first ranking hypothec on the
universality of the Company’s financed refundable tax credits receivable and a subordinated ranking hypothec
on accounts receivable and other receivables.
(c) On March 13, 2024, the Company entered into an amended agreement. The maturity of the subordinated
unsecured loans with Investissement Québec, in the amount of $20,000,000, was extended from
October 1, 2025 to October 1, 2026 and the loans are now renewable for one additional year at the lender’s
discretion. For the period up to October 1, 2025, the first $10,000,000 bears interest at fixed 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. The interest rates for the
period between October 1, 2025 to October 1, 2026 will be communicated by the lender at the latest fifteen days
prior to October 1, 2025. Once communicated, the Company will have the option to partially or fully repay the
loans, without penalties, by October 1, 2025 at the latest.
Under the terms of the loans, the Company is required to maintain compliance with certain financial covenants
which are measured on a quarterly basis.
(a)(c) The Company was in compliance with all of its financial covenants as at March 31, 2024 and 2023.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 37
12. INCOME TAXES
Income tax expense (recovery) for the year is as follows:
Year ended
March 31,
2024
2023
Current tax expense:
$
$
Current tax expense for the year
317
569
Deferred tax recovery:
Recognition of previously unrecognized tax benefits related to tax losses
—
(6,470)
Origination and reversal of temporary differences
(256)
(356)
Total deferred tax recovery
(256)
(6,826)
Total income tax expense (recovery)
61
(6,257)
The Company’s effective income tax rate differs from the combined statutory tax rate as follows:
Year ended
March 31,
2024
2023
%
$
%
$
Loss before income taxes
(16,599)
(36,354)
Company's statutory tax rate
26.5
(4,399)
26.5
(9,634)
Non-deductible share-based compensation expense
(6.7)
1,113
(3.1)
1,112
Other non-deductible and tax exempt items
3.0
(496)
(8.8)
3,198
Change in unrecognized deferred tax assets
(21.7)
3,600
0.7
(247)
Other
(1.5)
243
1.9
(686)
Effective income tax rate
(0.4)
61
17.2
(6,257)
The Company’s applicable statutory tax rate is the Canadian combined rates applicable in the jurisdictions in
which the Company operates.
Deferred income tax assets and liabilities
The amounts recognized in the consolidated statement of financial position consist of:
As at
March 31,
2024
2023
$
$
Deferred tax liabilities
(8,099)
(8,632)
Deferred tax assets
5,715
5,997
(2,384)
(2,635)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 38
12. INCOME TAXES (CONT’D)
Movements in temporary differences during the year were as follows:
As at
March 31, 2024
Opening
balance
Recognized
in earnings
Recognized in
equity
Business
acquisition
Foreign
currency
translation
adjustment
Total
$
$
$
$
$
$
Losses available for
carryforward and other tax
deductions
18,240
(8,308)
—
—
—
9,932
Lease liabilities
4,907
(1,854)
—
—
—
3,053
Deferred financing costs
484
(89)
—
—
—
395
Total deferred tax assets
23,631
(10,251)
—
—
—
13,380
Intangibles and goodwill
(16,140)
7,652
—
—
(5)
(8,493)
Tax credits and other
(7,580)
1,794
—
—
—
(5,786)
Right-of-use assets
(2,546)
1,061
—
—
—
(1,485)
Total deferred tax liability
(26,266)
10,507
—
—
(5)
(15,764)
Net carrying amount
(2,635)
256
—
—
(5)
(2,384)
As at
March 31, 2023
Opening
balance
Recognized
in earnings
Recognized in
equity
Business
acquisition
Foreign
currency
translation
adjustment
Total
$
$
$
$
$
$
Losses available for
carryforward and other tax
deductions
17,268
972
—
—
—
18,240
Lease liabilities
4,562
345
—
—
—
4,907
Deferred financing costs
576
(102)
10
—
—
484
Total deferred tax assets
22,406
1,215
10
—
—
23,631
Intangibles and goodwill
(15,439)
6,055
—
(6,519)
(237)
(16,140)
Tax credits and other
(6,659)
(921)
—
—
—
(7,580)
Right-of-use assets
(3,023)
477
—
—
—
(2,546)
Total deferred tax liability
(25,121)
5,611
—
(6,519)
(237)
(26,266)
Net carrying amount
(2,715)
6,826
10
(6,519)
(237)
(2,635)
During the year ended March 31, 2023, the Company 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 4). The recognized deferred tax asset relates to previous years' net operating losses of
the Company 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 39
12. INCOME TAXES (CONT’D)
Losses available for carryforward for which no deferred tax asset was recognized
Expiry date
Canada
$
2039
922
2040
390
2041
2,075
2042
3,516
2043
3,603
2044
802
11,308
Losses available for carryforward for which no deferred tax asset was recognized
Expiry date (a)
USA
$
2037
13,344
Indefinite
15,682
29,026
(a) Net operating losses amounting to $20,316,000, of which $13,344,000 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 $51,633,000 (with
expiry dates ranging from 2025 to 2044) and ii) net deductible temporary differences totaling approximately $18,998,000 for which no
deferred tax benefit has been recognized.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 40
13. SHARE CAPITAL
AUTHORIZED
As at March 31, 2024 and 2023, the Company’s authorized share capital consisted of 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.
NCIB
On September 13, 2023, 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 2,411,570
(previously 2,491,128) Subordinate Voting Shares, representing 5% of the Company’s public float as of the
close of markets on September 7, 2023.
The NCIB commenced on September 20, 2023 and will end on the earlier of September 19, 2024 (previously
between September 20, 2022 and 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 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 41
13. SHARE CAPITAL (CONT’D)
ISSUED
The following table presents information concerning issued share capital activity for the year ended March 31,
2024:
Subordinate Voting Shares
Multiple Voting Shares
Number of shares
$
Number of shares
$
Beginning balance
87,871,568
307,110
7,324,248
4,857
Shares issued pursuant to vesting of share-
based compensation granted on business
acquisition
622,421
1,924
—
—
Conversion of shares
50,000
33
(50,000)
(33)
Shares purchased for cancellation
(493,878)
(1,724)
—
—
Exercise of stock options
2,500
8
—
—
Settlement of DSUs
73,682
201
—
—
Settlement of RSUs
14,707
33
—
—
Ending balance
88,141,000
307,585
7,274,248
4,824
During the year ended March 31, 2024, the following transactions occurred:
• As part of the Datum Acquisition, 622,421 Subordinate Voting Shares, with a total value of $1,924,000
(US$1,438,000), reclassified from contributed surplus, were issued as settlement of the first anniversary share
consideration.
• 50,000 Class B multiple voting shares (“Multiple Voting Shares”) with a carrying value of $33,000 were
converted into 50,000 Subordinate Voting Shares by a director of the Company.
• 493,878 Subordinate Voting Shares were purchased for cancellation under the Company's NCIB for a total
cash consideration of $953,000 and a carrying value of $1,724,000. The excess of the carrying value over the
purchase price in the amount of $771,000 was recorded as a reduction to deficit.
• 2,500 stock options were exercised and 2,500 Subordinate Voting Shares were issued with a carrying value of
$8,000, for cash consideration of $6,000, with $2,000 reclassified from contributed surplus.
• 73,682 DSUs were settled and 73,682 Subordinate Voting Shares were issued with a carrying value of
$201,000, which was reclassified from contributed surplus.
• 14,707 RSUs were settled and 14,707 Subordinate Voting Shares were issued with a carrying value of
$33,000, which was reclassified from contributed surplus.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 42
13. SHARE CAPITAL (CONT’D)
The following table presents information concerning issued share capital activity for the year ended March 31,
2023:
Subordinate Voting Shares
Multiple Voting Shares
Number of shares
$
Number of shares
$
Beginning balance
85,554,000
300,901
7,171,616
4,321
Shares issued pursuant to vesting of share-
based compensation granted on business
acquisitions
738,382
1,708
—
—
Shares issued in consideration of the Datum
Acquisition (note 4)
1,867,262
5,528
—
—
Shares issued in consideration of the
acquisition of Trafic 3W inc. (note 4)
83,449
276
—
—
Shares purchased for cancellation
(371,525)
(1,303)
—
—
Exercise of stock options
—
—
152,632
536
Ending balance
87,871,568
307,110
7,324,248
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 4), 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 4), 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.
• 371,525 Subordinate Voting Shares were purchased for cancellation 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 43
14. SHARE-BASED PAYMENTS
Share purchase plan
Under the Company’s share purchase plan, eligible employees may contribute up to 10% of their annual gross
salary and the Company matches contributions made by employees up to a maximum percentage, depending
on the position held by the employee, of the employee’s gross salary. The employee’s and the Company’s
contributions are remitted to an independent administrative agent who purchases Subordinate Voting Shares on
the TSX on behalf of the employee.
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. The LTIP provides 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. Vesting is
generally four years from the date of grant and 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, 2024
March 31, 2023
Number of stock
options
Weighted
average exercise
price (CAD)
Number of stock
options
Weighted
average exercise
price (CAD)
$
$
Beginning balance
3,400,696
3.23
3,079,598
3.19
Granted
—
—
626,230
3.25
Forfeited
(57,250)
3.32
(67,500)
3.60
Expired
(22,750)
3.71
(85,000)
3.65
Exercised
—
—
(152,632)
2.27
Ending balance
3,320,696
3.22
3,400,696
3.23
Exercisable at year end
1,932,064
3.34
1,464,014
3.42
Year ended
March 31, 2024
March 31, 2023
Number of stock
options
Weighted
average exercise
price (USD)
Number of stock
options
Weighted
average exercise
price (USD)
$
$
Beginning balance
1,084,175
2.55
1,004,484
2.63
Granted
—
—
265,125
2.50
Forfeited
(52,100)
2.44
(94,475)
2.91
Expired
(13,000)
3.23
(90,959)
2.92
Exercised
(2,500)
1.67
—
—
Ending balance
1,016,575
2.55
1,084,175
2.55
Exercisable at year end
509,525
2.66
284,400
2.81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 44
14. SHARE-BASED PAYMENTS (CONT’D)
Included in the 1,932,064 (2023 - 1,464,014) exercisable stock options issued in Canadian dollars, 505,264
(2023 - 505,264) stock options are available to purchase Multiple Voting Shares as at March 31, 2024. No
further stock options to purchase Multiple Voting Shares may be issued as per the stock options plan.
During the year ended March 31, 2024, the weighted average share price at the date of exercise of stock
options was $2.45 (2023 - $2.66).
The Company did not grant stock options during the year ended March 31, 2024.
On June 21, 2022, the Company issued 626,230 and 265,125 stock options, to purchase a total of 891,355
Subordinate Voting Shares, at grant date fair values of $1.38 and US$1.06, respectively.
The assumptions used to determine the 2023 stock options grant date fair values using the Black-Scholes stock
option pricing model were as follows:
Year ended
March 31, 2023
Weighted average assumptions
Share price
$3.25
Exercise price
$3.25
Risk-free interest rate
3.50 %
Expected volatility (a)
35.0 %
Dividend yield
—
Expected option life (years)
6.6
Vesting conditions – time (years)
3.3
(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, 2024
March 31, 2023
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
730,264
4.48
735,264
5.44
2.56 to 2.96
295,000
1.63
295,000
2.63
2.97 to 3.30
1,316,432
7.12
1,366,432
8.15
3.31 to 3.95
550,000
4.47
564,000
5.48
3.96 to 4.55
429,000
4.59
440,000
5.59
3,320,696
5.29
3,400,696
6.31
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 45
14. SHARE-BASED PAYMENTS (CONT’D)
As at
March 31, 2024
March 31, 2023
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
165,000
6.23
175,000
7.23
2.26 to 2.75
624,825
7.15
665,425
8.20
2.76 to 3.44
226,750
4.96
243,750
5.96
1,016,575
6.52
1,084,175
7.54
DSUs
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. 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.
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.
The following table presents information concerning the outstanding number of DSUs for the respective years:
Year ended
March 31,
2024
2023
Beginning balance
666,974
439,521
Granted to non-employee directors
280,100
227,453
Granted to employees
304,688
—
Settled
(73,682)
—
Ending balance
1,178,080
666,974
During the year ended March 31, 2024, 280,100 (2023 - 227,453) fully vested DSUs, in aggregate, were granted
under the LTIP to non-employee directors of the Company at a weighted average grant date fair value of $2.01
(2023 - $2.55), per DSU, for an aggregate fair value of $563,000 (2023 - $579,000).
During the year ended March 31, 2024, 304,688 DSUs, in aggregate, were granted under the SUP at a grant
date fair value of $2.30, per DSU, for an aggregate fair value of $701,000. Share-based compensation expense
was recorded as at March 31, 2023 as the related services were performed and the performance conditions
were met at that date.
During the year ended March 31, 2024, 73,682 DSUs issued under the LTIP were settled through the issuance
of 73,682 Subordinate Voting Shares, with a carrying value of $201,000.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 46
14. SHARE-BASED PAYMENTS (CONT’D)
As at March 31, 2024, included in the 1,178,080 DSUs are 873,392 DSUs issued under the LTIP and 304,688
DSUs issued under the SUP.
RSUs
Under the Incentive Plans, the Board, subject to the provisions of the Incentive Plans and such other terms and
conditions, may grant RSUs to obtain Subordinate Voting Shares to eligible employees (and directors per the
LTIP) of the Company. Unless otherwise specified by the Board at the time of grant, RSUs granted under the
LTIP vest on the third anniversary of the date of grant and discretionary RSUs granted under the SUP vest on
December 15th of the second calendar year following the year in which the grant occurs. Under both the LTIP
and SUP, RSUs will be settled as soon as practicable following vesting.
The following table presents information concerning the outstanding number of RSUs for the respective years:
Year ended
March 31,
2024
2023
Beginning balance
181,498
181,498
Granted
349,700
—
Settled
(181,498)
—
Ending balance
349,700
181,498
During the year ended March 31, 2024, 349,700 RSUs, in aggregate, vesting over three years from the date of
grant, were granted under the SUP at an average grant date fair value of $2.23, per RSU, for an aggregate fair
value of $780,000.
During the year ended March 31, 2024, 181,498 RSUs issued under the LTIP were settled. 14,707 RSUs were
settled through the issuance of 14,707 Subordinate Voting Shares, with a carrying value of $33,000. The
balance was settled for a total cash consideration of $371,000.
As at March 31, 2024, all 349,700 RSUs were issued under the SUP.
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. The terms and
conditions of each PSU 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
March 31,
2024
2023
Beginning balance
855,383
332,263
Granted
1,349,752
528,120
Forfeited
(48,608)
(5,000)
Ending balance
2,156,527
855,383
During the year ended March 31, 2024, 1,349,752 (2023 - 528,120) PSUs, in aggregate, vesting three years
from the date of grant, were granted at a grant date fair value of $2.30 (2023 - $3.25), per PSU, for an aggregate
fair value of $3,104,000 (2023 - $1,716,000).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 47
14. SHARE-BASED PAYMENTS (CONT’D)
As at March 31, 2024, all 2,156,527 PSUs were issued under the LTIP.
Share-Based Compensation expense
Total share-based compensation expense for the years ended March 31, 2024 and 2023 is summarized as
follows:
Year ended
March 31,
2024
2023
$
$
Stock options
594
1,262
Share purchase plan – employer contribution
1,394
1,372
Share-based compensation granted on business acquisitions (a)
2,099
2,995
DSUs
600
1,250
RSUs
363
—
PSUs
1,207
1,233
6,257
8,112
(a) Excludes the portion of the contingent consideration payable to be settled in shares (note 20).
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 Datum Acquisition, an amount of
$2,099,000 (2023 - $2,644,000);
• In relation to the Subordinate Voting Shares to be issued as part of the acquisition of Matricis Informatique
Inc., an amount of nil (2023 - $100,000); and
• In relation to the Subordinate Voting Shares to be issued as part of the acquisition of Travercent LLC, an
amount of nil (2023 - $251,000).
15. COMMITMENTS AND CONTINGENCIES
Contingencies
From time to time, the Company 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 Company’s financial position and results of operations. Claims for which there is a probable
unfavorable outcome are recorded in provisions.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 48
15. COMMITMENTS AND CONTINGENCIES (CONT’D)
Operating commitments
Operating expenditures contracted for at the end of the reporting period but not yet incurred are as follows:
Year ended
March 31, 2024
Technology licenses, infrastructure and other
Total
$
2025
6,725
2026
3,096
2027
1,660
2028
1,009
Thereafter
2,070
14,560
16. RELATED PARTIES
Ultimate controlling party
As at March 31, 2024, the holders of Multiple Voting Shares, directly or indirectly, collectively owned or
exercised control over Subordinate Voting Shares and Multiple Voting Shares representing approximately 45.6%
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 Company’s Executive Committee and certain other key
management personnel. Key management of Alithya participate in the share purchase plan and the Incentive
Plans. The compensation paid or payable to directors and to key management for services is shown below:
Year ended
March 31,
2024
2023
$
$
Director compensation, and key management salaries and benefits (a)
4,100
4,101
Share-based compensation
2,106
3,081
6,206
7,182
(a) Salaries and benefits include short-term incentive compensation.
In addition to the above amounts, the Company is committed to pay incremental benefits to certain members of
key management up to $6,433,000 (2023 - $6,624,000) in the event of a change of control and/or termination
without cause.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 49
16. RELATED PARTIES (CONT’D)
Operating transactions with key management personnel
In the normal course of operations, the Company 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, 2024, the entity was no longer
a related party as its controlling shareholder ceased to be a director of the Company on September 14, 2022.
Year ended
March 31,
2024
2023
$
$
Revenues (a)
—
6,811
(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.
