Alithya's financial instruments consist of cash, short-term deposits, restricted cash, accounts receivable and other receivables, trade accounts payable and accrued liabilities and long-term debt and lease liabilities. Alithya, through its financial assets and liabilities, has exposure to the following risks from its use of financial instruments: interest rate risk, credit risk, liquidity risk and currency risk. Senior management and Board are responsible for setting risk levels and reviewing risk management activities as they determine necessary. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Alithya is exposed to fluctuations in interest rates -48- with respect to its variable rate on its Credit Facility. The interest rate risk profile of Alithya’s interest-bearing financial instruments was as follows: As at March 31, (In $ Thousands) 2020 2019 $ $ Variable rate financial instruments Credit facility 37,615 24,949 Other long-term debt 347 — 37,962 24,949 For the year ended March 31, 2020, Alithya has determined that a reasonably possible increase or decrease of 100 basis point in interest rates of the above variable-rate financial liabilities would not have a significant impact on equity and profit or loss. This analysis assumes that all other variables remain constant, in particular foreign currency exchange rates. It has been performed on the same basis for the year ended March 31, 2019. Alithya does not account for any fixed rate financial liabilities at fair value through profit or loss. Therefore, a change in interest rates at the reporting date would not affect equity and profit or loss. Liquidity risk Liquidity risk is the risk that Alithya will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Alithya’s activities are financed through a combination of cash flows from operations, borrowings under existing credit facilities, issuance of debt and issuance of equity. As a result of the effect of COVID-19, unanticipated pressures may occur on liquidity. In order to manage its exposure to liquidity risk, Alithya’s primary goal is to maintain an optimal level of liquidity through an active management of assets and liabilities as well as cash flows. Despite the pandemic, Alithya continues to be in regular contact with customers. Also, as at March 31, 2020, Alithya has an unused capacity of approximately $22,000,000 under its authorized secured senior revolving credit facility of $60,000,000. The following table summarizes the carrying amount and the contractual maturities of both the interest and principal portion of significant financial liabilities. As at March 31, 2020 (In $ Thousands) Carrying amount Total Less than 1 year 1-2 years 2-5 years More than 5 years $ $ $ $ $ $ Accounts payable and accrued liabilities 28,970 28,970 28,970 — — — Credit facility 37,615 39,775 1,178 38,597 — — Balances of purchase payable, non-interest bearing 15,609 17,006 1,000 3,259 12,747 — Other (included in long-term debt) 347 347 126 101 120 — Lease liabilities 13,232 16,091 2,020 2,018 6,464 5,589 95,773 102,189 33,294 43,975 19,331 5,589 -49- As at March 31, 2019 (In $ Thousands) Carrying amount Total 1 year or less 1-2 years 2-5 years More than 5 years $ $ $ $ $ $ Accounts payable and accrued liabilities 28,162 28,162 28,162 — — — Credit facility 24,949 29,149 1,493 1,493 26,163 — Balance of purchase payable, non-interest bearing 3,765 4,100 1,000 1,000 2,100 — 56,876 61,411 30,655 2,493 28,263 — Credit risk Credit risk is the risk of loss due to a counterparty's inability to meet its obligations. At March 31, 2020 and 2019, Alithya's credit risk exposure consists mainly of the carrying amounts of cash and short-term deposits held with major Canadian banks, accounts receivable and other receivables, and unbilled revenue. The carrying amounts of financial assets and unbilled revenue represent the maximum credit exposure. Impairment losses recognized in profit or loss is not significant both in 2020 and 2019. The credit risk in respect of cash balances and short-term deposits is minimal as they are held with reputable financial institutions. With respect to accounts receivable and unbilled revenue, Alithya is exposed to a concentration of credit risk on significant customers operating in Canada, as identified in Note 4 to our Annual Financial Statements included as Exhibit 15.3 to this Annual Report. However, this credit risk exposure is mitigated by the relative size and nature of the business carried on by such customers. Also, Alithya has a large and diversified client base from clients engaged in various industries, including banks with high credit-rating, government agencies, telecommunications and retails. Historically, Alithya has not made any significant write-offs. Notwithstanding the impact of COVID-19, Alithya’s credit risk exposure remains relatively low. A substantial portion of accounts receivable and unbilled revenues are with customers who operate in industries for which credit risk has not increased significantly following the pandemic. However, if a key customer experiences financial difficulties or fails to comply with its contractual obligations which may occur as the pandemic continues, this could result in a significant financial loss to Alithya. In order to manage its exposure to credit risk and assess credit quality, Alithya established a credit policy under which collection of account receivable is a priority. Each new customer is analyzed individually for creditworthiness before Alithya enters into contract. The financial stability and liquidity of customers are assessed on a regular basis, which included the review of default risk associated with the industry in which customers operate. Alithya also limits its exposure by setting credit limits when deemed necessary. No significant adjustments were made to allowance for doubtful accounts in connection with this assessment. For both 2020 and 2019, allowance for doubtful accounts was not significant. Currency risk Alithya is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which cash, accounts receivables and other receivables, accounts payables and -50- accrued liabilities and borrowings are denominated and the respective functional currencies of Alithya’s companies. The currencies in which these financial instruments are mainly denominated is USD. Other currencies have no significant impact on Alithya’s exposure to currency risk. The summary quantitative data about Alithya’s exposure to currency risk for the significant exchange rates is as follow. As at March 31, (In $ Thousands) 2020 2019 USD USD Cash 891 1,004 Accounts receivable and other receivables 377 80 Accounts payable and accrued liabilities (944) (110) Credit facility (14,000) (18,550) Net statement of financial position exposure (13,676) (17,576) The following table illustrates the sensitivity of profit and equity in regards to Alithya’s financial assets and financial liabilities and the USD/Canadian dollars exchange rate ‘all other things being equal’. It assumes a +/- 8% change of the USD/Canadian dollars exchange rate for the year ended March 31, 2020 (2019: +/-6%). This percentage has been determined based on the average market volatility in exchange rate in the previous twelve months. The sensitivity analysis is based on Alithya’s foreign currency financial instruments held at each reporting date. Profit or loss Effect in Canadian dollar Strengthening Weakening As at March 31, 2020 USD 8% Movement (1,087) 1,087 As at March 31, 2019 USD 6% Movement (1,115) 1,115 For further information, including information on the fair value of financial instruments, please see “Note 21. Financial Instruments” to our Annual Financial Statements included as Exhibit 15.3 to this Annual Report.