6-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 OF

THE SECURITIES EXCHANGE ACT OF 1934

For the month of December 2014

Commission File Number 1-14858

CGI Group Inc.

(Translation of Registrant’s Name Into English)

1350 René-Lévesque Boulevard West

15th Floor

Montréal, Québec

Canada H3G 1T4

(Address of Principal Executive Offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F           Form 40-F   ü  

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):        

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):        

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes          No   ü  

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-     .

Enclosures: 2014 Annual Report, and Proxy Circular dated December 12, 2014.

This Form 6-K shall be deemed incorporated by reference in the Registrant’s Registration Statement on Form S-8, Reg. Nos. 333-13350, 333-66044, 333-74932 , 333-112021, 333-146175, 333-177013 and 333-197742.

The following exhibits are filed herewith and incorporated herein:

Exhibit number	Description
99.1	2014 Annual Report
99.2	Proxy Circular dated December 12, 2014

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CGI GROUP INC.
	(Registrant)
Date:     December 22, 2014	By	/s/ Benoit Dubé

Name:	Benoit Dubé
Title:	Executive Vice-President and Chief Legal Officer

EX-99.1

EXHIBIT 99.1

CGI Group Inc.

2014 Annual Report

CGI’s 2014 Annual Report is comprised

of two separate volumes:

Volume 1: 2014 Annual Review

&

Volume 2: Fiscal 2014 Results

Volume 1 of the Annual Report

follows this page.

(this page does not form part of the Annual Report)

2014 Annual Review
OUR CLIENT COMMITMENT
TO LISTEN TO INNOVATE TO DELIVER
Business and IT consulting Systems integration IT managed services Business process services

In 2014, we conducted 820 in-person client interviews and 5,825 quality assessments
to align our services, solutions and delivery strategies to the exact needs of our clients. This builds upon an exercise we have repeated every year since our founding to continuously listen and respond to client priorities. This year’s Annual Review brings you the insights of 2014’s conversations. It provides an overview of our clients’ industry priorities and a snapshot of those strategic themes that, regardless of industry and location, are of signi?cant importance to all clients. The review offers a demonstration of how we partner with clients to deliver signi?cant value to their mission-critical, transformative work.
Revenue of CA$10.5 billion and backlog of CA$18.2 billion
Project delivery 95% on time and within budget
9/10 client satisfaction score
5th largest independent IT and business process services company
68,000 professionals
400 of?ces
40 countries
140 CGI-built business and IT solutions

CGI – 2014 ANNUAL REVIEW
CONTENTS
2 Satisfying clients is our business
Founder and Executive Chairman of the Board Serge Godin President and Chief Executive Of?cer Michael E. Roach
INDUSTRY INSIGHTS
4 Financial services
8 Health
10 Strategic theme – Digital transformation
12 Government
16 Communications
18 Utilities
20 Strategic theme – IT modernization
22 Oil and gas
24 Manufacturing
26 Strategic theme – Big data analytics
28 Transportation
30 Post and logistics
32 Retail and consumer services
34 Strategic theme – Cybersecurity
CGI SOLUTIONS
36 Mission-critical business and IT solutions
ABOUT CGI
38 Global footprint
40 Leadership team
42 Corporate social responsibility
43 CGI Constitution
1

Satisfying clients is our business
In 2014, CGI continued to build on a 38 year heritage of listening passionately to clients to evolve with their needs, innovating together to create business value, and delivering tangible results that help achieve long-term, sustainable growth.
The pages that follow offer highlights of our conversations with clients over the past year and our work in helping to drive their success. As we look ahead to 2015, Founder and Executive Chairman of the Board Serge Godin and President and Chief Executive Of?cer Michael E. Roach share their insights on CGI’s strategy and priorities in meeting client objectives.
One of the key messages of this year’s Annual Review is “We listen.” How does CGI invest in listening to clients to better understand and respond to their needs?
Serge: We conduct face-to-face interviews with clients every year as part of our strategic planning process. These interviews are very important to evolving our long-term vision as a company as they allow us to get a pulse on clients’ top business and IT priorities. In 2014, we completed 820 interviews. We use this input to align our priorities with clients’ priorities to ensure we invest in the capabilities and resources they need. This Annual Review is one way in which we report back to clients the results of these discussions.
Michael: As part of our day-to-day operating model, we also hold in-depth, in-person conversations with our clients as part of CGI’s Client Satisfaction Assessment Program (CSAP). This program underpins our commitment as a company to continuous improvement. Through our CSAP assessments, we obtain direct, signed feedback from clients detailing what we have done well and where we can improve. This, in turn, enables us to ensure high client satisfaction. In 2014, we conducted 5,825 assessments and achieved an average satisfaction rating of 9/10.
“Going into 2015, we are a solid, aligned company focused on operational excellence and positioned to further grow with our clients.”

2

CGI – 2014 ANNUAL REVIEW
CGI has doubled ?ve times over the past 20 years. How important is scale to our clients?
Serge: Today, CGI has a global platform of 400 of?ces in 40 countries to better serve our clients anywhere, anytime. We have implemented the CGI operating model and embedded the CGI Management Foundation across our global operations. The Foundation serves as the governing framework for all of our operations and our relationships with clients, members and shareholders. By focusing on the fundamentals outlined within the Foundation, we have the ?nancial strength and global alignment that enables us to consistently meet and exceed expectations.
“We will continue to work relentlessly to earn the satisfaction of all of our stakeholders.”
Michael: With this type of rapid growth, successful integration is a critical factor. We are a uni?ed company focused on operational excellence and on creating value. One particular focus area for 2015 is to continue to help bring innovation to our clients’ businesses. CGI’s services and solutions are transforming client operations around the world, and we want to focus more on this work in the coming year. To support this, we launched in 2014 a global Innovation, Creativity and Experimentation (ICE) program for our members to develop innovative solutions for clients—and with ourclients.
What can clients expect as CGI’s next area of growth?
Serge: We are going to build upon the global platform I just described. We’ve gone broad, now we are going to go deep. By this I mean we will build critical mass in those geographies that are key markets for our clients. Our objective is to go deep into metro markets with our industry expertise, end-to-end service offering, including IP services and solutions, and balanced global delivery model.
Michael: This notion of going deeper is important as our acquisition strategy will be very focused on increasing our capabilities to serve our clients better. Our goal is to be the best company, not necessarily the biggest. We know that clients want to partner with quality companies that can best serve them on a global basis. We are very focused on strengthening our presence, expertise and offerings within their markets to serve as their partner and expert of choice.
The CGI delivery model is a key strategic differentiator and enabler to creating additional value for our clients. What attracts clients to this model?
Michael: CGI is committed to delivering the best value to our clients in terms of service excellence, price and risk management. Through our client proximity model, we work closely with clients at the local level, providing deep industry and technology expertise and high responsiveness. Through our global delivery network, we offer the advantages of best-?t expertise and resources. We continue to open centers in strategic locations worldwide, adding three new centers this year to complement and expand our mix of onshore, nearshore and offshore centers. Serge: Our model is focused on providing the best value to clients. It is built upon rigorous quality management standards with fully certi?ed operations, demonstrating the highest standards in delivery processes and methodologies. All of this drives service excellence across CGI and is a key reason behind our project delivery track record of 95% on time and within budget.
What are your ?nal thoughts as CGI moves forward?
Michael: I am thankful for the ongoing trust and loyalty of our clients and shareholders, and the talent and dedication of our members. We will continue to listen, innovate and deliver in 2015.
Serge: We are committed to working relentlessly to drive the satisfaction of our clients, members and shareholders. We are grateful for their con?dence throughout our 38-year journey and we look forward to continuing to contribute to their success.

3

1 billion+

annual transactions are managed by CGI systems in the areas of collections, trade ?nance, payments, and insurance underwriting and claims settlement.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with 167 ?nancial services clients in 16 countries. The following were identi?ed as their common priorities:

• Digital capabilities to address changing customer behavior, omni-channel delivery, increased paperless transaction processing and virtual workforces

• Customer intelligence and insight to develop value-added services and a seamless experience

• IT modernization to drive straight through processing and cost reduction

• Regulatory compliance and reporting to demonstrate control of ?nancial activities

• Cybersecurity to counter growing operational and reputational risks from external threats

We innovate.
Through tangible innovation, mission-critical solutions and unique delivery models, we drive outcomes our clients depend on.
Omni-channel customer experience: Our services and solutions enable clients to deliver a seamless customer experience across branch, web, mobile and call center channels.
Future ?nancial models: CGI works with industry bodies, member banks and regulators to de?ne future payment, trade and digital banking models around the world.
Big data analytics: We revolutionize data collection and insight through our business intelligence framework, applied customer insight and next-generation information warehouse solutions, driving value based on a 360 degree view of customers.
Application optimization: Our application modernization approach maximizes the value of legacy applications and helped earn CGI a “Star Performer” ranking for bank IT outsourcing by Everest Group for the past two years.
Flexible models: CGI offers ?exible delivery models, including high-end consulting, systems integration and managed services, all of which can be delivered through our bene?ts funding, global delivery and cloud computing models to help clients reduce costs and mitigate risk.
Risk and regulation: CGI’s HotScan anti-money laundering software filters 64% of the world’s foreign exchange trades, and, for insurers, we offer solutions that help to minimize underwriting risks and improve pricing.
Cybersecurity: We help ?nancial services clients reduce security risks through our extensive cybersecurity capabilities, customizing services and solutions to their speci?c needs. Within the insurance sector, we help clients rapidly move into writing cyber insurance products for their customers.

