ANNUAL REPORT 2024 Igniting Growth. One Calian. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 2 Working capital is defined as (current assets less cash)- (current liabilities less debt, contingent earn-out and lease obligations). Be advised that certain information contained in this annual report is forward-looking and subject to important risks and uncertainties. The results predicted in these statements may be materially different from actual results. Please refer to the Forward-Looking Statements section of the Management’s Discussion and Analysis. Igniting Growth. One Calian. Table of Contents 1 5-Year Financial Highlights 2 Calian at a Glance 4 Message from the Chair 6 Message from the CEO 8 Key Performance Indicators 10 Looking Forward 12 Calian’s Operating Segments 14 IT & Cyber Solutions 16 Health 18 Advanced Technologies 20 Learning 22 Share Information 23 Management’s Discussion & Analysis 61 Audited Annual Consolidated Financial Statements 117 Corporate Information This year’s theme, One Calian. Igniting Growth., reflects the accelerated growth trajectory of the Company over the past year, with an increase in revenue and adjusted EBITDA1 of 13% and 30%, respectively. Bolstered by a combination of acquisitions and organic growth, the Company has ignited its development by expanding into new markets, diversifying its customer base, launching new products and services and increasing its margins. The cover image features a group of scattered arrows on the ground, with one illuminated and pointing upwards as if set to take off. This image portrays the successful execution of the Company’s first year of its 3-year strategic plan, “One Vision, One Purpose, One Calian 2026”, which aims to reach one billion dollars in revenue while essentially doubling its adjusted EBITDA1 by the end of fiscal year 2026. Kevin Ford, CEO, Calian Group Ltd. 1 ANNUAL REPORT 2024 2024 2023 2022 2021 2020 $ $ $ $ $ OPERATING RESULTS Revenue 746.6 658.6 582.2 518.4 432.3 Gross profit 254.0 204.2 169.2 126.7 89.2 Adjusted EBITDA1 85.5 66.0 65.9 51.9 36.8 Net profit 11.2 18.9 13.6 11.2 20.4 Adjusted net profit1 51.7 40.5 44.0 37.2 23.5 PER SHARE DATA Adjusted EBITDA per share – basic1 7.23 5.63 5.82 4.89 4.08 Adjusted EBITDA per share – diluted1 7.13 5.62 5.80 4.85 4.02 Net profit per share – basic 0.95 1.61 1.19 1.08 2.25 Net profit per share – diluted 0.93 1.61 1.19 1.07 2.23 Adjusted EPS – basic1 4.36 3.45 3.88 3.51 2.60 Adjusted EPS – diluted1 4.33 3.45 3.87 3.50 2.59 Operating free cash flow per share – basic1 4.92 3.83 4.16 3.27 3.08 Operating free cash flow per share – diluted1 4.86 3.81 4.13 3.24 3.03 Dividends per share 1.12 1.12 1.12 1.12 1.12 FINANCIAL RATIOS Gross profit margin 34.0% 31.0% 29.1% 24.4% 20.6% Adjusted EBITDA margin1 11.5% 10.0% 11.3% 10.0% 8.5% Operating free cash flow conversion1 68% 68% 72% 66% 76% Current ratio 1.3 1.4 1.4 2.2 2.2 Working capital/revenue2 7% 14% 14% 17% 21% Net debt/adjusted EBITDA1 0.4x 0.1x n/a n/a n/a FINANCIAL POSITION Cash and cash equivalents 51.8 33.7 42.6 78.6 24.2 Current assets 276.8 264.5 296.5 262.2 202.6 Total assets 707.9 585.7 547.2 458.0 331.1 Current liabilities 214.6 195.1 211.7 121.2 92.7 Working capital2 55.2 89.6 79.5 90.5 91.8 Shareholders’ equity 326.8 328.3 305.2 292.4 200.4 CASH FLOW Cash flows generated (used) from operating activities 87.2 56.8 43.1 46.5 (2.8) Cash flows generated (used) from financing activities 30.5 13.9 (6.2) 64.4 45.0 Cash flows generated (used) in investing activities (99.7) (79.6) (72.9) (56.6) (35.2) Operating free cash flow1 58.2 44.8 47.2 34.7 27.9 5-Year Financial Highlights For the years ended September 30 (Canadian dollars in millions of dollars, except per share amounts and percentages) 2 CALIAN GROUP LTD. Calian at a Glance Calian is a diverse products and services company providing innovative healthcare, communications, learning and cybersecurity solutions. The company is headquartered in Ottawa, Ontario with locations across Canada and in the U.S., the U.K. and Europe. The company is uniquely positioned to solve the significant and complex challenges its customers face so that they are better able to succeed and deliver on their objectives. The company’s shares are listed on the Toronto Stock Exchange (TSX: CGY). Mission Calian helps the world communicate, innovate, learn and lead safe and healthy lives. Values • Customer-First Commitment • Teamwork • Integrity • Innovation • Respect Four Pillars of Growth 1. Customer Retention 2. Customer Diversification 3. Innovation 4. Continuous Improvement Investment Value Proposition A strong capital allocator To build a multi-billion-dollar scalable company that is purpose- driven, has a strong values foundation and grows profitably. Capitalizes on market trends in mission-critical segments that are globally relevant • Surge in cyberattacks (ITCS) • Increase in healthcare demand (Health) • Acceleration of space programs (Advanced Technologies) • Rise in global political tensions (Learning) Established realistic and achievable growth objectives to be reached by the end of FY26 • Reach $1B in revenues with a combination of organic growth and acquisitions • Achieve $125M in adjusted EBITDA1, reflecting a margin of 12.5% • Deploy $250-$300M in capital for acquisitions • Generate $36-$43M in adjusted EBITDA1 from acquisitions • Convert ~70% of adjusted EBITDA1 into operating free cash flow1 • Maintain a net debt to adjusted EBITDA ratio1 below 2.5x Achieved key milestones in FY24 • Appointed Michael Tremblay to President, ITCS • Appointed Valérie Travain-Milone to President, Advanced Technologies • Acquired Decisive Group (ITCS) • Acquired the nuclear assets from MDA (Advanced Technologies) • Acquired Mabway (Learning) • Announced collaborations with Microsoft and Walmart Canada • Announced a sponsorship agreement with the Ottawa Senators • Surpassed $200M revenue mark in three segments • Signed gross new contracts valued at $785M • Renewed normal course issuer bid 3 ANNUAL REPORT 2024 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 2024 Key Metrics Diversified Revenue Streams Creates shareholder value OFCF1/diluted share 2020 $3.03 $3.24 $4.13 $3.81 $4.86 2021 2022 2023 2024 $3.91 $4.86 $5.77 $5.61 $7.13 2020 2021 2022 2023 2024 Adjusted EBITDA1/ diluted share $2.59 $3.50 $3.87 $3.45 $4.33 2020 2021 2022 2023 2024 Adjusted EPS1/ diluted share $747M Revenue $1.2B Backlog 5,800 1 Workforce $542M Market Capitalization 1 Includes 4,000 employees and 1,800 contractors CUSTOMERS 49% commercial 51% government GEOGRAPHY 32% international 68% Canada OFFERING 30% product 70% service Learning 15% ITCS 29% Advanced Technologies 28% Health 28% Segment 4 CALIAN GROUP LTD. 4 CALIAN GROUP LTD. Message from the Chair We achieved strong results in the first year of our One Calian 2026 three-year strategic plan, continued to successfully diversify our revenue streams, and made significant progress on our ESG commitments. As we reflect on a transformative year for Calian, I’m proud to say that we’ve not only achieved strong financial results but also positioned the company on a bold path of growth and innovation for years to come. With double-digit growth anticipated for both revenue and adjusted EBITDA1 in the coming year, we are well-positioned to continue our global expansion plans, invest in new solutions to drive organic growth, continue our M&A pace and reach one billion dollars in revenues by the end of fiscal year 2026, the next stop in our growth trajectory. We do not believe our current share price reflects our solid financial performance and growth opportunities, yet we remain dedicated to realizing our vision and are committed to working tirelessly toward improving our shareholder return. Record revenues and ongoing diversification Revenues increased 13% to $747 million, representing the seventh consecutive year of record revenues at double- digit growth. Driven by our deliberate execution of the One Calian 2026 strategic plan, we continued to diversify our revenue streams by customer, geography and offering, thus improving our margin profile. Commercial customers accounted for about half of our total revenues. For the first time, our international revenues exceeded 30% of the total, while product-related revenues reached 30% of our overall revenue. This planned diversification enabled us not only to enhance revenue streams but also to strengthen profitability and resilience, allowing us to increase both our gross profit and adjusted EBITDA1 margins over last year. Net profit stood at $11.2 million, or $0.93 per diluted share, and represented the 23rd consecutive year of profitable growth. When factoring in our intangibles, driven through our successful M&A agenda, adjusted net profit and adjusted EPS stood at $51.7 million and $4.33 per diluted share respectively. Line of sight to one billion dollars Achieving double-digit revenue growth has brought us closer to our three-year goal of one billion dollars in revenues and nearly double our adjusted EBITDA1. Although ambitious, these targets are well within reach. In fact, after year one we are on track with our plan. Furthermore, fiscal year 2025 is poised to be another record-setting year with double-digit growth in both revenue and adjusted EBITDA1 bringing us even closer to our goal. The board of directors has the utmost confidence in the management’s team ability to continue driving growth and executing the objectives set out in the One Calian 2026 strategic plan. Progressing on our ESG commitment In addition to our strong financial performance, we continued to make progress on our ESG commitment through several initiatives. On the environmental front, in line with the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations, we conducted a climate scenario analysis and developed a framework to enable Calian to systematically assess climate-related risks and opportunities. This framework will be used to establish key priorities and actions as we drive towards net zero. Our climate-related efforts are not just about managing risks— they’re about leading the way toward a sustainable future that benefits all stakeholders. Climate-related risks and opportunities will be embedded in our Enterprise Risk Management registry and form a key element of the Net-Zero Challenge milestone 2 criteria. In addition, for the second consecutive year, we submitted to the Carbon Disclosure Project (CDP). On the social front, to support employee engagement and provide line of sight to employee volunteer hours and charitable contributions, we launched the Calian CARES employee-based community giving platform and announced a quarterly employee cause program that will be instituted in 2025. In addition, we received the Canadian Council for Indigenous Business committed level Partnership Accreditation in Indigenous Relations (PAIR) certification, solidifying our commitment to support Indigenous supply chain and business development. On the governance front, we put in place new policies, including the Modern Slavery policy, Anti-Trafficking policy, and related statement which outlines the steps we are taking to prevent slavery and human trafficking in our business and supply chains. We also published our Supplier Code of Conduct to ensure that all our suppliers adhere to Calian’s ethical practices, standards of safe working conditions and fair treatment of all employees. Finally, we strengthened our privacy program and risk cataloguing and reporting. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 5 ANNUAL REPORT 2024 5 ANNUAL REPORT 2024 “Over the past five years, Calian has achieved compound annual growth rates of 15% for revenues and 23% for adjusted EBITDA1.” Our ESG efforts are more than checkboxes on a corporate agenda—they are about building a sustainable, inclusive and ethical future, not only for Calian but for the communities we serve. The board of directors is dedicated to advancing the company’s ESG agenda, which aligns with our core values and defines our organizational identity. We are enthusiastic about this ongoing journey and are committed to not only meeting but surpassing ESG standards in the future. Focused on shareholder value Over the last five years, despite achieving compound annual growth rates of 15% in revenue and 23% in adjusted EBITDA1, our share price has remained range bound. We do not believe our current share price reflects the company’s current value and promising growth potential, especially given that we are right on track with our ambitious three-year strategic plan after one year of execution. To address this, we put in place a normal course issuer bid in September 2023, and renewed it last September, to support our shares while we continue to execute our strategic plan. We also continue to provide a return to shareholders through our long-standing dividend. We are confident that the continued successful execution of our strategy will unlock shareholder value as we continue to deliver on our growth commitments. In closing, I believe we are just beginning to scratch the surface of our potential. With the collective strength of our team, tailwinds in our target markets and the trust of our shareholders, we are poised for even greater achievements in the coming years. On behalf of the board of directors, I would like to extend our gratitude to our senior leadership team and all employees for their tireless efforts and unwavering dedication. Thank you to our shareholders for their steadfast support during these challenging times for our share price. Your confidence and trust are truly invaluable. George Weber Chair 6 CALIAN GROUP LTD. 6 CALIAN GROUP LTD. Message from the CEO 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 2 AI: Artificial Intelligence Record year with double-digit growth Revenues increased 13% to reach a record $747 million, driven by growth in all four operating segments through a combination of acquisitions (Calian Pacific Teleport, Decisive Group, the nuclear assets from MDA, and Mabway) as well as organic growth, driven by our Health segment. Every milestone this year represents more than just financial success—it marks our readiness for the next chapter in our growth story. Gross profit continued its ascension above the $200 million mark and gross margin expanded to reach 34%, its highest level for a single year. Adjusted EBITDA1 increased 30% to a record $86 million driven by the high-margin contribution from recent acquisitions and revenue growth across all segments. As a result, adjusted EBITDA1 margin increased to 11.5%. Focused on four pillars of growth We continued to focus on our four pillars of growth (customer retention, customer diversification, innovation and continuous improvement) across the organization. We renewed, acquired and signed several new contracts valued at $785 million, thus retaining and diversifying our customer base. Noteworthy contracts include General Dynamics Mission Systems – Canada, Walmart Canada, NATO, Canadian Space Agency, Telesat, Canadian Armed Forces, Canadian Defence Academy and Military Personnel Generation Group. This diverse portfolio showcases how our customer-first approach continues to strengthen relationships and build new opportunities, even in light of short-term headwinds in some parts of the business. In support of our goal to be a global provider of mission- critical solutions, we invested close to $12 million in R&D, focusing on technologies that push the envelope of what’s possible. We participated in the U.K.-based Canadian Technology Accelerator program for digital health, enhanced our Corolar Virtual Care™ platform with new features, harnessed AI2 to bolster Calian MaestroEDE™, an exercise management tool for global military training, and transitioned to the cybersecurity platform Microsoft Sentinel. Finally, in terms of continuous improvement, we continued to optimize our operations, which is having a positive impact on our gross profit and adjusted EBITDA1 margins. Our focus on operational efficiency is not just about reducing costs—it’s about positioning Calian to scale effectively for future growth. Deploying capital prudently Driven by our strong financial performance, we generated $87 million of cash flow from operations. We used our cash, and a portion of our credit facility, primarily to make acquisitions. We acquired Decisive Group, a leader in the IT infrastructure and cybersecurity services business in Ontario, improving our unit economics in the space. We also acquired the nuclear assets from MDA in Ontario, adding new capabilities and services to our existing nuclear business. Finally, we acquired Mabway in the U.K., a leader in the management of large-scale defence role-playing environments, strengthening and expanding our relationship with the U.K. Ministry of Defence. These acquisitions were strategic investments designed to strengthen our differentiation in the marketplace, continue to position us in our targeted growth markets and enhance our margins with the goal of driving long-term profitability. We also used our cash to provide a return to shareholders in the form of dividends and share buybacks. In fact, we renewed our normal course issuer bid in September to continue to enhance shareholder value. We ended the year with a leverage ratio of 0.4x positioning us well for future growth. On track to achieve three-year plan objectives We successfully capped off the first year of our three-year One Calian 2026 strategic plan. Our financial results, successful M&A capital deployment and strong balance sheet confirm that we are on track to meet our objectives and position the company for continued long-term growth. We are very confident we can achieve our growth objectives In fiscal year 2024, we ignited the spark that is propelling Calian toward extraordinary new heights. We had another record year, with double-digit revenue growth and record adjusted EBITDA1. We advanced our M&A agenda, invested in innovation, pursued our continuous improvement journey, welcomed new members to our team and signed and acquired new contracts, ending the year with $1.2 billion in backlog. We were able to accomplish all this while maintaining a solid balance sheet. 7 ANNUAL REPORT 2024 7 ANNUAL REPORT 2024 given tailwinds in our growth markets (surge in cyber attacks, increased space exploration programs, growing healthcare demand and geo-political tensions), a robust pipeline of acquisitions and financing capacity. During the year, we welcomed two new members to our capable team of senior leaders. We appointed Mike Tremblay to the position of President, IT and Cyber Solutions and Valérie Travain-Milone to the position of President, Advanced Technologies. I am excited by their renewed vision and the potential of what they can achieve with their dedicated teams to drive Calian in its next phase of growth. In closing, thank you to our shareholders for your continued support, our employees for your unwavering dedication, our customers for your trust, and our board of directors for your conviction in our vision. We are on this journey together and, with your confidence, we are shaping Calian’s future as a multi-billion-dollar company focused on mission-critical solutions. Kevin Ford CEO “Acquisitions completed in FY24 have allowed us to strengthen our differentiation in the marketplace, continue to position us in our targeted growth markets and enhance our margins with the goal of driving long-term profitability.” 8 CALIAN GROUP LTD. Key Performance Indicators Revenue & Revenue Growth (in millions of $, except %) Adjusted EBITDA1 & Adjusted EBITDA Margin1 (in millions of $, except margin) Net Profit & Adjusted Net Profit1 (in millions of $) Adj. EBITDA1 Adj. EBITDA%1 Revenue Growth Net Profit Adjusted Net Profit1 2020 432 518 582 659 747 2021 2022 2023 2024 26% 20% 12% 13% 13% 2020 2021 2022 2023 2024 37 8.5% 10.0% 11.3% 11.5% 52 66 66 86 10.0% 2020 2021 2022 2023 2024 24 37 44 41 52 Revenues increased 13% to $747 million in fiscal 2024 when compared to fiscal 2023, in line with the Company’s 3-year strategic plan. Acquisitive growth was 11% and was generated from the full-year contribution from Hawaii Pacific Teleport, which closed in fiscal year 2023, as well as the acquisitions of Decisive Group, the nuclear assets from MDA and Mabway, which all closed in fiscal year 2024. Organic growth was 2% and was primarily driven by the Health segment. Adjusted EBITDA1 increased 30% to $86 million in fiscal 2024 when compared to fiscal 2023, in line with the Company’s 3-year strategic plan. This growth was driven by the higher-margin contribution from recent acquisitions and organic revenue growth from the Health segment. As a result, the adjusted EBITDA margin1 increased to 11.5% in fiscal 2024 from 10.0% in fiscal 2023. Adjusted net profit1 increased 28% to $52 million, or $4.33 per diluted share in fiscal 2024, from $41 million, or $3.45 per diluted share in fiscal 2023. 9 ANNUAL REPORT 2024 Net Debt to Adjusted EBITDA1 Net debt to adj. EBITDA1 Capital Allocation (in millions of $) Acquisitions Dividends Capex Share Buyback Operating Free Cash Flow1 & Operating Free Cash Flow Conversion1 (in millions of $, except %) OFCF1 OFCF Conversion1 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 2020 2021 2022 2023 2024 44 68 86 91 119 2020 2021 2022 2023 2024 28 35 47 45 58 76% 66% 72% 68% 68% Calian generated $58 million of operating free cash flow1 in fiscal 2024, an increase of 29% when compared to $45 million last year. This represents an operating free cash flow conversion1 rate from adjusted EBITDA1 of 68%, in line with the Company’s 3-year strategic plan. In fiscal 2024, Calian continued to have a disciplined approach to capital deployment, with a view of obtaining maximum return for the amounts invested. The Company invested $88 million in acquisitions, in line with its 3-year plan. It also invested $12 million in capital expenditures, as well as returned capital to shareholders by paying dividends of $13 million and buying back shares for $6 million. Calian ended fiscal year 2024 with net debt1 of $38 million, which represents a net debt to adjusted EBITDA1 ratio of 0.4x, well below its upper threshold of 2.5x. 2020 2021 2022 2023 2024 0.1× 0.4× 2.5× 10 CALIAN GROUP LTD. Looking Forward Update on Three-Year Strategic Plan On October 1, 2023, we launched our new three-year strategic plan called One Vision, One Purpose, One Calian 2026. Guided by our mission and values, the objective of the new plan is to achieve one billion dollars in revenues as a next step in our journey to build a scalable global growth company focused on mission-critical solutions. FY26 TARGET FY24 RESULTS TRACKING FINANCIAL RESULTS Revenue Growth 15% per year 13% On track Adjusted EBITDA1 $125M $86M On track M&A Capital Deployment in M&A $250-$300M $88M On track Adj. EBITDA1 generated from acquisitions $36-$43M $19M Above FINANCING Operating FCF Conversion1 70% 68% On track Leverage (Net debt1 to adj. EBITDA1) <2.5x 0.4x Above 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. After one year, I am pleased to report that we are on track to achieve our strategic plan in all three of our target areas, namely financial results, M&A and financing. With regards to our financial results, we increased revenues by 13% over fiscal year 2023, in line with our three-year objective of 15%. Acquisitive growth represented 11% and organic growth 2%. We generated $86 million of adjusted EBITDA1, a growth of 30% compared to fiscal year 2023, representing one-third of our three-year target. Furthermore, we accelerated our M&A agenda and made three acquisitions (Decisive Group, the nuclear assets from MDA and Mabway) and paid earnouts for a total consideration of $88 million, or about one-third of our three-year target. On an annualized basis, these acquisitions are expected to generate $19 million of adjusted EBITDA1, representing approximately half of our three-year target. These strong results, allowed us to generate operating free cash flow of $58 million, representing a 68% conversion rate from adjusted EBITDA1, in line with our three-year target. We ended the year with a net debt1 to adjusted EBITDA1 leverage ratio of 0.4x, below our upper threshold of 2.5x. For FY25, the second year of our ambitious three-year strategic plan, we expect to generate double-digit revenue and adjusted EBITDA1 growth over fiscal year 2024. Achieving these results would represent our eighth consecutive year of double-digit revenue growth and record adjusted EBITDA1. Going Beyond One Billion Dollars Achieving one billion dollars in revenue by the end of FY26 is the next major milestone in our journey. Our ultimate objective is to grow into a multi-billion-dollar global company, delivering mission-critical solutions through organic growth and acquisitions. The successful execution of this strategy will result in a high-growth, higher-margin business and create long-term value for shareholders. Kevin Ford CEO 11 ANNUAL REPORT 2024 Don Whitty President, Learning Carisa Gordon Senior VP, General Counsel and Privacy Officer Derek Clark President, Health Robin Richardson Senior VP, Marketing and Communications Valérie Travain-Milone President, Advanced Technologies Kevin Ford Chief Executive Officer Michael Muldner Chief Information and Technology Officer (CITO) Michael Tremblay President, IT and Cyber Solutions Patrick Houston Chief Financial and Development Officer Sue Ivay Chief Human Resources Officer (CHRO) Senior Leadership Team One Team Working Together 1 10 1 10 4 6 11 Global Footprint Expansion Calian operates across 7 continents and in 44 countries Corporate Headquarters (1) Regional Offices (17) Business Operations Centres (25) Acquired Mabway in the U.K. in FY24 Acquired Decisive Group in Ontario in FY24 CALIAN GROUP LTD. 12 Calian’s Operating Segments Calian’s four operating segments provide diversity and stability. This business model enables Calian to capitalize on unique opportunities during upturns in some markets while weathering downturns in others. 