Form 40-F Alithya Group inc For: Mar 31


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ALITHYA – Annual Information Form i


GENERAL INFORMATION

This Annual Information Form is dated June 9, 2021 and, unless otherwise indicated, all information disclosed herein is provided as at March 31, 2021.

Unless otherwise indicated, all references in this Annual Information Form to “Alithya”, “we”, “our”, “us”, “the Company” or similar terms refer to Alithya Group inc. and its consolidated subsidiaries and references to the “Board” refers to the board of directors of the Company. Unless otherwise indicated, all monetary amounts are in Canadian dollars, all references to “$”, “C$” and “dollars” mean Canadian dollars and all references to “US$” mean U.S. dollars.

References to the “Edgewater Transaction” refer to, collectively, on November 1, 2018, (i) the Company’s acquisition of Alithya Canada Inc. (formerly Alithya Group Inc.) (“Pre-IPO Alithya”), by way of a statutory plan of arrangement under the Business Corporations Act (Québec), and (ii) the merger of 9374-8572 Delaware Inc., a wholly-owned subsidiary of the Company, with and into Alithya USA, Inc. (formerly Edgewater Technology, Inc.) (“Edgewater”), a Delaware corporation, with Edgewater being the surviving corporation. As a result of the Edgewater Transaction, both Pre-IPO Alithya and Edgewater became wholly-owned subsidiaries of Alithya.

References to the “subordinate voting shares” and the “multiple voting shares” refer to the Class A subordinate voting shares, no par value, and the Class B multiple voting shares, no par value, of Alithya, respectively.

FORWARD-LOOKING STATEMENTS

This Annual Information Form contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities laws and “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and other applicable U.S. safe harbours (collectively “forward-looking statements”). Statements that do not exclusively relate to historical facts, as well as statements relating to management’s expectations regarding the future growth, results of operations, performance and business prospects of the Company, and other information related to the Company’s business strategy and future plans or which refer to the characterizations of future events or circumstances represent forward-looking statements. Such statements often contain the words “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should,” “project,” “target,” and similar expressions and variations thereof, although not all forward-looking statements contain these identifying words.

Forward-looking statements in this Annual Information Form include, among other things, information or statements about: (i) the Company’s ability to generate sufficient earnings to support its operations; (ii) the Company’s ability to take advantage of business opportunities and meet its goals set in its three-to-five-year strategic plan; (iii) the Company’s ability to develop new business and broaden the scope of its service offerings and enter into new contracts; (iv) the Company’s strategy, future operations, and prospects; (v) the Company’s need for additional financing and its estimates regarding its future financing and capital requirements; (vi) the Company’s expectations regarding its financial performance, including its revenues, profitability, research and development, costs and expenses, gross margins, liquidity, capital resources, and capital expenditures; (vii) the Company’s ability to realize the expected synergies or cost savings relating to the integration of its business acquisitions; and (viii) the impact of the COVID-19 pandemic and related response measures on the Company’s business operations, financial results and financial position and those of its clients and on the economy in general.

Forward-looking statements are presented for the sole purpose of assisting investors and others in understanding the Company’s objectives, strategies and business outlook as well as its anticipated operating environment and may not be appropriate for other purposes. Although management believes the expectations reflected in the Company’s forward-looking statements were reasonable as at the date they were made, forward-looking statements are based on the opinions, assumptions and estimates of management and, as such, are subject to a variety of risks and uncertainties and other factors, many of which are beyond the Company’s control, and which could cause actual events or results to differ materially from those expressed or implied in such statements. Such risks and uncertainties include but are not limited to the factors discussed under section titled “Risks and Uncertainties” of the Company’s management’s discussion and analysis for the fiscal years ended March 31, 2021 and 2020, incorporated by reference into this Annual Information Form under section titled “Risks and Uncertainties”, and the Company’s other materials made public, including documents filed with Canadian and U.S. securities regulatory authorities from time to time and which are available on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial could also have a material adverse effect on its financial position, financial performance, cash flows, business or reputation.

Forward-looking statements contained or incorporated by reference in this Annual Information Form are qualified by these cautionary statements. Unless otherwise indicated, forward-looking statements contained herein are made only as of the date of this Annual Information Form and those contained in other documents incorporated by reference are made only as of the date of such other documents. The Company expressly disclaims any obligation to update or alter forward-looking statements, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by applicable law. Investors are cautioned not to place undue reliance on forward looking statements since actual results may vary materially from them.

ALITHYA – Annual Information Form 2


CORPORATE STRUCTURE

Name, Address and Incorporation

Alithya Group inc. (formerly 9374-8572 Québec Inc.) was incorporated on March 8, 2018 under the Business Corporations Act (Québec) (the “QBCA”). The Company was created for the purpose of the business combination between Alithya Canada Inc. (formerly Alithya Group Inc.) (“Pre-IPO Alithya”), incorporated on April 2, 1992 under the Companies Act (Québec), Alithya USA, Inc. (formerly Edgewater Technology, Inc.) (“Edgewater”), a corporation incorporated on March 12, 1996 under the laws of Delaware and previously listed on the NASDAQ Global Market, and 9374-8572 Delaware Inc. (“U.S. Merger Sub”), a corporation governed under the laws of Delaware and a wholly-owned subsidiary of the Company.

On March 15, 2018, the Company, Pre-IPO Alithya, Edgewater, and U.S. Merger Sub entered into an arrangement agreement, which was amended on September 10, 2018 and October 17, 2018 (the “Arrangement Agreement”). On November 1, 2018, and pursuant to the terms of the Arrangement Agreement, among other things, (i) the Company acquired Pre-IPO Alithya, by way of a statutory plan of arrangement under the QBCA (the “Arrangement”), and (ii) U.S. Merger Sub merged with and into Edgewater, with Edgewater being the surviving corporation (the “Merger”). The Arrangement and the Merger are collectively referred to herein as the “Edgewater Transaction”. Following completion of the Edgewater Transaction, shareholders of Pre-IPO Alithya and Edgewater became shareholders of the Company, and each of Pre-IPO Alithya and Edgewater became wholly owned subsidiaries of the Company. On November 2, 2018, the Company’s subordinate voting shares commenced trading on the Toronto Stock Exchange (“TSX”) and on the NASDAQ Capital Market (“NASDAQ”) under the symbol “ALYA.”

Alithya’s head and registered office is located at 1100, Robert-Bourassa Boulevard, Suite 400, Montréal, Québec, Canada, H3B 3A5.

Intercorporate Relationships

Below is the list of the Company’s principal subsidiaries as at March 31, 2021, each of which is directly or indirectly wholly‑owned by it. Certain subsidiaries whose total assets did not represent more than 10% of the Company’s consolidated assets or whose revenues did not represent more than 10% of the Company’s consolidated revenues as at March 31, 2021, based on the Company’s annual audited consolidated financial statements, have been omitted. These omitted subsidiaries represented as a group less than 20% of the consolidated assets and revenues of the Company as at March 31, 2021.

ENTITY JURISDICTION PERCENTAGE OWNERSHIP
Alithya Canada Inc. Québec, Canada 100%
Alithya Consulting Inc. Québec, Canada 100%
Alithya Digital Technology Corporation Ontario, Canada 100%
Alithya Financial Solutions, Inc. Delaware, USA 100%
Alithya France SAS France 100%
Alithya Fullscope Solutions, Inc. Delaware, USA 100%
Alithya Ranzal LLC Delaware, USA 100%
Alithya Travercent LLC Texas, USA 100%
Alithya USA, Inc. Delaware, USA 100%

GENERAL DEVELOPMENT OF THE BUSINESS

Recently Announced Developments

On April 1, 2021, the Company completed the acquisition of R3D Consulting Inc. (“R3D Consulting”), now known as Alithya IT Services Inc., a digital solutions firm specialized in consulting and digital application development in the insurance, finance, government services, healthcare and telecommunications sectors (the “R3D Transaction”), in consideration for the issuance of 25,182,676 subordinate voting shares to R3D Consulting’s shareholders, which represented approximately 30% of the Company’s issued and outstanding shares immediately following the closing of the R3D Transaction, as well as payments in cash totaling approximately $978,000. The R3D Transaction, evaluated at approximately C$75 million (excluding the assumption of approximately C$8.5 million in debt), included commercial commitments totalling approximately C$600 million in combined revenues during the 10-year term commercial agreements entered into with Québecor Media Inc. and La Capitale Civil Service Insurer Inc. (a subsidiary of Beneva Inc.), two of R3D Consulting’s indirect principal shareholders. Following the closing of the R3D Transaction, Beneva Inc. and Québecor Media Inc. became indirect shareholders of the Company, and each held, through their respective subsidiary, approximately 11.9% of the

ALITHYA – Annual Information Form 3


Company’s share capital and approximately 6.7% of the voting rights attached to the issued and outstanding shares of the Company as at April 1, 2021.

2021 Developments

On June 18, 2020, the Company’s credit agreement was amended to reflect new covenant definitions, the Paycheck Protection Program loans certain of its U.S. subsidiaries received on or about May 5, 2020, a temporary minimum availability test, certain COVID-19 considerations, as well as other administrative clarifications.

On May 5, 2020, as a result of the COVID-19 pandemic, certain U.S. subsidiaries of the Company received funding under the Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (“SBA”) and entered into unsecured promissory notes (the “Notes”) in the aggregate principal amount of US$6,300,000. The Notes have a term of five years at an interest rate of 1% per annum, with a deferral of payments until the date on which the applicable forgiveness is decisioned, with respect to any portion of the Notes which is not forgiven. Under the terms of the CARES Act, PPP loan recipients can apply for forgiveness for all or a portion of loans granted under the PPP. Such forgiveness will be determined, subject to limitations and ongoing rule making by the SBA, based on the necessity of the loan at the time of application and the timely use of loan proceeds for payroll costs and the maintenance of employee and compensation levels. During the year ended March 31, 2021, PPP loans in an aggregate amount of US$1,500,000 were forgiven by the SBA for three of the Company’s U.S. subsidiaries. Two remaining PPP loans, which amount to US$2,500,000 and US$2,300,000 respectively, are still under review for forgiveness as at the date of this Annual Information Form.

2020 Developments

On February 1, 2020, the Company acquired all the issued and outstanding shares of Groupe Askida Inc. and Askida Consulting Services Inc., a Canadian group with expertise in software quality assurance tools and services, as well as in development and modernization of custom applications, for a total consideration of $16,000,000, payable in cash and subordinate voting shares. On April 1, 2021, Groupe Askida Inc. was merged with and into Alithya Canada Inc., and Askida Consulting Services Inc. was merged with and into Alithya Consulting Services Inc.

On December 13, 2019, the Company acquired, through Alithya Financial Solutions, Inc., an indirect wholly-owned subsidiary, all the issued and outstanding membership interests of Travercent LLC, a US-based cloud-focused Enterprise Resource Planning (ERP) consulting group specialized in the healthcare sector, now known as Alithya Travercent LLC (“Alithya Travercent”), for a total consideration of US$19,500,000, payable in cash and subordinate voting shares. Alithya Travercent’s competencies include implementing Oracle’s cloud ERP, Human Capital Management (HCM), Enterprise Performance Management (EPM) and Business Intelligence (BI) applications. Alithya Travercent has also developed a cloud solution named Capsure RFTM, an Oracle cloud extension that optimizes material management processes of healthcare providers for supply chain management and point of use.

On October 2, 2019, Alithya Zero2Ten, Inc. an indirect wholly-owned subsidiary of the Company, sold all the issued and outstanding shares of its wholly-owned subsidiary Zero2Ten EMEA Limited, for a total cash consideration of GBP£800,000.

On October 1, 2019, the Company acquired all the issued and outstanding shares of Matricis Informatique Inc. (“Matricis”), a Canadian consulting firm specialized in advanced applications and systems using techniques derived from the Internet of Things (IoT), Artificial Intelligence (AI), a combination of the aforementioned (AIoT), as well as operational intelligence in the healthcare, industrial and financial sectors. The acquisition of Matricis was completed for a total consideration of $7,200,000, payable in cash and subordinate voting shares. On March 31, 2021, Matricis was liquidated into Alithya Canada Inc.

2019 Developments

On January 22, 2019, the Company entered into a credit agreement for the provision of a $60,000,000 senior secured revolving credit facility (the “Credit Facility”), which replaced its previous credit facility. The facility can be drawn in both Canadian and US dollars, and is available in prime rate advances, LIBOR advances, bankers’ acceptances and letters of credit totaling up to $2,500,000. Under the terms of the credit agreement, the Company is required to maintain certain financial covenants. The Credit Facility matures in January 2022 and is renewable for additional one-year periods at the lender’s discretion.

On November 2, 2018, the Company’s subordinate voting shares commenced trading on the TSX and on the NASDAQ under the symbol “ALYA.”

On November 1, 2018, pursuant to the terms of an arrangement agreement previously entered into on March 15, 2018 between the Company, Pre-IPO Alithya, Edgewater and U.S. Merger Sub and subsequently amended on September 10, 2018 and October 17, 2018 (the “Arrangement Agreement”), among other things, (i) the Company acquired Pre-IPO Alithya, by way of a statutory plan of arrangement under the QBCA (the “Arrangement”), and (ii) U.S. Merger Sub merged with and into Edgewater, with Edgewater being the surviving corporation (the “Merger”). The Arrangement and the Merger are, collectively referred to herein, as the “Edgewater Transaction”. Following completion of the Edgewater Transaction, shareholders of Pre-IPO Alithya and Edgewater became shareholders of the Company, and each of Pre-IPO Alithya and Edgewater became wholly owned subsidiaries of the Company.

ALITHYA – Annual Information Form 4


On October 30, 2018, Pre-IPO Alithya closed a private placement, where an aggregate 11,736,055 subscription receipts were issued at a price of $4.50 per subscription receipt (the “Offering”). Each subscription receipt was automatically converted into a common share of Pre-IPO Alithya, immediately prior to the close of the Edgewater Transaction, and then exchanged for one subordinate voting share of Alithya, pursuant to the Arrangement Agreement. The net proceeds of the Offering were used to reduce indebtedness, fund future growth initiatives and for general corporate purposes.

DESCRIPTION OF THE BUSINESS

Corporate Overview

Alithya advises in strategy and digital transformation with more than 3,000 professionals in Canada, the U.S. and Europe and assists its clients in their pursuit of innovation and excellence and the achievement of their business objectives through the optimal use of digital technologies.

Alithya deploys solutions, services, and expert consultants to design, build and implement innovative and efficient solutions for the complex business challenges of its clients, tailored to their business needs in the financial services, renewable energy, manufacturing, telecommunications, transportation and logistics, professional services, healthcare and government sectors.

Business Offerings

Alithya’s business offerings include a comprehensive range of digital technology services to address client needs:

Business Strategy. Alithya leads clients through essential decision-making processes regarding strategic planning, change management, systems evolution, operational processes and more. Applying the most recurrent methodologies, we help our clients optimize efficiency and successfully navigate the digital transformation age. We achieve results by leveraging an array of Business Strategy services, including strategic consulting, digital transformation, organizational performance and enterprise architecture.

Application Services. Alithya’s experts guide clients through all facets of Application Services, from migration of legacy systems into future-ready digital solutions, to the development of completely new solutions using state-of-the-art technologies. Our experts assist our clients in the choice between cloud, on-premise, and hybrid hosting strategies and solutions. Alithya’s Application Solutions services include digital applications DevOps, legacy systems modernization, control and software engineering, cloud infrastructure, quality assurance and automated testing.

Enterprise Solutions. Working with key industry partners, including some of the world’s largest vendors of cloud-based Enterprise Solutions, Alithya’s experts help clients deploy company-wide systems to improve the efficiency of their finance, human capital, operations, and marketing functions. Alithya’s Enterprise Solutions services include Enterprise Resource Planning (ERP), Corporate Performance Management (CPM/EPM), Customer Relationship Management (CRM/CXM) and Human Capital Management (HCM).

Data and Analytics. Data analysis plays a critical role in the optimization of business processes. Leveraging specialized IT systems and software, Alithya’s data scientists help clients gain business insight and drive better decision-making through enhanced data collection, big data analytics, machine learning automation and reporting. Alithya’s Data and Analytics services include business intelligence, data management, artificial intelligence and machine learning, as well as Internet of Things (IoT).

Geographically, Alithya’s operations span across Canada, the United States and Europe, providing a full spectrum of strategy and digital technology services with deep expertise in a range of technologies and business domains.

Competitive Environment

Today, for many companies, digital systems and infrastructures are among their most important and strategic assets. Not only do these assets require significant investments, but they increasingly serve as key differentiators and drivers of growth for customers.

Accordingly, businesses are seeking solutions that allow them to maintain their ability to differentiate themselves from competitors with proprietary business processes, combined with product customization. That is where digital transformation comes into play, inviting companies to make a shift in their approach and to evolve from traditional information technologies to flexible digital technologies.

As businesses’ technology spending continues to increase, digital technology firms such as Alithya are striving to deliver innovative thinking and in-depth vertical industry expertise, while facilitating business process transformation through the use of the most optimal technologies.

Alithya believes it is well positioned to respond to these trends in clients’ investments in digital technology. Alithya’s business model is built on a philosophy of offering flexible and creative solutions, enabling clients to realize maximum benefits from their digital technology investments. Alithya positions itself as an agile trusted advisor and consulting partner capable of delivering rapid results for its clients.

ALITHYA – Annual Information Form 5


Alithya’s competitors include systems integration firms, contract programming companies, application software companies, cloud computing service providers, large or traditional consulting firms, professional services groups of computer equipment companies, infrastructure management and outsourcing companies and boutique digital companies. In addition, Alithya competes with numerous smaller local companies in the various geographic markets in which it operates.

Alithya competes based on the following principal differentiating factors: vision and strategic advisory ability, digital services capabilities, performance and reliability, quality of technical support, training and services, responsiveness to client needs, reputation and experience, financial stability and strong corporate governance and competitive pricing of services.

Alithya also relies on the following measures to compete effectively: (a) investments to scale its services practice areas; (b) a well-developed recruiting, training and retention model; (c) a successful service delivery model; (d) intrapreneurial culture and approach; (e) a broad referral base; (f) continual investment in process improvement and knowledge capture; (g) investment in infrastructure and research and development; (h) continued focus on responsiveness to client needs, quality of services and competitive prices; and (i) project management capabilities and technical expertise.

Strategic Business Plan

Alithya has adopted a three-to-five-year strategic plan which sets as a goal to consolidate its position as to become a North American digital transformation leader.

According to this plan, Alithya’s consolidated scale and scope should allow it to leverage its geographies, expertise, integrated offerings and position on the value chain to target the fastest growing IT services segments. Alithya’s specialization in digital technologies and the flexibility to deploy enterprise solutions and deliver solutions tailored to specific business objectives responds directly to client expectations. More specifically, Alithya has established a three-pronged plan focusing on:

Increasing scale through organic growth and strategic acquisitions by:

Generating profitable organic growth through innovation, higher-value offerings and client-relationships based on trust;

Completing value enhancing business acquisitions by way of a North American geographic expansion to complement current market presence, including geography, while progressively adding major integrated enterprise solutions offerings and selected specialized expertise;

Achieving best-in-class employee engagement by:

Fostering a culture of collaboration, diversity and ownership;

Cultivating employee well-being and personal growth;

Investing in the development of its leaders and employees;

Providing its investors, partners and stakeholders with long-term growing return on investment by:

Strengthening its existing relationships with clients, as a key trusted advisor, by generating long-term value;

Investing in innovation and higher value service offerings;

Acting responsibly, with a sustainable and respectful vision for its stakeholders.

Clients by Market Sectors

Alithya’s clients are mainly concentrated in the financial services, renewable energy, manufacturing, telecommunications, transportation and logistics, professional services, healthcare and government sectors. The majority are large to mid-size companies. Alithya seeks to cultivate collaborative and flexible service engagements that are designed to adapt to clients’ evolving priorities and challenges.

Client Approach Philosophy

With a client-centric and flexible service delivery philosophy, Alithya focuses on diligently supporting its clients in identifying and achieving their evolving objectives through exceptional communications and by developing tailor-made solutions that take into account their specific business realities. Alithya strives to sustain high levels of client satisfaction and exceed client expectations which is key to renewal of existing contracts and entry into new ones. Alithya’s agile approach ensures optimal alignment with clients, enabling them to overcome their challenges and attain their goals with seamless technology integration. Alithya’s goal is to become its clients’ trusted advisor by developing long-term relationships that extend beyond just project delivery.

Alithya also seeks to be an active participant in the ongoing consolidation of the digital technology industry and to leverage its expertise and solutions to offer clients an alternative to larger traditional digital technology solution providers. Alithya is

ALITHYA – Annual Information Form 6


continually looking to expand its capacity and broaden the scope of its service offerings through targeted business acquisitions. Growth through business acquisitions can offer Alithya opportunities to better serve existing clients with additional talent, technology, complementary services and greater scale. Through such business acquisitions, Alithya aims at expanding its existing client relationships by adding capacity in new geographic locations, while opening doors for existing capabilities into new client relationships.

Alithya believes that its growth strategy through business acquisitions also helps to provide an opportunity to achieve the scale that is increasingly required for mandates awarded by government and private organizations, and to attract potential business acquisition candidates which are poised to benefit from Alithya’s established relationships, better access to market and preferred supplier status.

Sales, Marketing and Strategic Partners

Alithya markets and sells its services directly through its professional staff, senior management and direct sales personnel operating out of its offices, which are strategically located in Canada, the U.S. and France.

In order to provide its clients with the solutions best suited to their needs, Alithya has established strategic partnerships with a number of companies, including Microsoft, Oracle and Amazon Web Services (AWS). These partnerships entail joint marketing efforts, making joint client presentations, and negotiating discounts on license fees, among other benefits. Where such partnerships are formalized in written agreements, those agreements are either terminable at will by either party or are for terms of one year or less. Alithya believes it has been successful in establishing strategic partnerships with a strong group of companies who are either industry leaders or well-regarded new entrants.

Human Capital

Alithya employed approximately 2,400 professionals as at March 31, 2021 and approximately 3,000 professionals following the closing of the R3D Transaction, none of which were covered by collective bargaining agreements. Alithya views its professionals as its greatest asset and an important competitive advantage and therefore strives on offering them a world-class work experience. As such, as part of its three-to-five-year strategic plan, Alithya has set to achieve best-in-class employee engagement by fostering a culture of collaboration, diversity and ownership, by cultivating employee well-being and personal growth and by investing in the development of its leaders and employees.

Alithya also prides itself on offering to its permanent professionals the right to acquire subordinate voting shares of Alithya pursuant to its Employee Share Purchase Plan (“ESPP”). The ESPP allows Alithya’s professionals to participate in the success they create, instills the ownership culture envisioned by Alithya and ensures strong dedication to offering quality services to clients.

Special Skills and Knowledge

Alithya operates in an industry where the skills and knowledge required to serve its clients are constantly evolving and are in high demand from market competitors. Alithya relies on a threefold approach to ensure it always lines-up the right team to meet its clients’ needs. Firstly, to retain and maintain highly-skilled professionals, Alithya offers its professionals competitive compensation packages and leadership and core competencies development programs, including through the Alithya Leadership Academy. Secondly, Alithya is always on the lookout for opportunities to complement its team’s expertise and industry knowledge through targeted business acquisitions. Thirdly, Alithya actively seeks talented and skilled professionals through various recruitment strategies, including an employee referral bonus program, a skilled recruitment team, participation at career fairs and widespread job postings.

Principal Office Locations

Alithya has a presence in Canada, the U.S. and Europe and services its clients from its principal offices in the locations listed in the table below.

CANADA UNITED STATED EUROPE
Montréal, Québec Alpharetta, GA Aix-en-Provence, France
Québec, Québec White Plains, NY Sophia-Antipolis, France
Toronto, Ontario Athens, AL
Pickering, Ontario
Gatineau, Québec

Intellectual Property

Through its practices and expertise, Alithya leverages its proprietary innovations, methodologies and other intellectual property when providing strategic advice to its clients. Alithya actively protects its intellectual property and has registered, or applied for registration of, Canadian, U.S. and international trademarks, service marks, domain names and copyrights.

ALITHYA – Annual Information Form 7


Alithya also owns licenses in a number of trademarks, copyrights, and other intellectual property rights relating to its solutions and services.