4

CGI – 2014 ANNUAL REVIEW
FINANCIAL SERVICES
Digital transformation for banking: “Going digital” is more than a marketing strategy; it is a fundamental change in how organizations learn about and satisfy their customers. Although banks have been investing in digital capabilities, many want to improve their return on investment. CGI works with clients to guide their digital transformations through a wide range of services and solutions for strategy development, business intelligence, omni-channel delivery, cybersecurity and more. In 2014, CGI published a study, “Understanding Financial Consumers in the Digital Era,” which highlights key insights and recommendations for retail banks seeking to advance in the digital world.
Learn more at cgi.com/?nancialconsumersurvey.
Core transformation for insurance: Leading insurers are transforming their core systems to drive agility, reduce time-to-market, improve customer service, save costs and more. Core system transformation enables insurers to overcome legacy constraints and succeed in today’s dynamic marketplace. CGI helps to ensure their success through a broad range of services—from infrastructure and application services, to packaged solution implementation, application re-platforming and quality assurance. We work closely with insurers to develop and implement an effective transformation strategy and roadmap.

5

Expertise
across all ?nancial services sectors
Retail banking and consumer ?nance
We work with leading retail institutions across the globe, providing:
Digital, omni-channel and big data strategies and solutions
30+ delivery centers and 7,000+ members with deep expertise in core banking platforms and applications
Core retail banking platforms that support multi-channel, end-to-end banking activities
Hybrid security model providing control and audit capabilities, as well as hands-on support
Wealth and portfolio management solutions that manage more than $1 trillion in assets
Capital markets
Our capital markets experience across both the buy and sell sides includes:
Management of complex trading environments and assets for leading capital market organizations in Europe and North America
End-to-end services and solutions for asset managers
CGI’s CLS Manager, which provides a complete settlement solution for Continuous Linked Settlement (CLS) member banks
Corporate and transaction banking
CGI has deep transaction banking expertise, including:
High-volume payment engines and related services that enable banks to build and run payment service hubs
Best-in-class trade ?nance platform, CGI Trade360
Treasury and asset management software used by 160+ clients in 10 countries
Cash management capabilities that provide seamless front-to-back processing
Insurance (P&C, Life)
We provide services and solutions across the entire insurance value chain, including:
Full IT outsourcing and application management
Ratabase, an industry-leading rating and pricing platform
Systems integration services for leading core insurance solutions
Industry data and reporting services
Business and IT consulting to advance client strategies
6

CGI – 2014 ANNUAL REVIEW
FINANCIAL SERVICES
We deliver.
CGI delivers to 24 of the top 30 banks in the world and 12 of the top 20 global insurers.
We have completed 350+ implementations of our collections, recoveries and loan originations solutions. Our solutions typically reduce costs by 10-25% while improving recovery rates.
Every year, CGI software processes more than
5 million card payment transactions. More than $1 billion in fraud has been avoided through the use of CGI-developed systems.
CGI’s Ratabase rating and pricing engine has been implemented for 100+ P&C and life insurers.
Our trade ?nance SaaS platform, CGI Trade360, supports global trade ?nance services in more than 80 countries.
We partner with more than 100 credit unions, banks and trusts, representing approximately 3 million end customers and more than 30% of the market share of Canadian credit union members.
CGI delivers more than 15 million risk information reports annually to insurers, brokers and agents.
cgi.com/?nancial-services
“Since 2001, CGI has been instrumental in supporting ANZ in our global transaction banking business. By partnering with CGI, we have met the demands of the evolving trade finance marketplace and our growth strategy. CGI allows us to concentrate on our business solutions and customers while they take care of our trade finance technology. This year we extended our contract for CGI’s Trade360 SaaS platform to further support our growth strategy. The CGI Trade360 platform has been very important to ANZ’s global expansion and supporting our growth as a super-regional bank. We use the one platform across our trade business globally.”
Alan Huse Managing Director,
Global Transaction Banking ANZ
Melbourne, Australia

7

1,000+
health facilities are supported by CGI services and solutions. Our health industry clients include government health regulators, providers and payers; commercial individual care delivery institutions, integrated health systems and payers; and pharmaceutical and life sciences ?rms.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with health industry clients in 8 countries. The following were identi?ed as their common priorities:

• Extension or replacement of legacy systems to meet changing demands

• Increase in operational ef?ciency through transformational managed services

• Mobility across legacy platforms to extend services

• Clinical and organizational insights through advanced enterprise analytics

• Compliance with security and privacy legislation

We innovate.
We help our clients respond to these priorities with mission-critical services and solutions such as IT modernization, managed services, data management, mobile computing and cybersecurity, supported by our global delivery network—always with the aim of improving business and clinical outcomes.
Electronic medical records (EMRs): We implement affordable, modular EMR solutions that give clients the ?exibility to adopt the latest platforms and leverage existing investments in clinical applications.
Patient-centric care management:
CGI CommunityCare360 brings together data and systems for home monitoring, care planning, workforce management and ambulance dispatch to advance health beyond hospital walls.
Diagnostic image exchange: Our interoperable solutions provide secure and rapid access to images across networks, improving clinical ef?ciency and the patient experience.
Enterprise content management (ECM):
For 170+ hospitals, CGI’s Sovera ECM solutions manage more than 6 billion health records and streamline processes, reduce costs, improve care, enhance the revenue cycle and increase physician satisfaction.
Health analytics: We apply advanced data analytics to help clients derive insights for improving operational ef?ciency, reducing fraud and waste, and avoiding harmful incidents.
Health information exchange (HIE): We help governments, health systems and payers to advance their visions of securely exchanging health information to improve healthcare quality.
Administrative excellence: CGI applies advanced technology and shared services models to help health clients transform their supply chain, logistics and other administrative functions.

8

CGI – 2014 ANNUAL REVIEW
HEALTH
We deliver.
CGI supports health clients with end-to-end implementation and integration services, as well as CGI designed solutions.
Here are representative examples of our client partnerships.
CGI’s Merlot Medi solution is used by the Hospital District of Helsinki and Uusimaa (HUS), which includes 24 municipalities, to support more than 223,000 emergency rescue missions annually.
University College London Hospital has managed the care of 60,000+ patients at the Macmillan Cancer Centre in London using CGI’s e-CareLogic technology.
CGI-supported pharmacy systems have helped with the dispensing of more than 75 million prescriptions to citizens in Alberta and Saskatchewan, Canada. For the New York State Of?ce of Mental Health, one of the largest healthcare delivery organizations in the U.S., CGI is implementing a new EMR system to provide a stable, ?exible platform for leveraging technology to improve patient care and safety.
cgi.com/health
“Working with CGI since 2001, we have been able to rapidly develop and amend our critical business applications in the event of legislative change. It is essential that our platforms are delivered on time and to a high quality, ensuring our citizens have access to the information and services they need in accordance with legislative timeframes and requirements. And I’m delighted to have our ministry and partnership with CGI recognized at the Information Technology Association of Canada INGENIOUS innovation awards in the Large Public Organization category for the development of the Alberta Organ and Tissue Donation Registry (AOTDR).”
Susan Anderson
Assistant Deputy Minister and CIO, Health Information Technology and Systems Division Alberta Health Alberta, Canada
9

CGI – 2014 ANNUAL REVIEW
DIGITAL TRANSFORMATION
10

In 2014, we interviewed 820 clients from the industries and countries we serve. During these discussions, one prevalent theme recurred: digital transformation is a critical driver for change.
A roadmap to transformation
In today’s digitally-driven world, the pressure is on for businesses and governments to leverage the promise of digital strategies, processes and technologies to improve the quality of life for consumers and citizens. These digital enablers create untold opportunities to offer smart, connected products, personalized solutions and integrated services, and also have profound implications for transforming business operations. CGI collaborates with clients to create a seamless experience for their customers and citizens by providing the following:

• A joined-up vision and roadmap for digital enablers such as big data analytics, social media, mobility and the Internet of Things (IoT) that is adapted according to clients’ needs, digital maturity, and mission-critical systems and processes

• An approach that balances customer demand-driven agility at the front-end and the need for integration, compliance and security at the back-end and across the organization to deliver innovative services anytime, anywhere, anyhow

• A forum for bringing insight and practical experience to promote meaningful dialogue between the business, operations and IT

We help clients make critical connections across industries, technologies and partners to link devices, infrastructures and users to deliver value to customers, citizens, suppliers and employees.
ThyssenKrupp Elevator pilots IoT-based predictive maintenance solution
Working with Microsoft, CGI developed a proof-of-concept elevator maintenance solution for ThyssenKrupp Elevator (TKE) using the latest Internet of Things (IoT) technologies. TKE, which maintains more than 1.2 million elevators around the world, wanted to test how to transition to a more proactive and predictive maintenance approach driven by real-time data. CGI developed a system that extracts data from smart sensors on the elevator, generates rich, valuable insight using predictive analytics, and makes the insight available to supervisors and site technicians via cloud-based dashboards. The system was implemented for a small number of elevators run by TKE in the Seattle, Washington area in the summer of 2014 and has resulted in improved elevator uptime, resource planning, cost forecasting and maintenance scheduling.
“We wanted to go beyond the industry standard of preventative maintenance to offer predictive and even pre-emptive maintenance, thereby guaranteeing a higher uptime percentage on our elevators.”
Andreas Schierenbeck CEO
ThyssenKrupp Elevator Essen, Germany
Learn more about CGI’s IoT services and solutions at cgi.com/IoT.
11