1 IT and Cyber Solutions 2 Health 13 ANNUAL REPORT 2024 3 Advanced Technologies 4 Learning CALIAN GROUP LTD. 14 2024 Results $214M Revenue 40% Gross margin $29M Adj. EBITDA1 13% Adj. EBITDA margin1 $137M Backlog $231M Gross new contract signings Revenue growth in FY22 was propelled by the acquisition of the assets of Computex in March 2022. 5-Year Revenue (in millions of $) 58 2020 82 2021 173 2022 189 2023 214 2024 Highlights • Appointed Michael Tremblay as new President, ITCS • Acquired Decisive Group, an IT infrastructure and cybersecurity services company in Ontario • Announced a collaboration with Microsoft to offer scalable cloud- native cybersecurity solutions through the adoption of Microsoft Sentinel (“Sentinel”) • Signed $231M of gross new contracts including one valued up to $90M over six years, for IT and software development services with General Dynamics Mission Systems • Recognized on multiple CRN2 lists (Tech Elite 250; Managed Service Provider 500; Solution Provider 500) Provides IT and cybersecurity solutions to public and private sector organizations across a variety of verticals. IT and Cyber Solutions 15 ANNUAL REPORT 2024 Decisive Group – December 1, 2023 Leader in the IT infrastructure and cyber security services business in the Ontario region. Designs, builds and maintains enterprise IT infrastructure and hybrid cloud as well as manages and protects data. Its customer base primarily includes Canadian government departments and agencies as well as some well-established commercial and enterprise clients. STRATEGIC RATIONALE •. Improves unit economics with larger scale •. Complements and rounds out current IT and Cyber Solutions portfolio in North America •. Generates synergies with existing defence and security customers Year in Review and Looking Ahead 2024 Resetting the strategy Despite macroeconomic headwinds, the ITCS segment put in place a new leadership team, transitioned the business to a regional go-to-market strategy and enhanced systems and processes, including artificial Intelligence (AI) solutions. It also completed the strategic acquisition of Decisive Group, expanding its IT and cyber infrastructure services in Canada and increasing its share of wallet with the government. Additionally, the collaboration with Microsoft represents a key enabler in its cybersecurity and data AI strategy, setting the stage for scalable, cloud-native solutions that will drive future growth and position Calian as a trusted leader in cybersecurity. 2025 Focusing on the cybersecurity opportunity The ITCS segment will ramp up its investment in people and technology to support the Sentinel solution for its cybersecurity customers. This is expected to drive revenue growth in the years to come. It will also continue the integration of Decisive Group and look for strategic acquisitions in targeted regional areas. “The protect-and-enable strategy, in partnership with Microsoft, positions ITCS to lead with data and AI-driven solutions for cybersecurity protection and cloud enablement services, empowering our customers to stay ahead of evolving threats while digitally transforming.” Michael Tremblay President ITCS Acquisition $50M Purchase Price upfront $40M Annual Revenue Ontario Location 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 2 A media brand of The Channel Company CALIAN GROUP LTD. 16 2024 Results $212M Revenue 26% Gross margin $39M Adj. EBITDA1 18% Adj. EBITDA margin1 $626M Backlog $166M Gross new contract signings Revenue growth in FY21 was driven by one-time contracts from the COVID-19 pandemic. 5-Year Revenue (in millions of $) 2020 2021 195 2022 167 185 2023 2024 Highlights • Agreed to collaborate with Walmart Canada to expand the retailer’s specialty pharmacy capabilities through licensing Calian’s custom- built digital health platform, Nexi™ • Experienced significant growth from the Canadian Defence health services contract and clinician services • Selected to participate in the Canadian Technology Accelerator program on digital health in the U.K. • Signed $166M of gross new contracts, including a one-year renewal option with Defence health services • Enhanced Corolar Virtual Care platform with new features to advance virtual healthcare and interoperability Health Provides health services, pharmaceutical solutions and digital health for public and private sector organizations. 163 212 17 ANNUAL REPORT 2024 Walmart Canada – October 1, 2024 Agreed to collaborate with Walmart Canada to expand the retailer’s specialty pharmacy capabilities through licensing Calian’s custom-built digital health platform Nexi™ through Walmart Canada’s network of 331 pharmacies nationwide. BENEFITS •. Provides visibility for Calian’s Nexi™ platform •. Exemplifies Calian’s commitment to providing leading-edge healthcare solutions •. Supports increased access for specialty medications in Canada Year in Review and Looking Ahead 2024 Growing with existing customers The Health segment generated double-digit organic growth driven by the increased demand from its long-term Defence health services contract as well as several short-term clinician services contracts with various government agencies. It also continued to make progress to digitally enable its services by leveraging its Nexi™ platform, embedding digital tools in its CRO2 business to improve productivity and continuing to digitize its recruiting processes to take advantage of new advances in AI3 and productivity tools. 2025 Driving new business development The Health segment will focus on driving new business development. It will continue to invest in sales and marketing, explore new market channels for digital health by leveraging its recent win with Walmart and focus on new health services and pharmaceutical solutions business. It will also look for strategic acquisitions in pharmaceutical solutions. Collaboration Multiyear Term 331 Stores Canada Location “The Health segment surpassed the $200M revenue mark this year and we are excited to continue to develop and grow our portfolio of products and services by leveraging our network of healthcare providers, digital solutions and complex project management skills.” Derek Clark President Health 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 2 CRO: Contract Research Organization 3 AI: Artificial Intelligence CALIAN GROUP LTD. 18 2024 Results $208M Revenue 40% Gross margin $42M Adj. EBITDA1 20% Adj. EBITDA margin1 $125M Backlog $192M Gross new contract signings Revenue in FY22 was impacted by the completion of the company’s largest-ever ground system project. 5-Year Revenue (in millions of $) 2020 2021 167 2022 150 178 2023 2024 Highlights • Acquired the nuclear assets from MDA • Appointed Valérie Travain-Milone as new President, Advanced Technologies • Selected by Telesat to develop and deploy element management system for Telesat lightspeed network • Won a contract with the Canadian Space Agency to develop a spectrum interference simulation solution • Collaborated with Point One Navigation to deliver smart GNSS antenna support for Polaris RTK2 Advanced Technologies Delivers innovative services and products that enhance performance in key industries, including space communications, defence, wired and wireless networks, GNSS, manufacturing, agricultural technology and nuclear sectors. 153 208 19 ANNUAL REPORT 2024 Nuclear assets from MDA – March 5, 2024 Provides professional services to the Canadian nuclear industry, supported by a highly specialized team of engineers delivering complex project planning and management for large nuclear outages and refurbishment projects, including experience in nuclear outage tooling. STRATEGIC RATIONALE •. Benefits from growing nuclear technology market •. Adds new capabilities and services to Calian’s nuclear business •. Enhances ability to better service Bruce Power, a mutual client Year in Review and Looking Ahead 2024 Expanding margins The Advanced Technologies segment continued its adjusted EBITDA1 margin expansion by generating increased revenues from higher margin products such as GNSS3 and agriculture technology solutions and from the growth of its overall product portfolio, including the addition of dedicated DOCSIS test products from Rohde & Schwarz. It also increased its margin from the over-performance of its two recent acquisitions, Calian Pacific Teleport and the nuclear assets from MDA. 2025 Focusing on high growth markets The Advanced Technologies segment will focus on driving organic growth by further developing its product portfolio through enhancements and extensions. It will also continue to leverage its cutting-edge technology in its space solutions division to meet increasing demand for satellite communications, earth observation and deep space connectivity. Investments in sales and marketing as well as R&D will be required to support these initiatives. In addition, it will look at tuck-in acquisitions to continue to build and expand its product and service offering. Acquisition $8M Purchase Price $8M Annual Revenue Ontario Location “Increasing revenues from our product portfolio will drive future margin expansion, enable the potential to scale and bring value to our customers.” Valérie Travain-Milone President Advanced Technologies 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 2 RTK: Real-Time Kinematic 3 GNSS: Global Navigation Satellite Systems CALIAN GROUP LTD. 20 2024 Results $113M Revenue 27% Gross margin $18M Adj. EBITDA1 16% Adj. EBITDA margin1 $279M Backlog $196M Gross new contract signings Consistent revenue growth driven by strong global demand for military training as well as by strategic acquisitions. 5-Year Revenue (in millions of $) 2020 2021 75 2022 2023 2024 Highlights • Acquired Mabway, a defence training company in the U.K. • Awarded a new contract by the CAF2 CFHSG3 valued at up to $23M over four years to provide military medical training • Renewed $10M contract for military training with CDA4 and MPGG5 • Bolstered R&D investment to expand technological capabilities to deliver interoperable global military training. For example, VCCI6 increased interoperability with primary NATO applications and Calian MaestroEDE™ AI7 capabilities were enhanced. • Impacted by short-term budget reductions from the CAF2 in the second half of the year Learning Works with private sector, government, academic and defence customers to develop tailored learning and training solutions, incorporating immersive technologies that enhance organizational performance, address diverse operational needs and empower teams with the skills to meet evolving industry demands. 58 92 106 113 21 ANNUAL REPORT 2024 Year in Review and Looking Ahead 2024 Investing for future growth The Learning segment focused on investments to position itself for future growth. It put in place a new sales infrastructure to drive its go-to-market strategy, invested in R&D to improve its product offering and completed the strategic acquisition of Mabway, to support its diversification efforts in the U.K. and Europe. This new acquisition will help to offset the short-term budget reductions from the CAF2. 2025 Leveraging new footprint in the U.K. The Learning segment will pro-actively manage the short-term budget reductions from the CAF2 to minimize the impact on its results, while nurturing its long-standing relationship with the customer. It will also complete the integration of Mabway and leverage it to demonstrate its full suite of training capabilities to the U.K. MOD8 and NATO countries. NATO countries’ recent defence spending increases are expected to fuel opportunities in the region, which the segment will be well positioned to capture. Acquisition $38M Purchase Price upfront $35M Annual Revenue U.K. Location “Recent increases in defence spending by NATO countries are expected to fuel significant opportunities in the region, which we are well positioned to capture” Don Whitty President Learning 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 2 CAF: Canadian Armed Forces 3 CFHSG: Canadian Forces Health Services Group 4 CDA: Canadian Defence Academy 5 MPGG: Military Personnel Generation Group 6 VCCI: Virtual Command and Control Interface 7 AI: Artificial Intelligence 8 Ministry of Defence Mabway – May 10, 2024 Leader in the management of live large-scale defence role-playing environments that simulate real-world operational environments and provides technical engineering education for naval and maritime communities. It has been a prime supplier to the British Army since 2012. It has several offices across the U.K., a workforce of more than 1,000 ex-military and civilian permanent staff and contractors, and services reaching into Europe. STRATEGIC RATIONALE •. Strengthens and expands relationship with the U.K. MOD8 •. Provides scale in the U.K. and Europe to support expansion •. Benefits from large addressable market with opportunities for growth 22 CALIAN GROUP LTD. Share Information For the years ended September 30 Closing Share Price Volume 1 Based on closing price 2 Includes both TSX and ATS volume Share Price Volume 600,000 500,000 400,000 300,000 200,000 100,000 0 $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $- 1-Oct-19 6-Nov-19 11-Dec-19 20-Jan-20 25-Feb-20 31-Mar-20 6-May-20 11-Jun-20 17-Jul-20 24-Aug-20 29-Sep-20 4-Nov-20 9-Dec-20 18-Jan-21 23-Feb-21 30-Mar-21 5-May-21 10-Jun-21 16-Jul-21 23-Aug-21 28-Sep-21 3-Nov-21 8-Dec-21 17-Jan22 22-Feb-22 29-Mar-22 4-May-22 9-Jun-22 15-Jul-22 22-Aug-22 27-Sep-22 2-Nov-22 7-Dec-22 16-Jan-23 21-Feb-23 28-Mar-23 3-May-23 8-Jun-23 14-Jul-23 21-Aug-23 26-Sep-23 1-Nov-23 6-Dec-23 15-Jan-24 20-Feb-24 26-Mar-24 1-May-24 6-Jun-24 12-Jul-24 19-Aug-24 24-Sep-24 2020 2021 2022 2023 2024 TRADING DATA ON COMMON SHARES 52-week high ($)1 68.50 69.95 71.58 67.00 $61.19 52-week low ($)1 33.02 53.73 53.42 50.43 $42.88 Closing ($) 67.25 61.00 55.93 51.03 $45.92 Total volume2 5,371,043 7,657,214 8,221,755 6,199,535 5,782,720 Average daily volume2 21,314 30,507 32,756 24,798 23,039 OTHER STATISTICS Dividends on common shares (in millions $) 9.9 11.8 12.8 13.2 13.3 Dividends per share ($) 1.12 1.12 1.12 1.12 1.12 Dividend yield (%) 1.7% 1.8% 2.0% 2.2% 2.4% Shares outstanding (000’s) 9,760 11,286 11,607 11,813 11,802 Weighted average shares outstanding – basic (000’s) 9,045 10,600 11,344 11,715 11,838 Weighted average shares outstanding – diluted (000’s) 9,104 10,640 11,383 11,748 11,931 Market capitalization (in millions $) 656 688 649 603 542 Management’s Discussion & Analysis For the year ended September 30, 2024 Basis of Presentation The following Management’s Discussion and Analysis (“MD&A”) of the financial condition and results of operations of Calian Group (“Calian” or the “Company”) is dated November 26, 2024 and should be read in conjunction with the audited annual consolidated financial statements and related notes of the Company for the twelve-month period ended September 30, 2024. The Company’s audited consolidated financial statements are reported in Canadian dollars and are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) and Chartered Professional Accountants (“CPA Canada”) Handbook Accounting - Part I. All amounts in this MD&A are in thousands of Canadian dollars unless otherwise indicated. This MD&A also contains non-GAAP and other financial measures which are not prescribed by IFRS and are not likely to be comparable to similar measures presented by other issuers. Refer to the section entitled “Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures” of this MD&A for an explanation of the non-GAAP and other financial measures used and presented by the Company and a reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures. 23 ANNUAL REPORT 2024 This MD&A is the responsibility of management and has been reviewed and approved by the Board of Directors (“the Board”) of the Company. The Board 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 carries out this responsibility principally through its Audit Committee. Additional information, including the Company’s Annual Information Form, quarterly and annual reports, and supplementary information is available on the SEDAR web site at www.sedarplus.ca. Press releases and other information are also available in the Investor Relations section of the Company’s website at www.calian.com. Forward-Looking Statements The Company cautions that this MD&A contains forward-looking information within the meaning of applicable securities laws (“forward-looking statements”). Forward-looking statements include those identified by the expressions “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “will”, “should” and similar expressions. Forward-looking statements are not based on historical facts, but instead reflect the Company’s current intentions, plans, expectations, and assumptions regarding future results or events which may prove to be inaccurate. Forward-looking statements in this MD&A include, but are not limited to, statements about the manner in which the Company intends to achieve and maintain growth, management’s expectations for the markets in which the Company provides its services, competition to be faced by the Company and expectations for certain customer projects described herein including expected timing of completion for certain projects. 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 products and 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; • The Company’s ability to execute on its acquisition program including successful integration of previously acquired businesses; • The Company’s ability to deliver to customers throughout any worldwide conflict zones, and any government regulations limiting business activities within such areas; and • The Company’s ability to successfully and efficiently manage through supply chain challenges, in sourcing and procuring goods used in production or for delivery to end customers. The Company cautions that the forward-looking statements in this MD&A are based on current expectations as at November 26, 2024, that may be 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 those anticipated in those forward-looking statements if any of these risks or uncertainties materialize, or if assumptions underlying forward-looking statements prove incorrect. 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, 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. 24 CALIAN GROUP LTD. Calian Profile Calian is a diverse products and services company providing innovative healthcare, communications, learning and cybersecurity and technology solutions. The Company is headquartered in Ottawa, Ontario with locations across Canada and in the U.S., the U.K. and Europe. The Company is uniquely positioned to solve the significant and complex problems its customers face so that these companies are better able to succeed and deliver on their objectives. The Company’s common shares are listed on the Toronto Stock Exchange under the symbol CGY. The Company is organized in four operating segments: Advanced Technologies, Health, IT and Cyber Solutions and Learning. This business model provides both diversity and stability. It enables Calian to capitalize on unique opportunities during upturns in some markets while weathering downturns in others. 01 MISSION MISSION Calian helps the world communicate, innovate, learn and lead safe and healthy lives. CULTURE Every Calian employee brings their “A” game for every client, works hard and works together using collaboration to powerful advantage. Calian attracts and challenges great people and great partners. VALUES • Customer-first Commitment • Teamwork • Integrity • Innovation • Respect 02 CULTURE 03 VALUES 25 ANNUAL REPORT 2024 Strategy Growth Fundamentals and Track Record Four Pillars of Growth While the four operating segments are diverse, each is anchored by the Company’s common four-pillar framework for growth. Customer Retention Through continued delivery excellence, each segment maintains relationships with their valued customer bases, thus earning more revenue through expanded scopes of existing contacts. Innovation Through continued investment in acquisitive and organic growth, each segment increases its product offerings and differentiation thus improving gross margins Customer Diversification Through continued diversification, each segment increases its percentage of revenue derived from winning non-government contracts and from commercial activity in global markets. Continuous Improvement Through continued leverage of innovation, the Company streamlines processes and scales its back-office support capability. 