Alithya’s intellectual property portfolio includes the following solutions:

AI-FITM solutions. These solutions leverage Alithya’s range of proprietary applications using artificial intelligence, machine learning and deep learning techniques. A play on the term hi-fi, short for high fidelity, the AI-FITM brand integrates the concepts of artificial intelligence (and its acronym AI) and fidelity (FI). Alithya’s AI-FITM solutions include:

AI-FITM Connect: a plugin-based data connector that enables integration between various data sources, designed to receive data from a source, structure it, replicate the structure to a destination, and automatically send new data to the destination as it becomes available.

AI-FITM Ultrasonic: detects wear-induced flaws in a nuclear plant’s fuel channels, a critical aspect of the operation and regulation of these plants.

AI-FITM Suitability Assessment: offers companies looking to leverage machine learning an in-depth review of their data and business processes to determine an AI strategy that’s right for them.

AI-FITM Enablement: allows organizations to adapt a swift deployment and integration of AI analytics.

Askida CTTM. This solution allows clients to test the functionality of applications on all platforms and in any programming language by running a series of systematic and repeatable tests and presents the results and status through sophisticated dashboards. Alithya recently launched a version of this solution which allows to automate test for Oracle modules.

Capsure RFTM. Capsure RFTM is a cloud-based platform that was purpose-built for healthcare providers to maximize inventory management processes. Capsure RFTM is a modern and open technology that has real time integration into Oracle Cloud ERP applications and can be integrated into other systems if necessary. Capsure RFTM’s four main functions are Mobile Supply Chain Automation, PAR Inventory, RFID for Inventory / Medical Equipment and Patient Charge Capture or Point of Use.

CASSITM Analytics and KPIs. These solutions help nuclear plants reduce the work needed to generate and distribute maintenance performance reports and provide insight into opportunities to streamline maintenance. CASSITM software drives accountability and tracks progress against corporate and site-based performance goals for work week leaders, planners, schedulers, operations and maintenance staff. CASSITM Analytics and KPIs include:

CASSITM Analytics for Online Weekly Maintenance: supports the continuous improvement of Nuclear Online Preparation, Execution, Backlog and Reliability-centered activities.

CASSITM Analytics for Outage Management: automates the generation of KPIs and objectively tracks and trends corporate targets.

CASSITM Analytics for PetroChem Turnarounds: delivers key performance indicators in support of continuous improvement, essential to a successful turnaround.

CASSITM Analytics for Maintenance and Reliability: supports the continuous improvement of Preparation, Execution, Backlog, and Reliability-centered activities for value-based maintenance organizations.

//SIDERTM. //SIDERTM is a secure solution that facilitates distribution of medical results to healthcare facilities and to centralized electronic health records. It acts as an integrated system for the electronic distribution of results, facilitating the work of all the health professionals, health clinics and laboratory managers involved in monitoring medical results.

While its proprietary intellectual property is important to its success, Alithya believes its business as a whole is not currently materially dependent on any particular intellectual property right, as its expertise spans from its practices and from providing high-end consulting advice to its client base.

RISK AND UNCERTAINTIES

A discussion of the risks and uncertainties to which the Company is subject is presented in section titled “Risks and Uncertainties” of the Company’s management’s discussion and analysis for the fiscal years ended March 31, 2021 and 2020, incorporated herein by reference, and in the Company’s other materials made public from time to time, all of which are available on SEDAR at www.sedar.com and EDGAR at www.sec.gov and on the Company’s website at www.alithya.com under the “Investors” section. Additional risks and uncertainties not currently known to the Company or that the Company currently deems to be immaterial could also have a material adverse effect on its financial position, financial performance, cash flows, business or reputation. Also see the section entitled “Forward-Looking Statements” on page 2 of this Annual Information Form for a discussion of risks associated with forward‐looking statements.

ALITHYA – Annual Information Form 8


DIVIDENDS

The Company does not currently expect to pay dividends on the subordinate voting shares or the multiple voting shares in the foreseeable future. The Company anticipates that it will retain all earnings, if any, to support its operations. Any future determination as to the payment of dividends will, subject to Canadian legal requirements and the Company’s articles, be at the sole discretion of the Board and will depend on the Company’s financial condition, results of operations, capital requirements and other factors the Board deems relevant. Currently, the provisions of the Company’s Credit Facility place certain limitations on the amount of cash dividends that the Company could pay.

CAPITAL STRUCTURE

Description of Securities

The authorized share capital of the Company consists of (i) an unlimited number of subordinate voting shares, without par value, which are listed under the symbol ALYA on both the TSX and NASDAQ, (ii) an unlimited number of multiple voting shares, without par value, which are held by a limited number of holders, and (iii) an unlimited number of preferred shares, without par value, issuable in series, of which, as at March 31, 2021, 51,373,822 subordinate voting shares and 7,321,616 multiple voting shares were issued and outstanding.

The following summary of the material features of the Company’s authorized share capital is given subject to the detailed provisions of its articles.

Voting Rights

Each subordinate voting share entitles its holder to one vote per share, and each multiple voting share entitles its holder to ten votes per share at any meeting of shareholders, other than meetings at which only the holders of a particular class or series of shares are entitled to vote due to statutory provisions or the specific attributes of this class or series. If and when issued, preferred shares will have such voting rights as may be determined by the Board at the time of issuance thereof.

The subordinate voting shares are “restricted securities” within the meaning of such term under applicable Canadian securities laws in that they do not carry equal voting rights with the multiple voting shares. In the aggregate, all of the voting rights associated with the subordinate voting shares represented, as at March 31, 2021, 41.23% of the voting rights attached to all of the issued and outstanding shares.

Rights to Dividends and Rights upon Winding-up and Dissolution

Subject to the prior rights of holders of preferred shares which rank prior to subordinate voting shares and multiple voting shares, if and when issued, holders of subordinate voting shares and multiple voting shares are entitled to receive pari passu any dividends and the remainder of the Company’s property in the event of a voluntary or involuntary winding up or dissolution, or any other distribution of assets among shareholders for the purposes of winding up the Company’s affairs.

Multiple Voting Shares Conversion Rights

Multiple voting shares are, at the holder’s entire discretion, convertible into subordinate voting shares on a share for share basis and shall be automatically converted upon their transfer to a person who is not a Permitted Holder (as defined below) or upon the death of a Permitted Holder, unless acquired by any of the remaining Permitted Holders in accordance with the terms of the voting agreement dated November 1, 2018 entered into between the Permitted Holders (the “Voting Agreement”), a copy of which is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. The multiple voting shares are not convertible into any other class of shares. Under applicable Canadian laws, an offer to purchase multiple voting shares would not necessarily require that an offer be made to purchase subordinate voting shares. However, as indicated above, multiple voting shares shall be automatically converted into subordinate voting shares on a share for share basis upon their transfer to a person who is not a Permitted Holder. If and when issued, preferred shares will have such conversion rights as may be determined by the Board at the time of issuance thereof.

For purposes of the above and below paragraphs, a “Permitted Holder” means each of Paul Raymond, Ghyslain Rivard, and Pierre Turcotte, and the entities over which they have control.

Restrictions on Transfer

Subject to the terms of the Voting Agreement, Permitted Holders cannot sell or otherwise transfer multiple voting shares to a person who is not a Permitted Holder, unless they first convert those shares into subordinate voting shares on a share for share basis, and then transfer such subordinate voting shares.

ALITHYA – Annual Information Form 9


MARKET FOR SECURITIES

Trading Price and Volume

Alithya’s subordinate voting shares are traded on the TSX and on NASDAQ under symbol “ALYA” since November 2, 2018. The table below shows the monthly range of high and low prices per share and the total monthly volumes for Alithya’s subordinate voting shares on the TSX for the fiscal year ended March 31, 2021.

MONTH HIGH ($) LOW ($) MONTHLY VOLUME
April 2020 2.62 2.14 355,215
May 2020 2.73 2.20 268,337
June 2020 2.94 2.10 640,303
July 2020 2.34 2.00 437,535
August 2020 3.28 2.09 719,888
September 2020 3.17 2.40 623,294
October 2020 3.92 3.03 578,881
November 2020 3.81 3.01 384,606
December 2020 3.30 2.70 658,633
January 2021 3.39 2.68 350,889
February 2021 6.91 2.56 2,847,854
March 2021 4.26 2.60 3,465,433

DIRECTORS AND OFFICERS

Board of Directors

The articles of the Company provide for the Board to consist of a minimum of 3 and a maximum of 15 directors. As at June 9, 2021, the Board is comprised of 9 members. The following table lists the name and place of residence of the current directors of the Company, as well as their principal occupation and their previously held positions during the last five years.

NAME AND PLACE OF RESIDENCE POSITION WITH THE COMPANY PRINCIPAL OCCUPATION

DIRECTOR SINCE(1)

PREVIOUS HELD POSITIONS
Dana Ades-Landy
Québec (Canada)
Director Corporate Director and Contract Position in the Special Loans Group, National Bank of Canada November 2016 Chief Executive Officer, Heart & Stroke Foundation of Canada (Québec)
Robert Comeau
Québec (Canada)
Lead Director Corporate Director and Lead Director of the Company May 2018
Fredrick DiSanto
Ohio (USA)
Director Chairman and Chief Executive Officer, Ancora Holdings Inc. November 2018
Lucie Martel
Québec (Canada)
Director Senior Vice-President and Chief Human Resources Officer, Intact Financial Corporation September 2019
Paul Raymond
Québec (Canada)
President and Chief Executive Officer
Director
President and Chief Executive Officer of the Company June 2011
James Renacci
Ohio (USA)
Director Founder and President of LTC Management Services, Inc. November 2019
Ghyslain Rivard
Québec (Canada)
Director Founder of the Company and Corporate Director April 1992
C. Lee Thomas
Ohio (USA)
Director Corporate Director and Executive in Residence of the School of Business of Baldwin Wallace University November 2018
Pierre Turcotte
Québec (Canada)
Chairman of the Board
Director
Corporate Director and Chairman of the Board of the Company June 2011

(1)     Includes periods during which certain directors served as directors of predecessors of the Company.

ALITHYA – Annual Information Form 10


The directors of the Company are elected at the Annual General Meeting. They hold office until their term expires at the following Annual General Meeting, subject to re-election, retirement, resignation or earlier vacancy.

The mandate for the Board provides that the Board shall be constituted at all times of a majority of individuals who are independent directors within the meaning of applicable Canadian and United States securities laws and the NASDAQ corporate governance standards (the “Independence Rules”). Based on the information received from each director and having taken into account the independence criteria set forth in the Independence Rules, the Board concluded that all directors are independent, with the exception of Paul Raymond, who is not independent as he is the President and Chief Executive Officer of the Company, and Pierre Turcotte, who was deemed not to be independent until March 31, 2021, as he rendered to Pre-IPO Alithya paid consulting services exceeding $75,000 during a 12-month period within the three fiscal years preceding the fiscal year ended March 31, 2021.

All other directors of the Company, namely Dana Ades-Landy, Robert Comeau, Fredrick DiSanto, Lucie Martel, James Renacci, Ghyslain Rivard and C. Lee Thomas are independent directors within the meaning of the Independence Rules. Each of them has no material relationship with the Company and, in the reasonable opinion of the Board, is independent under the Independence Rules.

The Board has an Audit and Risk Management Committee, a Corporate Governance and Nominating Committee and a Human Capital and Compensation Committee. The table below sets out the composition of each committee.

AUDIT & RISK MANAGEMENT COMMITTEE CORPORATE GOVERNANCE AND NOMINATING COMMITTEE HUMAN CAPITAL AND COMPENSATION COMMITTEE
Dana Ades-Landy Fredrick Di Santo Lucie Martel (Chair)
Robert Comeau (Chair) Ghyslain Rivard Ghyslain Rivard
C. Lee Thomas Pierre Turcotte (Chair) Pierre Turcotte

Executive Officers

The following table lists the name and place of residence of the current executive officers of the Company, as well as their current position with the Company and their previously held positions during the last five years.

NAME

CURRENT POSITION

EXECUTIVE OFFICE SINCE (1)

PREVIOUSLY HELD POSITION

Nathalie Forcier
Québec (Canada)
Chief Legal Officer and Corporate Secretary September 2018 Vice-President, Legal, CGI Inc.
Nigel Fonseca
Ontario (Canada)
Senior Vice President, Ontario and Western Canada June 2018 Chief Executive Officer, Systemware Innovation Corporation
Regional VP, Ontario and Western Canada
Robert Lamarre
Québec (Canada)
Chief Information Officer April 2016
Dany Paradis
Québec (Canada)
Senior Vice President, Québec and Oracle Practices Canada November 2018 Vice-President, Oracle Consulting Services
Vice-President, Management Integrated Systems
Natalie Piccinin
Québec (Canada)
Senior Vice President, Human Capital January 2019 Vice President, People and Culture, Belron Canada Inc.
Paul Raymond
Québec (Canada)
President and Chief Executive Officer and Director April 2011
Claude Rousseau
Florida (USA)
Chief Operating Officer January 2015
Russell Smith
Alabama (USA)
President, Alithya USA November 2018 President, Fullscope, Inc.
Claude Thibault
Québec (Canada)
Chief Financial Officer August 2018 Chief Financial Officer,
DCM Group Inc.

(1)    Includes periods during which certain executive officers served as executive officers of predecessors of the Company.

Directors’ and Executive Officers’ Share Ownership

As at June 9, 2021, the directors and executive officers of the Company, as a group, beneficially owned, directly or indirectly, or exercised control or direction over 3,346,438 subordinate voting shares and 7,321,616 multiple voting shares, representing respectively 4.37% of the issued and outstanding subordinate voting shares and 100% of the issued and outstanding multiple voting shares.

ALITHYA – Annual Information Form 11


Cease Trade Orders, Bankruptcies, Penalties or Sanctions

To the knowledge of the Company and based upon information provided to it by the Company’s directors and executive officers, no such person (including any personal holding company), is or has been, in the last ten years, a director, chief executive officer or chief financial officer of a company, including Alithya, that: (a) while such person was acting in that capacity, was the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more that 30 consecutive days; or (b) was subject to an event that occurred while such person was acting in that capacity which resulted, after that person ceased to act in that capacity, in the company being the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more that 30 consecutive days.

To the knowledge of the Company and based upon information provided to it by the Company’s directors, executive officers and shareholders holding sufficient securities to affect materially the control of the Company, as applicable, no such person (including any personal holding company): (a) is, or has been in the last ten years, a director or executive officer of any company (including Alithya) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (b) has, in the last ten years, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold their assets.

To the knowledge of the Company and based upon information provided to it by the Company’s directors, executive officers and shareholders holding sufficient securities to affect materially the control of the Company, as applicable, no such person (including any personal holding company) has been subject to: (a) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (b) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor making an investment decision.

Conflicts of Interest

To the knowledge of the Company, no director or officer of the Company has any existing or potential material conflicts of interest with the Company or any of its subsidiaries.

AUDIT AND RISK MANAGEMENT COMMITTEE

The Audit and Risk Management Committee (the “Audit Committee”), of which the charter is attached as Appendix “A” to this Annual Information Form, is currently composed of 3 members: Dana Ades-Landy, Robert Comeau and C. Lee Thomas, who have been members of the Audit Committee since at least the annual meeting of shareholders held on September 16, 2020. Dana Ades-Landy, Robert Comeau and C. Lee Thomas are each independent from the Company as required under the Independence Rules. In addition, each of the members of the Audit Committee is “financially literate” within the meaning of Independence Rules.

Relevant Education and Experience

The education and experience of each Audit Committee member that is relevant to the performance of his or her responsibilities as an Audit Committee member is as follows:

Robert Comeau brings significant financial expertise to the Audit Committee. He served as Chief Financial Officer of both public and private companies from 2005 to 2015 and currently sits as the Chair of the Audit Committee of H2O Innovation Inc. Mr. Comeau holds a Bachelor’s degree in accounting from HEC Montreal and is a Chartered Professional Accountant (CPA, CA).

Dana Ades-Landy has extensive financial expertise. With more than 25 years of experience as an executive in the banking industry, she currently holds a contract position with the Special Loans Group of the National Bank of Canada and serves as Chair of the Audit Committee of First Lion Holdings Inc. and Canada Mortgage and Housing Corporation. She holds a Master of Business Administration in finance/accounting from Concordia University.

C. Lee Thomas brings valuable financial expertise to the Audit Committee. He has held various roles at Ernst & Young LLP from 1976 to 2014, including that of Managing Partner. He holds a Bachelor’s degree in accounting from Baldwin Wallace University and is a Certified Public Accountant (CPA). He also currently teaches at Baldwin Wallace University.

Pre‐approval Policies and Procedures

The Audit Committee has adopted procedures for the pre-approval of engagement for services of its external auditors, which require pre-approval of all audit and non-audit services provided by the external auditors. Moreover, the Board, upon recommendation of the Audit Committee, approves, on an annual basis, the fees charged to the Company by the external auditors during the preceding year.

ALITHYA – Annual Information Form 12


AUDITORS

Independence

Raymond, Chabot, Grant Thornton LLP (“RCGT”) is the external auditor who prepared the report relating to the audit of the Company’s annual consolidated financial statements for the year ended March 31, 2021 and notes thereto, presented under the International Financial Reporting Standards. RCGT has confirmed that it is independent with respect to the Company within the meaning of the relevant rules and related interpretations prescribed by the relevant professional bodies in Canada and any applicable legislation or regulation as of the date hereof.

Service Fees

The fees billed by RCGT in each of the years ended March 31, 2021 and 2020 for audit, audit-related, tax and all other services provided to the Company by RCGT were as follows:

FISCAL YEAR ENDED MARCH 31
2021 2020

Audit fees(1)

$ 695,000 $ 659,000

Audit-related fees(2)

$ 20,606 $ 102,344

Tax fees(3)

$ 11,311 $ 81,405

All other fees(4)

Total $ 726,917 $ 842,749

(1)    “Audit fees” means the aggregate fees billed in each of the fiscal years for professional services rendered by RCGT for the audit of the Company’s annual consolidated financial statements and review of the Company’s interim condensed consolidated financial statements.

(2)    “Audit-related fees” includes assurance and related services reasonably related to the audit of the Company’s annual consolidated financial statements not included in audit services which are included in the “Audit fees” category as well as, for the fiscal year ended March 31, 2020, financial and tax due diligence related to the acquisition of Travercent, LLC.

(3)    “Tax fees” means the aggregate fees billed in each of the fiscal years for professional services rendered by RCGT for tax compliance and tax advice.

(4)    “All other fees” includes the aggregate of all other fees billed in each of the fiscal years. There were no other fees incurred in either fiscal year.

Pursuant to the terms of its mandate, the Audit Committee reviews and approves all audit and audit-related services, audit engagement fees and terms, and all non-audit engagements performed by the external auditors.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

During the ordinary course of conducting its business, Alithya may be threatened with or become subject to legal proceedings initiated by third parties or Alithya’s clients or regulatory proceedings from the authorities. Alithya currently has no material legal or regulatory proceedings pending.

INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS

To the knowledge of the Company and based upon information provided to it by the Company’s directors and executive officers, there were no (a) directors or executive officers, (b) persons that beneficially own, or control or direct, directly or indirectly, more than 10% of Alithya’s subordinate voting shares or multiple voting shares, or (c) any associate or affiliate of persons referred to in (a) and (b), with a material interest in any transaction within the three most recently completed financial years that has materially affected the Company or is reasonably expected to materially affect the Company.

TRANSFER AGENTS AND REGISTRARS

The Company’s transfer agent for the Company’s subordinate voting shares and multiple voting shares is AST Trust Company (Canada) (“AST”), whose head office is located in Toronto, Ontario. Share transfer service is available at AST’s Montréal, Québec and Toronto, Ontario offices in Canada as well as at the offices of American Stock Transfer & Trust Company, LLC in Brooklyn, NY, USA.

ALITHYA – Annual Information Form 13


MATERIAL CONTRACTS

Except for those contracts entered into in the ordinary course of business, the following material contracts of the Company were entered into during the year ended March 31, 2021 and are still in effect as of the date hereof:

The Amended and Restated Credit Agreement entered into on June 18, 2020 among the Company, The Bank of Nova Scotia, as Administrative Agent, the other lenders named therein and each of the guarantors party thereto.

ADDITIONAL INFORMATION

Additional information, including, without limitation, directors’ and officers’ remuneration and indebtedness, principal shareholders of the Company, and securities authorized for issuance under equity compensation plans is contained in the Company’s management information circular prepared in respect of its annual meeting of shareholders held on September 16, 2020.

Additional information regarding the Company, including financial information, can also be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov, including the Company’s annual audited consolidated financial statements and management’s discussion & analysis for the fiscal years ended March 31, 2021 and 2020 and the aforementioned management information circular. Those documents may also be obtained at no charge from the Company upon request at:

Investor Relations
Alithya Group inc.
1100, Robert-Bourassa Boulevard
Suite 400
Montréal, Québec, H3B 3A5
Tel.: 1-844-985-5552
Email:
investorrelations@alithya.com

Those documents, as well as all of the Company’s news releases, are also available on the Company’s website at www.alithya.com. Information contained in or otherwise accessible through the Company’s website is not incorporated by reference into this Annual Information Form.

ALITHYA – Annual Information Form 14


APPENDIX A – AUDIT AND RISK MANAGEMENT COMMITTEE CHARTER

PURPOSE

1.The Audit and Risk Management Committee (the “Committee”) is a standing committee appointed by the board of directors (the “Board”) of Alithya Group Inc. (the “Company”). The Committee is established to fulfil applicable public company obligations relating to audit committees and to assist the Board in fulfilling its oversight responsibilities with respect to financial reporting including responsibility to:

(a)    oversee the integrity of the Company’s financial statements and financial reporting process, including the audit process and the Company’s internal accounting controls and procedures and compliance with related legal and regulatory requirements;

(b)    oversee the qualifications and independence of the external auditors;

(c)    oversee the work of the Company’s financial management, internal auditors and external auditors in these areas; and

(d)    provide an open avenue of communication between the external auditors, the internal auditors, the Board and management, as applicable.

2.In addition, the Committee shall prepare, if required, an audit committee report for inclusion in the Company’s annual management information circular, in accordance with applicable rules and regulations. The Committee is also responsible for assisting the Board in fulfilling its responsibilities relating to pension matters.

3.The function of the Committee is oversight. It is not the duty or responsibility of the Committee or its members (i) to plan or conduct audits, (ii) to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles or (iii) to conduct other types of auditing or accounting reviews or similar procedures or investigations. The Committee, its Chair and its audit committee financial expert members are members of the Board of the Company, appointed to the Committee to provide broad oversight of the financial, risk and control related activities of the Company, and are specifically not accountable or responsible for the day-to-day operation or performance of such activities.

4.Management is responsible for the preparation, presentation and integrity of the Company’s financial statements. Management is also responsible for maintaining appropriate accounting and financial reporting principles and policies and systems of risk assessment and internal controls and procedures designed to provide reasonable assurance that assets are safeguarded and transactions are properly authorized, recorded and reported and to assure the effectiveness and efficiency of operations, the reliability of financial reporting and compliance with accounting standards and applicable laws and regulations. Management is also responsible for monitoring and reporting on the adequacy and effectiveness of the system of internal controls. The external auditors are responsible for planning and carrying out an audit of the Company’s annual financial statements in accordance with generally accepted auditing standards to provide reasonable assurance that, among other things, such financial statements are in accordance with generally accepted accounting principles.

PROCEDURES AND POWERS

General

The Committee shall have the following procedures and powers:

1.Composition – The Committee shall be composed of a minimum of three members. None of the members of the Committee shall be an officer or employee of the Company or any of its subsidiaries and each member of the Committee shall be an independent director within the meaning of applicable Canadian and United States securities laws and the NASDAQ corporate governance standards.

2.All members of the Committee must be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement, and cash flow statement and be “financially literate” (as that term is defined from time to time under the requirements or guidelines for audit committee service under applicable Canadian and United States securities laws and the rules of the Toronto Stock Exchange). At least one member of the Committee must also be an audit committee financial expert (as that term is defined from time to time under the requirements or guidelines for audit committee service under applicable Canadian and United States securities laws and the rules of the Toronto Stock Exchange and the NASDAQ).

