MANAGEMENT’S

DISCUSSION AND ANALYSIS

FISCAL YEAR 2018

November 7, 2018

Basis of Presentation

This Management’s Discussion and Analysis of the Financial Position and Results of Operations (MD&A) is the responsibility of management and has been reviewed and approved by the Board of Directors. This MD&A has been prepared in accordance with the requirements of the Canadian Securities Administrators. The Board of Directors is ultimately responsible for reviewing and approving the MD&A. The Board of Directors carries out this responsibility mainly through its Audit and Risk Management Committee, which is appointed by the Board of Directors and is comprised entirely of independent and financially literate directors.

Throughout this document, CGI Group Inc. is referred to as “CGI”, “we”, “our” or “Company”. This MD&A provides information management believes is relevant to an assessment and understanding of the consolidated results of operations and financial condition of the Company. This document should be read in conjunction with the audited consolidated financial statements and the notes thereto for the years ended September 30, 2018 and 2017. CGI’s accounting policies are in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). All dollar amounts are in Canadian dollars unless otherwise noted.

Materiality of Disclosures

This MD&A includes information we believe is material to investors. We consider something to be material if it results in, or would reasonably be expected to result in, a significant change in the market price or value of our shares, or if it is likely that a reasonable investor would consider the information to be important in making an investment decision.

Forward-Looking Statements

This MD&A contains “forward-looking information” within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable United States safe harbours. All such forward-looking information and statements are made and disclosed in reliance upon the safe harbour provisions of applicable Canadian and United States securities laws. Forward-looking information and statements include all information and statements regarding CGI’s intentions, plans, expectations, beliefs, objectives, future performance, and strategy, as well as any other information or statements that relate to future events or circumstances and which do not directly and exclusively relate to historical facts. Forward-looking information and statements often but not always use words such as “believe”, “estimate”, “expect”, “intend”, “anticipate”, “foresee”, “plan”, “predict”, “project”, “aim”, “seek”, “strive”, “potential”, “continue”, “target”, “may”, “might”, “could”, “should”, and similar expressions and variations thereof. These information and statements are based on our perception of historic trends, current conditions and expected future developments, as well as other assumptions, both general and specific, that we believe are appropriate in the circumstances. Such information and statements are, however, by their very nature, subject to inherent risks and uncertainties, of which many are beyond the control of the Company, and which give rise to the possibility that actual results could differ materially from our expectations expressed in, or implied by, such forward-looking information or forward-looking statements. These risks and uncertainties include but are not restricted to: risks related to the market such as the level of business activity of our clients, which is affected by economic conditions, and our ability to negotiate new contracts; risks related to our industry such as competition and our ability to attract and retain qualified employees, to develop and expand our services, to penetrate new markets, and to protect our intellectual property rights; risks related to our business such as risks associated with our growth strategy, including the integration of new operations, financial and operational risks inherent in worldwide operations, foreign exchange risks, income tax laws, our ability to negotiate favorable contractual terms, to deliver our services and to collect receivables, and the reputational and financial risks attendant to cybersecurity breaches and other incidents; as well as other risks identified or incorporated by reference in this MD&A and in other documents that we make public, including our filings with the Canadian Securities Administrators (on SEDAR at www.sedar.com) and the U.S. Securities and Exchange Commission

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(on EDGAR at www.sec.gov). Unless otherwise stated, the forward-looking information and statements contained in this MD&A are made as of the date hereof and CGI disclaims any intention or obligation to publicly update or revise any forward-looking information or forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law. While we believe that our assumptions on which these forward-looking information and forward-looking statements are based were reasonable as at the date of this MD&A, readers are cautioned not to place undue reliance on these forward-looking information or statements. Furthermore, readers are reminded that forward-looking information and statements are presented for the sole purpose of assisting investors and others in understanding our objectives, strategic priorities and business outlook as well as our anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes. Further information on the risks that could cause our actual results to differ significantly from our current expectations may be found in section 8 - Risk Environment, which is incorporated by reference in this cautionary statement. We also caution readers that the risks described in the previously mentioned section and in other sections of this MD&A are not the only ones that could affect us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial could also have a material adverse effect on our financial position, financial performance, cash flows, business or reputation.

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Non-GAAP and Key Performance Measures

The reader should note that the Company reports its financial results in accordance with IFRS. However, we use a combination of financial measures, ratios, and non-GAAP measures to assess the Company’s performance. The non-GAAP measures used in this MD&A do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures should be considered as supplemental in nature and not as a substitute for the related financial information prepared in accordance with IFRS.

The table below summarizes our non-GAAP measures and most relevant key performance measures:

Profitability	•	Adjusted EBIT (non-GAAP) – is a measure of earnings excluding acquisition-related and integration costs, restructuring costs, net finance costs and income tax expense. Management believes this measure is useful to investors as it best reflects the performance of its activities and allows for better comparability from period to period as well as to trend analysis. A reconciliation of the adjusted EBIT to its closest IFRS measure can be found in section 3.7 of the present document.
	•	Net earnings – is a measure of earnings generated for shareholders.
	•	Diluted earnings per share (diluted EPS) – is a measure of earnings generated for shareholders on a per share basis, assuming all dilutive elements are exercised.
	•	Net earnings excluding specific items (non-GAAP) – is a measure of net earnings excluding acquisition-related and integration costs, restructuring costs and tax adjustments. Management believes this measure is useful to investors as it best reflects the Company's performance and allows for better comparability from period to period. A reconciliation of the net earnings excluding specific items to its closest IFRS measure can be found in section 3.8.3. of the present document.
	•	Basic and diluted earnings per share excluding specific items (non-GAAP) – is defined as the net earnings excluding specific items (non-GAAP) on a per share basis. Management believes that this measure is useful to investors as it best reflects the Company's performance on a per share basis and allows for better comparability from period to period. The basic and diluted earnings per share reported in accordance with IFRS can be found in section 3.8 of the present document while the basic and diluted earnings per share excluding specific items can be found in section 3.8.3 of the present document.
Liquidity	•	Cash provided by operating activities – is a measure of cash generated from managing our day-to-day business operations. Management believes strong operating cash flow is indicative of financial flexibility, allowing us to execute the Company's strategy.
	•	Days sales outstanding (DSO) (non-GAAP) – is the average number of days needed to convert our trade receivables and work in progress into cash. DSO is obtained by subtracting deferred revenue from trade accounts receivable and work in progress; the result is divided by the quarter’s revenue over 90 days. Deferred revenue is net of the fair value adjustments on revenue-generating contracts established upon a business combination. Management tracks this metric closely to ensure timely collection and healthy liquidity, and is committed to a DSO target of 45 days or less. Management believes this measure is useful to investors as it demonstrates the Company's ability to timely convert its trade receivables and work in progress into cash.

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Growth	•	Constant currency growth (non-GAAP) – is a measure of revenue growth before foreign currency impacts. This growth is calculated by translating current period results in local currency using the conversion rates in the equivalent period from the prior year. Management believes that it is helpful to adjust revenue to exclude the impact of currency fluctuations to facilitate period-to-period comparisons of business performance and that this measure is useful to investors for the same reason.
	•	Backlog (non-GAAP) – includes new contract wins, extensions and renewals (bookings (non-GAAP)), adjusted for the backlog consumed during the period as a result of client work performed and adjustments related to the volume, cancellation and the impact of foreign currencies to our existing contracts. Backlog incorporates estimates from management that are subject to change. Management tracks this measure as it is a key indicator of management's best estimate of contracted revenue to be realized in the future and believes that this measure is useful to investors for the same reason.
	•	Book-to-bill ratio (non-GAAP) – is a measure of the proportion of the value of our bookings (non-GAAP) to our revenue in the period. This metric allows management to monitor the Company’s business development efforts to ensure we grow our backlog (non-GAAP) and our business over time and management believes that this measure is useful to investors for the same reason. Management remains committed to maintaining a target ratio greater than 100% over a trailing twelve-month period. Management believes that monitoring the Company's bookings over a longer period is a more representative measure as the services and contract type, size and timing of bookings could cause this measurement to fluctuate significantly if taken for only a three-month period.
Capital Structure	•	Net debt (non-GAAP) – is obtained by subtracting from our debt our cash and cash equivalents, short-term investments, long-term investments and fair value of foreign currency derivative financial instruments related to debt. Management uses the net debt metric to monitor the Company's financial leverage and believes that this metric is useful to investors as it provides insight into its financial strength. A reconciliation of net debt to its closest IFRS measure can be found in section 4.5 of the present document.
	•	Net debt to capitalization ratio (non-GAAP) – is a measure of our level of financial leverage and is obtained by dividing the net debt (non-GAAP) by the sum of shareholder's equity and debt. Management uses the net debt to capitalization ratio to monitor the proportion of debt versus capital used to finance the Company's operations and to assess its financial strength. Management believes that this metric is useful to investors for the same reasons.
	•	Return on equity (ROE) (non-GAAP) – is a measure of the rate of return on the ownership interest of our shareholders and is calculated as the proportion of net earnings for the last 12 months over the last four quarters' average equity. Management looks at ROE to measure its efficiency at generating net earnings for the Company’s shareholders and how well the Company uses the invested funds to generate net earnings growth and believes that this measure is useful to investors for the same reasons.
	•	Return on invested capital (ROIC) (non-GAAP) – is a measure of the Company’s efficiency at allocating the capital under its control to profitable investments and is calculated as the proportion of the net earnings excluding net finance costs after-tax for the last 12 months, over the last four quarters' average invested capital, which is defined as the sum of equity and net debt. Management examines this ratio to assess how well it is using its funds to generate returns and believes that this measure is useful to investors for the same reason.