26 CALIAN GROUP LTD. 5-Year Track Record of Execution Over the past five years, Calian generated a revenue compound annual growth rate (CAGR) of 15% through organic growth and acquisitions. The Company also increased its gross profit and adjusted EBITDA1, which grew at a CAGR of 30% and 23%, respectively, significantly outpacing top line growth. Furthermore, its gross margin expanded from 20.6% in FY20 to 34.0% in FY24 and its adjusted EBITDA1 margins expanded from 8.5% to 11.5% respectively. This significant profitability growth and margin expansion was driven by the Company’s revenue diversification by geography, customer and offering. Over the past five years, Calian successfully diversified its revenue streams by geography, customer and offering. Revenues generated outside Canada reached 32% of total revenues, up from 25% in FY20. Over this same period, revenues from commercial customers, typically at higher margins, grew from $203 million to $366 million. The Company was able to accomplish this while continuing to grow its legacy Canadian government business characterized by long-term contracts. A continued balance of both government and commercial customers will provide a balance of longer-term visibility and stability, with shorter term growth and margins. Revenues (in millions of $) Gross Profit & Margin (in millions of $, except margin) Adj. EBITDA1 & Margin1 (in millions of $, except margin) 37 2020 52 2021 2022 66 66 2023 86 2024 89 2020 127 2021 2022 169 204 2023 20.6% 8.5% 24.4% 10.0% 29.1% 11.3% 11.5% 31.0% 10.0% 432 2020 518 2021 2022 582 659 2023 747 2024 254 2024 Gross Profit Gross Margin Adj, EBITDA1 Adj. EBITDA1 Margin 34.0% 27 ANNUAL REPORT 2024 Finally, in FY24, product revenues totaled $227 million, up 59% from $143 million in FY20, demonstrating the Company’s progressive pivot to a technology company. Service Product Canada International Government Commercial 2020 25% 75% 2021 22% 78% 2022 29% 71% 2023 29% 71% 2024 32% 68% 2020 33% 67% 2021 25% 75% 2022 27% 73% 2023 24% 76% 2024 30% 70% 2020 47% 53% 2021 49% 51% 2022 53% 47% 2023 52% 48% 2024 49% 51% Geography Offering Customer 28 CALIAN GROUP LTD. 3-Year Strategic Plan On October 1, 2023, Calian launched its new three-year strategic plan called One Vision, One Purpose, One Calian 2026. The objective of the plan is to continue to build a purpose-driven organization that has a strong values foundation and is growing profitably. The focus of the plan is to continue to diversify the Company by geography, customer and offering, while improving operational efficiencies, retaining existing customers and building an effective sales culture. More specifically, the financial objective of this strategic plan is to reach one billion dollars in revenues by the end of FY26 through both organic growth and acquisitions. The playbook is to convert a high-level of profitable growth into strong operating free cash flow1 where the capital generated can then be deployed to maximize shareholder value. All this while maintaining a healthy balance sheet. The graphs below illustrate the five-year trends of these key performance indicators. 28 2020 35 2021 2022 47 45 2023 58 2024 76% 66% 72% 68% 68% OFCF1 OFCF1/EBITDA Acquisitions Dividends Capex Share buyback 91 2023 119 2024 2022 86 69 2021 45 2020 659 2023 747 2024 2022 582 518 2021 432 2020 Revenue Growth 26% 20% 12% 13% 13% Revenue & Revenue Growth (in millions of $, except %) Operating Free Cash Flow (OFCF1) & OFCF1 Conversion (in millions of $, except ratio) Capital Deployed (in millions of $) 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 29 ANNUAL REPORT 2024 The Company also wants to ensure that it analyzes the success of its execution through a shareholder lens. As such, it monitors adjusted EBITDA1 per diluted share, Operating Free Cash Flow1 per diluted share and Adjusted EPS1 per diluted share. 2022 $4.13 2021 $3.24 2020 $3.03 $3.81 2023 $4.86 2024 2022 $5.77 2021 $4.86 2020 $3.91 $5.61 2023 $7.13 2024 2022 $3.87 2021 $3.50 2020 $2.59 $3.45 2023 $4.33 2024 Adjusted EBITDA1/ Diluted Share (in $) OFCF1/Diluted Share (in $) Adjusted EPS/ Diluted Share (in $) 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 30 CALIAN GROUP LTD. Overview – Fourth Quarter of FY24 Revenues increased 3% to $181.2 million, as compared to $175.9 million for the same period last year. This represents the highest revenue on record for a fourth quarter in the Company’s history. Acquisitive growth was 11% and was generated by the acquisitions of Hawaii Pacific Teleport (“HPT”), Decisive Group Inc. (“Decisive”), the acquisition of the Nuclear assets from MDA Ltd., and Mabway Limited (“Mabway”). Organic revenues declined 8% as growth generated in the Health segment was more than offset by temporary slow downs or delays in the Company’s other segments. Gross profit increased 15%, to $63.9 million. Gross margin reached 35.3%, which is a new quarterly record and over two years of quarterly margins consistently greater than 30%. Similarly, adjusted EBITDA1 increased by 11% to $22.7 million, primarily driven by the higher-margin contribution from recent acquisitions and increased product revenue. Adjusted EBITDA1 margin reached 12.5%, up from 11.6% for the same period last year, as a result of a favorable revenue mix and geographical expansion. Calian generated $16.3 million of operating free cash flow1 in the quarter. The Company used its cash and a portion of its credit facility to make capital expenditure investments as well as provide a return to shareholders in the form of dividends and share buybacks, where ending share count at the end of September 2024 is lower than the year prior. The Company ended the quarter with net debt1 of $38.0 million, which on a trailing twelve month basis represented a net debt to adjusted EBITDA1 ratio of 0.4x. With cash on hand of $51.8 million, combined with the unused portion of its credit facility, Calian ended the quarter with net liquidity2 of $142.0 million. 3% 176 Q4 FY23 181 Q4 FY24 56 Q4 FY23 64 Q4 FY24 31.7% 35.3% Gross Profit Gross Margin 20.4 Q4 FY23 22.7 Q4 FY24 11.6% 12.5% Adj. EBITDA1 Adj. EBITDA1 % Revenues (in millions of $) Gross profit & Gross margin % (in millions of $, except margin) Adj. EBITDA1 & Adj. EBITDA1 % (in millions of $, except margin) 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 2 Net liquidity is defined as the Company’s total available credit under its credit facility less its net debt. 31 ANNUAL REPORT 2024 Calian signed gross new contract value of $156 million and ended the quarter with a backlog of $1.2 billion, of which $504 million is earmarked for FY25, $271 million for FY26 and $393 million beyond FY26. 0.1x Q4 FY23 0.4x Q4 FY24 10.7 Q4 FY23 16.3 Q4 FY24 67 Q4 FY23 8 Q4 FY24 Capex Share buyback Acquisitions Dividends OFCF1 (in millions of $) Net Debt/Adj. EBITDA1 Ratio Capital Deployed (in millions of $) Backlog The Company’s realizable backlog at September 30, 2024 was $1,167 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, 2024 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. • $43.6 million in signings of Cyber product and services • $26 million for a new win for Primary Nurse care services with a Healthcare provider across Ontario • $16 million in Advanced Technology product spanning a wide array of our product portfolio • $14.2 million in signings related to teleport and gateways services There were no material contracts that were cancelled unexpectedly that would have resulted in a significant decrease in our backlog. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 32 CALIAN GROUP LTD. $ Contracted backlog 901,561 Option renewals 483,138 1,384,699 Management estimate of unrealizable portion (217,333) Estimated Realizable Backlog 1,167,366 Estimated Recognition of Estimated Realizable Backlog October 1, 2024 to September 30, 2025 October 1, 2025 to September 30, 2026 Beyond September 30, 2026 Total $ $ $ $ Advanced Technologies 83,588 33,482 7,760 124,830 Health 220,332 113,943 292,000 626,275 Learning 114,714 97,751 66,400 278,865 ITCS 85,581 25,475 26,340 137,396 Total 504,215 270,651 392,500 1,167,366 Most fee-for-service contracts provide the customer with the ability to adjust the timing and level of effort throughout 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 2025, fiscal year 2026 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 $217 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, 2024 33 ANNUAL REPORT 2024 Consolidated Results Three months ended September 30, Year ended September 30, 2024 2023 2024 2023 $ $ $ $ Revenues 181,166 175,948 746,611 658,583 Gross profit 63,924 55,796 254,014 204,212 Gross profit margin (%) 35% 32% 34% 31% Profit before under noted items (adjusted EBITDA1) 22,677 20,381 85,535 65,987 Adjusted EBITDA1 margin % 13% 12% 11% 10% Depreciation of equipment, application software and capitalized research and development 2,750 2,133 10,048 9,043 Depreciation of right of use assets 1,587 1,352 6,043 4,501 Amortization of acquired intangible assets 7,577 4,460 25,738 14,874 Restructuring expense 368 2,618 1,864 2,618 Other changes in fair value (202) (314) (202) (314) Deemed compensation 1,797 403 4,322 550 Changes in fair value related to contingent earn-out 2,495 416 8,767 3,858 Profit before interest income and income tax expense 6,305 9,313 28,955 30,857 Interest expense 1,988 793 6,635 896 Interest tax expense 4,885 3,401 11,140 11,076 NET PROFIT (568) 5,119 11,180 18,885 EPS - Basic (0.05) 0.43 0.95 1.61 EPS - Diluted (0.05) 0.43 0.93 1.61 Adjusted net profit1 11,467 12,702 51,669 40,471 Adjusted EPS1 - Basic 0.97 1.08 4.36 3.45 Adjusted EPS1 - Diluted 0.96 1.07 4.33 3.45 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 34 CALIAN GROUP LTD. Analysis of Consolidated Results – Three and Twelve Months ended September 30, 2024 Revenue For the three-month period ended September 30, 2024, consolidated revenues increased 3% to $181,166, compared to the same period last year. Acquisitive growth was 11% generated from the acquisitions noted earlier in this report. Organic revenues were down 8% as growth generated in the Health segment was offset by declines in our domestic Learning segment due to short term project slow downs and procurement lags as well as project delays in our Advanced Technologies and ITCS segments. Note that Calian measures growth through acquisition on a trailing twelve-month basis. Once the acquisition has been included in results for twelve months, its contribution is included in the organic growth metric. For the year ended September 30, 2024, consolidated revenues increased 13%, compared to the same period last year. Acquisitive growth was 11% and was generated from the same acquisitions mentioned above. Organic growth stood at 2%, driven by double-digit growth from the Health segment. Gross Profit For the three-month period ended September 30, 2024, gross profit increased 15%, to $63,924, compared to $55,796 for the same period last year. This growth was driven by favorable revenue mix for existing business and the contribution from higher- margin acquisitive revenues. For the three-month period ended September 30, 2024, gross margin reached a record high of 35.3%, up from 31.7% for the same period last year, representing the 10th consecutive quarter above 30%. For the year ended September 30, 2024, gross profit increased 24% to $254,014, compared to $204,212 for the same period last year. This growth was driven by the same factors mentioned above. Product revenue for the annual period ended September 30, 2024 was 44% higher than the same period of the prior year. For the year ended September 30, 2024, gross margin stood at 34.0%, up from 31.0% for the same period last year, representing the highest annual gross margin on record. Adjusted EBITDA1 For the three-month period ended September 30, 2024, adjusted EBITDA1 increased 11% to $22,677, compared to $20,381 for the same period last year. This growth was primarily driven by the higher-margin contribution from recent acquisitions and increased product revenue. We have continued to invest in our sales and marketing activities to generate more pipeline that should benefit the company in the coming years. Adjusted EBITDA1 margin increased to 12.5%, compared to 11.6% for the same period last year, as a result of a favorable revenue mix and increased volume. For the year ended September 30, 2024, adjusted EBITDA1 increased 30% to $85,535, compared to $65,987 for the same period last year. This growth was driven by the same factors mentioned above. Adjusted EBITDA1 margin increased to 11.5%, compared to 10.0% for the same period last year. Depreciation and Amortization For the three-month period ended September 30, 2024, depreciation of property, plant and equipment stood at $2,750, an increase of 29%, from the same period last year. This increase is primarily due to assets acquired through acquisition. For the year ended September 30, 2024, depreciation of property, plant and equipment stood at $10,048, an increase of 11%, from the same period last year. For the three-month period ended September 30, 2024, depreciation of right of use assets increased $235, compared to the same period last year. This increase is mainly due to new leases signed in the last twelve months, coupled with leases brought on from recent acquisitions. For the year ended September 30, 2024, depreciation of right of use assets increased by $1,542, compared to the same period last year. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 35 ANNUAL REPORT 2024 For the three-month period ended September 30, 2024, amortization of acquired intangible assets increased $3,117, compared to the same period last year. This increase is primarily due to the acquired intangible assets from recent acquisitions (Decisive, the nuclear assets from MDA Ltd. and Mabway) amortizing since the acquisition dates in the last twelve months. For the year ended September 30, 2024, amortization of acquired intangible assets increased by $10,864, compared to the same period last year due to additional amortization from these same acquisitions. Please see note 13 to the Financial Statements for more information. Restructuring Expense For the three-month period ended September 30, 2024, the Company recorded a non-recurring restructuring charge of $368. This amount has reduced from the three-month period ended September 30, 2023 when the Company recorded restructuring charge of $2,618 for which the Company initially announced its restructuring plan in the third quarter of FY23. The restructuring in 2023 had helped the Company save on operating cost in fiscal 2024 which was a factor in the increase in EBITDA percentage year over year. The Company continues to evaluate its expenses throughout the organization for which employee restructuring may be required from time to time. For the year ended September 30, 2024, the Company recorded a non-recurring restructuring charge of $1,864 relating to realignment of management and resizing for fiscal 2025. For the year ended September 30, 2023, the Company recorded a one-time restructuring charge of $2,618, for the reasons mentioned above. Deemed Compensation and Changes in Fair Value Related to Contingent Earn Out For the three-month period ended September 30, 2024, deemed compensation increased by $1,394, compared to the same period last year. This increase is due to deemed compensation amounts applicable under the acquisition agreements of HPT, the asset acquisition from MDA Ltd. and Mabway. See financial statement note 25 for more information. For the year ended September 30, 2024, deemed compensation increased by $3,772 compared to the same period last year due to deemed compensation expenses relating to the same factors. For the three-month period ended September 30, 2024, changes in fair value related to contingent earn-out increased by $2,079, compared to the same period last year. This increase relates to additional accretion of interest in relation to open earn out amounts including HPT, Decisive and Mabway along with changes to estimated payouts for contingent earn outs for HPT and Decisive. See financial statement note 25 for more information. For the year ended September 30, 2024, the change in fair value related to contingent earn-out increased by $4,909 due to the same reasons. The change in fair value of contingent payments and deemed compensation is explained further in notes 25 and 26 of the Financial Statements. 36 CALIAN GROUP LTD. Interest Expense For the three-month period ended September 30, 2024, interest expense increased by $1,195, compared to the same period last year. This increase is due to the Company drawing on its credit facility to fund its recent acquisitions. For the year ended September 30, 2024, interest expense increased by $5,739, compared to the same period last year, due to the same reason mentioned above. Interest expense pertaining to our leases has increased by $419 for the three-month and $1,278 for the twelve-month periods ended September 30, 2024. This increase is due to leases brought on from recent acquisitions. Income Tax Expense For the three-month period ended September 30, 2024, the provision for income taxes was $4,885, an increase of $1,484 compared to the same period last year. This is primarily due to higher taxable income in the quarter. For the year ended September 30, 2024, the provision for income taxes was $11,140, up $64 compared to the same period last year. Income tax as a percentage of Operating Free Cash Flow1 for the year ended September 30, 2024 is 19%. This is down from the same period of the prior year when income tax as a percentage of operating free cash flow was 25%. This decrease is due to the utilization of loss carry forwards, the utilization of tax assets generated through recent acquisitions, and income generation in more favorable tax jurisdictions. Net Profit and Adjusted Net Profit1 For the three-month period ended September 30, 2024, net loss was $(568), or $(0.05) per diluted share, versus $5,119, or $0.43 per diluted share, for the same period last year. This decrease in profitability is primarily due to increased amortization and interest expenses related to acquisitions, partially offset by higher adjusted EBITDA1. Adjusted net profit1 was $11,467, or $0.96 per diluted share, versus $12,702, or $1.07 per diluted share, for the same period last year. For the year ended September 30, 2024, net profit was $11,180, or $0.93 per diluted share, versus $18,885, or $1.61 per diluted share, for the same period last year. Adjusted net profit1 was $51,669, or $4.33 per diluted share, versus $40,471, or $3.45 per diluted share, for the same period last year. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 37 ANNUAL REPORT 2024 Three months ended September 30, Year ended 2024 2023 2024 2023 $ $ $ $ Product 39,875 32,367 145,773 106,298 Service 13,082 20,154 62,169 72,065 Revenues 52,957 52,521 207,942 178,363 Gross profit 21,832 18,676 82,450 59,887 Gross profit % 41% 36% 40% 34% Adjusted EBITDA1 10,871 11,087 41,752 28,276 Adjusted EBITDA1 Margin% 21% 21% 20% 16% Organic/ Acquisitive Revenue Growth -7% / 8% 58% / 14% -1% / 18% 16% / 3% New contract signings (gross) 51,000 52,000 192,000 192,000 Backlog 124,830 148,805 124,830 148,805 Advanced Technologies (AT) Space Terrestrial Defence $208M FY24 Revenues 28% of total revenues Delivers innovative services and products that enhance performance in key industries, including space communications, defence, wired and wireless networks, GNSS, manufacturing, agricultural technology and nuclear sectors. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 38 CALIAN GROUP LTD. Three-months ended September 30, 2024 For the three-month period ended September 30, 2024, revenues increased 1% to $52,957, compared to the same period last year. Acquisitive growth was 8%, generated by the acquisition of Hawaii Pacific Teleport, closed on August 1, 2023 and the nuclear asset acquisition from MDA Ltd., closed on March 5, 2024. Organic revenues declined 7% due to project delays. This was partially offset by growth in our GNSS product sales, nuclear services and defence products. For the three-month period ended September 30, 2024, adjusted EBITDA1 decreased slightly by 2% to $10,871, compared to the same period last year. Adjusted EBITDA1 margin remained stable at 21% when compared to the same period last year. In the quarter, Advanced Technologies signed new contracts valued at $51 million, ending with a backlog of $125 million. Twelve-months ended September 30, 2024 For the year ended September 30, 2024, revenues increased 17% to $207,942, compared to the same period last year. Acquisitive growth was 18%, driven by the strong contribution from HPT and the nuclear assets of MDA. Organic growth declined 1%, due to slower starts from projects in our legacy space business. It was partially offset by the contribution of product sales, more specifically, Test Aerospace and defence, GNSS and Ag tech products, as well as nuclear services and defence solutions. For the year ended September 30, 2024, adjusted EBITDA1 increased by 48% to $41,752, compared to the same period last year. This significant growth was primarily fueled by acquisitions as well as GNSS antennas, Ag tech products and defence based solutions and products. Adjusted EBITDA1 margin increased to 20%, from 16% for the same period last year. Selected highlights for the year: • Selected by Telesat to design, develop, deliver and deploy the Element Management System within the Telesat Lightspeed Low Earth Orbit satellite network as well as to provide lifecycle maintenance and support for the system • Collaborating with Point One Navigation to deliver Smart GNSS Antenna support for Polaris Real-Time Kinematic (RTK) • Acquired portfolio of dedicated DOCSIS test products from Rohde & Schwarz • Purchased the assets associated with MDA Ltd’s (TSX:MDA) nuclear services • Won a contract with the Canadian Space Agency (CSA) to develop a spectrum interference simulation solution • Appointed Valerie Travain-Milone as President, Advanced Technologies effective April 8, 2024. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 39 ANNUAL REPORT 2024 Three months ended September 30, Year ended 2024 2023 2024 2023 $ $ $ $ Product 117 1 1,191 1 Service 52,122 51,567 210,839 184,855 Revenues 52,239 51,568 212,030 184,856 Gross profit 13,365 15,179 55,126 48,684 Gross profit % 26% 29% 26% 26% Adjusted EBITDA1 9,172 10,722 38,587 33,383 Adjusted EBITDA1 Margin% 18% 21% 18% 18% Organic / Acquisitive Revenue Growth 1% / 0% 31% / 0% 15% / 0% 11% / 0% New contract signings (gross) 42,000 29,000 166,000 115,000 Backlog 626,275 632,832 626,275 632,832 Health Health Health Pharmaceutical Solutions Digital Health $185M FY23 Revenues 28% Health Services $212M FY24 Revenues of total revenues Provides health services, pharmaceutical solutions and digital health for public and private sector organizations. