Exhibit 99.1
Interim Condensed Consolidated Financial Statements of Alithya Group inc. For the three months ended June 30, 2021 and 2020 (unaudited) | ||
TABLE OF CONTENTS
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Notes to Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | ||||||||
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3. | Business combination | |||||||
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5. | Intangibles | |||||||
6. | Goodwill | |||||||
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INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended June 30, | ||||||||||||||||||||||||||||||||
(in thousands of Canadian dollars, except per share data) (unaudited) | 2021 | 2020 | ||||||||||||||||||||||||||||||
Notes | $ | $ | ||||||||||||||||||||||||||||||
Revenues | 102,921 | 70,711 | ||||||||||||||||||||||||||||||
Cost of revenues | 74,581 | 50,308 | ||||||||||||||||||||||||||||||
Gross margin | 28,340 | 20,403 | ||||||||||||||||||||||||||||||
Operating expenses | ||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 10 | 22,747 | 19,416 | |||||||||||||||||||||||||||||
Business acquisition and integration costs | 3,943 | 913 | ||||||||||||||||||||||||||||||
Depreciation | 10 | 1,553 | 882 | |||||||||||||||||||||||||||||
Amortization of intangibles | 5 | 3,380 | 3,654 | |||||||||||||||||||||||||||||
Foreign exchange loss | 68 | 8 | ||||||||||||||||||||||||||||||
31,691 | 24,873 | |||||||||||||||||||||||||||||||
Operating loss | (3,351) | (4,470) | ||||||||||||||||||||||||||||||
Financial expenses | 11 | 949 | 728 | |||||||||||||||||||||||||||||
Loss before income taxes | (4,300) | (5,198) | ||||||||||||||||||||||||||||||
Income tax expense (recovery) | ||||||||||||||||||||||||||||||||
Current | (48) | 789 | ||||||||||||||||||||||||||||||
Deferred | (2,220) | (1,458) | ||||||||||||||||||||||||||||||
(2,268) | (669) | |||||||||||||||||||||||||||||||
Net loss | (2,032) | (4,529) | ||||||||||||||||||||||||||||||
Basic and diluted loss per share | 9 | (0.02) | (0.08) | |||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 3 |
INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
As at | June 30, | March 31, | ||||||||||||||||||
(in thousands of Canadian dollars) (unaudited) | 2021 | 2021 | ||||||||||||||||||
Notes | $ | $ | ||||||||||||||||||
Assets | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash | 10,653 | 6,903 | ||||||||||||||||||
Accounts receivable and other receivables | 81,114 | 69,363 | ||||||||||||||||||
Income taxes receivable | — | 642 | ||||||||||||||||||
Unbilled revenue | 19,710 | 9,924 | ||||||||||||||||||
Tax credits receivable | 4,805 | 4,936 | ||||||||||||||||||
Prepaids | 3,227 | 3,923 | ||||||||||||||||||
119,509 | 95,691 | |||||||||||||||||||
Non-current assets | ||||||||||||||||||||
Restricted cash | 3,238 | 3,233 | ||||||||||||||||||
Tax credits receivable | 12,915 | 7,809 | ||||||||||||||||||
Property and equipment | 10,206 | 8,449 | ||||||||||||||||||
Right-of-use assets | 4 | 14,542 | 11,118 | |||||||||||||||||
Intangibles | 5 | 85,633 | 36,590 | |||||||||||||||||
Deferred tax assets | 6,595 | 7,465 | ||||||||||||||||||
Goodwill | 6 | 113,025 | 72,906 | |||||||||||||||||
365,663 | 243,261 | |||||||||||||||||||
Liabilities and Shareholders' Equity | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Accounts payable and accrued liabilities | 75,683 | 51,571 | ||||||||||||||||||
Deferred revenue | 10,167 | 10,288 | ||||||||||||||||||
Income taxes payable | 487 | — | ||||||||||||||||||
Current portion of lease liabilities | 4 | 2,715 | 1,923 | |||||||||||||||||
Current portion of long-term debt | 7 | 51,733 | 35,134 | |||||||||||||||||
140,785 | 98,916 | |||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||
Long-term debt | 7 | 10,617 | 19,817 | |||||||||||||||||
Lease liabilities | 4 | 16,464 | 13,536 | |||||||||||||||||
Deferred tax liabilities | 10,933 | 2,980 | ||||||||||||||||||
178,799 | 135,249 | |||||||||||||||||||
Shareholders' equity | ||||||||||||||||||||
Share capital | 8 | 278,122 | 197,537 | |||||||||||||||||
Deficit | (98,222) | (96,190) | ||||||||||||||||||
Accumulated other comprehensive (loss) income | (1,126) | (508) | ||||||||||||||||||
Contributed surplus | 8,090 | 7,173 | ||||||||||||||||||
186,864 | 108,012 | |||||||||||||||||||
365,663 | 243,261 | |||||||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 4 |
INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the three months ended June 30, (in thousands of Canadian dollars, except share data) (unaudited) | ||||||||||||||||||||||||||||||||||||||||||||
Notes | Shares outstanding | Share capital | Deficit | Accumulated other comprehensive income (loss) | Contributed surplus | Total | ||||||||||||||||||||||||||||||||||||||
Number | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2021 | 58,695,438 | 197,537 | (96,190) | (508) | 7,173 | 108,012 | ||||||||||||||||||||||||||||||||||||||