$700+ billion
in government ?nancials are managed by CGI systems. We have successfully implemented or modernized more than 500 ERP systems for U.S. federal, state and local governments.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with 231 government clients in 12 countries. The following were identi?ed as their common priorities:

• IT modernization to enable cost savings and greater agility

• Digital transformation for enterprise processes and citizen interactions

• Shared services to drive economies of scale

• Cybersecurity to protect sensitive data and systems

• Data analytics for faster, better decisions

We innovate.
We respond to these priorities with tangible innovation, mission-critical solutions and agile delivery and funding models to help clients improve public services and increase ef?ciency.
CGI solutions: CGI’s purpose-built applications for critical government functions support administrative, ?nancial and revenue management; case management and public safety; citizen participation; identity and access management; patient-centric care; public space, facilities and energy management; mobile workforce management; and much more.
Modernization expertise: CGI helps governments modernize both systems and processes, while leveraging current assets, to streamline how they do business across the enterprise. Digital transformation: We help public sector clients adopt secure web, mobile, social and other digital technologies to achieve modern interaction models, transparency and accountability for public services.
Flexible delivery models: CGI offers a range of delivery models, including secure government clouds, managed services and onshore delivery centers, as well as bene?ts-funding approaches, to help clients reduce costs, mitigate risk, improve performance and adapt to evolving requirements. Cybersecurity: Our government-certi?ed cybersecurity experts and mission-grade solutions help agencies defend against ever-evolving cyber attacks in a model best suited to the degree of classi?cation of their mission and systems and budget requirements.
Big data analytics: CGI helps government clients better capture, integrate and analyze large amounts of data to gain real-time visibility and insight for better decisions.
12

CGI – 2014 ANNUAL REVIEW
GOVERNMENT
Future cities: CGI helps cities and regions build more sustainable futures. Using methodologies and tools based on international standards, we partner with clients to develop roadmaps and innovative solutions in energy and water management, intelligent transportation, health and social services, and more. As an example, CGI uses mobile technologies and gami?cation to help governments motivate citizens to participate in local decisions and contribute to their communities. Learn more at cgi.com/future-cities.
13

Expertise
across all government sectors
Central and federal
We have partnered with nearly 200 U.S. and Canadian federal agencies, plus the European Commission and central governments in 8 countries to:
Deliver self-service and open government strategies and solutions to meet changing expectations and reduce costs
Provide IT modernization, digital transformation and shared services to improve ef?ciency and effectiveness
Manage cybersecurity risks and threats
State, provincial and local
46 U.S. states and 200 local governments, a majority of Canadian provinces and territories, and numerous local governments throughout Europe and Australia have partnered with CGI to help:
Manage costs by modernizing IT and collaborating in multi-agency environments
Shift the role of IT to citizen services, where disruptive technology will enable innovation
Better manage the knowledge base due to an aging workforce
Defense and intelligence
National agencies in Canada, France, the Netherlands, Sweden, the UK and the U.S., as well as NATO, have relied on CGI to help them:
Adapt to budget pressures and a force realignment while enabling a rapid response to support forces
Deliver data insight and security to provide secure, timely and relevant data in complex and often hostile environments
Ensure interoperability of systems with other defense agencies
14

CGI – 2014 ANNUAL REVIEW
GOVERNMENT
We deliver.
CGI supports public sector clients by providing deep domain knowledge, purpose-built solutions and end-to-end services for mission-critical functions. Here are representative examples of the results of our client partnerships. The Police National Database, built and operated by CGI, is a critical intelligence system serving every police force in the UK. With a database of over 2.5 billion combined records, it allows forces to work together to make connections between suspects, events and locations.
23 U.S. states have partnered with CGI to advance their ERP systems and processes. In fact, 6 of the last 7 U.S. states to move forward with ERP modernizations chose CGI as their technology partner.
The World Anti-Doping Agency launched a CGI-developed “whereabouts” mobile application for more than 25,000 athletes worldwide. The app enables athletes to enter, check and change information on their whereabouts as part of their regulatory obligations.
The core infrastructure for the ?rst demonstrator for the Galileo Commercial Service, part of the emerging European Global Navigation Satellite System, is being built by CGI.
In 2014, more than 12.7 million citizens in France electronically ?led income tax declarations using CGI’s TéléIR application. For the U.S. Department of State, CGI provides services to approximately 5 million U.S. visa applicants annually in 68 countries and in 39 languages.
cgi.com/government
“Based on CGI Advantage ERP, CORE (Colorado Operations Resource Engine) will help Colorado departments and agencies reach new levels of efficiency and effectiveness. It’s a transformative solution that will serve our citizens for years to come and I applaud the outstanding work of our state team and CGI.”
Kathy Nesbitt Executive Director
Colorado Department of Personnel & Administration Denver, Colorado, United States
“CGI’s integration services enable us to deliver our agenda more effectively. The provision of desktop services hosted on CGI’s Secure Government Cloud offers a more flexible and open platform in line with UK Government’s IT disaggregation strategy. We have chosen the right partner for our diverse IT needs.”
Martin Ritchie CTO
UK Department of Energy and Climate Change London, United Kingdom
15

7+ million
communications (email, text and multimedia messages, interactive voice response and print) sent monthly to Bell customers, through a solution developed and maintained by CGI, are helping to improve the customer experience.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with communications industry clients in 11 countries. The following were identi?ed as their common priorities:

• Agile, convergent systems leveraging new technologies, including the Internet of Things (IoT), to support innovative services and improve the customer experience

• IT simpli?cation and rationalization to reduce costs and accelerate time to market

• Data analytics to develop new offers and strengthen customer relationships

• Cybersecurity to protect data, systems and networks

• Managed services to do more with less and to increase agility to respond to market changes

We innovate.
We respond to these priorities with tangible innovation and cost-effective, mission-critical operational support system/business support system (OSS/BSS) solutions to help communications service providers (CSPs) transform to new business models, develop new revenue streams and accelerate time to market. Our clients include traditional and cable CSPs, network equipment providers, and media and content providers that support the wireless, wireline, Internet and entertainment (IPTV) segments.
Telecom operations transformation: CGI helps
CSPs drive new revenue streams through high-value environments ranging from full IoT and mass data billing to digital commerce and customer care, enabling a seamless multi-channel customer experience.
Business optimization and cost reduction: Our order orchestration, billing, collections and testing services help CSPs drive greater operational ef?ciencies to accelerate time to market, enhance customer service effectiveness and reduce risks and costs.
Big data analytics: Our comprehensive data management solutions help CSPs leverage customer analytics to support marketing and sales strategies and improve the customer experience.
Cybersecurity: We help clients manage complex security needs, from audit and compliance to policy and architecture, with a business-focused approach. Managed services: CGI helps CSPs reduce their cost of delivery and speed time to market with high-quality application, infrastructure and business process services supported by our global delivery network.
16

CGI – 2014 ANNUAL REVIEW
COMMUNICATIONS
We deliver.
CGI partners with CSPs in all phases of their transformation programs, from de?nition to delivery. Here are representative examples of how we help our clients.
7 million+ active machine-to-machine devices are supported by CGI globally. CGI has supported the billing, order orchestration, revenue assurance or customer care transformation for six of the world’s largest CSPs.
30 million business messages per day pass through a business-critical enterprise service bus CGI has helped TeliaSonera develop. 25 million+ numbers have been ported by CGI for leading CSPs.
cgi.com/communications
“Bell and CGI are both leading Canadian companies focused on technological investment and innovation that delivers clear bene?ts for our customers. The recent renewal of our IT agreements with CGI to 2026 extends a collaboration of more than 15 years between our two Montréal-based companies to enhance the Bell customer experience while maximizing our operational ef?ciency.”
Michael Cole
Chief Information Of?cer BCE and Bell Canada Toronto, Canada
17

53 million
gas and electricity smart meters will be deployed across the UK between 2015 and 2020, and CGI is responsible for designing, building, hosting and running the data services enabling the rollout.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with utilities clients in 14 countries. The following were identi?ed as their common priorities:

• Evolution of business and IT operational models to drive ?exibility and cost savings

• Digital, mobile and smart technologies to transform operations and the customer experience

• Convergence of operational and information technologies to gain greater visibility and control

• Enhanced systems for enterprise asset management, enterprise resource planning, customer service, billing, regulatory compliance and other core operations