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 40 CALIAN GROUP LTD. Three-months ended September 30, 2024 For the three-month period ended September 30, 2024, revenues increased 1% to $52,239, compared to the same period last year. This growth was all organic and was driven by continued strong demand in our Defence Healthcare solutions which is partially offset by one time rapid response healthcare services that were performed in the prior year which did not occur in the current year. For the three-month period ended September 30, 2024, adjusted EBITDA1 decreased 14% to $9,172, compared to the same period last year. The decline was due to the one time rapid response healthcare services that were provided in the prior year. Adjusted EBITDA1 margin stood at 18%, slightly down from the prior year. In the quarter, Health signed new contracts valued at $42 million, leaving the backlog for the segment at $626 million. Twelve-months ended September 30, 2024 For the twelve-month period ended September 30, 2024, revenues increased 15% to $212,030, compared to the same period last year. This growth was all organic and was driven by the same reasons mentioned above. Adjusted EBITDA1 increased 16% for the twelve-month period ended September 30, 2024, compared to the same period last year, with the increased volume of services provided to Defence based customers. Adjusted EBITDA1 margin held at 18% when compared to the same period in the prior year. Selected highlights for the year: • Agreed to collaborate with Walmart Canada to expand the retailer’s specialty pharmacy capabilities through licensing Calian’s custom-built digital health platform NexiTM • Announced significant enhancements to its Corolar Virtual Care Platform with new features to advance virtual healthcare • Won contract to support a Phase 2 Clinical Trial of ZYUS Life Sciences’ lead drug product candidate • Announced a contribution of $25 per year for the next three years to the Canadian Institute for Military and Veteran Health Research (CIMVHR) to fund research related to improving access to care for military families • Selected to participate in the Canadian Technology Accelerator (CTA) program on Digital Health in the United Kingdom 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 41 ANNUAL REPORT 2024 Three months ended September 30, Year ended 2024 2023 2024 2023 $ $ $ $ Product 1,793 1,567 8,011 6,235 Service 28,442 22,661 104,889 99,957 Revenues 30,235 24,228 112,900 106,192 Gross profit 9,698 5,600 30,678 26,952 Gross profit % 32% 23% 27% 25% Adjusted EBITDA1 6,407 3,105 17,987 16,560 Adjusted EBITDA1 Margin% 21% 13% 16% 16% Organic/ Acquisitive Revenue Growth -17% / 42% 11% / 0% -7% / 14% 16% / 0% New contract signings (gross) 11,000 8,000 196,000 26,000 Backlog 278,865 247,712 278,865 247,712 Learning Learning Custom Learning Solutions $113M FY24 Revenues 15% of total revenues Defence Learning Works with private sector, government, academic and defence customers to develop tailored learning and training solutions, incorporating immersive technologies that enhance organizational performance, address diverse operational needs and empower teams with the skills to meet evolving industry demands. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 42 CALIAN GROUP LTD. Three-months ended September 30, 2024 For the three-month period ended September 30, 2024, revenues increased 25% to $30,235, compared to the same period last year. Acquisitive growth was 42%, generated by the acquisition of Mabway closed on May 10, 2024. Organic revenues declined 17% compared to the previous year. Despite being awarded new contracts from the Canadian Armed Forces in the year, the ramp up of activity has been significantly slower than previous contracts. This was coupled with short term reductions in activity in our domestic programs impacting the organic growth of the segment. Our recent investments in expansion into Europe has resulted in 240% increases in European revenues in the three-month period. For the three-month period ended September 30, 2024, adjusted EBITDA1 increased by 106% to $6,407, compared to the same period last year. This increase is due to the our recent acquisition of Mabway as well as growth in other European countries. As a result, adjusted EBITDA1 margin increased to a new high of 21%, up from 13%, compared to the same period last year. In the quarter, Learning signed new contracts valued at $11 million, and backlog stood at $279 million. Twelve-months ended September 30, 2024 For the twelve-month period ended September 30, 2024, revenues stood at $112,900, an increase of 6% from the same period last year, as the acquisitive revenue growth of 14% from our expansion into the United Kingdom was offset by the temporary reductions in Canadian federal defence learning programs. For the twelve-month period ended September 30, 2024, adjusted EBITDA1 increased by 9% to $17,987, compared to the same period last year. Adjusted EBITDA1 margin remained in line with the prior year at 16%. Selected highlights for the year: • Harnessing AI to bolster MaestroEDE exercise management tool for global military training • Completed the acquisition of Mabway, expanding military training and simulation solutions globally • Won $23 million contract for new military medical training program with the Canadian Armed Forces • Renewed $10 million contract for military training with Canadian Defence Academy and Military Personnel Generation Group • Won contracts with NATO Supreme Headquarters Allied Powers Europe (SHAPE) to provide comprehensive support to the development of Supreme Allied Commander Europe’s (SACEUR) Chemical, Biological, Radiological and Nuclear (CBRN) exercise program 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 43 ANNUAL REPORT 2024 ITCS ITCS Three months ended September 30, Year ended 2024 2023 2024 2023 $ $ $ $ Product 12,877 12,856 71,774 44,741 Service 32,858 34,775 141,965 144,431 Revenues 45,735 47,631 213,739 189,172 Gross profit 19,029 16,341 85,760 68,689 Gross profit % 42% 34% 40% 36% Adjusted EBITDA1 6,311 5,653 28,503 23,459 Adjusted EBITDA1 Margin% 14% 12% 13% 12% Organic/ Acquisitive Revenue Growth -13% / 9% -31% / 0% -4% / 17% -13% / 22% New contract signings (gross) 52,000 87,000 231,000 247,000 Backlog 137,396 140,688 137,396 140,688 Provides IT and cybersecurity solutions to public and private sector organizations across a variety of verticals. Cybersecurity Managed IT Services Cloud Modernization $214M FY24 Revenues 29% of total revenues 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 44 CALIAN GROUP LTD. Three-months ended September 30, 2024 For the three-month period ended September 30, 2024, revenues decreased 4% to $45,735, compared to the same period last year. Acquisitive growth was 9% driven by the acquisition of Decisive, closed on December 1, 2023. Organic revenues declined 13% due to longer sales cycles in our value added resale business in the US and slight reductions in our on demand government solutions business. For the three-month period ended September 30, 2024, adjusted EBITDA1 increased by $658 to $6,311, compared to the same period last year. This increase is a result of higher margin product sales in the current quarter slightly offset by an increase in selling and marketing costs. As a result, adjusted EBITDA1 margin increased to 14%, compared to 12% for the same period last year. In the quarter, ITCS signed new contracts valued at $52 million, implying a book-to-bill ratio of 1.1. Twelve-months ended September 30, 2024 For the twelve-month period ended September 30, 2024, revenues increased 13% to $213,739, compared to the same period last year. This growth was mainly attributed to the Decisive acquisition offset slightly by declines in our value added resale business in the US. Adjusted EBITDA1 increased by 22% to $28,503, compared to the same period last year, due to the same factors mentioned above. Selected highlights for the year: • Collaborates with Microsoft to offer scalable cloud-native cybersecurity solutions • Named to CRN’s Managed Service Provider 500 List • Named to CRN’s Solution Provider 500 list • Topped list of largest Houston-area Cybersecurity companies • Secured six-year contract valued up to $90 million for IT and software development services with General Dynamics Mission Systems to support the Canadian Army • Named to CRN’s 2024 Tech Elite 250 List • Announced the appointment of Michael Tremblay as President, IT and Cyber Solutions • Completed the acquisition of Decisive Group • Recognized as Canada Partner of the Year at the 2023 CrowdStrike Global Partner Awards • Achieved multiple Cisco Powered Services specializations for managed service expertise Shared Services For the three-month period ended September 30, 2024, shared services expenses decreased slightly by $102 to $10,084, compared to the same period last year. Selected Quarterly Financial Data The Company’s operations are 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. The Company’s first and third quarters are affected by business specific cycles, along with working days, statutory holidays and vacation periods impacting the Company’s delivery teams contributing to lower service revenues. 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. The following table sets forth selected financial information for the Company’s past eight quarters. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 45 ANNUAL REPORT 2024 (Canadian dollars in millions, except per share data) Q4/24 Q3/24 Q2/24 Q1/24 Q4/23 Q3/23 Q2/23 Q1/23 Q4/22 Revenues $ $ $ $ $ $ $ $ $ Advanced Technologies 53.0 52.6 51.3 51.1 52.5 44.8 46.8 34.3 30.5 Health 52.2 56.1 53.6 50.1 51.6 49.1 43.6 40.4 39.4 Learning 30.2 27.4 28.2 27.1 24.2 26.7 28.8 26.4 21.8 ITCS 45.8 49.0 68.2 50.8 47.6 45.9 49.3 46.4 68.8 Total Revenue 181.2 185.1 201.3 179.1 175.9 166.5 168.5 147.5 160.5 Cost of revenue 117.2 123.2 131.2 121.0 120.2 115.4 116.5 102.3 110.4 Gross profit 64.0 61.9 70.1 58.1 55.7 51.1 52.0 45.2 50.1 Selling and marketing 13.5 14.3 15.0 12.4 10.5 11.9 11.8 11.1 13.1 General and administration 24.7 26.4 26.6 23.6 22.0 21.4 20.5 17.4 17.0 Research and development 3.1 3.5 2.7 2.7 2.8 3.3 2.9 2.4 1.0 Profit before under noted items 22.7 17.7 25.8 19.4 20.4 14.5 16.8 14.3 19.0 Depreciation of equipment and application software 2.8 2.5 2.5 2.3 2.1 2.4 2.3 2.3 2.4 Depreciation of right of use asset 1.6 1.5 1.5 1.5 1.4 1.2 1.0 1.0 1.0 Amortization of acquired intangible assets 7.6 6.8 6.2 5.2 4.5 3.6 3.4 3.4 3.5 Other changes in fair value (0.2) — — — (0.3) — — — — Restructuring expense 0.3 — 1.5 — 2.6 — — — — Deemed Compensation 1.8 1.0 0.9 0.6 0.4 — 0.1 0.1 3.3 Changes in fair value related to contingent earn-out 2.5 1.5 4.1 0.7 0.4 — 2.5 0.7 2.3 Profit before interest and income tax expense 6.3 4.4 9.1 9.1 9.3 7.3 7.5 6.8 6.5 Interest expense 2.0 1.4 1.8 1.6 0.8 (0.1) 0.1 0.1 0.1 Income tax expense 4.9 1.7 2.4 2.1 3.4 2.7 2.9 2.1 5.4 Net profit (0.6) 1.3 4.9 5.4 5.1 4.7 4.5 4.6 1.0 Weighted average shares outstanding - Basic 11.8M 11.9M 11.8M 11.8M 11.8M 11.7M 11.7M 11.6M 11.4M Weighted average shares outstanding - Diluted 12.0M 12.0M 12.0M 11.9M 11.8M 11.8M 11.8M 11.7M 11.5M Net profit per share Basic (0.1) 0.1 0.4 0.5 0.4 0.4 0.4 0.4 0.1 Diluted (0.1) 0.1 0.4 0.5 0.4 0.4 0.4 0.4 0.1 Adjusted EBITDA1 per share Basic 1.92 1.49 2.17 1.65 1.73 1.24 1.45 1.23 1.67 Diluted 1.89 1.47 2.14 1.63 1.72 1.23 1.45 1.22 1.66 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 46 CALIAN GROUP LTD. Fourth Quarter Financial Summary Consolidated Statements of Net Profit For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands): Three months ended September 30, Year ended September 30, 2024 2023 2024 2023 September 30, 2024 September 30, 2023 September 30, 2024 September 30, 2023 $ $ $ $ Revenue 181,166 175,948 746,611 658,583 Cost of revenues 117,242 120,152 492,597 454,371 Gross profit 63,924 55,796 254,014 204,212 Selling and marketing 13,466 10,545 55,115 45,410 General and administration 24,734 22,034 101,397 81,363 Research and development 3,047 2,836 11,967 11,452 Profit before under noted items 22,677 20,381 85,535 65,987 Depreciation of property, plant and equipment 2,750 2,133 10,048 9,043 Depreciation of right of use assets 1,587 1,352 6,043 4,501 Amortization of acquired intangible assets 7,577 4,460 25,738 14,874 Restructuring expense 368 2,618 1,864 2,618 Other changes in fair value (202) (314) (202) (314) Deemed compensation 1,797 403 4,322 550 Changes in fair value related to contingent earn-out 2,495 416 8,767 3,858 Profit before interest income and income tax expense 6,305 9,313 28,955 30,857 Interest expense (income) 1,988 793 6,635 896 Income tax expense - current 4,623 3,776 15,442 12,919 Income tax expense - deferred 262 (375) (4,302) (1,843) NET PROFIT (568) 5,119 11,180 18,885 Net profit per share: Basic (0.05) 0.43 0.95 1.61 Diluted (0.05) 0.43 0.93 1.61 47 ANNUAL REPORT 2024 Consolidated Statements of Cash Flows For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands): Three months ended September 30, Year ended September 30, 2024 2023 2024 2023 $ $ $ $ CASH FLOWS GENERATED FROM (USED IN) OPERATING ACTIVITIES Net profit (568) 5,119 11,180 18,885 Items not affecting cash: Interest expense 1,410 634 4,826 365 Changes in fair value related to contingent earn-out 2,495 416 8,767 3,858 Lease obligations interest expense 578 159 1,809 531 Income tax expense 4,885 3,401 11,140 11,076 Employee share purchase plan expense 122 130 549 597 Share based compensation expense 562 1,618 3,824 3,273 Depreciation and amortization 11,914 7,945 41,829 28,418 Deemed compensation 1,797 403 4,322 550 Other changes in fair value (202) (314) (202) (314) 22,993 19,511 88,044 67,239 Change in non-cash working capital Accounts receivable (9,631) (8,971) 17,625 1,393 Work in process (1,123) 6,166 (2,509) 23,285 Prepaid expenses and other 3,007 (3,849) 337 (829) Inventory 1,002 1,873 2,795 (3,340) Accounts payable and accrued liabilities 9,133 9,476 (1,064) (17,947) Unearned contract revenue (1,687) 4,918 (6) 928 23,694 29,124 105,222 70,729 Interest paid (1,988) (791) (6,635) (895) Income tax paid (2,289) (5,629) (11,366) (13,059) 19,417 22,704 87,221 56,775 CASH FLOWS GENERATED FROM (USED IN) FINANCING ACTIVITIES Issuance of common shares net of costs 618 760 2,786 2,901 Dividends (3,397) (3,335) (13,351) (13,163) Net draw (repayment) on debt facility (4,250) 37,750 52,000 30,250 Payment of lease obligations (1,318) (1,261) (5,289) (4,382) Repurchase of common shares (2,819) (1,670) (5,648) (1,670) (11,166) 32,244 30,498 13,936 CASH FLOWS USED IN INVESTING ACTIVITIES Investments — — — (2,689) Business acquisitions — (59,834) (87,862) (68,494) Property, plant and equipment (2,462) (2,368) (11,803) (8,440) (2,462) (62,202) (99,665) (79,623) NET CASH INFLOW (OUTFLOW) 5,789 (7,254) 18,054 (8,912) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 45,999 40,988 33,734 42,646 CASH AND CASH EQUIVALENTS, END OF PERIOD 51,788 33,734 51,788 33,734 48 CALIAN GROUP LTD. The diluted weighted average number of shares has been calculated as follows: Three months ended September 30, Year ended September 30, 2024 2023 2024 2023 Weighted average number of common shares – basic 11,835,037 11,790,964 11,837,520 11,714,887 Additions to reflect the dilutive effect of employee stock options and RSUs 168,696 49,575 93,261 25,791 Weighted average number of common shares – diluted 12,003,733 11,840,539 11,930,781 11,740,678 The following table presents the revenue of the Company for the year ended September 30, 2024 and 2023 (Canadian dollars in thousands): Three months ended September 30, Year ended September 30, 2024 2023 2024 2023 $ $ $ $ Product revenue Advanced Technologies 39,875 32,367 145,773 106,298 Health 117 1 1,191 1 Learning 1,793 1,567 8,011 6,235 ITCS 12,877 12,856 71,774 44,741 Total product revenue 54,662 46,791 226,749 157,275 Service revenue Advanced Technologies 13,082 20,154 62,169 72,065 Health 52,122 51,567 210,839 184,855 Learning 28,442 22,661 104,889 99,957 ITCS 32,858 34,775 141,965 144,431 Total service revenue 126,504 129,157 519,862 501,308 Total revenue 181,166 175,948 746,611 658,583 49 ANNUAL REPORT 2024 Segmented information is as follows for three months ended September 30, 2024 (Canadian dollars in thousands): For the three months ended September 30, 2024 Advanced Technologies Health Learning ITCS Shared Services Total $ $ $ $ $ $ Revenue 52,957 52,239 30,235 45,735 — 181,166 Cost of revenues 31,125 38,874 20,537 26,706 — 117,242 Gross profit 21,832 13,365 9,698 19,029 — 63,924 Gross profit % 41% 26% 32% 42% N/A 35% Operating expenses 10,961 4,193 3,291 12,718 10,084 41,247 Profit before under noted items 10,871 9,172 6,407 6,311 (10,084) 22,677 Profit before under noted items % 21% 18% 21% 14% N/A 13% Depreciation of property, plant and equipment 2,750 Depreciation of right of use assets 1,587 Amortization of acquired intangible assets 7,577 Other changes in fair value (202) Restructuring expense 368 Deemed compensation 1,797 Changes in fair value related to contingent earn-out 2,495 Profit before interest income and income tax expense 6,305 Interest expense 1,988 Income tax expense - current 4,623 Income tax expense - deferred 262 NET PROFIT FOR THE PERIOD (568) 50 CALIAN GROUP LTD. Segmented information is as follows for three months ended September 30, 2023 (Canadian dollars in thousands): For the three months ended September 30, 2023 Advanced Technologies Health Learning ITCS Shared Services Total $ $ $ $ $ $ Revenue 52,521 51,568 24,228 47,631 — 175,948 Cost of revenues 33,845 36,389 18,628 31,290 — 120,152 Gross profit 18,676 15,179 5,600 16,341 — 55,796 Gross profit % 36% 29% 23% 34% N/A 32% Operating expenses 7,589 4,457 2,495 10,688 10,186 35,415 Profit before under noted items 11,087 10,722 3,105 5,653 (10,186) 20,381 Profit before under noted items % 21% 21% 13% 12% N/A 12% Depreciation of property, plant and equipment 2,133 Depreciation of right of use assets 1,352 Amortization of acquired intangible assets 4,460 Other changes in fair value (314) Restructuring expense 2,618 Deemed compensation 403 Changes in fair value related to contingent earn-out 416 Profit before interest income and income tax expense 9,313 Interest expense 793 Income tax expense - current 3,776 Income tax recovery - deferred (375) NET PROFIT FOR THE PERIOD 5,119 51 ANNUAL REPORT 2024 Financial Position Working capital as a percentage of trailing twelve month revenue has decreased to 7.4% at September 30, 2024 versus 13.6% for the same period of the prior year. This is a testament to the Company’s ability to increase growth and successfully manage its investments in working capital while doing so. The total working capital for the Company has decreased from where it was a year ago which has contributed to a positive cash flow of $16,870 for the year ended September 30, 2024, as working capital management continues to be a priority for the business. Assets As at September 30, 2024, total assets stood at $707,920, versus $585,723 as at September 30, 2023. The increase in total assets is primarily a result of the acquisitions of Decisive and Mabway with the corresponding purchased assets along with positive operating contributions from the existing business. As at September 30, 2024, cash and cash equivalents were $51,788, compared to $33,734 at September 30, 2023. Liabilities As at September 30, 2024, total liabilities stood at $381,165, versus $257,351 as at September 30, 2023. The increase is primarily a result of the acquisitions Decisive and Mabway, along with the debt drawn in order to fund the acquisitions. As at September 30, 2024, Calian had net debt1 of $37,962 and its net debt1 to trailing twelve month adjusted EBITDA1 ratio was 0.4x, well below its maximum threshold of 2.5x. As at September 30, 2024, the Company was in full compliance with its debt covenants. Management believes that the Company has sufficient cash resources to continue to finance its working capital requirements and pay a quarterly dividend. There were no off-balance sheet arrangements as at September 30, 2024. Shareholders’ Equity On August 30, 2023, the TSX accepted Calian’s Notice of Intention to Make a Normal Course Issuer Bid (“NCIB”) to purchase for cancellation up to 1,044,012 common shares during the 12-month period commencing September 1, 2023 and ending August 31, 2024, representing approximately 10% of the public float of its common shares as at August 22, 2023. On August 28, 2024, the TSX accepted Calian’s Notice of Intention to make a NCIB to purchase for cancellation up to 995,904 common shares during the 12-month period commencing September 1, 2024 and ending August 31, 2025, representing approximately 10% of the public float of its common shares as at August 16, 2024. Under these NCIB’s, the Company repurchased 61,422 common shares for cancellation in the three-month period ended September 30, 2024 for consideration of $2,819 under its NCIB. The Company repurchased 115,248 common shares for cancellation in the twelve-month period ended September 30, 2024 for consideration of $5,648. The Company has entered into an automatic share purchase plan (“ASPP”) to provide the option to instruct its broker to make purchases under the NCIB during any applicable blackout periods. As at September 30, 2024 (September 30, 2023), an obligation for the repurchase of shares of $3,075 (NIL) was recognized as an accrued liability, as instructions were provided to the Company’s broker to continue making purchases during the current blackout period in accordance with the ASPP. 52 CALIAN GROUP LTD. Share Capital As at September 30, 2024, the capital stock issued and outstanding of the Company consisted of 11,802,364 common shares (11,812,650 as at September 30, 2023). The following table presents the outstanding capital stock activity for the twelve-month period ended September 30, 2024 and September 30, 2023. Twelve-months ended September 30, 2024 Twelve-months ended September 30, 2023 Balance October 1 11,812,650 11,607,391 Shares issued under employee share plans 53,264 60,311 Shares issued under employee share purchase plan 50,566 48,620 Shares issued through acquisition 1,132 128,422 Shares cancelled through NCIB program (115,248) (32,094) Issued capital 11,802,364 11,812,650 Weighted average number of common shares – basic 11,837,520 11,714,887 Weighted average number of common shares – diluted 11,930,781 11,740,678 53 ANNUAL REPORT 2024 Liquidity and Capital Resources The following table provides selected information from the cash flow statement. Three months ended September 30, Year ended September 30, 2024 2023 2024 2023 $ $ $ $ Net profit (568) 5,119 11,180 18,885 Items not affecting cash: 23,561 14,392 76,864 48,354 CASH FLOWS FROM OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL 22,993 19,511 88,044 67,239 Change in non-cash working capital 701 9,613 17,178 3,490 Interest and income tax paid (4,277) (6,420) (18,001) (13,954) CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES 19,417 22,704 87,221 56,775 Dividends (3,397) (3,335) (13,351) (13,163) Draw (repayment) on debt facility (4,250) 37,750 52,000 30,250 Other (3,519) (2,171) (8,151) (3,151) CASH FLOWS GENERATED FROM (USED IN) FINANCING ACTIVITIES (11,166) 32,244 30,498 13,936 Investments — — — (2,689) Business acquisitions — (59,834) (87,862) (68,494) Capital Expenditures (2,462) (2,368) (11,803) (8,440) CASH FLOWS USED IN INVESTING ACTIVITIES (2,462) (62,202) (99,665) (79,623) NET CASH OUTFLOW 5,789 (7,254) 18,054 (8,912) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 45,999 40,988 33,734 42,646 CASH AND CASH EQUIVALENTS, END OF PERIOD 51,788 33,734 51,788 33,734 Operating Activities For the three-month period ended September 30, 2024, cash flows generated from operating activities amounted to $19,417, compared to $22,704 for the same period last year. The cash flow from operating activities benefited from strong cash income along with a decrease to working capital from the prior quarter. Cash from operating activities was $87,221 in the twelve-month period ended September 30, 2024 when compared to $56,775 for the same period of the previous year. This increase is a result of higher cash based income, along with strong cash generation from working capital maintenance. The Company was able to convert $17,178 due to changes in working capital in the twelve month period ended September 30, 2024. 1 This is a non-GAAP measure mainly derived from the consolidated financial statements, but does not have a standardized meaning prescribed by IFRS. Please refer to the Reconciliation of Non-GAAP Measures to Most Comparable IFRS Measures section of the Management’s Discussion and Analysis. 