Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya Group inc.

For the year ended March 31, 2020

Table of Contents

Page

1.

Basis of Presentation

1

2.

Forward-Looking Statements

1

3.

Business Overview

2

4.

Business Strategic Plan

3

5.

Financial Highlights

5

5.1

Q4 2020 Highlights

5

5.2

Fiscal 2020 Highlights

6

6.

Business Highlights

6

7.

Business Combinations and Divestiture

6

8.

Non-IFRS Measures

16

9.

Results of Operations

17

9.1

Revenues

17

9.2

Gross Margin

18

9.3

Segment Reporting

18

9.4

Operating Expenses

19

9.5

Other Income and Expenses

22

9.6

Net Loss and Loss per Share

22

10.

EBITDA and Adjusted EBITDA

23

11.

Liquidity and Capital Resources

24

11.1

Consolidated Statements of Cash Flows

24

11.2

Cash Flows from (Used in) Operating Activities

24

11.3

Cash Flows from (Used in) Investing Activities

25

11.4

Cash Flows from (Used in) Financing Activities

25

11.5

Capital Resources

26

11.6

Long-Term Debt and Net Bank Borrowing

26

11.7

Contractual Obligations

27

11.8

Off-Balance Sheet Arrangements

27

12.

Share Capital and Dividends

28

12.1

Authorized

28

12.2

Issued

29

12.3

Dividends

32

12.4

Share Purchase Plan

32

12.5

Long-Term Incentive Plan (the "Plan")

33

12.6

Stock Options

33

12.7

Deferred Share Units

35

12.8

Share-Based Compensation

35

13.

Subsequent Events

36

14.

Eight Quarter Summary

37

15.

Critical Accounting Estimates

37

15.1

Revenue Recognition, Unbilled Revenue and Deferred Revenue

38

15.2

Business Combinations

39

15.3

Government Assistance - Tax Credits

40

15.4

Intangibles

40

Management's Discussion and Analysis of Financial Condition and Results of Operations of Alithya For the year ended March 31, 2020

15.5

Goodwill

41

15.6

Impairment of Property and Equipment, Intangibles and Goodwill

41

15.7

Provisions

41

15.8

Income Taxes

42

15.9

Translation of Foreign Currencies

43

16.

New Standards and Interpretations Adopted as at April 1, 2019

43

16.1

IFRS 16 - Leases

43

17.

Future Accounting Standards

47

17.1

Classification of Liabilities as Current or Non-current (Amendments to IAS 1)

48

18.

Risks and Uncertainties

48

18.1

Risks Related to the Market

48

18.2

Risks Related to Alithya's Industry

49

18.3

Risks Related to Alithya's Business

52

18.4

Risks Related to Subordinate Voting Shares

59

19.

Management's Evaluation of our Disclosure Controls and Procedures

61

|3

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-month and twelve-month periods ended March 31, 2020. 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 audited consolidated financial statements and accompanying notes for the years ended March 31, 2020, 2019 and 2018. The MD&A, the financial statements, the Company's Annual Report on Form 20-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") atwww.sedar.comand the Electronic Data Gathering, Analysis and Retrieval system ("EDGAR") atwww.sec.gov.

Management's Discussion and Analysis of the Financial Condition and Results of Operations of the Group for the year ended March 31, 2018 was previously included in the section "Results of Operations" in the Company's Annual Report on Form 20-F for the fiscal year ended March 31, 2019, as filed with the SEC on June 19, 2019, and has not been included in this report.

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 18, 2020, the date the Company's Board of Directors ("Board") approved this MD&A and the consolidated financial statements for the year ended March 31, 2020.

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 expand our capacities and broaden the scope of our service offerings; (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 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 and 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 atwww.sedar.comand EDGAR atwww.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 statements containing 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 is a leader in strategy and digital transformation, with more than 2,000 professionals in Canada, the U.S., and Europe. For over 25 years, Alithya's experts have advised, guided and assisted 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, energy, manufacturing, telecommunications, transportation and logistics, professional services, healthcare and government sectors.

Business Offerings

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 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

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Alithya Group Inc. published this content on 19 June 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 June 2020 11:56:09 UTC