We innovate.
We focus on tangible innovation, mission-critical services and solutions, and best-?t global delivery options to help our utilities clients succeed.
Optimized network utility: CGI has developed a comprehensive vision for the optimized network utility—one that addresses changing industry paradigms—and is implementing that vision for clients through advanced transformation strategies, roadmaps and technologies.
Central energy markets: CGI has been at the forefront of developing market infrastructures for more than two decades.
Smart technologies: Recognized as a leader for smart grids, CGI is involved with high-pro?le smart grid projects such as Low Carbon London (UK) and supports smart metering for multiple utilities in the UK.
Network operations: We deliver a broad range of advanced network operations solutions, including our industry-leading PragmaLINE outage management system and mobile-based PragmaCAD workforce management solution.
Enterprise asset management (EAM):
As a founding member of the Institute of Asset Management, we contribute to the development of international EAM standards, including the new ISO 55000 series.
Production/generation: CGI developed an award-winning Renewables Management System for Energias de Portugal Renewables (EDPR) that controls more than 6,000 turbines on nearly 300 windfarms in 9 countries.
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CGI – 2014 ANNUAL REVIEW
UTILITIES
We deliver.
We partner with 250 electric, gas and water clients across the Americas, Europe and Asia Paci?c to deliver service excellence, value and results.
We deliver asset, workforce and outage management systems for 60 of the top 100 utilities in North America. CGI has implemented SAP customer care and services projects for large utilities in Brazil, Portugal, Belgium and Germany.
CGI built and implemented 11 of the 17 central market energy clearing houses in the world today.
cgi.com/utilities
One of the keys to success of this project was the full involvement of the project team. In addition, the company was able at the appropriate moment to allocate all the necessary resources for each stage of the project. It should also be noted that the close working relationship that existed with CGI allowed all obstacles to be overcome along the way. CGI, a partner of EDP for many years, has considerable experience in outage management systems, and this was also a factor that allowed this highly complex project to be completed within the expected timeframe and to a high standard.
Ferreira Pinto
Managing Director, Operations EDP Distribution Lisbon, Portugal
19

CGI – 2014 ANNUAL REVIEW
IT MODERNIZATION
20

IT modernization is a top priority for our clients based on our 2014 client interviews. As clients adapt for the digital world, they are examining their legacy investments to ?nd enablers for cost savings and agility. They are also under tremendous pressure to improve the quality and ef?ciency of their IT environments.
Enabling business agility
Because each client has unique business drivers, technology needs and resources, CGI offers a wide range of modernization approaches, from point solutions to end-to-end services. We help clients develop clear roadmaps for transforming their business processes, applications and infrastructures.

• Business processes: We go beyond infrastructure and application modernization to transform the business processes supported by these systems. Strong industry expertise combined with high-quality process execution and leading-edge process automation help our clients reduce operating costs, deliver new services quickly, improve customer satisfaction and place greater focus on core business activities.

• Applications: We help clients reduce high maintenance costs for mission-critical legacy applications by providing ?exible and proven approaches for rationalizing, consolidating and modernizing those applications. This includes our comprehensive framework for managing and transforming application portfolios.

• Infrastructures: Using our analytics-based approach, we provide actionable information and expert guidance for reducing client data center footprints and refreshing their IT environments, all while maximizing the use of existing investments. Our virtualization, cloud and legacy migration services help clients transform infrastructures faster and with less risk and cost.

• Delivery management toolset, delivery centers of excellence and a best-?t global delivery model

• Infrastructure services centers located in 13 countries across the Americas, Europe and Asia Paci?c

• Maximum score on “service execution and delivery excellence” in Forrester’s Wave™ reports on North American and EMEA application services for 2014

• Comprehensive cloud brokerage services—from strategic consulting to technology implementation to ongoing management—that transform cloud service procurement and delivery

APG and CGI partner to achieve greater agility and cost savings
CGI has a long and successful partnership with APG, the largest Dutch pension fund manager, in delivering IT services and projects, including IT modernization. One such project involved the migration of a mission-critical APG mainframe system to an open Unix environment. CGI’s innovative mainframe modernization approach enabled the migration to be completed in a short timeframe—eight months—without disrupting any of the affected applications. APG never missed a pension payment during the migration and has realized targeted cost savings. The migration’s success led APG and CGI to jointly receive a 2013 Computable Award for best ICT business project. With this success, APG selected CGI for strategic application services in December 2013. Together, APG and CGI are driving various transformation projects, including pension management and insurance, as well as the company’s shared services center.
CGI has extensive IT experience in the areas of pensions and insurance and has helped us in the IT ?eld in recent years to achieve good results. They helped us successfully migrate our Gross Net Distribution System as an outsourced mainframe to a Unix environment within the organization. This work received a Computable Award. We look forward to continuing to build our long-standing relationship.
Mark Boerekamp Chief Operations Of?cer APG
Amsterdam, Netherlands
21

95%
of all UK oil and gas offshore personnel movements are tracked by
VantagePoB, a widely used health, safety and environmental (HSE) workforce management solution developed by CGI.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with oil and gas clients in numerous countries. The following were identi?ed as their common priorities:

• Increased cybersecurity across the value chain to minimize risks, improve safety and prevent fraud

• Real-time data analytics to improve productivity, asset management and customer focus

• Better regulatory compliance tools to address the complexity and cost of compliance

• Enhanced customer experience to drive customer loyalty and market expansion

• Modernized systems to address exploration and production complexities, improve time to market and drive innovation

We innovate.
We help drive our clients’ growth and success through tangible innovation, mission-critical services and solutions, and best-?t global delivery options. Cybersecurity: CGI’s unique SECURE-ICS approach improves the cyber resilience of industrial control systems (ICS), enabling oil and gas companies to secure their digital oil ?elds and production and storage activities.
Big data analytics: We use sophisticated data modeling and visualization solutions to reduce exploration costs and speed up “time to first oil” and also integrate systems and data to create a single view of operations and information.
Regulatory compliance: Embedded within every CGI service and solution are robust regulatory compliance features that ensure timely and consistent compliance with new and evolving regulations.
Customer experience: We provide systems that support the entire card payment lifecycle and results-driven loyalty programs, and offer mobile payment solutions and the mining of payment transaction data to segment offers by market and targets.
Application modernization: We modernize back-of?ce systems and enable the fast adoption of smart, cloud, mobile and other ef?ciency and pro?t-driving technologies for rapid and standardized deployment in proven and emerging markets.
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CGI – 2014 ANNUAL REVIEW
OIL AND GAS
We deliver.
With a strong track record of delivery excellence, CGI is a partner to all 6 oil and gas majors.
We are a cloud services provider for
38 upstream operators, managing joint venture production data for more than 700 joint ventures.
CGI systems process more than 1.5 billion fuel card transactions and manage in excess of $100 billion in fuel card payments globally per annum.
We provide support for more than
1,000 upstream exploration and production applications for global oil and gas companies.
CGI’s Exploration2Revenue (X2R) Business Suite delivers robust solutions for joint venture, land and production management using mobile, digital and cloud technologies.
cgi.com/oil-and-gas
Our ERP system implementation has been an important step in our oil and retail business process development. Neste Oil and CGI can both be satis?ed having completed a development project of this complexity.
Tommi Tuovila CIO
Neste Oil Espoo, Finland
23

CGI – 2014 ANNUAL REVIEW
MANUFACTURING
100,000+
users at Airbus Group across the globe are supported by CGI’s application management services.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with manufacturing clients in 9 countries. The following were identi?ed as their common priorities:

• Operational improvements to reduce costs, increase productivity and speed up time to market

• Integration of enterprise systems to enable digital continuity across silos

• Internet of Things (IoT) and mobility to drive smarter manufacturing

• Master data management and big data analytics to improve data quality and usage

• Rationalization, standardization and modernization of application portfolios

• Agile infrastructures, including software as a service and other cloud models

We innovate.
We respond to these priorities by helping clients optimize the supply chain, improve operations, reduce costs and increase agility and customer focus. We do this across mining, metals, pulp, paper and chemicals, and for aerospace, automotive, high tech, electronics and other industrial products.
Business process transformation: We help manufacturing clients drive down costs, gain ?exibility and become more demand driven, using technology and services that enable dynamic and collaborative value chains.
Supply chain acceleration: CGI’s extensive subject matter expertise, services and solutions help clients transform operations across the value chain in engineering, procurement, manufacturing, logistics, marketing, sales and services.
Manufacturing execution system (MES) excellence:
CGI provides end-to-end MES services that help clients with business strategy, technology selection and implementation, and lifetime management. We actively participate in the Manufacturing Enterprise Solutions Association (MESA) and serve as a board member. (Learn about our 15th annual MES product survey at cgi.com/MES.) Digital transformation: We use IoT, mobile and other advanced technologies to help clients transition to smart manufacturing, including automation, remote monitoring and real-time predictive maintenance.
Big data analytics and cybersecurity: CGI helps manufacturers promote secure data sharing and extract actionable insights from the large volumes of information contained in their processes, products and business systems.
24