54 CALIAN GROUP LTD. Financing Activities For the three-month period ended September 30, 2024, financing activities decreased cash by $11,166 mainly due repayments of our credit facility in the current quarter of $4,250, outflows for dividend payments of $3,397 and repurchases of common shares in the amount of $2,819. For the three-month period ended September 30, 2023, financing activities increased cash by $32,244, primarily as a result of draws on our line of credit amounting to $37,750, offset by dividends paid of $3,335 and shares repurchased amounting to $1,670. Note that Calian 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. Investing Activities For the three-month period ended September 30, 2024, investing activities decreased cash by $2,462 due to capital expenditures. For the three-month period ended September 30, 2023, investing activities decreased cash by $62,202 due to the acquisition of HPT in the amount of $59,834 and capital expenditures of $2,368. For the twelve-month period ended September 30, 2024, investing activities decreased cash by $99,665 with capital expenditures of $11,803 and business acquisitions for acquisitions made in the year and earn-out payments made amounting to $87,862. This compares to the outflow of $79,623 for the twelve-month period ended September 30, 2023 where capital expenditures were $8,440, business acquisition payments along with earn-out payments. For further information of acquisition and earn-out payments please see note 25 and 26 of the September 30, 2024 annual financial statements. 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. 55 ANNUAL REPORT 2024 Adjusted EBITDA Three months ended September 30, Year ended September 30, 2024 2023 2024 2023 $ $ $ $ Net profit (568) 5,119 11,180 18,885 Depreciation of equipment and application software 2,750 2,133 10,048 9,043 Depreciation of right of use asset 1,587 1,352 6,043 4,501 Amortization of acquired intangible assets 7,577 4,460 25,738 14,874 Restructuring expense 368 2,618 1,864 2,618 Other changes in fair value (202) (314) (202) (314) Interest expense 1,988 793 6,635 896 Changes in fair value related to contingent earn-out 2,495 416 8,767 3,858 Deemed Compensation 1,797 403 4,322 550 Income tax 4,885 3,401 11,140 11,076 Adjusted EBITDA 22,677 20,381 85,535 65,987 Adjusted Net Profit Three months ended September 30, Year ended September 30, 2024 2023 2024 2023 $ $ $ $ Net profit (568) 5,119 11,180 18,885 Restructuring expense 368 2,618 1,864 2,618 Other changes in fair value (202) (314) (202) (314) Changes in fair value related to contingent earn-out 2,495 416 8,767 3,858 Deemed Compensation 1,797 403 4,322 550 Amortization of intangibles 7,577 4,460 25,738 14,874 Adjusted net profit 11,467 12,702 51,669 40,471 Weighted average number of common shares basic 11,835,037 11,790,964 11,837,520 11,714,887 Adjusted EPS Basic 0.97 1.08 4.36 3.45 Adjusted EPS Diluted 0.96 1.07 4.33 3.45 56 CALIAN GROUP LTD. Operating Free Cash Flow Three months ended September 30, Year ended September 30, 2024 2023 2024 2023 $ $ $ $ Cash flows generated from operating activities 19,417 22,704 87,221 56,775 Property, plant and equipment (2,462) (2,368) (11,803) (8,440) Free cash flow 16,955 20,336 75,418 48,335 Free cash flow 16,955 20,336 75,418 48,335 Adjustments: Change in non-cash working capital (701) (9,613) (17,178) (3,490) Operating free cash flow 16,254 10,723 58,240 44,845 Operating free cash flow per share - basic 1.37 0.91 4.92 3.83 Operating free cash flow per share - diluted 1.35 0.91 4.86 3.81 Operating free cash flow conversion 72% 53% 68% 68% Net Debt to Adjusted EBITDA September 30, 2024 September 30, 2023 $ $ Cash 51,788 33,734 Debt facility 89,750 37,750 Net debt (net cash) 37,962 4,016 Trailing twelve month adjusted EBITDA 85,535 65,987 Net debt to adjusted EBITDA 0.4 0.1 Operating free cash flow measures the company’s cash profitability after required capital spending when excluding working capital changes. The Company’s ability to convert adjusted EBITDA1 to operating free cash flow is critical for the long term success of its strategic growth. 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 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. Non-GAAP measures should not be considered a substitute for or be considered in isolation from measures prepared in accordance with IFRS. 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 IFRS financial measures. The Company has reconciled adjusted profit to the most comparable IFRS financial measure as shown above. 57 ANNUAL REPORT 2024 Risk and Uncertainties 1. Economic uncertainty 2. Sustainability and management of recent growth 3. Acquisitions (none available, we don’t grow, we don’t iintegrate) 4. Access to Capital 5. Negative covenants in credit facilities 6. Availability of commodities and inflationary prices 7. Security breaches – cyber attacks 8. Competition within key markets 9. Availability of qualified professionals 10. Government contracts 11. Defense industry 12. Non-Performance of a key supplier or contractor 13. Senior management personnel and succession iiiplanning 14. Concentration of key revenues 15. Performance on Fixed-Priced Contracts 16. Rapidly changing technologies and customer demands 17. Outsourcing/subcontracting 18. Historical pricing trends 19. Customer’s ability to retain market share 20. Consolidation of customer base 21. Backlog 22. Accounts Receivable collection risk 23. Foreign currency 24. Foreign operations 25. Dependence on Subsidiaries’ Cash Flows 26. Reputational and brand risks 27. Errors and defects in technology 28. Tax consequences 29. Privacy concerns 30. Intellectual property infringement and protection 31. Manufacturing limitations 32. Use of open-source software 33. Use of licensed technology 34. Insurance sufficiency 35. Medical malpractice 36. Negotiation of facilities leases 37. Warranty and product liability claims 38. Litigation 39. Climate risks 40. Environmental and Health & Safety risks 41. Events out of the Company’s control (natural disasters, war, terrorism, illness, etc.,) 42. Fraud 43. Corruption 44. Conflicts of Interest 45. Product obsolesce 46. Changes in Laws, Rules and Regulations 47. SRED or other R&D tax credits 48. Transfer pricing 49. Investment in R&D 50. Compliance with ESG reporting requirements 51. Price fluctuations of common shares 52. Dilution of common shares 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. 58 CALIAN GROUP LTD. 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 judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent 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 The Company enters into 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. Specifically for the Advanced Technologies fixed-price contracts, there is significant judgement and estimation uncertainty in determining the estimated costs to complete, including materials, labour and subcontractor costs. Impairment of goodwill and intangible assets Determining whether goodwill or acquired intangible assets are impaired requires an estimation of the recoverable amount of the cash-generating units or groups of cash-generating units. This was done through a 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 or groups of cash-generating units, and a suitable discount rate in order to calculate the 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. Judgments 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 estimated fair values. The identification of assets purchased and liabilities assumed and the valuation thereof can require specialized skills and knowledge. 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 estimated fair value of the contingent consideration is recorded as a liability at the time of acquisition and is measured at the estimated fair value at each reporting period. The key assumptions utilized in determining estimated fair value of contingent consideration may include probabilities associated with the occurrence of specified future events, financial projections of the acquired business including forecasted revenue and EBITDA, the timing of future cash flows, cash flow volatility and the appropriate discount rate. Deferred income taxes The Company’s accounting policy with regards to income taxes is described in Note 2 of the September 30, 2024 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. 59 ANNUAL REPORT 2024 Disclosure Controls and Internal Controls over Financial Reporting Management 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, 2024 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. Management 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, 2024, 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, 2024, 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. On behalf of Management, (s) Patrick Houston Chief Financial Officer November 26, 2024 60 CALIAN GROUP LTD. Audited Annual Consolidated Financial Statements For the year ended September 30, 2024 61 ANNUAL REPORT 2024 KPMG LLP 150 Elgin Street, Suite 1800 Ottawa, ON K2P 2P8 Canada Telephone 613 212 5764 Fax 613 212 2896 KPMG LLP, an Ontario limited liability partnership and member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. KPMG Canada provides services to KPMG LLP. INDEPENDENT AUDITOR’S REPORT To the Shareholders of Calian Group Ltd. Opinion We have audited the consolidated financial statements of Calian Group Ltd. (the “Entity”), which comprise: the consolidated statements of financial position as at September 30, 2024 and September 30, 2023 the consolidated statements of net profit for the years then ended the consolidated statements of comprehensive income for the years then ended the consolidated statements of changes in equity for the years then ended the consolidated statements of cash flows for the years then ended and notes to the consolidated financial statements, including a summary of material accounting policy information (Hereinafter referred to as the “financial statements”). In our opinion, the accompanying financial statements present fairly, in all material respects, the consolidated financial position of the Entity as at September 30, 2024 and September 30, 2023, and its consolidated financial performance and its consolidated cash flows for the years then ended in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board. Basis for Opinion We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the “Auditor’s Responsibilities for the Audit of the Financial Statements” section of our auditor’s report. We are independent of the Entity 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. 62 CALIAN GROUP LTD. Page 2 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements for the year ended September 30, 2024. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our auditor’s report. Evaluation of the estimated costs to complete for the Advanced Technologies fixed price contracts Description of the matter We draw attention to Notes 2(a), 3, and 20 to the financial statements. The Entity enters into 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 based on management’s best estimate of the costs and related risks associated with completing the projects. Specifically for the Advanced Technologies fixed-price contracts, there is significant judgment in determining the estimated costs to complete, including materials, labour and subcontractor costs. The service revenue in Advanced Technologies is $62,169 thousand, the majority of which is composed of fixed price contracts. Why the matter is a key audit matter We identified the evaluation of the estimated costs to complete for the Advanced Technologies fixed price contracts as a key audit matter. This matter represents a significant risk of material misstatement due to the magnitude of the balance and the high degree of judgment in determining the estimated costs to complete. Significant auditor judgment was required in evaluating the results of our audit procedures over the estimated costs to complete. How the matter was addressed in the audit The primary procedures we performed to address this key audit matter included the following: We evaluated the design and tested the operating effectiveness of certain controls over the Entity’s revenue recognition process. This included a control related to the evaluation of estimated costs to complete fixed price contracts with customers. We evaluated the Entity’s ability to estimate costs to complete fixed price contracts by comparing actual costs incurred for a selection of fixed price contracts completed in the current year against the total contract costs estimated in the prior year. 63 ANNUAL REPORT 2024 Page 3 For a selection of fixed price contracts: We evaluated the estimated costs to complete by inspecting the executed contracts, including any significant amendments, inquiring with the project manager, and obtaining supporting documentation, such as project planning documents. We evaluated the materials, labour, and subcontractor costs included in the estimated costs to complete through inquiring with the project manager and inspecting corroborative evidence, such as correspondence between the Entity and the customer, suppliers, and subcontractors. Evaluation of the acquisition-date fair value of customer relationships and contingent consideration related to the Decisive Group Inc. business acquisition Description of the matter We draw attention to Notes 2, 3, 13, and 25 to the financial statements. On December 1, 2023, the Entity acquired all outstanding shares of Decisive Group Inc. (“Decisive”), for a total purchase price of $68,767 thousand including contingent consideration of $17,880. The acquisition-date fair value of the customer relationships is $49,400 thousand. The Entity estimates the fair value of the customer relationships using the multi-period excess earnings method. The Entity estimates the fair value of the contingent consideration using a scenario-based model. The valuations of the customer relationships and contingent consideration involve significant estimation uncertainty, including assumptions relating to forecasted revenues and forecasted earnings before interest, tax, depreciation and amortization (“EBITDA”) margins. The valuation of the customer relationships also included significant assumptions related to the customer attrition rate and discount rate. Why the matter is a key audit matter We identified the evaluation of the acquisition-date fair value of the customer relationships and contingent consideration related to the Decisive business acquisition as a key audit matter. This matter represented an area of significant risk of material misstatement given the magnitude of the fair value and high degree of estimation uncertainty in determining the fair value of the customer relationships and contingent consideration. In addition, significant auditor judgment and specialized skills and knowledge were required in evaluating the results of our audit procedures due to the sensitivity of the fair value of the customer relationships and contingent consideration to change in the assumptions noted above. How the matter was addressed in the audit The primary procedures we performed to address this key audit matter included the following: We evaluated the Entity’s forecasted revenues and EBITDA margins by considering historical results, industry data, and publicly available customer market data. We took into account changes in conditions and events affecting the customer relationships and contingent consideration arrangement to assess the adjustment, or lack of adjustments, made by the Entity to historical results in arriving at the forecasted amounts. 64 CALIAN GROUP LTD. Page 4 We involved valuation professionals with specialized skills and knowledge, who assisted in: Evaluating the customer attrition rate by considering historical results and by comparing against publicly available market data from comparable companies. Evaluating the Entity’s discount rate by comparing against discount rate ranges that were independently developed using industry data and publicly available market data from comparable companies. Evaluation of the acquisition-date fair value of customer relationships related to the Mabway Limited acquisition Description of the matter We draw attention to Notes 2, 3, 13, and 25 to the financial statements. On May 9, 2024, the Entity acquired all outstanding shares of Mabway Limited (“Mabway”), for a total purchase price of $44,182 thousand. The acquisition-date fair value of the customer relationships is $21,925 thousand. The Entity estimates the fair value of the customer relationships using the multi-period excess earnings method. The valuation involves significant estimation uncertainty, including assumptions relating to forecasted revenues attributable to the customer relationships, and discount rate. Why the matter is a key audit matter We identified the evaluation of the acquisition-date fair value of customer relationships related to the Mabway business acquisition as a key audit matter. This matter represented an area of significant risk of material misstatement given the magnitude of the fair value and high degree of estimation uncertainty in determining the fair value of the customer relationships. In addition, significant auditor judgment and specialized skills and knowledge were required in evaluating the results of our audit procedures due to the sensitivity of the fair value of the customer relationships to change in the assumptions noted above. How the matter was addressed in the audit The primary procedures we performed to address this key audit matter included the following: We evaluated the Entity’s forecasted revenues by considering historical results. We took into account changes in conditions and events affecting the customer relationships to assess the adjustment, or lack of adjustments, made by the Entity to historical results in arriving at the forecasted amounts. We examined a selection of contracts with customers and inspected for renewal clauses to assess the Entity’s forecasted revenues. We involved valuation professionals with specialized skills and knowledge, who assisted in: Evaluating the Entity’s discount rate by comparing against discount rate ranges that were independently developed using industry data and publicly available market data from comparable companies. 65 ANNUAL REPORT 2024 Page 5 Evaluation of goodwill impairment analysis for the IT and Cyber Security (“ITCS”) group of cash generating units (“CGUs”) Description of the matter We draw attention to notes 2 and 3 to the financial statements. The Entity has recorded goodwill of $210,392 thousand and acquired intangible assets of $128,253 thousand. For impairment testing purposes, CGUs are grouped according to the Company's reporting segments, and $181,727 thousand of the combined goodwill and acquired intangible assets balance relates to the ITCS reporting segment. CGUs or groups of CGUs to which goodwill has been allocated are tested for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount of a CGU may not be recoverable. Determining whether goodwill or acquired intangible assets are impaired requires an estimation of the recoverable amount of the group of CGUs, which was assessed through a value in use calculation. Key assumptions used in determining the value in use include projected after-tax cash earnings, terminal growth rate, and the discount rate. Why the matter is a key audit matter We identified the evaluation of goodwill impairment analysis for the ITCS group of CGUs as a key audit matter. This matter represented an area of significant risk of material misstatement due to the magnitude of the balance and the high degree of estimation uncertainty in determining the recoverable amount. Further, professionals with specialized skills and knowledge were required in performing and evaluating the results of our procedures due to the sensitivity of the recoverable amount to changes in key assumptions. How the matter was addressed in the audit The primary procedures we performed to address this key audit matter included the following: We assessed the Entity’s ability to accurately estimate projected after-tax cash earnings by comparing the Entity’s historical estimated projected after-tax cash earnings to actual results. We considered changes in conditions and events affecting the ITCS group of CGUs and assessed how they have been factored into the Entity’s estimated projected after-tax cash earning. We involved valuation professionals with specialized skills and knowledge, who assisted in: • Evaluating the appropriateness of the discount rate assumption by comparing the Entity’s WACC to a WACC that was independently developed using publicly available information for comparable entities and considering risks specific to the ITCS segment. • Evaluating the appropriateness of the terminal growth rate assumption by comparing it against an independently developed terminal growth rate developed using long-term estimates of inflation. We assessed the Entity’s determination that the recoverable amount of the ITCS group of CGUs exceeded its carrying value by independently estimating the recoverable amount, using the Entity’s projected after-tax cash earnings along with a discount rate and terminal growth rate developed by valuation professionals. 66 CALIAN GROUP LTD. Page 6 Other Information Management is responsible for the other information. Other information comprises: the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions the information, other than the financial statements and the auditor’s report thereon, included in a document likely to be entitled “Annual Report 2024.” 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 and remain alert for indications that the other information appears to be materially misstated. We obtained the information included in Management’s Discussion and Analysis filed with the relevant Canadian Securities Commissions as at the date of the 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 the auditor’s report. We have nothing to report in this regard. The information, other than the financial statements and the auditor’s report thereon, included in a document likely to be entitled “Annual Report 2024” is expected to be made available to us after the date of this 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 Accounting Standards as issued by the International Accounting Standards Board, 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 Entity’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 Entity or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Entity’s financial reporting process. 67 ANNUAL REPORT 2024 Page 7 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 generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the 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 Entity'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 Entity'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 Entity 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. 