2020 Annual Report
Table of Contents
1 Chairman’s Letter
2 Message from the CEO
13 2020 Segment Highlights
14 People Driving Growth
18 Social Impact
21 Looking Forward
22 Management’s Discussion and Analysis
of Financial Condition and Results of
Operations
55
Independent Auditors’ Report
57 Consolidated Statements
of Financial Position
58 Consolidated Statements of Net Profit
59 Consolidated Statements
of Comprehensive Income
60 Consolidated Statements of Changes in Equity
61 Consolidated Statements of Cash Flows
62 Notes to the Consolidated
Financial Statements
Chairman’s letter
Calian Group Ltd. (TSX:CGY)
delivered an impressive
performance in 2020 despite
the unprecedented challenges
created by COVID-19.
Management’s long-term
profitable growth strategy and
diversified business model,
supported by a passionate,
dedicated team, has led the
company through significant
adversity to another year of record results.
Reflecting the company’s record annual revenue of $432
million, Calian’s share price continued to outperform key
benchmarks, gaining 91% in FY2020 while the S&P/TSX
Composite, and S&P/TSX Small Cap indexes which gained
11%, and declined by 6%, respectively, over the same
period.
“Stability through diversity, growth through innovation”
is how the company summarizes its investment value
proposition, and the results have once again demonstrated
that. Calian has continued to pay a stable dividend, returning
a total of $9.9 million to shareholders through the year, which
the company finished having now reported consecutive
profitable quarters for 19 straight years. Dividends plus
share price growth have been an impressive combination.
CGY’s total shareholder return for FY2020 was 95%; over
the three years to October 1, 2020, shareholders saw total
returns of 147%.
Calian’s management team has successfully laid a foundation
for continued profitable growth and rising shareholder value.
Through management’s strategy of organic and acquisitive
growth, targeted investment in research and development,
and a pivot toward more innovation and global markets, the
company is well situated to move beyond the current public
health crisis and into a stronger position than ever.
In February, Calian was pleased to announce a successful
bought deal offering, under which a total of 1,568,600
common shares were sold for aggregate gross proceeds of
approximately $69 million. The capital strengthens Calian’s
balance sheet and provides additional liquidity as the
company begins execution of its new three-year growth plan
and maintains strong growth momentum.
An important aspect of Calian’s value proposition is its
social impact. Calian’s social responsibility commitments
are driven by the company’s strong desire to make a
difference in people’s lives. This year, Calian’s donations
largely reflected the public health crisis which
has caused real and lasting damage for so
many families and communities. As a result,
the company supported various pandemic
relief and response efforts, including those of
the Canadian Red Cross Society, the Ottawa
Hospital Foundation’s COVID-19 Emergency
Response Fund, the Ottawa Food Bank,
Saskatoon Food Bank & Learning Centre, and
Dress for Success Ottawa.
Calian’s social efforts continued to support
health care access for military families. Many
people do not know that, while the Canadian
Armed Forces (CAF) provides serving members
with complete health care, their military family members
rely on provincial health systems for care. This presents a
challenge for military families who relocate frequently due to
postings.
In partnership with Military Family Services, a division of
Canadian Forces Morale and Welfare Services, the Military
Family Doctor Network (MFDN) was established to assist
military families with finding a family physician. The program
marked a significant milestone, with more than 3,000 military
family members being referred to a family doctor through the
program since its inception in 2016.
I was pleased to see Calian continue to engage in partnerships
to further Indigenous relations and reflect the Indigenous
relations framework Calian adopted in 2019, which aims
to establish meaningful relationships with First Nations and
Indigenous suppliers, advocacy groups, business councils,
and employees. For example, Calian began an important
collaboration with Saulteaux Tribal Nation L.P., a First
Nations-owned and operated company in Manitoba, to
upgrade community resilience and emergency response
capacity in the province.
It has been a pleasure for me to assume the role of Chair
during the year, as former chair Kenneth Loeb stepped away
to deal with personal matters. I know the company very well,
having served as a director on the board since 2012 and
an inside observer of its unprecedented growth in recent
years. As Chair, I look forward to continued engagement on
strategy and targeted acquisitions.
Calian has seen an impressive evolution in recent years
under the dynamic leadership of CEO Kevin Ford. His vision,
thirst for growth and drive for positive change has been felt at
the board and across the organization. With much roadway
ahead, I look forward to continuing this exciting journey.
George Weber
Chairman
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Calian Group Ltd.2020 Annual Report Kevin Ford
President and CEO,
Calian Group Ltd.
The Advanced Technologies team helped
position Calian for increased growth with
the acquisition of Tallysman Wireless Inc.,
whose sector-leading antennas and related
satcom components fit very well with our
ground-based satellite communications
business. Growth potential in our Health
segment was reinforced by the acquisition
of
two Ottawa-based health service
companies, Allphase Clinical Research
Services Inc. and Alio Health Services
Inc. (collectively, “Allphase/Alio”). Building
on our complementary strengths,
the
acquisition has opened the way for Allphase/
Alio to grow its sector presence leveraging
Calian’s market position, while expanding
the overall Health segment customer base
to hospitals, home-based patient support programs and
pharmaceuticals.
In our ongoing pivot to global markets, Calian’s Learning
team announced the acquisition of Comprehensive
Training Solutions International, a boutique training
firm based in Norway that provides training exercises
for NATO. The move supports our expansion in Europe
where we had strengthened our European satcom
solutions with
the acquisition of Germany-based
SatService.
Aligned with Calian’s strategic pillars of customer
diversification and service line innovation, this fiscal
year we acquired EMSEC Solutions, which specializes
in radio frequency emission security and technical
surveillance countermeasures. The addition of EMSEC’s
team to our Information Technology division is an
Message from the CEO
As CEO, I am very proud of the
resilience Calian demonstrated
through 2020, a year characterized
by extreme challenge and
uncertainty around the globe. Our
diverse business, essential service
delivery, and expert, dedicated
team helped the company achieve
record results amid the COVID-19
crisis.
Calian demonstrated its consistent ability
revenues while maintaining
to grow
profitability
targeted
and making
in R&D to propel future
investments
opportunities. Four acquisitions through the fiscal year
supported our growth objectives with new products,
solutions and an expanded customer base in Canada
internationally. Through strategic acquisitions,
and
customer retention and diversification and new product
delivery, the company continued our strategic pivot
toward establishing ourselves as an innovative, global
growth company.
By challenging ourselves to build on our stability and
fulfill the dynamic growth potential of Calian’s four-
segment business, Calian exceeded its targets and
delivered our biggest year on record, recording annual
revenue of $432.3 million and Adjusted EBDITA of $36.8
million, respectively growing 26% and 36% year-over-
year. Importantly, our stable, steady growth continued
to be profitable. Calian finished the year reporting our
76th consecutive profitable quarter, and record quarterly
revenue for the ninth consecutive quarter.
2
2020 Annual ReportCalian Group Ltd. exciting development that will deepen Calian’s expertise
and growth potential in the fast-expanding field of cyber
security, for government, defence, and the private
sector.
In a testament to the commitment of our more-than
4,400 staff across the company, Calian responded
to the difficulties and unique circumstances of the
pandemic with several wins throughout the year that
furthered our ongoing pivot to innovation, growth and
global markets. These accomplishments were seen
in our expanded services, successful recompetes for
contracts, the launch of innovative products, and new
business activities that resulted in $693 million in new
contract signings over the year.
The Advanced Technologies segment capitalized
on our research and development efforts, starting
delivery of an innovative wireless product for a Tier 1
North American mobile operator. This was our first
deployment of telecom equipment for a Tier 1 operator,
and showcases Calian’s ability to use our expertise
to solve complex customer problems. In another
significant accomplishment, the company was selected
by a global satellite communications operator for
the provision and installation of new radio frequency
satellite ground systems. The Advanced Technology
segment will support the satellite operator’s existing
systems as well as future deployments in accordance
with this $30 million dollar-plus contract. Roll out for our
largest ground systems contract continues, with COVID
creating some challenges on our ability to travel and
deploy the systems. At time of this report the team
continues to work through these challenges.
Our product launches continued to demonstrate the
company’s pivot to innovation and technology solutions
addressing specific industry needs. In June, Calian
commercially released the Decimator D4. This is the
fourth generation of Calian’s spectrum analyzer product
line, which has been a mainstay of communications
monitoring for years. We also officially launched Calian
ResponseReady™, a licensed software solution now
available for the design, delivery and evaluation of
emergency exercises and training. Calian continued
to roll out its second-generation MaetroEDE™, a
web-based program used for exercises supporting
emergency preparedness
for military operations,
disasters and major events.
Commitment: Calian responded to the difficulties
and unique circumstances of the pandemic with
several wins throughout the year that furthered
our ongoing pivot to innovation, growth and global
markets.
Calian Group Ltd.
2020 Annual Report
3
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Calian Group Ltd.2020 Annual Report Calian’s consolidated results this year drove home the
resilience and stability of our four-division structure.
Positive growth and financial results in the Health,
Advanced Technologies and Information Technology
segments offset a slight decline in revenue in the Learning
segment, as some training exercises and in-classroom
courses were postponed by COVID-19. Health’s strong
gains reflected increased demand across the segment.
The company continues to evolve and invest strategically
to support our growth objectives. Post year-end, I was
pleased to appoint a new Chief Commercial Officer (CCO)
and Chief Technology Officer (CTO) to our management
team. Michele Bedford, as CCO, will help drive Calian’s
sales and marketing as we expand into new markets
and customer segments. We are excited about our new
CTO, Seann Hamer, who will provide a focal point to
propel innovation internally and strategically define
Calian’s technology and innovation opportunities across
the organization. We have been working diligently to
refresh our brand, refine our digital presence and launch
a new and improved website to further demonstrate
our commitment to raising the profile of Calian as an
innovative leader in the markets we serve.
Our strategic recompetes this year
included the
Department of National Defence’s (DND) selection of
Calian to provide an expanded role in the evolving cyber
security landscape and help meet the growing cyber
needs of the federal government. Additionally, Calian
successfully re-competed to provide DND with training
services for the Canadian Forces School of Aerospace
(CFSATE). CFSATE
Technology and Engineering
delivers aerospace, technical and engineering training
and provides the Royal Canadian Air Force (RCAF) with
qualified aircraft maintenance personnel. Collectively,
these contract rewins added over $54M to our backlog.
We are truly honoured that Calian continues to provide
our trusted services and solutions in support of Strong,
Secure, Engaged: Canada’s Defence Policy.
Our annual results demonstrated the company has
remained resilient through this extreme environment,
and the company is well on its way in our pivot. Year-
over-year, Calian’s 2020 revenues gained 26% as
EBITDA rose 36%. The team continued to successfully
compete for new business and rebids that helped us
end the year with a sustained revenue backlog of $1.3
billion.
Importantly, this year would not have been possible if it
was not for the dedication and courage demonstrated
by all frontline health and essential service workers.
I would like to thank and recognize all who have been
out there delivering essential services like our frontline
health workers, Canadian Armed Forces members and
many other service workers. This has been an incredibly
challenging year, and all of us at Calian offer our deepest
appreciation for your service.
4
I would like to deeply thank our talented staff for
their contributions in a very challenging year. Their
dedication is second to none, and I am excited by the
shifting corporate culture at Calian in support of our
pivot.
Looking forward, the team is excited about Calian’s
potential. This year, the company finalized a new three-
year strategy and having completed a successful
round of financing in the second quarter of 2020,
has the required capital to help sustain our profitable
growth momentum. The Calian team is committed to
completing our pivot to becoming an innovative global
growth company. The recent surge in COVID-19 globally
is concerning, and our team is committed to work
through the challenges this creates for the company. We
believe we are well positioned to keep the momentum
going, but will need to ensure we prioritize the safety of
our staff while building on our record accomplishments
in 2020.
Kevin Ford
President and CEO
Frontline workers: This year would not have been
possible if it was not for the dedication and courage
demonstrated by all frontline health and essential
service workers.
2020 Annual ReportCalian Group Ltd.
2020 Segment Highlights
Advanced Technologies
The Advanced Technologies segment
continued to focus on growth in 2020
while ensuring continuity of operations
and customer deliveries amid a
challenging global business environment.
While providing customers with critical
communications infrastructure, the
segment expanded its defence and satellite
communications solutions with the delivery
of world-class, innovative products and the
acquisition of a leading manufacturer of
wireless antennas.
The segment’s determined efforts to maintain workflow
and minimize service interruptions during the pandemic
included enhanced contact with supply chains, remote
working for engineering staff, and implementation of
health and safety measures at Calian’s manufacturing
facilities. We were pleased to report that these efforts
allowed the majority of work to continue unaffected.
Among Advanced Technologies’ diverse operations,
the satellite ground systems business faced the most
challenges. Health and safety COVID-19 restrictions
varied globally from region to region making ground
system deployments and logistics very difficult for
crews. Although challenging, we continued to make
progress deploying ground systems for customers.
In the fourth quarter, the Advanced Technologies team
was excited to announce the acquisition of Ottawa-
based Tallysman Wireless, a leading manufacturer of
precision global navigation satellite systems (GNSS)
antennas and related components. With GNSS as one
of the fastest growing markets for satellite technology,
Calian welcomed the opportunity to join forces with a
leader in the field.
Tallysman’s product line and solutions complement
Calian’s ground-based satellite communications
business and expand our reach in the satcom industry
to markets and customers requiring smaller antennas.
Tallysman has invested significantly in research and
development to produce the most accurate and widest
range of GNSS antenna available. With a growing
product portfolio of precision and custom GNSS
antennas, Tallysman is poised to maintain its growth
momentum under Calian.
In a significant milestone, Calian commenced deliveries
of an innovative telecommunications product for a Tier
1 North American mobile operator. The new product
is an example of the company’s product strategy and
our research and development programs targeting
the needs of customers. The product is the result of
14 months of communications technology research,
development and certification. When installed with
the
existing
customer to maximize use of existing spectrum assets
and broadcast capabilities to support the ongoing
evolution of the operator’s mobile network.
transmission equipment,
it enables
Along with several other initiatives during the year, this
new product was evidence of the Calian engineering
team’s capability to solve complex customer problems
using our deep knowledge base in leading-edge,
mixed-signal analog-digital product designs. It also
demonstrated an ability to satisfy the demanding
performance and certification requirements of a major
mobile wireless network operator.
In other product launches, the segment commercially
released the Decimator D4, the fourth generation
of Calian’s spectrum analyzer designed to allow
satellite service providers to monitor and analyze
satellite and terrestrial wireless radio
frequency
(RF) communications signals. Our investment in the
Decimator product line has produced the Decimator
D4, a significant redesign of the D3 signal processing
engine, providing for a number of new capabilities. The
D4’s most significant new feature allows it to peer into
the RF signal for deeper analysis of the quality of digital
signal components. The feature proactively identifies
issues in the network before they manifest as a failure.
The Decimator product line has been a mainstay
of communications monitoring for over a decade.
The D4 complements a diverse range of services
and solutions for domestic and global markets, and
demonstrates Calian’s determination to continuously
evolve its product lines to address challenges faced
by its customers.
5
Calian Group Ltd.2020 Annual Report As a global supplier of communication systems
solutions and products, Calian was selected by a
global satellite communications operator this year to
provide and install new radio frequency (RF) satellite
ground systems. In January, Calian announced the
appointment of a director to lead sales activities for the
company’s new line of high-performance composite
carbon fiber antennas. These advanced antennas
are designed to meet the demanding operational
requirements of Ka/Q/V-band frequencies and beyond.
Considerable effort was expended this year validating
the long term performance of the 10m version of our
Ka/Q/V band antenna tested over satellite in a variety
of operational environments. Some of the technical
challenges involved in developing and deploying the
RF systems, including these antennas, for our largest
ground system contract have had a negative effect on
our margins, however the team remains committed
to the successful completion of the ground system
deployment.
Modern, high-throughput satellite communications
are becoming increasingly complex with software-
defined payloads and dynamic beamforming that
creates thousands of independent beams of different
sizes, bandwidth and power that can be reconfigured
and repositioned across the globe in real time. Such
capabilities require complex software solutions to
both plan and control these resources. The Advanced
Technologies segment was selected by satellite
operator Inmarsat to provide next-generation software
solutions for the planning, management and monitoring
resources. Advanced Technologies’
of satellite
software development team continues to innovate
with research and development into areas of machine
learning and scalable cloud computing.
Our
integration of Germany-based SatService
continued, with growth in customers that demonstrated
Calian’s success leveraging defence expertise for the
European market. We were pleased to be selected by a
European government defence organization and their
teleport operator for the procurement, integration and
installation of a receive-only RF system which included
a large-aperture antenna.
Satellite resource management user
interface: The Advanced Technologies
segment was selected by satellite operator
Inmarsat to provide next-generation software
solutions for the planning, management and
monitoring of satellite resources.
66
2020 Annual Report
Calian Group Ltd.
2020 Annual ReportCalian Group Ltd. Advanced Technologies’ engineering team continued
to win projects with government and other clients. In
the fourth quarter, Calian’s defence engineering team
was selected by the Department of National Defence
(DND) to provide scalable science and technology
services in support of public safety and security. The
contract supports DND and approximately 21 federal
departments and agencies with the ability to scale up
Canada’s science and technology capabilities to meet
specific operational requirements.
IntraGrain, Calian’s AgTech solutions provider,
continued to expand its distribution network and evolve
its solutions for new customer segments. The nuclear
engineering team has continued to deliver training and
consulting services to a large nuclear power operator.
Calian continues to engage in dialogue and studies on
potential solutions related to the commercialization
and deployment of small modular nuclear reactors —
an energy solution that holds tremendous potential as
inexpensive, safe and readily deployable.
Despite a challenging global environment, the segment
had a very strong year. We remain committed to
resolving the logistical challenges presented by the
pandemic and successfully commissioning these
ground systems during FY2021.
The team remains focused on integrating acquisitions,
and with continued investment in organic growth,
research and development and potential M&A,
Advanced Technologies is positively positioned for
continuing its growth momentum.
Acquisition of Ottawa-based Tallysman
Wireless: Tallysman Wireless is a leading
manufacturer of precision global navigation
satellite systems (GNSS) antennas and related
components.
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Calian Group Ltd.2020 Annual Report Health
Collaboration, flexibility and responsiveness
were key to the Health segment’s success
in 2020 as the team engaged with clients
to address the COVID-19 global health
crisis. Responding to increased demand for
primary care needs during the pandemic,
the Health team expanded its services with
new contracts. These included work with
SNC-Lavalin PAE Joint Venture to support
the Government of Canada’s pandemic and
emergency response preparedness, and
public and private sector health screening
contracts across Canada.
Calian’s Health services continued to grow and evolve,
particularly with the acquisition of two Ottawa-based
health service companies, Allphase Clinical Research
Services Inc. and Alio Health Services Inc. (collectively,
“Allphase/Alio”). Acquired in the second quarter, the
companies serve the pharmaceutical and medical
device industry and the broader health care sector
with clinical trial services, specialty patient support,
community care and other health services, all enabled
by our Health Outcomes Management Engine™, an
innovative health care delivery management software
application. The acquisition has provided Calian’s
Health segment with access to innovative services and
new customer segments in pharmaceuticals, hospital
care and patient support at home.
Calian’s scale and market reach has enabled Allphase/
Alio’s continued expansion within the sector and
supports the company’s ability to take its proprietary
software products, systems and services to the
next level. For Calian, the acquisition is accelerating
access to emerging technologies and business in new
markets, encompassing hospitals, patient support at
home and clinical trial services. As Calian prepares to
leverage the Health Outcomes Management Engine
application across its existing health services portfolio,
the company sees significant potential to create
efficiencies, bring greater value to our clients and drive
new business. During the fiscal year, Allphase was
pleased to launch its primary Patient Support Program,
PSP One, for Novartis Canada.
8
The Health team saw increased demand in the
provision of essential primary care services, largely
related to COVID-19, as the segment added eight new
clients during the year. Health experienced significant
growth in contracts with federal departments as well as
the Government of Nunavut, for which we now provide
a comprehensive suite of nursing and COVID-19
screening services across multiple sites. Additional
business was won in the natural resource sector for
companies requiring COVID-19 screening services for
employees.
In June, Calian won significant new business
providing expertise and medical equipment to help
the Government of Canada plan and prepare for the
medical surge capacity needed to protect Canadians
amid the pandemic. Calian was awarded a contract by
Allphase/Alio: The acquisition of Allphase/
Alio is accelerating Calian’s access to emerging
technologies and business in new markets,
encompassing hospitals, patient support at home
and clinical trial services.
2020 Annual ReportCalian Group Ltd. SNC-Lavalin PAE Joint Venture to support the delivery
of up to 10 100-bed Mobile Respiratory Care Units
(MRCUs) for the government’s pandemic response
efforts. The partnership allowed the government to
prepare for deployment of turnkey MRCUs in various
locations in Canada. The easily storable, accessible
and transportable MRCUs are self-sufficient units
that provide targeted care for persons with acute
respiratory disease and distress. The Health team
has been privileged to contribute to the federal
government’s response efforts and ultimately help
increase Canada’s response capabilities during this
devastating pandemic.
Demand continued to be stable on the Health Care
Providers Requirements (HCPR) contract for the
provision of health support services to the Canadian
Armed Forces (CAF). We continued to maintain high
customer satisfaction ratings on the contract. Calian
is honoured to support the health of the serving
men and women of the Canadian Armed Forces, the
RCMP and the former serving members of Veterans
Affairs Canada.
Primacy, our medical property management brand
supporting over six million patient visits per year at
more than 150 locations across Canada, signed a
new five-year master agreement (with a three-year
renewal option) with Loblaw. This advances Primacy’s
service delivery in Loblaw grocery stores, including
Real Canadian Superstore®, Zehrs®, Loblaws® and
No Frills®.
Calian’s Military Family Doctor Network
(MFDN)
marked a significant milestone this year. As of fiscal
year-end, more than 2,900 military family members
have been referred to a family doctor since the
inception of the program in 2016. (Read more about
this important program for military families in the Social
Impact section of this report.)
Calian’s Health team had an exceptional year in an
extremely challenging environment, thanks to its
passionate, dedicated and courageous team. The
segment remains focused on diversifying its customer
base and evolving services through the implementation
of health technology enabled solutions.
Allphase/Alio: The companies serve the pharmaceutical and medical device industry and the broader health
care sector with clinical trial services, specialty patient support, community care and other health services.
Calian Group Ltd.
2020 Annual Report
9
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Calian Group Ltd.2020 Annual Report Learning
Despite the impact of COVID-19, Calian’s
emergency management and training teams
continued to show impressive leadership
with new contracts, business development
and expansion in Canada and Europe.
Although the segment experienced a year-
over-year revenue decline as a result of
the pandemic’s disruptions to large-scale
exercises and training courses within its
core defence customers, many strides were
made positioning for future growth.
Emergency preparedness and disaster mitigation
planning is an increasing priority for communities
and organizations around
the world. Calian
Emergency Management helps people, organizations,
governments and communities prepare for events
where the consequences of failure are unacceptable.
With 2020 presenting an extreme environment
for many organizations, the team demonstrated
leadership in this evolving market which was affected
by the increasing impacts of natural disasters, health,
safety and security issues, and aging infrastructure.
In a significant achievement this year for Calian
Emergency Management, the team was selected
by the Region of Peel to develop a wastewater
emergency response plan and a flood response
plan. Calian is providing the Region of Peel with a
unique combination of engineering, security and
emergency management expertise and is leading a
team of specialists to conduct risk and vulnerability
assessments, develop site-specific,
facility-based
response plans and procedures, and design and
facilitate a comprehensive training program.
Calian believes in building long-term relationships
with clients amid growing demand for emergency
management services. In other recent projects, Calian
assisted the Province of New Brunswick, City of Ottawa
and City of Nanaimo with emergency management
after-action reviews, and City of Whitehorse with a
hazard, risk and vulnerability assessment.
Calian was honoured this year to partner with Saulteaux
Tribal Nation L.P., a First Nations-owned and operated
company in Manitoba. In this partnership, Calian
is working collaboratively with Saulteaux to deliver
emergency management services and best practices
to other First Nations in the province.
increase
The unique agreement is designed to help Manitoba’s
First Nations
resilience, emergency
management independence and build community
capacity and economic opportunity. The partnership
reflects the changing nature of Indigenous business
relationships in Canada and a collective goal to support
the 2015 Truth and Reconciliation Commission Calls
Emergency Management: Emergency
preparedness and disaster mitigation planning
is an increasing priority for communities and
organizations around the world.
1010 2020 Annual Report
Calian Group Ltd.
2020 Annual ReportCalian Group Ltd. to Action, which urged the corporate sector to adopt
a reconciliation framework and commit to meaningful
relationships with
respectful
consultation and
Indigenous peoples.
The Emergency Management
team has greatly
appreciated the opportunity to work with Saulteaux
to increase community resilience and capacity in
the province, at a time when these vital services and
capacities are needed vis-à-vis a rising number of
disasters nationally.
In customer retention efforts, Calian was again selected
by the Department of National Defence to provide
training services for the Canadian Forces School of
Aerospace Technology and Engineering (CFSATE).
Based at Canadian Forces Base Borden, CFSATE
delivers aerospace, technical and engineering training
and provides the Royal Canadian Air Force (RCAF)
with qualified aircraft maintenance personnel. Under
the contract, Calian is delivering training and other
services to CFSATE, including course review, design
and delivery and technology support. The contract
award affirms Calian’s commitment
training
excellence for DND.
to
In customer diversification, the Learning segment
secured its first contract with the Royal Canadian Navy
in support of the Naval Training Development Centre
(Pacific) as it develops the Navy’s vision of a future-
ready naval training system. This system represents
instruction to
a shift from traditional classroom
learning
an
environment.
technologically enabled
integrated,
Broadening Calian’s presence in Europe, the company
announced the acquisition of Comprehensive Training
Solutions International (CTS), a boutique training firm
based in Stavanger, Norway. CTS designs, develops
and delivers complex training exercises for the Joint
Warfare Centre (JWC), a multinational and multi-
service organization of NATO, and the wider NATO
audience across Europe.
CTS signifies the European market’s importance to
Calian’s overall growth strategy. Last year, Calian
acquired Germany-based SatService, an innovative
player in European satellite ground systems market.
CTS has supported the growth of Calian’s business
in Europe and furthers the strategic goal of customer
diversification.
In June, in support of growth through innovation,
the company was pleased to officially launch Calian
ResponseReady™, a licensed software solution now
available for the design, delivery and evaluation of
emergency exercises and training. ResponseReady,
originally developed by Calian’s nuclear engineering
team to support large-scale nuclear exercises, has
been made available as a commercial product. The
product supports the design, delivery and evaluation
of realistic exercises ranging from large-scale, multi-
department, multi-agency exercises,
to smaller
organizational exercises and drills. It is a response
to the increasing need by all organizations for an
exercise and training program allowing for the testing
of plans and procedures, and a structured approach to
managing emergencies.
This year Calian continued to roll out its second-
generation MaestroEDE™, a web-based program
that supports the exercise design, development and
delivery process (E3D) for complex, high fidelity and
large scale exercises. The platform is used for exercises
supporting readiness for military operations, whole-
of-government and international events, disasters
and security for major events. Calian showcased the
software with a booth at this year’s virtual 15th NATO
CA2X2 Forum (Computer Aided Analysis, Exercise,
Experimentation) event in Europe.
While pandemic-related headwinds reduced the ability
to conduct training across the Learning segment’s
customer base, significant strides have been made
to open opportunities and position Learning for future
growth. The segment continues to be focused on
customer diversification, new geographic markets,
and investment in learning products and capacity.
11
Calian Group Ltd.2020 Annual Report Information Technology
Continuing to excel in the high-expectation
information technology sector, Calian added
important new strategic depth to its cyber
security team and continued to support
the efficiency and security of IT systems,
services and networks for public- and
private-sector clients.
Through M&A, Calian’s IT segment was pleased to
see its growth story continue with the acquisition of
EMSEC Solutions, a boutique firm specializing in
radio frequency (RF) emission security and technical
surveillance countermeasures. Fulfilling the strategic
goals of innovation and customer diversification, the
addition of EMSEC’s team further strengthens Calian’s
expertise in the area of government and defence
cyber security, and provides the company with
innovative software and technology-enabled services
to expand its depth of solutions. Emissions security is
a specialized, growing field as more organizations see
a need to protect intellectual property.
