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

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# FORM 40-F

(Check one)

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

For
the fiscal year ended September 30, 2003       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 Information Systems
& Management Consultants, Inc. 600 Federal StreetAndover, MA 01810(978) 946-3000 (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:

||X| Annual Information Form | |X| 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: 339,900,257 Class A Subordinate Shares,
40,799,774 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, 2003. 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, 2003 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
Financial Expert

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, Chair of the Audit and Risk Management Committee; and
| | - |  | ------------------------------------------------------------------------

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

# 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 of 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.

-2-

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# 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 connection with the sale of
certain assets, the Registrant has agreed to indemnify the purchasers of the assets should
a claim be filed regarding tax matters or any other matters related to the previous
ownership of these assets. 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 can not 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. Furthermore, the
Registrant has guaranteed, in the past, certain financial liabilities which relate to debt
obligations of its senior management team who purchased the Registrant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 $6,028,000 as of September 30,
2003.

# 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, 2003
|-- |  | --------------------------------------------------------------------

|2. |  | Audited
Annual Financial Statements for the fiscal year ended September 30, 2003
|-- |  | --------------------------------------------------------------------------------

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

Note: The Annual Information Form and
Managements Discussion and Analysis of Financial Position and Results of Operations
included in this report disclose free cash flow, a non-GAAP measure, which we define as
net cash provided by continuing operating activities, less purchase of fixed assets. We
report free cash flow to enable investors to differentiate between cash generated by our
ongoing business operations and cash generated or used by events or transactions unrelated
to these ongoing operations. Free cash flow should not be considered by an investor as an
alternative to net earnings as a measure of operating performance or cash provided by
continuing operating activities as a measure of liquidity.

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

|23.1 |  | Consent
of Samson Belair / Deloitte & Touche s.e.n.c.r.l.
|---- |  | ---------------------------------------------------------

|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.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

-3-

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# ANNUAL INFORMATION FORM

# CGI GROUP INC.

For the fiscal year ended
September 30, 2003

February 16, 2004

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|TABLE OF CONTENTS                                                                       
|----------------------------------------------------------------------------------------
|1.       INCORPORATION AND DESCRIPTION OF CAPITAL STOCK                                 
|1.1 The Company                                                                         
|1.2 The Subsidiaries                                                                    
|2.     GENERAL DEVELOPMENT OF BUSINESS                                                  
|2.1 Mission and Profile                                                                 
|2.1.1 CGI's Business Approach                                                           
|2.1.2 Strategic Alliances                                                               
|2.1.3 Related-Party Transactions                                                        
|2.1.4 Commercial Alliances                                                              
|3.     DESCRIPTION OF BUSINESS                                                          
|3.1 Business Structure                                                                  
|3.2 Main Services Offered by CGI                                                        
|3.3 Research                                                                            
|3.4 Human and Material Resources                                                        
|3.5 Client Base                                                                         
|3.6 The North American Information Technology Services Industry                         
|3.6.1 Size, Structure and Recent Developments                                           
|3.6.2 Industry Trends and Outlook                                                       
|3.7 CGI's Growth and Positioning Strategy                                               
|4.     FINANCIAL INFORMATION                                                            
|4.1 Table of Comparative Results                                                        
|4.2 Management's Discussion and Analysis of Financial Position and Results of Operations
|4.2.1 Fiscal 2003                                                                       
|4.3 Statistics for Past Nine Quarters (2002-2004)                                       
|4.4 Forward-Looking Statements                                                          
|5.     DIRECTORS AND OFFICERS                                                           
|5.1 Directors                                                                           
|5.2 Officers                                                                            
|6.     ownership of securities on the part of directors and officers                    
|7.     MARKET FOR SECURITIES                                                            
|8.     ADDITIONAL INFORMATION                                                           

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|    | This Annual  Information Form is
dated February 16, 2004 and, unless  specifically  stated otherwise,  all
         information  disclosed in this form is provided as at September  30,  2003,  the
end of the most  recently          completed fiscal year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
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|1.  | INCORPORATION AND DESCRIPTION OF CAPITAL STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|1.1 | The Company                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    | CGI Group Inc.  (the  "Company"  or
 "CGI")  was  incorporated  under the  provisions  of  Part IA  of the          Companies
 Act (Quebec) on  September 29,  1981 to continue the  activities of  Conseillers  en
gestion et          informatique  C.G.I. inc.,  founded in 1976. In February  1983,
 September  1986 and September  1998,  the          Company obtained Certificates of
Amendment to change its name.


On  December 17,  1986,  CGI
 completed  its  initial  public  offering  with an issue of  800,000 Class A
         subordinate  shares  ("Class A  shares").  A Certificate  of Amendment was then
obtained to reorganize the          Company's  share capital,  and its by-laws were
modified to enable the creation of an unlimited  number of          First Preferred
shares and Second Preferred  shares,  Class A shares and Class B shares (multiple
 voting)          ("Class B  shares"),  all without par value.  Class A  shares carry one
vote per share and Class B  shares          carry 10 votes per share.  Class A shares may
be converted into Class B shares,  under certain conditions,          in the event of
certain take-over bids in respect of Class B shares.


On January 7,  2000,  the Company
 proceeded  with a  subdivision,  on a two for one basis,  of all of the
         outstanding shares of its share capital.


On December  20, 2001,  CGI
 completed  its public  offering of Class A shares,  through  which CGI issued
         11,110,000 Class A  shares at a price of $11.25  per  share,  for gross
 proceeds  of  $124,987,500,  to a          syndicate of investment dealers.


In July 2003, in conjunction with
the  re-negotiation  and extension of the IS/IT  outsourcing  agreements          between
 CGI and Bell  Canada,  BCE Inc.  ("BCE"),  CGI and Messrs.  Serge  Godin,  Andre  Imbeau
and Jean          Brassard (the majority  shareholders  of CGI) executed a new
 Shareholders  Agreement  (the  "Shareholders          Agreement")  with respect to BCE's
 ownership in CGI, which replaced and superseded the Options  Agreement          executed
by such parties on November 18,  1998. Among other matters, the Shareholders  Agreement
cancelled          the put and call options  between BCE and the majority  shareholders
 of CGI. In addition,  BCE  converted          all of its CGI Class B multiple  voting
 shares  into CGI Class A single  voting  shares on a  one-for-one          basis with
the result  that as at  September  30,  2003,  BCE owned  120,028,400  CGI Class A
 subordinate          shares and held 29.86% of the total equity in CGI.  BCE is also
 entitled to certain  shareholder  rights,          including pre-emptive rights,
 certain rights over certain significant  transactions and representation on
         CGI's Board of Directors.  BCE currently holds three seats on CGI's Board of
Directors.


As at January 31,  2004, CGI's
outstanding  share capital was comprised of 368,545,414  Class A shares and
         33,772,168  Class B  shares,  and the  Company  had  proceeded  with four
 subdivisions  of its issued and          outstanding Class A shares as follows:

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

1

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|    | -        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.                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1.2 | The 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,  2003,  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, 2003.

| | Name                                                    | Laws ofIncorporation | Percentage ofOwnership
| | ------------------------------------------------------- | -------------------- | ----------------------
| | CGI Information Systems and Management Consultants Inc. | Canada               | 100%                  
| | Conseillers en gestion et informatique C.G.I. inc.      | Quebec               | 100%                  
| | The CGI Group Holding Corporation                       | Delaware             | 100%                  

|2.  | GENERAL DEVELOPMENT
OF BUSINESS
|--- | -------------------------------
|2.1 | Mission and Profile            

| | 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 information technology, business processes and management. In all we do, we
foster a culture of partnership, intrapreneurship and integrity, building a world-class IT
and business process outsourcing company.

CGI
is the largest independent Canadian information technology (IT) services company and the
fifth largest independent in North America, based on its headcount ofapproximately
20,000 professionals, as at January 31, 2004. 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.

2.1.1 CGIs Business
Approach

As
of September 30, 2003, CGI focused on serving six specific industry sectors for which it
has developed deep expertise. As of December 31, 2003 CGI re-defined these same six
markets and they are now presented as segmented 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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

2

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

2.1.2 Strategic Alliances
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | BCE,
and Bell Canada


CGI has entered into a strategic
alliance with Bell Canada which originated in 1995 with a Bell Canada strategic
agreement. On November 17, 1995, CGI and Bell Canada entered into a five-year
renewable strategic agreement, which agreement 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 residence 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 and
Bell Canada acquired 6 million Class A shares of CGI from Teleglobe
Investment Corp. On June 30, 1998, as part of CGIs acquisition of BCE
subsidiaries Bell Sygma and Bell Sygma International (BSI), BCE acquired 8.6 million
First Preferred shares, Series 6 of CGI. With these two transactions completed in
1998, BCEs representation on CGIs Board of Directors was increased to three
members; the equity interest of BCE in CGI totalled 43% and its voting interest stood at
17.9%. As at January 31, 2004 BCEs equity stake in CGI stood at 29.83% and its
voting interest represented 16.99%.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.1.3 Related-Party
Transactions
| | --------------------------------

| | Throughout fiscal 2003, CGI
continued to build on its strategic alliance with BCE and Bell Canada and in July 2003
the IS/IT outsourcing agreements with Bell Canada were extended until June 2012. In the
normal course of business, the Company is party to contracts with certain BCE
subsidiaries and affiliated companies, pursuant to which CGI is their preferred supplier
for information systems and IT needs.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2.1.4 Commercial Alliances
| | --------------------------

| | CGI currently has approximately 40
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;
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

3

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| |    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.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.  | DESCRIPTION OF
BUSINESS                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1 | Business Structure                                                                                                                                                                                                                                                                                                                                              
|    | CGIs business operations are
structured in two key lines of business (LOB): The Information Technology (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                           
| |  | Investments and acquisitions             
| |  | Legal                                    
| |  | Marketing                                
| |  | Mergers & Acquisitions                   
| |  | Planning and corporate development       
| |  | Quality                                  
| |  | R&D and professional development programs
| |  | Support to large outsourcing projects    
| |  | Knowledge management                     
| |  | Project performanc                       

| | IT
Services LOB


The IT Services LOB provides a full
range of services in systems integration, consulting and outsourcing, to clients 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 delivery model.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4

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| | BPS
LOB


The BPS LOB provides a full spectrum
of business process outsourcing 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.



Offices and data centres
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                           | NORTH AMERICA          | EUROPE      
|---------------------------------------------------------------------------------------------------------- | ---------------------- | ------------
|                                                                                                          
|Canada                                                                                                     | U.S.                   | England     
|Burnaby, BC                                                                                                | Albany, NY             | Basingstoke1
|Calgary, AB                                                                                                | Andover, MA            | Bristol     
|Dartmouth, NS                                                                                              | Atlanta, GA            | Stevenage   
|Edmonton, AB                                                                                               | Canton, MA             |             
|Fredericton, NB                                                                                            | Chicago, IL            |             
|Halifax, NS1                                                                                               | Cincinnati, OH         | France      
|Mississauga, ON1                                                                                           | Clearwater, FL         |             
|Montreal, QC1                                                                                              | Cleveland, OH          | Nimes       
|Ottawa, ON1                                                                                                | Columbia, SC           | Paris       
|Quebec City, QC                                                                                            | Dallas/Fort Worth, TX1 |             
|Regina, SK1                                                                                                | Detroit, MI1           | Italy       
|Saguenay, QC                                                                                               | Houston, TX            | Milan       
|Saint John, NB                                                                                             | Minneapolis, MN        |             
|Saskatoon, SK                                                                                              | Nashville, TN          |             
|St. John's, NF                                                                                             | New York, NY           |             
|Toronto, ON                                                                                                | Novato, CA             |             
|Vancouver, BC                                                                                              | Oklahoma City, OK      |             
|Winnipeg, MB                                                                                               | Phoenix, AZ1           |             
|                                                                                                           |                        |             
|                                                                                                           | San Diego, CA          |             
|                                                                                                           | Seattle, WA            |             
|                                                                                                           | Sheboygan, WI          |             
|                                                                                                           | Warren, NJ             |             
|                                                                                                          
|                                                                                                           |                        | ASIA PACIFIC
|                                                                                                          
|                                                                                                           |                        | India2      
|                                                                                                           |                        |             
|                                                                                                           |                        | Bangalore   
|                                                                                                           |                        | Mumbai      
|                                                                                                          
|1. Important data centre facility.                                                                        
|2. Indian  operations in Bangalore and Mumbai are considered part of the IT services,  which they
support.

|3.2 | Main Services
Offered by CGI                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | CGI provides the full range of IT services
including management of IT and business functions (outsourcing), systems integration and
consulting. The Companys primary focus is

5

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| | 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.


Management of IT and Business
Functions (outsourcing)


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 has become the leading Canadian independent
provider of IT services and the fifth largest in North America, based on its
headcount.


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 IT or business functions in order
to achieve significant savings and access the best information technology, 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 business process services
including functions such as document management, finance and accounting administration or
insurance policy administration.


CGI operates a number of data centre
facilities in Canada, the United States and the United Kingdom. CGIs important data
centre facilities in Canada are located in Halifax, Montreal, Mississauga, Ottawa and
Regina, and it operates service centres as well in Montreal, Quebec City and Mississauga.
CGIs important data centre facilities in the United States are located in
Dallas/Fort Worth, Detroit and Phoenix. CGI also operates a data centre facility in the
United Kingdom (Basingstoke) and two application development centres in India (Bangalore
and Mumbai).


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.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

6

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|3.3 | 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 such clients.


The following chart shows the
amounts invested in research in the past three years.

|         | (in `000 of Canadian dollars) | 2003       | 2002       | 2001
|-------- | ----------------------------- | ---------- | ---------- | ----
|        
|Revenue  | $2,719,695                    | $2,169,613 | $1,560,391
|        
|Research | $22,036                       | $17,609    | $12,585   

|3.4 | Human and Material
Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | As at January 31, 2004, CGI had
approximately 20,000 employees. None of its employees are unionized. 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, 2003, the net value of CGIs fixed assets was $144.9 million.
Capital leases related to these fixed assets amounted to $4.4 million.
|3.5 | Client Base                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | CGI works with some 3,500 large and
medium-sized businesses in the private and public sectors throughout Canada, the United
States and internationally. The Companys clientele is well-balanced in terms of
quality, quantity, stability and diversity. The BCE group of companies domestic
operations accounted for 18.4% of CGIs revenue in fiscal 2003, compared with 23.2%
in fiscal 2002, however, on an absolute dollar basis, there was essentially no change
year-over-year. With the exception of 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%.                                                                                                                                                                                                                                                                              
|3.6 | The North American Information Technology Services Industry                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    | 3.6.1 Size, Structure and Recent
Developments


CGI is evolving within one of the
most dynamic industries in the world. In October 2002, according to United States based
research firm International Data Corp., the total annual spending in IT services,
excluding hardware and software sales, but including a portion of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

7

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| | the internal IT
spending of organizations, was valued at US$41 billion in Canada, US$778 billion
in the United States and US$701 billion in Europe. CGI refers to this total IT
spending potential as the IT domain. In Canada, IDC estimated the size of the 2002
external IT services spend at C$13.8B (the remainder being spent internally). The three
largest IT services companies held a 37% market share, of which CGI represented 13%.
The BPO
market, which is much larger and less developed, offers even more potential. In
the BPO market, it is estimated that CGI currently has about 8% market share. Therefore,
CGI believes that the Canadian IT services market offers significant growth
opportunities. In the US market, where the size of the market is about 15 times larger,
the opportunities for CGI are many times greater.


3.6.2 Industry Trends and Outlook


In the last few years, this 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.


Over the last few years, due to the
struggling global economy, many clients continue 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.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3.7 | 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 information technology services.


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.

8

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| | 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.


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 such
objectives. These processes ensure that clients requirements drive CGIs
solutions. Clients are constantly kept informed; their degree of satisfaction is
constantly measured and the remuneration of CGI managers is linked to results.


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 information technology
consulting field to receive ISO 9001 certification for the way in which it managed
projects. Between 1995 and 2002, CGI 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.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9

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|4.  | FINANCIAL INFORMATION                                                              
|--- | -----------------------------------------------------------------------------------
|4.1 | Table of Comparative
Results                                                       
|    | Fiscal years ended September 30
(in thousands of dollars, except per share amounts)

|                             | 2003      | 2002      | 2001     
|---------------------------- | --------- | --------- | ---------
|                            
|Revenue                      | 2,719,695 | 2,169,613 | 1,560,391
|Earnings before amortization
|of goodwill and discontinued | 175,397   | 135,799   | 89,924   
|operations                  
|Net earnings                 | 177,366   | 135,799   | 62,789   
|Basic per share              | 0.45      | 0.36      | 0.21     
|Total assets                 | 2,997,857 | 2,306,970 | 2,028,669
|Shareholders' equity         | 1,980,210 | 1,779,615 | 1,503,114
|Net book value per share     | 5.01      | 4.72      | 5.02     
|Long-term debt (1)           | 267,986   | 8,500     | 40,280   
|                            
|(1)  Including current       |          
|                            

|4.2 | Management's Discussion and Analysis of Financial Position and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 4.2.1 Fiscal 2003


Basis of Presentation


This 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 for our fiscal years 2003, 2002
and 2001 and the notes beginning on page 42 of the 2003 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 2003, 2002 and 2001 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, 2003, or September 30 of
the year referenced, and all comparisons are to prior years.


Corporate Overview and Business


Headquartered in Montreal, CGI
provides end-to-end information technology services (commonly referred to as IT services)
and business solutions to clients worldwide, utilizing a highly customized, cost
efficient delivery model that combines our on-site and off-site operations through a
network of state-of-the-art data centers in Canada (Mississauga, Montreal, and Regina),
in the US (Phoenix) and in the UK (Basingstoke). We also have applications

10

---

| | maintenance and development centers
in India (Mumbai and Bangalore). More specifically, our services are generally broken
down as follows:


Consulting  We act as a
trusted advisor to our clients, providing a full range of IT and management consulting
services, including IT strategic planning, business process engineering and systems
architecture.


Systems integration  We
provide 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 our expertise at working with leading
technologies and software applications, we provide customized application development
services leveraging our ISO 9001 and CMM certified methodologies and the option of
economies from offshore development.


Management of IT and business
functions (outsourcing)  Clients delegate entire or partial responsibility of their
IT or business functions to CGI in order to achieve significant savings and access the
best information technology, while retaining control over strategic functions. These
contracts, typically for five to 10 years and generally renewable, provide revenue
visibility and support performance stability. Services provided as part of an outsourcing
contract can include facilities management (data centers, call centers, network and
desktop services); application maintenance and support; development and integration of
new projects and applications; business processing for insurance companies, banks,
investment firms , financial cooperatives and other clients, as well as payroll services,
document management and finance and administration services.


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 operating in that
industry. In fiscal 2003 we defined our vertical markets as including financial services,
telecommunications, manufacturing-retail-distribution, governments, utilities and
services as well as healthcare. As of December 31, 2003 CGI re-defined these same six
markets and they are now presented as segmented in five sectors: financial services,
manufacturing, retail and distribution, governments and healthcare, as well as utilities
and telecommunications.


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 and Europe. Our
professionals and facilities in India and Canada also serve US and foreign-based clients
as an integral part of our offshore and near-shore delivery model.


 The BPS LOB provides a
full spectrum of business process out sourcing 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.


As at September 30, 2003, we
employed approximately 20,000 members. In fiscal 2003, we integrated 5,400 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.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

11

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| | Business Environment


Industry research as recent as June
2003, from firms such as Gartner Group and IDC, confirms that market demand for IT and
Business Process Outsourcing (BPO) is large and expected to grow
significantly over the long-term. However, during fiscal 2003, the IT services industry
experienced a reduction in global demand for shorter-term, project oriented services as
companies and organizations reduced discretionary spending in response to the economic
environment. Based on various industry and company-specific indicators, we continue to
anticipate a stabilization of demand in our markets for systems integration and
consulting services, but do not expect a significant pick-up in demand until 2005.


Demand for longer-term outsourcing
contracts is still healthy as companies realize the cost benefits that are achievable
through outsourcing. We are a dominant 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. Our presence in the US market today is roughly at
the same stage we were at 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.


Vision and Strategy


CGIs vision is to be a
world-class IT and BPO leader helping our 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 our clients, both locally and internationally. In all we do, we will strive to seek
the best equilibrium between 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, 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.
Most organic growth to date has been in Canada, but we are growing our sales funnel of
contract proposals more meaningfully in the US and internationally.


The second element of our growth
strategy is the pursuit of large, new outsourcing contracts, valued at more than $50
million per year. Canada continues to offer tremendous untapped opportunities, but
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. Currently, 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 the US that will
increase our geographical presence and critical mass in order to further qualify us for
larger outsourcing deals. In Canada, we will continue to be an IT domain consolidator of
both small and large IT services companies. Important to this
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12

---

| | growth strategy is a disciplined
approach to acquisitions and focus on increasing shareholder value.


Significant Developments in 2003


Acquisitions


In fiscal 2003, 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.


INSpire Insurance Solutions Inc. (INSpire)
 In November 2002, we purchased the majority of the assets of this Fort Worth,
Texas-based firm for $7.8 million in cash. INSpire, which had annualized revenue of $41
million and approximately 265 professionals located in five offices in the US, joined us
to strengthen our business process services offering to the insurance sector.


ProjExpert  In December 2002,
we purchased this Montreal-based consulting company that specialized in the
implementation of enterprise resource planning (ERP) programs specific to Oracle
applications for the government, financial services and manufacturing sectors. Sixteen
professionals joined us in Montreal.


Underwriters Adjustment Bureau Ltd. (UAB)
 In January 2003, we purchased UAB for $54.1 million in cash to expand our
capabilities in the insurance vertical as well as in our business process services
offering. UAB had annualized revenue of approximately $100 million and added 1,300
professionals to our workforce in Canada.


Cornerstone Project Management Group
Inc. (Cornerstone)  In January 2003, we acquired this Halifax-based
firm with revenues at the time of $2.8 million. Cornerstones 25 professionals
provided project management and consulting services to organizations in the government,
healthcare and financial services sectors including Atlantic Blue Cross Care, Maritime
Life, Brainworks International and the Province of Nova Scotia.


COGNICASE Inc. (Cognicase)
 In February 2003, we closed the acquisition of Cognicase for $329.4 million in a
combination of $180.2 million in cash and 19,850,245 Class A subordinate shares of CGI.
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. We began recognizing 90% of Cognicase on
January 14, 2003, and started fully consolidating by February 25, 2003.


Other


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. In addition, we now have
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,
Toronto-Dominion Bank and Caisse centrale Desjardins, as co-arrangers; as well as Caisse
de dépôt et placement du Québec, Bank of Montreal, Royal Bank of
Canada and United Overseas Bank Limited, as participants. Also, through a separate
agreement with Bank of Montreal, we have access to a $25 million operating facility for
cash management purposes.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

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| | In June 2003, we announced the
successful addition of $100 million to our existing bank credit facilities. National Bank
of Canada and SociétéGénérale (Canada) each contributed $50
million.  The additional $100 million follows the terms of the credit agreement announced
in November 2002.


In July 2003, BCE Inc. (BCE)
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 entered into a network services Memorandum
of Agreement under which CGI and Bell Canada agreed to enter into a network services
outsourcing agreement. Additionally, BCE, CGI and CGIs majority shareholders  Mr.
Serge Godin, Mr. André Imbeau and Mr. Jean Brassard, signed a new shareholders agreement
with respect to BCEs ownership in CGI. Among other details, the put and call
options between BCE and CGIs majority shareholders  Mr. Serge Godin, Mr. André Imbeau
and Mr. Jean Brassard  were cancelled. Additionally, BCE converted all of its CGI
Class B multiple voting shares into CGI Class A single voting shares on a one-for-one
basis and as at September 30, 2003, BCE owned 120,028,400 CGI Class A subordinate shares
and held 29.86% of the total equity in CGI. BCE is also entitled to certain shareholder
rights, including pre-emptive rights, certain rights over certain significant
transactions and representation on CGIs Board of Directors. BCE currently holds
three seats on our Board of Directors. The strengthening of our strategic alliance with
BCE cleared the way for us to focus on our continuing growth.


In September 2003, we announced the
appointment of Clarence J. Chandran as President, Business Process Services (BPS) and
Chairman of the board, India operations. To continue to propel our growth in the BPS
sector, we wanted to ensure that we had a leader exclusively dedicated to building this
increasingly strategic area of our business. Regrettably, CGI announced on February
13, 2004 that Mr. Chandran was stepping down from his new position for health
reasons. While Mr. Chandran remains with CGI as Chairman of the Board of the Companys
subsidiary in India and as a member of CGIs newly created International Advisory
Council, CGIs President and Chief Operating Officer, Michael Roach, will oversee
the BPS operations.


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: $10.5 million in cash, including 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 converted upon the approval by
Nexxlinks shareholders who voted on the matter at the annual general and special
meeting of Nexxlinks shareholders held on December 11, 2003. This transaction gives
CGI a 32% equity interest in Nexxlink. As such, the net earnings, assets, liabilities and
the net cash and cash equivalents provided by these operations plus other non-core
operations that we are in the process of selling, are presented separately in the
Consolidated Financial Statements.


Performance Overview


Fiscal 2003 marked the 27th
consecutive year of revenue growth for CGI. Revenue grew to $2,719.7 million, up from
$2,169.6 million in fiscal 2002 and $1,560.4 million in fiscal 2001. Net earnings
amounted to $177.4 million ($0.45 basic and diluted earnings per share), compared to net
earnings of $135.8 million ($0.36 basic and diluted earnings per share) in fiscal 2002
and compared to net earnings before amortization of goodwill (cash net earnings)
of $89.9 million ($0.30 basic
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

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| | and diluted cash earnings per share)
and net earnings of $62.8 million ($0.21 basic and diluted earnings per share) in fiscal
2001. The net margin (i.e. net earnings over revenue) improved to 6.5%, compared with
6.3% in 2002 and 4.0% in 2001.


The balance sheet as at September
30, 2003 included $83.5 million in cash and cash equivalents, $1,980.2 million of
shareholders equity and $268.0 million in long-term debt.


Critical Accounting Policies and
Estimates


Revenue recognition


The IT services segment includes a
full range of services in systems integration, consulting and outsourcing. The BPS
segment provides end-to-end business processing for insurance companies, banks,
investment firms , financial cooperatives and other clients, as well as payroll services,
document management and finance and administration services. Our revenue is principally
derived from outsourcing contracts.


Revenue from IT outsourcing
contracts is based on the services performed or information processed during the period
in accordance with contract terms and the agreed-upon billing rates applied to the
consumed service metrics. In some cases, we bill clients prior to performing the service,
resulting in deferred revenue, which is presented as a current liability in the
Consolidated Financial Statements. 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.


For time and materials and level of
effort types of contracts, revenue is recognized as the services are provided. For
cost-based contracts, revenue is recorded as reimbursable costs are incurred. These types
of contracts are generally entered into with clients in the context of systems
integration and consulting services.