Reporting Segments

During the first quarter of Fiscal 2018, we conducted an internal reorganization of our leadership. As a result, the Company is now managed through nine operating segments, namely: Northern Europe (including Nordics, Baltics and Poland); Canada; France (including Luxembourg and Morocco), United States of America (U.S.) Commercial and State Government; U.S. Federal; United Kingdom (U.K.); Eastern, Central and Southern Europe (primarily Netherlands and Germany) (ECS); Asia Pacific Global Delivery Centers of Excellence (India and Philippines); and Australia. The last two operating segments, which

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each have reported revenue, earnings and assets that are less than 10% of the Company's total revenue, earnings and assets, are grouped together as Asia Pacific. This MD&A also includes the transfer of our Poland operations from ECS to Northern Europe. The Company has retrospectively revised the segmented information for the comparative periods to conform to the segment information structure in effect as of Q1 2018. Please refer to sections 3.4, 3.6, 5.3 and 5.4 of the present document and to note 28 of our audited consolidated financial statements for additional information on our segments.

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MD&A Objectives and Contents

In this document, we:

• Provide a narrative explanation of the audited consolidated financial statements through the eyes of management;

• Provide the context within which the audited consolidated financial statements should be analyzed, by giving enhanced disclosure about the dynamics and trends of the Company’s business; and

• Provide information to assist the reader in ascertaining the likelihood that past performance may be indicative of future performance.

In order to achieve these objectives, this MD&A is presented in the following main sections:

Section	Contents	Pages
1.      Corporate Overview	A description of our business and how we generate revenue as well as the markets in which we operate.
	1.1.     About CGI	8
	1.2.     Vision and Strategy	9
	1.3.     Competitive Environment	10
2.      Highlights and Key Performance Measures	A summary of key highlights during the year, the past three years' key performance measures, and CGI’s stock performance.
	2.1.     Fiscal 2018 Highlights	11
	2.2.     Selected Yearly Information & Key Performance Measures	12
	2.3.     Stock Performance	13
	2.4. Investments in Subsidiaries	14
3.      Financial Review	A discussion of year-over-year changes to financial results between the years ended September 30, 2018 and 2017, describing the factors affecting revenue and adjusted EBIT on a consolidated and segment basis, and also by describing the factors affecting changes in the major expense categories. Also discussed are bookings broken down by contract type, service type, segment, and by vertical market.
	3.1.     Bookings and Book-to-Bill Ratio	16
	3.2.     Foreign Exchange	17
	3.3.     Revenue Distribution	18
	3.4.     Revenue by Segment	19
	3.5.     Operating Expenses	21
	3.6.     Adjusted EBIT by Segment	22
	3.7.     Earnings Before Income Taxes	24
	3.8.     Net Earnings and Earnings Per Share	25

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Section	Contents	Pages
4.      Liquidity	A discussion of changes in cash flows from operating, investing and financing activities. This section also describes the Company’s available capital resources, financial instruments, and off-balance sheet financing and guarantees. Measures of capital structure (net debt to capitalization ratio, ROE, and ROIC) and liquidity (DSO) are analyzed on a year-over-year basis.
	4.1.     Consolidated Statements of Cash Flows	27
	4.2.     Capital Resources	30
	4.3.     Contractual Obligations	31
	4.4.     Financial Instruments and Hedging Transactions	31
	4.5.     Selected Measures of Capital Resources and Liquidity	32
	4.6.     Off-Balance Sheet Financing and Guarantees	32
	4.7.     Capability to Deliver Results	33
5.      Fourth Quarter Results	A discussion of year-over-year changes to the unaudited operating results between the three months ended September 30, 2018 and 2017, describing the factors affecting revenue, adjusted EBIT on a consolidated and reportable segment basis as well as cash from operating, investing and financing activities.
	5.1. Bookings and Book-to-Bill Ratio	34
	5.2. Foreign Exchange	35
	5.3.     Revenue Distribution	36
	5.4. Revenue by Segment	37
	5.5. Adjusted EBIT by Segment	39
	5.6. Net Earnings and Earnings Per Share	41
	5.7.     Consolidated Statements of Cash Flows	43
6.      Eight Quarter Summary	A summary of the past eight quarters’ key performance measures and a discussion of the factors that could impact our quarterly results.	45
7.    Changes in Accounting Policies	A summary of the accounting standard changes.	47
8.      Critical Accounting Estimates	A discussion of the critical accounting estimates made in the preparation of the audited consolidated financial statements.	49
9.      Integrity of Disclosure	A discussion of the existence of appropriate information systems, procedures and controls to ensure that information used internally and disclosed externally is complete and reliable.	52
10.    Risk Environment	A discussion of the risks affecting our business activities and what may be the impact if these risks are realized.
	10.1.    Risks and Uncertainties	53
	10.2.    Legal Proceedings	61

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1. Corporate Overview

1.1. ABOUT CGI

Founded in 1976 and headquartered in Montréal, Canada, CGI is among the largest information technology (IT) and business consulting services firms in the world. CGI delivers an end-to-end portfolio of capabilities, including high-end IT and business consulting, systems integration, and outsourcing. CGI’s Intellectual Property (IP) solutions, combined with in-depth industry expertise, a unique client proximity model and best-fit global delivery network enable CGI to partner with clients around the world to accelerate results, transform their organizations, and drive competitive advantage. The Company employs approximately 74,000 professionals worldwide.

End-to-end services and solutions

CGI delivers end-to-end services that cover the full spectrum of technology delivery; from digital strategy and architecture to solution design, development, integration, implementation, and operations. Our portfolio encompasses:

• High-end IT and business consulting and systems integration: CGI helps clients define their digital strategy and roadmap, adopting an agile, iterative approach that enables them to innovate, connect and optimize mission-critical systems to deliver enterprise-wide change.

• Outsourcing: Our clients entrust us with full or partial responsibility for their IT and business functions to improve how they operate and transform their business. In return, we deliver innovation, significant efficiency gains, and cost savings. Typical services in an end-to-end engagement include: application development, integration and maintenance; technology infrastructure management; and business process services, such as in collections and payroll management. Outsourcing contracts are long-term in nature, with a typical duration of five to ten or more years, allowing our clients to reinvest savings, further driving investments in their digital transformations.

Intellectual property (IP)

Our IP portfolio includes more than 175 business solutions that have been co-innovated with clients and act as digital business accelerators for the industries we serve, as well as cross-industry solutions. These include business solutions encompassing commercial software embedded with our end-to-end-services, and digital enablers such as methodologies and frameworks to drive change across business and IT processes.

Deep industry expertise

CGI has long standing and focused practices in all of its core industries, providing clients with a partner that is not only an expert in IT, but also expert in their industries. This combination of business knowledge and digital technology expertise allows us to help our clients adapt with shifts in consumer and citizen expectations and market dynamics and, in the process, to evolve the services and solutions we deliver within those industries.

Our targeted industries include: government, financial services, health & life sciences, communications, utilities, oil & gas, manufacturing, retail & consumer services, and transportation, post & logistics. While these represent our go-to-market industry targets, we group these industries into the following for reporting purposes: government; financial services; health; communications & utilities; and manufacturing, retail & distribution (MRD).

As the move toward digitalization continues across industries, CGI partners with clients to help guide them in becoming customer-centric digital organizations.

Applied innovation

CGI is a trusted partner with more than 40 years of experience in delivering innovative, client-inspired business services and solutions. In summary, at CGI we help develop, innovate and protect the technology that enables clients to achieve their digital transformation goals faster, with reduced risk and enduring results. Through our day-to-day project engagements as well as global programs and investments, CGI partners with clients to deliver practical innovations that are replicable, scalable, and

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deliver measurable results. At CGI, innovation happens across many, interconnected fronts. It starts in our everyday work on client projects, where thousands of innovations are applied daily. Through benchmark in-person interviews we conduct each year, business and technology executives share their priorities with us, informing our own innovation investments and driving our client proximity teams focus on local client priorities. We also turn ideas into new business solutions through our Innovate, Collaborate and Evolve (ICE) program which incubates proximity team innovations into scalable, replicable solutions for global application.

Quality processes

CGI's clients expect consistency of service wherever and whenever they engage us. We have an outstanding track record of on-time, within-budget delivery as a result of our commitment to excellence and our robust governance model - the CGI Management Foundation. The CGI Management Foundation provides a common business language, frameworks and practices for managing all operations consistently across the globe, driving a focus on continuous improvement. We also invest in rigorous quality and service delivery standards (including ISO and Capability Maturity Model Integration (CMMI) certification programs), as well as a comprehensive Client Satisfaction Assessment Program, with signed client assessments, to ensure high satisfaction on an ongoing basis.

1.2. VISION AND STRATEGY

CGI is unique compared to most companies. We not only have a vision, but also a dream: “To create an environment in which we enjoy working together and, as owners, contribute to building a company we can be proud of.” This dream has motivated us since our founding in 1976 and drives our vision: “To be a global, world-class end-to-end IT and business consulting services leader helping our clients succeed.”

In pursuing this dream and vision, CGI has been highly disciplined throughout its history in executing a Build and Buy profitable growth strategy comprised of four pillars that combine profitable organic growth (Build) and accretive acquisitions (Buy):

Pillar 1: Win, renew and extend contracts

Pillar 2: New large outsourcing contracts

Pillar 3: Metro market acquisitions

Pillar 4: Large, transformational acquisitions

The first two pillars relate to driving profitable organic growth through the pursuit of contracts with new and existing clients in our targeted industries.

The last two pillars focus on growth through metro market acquisitions. We identify metro market acquisitions through a strategic qualification process that systematically searches for targets to strengthen our local proximity model leveraging strong relationships with customers, applying our industry expertise and enhancing our services and solutions. We also pursue large acquisitions to further expand our geographic presence and critical mass, which enables us to compete for large outsourcing contracts and broaden our client relationships. CGI will continue to be a consolidator in the IT services industry.

Executing our strategy

CGI’s strategy is executed through a unique business model that combines client proximity with an extensive global delivery network to deliver the following benefits:

• Local relationships and accountability: We live and work near our clients to provide a high level of responsiveness, partnership, and innovation. Our local CGI members speak our clients' language, understand their business environment, and collaborate to meet their goals and advance their business.