We deliver.
CGI supports manufacturing clients through best-?t global delivery options and end-to-end, mission-critical services and solutions that range from strategy development to lifetime support.
Toyota Material Handling Europe selected CGI to manage its entire IT operations, including data center, applications, service desk, email, network, collaboration, storage and security services. Objectives are to free up resources for business development, reduce costs, improve quality and gain greater access to IT expertise and innovation.
Michelin and CGI are continuing a 28 year relationship based on an innovative co-management model. CGI is Michelin’s preferred partner for the support of supply chain, procurement, marketing, sales and corporate finance applications in Europe and North America.
CGI provides SAP application management services for Cameco, one of the world’s largest uranium producers. This includes day-to-day software support, software enhancement and preventative maintenance services.
For Bombardier Recreational Products (BRP), CGI provides infrastructure, applications and system development services for SAP, customer and dealer support solutions across all BRP locations in 100 countries and 4,200+ dealers. Our partnership provides BRP with access to global expertise, ?exible delivery capacity and IT innovation.
cgi.com/manufacturing
I would like to express my great appreciation for the exemplary work, professionalism and commitment of the CGI team in the delivery of the Oracle project, the implementation of the Oracle AMS, and the outsourcing of Oracle infrastructure. Within the midst of very tight schedules for highly complex projects, the members of your team worked steadfastly seven days a week. Day after day, I would see them onsite at 7 am, and they often were still on hand at 11 pm, demonstrating the same positive spirit and dedicated determination to achieving our objectives. I am truly impressed and grati?ed to have made the right choice in partnering with CGI.
Benoit Durand
Chief Information Of?cer CAE
Montréal, Canada
Driving a huge business transformation process and the world’s largest Microsoft Dynamics AX rollout, I formed a partnership with CGI to help deliver our strategic business imperatives. CGI provides innovation, competence and cost-effective operations. CGI members work alongside our employees locally in the Nordics and support our Asian geographies such as New Zealand, Australia, etc., bringing together the depth and breadth of our joint global resources to solve complex challenges—and more.
Jens Nielsen Group CIO ASSA ABLOY Stockholm, Sweden
25

CGI – 2014 ANNUAL REVIEW
BIG DATA ANALYTICS
26

In 2014, we conducted 820 face-to-face client interviews and, no matter the industry and geography, clients told us that getting more value from their data is one of their chief business priorities.
Two primary reasons were cited: The ?rst is the need to ?nd and use valuable insights about their customers, citizens, employees and operations, and the second is the need to tame the costs and complexity of managing ever-growing volumes of data generated by our digital world.
Helping clients get more value from their data
CGI helps clients on both fronts with expertise, solutions and partnerships using our Data2Diamonds approach to simplifying data management and realizing value from analytics. This framework provides a blueprint for success in putting information to work. Our objectives are to:

• Shorten the “distance” between data assets and the people who need them

• Discover insights into important behaviors of people and machines

• Help clients use those insights to improve results

Helping Vitens to better detect leakages
Guaranteeing the reliable supply of drinking water to 5.5 million customers in the Netherlands is the job of Vitens, the water supply company. Before ?owing out of a customer’s faucet, water is first purified at a production facility and then sent through kilometers of pipe. With big data and predictive analytics, CGI has helped Vitens detect leaks in these pipes sooner and with fewer dif?culties.
Supporting health data accuracy, reliability and privacy for Alberta citizens
For Alberta Health, the ministry responsible for setting policy, legislation and standards for the province’s health system, CGI supports more than 100 clinical and administrative applications. CGI’s business intelligence services for Alberta Health help ensure reliable and accurate data for use by health system stakeholders and data privacy for Albertans.
Helping Alaska’s State Government make faster, better decisions
For the State of Alaska, a CGI-developed statewide data warehouse and business intelligence system puts reporting in the hands of business users for ?nancial, human resources and payroll information. Accessed by 1,200 government employees, the system has reduced report wait times from months to minutes, providing both current and historical data to support smarter decisions on investments that matter to Alaskans.
27

CGI – 2014 ANNUAL REVIEW
TRANSPORTATION
30
airlines worldwide use CGI’s Pro Logistica in-flight retail solution to manage on-board sales.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with transportation clients in 11 countries. The following were identi?ed as their common priorities:

• Enhanced cybersecurity to ensure passenger safety, prevent infrastructure attacks and protect personal data

• Integration of ERP and CRM systems to support 360 degree customer visibility

• Adoption of Internet of Things (loT), digital and mobile technologies to increase visibility and enhance the customer experience

• Intelligent transport systems to improve mission-critical operations across the enterprise

• IT modernization to optimize the supply chain, leverage real-time data and improve services

• Improved enterprise asset management to drive productivity and ef?ciencies

We innovate.
We deliver tangible innovation and mission-critical services and solutions, along with best-?t global delivery options, to help drive clients’ transformation and success.
Passenger experience: We deliver customer intelligence solutions that optimize the passenger experience, such as our award-winning iNStapp train occupancy application for NS and a “My Train” arrival application for the Norwegian National Rail Administration.
Retail, customer care and billing: We deliver mobile and cloud-based solutions that transform these mission-critical areas, driving ef?ciencies, cost savings and an enhanced customer experience.
Internet of Things (IoT): CGI received the 2014
Microsoft Intelligent Systems Partner of the Year Award for our innovative Internet of Things (IoT) solution work within the public transportation sector.
Intelligent transport systems: Chosen by the
Swedish Transport Administration as its strategic IT services provider, CGI operates an image capture system for the Administration’s road traffic registry and is also spearheading a workplace modernization program.
Supply chain optimization: CGI’s Supply Chain
Acceleration framework and services deliver increased automation, visibility and quality across our clients’ mission-critical supply chains.
Asset and workforce management: Our ?eld productivity mobile app, developed with ProRail, received the 2014 SAP-Microsoft Unite Partner Connection Innovation Award, and we also received a 2014 Esri outstanding partner award for our SIGMA rail management solution.
Cybersecurity: CGI helps assess, enhance and manage clients’ cybersecurity capabilities, providing expertise, services and solutions that protect their businesses.
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We deliver.
We work with 140 clients in the aviation, rail, and road and regional transit sectors.
CGI’s smart data solution for the bus system in Helsinki, Finland captures and analyzes fuel consumption and driver performance data, enabling the city to reduce fuel costs, improve safety and enhance the customer experience.
Used by 3 of the 8 national road tolling schemes in Europe, CGI’s
Traf?c360 service combines automated and manual processes to capture data from millions of license plate numbers, ensuring 100% data reliability for road toll operators. CGI’s GO solution is a fully integrated airport management solution that covers all processes—from arrival to departure—and is used by 10 airports in the Portuguese ANA Group.
CGI-developed systems have supported the City of New York since 1987, collecting $11+ billion for a variety of parking-related violations.
cgi.com/transportation
CGI’s back-office system first installed in 2006 is still enabling us to deliver an easy-to-administer, national, concessionary travel scheme that brings enormous benefits to all concerned: the people of Scotland, the Scottish Government and all of the transport operators involved. In particular, the system has played a key part in helping us operate an effective fraud strategy, resulting in substantial savings to the public purse.
Gordon Hanning
Head of Concession Travel and Integrated Ticketing Transport Scotland Glasgow, United Kingdom
29

25 million
Nordic residents, plus 2 million businesses, receive 5.9 billion letters,
110 million parcels and 2.5 billion kilograms of goods delivered by PostNord with the support of CGI services.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with key post and logistics clients in a number of countries. The following were identi?ed as their common priorities:

• Data analytics to better understand customers and increase operational ef?ciencies

• IT modernization to drive cost savings, collaboration, sustainability and customer focus

• Internet of Things (IoT) and digital technologies to enhance processes, work?ows and customer interaction across the entire value chain

• Advanced CRM solutions to differentiate and build customer loyalty

• Transport management to increase productivity, reduce fuel costs and improve sustainability

We innovate.
For post and logistics clients worldwide, we deliver tangible innovation, mission-critical services and solutions, and best-?t global delivery options. Big data analytics: CGI is part of the European Research project, iCargo, which is exploring innovative logistics solutions for the sharing of real-time information in an easy, secure and controlled manner across the entire supply chain. IT modernization: We modernize systems across the parcel, express, logistics and national postal delivery sectors, using a unique, proven application modernization roadmap and an application portfolio management approach that drives cost savings and agility.
Digital transformation: We leverage IoT and digital technologies to integrate and optimize client operations, helping clients to embrace omni-channel delivery and enhance the customer experience. Transport management: CGI delivers intelligent transport management expertise and solutions to leading post and logistics companies to transform and optimize the planning, execution and measurement of freight movements.
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CGI – 2014 ANNUAL REVIEW
POST AND LOGISTICS
We deliver.
We have decades of experience in delivering results to post and logistics clients across the globe.
Point of sale (POS) solutions implemented by CGI for Itella in Finland are used in 500 postal service outlets and by 1,500 users across the country; and through CGI’s process automation, Itella now receives more than 5 million electronic acknowledgements within its service outlet network every year. CGI’s River Information Services (RIS) solution for Schelderadarketen (SRK) harmonizes and enriches data, enabling interoperability between SRK applications and various partner systems and improving the safety, effectiveness and environmental friendliness of inland waterway freight movement.
CGI’s IT4CARGO TARIC service helps clients such as Nurminen Logistics use the correct codes in custom declarations to ensure proper duty and tax payments. CGI is delivering an innovative business intelligence approach with state-of-the-art technologies and a CO2 optimized infrastructure in partnership with the
Deutsche Bahn Group.
cgi.com/post-and-logistics
With this new system, developed and deployed by CGI, we are able to manage the Posti’s service outlet network in a chainlike manner. The new system integrates many of our core business functions, and we are therefore able to handle the constant growth of parcel traffic.
Jukka Rosenberg
Mail Communications Director Itella Helsinki, Finland
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CGI – 2014 ANNUAL REVIEW
RETAIL AND
CONSUMER SERVICES
3 million
lines of orders are successfully delivered every day to 5,000 Carrefour stores in France through systems supported by CGI, enabling Carrefour to consistently meet its customers’ expectations and needs.
We listen.
As part of our 2014 annual strategic planning process, we conducted face-to-face interviews with retail and consumer services clients in 10 countries. The following were identi?ed as their common priorities:
Omni-channel delivery to create a seamless customer experience
Mobile solutions to enable customers to shop anytime, anywhere
Behavioral insight to better understand past behaviors, predict future buying patterns and meet high customer expectations
Supply chain optimization to increase ?exibility to support and further enable customer-centric operations
We innovate.
We work with leading brands worldwide to deliver tangible innovation, mission-critical services and solutions, and best-?t global delivery options. Omni-channel delivery: CGI builds, integrates, supports and maintains digital, mobile, e-commerce and in-store channels, creating a seamless customer experience, providing customers the ability to shop anywhere, anytime, and improving customer loyalty and retention.
Customer-facing mobility: Through our end-to-end enterprise mobility solutions, CGI develops, implements, manages and evolves mobile strategies, platforms and application suites for our clients.
Behavioral insight: CGI leverages the latest techniques and technologies, such as advanced data analytics for digital, mobile and in-store channels, helping our clients harness, analyze and transform data into valuable insight to gain a better understanding of customer behavior and develop new channels, services and products.
Supply chain optimization: CGI’s Supply Chain
Acceleration portfolio optimizes the entire value chain from end to end and reduces total cost of delivery through a broad range of business and IT services that enable a seamless customer experience in an omni-channel environment.
32

