# SECURITIES AND
EXCHANGE COMMISSION WASHINGTON, D.C. 20549

---

# FORM 40-F

(Check one)

Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934
                                                
or Annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934

For
the fiscal year ended September 30, 2004       Commission
file number 1-14858

GROUPE CGI INC./CGI
GROUP INC. (Exact name of
Registrant as Specified in Its Charter)

CGI Group Inc.(Translation of
Registrants Name Into English)

Québec, Canada(Province
or Other Jurisdiction of Incorporation or Organization)

7374(Primary Standard
Industrial Classification Code Number)

[Not Applicable](I.R.S. Employer
Identification Number)

1130 Sherbrooke Street
West 5th FloorMontréal,
Québec Canada H3A 2M8(514) 841-3200(Address
and Telephone Number of Registrants Principal Executive Offices)

CGI-AMS Inc.
4050 Legato RoadFairfax, VA 22033(703) 267-8000(Name, Address and
Telephone Number of Agent For Service in the United States)

Securities registered or to be
registered pursuant to Section 12(b) of the Act:

|Title Of Each Class        | Name Of Each Exchange On Which Registered
|-------------------------- | -----------------------------------------
|Class A Subordinate Shares | New York Stock Exchange                  

Securities registered or to be registered
pursuant to Section 12(g) of the Act:

None (Title of Class)

Securities for which there is a
reporting obligation pursuant to Section 15(d) of the Act:

None

For annual reports, indicate by check
mark the information filed with this form:

|Annual Information Form | Audited Annual Financial Statements
|----------------------- | -----------------------------------

Indicate the number of outstanding
shares of each of the issuers classes of capital or common stock as of the close of
the period covered by the annual report: 410,720,891 Class A Subordinate Shares,
33,772,168 Class B Shares

Indicate by check mark whether the
registrant by filing the information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934 (the Exchange Act). If Yes is marked, indicate the file
number assigned to the registrant in connection with such rule. Yes____ 82-____
No X

Indicate by check mark whether the
registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such filing
requirements for the past 90 days. YesX No____

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# Undertaking

Registrant
undertakes to make available, in person or by telephone, representatives to respond to
inquiries made by the Commission staff, and to furnish promptly, when requested to do so
by the Commission staff, information relating to: the securities registered pursuant to
Form 40-F; the securities in relation to which the obligation to file an annual report on
Form 40-F arises; or transactions in said securities.

# Controls and Procedures

The
Registrant has established a system of controls and other procedures designed to ensure
that information required to be disclosed in its periodic reports filed under the
Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commissions rules and forms. These disclosure controls and procedures have been
evaluated under the direction of the Registrants Chief Executive Officer and Chief
Financial Officer as of the end of the Registrants most recently completed fiscal
year on September 30, 2004. Based on such evaluations, the Chief Executive Officer and
Chief Financial Officer have concluded that the disclosure controls and procedures are
effective. No change was made in the Registrants internal controls over financial
reporting during the fiscal year ended September 30, 2004 that has materially affected, or
is reasonably likely to materially affect, the Registrants internal control over
financial reporting. No significant changes were made in the Registrants internal
controls or in other factors that could significantly affect these controls subsequent to
the date of their evaluation.

# Audit Committee

The
Audit and Risk Management Committee of the Board of Directors is composed entirely of
unrelated directors who meet the independence and experience requirements of the New York
Stock Exchange, the Toronto Stock Exchange, the U.S. Securities and Exchange Commission
rules and Multi-Lateral Instrument 52-110 adopted by the Canadian Securities
Administrators which took effect on March 30, 2004.

The
Audit and Risk Management Committee is composed of Mrs. Eileen Mercier, Chair of the
committee, and Messrs. Claude Boivin and Robert Chevrier.

The
Registrants Board of Directors has determined that the following members of the
Audit and Risk Management Committee of the Board of Directors are audit committee
financial experts within the meaning of paragraph (8) of General Instruction B to
Form 40-F:

| | - |  | Eileen
A. Mercier; and
| | - |  | ----------------------

| | - |  | Robert
Chevrier.
| | - |  | ----------------

# Principal Accountant Fees
and Services

In order to satisfy itself as to the
independence of the external auditors, the Audit and Risk Management Committee has adopted
an auditor independence policy which covers (a) the services that may and may not be
performed by the external auditors, (b) the governance procedures to be followed
prior to retaining services from the external auditors, and (c) the responsibilities
of the key participants. The following is a summary of the material provisions of the
policy.

Performance of Services

| | Services
are either acceptable services or prohibited services.
| | ---------------------------------------------------------------

| | The
acceptable services are (a) audit and review of financial statements, (b) prospectus
work, (c) audit of pension plans, (d) special audits on control procedures, (e) tax
planning services on mergers and acquisitions activities, (f) due diligence relating to
mergers and acquisitions, (g) tax services related to transfer pricing, (h) sales tax
planning, (i) research and interpretation related to taxation, (j) research
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-2-

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| | relating
to accounting issues, (k) proposals and related services for financial structures and
large tax planning projects, (l) preparation of tax returns and (m) all other services
that are not prohibited services.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The
prohibited services are (a) bookkeeping services, (b) design and implementation of
financial information systems, (c) appraisal or valuation services or fairness opinions,
(d) actuarial services, (e) internal audit services, (f) management functions, (g) human
resources functions, (h) broker-dealer services, (i) legal services, (j) services based
on contingency fees and (k) expert services.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Governance Procedures

The
following control procedures are applicable when considering whether to retain the
external auditors services:

For
all services falling within the permitted services category, whether they are audit or
non-audit services, a request for approval must be submitted to the Audit and Risk
Management Committee through the Executive Vice-President and Chief Financial Officer
prior to engaging the auditors to perform the services.

In
the interests of efficiency, certain permitted services are pre-approved quarterly by the
Audit and Risk Management Committee and thereafter only require approval by the Executive
Vice-President and Chief Financial Officer as follows:

| |  |  | The
Audit and Risk Management Committee can pre-approve envelopes for certain services to
pre-determined dollar limits on a quarterly basis;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Once
pre-approved by the the Audit and Risk Management Committee, the Executive Vice-President
and Chief Financial Officer may approve the services prior to the engagement;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | For
services not captured within the pre-approved envelopes and for costs in excess of the
pre-approved amounts, separate requests for approval must be submitted to the Audit and
Risk Management Committee;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | At
each meeting of the Audit and Risk Management Committee a consolidated summary of all
fees by service type is presented including a break down of fees incurred within each of
the pre-approved envelopes.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fees Paid to External
Auditors

During the years ended
September 30, 2004 and September 30, 2003, the Registrant paid the following fees to
its external auditors:

|Service retained          | Fees paid  
|------------------------- | -----------
|
|Audit services            | $3,338,048 
|Audit related services(a) | $   775,464
|Tax fees(b)               | $1,942,460 
|All other fees(c)         | Nil        
|Total fees paid           | $6,055,972 

|(a) | the audit related fees paid to the external auditors for the years ended
                    September 30, 2004 and September 30 2003 were in relation to
prospectus work,                     special audits on control procedures, due diligence
relating to mergers and                     acquisitions, research relating to accounting
issues and proposals and related                     services for financial structures
and large tax planning projects.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) | the tax                     related fees paid to the external auditors for the years
ended September 30,                     2004 and September 30 2003 were in relation to
tax planning services on mergers                     and acquisitions activities, tax
services related to transfer pricing, sales tax                     planning, research
and interpretation related to taxation, proposals and related
                    services for financial structures and large tax planning projects,
and                     preparation of tax returns.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(c) | the
other fees paid to the external auditors for the year ended September 30,
                    2003 were in relation to the implementation of security systems at
the                     Companys offices in Montreal.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

-3-

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# Code of Ethics

In
addition to its Code of Ethics and Business Conductthat applies to all the
Registrants employees, officers and directors, the Registrant has adopted an
Executive Code of Conductthat applies specifically to the Registrants
principal executive officer, principal financial officer, principal accounting officer or
controller, or other persons performing similar functions (collectively, the
Officers). The Executive Code Conduct is designed to deter wrongdoing
and to promote:

| |  |  |  | Honest
and ethical conduct, including the ethical handling of actual or apparent conflicts of
interest between personal and professional relationships;
| |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | Full,
fair, accurate, timely, and understandable disclosure in reports and documents that the
Registrant files with, or submits to, the Securities and Exchange Commission and in other
public communications made by the Registrant;
| |  | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | Compliance
with applicable governmental laws, rules and regulations;
| |  | - |  | --------------------------------------------------------------------

| |  |  |  | The
prompt internal reporting of violations of the code to an appropriate person or persons
identified                    in the code; and
| |  | - |  | ------------------------------------------------------------------------------------------------------------------------------------------

| |  |  |  | Accountability
for adherence to the code.
| |  | - |  | -----------------------------------------

The Registrants Executive
Code of Conductand its Code of Ethics and Business Conducthave been posted on
the Registrants website at http://www.cgi.com.

The Registrant has not amended its
Executive Code of Conductin any respect since its adoption, nor have any waivers
been granted in respect of any of its provisions.

# Off-balance sheet
arrangements

The
Registrant does not enter into off-balance sheet financing as a matter of practice except
for the use of operating leases for office space, computer equipment and vehicles, none of
which are off-balance sheet arrangements within the meaning of paragraph (11) of General
Instruction B to Form 40-F. In accordance with Canadian GAAP, neither the lease liability
nor the underlying asset is carried on the balance sheet as the terms of the leases do not
meet the threshold for capitalization.

As disclosed in Note 20 to the
Registrants Consolidated Financial Statements, in the normal course of business, the
Registrant enters into agreements that may provide for indemnification and guarantees to
counterparties in transactions such as consulting and outsourcing services, business
divestitures, lease agreements and financial obligations. These indemnification
undertakings and guarantees may require the Company to compensate counterparties for costs
and losses incurred as a result of various events, including breaches of representations
and warranties, intellectual property right infringement, claims that may arise while
providing services or as a result of litigation that may be suffered by counterparties.
The nature of most indemnification undertakings prevent the Registrant from making a
reasonable estimate of the maximum potential amount the Registrant could be required to
pay counterparties, as the agreements do not specify a maximum amount and the amounts are
dependent upon the outcome of future contingent events, the nature and likelihood of which
cannot be determined at this time. The Registrant does not expect that any sum it may have
to pay in connection with these guarantees will have a materially adverse effect on its
Consolidated Financial Statements.

-4-

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# Tabular Presentation of
Contractual Obligations

As of September 30, 2004, the
Registrants known contractual obligations were as follows:

|                                                      | Payment due by period |                  |                   |                   |              
|----------------------------------------------------- | --------------------- | ---------------- | ----------------- | ----------------- | -------------
|Contractual Obligations (in `000 of Canadian dollars) | Total                 | Less than 1
year | 2nd and 3rd
years | 4th and 5th
years | After 5 years
|                                                      |                       |                  |                   |                   |              
|Long-Term Debt Obligations                            | 485,524               | 11,993           | 230,862           | 107,502           | 135,167      
|Capital (Finance) Lease Obligations                   | 4,296                 | 2,536            | 1,625             | 135               | --           
|Operating Lease Obligations                           | 1,368,620             | 225,940          | 337,407           | 207,229           | 598,044      
|Purchase Obligations                                  | 68,967                | 28,737           | 32,599            | 7,631             | 0            
|Total                                                 | 1,927,407             | 269,207          | 602,492           | 322,497           | 733,211      

# Information to be Filed on
This Form

The
following materials are filed as a part of this Annual Report:

|1. |  | Annual
Information Form for the fiscal year ended September 30, 2004
|-- |  | --------------------------------------------------------------------

|2. |  | Audited
Annual Financial Statements for the fiscal year ended September 30, 2004
|-- |  | --------------------------------------------------------------------------------

|3. |  | Managements
Discussion and Analysis of Financial Position and Results of           Operations
|-- |  | ----------------------------------------------------------------------------------------------

The
following documents are filed as exhibits to this Annual Report:

|23.1 |  | Consent
of Samson Bélair / Deloitte & Touche LLP
|---- |  | ------------------------------------------------

|99.1 |  | Certification
of the Registrant's Chief Executive Officer required pursuant to Rule 13a-14(a).
|---- |  | ----------------------------------------------------------------------------------------------

|99.2 |  | Certification
of the Registrant's Chief Financial Officer required pursuant to Rule 13a-14(a).
|---- |  | ----------------------------------------------------------------------------------------------

|99.3 |  | Certification
of the Registrants Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|99.4 |  | Certification
of the Registrants Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

-5-

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# ANNUAL INFORMATION FORM

For the fiscal year
ended September 30, 2004

---

February 1, 2005

---

CGI GROUP INC.

# TABLE OF CONTENTS

|INCORPORATION AND DESCRIPTION OF CAPITAL STOCK                | 1 
|------------------------------------------------------------- | --
|Corporate Structure                                           | 1 
|Subsidiaries                                                  | 1 
|Capital Structure                                             | 1 
|Stock Splits                                                  | 1 
|Market for Securities, Trading Price and Volume               | 2 
|GENERAL DEVELOPMENT AND DESCRIPTION OF THE BUSINESS           | 2 
|GENERAL DEVELOPMENT OF BUSINESS                               | 2 
|Mission and Profile                                           | 2 
|CGI's Business Approach                                       | 3 
|Strategic Alliances                                           | 3 
|Related Party Transactions                                    | 3 
|Commercial Alliances                                          | 4 
|DESCRIPTION OF CGI'S BUSINESS                                 | 6 
|Business Structure                                            | 6 
|Principal Offices                                             | 7 
|Main Services Offered by CGI                                  | 7 
|Research                                                      | 8 
|Human and Material Resources                                  | 8 
|Client Base                                                   | 8 
|The North American Information Technology Services Industry   | 9 
|Industry Trends and Outlook                                   | 9 
|CGI's Growth and Positioning Strategy                         | 9 
|Quality Processes                                             | 10
|SIGNIFICANT ACQUISITIONS                                      | 11
|RISK FACTORS                                                  | 11
|DIRECTORS AND OFFICERS                                        | 12
|Directors                                                     | 12
|Officers                                                      | 12
|Ownership of Securities on the Part of Directors and Officers | 13
|LEGAL PROCEEDINGS                                             | 13
|TRANSFER AGENT AND REGISTRAR                                  | 13
|MATERIAL CONTRACTS                                            | 13
|ADDITIONAL INFORMATION                                        | 14

---

CGI GROUP INC. - i

This Annual Information Formis dated February 1, 2005 and, unless specifically stated otherwise, all information
disclosed in this form is provided as at September 30, 2004, the end of the most recently
completed fiscal year.

# INCORPORATION AND
DESCRIPTION OF CAPITAL STOCK

# Corporate Structure

CGI Group Inc. (the
Company or CGI) was incorporated on           September 29,
1981 under, and is governed by, the provisions of           Part IA of the Quebec Companies
Act.The Company continued the           activities of Conseillers en gestion et
informatique C.G.I. inc.,           which was originally founded in 1976. The
executive and registered office of the           Company is situated at 1130 Sherbrooke
Street West, 5th floor, Montreal, Quebec,           Canada, H3A 2M8. CGI became a public
company on December 17, 1986, upon           completing an initial public offering
of 800,000 Class A subordinate           shares.

# Subsidiaries

The following is a list of the
subsidiaries of CGI having (i) total assets representing more than 10% of the
consolidated assets of CGI as at September 30, 2004, or (ii) sales and operating
revenues representing more than 10% of the consolidated sales and operating revenues of
CGI for the year ended September 30, 2004.

|Name                                                    | Laws of
Incorporation | Percentage of
Ownership
|------------------------------------------------------- | --------------------- | -----------------------
|CGI Information Systems and Management Consultants Inc. | Canada                | 100%                   
|Conseillers en gestion et informatique C.G.I. inc       | Quebec                | 100%                   
|CGI-AMS Inc.                                            | Delaware              | 100%                   

# Capital Structure

The Companys authorized share
capital consists of an unlimited number of First Preferred Shares (First Preferred
Shares), issuable in series, an unlimited number of Second Preferred Shares
(Second Preferred Shares), issuable in series, an unlimited number of Class A
subordinate shares and an unlimited number of Class B shares (multiple voting)
(Class B shares), all without par value, of which, as of February 1, 2005,
410,907,535 Class A subordinate shares, 33,772,168 Class B shares were issued and
outstanding and none of the First Preferred Shares or Second Preferred Shares were issued
and outstanding. As of February 1, 2005, 55% and 45% of the aggregate voting
rights were attached to the outstanding Class A subordinate shares and Class B shares
respectively.

The Company incorporates by reference
the disclosure contained under the headings Class A Subordinate Shares, on
page 10 and First Preferred Shares and Second Preferred Shares on
page 11 of CGIs Management Proxy Circular dated December 9, 2004 which was
filed on December 30, 2004 and which is available at
www.sedar.com and on the Companys web site at www.cgi.com.

# Stock Splits

As of February 1, 2005, the Company
had proceeded with four subdivisions of its issued and outstanding Class A subordinate shares as
follows:

| |  | August
12, 1997 on a two for one basis;
|- |  | ---------------------------------------

| |  | December
15, 1997 on a two for one basis;
|- |  | -----------------------------------------

| |  | May
21, 1998 on a two for one basis; and
|- |  | ----------------------------------------

| |  | January
7, 2000 on a two for one basis.
|- |  | ---------------------------------------

---

CGI GROUP INC. - 1

# Market for Securities,
Trading Price and Volume

CGIs Class A subordinate
shares are listed for trading on the Toronto Stock Exchange under the symbol GIB.SV.A and
on the New York Stock Exchange, under the symbol GIB. A total of 150,128,615 Class A
subordinate shares were traded on the Toronto Stock Exchange during the year ended
September 30, 2004 as follows:

| | Month                                                                                                                                               | High(a)
($) | Low(a)
($) | Volume     | 
| | --------------------------------------------------------------------------------------------------------------------------------------------------- | ----------- | ---------- | ---------- | 
| |                                                                                                                                                    
| | October 2003                                                                                                                                        | 7.97        | 7.25       | 13,359,132 | 
| |                                                                                                                                                    
| | November 2003                                                                                                                                       | 7.66        | 7.11       | 17,333,022 | 
| |                                                                                                                                                    
| | December 2003                                                                                                                                       | 8.12        | 7.35       | 9,878,908  | 
| |                                                                                                                                                    
| | January 2004                                                                                                                                        | 9.20        | 7.74       | 16,232,549 | 
| |                                                                                                                                                    
| | February 2004                                                                                                                                       | 9.29        | 8.41       | 13,180,899 | 
| |                                                                                                                                                    
| | March 2004                                                                                                                                          | 8.80        | 8.20       | 13,018,006 | 
| |                                                                                                                                                    
| | April 2004                                                                                                                                          | 9.00        | 7.76       | 10,129,032 | 
| |                                                                                                                                                    
| | May 2004                                                                                                                                            | 8.42        | 7.93       | 9,031,539  | 
| |                                                                                                                                                    
| | June 2004                                                                                                                                           | 9.08        | 8.16       | 17,218,682 | 
| |                                                                                                                                                    
| | July 2004                                                                                                                                           | 9.00        | 8.59       | 9,957,629  | 
| |                                                                                                                                                    
| | August 2004                                                                                                                                         | 8.80        | 8.25       | 8,632,044  | 
| |                                                                                                                                                    
| | September 2004                                                                                                                                      | 8.71        | 8.05       | 12,157,173 | 
| |                                                                                                                                                    
| | (a) The high and low prices  reflect the  highest and lowest  prices at which
a board lot trade was executed in a trading session during the month. |            

# Normal Course Issuer Bid

On February 1, 2005 CGI announced
that it was making a normal course issuer bid to repurchase up to 10% of the public float
of its issued and outstanding Class A subordinate shares. See Normal Course Issuer
Bid below in the section entitled Significant developments since the most
recent year end on September 30, 2004".

# GENERAL DEVELOPMENT AND
DESCRIPTION OF THE BUSINESS

# GENERAL DEVELOPMENT OF
BUSINESS

# Mission and Profile

CGI's vision is to be a world-class
 information  technology ("IT") and business process outsourcing ("BPO") leader helping
 our  clients  win and grow.  The  mission of CGI is to help its  clients  with
 professional  services  of outstanding quality,  competence and objectivity,  delivering
the best solutions to fully satisfy client objectives in IT, business processes and
management.  In all we do, we foster a culture of partnership,  intrapreneurship  and
integrity, building a world-class IT and BPO company.

At CGI we have always  understood,
 and we have always valued,  the link between sound,  ethical business practices and the
creation of  shareholder  value.  We believe in balancing
 the interests of our key stakeholders: our clients, our members and our shareholders
in order to be recognized by our clients as their partner of choice, for the depth
of our experience in their industry sectors; to be recognized by our members and industry
peers as the best employer in the industry; and by our shareholders as a well-managed
company providing superior returns.

When our  employees  (whom we call
our  members)  know that  their  contribution  is  valued  and when  their  work
environment is both challenging and rewarding,  they deliver  services to our clients
that are consistently  timely and of the highest quality.  Our clients reap the
considerable  benefits of our members'  exceptional

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CGI GROUP INC. - 2

performance, and they in turn reward
us with the trust and loyalty  that help us to build the  long-term  partnerships  on
which CGI is built.

These fundamental  business
 principles that underlie all of the Company's  business  activities are contained in a
collection  of documents  and policies  that  collectively  are called CGI's  Fundamental
 Texts which  contain the charter of the Company's  Board of Directors and those of its
Standing  Committees,  reflect  applicable  corporate governance  regulations  and
guidelines  and take into account  evolving best practices in Canada and the US. These
documents  are to be read in the context of CGI's  Mission,  Vision,  Dream and Values
 which are  explained in the preamble to the Fundamental Texts. The Fundamental Texts are
posted on the Company's web site at www.cgi.com.

CGI now ranks among the largest
 independent IT and business  process  services  firms in North America.  CGI helps its
clients in the private and public  sectors  meet their  strategic  goals by providing
 them with an  end-to-end offering of high-level IT services and business  solutions from
offices located around the world.  CGI's unique mix of services is comprised of
management of IT and business  functions,  systems  development  and  integration,  and
consulting.

# CGI's Business Approach

As of February 1, 2005,  CGI focused
on serving  markets in five  sectors.  Over time the Company has been able to develop
 close,  long  term  relationships  with  its  clients  and to  become  their IT  partner
 of  choice.  CGI professionals have a thorough understanding of their clients' business
needs.

CGI  chooses  to  focus  on
 industries  that  make a  strategic  use of IT and that  rely on it to  enhance  their
competitive  position.  CGI  therefore  provides  end-to-end IT services in the
 following  five economic  sectors: financial   services,   manufacturing,   retail  and
  distribution,   governments  and  healthcare,   as  well  as telecommunications and
utilities.

# Strategic Alliances

# BCE Inc. and Bell Canada

CGI has entered into a strategic
 alliance with Bell Canada which  originated  in 1995.  On November 17, 1995,  CGI and
Bell Canada  entered  into a five year  renewable  strategic  agreement,  which was
extended in July 2003 until June 2012. Bell Canada, the largest Canadian
 telecommunications  operating company,  markets a full range of state of the art
products and services to business and residential  customers in Canada.  In 1995, Bell
Canada  initially injected $18.4 million into CGI's share capital to acquire  2,300,000
First Preferred  Shares,  Series 1. Following this  investment,  two Bell  Canada
 nominees  were  appointed  to CGI's  Board of  Directors.  In addition to this strategic
 alliance,  CGI and Bell Canada signed a commercial  alliance whereby both companies
agreed to partner in addressing certain market opportunities.

On January 5, 1998,  BCE Inc. and
Bell Canada  acquired 6 million Class A subordinate  shares of CGI from Teleglobe
Investment  Corp.  On June 30, 1998,  as part of CGI's  acquisition  of BCE Inc.
 subsidiaries  Bell Sygma and Bell Sygma  International,  BCE Inc.  acquired  8.6 million
 First  Preferred  Shares,  Series 6 of CGI.  With these two transactions  completed  in
1998,  BCE Inc.'s  representation  on CGI's Board of Directors  was  increased to three
members;  the equity  interest of BCE Inc. in CGI  totalled  43% and its voting  interest
 stood at 17.9%.  In July 2003,  the Company,  BCE Inc. and certain  other parties
 entered into a new  agreement  with respect to BCE Inc.'s ownership interest in CGI.
 See "Material Contracts" below.

As of  February 1, 2005,  2004 BCE
 Inc.'s  equity  stake in CGI stood at 28.85% and its  voting  interest  represented
17.14%.

# Related Party Transactions

Throughout  fiscal 2003,  CGI
 continued to build on its  strategic  alliance  with BCE Inc. and Bell Canada and in
July 2003 the IS/IT  outsourcing  agreement  with Bell Canada was extended until June
2012. In the normal

---

CGI GROUP INC. - 3

course of business,  the Company is
party to contracts with certain BCE Inc. subsidiaries and affiliated companies,  pursuant
to which CGI is their preferred supplier for information systems and IT needs.

In July of 2004 CGI,  Bell Canada and
 Connexim  Inc.,  a  subsidiary  of Bell  Canada,  entered  into an agreement pursuant to
which the Company's  network  services will be  outsourced to Connexim Inc. The
 outsourcing  agreement provides the Company with economies of scale as well as best
practices in network management.

# Commercial Alliances

CGI currently has commercial
 alliance agreements with various business partners.  These  non-exclusive  commercial
agreements  with  hardware  and  software  providers  allow the Company to provide  its
clients  with  best of breed technology,  often on
the best commercial terms available.  The following is a chronological  list of CGI's
primary commercial alliances:

| |  | in
1996, CGI entered into a procurement relationship with IBM Canada;
|- |  | ---------------------------------------------------------------------

| |  | in
1998, CGI signed commercial agreements with ERP program developers SAP, PeopleSoft and
Oracle;
|- |  | -------------------------------------------------------------------------------------------------

| |  | in
September 1999, CGI entered into a non-exclusive alliance with Microsoft;
|- |  | ----------------------------------------------------------------------------

| |  | in
October  1999,  CGI  signed a  non-exclusive  direct  commercial  systems  integrator
 agreement  with Sun       Microsystems;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------

| |  | in
December 2000, CGI signed a non-exclusive systems integration agreement with Siebel; and
|- |  | -------------------------------------------------------------------------------------------

| |  | in
July 2002, CGI signed a non-exclusive systems integration agreement with BEA Systems.
|- |  | ----------------------------------------------------------------------------------------

# Significant developments
since the most recent year end on September 30, 2004

Normal Course Issuer Bid

On February 1, 2005 the Companys
Board of Directors authorized the purchase of up to 10% of the public float of the Companys
Class A subordinate shares during the ensuing 12 months through a Normal Course Issuer
Bid (the Issuer Bid), which was approved by the Toronto Stock Exchangethe
same day. Management and the Board of Directors of the Company believe that the Class A
subordinate shares of the Company, at the market prices prevailing on February 1, 2005,
represent an attractive investment opportunity for the Company, and the Issuer Bid
provides the Company with the flexibility to purchase Class A subordinate shares from
time to time as the Company considers it advisable, as part of its strategy to increase
shareholder value

The Issuer Bid enables the Company to
purchase on the open market through the facilities of the Toronto Stock Exchangeup
to 27,834,417 Class A subordinate shares for cancellation. As of January 28, 2005, the
reference date used to determine the number of shares eligible to be repurchased under
the Issuer Bid, the Company had 410,902,202 Class A subordinate shares issued and
outstanding, and as of that date, people who were directors, officers or holders of more
than 10% of the shares of the Company held 132,558,031 Class A subordinate shares,
resulting in the Company having a public float of 278,344,171 Class A subordinate shares
for the purposes of the Issuer Bid. Purchases may be made under the Issuer Bid commencing
on February 3, 2005 and ending no later than February 2, 2006, or on such earlier date
when the Company completes its purchases or elects to terminate the bid.

Credit Facility Renewal

On December 20, 2004 CGI announced
that it had concluded a five-year  unsecured  revolving credit  facility,  which replaced
its previous  syndicated  bank  facilities.  The new credit  facilities of an aggregate
 amount of CDN$800 million are  presently  comprised of a US tranche worth the
 equivalent of CDN$ 300 million and a Canadian  tranche worth CDN$500  million.  The
credit  facilities were concluded with a banking  syndicate in which the National Bank of
Canada acted as  administrative  agent and lead  arranger;  JPMorgan Chase Bank and
Caisse  centrale  Desjardins acted as syndication agents and lead arrangers;  The Toronto
Dominion Bank, Bank of America,  KeyBank and Caisse de depot et placement du Quebec acted
as documentation  agents; ABN AMRO, Bank of Montreal,  Canadian Imperial Bank of
Commerce,  the Royal Bank of Canada,  United  Overseas  Bank and  Societe  Generale
 acted as  managing  agents and Citibank acted as a participant.