3.Appointment and Replacement of Committee Members – Any member of the Committee may be removed or replaced at any time by the Board and shall automatically cease to be a member of the Committee upon ceasing to be a director. The Board may fill vacancies on a Committee by appointing another director to the Committee. The Board shall fill any vacancy if the membership of the Committee is less than three directors. Whenever there is a vacancy on

ALITHYA – Annual Information Form 15


the Committee, the remaining members may exercise all its power as long as a quorum remains in office. Subject to the foregoing, the members of the Committee shall be appointed by the Board annually and each member of a Committee shall remain on the Committee until the next annual meeting of shareholders after his or her appointment or until his or her successor shall be duly appointed and qualified.

4.Committee Chair – The Board shall designate the Chair by majority vote. If the Chair is absent from a meeting, the members shall select a Chair from those in attendance to act as Chair of the meeting. The Chair of the Committee shall be responsible for leadership of the Committee assignments and reporting to the Board.

5.Conflicts of Interest – If a Committee member faces a potential or actual conflict of interest relating to a matter before the Committee, other than matters relating to the compensation of directors, that member shall be responsible for alerting the Committee Chair. If the Committee Chair faces a potential or actual conflict of interest, the Committee Chair shall advise the Chair of the Board. If the Committee Chair, or the Chair of the Board, as the case may be, concurs that a potential or actual conflict of interest exists, the member faced with such conflict shall disclose to the Committee his or her interest and shall not participate in consideration of the matter and shall not vote on the matter.

6.Service on Multiple Audit Committees – If a Committee member serves on the audit committee of more than three public companies, including the Company, the Board must determine that such service would not impair the ability of the member to effectively serve on the Committee.

7.Compensation of Committee Members – The members of the Committee shall be entitled to receive such remuneration for acting as members of the Committee as the Board may from time to time determine.

8.Meetings – The Committee shall meet regularly at times necessary to perform the duties described herein in a timely manner, but not less than four times a year and any time the Company proposes to issue a press release with its quarterly or annual earnings information. The Committee shall also meet without management present at every meeting. Meetings may be held at any time deemed appropriate by the Committee.

(1)    Calling of Meetings – The Committee shall meet as often as it deems appropriate to discharge its responsibilities. Notice of the time and place of every meeting shall be given in writing, by any means of transmitted or recorded communication, including facsimile, email or other electronic means that produces a written copy, to each member of the Committee at least 48 hours prior to the time fixed for such meeting, with a copy to the Chair of the Board, the Chief Executive Officer and the Corporate Secretary of the Company. However, a member may in any manner waive a notice of a meeting. Attendance of a member at a meeting constitutes a waiver of notice of the meeting, except where a member attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. Whenever practicable, the agenda for the meeting and the meeting materials shall be provided to members before each Committee meeting in sufficient time to provide adequate opportunity for their review.

(2)    Quorum – A majority of the members constitute a quorum for the transaction of the Committee business.

(3)    Secretary of Meeting – The Chair of the Committee shall designate a person who need not be a member of the Committee to act as secretary or, if the Chair of the Committee fails to designate such a person, the Corporate Secretary of the Company shall be secretary of the Committee. The agenda of the Committee meeting will be prepared by the secretary of the Committee and, whenever reasonably practicable, circulated to each member prior to each meeting.

(4)    Minutes – Minutes of the proceedings of the Committee shall be kept in a minute book provided for that purpose. The minutes of the Committee meetings shall accurately record the discussions of and decisions made by the Committee, including all recommendations to be made by the Committee to the Board and shall be distributed to all Committee members.

9.Separate Executive and In-Camera Meetings – The Committee shall meet periodically with the Chief Financial Officer, the head of the internal audit function (if other than the Chief Financial Officer) and the external auditors in separate executive sessions to discuss any matters that the Committee or each of these groups believes should be discussed privately and such persons shall have access to the Committee to bring forward matters requiring its attention. The Committee shall also meet periodically without management present.

10.Professional Assistance – The Committee may require the external auditors and internal auditors to perform such supplemental reviews or audits as the Committee may deem desirable. In addition, the Committee may retain such special legal, accounting, financial or other consultants as the Committee may determine to be necessary to carry out the Committee’s duties at the Company’s expense.

11.Reliance – Absent actual knowledge to the contrary (which shall be promptly reported to the Board), each member of the Committee shall be entitled to rely on (i) the integrity of those persons or organizations within and outside the Company from which it receives information, (ii) the accuracy of the financial and other information provided to the Committee by such persons or organizations and (iii) representations made by management and the external auditors as to any information technology, audit and other non-audit services provided by the external auditors to the Company and its subsidiaries.

ALITHYA – Annual Information Form 16


12.Reporting to the Board – The Committee will report through the Committee Chair to the Board following meetings of the Committee on matters considered by the Committee, its activities and compliance with this Charter.

13.Outsiders May Attend Meetings – The Committee may invite members of management or others to attend meetings or provide information as necessary. The Company’s external auditors will have direct access to the Committee at their own initiative.

Powers

14.The Committee shall have the following powers:

(a)    Access – The Committee is entitled to full access to all books, records, facilities, and personnel of the Company and its subsidiaries. The Committee may require such officers, directors and employees of the Company and its subsidiaries and others as it may see fit from time to time to provide any information about the Company and its subsidiaries it may deem appropriate and to attend and assist at meetings of the Committee.

(b)    Delegation – The Committee may delegate from time to time to any person or committee of persons any of the Committee’s responsibilities that lawfully may be delegated.

(c)    Adoption of Policies and Procedures – The Committee may adopt policies and procedures for carrying out its responsibilities.

AUDIT RESPONSIBILITIES OF THE COMMITTEE

Selection and Oversight of the External Auditors

1.The external auditors are ultimately accountable to the Committee and the Board as the representatives of the shareholders of the Company and shall report directly to the Committee and the Committee shall so instruct the external auditors. The Committee shall annually evaluate the performance of the external auditors and propose the appointment of the external auditors of the Company in the Company’s management information circular for shareholder approval. If the Committee deems it in the best interest of the Company to proceed with a change in external auditors, the Committee shall report to the Board the reasons for the change and any other significant issues related to the change, including the response of the incumbent external auditors, and enquire on the qualifications of the proposed external auditors before approving or rejecting the proposed change in external auditors.

2.The Committee shall approve in advance the terms of engagement and the compensation to be paid by the Company to the external auditors with respect to the conduct of the annual audit. The Committee may approve policies and procedures for the pre-approval of services to be rendered by the external auditors, which policies and procedures shall include reasonable detail with respect to the services covered. All non-audit services to be provided to the Company or any of its affiliates by the external auditors or any of their affiliates which are subject to pre-approval by the Committee shall be approved by the Committee or the Chair of the Committee, in accordance with the Committee’s Pre-Approval Policies and Procedures.

3.The Committee shall annually review the independence of the external auditors and shall make recommendations to the Board on appropriate actions to be taken which the Committee deems necessary to protect and enhance the independence of the external auditors. In connection with such review, the Committee shall:

(a)    actively engage in a dialogue with the external auditors about all relationships or services that may impact the objectivity and independence of the external auditors;

(b)    require that the external auditors submit to it on a periodic basis, and at least annually, a formal written statement delineating all relationships between the Company and its subsidiaries, on the one hand, and the external auditors and their affiliates on the other hand;

(c)    ensure the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by applicable law;

(d)    consider whether there should be a regular rotation of the external audit firm itself; and

(e)    consider the external auditor independence standards promulgated by applicable auditing regulatory and professional bodies.

4.The Committee shall prohibit the external auditor and its affiliates from providing certain non-audit services to the Company and its affiliates.

5.The Committee shall establish and monitor clear policies for the hiring by the Company of employees or former employees of the external auditors.

6.The Committee shall require the external auditors to provide to the Committee, and the Committee shall review and discuss with the external auditors, all reports which the external auditors are required to provide to the Committee or

ALITHYA – Annual Information Form 17


the Board under rules, policies or practices of professional or regulatory bodies applicable to the external auditors, and any other reports which the Committee may require. Such reports shall include:

(a)    a description of the external auditors’ internal quality-control procedures, any material issues raised by the most recent internal quality-control review, or peer review, of the external auditors, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more audits carried out by the external auditors, and any steps taken to deal with any such issues; and

(b)    a report describing (i) all critical accounting policies and practices to be used in the annual audit, (ii) all alternative treatments of financial information within generally accepted accounting principles related to material items that have been discussed with management, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the external auditors and (iii) other material written communication between the external auditors and management, such as any management letter or schedule of unadjusted differences.

7.The Committee shall review the performance of the external auditors, including assessing their effectiveness and quality of service, annually and, every 5 years, perform a comprehensive review of the performance of the external auditors over multiple years to provide further insight on the audit firm, its independence and application of professional skepticism.

8.The Committee is responsible for resolving disagreements between management and the external auditors regarding financial reporting.

Appointment and Oversight of Internal Auditors

9.The appointment, terms of engagement, compensation, replacement or dismissal of internal auditors shall be subject to prior review and approval by the Committee. When the internal audit function is performed by employees of the Company, the Committee may delegate responsibility for approving the employment, term of employment, compensation and termination of employees engaged in such function other than the head of the Company’s internal audit function.

10.The Committee shall obtain from the internal auditors and shall review summaries of the significant reports to management prepared by the internal auditors, or the actual reports if requested by the Committee, and management’s responses to such reports, as applicable.

11.The Committee shall, as it deems necessary and applicable, communicate with the internal auditors with respect to their reports and recommendations, the extent to which prior recommendations have been implemented and any other matters that the internal auditor brings to the attention of the Committee. The head of the internal audit function shall have unrestricted access to the Committee.

12.The Committee shall, annually or more frequently as it deems necessary and applicable, evaluate the internal auditors including their activities, organizational structure and qualifications and effectiveness.

Oversight and Monitoring of Audits

13.The Committee shall review with the external auditors, the internal auditors and management, as applicable, the audit function generally, the objectives, staffing, locations, co-ordination, reliance upon management and internal audit and general audit approach and scope of proposed audits of the financial statements of the Company and its subsidiaries, the overall audit plans, the responsibilities of management, the internal auditors and the external auditors, the audit procedures to be used and the timing and estimated budgets of the audits.

14.The Committee shall meet periodically or as it deems necessary and applicable, with the internal auditors to discuss the progress of their activities and any significant findings stemming from internal audits and any difficulties or disputes that arise with management and the adequacy of management’s responses in correcting audit related deficiencies.

15.The Committee shall discuss with the external auditors any difficulties or disputes that arose with management or the internal auditors during the course of the audit and the adequacy of management’s responses in correcting audit-related deficiencies.

16.The Committee shall review with management the results of internal and external audits.

17.The Committee shall take such other reasonable steps as it may deem necessary to satisfy itself that the audit was conducted in a manner consistent with all applicable legal requirements and auditing standards of applicable professional or regulatory bodies.

Oversight and Review of Accounting Principles and Practices

18.The Committee shall, as it deems necessary, oversee, review and discuss with management, the external auditors and the internal auditors:

ALITHYA – Annual Information Form 18


(a)    the quality, appropriateness and acceptability of the Company’s accounting principles and practices used in its financial reporting, changes in the Company’s accounting principles or practices and the application of particular accounting principles and disclosure practices by management to new transactions or events;

(b)    all significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including the effects of alternative methods within generally accepted accounting principles on the financial statements and any “second opinions” sought by management from an external auditor with respect to the accounting treatment of a particular item;

(c)    any material change to the Company’s auditing and accounting principles and practices as recommended by management, the external auditors or the internal auditors or which may result from proposed changes to applicable generally accepted accounting principles;

(d)    the effect of regulatory and accounting initiatives on the Company’s financial statements and other financial disclosures;

(e)    any reserves, accruals, provisions, estimates or management programs and policies, including factors that affect asset and liability carrying values and the timing of revenue and expense recognition, that may have a material effect upon the financial statements of the Company;

(f)    the use of special purpose entities and the business purpose and economic effect of off-balance sheet transactions, arrangements, obligations, guarantees and other relationships of the Company and their impact on the reported financial results of the Company;

(g)    any legal matter, claim or contingency that could have a significant impact on the financial statements, the Company’s compliance policies and any material reports, inquiries or other correspondence received from regulators or governmental agencies and the manner in which any such legal matter, claim or contingency has been disclosed in the Company’s financial statements;

(h)    the treatment for financial reporting purposes of any significant transactions which are not a normal part of the Company’s operations;

(i)    the use of any “pro forma” or “adjusted” information not in accordance with generally accepted accounting principles; and

(j)    management’s determination of goodwill impairment, if any, as required by applicable accounting standards.

19.The Committee will review and resolve disagreements between management and the external auditors regarding financial reporting or the application of any accounting principles or practices.

Oversight and Monitoring of Internal Controls

20.The Committee shall, as it deems necessary, exercise oversight of, review and discuss with management, the external auditors and the internal auditors:

(a)    the adequacy and effectiveness of the Company’s internal accounting and financial controls and the recommendations of management, the external auditors and the internal auditors for the improvement of accounting practices and internal controls;

(b)    any significant deficiency and material weakness in the design or operation of internal control over financial reporting, including with respect to computerized information system controls and security; and

(c)    management’s compliance with the Company’s processes, procedures and internal controls.

Oversight and Monitoring of Reported Unethical Conduct

21.In accordance with the Company’s Whistleblower Policy, the Committee shall establish and monitor procedures for the receipt and treatment of complaints received by the Company regarding accounting, internal accounting controls or audit matters and the anonymous submission by employees of concerns regarding questionable accounting or auditing matters and review periodically or as it deems necessary and applicable, with management and the internal auditors these procedures and any significant complaints received.

Oversight and Monitoring of the Company’s Financial Disclosures

22.The Committee shall:

(a)    review with the external auditors and management and recommend to the Board for approval the annual audited financial statements and notes relating thereto and managements’ Discussion and Analysis accompanying such financial statements, the Company’s annual report and any financial information of the Company contained in any prospectus or information circular of the Company; and

ALITHYA – Annual Information Form 19


(b)    review with the external auditors and management each set of interim unaudited financial statements and notes related thereto and managements’ Discussion and Analysis accompanying such financial statements and any other disclosure documents or regulatory filings of the Company containing or accompanying financial information of the Company.

Such reviews shall be conducted prior to the release of any summary of the financial results or the filing of such reports with applicable regulators.

23.Prior to their distribution, the Committee shall discuss earnings press releases, as well as financial information and earnings guidance provided to analysts and any ratings agencies, it being understood that such discussions may, in the discretion of the Committee, be done generally (i.e., by discussing the types of information to be disclosed and the type of presentation to be made) and that the Committee need not discuss in advance each earnings release or each instance in which the Company gives earning guidance.

24.The Committee shall review the disclosure with respect to its pre-approval of audit and non-audit services provided by the external auditors.

Oversight of Finance Matters

25.Appointments of the key financial executives involved in the financial reporting process of the Company, including the Chief Financial Officer, shall require the prior review of the Committee.

26.The Committee shall receive and review:

(a)    periodic reports on compliance with requirements regarding statutory deductions and remittances;

(b)    material policies and practices of the Company respecting cash management and material financing strategies or policies or proposed financing arrangements and objectives of the Company; and

(c)    material tax policies and tax planning initiatives, tax payments and reporting and any pending tax audits or assessments.

27.The Committee shall meet periodically with management to review and discuss the Company’s major financial risk exposures and the policy steps management has taken to monitor and control such exposures, including the use of financial derivatives and hedging activities.

28.The Committee shall receive and review the financial statements and other financial information of material subsidiaries of the Company and any auditor recommendations concerning such subsidiaries.

29.The Committee shall meet with management to review the process and systems in place for ensuring the reliability of public disclosure documents that contain audited and unaudited financial information and their effectiveness.

Risk Oversight and Compliance

30.Assess risk tolerance of the Company, management’s program of risk assessment and steps taken to address significant risks or exposures, including insurance coverage, and obtain the external auditors’ opinion of management’s assessment of significant financial risks facing the Company and how effectively such risks are being managed or controlled.

31.(A) Review and monitor (i) management’s practices and policies with respect to the Company’s major security risks, including physical, information, and cybersecurity risks, and control thereof, in accordance with applicable legal and regulatory requirements, (ii) security trends that may impact the Company’s operations and business and evolving environment, (iii) contingency plans in the event of a security threat or breach, and (iv) initiatives in terms of development and implementation of appropriate communications and trainings, and (B) report to the Board on the Company’s compliance with such practices and policies and progress in remedying any significant deficiencies related thereto and, where appropriate, make recommendations.

32.Obtain regular updates from management and others, including internal and external auditors and legal counsel, concerning the Company’s compliance with financial related laws and regulations such as tax and financial reporting laws and regulations and legal withholding requirements.

33.Review the findings of any examination by regulatory agencies.

Committee Reporting

34.If required by applicable laws or regulations or stock exchange requirements, the Committee shall prepare, review and approve a report to shareholders and others (the “Report”). In the Report, the Committee shall state whether it has:

(a)    reviewed and discussed the audited or unaudited financial statements with management, the external auditors and the internal auditors, where applicable;

ALITHYA – Annual Information Form 20


(b)    received from the external auditors all reports and disclosures required under legal, listing and regulatory requirements and this Charter and have discussed such reports with the external auditors, including reports with respect to the independence of the external auditors; and

(c)    based on the reviews and discussions referred to in clauses (a) and (b) above, recommended to the Board that the audited financial statements be included in the Company’s annual report.

Additional Responsibilities

35.The Committee shall review and make recommendations to the Board concerning the financial structure, condition and strategy of the Company and its subsidiaries, including with respect to annual budgets, long-term financial plans, corporate borrowings, investments, capital expenditures, long-term commitments and the issuance and/or repurchase of stock.

36.The Committee shall review and/or approve any other matter specifically delegated to the Committee by the Board and undertake on behalf of the Board such other activities as may be necessary or desirable to assist the Board in fulfilling its oversight responsibilities with respect to financial reporting.

THE CHARTER

The Committee shall review and reassess the adequacy of this Charter at least annually and otherwise as it deems appropriate and recommend changes to the Board. The performance of the Committee shall be evaluated with reference to this Charter annually.

The Committee shall ensure that this Charter is disclosed on the Company’s website and that this Charter or a summary of it which has been approved by the Committee is disclosed in accordance with all applicable securities laws or regulatory requirements in the management information circular or annual report of the Company.

ALITHYA – Annual Information Form 21

Exhibit 99.3

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Management’s Discussion

and Analysis of Financial Condition and Results of Operations of Alithya Group inc.

For the year ended March 31, 2021


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Table of Contents

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021


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1. Basis of Presentation

This Management’s Discussion and Analysis (“MD&A”) provides a review of the results of operations, financial condition and cash flows for Alithya Group inc. for the three months and twelve months ended March 31, 2021. References to “Alithya”, the “Company”, the “Group”, “we”, “our” and “us” in this MD&A refer to Alithya Group inc. and its subsidiaries or any one or more of them, unless the context requires otherwise. This document should be read in conjunction with the information contained in the Company’s annual audited consolidated financial statements and accompanying notes for the years ended March 31, 2021 and 2020. The Company’s MD&A, financial statements, Annual Information Form, Annual Report on Form 40-F, and additional information regarding the business of the Company, are available under the Company’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and the Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”) at www.sec.gov.

For reporting purposes, the Company prepared the consolidated financial statements in Canadian dollars in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Unless otherwise indicated, all dollar (“$”) amounts and references in this MD&A are in Canadian dollars and references to “US$” are to US dollars. Variances, ratios and percentage changes in this MD&A are based on unrounded numbers.

This MD&A contains both IFRS and non-IFRS financial measures. See the section titled “Non-IFRS Measures”.

Unless otherwise stated, in preparing this MD&A, the Company has considered information available to it up to June 9, 2021, the date the Company’s Board of Directors (“Board”) approved this MD&A and the consolidated financial statements for the year ended March 31, 2021.

2. Forward-Looking Statements

This MD&A contains statements that may constitute “forward-looking information” within the meaning of applicable Canadian securities laws and “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and other applicable U.S. safe harbours (collectively “forward-looking statements”). Statements that do not exclusively relate to historical facts, as well as statements relating to management’s expectations regarding the future growth, results of operations, performance and business prospects of Alithya, and other information related to Alithya’s business strategy and future plans or which refer to the characterizations of future events or circumstances represent forward-looking statements. Such statements often contain the words “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “could,” “would,” “will,” “may,” “can,” “continue,” “potential,” “should,” “project,” “target,” and similar expressions and variations thereof, although not all forward-looking statements contain these identifying words.

Forward-looking statements in this MD&A include, among other things, information or statements about: (i) our ability to generate sufficient earnings to support our operations; (ii) our ability to take advantage of business opportunities and meet our goals set in our three-to-five-year strategic plan; (iii) our ability to develop new business, broaden the scope of our service offerings and enter into new contracts; (iv) our strategy, future operations, and prospects; (v) our need for additional financing and our estimates regarding our future financing and capital requirements; (vi) our expectations regarding our financial performance, including our revenues, profitability, research and development, costs and expenses, gross margins, liquidity, capital resources, and

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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capital expenditures; (vii) our ability to realize the expected synergies or cost savings relating to the integration of our business acquisitions, and (viii) the impact of the COVID-19 pandemic and related response measures on our business operations, financial results and financial position and those of our clients and on the economy in general.

Forward-looking statements are presented for the sole purpose of assisting investors and others in understanding Alithya’s objectives, strategies and business outlook as well as its anticipated operating environment and may not be appropriate for other purposes. Although management believes the expectations reflected in Alithya’s forward-looking statements were reasonable as at the date they were made, forward-looking statements are based on the opinions, assumptions and estimates of management and, as such, are subject to a variety of risks and uncertainties and other factors, many of which are beyond Alithya’s control, and which could cause actual events or results to differ materially from those expressed or implied in such statements. Such risks and uncertainties include but are not limited to those discussed in the section titled “Risks and Uncertainties” of this MD&A, as well as in Alithya’s other materials made public, including documents filed with Canadian and U.S. securities regulatory authorities from time to time and which are available on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Additional risks and uncertainties not currently known to Alithya or that Alithya currently deems to be immaterial could also have a material adverse effect on its financial position, financial performance, cash flows, business or reputation.

Forward-looking statements contained in this MD&A are qualified by these cautionary statements and are made only as of the date of this MD&A. Alithya expressly disclaims any obligation to update or alter any forward-looking statements, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by applicable law. Investors are cautioned not to place undue reliance on forward-looking statements since actual results may vary materially from them.

3. Business Overview

Alithya advises in strategy and digital transformation, with more than 3,000 professionals in Canada, the U.S., and Europe and assists clients in their pursuit of innovation and excellence and the achievement of their business objectives through the optimal use of digital technologies.

Alithya deploys solutions, services, and expert consultants to design, build and implement innovative and efficient solutions for the complex business challenges of its clients, tailored to their business needs in the financial services, renewable energy, manufacturing, telecommunications, transportation and logistics, professional services, healthcare and government sectors.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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Business Offerings

Alithya’s business offerings include a comprehensive range of digital technology services to address client needs:

Business Strategy. Alithya leads clients through essential decision-making processes regarding strategic planning, change management, systems evolution, operational processes, and more. Applying the most recurrent methodologies, we help our clients optimize efficiency and successfully navigate the digital transformation age. We achieve results by leveraging an array of Business Strategy services, including strategic consulting, digital transformation, organizational performance and enterprise architecture.

Application Services. Alithya’s experts guide clients through all facets of Application Services, from migration of legacy systems into future-ready digital solutions, to the development of completely new solutions using state-of-the-art technologies. Our experts assist our clients in the choice between cloud, on-premise, and hybrid hosting strategies and solutions. Alithya’s Application Solutions services include digital applications DevOps, legacy systems modernization, control and software engineering, cloud infrastructure, quality assurance and automated testing.

Enterprise Solutions. Working with key industry partners, including some of the world’s largest vendors of cloud-based Enterprise Solutions, Alithya’s experts help clients deploy company-wide systems to improve the efficiency of their finance, human capital, operations, and marketing functions. Alithya’s Enterprise Solutions services include Enterprise Resource Planning (ERP), Corporate Performance Management (CPM/EPM), Customer Relationship Management (CRM/CXM) and Human Capital Management (HCM).

Data and Analytics. Data analysis plays a critical role in the optimization of business processes. Leveraging specialized IT systems and software, Alithya’s data scientists help clients gain business insight and drive better decision-making through enhanced data collection, big data analytics, machine learning automation and reporting. Alithya’s Data and Analytics services include business intelligence, data management, artificial intelligence and machine learning, as well as Internet of Things (IoT).