We deliver.
We offer a broad range of services and solutions that are delivering results to major retailers and consumer services companies across the globe.
CGI delivers all in-store IT services to more than 530 Reitan Convenience stores, which include the 7-Eleven and Narvesen brands in Norway.
Through Apple’s iBeacon open standard, CGI developed a mobile app for Liseberg, the largest amusement park in Sweden. With such features as a map of attractions, information on queue times, the ability to position friends and family, and integration with social media, the app has been downloaded more than 300,000 times and has distinguished Liseberg from its competitors by being the ?rst to leverage the iBeacon technology.
CGI has helped the Auchan Group better understand changes in consumer behavior within the digital journey through the development and implementation of omni-commerce solutions such as “click and collect.” CGI and ADEO, the world’s third largest DIY retailer, are collaborating to implement a corporate community platform aimed at connecting ADEO’s 90,000 employees. After a pilot period that connected 24,000 employees across 4 business units, this innovative solution is ready to be implemented across ADEO’s 27 companies.
cgi.com/retail
Over the past few years, CGI has become a key partner we rely on to implement Carrefour’s multi-format and multi-local strategy in France. Our ambition is to enable our stores to even better satisfy our local customers every day. CGI is helping us to simplify our processes and strengthen our core back-office systems to deliver on our promises across all types of stores and channels. Our great cultural fit with CGI, shared professionalism, and mutual commitment to our clients is driving this successful collaboration.
Hervé Thoumyre Group & France CIO Carrefour Paris, France
33

CGI – 2014 ANNUAL REVIEW
CYBERSECURITY
34

Across industries and geographies, protecting data and critical infrastructure from cyber attacks was identi?ed as a top priority in our face-to-face client interviews in 2014.
The digital transformation of our interconnected economies has created new vulnerabilities to be identi?ed and protected as cyber crimes become more sophisticated and prevalent.
As a result, our clients are rethinking their cybersecurity postures in the context of broader risk management strategies. In the private sector, missteps can mean ?nancial loss and reputational damage. In government, no margin of error in public safety is acceptable.
Security is part of everything we do for our clients.
At CGI, our business-focused approach provides the insight, foresight and advanced threat capabilities to protect against cyber attacks and take decisive action when they occur. Our full life cycle cybersecurity services help clients assess the risk, protect the business and operate with con?dence.
9,000+ biometrics systems and devices
have been deployed and supported for the U.S. military.
10 Security Operations Centers
continuously identify and monitor cyber threats and 3 accredited security certi?cation facilities provide extensive assessment services.
20–40% cost savings
are achieved by clients that rely on CGI managed security services provided by local cyber teams, backed by our 1,400 cyber experts globally.
Reducing cyber risks for our clients
In 2014, we continued to see momentum and activity to further help our clients safeguard their businesses. Here are representative headlines from the year:

• CGI’s new UK security facilities to deliver protective monitoring and cyber threat analysis services

• CGI and Aon partner to provide cyber insurance risk assessment services for Finnish companies

• Volvo Car Group selects CGI for security services

• CGI awarded DISA Operational Security certi?cation for defense cloud services

Certi?ed, secure cloud services
CGI was the ?rst large cloud provider to receive the U.S. Federal Risk and Authorization Management Program (FedRAMPSM) cloud security certi?cation, and one of the first to receive the Defense Information Systems Agency’s (DISA) cloud security accreditation. CGI also offers secure cloud services through the UK’s G-Cloud initiative, which helps public bodies quickly and simply select proven and ?exible cloud-based IT services.
35

CGI – 2014 ANNUAL REVIEW
CGI SOLUTIONS
Our full-service offering includes a large portfolio of CGI-developed solutions. These software applications, reusable frameworks and delivery methods represent years of investment in capturing our industry and technology expertise. Whether deploying our own solutions or solutions that combine CGI and partner capabilities, CGI exemplifies know-how in the design, implementation and management of the solutions that power our clients’ businesses.
36

Powering clients’ businesses with purpose-built solutions
We have developed mission-critical solutions and frameworks for all of the industries we serve and to support clients’ cross-industry functions. As part of the face-to-face interviews we conducted with our clients, many of our solutions were cited as being in top demand for supporting key functions, including:
Credit, payment and trade
Cybersecurity, identity and access management, including biometrics
Government enterprise resource planning and collections
Electronic records, patient-care management and pathology
Asset and workforce management
Smart metering
Supply chain acceleration
Intelligent transport systems
Oil and gas lifecycle management
Solution recognition
CGI solutions received distinguished recognition during 2014 by industry bodies and technology partners, including:
Alliander and CGI received the ICT Milieu Award 2014 for their Open Smart Grid Platform.
ProRail and CGI received the 2014 SAP-Microsoft Unite Partner Connection Innovation Award for a mobile solution that improves ?eld worker productivity.
CGI received the 2014 Microsoft Intelligent Systems Partner of the Year Award for our innovative Internet of Things (IoT) solution that delivers signi?cant client bene?ts.
CGI was awarded the 2014 Esri outstanding partner award for our SIGMA rail management solution.
CGI was named as a leader in the IDC MarketScape: Worldwide IT Professional Services for Utility Smart Grid 2014 Vendor Assessment.
CGI received the 2014 Center for Digital Government “Best Fit Integrator” Performance and Modernization Award for our work on the California Franchise Tax Board’s Enterprise Data to Revenue program.
eVA (Virginia’s electronic purchasing solution), developed in partnership with CGI, was named as part of the 2014 Supply & Demand Chain Executive 100.
CGI HotScan for Watchlist Filtering has been awarded the SWIFT Alliance Add-on Label every year since 2005.
Solution spotlights
CGI Trade360
Powering a bank’s global trade business
CGI Trade360 is a global SaaS platform for running banks’ trade and open account business. It enables banks to provide a global standard of service, bring products to market quickly and improve customer interactions. It also helps them mitigate risk and reduce total cost of ownership with CGI providing all software, infrastructure and support. The solution currently supports bank trade services for more than 30,000 portal users in 80 countries across Asia, Europe, North America and Oceania.
Learn more at cgi.com/CGITrade360.
Sm@rtering
Delivering advanced meter infrastructure management
CGI offers Sm@rtering, a comprehensive meter data management platform, to help utilities benefit from the advantages of smart meters, including improved efficiencies and customer service. Sm@rtering’s robust capabilities support data collection, meter and energy data management, meter infrastructure supervision and smart grid management. Built on a ?exible, service-oriented architecture, Sm@rtering is a web-based, user-friendly platform. All operations can be performed through graphical user or machine-to-machine interfaces that are easy to implement and navigate.
Learn more at cgi.com/smartering.
To view our extensive portfolio of CGI solutions, go to cgi.com/solutions.
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CGI’s global footprint
Juneau
CANADA
Edmonton Markham Mississauga Toronto Saskatoon Calgary Regina Burnaby Victoria
Stratford Fredericton Moncton
UNITED STATES Halifax OF AMERICA
Albany Montréal Somersworth Buffalo Ottawa Mansfield Québec City Saguenay Shawinigan New York City Sherbrooke Lakewood Denver Sacramento Leavenworth Oakland
Los Angeles Aberdeen Durham North Charleston Phoenix Alexandria Fairfax Orange Park Tempe San Diego Annapolis Junction Fairview Heights Pittsburgh Tucson Athens Fayetteville Richmond Sierra Vista Atlanta Frankfort St. Louis Baltimore Huntsville Tampa Lafayette Birmingham Lebanon Troy Cleveland Lexington Park Washington, D.C.
Columbia Manassas Columbus Mayfield Heights Dumfries Norfolk
Honolulu
Austin Hot Springs Bedford Houston Belton Lawton Dallas Norman Edmond San Angelo Fort Worth San Antonio
Caracas
COLOMBIA
VENEZUELA
Bogotá
PERU BRAZIL
A strong local Lima presence in
400 communities São Paulo Mogi das Cruzes
around the world
Santiago
CHILE
Americas
38