Net loss | — | — | (2,032) | — | — | (2,032) | ||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (618) | — | (618) | ||||||||||||||||||||||||||||||||||||||
Total comprehensive loss | — | — | (2,032) | (618) | — | (2,650) | ||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | 439 | 439 | ||||||||||||||||||||||||||||||||||||||
Share-based compensation on shares vested during the period, issued on business acquisitions | — | — | — | — | 478 | 478 | ||||||||||||||||||||||||||||||||||||||
Acquisition of R3D Consulting Inc. | 8 | 25,182,676 | 80,585 | — | — | — | 80,585 | |||||||||||||||||||||||||||||||||||||
Total contributions by, and distributions to, shareholders | 25,182,676 | 80,585 | — | — | 917 | 81,502 | ||||||||||||||||||||||||||||||||||||||
Balance as at June 30, 2021 | 83,878,114 | 278,122 | (98,222) | (1,126) | 8,090 | 186,864 | ||||||||||||||||||||||||||||||||||||||
Balance as at March 31, 2020 | 58,073,517 | 195,335 | (78,780) | 6,123 | 4,691 | 127,369 | ||||||||||||||||||||||||||||||||||||||
Net loss | — | — | (4,529) | — | — | (4,529) | ||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | (2,328) | — | (2,328) | ||||||||||||||||||||||||||||||||||||||
Total comprehensive loss | — | — | (4,529) | (2,328) | — | (6,857) | ||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | 319 | 319 | ||||||||||||||||||||||||||||||||||||||
Share-based compensation on shares vested during the period, issued on business acquisitions | — | — | — | — | 1,246 | 1,246 | ||||||||||||||||||||||||||||||||||||||
Issuance of Subordinate Voting Shares from settlement of DSUs | 7,718 | 32 | — | — | (32) | — | ||||||||||||||||||||||||||||||||||||||
Total contributions by, and distributions to, shareholders | 7,718 | 32 | — | — | 1,533 | 1,565 | ||||||||||||||||||||||||||||||||||||||
Balance as at June 30, 2020 | 58,081,235 | 195,367 | (83,309) | 3,795 | 6,224 | 122,077 | ||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 5 |
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
For the three months ended June 30, | ||||||||||||||||||||||||||
(in thousands of Canadian dollars) (unaudited) | 2021 | 2020 | ||||||||||||||||||||||||
$ | $ | |||||||||||||||||||||||||
Net loss | (2,032) | (4,529) | ||||||||||||||||||||||||
Other comprehensive loss | ||||||||||||||||||||||||||
Items that may be classified subsequently to profit or loss | ||||||||||||||||||||||||||
Cumulative translation adjustment on consolidation of foreign subsidiaries | (618) | (2,328) | ||||||||||||||||||||||||
(618) | (2,328) | |||||||||||||||||||||||||
Comprehensive loss | (2,650) | (6,857) | ||||||||||||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 6 |
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended June 30, | ||||||||||||||||||||||||||||||||
(in thousands of Canadian dollars) (unaudited) | 2021 | 2020 | ||||||||||||||||||||||||||||||
Notes | $ | $ | ||||||||||||||||||||||||||||||
Operating activities | ||||||||||||||||||||||||||||||||
Net loss | (2,032) | (4,529) | ||||||||||||||||||||||||||||||
Items not affecting cash | ||||||||||||||||||||||||||||||||
Depreciation and amortization | 4,933 | 4,536 | ||||||||||||||||||||||||||||||
Amortization of finance costs | 11 | 63 | 53 | |||||||||||||||||||||||||||||
Share-based compensation | 917 | 1,565 | ||||||||||||||||||||||||||||||
Unrealized foreign exchange gain | (2) | (332) | ||||||||||||||||||||||||||||||
Foreign exchange loss (gain) on repayment of long-term debt | 3 | (197) | ||||||||||||||||||||||||||||||
Forgiveness of PPP loan | 7 | (5,868) | — | |||||||||||||||||||||||||||||
Interest accretion on balances of purchase payable | 11 | 207 | 210 | |||||||||||||||||||||||||||||
Loss on disposal of property and equipment | — | 147 | ||||||||||||||||||||||||||||||
Other | — | (122) | ||||||||||||||||||||||||||||||
Deferred taxes | (2,220) | (1,458) | ||||||||||||||||||||||||||||||
Changes in non-cash working capital items | 12 | 4,525 | 7,490 | |||||||||||||||||||||||||||||
2,558 | 11,892 | |||||||||||||||||||||||||||||||
Net cash from operating activities | 526 | 7,363 | ||||||||||||||||||||||||||||||
Investing activities | ||||||||||||||||||||||||||||||||
Additions to property and equipment | (341) | (607) | ||||||||||||||||||||||||||||||
Additions to intangibles | — | (2) | ||||||||||||||||||||||||||||||
Restricted cash | (5) | (1,006) | ||||||||||||||||||||||||||||||
Business acquisition, net of cash acquired | 3 | (401) | — | |||||||||||||||||||||||||||||
Net cash used in investing activities | (747) | (1,615) | ||||||||||||||||||||||||||||||
Financing activities | ||||||||||||||||||||||||||||||||
Increase in long-term debt, net of related transaction costs | 27,535 | 17,741 | ||||||||||||||||||||||||||||||
Repayment of long-term debt | (23,080) | (18,569) | ||||||||||||||||||||||||||||||
Repayment of lease liabilities | (462) | (288) | ||||||||||||||||||||||||||||||