Geographically, Alithya’s operations span across Canada, the United States and Europe, providing a full spectrum of strategy and digital technology services with deep expertise in a range of technologies and business domains.

Competitive Environment

Today, for many companies, digital systems and infrastructures are among their most important and strategic assets. Not only do these assets require significant investments, but they increasingly serve as key differentiators and drivers of growth for customers.

Accordingly, businesses are seeking solutions that allow them to maintain their ability to differentiate themselves from competitors with proprietary business processes, combined with product customization. That is where digital transformation comes into play, inviting companies to make a shift in their approach and to evolve from traditional information technologies to flexible digital technologies.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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As businesses’ technology spending continues to increase, digital technology firms such as Alithya are striving to deliver innovative thinking and in-depth vertical industry expertise, while facilitating business process transformation through the use of the most optimal technologies.

Alithya believes it is well positioned to respond to these trends in clients’ investments in digital technology. Alithya’s business model is built on a philosophy of offering flexible and creative solutions, enabling clients to realize maximum benefits from their digital technology investments. Alithya positions itself as an agile trusted advisor and consulting partner capable of delivering rapid results for its clients.

Alithya’s competitors include systems integration firms, contract programming companies, application software companies, cloud computing service providers, large or traditional consulting firms, professional services groups of computer equipment companies, infrastructure management and outsourcing companies and boutique digital companies. In addition, Alithya competes with numerous smaller local companies in the various geographic markets in which it operates.

Alithya competes based on the following principal differentiating factors: vision and strategic advisory ability, digital services capabilities, performance and reliability, quality of technical support, training and services, responsiveness to client needs, reputation and experience, financial stability and strong corporate governance and competitive pricing of services.

Alithya also relies on the following measures to compete effectively: (a) investments to scale its services practice areas; (b) a well-developed recruiting, training and retention model; (c) a successful service delivery model; (d) intrapreneurial culture and approach; (e) a broad referral base; (f) continual investment in process improvement and knowledge capture; (g) investment in infrastructure and research and development; (h) continued focus on responsiveness to client needs, quality of services and competitive prices; and (i) project management capabilities and technical expertise.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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4. Strategic Business Plan

Alithya has adopted a three-to-five-year strategic plan which sets as a goal to consolidate its position as to become a North American digital transformation leader.

According to this plan, Alithya’s consolidated scale and scope should allow it to leverage its geographies, expertise, integrated offerings, and position on the value chain to target the fastest growing IT services segments. Alithya’s specialization in digital technologies and the flexibility to deploy enterprise solutions, and deliver solutions tailored to specific business objectives, responds directly to client expectations.More specifically, Alithya has established a three-pronged plan focusing on:

Increasing scale through organic growth and strategic acquisitions by:

Generating profitable organic growth through innovation, higher-value offerings and client-relationships based on trust;

Completing value enhancing business acquisitions by way of a North American geographic expansion to complement current market presence, including geography, while progressively adding major integrated enterprise solutions offerings and selected specialized expertise;

Achieving best-in-class employee engagement by:

Fostering a culture of collaboration, diversity, and ownership;

Cultivating employee well-being and personal growth;

Investing in the development of its leaders and employees;

Providing its investors, partners and stakeholders with long-term growing return on investment by:

Strengthening its existing relationships with clients, as a key trusted advisor, by generating long-term value;

Investing in innovation and higher value service offerings;

Acting responsibly, with a sustainable and respectful vision for its stakeholders.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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5. Financial Highlights

Results of Operations Three months ended March 31, Year ended March 31,
(in $ thousands) 2021 2020 2021 2020
$ $ $ $
Revenues 77,971  73,181  287,643  279,007 
Net Loss (2,525) (33,975) (17,338) (39,667)

EBITDA (1)

922  (1,596) (840) 2,397 

EBITDA Margin (1)

1.2  % (2.2) % (0.3) % 0.9  %

Adjusted EBITDA (1)

3,262  2,015  9,645  11,792 

Adjusted EBITDA Margin (1)

4.2  % 2.8  % 3.4  % 4.2  %
 
Other March 31, March 31
(in $ thousands) 2021 2020
$ $
Total Assets 243,261  257,816 

Net Bank Borrowing (2)

21,100  26,940 
Total Long-Term Debt 54,951  53,229 
     
Shares and Stock Options Outstanding June 4,
2021
Class A subordinate voting shares (“Subordinate Voting Shares”) 76,556,498 
Class B multiple voting shares (“Multiple Voting Shares”) 7,321,616 

Options (3)

3,520,181 
Deferred Share Units (“DSU”) 330,246 
Restricted Share Units (“RSU”) 181,498 
   

1 These are non-IFRS financial measures defined below and accompanied by a reconciliation to the most directly comparable IFRS financial measure. Refer to the section below titled “Non-IFRS Financial Measures”.

2 This is a non-IFRS financial measure as defined below. Refer to the section below titled “Non-IFRS Financial Measures” and to section 10.6 for the calculated amount.

3 Includes 810,528 stock options to purchase Multiple Voting Shares.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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Q4-2021 Highlights

Revenues increased 6.5% to $78.0 million, compared to $73.2 million for the same quarter last year. The consolidated percentage increase would have been 7.7% assuming a constant US$ exchange rate

Gross margin increased 12.0% to $23.5 million, compared to $20.9 million for the same quarter last year

Gross margin as a percentage of revenues of 30.1%, higher than the same quarter last year, and increasing on a sequential basis from the third quarter

Adjusted EBITDA(1) increased 61.8% to $3.3 million, compared to $2.0 million in the same quarter last year, and a 42.3% sequential improvement compared to $2.3 million in the third quarter

Q4 bookings(1) reached $92.8 million, which translated into a book-to-bill ratio(1) of 1.23

Net loss of $2.5 million, or $0.04 per share, compared to a net loss of $34.0 million, or $0.59 per share, for the same quarter last year

F2021 Highlights

Revenues increased 3.1% to $287.6 million, compared to $279.0 million for fiscal 2020

Gross margin percentage decreased to 28.9%, from 29.7% year-over-year

Adjusted EBITDA(1) decreased 18.2% to $9.6 million, from $11.8 million last year

Fiscal 2021 bookings(1) reached $362.1 million, which translated into a book-to-bill ratio(1) of 1.31

Net loss of $17.3 million, or $0.30 per share, compared to a net loss of $39.7 million, or $0.70 per share last year

6. Non-IFRS Measures

This MD&A includes certain measures which have not been prepared in accordance with IFRS. These measures do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS.

The non-IFRS measures used by Alithya are described below:

“EBITDA” refers to net income before adjusting for income tax expense (recovery), financial expenses, amortization of intangibles, depreciation of property and equipment and right-of-use assets, and impairment of intangibles and goodwill. Management believes that EBITDA is a useful measure as it provides an indication of the results generated by Alithya’s main business activities prior to taking into consideration how those activities are financed and taxed. For a reconciliation of net loss to EBITDA, see the section titled “EBITDA and Adjusted EBITDA” below.

“EBITDA Margin” refers to the percentage of total revenue that EBITDA represents for a given period. See the section titled “EBITDA and Adjusted EBITDA” below.

“Adjusted EBITDA” refers to net income before adjusting for income tax expense (recovery), financial expenses, foreign exchange, amortization of intangibles, depreciation of property and equipment and right-

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 7


of-use assets, impairment of intangibles and goodwill, share-based compensation, business acquisitions and integration costs, severance, internal ERP systems implementation and other redundant and non-recurring items. Management believes that Adjusted EBITDA is a useful measure as it provides an indication of the results generated by Alithya’s main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration the non-cash and other items listed above. For a reconciliation of net loss to adjusted EBITDA, see the section titled “EBITDA and Adjusted EBITDA” below.

“Adjusted EBITDA Margin” refers to the percentage of total revenue that Adjusted EBITDA represents for a given period. See the section titled “EBITDA and Adjusted EBITDA” below.

“Net Bank Borrowing” refers to long-term debt, including the current portion, less balances of purchase payable, unsecured promissory notes under the Payroll Protection Program (“PPP”), deferral of employment tax payments under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), unamortized transaction costs, cash, and restricted cash. For the calculation of net bank borrowing, see the section titled “Long-Term Debt and Net Bank Borrowing” below. Management believes that Net Bank Borrowing is a useful measure as it provides an indication of the liquidity of the Company.

‘’Bookings’’ refers to the amount of new bookings in Canada and the U.S., which includes new contracts, including those acquired through acquisitions, as well as renewals, extensions and changes to existing contracts occurring during the period. Management believes information regarding new bookings can provide useful trend insight regarding changes in the volume of new business over time.

‘’Book-to-Bill Ratio’’ refers to bookings divided by revenues, for the same period. Management believes this measure allows the monitoring of the Company’s backlog and offers useful insight on how the business varies and evolves over time. This measure is best used over a long period as it could fluctuate significantly from one quarter to the other.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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7. Results of Operations

For the three months ended March 31, For the year ended March 31,
(in $ thousands, except for per share data) 2021 2020 2021 2020
$ $ $ $
Revenues 77,971  73,181  287,643  279,007 
Cost of revenues 54,517  52,228  204,626  196,033 
Gross margin 23,454  20,953  83,017  82,974 
Operating expenses
Selling, general and administrative expenses 21,740  21,534  81,723  76,782 
Business acquisitions and integration costs 718  1,173  2,321  4,637 
Depreciation 1,058  894  3,767  3,368 
Amortization of intangibles 2,490  3,480  11,739  11,278 
Foreign exchange loss (gain) 74  (158) 473  (161)
Impairment of intangibles and goodwill —  28,036  —  28,036 
26,080  54,959  100,023  123,940 
Operating loss (2,626) (34,006) (17,006) (40,966)
Financial expenses 849  668  3,274  2,347 
Gain on recovery of note receivable —  —  (660) — 
Gain on sale of subsidiary —  —  —  (681)
Loss before income taxes (3,475) (34,674) (19,620) (42,632)
Income tax expense (recovery)
Current 465  295  1,515  237 
Deferred (1,415) (994) (3,797) (3,202)
(950) (699) (2,282) (2,965)
Net loss (2,525) (33,975) (17,338) (39,667)
Basic and diluted loss per share (0.04) (0.59) (0.30) (0.70)

7.1Revenues

Revenues amounted to $78.0 million for the three months ended March 31, 2021, a $4.8 million increase, or 6.5%, from $73.2 million for the three months ended March 31, 2020. Assuming a constant US$ exchange rate, the consolidated percentage increase would have been 7.7%.

Revenues in Canada increased by $7.2 million, or 19.0%, to $45.4 million for the three months ended March 31, 2021, from $38.2 million for the three months ended March 31, 2020. General organic growth in most areas, growth at certain key clients and additional revenues of $1.2 million from the acquisition of Groupe Askida Inc. and Askida Consulting Services Inc. (collectively, “Askida”) accounted for the bulk of the increase in revenues. On a sequential basis, revenues in Canada increased by $5.3 million, from $40.0 million for the third quarter of this year.

U.S. revenues decreased by $1.8 million, or 5.8%, to $29.7 million for the three months ended March 31, 2021, from $31.5 million for the three months ended March 31, 2020 due primarily to the foreign exchange variation impact over the two periods. Revenues would have been $31.4 million with a constant US$ exchange rate, while being negatively impacted by the COVID-19 pandemic. On a sequential basis, revenues in the U.S.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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increased by $2.1 million, from $27.6 million for the third quarter of this year, despite an unfavorable US$ exchange rate impact of $0.9 million and the ongoing negative impacts of the COVID-19 pandemic.

In Europe, revenues decreased to $2.9 million, from $3.5 million for the same quarter last year, a result of the impacts of the COVID-19 pandemic at one important client, partially offset by new business and clients and a favorable impact of foreign exchange rate variations. On a sequential basis, revenues in Europe decreased by $0.1 million, from $3.0 million for the third quarter of this year.

Revenues amounted to $287.6 million for the twelve months ended March 31, 2021, an $8.6 million increase, or 3.1%, from $279.0 million for the twelve months ended March 31, 2020.

Revenues in Canada increased by $15.0 million, or 10.1%, to $162.8 million for the twelve months ended March 31, 2021, from $147.8 million for the twelve months ended March 31, 2020. Additional revenues of $13.1 million from the acquisitions of Matricis Informatique Inc. (“Matricis”) and Askida and growth at certain key clients accounted for the increase in revenues which were partially offset by the negative impacts of the COVID-19 pandemic.

U.S. revenues decreased by $3.5 million, or 3.0%, to $114.6 million for the twelve months ended March 31, 2021, from $118.1 million for the twelve months ended March 31, 2020, due primarily to the negative impacts of the COVID-19 pandemic, which were felt particularly strongly in the U.S. compared to Canada, partially offset by incremental revenues of $10.2 million from the acquisition of Travercent LLC (“Travercent”). In Europe, revenues decreased by $2.8 million, or 21.4%, to $10.3 million for the twelve months ended March 31, 2021, from $13.1 million for the twelve months ended March 31, 2020, primarily due to the impacts of the COVID-19 pandemic at one important client.

Globally, for the three months and twelve months ended March 31, 2021, higher value-added, digital transformation service revenues increased in proportion to lower margin service revenues, largely due to the revenues from acquisitions and the continued transformation of our business, and the commercial benefits of Alithya’s larger scale. The Company’s strategy to offer an increasing proportion of higher value-added services continued to unfold, albeit impacted by the COVID-19 pandemic.

7.2Gross Margin

Gross margin increased by $2.6 million, or 12.0%, to $23.5 million for the three months ended March 31, 2021, from $20.9 million for the three months ended March 31, 2020. Gross margin as a percentage of revenues increased to 30.1% for the three months ended March 31, 2021, from 28.6% for the three months ended March 31, 2020. The percentage increase was driven primarily by increased gross margin from Canada and the U.S., due in part to increased utilization rates and the changing mix of revenues described above, as well as some governmental wage subsidies in Canada and the U.S., partially offset by the negative impacts of the US$ exchange rate and the impact of increased costs on one large project. Decreased gross margin in Europe was due to the impacts of the COVID-19 pandemic at one important client and by the negative impacts of the COVID-19 pandemic on utilization rates. On a sequential basis, the overall gross margin increased by $3.1 million, or 14.8%, from $20.4 million for the third quarter of this year.

Gross margin was stable at $83.0 million for the twelve months ended March 31, 2021 and 2020. Gross margin as a percentage of revenues decreased to 28.9% for the twelve months ended March 31, 2021, from 29.7% for the twelve months ended March 31, 2020. The percentage decrease was driven primarily by reduced gross

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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margin from the U.S. and Europe, due to the negative impacts of the COVID-19 pandemic on utilization rates, and the impact of increased costs on one large project, partially offset by increased gross margin in Canada, due in part to the changing mix of revenues described above, despite the impacts of COVID-19, as well as some governmental wage subsidies in Canada, the U.S. and Europe.

7.3Segment Reporting

An operating segment is a component of a company that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of Alithya’s other segments.

Based on the information received and analyzed by decision-makers on a regular basis, Alithya has determined that it has a single reportable segment. Within this single reportable segment, results can be analyzed by geographic location (Canada, U.S. and Europe).

The following table presents total external revenues by geographic location:

For the three months ended March 31, For the year ended March 31,
(in $ thousands) 2021 2020 2021 2020
$ % $ % $ % $ %
Canada 45,429  58.3  38,181  52.2  162,764  56.6  147,821  53.0 
U.S. 29,655  38.0  31,468  43.0  114,608  39.8  118,125  42.3 
Europe 2,887  3.7  3,532  4.8  10,271  3.6  13,061  4.7 
77,971  100.0  73,181  100.0  287,643  100.0  279,007  100.0 

7.4Operating Expenses

7.4.1Selling, General and Administrative Expenses

Selling, general and administrative expenses include salary, wages and other benefits for selling and administrative employees, professional fees, occupancy costs, information technology and communications costs, share-based compensation, public listing and investor fees, and other administrative expenses.

Selling, general and administrative expenses totaled $21.7 million for the three months ended March 31, 2021, an increase of $0.2 million, or 0.9%, from $21.5 million for the three months ended March 31, 2020.

Expenses in Canada increased by $1.8 million, or 15.4%, including $0.3 million related to the Askida acquisition on February 1st, 2020, to $13.6 million, for the three months ended March 31, 2021, from $11.8 million for the three months ended March 31, 2020, due primarily to an increase of $1.9 million in employee compensation costs and an increase of $0.4 million of recruiting fees due to increased headcount and an increase of $0.4 million in professional fees, partially offset by decreases of $0.6 million in mostly non-cash share-based compensation due to fully vested shares for anniversary payments of prior acquisitions and $0.3 million in travel expenses incurred due COVID-19 travel restrictions.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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Expenses in the U.S. and Europe decreased by $1.5 million due to a favorable US$ exchange rate variation impact of $0.4 million, continued integration, cost-saving measures implemented in response to the COVID-19 pandemic and to government subsidies recorded against compensation costs.

Selling, general and administrative expenses totaled $81.7 million for the twelve months ended March 31, 2021, an increase of $4.9 million, or 6.4%, from $76.8 million for the twelve months ended March 31, 2020. The additional expenses from the Matricis, Travercent, and Askida acquisitions accounted for $5.3 million of the increase, meaning that before acquisitions, selling, general and administrative expenses have decreased by $0.4 million between the twelve months ended March 31, 2021 and 2020.

Expenses in Canada increased by $8.8 million, or 21.8%, including a $3.0 million increase related to the Matricis and Askida acquisitions, to $49.1 million, for the twelve months ended March 31, 2021, from $40.3 million for the twelve months ended March 31, 2020, due primarily to increases of $4.2 million in employee compensation costs, $2.7 million in mostly non-cash share-based compensation and $1.1 million in occupancy costs due to increased headcount and $0.6 million in information technology costs, partially offset by a $1.6 million decrease in travel and business development costs.

Expenses in the U.S. decreased by $3.0 million, net of a $2.4 million increase related to the acquisition of Travercent, due to continued integration and cost-saving measures implemented in response to the COVID-19 pandemic.

Expenses in Europe decreased by $0.8 million due to government subsidies recorded against compensation costs and reduced travel expenses.

7.4.2Share-Based Compensation

Share-based compensation is included in cost of revenues and selling, general and administrative expenses and is detailed in the table below:

For the three months ended March 31, For the year ended March 31,
(in $ thousands) 2021 2020 2021 2020
$ $ $ $
Stock option plan 167  187  700  745 
Share purchase plan – employer contribution 224  173  653  633 
Share-based compensation on shares vested during the year, issued on business acquisitions 576  1,184  4,051  1,868 
Deferred share units 115  141  523  305 
Restricted share units 101  —  314  — 
1,183  1,685  6,241  3,551 

Share-based compensation amounted to $1.2 million for the three months ended March 31, 2021, representing a decrease of $0.5 million, from $1.7 million for the three months ended March 31, 2020. The decrease in share-based compensation was driven primarily by decreased expenses related to the fully vested shares issued in connection to anniversary payments made in the year ended March 31, 2021 related to previous business acquisitions, as these shares ceased to generate share-based compensation once issued.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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Share-based compensation amounted to $6.2 million for the twelve months ended March 31, 2021, representing an increase of $2.6 million, from $3.6 million for the twelve months ended March 31, 2020. The increase in share-based compensation was driven primarily by increased expenses related to the vesting of shares issued in connection with previous business acquisitions, increased grant of deferred share units and the grant of restricted share units.

7.4.3Business Acquisitions and Integration Costs

Business acquisitions and integration costs amounted to $0.7 million for the three months ended March 31, 2021, representing a decrease of $0.5 million, from $1.2 million for the three months ended March 31, 2020, driven by a decrease in integration costs related to Matricis, Travercent and Askida.

Business acquisitions and integration costs amounted to $2.3 million for the twelve months ended March 31, 2021, representing a decrease of $2.3 million, from $4.6 million for the twelve months ended March 31, 2020, driven by a decrease in integration costs related to Alithya USA, Inc. (formerly Edgewater Technology Inc, and hereinafter, “Alithya USA”), Matricis, Travercent and Askida.

7.4.4Depreciation

Depreciation totaled $1.1 million for the three months ended March 31, 2021, compared to $0.9 million for the three months ended March 31, 2020. These costs consisted primarily of depreciation of Alithya’s property and equipment and right-of-use assets.

Depreciation related to property and equipment amounted to $0.6 million for the three months ended March 31, 2021, representing an increase of $0.2 million, from $0.4 million for the three months ended March 31, 2020. Depreciation related to right-of-use assets amounted to $0.5 million for the three months ended March 31, 2021 and 2020.

Depreciation totaled $3.8 million for the twelve months ended March 31, 2021, compared to $3.4 million for the twelve months ended March 31, 2020. These costs consisted primarily of depreciation of Alithya’s property and equipment and right-of-use assets.

Depreciation related to property and equipment amounted to $1.9 million for the twelve months ended March 31, 2021, representing an increase of $0.6 million, from $1.3 million for the twelve months ended March 31, 2020. Depreciation related to right-of-use assets amounted to $1.9 million for the twelve months ended March 31, 2021, representing a decrease of $0.2 million, from $2.1 million for the twelve months ended March 31, 2020.

7.4.5Amortization of Intangibles

Amortization of intangibles totaled $2.5 million for the three months ended March 31, 2021, compared to $3.5 million for the three months ended March 31, 2020. These costs consisted primarily of amortization of customer relationships recognized on acquisitions which decreased by $0.8 million and a decrease in the amortization of non-compete agreements of $0.2 million.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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Amortization of intangibles increased by $0.4 million, to $11.7 million for the twelve months ended March 31, 2021, from $11.3 million for the twelve months ended March 31, 2020. These costs consisted primarily of amortization of customer relationships recognized on acquisitions which decreased by $1.2 million, offset by increases in the amortization of non-compete agreements and software of $1.0 million and $0.6 million, respectively.

7.4.6Foreign Exchange Loss (Gain)

Foreign exchange loss amounted to $0.1 million and $0.5 million for the three and twelve months ended March 31, 2021, respectively, compared to foreign exchange gains of $0.2 million for each of the three and twelve months ended March 31, 2020.

7.4.7Impairment of Intangibles and Goodwill

The Group completed an annual impairment test as at March 31, 2021 and concluded no impairment occurred.

An impairment loss of $13.3 million was recognized as at March 31, 2020 for the tradenames related to the EPM and the ERP US operations, both stemming from the acquisition of Alithya USA. The recoverable amount of the asset is its value-in-use, as determined by management. The continued development and promotion of the Alithya tradename, and its resulting increased recognition and value, has reduced the use, relative importance and value, of the Company’s past acquisitions’ historical tradenames. The tradenames will nevertheless continue to be registered and protected, where appropriate, for competitive considerations.

The Company had performed its annual goodwill impairment testing, on March 31, 2020, in the context of the COVID-19 pandemic and the significantly increased uncertainty surrounding global economic conditions in general, and the outlook of the Company’s clients’ different markets and industries in particular. As a result, the Company recorded a total goodwill impairment of $14.7 million. The immediate and long-term impacts of the COVID-19 pandemic, including related government and central bank interventions were unknown at the time and any estimate thereof was subject to significant uncertainty. The effects of the pandemic may therefore differ from those used in the impairment calculations.

For more details on impairment testing of intangibles and goodwill, refer to section 15.6 of this document.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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7.5Other Income and Expenses

7.5.1Financial Expenses

Financial expenses are summarized in the table below:

For the three months ended March 31, For the year ended March 31,
(in $ thousands) 2021 2020 2021 2020
$ $ $ $
Interest on long-term debt 321  275  1,185  1,155 
Interest and financing charges 119  61  448  306 
Interest on lease liabilities 150  98  595  375 
Amortization of finance costs 63  48  242  231 
Interest accretion on balances of purchase payable 208  191  835  318 
Interest income (12) (5) (31) (38)
849  668  3,274  2,347 

Financial expenses amounted to $0.8 million for the three months ended March 31, 2021, representing an increase of $0.1 million, or 27.0%, from $0.7 million for the three months ended March 31, 2020, driven mainly by increased interest on lease liabilities, and interest and financing charges.

Financial expenses amounted to $3.3 million for the twelve months ended March 31, 2021, representing an increase of $1.0 million, or 39.5%, from $2.3 million for the twelve months ended March 31, 2020, driven mainly by increased interest accretion on balances of purchase payable, interest on lease liabilities, and interest and financing charges.