• Global reach: Our local presence is complemented by an expansive global delivery network that ensures our clients have 24/7 access to best-fit digital capabilities and resources to meet their end-to-end needs. In addition, clients benefit from our unique combination of industry domain and technology expertise within our global delivery model.

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• Committed experts: One of our key strategic goals is to be our clients’ expert of choice. To achieve this, we invest in developing and recruiting professionals with extensive industry, business and in-demand technology expertise. In addition, CGI professionals, who we also refer to as members, are also shareholders, providing an added level of commitment to the success of our clients.

• Comprehensive quality processes: CGI’s investment in quality frameworks and rigorous client satisfaction assessments has resulted in a consistent track record of on-time and within-budget project delivery.

1.3. COMPETITIVE ENVIRONMENT

In today’s digital era, there is a competitive urgency for organizations across industries to become digital in a sustainable way. The pressure is on to modernize legacy assets and connect them to digital business and operating models. Central to this massive transformation is the evolving role of technology. Traditionally viewed as an enabler, technology is now recognized as a driver of business transformation. The promise of digital creates an enormous opportunity to transform organizations end-to-end, and CGI is well-positioned to serve as a digital partner and expert of choice. We’re working with clients across the globe to implement digital strategies, roadmaps and solutions that revolutionize the customer/citizen experience, drive the launch of new products and services, and deliver efficiencies and cost savings.

As the demand for digitalization increases, competition within the global IT industry is intensifying. CGI’s competition comprises a variety of players; from niche companies providing specialized services and software, to global, end-to-end IT service providers, to large consulting firms. All of these players are competing to deliver some or all of the services we provide. Many factors distinguish the industry leaders, including the following:

• Depth and breadth of industry and technology expertise;

• Consistent, on-time, within-budget delivery everywhere the client operates;

• Total cost of services and value delivered;

• Breadth of digital IP solutions;

• Ability to deliver practical innovation for measurable results;

• Global, nearshore and onshore delivery network options; and

• Local presence and strength of client relationships.

CGI compares very favourably with the competition with respect to all of these factors. We’re not only delivering all of the capabilities clients need to compete in a digital world, but the immediate results and long-term value they expect. As the market dynamics and industry trends continue to increase demand for enterprise solutions from global, end-to-end IT and business consulting services firms, CGI is one of few firms with the scale, reach, and capabilities to meet clients’ enterprise needs.

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2. Highlights and Key Performance Measures

2.1. FISCAL 2018 HIGHLIGHTS

• Revenue of $11.5 billion, up 6.1%, or 4.6% in constant currency;

• Adjusted EBIT of $1,701.7 million, up 7.3%;

• Adjusted EBIT margin of 14.8%, up 20 bps;

• Net earnings of $1,141.4 million, up 10.3%;

• Diluted EPS of $3.95, up 15.8%;

• Net earnings, excluding specific items¹, of $1,210.7 million, up 9.4%;

• Diluted EPS, excluding specific items¹, of $4.19, up 14.8%;

• Cash provided by operating activities of $1,493.4 million, up 9.9%;

• Bookings of $13.5 billion, or 117.3% of revenue; and,

• Backlog of $22.6 billion, up $1.8 billion.

¹   Specific items are comprised of acquisition-related and integration costs and restructuring costs, both net of tax, and the net favourable tax adjustment, which are discussed in sections 3.7.1.,3.7.2. and 3.8.1 of the present document.

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2.2. SELECTED YEARLY INFORMATION & KEY PERFORMANCE MEASURES

As at and for the years ended September 30,	2018	2017	2016	Change 2018 / 2017	Change 2017 / 2016
In millions of CAD unless otherwise noted
Growth
Revenue	11,506.8	10,845.1	10,683.3	661.7	161.8
Year-over-year revenue growth	6.1%	1.5%	3.9%	4.6%	(2.4%)
Constant currency year-over-year revenue growth	4.6%	4.3%	0.2%	0.3%	4.1%
Backlog	22,577	20,813	20,893	1,764	(80)
Bookings	13,493	11,284	11,731	2,209	(447)
Book-to-bill ratio	117.3%	104.1%	109.8%	13.2%	(5.7%)
Profitability
Adjusted EBIT	1,701.7	1,586.6	1,560.3	115.1	26.3
Adjusted EBIT margin	14.8%	14.6%	14.6%	0.2%	—%
Net earnings	1,141.4	1,035.2	1,068.7	106.2	(33.5)
Net earnings margin	9.9%	9.5%	10.0%	0.4%	(0.5)%
Diluted EPS (in dollars)	3.95	3.41	3.42	0.54	(0.01)
Net earnings excluding specific items	1,210.7	1,107.0	1,081.5	103.7	25.5
Net earnings margin excluding specific items	10.5%	10.2%	10.1%	0.3%	0.1%
Diluted EPS excluding specific items (in dollars)	4.19	3.65	3.46	0.54	0.19
Liquidity
Cash provided by operating activities	1,493.4	1,358.6	1,333.1	134.8	25.5
As a % of revenue	13.0%	12.5%	12.5%	0.5%	—%
Days sales outstanding	52	47	44	5	3
Capital structure
Net debt	1,640.8	1,749.4	1,333.3	(108.6)	416.1
Net debt to capitalization ratio	19.2%	21.5%	15.8%	(2.3)%	5.7%
Return on equity	17.3%	16.1%	17.2%	1.2%	(1.1)%
Return on invested capital	14.5%	13.7%	14.2%	0.8%	(0.5)%
Balance sheet
Cash and cash equivalents, and short-term investments	184.1	165.9	596.5	18.2	(430.6)
Total assets	11,919.1	11,396.2	11,693.3	522.9	(297.1)
Long-term financial liabilities1	1,530.1	1,821.9	1,765.4	(291.8)	56.5

¹ Long-term financial liabilities include the long-term portion of the debt and the long-term derivative financial instruments.

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2.3. STOCK PERFORMANCE

2.3.1. Fiscal 2018 Trading Summary

CGI’s shares are listed on the Toronto Stock Exchange (TSX) (stock quote – GIB.A) and the New York Stock Exchange (NYSE) (stock quote – GIB) and are included in key indices such as the S&P/TSX 60 Index.

TSX	(CAD)	NYSE	(USD)
Open:	63.82	Open:	51.49
High:	87.22	High:	66.53
Low:	63.71	Low:	51.03
Close:	83.28	Close:	64.48
CDN average daily trading volumes1:	795,691	NYSE average daily trading volumes:	186,587

¹     Includes the average daily volumes of both the TSX and alternative trading systems.

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2.3.2. Normal Course Issuer Bid (NCIB)

On January 31, 2018, the Company’s Board of Directors authorized and subsequently received the approval from the TSX for the renewal of CGI's NCIB which allows for the purchase for cancellation of up to 20,595,539 Class A subordinate voting shares (Class A Shares), representing 10% of the Company’s public float as of the close of business on January 24, 2018. Class A Shares may be purchased for cancellation under the current NCIB commencing on February 6, 2018 until no later than February 5, 2019, or on such earlier date when the Company has either acquired the maximum number of Class A Shares allowable under the NCIB or elects to terminate the bid.

During Fiscal 2018, the Company purchased for cancellation 10,375,879 Class A Shares for approximately $797.9 million, excluding fees, at a weighted average price of $76.90. The purchased shares included 3,634,729 Class A Shares purchased for cancellation from Caisse de dépôt et de placement du Québec (CDPQ) for cash consideration of $272.8 million and 3,230,450 Class A Shares purchased for cancellation from Serge Godin, Founder and Executive Chairman of the Board, for cash consideration of $231.4 million. The purchase from Serge Godin was recommended by an independent committee of the Board of Directors of the Company following the receipt of an external opinion regarding the reasonableness of the terms of the transaction. Both purchases are considered within the annual aggregate limit that the Company is entitled to purchase under its current NCIB.

As at September 30, 2018, of the 10,375,879 Class A Shares purchased for cancellation, 50,000 Class A Shares remain unpaid for approximately $4.2 million.

As at September 30, 2018, the Company could still purchase up to 10,219,660 Class A Shares for cancellation, under the current NCIB.

2.3.3. Capital Stock and Options Outstanding

The following table provides a summary of the Capital Stock and Options Outstanding as at November 2, 2018:

Capital Stock and Options Outstanding	As at November 2, 2018
Class A subordinate voting shares	249,386,524
Class B multiple voting shares	28,945,706
Options to purchase Class A subordinate voting shares	12,644,984

2.4. INVESTMENTS IN SUBSIDIARIES

The Company made the following acquisitions during year ended September 30, 2018:

The Company acquired 96.7% of the outstanding shares of Affecto Plc (Affecto) in October 2017 and the remaining outstanding shares during the three months ended March 31, 2018 for a purchase price of $145.0 million (€98.5 million). Affecto was a leading provider of business intelligence and enterprise information management solutions and services, headquartered in Helsinki, Finland. This acquisition adds more than 1,000 professionals and annualized revenues of approximately €110 million to the Company.

On December 7, 2017, the Company acquired all of the outstanding shares of Paragon Solutions, Inc. (Paragon), for a purchase price of $79.5 million (US$61.9 million). Paragon was a high-end commercial business consultancy with depth in health and life sciences and IT expertise in digital transformation and systems integration, headquartered in Cranford, New Jersey. This acquisition adds more than 300 professionals and annualized revenues of approximately US$54 million to the Company.

