CGI (ME, TSE: Gib.A) today announced results for the fiscal year ended September 30, 1997, the 21st consecutive year of revenue growth.
Revenue increased by 90.1% to $231.9million compared with $122.0 million the previous year, with approximately half the growth reflecting new and renewed outsourcing and systems integration contracts, and the balance resulting from strategic acquisitions, notably CDSL which CGI acquired in April 1997 and also the first full year of some earlier acquisitions and a joint venture company.
Net earnings in fiscal 1997 increased by 185.7% to $7.8million ($0.40 per share) compared with $2.7million ($0.16 per share) in fiscal 1996 on 13.5% more shares outstanding in 1997 on a weighted average basis. The company's net profit margin increased to 3.3% in fiscal 1997, including a margin of 3.9% in the fourth quarter, from 2.2% in fiscal 1996. Cash flow increased 177.6% to $21.8million ($1.12 per share), from $7,851,000 ($0.46 per share) in fiscal 1996.
In the fourth quarter ended September 30, 1997, revenue increased 88.3% to $72.4million from $38.5million in the same quarter of fiscal 1996, and net earnings increased 401% to $2.9million ($0.14 per share) from $572,000 ($0.06 per share) a year ago. Cash flow increased 216% to $9.0million ($0.43 per share), from $2.9million ($0.16 per share) in the fourth quarter of fiscal 1996.
"The fourth quarter performance results from strategic initiatives which position CGI for continuing strong growth in our targeted IT services markets," said Serge Godin, Chairman and CEO. "We continue to strengthen our position in each of our targeted markets through a combination of internal growth and acquisitions."
CGI's increasing profitability reflects a number of factors: the growth of outsourcing contracts as a percentage of total revenue, efficiencies resulting from the application of ISO 9001 standards to project management, economies of scale related to business growth, and synergies from integrating recent acquisitions.
Subsequent to year end, CGI acquired the Insurance Systems group of Teleglobe Inc. (TIS), the third largest outsourcer and provider of business solutions to the property and casualty insurance industry in North America and the largest in Canada. TIS results were consolidated into those of CGI as of October 23, 1997 and the revenue contribution of this acquisition will be reflected in the first quarter of fiscal 1998.
CGI continues to benefit from a strong balance sheet, particularly subsequent to year end with the acquisition of the Insurance Systems group of Teleglobe Inc. (TIS) and the issuance to Bell Canada of an additional $43.7million of first preferred shares, series 1, to maintain its 23.8% interest in CGI. Following these two transactions, on a pro forma basis, CGI as of October 23, 1997 has no debt, $12million cash, and a $163.7million increase in shareholders equity from $72.3million at September 30, 1997.
Following the acquisition in October, CGI had an order backlog in excess of $1.3billion, compared with $175million a year earlier. At least half of the increase during the year was from internally generated contracts, primarily new outsourcing contracts and a 100% renewal rate of existing contracts.
Operations Review
During the fourth quarter, CGI continued to build its order backlog.
In July, CGI was awarded a $3million contract to customize and install AMICUS library management software for The British Library in conjunction with Axis Resources.
In September, CGI became the first non-financial institution member of Canada's Interac electronic payment system with the ability to provide Interac services including shared cash dispensing and direct payment to clients on a stand alone basis. CGI launched this service with a contract with the Canadian affiliate of Republic National Bank of New York.
Subsequent to the fiscal year end, CGI acquired TIS, thereby increasing its revenue run rate to in excess of $500million, gaining a strong base of property and casualty insurance clients in the U.S. and in Canada, and a presence in the U.K. which will also provide access to European markets.
CGI is the largest independent information technology consulting firm Canada. CGI has 4,000 professionals, a revenue run rate in excess of $500million, and an order backlog valued at over $1.3 billion. CGI provides end-to-end IT services and business solutions to some 2,000 clients throughout North America and elsewhere in the world.
For further information, contact:
André Imbeau, Executive Vice-President and CFO
Paule Doré, Executive Vice-President, Corporate Affairs
Telephone: (514) 841-3200