Revenue on fixed-price contracts
related to systems integration and consulting services is recognized on the basis of the
estimated percentage-of-completion of services rendered that reflects the extent of work
accomplished. Management estimates the percentage-of-completion by reference to measures
of performance that are reasonably determinable and are directly related to the
activities critical to completion of the contract. Management measures performance
principally based on the labor hours spent on the contract over the total estimated labor
hours of the contract. We use this method of revenue recognition as projected contract
revenue and costs may reasonably be estimated based on our business practices, methods
and historical experience. This method requires estimates of costs and profits over the
entire term of the contract. 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.


Occasionally, we sell software
licenses. Revenue from the sale of software licenses is recognized when the product is
delivered, no significant vendor obligations remain and the collection of the agreed-upon
fee is probable. Where license agreements include multiple elements, revenue from the
sale of licenses is recognized on the same basis, provided the services do not include
significant customization to the base product. In these cases, revenue is recognized over
the period of delivery. Revenue from software maintenance and support agreements is
recognized on a straight-line basis over the term of the related agreements.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

15

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| | Contract Costs


Contract costs are incurred in the
course of two to 10-year IT services and BPO 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 signature of long-term outsourcing contracts


Occasionally, incentives can be
granted either in the form of cash payments, issuance of equity instruments or rebates
awarded principally over a transition period as negotiated in the contract. In the case
of an incentive in the form 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 rebates, cost is measured at the value of the financial commitment granted and a
corresponding deferred credit is recorded. As services are provided to the client, the
deferred credit 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 with outsourcing contracts are considered as an
incentive granted to the client and are recorded and amortized as described above.


b) Transition costs incurred during the
transition period on long-term outsourcing           contracts


These costs consist of expenses
associated with the installation of systems and processes incurred after the award of
outsourcing contracts.


Other intangibles and other
long-term assets


Other intangibles and other
long-term assets comprise the following:


a) Internal software


Internal software includes software
acquired and/or developed for internal use. These software solutions are amortized over
their estimated useful life.


b) Business solutions


Business solutions include
commercial software solutions acquired through business acquisitions and costs incurred
to develop commercial software solutions. These costs are capitalized only after
technological feasibility is established. Business solutions are recorded at cost and
amortized on a straight-line basis over their respective estimated useful life.
Management regularly reviews business solutions for impairment.


c) Software licenses


Software licenses are purchased to
fulfill our obligations under outsourcing contracts and are recorded at cost. These costs
are amortized on a straight-line basis over the lesser of their estimated useful life or
the related outsourcing contract term.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16

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| | d) Customer relationships


Customer relationships relate to the
fair value assigned to customer relationships in the context of a business acquisition
and are amortized on a straight-line basis over their estimated life.


e) Other
long-term assets


Other long-term assets are comprised
of the long-term portion of a net investment in a direct financing lease taken by one of
our joint ventures, as well as an investment in an entity subject to significant
influence.


Goodwill


Goodwill represents the excess of
the purchase price over the fair value of the net assets of the entities acquired at the
respective dates of acquisition. On October 1, 2001, we adopted prospectively the new
recommendations of the CICA Handbook Sections 1581, Business Combinations, and
3062, Goodwill and Other Intangible Assets. Accordingly, we discontinued the
amortization of goodwill as at October 1, 2001. Prior to October 1, 2001, goodwill was
amortized on a straight-line basis over its expected useful life of 20 years. For
business combinations occurring after June 30, 2001, we did not amortize the resulting
goodwill, consistent with the transition recommendations of Section 1581.


Goodwill is tested annually, 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.


We perform the annual review of
goodwill as at September 30 of each year. Based on the impairment tests performed as at
September 30, 2002 and 2003, we concluded that no goodwill impairment charge was
required. In addition, we performed a supplemental impairment test, following the
decision to modify our management structure and, based on the results of this impairment
test, we concluded that no goodwill impairment charge was required.


Impairment of long-lived  assets
other than goodwill and intangible assets with indefinite lives


We evaluate the carrying value of
long-lived assets other than goodwill and intangible assets with indefinite lives on an
ongoing basis. In order to determine whether an impairment exists, we consider the
undiscounted cash flows estimated to be generated by those assets as well as other
indicators. Any permanent impairment in the carrying value of assets is charged against
earnings in the period an impairment is determined. We do not have intangible assets with
indefinite lives.


Deferred credits


Deferred credits principally
comprise the unused portion of rebates granted to clients under the terms of certain
long-term outsourcing contracts (see Contract costs described above).


Stock option plan


We have a stock option compensation
plan which is described in Note 9 to the Consolidated Financial Statements. Any
consideration paid by employees and directors on exercise of stock options is credited to
share capital.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

17

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| | We apply the recommendations of CICA
Handbook Section 3870, Stock-Based Compensation and Other Stock-Based Payments.
This Section establishes standards for the recognition, measurement and disclosure of
stock-based compensation made in exchange for goods and services, and requires the use of
the fair value method to account for awards to non-employees and
direct awards of stock
to employees, as well as encourages, but does not require, the use of the fair value
method to account for stock-based compensation costs arising from awards to employees.
The Section also requires pro forma disclosures relating to net earnings and earnings per
share figures as if the fair value method of accounting had been used. We have chosen not
to use the fair value method to account for stock-based compensation costs arising from
awards to employees. The pro forma disclosure is presented in Note 9 to the Consolidated
Financial Statements.


Recent accounting changes


In 2003, the CICA issued Accounting
Guideline 14, Disclosure of Guarantees, with the effective date for financial
statements of interim and annual periods beginning on or after January 1, 2003. This
guideline provides guidance regarding the identification of guarantees and requires a
guarantor to disclose the significant details of guarantees that have been given
regardless of whether the guarantor will have to make payments under the guarantees. See
Note 20 to the Consolidated Financial Statements for disclosure of guarantees.


The CICA issued Handbook Section
3475, Disposal of Long-lived Assets and DiscontinuedOperations, which
applies to disposal activities initiated by an enterprises commitment to a plan on
or after May 1, 2003. The new section 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.


In November 2002 and May 2003, the
Emerging Issues Task Force (EITF) reached a consensus on Issue 00-21, Revenue
Arrangements with Multiple Deliverables. EITF Issue 00-21 provides guidance and
criteria for determining when a multiple deliverable arrangement contains more than one
unit of accounting. The guidance also addresses methods of measuring and allocating
arrangement consideration to separate units of accounting. The guidance is effective for
revenue arrangements entered into after June 15, 2003. The adoption of this new guidance
had no significant impact on our Consolidated Financial Statements as we were already
conforming to this guidance.


Future accounting changes


The CICA issued Accounting Guideline
13, Hedging Relationships, which deals with the identification, documentation,
designation and effectiveness of hedges and also the discontinuance of hedge accounting,
but does not specify hedge accounting methods. This guidance is applicable to hedge
relationships in effect in fiscal years beginning on or after July 1, 2003.


The CICA issued Handbook Section
3110, Asset Retirement Obligations. This new standard 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 CICA issued Handbook Section
3063, Impairment of Long-lived Assets, which is effective for fiscal years
beginning on or after April 1, 2003. This section provides guidance on
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

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| | recognizing, measuring and
disclosing the impairment of long-lived assets. It replaces the write-down provisions in
Section 3061, Property, Plant and Equipment.


We are currently evaluating the
impact of the adoption of these new standards and guidance, and therefore we have not yet
assessed their effect on our future Consolidated Financial Statements.



Bookings and Backlog
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | Year ended 
Sept. 30, 
2003 | Year ended 
Sept. 30, 
2002 | Year ended 
Sept. 30, 
2001 | Percent
Change
2003/2002 | Percent
Change
2002/2001
|----------------------------- | --------------------------- | --------------------------- | --------------------------- | ------------------------ | ------------------------
|                             
|(in `000 of Canadian dollars) | $                           | $                           | $                           |                          |                         
|Bookings                      | 4,018,500                   | 3,525,500                   | 3,078,300                   | 14.0%                    | 14.5%                   
|Backlog                       | 12,300,000                  | 10,400,000                  | 9,300,000                   | 18.3%                    | 11.8%                   
|                             

| | As at September 30, 2003, our
backlog of signed contracts for work that had yet to be delivered was $12.3 billion, with
an average duration of 8.3 years. Our backlog, which provides good revenue visibility,
represents new contract wins, extensions and renewals signed in fiscal 2003 of $4.0
billion, minus backlog consumption during the year. The outsourcing contracts extended
with the BCE family in July 2003 represented $1.5 billion of our bookings in 2003 and are
part of the backlog. Contract bookings included a 10-year, $1.75 billion contract win
from Canada Post in 2002, and a 10-year, $1.2 billion contract win from Desjardins in
2001.


Comparison of Operating Results for
Fiscal Years 2003, 2002 And 2001
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Revenue
(in `000 of Canadian
dollars) | Year ended 
Sept. 30, 
2003 | Year ended 
Sept. 30, 
2002 | Year ended 
Sept. 30, 
2001
|------------------------------------- | --------------------------- | --------------------------- | ---------------------------
|                                     
|Revenue                               | $   2,719,695               | $   2,169,613               | $   1,560,391              
|Growth over previous year             | 25.4%                       | 39.0%                       | 9.6%                       
|                                     

| | Revenue increased 25.4% in 2003.
Year-over-year organic growth of 6.5% was driven by new bookings from a combination of
new client wins, notably with Canada Post, Purolator and Air Liquide, as well as contract
renewals, extensions and add-on projects from existing clients. External revenue growth
in 2003 was 19.9% and was primarily attributable to our acquisition of Cognicase in
January 2003. Organic growth was lower in 2003 than in 2002 for several reasons,
including the effect of the currency exchange rate on our US and foreign denominated
revenue, which resulted in a 1.0% revenue decline versus 2002, as well as the decline in
information technology spending and the uncertain economic environment. These conditions
affected all of our principal markets, but were especially pronounced in the US.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19

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| | Revenue mix


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

|                                            | Year ended
Sept. 30,
2003 | Year ended
Sept. 30,
2002 | Year ended
Sept. 30,
2001
|------------------------------------------- | ------------------------- | ------------------------- | -------------------------
|                                           
|                                            | %                         | %                         | %                        
|By contract type                            |                           |                           |                          
|Outsourcing                                 | 73                        | 72                        | 69                       
|Systems integration and consulting ("SI&C") | 27                        | 28                        | 31                       
|By client based geography                  
|Canada                                      | 78                        | 73                        | 77                       
|US                                          | 17                        | 20                        | 17                       
|All other regions                           | 5                         | 7                         | 6                        
|By vertical                                
|Financial services                          | 42                        | 41                        | 38                       
|Telecommunications                          | 20                        | 25                        | 33                       
|Manufacturing, retail and distribution      | 15                        | 15                        | 15                       
|Governments                                 | 13                        | 15                        | 12                       
|Utilities and services                      | 8                         | 3                         | 2                        
|Healthcare                                  | 2                         | 1                         | 1                       
|                                           

| | Revenue derived from our long-term
outsourcing contracts represented 73% of the total revenue in fiscal 2003, including
approximately 53% from IT services and 20% from BPO services. Systems integration and
consulting (SI&C) projects represented 27% of our revenue. Despite the
acquisition of Cognicase, which generated more revenue from shorter-term contracts, we
were able to increase the proportion of long-term contracts with the acquisition of UAB,
which provided longer-term BPO services, and by winning new outsourcing contracts in the
year. Our targeted mix of revenue between outsourcing contracts and SI&C contracts is
75% and 25%, respectively.


The revenue mix based on our clients
geography changed from last year, mainly as a result of the acquisitions of Cognicase,
whose business concentrated on serving mostly Canadian clients, as well as UAB which
served Canadian clients exclusively.


In fiscal 2003, we maintained the
diversification of our revenue mix among the industry verticals that we target with our
expertise. We have grown our presence in the utilities and services sector over the last
year so that telecom revenue, while consistent in absolute dollars, has declined as a
percentage of total revenue from 25% in 2002 to 20% in 2003. The increase in proportional
revenue derived from clients in the utilities and services sector primarily represents
our growing business with Innovapost, our joint venture with Canada Post. Innovapost
provides IT services to the Canada Post Group of companies, Canadas postal
organization.


Our top 5 clients represented 33.4%
of total revenue in 2003, compared with 34.6% last year. Combined revenue attributable to
numerous contracts from the BCE family of companies decreased to 18.4% of our total
revenue, compared to 23.2% in 2002. However, on an absolute dollar basis, there was
essentially no change year-over-year.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

20

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| | Operating expenses, EBIT and
interest
| | -------------------------------------

|(in `000 of Canadian
dollars except
percentages)                                  | Year ended
Sept. 30,
2003
$ | Year ended
Sept. 30,
2002
$ | Year ended
Sept. 30,
2001
$ | As a
percentage of
total revenue
2003
% | As a
percentage of
total revenue
2002
% | As a
percentage of
total revenue
2001
%
|--------------------------------------------------------------------------------- | --------------------------- | --------------------------- | --------------------------- | --------------------------------------- | --------------------------------------- | ---------------------------------------
|                                                                                 
|Costs of services,selling, andadministrative
expenses                             | 2,277,500                   | 1,842,854                   | 1,328,460                   | 83.7                                    | 84.9                                    | 85.1                                   
|Research expenses                                                                 | 22,036                      | 17,609                      | 12,585                      | 0.8                                     | 0.8                                     | 0.8                                    
|Depreciation andamortization expenses                                            
|Fixed assets                                                                      | 44,112                      | 28,303                      | 29,185                      |                                         |                                         |                                        
|Contract costs    related to    transition costs                                  | 4,219                       | 2,656                       | 169                         |                                         |                                         |                                        
|Other intangibles    and other long-    term assets                               | 73,530                      | 46,046                      | 26,368                      |                                         |                                         |                                        
|                                                                                  |                             |                            
|Total depreciation and amortization expenses                                      | 121,861                     | 77,005                      | 55,722                      | 4.5                                     | 3.5                                     | 3.6                                    
|EBIT(1)                                                                           | 298,298                     | 232,145                     | 163,624                     | 11.0                                    | 10.7                                    | 10.5                                   
|Interest on long-term debt                                                        | 12,578                      | 2,411                       | 4,206                       | 0.5                                     | 0.1                                     | 0.3                                    
|                                                                                 
|(1)  Earnings before interest, income taxes,goodwill and discontinued operations.

| | Our cost of services, selling and
administrative expenses was $2,277.5 million in 2003 or 83.7% of revenue, which is 1.2%
and 1.4% lower compared to 2002 and 2001, respectively. The decrease in cost of services,
selling and administrative expenses is mostly due to the successful restructuring we
undertook in our US operations in 2002 and to tight expense controls applied across all
of our business units, as well as the contribution from the acquisitions we made during
the year. Research expenses were $22.0 million in 2003 or 0.8% of revenue, which is
comparable with previous years on a percentage of revenue basis.


Total expenses for depreciation and
amortization were $121.9 million, up $44.9 million compared to 2002.


As detailed in Note 10 to the
Consolidated Financial Statements, in 2003, depreciation and amortization of fixed assets
increased to $44.1 million, reflecting the growth in our purchase of fixed assets made
through either direct purchases or business acquisitions, as well as the investments we
made for leasehold improvements to our E-Commerce Place facilities in Montreal.


The amortization of other
intangibles and other long-term assets increased to $73.5 million, up $27.5 million from
last year. The most important increase was related to the amortization of the definite
life intangible assets, comprised of customer relationships and business solutions which
together increased by $12.4 million, resulting mainly from our acquisitions of Cognicase,
UAB and INSpire.


Earnings before interest, income
taxes, entity subject to significant influence, amortization of goodwill and
discontinued operations (EBIT)


EBIT increased to $298.3 million in
2003 and EBIT margin (i.e. EBIT as a percentage of revenue) improved to 11.0% for the
year, compared to 10.7% in 2002 and 10.5% in 2001. The increase in EBIT versus 2002 is
mostly attributable to the synergies of additional contracts, tight
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

21

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| | expense controls applied across all
our business units and the contribution from acquisitions made during the year.


Interest


Interest on long-term debt increased
to $12.6 million as a result of an increase in the average debt and the capital leases
held during the year. In 2003, we issued debt to finance the acquisitions of UAB and
Cognicase, as described in the section under developments in 2003". In fiscal 2002,
interest expense was related mainly to the Libor advance debt of US$20 million. In fiscal
2001, this expense stemmed mainly from a loan contracted in the course of a large
outsourcing contract as well as an acquisition.


Income taxes


Our effective income tax rate in
2003 was down to 39.4%, compared with 41.6% in 2002 and 44.5% in 2001. The decrease in
our tax rate compared with last year reflects the reduction in the Canadian combined
federal and provincial statutory tax rates and an improvement in the profitability of our
US and UK subsidiaries.


Amortization of goodwill, net of
income taxes
Effective October 1, 2001, we
stopped recording goodwill amortization based on the new CICA Handbook recommendations,
discussed in the section Critical Accounting Policies earlier in this MD&A.
As such, current net earnings and earnings before amortization of goodwill (cash
net earnings) for periods before October 1, 2001, are equivalent. For purposes of
clarity and ease of comparison, we compare net earnings to cash net earnings figures in
year-over-year comparisons.


Net earnings and earnings per share


CGIs net earnings and basic
and diluted earnings per share for fiscal 2003, 2002 and 2001 were as follows:
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                        | Year ended
Sept. 30,
2003 | Year ended
Sept. 30,
2002 | Year ended
Sept. 30,
2001 | Change
2003/2002 | Change
2002/2001
|--------------------------------------------------------------------------------------- | ------------------------- | ------------------------- | ------------------------- | ---------------- | ----------------
|                                                                                       
|(in `000 of Canadian dollars except share data)                                        
|                                                                                       
|Earnings before    amortization of
    goodwill and    discontinued    operations       | $175,397                  | $135,799                  | $89,924                   | 29.2%            | 51.0%           
|                                                                                       
|Earnings before    amortization of    goodwill and    discontinued    operations margin | 6.4%                      | 6.3%                      | 5.8%                      |                  |                 
|                                                                                       
|Net earnings                                                                            | $177,366                  | $135,799                  | $62,789                   | 30.6%            | 116.3%          
|                                                                                       
|Net earnings margin                                                                     | 6.5%                      | 6.3%                      | 4.0%                      |                  |                 
|                                                                                       
|Weighted average     number of Class A
    subordinate shares and    Class B shares     | 395,191,927               | 377,349,472               | 299,500,350               | 4.7%             | 26.0%           
|                                                                                       

22

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|                                        | Basic and diluted    earnings per share    before amortization of    goodwill | $0.45 | $0.36 | $0.30 | $0.09 | $0.06
|--------------------------------------- | ----------------------------------------------------------------------------- | ----- | ----- | ----- | ----- | -----
|                                       
|Basic and diluted    earnings per share | $0.45                                                                         | $0.36 | $0.21 | $0.09 | $0.15
|                                       
|                                       

| | In fiscal 2003, earnings before
amortization of goodwill and discontinued operations were $175.4 million in the year.
They were up 29.2% over last years comparable earnings before amortization of
goodwill and discontinued operations. The net earnings from discontinued operations of
$2.0 million for 2003 are comprised of the net earnings related to certain assets sold to
Nexxlink, announced on October 21, 2003, representing approximately $40 million in
revenue. Also included are the results of operations of some non-core activities that we
are in the process of selling. 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 2003 increased 30.6%
to $177.4 million compared to 2002. Net earnings for 2002 were up 116.3% over comparable
net earnings of 2001. The net earnings margin improved to 6.5% from 6.3% in 2002 and 4.0%
in 2001. Basic and diluted earnings per share of $0.45 in fiscal 2003 were up from $0.36
in 2002 and up from basic and diluted earnings per share before amortization of goodwill
of $0.21 and basic and diluted earnings per share of $0.30 in 2001. The increase in the
weighted average number of Class A subordinate shares outstanding between 2003 and 2002
was a function of the shares issued for the acquisition of Cognicase in January 2003,
while the increase between 2002 and 2001 was a function of the shares that were issued as
part of the acquisition of IMRglobal Corp., in July 2001. The increase in net earnings
and higher earnings per share between 2002 and 2001 partly reflects the fact that we
stopped recording goodwill amortization at the end of fiscal 2001. The use of debt
contributed to an increase in our earnings per share as it provided financial leverage
from financing.


Pro forma net earnings


Under the Stock option plan, had
compensation cost been determined using the fair value method at the day of grant for
awards granted since October 1, 2001, our pro forma net earnings, basic and diluted
earnings per share would have been $169.2 million, $0.43 and $0.43, respectively, for the
12-month period ended September 30, 2003.


Reconciliation of results
reported in accordance with Canadian GAAP to US GAAP


Under US GAAP, net earnings for
fiscal 2003 would have been $173.3 million, and the basic and diluted earnings per share
would have been $0.44. 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 12-month periods ended September 30, 2003,
2002 and 2001). We modified our management structure to reflect, firstly, the increasing
proportion of business that we derive from
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

23

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| | BPO services coming from the
acquisitions of Cognicase, UAB and INSpire and, secondly, the global delivery approach
that we are taking in providing IT services to our clients. Our end-to-end IT outsourcing
contracts are increasingly being delivered by 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 expertise and
technology centers. The delivery of these contracts crosses international borders and
mixes and matches the best of CGI in delivering solutions to our clients.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                              | Year ended
Sept. 30,
2003 | Year ended
Sept. 30,
2002 | Year ended
Sept. 30,
2001
|----------------------------- | ------------------------- | ------------------------- | -------------------------
|                             
|(in `000 of Canadian dollars) | $                         | $                         | $                        
|Revenue                      
|IT services                   | 2,232,335                 | 1,839,108                 | 1,310,610                
|BPS                           | 554,461                   | 388,031                   | 288,229                  
|Intersegment elimination      | (67,101)                  | (57,526)                  | (38,448)                 
|                             
|Total revenue                 | 2,719,695                 | 2,169,613                 | 1,560,391                
|                             
|EBIT                         
|IT services                   | 293,947                   | 223,099                   | 148,527                  
|BPS                           | 72,393                    | 65,722                    | 46,006                   
|Corporate                     | (68,042)                  | (56,676)                  | (30,909)                 
|                             
|Total EBIT                    | 298,298                   | 232,145                   | 163,624                  
|                             

| | 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, fueled solid growth in 2003. Revenue was
driven by a combination of IT and business process outsourcing and SI&C contract
wins, renewals and add-on projects as well as acquisitions. Growth in revenue, without a
corresponding increase in overhead, resulted in good margin contribution.


In 2003, revenue derived from
delivering IT services increased 21.4% from the previous years revenue, driven
primarily by the acquisition of Cognicase in January 2003 and the completion of the first
full year of activities on our outsourcing contract with Canada Post. While acquisitions
accounted for 15.1% of the year-over-year growth, growth from organic activities in
constant dollars was 6.8% with foreign currency effect having a modest negative impact of
0.5%. The appreciation of the Canadian dollar against the US dollar was partially offset
by the depreciation experienced in the year by the Canadian dollar against the British
pound and the Euro. Our organic growth was reduced by $16.5 million as a result of some
of our US clients being acquired or, in one case, being placed under court protection. In
addition, we were impacted to a lesser extent by the continued softness in the US market
and the weak demand for SI&C services. As well, our decision to wind down our
operations in Portugal and Latin America last year also contributed to a lower organic
growth factor. The impact of this decision was a $13.7 million reduction in our revenue.
In Europe, the improvement in revenue was driven largely by growth in the UK, especially
SI&C contract wins. As expected, revenue from operations in France was down,
reflecting the local market conditions for SI&C.


With revenue increasing 21.4% over
last year, EBIT grew by 31.8%, fueled partially by acquisitions and new outsourcing
business as well as improvements in operations. A significant driver of this improvement
was the full adoption of the CGI global business model within the US operations and
adherence to CGIs standard management ratios. The US delivery units had
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

24

---

| | previously been structured around
industry vertical expertise. In late fiscal 2002, the integration of US operations was
completed under a global operations structure and we restructured these units based on
nine major metro markets. 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. Operational improvements realized in France during 2003 also had a positive
effect on margins.


BPS


Fiscal 2003 was a building year for
our BPS LOB, following the acquisitions of INSpire and UAB in January 2003, and the
subsequent creation of a new group called Insurance Business Services  a leading
full-service provider of outsourced insurance services focused on providing end-to-end
business process outsourcing services to the North American insurance industry, namely
property and casualty and life insurance companies. This group currently serves every
major insurance company in Canada and many providers in the US, and has a great
opportunity to sell deeper into the client base and target many new opportunities. We are
pleased with the breadth and depth of business process outsourcing services added in the
last year and look forward to leveraging higher growth with our expertise in the future.


The business process outsourcing
activities represented 20.4% of our total revenue in 2003 and reflected 42.9%
year-over-year growth. The majority of this growth was driven by the acquisition of UAB,
the assets from INSpire as well as the BPO operations acquired as part of the Cognicase
transaction. These acquisitions accounted for 39.3% growth while the impact of the
strengthening Canadian dollar compared to the US dollar reduced revenue by 2.3%. The
organic growth in the BPS activities in constant dollars was 5.8%.



EBIT for the BPS LOB increased 10.2%
from the previous year. As a certain time was required to effectively integrate our new
insurance businesses, the net profitability of the acquired operations was at a level
lower than that of the pre-existing operations. We expect the margins of these units to
increase to the traditional levels for this business. In addition, our profitability
declined in the banking and investment sector following a clients decision to
suspend IT investments as a result of the soft financial market in 2002. While the
healthcare sector realized increased profitability for the year, the market softness in
both the consulting and claims processing areas largely offset a one-time claim recovery
received from a client early in the year. The majority of the improvement in the
profitability from 2001 to 2002 reflected a full year of the banking and investment
operations acquired in 2001 and included synergies and cost savings that were realized
from the integration of these operations into the company.


