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Canadian Corporate News --- Hot Off The Wire
News Release for "CGI GROUP INC"
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*** As of January 1, 1997, many Canadian public companies are
*** required to electronically file their disclosure documents.
*** Visit tefa.com for more information.
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NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: CGI GROUP INC.
TSE, ME SYMBOL: GIB.A
DECEMBER 3, 1997
CGI Reports 90 percent Revenue Growth and 186 percent Net
Earnings Growth for Fiscal 1997
MONTREAL, QUEBEC--
Fourth quarter growth of 88 percent in revenues and 401 percent in
net earnings
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 percent to $231.9 million 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 percent to $7.8
million ($0.40 per share) compared with $2.7 million ($0.16 per
share) in fiscal 1996 on 13.5 percent more shares outstanding in
1997 on a weighted average basis. The company's net profit margin
increased to 3.3 percent in fiscal 1997, including a margin of 3.9
percent in the fourth quarter, from 2.2 percent in fiscal 1996.
Cash flow increased 177.6 percent to $21.8 million ($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 percent to $72.4 million from $38.5 million in the same
quarter of fiscal 1996, and net earnings increased 401 percent to
$2.9 million ($0.14 per share) from $572,000 ($0.06 per share) a
year ago. Cash flow increased 216 percent to $9.0 million ($0.43
per share), from $2.9 million ($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 $43.7 million of first preferred shares,
series 1, to maintain its 23.8 percent interest in CGI. Following
these two transactions, on a pro forma basis, CGI as of October
23, 1997 has no debt, $12 million cash, and a $163.7 million
increase in shareholders' equity from $72.3 million at September
30, 1997.
Following the acquisition in October, CGI had an order backlog in
excess of $1.3 billion, compared with $175 million a year earlier.
At least half of the increase during the year was from internally
generated contracts, primarily new outsourcing contracts and a 100
percent renewal rate of existing contracts.
Operations Review
During the fourth quarter, CGI continued to build its order
backlog.
In July, CGI was awarded a $3 million 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 $500 million,
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 $500 million, 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.
/T/
THE CGI GROUP INC.
Consolidated statements of earnings
years ended September 30
(in thousands of dollars, except earnings per share)
1997 1996
$ $
Revenue 231,916 122,015
------- -------
Operating expenses
Direct costs, selling
and administration expenses 203,677 111,299
Research and development 3,115 2,115
Depreciation and amortization of fixed assets 3,583 1,264
Amortization of
costs related to outsourcing contracts 3,985 538
Amortization of software and development costs 591 86
Amortization of goodwill 1,517 475
Interest on long-term debt 647 235
Other interest expenses 908 352
-------- -------
218,023 116,364
-------- -------
Earnings before income taxes,
share in the results of an entity
subject to significant influence
and share of non controlling interest 13,893 5,651
Income taxes 5,685 2,426
-------- -------
Earnings before share in the results
of an entity subject to significant
influence and share of non controlling
interest 8,208 3,225
Share in the results of an entity
subject to significant influence,
net of deferred income taxes of
$159 ($260 in 1996) (310) (507)
Share of non controlling interest (133) -
-------- -------
Net earnings 7,765 2,718
-------- -------
Weighted average number of outstanding Class A
subordinate shares, Class B shares and first
preferred shares, Series 1 19,450,702 17,137,172
---------- ----------
Earnings per Class A subordinate share,
Class B share and first preferred
share, Series 1 0.40 0.16
-------- -------
/T/
-30-
FOR FURTHER INFORMATION PLEASE CONTACT:
CGI Group Inc.
Andre Imbeau
Executive Vice-President and CFO
(514) 841-3200
Internet: www.cgi.ca
or
CGI Group Inc.
Paule Dore
Executive Vice-President, Corporate Affairs
(514) 841-3200
Internet: www.cgi.ca
INDUSTRY: DTC
SUBJECT: ERN
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