---

CGI GROUP INC. - 4

# Significant developments
of the most recent three fiscal years

Fiscal Year ended September 30, 2004

| |  | Significant Acquisitions
| |  | ------------------------

In  fiscal  2004 we  acquired
 American  Management  Systems,  Incorporated  ("AMS"),  a  premier  business  and IT
consulting firm to the government,  healthcare,  financial  services and  communications
 industries.  CGI acquired AMS' business with associated revenue of more than $900
million for a net cash  consideration of $584 million.  For a more detailed description
of the AMS acquisition see "Significant Acquisitions" below.

| |  | Other Significant Developments
| |  | ------------------------------

On October 21, 2003,  Nexxlink
 Technologies  Inc.  ("Nexxlink")  purchased  various non-core CGI assets generating
approximately  $40 million in annual revenue for a price of $21 million payable to CGI in
cash, a convertible  note and shares of  Nexxlink.  This  transaction  provided CGI
 initially  with a 32% equity  interest in  Nexxlink.  On December 9, 2004,  Bell Canada
 announced that it was making an offer to acquire all of the  outstanding  shares of
Nexxlink at a price of $6.05 per share for an equity value of approximately  $67 million.
  CGI agreed with Bell Canadato support Bell Canadas offer and therefore tendered
the Nexxlink shares that it
or its wholly-owned subsidiaries owned in response to Bell Canadas bid. The
bid closed successfully on January 25, 2005 with the result that the Company disposed on
that date of all of its interest in Nexxlink.

On January 30, 2004, we announced
 that CGI had completed a US$192 million  private debt  placement  financing with US
institutional  investors.  The private  placement was comprised of three tranches of
guaranteed senior unsecured notes,  with a weighted  average  maturity of 6.4 years and a
weighted  average fixed coupon of 4.97%. The proceeds were used to reimburse the
drawn-down portion of the Company's  existing credit facilities,  as well as for general
corporate purposes.

On March 19, 2004, we completed (i) a
firm  underwritten  private  placement in Canada and the US of  approximately 33.1
 million  subscription  receipts  at a price of  CDN$8.00  per  subscription  receipt
 for gross  proceeds  of CDN$264.6  million and (ii) a private placement of approximately
 8.3 million  subscription  receipts with BCE Inc. at a price of CDN$8.00 per
subscription  receipt for proceeds of approximately  CDN$66.1 million, on the same terms
and conditions as the firm  underwritten  private  placement  offering.  The private
 placements  were undertaken in connection  with
 our  acquisition  of AMS  (see  "Significant  Acquisitions"  below).  On  May 3,  2004,
 upon the satisfaction of certain conditions  related to the acquisition of AMS, each
subscription  receipt was automatically exchanged for one Class A subordinate share
without payment of additional consideration.

Fiscal Year ended September 30, 2003

| |  | Significant Acquisitions
| |  | ------------------------

In fiscal 2003 we closed the
 acquisition  of COGNICASE Inc.  ("Cognicase")  for $329.4 million in a combination of
$180.2 million in cash and 19,850,245 Class A subordinate  shares.  Cognicase was the
second largest independent IT solutions  provider in Canada with approximately  4,300
employees,  an annualized revenue run-rate of approximately $500 million and a solid
recurring revenue base.

| |  | Other Significant Developments
| |  | ------------------------------

In November 2002, we signed an
agreement with a banking  syndicate  pertaining to two unsecured credit  facilities. As
part of the agreement,  we secured a $265 million,  three-year term revolving  credit
facility for the financing of acquisitions  and  outsourcing  contracts.  The agreement
 provided  access to a $150 million  revolving  credit facility for our operating
 activity and working capital needs.  The credit  facilities  totaling $415 million were
concluded with a banking  syndicate  comprised of the following:  Canadian  Imperial Bank
of Commerce,  The Toronto Dominion Bank and Caisse centrale Desjardins,  as co-arrangers;
 as well as Caisse

---

CGI GROUP INC. - 5

de depot et placement du Quebec, Bank
of Montreal, Royal Bank of Canada and United Overseas Bank Limited, as participants.

In July  2003,  BCE  Inc.  and CGI
 announced  that  Bell  Canada  and CGI had  extended  their  IS/IT  outsourcing
agreements.  We renewed and  expanded  our  commercial  alliance,  which  designates
 Bell Canada as our  preferred telecom services provider and added a new network
 management  agreement.  Additionally,  BCE Inc. and CGI signed a new  shareholders'
 agreement with respect to BCE Inc.'s  ownership in CGI.  Among other details,  the put
and call options with the majority  shareholders - Messrs.  Serge Godin,  Andre Imbeau
and  Jean Brassard  - were cancelled. Additionally,  BCE Inc.  converted  all of its
Class B shares  into  Class A  subordinate  shares on a  one-for-one basis.  The
 strengthening  of our  strategic  alliance  with  BCE  Inc.  cleared  the way for us to
 focus  on our continuing growth.

Fiscal Year ended September 30, 2002

| |  | Significant Developments
| |  | ------------------------

On May 3,  2002,  CGI  signed  a
 shareholders'  agreement  which  finalized  the  terms  and  conditions  of a new
jointly-owned  IT services  company,  Innovapost  Inc.  ("Innovapost"),  with Canada Post
as  co-owner.  Innovapost provides all IT services to Canada Post, its affiliated
 companies,  and potentially to other postal  organizations worldwide.

On October 1, 2001,  Fireman's Fund
Insurance  Company  ("Fireman's  Fund"),  a subsidiary of Allianz AG of Munich, and CGI
finalized a 10-year IT outsourcing  agreement  originally  valued at US$380 million.
 Over time, the client had negotiated to reduce the scope of services under the contract,
 and had entered into  negotiations in late 2004 to obtain further cost  reductions
 resulting from new business  requirements  and  technology  changes.  Since the contract
was not meeting  CGI's  profitability  standards  and it was not  possible to achieve a
revised  agreement that  would  meet the  client's  requirements  while  also being in
the  interests  of CGI's  shareholders,  it was mutually  announced  on  October  20,
 2004 that the  contract  would be  terminated.  Taking the net impact of the termination
into account, CGI's backlog at September 30, 2004 was $13 billion.

On December 20, 2001,  CGI closed a
public  offering of more than 11 million Class A subordinate  shares in Canada. The net
 proceeds  of the  offering  were  added  to  CGI's  general  funds  and used to  finance
 its  development activities,  including  the  funding  of large  outsourcing  contracts
 and  acquisitions,  and for  other  general corporate purposes.

# DESCRIPTION OF CGI'S
BUSINESS

# Business Structure

CGI's  business  operations  are
 structured  in two key lines of business  ("LOB"):  The IT  Services  LOB and the
Business  Process  Services  ("BPS")  LOB.  CGI's  remaining  business  activities  are
in the nature of  corporate services that are carried on primarily by CGI's head office
staff.

Corporate services - Head Office
(Montreal)

| |  | Administrative
and financial functions
|- |  | --------------------------------------

| |  | Communications
and investor relations
|- |  | -------------------------------------

| |  | Corporate
and strategic development
|- |  | -----------------------------------

| |  | Corporate
affairs
|- |  | -----------------

| |  | Human
resources
|- |  | ---------------

| |  | Internal
Audit
|- |  | --------------

| |  | Legal
|- |  | -----

| |  | Marketing
|- |  | ---------

| |  | Mergers
& Acquisitions
|- |  | ----------------------

| |  | Planning
and corporate development
|- |  | ----------------------------------

| |  | Quality
|- |  | -------

---

CGI GROUP INC. - 6

| |  | Research
& Development
|- |  | ----------------------

| |  | Professional
development programs
|- |  | ---------------------------------

| |  | Support
to large outsourcing projects
|- |  | -------------------------------------

| |  | Knowledge
management
|- |  | --------------------

| |  | Project
performance
|- |  | -------------------

IT
Services LOB

The IT Services  LOB  provides a full
range of services in systems  integration,  consulting  and  outsourcing,  to clients
 primarily  located in Canada,  the United States and Europe.  CGI's  professionals and
facilities in India and Canada also serve US and  foreign-based  clients as an integral
 part of our  offshore  and  near-shore  global delivery model.

BPS LOB

The BPS LOB  provides a full
 spectrum  of BPO  services  to our  client  base.  Our  services  include  end-to-end
business  processing  for  insurance  companies,  banks,  investment  firms and financial
 cooperatives  as well as payroll services, document management and finance and
administration services.

# Principal Offices

The Company has 107 offices in 19
countries  worldwide,  with 50 offices in the United  States.  Its main locations are
listed on page 71 of CGI's Annual Report for fiscal 2004 which  information is
incorporated  by reference.  The 2004 Annual  Report was filed on December 30, 2004
and is available at  www.sedar.com and on the Company's web
site at www.cgi.com.

# Main Services Offered by
CGI

CGI
provides the full range of IT services  including the management of IT and business
 processes on an outsourced basis,  as well as  systems  integration  and  consulting.
 The  Company's  primary  focus is large  scale  systems integration and outsourcing
 contracts.  CGI provides the consulting,  implementation and operations  services that
companies need to turn their corporate strategy into reality.

Outsourced Management of IT and Business Processes

Outsourcing is one of the fastest
 growing  segments of the IT industry.  CGI has been active in outsourcing  since 1986,
which makes it a pioneer in this segment.  Through a series of acquisitions  completed
since 1996,  including the  acquisition  on July 1, 1998 of Bell  Sygma and Bell  Sygma
 International,  the  Company  is now the  largest provider of IT and BPO services in
Canada, and continues to strengthen its position in the US outsourcing market.

Outsourcing  contracts are signed for
periods ranging from five to ten years and are generally renewable.  They are paid for
according to a formula of monthly payments.

As part of outsourcing  contracts,
 clients delegate entire or partial  responsibility for their IT operations or a business
 process in order to achieve  significant  savings and access the best IT,  while
 retaining  control over strategic functions. These contracts provide revenue visibility
and support performance stability.

Services  provided as part of an
 outsourcing  contract  may include  facilities  management  (data  centres,  call
centres,  network and desktop services),  application  maintenance and support,
 development and integration of new projects and  applications,  as well as BPS including
 functions  such as document  management,  payroll  services, finance and accounting
administration or insurance policy administration.

---

CGI GROUP INC. - 7

Consulting
and Systems Integration

When providing consulting services,
 CGI acts as a trusted advisor to its clients,  offering a full range of IT and
management  consulting  services,  including  IT  strategic  planning,  business  process
 engineering  and systems architecture.  In addition to their  technical  expertise,  CGI
 professionals  understand the business issues in a particular industry or sector.

In terms of  systems  integration,
 CGI  provides  implementation  services  covering  the  full  scope of  today's
enterprise  IT  environment,  integrating  different  technologies  to create IT systems
 that  respond to clients' strategic  needs.  In addition to its  expertise at working
with leading  technologies  and software  applications, CGI provides customized
 application  development  services leveraging its ISO and SEI CMM certified
 methodologies and the option of economies from offshore development.

# Research

Information  technologies are
abundant,  complex and rapidly  changing.  In this context,  CGI's success depends on its
 ability  to remain at the  forefront  of its  field,  as well as to adapt its  service
 approach  to suit each client's  specific needs.  This situation  requires the ongoing
 development of cutting edge  expertise,  tools and methodology.  However,  most of CGI's
research  activities are initiated as part of client  projects and their cost is
therefore supported by its clients.

The following table shows the
Company's revenues and the amounts invested in research in the past three years.

|(in '000's of Canadian dollars) | 2004       | 2003       | 2002      
|------------------------------- | ---------- | ---------- | ----------
|                                |            |            |           
|Revenue                         | $3,243,612 | $2,684,816 | $2,135,189
|Research                        | $26,710    | $22,036    | $17,609   

Research  expenses as a percentage of
revenue were 0.8%,  which is comparable  with previous years. In fiscal 2004, research
 and  development  expenses  including  capitalized  expenses  were $76.8  million,  of
which direct costs represented $55.6 million. In fiscal 2003, research and development
 expenses including  capitalized  expenses were $59.2 million of which direct costs
totalled $42.8 million.

# Human and Material
Resources

As of February 1, 2005, CGI had
approximately 25,000 employees.  In order to
encourage the high degree of commitment  necessary to ensure the quality and continuity
of client service,  CGI has had an employee share purchase plan in place for several
 years.  In 1990, the Company  introduced a profit sharing program based on the
 performance  of its business  units.  These  measures,  together  with the Company's
 ongoing training  programs,  are based on the concepts of  intrapreneurship  and total
 quality that form the core of CGI's corporate culture.

As for  facilities,  the vast
majority of CGI's offices are located in rented  premises.  A portion of the computer
equipment,  furniture and software used by the Company is covered by capital leases.  As
of September 30, 2004, the net value of CGI's fixed assets was $142.7  million.  Capital
leases related to these fixed assets amounted to $4.5 million.

# Client Base

CGI works with large and medium
 sized  businesses  in the  private and public  sectors  worldwide.  The  Company's
clientele  is well  balanced  in terms  of  quality,  quantity,  stability  and
 diversity.  The BCE Inc.  group of companies'  (including  Bell  Canada)  domestic
 operations  accounted  for 15.9% of CGI's  revenue in fiscal 2004, compared  with 18.6%
of CGI's  revenue in fiscal 2003,  and 23.5% in fiscal 2002.  However,  on an absolute
 dollar basis,  revenue  from the BCE Inc.  family  increased  3.4%  compared to fiscal
 2003.  With the  exception of

---

CGI GROUP INC. - 8

Bell Canada,  none of CGI's clients
accounted for more than 10% of its business.  During the past ten years, CGI has had a
client retention rate of approximately 90%.

# The North American IT
Services Industry

# Size, Structure and Recent
Developments

Looking ahead, we expect that market
demand for systems integration and consulting services will increase, in line with
improving economic conditions.  With respect to information technology and business
process services outsourcing, we believe that the potential remains enormous. Each year,
for the past few years, CGI has commissioned a study from International Data Corp. (IDC)
which provides us with the spending on information technology and business process
services for Canada, the United States and Western Europe. We exclude the numbers related
to services that are already outsourced.

These numbers represent the
opportunity for outsourcing and they indicate that this is largely an untapped market.
The new business opportunity for information technology outsourcing represents US$682
billion in the US, US$476 billion in Western Europe and US$60 billion in Canada. For
business process services, the opportunity is even greater, amounting to US$1.4 trillion
in the US, US$480 billion in Europe, and US$80 billion in Canada.

Another study we commissioned from
Gartner/Dataquest identifies a trend to full information technology outsourcing.
According to this study, there is an 80% chance that half of current information
technology operations will be outsourced by 2010.  CGI therefore believes that the
Canadian IT services market offers significant growth opportunities.  In the US market,
where the size of the market is about 11 times larger, the opportunities for CGI are many
times greater.

# Industry Trends and Outlook

In the last few years,  our industry
has also grown very rapidly in terms of its main  services and formulas.  For instance,
 in the early to mid  1990s,  75% of the  industry's  revenue  came  from per diem
 services,  i.e.  from specialized  assistance  within specific  projects.  Such services
did not require a large or complex  organization nor did they allow for much
differentiation between firms, which resulted in fierce competition.

Today,  80% of the large firms'
 revenues are generated by systems  integration  or  outsourcing  projects aimed at
comprehensive  business  solutions.  Both  public and  private  sector  organizations
 are  looking for new ways to provide better  services at lower cost. For  organizations,
 the emergence of internet  applications  and web based business  models have  shortened
 implementation  time for  solutions  while  increasing  pressure to retain scarce
professional  resources.  Their need to  concentrate  on their core  mission and to be
more  flexible  explains why companies  increasingly  turn to  outside  professionals
 for  the  development  and  management  of some of  their specialized functions,
 including information systems. They are demanding proven technological  solutions that
will be rapidly installed, while allowing them to minimize operating costs.

For the last few years,  due to
conditions in the global economy,  many clients continued to place greater emphasis on a
reduction of their cost base and are more inclined than ever to consider  outsourcing
 part or all of their IT services.  These factors explain the growing  popularity of
global  outsourcing  services,  a trend that is all the more  important in the field of
 information  systems given the fact that  specialized  firms are the ones that can best
cope with the large variety and complexity of information technologies.

Today,  major  IT  outsourcing
 firms,  with  adequate  financial  strength  and  a  wide  range  of  services  and
technological infrastructure, have easier access to large scale IT outsourcing contracts.

# CGI's Growth and
Positioning Strategy

CGI has major  competitive
 advantages  to meet  market  demand  efficiently.  The Company  benefits  from a strong
financial position and offers the full range of IT services.

---

CGI GROUP INC. - 9

Its independence  from hardware
 manufacturers is also a decisive factor,  since CGI is among the few major players in
North America that can guarantee  their clients that their  technological  decisions are
completely  transparent and based on performance, quality and cost criteria.

CGI  benefits  from a highly
 flexible  delivery  model,  which  allows it to serve its US  clients  using a mix of
domestic (US) facilities,  Canadian-based  infrastructure and Indian-based  application
 development centres.  This flexible service offering provides clients with high quality
services on very competitive  terms,  while protecting CGI's  margins.  Today,  CGI is
one of only a few providers of  outsourcing  services in the world that can provide this
delivery through all of its own operations.

CGI's  client  base  represents  all
of the main  economic  sectors.  In order to develop  services  adapted to the specific
needs of each market,  the Company's  professionals  are grouped  according to targeted
 client  segments, which  provide the Company  with a deeper  understanding  of the
trends  specific  to each  industry,  as well as a better  understanding  of the clients'
 competitive and  technological  challenges.  This market expertise is a key factor in a
company's ability to develop comprehensive business solutions.

With  the  addition  of the
 operations  we  acquired  when  we  purchased  AMS in May of  2004  (see  "Significant
Acquisitions"  below),  our  presence in the US market  today is roughly at the same
stage we had  reached  several years ago in Canada.  The strategy that we are pursuing is
to replicate what we successfully  applied in Canada, by becoming an end-to-end IT
services provider in the US and a significant player for large outsourcing contracts.

CGI utilizes a four-pronged growth
strategy that combines organic growth and acquisitions.

| |  | The
first growth driver,  focused on organic  growth,  is comprised of systems  integration
and consulting          contract wins,  renewals and extensions,  and outsourcing
 contracts valued under $50 million a year. This          business is mainly  identified
and won at the local and regional level of our  operations.  We are growing          our
sales funnel of contract proposals across all of our geographic markets.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
second element of our growth  strategy is the pursuit of new large  outsourcing
 contracts,  valued at          more than $50  million  per  year.  Canada  continues  to
offer  tremendous  untapped  opportunities,  and          proposal activity is healthy
across all regions.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The third and fourth  drivers of our
growth  strategy focus on  acquisitions  of smaller firms or niche players and of large
 companies,  respectively.  In North  America,  we will continue to be an IT domain
 consolidator  of both small and large IT services companies.

| |  | Small
 acquisitions:  We identify niche company  acquisitions  through our strategic  mapping
program that          systematically  searches for companies  that could  strengthen our
geographic  presence,  vertical  market          knowledge or increase the richness of
our service  offerings.  Currently,  we are focused on  acquisitions          in our
targeted verticals and metro markets in the US, as well as on expanding our BPO
capabilities.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Large
 acquisitions:  Through large  acquisitions,  we are seeking  targets in Europe and the
US that will          increase  our  geographical  presence  and  critical  mass in
 order  to  further  qualify  us for  larger          outsourcing deals.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Quality Processes

CGI's ISO 9001  certified  management
 frameworks  ensure that its clients'  objectives are clearly  defined,  that projects
are properly  scoped and that the necessary  resources  are applied to meet  objectives.
 These  processes ensure that clients'  requirements  drive CGI's  solutions.  Clients
are constantly kept informed;  their degree of satisfaction is constantly measured and
part of the incentive remuneration of CGI managers is linked to the results.

---

CGI GROUP INC. - 10

In 1993, the Company began working
towards obtaining ISO 9001 certification for its Project  Management  Framework. CGI's
 Quebec City  office was  granted ISO 9001  certification  in June 1994,  which  allowed
CGI to become  North America's first  organization in the IT consulting field to receive
ISO 9001  certification for the way in which it managed projects.  Since 1995 CGI has expanded
the ISO 9001 certification  throughout its Canadian,  US and international
offices as well as its corporate  headquarters.  Over the past several years, in the
context of CGI's high growth rate,  its ISO certified  quality  system has been a key
 ingredient in spreading its culture,  in part because it helps to integrate new members
successfully.

As clients grow and IT projects
become  increasingly  complex,  CGI strives to further refine its quality processes while
allowing them to branch out across all its  activities.  CGI's enhanced  quality  system,
 referred to as the Client  Partnership  Management  Framework  ("CPMF") is simpler and
 provides  the  Company's  business  units with greater  autonomy in a context of
 decentralized  activities.  One of CGI's key focus areas remains the  successful
management of client  relationships,  leading to long-term  partnerships.  Following  its
merger with  IMRglobal in July 2001, CGI gained  applications  development  centres in
Mumbai and Bangalore which have achieved SEI CMM Level 5 quality certification.

CGI strives to ensure that clients
 benefit from a seamless  offering of consistently  high quality.  Regardless of which
CGI  business  unit they deal with,  clients  know that CGI will  provide the same
 quality  services,  while delivering projects on time and on budget by a margin that far
exceeds industry standards.

CGI also obtained ISO 9001 certification
for the application of its Member Partnership Management Framework in its operations,
and most recently, in 2004, similarly obtained ISO 9001 certification for its Shareholder
Partnership Management Framework ("SPMF").  The SPMF structures the processes and
information flows between CGI and its shareholders as well as with the investment community.

CGI now holds ISO quality
certification for the management of its partnerships with each of its three major
stakeholder groups.

# SIGNIFICANT ACQUISITIONS

On March 10, 2004 the Company entered
into a merger  agreement (the "Merger  Agreement")  with American  Management Systems,
 Incorporated  ("AMS")  pursuant to which the Company  indirectly  acquired by way of a
tender  offer (the "Tender Offer") all of the issued and outstanding  shares of AMS for a
purchase price of approximately $1.1 billion (the  "AMS  Acquisition").  As part of the
AMS  Acquisition,  CACI  International  Inc.  ("CACI")  agreed  to first purchase  from
AMS the U.S.  assets of its defence and  intelligence  Group (the "DIG  Business")  for
an aggregate consideration of approximately $549 million,  subject to certain closing
 adjustments (the  "Disposition") (the AMS Acquisition  excluding the DIG Business is
hereafter  referred to as the  "Acquisition").  In  connection  with the Disposition,
 income taxes of approximately  $147 million were incurred by the Company.  The
Acquisition  closed on May 3, 2004.

# RISK FACTORS

The Company  incorporates by
reference the disclosure  contained in the section entitled "Risks and  Uncertainties"
describing  the risk factors to which the  Company's  business is exposed,  which is
contained in its  Management's Discussion  and Analysis for the year ended  September
 30, 2004 on pages 33 to 36 in the 2004 Annual  Report which was filed on December 30, 2004
 and which is available on  www.sedar.com as well as on
CGI's web site at www.cgi.com.

---

CGI GROUP INC. - 11

# DIRECTORS AND OFFICERS

# Directors

The Company  incorporates  by
reference  the  disclosure  under the heading  "Nominees  for Election as  Directors"
relating to the Company's  directors  contained on pages 13 to 17 of CGI's Management
Proxy Circular dated December 9, 2004 which was filed on December 30, 2004 and which is available at  www.sedar.com and on the Company's web site
at www.cgi.com.

# Officers

The  following  table  states the
names of CGI's Senior  Officers,  their place of  residence  and their  principal
occupation:

|Name and place of residence             | Principal occupation                                                                 
|--------------------------------------- | -------------------------------------------------------------------------------------
|Serge GodinMontreal, QuebecCanada       | Chairman of the Board
and Chief Executive Officer                                    
|Jean Brassard
Longueuil, Quebec
Canada  | Vice-Chairman of the Board                                                           
|David AndersonToronto, OntarioCanada    | Senior Vice-President and Corporate Controller                                       
|André BourqueMontreal, Quebec Canada    | Senior Vice-President and Chief Legal Officer                                        
|Paule DoréMontreal, QuebecCanada        | Executive Vice-President and Chief Corporate Officer and Secretary                   
|André ImbeauBeloeil, QuebecCanada       | Executive Vice-President and Chief Financial Officer and Treasurer                   
|Donna MoreaFalls Church, VirginiaUSA    | President - Information Technology Services - U.S.A. Operations                      
|Luc PinardLongueuil, QuebecCanada       | Chief Technology Officer                                                             
|Michael E. RoachAjax, OntarioCanada     | President and Chief Operating Officer                                                
|Daniel RocheleauLongueuil, QuebecCanada | Executive Vice-President andChief Business Engineering Officer                       
|Jacques RoyLongueuil, Quebec Canada     | Senior Vice-President, Finance and Treasury                                          
|Joseph SalibaLondonEngland              | President  Business Process Services and President Europe and Asia Pacific Operations

---

CGI GROUP INC. - 12

All of the above-mentioned persons
have held the position set out opposite their names, or other executive or equivalent
management functions in the Company or its subsidiaries during the last five years, except
Donna Morea who prior to May 3, 2004 served as Executive Vice-President  Public
Sector Groupof AMS and in other equivalent executive positions at AMS prior to its
acquisition by CGI on May 3, 2004, and Joseph Saliba, who, prior to July 2001, was
President, Outsourcing and Software Solutionswith Sabre Inc. until July
2001.

# Ownership of Securities on
the Part of Directors and Officers

The Company incorporates by reference
the disclosure under the heading Voting Shares and Principal Holders of Voting
Shares on page 11 of CGIs Management Proxy Circulardated December 9,
2004 which was filed on December 30, 2004 and which is
available at www.sedar.com and on the Companys web site at www.cgi.com.

As of February 1, 2005, the
directors and officers of the Company, as a group, beneficially owned, directly or
indirectly, 4,263,636 Class A subordinate shares representing 1.04% of the issued and
outstanding Class A subordinate shares and 33,772,168 Class B shares representing 100% of
the issued and outstanding Class B shares.

# LEGAL PROCEEDINGS

A suit was launched on May 9, 2002
under the U.S. False Claims Act (FCA) against American Management
Systems, Incorporated (AMS) which, further to CGIs acquisition of
AMS, is now the Companys U.S. operating subsidiary, CGI-AMS Inc. The lawsuit,
alleging violations of the FCA, is currently pending in the U.S. District Courtfor
the Southern District of Ohio. Under the treble damages provisions of the FCA, the lawsuit
seeks more than US$290 million.

The case involves CGI-AMS Inc.s
five-year, $100 million plus contracts with the Ohio Department of Job and Family
Services(Ohio DJFS) for the development and implementation of an
integrated computer system called the electronic client management system (the
e-ICMS Contracts).

The suit alleges that CGI-AMS Inc.knowingly billed the Ohio DJFS for services performed outside the scope of the e-ICMS
Contracts and outside of the intended purpose of the federal grant funds that Ohio DJFS
would use to pay the invoices. In addition, the lawsuit alleges that CGI-AMS Inc.billed the Ohio DJFS for services performed by certain employees at a rate higher than
that which was authorized, and that CGI-AMS Inc.billed Ohio DJFS for the full-time
work of employees who devoted only part of their time to the e-ICMS Contracts.

On July 13, 2004, the Court issued a
memorandum and order (the Order) granting in part CGI-AMS Inc.s
motion to dismiss the lawsuit, which significantly reduces CGI-AMS Inc.s
exposure, with the result that the Company does not consider the lawsuit to be a material
claim. CGI-AMS Inc.has a good defence to the law suit, which is currently in the
discovery phase of the proceedings, and the Company will continue to contest the suit
vigorously.

# TRANSFER AGENT AND
REGISTRAR

The Companys transfer agent for
the Companys Class A subordinate shares is Computershare Trust Company of Canada
whose head office is situated in Toronto (Ontario). Share transfer service is available at
Computershares Montreal (Quebec) and Toronto (Ontario) offices as well as at the
principal office of Computershare Trust Company, Inc. in Denver (Colorado), and New York
(New York). The transfer agent for the Companys Class B shares is National Bank
Trust Inc. and the register for Class B shares is situated in Montreal (Quebec).

# MATERIAL CONTRACTS

The only material contracts entered
into during the year ended September 30, 2004 or in prior years that are still in effect
are:

---

CGI GROUP INC. - 13

|i) |  | the agreements entered into with BCE Inc.and its affiliates in July
                    2003 that are described in the Companys Management Proxy Circularunder the heading on page 36 entitled Agreements with BCE Inc.
                    which is incorporated by reference, was filed on December 30, 2004 and which is available on www.sedar.com as well
                    as on CGIs web site at www.cgi.com; and
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ii) |  | the agreements entered into with AMS and CACI International Inc.in
                    relation to the Companys acquisition of AMS in May 2004 are described
                    above in the section entitled Significant Acquisitions.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# ADDITIONAL INFORMATION

The Company will provide to any
person, upon request to the secretary of the Company, (i) a copy of the Annual
Information Formof the Company, together with one copy of any document, or the
pertinent pages of any document incorporated by reference in the Annual Information
Form, (ii) a copy of the comparative financial statements of the Company for the
year ended September 30, 2004 together with the accompanying report of the auditor
and one copy of any subsequent interim financial statements, (iii) a copy of the
Management Proxy Circulardated December 9, 2004 and (iv) a copy of the
2004 Annual Reportof the Company.