Liquidity and Capital Resources


We finance the growth of our
business through cash flows from operations combined with the issuance of debt, borrowing
under our existing credit facilities and/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, 2003, we held
$83.5 million in cash and cash equivalents, a decrease of $20.7 million from September
30, 2002. Historically, the majority of our cash and cash equivalents have been provided
by continuing operating activities. In 2003, cash provided by continuing operating
activities was higher by $52.0 million compared to the previous fiscal year. This was
offset by a higher level of cash used for continuing investing activities which, net of
the cash provided by continuing financing activities, was $133.9 million higher than in
2002.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

25

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|                                                                            | Year ended
Sept. 30,
2003 | Year ended
Sept. 30,
2002 | Year ended
Sept. 30,
2001
|--------------------------------------------------------------------------- | ------------------------- | ------------------------- | -------------------------
|                                                                           
|(in `000 of Canadian dollars)                                               | $                         | $                         | $                        
|Net cash provided by (used in):                                            
|Continuing operating activities                                             | 229,459                   | 177,447                   | 174,002                  
|Continuing investing activities                                             | (462,279)                 | (215,603)                 | (157,751)                
|Continuing financing activities                                             | 205,670                   | 92,894                    | (15,821)                 
|Effect of rate changes on cash and cashequivalents of continuing operations | 917                       | 3,475                     | (3,763)                  
|                                                                           
|Net change in cash and cash equivalents ofcontinuing operations             | (26,233)                  | 58,213                    | (3,333)                  
|Net cash and cash equivalents provided bydiscontinued operations            | 5,521                     | --                        | --                       
|Cash and cash equivalents, beginning of year                                | 104,221                   | 46,008                    | 49,341                   
|                                                                           
|Cash and cash equivalents, end of year                                      | 83,509                    | 104,221                   | 46,008                   
|                                                                           

| | The increase in cash flow from
continuing operating activities was driven by higher net earnings from continuing
operations achieved during fiscal 2003 of $39.6 million, and by the non-cash adjustments,
such as the amortization and depreciation expenses which were significantly higher than
in fiscal 2002. However, it was offset by the net change in non-cash working capital
items, which was $69.3 million lower than last year. This was mostly explained by the
working capital




components related to the
acquisitions made during the year, including Cognicase and UAB, which impacted the
Consolidated Statements of Cash Flows the most. Even if the days of sales outstanding (DSO),
as at September 30, 2003 remained unchanged from September 30, 2002, at 50 days, the
increase in accounts receivable and work in progress net of the decrease in deferred
revenue totaled $53.7 million. This demonstrates our ability to manage the increased
business operations acquired from Cognicase and UAB and keep the DSO at the level prior
to their acquisition. We calculate the DSO by subtracting the deferred revenue from
accounts receivable, net of the tax credits receivable, and work in progress balances.
The cash used from the accounts receivable can also be explained by tax credits recorded
this year, for which the receivable was increased by approximately $60.4 million during
the year. This was net of the payments received during the year of $43.0 million, which
was based on the prior years returns. The net amount of the tax credits recorded
this year increased the accounts receivable, but did not affect the DSO.


Another reason for the draw down of
the cash from the net change in non-cash working capital items was the cash used for the
accounts payable and accrued liabilities. It was mainly related to the decrease of the
provision for severance payments and costs to exit activities, which was recorded in the
accounts payable and accrued liabilities when we acquired Cognicase, thus having no
impact on the cash flow from continuing operating activities at that time. However, after
the acquisition, when payments were issued for severance payments and exit costs, they
were reflected as a use of cash by continuing operating activities. The decrease of this
provision since January 13, 2003, the date of the acquisition, until September 30, 2003,
was $27.2 million. As well, in the course of this acquisition, a provision was
established in order to pay for estimated losses on fixed price contracts acquired
through the purchase of Cognicase, which was drawn down during the year. Also, the
payments from clients in advance of the work being performed were lower by $21.6 million
compared with September 30, 2002. Deferred revenue may fluctuate from year to year
depending on the timing of payments received from outsourcing
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

26

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| | clients. The negative impact on the
cash balance of the items described above was offset by the increase in income taxes
payable of $4.2 million, which is primarily explained by the difference in the amount of
the installments paid during the year, which are based on the previous years
taxable income, compared to taxes that are accrued for this year based on actual
increased taxable income. As such, this increased the liability for income taxes.
Furthermore, the accrued compensation change had a positive impact of $22.0 million in
the net change in non-cash working capital items.


Cash used in continuing investing
activities was $462.3 million in 2003, an increase of $246.7 million compared to the
prior fiscal year. The majority, or 50.4%, of the 2003 continuing investing activities
was for business acquisitions. The purchase of fixed assets represented 13.2%, contract
costs represented 6.3% and other intangibles and other long-term assets represented 32.2%
of the total continuing investing activities. Our capital expenditures, including fixed
assets, contract costs, other intangibles and other long-term assets, were 8.8% of
revenue, compared to 8.3% of revenue in 2002. We believe this to be adequate to support
our growing business and to meet contractual requirements.


Details of our business acquisitions
can be found in Note 12 to the Consolidated Financial Statements. In fiscal 2003, we made
two major acquisitions and three smaller niche acquisitions for a total cash
consideration of $233.0 million. Cognicase, acquired on January 13, 2003, was purchased
for $329.4 million, including $180.2 million in cash, $139.7 million through the issuance
of shares and the balance was related to acquisition costs. UAB was purchased for $54.1
million, including a $53.0 million cash consideration and the remaining consisted of
acquisition costs. The rest of the business acquisitions represented a cash investment of
$12.9 million. In fiscal 2002, we completed five acquisitions of IT consulting firms for
a total consideration of $19.9 million. We also invested $26.0 million for the start-up
of our joint venture, Innovapost. In fiscal 2001, our investment of $86.4 million was
used to acquire 10 companies, including IMRglobal Corp., Star Data Systems Inc., C.U.
Processing Inc. and the outsourcing contract with Desjardins, as well as to enter into
two joint venture agreements. The proceeds of the sale of subsidiaries, representing $0.5
million in 2003, corresponded to the sale of small-scale operations of Cognicase. The
proceeds from the sale of these subsidiaries were lower than the cash held by these units
at the time of their disposition, causing the proceeds to reflect a use of cash. In
fiscal 2002, the proceeds from the sale of subsidiaries corresponded to the sale of the
Japanese and Australian operations that had been acquired with IMRglobal Corp. in July
2001.



The purchase of fixed assets of
$60.8 million increased by $37.4 million compared to 2002. The 2003 investment in fixed
assets related mostly to leasehold improvements of $30.0 million, including approximately
$19.8 million for the installation costs for the fit-up of the new offices at E-Commerce
Place in Montreal. Additionally, during the first quarter, following the finalization of
a contract signed with a subsidiary of Canada Post in the fourth quarter of 2002, we
acquired the Tier 1 infrastructure assets of this subsidiary for a net value of $16.3
million. This contract is part of the larger IT outsourcing agreement signed in May 2002
with Canada Post.


Our investment in contract
costs of $29.2 million decreased when compared to $62.0 million spent in the prior year.
Included in this amount are approximately $9.0 million in incentives that were granted as
part of outsourcing contracts announced during the year with clients such as Alcan, Air
Liquide and League Data. Additionally, approximately $23.0 million represents the
transition costs incurred with outsourcing clients in their transition period, such as
Canada Post and one of its subsidiaries, as well as Alcan, League Data, Russell
Investment Group and Air Liquide (most of these contracts were signed during the last
fiscal year). Last year, the amount was comprised of transition costs and incentives for
large outsourcing contracts signed, the most
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

27

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| | significant being Firemans
Fund Insurance Company (a subsidiary of Allianz AG of Munich) and Canada Post.


The investment in other intangibles
and other long-term assets was $149.0 million in 2003, an increase of $54.4 million
compared to last year. The details of what is included in this category are provided in
the section Critical Accounting Policies and Estimates. The most significant
item was the purchase of certain assets of Canada Post by Innovapost, a joint venture for
which we recognize a 49% ownership, representing $47.3 million. These assets were part of
the original outsourcing agreement, are comprised of capitalized costs and software, and
are related to the enterprise resource system used by Canada Post, which will initially
be used by Canada Post and subsequently, also by other Canada Post companies. In the
course of this transaction, Innovapost bought these assets and sold them back to Canada
Post through a direct financing 50-month lease agreement. As at September 30, 2003, $25.4
million was included in the other intangibles and other long-term assets. In addition, an
amount of $47.4 million was invested in new business solutions, with about half alloted
to the development of solutions for our clients and the remaining for software being
implemented for our internal use. We expect this software to serve our needs for a period
of at least seven years. Finally, as per normal business with outsourcing clients,
software licenses were acquired for an approximate value of $45.6 million in order to
deliver IT outsourcing services.


Cash provided by continuing
financing activities was $205.7 million in 2003, compared with $92.9 million during 2002.
Continuing financing activities in 2003 included the signature, on November 12, 2002, of
an agreement with a banking syndicate pertaining to two unsecured credit facilities. More
details surrounding this agreement are provided in the Significant Developments in
2003  Other section. 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. The decrease of other long-term debt is comprised of a few items. First, as part of the
acquisition of Cognicase, purchase price balances for acquisitions made by Cognicase
prior to January 13, 2003 were added to the long-term debt. These obligations will be
disbursed over the period ending December 2006. As at September 30, 2003, an amount of
$15.0 million remains outstanding, given that $27.5 million has been paid since January
13, 2003, and the remainder of the variance is comprised of interest and adjustments made
to some of the balances. It also includes the reimbursement of the credit lines that were
held by Cognicase and UAB at the acquisition dates. The balance of the amount reflects
mostly the payment of capital leases. The decrease in the long-term debt was partially
offset by the debt incurred by Innovapost to pay for certain Canada Post assets. In
fiscal 2002, the cash provided by continuing financing activities came mainly from the
issuance, in December 2001, of 11,110,000 Class A subordinate shares at $11.25 per share
for net proceeds of $119.5 million. Partly offsetting the cash raised in this offering
was the repayment of a US$20 million Libor debt advance in the fourth quarter of fiscal
2002 and payments of capital leases that we held. In fiscal 2001, the $65.0 million debt
repayment was related to the reimbursement of outstanding long-term debt of companies
acquired during this year, namely Star Data Systems Inc. and IMRglobal Corp. It was
offset by $54.2 million of net proceeds from the issuance of 6.4 million shares, which
had resulted from the exercise of preemptive rights by two majority shareholders of CGI,
pursuant to the IMRglobal Corp. acquisition in July 2001.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

28

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| | Free cash flow
| | --------------

|                                                                                                                                                 | Year ended
Sept. 30,
2003 | Year ended
Sept. 30,
2002 | Year ended
Sept. 30,
2001
|------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------- | ------------------------- | -------------------------
|                                                                                                                                                
|(in `000 of Canadian dollars)                                                                                                                    | $                         | $                         | $                        
|Cash provided by continuing     operating activities                                                                                             | 229,459                   | 177,447                   | 174,002                  
|Cash used for purchase of fixed assets                                                                                                           | 60,843                    | 23,465                    | 21,594                   
|                                                                                                                                                
|Free cash flow(1)                                                                                                                                | 168,616                   | 153,982                   | 152,408                  
|                                                                                                                                                
|(1)We
define free cash flow, which is a non-GAAP measure, as cash provided by continuing
operating activities less the purchase of fixed assets.

| | Free cash flow, which we define as
cash provided by continuing operating activities less the purchase of fixed assets, was
$168.6 million in 2003 compared to $154.0 million in 2002 and $152.4 million in 2001. As
we have stated in the past, our cash flow may vary from quarter to quarter depending on
large outsourcing contract wins or acquisitions, the timing of tax credits received and
the timing of large clients payables for their outsourcing contracts, among other
things. The increase in free cash flow this year compared to last year is mostly due to
an increase in the cash provided by continuing operating activities that was partially
offset by the increase in capital expenditures. The purchase of fixed assets is detailed
above.


Capital structure
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                               | 2003      | 2002      | 2001     
|---------------------------------------------- | --------- | --------- | ---------
|                                              
|(in `000 of Canadian dollars)                  | $         | $         | $        
|Long-term debt, including current portion      | 267,986   | 8,500     | 40,280   
|Shareholders' equity                           | 1,980,210 | 1,779,615 | 1,503,114
|Long-term debt to equity ratio                 | 0.14:1    | 0.00:1    | 0.03:1   
|Total market capitalization as of September 30 | 3,139,688 | 2,303,235 | 3,328,884
|Long-term debt to market capitalization ratio  | 8.5%      | 1%       | 1.2%     
|                                              

| | The long-term debt increased this
year following the acquisitions of Cognicase and UAB, to which most of the debt issuance
was related. Also included in the long-term debt are the purchase price balances of acquisitions
accrued by Cognicase prior to January 13, 2003, and for which the unpaid balance as at
September 30, 2003, was $15.0 million. Finally, it includes debt of $18.9 million
incurred by Innovapost to pay for certain assets acquired from Canada Post. The
shareholders equity increased mainly due to the issuance of shares during the year
and to the net earnings achieved in the year, which amounted to $177.4 million. The
capital stock increased with the exercise of $7.9 million of options during the year, but
mostly reflects the $139.7 million paid through the issuance of 19.9 million Class A
subordinate shares in January 2003 to pay for the Cognicase acquisition. An additional
113,154 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 $123.8 million, due to the
depreciation by 15.1% of the US dollar versus the Canadian dollar between September 30,
2002 and September 30, 2003. We translate the assets denominated in foreign currencies
using the year-end exchange rates.


The total value of market
capitalization increased by 36.3% as a result of a 5.6% increase in outstanding shares
year-over-year, and a 29.1% increase in the closing share price on September 30, 2003,
versus September 30, 2002.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

29

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| | The long-term debt to equity and the
long-term debt to market capitalization ratios both increased during the year as a
function of the debt that we issued to pay for the acquisitions of Cognicase and UAB.
Most of the acquisitions we made since 2001, including IMRglobal Corp. and Star Data
Systems Inc., were financed mainly through the issuance of shares. Since then, to
increase the earnings per share value for our shareholders, we have decided to minimize
the dilution effect and we use more debt as a leverage tool.


Capital resources
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                           | Total
Commitment (1) | Available at
Sept. 30, 2003 | Outstanding
at Sept. 30,
2003 (2) | Available at
Sept. 30,2002 | Outstanding
at Sept. 30,
2002 (2)
|-------------------------------------------------------------------------- | -------------------- | --------------------------- | --------------------------------- | -------------------------- | ---------------------------------
|                                                                          
|(in `000 of Canadian dollars)                                              | $                    | $                           | $                                 | $                          | $                                
|Unsecured syndicatedcredit facilities                                      | 515,000              | 285,500                     | 229,500                           | 222,796                    | 2,204                            
|Lines of credit(Bank of Montreal)                                          | 25,000               | 25,000                      | 0                                 | 23,342                     | 1,658                            
|Other                                                                      | 2,700                | 2,700                       | 0                                 | 2,971                      | 0                                
|                                                                          
|(1) Excluding any existing credit facility for non-majority owned entities
|(2) Includes Drawn Letters of Credit.                                     

| | As at September 30, 2003, cash and
cash equivalents were $83.5 million and the total credit facility available amounted to
$313.2 million. Cash equivalents typically include commercial paper and term deposits as
well as bankers acceptances and bearer deposit notes issued by major Canadian
banks.


Under a new credit agreement
structured during the year, we have access to a $186 million revolving credit facility
for our operating activity and working capital needs, and a $329 million three-year term
revolving credit facility for the financing of acquisitions and outsourcing contracts. We
also have access to a $25 million uncommitted operating facility for cash management
purposes. The $186 million revolving credit facility, at the option of the lenders, can
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 requires us to maintain certain
financial ratios. As at September 30, 2003, and September 30, 2002, we met these ratios.




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 structure if we felt it was beneficial to the
Company. We believe that our balance sheet, cash position and bank lines are sufficient.
If these resources need to be augmented due to the financing requirements related to new
large outsourcing contracts or large acquisitions, significant additional cash
requirements would likely be financed by the issuance of debt and/or equity securities.


Contractual obligations and
commitments
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Commitment types              | Total minimal lease
payments due until 2008
|----------------------------- | -------------------------------------------
|                             
|(in `000 of Canadian dollars) | $                                          
|Operating leases             
|Rental of office space        | 428,653                                    
|Computer equipment            | 151,705                                    
|Long-term service agreements  | 54,131                                     
|Included in long-term debt   
|Long-term debt repayments     | 257,879                                    
|Capital lease payments        | 12,252                                     
|                             

30

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| | We are committed under the term of
operating leases with various expiration dates, primarily for rental of premises,
computer equipment used in outsourcing contracts and long-term service agreements in the
aggregate amount of $1,202.6 million. Of this, rental of office space represents $996.0
million, computer equipment represents $152.5 million and long-term service agreements
represent $54.1 million. Total operating leases have increased by $312.5 million compared
to those at the end of the last fiscal year, primarily reflecting an increase in the
commitments related to the rental of premises of $253.5 million. These increases are in
line with the growth of our business, primarily reflecting commitments acquired with
Cognicase and UAB during the year. For one building lease we assumed from Cognicase,
there is a commitment representing $58.8 million, which is now included in our
commitments. Also, our 20-year lease commitment at E-Commerce Place in Montreal has grown
by $60.5 million, as a result of an increase in the space that we occupy. Finally, as
part of the reorganization of our offices in the Greater Toronto area, a new lease has
been signed during the last fiscal year and the commitment represents $68.0 million.


Computer equipment leases are
related to hardware leased from manufacturers or financial institutions in the course of
business activities. As part of the outsourcing agreements in particular, clients agree
to take back the computer equipment in the case of early contract termination.


The long-term debt principal
repayments are described in Note 8 to the Consolidated Financial Statements.


The capital lease payments are
mainly comprised of contracts for the lease of computer equipment, with terms from one to
five years, along with the capital lease contracts that were acquired with Cognicase and
UAB. We do not normally enter into capital lease contracts for computer equipment.


We do 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. 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 2004, 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.


Risks and Uncertainties


While we are confident about our
long-term prospects, the following risks and uncertainties would affect our ability to
achieve our strategic vision and objectives for growth and should be considered when
evaluating our potential as an investment:


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 certified processes and
in corporate manuals. These 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 six economic sectors we target. As of
December 31, 2003 CGI re-defined these same six markets and they are now presented as
segmented in five sectors. This in-depth market knowledge helps enhance our competitive
position. CGI is a dominant provider of
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

31

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| | 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.


Difficulties in executing our
acquisition strategy  A significant part of our growth strategy is dependent on our
ability to continue acquiring 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.


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.


Foreign currency risk  The
increased international business volume could expose CGI to greater foreign currency
exchange risks, which could adversely impact our operating results. We have a hedging
strategy in place to protect ourselves, to the extent possible, against foreign currency
exposure. Other than the use of financial products to deliver on our hedging strategy, we
do not trade derivative financial instruments.


Business mix variations  The
revenue that we generate from shorter-term systems integration and consulting 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 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 performance-driven remuneration. In addition, we have implemented
a comprehensive program aimed at attracting and retaining qualified and dedicated
professionals and today, we believe that we are considered to be 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 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 more than 50 companies since our inception. Our disciplined approach to
management, largely based on our ISO 9001 certified management frameworks, has been an
important factor in the successful integration of human resources of acquired companies
and the IT operations of outsourcing clients. As at September 30, 2003, the vast majority
of our operations had received ISO 9001 certification.


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
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

32

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| | industry, thus ensuring that we can
meet the evolving needs of our clients. We achieved this expertise as a result of our
specialization in six targeted economic sectors (re-defined as five economic sectors as
of December 31, 2003); 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.


Material developments regarding
major commercial clients resulting from such causes as changes in financial condition,
mergers or business acquisitions  With the exception of BCE, 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. 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.


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  If
measures announced in the June 12, 2003 Quebec provincial budget are applied, a change in
voting control of CGI could translate into a loss of provincial tax credits related to
E-Commerce Place and the Cité Multimédia in Montréal, the Carrefour
de la nouvelle économie in Saguenay and the Carrefour national des nouvelles
technologies de Québec.


Outlook


Our 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 BPO 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 Canada. We
believe that there are many acquisition opportunities available, but are committed to
certain
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

33

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|    | financial, operational and cultural
criteria, and will not sacrifice these for short term or potential gain.


Based on information known today
about current market conditions and demand, we anticipate revenue and earnings per share
to grow between 8% and 17% for fiscal 2004. This guidance is based on what is known today
about current market conditions and the fluctuation of currency exchange rates. It
excludes the impact of other acquisitions or large outsourcing contracts contributing
more than $100 million per year in revenue.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.3 | Statistics for Past
Nine Quarters (2002-2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    | Please note that all amounts are in
thousands of dollars, except per share amounts.                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

|                                     | Fiscal year
2004 | Fiscal year
2003 | Fiscal year
2002
|------------------------------------ | ---------------- | ---------------- | ----------------
|                                    
|
|                                    
|                                     | 31/12/03         | 30/09/03         | 31/03/03        
|                                     |                  |                  |                 
|Revenue                              | 700,470          | 694,180          | 716,184         
|                                     |                  |                  |                 
|Net earningsfromcontinuingoperations | 49,493           | 47,984           | 46,758          
|                                     |                  |                  |                 
|Net Earnings                         | 48,741           | 48,469           | 47,068          
|                                     |                  |                  |                 
|Basic per   share                    | 0.12             | 0.12             | 0.12            
|                                    

|4.4 | Forward-Looking
Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | All statements in this Annual
Information Form 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 forward-looking 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.

34

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|5.  | DIRECTORS AND OFFICERS                                                                        
|--- | ----------------------------------------------------------------------------------------------
|5.1 | Directors                                                                                     
|    | Each of the directors has been
elected to serve until the next annual meeting of shareholders.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | William D. Anderson
Montreal, Quebec
Director since 1999
Member of the Corporate Governance Committee and of the Human Resources Committee
Class A Subordinate Shares: 1,000 (*)
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|William D. Anderson is President of BCE Ventures Inc.,  responsible for BCE Inc.'s investment in a number
of companies including CGI. A chartered  accountant,  Mr. Anderson previously was Chief Financial Officer
(CFO) of Bell Canada,  CFO of BCE Inc. and CFO of Bell Cablemedia plc. Mr. Anderson is also a Director of
Aliant  Inc.,  BCE Emergis  Inc.,  Bell Canada  International  Inc.,  Canbras  Communications  Corp.  and
TransAlta Corporation.

|                                                                                                                                                                                                                                                                                                                                              |  | Claude Boivin                                                                          
Longueuil, Quebec                                                                      
Director since 1993                                                                    
Chairman of the Corporate Governance Committee, member of the Audit and Risk Management
Committee and Lead Director                                                            
Class A subordinate shares: 106,596 (*)                                                
Deferred stock units: 5,561 (+)                                                        
Stock options: 24,763
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Claude Boivin held a number of senior  positions at  Hydro-Quebec  and was President and Chief  Operating
                      Officer  when he  retired in 1992.  Mr.  Boivin is a  Director  of Tembec  Inc.,  Heroux  Devtek,  Groupe
                      Laperriere et Verreault Inc. and Chairman of Boralex Power Income Fund Trust.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | Jean Brassard                          
Longueuil, Quebec                      
Director since 1978                    
Class A subordinate shares: 233,448 (*)
Class B shares: 1,334,496 (*)          
Stock options: 62,000
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Jean Brassard is  Vice-Chairman of the Board and was, until 2000,  President and Chief Operating  Officer
of CGI. He contributed to CGI's growth in Canada,  the US and Europe. He joined CGI in 1978. Mr. Brassard
is also a Director of AGTI Consulting Services Inc. and Conseillers en informatique  d'affaires CIA Inc.,
two subsidiaries of CGI. He also serves as a Director of several  organizations,  including  Fondation de
l'Universite Laval and Centre d'arts Orford.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Claude Chamberland                     
Longueuil, Quebec                      
Director since 1998                    
Member of the Human Resources Committee
Class A subordinate shares: 11,396 (*) 
Deferred stock units: 5,830 (+)        
Stock options: 23,453
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Claude  Chamberland has spent over 37 years with Alcan Inc.  covering most management  levels and finally
retiring as  Executive  Vice-President.  His  national and  international  responsibilities  were largely
related to  management  and general  management  of operating  businesses  but, at times,  included  R&D,
information technology and construction management.  He is a Director of Hatch Associates Ltd., Intellium
Technologies Inc., FRE Composites Inc. and a number of non-profit organizations.

35

---

|                                                                                                                                                                                                                                                                                                                                                          |  | Robert Chevrier                                  
Montreal, Quebec                                 
Director since 2003                              
Member of the Audit and Risk Management Committee
Class A subordinate shares: 10,000 (*)           
Deferred stock units: 1,482 (+)                  
Stock options: 8,965
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Robert Chevrier is President of Roche Management Co. Inc., a holding and investment  company. A chartered
accountant,  he was  previously  Chairman and Chief  Executive  Officer of Rexel  Canada  Inc.,  formerly
Westburne  Inc. He also serves as a Director of Bank of Montreal,  Transcontinental  Inc.,  Cascades Inc.
and Richelieu Hardware Ltd.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Paule Doré                            
Montreal, Quebec                       
Director since 1996                    
Class A subordinate shares: 478,374 (*)
Stock options: 325,000
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Paule Dore joined CGI in 1990 and is currently Executive  Vice-President and Chief Corporate Officer. She
is responsible for human resources and leadership development,  corporate governance, quality, marketing,
knowledge management and communications,  including financial communications. She is currently a Director
of AXA Canada,  the Canadian Centre for  Architecture,  the National Arts Centre  Foundation,  as well as
Chair of the Board of Directors of the Montreal Women's Y Foundation.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | Serge Godin                                                                              
Montreal, Quebec                                                                         
Director since 1976                                                                      
Ex-officio member of the Human Resources Committee and the Corporate Governance Committee
Class A subordinate shares: 573,963 (*)                                                  
Class B shares: 28,216,507 (*)                                                           
Stock options: 952,000
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Serge  Godin  co-founded  CGI in 1976 and is its  Chairman  and  Chief  Executive  Officer.  Since  CGI's
inception,  Mr.  Godin has  successfully  grown the Company to become  Canada's  largest  independent  IT
services company and the fifth largest in North Amercia.  Throughout his career, Serge Godin has remained
active in a number of organizations  promoting the economic  development of Montreal,  Quebec and Canada.
This year, he was named Great Montrealer for his  contributions in the economic sector. He was awarded an
honorary Doctor of Law degree from Concordia  University and an honorary Doctor of Management degree from
Universite Laval.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  | André Imbeau                           
Beloeil, Quebec                        
Director since 1976                    
Class A subordinate shares: 235,191 (*)
Class B shares: 4,221,165 (*)          
Stock options: 495,000
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Andre Imbeau  co-founded  CGI in 1976 and is Executive  Vice-President  and Chief  Financial  Officer and
Treasurer of CGI. Mr.  Imbeau's  financial  leadership  and strong  commitment to teamwork  significantly
contributed to CGI's track record of maintaining 27 years of consecutive revenue growth.  Andre Imbeau is
responsible for creating value for all  stakeholders  through managing key functions  including  finance,
treasury,  mergers and acquisitions,  legal and corporate engagement assessment services. Mr. Imbeau sits
on the boards of AGTI Consulting Services Inc. and Conseillers en informatique  d'affaires CIA Inc., both
subsidiaries of CGI.