17. EARNINGS (LOSS) PER SHARE
Year ended
March 31,
2024
2023
$
$
Net loss
(16,660)
(30,097)
Weighted average number of Shares outstanding
95,527,385
94,178,549
Basic and diluted loss per share
(0.17)
(0.32)
The potentially dilutive outstanding equity instruments, which are DSUs, PSUs and options mentioned in Note
14 granted under the LTIP and certain shares to be issued as part of anniversary payments related to business
acquisition, 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 50
18. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
The changes in the Company’s liabilities arising from financing activities can be classified as follows:
As at
March 31, 2024
March 31, 2023
Contingent
consideration
Long-term
debt
Total
Contingent
consideration
Long-term
debt
Total
$
$
$
$
$
$
Beginning balance
7,037
127,190
134,227
—
106,676
106,676
Repayment
—
(159,110)
(159,110)
—
(97,518)
(97,518)
Proceeds
—
148,340
148,340
—
98,682
98,682
Total cash flow
—
(10,770)
(10,770)
—
1,164
1,164
Business
acquisition (note 4)
—
—
—
7,037
11,053
18,090
Changes in
estimate
(note 4, 20)
(2,962)
—
(2,962)
—
—
—
Amortization of
finance costs
—
426
426
—
430
430
Interest accretion
on balances of
purchase payable
—
384
384
—
784
784
Impacts of foreign
exchange
7
152
159
—
7,083
7,083
Total non-cash
(2,955)
962
(1,993)
7,037
19,350
26,387
Ending balance
4,082
117,382
121,464
7,037
127,190
134,227
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 51
19. ADDITIONAL INFORMATION ON CONSOLIDATED LOSS
The following table provides additional information on the consolidated loss:
Year ended
March 31,
2024
2023
$
$
Expenses by Nature
Employee compensation and subcontractor costs
431,543
469,210
Government assistance in the form of tax credits (a)
(8,467)
(10,686)
Licenses and telecommunications
13,915
12,692
Professional fees
9,010
7,496
Other expenses
15,910
15,979
Impairment of property and equipment and right-of-use assets (note 6,7) (b)
1,462
2,758
Depreciation of property and equipment
3,338
2,807
Depreciation of right-of-use assets
2,575
3,729
469,286
503,985
Expenses by Function
Cost of revenues
341,815
370,927
Selling, general and administrative expenses
121,558
126,522
Depreciation
5,913
6,536
469,286
503,985
(a) Tax credits are included in cost of revenues.
(b) Includes derecognition of right-of-use assets, remeasurement of lease liabilities and certain costs related to lease termination.
20. BUSINESS ACQUISITION, INTEGRATION AND REORGANIZATION COSTS
Year ended
March 31,
2024
2023
$
$
Acquisition costs (a)
263
1,554
Integration costs (b)
2,096
2,189
Reorganization costs (c)
4,377
4,582
Employee compensation on business acquisition (note 4) (d)
475
597
Contingent consideration (note 4) (e)
(3,827)
9,157
3,384
18,079
(a) The acquisition costs consisted mainly of professional fees incurred in relation to business acquisitions (note 4).
(b) For the year ended March 31, 2024, integration costs referred mainly to retention bonuses and common area expenses on vacated
premises in relation to business acquisitions (2023 - mostly for $939,000 for impairment of right-of-use assets previously acquired as part of
business combinations (note 7)).
(c) Reorganization costs consisted of employee termination costs.
(d) Employee compensation on business acquisition included deferred cash consideration from the Datum Acquisition (note 4).
(e) Contingent consideration includes recoveries from changes in the estimated amount payable of $(2,962,000) (2023 - expenses of
$7,037,000) related to the portion payable in cash and $(865,000) (2023 - expenses of $2,120,000) related to the portion to be settled in
shares as per the earn-out consideration of the Datum Acquisition (note 4).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 52
21. NET FINANCIAL EXPENSES
The following table summarizes net financial expenses:
Year ended
March 31,
2024
2023
$
$
Interest on long-term debt
10,831
7,087
Interest on lease liabilities
664
825
Amortization of finance costs
426
430
Interest accretion on balances of purchase price payable
384
784
Financing fees
220
558
Interest income
(668)
(349)
11,857
9,335
22. SUPPLEMENTARY CASH FLOW INFORMATION
Changes in non-cash working capital items are as follows :
As at
March 31,
2024
2023
$
$
Accounts receivable and other receivables
(6,243)
15,750
Unbilled revenues
8,496
(4,482)
Tax credits receivable
1,168
(1,606)
Prepaids
614
(940)
Other assets
(213)
103
Accounts payable and accrued liabilities
(17,054)
(6,159)
Deferred revenues
2,988
(366)
(10,244)
2,300
During the year ended March 31, 2024, non-cash investing and financing activities included additions to right-of-
use assets and lease liabilities in the amount of $557,000 (2023 - $293,000).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 53
23. SEGMENT AND GEOGRAPHICAL INFORMATION
The Company has three operating and reportable segments: Canada, U.S. and International.
The Company'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 capital, 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 3. The revenues and
operating income by segment exclude intersegmental revenues and cost of revenues.
The following tables present the Company's operations based on reportable segments:
Year ended
March 31, 2024
Canada
U.S.
International
Total
$
$
$
$
Revenues
277,544
192,493
21,088
491,125
Operating income by segment
32,913
32,830
2,480
68,223
Head office general and administrative expenses
40,471
Business acquisition, integration and
reorganization costs
3,384
Foreign exchange loss
102
Operating income before depreciation and
amortization
24,266
Depreciation and amortization
29,008
Operating loss
(4,742)
Year ended
March 31, 2023
Canada
U.S.
International
Total
$
$
$
$
Revenues
312,349
189,883
20,469
522,701
Operating income by segment
35,964
26,736
2,953
65,653
Head office general and administrative expenses
40,401
Business acquisition, integration and
reorganization costs
18,079
Foreign exchange loss
159
Operating income before depreciation and
amortization
7,014
Depreciation and amortization
34,033
Operating loss
(27,019)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 54
23. SEGMENT AND GEOGRAPHICAL INFORMATION (CONT’D)
Long-lived assets by geographic location
The following table presents the total net book value of the Company’s long-lived assets by geographic location:
As at
March 31,
2024
2023
$
%
$
%
Canada
123,981
48.1
138,450
47.9
U.S.
132,366
51.3
148,316
51.4
International
1,615
0.6
2,039
0.7
257,962
100.0
288,805
100.0
Information about revenues and deferred revenues
An analysis of the Company’s revenues from customers for each major service category is as follows:
Year ended
March 31, 2024
Canada
U.S.
International
Total
$
$
$
$
Strategic consulting and enterprise transformation
services - time and materials arrangements (a)
241,422
108,217
18,609
368,248
Enterprise transformation services - fixed-fee
arrangements
23,604
37,382
2,479
63,465
Business enablement services
12,518
46,894
—
59,412
277,544
192,493
21,088
491,125
Year ended
March 31, 2023
Canada
U.S.
International
Total
$
$
$
$
Strategic consulting and enterprise transformation
services - time and materials arrangements
264,542
115,145
18,263
397,950
Enterprise transformation services - fixed-fee
arrangements
34,062
25,834
2,201
62,097
Business enablement services
13,745
48,904
5
62,654
312,349
189,883
20,469
522,701
(a) Including $106,826,000 of time and materials arrangements applying the Input Method.
During the years ended March 31, 2024 and 2023, significantly all amounts included in the opening balance of
deferred revenues were recognized as revenue.
Major customer
During the year ended March 31, 2024, one Canadian client generated more than 10% of total revenues for
$52,916,000 (2023 - two Canadian clients generated individually more than 10% of total revenues for
$109,743,000). As at March 31, 2024, no customer represented more than 10% of total accounts receivable and
other receivables (2023 - one major customer amounted to $10,777,000 or 11.7%).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 55
24. REMAINING PERFORMANCE OBLIGATIONS
Remaining performance obligations relate to the Company’s performance obligations that are partially or fully
unsatisfied under signed time and materials arrangements applying the Input Method and fixed-fee
arrangements. When estimating minimum transaction prices allocated to the remaining unsatisfied, or partially
unsatisfied, performance obligations, the Company 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 the Company bills 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, 2024 is
$80,781,000 (2023 - $30,989,000) and is expected to be recognized as revenue within a weighted average of
2.7 years (2023 - 1.6 years).
25. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of cash, accounts receivable and other receivables, other assets,
accounts payable and accrued liabilities, contingent consideration and long-term debt. The Company, 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 deem 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 Company is exposed to fluctuations in interest rates with respect to its
variable rate on long-term debts. The Company's financial instruments bearing interest at variable rates are as
follows:
As at
March 31,
2024
2023
$
$
Credit Facility (note 11)
81,073
82,512
Secured loans (note 11)
8,537
13,192
89,610
95,704
On August 30, 2022, the Company 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 Company pays interest based on a fixed rate of 3.97%, and receives interest based on the actual one-month
BA/CDOR rate. The fair market value of the interest rate swap agreement as at March 31, 2024 and 2023 was
insignificant.
For the year ended March 31, 2024, the Company has determined that a reasonably possible increase or
decrease of 100 basis points in interest rates on 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 was performed on the same basis for the year ended March 31,
2023.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 56
25. FINANCIAL INSTRUMENTS (CONT’D)
Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its
financial liabilities that are settled by delivering cash or another financial asset. The Company’s activities are
financed through a combination of cash flows from operations, borrowings under the existing Credit Facility,
issuance of debt and issuance of equity instruments. In order to manage its exposure to liquidity risk, the
Company’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, 2024, the Company has an unused capacity of $58,927,000
(2023 - $37,449,000) under its Credit Facility of $140,000,000 (2023 - $125,000,000).
The following table summarizes the carrying amounts and the contractual maturities of both the interest and
principal portions of significant financial liabilities.
As at
March 31, 2024
Carrying
amount
Total
Less than 1
year
1-2 years
2-5 years
More than 5
years
$
$
$
$
$
$
Trade payable
41,751
41,751
41,751
—
—
—
Contingent consideration
4,082
4,358
—
4,358
—
—
Credit Facility
81,073
93,444
6,065
6,306
81,073
—
Secured loans
8,537
8,580
8,580
—
—
—
Subordinated unsecured loans
20,000
23,871
1,310
1,608
20,953
—
Balance of purchase price
payable
8,172
8,436
4,218
4,218
—
—
Lease liabilities
11,520
12,615
4,559
2,750
3,981
1,325
175,135
193,055
66,483
19,240
106,007
1,325
As at
March 31, 2023
Carrying
amount
Total
Less than 1
year
1-2 years
2-5 years
More than 5
years
$
$
$
$
$
$
Trade payable
53,145
53,145
53,145
—
—
—
Contingent consideration
9,157
9,565
—
8,826
739
—
Credit Facility
82,512
88,436
5,924
82,512
—
—
Secured loans
13,192
14,226
9,398
4,828
—
—
Subordinated unsecured loans
20,000
23,275
1,310
1,310
20,655
—
Balance of purchase price
payable
11,993
12,642
4,214
4,214
4,214
—
Lease liabilities
18,516
20,499
4,545
5,219
7,197
3,538
208,515
221,788
78,536
106,909
32,805
3,538
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 57
25. 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, 2024 and
2023, the Company's credit risk exposure consists mainly of the carrying amounts of cash held with major
Canadian banks, accounts receivable and other receivables, unbilled revenues and other assets. The carrying
amounts of financial assets and unbilled revenues represent the maximum credit exposure.
Impairment losses recognized in profit or loss were not significant in both 2024 and 2023.
The credit risk in respect of cash balances is minimal as they are held with reputable financial institutions.
With respect to trade accounts receivable, unbilled revenues and other assets, the Company’s credit risk
exposure is mitigated by the relative size and nature of the business carried on by such customers. Also, the
Company has a large and diversified client base from clients engaged in various industries, including banks with
high credit-ratings, government agencies, telecommunications and retails. Historically, the Company has not
made any significant write-offs.
In order to manage its exposure to credit risk and assess credit quality, the Company established a credit policy
under which collection of trade accounts receivable is a priority. Each new customer is analyzed individually for
creditworthiness before the Company enters into a contract. The financial stability and liquidity of customers are
assessed on a regular basis, which include 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 Company also limits its exposure by setting credit limits when deemed necessary.
The Company 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 Company 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, 2024 and 2023,
allowance for ECLs was not significant.
The following table provides information about the exposure to credit risk for trade accounts receivable:
As at
March 31,
2024
2023
$
$
Current
65,907
65,682
0-30 days
26,726
19,544
31-60 days
979
1,690
61-90 days
2,191
852
Over 90 days
2,543
2,239
98,346
90,007
The unbilled revenues are substantially all current in nature.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 58
25. FINANCIAL INSTRUMENTS (CONT’D)
Currency risk
The Company is exposed to foreign currency risk on financial instruments denominated in currencies which are
different from the respective functional currencies of the subsidiaries. The currency in which these financial
instruments are mainly denominated is USD. Other currencies have no significant impact on the Company’s
exposure to currency risk.
The summary quantitative data about the Company’s exposure to currency risk for the significant exchange
rates is as follow, expressed in Canadian dollars:
As at
March 31,
2024
2023
$
$
Cash
16
3,662
Accounts receivable and other receivables
901
325
Accounts payable and accrued liabilities
(1,865)
(1,449)
Contingent consideration
(4,082)
(2,120)
Intercompany receivable net of Credit Facility (Credit Facility net of intercompany
receivable)
6,252
(759)
Balance of purchase price payable
(1,721)
(2,525)
Net statement of financial position exposure
(499)
(2,866)
The following table illustrates the sensitivity of profit and equity in regards to the Company’s financial assets and
financial liabilities and the USD/Canadian dollar exchange rate ‘all other things being equal’. It assumes a +/-5%
change of the USD/Canadian dollar exchange rate for the year ended March 31, 2024 (2023: +/-13%). This
percentage has been determined based on the average market volatility of the exchange rate in the previous
twelve months. The sensitivity analysis is based on the Company’s foreign currency financial instruments held at
each reporting date.
Profit or loss
Effect in Canadian dollars
Strengthening
Weakening
As at March 31, 2024
USD
5%
Movement
(18)
18
As at March 31, 2023
USD
13%
Movement
(278)
278
Fair Value of Financial Instruments
Financial instruments recorded at fair value on the consolidated statements of financial position are classified
using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The
fair value hierarchy has the following levels:
• Level 1 - Valuation based on quoted prices observed in active markets for identical assets or liabilities.
• Level 2 - Valuation techniques based on inputs that are quoted prices of similar instruments in active markets;
quoted prices for identical or similar instruments in markets that are not active; inputs other than quoted prices
used in a valuation model that are observable for that instrument; and inputs that are derived principally from
or corroborated by observable market data by correlation or other means.
• Level 3 - Valuation techniques with significant unobservable market inputs. A financial instrument is classified
at the lowest level of the hierarchy for which a significant input has been considered in measuring fair value.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 59
25. FINANCIAL INSTRUMENTS (CONT’D)
The carrying amounts of 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 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 Company for debts of the same remaining maturities and
conditions (level 2). For both 2024 and 2023, the Company has determined that the fair values of the Credit
Facility, the secured loans, the subordinated unsecured loan and the balance of purchase price payable are not
significantly different than their carrying amounts.
The following table summarizes their carrying amounts:
As at
March 31,
2024
2023
$
$
Credit Facility
81,073
82,512
Secured loans
8,537
13,192
Subordinated unsecured loans
20,000
20,000
Balance of purchase price payable
8,172
11,993
117,782
127,697
26. CAPITAL DISCLOSURES
The Company's capital consists of cash, long-term debt, contingent consideration and total shareholders’ equity.
The Company'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 Company 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 Company 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 60
26. CAPITAL DISCLOSURES (CONT’D)
Total capital as at March 31, 2024 and 2023 is calculated as follows:
As at
March 31,
2024
2023
$
$
Cash
(8,859)
(22,583)
Current portion of long-term debt
12,687
12,808
Contingent consideration
4,082
7,037
Long-term debt
104,695
114,382
Share capital
312,409
311,967
Deficit
(157,370)
(141,481)
Accumulated other comprehensive income
4,606
4,610
Contributed surplus
15,559
14,092
287,809
300,832
The Company 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.
The Company uses operating income, Adjusted EBITDA, Adjusted Net Earnings (defined as net earnings (loss)
before adjusting for amortization of intangibles, impairment of intangibles and goodwill, impairment of property
and equipment and right-of-use assets and (gain) loss on lease termination, share-based compensation,
business acquisition, integration and reorganization costs, and the income tax effects of these items) and cash
flow from operations as measurements to monitor operating performance. Adjusted EBITDA, Adjusted EBITDA
ratio and Adjusted Net Earnings, as presented, are not recognized for financial statement presentation purposes
under IFRS, and do not have a standardized meaning. Therefore, they are not likely to be comparable to similar
measures presented by other entities.
The continued availability of the Credit Facility is subject to the Company’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 Company 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 Company was in compliance with all such covenants at March 31, 2024 and
2023.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 2024 AND 2023
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables)
Alithya Group inc. – Consolidated Financial Statements for the years ended March 31, 2024 and 2023.
| 61
Management’s Discussion and Analysis
of Financial Condition and Results of
Operations of Alithya Group inc.
For the year ended March 31, 2024
Exhibit 99.3
Table of Contents
Page
1.
Basis of Presentation
1
2.
Forward-Looking Statements and Financial Outlook
1
3.
Business Overview
2
4.
Strategic Business Plan Outlook
4
5.
Non-IFRS and Other Financial Measures
5
6.
Financial Highlights
8
7.
Business Combinations
12
8.
Results of Operations
15
8.1
Revenues
16
8.2
Gross Margin
17
8.3
Operating Expenses
18
8.4
Other Income and Expenses
22
8.5
Net Earnings (Loss) and Earnings (Loss) per Share
23
8.6
Adjusted Net Earnings and Adjusted Net Earnings per Share
24
8.7
Segment Reporting
25
8.8
EBITDA and Adjusted EBITDA
27
9.
Bookings and Backlog
28
10.
Liquidity and Capital Resources
29
10.1
Consolidated Statements of Cash Flows
29
10.2
Cash Flows - Operating Activities
29
10.3
Cash Flows - Investing Activities
30
10.4
Cash Flows - Financing Activities
31
10.5
Capital Resources
31
10.6
Long-Term Debt and Net Debt
32
10.7
Contractual Obligations
34
10.8
Off-Balance Sheet Arrangements
34
11.
Share Capital
35
11.1
Normal Course Issuer Bid
35
12.
Related Parties
35
13.
Selected Annual Information
37
14.
Eight Quarter Summary
38
15.
Significant Management Judgement and Accounting Estimates
39
16.
Accounting Standard Amendments Effective for the Year Ending March 31, 2024
40
17.
New Standards and Interpretations Issued but Not Yet Effective
41
18.
Risks and Uncertainties
42
19.
Management’s Evaluation of Disclosure Controls and Procedures and Internal Control over Financial
Reporting
63
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
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, 2024.
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, 2024 and 2023. 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.sedarplus.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 U.S. 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 section 5 titled “Non-IFRS and Other
Financial Measures”.
Unless otherwise stated, in preparing this MD&A, the Company has considered information available up to
June 12, 2024, the date the Company’s Board of Directors (“Board”) approved this MD&A and the annual
audited consolidated financial statements for the year ended March 31, 2024.