On May 16, 2018, the Company acquired all of the outstanding shares of Facilité Informatique Canada Inc. (Facilité Informatique) for a purchase price of $42.0 million. Facilité Informatique was an IT consulting services firm in high-demand digital services across a wide range of industries with a strong local presence in Montréal and Québec City, headquartered in Montréal, Québec. This acquisition adds more than 350 professionals and annualized revenues of approximately $60 million to the Company.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 14

These acquisitions were made to complement the Company's proximity model and further strengthen its global capabilities across several in-demand digital transformation areas. Please refer to note 26 of our audited consolidated financial statements for additional information on our investments in subsidiaries.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 15

3. Financial Review

3.1. BOOKINGS AND BOOK-TO-BILL RATIO

Bookings for the year were $13.5 billion representing a book-to-bill ratio of 117.3%. The breakdown of the new bookings signed during the year is as follows:

	Contract Type				Service Type				Segment				Vertical Market
A.	Extensions and renewals	55	%	A.	System integration and consulting	51	%	A.	U.S. Federal	19	%	A.	Government	42	%
B.	New business	45	%	B.	Management of IT and	49	%	B.	Northern Europe	18	%	B.	MRD	22	%
					business functions			C.	U.S. Commercial and State Government	15	%	C.	Financial Services	19	%
								D.	France	13	%	D.	Communication	13	%
								E.	U.K.	12	%		& utilities
								F.	Canada	12	%	E.	Health	4	%
								G.	ECS	10	%
								H.	Asia Pacific	1	%

Information regarding our bookings is a key indicator of the volume of our business over time. However, due to the timing and transition period associated with outsourcing contracts, the realization of revenue related to these bookings may fluctuate from period to period. The values initially booked may change over time due to their variable attributes, including demand-driven usage, modifications in the scope of work to be performed caused by changes in client requirements as well as termination clauses at the option of the client. As such, information regarding our bookings is not comparable to, nor should it be substituted for, an analysis of our revenue. Management however believes that it is a key indicator of potential future revenue.

The following table provides a summary of the bookings and book-to-bill ratio by segment:

In thousands of CAD except for percentages	Bookings for the year ended September 30, 2018	Book-to-bill ratio for the year ended September 30, 2018
Total CGI	13,492,959	117.3	%
Northern Europe	2,331,847	123.3	%
Canada	1,647,927	90.6	%
France	1,775,929	101.0	%
U.S. Commercial and State Government	2,055,587	117.9	%
U.S. Federal	2,574,633	173.9	%
U.K.	1,663,132	117.3	%
ECS	1,372,820	108.2	%
Asia Pacific	71,084	55.6	%

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 16

3.2. FOREIGN EXCHANGE

The Company operates globally and is exposed to changes in foreign currency rates. Accordingly, as prescribed by IFRS, we value assets, liabilities and transactions that are measured in foreign currencies using various exchange rates. We report all dollar amounts in Canadian dollars.

Closing foreign exchange rates

As at September 30,	2018	2017	Change
U.S. dollar	1.2925	1.2509	3.3	%
Euro	1.5024	1.4782	1.6	%
Indian rupee	0.0178	0.0192	(7.3	%)
British pound	1.6874	1.6770	0.6	%
Swedish krona	0.1456	0.1534	(5.1	%)
Australian dollar	0.9356	0.9809	(4.6	%)

Average foreign exchange rates

For the year ended September 30,	2018	2017	Change
U.S. dollar	1.2838	1.3140	(2.3	%)
Euro	1.5278	1.4511	5.3	%
Indian rupee	0.0193	0.0200	(3.5	%)
British pound	1.7271	1.6650	3.7	%
Swedish krona	0.1510	0.1507	0.2	%
Australian dollar	0.9762	1.0013	(2.5	%)

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 17

3.3. REVENUE DISTRIBUTION

The following charts provide additional information regarding our revenue mix for the year:

Service Type				Client Geography					Vertical Market
A.	System integration and consulting	52	%	A.	U.S.	28	%		A.	Government	32	%
B.	Management of IT and business functions	48	%	B.	Canada	16	%		B.	MRD	24	%
				C.	France	15	%		C.	Financial services	22	%
				D.	U.K.	12	%		D.	Communications & utilities	15	%
				E.	Sweden	7	%		E.	Health	7	%
				F.	Finland	7	%
				G.	Rest of the world	15	%

3.3.1. Client Concentration

IFRS guidance on segment disclosures defines a single customer as a group of entities that are known to the reporting entity to be under common control. As a consequence, our work for the U.S. federal government including its various agencies represented 12.0% of our revenue for Fiscal 2018 as compared to 14.0% for Fiscal 2017.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 18

3.4. REVENUE BY SEGMENT

Our segments are reported based on where the client's work is delivered from - our geographic delivery model.

The following table provides a summary of the year-over-year changes in our revenue, in total and by segment, separately showing the impacts of foreign currency exchange rate variations between Fiscal 2018 and Fiscal 2017. The Fiscal 2017 revenue by segment was recorded reflecting the actual foreign exchange rates for that period. The foreign exchange impact is the difference between the current period’s actual results and the same period’s results converted with the prior year’s foreign exchange rates.

For the years ended September 30,	Change
	2018		2017	$		%
In thousands of CAD except for percentages
Total CGI revenue	11,506,825		10,845,066	661,759		6.1	%
Variation prior to foreign currency impact	4.6	%
Foreign currency impact	1.5	%
Variation over previous period	6.1	%
Northern Europe
Revenue prior to foreign currency impact	1,748,293		1,607,942	140,351		8.7	%
Foreign currency impact	52,167
Northern Europe revenue	1,800,460		1,607,942	192,518		12.0	%
Canada
Revenue prior to foreign currency impact	1,686,706		1,605,500	81,206		5.1	%
Foreign currency impact	329
Canada revenue	1,687,035		1,605,500	81,535		5.1	%
France
Revenue prior to foreign currency impact	1,626,906		1,559,869	67,037		4.3	%
Foreign currency impact	88,580
France revenue	1,715,486		1,559,869	155,617		10.0	%
U.S. Commercial and State Government
Revenue prior to foreign currency impact	1,711,615		1,554,877	156,738		10.1	%
Foreign currency impact	(37,227	)
U.S. Commercial and State Government revenue	1,674,388		1,554,877	119,511		7.7	%
U.S. Federal
Revenue prior to foreign currency impact	1,494,014		1,473,478	20,536		1.4	%
Foreign currency impact	(35,273	)
U.S. Federal revenue	1,458,741		1,473,478	(14,737	)	(1.0	%)
U.K.
Revenue prior to foreign currency impact	1,241,911		1,286,700	(44,789	)	(3.5	%)
Foreign currency impact	48,670
U.K. revenue	1,290,581		1,286,700	3,881		0.3	%
ECS
Revenue prior to foreign currency impact	1,208,642		1,164,350	44,292		3.8	%
Foreign currency impact	63,916
ECS revenue	1,272,558		1,164,350	108,208		9.3	%
Asia Pacific
Revenue prior to foreign currency impact	629,230		592,350	36,880		6.2	%
Foreign currency impact	(21,654	)
Asia Pacific revenue	607,576		592,350	15,226		2.6	%

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 19

For the year ended September 30, 2018, revenue was $11,506.8 million, an increase of $661.8 million, or 6.1% over the same period last year. On a constant currency basis, revenue increased by $502.3 million or 4.6%. Foreign currency rate fluctuations favourably impacted our revenue by $159.5 million or 1.5%. The increase in revenue was mostly due to business acquisitions and the strength in demand for our services and solutions across our segments.

3.4.1. Northern Europe

For the year endedSeptember 30, 2018, revenue in our Northern Europe segment was $1,800.5 million, an increase of $192.5 million or 12.0% over the same period last year. On a constant currency basis, revenue increased by $140.4 million or 8.7%. The increase was mainly driven by the Affecto acquisition and higher systems integration and consulting services in Sweden, partly offset by the non-renewal of certain outsourcing contracts in Sweden and Finland, mainly in infrastructure.

On a client geographic basis, the top two Northern Europe vertical markets were MRD and government, generating combined revenues of approximately $1,161 million for the year endedSeptember 30, 2018.

3.4.2. Canada

For the year ended September 30, 2018, revenue in our Canada segment was $1,687.0 million, an increase of $81.5 million or 5.1% compared to the same period last year. On a constant currency basis, revenue increased by $81.2 million or 5.1%. The increase in revenue was mainly due to organic growth within the financial services and communications & utilities vertical markets and, to a lesser extent, revenue associated with the Facilité Informatique acquisition.

On a client geographic basis, the top two Canada vertical markets were financial services and communications & utilities, generating combined revenues of approximately $1,157 million for the year endedSeptember 30, 2018.

3.4.3. France

For the year ended September 30, 2018, revenue in our France segment was $1,715.5 million , an increase of $155.6 million or 10.0% over the same period last year. On a constant currency basis, revenue increased by $67.0 million or 4.3%. The increase in revenue was the result of organic growth across all vertical markets, most notably in MRD and financial services.

On a client geographic basis, the top two France vertical markets were MRD and financial services, generating combined revenues of approximately $1,167 million for the year endedSeptember 30, 2018.

3.4.4. U.S. Commercial and State Government

For the year endedSeptember 30, 2018, revenue in our U.S. Commercial and State Government segment was $1,674.4 million, an increase of $119.5 million or 7.7% over the same period last year. On a constant currency basis, revenue increased by $156.7 million or 10.1% primarily due to Paragon and prior year acquisitions, and organic growth most notably within the financial services vertical market. This was partly offset by lower IP license sales as a result of a shift towards software as a service, especially for ERP business solutions.

On a client geographic basis, the top two U.S. Commercial and State Government vertical markets were financial services and government, generating combined revenues of approximately $1,062 million for the year endedSeptember 30, 2018.

3.4.5. U.S. Federal

For the year endedSeptember 30, 2018, revenue in our U.S. Federal segment was $1,458.7 million, a decrease of $14.7 million or 1.0% over the same period last year. On a constant currency basis, revenue increased by $20.5 million or 1.4%. The increase was driven by growth in civilian based revenues mainly related to our ERP business solutions and cyber & other security services, partly offset by a work in progress adjustment taken on a contract in Q4 2018.

For the year ended September 30, 2018, 79% of revenues within the U.S. Federal segment were Federal civilian based.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 20

3.4.6. U.K.

For the year ended September 30, 2018, revenue in our U.K. segment was $1,290.6 million, an increase of $3.9 million or 0.3% over the same period last year. On a constant currency basis, revenue decreased by $44.8 million or 3.5%. The change in revenue was mainly due to the non-renewal of certain infrastructure outsourcing contracts and the impact of a favourable renegotiation of a loss making contract in Fiscal 2017, partly offset by new outsourcing contracts within the government and communications & utilities vertical markets.