36

---

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |  | David L. Johnston                        
Waterloo, Ontario                        
Director since 1994                      
Chairman of the Human Resources Committee
Class A subordinate shares: 74,120 (*)   
Deferred stock units: 7,339 (+)          
Stock options: 28,317
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Professor  Johnston is President and  Vice-Chancellor  of the University of Waterloo,  appointed in 1999,
and previously  was a professor at McGill  University's  Faculty of Law,  following 15 years as Principal
and Vice-Chancellor of McGill University.  He has chaired numerous boards and organizations including the
Board of  Overseers of Harvard  University  and the Federal  Government's  Information  Highway  Advisory
Council. He has authored 12 books providing the legal perspective on e-business,  the information highway
and corporations.  Prof.  Johnston has 12 honorary  doctorates and is a Companion of the Order of Canada.
He is a Director of Alcatel Canada Inc., Open Text Ltd. and Masco Corporation.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Eileen A. Mercier                                  
Toronto, Ontario                                   
Director since 1996                                
Chairman of the Audit and Risk Management Committee
Class A subordinate shares: 15,774 (*)             
Deferred stock units: 3,384 (+)                    
Stock options: 19,977
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Eileen A. Mercier is a corporate  director.  Previously,  she was President of Finvoy  Management Inc., a
management  consulting  firm, and before that was Senior  Vice-President  and Chief Financial  Officer of
Abitibi-Price Inc. Ms. Mercier is a Director of several  corporations  including Hydro One Inc., Quebecor
World Inc., ING Bank Canada,  Winpak  Limited,  Teekay Shipping Corp. and Shermag Inc., and of non-profit
organizations  including York University and the University Health Network. Ms. Mercier holds an MBA from
York University.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  | Michael J. Sabia   
Montreal, Quebec   
Director since 2003
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------
|Michael J. Sabia is President  and Chief  Executive  Officer and a Director of BCE Inc.,
as well as Chief  Executive  Officer and a Director of Bell  Canada.  Mr. Sabia has held
the above executive  positions since April 2002 and May 2002 respectively.  Prior to his
appointment as Vice-Chairman  and Chief Executive  Officer of Bell Canada  International
Inc. in October
1999,Mr.  Sabia held the position of Executive  Vice-President  and Chief  Financial  Officer of Canadian
National Railway Company. In July 2000, Mr. Sabia was appointed Executive  Vice-President of BCE Inc. and
Vice-Chairman of Bell Canada.  From December 2000 to March 2002, he held the position of President of BCE
Inc. In March 2002, Mr. Sabia was appointed  President and Chief Operating  Officer of BCE Inc. and Chief
Operating  Officer of Bell Canada.  He is also Chairman of the Board of BCE Emergis Inc., Bell Globemedia
Inc. and a Director of Bell Mobility Holdings Inc., Bell ExpressVu Inc., and Telesat Canada.

| |  | C. Wesley M. Scott                  
Toronto, Ontario                     
Director since 2001                  
Class A subordinate shares: 1,000 (*)
Deferred stock units: 4,310 (+)      
Stock options: 22,618
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

37

---

| | C. Wesley M. Scott is a retired  executive of the BCE Inc.  group of  companies,  having held a number of
positions,  including  Chief  Corporate  Officer  of BCE Inc.,  Vice-Chairman  of Bell  Canada  and Chief
Financial Officer of Nortel Networks Corporation.  He is a Director of a number of public companies:  BCE
Emergis Inc., Legacy Hotels Real Estate Investment Trust, Sears Canada Inc. and Solectron Corporation.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                  |  | Gerald T. Squire                           
WestTVancouver, British Columbia            
Director since 2003                         
Member of the Corporate Governance Committee
Class A subordinate shares: 5,000 (*)       
Deferred stock units: 1,482 (+)             
Stock options: 8,965
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Gerald T. Squire  retired  from his  position as  President  and CEO of The  Co-operators  Group in 2002,
following  47 years in the  insurance  sector.  Mr.  Squire  participated  in a  number  of  professional
organizations  including  Chairman of the  Insurance  Institute of Canada and  Director of the  Insurance
Bureau of Canada and the International Cooperative and Mutual Insurance Federation.

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |  | Robert Tessier                             
Montreal, Quebec                            
Director since 2003                         
Member of the Corporate Governance Committee
Class A subordinate shares: 5,000 (*)       
Deferred stock units: 1,482 (+)             
Stock options: 8,965
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Robert  Tessier has been President and Chief  Executive  Officer of Gaz Metro Limited  Partnership  since
1997. Previously,  he was President and Chief Executive Officer of Alstom Canada, a manufacturer of power
equipment  and railway  material.  Mr.  Tessier is President  of the Board of the  Montreal  Institute of
Cardiology. He is a Director of AXA Canada and Investors Group Corporate Class Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(*) Number of shares beneficially owned or controlled.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(+) For more information regarding deferred stock units ("DSUs"),
please refer to the "Remuneration of                           Directors" section of the
Management Proxy Circular.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|For the past five years, all of the
nominees have been engaged in their present occupation or in other management capacities
with the companies with which they currently hold positions, except for: Mr. William D.
Anderson who, prior to December 2000, was Chief Financial Officer of BCE Inc.; Mr. Jean
Brassard who, prior to October 2000, was President and Chief Operating Officer of CGI
Group Inc.; Mr. Claude Chamberland who, prior to May 2001, was President of Alcan
International Ltd.; Mr. Robert Chevrier who, prior to March 2001, was Chairman and Chief
Executive Officer of Rexel Canada Inc., formerly Westburne Inc.; Ms. Eileen A. Mercier
who, prior to December 2003, was President of Finvoy Management Inc.; Mr. C. Wesley M.
Scott who, prior to March 2001, was Chief Corporate Officer of BCE Inc.; Mr. Gerald T.
Squire who, prior to April 2002, was President and Chief Executive Officer of The
Co-operators Group.

38

---

| | Structure of Board of Directors
Standing Committees and committee membership
| | ----------------------------------------------------------------------------

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|Audit and Risk Management Committee
Composed  entirely of  independent  outside  directors,  the Audit and
Risk  Management  Committee  is mandated by the Board of  Directors to
review with the  auditors the scope of the audit  review;  review with
the  auditors  and  management  the  effectiveness  of  the  Company's
accounting  policies and  practices,  the Company's  internal  control
procedures,  programs and policies and the adequacy and  effectiveness
of the Company's  internal  controls over the accounting and financial
reporting   systems   within  the  Company;   review   related   party
transactions;  and review and  recommend to the Board of Directors the
approval of the  Company's  interim and audited  financial  statements
and all public disclosure  documents  containing  audited or unaudited
financial information. | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|Corporate Governance Committee
Composed  of  a  majority  of  outside  independent   directors,   the 
Corporate  Governance  Committee is  responsible  for  developing  the 
Company's  approach  to  Board  governance  issues  and the  Company's 
response  to  the  corporate  governance  guidelines;   reviewing  the 
composition  and  contribution  of  the  Board  and  its  members  and
recommending  Board nominees;  overseeing the orientation  program for
new   directors;   and  helping  to  maintain  an  effective   working
relationship  between  the  Board  of  Directors  of the  Company  and
management.                                                                                                                                                                                                                                  | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|Human Resources Committee
Composed of a majority  of outside  independent  directors,  the Human
Resources   Committee  is   responsible   for   reviewing  and  making
recommendations  to the  Board of  Directors  of the  Company  for the
appointment  of Senior  Executives of the Company and for  determining
terms of employment of Senior  Executives.  It also performs functions
such as reviewing  succession  planning and matters of compensation as
well as such other matters that the  Committee  may consider  suitable
with respect to  compensation  or as may be  specifically  directed by
the Board of Directors of the Company from time to time.                                                                                                                                                                                              | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|5.2 | Officers                                                                                                                                               
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The following table states the names
of CGIs Senior Officers, their place of residence and their principal occupation
within the five preceding years:

|                  |                            
|----------------- | ---------------------------
|
|                 
|Serge Godin       | Chairman of the Board      
|Montreal, Quebec  | and Chief Executive Officer
|                  |                            
|Jean Brassard     | Vice-Chairman of the Board 
|Longueuil, Quebec
|                  |                            

39

---

|                      | David Anderson                                | Senior Vice-President and Corporate Controller
|--------------------- | --------------------------------------------- | ----------------------------------------------
|Toronto, Ontario     
|                      |                                              
|André  Bourque        | Senior Vice-President and Chief Legal Officer
|Montreal, Quebec     
|                      |                                              
|Paule Doré            | Executive Vice-President and Chief           
|Montreal, Quebec      | Corporate Officer and Secretary              
|                      |                                              
|André Imbeau          | Executive Vice-President and                 
|Beloeil, Quebec       | Chief Financial Officer and Treasurer        
|                      |                                              
|Andre Nadeau          | Executive Vice-President                     
|Montreal, Quebec      | and Chief Strategy Officer                   
|                      |                                              
|Luc Pinard            | Chief Technology Officer                     
|Longueuil, Quebec    
|                      |                                              
|Michael E. Roach      | President and Chief Operating Officer        
|Ajax, Ontario        
|                      |                                              
|Daniel Rocheleau      | Executive Vice-President and                 
|Longueuil, Quebec     | Chief Business Engineering Officer           
|                      |                                              
|Jacques Roy           | Senior Vice-President, Finance and Treasury  
|Longueuil, Quebec    
|                      |                                              
|Joseph I. Saliba      | President, US and Asia Pacific               
|Boston, Massachussets
|                     

|6. | OWNERSHIP OF SECURITIES ON THE PART OF DIRECTORS AND OFFICERS                                                                                                                                                                                                                                                                  
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | As of January 31, 2004 CGIs
directors and officers as a group own, or exercise control or direction over, directly or
indirectly, 4,059,779 Class A shares representing 1.1 % of CGIs issued and
outstanding Class A shares, and 33,772,168 Class B shares representing 100 % of CGIs
issued and outstanding Class B shares.
|7. | MARKET FOR SECURITIES                                                                                                                                                                                                                                                                                                          
|   | CGIs Class A shares are
traded on the Toronto Stock Exchange under the symbol GIB.A and on the New York Stock
Exchange, under the symbol GIB.                                                                                                                                                                                 

40

---

|8. | ADDITIONAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | The Company shall provide to any
person, upon request to the secretary of the Company, (i) a copy of the Annual
Information Form of the issuer, together with one copy of any document, or the pertinent
pages of any document incorporated by a reference in the Annual Information Form, (ii) a
copy of the comparative financial statements of the Company for the year ended September 30,
2003 together with the accompanying report of the auditor and one copy of any subsequent
interim financial statements, (iii) a copy of the Information Circular dated December 22,
2003 and (iv) a copy of the 2003 Annual Report of the Company.


Additional information including
directors and officers remuneration and indebtedness, and principal holders
of the Companys shares is included in the Information Circular dated December 22,
2003.


Additional financial information on
the last fiscal year ended September 30, 2003, is presented in the audited financial
statements (pages 41to 73) and under the title Managements Discussion
and Analysis of Financial Position and Results of Operations (pages 24 to 39),
in the 2003 Annual Report.


The documents mentioned above are
available at the Companys head office:


1130 Sherbrooke Street West                      5th
Floor                      Montreal, Quebec                      H3A 2M8 Telephone: (514) 841-3200
Fax:
(514) 841-3299

41

---

Financial Statements

|CONSOLIDATED STATEMENTS OF EARNINGS                                                                                                    | YEARS ENDED SEPTEMBER 30  (IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)
|-------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------
|                                                                                                                                       | 2003                                                                            
|                                                                                                                                      
|                                                                                                                                       | $                                                                               
|Revenue                                                                                                                                |                                                                                 
|                                                                                                                                      
|Operating expenses      Costs of services, selling and administrative expenses                                                         |                                                                                 
|Research expenses                                                                                                                      |                                                                                 
|Depreciation and amortization expenses (Note 10)                                                                                       |                                                                                 
|                                                                                                                                      
|                                                                                                                                       |                                                                                 
|                                                                                                                                      
|Earnings before the following items:                                                                                                   |                                                                                 
|                                                                                                                                      
|Interest      Long-term debt                                                                                                           |                                                                                 
|Other                                                                                                                                  |                                                                                 
|                                                                                                                                      
|                                                                                                                                       |                                                                                 
|                                                                                                                                      
|Earnings before income taxes, entity subject to significant influence,
           amortization of goodwill and discontinued operations |                                                                                 
|Income taxes (Note 11)                                                                                                                 |                                                                                 
|                                                                                                                                      
|Earnings before entity subject to significant influence,
           amortization of goodwill and discontinued operations               |                                                                                 
|Entity subject to significant influence                                                                                                |                                                                                 
|                                                                                                                                      
|Earnings before amortization of goodwill and discontinued operations                                                                   |                                                                                 
|Amortization of goodwill, net of income taxes (Note 2)                                                                                 |                                                                                 
|                                                                                                                                      
|Net earnings from continuing operations                                                                                                |                                                                                 
|Net earnings from discontinued operations (Note 13)                                                                                    |                                                                                 
|                                                                                                                                      
|Net earnings                                                                                                                           |                                                                                 
|                                                                                                                                      
|Weighted-average number outstanding Class A
           subordinate shares and Class B shares                                           |                                                                                 
|                                                                                                                                      
|Basic and diluted earnings per share before amortization of goodwill
           Continuing operations                                  |                                                                                 
|Discontinued operations                                                                                                                |                                                                                 
|                                                                                                                                      
|                                                                                                                                       |                                                                                 
|                                                                                                                                      
|Basic and diluted earnings per share
           Continuing operations                                                                  |                                                                                 
|Discontinued operations                                                                                                                |                                                                                 
|                                                                                                                                      
|                                                                                                                                       |                                                                                 
|                                                                                                                                      

See Notes to the Consolidated Financial Statements

|CONSOLIDATED STATEMENTS OF RETAINED EARNINGS    | YEARS ENDED SEPTEMBER 30  (IN THOUSANDS OF CANADIAN DOLLARS)
|----------------------------------------------- | -------------------------------------------------------------
|                                                | 2003                                                         
|                                               
|                                                | $                                                            
|Retained earnings, beginning of year            |                                                              
|Net earnings                                    |                                                              
|Share issue costs, net of income taxes (Note 9) |                                                              
|                                               
|Retained earnings, end of year                  |                                                              
|                                               

See Notes to the Consolidated Financial Statements

39 _ CGI GROUP INC. 2003


---

Financial Statements

|CONSOLIDATED BALANCE SHEETS                                                                   | AS AT SEPTEMBER 30  (IN THOUSANDS OF CANADIAN DOLLARS)
|--------------------------------------------------------------------------------------------- | -------------------------------------------------------
|                                                                                              | 2003                                                   
|                                                                                             
|                                                                                              | $                                                      
|Assets
     Current assets
           Cash and cash equivalents                               |                                                        
|Accounts receivable (Note 3)                                                                  |                                                        
|Work in progress                                                                              |                                                        
|Prepaid expenses and other current assets                                                     |                                                        
|Future income taxes (Note 11)                                                                 |                                                        
|Assets of businesses held for sale (Note 13)                                                  |                                                        
|                                                                                             
|                                                                                              |                                                        
|Fixed assets (Note 4)                                                                         |                                                        
|Contract costs (Note 5)                                                                       |                                                        
|Other intangibles and other long-term assets (Note 6)                                         |                                                        
|Future income taxes (Note 11)                                                                 |                                                        
|Goodwill (Note 7)                                                                             |                                                        
|                                                                                             
|                                                                                              |                                                        
|                                                                                             
|Liabilities
     Current Liabilities
           Accounts payable and accrued liabilities      |                                                        
|Accrued compensation                                                                          |                                                        
|Deferred revenue                                                                              |                                                        
|Income taxes                                                                                  |                                                        
|Future income taxes (Note 11)                                                                 |                                                        
|Current portion of long-term debt (Note 8)                                                    |                                                        
|Liabilities of businesses held for sale (Note 13)                                             |                                                        
|                                                                                             
|                                                                                              |                                                        
|Future income taxes (Note 11)                                                                 |                                                        
|Long-term debt (Note 8)                                                                       |                                                        
|Deferred credits and other long-term liabilities                                              |                                                        
|                                                                                             
|                                                                                              |                                                        
|                                                                                             
|Commitments and contingencies (Note 19)Shareholders' equity
           Capital stock (Note 9) |                                                        
|Contributed surplus                                                                           |                                                        
|Warrants and stock options (Note 9)                                                           |                                                        
|Retained earnings                                                                             |                                                        
|Foreign currency translation adjustment                                                       |                                                        
|                                                                                             
|                                                                                              |                                                        
|                                                                                             
|                                                                                              |                                                        
|                                                                                             

See Notes to the Consolidated Financial Statements

|Approved by the Board
          (Signed)
          Serge Godin
          Director | (Signed)
          André Imbeau
          Director
|--------------------------------------------------------------------------------- | --------------------------------------------------

40 _ CGI GROUP INC. 2003


---

Financial Statements

|CONSOLIDATED STATEMENTS OF CASH FLOWS                                                  | YEARS ENDED SEPTEMBER 30  (IN THOUSANDS OF CANADIAN DOLLARS)
|-------------------------------------------------------------------------------------- | -------------------------------------------------------------
|                                                                                       | 2003                                                         
|                                                                                      
|                                                                                       | $                                                            
|Operating activities
           Net earnings from continuing operations                |                                                              
|Adjustments for:
              Depreciation and amortization expenses                  |                                                              
|Amortization of goodwill                                                               |                                                              
|Deferred credits and other long-term liabilities                                       |                                                              
|Future income taxes                                                                    |                                                              
|Foreign exchange loss                                                                  |                                                              
|Entity subject to significant influence                                                |                                                              
|Net change in non-cash working capital items (Note 15)                                 |                                                              
|                                                                                      
|Cash provided by continuing operating activities                                       |                                                              
|                                                                                      
|Investing activities
           Business acquisitions (net of cash acquired) (Note 12) |                                                              
|Proceeds from sale of subsidiaries (Note 12)                                           |                                                              
|Investment in a joint venture (Note 12)                                                |                                                              
|Purchase of fixed assets                                                               |                                                              
|Proceeds from sale of fixed assets                                                     |                                                              
|Contract costs                                                                         |                                                              
|Increase in other intangibles and other long-term assets                               |                                                              
|Decrease in other intangibles and other long-term assets                               |                                                              
|                                                                                      
|Cash used for continuing investing activities                                          |                                                              
|                                                                                      
|Financing activities
           Net variation in credit facility                       |                                                              
|Decrease of other long-term debt                                                       |                                                              
|Issuance of shares (Note 9)                                                            |                                                              
|Share issue costs (Note 9)                                                             |                                                              
|                                                                                      
|Cash provided by (used for) continuing financing activities                            |                                                              
|                                                                                      
|Effect of rate changes on cash and cash equivalents of continuing operations           |                                                              
|                                                                                      
|Net (decrease) increase in cash and cash equivalents of continuing operations          |                                                              
|Net cash and cash equivalents provided by discontinued operations (Note 13)            |                                                              
|Cash and cash equivalents, beginning of year                                           |                                                              
|                                                                                      
|Cash and cash equivalents, end of year                                                 |                                                              
|                                                                                      

Supplementary cash flow information (Note 15)
See Notes to the Consolidated Financial Statements

41 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 1: DESCRIPTION OF
BUSINESS

CGI Group Inc. (the
Company or CGI), 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 POLICIES

The 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 2003.

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.

Principles of
consolidation

The financial statements of entities
controlled by the Company are consolidated; entities jointly controlled by the Company,
referred to as joint ventures, are accounted for using the proportionate consolidation
method; the associated company, which the Company has the ability to significantly
influence, is accounted for using the equity method.

Revenue recognition

The Company provides two lines of
services. The IT services include a full range of services in systems integration,
consulting and outsourcing. The BPS provide end-to-end business processing for insurance
companies, banks, investment firms and financial cooperatives, as well as pay services,
document management and finance and administration services. The Companys revenue is
principally derived from outsourcing contracts.

Revenue
from IT outsourcing contracts is based on the services performed or information processed
during the period in accordance with contract terms and the agreed-upon billing rates
applied to the consumed service metrics. In some cases, the Company bills clients prior to
performing the service, resulting in deferred revenue which is presented as a current
liability in the Consolidated Financial Statements. 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.

For
time and materials and level of effort types of contracts, revenue is recognized as the
services are provided. For cost-based contracts, revenue is recorded as reimbursable costs
are incurred. These types of contracts are generally entered into with clients in the
context of systems integration and consulting services.

Revenue
on fixed-price contracts related to systems integration and consulting services is
recognized on the basis of the estimated percentage-of-completion of services rendered
that reflects the extent of work accomplished. Management estimates the
percentage-of-completion by reference to measures of performance that are reasonably
determinable and are directly related to the activities critical to completion of the
contract. Management measures performance principally based on the labor hours spent on
the contract over the total estimated labor hours for the contract. The Company uses this
method of revenue recognition as projected contract revenue and costs may reasonably be
estimated based on the Companys business practices, methods and historical
experience. This method requires estimates of costs and profits over the entire term of
the contract. 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.

Occasionally, the Company sells software licenses.
Revenue from the sale of software licenses is recognized when the product is delivered, no
significant vendor obligations remain and the collection of the agreed-upon fee is
probable. Where license agreements include multiple elements, revenue from the sale of
licenses is recognized on the same basis, provided the services do not include significant
customization to the base product.

42 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

In these cases, revenue is recognized over the period of delivery. Revenue from software
maintenance and support agreements is recognized on a straight-line basis over the term of
the related agreements.

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 depreciated and amortized over their estimated useful lives, using principally the
straight-line method. The annual depreciation and 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 10-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 signature of long-term outsourcing contracts
     Occasionally, incentives can be granted either in the form of cash payments, issuance of equity
     instruments, or rebates awarded principally over a transition period as negotiated in the
     contract. In the case of an incentive in the form 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 rebates, cost is measured at the value of the financial
     commitment granted and a corresponding deferred credit is recorded. As services are
     provided to the client, the deferred credit 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 depreciation 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Other intangibles and other long-term
assets

Other intangibles and other long-term assets comprise the following:

 Internal software

Internal software includes software
acquired and developed for internal use. This software is
amortized over its estimated useful life.

 Business solutions

Business solutions include commercial
software solutions acquired through business acquisitions and costs incurred to develop
commercial software solutions. These costs are capitalized only after technological
feasibility is established. Business solutions are recorded at cost and amortized on a
straight-line basis over their respective estimated useful life. Management regularly
reviews business solutions for impairment.


Software licences

Software licences are purchased to
fulfill the Companys obligations under outsourcing
contracts and are recorded at cost. These costs are amortized on a straight-line basis
over the lesser of their estimated useful life or the related outsourcing contract term.
 Customer relationships

 Customer relationships

Customer relationships relate to
the fair value assigned to customer relationships in the context
of a business acquisition and are amortized on a straight-line basis over their estimated
life.

 Other long-term assets

Other long-term assets are comprised
of the long-term portion of a net investment in a direct financing lease taken by one of
the Companys joint ventures, as well as an investment in an entity subject to
significant influence.

43 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 2: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTD)

Goodwill

Goodwill represents the excess of the
purchase price over the fair values of the net assets of entities acquired at the
respective dates of acquisition. On October 1, 2001, the Company adopted prospectively the
new recommendations of the Canadian Institute of Chartered Accountants (CICA)
Handbook Sections 1581, Business Combinations, and 3062, Goodwill and Other Intangible
Assets. Accordingly, the Company discontinued the amortization of goodwill as of October
1, 2001. Prior to October 1, 2001, goodwill was amortized on a straight-line basis over
its expected useful life of 20 years. For business combinations occurring after June 30,
2001, the Company did not amortize the resulting goodwill, consistent with transition
recommendations of Section 1581.

Goodwill
is tested annually, 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.

The
Company performs its annual review of goodwill as of September 30 of each year. Based on
the impairment tests performed as of September 30, 2002 and 2003, the Company concluded
that no goodwill impairment charge was required. In addition, the Company performed a
supplemental impairment test following its decision to modify its management structure
and, based on the results of this impairment test, the Company concluded that no goodwill
impairment charge was required.

Impairment of long-lived assets other
than goodwill and intangible assets with indefinite lives

The Company evaluates the
carrying value of its long-lived assets other than goodwill and intangible assets with
indefinite lives on an ongoing basis. In order to determine whether an impairment exists,
management considers the undiscounted cash flows estimated to be generated by those assets
as well as other indicators. Any permanent impairment in the carrying value of assets is
charged against earnings in the period an impairment is determined. The Company does not
have intangible assets with indefinite lives.

Deferred credits

Deferred credits principally comprise
the unused portion of rebates granted by the Company to clients under the terms of certain
long-term outsourcing contracts (see Contract costs described above).

Stock option plan

The Company has a stock option
compensation plan which is described in Note 9. Any consideration paid by employees and
directors on exercise of stock options is credited to share capital.

The
Company applies the recommendations of CICA Handbook Section 3870, Stock-Based
Compensation and Other Stock-Based Payments. This Section establishes standards for the
recognition, measurement and disclosure of stock-based compensation made in exchange for
goods and services, and requires the use of the fair value method to account for awards to
non-employees and direct awards of stock to employees, as well as encourages, but does not
require, the use of the fair value method to account for stock-based compensation costs
arising from awards to employees. The Section also requires pro forma disclosures relating
to net earnings and earnings per share figures as if the fair value method of accounting
had been used. The Company has chosen not to use the fair value method to account for
stock-based compensation costs arising from awards to employees. The pro forma disclosure
is presented in Note 9.

Research expenses

Research expenses are charged to
earnings in the year they are incurred, net of related investment tax credits.

Income taxes

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 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.

44 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

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 and joint ventures 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 and joint ventures 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 and joint ventures,
the foreign currency translation adjustment decreased by $123,768,000 in 2003 and
increased by $10,505,000 and $21,634,000 in 2002 and 2001, respectively. These variations
resulted principally from translating US dollars 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.

Prior
to October 1, 2001, the Company used the current-rate method to account for all its
subsidiaries and joint ventures except for its Japanese, Australian, South American and
United Kingdom (UK) subsidiaries, which were translated using the temporal
method. On October 1, 2001, the Company reclassified, for foreign currency translation
purposes, its subsidiary located in the UK from integrated to self-sustaining operations
as a result of changes in facts and circumstances. During 2001, the UK subsidiary signed
large contracts allowing it to generate cash flows independently. Prior to 2001, the UK
subsidiary generated minimal local cash flows from operations. In addition, as a result of
the acquisition of IMRglobal Corp. (IMRglobal or IMR), completed
in July 2001 (see Note 12), CGI acquired a second subsidiary in the UK. This contributed
to additional, more significant revenue streams for the UK operations. As a result of this
reclassification, applied on a prospective basis, the foreign currency translation
component of shareholders equity increased by approximately $1,400,000.

Recent accounting changes

In 2003, the CICA issued Accounting
Guideline 14, Disclosure of Guarantees, with the effective date for financial statements
of interim and annual periods beginning on or after January 1, 2003. This guideline
provides guidance regarding the identification of guarantees and requires a guarantor to
disclose the significant details of guarantees that have been given regardless of whether
the guarantor will have to make payments under the guarantees. See Note 20 for disclosure
of guarantees.

The
CICA issued Handbook Section 3475, Disposal of Long-lived Assets and Discontinued
Operations, which applies to disposal activities initiated by an enterprises
commitment to a plan on or after May 1, 2003. The new section 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.

In
November 2002 and May 2003, the Emerging Issues Task Force (EITF) reached a
consensus on Issue 00-21, Revenue Arrangements with Multiple Deliverables. EITF Issue
00-21 provides guidance and criteria for determining when a multiple deliverable
arrangement contains more than one unit of accounting. The guidance also addresses methods
of measuring and allocating arrangement consideration to separate units of accounting. The
guidance is effective for revenue arrangements entered into after June 15, 2003. The
adoption of this new guidance had no significant impact on the Consolidated Financial
Statements as the Company was already conforming to this guidance.