2. Forward-Looking Statements and Financial Outlook
This MD&A contains statements that may constitute “forward-looking information”, "forward-looking statements"
or "financial outlook" within the meaning of applicable Canadian securities laws and 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 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, by leveraging artificial intelligence ("AI"),
our geographic presence, our expertise, and our integrated offerings, and by entering into new contracts and
penetrating new markets; (iv) our strategy, future operations, and prospects, including our expectations
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 1
regarding future revenue resulting from bookings and backlog and providing stakeholders with long-term
growing return on investment; (v) our ability to service our debt and raise additional capital; (vi) our estimates
regarding our financial performance, including our revenues, profitability, research and development, costs and
expenses, gross margins, liquidity, capital resources, and capital expenditures; (vii) our ability to identify suitable
acquisition targets and realize the expected synergies or cost savings relating to the integration of our business
acquisitions, and (viii) our ability to balance, meet and exceed the needs of our stakeholders.
Forward-looking statements are presented for the sole purpose of assisting investors and others in
understanding Alithya’s objectives, strategies and strategic business plan 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.sedarplus.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
With professionals in Canada, the United States, and internationally, Alithya provides technology advisory
services based on deep expertise in strategy and digital transformation. The Company guides and supports its
clients in the pursuit of their business objectives, leveraging innovation and delivery excellence in the
application of digital technologies.
Alithya’s collective intelligence and expertise targets three main pillars: strategic consulting, enterprise
transformation, and business enablement. With collaboration at the core of its business model, Alithya
professionals deliver practical IT services and solutions to help solve complex business challenges for clients in
the financial services, healthcare, manufacturing, government, energy, higher education, telecommunications,
transportation and logistics, and other sectors. The Company has developed industry-specific solutions and
services for many of these industries that aim at solving sector-specific business challenges and helping
expedite the time to value of technology investments.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 2
Alithya's expertise with respect to its main pillars, offered in each reportable segment, includes:
•
Strategic Consulting: Alithya provides advisory services for digital strategy, organization performance,
cybersecurity, enterprise architecture, and change management. Business outcomes in this area
include refining business processes to reflect real-world scenarios; boosting systems security from
cyberattacks; migrating critical applications and data to the cloud; understanding the optimal enterprise
architecture approach; defining change management strategies; and facilitating project planning
activities for software selections, strategic roadmaps, or agile/scrum delivery teams.
•
Enterprise Transformation: Alithya has more than 20 years of business transformation and enterprise
applications implementation experience with enterprise resource planning (ERP), supply chain
management (SCM), enterprise performance management (EPM), customer relationship management
(CRM), and human capital management (HCM). Also, leveraging AI and machine learning technologies
as a foundation, the Company provides transformational solutions and services for cloud infrastructure,
custom applications development, legacy systems modernization, control/software engineering, data
and analytics, and intelligent document processing. Alithya not only helps clients modernize enterprise
applications through upgrades and the consolidation of multiple systems, but also helps to define
overall technology ecosystems, to envision the use and impact of AI throughout an organization, and to
build custom applications to address unique client needs.
•
Business Enablement: Alithya offers ongoing paths to drive value through the provision of digital
adoption and training, managed services, change enablement, and quality engineering. This practice
area enables Alithya to move beyond advisory, implementations and project go-lives to provide ongoing
value, including using AI to mine data for important insights for making faster, smarter business
decisions; realizing a return on investment (ROI) on digital projects by driving adoption and
consumption of technology; helping clients to train and retain their workforce; bookending a change
management strategy with a change enablement plan that converts visions into reality; and providing a
routine, consistent way to test updates and fixes before deploying any new software products.
Competitive Environment
For many companies, digital systems and infrastructures are among their most important and strategic assets.
These assets require significant investments and increasingly serve as key differentiators and drivers of growth
for customers.
Accordingly, businesses are seeking solutions that allow them to maintain their ability to differentiate themselves
from competitors with proprietary business processes, combined with product customization. That is where
digital transformation comes into play, inviting companies to make a shift in their approach and to evolve from
traditional information technologies to flexible digital technologies.
As businesses’ technology spending continues to increase, digital technology firms such as Alithya are striving
to deliver innovative thinking and in-depth vertical industry expertise, while facilitating business process
transformation through the use of the most optimal technologies.
Alithya believes it is well positioned to respond to these trends in clients’ investments in digital technology.
Alithya’s business model is built on a philosophy of focusing on our clients’ complex business challenges,
offering flexible and creative solutions, enabling clients to realize maximum benefits from their digital technology
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 3
investments. Alithya positions itself as an agile trusted advisor and partner capable of delivering rapid results for
its clients.
Alithya’s competitors, in each of its operating and reportable segments, include systems integration firms,
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, global
presence, 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) a broad referral base; (e) continual investment in process improvement and knowledge capture; (f)
investment in infrastructure and research and development; (g) continued focus on responsiveness to client
needs, quality of services and competitive prices; and (h) project management capabilities and technical
expertise.
4. Strategic Business Plan Outlook
Alithya embarked on a journey to be recognized as the trusted technology advisor of its clients. By the end of
fiscal 2027, management believes that our achievement of this new scale and scope would allow us to leverage
our industry knowledge, geographic presence, expertise, integrated offerings, and our position on the value
chain to target higher value IT segments.
Our strategic process begins with our agile approach to aligning our offerings with the most pressing challenges
being experienced within the sectors that we service, and in our ability to continuously reinforce the building
blocks of trusted relationships with our clients, our people, our investors, and our partners. To ensure that we
remain innovative and relevant, we strive to meet or exceed the expectations of our stakeholders, including
optimizing employee experiences, assisting our clients in achieving their missions, and creating greater value
for our investors.
More specifically, Alithya has developed a three-year strategic plan outlining objectives for each of our four
stakeholder categories, with the primary goals detailed as follows:
•
Increasing scale through organic growth and strategic acquisitions:
◦
Organic Growth: Alithya aims to achieve between 5 and 10 percent annualized organic
growth.
◦
Acquisitions: Alithya plans to acquire complementary businesses totaling 150 million dollars of
revenues.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 4
◦
AI and IP Solutions: Alithya intends to increase the utilization of its AI and intellectual property
solutions.
•
Providing our investors, partners and stakeholders with long-term growing return on investment:
◦
Profitability: Alithya’s Adjusted EBITDA Margin(1) is targeted to increase to within the range of
11 to 13 percent.
◦
Smart shoring centers: Alithya aims to deliver an increasing percentage of its business
through smart shoring centers.
◦
Environmental goal: Alithya endeavours to obtain Carbon Care Certification® (Level 1), and to
initiate steps towards achieving carbon neutrality certification (Level 2).
The objectives in our three-year strategic plan, including our organic growth, acquisition, and profitability
objectives, are based on our current business plan and strategies and are not intended to be a forecast or a
projection of future results. Rather, they are objectives that we seek to achieve from the execution of our
strategy over time, and contemplate our historical performance and certain assumptions including but not
limited to (i) our ability to execute our growth strategies, (ii) our ability to identify and acquire complementary
businesses on accretive terms, and (iii) our estimates and expectations in relation to future economic and
business conditions and other factors.
1 This is a non-IFRS financial measure. Refer to section 5 titled “Non-IFRS and Other Financial Measures” for an explanation of the
composition and usefulness of this non-IFRS financial measure and to section 8.8 titled “EBITDA and Adjusted EBITDA” for a quantitative
reconciliation to the most directly comparable IFRS measures.
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 are
provided as additional information to complement IFRS measures by providing further understanding of Alithya's
results of operations from management's perspective. They do not have any standardized meaning prescribed
by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. They
should be considered as supplemental in nature and not as a substitute for the related financial information
prepared in accordance with IFRS. They are used to provide investors with additional insight into Alithya's
operating performance and thus highlight trends in Alithya's business that may not otherwise be apparent when
relying solely on IFRS measures.
The non-IFRS measures used by Alithya are described below:
EBITDA and EBITDA Margin
“EBITDA” refers to net earnings (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’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 5
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 earnings (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 earnings (loss) before adjusting for amortization of intangibles, impairment
of intangibles and goodwill, impairment of property and equipment and right-of-use assets and (gain) loss on
lease termination, share-based compensation, business acquisition, integration and reorganization costs, and
the income tax effects of these items.
“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”), 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 earnings (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 earnings (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 and (gain) loss on lease termination, share-based compensation, business acquisition, integration
and reorganization costs, 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 earnings (loss) to Adjusted EBITDA, see section 8.8 titled “EBITDA and
Adjusted EBITDA”.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 6
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”.
Net Debt
“Net Debt” refers to long-term debt, including the current portion, less 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 remaining performance obligations, as disclosed in the Company's
consolidated financial statements, as backlog also includes time and materials arrangements in which
contractual billings correspond with the value provided to the client and contracts with original expected
durations under one year. Management believes that backlog information can provide useful trend insight to
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 7
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.
6. Financial Highlights
Results of Operations
Three months ended March 31,
Year ended March 31,
(in $ thousands)
2024
2023
2024
2023
$
$
$
$
Revenues
120,540
136,224
491,125
522,701
Gross Margin
38,747
40,732
149,310
151,774
Gross Margin as a Percentage of Revenues (1)
32.1 %
29.9 %
30.4 %
29.0 %
Selling, General and Administrative Expenses
29,608
35,978
121,558
126,522
Selling, General and Administrative Expenses as a
Percentage of Revenues (1)
24.6 %
26.4 %
24.8 %
24.2 %
Net Earnings (Loss)
2,298
(19,993)
(16,660)
(30,097)
Basic and Diluted Earnings (Loss) per Share
0.02
(0.21)
(0.17)
(0.32)
Adjusted Net Earnings (2)
6,055
5,001
13,608
14,742
Adjusted Net Earnings per Share (2)
0.06
0.05
0.14
0.16
Adjusted EBITDA (3)
10,504
10,463
35,471
36,122
Adjusted EBITDA Margin (3)
8.7 %
7.7 %
7.2 %
6.9 %
Other
March 31,
March 31,
(in $ thousands, except Backlog and DSO)
2024
2023
$
$
Total Assets
416,497
464,101
Non-Current Financial Liabilities (4)
116,161
136,062
Total Long-Term Debt
117,382
127,190
Net Debt (5)
108,523
104,607
Backlog (1)
16 months
16 months
DSO (1)
56 days
54 days
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 8
Shares, Stock Options and Share Units Outstanding
June 11,
2024
Subordinate Voting Shares
88,080,427
Multiple Voting Shares
7,274,248
Options (6)
4,322,271
Deferred Share Units ("DSUs")
1,178,079
Restricted Share Units ("RSUs")
349,700
Performance Share Units ("PSUs")
2,156,527
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, the long-term portion of lease liabilities, and the long-
term portion of the contingent consideration. For an explanation of the variance, refer to section 10.6 titled "Long-Term Debt and Net Debt".
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 and an explanation of the variance.
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, 2024
| 9
For the three months ended March 31, 2024
•
Revenues decreased 11.5% to $120.5 million, compared to $136.2 million for the same quarter last year.
On a sequential basis, revenues increased by $0.1 million, from the third quarter of this year.
•
83.9% of revenues were generated from clients which we had in the same quarter last year.
•
Gross margin as a percentage of revenues increased to 32.1%, compared to 29.9% for the same quarter
last year. On a sequential basis, gross margin as a percentage of revenues increased, compared to 31.3%
for the third quarter of this year.
•
Gross margin decreased 4.9% to $38.7 million, compared to $40.7 million for the same quarter last year.
•
Selling, general and administrative expenses decreased by $6.4 million, or 17.7%, to $29.6 million,
compared to $36.0 million for the same quarter last year.
•
Adjusted EBITDA increased 0.4% to $10.5 million, for an Adjusted EBITDA Margin of 8.7% of revenues,
compared to $10.5 million, or an Adjusted EBITDA Margin of 7.7% of revenues, for the same quarter last
year. On a sequential basis, Adjusted EBITDA increased by $1.0 million, from $9.5 million for the third
quarter of this year.
•
Net earnings was $2.3 million, or $0.02 per share, compared to a net loss of $20.0 million, or $0.21 per
share, for the same quarter last year.
•
Adjusted Net Earnings increased by $1.1 million, or 21.1%, to $6.1 million, compared to $5.0 million for the
same quarter last year. This translated into Adjusted Net Earnings per Share of $0.06, compared to $0.05
for the same quarter last year.
•
Net cash from operating activities was $9.7 million, representing an increase of $5.3 million,
from $4.4 million for the same quarter last year.
•
Q4 bookings(1) reached $133.9 million, which translated into a book-to-bill ratio(1) of 1.11. The book-to-bill
ratio would be 1.27 if revenues from the two long-term contracts signed as part of an acquisition in the first
quarter of fiscal year 2022 were excluded.
•
Backlog represented approximately 16 months of trailing twelve-month revenues as at March 31, 2024.
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, 2024
| 10
For the twelve months ended March 31, 2024
•
Revenues decreased 6.0% to $491.1 million, compared to $522.7 million last year.
•
Gross margin as a percentage of revenues increased to 30.4%, compared to 29.0% last year.
•
Gross margin decreased 1.6% to $149.3 million, compared to $151.8 million last year.
•
Selling, general and administrative expenses decreased by $4.9 million, or 3.9%, to $121.6 million,
compared to $126.5 million last year.
•
Adjusted EBITDA decreased 1.8% to $35.5 million, for an Adjusted EBITDA Margin of 7.2% of revenues,
from $36.1 million, or an Adjusted EBITDA Margin of 6.9% of revenues, last year.
•
Net loss was $16.7 million, or $0.17 per share, compared to a net loss of $30.1 million, or $0.32 per share,
last year.
•
Adjusted Net Earnings decreased by $1.1 million, or 7.7%, to $13.6 million, compared to $14.7 million last
year. This translated into Adjusted Net Earnings per Share of $0.14, compared to $0.16 last year.
•
Net cash from operating activities was $15.7 million, representing a decrease of $13.3 million, or 45.7%,
from $28.9 million last year.
•
Fiscal 2024 bookings reached $480.5 million, which translated into a book-to-bill ratio of 0.98. The book-to-
bill ratio would be 1.13 if revenues from the two long-term contracts signed as part of an acquisition in the
first quarter of fiscal year 2022 were excluded.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 11
7. 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").
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 is recognized as employee compensation on business acquisition, over three
years.
The deferred share consideration is 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”).
As a result of the Earn-out Amendment, a contingent consideration liability in the amount of $7,037,000
(US$5,202,000), representing the portion payable in cash, and contributed surplus in the amount of $2,120,000,
representing the portion to be settled in shares, for a total expense 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 12
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 and liabilities assumed, and the purchase consideration’s valuation were
completed on March 31, 2023.
On March 31, 2024, management’s best estimate of the earn-out settlement amount was reviewed, resulting in
a recovery of $3,827,000, in aggregate, which was recorded in business acquisition, integration and
reorganization costs, with a corresponding adjustment to contingent consideration liability and contributed
surplus.
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
2,798
Accounts receivable and other receivables
3,552
Unbilled revenue
1,301
Prepaids
159
7,810
Non-current assets
Other assets
2
Property and equipment
55
Right-of-use assets
135
Intangibles
24,070
Goodwill
13,696
Total assets acquired
45,768
Current liabilities
Accounts payable and accrued liabilities
4,255
Deferred revenue
945
Current portion of lease liabilities
71
5,271
Non-current liabilities
Lease liabilities
64
Deferred tax liabilities
6,398
Total liabilities assumed
11,733
Net assets acquired
34,035
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 13
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
Company'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
17,430
Issuance of 1,867,262 Subordinate Voting Shares
5,552
Balance of purchase payable with a nominal value of US$9,345,000 ($12,028,000)
11,053
Total consideration transferred
34,035
Datum's contribution to the Company’s 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 Company 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. 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 14
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
For the three months ended
March 31,
For the year ended
March 31,
(in $ thousands, except for per share data)
2024
2023
2024
2023
$
$
$
$
Revenues
120,540
136,224
491,125
522,701
Cost of revenues
81,793
95,492
341,815
370,927
Gross margin
38,747
40,732
149,310
151,774
Operating expenses
Selling, general and administrative expenses
29,608
35,978
121,558
126,522
Business acquisition, integration and reorganization costs
(1,414)
12,166
3,384
18,079
Depreciation
1,303
1,721
5,913
6,536
Amortization of intangibles
4,795
8,693
23,095
27,497
Foreign exchange loss
152
96
102
159
34,444
58,654
154,052
178,793
Operating income (loss)
4,303
(17,922)
(4,742)
(27,019)
Net financial expenses
2,262
2,577
11,857
9,335
Income (loss) before income taxes
2,041
(20,499)
(16,599)
(36,354)
Income tax expense (recovery)
Current
(133)
362
317
569
Deferred
(124)
(868)
(256)
(6,826)
(257)
(506)
61
(6,257)
Net earnings (loss)
2,298
(19,993)
(16,660)
(30,097)
Basic and diluted earnings (loss) per share
0.02
(0.21)
(0.17)
(0.32)
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 15
8.1
Revenues
The following table reconciles Constant Dollar Revenue(1) to revenues by geographic location:
For the three months ended March 31,
For the twelve months ended March 31,
(in $ thousands, except for percentages)
2024
2023
% (2)
2024
2023
%
Total Alithya revenue as reported
120,540
136,224
(11.5) %
491,125
522,701
(6.0) %
Variation prior to foreign currency impact
(11.4) %
(7.0) %
Foreign currency impact
(0.1) %
0.9 %
Variation over previous period
(11.5) %
(6.1) %
Canada
Constant dollar revenue
64,589
81,158
(20.4) %
277,544
312,349
(11.1) %
Foreign currency impact
—
—
Canada revenue as reported
64,589
81,158
(20.4) %
277,544
312,349
(11.1) %
U.S.
Constant dollar revenue
50,604
49,289
2.7 %
188,790
189,883
(0.6) %
Foreign currency impact
(155)
3,703
U.S. revenue as reported
50,449
49,289
2.4 %
192,493
189,883
1.4 %
International
Constant dollar revenue
5,454
5,777
(5.6) %
19,857
20,469
(3.0) %
Foreign currency impact
48
1,231
International revenue as reported
5,502
5,777
(4.8) %
21,088
20,469
3.0 %
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 $120.5 million for the three months ended March 31, 2024, of which 83.9% was
generated from clients which we had in the same quarter last year, representing a decrease of $15.7 million, or
11.5%, from $136.2 million for the three months ended March 31, 2023. On a sequential basis, revenues
increased by $0.1 million, from the third quarter of this year.