68 CALIAN GROUP LTD. Page 8 • 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. • Provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group Entity 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. • Determine, from the matters communicated with those charged with governance, those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Chartered Professional Accountants, Licensed Public Accountants The engagement partner on the audit resulting in this auditor’s report is Mahesh Mani. Ottawa, Canada November 26, 2024 69 ANNUAL REPORT 2024 NOTES September 30, 2024 September 30, 2023 $ $ $ ASSETS CURRENT ASSETS Cash and cash equivalents 5 51,788 33,734 Accounts receivable 6 157,376 173,052 Work in process 9 20,437 16,580 Inventory 7 23,199 21,983 Prepaid expenses 8 23,978 19,040 Derivative assets 24 32 155 Total current assets 276,810 264,544 NON-CURRENT ASSETS Property, plant and equipment 10 40,962 37,223 Right of use assets 11 36,383 34,637 Prepaid expenses 8 7,820 10,386 Deferred tax asset 3,425 967 Investments 12 3,875 3,673 Acquired intangible assets 13 128,253 75,160 Goodwill 14 210,392 159,133 Total non-current assets 431,110 321,179 TOTAL ASSETS 707,920 585,723 LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Debt facility 17 — 37,750 Accounts payable and accrued liabilities 15 124,884 105,550 Provisions 16 3,075 2,848 Unearned contract revenue 9 41,723 32,423 Lease obligations 11 5,645 4,949 Contingent earn-out 26 39,136 11,263 Derivative liabilities 24 92 353 Total current liabilities 214,555 195,136 NON-CURRENT LIABILITIES Debt facility 17 89,750 — Lease obligations 11 33,798 32,057 Unearned contract revenue 9 14,503 15,592 Contingent earn-out 26 2,697 2,535 Deferred tax liabilities 22 25,862 12,031 Total non-current liabilities 166,610 62,215 TOTAL LIABILITIES 381,165 257,351 SHAREHOLDERS’ EQUITY Issued capital 18 225,747 225,540 Contributed surplus 6,019 4,856 Retained earnings 91,268 96,859 Accumulated other comprehensive income (loss) 3,721 1,117 TOTAL SHAREHOLDERS’ EQUITY 326,755 328,372 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 707,920 585,723 Number of common shares issued and outstanding 11,802,364 11,812,650 George Weber, Chairman The accompanying notes are an integral part of the audited annual consolidated financial statements. Calian Group Ltd. Consolidated statements of financial position As at September 30, 2024 and 2023, (Canadian dollars in thousands, except per share data) 70 CALIAN GROUP LTD. Calian Group Ltd. Consolidated statements of net profit For the years ended September 30, 2024 and 2023, (Canadian dollars in thousands, except per share data) Year ended September 30, NOTES 2024 2023 $ $ Revenue 20 746,611 658,583 Cost of revenues 492,597 454,371 Gross profit 254,014 204,212 Selling and marketing 55,115 45,410 General and administration 101,397 81,363 Research and development 11,967 11,452 Profit before under noted items 85,535 65,987 Depreciation of property, plant and equipment 10 10,048 9,043 Depreciation of right of use assets 11 6,043 4,501 Amortization of acquired intangible assets 13 25,738 14,874 Restructuring expense 1,864 2,618 Other changes in fair value 12 (202) (314) Deemed compensation 25, 26 4,322 550 Changes in fair value related to contingent earn-out 25, 26 8,767 3,858 Profit before interest income and income tax expense 28,955 30,857 Interest expense 11 6,635 896 Income tax expense - current 22 15,442 12,919 Income tax recovery - deferred 22 (4,302) (1,843) NET PROFIT 11,180 18,885 Net profit per share: Basic 21 0.95 1.61 Diluted 21 0.93 1.61 The accompanying notes are an integral part of the audited annual consolidated financial statements. 71 ANNUAL REPORT 2024 Calian Group Ltd. Consolidated statements of comprehensive income For the years ended September 30, 2024 and 2023, (Canadian dollars in thousands) Year ended September 30, 2024 2023 $ $ NET PROFIT 11,180 18,885 Cumulative translation adjustment 2,213 2,528 Change in deferred gain on derivatives designated as cash flow hedges, net of tax of $141 (2023 - $912) 391 2,357 Other comprehensive income, net of tax 2,604 4,885 COMPREHENSIVE INCOME 13,784 23,770 The accompanying notes are an integral part of the audited annual consolidated financial statements. 72 CALIAN GROUP LTD. Calian Group Ltd. Consolidated statements of changes in equity For the years ended September 30, 2024and 2023, (Canadian dollars in thousands, except per share data) Issued capital Contributed surplus Retained earnings Other Comprehensive Income Notes Total $ $ $ $ $ Balance October 1, 2023 225,540 4,856 96,859 1,117 328,372 Net profit and comprehensive income — — 11,180 2,604 13,784 Dividend paid ($1.12 per share) — — (13,351) — (13,351) Share repurchase (2,249) — (3,420) — (5,669) Shares issued under employee share plans 18 2,684 (3,018) — — (334) Shares issued through acquisition 77 — — — 77 Shares issued under employee share purchase plan 18 2,770 — — — 2,770 Share-based compensation expense 19 — 4,181 — — 4,181 Obligation related to share repurchase 18 (3,075) — — — (3,075) Balance September 30, 2024 225,747 6,019 91,268 3,721 326,755 Issued capital Contributed surplus Retained earnings Other Comprehensive Income Notes Total $ $ $ $ $ Balance October 1, 2022 213,277 3,479 92,198 (3,768) 305,186 Net Comprehensive income — — 18,885 4,885 23,770 Dividend paid ($1.12 per share) — — (13,163) — (13,163) Share repurchase (609) — (1,061) — (1,670) Shares issued under employee share plans 18 2,472 (1,524) — — 948 Share issued through acquisition 3,964 — — — 3,964 Contingent earn out 26 3,511 — — — 3,511 Shares issued under employee share purchase plan 18 2,925 — — — 2,925 Share based compensation expense 19 — 2,901 — — 2,901 Balance September 30, 2023 225,540 4,856 96,859 1,117 328,372 The accompanying notes are an integral part of the audited annual consolidated financial statements. 73 ANNUAL REPORT 2024 Calian Group Ltd. Consolidated statements of cash flows For the years ended September 30, 2024 and 2023, (Canadian dollars in thousands) Year ended September 30, NOTES 2024 2023 $ $ CASH FLOWS GENERATED FROM (USED IN) OPERATING ACTIVITIES Net profit 11,180 18,885 Items not affecting cash: Interest expense 4,826 365 Changes in fair value related to contingent earn-out 26 8,767 3,858 Lease obligations interest expense 11 1,809 531 Income tax expense 11,140 11,076 Employee share purchase plan expense 19 549 597 Share based compensation expense 19 3,824 3,273 Depreciation and amortization 10,11,13 41,829 28,418 Deemed compensation 25,26 4,322 550 Other changes in fair value (202) (314) 88,044 67,239 Change in non-cash working capital Accounts receivable 17,625 1,393 Work in process (2,509) 23,285 Prepaid expenses and other 337 (829) Inventory 2,795 (3,340) Accounts payable and accrued liabilities (1,064) (17,947) Unearned contract revenue (6) 928 105,222 70,729 Interest paid (6,635) (895) Income tax paid 22 (11,366) (13,059) 87,221 56,775 CASH FLOWS GENERATED FROM (USED IN) FINANCING ACTIVITIES Issuance of common shares net of costs 18,19 2,786 2,901 Repurchase of common shares (5,648) (1,670) Dividends (13,351) (13,163) Net draw (repayment) on debt facility 17 52,000 30,250 Payment of lease obligations 11 (5,289) (4,382) 30,498 13,936 CASH FLOWS USED IN INVESTING ACTIVITIES Investments 12 — (2,689) Business acquisitions 25 (87,862) (68,494) Property, plant and equipment 10 (11,803) (8,440) (99,665) (79,623) NET CASH INFLOW (OUTFLOW) 18,054 (8,912) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 33,734 42,646 CASH AND CASH EQUIVALENTS, END OF PERIOD 51,788 33,734 The accompanying notes are an integral part of the audited annual consolidated financial statements. 74 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 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 IT and Cyber Solutions (“ITCS”). Headquartered in Ottawa, Calian provides business services and solutions to both industry and government customers in the areas of health, learning, defence, security, aerospace, engineering, AgTech, satellite communications (satcom), 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 Standards Board (“IASB”) and in place for September 30, 2024. 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 26, 2024. 2. Material Accounting Policies On October 1, 2023, the Company adopted amendments within IAS 1 Presentation of Financial Statements related to the Disclosure of Accounting Policies. The changes required an entity to disclose material rather than significant accounting policies. Accordingly, management reviewed its accounting policies and updated the accounting policy information within this note to align with these amendments. 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, Calian Agriculture Ltd., located in Regina, Saskatchewan, SatService Gesellschaft für Kommunikationssysteme mbH (“SatService”), located in Steisslingen, Germany, Calian Contract Research Organization Ltd., located in Ottawa, Ontario, Calian Patient Support Programs Ltd., located in Ottawa, Ontario, Calian Europe AS, located in Stavanger, Norway, Calian GNSS Inc., located in Ottawa, Ontario, Calian UK Ltd., located in London, England, Calian Antenna Solutions Inc., located in Vaudreuil-Dorion, Quebec, Calian Digital Solutions Ltd., located in Toronto, Ontario, SimFront Simulation Systems Corporation (“Simfront”), located in Ottawa, Ontario, Calian Corp., located in Houston, Texas, Calian Pacific Teleport Ltd. (formerly Hawaii Pacific Teleport or “HPT”), located in Kapolei, Hawaii, Decisive Technologies Inc. (“Decisive”), located in Ottawa, Ontario, and Mabway Limited (“Mabway”), located in Fareham, England. 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. 75 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) 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, rapid response healthcare support, clinical research and psychological assessments • Learning services including Custom Training for the military, emergency preparedness and simulation training • IT services including IT support, systems implementation services, cyber security consulting and cyber security monitoring Product revenue • Sale of internally developed hardware and software products used in many applications across multiple industries • Licensing of internally developed Healthcare software products • Resale of IT product which can include hardware and software • Manufacturing and installation of large satellite antennae ground systems • Licensing of cyber product solutions (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 fixed price contracts, the customer controls the work in process as evidenced by the 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 the majority of fixed price revenue for the Company, 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. For a select few projects, the Company will recognize revenue by measuring progress toward complete satisfaction of that performance obligation using the output method. 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. For certain contracts, the Company does not have control of the product prior to delivery to the customer. In this case, revenue is measured net of cost of sales. 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. 76 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) 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. For other customer arrangements across the portfolio contracts, 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 renewal period does not provide customers with any advantage when they enter into the initial contract and therefore 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, IFRS15, Revenue from Contracts with Customers indicates IAS37, Provisions, Contingent Liabilities and Contingent Assets, is applied as the contract is considered onerous. IAS37 however contains no further requirements as to the measurement of onerous contracts. 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. 77 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) (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. 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. The Company has compensation units that are to be settled in cash but are tied to the value of the share price of the Company. At each reporting period end the Company values the fair market value of the units outstanding through use of the Black-Scholes method. 78 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) 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 liability 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 commencement date, discounted using the Company’s incremental borrowing rate. Variable lease payments that do not depend 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 expedient 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. 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. 79 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) 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. Inventory Inventories are recorded at the lower of cost or net realizable value. Global Navigation Satellite System (GNSS) inventory is calculated using the FIFO method. All remaining inventory is calculated using 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. Capitalized Research and Development (“R&D”) Research costs are expensed as incurred. Internally developed internal-use asset costs 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: • 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. 80 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) Capitalized R&D is measured at cost and depreciated over the useful life of the assets which is determined to be five years. Costs include expenditures that are directly attributable to its construction. Equipment Equipment, comprising furniture, computer equipment, along with leasehold improvements, and buildings, are 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: 3 to 13 years • Building: 20 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 ten 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 relationships: 3 to 14 years • Contracts with customers: 3 to 5 years • Non-competition agreements: 2 to 5 years • Technology and Trademarks: 2 to 9 years Impairment of equipment, application software and intangible assets At each reporting period, management reviews the carrying amounts of its equipment, application software and acquired intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. 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 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. 81 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) 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. Impairment of goodwill Goodwill arising on the acquisition of a business represents the excess of the purchase price over the fair value of the identifiable assets, liabilities and contingent liabilities of the acquired businesses at the acquisition date. Initially, goodwill is recognized as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. For the purposes of impairment testing, goodwill is allocated to the cash-generating unit (“CGUs”) or groups of CGUs that are expected to benefit from the synergies of the acquisition. CGUs or groups of CGUs to which goodwill has been allocated are tested for impairment annually, or when events or changes in circumstances indicate that the carrying amount of a CGU may not be recoverable. If the recoverable amount of a CGU or group of CGUs to which goodwill has been allocated is less than its carrying amount, the impairment loss is first applied to reduce the carrying value of goodwill allocated to the unit. Any remaining impairment loss is then allocated pro-rata to the other assets of the CGU. Notable, impairment losses recognized for goodwill cannot be reversed in future periods. The Company performs its annual goodwill impairment review on September 30th each year. For impairment testing purposes, CGUs are grouped according to the Company’s reporting segments, as disclosed in Note 23. The goodwill and intangibles allocated to each segment as of September 30, 2024 are as follows: Advanced Technologies Health Learning ITCS $ $ $ $ Acquired intangible assets 36,081 1,846 22,820 67,505 Goodwill 51,436 12,852 31,882 114,222 Total 87,517 14,698 54,702 181,727 For the years ended September 30, 2024 and 2023, the Company developed key assumptions to estimate the recoverable values of assets for each segment. These assumptions included discount rates, projected after-tax cash earnings, terminal growth rate and projected capital expenditures. Based on these assumptions, the Company determined the estimated carrying values as of September 30, 2024. This process involved forecasting performance of each segment for fiscal 2025, a review that is conducted annually at various management levels and is approved by the Board of Directors. Growth rates for cash flows were set at 10% for the subsequent four years, with a terminal growth of 3% for each segment, reflecting management’s best estimate and industry norms for long-term growth based on past experience. 82 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) As of September 30, 2024 and 2023, management assessed the recoverable amount of goodwill and concluded that no goodwill impairment charge was necessary. Management believes that reasonable changes in significant assumptions used in the impairment model would not cause the carrying values to exceed recoverable amounts for Advanced Technologies, Health and Learning segments. The Company concluded that the lowest excess value was in the ITCS segment, therefore the Company performed incremental sensitivity analysis. Using growth rates of 10% beyond the 2025 forecasted performance, a terminal growth rate of 3% and a discount rate of 10.9%, the excess value was determined to be 67%. These sensitivities included a scenario with a 5% growth rate beyond the 2025 forecasted performance, while maintaining the discount rate and terminal growth rates, and a more conservative scenario assuming 0% growth from 2024 performance and 0% terminal growth, with the same discount rate. In the 5% scenario, the excess value over the carrying value of ITCS assets was 50%. In the 0% growth scenario, an impairment would result. If significant changes in the outlook for any segment or adjustments to the capital structure lead to an increased discount rate above 14%, the resulting lower recoverable value could result in an impairment. Business acquisition Business acquisitions are accounted for using the acquisition method. The consideration transferred in a business combination is measured at estimated 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 estimated 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 estimated fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date fair values of the identifiable assets acquired and the liabilities assumed. If 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 estimated 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 or employees, the amount is deemed to represent deferred compensation payable to such individuals 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 estimated fair value and included as part of the consideration transferred in a business combination. Changes in the estimated 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. Changes in the estimated fair value of the contingent consideration outside of the measurement period are adjusted prospectively against changes in fair value in the statement of net profit. 83 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) 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 Calian Corp. and Calian Pacific Teleport which are in USD, SatService which is in Euro, Calian Europe which is in Norwegian Krone, along with Calian UK and Mabway which are in Pound Sterling. Financial instruments 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 Amortized cost Accounts receivable Amortized cost Investments Fair value through profit and loss Derivative assets 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. 84 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) Financial liabilities The Company determines the classification of its financial liabilities at initial recognition. The Company’s financial liabilities are as follows: Debt facility Amortized cost Accounts payable and accrued liabilities Amortized cost Contingent earn-out Fair value through profit and loss Provisions Amortized cost Derivative liabilities 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. 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. 85 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 2. Material Accounting Policies (continued) 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 24 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. 86 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 3. 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 judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and disclosure of contingent 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 The Company enters into 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. Specifically for the Advanced Technologies fixed-price contracts, there is significant judgement and estimation uncertainty in determining the estimated costs to complete, including materials, labour and subcontractor costs. Impairment of goodwill and intangible assets Determining whether goodwill or acquired intangible assets are impaired requires an estimation of the recoverable amount of the cash-generating units of groups of cash-generating units. This was assessed through a 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 or groups of cash-generating units, and a suitable discount rate in order to calculate the 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. Judgments: 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 estimated fair values. The identification of assets purchased and liabilities assumed and the valuation thereof can require specialized skills and knowledge. 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 estimated fair value of the contingent consideration is recorded as a liability at the time of acquisition and is measured at the estimated fair value at each reporting period. The key assumptions utilized in determining estimated fair value of contingent consideration may include probabilities associated with the occurrence of specified future events, financial projections of the acquired business including forecasted revenue and EBITDA, the timing of future cash flows, cash flow volatility and the appropriate discount rate. 87 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 3. Critical Accounting Judgments and Key Sources of Estimation Uncertainty (continued) As as September 30, 2024, the Company had significant estimates relating to the earn-out liability for the acquisition of Decisive ($18,672), Hawaii Pacific Teleport ($15,972) and Mabway ($6,348). See note 25 and 26 for further information. 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. 4. 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 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. 5. Cash and Cash Equivalents The following table presents cash and cash equivalents by currency: Local Currency Foreign Exchange Presentation Currency $ $ CAD 1,193 1 .00 1,193 USD 25,691 1.39 35,652 GBP 4,660 1.81 8,432 EUR 2,233 1.52 3,391 NOK 24,000 0.13 3,120 Total cash and cash equivalents September 30,2024 51,788 CAD 11,598 1.00 11,598 USD 13,013 1.35 17,567 GBP 167 1.65 275 EUR 2,331 1.43 3,333 NOK 7,392 0.13 961 Total cash and cash equivalents September 30, 2023 33,734 88 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 6. Accounts Receivable The following table presents the trade and other receivables as at: September 30, 2024 September 30, 2023 $ $ Trade and accounts receivable 151,023 164,803 Tax and Scientific Research and Development receivable 6,064 4,394 Other 1,353 4,151 158,440 173,348 Loss Allowance (1,064) (296) 157,376 173,052 Bad debt expense recognized in the year ended September 30, 2024 (2023) is $890 ($615). 