Mid-year, Calian was honoured to be selected to
provide an expanded role in the evolving cyber security
landscape and help meet the growing cyber needs of
the Department of National Defence (DND). The IT
team successfully recompeted for a contract award
valued at approximately $22 million over three years
to provide expanded cyber security and informatics
services to DND.
the contract award, Calian
Under
is providing
consulting services to support DND’s information
and cyber security initiatives. These services include
project management, change management, network
security, IT security vulnerability assessments, IT
security system operations, and incident management.
This contract award for the IT team exemplified
Calian’s commitment to customer retention as the first
pillar of our growth framework. Recognizing that some
of the top threats to governments and national security
are cyber threats, the team is honoured to continue
to provide its trusted services in support of Strong,
Secure, Engaged: Canada’s Defence Policy.
12
The segment continued to see growth on its IT services
contract with General Dynamics Mission Systems–
Canada as part of a partnership to deliver Land
Command, Control, Communications, Computers,
Intelligence, Surveillance and Reconnaissance (C4ISR)
systems support for the Canadian Army. These Land
C4ISR systems enhance the Canadian Army’s ability to
protect the communications and information systems
they depend on.
In customer diversification, the cyber team increased
its marketing and sales activities, including digital
campaigns that helped grow cyber sales and the funnel
of opportunities in Ottawa and the Greater Toronto
Area (GTA). This included a substantial new contract
for the cyber practice with Shared Services Canada to
support the expansion of the customer’s data centre
consolidation initiative.
Moving forward, the segment will continue to focus
on diversifying the customer base both geographically
and in our target sectors, evolving our IT services
capability in cloud migration, and deepening our cyber
security offerings.
Cyber security and informatics services: The
IT team successfully recompeted for a contract
award valued at approximately $22 million over
three years to provide expanded cyber security
and informatics services to DND.
2020 Annual ReportCalian Group Ltd. How our segments performed
Advanced Technologies
Health
Core business: Engineering services, products,
solutions, software development, manufacturing,
training, technical services
Markets: Satellite communications, aerospace,
defence, cable networks, nuclear power, agriculture,
government
Customers: Canadian Space Agency, Sirius XM,
Ontario Power Generation, DND, Inmarsat
2020
2019
Revenues:
Gross margin (%):
EBITDA(1):
EBITDA (%):
Backlog(2):
22%
$ 153,382 $ 109,697
28%
$ 21,003 $ 16,523
15%
$ 155,000
14%
$ 143,400
Core business: Health services, psychological
assessment services, medical property management
Markets: Defence, law enforcement and security,
corrections, energy, occupational safety
Customers: DND, Canada Border Services Agency,
Edmonton Police
Revenues:
Gross margin (%):
EBITDA(1):
EBITDA (%):
Backlog(2):
2020
2019
$ 163,035 $ 115,719
20%
$ 18,496
16%
$720,000
20%
$ 23,396
14%
$ 822,600
Learning
Information Technology
Core business: Custom training, emergency
management solutions, software products,
consulting, course development
Core business: IT consulting, IT and cloud
solutions, software development, SAP consulting,
cyber security solutions
Markets: Defence, health, energy, government,
Indigenous communities
Customers: DND, Province of New Brunswick, City
of Victoria, Interlake Reserves Tribal Council
Markets: Government, defence, private sector
Customers: Shared Services Canada, DND,
General Dynamics Mission Systems —Canada,
Toronto Transit Commission, Ericsson
Revenues:
Gross margin (%):
EBITDA(1):
EBITDA (%):
Backlog(2):
2020
2019
$ 57,834 $ 63,098
20%
22%
8,582 $ 8,787
14%
15%
$ 268,000
$ 276,100
$
Revenues:
Gross margin (%):
EBITDA(1):
EBITDA (%):
Backlog(2):
2020
2019
18%
$ 58,069 $ 54,531
15%
$ 4,787 $ 3,567
7%
$ 42,000
8%
$ 65,900
Canadian dollars in thousands
(1) Excludes corporate costs; see financial statements for reconciliation.
(2) Total backlog is $1.5 billion (FY19 $1.3 billion) and realizable backlog is $1.3 billion (FY19 $1.1 billion).
13
Calian Group Ltd.2020 Annual Report
Micah Grinstead
Micah’s primary focus is supporting and enabling
success for his team of manufacturing professionals.
He recently joined Calian through the acquisition
of Tallysman, a leading manufacturer of precision
Global Navigation Satellite Systems (GNSS) antennas
and components. With decades of experience in
manufacturing and the complex and dynamic world
of global supply chains, Tallysman’s engineering and
sales teams rely on Micah’s valued insights to meet
demanding innovation requirements and the complex
needs of customers in a fast-evolving industry. As
director of operations, he manages two facilities that
support Calian’s global reputation as a trusted provider
of leading-edge satellite communications products
and solutions.
Alexandra McCabe
Alexandra applies Calian’s health
services
expertise to manage highly skilled nursing teams
across Canada in support of northern and Inuit
communities. Overseeing dedicated nursing teams
in approximately 25 northern communities as well
as COVID-19 isolation hubs in five Canadian cities,
Alexandra ensures Calian is viewed as a trusted
partner that can respond quickly with practical
solutions to rapidly changing needs. She also
manages relationships with a number of provincial
and federal health customers receiving impactful
mental health support services.
People
driving growth
A small selection of the many people at
Calian who are advancing our innovation
and growth, in Canada and abroad.
14
2020 Annual ReportCalian Group Ltd. John Simpson
which
countermeasures,
John’s specialty is emission security and technical
surveillance
help
organizations prevent the unintentional disclosure of
sensitive information through the release of electrical
and electromagnetic emissions. A certified TEMPEST
professional and member of the Canadian Industrial
TEMPEST Program, John is Chief Technology Officer
of Emsec Solutions, which joined Calian’s cyber
solutions team this year through acquisition. John is
recognized in NATO and Five Eyes countries for his
extensive expertise in the field of radio frequency
signals analysis.
Jordan Miller
Jordan is a program manager in strategy and
public affairs who develops branding, positioning
and engagement strategies to showcase Calian’s
solutions to the market and potential partners.
When COVID-19 hit, Jordan was asked to take
charge of one of Calian’s central response services.
He worked for months to overcome supply chain
and design challenges and, managing a network
of suppliers and consultants, coordinated expert
input and delivery of materials and equipment
to help strengthen the Government of Canada’s
response capabilities. Jordan’s leadership helped
demonstrate Calian’s marketplace position as an
innovative and trusted partner delivering complex
solutions to real-world challenges.
Calian Group Ltd.
2020 Annual Report 15
15
Calian Group Ltd.2020 Annual Report John Cullen
John is Managing Director of Comprehensive Training
Solutions, a full-service crisis response management
training company servicing NATO, the European
Union and European nations, which Calian acquired
this year. For over 12 years, John has played a key
role in designing, developing and delivering exercises
and training events for senior leaders across NATO
in support of the Joint Warfare Centre in Stavanger,
Norway. With a view to business development and
European expansion, he continues to participate in
exercise design and training delivery to understand
client needs and remain current on crisis management
doctrine and processes.
Peter Patterson
Peter joined Calian through the acquisition of
boutique security firm EMSEC Solutions, where he
is President and CFO. He works closely with clients
to provide solutions that may include a combination
of product sales and professional and technical
services, and also acts in a project management
capacity for larger government and private sector
programs requiring senior-level oversight. Peter
maintains relationships with North American and
European suppliers represented by EMSEC and
helps potential partners in the growth area of
emission security technologies. Besides day-to-day
management, his responsibilities include managing
cash flow and the company’s overall financials,
short- and long-term.
Hicham Farhat
Hicham is a health services solutions and management
professional who leads government and private sector
health program growth strategies. Working closely
with operations leads across Canada, Hicham is the
primary point of contact for all new health related
initiatives, partnerships and alliances. Hicham and
his team of health solutions experts focus on building
Calian’s organic growth opportunities
through
collaboration on new and innovative health services
solutions, all while ensuring the highest possible level
of customer satisfaction.
16
2020 Annual ReportCalian Group Ltd. Julien Hautcoeur
Kaytlin Sadler
Julien manages a team of engineers and technicians
responsible for the development of new antennas
and components for the Global Navigation Satellite
System (GNSS) constellation of satellites. With a PhD
in electronics and communications systems from
Université de Rennes, Julien joined the Calian team
this year through the acquisition of Tallysman, where
he is director of GNSS product R&D. Julien is looking
forward to bringing new products to market as Calian
continues to grow, innovate and expand into new
customer segments at home and abroad.
Kaytlin contributes every day to the mission at Alio
Health, acquired by Calian in 2020. She helps define
and execute Alio’s strategic objectives and plans
for new business opportunities. Overseeing internal
operations and building strong client relationships,
she has helped maximize Alio’s operational pace to
achieve real outcomes. Kaytlin played a key role in
the strategic evolution of Alio’s Health Outcomes
Management Engine™, innovative software that
meets industry needs and is helping to shape where
the industry is headed. In keeping with Alio’s efforts
to challenge and empower its employees, she has
built a strong, confident team of diverse yet like-
minded individuals.
17
Calian Group Ltd.2020 Annual Report Social impact
Calian is committed to positive social
impact in our communities, whether that
is through our work, partnerships or social
responsibility programs. We continued this
approach in the past year, adjusting as
much as possible to address the immense
challenges the public health crisis has
presented to people around the globe.
Calian’s social impact approach is aligned
with our oft-stated core purpose: We help
the world communicate, learn, lead healthy
lives and stay safe. In doing so we are
committed to conducting our business
with integrity, uncompromising quality and
professionalism.
This year, honouring CEO Kevin Ford’s commitment
to step forward to help support those affected by the
COVID-19 pandemic, the company provided financial
support to various pandemic relief and response
efforts, including those of the Canadian Red Cross, the
Ottawa Hospital Foundation’s COVID-19 Emergency
Response Fund, the Ottawa Food Bank, Saskatoon
Food Bank & Learning Centre, and Dress for Success
Ottawa. Calian is grateful for all of our employees who
continued to be involved in charitable causes and
campaigns, with the company encouraging staff to
take paid time off to volunteer for charitable activities
of their choice.
the
reflect
relations and
Working with Indigenous partners
We continued to engage in partnerships to further
Indigenous
Indigenous
relations framework Calian adopted in 2019, with
three
fundamental principles: Listening, Learning
and Leveraging. These principles apply as Calian
establishes meaningful relationships with First Nations
and Indigenous suppliers, advocacy groups, business
councils, and employees. We seek out Indigenous
communities for partnerships and actively work towards
developing a shared vision to meet their needs.
As part of our corporate social
responsibility
commitments, the company has taken a leadership
position as a sponsor in a long-term research project
under the auspices of Luminary, a national initiative
18
to design and implement an Indigenous innovation
strategy that supports economic transformation and
well-being within Indigenous communities. Calian is a
charter member of Luminary.
Similarly, Calian was honoured this year to launch a
collaboration with Saulteaux Tribal Nation L.P., a First
Nations-owned and operated company in Manitoba,
to upgrade community resilience and emergency
response capacity in the province. In this partnership
Calian is working collaboratively with Saulteaux to
deliver emergency management services and best
practices to other First Nations in the province.
Through this joint effort, Calian is striving to do its
part to build more respectful, long-term, economically
sustainable programs with Indigenous communities
based on consultation, shared knowledge and
collective goals. The approach is in keeping with the
need to strengthen business-Indigenous relationships
and increase Indigenous economic engagement and
inclusion, as prioritized in the reconciliation framework
laid out
the 2015 Truth and Reconciliation
Commission Calls to Action.
in
Supporting the military community
Support for Canadian Armed Forces (CAF) members
and their families remained core to our social impact
efforts this year. Calian moved ahead with a virtual
health pilot program to expand military family access
to physicians in Ontario. The Ontario Telemedicine
Network (OTN) partnered with Calian to offer military
family members access to a network of virtual doctors.
Military family patients from the Petawawa/Pembroke
region of Ontario can now access an Ontario physician
at home via secure video through this pilot program.
This project is the latest step in Calian’s program
dedicated to helping military families access a family
physician. While the CAF provides serving members
with complete health care, their family members rely
on the provincial health systems, presenting a unique
challenge for military families who relocate frequently
due to postings. In response to this issue, Calian
created the Military Family Doctor Network (MFDN) in
partnership with Military Family Services, a division of
Canadian Forces Morale and Welfare Services. MFDN
helps connect military family members to participating
physicians after the families relocate to communities
2020 Annual ReportCalian Group Ltd. Saulteaux Tribal Nation L.P.: Calian is working collaboratively with Saulteaux to deliver emergency
management services and best practices to other First Nations in the province.
around the country. We are proud to say this project
has received widespread pickup from those it is
intended to support. As of fiscal year-end, more than
3,000 military family members had been referred to a
family doctor through MFDN.
Calian continued to work in support of military families
as the founder of Innovation to Impact, a multi-
disciplinary working group that is making the growing
body of military family research available to physicians
and health care providers across Canada. With funding
from the Veteran and Family Well-Being Fund, Calian
created information guides to help physicians and
Military family members share the unique healthcare
needs of Veterans and their families. The results-
oriented Innovation to Impact group is comprised of
Calian, Military Family Services, the Canadian Institute
for Military and Veteran Health Research, and the
Vanier Institute of the Family.
Calian is passionate about making a difference in the
lives of transitioning military members, Veterans and
their families. It is well-known that a serving member’s
transition to civilian life can be challenging, representing
a sudden change in culture, the structure of daily life
and application of long-held skills. Recognizing these
challenges, Calian is committed to being one of the
country’s top Veteran-friendly employers. We strive to
assist military members find high-quality jobs as they
move into civilian life.
At the end of FY2020, Calian had hired more than 750
former military personnel since January 2012, and,
as a participant in the Military Spousal Employment
Network, we have hired approximately 190 military
spouses since January 2016. Aligned with Calian’s
ongoing support for military members and their
families, we were pleased to once again support the
Ottawa Senators’ annual Canadian Armed Forces
Appreciation Night in October 2019.
Health and diversity
As one of Canada’s largest national health service
providers, Calian supported several health-related
social responsibility initiatives in 2020. We were a
sponsor of the President’s Breakfast at the Ottawa
Hospital, and sponsored Gloria Higdon, a Calian
senior business relationship manager, for Women for
Mental Health, a philanthropic undertaking of the Royal
Ottawa hospital. For Operation Smile, a group that
provides support to children with cleft palates, Calian
offered free advertising on Primacy TV, the television
health and lifestyle advertising program in the waiting
rooms of Primacy’s 140-plus clinics across Canada.
Throughout our growing organization, diversity in our
people is recognized as one of Calian’s core strengths.
We believe that building teams with widely different
ethnic, racial, and social backgrounds accelerates
19
Calian Group Ltd.2020 Annual Report our pursuit of excellence. Supporting diversity means
fostering an environment that lets Calian employees
fully contribute to our collective success as well as their
own. We believe in nurturing a culture where everyone
is valued for the unique qualities they provide. Calian
remains focused on its corporate diversity policy and
objectives to increase the number of women and
people from underrepresented groups in its executive
team. Calian was recognized this year in the “Women
Work Here” special in The Globe and Mail’s Report
on Business, identifying the company as one of 73
Canadian enterprises at the forefront of women in
leadership positions
We are committed to equal employment opportunity
and to complying with all laws related to workplace
opportunity. Our Equal Employment Opportunity
practice applies to all phases of employment – selection,
promotion and demotion, transfer, compensation and
benefits, layoff and recall, and termination. Calian
strives for a workplace free of discrimination, hostility,
and physical or verbal harassment.
Human rights and the environment
Calian’s human rights principles extend internationally,
with our Advanced Technologies division refusing,
for instance, to support the use of minerals linked to
conflicts or human rights abuses. We remain cognizant
of our environmental footprint. Our Calian excellence
framework includes leadership and governance drivers
that emphasize social and environmental factors, and
we are committed to protecting the environment and
reducing waste.
Wherever possible, Calian promotes the efficient
use of energy and natural resources and supports
environmentally friendly disposal. To this end, Calian
manages our manufacturing services to maintain our
reputation as a good environmental steward. We meet
all of our environmental laws and regulations, in addition
to offering lead-free manufacturing capabilities in
compliance with Restriction of Hazardous Substances
(RoHS) standards. We constantly look for ways to
reduce our environmental footprint through new
processes and materials.
Calian remains committed to having a positive impact
within our communities, whether through charitable
20
work, contributions, delivering services and solutions,
or collaborations with our partners. We look forward
to continuing to work with customers and partners to
support our communities and the people within them,
with special attention to military members and their
families. Our impact will continue to be focused on
helping the world communicate, learn, lead healthy
lives and stay safe.
Supporting charitable campaigns
Some charitable organizations Calian supported
FY2020
• HealthPartners
• Royal Ottawa Foundation
• The Ottawa Hospital Foundation
• United Way
• Canadian Red Cross
• Centraide Outaouais
• The Montfort Hospital
• CHEO
• Rideauwood Addiction and Family Services
• Stars Air Ambulance
• Saskatoon Food Bank and Learning Centre
• Ottawa Food Bank
• Dress for Success Ottawa
• Holiday Hamper Program (Saskatoon)
• Canadian International Rover Challenge
• University of Saskatchewan Space Design Team
• Space Camp for Kids (Saskatoon)
• CJ Mackenzie Gala of Engineering Excellence
• University of Saskatchewan, University
of Regina and Saskatchewan Polytechnic
(scholarships)
2020 Annual ReportCalian Group Ltd. Looking Forward
Calian has demonstrated the ability to consistently
grow the business while maintaining our profitability
and making targeted investments in our growth
posture. Our growth
through 2020 was both
challenging and rewarding. The company’s resilience
was clearly evident as our diversified essential
services and solutions helped the company report
record revenues amid the historic public health crisis.
targeted
Calian’s stability remains key to our investment
value proposition: Stability
through diversity,
growth through innovation. Strategic acquisitions
and
investments have expanded our
products, solutions and customer base in Canada
and internationally — and through this growth we
have maintained our stability. We were very happy to
finish the fiscal year reporting our 76th consecutive
profitable quarter, that’s 19 years of consistent
profitable execution.
We are excited about the potential of this company as
we continue our pivot to innovation, growth and global
markets. This was an important year for the team as
we finalized a new strategy that will take us through
the second half of that pivot over the next three years.
We remain proud of the impact of Calian’s services,
which have been critical to customers’ operations or
Corporate leadership team
well-being. This has reflected our updated mission
statement: “To deliver innovative solutions that help
the world communicate, learn, lead healthy lives and
stay safe.”
Looking forward, the company is well-positioned
to build on our record accomplishments in 2020.
Having completed a successful round of financing
in the second quarter of 2020, Calian remains
well-capitalized to support our profitable growth
momentum as we execute our strategy. We have
invested in the management team, with the addition
of a Chief Commercial Officer and Chief Technology
Officer, who will help drive Calian’s customer
diversification, innovation, product offerings and
overall growth. The entire Calian team is excited about
the opportunity to capitalize on Calian’s potential in
the months and years to come.
The team will continue to embrace Calian’s diversity
and four-segment structure. For our customers,
it comes down to continuously improving and
expanding the products, services and solutions that
our team of experts can deliver for critical industries.
It has been an exciting journey to date, and as we
often say at Calian, we’re just getting started.
Kevin Ford,
CEO
Patrick Houston,
CFO and
Corporate
Secretary
Sue Ivay,
CHRO
Jerry Johnston,
CIO
Jacqueline
Gauthier, Senior
VP, Corporate
Development
Patrick Thera,
VP and General
Manager,
Advanced
Technologies
21
Calian Group Ltd.2020 Annual Report The following Management’s Discussion and Analysis is dated November 24, 2020 (this “MD&A”) and should be
read in conjunction with the audited consolidated financial statements. The Company’s accounting policies are in
accordance with IFRS. As in the unaudited interim condensed consolidated financial statements, all dollar amounts
in this MD&A are expressed in thousands of Canadian dollars unless otherwise noted.
This MD&A is the responsibility of management and has been reviewed and approved by the Board of
Directors of the Company. This MD&A has been prepared in accordance with the requirements of the
Canadian Securities Administrators. The Board of Directors is responsible for ensuring that management
fulfills its responsibilities for financial reporting and is ultimately responsible for reviewing and approving the
MD&A. The Board of Directors carries out this responsibility principally through its Audit Committee.
IFRS and non-GAAP measures:
This MD&A contains both IFRS and non-GAAP measures. Non-GAAP measures are defined and reconciled to
the most comparable IFRS measure.
Forward-looking statements
The Company cautions that this M&DA contains forward-looking statements. These forward-looking statements are
based on certain assumptions made by the Company that may prove to be inaccurate. Forward-looking statements
includes those identified by the expressions “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend” and similar
expressions. Forward-looking statements are not historical facts, but reflect the Company’s current intentions, plans,
expectations and assumptions regarding future results or events. Forward-looking statements are intended to assist
readers in understanding management’s expectations as of the date of this MD&A and may not be suitable for other
purposes.
Forward-looking statements are based on assumptions, including assumptions as to the following factors:
• customer demand for the Company’s services;
• the Company’s ability to maintain and enhance customer relationships;
• market conditions;
• levels of government spending;
• the Company’s ability to bring to market products and services; and
• the Company’s ability to execute on its acquisition program including successful integration of previously acquired
businesses; and
• the Company’s ability to deliver to customers throughout the COVID-19 pandemic, and any government regulations
limiting business activities.
The Company cautions that the forward-looking statements in this MD&A are based on current expectations as at
November 24, 2020 that are subject to change and to risks and uncertainties, including those set out under the heading
“Risks and Uncertainties” below, many of which are outside the Company’s control. Actual results may materially
differ from such forward-looking information due to factors such as customer demand, customer relationships, new
service offerings, delivery schedules, revenue mix, competition, pricing pressure, foreign currency fluctuations and
uncertainty in the markets in which the Company conducts business. Additional information identifying risks and
uncertainties is contained in the Company’s filings with securities regulators. The Company does not assume any
intention or obligation to publicly update or revise any forward-looking statements or forward-looking information,
whether as a result of new information, future events or otherwise, except as required by applicable law. Readers
should not place undue reliance on the Company’s forward-looking statements.
22
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd.
The outbreak of the coronavirus, or COVID-19, which was declared a pandemic by the World Health Organization
on March 11, 2020 has spread across the globe and is impacting worldwide economic activity. A public health
pandemic, including COVID-19, poses the risk that the Company and its employees, contractors, suppliers, and other
partners may be prevented from conducting business activities. This can especially be the case where government
authorities mandate shutdowns. Certain countries may also be more heavily impacted where travel restrictions
continue for longer periods and full quarantines are in effect. The extent to which the COVID-19 outbreak impacts the
Company’s results will depend on future developments that are highly uncertain and cannot be predicted, including
new information that may emerge concerning the severity of the virus and the actions to contain its impact. The
Company and its employees have transitioned to working remotely and customer delivery has not been materially
impacted. The Company is reliant on this alternative work arrangement in order to minimize the impact of outbreak
on its financial results.
Business overview and strategic direction
Calian is a diverse company. For over 38 years, the Company has evolved into an organization that has consistently
demonstrated the ability to manage numerous profitable service offerings while earning a high level of customer
satisfaction. Our DNA allows us to manage this complexity, and to successfully deliver in domestic and global markets.
Calian’s primary operating segments are:
• Advanced Technologies
• Health
• Learning
• Information Technology (“IT”)
The diversity of this operating model is pivotal to the Company’s success. By serving many customers in wide
ranging and geographically varied markets, Calian is able to capitalize on unique opportunities and upturns in a
number of markets while at the same time weathering the downturns experienced in others. This diversity is most
evident when comparing the business and operating models of the four segments.
While our services are diverse, our growth strategy is anchored in a common four- pillar framework which can
be described as follows:
• Customer retention: through continued delivery excellence, maintain a valued relationship with current
customer base;
• Customer diversification: through increasing the percentage of revenues derived from new business in
adjacent and non-government markets, balance customer revenue into numerous global and domestic
sectors;
• Service line innovation: continue investment in service offerings to increase differentiation and improve
gross margins; and
• Continuous improvement: leverage innovation to improve how the company operates with a goal to
streamline processes and provide for a scalable back office support capability.
The growth strategy at Calian can be summarized as follows: winning new contracts, expanding the scope of
existing contracts, capitalizing on innovation demonstrated in each of the operating segments, and Mergers and
Acquisitions. We have continued to demonstrate our ability to win new contracts and evolve; for example, continued
expansion in our Health segment where we have not only increased our total number of contracts in the year, but
also our services continue to evolve as well. This can be observed through our contract wins in the current year for
COVID-19 screening, and the support in delivering up to ten 100-bed Mobile respiratory Care Units as part of the
federal government’s pandemic response. Further, we have demonstrated an ability to expand the scope of services
with existing customers through our cross service line pollination and growth.
23
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report
A number of our services are applicable to each and every one of our customers and we have been bringing more
value to the table for our customers through the diverse service offerings. Innovation is a key growth driver for Calian.
Innovation in the new product and services we develop, as well as innovation in the way we deliver those services
are key in maintaining our market position and winning new customers.
Finally, with twelve successful acquisitions in the last nine years, we continue to demonstrate to our customers an
ability to grow and expand, both in terms of geography and service offerings.
In aggregate, all of these factors contributed to Calian’s profitable growth. Revenue grew 12% in fiscal 2019 and
26% in fiscal 2020 which resulted in the Company’s highest level of both adjusted net profit and EBITDA.
Key attributes of our four operating segments:
Customers
Business units
Customer
Geography
Government
Revenue
Quality initiatives
Health
Learning
Information
Technology
Department of
National Defence,
Canada Border
Services Agency,
Loblaw, Police
agencies across
Ontario, SNC-
Lavalin PAE
Department of National
Defence, Canadian Army
Simulation Centre, Bruce
Power, City of Ottawa
and other municipalities
across Canada
Shared Services
Canada, General
Dynamics and
other private and
public high-tech
companies
Health services,
psychological
assessment services,
medical property
management
Custom training,
emergency management
solutions, software
products, consulting,
course development
IT consulting,
IT and cloud
solutions, software
development, SAP
consulting, cyber
security solutions
Advanced
Technologies
European
Space Agency,
Inmarsat, MDA,
Sirius XM, Bruce
Power
Engineering
services,
products,
solutions,
software
development,
manufacturing,
training, technical
services
International
Canada
Canada, Europe
Canada
19%
64%
98%
65%
Excellence
Canada / ISO
9001:2015
Excellence Canada /
ISO 9001:2015
Excellence Canada
Excellence
Canada
Backlog ($ 000’s)
143,366
822,568
276,109
65,914
Calian operates at locations across Canada (ranging from British Columbia to Nova Scotia), as well as Europe
(Germany, and Norway with the acquisition which closed on July 8, 2020). Calian is headquartered in Ottawa,
Ontario, and is recognized as a leading professional services organization, providing services and solutions in
Advanced Technologies, Health, Learning and IT. We are a continuous improvement organization, a founding
partner of Excellence Canada, and accredited to Excellence Canada’s Excellence, Innovation and Wellness Gold-
Level certification.
24
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd.
The cost structure of Calian’s Health, Learning and Information Technology segments is for the most part variable,
as contracts are typically on a per-diem basis with a majority being multi-year outsourcing assignments. This allows
for predictable cash flows over long periods of time. With a long term commitment and reduced risk profile, margins
are correspondingly lower.
Historically our core competencies, common across all operating segments, are project, contract and workforce
management; however, the segments continue to evolve their services to incorporate technology to offer full
solutions to our customers. Each of these competencies is aligned to each of our segments.
A large portion of our revenues are derived from Canadian sources in the public and private sectors, with a large
presence in the Department of National Defence. We have been successful in our diversification strategy, and have
developed a well-established private sector customer base across Indigenous communities, oil and gas, nuclear,
aerospace, defence and numerous others. For example, our health service line includes the administration on behalf
of Loblaw of over 150 medical clinics across Canada, as well as the provision of health care services to oil and gas
customers. The Learning segment, which historically was predominantly revenue generated from the Government of
Canada, has expanded its customer base to include municipalities, First Nations, healthcare, private industry, and
into NATO spurring from the acquisition of Comprehensive Training Solutions. In addition, Advanced Technologies
delivers to customers through usually fixed price projects and product sales to a predominantly global marker with
over 80% of sales coming from international business.
Revenue growth from new contract opportunities within government will be largely dependent on the issuance
of the initial proposal request and the ultimate timing of the related contract award. The Company has significant
realizable backlog at $1,307 million that spans over 10 years. Calian’s historical high renewal rate combined with its
win strategy provides management confidence in its ability to successfully remain the customer’s preferred choice.