On a client geographic basis, the top two U.K. vertical markets were government and communications & utilities, generating combined revenues of approximately $1,007 million for the year endedSeptember 30, 2018.

3.4.7. ECS

For the year ended September 30, 2018, revenue in our ECS segment was $1,272.6 million, an increase of $108.2 million or 9.3% over the same period last year. On a constant currency basis, revenue increased by $44.3 million or 3.8%. The increase in revenue was mainly driven by market demand in Germany. This was partly offset by the higher use of our global delivery centers and project completions in the Netherlands.

On a client geographic basis, the top two ECS vertical markets were MRD and communications & utilities generating combined revenues of approximately $812 million for the year endedSeptember 30, 2018.

3.4.8. Asia Pacific

For the year ended September 30, 2018, revenue in our Asia Pacific segment was $607.6 million, an increase of $15.2 million or 2.6% over the same period last year. On a constant currency basis, revenue increased by $36.9 million or 6.2%. The increase in revenue was mainly driven by the continued demand for our offshore delivery centers and the favourable renegotiation of a client contract in Australia in Q1 2018.

On a client geographic basis, the top two Asia Pacific vertical markets were government and communications & utilities, generating combined revenues of approximately $66 million for the year endedSeptember 30, 2018.

3.5. OPERATING EXPENSES

		% of Revenue			% of Revenue		Change
For the years ended September 30,	2018			2017			$	%
In thousands of CAD except for percentages
Costs of services, selling and administrative	9,801,791	85.2	%	9,257,659	85.4	%	544,132	5.9	%
Foreign exchange loss	3,300	0.0	%	784	0.0	%	2,516	320.9	%

3.5.1. Costs of Services, Selling and Administrative

For the year ended September 30, 2018, costs of services, selling and administrative expenses amounted to $9,801.8 million, an increase of $544.1 million over the same period last year. As a percentage of revenue, costs of services, selling and administrative expenses decreased to 85.2% from 85.4%. As a percentage of revenue, costs of services remained relatively stable compared to the same period last year as savings generated by the Restructuring Program (see section 3.7.2. of the present document) helped compensate for lower license sales in the U.S., as well as the non-renewal of certain outsourcing contracts in Sweden and Finland, temporarily impacting our cost structure. As a percentage of revenue, selling and administrative expenses improved mainly due to savings generated by the Restructuring Program.

During the year ended September 30, 2018, the translation of the results of our foreign operations from their local currencies to the Canadian dollar unfavourably impacted costs by $141.8 million offsetting the favourable translation impact of $159.5 million on our revenue.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 21

3.5.2. Foreign Exchange Loss

During the year ended September 30, 2018, CGI incurred $3.3 million of foreign exchange losses, mainly driven by the timing of payments combined with the volatility and fluctuation of foreign exchange rates. The Company, in addition to its natural hedges, uses derivatives as a strategy to manage its exposure, to the extent possible, to exchange rate fluctuations.

3.6. ADJUSTED EBIT BY SEGMENT

For the years ended September 30,	Change
	2018		2017		$		%
In thousands of CAD except for percentages
Northern Europe	196,823		182,775		14,048		7.7	%
As a percentage of segment revenue	10.9	%	11.4	%
Canada	367,843		343,856		23,987		7.0	%
As a percentage of segment revenue	21.8	%	21.4	%
France	236,207		193,075		43,132		22.3	%
As a percentage of segment revenue	13.8	%	12.4	%
U.S. Commercial and State Government	284,181		290,333		(6,152	)	(2.1	%)
As a percentage of segment revenue	17.0	%	18.7	%
U.S. Federal	198,140		205,441		(7,301	)	(3.6	%)
As a percentage of segment revenue	13.6	%	13.9	%
U.K.	191,514		152,185		39,329		25.8	%
As a percentage of segment revenue	14.8	%	11.8	%
ECS	97,627		96,195		1,432		1.5	%
As a percentage of segment revenue	7.7	%	8.3	%
Asia Pacific	129,399		122,763		6,636		5.4	%
As a percentage of segment revenue	21.3	%	20.7	%
Adjusted EBIT	1,701,734		1,586,623		115,111		7.3	%
Adjusted EBIT margin	14.8	%	14.6	%

For the year ended September 30, 2018, adjusted EBIT margin increased to 14.8% from 14.6% in 2017. The increase was mainly due to savings generated from the Restructuring Program, partly offset by the impact of lower IP license sales.

3.6.1. Northern Europe

For the year ended September 30, 2018, adjusted EBIT in the Northern Europe segment was $196.8 million, an increase of $14.0 million when compared to the same period last year. Adjusted EBIT margin decreased to 10.9% from 11.4%. The change was mainly due to the short-term cost impact of the non-renewal and decrease of work volumes on certain outsourcing contracts in Sweden and Finland, as well as the temporary dilutive impact of the Affecto acquisition. This was in part compensated by savings generated by the Restructuring Program.

3.6.2. Canada

For the year ended September 30, 2018, adjusted EBIT in the Canada segment was $367.8 million, an increase of $24.0 million when compared to the same period last year. The adjusted EBIT margin increased to 21.8% from 21.4% mainly due to savings generated from the Restructuring Program.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 22

3.6.3. France

For the year ended September 30, 2018, adjusted EBIT in the France segment was $236.2 million, an increase of $43.1 million when compared to the same period last year. Adjusted EBIT margin increased to 13.8% from 12.4% mainly due to organic growth and its positive impact on utilization.

3.6.4. U.S. Commercial and State Government

For the year ended September 30, 2018, adjusted EBIT in the U.S. Commercial and State Government segment was $284.2 million, a decrease of $6.2 million when compared to the same period last year. Adjusted EBIT margin decreased to 17.0% from 18.7%. The change in adjusted EBIT margin was mainly due to the impact of lower IP license sales as a result of a shift towards software as a service.

3.6.5. U.S. Federal

For the year ended September 30, 2018, adjusted EBIT in the U.S. Federal segment was $198.1 million, a decrease of $7.3 million when compared to the same period last year. Adjusted EBIT decreased to 13.6% from 13.9% primarily due to a work in progress adjustment taken on a contract partly offset by lower performance-based compensation expenses.

3.6.6. U.K.

For the year ended September 30, 2018, adjusted EBIT in the U.K. segment was $191.5 million, an increase of $39.3 million when compared to the same period last year. Adjusted EBIT margin increased to 14.8% from 11.8%. The increase in adjusted EBIT margin was mainly due to savings generated by the Restructuring Program and improved utilization rates. In addition, the adjusted EBIT margin also increased due to contract provision releases in Q1 2018 upon successful completion of large client programs.

3.6.7. ECS

For the year ended September 30, 2018, adjusted EBIT in the ECS segment was $97.6 million, an increase of $1.4 million when compared to the same period last year. Adjusted EBIT margin decreased to 7.7% from 8.3% last year. The change in adjusted EBIT margin was mainly due to the favourable settlement of a client contract in Q2 2017.

3.6.8. Asia Pacific

For the year ended September 30, 2018, adjusted EBIT in the Asia Pacific segment was $129.4 million, an increase of $6.6 million when compared to the same period last year. Adjusted EBIT margin increased to 21.3% from 20.7% last year. This increase was primarily due to savings generated by the Restructuring Program.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 23

3.7. EARNINGS BEFORE INCOME TAXES

The following table provides a reconciliation between our adjusted EBIT and earnings before income taxes, which is reported in accordance with IFRS.

For the years ended Setember 30,							Change
	2018	% of Revenue		2017	% of Revenue		$	%
In thousands of CAD except for percentage
Adjusted EBIT	1,701,734	14.8	%	1,586,623	14.6	%	115,111	7.3	%
Minus the following items:
Acquisition-related and integration costs	37,482	0.3	%	10,306	0.1	%	27,176	263.7	%
Restructuring costs	100,387	0.9	%	88,628	0.8	%	11,759	13.3	%
Net finance costs	73,885	0.6	%	69,792	0.6	%	4,093	5.9	%
Earnings before income taxes	1,489,980	12.9	%	1,417,897	13.1	%	72,083	5.1	%

3.7.1. Acquisition-Related and Integration Costs

For the year ended September 30, 2018, the Company incurred $37.5 million of acquisition-related and integration costs, related to the integration of recent business acquisitions' operations to the CGI operating model. These costs are mainly related to the termination of employment as well as leases of vacated premises.

3.7.2. Restructuring Costs

The Company previously announced a Restructuring Program to improve profitability by addressing the underutilization of the Company's resources due to the accelerating shift in client demand.

As at September 30, 2018, the Company completed the program for a total cost of $189.0 million, of which $100.4 million was expensed during the year ended September 30, 2018. These amounts include restructuring costs for termination of employment, leases of vacated premises, as well as other restructuring costs.