Lease incentives | — | 917 | ||||||||||||||||||||||||||||||
Net cash from (used) in financing activities | 3,993 | (199) | ||||||||||||||||||||||||||||||
Effect of exchange rate changes | (22) | (82) | ||||||||||||||||||||||||||||||
Net change in cash | 3,750 | 5,467 | ||||||||||||||||||||||||||||||
Cash, beginning of period | 6,903 | 8,810 | ||||||||||||||||||||||||||||||
Cash, end of period | 10,653 | 14,277 | ||||||||||||||||||||||||||||||
Cash paid (included in cash flow (used in) from operating activities) | ||||||||||||||||||||||||||||||||
Interest paid | 660 | 460 | ||||||||||||||||||||||||||||||
Income taxes paid (recovered) | (902) | 2 | ||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 7 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
1. GOVERNING STATUTES AND NATURE OF OPERATIONS
Alithya Group inc. (“Alithya” or the “Company”) and its subsidiaries (collectively with Alithya, the “Group”) are leaders in strategy and digital transformation. Alithya's integrated offer is based on four pillars of expertise: business strategies,enterprise cloud solutions, application services, and data and analytics. The Group deploys leading-edge solutions, services, and skill to develop tools designed to meet the unique needs of customers in a variety of sectors, including financial services, manufacturing, renewable energy, telecommunications, transportation and logistics, professional services, healthcare, and government.
The Company’s Class A subordinate voting shares (the “Subordinate Voting Shares”) trades on the Toronto Stock Exchange (“TSX”) and on the NASDAQ Capital Market (“NASDAQ”) under the symbol “ALYA”.
The Company is the Group’s ultimate parent company and its head office is located at 1100, Robert-Bourassa Boulevard, Suite 400, Montréal, Québec, Canada, H3B 3A5.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These interim condensed consolidated financial statements have been prepared in accordance with the accounting policies adopted in the most recent annual consolidated financial statements for the year ended March 31, 2021, except for changes as detailed below.
The accounting policies have been applied consistently by all Alithya entities.
BASIS OF PREPARATION
Statement of Compliance
The Company’s interim condensed consolidated financial statements are presented in Canadian dollars, which is also the parent company’s functional currency. They have been prepared in accordance with IAS 34 - Interim Financial Reporting. They do not include all of the information required in annual financial statements in accordance with International Financial Reporting Standards ("IFRS"), and should be read in conjunction with the consolidated financial statements for the year ended March 31, 2021.
These interim condensed consolidated financial statements were approved and authorized for issue by the Board of Directors (the “Board”) on August 11, 2021.
Basis of Measurement and Comparative Figures
The interim condensed consolidated financial statements have been prepared on an accrual basis and under the historical cost basis except for certain assets and liabilities initially recognized in connection with business combinations, which are measured at fair value.
Certain figures have been reclassified to conform to the current year presentation.
INTANGIBLES
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, as follows:
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 8 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
Method | Period | |||||||||||||
Customer relationships | Straight line | 3 - 10 years or over the term of the underlying contract | ||||||||||||
Non-compete agreements | Straight line | 3 - 10 years | ||||||||||||
Software | Straight line | 3 years | ||||||||||||
Tradenames | - | Indefinite | ||||||||||||
The residual value, depreciation method and useful life of each asset are reviewed at least once a year, at the reporting date.
SHARE-BASED COMPENSATION PLANS
Share purchase plan
The Company operates a share purchase plan for eligible employees of the Company and its subsidiaries. Under this plan, the Group matches the contributions made by employees up to a maximum percentage of the employee's salary. The Group’s contributions to the plan are recognized in salaries within cost of revenues and selling, general and administrative.
Long-term incentive plan
The Company operates a long-term incentive plan for eligible employees and directors of the Company and its subsidiaries which provides for various types of awards, including equity-settled stock options, deferred share units (“DSUs”), restricted share units (“RSUs”) and performance share units (“PSUs”) awards. The Board, at its discretion, may elect to settle the RSUs and PSUs in the form of a cash payment. The Company accounts for the RSUs and PSUs as equity-settled awards as management intends to settle these awards through the issuance of capital stock.