Revenues in Canada decreased by $16.6 million, or 20.4%, to $64.6 million for the three months ended
March 31, 2024, from $81.2 million for the three months ended March 31, 2023. The decrease in revenues was
principally due to a reduction in information technology investments in the banking sector, and certain client
projects reaching maturity compared to the same quarter last year. On a sequential basis, revenues in Canada
decreased by $3.4 million, from $68.0 million for the third quarter of this year.
U.S. revenues increased by $1.1 million, or 2.4%, to $50.4 million for the three months ended March 31, 2024,
from $49.3 million for the three months ended March 31, 2023, due primarily to organic growth in certain areas
of the business, partially offset by an unfavorable US$ exchange rate impact of $0.2 million between the two
periods. On a sequential basis, revenues in the U.S. increased by $3.3 million, from $47.1 million for the third
quarter of this year.
International revenues decreased by $0.3 million, or 4.8%, to $5.5 million for the three months ended
March 31, 2024, from $5.8 million for the three months ended March 31, 2023, mainly due to reduced activities
in Australia, partially offset by a favorable foreign exchange rate impact of $0.05 million between the two
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 16
periods. On a sequential basis, revenues increased by $0.1 million, from $5.4 million for the third quarter of this
year.
Revenues amounted to $491.1 million for the twelve months ended March 31, 2024, representing a decrease of
$31.6 million, or 6.0%, from $522.7 million for the twelve months ended March 31, 2023.
Revenues in Canada decreased by $34.8 million, or 11.1%, to $277.5 million for the twelve months ended
March 31, 2024, from $312.3 million for the twelve months ended March 31, 2023. The decrease in revenues
was principally due to a reduction in information technology investments in the banking sector and certain client
projects reaching maturity.
U.S. revenues increased by $2.6 million, or 1.4%, to $192.5 million for the twelve months ended
March 31, 2024, from $189.9 million for the twelve months ended March 31, 2023, due primarily to increased
revenues from the acquisition of Datum's U.S. business, which contributed an additional three months of
revenues compared to the prior year, and organic growth in other parts of the business and a favorable US$
exchange rate impact of $3.7 million between the two periods, partially offset by weaker conditions in certain
areas of the information technology services sector, notably in digital skilling and change enablement services,
and some slower project starts.
International revenues increased by $0.6 million, or 3.0%, to $21.1 million for the twelve months ended
March 31, 2024, from $20.5 million for the twelve months ended March 31, 2023, driven predominantly by a
favorable foreign exchange rate impact of $1.2 million between the two periods, partially offset by reduced
activities in Australia.
8.2
Gross Margin
Gross margin decreased by $2.0 million, or 4.9%, to $38.7 million for the three months ended March 31, 2024,
from $40.7 million for the three months ended March 31, 2023. Gross margin as a percentage of revenues
increased to 32.1% for the three months ended March 31, 2024, from 29.9% for the three months ended
March 31, 2023. On a sequential basis, gross margin as a percentage of revenues increased, from 31.3% for
the third quarter of this year, despite the seasonal governmental employer benefits reset as at January 1, 2024.
In Canada, gross margin as a percentage of revenues increased, compared to the same quarter last year,
mainly due to higher margin offerings, higher hourly billing rates, and a proportionally larger decrease in the use
of subcontractors compared to permanent employees. On a sequential basis, gross margin as a percentage of
revenues also increased 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 higher utilization and improved project performance. On a sequential basis, gross margin as a
percentage of revenues also increased, compared to the third quarter of this year.
International gross margin as a percentage of revenues increased compared to the same quarter last year,
mainly as a result of higher utilization and improved project performance in France, partially offset by reduced
activities in Australia, which historically had a higher gross margin. On a sequential basis, gross margin as a
percentage of revenues also increased, compared to the third quarter of this year.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 17
Gross margin decreased by $2.5 million, or 1.6%, to $149.3 million for the twelve months ended
March 31, 2024, from $151.8 million for the twelve months ended March 31, 2023. Gross margin as a
percentage of revenues increased to 30.4% for the twelve months ended March 31, 2024, from 29.0% for the
twelve months ended March 31, 2023, despite annual salary increases which came into effect in the first quarter
of this year and a $1.1 million provision on tax credits receivable related to previous periods recorded in the
second quarter of this year.
In Canada, gross margin as a percentage of revenues increased for the twelve months ended March 31, 2024,
compared to the same period last year, mainly due to higher margin offerings, higher hourly billing rates, and a
proportionally larger decrease in the use of subcontractors compared to permanent employees, partially offset
by a $1.1 million provision on tax credits receivable related to previous periods.
In the U.S., gross margin as a percentage of revenues increased for the twelve months ended March 31, 2024,
compared to the same period last year, due to a positive margin impact from the acquisition of Datum's U.S.
business, higher margin offerings, higher utilization rates, and improved project performance.
International gross margin as a percentage of revenues decreased for the twelve months ended
March 31, 2024, compared to the same period last year, mainly due to reduced activities in Australia, which
historically had a higher gross margin.
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 $29.6 million for the three months ended March 31, 2024,
representing a decrease of $6.4 million, or 17.7%, from $36.0 million for the three months ended
March 31, 2023. Selling, general and administrative expenses as a percentage of revenues amounted to 24.6%
for the three months ended March 31, 2024, compared to 26.4% for the same period last year, driven mainly by
decreases of $1.8 million in employee compensations costs, due to an ongoing review of Alithya's cost
structure, $1.7 million in non-cash shared-based compensation expenses, $0.3 million in training costs, and a
decrease of $2.7 million in expenses mainly related to a reduction in impairment of property and equipment and
right-of-use assets from the same quarter last year, 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 and realize synergies.
In Canada, expenses decreased by $4.0 million, or 20.1%, to $16.2 million for the three months ended
March 31, 2024, from $20.2 million for the three months ended March 31, 2023, due primarily to a decrease of
$2.7 million in expenses mainly related to a reduction in impairment of property and equipment and right-of-use
assets, as discussed above, and decreases of $1.0 million in non-cash share-based compensation, $0.8 million
in employee compensation costs, and $0.4 million in employee training costs, partially offset by increases of
$0.5 million in professional fees and $0.2 million in information technology and communications costs.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 18
U.S. expenses decreased by $2.4 million, or 16.3%, to $12.1 million for the three months ended
March 31, 2024, from $14.5 million for the three months ended March 31, 2023, due primarily to decreases of
$1.2 million in employee compensation costs, $0.8 million in non-cash share-based compensation, $0.4 million
in professional fees, and $0.2 million in information technology and communications costs, partially offset by
increases of $0.1 million in recruiting fees and $0.1 million in travel costs.
International expenses remained constant at $1.3 million for the three months ended March 31, 2024 and 2023.
Selling, general and administrative expenses totaled $121.6 million for the twelve months ended
March 31, 2024, representing a decrease of $4.9 million, or 3.9%, from $126.5 million for the twelve months
ended March 31, 2023. Selling, general and administrative expenses as a percentage of revenues amounted to
24.8% for the twelve months ended March 31, 2024, compared to 24.2% for the twelve months ended
March 31, 2023 driven mainly by a decrease of $4.8 million in employee compensation costs due to an ongoing
review of Alithya's cost structure, in response to the current economic environment, since the beginning of the
year, and decreases of $1.8 million in non-cash shared based compensation costs, $1.4 million in impairment of
property and equipment and right-of-use assets, $0.8 million in recruiting fees, and $0.4 million in social
activities costs, partially offset by increases of $1.3 million in professional fees, $1.0 million related to internal IT
projects and support costs, $0.7 million in travel costs, $0.5 million in information technology and
communications costs, $0.3 million in business development costs, $0.3 million in occupancy costs, and
$0.2 million in public listing and investor fees.
Expenses in Canada decreased by $5.0 million, or 7.0%, to $65.9 million for the twelve months ended
March 31, 2024, from $70.9 million for the twelve months ended March 31, 2023, due primarily to decreases of
$3.2 million in employee compensation costs, $1.3 million in non-cash share-based compensation, $1.4 million
in impairment of property and equipment and right-of-use assets, as discussed above, $0.6 million in recruiting
fees, $0.6 million in occupancy costs, and $0.5 million in training costs. These decreases were partially offset by
increases of $1.3 million in professional fees, mainly due to the first year integrated SOX audit, $0.8 million in
information technology and communications costs, $0.2 million in travel costs, and $0.2 million in public listing
and investor fees.
US expenses decreased by $1.2 million, or 2.4%, to $50.4 million for the twelve months ended March 31, 2024,
from $51.6 million for the twelve months ended March 31, 2023, due primarily to decreases of $2.2 million in
employee compensation costs, $0.5 million in non-cash share-based compensation, and $0.4 million in
professional fees, partially offset by increases of $0.6 million in information technology and communications
costs, $0.6 million in occupancy costs, and $0.6 million in travel costs. The decreased expenses were partially
offset by an unfavorable US$ exchange rate impact of $1.0 million.
International expenses increased by $1.3 million, or 32.1%, to $5.3 million for the twelve months ended
March 31, 2024, from $4.0 million for the twelve months ended March 31, 2023, mainly due to increases of
$0.6 million in employee compensation costs, $0.3 million in professional fees, and $0.2 million in occupancy
costs, primarily related to Datum's international business, acquired on July 1, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 19
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:
For the three months ended March 31,
For the year ended March 31,
(in $ thousands)
2024
2023
2024
2023
$
$
$
$
Stock options
127
525
594
1,262
Share purchase plan – employer contribution
340
347
1,394
1,372
Share-based compensation granted on business
acquisitions
404
734
2,099
2,995
DSUs
146
818
600
1,250
RSUs
121
—
363
—
PSUs
88
527
1,207
1,233
1,226
2,951
6,257
8,112
Share-based compensation amounted to $1.2 million for the three months ended March 31, 2024, representing
a decrease of $1.8 million, from $3.0 million for the three months ended March 31, 2023. The decrease in
share-based compensation was driven primarily by decreased expenses related to DSUs granted to eligible
employees, decreased PSU expenses resulting from a recovery of expenses following management's review of
assumptions related to the achievement of a performance vesting condition, and decreases in stock option
expenses and share-based compensation granted on business acquisitions, partially offset by increased
expenses related to RSUs.
Share-based compensation amounted to $6.3 million for the twelve months ended March 31, 2024,
representing a decrease of $1.8 million, from $8.1 million for the twelve months ended March 31, 2023. The
decrease in share-based compensation was driven primarily by decreased expenses related to share-based
compensation granted on business acquisitions, stock options, and DSUs granted to eligible employees,
partially offset by increased expenses related to RSUs.
8.3.3
Business Acquisition, Integration and Reorganization Costs
Business acquisition, integration and reorganization costs amounted to a recovery of $1.4 million for the three
months ended March 31, 2024, compared to an expense of $12.2 million for the three months ended
March 31, 2023, driven primarily by a review of the earn-out settlement amount related to the Datum
Acquisition, resulting in a recovery of $3.8 million of the earn-out consideration, as described in section 7 titled
“Business Combinations”, and a decrease of $0.9 million in integration costs, partially offset by an increase of
$0.3 million in reorganization costs driven by severance payments related to workforce reductions in response
to the current economic environment, compared to the same quarter last year where reorganization costs were
entirely related to modifications to cost structure consisting of employee termination and benefits costs.
Business acquisition, integration and reorganization costs amounted to $3.4 million for the twelve months ended
March 31, 2024, representing a decrease of $14.7 million, from $18.1 million for the twelve months ended
March 31, 2023, driven primarily by a recovery of $3.8 million of the earn-out settlement related to the Datum
Acquisition, as described above, and decreases of $1.3 million in acquisition costs, $0.2 million in
reorganization costs, and $0.1 million in integration costs.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 20
8.3.4
Depreciation
Depreciation totaled $1.3 million for the three months ended March 31, 2024, compared to $1.7 million for the
three months ended March 31, 2023. These costs consisted primarily of depreciation of Alithya’s property and
equipment, which decreased by $0.1 million, and right-of-use assets, which decreased by $0.3 million.
Depreciation totaled $5.9 million for the twelve months ended March 31, 2024, compared to $6.5 million for the
twelve months ended March 31, 2023. These costs consisted primarily of depreciation of Alithya’s property and
equipment, which increased by $0.5 million, and right-of-use assets, which decreased by $1.1 million.
8.3.5
Amortization of Intangibles
Amortization of intangibles totaled $4.8 million for the three months ended March 31, 2024, compared to
$8.7 million for the three months ended March 31, 2023. These costs consisted primarily of amortization of
customer relationships recognized on acquisitions, which decreased by $3.5 million, and amortization of
software, which decreased by $0.4 million, as certain intangibles were fully amortized, compared to the same
quarter last year.
Amortization of intangibles totaled $23.1 million for the twelve months ended March 31, 2024, compared to
$27.5 million for the twelve months ended March 31, 2023. These costs consisted primarily of amortization of
customer relationships recognized on acquisitions, which decreased by $4.9 million, and amortization of
software, which increased by $0.4 million.
8.3.6
Foreign Exchange Loss
Foreign exchange loss amounted to $0.2 million for the three months ended March 31, 2024, compared to
$0.1 million for the three months ended March 31, 2023.
Foreign exchange loss amounted to $0.1 million for the twelve months ended March 31, 2024, compared to
$0.2 million for the twelve months ended March 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 21
8.4
Other Income and Expenses
8.4.1
Net Financial Expenses
Net financial expenses are summarized in the table below:
For the three months ended
March 31,
For the year ended March 31,
(in $ thousands)
2024
2023
2024
2023
$
$
$
$
Interest on long-term debt
2,173
2,127
10,831
7,087
Interest on lease liabilities
129
194
664
825
Amortization of finance costs
79
149
426
430
Interest accretion on balances of purchase price payable
87
127
384
784
Financing fees
39
96
220
558
Interest income
(245)
(116)
(668)
(349)
2,262
2,577
11,857
9,335
Net financial expenses amounted to $2.3 million for the three months ended March 31, 2024, representing a
decrease of $0.3 million, or 12.3%, from $2.6 million for the three months ended March 31, 2023, driven mainly
by increased interest income and decreases in amortization of finance costs, interest on lease liabilities,
financing fees, and interest accretion on balances of purchase price payable.
Net financial expenses amounted to $11.9 million for the twelve months ended March 31, 2024, representing an
increase of $2.6 million, or 27.0%, from $9.3 million for the twelve months ended March 31, 2023, driven mainly
by increased variable interest rates, which accounted for the increase in interest on long-term debt, partially
offset by decreases in interest accretion on balances of purchase payable, financing fees, and interest on lease
liabilities, and increased interest income, earned primarily in the first quarter of this year on a special one-time
commercial agreement.
8.4.2
Income Taxes
Income tax recovery amounted to $0.3 million for the three months ended March 31, 2024, representing a
decrease of $0.2 million, from $0.5 million for the three months ended March 31, 2023, due primarily to
decreased deferred tax recovery in certain entities, partially offset by increased current tax recovery, as a result
of decreased taxable income in certain jurisdictions. Certain entities of the Group with a history of losses do not
recognize deferred tax assets related to their loss in the period.
Income tax expense amounted to $0.1 million for the twelve months ended March 31, 2024, representing an
increase of $6.4 million, from a recovery of $6.3 million for the twelve months ended March 31, 2023, due
primarily to a deferred tax recovery resulting from 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 pursuant to the acquisition of Datum in the
same period last year, partially offset by a decrease in current tax expense, as a result of decreased taxable
income in certain jurisdictions. Certain entities of the Group with a history of losses do not recognize deferred
tax assets related to their loss in the period.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 22
8.5
Net Earnings (Loss) and Earnings (Loss) per Share
Net earnings for the three months ended March 31, 2024 were $2.3 million, representing an increase
of $22.3 million, from a net loss of $20.0 million for the three months ended March 31, 2023. The net earnings
were driven by a decrease in selling, general and administrative expenses, including a $2.7 million reduction in
expenses mainly related to impairment of property and equipment and right-of-use assets, decreased business
acquisition, integration and reorganization costs, including a recovery of $3.8 million of the earn-out
consideration related to the Datum Acquisition, decreased amortization of intangibles and depreciation of
property and equipment, and decreased net financial expenses, partially offset by decreased gross margin and
increased income tax expense for the three months ended March 31, 2024, compared to the three months
ended March 31, 2023. On a per share basis, this translated into basic and diluted net earnings per share of
$0.02 for the three months ended March 31, 2024, compared to a net loss of $0.21 per share for the three
months ended March 31, 2023.
Net loss for the twelve months ended March 31, 2024 was $16.7 million, representing a decrease of
$13.4 million, from $30.1 million, for the twelve months ended March 31, 2023. The decreased net loss was
driven by decreased selling, general and administrative expenses, including a $1.4 million reduction in
expenses mainly related to impairment of property and equipment and right-of-use assets, decreased business
acquisition, integration and reorganization costs, including a recovery of $3.8 million of the earn-out
consideration related to the Datum Acquisition, and decreased amortization of intangibles and depreciation of
property and equipment, partially offset by an increase in income tax expense, primarily due to a decrease in
deferred tax recovery resulting from 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 pursuant to the acquisition of Datum in the same period last
year, a decrease in gross margin, and an increase in net financial expenses for the twelve months ended
March 31, 2024, compared to the twelve months ended March 31, 2023. On a per share basis, this translated
into a basic and diluted net loss per share of $0.17 for the twelve months ended March 31, 2024, compared to a
net loss of $0.32 per share for the twelve months ended March 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 23
8.6
Adjusted Net Earnings and Adjusted Net Earnings per Share
The following table reconciles net earnings (loss) to Adjusted Net Earnings:
For the three months ended March 31,
For the year ended March 31,
(in $ thousands)
2024
2023
2024
2023
$
$
$
$
Net earnings (loss)
2,298
(19,993)
(16,660)
(30,097)
Business acquisition, integration and
reorganization costs
(1,414)
12,166
3,384
18,079
Amortization of intangibles
4,795
8,693
23,095
27,497
Share-based compensation
1,226
2,951
6,257
8,112
Impairment of property and equipment and right-
of-use assets and loss on lease termination
139
2,758
1,462
2,758
Income tax related to deferred tax asset
recognized on purchase price allocation
—
—
—
(6,026)
Income tax expense related to above items
(989)
(1,574)
(3,930)
(5,581)
Adjusted Net Earnings (1)(2)
6,055
5,001
13,608
14,742
Basic and diluted earnings (loss) per share
0.02
(0.21)
(0.17)
(0.32)
Adjusted Net Earnings per Share (1)(2)
0.06
0.05
0.14
0.16
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 Figures for the year ended March 31, 2024 reflect adjustments for certain changes to the calculations and assumptions.