Future accounting changes

The CICA issued Accounting Guideline
13, Hedging Relationships, which deals with the identification, documentation, designation
and effectiveness of hedges and also the discontinuance of hedge accounting, but does not
specify hedge accounting methods. This guidance is applicable to hedge relationships in
effect in fiscal years beginning on or after July 1, 2003.

The
CICA issued Handbook Section 3110, Asset Retirement Obligations. The new standard 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
CICA issued Handbook Section 3063, Impairment of Long-lived Assets, which is effective for
fiscal years beginning on or after April 1, 2003. This section provides guidance on
recognizing, measuring and disclosing impairment of long-lived assets. It replaces the
write-down provisions in Section 3061, Property, Plant and Equipment.

45 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 2: SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES (CONTD)

The
Company is currently evaluating the impact of the adoption of these new standards and
guidance, and therefore has not yet assessed their effect on the Companys
Consolidated Financial Statements.

NOTE 3: ACCOUNTS
RECEIVABLE

|          | 2003    | 2002   
|--------- | ------- | -------
|         
|          | $       | $      
|Trade     | 301,430 | 229,583
|Other (1) | 138,105 | 71,686 
|         
|          | 439,535 | 301,269
|         

|(1) | Other accounts receivable,
     as at September 30, 2003 and 2002 include refundable tax credits on salaries,
     related to the E-Commerce Place, Multimedia City, SR&ED and other tax credits
     progams of approximately $104,875,000 and $44,524,000 respectively.  Of these
     amounts, $69,052,000, $47,979,000 and $24,763,000 were recorded as a reduction of
     salary expense comprised in costs of services, selling and administrative expenses
     in the consolidated statements of earnings for 2003, 2002 and 2001, respectively.
     The Company is defined as an eligible company and operates eligible activities
under the terms of various Quebec government tax credits programs on salaries for eligible
employees located mainly in the E-Commerce Place and in the Multimedia City.
     These refundable tax credits on salaries carry certain conditions. Furthermore, the Company
must, annually, obtain an eligibility certificate from the Quebec government. These
credits are calculated at rates of 35% to 40% on salaries paid in Quebec, to a maximum of
$12,500 to $15,000 per year per eligible employee. Should the Company fail to meet its
obligations defined under the current tax credits on salaries programs, any tax credits
received would have to be refunded to the Quebec 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, 2003.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

NOTE 4: FIXED ASSETS

|2003                  
|----------------------
|                      
|                      
|Land                  
|Buildings             
|Leasehold improvements
|Furniture and fixtures
|Computer equipment    
|                      
|                      
|                      
|2002                  
|                      
|                      
|Land                  
|Buildings             
|Leasehold improvements
|Furniture and fixtures
|Computer equipment    
|                      
|                      
|                      

Fixed assets include assets acquired
under capital leases totaling $4,372,000 (2002  $9,434,000), net of accumulated
depreciation and amortization of $3,927,000 (2002  $22,209,000).

46 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 5: CONTRACT COSTS

|2003            
|----------------
|                
|Incentives      
|Transition costs
|                
|                
|                
|2002            
|                
|Incentives      
|Transition costs
|                
|                
|                

Amortization expense of contract
costs is presented as follows in the consolidated statements of earnings (see Note 2):

|                                               | 2003 
     $ | 2002 
     $ | 2001 
     $
|---------------------------------------------- | ------------ | ------------ | ------------
|                                              
|Incentives (presented as reduction of revenue) | 27,789       | 23,559       | 10,274      
|Transition costs                               | 4,219        | 2,656        | 169         
|                                              
|                                               | 32,008       | 26,215       | 10,443      
|                                              

NOTE 6: OTHER INTANGIBLES AND OTHER
LONG-TERM ASSETS

|2003                                                    
|--------------------------------------------------------
|                                                        
|Internal software                                       
|Business solutions                                      
|Software licenses                                       
|Customer relationships                                  
|                                                        
|Other intangibles                                       
|                                                        
|Financing lease (Note 14)                               
|Investment in an entity subject to significant influence
|                                                        
|Other long-term assets                                  
|                                                        
|Total other intangibles and other long-term assets      
|                                                        
|2002                                                    
|                                                        
|Internal software                                       
|Business solutions                                      
|Software licenses                                       
|Customer relationships                                  
|                                                        
|Total other intangibles and other long-term assets      
|                                                        

47 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 6: OTHER INTANGIBLES AND OTHER
LONG-TERM ASSETS (CONTD)

Amortization expense of other
intangibles is presented as follows in the consolidated statements of earnings:

|                       | 2003   | 2002   | 2001  
|---------------------- | ------ | ------ | ------
|                      
|                       | $      | $      | $     
|Internal software      | 12,048 | 9,350  | 3,351 
|Business solutions     | 15,508 | 14,501 | 4,879 
|Software licenses      | 28,521 | 16,988 | 15,638
|Customer relationships | 17,453 | 5,207  | 2,500 
|                      
|                       | 73,530 | 46,046 | 26,368
|                      

NOTE 7: GOODWILL

The changes in the book value of
goodwill are as follows:

|2003                                        
|--------------------------------------------
|                                            
|                                            
|                                            
|Balance, beginning of year                  
|Acquisitions                                
|Purchase price adjustments                  
|Disposal of subsidiaries                    
|Goodwill related to businesses held for sale
|Foreign currency translation adjustment     
|                                            
|Balance, end of year                        
|                                            

|2002                                   
|---------------------------------------
|                                       
|                                       
|                                       
|Balance, beginning of year             
|Acquisitions                           
|Purchase price adjustments             
|Disposal of subsidiaries               
|Foreign currency translation adjustment
|                                       
|Balance, end of year                   
|                                       

48 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 8: LONG-TERM DEBT

|                                                                                                                                                                                                                                        | 2003    | 2002 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | -----
|                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                        | $       | $    
|Unsecured committed revolving term facility bearing interest at the bankers' acceptance rate
           plus 1.25%, maturing in 2006 (1)                                                                                                | 219,000 | -    
|Balances of purchase price related to business acquisitions, non-interest bearing,
           repayable by various instalments through 2006. These balances were recorded at their
           discounted value using a 7% interest rate | 14,966  | -    
|Obligations under capital leases, bearing interest at rates varying from 2.9% to 13.38% and
           repayable by blended monthly instalments maturing at various dates until 2008                                                    | 11,269  | 8,500
|Other loans bearing interest at various rates, repayable through 2006                                                                                                                                                                   | 1,368   | -    
|Share of joint venture's long-term debt
           Secured term loan repayable by blended monthly payments of $540,249, maturing in 2007 (2)                                                                                            | 18,933  | -    
|Redeemable preferred shares (3)                                                                                                                                                                                                         | 2,450   | -    
|                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                        | 267,986 | 8,500
|Current portion                                                                                                                                                                                                                         | 20,555  | 4,172
|                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                        | 247,431 | 4,328
|                                                                                                                                                                                                                                       

|(1) | An additional amount of $285,550,000 is available under the terms of the
          unsecured committed revolving credit facilities. In addition to these revolving
          credit facilities, the Company has available lines of credit totaling
          $27,700,000, of which an amount of $10,450,000 has been drawn, as at September
          30, 2003, to cover various letters of credit issued for contracts with major
          outsourcing and systems integration clients. The credit facilities include
          covenants which require the Company to maintain certain financial ratios. As of
          September 30, 2003, these financial ratios were met.                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | As at year-end, one of the Companys joint ventures, which is owned at 49%,
          entered into a $38,639,068 term loan to finance its operations, repayable by
          blended monthly payments of $1,102,548, maturing in December 2006. As part of
          the credit agreement entered into during the year, the joint venture has an
          unsecured $10,000,000 operating credit facility for its working capital, to be
          renewed after 364 days. As of September 30, 2003, there is no amount outstanding
          on this facility.                                                                                                                                                                                                                                                                                                  
|(3) | The same joint venture entered into a subscription agreement for the issuance of
          10,000,000 redeemable preferred shares at the option of the holder under certain
          conditions. These preferred shares are non-voting and are not entitled to
          receive dividends. Upon liquidation, dissolution, winding-up of the joint
          venture (voluntary or involuntary), holders of the preferred shares are entitled
          to receive for each share, in preference and priority to any distribution of the
          assets of the joint venture to the common shareholders, an amount equal to:
     (a) $1.00 (issue price) per share plus 4.20% of the issue price, compounded
                    annually; and
     (b) an amount otherwise agreed to from time to time in writing
                    from the joint venture.

Principal repayments on long-term
debt over the next four years are as follows:

|    
|----
|    
|2004
|2005
|2006
|2007
|    

Minimum capital lease payments are as
follows:

|                                     | PAYMENT | INTEREST | PRINCIPAL
|------------------------------------ | ------- | -------- | ---------
|                                    
|                                     | $       | $        | $        
|2004                                 | 7,632   | 647      | 6,985    
|2005                                 | 2,959   | 227      | 2,732    
|2006                                 | 1,152   | 86       | 1,066    
|2007                                 | 378     | 18       | 360      
|2008                                 | 131     | 5        | 126      
|                                    
|Total minimum capital lease payments | 12,252  | 983      | 11,269   
|                                    

49 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 9: CAPITAL STOCK, STOCK OPTIONS
AND WARRANTS

A) Capital stock

Authorized, in 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
     10 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 2003, 2002 and 2001, the Class A
subordinate shares and the Class B shares changed as follows:

|                                                            | CLASS A SUBORDINATE SHARES |             | CLASS B SHARES |          
|----------------------------------------------------------- | -------------------------- | ----------- | -------------- | ---------
|                                                            | NUMBER                     |             | CARRYING VALUE |          
|                                                           
|                                                            | $                          |             | $              |          
|Balance, September 30, 2000                                 |                            | 240,755,667 |                | 490,645  
|Issued for cash                                             |                            | -           |                | -        
|Issued as consideration for business acquisitions (Note 12) |                            | 85,835,178  |                | 651,010  
|Options exercised                                           |                            | 441,872     |                | 2,236    
|                                                           
|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
|                                                           

|(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, 7,027,606 Class B shares were converted into an equivalent
          number of Class A subordinate shares.                     

B) Stock options

Under a Stock option compensation plan for certain employees and
          directors of the Company and its subsidiaries, the Board of Directors may grant,
          at its discretion, options to purchase company stock 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 share 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 10-year period, except in the
          event of retirement, termination of employment or death. As at September 30,
          2003, 33,625,043 Class A subordinate shares have been reserved for issuance
          under the Stock option plan.

50 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

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:

|                                                           | YEAR ENDED
     SEPTEMBER 30,
     2003 |         | YEAR ENDED
     SEPTEMBER 30,
     2002 |      
|---------------------------------------------------------- | --------------------------------------- | ------- | --------------------------------------- | -----
|                                                          
|                                                           | CONTINUING
     OPERATIONS
     $       |         | DISCONTINUED
     OPERATIONS
     $     |      
|Net earnings                                               |                                         | 175,397 |                                         | 1,969
|Adjustment to net earnings                                 |                                         | (8,168  | )                                       | -    
|                                                          
|Pro forma net earnings                                     |                                         | 167,229 |                                         | 1,969
|Pro forma basic and diluted earnings per share             |                                         | 0.42    |                                         | 0.01 
|                                                           | 2003                                    |         | 2002                                    |      
|                                                          
|Assumptions used in the Black-Scholes option pricing model
|Dividend yield                                             |                                         |         | 0.0%                                    |      
|Expected volatility                                        |                                         |         | 52.7%                                   |      
|Risk free interest rate                                    |                                         |         | 4.21%                                   |      
|Expected life (years)                                      |                                         |         | 5                                       |      
|Weighted average grant date fair value ($)                 |                                         |         | 3.16                                    |      
|                                                          

In connection with a business
acquisition completed in fiscal 2001 (see Note 12) where outstanding stock options of the
acquiree became options to acquire CGI Class A subordinate shares, the Company recorded
3,357,962 vested options out of a total of 8,424,502 options outstanding as a purchase
consideration of $16,519,000 representing the estimated fair value of the outstanding
vested stock options of the acquiree at the date of acquisition (see Note 9D and 9E).

C) Warrants

In connection with the signing of a
strategic outsourcing contract and of a business acquisition (see Note 12), 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, 2003, 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), CGI issued to the Majority Shareholders and
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 CGI, 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 CGI upon the exercise
of such Warrants, to convert each of such Class B shares 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 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.

51 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 9: CAPITAL STOCK, STOCK OPTIONS
AND WARRANTS (CONTD)

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

|                                                                                 | 2003        | 2002       
|-------------------------------------------------------------------------------- | ----------- | -----------
|                                                                                
|                                                                                 | NUMBER      | NUMBER     
|Class A subordinate shares                                                       | 368,236,503 | 339,900,257
|Class B shares                                                                   | 33,772,168  | 40,799,774 
|                                                                                
|Total capital stock                                                              | 402,008,671 | 380,700,031
|Number of stock options (Class A subordinate shares)                            
|- Accounted for                                                                  | 1,675,913   | 2,333,231  
|Number of stock options (Class A subordinate shares)                            
|- Not accounted for                                                              | 18,783,602  | 18,481,589 
|Number of warrants (Class A subordinate shares)                                 
|- Accounted for                                                                  | 5,118,210   | 5,118,210  
|Number of warrants (Class A subordinate shares 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 | 432,148,454 | 411,195,119
|                                                                                

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

|2003                       | 2002          |          
|-------------------------- | ------------- | ---------
|                          
|                           | STOCK OPTIONS | WARRANTS 
|                           |               |          
|                           | NUMBER        |          
|Balance, beginning of year |               | 2,333,231
|Exercised                  |               | (206,208 
|Forfeited and expired (1)  |               | (451,110 
|                          
|Balance, end of year       |               | 1,675,913
|                          

|(1) | During 2003 and 2002, the Company cancelled options for an amount of $2,218,000
          and $3,441,000, 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:

|2003                                  | 2002                | 2001       |                                        
|------------------------------------- | ------------------- | ---------- | ---------------------------------------
|                                     
|                                      | NUMBEROF OPTIONS(1) |            | WEIGHTEDAVERAGEEXERCISE PRICEPER SHARE$
|Outstanding, beginning of year        |                     | 20,814,820 |                                        
|Granted                               |                     | 4,600,502  |                                        
|Granted as consideration for business
|acquisition (Note 12)                 |                     | -          |                                        
|Exercised                             |                     | (1,345,241 | )                                      
|Forfeited and expired                 |                     | (3,610,566 | )                                      
|                                     
|Outstanding, end of year              |                     | 20,459,515 |                                        
|                                     

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

52 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

The following table summarizes
information about outstanding stock options granted to certain employees and directors of
the Company at September 30, 2003:

|OPTIONS OUTSTANDING       | OPTIONS EXERCISABLE
|------------------------- | -------------------
|                         
|RANGE OF EXERCISE PRICE $ | NUMBER OUTSTANDING 
|1.90 TO 4.38              | 506,2670           
|5.07 TO 6.98              | 5,402,2337         
|7.00 TO 8.99              | 7,888,3850         
|9.05 TO 10.44             | 2,272,385          
|11.13 TO 14.86            | 1,503,638          
|15.01 TO 19.34            | 2,149,208          
|20.29 TO 31.35            | 737,399            
|                         
|                          | 20,459,515         
|                         

G) Earnings per share

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

|2003              | 2002                       | 2001                          
|----------------- | -------------------------- | ------------------------------
|                 
|                  | NET EARNINGS (NUMERATOR) $ | NUMBER OF SHARES (DENOMINATOR)
|Net earnings      | 177,366                    | 395,191,927                   
|Dilutive options  | -                          | 1,508,995                     
|Dilutive warrants | -                          | 764,755                       
|                 
|Net earnings     
|after assumed    
|conversions       | 177,366                    | 397,465,677                   
|                 

NOTE 10: DEPRECIATION AND
AMORTIZATION EXPENSES

|                                                             | 2003    | 2002    | 2001  
|------------------------------------------------------------ | ------- | ------- | ------
|                                                            
|                                                             | $       | $       | $     
|Depreciation and amortization of fixed assets                | 44,112  | 28,303  | 29,185
|Amortization of contract costs related to transition costs   | 4,219   | 2,656   | 169   
|Amortization of other intangibles and other long-term assets | 73,530  | 46,046  | 26,368
|                                                            
|                                                             | 121,861 | 77,005  | 55,722
|Amortization of contract costs related to incentives        
|(presented as reduction of revenue)                          | 27,789  | 23,559  | 10,274
|                                                            
|                                                             | 149,650 | 100,564 | 65,996
|                                                            

53 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 11: INCOME TAXES

The income tax provision is as
follows for the years ended September 30:

|          | 2003    | 2002   | 2001  
|--------- | ------- | ------ | ------
|         
|          | $       | $      | $     
|Current   | 67,460  | 61,166 | 38,125
|Future(1) | 46,249  | 35,602 | 34,040
|         
|          | 113,709 | 96,768 | 72,165
|         

(1) Includes $1,451,000 in
2001 of future income taxes related to goodwill amortization.

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:

|                                                       |  | 2003 |  | 2002 |   | 2001 |  
|------------------------------------------------------ |  | ---- |  | ---- | - | ---- | -
|                                                      
|                                                       |  | $    |  | $    |   | $    |  
|Combined federal and provincial tax rates              |  | 34.5 |  | 36.6 |   | 38.6 |  
|Non-deductible items                                   |  | 0.8  |  | 0.7  |   | 8.6  |  
|Valuation allowance relating to tax benefits on losses |  | 2.4  |  | 4.4  |   | 7.8  |  
|Other                                                  |  | 1.7  |  | (0.1 | ) | (2.0 | )
|                                                      
|Effective income tax rate after goodwill amortization  |  | 39.4 |  | 41.6 |   | 53.0 |  
|Goodwill amortization                                  |  | -    |  | -    |   | (8.5 | )
|                                                      
|Effective income tax rate before goodwill amortization |  | 39.4 |  | 41.6 |   | 44.5 |  
|                                                      

Future income taxes are as follows at
September 30:

|                                                                              |  | 2003     |   | 2002    |  
|----------------------------------------------------------------------------- |  | -------- | - | ------- | -
|                                                                             
|                                                                              |  | $        |   | $       |  
|Future income tax assets:                                                     | 
|Provision for integration costs                                               |  | 24,159   |   | 5,160   |  
|Tax benefits on losses carried forward                                        |  | 115,437  |   | 127,609 |  
|Accrued compensation and post employment benefits                             |  | 8,811    |   | 5,969   |  
|Allowance for doubtful accounts                                               |  | 5,613    |   | 1,421   |  
|Other                                                                         |  | 6,003    |   | 1,888   |  
|                                                                             
|                                                                              |  | 160,023  |   | 142,047 |  
|                                                                             
|Future income tax liabilities:                                                | 
|Fixed assets, contract costs and other intangibles and other long-term assets |  | 130,907  |   | 88,387  |  
|Work in progress                                                              |  | 10,341   |   | 6,490   |  
|Goodwill                                                                      |  | 5,116    |   | 5,309   |  
|Refundable tax credits on salaries                                            |  | 34,315   |   | 13,832  |  
|Other                                                                         |  | 6,920    |   | 5,979   |  
|                                                                             
|                                                                              |  | 187,599  |   | 119,997 |  
|                                                                             
|Valuation allowance                                                           |  | 102,997  |   | 100,819 |  
|                                                                             
|Future income taxes, net                                                      |  | (130,573 | ) | (78,769 | )
|                                                                             
|Future income taxes are classified as follows:                                | 
|Current future income tax assets                                              |  | 34,237   |   | 12,567  |  
|Long-term future income tax assets                                            |  | 22,764   |   | 28,661  |  
|Current future income tax liabilities                                         |  | (47,003  | ) | (26,301 | )
|Long-term future income tax liabilities                                       |  | (140,571 | ) | (93,696 | )
|                                                                             
|Future income tax liabilities, net                                            |  | (130,573 | ) | (78,769 | )
|                                                                             

54 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

Certain of the Companys
subsidiaries have losses carried forward aggregating approximately $324,000,000, of which
approximately $281,000,000 (US$208,000,000) 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. Should any of the unrecorded tax benefits on
losses carried forward amounting to $81,000,000 be realized, goodwill would be reduced
accordingly.

Foreign
earnings of certain of CGI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.

NOTE 12: INVESTMENTS IN SUBSIDIARIES
AND JOINT VENTURES

For all business acquisitions, the
Company began recording the results of operations of the acquired entities as of their
respective effective acquisition dates.

a) During 2003, 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.                                                                                                                                                                  
| |  | Others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.

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. Also, the Company 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.

55 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 12: INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES (CONTD)

For
Cognicase, the components of the integration liabilities assumed and included in the
preliminary allocation of the purchase price are as follows:

|ACQUISITION AND INTEGRATION LIABILITIES | PAID AS AT SEPTEMBER 30, 2003 | BALANCE REMAINING AS AT SEPTEMBER 30, 2003
|--------------------------------------- | ----------------------------- | ------------------------------------------
|                                       
|$                                       | $                             | $                                         
|Consolidation and closure of facilities | 47,422                        | 6,393                                     
|Severance                               | 30,404                        | 20,824                                    
|                                       
|                                        | 77,826                        | 27,217                                    
|                                       

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

|                                                     | UAB |        | COGNICASE |          | OTHER |        | TOTAL |         
|---------------------------------------------------- | --- | ------ | --------- | -------- | ----- | ------ | ----- | --------
|                                                    
|                                                     | $   |        | $         |          | $     |        | $     |         
|Non-cash working capital items                       |     | 7,818  |           | (113,299 | )     | (4,910 | )     | (110,391
|Fixed assets                                         |     | 6,855  |           | 31,283   |       | 1,233  |       | 39,371  
|Other intangibles and other long-term assets         |     | 16,506 |           | 132,997  |       | 2,821  |       | 152,324 
|Future income taxes                                  |     | (2,918 | )         | (7,468   | )     | (153   | )     | (10,539 
|Goodwill(1)                                          |     | 30,848 |           | 323,307  |       | 9,795  |       | 363,950 
|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.

Also during the year, the Company
sold two subsidiaries previously owned by Cognicase for a non-significant cash
consideration.

In
addition, during the year, 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, and a net increase of other intangibles and other long-term
assets of $1,478,000 and cash consideration paid of $1,060,000.

56 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

b) During 2002, 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  
|Other 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 a 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 10-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.

During
2002, the Company sold its Australian and Japanese operations for an aggregate cash
consideration of $10,365,000 with no resulting gain.

57 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 12: INVESTMENTS IN SUBSIDIARIES
AND JOINT VENTURES (CONTD)

c) During 2001, the Company made the following
acquisitions:

| |  | C.U. Processing Inc. (CUP)On October 4, 2000, the Company acquired all
the outstanding shares of CUP, a Detroit-based provider of information management systems
primarily to US credit unions;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | AGTI Consulting Services Inc. (AGTI)On November 27, 2000, the Company
acquired 49% of all outstanding shares of AGTI, a Montreal-based IT consulting firm. The
Company accounts for its 49% interest in AGTI using the proportionate consolidation
method;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| |  | Star Data Systems Inc. (Star Data)On
January 9, 2001, the
Company acquired all the outstanding common shares of Star Data on the basis of 0.737
Class A subordinate shares of the Company for each Star Data common share; therefore, the
Company issued 13,546,327 Class A subordinate shares at a price of
$7.59 per share for a total consideration of $102,820,000 before acquisition costs of
approximately $2,150,000. Star Data is a Canadian-based provider of IT services and
solutions to the financial services industry;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | Assets and liabilities of Confédération des
caisses populaires et déconomie Desjardins du Québec used in data and micro-computing of
Mouvement des caisses Desjardins (Desjardins) operationsOn May 1, 2001,
the Company acquired the assets, certain intellectual property rights and assumed certain
liabilities of Desjardins which it used in data and micro-computing. In addition,
approximately 450 Desjardins employees were transferred to the Company. The total
consideration paid for this acquisition was $72,216,000, before acquisition costs of
approximately $120,000, comprises cash of $57,945,000 and the issuance of 4,000,000
warrants at fair value in the amount of $14,271,000 (see Note 9). The warrants are
presented as a component of shareholders equity with a corresponding amount included
in contract costs, in accordance with their substance;                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | IMRglobal Corp.On July 27, 2001, the Company merged with IMRglobal, a US-based
leading global provider of end-to-end IT solutions, acquiring all the outstanding common
stock of IMRglobal on the basis of 1.5974 Class A subordinate shares of the Company for
each share of IMRglobal common stock; therefore, the Company issued 70,753,841 Class A
subordinate shares at a price of $7.58 per share for a consideration of $536,314,000
before acquisition costs of approximately $17,347,000. In addition, each outstanding
IMRglobal stock option as of that date became a 1.5974 stock option to acquire a Class A
subordinate share of the Company; therefore, the Company effectively issued 8,424,502
stock options having a weighted-average exercise price per share of $12.27 and having a
weighted-average fair value of $5.37 per option. Consistent with Canadian GAAP at the
time, $16,519,000 representing the total fair value of 3,357,562 outstanding vested stock
options having a weighted average fair value of $4.92 per option, was recorded as purchase
consideration. The remaining $28,720,000, representing the total fair value of 5,066,940
outstanding unvested stock options having a weighted-average fair value of $5.67 per
option, was not recorded as purchase consideration (see Note 9).

At
various dates throughout fiscal 2001, the Company completed the acquisition of all
outstanding shares of six other companies, entered into two joint venture agreements and
increased its interest in an equity investee for an aggregate consideration of
$32,705,000. The sum of the purchase price allocations to the net assets acquired is
presented in the Other column in the table below. A total of 1,535,010 Class A
subordinate shares having a weighted-average value per share of $7.74 were issued in
connection with these acquisitions. In addition, the Company began using the proportionate
consolidation method to account for its investment in the joint venture as of January 12,
2001.

