CGI Group Q1 results: Rev +175%, Earnings +379%, CFlow +452%
JANUARY 29, 1998
CGI Reports 175 Percent Revenue Growth 379 Percent
Earnings Growth, for Q1 Fiscal 1998
MONTREAL, QUEBEC--CGI today announced results for the first
quarter ended December 31, 1997. Revenue increased by 175 percent
to $115.8 million compared with $42.1 million in the first quarter
of fiscal 1997, reflecting acquisitions and internal growth.
Net earnings increased by 379 percent to $5.0 million ($0.09 per
share) from $1.0 million ($0.03 per share) in the first quarter of
fiscal 1997, on 43.4 percent more shares outstanding. The net
profit margin increased to 4.3 percent, from 2.5 percent a year
ago. Increasing margins primarily result from the continuing shift
in business mix toward large outsourcing contracts, and
efficiencies related to the application of ISO 9001 processes
throughout the company.
Cash flow increased 452 percent to $14.6 million ($0.27 per share)
from $2.6 million ($0.07 per share) a year ago.
The balance sheet at quarter end was strong, with a 472 percent
increase in shareholders' equity to $241 million, no bank debt and
$9.9 million cash. Working capital increased to $48.6 million,
from $19.6 million a year ago.
At the end of the quarter, and including the acquisition of the
Insurance Systems group of Teleglobe Inc. which was completed
October 22, 1997, CGI had an annual revenue run rate in excess of
$550 million and an order backlog of $1.5 billion.
As previously announced, CGI on January 5, 1998 signed an
agreement with BCE and Bell Canada whereby Bell and CGI will
strengthen and extend for an additional 10 years their business
partnership first entered into in November 1995.
There are three main components to this agreement. First, CGI
will manage Bell Canada's IT systems development and maintenance -
the largest IT services outsourcing contract ever in Canada, worth
more than $3 billion over 10 years. Second, CGI will continue to
partner with Bell in IT contracts for their respective clientele.
Third, CGI will acquire Bell Sygma International, which has
worldwide systems integration and outsourcing revenue of $100
million.
When Bell Sygma is included, CGI will have a revenue run rate of
approximately $1 billion, and an order backlog of $4.5 billion.
This agreement is expected to close June 30, 1998, pending
regulatory approvals and a CGI shareholder vote on certain aspects
of the agreement.
"Our growth is driven by new contracts and acquisitions. We are
proposing, and bidding on, an increasing number of larger
contracts," said Serge Godin, Chairman and Chief Executive
Officer. "We are strongly positioned to continue our growth in the
IT services industry, which is undergoing rapid consolidation."
"Through acquisitions this past year, we gained coast to coast
infrastructure, prominence as a major provider to the financial
services industry, a strong base in the U.S. and a presence in the
U.K. The planned, major transaction with Bell Canada will provide
CGI with the expertise, critical mass and resources to become a
world class IT player in international telecommunications
markets."
CGI is the largest Canadian-owned independent information
technology consulting firm, providing end-to-end IT services and
business solutions to some 2,000 clients throughout North America
and internationally. CGI has more than 4,000 professionals, a
revenue-run rate of approximately $550 million and an order
backlog of more than $1.5 billion. CGI's shares (GIB.A) are
included in The Toronto Stock Exchange's TSE 300 and TSE 200
Composite indexes. Website address: www.cgi.ca.
/T/
CGI GROUP INC.
CONSOLIDATED FINANCIAL STATEMENTS
for the three-month period ended December 31, 1997
CONSOLIDATED STATEMENT OF EARNINGS
for the three-month periods ended December 31
(in thousands of dollars,except earnings per share)
1997 1996
Revenue 115,796 $ 42,118 $
---------- ----------
Operating expenses
Direct costs,selling and
administration expenses 99,058 $ 38,052 $
Research and development 1,154 $ 506 $
Depreciation and
amortization of fixed
assets 3,160 $ 310 $
Amortization of costs
related to outsourcing
contracts 1,871 $ 656 $
Amortization of software
and development costs 319 $ 106 $
Amortization of
goodwill 1,419 $ 203 $
Interest on long-term
debt 174 $ 33 $
Other interest expenses 66 $ 145 $
---------- ----------
107,221 $ 40,011 $
---------- ----------
Earnings before following
items 8,575 $ 2,107 $
Income taxes 3,786 $ 951 $
---------- ----------
Earnings before share in
the results of an entity
subject to significant
influence and share
of non-controlling
interest 4,789 $ 1,156 $
Share in the results of
an entity subject to
significant influence (123 $)
Share of non-controlling
interest 161 $
---------- ----------
Net earnings 4,950 $ 1,033 $
---------- ----------
---------- ----------
Weighted average number
of outstanding Class A
subordinate shares, Class
B shares and first
preferred shares 53,474,593 37,279,252
---------- ----------
---------- ----------
Earnings per Class A
subordinate share,
Class B and first
preferred share $0.09 $0.03
---------- ----------
---------- ----------
CGI GROUP INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
for the three-month periods ended December 31
(in thousands of dollars)
1997 1996
Balance at beginning $20,436 $12,671
Net earnings $4,950 $1,033
--------- --------
Balance at end $25,386 $13,704
--------- --------
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CGI GROUP INC.