7. Inventory Inventories are recorded at the lower of cost or net realizable value. Cost is calculated based on the weighted average cost and FIFO methods. 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: September 30, 2024 September 30, 2023 $ $ Raw materials 16,111 15,519 Work in process inventory 3,253 3,472 Finished goods 3,835 2,992 23,199 21,983 Inventory recognized as cost of revenues in the year ended is $35,941 ($19,838). Inventory provisions recognized in the year ended September 30, 2023 (2022) is $517 ($Nil). 89 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 8. Prepaid Expenses The following table presents prepaid expenses as at: September 30, 2024 September 30, 2023 $ $ Prepaid maintenance 18,690 20,250 Other prepaid expenses 13,108 9,176 31,798 29,426 Current 23,978 19,040 Non-current 7,820 10,386 31,798 29,426 9. Contract Assets and Liabilities The following table presents net contract liabilities as at: Net Contract Assets September 30, 2024 September 30, 2023 $ $ Work in process 20,437 16,580 Unearned contract revenue (current) (41,723) (32,423) Unearned contract revenue (non-current) (14,503) (15,592) Net contract liabilities (35,789) (31,435) The following table presents changes in net contract liabilities for the period ended: Changes in Net Contract Assets September 30, 2024 September 30, 2023 $ $ Opening balance, October 1 (31,435) (6,345) Revenue recognized for net contract liabilities 126,970 93,592 Billings (125,088) (117,805) Acquisitions (Note 25) (6,236) (877) Ending balance (35,789) (31,435) 90 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 10. Property, Plant and Equipment A continuity of the leasehold improvements, land and building, equipment, application software and capitalized research and development for the year ended September 30, 2024 is as follows: Cost Depreciation Carrying Value Cost Additions/ Disposals Acquisitions (Note 25) Total Depreciation Accumulated Depreciation September 30, 2023 September 30, 2022 $ $ $ $ $ $ $ $ Leasehold improvements 5,196 (121) — 5,075 (630) (3,044) 2,031 2,765 Land and Building 1,321 955 — 2,276 (30) (28) 2,248 1,309 Equipment 51,909 9,014 1,758 62,681 (7,346) (36,525) 26,156 22,635 Application software 15,265 573 — 15,838 (1,244) (7,063) 8,775 9,446 Capitalized research and development 5,139 — — 5,139 (749) (4,820) 319 1,068 Intellectual property rights — 1,482 — 1,482 (49) (49) 1,433 — Total 78,830 11,903 1,758 92,491 (10,048) (51,529) 40,962 37,223 Additions in the table above are net of disposals in the amount of $108 ($127) for the year ended September 30, 2024 (2023). The Company recognized foreign exchange of $179 in the cost and $(226) in the depreciation of equipment in the year ended September 30, 2024. 11. Right of Use Assets and Lease Obligations The following table presents the right of use assets for the Company: Years ended September 30, 2024 September 30, 2023 $ $ Balance at October 1 34,637 16,678 Additions 6,190 2,302 Disposals and foreign exchange adjustments (694) 30 Depreciation (6,043) (4,501) Acquisitions (Note 25) 2,294 20,128 36,383 34,637 The Company’s leases are for land, 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. 91 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 11. Right of Use Assets and Lease Obligations (continued) The following table presents lease obligations for the Company: Years ended September 30, 2024 September 30, 2023 $ $ Balance at October 1 37,006 19,035 Additions 6,116 2,403 Disposals and foreign exchange adjustments (621) (71) Principal payments (5,289) (4,382) Acquisitions (Note 25) 2,231 20,021 39,443 37,006 Current 5,645 4,949 Non-current 33,798 32,057 Total 39,443 37,006 The following table presents the contractual undiscounted cash flows for lease obligations as at September 30, 2024: Total Undiscounted Lease Obligations $ Less than one year 7,334 One to five years 19,313 More than five years 24,834 Total undiscounted lease obligations 51,481 Total cash outflow for leases in the year ended September 30, 2024 (2023) is $7,098 ($4,913) , including principal payments relating to lease obligations of $5,289 ($4,382), interest expense on lease obligations is $1,809 ($531). Expenses relating to short-term leases recognized in general and administration expenses was $152 ($137) for the year ended September 30, 2024 (2023). 12. Investments Cliniconex Inc., is an Ottawa-based patient outreach solutions vendor. During the years of 2017 to 2020, the Company invested a total $569 in common and preferred shares of the Company, representing a minority interest. 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 fiscal 2020. During the period ended September 30, 2023, the Company invested $2,000 USD ($2,689) to acquire a minority interest in preferred shares of Field Effect Software Inc. (“Field Effect”). Field Effect is Ottawa based and provides cyber security solutions. The Company recognizes this investment at fair value and has recognized a gain of $202 ($314) in the period ended September 30, 2024 (2023). 92 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 13. Acquired Intangible Assets A continuity of the acquired intangible assets for the year ended September 30, 2024 is as follows: September 30, 2024 Opening Balance Additions (Note 25) Amortization Foreign Exchange Revaluation Closing Balance $ $ $ $ $ Customer relationships 60,624 77,030 (20,117) 945 118,482 Discrete contracts with customers & non-competition agreements 4,016 — (2,154) — 1,862 Technology and trademarks 10,520 856 (3,467) — 7,909 75,160 77,886 (25,738) 945 128,253 In the year ended September 30, 2024 the Company recorded a foreign currency revaluation of intangible assets held in foreign subsidiaries which utilize different functional currencies than the Company’s presentation currency. These foreign exchange revaluations are reflected in comprehensive income. A continuity of the acquired intangible assets for the year ended September 30, 2023 is as follows: September 30, 2023 Opening Balance Additions Note (25) Amortization Foreign Exchange Revaluation Closing Balance $ $ $ $ $ Customer relationships 41,598 28,553 (9,850) 323 60,624 Discrete contracts with customers & non-competition agreements 586 4,071 (641) — 4,016 Technology and trademarks 14,903 — (4,383) — 10,520 57,087 32,624 (14,874) 323 75,160 93 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 14. Goodwill The following table presents the goodwill for the Company for the year ended September 30, 2024: September 30, 2024 $ Opening balance, October 1 159,133 Additions: Acquisition of Decisive (Note 25) 29,959 Acquisition of MDA Nuclear Division (Note 25) 1,039 Acquisition of Mabway (Note 25) 16,159 Adjustments: Acquisition of Hawaii Pacific Teleport (Note 25) 2,767 Foreign Exchange 1,335 210,392 In the year ended September 30, 2024 the Company recorded a foreign currency revaluation of goodwill held in foreign subsidiaries which utilize different functional currencies than the Company’s presentation currency. These foreign exchange revaluations are reflected in comprehensive income. The following table presents the goodwill for the Company for the year ended September 30, 2023: September 30, 2023 $ Opening balance, October 1 145,959 Additions: Acquisition of HPT (Note 25) 12,916 Adjustments: Foreign Exchange 258 159,133 94 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 15. Accounts Payable and Accrued Liabilities The following table presents the accounts payable and accrued liabilities for the Company as at: September 30, 2024 September 30, 2023 $ $ Trade accounts payable 89,928 76,168 Payroll accruals 24,575 22,252 Income tax payable 4,982 2,150 Other accruals 5,399 4,980 124,884 105,550 16. Provisions Changes in provisions for the year ended September 30, 2024 were as follows: Product Warranties Severance Other Total $ $ $ $ Balance as October 1, 2023 1,335 1,395 118 2,848 Additions 1,449 2,360 — 3,809 Utilization/Reversals (1,414) (2,124) (44) (3,582) Balance at September 30, 2024 1,370 1,631 74 3,075 Changes in provisions for the year ended September 30, 2023 were as follows: Product Warranties Severance Other Total $ $ $ $ Balance as October 1, 2022 897 248 104 1,249 Additions 1,184 2,658 24 3,866 Utilization/Reversals (746) (1,511) (10) (2,267) Balance at September 30, 2023 1,335 1,395 118 2,848 95 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 17. Debt Agreement On July 21, 2023, the Company signed an amended debt facility that provides the Company with the ability to draw up to $180,000 CAD and an accordion feature of up to $75,000 CAD. The agreement has a three-year term, which will mature on July 21, 2026. At September 30, 2024 (September 30, 2023), the Company utilized $89,750 ($37,750) 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. As at September 30, 2024 the Company is in compliance with all applicable covenants under the debt facility. 18. 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, 2024. Common shares issued and outstanding: September 30, 2024 September 30, 2023 Shares Amount Shares Amount $ $ Balance October 1 11,812,650 225,540 11,607,391 213,277 Shares issued under employee share plans 53,264 2,684 60,311 2,471 Shares issued under employee share purchase plan 50,566 2,770 48,620 2,925 Shares issued through acquisition 1,132 77 69,094 3,964 Shared issued through earn out — — 59,328 3,511 Shares repurchased (115,248) (2,249) (32,094) (608) Obligation related to share repurchase — (3,075) — — Issued capital 11,802,364 225,747 11,812,650 225,540 On September 1, 2023, the Company entered into a normal course issuer bid (“NCIB”). The NCIB was renewed on September 1, 2024 where the Company was approved to purchase up to 995,904 shares during the 12-month period commencing September 1, 2024 and ending August 31, 2025. During the year ended September 30, 2024 (2023), the Company repurchased and cancelled 115,248 (32,094) common shares for total cash consideration of $5,648 ($1,667) at an average purchase price per share of $49.01 ($51.96). The Company has entered into an automatic share purchase plan (“ASPP”) to provide the option to instruct its broker to make purchases under the NCIB during any applicable blackout periods. As at September 30, 2024 (2023), an obligation for the repurchase of shares of $3,075 (NIL) was recognized as an accrued liability, as instructions were provided to the Company’s broker to continue making purchases during the current blackout period in accordance with the ASPP. 96 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 18. Issued Capital and Reserves (continued) Subsequent to the date of the statement of financial position, on November 25, 2024, the date of issuance of these audited annual consolidated financial statements, the Company declared a dividend of $0.28 per common share payable on December 23, 2024. 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. 19. Share-Based Compensation Employee Share Purchase Plan Under the Company’s 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, 2024 (2023), the Company can issue 315,486 (366,052) shares. During the year ended September 30, 2024 (2023) under the 2020 Employee Share Purchase Plan, the Company issued 50,566 (48,620) shares at an average price of $54.79 ($60.15). The Company received $2,192 ($2,307) in proceeds and recorded an expense of $548 ($597). 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 7% (826,165) 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, 2024 (2023), the Company has 410,371 (403,829) stock options and restricted share units (“RSUs”) outstanding. As a result, the Company could grant up to 415,794 (659,310) additional stock options or RSUs pursuant to the plan. The weighted average fair value of options granted during the twelve months ended September 30, 2024 (2023) was $11.05 ($14.26) 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 issuances and adjusted based on management’s best estimate for the effects of non- transferability, exercise 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. 97 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 19. Share-Based Compensation (continued) The following assumptions were used to determine the fair value of the options granted in the twelve months ended September 30, 2024: Weighted Average Options Granted September 30, 2024 September 30, 2023 Grant date share price $ 52.26 $ 60.44 Exercise price $ 52.26 $ 60.43 Expected price volatility % 27.21 % 31.74 Expected option life yrs 3.42 yrs 3.33 Expected dividend yield % 2.14 % 1.89 Risk-free interest rate % 4.23 % 3.66 Forfeiture rate % — % — September 30, 2024 September 30, 2023 Number of Options Weighted Avg. Exercise Price Number of Options Weighted Avg. Exercise Price $ $ Outstanding October 1 212,416 56.22 220,800 52.55 Exercised (19,500) 30.97 (31,000) 30.75 Forfeited (3,644) 59.85 (926) 60.43 Granted 31,138 52.26 23,542 60.43 Outstanding September 30 220,410 57.84 212,416 56.22 The following options are outstanding at September 30, 2024: Option series: Number of Options Grant date Expiry date Exercise price Fair value at grant date $ $ (1) Issued November 25, 2019 11,000 November 25, 2019 November 25, 2024 36.49 5.18 (2) Issued August 13, 2020 94,615 August 13, 2020 August 13, 2025 60.3 8.44 (3) Issued November 24, 2020 21,222 November 24, 2020 November 24, 2025 61.16 10.24 (4) Issued February 9, 2021 1,817 February 9, 2021 February 9, 2026 60.35 9.92 (5) Issued November 24, 2021 37,260 November 24, 2021 November 24, 2026 58.9 10.66 (6) Issued March 9, 2022 1,536 March 9, 2022 March 9, 2027 60.55 10.33 (7) Issued November 24, 2022 20,636 November 24, 2022 November 24, 2027 60.43 14.26 (8) Issued February 15, 2023 1,186 February 15, 2023 February 15, 2028 60.44 14.2 (9) Issued November 27, 2023 31,138 November 27, 2023 November 27, 2028 52.26 11.05 For the options issued on November 27, 2023, vesting occurs through to November 27, 2025. 98 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 19. Share-Based Compensation (continued) At September 30, 2024 (2023) the weighted average remaining contractual life of options outstanding is 1.78 (1.92) years of which 198,192 (186,164) options are exercisable at a weighted average price of $58.32 ($55.71). The Company has recorded $351 ($339) of share-based compensation expense in the year ended September 30, 2024 (2023) related to the options that have been granted. At September 30, 2024 (2023) the Company has total unrecognized compensation expense of $60 ($67) that will be recorded in the next two fiscal years. Restricted Share Units: Under the Company’s restricted stock unit (“RSU”) plan, 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. At the discretion of the Board, the Company may issue one common share to participants for each whole vested share unit or a cash payment. 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. Under the above RSU plan, the Company issued performance share units (“PSUs”) which will vest on the date or dates designated for that unit, conditional on any vesting conditions being met. Vesting conditions for performance share units are tied to the Company’s performance over time. The following table summarizes information about the RSUs for the year ended September 30, 2024: September 30, 2024 September 30, 2023 Number of RSUs Weighted Avg. Grant Date Fair Value Number of RSUs Weighted Avg. Grant Date Fair Value $ $ Balance at October 1 191,413 59.18 56,517 49.09 Exercised (33,764) 59.15 (29,311) 47.21 Forfeited (36,195) 59.16 (24,425) 50.92 Granted 68,507 58.45 188,632 59.18 Outstanding September 30 189,961 58.92 191,413 59.18 99 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 19. Share-Based Compensation (continued) Of the units issued in the current year under the RSU plan, 312 units have vested as of September 30, 2024. The Company has recorded $3,474 ($2,500) of share-based compensation expense in the year ended September 30, 2024 (2023) related to the RSUs that have been granted. At September 30, 2024 (2023) the Company has total unrecognized compensation expense of $1,990 ($965) that will be recorded over the next three years. The following unvested RSU-based payment arrangements are in existence: Number of Units Fair value at grant date RSU series: Grant date Vest through $ (1) Issued November 24, 2021 RSU 5,723 November 24, 2021 November 15, 2024 58.90 (2) Issued Feb 9, 2022 RSU 26 February 9, 2022 November 15, 2024 57.18 (3) Issued May 10, 2022 RSU 280 May 10, 2022 November 15, 2024 67.34 (4) Issued Aug 10, 2022 RSU 40 August 10, 2022 November 15, 2024 66.60 (5) Issued September 14, 2022 RSU 326 September 14, 2022 November 15, 2024 56.10 (6) Issued November 24, 2022 RSU 16,873 November 24, 2022 November 15, 2025 59.18 PSU 104,597 November 24, 2022 November 15, 2025 59.18 (7) Issued February 14, 2024 RSU 1,243 February 14, 2024 February 14, 2027 58.68 (8) Issued February 23, 2024 RSU 6,415 February 23, 2024 February 28, 2026 59.00 (9) Issued March 15, 2024 RSU 35,403 March 15, 2024 November 15, 2026 59.00 PSU 6,929 March 15, 2024 November 15, 2025 59.00 (10) Issued May 14, 2024 RSU 1,779 May 14, 2024 May 14, 2027 55.98 (11) Issued June 26, 2024 PSU 10,140 June 26, 2024 November 15, 2025 56.00 (12) Issued August 14, 2024 RSU 187 August 7, 2024 May 14, 2027 53.62 Deferred Share Unit Plan At September 30, 2024 (2023) the Company has 26,119 (45,345) Deferred Share Units (“DSU”) outstanding, of which 25,139 (20,723) have vested, and the remainder will vest until December 2024. The Company recorded share-based compensation of $685 ($1,113) in the year ended September 30, 2024 (2023). Each DSU entitles the participant to receive the value of one Common Share at the time of vesting. Vesting of the share units are based on service intervals or held until termination of service. The fair value of the DSUs outstanding at September 30, 2024 (2023) was $40.65 ($45.70) per unit using the fair value of a Common Share at period end. 100 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 20. Revenue The following table presents the revenue of the Company for the year ended September 30, 2024 and 2023: Year ended September 30, 2024 September 30, 2023 $ $ Product revenue Advanced Technologies 145,773 106,298 Health 1,191 1 Learning 8,011 6,235 ITCS 71,774 44,741 Total product revenue 226,749 157,275 Service revenue Advanced Technologies 62,169 72,065 Health 210,839 184,855 Learning 104,889 99,957 ITCS 141,965 144,431 Total service revenue 519,862 501,308 Total revenue 746,611 658,583 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, 2024 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 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: September 30, 2024 $ Less than 24 months 694,560 Thereafter 22,629 Total 717,189 101 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 21. Net Profit per Share The diluted weighted average number of shares has been calculated as follows: Year ended September 30 2024 2023 Weighted average number of common shares – basic 11,837,520 11,714,887 Additions to reflect the dilutive effect of employee stock options and RSUs 93,261 25,791 Weighted average number of common shares – diluted 11,930,781 11,740,678 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 twelve months ended September 30, 2024 (2023), 209,410 (46,374) options and 3,209 (42,507) RSUs were excluded from the above computation. 22. Income Tax 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: 2024 2023 $ $ Profit before income taxes 22,320 29,961 Tax provision at the combined basic Canadian federal and provincial income tax rate of 26.5% (2023: 26.9%) 5,915 7,940 Increase (decrease) resulting from: Effect of expenses that are not deductible in determining taxable profits 4,433 1,601 Impact of rate reductions on valuation of deferred income tax assets (362) 83 Other income not taxable in determining net profit 475 224 Tax expense relating to prior year 337 646 Impact of rate differences of foreign jurisdictions 342 582 Income tax expense 11,140 11,076 102 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 22. Income Tax (continued) Deferred Income Taxes Reconciliation of deferred tax assets and liabilities are shown below: Deferred tax assets (liabilities) Equipment and application software Acquired intangible assets Bought deal costs Cash flow hedging reserve Other Total $ $ $ $ $ $ Deferred tax liability at September 30, 2022 (3,948) (10,676) 1,054 1,414 686 (11,470) Current year acquisition — (502) — — — (502) Recovery (expensed) to statement of net profit (1,809) 2,478 (429) — 1,603 1,843 Recovery (expensed) to other comprehensive income — — — (950) 15 (935) Other — — — (365) 365 — Deferred tax liability at September 30, 2023 (5,757) (8,700) 625 99 2,669 (11,064) Current year acquisition 2,359 (18,541) — — 1,676 (14,506) Recovery (expensed) to statement of net profit (378) 5,411 (427) — 4,302 Recovery (expensed) to other comprehensive income — (274) — (84) (304) (358) Other — — — — (811) (811) Deferred tax liability at September 30, 2024 (3,776) (22,104) 198 15 3,230 (22,437) The Company has tax losses $881 (2023: $4,933) that are available for offsetting against future taxable profits of the companies in which the losses arose. These losses start to expire in 2043. 23. 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. The Company’s segments are categorized as follows: Advanced Technologies, Health, Learning, and ITCS. 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. 103 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 23. Segmented Information (continued) The Company evaluates performance and allocates resources based on profit before undernoted items. For the year ended September 30, 2024: For the year ended September 30, 2024 Advanced Technologies Health Learning ITCS Shared Services Total $ $ $ $ $ $ Revenue 207,942 212,030 112,900 213,739 — 746,611 Cost of revenues 125,492 156,904 82,222 127,979 — 492,597 Gross profit 82,450 55,126 30,678 85,760 — 254,014 Gross profit % 40% 26% 27% 40% N/A 34% Operating expenses 40,698 16,539 12,691 57,257 41,294 168,479 Profit before under noted items 41,752 38,587 17,987 28,503 (41,294) 85,535 Profit before under noted items % 20% 18% 16% 13% N/A 11% Depreciation of property, plant and equipment 10,048 Depreciation of right of use assets 6,043 Amortization of acquired intangible assets 25,738 Other changes in fair value (202) Restructuring expense 1,864 Deemed compensation 4,322 Changes in fair value related to contingent earn-out 8,767 Profit before interest income and income tax expense 28,955 Interest expense 6,635 Income tax expense - current 15,442 Income tax recovery - deferred (4,302) NET PROFIT FOR THE PERIOD 11,180 104 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 23. Segmented Information (continued) For the year ended September 30, 2023: For the year ended September 30, 2023 Advanced Technologies Health Learning ITCS Shared Services Total $ $ $ $ $ $ Revenue 178,363 184,856 106,192 189,172 — 658,583 Cost of revenues 118,476 136,172 79,240 120,483 — 454,371 Gross profit 59,887 48,684 26,952 68,689 — 204,212 Gross profit % 34% 26% 25% 36% N/A 31% Operating expenses 31,611 15,301 10,392 45,230 35,691 138,225 Profit before under noted items 28,276 33,383 16,560 23,459 (35,691) 65,987 Profit before under noted items % 16% 18% 16% 12% N/A 10% Depreciation of property, plant and equipment 9,043 Depreciation of right of use assets 4,501 Amortization of acquired intangible assets 14,874 Other changes in fair value (314) Restructuring expense 2,618 Deemed compensation 550 Changes in fair value related to contingent earn-out 3,858 Profit before interest income and income tax expense 30,857 Interest expense 896 Income tax expense - current 12,919 Income tax recovery - deferred (1,843) NET PROFIT FOR THE PERIOD 18,885 105 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 23. Segmented Information (continued) The Company operates in Canada but provides services to customers in various countries. Revenues from external customers for the year months ended September 30, 2024 (2023) are attributed as follows: September 30, 2024 September 30, 2023 Canada 68 % 71 % United States 22 % 24 % Europe 9 % 4 % Other 1 % 1 % 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, 2024 (2023) represented 51% (48%) of the Company’s total revenues. All four operating segments conduct business with this category of customer. 