CGI – 2014 ANNUAL REVIEW
Kiruna
FINLAND
Gällivare
Tornio
SWEDEN Luleå
Oulu Skellefteå Umeå Örnsköldsvik Östersund Vaasa Kuopio Härnösand Jyväskylä Joensuu Sundsvall NORWAY Mikkeli
Söderhamn Pori
Lappeenranta
Gävle Espoo Bergen Turku Oslo Borlänge Västerås Helsinki Haugesund Grålum Hämeenlinna Stockholm ESTONIA
Tønsberg Tallinn Kouvola Stavanger Tartu Lahti Riihimäki Aberdeen Bromölla Tampere Aalborg UNITED KINGDOM Herning Eskilstuna Aarhus Göteborg Glasgow Edinburgh DENMARKBallerup Helsingborg Newcastle Kolding Malmö Jönköping Kalmar Karlskrona NETHERLANDS Hamburg Karlstad Bremen POLAND
Hanover Berlin Warsaw Linköping Mariestad Basingstoke GERMANY
BELGIUM Norrköping Birmingham Erfurt CZECH REPUBLIC Örebro Brentwood LUXEMBOURG Prague Krakow Oskarshamn Bridgend Arnhem Amiens Brno Skara Bristol Paris SLOVAKIA Bertrange Rennes Stuttgart Colchester Le Mans Brussels Brest Basel Munich Bratislava Gloucester Orléans Darmstadt Nantes Leatherhead FRANCE SWITZERLAND Düsseldorf London Niort Geneva Eindhoven Limoges Lyon Manchester Milan Groningen Clermont-Ferrand Milton Keynes Grenoble Hennef Bordeaux Reading Toulouse Nice Heerlen
ITALY
St Albans Pau Hoofddorp Montpellier Aix-en-Provence Karlsruhe
SPAIN Lille Porto Mannheim Rotterdam
PORTUGAL Madrid
Strasbourg Toledo Sulzbach Lisbon Sacavém Málaga Sintra
Rabat Casablanca
MOROCCO
Europe
INDIA
Mumbai
Hyderabad Manila
Bangalore Chennai PHILIPPINES
Kuala Lumpur MALAYSIA
SINGAPORE
AUSTRALIA
Brisbane
Sydney Canberra
Melbourne
Hobart
Asia Paci?c
39

CGI’s leadership team
CGI’s management team includes seasoned experts within the IT services industry who develop strategies to satisfy the needs of our three stakeholders – clients, members and shareholders – and work to ensure all stakeholders’ success.
Corporate services
Serge Godin
Founder and Executive Chairman of the Board
Michael E. Roach
President and Chief Executive Of?cer
François Boulanger
Executive VP and Chief Financial Of?cer
Benoit Dubé
Executive VP and Chief Legal Of?cer
Julie Godin
Executive VP, Global Human Resources and Strategic Planning
Global operations
ASIA PACIFIC AND MIDDLE EAST
Colin Holgate
President
Mark Aston
South East Asia
Scott Ayer
Australia
David Butcher
Middle East
S. Chandramouli
India
CANADA
Claude Marcoux
Chief Operating Of?cer
Réjean Bernard
Global Infrastructure Services
Alain Bouchard
Québec City
Shawn Derby
Western Canada
Michael Godin
National Capital Region
Roy Hudson
Communications Services Business
Marie MacDonald
Greater Toronto
Jay Maclsaac
Atlantic Canada
Guy Vigeant
Greater Montréal
CENTRAL AND EASTERN EUROPE
Serge Dubrana
President
Sake Algra
Netherlands
Dariusz Gorzen
Poland
Torsten Strass
Germany and Switzerland
Stefan Szabó
Czech Republic and Slovakia
Hans Vets
Belgium
FRANCE
Jean-Michel Baticle
President
Philippe Bouron
Business Consulting
Fabien Debû
Grand East
Stéphane Jaubert
CPG Retail and North
David Kirchhoffer
Financial Services
Mohamed Lakhli?
Morocco
Gilles Le Franc
Grand West
Michel Malhomme
Global Delivery Center
Pierre-Dominique Martin
Public Sector / HR / Transportation
Sassan Mohseni
Energy and Utilities /
Telecommunications and Media
Hervé Vincent
Manufacturing
40

CGI – 2014 ANNUAL REVIEW
Lorne Gorber Eva Maglis Doug McCuaig Luc Pinard Claude Séguin
Senior VP, Global Executive VP, Global Chief Executive VP, Global Client Executive VP, Senior VP, Corporate
Communications and Information Of?cer Transformation Services Corporate Performance Development and
Investor Relations Strategic Investments
NORDICS,
SOUTHERN EUROPE AND SOUTH AMERICA
João Baptista
President
Pär Fors
Sweden
José Carlos Gonçalves
Southern Europe
Edson Leite
South America
Heikki Nikku
Finland and Estonia
Martin Petersen
Denmark
Olav Sandbakken
Norway
UNITED KINGDOM
Timothy Gregory
President
David Fitzpatrick
Global Infrastructure Services
Tara McGeehan
Energy and Utilities
Steve Smart
Space, Defence and National Security
Steve Thorn
Public Sector
Mike Whitchurch
Commercial Sector
UNITED STATES
George Schindler
President
Mark Boyajian
Mid-Atlantic
Dave Delgado
West
Ned Hammond
Global Infrastructure Services
Dave Henderson
Central-South
Christopher James
Business Solutions and Onshore Delivery
Steven Starace
Northeast
Dr. James Peake
President, CGI Federal
Patrick Dougherty
Army and Defense Intelligence Programs
Sandra Gillespie
Health and
Compliance Programs
Tim Hurlebaus
National Security and Defense Programs
Tom Kirk
Government Secure Solutions, CGI Inc.
Toni Townes-Whitley
Chief Operating Of?cer and Civilian Agency Programs
SERVICES TO SHELL
Ron de Mos
Senior VP
41

CGI – 2014 ANNUAL REVIEW
Corporate social responsibility (CSR)
Building a sustainable future together
CSR represents a key aspect of our business model, which is designed to bring us closer to our members, clients, shareholders and communities. It is also one of our six core values, guiding us as we strive daily to operate as a strong, productive and sustainable company that bene?ts society as a whole.
Our commitments
To provide our professionals with health, wellness and ownership programs that positively in?uence their well-being and satisfaction
To partner with our clients to deliver energy and environmental sustainability solutions and to collectively support charitable causes
To support our communities through causes that improve their social, economic and environmental well-being
To improve the environment through environmentally friendly operating practices, community service activities and green IT offerings
To operate ethically through a strong code of ethics and good corporate governance Learn more about these commitments and examples of how we ful?ll them at cgi.com/CSR.
In 2014, CGI invested in numerous initiatives to further our CSR commitments. Highlights include:
Launch of the Innovation, Creativity and Experimentation (ICE) program that harnesses, evaluates and funds new ideas that bring the greatest bene?ts to our stakeholders (Read more at cgi.com/ICE.)
Expansion of our global delivery network with the announcement of 3 new centers that will create 1,300 high-quality jobs and will join some 30 centers of excellence around the globe that contribute to the economic development of our communities
Global rollout of CGI’s Member Assistance Program that provides a wide range of free and confidential support services to members to support their professional and personal lives
Expanded coverage of our ISO 14001 environmental management certi?cation in Europe with certi?cation now including our 21 of?ces in France
Continued focus on partnering with clients and other community stakeholders to contribute to community development (Read more at cgi.com/community-stories.)
42

