CGI Group Inc. (TSE: GIB:A; NYSE: GIB) announced today unaudited financial results for the fourth quarter and fiscal year ended September 30, 2000, its 24th consecutive year of revenue growth. All dollar amounts are in Canadian dollars. The company's financial statements for the fourth quarter and 12 months of fiscal 2000 will be released on November 8, 2000.
Financial Results
Fiscal 2000 revenue increased to $1.44 billion, from $1.41 billion in fiscal 1999. Most of this growth came from e-business contracts, and from a full year of revenue for a major contract and a U.S. acquisition, both completed during fiscal 1999. This growth partly offset decreased IT spending at one of CGI's main clients. The order backlog of signed contracts at September 30, 2000 was $7.0 billion.
Earnings before amortization of goodwill were $73.5 million, or $0.27 per share, compared with $99.9 million, or $0.37 per share, in fiscal 1999. Net earnings amounted to $55.7 million, or $0.21 per share, compared with $83.8 million, or $0.31 per share, the previous year. The net margin was 3.9% compared with 5.9% a year ago.
"We view fiscal 2000 as a transition period after Y2K. While the transition is still underway, CGI is well positioned to capitalize on the return to higher growth throughout the industry, which we believe will be driven by a resurgence in large systems integration and outsourcing contracts and increasing complexity of e-business contracts," said Serge Godin, chairman, president and chief executive officer of CGI Group.
"We have a strong offering in e-business, and are using this transition period within our markets to optimize this offering by developing our portfolio of e-business solutions and extending our network of centres of expertise for specific applications," Mr. Godin said. "Our competitive strengths include leading technology, our full range of IT services for all platforms from legacy systems to web-based platforms, our strategic understanding of our targeted markets, our ISO 9001 certified methodology which enables CGI to deliver on time and on budget, and our strong financial position."
"We have maintained our teams of professionals at a level that is appropriate to meet demand resulting from our pipeline of bids, as and when this demand does materialize," Mr. Godin said. In recent months, during this period of transition for the industry, our emphasis on business development at the business unit level has resulted in two acquisitions. Similarly, we have signed two letters of intent, one to take an equity investment in AGTI, and a second to increase our equity interest in CIA, a Quebec-based IT services firm, from 35% to 49%. These initiatives parallel our focus at the corporate level on winning large contracts and acquisitions," Mr. Godin added.
"This transition period has confirmed the soundness of our strong values, deeply rooted culture and quality systems. These values and systems ensure that we remain on course and continue to achieve high service standards consistently."
In the fourth quarter, revenue was $320.1 million, compared with $394.0 million in the fourth quarter a year ago, in line with the outlook issued in June by CGI. Earnings before amortization of goodwill were $7.1 million, or 3 cents per share, compared with $27.3 million or 10 cents per share a year ago. Net earnings were $2.4 million or 1 cent per share on a fully diluted basis, compared with $22.6 million or 8 cents per share on a fully diluted basis in the same quarter of fiscal 1999.
Fourth Quarter Highlights
On September 14, 2000, CGI announced an adjustment to its organizational structure, whereby the senior executives managing each of its three strategic business units, namely Canada, the United States and International, now report directly to the chief executive officer. The organizational adjustment stems from the retirement of the president and chief operating officer, Jean Brassard, who remains a director and a significant shareholder of CGI.
During the fourth quarter, CGI signed a number of new contracts, acquired one IT services company and negotiated another acquisition which closed in early October 2000.
- Effective September 1, CGI acquired Montreal-based APG Technologies and Solutions, an IT consulting firm specializing in the implementation of enterprise resource planning (ERP) packages, systems evolution and knowledge management. APG employed some 750 people at seven offices mainly in Canada, serving 250 clients mainly in the financial services and telecom sectors and generating annualized revenue of more than $80 million.
- On September 20, CGI signed a letter of intent to acquire a 49% interest in Montreal-based AGTI, a high-level IT services firm with 225 employees.
- On August 31, 2000, CGI became the first systems integrator in Canada to apply SAP solutions to an application service provider (ASP) model in the health care sector, through a five-year contract with the Centre hospitalier Angrignon.
Subsequent to fiscal 2000:
- Yesterday, CGI and the Mouvement des caisses Desjardins jointly announced a major, strategic alliance, worth more than $1 billion to CGI over 10 years. As part of this agreement, CGI will assume the management of Desjardins' data processing operations and will take on 550 Desjardins employees. CGI believes that it was selected primarily based on its expertise of the financial services industry in general and of the credit union sector in particular.
- Effective October 4, 2000, CGI acquired Detroit-based C.U. Processing, a provider of information management systems primarily to U.S. credit unions. C.U. Processing has 160 professionals in 14 U.S. locations, serving 300 clients in the financial services sector and generating annualized revenue of $35 million. It was purchased for a consideration of $37 million in cash.
About CGI
Founded in 1976, CGI is the largest independent Canadian information technology consulting firm and the fifth largest in North America, based on its revenue run rate of CDN$1.4 billion. CGI's order backlog totals approximately CDN$7.0 billion. CGI has close to 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 exchange (GIB.A). They are included in the Toronto Stock Exchange's TSE 100 index as well as the S&P/TSE Canadian Information Technology index. Web site: www.cgi.ca
All statements in this press release that do not directly and exclusively relate to historical facts constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements represent CGI Group Inc.'s 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 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, and other risks identified in Management's Discussion and Analysis (MD&A) in CGI Group Inc.'s annual report or Form 40F filed with the US Securities & Exchange Commission and the Company's Annual Information Form filed with Canadian securities commissions. All of the risk factors included in these filed documents are included here by reference. CGI disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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