58 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

These acquisitions for fiscal 2001
were accounted for using the purchase method, as follows:

|NET ASSETS REQUIRED                                     |  | IMR(4)  |     | STAR DATA |     | DESJARDINS(5) |   | AGTI   |  | CUP     |   | OTHER  |     | TOTAL   |  
|------------------------------------------------------- |  | ------- | --- | --------- | --- | ------------- | - | ------ |  | ------- | - | ------ | --- | ------- | -
|                                                       
|                                                        |  | $       |     | $         |     | $             |   | $      |  | $       |   | $      |     | $       |  
|Non-cash working capital items                          |  | (45,695 | )   | (16,934   | )   | 24,245        |   | 2,216  |  | (12,061 | ) | 1,635  |     | (46,594 | )
|Fixed assets                                            |  | 40,703  |     | 21,211    |     | 3,612         |   | 448    |  | 3,296   |   | 2,135  |     | 71,405  |  
|Contract costs                                          |  | -       |     | -         |     | 110,627       |   | -      |  | -       |   | -      |     | 110,627 |  
|Other intangibles and other                             | 
|long-term assets                                        |  | 31,315  |     | 9,203     |     | 1,359         |   | -      |  | 447     |   | 11     |     | 42,335  |  
|Future income taxes                                     |  | 1,102   |     | 16,729    |     | (7,744        | ) | 10     |  | 4,228   |   | 2,596  |     | 16,921  |  
|Goodwill(1)                                             |  | 560,520 |     | 70,590    |     | 7,744         |   | 14,602 |  | 41,601  |   | 24,025 |     | 719,082 |  
|Long-term debt                                          |  | (53,988 | )   | (10,799   | )   | -             |   | -      |  | (812    | ) | (1,759 | )   | (67,358 | )
|Deferred credits and other                              | 
|long-term liabilities                                   |  | (7,609  | )   | -         |     | (67,627       | ) | -      |  | -       |   | -      |     | (75,236 | )
|                                                       
|                                                        |  | 526,348 |     | 90,000    |     | 72,216        |   | 17,276 |  | 36,699  |   | 28,643 |     | 771,182 |  
|Cash position at acquisition                            |  | 26,485  |     | 12,820    |     | -             |   | 7,639  |  | 1,837   |   | 4,062  |     | 52,843  |  
|                                                       
|                                                        |  | 552,833 |     | 102,820   |     | 72,216        |   | 24,915 |  | 38,536  |   | 32,705 |     | 824,025 |  
|                                                       
|Consideration                                           | 
|Cash                                                    |  | -       |     | -         |     | 57,945        |   | 24,915 |  | 38,536  |   | 19,561 |     | 140,957 |  
|Issuance of 85,835,178                                  | 
|Class A subordinate shares                              |  | 536,314 | (2) | 102,820   | (3) | -             |   | -      |  | -       |   | 11,876 | (3) | 651,010 |  
|Fair value of 3,357,562 vested                          | 
|stock options (Notes 2 and 9)                           |  | 16,519  |     | -         |     | -             |   | -      |  | -       |   | -      |     | 16,519  |  
|4,000,000 warrants at
              fair value (Note 9) |  | -       |     | -         |     | 14,271        |   | -      |  | -       |   | -      |     | 14,271  |  
|Equity value of investment                              | 
|at acquisition date                                     |  | -       |     | -         |     | -             |   | -      |  | -       |   | 1,268  |     | 1,268   |  
|                                                       
|                                                        |  | 552,833 |     | 102,820   |     | 72,216        |   | 24,915 |  | 38,536  |   | 32,705 |     | 824,025 |  
|                                                       

|(1) | Includes $55,413,000 of goodwill deductible for tax purposes. Of the total
               goodwill amount, approximately $210,000,000 is included in the BPS segment and
               the remaining $509,082,000 is related to the IT services segment.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The price per share was determined using the average trading price on the TSX of
               the CGI Class A subordinate shares over a reasonable period before and after the
               date terms of the business combination were agreed to and announced.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) | The price per share value of the shares issued as consideration was determined
               using the trading price on the TSX of the CGI Class A subordinate shares over a
               reasonable period before and after the closing date of the acquisition.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(4) | During 2002, the Company finalized the purchase price allocation of IMR; as a
               result, other intangibles and other long-term assets were increased by
               $7,577,000 and non-cash working capital items, goodwill and future income taxes
               were decreased by $3,947,000, $978,000 and $2,652,000, respectively. Total
               acquisition and integration initial costs of $68,000,000 were also adjusted
               (decrease of $20,810,000) to reflect the Companys reviewed interpretation
               of the accounting treatment for integration liabilities to be incurred in
               connection with business acquisitions. These adjustments are all reflected in
               the table above.
|(5) | During 2002, the Company finalized the purchase price allocation and made
               adjustments relating to certain business acquisitions completed in 2001,
               resulting in a net decrease in goodwill and non-cash working capital of
               $7,838,000 and $6,427,000, respectively and in a net increase in future income
               tax assets of $1,411,000. These adjustments are all reflected in the table
               above.                                                                                                                                                                                                                                                                                                 

59 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 13: DISCONTINUED
OPERATIONS

Subsequent to the acquisition of
Cognicase, the Company formally adopted a plan to divest certain activities acquired from
Cognicase which were not related to its core business. As of September 30, 2003, two
divisions are classified as discontinued operations.

One
of the divisions activities consist mainly of sales of integrated management system
software package suites (Enterprise Resource Planning or ERP) and related services
targeted to municipalities, healthcare institutions as well as manufacturing and
distribution companies. The other division activities consist mainly of providing
installation and technical services for mid-range and micro computer systems and automated
teller machines.

On
October 21, 2003, the Company announced the disposal of its ERP and related services
activities described above.

The following table presents
summarized financial information related to these discontinued operations:

|                                                                  |  | 2003   |  
|----------------------------------------------------------------- |  | ------ | -
|                                                                 
|                                                                  |  | $      |  
|Revenue                                                           |  | 49,466 |  
|                                                                 
|Earnings before the under-noted:                                  |  | 6,856  |  
|Depreciation and amortization expenses                            |  | (3,827 | )
|                                                                 
|Earnings before income taxes                                      |  | 3,029  |  
|Income taxes                                                      |  | (1,060 | )
|                                                                 
|Net earnings from discontinued operations                         |  | 1,969  |  
|                                                                 
|Net cash provided by operating activities                         |  | 7,913  |  
|Net cash used in investing activities                             |  | (1,835 | )
|Net cash used in financing activities                             |  | (557   | )
|                                                                 
|Net cash and cash equivalents provided by discontinued operations |  | 5,521  |  
|                                                                 
|Current assets                                                    |  | 11,268 |  
|Fixed assets                                                      |  | 6,003  |  
|Other 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    |  
|Deferred credits and other long-term liabilities                  |  | 54     |  
|                                                                 
|Liabilities of businesses held for sale                           |  | 16,316 |  
|                                                                 

Discontinued operations are included
in the IT services segment.

60 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 14: JOINT VENTURES:
SUPPLEMENTARY INFORMATION

The Companys proportionate
share of its joint venture investees operations included in the Consolidated
Financial Statements is as follows:

|                             |  | AS AT AND FORYEAR ENDEDSEPTEMBER 30,2003 |   | AS AT AND FORYEAR ENDEDSEPTEMBER 30,2002 |  
|---------------------------- |  | ---------------------------------------- | - | ---------------------------------------- | -
|                            
|                             |  | $                                        |   | $                                        |  
|Balance sheets               | 
|Current assets               |  | 76,806                                   |   | 34,252                                   |  
|Non-current assets           |  | 58,275                                   |   | 29,431                                   |  
|Current liabilities          |  | 36,758                                   |   | 15,547                                   |  
|Non-current liabilities      |  | 22,551                                   |   | 3,580                                    |  
|Statements of earnings       | 
|Revenue                      |  | 189,693                                  |   | 79,456                                   |  
|Expenses                     |  | 182,268                                  |   | 77,226                                   |  
|                            
|Net earnings                 |  | 7,425                                    |   | 2,230                                    |  
|                            
|Statements of cash flows     | 
|Cash provided by (used for): | 
|Operating activities         |  | 5,673                                    |   | 10,552                                   |  
|Investing activities         |  | (49,169                                  | ) | (2,573                                   | )
|Financing activities         |  | 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, 2003, an amount of $11,600,000 representing
the current portions included in prepaid expenses and other current assets and the
remaining $25,413,000 is included in other long-term assets. The effective interest rate
of the lease agreement is 5.02% and net investment is $37,013,000 as of September 30,
2003.

61 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 15: SUPPLEMENTARY
CASH FLOW INFORMATION

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

|                                          |  | 2003     |   | 2002    |   | 2001    |  
|----------------------------------------- |  | -------- | - | ------- | - | ------- | -
|                                         
|                                          |  | $        |   | $       |   | $       |  
|Accounts receivable                       |  | (30,481  | ) | (617    | ) | 725     |  
|Income taxes                              |  | 4,175    |   | 6,502   |   | (559    | )
|Work in progress                          |  | (1,662   | ) | (17,673 | ) | (12,277 | )
|Prepaid expenses and other current assets |  | (5,044   | ) | (1,361  | ) | (556    | )
|Accounts payable and accrued liabilities  |  | (82,397  | ) | (53,787 | ) | (38,037 | )
|Accrued compensation                      |  | 21,992   |   | 10,588  |   | 40,110  |  
|Deferred revenue                          |  | (21,578  | ) | 10,611  |   | 4,872   |  
|                                         
|                                          |  | (114,995 | ) | (45,737 | ) | (5,722  | )
|                                         

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

|                                                 |  | 2003    |   | 2002   |  | 2001    | 
|------------------------------------------------ |  | ------- | - | ------ |  | ------- | 
|                                                
|                                                 |  | $       |   | $      |  | $       | 
|Operating activities                             | 
|Deferred credits and other long-term liabilities |  | (839    | ) | 15,728 |  | 14,000  | 
|Future income taxes                              |  | 2,341   |   | 12,347 |  | 3,029   | 
|                                                
|                                                 |  | 1,502   |   | 28,075 |  | 17,029  | 
|                                                
|Investing activities                             | 
|Business acquisitions (Note 12)                  |  | 140,546 |   | 2,261  |  | 681,800 | 
|Other intangibles and other long-term assets     |  | 1,502   |   | 28,075 |  | 22,413  | 
|                                                
|                                                 |  | 142,048 |   | 30,336 |  | 704,213 | 
|                                                
|Financing activities                             | 
|Issuance of shares (Note 9)                      |  | 140,546 |   | 2,261  |  | 651,010 | 
|Issuance of warrants and stock options           |  | -       |   | -      |  | 36,174  | 
|                                                
|                                                 |  | 140,546 |   | 2,261  |  | 687,184 | 
|                                                

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

|                  | 2003   | 2002   | 2001  
|----------------- | ------ | ------ | ------
|                 
|                  | $      | $      | $     
|Interest paid     | 9,293  | 2,172  | 4,592 
|Income taxes paid | 66,526 | 51,923 | 41,615
|                 

62 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 16: SEGMENTED
INFORMATION

With the acquisition of Cognicase,
UAB and INSpire in fiscal 2003 and with the evolution of the near-shore and off-shore
business model, the Company modified its management structure to reflect the increasing
proportion of business that they derive from business process outsourcing services and the
global delivery approach taken in delivering information technology (IT
services) to their clients.

Effective
July 1, 2003, the Company has two lines of business (LOB) as follows: IT
services and Business Process Services (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 located in Canada, the United States and Europe.
The professionals and facilities in India and Canada also serve United States and
foreign-based clients as an integral part of their off-shore and near-shore delivery
model.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The BPS LOB provides a full spectrum of business process outsourcing services to its
client base. Its services include end-to-end business processing for insurance companies,
banks, investment firms and financial cooperatives, as well as pay services, document
management and finance and administration services.                                      

As
of July 1, 2003, the Company began to evaluate each LOBs performance under this
structure. Comparative segmented information has been restated to reflect the new
segmentation basis.

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

|2003                                           | 
|---------------------------------------------- | 
|                                              
|                                               | 
|Revenue                                        | 
|Operating expenses before depreciation         | 
|and amortization expenses                      | 
|Depreciation and amortization expenses         | 
|                                              
|Earnings before interest, income taxes, entity | 
|subject to significant influence, amortization | 
|of goodwill and discontinued operations        | 
|                                              
|Total assets                                   | 
|                                              
|2002                                           | 
|                                              
|                                               | 
|Revenue                                        | 
|Operating expenses before depreciation         | 
|and amortization expenses                      | 
|Depreciation and amortization expenses         | 
|                                              
|Earnings before interest, income taxes, entity | 
|subject to significant influence, amortization | 
|of goodwill and discontinued operations        | 
|                                              
|Total assets                                   | 
|                                              

63 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 16: SEGMENTED
INFORMATION (CONTD)

|2001                                           | 
|---------------------------------------------- | 
|                                              
|                                               | 
|Revenue                                        | 
|Operating expenses before depreciation         | 
|and amortization expenses                      | 
|Depreciation and amortization expenses         | 
|                                              
|Earnings before interest, income taxes, entity | 
|subject to significant influence, amortization | 
|of goodwill and discontinued operations        | 
|                                              
|Total assets                                   | 
|                                              

|            | FIXED ASSET2003 |         | FIXED ASSET2002 |        
|----------- | --------------- | ------- | --------------- | -------
|           
|            | $               |         | $               |        
|IT services |                 | 101,335 |                 | 88,437 
|BPS         |                 | 20,246  |                 | 10,231 
|Corporate   |                 | 23,360  |                 | 4,871  
|           
|            |                 | 144,941 |                 | 103,539
|           

The accounting policies of the
segments are the same as those described in the Summary of significant accounting policies
(Note 2).

Geographic information

The following table sets out certain
geographic market information based on clients location:

|                         |  | YEAR ENDEDSEPTEMBER 30,2003 |   | YEAR ENDEDSEPTEMBER 30,2002 |   | YEAR ENDEDSEPTEMBER 30,2001 |  
|------------------------ |  | --------------------------- | - | --------------------------- | - | --------------------------- | -
|                        
|                         |  | $                           |   | $                           |   | $                           |  
|Revenue                  | 
|Canada                   |  | 2,188,181                   |   | 1,637,125                   |   | 1,280,258                   |  
|United States            |  | 466,683                     |   | 450,622                     |   | 231,731                     |  
|Europe                   |  | 131,932                     |   | 139,392                     |   | 86,850                      |  
|Intersegment elimination |  | (67,101                     | ) | (57,526                     | ) | (38,448                     | )
|                        
|                         |  | 2,719,695                   |   | 2,169,613                   |   | 1,560,391                   |  
|                        

64 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 17: RELATED PARTY
TRANSACTIONS

In the normal course of business, the
Company is party to contracts with certain of BCE Inc.s (BCE, a
shareholder) subsidiaries and affiliated companies, 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 29.86% (2002  31.53%)
ownership interest in CGI 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:

|                                         | 2003    | 2002    | 2001   
|---------------------------------------- | ------- | ------- | -------
|                                        
|                                         | $       | $       | $      
|Revenue                                  | 500,068 | 502,645 | 437,591
|Purchase of services                     | 91,471  | 82,978  | 78,495 
|Accounts receivable                      | 21,659  | 18,756  | 37,549 
|Work in progress                         | 1,123   | 126     | 16,389 
|Contract costs                           | 21,373  | 26,257  | 22,750 
|Accounts payable and accrued liabilities | 5,161   | 7,850   | 4,828  
|Deferred revenue                         | 1,330   | 853     | 24,010 
|                                        

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. CGI exercises significant
influence over Innovaposts operating, financing and investing activities through its
49% ownership interest.

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

|                                                 | 2003   | 2002  
|------------------------------------------------ | ------ | ------
|                                                
|                                                 | $      | $     
|Revenue                                          | 62,653 | 8,778 
|Accounts receivable                              | 5,086  | 8,721 
|Work in progress                                 | 361    | 3,606 
|Contract costs                                   | 21,989 | 23,747
|Accounts payable and accrued liabilities         | 227    | -     
|Deferred revenue                                 | 2,125  | -     
|Deferred credits and other long-term liabilities | 4,463  | 10,624
|                                                

NOTE 18: EMPLOYEE BENEFITS

Generally, the Company does not offer
pension plan or postretirement benefits to its employees with the exception of the
following:

Subsequent
to the acquisition date of UAB, CGI 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. As at September 30, 2003, the settlement amount remained nil. Management
expects to finalize the wind-up process of the plan in the near future with a retroactive
effect date as at September 30, 2003.

UAB
also 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. As at September 30, 2003, the post-employment benefits
liability totaled $7,579,000 and current year related expense was estimated at
approximately $638,000.

65 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 19: COMMITMENTS AND
CONTINGENCIES

A) Commitments

At September 30, 2003, 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 $1,148,494,000. Minimum lease payments due in each of the next
five years are as follows:

|    
|----
|    
|2004
|2005
|2006
|2007
|2008
|    

The Company concluded five long-term
service agreements representing a total commitment of $54,131,000. Minimum payments under
these agreements due in each of the next four years are as follows:

|    
|----
|    
|2004
|2005
|2006
|2007
|    

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: GUARANTEES

In connection with the sale of
certain assets, the Company has agreed to indemnify the purchasers should a claim be filed
regarding tax matters or any other matters related to the previous ownership of these
assets. The nature of most indemnification 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
can not be determined at this time. The Company 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.

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 $6,028,000 as of September
30, 2003.

66 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 21: FINANCIAL
INSTRUMENTS

Risk management

The Company periodically uses various derivative instruments to manage its foreign currency
position. The derivative instruments entered into by CGI comprise principally forward
contracts.

The Company does not hold or issue financial instruments for trading purposes.

Fair value

At September 30, 2003 and 2002, 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, 2003 and 2002.

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. As at September 30, 2003,
the Company held a US$15,000,000 forward contract maturing on October 10, 2003 for the
payment of insurance premiums. 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, 2003 were not significant.

NOTE 22: RECONCILIATION OF RESULTS
REPORTED IN ACCORDANCE WITH CANADIAN GAAP TO US GAAP

The material differences between
Canadian and US GAAP affecting the Companys Consolidated Financial Statements are
detailed as follows:

Reconciliation of net earnings:

|                                   |  | 2003    |   | 2002    |   | 2001    |  
|---------------------------------- |  | ------- | - | ------- | - | ------- | -
|                                  
|                                   |  | $       |   | $       |   | $       |  
|Net earningsCanadian GAAP         |  | 177,366 |   | 135,799 |   | 62,789  |  
|Adjustments for:                   | 
|Capitalized software costs (i)     |  | (2,053  | ) | (2,771  | ) | -       |  
|Warrants (ii)                      |  | 1,405   |   | 910     |   | (11,605 | )
|Unearned compensation (iii)        |  | (1,450  | ) | (1,450  | ) | (150    | )
|Leases (iv)                        |  | (1,975  | ) | -       |   | -       |  
|Integration costs (v)              |  | -       |   | -       |   | (4,842  | )
|Goodwill (vi)                      |  | -       |   | -       |   | (500    | )
|Foreign currency translation (vii) |  | -       |   | -       |   | 523     |  
|                                  
|Net earningsUS GAAP               |  | 173,293 |   | 132,488 |   | 46,215  |  
|                                  
|Basic and diluted EPSUS GAAP      |  | 0.44    |   | 0.35    |   | 0.15    |  
|                                  

67 _ CGI GROUP INC. 2003


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Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 22: RECONCILIATION OF RESULTS
REPORTED IN ACCORDANCE WITH CANADIAN GAAP TO US GAAP (CONTD)

Reconciliation of shareholders equity:

|                                                  |  | 2003      |   | 2002      |   | 2001                |  
|------------------------------------------------- |  | --------- | - | --------- | - | ------------------- | -
|                                                 
|                                                  |  | $         |   | $         |   | $(RESTATED, NOTE 2) |  
|Shareholders' equity--Canadian GAAP               |  | 1,980,210 |   | 1,779,615 |   | 1,503,114           |  
|Adjustments for:                                  | 
|Capitalized software costs (i)                    |  | (4,824    | ) | (2,771    | ) | -                   |  
|Warrants (ii)                                     |  | (9,290    | ) | (10,695   | ) | (11,605             | )
|Unearned compensation (iii)                       |  | (3,694    | ) | (3,694    | ) | (3,694              | )
|Leases (iv)                                       |  | (1,975    | ) | -         |   | -                   |  
|Integration costs (v)                             |  | (6,606    | ) | (6,606    | ) | (6,606              | )
|Goodwill (vi)                                     |  | 28,078    |   | 28,078    |   | 27,578              |  
|Foreign currency translation (vii)                |  | 581       |   | 581       |   | 581                 |  
|Adjustment for change in accounting policy (viii) |  | 9,134     |   | 9,134     |   | 9,134               |  
|                                                 
|Shareholders' equity--US GAAP                     |  | 1,991,614 |   | 1,793,642 |   | 1,518,502           |  
|                                                 

(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 2001 adjustment represents the subtraction
to revenue, net of contract costs amortization recorded for Canadian GAAP purposes and net
of income taxes. The 2002 and 2003 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.

(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. The prior
year adjustment is not material.

(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.

68 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

(vi) Goodwill

As described in (viii) below,
goodwill recorded by the Company would be greater for US GAAP purposes than for Canadian
GAAP purposes. The 2001 adjustment reflects the additional goodwill amortization expense
for US GAAP purposes. Consistent with both Canadian and US GAAP, the Company discontinued
the amortization of goodwill effective October 1, 2001.

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 (see Note 12), 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.

During
the year ended September 30, 2002, the Company revised the calculation of the goodwill
component adjustment under US GAAP. As a result, the goodwill component adjustment to
Canadian shareholders equity increased to $28,078,000 as at September 30, 2002 from
$27,578,000 as at September 30, 2001.

(vii) Foreign
currency translation

Under Canadian GAAP, the financial
statements of the Companys foreign subsidiaries, which are considered integrated
operations, have been translated 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.

Under
US GAAP, Statement of Financial Accounting Standards (SFAS) No.52, Foreign
Currency Translation, requires companies to translate functional-currency financial
statements into reporting currency using the current exchange rate method whereby the
rates in effect on the balance sheet dates for assets and liabilities and the weighted
average rate for statement of earnings elements are used. Any translation adjustments,
resulting from the process of translating the financial statements of foreign subsidiaries
into Canadian dollars, are excluded from the determination of net earnings and are
reported as comprehensive income as a separate component in shareholders equity.

(viii) 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 (see Note 2). The
recommendations of Section 3465 are similar to the provisions of 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 purchase
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.

Prior
to the issuance of Section 3465, under Canadian GAAP, accounting for income taxes was
similar to the provisions of the US Accounting Principles Board No.11. Under US GAAP, the
Company would have followed the provisions of SFAS No.109.

(ix) 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 (see (vii) above).

The following table represents
comprehensive income in accordance with SFAS No.130, Reporting Comprehensive Income:

|                                                                             | 2003      | 2002    | 2001  
|---------------------------------------------------------------------------- | --------- | ------- | ------
|                                                                            
|Net earnings--US GAAP                                                        | 173,293   | 132,488 | 46,215
|Other comprehensive income:
         Foreign currency translation adjustment | (123,768) | 10,505  | 21,634
|                                                                            
|Comprehensive income                                                         | 49,525    | 142,993 | 67,849
|                                                                            

69 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

NOTE 22: RECONCILIATION OF RESULTS
REPORTED IN ACCORDANCE WITH CANADIAN GAAP TO US GAAP (CONTD)

(x) 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, 2003 and 2002, and for each of the years in the three-year period ended
September 30, 2003. 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, the
Company has elected, for the purpose of this reconciliation, to account for interests in
joint ventures using the proportionate consolidation method.

(xi) Earnings before
amortization of goodwill

In Canada, the Accounting Standards Board approved an addendum to
CICA Handbook Section 1580, Business Combinations, subsequently superceded by Section
1581, Business Combinations, that permitted goodwill amortization expense to be presented
net-of-tax on a separate line in the consolidated statements of earnings. This
presentation was not permitted under US GAAP. Under US GAAP, for the year ended September
30, 2001, $29,086,000 (as adjusted for US GAAP purposes) of amortization of goodwill would
have been included in operating expenses.

(xii) 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, 2003 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.

(xiii) Share issue
costs

Under Canadian GAAP, 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.

70 _ CGI GROUP INC. 2003


---

Notes to the Consolidated
Financial StatementsYEARS ENDED SEPTEMBER 30, 2003, 2002, 2001 (TABULAR AMOUNTS ONLY ARE
IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT SHARE DATA)

(xiv) Recent and future
accounting changes

In June 2002, the FASB issued SFAS No.146, Accounting for Exit or
Disposal Activities. SFAS No.146 requires companies to recognize costs associated with
exit or disposal activities when they are incurred rather than at the date of a commitment
to an exit or disposal plan. SFAS No.146 replaces previous accounting guidance provided by
the EITF Issue No.94-3, Liability Recognition for Certain Employee Termination Benefits
and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring),
and was effective for the Company for exit or disposal activities initiated after December
31, 2002. The adoption of this new standard is reflected in Note 13.

In
November 2002, the FASB issued Interpretation No.45 (FIN 45), Guarantors Accounting
and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness
of Others. The interpretation requires disclosure about the nature and terms of
obligations under certain guarantees that the Company has issued. The interpretation also
clarifies that a guarantor is required to recognize, at inception of a guarantee, a
liability for the fair value of the obligation undertaken in issuing a guarantee. The
initial recognition and initial measurement provisions are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002.

In
November 2002, the FASB issued Interpretation No.46 (FIN 46), Consolidation of Variable
Interest Entities. The interpretation clarifies the application of Accounting Research
Bulletin No.51, Consolidated Financial Statements, to certain entities in which equity
investors do not have the characteristics of a controlling financial interest or do not
have sufficient equity at risk for the entity to finance its activities without additional
subordinated financial support from other parties. This interpretation applies immediately
to variable interest entities created after January 31, 2003 and variable interest
entities in which the Company obtains an interest after January 31, 2003. For variable
interest entities in which a company obtained an interest before February 1, 2003, the
interpretation applies to the interim period beginning after June 15, 2003. Adoption of
this interpretation did not have a significant effect on the Companys consolidated
financial position or results of operations.

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 statement will
be effective for the Companys fiscal 2004.

In
April 2003, the FASB issued SFAS No.149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. SFAS 149 amends and clarifies financial accounting and
reporting for derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities under FASB Statement No.133, Accounting for Derivative Instruments and Hedging
Activities. This statement is effective for contracts entered into or modified after June
30, 2003. Adoption of this statement did not have a significant effect on the
Companys consolidated financial position or results of operations.

In
May 2003, the FASB issued SFAS No.150, Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. SFAS No.150 establishes standards for how
an issuer classifies and measures certain financial instruments with characteristics of
both liabilities and equity. This statement is effective for financial instruments entered
into or modified after May 31, 2003. Adoption of this statement did not have a significant
effect on the Companys consolidated financial position or results of operations.

71 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

BASIS OF PRESENTATION
This 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 2003, 2002 and 2001 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 2003, 2002 and
2001 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,
2003, or September 30 of the year referenced, and all comparisons are to prior years.

CORPORATE OVERVIEW AND
BUSINESS
Headquartered in Montreal, CGI
provides end-to-end information technology services (commonly referred to as IT services)
and business solutions to clients worldwide, utilizing a highly customized, cost efficient
delivery model that combines our on-site and off-site operations through a network of
state-of-the-art data centers in Canada (Montreal, Toronto and Regina), in the US
(Phoenix) and in the UK (Basingstoke). We also have applications maintenance and
development centers in India (Mumbai and Bangalore). More specifically, our services are
generally broken down as follows:

ConsultingWe
act as a trusted advisor to our clients, providing a full range of IT and management
consulting services, including IT strategic planning, business process engineering and
systems architecture.

Systems
integrationWe provide 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 our expertise at
working with leading technologies and software applications, we provide customized
application development services leveraging our ISO 9001 and CMM certified methodologies
and the option of economies from offshore development.

Management
of IT and business functions (outsourcing)Clients delegate entire or partial
responsibility of their IT or business functions to CGI in order to achieve significant
savings and access the best information technology, while retaining control over strategic
IT functions. These contracts, typically for five to 10 years and renewable, provide
revenue visibility and support performance stability. Services provided as part of an
outsourcing contract can include facilities management (data centers, call centers,
network and desktop services); application maintenance and support; development and
integration of new projects and applications; business processing for insurance companies,
banks, investment firms and financial cooperatives, as well as pay services, document
management and finance and administration services.