24. Financial Instruments and Risk Management Capital Risk Management 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 its foreign currency exposures within entities operating in currencies outside of their functional currencies. The Company’s objective is to manage and control exposure and secure the Company’s profitability on existing contracts and therefore, the Company’s policy is to hedge its foreign currency exposure where it is most practical to do so. 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 US subsidiary is the US Dollar (“USD”), the functional currency of its German subsidiary is the European Euro (“EUR”), the functional currency of its Norwegian subsidiary is the Norwegian Krone (“NOK”), and the functional currency of its U.K. based subsidiary is the Pound sterling (“GBP”). The presentation currency of these financial statements is the Canadian dollar. 106 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 24. Financial Instruments and Risk Management (continued) 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. For the purpose of preparing consolidated financial statements, the assets and liabilities of the Company’s US operations, German operations, Norwegian operations, and U.K. operations are first expressed in the Companies’ USD, EUR, NOK and GBP 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, 2024, the Company had the following forward foreign exchange contracts: Type Notional Currency Maturity Equivalent Cdn. Dollars Fair Value September 30, 2024 $ $ BUY 3,272 USD October 1, 2024 4,422 9 BUY 4,707 EURO October 1, 2024 7,092 23 Derivative assets 32 SELL 30,133 USD October 1, 2024 40,722 (82) SELL 2,051 EURO October 1, 2024 3,090 (10) Derivative liabilities (92) A 10% strengthening of the Canadian dollar against the following currencies at September 30, 2024 would have decreased other comprehensive income as related to the forward foreign exchange contracts or subsidiaries operating outside of the Company’s presentation currency by the amounts shown below. September 30, 2024 $ USD 3,445 EURO 286 GBP 925 NOK 154 Total 4,810 107 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 24. Financial Instruments and Risk Management (continued) 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 or subsidiaries operating outside of the Company’s presentation currency would have increased Net Profit (a 10% weakening against the Canadian dollar would have had the opposite effect) by the amounts shown below. September 30, 2024 $ USD (1,440) EURO 1,527 GBP 963 NOK 398 Total 1,447 Credit Risk 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 diverse, however a significant portion of them are federal or provincial government agencies, or large private entities. A significant portion of the Company’s accounts receivable is from long-time customers. At September 30, 2024 (2023), 38% (33%) 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 incurred any significant credit related losses. The Company limits its exposure to credit risks from counterparties to derivative financial instruments by dealing only with major Canadian financial institutions. Management does not expect any counterparties to fail to meet their obligations. The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: September 30, 2024 September 30, 2023 $ $ Cash and cash equivalents 51,788 33,734 Accounts receivable 157,376 173,052 Derivative assets 32 155 Total 209,196 206,941 108 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 24. Financial Instruments and Risk Management (continued) The aging of accounts receivable at the reporting date was: September 30, 2024 September 30, 2023 $ $ Current 145,855 161,985 Past due (61‑120 days) 6,526 7,905 Past due (> 120 days) 4,995 3,162 Total 157,376 173,052 Liquidity Risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. At September 30, 2024, the Company has a secured debt facility that matures on July 21, 2026 that allows the Company to draw up to $180,000 CAD. As at September 30, 2024, the Company had $51,788 cash on hand and $89,750 was drawn on the facility for current operations and for use in business acquisitions. Fair Value The carrying amount of short-term investments, accounts receivable, accounts payable and accrued liabilities are recorded at amortized cost and approximate fair value due to the short-term maturity of these investments. The debt facility is on a revolver and is recorded at amortized cost. 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, 2024 and represents the difference between the hedge rate and the exchange rate at the end of the reporting period. 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). Investments are made in companies that do not have directly an observable market. These are fair valued when market participant data becomes available or if financings for the investments are completed. The fair value of contingent earn-out amounts has been determined by applying a discounted cash flow technique on the expected future value of a settlement amount. 109 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 24. Financial Instruments and Risk Management (continued) September 30, 2024 Level 1 Level 2 Level 3 $ $ $ Cash and cash equivalents 51,788 — — Investments — — 3,875 Derivative assets — 32 — Debt facility — (89,750) — Contingent earn-out — — (41,833) Derivative liabilities — (92) — Total 51,788 (89,810) (37,958) September 30, 2023 Level 1 Level 2 Level 3 $ $ $ Cash and cash equivalents 33,734 — — Investments — — 3,673 Derivative assets — 155 — Debt facility — (37,750) — Contingent earn-out — — (13,798) Derivative liabilities — (353) — Total 33,734 (37,948) (10,125) There were no transfers between Level 1, Level 2 and level 3 during the three and year ended September 30, 2024. 25. Acquisitions Hawaiian Pacific Teleport (“HPT”) On August 1, 2023, the Company acquired the outstanding shares of HPT, for total cash consideration of up to $50,393 USD ($66,978 CAD) of which, $28,474 USD ($37,845 CAD) was paid in cash on the date of closing, $681 USD ($905 CAD) is estimated owing back to Calian for the settlement of net working capital, $3,500 USD ($4,562 CAD) was placed in escrow, $3,000 USD ($3,964 CAD) was paid through the issuance of common shares and $16,100 USD ($21,399 CAD) is payable contingently, of which $8,905 USD ($11,835 CAD) is included in the purchase price. The difference between the amount payable contingently that is included in the purchase price and the total potential liability is deemed compensation and an adjustment for the likelihood of achievement of earn out amounts. HPT operates as a US-based provider of independent teleport and satellite communications solutions. HPT has service locations across the Hawaiian Islands and Guam, and HPT provides connectivity through the Asia Pacific region. HPT is reported as part of the Advanced Technologies operating segment. 110 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 25. Acquisitions (continued) Under the contingent consideration arrangement, the Company is required to pay the former shareholders of HPT an additional $8,050 USD ($10,699 CAD) and $8,050 USD ($10,699 CAD) if HPT attains specific levels of EBITDA for the years ended July 31, 2024 and July 31, 2025, respectively. $3,816 USD ($5,072 CAD) of the first and second year earn out payable amounts is subject to the retention of the principal shareholders for a period of two years from the date of acquisition. This amount is deemed to represent deferred compensation payable to such shareholders and therefore is excluded from the total consideration of the purchase price and will be expensed in the Company’s consolidated statement of net profit as deemed compensation related to acquisitions on a straight-line basis over the retention period. There was a change in the purchase price from September 30, 2023 due to final adjustments to the closing balance sheet resulting in an increase to goodwill of $2,767. The Company recognized $1,663 in the year ended September 30, 2024 related to changes in fair value of contingent earn out and recorded deemed compensation expense of $2,811. At September 30, 2024 the Company revised its estimated payout of the second year contingent consideration amount due to higher performance than anticipated, resulting in an adjustment of $1,781 which was recognized in the statement of comprehensive income. Decisive Group Inc. (“Decisive”) On December 1, 2023, the Company acquired all outstanding shares of Decisive, for total maximum consideration of $74,700. The consideration consisted of the following components: $49,882 was paid in cash on closing, $900 was placed in escrow, $105 was settled on finalized closing working capital and there is one potential earn-out with maximum value to be paid of $24,725, with an estimated fair value of $17,880 which has been determined at the closing date and included in the initial purchase price. The Company used a scenario-based model to value the contingent earn-out. Decisive, an Ottawa-based IT infrastructure and cyber security services firm, brings new capabilities, partnerships and customers into the Company’s portfolio. The goodwill recognized in the transaction primarily reflects the value of the assembled workforce and potential synergies with the Company’s previously acquired entities in the IT and cybersecurity space. Decisive is reported as part of the ITCS operating segment. In valuing acquired intangible assets, including customer relationships of $49,400, the Company uses the multi-period excess earnings method. This method calculates the estimated fair value of an intangible asset based on projected future cash flows over the remaining useful life, isolating the cash flows attributable to the customer relationships by forecasting expected revenues from existing customers. The valuation involves significant estimation uncertainty, including assumptions related to forecasted revenues, earnings before interest, tax, amortization and depreciation (“EBITDA”) margins attributable to the customer relationships, customer attrition rates, and discount rate. Under the contingent consideration arrangement, the Company is obligated to pay the former shareholders of Decisive an additional $24,725, contingent on Decisive achieving specific EBITDA targets for the year ending December 1, 2024. Of note, there is a minimum EBITDA target for the year ended December 1, 2024 that must be surpassed in order to achieve any contingent earn-out amount. The difference between the earn-out amount included in the purchase price and the total potential liability reflects the Company’s estimate of the likelihood of the earn-out being fully achieved as assessed on the purchase date. As at September 30, 2024, the Company has recorded a liability of $18,672 based on the Company’s estimate of achievement of EBITDA versus the earn-out targets. The agreement involved a minimum threshold of EBITDA required for any earn-out to be payable. As at September 30, 2024 Decisive is on track for achievement but has not yet achieved the minimum threshold as at the reporting date. 111 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 25. Acquisitions (continued) The Company recognized $3,090 in the year ended September 30, 2024 related to changes in fair value of contingent earn out. The Company recognized an adjustment to the contingent earn out payable in the year ended September 30, 2024 in the amount of $1,410. This adjustment is a result of revised EBITDA achievement estimated for the earn out period from the initial estimate at acquisition date. Net Assets Acquired Goodwill and Intangibles Accounting Total Net Assets Acquired $ $ $ Cash 3,325 — 3,325 Accounts receivable and tax receivable 3,148 — 3,148 Inventory 4,012 — 4,012 Prepaid expenses 1,509 — 1,509 Deferred tax asset 4,045 — 4,045 16,039 — 16,039 Prepaid expenses 611 — 611 Equipment and application software 898 — 898 Right of use asset 2,059 — 2,059 Acquired intangible assets — 49,400 49,400 Goodwill — 29,959 29,959 19,607 79,359 98,966 Accounts payable and accrued liabilities 11,216 — 11,216 Lease obligation 2,016 — 2,016 Unearned contract revenue 7,584 — 7,584 Deferred tax liability — 13,091 13,091 20,816 13,091 33,907 Net purchase price 65,059 Discount on contingent consideration 3,708 Total purchase price 68,767 112 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 25. Acquisitions (continued) MDA Ltd. (“MDA”) On March 5, 2024, the Company acquired assets of MDA’s nuclear services, for total cash consideration of $7,600. Of this amount, $7,400 was paid in cash on closing and $200 was put in escrow. MDA provides professional services to the Canadian nuclear industry and increases the Company’s technical capability in it’s service delivery. Goodwill recorded can be represented by expansion of services into existing customers and synergies in delivery capabilities. MDA is reported as part of the Advanced Technologies operating segment. The Company uses the multi-period excess earnings method to value acquired intangible assets, including the customer relationships. This method calculates the estimated fair value of an intangible asset based on the estimated future cash flows that the asset can be expected to generate over its remaining useful life, and isolates the cash flows attributable to the customer relationships by utilizing a forecast of expected cash flows for existing customers alone. The valuation involves significant estimation uncertainty, including assumptions relating to forecasted revenues and forecasted earnings before interest and tax (“EBIT”) margins attributable to the customer relationships, customer attrition rate, and discount rate. The Company recognized $170 in the year ended September 30, 2024 related to deemed compensation. Goodwill and Intangibles Accounting Total Net Assets Acquired $ $ Acquired intangible assets 6,561 6,561 Goodwill 1,039 1,039 7,600 7,600 Total purchase price 7,600 Mabway Limited “Mabway” On May 9, 2024, the Company acquired all outstanding shares of Mabway, for total maximum consideration of $47,037 (GBP 27,440). Of this amount, $37,798 (GBP 22,045) was paid in cash on closing, and $9,239 (GBP 5,395) as contingent consideration, of which $5,128 (GBP 2,994) is included in the purchase price. The difference between the contingent consideration that is included in the purchase price to the total potential liability is due to some amounts being considered deemed compensation and likelihood of achievement of EBITDA targets and fulfillment of other contingent conditions. Mabway is a U.K.-based business that provides of large-scale defense role-playing environments that simulate real-world operational environments and provides technical engineering education for naval and maritime communities. The acquisition expands Calian’s existing presence in the U.K. and Europe, reinforcing the Company’s military training and simulation solutions portfolio in the region. Mabway’s position in the U.K. defense sector provides opportunities for the Company to introduce its immersive learning solutions to complement the solutions Mabway is delivering. Mabway is reported as part of the Learning operating segment. The Company uses the multi-period excess earnings method to value customer relationship intangible assets and replacement cost to value the technology assets acquired. The multi-period excess earnings method calculates the estimated fair value of an intangible asset based on the estimated future cash flows that the asset can be expected to generate over its remaining useful life, and isolates the cash flows attributable to the customer relationships by utilizing a forecast of expected cash flows for existing customers alone. The valuation involves significant estimation uncertainty, including assumptions relating to forecasted revenues and forecasted earnings attributable to the customer relationships, and discount rate. 113 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 25. Acquisitions (continued) Under the contingent consideration arrangement, the Company is required to pay the former shareholders of Mabway an additional $5,770 (3,334 GBP) if Mabway attains specific EBITDA targets for the year ended March 31, 2025 and obtains certain key signings by October 1, 2027, and $2,855 (GBP 1,667) if certain integration and transition criteria are attained by May 8, 2025. Of this amount, $2,855 (GBP 1,667) is subject to the retention of principal employees for a period of one year from the date of acquisition. This amount is deemed to represent deferred compensation payable to such shareholders and therefore is excluded from the total consideration of the purchase price and will be expensed in the Company’s consolidated statement of net profit as deemed compensation related to acquisitions on a straight-line basis over the retention period. The Company recognized $345 in the year ended September 30, 2024 related to changes in fair value of contingent earn out and recorded deemed compensation expense of $1,071. At September 30, 2024 the Company revised its estimated payout of the contingent consideration amount resulting in an adjustment of $478 which was recognized in the statement of comprehensive income. Net Assets Acquired Goodwill and Intangibles Accounting Total Net Assets Acquired $ $ $ Cash 8,233 — 8,233 Accounts receivable and tax receivable 1,635 — 1,635 Work in progress 1,348 — 1,348 Prepaid expenses 630 — 630 11,846 — 11,846 Equipment and application software 860 — 860 Right of use asset 235 — 235 Acquired intangible assets — 21,925 21,925 Goodwill — 16,159 16,159 12,941 38,084 51,025 Accounts payable and accrued liabilities 2,356 — 2,356 Lease obligation 215 — 215 Deferred tax liability 99 5,430 5,529 2,670 5,430 8,100 Net purchase price 42,925 Discount on contingent consideration 1,257 Total purchase price 44,182 The goodwill of $16,159 comprises the value of expected synergies arising from the acquisition and assembled workforce, which is not separately recognized from the goodwill. The assembled workforce does not meet the criteria for recognition as an intangible asset under IAS 38. None of the goodwill recognized is expected to be deductible for income tax purposes. 114 CALIAN GROUP LTD. Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 25. Acquisitions (continued) Cash consideration paid for the acquisition activity during the year ended September 30, 2024: Net Assets Acquired Goodwill and Intangibles Accounting Total Net Assets Acquired $ $ $ Consideration paid in cash 50,782 7,600 37,798 Less- cash balance acquired (3,325) — (8,233) 47,457 7,600 29,565 Total revenue and net profit recognized by the acquired entities from the date of acquisition to the year ended September 30, 2024 was a total of $52,077 and $10,952, respectively. Had the acquisitions been completed at October 1, 2023, the total revenue and net profit recognized would have been $81,687 and $18,029, respectively. Management considers these ‘pro- forma’ numbers to represent an approximate measure of the performance of the combined group for the year ended September 30, 2024. Future periods may be impacted by seasonality or other external factors. 26. Contingent Earn-Out The following shows the contingent consideration activity for the year ended September 30, 2024: Company Acquired Beginning balance Acquisition Payments Change in Fair Value Adjustments Ending balance $ $ $ $ $ $ Alio/Allphase 841 — — — — 841 SimFront 3,240 — (3,240) — — — Hawaii Pacific Teleport 9,717 — — 1,663 4,592 15,972 Decisive — 14,172 — 3,090 1,410 18,672 Mabway — 4,454 — 345 1,549 6,348 Total 13,798 18,626 (3,240) 5,098 7,551 41,833 As at September 30, 2024, the total gross value of all contingent consideration outstanding is $56,341. Included in the adjustments column in the table are deemed compensation, along with changes in estimated payment amounts to make under contingent earn out estimates. Contingent consideration estimates are based on the forecasted earnings before interest, tax (“EBITDA”)and amortization for the respective acquired entities included in the able above. There is significant judgement in the forecasted EBITDA for each respective entity. Payouts begin at agreed upon EBITDA targets, and the Company will increase the payout by multiples from $0.603 to $1.42384 for every dollar achieved above that target amount. Estimated payouts are then calculated and discounted using rates between 15% and 20%, depending on the acquired entity. 115 ANNUAL REPORT 2024 Calian Group Ltd. Notes to the consolidated financial statements For the years ended September 30, 2024 and 2023 (Canadian dollars in thousands, except per share amounts) 26. Contingent Earn-Out (continued) The following shows the contingent consideration activity for the year ended September 30, 2023: Company Acquired Beginning balance Acquisition Payments Change in Fair Value Adjustments Ending balance $ $ $ $ $ $ Alio/Allphase 1,860 — (3,350) 59 2,272 841 Tallysman Wireless 5,411 — (5,613) 102 100 — Cadence 75 — (287) 165 47 — Dapasoft 15,758 — (16,187) 429 — — SimFront 5,446 — (2,760) 554 — 3,240 Hawaii Pacific Teleport — 9,037 — 277 403 9,717 Total 28,550 9,037 (28,197) 1,586 2,822 13,798 27. Related Party Transactions 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 individual and market trends. This amount incorporated the named officers of the Company. September 30, 2024 September 30, 2023 $ $ Compensation and short-term benefits 3,350 3,249 Share-based payments 2,307 2,386 Total 5,657 5,635 116 CALIAN GROUP LTD. ANNUAL REPORT 2024 117 Corporate Information Additional information about the Company such as the Company’s Annual Information Form and Management Circular can be found on SEDAR at www.sedarplus.ca Dated January 13, 2025 Corporate Head Office 770 Palladium Drive Ottawa, Ontario, Canada K2V 1C8 Phone: 613.599.8600 Web: www.calian.com Board of Directors George Weber, Chair of the Board Corporate Director, ICD.D Ray Basler Corporate Director, CPA, CA Kevin Ford CEO, Calian Group Ltd Lori O’Neill Corporate Director, FCPA, FCA, ICD.D, CPA Young Park Corporate Director, ICD.D Jo-Anne Poirier President and CEO, VON Canada, ICD.D Ronald Richardson Corporate Director, P. ENG., ICD.D Valerie Sorbie Partner and Managing Director, Gibraltar & Company 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. Transfer Agent Odyssey Trust Company Trader’s Bank Building 702, 67 Young Street Toronto, Ontario M5E 1J8 Phone: 1-888-290-1175 Shareholders@odysseytrust.com Contact Information Investor Relations inquiries: ir@calian.com Media inquiries: pr@calian.com General information inquiries: info@calian.com calian.com ir@calian.com