Adjusted Net Earnings amounted to $6.1 million for the three months ended March 31, 2024, representing an
increase of $1.1 million, or 21.1%, from $5.0 million for the three months ended March 31, 2023. As explained
above, decreased selling, general and administrative expenses, decreased depreciation of property and
equipment and right-of-use assets, and decreased net financial expenses were partially offset by decreased
gross margin and decreased income tax recovery. This translated into Adjusted Net Earnings per Share of
$0.06 for the three months ended March 31, 2024, compared to $0.05 for the three months ended
March 31, 2023.
Adjusted Net Earnings amounted to $13.6 million for the twelve months ended March 31, 2024, representing a
decrease of $1.1 million, or 7.7%, from $14.7 million for the twelve months ended March 31, 2023. As explained
above, decreased gross margin, increased net financial expenses, and increased income tax expense, resulting
primarily from 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 pursuant to the acquisition of Datum in the same period last year, were partially offset
by decreased selling, general and administrative expenses and decreased depreciation of property and
equipment and right-of-use assets. This translated into Adjusted Net Earnings per Share of $0.14 for the twelve
months ended March 31, 2024, compared to $0.16 for the twelve months ended March 31, 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 24
8.7
Segment Reporting
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 capital, 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:
For the three months ended March 31, 2024
(in $ thousands)
Canada
U.S.
International
Total
$
$
$
$
Revenues
64,589
50,449
5,502
120,540
Operating income by segment
7,992
10,258
761
19,011
Head office general and administrative expenses
9,872
Business acquisition, integration and reorganization
costs
(1,414)
Foreign exchange loss
152
Operating income before depreciation and amortization
10,401
Depreciation and amortization
6,098
Operating income
4,303
For the three months ended March 31, 2023
(in $ thousands)
Canada
U.S.
International
Total
$
$
$
$
Revenues
81,158
49,289
5,777
136,224
Operating income by segment
10,490
7,572
688
18,750
Head office general and administrative expenses
13,996
Business acquisition, integration and reorganization
costs
12,166
Foreign exchange loss
96
Operating loss before depreciation and amortization
(7,508)
Depreciation and amortization
10,414
Operating loss
(17,922)
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 25
For the year ended March 31, 2024
(in $ thousands)
Canada
U.S.
International
Total
$
$
$
$
Revenues
277,544
192,493
21,088
491,125
Operating income by segment
32,913
32,830
2,480
68,223
Head office general and administrative expenses
40,471
Business acquisition, integration and reorganization
costs
3,384
Foreign exchange loss
102
Operating income before depreciation and amortization
24,266
Depreciation and amortization
29,008
Operating loss
(4,742)
For the year ended March 31, 2023
(in $ thousands)
Canada
U.S.
International
Total
$
$
$
$
Revenues
312,349
189,883
20,469
522,701
Operating income by segment
35,964
26,736
2,953
65,653
Head office general and administrative expenses
40,401
Business acquisition, integration and reorganization
costs
18,079
Foreign exchange loss
159
Operating income before depreciation and amortization
7,014
Depreciation and amortization
34,033
Operating loss
(27,019)
For a discussion of revenue variances by segment, refer to section 8.1 titled “Revenues”.
Operating income by segment in Canada decreased by $2.5 million, or 23.8%, to $8.0 million for the three
months ended March 31, 2024, from $10.5 million for the three months ended March 31, 2023, due to
decreased gross margin caused primarily by revenue decline, partially offset by decreased selling, general and
administrative expenses related to operations.
Operating income by segment in the U.S. increased by $2.7 million, or 35.5%, to $10.3 million for the three
months ended March 31, 2024, from $7.6 million for the three months ended March 31, 2023, due to increased
revenues and gross margin and decreased selling, general and administrative expenses related to operations.
Operating income for the international segment increased by $0.1 million, or 10.6%, to $0.8 million for the three
months ended March 31, 2024, from $0.7 million for the three months ended March 31, 2023, due to increased
gross margin.
Operating income by segment in Canada decreased by $3.1 million, or 8.5%, to $32.9 million for the twelve
months ended March 31, 2024, from $36.0 million for the twelve months ended March 31, 2023, due to
decreased gross margin caused primarily by revenue decline, partially offset by decreased selling, general and
administrative expenses related to operations.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 26
Operating income by segment in the U.S. increased by $6.1 million, or 22.8%, to $32.8 million for the twelve
months ended March 31, 2024, from $26.7 million for the twelve months ended March 31, 2023, due to
increased revenues and gross margin and decreased selling, general and administrative expenses related to
operations.
Operating income for the international segment decreased by $0.5 million, or 16.0%, to $2.5 million for the
twelve months ended March 31, 2024, from $3.0 million for the twelve months ended March 31, 2023, due to
decreased gross margin and increased selling, general and administrative expenses related to operations.
8.8
EBITDA and Adjusted EBITDA
The following table reconciles net earnings (loss) to EBITDA and Adjusted EBITDA:
For the three months ended March 31,
For the year ended March 31,
(in $ thousands)
2024
2023
2024
2023
$
$
$
$
Revenues
120,540
136,224
491,125
522,701
Net earnings (loss)
2,298
(19,993)
(16,660)
(30,097)
Net financial expenses
2,262
2,577
11,857
9,335
Income tax (recovery) expense
(257)
(506)
61
(6,257)
Depreciation
1,303
1,721
5,913
6,536
Amortization of intangibles
4,795
8,693
23,095
27,497
EBITDA (1)
10,401
(7,508)
24,266
7,014
EBITDA Margin (1)
8.6 %
(5.5) %
4.9 %
1.3 %
Adjusted for:
Foreign exchange loss
152
96
102
159
Share-based compensation
1,226
2,951
6,257
8,112
Business acquisition, integration and
reorganization costs
(1,414)
12,166
3,384
18,079
Impairment of property and equipment and right-
of-use assets and loss on lease termination
139
2,758
1,462
2,758
Adjusted EBITDA (1)
10,504
10,463
35,471
36,122
Adjusted EBITDA Margin (1)
8.7 %
7.7 %
7.2 %
6.9 %
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 $10.4 million for the three months ended March 31, 2024, representing an increase of
$17.9 million, from a loss of $7.5 million for the three months ended March 31, 2023. EBITDA Margin was 8.6%
for the three months ended March 31, 2024, compared to (5.5)% for the three months ended March 31, 2023.
Adjusted EBITDA amounted to $10.5 million for the three months ended March 31, 2024 and 2023. As
explained above, decreased gross margin caused primarily by revenue decline was offset by decreased selling,
general, and administrative expenses. Adjusted EBITDA Margin was 8.7% for the three months ended
March 31, 2024, compared to 7.7% for the three months ended March 31, 2023.
EBITDA amounted to $24.3 million for the twelve months ended March 31, 2024, representing an increase of
$17.3 million, or 246.0%, from $7.0 million for the twelve months ended March 31, 2023. EBITDA Margin was
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 27
4.9% for the twelve months ended March 31, 2024, compared to 1.3% for the twelve months ended
March 31, 2023.
Adjusted EBITDA amounted to $35.5 million for the twelve months ended March 31, 2024, representing a
decrease of $0.6 million, or 1.8%, from $36.1 million for the twelve months ended March 31, 2023. As explained
above, decreased gross margin was partially offset by decreased selling, general and administrative expenses.
Adjusted EBITDA Margin was 7.2% for the twelve months ended March 31, 2024, compared to 6.9% for the
twelve months ended March 31, 2023.
9. Bookings and Backlog
Bookings during the three months ended March 31, 2024 were $133.9 million, which translated into a Book-to-
Bill Ratio of 1.11 for the quarter. The Book-to-Bill Ratio would be 1.27 if revenues from the two long-term
contracts signed as part of an acquisition in the first quarter of fiscal year 2022 were excluded.
For the twelve months ended March 31, 2024, Bookings were $480.5 million, which translated into a Book-to-
Bill ratio of 0.98. The Book-to-Bill Ratio would be 1.13 if revenues from the two long-term contracts signed as
part of an acquisition in the first quarter of fiscal year 2022 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.
As at March 31, 2024, 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 revenues 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, 2024
| 28
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, 2024 and 2023:
For the three months ended March 31,
For the year ended March 31,
(in $ thousands)
2024
2023
2024
2023
$
$
$
$
Net cash from operating activities
9,732
4,431
15,669
28,882
Net cash used in investing activities
(331)
(326)
(787)
(13,728)
Net cash used in financing activities
(11,473)
(5,633)
(28,577)
(11,326)
Effect of exchange rate changes
114
92
(29)
1,100
Net change in cash
(1,958)
(1,436)
(13,724)
4,928
Cash at the beginning of the period
10,817
24,019
22,583
17,655
Cash at the end of the period
8,859
22,583
8,859
22,583
10.2
Cash Flows - Operating Activities
For the three months ended March 31, 2024, net cash from operating activities was $9.7 million, representing
an increase of $5.3 million, or 119.6%, from $4.4 million for the three months ended March 31, 2023. The cash
flows for the three months ended March 31, 2024 resulted primarily from the net earnings of $2.3 million, plus
$5.8 million of non-cash adjustments to net earnings, consisting primarily of depreciation and amortization, net
financial expenses, share-based compensation, and unrealized foreign exchange loss, partially offset by a
recovery of contingent consideration from the earn-out settlement amount related to the Datum Acquisition, as
described in section 7 titled “Business Combinations”, and deferred taxes, and $1.7 million in favorable changes
in non-cash working capital items. In comparison, 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, share-based compensation, and net financial expenses, partially offset by
deferred taxes, and $3.6 million in unfavorable changes in non-cash working capital items.
Favorable changes in non-cash working capital items of $1.7 million during the three months ended
March 31, 2024 consisted primarily of a $5.9 million decrease in tax credits receivable, a $2.5 million decrease
in unbilled revenues, a $2.3 million increase in deferred revenues, a $1.3 million increase in accounts payable
and accrued liabilities, and a $0.2 million decrease in other assets, partially offset by a $9.6 million increase in
accounts receivable and other receivables and a $0.9 million increase in prepaids. For the three months ended
March 31, 2023, unfavorable changes in non-cash working capital items of $3.6 million 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
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 29
accounts payable and accrued liabilities and a $0.5 million decrease in accounts receivable and other
receivables.
For the twelve months ended March 31, 2024, net cash from operating activities was $15.7 million, representing
a decrease of $13.3 million, or 45.7%, from $28.9 million for the twelve months ended March 31, 2023. The
cash flows for the twelve months ended March 31, 2024 resulted primarily from the net loss of $16.7 million,
plus $42.6 million of non-cash adjustments to the net loss, consisting primarily of depreciation and amortization,
net financial expenses, share-based compensation, and impairment of property and equipment and right-of-use
assets, partially offset by a recovery of contingent consideration from the earn-out settlement amount related to
the Datum Acquisition, the settlement of RSUs, deferred taxes, and other items, and $10.2 million in
unfavorable changes in non-cash working capital items. In comparison, 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 realized 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.
Unfavorable changes in non-cash working capital items of $10.2 million during the twelve months ended
March 31, 2024 consisted primarily of a $17.1 million decrease in accounts payable and accrued liabilities, a
$6.2 million increase in accounts receivable and other receivables and a $0.2 million increase in other assets,
partially offset by a $8.5 million decrease in unbilled revenues, a $3.0 million increase in deferred revenues, a
$1.2 million decrease in tax credits receivable, and a $0.6 million decrease in prepaids. For the twelve months
ended March 31, 2023, favorable changes in non-cash working capital items of $2.3 million 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.
10.3
Cash Flows - Investing Activities
For the three months ended March 31, 2024 and 2023, net cash used in investing activities was $0.3 million.
The cash used in the three months ended March 31, 2024 resulted primarily from purchases of property and
equipment as part of the ordinary course of business. In comparison, 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.
For the twelve months ended March 31, 2024, net cash used in investing activities was $0.8 million,
representing a decrease of $12.9 million, from $13.7 million for the twelve months ended March 31, 2023. The
cash used in the twelve months ended March 31, 2024 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
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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 30
10.4
Cash Flows - Financing Activities
For the three months ended March 31, 2024, net cash used in financing activities was $11.5 million,
representing an increase of $5.9 million, from $5.6 million for the three months ended March 31, 2023. The cash
flows for the three months ended March 31, 2024 resulted primarily from $45.1 million in long-term debt
repayments, $2.1 million in financial expenses paid, $1.5 million in repayments of lease liabilities, including
lease termination costs, and $0.2 million in shares purchased for cancellation, partially offset by $37.5 million in
proceeds from long-term debt, net of related transaction costs, as described in section 10.6. In comparison, the
cash flows for the three months ended March 31, 2023 resulted primarily from $30.9 million in long-term debt
repayments, $2.3 million in financial expenses paid, and $0.9 million in repayments of lease liabilities, including
lease termination costs, 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.
For the twelve months ended March 31, 2024, net cash used in financing activities was $28.6 million,
representing an increase of $17.3 million, from $11.3 million for the twelve months ended March 31, 2023. The
cash flows for the twelve months ended March 31, 2024 resulted primarily from $159.1 million in long-term debt
repayments, $11.0 million in financial expenses paid, $5.8 million in repayments of lease liabilities, including
lease termination costs, and $1.0 million in shares purchased for cancellation, partially offset by $148.3 million
in proceeds from long-term debt, net of related transaction costs. In comparison, 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 financial expenses paid, $3.7 million in repayments of lease liabilities, including lease termination costs, 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.
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, borrowings.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 31
10.6
Long-Term Debt and Net Debt
The following table summarizes the Company’s long-term debt:
As at
March 31,
March 31,
(in $ thousands)
2024
2023
$
$
Senior secured revolving credit facility (the "Credit Facility") (a)
81,073
82,512
Secured loans (b)
8,537
13,192
Subordinated unsecured loans (c)
20,000
20,000
Balance of purchase price payable with a nominal value of $8,436,000 (US$6,230,000) (March
31, 2023 - $12,641,000 (US$9,345,000)), non-interest bearing (4.4% effective interest rate),
payable in annual installments of $4,218,000 (US$3,115,000), maturing on July 1, 2025
8,172
11,993
Unamortized transaction costs (net of accumulated amortization of $215,000 and $1,184,000)
(400)
(507)
117,382
127,190
Current portion of long-term debt
12,687
12,808
104,695
114,382
(a) On December 22, 2023, the Company entered into an Amended and Restated Credit Agreement (the
“Agreement”). The Agreement increased the existing available Credit Facility to a maximum amount of
$140,000,000 which can be increased under an accordion provision to $190,000,000, under certain conditions,
and can be drawn in Canadian dollars and the equivalent amount in U.S. dollars. It is available in prime rate
advances, CORRA advances, SOFR advances and letters of credit of up to $2,500,000.
The advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.75%
to 1.75%, or CORRA or SOFR rates, plus an applicable margin ranging from 2.00% to 3.00%, 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
Company is required to maintain certain financial covenants which are measured on a quarterly basis.
The Credit Facility now matures on April 1, 2026 and is renewable for additional one-year periods at the lender’s
discretion, but the term of the Credit Facility cannot exceed three years.
As at March 31, 2024, the amount outstanding under the Credit Facility includes $71,773,000 (March 31, 2023 -
$82,512,000) payable in U.S. dollars (US$53,000,000; March 31, 2023 - US$61,000,000).
The Company has an additional operating credit facility available to a maximum amount of $2,708,000
(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, 2024 and 2023.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 32
(b) The secured loans issued by Investissement Québec to finance the Company’s refundable tax credits have
the following terms and conditions:
As at
March 31,
March 31,
(in $ thousands)
2024
2023
$
$
Year of related Refundable
Tax Credit
Repayable on the earlier of
the date of receipt of the
refundable tax credits
receivable and
Bearing interest at
2022
March 31, 2024
Prime rate + 1,00%
—
8,719
2023
March 31, 2025
Prime rate + 1,25%
8,537
4,473
8,537
13,192
The maximum amount that can be financed for the 2023 refundable tax credits is the lesser of 90% of the
eligible refundable tax credits and $10,670,000. The loans are secured by a first ranking hypothec on the
universality of the Company’s financed refundable tax credits receivable and a subordinated ranking hypothec
on accounts receivable and other receivables.
(c) On March 13, 2024, the Company entered into an amended agreement. The maturity of the subordinated
unsecured loans with Investissement Québec, in the amount of $20,000,000, was extended from
October 1, 2025 to October 1, 2026 and the loans are now renewable for one additional year at the lender’s
discretion. For the period up to October 1, 2025, the first $10,000,000 bears interest at fixed 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. The interest rates for the
period between October 1, 2025 to October 1, 2026 will be communicated by the lender at the latest fifteen
days prior to October 1, 2025. Once communicated, the Company will have the option to partially or fully repay
the loans, without penalties, by October 1, 2025 at the latest.
Under the terms of the loans, the Company is required to maintain compliance with certain financial covenants
which are measured on a quarterly basis.
(a)(c) The Company was in compliance with all of its financial covenants as at March 31, 2024 and 2023.
Total long-term debt as at March 31, 2024 decreased by $9.8 million, to $117.4 million, from $127.2 million as at
March 31, 2023, due primarily to a decrease of $4.7 million in the secured loans, a reduction of $3.8 million in
the balance of purchase price payable related to the Datum Acquisition, and a decrease of $1.4 million in
drawings under the Credit Facility. The decrease in total long-term debt resulted in a $13.7 million decrease in
cash as at March 31, 2024 compared to March 31, 2023.
As at March 31, 2024, cash amounted to $8.9 million and $81.1 million was drawn under the Credit Facility and
classified as long-term debt. In comparison, 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 33
The following table reconciles long-term debt to Net Debt(1):
As at
March 31,
March 31,
(in $ thousands)
2024
2023
$
$
Current portion of long-term debt
12,687
12,808
Non-current portion of long-term debt
104,695
114,382
Total long-term debt
117,382
127,190
Less:
Cash
8,859
22,583
Net Debt
108,523
104,607
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, 2024, Alithya's Net Debt increased primarily as a result of the
decrease in cash, partially offset by the decreased borrowing under the Credit Facility, as explained above.