Additional information including
directors and officers remuneration and indebtedness, securities authorized
for issuance under equity compensation plans and principal holders of the Companys
shares is included in the Management Proxy Circulardated December 9, 2004.

Additional financial information on
the last fiscal year ended September 30, 2004, is presented in the audited financial
statements (pages 39 to 70) and under the title Managements Discussion and
Analysis of Financial Position and Results of Operations (pages 19 to 37), in the
2004 Annual Report.

The documents mentioned above are
available on www.sedar.com and on the Companys web site at www.cgi.com as well as at
the Companys head office:

1130 Sherbrooke Street
West5th FloorMontreal, Quebec H3A 2M8 Telephone: (514) 841-3200Fax:
(514) 841-3299

---

CGI GROUP INC. - 14

|Financial statements | CGI Group Inc. Annual Report 2004   39
|-------------------- | --------------------------------------

Consolidated statements of earnings

|Years ended September 30 (in thousands of Canadian dollars, except share data)                            | 2004        | 2003        | 2002       
|--------------------------------------------------------------------------------------------------------- | ----------- | ----------- | -----------
|                                                                                                         
|                                                                                                          | $           | $           | $          
|Revenue                                                                                                   | 3,243,612   | 2,684,816   | 2,135,189  
|                                                                                                         
|Operating expenses
        Costs of services, selling and administrative                                  | 2,717,040   | 2,244,511   | 1,810,077  
|Research                                                                                                  | 26,710      | 22,036      | 17,609     
|Amortization (Note 10)                                                                                    | 164,451     | 121,133     | 76,894     
|                                                                                                         
|                                                                                                          | 2,908,201   | 2,387,680   | 1,904,580  
|                                                                                                         
|Earnings before the following items:                                                                      | 335,411     | 297,136     | 230,609    
|                                                                                                         
|                                                                                                         
|Interest
        Long-term debt                                                                           | 20,675      | 12,578      | 2,411      
|Other                                                                                                     | (8,728)     | (3,094)     | (2,833)    
|                                                                                                         
|                                                                                                          | 11,947      | 9,484       | (422)      
|                                                                                                         
|Earnings before income taxes, entity subject to
        significant influence and discontinued operations | 323,464     | 287,652     | 231,031    
|Income taxes (Note 11)                                                                                    | 113,142     | 113,269     | 96,184     
|                                                                                                         
|                                                                                                         
|Earnings before entity subject to significant influence
        and discontinued operations               | 210,322     | 174,383     | 134,847    
|Entity subject to significant influence                                                                   | 488         | 295         | --         
|                                                                                                         
|Net earnings from continuing operations                                                                   | 210,810     | 174,678     | 134,847    
|                                                                                                         
|Net earnings from discontinued operations (Note 13)                                                       | 8,790       | 2,688       | 952        
|                                                                                                         
|Net earnings                                                                                              | 219,600     | 177,366     | 135,799    
|                                                                                                         
|                                                                                                         
|Weighted-average number of outstanding Class A
        subordinate and Class B shares                     | 419,510,503 | 395,191,927 | 377,349,472
|                                                                                                         
|Basic and diluted earnings per share (Note 9g)
        Continuing operations                              | 0.50        | 0.44        | 0.36       
|Discontinued operations                                                                                   | 0.02        | 0.01        | --         
|                                                                                                         
|                                                                                                          | 0.52        | 0.45        | 0.36       
|                                                                                                         

See Notes to the consolidated financial statements.


Consolidated statements of retained
earnings

|Years ended September 30 (in thousands of Canadian dollars) | 2004    | 2003    | 2002   
|----------------------------------------------------------- | ------- | ------- | -------
|                                                           
|                                                            | $       | $       | $      
|Retained earnings, beginning of year                        | 555,310 | 377,944 | 245,945
|Net earnings                                                | 219,600 | 177,366 | 135,799
|Share issue costs, net of income taxes (Note 9a)            | (5,489) | --      | (3,800)
|                                                           
|Retained earnings, end of year                              | 769,421 | 555,310 | 377,944
|                                                           

See Notes to the consolidated financial statements.


---

|40 | Financial statements | CGI Group Inc. Annual Report 2004
|-- | -------------------- | ---------------------------------

Consolidated balance sheets

|As at September 30 (in thousands of Canadian dollars)                                 | 2004      | 2003      
|------------------------------------------------------------------------------------- | --------- | ----------
|                                                                                     
|                                                                                      | $         | $ Restated
|AssetsCurrent assets   Cash and cash equivalents                                      | 200,623   | 83,509    
|Accounts receivable (Note 3)                                                          | 545,056   | 439,535   
|Work in progress                                                                      | 222,278   | 122,737   
|Prepaid expenses and other current assets                                             | 94,617    | 78,183    
|Future income taxes (Note 11)                                                         | 80,814    | 35,767    
|Assets of businesses held for sale (Note 13)                                          | --        | 41,014    
|                                                                                     
|                                                                                      | 1,143,388 | 800,745   
|Fixed assets (Note 4)                                                                 | 142,761   | 144,941   
|Contract costs (Note 5)                                                               | 278,240   | 256,320   
|Definite-life intangibles and other long-term assets (Note 6)                         | 625,121   | 392,069   
|Future income taxes (Note 11)                                                         | 102,720   | 22,764    
|Goodwill (Note 7)                                                                     | 1,827,604 | 1,385,518 
|                                                                                     
|Total assets before funds held for clients                                            | 4,119,834 | 3,002,357 
|Funds held for clients (Note 2)                                                       | 196,622   | 134,326   
|                                                                                     
|                                                                                      | 4,316,456 | 3,136,683 
|                                                                                     
|LiabilitiesCurrent liabilities   Accounts payable and accrued liabilities             | 433,415   | 289,556   
|Accrued compensation                                                                  | 118,541   | 110,398   
|Deferred revenue                                                                      | 123,213   | 70,300    
|Income taxes                                                                          | 31,369    | 19,165    
|Future income taxes (Note 11)                                                         | 68,603    | 47,003    
|Current portion of long-term debt (Note 8)                                            | 14,529    | 20,555    
|Liabilities of businesses held for sale (Note 13)                                     | --        | 16,316    
|                                                                                     
|                                                                                      | 789,670   | 573,293   
|Future income taxes (Note 11)                                                         | 287,433   | 140,571   
|Long-term debt (Note 8)                                                               | 475,291   | 247,431   
|Accrued integration charges and other long-term liabilities                           | 104,771   | 60,852    
|                                                                                     
|Total liabilities before clients' funds obligations                                   | 1,657,165 | 1,022,147 
|Clients' funds obligations (Note 2)                                                   | 196,622   | 134,326   
|                                                                                     
|                                                                                      | 1,853,787 | 1,156,473 
|                                                                                     
|Commitments and contingencies (Note 19)Shareholders' equity   Capital stock (Note 9a) | 1,820,230 | 1,480,631 
|Contributed surplus (Note 9e)                                                         | 6,693     | 5,870     
|Warrants and stock options (Note 9e)                                                  | 24,984    | 27,901    
|Retained earnings                                                                     | 769,421   | 555,310   
|Foreign currency translation adjustment                                               | (158,659) | (89,502)  
|                                                                                     
|                                                                                      | 2,462,669 | 1,980,210 
|                                                                                     
|                                                                                      | 4,316,456 | 3,136,683 
|                                                                                     

See Notes to the consolidated financial statements.


|Approved by the Board
(Signed)SERGE GODIN
DIRECTOR |  | (Signed)ANDRÉ IMBEAU
DIRECTOR |  | 
|-------------------------------------------------- |  | ----------------------------- |  | 

---

|Financial statements | CGI Group Inc. Annual Report 2004   41
|-------------------- | --------------------------------------

Consolidated statements of cash flows

|Years ended September 30 (in thousands of Canadian dollars)                                | 2004      | 2003       | 2002     
|------------------------------------------------------------------------------------------ | --------- | ---------- | ---------
|                                                                                          
|                                                                                           | $         | $ Restated | $        
|Operating activities                                                                       |           |            |          
|Net earnings from continuing operations                                                    | 210,810   | 174,678    | 134,847  
|Adjustments for:      Amortization expense (Note 10)                                       | 194,185   | 148,922    | 100,453  
|Deferred credits                                                                           | (16,439)  | (30,174)   | (50,021) 
|Future income taxes                                                                        | 52,963    | 47,962     | 35,602   
|Foreign exchange (gain) loss                                                               | (789)     | 1,914      | 1,240    
|Entity subject to significant influence                                                    | (488)     | (295)      | --       
|Net change in non-cash working capital items (Note 15)                                     | (210,423) | (115,068)  | (45,737) 
|                                                                                          
|Cash provided by continuing operating activities                                           | 229,819   | 227,939    | 176,384  
|                                                                                          
|Investing activities   Business acquisitions (net of cash acquired) (Note 12)              | (589,678) | (233,512)  | (19,866) 
|Proceeds from sales of assets and businesses      (net of cash disposed) (Notes 12 and 13) | 87,503    | --         | 10,365   
|Investment in a joint venture (Note 12)                                                    | --        | --         | (26,000) 
|Purchase of fixed assets                                                                   | (54,616)  | (60,833)   | (23,465) 
|Contract costs                                                                             | (76,260)  | (29,211)   | (61,987) 
|Increase in definite-life intangibles and other long-term assets                           | (83,085)  | (144,510)  | (94,650) 
|Decrease in definite-life intangibles and other long-term assets                           | 17,595    | 10,321     | --       
|                                                                                          
|Cash used in continuing investing activities                                               | (698,541) | (457,745)  | (215,603)
|                                                                                          
|Financing activities   Net variation in credit facility                                    | 21,534    | 219,000    | (25,000) 
|Increase (decrease) in long-term debt                                                      | 231,123   | (19,812)   | (8,342)  
|Issuance of shares (net of share issue costs) (Notes 9a and 9e)                            | 330,996   | 6,451      | 126,236  
|                                                                                          
|Cash provided by continuing financing activities                                           | 583,653   | 205,639    | 92,894   
|                                                                                          
|                                                                                          
|Effect of rate changes on cash and cash equivalents   from continuing operations           | 186       | 917        | 3,475    
|                                                                                          
|Net increase (decrease) in cash and cash equivalents   from continuing operations          | 115,117   | (23,250)   | 57,150   
|Net cash and cash equivalents from discontinued operations (Note 13)                       | 1,997     | 2,538      | 1,063    
|Cash and cash equivalents, beginning of year                                               | 83,509    | 104,221    | 46,008   
|                                                                                          
|Cash and cash equivalents, end of year                                                     | 200,623   | 83,509     | 104,221  
|                                                                                          

Supplementary cash flow information (Note 15)
See Notes to the consolidated financial statements.


---

|42 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 1. Description of businessCGI Group Inc. (the Company),
directly or through its subsidiaries, provides end-to-end information technology (IT)
services and business process services (BPS). The Companys primary
focus is large-scale systems integration and outsourcing contracts for both private and
public sector organizations.

Note 2. Summary of significant
accounting policiesThe consolidated financial statements
are prepared in accordance with Canadian generally accepted accounting principles
(GAAP), which differ in certain material respects with US GAAP. Significant
differences relevant to the Company are presented in Note 22.
   Certain comparative figures have been reclassified in order to conform to the presentation adopted in 2004.

Restatements


|i) | Funds
held for clients and clients funds obligations In connection with           the
Companys payroll and tax filing services, the Company collects funds           for
payment of payroll and taxes, temporarily holds such funds until payment is
          due, remits the funds to the clients employees and appropriate tax
          authorities, files federal and local tax returns, and handles related
regulatory           correspondence and amendments. Effective April 1, 2004, the Company
presented           separately the payroll funds held for clients and related
obligations. The           Company considers that such a presentation is more appropriate
and better           reflects the total assets on which returns are earned. Prior years
amounts           were restated to conform to the current years presentation.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ii) | Accrued
          integration charges Subsequent to the acquisition date of Underwriters
          Adjustment Bureau Ltd. (UAB), the Company began the process of
          winding up the defined benefit pension plan covering UAB employees. As per the
          pension plan policies, any excess of the plan assets over the defined
          obligations must be remitted to UAB employees. As at the acquisition date, the
          fair value of plan assets exceeded the value of the defined benefit obligations
          and accordingly, the settlement amount used in the purchase price allocation of
          UAB was nil. The Company revised the calculation of the defined benefit pension
          plan as the initial actuarial valuation made as of the acquisition date
          understated the pension plan liability, future income tax assets and goodwill
by           $4,500,000, $1,530,000 and $2,970,000, respectively. Accordingly, the
balance           sheet as at September 30, 2003, has been restated.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Use of estimates
The preparation of the consolidated
financial statements in conformity with Canadian GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses during the reporting period.
Because of the use of estimates inherent in the financial reporting process, actual
results could differ from those estimates.

Basis of consolidation
The consolidated financial statements
include the accounts of the Company and its majority-owned subsidiaries. All intercompany
transactions and balances have been eliminated. The Company accounts for its
jointly-controlled investments using the proportionate consolidation method. For
investments whereby the Company has the ability to exercise significant influence, the
Company accounts for these under the equity method.
   In situations whereby the Company does
not exercise significant influence, the investments are recorded at cost. The carrying
amount of the investments is reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of the investments may not be recoverable.

Revenue recognition
The Company generates revenue
principally through the provision of IT services and BPS.
The IT services include a full range
of information technology services, namely i) outsourcing ii) systems integration and
consulting iii) software licenses and iv) maintenance. The BPS unit provides business
processing for the financial services sector, as well as payroll services, document
management services, and finance and administration services.

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   43
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

Services revenue related to
outsourcing arrangements and BPS under fixed fee contracts is recognized on a
straight-line basis over the term of the arrangement, regardless of the amounts billed,
unless there is a better measure of performance or delivery. Revenue from time and
materials and unit-priced arrangements is recognized as the services are provided at the
contractual stated price. If the contractual per-unit prices within a unit-priced
contract change during the term of the arrangement, then the Company evaluates whether it
is more appropriate to record revenue based on the average per-unit prices during the
term of the contract or based on the actual amounts billed. For outsourcing arrangements
which include multiple elements, the total arrangement value is allocated to each element
based on their relative fair values. Revenue is then recognized for each element based on
the nature of the services as described above.
   Services revenue related to systems
integration and consulting arrangements, under time and material contracts, are recognized
as services are rendered whereas systems integration and consulting arrangements under
fixed fee contracts are recognized using the percentage-of-completion method over the
implementation period. Management regularly reviews underlying estimates of project
profitability. Revisions to estimates are reflected in the statement of earnings in the
period in which the facts that give rise to the revision become known. Provisions for
estimated losses, if any, are recognized in the period in which the loss is determined.
Contract losses are measured as the amount by which the estimated costs of the contract
exceed the estimated total revenue from the contract. In addition, the Company provides
systems integration and consulting services based on benefits-funded arrangements whereby
the Company recognizes revenue only to the extent it can be predicted, with reasonable
certainty, that the benefit stream will generate amounts sufficient to fund the value on
which revenue recognition is based. For cost-based contracts, revenue is recorded as
reimbursable costs are incurred.
   Revenue from the sale of software
license agreements is recognized upon delivery of software if persuasive evidence of an
arrangement exists, collection is probable, the fee is fixed or determinable and
vendor-specific evidence of an arrangement exists to allocate the total fee to the
different elements of an arrangement. Vendor specific objective evidence is typically
based on the price charged when an element is sold separately. In circumstances where the
implementation services are essential to the functionality of the software or where the
software requires significant customization, the Company recognizes software license
revenue using the percentage-of-completion method over the implementation period.
   Revenues
from maintenance services for licences previously sold and implemented are recognized
ratably over the term of the contract.
   Amounts recognized as revenue in
excess of billings are classified as work in progress. Amounts received in advance of the
delivery of products or performances of services are classified as deferred revenue.
   Reimbursements, including those
relating to travel and other out-of-pocket expenses, and other similar third party costs,
such as the cost of hardware and software resales, are included in revenue and the
corresponding expense is included in costs of services.

Cash and cash equivalents
Cash and cash equivalents consist
primarily of unrestricted cash and short-term investments having an initial maturity of
three months or less.

Fixed assets
Fixed assets are recorded at cost and
are amortized over their estimated useful lives, using principally the straight-line
method. The annual amortization periods by fixed asset category are as follows:

|                      
|----------------------
|Buildings             
|Leasehold improvements
|Furniture and fixtures
|Computer equipment    
|                      

---

|44 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 2: Summary of significant accounting policies (cont'd)  Contract costs
Contract costs are incurred in the
course of two- to ten-year IT services and business process outsourcing contracts. These
assets are recorded at cost and amortized using the straight-line method over the term of
the respective contracts. Contract costs principally comprise the following:


|a) | Incentives
granted to clients upon signing of long-term outsourcing contracts Occasionally,
incentives can be granted either in the form of cash payments, issuance of equity
instruments, or discounts awarded principally over a transition period as negotiated in
the contract. In the case of an incentive in the form of an issuance of equity
instruments, cost is measured at the estimated fair value of the equity instruments at
the time they are issued. For incentives in the form of discounts, cost is measured at
the value of the financial commitment granted and a corresponding amount is recorded in
other long-term liabilities. As services are provided to the client, the amount is
reversed in the statement of earnings and recognized as revenue. Amortization of the
incentives is presented as a reduction of revenue.
   Fixed assets acquired in connection
with outsourcing contracts are capitalized to fixed assets and amortized, consistent with
the amortization policies described previously. The excess of the amount paid over the
fair value of fixed assets acquired in connection with outsourcing contracts are
considered as an incentive granted to the client and are recorded and amortized as
described in the preceding paragraph.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) | Transition
costs incurred during the transition period of long-term outsourcing           contracts
These costs consist of expenses associated with installation of           systems and
processes incurred after the award of outsourcing contracts and are           recorded
and amortized as described above.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Definite-life intangibles
Definite-life intangibles are
recorded at cost and are amortized over their estimated useful lives, using principally
the straight-line method. The annual amortization periods by intangible asset category are
as follows:

|                                
|--------------------------------
|Internal software               
|Business solutions              
|Software licenses               
|Customer relationships and other
|                                

Goodwill
Goodwill represents the excess of the
purchase price over the fair values of the estimated net identifiable tangible and
intangible assets of entities acquired at the respective dates of acquisition. Goodwill is
tested annually as at September 30, or more frequently if impairment indicators arise, for
impairment in relation to the fair value of each reporting unit to which goodwill applies
and the value of other assets in that reporting unit. An impairment charge is recorded for
any goodwill that is considered impaired. Based on the impairment tests performed as at
September 30, 2004 and 2003, the Company concluded that no goodwill impairment charge was
required.

Accrued integration charges
Accrued integration charges are
comprised primarily of liabilities for costs incurred on business combinations, such as
provisions related to leases for premises occupied by the acquired businesses which the
Company plans to vacate.

Earnings per share
Basic earnings per share are based on
the weighted-average number of units outstanding during the period. The dilutive effect of
stock options is determined using the treasury stock method.

Stock-based compensation and other
stock-based payments
The Company has a stock option plan,
which is described in Note 9b). The Company records no compensation cost on the grant of
stock options to directors, officers and employees. Direct awards of stock to employees
and stock options granted to non-employees are accounted for in accordance with the fair
value method of accounting for stock-based compensation.

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   45
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

Any consideration paid by employees
and directors on exercise of stock options is credited to share capital. Pro forma
disclosures relating to net earnings and earnings per share figures as if the fair value
method of accounting had been used has been presented in Note 9b).
   As of October 1, 2004,
the Company will adopt the fair-value based method for all stock-based compensation
awards and recognize an expense in the financial statements in accordance with the
amendments to the Canadian Institute of Chartered Accountants (CICA) Handbook
Section 3870, Stock-Based Compensation and Other Stock-Based Payments(see Future
accounting changes).

Research and development costs
Research costs are charged to earnings in the year they are incurred, net of related investment tax credits.
   Development costs are charged to
earnings in the year they are incurred, net of related investment tax credits unless they
meet specific criteria related to technical, market and financial feasibility in order to
be capitalized. Deferred development costs are included as part of Definite-life
intangiblesBusiness solutions.
   During the year, the Company incurred direct research
and development costs of $55,577,000 ($42,835,000 in 2003), net of related investment tax
credits.

Income taxes
Income taxes are accounted for using
the liability method of tax allocation. Future income taxes relate to the expected future
tax consequences of differences between the carrying amount of balance sheet items and
their corresponding tax values. Future income tax assets are recognized only to the extent
that, in the opinion of management, it is more likely than not that the future income tax
assets will be realized. Future income tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates from the date of enactment or substantive
enactment.

Translation of foreign currencies
Revenue and expenses denominated in
foreign currencies are recorded at the rate of exchange prevailing at the transaction
date. Monetary assets and liabilities denominated in foreign currencies are translated at
exchange rates prevailing at the balance sheet dates. Unrealized translation gains and
losses are reflected in net earnings.
   Self-sustaining subsidiaries whose economic
activities are largely independent of the parent company are accounted for using the
current-rate method. Under this method, assets and liabilities of subsidiaries denominated
in a foreign currency are translated into Canadian dollars at exchange rates in effect at
the balance sheet dates. Revenue and expenses are translated at average exchange rates
prevailing during the period. Resulting unrealized gains or losses are accumulated and
reported as foreign currency translation adjustment in shareholders equity. As a
result of differences in the translation of the financial statements of foreign
subsidiaries, the foreign currency translation adjustment decreased by $69,157,000 and
$123,768,000 in 2004 and 2003, respectively. These variations resulted principally from
translating US dollar denominated goodwill.
   The accounts of foreign subsidiaries,
which are financially or operationally dependent on the parent company, are accounted for
using the temporal method. Under this method, monetary assets and liabilities are
translated at the exchange rates in effect at the balance sheet dates and non-monetary
assets and liabilities are translated at historical exchange rates. Revenue and expenses
are translated at average rates for the period. Translation exchange gains or losses of
such subsidiaries are reflected in net earnings.

Financial instruments
The Company uses various financial
instruments to manage its exposure to fluctuations in foreign currency exchange rates. The
Company does not hold or use any derivative instruments for speculative trading purposes.
   The Company enters into financial
instruments contracts to hedge its net investment in foreign subsidiaries. Foreign
exchange translation gain or loss on the net investment is recorded under foreign currency
translation adjustment. Any realized or unrealized gain or loss on instruments covering
the net investment is also recognized in foreign currency translation adjustment.
   The Company also enters into forward contracts to hedge forecasted cash flows denominated in
currencies other than the functional currency of its subsidiaries. Gains and losses on
foreign exchange contracts designated as hedges for firm commitments or forecasted
transactions are recorded in costs of services, selling and administrative expenses when
the related transaction is realized.
   Periodic assessments of each hedges effectiveness are performed during the year.

---

|46 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 2. Summary of significant accounting policies (cont'd) Recent accounting changes
As of October 1, 2003, the Company
adopted the following new Handbook Sections issued by the CICA:


|a) | Handbook
Section 3063, Impairment of Long-Lived Assets, provides guidance           on the
recognition, measurement and disclosure of the impairment of long-lived           assets.
It replaces the write-down provisions in Section 3061, Property,           Plant and
Equipment. The provisions of the Section require an impairment           loss for a
long-lived asset to be held and used to be recognized when its           carrying amount
exceeds the sum of the undiscounted cash flows expected from its           use and
eventual disposition. The impairment loss is measured as the amount by           which
its carrying amount exceeds its fair value. The adoption of this section           did
not have a significant impact on the financial statements.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) | Handbook
Section 3475, Disposal of Long-Lived Assets and Discontinued           Operations,
provides guidance on recognizing, measuring, presenting and           disclosing
long-lived assets to be disposed of and replaces the disposal           provisions in
Section 3475, Discontinued Operations, and Section 3061, Property, Plant and
Equipment. The section provides criteria for           classifying assets as held for
sale, requires an asset classified as held for           sale to be measured at fair
value less cost to sell, provides criteria for           classifying a disposal as a
discontinued operation and specifies presentation           and disclosure for
discontinued operations and other disposals of long-lived           assets. The
disclosure has been modified to conform with the adoption of this           section.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) | Accounting Guideline 13, Hedging Relationships, deals with           the
identification, documentation, designation and effectiveness of hedges and           also
the discontinuance of hedge accounting, but does not specify hedge           accounting
methods. The disclosures required by this Accounting Guideline are           included in
Note 21.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Future accounting changes
The CICA has issued the following new
Handbook Sections:


|a) | Amended
Section 3870, Stock-Based Compensation and Other Stock-Based           Payments,
is effective for fiscal years beginning on or after January 1,           2004. The
amendments of the section require the adoption of the fair-value based           method
for all stock-based awards and the recognition of an expense in the           financial
statements. Effective October 1, 2004, the Company will adopt the           amendments on
a retroactive basis, as permitted by the standard. The impact of           the adoption
on net earnings will result in an approximate charge for 2005 of           $24,000,000
and charges for 2004, 2003 and 2002 amounting to $25,559,000,           $8,168,000 and
$4,130,000, respectively.
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) | Handbook
Section 3110, Asset Retirement Obligations, focuses on the           recognition
and measurement of liabilities for obligations associated with the           retirement
of property, plant and equipment when those obligations result from           the
acquisition, construction, development or normal operation of the assets.           The
standard is effective for fiscal years beginning on or after January 1,           2004.
The adoption of this section will not have a significant impact on the
          financial statements.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) | Accounting
Guideline 15, Consolidation of Variable           Interest Entities, provides
clarification on the consolidation of those           entities defined as variable
interest entities, when equity           investors are not considered to have a
controlling financial interest or they           have not invested enough equity to allow
the entity to finance its activities           without additional subordinated financial
support from other parties. Variable           interest entities are commonly referred to
as special purpose entities. The           guideline comes into effect for interim
periods beginning on or after November           1, 2004. The Company does not believe
that the adoption of this guideline will           have a significant impact on the
financial statements.
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   47
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

Note 3. Accounts receivable

|          | 2004    | 2003   
|--------- | ------- | -------
|         
|          | $       | $      
|Trade     | 432,685 | 301,430
|Other (1) | 112,371 | 138,105
|         
|          | 545,056 | 439,535
|         

|(1) | Other
accounts receivable include refundable tax credits on salaries related to           the
E-Commerce Place, Cité Multimédia, New Economy Center,           SR&ED
and other tax credits programs of approximately $79,865,000 and           $104,875,000,
in 2004 and 2003, respectively. Tax credits amounting to           $62,531,000,
$65,315,000 and $45,599,000 were recorded as a reduction of salary           expense
included in costs of services, selling and administrative expenses and           research
expenses in the consolidated statements of earnings for the years ended
          September 30, 2004, 2003 and 2002, respectively.
   The Company
is defined as an eligible company and operates eligible activities under the
terms of various Québec government tax credit programs on salaries for eligible
employees located mainly in designated locations in the province of Québec,
Canada. These programs are designed to support job creation and revitalization efforts in
certain urban areas. As part of the Companys participation in these programs, the
Company committed to maintaining and creating more than 2,000 jobs in Québec. As
at September 30, 2004, the Company had maintained or created a total of 4,000 jobs in Québec.
As per these programs, the Company also relocated some of its employees into new or
refurbished buildings where the real estate cost is significantly higher than in its
previous facilities. Initially, the Companys financial commitments for these real
estate locations represented $618,800,000. As at September 30, 2004, the balance
outstanding for these committments, ranging between 4 and 19 years, was $568,500,000.
   These
refundable tax credits are calculated at rates of 35% to 40% on salaries paid in Québec,
to a maximum of $12,500 to $15,000 per year per eligible employee. These credits on
salaries carry certain conditions and the Company must obtain an eligibility certificate
from the Québec government annually. Should the Company fail to meet its
obligations defined under the current tax credits on salaries programs, including job
creation objectives, any tax credits received would have to be refunded to the Québec
government. Any refund made by the Company would be charged to earnings in the
corresponding period. No liability has been recorded related to any reimbursement clause
as of September 30, 2004.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 4. Fixed assets

|                       |         |                           | 2004          
|---------------------- | ------- | ------------------------- | --------------
|                      
|                       | Cost    | Accumumlated amortization | Net book value
|                      
|                       | $       | $                         | $             
|Land and buildings     | 4,377   | 538                       | 3,839         
|Leasehold improvements | 106,052 | 24,926                    | 81,126        
|Furniture and fixtures | 40,507  | 20,516                    | 19,991        
|Computer equipment     | 106,614 | 68,809                    | 37,805        
|                      
|                       | 257,550 | 114,789                   | 142,761       
|                      

|                       |         |                           | 2003          
|---------------------- | ------- | ------------------------- | --------------
|                      
|                       | Cost    | Accumumlated amortization | Net book value
|                      
|                       | $       | $                         | $             
|Land and buildings     | 25,694  | 840                       | 24,854        
|Leasehold improvements | 82,077  | 18,333                    | 63,744        
|Furniture and fixtures | 38,241  | 19,323                    | 18,918        
|Computer equipment     | 119,802 | 82,377                    | 37,425        
|                      
|                       | 265,814 | 120,873                   | 144,941       
|                      

Fixed assets include assets acquired
under capital leases totaling $4,516,000 (2003$4,372,000), net of accumulated
amortization of $4,215,000 (2003$3,927,000).