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
operating in that industry, including financial services, telecommunications,
manufacturing-retail-distribution, governments, utilities and services as well as
healthcare.

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 and Europe.
Our professionals and facilities in India and Canada also serve US and foreign-based
clients as an integral part of our offshore and near-shore delivery model.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The BPS LOB provides a full spectrum of business process out sourc ing 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 pay services, document
management and finance and administration services.                      

As
at September 30, 2003, we employed approximately 20,000 members. In fiscal 2003, we
integrated 5,400 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 ENVIRONMENT
Industry research as recent as June
2003, from firms such as Gartner Group and IDC, confirms that market demand for IT and
Business Process Outsourcing (BPO) is large and expected to grow significantly
over the long-term. However, during fiscal 2003, the IT services industry experienced a
reduction in global demand for shorter-term, project oriented services as companies and
organizations reduced discretionary spending in response to the economic environment.
Based on various industry and company-specific indicators, we continue to anticipate a
stabilization of demand in our markets for systems integration and consulting services,
but do not expect a significant pick-up in demand until 2005.

22 _ CGI GROUP INC. 2003


---

Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

Demand
for longer-term outsourcing contracts is still healthy as companies realize the cost
benefits that are achievable through outsourcing. We are a dominant 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. Our presence in the US market
today is roughly at the same stage we were at 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.

VISION AND STRATEGY
CGIs vision is to be a
world-class IT and BPO leader helping our 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 our clients,
both locally and internationally. In all we do, we will strive to seek the best
equilibrium between 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, 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. Most organic growth to date has been in Canada, but we are
growing our sales funnel of contract proposals more meaningfully in the US and
internationally.

The
second element of our growth strategy is the pursuit of large, new outsourcing contracts,
valued at more than $50 million per year. Canada continues to offer tremendous untapped
opportunities, but 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. Currently, 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 the US that
will increase our geographical presence and critical mass in order to further qualify us
for larger outsourcing deals. In Canada, we will continue to be an IT domain consolidator
of both small and large IT services companies. Important to this growth strategy is a
disciplined approach to acquisitions and focus on increasing shareholder value.

SIGNIFICANT DEVELOPMENTS
IN 2003
Acquisitions
In fiscal 2003, 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.

INSpire
Insurance Solutions Inc. (INSpire)In November 2002, we purchased the
majority of the assets of this Fort Worth, Texas-based firm for $7.8 million in cash.
INSpire, which had annualized revenue of $41 million and approximately 265 professionals
located in five offices in the US, joined us to strengthen our business process services
offering to the insurance sector.

ProjExpertIn
December 2002, we purchased this Montreal-based consulting company that specialized in the
implementation of enterprise resource planning (ERP) programs specific to Oracle
applications for the government, financial services and manufacturing sectors. Sixteen
professionals joined us in Montreal.

Underwriters
Adjustment Bureau Ltd. (UAB)In January 2003, we purchased UAB for $54.1
million in cash to expand our capabilities in the insurance vertical as well as in our
business process services offering. UAB had annualized revenue of approximately $100
million and added 1,300 professionals to our workforce in Canada.

Cornerstone
Project Management Group Inc. (Cornerstone) In January 2003, we acquired
this Halifax-based firm with revenues at the time of $2.8 million. Cornerstones 25
professionals provided project management and consulting services to organizations in the
government, healthcare and financial services sectors including Atlantic Blue Cross Care,
Maritime Life, Brainworks International and the Province of Nova Scotia.

COGNICASE
Inc. (Cognicase)In February 2003, we closed the acquisition of Cognicase
for $329.4 million in a combination of $180.2 million in cash and 19,850,245 Class A
subordinate shares of CGI. 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. We began recognizing 90% of
Cognicase on January 14, 2003, and started fully consolidating by February 25, 2003.

23 _ CGI GROUP INC. 2003


---

Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

Other
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. In addition, we now have 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, Toronto-Dominion Bank and
Caisse centrale Desjardins, as co-arrangers; as well as Caisse de dépôt et
placement du Québec, Bank of Montreal, Royal Bank of Canada and United Overseas
Bank Limited, as participants. Also, through a separate agreement with Bank of Montreal,
we have access to a $25 million operating facility for cash management purposes.

In
June 2003, we announced the successful addition of $100 million to our existing bank
credit facilities. National Bank of Canada and Société
Générale (Canada) each contributed $50 million. The additional $100 million
follows the terms of the credit agreement announced in November 2002.

In
July 2003, BCE Inc. (BCE) 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 and CGI signed a new
shareholders agreement with respect to BCEs ownership in CGI. Among other
details, the put and call options with the majority shareholdersMr. Serge Godin, Mr.
André Imbeau and Mr. Jean Brassardwere cancelled. Additionally, BCE converted
all of its CGI Class B multiple voting shares into CGI Class A single voting shares on a
one-for-one basis and as at September 30, 2003, BCE owned 120,028,400 CGI Class A
subordinate shares and held 29.86% of the total equity in CGI. BCE also holds two seats on
our Board of Directors. The strengthening of our strategic alliance with BCE cleared the
way for us to focus on our continuing growth.

In
September 2003, we announced the appointment of Clarence J. Chandran as President,
Business Process Services (BPS) and Chairman of the board, India operations. To continue
to propel our growth in the BPS sector, we wanted to ensure that we had a leader
exclusively dedicated to building this increasingly strategic area of our business.

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: $10.5 million in cash,
including 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 shall be
automatically converted upon the approval by Nexxlinks shareholders who will vote on
the matter at the Annual General and Special Meeting of Shareholders to be held on
December 11, 2003. This transaction will give CGI a 32% equity interest in Nexxlink. As
such, the net earnings, assets, liabilities and the net cash and cash equivalents provided
by these operations plus other non-core operations that we are in the process of selling,
are presented separately in the Consolidated Financial Statements.

PERFORMANCE OVERVIEW
Fiscal 2003 marked the 27th
consecutive year of revenue growth for CGI. Revenue grew to $2,719.7 million, up from
$2,169.6 million in fiscal 2002 and $1,560.4 million in fiscal 2001. Net earnings amounted
to $177.4 million ($0.45 basic and diluted earnings per share), compared to net earnings
of $135.8 million ($0.36 basic and diluted earnings per share) in fiscal 2002 and compared
to net earnings before amortization of goodwill (cash net earnings) of $89.9
million ($0.30 basic and diluted cash earnings per share) and net earnings of $62.8
million ($0.21 basic and diluted earnings per share) in fiscal 2001. The net margin (i.e.
net earnings over revenue) improved to 6.5%, compared with 6.3% in 2002 and 4.0% in 2001.

The
balance sheet as at September 30, 2003 included $83.5 million in cash and cash
equivalents, $1,980.2 million of shareholders equity and $268.0 million in long-term
debt.

CRITICAL ACCOUNTING
POLICIES AND ESTIMATES
Revenue recognition
The IT services segment includes a
full range of services in systems integration, consulting and outsourcing. The BPS segment
provides end-to-end business processing for insurance companies, banks, investment firms
and financial cooperatives, as well as pay services, document management and finance and
administration services. Our revenue is principally derived from outsourcing contracts.

Revenue
from IT outsourcing contracts is based on the services performed or information processed
during the period in accordance with contract terms and the agreed-upon billing rates
applied to the consumed service metrics. In some cases, we bill clients prior to
performing the service, resulting in deferred revenue, which is presented as a current
liability in the Consolidated Financial Statements. 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.

For time and materials and level of
effort types of contracts, revenue is recognized as the services are provided. For
cost-based contracts, revenue is recorded as reimbursable costs are incurred. These types
of contracts are generally entered into with clients in the context of systems integration
and consulting services.

24 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

Revenue
on fixed-price contracts related to systems integration and consulting services is
recognized on the basis of the estimated percentage-of-completion of services rendered
that reflects the extent of work accomplished. Management estimates the
percentage-of-completion by reference to measures of performance that are reasonably
determinable and are directly related to the activities critical to completion of the
contract. Management measures performance principally based on the labor hours spent on
the contract over the total estimated labor hours of the contract. We use this method of
revenue recognition as projected contract revenue and costs may reasonably be estimated
based on our business practices, methods and historical experience. This method requires
estimates of costs and profits over the entire term of the contract. 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.

Occasionally,
we sell software licenses. Revenue from the sale of software licenses is recognized when
the product is delivered, no significant vendor obligations remain and the collection of
the agreed-upon fee is probable. Where license agreements include multiple elements,
revenue from the sale of licenses is recognized on the same basis, provided the services
do not include significant customization to the base product. In these cases, revenue is
recognized over the period of delivery. Revenue from software maintenance and support
agreements is recognized on a straight-line basis over the term of the related agreements.

Contract costs
Contract costs are incurred in the course of two to 10-year IT services and BPO 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 signature of long-term outsourcing contracts

Occasionally, incentives can be
granted either in the form of cash payments, issuance of equity instruments or rebates
awarded principally over a transition period as negotiated in the contract. In the case of
an incentive in the form 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
rebates, cost is measured at the value of the financial commitment granted and a
corresponding deferred credit is recorded. As services are provided to the client, the
deferred credit 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 with outsourcing contracts
are considered as an incentive granted to the client and are recorded and amortized as
described above.

b) Transition costs incurred during the transition
period on long-term outsourcing contracts

These costs consist of expenses associated with the
installation of systems and processes incurred after the award of outsourcing contracts.

Other intangibles and other long-term
assets
Other intangibles and other long-term assets comprise the following:

a) Internal software

Internal software includes software acquired and/or developed for internal use. These software
solutions are amortized over their estimated useful life.

b) Business solutions

Business solutions include commercial
software solutions acquired through business acquisitions and costs incurred to develop
commercial software solutions. These costs are capitalized only after technological
feasibility is established. Business solutions are recorded at cost and amortized on a
straight-line basis over their respective estimated useful life. Management regularly
reviews business solutions for impairment.

c) Software licenses
Software licenses are purchased to fulfill our obligations under outsourcing contracts and are
recorded at cost. These costs are amortized on a straight-line basis over the lesser of
their estimated useful life or the related outsourcing contract term.

d) Customer relationships
Customer relationships relate to the fair value assigned to customer relationships in the context
of a business acquisition and are amortized on a straight-line basis over their estimated
life.

e) Other long-term assets
Other long-term assets are comprised
of the long-term portion of a net investment in a direct financing lease taken by one of
our joint ventures, as well as an investment in an entity subject to significant
influence.

Goodwill
Goodwill represents the excess of the
purchase price over the fair value of the net assets of the entities acquired at the
respective dates of acquisition. On October 1, 2001, we adopted prospectively the new
recommendations of the CICA Handbook Sections 1581, Business Combinations, and 3062,
Goodwill and Other Intangible Assets. Accordingly, we discontinued the amortization of
goodwill as at October 1, 2001. Prior to October 1, 2001, goodwill was amortized on a
straight-line basis over its expected useful life of 20 years. For business combinations
occurring after June 30, 2001, we did not amortize the resulting goodwill, consistent with
the transition recommendations of Section 1581.

25 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

Goodwill
is tested annually, 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.

We
perform the annual review of goodwill as at September 30 of each year. Based on the
impairment tests performed as at September 30, 2002 and 2003, we concluded that no
goodwill impairment charge was required. In addition, we performed a supplemental
impairment test, following the decision to modify our management structure and, based on
the results of this impairment test, we concluded that no goodwill impairment charge was
required.

Impairment of long-lived assets
other than goodwill and intangible assets with indefinite lives
We evaluate the
carrying value of long-lived assets other than goodwill and intangible assets with
indefinite lives on an ongoing basis. In order to determine whether an impairment exists,
we consider the undiscounted cash flows estimated to be generated by those assets as well
as other indicators. Any permanent impairment in the carrying value of assets is charged
against earnings in the period an impairment is determined. We do not have intangible
assets with indefinite lives.

Deferred credits
Deferred credits principally comprise
the unused portion of rebates granted to clients under the terms of certain long-term
outsourcing contracts (see Contract costs described above).

Stock option plan
We have a stock option compensation
plan which is described in Note 9 to the Consolidated Financial Statements. Any
consideration paid by employees and directors on exercise of stock options is credited to
share capital.

We
apply the recommendations of CICA
Handbook Section 3870, Stock-Based Compensation and Other Stock-Based Payments. This
Section establishes standards for the recognition, measurement and disclosure of
stock-based compensation made in exchange for goods and services, and requires the use of
the fair value method to account for awards to non-employees and direct awards of stock to
employees, as well as encourages, but does not require, the use of the fair value method
to account for stock-based compensation costs arising from awards to employees. The
Section also requires pro forma disclosures relating to net earnings and earnings per
share figures as if the fair value method of accounting had been used. We have chosen not
to use the fair value method to account for stock-based compensation costs arising from
awards to employees. The pro forma disclosure is presented in Note 9 to the Consolidated
Financial Statements.

Recent accounting changes
In 2003, the CICA issued Accounting
Guideline 14, Disclosure of Guarantees, with the effective date for financial statements
of interim and annual periods beginning on or after January 1, 2003. This guideline
provides guidance regarding the identification of guarantees and requires a guarantor to
disclose the significant details of guarantees that have been given regardless of whether
the guarantor will have to make payments under the guarantees. See Note 20 to the
Consolidated Financial Statements for disclosure of guarantees.

The
CICA issued Handbook Section 3475, Disposal of Long-lived Assets and Discontinued
Operations, which applies to disposal activities initiated by an enterprises
commitment to a plan on or after May 1, 2003. The new section 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.

In
November 2002 and May 2003, the Emerging Issues Task Force (EITF) reached a
consensus on Issue 00-21, Revenue Arrangements with Multiple Deliverables. EITF Issue
00-21 provides guidance and criteria for determining when a multiple deliverable
arrangement contains more than one unit of accounting. The guidance also addresses methods
of measuring and allocating arrangement consideration to separate units of accounting. The
guidance is effective for revenue arrangements entered into after June 15, 2003. The
adoption of this new guidance had no significant impact on our Consolidated Financial
Statements as we were already conforming to this guidance.

Future accounting changes
The CICA issued Accounting Guideline
13, Hedging Relationships, which deals with the identification, documentation, designation
and effectiveness of hedges and also the discontinuance of hedge accounting, but does not
specify hedge accounting methods. This guidance is applicable to hedge relationships in
effect in fiscal years beginning on or after July 1, 2003.

The
CICA issued Handbook Section 3110, Asset Retirement Obligations. This new standard 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
CICA issued Handbook Section 3063, Impairment of Long-lived Assets, which is effective for
fiscal years beginning on or after April 1, 2003. This section provides guidance on
recognizing, measuring and disclosing the impairment of long-lived assets. It replaces the
write-down provisions in Section 3061, Property, Plant and Equipment.

We
are currently evaluating the impact of the adoption of these new standards and guidance,
and therefore we have not yet assessed their effect on our future Consolidated Financial
Statements.

26 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

|BOOKINGS AND BACKLOG          |                            
|----------------------------- | ---------------------------
|                              | YEAR ENDEDSEPTEMBER 30,2003
|                             
|(IN `000 OF CANADIAN DOLLARS) | $                          
|Bookings                      | 4,018,500                  
|Backlog                       | 12,300,000                 
|                             

As at September 30, 2003, our backlog of signed contracts for work that had yet to be delivered was $12.3 billion, with an average duration of 8.3 years. Our backlog, which provides good revenue visibility, represents new contract wins, extensions and renewals signed in fiscal 2003 of $4.0 billion, minus backlog consumption during the year. The outsourcing contracts extended with the BCE family in July 2003 represented $1.5 billion of our bookings in 2003 and are part of the backlog. Contract bookings included a 10-year, $1.75 billion contract win from Canada Post in 2002, and a 10-year, $1.2 billion contract win from Desjardins in 2001.

COMPARISON OF OPERATING RESULTS FOR FISCAL YEARS 2003, 2002 AND 2001

|Revenue                       |                            
|----------------------------- | ---------------------------
|                              | YEAR ENDEDSEPTEMBER 30,2003
|                             
|(IN `000 OF CANADIAN DOLLARS) |                            
|Revenue                       | $2,719,695                 
|Growth over previous year     | 25.4%                      
|                             

Revenue increased 25.4% in 2003.
Year-over-year organic growth of 6.5% was driven by new bookings from a combination of new
client wins, notably with Canada Post, Purolator and Air Liquide, as well as contract
renewals, extensions and add-on projects from existing clients. External revenue growth in
2003 was 19.9% and was primarily attributable to our acquisition of Cognicase in January
2003. Organic growth was lower in 2003 than in 2002 for several reasons, including the
effect of the currency exchange rate on our US and foreign denominated revenue, which
resulted in a 1.0% revenue decline versus 2002, as well as the decline in information
technology spending and the uncertain economic environment. These conditions affected all
of our principal markets, but were especially pronounced in the US.

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

|                                                          | YEAR ENDEDSEPTEMBER 30,2003 | YEAR ENDEDSEPTEMBER 30,2002 | YEAR ENDEDSEPTEMBER 30,2001
|--------------------------------------------------------- | --------------------------- | --------------------------- | ---------------------------
|                                                         
|                                                          | %                           | %                           | %                          
|By contract type
             Outsourcing                 | 73                          | 72                          | 69                         
|Systems integration and
              consulting ("SI&C") | 27                          | 28                          | 31                         
|                                                         
|By client based geography
         Canada                 | 78                          | 73                          | 77                         
|US                                                        | 17                          | 20                          | 17                         
|All other regions                                         | 5                           | 7                           | 6                          
|                                                         
|By vertical
         Financial services                   | 42                          | 41                          | 38                         
|Telecommunications                                        | 20                          | 25                          | 33                         
|Manufacturing, retail
                  and distribution  | 15                          | 15                          | 15                         
|Governments                                               | 13                          | 15                          | 12                         
|Utilities and services                                    | 8                           | 3                           | 2                          
|Healthcare                                                | 2                           | 1                           | <1                         
|                                                         

Revenue derived from our long-term
outsourcing contracts represented 73% of the total revenue in fiscal 2003, including
approximately 53% from IT services and 20% from BPO services. Systems integration and
consulting (SI&C) projects represented 27% of our revenue. Despite the
acquisition of Cognicase, which generated more revenue from shorter-term contracts, we
were able to increase the proportion of long-term contracts with the acquisition of UAB,
which provided longer-term BPO services, and by winning new outsourcing contracts in the
year. Our targeted mix of revenue between outsourcing contracts and SI&C contracts is
75% and 25%, respectively.

27 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

The
revenue mix based on our clients geography changed from last year, mainly as a
result of the acquisitions of Cognicase, whose business concentrated on serving mostly
Canadian clients, as well as UAB which served Canadian clients exclusively.

In
fiscal 2003, we maintained the diversification of our revenue mix among the industry
verticals that we target with our expertise. We have grown our presence in the utilities
and services sector over the last year so that telecom revenue, while consistent in
absolute dollars, has declined as a percentage of total revenue from 25% in 2002 to 20% in
2003. The increase in proportional revenue derived from clients in the utilities and
services sector primarily represents our growing business with Innovapost, our joint
venture with Canada Post. Innovapost provides IT services to the Canada Post Group of
companies, Canadas postal organization.

Our
top 5 clients represented 33.4% of total revenue in 2003, compared with 34.6% last year.
Combined revenue attributable to numerous contracts from the BCE family of companies
decreased to 18.4% of our total revenue, compared to 23.2% in 2002. However, on an
absolute dollar basis, there was essentially no change year-over-year.

Operating expenses, EBIT and interest

|                                                             | YEAR ENDEDSEPTEMBER 30,2003 | YEAR ENDEDSEPTEMBER 30,2002 | YEAR ENDEDSEPTEMBER 30,2001 | AS APERCENTAGE OFTOTAL REVENUE2003 | AS APERCENTAGE OFTOTAL REVENUE2002 | AS APERCENTAGE OFTOTAL REVENUE2001
|------------------------------------------------------------ | --------------------------- | --------------------------- | --------------------------- | ---------------------------------- | ---------------------------------- | ----------------------------------
|                                                            
|(IN `000 OF CANADIAN DOLLARS EXCEPT PERCENTAGES)             | $                           | $                           | $                           | %                                  | %                                  | %                                 
|Costs of services, selling, and administrative expenses      | 2,277,500                   | 1,842,854                   | 1,328,460                   | 83.7                               | 84.9                               | 85.1                              
|Research expenses                                            | 22,036                      | 17,609                      | 12,585                      | 0.8                                | 0.8                                | 0.8                               
|Depreciation and amortization expenses
         Fixed assets | 44,112                      | 28,303                      | 29,185                      |                                    |                                    |                                   
|Contract costs related to transition costs                   | 4,219                       | 2,656                       | 169                         |                                    |                                    |                                   
|Other intangibles and other long-term assets                 | 73,530                      | 46,046                      | 26,368                      |                                    |                                    |                                   
|                                                             |                             |                            
|Total depreciation and amortization expenses                 | 121,861                     | 77,005                      | 55,722                      | 4.5                                | 3.5                                | 3.6                               
|EBIT(1)                                                      | 298,298                     | 232,145                     | 163,624                     | 11.0                               | 10.7                               | 10.5                              
|Interest on long-term debt                                   | 12,578                      | 2,411                       | 4,206                       | 0.5                                | 0.1                                | 0.3                               
|                                                            

|(1) | Earnings before interest, income taxes, entity subject to significant influence, amortization of goodwill and discontinued operations.
|--- | --------------------------------------------------------------------------------------------------------------------------------------

Our cost of services, selling and administrative expenses was $2,277.5 million in 2003 or 83.7% of revenue, which is 1.2% and 1.4% lower compared to 2002 and 2001, respectively. The decrease in cost of services, selling and administrative expenses is mostly due to the improved
profitability in the US following the successful restructuring we had in 2002 and to tight expense controls applied across all of our business units, as well as the contribution from the acquisitions we made during the year. Research expenses were $22.0 million in 2003 or 0.8% of
revenue, which is comparable with previous years on a percentage of revenue basis.

Total expenses for depreciation and amortization were $121.9 million, up $44.9 million compared to 2002.

As detailed in Note 10 to the Consolidated Financial Statements, in 2003, depreciation and amortization of fixed assets increased to $44.1 million, reflecting the growth in our purchase of fixed assets made through either direct purchases or business acquisitions, as well as the
investments we made for leasehold improvements to our E-Commerce Place facilities in Montreal.

The amortization of other intangibles and other long-term assets increased to $73.5 million, up $27.5 million from last year. The most important increase was related to the amortization of the definite life intangible assets, comprised of customer relationships and business
solutions which together increased by $12.4 million, resulting mainly from our acquisitions of Cognicase, UAB and INSpire.

Earnings before interest, income taxes, entity subject to significant influence, amortization of goodwill and discontinued operations ("EBIT")
EBIT increased to $298.3 million in 2003 and EBIT margin (i.e. EBIT over revenue) improved to 11.0% for the year, compared to 10.7% in 2002 and 10.5% in 2001. The increase in EBIT versus 2002 is mostly attributable to the synergies of additional contracts, tight expense controls applied
across all our business units and the contribution from acquisitions made during the year.

28 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

Interest
Interest on long-term debt increased to $12.6 million as a result of an increase in the average debt and the capital leases held during the year. In 2003, we issued debt to finance the acquisitions of UAB and Cognicase, as described in the section under developments in 2003". In fiscal
2002, interest expense was related mainly to the Libor advance debt of US$20 million. In fiscal 2001, this expense stemmed mainly from a loan contracted in the course of a large outsourcing contract as well as an acquisition.

Income taxes
Our effective income tax rate in 2003 was down to 39.4%, compared with 41.6% in 2002 and 44.5% in 2001. The decrease in our tax rate compared with last year reflects the reduction in the Canadian combined federal and provincial statutory tax rates and an improvement in the profitability
of our US and UK subsidiaries.

Amortization of goodwill, net of income taxes
Effective October 1, 2001, we stopped recording goodwill amortization based on the new CICA Handbook recommendations, discussed in the section "Critical Accounting Policies" earlier in this MD&A. As such, current net earnings and earnings before amortization of goodwill ("cash net
earnings") for periods before October 1, 2001, are equivalent. For purposes of clarity and ease of comparison, we compare net earnings to cash net earnings figures in year-over-year comparisons.

Net earnings and earnings per share
CGI's net earnings and basic and diluted earnings per share for fiscal 2003, 2002 and 2001 were as follows:

|                                                                                     | YEAR ENDEDSEPTEMBER 30,2003 | YEAR ENDEDSEPTEMBER 30,2002 | YEAR ENDEDSEPTEMBER 30,2001 | PERCENT CHANGE(EXCEPT SHARE DATE)2003/2002 | PERCENT CHANGE(EXCEPT SHARE DATE)2002/2001
|------------------------------------------------------------------------------------ | --------------------------- | --------------------------- | --------------------------- | ------------------------------------------ | ------------------------------------------
|                                                                                    
|(in `000 of Canadian dollars except share data)                                      |                             |                             |                             |                                            |                                           
|Earnings before amortization of goodwill
         and discontinued operations        | $175,397                    | $135,799                    | $89,924                     | 29.2%                                      | 51.0%                                     
|Earnings before amortization of goodwill
         and discontinued operations margin | 6.4%                        | 6.3%                        | 5.8%                        |                                            |                                           
|Net earnings                                                                         | $177,366                    | $135,799                    | $62,789                     | 30.6%                                      | 116.3%                                    
|Net earnings margin                                                                  | 6.5%                        | 6.3%                        | 4.0%                        |                                            |                                           
|Weighted average number of Class A
         subordinate shares and Class B shares    | 395,191,927                 | 377,349,472                 | 299,500,350                 | 4.7%                                       | 26.0%                                     
|Basic and diluted earnings per share before
         amortization of goodwill        | $0.45                       | $0.36                       | $0.30                       | $0.09                                      | $0.06                                     
|Basic and diluted earnings per share                                                 | $0.45                       | $0.36                       | $0.21                       | $0.09                                      | $0.15                                     
|                                                                                    

In fiscal 2003, earnings before amortization of goodwill and discontinued operations were $175.4 million in the year. They were up 29.2% over last year's comparable earnings before amortization of goodwill and discontinued operations. The net earnings from discontinued operations of
$2.0 million for 2003 are comprised of the net earnings related to certain assets sold to Nexxlink, announced on October 21, 2003, representing approximately $40 million in revenue. Also included are the results of operations of some non-core activities that we are in the process of
selling. 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 2003 increased 30.6% to $177.4 million compared to 2002. Net earnings for 2002 were up 116.3% over comparable net earnings of 2001. The net earnings margin improved to 6.5% from 6.3% in 2002 and 4.0% in 2001. Basic and diluted earnings per share of $0.45 in fiscal 2003
were up from $0.36 in 2002 and up from basic and diluted earnings per share before amortization of goodwill of $0.21 and basic and diluted earnings per share of $0.30 in 2001. The increase in the weighted average number of Class A subordinate shares outstanding between 2003 and 2002 was
a function of the shares issued for the acquisition of Cognicase in January 2003, while the increase between 2002 and 2001 was a function of the shares that were issued as part of the acquisition of IMRglobal Corp., in July 2001. The increase in net earnings and higher earnings per
share between 2002 and 2001 partly reflects the fact that we stopped recording goodwill amortization at the end of fiscal 2001. The use of debt contributed to an increase in our earnings per share as it provided financial leverage from financing.