The fair value of the share-based expense is based on the grant date fair value of the award expected to vest over the vesting period with a corresponding adjustment through contributed surplus. Forfeitures are estimated at the time of the grant and are included in the measurement of the expense and are subsequently adjusted to reflect actual events. For awards with graded vesting, the fair value of each tranche is recognized on a straight-line basis over its vesting period.
Any consideration paid by participants on exercise of stock options is credited to capital stock together with any related share-based compensation expense originally recorded in contributed surplus. If the amount of the tax deduction (or estimated future tax deduction) exceeds the amount of the related cumulative remuneration expense for stock options, this indicates that the tax deduction relates not only to remuneration expense but also to an equity item. In this situation, the Company recognizes the excess of the associated current or deferred tax to contributed surplus prior to an award being exercised, and any such amounts are transferred to capital stock upon exercise of the stock options.
When DSUs, RSUs and PSUs are settled, the recorded fair value of the award is removed from contributed surplus and credited to capital stock.
SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY
The preparation of these interim condensed consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the amounts reported as assets, liabilities, income and expenses in the interim condensed 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 Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 9 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D)
The judgments, estimates and assumptions applied in the interim condensed consolidated financial statements including key sources of estimation uncertainty, were the same as those applied in the Group's last annual audited consolidated financial statements for the year ended March 31, 2021.
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 interim condensed 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. The estimates, judgments and assumptions used were the same as those applied in the Group's last annual audited financial statements for the year ended March 31, 2021.
FUTURE ACCOUNTING STANDARDS
At the date of authorization of these interim condensed 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.
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.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 10 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
3. BUSINESS COMBINATION
Alithya IT Services Inc.
Overview
On April 1, 2021, the Company acquired all of the outstanding shares of R3D Consulting Inc. (now Alithya IT Services Inc.) ("Alithya IT" or "R3D") (the “R3D Acquisition”), a private Québec firm that specializes in digital solutions.
The purchase price was paid by the issuance of 25,182,676 Subordinate Voting Shares of the Company, subject to customary post-closing purchase price adjustments, at a value of $3.20 per share, which was the closing share price on the TSX on April 1, 2021, cash of $978,000 and assumption of accounts payable and accrued liabilities and long-term debt of $45,000 and $8,887,000, respectively, on the closing date. The accounting for this acquisition and the purchase price allocation have not yet been finalized.
The fair value of the assets acquired, liabilities assumed, and the purchase consideration is preliminary pending completion of their valuation. Should new information, obtained within one year of the date of acquisition, about the facts and circumstances that existed at the date of the R3D Acquisition, result in adjustments to the below amounts, or require additional provisions for conditions that existed at the date of the R3D Acquisition, the fair value will then be revised. The R3D Acquisition is being accounted for using the acquisition method of accounting.
For the three months ended June 30, 2021, the Company incurred acquisition-related costs of approximately $1,646,000. These costs have been recorded in the consolidated statement of operations in business acquisition and integration costs.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 11 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
3. BUSINESS COMBINATION (CONT'D)
Purchase Price Allocation
The preliminary allocation of the fair value of the assets acquired and the liabilities assumed is detailed as follows:
Acquisition of Alithya IT Services Inc. | $ | |||||||
Current assets | ||||||||
Cash | 577 | |||||||
Accounts receivable and other receivables | 10,165 | |||||||
Unbilled revenue | 7,169 | |||||||
Prepaids | 91 | |||||||
18,002 | ||||||||
Non-current assets | ||||||||
Tax credits receivable | 3,234 | |||||||
Property and equipment | 2,207 | |||||||
Right-of-use assets | 4,212 | |||||||
Intangibles | 52,777 | |||||||
Deferred tax assets | 763 | |||||||
Goodwill | 40,627 | |||||||
Total assets acquired | 121,822 | |||||||
Current liabilities | ||||||||
Accounts payable and accrued liabilities | 15,070 | |||||||
Income taxes payable | 155 | |||||||
Deferred revenue | 125 | |||||||
Current portion of lease liabilities | 592 | |||||||
Current portion of long-term debt | 8,887 | |||||||
24,829 | ||||||||
Non-current liabilities | ||||||||
Lease liabilities | 3,620 | |||||||
Deferred tax liabilities | 11,810 | |||||||
Total liabilities assumed | 40,259 | |||||||
Net assets acquired | 81,563 | |||||||
Goodwill
The goodwill recognized consists mainly of the future economic value attributable to the profitability of the acquired business, as well as its workforce and expected synergies from the integration of Alithya IT into the Group's existing business. The Company does not expect the goodwill to be deductible for income tax purposes.
Consideration paid
The following table summarizes the acquisition date fair value of each class of consideration as follows:
Acquisition of Alithya IT Services Inc. | $ | |||||||
Cash paid | 978 | |||||||
Issuance of 25,182,676 Subordinate Voting Shares | 80,585 | |||||||
Total consideration transferred | 81,563 | |||||||
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 12 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
3. BUSINESS COMBINATION (CONT'D)
Alithya IT 's contribution to the Group results
The Alithya IT business contributed revenues of approximately $19,993,000 and a loss before income taxes of $1,709,000, including amortization of intangibles and integration costs of $951,000 and $1,792,000, respectively, to the Group. These amounts have been calculated using Alithya IT's results and adjusting for:
•differences in accounting policies between the Group and Alithya IT; and
•the additional amortization that would have been charged assuming the fair value adjustments to intangibles had been applied from April 1, 2021.