---

|48 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 5. Contract costs

|                 |         |                           | 2004          
|---------------- | ------- | ------------------------- | --------------
|                
|                 | Cost    | Accumumlated amortization | Net book value
|                
|                 | $       | $                         | $             
|Incentives       | 291,339 | 97,482                    | 193,857       
|Transition costs | 100,919 | 16,536                    | 84,383        
|                
|                 | 392,258 | 114,018                   | 278,240       
|                

|                 |         |                           | 2003          
|---------------- | ------- | ------------------------- | --------------
|                
|                 | Cost    | Accumumlated amortization | Net book value
|                
|                 | $       | $                         | $             
|Incentives       | 284,879 | 64,884                    | 219,995       
|Transition costs | 44,966  | 8,641                     | 36,325        
|                
|                 | 329,845 | 73,525                    | 256,320       
|                

Note 6. Definite-life intangibles and
other long-term assets

|                                                           |         |                           | 2004          
|---------------------------------------------------------- | ------- | ------------------------- | --------------
|                                                          
|                                                           | Cost    | Accumumlated amortization | Net book value
|                                                          
|                                                           | $       | $                         | $             
|Internal software                                          | 72,515  | 25,549                    | 46,966        
|Business solutions                                         | 226,412 | 48,286                    | 178,126       
|Software licenses                                          | 142,578 | 61,878                    | 80,700        
|Customer relationships and other                           | 346,107 | 60,763                    | 285,344       
|                                                          
|Definite-life intangibles                                  | 787,612 | 196,476                   | 591,136       
|                                                          
|                                                          
|Financing lease (Note 14a)                                 |         |                           | 13,121        
|Investment in an entity subject to significant influence   |         |                           | 16,415        
|Other                                                      |         |                           | 4,449         
|                                                          
|Other long-term assets                                     |         |                           | 33,985        
|                                                          
|Total definite-life intangibles and other long-term assets |         |                           | 625,121       
|                                                          

|                                                           |         |                           | 2003          
|---------------------------------------------------------- | ------- | ------------------------- | --------------
|                                                          
|                                                           | Cost    | Accumumlated amortization | Net book value
|                                                          
|                                                           | $       | $                         | $             
|Internal software                                          | 72,800  | 19,642                    | 53,158        
|Business solutions                                         | 130,897 | 33,360                    | 97,537        
|Software licenses                                          | 116,887 | 55,378                    | 61,509        
|Customer relationships and other                           | 181,551 | 31,971                    | 149,580       
|                                                          
|Definite-life intangibles                                  | 502,135 | 140,351                   | 361,784       
|                                                          
|                                                          
|Financing lease (Note 14a)                                 |         |                           | 25,413        
|Investment in an entity subject to significant influence   |         |                           | 4,872         
|                                                          
|Other long-term assets                                     |         |                           | 30,285        
|                                                          
|Total definite-life intangibles and other long-term assets |         |                           | 392,069       
|                                                          

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   49
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

Amortization expense of definite-life
intangibles is presented as follows in the consolidated statements of earnings:

|                                 | 2004    | 2003   | 2002  
|-------------------------------- | ------- | ------ | ------
|                                
|                                 | $       | $      | $     
|Internal software                | 15,012  | 12,040 | 9,350 
|Business solutions               | 23,207  | 11,908 | 12,163
|Software licenses                | 34,126  | 28,521 | 16,988
|Customer relationships and other | 30,225  | 20,505 | 7,545 
|                                
|                                 | 102,570 | 72,974 | 46,046
|                                

Note 7. GoodwillThe variations in goodwill are as follows:

|                                        |             |          | 2004     
|--------------------------------------- | ----------- | -------- | ---------
|                                       
|                                        | IT services | BPS      | Total    
|                                       
|                                        | $           | $        | $        
|Balance, beginning of year              | 1,056,103   | 329,415  | 1,385,518
|Acquisitions                            | 556,354     | 105      | 556,459  
|Purchase price adjustments              | (9,716)     | (1,610)  | (11,326) 
|Disposal of subsidiaries                | (5,693)     | (20,640) | (26,333) 
|Foreign currency translation adjustment | (64,635)    | (12,079) | (76,714) 
|                                       
|Balance, end of year                    | 1,532,413   | 295,191  | 1,827,604
|                                       

|                                             |             |          | 2003     
|-------------------------------------------- | ----------- | -------- | ---------
|                                            
|                                             | IT services | BPS      | Total    
|                                            
|                                             | $           | $        | $        
|Balance, beginning of year                   | 850,801     | 283,051  | 1,133,852
|Acquisitions                                 | 289,633     | 77,287   | 366,920  
|Purchase price adjustments                   | (332)       | (2,916)  | (3,248)  
|Disposal of subsidiaries                     | (140)       | --       | (140)    
|Goodwill related to businesses held for sale | (11,264)    | --       | (11,264) 
|Foreign currency translation adjustment      | (72,595)    | (28,007) | (100,602)
|                                            
|Balance, end of year                         | 1,056,103   | 329,415  | 1,385,518
|                                            

---

|50 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 8. Long-term debt

|                                                                                                                                                                                                                                  | 2004    | 2003   
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | -------
|                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                  | $       | $      
|Unsecured committed revolving term facility bearing interest at US LIBOR                                                                                                                                                          |         |        
|rate plus 1.50% or bankers' acceptance rate plus 1.25%, maturing in 2006 (1)                                                                                                                                                      | 221,182 | 219,000
|Senior US unsecured notes bearing interest at an average rate of 4.97% and
        maturing at various dates until 2014 (2)                                                                                                       | 242,669 | --     
|Balances of purchase price related to business acquisitions, non-interest bearing,
        repayable in various instalments through 2006. These balances were recorded
        at their discounted value using a 7% interest rate | 6,108   | 14,966 
|Obligations under capital leases, bearing interest at a weighted-average rate of 7.71%
        and repayable in blended monthly instalments maturing at various dates until 2008                                                  | 4,296   | 11,269 
|Other loans bearing interest at a rate of prime plus 1.75%, repayable at various dates until 2006                                                                                                                                 | 1,277   | 1,368  
|Share of joint venture's long-term debt
        Secured term loan repayable in blended monthly payments of $540,249,
           at an interest rate of 3.46%, maturing in 2007 (3)                                                | 12,885  | 18,933 
|Redeemable preferred shares                                                                                                                                                                                                       | 1,403   | 2,450  
|                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                  | 489,820 | 267,986
|Current portion                                                                                                                                                                                                                   | 14,529  | 20,555 
|                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                  | 475,291 | 247,431
|                                                                                                                                                                                                                                 

|(1) | The
Company has unsecured revolving bank credit facilities totalling           $515,000,000
or its equivalent in US dollars. The interest rate charged is           determined by the
denomination of the amount drawn. As at September 30, 2004, in           addition to the
amount drawn, an amount of $10,210,000 has been committed           against these
facilities to cover various letters of credit issued for clients.           In addition
to these revolving credit facilities, the Company has available           demand lines of
credit in the amounts of $25,000,000, US$6,877,683 and           £2,000,000, of
which US$6,877,683 has been committed as at September 30,           2004, to cover
various letters of credit issued in the US. The credit facilities           include
covenants which require the Company to maintain certain financial           ratios. As of
September 30, 2004, these financial ratios were met.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | This
US$192,000,000 debt private placement financing with US institutional           investors
is comprised of three tranches of senior unsecured notes, and was           issued on
January 29, 2004 with a weighted average maturity of 6.4 years and a           weighted
average fixed coupon interest rate of 4.97%.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | In
2003, one of the           Companys joint ventures, which is 49% owned, entered
into a $38,639,068           term loan, repayable by blended monthly payments of
$1,102,548, maturing in           December 2006. In addition, as part of the credit
agreement, the joint venture           has an unsecured $10,000,000 operating credit
facility, to be renewed after 364           days.
As at September 30, 2004, there is no amount outstanding under this facility.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Principal repayments on long-term
debt over the next five years and thereafter are as follows:

|          
|----------
|          
|2005      
|2006      
|2007      
|2008      
|2009      
|Thereafter
|          

Minimum capital lease payments are as
follows:

|                                     | Principal | Interest | Payment
|------------------------------------ | --------- | -------- | -------
|                                    
|                                     | $         | $        | $      
|2005                                 | 2,536     | 218      | 2,754  
|2006                                 | 1,120     | 97       | 1,217  
|2007                                 | 505       | 21       | 526    
|2008                                 | 135       | 4        | 139    
|                                    
|Total minimum capital lease payments | 4,296     | 340      | 4,636  
|                                    

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   51
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

Note 9. Capital stock, stock options
and warrants a) Capital stock
Authorized, an unlimited number without par value:


| | First
preferred shares, carrying one vote per share, ranking prior to second preferred shares,
Class A subordinate shares and Class B shares with respect to the payment of dividends;
Second
preferred shares, non-voting, ranking prior to Class A subordinate shares and Class B
shares with respect to the payment of dividends;
Class A subordinate shares, carrying one
vote per share, participating equally with Class B shares with respect to the payment of
dividends and convertible into Class B shares under certain conditions in the event of
certain takeover bids on Class B shares;
Class B shares, carrying ten votes per share,
participating equally with Class A subordinate shares with respect to the payment of
dividends, convertible at any time at the option of the holder into Class A subordinate
shares.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

For 2004, 2003 and 2002, the Class A
subordinate and the Class B shares changed as follows:

|                                                            | Class A subordinate shares | Class B shares
|----------------------------------------------------------- | -------------------------- | --------------
|                                                           
|                                                            | Number                     | Carrying value
|                                                           
|                                                            |                            | $             
|Balance, September 30, 2001                                 | 327,032,717                | 1,143,891     
|Issued for cash (1)                                         | 11,110,000                 | 124,988       
|Issued as consideration for business acquisitions (Note 12) | 210,739                    | 2,261         
|Options exercised                                           | 1,546,801                  | 7,276         
|                                                           
|                                                           
|Balance, September 30, 2002                                 | 339,900,257                | 1,278,416     
|Issued as consideration for business acquisitions (Note 12) | 19,963,399                 | 140,546       
|Conversion (2)                                              | 7,027,606                  | 9,337         
|Options exercised                                           | 1,345,241                  | 7,464         
|                                                           
|                                                           
|Balance, September 30, 2003                                 | 368,236,503                | 1,435,763     
|Issued for cash (3)                                         | 41,340,625                 | 330,725       
|Issued as consideration for business acquisitions (Note 12) | 136,112                    | 1,020         
|Options exercised                                           | 1,007,651                  | 7,854         
|                                                           
|                                                           
|Balance, September 30, 2004                                 | 410,720,891                | 1,775,362     
|                                                           

|(1) | On
December 20, 2001, the Company issued 11,110,000 Class A subordinate shares           to
the public for cash proceeds of $124,988,000 before share issue costs of
          $3,800,000 (net of income tax recoveries of $1,700,000).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | As
part of the           agreement of July 24, 2003, entered into by the Majority
Shareholders and BCE           Inc., 7,027,606 Class B shares were converted into an
equivalent number of Class           A subordinate shares.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | On
May 3, 2004, the Company issued 41,340,625 Class A           subordinate shares to the
public and to BCE Inc. for cash proceeds of           $330,725,000 before share issue
costs of $5,489,000 (net of income tax           recoveries of $2,466,000).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

b) Stock options
Under the Companys stock option
plan for certain employees and directors of the Company and its subsidiaries, the Board of
Directors may grant, at its discretion, options to purchase Class A subordinate shares to
certain employees and directors of the Company and its subsidiaries. The exercise price is
established by the Board of Directors and is equal to the closing price of the Class A
subordinate shares on the Toronto Stock Exchange (TSX) on the day preceding
the date of the grant. Options generally vest one to three years from the date of grant
and must be exercised within a ten-year period, except in the event of retirement,
termination of employment or death. As at September 30, 2004, 41,978,376 Class A
subordinate shares have been reserved for issuance under the Stock option plan.

---

|52 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 9. Capital stock, stock options and warrants (cont'd)b) Stock options (cont'd)
The following outlines the impact and
assumptions used had the Company determined compensation cost for the Companys
stock option plan using the fair value based method of accounting for awards granted
since October 1, 2001:

|Years ended September 30,                      |                       |                         | 2004     | 2003    | 2002   
|---------------------------------------------- | --------------------- | ----------------------- | -------- | ------- | -------
|                                              
|                                               | Continuing operations | Discontinued operations | Total    | Total   | Total  
|                                              
|                                               | $                     | $                       | $        | $       | $      
|Net earnings                                   | 210,810               | 8,790                   | 219,600  | 177,366 | 135,799
|Fair value of stock-based compensation         | (25,559)              | --                      | (25,559) | (8,168) | (4,130)
|                                              
|Pro forma net earnings                         | 185,251               | 8,790                   | 194,041  | 169,198 | 131,669
|Pro forma basic and diluted earnings per share | 0.44                  | 0.02                    | 0.46     | 0.43    | 0.35   

|                                                                                   | 2004  | 2003  | 2002 
|---------------------------------------------------------------------------------- | ----- | ----- | -----
|                                                                                  
|Assumptions used in the Black-Scholes option pricing model:
        Dividend yield | 0.0%  | 0.0%  | 0.0% 
|Expected volatility                                                                | 47.4% | 52.7% | 48.7%
|Risk-free interest rate                                                            | 3.93% | 4.21% | 4.60%
|Expected life (years)                                                              | 5     | 5     | 5    
|Weighted-average grant date fair value ($)                                         | 3.68  | 3.16  | 4.27 
|                                                                                  

c) Warrants
In connection with the signing of a
strategic outsourcing contract and of a business acquisition, the Company granted warrants
entitling the holders to subscribe to up to 5,118,210 Class A subordinate shares. The
exercise prices were determined using the average closing price for Class A subordinate
shares at a date and for a number of days around the respective transaction dates. The
warrants vest upon signature of the contract or date of business acquisition, and have an
exercise period of five years. As at September 30, 2004, there were 5,118,210 warrants
issued and outstanding, 4,000,000 of which are exercisable at a price of $6.55 per share
and expire April 30, 2006, and the remaining 1,118,210 are exercisable at a price of $8.78
per share expiring June 13, 2006. The fair values of the warrants, totaling $19,655,000,
were estimated at their respective grant dates using the Black-Scholes option pricing
model with the following assumptions: risk-free interest rate of 4.9%, dividend yield of
0.0%, expected volatility of 57.7% and expected life of five years.
   In addition to the warrants to
purchase up to 5,118,210 Class A subordinate shares referred to above (the Initial
Warrants), the Company issued to the majority shareholders and BCE Inc.
(BCE), warrants (the Pre-emptive Rights Warrants) to subscribe in
the aggregate up to 3,865,014 Class A subordinate shares and 697,044 Class B shares
pursuant to their pre-emptive rights contained in the articles of incorporation of the
Company, with substantially similar terms and conditions as those of the Initial Warrants.
The Pre-emptive Rights Warrants may be exercised by BCE and the Majority Shareholders only
to the extent that the holders of the Initial Warrants exercise such Initial Warrants.
Upon the exercise by BCE of its rights under its Pre-emptive Rights Warrants to subscribe
to 140,575 Class B shares, BCE has undertaken to give instructions to the Secretary of the
Company upon the exercise of such Warrants, to convert each of such Class B share into one
Class A subordinate share upon their issuance.
   Furthermore, subject to regulatory
approval, the Company has undertaken in favor of a holder of Initial Warrants to purchase
up to 4,000,000 Class A subordinate shares to issue promptly after April 30, 2006 (the
Expiration Date) replacing warrants (the Extended Warrants) to
purchase Class A subordinate shares equal to the number of Class A subordinate shares not
purchased by such holder under the terms of the Initial Warrants on the Expiration Date.
The Extended Warrants will have substantially similar terms and conditions as those of the
Initial Warrants, except for the exercise price, which will be based upon the closing
price of the Class A subordinate shares on the TSX on the date preceding the issuance of
the Extended Warrants.

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   53
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

d) Shares,
stock options and warrants outstanding
The following table presents           the
number of all shares, stock options and warrants outstanding as at September           30:

|                                                                                        | 2004        | 2003       
|--------------------------------------------------------------------------------------- | ----------- | -----------
|                                                                                       
|                                                                                        | Number      | Number     
|                                                                                       
|Class A subordinate shares                                                              | 410,720,891 | 368,236,503
|Class B shares                                                                          | 33,772,168  | 33,772,168 
|                                                                                       
|Total capital stock                                                                     | 444,493,059 | 402,008,671
|Number of stock options (Class A subordinate shares)
        --Accounted for            | 1,083,208   | 1,675,913  
|--Not accounted for                                                                     | 24,454,092  | 18,783,602 
|Number of warrants (Class A subordinate shares)
        --Accounted for                 | 5,118,210   | 5,118,210  
|Number of warrants (Class A subordinate and Class B shares)
        --Not accounted for | 4,562,058   | 4,562,058  
|                                                                                       
|Number of shares reflecting the potential exercise of stock options and warrants        | 479,710,627 | 432,148,454
|                                                                                       

e) Stock options and
warrants accounted for
The following table presents information concerning
stock options and warrants accounted for the years ended September 30:

|                           | 2004          | 2003          
|-------------------------- | ------------- | --------------
|                          
|                           | Stock options | Warrants      
|                          
|                           | Number        | Carrying value
|                          
|                           |               | $             
|Balance, beginning of year | 1,675,913     | 8,246         
|Exercised                  | (425,352)     | (2,094)       
|Forfeited and expired (1)  | (167,353)     | (823)         
|                          
|Balance, end of year       | 1,083,208     | 5,329         
|                          

|(1) | During
2004 and 2003, the Company cancelled options for an amount of $823,000           and
$2,218,000, respectively, which have been reclassified to contributed           surplus.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

f) Additional
information on stock options
The following table presents           information
concerning all outstanding stock options granted to certain           employees and
directors by the Company for the years ended September 30:

|                               | 2004                 | 2003                                            | 2002                
|------------------------------ | -------------------- | ----------------------------------------------- | --------------------
|                              
|                               | Number of options(1) | Weighted average exercise price per share value | Number of options(1)
|                              
|                               |                      | $                                               |                     
|Outstanding, beginning of year | 20,459,515           | 9.69                                            | 20,814,820          
|Granted                        | 7,577,166            | 7.90                                            | 4,600,502           
|Exercised                      | (1,007,651)          | 5.61                                            | (1,345,241)         
|Forfeited and expired          | (1,491,730)          | 9.71                                            | (3,610,566)         
|                              
|Outstanding, end of year       | 25,537,300           | 9.20                                            | 20,459,515          
|                              
|Exercisable, end of year       | 16,492,063           | 9.93                                            | 15,110,007          
|                              

|(1) | Includes
stock options that are accounted for as indicated in the table above.
|--- | ------------------------------------------------------------------------------

---

|54 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 9. Capital stock, stock options and warrants (cont'd)f) Additional information on stock options (cont'd)
The following table summarizes
information about outstanding stock options granted to certain employees and directors of
the Company as at September 30, 2004:

|Options outstanding     | Options exercisable
|----------------------- | -------------------
|                       
|Range of exercise price | Number outstanding 
|                       
|$                       |                    
|1.78 to 2.53            | 382,527            
|4.75 to 6.98            | 4,365,245          
|7.00 to 7.91            | 7,020,507          
|8.00 to 8.99            | 7,589,380          
|9.05 to 10.44           | 2,314,383          
|11.34 to 14.85          | 1,655,367          
|15.01 to 19.14          | 1,880,627          
|22.75 to 29.41          | 329,264            
|                       
|                        | 25,537,300         
|                       

g) Earnings per share
The following table sets forth the
computation of basic and diluted earnings per share for the years ended September 30:

|                                                       | 2004                     | 2003                           | 2002              
|------------------------------------------------------ | ------------------------ | ------------------------------ | ------------------
|                                                      
|                                                       | Net earnings (numerator) | Number of shares (denominator) | Earnings per share
|                                                      
|                                                       | $                        |                                | $                 
|Net earnings                                           | 219,600                  | 419,510,503                    | 0.52              
|Dilutive options (1)                                   | --                       | 1,994,835                      | --                
|Dilutive warrants (1)                                  | --                       | 1,595,014                      | --                
|                                                      
|Net earnings
        after assumed
        conversions | 219,600                  | 423,100,352                    | 0.52              
|                                                      

|(1) | The
calculation of the dilutive effects excludes all anti-dilutive options and
          warrants that would not be exercised because their exercise price is higher
than           the average market value of a Class A subordinate share of the Company for
each           of the periods shown in the table. The number of excluded options was
13,194,520           and 14,388,314 for the years ended September 30, 2004 and 2003,
respectively.           The number of excluded warrants was 2,113,041 for the years ended
September 30,           2004 and 2003.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 10. Amortization expense

|                                                                                         | 2004    | 2003    | 2002   
|---------------------------------------------------------------------------------------- | ------- | ------- | -------
|                                                                                        
|                                                                                         | $       | $       | $      
|Amortization of fixed assets                                                             | 48,214  | 43,940  | 28,192 
|Amortization of contract costs related to transition costs                               | 9,633   | 4,219   | 2,656  
|Amortization of definite-life intangibles and other long-term assets (Note 6)            | 102,570 | 72,974  | 46,046 
|Impairment of contract costs                                                             | 4,034   | --      | --     
|                                                                                        
|                                                                                         | 164,451 | 121,133 | 76,894 
|Amortization of contract costs related to incentives (presented as reduction of revenue) | 29,734  | 27,789  | 23,559 
|                                                                                        
|                                                                                         | 194,185 | 148,922 | 100,453
|                                                                                        

Note 11. Income taxesThe income tax provision is as follows for the years ended September 30:

|        | 2004    | 2003    | 2002  
|------- | ------- | ------- | ------
|       
|        | $       | $       | $     
|Current | 57,516  | 67,020  | 60,582
|Future  | 55,626  | 46,249  | 35,602
|       
|        | 113,142 | 113,269 | 96,184
|       

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   55
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

The Companys effective income
tax rate differs from the combined Canadian statutory tax rate for the following reasons
for the years ended September 30:

|                                                       | 2004  | 2003 | 2002 
|------------------------------------------------------ | ----- | ---- | -----
|                                                      
|                                                       | %     | %    | %    
|Combined statutory tax rates                           | 33.6  | 34.5 | 36.6 
|Non-deductible items                                   | 0.8   | 0.8  | 0.7  
|Valuation allowance relating to tax benefits on losses | 0.8   | 2.4  | 4.4  
|Other                                                  | (0.2) | 1.7  | (0.1)
|                                                      
|Effective income tax rate                              | 35.0  | 39.4 | 41.6 
|                                                      

Future income taxes are as follows at
September 30:

|                                                                                                                             | 2004      | 2003     
|---------------------------------------------------------------------------------------------------------------------------- | --------- | ---------
|                                                                                                                            
|                                                                                                                             | %         | %Restated
|Future income tax assets:
        Accrued integration charges and accounts payable and accrued liabilities                   | 83,254    | 24,159   
|Tax benefits on losses carried forward                                                                                       | 94,039    | 115,437  
|Accrued compensation                                                                                                         | 19,000    | 10,341   
|Allowance for doubtful accounts                                                                                              | 6,695     | 5,613    
|Share issue costs                                                                                                            | 4,724     | 2,249    
|Other                                                                                                                        | 8,508     | 3,754    
|                                                                                                                            
|                                                                                                                             | 216,220   | 161,553  
|                                                                                                                            
|                                                                                                                            
|Future income tax liabilities:
        Fixed assets, contract costs and definite-life intangibles and other long-term assets | 276,223   | 130,907  
|Work in progress                                                                                                             | 34,027    | 10,341   
|Goodwill                                                                                                                     | 3,163     | 5,116    
|Refundable tax credits on salaries                                                                                           | 25,001    | 34,315   
|Other                                                                                                                        | 17,622    | 6,920    
|                                                                                                                            
|                                                                                                                             | 356,036   | 187,599  
|                                                                                                                            
|Valuation allowance                                                                                                          | 32,686    | 102,997  
|                                                                                                                            
|Future income taxes, net                                                                                                     | (172,502) | (129,043)
|                                                                                                                            
|                                                                                                                            
|Future income taxes are classified as follows:
        Current future income tax assets                                      | 80,814    | 35,767   
|Long-term future income tax assets                                                                                           | 102,720   | 22,764   
|Current future income tax liabilities                                                                                        | (68,603)  | (47,003) 
|Long-term future income tax liabilities                                                                                      | (287,433) | (140,571)
|                                                                                                                            
|Future income tax liabilities, net                                                                                           | (172,502) | (129,043)
|                                                                                                                            

Certain of the Companys
subsidiaries have losses carried forward aggregating approximately $275,450,000, of which
approximately $218,822,000 (US$173,133,000) originates from the Companys US
subsidiaries, available to reduce future taxable income and expiring at various dates to
2022. The benefit of these losses has been reflected in the consolidated financial
statements to the extent that it is considered to be more likely than not that the
related future income tax assets would be realized. During the year, the Company reversed
its valuation allowance by an amount of $44,707,000 (US$35,375,000) in reduction of the
AMS goodwill. Should any of the unrecorded tax benefits on losses carried forward
amounting to $26,908,000 be realized, goodwill would be reduced accordingly.
   Foreign earnings of certain of the
Companys subsidiaries would be taxed only upon their repatriation to Canada. The
Company has not recognized a future tax liability for these retained earnings as
management does not expect them to be repatriated. On remittance, certain countries impose
withholding taxes that, subject to certain limitations, are then available for use as tax
credits against a federal or provincial income tax liability, if any. Determination of the
amount of unrecognized federal and provincial future income tax liability for these
retained earnings or foreign tax withholding is not practicable because of the
complexities associated with its hypothetical calculation.

---

|56 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 12. Investments in
subsidiaries and joint venturesFor all business acquisitions, the Company began
recording the results of operations of the acquired entities as of their respective
effective acquisition dates.

2004 transactionsa) Acquisitions
The Company made the following acquisitions:


| |  | American
Management Systems, Incorporated (AMS)On May 3, 2004, the Company
acquired all outstanding shares of AMS, a business services and IT consulting firm to the
government, healthcare, financial services, and communications industries.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | OtherOn
October 28, 2003, the Company acquired all outstanding shares of Apex Consulting Group
Inc, a business service, which provides systems integration and consulting with a focus
on business process improvement and new technologies. On January 14, 2004, it also
acquired certain assets of GDS & Associates Systems Ltd., which provides systems
integration and consulting services to clients primarily within the government sector.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The acquisitions were accounted for
using the purchase method. The purchase price allocation shown below is preliminary and
based on the Companys best estimates. The final purchase price allocations are
expected to be completed as soon as Companys management has gathered all the
significant information believed to be available and considered necessary in order to
finalize this allocation.

|                                                            | AMS       | Other  | Total    
|----------------------------------------------------------- | --------- | ------ | ---------
|                                                           
|                                                            | $         | $      | $        
|Non-cash working capital items                              | (200,439) | (936)  | (201,375)
|Fixed assets                                                | 13,475    | 459    | 13,934   
|Definite-life intangibles and other long-term assets        | 280,540   | 3,452  | 283,992  
|Future income taxes                                         | 13,659    | 12     | 13,671   
|Goodwill (1)                                                | 549,519   | 6,940  | 556,459  
|Long-term debt                                              | --        | (70)   | (70)     
|Accrued integration charges and other long-term liabilities | (72,760)  | --     | (72,760) 
|                                                           
|                                                            | 583,994   | 9,857  | 593,851  
|Cash position at acquisition                                | 616,237   | 224    | 616,461  
|                                                           
|Net assets acquired                                         | 1,200,231 | 10,081 | 1,210,312
|                                                           
|Consideration
        Cash                                  | 1,179,156 | 8,449  | 1,187,605
|Acquisition costs                                           | 21,075    | 612    | 21,687   
|Issuance of 136,112 Class A subordinate shares (2)          | --        | 1,020  | 1,020    
|                                                           
|                                                            | 1,200,231 | 10,081 | 1,210,312
|                                                           

|(1) | The
near totality of the goodwill is included in the IT services segment and
          $35,749,000 is deductible for tax purposes.
|--- | ----------------------------------------------------------------------------------------------------------------------------------

|(2) | The
value of the shares issued as consideration for the business acquisition was
          determined using the average closing share price on the TSX over a reasonable
          period before and after the date the terms of the business combination were
          agreed to and announced.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

In connection with the acquisitions
completed in 2004,           the Company has adopted certain plans to restructure and
integrate the acquired           businesses. Consequently, the Company established
provisions related to leases           for premises occupied by the acquired businesses,
which the Company plans to           vacate, in the amount of $43,290,000, as well as
costs related to the planned           termination of certain employees of the acquired
businesses performing functions           already available through its existing
structure in the amount of $96,981,000.