29 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

Pro forma net earnings
Under the
Stock option plan, had compensation cost been determined using the fair value method at
the day of grant for awards granted since October 1, 2001, our pro forma net earnings,
basic and diluted earnings per share would have been $169.2 million, $0.43 and $0.43,
respectively, for the 12-month period ended September 30, 2003.

Reconciliation of results
reported in accordance with Canadian GAAP to US GAAP
Under US GAAP, net earnings for
fiscal 2003 would have been $173.3 million, and the basic and diluted earnings per share
would have been $0.44. 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
12-month periods ended September 30, 2003, 2002 and 2001). We modified our management
structure to reflect, firstly, the increasing proportion of business that we derive from
BPO services coming from the acquisitions of Cognicase, UAB and INSpire and, secondly, the
global delivery approach that we are taking in providing IT services to our clients. Our
end-to-end IT outsourcing contracts are increasingly being delivered by 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
expertise and technology centers. The delivery of these contracts crosses international
borders and mixes and matches the best of CGI in delivering solutions to our clients.

|                              | YEAR ENDEDSEPTEMBER 30,2003 |   | YEAR ENDEDSEPTEMBER 30,2002 |   | YEAR ENDEDSEPTEMBER 30,2001 |  
|----------------------------- | --------------------------- | - | --------------------------- | - | --------------------------- | -
|                             
|(in '000 OF CANADIAN DOLLARS) | $                           |   | $                           |   | $                           |  
|Revenue                      
|IT services                   | 2,232,335                   |   | 1,839,108                   |   | 1,310,610                   |  
|BPS                           | 554,461                     |   | 388,031                     |   | 288,229                     |  
|Intersegment elimination      | (67,101                     | ) | (57,526                     | ) | (38,448                     | )
|                             
|Total revenue                 | 2,719,695                   |   | 2,169,613                   |   | 1,560,391                   |  
|EBIT                         
|IT services                   | 293,947                     |   | 223,099                     |   | 148,527                     |  
|BPS                           | 72,393                      |   | 65,722                      |   | 46,006                      |  
|Corporate                     | (68,042                     | ) | (56,676                     | ) | (30,909                     | )
|                             
|Total EBIT                    | 298,298                     |   | 232,145                     |   | 163,624                     |  
|                             

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 2003. Revenue
was driven by a combination of IT and business process outsourcing and SI&C contract
wins, renewals and add-on projects as well as acqui sitions. Growth in revenue, without a
corresponding increase in overhead, resulted in good margin contribution.

In
2003, revenue derived from delivering IT services increased 21.4% from the previous
years revenue, driven primarily by the acquisition of Cognicase in January 2003 and
the completion of the first full year of activities on our outsourcing contract with
Canada Post. While acquisitions accounted for 15.1% of the year-over-year growth, growth
from organic activities in constant dollars was 6.8% with foreign currency effect having a
modest negative impact of 0.5%. The appreciation of the Canadian dollar against the US
dollar was partially offset by the depreciation experienced in the year by the Canadian
dollar against the British pound and the Euro. Our organic growth was reduced by $16.5
million as a result of some of our US clients being acquired or, in one case, being placed
under court protection. In addition, we were impacted to a lesser extent by the continued
softness in the US market and the weak demand for SI&C services. As well, our decision
to wind down our operations in Portugal and Latin America last year also contributed to a
lower organic growth factor. The impact of this decision was a $13.7 million reduction in
our revenue. In Europe, the improvement in revenue was driven largely by growth in the UK,
especially SI&C contract wins. As expected, revenue from operations in France was
down, reflecting the local market conditions for SI&C.

With
revenue increasing 21.4% over last year, EBIT grew by 31.8%, fueled partially by
acquisitions and new outsourcing business as well as improvements in operations. A
significant driver of this improvement was the full adoption of the CGI global business
model within the US operations and adherence to CGIs standard management ratios. The
US delivery units had previously been structured around industry vertical expertise. In
late fiscal 2002, the integration of US operations was completed under a global operations
structure and we restructured these units based on nine major metro markets. 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. Operational improvements realized in
France during 2003 also had a positive effect on margins.

30 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

BPS 
Fiscal 2003 was a building year for
our BPS LOB, following the acquisitions of INSpire and UAB in January 2003, and the
subsequent creation of a new group called Insurance Business Servicesa leading
full-service provider of outsourced insurance services focused on providing end-to-end
business process outsourcing services to the North American insurance industry, namely
property and casualty and life insurance companies. This group currently serves every
major insurance company in Canada and many providers in the US, and has a great
opportunity to sell deeper into the client base and target many new opportunities. We are
pleased with the breadth and depth of business process outsourcing services added in the
last year and look forward to leveraging higher growth with our expertise in the future.

The
business process outsourcing activities represented 20.4% of our total revenue in 2003 and
reflected 42.9% year-over-year growth. The majority of this growth was driven by the
acquisition of UAB, the assets from INSpire as well as the BPO operations acquired as part
of the Cognicase transaction. These acquisitions accounted for 39.3% growth while the
impact of the strengthening Canadian dollar compared to the US dollar reduced revenue by
2.3%. The organic growth in the BPS activities in constant dollars was 5.8%.

EBIT
for the BPS LOB increased 10.2% from the previous year. As a certain time was required to
effectively integrate our new insurance businesses, the net profitability of the acquired
operations was at a level lower than that of the pre-existing operations. We expect the
margins of these units to increase to the traditional levels for this business. In
addition, our profitability declined in the banking and investment sector following a
clients decision to suspend IT investments as a result of the soft financial market
in 2002. While the healthcare sector realized increased profitability for the year, the
market softness in both the consulting and claims processing areas largely offset a
one-time claim recovery received from a client early in the year. The majority of the
improvement in the profitability from 2001 to 2002 reflected a full year of the banking
and investment operations acquired in 2001 and included synergies and cost savings that
were realized from the integration of these operations into the company.

LIQUIDITY AND CAPITAL
RESOURCES
We finance the growth of our business
through cash flows from operations combined with the issuance of debt, borrowing under our
existing credit facilities and/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, 2003, we held $83.5 million in cash and cash equivalents, a decrease of
$20.7 million from September 30, 2002. Historically, the majority of our cash and cash
equivalents have been provided by continuing operating activities. In 2003, cash provided
by continuing operating activities was higher by $52.0 million compared to the previous
fiscal year. This was offset by a higher level of cash used for continuing investing
activities which, net of the cash provided by continuing financing activities, was $133.9
million higher than in 2002.

|                                                                             | YEAR ENDEDSEPTEMBER 30,2003 |          | YEAR ENDEDSEPTEMBER 30,2002 |          | YEAR ENDEDSEPTEMBER 30,2001 |         
|---------------------------------------------------------------------------- | --------------------------- | -------- | --------------------------- | -------- | --------------------------- | --------
|                                                                            
|(IN '000 OF CANADIAN DOLLARS)                                                |                             | $        |                             | $        |                             | $       
|Net cash provided by (used in):                                             
|Continuing operating activities                                              |                             | 229,459  |                             | 177,447  |                             | 174,002 
|Continuing investing activities                                              |                             | (462,279 | )                           | (215,603 | )                           | (157,751
|Continuing financing activities                                              |                             | 205,670  |                             | 92,894   |                             | (15,821 
|Effect of rate changes on cash and cash equivalents of continuing operations |                             | 917      |                             | 3,475    |                             | (3,763  
|                                                                            
|Net change in cash and cash equivalents of continuing operations             |                             | (26,233  | )                           | 58,213   |                             | (3,333  
|Net cash and cash equivalents provided by discontinued operations            |                             | 5,521    |                             | -        |                             | -       
|Cash and cash equivalents, beginning of year                                 |                             | 104,221  |                             | 46,008   |                             | 49,341  
|                                                                            
|Cash and cash equivalents, end of year                                       |                             | 83,509   |                             | 104,221  |                             | 46,008  
|                                                                            

31 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

The increase in cash flow from
continuing operating activities was driven by higher net earnings from continuing
operations achieved during fiscal 2003 of $39.6 million, and by the non-cash adjustments,
such as the amortization and depreciation expenses which were significantly higher than in
fiscal 2002. However, it was offset by the net change in non-cash working capital items,
which was $69.3 million lower than last year. This was mostly explained by the working
capital components related to the acquisitions made during the year, including Cognicase
and UAB, which impacted the Consolidated Statements of Cash Flows the most. Even if the
days of sales outstanding (DSO), as at September 30, 2003 remained unchanged
from September 30, 2002, at 50 days, the increase in accounts receivable and work in
progress net of the decrease in deferred revenue totaled $53.7 million. This demonstrates
our ability to manage the increased business operations acquired from Cognicase and UAB
and keep the DSO at the level prior to their acquisition. We calculate the DSO by
subtracting the deferred revenue from accounts receivable, net of the tax credits
receivable, and work in progress balances. The cash used from the accounts receivable can
also be explained by tax credits recorded this year, for which the receivable was
increased by approximately $60.4 million during the year. This was net of the payments
received during the year of $43.0 million, which was based on the prior years
returns. The net amount of the tax credits recorded this year increased the accounts
receivable, but did not affect the DSO.

Another
reason for the draw down of the cash from the net change in non-cash working capital items
was the cash used for the accounts payable and accrued liabilities. It was mainly related
to the decrease of the provision for severance payments and costs to exit activities,
which was recorded in the accounts payable and accrued liabilities when we acquired
Cognicase, thus having no impact on the cash flow from continuing operating activities at
that time. However, after the acquisition, when payments were issued for severance
payments and exit costs, they were reflected as a use of cash by continuing operating
activities. The decrease of this provision since January 13, 2003, the date of the
acquisition, until September 30, 2003, was $27.2 million. As well, in the course of this
acquisition, a provision was established in order to pay for estimated losses on fixed
price contracts acquired through the purchase of Cognicase, which was drawn down during
the year. Also, the payments from clients in advance of the work being performed were
lower by $21.6 million compared with September 30, 2002. Deferred revenue may fluctuate
from year to year depending on the timing of payments received from outsourcing clients.
The negative impact on the cash balance of the items described above were offset by the
increase in income taxes payable of $4.2 million, which is primarily explained by the
difference in the amount of the installments paid during the year, which are based on the
previous years taxable income, compared to taxes that are accrued for this year
based on actual increased taxable income. As such, this increased the liability for income
taxes. Furthermore, the accrued compensation change had a positive impact of $22.0 million
in the net change in non-cash working capital items.

Cash
used in continuing investing activities was $462.3 million in 2003, an increase of $246.7
million compared to the prior fiscal year. The majority, or 50.4%, of the 2003 continuing
investing activities was for business acquisitions. The purchase of fixed assets
represented 13.2%, contract costs represented 6.3% and other intangibles and other
long-term assets represented 32.2% of the total continuing investing activities. Our
capital expenditures, including fixed assets, contract costs, other intangibles and other
long-term assets, were 8.8% of revenue, compared to 8.3% of revenue in 2002. We believe
this to be adequate to support our growing business and to meet contractual requirements.

Details
of our business acquisitions can be found in Note 12 to the Consolidated Financial
Statements. In fiscal 2003, we made two major acquisitions and three smaller niche
acquisitions for a total cash consideration of $233.0 million. Cognicase, acquired on
January 13, 2003, was purchased for $329.4 million, including $180.2 million in cash,
$139.7 million through the issuance of shares and the balance was related to acquisition
costs. UAB was purchased for $54.1 million, including a $53.0 million cash consideration
and the remaining consisted of acquisition costs. The rest of the business acquisitions
represented a cash investment of $12.9 million. In fiscal 2002, we completed five
acquisitions of IT consulting firms for a total consideration of $19.9 million. We also
invested $26.0 million for the start-up of our joint venture, Innovapost. In fiscal 2001,
our investment of $86.4 million was used to acquire 10 companies, including IMRglobal
Corp., Star Data Systems Inc., C.U. Processing Inc. and the outsourcing contract with
Desjardins, as well as to enter into two joint venture agreements. The proceeds of the
sale of subsidiaries, representing $0.5 million in 2003, corresponded to the sale of
small-scale operations of Cognicase. The proceeds from the sale of these subsidiaries were
lower than the cash held by these units at the time of their disposition, causing the
proceeds to reflect a use of cash. In fiscal 2002, the proceeds from the sale of
subsidiaries corresponded to the sale of the Japanese and Australian operations that had
been acquired with IMRglobal Corp. in July 2001.

The
purchase of fixed assets of $60.8 million increased by $37.4 million compared to 2002. The
2003 investment in fixed assets related mostly to leasehold improvements of $30.0 million,
including approximately $19.8 million for the installation costs for the fit-up of the new
offices at E-Commerce Place in Montreal. Additionally, during the first quarter, following
the finalization of a contract signed with a subsidiary of Canada Post in the fourth
quarter of 2002, we acquired the Tier 1 infrastructure assets of this subsidiary for a net
value of $16.3 million. This contract is part of the larger IT outsourcing agreement
signed in May 2002 with Canada Post.

32 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

Our
investment in contract costs of $29.2 million decreased when compared to $62.0 million
spent in the prior year. Included in this amount are approximately $9.0 million in
incentives that were granted as part of outsourcing contracts announced during the year
with clients such as Alcan, Air Liquide and League Data. Additionally, approximately $23.0
million represents the transition costs incurred with outsourcing clients in their
transition period, such as Canada Post and one of its subsidiaries, as well as Alcan,
League Data, Russell Investment Group and Air Liquide (most of these contracts were signed
during the last fiscal year). Last year, the amount was comprised of transition costs and
incentives for large outsourcing contracts signed, the most significant being
Firemans Fund Insurance Company (a subsidiary of Allianz AG of Munich) and Canada
Post.

The
investment in other intangibles and other long-term assets was $149.0 million in 2003, an
increase of $54.4 million compared to last year. The details of what is included in this
category are provided in the section Critical Accounting Policies and
Estimates. The most significant item was the purchase of certain assets of Canada
Post by Innovapost, a joint venture for which we recognize a 49% ownership, representing
$47.3 million. These assets were part of the original outsourcing agreement, are comprised
of capitalized costs and software, and are related to the enterprise resource system used
by Canada Post, which will initially be used by Canada Post and subsequently, also by
other Canada Post companies. In the course of this transaction, Innovapost bought these
assets and sold them back to Canada Post through a direct financing 50-month lease
agreement. As at September 30, 2003, $25.4 million was included in the other intangibles
and other long-term assets. In addition, an amount of $47.4 million was invested in new
business solutions, with about half alloted to the development of solutions for our
clients and the remaining for software being implemented for our internal use. We expect
this software to serve our needs for a period of at least seven years. Finally, as per
normal business with outsourcing clients, software licenses were acquired for an
approximate value of $45.6 million in order to deliver IT outsourcing services.

Cash
provided by continuing financing activities was $205.7 million in 2003, compared with
$92.9 million during 2002. Continuing financing activities in 2003 included the signature,
on November 12, 2002, of an agreement with a banking syndicate pertaining to two unsecured
credit facilities. More details surrounding this agreement are provided in the
Significant Developments in 2003Other section. 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. The decrease of other long-term debt is comprised of a few items.
First, as part of the acquisition of Cognicase, purchase price balances for acquisitions
made by Cognicase prior to January 13, 2003 were added to the long-term debt. These
obligations will be disbursed over the period ending December 2006. As at September 30,
2003, an amount of $15.0 million remains out standing, given that $27.5 million has been
paid since January 13, 2003, and the remaining of the variance is comprised of interest
and adjustments made to some of the balances. It also includes the reim burse ment of the
credit lines that were held by Cognicase and UAB at the acquisition dates. The balance of
the amount reflects mostly the payment of capital leases. The decrease in the long-term
debt was partially offset by the debt incurred by Innovapost to pay for certain Canada
Post assets. In fiscal 2002, the cash provided by continuing financing activities came
mainly from the issuance, in December 2001, of 11,110,000 Class A subor dinate shares at
$11.25 per share for net proceeds of $119.5 million. Partly offsetting the cash raised in
this offering was the repayment of a US$20 million Libor debt advance in the fourth
quarter of fiscal 2002 and payments of capital leases that we held. In fiscal 2001, the
$65.0 million debt repayment was related to the reimbursement of outstanding long-term
debt of companies acquired during this year, namely Star Data Systems Inc. and IMRglobal
Corp. It was offset by $54.2 million of net proceeds from the issuance of 6.4 million
shares, which had resulted from the exercise of preemptive rights by two majority
shareholders of CGI, pursuant to the IMRglobal Corp. acquisition in July 2001.

Free cash flow

|                              | YEAR ENDEDSEPTEMBER 30,2003 |         | YEAR ENDEDSEPTEMBER 30,2002 |         | YEAR ENDEDSEPTEMBER 30,2001 |        
|----------------------------- | --------------------------- | ------- | --------------------------- | ------- | --------------------------- | -------
|                             
|(in '000 of Canadian dollars) |                             | $       |                             | $       |                             | $      
|Cash provided by continuing  
|operating activities          |                             | 229,459 |                             | 177,447 |                             | 174,002
|Cash used for purchase       
|of fixed assets               |                             | 60,843  |                             | 23,465  |                             | 21,594 
|                             
|Free cash flow(1)             |                             | 168,616 |                             | 153,982 |                             | 152,408
|                             

|(1) | We define free cash flow, which is a non-GAAP measure, as cash provided by continuing operating activities less the purchase of fixed assets.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

Free cash flow, which we define as cash provided by continuing operating activities less the purchase of fixed assets, was $168.6 million in 2003 compared to $154.0 million in 2002 and $152.4 million in 2001. As we have stated in the past, our cash flow may vary from quarter to quarter
depending on large outsourcing contract wins or acquisitions, the timing of tax credits received and the timing of large clients' payables for their outsourcing contracts, among other things. The increase in free cash flow this year compared to last year is mostly due to an increase in
the cash provided by continuing operating activities that was partially offset by the increase in capital expenditures. The purchase of fixed assets is detailed above.

33 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

CAPITAL STRUCTURE

|                                                  | 2003 |           | 2002 |           | 2001 |          
|------------------------------------------------- | ---- | --------- | ---- | --------- | ---- | ---------
|                                                 
|(in '000 of Canadian dollars)                     |      | $         |      | $         |      | $        
|Long-term debt, including    current portion      |      | 267,986   |      | 8,500     |      | 40,280   
|Shareholders' equity                              |      | 1,980,210 |      | 1,779,615 |      | 1,503,114
|Long-term debt to equity ratio                    |      | 0.14:1    |      | 0.00:1    |      | 0.03:1   
|Total market capitalization    as of September 30 |      | 3,139,688 |      | 2,303,235 |      | 3,328,884
|                                                  |     
|Long-term debt to market    capitalization ratio  |      | 8.5%      |      | <1%       |      | 1.2%     
|                                                 

The long-term debt increased this
year following the acquisitions of Cognicase and UAB, to which most of the debt issuance
was related. Also included in the long-term debt are the purchase price balances of
acquisitions accrued by Cognicase prior to January 13, 2003, and for which the unpaid
balance as at September 30, 2003, was $15.0 million. Finally, it includes debt of $18.9
million incurred by Innovapost to pay for certain assets acquired from Canada Post. The
shareholders equity increased mainly due to the issuance of shares during the year
and to the net earnings achieved in the year, which amounted to $177.4 million. The
capital stock increased with the exercise of $7.9 million of options during the year, but
mostly reflects the $139.7 million paid through the issuance of 19.9 million Class A
subordinate shares in January 2003 to pay for the Cognicase acquisition. An additional
113,154 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 $123.8 million, due to the
depreciation by 15.1% of the US dollar versus the Canadian dollar between September 30,
2002 and September 30, 2003. We translate the assets denominated in foreign currencies
using the year-end exchange rates.

The
total value of market capitalization increased by 36.3% as a result of a 5.6% increase in
outstanding shares year-over-year, and a 29.1% increase in the closing share price on
September 30, 2003, versus September 30, 2002.

The
long-term debt to equity and the long-term debt to market capitalization ratios both
increased during the year as a function of the debt that we issued to pay for the
acquisitions of Cognicase and UAB. Most of the acquisitions we made since 2001, including
IMRglobal Corp. and Star Data Systems Inc., were financed mainly through the issuance of
shares. Since then, to increase the earnings per share value for our shareholders, we have
decided to minimize the dilution effect and we use more debt as a leverage tool.

CAPITAL RESOURCES

|                                       | TOTALCOMMITMENT(1) | AVAILABLE ATSEPTEMBER 30,2003 | OUTSTANDING ATSEPTEMBER 30,2003 | AVAILABLE ATSEPTEMBER 30,2003 | OUTSTANDING ATSEPTEMBER 30,20022
|-------------------------------------- | ------------------ | ----------------------------- | ------------------------------- | ----------------------------- | --------------------------------
|                                      
|(in '000 of Canadian dollars)          | $                  | $                             | $                               | $                             | $                               
|Unsecured syndicated credit facilities | 515,000            | 285,500                       | 229,500                         | 222,796                       | 2,204                           
|Lines of credit (Bank of Montreal)     | 25,000             | 25,000                        | 0                               | 23,342                        | 1,658                           
|Other                                  | 2,700              | 2,700                         | 0                               | 2,971                         | 0                               
|                                      

|(1) | Excluding any existing credit facility for non-majority owned entities.
|--- | -----------------------------------------------------------------------
|(1) | Includes Drawn Letters of Credit.                                      

As at September 30, 2003, cash and
cash equivalents were $83.5 million and the total credit facility available amounted to
$313.2 million. Cash equivalents typically include commercial paper and term deposits as
well as bankers acceptances and bearer deposit notes issued by major Canadian banks.

Under
a new credit agreement structured during the year, we have access to a $186 million
revolving credit facility for our operating activity and working capital needs, and a $329
million three-year term revolving credit facility for the financing of acquisitions and
outsourcing contracts. We also have access to a $25 million uncommitted operating facility
for cash management purposes. The $186 million revolving credit facility, at the option of
the lenders, can 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 requires us to maintain
certain financial ratios. As at September 30, 2003, and September 30, 2002, we met these
ratios.

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 structure
if we felt it was beneficial to the Company. We believe that our balance sheet, cash
position and bank lines are sufficient. If these resources need to be augmented due to the
financing requirements related to new large outsourcing contracts or large acquisitions,
significant additional cash requirements would likely be financed by the issuance of debt
and/or equity securities.

34 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

|COMMITMENT TYPES              | TOTAL MINIMAL LEASEPAYMENTS DUE UNTIL 2008
|----------------------------- | ------------------------------------------
|                             
|(in '000 of Canadian dollars) | $                                         
|Operating leases             
|Rental of office space        | 428,653                                   
|Computer equipment            | 151,705                                   
|Long-term service agreements  | 54,131                                    
|Included in long-term debt   
|Long-term debt repayments     | 257,879                                   
|Capital lease payments        | 12,252                                    
|                             

We are committed under the term of
operating leases with various expiration dates, primarily for rental of premises, computer
equipment used in outsourcing contracts and long-term service agreements in the aggregate
amount of $1,202.6 million. Of this, rental of office space represents $996.0 million,
computer equipment represents $152.5 million and long-term service agreements represent
$54.1 million. Total operating leases have increased by $312.5 million compared to those
at the end of the last fiscal year, primarily reflecting an increase in the commitments
related to the rental of premises of $253.5 million. These increases are in line with the
growth of our business, primarily reflecting commitments acquired with Cognicase and UAB
during the year. For one building lease we assumed from Cognicase, there is a commitment
representing $58.8 million, which is now included in our commitments. Also, our 20-year
lease commitment at E-Commerce Place in Montreal has grown by $60.5 million, as a result
of an increase in the space that we occupy. Finally, as part of the reorganization of our
offices in the Greater Toronto area, a new lease has been signed during the last fiscal
year and the commitment represents $68.0 million.

Computer
equipment leases are related to hardware leased from manufacturers or financial
institutions in the course of business activities. As part of the outsourcing agreements
in particular, clients agree to take back the computer equipment in the case of early
contract termination.

The
long-term debt principal repayments are described in Note 8 to the Consolidated Financial
Statements.

The
capital lease payments are mainly comprised of contracts for the lease of computer
equipment, with terms from one to five years, along with the capital lease contracts that
were acquired with Cognicase and UAB. We do not normally enter into capital lease
contracts for computer equipment.

We
do 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. 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 2004, 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.

RISKS AND UNCERTAINTIES
While we are confident about our
long-term prospects, the following risks and uncertainties would affect our ability to
achieve our strategic vision and objectives for growth and should be considered when
evaluating our potential as an investment:

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 certified processes and in corporate manuals. These 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 six economic
sectors we target, and this helps enhance our competitive position. CGI is the dominant
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.

Difficulties
in executing our acquisition strategyA significant part of our growth strategy is
dependent on our ability to continue acquiring 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.

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.

35 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

Foreign
currency riskThe increased international business volume could expose CGI to greater
foreign currency exchange risks, which could adversely impact our operating results. We
have a hedging strategy in place to protect ourselves, to the extent possible, against
foreign currency exposure. Other than the use of financial products to deliver on our
hedging strategy, we do not trade derivative financial instruments.

Business
mix variationsThe revenue that we generate from shorter-term systems integration and
consulting 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
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 performance-driven remuneration. In addition,
we have implemented a comprehensive program aimed at attracting and retaining qualified
and dedicated professionals and today, we believe that we are considered to be 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 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 more than 50 companies since our inception. Our
disciplined approach to management, largely based on our ISO 9001 certified management
frameworks, has been an important factor in the successful integration of human resources
of acquired companies and the IT operations of outsourcing clients. As at September 30,
2003, the vast majority of our operations had received ISO 9001 certification.

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 six 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.

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.

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

36 _ CGI GROUP INC. 2003


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Managements Discussion and Analysis of Financial Position and Results of OperationsFISCAL YEAR ENDED SEPTEMBER 30, 2003

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If measures announced in the June 12, 2003 Quebec provincial budget
are applied, an acquisition of control of CGI could translate into a loss of provincial
tax credits related to E-Commerce Place and the Cité Multimédia in
Montréal, the Carrefour de la nouvelle économie in Saguenay and the
Carrefour national des nouvelles technologies de Québec.

OUTLOOK
Our 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
BPO 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 Canada. 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 information known today about current market conditions and demand, we anticipate
revenue and earnings per share to grow between 8% and 17% for fiscal 2004. This guidance
is based on what is known today about current market conditions and the fluctuation of
currency exchange rates. It excludes the impact of other acquisitions or large outsourcing
contracts contributing more than $100 million per year in revenue.

FORWARD-LOOKING STATEMENTS
All 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 forward-looking 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.

37 _ CGI GROUP INC. 2003


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# 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 16, 2004 | 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 s.e.n.c.r.l.
|---- |  | ---------------------------------------------------------

|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.
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------