While federal government spending priorities fluctuate, profitable business does exist for companies who have
the financial strength to accommodate slowdowns in government spending, and the discipline to adjust costs to
declines in revenue. Calian’s strong back office capabilities, along with our emphasis on continuous improvement and
business development, ensures that we are able to identify and win new business opportunities and accommodate
that new business in a scalable fashion.
Of note, as our segments operate in niche areas within large markets, there exists minimal third-party data to
compare with the Company’s performance. While analyzing general market trends provides some insight on the
strength and potential opportunities within those markets, it is not always indicative of the health, demand, and
funding of the individual customers of the Company. To compensate for the limited amount of information, and
to provide an indication of future revenue potential, this MD&A provides a detailed overview of the Company’s
backlog by segment showing both contracted backlog and option renewals by fiscal year. In addition, the following
discussion, which refers to the type of contracts performed by each of the four segments will provide some insight
into the level of customer specific demand for our services.
The Company’s operations are subject to some quarterly seasonality due to the timing of vacation periods , statutory
holidays and fluctuations in demand by industry. Typically, the Company’s first and last quarter will be negatively
impacted because of the Christmas season and summer vacation period. During these periods, the Company can
only invoice for work performed and is also required to pay for statutory holidays. This results in reduced levels of
revenues and in a drop in gross margins. This seasonality may not be apparent in the overall results of the Company
depending on the impact of the realized sales mix of its various projects. This is slightly offset in the summer months
with IntraGrain having higher sales in this period, but further adds to the seasonality in the first quarter results.
25
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report Selected quarterly financial data
(Canadian dollars in millions, except per share data)
Q4/20
Q3/20
Q2/20
Q1/20 Q4/19(1) Q3/19(1) Q2/19(1) Q1/19(1)
Revenues
Advanced Technologies
$ 37.6
$ 35.9
$
39.9
$ 40.0
$ 31.4
$ 30.5
$ 23.9
$ 23.8
56.8
14.3
14.4
43.9
11.1
14.6
32.2
17.3
15.1
30.0
15.1
14.1
31.3
14.0
14.2
29.3
15.6
13.4
27.8
17.6
14.1
27.3
15.9
12.9
$ 123.1
$ 105.5
$ 104.5
$ 99.2
$ 90.9
$ 88.8
$ 83.4
$ 79.9
79.0
20.2
70.6
20.3
69.5
19.3
65.3
18.1
63.1
16.8
Health
Learning
Information Technology
Total revenue
Cost of revenue
Gross profit
Selling and marketing
General and administration
Research and development
Profit before under noted
items
Depreciation of equipment
and application software
Depreciation of right of use
asset
Amortization of acquired
intangible assets
Other changes in fair value
100.2
22.9
3.0
10.0
0.7
9.2
1.0
0.7
1.7
-
83.0
22.5
3.2
9.8
0.5
9.0
0.9
0.7
1.4
-
Changes in fair value related
to contingent earn-out
(2.8)
0.4
Profit before interest and
income tax expense
Lease interest expense
Interest expense (income)
Profit before income tax
expense
Income tax expense
8.6
0.1
-
8.5
1.6
5.6
0.1
(0.1)
5.6
1.8
Net profit
$
6.9
$
3.8
$
81.0
23.5
3.3
9.5
0.4
10.3
0.6
0.7
1.2
-
0.3
7.5
0.1
0.2
7.2
1.8
5.4
2.8
8.6
0.4
8.4
0.5
0.7
0.9
(0.1)
0.2
6.2
0.1
0.1
6.0
1.7
2.8
9.1
0.3
8.1
0.6
-
1.4
-
2.9
9.3
0.4
6.7
0.6
-
1.0
-
(4.1)
(0.3)
10.2
-
-
10.2
1.7
5.4
-
-
5.4
1.1
4.3
2.3
8.9
0.3
6.6
0.6
-
0.4
-
0.2
5.4
-
-
5.4
1.5
2.4
8.3
0.4
5.7
0.5
-
0.3
-
0.1
4.8
-
-
4.8
1.5
$
3.9
$ 3.3
$
4.3
$
8.5
$
Weighted average shares
outstanding - Basic
Weighted average shares
outstanding - Diluted
Net profit per share
Basic
Diluted
Adjusted EBITDA per share
Basic
Diluted
9.0M
8.8M
8.8M
7.9M
7.9M
7.9M
7.8M
7.8M
9.1M
8.9M
8.9M
8.0M
8.0M
7.9M
7.9M
7.8M
$ 0.70
$ 0.40
$ 0.70
$ 0.40
$ 0.94
$ 0.93
$ 0.95
$ 0.92
$
$
$
$
0.60
0.59
1.16
1.14
$ 0.55
$ 1.08
$ 0.54
$ 0.50
$ 0.43
$ 0.54
$ 1.08
$ 0.54
$ 0.49
$ 0.43
$ 1.04
$ 1.03
$ 0.86
$ 0.84
$ 0.73
$ 1.03
$ 1.02
$ 0.85
$ 0.84
$ 0.73
(1)No restatement performed in Fiscal 2019 or 2018 figures due to the entity applying the modified retrospective approach on implementation
of IFRS 16 which occurred in fiscal 2020.
26
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. Certain comparative figures have been reclassified to conform to the current year’s presentation whereby facilities
expense have been reclassified into general and administration expense, and research and development expense in
operating expenses have been separated from general and administration expense.
With the implementation of IFRS 16, facilities expenses have decreased significantly since the Company has adopted
the standard using the modified retrospective method where prior period statements are not restated. The fixed lease
cost portion of previous lease expenses is now depreciation and interest under IFRS 16. Lease costs not capitalized
under IFRS 16 have been included in general and administration expenses. The reclassification of facilities to general
and admin by quarter was Q1 FY19: $1,293, Q2 FY19: $1,305, Q3 FY19: $1,346 and Q4 FY19: $1,362. The Company
is presenting comparative information for fiscal 2019 with research and development as a separate line item in the
statement of profit, whereas previously it was presented in general and administrative expenses. The reclassification
of research and development from general and administration by quarter was Q1 FY19: $279, Q2 FY19: $361, Q3
FY19: $343 and Q4 FY19: $436. When reporting comparative information, there is no financial statement that the
Company has issued where research and development are presented separately for fiscal year 2018 or previous.
The Company maintains that presentation here for 2018 where research and development operating expense costs
are included in the general and administration expense.
The Company has included all changes that relate to contingent earnout in the changes in fair value related to
contingent earnout for the current year. A reclassification is required for the prior year when management separated
changes in earnout relating to interest in changes in fair value related to contingent earnout and writing down the
provision for earnout payable to other changes in fair value line. The reclassification of other changes in fair value to
changes in fair value related to contingent earnout by quarter was Q3 FY19: $650, Q4 FY19: $4,522.
27
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report Fourth Quarter Financial Summary
This fourth quarter unaudited interim condensed consolidated financial summary should be read in conjunction with
the annual financial statements along with accompanying notes thereto.
Consolidated Statements of Net Profit
For the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share data):
Three months ended
September 30,
Year ended
September 30,
2020
2019
2020
2019
Revenue
Advanced Technologies
$
37,570
$
31,437
$
153,382
$
109,697
Health
Learning
Information Technology
Total Revenue
Cost of revenues
Gross profit
Selling and marketing
General and administration
Research and development
Profit before under noted items
Depreciation of equipment,
application software and
research and development
Depreciation of right of use asset
Amortization of acquired
intangible assets
Other changes in fair value
Changes in fair value related to
contingent earn-out
Profit before interest income and
income tax expense
Lease obligations interest
expense
Interest expense (income)
Profit before income tax expense
Income tax expense – current
Income tax expense (recovery) –
deferred
Total income tax expense
NET PROFIT
Net profit per share:
Basic
Diluted
28
56,848
14,282
14,357
123,057
100,190
22,867
3,028
9,978
658
9,203
969
734
1,684
-
31,286
13,983
14,208
90,914
70,571
20,343
2,769
8,990
436
8,148
622
-
1,460
-
163,035
57,834
58,069
432,320
343,164
89,156
12,336
38,012
1,998
36,810
2,976
2,771
5,166
(101)
115,718
63,098
54,531
343,044
268,387
74,657
10,499
35,592
1,420
27,146
2,220
-
3,168
-
(2,772)
(4,225)
(1,882)
(4,149)
8,588
123
19
8,446
2,122
(562)
1,560
6,886
0.70
0.70
$
$
$
$
$
$
10,291
27,880
25,907
-
50
10,241
1,982
(217)
1,765
8,476
475
185
27,220
8,171
(1,311)
6,860
$
20,360
$
-
36
25,871
6,318
(439)
5,879
19,992
1.08
1.08
$
$
2.25
2.23
$
$
2.55
2.54
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd.
Consolidated Statements of Cash Flows
For the years ended September 30, 2020 and 2019 (Canadian dollars in thousands):
CASH FLOWS GENERATED FROM (USED IN) OPERATING
ACTIVITIES
Net profit
Items not affecting cash:
Interest expense (income)
Changes in fair value related to contingent earn-out
Lease obligations interest expense
Income tax expense
Employee share purchase plan expense
Share based compensation expense
Depreciation and amortization
Other changes in fair value
Change in non-cash working capital
Accounts receivable
Work in process
Prepaid expenses
Inventory
Accounts payable and accrued liabilities
Unearned contract revenue
Interest received (paid)
Income tax recovered (paid)
CASH FLOWS GENERATED FROM FINANCING ACTIVITIES
Issuance of common shares
Dividends paid
Draw (repayment) on line of credit
Share repurchases
Payment of lease obligations
CASH FLOWS USED IN INVESTING ACTIVITIES
Investments and loan receivable
Business acquisitions
Capitalized research and development
Equipment and application software
Three months ended
September 30,
Year ended
September 30,
2020
2019
2020
2019
$ 6,886
$ 8,476
$ 20,360
$ 19,992
19
(2,772)
123
1,560
78
279
3,387
-
9,560
7,256
(8,508)
1,225
(133)
2,233
(12,314)
(681)
(142)
1,059
236
1,589
(2,747)
-
-
(656)
(1,814)
-
(18,855)
(107)
(1,521)
(20,483)
50
(4,225)
-
1,765
37
322
185
(1,882)
475
6,860
199
1,163
2,082
10,913
-
(101)
36
(4,149)
-
5,879
173
1,182
5,388
-
8,507
38,172
28,501
3,140
(11,676)
(12,501)
(44,911)
6,334
(20,973)
(1,395)
1,216
8,167
(1,806)
20,044
(127)
(6,384)
13,533
3,316
(8,803)
13,000
(118)
-
7,395
(1,271)
(328)
17,251
4,501
1,738
(678)
(3,813)
(2,753)
70,488
(9,938)
(13,000)
-
(2,508)
45,042
(100)
-
(29,288)
(20,849)
(1,227)
(4,574)
(1,768)
(3,018)
(35,189)
(25,635)
1,173
(85)
4,479
(2,587)
2,126
(50)
(1,409)
667
366
(2,235)
1,000
-
-
(869)
-
-
(96)
(552)
(648)
NET CASH (OUTFLOW) INFLOW
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
$
$
(22,061)
$
(850)
$
7,100
46,296
24,235
$ 17,985
$ 17,135
$ 17,135
$ 24,235
$
$
$
(4,707)
21,842
17,135
29
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report
The diluted weighted average number of shares has been calculated as follows:
Three months ended
September 30,
Year ended
September 30,
2020
2019
2020
2019
Weighted average number of common shares – basic
9,732,754
7,915,071
9,044,588
7,843,265
Additions to reflect the dilutive effect of employee
stock options and RSU’s
122,603
43,722
59,910
20,096
Weighted average number of common shares – diluted
9,855,357
7,958,793
9,104,498
7,863,361
The following table presents the revenue of the Company for the years ended September 30, 2020 and 2019
(Canadian dollars in thousands):
Product revenue
Advanced Technologies
Health
Learning
Information Technology
Total product revenue
Service revenue
Advanced Technologies
Health
Learning
Information Technology
Total service revenue
Three months ended
September 30,
Year ended
September 30,
2020
2019
2020
2019
$ 26,420
$ 19,985
$ 109,532
$ 66,204
17,534
-
1,758
-
-
25,184
-
-
-
1,713
8,357
3,549
$ 45,712
$ 21,698
$ 143,073
$ 69,753
$ 11,150
$ 11,452
$ 43,850
$ 43,493
39,314
14,282
12,599
31,286
13,983
12,495
137,851
115,718
57,834
49,712
63,098
50,982
$ 77,345
$ 69,216
$ 289,247
$ 273,291
Total revenue
$ 123,057
$ 90,914
$ 432,320
$ 343,044
30
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd.
Segmented information is as follows for three months ended September 30, 2020 (Canadian dollars in thousands):
For the three months ended
September 30, 2020
Advanced
Technologies
Health
Learning
IT
Revenue
Cost of revenues
Gross profit
Gross profit %
Selling and marketing
General and administration
Research and development
$ 37,570
$ 56,848
$ 14,282
$ 14,357
30,544
7,026
46,976
9,872
10,955
11,715
3,327
2,642
19%
17%
23%
18%
1,136
1,559
497
526
2,069
160
230
778
-
724
829
1
Shared
Services
-
-
-
N/A
412
4,743
-
Total
$123,057
100,190
22,867
19%
3,028
9,978
658
Profit before under noted items
$ 3,834
$ 7,117
$ 2,319
$ 1,088
$ (5,155)
$ 9,203
Profit before under noted items
%
Depreciation of equipment and
application software
Depreciation of right of use asset
Amortization of acquired
intangibles
Other changes in fair value
Changes in fair value related to
contingent earn-out
Profit before interest income
and income tax expense
Lease interest expense
Interest expense (income)
Profit before income tax
expense
Income tax expense – current
Income tax expense – deferred
Total income tax expense
10%
13%
16%
8%
N/A%
7%
969
734
1,684
-
(2,772)
$8,588
123
19
$8,446
2,122
(562)
$1,560
31
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report NET PROFIT FOR THE PERIOD
$6,886
Segmented information is as follows for three months ended September 30, 2019 (Canadian dollars in thousands):
For the three months ended
September 30, 2019
Advanced
Technologies
Health
Learning
IT
Revenue
Cost of revenues
Gross profit
Gross profit %
$ 31,437
$ 31,286
$ 13,983
$ 14,208
22,974
8,463
24,870
6,416
11,025
11,702
2,958
2,506
26%
21%
21%
18%
Shared
Services
-
-
-
-
Selling and marketing
General and administration
Research and development
1,320
2,117
436
191
1,002
-
198
732
-
712
587
-
348
4,552
-
Total
$ 90,914
70,571
20,343
22%
2,769
8,990
436
Profit before under noted items
$ 4,590
$ 5,223
$ 2,028
$ 1,207
$ (4,900)
$ 8,148
Profit before under noted items
%
Depreciation of equipment and
application software
Depreciation of right of use asset
Amortization of acquired
intangibles
Other changes in fair value
Changes in fair value related to
contingent earn-out
Profit before interest income
and income tax expense
Lease interest expense
Interest expense (income)
Profit before income tax
expense
Income tax expense – current
Income tax expense – deferred
Total income tax expense
NET PROFIT FOR THE PERIOD
15%
17%
15%
9%
N/A
9%
622
-
1,460
-
(4,225)
$10,291
-
50
$ 10,241
1,982
(217)
$ 1,765
$ 8,476
Certain comparative figures have been reclassified to conform to the current year’s presentation whereby facilities
expense have been reclassified into general and administration expense, and research and development expense in
operating expenses have been separated from general and administration expense.
With the implementation of IFRS 16, facilities expenses have decreased significantly since the Company has adopted
the standard using the modified retrospective method where prior period statements are not restated. The fixed lease
cost portion of previous lease expenses is now depreciation and interest under IFRS 16. Lease costs not capitalized
under IFRS 16 have been included in general and administration expenses. The reclassification of facilities to general
and admin by quarter was Q1 FY19: $1,293, Q2 FY19: $1,305, Q3 FY19: $1,346 and Q4 FY19: $1,362. The Company
is presenting comparative information for fiscal 2019 with research and development as a separate line item in the
statement of profit, whereas previously it was presented in general and administrative expenses. The reclassification
of research and development from general and administration by quarter was Q1 FY19: $279, Q2 FY19: $361, Q3
FY19: $343 and Q4 FY19: $436. When reporting comparative information, there is no financial statement that the
32
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. Company has issued where research and development are presented separately for fiscal year 2018 or previous.
The Company maintains that presentation here for 2018 where research and development operating expense costs
are included in the general and administration expense.
The Company has included all changes that relate to contingent earnout in the changes in fair value related to
contingent earnout for the current year. A reclassification is required for the prior year when management separated
changes in earnout relating to interest in changes in fair value related to contingent earnout and writing down the
provision for earnout payable to other changes in fair value line. The reclassification of other changes in fair value to
changes in fair value related to contingent earnout by quarter was Q3 FY19: $650, Q4 FY19: $4,522.
Calian consolidated results
During 2020, the Company made significant progress on its growth, diversification and innovation agendas. Overall
consolidated growth was 26%. The realization of double digit growth in our health and advanced technologies
segments, along with single digit growth in out IT segment were partially offset by shortfalls experienced in segments
where the effects of the COVID-19 business environment are felt more strongly. In 2020, we also signed numerous
significant contracts totaling $554 million, ending the period with a realizable backlog of $1,307 million. This compares
to a realizable backlog of $1,185 million at the beginning of the year.
The Company has made progress in its efforts to diversify outside its traditional customer base of government entities.
Revenue from government in 2020 was 53%, compared to 69% in the previous year. Revenue growth year over year
for customers outside government was 90%.
Revenue
Gross profit
Selling and marketing
General and administration
Research and development
Three months ended
Year ended
September 30,
2020
September 30,
2019(1)
September 30,
2020
September 30,
2019(1)
$
123,057
$
22,867
3,028
9,978
658
90,914
20,343
2,769
8,990
436
$
432,320
$
343,044
89,156
12,336
38,012
1,998
74,657
10,499
35,592
1,420
Profit before under noted items
$
9,203
$
8,148
$
36,810
$
27,146
(1)No restatement performed in Fiscal 2019 figures due to the entity applying the modified retrospective approach on implementation of IFRS 16
which occurred in fiscal 2020.
Revenue
The Company experienced significant growth in revenue in its fourth quarter and fiscal year, increasing revenue by
35% in the three-month period and 26% for the twelve months ended September 30, 2020, compared to already
record levels in the same periods of the prior year. Revenue growth in the three-month period ending September 30,
2020 can be attributed to 27% from organic growth, and 8% from acquisitions while revenue growth for the twelve
month period ended September 30, 2020 can be attributed to 21% organic growth, and 5% from acquisitions. We
measure our growth through acquisition on trailing 12-month basis; once the acquisition has been included in our
results for 12-months, we include the contribution in our organic growth metric.
Our Health segment saw the most significant growth in the quarter. Revenue increased 82% quarter over quarter,
and 41% year over year. This was the result of strong demand on our existing contracts despite COVID-19, increases
in scope for our existing contracts with the Government of Nunavut, a new contract to supply Mobile Respiratory
Care Units with SNC-Lavalin PAE and contributions from Alio Health, acquired earlier this year.
Advanced Technologies revenue grew by 20% in our fourth quarter when compared to the same period of the previous
year, and 40% for the twelve months when compared to the previous fiscal year. This was the result of deliveries on the
company’s largest ever satellite ground system project, and growth of its business into new market verticals.
33
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report
During the three and twelve-month periods ended September 30, 2020, the Company has been impacted by the
COVID-19 pandemic which resulted in the pause of certain projects which required on-site delivery. This was the case
in our Health, IT and Learning segments where customer engagements were structured to be delivered in-person.
In cooperation with our customers, the Company was able to resume activities with increased safety protocols, or
develop alternative delivery models which respected local government health and safety restrictions. The financial
impact of these temporary pauses in activity in contracts that otherwise would have continued was approximately
$12,200 in revenue and $3,700 in gross margins for the full fiscal year.
COVID-19 also impacted the business from demand perspective as certain customer groups reduced or deferred
spending. This was seen in our fourth quarter as demand for our AgTech products was lower than expected in the
pandemic context.
The impacts of COVID-19 were also seen on our cost to deliver existing contracts in our satellite ground system
business unit. Increased costs for travel and quarantine, availability of trained staff and delays in material resulted in
increased costs. At this time, we expect this environment to continue into 2021 and we have reflected this in our project
estimates.
Despite the business impacts described, COVID-19 has generated new opportunities in our Health and Learning
segments. We won $35,500 of new business related to governments and private enterprises responding to the
pandemic, of which, $27,600 was delivered in the current year.
Gross profit
As can be seen in the detailed discussions of each segments performance, gross margin by segment vary greatly
from 15% to 28% (see discussion by segment), and the mix of business in turn affects our consolidated gross
margin. We continue to see a significant portion of revenues from the Advanced Technology segment come from
large ground installation projects which typically have lower gross margins which has impacted margins in the
current year. Margins have also been impacted by the pandemic, as the revenues lost were at our historical margin
levels while new business won in our Health segment for Mobile Respiratory Care Units have lower gross margins.
The volatility of the Canadian dollar is an influencing factor for gross margins on new work in the Advanced
Technologies segment to the extent that work is denominated in foreign currencies and our direct costs are incurred
in Canadian dollars.
Operating expenses
Selling and marketing costs increased 17% for the 12-month period ended September 30, 2020, compared to the
same period of the prior year. The growth of selling and marketing costs is part of the Company’s efforts to diversify
our customer base and enter new market verticals. Our recent acquisitions have also resulted in additional sales
and marketing. COVID-19 did see us reduce our travel, and participation in trade shows and events due to social
distancing measures and travel restrictions.
General and administration costs increased by 11% for the three-month period and 7% for the twelve-month period
ended September 30, 2020 compared to the same periods of the year. Implementation of IFRS 16 in the current
period resulted in a reduction of facilities cost of $735 for the three-month period and $2,747 for the 12-month
period ended September 30, 2020, with a similar increase in depreciation and interest expense. After adjusting for
this modification, general and admin expenses increased by 19% for the three-month and 15% for the 12-month
periods when compared to the same period in the previous year. The increase is the result of investments within
the four operating segments to enable project delivery, increased costs for technology as our staff migrated to work
from home, costs acquired through recent acquisitions, increased costs in relation to share equity plans and the
one-time costs to complete the acquisitions of EMSEC Solutions, Comprehensive Training Solutions International,
and Tallysman Wireless.
Research and development costs increased $222 in the three-month and $579 for the 12-month periods ended
34
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. September 30, 2020, compared to the same periods in the prior year. The increase was the result of investments in
our AgTech product development along with software development costs from our recent acquisitions.
+40%
$153
2020
Segment
Revenue
$99
$110
+11%
2018
$153.4M
$21.0M
Advanced Technologies
Calian’s Advanced Technologies segment
offers
products,
engineering services and solutions for the
space, communications, nuclear, agriculture,
defence and government sectors. Our
covering
capabilities
software development, product development, custom manufacturing, full life-cycle support, studies, requirements
analysis, project management, multi-discipline engineered system solutions, and training. With a presence across
Canada and in Europe, the Advanced Technologies segment is a full-service organization offering turnkey solutions
for industry-leading customers in North American, European and global markets.
2019
Revenue (millions)
2020
Segment
EBITDA
are wide-ranging,
developed
internally
2020
A supplier of communication systems and products for terrestrial and satellite networks, Calian operates a centre
of excellence in communication ground systems for satellite and cable network operators around the world. We
provide satellite gateways which can include large aperture radio frequency (“RF”) antennas, telemetry tracking and
control, as well as high-availability software solutions for managing and monitoring these networks. The segment’s
software tools enable network operators to manage, plan and analyze network resources, including satellite power
and frequencies. With an international reputation for supporting space missions, we deliver custom communication
solutions and systems engineering capabilities to customers in Canada and around the world.
Calian’s manufacturing capability includes a surface mount electronics manufacturing line with automated inspection
and X-ray. We offer a composite carbon fiber manufacturing capability as well as an extruded cable manufacturing
line. These are complemented by engineering capabilities that support custom build-to-print manufacturing services
for commercial and defence clients. Calian’s AgTech products and solutions are manufactured in-house for the
agriculture sector, helping to protect assets such as stored crops, fuel and water.
Calian’s engineering and technical services support clients across the system engineering process, including
concept development for the design and implementation of next-generation critical systems and full life-cycle
support for propulsion, electrical and electronic systems, computer systems, naval architecture, and aerospace
and nuclear systems. Associated services are provided in integrated logistics support, drafting, and other technical
services. Our nuclear services team develops and executes comprehensive and cost-effective waste management
and decommissioning solutions, and provides a systematic approach to identifying hazards, determining their
consequences, and providing recommendations to mitigate identified risks. The scope of our nuclear services
includes decommissioning programs, radioactive waste management programs and remediation.
Financial performance
Revenue
Gross profit
Selling and marketing
General and administration
Research and development
Three months ended
Year ended
September 30,
2020
September 30,
2019(1)
September 30,
2020
September 30,
2019(1)
$
37,570
$
31,437
$
153,382
$
109,697
7,026
1,136
1,559
497
8,463
1,320
2,119
436
33,991
4,995
6,457
1,536
30,628
4,934
7,750
1,420
Profit before under noted items
$
3,834
$
4,588
$
21,003
$
16,524
(1)No restatement performed in Fiscal 2019 figures due to the entity applying the modified retrospective approach on implementation of IFRS 16
which occurred in fiscal 2020.
35
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report
In 2020, Advanced Technologies’ revenues increased by 20% for the three-month and 40% for the 12-month
periods ended September 30, 2020 compared to the same periods in the previous year. This continued revenue
growth in the current year is attributable to ongoing ground systems projects, increases in volumes of a new mobile
wireless product for a Tier 1 North American mobile operator, contract manufacturing for various defence projects,
and increases due to an ongoing satellite gateways software systems project. Internally developed product sales
continue to be a focus for the Company, contributing positively to revenue growth and higher margins in the future.
Acquisitive revenue growth amounted to 3% for the three-month and 4% for the 12-month periods ended September
30, 2020 which is attributable to revenue from acquisitions made in the last 12 month period from September 30, 2020.
During the quarter, margins were negatively impacted as higher costs for delivery and installation were seen on our
large North American satellite ground system project. The environment is resulting in increased costs for travel and
quarantine, availability of trained staff and delays in material resulted in increased costs. We expect this to continue in
the near future and have reflected this cost in our project costs which had a negative impact on the segment’s gross
margins. Gross margin percentage has decreased from 27% to 19% for the three-month period, and from 28% to
22% in the twelve-month period ended September 30, 2020 when compared to the same periods of the prior year.
During the quarter, the Advanced Technologies segment was impacted by COVID-19 in three main areas. First the
demand from our Fuel Lock product did not have the market penetration that we wanted due to travel restrictions
and trade show cancellations hindering our marketing efforts, along with the Agriculture industry tightening their
spending out of COVID-19 fears. Secondly, the ground systems projects have experienced additional costs due to
additional challenges introduced by COVID-19 mentioned previously and resulted in the company re-assessing its
cost to complete current ground system projects. This not only has a direct impact on the gross margin of the project,
but also impacts revenues as projects are recognized over time using the input method as costs are incurred. Finally,
throughout the segment we have seen projects that would have ultimately been delivered on time being delayed
which push out the revenue and margin into the next fiscal year. Total COVID-19 impacts have resulted in revenue
decrease of approximately $1,300 and $1,500 of gross profit for the quarter, and approximately $1,750 in revenue
and $1,600 in gross margin for the twelve month period ended September 30, 2020.
Selling and marketing expenses decreased by $184 for the three-month period ended September 30, 2020,
compared to the same period in the year prior. Decreases in the current quarter can be attributable to the ongoing
COVID-19 Pandemic, where travel restrictions and conferences have been delayed or cancelled. Increase in year to
date expenses when compared to the prior year is due to additional sales efforts across the segment focused on
customer diversification. General and administration expenses decreased by 26% for the three-month period, and
17% for the twelve-month period ended September 30, 2020, compared to the same periods in the year prior due to
changes in estimates of amounts payable, reductions from streamlining certain processes, and a focus on arbitrary
spend to offset lost revenues and margin due to the pandemic while being slightly offset by increases in revenue from
acquisitions.
Profitability decreased for the three-month period ended September 30, 2020 due to lower gross margin percentage
compared to the previous year. For the twelve-month period ended September 30, 2020, profitability for the
Advanced Technologies segment increased due to higher volumes and lower operating expenses, offset by a lower
gross margin percentage.