CONSOLIDATED BALANCE SHEETS
as at December 31
(in thousands of dollars)
ASSETS 1997 1996
Current assets
Cash and short-term investments 9,916 $
Accounts receivable 93,795 $ 41,505 $
Income taxes 200 $ 322 $
Work in progress 13,987 $ 10,470 $
Prepaid expenses 5,887 $ 1,872 $
123,785 $ 54,169 $
--------- --------
INVESTMENT IN AN ENTITY SUJECT
TO SIGNIFICANT INFLUENCE 1,584 $
FIXED ASSETS 30,672 $ 3,738 $
COSTS RELATED TO OUTSOURCING
CONTRACTS 24,927 $ 3,538 $
SOFTWARE AND DEVELOPMENT COSTS 3,660 $ 1,173 $
DEFERRED INCOME TAXES 10,025 $
GOODWILL 128,220 $ 14,990 $
--------- --------
321,289 $ 79,192 $
--------- --------
--------- --------
CGI GROUP INC.
CONSOLIDATED BALANCE SHEETS
as at December 31
(in thousands of dollars)
1997 1996
LIABILITIES
Current liabilities
Bank indebtedness 10,810 $
Accounts payable and accrued
liabilities 66,896 $ 20,650 $
Imp“ts sur le revenu 0 $ 0 $
Deferred income taxes 5,215 $ 1,835 $
Current portion of long-term
debt 3,053 $ 1,251 $
--------- --------
75,164 $ 34,546 $
--------- --------
LONG-TERM DEBT 4,786 $ 1,275 $
--------- --------
DEFERRED INCOME TAXES 1,227 $
--------- --------
SHARE OF NON-CONTROLLING INTEREST 339 $
SHAREHOLDERS' EQUITY
Capital stock 215,403 $ 28,229 $
Contributed surplus 211 $ 211 $
Retained earnings 25,386 $ 13,704 $
--------- --------
241,000 $ 42,144 $
--------- --------
321,289 $ 79,192 $
--------- --------
--------- --------
CGI GROUP INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
for the three-month periods ended December 31
(in thousands of dollars)
1997 1996
OPERATING ACTIVITIES
Net earnings 4,950 $ 1,033 $
Items not affecting cash
Depreciation and
amortization of fixed
assets 3,160 $ 310 $
Amortization of goodwill 1,419 $ 203 $
Amortization of software
and development costs 319 $ 106 $
Amortization of costs
related to outsourcing
contracts 1,871 $ 656 $
Deferred income taxes 3,014 $ 210 $
Share in the results of
an entity subject to
significant influence 123 $
Share of non-controlling
interest (161 $)
--------- --------
14,572 $ 2,641 $
Changes in non-cash operating
working capital items 3,373 $ (2,892 $)
--------- --------
17,945 $ (251 $)
--------- --------
FINANCING ACTIVITIES
Increase in long-term debt 294 $
Repayment of long-term debt (21,202 $) (250 $)
Issue of shares 163,779 $ 322 $
--------- --------
142,577 $ 366 $
--------- --------
INVESTING ACTIVITIES
Acquisitions of fixed assets (5,591 $) (451 $)
Proceeds on disposal of fixed
assets 8 $
Investment in an entity
subject to significant
influence (44 $)
Costs related to outsourcing
contracts (3,197 $) (174 $)
Business acquisitions (126,996 $) (1,606 $)
--------- --------
(135,784 $) (2,267 $)
--------- --------
INCREASE (DECREASE) IN CASH
POSITION 24,738 $ (2,152 $)
CASH POSITION AT BEGINNING (14,822 $) (8,658 $)
--------- --------
CASH POSITION AT END 9,916 $ (10,810 $)
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