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   57
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

2004 transactions (cont'd)b) Dispositions


| |  | The
Company sold the assets related to the           information services to the banking and
investment group, one of the divisions           presented in the discontinued operations
(Note 13), for cash consideration of           $47,000,000, which resulted in a gain on
sale of $11,217,000 after tax and           goodwill reduction of $20,355,000.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
Company sold three other divisions           which were classified as discontinued
operations for total consideration of           $40,350,000, which is comprised of cash
consideration of $17,560,000, a balance           of sale of $6,000,000, an
interest-bearing note of $2,750,000, an assumption of           liabilities of $540,000
and $13,500,000 of shares of Nexxlink Technologies Inc.           These transactions
resulted in a loss of approximately $1,400,000.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
          Company sold its interest in a joint venture and non significant assets for
cash           consideration of $4,260,000, net of $4,235,000 of cash disposed. These
          transactions resulted in a nominal gain.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

c) Balance of integration charges
For AMS and Cognicase, the components
of the integration charges related to business acquisitions included in accounts payable
and accrued liabilities and accrued integration charges and other long-term liabilities
are as follows:

|                                        | Consolidation and closure of facilities | Severance | Total   
|--------------------------------------- | --------------------------------------- | --------- | --------
|                                       
|                                        | $                                       | $         | $       
|Balance, as at October 1, 2003          | 41,029                                  | 9,580     | 50,609  
|New integration charges                 | 43,102                                  | 96,360    | 139,462 
|Adjustments to initial provision (1)    | 678                                     | (5,963)   | (5,285) 
|Foreign currency translation adjustment | (3,028)                                 | (6,817)   | (9,845) 
|Paid during 2004                        | 12,804)                                 | (72,910)  | (85,714)
|                                       
|Balance, as at September 30, 2004       | 68,977                                  | 20,250    | 89,227  
|                                       

|(1) | Has
been recorded as a reduction of goodwill.
|--- | ---------------------------------------------

d) Modifications to purchase price
allocation
The Company modified the purchase
price allocations and made adjustments relating to certain businesses purchased within the
last twelve months, resulting in a net decrease of goodwill of $11,326,000 and a net
increase of non-cash working capital items, future income taxes and cash of $8,058,000,
$115,000 and $3,153,000, respectively.

2003 transactionsa) Acquisitions
The Company made the following acquisitions:


| |  | Underwriters
Adjustment Bureau Ltd. (UAB)Effective January 1, 2003, the Company
acquired all the outstanding shares of UAB, a provider of claims management, underwriting
and actuarial services for the property and casualty insurance industry.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | COGNICASE
Inc. (Cognicase)The Company acquired from January 13, 2003 through
February 25, 2003, all outstanding shares of Cognicase. At the option of the holder, the
Company offered for each share of Cognicase $4.50 cash or 0.6311 Class A subordinate
share of the Company, or a combination thereof. Cognicase provides solutions including
the implementation of e-business solutions, ASP services, re-engineering of existing
applications for e-business, technology configuration management, as well as project
management and business process improvement consulting services.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | OtherThe
Company acquired all the assets of INSpire Insurance Solutions Inc., which provides
claims and policy administration outsourcing services as well as software and consulting
services, and all the outstanding shares of ProjExpert Conseillers en Gestion et
Informatique Inc., a consulting company specializing in the implementation of enterprise
resource planning systems, on December 2, 2002 and January 1, 2003, respectively.
Furthermore, the Company acquired all the outstanding shares of Cornerstone Project
Management Group Inc., a provider of project management and consulting services in the
government, healthcare and financial services sectors on January 30, 2003 and increased
its interest in one of its joint ventures.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|58 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 12. Investments in subsidiaries and joint ventures (cont'd) 2003 transactions (cont'd)a) Acquisitions (cont'd)
In connection with these
acquisitions, the Company has adopted certain plans to restructure and integrate the
acquired businesses. Consequently, the Company established provisions related to leases
for premises occupied by the acquired businesses, which the Company plans to vacate, as
well as costs related to the planned termination of certain employees of the acquired
businesses performing functions already available through its existing structure. The
Company also planned to divest from certain activities which are not part of the Companys
core business (see Note 13).
   These restructuring and integration
plans involve costs related to the planned abandonment of numerous real estate leases,
located in Canada and the United States for a total amount of approximately $49,600,000.
These plans also provide for severance costs related to the termination of various groups
of employees working mostly as consultants and project managers, along with finance and
administration personnel located throughout Canada and the United States, of approximately
$34,700,000.
   The acquisitions were accounted for using the purchase method and the total
initial purchase price allocation is as follows:

|                                                      | UAB       | Cognicase | Other   | Total    
|----------------------------------------------------- | --------- | --------- | ------- | ---------
|                                                     
|                                                      | $Restated | $         | $       | $        
|Non-cash working capital items                        | 7,818     | (113,299) | (4,910) | (110,391)
|Fixed assets                                          | 6,855     | 31,283    | 1,233   | 39,371   
|Definite-life intangibles and other long-term assets  | 16,506    | 132,997   | 2,821   | 152,324  
|Future income taxes                                   | (1,388)   | (7,468)   | (153)   | (9,009)  
|Goodwill (1)                                          | 33,818    | 323,307   | 9,795   | 366,920  
|Pension cost                                          | (4,500)   | --        | --      | (4,500)  
|Assumption of long-term debt                          | (1,073)   | (60,903)  | (215)   | (62,191) 
|                                                     
|                                                      | 58,036    | 305,917   | 8,571   | 372,524  
|Cash position at acquisition                          | (3,967)   | 23,495    | 5,954   | 25,482   
|                                                     
|Net assets acquired                                   | 54,069    | 329,412   | 14,525  | 398,006  
|                                                     
|Consideration
        Cash                            | 53,000    | 180,154   | 12,891  | 246,045  
|Acquisition costs                                     | 1,069     | 9,512     | 834     | 11,415   
|Issuance of 19,850,245 Class A subordinate shares (2) | --        | 139,746   | --      | 139,746  
|Issuance of 113,154 Class A subordinate shares (2)    | --        | --        | 800     | 800      
|                                                     
|                                                      | 54,069    | 329,412   | 14,525  | 398,006  
|                                                     

|(1) | Includes
$4,670,000 of goodwill deductible for tax purposes.
|--- | ------------------------------------------------------------

|(2) | The
value of the shares issued as consideration for the business acquisition was
          determined using the average closing share price on the TSX over a reasonable
          period before and after the date the terms of the business combination were
          agreed to and announced.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

b) Dispositions
The Company sold two subsidiaries previously owned           by Cognicase for a non
significant cash consideration.

c) Balance of integration charges
For Cognicase, the components of the
integration charges included in accounts payable and accrued liabilities and accrued
integration charges and other long-term liabilities related to the business acquisition
are as follows:

|                                  | Consolidation and closure of facilities | Severance | Total   
|--------------------------------- | --------------------------------------- | --------- | --------
|                                 
|                                  | $                                       | $         | $       
|Balance, as at October 1, 2002    | --                                      | --        | --      
|New integration charges           | 47,422                                  | 30,404    | 77,826  
|Paid during 2003                  | (6,393)                                 | (20,824)  | (27,217)
|                                 
|Balance, as at September 30, 2003 | 41,029                                  | 9,580     | 50,609  
|                                 

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   59
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

2003 Transactions (cont'd)d) Modifications to purchase price allocations
The Company finalized the purchase
price allocations and made adjustments relating to certain business acquisitions completed
in the last twelve months, resulting in a net decrease of goodwill, future income tax
liabilities, income tax liabilities and accounts payable and accrued liabilities of
$3,248,000, $143,000, $659,000 and $2,028,000, respectively, a net increase of
definite-life intangibles and other long-term assets of $1,478,000 and a cash
consideration paid of $1,060,000.

2002 Transactionsa) Acquisitions


| |  | The
Company completed five acquisitions of IT consulting firms for considerations ranging
between $2,100,000 and $7,000,000, for an aggregate consideration of $24,988,000,
including acquisition costs of approximately $503,000 and the issuance of 210,739 Class A
subordinate shares at a price of $10.73 per share. The Company acquired all of the
outstanding shares of the businesses, except in two cases where assets were acquired.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The acquisitions were accounted for
using the purchase method and the total initial purchase price allocation is as follows:

|                                                         | 2002   
|-------------------------------------------------------- | -------
|                                                        
|                                                         | $      
|Non-cash working capital items                           | (2,686)
|Future income taxes                                      | 933    
|Fixed assets                                             | 1,014  
|Definite-life intangibles and other long-term assets     | 2,423  
|Goodwill (1)                                             | 23,049 
|                                                        
|                                                         | 24,733 
|Cash position at acquisition                             | 255    
|                                                        
|Net assets acquired                                      | 24,988 
|                                                        
|Consideration
        Cash (including acquisition costs) | 20,121 
|Balance of purchase price                                | 2,606  
|Issuance of 210,739 Class A subordinate shares (2)       | 2,261  
|                                                        
|                                                         | 24,988 
|                                                        

|(1) | Includes
$9,292,000 of goodwill deductible for tax purposes.
|--- | ------------------------------------------------------------

|(2) | The
per share value of the shares issued as consideration for one of the           business
acquisitions was determined using the average closing share price on           the TSX
over a reasonable period before and after the date the terms of the           business
combination were agreed to and announced.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | In
May 2002, the Company acquired, for cash consideration of $26,000,000, a 49% interest in
a newly created joint venture, Innovapost Inc. (Innovapost). The Company also
paid, through Innovapost, an incentive of $26,000,000 to Canada Post Corporation, its
partner in the joint venture, for the signing of a ten-year outsourcing contract. The
aggregate consideration paid of $52,000,000 was accounted for as contract costs in
accordance with its substance and will be amortized over the term of the contract.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

b) Dispositions
The Company sold its Australian and Japanese operations for an aggregate cash consideration
of $10,365,000, with no resulting gain or loss.

---

|60 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 13. Discontinued operations and
assets held for saleIn 2004 and 2003, the Company
formally adopted plans to divest from certain activities acquired from previous
acquisitions which were not related to its core business and which included four
divisions, two buildings and land. Consequently these items were classified as assets held
for sale.
   One of the divisions activities consists mainly of sales of integrated
management system software package suites (Enterprise Resource Planning or ERP) and
related services targeted to municipalities, healthcare bodies, as well as manufacturing
and distribution companies. The second divisions activities consist mainly of
providing installation and technical services for mid-range and micro computer systems and
automated teller machines. The third divisions activities consist mainly of
supplying high-quality PC-based power engineering software applications and the last
divisions activities consist mainly of providing information services to banking and
investment groups.
   During the year, the Company disposed of these divisions (Note 12) and
the above-mentioned assets, the latter of which resulted in proceeds in the amount of
$18,683,000 and a nominal loss.
   The following table presents summarized financial
information related to discontinued operations:

|                                                                  | 2004   | 2003    | 2002  
|----------------------------------------------------------------- | ------ | ------- | ------
|                                                                 
|                                                                  | $      | $       | $     
|Revenue                                                           | 37,291 | 84,345  | 34,424
|                                                                 
|Earnings before the undernoted:                                   | 19,349 | 8,743   | 1,647 
|Amortization expense                                              | 1,848  | 4,555   | 111   
|                                                                 
|Earnings before income taxes                                      | 17,501 | 4,188   | 1,536 
|Income taxes                                                      | 8,711  | 1,500   | 584   
|                                                                 
|Net earnings from discontinued operations                         | 8,790  | 2,688   | 952   
|                                                                 
|                                                                 
|Net cash provided by operating activities                         | 1,997  | 5,197   | 1,063 
|Net cash used in investing activities                             | --     | (2,133) | --    
|Net cash used in financing activities                             | --     | (526)   | --    
|                                                                 
|Net cash and cash equivalents provided by discontinued operations | 1,997  | 2,538   | 1,063 
|                                                                 

|                                                     | 2004 | 2003  
|---------------------------------------------------- | ---- | ------
|                                                    
|                                                     | $    | $     
|Current assets                                       | --   | 11,268
|Fixed assets                                         | --   | 6,003 
|Definite-life intangibles and other long-term assets | --   | 12,479
|Goodwill                                             | --   | 11,264
|                                                    
|Assets of businesses held for sale                   | --   | 41,014
|                                                    
|Current liabilities                                  | --   | 10,133
|Future income taxes                                  | --   | 5,978 
|Long-term debt                                       | --   | 151   
|Other long-term liabilities                          | --   | 54    
|                                                    
|Liabilities of businesses held for sale              | --   | 16,316
|                                                    

Discontinued operations are included
in the IT services segment.

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   61
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

Note 14. Joint ventures:
supplementary informationThe Companys proportionate share of its joint venture investees operations included in the consolidated
financial statements is as follows:

|                        | 2004   | 2003  
|----------------------- | ------ | ------
|                       
|                        | $      | $     
|Balance sheets          |        |       
|Current assets          | 67,122 | 76,806
|Non-current assets      | 46,158 | 58,275
|Current liabilities     | 33,639 | 36,758
|Non-current liabilities | 47,774 | 22,551
|                       

|                                                                                             | 2004     | 2003     | 2002   
|-------------------------------------------------------------------------------------------- | -------- | -------- | -------
|                                                                                            
|                                                                                             | $        | $        | $      
|Statements of earnings                                                                       |          |          |        
|Revenue                                                                                      | 138,570  | 189,693  | 79,456 
|Expenses                                                                                     | 129,923  | 182,268  | 77,226 
|                                                                                            
|Net earnings                                                                                 | 8,647    | 7,425    | 2,230  
|                                                                                            
|                                                                                            
|Statements of cash flows
        Cash provided by (used in):
           Operating activities | 5,247    | 5,673    | 10,552 
|Investing activities                                                                         | (17,008) | (49,169) | (2,573)
|Financing activities                                                                         | 599      | 46,031   | 3,868  
|                                                                                            

(a) Financing lease
On November 1, 2002, one of the
Companys joint ventures, acting as the lessor, entered into a 50-month lease
agreement for the information system and technology assets, as part of an existing
outsourcing contract with one of its major clients. This agreement was accounted for as a
direct financing lease. As at September 30, 2004, an amount of $11,296,000, representing
the current portion, is included in prepaid expenses and other current assets and the
remaining $13,121,000 is included in definite-life intangibles and other long-term assets.
The effective interest rate of the lease agreement is 5.02% and the net investment is
$24,417,000 as of September 30, 2004.

Note 15. Supplementary cash flow
information


|a) | Net
change in non-cash working capital items is as follows for the years ended September 30:
|-- | --------------------------------------------------------------------------------------------

|                                          | 2004      | 2003      | 2002    
|----------------------------------------- | --------- | --------- | --------
|                                         
|                                          | $         | $         | $       
|Accounts receivable                       | 38,660    | (31,056)  | (617)   
|Work in progress                          | (24,520)  | (1,662)   | (17,673)
|Prepaid expenses and other current assets | (52)      | (5,048)   | (1,361) 
|Accounts payable and accrued liabilities  | (97,274)  | (82,079)  | (53,787)
|Accrued compensation                      | (39,143)  | 21,969    | 10,588  
|Deferred revenue                          | 16,958    | (21,367)  | 10,611  
|Income taxes                              | (105,052) | 4,175     | 6,502   
|                                         
|                                          | (210,423) | (115,068) | (45,737)
|                                         

---

|62 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 15. Supplementary cash flow information (cont'd)


|b) | Non-cash
operating, investing and financing activities related to continuing operations are as
follows for the years ended September 30:
|-- | ----------------------------------------------------------------------------------------------------------------------------------------

|                                                                           | 2004     | 2003    | 2002  
|-------------------------------------------------------------------------- | -------- | ------- | ------
|                                                                          
|                                                                           | $        | $       | $     
|Operating activities                                                       |          |         |       
|Accrued integration charges and other long-term liabilities                | (7,583)  | 1,502   | 15,728
|Future income taxes                                                        | --       | --      | 12,347
|                                                                          
|                                                                           | (7,583)  | 1,502   | 28,075
|                                                                          
|                                                                          
|Investing activities
        Business acquisitions (Note 12)               | 1,020    | 140,546 | 2,261 
|Proceeds from sales of assets and business (Notes 12 and 13)               | 13,500   | --      | --    
|Purchase of fixed assets                                                   | 1,393    | --      | --    
|Contract costs                                                             | (7,583)  | 1,502   | 28,075
|Increase in definite-life intangibles and other long-term assets (Note 12) | (13,500) | --      | --    
|                                                                          
|                                                                           | (5,170)  | 142,048 | 30,336
|                                                                          
|                                                                          
|Financing activities
        Increase in obligations under capital leases  | 1,393    | --      | --    
|Issuance of shares (Note 9)                                                | 1,020    | 140,546 | 2,261 
|                                                                          
|                                                                           | 2,413    | 140,546 | 2,261 
|                                                                          

|c) | Interest
paid and income taxes paid are as follows for the years ended September           30:
|-- | ----------------------------------------------------------------------------------------------

|                  | 2004    | 2003   | 2002  
|----------------- | ------- | ------ | ------
|                 
|                  | $       | $      | $     
|Interest paid     | 21,477  | 9,293  | 2,172 
|Income taxes paid | 143,405 | 66,526 | 51,923
|                 

Note 16. Segmented information The Company has two lines of business (LOB): IT services and BPS.


| |  | The  focus
of these lines of business is as follows:
| |  | ----------------------------------------------------

| |  | The
IT services LOB provides a full-range of IT services, including systems integration,
consulting and outsourcing, to clients worldwide. The professionals and facilities in
India and Canada also serve the United States and foreignbased clients as an integral
part of their offshore and nearshore delivery model.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The
BPS LOB provides a full spectrum of business process outsourcing services to its client
base. Its services include business processing for the financial services sector, as well
as payroll services, document management services, and finance and administration
services.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   63
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

The following presents information on
the Companys operations based on its management structure:

|2004                                                                                                               
|-------------------------------------------------------------------------------------------------------------------
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Revenue                                                                                                            
|Operating expenses before amortization expense                                                                     
|Amortization expense                                                                                               
|                                                                                                                   
|Earnings before interest, income taxes, entity subject to significant
        influence and discontinued operations
|                                                                                                                   
|                                                                                                                   
|Total assets                                                                                                       
|                                                                                                                   

|2003                                                                                                               
|-------------------------------------------------------------------------------------------------------------------
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Revenue                                                                                                            
|Operating expenses before amortization expense                                                                     
|Amortization expense                                                                                               
|                                                                                                                   
|Earnings before interest, income taxes, entity subject to significant
        influence and discontinued operations
|                                                                                                                   
|                                                                                                                   
|Total assets (restated)                                                                                            
|                                                                                                                   

|2002                                                                                                               
|-------------------------------------------------------------------------------------------------------------------
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|                                                                                                                   
|Revenue                                                                                                            
|Operating expenses before amortization expense                                                                     
|Amortization expense                                                                                               
|                                                                                                                   
|Earnings before interest, income taxes, entity subject to significant
        influence and discontinued operations
|                                                                                                                   
|                                                                                                                   
|Total assets                                                                                                       
|                                                                                                                   

|             | 2004    | 2003   
|------------ | ------- | -------
|            
|             | $       | $      
|Fixed assets |         |        
|IT services  | 97,700  | 101,335
|BPS          | 19,236  | 20,246 
|Corporate    | 25,825  | 23,360 
|            
|             | 142,761 | 144,941
|            

The accounting policies of each
segment are the same as those described in the summary of significant accounting policies
(Note 2). The figures are presented net of intersegment sales and transfers, which are
priced as if the sales or transfers were to third parties.

---

|64 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 16. Segmented information (cont'd)Geographic information
The following table sets out certain
geographic market information based on clients location.

|              | 2004      | 2003      | 2002     
|------------- | --------- | --------- | ---------
|             
|              | $         | $         | $        
|Revenue       |           |           |          
|Canada        | 2,293,350 | 2,098,830 | 1,530,885
|United States | 769,982   | 460,449   | 470,392  
|Europe        | 180,280   | 125,537   | 133,912  
|             
|              | 3,243,612 | 2,684,816 | 2,135,189
|             

Capital assets and goodwill are not
disclosed by geographic areas as this financial information is not used to produce the
general-purpose financial statements. All the Companys business units share the
capital asset infrastructure. Providing geographic information for capital assets and
goodwill is therefore impracticable.

Note 17. Related party transactionsIn the normal course of business, the
Company is party to contracts with certain subsidiaries and affiliated companies of BCE (a
shareholder), pursuant to which the Company is its preferred IT supplier. BCE exercises
significant influence over the Companys operating, financing and investing
activities through its 28.86% (200329.86%) ownership interest and through the
significant business volume originating from BCE, together with its subsidiaries and
affiliates.
   Transactions and resulting balances, which were measured at exchange amounts,
are presented below:

|                                         | 2004    | 2003    | 2002   
|---------------------------------------- | ------- | ------- | -------
|                                        
|                                         | $       | $       | $      
|Revenue                                  | 516,968 | 500,068 | 502,645
|Purchase of services                     | 99,881  | 91,471  | 82,978 
|Accounts receivable                      | 16,730  | 21,659  | 18,756 
|Work in progress                         | 5,894   | 1,123   | 126    
|Contract costs                           | 17,916  | 21,373  | 26,257 
|Accounts payable and accrued liabilities | 8,343   | 5,161   | 7,850  
|Deferred revenue                         | 1,249   | 1,330   | 853    
|                                        

In the normal course of business, the
Company is also party to contracts with Innovapost, a joint venture, pursuant to which
the Company is its preferred IT supplier. The Company exercises significant influence
over Innovaposts operating, financing and investing activities through its 49%
ownership interest.

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   65
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

Transactions and resulting balances,
which were measured at exchange amounts, are presented below:

|                                         | 2004   | 2003  
|---------------------------------------- | ------ | ------
|                                        
|                                         | $      | $     
|Revenue                                  | 94,607 | 62,653
|Accounts receivable                      | 3,622  | 5,086 
|Work in progress                         | 1,988  | 361   
|Prepaid expenses                         | 1,815  | --    
|Contract costs                           | 19,696 | 21,989
|Accounts payable and accrued liabilities | 1,113  | 227   
|Deferred revenue                         | 946    | 2,125 
|Other long-term liabilities              | --     | 4,463 
|                                        

Note 18. Employee future benefitsGenerally, the Company does not offer
pension plan or postretirement benefits to its employees with the exception of the
following:
   UAB maintained a post-employment
benefits plan. As at the acquisition date, the Company recorded an unrecognized
post-employment benefits liability. Subsequent to the acquisition, the Company modified
the post-employment plan benefits to cover the former UAB retired employees and the
employees that will be retiring in the two-year period subsequent to the acquisition. The
post-employment benefits liability totaled $7,206,000 and $7,579,000, as at September 30,
2004 and 2003, respectively. The current year related expense was nil and approximately
$638,000 for the period ended September 30, 2003.
   With the acquisition of AMS, the
Company assumed defined contribution pension plans. Total pension plan expense for the
period ended September 30, 2004 was approximately $3,300,000.
   The Company maintains a 401(k)
defined contribution plan covering substantially all U.S. employees. The Company matches
employees contributions to a maximum of $1,000 per year. For the periods ended
September 30, 2004 and 2003, the amounts of the Companys contributions were
$2,784,000 and $1,992,000, respectively.

Note 19. Commitments and
contingenciesa) Commitments
At September 30, 2004, the Company is
committed under the terms of operating leases with various expiration dates, primarily for
rental of premises and computer equipment used in outsourcing contracts, in the aggregate
amount of approximately $1,239,620,000. Minimum lease payments due in the next five years
are as follows:

|    
|----
|    
|2005
|2006
|2007
|2008
|2009
|    

---

|66 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 19. Commitments and contingencies (cont'd)a) Commitments (cont'd)
The Company concluded six long-term
service agreements representing a total commitment of $56,876,000. Minimum payments under
these agreements due in each of the next five years are as follows:

|    
|----
|    
|2005
|2006
|2007
|2008
|2009
|    

b) Contingencies
The Company is currently party to a
number of disputes which involve or may involve litigation. It is the opinion of the
Companys management that ultimate liability, if any, with respect to these disputes
will not be material to the Companys consolidated financial statements and
appropriate provisions have been recorded.

Note 20. GuaranteesIn the normal course of business, the
Company enters into agreements that may provide for indemnification and guarantees to
counterparties in transactions such as consulting and outsourcing services, business
divestitures, lease agreements and financial obligations. These indemnification
undertakings and guarantees may require the Company to compensate counterparties for costs
and losses incurred as a result of various events, including breaches of representations
and warranties, intellectual property right infringement, claims that may arise while
providing services or as a result of litigation that may be suffered by counterparties.
The nature of most indemnification and guarantees undertakings prevent the Company from
making a reasonable estimate of the maximum potential amount the Company could be required
to pay counterparties, as the agreements do not specify a maximum amount and the amounts
are dependent upon the outcome of future contingent events the nature and likelihood of
which cannot be determined at this time. The Company does not expect that any sum it may
have to pay in connection with indemnification and guarantees will have a materially
adverse effect on its consolidated financial statements.
   Furthermore, the Company has, in
the past, guaranteed certain financial liabilities which relate to debt obligations of its
senior management team who purchased the Companys shares as part of their total
compensation plan. This program has since been modified and no new guarantees have been
issued. The maximum potential amount of future payments which the Company could be
required to make under these guarantees is $5,825,000 as of September 30, 2004 ($6,028,000
as of September 30, 2003).

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   67
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

Note 21. Financial instrumentsThe Company periodically uses various
financial instruments to manage its exposure to foreign currency risk, but does not hold
or issue such financial instruments for trading purposes.

Fair value
At September 30,
2004 and 2003, the estimated fair values of cash and cash equivalents, accounts
receivable, work in progress and accounts payable and accrued liabilities approximate
their respective carrying values. The estimated fair values of long-term debt and
obligations under capital leases are not significantly different from their respective
carrying values at September 30, 2004 and 2003.

Interest rate risk
The Company
is exposed to interest rate risk on a portion of its long-term debt and does not
currently hold any financial instruments that mitigate this risk. Management does not
believe that this risk is significant.

Credit risk
Credit risk
concentration with respect to trade receivables is limited due to the Companys
large client base. Furthermore, as described in Note 17, the Company generates a
significant portion of its revenue from a shareholders subsidiaries and affiliates.
Management does not believe that the Company is subject to any significant credit risk.

Currency risk
The Company
operates internationally and is exposed to risks from changes in foreign currency rates.
The Company mitigates this risk principally through foreign debt and forward contracts.
During 2004, the Company designated a debt of US$192,000,000 and US$175,000,000 of the
revolving term facility as the hedging instrument for a part of the Companys net
investment in self-sustaining foreign subsidiaries for which foreign currency translation
gains or losses have been recorded under foreign currency translation adjustment.
Realized or unrealized gains or losses on financial instruments have also been recorded
under the same caption, as they qualify for hedge accounting. There were no outstanding
forward contracts as at September 30, 2004 (US$15,000,000 as at September 30, 2003).
Realized and unrealized foreign exchange gains and losses in relation to forward
contracts for each of the years in the three-year period ended September 30, 2004 were
not significant.

---

|68 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 22. Reconciliation of results
reported in accordance with Canadian GAAP to US GAAPThe material differences between
Canadian and US GAAP affecting the Companys consolidated financial statements are
detailed as follows:

|                                                                           | 2004      | 2003      | 2002     
|-------------------------------------------------------------------------- | --------- | --------- | ---------
|                                                                          
|                                                                           | $         | $         | $        
|Reconciliation of net earnings                                             |           |           |          
|Net earnings--Canadian GAAP                                                | 219,600   | 177,366   | 135,799  
|Adjustments for:
        Capitalized software costs (i)                    | (763)     | (2,053)   | (2,771)  
|Warrants (ii)                                                              | 1,405     | 1,405     | 910      
|Unearned compensation (iii)                                                | (794)     | (1,450)   | (1,450)  
|Leases (iv)                                                                | (1,236)   | (1,975)   | --       
|                                                                          
|Net earnings--US GAAP                                                      | 218,212   | 173,293   | 132,488  
|                                                                          
|                                                                          
|Basic and diluted EPS--US GAAP                                             | 0.52      | 0.44      | 0.35     
|                                                                          
|                                                                          
|Reconciliation of shareholders' equity
Shareholders' equity--Canadian GAAP | 2,462,669 | 1,980,210 | 1,779,615
|Adjustments for:
        Capitalized software costs (i)                    | (5,587)   | (4,824)   | (2,771)  
|Warrants (ii)                                                              | (7,885)   | (9,290)   | (10,695) 
|Unearned compensation (iii)                                                | (3,694)   | (3,694)   | (3,694)  
|Leases (iv)                                                                | (3,211)   | (1,975)   | --       
|Integration costs (v)                                                      | (6,606)   | (6,606)   | (6,606)  
|Goodwill (vi)                                                              | 28,078    | 28,078    | 28,078   
|Adjustment for change in accounting policy (vii)                           | 9,715     | 9,715     | 9,715    
|                                                                          
|Shareholders' equity--US GAAP                                              | 2,473,479 | 1,991,614 | 1,793,642
|                                                                          

(i) Capitalized software costs
Under Canadian GAAP, certain overhead
costs were capitalized. Under US GAAP, these overhead costs are expensed as incurred. The
adjustment represents the charge to consolidated net earnings, net of amortization already
recorded for Canadian GAAP purposes and net of income taxes.