4. LEASES
Right-of-use assets
The following right-of-use assets relate to right-of-use real estate:
As at | June 30, 2021 | March 31, 2021 | ||||||||||||
$ | $ | |||||||||||||
Beginning balance as at April 1, 2021 and 2020 | 11,118 | 11,492 | ||||||||||||
Additions | 4,212 | 2,611 | ||||||||||||
Depreciation | (764) | (1,906) | ||||||||||||
Reassessment | — | (830) | ||||||||||||
Lease inducement allowance | 3 | 28 | ||||||||||||
Exchange rate effect | (27) | (277) | ||||||||||||
Ending balance | 14,542 | 11,118 | ||||||||||||
Lease liabilities
As at | June 30, 2021 | March 31, 2021 | ||||||||||||
$ | $ | |||||||||||||
Beginning balance as at April 1, 2021 and 2020 | 15,459 | 13,232 | ||||||||||||
Additions | 4,212 | 2,611 | ||||||||||||
Lease payments | (639) | (1,992) | ||||||||||||
Lease incentives | — | 2,243 | ||||||||||||
Lease interest | 177 | 595 | ||||||||||||
Reassessment | — | (830) | ||||||||||||
Concession | — | (110) | ||||||||||||
Exchange rate effect | (30) | (290) | ||||||||||||
Ending balance | 19,179 | 15,459 | ||||||||||||
Current portion | 2,715 | 1,923 | ||||||||||||
16,464 | 13,536 | |||||||||||||
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 13 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
4. LEASES (CONT'D)
Contractual lease payments under the lease liabilities as at June 30, 2021 are as follows:
As at | June 30, 2021 | |||||||
$ | ||||||||
Less than one year | 3,366 | |||||||
One to two years | 3,292 | |||||||
Two to five years | 9,469 | |||||||
More than five years | 5,627 | |||||||
Total undiscounted lease payments at period end | 21,754 | |||||||
Amounts recognized in net loss
For the three months ended June 30, | ||||||||||||||||||||||||||
As at | 2021 | 2020 | ||||||||||||||||||||||||
$ | $ | |||||||||||||||||||||||||
Interest on lease liabilities | 177 | 135 | ||||||||||||||||||||||||
Variable lease payments | 844 | 791 | ||||||||||||||||||||||||
1,021 | 926 | |||||||||||||||||||||||||
Total cash outflow for leases for the three months ended June 30, 2021 was $1,483,000 and $1,214,000 for the three months ended June 30, 2020, respectively.
5. INTANGIBLES
As at | June 30, 2021 | March 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||
Customer relationships | Software | Non-compete agreements | Total | Customer relationships | Software | Non- compete agreements | Total | ||||||||||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||||||||
Cost | 67,720 | 4,334 | 6,902 | 78,956 | 73,722 | 4,377 | 7,530 | 85,629 | |||||||||||||||||||||||||||||||||||||||
Additions, purchased | — | — | — | — | — | 7 | — | 7 | |||||||||||||||||||||||||||||||||||||||
Additions through business acquisition | 52,777 | — | — | 52,777 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Additions, internally generated | — | — | — | — | — | 159 | — | 159 | |||||||||||||||||||||||||||||||||||||||
Disposals / retirements | — | — | — | — | (2,933) | (29) | (237) | (3,199) | |||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | (309) | (8) | (37) | (354) | (3,069) | (180) | (391) | (3,640) | |||||||||||||||||||||||||||||||||||||||
Subtotal | 120,188 | 4,326 | 6,865 | 131,379 | 67,720 | 4,334 | 6,902 | 78,956 | |||||||||||||||||||||||||||||||||||||||
Accumulated amortization | 38,033 | 2,471 | 1,862 | 42,366 | 31,970 | 1,242 | 613 | 33,825 | |||||||||||||||||||||||||||||||||||||||
Amortization | 2,808 | 237 | 335 | 3,380 | 8,996 | 1,258 | 1,485 | 11,739 | |||||||||||||||||||||||||||||||||||||||
Disposals / retirements | — | — | — | — | (2,933) | (29) | (236) | (3,198) | |||||||||||||||||||||||||||||||||||||||
Subtotal | 40,841 | 2,708 | 2,197 | 45,746 | 38,033 | 2,471 | 1,862 | 42,366 | |||||||||||||||||||||||||||||||||||||||
Net carrying amount | 79,347 | 1,618 | 4,668 | 85,633 | 29,687 | 1,863 | 5,040 | 36,590 | |||||||||||||||||||||||||||||||||||||||
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 14 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
6. GOODWILL
As at | June 30, 2021 | |||||||||||||||||||||||||||||||||||||
Canada | ADT | France | EPM US | ERP US | Total | |||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Beginning balance | 26,950 | 7,694 | 137 | 8,915 | 29,210 | 72,906 | ||||||||||||||||||||||||||||||||
Business acquisition (note 3) | 40,627 | — | — | — | — | 40,627 | ||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | (1) | (118) | (389) | (508) | ||||||||||||||||||||||||||||||||
Net carrying amount | 67,577 | 7,694 | 136 | 8,797 | 28,821 | 113,025 | ||||||||||||||||||||||||||||||||
As at | March 31, 2021 | |||||||||||||||||||||||||||||||||||||
Canada | ADT | France | EPM US | ERP US | Total | |||||||||||||||||||||||||||||||||
$ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Beginning balance | 26,950 | 7,694 | 150 | 10,012 | 32,802 | 77,608 | ||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | (13) | (1,097) | (3,592) | (4,702) | ||||||||||||||||||||||||||||||||