Fourth quarter and fiscal year 2020 highlights
Throughout the 2020 year, the Advanced Technologies segment focused on ensuring business continuity of
service for our customers in light of significant changes in the business environment due to COVID-19 as most
services provided are considered essential. Efforts to maintain workflow and minimize service interruptions included
enhanced close contact with supply chains, remote working for most staff, and implementation of health and safety
measures at the manufacturing facilities (staggered shifts, dispersed workstations, increased cleaning and sanitation,
among other measures). The majority of work continued relatively unabated throughout the year, but the various
changes mentioned did result in a higher cost environment. Any project disruptions are expected to be recovered
in future quarters. Limitations on travel will continue to be a factor in our ability to deliver and complete system
implementations.
On June 16, 2020, the Company announced the release of the Decimator D4 spectrum analyzer product. This is the
36
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. fourth generation of a previously successful product for the Advanced Technologies segment which is designed to
monitor radio frequency communications and detect signal issues. Powered by a new signal processing engine, the
Decimator D4 demodulates and decodes satellite signals, allowing a deeper inspection and analysis of the signals than
a traditional spectrum display. The feature proactively identifies issues in the network before they manifest as a failure.
The Engineering Technical Services unit was impacted by the COVID-19 customer site shutdowns early in the
pandemic, but has successfully moved to a remote delivery platform and which has resulted in a subsequent increase
in revenue up to the end of the year.
Calian Nuclear’s work continued on existing contracts without disruption. The nuclear consulting team has started
delivery on a new contract to conduct a large-scale, interoperable emergency preparedness exercise and safety
analysis work with a nuclear power station.
On September 1, 2020 the Company acquired Tallysman Wireless Inc. a leading manufacturer of precision Global
Navigation Satellite Systems (GNSS) antennas, and related components. Tallysman designs, manufactures and sells
a very wide range of GNSS, Iridium and Globalstar antennas and related products into a market with a broad range
of vertical applications that include precision reference systems, survey, timing, precision agriculture, unmanned
and autonomous vehicles, marine and many more. Tallysman also produces cloud-based wireless tracking systems
over two-way radio systems and 4G category M cellular systems, for applications ranging from school buses to
municipal public works.
+41%
$163
+17%
$116
$99
2018
2019
Revenue (millions)
2020
Health
2020
Segment
Revenue
2020
Segment
EBITDA
$163.0M
$23.4M
Calian’s health services team is one of Canada’s
largest national health services organizations.
The segment manages a network of more
than 1,800 health care professionals delivering
primary care and occupational health services
to public and private sector clients across
Canada.
The Department of National Defence is our largest customer, with health and psychological services also provided
to police, correctional institutions and border services agencies in the Canadian market.
Primacy, Calian’s medical property management brand, supports over nine million patient visits per year at over 150
clinic locations across Canada. Primacy clinics are located in Loblaw grocery stores across the country (including
Real Canadian Superstore®, Zehrs®, Loblaws® and No Frills®).
Our Health team recently entered the pharmaceutical trial management and administering patient support programs
on behalf of large Canadian pharmaceutical companies, through the acquisition of Alio and Allphase.
Financial performance
Revenue
Gross profit
Selling and marketing
General and administration
Research and development
Three months ended
Year ended
September 30,
2020
September 30,
2019(1)
September 30,
2020
September 30,
2019(1)
$
56,848
$
31,286
$
163,035
$
115,718
9,872
526
2,069
160
6,416
191
1,002
-
32,370
1,699
6,815
460
23,211
767
3,948
-
Profit before under noted items
$
7,117
$
5,223
$
23,396
$
18,496
(1)No restatement performed in Fiscal 2019 figures due to the entity applying the modified retrospective approach on implementation of IFRS 16
which occurred in fiscal 2020.
37
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report
Revenues increased 82% for the three-month and 41% for the twelve-month periods ended September 30, 2020
when compared to the same periods of the previous year as a result of new contract wins for fast turnaround in
relation to the COVID-19 Pandemic, and acquisitive revenue. Acquisitive growth represented a 20% increase for
the three-month and 12% for the twelve-month periods ended September 30, 2020 when compared to the same
periods of the prior year.
The Company has seen increased demand from new and existing opportunities in our clinician services and services
to remote locations in Northern Canada, and significant growth year-over-year from the delivery for SNC-Lavalin
PAE and government customers for medical screening for travelers.
Health was able to win considerable new business during the pandemic. This included a $30 million contract with
SNC Lavalin-PAE as well as multiple engagements to carry out screening for private enterprises.
During the quarter, the Health segment saw delays and shutdowns in certain projects due to the impact of COVID-19
which negatively affected both revenue and margin. The impact of those temporary pauses were a decrease of
approximately $600 in revenue for the three-month period, and approximately $4,250 in revenue and $770 in gross
margin for the twelve-month period ended September 30, 2020.
Gross margin percentage decreased from 20% to 17% for the three-month, and has remained constant at 20% for
the twelve-month periods ended September 30, 2020 when compared to the same periods of the prior year. The
decrease in the current quarter was due to the lower margin profile on the contract to deliver mobile hospitals in
response to COVID-19. Excluding this one-time item, margins overall for the fiscal year have improved by 3% as
compared to the previous year.
Selling and marketing expenses increased by $335 for the three-month and $932 for the twelve-month periods ended
September 30, 2020 due to costs in our Alio and Allphase pharmaceutical business unit, and variable compensation
costs. General and administration expenses increased by $1,067 for the three-month and $2,867 for the twelve-
month periods ended September 30, 2020 when compared to the same periods of the prior year, due to increases
in headcount to support new contracts and new headcount from our acquisitions completed in the previous 12
months.
Research and development increased in the Health segment is the result of continued investment in our HOME
software used extensively in the delivery of our patient support programs for pharmaceutical customers.
Fourth quarter and fiscal year 2020 highlights
During the year, the Health segment experienced increased demand in the provision of essential primary care
services and health care equipment, largely related to COVID-19 health care needs. Non-primary health services
workload were adjusted to comply with social distancing guidelines.
Health saw significant growth in our contract with the Government of Nunavut. The segment provides a comprehensive
suite of nursing services across multiple sites. During the quarter, we saw a significant increase in their need for
nursing services as they managed their COVID-19 response. Health saw a 100% increase in the revenues attributable
to the Government of Nunavut in the last quarter which demonstrates the satisfaction levels of the customer.
Customer satisfaction has been a staple for the Health segment over the years with long-standing contracts with
customers. This includes the contract with DND for the provision of health care providers which was won in 2017,
and was a continuation of services from the previous contract held from 2005 to 2018. In the current year, the Health
segment obtained record high performance management framework scores on the contract, which has resulted in
the highest performance incentive fee in relation to the contract to-date.
Customer diversification was also demonstrated in the quarter with the SNC-Lavalin PAE Joint Venture contract
win to support the delivery of up to ten 100-bed Mobile Respiratory Care Units (MRCUs) for the Government of
38
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. Canada’s pandemic response efforts. Deliveries of approximately $25 million have been made in the fiscal year with
the remaining scheduled to be delivered in the first quarter of fiscal 2021. This opportunity demonstrates the Health
segment’s ability to generate new business through difficult times. This is our first entry into the resiliency services
market, and launches a relationship which may prove strategic to the segment’s evolution.
Alio Health, Calian’s second quarter acquisition, contributed significant growth as it added new pharmaceutical
programs to its existing base. With the launch of “PSP One” for a large Canadian pharmaceutical company, which
is the consolidation of all of the Pharmaceutical Company’s patient support programs (“PSP”) with a single partner.
Wins in the energy sector across provinces of Alberta, British Columbia, and Saskatchewan over 8 locations will
continue throughout the COVID-19 Pandemic and help in offsetting some of the lost revenues from the Pandemic’s
impact on the segment.
Primacy, Allphase Clinical Research Services, and Alio Health Services continued to provide essential services with
steady demand and minimal disruptions to operations.
Learning
$62
$58
+2% -8%
$63
2020
Segment
Revenue
Calian is a trusted provider of specialized training
services and solutions for the Canadian Armed
Forces and clients in the defence, health, energy
and other sectors. We enable clients to improve
competency and validate learning plans and team
performance. Calian provides consulting services
in emergency management, training and advanced
training technologies to federal and provincial
governments, municipalities, Indigenous communities, and the private sector, primarily in domestic markets. Learning
offers full-service training programs and services ranging from needs analysis and program design, development
and delivery to administration and evaluation. Our goal for clients is to shorten the student’s time-to-competency.
Calian’s training consulting services help clients achieve learning outcomes and optimize their workforce.
$57.8M
$8.6M
2019
Revenue (millions)
2020
Segment
EBITDA
2018
2020
Complementing our training services are our products and technology. Calian MaestroEDE™ is a tool used to design,
develop and deliver high-fidelity, collective training exercises for military customers; Calian ResponseReady™ is an
online platform and simulation tool that supports emergency management training exercise delivery and evaluation.
Financial performance
Revenue
Gross profit
Selling and marketing
General and administration
Research and development
Three months ended
Year ended
September 30,
2020
September 30,
2019(1)
September 30,
2020
September 30,
2019(1)
$
14,282
$
13,983
$
3,327
230
778
-
2,958
198
731
-
$
57,834
12,451
987
2,882
-
63,098
12,535
910
2,838
-
Profit before under noted items
$
2,319
$
2,029
$
8,582
$
8,787
(1)No restatement performed in Fiscal 2019 figures due to the entity applying the modified retrospective approach on implementation of IFRS 16
which occurred in fiscal 2020.
39
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report
Revenue increased by 2% for the three-month and decreased by 8% for the twelve-month periods ended September
30, 2020 when compared to the same period of the prior year due to the impact of the COVID-19 pandemic. The
three-month growth is directly related to acquisitive growth. COVID-19 had a significant impact for programs that
required in-person training exercises, and in-class learning environments. As much as possible, the Company has
worked with customers to find alternative approaches to maintaining continuity of service and as of June, many
of the engagements that had to be paused have returned to work with new regulations to maintain safety of the
instructors and students. The impact to the learning segment in the current year due to the pandemic has resulted
in revenue decrease of approximately $480 and $90 of gross margin, respectively, for the three-month period, and
approximately $5,050 in revenue and $975 in gross margin for the twelve-month period ended September 30, 2020.
Gross margin increased from 21% to 23% for the three-month period and 20% to 22% for the twelve-month periods
ended September 30, 2020 due to a focus on margin efficiency for ongoing projects and some of the COVID-19
impact being on lower margin work. Operating costs remained in line with previous periods.
Fourth quarter and fiscal year 2020 highlights
Early in the year, the Learning segment won a contract for the Region of Peel to develop a wastewater emergency
response plan and a flood response plan. Calian Emergency Management Solutions will provide the Region of Peel
with engineering, security and emergency management expertise and lead a team of specialists to conduct risk and
vulnerability assessments, develop site-specific, facility-based response plans and procedures, and design and
facilitate a comprehensive training program. In similar recent projects, Learning segment experts have assisted the
Province of New Brunswick, City of Ottawa and City of Nanaimo with after-action reviews, and City of Whitehorse
with a hazard, risk and vulnerability assessment.
On April 28, 2020, the Company was awarded a contract renewal for custom training with the Canadian Forces
School of Aerospace Technology and Engineering. The contract is valued at $54 million over a six-year period. This
continues the engagement from our previous contract which began in 2016, and continues the relationship with the
Canadian Forces School of Aerospace Technology and Engineering who has been a partner of Calian’s for over 10
years.
On June 17, 2020, through the Learning segment, Calian has expanded its product catalogue with the launch of
ResponseReady™ for exercise simulation and training. ResponseReady™ is a licensed software solution for the
design, delivery and evaluation of emergency exercises and training. The software solution is applicable to the
work of emergency management professionals responsible for situations such as floods, wildfires and pandemics;
communications personnel who manage public response during a crisis; experts mandated with maintaining critical
infrastructure safety such as that of nuclear power facilities; or enterprise IT teams responsible for business continuity
related to cyber security threats.
On July 8th, 2020 the Company acquired Custom Training Solutions AS (“CTS”), a boutique training firm based
in Stavanger, Norway to expand its customer base and geographical reach. CTS designs, develops and delivers
complex training exercises for the Joint Warfare Centre (JWC), a multi-national and multi-service organization of
NATO, and the wider NATO audience across Europe.
Overall, Learning was greatly impacted by COVID-19 and temporary restrictions imposed by governments across
Canada. However, through the impacts of the pandemic, the segment has won significant work, and expanded
geographically along with customer base through acquisition closed in the year, which well positions the segment
looking out into fiscal year 2021.
40
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. Information Technology
+22% +6%
$55
$58
$45
2018
2019
Revenue (millions)
2020
2020
Segment
Revenue
2020
Segment
EBITDA
$58.1M
$4.8M
Calian’s IT services support customer requirements
for subject matter expertise in the delivery of their
complex IT solutions. With a primary focus on cloud
migration, IT development, support services, SAP
consulting and cyber security solutions, Calian
supports customers at all levels of government
and the private sector in the domestic market.
Calian Cyber Security Solutions provides public
and private sector organizations with the right people, processes and technology to build actionable plans and
keep their environments safe and secure.
Financial performance
Revenue
Gross profit
Selling and marketing
General and administration
Research and development
Three months ended
Year ended
September 30,
2020
September 30,
2019(1)
September 30,
2020
September 30,
2019(1)
$
14,357
$
14,208
$
2,642
724
829
1
2,506
712
586
-
58,069
10,344
2,770
2,785
2
$
54,531
8,283
2,219
2,497
-
Profit before under noted items
$
1,088
$
1,208
$
4,787
$
3,567
(1)No restatement performed in Fiscal 2019 figures due to the entity applying the modified retrospective approach on implementation of IFRS
16 which occurred in fiscal 2020.
Revenues were up by 1% for the three-month period, and increased by 6% in the twelve-month period ended
September 30, 2020 compared to the same periods of the previous year. The increase in the fourth quarter is
attributable to recent acquisitions. The annual revenue growth is the result of increased demand from existing
customers for cyber security products, increase revenue attributable to maintenance revenue in relation to higher
product sales from the previous quarters, and an increase in service delivery for IT professional services across a
number of existing customers.
Gross margin is consistent for the three-month period and increased from 15% to 18% in the twelve-month period
ended September 30, 2020 when compared to the same period of the previous year due to higher product sales,
and focus on higher margin activities in cyber security.
41
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report
During the quarter, the Information Technology segment saw continued delays with certain projects which were
impacted in the second quarter of 2020 through customers premises shutting down which led to the inability to
deliver certain services all due to the impact of COVID-19. In the year ended September 30, 2020, this has resulted
in revenue decreases of approximately $260 in revenue and $30 of gross margin, respectively, for the three-month
period and approximately $2,100 in revenue and $280 in gross margin for the twelve-month period ended September
30, 2020.
Selling and marketing expense increased by $551 for the twelve-month period ended September 30, 2020 when
compared to the same period of the previous year. This was the result of increased investment in our sales headcount
and business development in existing and new geographies. General and administrative expenses have increased
by $243 in the three-month and $288 in the twelve-month periods ended September 30, 2020 due to increased
supporting headcount to support the growth in number of contracts and delivery requirements to end customers.
Fourth quarter and fiscal year 2020 highlights
The majority of Information Technology’s revenues comes from large, stable customers. Some projects were scaled
back during the previous quarters due to work-from-home measures and school closures, which impacted billings.
The team has been working with customers to successfully make work-from-home arrangements for many staff
and projects, which has resulted in recapture of revenues lost. Through the group’s efforts and alteration of delivery
method, 97% of the work that was impacted due to COVID-19 is back to full delivery at pre-pandemic levels by year
end.
In the first quarter the cyber security practice won a substantial contract with Shared Services Canada to support
the expansion of the customer’s data centre consolidation initiative. We continue to generate new customers and
business in existing customers across the service line, but especially in the cyber security offerings. The segment
continues to invest in delivery of services, implementing best-in-breed cyber security solutions in new geographies
and with new customers.
On May 15, 2020 the Information Technology segment has secured a $22 million cyber security defence contract
with the Department of National defence for service delivery over the next three years. This re-win demonstrates the
Company’s focus on customer retention.
On July 14 the Company acquired EMSEC Solutions Inc. (“EMSEC”), a boutique firm specializing in radio frequency
(RF) emission security and technical surveillance countermeasures located in Ottawa, Canada who will expand the
current cyber product and service offering at Calian. Emissions security relates to the control and prevention of
unintentional electrical and electromagnetic emissions that can disclose sensitive or classified information. EMSEC
provides technical and professional services including TEMPEST products and other mitigation techniques such
as facility zoning (physical distancing, building modifications, separation of IT systems, and other measures). This
specialized field is growing as organizations increasingly see a need to protect intellectual property.
The Information Technology segment although impacted greatly in March and April due to temporary lockdown
measures by the Government of Canada, moved swiftly to shift customer delivery, and focused on margin efficiency.
This has resulted in overall record revenue and margin percentage for the year ended September 30, 2020.
Summary
In summary, 2020 was a year of focused efforts and a demonstration of the Company’s delivery in a challenging
environment. The Company entered 2020 with a strong backlog of work, and successfully added $554M of new
contracts during the year to maintain its backlog position.
The Company diversified its customer base and grew its non-government business by 90%. Our organic growth in
FY20 was 21%. We continue to invest in research and development and sales capacity in order to support further
organic growth.
42
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. Growth through acquisitions continues to be a focus. We completed four M&A transactions this year, with three
of them closing during our fourth quarter. All of these transactions bring new products and services in three new
customer verticals which we did not participate in previously (Emissions security, GNSS antennas and pharmaceutical
health services).
COVID-19 presented us with new challenges. Contracts that otherwise would have continued uninterrupted were
paused in the spring due to stay-at-home measures. It also changed our operating environment in our Advanced
Technology segment which resulted in higher costs. These factors resulted in revenue and gross profit impacts of
approximately $1,475 and $1,600, respectively, in our fourth quarter due to the impacts of COVID-19. On a year-
to-date basis ending September 30, 2020, revenue and gross profit impacts due to COVID-19 are approximately
$13,200 and $3,775, respectively.
COVID-19 also presented an opportunity to provide our expertise to respond to this pandemic. Our Health segment
was able to win $35M in new business directly related to the health response in Canada.
Calian is a diverse company which has consistently demonstrated the ability to manage this diversity and provide
excellent returns for our shareholders. Under our strategic framework, each segment of the company has the ability,
capacity and management focus to control and manage their respective business segment. We are an innovative
company, proudly Canadian, and focused on sustaining our positive momentum into the next fiscal year.
Reconciliation of non-GAAP measures to most comparable IFRS measures
These non-GAAP measures are mainly derived from the consolidated financial statements, but do not have a
standardized meaning prescribed by IFRS; therefore, others using these terms may calculate them differently.
The exclusion of certain items from non-GAAP performance measures does not imply that these are necessarily
nonrecurring. From time to time, we may exclude additional items if we believe doing so would result in a more
transparent and comparable disclosure. Other entities may define the above measures differently than we do. In
those cases, it may be difficult to use similarly named non-GAAP measures of other entities to compare performance
of those entities to the Company’s performance.
Management believes that providing certain non-GAAP performance measures, in addition to IFRS measures,
provides users of the Company’s financial reports with enhanced understanding of the Company’s results and related
trends and increases transparency and clarity into the core results of the business. Adjusted EBITDA excludes items
that do not reflect, in our opinion, the Company’s core performance and helps users of our MD&A to better analyze
our results, enabling comparability of our results from one period to another.
The weighted average shares outstanding over the period presented increased largely because of equity financing
in the twelve-month period ended September 30, 2020. The equity financing closed in February 2020 resulted in an
additional 1,568,600 common shares being issued. Along with other equity transactions throughout the year, the
total common shares outstanding grew from 7,929,238 at September 30, 2019 to 9,760,032 as at September 30,
2020. The fully diluted weighted average shares outstanding increased to 9,855,357 for the three-month period and
9,104,498 for the twelve-month period ended September 30, 2020 when compared to 7,965,442 and 7,863,361,
respectively, for the same periods of the previous year.
43
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report Adjusted EBITDA
Three months ended
Year ended
September 30,
2020
September 30,
2019(1)
September 30,
2020
September 30,
2019(1)
Net profit
$
6,886
$
8,476
$
20,360
$
19,992
Depreciation of equipment,
application software and R&D
Depreciation of right of
use asset
Amortization of acquired
intangible assets
Lease interest expense
Changes in fair value related
to contingent earn-out
Deemed compensation
Interest expense (income)
Other changes in fair value
Income tax
Adjusted EBITDA
969
734
1,684
123
622
-
1,460
-
(2,772)
(4,225)
-
19
-
1,560
9,203
$
-
50
-
1,765
8,148
$
2,976
2,771
5,166
475
(1,882)
-
185
(101)
6,860
$
36,810
$
2,220
-
3,168
-
(4,149)
-
36
-
5,879
27,146
(1)No restatement performed in Fiscal 2019 figures due to the entity applying the modified retrospective approach on implementation of IFRS 16
which occurred in fiscal 2020.
Adjusted net profit and adjusted EPS
Three months ended
Year ended
September 30,
2020
September 30,
2019(1)
September 30,
2020
September 30,
2019(1)
Net profit
$
6,886
$
8,476
$
20,360
$
19,992
Other changes in fair value
Changes in fair value related
to contingent earn-out
Deemed compensation
Amortization of intangibles
Adjusted net profit
$
Weighted average number of
common shares basic
Adjusted EPS Basic
Adjusted EPS Diluted
-
(2,772)
-
1,684
5,798
$
-
(4,225)
-
1,460
5,711
(101)
(1,882)
-
5,166
-
(4,149)
-
3,168
$
23,543
$
19,011
9,732,754
7,915,071
9,044,588
7,843,265
0.60
0.59
0.74
0.73
2.60
2.59
2.43
2.41
(1)No restatement performed in Fiscal 2019 figures due to the entity applying the modified retrospective approach on implementation of IFRS 16
which occurred in fiscal 2020.
The Company uses adjusted net profit and adjusted earnings per share, which remove the impact of our acquisition
amortization and gains, resulting in accounting for acquisitions and changes in fair value to measure our performance.
These measurements better align the reporting of our results and improve comparability against our peers. We believe
that securities analysts, investors and other interested parties frequently use non-GAAP measures in the evaluation
44
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd.
of issuers. Management also uses non-GAAP measures in order to facilitate operating performance comparisons
from period to period, prepare annual operating budgets and assess our ability to meet our capital expenditure
and working capital requirements. Adjusted profit and adjusted earnings per share are not recognized, defined or
standardized measures under the International Financial Reporting Standards. Our definition of adjusted profit and
adjusted earnings per share will likely differ from that used by other companies (including our peers) and therefore
comparability may be limited. Non-GAAP measures should not be considered a substitute for or be considered in
isolation from measures prepared in accordance with International Financial Reporting Standards. Investors are
encouraged to review our financial statements and disclosures in their entirety and are cautioned not to put undue
reliance on non-GAAP measures and view them in conjunction with the most comparable International Financial
Reporting Standards financial measures. The Company has reconciled adjusted profit to the most comparable
International Financial Reporting Standards financial measure as shown above.
Consolidated net income and other selected financial information
Profit before under noted
items
Depreciation of equipment
and application software
Depreciation of right of use
asset
Amortization of acquired
intangible assets
Other changes in fair value
Changes in fair value related
to contingent earn-out
Profit before interest income
and income tax expense
Lease interest expense
Interest expense (income)
Income tax expense
Net profit
$
Net profit per share, basic
Total assets
Dividends per share
Three months ended
Year ended
September 30,
2020
September 30,
2019(1)
September 30,
2020
September 30,
2019(1)
$
9,203
$
8,148
$
36,810
$
27,146
$
969
$
622
$
2,976
$
2,220
734
1,684
-
-
1,460
-
2,771
5,166
(101)
-
3,168
-
(2,772)
(4,225)
(1,882)
(4,149)
$
8,588
$
10,291
$
27,880
$
25,907
123
19
1,560
6,886
0.70
331,053
0.28
$
-
50
1,765
8,476
1.08
195,026
0.28
475
185
6,860
-
36
5,879
$
20,360
$
19,992
2.25
331,053
1.12
2.55
195,026
1.12
(1)No restatement performed in Fiscal 2019 figures due to the entity applying the modified retrospective approach on implementation of IFRS 16
which occurred in fiscal 2020.
Depreciation increased by 56% in the three-month and 34% in the twelve-month periods ended September 30,
2020 when compared to the same periods in the year prior due to higher balances of assets across the organization,
depreciation of the capitalized research and development asset which began in the current year, and capital
expenditures to sustain the Company’s growth.
Depreciation of right of use assets is the result of adopting IFRS 16 at the beginning of the current period. Further
information regarding the lease accounting and depreciation can be found in the first quarter 2020 financial statements
in notes 3 and 12.
45
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report
Amortization increased by $224 in the three-month and $1,998 in the twelve-month periods ending September 30,
2020 when compared to the same periods of the previous year due to acquisitions in the prior year of Intragrain and
SatService which have a full year of amortization in the current year, along with the current year acquisitions of Alio
and Allphase, Comprehensive Training Solutions, EMSEC Solutions, and Tallysman Wireless as described in note
26 to the financial statements. Other changes in fair value for the twelve-month period ended September 30, 2020
represent a gain on fair value of the Cliniconex investment as described in note 13 of the Financial Statements.
The gain on changes in fair value related to contingent earn-outs decreased by $1,453 in the three-month and
$2,267 in the twelve-month periods ended September 30, 2020 when compared to the same periods of the previous
year. The gains represent the Company derecognizing liabilities for earnout targets that are not going to be achieved
by the acquisitions. The targets are based on achievement of EBITDA levels for annual periods to which IntraGrain
and Satservice are not likely to achieve. The acquisitions both attributed positive EBITDA in the annual period,
but not at the level that was negotiated upon at the time of acquisition. The acquisitions were also impacted by
COVID-19 impacts on sales and marketing efforts in order to bring products into expanded geographical markets,
and impacted delivery ability on international products due to travel restrictions. This is offset by accruing interest
charges relating to present valuing of the earnout liabilities for Allphase/Alio, Comprehensive Training Solutions,
EMSEC Solutions, and Tallysman Wireless, along with recognition of a loss relating to Allphase/Alio for liabilities
not accrued for at the acquisition date. For further information refer to notes 26 and 27 of the Financial Statements.
Interest income increased in the twelve-month period ended September 30, 2020 due to GIC balances held by
the Company in the year, whereas interest income was offset in the prior year by interest expenses due to the
Company’s use of a line of credit.
Finally, the Company reports its results on a fully taxed basis. The provision for income taxes for the three-month
period ended September 30, 2020 was $1,560, or 27.5% of earnings before income taxes adjusted for non-taxable
items compared to the $1,765, or 29.3% of earnings before income taxes in the same period of the previous fiscal
year. The provision for income taxes for the twelve-month period ended September 30, 2020 was $6,860, or 27.1%
of earnings before income taxes adjusted for non-taxable items compared to the $5,879, or 27.1% of earnings
before income taxes in the same period of the previous fiscal year. The difference in effective tax rates is primarily
due to the increase in non-taxable items in the statement of profit and loss including intangible amortization and
changes in fair value related to contingent earnout amounts.
Backlog
The Company’s realizable backlog at September 30, 2020 was $1,307 million with terms extending to fiscal 2030.
Contracted backlog represents maximum potential revenues remaining to be earned on signed contracts, whereas
option renewals represent customers’ options to further extend existing contracts under similar terms and conditions.
During the three-month period ended September 30, 2020 the following contracts were the major contributors to
the Company’s backlog. These contracts are further described in the business overview section of this Management
Discussion and Analysis.
• $15 million Defence Research and Development Canada contract win to support the Center for Security Science
• $14 million in added backlog from recent acquisitions
• $13.5 million contract signing for a patient support program with the Canadian division of a Global pharmaceutical
company
• $5 million IT consulting services contract amendment with an existing customer
• $5 million contract renewal with DND in supporting the Royal Canadian Air Force through Training Delivery and
Concept Development services
There were no contracts which were cancelled unexpectedly that would have resulted in a significant decrease in
our backlog.
Most fee-for-service contracts provide the customer with the ability to adjust the timing and level of effort throughout
46
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. the contract life and as such the amount actually realized could be materially different from the original contract
value. The following table represents management’s best estimate of the backlog realization for fiscal year 2021,
fiscal year 2022 and beyond based on management’s current visibility into customers’ existing requirements.
Management’s estimate of the realizable portion (current utilization rates and known customer requirements) is less
than the total value of signed contracts and related options by approximately $284 million. The Company’s policy
is to reduce the reported contractual backlog once it receives confirmation from the customer that indicates the
utilization of the full contract value may not materialize.
