Q1 results: Rev up 71%, Earnings up 107%, EPS up 57%
NEWS RELEASE TRANSMITTED BY CANADIAN CORPORATE NEWS
FOR: CGI GROUP INC.
TSE;ME SYMBOL: GIB.A
JANUARY 29, 1997
CGI Discloses its Results for the First Quarter of the
Current Fiscal Year - Net Earnings of $1,033,00 an
Increase of 107 Percent - Growth of 71 Percent in
Revenues - Earnings Per Share of $0.11
MONTREAL, QUEBEC--During the Annual General Meeting of
Shareholders held this morning in Montreal, management of CGI
disclosed strong growth in its results for the three months ended
December 31, 1996. During the first quarter of fiscal 1997, the
Company's revenues increased by 71 percent, climbing to $42.1
million. The Company posted net earnings of $1,033,000, more than
double the earnings of $498,000 recorded for the same quarter one
year ago. Earnings per share grew by 57 percent, rising from
$0.07 on a weighted average of 7,5 million shares outstanding for
the first quarter of fiscal 1996 to $0.11 on a weighted average of
9,3 million shares this year. Finally, cash flow climbed to
$2,641,000 or $0.28 per share, up 96 percent.
This solid performance is the result of a significant increase in
CGI's operating profit margin, which rose from 6.4 percent for the
first quarter of the previous year to 8.5 percent this year.
Management stated that this improvement can be attributed mainly
to the current trend in CGI's project mix, where operations
yielding a stable return, such as outsourcing, have gained more
and more importance. It is also due to more efficient management
of major systems integration contracts resulting from the ISO
9001-certified management framework.
In addition to winning new contracts over the past few months, the
growth in revenues reflects the previous year's strategic
developments, in particular the benefits of the strategic alliance
with Bell Canada. The acquisition of IST Group's Outsourcing and
Systems Integration Division in May 1996 and of Optel P.M.L.
Telecommunication Consultants Inc. last July, as well as the
September start-up of the operations of Solfitech Inc. set up
jointly with the Caisse de depot et placement du Quebec, also
contributed to this performance.
It should also be noted that CGI made another strategic
acquisition in December 1996 by integrating the resources and
expertise of CGO Inc., a company specializing in the changing
health-care management sector.
Outlook
Serge Godin, Chairman of the Board and Chief Executive Officer of
CGI, indicated that the growth recorded over the past six months
clearly illustrates the potential of the Company's current asset
base. "In 1996, CGI took on a commercial and financial structure
capable of generating faster growth in our revenues and net
earnings in all our target segments. Our performance is firmly
rooted and we are confident that CGI is headed for another good
year in 1997."
Mr. Godin added that the information technology industry will
record annual growth of approximately 15 percent over the next
three years, and nearly 25 percent in the outsourcing segment.
"The outsourcing market is increasingly reserved for major
consulting firms such as CGI, which have the necessary critical
mass and technological infrastructure as well as the full range of
information technology services. The industry consolidation can
therefore be expected to accelerate in Canada, where the market
remains highly fragmented.
This is why we intend to step up our acquisition program in the
coming years. In addition, while continuing to increase our
profit margins, we will capitalize on our status as the largest
fully independent Canadian company as well as our strategic
alliances to secure our foothold in the face of large-scale
outsourcing and systems integration contracts."
/T/
THE CGI GROUP INC.
CONSOLIDATED STATEMENTS OF EARNINGS
for the three-month period ended December 31
(in thousands of dollars, except earnings per share)
(unaudited)
1996 1995
_______ _______
Revenue $42,118 $24,697
_______ _______
Operating expenses
Direct costs, selling
and administration
expenses 38,052 22,725
Research and development 506 385
Depreciation and
amortization of fixed
assets 310 247
Amortization of amounts
recoverable under long-term
outsourcing contracts 656 90
Amortization of
development costs 106 12
Amortization of goodwill 203 65
Interest on long-term debt 33 62
Other interest expenses 145 176
_______ _______
40,011 23,762
_______ _______
Earnings before income taxes and
share in the results of an entity
subject to significant
influence 2,107 935
Income taxes 951 437
_______ _______
Earnings before share in the
results of an entity subject
to significant influence 1,156 498
Share in the results of an entity
subject to significant influence (123) -
_______ _______
NET EARNINGS $1,033 $498
_______ _______
_______ _______
Weighted average number of
outstanding Class A subordinate
shares, Class B shares and first
preferred shares, Series 1
and Series 2 9,319,813 7,527,636
_________ _________
_________ _________
Earnings per Class A subordinate
share, Class B shares and first
preferred share, Series 1 and
Series 2 $0.11 $0.07
_______ _______
_______ _______
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