CGI REPORTS NET EARNINGS OF $56.9 MILLION IN THE FIRST QUARTER OF 2006

To access the financial results – click here (XLS)

CGI Group Inc. (NYSE: GIB; TSX: GIB.SV.A), the 8^th largest independent provider of end-to-end information technology and business process services in the world, today reported unaudited results for its first fiscal quarter of 2006, ended December 31, 2005. All figures are in Canadian dollars unless otherwise indicated.

Quarterly Financial Highlights

• Revenue was $898.5 million, or 1.3% less than in the first quarter of fiscal 2005 on a constant currency basis.
• Net earnings from continuing operations were $56.9 million, compared with $53.1 million a year ago.
• Earnings per share from continuing operations were $0.13 during the quarter, compared with $0.12 in the first quarter of 2005.
• The net earnings from continuing operations margin was 6.3%, up from 5.7% in the first quarter of fiscal 2005.
• The Company sold its electronic switching assets, recording a pre-tax gain of $11 million in the first quarter.
• Cash net earnings were $76.8 million or $0.18 per share, up 2 cents from the first quarter of 2005.
• Cash provided by continuing operating activities was $63.4 million.
• Cash and equivalents at the end of December 2005 were $262.9 million
• Contract bookings totalled $2.1 billion (including additional $1.1 billion from BCE contract extensions, signed on January 12, 2006).
• The Company announced the buyback of 100 million shares from BCE at a price of $859 million. The transaction subsequently closed on January 12, 2006 and the shares cancelled.

“Our solid balance sheet as well as our ability to generate significant cash flow enabled us to repurchase almost 26% of our total shares outstanding,” said Serge Godin, Executive Chairman and Founder. “Following this investment, the Company retains its flexibility to pursue both large outsourcing opportunities and acquisitions.”

First Quarter Financials
Revenue for the first quarter ended December 31, 2005 totaled $898.5 million, compared with $929.1 million in the same quarter last year. Before the impact of foreign exchange, mainly the strengthening of the Canadian dollar, revenue was 1.3% lower than a year ago. This change in revenue mainly reflected the previously announced termination, earlier in fiscal 2005, of a contract that was not meeting our profitability standards as well as normal fluctuations in the level of work received from our outsourcing clients. Currency fluctuations negatively impacted revenue by $18.5 million or 2.0%, compared with the previous year. Year-over-year, external growth was 1.8%.

Earnings before interest, income taxes and entities subject to significant influence and discontinued operations (“adjusted EBIT”) were $78.7 million in the first quarter, compared with $86.2 million in last year’s first quarter. The adjusted EBIT margin was 8.8% for the quarter compared to 9.3% a year ago.

During the quarter, the Company completed the $28 million divestiture of its electronic switching assets to Everlink Services and recorded a pre-tax gain of $11 million.

Net earnings from continuing operations in the first quarter were $56.9 million, or $0.13 per share compared to $53.1 million or $0.12 per share in the same quarter of 2005. The margin on net earnings from continuing operations increased to 6.3% in the first quarter from 5.7% a year ago.

All per share data is on a basic and diluted basis, and at the end of the quarter there were 3.2% fewer average weighted shares outstanding than a year ago. As at January 12, 2006, compared with December 31, 2004, that number would be down 25.7%. By taking into consideration the new number of shares outstanding following the recent cancellation of 100 million shares, as well as the interest expense related to our debt, EPS in the first quarter would have been $0.15 per share.

Cash net earnings, which are before the amortization of intangibles, were $76.8 million or $0.18 per share in the first quarter of fiscal 2006, compared with $72.6 million or $0.16 per share achieved in the same quarter a year ago. Cash net earnings in the quarter represented 8.5% of revenue, compared with 7.8% a year ago. Amortization of intangibles relates mainly to the value of internal software, business solutions and client relationships gained through acquisitions and new outsourcing contracts.

First Quarter Operating Highlights
During the quarter, CGI announced the following transactions:

• October: Two year, $20 million contract with the Quebec revenue ministry to adapt and integrate IT and new accounting systems related to the provincial Goods and Services Tax.
• October: Four year, $60 million contract renewal with the Alberta Health and Wellness Ministry
• November: Up to five years, US$44 million contract to administer housing units within the state of New York for The Housing Trust Fund Corporation of New York.
• December: Seven year US$300 million contract with two optional three-year renewal periods, with The Commonwealth of Virginia to partner on a sweeping initiative to transform the state’s business and information technology program.
• December: the signing of a multi-year contract valued between US$30 and 40 million with Medco Health Solutions (“Medco”), one of the leading pharmacy benefit managers in the US under which member billing, Medicare payment reconciliation, enrollment form processing, and IT hosting services will be performed.
• January: $859 million to repurchase and cancel 100 million shares from BCE.
• January: $1.1 billion added to backlog, following the extensions of BCE outsourcing agreements, until June 2016. CGI’s agreement outsourcing its Canadian communications network management requirements to Bell will be similarly extended. As well, the commercial alliance between CGI and Bell Canada’s Enterprise Group will be extended until 2016.

Market Outlook
As outsourcing deals become larger and more complex, the Company is experiencing longer selling cycles. If it were between 6 and 18 months in the past, it is now between 12 and 24 months. However, there is a lot of activity in the marketplace.