3.7.3. Net Finance Costs

Net finance costs mainly include the interest on our long-term debt. For the year ended September 30, 2018, the net finance costs increase was mainly due to an increase in utilization of our unsecured committed revolving credit facility.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 24

3.8. NET EARNINGS AND EARNINGS PER SHARE

The following table sets out the information supporting the earnings per share calculations:

					Change
For the years ended September 30,	2018		2017		$		%
In thousands of CAD except for percentage and shares data
Earnings before income taxes	1,489,980		1,417,897		72,083		5.1	%
Income tax expense	348,578		382,702		(34,124	)	(8.9	%)
Effective tax rate	23.4	%	27.0	%
Net earnings	1,141,402		1,035,195		106,207		10.3	%
Net earnings margin	9.9	%	9.5	%
Weighted average number of shares outstanding
Class A subordinate voting shares and Class B multiple voting shares (basic)	283,878,426		297,516,970				(4.6	%)
Class A subordinate voting shares and Class B multiple voting shares (diluted)	288,858,580		303,293,485				(4.8	%)
Earnings per share (in dollars)
Basic	4.02		3.48		0.54		15.5	%
Diluted	3.95		3.41		0.54		15.8	%

3.8.1. Income Tax Expense

For the year ended September 30, 2018, the income tax expense was $348.6 million compared to $382.7 million over the same period last year, while our effective tax rate decreased to 23.4% from 27.0%. On December 22, 2017, the U.S. government enacted a tax reform which includes several measures such as a reduction of corporate tax rate from 35% to 21%, effective on January 1, 2018, and a one-time repatriation tax on earnings held by foreign subsidiaries. In addition to the U.S. tax reform, the government of France enacted a temporary corporate surtax for the current year and a tax rate reduction was enacted by the government of Belgium. As such, the Company recorded a net income tax recovery of $34.1 million resulting from the re-evaluation of its deferred tax assets and liabilities of $45.5 million partially offset by an income tax expense of $11.4 million in relation to the U.S. repatriation tax.

When excluding these tax adjustments and the tax effects from acquisition-related and integration costs and restructuring costs incurred, the income tax rate would have been 25.6% for the year ended September 30, 2018, compared to 27.0% in the same period last fiscal year. The decrease in income tax rate was mainly attributable to the taxation of our U.S. operations at a lower tax rate.

The table in section 3.8.3. shows the year-over-year comparison of the tax rate with the impact of specific items removed.

Based on the enacted rates at the end of Fiscal 2018 and our current business mix, we expect our effective tax rate before any significant adjustments to be in the range of 24.5% to 26.5% in subsequent periods.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 25

3.8.2. Weighted Average Number of Shares

For Fiscal2018, CGI’s basic and diluted weighted average number of shares decreased compared to Fiscal 2017 due to the impact of the purchase for cancellation of Class A Shares, partly offset by the grant and the exercise of stock options.

3.8.3. Net Earnings and Earnings per Share Excluding Specific Items

Below is a table showing the year-over-year comparison excluding specific items namely, acquisition-related and integration costs, restructuring costs, and tax adjustments:

					Change
	2018		2017		$		%
In thousands of CAD except for percentages and shares data
Earnings before income taxes	1,489,980		1,417,897		72,083		5.1	%
Add back:
Acquisition-related and integration costs	37,482		10,306		27,176		263.7	%
Restructuring costs	100,387		88,628		11,759		13.3	%
Earnings before income taxes excluding specific items	1,627,849		1,516,831		111,018		7.3	%
Margin	14.1	%	14.0	%
Income tax expense	348,578		382,702		(34,124	)	(8.9	%)
Add back:
Tax deduction on acquisition-related and integration costs	7,922		3,849		4,073		105.8	%
Tax deduction on restructuring costs	26,526		23,292		3,234		13.9	%
Net tax adjustment	34,100		—		34,100		—
Income tax expense excluding specific items	417,126		409,843		7,283		1.8	%
Effective tax rate excluding specific items	25.6	%	27.0	%
Net earnings excluding specific items	1,210,723		1,106,988		103,735		9.4	%
Net earnings excluding specific items margin	10.5	%	10.2	%
Weighted average number of shares outstanding
Class A subordinate voting shares and Class B multiple voting shares (basic)	283,878,426		297,516,970				(4.6	%)
Class A subordinate voting shares and Class B multiple voting shares (diluted)	288,858,580		303,293,485				(4.8	%)
Earnings per share excluding specific items (in dollars)
Basic	4.26		3.72		0.54		14.5	%
Diluted	4.19		3.65		0.54		14.8	%

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 26

4. Liquidity

4.1. CONSOLIDATED STATEMENTS OF CASH FLOWS

CGI’s growth is financed through a combination of cash flow from operations, borrowing under our existing credit facility, the issuance of long-term debt, and the issuance of equity. One of our financial priorities is to maintain an optimal level of liquidity through the active management of our assets and liabilities as well as our cash flows.

As at September 30, 2018, cash and cash equivalents were $184.1 million. The following table provides a summary of the generation and use of cash for the years ended September 30,2018 and 2017.

For the years ended September 30,	2018		2017		Change
In thousands of CAD
Cash provided by operating activities	1,493,408		1,358,552		134,856
Cash used in investing activities	(577,418	)	(592,256	)	14,838
Cash used in financing activities	(879,044	)	(1,182,986	)	303,942
Effect of foreign exchange rate changes on cash and cash equivalents	(18,727	)	(13,967	)	(4,760	)
Net increase (decrease) in cash and cash equivalents	18,219		(430,657	)	448,876

4.1.1. Cash Provided by Operating Activities

For the year ended September 30, 2018, cash provided by operating activities was $1,493.4 million or 13.0% of revenue compared to $1,358.6 million or 12.5% for the same period last year.

The following table provides a summary of the generation and use of cash from operating activities:

For the years ended September 30,	2018		2017		Change
In thousands of CAD
Net earnings	1,141,402		1,035,195		106,207
Amortization and depreciation	392,675		377,204		15,471
Other adjustments1	(2,432	)	92,238		(94,670	)
Cash flow from operating activities before net change in non-cash working capital items	1,531,645		1,504,637		27,008
Net change in non-cash working capital items:
Accounts receivable, work in progress and deferred revenue	(159,609	)	(185,501	)	25,892
Accounts payable and accrued liabilities, accrued compensation, provisions and long-term liabilities	79,322		11,353		67,969
Other2	42,050		28,063		13,987
Net change in non-cash working capital items	(38,237	)	(146,085	)	107,848
Cash provided by operating activities	1,493,408		1,358,552		134,856

¹ Comprised of deferred income taxes, foreign exchange (gain) loss and share-based payment costs.

²  Comprised of prepaid expenses and other assets, long-term financial assets, retirement benefits obligations, derivative financial instruments and income taxes.

For the year ended September 30, 2018, the net change in non-cash working capital items of $38.2 million was mostly due to the increase in our DSO from 47 days in 2017 to 52 days in 2018. This was partially offset by the timing of accounts payable, income tax payments and accrued compensation.

The timing of our working capital inflows and outflows will always have an impact on the cash flow from operations.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 27

4.1.2. Cash Used in Investing Activities

For the year ended September 30, 2018, $577.4 million was used in investing activities while $592.3 million was used over the prior year.

The following table provides a summary of the use of cash from investing activities:

For the years ended September 30,	2018		2017		Change
In thousands of CAD
Business acquisitions	(248,137	)	(283,061	)	34,924
Proceeds from sale of property, plant and equipment	—		3,317		(3,317	)
Proceeds from sale of business	3,500		—		3,500
Purchase of property, plant and equipment	(143,250	)	(112,667	)	(30,583	)
Additions to contract costs	(87,420	)	(95,676	)	8,256
Additions to intangible assets	(95,451	)	(106,267	)	10,816
Net (purchase) proceeds from sale of long-term investments	(6,660	)	2,098		(8,758	)
Cash used in investing activities	(577,418	)	(592,256	)	14,838

The decrease of $14.8 million in cash used in investing activities during the year ended September 30, 2018 was mainly due to the decrease in business acquisitions and less transition costs on outsourcing contracts, partly offset by an increase in computer equipment and leasehold improvements, when compared to the same period last year.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 28

4.1.3. Cash Used in Financing Activities

For the year ended September 30, 2018, $879.0 million was used in financing activities while $1,183.0 million was used over the same period last year.

The following table provides a summary of the generation and use of cash from financing activities:

For the years ended September 30,	2018		2017		Change
In thousands of CAD
Net change in unsecured committed revolving credit facility	(5,205	)	200,000		(205,205	)
Net change in long-term debt	(101,660	)	(180,920	)	79,260
	(106,865	)	19,080		(125,945	)
Settlement of derivative financial instruments	(2,430	)	—		(2,430	)
Repayment of debt assumed from business acquisitions	(28,609	)	(9,119	)	(19,490	)
Purchase of Class A subordinate voting shares held in trusts	(24,789	)	—		(24,789	)
Resale of Class A subordinate voting shares held in trusts	528		4,046		(3,518	)
Purchase and cancellation of Class A subordinate voting shares	(794,076	)	(1,246,664	)	452,588
Issuance of Class A subordinate voting shares	77,197		49,671		27,526
Cash used in financing activities	(879,044	)	(1,182,986	)	303,942

For the year ended September 30, 2018, we used $101.7 million to reduce our outstanding long-term debt, mainly driven by the first yearly scheduled repayment on a tranche of the Senior U.S. unsecured notes in the amount of $65.0 million (US$50.0 million). For the year ended September 30, 2017, we used $180.9 million to reduce our outstanding long-term debt,mainly driven by the scheduled repayment of a tranche of the Senior U.S. unsecured notes in the amount of $113.6 million (US$85.0 million). Also in Fiscal 2017, we drew $200.0 million on the Company's unsecured committed revolving credit facility.

In addition, $28.6 million was used to repay debt assumed from business acquisitions made during the year ended September 30, 2018, while an amount of $9.1 million was used to repay the debt assumed from business acquisitions during the year ended September 30, 2017.

For the year ended September 30, 2018, $24.8 million was used to purchase Class A Shares in connection with the Company's Performance Share Unit Plans (PSU Plans). More information concerning the PSU Plans can be found in note 19 of the audited consolidated financial statements.

For the year ended September 30, 2018, $794.1 million including fees was used to pay for the purchase for cancellation of 10,325,879 Class A Shares compared to $1,246.7 million for the purchase for cancellation 19,929,268 Class A Shares for last year.

Finally, for the year ended September 30, 2018, we received $77.2 million in proceeds from the exercise of stock options, compared to $49.7 million during the year ended September 30, 2017.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 29

4.1.4. Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents

For the year ended September 30, 2018, the effect of foreign exchange rate changes on cash and cash equivalents was an unfavourable impact of $18.7 million. This amount had no effect on net earnings as it was recorded in other comprehensive income.