(ii) Warrants
Under Canadian
GAAP, the fair value of warrants issued in connection with long-term outsourcing
contracts is recorded as contract costs and amortized on a straight-line basis over the
initial contract term. Under US GAAP, the fair value of equity instruments issued was
subtracted from the initial proceeds received in determining revenue. The 2004, 2003 and
2002 adjustments reflect the reversal of contract cost amortization, net of income taxes,
which is included as a reduction to Canadian GAAP consolidated net earnings.

(iii) Unearned compensation
Under Canadian GAAP prior to July 1, 2001,
unvested stock options granted as a result of a business combination were not recorded.
The adjustment reflects the intrinsic value of unvested stock options (see (vi) below)
that would have been recorded as a separate component of shareholders equity for US
GAAP purposes. This unearned compensation is amortized over approximately three years,
being the estimated remaining future vesting service period.

---

|Notes to the consolidated financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadian dollars, except share data) | CGI Group Inc. Annual Report 2004   69
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------

(iv) Leases
Under Canadian GAAP, lease rentals
are charged to expenses over the lease term as they become payable. Under US GAAP,
operating lease agreements that specify scheduled rent increases over the lease term shall
be recognized on a straight-line basis over the lease term. The adjustment reflects the
additional charges to consolidated net earnings in US GAAP, net of income taxes.

(v) Integration costs
Under
Canadian GAAP, prior to January 1, 2001, certain restructuring costs relating to the
purchaser may be recognized in the purchase price allocation when accounting for business
combinations, subject to certain conditions. Under US GAAP, only costs relating directly
to the acquired business may be considered in the purchase price allocation. The
adjustment represents the charge to consolidated net earnings, net of goodwill
amortization in 2001, recorded for Canadian GAAP purposes and net of income taxes.

(vi) Goodwill
The goodwill adjustment to
shareholders equity results principally from the difference in the value assigned to
stock options issued to IMR employees. Under Canadian GAAP, the fair value of outstanding
vested stock options is recorded as part of the purchase allocation whereas under US GAAP,
the fair value of both vested and unvested outstanding stock options granted as a result
of the business acquisition is recorded. See (iii) above for a further discussion relating
to this item.

(vii) Income taxes and adjustment
for change in accounting policy
On October 1, 1999, the Company adopted the
recommendations of CICA Handbook Section 3465, Income taxes. The recommendations
of Section 3465 are similar to the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes, issued by the
Financial Accounting Standards Board (FASB). Upon the implementation of
Section 3465, the Company recorded an adjustment to reflect the difference between the
assigned value and the tax basis of assets acquired in a business combination, which
resulted in future income tax liabilities; the Company recorded this amount through a
reduction of retained earnings as part of the cumulative adjustment. Under US GAAP, this
amount would have been reflected as additional goodwill.

(viii) Comprehensive income
Cumulative other comprehensive income is comprised solely of foreign currency translation
adjustments which result from the process of translating the financial statements of
foreign subsidiaries.
   The following table represents comprehensive income in accordance
with SFAS No. 130, Reporting Comprehensive Income:

|                                                                            | 2004     | 2003      | 2002   
|--------------------------------------------------------------------------- | -------- | --------- | -------
|                                                                           
|                                                                            | $        | $         | $      
|Net earnings--US GAAP                                                       | 218,212  | 173,293   | 132,488
|Other comprehensive income:
        Foreign currency translation adjustment | (69,157) | (123,768) | 10,505 
|                                                                           
|Comprehensive income                                                        | 149,055  | 49,525    | 142,993
|                                                                           

---

|70 | Notes to the consolidated Financial statements
     Years ended September 30, 2004, 2003 and 2002
     (tabular amounts only are in thousands of Canadians dollars, except share data) | CGI Group Inc. Annual Report 2004
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------

Note 22. Reconciliation of results reported
with Canadian GAAP to US GAAP (cont'd)(ix) Proportionate consolidation
The proportionate consolidation
method is used to account for interests in joint ventures. Under US GAAP, entities in
which the Company owns a majority of the share capital would be fully consolidated and
those which are less than majority-owned but over which the Company exercises significant
influence, would be accounted for using the equity method. This would result in
reclassifications in the consolidated balance sheets and statements of earnings as at
September 30, 2004 and 2003, and for each of the years in the three-year period ended
September 30, 2004. However, the differences in the case of majority-owned joint ventures
were not considered material and have consequently not been presented (see Note 14). In
accordance with practices prescribed by the U.S. Securities and Exchange Commission
(SEC), the Company has elected, for the purpose of this reconciliation, to
account for interests in joint ventures using the proportionate consolidation method.

(x) Consolidated statements of
cash flows
The Companys consolidated statements of cash flows for each of the
years in the three-year period ended September 30, 2004 were prepared in accordance with
CICA Handbook Section 1540, Cash Flow Statements, the provisions of which are
substantially similar to those of SFAS No. 95, Statement of Cash Flows.

(xi) Share issue costs
As permitted under Canadian GAAP, the
Companys share issue costs are charged to retained earnings. For US GAAP purposes,
share issue costs are recorded as a reduction of the proceeds raised from the issuance of
capital stock.

(xii) Recent and future accounting changes
In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
CompensationTransition and Disclosurean amendment of FASB Statement No. 123.
SFAS No. 148 provides alternative methods of transition for a voluntary change to the
fair value-based method of accounting for stock-based employee compensation. The Company
will adopt the fair value-based method effective October 1, 2004.
   In December 2003, the SEC issued
Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition, which
codifies, revises and rescinds certain sections of SAB 101, Revenue Recognition, in
order to make this interpretive guidance consistent with current authoritative accounting
and auditing guidance and SEC rules and regulations. The adoption of SAB 104 did not have
a significant impact on the Companys financial statements.

---

Managements
discussion
and analysis

Fisal year ended September 30, 2004

Basis of presentationThis managements discussion and
analysis of financial position and results of operations (MD&A) describes
our business, the business environment as we see it today, our vision and strategy, the
critical accounting policies of our company that will help you understand our consolidated
financial statements, the principal factors affecting the results of operations, and
liquidity and capital resources. This discussion should be read in conjunction with the
consolidated financial statements of our fiscal years 2004, 2003 and 2002 and the notes
beginning on page 42 of this annual report. CGIs accounting policies are in
accordance with Canadian generally accepted accounting principles (GAAP) of
the Canadian Institute of Chartered Accountants (CICA). These differ in some
respects from GAAP in the United
States (US GAAP). The fiscal 2004, 2003 and
2002 results are reconciled to US GAAP in Note 22 to the consolidated financial
statements. All dollar amounts are in Canadian dollars unless otherwise indicated.
   Except
as otherwise specified, references to years indicate our fiscal year ended September 30,
2004, or September 30 of the year referenced, and all comparisons are to prior years.

Corporate overview and businessHeadquartered in Montreal, Canada,
CGI provides end-to-end information technology services (commonly referred to as IT
services) and business process services to clients worldwide, utilizing a highly
customized, cost efficient delivery model. As per the Companys delivery model, work
may be carried
out onsite at client premises, or through one of CGIs 20 centers of
excellence located in Canada, the US, Europe and India. CGI also has a number of leading
business solutions that support longterm client relationships. Our services are generally
broken down as follows:
   ConsultingWe act as a trusted
advisor to our clients, offering a full range of IT and management consulting services,
including business transformation, IT strategic planning, business process engineering and
systems architecture.
   Systems integrationWe integrate and customize leading
technologies and software applications to create IT systems that respond to clients
strategic needs.
   Management of IT and business functions (outsourcing)Clients
delegate entire or partial responsibility for their

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|20 | Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004
|-- | ------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------

IT or business functions to CGI to
achieve significant savings and access the best information technology, while retaining
control over strategic IT and business functions. CGI hires clients IT and
specialized professionals enabling clients to focus on mission critical operations.
Services provided as part of an outsourcing contract can include development and
integration of new projects and applications; application maintenance and support;
facilities management (data centers, call centers, network and desktop services);
business processing for the financial services sector, as well as payroll services,
document management and finance and administration services. Outsourcing contracts,
typically for five to 10 years and renewable, provide revenue visibility and support
performance stability.
   CGI pursues clients in certain
vertical markets where we have developed specialized knowledge and understanding of the
trends, unique demands or regulatory changes that are specific to that industry, including
financial services, government and healthcare, telecommunications and utilities, retail
and distribution, as well as manufacturing.
   CGIs operations are managed through two
lines of business (LOB), in addition to Corporate services, namely:
information technology (IT) services and business process services
(BPS). The focus of these LOBs is as follows:


| | The IT services LOB
provides a full range of IT services, including systems integration, consulting and
outsourcing, to clients located in Canada, the United States, Europe and Asia Pacific. Our
professionals and facilities in India and Canada also serve US and foreignbased clients as
an integral part of our offshore and nearshore delivery model.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The BPS LOB provides a full
spectrum of business process outsourcing services to our client base. Our services include
business processing for the financial services sector, as well as payroll services,
document management and finance and administration services.                                                                                     

As at September 30, 2004, we
employed approximately 25,000 members. In fiscal 2004, we integrated 5,000 new members as
a result of acquisitions and outsourcing contract wins. We believe that our success
depends on our continuing ability to attract and retain skilled technical, marketing and
management personnel and believe that our strong corporate culture has been the key to our
success to date.


Business environmentMarket demand for IT and business
process outsourcing (BPO) is large and expected to grow significantly over the
long-term. During fiscal 2004, the IT services industry experienced a stable global demand
for shorter-term, projectoriented services as some companies and organizations held back
discretionary spending in response to the economic environment. Based on various industry
and company-specific indicators, we continue to expect a growing demand as market
conditions continue to improve for systems integration and consulting services, and in the
second half of fiscal 2004, we have experienced a pick up in our sales for such contracts.
   Demand for longer-term outsourcing
contracts is healthy as companies realize the cost benefits that are achievable through
outsourcing. We are the largest provider of IT and BPO services in Canada, and through a
combination of organic growth and acquisitions, continue to strengthen our position in the
US outsourcing market. We now have a significant footprint in each of our selected
geographies, namely Canada, the US and Europe. The strategy that we are pursuing is to
replicate what we successfully achieved in Canada, by becoming an end-to-end IT services
provider in the US and a significant player for large outsourcing contracts.

Vision and strategyCGIs vision is to be a
world-class IT and BPO leader helping its clients win and grow. Our mission is to help our
clients with professional services of outstanding quality, competence and objectivity,
delivering the best solutions to fully satisfy client objectives in information
technology, business processes and management. We foster a culture of partnership,
intrapreneurship and integrity. We strive to be recognized by our clients, our members and
our shareholders as one of the top five pure players in IT and BPO services. We are
achieving our vision by concentrating on our core competencies and by building critical
mass predominantly in Canada, the United States and Europe to better serve clients, both
locally and internationally. In all we do, we seek the best equilibrium between the needs
of our three key stakeholder groups, namely our clients, members and shareholders.
   CGI utilizes a four-pronged growth
strategy that combines organic growth and acquisitions. The first growth driver, focused
on organic growth, is comprised of systems integration and consulting contract wins,
renewals and extensions, new project work from existing outsourcing clients, as well as
outsourcing contracts valued at under $50 million a year. This business is mainly
identified and won at the local and regional level of our operations. We are growing our
sales funnel of contract proposals across all of our geographic markets.
   The second element of our growth
strategy is the pursuit of new large outsourcing contracts, valued at more than $50
million per year. Canada continues to offer tremendous untapped opportunities, and
proposal activity is healthy across all regions.
   The third and fourth drivers of our
growth strategy focus on acquisitions of smaller firms or niche players and of large
companies, respectively. We identify niche company acquisitions through our strategic
mapping program that systematically searches for companies that could strengthen our
geographic presence, vertical market knowledge or increase the richness of our service
offerings. We are focused on acquisitions in our targeted verticals and metro markets in
the US, as well as on expanding our BPO capabilities. Through large acquisitions, we are
seeking targets in Europe and

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|Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004   21
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------

the US that will increase our
geographical presence and critical mass in order to further qualify us for larger
outsourcing contracts. In North America, we will continue to be an IT domain consolidator
of both small and large IT services companies.

Significant developments in 2004Acquisitions
In fiscal 2004, we made the following
strategic small and large acquisitions to strengthen our geographic presence, vertical
market knowledge or to increase the richness of our service offerings or increase our
critical mass.
   Apex Consulting Group Inc.
(Apex) In October 2003, we announced the acquisition of Boston-based
Apex with revenues of US$4.0 million. Apex is a business services, systems integration and
consulting company with a focus on business process improvement and new technologies.
Specializations include order entry/processing optimization, customer relationship
management, Microsoft.Net and J2EE architecture and development, and IS management
support.
   GDS & Associates Systems Ltd. (GDS)In January 2004, we
acquired certain assets of GDS representing approximately $6 million in annual revenue.
Through this acquisition, we obtained a presence in Victoria (British Columbia) and an
opportunity to extend relationships with government and other accounts.
   American Management Systems, Inc.
(AMS) In March 2004, we announced a major acquisition, namely AMS, a
premier information technology consulting and systems integration firm to the government,
healthcare, financial services and communications industries. On May 3, CGI acquired
AMS business with associated revenue of $927 million for a net cash consideration of
$584 million.

Other
On October 21, 2003, we announced
that Nexxlink Technologies Inc. (Nexxlink) was purchasing various CGI assets,
generating approximately $40 million in annual revenue. The transaction
amounted to $21 million, broken down as follows: $6.0 million in cash, a $4.5 million balance of sale with
CGI, and a $10.5 million note convertible into 2.5 million shares of Nexxlink at a price
of $4.20 per share. The note was automatically converted following approval by
Nexxlinks shareholders at the annual general and special meeting of shareholders
held on December 11, 2003. This transaction provided CGI with a 32% equity interest in
Nexxlink. As such, this investment is presented as an entity subject to significant
influence in the consolidated financial statements.
   On January 30, 2004, we announced that
CGI had completed a US$192 million private debt placement financing with US institutional
investors. The private placement was comprised of three tranches of guaranteed senior
unsecured notes, with a weighted average maturity of 6.4 years and a weighted average
fixed coupon of 4.97%. The proceeds were used to reimburse the drawn-down portion of the
Companys existing credit facilities, as well as for general corporate purposes.
   On April 12, 2004, we announced that The Thomson Corporation had signed an asset purchase
agreement under which it acquired the Information Services division of the Banking and
Investment group of CGI, including the Starquote software solution, for a consideration of
$47 million.
   On April 14, 2004, we announced the
conclusion of the acquisition by Nexxlink of CGIs assets related to the technical
support company Meta-4 Technical Support Services (Meta-4). The transaction
amounted to $8.75 million, broken down as follows: $1.5 million cash; $1.5 million as a
balance of sale; $2.75 million through the issue of an interest-bearing note; and $3.0
million through the issue of shares raising CGIs interest in Nexxlinks capital
stock from 32% to 35%.
   On July 7, 2004, we announced that privately-held firm Ezee ATM LP
had acquired Meta-4 Business Networking Solutions (MBNS) from CGI Group Inc. for $5.6
million.

Performance overviewFiscal 2004 marked the 28th
consecutive year of revenue growth for CGI. Revenue grew 20.8% to $3,243.6 million, up
from $2,684.8 million in fiscal 2003 and $2,135.2 million in fiscal 2002. Net earnings
grew 23.8% to $219.6 million ($0.52 basic and diluted earnings per share), compared with
net earnings of $177.4 million ($0.45 basic and diluted earnings per share) in fiscal 2003
and compared with net earnings of $135.8 million ($0.36 basic and diluted earnings per
share) in fiscal 2002. The net margin (i.e. net earnings over revenue) improved to 6.8%,
compared with 6.6% in 2003 and 6.4% in 2002.
   The balance sheet as at September 30,
2004, included $200.6 million in cash and cash equivalents, $2,462.7 million of
shareholders equity and $489.8 million in long-term debt.

Critical accounting policies and
estimatesThe consolidated financial statements
are prepared in accordance with Canadian GAAP, which differ in certain material respects
with US GAAP. Significant differences relevant to the Company are presented in Note 22.
   Certain comparative figures have been reclassified in order to conform to the presentation
adopted in 2004.

Restatements
i) Funds held for clients and clients funds obligations
 In connection with
          our payroll and tax filing services, we collect funds for payment of payroll and
          taxes, temporarily hold such funds until payment is due, remit the funds to the
          clients employees and appropriate tax authorities, file federal and local
          tax returns, and handle related regulatory correspondence and amendments.
          Effective April 1, 2004, we presented separately the payroll funds held for
          clients and related obligations. We consider that such a presentation is more
          appropriate and better reflects the total assets on which returns are earned.
          Prior years amounts were restated to conform to the current years
          presentation.

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|22 | Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004
|-- | ------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------

ii) Accrued
integration charges
Subsequent to the acquisition date of Underwriters
          Adjustment Bureau Ltd. (UAB), we began the process of winding up
the           defined benefit pension plan covering UAB employees. As per the pension
plan           policies, any excess of the plan assets over the defined obligations must
be           remitted to UAB employees. As at the acquisition date, the fair value of
plan           assets exceeded the value of the defined benefit obligations and
accordingly,           the settlement amount used in the purchase price allocation of UAB
was nil. The           Company revised the calculation of the defined benefit pension
plan as the           initial actuarial valuation made as of the acquisition date
understated the           pension plan liability, future income tax assets and goodwill
by $4,500,000,           $1,530,000 and $2,970,000, respectively. Accordingly, the
balance sheet as at           September 30, 2003, has been restated.

Use of estimates
The preparation of the consolidated
financial statements in conformity with Canadian GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the consolidated financial
statements and the reported amounts of revenue and expenses during the reporting period.
Because of the use of estimates inherent in the financial reporting process, actual
results could differ from those estimates.

Basis of consolidation
The consolidated financial statements
include the accounts of CGI and its majority-owned subsidiaries. All intercompany
transactions and balances have been eliminated. We account for jointly-controlled
investments using the proportionate consolidation method. Forinvestments whereby CGI has
the ability to exercise significant influence, we account for these under the equity
method. In situations whereby the Company does not exercise significant influence, the
investments are recorded at cost.
The carrying amount of the investments is reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount
of the investments may not be recoverable.

Revenue recognition
CGI generates revenue principally
through the provision of IT and BPO services.
   The IT services include a full range
of information technology services, namely i) outsourcing ii) systems integration and
consulting iii) software licenses and iv) maintenance. The BPS unit provides business
processing for the financial services sector, as well as payroll services, document
management services, and finance and administration services.
   Services revenue related to
outsourcing arrangements and BPS under fixed fee contracts is recognized on a
straight-line basis over the term of the arrangement, regardless of the amounts billed,
unless there is a better measure of performance or delivery. Revenue from time and
materials and unit-priced arrangements is recognized as the services are provided at the
contractual stated price. If the contractual per-unit prices within a unit-priced contract
change during the term of the arrangement, then we evaluate whether it is more appropriate
to record revenue based on the average per-unit prices during the term of the contract or
based on the actual amounts billed. For outsourcing arrangements which include multiple
elements, the total arrangement value is allocated to each element based on their relative
fair values. Revenue is then recognized for each element based on the nature of the
services as described above.
   Services revenue related to systems
integration and consulting arrangements, under time and material contracts, are recognized
as services are rendered, whereas systems integration and consulting arrangements under
fixed fee contracts are recognized using the percentage-of-completion method over the
implementation period. Management regularly reviews underlying estimates of project
profitability. Revisions to estimates are reflected in the statement of earnings
in the
period in which the facts that give rise to the revision become known. Provisions for
estimated losses, if any, are recognized in the period in which the loss is determined.
Contract losses are measured as the amount by which the estimated costs of the contract
exceed the estimated total revenue from the contract. In addition, we provide systems
integration and consulting services based on benefits-funded arrangements whereby we
recognize revenue only to the extent it can be predicted, with reasonable certainty, that
the benefit stream will generate amounts sufficient to fund the value on which revenue
recognition is based. For cost-based contracts, revenue is recorded as reimbursable costs
are incurred.
   Revenue from the sale of software
license agreements is recognized upon delivery of software if persuasive evidence of an
arrangement exists, collection is probable, the fee is fixed or determinable and
vendor-specific evidence of an arrangement exists to allocate the total fee to the
different elements of an arrangement. Vendor specific objective evidence is typically
based on the price charged when an element is sold separately. In circumstances where the
implementation services are essential to the functionality of the software or where the
software requires significant customization, we recognize software license revenue using
the percentage-of-completion method over the implementation period.  
   Revenues from maintenance services for licences previously sold and implemented are recognized rateably
over the term of the contract.
   Amounts recognized as revenue in
excess of billings are classified as work in progress. Amounts received in advance of the
delivery of products or performance of services are classified as deferred revenue.
   Reimbursements, including those
relating to travel and other out-of-pocket expenses, and other similar third party costs,
such as the cost of hardware and software resales, are included in revenue and the
corresponding expense is included in costs of services.

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|Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004   23
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------

Cash and cash equivalents
Cash and cash equivalents consist primarily of unrestricted cash and short-term investments having an initial maturity of
three months or less.

Fixed assets
Fixed assets are recorded at cost and
are amortized over their estimated useful lives, using principally the straight-line
method. The annual amortization periods by fixed asset category are as follows:

|                      
|----------------------
|Buildings             
|Leasehold improvements
|Furniture and fixtures
|Computer equipment    
|                      

Contract costs
Contract costs are incurred in the
course of two to ten year IT services and business process outsourcing contracts. These
assets are recorded at cost and amortized using the straight-line method over the term of
the respective contracts. Contract costs principally comprise the following:
a) Incentives granted to clients upon signing of long-term outsourcing contracts
Occasionally,
incentives can be granted either in the form of cash payments, issuance of equity
instruments, or discounts awarded principally over a transition period as negotiated in
the contract. In the case of an incentive in the form of an issuance of equity
instruments, cost is measured at the estimated fair value of the equity instruments at the
time they are issued. For incentives in the form of discounts, cost is measured at the
value of the financial commitment granted and a corresponding amount is recorded in other
long-term liabilities. As services are provided to the client, the amount is reversed in
the statement of earnings and recognized as revenue. Amortization of the incentives is
presented as a reduction of revenue.
   Fixed assets acquired in connection with outsourcing
contracts are capitalized to fixed assets and amortized, consistent with the amortization
policies described previously. The excess of the amount paid over the fair value of fixed
assets acquired in connection with outsourcing contracts are considered as an incentive
granted to the client and are recorded and amortized as described in the preceding
paragraph.
b) Transition costs incurred during the transition period of long-term outsourcing
          contracts
These costs consist of expenses associated with installation of systems and processes incurred after the award of outsourcing contracts and are
recorded and amortized as described above.

Definite-life intangibles and other
long-term assets
Definite-life intangibles are
recorded at cost and are amortized over their estimated useful lives, using principally
the straight-line method. The annual amortization periods by intangible asset category are
as follows:

|                                     
|-------------------------------------
|Internal software                    
|Business solutions                   
|Software licenses                    
|Customer relationships
     and other
|                                     

Goodwill
Goodwill represents the excess of the
purchase price over the fair values of the estimated net identifiable tangible and
intangible assets of entities acquired at the respective dates of acquisition. Goodwill is
tested annually as at September 30 or more frequently if impairment indicators arise, for
impairment in relation to the fair value of each reporting unit to which goodwill applies
and the value of other assets in that reporting unit. An impairment charge is recorded for
any goodwill that is considered impaired. Based on the impairment tests performed as at
September 30, 2004 and 2003, the Company concluded that no goodwill impairment charge was
required.

Accrued integration charges
Accrued integration charges are
comprised primarily of liabilities for costs incurred on business combinations, such as
provisions related to leases for premises occupied by the acquired businesses which the
Company plans to vacate.

Earnings per share
Basic earnings per share are based on
the weighted-average number of units outstanding during the period. The dilutive effect of
stock options is determined using the treasury stock method.

Stock-based compensation and other
stock-based payments
The Company has a stock option plan,
which is described in Note 9b). We record no compensation cost on the grant of stock
options to directors, officers and employees. Direct awards of stock to employees and
stock options granted to non-employees are accounted for in accordance with the fair value
method of accounting for stock-based compensation. Any consideration paid by employees and
directors on exercise of stock options is credited to share capital. Pro forma disclosures
relating to net earnings and earnings per share figures as if the fair value method of
accounting had been used has been presented in Note 9b).
As of October 1, 2004, the Company
will adopt the fair-value based method for all stock-based compensation awards and
recognize an expense in the financial statements in accordance with the amendments to the
CICA Handbook Section 3870, Stock-Based Compensation and Other Stock-Based Payments(see Future accounting changes).

Research and development costs
Research costs are charged to
earnings in the year they are incurred, net of related investment tax credits.
Development costs are charged to
earnings in the year they are incurred, net of related investment tax credits, unless they
meet specific criteria related to technical, market and financial feasibility in order to
be capitalized. Deferred development costs are included as part of Definite-life
intangiblesBusiness solutions.

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|24 | Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004
|-- | ------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------

During the year, the Company incurred
direct research and development costs of $55,577,000 ($42,835,000 in 2003), net of
related investment tax credits.

Income taxes
Income taxes are accounted for using
the liability method of tax allocation. Future income taxes relate to the expected future
tax consequences of differences between the carrying amount of balance sheet items and
their corresponding tax values. Future income tax assets are recognized only to the extent
that, in the opinion of management, it is more likely than not that the future income tax
assets will be realized. Future income tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates from the date of enactment or substantive
enactment.

Translation of foreign currencies
Revenue and expenses denominated in
foreign currencies are recorded at the rate of exchange prevailing at the transaction
date. Monetary assets and liabilities denominated in foreign currencies are translated at
exchange rates prevailing at the balance sheet dates. Unrealized translation gains and
losses are reflected in net earnings.
   Self-sustaining subsidiaries whose economic
activities are largely independent of the parent company are accounted for using the
current-rate method. Under this method, assets and liabilities of subsidiaries denominated
in a foreign currency are translated into Canadian dollars at exchange rates in effect at
the balance sheet dates. Revenue and expenses are translated at average exchange rates
prevailing during the period. Resulting unrealized gains or losses are accumulated and
reported as foreign currency translation adjustment in shareholders equity. As a
result of differences in the translation of the financial statements of foreign
subsidiaries, the foreign currency translation adjustment decreased by $69,157,000 and
$123,768,000 in 2004 and 2003, respectively. These variations resulted principally from
translating US dollar denominated goodwill.  
   The accounts of foreign subsidiaries, which
are financially or operationally dependent on the parent company, are accounted for using
the temporal method. Under this method, monetary assets and liabilities are translated at
the exchange rates in effect at the balance sheet dates and non-monetary assets and
liabilities are translated at historical exchange rates. Revenue and expenses are
translated at average rates for the period. Translation exchange gains or losses of such
subsidiaries are reflected in net earnings.

Financial instruments
The Company uses various financial
instruments to manage its exposure to fluctuations in foreign currency exchange rates. We
do not hold or use any derivative instruments for speculative trading purposes.
   We enter into financial instruments
contracts to hedge our net investment in foreign subsidiaries. Foreign exchange
translation gain or loss on the net investment is recorded under foreign currency
translation adjustment. Any realized or unrealized gain or loss on instruments covering
the net investment is also recognized in foreign currency translation adjustment.
   The Company also enters into forward contracts to hedge forecasted cash flows denominated in
currencies other than the functional currency of its subsidiaries. Gains and losses on
foreign exchange contracts designated as hedges for firm commitments or forecasted
transactions are recorded in costs of services, selling and administrative expenses when
the related transaction is realized.
   Periodic assessments of each
hedges effectiveness are performed during the year.