CGI’s 2006-2008 business plan reaffirms its successful four pillar growth strategy, with CGI a consolidator in its industry through a balance of organic and external growth. While CGI already has critical mass in its main geographies, it will continue to increase its presence through acquisitions in selected metro markets where it sees the greatest potential to drive organic growth.

Normal Course Issuer Bid
This morning, the Company’s Board of Directors authorized the renewal of a Normal Course Issuer Bid and the purchase of up to 10% of the public float of the Company’s Class A subordinate shares during the next year. The Company has received approval from the Toronto Stock Exchange for its intention to make an Issuer Bid.

The Issuer Bid enables CGI to purchase on the open market through the facilities of the Toronto Stock Exchange up to 29,288,443 Class A subordinate shares for cancellation. At the close of business on January 27, 2006, there were 297,298,451Class A subordinate shares of the Company outstanding of which approximately 98.5% were widely held. The Class A subordinate shares may be purchased under the Issuer Bid commencing February 3, 2006 and ending no later than February 2, 2007, or on such earlier date when the Company completes its purchases or elects to terminate the bid.

Use of Non-GAAP Financial Information
CGI reports its financial results in accordance with GAAP. However, we also use certain non-GAAP performance measures which include: adjusted earnings before interest, other income, gain on sale of assets, entity subject to significant influence, income taxes and discontinued operations (“adjusted EBIT”) and net earnings from continuing operations before amortization of finite-life intangibles (“cash net earnings”).

Management believes that these non-GAAP measures provide useful information to investors regarding the Company’s financial condition and results of operations as they provide additional measures of its performance. Adjusted EBIT provides information that can be used to evaluate the effectiveness of our business from an operational perspective, exclusive of the costs to finance our activities and exclusive of income taxes, neither of which are directly relevant to the operations. Cash net earnings provides better visibility of our ability to generate cash from our assets. Amortization of finite life intangibles is a non-cash item that relates mainly to the estimated value of internal software, business solutions and customer relationships gained through acquisitions and new outsourcing contracts.

These non-GAAP financial measures do not have any standardized meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. They should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with GAAP.

A reconciliation of these non-GAAP measures with GAAP financial statements is provided in the MD&A which is posted on CGI’s website at www.cgi.com, and filed with SEDAR and EDGAR.

Quarterly Conference Call
A conference call for the investment community will be held today, January 31, 2006, at 9:30 am (ET). Participants may access the call by dialing (888) 575-8232 or through the Internet at www.cgi.com. Supporting slides for the call will also be available at www.cgi.com. For those unable to participate on the live call, a webcast and copy of the slides will be archived at www.cgi.com.

Annual General Meeting
The Annual General Meeting of shareholders will take place at the Hilton Montreal Bonaventure Hotel in Montreal this morning at 11 a.m. (EST). For those who are unable to attend in person, the Company will simultaneously webcast a live video of the meeting via its website at www.cgi.com.

CGI shareholders of record at the close of business on December 13, 2005 will be entitled to vote on matters considered at the meeting. The Notice of Annual Meeting of Shareholders, the Management Proxy Circular, and the Annual Report for fiscal 2005 have been sent to CGI’s shareholders on or about December 23, 2005. These documents are also available on the Company’s website.

Forward-Looking Statements
All statements in this MD&A that do not directly and exclusively relate to historical facts constitute “forward-looking statements” within the meaning of that term in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. These statements represent CGI Group Inc.’s (“CGI”) intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors, of which many are beyond the control of the Company. These factors could cause actual results to differ materially from such forward-looking statements. These factors include and are not restricted to the timing and size of new contracts, acquisitions and other corporate developments; the ability to attract and retain qualified members; market competition in the rapidly-evolving information technology industry; general economic and business conditions, foreign exchange and other risks identified in the MD&A, in CGI’s Annual Report or Form 40-F filed with the U.S. Securities and Exchange Commission (filed on EDGAR at www.sec.gov), the Company’s Annual Information Form filed with the Canadian securities authorities (filed on SEDAR at www.sedar.com), as well as assump-tions regarding the foregoing. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “foresee,” “plan,” and similar expressions and variations thereof, identify certain of such forward-looking statements, which speak only as of the date on which they are made. In particular, statements relating to future performance are forward-looking statements. CGI disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements. You will find more information about the risks that could cause our actual results to significantly differ from our current expectations in the Risks and Uncertainties section.

These factors include and are not restricted to the timing and size of contracts, acquisitions and other corporate developments; the ability to attract and retain qualified employees; market competition in the rapidly-evolving information technology industry; general economic and business conditions, foreign exchange and other risks identified in the Management's Discussion and Analysis (MD&A) in CGI Group Inc.'s Annual Report or Form 40-F filed with the SEC, the Company's Annual Information Form and in the Company's MD&A for the fourth quarter of 2005 filed with the Canadian securities authorities, as well as assumptions regarding the foregoing. The words "believe", "estimate", "expect", "intend", "anticipate", "foresee", "plan", and similar expressions and variations thereof, identify certain of such forward-looking statements, which speak only as of the date on which they are made. In particular, statements relating to future performance are forward-looking statements. CGI disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements.

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For more information:

Investors
Lorne Gorber,
Vice-president, Investor Relations
(514) 841-3355

Ronald White,
Director, Investor Relations
(514) 841-3230

Media
Eileen Murphy,
Director, Media Relations
(514) 841-3430