4.2. CAPITAL RESOURCES

As at September 30, 2018	Available
In thousands of CAD
Cash and cash equivalents	184,091
Long-term investments	30,054
$1.5 billion unsecured committed revolving credit facility1	1,295,595
Total	1,509,740

¹ Includes an amount of $194.8 million outstanding under our unsecured committed revolving credit facility and letters of credit in the aggregate amount of $9.6 million as at September 30, 2018.

Our cash position and bank lines are sufficient to support our growth strategy. As at September 30, 2018, cash and cash equivalents and long-term investments represented $214.1 million.

Cash equivalents include term deposits, all with maturities of 90 days or less. Long-term investments include corporate and government bonds with maturities ranging from one to five years, with a credit rating of A or higher.

As at September 30, 2018, the aggregate amount of the capital resources available to the Company was of $1,509.7 million. The long-term debt agreements contain covenants, which require us to maintain certain financial ratios. As at September 30, 2018, CGI was in compliance with these covenants.

Total debt decreased by $61.1 million to $1,800.9 million as at September 30, 2018, compared to $1,862.0 million as at September 30, 2017. The variance was mainly due to the net change on our long-term debt of $103.1 million partially offset by a foreign exchange translation impact of $55.2 million.

As at September 30, 2018, CGI was showing a negative working capital² of $8.8 million. The Company also had $1,295.6 million available under its unsecured committed revolving credit facility and is generating a significant level of cash that will allow it to fund its operations while maintaining adequate levels of liquidity. On November 6, 2018, the unsecured committed revolving facility was extended by one year to December 2023 and can be further extended. There were no material changes in the terms and conditions.

As at September 30, 2018 the cash and cash equivalents held by foreign subsidiaries were $142.4 million ($126.4 million as at September 30, 2017). The tax implications and impact related to its repatriation will not materially affect the Company's liquidity.

²Working capital is defined as total current assets minus total current liabilities.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 30

4.3. CONTRACTUAL OBLIGATIONS

We are committed under the terms of contractual obligations which have various expiration dates, primarily for the rental of premises, computer equipment used in outsourcing contracts and long-term service agreements. For the year ended September 30, 2018, the Company decreased its commitments by $12.9 million mainly due to the reduction of long-term debt.

Commitment type	Total	Less than 1 year	2nd and 3rd years	4th and 5th years	After 5 years
In thousands of CAD
Long-term debt	1,783,717	336,200	342,294	651,434	453,789
Estimated interest on long-term debt	251,965	64,569	109,782	59,454	18,160
Finance lease obligations	29,909	12,380	15,731	1,798	—
Estimated interest on finance lease obligations	1,067	529	473	65	—
Operating leases
Rental of office space (excluding cost of services and taxes)	626,885	128,471	222,201	158,201	118,012
Computer equipment	10,770	4,208	6,116	446	—
Automobiles	68,485	34,792	30,251	3,442	—
Long-term service agreements and other	283,469	136,509	138,408	8,552	—
Total	3,056,267	717,658	865,256	883,392	589,961

Our required benefit plan contributions have not been included in this table as such contributions depend on periodic actuarial valuations for funding purposes. Our contributions to defined benefit plans are estimated at $24.2 million for Fiscal 2019 as described in note 16 of the audited consolidated financial statements.

4.4. FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS

We use various financial instruments to manage our exposure to fluctuations of foreign currency exchange rates and interest rates. Please refer to note 3 and 31 of our audited consolidated financial statements for additional information on our financial instruments and hedging transactions.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 31

4.5. SELECTED MEASURES OF CAPITAL RESOURCES AND LIQUIDITY

As at September 30,	2018		2017
In thousands of CAD except for percentages
Reconciliation between net debt and long-term debt including the current portion:
Net debt	1,640,814		1,749,374
Add back:
Cash and cash equivalents	184,091		165,872
Long-term investments	30,054		23,047
Fair value of foreign currency derivative financial instruments related to debt	(54,066	)	(76,290	)
Long-term debt including the current portion	1,800,893		1,862,003
Net debt to capitalization ratio	19.2	%	21.5	%
Return on equity	17.3	%	16.1	%
Return on invested capital	14.5	%	13.7	%
Days sales outstanding	52		47

We use the net debt to capitalization ratio as an indication of our financial leverage in order to realize our Build and Buy strategy. The net debt to capitalization ratio decreased to 19.2% in Fiscal 2018 from 21.5% in Fiscal 2017. The change in the net debt to capitalization ratio was mostly due to an increase in our equity following a strong profitability over the last year.

ROE is a measure of the return we are generating for our shareholders. ROE increased to 17.3% in Fiscal 2018 from 16.1% in Fiscal 2017. The increase was mainly due to higher net earnings over the last four quarters.

ROIC is a measure of the Company’s efficiency in allocating the capital under our control to profitable investments. The return on invested capital ratio increased to 14.5% in Fiscal 2018 from 13.7% in Fiscal 2017. The improvement in the ROIC was mainly the result of our higher net earings excluding net finance costs after-tax over the last four quarters.

DSO increased to 52 days at the end of Fiscal 2018 when compared to 47 days in Fiscal 2017 due to an increased proportion of our revenues from system integration & consulting services. In calculating the DSO, we subtract the deferred revenue balance from trade accounts receivable and work in progress; for that reason, the timing of payments received from outsourcing clients in advance of the work to be performed and the timing of payments related to project milestones can affect the DSO. The Company maintains a target DSO of 45 days.

4.6. OFF-BALANCE SHEET FINANCING AND GUARANTEES

In the normal course of operations, CGI uses off-balance sheet financing for a variety of transactions such as operating leases for office space, computer equipment and vehicles. From time to time, we also enter into agreements to provide financial or performance assurances to third parties on the sale of assets, business divestitures and guarantees on government and commercial contracts.

In connection with sales of assets and business divestitures, we may be required to pay counterparties for costs and losses incurred as a result of breaches in our contractual obligations, representations and warranties, intellectual property right infringement and litigation against counterparties, among others. While some of the agreements specify a maximum potential exposure of approximately $11.4 million, others do not specify a maximum amount or limited period. It is not possible to reasonably estimate the maximum amount that may have to be paid under such guarantees. The amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. The Company does not expect to incur any potential payment in connection with these guarantees that could have a materially adverse effect on its audited consolidated financial statements.

In the normal course of business, we may provide certain clients, principally governmental entities, with bid and performance bonds. In general, we would only be liable for the amount of the bid bonds if we refuse to perform the project once we are awarded the bid. We would also be liable for the performance bonds in the event of a default in the performance of our obligations. As at September 30, 2018, we had committed a total of $27.8 million for these bonds. To the best of our knowledge, we complied with our performance obligations under all service contracts for which there was a performance or bid bond, and

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 32

the ultimate liability, if any, incurred in connection with these guarantees would not have a material adverse effect on our consolidated results of operations or financial condition.

4.7. CAPABILITY TO DELIVER RESULTS

Sufficient capital resources and liquidity are required for supporting ongoing business operations and to execute our Build and Buy growth strategy. The Company has sufficient capital resources coming from the cash generated from operations, credit facilities, long-term debt agreements and invested capital from shareholders. Our principal uses of cash are for procuring new large outsourcing and managed services contracts; investing in our business solutions; pursuing accretive acquisitions; purchasing for cancellation Class A Shares and paying down debt. In terms of financing, we are well positioned to continue executing our four-pillar growth strategy in Fiscal 2019.

Strong and experienced leadership is essential to successfully implement the Company's strategy. CGI has a strong leadership team with members who are highly knowledgeable and have gained a significant amount of experience in the IT industry via various career paths and leadership roles. CGI fosters leadership development to ensure a continuous flow of knowledge and strength is maintained throughout the organization. As part of our succession planning in key positions, we established the CGI Leadership Institute to develop leadership, technical and managerial skills inspired by CGI’s roots and traditions.

As a Company built on human capital, our professionals and their knowledge are critical to delivering quality service to our clients. Our human resources program provides competitive compensation and benefits, a favourable working environment, and our training and career development programs combine to allow us to attract and retain the best talent. Employee satisfaction is monitored regularly through a Company-wide survey. Furthermore, our members are also owners of CGI through our Share Purchase Plan. The Share Purchase Plan, along with the Profit Participation Program, allows members to share in the success of the Company and aligns member objectives with our strategic goals.

In addition to our capital resources and the talent of our human capital, CGI has established a Management Foundation encompassing governance policies, sophisticated management frameworks and an organizational model for its business units and corporate processes. This foundation, along with our appropriate internal systems, helps in providing a disciplined high standard of quality service to our clients across all of our operations, and additional value to our stakeholders. CGI’s operations maintain appropriate certifications in accordance with service requirements such as the ISO and CMMI certification programs.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 33

5.    Fourth Quarter Results (Unaudited)

5.1. BOOKINGS AND BOOK-TO-BILL RATIO

Bookings for the quarter ended September 30, 2018 were $3.5 billion representing a book-to-bill ratio of 126.2%. The breakdown of the new bookings signed during the quarter is as follows:

	Contract Type				Service Type				Segment				Vertical Market
A.	New business	51	%	A.	Management of IT and business functions	52	%	A.	U.S. Federal	33	%	A.	Government	48	%
B.	Extensions and	49	%	B.	System integration and	48	%	B.	Northern Europe	15	%	B.	MRD	23	%
	renewals				consulting			C.	U.S. Commercial and	13	%	C.	Communication	13	%
									State Government				& utilities
								D.	France	13	%	D.	Financial Services	11	%
								E.	Canada	10	%	E.	Health	5	%
								F.	ECS	8	%
								G.	U.K.	8	%
								H.	Asia Pacific	—	%

Information regarding our bookings is a key indicator of the volume of our business over time. However, due to the timing and transition period associated with outsourcing contracts, the realization of revenue related to these bookings may fluctuate from period to period. The values initially booked may change over time due to their variable attributes, including demand-driven usage, modifications in the scope of work to be performed caused by changes in client requirements as well as termination clauses at the option of the client. As such, information regarding our bookings is not comparable to, nor should it be substituted for, an analysis of our revenue. Management however believes that it is a key indicator of potential future revenue.