Contract backlog as of September 30, 2020
Contracted backlog
Option renewals
Management estimate of unrealizable portion
Estimated Realizable Backlog
Estimated recognition of estimated realizable backlog
$
$
$
740,254
851,552
1,591,806
(283,848)
1,307,958
October 1, 2020
to September
31, 2021
October 1, 2021
to September
30, 2022
Beyond
September 30,
2022
Total
Advanced Technologies
$
97,563
$
35,367
$
10,437
$
143,367
Health
Learning
Information Technology
151,641
56,524
33,800
136,960
47,708
14,833
533,968
171,877
17,281
822,569
276,109
65,913
Total
$
339,528
$
234,868
$
733,562
$ 1,307,958
Statement of cash flows
Cash flows from operating
activities before changes in
working capital
Changes in non-cash working
capital
Cash flows from (used in)
operating activities
Cash flows from (used in)
financing activities
Cash flows from (used in)
investing activities
Three months ended
Year ended
September 30,
2020
September 30,
2019(1)
September 30,
2020
September 30,
2019(1)
$
10,477
$
7,048
$
33,681
$
28,501
(10,241)
(6,381)
(36,434)
(14,968)
236
(1,814)
(20,483)
667
(869)
(648)
(850)
(2,753)
13,533
45,042
7,395
(35,189)
(25,635)
$
7,100
$
(4,707)
Increase (decrease) in cash
$
(22,061)
$
(1)No restatement performed in Fiscal 2019 figures due to the entity applying the modified retrospective approach on implementation of IFRS 16
which occurred in fiscal 2020.
47
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report
Operating activities
Cash inflows from operating activities for the three-month period ended September 30, 2020 were $236 compared
to cash inflows of $667 in the same period of the prior year. On a twelve-month basis, cash outflows total $2,753 for
the period ended September 30, 2020 when compared to inflows of $13,533 for the same period in the prior year.
Working capital (accounts receivable, work in process, inventory, prepaid expenses and other, accounts payable
and accrued liabilities, provisions and unearned contract revenue) impacted cash flows by a reduction of $10,528 in
the three-month period ended September 30th, and stood at a net balance of $91,563.
Amounts owed from customer increased by $19,000 driven by the growth in revenue. Our ongoing large North
American ground system project was $8,000 of this increase. We were able to offset this by an improvement in
the USD/CAD foreign exchange rate of $1,500, government programs which allowed us to defer tax payments into
future periods of $1,100 and improved collections of older receivables and management of our accounts payables
of $6,000.
Financing activities
Lease payments
The Company has made payments of $656 for the three-month and $2,508 for the twelve-month periods ended
September 30, 2020 due to the implementation of IFRS 16 in the current year.
Dividend
The Company has maintained its dividend for the three and twelve-month periods ended September 30, 2020. The
Company paid dividends totaling $2,747 for the three-month period ended September 30, 2020 or $0.28 cents
per share, and $9,938 for the twelve-month period then ended, or $1.12 cents per share compared to the same
periods of the prior year when the Company paid $2,235 and $8,803, respectively, in dividends or the same amount
per share as the current periods. The increase in dividends paid is due to a higher number of common shares
outstanding year over year.
Debt
In the three-month period ended September 30, 2020, the Company had no activity in relation to its debt facility,
this compares to a draw on the facility of $1,000 in the same period of the prior year. In the twelve-month period
ended September 30, 2020, the Company repaid the Revolving Credit Facility in its entirety, which amounted to a
cash outflow of $13,000, when compared to a cash inflow of $13,000 from utilizing the facility in the same period of
the previous year.
Shares
On February 25, 2020 the Company completed an upsized public offering, under which a total of 1,568,600 Common
Shares were sold at a price of $44.00 per Common Share for aggregate gross proceeds of $69,018, including shares
issued pursuant to the exercise in full of the over-allotment option granted to the Underwriters. Net cash proceeds
after commissions and issuance costs were $64,713.
Exercises of stock options and issuances of shares under the employee share purchase plan has resulted in cash
inflows of $1,589 for the three-month period ended September 30, 2020 when compared to an inflow of $366 for the
same activities in the same period of the prior year. In the twelve-month period ended September 30, 2020, the cash
inflow from stock option exercises and issuances of shares under the employee share purchase plan amounted to
$5,775, when compared to an inflow of $3,316 for the same period of the prior year.
48
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. Investing activities
Equipment expenditures and capitalized research and development
The Company invested $1,521 in the three-month and $4,574 in the twelve-month periods ending September 30,
2020, when compared to $552 and $3,018, respectively, for the same periods of the prior year. Acquisitions of
equipment in the current period are mainly attributed to the beginning stages of the Company’s ERP implementation
and general capital expenditures.
The Company invested $107 in capitalized research and development in the three-month and $1,227 in the twelve-
month periods ending September 30, 2020, when compared to $96 and $1,768, respectively, for the same periods
of the prior year.
Acquisitions
The company acquired Allphase/Alio, Comprehensive Training Solutions, EMSEC Solutions, and Tallysman Wireless
along with making payment for earn out amounts related to the acquisition of Secure Technologies which resulted in
a total cash outflow of $29,288 in the twelve-month period ended September 30, 2020. For the same period of the
prior year, the Company acquired IntraGrain and Satservice, and made earn out payments to ISR resulting in cash
outflows relating to acquisitions of $20,849.
Investments
A $100 minority investment was made in the nine-month period ended September 30, 2020 in Cliniconex as
described in Note 13 of the Financial Statements, whereas there were no investment outflows for the same period
of the prior year.
Liquidity and capital resources
Cash
Calian’s cash and cash equivalent position was $24,235 at September 30, 2020, compared to $17,135 at September
30, 2019, with a cash net of debt position of $24,235 at September 30, 2020 when compared to $4,135 at September
30, 2019.
Capital resources
At September 30, 2020, the Company had a short-term credit facility of $60,000 with a Canadian chartered bank that
bears interest at prime and is secured by assets of the Company. To date, the Company has drawn NIL against the
credit facility and an amount of $130 was used to issue letters of credit to meet customer contractual requirements.
Management believes that the company has sufficient cash resources to continue to finance its working capital
requirements and pay a quarterly dividend.
Off-balance sheet arrangements
There were no off-balance sheet arrangements at September 30, 2020.
Related-party transactions
During the three-month period ended September 30, 2020 (2019), the Company had sales of $230 ($231) to GrainX
in which Cailan holds a non-controlling equity investment. During the year ended September 30, 2020 (2019), the
Company had sales of $1,160 ($1,552) to GrainX. At September 30, 2020 (2019), the Company had an accounts
receivable balance with GrainX of $130 ($90) which is included in accounts receivable. The terms and conditions
of the related party sales are within the Company’s normal course of operations and are measured at the exchange
amounts agreed to by both parties.
49
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report The Company has certain office space leases with employees of the Company. The total amount of expense due to
leases with related parties is $46 (46) for the three-month period ended September 30, 2020 (2019) The total amount
of expense due to leases with related parties is $184 ($90) for the year ended September 30, 2020 (2019).
Adoption of new accounting standards and impact on financial results
In 2020 the Company adopted IFRS 16 – Leases. The accounting policies and impacts to the financial statements are
expressed in note 2 to the financial statements.
Had the Company not adopt IFRS16 – Leases in the current period, the Statement of Net Profit would be impacted in
the following way for the twelve-months ended September 30, 2020:
Operating Expenses
Profit before under noted items
Depreciation of right of use assets
Profit before interest income and income tax expense
Lease interest expense
Net profit impact
IAS 17
$ 5,405
IFRS 16
$ 2,494
Change
$ (2,911)
(5,405)
-
(5,405)
-
(2,494)
2,771
(5,265)
475
2,911
2,771
140
(475)
$ (5,405)
$ (5,740)
$
(335)
Critical accounting judgements and key sources of estimation uncertainty
Estimates
The preparation of financial statements in conformity with IFRS requires the Company’s management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting periods presented. Actual results could differ
from those estimates.
Project completion for revenue
A significant portion of the revenue is derived from fixed-price contracts which can extend over more than one reporting
period. Revenue from these fixed-price projects is recognized over time using the input method using management’s
best estimate of the costs and related risks associated with completing the projects. Management’s approach to
revenue recognition 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 goodwill and intangible assets
Determining whether goodwill or acquired intangibles assets are impaired requires an estimation of the value in use of
the cash-generating units to which goodwill has been allocated. The value in use calculation requires management to
estimate the future cash flows expected to arise from the cash-generating unit, and a suitable discount rate in order
to calculate present value.
Income taxes
The Company records deferred income tax assets and liabilities related to deductible or taxable temporary differences.
The Company assesses the value of these assets and liabilities based on the likelihood of the realization as well as the
timing of reversal given management assessments of future taxable income.
Contingent liabilities
From time-to-time the Company is involved in claims in the normal course of business. Management assesses such
claims and where considered probable to result in an exposure and, where the amount of the claim can be measured
reliably, provisions for loss are made based on management’s assessment of the likely outcome.
50
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd.
Loss allowance
The Company has extensive commercial history upon which to base its provision for doubtful accounts receivable.
Due to the nature of the industry in which the Company operates, the Company does not create a general provision
for bad debts but rather determines bad debts on a specific account basis.
Judgments
Financial instruments
The Company’s accounting policy with regards to financial instruments is described in Note 2 of the September 30,
2019 annual financial statements. In applying this policy, judgments are made in applying the criteria set out in IFRS
9 – Financial instruments, to record financial instruments at fair value through profit or loss, and the assessments of
the classification of financial instruments and effectiveness of hedging relationships.
Business combinations
The consideration transferred for an acquired business is assigned to the identifiable tangible and intangible assets
purchased, along with liabilities assumed on the basis of their acquisition date fair values. The identification of
assets purchased and liabilities assumed and the valuation thereof is specialized and judgemental. Where ap-
propriate, the Company engages external business valuators to assist in the valuation of tangible and intangible
assets acquired. When a business combination involves contingent consideration, an amount equal to the fair
value of the contingent consideration is recorded as a liability at the time of acquisition. The key assumptions uti-
lized in determining fair value of contingent consideration may include probabilities associated with the occurrence
of specified future events, financial projections of the acquired business, the timing of future cash flows, and the
appropriate discount rate.
Accounting policy for equipment and intangible assets
Management makes judgments in determining the most appropriate methodology for amortizing long-lived assets over
their useful lives. The method chosen is intended to mirror, to the best extent possible, the consumption of the asset.
Deferred income taxes
The Company’s accounting policy with regards to income taxes is described in Note 2 of the September 30, 2019
annual financial statements. In applying this policy, judgments are made in determining the probability of whether
deductions or tax credits can be utilized and related timing of such items.
Input methodology for project completion
The Company uses judgment in determining the most appropriate basis on which to determine percentage of
completion. Options available to the Company include the proportion that contract costs incurred for work performed
to date bear to the estimated total contract costs, surveys of work performed, and completion of a physical proportion
of the contract work. While the Company considers the costs to complete, the stage of completion is assessed
based upon the assessment of the proportion of the contract completed. Judgments are also made in determining
what costs are project costs for determining the percentage complete.
Management’s conclusion on the effectiveness of disclosure controls
The Chief Executive Officer and the Chief Financial Officer of the Company, after evaluating the effectiveness of the
Company’s disclosure controls and procedures as of September 30, 2020, have concluded that the Company’s
disclosure controls and procedures were adequate and effective to ensure that material information relating to the
Company and its consolidated subsidiaries would have been known to them and that information required to be
disclosed by the Company is recorded, processed, summarized and reported within the time periods specified in
the securities legislation.
51
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report Management’s conclusion on the effectiveness of internal control over financial reporting
The Chief Executive Officer and the Chief Financial Officer of the Company, after evaluating the effectiveness of the
Company’s internal control over financial reporting as of September 30, 2020, have concluded that the Company’s
internal controls over financial reporting provide reasonable assurance regarding the reliability of financial reporting
for external purposes in accordance with IFRS.
During the most recent interim quarter ending September 30, 2020, there have been no changes in the design of the
Company’s internal controls over financial reporting that has materially affected, or is reasonably likely to materially
affect, the Company’s internal controls over financial reporting.
Risk and uncertainties
We are exposed to risks and uncertainties in our business, including the risk factors set forth below:
• The markets for the Company’s services are very competitive, rapidly evolving and subject to technological
changes.
• The Company has certain ongoing contracts that account for a significant portion of the Company’s revenues
and if these contracts are not renewed at expiry or should a competitor win the renewal, the Company’s future
revenue stream and overall profitability could be significantly reduced.
• The Company must compete for qualified employees for its own operations and must have ready access to a
large pool of qualified professionals to satisfy contractual arrangements with customers.
• There is a risk in all fixed-price contracts that the Company will be unable to deliver the system within the time
specified and at the expected cost.
• The Company’s business is often dependent on performance by third parties and subcontractors in connection
with contracts for which the Company is the prime contractor.
• The markets in which the Company operates are characterized by changing technology and evolving industry
standards and the Company’s ability to anticipate changes in technology, technical standards and service
offerings will be a significant factor in the Company’s ability to compete or expand into new markets.
• Erosion of our customers’ market share for a particular product could have a direct impact on the Company’s
revenues and profitability.
• The government may change its policies, priorities or funding levels through agency or program budget reductions
or impose budgetary constraints, which could have a direct impact on the Company’s revenues and profitability.
• Most fee-for-service contracts provide the applicable customer with the ability to adjust the timing and level of
effort throughout the contract life so the amount actually realized by the Company could be materially different
from the original contract value.
• There is a risk that as the Company grows, credit risk increases with respect to accounts receivable.
• In the event that an operating segment cannot secure an appropriate workforce, such operating segment may
not be in a position to bid on or secure certain contracts.
• The Company is subject to foreign exchange risk in that approximately 19% of the Company’s revenues are
derived from non-Canadian sources, which can have a direct impact on the profitability of the Company.
• The Company is exposed to a range of risk related to its foreign operations.
• The Company conducts acquisitions and faces risks associated with those acquisitions and the integration of
the acquired businesses.
• The Company’s insurance policies may not be sufficient to insure itself for all events that could arise in the
52
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. course of the Company’s business and operations.
• The Company operates in the health services sector and faces the risks inherent in that sector.
• As newly formed entities in certain markets and industries are restructured and consolidated from time to
time, opportunities for the Company may be diminished or work currently performed by the Company could be
repatriated, resulting in a loss of revenue.
• Any fraudulent, malicious or accidental breach of our data security could result in unintentional disclosure of,
or unauthorized access to, third party, customer, vendor, employee or other confidential or sensitive data or
information, which could potentially result in additional costs to the Company to enhance security or to respond
to occurrences, lost sales, violations of privacy or other laws, penalties, fines, regulatory action or litigation.
• The Company is dependent upon information technology systems in the conduct of our operations and we
collect, store and use certain sensitive data, intellectual property, our proprietary business information and
certain personally identifiable information of our employees and customers on our networks.
• The Company is exposed to environmental and health and safety regulations associated with its manufacturing
activities.
• The Company faces risks related to health epidemics and other outbreaks of communicable diseases, which
could significantly disrupt its operations and may materially and adversely affect its business and financial
conditions.
• The international response to the spread of COVID-19 has led to significant restrictions on travel; temporary
business closures; quarantines; global stock market and financial market volatility; declining trade and market
sentiment; all of which have and could further effect on interest rates, credit ratings and credit risk. The continued
spread of the coronavirus in Canada, and globally, could adversely impact the Company’s business including
without limitation, employee health, workforce productivity, increased insurance premiums, limitations on travel,
the availability of industry experts and personnel, and other factors that will depend on future developments
beyond the Company’s control, which may have a material and adverse effect on the its business, financial
condition and results of operations.
A comprehensive discussion of risks, including risks not specifically listed above, can be found in our most recently
filed Annual Information Form. Additional risks and uncertainties not presently known to us or that we currently
consider immaterial also may impair our business and operations and cause the price of our shares to decline. If any
of the noted risks actually occur, our business may be harmed and our financial condition and results of operations
may suffer significantly.
Short-term outlook
Revenue
Adjusted EBITDA
Adjusted net profit
Fiscal 2021 Guidance
Low
High
450,000 $
490,000
38,500 $
42,000
$
$
$ 25,200
$ 28,300
On a year to date basis ending September 30, 2020, the Company experienced both revenue and gross profit
impacts of $13,200 and $3,775, respectively related to the COVID-19 Pandemic.
Long-term outlook
We believe the company Company is well positioned for sustained profitable growth in the long term. The Company’s
53
Management’s Discussion and Analysis of Financial Condition and Results of OperationsCalian Group Ltd.2020 Annual Report strong contract backlog provides a solid base for the realization of future revenues. Leveraging the Company’s
diverse services offerings, the Company operates in global and domestic markets that will continue to require the
services that the Company offers. To ensure the Company is positioned to respond to market requirements, the
Company will focus on the execution of its four-pillar growth strategy:
• Customer retention: through continued delivery excellence, maintain a valued relationship with current customer
base;
• Customer diversification: through increasing the percentage of its revenues derived from new business in
adjacent and non-government markets, balance customer revenue into numerous global and domestic sectors;
• Service line innovation: continue investment in service offerings to increase differentiation and improve gross
margin attainment;
• Continuous improvement: leverage innovation to improve how the company operates with a goal to streamline
processes and provide for a scalable back office support capability.
The Company has completed multiple acquisitions in recent years and will proactively look for companies that can
accelerate its growth strategy with a focus on customer diversification and service line evolution.
Calian’s Advanced Technologies segment has been working within a sustainable satellite sector and is expecting
opportunities to continue to arise as systems adopting the latest technologies will be required by customers wishing
to maintain and improve their service offerings and react to an increasing demand for bandwidth. We continue
to invest in communications products, software development and manufacturing equipment to strengthen the
segment’s competitive position and diversify its customer base in the agriculture, cable and defence sectors. In
the short-term, activity levels in custom manufacturing will continue to be directly dependent upon the segment’s
customer requirements and continuing volatility in orders is anticipated as both government and commercial
customers continue to re-examine their traditional spending patterns. The delays, deferrals and cancellations of
DND capital procurements have created intense competition for available manufacturing work. Finally, changes
in the relative value of the Canadian dollar may negatively or positively impact the segment’s competitiveness on
projects denominated in foreign currencies.
The Health, Learning and IT segments’ professional services are adaptable to many different markets. Currently, the
strength of these segments lies in providing professional services, solutions, and delivery services across Canada
with a significant portion of this work currently with the Department of National Defence. Recently these segments
have been successful in diversifying their customer base and evolving their service offerings. Management believes
that for the long term, the public and private sector will continue to require Health, Learning and IT services from
private enterprise to achieve their business outcomes. As to the current outlook, the Federal government continues to
spend on priority programs and, while there is general uncertainty as to the extent of demand from this customer, at
least in the short-term, spending seems to have stabilized. With recent investments in sales, marketing, acquisitions
and success in new markets outside of the Federal government, these segments are better positioned to manage
through any potential government spending downturns. Recent acquisitions have also bolstered the performance
of these segments and it is expected that, overall, the acquired companies will continue to meet and exceed the
financial targets established as part of the acquisitions.
54
Management’s Discussion and Analysis of Financial Condition and Results of Operations2020 Annual ReportCalian Group Ltd. Independent Auditor’s Report
To the Shareholders and the Board of Directors of Calian Group Ltd.
Opinion
We have audited the consolidated financial statements of Calian Group Ltd. (the “Company”), which comprise the
consolidated statements of financial position as at September 30, 2020 and 2019, and the consolidated statements
of net profit, comprehensive income, changes in equity and cash flows for the years then ended, and notes to the
consolidated financial statements, including a summary of significant accounting policies (collectively referred to as the
“financial statements”).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of
the Company as at September 30, 2020 and 2019, and its financial performance and its cash flows for the years then
ended in accordance with International Financial Reporting Standards (“IFRS”).
Basis for Opinion
We conducted our audit in accordance with Canadian generally accepted auditing standards (“Canadian GAAS”). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of the Company in accordance with the ethical requirements that
are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Other Information
Management is responsible for the other information. The other information comprises:
• Management’s Discussion and Analysis
• The information, other than the financial statements and our auditor’s report thereon, in the Annual Report.
Our opinion on the financial statements does not cover the other information and we do not and will not express any
form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is
to read the other information identified above and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We obtained Management’s Discussion and Analysis prior to the date of this auditor’s report. If, based on the work we
have performed on this other information, we conclude that there is a material misstatement of this other information,
we are required to report that fact in this auditor’s report. We have nothing to report in this regard.
The Annual Report is expected to be made available to us after the date of the auditor’s report. If, based on the work
we will perform on this other information, we conclude that there is a material misstatement of this other information,
we are required to report that fact to those charged with governance.
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with
IFRS, and for such internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as
a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic
alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Calian Group Ltd.
2020 Annual Report 55
Independent Auditor’s Report
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Canadian GAAS will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Canadian GAAS, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions and events in a manner that
achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Company to express an opinion on the financial statements. We are responsible for the
direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
The engagement partner on the audit resulting in this independent auditor’s report is Amy deRidder.
/s/ Deloitte LLP
Chartered Professional Accountants
Licensed Public Accountants
Ottawa, Canada
November 24, 2020
56 2020 Annual Report
Calian Group Ltd.
Calian Group Ltd. Consolidated Statements of Financial Position
As at September 30, 2020 and 2019
(Canadian dollars in thousands, except per share data)
NOTES
September 30,
2020
September 30,
2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable
Work in process
Inventory
Prepaid expenses
Derivative assets
Total current assets
NON-CURRENT ASSETS
Capitalized research and development
Equipment
Application software
Right of use asset
Investment and loan receivable
Acquired intangible assets
Goodwill
Total non-current assets
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Line of Credit
Accounts payables and accrued liabilities
Contingent earn-out
Provisions
Unearned contract revenue
Derivative liabilities
Lease obligations
Total current liabilities
NON-CURRENT LIABILITIES
Lease obligations
Contingent earn-out
Deferred tax liabilities
Total non-current liabilities
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY
Issued capital
Contributed surplus
Retained earnings
Accumulated other comprehensive income (loss)
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
Number of common shares issued and outstanding
The accompanying notes are an integral part
of the audited annual consolidated financial statements.
Approved by the Board on November 24, 2020:
6
7
10
8
9
25
11
11
11
12
13
14
15
18
16
27
17
10
25
12
12
27
23
19
19
$
$
$
24,235
81,109
84,132
6,095
6,707
358
202,636
3,924
11,655
3,092
17,595
670
36,191
55,290
128,417
331,053
-
72,007
3,251
1,038
13,435
152
2,790
92,673
16,800
11,913
9,261
37,974
130,647
$
$
$
17,135
63,977
39,221
3,147
5,403
96
128,979
3,216
10,965
1,013
-
452
16,699
33,702
66,047
195,026
13,000
45,058
800
1,129
8,778
143
-
68,908
-
5,519
5,525
11,044
79,952
107,931
2,002
92,030
(1,557)
200,406
331,053
9,760,032
$
32,515
1,817
81,608
(866)
115,074
195,026
7,929,238
$
George Weber
Chairman
Richard Vickers
Director
Calian Group Ltd.
2020 Annual Report 57
Calian Group Ltd. Consolidated Statements of Net Profit
For the years ended September 30, 2020 and 2019
(Canadian dollars in thousands, except per share data)
Revenue
Advanced Technologies
Health
Learning
Information Technology
Total Revenue
Cost of revenues
Gross profit
Selling and marketing
General and administration
Research and development
Profit before under noted items
Depreciation of equipment, application software and research
and development
Depreciation of right of use asset
Amortization of acquired intangible assets
Other changes in fair value
Changes in fair value related to contingent earn-out
Profit before interest and income tax expense
Lease obligations interest expense
Interest expense (income)
Profit before income tax expense
Income tax expense – current
Income tax expense (recovery) – deferred
Total income tax expense
NET PROFIT
Net profit per share:
Basic
Diluted
Year ended September 30,
NOTES
2020
2019
$
153,382
$
109,697
163,035
57,834
58,069
432,320
343,164
89,156
12,336
38,012
1,998
36,810
2,976
2,771
5,166
(101)
(1,882)
27,880
475
185
27,220
8,171
(1,311)
6,860
20,360
2.25
2.23
$
$
$
115,718
63,098
54,531
343,044
268,387
74,657
10,499
35,592
1,420
27,146
2,220
-
3,168
-
(4,149)
25,907
-
36
25,871
6,318
(439)
5,879
19,992
2.55
2.54
$
$
$
21
31
31
11
12
14
13
27
12
23
22
22
The accompanying notes are an integral part of the audited annual consolidated financial statements.
58
2020 Annual ReportCalian Group Ltd.
Calian Group Ltd. Consolidated Statements of Comprehensive Income
For the years ended September 30, 2020 and 2019
(Canadian dollars in thousands)
NET PROFIT
Other comprehensive income, net of tax
Items that will be reclassified subsequently to net profit
Cumulative translation adjustment
Change in deferred gain on derivatives designated as cash
flow hedges, net of tax of $335 (2019 - $217)
Other comprehensive income (loss), net of tax
COMPREHENSIVE INCOME
The accompanying notes are an integral part of the consolidated financial statements.
Year ended September 30,
2020
2019
$
20,360
$
19,992
238
(929)
(691)
-
(683)
(683)
$
19,669
$
19,309
59
Calian Group Ltd.2020 Annual Report
Calian Group Ltd. Consolidated Statements of Changes in Equity
For the years ended September 30, 2020 and 2019
(Canadian dollars in thousands, except per share data)
Notes
Issued
capital
Contributed
surplus
Retained
earnings
Other Com-
prehensive
Income
Total
Balance October 1, 2019
$
32,515
$
1,817
$
81,608
$
(866) $ 115,074
Net profit and comprehensive
income
Dividend paid ($1.12 per share)
Shares issued under employee
share plans
Shares issued through acqui-
sition
Shares issued under public
offering net of issuance costs
Shares issued under employee
stock purchase plan
Share-based compensation
expense
19
19
19
19
20
-
-
-
-
20,360
(9,938)
(691)
-
19,669
(9,938)
5,323
(978)
2,500
65,847
1,746
-
-
-
-
1,163
-
-
-
-
-
-
-
-
-
-
4,345
2,500
65,847
1,746
1,163
Balance September 30, 2020
$ 107,931
$
2,002
$
92,030
$
(1,557) $ 200,406
Notes
Issued
capital
Contributed
surplus
Retained
earnings
Other Com-
prehensive
Income
Total
Balance October 1, 2018
$
28,647 $
1,065 $
70,521 $
(183) $
100,050
Net profit and comprehensive
income
Dividend paid ($1.12 per share)
Share repurchase
Shares issued under employee
share plans
Shares issued under employee
stock purchase plan
Share-based compensation
expense
19
19
19
20
-
-
(16)
-
-
-
3,034
(430)
850
-
-
1,182
19,992
(683)
19,309
(8,803)
(102)
-
-
-
-
-
-
-
-
(8,803)
(118)
2,604
850
1,182
Balance September 30, 2019
$
32,515 $
1,817 $
81,608 $
(866) $
115,074
The accompanying notes are an integral part of the audited annual consolidated financial statements.
60
2020 Annual ReportCalian Group Ltd.
Calian Group Ltd. Consolidated Statements of Cash Flows
For the years ended September 30, 2020 and 2019
(Canadian dollars in thousands)
Year ended September 30,
NOTES
2020
2019
$
20,360
$
19,992
CASH FLOWS GENERATED FROM (USED IN) OPERATING
ACTIVITIES
Net profit
Items not affecting cash:
Interest expense (income)
Changes in fair value related to contingent earn-out
Lease obligations interest expense
Income tax expense
Employee share purchase plan expense
Share based compensation expense
Depreciation and amortization
Other changes in fair value
Change in non-cash working capital
Accounts receivable
Work in process
Prepaid expenses
Inventory
Accounts payable and accrued liabilities
Unearned contract revenue
Interest received (paid)
Income tax recovered (paid)
27
12
20
20
11, 12, 14
13
CASH FLOWS GENERATED FROM FINANCING ACTIVITIES
Issuance of common shares
Dividends paid
Draw (repayment) on line of credit
Share repurchases
Payment of lease obligations
CASH FLOWS USED IN INVESTING ACTIVITIES
Investments and loan receivable
Business acquisitions
Capitalized research and development
Equipment and application software
19, 20
18
12
13
26
11
11
NET CASH (OUTFLOW) INFLOW
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
CASH AND CASH EQUIVALENTS, END OF PERIOD
$
$
7,100
17,135
24,235
$
$
The accompanying notes are an integral part of the audited annual consolidated financial statements.