7.5.2Income Taxes

Income tax recovery was $0.9 million for the three months ended March 31, 2021, representing an increase of $0.2 million, from a recovery of $0.7 million for the three months ended March 31, 2020, due primarily to an increase in deferred tax recovery in certain entities.

Income tax recovery was $2.3 million for the twelve months ended March 31, 2021, representing a decrease of $0.7 million, from a recovery of $3.0 million for the twelve months ended March 31, 2020, due primarily to an increase in current tax expense in certain entities.

7.6Net Loss and Loss per Share

Net loss for the three months ended March 31, 2021 was $2.5 million, a decrease of $31.5 million, from $34.0 million for the three months ended March 31, 2020, due to no impairment loss recorded in the three months ended March 31, 2021 compared to a $28.0 million impairment loss for the three months ended March 31, 2020. The decreased loss was also a result of increased Adjusted EBITDA, decreased share-based compensation, decreased amortization of intangibles, decreased business acquisition and integration costs, and increased income tax recovery in the three months ended March 31, 2021, compared to the three months ended March 31, 2020. On a per share basis, this translated into a basic and diluted net loss per share of $0.04

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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for the three months ended March 31, 2021, compared to a net loss of $0.59 per share for the three months ended March 31, 2020.

Alithya’s net loss for the twelve months ended March 31, 2021 was $17.3 million, a decrease of $22.4 million, from $39.7 million for the twelve months ended March 31, 2020. The decreased loss was driven primarily by no impairment loss recorded for the twelve months ended March 31, 2021 compared to a $28.0 million impairment loss for twelve months ended March 31, 2020. The decreased loss was also a result of decreased Adjusted EBITDA, increased share-based compensation, increased amortization of intangibles and depreciation, increase financial expenses and decreased income tax recovery in the twelve months ended March 31, 2021, compared to the twelve months ended March 31, 2020. On a per share basis, this translated into a basic and diluted net loss per share of $0.30 for the twelve months ended March 31, 2021, compared to a net loss of $0.70 per share for the twelve months ended March 31, 2020.

8. EBITDA and Adjusted EBITDA

The following table reconciles net loss to EBITDA and adjusted EBITDA:

For the three months ended March 31, For the year ended March 31,
(in $ thousands) 2021 2020 2021 2020
$ $ $ $
Revenues 77,971  73,181  287,643  279,007 
Net loss (2,525) (33,975) (17,338) (39,667)
Financial expenses 849  668  3,274  2,347 
Income tax recovery (950) (699) (2,282) (2,965)
Depreciation 1,058  894  3,767  3,368 
Amortization of intangibles 2,490  3,480  11,739  11,278 
Impairment of intangibles and goodwill —  28,036  —  28,036 

EBITDA (1)

922  (1,596) (840) 2,397 

EBITDA Margin (1)

1.2  % (2.2) % (0.3) % 0.9  %
Adjusted for:
Foreign exchange loss (gain) 74  (158) 473  (161)
Share-based compensation 1,183  1,685  6,241  3,551 
Business acquisitions and integration costs 718  1,173  2,321  4,637 
Gain on recovery of note receivable —  —  (660) — 
Gain on sale of subsidiary —  —  —  (681)
Premise relocation expenses 155  126  933  330 
Severance 384  154  554 
Internal ERP systems implementation 207  401  1,023  1,165 

Adjusted EBITDA (1)

3,262  2,015  9,645  11,792 

Adjusted EBITDA Margin (1)

4.2  % 2.8  % 3.4  % 4.2  %

1 Non-IFRS measure. See “Non-IFRS Measures” above.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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EBITDA amounted to $0.9 million for the three months ended March 31, 2021, representing an increase of $2.5 million, from a negative EBITDA of $1.6 million for the three months ended March 31, 2020. EBITDA Margin was equal to 1.2% for the three months ended March 31, 2021, compared to (2.2)% for the three months ended March 31, 2020.

Adjusted EBITDA amounted to $3.3 million for the three months ended March 31, 2021, representing an increase of $1.3 million, from $2.0 million for the three months ended March 31, 2020. The contribution from the acquisition of Askida and increased margins from higher value-added business were partially offset by increased selling, general and administrative expenses. Adjusted EBITDA Margin was 4.2% for the three months ended March 31, 2021, compared to 2.8% for the three months ended March 31, 2020.

EBITDA amounted to a loss of $0.8 million for the twelve months ended March 31, 2021, representing a decrease of $3.2 million, from $2.4 million of EBITDA for the twelve months ended March 31, 2020. EBITDA Margin was equal to (0.3)% for the twelve months ended March 31, 2021, compared to 0.9% for the twelve months ended March 31, 2020.

Adjusted EBITDA amounted to $9.6 million for the twelve months ended March 31, 2021, representing a decrease of $2.2 million, from $11.8 million for the twelve months ended March 31, 2020. The contribution from acquisitions and increased margins from higher value-added business, were more than offset by the impacts of the COVID-19 pandemic on utilization rates and increased selling, general and administrative expenses. Adjusted EBITDA Margin was 3.4% for the twelve months ended March 31, 2021, compared to 4.2% for the twelve months ended March 31, 2020.

9. Bookings

Booking information is a non-IFRS measure, which involves judgments, estimates and assumptions, which does not have a standard industry definition, and which does not replace the analysis of historical revenues. For more information about the “Bookings” and “Book-to-Bill Ratio” measures, see section titled “Non-IFRS Measures” above.

New bookings during the three months ended March 31, 2021 were $92.8 million. This translates into a book-to-bill ratio, for the quarter, of 1.23. For the twelve months ended March 31, 2021, new bookings were $362.1 million, which translated into a book-to-bill ratio of 1.31.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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10. Liquidity and Capital Resources

10.1Consolidated Statements of Cash Flows

Alithya’s ongoing operations and growth are financed through a combination of operating cash flows, borrowings under its existing credit facility, and the issuance of equity. Alithya seeks to maintain an optimal level of liquidity through the active management of its assets and liabilities, as well as its cash flows. The following table summarizes Alithya’s cash flow activities for the for the three months and twelve months ended March 31, 2021 and 2020:

For the three months ended March 31, For the year ended March 31,
(in $ thousands) 2021 2020 2021 2020
$ $ $ $
Net cash (used in) from operating activities (2,193) (2,971) (456) 8,692 
Net cash used in investing activities (365) (8,095) (4,567) (18,204)
Net cash from (used in) financing activities 174  (1,214) 3,424  4,942 
Effect of exchange rate changes (142) 1,299  (308) 579 
Net change in cash (2,526) (10,981) (1,907) (3,991)
Cash at the beginning of the period 9,429  19,791  8,810  12,801 
Cash at the end of the period 6,903  8,810  6,903  8,810 

10.2Cash Flows – Operating Activities

For the three months ended March 31, 2021, net cash used in operating activities was $2.2 million, representing an improvement of $0.8 million, from $3.0 million of cash used for the three months ended March 31, 2020. The cash flows for the three months ended March 31, 2021 resulted primarily from the net loss of $2.5 million, plus $3.4 million of non-cash adjustments to the net loss consisting primarily of depreciation and amortization and unrealized foreign exchange loss, partially offset by the forgiveness of PPP loans and deferred taxes, and $3.0 million in unfavorable changes in non-cash working capital items. In comparison, the cash flows for the three months ended March 31, 2020 resulted primarily from the net loss of $34.0 million, plus $33.4 million of non-cash adjustments to the net loss, consisting primarily of impairment of intangibles and goodwill and depreciation and amortization, partially offset by deferred taxes, and $2.4 million in unfavorable changes in non-cash working capital items.

Unfavorable changes in non-cash working capital items of $3.0 million during the three months ended March 31, 2021 consisted primarily of a $12.0 million increase in accounts receivable and other receivables, a $1.4 million decrease in deferred revenue, and a $0.9 million increase in tax credits receivable, partially offset by a $7.7 million increase in accounts payable and accrued liabilities, $2.1 million decrease in unbilled revenue and a $1.0 million decrease in prepaids. For the three months ended March 31, 2020, unfavorable changes in non-cash working capital items of $2.4 million consisted primarily of a $3.9 million increase in accounts receivable and other receivables, and a $1.1 million decrease in deferred revenue, partially offset by a $2.3 million decrease in unbilled revenue.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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For the year ended March 31, 2021, net cash used in operating activities was $0.5 million, representing a decrease of $9.2 million, from $8.7 million of cash from operations for the year ended March 31, 2020. The cash flows for the year ended March 31, 2021 resulted primarily from the net loss of $17.3 million, plus $17.0 million of non-cash adjustments to the net loss consisting primarily of depreciation and amortization and share-based compensation, partially offset by the forgiveness of PPP loans and deferred taxes, and $0.1 million in unfavorable changes in non-cash working capital items. In comparison, the cash flows for the year ended March 31, 2020 resulted primarily from the net loss of $39.7 million, plus $42.6 million of non-cash adjustments to the net loss including depreciation and amortization and share-based compensation, partially offset by the gain on the divestiture of Alithya UK and deferred taxes, and $5.7 million in favorable changes in non-cash working capital items.

Unfavorable changes in non-cash working capital items of $0.1 million during the year ended March 31, 2021 consisted primarily of a $5.3 million increase in accounts receivable and other receivables, a $2.2 million increase in unbilled revenue, and a $0.9 million increase in prepaids, partially offset by a $5.5 million increase in accounts payable and accrued liabilities, a $1.5 million decrease in income taxes receivable, and a $1.3 million increase in deferred revenue. For the year ended March 31, 2020, favorable changes in non-cash working capital items of $5.7 million consisted primarily of a $7.6 million decrease in accounts receivable and other receivables, and a $2.2 million decrease in unbilled revenue, partially offset by a $4.7 million decrease in accounts payable and accrued liabilities.

10.3Cash Flows – Investing Activities

For the three months ended March 31, 2021, net cash used in investing activities was $0.4 million, representing an decrease of $7.7 million, from $8.1 million of cash used for the three months ended March 31, 2020. The cash used in the three months ended March 31, 2021 resulted primarily from purchases of property and equipment mainly related to leasehold improvements. In comparison, the cash used in the three months ended March 31, 2020 resulted primarily from the acquisition of Askida and purchases of property and equipment mainly related to the relocation of certain office premises and computer equipment acquired to facilitate teleworking due to COVID-19.

For the year ended March 31, 2021, net cash used in investing activities was $4.6 million, representing a decrease of $13.6 million, from $18.2 million of cash used for the year ended March 31, 2020. The cash flows for the year ended March 31, 2021 resulted primarily from the purchases of property and equipment mainly related to the relocation of certain office premises including leasehold improvements and the repurchase of equity instruments previously issued on the acquisition of Travercent. In comparison, the cash flows for the year ended March 31, 2020 resulted primarily from the acquisitions of Matricis, Travercent and Askida and purchases of property and equipment mainly related to the relocation of certain office premises.

10.4     Cash Flows – Financing Activities

For the three months ended March 31, 2021, net cash from financing activities was $0.2 million, representing an increase of $1.4 million, from $1.2 million of cash used for the three months ended March 31, 2020. The cash flows for the three months ended March 31, 2021 resulted primarily from $8.3 million in proceeds from long-term debt, partially offset by $7.9 million in long-term debt repayments. In comparison, the cash used for the three months ended March 31, 2020 resulted primarily from $21.1 million in long-term debt repayments and $3.2

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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million in line of credit repayments, partially offset by $23.4 million in proceeds from long-term debt, net of related transaction costs.

For the year ended March 31, 2021, net cash from financing activities was $3.4 million, representing a decrease of $1.5 million, from $4.9 million of cash from financing activities for the year ended March 31, 2020. The cash flows for the year ended March 31, 2021 resulted primarily from $53.5 million in proceeds from long-term debt and $0.9 million of lease incentives received, partially offset by $49.9 million in long-term debt repayments and $1.4 million in repayments of lease liabilities. In comparison, the cash flows for the year ended March 31, 2020 resulted primarily from $64.1 million in proceeds from long-term debt, net of related transaction costs, partially offset by $54.4 million in long-term debt repayments and $3.2 million in line of credit repayments.

10.5Capital Resources

Alithya’s capital consists of cash, restricted cash, long-term debt and total equity. Alithya’s main objectives when managing capital are to provide a strong capital base in order to maintain shareholders’, creditors’ and other stakeholders’ confidence and to sustain future growth and development of the business, to maintain a flexible capital structure that optimizes the cost of capital at an acceptable risk level and preserves the ability to meet its financial obligations, to ensure sufficient liquidity to pursue its organic growth strategy and undertake selective acquisitions, and to provide returns on investment to shareholders.

In managing its capital structure, Alithya monitors performance throughout the year to ensure anticipated working capital requirements and maintenance capital expenditures are funded from operations, available cash on deposit and, where applicable, borrowings.

In the context of the COVID-19 pandemic, governments in certain jurisdictions offer a number of financial assistance programs. The Company keeps track of such programs in order to verify its eligibility, on an ongoing basis. As such, certain subsidiaries of the Company benefited and are benefiting from certain programs in Canada, the U.S. and France.

10.6    Long-Term Debt and Net Bank Borrowing

Alithya has a $60.0 million senior secured revolving credit facility (the “Credit Facility”), which can be drawn in Canadian and U.S. dollars, and is available in prime rate advances, LIBOR advances, bankers’ acceptances and letters of credit up to $2.5 million. The advances bear interest at the Canadian or U.S. prime rate, plus an applicable margin ranging from 0.00% to 1.50%, or bankers’ acceptances or LIBOR rates, plus an applicable margin ranging from 1.00% to 2.75%, as applicable for Canadian and U.S. advances, respectively. Until June 30, 2021, the applicable margin on the Canadian or U.S. advances and the bankers’ acceptances and LIBOR advances is set at 1.50% and 2.75%, respectively. Thereafter, the applicable margin will be determined based on threshold limits for certain financial ratios.

The Credit Facility is secured by a first ranking hypothec on the universality of Alithya’s assets, excluding leased equipment and Investissement Quebec’s first ranking lien on tax credits receivable for the financing tied to refundable tax credits, to a maximum of $7.5 million. The Credit Facility matures on January 22, 2022 and is renewable for additional one-year periods at the lender’s discretion. As the maturity date of the Credit Facility is within twelve months after the reporting date, it has been classified as under the current portion of long-term debt. The Group does not anticipate any issue in renewing its Credit Facility before the maturity date.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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Under the terms of the Credit Facility, Alithya is required to maintain certain financial covenants which are measured on a quarterly basis. A monthly minimum availability test is also applicable until March 31, 2021. As at March 31, 2021 and 2020, Alithya was in compliance with its financial covenants.

As a result of the COVID-19 pandemic, on May 5, 2020, certain U.S. subsidiaries of the Group received funding under the PPP of the CARES Act administered by the U.S. Small Business Administration (“SBA”) and entered into unsecured promissory notes (the “Notes”) in the aggregate principal amount of US$6.3 million ($7.9 million). The Notes have a term of five years at an interest rate of 1% per annum, with a deferral of payments until the date on which the applicable forgiveness is decisioned, with respect to any portion of the Notes which is not forgiven as described below.

Under the terms of the CARES Act, PPP loan recipients can apply for forgiveness for all or a portion of loans granted under the PPP. The Group accounts for the forgiveness as government assistance with a corresponding reduction in the cost of the related item. Such forgiveness will be determined, subject to limitations and ongoing rule making by the SBA, based on the necessity of the loan at the time of application and the timely use of loan proceeds for payroll costs, including payments required to continue group health care benefits, and certain rent, utility, and mortgage interest costs and the maintenance of employee and compensation levels. The PPP loans, even after notice of forgiveness by the SBA, are subject to subsequent audit by the SBA, for a period of six years after receiving notice of forgiveness.

During the year ended March 31, 2021, the Group recognized an aggregate amount of US$1.5 million ($1.9 million) as government assistance for three of the Group’s subsidiaries given that the Group had complied with all relevant conditions for forgiveness which was confirmed by reception of a full loan forgiveness decision by the SBA. The amount was included against the net loss for the year ended March 31, 2021

The two remaining PPP loans, which amount to US$2.5 million ($3.2 million) and US$2.3 million ($2.9 million) respectively, are still under review for forgiveness as at the date of release of these consolidated financial statements. The SBA had indicated all PPP loans over US$2.0 million would be subject to greater scrutiny and subsequent audit. Consequently, the Group believes it does not yet have reasonable assurance of recognizing such government assistance as at March 31, 2021, and that reasonable assurance will be attained once the SBA has communicated forgiveness, in whole or in part, of these loans. Accordingly, no amounts have been recognized against the net loss for the year ended March 31, 2021 related to these two remaining PPP loans. The Group continues to believe it complies with the program’s forgiveness guidelines, rules and conditions, and has used the proceeds of the Notes for qualifying expenses.

The CARES Act allows employers to defer the payments of the employer share of social security taxes during the period beginning on March 27, 2020 and ending on the earlier of December 31, 2020 or the date the Company receives a decision from the lender that the PPP loan is forgiven. The payment of the deferred social security taxes is due fifty percent on December 31, 2021 and the remaining amount on December 31, 2022.

Total long-term debt as at March 31, 2021 increased by $1.8 million to $55.0 million from $53.2 million as at March 31, 2020. The increase was primarily due to an increase of $6.0 million related to the unsecured promissory notes under the PPP and $2.4 million related to the deferral of employment tax payments under the CARES Act, partially offset by a decrease of $6.6 million in our Credit Facility.

As at March 31, 2021, cash amounted to $6.9 million, restricted cash held in trust as required by contractual obligations arising from business acquisitions was $3.2 million, and $31.0 million was drawn under the Credit

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 21


Facility and classified as current portion of long-term debt. In comparison, as at March 31, 2020, cash amounted to $8.8 million, restricted cash held in trust as required by contractual obligations arising from business acquisitions was $2.2 million, and $37.6 million was drawn under the Credit Facility and classified as long-term debt.

The following table reconciles long-term debt to net bank borrowing:

As at March 31, March 31,
(in $ thousands) 2021 2020
$ $
Current portion of long-term debt 35,134  1,143 
Long-term debt 19,817  52,086 
Total long-term debt 54,951  53,229 
Less:
Balances of purchase payable 15,519  15,609 
Unsecured promissory notes under the PPP 6,034  — 
Deferral of employment tax payments under the CARES Act 2,361  — 
Unamortized transaction costs (199) (342)
Cash 6,903  8,810 
Restricted cash 3,233  2,212 
33,851  26,289 

Net Bank Borrowing (1)

21,100  26,940 
     

(1) Non-IFRS measure. See “Non-IFRS Measures” above.

As at March 31, 2021, Alithya’s net bank borrowing decreased compared to March 31, 2020 due primarily to the additions of unsecured promissory notes under the PP and the deferral of employment tax payments under the CARES Act, partially offset by the increase in long-term debt.

10.7    Contractual Obligations

The following table summarizes the carrying amounts and the contractual maturities of both the interest and principal portions of significant financial liabilities and contracted expenditures for operating commitments:

As at March 31, 2021
Carrying amount Total Less than 1 year 1-2 years 2-5 years More than 5 years
$ $ $ $ $ $
Accounts payable and accrued liabilities 27,674  27,674  27,674  —  —  — 
Credit Facility 31,023  32,008  32,008  —  —  — 
Balances of purchase payable, non-interest bearing 15,519  16,739  3,259  13,480  —  — 
Other (included in long-term debt) 213  213  213  —  —  — 
Lease liabilities 15,459  17,866  2,482  2,602  6,756  6,026 
Operating commitments —  3,113  2,143  462  508  — 
89,888  97,613  67,779  16,544  7,264  6,026 
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 22


10.8Off-Balance Sheet Arrangements

Alithya uses off-balance sheet financing for operating commitments for technology licenses and infrastructure, as disclosed in the section above titled “Contractual Obligations”. Other than as disclosed in the section above and Note 13 of the consolidated financial statements, there have been no material changes with respect to off-balance sheet arrangements since March 31, 2020 outside of Alithya’s ordinary course of business.

11. Share Capital

In the context of the discussion on share capital, Alithya Group inc. will be referred to as “Alithya” or the “Company”, and the Company and its subsidiaries will be referred to as the “Group”.

11.1Authorized

As at March 31, 2021 and 2020, the Company had an unlimited number of shares without par value as follows:

Subordinate Voting Shares, carrying one vote per share, ranking pari passu with the Multiple Voting Shares as to the right to receive dividends and the remainder of the Company’s property in the event of a voluntary or involuntary winding-up or dissolution, or any other distribution of assets among shareholders for the purposes of winding up the Company’s affairs;

Multiple Voting Shares, carrying ten votes per share, ranking pari passu with the Subordinate Voting Shares as to the right to receive dividends and the remainder of the Company’s property in the event of a voluntary or involuntary winding-up or dissolution, or any other distribution of assets among shareholders for the purpose of winding-up the Company’s affairs, each share being convertible at the holder’s entire discretion into Subordinate Voting Shares on a share for share basis, and being automatically converted upon their transfer to a person who is not a permitted holder or upon the death of a permitted holder, unless otherwise acquired by any of the remaining permitted holders in accordance with the terms of the voting agreement entered into between permitted holders; and

Preferred Shares, issuable in series, each series ranking pari passu with other series but prior to any class ranking junior thereto, as well as prior to Subordinate Voting Shares and Multiple Voting Shares as to the right to receive dividends, and the remainder of the Company’s property in the event of a voluntary or involuntary winding-up or dissolution, or any other distribution of assets among shareholders for the purposes of winding up the Company’s affairs. If and when issued, preferred shares will have such voting rights and conversion rights as may be determined by the Company’s Board at the time of issuance thereof.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 23


11.2Issued

Subordinate Voting Shares Multiple Voting Shares
(in $ thousands) Number of shares $ Number of shares $
Beginning balance as at April 1, 2020 50,904,533  191,820  7,168,984  3,515 
Share-based compensation on shares vested during the period, issued on business acquisitions 458,071  1,686  —  — 
Exercise of stock options 3,500  14  152,632  470 
Settlement of deferred share units 7,718  32  —  — 
As at March 31, 2021 51,373,822  193,552  7,321,616  3,985 

During the year ended March 31, 2021, the following transactions occurred:

As part of the acquisition of Matricis, 157,882 Subordinate Voting Shares, with a total value of $600,000, reclassified from contributed surplus, were issued as settlement of the first anniversary share consideration rights;

As part of the acquisition of Travercent, the Company elected not to convert the first anniversary share consideration rights into Subordinate Voting Shares but rather to settle for total cash consideration of US $975,000 ($1,276,175). This resulted in a repurchase of a vested equity instrument, which has been recorded as a reduction of retained earnings and contributed surplus in the amounts of $72,237 and $1,203,938, respectively. The Company continues to account for the December 13, 2021 and 2022 anniversary share consideration rights as an equity instrument;

As part of the acquisition of Askida, 300,189 Subordinate Voting Shares, with a total value of $1,086,250 reclassified from contributed surplus, were issued as settlement of the first anniversary share consideration rights;

156,132 stock options were exercised and 3,500 Subordinate Voting Shares and 152,632 Multiple Voting Shares were issued with a value of $484,000, for cash consideration of $300,000, with $184,000 reclassified from contributed surplus; and

7,718 deferred share units were settled and 7,718 Subordinate Voting Shares were issued with an approximate value of $32,085, reclassified from contributed surplus.

In addition, during the year ended March 31, 2021, the following share-based compensation was recognized:

In relation to the Subordinate Voting Shares, to be issued as part of the Matricis Acquisition, an amount of $800,000;

In relation to the Subordinate Voting Shares, to be issued as part of the Travercent Acquisition, an amount of $1,803,000; and

In relation to the Subordinate Voting Shares, to be issued as part of the Askida Acquisition, an amount of $1,448,000.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 24


As at March 31, 2020, the issued share capital of the Company is as follows:

Subordinate Voting Shares Multiple Voting Shares
Number of shares $ Number of shares $
Beginning balance as at April 1, 2019 48,496,492  183,346  7,168,984  3,515 
Share-based compensation on shares vested during the period, issued on business acquisitions —  407  —  — 
Business acquisiton of Matricis 473,646  1,800  —  — 
Business acquisiton of Travercent 1,274,510  3,870  —  — 
Business acquisiton of Askida 600,384  2,173  —  — 
Exercise of stock options 53,987  201  —  — 
Settlement of DSU 5,514  23     
As at March 31, 2020 50,904,533  191,820  7,168,984  3,515 

During the year ended March 31, 2020, the following transactions occurred:

As part of the Matricis Acquisition, 473,646 Subordinate Voting Shares, with a total value of $1,800,000, were issued as partial settlement of the acquisition;

As part of the Travercent Acquisition, 1,274,510 Subordinate Voting Shares, with a total value of $3,870,000, were issued as partial settlement of the acquisition;

As part of the Askida Acquisition, 600,384 Subordinate Voting Shares, with a total value of $2,172,500, were issued as partial settlement of the acquisition;

53,987 stock options were exercised and 53,987 Subordinate Voting Shares were issued with an approximate value of $201,000, for cash consideration of $165,000, with $36,000 reclassified from contributed surplus; and

5,514 DSU were settled and 5,514 Subordinate Voting Shares were issued with an approximate value of $23,000, reclassified from contributed surplus.