The following table provides a summary of the bookings and book-to-bill ratio by segment:

In thousands of CAD except for percentages	Bookings for the three months ended September 30, 2018	Bookings for the year ended September 30, 2018	Book-to-bill ratio for the year ended September 30, 2018
Total CGI	3,533,650	13,492,959	117.3	%
Northern Europe	518,917	2,331,847	123.3	%
Canada	365,785	1,647,927	90.6	%
France	457,771	1,775,929	101.0	%
U.S. Commercial and State Government	459,133	2,055,587	117.9	%
U.S. Federal	1,172,161	2,574,633	173.9	%
U.K.	269,330	1,663,132	117.3	%
ECS	278,713	1,372,820	108.2	%
Asia Pacific	11,840	71,084	55.6	%

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 34

5.2. FOREIGN EXCHANGE

The Company operates globally and is exposed to changes in foreign currency rates. Accordingly, as prescribed by IFRS, we value assets, liabilities and transactions that are measured in foreign currencies using various exchange rates. We report all dollar amounts in Canadian dollars.

Average foreign exchange rates

For the three months ended September 30,	2018	2017	Change
U.S. dollar	1.3072	1.2531	4.3	%
Euro	1.5204	1.4728	3.2	%
Indian rupee	0.0187	0.0195	(4.1	%)
British pound	1.7035	1.6399	3.9	%
Swedish krona	0.1462	0.1541	(5.1	%)
Australian dollar	0.9565	0.9896	(3.3	%)

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 35

5.3. REVENUE DISTRIBUTION

The following charts provide additional information regarding our revenue mix for the quarter ended September 30, 2018:

Service Type				Client Geography					Vertical Market
A.	System integration and consulting	53	%	A.	U.S.	29	%		A.	Government	32	%
B.	Management of IT and business functions	47	%	B.	Canada	16	%		B.	MRD	25	%
				C.	France	15	%		C.	Financial services	22	%
				D.	U.K.	13	%		D.	Communications & utilities	15	%
				E.	Finland	6	%		E.	Health	6	%
				F.	Sweden	6	%
				G.	Rest of the world	15	%

5.3.1. Client Concentration

IFRS guidance on segment disclosures defines a single customer as a group of entities that are known to the reporting entity to be under common control. As a consequence, our work for the U.S. federal government including its various agencies represented 12.0% of our revenue for Q4 2018 as compared to 14.3% for Q4 2017.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 36

5.4. REVENUE BY SEGMENT

The following table provides a summary of the year-over-year changes in our revenue, in total and by segment, separately showing the impacts of foreign currency exchange rate variations between the Q4 2018 and Q4 2017 periods. The Q4 2017 revenue by segment was recorded reflecting the actual average foreign exchange rates for that period. The foreign exchange impact is the difference between the current period’s actual results and the current period’s results converted with the prior year’s average foreign exchange rates.

For the three months ended September 30,				Change
	2018		2017	$		%
In thousands of CAD except for percentages
Total CGI revenue	2,798,960		2,608,099	190,861		7.3	%
Variation prior to foreign currency impact	5.0	%
Foreign currency impact	2.3	%
Variation over previous period	7.3	%
Northern Europe
Revenue prior to foreign currency impact	398,658		356,623	42,035		11.8	%
Foreign currency impact	(2,289	)
Northern Europe revenue	396,369		356,623	39,746		11.1	%
Canada
Revenue prior to foreign currency impact	421,642		397,317	24,325		6.1	%
Foreign currency impact	511
Canada revenue	422,153		397,317	24,836		6.3	%
France
Revenue prior to foreign currency impact	394,837		369,472	25,365		6.9	%
Foreign currency impact	14,203
France revenue	409,040		369,472	39,568		10.7	%
U.S. Commercial and State Government
Revenue prior to foreign currency impact	407,120		391,353	15,767		4.0	%
Foreign currency impact	17,814
U.S. Commercial and State Government revenue	424,934		391,353	33,581		8.6	%
U.S. Federal
Revenue prior to foreign currency impact	338,952		364,073	(25,121	)	(6.9	%)
Foreign currency impact	14,734
U.S. Federal revenue	353,686		364,073	(10,387	)	(2.9	%)
U.K.
Revenue prior to foreign currency impact	316,588		294,175	22,413		7.6	%
Foreign currency impact	12,680
U.K. revenue	329,268		294,175	35,093		11.9	%
ECS
Revenue prior to foreign currency impact	304,959		285,870	19,089		6.7	%
Foreign currency impact	9,660
ECS revenue	314,619		285,870	28,749		10.1	%
Asia Pacific
Revenue prior to foreign currency impact	155,396		149,216	6,180		4.1	%
Foreign currency impact	(6,505	)
Asia Pacific revenue	148,891		149,216	(325	)	(0.2	%)

We ended the fourth quarter of Fiscal 2018 with revenue of $2,799.0 million, an increase of $190.9 million, or 7.3% when compared to the same period of Fiscal 2017. On a constant currency basis, revenue increased by $130.1 million or 5.0%. Foreign currency rate fluctuations favourably impacted our revenue by $60.8 million or 2.3%. The increase in revenue was primarily due to recent business acquisitions, the strength and demand for our services and solutions across our segments, partially offset by a work in progress adjustment taken on a contract in the U.S. Federal in Q4 2018.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 37

5.4.1. Northern Europe

Revenue in our Northern Europe segment was $396.4 million in Q4 2018, an increase of $39.7 million or 11.1% compared to the same period last year. On a constant currency basis, revenue increased by $42.0 million or 11.8%. The increase was primarily driven by the Affecto acquisition and higher systems integration and consulting services in Sweden, partly offset by the non-renewal of certain outsourcing contracts in Sweden and Finland, mainly in infrastructure.

On a client geographic basis, the top two Northern Europe vertical markets were MRD and government, generating revenues of approximately $270 million for the current quarter.

5.4.2. Canada

Revenue in our Canada segment for Q4 2018 was $422.2 million, an increase of $24.8 million or 6.3% compared to the same period last year. On a constant currency basis, revenue increased by $24.3 million or 6.1%. The increase was driven by revenue associated with the Facilité Informatique acquisition as well as organic growth within the financial services vertical market. This was partly offset by lower IP revenue due to a large license sale within the financial services vertical market in Fiscal 2017.

On a client geographic basis, the top two Canada vertical markets were financial services and communication & utilities, generating revenues of approximately $292 million for the current quarter.

5.4.3. France

Revenue from our France segment was $409.0 million in Q4 2018, an increase of $39.6 million or 10.7% compared to the same period last year. On a constant currency basis, revenue increased by $25.4 million or 6.9%. The increase in revenue was mainly the result of organic growth across all vertical markets, predominantly in MRD and financial services.

On a client geographic basis, the top two France vertical markets were MRD and financial services, generating revenues of approximately $278 million for the current quarter.

5.4.4. U.S. Commercial and State Government

Revenue from our U.S. Commercial and State Government segment was $424.9 million in Q4 2018, an increase of $33.6 million or 8.6% compared to the same period last year. On a constant currency basis, revenue increased by $15.8 million or 4.0%. The increase in revenue is primarily due to the Paragon acquisition and higher work volumes primarily within the financial services vertical market.

On a client geographic basis, the top two U.S. Commercial and State Government vertical markets were financial services and government, generating revenues of approximately $266 million for the current quarter.

5.4.5. U.S. Federal

Revenue from our U.S. Federal segment was $353.7 million in Q4 2018, a decrease of $10.4 million or 2.9% compared to the same period last year. On a constant currency basis, revenue decreased by $25.1 million or 6.9%. The change was maily due to decreased work volume within defense agencies and a work in progress adjustment taken on a contract. This was partly offset by growth in civilian based revenues mainly related to our ERP business solutions and cyber & other security services.

For the current quarter, 78% of revenues within the U.S. Federal segment were Federal civilian based.

5.4.6. U.K.

Revenue from our U.K. segment was $329.3 million in Q4 2018, an increase of $35.1 million or 11.9% when compared to the same period last year. On a constant currency basis, revenue increased by $22.4 million or 7.6%. The increase in revenue was mainly due to new outsourcing contracts within the government and communications & utilities vertical markets, partly offset by the non-renewal of certain infrastructure outsourcing contracts.

On a client geographic basis, the top two U.K. vertical markets were government and communication & utilities, generating revenues of approximately $266 million for the current quarter.

CGI Group Inc. - Management's Discussion and Analysis for the year ended September 30, 2018 Page 38

5.4.7. ECS

Revenue from our ECS segment was $314.6 million in Q4 2018, an increase of $28.7 million or 10.1% compared to the same period last year. On a constant currency basis, revenue increased by $19.1 million or 6.7%. The increase in revenue was mainly driven by market demand and growth in Germany and in Eastern Europe.

On a client geographic basis, the top two ECS vertical markets were MRD and communication & utilities, generating revenues of approximately $208 million for the current quarter.

5.4.8. Asia Pacific

Revenue from our Asia Pacific segment was $148.9 million in Q4 2018, a decrease of $0.3 million or 0.2% compared to the same period last year. On a constant currency basis, revenue increased by $6.2 million or 4.1%. The increase in revenue was mainly driven by the continued demand for our offshore delivery centers, partly offset by successful project completions in Australia.

On a client geographic basis, the top two Asia Pacific vertical markets were MRD and financial services, generating revenues of approximately $14 million for the current quarter.

5.5. ADJUSTED EBIT BY SEGMENT

For the three months ended September 30,					Change
	2018		2017		$		%
In thousands of CAD except for percentages
Northern Europe	49,868		41,597		8,271		19.9	%
As a percentage of segment revenue	12.6	%	11.7	%
Canada	93,329		99,243		(5,914	)	(6.0	%)
As a percentage of segment revenue	22.1	%	25.0	%