CGI (ME, TSE: GIB A) today announced continuing strong growth for the second quarter and six months ended March 31, 1998 compared with the previous year.
In the second quarter of fiscal 1998, revenue increased by 207% to $142.9 million, net earnings by 317% to $6.1 million, and cash flow by 304% to $14.5 million. The net profit margin increased to 4.3%, from 3.1% a year ago. On a per share basis, reflecting a 52% increase in shares outstanding to 57.1 million on a weighted average basis, net earnings per share were 11 cents, compared with 4 cents the previous year.
The increase in revenue, earnings and cash flow reflects both external and internal growth. Since March 1997, CGI has completed two major information technology services acquisitions focused on the financial services industry -- CDSL in April 1997, and the Insurance Systems Group of Teleglobe Inc. in October 1997. Additionally, CGI has been awarded a number of major systems integration and outsourcing contracts.
For the six months ended March 31, 1998, revenue increased by 191.7% to $258.7 million, net earnings by 343% to $11.0 million, and cash flow by 367% to $29.1 million. The net profit margin for the first half of fiscal 1998 was 4.3% compared with 2.8% in the same period of fiscal 1997. On a per share basis, reflecting a 48% increase in shares outstanding to 55.3 million, net earnings were 20 cents compared with 7 cents a year ago, and cash flow was 53 cents per share compared with 17 cents a year ago.
Shareholders' equity increased more than 450% to $247.2 million from a year ago, reflecting higher retained earnings, and shares issued as part payment for acquisitions. The company has practically no debt and $16 million cash.
During the past year, CGI further enhanced its position in its six target markets, including financial services and retail and distribution. "We foresee continuing strong growth as we apply our competitive strengths as an end-to-end IT services company to the needs of our clients in North America and internationally," said Serge Godin, Chairman and CEO.
Second Quarter Highlights
- Bell Sygma Agreement
On January 5, 1998, CGI and Bell Canada announced an agreement in principle for CGI to acquire Bell Sygma Telecom Solutions and Bell Sygma International operations in exchange for 8.6 million Series 6 preferred shares of CGI at $22.98 per share, convertible one-for-one into Class A subordinate voting shares.
The agreement includes a 10-year contract valued at more than $3 billion for CGI to develop and maintain Bell Canada's internal information systems. This is the largest outsourcing contract ever in Canada, and one of the largest in North America. The agreement also provides for the acquisition of Bell Sygma International, with $80 million annual revenue. - Backlog Evolution
The order backlog has increased from $175 million in October 1996, to $1.3 billion in October 1997 and $1.5 billion currently. With the acquisition of Bell Sygma, the order backlog will increase to in excess of $4.5 billion. - New Contracts
In January 1998, CGI announced a $100 million five-year outsourcing contract with the Credit Union Central of Canada. As part of the agreement, CGI will provide a range of financial switching and telecommunications services to support Interac shared cash dispensing and point of sale direct payment services for Canada's 900 credit unions.
In March, CGI announced the signing of several contracts related to financial services business solutions and year 2000 conversion activities. The projects, taking place across CGI's network, are expected to generate total revenue of approximately $33.4 million. - Integration of CDSL and TIS
CGI successfully completed the integration of the staff and facilities of CDSL and continued the integration of the Insurance Systems Group acquired from Teleglobe. Over the course of numerous acquisitions in recent years, the company has developed business processes which represent best practices in integrating the members and facilities that come with outsourcing contracts and corporate acquisitions. CGI has experienced a 100% renewal rate of contracts of acquired companies and a high retention rate of new members.
After completing the acquisition of Bell Sygma, pending final approvals, CGI will have more than 7,000 professionals and a revenue run rate of about $1 billion. CGI's shares are included in the TSE 300 composite and TSE 200 indexes.
For more information:
André Imbeau
Executive Vice-President & CFO
Paule Doré
Executive Vice-President, Corporate Affairs
(514) 841-3200