Recent accounting changes
As of October 1, 2003, CGI adopted
the following new Handbook Sections issued by the CICA:
a) Handbook Section 3063, Impairment of Long-Lived Assets, provides guidance
          on the recognition, measurement and disclosure of the impairment of long-lived
          assets. It replaces the write-down provisions in Section 3061, Property,
          Plant and Equipment. The provisions of the Section require an impairment
          loss for a long-lived asset to be held and used to be recognized when its
          carrying amount exceeds the sum of the undiscounted cash flows expected from its
          use and eventual disposition. The impairment loss is measured as the amount by
          which its carrying amount exceeds its fair value. The adoption of this section
          did not have a significant impact on the financial statements.

b) Handbook Section 3475, Disposal
of Long-Lived Assets and Discontinued           Operations, provides guidance on
recognizing, measuring, presenting and           disclosing long-lived assets to be
disposed of and replaces the disposal           provisions in Section 3475, Discontinued
Operations, and Section 3061, Property, Plant and Equipment. The section
provides criteria for           classifying assets as held for sale, requires an asset
classified as held for           sale to be measured at fair value less cost to sell,
provides criteria for           classifying a disposal as a discontinued operation and
specifies presentation           and disclosure for discontinued operations and other
disposals of long-lived           assets. The disclosure has been modified to conform
with the adoption of this           section.

c) Accounting Guideline 13, Hedging
Relationships, deals with           the identification, documentation, designation
and effectiveness of hedges and           also the discontinuance of hedge accounting,
but does not specify hedge           accounting methods. The disclosures required by this
Accounting Guideline are           included in Note 21.

Future accounting changes
The CICA has issued the following new
Handbook Sections:
a) Amended Section 3870, Stock-Based Compensation and Other Stock-Based
          Payments, is effective for fiscal years beginning on or after January 1,
          2004. The amendments of the section require the adoption of the fair-value based
          method for all stock-based awards and the recognition of an expense in the
          financial statements. Effective October 1, 2004,

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|Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004   25
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------

we will adopt the
          amendments on a retroactive basis, as permitted by the standard. The impact of
          the adoption on net earnings will result in an approximate charge for 2005 of
          $24,000,000 and charges for 2004, 2003 and 2002 amounting to $25,559,000,
          $8,168,000 and $4,130,000, respectively.

b) Handbook Section 3110, Asset
Retirement Obligations, focuses on the           recognition and measurement of
liabilities for obligations associated with the           retirement of property, plant
and equipment when those obligations result from           the acquisition, construction,
development or normal operation of the assets.           The standard is effective for
fiscal years beginning on or after January 1,           2004. The adoption of this
section will not have a significant impact on the           financial statements.

c) Accounting Guideline 15, Consolidation
of Variable           Interest Entities, provides clarification on the consolidation
of those           entities defined as variable interest entities, when
equity           investors are not considered to have a controlling financial interest or
they           have not invested enough equity to allow the entity to finance its
activities           without additional subordinated financial support from other
parties. Variable           interest entities are commonly referred to as special purpose
entities. The           guideline comes into effect for interim periods beginning on or
after November           1, 2004. We do not believe that the adoption of this guideline
will have a           significant impact on our financial statements.

Bookings and backlog

|                              | Year ended 
September 30,2004 | Year ended 
September 30,2003 | Year ended 
September 30,2002 | Percent 
change2004/2003 | Percent 
change2003/2002
|----------------------------- | ----------------------------- | ----------------------------- | ----------------------------- | ------------------------ | ------------------------
|                             
|(in '000 of Canadian dollars) | $                             | $                             | $                             | %                        | %                       
|Bookings                      | 3,040,900                     | 4,018,500                     | 3,525,500                     | -24.3                    | 14.0                    
|Backlog                       | 12,965,000                    | 12,300,000                    | 10,400,000                    | 5.4                      | 18.3                    
|                             

As at September 30, 2004, our backlog
of signed contracts for work that had yet to be delivered was $13.0 billion, with an
average duration of 7.2 years. Our backlog, which provides good revenue visibility,
represents new contract wins, extensions and renewals signed in fiscal 2004 of $3.0
billion, minus backlog consumption during the year. The backlog figure as at September 30,
2004 includes the signed contracts that were acquired from AMS on May 3, 2004. Contract
bookings included new 10-year contracts with Cox Insurance Holdings Plc (Cox)
(£138 million), Cott Corporation ($210.0 million) and Robert Plan Corporation
(Robert Plan) (US$167.0 million) and the termination of Firemans Fund
Insurance Companys remaining contract. The bookings for 2003 reflected the $1.5
billion contract extension with the BCE family while the 2002 bookings included the
10-year $1.75 billion contract with Canada Post.

Comparison of operating results for
fiscal years 2004, 2003 and 2002Revenue

|                                      | Year ended 
September 30, 2004 | Year ended 
September 30,2003 | Year ended 
September 30,2002
|------------------------------------- | ------------------------------ | ----------------------------- | -----------------------------
|                                     
|                                     
|Revenue (in `000 of Canadian dollars) | 3,243,612                      | 2,684,816                     | 2,135,189                    
|Growth over previous year             | 20.8%                          | 25.7%                         | 36.8%                        
|                                     

Revenue increased $558.8 million or
20.8% in 2004. External revenue growth was 21.0% and primarily attributable to our
acquisition of AMS in May 2004 and COGNICASE Inc. (Cognicase) in January 2003.
Year-over-year organic growth of 2.0% was driven by new bookings from a combination of new
client wins, notably with Bombardier Aerospace, Robert Plan, Alcan Inc.s Rolled
Products North America division (Alcan) and Cox, as well as contract renewals,
extensions and add-on projects from existing clients. The currency exchange rate
fluctuations, mainly between the Canadian and US dollars, reduced the year-over-year
growth by 2.2%. The growth between 2002 and 2003 of 25.7% resulted from external growth of
20.2%, organic growth of 6.5% and negative foreign currencies fluctuations of 1.0%. The
external growth was mainly attributable to the acquisitions of Cognicase, UAB and INSpire
Insurance Solutions Inc., while the internal growth

---

|26 | Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004
|-- | ------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------

resulted from new client wins,
notably Canada Post, Purolator and Air Liquide.  

We calculate organic or internal growth
as total revenue less the revenue run-rate from acquired companies as at the transaction
date and the impact from the fluctuations of foreign currencies against the Canadian
dollar.

Revenue mix
The revenue mix by contract type,
geographic market and targeted vertical is as shown below:

|Revenue mix                                 | Year ended 
     September 30, 2004 | Year ended 
     September 30,2003 | Year ended 
     September 30,2002
|------------------------------------------- | ----------------------------------- | ---------------------------------- | ----------------------------------
|                                           
|                                            | %                                   | %                                  | %                                 
|By contract type                            |                                     |                                    |                                   
|Outsourcing                                 | 62                                  | 73                                 | 72                                
|Systems integration and consulting ("SI&C") | 38                                  | 27                                 | 28                                
|According to client geography              
|Canada                                      | 71                                  | 78                                 | 72                                
|US                                          | 24                                  | 17                                 | 22                                
|All other regions                           | 5                                   | 5                                  | 6                                 
|By vertical                                
|Financial services                          | 38                                  | 41                                 | 40                                
|Telecommunications and utilities            | 23                                  | 22                                 | 27                                
|Government and healthcare                   | 22                                  | 17                                 | 16                                
|Retail and distribution                     | 11                                  | 12                                 | 8                                 
|Manufacturing                               | 6                                   | 8                                  | 9                                 
|Top five clients                            | 30.6                                | 33.8                               | 35.1                              
|BCE family                                  | 15.9                                | 18.6                               | 23.5                              
|                                           

Revenue derived from our long-term
outsourcing contracts represented 62% of the total revenue in fiscal 2004, including
approximately 47% from IT services and 15% from BPO services. Project-oriented systems
integration and consulting (SI&C) work represented 38% of our revenue, up
from 27% compared with last year due to the acquisition of AMS whose operations were
concentrated in the SI&C business. However, our long-term targeted mix of revenue
between outsourcing contracts and SI&C contracts remains 75% and 25%, respectively.
   The revenue mix based on our
clients geography changed from last year, mainly as a result of the acquisition of
AMS, whose business concentrated on serving mostly clients located in the United States
and Europe.  
   In fiscal 2004, we maintained the diversification of our revenue mix among the
industry verticals that we target with our expertise. However, since AMS revenue was
primarily concentrated in the government and healthcare, and in the telecommunications and
utilities sectors, the proportion of revenue from clients in the financial services
vertical decreased to 38% of CGIs total revenue, compared with 41% in 2003.
Meanwhile, telecommunications and utilities represented 23% compared with 22% in 2003; the
government and healthcare sector represented 22%, up five percentage points; retail and
distribution, was 11%, down one percentage point; and manufacturing was 6%, compared with
8% during the last fiscal year. The main change in our vertical mix
between 2002 and 2003 resulted from our growth with Innovapost in the retail and
distribution vertical. The decrease in the telecommunications and utilities vertical
resulted from the acquisition of companies having less presence in this sector.
   Our top
five clients represented 30.6% of total revenue in 2004, compared with 33.8% last year.
Combined revenue from contracts with the BCE family of companies decreased to 15.9% of our
total revenue, compared with 18.6% in 2003. However, on an absolute dollar basis, revenue
from our top five clients and from the BCE family increased 9.4% and 3.4% respectively,
compared with last year.

---

|Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004   27
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------

Operating expenses, EBIT and interest

|                                                                | Year ended 
     September 30, 2004 | Year ended 
     September 30,2003 | Year ended 
     September 30,2002 | As a 
     percentage of 
     total revenue2004 | As a 
     percentage of 
     total revenue2003 | As a 
     percentage of 
     total revenue2002
|--------------------------------------------------------------- | ----------------------------------- | ---------------------------------- | ---------------------------------- | ------------------------------------------------ | ------------------------------------------------ | ------------------------------------------------
|                                                               
|(in '000 Canadian dollars except percentages)                   | $                                   | $                                  | $                                  | %                                                | %                                                | %                                               
|Costs of services, selling, and                                 |                                     |                                    |                                    |                                                  |                                                  |                                                 
|administrative expenses                                         | 2,717,040                           | 2,244,511                          | 1,810,077                          | 83.8                                             | 83.6                                             | 84.7                                            
|Research expenses                                               | 26,710                              | 22,036                             | 017,609                            | 0.8                                              | 0.8                                              | 0.8                                             
|Amortization expenses
        Fixed assets                      | 48,214                              | 43,940                             | 28,192                             | 1.5                                              | 1.6                                              | 1.3                                             
|Contract costs related to
           transition costs           | 9,633                               | 4,219                              | 2,656                              | 0.3                                              | 0.2                                              | 0.1                                             
|Definite-life intangibles and
           other long-term assets | 102,570                             | 72,974                             | 46,046                             | 3.2                                              | 2.7                                              | 2.2                                             
|Impairment of contract costs                                    | 4,034                               | --                                 | --                                 | 0.1                                              | --                                               | --                                              
|                                                               
|Amortization expenses                                           | 164,451                             | 121,133                            | 76,894                             | 5.1                                              | 4.5                                              | 3.6                                             
|EBIT (1)                                                        | 335,411                             | 297,136                            | 230,609                            | 10.3                                             | 11.1                                             | 10.8                                            
|Interest on long-term debt                                      | 20,675                              | 12,578                             | 2,411                              | 0.6                                              | 0.5                                              | 0.1                                             
|                                                               

(1)              Earnings
before interest, income taxes, entity subject to significant influence           and
discontinued operations.


Our cost of services, selling and
administrative expenses was $2,717.0 million, up $472.5 million in 2004, reflecting the
growth in the business coming from the acquisition of AMS as well as the start-up of new
contracts. In 2003, these costs were up from the previous year by $434.4 million, again
reflecting the impact of acquisitions in that year as well as the start-up of new
contracts won in that timeframe. The costs of services, selling and administrative
expenses were 83.8% of revenue in 2004, reflecting an increase of 0.2% from the previous
year resulting from the incremental costs related to the integration of the AMS operations
into CGI. The reduction of 0.9% achieved in the previous year reflected the timing and the
longer time span we had between the acquisition date and the yearend for Cognicase and
UAB, versus that for AMS, to realize the synergies of the combination. Research expenses
were $26.7 million in 2004, up $4.7 million or 21.2% from 2003. Research expenses as a
percentage of revenue were 0.8%, which is comparable with previous years.
   In fiscal 2004, research and
development expenses including capitalized expenses were $76.8 million, of which direct
costs represented $55.6 million. In fiscal 2003, research and development expenses
including capitalized expenses were $59.2 million, of which direct costs totalled $42.8
million.
   Total amortization expenses were $164.5 million, up $43.3 million compared with
2003. This is broken down as follows: an increase of $29.6 million related to the
amortization of definite-life intangibles and other long-term assets; an increase of $4.3
million related to the amortization of fixed assets; $5.4 million related to the
amortization of contract costs related to transition costs; and $4.0 million related to
the accelerated amortization of a non-profitable contract.
   As detailed in Note 10 to the
consolidated financial statements, in 2004, amortization of fixed assets increased $4.3
million to $48.2 million, reflecting our purchases of fixed assets related to the start-up
of new outsourcing contracts and business acquisitions, as well as the investments we made
for leasehold improvements to our E-Commerce Place facilities in Montreal.
   The amortization of contract costs
related to transition costs was $9.6 million for the year and is associated with costs
incurred in the initial phases of new projects.
   The amortization of definite-life
intangibles and other long-term assets increased to $102.6 million, up $29.6 million from
last year and up $26.9 million for 2003. The primary cause of these increases was the
addition of intangible assets from acquisitions, namely client relationships and business
solutions.

Earnings before interest, income
taxes, entity subject to significant influence and discontinued operations (EBIT).
EBIT was $335.4 million, representing
an increase of $38.3 million or 12.9% compared with 2003. EBIT margin (i.e. EBIT over
revenue) was 10.3% for the year, compared with 11.1% in 2003 and 10.8% in 2002. The
increase in EBIT versus 2003 is mostly attributable to the growth in our business from
acquisitions and new contracts. The year-over-year change in the EBIT margin is reflective
of the higher cost structure related to the AMS operations and the costs related to the
start-up of new outsourcing contracts.

Interest
Interest on long-term debt increased
to $20.7 million from $12.6 million as a result of the additional debt issued to partially
finance the AMS acquisition, as described in the section Significant developments in
2004". In 2003, we issued debt to partially finance the acquisitions of UAB and
Cognicase. Other interest for the year was $8.7 million, up from $3.1 million for

---

|28 | Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004
|-- | ------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------

the previous year, as a result of the
fact that the Company held a higher average cash balance.

Income taxes Our
effective income tax rate in 2004 was down to 35.0%, compared with 39.4% in 2003 and
41.6% in 2002. The decrease in our tax rate compared with last year reflects the
reduction in the Canadian combined federal and provincial statutory tax rates and a more
balanced distribution of our earnings across our major geographic markets.

Net earnings and earnings per share
CGIs net earnings and basic and
diluted earnings per share for fiscal 2004, 2003 and 2002 were as follows. In fiscal 2004,
earnings before entity subject to significant influence and discontinued operations were
$210.3 million, up 20.6% over 2003. Net earnings from discontinued operations of $8.8
million for 2004 were comprised of the net earnings of the assets sold to Nexxlink on
October 21, 2003, as well as the net earnings resulting from the sale of our Starquote
market data services business announced April 12, 2004. In line with GAAP with respect to
the disposal of long-lived assets and discontinued operations, our yearly revenue and net
earnings were adjusted to present these results as net earnings from discontinued
operations.
   Net earnings in 2004 increased $42.2
million or 23.8% to $219.6 million compared with $177.4 million in 2003. Net earnings for
2003 were up 30.6% over comparable net earnings of 2002. The net earnings margin improved
to 6.8% from 6.6% in 2003 and 6.4% in 2002. Basic and diluted earnings per share of $0.52
in fiscal 2004 were up from $0.45 in 2003 and up from basic and diluted earnings per share
of $0.36 in 2002. CGIs basic weighted average number of shares outstanding at the
end of the year was 419,510,503, up by 24,318,576 shares when compared with last year,
following the issuance of 41.3 million shares on May 3, 2004, to partially finance the
acquisition of AMS and the exercise of stock options. The increase in the number of shares
outstanding between 2003 and 2002 was the result of the shares issued for the acquisition
of Cognicase in January 2003.

|Earnings and earnings per share                                                                    | Year ended 
September 30, 2004 | Year ended 
     September 30,2003 | Year ended 
     September 30,2002 | Change2004/2003 | Change2003/2002
|-------------------------------------------------------------------------------------------------- | ------------------------------ | ---------------------------------- | ---------------------------------- | --------------- | ---------------
|                                                                                                  
|(in '000 Canadian dollars except share data)                                                       |                                |                                    |                                    |                 |                
|Earnings before entity subject to significant                                                      |                                |                                    |                                    |                 |                
|influence and discontinued operations                                                              | 210,322                        | 174,383                            | 134,847                            | 20.6%           | 29.3%          
|Earnings before entity subject to significant
        influence and discontinued operations margin | 6.5%                           | 6.5%                               | 6.3%                               |                 |                
|Net earnings                                                                                       | 219,600                        | 177,366                            | 135,799                            | 23.8%           | 30.6%          
|Net earnings margin                                                                                | 6.8%                           | 6.6%                               | 6.4%                               |                 |                
|Weighted average number of Class A                                                                
|subordinate shares and Class B shares                                                              | 419,510,503                    | 395,191,927                        | 377,349,472                        | 6.2%            | 4.7%           
|Basic and diluted earnings per share
        from continuing operations                            | 0.50                           | 0.44                               | 0.36                               | 0.06            | 0.08           
|Basic and diluted earnings per share                                                               | 0.52                           | 0.45                               | 0.36                               | 0.07            | 0.09           
|                                                                                                  

Pro forma net earnings
Under the stock option plan, had
compensation cost been determined using the fair value method at the date of grant for
awards granted since October 1, 2001, our pro forma net earnings from continuing
operations, basic and diluted earnings per share from continuing operations would have
been $185.3 million, $0.44 and $0.44, respectively, for the year ended September 30, 2004.
Our pro forma net earnings, basic and diluted earnings per share would have been $194.0
million, $0.46 and $0.46, respectively.

Reconciliation of results reported in
accordance with Canadian GAAP to US GAAP
Under US GAAP, net earnings for
fiscal 2004 would have been $218.2 million, and the basic and diluted earnings per share
would have been $0.52 and $0.52, respectively. US GAAP and Canadian GAAP are becoming
increasingly aligned.

Performance by lines of business
As discussed in an earlier section,
we have two LOBs: IT services and BPS. We manage our operations, evaluate each LOBs
performance and report segmented information according to this structure (see Note 16 to
the consolidated financial statements for the years ended September 30, 2004, 2003 and
2002). We modified our operational structure in the fourth quarter of fiscal 2003 to
primarily reflect the global delivery approach that we take in providing IT services to
our clients. Each of our IT services outsourcing contracts are increasingly being
delivered through a combination of business units that balance the clients
requirements for local delivery and sales support with the economies and expertise
available from our global network of centers of excellence and technology centers. The
delivery of these contracts across international borders mixes and matches the best of CGI
for our clients.

---

|Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004   29
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------

IT services
CGIs position as a leading
end-to-end IT services provider in its markets, coupled with numerous strong client
relationships and high client satisfaction ratings, fueled solid growth in 2004. Revenue
was driven by a combination of IT and BPO and SI&C contract wins, renewals and add-on
projects as well as acquisitions.
   In 2004, revenue derived from delivering IT services
increased 25.2% from the previous years revenue. External growth accounted for 23.8%
of the year-over-year increase and organic growth in constant dollars was 3.5%. In 2004,
revenue growth versus 2003 was offset marginally by the currency exchange rate
fluctuation, mainly between the Canadian and US dollar, which reduced the year-over-year
growth by $43.9 million or 2.0%.
   External growth for 2004 and 2003 was
driven primarily by the acquisitions of AMS in April 2004 and Cognicase in January 2003,
respectively, while organic growth resulted from new large outsourcing contracts in all of
our major geographic markets as well as an overall increase of business solutions sales.
   EBIT was $340.6 million, up $46.8 million from $293.8 million in 2003 and up $119.0
million from 2002. The primary drivers for the EBIT growth were the business acquisitions
and the new contracts started in the respective periods. The EBIT margin was 12.5%, down
1.0% from 13.5% in 2003. The change in the EBIT margin was reflective of the higher cost
structure of the AMS operations.
   The 13.5% EBIT margin for 2003 had
increased 0.9% from the previous year as a result of the full adoption of the CGI global
business model within the US operations and adherence to CGIs standard management
ratios. As well, our IT outsourcing business has grown in the US, leveraging our
near-shore and offshore delivery model which takes advantage of the lower cost delivery
services in Canada and India. The revenue growth in the UK allowed this operation to
leverage its infrastructure, therefore delivering improved margin performance.

|Performance by line of business | Year ended 
September 30, 2004 | Year ended 
     September 30,2003 | Year ended 
     September 30,2002
|------------------------------- | ------------------------------ | ---------------------------------- | ----------------------------------
|                               
|(in '000 Canadian dollars)      | $                              | $                                  | $                                 
|Revenue                         |                                |                                    |                                   
|IT services                     | 2,733,371                      | 2,182,568                          | 1,756,380                         
|BPS                             | 510,241                        | 502,248                            | 378,809                           
|                               
|Total revenue                   | 3,243,612                      | 2,684,816                          | 2,135,189                         
|                               
|EBIT
       IT services         | 340,604                        | 293,820                            | 221,563                           
|BPS                             | 74,108                         | 71,358                             | 65,722                            
|Corporate                       | (79,301)                       | (68,042)                           | (56,676)                          
|                               
|Total EBIT                      | 335,411                        | 297,136                            | 230,609                           
|                               

BPS
In 2004, our BPS revenue was $510.2
million, up $8.0 million or 1.6% from 2003 and up $131.4 million or 34.7% from 2002. The
business process outsourcing activities represented 15.7% of our total revenue in 2004,
reflecting a year-over-year external growth of 9.1%, offset by the impact of foreign
currency fluctuations, totaling $16.2 million or 3.2% of revenue, and by negative internal
growth of 4.3%. The external growth reflected mainly the incremental months in the current
fiscal year of BPS revenue acquired from UAB and Cognicase in January 2003. The negative
internal growth was due to the expiry of some contracts and termination of contracts
inherited from acquisitions which were not meeting CGIs profitability targets.
   EBIT for the BPS LOB increased $2.8 million or 3.9% to $74.1 million from the previous year and
$8.4 million or 12.8% from 2002. The increase of our EBIT versus 2003 and 2002 resulted
mainly from the growth of our BPO activities, mainly following the Cognicase and UAB
acquisitions in 2003.
   The EBIT margin was 14.5% in 2004, up
0.3 percentage point from 14.2% in 2003 but down 3.1 percentage points from 17.3% in 2002.
The improvement of our margin in 2004 versus last year reflected the termination of
certain contracts which were underperforming, synergies realized following the
acquisitions of UAB, and the BPO operations of Cognicase in 2003 and actions taken to
reduce and control expenses. The decline of our profitability in 2003 versus 2002 resulted
from a decline in the healthcare and banking and investment sectors.

Corporate expensesCorporate expenses were $79.3 million
for fiscal 2004, up $11.3 million, reflecting the growth of our operations. Corporate
spending as a percentage of revenue was 2.4%, down 0.1% from the previous year and down
0.2% from 2002, reflecting the synergies realized from the growth of our business.

Liquidity and capital resourcesWe finance the growth of our business
through cash flows from operations combined with the issuance of debt, borrowing under our
existing credit facilities or the issuance of equity. One of our primary financial goals
is to maintain the optimal level of liquidity through the active management of our assets
and liabilities as well as cash flows.
   As at September 30, 2004, we held $200.6 million in
cash and cash equivalents, an increase of $117.1 million from September 30, 2003. The net
change in cash and cash equivalents from continuing operations was $115.1 million, $138.4
million higher than last year. Historically, the majority of our cash and cash equivalents
have been provided by continuing operating activities. In 2004, cash provided by
continuing operating activities was higher by $1.9 million when compared with the previous
fiscal year after taking into account the payment of $78.6 million

---

|30 | Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004
|-- | ------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------

for the income taxes that were due to
the sale of AMSs defense business and the payment of $85.7 million in integration
costs for our acquisitions. Cash used in continuing investing activities was $240.8
million higher than 2003, while the cash provided by continuing financing activities was
$378.0 million more than in 2003. These variances resulted from the acquisition of AMS
and the related issuance of shares that partially funded the purchase.

|                                                                             | Year ended 
September 30, 2004 | Year ended 
     September 30,2003 | Year ended 
     September 30,2002
|---------------------------------------------------------------------------- | ------------------------------ | ---------------------------------- | ----------------------------------
|                                                                            
|(in '000 Canadian dollars)                                                   | $                              | $Restated                          | $                                 
|Net cash provided by (used in):                                              |                                |                                    |                                   
|Continuing operating activities                                              | 229,819                        | 227,939                            | 176,384                           
|Continuing investing activities                                              | (698,541)                      | (457,745)                          | (215,603)                         
|Continuing financing activities                                              | 583,653                        | 205,639                            | 92,894                            
|Effect of rate changes on cash and cash equivalents of continuing operations | 186                            | 917                                | 3,475                             
|                                                                            
|Net change in cash and cash equivalents of continuing operations             | 115,117                        | (23,250)                           | 57,150                            
|Net cash and cash equivalents provided by discontinued operations            | 1,997                          | 2,538                              | 1,063                             
|                                                                            
|Cash and cash equivalents, beginning of year                                 | 83,509                         | 104,221                            | 46,008                            
|                                                                            
|Cash and cash equivalents, end of year                                       | 200,623                        | 83,509                             | 104,221                           
|                                                                            

In fiscal 2004, the increase in cash
flow from continuing operating activities was driven by higher net earnings from
continuing operations and the increase in amortization from AMS operations, representing
an increase of $81.4 million over fiscal 2003. However, this was offset by the net change
in non-cash working capital items of $210.4 million, which was $95.4 million lower than
last year and is due to the impact of the income tax payments related to the AMS sale of
the defense business and the payment of integration costs described in more detail below.
   Days sales outstanding
(DSOs) were 53 days at September 30, 2004, down eight days from the 61 days at
June 30, 2004, following the acquisition of AMS, and slightly higher than the 51 days at
September 30, 2003. This demonstrates our ability to manage the increase in business from
large acquisitions without significantly affecting DSOs. In calculating DSOs we subtract
the deferred revenue balance and the tax credits receivable from the accounts receivable
and work in progress. The net cash provided by accounts receivable also included $87.3
million of refundable tax credits on salaries received during the year, as compared to the
$43.0 million received in fiscal 2003.
   Another significant item affecting
the fiscal 2004 change in non-cash working capital was income tax payable. Following the
acquisition of AMS, we paid $78.6 million in income taxes as a result of the sale of the
AMS defense business. This liability was set-up at the acquisition date and did not have
an impact on cash flow at that time, however it did negatively impact our cash flow from
continuing operating activities when the payment was made in September 2004. Accounts
payable and accrued liabilities were also increased at the acquisition date to account for
severance payments and costs to exit activities. However, after the acquisition, when
payments were issued for these severance payments and exit costs, they were reflected as a
use of cash by continuing operating activities. The decrease of this provision from May 3,
2004, the date of the acquisition, until September 30, 2004, was $72.4 million. Excluding
these two items, cash provided by operations would have been $151.1 million higher.
   Payments from clients in advance of the work being performed and deferred revenue may
fluctuate from year to year depending on the timing of payments received from outsourcing
clients. This

---

|Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004   31
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------

had a negative impact on the cash
balance of $7.6 million. Furthermore, the change in accrued compensation had a negative
impact of $39.1 million in the net change in non-cash working capital items. This is due
to the timing of payroll related payments made during fiscal 2004 versus the prior year.
   Cash used in continuing investing activities was $698.5 million in 2004, an increase of
$240.8 million compared with the prior fiscal year. The majority, or $589.7 million, of
the 2004 continuing investing activities was for business acquisitions.
   Details of our
business acquisitions can be found in Note 12 to the consolidated financial statements.
In fiscal 2004, we made one major acquisition and several smaller niche acquisitions for
a total net cash consideration of $589.7 million. AMS, acquired on May 3, 2004, was
purchased for a net cash consideration of $584.0 million. Some $325.2 million was raised
through an equity private placement and $255.8 million was raised through a debt private
placement with the balance coming from existing cash resources. Other business
acquisitions represented a net cash investment of $5.7 million. In fiscal 2003, we
completed five acquisitions of IT consulting firms. The cash used for these acquisitions
was $233.0 million. In fiscal 2002, our investments included $19.9 million to acquire
five IT consulting firms and $26.0 million for the start-up of our joint venture,
Innovapost.
   The proceeds from the sale of
businesses of $87.5 million in 2004 were generated by the sale of several operations
acquired with Cognicase, as well as the sale of the Starquote business, and of the
Clearwater, Florida building acquired with IMRglobal Corp. in July 2001.
   The 2004
investment in fixed assets of $54.6 million related mostly to leasehold improvements of
$24.2 million, including approximately $10.0 million for the installation costs for our
Montreal offices at E-Commerce Place and Cité Multimedia. In addition, computer
equipment purchases of $26.6 million were required to support the growth in our
operations.
   Our investment in contract costs of
$76.3 million increased by $47.1 million when compared with the $29.2 million spent in the
prior year. Included in this amount are approximately $18.6 million in incentives that
were granted as part of outsourcing contracts announced during the year with clients such
as Cox, Robert Plan and Alcan. Additionally, approximately $59.8 million represent the
transition costs incurred with outsourcing clients in their initial contract period, such
as Canada Post, Robert Plan and GrafTech. Last year, the amount was comprised of
transition costs and incentives for large outsourcing contracts signed, the most
significant being Alcan and Air Liquide.
   The net investment in definite-life
intangibles and other long-term assets of $65.5 million was $68.7 million lower than last
year. The details of what is included in this category are provided in the section
Critical Accounting Policies and Estimates. As per normal business with our
outsourcing clients, software licenses were acquired for an approximate value of $45.9
million in addition to $23.5 million of business solutions, in order to deliver IT
outsourcing services. The decrease versus 2003 was mainly due to last years
investment in the Innovapost joint venture, representing $25.4 million mostly related to
the enterprise resource system used by Canada Post. In addition, we invested approximately
$23.5 million in 2003 to implement new internal financial software, which represented
$20.1 million more than this year.
   Cash provided by continuing financing
activities was $583.7 million in 2004, compared with $205.6 million during 2003.
Continuing financing activities in 2004 included the issuance of a debt private placement
for $255.8 million, a net drawdown of $21.5 million from our unsecured committed credit
facilities and a $325.2 million equity private placement (net of fees). The cash provided
was used primarily to finance the acquisition of AMS and to strengthen our cash position
for future growth. The debt private placement was issued to strengthen capital resources,
and to better match the duration of our liabilities with the average term of our backlog.
More details surrounding this agreement are provided in the Significant Developments
in 2004Other section. In fiscal 2003, continuing financing activities included
the signing, on November 12, 2002, of an agreement with a banking syndicate pertaining to
two unsecured credit facilities. Under this agreement, CGI used an amount of $309.0
million to finance its activities, particularly to pay the cash portion of the
acquisitions of Cognicase and UAB. At the end of fiscal 2003, we were able to reimburse
$90.0 million of this long-term debt with the cash generated by continuing operating
activities.