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
March 31, 2024
(in $ thousands)
Carrying
amount
Total
Less than 1
year
1-2 years
2-5 years
More than 5
years
$
$
$
$
$
$
Trade payable
41,751
41,751
41,751
—
—
—
Contingent consideration
4,082
4,358
—
4,358
—
—
Credit Facility
81,073
93,444
6,065
6,306
81,073
—
Secured loans
8,537
8,580
8,580
—
—
—
Subordinated unsecured loans
20,000
23,871
1,310
1,608
20,953
—
Balance of purchase price payable
8,172
8,436
4,218
4,218
—
—
Lease liabilities
11,520
12,615
4,559
2,750
3,981
1,325
Operating commitments
—
14,560
6,725
3,096
4,739
—
175,135
207,615
73,208
22,336
110,746
1,325
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 15 of the annual audited consolidated financial statements, there have been no material changes with
respect to off-balance sheet arrangements since March 31, 2023 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, 2024
| 34
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 13 of Alithya's annual audited consolidated financial
statements.
11.1
Normal Course Issuer Bid
On September 13, 2023, the Company’s Board of Directors authorized and subsequently the TSX approved the
renewal of its normal course issuer bid ("NCIB"). Under the NCIB, the Company is allowed to purchase for
cancellation up to 2,411,570 (previously 2,491,128) Subordinate Voting Shares, representing 5% of the
Company’s public float as of the close of markets on September 7, 2023.
The NCIB commenced on September 20, 2023 and will end on the earlier of September 19, 2024 (previously
between September 20, 2022 and 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 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, 2024, the holders of Multiple Voting Shares, directly or indirectly, collectively owned or
exercised control over Subordinate Voting Shares and Multiple Voting Shares representing approximately
45.6% 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, 2024
| 35
Transactions with directors and key management personnel
Key management includes members of the Company’s Executive Committee and certain other key
management personnel. Key management of Alithya participate in the share purchase plan, the Long-term
Incentive Plan, and the Share Unit Plan. The compensation paid or payable to directors and to key
management for services is shown below:
Year ended
March 31,
March 31,
(in $ thousands)
2024
2023
$
$
Director compensation, and key management salaries and benefits (a)
4,100
4,101
Share-based compensation
2,106
3,081
6,206
7,182
(a) Salaries and benefits include short-term incentive compensation.
In addition to the above amounts, the Company is committed to pay incremental benefits to certain members of
key management up to $6,433,000 (2023 - $6,624,000) in the event of a change of control and/or termination
without cause.
Operating transactions with key management personnel
In the normal course of operations, the Company 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, 2024, the entity was no longer
a related party as its controlling shareholder ceased to be a director of the Company on September 14, 2022.
Year ended
March 31,
March 31,
(in $ thousands)
2024
2023
$
$
Revenues (a)
—
6,811
(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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 36
13. Selected Annual Information
For the years ended March 31,
(in $ thousands)
2024
2023
2022
$
$
$
Revenues
491,125
522,701
437,885
Net loss
(16,660)
(30,097)
(15,548)
Basic and diluted loss per share
(0.17)
(0.32)
(0.18)
Total assets
416,497
464,101
447,721
Non-current long-term debt and lease liabilities
112,079
129,025
105,113
Revenues decreased from March 31, 2023 to March 31, 2024 primarily due to a reduction in information
technology investments in the banking sector and certain client projects reaching maturity, partially offset by
organic growth in certain areas of the business and the positive impact of foreign exchange variations between
the periods. Revenues increased from March 31, 2022 to March 31, 2023 primarily due to the acquisitions of
Vitalyst, LLC ("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.
Net loss and basic and diluted loss per share decreased from March 31, 2023 to March 31, 2024 primarily due
to decreases in selling, general and administrative expenses, business acquisition, integration and
reorganization costs, including a recovery of the earn-out consideration related to the Datum Acquisition, and
amortization of intangibles and depreciation of property and equipment, partially offset by decreased gross
margin and increases in income tax expense, primarily due to a decrease in deferred tax recovery resulting from
a deferred tax asset that was probable of being realized as a result of the deferred tax liability pursuant to the
acquisition of Datum in the prior year, and net financial expenses. Net loss and basic and diluted loss per share
increased from March 31, 2022 to March 31, 2023 primarily due to increases in selling, general and
administrative expenses, including decreased governmental wage subsidies, business acquisition, integration
and reorganization costs, including the potential earn-out consideration related to the Datum Acquisition,
depreciation and amortization, and net financial expenses, partially offset by increases in gross margin and
income tax recovery.
The decrease in total assets from March 31, 2023 to March 31, 2024 was due primarily to the decrease in cash,
due to repayments under the Credit Facility, and the decreases in unbilled revenues and intangibles assets and
property and equipment due to amortization and depreciation that occurred during the year ended
March 31, 2024, partially offset by an increase in accounts receivable and other receivables. 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 decrease in intangible assets
due to amortization that occurred during the year ended March 31, 2023.
Non-current long-term debt and lease liabilities decreased from March 31, 2023 to March 31, 2024 primarily due
to the decreased long-term debt, as described in section 10.6, a recovery of the earn-out consideration related
to the Datum Acquisition, and a reassessment of lease liabilities 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 and realize synergies. Non-current long-term debt and lease liabilities increased from
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 37
March 31, 2022 to March 31, 2023 primarily due to the increase in long-term debt, in order to fund the Datum
Acquisition and operations.
14. Eight Quarter Summary
For the three months ended
(in $ thousands, except for per
share data)
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
2022
2022
2022
2023
2023
2023
2023
2024
Revenues
126,764
128,933
130,780
136,224
131,595
118,492
120,498
120,540
Cost of revenues
92,700
91,173
91,562
95,492
93,502
83,701
82,819
81,793
Gross margin
34,064
37,760
39,218
40,732
38,093
34,791
37,679
38,747
26.9 %
29.3 %
30.0 %
29.9 %
28.9 %
29.4 %
31.3 %
32.1 %
Operating expenses
Selling, general and
administrative expenses
28,927
30,421
31,196
35,978
32,499
29,930
29,521
29,608
Business acquisition, integration
and reorganization costs
1,882
2,741
1,290
12,166
1,105
2,663
1,030
(1,414)
Depreciation
1,579
1,602
1,634
1,721
1,668
1,498
1,444
1,303
Amortization of intangibles
4,699
6,708
7,397
8,693
6,824
6,177
5,299
4,795
Foreign exchange (gain) loss
(164)
64
163
96
(128)
112
(34)
152
36,923
41,536
41,680
58,654
41,968
40,380
37,260
34,444
Operating (loss) income
(2,859)
(3,776)
(2,462)
(17,922)
(3,875)
(5,589)
419
4,303
Net financial expenses
1,793
2,301
2,664
2,577
3,220
3,073
3,302
2,262
(Loss) income before income
taxes
(4,652)
(6,077)
(5,126)
(20,499)
(7,095)
(8,662)
(2,883)
2,041
Income tax (recovery) expense
(488)
(5,642)
379
(506)
150
514
(346)
(257)
Net (loss) earnings
(4,164)
(435)
(5,505)
(19,993)
(7,245)
(9,176)
(2,537)
2,298
Basic and diluted (loss) earnings
per share
(0.04)
—
(0.06)
(0.21)
(0.08)
(0.10)
(0.03)
0.02
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 fluctuated due to business acquisitions, and most recently,
reductions in information technology investments in the banking sector due to the current economic
environment. Gross margin as a percentage of revenues has generally followed an increasing trend, including
over the last four quarters, mainly due to higher utilization, improved project performance, and a steady
migration towards higher value-added services. Selling, general and administrative expenses have fluctuated
due to business acquisitions, net of possible synergies, and remained steady in the current quarter, after notably
decreasing over the previous three quarters, mainly as a result of the review of Alithya's cost structure initiated
in the fourth quarter of fiscal 2022 and the modifications undertaken in the quarters that followed, and workforce
reductions in response to the current economic environment, incurred in recent quarters. As a percentage of
consolidated revenues, total selling, general and administrative expenses have fluctuated due to acquisitions,
cost structure reviews, and as a result of the variations in revenues discussed above. Other expenses, such as
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 38
business acquisition, integration and reorganization costs, depreciation, amortization of intangibles, and income
tax (recovery) expense, have also varied as a result of business acquisitions and the subsequent integration
activities and requirements.
15. Significant Management Judgement and 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 material accounting
policies are fully described in Note 3 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 Company manages and monitors its operations, the nature of each CGU’s operations, and the
major customer markets they serve. As such, the Company 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 operating segments – The Company uses judgment in the determination of operating
segments for financial reporting and disclosure purposes. The Company 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 for fixed-fee and time and material arrangements applying the input method – The
Company recognizes revenues from arrangements applying the input method which can extend over more than
one reporting period. Revenue from these fixed-fee arrangements is recognized over time based on a measure
of progress using the Company’s best estimate of the total expected labour costs, and the related risks
associated with completing the service. The determination of total expected labour costs to complete a service
is based on estimates that can be affected by a variety of factors, including but not limited to, changes in the
scope of the contract, delays in reaching milestones, changes in labour mix and rates, previously unidentified
complexities in service delivery, or 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 Company'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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 39
Impairment of long-lived assets – The Company’s impairment test for goodwill is based on internal estimates of
its individual CGUs’ recoverable amounts determined as the greater of value in use and fair value less costs of
disposal. Value in use represents the present value of the future cash flows expected to be derived from the
CGU from its continued use. The fair value less cost of disposal represents the price that would be received to
sell the CGU in an orderly transaction between market participants at the measurement date under current
market conditions, less incremental costs directly attributable to disposing of the CGU, excluding finance costs
and income tax expense.
Key assumptions of the individual CGUs’ value-in-use include forecasted revenues, cost of revenues, SG&A
expenses and other non-cash adjustments applied in the determination of the Company’s three year net
operating cash flow forecast, estimated long-term growth rates used to extrapolate the three year net operating
cash flow forecast and the pre-tax value weighted average cost of capital (“WACC”) applied in the determination
of the present value of the net operating cash flow forecast.
Key assumptions of the individual CGUs’ fair value less cost of disposal include estimated revenues, cost of
revenues, SG&A expenses and other non-cash adjustments applied in the determination of the Company’s
forecasted Adjusted EBITDA and an implied market multiple applied to forecasted Adjusted EBITDA.
Changes in these key assumptions can have a material impact on the recoverable amount calculated and
ultimately the amount of any goodwill impairment recognized. Refer to Note 9 of Alithya's annual audited
consolidated financial statements. for additional information on the assumptions used.
Business acquisitions – The fair values allocated to identifiable intangible assets acquired as part of a business
acquisition are based on management assumptions, including assumptions that would be made by market
participants acting in their economic best interest. The Company develops the fair value of identifiable intangible
assets acquired by using appropriate valuation techniques which are generally based on discounted future
expected cash flows. Key assumptions applied in the determination of the acquisition date fair values of
identifiable intangible assets acquired as part of a business acquisition include forecasted cash flows
attributable to the asset, discount rates and, when applicable, attrition 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.
16. Accounting Standard Amendments Effective for the Year Ending
March 31, 2024
The following amendments to existing standards were adopted by the Company on April 1, 2023:
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:
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 40
• 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 Company has updated its accounting policy information disclosures in these annual consolidated financial
statements for the year ended March 31, 2024.
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
amendment of IAS 8 had no impact on the Company’s annual consolidated financial statements for the year
ended March 31, 2024.
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
Company has updated its disclosures in these annual consolidated financial statements for the year ended
March 31, 2024. The adoption of these amendments resulted in a $4.9 million gross-up presentation of the
lease liability deferred tax asset and right-of-use deferred tax liability as at March 31, 2023, for note disclosure
purposes, with no impact on the net amount of deferred tax liability recognized.
17. New Standards and Interpretations Issued but Not Yet Effective
At the date of authorization of the consolidated financial statements, certain new standards, amendments and
interpretations, and improvements to existing standards have been published by the IASB but are not yet
effective and have not been adopted early by the Company. 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 Company’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
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 41
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. On October 31, 2022, the IASB issued Non-current liabilities with covenants (Amendment to IAS 1) to
clarify 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 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.
IFRS 18 - Presentation and Disclosures in Financial Statements
On April 9, 2024, the IASB published the new IFRS 18 – Presentation and Disclosures in Financial Statements
that will replace IAS 1 – Presentation of Financial statements.
IFRS 18 covers four main areas:
• Introduction of defined subtotals and categories in the statement of profit or loss
• Introduction of requirements to improve aggregation and disaggregation
• Introduction of disclosures about management-defined performance measures (MPMs) in the notes to the
financial statements
• Targeted improvements to the statement of cash flows by amending IAS 7 – Statement of Cash Flows
IFRS 18 applies retrospectively and is effective for annual periods beginning on or after January 1, 2027, with
earlier application permitted. Management is currently evaluating the impact of the amendment on its
consolidated financial statements.
18. Risks and Uncertainties
While Alithya is confident about its long-term prospects, it operates in an environment that presents a variety of
risks and uncertainties and is affected by a number of factors which could have a material adverse effect on its
business, financial condition and results of operations, cash flows, business or reputation.
Alithya’s risk management strategy is aligned with its business strategy and its activities are conducted with the
understanding that risk-taking and effective management of risks are necessary and integral to achieving
strategic objectives and managing business operations. The Board has delegated to the Audit and Risk
Management Committee the responsibility to oversee risks and to the Corporate Governance and Nominating
Committee the responsibility to oversee risks disclosure. Management discusses the critical risks facing
Alithya’s business with the Audit and Risk Management Committee on a quarterly basis and with the Board on
an annual basis during the strategic planning and budgeting processes, as well as on an ad hoc basis, as
deemed necessary. Management also discusses risks disclosure with the Corporate Governance and
Nominating Committee on a quarterly basis to ensure its disclosure remains accurate and addresses the
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 42
material risks that Alithya faces. Early identification of risks helps Alithya be more proactive and prevent major
incidents and consequences.
The risks that Alithya currently believes could materially affect it are described in this section. They are grouped
in the following categories:
•
Risks related to the market: Includes risks arising from the market in general and which could have a
material impact on Alithya’s business;
•
Risks related to Alithya’s industry: Includes risks to which companies providing digital technology
consulting services are subject to;
•
Risks related to Alithya’s business: Includes risks specific to the way in which Alithya’s business is
structured and operates; and
•
Risks related to Subordinate Voting Shares and Liquidity: Includes risks specific to holding
Subordinate Voting Shares and liquidity.
These risks are, however, not necessarily the only risks Alithya faces. Additional risks and uncertainties that are
presently unknown or that Alithya may currently deem immaterial could adversely affect its business. Investors
should carefully consider the risks and uncertainties discussed in this section as well as in Alithya’s other
materials made public, including documents filed with Canadian and U.S. securities regulatory authorities and
which are available on SEDAR+ and EDGAR, before making an investment decision. The realization of any of
these risks could, among other things, have an impact on the market price of the Subordinate Voting Shares.
18.1
Risks Related to the Market
18.1.1
Economic risks and political uncertainty
Alithya’s results of operations are affected by the level of business activity of its customers, which in turn is
affected by their level of economic activities in the industries and markets in which they operate as well as
political uncertainty, which may include armed conflict, labour or social unrest, rising inflation, recession, climate
change, and diseases or health emergencies. Economic conditions and political uncertainty could cause certain
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 maintains cost-savings initiatives to manage its expenses as a
percentage of revenues, but there is no assurance that such initiatives would be successful over a long period
affected by difficult economic conditions or political uncertainty. Alithya can neither predict the impact that
economic and political conditions may have on its future revenues, nor predict changes in economic conditions
or future political uncertainty.
Although its customers are principally located in Canada and the U.S., Alithya serves them through local
presence as well as delivery centers located outside of Canada and the U.S. Accordingly, economic risks and
political uncertainty in the jurisdictions from which it provides services could affect the delivery of its services.
Similarly, as the Company continues to expand its operations in North America and internationally, including
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, war or armed conflict that could affect such
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 43
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 customers’ operations, impact its professionals’ 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 Alithya’s management of climate-related issues
and the level of disclosure related to such matters. Such risks could affect Alithya 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 operations and financial condition.
18.1.2
Inflation
With the current higher levels of inflation, Alithya may become subject to significant cost pressures, which may
result in market volatility. Governments of jurisdictions in which Alithya has direct or indirect business activities
may adopt initiatives to combat inflation, such as raising interest rates, thus increasing its cost of borrowing and
decreasing the liquidity of capital markets. Higher levels of inflation may also lead to increased costs of labour
and Alithya’s selling, general and administrative expenses. If Alithya’s operating costs were to become subject
to significant inflationary pressures, there is no assurance that Alithya would be able to offset such higher costs,
in part or in full, through price increases or other expense management efficiencies, which could have a material
adverse effect on its business, financial condition or results of operations.
18.1.3
Pandemics
Pandemics can create significant volatility and uncertainty and disrupt the industries and markets in which
Alithya operates and pose the risk that Alithya’s professionals, customers, subcontractors and business partners
may be prevented from, or restricted in, conducting business activities as per past practice or as expected for
an indefinite period, including due to the virus or disease or as a result of emergency measures and restrictions
that may be recommended or imposed by governmental authorities to combat any such pandemic.
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 adverse impact on Alithya’s business and results of operations.
A pandemic may result in: (i) reduced customer demand for Alithya’s services and solutions; (ii) customer
pressure on pricing and payment terms; (iii) difficulty in invoice collection; (iv) demands from customers to
change or terminate existing contracts or work orders; (v) the non-renewal of expiring customer contracts; (vi)
reduction in budgets for government programs that may be used by Alithya to support its research and growth;
(vii) delays and disruptions in services from Alithya’s third party service providers; and (viii) devotion of
substantial amounts of management time and resources and increased operating costs to mitigate the impact of
the pandemic. No one can predict the duration or scope of a pandemic or the emergence or resurgence of a
pandemic and, although some impacts may materialize themselves, it would be challenging for Alithya to
accurately estimate or quantify the severity of a pandemic and the full scope and magnitude of its impacts and
consequences on Alithya, its business, financial condition and prospects.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 44
18.2
Risks Related to Alithya's Industry
18.2.1
Competition in the digital technology consulting services market
Competition in the digital technology consulting services market is intense. Alithya competes with local and
international competitors, as well as customers’ internal IT departments. There is also a growing number of
smaller niche boutique digital technology consulting firms that have developed services similar to those offered
by Alithya over the years and Alithya believes that competition will continue to be strong and may increase in the
future, especially as there are relatively low barriers to enter the digital technology consulting services market.