185
(1,882)
475
6,860
199
1,163
10,913
(101)
38,172
(11,676)
(44,911)
(1,271)
(328)
17,251
4,501
1,738
(678)
(3,813)
(2,753)
70,488
(9,938)
(13,000)
-
(2,508)
45,042
(100)
(29,288)
(1,227)
(4,574)
(35,189)
36
(4,149)
-
5,879
173
1,182
5,388
-
28,501
6,334
(20,973)
(1,395)
1,216
8,167
(1,806)
20,044
(127)
(6,384)
13,533
3,316
(8,803)
13,000
(118)
-
7,395
-
(20,849)
(1,768)
(3,018)
(25,635)
(4,707)
21,842
17,135
61
Calian Group Ltd.2020 Annual Report
1. Basis of Preparation
Calian Group Ltd. (“the Company”) is incorporated under the Canada Business Corporations Act. The address of its
registered office and principal place of business is 770 Palladium Drive, Ottawa, Ontario K2V 1C8. The company’s
capabilities are diverse with services and solutions delivered through four segments: Advanced Technologies,
Health, Learning and Information Technology (“IT”). Headquartered in Ottawa, Calian provides business services
and solutions to both industry and government customers in the areas of health, defence, security, aerospace,
engineering, AgTech and IT.
Statement of compliance
These consolidated financial statements are expressed in Canadian dollars and have been prepared in accordance
with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standard Board
(“IASB”) and in place for September 30, 2020. These consolidated financial statements were prepared using the
accounting policies as described in Note 2 – Summary of significant accounting policies.
These consolidated financial statements were authorized for issuance by the Board of Directors on November 24,
2020.
2. Summary of Significant Accounting Policies
The accounting policies below have been applied consistently to all periods presented in these consolidated financial
statements unless otherwise stated.
Basis of consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries
Calian Ltd. located in Ottawa, Ontario, Primacy Management Inc. (“Primacy”), located in Burlington, Ontario, DWP
Solutions Inc. (“DWP”), located in Ottawa, Ontario, IntraGrain Technologies Inc. (“IntraGrain”) located in Regina,
Saskatchewan, SatService Gesellschaft für Kommunikationssysteme mbH (“SatService”) located in Steisslingen,
Germany, Allphase Clinical Research Services Inc., located in Ottawa, Ontario, Alio Health Services Inc., located in
Ottawa, Ontario (collectively “Allphase/Alio”), Comprehensive Training Solutions AS (“CTS”) located in Stavanger,
Norway, EMSEC Solutions Inc. (“EMSEC”) located in Ottawa, Ontario, and Tallysman Wireless Inc. (“Tallysman”)
located in Ottawa, Ontario. All transactions and balances between these companies have been eliminated on
consolidation.
Basis of presentation
The consolidated financial statements are presented at historical cost unless otherwise noted. Historical cost is
generally based on the fair value of the consideration given in exchange for the asset or liability.
Revenue recognition
The Company recognizes revenue from the following sources, although this list is not exhaustive:
Service revenue
• Advanced Technologies support services across a number of industries, and product development
• Healthcare services including clinic management, healthcare practitioner support and psychological
assessments
• Learning services including, Custom Training for the military, emergency preparedness and simulation
training
• IT services including IT support services, systems implementation services, and cyber security consulting
services
62
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 2. Summary of Significant Accounting Policies (continued)
Product revenue
• Sale of internally developed hardware and software products
• Resale of radio frequency communications product
• Sale of healthcare products
• Resale of IT product which can include hardware and/or software
• Manufacturing and installation of large satellite antennae ground systems
(a) Revenue recognition:
Revenue is recognized in profit or loss in accordance with the pattern of satisfying the Company’s performance
obligations under a contract. This satisfaction occurs when control of a good or service transfers to the customer. In
the majority of the Company’s contracts, the customer controls the work in process as evidenced by the Company’s
right to payment for work performed to date plus a reasonable profit to deliver products or services that do not have an
alternative use to the Company. Based on the nature of these contractual arrangements, control is transferred over time
and revenue is recognized over time.
For each performance obligation satisfied over time, the Company will recognize revenue by measuring progress toward
complete satisfaction of that performance obligation using the input method. In this way, the Company recognizes
revenue in a pattern that reflects the transfer of control of the promised goods or services to the customer. Fixed price
contracts are recognized using the input method with reference to costs incurred. If the outcome of a contract cannot
be estimated reliably for management to estimate the ultimate profitability of the contract with a reasonable degree
of certainty, no profit is recognized. When further clarity is gained throughout the progression of the contract, the
constrained margin and associated revenue will be reassessed. Revenue from cost plus arrangements is recognized as
services are performed and costs are incurred.
Revenue from generic product sales, or product that does not meet criteria for over time recognition is measured at a
point in time following the transfer of control of such products to the customer, which typically occurs upon shipment
or delivery depending on the terms of the underlying contracts.
Revenue from contract modifications, commonly referred to as change orders or purchase orders issued on contracts,
will be recognized to the extent that the contract modifications have been approved by the customer and the amount
can be measured reliably. In cases where the contract modification is approved, but the price has not been finalized, the
Company will account for the contract modification using variable consideration guidance described below.
For a portion of customer arrangements, the customer contracts with the Company to provide a significant service of
integrating a complex set of tasks and components into a single project or capability (even if that single project results
in the delivery of multiple units). The Company therefore considers that the entire contract results in the delivery of
a single performance obligation. Less commonly, the Company may promise to provide distinct goods or services
within a contract in which case the contract is separated into the associated performance obligations as assessed
from the customer’s perspective. If a contract contains multiple performance obligations, the Company allocates the
total transaction price to each performance obligation in an amount based on the estimated relative standalone selling
prices of the promised goods or services underlying each performance obligation. When the Company is contracted to
construct customer specific projects, the budgets and overall transaction prices are built up using the Company’s best
estimate of costs associated to complete the customized project using the appropriate overhead and subcontractor
rates for a given project and location. This approach to estimate the overall costs and associated revenues is considered
the most appropriate assessment of the standalone selling price for the associated performance obligations.
In certain contracts for products, the Company may agree to provide warranty and maintenance services for periods
that can extend up to 5 years. Warranty and maintenance are often included in the transaction price and is an after–
sales service. Upon expiration, the warranty period may be extended at the customer’s option. Regardless of whether
a renewal option exists in a contract, the Company does not account for a renewal option until this option is agreed
upon. This is subsequently accounted for at the agreed upon price on renewal. Consequently, the option to extend the
63
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 2. Summary of Significant Accounting Policies (continued)
renewal period does not represent a material right when they enter into the initial contract and therefore this does
not represent a separate performance obligation, and no revenue has been deferred relating to this renewal option.
The maintenance or warranty service is considered to be a distinct service when it is both regularly supplied by
the Company to other customers on a stand-alone basis and is available for customers from other providers in
the market. When these criteria are met, the warranty is considered a service type warranty where a portion of the
transaction price is allocated to the maintenance services based on the stand-alone selling price of those services.
Revenue relating to the maintenance services is recognized over time as the service is provided and incurs warranty
costs over the satisfaction of the performance obligation. Assurance type warranties are those that promise to the
customer that the delivered product will function as intended and will comply with agreed-upon specifications.
Assurance type warranty costs are recognized as a provision in accordance with IAS 37 Provisions, Contingent
Liabilities and Contingent Assets, based on the progress of the other performance obligations in the contract, and
the provision recognized is reduced as costs are incurred or reversed if no longer required.
If estimated total costs on any contract, including any inefficient costs, are greater than the net contract revenues,
IFRS 15, Revenue from Contracts with Customers indicates IAS37, Provisions, Contingent Liabilities and Contingent
Assets, should be applied as the contract is considered onerous. IAS37 however contains no further requirements
as to the measurement of onerous contracts. On adoption of IFRS15, all loss provisions for contracts with customers
follow the same policy for the definition of unavoidable costs to fulfilling the contract. The Company defines
unavoidable costs as the costs that the Company cannot avoid because it has the contract (for example, this would
include an allocation of overhead costs if those costs are incurred for activities required to complete the contract).
(b) Contract assets and liabilities
Any excess of costs and estimated earnings over progress billings on construction contracts is carried as a contract
asset in the financial statements. Any excess of progress billings over earned revenue on construction contracts is
carried as a contract liability in the financial statements.
Contract assets and liabilities (or “work in process” and “unearned contract revenue”, respectively) are reported in
a net position on a contract-by-contract basis at the end of each reporting period. All contract assets and liabilities
are classified as current in the financial statements as they are expected to be settled within the Company’s normal
operating cycle.
(c) Provisions:
Provisions are recognized when, at the financial statement date, the Company has a present obligation as a result
of a past event, and it is more likely than not that the Company will be required to settle that obligation and the cash
outflow can be estimated reliably. The amount recognized for provisions is the best estimate of the expenditure to
be incurred. Provisions are measured at their present value.
Provisions include:
i. Provisions for potential warranty claims relating to construction projects. These claims are usually settled
during the project’s warranty period. A provision is recognized when it is more likely than not that a warranty
claim will arise. The amount recognized is the best estimate of the amount required to settle the warranty
issue.
ii. Provisions for loss contracts are recorded when costs are determined to be greater than total revenues for
the contract. Losses from any construction contracts are recognized in full in the period the loss becomes
apparent. The loss provision will be net of management’s estimate of probable expected recoveries, which
differs from the criterion used for revenue recognition.
64
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 2. Summary of Significant Accounting Policies (continued)
Share-based compensation
The Company has a stock option plan for executives and other key employees. The Company measures and
recognizes compensation expense based on the grant date fair-value of the stock options issued using the Black-
Scholes pricing model. The offsetting credit is recorded in contributed surplus. Each tranche of an award is considered
a separate award with its own vesting period and grant date fair value. Compensation expense for each tranche is
recorded on a straight-line basis over the vesting period based on the Company’s estimate of share options that will
ultimately vest. At each reporting period, the Company revises its estimate of the stock options expected to vest.
The impact on the change in estimate, if any, is recognized over the remaining vesting period. Consideration paid
by employees on the exercise of options and related amounts of contributed surplus are recorded as issued capital
when the shares are issued.
The Company has a restricted share unit plan for executives and other key employees. The Company measures
and recognizes compensation expense based on the grant date fair-value of the units issued using the market
value based on the price at the date preceding the grant. The offsetting credit is recorded in contributed surplus.
Each tranche of an award is considered a separate award with its own vesting period and grant date fair value.
Compensation expense for each tranche is recorded on a straight-line basis over the vesting period based on the
Company’s estimate of units that will ultimately vest. At each reporting period, the Company revises its estimate of
the units expected to vest. The impact on the change in estimate, if any, is recognized over the remaining vesting
period.
The Company has an employee stock purchase plan available to all employees of the Company. The plan provides
for a discount to the fair market value at the date the shares are issued. Compensation expense representing the
discount is recorded as general and administration expenses with an offsetting amount to issued capital.
Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The Company has elected to apply the practical expedient to account for each lease component and any non-lease
components as a single lease component. The Company recognizes a right-of-use asset and a lease liability at the
lease commencement date. The right-of-use asset is initially measured based on the initial amount of the lease liabil-
ity adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred
and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site
on which it is located, less any lease incentives received. The assets are depreciated to the earlier of the end of the
useful life of the right-of-use asset, or the lease term using the straight-line method as this most closely reflects the
expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an
option to extend if the Company is reasonably certain to exercise that option.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commence-
ment date, discounted using the Company’s incremental borrowing rate. Variable lease payments that do not de-
pend on an index or rate are not included in the measurement of the lease liability. The lease liability is measured at
amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments
arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to
be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise
a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding
adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying
amount of the right-of-use asset has been reduced to zero. The Company has elected to apply the practical ex-
pedient not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of 12
months or less and leases of low-value assets. The lease payments associated with these leases are recognized as
an expense on a straight-line basis over the lease term.
65
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 2. Summary of Significant Accounting Policies (continued)
Income taxes
Income tax expense comprises current and deferred tax. Income tax expense is recognized in net profit, except
when it relates to items that are recognized in other comprehensive income or directly in equity, in which case, the
current and deferred tax are also recognized in other comprehensive income or directly in equity respectively. Where
current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in
the accounting for the business combination.
Current tax
The tax currently payable is based on taxable income for the period using tax rates enacted or substantively enacted
as at each reporting period and any adjustments to tax payable related to previous years. Taxable profit differs from
profit as reported in the consolidated statement of net profit because it excludes items of income or expense that are
taxable or deductible in other years and it further excludes items that are never taxable or deductible.
Deferred tax
Deferred tax is recognized using the balance sheet method, providing for differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the corresponding tax bases used for taxation purposes
calculated using the tax rates in effect when the differences are expected to reverse.
Deferred tax liabilities are generally recognized for all taxable temporary differences, and deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which those deductible temporary differences can be utilized. Such assets and liabilities are not
recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting
profit.
Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries,
except where the Company is able to control the reversal of the temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments are only recognized to the extent that it is probable that there will be
sufficient taxable profits against which to utilize the benefits of the temporary differences, and they are expected to
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable income will be available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the
liability is settled or the asset realized, based on tax rates that have been enacted or substantively enacted at each
reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would
follow from the manner in which the Company expects, at the reporting date, to recover or settle the carrying amount
of its assets and liabilities.
Capitalized Research and Development (“R&D”)
Research costs are expensed as incurred. Internally developed internal-use asset costs incurred in the development
phase of a project are capitalized. Certain costs incurred in connection with the development of assets to be used
internally are capitalized once a project has progressed beyond a conceptual, preliminary stage to that of development.
Development costs that are directly attributable to the design and testing of identifiable assets controlled by the
Company are recognized as assets when the following criteria are met:
66
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 2. Summary of Significant Accounting Policies (continued)
• it is technically feasible to complete the asset so that it will be available for use;
• there is an ability and management intends to complete the asset for use or sale;
• it can be demonstrated how the asset will generate probable future economic benefits;
• adequate technical, financial and other resources to complete the development and to use or sell the asset
are available; and
• the expenditure attributable to the asset during its development can be reliably measured.
Costs that qualify for capitalization include both internal and external costs, but are limited to those that are
directly related to the specific project. Capitalized development expenditure is measured at cost less accumulated
amortization and accumulated impairment losses. Amortization is recognized in net profit over the estimated useful
life of the underlying assets.
Capitalized R&D is measured at cost and depreciated over the useful life of the assets which is determined to be 5
years. Costs include expenditures that are directly attributable to its construction.
Equipment
Equipment, comprising furniture and computer equipment, along with leasehold improvements, is stated at cost
less accumulated depreciation and impairment losses, if any. The carrying value is net of any related government
assistance and investment tax credits. Depreciation is recognized in net profit on a straight-line basis over the
estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the term of
the leases. The estimated useful lives are as follows:
• Equipment:
5 to 10 years
The estimated useful lives, residual values and depreciation methods are reviewed annually, with the effect of any
changes in estimate accounted for on a prospective basis.
Application software
Application software is measured at cost less accumulated depreciation and is amortized on a straight-line basis
over its estimated useful life not exceeding five years. The amortization method and estimate of useful lives are
reviewed annually.
Acquired intangible assets
Acquired intangible assets are measured at cost less accumulated amortization. Amortization is recognized in net
profit over the estimated useful lives of the underlying assets. The estimated useful lives are as follows:
• Customer relationship Primacy:
indefinite
• Other customer relationships:
3 to 8 years
• Contracts with customers:
3 to 5 years
• Non-competition agreements:
2 to 5 years
• Technology and Trademarks:
2 to 9 years
The customer relationship from the Primacy acquisition, representing expected renewals of the acquired contract, is
considered to have an indefinite life based on the fact that the contract is renewable on an annual basis indefinitely.
The amortization method and estimate of useful life for all other intangible assets is reviewed annually.
67
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 2. Summary of Significant Accounting Policies (continued)
Impairment of capitalized R&D, equipment, application software and intangible assets
At each reporting period, management reviews the carrying amounts of its capitalized R&D, equipment, application
software and acquired intangible assets to determine whether there is any indication that those assets have suffered
an impairment loss. Intangible assets with an indefinite life are also tested for impairment annually or more frequently
if events or changes in circumstances indicate that the asset might be impaired. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where
it is not possible to estimate the recoverable amount of an individual asset, management estimates the recoverable
amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation
can be identified, corporate assets are also allocated to individual cash-generating units. The Company performs its
annual review of acquired intangible assets with an indefinite life on September 30th each year.
The recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset for which the estimates of
future cash flows have not been adjusted.
If the recoverable amount of an asset or cash-generating unit is estimated to be less than its carrying amount, the
carrying amount of the asset or cash-generating unit is reduced to its recoverable amount. An impairment loss is
recognized immediately in profit or loss.
Current year impairment testing occurred due to triggering events relating to intangible assets described in Note 26
where the triggering event was the change in estimate on the contingent earn out payable. In order to calculate the
value in use of the intangible assets, the Company calculated the present value of discounted cash flows that relate
specifically to these cash generating units for which the intangibles relate. Assumptions were made on the forecasted
cash flows for the cash generating units, and discount rates used in the present value.
Impairment of goodwill
Goodwill arising on the acquisition of a business represents the excess of the purchase price over the net fair
value of identifiable assets, liabilities and contingent liabilities of the acquired businesses recognized at the date of
the acquisition. Goodwill is initially recognized as an asset at cost and is subsequently measured at cost less any
accumulated impairment losses. For the purpose of impairment testing, goodwill is allocated to the cash-generating
units expected to benefit from the synergies of the combination. Cash-generating units or groups of cash generating
units to which goodwill has been allocated are tested for impairment annually or more frequently if events or changes
in circumstances indicate that the unit might be impaired. For purposes of impairment testing of goodwill, cash-
generating units or groups of cash generating units correspond to the Company’s reporting segments as disclosed
in Note 24.
When the recoverable amount of the cash-generating unit is less than the carrying amount of the cash-generating
unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then
to the other assets of the cash-generating unit on a pro-rata basis. An impairment loss recognized for goodwill is not
reversed in a subsequent period. The Company performs its annual review of goodwill on September 30th each year.
At September 30, 2020 and 2019, management assessed the recoverable amount of goodwill and concluded that a
goodwill impairment charge was not required.
For the years ended September 30, 2020 and 2019, various assumptions were taken to arrive at estimated values per
segment, including discount rates in the range of 12% to 15% and growth rate assumptions of 0% to 5%. Outlook
for the next fiscal year was used as the basis for the future cash flow estimates and the future estimated growth rates
were validated by comparing to average growth levels for the previous 3 years.
68
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 2. Summary of Significant Accounting Policies (continued)
Business acquisition
Acquisition of businesses is accounted for using the acquisition method. The consideration transferred in a business
combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets
transferred by the Company, and liabilities incurred by the Company to the former owners of the acquiree in exchange
for control of the acquiree. Acquisition-related costs are generally expensed in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired, and the liabilities assumed are recognised at their fair value,
except that deferred tax assets or liabilities are recognised and measured in accordance with IAS 12 Income Taxes.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any)
over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and the
fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit
or loss as a bargain purchase gain.
When the consideration transferred by the Company in a business combination includes a payment subject to the
retention of the principal shareholders, the amount is deemed to represent deferred compensation payable to such
shareholders and therefore is excluded from the total consideration of the purchase, and is expensed on a straight-line
basis over the retention period in the Company’s consolidated statement of net profit as deemed compensation related
to acquisitions.
When the consideration transferred by the Company in a business combination includes assets or liabilities resulting from
a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and
included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent
consideration that qualify as measurement period adjustments are adjusted retrospectively, with corresponding
adjustments against goodwill. Measurement period adjustments are adjustments that arise from additional information
obtained during the ‘measurement period’ (which cannot exceed one year from the acquisition date) about facts and
circumstances that existed at the acquisition date.
Foreign currency translation
Transactions in currencies other than the Company’s functional currency (foreign currencies) are recorded at the rates of
exchange prevailing at the dates of the transactions. Income and expense items are translated at the average exchange
rates for the period, unless exchange rates fluctuated significantly during that period, in which case the exchange rates
at the dates of the transactions are used. At each reporting period, monetary items denominated in foreign currencies
are retranslated at the rates prevailing at each reporting period. Non-monetary items which are measured in terms of
historical cost in a foreign currency are not retranslated. Exchange differences are recognized in net profit in the period
in which they arise except for exchange differences on transactions entered into in order to hedge certain foreign
currencies (see note below for hedging policy).
The functional currency of the parent company and its subsidiaries is the Canadian dollar, except for SatService which
is the Euro, and CTS which is the Norwegian Krone.
Financial instruments
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the
instrument.
Financial assets and liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair
value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
financial liabilities at fair value through profit or loss are recognized immediately in profit or loss.
69
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 2. Summary of Significant Accounting Policies (continued)
Financial assets
All financial assets are recognized and de-recognized on trade date. The classification of financial assets depends
on the business model for managing the financial assets and the contractual cash flow characteristics of the financial
asset. A financial asset is measured at amortized cost if it is held within a business model whose objective is to hold
assets to collect contractual cash flows, and its contractual terms give rise on specified dates to cash flows that are
solely payments of principal and interest on the principal amount outstanding.
The Company’s financial assets are classified as follows:
Cash
Accounts receivable
Investment and loan receivable
Derivative assets
Amortized cost
Amortized cost
Fair value through profit and loss
Fair value through other comprehensive income (“OCI”)
Amortized cost
Subsequent to initial recognition, financial assets at amortized cost are measured using the effective interest method,
less any impairment. Interest income is recognized by applying the effective interest rate except for accounts receivable,
where the interest revenue would be immaterial. Interest income, foreign exchange gains and losses, and impairment
and any gain or loss on de-recognition are recognized in profit and loss.
Impairment of financial assets
The Company measures a loss allowance based on the lifetime expected credit losses. Lifetime expected credit losses
are estimated based on factors such as the Company’s past experience of collecting payments, observable changes in
national or local economic conditions that correlate with default on receivables, financial difficulties of the borrower, and
it becoming probable that the borrower will enter bankruptcy or financial re-organization. Financial assets are written off
when there is no reasonable expectation of recovery.
Financial liabilities
The Company determines the classification of its financial liabilities at initial recognition. The Company’s financial
liabilities are classified as follows:
Line of credit
Accounts payable and accrued liabilities
Contingent earn-out
Provisions
Derivative liabilities
Amortized cost
Amortized cost
Fair value through profit and loss
Amortized cost
Fair value through OCI
Fair value hierarchy
The Company’s fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The three
levels of the fair value hierarchy are:
Level 1 values are based on unadjusted quoted prices in active markets that are accessible at the measurement date
for identical assets or liabilities.
Level 2 values are based on quoted prices in markets that are not active or model inputs that are observable either
directly or indirectly for substantially the full term of the asset or liability.
Level 3 values are based on prices or valuation techniques that require inputs that are both unobservable and significant
to the overall fair value measurement.
When the inputs used to measure fair value fall within more than one level of the hierarchy, the level within which the
fair value measurement is categorized is based on the Company’s assessment of the lowest level input that is the most
significant to the fair value measurement.
70
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 2. Summary of Significant Accounting Policies (continued)
Derivative financial instruments and risk management
The Company enters into derivative financial instruments, mainly foreign exchange forward contracts to manage
its foreign exchange rate risk. The Company’s policy does not allow management to enter into derivative financial
instruments for trading or speculative purposes. Foreign exchange forward contracts are entered into to manage the
foreign exchange rate risk on foreign denominated financial assets and liabilities and foreign denominated forecasted
transactions.
Derivatives are initially recognized at fair value at the date a derivative contract is entered into with transaction costs
recognized in profit and loss. Derivatives are subsequently re-measured to their fair value at each reporting period.
The resulting gain or loss is recognized in net profit immediately unless the derivative is designated and effective as
a hedging instrument, in which event the effective portion of changes in the fair value of the derivative is recorded in
other comprehensive income and is recognized in net profit when the hedged item affects net profit. The Company
expenses transaction costs related to its foreign exchange contracts. Fair value of the forward exchange contracts
reflects the cash flows due to or from the Company if settlement had taken place at the end of the period. A derivative
is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than
12 months and it is not expected to be realized or settled within 12 months.
Hedge accounting
Management designates its foreign exchange forward contracts as either hedges of the fair value of recognized
assets or liabilities (fair value hedges) or hedges of highly probable forecast transactions and firm commitments
(cash flow hedges).
At the inception of the hedge relationship, the Company documents the relationship between the hedging instruments
and the hedged items, as well as its risk management objective and strategy for undertaking various hedge
transactions. Furthermore, both at the hedge’s inception and on an on-going basis, the Company also assesses
whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values
or cash flows of hedged items.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in net profit
immediately, together with any changes in the fair value of the hedged item that are attributable to the hedged risk.
The change in the fair value of the hedging instrument and the change in the hedged item attributable to the hedged
risk are recognized in the line of the income statement relating to the hedged item.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges
are deferred in other comprehensive income and accumulated under the heading of cash flow hedging reserve.
The gain or loss relating to the ineffective portion is recognized immediately in net profit, and is included in other
gains and losses, if any. Amounts deferred in other comprehensive income are recycled in net profit in the periods
when the hedged item is recognized in net profit, in the same line of the consolidated statement of net profit as the
recognized hedged item.
Hedge accounting is discontinued when management revokes the hedging relationship; the hedging instrument is
terminated or no longer qualifies for hedge accounting. For fair value hedges, the adjustment to the carrying amount
of the hedged item arising from the hedged risk is amortized to net profit from that date. For cash flow hedges, any
cumulative gain or loss deferred in other comprehensive income at that time remains in other comprehensive income
and is recognized when the forecast transaction is ultimately recognized in net profit. When a forecast transaction
is no longer expected to occur, the cumulative gain or loss that was deferred in other comprehensive income is
recognized immediately in net profit.
Note 25 sets out details of the fair values of the derivative instruments used for hedging purposes. Movements in the
hedging reserve in equity are also detailed in the consolidated statement of changes in equity.
71
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 3. Changes in Accounting Policies
IFRS 16
In January 2016, the IASB released IFRS 16 Leases which replaces IAS 17 Leases. IFRS 16 set outs a single
lessee accounting model that requires a lessee to recognize assets and liabilities for all lease agreements unless
the underlying asset has a low value or the lease term is twelve months or less. A lessee is required to recognize
a right-of-use asset for the underlying leased asset and a lease liability representing the present value of payment
obligations for the lease term. IFRS 16 is effective for the Company’s annual periods beginning on October 1, 2019.
The Company has elected to use the modified retrospective approach for transition to IFRS 16 whereby the lease
liability is measured at the present value of the remaining lease payments, discounted using the lessee’s incremental
borrowing rate at the date of initial application and the right-of-use asset is measured at an amount equal to the
lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in
the statement of financial position immediately before the date of initial adoption for leases previously classified as
an operating lease.
Effective October 1, 2019, the Company adopted IFRS 16 using the modified retrospective approach and accordingly
the information presented for the comparative fiscal year has not been restated and the presentation remains as
previously reported under IAS 17 and related interpretations. The Company has assessed the new standard and
reviewed its portfolio of contracts in order to identify leases under the scope of IFRS 16. The review has identified a
number of contracts that were previously accounted for as operating leases under the previous accounting standard,
all of which represent leases for office space.
The Company has elected to apply the practical expedient to account for leases for which the lease term ends
within 12 months of the date of initial application as short-term leases. The Company has elected to apply the
practical expedient to grandfather the assessment of which transactions are leases on the date of initial application,
as previously assessed under IAS 17 and IFRIC 4. The Company applied the definition of a lease under IFRS 16 to
contracts entered into or changed on or after October 1, 2019. The Company has used hindsight where applicable,
such as in determining the lease term if the contract contains options to extend or terminate the lease.
Based on management’s assessment of these contracts, the balance sheet impact is as follows:
Operating leases as at
September 30, 2019
Transitional
adjustments
Leases as at
October 1, 2019
Assets
Prepaid expenses
Right-of-use asset
Total assets
Liabilities and equity
$
157
-
157
$
(157)
18,416
18,259
Accounts payable and accrued liabilities
$
2,000
$
(2,000)
Lease obligation
Total current liabilities
Retained earnings
Total liabilities and equity
-
2,000
-
20,259
18,259
-
$
2,000
$
18,259
$
20,259
The weighted average incremental borrowing rate applied to the lease liabilities recognized in the statement of
financial position on October 1, 2019 is 2.47%.