In addition, during the year ended March 31, 2020, the following share-based compensation was recognized:

In relation to the Subordinate Voting Shares, to be issued as part of the Matricis Acquisition, an amount of $550,000;

In relation to the Subordinate Voting Shares, to be issued as part of the Travercent Acquisition, an amount of $272,000;

In relation to the Subordinate Voting Shares, to be issued as part of the Askida Acquisition, an amount of $639,000;

As part of a previous year’s business acquisition, ADT, Class A shares previously issued to employees as share-based compensation on the acquisition date vested during the period. The value of the vested shares for the year ended March 31, 2020 was $326,000; and

As part of a previous year’s business acquisition, Pro2p Services Conseils Inc. (“Pro2p”), Class A shares previously issued to employees as share-based compensation on the acquisition date vested during the period. The value of the vested shares for the year ended March 31, 2020 was $81,000.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 25


11.3Share Purchase Plan

Under the Company’s share purchase plan, the Group contributes an amount equal to a percentage of the employee’s basic contribution, depending on the position held by the employee. The employee may make additional contributions, for total employee contributions, including basic contributions, of up to 10% of the annual gross salary. However, the Group does not match contributions in the case of such additional contributions. The employee and the Group’s contributions are remitted to an independent administrative agent who purchases Subordinate Voting Shares on the open market on behalf of the employee through either the TSX or NASDAQ. The Group’s contribution expense is recognized as share-based compensation.

11.4Long-Term Incentive Plan (the “Plan”)

The Company operates a plan which provides for awards of stock options, restricted shares, restricted share units, performance share units, DSU, and share appreciation rights to eligible employees and directors of the Company and its subsidiaries, all of which once exercised or settled result in the issuance of Subordinate Voting Shares.

11.5Stock Options

Under the Company’s Plan, the Board may grant, at its discretion, stock options to purchase Subordinate Voting Shares to eligible employees and directors of the Company and its subsidiaries. The Board establishes the exercise price at the time the stock options are granted, where the exercise price must in all cases be not less than the greater of the closing price of such shares on the TSX and NASDAQ on the business day immediately prior to the grant date. Stock options vest, as set out in the applicable award agreement between the participant and the Company, which may include performance-based vesting conditions. Vesting is generally four years from the date of grant and the stock options may be exercised by the tenth anniversary of the grant date, except in the event of death, disability, retirement or termination of employment. The Plan provides that the aggregate number of Subordinate Voting Shares issuable pursuant to any type of awards under the Plan shall not exceed 10% of the aggregate number of Subordinate Voting Shares and Multiple Voting Shares issued and outstanding from time to time.

The following table presents information concerning stock option activity for the respective years:

March 31, 2021 March 31, 2020
Number of stock options Weighted average exercise price Number of stock options Weighted average exercise price
$ $
Beginning balance as at April 1, 2020 3,172,289  3.72  2,623,542  3.80 
Granted 755,000  2.26  970,500  3.63 
Forfeited (130,163) 4.93  (137,151) 4.88 
Expired (115,813) 5.93  (230,615) 3.66 
Exercised (156,132) 1.92  (53,987) 3.10 
Ending balance as at March 31, 2021 3,525,181  3.37  3,172,289  3.72 
Exercisable at year end 1,580,444  3.44  1,513,789  3.43 
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 26


Included in the 1,580,444 and 1,513,789 of stock options exercisable as at March 31, 2021 and 2020, respectively, 810,528 and 863,160 stock options are available to purchase Multiple Voting Shares as at March 31, 2021 and 2020, respectively.

During the year ended March 31, 2021, the Company issued the following stock options:

On June 23, 2020, Alithya issued 570,000 and 185,000 stock options, to purchase a total of 755,000 Subordinate Voting Shares at an exercise price of $2.26 and US$1.67, respectively.

The weighted average share price per share of the stock options exercised was $3.10.

During the year ended March 31, 2020, the Company issued the following stock options:

On June 21, 2019, Alithya issued 435,000 and 190,500 stock options, to purchase a total of 625,500 Subordinate Voting Shares, subject to terms set out in the grant letters at an exercise price of $3.64 and US$2.76, respectively;

On August 16, 2019, Alithya issued 85,000 and 95,000 stock options, to purchase a total of 180,000 Subordinate Voting Shares, subject to terms set out in the grant letters at a weighted average exercise price of $3.65 and US$2.78, respectively; and

On December 18, 2019, Alithya issued 165,000 stock options, to purchase a total of 165,000 Subordinate Voting Shares subject to terms set out in the grant letters at an exercise price of US$2.64.

The weighted average share price per share of the stock options exercised was $3.85.

The following tables summarize the number of stock options outstanding by currency, exercise price and the weighted average remaining exercise period, expressed in number of years:

As at March 31, 2021 March 31, 2020
Exercise price (CAD) Number of options Weighted average
remaining exercise
period – in years
Number of options Weighted average
remaining exercise
period – in years
$
1.90 210,528  2.50 363,160  2.45
1.92 100,000  1.00 100,000  2.00
2.21 115,000  3.02 115,000  4.02
2.26 570,000  9.23 —  — 
2.46 100,000  2.00 100,000  3.00
2.87 120,000  4.09 120,000  5.09
2.96 182,500  5.01 186,000  6.01
3.29 —  —  2,000  6.67
3.64 418,000  8.23 418,000  9.23
3.65 85,000  1.37 85,000  2.38
3.80 227,500  6.14 249,500  7.14
3.90 20,000  7.88 20,000  8.88
4.50 459,000  7.59 463,000  8.59
2,607,528  6.30 2,221,660  6.12
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 27


As at March 31, 2021 March 31, 2020
Exercise price range (USD) Number of options Weighted average
remaining exercise
period – in years
Number of options Weighted average
remaining exercise
period – in years
$
1.67 to 2.25 185,000  9.24 —  — 
2.26 to 3.85 532,550  6.98 599,960  7.98
3.86 to 4.45 20,856  0.89 23,240  1.74
4.59 to 4.85 47,672  0.49 154,141  1.10
4.90 to 5.45 131,575  1.00 173,288  2.42
917,653  6.09 950,629  5.70

11.6Deferred Share Units

Under the Plan, the Board, subject to the provisions of the Plan and such other terms and conditions, may grant DSU to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its subsidiaries. The DSU shall be settled on the date as set out in the applicable award agreement, between the participant and the Company, however not earlier than the participant’s termination date. If the agreement does not establish a settlement date then it shall be the 90th day following the participant’s termination date for eligible Canadian participants and not earlier than the date that is six months after the termination date for eligible U.S. participants.

The following table presents information concerning DSU activity for the period:

 Number of DSU Weighted average exercise price
$
Beginning balance as at April 1, 2020 140,885  3.48 
Granted 197,079  2.65 
Settled (7,718) 4.16 
Ending balance as at March 31, 2021 330,246  2.97 

During the year ended March 31, 2021, the Company issued the following fully vested DSU:

On June 30, 2020, September 30, 2020, December 31, 2020 and March 31, 2021, 66,840, 46,405, 48,241 and 35,593 fully vested DSU, respectively, in aggregate, were granted to non-employee directors of the Company at a fair value of $2.10, $2.89, $2.78 and $3.22, respectively, per DSU, for an aggregate fair value of $140,364, $134,110, $134,110 and $114,609, respectively. The amounts have been recorded in share-based compensation expense.

During the year ended March 31, 2020, the Company issued the following fully vested DSU:

On September 30, 2019, December 31, 2019 and March 31, 2020, 20,937, 22,299 and 53,370 fully vested DSU, respectively, in aggregate, were granted to non-employee directors of the Company at a fair value of $3.97, $3.66 and $2.63, respectively, per DSU, for an aggregate fair value of $83,120, $81,614 and $140,363, respectively. The amounts have been recorded in share-based compensation expense.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 28


11.7Restricted Share Units

Under the Plan, the Board, subject to the provisions of the Plan and such other terms and conditions, may grant RSU to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its subsidiaries. The RSU shall vest on the third anniversary of the date of grant and will settle as soon as practicable following the expiry of the vesting period, unless otherwise specified by the Board at the time of grant.

On June 23, 2020, 181,498 RSU, in aggregate, vesting one year from the date of grant, were granted to employees of the Company subject to the terms set out in the award agreement at a fair value of $2.26, per RSU, for an aggregate fair value of $410,000. Share-based compensation expense for the year ended March 31, 2021 amounted to $314,000.

11.8Share-Based Compensation

The number of Alithya stock options granted to employees during the twelve months ended March 31, 2021 and 2020, the related compensation expense recorded, and the assumptions used to determine share-based compensation expense, using the Black-Scholes stock option pricing model, were as follows:

   Period ended March 31, March 31,
(in $ thousands, except for per share data) 2021 2020
Compensation expense related to the options granted 156 318
Number of stock options granted 755,000 970,500
Weighted average fair value of options granted $0.81 $1.13
Aggregate fair value of options granted 609 1,096
Weighted average assumptions
Share price $2.26 $3.63
Exercise price $2.26 $3.63
Risk-free interest rate 0.46  % 1.79  %
Expected volatility* 34.9  % 30.0  %
Dividend yield
Expected option life (years) 6.6 5.7
Vesting conditions – time (years) 3.2 2.7

* Determined on the basis of observed volatility in publicly traded companies operating in similar industries.

12. Subsequent Event

On April 1, 2021, the Company acquired all of the outstanding shares of R3D Consulting Inc. (now Alithya IT Services Inc.), a private Quebec firm that specializes in digital solutions. Subject to customary post-closing purchase price adjustments, the purchase price was paid by the issuance of 25,182,676 Subordinate Voting Shares of the Company, at a value of $3.20 per share, which was the closing share price on the TSX on April 1, 2021, cash of $1.0 million and assumed long-term debt of $8.9 million on the closing date. The accounting for this acquisition and the purchase price allocation have not yet been finalized due to the timing of the acquisition.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 29


13. Selected Annual Information

For the years ended March 31,
(in $ thousands) 2021 2020 2019
$ $
Revenues 287,643  279,007  209,478 
Net loss (17,338) (39,667) (12,475)
Basic and diluted loss per share (0.30) (0.70) (0.34)
Total assets 243,261  257,816  236,869 
Non-current long-term debt and lease liabilities 33,353  63,759  27,305 

Revenues increased from March 31, 2020 to March 31, 2021 due primarily to general organic growth. Revenue growth from March 31, 2019 to March 31, 2020 was driven primarily by the additional months of revenues from Alithya USA, acquired during the year ended March 31, 2019 and from the acquisitions of Matricis, Travercent and Askida, partially offset by the revenues lost from the divestiture of the UK subsidiary during the year ended March 31, 2020,

Net loss and basic and diluted loss per share decreased from March 31, 2020 to March 31, 2021 primarily due to the impairment loss recorded in the year ended March 31, 2020. Similarly, net loss and basic and diluted loss per share increased from March 31, 2019 to March 31, 2020 primarily due to the impairment loss recorded in the year ended March 31, 2020.

The decrease in total assets from March 31, 2020 to March 31, 2021 related primarily to the amortization of intangible assets that occurred during the year ended March 31, 2021. The increase in total assets from March 31, 2019 to March 31, 2020 was driven primarily by the recognition of right-of use assets from the adoption of IFRS 16 – Leases on April 1, 2019, the recognition of intangible assets and goodwill on the acquisitions of Matricis, Travercent and Askida, and additions to property and equipment relating mostly to leasehold improvements due to the relocation of certain office premises.

The decrease in non-current long-term debt and lease liabilities from March 31, 2020 to March 31, 2021 is primarily due to the reclassification of the Credit Facility, which matures on January 22, 2022, to current portion of long-term debt. The increase in non-current long-term debt and lease liabilities from March 31, 2019 to March 31, 2020 was driven primarily by the recognition of lease liabilities from the adoption of IFRS 16 – Leases on April 1, 2019, an increase in balance of purchase payables for remaining payments for the acquisitions of Matricis, Travercent and Askida and the increase in the Credit Facility for the financing of the acquisitions.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 30


14. Eight Quarter Summary

 For the three months ended
(in $ thousands, except for per share data) Jun 30, Sep 30, Dec 31, Mar 31, Jun 30, Sep 30, Dec 31, Mar 31,
2019 2019 2019 2020 2020 2020 2020 2021
Revenues 72,218  67,363  66,245  73,181  70,711  68,355  70,606  77,971 
Cost of revenues 51,041  46,680  46,084  52,228  50,308  49,623  50,178  54,517 
Gross margin 21,177  20,683  20,161  20,953  20,403  18,732  20,428  23,454 
29.3  % 30.7  % 30.4  % 28.6  % 28.9  % 27.4  % 28.9  % 30.1  %
Operating expenses
Selling, general and administrative expenses 18,927  18,576  17,745  21,534  19,416  20,146  20,421  21,740 
Business acquisitions and integration costs 674  1,416  1,374  1,173  913  190  500  718 
Depreciation 786  810  878  894  882  927  900  1,058 
Amortization of intangibles 2,551  2,531  2,716  3,480  3,654  2,892  2,703  2,490 
Foreign exchange expense (gain) 54  (87) 30  (158) 344  47  74 
Impairment of intangibles and goodwill —  —  —  28,036  —  —  —  — 
22,992  23,246  22,743  54,959  24,873  24,499  24,571  26,080 
Operating loss (1,815) (2,563) (2,582) (34,006) (4,470) (5,767) (4,143) (2,626)
Financial expenses 621  450  608  668  728  827  870  849 
Gain on recovery of note receivable —  —  —  —  —  (660) —  — 
Gain on sale of subsidiary —  —  (681) —  —  —  —  — 
Loss before income taxes (2,436) (3,013) (2,509) (34,674) (5,198) (5,934) (5,013) (3,475)
Income tax recovery (889) (683) (694) (699) (669) (443) (220) (950)
Net loss (1,547) (2,330) (1,815) (33,975) (4,529) (5,491) (4,793) (2,525)
Basic and diluted loss per share (0.03) (0.04) (0.03) (0.59) (0.08) (0.09) (0.08) (0.04)
         

Quarterly variances in Alithya’s results are due primarily to seasonality. The revenues generated by Alithya’s consultants are impacted by the number of working days in a particular quarter, which can vary as a result of vacations and other paid time off and statutory holidays. Similarly, customer information technology investment cycles are also affected by the seasonality of their own operations. Finally, quarterly variations can be attributed to the timing of acquisitions.

Over the eight-quarter period, revenues have increased mainly due to business acquisitions, and organic growth in certain areas of the Company’s business, which was partially offset by a cyclical decline in the IT spending of certain large historical customers. Excluding quarters which have been negatively impacted by the COVID-19 pandemic, gross margin has also followed an increasing trend, mainly due to business acquisitions with higher margins, and a steady migration towards higher value-added services. Selling, general and administrative expenses have increased mainly from business acquisitions, net of possible synergies, and, in past quarters, additional costs associated with managing the duties related to becoming a public company. Other expenses, such as business acquisitions and integration costs and depreciation and amortization of intangibles, have also varied as a result of business acquisitions.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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15. Critical Accounting Estimates

The preparation of Alithya’s consolidated financial statements in accordance with IFRS requires management to make judgments, estimates and assumptions which affect the application of accounting policies and the amounts reported as assets, liabilities, income and expenses in the consolidated financial statements. Actual results could differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which they occur and in any future periods affected.

Alithya’s significant accounting policies are fully described in Note 2 of Alithya’s annual audited consolidated financial statements. Management believes the critical accounting policies described below reflect the more significant estimates and assumptions used in the preparation of Alithya’s consolidated financial statements.

Assessment of COVID-19 impact

As a result of the continued and uncertain economic and business impact of the COVID-19 pandemic, the Group has reviewed its estimates, judgments and assumptions used in the preparation of its consolidated financial statements, including the determination of whether indicators of impairment exist for its tangible and intangible assets, including goodwill, estimated losses on revenue from fixed-fee arrangement contracts, the credit risk of its counterparties, and the estimates and judgments used for the measurement of its deferred tax assets.

Due to the pandemic and the significantly increased uncertainty surrounding global economic conditions in general, and the outlook of the Company’s clients’ different markets and industries in particular, the Group has made revisions to estimates and assumptions used in the determination of impairment of goodwill, as necessary, to reflect the increased uncertainty and risks.

As the situation is dynamic and the impact of COVID-19 on the Group’s operations and financial conditions will be impacted by the duration of government-mandated measures and overall customer demand, revisions may be required in future periods to estimates and assumptions. Although management expects COVID-19 related disruptions to continue beyond fiscal 2021, it believes that the Group’s long-term estimates and assumptions do not require further revisions, however management continues to monitor and evaluate the situation and its impact on the Group’s business.

15.1Revenue Recognition, Unbilled Revenue and Deferred Revenue

The Group generates revenue principally through the provision of consulting services in the areas of information technology including systems implementation and strategy. These services are provided under arrangements with varying pricing mechanisms.

To determine whether to recognize revenue, the Group follows a 5-step process:

Identifying the contract with a customer;

Identifying the performance obligations;

Determining the transaction price;

Allocating the transaction price to the performance obligations; and

Recognizing revenue when/as performance obligation(s) are satisfied.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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The total transaction price for a contract is allocated amongst the various performance obligations based on their relative stand-alone selling prices. Revenue is recognized either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised goods or services to its customers.

The Group recognizes contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as other liabilities in the statement of financial position. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognizes either a contract asset or a receivable in its statement of financial position, depending on whether something other than the passage of time is required before the consideration is due.

Certain of the Group’s arrangements may include client acceptance clauses. Each clause is analyzed to determine whether the earnings process is complete when the service is performed. Formal client sign-off is not always necessary to recognize revenue, provided that the Group objectively demonstrates that the criteria specified in the acceptance provisions are satisfied. Some of the criteria reviewed include historical experience with similar types of arrangements, whether the acceptance provisions are specific to the client or are included in all arrangements, the length of the acceptance term and historical experience with the specific client.

Time and materials arrangements – Revenue from consulting services and systems implementations under time and materials arrangements is recognized as the services are rendered.

Fixed-fee arrangements – Revenue from consulting services and systems implementations under fixed-fee arrangements where the outcome of the arrangements can be estimated reliably is recognized using the percentage-of-completion method over the service periods. The Group primarily uses labour costs or labour hours to measure the progress towards completion. This method relies on estimates of total expected labour costs or total expected labour hours to complete the service, which are compared to labour costs or labour hours incurred to date, to arrive at an estimate of the percentage of revenue earned to date. Management regularly reviews underlying estimates of total expected labour costs or hours. If the outcome of an arrangement cannot be estimated reliably, revenue is recognized to the extent of arrangement costs incurred that are likely to be recoverable.

Unbilled revenue and deferred revenue – Amounts recognized as revenue in excess of billings are classified as unbilled revenue. Amounts received in advance of the performance of services are classified as deferred revenue.

Retainer based arrangements The client pays a recurring fee in exchange for a monthly recurring service (typically support). The revenue for these arrangements is recognized over time (using an hours-based input method). Revenue recognition over time is based on customer simultaneously receiving and consuming the benefit of the services provided.

Estimated losses on revenue-generating contracts – Estimated losses on revenue-generating contracts may occur due to additional contract costs which were not foreseen at the inception of the contract. Contract losses are measured at the amount by which the estimated total costs exceed the estimated total revenue from the contract. The estimated losses on revenue-generating contracts are recognized in the period when it is determined that a loss is probable. The expected loss is first applied to impair the related capitalized contract costs, if any, with the excess recorded in accounts payable and accrued liabilities. Management regularly reviews arrangement profitability and underlying estimates.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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Software revenue Software revenue is generated from the resale of certain third-party off-the-shelf software and maintenance. The majority of the software sold by the Group is delivered electronically. For software that is delivered electronically, the Group considers transfer of control to have occurred when the customer either (a) takes possession of the software via a download (that is, when the customer takes possession of the electronic data on its hardware), or (b) has been provided with access codes that allow the customer to take immediate possession of the software on its hardware pursuant to an agreement or purchase order for the software. In all instances, the resale of third-party software and maintenance is recorded on a net basis. Group created software, and the associated maintenance, is reported on a gross basis, however it is immaterial in all periods presented.

Third party software and maintenance revenue are recognized upon delivery of the software, as all related warranty and maintenance is performed by the primary software vendor and not the Group.

The Group enters into arrangements with multiple performance obligations which typically include software, post-contract support (or maintenance), and consulting services. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis. The Group has determined standalone selling price for each of the performance obligations in connection with the evaluation of arrangements with multiple performance obligations. The Group has established standalone selling price for consulting services based on a stated and consistent rate per hour range in standalone transactions. The Group has established standalone selling price for software through consistent stated rates for software components. The Group has established standalone selling price for maintenance based on observable prices for standalone renewals.

15.2Business Combinations

The Group accounts for its business combinations using the acquisition method. Under this method the consideration transferred is measured at fair value. Acquisition-related and integration costs associated with the business combination are expensed as incurred. The Group recognizes goodwill as the excess of the cost of the acquisition over the net identifiable tangible and intangible assets acquired and liabilities assumed at their acquisition date fair values and any non-controlling interest in the acquiree. The fair value allocated to tangible and intangible assets acquired and liabilities assumed are based on management’s assumptions, including assumptions that would be made by market participants, acting in their economic best interest. These assumptions include the future expected cash flows arising from the intangible assets identified. The goodwill recognized is composed of the future economic value associated to acquired work force and any identified synergies with the Group’s operations which are primarily due to reduction of costs and new business opportunities. The determination of fair value involves making estimates relating to acquired intangible assets, property and equipment, litigation, provision for estimated losses on revenue-generating contracts, other onerous contracts, tax and other contingency reserves. Estimates include the forecasting of future cash flows and discount rates. Subsequent changes in fair values are adjusted against the cost of acquisition, if they qualify as measurement period adjustments. The measurement period is the period between the date of acquisition and the date where all significant information necessary to determine the fair values is available, not to exceed 12 months. All other subsequent changes are recognized in the consolidated statements of operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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15.3Government Assistance

Certain subsidiaries are eligible for government assistance programs, in the different jurisdictions, in the form of grants, loans and tax credits for the development of e-business. Government assistance is recorded when there is reasonable assurance that the assistance will be received and that the subsidiary will comply with all relevant conditions. Assistance is treated as a reduction in the cost of the related item.

In preparing claims, judgment is required in interpreting the regulations related to these programs, determining if the operations of the subsidiaries qualify and identifying quantifying eligible expenses. These claims are subject to examination and audit by local authorities, who may disagree with interpretations made by the Group. Management estimates the amounts to be received or forgiven under these programs. Final settlements following examinations and audits could be different from amounts recorded and could have a material effect on the financial position or operating results of the Group.

Alithya recognized amounts of $1.9 million and $6.7 million as reductions of expenses for the three and twelve months ended March 31, 2021, respectively, in connection with tax credits, compared to $1.3 million and $4.8 million for the three and twelve months ended March 31, 2020, respectively.

Alithya also recognized amounts of $2.8 million and $6.5 million as reductions of expenses for the three and twelve months ended March 31, 2021, respectively, in connection with government grants and loan forgiveness, compared to nil for both the three and twelve months ended March 31, 2020.

15.4Intangibles

Intangible assets consist mainly of customer relationships, non-compete agreements, internal-use business solutions and software licenses and tradenames. Internal use business solutions and software licenses (“Software”) are recorded at cost. In addition, internal-use business solutions developed internally are capitalized when they meet specific capitalization criteria related to technical and financial feasibility and when the Group demonstrates its ability and intention to use them. Amortization of internal-use business solutions commences once the solution is available for use. Customer relationships, internal-use business solutions and software licenses acquired through business combinations are initially recorded at their fair value. The Group amortizes its intangible assets using the straight-line method over their estimated useful lives

The residual value, depreciation method and useful life of each asset are reviewed at least once a year, at the reporting date.

