CGI Group Inc. (ME, TSE: GIB.A; NYSE: GIB) today announced unaudited results for the fourth quarter and fiscal year ended September 30, 1999, the 23rd consecutive year of revenue growth. All dollar amounts are in Canadian dollars. The company's financial statements for the fourth quarter ended September 30, 1999 will be released on November 10, 1999.
Financial Results
Fiscal 1999 revenue increased by 90% to $1,409.5 million, from $741.0 million the year before. Net earnings increased 141% to $83.8 million from $34.8 million a year ago. Earnings per share increased 110% to $0.63 per share (basic and fully diluted) from $0.30 per share in fiscal 1998, based on a 14% increase in the weighted average number of shares in fiscal 1999. The net profit margin increased to 5.9% from 4.7% the year before.
The higher revenue results from new outsourcing and systems integration contracts, primarily in Canada but increasingly in the U.S. and internationally, and from acquisitions in Canada and the U.S. The increasing profitability reflects operating efficiencies resulting from application of ISO 9001 quality standards, synergies from the integration of acquisitions, and increasing economies of scale.
"We continue to build our order backlog, most of which is long-term outsourcing contracts focused on higher value added IT services business," said Serge Godin, Chairman and Chief Executive Officer. "Higher value added business allows us to partner with our clients and provides for embedded growth as we meet their evolving IT needs. An important growth driver is Web-enabling technology, which we refer to as e-space business, which currently represents 20% of our revenue on a run-rate basis."
"During the quarter, we significantly strengthened the company's position in the U.S. market through the acquisition of DRT Systems International," Mr. Godin continued. "We are committed to establishing a strong presence in the U.S. through further acquisitions, major contracts and organic growth."
In the fourth quarter ended September 30, 1999, revenue increased 21% to $394.0 million from $324.5 million in the same period last year. Net earnings increased 40% to $22.6 million, or $0.17 per share, from $16.1 million, or $0.13 per share, in the fourth quarter of fiscal 1998. At September 30, 1999 the order backlog was $7.5 billion compared with $6.5 billion a year earlier.
Fourth Quarter 1999 Highlights
During the fourth quarter, CGI continued to gain complementary strengths, new markets and critical mass. Notably, the company:
- On July 1, acquired DRT Systems International from Deloitte Consulting, doubling CGI's revenue in the U.S. and tripling its staff and office network in the U.S. With this acquisition, CGI gained the critical mass and strong team required to win large systems integration and outsourcing contracts in the U.S.
- On July 15, entered into a 12-month, $57 million IT systems integration agreement with Brazilian-based local and long-distance telephone services provider Mirror S.A.
- On September 10, announced a three-year, enterprise alliance with Microsoft Corporation, enabling CGI to develop and deploy leading solutions for the telecommunications, government and financial services markets across the United States and Canada.
Subsequent to quarter end, CGI announced the following:
- A non-exclusive Direct Commercial Systems Integrator Agreement with Sun Microsystems of Canada Inc. to conduct joint marketing and technical implementation activities to respond to the growing demand for e-commerce expertise, solutions and service throughout North America.
- The signing of several Internet-related contracts with clients, further consolidating CGI's strong presence in all segments of the North American e-commerce market.
In its November 1, 1999 issue, U.S.-based Forbes magazine ranks CGI 7th and the top Canadian company - on its Global 100 list of high-growth non-U.S. companies from around the world. The list was developed from a database of 12,000 companies operating in 34 countries, with the best selected according to revenue size and based on at least 15% net income growth and 15% revenue growth in the latest fiscal year, on top of a 10% five-year annual average growth in net income and sales. To make the list, companies also needed current return-on-equity of at least 10% and a five-year return-on-equity of at least 10%.
Y2K Compliance
For CGI, the Year 2000 ("Y2K") issue encompasses the costs required to make its internal systems and those it uses to provide services to its clients, Y2K compliant, as well as providing a revenue opportunity which the company has managed to keep within 5% of its annual revenue. CGI has completed all five stages of its Year 2000 compliance methodology (assessment, analysis, remediation, testing and implementation) for most of its business units. Exceptions concern essentially recent acquisitions, which have been audited and integrated in the overall project, and testing project extensions demanded by clients. No impact is expected on services that CGI provides.
The company has contingency plans for all mission critical systems, and for all of its business units significant suppliers, tested and in place. Command and Communication Centres are also being activated in all business units.
CGI is the largest independent information technology consulting firm in Canada and the fifth largest in North America, based on its revenue run rate of $1.6 billion. Its order backlog totals more than $7.5 billion and the company currently has proposals outstanding for an additional $4 billion in potential large contracts. CGI has 10,000 professionals and provides end-to-end IT services and business solutions to 2,500 clients in Canada, the United States and more than 20 countries around the world. CGI's shares are listed on the New York Stock Exchange (GIB), as well as on the Toronto and Montreal exchanges (GIB.A). They are included in the Toronto Stock Exchange's TSE 300 Composite and TSE 100 indexes. Web site: www.cgi.ca.
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For information:
CGI
André Imbeau
Executive Vice-President and CFO
(514) 841-3200
Paule Doré
Executive Vice-President, Corporate Affairs
(514) 841-3200
All statements contained in this or any other press release of CGI Group Inc., or in any document filed by the Company with the U.S. Securities and Exchange Commission, or in any other written or oral communication by or on behalf of the company, that do not directly and exclusively relate to historical facts, constitute "forward looking statements" within the meaning of the U.S. Private Securities Litigation Report Act of 1995. These statements represent the Company's expectations and beliefs, and no assurance can be given that the results described in such statements will be achieved.
This press release may contain forward looking statements that involve a number of risks and uncertainties, including statements regarding the outlook for the company's business and results of operations. There are a number of factors that could cause actual results to differ materially from those indicated. Such factors include, without limitation, the various factors set forth in the Company's annual report.
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