For the three months ending March 31, 1997, CGI (ticker symbol GIB.A) once again turned in a solid financial performance, with a 76.1% increase in its revenues, which climbed to $46.6 million from $26.4 million for the same quarter in 1996. Operating income grew by 114.7%, rising to $4.7 million. The operating profit margin thus improved from 8.3% for the second quarter of 1996 to 10.1% for the same quarter of the current fiscal year. Depreciation and amortization expenses were up by $1 million, mainly due to the increase in assets recoverable under outsourcing contracts following CGI's strong expansion in this sector. The Company posted net earnings of $1,462,000, up 87.2% over $781,000 in 1996. The net profit margin thus grew from 2.95% to 3.14%. Earnings per share amounted to $0.16 on a weighted average of 9,365,793 shares outstanding, compared with $0.09 on 8,764,662 shares outstanding in 1996.
These results bring year-to-date revenues for the first six months of the fiscal year to $88.7 million, up 73.4% over the revenues of $51.1 million recorded for the same period one year earlier. Operating income more than doubled, rising from $3.8 million in 1996 for a profit margin of 7.4% to $8.3 million in 1997 for a margin of 9.3%. CGI posted net earnings of $2,495,000, compared with $1,279,000, an increase of 95.1%. The Company recorded earnings per share of $0.27, up from $0.16 for the same period in 1996. Considering the more substantial depreciation and amortization expenses, cash flow increased by more than 136%, climbing to $6.2 million or $0.67 per share.
For the 12 months ending March 31, 1997, CGI reported in net earnings of $3,934,000 or $0.43 per share and cash flow of $11,447,000 or $1.27 per share on revenues of $159.6 million.
In addition to the alliance with Bell Canada and acquisitions made over the past 12 months, the strong growth in CGI's revenues and profitability in the past four quarters can be attributed to major value-added outsourcing and business solution contracts. Management estimates that the contribution of the Company's outsourcing operations to consolidated revenues will top the 40% mark for fiscal 1997, up from approximately 25% over the past year. During the last four months alone, CGI has won contracts totaling $8.4million to adapt information systems for a dozen organizations for the year 2000, including one $4.7 million contract with the Société de l'assurance automobile du Québec (SAAQ).
CDSL Holdings Limited: A key springboard for CGI's growth
On April 1, 1997, at the beginning of the third quarter, CGI acquired from The Cooperators Group Limited insurance company all the shares of its subsidiary CDSL Holdings Limited, a company with nearly $80 million in annual revenues which specializes in information technology outsourcing services. As part of this transaction, CGI was awarded a five-year $100 million contract renewable for another five years to provide The Cooperators Group with information technology services.
Pointing out that this is CGI's largest acquisition ever, Serge Godin, Chairman of the Board and Chief Executive Officer, stated that the integration of CDSL gives CGI an order book totaling over 400 million and an asset base capable of generating more than $260 million in annual revenues. "This acquisition confirms CGI's leadership as the largest independent end-to-end service provider in the Canadian information technology industry. It positions us to maintain an accelerated pace of growth across Canada, particularly in outsourcing. With our current market share and strong financial position, we will pursue our growth through internal development and acquisitions."
With the purchase of CDSL, CGI has some 2,600 professionals offering a full range of information technology services. The Company serves over 1,800 clients across Canada and around the world.
THE CGI GROUP INC.
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
THE CGI GROUP INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(in thousands of dollars, except earnings per share)
| Three months ending March 31 | Six months ending March 31 | |||||
| 1997 | 1996 | 1997 | 1996 | |||
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| Revenue | $46,564 | $26,444 | $88,682 | $51,141 | ||
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| Operating expenses | ||||||
| Direct costs, selling and administration expenses | 41,123 | 23,545 | 79,175 | 46,270 | ||
| Research and development | 719 | 700 | 1,225 | 1,085 | ||
| Depreciation and amortization of fixed assets | 356 | 244 | 666 | 491 | ||
| Amortization of amounts recoverable under | ||||||
| long-term outsourcing contracts | 741 | 85 | 1,397 | 175 | ||
| Amortization of development costs | 107 | 11 | 213 | 23 | ||
| Amortization of goodwill | 206 | 63 | 409 | 128 | ||
| Interest on long-term debt | 28 | 70 | 61 | 132 | ||
| Other interest expenses | 164 | 14> | 309 | 190 | ||
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| 43,444 | 24,732 | 83,455 | 48,494 | |||
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| Earnings before income taxes and equity | ||||||
| in an entity subject to significant influence | 3,120 | 1,712 | 5,227 | 2,647 | ||
| Income taxes | 1,508 | 770 | 2,459 | 1,207 | ||
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| Earnings before equity in an entity | ||||||
| subject to significant influence< | 1,612 | 942 | 2,768 | 1,440 | ||
| Share in the results of an entity subject | ||||||
| to significant influence | (150) | (161) | (273) | (161) | ||
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| NET EARNINGS | $1,462 | $781 | $2,495 | $1,279 | ||
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| Weighted average number of outstanding Class A subordinate shares, Class B shares and first preferred shares, Series 1 and Series 2 | 9,365,793 | 8,764,662 | 9,342,782 | 8,142,769 | ||
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| Earnings per Share | $0.16 | $0.09< | $0.27 | 0.16 | ||
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Source:
CGI
Contact:
Serge Godin, Chairman of the Board and Chief Executive Officer
André Imbeau, Executive Vice-President and Chief Financial Officer
Paule Doré, Senior Vice-President, Corporate Affairs
(514) 841-3200