Net intangible assets amounted to $36.6 million at March 31, 2021 and $51.8 million at March 31, 2020.

15.5Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition and it is measured net of accumulated impairment losses. Goodwill is not amortized, but instead tested for impairment annually, or more frequently, should events or changes in circumstances indicate that the goodwill may be impaired.

Goodwill amounted to $72.9 million at March 31, 2021 and $77.6 million at March 31, 2020.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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15.6Impairment of Property and Equipment, Intangibles and Goodwill

Timing of impairment testing

The carrying amounts of the Group’s property and equipment, right-of-use assets, intangible assets and goodwill are reviewed for impairment when events or changes in circumstances indicate that the carrying value may be impaired. At each reporting date, the Group assesses whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the impairment is tested at least annually, typically as at March 31.

Impairment testing

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs of disposal. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”, or “CGU”). For the purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the CGU, or the group of CGUs, that is expected to benefit from the synergies of the combination. This allocation is subject to an operating segment ceiling test and reflects the lowest level at which that goodwill is monitored for internal reporting purposes. An impairment loss is recognized if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognized in consolidated earnings. Impairment losses recognized in respect of CGUs that include goodwill are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis not beyond the highest of:

The fair value less costs of disposal; and

Value in use of the individual asset, if determinable.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognized in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized.

Alithya performed its annual impairment test at March 31, 2021 using the approach described above and concluded no impairment was required.

15.7Provisions

Provisions are recognized when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The Group’s provisions may consist of litigation and claim provisions arising in the ordinary course of business and decommissioning liabilities for operating leases of office buildings. The Group may record restructuring provisions related to business combinations and termination of employment costs incurred as part of the Group’s productivity improvement initiatives. The amount recognized as a provision is the best estimate of the consideration required

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Provisions are discounted using a current pre-tax rate when the impact of the time value of money is material. The increase in the provision due to the passage of time is recognized as a finance cost. The accrued litigation and legal claim provisions are based on historical experience, current trends and other assumptions that are believed to be reasonable under the circumstances. Estimates include the period in which the underlying cause of the claim occurred and the degree of probability of an unfavorable outcome.

In the case of decommissioning liabilities pertaining to operating leases of buildings where certain arrangements require premises to be returned to their original state at the end of the lease term, the provision is determined using the present value of the estimated future cash outflows.

Restructuring provisions, consisting primarily of severance, are recognized when a detailed formal plan identifies the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs, appropriate timelines and has been communicated to those affected by it.

Provisions amounted to nil at March 31, 2021 and $0.5 million at March 31, 2020.

15.8Income Taxes

Income taxes are accounted for using the liability method of accounting.

Current income taxes are recognized with respect to the amounts expected to be paid or recovered under the tax rates and laws that have been enacted or substantively enacted at the reporting date. Deferred income tax assets and liabilities are determined based on deductible or taxable temporary differences between the amounts reported for financial statement purposes and tax values of the assets and liabilities using enacted or substantively enacted tax rates that will be in effect for the year in which the differences are expected to be recovered or settled. Deferred income tax assets and liabilities are recognized in earnings, other comprehensive income or in equity based on the classification of the item to which they relate.

Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred tax assets amounted to $7.5 million and deferred tax liabilities amounted to $3.0 million at March 31, 2021, compared to $4.7 million and $4.1 million, respectively, at March 31, 2020.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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16. Future Accounting Standards

At the date of authorization of these consolidated financial statements, certain new standards, amendments and interpretations, and improvements to existing standards have been published by the IASB but are not yet effective and have not been adopted early by the Group. Management anticipates that all the relevant pronouncements will be adopted in the first reporting period following the date of application. Information on new standards, amendments and interpretations, and improvements to existing standards, which could potentially impact the Group’s consolidated financial statements, are detailed as follows:

New Standards and Interpretations Issued but Not Yet Effective

On January 23, 2020, the IASB issued amendments to IAS 1 – Presentation of Financial Statements, to clarify the classification of liabilities as current or non-current. In July 2020, the IASB issued final amendments to defer the effective date to annual periods beginning on or after January 1, 2023. Early adoption is permitted. For the purposes of non-current classification, the amendments removed the requirement for a right to defer settlement or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must have substance and exist at the end of the reporting period. The amendments also clarify how a company classifies a liability that includes a counterparty conversion option. The amendments state that: settlement of a liability includes transferring a company’s own equity instruments to the counterparty; and when classifying liabilities as current or non-current, a company can ignore only those conversion options that are recognized as equity. Management is currently assessing, but has not yet determined, the impact of this new standard on the Group’s consolidated financial statements.

On May 14, 2020, the IASB published Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37), which specifies which costs a company includes when assessing whether a contract will be loss-making. The amendments are effective for annual periods beginning on or after January 1, 2022. Management is currently assessing, but has not yet determined, the impact on the Group’s consolidated financial statements.

On May 28, 2020, the IASB published COVID-19-Related Rent Concessions (Amendment to IFRS 16), which amends IFRS 16, Leases, to provide lessees with a practical expedient that relieves lessees from assessing whether a COVID-19-related rent concession is a lease modification. The amendments are effective for annual periods beginning on or after June 1, 2020 and will be applied retrospectively. Management has completed its analysis of the guidance and does not expect it to materially impact the Group’s consolidated financial statements.

Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Group’s consolidated financial statements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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17. Risks and Uncertainties

17.1Risks Related to the Market

17.1.1Economic risks and political uncertainty

Alithya’s results of operations are affected by the level of business activity of its customers, which in turn is affected by the level of economic activity in the industries and markets that they serve as well as political uncertainty. Economic conditions and political uncertainty could cause some customers to reduce or defer their expenditures for digital technology consulting services and a significant prolonged decline in the level of business activity of Alithya’s customers could have a material adverse effect on its revenues and profit margin. Alithya has implemented and will continue to implement cost-savings initiatives to manage its expenses as a percentage of revenues.

17.1.2COVID-19 pandemic

The COVID-19 pandemic resulted in governments and businesses worldwide adopting emergency measures to combat the spread of the coronavirus, and impacted the markets in which Alithya operates throughout most of 2020 and up to the end of Alithya’s fiscal year ended March 31, 2021. The COVID-19 pandemic and the measures taken in response to it, including travel bans, border closures, self-imposed quarantine periods, mandated business closures, curfews and social distancing measures, as well as unprecedented uncertainty in the global economy, imposed significant pressure on businesses in general and had and will likely continue to have an adverse impact on the global economy in the short and long term, which poses the risk that Alithya’s customers, contractors and partners may, temporarily or permanently, be prevented from conducting business as they have historically or previously expected to, which could in turn have an adverse impact on Alithya’s business and results of operations. Although Alithya and a significant number of its customers were fortunate to continue operating as essential services providers by the Québec and Ontario governments, the COVID-19 outbreak had impacts on Alithya’s business, with disruptions to its operations including temporary office closures, reduced activity and certain pricing adjustments with a limited number of clients, slower procurement decisions in some cases, and possible changes to customers’ spending and investment priorities. The most significant impact of the COVID-19 pandemic on our business and financial results was experienced in the first three quarters of 2021. The gradual easing of certain emergency measures allowed many businesses to resume some level of, or increase, commercial activities, resulting in a sequential improvement in our financial performance. However, resurgences of new COVID-19 cases and related strengthening or reintroduction of emergency measures, or a more prolonged duration of the COVID-19 pandemic, may continue to result in: (i) reduced customer demand for Alithya’s services and solutions; (ii) customer pressure on pricing and payment terms; (iii) difficulty in invoice collection; (iv) demands from customers to change or terminate existing contracts or work orders; (v) the non-renewal of expiring customer contracts; (vi) reduction in budgets for government programs that may be used by Alithya to support its research and growth; (vii) delays and disruptions in services from Alithya’s third party service providers; and (viii) devotion of substantial amount of management time and resources and increased operating costs to mitigate the impact of the pandemic. Also, while the COVID‑19 pandemic could create an increase for digital technologies and services in certain industry segments, which could benefit Alithya, there is no assurance that Alithya will be able to respond to such demand while providing services remotely or observing government recommendations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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The Company has taken and continues to take measures to protect the health and safety of its employees, work with its customers to minimize potential disruptions and address the challenges and opportunities posed by this global pandemic. The Company and its employees have transitioned to working remotely, relatively seamlessly, allowing us to continue supporting our customers without material disruption. The Company also implemented several measures to protect its financial position and preserve liquidity, and strict cost containment measures including temporary management salary reductions, and reduced work weeks and temporary layoffs for a limited number of employees, all of which have returned to normal as of today. To ensure business continuity and retain existing highly trained and experienced technical consultants on which Alithya’s success depends in large part, certain subsidiaries of the Company are benefiting from governmental financial assistance programs in Canada, the US and France.

As the Company continues to monitor the issues raised by the COVID-19 pandemic, it may take further actions that alter its business operations as may be required by governmental authorities, or that it determines are in the best interests of its employees, clients, partners and shareholders, and the Company cannot predict the potential effects any such alterations or modifications may have on its business, including the impact on its financial results. The extent to which the COVID-19 pandemic may further adversely impact Alithya’s business and results of operations depends on numerous evolving factors that are highly uncertain, difficult to predict and outside of Alithya’s control, including: (i) the duration and scope of the pandemic; (ii) actions taken by governments and other parties in response to the pandemic; (iii) the effective distribution of approved vaccines and treatments, and the potential development and distribution of new vaccines and treatments; (iv) the impact of the pandemic on the level of general economic activity; (v) the effect of the pandemic on Alithya’s customers and customer demand for its services and solutions; (vi) the ability of Alithya’s customers to pay for its services and solutions on time or at all; (vii) Alithya’s ability to sell and provide its services and solutions to existing and prospective clients; and (viii) new information which may emerge concerning the COVID-19 pandemic and the actions required to contain the coronavirus or remedy its impacts. Also, although Alithya has a business continuity plan in the event the health of any of its key employees would become at risk as a result of contracting COVID-19, there is no assurance that the implementation of such business continuity plan would be successful. While Alithya closely monitors the COVID-19 pandemic situation as this unprecedented pandemic continues to evolve and as long as measures adopted in response to the COVID-19 pandemic remain in place or are reintroduced, and potentially upon and after their gradual or complete removal, it could affect Alithya’s business and results of operations in a manner that is not presently known or in a manner that Alithya does not currently consider will present significant risks to its operations. At the present time, no person, entity or expert can accurately predict the duration or scope of the pandemic and, although some impacts have materialized, it remains challenging for the Company to accurately estimate or quantify the full scope and magnitude of the pandemic’s impact on the Company, its business, financial condition and prospects. Furthermore, the trading price for Alithya’s Subordinate Voting Shares and the securities of other companies in the industry has been volatile as a result of the COVID-19 pandemic and a recession, slowdown or other sustained adverse market event resulting from the COVID-19 pandemic could materially and adversely affect the financial markets, the value of Alithya’s Subordinate Voting Shares and Alithya’s ability to obtain equity or debt financing on favorable or acceptable terms or at all.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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17.2Risks Related to Alithya’s Industry

17.2.1Competition in the digital technology consulting services market

Competition in the digital technology consulting services market is intense and Alithya may lose projects to, or face pricing pressure from, its competitors or prospective customers’ internal IT departments. The market for digital technology consulting services providers is highly competitive. In many cases, Alithya competes for specialty digital technology consulting services work with in-house technical staff, and other international digital technology consulting firms. In addition, there are many small, boutique digital technology consulting firms that have developed services similar to those offered by Alithya. Alithya believes that competition will continue to be strong and may increase in the future, especially if Alithya’s competitors continue to reduce their price for digital technology consulting services. Any pricing pressure could have a material adverse impact on Alithya’s revenues and margins and limit its ability to provide competitive services.

Alithya’s target market is rapidly evolving and is subject to continuous technological change. While Alithya strives to remain competitive, Alithya’s competitors may be better positioned to address technological changes or may react more favorably to these changes, which could have a material adverse effect on Alithya’s business. Alithya competes on the basis of a number of factors, many of which may be beyond its control. Existing or future competitors may develop or offer digital technology consulting services that provide significant technological, creative, performance, price or other advantages over the services Alithya offers.

Some of Alithya’s competitors have longer operating histories and benefit from significantly greater financial, technical, marketing and managerial resources than Alithya. There are relatively low barriers to entry in Alithya’s business. Alithya currently has no patented technology that would preclude or inhibit competitors from entering its digital technology consulting services market. Therefore, Alithya must rely on the skill of its personnel and the quality of its customer service. In addition, as the costs to start a digital technology consulting services firm are relatively low, Alithya expects that it will continue to face additional competition from new entrants into the market in the future, offshore providers and larger integrators and it is subject to the risk that its employees may leave and start competing businesses. Any one or more of these factors could have a material adverse impact on Alithya’s business, financial condition and results of operations.

17.2.2Reliance on highly-trained and experienced personnel

Alithya’s success depends in large part on its ability to attract new qualified employees and retain existing highly-trained and experienced technical consultants, project management consultants, business analysts and sales and marketing professionals of various experience levels. The markets that Alithya serves are highly competitive and competition for skilled employees in the digital technology consulting industry is intense. If Alithya fails to attract new employees or retain its existing employees, Alithya may be unable to complete existing projects or bid for new projects of similar size, which could adversely affect its revenues. Even if Alithya is able to grow and expand its employee base, the additional resources required to attract new employees and retain existing employees may adversely affect its operating margins.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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17.2.3Failure to enhance existing services and solutions and to develop new services and solutions

The markets for technology, digital and outsourcing services are characterized by rapid technological change, evolving industry standards, changing customer preferences and new services and solutions introductions. Alithya is currently in the midst of a shift towards increasing customer demand for digital technologies and services. Alithya’s future success depends on its ability to develop digital and other services and solutions that keep pace with changes in the markets in which it operates. Alithya may not be successful in developing digital and other new services and solutions addressing evolving technologies in a timely or cost-effective manner and there is no assurance that any services and solutions it does develop will be successful in the marketplace. Alithya’s failure to address the demands of the rapidly evolving technological environment could have a material adverse effect on its ability to retain and attract customers and on its competitive position, which could in turn have a material adverse effect on its business, financial condition and results of operations.

17.2.4Government sponsored programs

Alithya benefits from government sponsored programs designed to support research and development, labor and economic growth. Government programs reflect government policy and depend on various political and economic factors. There can be no assurance that such government programs will continue to be available to Alithya in the future, or will not be reduced, amended or eliminated. Any future government program reduction, elimination or other amendment to the government sponsored programs from which Alithya benefits could increase operating or capital expenditures incurred by Alithya and have a material adverse effect on its net earnings or cash flow.

17.2.5Intellectual property rights

Our success depends in part on our ability to protect our proprietary methodologies, processes, know-how, techniques, tools and other intellectual property that we use to provide our services. Alithya has registered, and applied for the registration of, trademarks, domain names and copyrights. Alithya also owns a number of trademarks and copyrights and holds licenses, which vary in duration, relating to its solutions and services. Existing trade secret and copyright laws, however, afford Alithya only limited protection. Third parties may attempt to disclose, obtain or use Alithya’s solutions or technologies. Others may also independently develop and obtain patents or copyrights for technologies that are similar or superior to Alithya’s technologies and should that happen, Alithya may need to license these technologies and may not be able to obtain licenses on reasonable terms, if at all. If Alithya is unsuccessful in any intellectual property litigation, it may be forced to do one or more of the following: (i) cease selling or using technology that incorporates the challenged intellectual property; (ii) obtain a license, which may not be available on reasonable terms or at all, to use the relevant technology; (iii) rebrand Alithya’s services and solutions, which could result in a loss of brand recognition and could require Alithya to devote additional resources to advertising and marketing its new brands; (iv) configure services to avoid infringement; and (v) refund license fees or other payments that were previously received.

As Alithya develops software applications for specific customer engagements, issues relating to the ownership of, and the rights to use of, software applications and frameworks could arise. Alithya relies on a combination of copyright, trademark, unfair competition and trade secret laws, as well as intellectual property assignment and confidentiality agreements and other methods to protect Alithya’s intellectual property rights. Protection of intellectual property rights and confidentiality in some countries in which Alithya operates may not be as effective as in Canada or other countries with more developed intellectual property protections. Also, Alithya

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

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may have to pay economic damages in the event of lost disputes relating to intellectual property rights, which could adversely affect its results of operations and financial condition. Further, Alithya cannot provide assurance that competitors will not infringe Alithya’s intellectual property rights, or that Alithya will have adequate resources to enforce its intellectual property rights. If Alithya does enforce its intellectual property rights through litigation, Alithya may not be successful and the litigation may result in substantial costs and diversion of resources and management attention.

17.2.6Infringing on the intellectual property rights of others

When developing solutions and providing services for its customers, Alithya utilizes its own, and may also enter into licensing agreements with third parties for the right to use patents, trademarks, copyrights, trade secrets and other intellectual property rights. Alithya may also develop intellectual property rights on its own or together with its customers when developing solutions and providing services for such customers. Although Alithya uses reasonable efforts to ensure that no intellectual property rights of others are infringed, third parties or even Alithya’s customers may assert claims against Alithya. In addition, certain agreements to which Alithya is a party may contain indemnity clauses pursuant to which Alithya would be required to indemnify its clients against liability and damages arising from third-party claims of intellectual property right infringement as part of its service contracts with its customers and, in some instances, the amount of these indemnity claims may exceed the revenues Alithya generates under the contracts or the coverage provided by Alithya’s insurance.

Any intellectual property claims or litigation against Alithya could incur substantial costs, consume the time and energy of Alithya’s management, harm Alithya’s reputations, require Alithya to enter into additional licensing arrangements or prevent Alithya from providing some solutions or services. Any limitation on Alithya’s ability to sell or use solutions or services that utilize intellectual property rights that are the subject of a claim could cause Alithya to lose revenues or incur additional expenses to modify its solutions and services for future projects.

17.2.7Regulatory risks

Alithya’s operations require compliance with laws on many matters in different jurisdictions, including anti-corruption, intellectual property, trade restrictions, immigration, taxation, antitrust, data privacy, labor relations, environment and securities. Complying with these diverse requirements is a challenge and consumes significant resources. Also, some of these laws may impose conflicting requirements or restrictions on the movement of cash and other assets and on the repatriation of Alithya’s earnings and thereby reduce its earnings. These legal requirements may also expose Alithya to potential penalties for non‑compliance and harm its reputation.

17.3Risks Related to Alithya’s Business

17.3.1Changes in the nature of revenues

Any change in the mix of Alithya’s arrangements with its customers could have an impact upon its periodic operating performance, including gross margin. Alithya generates revenues principally through the provision of consulting services in the areas of digital technology. These services are provided under arrangements with varying pricing mechanisms. Alithya’s revenues-generating customer contracts generally fall into one of the following four categories: (i) time and materials arrangements for which revenues are recognized as the services are rendered and which represent the majority of Alithya’s revenues, (ii) fixed-fee arrangements where

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the outcome can be estimated reliably and for which revenues are recognized using the percentage-of-completion method over the service periods and labor costs or labor hours are used to measure the progress towards completion, (iii) retainer-based arrangements for which customers pay a recurring fee in exchange for a monthly recurring service (typically support) for which revenues are recognized over time using an hours-based input method, and (iv) resale of third-party off-the-shelf software and maintenance for which revenues are recognized on a net basis and resale of Alithya-created software and maintenance for which revenues are reported on a gross basis. Alithya also sometimes enters into arrangements with multiple performance obligations which typically include software, post-contract support and consulting services and which require an allocation of the transaction price to each performance obligation based on a relative standalone selling price basis.

Alithya also provides a payrolling service through which contractor candidates recruited and selected by clients are hired by Alithya and then assigned to client projects. Alithya assumes all administrative responsibilities related to these candidates and invoices the client for time and materials. The sale of payrolling services is recognized on a net basis. As Alithya’s overall business volume increases, management intends to continue to gradually phase-out this relatively low margin business.

17.3.2Customer concentration

Alithya derives a significant portion of its revenues from its major customers and expects this to continue for the foreseeable future. The increased breadth of Alithya’s services and solutions offerings has also resulted and may continue to result in larger and more complex projects and contracts with these major customers. Retaining these customers requires Alithya to foster close relationships with them and achieve a thorough understanding of their operations and needs in order to continue to provide high-quality services. Alithya’s ability to maintain such relationships depends on a number of factors, including the proficiency of its professionals and its management personnel. There can be no assurance that each such customer will continue to be satisfied with Alithya’s services and utilize Alithya on the same terms, or at all, in the future. Failure to maintain close relationship with these customers could result in termination of customer contracts and potential liability for significant penalties or damages, any of which could have a material adverse effect on Alithya’s business, financial condition and results of operations.

17.3.3Fluctuation of business and financial results

Alithya’s ability to maintain and increase its revenues is affected not only by its success in implementing its strategy, but also by a number of other factors, which could cause Alithya’s financial results to fluctuate. These factors include: (i) its ability to introduce and deliver new services and business solutions; (ii) its potential exposure to a lengthened sales cycle; (iii) the cyclicality of the purchases of its technology services; and (iv) the nature of its customer’s business (for example, if a customer encounters financial difficulty, it may be forced to cancel, reduce or defer existing contracts with Alithya). These, and other factors, make it difficult to predict financial results for any given period.

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17.3.4Early termination risk

If Alithya fails to deliver its services in accordance with the terms and conditions of its contractual agreements or as a result of other circumstances, which may be beyond Alithya’s or its customers’ control, some of its customers could elect to terminate their contracts before their agreed expiry date, which would result in a reduction of Alithya’s earnings and cash flow and may impact the value of its backlog of orders. Early contract termination can result from the exercise of a legal right or when circumstances that are beyond Alithya’s or its customers’ control prevent the contract from continuing. In cases of early termination, Alithya may not be able to eliminate ongoing costs incurred to support the contract.

17.3.5Costs of services

In order to generate acceptable margins, Alithya’s pricing for services depends on its ability to accurately estimate the costs and timing for completing projects, which can be based on a customer’s bid specification, sometimes in advance of the final determination of the full scope and design of the contract. In addition, a portion of Alithya’s project-oriented contracts are performed on a fixed-price basis. Billing for fixed-price engagements is carried out in accordance with the contractual terms agreed upon with Alithya’s customers, and revenues are recognized based on the percentage of effort incurred to date in relation to the total estimated efforts to be incurred over the duration of the respective contract. These estimates reflect Alithya’s best judgment regarding the efficiencies of its methodologies and professionals as it plans to apply them to the contracts in accordance with Alithya’s standards of contract management. If Alithya is unsuccessful in accurately estimating the time or resources required to fulfill its obligations under a contract, or if unexpected factors, including those outside of its control, arise, there may be an impact on costs or the delivery schedule which could have a material adverse effect on Alithya’s expected net earnings.

17.3.6Teaming agreements and subcontracts

Alithya derives revenues from contracts where it enters into teaming agreements with other providers. In some teaming agreements, Alithya is the primary contractor, whereas in others, Alithya acts as a subcontractor. In both cases, Alithya relies upon its relationships with other providers to generate business and expects to continue to do so in the foreseeable future. Where Alithya acts as the primary contractor, if it fails to maintain its relationships with other providers, Alithya may have difficulty attracting suitable participants in its teaming agreements. Similarly, where it acts as subcontractor, if its relationships are impaired, other providers might reduce the work they award to Alithya, award that work to Alithya’s competitors or choose to offer the services directly to the customers in order to compete with Alithya’s business. In either case, if Alithya fails to maintain its relationship with these providers or if its relationship with these providers is otherwise impaired, Alithya’s business, prospects, financial condition and results of operations could be materially adversely affected.

17.3.7Partners’ ability to deliver on their commitments

Increasingly large and complex contracts may require Alithya to rely upon third party subcontractors, including software and hardware suppliers, to help Alithya fulfill its commitments. Under such circumstances, Alithya’s success depends on the ability of third parties to perform their obligations within agreed upon budgets and time frames. If Alithya’s partners fail to deliver, Alithya’s ability to complete ongoing contracts may be adversely affected, which could have an unfavorable impact on its profitability. In addition, Alithya may not be able to replace the functions provided by these third parties if their software components or solutions become obsolete,

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defective or incompatible with future versions of Alithya’s solutions and services, or if they are not adequately maintained or updated. Third-party suppliers of software or other intellectual property assets could also be unwilling to permit Alithya to use or to continue to use their intellectual property and this could impede or disrupt the use of their solutions or services by Alithya’s customers and Alithya.