Net carrying amount | 26,950 | 7,694 | 137 | 8,915 | 29,210 | 72,906 | ||||||||||||||||||||||||||||||||
7. LONG-TERM DEBT
The following table summarizes the Group’s long-term debt:
As at | June 30, | March 31, | ||||||||||||
2021 | 2021 | |||||||||||||
$ | $ | |||||||||||||
Senior secured revolving credit facility (the "Credit Facility") (a) | 44,349 | 31,023 | ||||||||||||
Balance of purchase payable with a nominal value of $3,100,000, non-interest bearing (5.8 % effective interest rate) payable April 3, 2022 | 3,016 | 2,988 | ||||||||||||
Balance of purchase payable with a nominal value of $1,800,000, non-interest bearing (6.0 % effective interest rate), payable on October 1, 2022 | 1,674 | 1,649 | ||||||||||||
Balance of purchase payable with a nominal value of $8,465,750 (US$6,825,000), non-interest bearing (6.0 % effective interest rate), payable on December 13, 2022 | 7,779 | 7,770 | ||||||||||||
Balance of purchase payable with a nominal value of $3,258,750, non-interest bearing (5.7 % effective interest rate) payable on February 1, 2022 | 3,155 | 3,112 | ||||||||||||
Unsecured promissory notes (US$ nil; March 31, 2021 US$4,800,000) (b) | — | 6,034 | ||||||||||||
Deferral of employment tax payments (US$1,877,873) (c) | 2,329 | 2,361 | ||||||||||||
Other | 184 | 213 | ||||||||||||
Unamortized transaction costs (net of accumulated amortization of $539,617 and $476,685) | (136) | (199) | ||||||||||||
62,350 | 54,951 | |||||||||||||
Current portion of long-term debt | 51,733 | 35,134 | ||||||||||||
10,617 | 19,817 | |||||||||||||
(a) The Credit Facility is available to a maximum amount of $60,000,000, which was increased until September 30, 2021 to $70,000,000, and can be drawn in Canadian and the equivalent amount in U.S. dollars. It is available in prime rate advances, LIBOR advances, bankers’ acceptances and letters of credit up to $2,500,000.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 15 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
7. LONG-TERM DEBT (CONT'D)
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.
As security for the Credit Facility, Alithya provided a first ranking hypothec on the universality of its assets excluding leased equipment and Investissement Québec’s first ranking lien on tax credits receivable for the financing related to refundable tax credits, to a maximum of $7,500,000. Under the terms of the agreement, the Group is required to maintain certain financial covenants which are measured on a quarterly basis. The Credit Facility matures in 2022 and is renewable for additional one-year periods at the lender’s discretion.
The Group was in compliance with all of its financial covenants as at June 30, 2021 and March 31, 2021.
(b) As a result of the COVID-19 pandemic, on May 5, 2020, five U.S. subsidiaries of the Group 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 ($7,932,000). 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 may not be 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, which the Group applied for between November 17, 2020 and January 5, 2021. The Group accounts for the forgiveness as government assistance with a corresponding reduction in the cost of the related item. Such forgiveness is to 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 such notice.
During the three months ended June 30, 2021 and 2020, the Group recognized an aggregate amount of $5,868,000 (US$4,800,000) and nil, respectively, as government assistance for the last two remaining PPP loans. On June 15, 2021, the Group received confirmation of full loan forgiveness by the SBA of one of the subsidiary loans, and believes it has reasonable assurance for recognizing forgiveness on the last remaining PPP loan, as evidenced by the reception of four full loan forgiveness decisions, out of five PPP loans obtained in May 2020. The amount was included against the net loss for the period ended June 30, 2021.
(c) 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.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 16 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
8. SHARE CAPITAL
Subordinate Voting Shares | Multiple Voting Shares | |||||||||||||||||||||||||
Number of shares | $ | Number of shares | $ | |||||||||||||||||||||||
Beginning balance as at April 1, 2021 | 51,373,822 | 193,552 | 7,321,616 | 3,985 | ||||||||||||||||||||||
Business acquisition of R3D (note 3) | 25,182,676 | 80,585 | — | — | ||||||||||||||||||||||
As at June 30, 2021 | 76,556,498 | 274,137 | 7,321,616 | 3,985 | ||||||||||||||||||||||
During the three months ended June 30, 2021, the following transaction occurred:
•As part of the R3D Acquisition, 25,182,676 Subordinate Voting Shares, with a total value of $80,585,000, were issued in consideration of the acquisition.