72
$
$
-
18,416
18,416
-
20,259
20,259
-
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 3. Changes in Accounting Policies (continued)
The following table reconciles the Company’s operating lease obligations at September 30, 2019, as previously
disclosed in the Company’s consolidated financial statements commitment note, to the lease obligations recognized
on initial application of IFRS 16 at October 1, 2019:
Operating lease commitments at September 30, 2019
Discounted using the incremental borrowing rate at October 1, 2019
Variable lease payments that do not depend on an index or rate
Recognition exemption for short-term leases
Extension options reasonably certain to be exercised
Other
Lease obligations recognized at October 1, 2019
$ 24,640
23,291
(7,058)
(27)
4,213
(160)
$ 20,259
4. Critical Accounting Judgments and Key Sources of Estimation Uncertainty
Estimates:
The preparation of financial statements in conformity with IFRS requires the Company’s management to make
judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities as at the date of the financial statements,
and the reported amounts of revenues and expenses during the reporting periods presented. Actual results could
differ from those estimates.
Project completion for revenue
A significant portion of the revenue is derived from fixed-price contracts which can extend over more than one
reporting period. Revenue from these fixed-price projects is recognized over time using the input method using
management’s best estimate of the costs and related risks associated with completing the projects. Management’s
approach to revenue recognition 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 goodwill and intangible assets
Determining whether goodwill or acquired intangibles assets are impaired requires an estimation of the value of
the cash-generating units. This was done through the value in use calculation. The value in use calculation requires
management to estimate the future cash flows expected to arise from the cash-generating unit, and a suitable
discount rate in order to calculate present value.
Income taxes
The Company records deferred income tax assets and liabilities related to deductible or taxable temporary differences.
The Company assesses the value of these assets and liabilities based on the likelihood of the realization as well as
the timing of reversal given management assessments of future taxable income.
Contingent liabilities
From time-to-time the Company is involved in claims in the normal course of business. Management assesses such
claims and where considered probable to result in an exposure and, where the amount of the claim can be measured
reliably, provisions for loss are made based on management’s assessment of the likely outcome.
73
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report
4. Critical Accounting Judgments and Key Sources of Estimation Uncertainty
(continued)
Loss allowance
The Company has extensive commercial history upon which to base its provision for doubtful accounts receivable.
Due to the nature of the industry in which the Company operates, the Company does not create a general provision
for bad debts but rather determines bad debts on a specific account basis.
Judgments:
Financial instruments
The Company’s accounting policy with regards to financial instruments is described in Note 2. In applying this policy,
judgments are made in applying the criteria set out in IFRS9, Financial Instruments, to record financial instruments at
fair value through profit or loss, and the assessments of the classification of financial instruments and effectiveness
of hedging relationships.
Business combinations
The consideration transferred for an acquired business is assigned to the identifiable tangible and intangible assets
purchased, along with liabilities assumed on the basis of their acquisition date fair values. The identification of assets
purchased and liabilities assumed and the valuation thereof is specialized and judgemental. Where appropriate, the
Company engages external business valuators to assist in the valuation of tangible and intangible assets acquired.
When a business combination involves contingent consideration, an amount equal to the fair value of the contingent
consideration is recorded as a liability at the time of acquisition. The key assumptions utilized in determining fair
value of contingent consideration may include probabilities associated with the occurrence of specified future events,
financial projections of the acquired business, the timing of future cash flows, and the appropriate discount rate.
Accounting policy for equipment and intangible assets
Management makes judgments in determining the most appropriate methodology for amortizing long-lived assets
over their useful lives. The method chosen is intended to mirror, to the best extent possible, the consumption of the
asset.
Deferred income taxes
The Company’s accounting policy with regards to income taxes is described in Note 2. In applying this policy,
judgments are made in determining the probability of whether deductions or tax credits can be utilized and related
timing of such items.
Input methodology for project completion
The Company uses judgment in determining the most appropriate basis on which to determine the completion of
projects. Options available to the Company include the proportion that contract costs incurred for work performed to
date bear to the estimated total contract costs, surveys of work performed, and completion of a physical proportion
of the contract work. While the Company considers the costs to complete, the stage of completion is assessed
based upon the assessment of the proportion of the contract completed. Judgments are also made in determining
what costs are project costs for determining the percentage complete.
5. Seasonality
The results of operations for the interim periods are not necessarily indicative of the results of operations for the full
year. The Company’s revenues and earnings have historically been subject to some quarterly seasonality due to
the timing of vacation periods, statutory holidays, industry specific seasonal cycles and the timing and delivery of
milestones for significant projects. IntraGrain for instance generates a significant portion of its revenues during the
third and fourth quarter of the Company’s fiscal year.
74
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 6. Cash and Cash Equivalents
The following table presents the cash and cash equivalents as at:
Cash
Restricted cash
Total cash and cash equivalents
September 30, 2020
September 30, 2019
$
$
23,344
891
24,235
$
$
17,135
-
17,135
The following table presents cash and cash equivalents by currency:
CAD
USD
GBP
EUR
CHF
NOK
Total cash and cash equivalents September 30, 2020
CAD
USD
GBP
EUR
CHF
Local
Currency
$
11,771
4,534
78
2,906
421
7,958
7,996
4,832
5
1,896
17
$
Foreign
Exchange
Presentation
Currency
1.00
1.33
1.72
1.56
1.45
0.14
1.00
1.32
1.63
1.44
1.33
$
11,771
6,048
135
4,542
609
1,130
24,235
7,996
6,378
8
2,730
23
$
$
Total cash and cash equivalents September 30, 2019
$
17,135
7. Accounts Receivable
The following table presents the trade and other receivables as at:
Trade and accounts receivable
$
78,788
$
62,507
September 30, 2020
September 30, 2019
Tax and Scientific Research and Development receivable
Other
Loss Allowance
1,563
803
81,154
(45)
1,500
46
64,053
(76)
$
81,109
$
63,977
Bad debt recovery recognized in the year ended September 30, 2020 (2019) is $2 ($79).
75
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report
8. Inventory
Inventories are recorded at the lower of cost or net realizable value. Cost is calculated based on the weighted
average cost method. Write-downs are taken for excess and obsolete inventory and for a reduction in the carrying
value of inventory to reflect realizable value based on current cost, production and sales estimates. Cost comprises
all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location
and condition.
The following table presents inventories as at:
Raw materials
Work in process inventory
Finished goods
September 30, 2020
September 30, 2019
$
$
3,677
957
1,461
6,095
$
1,391
275
1,481
3,147
$
Inventory recognized as cost of revenues in the year ended September 30, 2020 (2019) is $6,942 ($5,529). No
inventory provisions have been recognized in the years ended September 30, 2020 (2019).
9. Prepaid Expenses
The following table presents prepaid expenses as at:
Prepaid maintenance
Other prepaid expenses
10. Contract assets and liabilities
The following table presents net contract assets as at:
Work in process
Unearned contract revenue
Net contract assets
September 30, 2020
September 30, 2019
$
$
3,080
3,627
6,707
$
$
2,406
2,997
5,403
Net Contract Assets
September 30, 2020
September 30, 2019
$
$
84,132
(13,435)
70,697
$
$
39,221
(8,778)
30,443
The following table presents changes in net contract assets for the period ended:
Opening balance, October 1
Additions
Billings
Acquisitions
Ending balance
76
Changes in Net Contract Assets
September 30, 2020
September 30, 2019
$
30,443
$
7,335
128,772
(88,362)
(156)
84,583
(61,804)
329
$
70,697
$
30,443
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd.
11. Equipment
A continuity of the property and equipment for the year ended September 30, 2020 is as follows:
Cost
Depreciation
Carrying Value
Cost
Additions/
Disposals
Acquisitions
Total
Depreciation
Accumulated
Depreciation
September
30, 2020
September
30, 2019
Leasehold
improvements $ 2,437 $
24 $
76 $
2,537 $
(244)
$
(667)
$
1,870 $
2,049
Equipment
Total
equipment
Application
software
Capitalized
research and
development
21,379
1,873
1,577
24,829
(1,831)
(15,044)
9,785
8,916
$ 23,816 $
1,897 $
1,653 $ 27,366 $ (2,075)
$ (15,711)
$ 11,655 $ 10,965
$
4,311 $
2,438 $
335 $
7,084 $
(381)
$ (3,992)
$
3,092 $
1,013
$
3,217 $
1,227 $
-
$
4,444 $
(520)
$
(520)
$
3,924 $
3,216
12. Right-of-Use Assets and Lease Obligations
The following table presents the right-of-use assets for the Company:
Balance October 1, 2019
Additions
Disposals
Depreciation
Balance at September 30, 2020
Total Right-of-Use Assets
$
18,416
2,045
(95)
(2,771)
$
17,595
The Company’s leases are for office and manufacturing space. The Company has included renewal options in the
measurement of lease obligations when it is reasonably certain to exercise the renewal option.
The following table presents lease obligations for the Company:
Balance October 1, 2019
Additions
Disposals
Principal Payments
Balance at September 30, 2020
Current
Non-current
Total
Total Lease Obligations
$
20,259
1,969
(130)
(2,508)
19,590
2,790
16,800
$
$
$
19,590
77
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report
12. Right-of-Use Assets and Lease Obligations (continued)
The following table presents the contractual undiscounted cash flows for lease obligations as at
September 30, 2020:
Less than one year
One to five years
More than five years
Total undiscounted lease obligations
Total Undiscounted Lease Obligations
$
3,167
11,667
6,629
$
21,463
Total cash outflow for leases in the year ended September 30, 2020 (2019) was $2,983 (nil), including principal pay-
ments relating to lease obligations of $2,508 (nil). Interest expense on lease obligations was $475 (nil). Expenses
relating to short-term leases were $219 (nil) recognized in general and administration expenses.
13. Investment and Loan Receivable
Cliniconex
Cliniconex Inc., is an Ottawa-based patient outreach solutions vendor. In 2017, the Company invested $250, which
included $100 in common shares, and $150 in convertible debt, which accrued interest at 12% and matures on June
6, 2021. In 2018, the Company invested an additional $150 in the form of a convertible loan with interest of 12% and
maturing on June 9, 2020.
On November 13, 2019, the Company elected to exchange its existing convertible debt, and accrued interest into
preferred shares, as well as invest a further $100 in preferred shares. The Company recognizes the investment at fair
value, and has adjusted its common and preferred shares to the most recent fair value, resulting in a gain of $101
recognized in the year ended September 30, 2020. The year ended September 2019 resulted in interest income on
the convertible loans of $20.
14. Acquired Intangible Assets
A continuity of the intangible assets for the year ended September 30, 2020 is as follows:
September 30, 2020
Opening
Balance
Additions
(Note 26)
Amortization
Closing
Balance
Customer relationship - Primacy
$
1,909
$
-
$
-
Customer relationships
8,055
12,449
(2,843)
Contracts with customers & Non-competition
agreements
Technology and trademarks
1,083
5,652
373
11,836
(399)
(1,924)
1,909
17,661
1,057
15,564
$ 16,699
$
24,658
$
(5,166)
$
36,191
78
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd.
14. Acquired Intangible Assets (continued)
A continuity of the intangible assets for the year ended September 30, 2019 is as follows:
September 30, 2019
Opening
Balance
Additions
Amortization
Customer relationship - Primacy
$
1,909
$
-
$
-
Customer relationships
3,083
6,353
(1,381)
Contracts with customers & Non-competition
agreements
Technology and trademarks
1,369
341
296
6,516
(582)
(1,205)
Closing
Balance
1,909
8,055
1,083
5,652
$
6,702
$
13,165
$
(3,168)
$
16,699
15. Goodwill
The following table presents the goodwill for the Company for the year ended September 30, 2020:
Opening balance
Additions:
Alio/Allphase
Comprehensive Training Solutions
EMSEC Solutions
Tallysman Wireless
Ending balance
September 30, 2020
$
33,702
8,566
1,003
2,557
9,462
$
55,290
The following table presents the goodwill for the Company for the year ended September 30, 2019:
Opening balance
Additions:
IntraGrain
SatService
Ending balance
September 30, 2019
$
18,236
7,745
7,721
$
33,702
16. Accounts Payable and Accrued Liabilities
The following table presents the accounts payable and accrued liabilities for the Company as at:
Trade accounts payable
Payroll accruals
Income tax payable
Other accruals
September 30,
2020
September 30,
2019
$
$
47,827
14,785
4,906
4,489
24,748
11,387
256
8,667
$
72,007
$
45,058
79
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report
17. Provisions
Changes in provisions for the year ended September 30, 2020 were as follows:
Balance at October 1, 2019
Additions
Utilization/Reversals
Balance at September 30, 2020
Product
Warranties
$
$
801
646
(802)
645
Severance
Other
Total
$
$
301
436
(457)
280
$
$
27
86
-
$
1,129
1,168
(1,259)
113
$
1,038
Changes in provisions for the year ended September 30, 2019 were as follows:
Balance at October 1, 2018
Additions
Utilization/Reversals
Balance at September 30, 2019
Product
Warranties
$
1,365
425
(989)
801
$
Severance
Other
Total
$
$
414
471
(584)
301
$
$
153
$
1,932
-
(126)
896
(1,699)
27
$
1,129
18. Line of Credit
The Company has a Revolving Credit Facility in the amount of $60,000 CAD available. The facility is committed for a
364 day term with maturity at June 4, 2021, at which point it can be renewed for another 364 day term. At Septem-
ber 30, 2020 (2019), the Company utilized NIL ($13,000) of the facility. The facility is secured against the Company’s
assets and is interest bearing at the Royal Bank of Canada’s Prime Rate plus applicable margin.
19. Issued Capital and Reserves
Issued capital
The Company is authorized to issue an unlimited number of Common Shares and an unlimited number of preferred
shares. The holders of Common Shares are entitled to dividends if, as and when declared by the Board, to one
vote per share at the meetings of holders of Common Shares and, upon liquidation, to receive such assets of the
Company as are distributable to the holders of the Common Shares. No Preferred Shares are outstanding as of the
September 30, 2020.
Common share issued and outstanding:
September 30, 2020
September 30, 2019
Shares
Amount
Shares
Amount
Balance October 1
7,929,238
$
32,515
7,764,762
$
28,647
Shares issued under employee share plans
153,222
Shares issued under employee stock purchase plan
46,918
Share repurchases
Shares issued through acquisition
Shares issued under public offering
-
62,054
1,568,600
5,323
1,746
-
2,500
65,847
139,814
28,941
(4,279)
-
-
3,034
850
(16)
-
-
Issued capital
9,760,032
$
107,931
7,929,238
$
32,515
80
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd.
19. Issued Capital and Reserves (continued)
On February 25, 2020 the Company completed an upsized bought deal offering, under which a total of 1,568,600
Common Shares were sold at a price of $44.00 per Common Share for aggregate gross proceeds of $69,018,
including shares issued pursuant to the exercise in full of the over-allotment option granted to the Underwriters. Net
proceeds after commissions, issuance costs and deferred tax relating to issuance costs were $65,847.
Subsequent to the date of the statement of financial position, on November 24, 2020, the date of issuance of
these consolidated financial statements, the Company declared a dividend of $0.28 per common share payable on
December 22, 2020.
Contributed surplus
Contributed surplus comprises the value of share-based compensation expense related to options granted that
have not been exercised or have expired unexercised.
20. Share-Based Compensation
Employee Share Purchase Plan
During the year ended September 30, 2020 (2019), the Company issued 28,754 (28,941) shares under the Company’s
previous Employee Share Purchase Plan at an average price of $24.70 ($26.65). The Company received $710 ($714)
in proceeds.
On February 6, 2020, the Company adopted a new Employee Share Purchase Plan (the “2020 Employee Share
Purchase Plan”). This new plan replaces the previous Employee Share Plan. Under the 2020 Employee Share
Purchase Plan, shares are issued monthly using the volume weighted average price for the last 5 days of the month
for the contributions made by employees in that month. The Company provides matching shares at 25% for all
employee contributions each month. Pursuant to the plan, 500,000 Common Shares are reserved for issuance, as
of September 30, 2020 the Company can issue 481,836 shares.During the year ended September 30, 2020 under
the 2020 Employee Share Purchase Plan, the Company issued 18,164 shares at an average price of $49.58. The
Company received $720 in proceeds to date under the new plan.
For the year ended September 30, 2020 (2019) the Company recorded Employee Share Purchase Plan expense of
$196 ($136) for both plans.
Stock Options
The Company has an established stock option plan. Under the plan, eligible directors and employees are granted the
right to purchase shares of common stock at a price established by the Board of Directors on the date the options
are granted but in no circumstances below fair market value of the shares at the date of grant. Stock options are
issued at market value based on the price at the date preceding the grant, and can have a contractual term of up to
ten years and generally vest over 3 years. The maximum number of common shares reserved for issuance under the
plan is equal to an aggregate 9% (878,403) of the Company’s issued and outstanding shares from time to time less
the aggregate number of shares reserved for issuance or issuable under any other security-based compensation
arrangement for the Company.
As at September 30, 2020, the Company has 286,677 stock options and RSUs outstanding. As a result, the Company
could grant up to 591,726 additional stock options or RSU’s pursuant to the plan.
The weighted average fair value of options granted during the year ended September 30, 2020 was $7.58 per option
calculated using the Black-Scholes option pricing model. Where relevant, the expected life of the options was
based on historical data for similar issuance and adjusted based on management’s best estimate for the effects of
non-transferability, exercises restrictions and behavioural considerations. Expected volatility is based on historical
price volatility over the past 5 years. To allow for the effects of early exercise, it was assumed that options would be
exercised on average 2 years after vesting.
81
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 20. Share-Based Compensation (continued)
The following assumptions were used to determine the fair value of the options granted in the year ended
September 30, 2020:
Grant date share price
Exercise price
Expected price volatility
Expected option life
Expected dividend yield
Risk-free interest rate
Forfeiture rate
Outstanding October 1
Exercised
Forfeited
Granted
Outstanding September 30
Weighted Average Options Granted
Year ended September 30,
2020
2019
$
$
%
yrs
%
%
%
54.01
54.01
22.3
4.00
2.14
0.68
0
$
$
%
yrs
%
%
%
29.52
29.52
22.8
4.00
3.78
2.25
0
September 30, 2020
September 30, 2019
Number of
Options
239,400
(139,300)
(2,000)
132,538
230,638
Weighted Avg.
Exercise Price
$
$
30.57
31.17
29.55
54.01
43.69
Number of
Options
247,400
(131,600)
(5,000)
128,600
239,400
Weighted Avg.
Exercise Price
$
$
25.43
19.79
32.57
29.52
30.57
The following share-based payment arrangements are in existence:
Option series:
Number of
Options
Grant date
(1) Issued May 17, 2017
10,000
May 17, 2017
Expiry date
May 17, 2022
(2) Issued November 24, 2017
15,000
November 24, 2017
November 24, 2022
(3) Issued March 27, 2018
6,000
March 27, 2018
March 27, 2023
(4) Issued November 19, 2018
70,600
November 19, 2018
November 19, 2023
(5) Issued February 8, 2019
3,000
February 8, 2019
February 8, 2024
(6) Issued November 25, 2019
28,500
November 25, 2019
November 25, 2024
(7) Issued August 13, 2020
97,538
August 13, 2020
August 13, 2025
Exercise
price
$ 27.30
$ 34.58
$ 31.54
$ 29.55
$ 29.06
$ 36.49
$ 60.30
Fair
value at
grant date
$ 3.42
$ 4.53
$ 4.62
$ 3.96
$ 3.95
$ 5.18
$ 8.44
For the options issued on November 25, 2019, 7,000 options vested immediately with the remaining vesting through
to November 25, 2020. Options issued on August 13, 2020 vest through to August 13, 2022.
At September 30, 2020 (2019) the weighted average remaining contractual life of options outstanding is 3.85 (3.53)
years of which 98,100 (143,400) options are exercisable at a weighted average price of $31.73 ($30.30). The Company
has recorded $324 of share-based compensation expense in the year ended September 30, 2020 (2019 - $491)
related to the options that have been granted. The Company has total unrecognized compensation expense of $766
(2019 - $86) that will be recorded in the next two fiscal years.
82
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd.
20. Share-Based Compensation (continued)
Restricted share units:
The Company has an established a restricted stock unit (“RSU”) plan. Under the RSU plan, the maximum number of
common shares reserved for issuance is equal to 9% of the Company’s issued and outstanding shares from time to time
less the aggregate number of shares reserved for issuance or issuable under any other security-based compensation
arrangement for the Company. Share units may be awarded to any officer or employee of the Company. Each restricted
share unit will vest on the date or dates designated for that unit, conditional on any vesting conditions being met.
Participants in the RSU plan may elect to redeem their share units either by the Company issuing the participant one
common share for each whole vested share unit or, subject to the consent by the Company, elect to receive an amount
in cash. The cash amount is equal to the number of vested share units to be redeemed multiplied by the value of the
common shares otherwise issuable on redemption of the share units.
The following table summarizes information about the RSU’s as of September 30, 2020:
Balance at October 1
Exercised
Forfeited
Granted
Balance at September 30
September 30, 2020
September 30, 2019
Number of
RSUs
47,736
(13,922)
(790)
23,015
56,039
Weighted Avg.
Grant Date
Fair Value
$
$
30.11
30.28
31.99
36.49
32.67
Number of
RSUs
20,970
(8,214)
(1,713)
36,693
47,736
Weighted Avg.
Grant Date
Fair Value
$
$
31.40
30.83
30.24
29.54
30.11
Of the units issued in the current year under the RSU plan, 26 have vested as of September 30, 2020. The Company has
recorded $899 of share-based compensation expense in the year ended September 30, 2020 (2019 - $691) related to
the RSUs that have been granted. The Company has total unrecognized compensation expense of $475 at September
30, 2020 (2019 - $579) that will be recorded over the next two years.
The following unvested RSU-based payment arrangements are in existence:
RSU series:
Number of
RSUs
Grant date
Vest through
(1) Issued November 24, 2017
(2) Issued February 12, 2018
(3) Issued March 27, 2018
2,881
1,141
185
November 24, 2017
November 15, 2022
February 12, 2018
November 15, 2020
March 27, 2018
November 15, 2020
(4) Issued November 16, 2018
28,577
November 6, 2018
November 15, 2021
(5) Issued February 7, 2019
450
February 7, 2019
November 15, 2021
(6) Issued November 25, 2019
22,805
November 25, 2019
November 15, 2022
Fair value
at grant date
$
$
$
$
$
$
34.58
31.01
31.54
29.55
29.06
36.49
Deferred share unit plan
During the year ended September 30, 2020 (2019) the Company granted 3,738 (4,046) deferred share units (“DSU”).
The Company recorded share-based compensation of $141 (2019 – $207) related to the DSUs in the year ended
September 30, 2020 (2019). Each DSU entitles the participant to receive the value of one Common Share. The DSUs
vest immediately as the participants are entitled to the value of shares upon termination of their service.
There are 24,652 (20,914) DSUs outstanding at September 30, 2020 (2019). The fair value of the DSUs outstanding at
September 30, 2020 (2019) was $61.71 ($29.94) per unit using the fair value of a Common Share at period end. The
company recorded a fair value adjustment in general and administration expense during the year ended September 30,
2020 (2019) of $780 ($90).
83
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report
21. Revenue
The following table presents the revenue of the Company for the year ended September 30, 2020 and 2019:
Product revenue
Advanced Technologies
Health
Learning
Information Technology
Total product revenue
Service revenue
Advanced Technologies
Health
Learning
Information Technology
Total service revenue
Total revenue
Year ended
September 30, 2020
September 30, 2019
$
109,532
$
66,204
25,184
-
8,357
143,073
43,850
137,851
57,834
49,712
289,247
432,320
$
$
$
$
-
-
3,549
69,753
43,493
115,718
63,098
50,982
273,291
343,044
$
$
$
$
Remaining performance obligations
The following table presents the aggregate amount of the revenues expected to be realized in the future from
partially or fully unsatisfied performance obligations as at September 30, 2020 for contracts recognized over time.
The amounts disclosed below represent the value of the firm orders only. Such orders may be subject to future
modifications that might materially impact the amount and/or timing of revenue recognition. The amounts disclosed
below do not include unexercised options or letters of intent.
Revenues expected to be recognized in:
Less than 24 months
Thereafter
Total
September 30, 2020
$ 479,820
260,435
$ 740,255
84
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd.
22. Net Profit per Share
The diluted weighted average number of shares has been calculated as follows:
Weighted average number of common shares – basic
Additions to reflect the dilutive effect of employee stock options
and RSU’s
Weighted average number of common shares – diluted
Year ended September 30
2020
9,044,588
59,910
9,104,498
2019
7,843,265
20,096
7,863,361
Options that are anti-dilutive because the exercise price was greater than the average market price of the common
shares are not included in the computation of diluted net profit per share. For the year ended September 30, 2020
(2019), NIL (204,200) options and NIL (NIL) RSU’s were excluded from the above computation. Net profit is the
measure of profit or loss used to calculate profit per share.
23. Income Taxes
Current Income Taxes
The following table reconciles the difference between the income taxes that would result solely by applying statutory
tax rates to pre-tax income and the reported income tax expenses:
Profit before income taxes
2020
$
27,220
2019
$ 25,871
Tax provision at the combined basic Canadian federal and
provincial income tax rate of 26.9% (2019: 26.9%)
7,322
6,959
Increase (decrease) resulting from:
Non-deductible expenses
Impact of rate changes relating to deferred income tax assets
Other income not taxable in determining net profit
Other
Income tax expense
489
(236)
(854)
139
707
(327)
(1,381)
(79)
$
6,860
$
5,879
85
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report
23. Income Taxes (continued)
Deferred Income Taxes
Reconciliation of deferred tax assets and liabilities are shown below:
Deferred tax assets (liabilities)
Deferred tax liability at September 30,
2018
$
(728)
$ (1,776)
$
Current year acquisition
-
(3,693)
Recovery (expensed) to statement of net
profit
Recovery (expensed) to other
comprehensive income
Deferred tax liability at September 30,
2019
(574)
861
-
-
$ (1,302)
$ (4,608)
Equipment
and
application
software
Acquired
intangible
assets
Bought
deal costs
Cash flow
hedging
reserve
Other
Total
-
-
-
-
-
-
$
(10)
$
-
-
217
26
-
$ (2,488)
(3,693)
152
-
439
217
$ 207
$ 178
$ (5,525)
-
-
-
-
-
(6,409)
1,027
783
1,311
(6,409)
-
-
-
1,027
(674)
1,313
(111)
-
-
-
335
-
335
$ (1,976)
$ (9,704)
$
916 $ 542
$ 961
$ (9,261)
Current year acquisition
Bought Deal Offering
Recovery (expensed) to statement of net
profit
Recovery (expensed) to other
comprehensive income
Deferred tax liability at September 30,
2020
Investments in subsidiaries
As at September 30, 2020 (2019), the Company had temporary differences of $8,396 ($5,172) associated with
investments in subsidiaries for which no deferred tax liabilities have been recognized as it is not probable that these
differences will reverse in the foreseeable future.
24. Segmented Information
Operating segments are identified as components of an enterprise about which separate discrete financial information
is available for evaluation by the chief operating decision maker, regarding how to allocate resources and assess
performance. The Company’s chief operating decision maker is the Chief Executive Officer (“CEO)”. The Company’s
segments are categorized as follows: Advanced Technologies, Health, Learning, and Information Technology (“IT”).
Shared Services are aggregated and incurred to support all segments. These include, but are not limited to, the
Finance, Human Resources, IT support, Corporate development, Legal, Corporate marketing, and administrative
functions, facilities costs, costs of operating a public company, and other costs.
The Company evaluates performance and allocates resources based on profit before interest income and income
tax expense.