17.3.8Guarantee and indemnification risks

In the normal course of business, Alithya enters into agreements that may provide for indemnification and guarantees to counterparties in transactions such as consulting services, business divestitures, lease agreements and financial obligations. These indemnification undertakings and guarantees may require Alithya to compensate counterparties for costs and losses incurred as a result of various events, including breaches of representations and warranties, intellectual property right infringement, claims that may arise while providing services or as a result of litigation that may be suffered by counterparties. If Alithya is required to compensate counterparties due to such arrangements and its insurance does not provide adequate coverage, its business, prospects, financial condition and results of operations could be materially adversely affected.

17.3.9Utilization rates

In order to maintain and grow revenues levels, Alithya has to maintain an appropriate level of availability of professional resources in each of its geographic regions by having a high utilization rate while still being able to assign additional resources to new work.

Maintaining an efficient utilization rate, however, requires Alithya to forecast its need for professional resources accurately and to manage recruitment activities, professional training programs, attrition rates and restructuring activities appropriately. To the extent that it fails to do so, Alithya’s utilization rates may be reduced and thereby adversely affect its revenues and profitability. In addition, Alithya may find that it does not have sufficient resources to deploy against new business opportunities, in which case its ability to grow its revenues would suffer.

17.3.10Services for government departments and agencies

Changes in government spending policies or budget priorities could directly affect Alithya’s financial performance. Among the factors that could harm Alithya’s government contracting business are: (i) the curtailment of governments’ use of consulting and IT services firms; (ii) a significant decline in spending by governments in general, or by specific departments or agencies in particular; (iii) the adoption of new legislation and/or actions affecting companies that provide services to governments; (iv) delays by governments in the payment of its invoices; and (v) general economic and political conditions.

These and other factors could cause government departments and agencies to reduce their purchases under contracts, to exercise their right to terminate contracts, to issue temporary stop work orders, or not to exercise options to renew contracts, any of which would cause Alithya to lose future revenues. Government spending reductions or budget cutbacks at departments or agencies to which Alithya provides services or expects to provide services could materially harm Alithya’s continued performance or limit the award of additional contracts.

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17.3.11Tax obligations

In estimating its income tax payable, Alithya uses accounting principles to determine income tax positions that are likely to be sustained by applicable tax authorities. However, there is no assurance that Alithya’s tax benefits or tax liability will not materially differ from its estimates or expectations. The tax legislation, regulation and interpretation that apply to Alithya’s operations are continually changing. In addition, future tax benefits and liabilities are dependent on factors that are inherently uncertain and subject to change, including future earnings, future tax rates, and anticipated business mix in the various jurisdictions in which Alithya operates. Moreover, Alithya’s tax returns are continually subject to review by applicable tax authorities, which determine the actual amounts of taxes payable or receivable, of any future tax benefits or liabilities and of income tax expense that Alithya may ultimately recognize and such determinations may become final and binding on Alithya.

Any of the aforementioned factors could have a material adverse effect on Alithya’s net income or cash flow by affecting its operations and profitability, the availability of tax credits, the cost of the services it provides, and the availability of deductions for operating losses as it develops its international service delivery capabilities.

17.3.12Foreign exchange

Foreign exchange risk is the risk that the fair value of assets or liabilities, or future cash flows, will fluctuate because of changes in foreign exchange rates. Alithya’s functional and reporting currency is the Canadian dollar. As a significant portion of Alithya’s revenues, earnings and net assets is denominated in foreign currencies, including in US dollars and Euros, fluctuations in exchange rates between the Canadian dollar and such currencies could have an adverse effect on its financial condition and results of operations. This risk is partially mitigated by a natural hedge in matching Alithya’s costs with revenues denominated in the same currency.

Future events that may significantly increase or decrease the risk of future movement in the exchange rates for these currencies cannot be predicted. Although Alithya does not currently have an exchange rate risk policy that would materially affect its results of operations, it is still subject to foreign exchange risk.

17.3.13Legal claims

During the ordinary course of conducting its business, Alithya may be threatened with or become subject to legal proceedings initiated by third parties or Alithya’s customers. For instance, Alithya’s solutions may suffer from defects that adversely affect their performance, may not meet its customers’ requirements or may fail to perform in accordance with applicable service levels. Such problems could subject Alithya to legal liability. Alithya uses reasonable efforts to include provisions in its contracts which are designed to limit its exposure to legal claims relating to its services and the applications it develops and obtain liability insurance coverage. However, Alithya may not always be able to include such provisions or obtain sufficient insurance coverage and, where it is successful in doing so, they may not protect Alithya adequately or may not be enforceable under some circumstances or under the laws of some jurisdictions. Defending lawsuits against Alithya could require substantial amounts of management’s attention and incur significant attorney fees, damage awards and fines or penalties for which Alithya may not be fully insured and which could harm its reputation and adversely affect its business, financial condition and results of operations.

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17.3.14IT systems and infrastructure

To deliver its services and solutions to its customers, Alithya relies upon high speed networks, including satellite, fiber optic and land lines operated by third parties, to provide reliable communications between its main operating offices, other global delivery centers and the offices of its customers and associates worldwide. Any systems failure or outage or a significant disruption in such communications or in Alithya’s IT systems and infrastructure could result in curtailed operations, a loss of customers and reputational damage, which would have an adverse effect on Alithya’s business, financial condition and results of operations.

17.3.15Security and cybersecurity risks

In the current environment, there are numerous and evolving security risks, especially from cybersecurity threats, including criminal hackers, hacktivists, state sponsored organizations, industrial espionage, insider or employee misconduct or negligence and human or technological error. Alithya’s business could be negatively impacted by these physical and cybersecurity threats, which could affect its future sales, financial position and competitive position in the market or increase its costs and expenses. These security threats to Alithya include potential attacks not only on its own solutions, services and systems, but also those of its customers, contractors, partners, suppliers and other third parties. Alithya seeks to detect and investigate all security incidents and to prevent their occurrence or recurrence by continuously investing in security infrastructure, data security and privacy controls, threat protections, detection and mitigation policies, procedures and controls, and employee security awareness and trainings. However, because of the evolving nature and sophistication of these security threats, Alithya may be unable to detect or prevent all of these threats. Techniques used to obtain unauthorized access to, or to sabotage, systems or networks, are constantly evolving and generally are not recognized until launched against a target. Therefore, Alithya may be unable to anticipate these techniques, react in a timely manner, or implement adequate preventive measures, and may face delays in the detection or remediation of, or other responses to, security breaches and other security‑related incidents. Additionally, with advances in computer capabilities and data protection requirements to address ongoing threats, Alithya may be required to expend significant capital and other resources to protect against potential security breaches or to alleviate problems caused by security breaches. Any failure by Alithya to adequately maintain and enhance its systems and networks could require Alithya to incur substantial remediation costs, including costs associated with repairing its information systems, implementing further data protection measures, engaging third-party experts and consultants, and increased insurance premiums. Alithya’s Chief Information Security Officer is responsible for overseeing its security measures, the prevention of security incidents and the detection and investigation of incidents in the event of the occurrence of threats by implementing security measures to ensure an appropriate level of control based on the nature of the information and the inherent risks attached thereto. Alithya’s security management framework provides a foundation for a risk-based approach to the development, review and regular improvements of policies, processes, standards and controls related to information security, data privacy, physical security and business continuity. In addition, while Alithya selects third-party suppliers carefully and includes safeguards in its contractual terms, it does not control their actions. Any security breaches caused by the negligence or misconduct of these third parties could adversely affect Alithya’s ability to safeguard its information technology infrastructure and deliver solutions and services to its customers and otherwise conduct business. Furthermore, while Alithya’s liability insurance policy covers cyber risks, there is no assurance that such insurance coverage will be sufficient in type or amount to cover the costs, damages, liabilities or losses that could result from security breaches, cyber-attacks and other related breaches, that insurance will continue to be available to Alithya on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The occurrence of any of these aforementioned security threats

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could expose Alithya, its customers or other third parties to potential liability, litigation, and regulatory action, could materially compromise or disrupt Alithya’s business operations, and could cause the loss of customer confidence, loss of existing or potential customers, loss of sensitive government contracts, damage to brand and reputation and other financial loss.

17.3.16Risks from security breaches or disclosure of sensitive data or failure to comply with data protection laws and regulations

Alithya is dependent on IT networks and systems to process, transmit, host and securely store electronic information and to communicate among its locations around the world and with its customers, contractors and partners. Security breaches, employee negligence or malfeasance or human or technological error could lead to shutdowns or disruptions of Alithya’s operations and potential unauthorized disclosure of sensitive data, which in turn could jeopardize projects that are critical to the operations of Alithya’s customers’ businesses. The theft and/or unauthorized use or disclosure of Alithya’s or its customers’ and their customers’ confidential information or other proprietary business information as a result of such an incident could adversely affect Alithya’s competitive position and reduce marketplace acceptance of its services. Any failure in the networks or computer systems used by Alithya or its customers could also result in a claim for substantial damages against Alithya and significant reputational harm, and may cause Alithya’s current and prospective customers to lose confidence in the effectiveness of our data security measures, regardless of Alithya’s responsibility for the failure.

In addition, as a global service provider with customers in a broad range of industries, Alithya often has access to or is required to manage, utilize, collect and store sensitive data subject to various regulatory regimes, including but not limited to US or Canadian federal and state or provincial laws governing the protection of personal information and the European Union’s General Data Protection Regulation. Alithya’s Chief Information Security Officer oversees its compliance with the laws that protect the privacy of personal information. If unauthorized access to or disclosure of personal information in Alithya’s possession or control occurs or it otherwise fails to comply with applicable laws and regulations in this regard, Alithya could be exposed to civil or criminal enforcement actions and penalties, as well as lawsuits brought by its customers, its customers’ customers, their customers or third parties for breaching contractual confidentiality and security provisions or data protection laws. Laws and expectations relating to data protections continue to evolve in ways that may limit Alithya’s access, use and disclosure of sensitive data, and may require increased expenditures by Alithya or may dictate that it no longer continues to offer certain types of services.

17.3.17Reputational risks

Alithya’s reputation as a capable and trustworthy service provider and long-term business partner is key to its ability to compete effectively in the market for IT services. The nature of Alithya’s operations exposes it to the potential loss, unauthorized access to, or destruction of its customers’ information, as well as temporary service interruptions. Depending on the nature of the information or services, such events may have a negative impact on how Alithya is perceived in the marketplace. Under such circumstances, Alithya’s ability to obtain new customers and retain existing customers could suffer with a resulting impact on its revenues and net earnings.

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17.3.18Operational, financial and other internal controls and systems

Alithya’s historic and anticipated growth places significant demands on its management and other resources, and requires Alithya to continue to develop and improve its operational, financial and other internal controls. In particular, Alithya’s growth has presented and will continue to present challenges with respect to: (i) recruiting, training and retaining technical, finance, marketing and management personnel with the knowledge, skills and experience that its business model requires; (ii) maintaining high levels of customer satisfaction; (iii) developing and improving its internal administrative infrastructure, particularly its operational, financial and other internal control systems; (iv) preserving its culture, values and entrepreneurial environment; and (v) effectively managing its personnel and operations and effectively communicating to its personnel worldwide its core values, strategies and goals.

In addition, the increasing size and scope of Alithya’s operations increases the possibility that a member of its personnel will engage in unlawful or fraudulent activity, breach its contractual obligations, or otherwise expose Alithya to unacceptable business risks, despite its efforts to train its personnel and maintain internal controls to prevent such instances. If Alithya does not continue to develop and implement the right processes and tools to manage its enterprise, its business, results of operations and financial condition could be adversely affected.

Due to the inherent limitations of internal controls including the circumvention or overriding of controls or fraud, there can, however, only be reasonable assurance that Alithya’s internal controls will detect and prevent a misstatement. If Alithya is unable to design, implement, monitor and maintain effective internal controls throughout its different business environments, the efficiency of its operations might suffer, resulting in a decline in revenues and profitability, and the accuracy of its financial reporting could be impaired.

17.3.19Commitment of substantial resources for growth

Growing the Alithya business over the longer-term may require commitment of continued investment in the operations of Alithya. Alithya’s future capital requirements will depend on many factors, including many of those discussed above, such as: (i) the results of Alithya’s operations and the rate of its revenues growth; (ii) the development of new service offerings; (iii) the successful integration of its business acquisitions; (iv) hiring and retaining key personnel; (v) maintaining customer relationships; and (vi) the identification of suitable future acquisition opportunities.

Alithya’s funds may not be sufficient to fund these activities if opportunities arise, and Alithya may be unable to expand its business if it does not have sufficient capital or cannot borrow or raise additional capital on attractive terms.

17.3.20Implementation of the strategy of growing through acquisitions

Alithya’s ability to grow through acquisitions requires that it identifies suitable acquisition targets and that it correctly evaluates their potential as transactions that will meet Alithya’s financial and operational objectives. There can be no assurance that Alithya will be able to identify suitable acquisition candidates and consummate additional acquisitions that meet its economic thresholds, or that future acquisitions will be successfully integrated into its operations and yield the tangible accretive value that had been expected. If Alithya is unable to implement its strategy, it will likely be unable to maintain its historic or expected growth rates.

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The successful integration of new operations arising from Alithya’s acquisition strategy requires that a substantial amount of management time and attention be focused on integration activities and management time that is devoted to integration activities may divert management’s normal operations focus on growing the business organically with resulting pressure on the revenues and earnings from its existing operations. In addition, Alithya may face complex and potentially time-consuming challenges in implementing its uniform standards, controls, procedures and policies across new operations when harmonizing their activities with those of its existing business units. Integration activities can result in unanticipated operational problems, expenses and liabilities. If Alithya is not successful in executing its integration strategies in a timely and cost-effective manner, it will have difficulty achieving its growth and profitability objectives. Additional risks and uncertainties relating to acquisitions and other strategic transactions include: (i) difficulties in the assimilation and retention of key employees and in maintaining relationships with present and potential customers, contractors and partners; (ii) difficulties managing and integrating operations in geographically dispersed locations; (iii) the risk that the targeted markets do not evolve as anticipated and that technologies acquired prove to be inferior to Alithya’s expectations; (iv) difficulties in combining or managing different corporate cultures; (v) potential deficiencies in internal controls at acquired companies; (vi) cybersecurity and compliance related issues; and (vii) exposure to unanticipated liabilities of acquired companies.

In connection with acquisitions, Alithya may incur debt, issue equity securities, assume contingent liabilities or have amortization expenses and write-downs of acquired assets, which could cause Alithya’s earnings to decline.

17.3.21Dependence on certain key personnel

Alithya depends on certain key personnel, and the loss of their services may adversely affect Alithya’s business. Alithya believes that its success depends on the continued employment of its senior management team and other key personnel. This dependence is particularly important to Alithya’s business because personal relationships are a critical element in obtaining and maintaining customer engagements. If one or more members of Alithya’s senior management team or other key personnel were unable or unwilling to continue in their present positions, Alithya’s business could be adversely affected. Furthermore, other companies seeking to develop in-house business capabilities may hire away some of Alithya’s key personnel.

17.3.22History of losses

Alithya generated a net loss of $17.3 million and $39.7 million for the fiscal years ended March 31, 2021 and 2020, respectively. Alithya intends to continue to expend significant funds to increase its capability to win new contracts, expand and improve its existing operations and make additional acquisitions. As it continues to grow, Alithya expects the aggregate amount of these expenses will also continue to grow. Alithya’s efforts to grow its business may, however, be more costly than expected and Alithya may not be able to increase its revenue enough to offset higher operating expenses. Alithya may also incur significant losses in the future for a number of reasons, including as a result of unforeseen expenses, difficulties, complications and delays, the other risks described herein and other unknown events. The amount of future net losses, if any, will depend, in part, on the growth of Alithya’s future expenses and its ability to generate revenue. Any future net losses of Alithya or its inability to maintain profitability and positive cash flows from operating activities, among other things, may have an adverse effect on Alithya shareholders’ equity and working capital.

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17.3.23Goodwill

Alithya recognizes an accounting value for goodwill and other intangible assets in connection with its business acquisitions. Under IFRS, goodwill must be assessed at least annually and potentially more frequently, in the event the value of goodwill and other indefinite-lived intangible assets has been impaired. Amortizing intangible assets will be assessed for impairment in the event of an impairment indicator. Any reduction or impairment of the value of goodwill or other intangible assets will result in a charge against earnings, which could materially adversely affect Alithya’s results of operations and shareholders’ equity in future periods.

17.4Risks Related to Subordinate Voting Shares

17.4.1Limited voting rights

Alithya’s Multiple Voting Shares are similar to its Subordinate Voting Shares except that each Multiple Voting Share has ten times the voting rights of each Subordinate Voting Share. As a result, holders of Multiple Voting Shares have a disproportionate level of control over matters submitted to Alithya shareholders for approval, which may reduce the ability of holders of Subordinate Voting Shares to influence corporate matters and, as a result, Alithya may take actions that they do not view as beneficial.

17.4.2Market price of Subordinate Voting Shares

Alithya cannot predict the price of Subordinate Voting Shares. The stock market may experience significant price and volume fluctuations that are often unrelated or disproportionate to the operating performance of companies. These broad market and industry factors, together with other economical circumstances, may materially harm the market price of Alithya’s Subordinate Voting Shares, regardless of Alithya’s operating performance. In addition, the price of Alithya’s Subordinate Voting Share may be dependent upon the valuations and recommendations of the analysts who cover the Alithya business, and if Alithya’s results do not meet the analysts’ forecasts and expectations, Alithya’s share price could decline as a result of analysts lowering their valuations and recommendations or otherwise. In the past, following periods of volatility in the market, securities class-action litigations have often been instituted against companies. Such litigations, if instituted against Alithya, could result in substantial costs and diversion of management’s attention and resources.

17.4.3Raising additional capital

Alithya’s future growth is contingent on the execution of its business strategy, which, in turn, is dependent on its ability to grow the business organically as well as through business acquisitions. In the event Alithya would need to fund any currently unidentified or unplanned future acquisitions and other growth opportunities, Alithya may have to raise additional capital through a combination of public and private equity offerings and debt financings and there can be no assurance that such funding will be available in amounts and on terms acceptable to Alithya. Alithya’s ability to raise the required funding depends on the capacity of the capital markets to meet Alithya’s equity and/or debt financing needs in a timely fashion and on the basis of interest rates and/or share prices that are reasonable in the context of Alithya’s commercial objectives. Increasing interest rates, volatility in Alithya’s share price, and the capacity of Alithya’s current lenders to meet Alithya’s additional liquidity requirements are all factors that may have a material adverse effect on any acquisitions or growth activities that Alithya may, in the future, identify or plan. If Alithya is unable to obtain the necessary funding, it may be unable to achieve its growth objectives.

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To the extent that Alithya raises additional capital through the sale of equity or convertible debt securities, the ownership interests of Alithya’s shareholders will be diluted, and the terms may include liquidation or other preferences that could adversely affect the rights of Alithya’s shareholders. The incurrence of indebtedness would result in increased fixed payment obligations and could involve certain restrictive covenants, such as limitations on Alithya’s ability to incur additional debt and other operating restrictions that could adversely impact its ability to conduct its business.

17.4.4Active market

If an active market for Alithya’s Subordinate Voting Shares is not sustained, holders of Subordinate Voting Shares may be unable to sell their investments on satisfactory terms. Declines in the value of Subordinate Voting Shares may adversely affect the liquidity of the market for Subordinate Voting Shares. Factors unrelated to Alithya’s performance may also have an effect on the price and liquidity of Subordinate Voting Shares including the extent of analyst coverage of Alithya, lower trading volume and general market interest in Subordinate Voting Shares, the size of Alithya’s public float and any event resulting in a delisting of Subordinate Voting Shares from the TSX or the NASDAQ.

17.4.5Dividends

Alithya does not expect to pay dividends in the immediate future and anticipates that it will retain all earnings, if any, to support its operations. Any future determination as to the payment of dividends will, subject to Canadian legal requirements and Alithya’s articles of incorporation, be at the sole discretion of Alithya’s board of directors and will depend on Alithya’s financial condition, results of operations, capital requirements and other factors the board of directors deems relevant. Holders of Subordinate Voting Shares must therefore rely on potential increases in the trading price of their shares for returns on their investment in the foreseeable future.

18. Management’s Evaluation of our Disclosure Controls and Procedures

Disclosure Controls and Procedures

The Company has established and maintains disclosure controls and procedures designed to provide reasonable assurance that the material information relating to the Company is made known to the Chief Executive Officer and Chief Financial Officer by others, particularly during the period in which annual and interim filings are prepared and that information required to be disclosed by the Company in its annual, interim filings or other reports filed or submitted by the Company under Canadian and U.S. securities laws is recorded, processed, summarized and reported within the time periods specified under those laws and the related rules. The effectiveness of these disclosure controls and procedures, as defined under National Instrument 52-109 – Issuers’ annual and interim filings (“NI 52-109”) adopted by Canadian securities regulators and in Rule 13a-15(e) and 15d-15(e) under the U.S. Securities Exchange Act of 1934, as amended, was evaluated under the supervision of and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer as at the end of the Company’s most recently completed financial year ended March 31, 2021. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as at March 31, 2021.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 53


Internal Control over Financial Reporting

The Company has also established and maintains adequate internal control over financial reporting, as defined under NI 52-109 adopted by Canadian securities regulators and in Rule 13a-15(f) and 15d-15(f) under the U.S. Securities Exchange Act of 1934, as amended. The Company’s internal control over financial reporting is a process designed under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, and effected by management and other key employees, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS as issued by the IASB. The effectiveness of the Company’s internal control over financial reporting was evaluated under the supervision of and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer as at the end of the Company’s most recently completed financial year ended March 31, 2021 based on the criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on such evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s internal control over financial reporting was effective as at March 31, 2021.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting during the quarter ended March 31, 2021, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Limitations on Effectiveness of Disclosure Controls and Procedures and Internal Control over Financial Reporting

The Company’s management recognizes that any disclosure controls and procedures and internal control over financial reporting, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Because of their inherent limitations, disclosure controls and procedures and internal control over financial reporting may not prevent or detect all errors or misstatements on a timely basis.

Management’s Discussion and Analysis of Financial Condition and Results of Operations of Alithya

For the year ended March 31, 2021

| 54

Exhibit 99.4

SECTION 302 CERTIFICATION

I, Paul Raymond, certify that:

1.I have reviewed this annual report on Form 40-F of Alithya Group inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.


Date: June 10, 2021 

     /s/ Paul Raymond

Paul Raymond
President and Chief Executive Officer

Exhibit 99.5

SECTION 302 CERTIFICATION

I, Claude Thibault, certify that:

1.I have reviewed this annual report on Form 40-F of Alithya Group inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;

4.The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and

5.The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.


Date: June 10, 2021 

            /s/ Claude Thibault

Claude Thibault
Chief Financial Officer

Exhibit 99.6

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Annual Report on Form 40-F for the fiscal year ended March 31, 2021 (the “Report”) by Alithya Group inc. (the “Company”), the undersigned, as the Chief Executive Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 10, 2021

 

            /s/ Paul Raymond

Paul Raymond
President and Chief Executive Officer

Exhibit 99.7

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the filing of the Annual Report on Form 40-F for the fiscal year ended March 31, 2021 (the “Report”) by Alithya Group inc. (the “Company”), the undersigned, as the Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

the Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: June 10, 2021

 

            /s/ Claude Thibault

Claude Thibault
Chief Financial Officer
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Raymond Chabot

Grant Thornton LLP

Suite 2000

National Bank Tower

600 De La Gauchetière Street West

Montréal, Quebec

H3B 4L8

Consent of Independent Registered    T 514-878-2691

Public Accounting Firm

We have issued our report dated June 9, 2021, with respect to the consolidated financial statements included as an Exhibit to the Annual Report of Alithya Group inc. on Form 40-F for the fiscal year ended March 31, 2021.

We consent to the inclusion of said report in the Annual Report of Alithya Group inc. on Form 40-F for the fiscal year ended March 31, 2021.

We also consent to the incorporation by reference of said report in the Registration Statement of Alithya Group inc. on Form S-8 (File No. 333-228487).

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Montréal, Canada

June 9, 2021

Member of Grant Thornton International Ltd rcgt.com



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