Thursday 07 November 2019

CGI: Strong FY19

CGI logoFY19 (to end September) was a strong year for CGI. At the global level, revenues increased by 5.3% to CAN$12.1b or by 5.9% in constant currency (ccy). And the adjusted EBIT stood at 15.1%, up 30bps. The company had a particularly strong Q4, with growth of 7.7% (ccy); President & CEO, George Schindler, points to CGI’s focus on bringing clients more end-to-end services having an impact, particularly in the U.S. The book-to-bill ratio stood at 104%.

The U.K. and Australia businesses are now one reporting unit. Although there is no critical mass in Australia, the performance of that business will have had a dampening effect on the numbers. For the full year, U.K. and Australia grew revenues by 0.7% to CAN$1.4b, equating to 2.8% growth at constant currency. The EBIT margin declined from 14.5% in FY18 to 13.4%, impacted by client contract adjustments.

Like CGI as a whole, the region had a strong Q4, reporting 4.6% growth (ccy). Bookings for the last quarter stood at just under 100%, “reflecting continued uncertainty related to Brexit”. Like others, CGI is confident that once we see a final Brexit outcome, opportunities will start to flow, and CGI will benefit from its incumbent status in UK Government; we wouldn’t disagree. Interesting, and in line with our view of the market, is the company’s view that there are an increasing number of commercial clients considering larger IT investments.

A strong pipeline of opportunities in the private sector will support CGI UK’s ambition to launch more metros next year, in line with its ‘metro model’ strategy. Having established metros in Manchester, off the back of its TalkTalk contract (see CGI talk talks telco into transformational outsourcing contract), and Liverpool off the back of the Home Office Disclosure & Barring Service (DBS) contract (see CGI bars the competition with DBS win), the company has identified numerous other potential ‘anchor clients’ in cities around the UK. Having put the metro model into practice in a couple of regions already, UK President Tara McGeehan states that they now have a ‘Metro in a Box’ allowing them to set up fast and determine the likelihood of success in a region very quickly.

Posted by: Georgina O'Toole

Tags: results   financialservices   SI   government   IP   brexit  

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