While Alithya strives to remain competitive, Alithya’s competitors may be better positioned to address
technological changes or 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, or other advantages over the services Alithya offers in addition
to lower prices. Also, as Alithya expands its portfolio of services and solutions, it may face new competitors who
may be able to leverage a larger installed customer base and their involvement beyond the services and
solutions provided by Alithya may allow them to adopt more aggressive pricing policies and offer more attractive
sales terms, which could cause Alithya to lose potential sales or to sell services and solutions at lower prices.
Some of Alithya’s competitors may also have longer operating histories and benefit from significantly greater
financial, technical, marketing and managerial resources than Alithya. If Alithya fails to anticipate or react in an
agile manner to known and unexpected moves by existing or new competitors or if competitors reduce their
prices, Alithya could lose projects to such competitors. Any pricing pressure could also have a material adverse
impact on Alithya’s revenues and margins and limit its ability to provide competitive services. Alithya expects to
continue to invest significant resources to develop and enhance its business offerings and leverage a high level
of customer satisfaction, but there is no assurance it will be able to satisfy customer demands as they evolve
and as competition continues to increase.
In addition, 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 skills of its personnel and
the quality of its customer service. Also, 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.
18.2.2
Reliance on highly-trained and experienced personnel
Alithya’s success depends in large part on its ability to attract and retain qualified technical consultants, project
management consultants, business analysts, and sales and marketing professionals of various levels of
experience. 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 compensation. While Alithya’s management believes its measures to
attract and retain qualified employees are competitive, if such measures prove to be insufficient, Alithya may be
unable to support its growth strategy and objectives or normal business operations, including completing
existing projects or bidding on new projects, which could adversely affect its revenues. Since the COVID-19
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 45
pandemic, Alithya has been faced with new talent-related challenges and risks, including higher employee
mobility, a re-evaluation of employee’s relationship with their workplace and a highly competitive employee
marketplace which may make it more difficult to recruit, attract and retain skilled personnel.
18.2.3
Failure to expand, develop and adapt services and solutions to meet customers’ needs
The markets for technology, digital and outsourcing services are characterized by rapid technological change,
evolving industry standards, continually declining costs of acquiring and maintaining IT infrastructure, 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. Alithya must anticipate changes in its customers’ needs and to do so, it must adapt its services and
solutions and remain able to provide cost effective services and solutions. Offerings relating to digital, cloud and
security services are examples of areas that are continually evolving, as well as changes and developments in
artificial intelligence (including generative artificial intelligence, as well as automation and machine learning)
(“AI”). Although Alithya strives at developing digital and other new services and solutions addressing evolving
technologies and customers’ needs, there is no assurance that it will be successful in developing any such
services and solutions, that it will be able to do it in a timely or cost-effective manner or that any such services
and solutions it develops will be successful once offered in the marketplace. If Alithya does not keep pace and
address the demands of the rapidly evolving technological environment and the needs of customers, including
in the emerging field of AI, its ability to retain and attract customers and gain new business may be adversely
affected, which could in turn have a material adverse effect on its business, financial condition and results of
operations. Also, as Alithya expands its offerings of services and solutions, and as it expands such offerings, it
may be exposed to operational, legal, regulatory, ethical, technological and other risks specific to such
expanded services and solutions, which may result in additional pressure on its revenues, net earnings and
resulting cash flow from operations.
18.2.4
Risks related to Artificial Intelligence
The use of AI may give rise to issues and risks related to harmful content, inaccurate content, bias, intellectual
property right infringement or misappropriation, data privacy and cybersecurity, among others, and may also
bring the possibility of ethical concerns and/or new or enhanced governmental or regulatory scrutiny, litigation or
other legal liability, all of which could have a material adverse effect on Alithya’s business, financial condition
and results of operations.
18.2.5
Protecting intellectual property rights
Alithya’s success depends in part on its ability to protect its proprietary methodologies, processes, know-how,
techniques, tools and other intellectual property that are used to provide services. Alithya relies on a
combination of trademarks, laws that protect intellectual property rights, regardless of whether such rights are
registered, as well as contractual restrictions, such as confidentiality agreements, assignment of rights and
licenses, to protect its intellectual property rights. Existing laws that protect intellectual property rights, however,
only afford Alithya limited protection and there is no assurance that contractual restrictions will be observed by
customers and third parties. 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.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 46
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.
The protection of intellectual property rights and confidentiality in some jurisdictions in which Alithya operates
may also not be as effective as in Canada, the U.S. or other jurisdictions with more developed intellectual
property protection rights. In addition, 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.
Alithya’s 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, Alithya may be subject to certain conditions, including requirements that it offers its proprietary
software that incorporates the open source software for no cost, that it makes available source code for
modifications or derivative works that is created based upon, incorporating or using the open source code, or
that it licenses such modifications or derivative works under the terms of the particular open source license. If
an author or other third party that uses or distributes such open source software were to allege that Alithya had
not complied with the conditions of one or more of these licenses, Alithya could be required to incur significant
legal expenses defending against such allegations, to pay significant damage awards, and to dispose of its
solutions that contain or are dependent upon the open source code, all of which could disrupt the distribution
and sale of some of Alithya’s solutions. Litigation, if any, could be onerous, have a negative effect on Alithya’s
financial condition and results or operations or require it to devote additional research and development
resources to implement any required changes to its solutions. Any requirement to disclose proprietary source
code, terminate license rights or pay damages for breach of contract could have a material adverse effect on
Alithya’s business, financial condition and results of operations, and could help competitors develop products
and services that are similar to or better than Alithya’s. Although Alithya believes that it complies with its
obligations under the licenses for open source code that it uses, it is possible that it may not be aware of all
instances where open source code has been incorporated into its solutions or used in connection with its
solutions.
18.2.6
Infringing on the intellectual property rights of others
When developing solutions and providing services for its customers, Alithya utilizes its own, and may also enter
into licensing agreements with third parties for the right to use patents, trademarks, copyrights, trade secrets
and other intellectual property rights. Alithya may also develop intellectual property 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
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 47
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.
18.2.7
Government sponsored programs
Alithya benefits from government sponsored programs designed to support research and development, labour
and economic growth. Alithya may also receive tax credits from governments in Canada and abroad.
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. In addition, these tax credits and programs are
routinely subject to review and audit, which may result in challenges and disputes and could result in reductions
or reversals of grants or tax credits previously received. Any government program reduction, elimination or other
amendment to the government sponsored programs from which Alithya benefits, as well as any reduction or
reversal of grants, credits or contributions previously received, could increase operating or capital expenditures
incurred by Alithya and have a material adverse effect on its net earnings or cash flow.
18.2.8 Regulatory 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, labour 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.
18.2.9 Ethical and ESG risks
Alithya’s professionals, officers, directors and subcontractors are expected to comply with applicable laws,
regulations and ethical standards. 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 Alithya continues to expand its business internationally.
Also, 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
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when selecting a service provider. The ESG practices and initiatives that Alithya maintains or chooses to
implement and pursue, and Alithya’s ability to achieve and report on such practices and initiatives, could
therefore have an impact on its 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.
18.3
Risks Related to Alithya's Business
18.3.1
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
revenue-generating customer contracts generally fall into one of the following three categories: (i) strategic
consulting and enterprise transformation services (time and materials arrangements), (ii) enterprise
transformation services (fixed-fee arrangements), and (iii) business enablement services. Alithya also
sometimes enters into arrangements with multiple performance obligations as well as payrolling services with
certain customers through which contractor candidates recruited and selected by customers are hired by Alithya
and then assigned to customer 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.
18.3.2
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 in,
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, however, 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. Consolidation among customers resulting from
mergers and acquisitions could also result in loss or reduction of business when the successor's business IT
needs are served by another service provider or provided by the successor company’s internal IT department.
Growth in a customer’s IT needs resulting from acquisitions or operations may mean that Alithya no longer has
a sufficient geographic scope or the critical mass to serve the customer’s needs efficiently, resulting in the loss
of the customer’s business and impairing future prospects. There can be no assurance that Alithya will be able
to achieve the objectives of its growth strategy in order to maintain and increase its geographic scope and
critical mass in its targeted markets.
18.3.3
Fluctuation of business and financial results
Alithya’s ability to maintain and increase its revenues is affected not only by its success in implementing its
growth strategy by organic growth and acquisitions, 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
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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).
Alithya’s business, revenues and cash flows may also be affected by certain seasonal trends that affect its
customers. For example, revenues may be lower in its second quarter which covers the period from July 1 to
September 30, as its customers operations often experience a slow-down in the summer.
18.3.4 Commitment of substantial resources for growth
Growing Alithya’s business over the long-term requires commitment of continued investments. Alithya’s future
capital requirements depends 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 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.
18.3.5 Growth through acquisitions
Alithya’s ability to grow through acquisitions requires that it identifies suitable acquisition targets that meet its
financial and operational objectives and fit its culture and strategy. There can, however, be no assurance that
Alithya will be able to identify and correctly evaluate suitable acquisition targets 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 rate.
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 Alithya; (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. Following an acquisition, Alithya may also remain
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reliant on the acquired business’ personnel, good faith, expertise, historical performance, technical resources, IT
infrastructure and systems, timely support, and proprietary information. Accordingly, Alithya may be exposed to
risks associated with adverse developments in the business and affairs of the acquired business as well as
vulnerabilities of its IT infrastructure and systems.
Although Alithya strives to conduct a sufficient level of due diligence when contemplating an acquisition, an
unavoidable level of risk remains regarding the accuracy, quality and completeness of the information provided
to Alithya during such process and there may be liabilities, deficiencies or other claims associated with
companies or assets that are acquired and that Alithya failed to discover or which Alithya was unable to quantify
accurately or at all during the due diligence process, as it was not in a position to independently verify the
accuracy or completeness of such information, and which may result in unanticipated costs. In connection with
acquisitions, Alithya may also incur debt, issue Subordinate Voting Shares or securities convertible into
Subordinate Voting Shares, assume contingent liabilities or have amortization expenses and write-downs of
acquired assets, which could cause Alithya’s earnings to decline.
18.3.6 Penetrating new markets
Penetrating new markets, including as a result of the development and offering of new technologies and
solutions, represents both a risk and an opportunity. If Alithya expands its business offerings into new industries
or geographies, it will face risks associated with entering into such new markets in which it may have limited or
no experience. Such new markets may also present additional complexity and Alithya may have limited or no
brand recognition in such markets. It could also be costly to establish, develop and maintain international
operations, as well as promote Alithya’s brand internationally. Furthermore, expanding into new jurisdictions,
including where the main language is not English or French, may require substantial expenditures and take
considerable time and attention, and there is no assurance that Alithya would be successful enough in these
new markets to build on its investments in a timely manner, or at all.
18.3.7 International operations
Alithya operates in several jurisdictions around the world. As such, the scope of its operations subjects it 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 Alithya’s ability to repatriate cash, funds or capital invested or held in certain
jurisdictions in which Alithya 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.
18.3.8 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
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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 its
business grows, including through acquisitions, Alithya may also implement changes in its management
structure, which it believes 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 have established and
regularly review a succession plan for Alithya’s senior management team, which includes an emergency
succession plan to deal with any situation which requires immediate replacement, it still presents logistical
challenges in its application and may result in incremental costs to Alithya. 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.
18.3.9 Bidding processes
Alithya obtains a part of its contracts through competitive bidding processes. Costs and resources, including
time from management, are required to prepare bids and proposals for contracts that may ultimately not be
awarded to Alithya or that may be split with competitors. A part of Alithya’s revenues depends on obtaining new
orders and continued replenishment of its backlog and there is no assurance that Alithya will continue to win
contracts through competitive bidding processes at the same rate as it has in the past or at a higher rate.
Moreover, certain governments increasingly put pressure on prices or may require that bidders meet certain
criteria that Alithya may not meet alone. In addition, as the competitive environment intensifies, Alithya remains
subject to potential unsuccessful bidders protesting its selection through a bidding contest, which could divert
management’s attention and resources, in addition to potentially resulting in contract modifications or the award
decision being reversed and the loss of the contract. Even though a bid protest would not result in the loss of an
award, the resolution could extend the time until the contract activity can begin, which could reduce Alithya’s
earnings in the period in which the contract would otherwise have been performed.
In addition, when making proposals, Alithya relies heavily on estimates of costs and timing for completing
projects, as well as assumptions regarding technical issues. It may also bid on contracts for which the work
activities, deliverables and timelines are vague or for which the solicitation incompletely describes the actual
work, which may result in inaccurate pricing assumptions. These factors affect the cost estimates of contracts
on which Alithya bids, which can ultimately result in the contractual price being less favorable to Alithya. Also,
failure to achieve program milestones as scheduled or the need to devote more resources than originally
anticipated may impact timely execution and profitability. Furthermore, the delivery of services in connection
with such contracts may result in the lost opportunity of not bidding on and winning other more favorable
contracts that could have been pursued instead.
18.3.10 History of losses
Alithya generated a net loss of $16.6 million and $36.4 million for the fiscal years ended March 31, 2024 and
2023, 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.
18.3.11 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 customer 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 them, 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.
18.3.12 Changes to backlog
Backlog represents management’s estimate of the aggregate amount of revenues expected to be realized in the
future. As Alithya’s revenues depend 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 “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 condition and results of operations.
18.3.13 Customer collection and credit risk
In order to sustain its cash flow from operations, Alithya must invoice and collect amounts owed in an efficient
and timely manner. Adverse changes in a customer’s financial condition could cause Alithya to limit or
discontinue business with that customer, require Alithya to assume more credit risk relating to that customer’s
future business, or result in uncollectible accounts receivable from that customer. Although Alithya maintains
provisions to account for anticipated shortfalls in amounts collected from customers, the provisions it takes are
based on management estimates and on its assessment of its customers’ creditworthiness, which may prove to
be inadequate in the light of actual results. To the extent that Alithya fails to invoice customers and collect the
amounts owed for its services correctly in a timely manner, its collections could be negatively impacted, which
could materially adversely affect its revenues, net earnings and cash flow. In addition, a prolonged economic
downturn may impair customers’ ability to pay for services already provided, and ultimately cause them to
default on existing contracts. Future credit losses relating to any one of Alithya’s major customers could also be
material and result in a material change in its financial results.
18.3.14 Utilization rates
In order to maintain and grow revenues, 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
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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, or to the extent that laws and regulations
restrict its ability to do so, Alithya’s utilization rates may be reduced and thereby adversely affect its revenues
and profitability. Conversely, Alithya may find that it does not have sufficient resources to deploy against new
business opportunities, in which case its ability to grow its revenues would suffer.
18.3.15 Costs of services
In order to generate acceptable margins, Alithya’s pricing for services depends on its ability to accurately
estimate the costs and timing for completing projects, which can be based on a customer’s bid specification,
sometimes in advance of the final determination of the full scope and design of the contract. In addition, a
portion of Alithya’s project-oriented contracts are performed on a fixed-fee basis. Billing for fixed-fee
arrangements is carried out in accordance with the contractual terms agreed upon with Alithya’s customers, and
revenues are recognized based on the percentage of effort incurred to date in relation to the total estimated
efforts to be incurred over the duration of the respective contract. These estimates reflect Alithya’s best
judgment regarding the efficiencies of its methodologies and professionals as it plans to apply them to the
contracts in accordance with Alithya’s standards of contract management. Although fixed-fee arrangements 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, Alithya may be required to absorb
cost overruns, reducing profit margins or incurring losses, thereby having a material adverse effect on Alithya’s
expected net earnings.
18.3.16 Teaming agreements and subcontractors
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.
18.3.17 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
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adequately maintained or updated. Third-party suppliers of software or other intellectual property assets could
also be unwilling to permit Alithya to use or to continue to use their intellectual property and this could impede or
disrupt the use of their solutions or services by Alithya’s customers and Alithya.
18.3.18 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
counterparties due to such arrangements and its insurance does not provide adequate coverage, its business,
prospects, financial condition and results of operations could be materially adversely affected.
18.3.19 Insurance Limits
Alithya maintains comprehensive insurance coverage to provide indemnity for its losses and liabilities in
connection with various aspects of its business and operations. Alithya’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,
Alithya may be subject to future liability for which it is only partially insured, or completely uninsured. Alithya
believes that its insurance programs address all material insurable risks and provide coverage that is in
accordance with what would be maintained by a prudent operator of a similar business (including in terms of
retentions, limits and exclusions). However, there can be no assurance that such insurance will continue to be
offered on economically feasible terms, that all events that could give rise to a loss or liability are or will be
insurable, or that the amounts of insurance will be sufficient to cover every loss or claim that may arise.
18.3.20 IT infrastructure and systems and use of the cloud
To deliver its services and solutions and provide reliable communications between its offices, delivery centers,
customers, subcontractors and other business partners worldwide, Alithya relies upon its own IT infrastructure
and systems as well as those of third parties. Any failure, outage or disruption in Alithya’s or any third party’s IT
infrastructure or systems could result in curtailed operations, a loss of customers and reputational damage, all
of which could have an adverse effect on Alithya’s business, financial condition and results of operations. For
example, Alithya delivers its solutions and services to customers through the use of third-party cloud computing
services, such as Microsoft Azure and Amazon Web Services (AWS) cloud services. If, for any reason, such
services were discontinued or Alithya was required to migrate its 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
services or incidents. Any damage to, or failure of, Alithya’s services providers' IT infrastructure or systems
could result in interruptions of Alithya’s services, which could have an impact on its revenues, subject it to
potential liability and adversely affect its ability to retain or attract customers. 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 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 no assurance that such capacity will be
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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.
18.3.21 Security and cybersecurity risks
Alithya faces security risks affecting its premises as well as cybersecurity risks affecting its IT infrastructure,
systems, software and solutions. Both security risks present a risk of loss, theft and unauthorized access, use or
disclosure of proprietary information (including intellectual property rights) or confidential information (including
personal information of customers, partners or employees) of Alithya, its customers, their customers, its
subcontractors and its business partners. Cybersecurity threats to IT infrastructure, systems, software and
solutions are serious threats to the confidentiality, integrity, reliability, and availability of technology and
information. Cybersecurity threats and incidents may take the form of denial of service, system failures or
interruptions, software bugs or defects, cyber extortion (i.e. ransomware), breaches of systems security,
electronic crime, malware, unauthorized attempts to gain access to proprietary and confidential information,
hacking, phishing, identity theft, fraud and theft. State sponsored attacks, industrial espionage, employee
misconduct or negligence, and human or technological errors (including from advertent or inadvertent actions or
inactions by Alithya’s professionals or subcontractors) also present potential risks and geopolitical instability and
tension may exacerbate certain threats.