Share purchase plan
Under the Company’s share purchase plan, the Group contributes an amount equal to a percentage of the employee’s basic contribution, depending on the position held by the employee. The employee may make additional contributions, for total employee contributions, including basic contributions, of up to 10% of the 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.
Long-Term Incentive Plan (the “Plan”)
The Company operates a plan which provides for awards of stock options, restricted shares, DSUs, RSUs, PSUs 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. At the Board's discretion, the RSUs and PSUs may be settled, in whole or in part, in cash.
Stock 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 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 Class B multiple voting shares (the "Multiple Voting Shares") issued and outstanding from time to time.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 17 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
8. SHARE CAPITAL (CONT'D)
The following table presents information concerning stock option activity for the period:
Number of stock options | Weighted average exercise price | |||||||||||||
$ | ||||||||||||||
Beginning balance as at April 1, 2021 | 3,525,181 | 3.37 | ||||||||||||
Granted | 1,073,302 | 3.23 | ||||||||||||
Forfeited | (72,500) | 3.10 | ||||||||||||
Ending balance as at June 30, 2021 | 4,525,983 | 3.28 | ||||||||||||
Exercisable at period end | 1,722,944 | 2.69 | ||||||||||||
Included in the 1,722,944 of stock options exercisable as at June 30, 2021, 810,528 stock options are available to purchase Multiple Voting Shares.
On June 14, 2021, Alithya issued 774,202 and 299,100 stock options, to purchase a total of 1,073,302 Subordinate Voting Shares at a grant price of $3.23 and US$2.66, respectively.
DSUs
Under the Plan, the Board, subject to the provisions of the Plan and such other terms and conditions, may grant DSUs to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its subsidiaries. The DSUs shall be settled on the date as set out in the applicable award agreement, between the participant and the Company, however not earlier than the participant’s termination date. If the agreement does not establish a settlement date then it shall be on the 90th day following the participant’s termination date for eligible Canadian participants and not earlier than on 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 DSUs | Weighted average grant date fair value | |||||||||||||
$ | ||||||||||||||
Beginning balance as at April 1, 2021 | 330,246 | 2.97 | ||||||||||||
Granted | 46,310 | 3.39 | ||||||||||||
Ending balance as at June 30, 2021 | 376,556 | 3.02 | ||||||||||||
On June 30, 2021, 46,310 fully vested DSUs, in aggregate, were granted to non-employee directors of the Company at a fair value of $3.39, per DSU, for an aggregate fair value of $156,991. The amounts have been recorded in share-based compensation expense.
RSUs
Under the Plan, the Board, subject to the provisions of the Plan and such other terms and conditions, may grant RSUs to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its subsidiaries. The RSUs shall generally 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. The June 23, 2020 grants vested on the first anniversary date of the date of grant.
As at June 30, 2021, 181,498 fully vested RSUs, in aggregate, are outstanding with a grant date fair value of $2.26.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 18 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
8. SHARE CAPITAL (CONT'D)
PSUs
Under the Plan, the Board, subject to the provisions of the Plan and such other terms and conditions, may grant PSUs to obtain Subordinate Voting Shares to qualified employees and directors of the Company and its subsidiaries. The terms and conditions of each PSU grant, including the performance goals, shall be determined by the Board. The PSUs shall be settled on the date as set out in the applicable award agreement between the participant and the Company. The Board, at its discretion, may elect to settle the PSUs in the form of a cash payment.
On June 14, 2021, the Board approved the issuance of 332,263 PSUs, in aggregate, vesting three years from the date of grant. However, the determination as to whether the performance goals related to each PSU grant are satisfied will take place in May or June of that third year subject to the terms set out in the award agreement.
Share-Based Compensation
The number of Alithya stock options granted to employees during the three months ended June 30, 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 | June 30, | |||||||||||||
2021 | 2020 | |||||||||||||
Compensation expense related to the options granted | 19 | 4 | ||||||||||||
Number of stock options granted | 1,073,302 | 755,000 | ||||||||||||
Weighted average fair value of options granted | $1.20 | $0.81 | ||||||||||||
Aggregate fair value of options granted | 1,290 | 609 | ||||||||||||
Weighted average assumptions | ||||||||||||||
Share price | $3.23 | $2.26 | ||||||||||||
Exercise price | $3.23 | $2.26 | ||||||||||||
Risk-free interest rate | 1.25 | % | 0.46 | % | ||||||||||
Expected volatility* | 34.7 | % | 35.0 | % | ||||||||||
Dividend yield | — | — | ||||||||||||
Expected option life (years) | 6.6 | 6.6 | ||||||||||||
Vesting conditions – time (years) | 3.2 | 3.2 | ||||||||||||
* Determined on the basis of observed volatility in publicly traded companies operating in similar industries.
