Excellent earnings and a low PSR ratio also helps. Are you long GIB? It's trading at less than 1X sales while comparable U.S. stocks like CHRZ trade at much higher multiples.
FOR: THE CGI GROUP INC.
TSE;ME SYMBOL: GIB.A
DECEMBER 3, 1996
CGI Achieves Strong Performance in Fiscal 1996
MONTREAL, QUEBEC--
- Annual growth of 26 percent in revenues and 157 percent in net
earnings
- Fourth-quarter growth of 70 percent in revenues and 377 percent
in net earnings
CGI closed its latest fiscal year with a strong performance, the
result of both internal growth and strategic developments. For the
year ended September 30, 1996, the Company's operating revenue
rose to $122,015,000, an increase of 26 percent over 1995. CGI
posted net earnings of $2,718,000, up 157 percent over $1,059,000
one year earlier. Earnings per share grew by 91 percent, to $0.32
on a weighted average of 8,568,586 participating shares, compared
with $0.17 on 6,379,657 shares in fiscal 1995. Cash flow nearly
doubled, reaching $7.9 million or $0.92 per share.
Operating income (earnings before depreciation, amortization,
interest, share in the results of an entity subject to significant
influence and income taxes) grew by 47 percent, to $8,601,000. In
addition to the growth in business volume, this increase is
attributable to the larger contribution of value-added and
recurring-revenue contracts, combined with more efficient
management of major systems integration contracts. In this regard,
it should be noted that all CGI offices involved in systems
integration are now ISO 9001 certified for the project management
framework.
For the three months ended September 30, 1996, CGI's revenue
totalled $38.5 million, an increase of 70 percent. Net earnings
amounted to $572,000 or $0.06 per share, up 377 percent over the
same quarter of 1995. This strong growth reflects the impact of
the developments in the previous quarter, particularly the
acquisition of the outsourcing and systems integration division of
IST Group and the acquisition of Optel, as well as the start-up of
major contracts. Solfitech, a company set up jointly by CGI and
the Caisse de depot et placement du Quebec, contributed to 1996
fourth- quarter results for one month only.
"Our growth during the fourth quarter of fiscal 1996 marks the new
higher level of performance we are able to achieve with our
current base of operations, especially since this quarter is
generally less strong than the others," stated Serge Godin,
Chairman of the Board and Chief Executive Officer of CGI. "With
the past year's strategic alliances and acquisitions, we have
gained a commercial position and a financial structure that should
enable us to substanstially increase our profit "
Mr. Godin specified that CGI anticipates significant internal
growth during fiscal 1997 when it will benefit for the entire
period from the expansion completed in fiscal 1996. Several
factors will help increase its profit margins, including its
network-wide ISO 9001-certified project management framework, the
growing share of high-yield operations such as outsourcing and
economies of scale that will result from the recent merger of its
technology management network with that of IST.
"We have just established a new three-year plan which focuses on
an accelerated yet profitable expansion of our base of operations.
We will seek to optimize the various growth avenues opened up this
year and remain on the lookout for acquisition opportunities. We
are well positioned for acquisitions, as we have a solid balance
sheet that makes CGI one of the best capitalized companies in the
North American industry. Moreover, we have increased the Company's
total market capitalization fivefold over the past year," said
Serge Godin.
CGI is the largest Canadian-owned public information technology
consulting company. The Company has over 1,600 professionals
across Canada and in the United States.
THE CGI GROUP INC.
CONSOLIDATED STATEMENTS OF EARNINGS
year ended September 30
(in thousands of dollars, except earnings per share)
1996 1995
________ _________
Revenue $122,015 $96,690
________ ________
Operating expenses
Direct costs, selling and
administration expenses 111,299 88,838
Research and development 2,115 1,993
Depreciation and amortization of
fixed assets 1,264 1,215
Amortization of amounts recoverable
under long-term outsourcing contracts 538 461
Amortization of development costs 86 188
Amortization of goodwill 475 260
Interest on long-term debt 235 284
Other interest expenses 352 1,523
________ ________
116,364 94,762
________ ________
Earnings before income taxes
and shares in the results of an
entity subject to significant
influence 5,651 1,928
Income taxes (Note 9) 2,426 869
_________ ________
Earnings before share in the results
of an entity subject to significant
influence 3,225 1,059
Share in the results of an entity
subject to significant influence,
net of deferred income taxes of
$260 (507) ---
________ ________
Net earnings $2,718 $1,059
________ _______
________ _______
Weighted average number of outstanding
Class A subordinate shares, Class B shares
and first preferred shares, Series 1 and
Series 2 8,568,586 6,379,657
_________ _________
Earnings per Class A subordinate
share, Class B share and first
preferred share, Series 1 and
Series 2 $0.32 $0.17
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