86
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 24. Segmented Information (continued)
For the year ended September 30, 2020:
For the year ended September 30, 2020
Advanced
Technologies
Health
Learning
IT
Shared
Services
Revenue
Cost of revenues
Gross profit
Gross profit %
Selling and marketing
General and administration
Research and development
$153,382
$163,035
$ 57,834
$ 58,069
$
119,391
130,665
33,991
32,370
45,383
12,451
47,725
10,344
-
-
-
Total
$ 432,320
343,164
89,156
22%
20%
22%
18%
N/A%
21%
4,995
6,457
1,536
1,699
6,815
460
987
2,882
-
2,770
2,785
2
1,885
19,073
-
12,336
38,012
1,998
Profit before under noted items
$ 21,003
$ 23,396
$ 8,582
$ 4,787
$(20,958)
$ 36,810
Profit before under noted items %
14%
14%
15%
8%
N/A%
9%
Depreciation of equipment,
application software and R&D
Depreciation of right of use asset
Amortization of acquired
intangible assets
Other changes in fair value
Changes in fair value related to
contingent earn-out
Profit before interest and
income tax expense
Lease obligations interest
expense
Interest expense (income)
Profit before income tax
expense
Income tax expense – current
Income tax expense (recovery) –
deferred
Total income tax expense
NET PROFIT FOR THE PERIOD
2,976
2,771
5,166
(101)
(1,882)
$ 27,880
475
185
$ 27,220
8,171
(1,311)
$ 6,860
$ 20,360
87
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 24. Segmented Information (continued)
For the year ended September 30, 2019:
For the year ended September 30, 2019
Advanced
Technologies
Health
Learning
IT
Shared
Services
Revenue
Cost of revenues
Gross profit
Gross profit %
Selling and marketing
General and administration
Research and development
$109,697
$115,718
$ 63,098
$ 54,531
$
79,069
30,628
92,507
23,211
50,563
12,535
46,248
8,283
-
-
-
Total
$ 343,044
268,387
74,657
28%
20%
20%
15%
N/A%
22%
4,934
7,752
1,420
767
3,948
-
910
2,838
-
2,219
2,497
-
1,669
18,557
-
10,499
35,592
1,420
Profit before under noted items
$ 16,522
$ 18,496
$ 8,787
$ 3,567
$(20,226)
$ 27,146
Profit before under noted items %
15%
16%
14%
7%
N/A%
8%
Depreciation of equipment,
application software and R&D
Amortization of acquired
intangible assets
Other changes in fair value
Changes in fair value related to
contingent earn-out
Profit before interest and
income tax expense
Interest expense (income)
Profit before income tax
expense
Income tax expense – current
Income tax expense (recovery) –
deferred
Total income tax expense
NET PROFIT FOR THE PERIOD
2,220
3,168
-
(4,149)
$ 25,907
36
$ 25,871
6,318
(439)
$ 5,879
$ 19,992
The Company operates in Canada but provides services to customers in various countries. Revenues from external
customers are attributed as follows:
Canada
United States
Europe
September 30, 2020
September 30, 2019
75%
19%
6%
81%
15%
4%
Revenues are attributed to foreign countries based on the location of the customer. Revenues from various
departments and agencies of the Canadian federal, provincial and municipal governments for the year ended
September 30, 2020 (2019) represented 53% (69%) of the Company’s total revenues. All four operating segments
conduct business with this category of customer.
88
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd.
25. Financial Instruments and Risk Management
Capital Risk Management
The Company’s objective is to maintain a strong capital base in order to maintain investor, creditor and market
confidence and to sustain future development of the business and provide the ability to continue as a going concern.
Management defines capital as the Company’s shareholders’ equity excluding accumulated other comprehensive
income relating to cash flow hedges. The Company uses debt to fund working capital and its investment initiatives.
Net profits generated from operations are available to repay debt and reinvestment in the Company or distribution
to the Company’s shareholders. The Board of Directors does not establish quantitative return on capital criteria for
management; but rather promotes year-over-year sustainable profitable growth. The Board of Directors also reviews
on a quarterly basis the level of dividends paid to the Company’s shareholders and monitors the share repurchase
program activities. The Company does not have a defined share repurchase plan and buy and sell decisions are
made on a specific transaction basis and depend on market prices and regulatory restrictions. There were no
changes in the Company’s approach to capital management during the period. Neither the Company nor any of its
subsidiaries are subject to externally imposed capital requirements.
Market risk is the risk that changes in market prices, such as foreign exchange rates, and interest rates will affect the
Company’s income or the value of its holding of financial instruments.
Foreign currency risk related to contracts
The Company is exposed to foreign currency exchange fluctuations on its cash balance, accounts receivable,
accounts payable and accrued liabilities, contingent earn-out and future cash flows related to contracts denominated
in a foreign currency. Future cash flows will be realized over the life of the contracts. The Company utilizes derivative
financial instruments, principally in the form of forward exchange contracts, in the management of the majority
of its foreign currency exposures. The Company’s objective is to manage and control exposures and secure the
Company’s profitability on existing contracts and therefore, the Company’s policy is to hedge the majority of its
foreign currency exposure. The Company does not utilize derivative financial instruments for trading or speculative
purposes. The Company applies hedge accounting when appropriate documentation and effectiveness criteria are
met.
The Company formally documents all relationships between hedging instruments and hedged items, as well as its
risk management objective and strategy for undertaking various hedge transactions. This process includes linking
all derivatives to specific firm contractually related commitments on projects.
The Company also formally assesses, both at the hedge’s inception and on an on-going basis, whether the derivatives
that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged
items. Hedge ineffectiveness has historically been insignificant. The forward foreign exchange contracts primarily
require the Company to purchase or sell certain foreign currencies with or for Canadian dollars at contractual rates.
The functional currency of each of the Company’s entities is determined using the currency of the primary economic
environment in which that entity operates. The Company’s functional currency is the Canadian dollar while the
functional currency of its German subsidiary is the European Euro (“EUR”), and the functional currency of its
Norwegian subsidiary is the Norwegian Krone (“NOK”). The presentation currency of these financial statements is
the Canadian dollar.
In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s
functional currency (foreign currencies) are recorded at the rate of exchange prevailing at the dates of the transactions.
At each reporting date, monetary items denominated in foreign currencies are retranslated at rates prevailing at the
reporting dates and are recognized in profit and loss in the period in which they arise. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not retranslated.
89
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 25. Financial Instruments and Risk Management (continued)
For the purpose of preparing consolidated financial statements, the assets and liabilities of the Company’s German
operations and Norwegian operations are first expressed in the Companies’ EUR and NOK functional currencies,
respectively, using exchange rates prevailing at the reporting date which are then translated into the Company’s
reporting currency using prevailing rates at the reporting date. Income and expense items are translated at the
average exchange rates for the period, unless exchange rates fluctuated significantly during that period, in which
case the exchange rates at the dates of the transactions are used. Translation differences are recognized in other
comprehensive income and recorded in the “cumulative translation adjustment”.
At September 30, 2020, the Company had the following forward foreign exchange contracts:
Type
SELL
BUY
BUY
Derivative assets
BUY
SELL
SELL
Derivative liabilities
Notional
Currency
Maturity
Equivalent
Cdn. Dollars
Fair Value
September 30,
2020
$ 125,548
933
644
$
45,393
6,312
421
USD
EURO
CHF
USD
EURO
CHF
October 2020
$ 167,217
October 2020
October 2020
1,458
932
October 2020
$
60,459
October 2020
October 2020
9,861
609
$
$
$
$
352
3
3
358
(127)
(23)
(2)
(152)
A 10% strengthening of the Canadian dollar against the following currencies at September 30, 2020 would have
decreased other comprehensive income by the amounts shown below.
USD
EURO
CHF
NOK
Total
September 30,
2020
$
9,705
5,139
(29)
272
$
15,087
A 10% strengthening against the Canadian dollar of the currencies to which the Company had exposure that is not
related to forward foreign exchange contracts would have increased Net Profit (a 10% weakening against the USD
would have had the opposite effect) by the amounts shown below.
USD
EURO
Total
90
September 30,
2020
$
$
294
2
296
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd.
25. Financial Instruments and Risk Management (continued)
Credit risk
Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails
to meet its contractual obligations and arises principally from the Company’s accounts receivable and its foreign
exchange contracts.
The Company’s exposure to credit risk with its customers is influenced mainly by the individual characteristics of
each customer. The Company’s customers are for the most part, federal and provincial government departments and
large private companies. A significant portion of the Company’s accounts receivable is from long-time customers. At
September 30, 2020 (2019), 56% (71%) of its accounts’ receivable were due from various departments and agencies
of the Canadian federal government. Over the last five years the Company has not suffered any significant credit
related losses.
The Company limits its exposure to credit risks from counter-parties to derivative financial instruments by dealing
only with major Canadian financial institutions.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit
risk at the reporting date was:
Cash and cash equivalents
Accounts receivable
Derivative assets
Total
The aging of accounts receivable at the reporting date was:
Current
Past due (61-120 days)
Past due (> 120 days)
Total
Liquidity risk
September 30,
2020
September 30,
2019
$
$
24,235 $
81,109
358
17,135
63,977
96
105,702 $
81,208
September 30,
2020
September 30,
2019
$
$
76,470 $
60,574
3,305
1,334
1,249
2,154
81,109 $
63,977
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The
Company’s approach to managing liquidity risk is to ensure, as much as possible, that it will always have sufficient
liquidity to meet liabilities when due. At September 30, 2020, the company has a secured credit facility, subject to
annual renewal, that allows the Company to borrow funds up to an aggregate of $60,000. At as September 30, 2020,
NIL was drawn on the facility for current operations, and Nil was drawn to issue letters of credit to meet customer
contractual requirements.
Fair Value
The fair value of accounts receivable, accounts payable and accrued liabilities approximates their carrying values
due to their short-term maturity. Fair value of the forward exchange contracts reflects the cash flows due to or from
the Company if settlement had taken place on September 30, 2020 and represent the difference between the hedge
rate and the exchange rate at the end of the reporting period.
91
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report
25. Financial Instruments and Risk Management (continued)
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition
at fair value, grouped into Levels 1 to 3 of the fair value hierarchy based on the degree to which the fair value is
observable:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for
identical assets or liabilities;
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
Cash and cash equivalents
Investment and loan receivable
Derivative financial assets
Contingent earn-out
Derivative financial liabilities
Total
Cash and cash equivalents
Investment and loan receivable
Derivative financial assets
Contingent earn-out
Derivative financial liabilities
Total
September 30, 2020
Level 1
Level 2
Level 3
$
24,235
$
-
-
-
-
$
24,235
$
-
-
358
-
(152)
206
$
-
670
-
(15,164)
-
$
(14,494)
September 30, 2019
Level 1
Level 2
Level 3
$
17,135
$
-
-
-
-
$
17,135
$
-
-
96
-
(143)
(47)
$
-
452
-
(6,319)
-
$
(5,867)
There were no transfers between Level 1, Level 2 and level 3 during the three and nine month periods ended
September 30, 2020.
26. Acquisitions
(D.T.) Secure Technologies International Inc.
On May 31, 2018, the Company acquired all of the outstanding shares of Secure Tech for a purchase price of up to
$4,188. Of this amount, $2,588 was paid on the date of closing and $1,600 is payable contingently. Secure Tech is
a dedicated partner in IT and Information Security. Secure Tech was acquired to expand the Company’s information
technology cyber offering and is reported as part of the IT operating segment.
Under the contingent consideration arrangement, the Company is required to pay the former shareholders of Secure Tech
an additional $800 and $800 if Secure Tech attains specified levels of EBITDA for the years ending May 31, 2019 and 2020,
respectively. Secure Tech did not achieve the level of EBITDA required for the year 1 earn-out. This resulted in a reduction
of the first year earn out liability in the amount of $800 which was recognized in fiscal year 2019. At September 30, 2020,
the second year target was met, and overachieved, resulting in a payment of $1,025. For the year ended September 30,
2020, the net impact was $225 reflected in ‘ changes in fair value related to contingent earn-out’.
92
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd.
26. Acquisitions (continued)
IntraGrain Technologies Inc. (“IntraGrain”)
On November 1, 2018, the Company acquired all of the outstanding shares of IntraGrain for a purchase price of up to
$17,000. Of this amount, $11,000 was paid on the date of closing and $6,000 is payable contingently. IntraGrain is the
maker of the BIN-SENSE® grain storage solution. The technology combines Internet of Things (connectivity) with bin
sensors to protect grain quality and eliminate the risk of stored grain spoilage and is reported as part of the Advanced
Technologies operating segment.
Under the contingent consideration arrangement, the Company is required to pay the former shareholders of IntraGrain
an additional $2,500 and $3,500 if IntraGrain attains specified levels of EBITDA for the years ending October 31, 2019
and 2020, respectively. IntraGrain did not achieve the level of EBITDA required for the year 1 earn-out. This resulted
in a decrease of the first year earn out liability in the amount of $2,447 which was recognized in fiscal year 2019. At
September 30, 2020, it is estimated that IntraGrain will not achieve its second year targeted EBITDA to meet the earn-
out criteria, which resulted in a decrease of the second year earn-out liability in the amount of $3,288 reflected in
‘changes in fair value related to contingent earn-out’ in the statement of Net profit.
Sat Service, Gesellschaft für Kommunikationssysteme mbH. (“SatService”)
On April 1, 2019, the Company acquired all of the outstanding shares of SatService for a purchase price of $16,036.
Of this amount, $9,810 (6,450 EURO) was paid on the date of closing, $931 (618 EURO) was paid upon settlement of
net equity and $5,295 (3,550 EURO) is payable contingently. SatService offers innovative engineering solutions and
products for the satellite communications market and is reported as a part of the Advanced Technologies operating
segment.
Under the contingent consideration arrangement, the Company is required to pay the former shareholders of SatService
an additional $2,014 and $3,282 (1,350 EURO and 2,200 EURO) if SatService attains specified levels of EBITDA for the
nine-month period ended December 31, 2019 and for the twelve-month period ending December 31, 2020. SatService
did not achieve the level of EBITDA required for the year 1 earn-out. This resulted in a decrease of the first year earn out
liability in the amount of $1,925 which was recognized in fiscal year 2019. At September 30, 2020, it is estimated that
SatService will not achieve its second year targeted EBITDA to meet the earn-out criteria, which resulted in a decrease
of the second year earn-out liability in the amount of $2,988 reflected in ‘changes in fair value related to contingent
earn-out’ in the statement of Net Profit.
Allphase Clinical Research Services Inc. and Alio Health Services Inc. (collectively “Alio/Allphase”)
On January 30, 2020, the Company acquired all of the outstanding shares of Alio/Allphase for a purchase price of up
to $25,056. Of this amount, $10,500 was paid in cash on the date of closing, $56 was paid in cash on settlement of
net equity, $2,500 was paid in common shares, and $12,000 is payable contingently, of which $3,000 is included in
the purchase price. Alio/Allphase serve the pharmaceutical and medical device industry and the broader health care
sector with clinical trial services, specialty medication support and community care and other services, all enabled by
an innovative health care delivery management software application. Alio/Allphase is reported as part of the Health
operating segment.
Under the contingent consideration arrangement, the Company is required to pay the former shareholders of Alio/
Allphase an additional $6,000 and $6,000 if Alio/Allphase attains specified levels of EBITDA for the years ending January
30, 2021 and 2022, respectively. This contingent consideration is recognized at its present and risk adjusted value of
$2,355 at the date of acquisition. On the transaction close date, it was estimated that Alio/Allphase was not going to
achieve the first year target and the contingent earn-out at the date of acquisition that was accounted for only included
the second year amount. At September 30, 2020, management assessed the likelihood of Alio/Allphase achieving the
earn-out target for year 1, and it was determined that an amount of $3,152 is likely to be achieved. This was recognized
in the current year as a change in fair value related to contingent earn out in the statement of profit. To date, $207
in changes in fair value related to the second year contingent earn out has been recognized. Alio/Allphase changed
their estimate, resulting in a recovery of $100 in contingent earnout relating to an acquisition that occurred previous to
January 30, 2020. This amount is included in ‘changes in fair value in the statement of Net Profit.
93
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 26. Acquisitions (continued)
The following are the assets acquired and liabilities recognized at the date of the acquisitions of Alio/Allphase:
Cash and equivalents
Receivables
Prepaids and other
Fixed assets (net)
Intangible assets
Goodwill
Payables and accrued liabilities
Long term payable
Deferred income
Contingent earn-out
Deferred tax liability
Net purchase price
Discount on contingent consideration
Total purchase price
Net Assets
Acquired
Purchase Price
Accounting
Fair Value of Net
Assets Acquired
$
$
$
$
$
67
3,227
79
3,373
76
361
498
4,308
1,814
1,022
95
200
122
$
$
$
$
$
3,253
$
-
-
-
-
-
8,555
8,068
16,623
-
-
-
-
2,267
2,267
$
$
$
$
$
$
67
3,227
79
3,373
76
8,916
8,566
20,931
1,814
1,022
95
200
2,389
5,520
15,411
645
$
16,056
94
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 26. Acquisitions (continued)
EMSEC Solutions Inc. (“EMSEC”)
On July 14, 2020, the Company acquired all of the outstanding shares of EMSEC for a purchase price of up to
$4,809. Of this amount, $3,000 was paid in cash on the date of closing, $9 is to be paid in cash on settlement of
net equity and $1,800 is payable contingently. EMSEC’s customized services include vulnerability assessments,
monitoring, training, risk mitigation and countermeasure sweeps. The firm’s emission analyzer software product,
provides automated and manual signal analysis supporting production testing, equipment certification, as well as
troubleshooting, investigation and research. EMSEC is reported as part of the IT operating segment.
Under the contingent consideration arrangement, the Company is required to pay the former shareholders of EMSEC
an additional $900 and $900 if EMSEC attains specific levels of EBITDA for the years ending December 31, 2021 and
December 31, 2022, respectively. With the current projections, management believes that EMSEC can achieve its
earn-out target in both years. Therefore, the amount of $1,297 represents the estimated present and risk adjusted
value of the Company’s obligation at the acquisition date. To date, $63 in changes in fair value related to the
contingent earn-outs has been recognized.
Cash
Accounts receivable and tax receivable
Prepaid expenses and other
Equipment
Goodwill
Intangible assets
Accounts payable and accrued liabilities
Deferred tax liability
Taxes Payable
Net purchase price
Discount on contingent consideration
Total purchase price
Net Assets
Acquired
Purchase Price
Accounting
Fair Value of Net
Assets Acquired
$
$
$
$
$
$
254
611
9
874
109
25
-
1,008
386
-
113
499
-
-
-
-
-
2,532
1,721
4,253
-
456
-
456
$
$
$
$
$
$
$
$
$
$
$
$
254
611
9
874
109
2,557
1,721
5,261
386
456
113
955
4,306
503
4,809
95
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 26. Acquisitions (continued)
Comprehensive Training Solutions International (“CTS”)
On July 8, 2020, the Company acquired all of the outstanding shares of CTS for a purchase price of up to $1,983.
Of this amount, $1,135 was paid in cash on the date of closing and $848 is payable contingently. CTS designs,
develops and delivers complex training exercises for the Joint Warfare Centre, a multi-national and multi-service
organization of North Atlantic Treaty Organization (“NATO”), and the wider NATO audience across Europe. CTS is
reported as part of the Learning operating segment.
Under the contingent consideration arrangement, the Company is required to pay the former shareholders of CTS
an additional $417 and $431 if CTS attains specific levels of EBITDA for the years ending December 31, 2021 and
December 31, 2022, respectively. With the current projections, management believes that CTS can achieve its earn-
out target in both years. Therefore, the amount of $618 represents the estimated present and risk adjusted value
of the Company’s obligation at the acquisition date. To date, $27 in changes in fair value related to the contingent
earn-outs has been recognized.
Cash
Accounts receivable and tax receivable
Equipment
Goodwill
Intangible assets
Accounts payable and accrued liabilities
Deferred tax liability
Taxes Payable
Net purchase price
Discount on contingent consideration
Total purchase price
Tallysman Wireless Inc. (“Tallysman”)
Net Assets
Acquired
Purchase Price
Accounting
Fair Value of Net
Assets Acquired
$
$
$
$
$
$
408
53
461
8
-
469
112
-
122
234
-
-
-
-
1,003
661
1,664
-
146
-
146
$
$
$
$
$
$
$
$
$
$
$
$
408
53
461
8
1,003
661
2,133
112
146
122
380
1,753
230
1,983
On September 1, 2020, the Company acquired all of the outstanding shares of Tallysman for a purchase price of
up to $25,354. Of this amount, $15,000 was paid in cash on the date of closing, $1,654 is to be paid in cash on
settlement of net equity and $8,700 is payable contingently. Tallysman designs, manufactures and sells a very wide
range of Global Navigation Satellite System, Iridium and Globalstar antennas and related products into a market with
a broad range of vertical applications that include precision reference systems, survey, timing, precision agriculture,
unmanned and autonomous vehicles and marine. The company also produces cloud based wireless tracking
systems over two-way radio systems and 4G category M cellular systems, for applications ranging from school
buses to municipal public works. Tallysman is reported as part of the Advanced Technologies operating segment.
96
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 26. Acquisitions (continued)
Under the contingent consideration arrangement, the Company is required to pay the former shareholders of Tallysman
an additional $3,950 and $4,750 if Tallysman attains specific levels of EBITDA for the years ending December 31, 2021
and December 31, 2022, respectively. With the current projections, management believes that Tallysman can achieve
its earn-out target in both years. Therefore, the amount of $7,282 represents the estimated present and risk adjusted
value of the Company’s obligation at the acquisition date. To date, $63 in changes in fair value related to the contingent
earn-outs has been recognized.
Net Assets
Acquired
Purchase Price
Accounting
Fair Value of Net
Assets Acquired
Cash
Accounts receivable and tax receivable
Prepaid expenses and other
Inventory
Equipment
Goodwill
Intangible assets
Accounts payable and accrued liabilities
Deferred Income
Deferred tax liability
Net purchase price
Discount on contingent consideration
Total purchase price
$
$
$
$
$
$
643
1,640
105
2,621
5,009
459
-
-
5,468
753
61
-
814
-
-
-
-
-
-
9,462
13,360
22,822
-
-
3,540
3,540
$
$
$
$
$
$
$
$
$
$
$
643
1,640
105
2,621
5,009
459
9,462
13,360
28,290
753
61
3,540
4,354
23,936
1,418
$
25,354
Cash consideration paid for acquisitions during the year ended September 30, 2020:
Secure Tech Alio/Allphase
EMSEC
CTS
Tallysman
Total
Consideration paid
in cash
Less- cash balance
acquired
$
1,025
10,500
3,000
1,135
15,000
30,660
-
(67)
$
1,025
10,433
(254)
2,746
(408)
727
(643)
14,357
(1,372)
29,288
Cash consideration paid for acquisitions during the year ended September 30, 2019:
Consideration paid in cash
Less- cash balance acquired
ISR
1,640
-
1,640
$
$
IntraGrain
SatService
Total
11,000
(111)
10,889
10,741
(2,421)
8,320
23,381
(2,532)
20,849
None of the goodwill arising on the acquisitions is expected to be deductible for tax purposes.
97
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report 27. Contingent Earn-Out
The following shows the contingent consideration activity for the year ended September 30, 2020:
Company Acquired
Secure Tech
IntraGrain Technologies
SatService
Alio/Allphase
Comprehensive Training Solutions
EMSEC Solutions
Tallysman Wireless
Total
Beginning
balance
Acquisition
Payments
Other
Adjustment for
likelihood of
payment
Ending
balance
Change in Fair Value
$
800
$
2,885
2,634
-
-
-
-
-
-
-
2,555
618
1,297
7,282
$ (1,025)
$
-
$
225
$
-
-
-
-
-
-
403
354
207
27
63
63
(3,288)
(2,988)
3,052
-
-
-
-
-
-
5,814
645
1,360
7,345
$ 6,319
$ 11,752
$ (1,025)
$ 1,117 $ (2,999)
$ 15,164
As at September 30, 2020, the total gross value of all contingent consideration outstanding is $30,277.
The following shows the contingent consideration activity for the year ended September 30, 2019:
Company Acquired
ISR
Secure Tech
IntraGrain Technologies
SatService
Total
Change in Fair Value
Beginning
balance
Acquisition
Payments
Other
$ 1,566
$
1,600
-
-
-
4,688
4,254
$ (1,640)
$
-
-
-
74
-
644
305
Adjustment for
likelihood of
payment
Ending
balance
$
-
$
-
(800)
(2,447)
(1,925)
800
2,885
2,634
$ 3,166
$ 8,942
$ (1,640)
$ 1,023
$ (5,172)
$ 6,319
28. Pension Plan
The Company sponsors a defined contribution pension plan for certain of its employees. Required contributions
have been fully funded to September 30, 2020. For fiscal 2020 (2019), an amount of $1,228 ($1,172) was expensed
related to this pension plan.
29. Related Party Transactions
During the year ended September 30, 2020 (2019), the Company had sales of $1,160 ($1,552) to GrainX in which
Calian holds a non-controlling equity investment. At September 30, 2020 (2019), the Company had an accounts
receivable balance with GrainX of $130 ($90) which is included in accounts receivable. The terms and conditions
of the related party sales are within the Company’s normal course of operations and are measured at the exchange
amounts agreed to by both parties and are representative of fair market value.
The Company has certain office space leases with employees of the Company. The total amount of expense due
to leases with related parties is $184 ($192) for the year ended September 30, 2020 (2019). Lease terms are within
normal course of operations and are representative of fair market value.
98
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)2020 Annual ReportCalian Group Ltd. 29. Related Party Transactions (continued)
The compensation for directors and other members of key management during the year was as follows. The
compensation of directors and key executives is determined by the compensation committee having regards to the
performance of individuals and market trends. The key executives are the Chief Executive Officer, the Chief Financial
Officer, Chief Information Officer, Chief Human Resource Officer and Vice-President, Engineering.
Short-term benefits
Share-based payments
2020
$
2,570
1,349
$
3,919
2019
$
$
2,699
536
3,235
30. Contingencies
In the normal course of business, the Company is party to business and employee-related claims. The potential
outcomes related to existing matters faced by the Company are not determinable at this time. The Company intends
to defend these actions, and management believes that the resolution of these matters will not have a material adverse
effect on the Company’s financial condition.
31. Comparative Figures
Certain comparative figures have been reclassified to conform to the current year’s presentation whereby facilities
expense of $5,306 for the year ended September 30, 2019 have been reclassified from a stand-alone line in the
statement of net profit into general and administration expense, and research and development expense of $1,420 for
the year ended September 30, 2019 has been separated from general and administration expense into research and
development expenses.
With the implementation of IFRS16, facilities expense have decreased significantly. This is due to the fact that the fixed
lease cost portion of previous lease expenses is now depreciation and interest expense under IFRS16. Without the
fixed portion of the lease costs, the facilities line is not significant enough to separate from general and administration
expense on the statement of net profit.
In addition, certain comparative lines have been reclassified in the current year for amounts related to contingent earn
out changes on the statement of Net Profit. In the current year the Company reports all changes in fair value related to
contingent earn out in the Changes in fair value related to contingent earn out amount in the statement of Net Profit.
This has resulted in the amounts of income of $5,172 presented in Gain on change in estimate and expense of $1,023
presented in Accretion interest expense related to acquisitions being presented in Changes in fair value related to
contingent earn out for comparative purposes.
32. Subsequent Events
Effective October 30, 2020, the Company acquired the outstanding shares of Cadence Consultancy Limited (“Cadence”),
for total cash consideration of up to 2,000 Pound Sterling ($3,451 CAD) of which, £1,100 ($1,898 CAD) was paid on
closing, and £900 ($1,553 CAD) is payable contingently. Cadence is a UK based training firm with operations across
the North Atlantic Treaty Organization (NATO) with a particular focus on the Joint Forces Training Centre (JFTC).
Cadence was acquired to expand the Company’s work with NATO which was initially won with the acquisition of CTS
in July of fiscal 2020. Cadence will be reported as part of the Learning operating segment and fully consolidated as of
November 1, 2020.
99
Calian Group Ltd. Notes to the Consolidated Financial StatementsFor the years ended September 30, 2020 and 2019 (Canadian dollars in thousands, except per share amounts)Calian Group Ltd.2020 Annual Report Additional Information
Common Share Information
The Company’s common shares are listed for trading on the
Toronto Stock Exchange under the symbol CGY.
Dividend Policy
The Company intends to continue to declare a quarterly
dividend in line with its overall financial performance and
cash flow generation. Decisions on dividend payments are
made on a quarterly basis by the Board of Directors. There
can be no assurance as to the amount of such dividends in
the future.
Additional information about the Company such as
the Company’s 2020 Annual Information Form and
Management Circular can be found on SEDAR at www.
SEDAR.com
Corporate Head Office
770 Palladium Drive
Ottawa, Ontario, Canada K2V 1C8
Phone: 613.599.8600
Fax: 613.592.3664
Web: www.calian.com
Board of Directors
George Weber
President, WebX Consulting Ltd.
Chairman, Calian Group Ltd.
Chair of the Nominating Committee
Kenneth J. Loeb
Executive Chairman, Ambassador Realty Inc.
Chair of the Compensation Committee
Richard Vickers, FCA
Consultant
Chair of the Audit Committee
Jo-Anne Poirier
President and CEO, VON Canada
Chair of the Governance Committee
Ray Basler, CPA, CA
Consultant
Young Park
Consultant
Kevin Ford
President and CEO, Calian Group Ltd.
2020 Annual Report