9. EARNINGS PER SHARE
For the three months ended June 30, | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
$ | $ | |||||||||||||||||||||||||
Net loss | (2,032) | (4,529) | ||||||||||||||||||||||||
Weighted average number of common shares outstanding | 83,878,114 | 58,078,691 | ||||||||||||||||||||||||
Basic and diluted loss per share | (0.02) | (0.08) | ||||||||||||||||||||||||
The stock options mentioned in Note 8 were not included in the calculation of diluted earnings per share since the Company suffered losses and the inclusion of these stock options would have an antidilutive effect.
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 19 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
10. ADDITIONAL INFORMATION ON CONSOLIDATED LOSS
The following table provides additional information on the consolidated loss:
For the three months ended June 30, | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
$ | $ | |||||||||||||||||||||||||
Employee compensation costs | 62,367 | 51,556 | ||||||||||||||||||||||||
Government assistance | ||||||||||||||||||||||||||
- tax credits (a) | (2,125) | (1,464) | ||||||||||||||||||||||||
- grants and loan forgiveness (b) | (6,088) | (1,398) | ||||||||||||||||||||||||
Selling expenses (c) | 11,264 | 11,190 | ||||||||||||||||||||||||
General and administrative expenses (c) | 11,483 | 8,226 | ||||||||||||||||||||||||
Depreciation of property and equipment | 789 | 370 | ||||||||||||||||||||||||
Depreciation of right-of-use assets | 764 | 512 | ||||||||||||||||||||||||
(a) Included in cost of sales.
(b) $4,764,000 and $1,324,000 (2020 - $1,308,000 and $90,000) are included in cost of sales and selling, general and administrative expenses, respectively.
(c) Including related employee compensation costs.
11. FINANCIAL EXPENSES
The following table summarizes financial expenses:
For the three months ended June 30, | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
$ | $ | |||||||||||||||||||||||||
Interest on long-term debt | 479 | 310 | ||||||||||||||||||||||||
Interest and financing charges | 75 | 25 | ||||||||||||||||||||||||
Interest on lease liabilities | 177 | 135 | ||||||||||||||||||||||||
Amortization of finance costs | 63 | 53 | ||||||||||||||||||||||||
Interest accretion on balances of purchase payable | 207 | 210 | ||||||||||||||||||||||||
Interest income | (52) | (5) | ||||||||||||||||||||||||
949 | 728 | |||||||||||||||||||||||||
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 20 |
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(Tabular amounts are in thousands of Canadian dollars, except share and per share data in tables) (unaudited)
12. SUPPLEMENTARY CASH FLOW INFORMATION
Net change in non-cash working capital items is as follows:
For the three months ended June 30, | ||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||
$ | $ | |||||||||||||||||||||||||
Accounts receivable and other receivables | (1,916) | 7,613 | ||||||||||||||||||||||||
Income taxes receivable | 642 | 597 | ||||||||||||||||||||||||
Unbilled revenue | (2,660) | (2,545) | ||||||||||||||||||||||||
Tax credits receivable | (1,747) | 2,484 | ||||||||||||||||||||||||
Prepaids | 754 | (133) | ||||||||||||||||||||||||
Accounts payable and accrued liabilities | 9,261 | 119 | ||||||||||||||||||||||||
Income taxes payable | 332 | — | ||||||||||||||||||||||||
Deferred revenue | (141) | (645) | ||||||||||||||||||||||||
4,525 | 7,490 | |||||||||||||||||||||||||
13. SEGMENT AND GEOGRAPHICAL INFORMATION
The Company has examined its activities and has determined, based on information received on a regular basis by the decision-makers, that it has a single reportable segment.
Revenues by geographic location
The following table presents total external revenues by geographic location:
For the three months ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||||||
Canada | 68,234 | 66.3 | 38,370 | 54.2 | ||||||||||||||||||||||||||||||||||||||||||||||
U.S. | 31,434 | 30.5 | 30,302 | 42.9 | ||||||||||||||||||||||||||||||||||||||||||||||
Europe | 3,253 | 3.2 | 2,039 | 2.9 | ||||||||||||||||||||||||||||||||||||||||||||||
102,921 | 100.0 | 70,711 | 100.0 | |||||||||||||||||||||||||||||||||||||||||||||||
Long-lived assets by geographic location
The following table presents the total net book value of the Group’s long-lived assets by geographic location:
As at | June 30, | March 31, | ||||||||||||||||||||||||
2021 | 2021 | |||||||||||||||||||||||||
$ | % | $ | % | |||||||||||||||||||||||
Canada | 159,337 | 71.3 | 62,172 | 48.2 | ||||||||||||||||||||||
U.S. | 63,004 | 28.2 | 65,784 | 51.0 | ||||||||||||||||||||||
Europe | 1,065 | 0.5 | 1,107 | 0.8 | ||||||||||||||||||||||
223,406 | 100.0 | 129,063 | 100.0 | |||||||||||||||||||||||
Alithya Group inc. – Interim Condensed Consolidated Financial Statements for the three months ended June 30, 2021 and 2020 | | 21 |