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|32 | Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004
|-- | ------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------

Selected measures of liquidity and
capital resources

|                                                               | 2004    | 2003    | 2002   
|-------------------------------------------------------------- | ------- | ------- | -------
|                                                              
|                                                               | $       | $       | $      
|Working capital (in `000 of Canadian dollars)                  | 353,718 | 227,452 | 202,212
|Current ratio                                                  | 1.45:1  | 1.40:1  | 1.55:1 
|Shareholders' equity per
   common share (in Canadian dollars) | 5.54    | 4.93    | 4.67   
|Long-term debt to capitalization ratio                         | 16.6%   | 11.9%   | <1%    
|Days sales outstanding                                         | 53      | 51      | 50     
|                                                              

Shareholders equity increased
mainly due to the issuance of shares during the year as part of the funding of the AMS
acquisition and net earnings achieved in the year, which amounted to $219.6 million. The
capital stock increased mainly following the issuance of 41,340,625 Class A subordinate
shares in May 2004 to partially fund the AMS acquisition. This share issue generated
$330.7 million. An additional 136,112 shares were issued to pay for the other smaller
acquisitions made during the year. However, the total increase in shareholders
equity was partially offset by the change in the foreign currency translation adjustment
of $69.2 million, mainly due to the 6.2% depreciation of the US dollar versus the Canadian
dollar between September 30, 2003 and September 30, 2004. We translate the assets
denominated in foreign currencies using the year-end exchange rates.
   The long-term debt to capitalization
ratio increased during the year as a function of the increase in long-term debt as
mentioned earlier. Some of the acquisitions we made since 2001, including IMRglobal Corp.
and Star Data Systems Inc., were financed mainly through the issuance of shares.
   The days sales outstanding, as at September 30, 2004, increased to 53 days from 51 days at
September 30, 2003, while the increase in accounts receivable and work in progress net of
the increase in deferred revenue totaled $152.1 million. The majority of this increase can
be attributed to CGIs growth, including the new business acquired with AMS.

Capital resources

|                                         | Total commitment(1) | Available at September 30, 2004 | Outstanding at September 30, 2004 | Available at September 30,2003 | Outstanding at September 30,2003
|---------------------------------------- | ------------------- | ------------------------------- | --------------------------------- | ------------------------------ | --------------------------------
|                                        
|(in `000 of Canadian dollars)            | $                   | $                               | $                                 | $                              | $                               
|Unsecured committed revolving facilities | 515,000             | 283,608                         | 231,392(2)                        | 285,500                        | 229,500                         
|Lines of credit and other facilities     | 38,300              | 29,607                          | 8,693(3)                          | 27,700                         | 0                               
|                                        

(1)   Excluding any existing credit facility for non-majority owned entities.
(2)   Consists of US$175 million of US LIBOR and of $10.2 million of drawn Letters of Credit.
(3)   Consists of US$6.9 million of drawn Letters of Credit.


Our cash position, together with bank
lines, is sufficient to support our growth strategy. At September 30, 2004, cash and cash
equivalents were $200.6 million and the total credit facility available amounted to $313.2
million. Cash equivalents typically include commercial paper and term deposits as well as
bankers acceptances and bearer deposit notes issued by major Canadian banks.
   The $515.0 million commitment is comprised of a $186.2 million revolving credit facility for
our operating activities and working capital purposes and a $328.8 million three-year term
revolving credit facility, expiring in November 2005, for the financing of acquisitions
and outsourcing contracts. We also have access to a $25.0 million demand line of credit
for cash management purposes, $8.7 million to cover outstanding letters of credit and $4.6
million of other facilities to cover other requirements. The $186.2 million revolving
credit facility, at the option of the lenders, may be renewed on an annual basis for an
additional year. Otherwise, we have the option of locking the balance outstanding on this
credit facility into a two-year term loan. The bank credit facility contains certain
covenants, which require us to maintain certain financial ratios. At September 30, 2004,
and September 30, 2003, CGI was in compliance with these covenants.
   We continuously review
our cash management and financing strategy in order to optimize the use of funds generated
from operations and could modify the current financial structure if we deemed it
beneficial to the Company. We expect that new large outsourcing contracts or large
acquisitions will be financed by the issuance of debt and equity, should additional cash
resources be required.

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|Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004   33
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------

Contractual obligations

|Payments due by period                         
|-----------------------------------------------
|                                               
|                                               
|                                               
|(in `000 of Canadian dollars)                  
|Long-term debt                                 
|Capital lease obligations                      
|Operating leases
        Rental of office space
|Computer equipment                             
|Long-term service agreements                   
|                                               
|Total contractual obligations                  
|                                               

We are committed under the terms of
contractual obligations with various expiration dates, primarily for the rental of
premises, computer equipment used in outsourcing contracts and long-term service
agreements in the aggregate amount of $1,927.4 million. Of this, rental of office space
represents $1,175.5 million, computer equipment totals $193.1 million and long-term
service agreements, which are comprised of enterprise license and maintenance contracts,
represent $69.0 million. Computer equipment leases pertain to hardware leased from
manufacturers or financial institutions in the course of business activities. As part of
the outsourcing agreements, clients have agreed to take back the computer equipment in
case of early contract termination.
    We do not engage in the practice of off-balance sheet
financing, except for the use of operating leases for office space, computer equipment and
vehicles. In accordance with GAAP, neither the lease liability nor the underlying asset is
carried on the balance sheet as the terms of the leases do not meet the threshold for
capitalization.
    In fiscal 2005, considering the needs
for reinvestment in our operations and the size of the investment projects, we do not
expect to pay a dividend. In the future, we will evaluate annually whether or not to pay a
dividend and this is subject to regular review by our Board of Directors.

Capability to deliver resultsWe believe that we have the capital
resources and liquidity necessary to meet our commitments and existing obligations and to
finance our operations. We also believe that we have the required noncapital resources
necessary to achieve our goals for continued growth, including a strong management team
with a very low historical turnover rate, sophisticated frameworks for ongoing managerial
training and quality processes that help us integrate new members as part of large
outsourcing contract wins or acquisitions.

Risks and uncertaintiesWhile we are confident about our
longterm prospects, the following risks and uncertainties could affect our ability to
achieve our strategic vision and objectives for growth and should be considered when
evaluating our potential as an investment.

Risks related to our industry
The competition for contractsWe
have a disciplined approach to the management of all aspects of our business, with an
increasing proportion of our operations codified under ISO 9001 certification. Our
management processes were developed to help us ensure that our employees consistently
deliver services according to our high standards and that they are based on strong values
underlying our client-focused culture. These processes have contributed to CGIs high
contract win rate and renewal rate to date. Additionally, we have developed a deep
strategic understanding of the five economic sectors we target, and this helps enhance our
competitive position. CGI is a leading provider of IT and BPO services in Canada, and
through a combination of organic growth and acquisitions, we continue to strengthen our
position in the US outsourcing market. We have made good progress in growing our revenue
from the US and internationally over the last three years and expect this trend to
continue. However, the market for new IT and BPO contracts remains very competitive and
there can be no assurances that we will continue to compete successfully.
   The long sales cycle for major
outsourcing contractsThe average sales cycle for large outsourcing contracts
typically ranges from six to 18 months, with some extending over 24 months. If current
market conditions prevail or worsen, the average sales cycle could become even longer,
thus affecting our ability to meet our growth targets.
   The availability and cost of
qualified IT professionalsThe high growth of the IT industry results in strong
demand for qualified individuals. Over the years, we have been able to successfully staff
for our needs thanks to our solid culture, strong values and emphasis on career
development, as well as performancedriven remuneration. In addition, we have implemented a
comprehensive program

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|34 | Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004
|-- | ------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------

aimed at attracting and retaining
qualified and dedicated professionals and today, we believe that we are a preferred
employer in the IT services industry. We also secure access to additional qualified
professionals through outsourcing contract wins and business acquisitions.
   The ability to continue developing
and expanding service offerings to address emerging business demands and technology
trendsCGI remains at the forefront of developments in the IT services industry, thus
ensuring that we can meet the evolving needs of our clients. We achieved this expertise as
a result of our specialization in five targeted economic sectors; our non-exclusive
commercial alliances with hardware and software vendors and strategic alliances with major
partners; our development of proprietary IT solutions to meet the needs of our clients;
regular training and sharing of professional expertise across our network of offices; and
business acquisitions that provide specific knowledge or added geographic coverage.
   Infringing on the intellectual property rights of othersWe cannot be sure that our
services and offerings do not infringe on the intellectual property rights of third
parties, and we may have infringement claims asserted against us. These claims may be
costly, harm our reputation, and prevent us from providing some services and offerings. We
enter into licensing agreements with our clients for the rights to use intellectual
property that include a commitment to indemnify the licensee against liability and damages
arising from any third-party claims of patent, copyright, trademark or trade secret
infringement. In some instances, the amount of
these indemnity claims could be greater than the revenue we receive from the client.
Any claims or litigation in this area,
whether we ultimately win or lose, could be time-consuming and costly, injure our
reputation, or require us to enter into royalty or licensing arrangements. Any limitation
on our ability to sell or use products or services that incorporate challenged software or
technologies could cause us to lose revenue-generating opportunities or require us to
incur additional expenses to modify solutions for future projects.
   Limited ability to protect our intellectual property rightsOur success depends, in part, on our ability
to protect our proprietary methodologies and other intellectual property that we use to
provide our services. Our general practice is to pursue patent or other appropriate
intellectual property protection that is reasonable and necessary to protect and leverage
our intellectual assets. We assert trademark rights in and to our name, product names,
logos and other markings used to identify our goods and services in the marketplace. We
routinely file for and have been granted trademark registrations from the U.S. Patent and
Trademark Office and other trademark offices worldwide. However, the laws of some
countries in which we conduct business may offer only limited protection of our
intellectual property rights; and despite our efforts, the steps taken to protect our
intellectual property may not be adequate to prevent or deter infringement or other
misappropriation of intellectual property, and we may not be able to detect unauthorized
use of our intellectual property, or take appropriate steps to enforce our intellectual
property rights.

Risks related to our business
Business mix variationsThe
revenue that we generate from shorter-term SI&C projects, versus revenue from
long-term outsourcing contracts, will fluctuate at times, affected by acquisitions or
other transactions. An increased exposure to revenue from SI&C projects may result in
greater quarterly revenue variations. However, our long-term goal is to generate
approximately 75% of our overall revenues from long-term outsourcing contracts, thus
ensuring greater revenue visibility and predictability.
   The financial and operational
risks inherent in worldwide operationsWith the acquisition of AMS, we now manage
operations in 19 countries worldwide, with slightly less than 10% of revenue coming from
outside North America. We believe that our Management Foundation, which includes
management frameworks and processes that guide business unit leaders in managing our
members and clients, help ensure worldwide operational efficiency and consistency.
However, the immense scope of our worldwide operations makes us subject to currency
fluctuations; price controls or restrictions on the exchange of foreign currency; the
burdens of complying with a wide variety of national and local laws; differences in, and
uncertainties arising from, local business culture and practices; multiple and sometimes
conflicting laws and regulations, including tax laws; operating losses incurred in certain
countries as we develop our international service delivery capabilities and the
non-deductibility of those losses for tax purposes; the absence in some jurisdictions of
effective laws to protect our intellectual property rights; restrictions on the movement
of cash and other assets; restrictions on the import and export of certain technologies;
restrictions on the repatriation of earnings; and political, social and economic
instability. We have a hedging strategy in place to protect ourselves, to the extent
possible, against foreign currency exposure; but, other than the use of financial products
to deliver on our hedging strategy, we do not trade derivative financial instruments.
While we believe we have effective management processes in place in each office worldwide,
any or all of these risks could impact our global business operations and cause our
profitability to decline.
   The ability to successfully integrate business acquisitions and
the operations of IT outsourcing clientsThe integration of acquired operations has
become a core competency for us as we have acquired some 60 companies since our inception.
Our disciplined approach to management, largely based on our management frameworks, has
been an important factor in

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|Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004   35
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------

the successful integration of human
resources of acquired companies and the IT operations of outsourcing clients. As at
September 30, 2004, the majority of our operations had received ISO 9001 certification.
   Material developments regarding major
commercial clients resulting from such causes as changes in financial condition, mergers
or business acquisitionsWith the exception of BCE Inc., its subsidiaries and
affiliates, no one company or group of related companies represents more than 10% of our
total revenue.
   Early termination riskIf we failed to deliver our services according
to contractual agreements, some of our clients could elect to terminate contracts before
their agreed expiry date, which would result in a reduction of our earnings and cash flow.
We have a strong record of successfully meeting or exceeding our clients needs. We
take a professional approach to business, and our contracts are written to clearly
identify the scope of our responsibilities and to minimize risks. In addition, a number of
our outsourcing contractual agreements have change of control clauses according to which a
change in control of CGI could lead to a termination of the said agreements.
   Credit risk concentration with
respect to trade receivablesWe generate a significant portion of our revenue from
the subsidiaries and affiliates of one of our large shareholders, namely BCE Inc. However,
it is our belief that we are not subject to any significant credit risk, especially in
view of our large and diversified client base.
   Short-term, project-related contract
risksWith the acquisition of AMS, the percentage of revenue that CGI derives from
shorter-term, project-oriented contracts increased substantially. We manage all client
contracts utilizing the Client Partnership Management Framework (CPMF), a
process framework which helps ensure that client projects are all managed according to the
same high standards of consistency throughout the organization. As a result of the CPMF,
there is a high degree of rigor and discipline used to accurately estimate the cost of
client engagements. However, a significant portion of engagements that were acquired with
AMS are performed on a fixed-price basis. Billing for fixed-price engagements is made in
accordance with the contract terms agreed to with our client, and revenue is recognized
based on the percentage of costs incurred to date in relation to the total estimated costs
to be incurred over the duration of the respective contract. When making proposals for
these types of engagements, we rely on our estimates of costs and timing for completing
the projects. These estimates reflect our best judgment regarding the efficiencies of our
methodologies and professionals as we plan to apply them to the projects. Any increased or
unexpected costs or unanticipated delays in connection with the performance of fixed-price
contracts, including delays caused by factors outside our control, could make these
contracts less profitable or unprofitable.
   Guarantees riskIn the normal course of
business, we enter into agreements that may provide for indemnification and guarantees to
counterparties in transactions such as consulting and outsourcing services, business
divestitures, lease agreements and financial obligations. These indemnification
undertakings and guarantees may require us to compensate counterparties for costs and
losses incurred as a result of various events, including breaches of representations and
warranties, intellectual property right infringement, claims that may arise while
providing services or as a result of litigation that may be suffered by counterparties.
   Government tax credits riskAn
acquisition of control of CGI could translate into a loss of provincial tax credits
related to E-Commerce Place and the Cité Multimédiain
Montréal, the Carrefour de la nouvelle économiein Saguenay and the
Centre national des nouvelles technologies de Québec.
Government business
riskChanges in federal, provincial or state government spending policies or budget
priorities could directly affect our financial performance. Among the factors that could
harm our government contracting business are the curtailment of the governments use
of consulting and technology services firms; a significant decline in spending by the
governments, in general, or by specific departments or agencies in particular; the
adoption of new laws or regulations that affect companies that provide services to the
governments; delays in the payment of our invoices by government payment offices; and
general economic and political conditions. These or other factors could cause government
agencies and departments to reduce their purchases under contracts, to exercise their
right to terminate contracts, to issue temporary stop work orders, or not to exercise
options to renew contracts, any of which would cause us to lose future revenue. Our client
base in the government vertical is very diversified with contracts from many different
departments and agencies in the US and Canada; however, government spending reductions or
budget cutbacks at these departments or agencies could materially harm our continued
performance under these contracts, or limit the awarding of additional contracts from
these agencies.
   Legal claims made against our
work We create, implement and maintain IT solutions that are often critical to the
operations of our clients businesses. Our ability to complete large projects as
expected could be adversely affected by unanticipated delays, renegotiations, and changing
client requirements or project delays. Such problems could subject us to legal liability,
which could adversely impact our business, operating results and financial condition, and
may negatively affect our professional reputation. We typically include provisions in our
contracts which are designed to limit our exposure to legal claims relating to our
services and the applications we develop. These

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|36 | Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004
|-- | ------------------------------------------------------------------------------------------------------------------------------ | ---------------------------------

provisions may not protect us or may
not be enforceable under some circumstances or under the laws of some jurisdictions.

Risks related to business
acquisitions
Difficulties in executing our
acquisition strategyA significant part of our growth strategy is dependent on our
ability to continue making niche acquisitions to increase the breadth and depth of our
service offerings as well as large acquisitions to specifically increase our critical mass
in the US and Europe. We cannot, however, make any assurances that we will be able to
identify any potential acquisition candidates, consummate any additional acquisitions or
that any future acquisitions will be successfully integrated into our operations and
provide the tangible value that had been expected. Without additional acquisitions, we are
unlikely to maintain our historic or expected growth rates.
   Realization of acquisition
benefits We believe that our recent acquisition of AMS will provide certain benefits
to CGI that include both operational and service enhancements as well as financial
efficiencies. By increasing our critical mass in the US, enhancing our services and
capabilities and adding to our client base, we believe we will be better positioned to bid
on and win new outsourcing contracts. Additionally, we believe that substantial
operational and administrative efficiency gains will be realized during the integration of
AMS. However, there is a risk that some of the expected benefits and expected synergies of
the acquisition may fail to materialize, or may not occur within the timeline we
anticipate as of today. Our ability to realize these benefits and synergies will depend on
managements success in integrating the acquired operations, personnel and
technology. Our management faces a complex and potentially time-consuming task of
implementing uniform standards, controls, procedures and policies across our business
units. Integrating businesses can result in unanticipated operational problems, expenses
and liabilities. In addition, to the extent that management is required to devote
significant time, attention and resources to the integration of operations, personnel and
technology, our ability to service current clients may be reduced, which may adversely
affect our revenue and profitability.

Risks related to the market
Economic riskAn economic
downturn may cause our revenue to decline. The level of business activity of our clients,
which is affected by economic conditions, has a bearing upon our results of operations. We
cannot predict the impact that current economic conditions will have on our future
revenue, nor can we predict when economic conditions will show meaningful improvement.
During an economic downturn, our clients and potential clients often cancel, reduce or
defer existing contracts and delay entering into new engagements. In general, companies
also decide to undertake fewer IT systems projects during difficult economic times,
resulting in limited implementations of new technology and smaller engagements. Because
there are fewer engagements in a downturn, competition usually increases and pricing for
services may decline as competitors, particularly companies with significant financial
resources, decrease rates to maintain or increase their market share in our industry. Our
pricing, revenues and profitability could be negatively affected as a result of these
factors.

Integrity of disclosureCGIs management assumes the
responsibility for the existence of appropriate information systems, procedures and
controls to ensure that information used internally and disclosed externally is complete
and reliable. The Board of Directors duties include the assessment of the integrity
of the Companys internal control and information system.
   The Audit and Risk
Management Committee of CGI is composed entirely of unrelated directors who meet the
independence and experience requirements of the New York Stock Exchange and the TSX. The
responsibilities of the Audit and Risk Management Committee of CGI include a) the review
of all public disclosure documents containing audited or unaudited financial information
concerning CGI, b) the review and assessment of the effectiveness of CGIs accounting
policies and practices concerning financial reporting, c) the review and monitoring of
CGIs internal control procedures, programs and policies and assessment of the
adequacy and effectiveness thereof, d) recommendation to the Board of Directors of CGI on
the appointment of external auditors, assertion of the independence thereof, review of the
terms of engagement thereof and ongoing discussions therewith, e) the review of the audit
procedures, and f) such other responsibilities usually attributed to audit and risk
committees or as directed by the Board of Directors of CGI.

Legal proceedingsFrom time to time, the Company is
involved in various litigation matters arising in the ordinary course of its business. The
Company has no reason to believe that the disposition of any such current matters could
reasonably be expected to have a material adverse impact on CGIs financial position,
results of operations, or the ability to carry on any of its business activities.

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|Management's discussion and analysis of financial position and results of operations
     Fiscal year ended September 30, 2004 | CGI Group Inc. Annual Report 2004   37
|------------------------------------------------------------------------------------------------------------------------------ | --------------------------------------

OutlookOur growth strategy is driven by a
balanced mix of organic growth through smaller contracts and project wins, organic growth
through large outsourcing contract wins, acquisitions and equity investments at the
business unit level and large acquisitions.
   We will continue to leverage our competitive
differentiators in order to secure new IT and business process outsourcing contracts.
Additionally, we are active in reviewing potential acquisition candidates to increase our
critical mass in the US and Europe, and will continue to act as an IT domain consolidator
in North America. We believe that there are many acquisition opportunities available, but
are committed to certain financial, operational and cultural criteria, and will not
sacrifice these for short-term or potential gain.
   Based on current market conditions
and the opportunities we see in our markets, we provide the following guidance for fiscal
2005. We expect to achieve growth in revenue of 20% to 28% and growth in net earnings of
25% to 35%, after giving retroactive effect to the expensing of stock options. This will
represent revenue between $3.90 billion and $4.15 billion and earnings per share between
$0.52 and $0.56, after the expensing of stock options. Beginning in the first quarter of
fiscal 2005, in accordance with GAAP, CGI will begin expensing stock options. The
nondeductibility of stock options expenses for Canadian tax purposes will increase our
effective tax rate to around 35%. For comparison purposes with US
peers, which are not yet required to expense stock options under US GAAP, CGI discloses
that the effect of stock options expensing on its earnings per share is expected to be
$0.05 in fiscal 2005.

Forward-looking statementsAll statements in this MD&A that
do not directly and exclusively relate to historical facts constitute
forward-looking statements within the meaning of that term in Section 27A of
the United States Securities Act of 1933, as amended, and Section 21E of the United States
Securities Exchange Act of 1934, as amended. These statements represent CGI Group
Inc.s intentions, plans, expectations and beliefs, and are subject to risks,
uncertainties and other factors, of which many are beyond the control of the Company.
These factors could cause actual results to differ materially from such forward-looking
statements.  These factors include and are not restricted to the timing and size of
contracts, acquisitions and other corporate developments; the ability to attract and
retain qualified employees; market competition in the rapidly-evolving information
technology industry; general economic and business conditions, foreign exchange and other
risks identified in the MD&A, in CGI Group Inc.s Annual Report or Form 40-F
filed with the U.S. Securities and Exchange Commission, the Companys Annual
Information Form filed with the Canadian securities authorities, as well as assumptions
regarding the foregoing. The words believe, estimate,
expect, intend, anticipate, foresee,
plan, and similar expressions and variations thereof, identify certain of such
forward-looking statements, which speak only as of the date on which they are made. In
particular, statements relating to future growth are forward-looking statements. CGI
disclaims any intention or obligation to publicly update or revise any forwardlooking
statements, whether as a result of new information, future events or otherwise. Readers
are cautioned not to place undue reliance on these forward-looking statements.

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|38 | Management's and Auditor's reports | CGI Group Inc. Annual Report 2004
|-- | ---------------------------------- | ---------------------------------

Managements Statement of
Responsibility for Financial ReportingThe management of the Company is
responsible for the preparation and integrity of the consolidated financial statements,
the Managements Discussion and Analysis (MD&A) and related
information contained in this Annual Report. The consolidated financial statements have
been prepared in accordance with accounting principles generally accepted in Canada and
necessarily include some amounts that are based on managements best estimates and
judgment. Financial and operating data elsewhere in this Annual Report are consistent with
that contained in the accompanying consolidated financial statements.
   To fulfill its responsibility,
management developed and continues to maintain systems of internal controls reinforced by
the Companys standards of conduct and ethics set out in written policies to ensure
the reliability of the financial information and to safeguard its assets. The internal
control systems and financial records are subject to review by the independent auditors,
Samson Bélair Deloitte & Touche, Chartered Accountants, whose report follows.
They were appointed as independent auditors by a vote of the Companys shareholders
to audit the consolidated financial statements. In addition, the Management Committee of
the Company reviews the disclosure of corporate information and oversees the functioning
of the Companys disclosure controls and procedures.
   The Audit and Risk Management
Committee of the Board of Directors, all of whom are independent of the Company, meets
regularly with the independent auditors and with management to discuss internal controls
in the financial reporting process, auditing matters and financial reporting issues and
formulates the appropriate recommendations to the Board of Directors. The independent
auditors have unrestricted access to the Audit and Risk Management Committee. The
financial statements and MD&A have been reviewed and approved by the Board of
Directors for inclusion in this Annual Report.

|(Signed)SERGE GODIN
CHAIRMAN AND
CHIEF EXECUTIVE OFFICER
NOVEMBER 8, 2004 |  | (Signed)ANDRÉ IMBEAU
EXECUTIVE VICE-PRESIDENT AND
CHIEF FINANCIAL OFFICER |  | 
|------------------------------------------------------------------------- |  | ------------------------------------------------------------------------- |  | 

Auditors ReportTo the Shareholders of CGI Group Inc.
   We have audited the consolidated
balance sheets of CGI Group Inc. as at September 30, 2004 and 2003 and the consolidated
statements of earnings, retained earnings and cash flows for each of the years in the
three-year period ended September 30, 2004. These financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.
   We conducted our audits in
accordance with Canadian generally accepted auditing standards. Those standards require
that we plan and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation.
   In our opinion, these consolidated
financial statements present fairly, in all material respects, the financial position of
the Company as at September 30, 2004 and 2003 and the results of its operations and its
cash flows for each of the years in the three-year period ended September 30, 2004 in
accordance with Canadian generally accepted accounting principles.

(Signed)
CHARTERED ACCOUNTANTS
MONTRÉAL, QUÉBEC
NOVEMBER 8, 2004

---

# SIGNATURES

Pursuant
to the requirements of the Exchange Act, the registrant certifies that it meets all of the
requirements for filing on Form 40-F and has duly caused this annual report to be signed
on its behalf by the undersigned, thereto duly authorized.

|                        | Groupe CGI Inc./CGI Group Inc.                                                                                                         
|----------------------- | ---------------------------------------------------------------------------------------------------------------------------------------
|Date:  February 7, 2005 | By /s/ Paule Doré
       Name:   Paule Doré
       Title:     Executive Vice-President
                     and Chief Corporate Affairs

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# EXHIBIT INDEX

|23.1 |  | Consent
of Samson Bélair / Deloitte & Touche LLP
|---- |  | ------------------------------------------------

|99.1 |  | Certification
of the Registrant's Chief Executive Officer required pursuant to Rule 13a-14(a).
|---- |  | ----------------------------------------------------------------------------------------------

|99.2 |  | Certification
of the Registrant's Chief Financial Officer required pursuant to Rule 13a-14(a).
|---- |  | ----------------------------------------------------------------------------------------------

|99.3 |  | Certification
of the Registrants Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

|99.4 |  | Certification
of the Registrants Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------