Also, in addition to the inherent cybersecurity risks that arise from operating in the IT sector, Alithya increases its
exposure and vulnerability to cybersecurity risks as follows: (i) by allowing its professionals and subcontractors
to work remotely and use video conferencing and collaborative platforms, (ii) by granting its subcontractors
access to its IT infrastructure and systems, (iii) by operating or gaining access to its customers’ IT infrastructure
and systems to deliver services, (iv) by managing customer services in its IT infrastructure and thereby
exposing itself to the risks that its customers face, especially if they have an elevated threat condition due to the
nature of their business; (v) by allowing the use of open source code by its professionals and subcontractors,
and (vi) by integrating and relying on AI services from suppliers. While Alithya selects its subcontractors
carefully and includes safeguards in their contractual terms, it does not control their actions. Further, while
Alithya has guidelines relating to the use of AI, AI poses evolving cybersecurity risks.
The occurrence of any of the aforementioned security and cybersecurity risks could expose Alithya, its
customers or subcontractors to potential liability, litigation, and regulatory action, could materially affect or
disrupt their business operations, and could cause loss of customer confidence, loss of existing or potential
customers, damage to their reputation and competitive position, and increase costs and expenses.
Alithya seeks to detect and investigate all security incidents and to prevent their occurrence or recurrence by
continuously testing, controlling and investing in security measures and controls (including both physical and
logical controls on access to premises and information), adopting or enhancing mitigation policies and
procedures, and providing employee security awareness and training. If security protection does not evolve at
the same pace as threats, a growing gap on Alithya’s level of protection will be created. However, given the
highly evolving nature and sophistication of cyber and other security threats and their increased frequency,
Alithya may be unable to anticipate, prevent, detect and react to all threats in a timely manner. Alithya may be
required to expend significant capital and other resources to protect itself against potential security and
cybersecurity threats or to mitigate the impact caused by security and cybersecurity breaches. Any
cybersecurity incident could require Alithya to incur substantial costs, including costs associated with repairing
its IT infrastructure and systems, implementing further protection measures, engaging third-party experts and
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consultants, and result in increased insurance premiums. The impact of any future security or cybersecurity
incident cannot be easily predicted, and the costs related to such threats or disruptions could not be fully
insured or indemnified by other means. 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 and cybersecurity incidents, 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.
Alithya’s Chief Information Security Officer is responsible for overseeing its physical and cyber security
measures, including the prevention, 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.
18.3.22 Data privacy rights and risks of unauthorized access or disclosure
In the course of its business, whether while providing its services or for its own proprietary information and the
personal information of its employees, Alithya often has access to or collects, processes and stores personal
information. When accessing, collecting, processing or storing personal information, Alithya depends on the
security features of its IT infrastructure and systems and those of its customers, partners or third parties.
Security or cybersecurity threats, employee or subcontractor negligence or misconduct, and human or
technological errors, however, present potential risks of theft, loss or unauthorized access or disclosure of
personal information.
Alithya’s Privacy Officer oversees its compliance with the laws that protect personal information, including but
not limited to U.S. and Canadian laws and regulations as well as the European Union’s General Data Protection
Regulation (GDPR), and puts in places policies, standards and procedures to cause personal information to be
accessed, collected, processed and stored securely and in accordance with such applicable laws and
regulations. The theft and/or unauthorized access to, loss of, or disclosure of personal information in Alithya’s
possession or control (or the failure by Alithya to comply with applicable laws and regulations) could expose it to
civil, administrative 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
privacy laws or regulations. The amount of damages could be substantial, and any such claim could cause
significant reputational harm to Alithya. Its current and prospective customers could also lose confidence in the
effectiveness of its data security measures and reduce the demand for its services, regardless of whether
Alithya was responsible for the breach. Incidentally, in the event of a data privacy incident, Alithya may be
required to shut-down affected IT infrastructure and systems to isolate the threat and thereby jeopardize its
operations, including projects that may be critical to the operations of its customers’ businesses.
Furthermore, as laws and expectations relating to data privacy continue to rapidly evolve, the way in which
Alithya may access, collect, process, store and disclose personal information may become even more limited,
and may require increased expenditures by Alithya. Should those expenditures and risks outweigh the revenues
and gains associated with certain services, Alithya could also take the decision of no longer continuing to offer
certain types of services.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 57
18.3.23 Services to government departments and agencies
One of Alithya’s principal targeted markets is the government sector. 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
provide services could materially harm Alithya’s continued performance or limit the award of additional
contracts.
18.3.24 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. Tax authorities have disagreed and may in the future disagree with Alithya’s income tax positions and
are taking increasingly restrictive positions in respect of income tax positions, including with respect to
intercompany transactions.
A number of jurisdictions in which Alithya operates have also implemented, or are considering implementing,
changes in relevant tax and other laws, regulations and interpretations and the overall tax environment has
made it increasingly challenging for multinational corporations to operate with certainty about taxation in many
jurisdictions.
Any of the aforementioned factors could have a material adverse effect on Alithya’s net earnings or cash flow by
affecting its operations and profitability, the availability of tax credits, the cost of the services it provides, and the
availability of deductions for operating losses as it develops its international service delivery capabilities.
18.3.25 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
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 58
between the Canadian dollar and such currencies could have an adverse effect on its financial condition and
results of operations. This risk is partially mitigated by a natural hedge in matching Alithya’s costs with revenues
denominated in the same currency.
Future events that may significantly increase or decrease the risk of future movement in the exchange rates for
these currencies cannot be predicted. Although Alithya does not currently have an exchange rate risk policy that
would materially affect its results of operations, it is still subject to foreign exchange risk.
18.3.26 Estimates used in accounting and impairment risk
Accounting for Alithya’s contracts requires judgment associated with estimating contract revenue and costs and
assumptions for schedule and technical issues. Because of the significance of the judgements and estimation
processes involved in accounting for contracts, materially different amounts could be recorded if Alithya used
different assumptions or if the underlying circumstances were to change. Changes in underlying assumptions,
circumstances or estimates may adversely affect Alithya’s future results of operations.
Also, Alithya recognizes an accounting value for non-financial assets such as goodwill and other intangible
assets in connection with its acquisitions. The carrying amounts of Alithya’s non-financial assets subject to
amortization are tested for impairment whenever events or changes in circumstances indicate that the carrying
amount may not be recoverable. Goodwill is tested for impairment annually or at any time if an indicator of
impairment exists. Changes in key assumptions may result in the carrying value of Alithya’s goodwill not being
recoverable. Key assumptions include changes in forecasted revenues and expenses applied in the
determination the Company’s three-year net operating cash flow forecast, estimated long-term growth rate and
the pre-tax value weighted average cost of capital applied. Because of the significance of Alithya’s non-financial
assets, any reduction or impairment of the value of these assets could result in a charge against net earnings,
which could materially adversely affect Alithya’s results of operations and shareholders’ equity in future periods.
18.3.27 Legal claims
During the ordinary course of conducting its business, Alithya may be threatened with or become subject to
legal proceedings initiated by 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 or
certain provisions may ultimately prove to be unenforceable under the laws of certain jurisdictions or not protect
Alithya adequately. Defending lawsuits against Alithya could require substantial amounts of management’s
attention and require Alithya to incur significant 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.
18.3.28 Reputational risks
Alithya’s reputation as a capable and trustworthy service provider and long-term business partner is key to its
ability to compete effectively in the market for IT services. The nature of Alithya’s operations exposes it to the
potential loss, unauthorized access to, or destruction of its customers’ information, as well as temporary service
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 59
interruptions. Depending on the nature of the information or services, such events may have a negative impact
on how Alithya is perceived in the marketplace. Under such circumstances, Alithya’s ability to obtain new
customers and retain existing customers could suffer with a resulting impact on its revenues and net earnings.
18.3.29 Effectiveness of internal controls over financial reporting
Alithya is required to maintain internal controls over financial reporting, as defined under National Instrument
52-109 and in Rule 13(a)-15(f) under the U.S. Securities Exchange Act of 1934, as amended. Internal controls
are a process designed under the supervision of the President and Chief Executive Officer and the Chief
Financial Officer, and effected by management and other key professionals, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with IFRS. However, due to the inherent limitations of internal controls, no evaluation of controls
can provide absolute assurance that all control issues within an organization are detected and Alithya’s internal
controls over financial reporting could prove to be insufficient or unable to prevent or detect misstatements due
to errors or fraud in timely manner or at all. Any failure of Alithya’s internal controls could have an adverse effect
on its results of operations, harm its reputation and limit its ability to produce timely and accurate financial
statements or comply with applicable regulations, causing investors to lose confidence in its reported financial
information.
Alithya’s historic and anticipated growth also places significant pressure on its management and key resources
that work on implementing internal controls throughout Alithya. 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.
18.4
Risks Related to Subordinate Voting Shares and Liquidity
18.4.1
Limited voting rights
Alithya’s Multiple Voting Shares are similar to its Subordinate Voting Shares except that each Multiple Voting
Share has ten times the voting rights of each Subordinate Voting Share. As a result, holders of Multiple Voting
Shares have a disproportionate level of control over matters submitted to Alithya shareholders for approval,
which may reduce the ability of holders of Subordinate Voting Shares to influence corporate matters and, as a
result, Alithya may take actions that they do not view as beneficial.
18.4.2 Market price of Subordinate Voting Shares
Alithya cannot predict the price of Subordinate Voting Shares. The stock market may experience significant
price and volume fluctuations that are often unrelated or disproportionate to the operating performance of
companies. These broad market and industry factors, together with other economical circumstances, may
materially harm the market price of Alithya’s Subordinate Voting Shares, regardless of Alithya’s operating
performance. In addition, the price of Alithya’s Subordinate Voting Share may be dependent upon the valuations
and recommendations of the analysts who cover 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. In the past, following periods of volatility in the market, securities class-action
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 60
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.
18.4.3 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 Subordinate Voting Shares or securities convertible in
Subordinate Voting Shares, 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.
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 earnings and cash flows would decrease accordingly, which could
have an adverse effect on Alithya’s business, financial condition and results of operations.
18.4.4 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 or other growth opportunities, Alithya may have to
raise additional capital through public and private equity offerings, debt financings or a combination of both, 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
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 61
results of operations are 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.
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.
18.4.5 Dilution
When acquiring a new business, by way of share purchase or asset purchase, Alithya may consider paying the
purchase price, in part of in whole, by way of issuance of Subordinate Voting Shares or securities convertible
into Subordinate Voting Shares. Alithya may also, independent of any acquisition process, decide to seek the
completion of a public or private financing involving the issuance of Subordinate Voting Shares or securities
convertible into Subordinate Voting Shares to raise capital. Any issuance of additional Subordinate Voting
Shares will result in dilution of the ownership interests of Alithya’s shareholders as well as dilution in earnings
per share. The terms of any such financing may also include liquidation or other preference rights that could
adversely affect the rights of Alithya’s shareholders. Alithya cannot predict the size of future issuances nor the
effect that such issuances may have on the market price of the Subordinate Voting Shares. Issuances of a
substantial number of additional Subordinate Voting Shares (or securities convertible into Subordinate Voting
Shares), or the perception that such issuances could occur, could also adversely affect the prevailing market
price of the Subordinate Voting Shares.
18.4.6 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 also adversely affect the liquidity of the market for Subordinate Voting Shares. Factors
unrelated to Alithya’s performance may 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 the
Subordinate Voting Shares from the TSX.
18.4.7 Dividends
Alithya does not expect to pay dividends in the immediate future and anticipates that it will retain all earnings, if
any, to support its operations. Any future determination as to the payment of dividends will, subject to Canadian
legal requirements and Alithya’s articles of incorporation, be at the sole discretion of Alithya’s Board and will
depend on Alithya’s financial condition, results of operations, capital requirements and other factors the Board
deems relevant. Holders of Subordinate Voting Shares must therefore rely on potential increases in the trading
price of their shares for returns on their investment in the foreseeable future.
18.4.8 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, although its Subordinate Voting Shares are registered with the SEC, it is not subject
to the same requirements that are imposed upon U.S. domestic issuers. Under the Securities Exchange Act of
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 62
1934, as amended (the “Exchange Act”), Alithya is indeed exempt from certain rules and regulations under U.S.
securities laws and, as such, its reporting obligations are, in certain respects, less detailed and less frequent
than those of U.S. domestic reporting issuers. As a result, Alithya does not file the same reports as U.S.
domestic reporting issuers file with the SEC. Instead, it is required to file or furnish to the SEC the continuous
disclosure documents that it is required to file in Canada under Canadian securities laws. In addition, Alithya’s
officers, directors and principal shareholders are exempt from the reporting requirements set forth under Section
16 of the Exchange Act.
Also, although it is Alithya’s current intention to deregister its Subordinate Voting Shares from the SEC, there is
no assurance as to if and when it will meet the eligibility requirements to do so in the near future. If and once
deregistered, it will, however, no longer be required to file or furnish documents with the SEC in accordance with
U.S. securities regulations. U.S. shareholders would therefore have to rely solely on documents filed with
Canadian securities regulators and which would be prepared in accordance with Canadian securities
regulations.
18.4.9 Enforcement of civil liabilities under U.S. securities laws and rules
Although Alithya does business in the U.S., it is governed by the Business Corporations Act (Quebec), its
registered office is located in Canada, the majority of its directors and officers are based principally in Canada,
and a substantial portion of its assets are located outside of the U.S.. It may therefore be difficult for investors
who reside in the U.S. to enforce court judgments predicated upon civil liability provisions of 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 Alithya 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. Management’s Evaluation of Disclosure Controls and Procedures
and Internal Control over Financial Reporting
Disclosure Controls and Procedures
Management is responsible for establishing and maintaining adequate disclosure controls and procedures
(“DC&P”) which are 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 DC&P, 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, 2024. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s DC&P
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 63
were not effective as of March 31, 2024 due to the material weakness in internal control over financial reporting
described below.
Internal Control over Financial Reporting
Management is also responsible for establishing and maintaining adequate internal control over financial
reporting (“ICFR”), 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 ICFR are
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 ICFR 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, 2024 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 ICFR was not effective as of March 31, 2024 due to the material
weakness described below.
A material weakness is a deficiency, or a combination of deficiencies, in ICFR, such that there is a reasonable
possibility that a material misstatement of the Company’s annual or interim financial statements will not be
prevented or detected on a timely basis.
In connection with the Company’s evaluation of ICFR, management identified a material weakness related to
the control activities in its revenue processes. Notwithstanding the existence of a material weakness,
management has concluded that the Company’s annual audited consolidated financial statements for the year
ended March 31, 2024 present fairly, in all material respects, the Company’s financial position, results of
operations, changes in equity and cash flows in accordance with IFRS, and confirms that this material
weakness did not result in (i) any material adjustments to the Company’s annual audited consolidated financial
statements for the year ended March 31, 2024 and (ii) there were no changes to previously released financial
results. However, because the material weakness creates a reasonable possibility that a material misstatement
to our financial statements would not be prevented or detected on a timely basis, it was concluded that as of
March 31, 2024 the Company’s ICFR was not effective.
Remediation Plan
Management, with oversight of the Audit and Risk Management Committee, has initiated and continues to
implement remediation measures designed to ensure that the deficiencies in the Company’s ICFR that resulted
in a material weakness are remediated. The remediation actions include providing additional training to control
operators as well as improving documentary evidence protocols at the control execution level. Although
management expects that the remediation of deficiencies in key controls related to its revenue processes which
resulted in the occurrence of a material weakness will be completed during the year ending March 31, 2025,
there is no assurance as to when such remediation will be completed, nor if the remediation measures put in
place will be effective to remediate such deficiencies. The material weakness will also not be considered fully
remediated until the applicable internal controls operate for a sufficient period of time and management has
concluded, through testing, that these internal controls are operating effectively.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya
For the year ended March 31, 2024
| 64
Changes in Internal Control over Financial Reporting
Other than the material weakness and remediation process described above, there have been no changes in
the Company’s ICFR during the year ended March 31, 2024, that have materially affected, or are reasonably
likely to materially affect, the Company’s ICFR.
Auditor’s Report on Internal Control over Financial Reporting
The effectiveness of ICFR as of March 31, 2024 has been audited by KPMG LLP, (“KPMG”), the Company’s
independent registered public accounting firm. In view of the above, KPMG has expressed an adverse opinion
on the Company’s ICFR as of March 31, 2024.
Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control over Financial
Reporting
The Company’s management recognizes that any DC&P and ICFR, no matter how well designed and operated,
can provide only reasonable assurance of achieving their objectives. Because of their inherent limitations,
DC&P and ICFR 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, 2024
| 65
Exhibit 99.4
SECTION 302 CERTIFICATION
I, Paul Raymond, certify that:
1. I have reviewed this annual report on Form 40-F of Alithya Group inc.;
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 13, 2024
/s/ Paul Raymond
Paul Raymond
President and Chief Executive Officer
Exhibit 99.5
SECTION 302 CERTIFICATION
I, Claude Thibault, certify that:
1. I have reviewed this annual report on Form 40-F of Alithya Group inc.;
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 13, 2024
/s/ Claude Thibault
Claude Thibault
Chief Financial Officer
Exhibit 99.6
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of the Annual Report on Form 40-F for the fiscal year ended March 31, 2024
(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 13, 2024
/s/ Paul Raymond
Paul Raymond
President and Chief Executive
Officer
Exhibit 99.7
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the filing of the Annual Report on Form 40-F for the fiscal year ended March 31, 2024
(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 13, 2024
/s/ Claude Thibault
Claude Thibault
Chief Financial Officer
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 12, 2024 on the consolidated financial statements of Alithya Group inc.
(the "Company") which comprise the consolidated statements of financial position as of
March 31, 2024 and 2023, the related consolidated statements of operations and
comprehensive loss, changes in shareholders’ equity, and cash flows for the years ended
March 31, 2024 and 2023, and the related notes (collectively the "consolidated financial
statements"), and
•
our report dated June 12, 2024 on the effectiveness of the Company's internal control over
financial reporting as of March 31, 2024
each of which is included in the Annual Report on Form 40-F of the Company for the fiscal year
ended March 31, 2024.
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 Company.
/s/ KPMG LLP
Montréal, Canada
June 13, 2024
Exhibit 99.8