The CGI Constitution
While most companies have a vision and mission, CGI goes a step beyond. We have a company dream, which emphasizes the enjoyment and ownership principles essential to our success. The CGI dream, together with our vision, mission and values, make up the CGI Constitution. With frameworks and programs founded upon this Constitution, CGI’s professionals have the opportunity to participate in the life and development of their company, which, in turn, results in client loyalty and shareholder growth.
Our dream
To create an environment in which we enjoy working together and, as owners, contribute to building a company we can be proud of.
Our vision
To be a global world class information technology and business process services leader helping our clients succeed.
Our mission
To help our clients succeed through outstanding quality, competence and objectivity, providing thought leadership and delivering the best services and solutions to fully satisfy client objectives in information technology, business processes and management. In all we do, we foster a culture of partnership, intrapreneurship, teamwork and integrity, building a global world class information technology and business process services company.
Our values
PARTNERSHIP AND QUALITY
For us, partnership and quality are both a philosophy and a way of life. We constantly deepen our understanding of our clients’ business and we develop and follow the best management practices. We entrench these approaches into client relationship and service delivery frameworks in order to foster long term and strong partnerships with our clients. We listen to our clients and we are committed to their total satisfaction in everything we do.
OBJECTIVITY AND INTEGRITY
We exercise the highest degree of independent thinking in selecting the products, services and solutions we recommend to clients. In doing so, we adhere to the highest values of quality, objectivity and integrity. We do not accept any remuneration from suppliers. We always act honestly and ethically. We never seek to gain undue advantages and we avoid con?icts of interest, whether real or perceived.
INTRAPRENEURSHIP AND SHARING
Our collective success is based on our competence, commitment and enthusiasm. We promote a culture of innovation and initiative where we are empowered with a sense of ownership in supporting clients, thus ensuring our pro?table growth. Through teamwork, sharing our know-how and expertise across our global operations, we bring the best of CGI to our clients. As members, we share in the value we create through equity ownership and pro?t participation.
RESPECT
In all we do, we are respectful of our fellow members, clients, business partners and competitors. As a global company, we recognize the richness that diversity brings to the company and welcome this diversity while embracing the overall CGI business culture.
FINANCIAL STRENGTH
We strive to deliver strong, consistent ?nancial performance which sustains long term growth and bene?ts both members and shareholders. Financial strength enables us to continuously invest in our members’ capabilities, our services and our business solutions to the bene?t of our clients. To this end, we manage our business to generate industry superior returns.
CORPORATE SOCIAL RESPONSIBILITY
Our business model is designed to ensure that we are close to our clients and communities. As members, we embrace our social responsibilities and contribute to the continuous development of the communities in which we live and work.
43

Founded in 1976, CGI is a global IT and business process services provider delivering high-quality business consulting, systems integration and managed services. With 68,000 professionals in 40 countries, CGI has an industry-leading track record of delivering 95% of projects on time and within budget, aligning our teams with clients’ business strategies to achieve top-to-bottom line results.
cgi.com
© 2014 CGI Group Inc.
CGI Advantage, CGI CommunityCare360, CGI Trade360, Data2Diamonds, Experience the commitment,
Exploration2Revenue, HotScan, IT4CARGO, Pragma, Pro Logistica, Ratabase and Sovera are trademarks or registered trademarks of CGI Group Inc. or its related companies.

CGI Group Inc.

2014 Annual Report

CGI’s 2014 Annual Report is comprised

of two separate volumes:

Volume 1: 2014 Annual Review

&

Volume 2: Fiscal 2014 Results

Volume 2 of the Annual Report

follows this page.

(this page does not form part of the Annual Report)

Fiscal 2014 Results
Business and IT consulting Systems integration IT managed services Business process services

    1 Management’s Discussion and Analysis

of Financial Position and Results of Operations

  56 Management’s and Auditors’ Reports

  61 Consolidated Financial statements

127 Shareholder information

FISCAL 2014 RESULTS

Management’s Discussion and Analysis of Financial

Position and Results of Operations

November 13, 2014

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, 2014 and 2013. 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 indicated.

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

All statements in this MD&A that do not directly and exclusively relate to historical facts constitute “forward-looking statements” within the meaning of that term in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended, and are “forward-looking information” within the meaning of Canadian securities laws. These statements and this information represent CGI’s intentions, plans, expectations and beliefs, and are subject to risks, uncertainties and other factors, of which many are beyond the control of the Company. These factors could cause actual results to differ materially from such forward-looking statements or forward-looking information. These factors include but are not restricted to: the timing and size of new contracts; acquisitions and other corporate developments; the ability to attract and retain qualified members; market competition in the rapidly evolving information technology industry; general economic and business conditions; foreign exchange and other risks identified in the MD&A, in CGI’s Annual Report on Form 40-F filed with the U.S. Securities and Exchange Commission (filed on EDGAR at www.sec.gov), the Company’s Annual Information Form filed with the Canadian securities authorities (filed on SEDAR at www.sedar.com), as well as assumptions regarding the foregoing. The words “believe”, “estimate”, “expect”, “intend”, “anticipate”, “foresee”, “plan”, and similar expressions and variations thereof, identify certain of such forward-looking statements or forward-looking information, which speak only as of the date on which they are made. In particular, statements relating to future performance are forward-looking statements and forward-looking information. CGI disclaims any intention or obligation to publicly update or revise any forward-looking statements or forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable law. Readers are cautioned not to place undue reliance on these forward-looking statements or on this forward-looking information. You will find more information about the risks that could cause our actual results to differ significantly from our current expectations in Section 10 – Risk Environment.

1

Management’s Discussion and Analysis

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 our 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 before integration-related costs, finance costs, finance income and income tax expense as these items are not directly related to the cost of operations. Management believes this measure is useful to investors as it best reflects the profitability of our operations and allows for better comparability from period to period as well as to analyze the trends in our operations. A reconciliation of the yearly and current quarter’s adjusted EBIT to its closest IFRS measure can be found on pages 22 and 38.
	•	Net earnings prior to specific items1 (non-GAAP) – is a measure of earnings before the integration-related costs, adjustments related to tax and the resolution of acquisition-related provisions. Management believes that this measure is useful to investors as it best reflects the Company’s operating profitability and allows for better comparability from period to period. A reconciliation of the yearly and current quarter’s net earnings prior to specific items to its closest IFRS measure can be found on pages 24 and 39.
	•	Basic and diluted earnings per share prior to specific items1 (non-GAAP) – is defined as the net earnings excluding integration-related costs, adjustments related to tax and the resolution of acquisition-related provisions on a per share basis, assuming all dilutive elements are exercised. Management believes that this measure is useful to investors as it best reflects the Company’s operating profitability on a per share basis and allows for better comparability from period to period. The yearly and current quarter’s diluted net earnings reported in accordance with IFRS can be found on pages 23 and 38 while the yearly and current quarter’s diluted net earnings prior to specific items can be found on pages 24 and 39.
	•	Net earnings – is a measure of earnings generated for shareholders.
	•	Diluted earnings per share – is a measure of earnings generated for shareholders on a per share basis, assuming all dilutive elements are exercised.
Liquidity	•	Cash provided by operating activities – is a measure of cash generated from managing our day-to-day business operations. We believe strong operating cash flow is indicative of financial flexibility, allowing us to execute our corporate 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. Management tracks this metric closely to ensure timely collection, healthy liquidity, and is committed to a DSO target of 45 days or less. We believe 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.

1 Specific items related to the resolution of acquisition-related provisions are described on page 20.

2

FISCAL 2014 RESULTS

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. We believe that this measure is useful to investors for the same reason.
	•	Backlog (non-GAAP) – Backlog includes new contract wins, extensions and renewals (“bookings”(non- GAAP)), partially offset by the backlog consumed during the year as a result of client work performed and adjustments related to the volume, cancellation and/or 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 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 contract wins to our revenue in the period. This metric allows management to monitor the Company’s business development efforts to ensure we grow our backlog and our business over time. Management remains committed to maintaining a target ratio greater than 100% over a trailing 12-month period. Management believes that the longer period is a more effective measure as the 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 our cash and cash equivalents, short-term investments and long-term investments from our debt. Management uses the net debt metric to monitor the Company’s financial leverage. We believe that this metric is useful to investors as it provides insight into our financial strength. A reconciliation of net debt to its closest IFRS measure can be found on page 30.
	•	Net debt to capitalization ratio (non-GAAP) – is a measure of our level of financial leverage and is obtained by dividing the net debt by the sum of shareholder’s equity and debt. Management uses the net debt to capitalization metric to monitor the proportion of debt versus capital used to finance our operations and to assess the Company’s financial strength. We believe that this metric is useful to investors as it provides insight into our financial strength.
	•	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 earnings for the last 12 months over the last four quarter’s average equity. Management looks at ROE to measure its efficiency at generating profits for the Company’s shareholders and how well the Company uses the invested funds to generate earnings growth. We believe 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 after-tax adjusted EBIT for the last 12 months, over the last four quarter’s 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. We believe that this measure is useful to investors for the same reason.

Reporting Segments

The Company is managed through the following seven operating segments, namely: United States of America (“U.S.”); Nordics, Southern Europe and South America (“NSESA”); Canada; France (including Luxembourg and Morocco) (“France”); United Kingdom (“U.K.”); Central and Eastern Europe (primarily the Netherlands and Germany) (“CEE”); and Asia Pacific (including Australia, India and the Philippines) (“Asia Pacific”). Please refer to section 3.4 and 3.6 of the present document and to Note 28 of our audited consolidated financial statements for additional information on our segments.

To assist in better understanding the operational performance of our company since the acquisition of Logica plc (“Logica”) in 2012, we refer to our operations in two broad groupings. Our activities prior to Logica were predominantly comprised of the Canada and the U.S. segments which we refer to as our North American operations or segments. The acquired operations which we refer herein as our European operations or segments is comprised of the NSESA, France, U.K., CEE and Asia Pacific segments.

3

Management’s Discussion and Analysis

MD&A Objectives and Contents

• 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 is 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	This includes a description of our business and how we generate revenue as well as the markets in which we operate.
	1.1.      About CGI	6
	1.2.      Vision and Strategy	6
	1.3.      Competitive Environment	7
2.     Highlights and Key  Performance  Measures	A summary of key achievements during the year and past three years’ key performance measures as well as CGI’s share performance.
	2.1.      Fiscal 2014 Highlights	9
	2.2.      Selected Yearly Information & Key Performance Measures	11
	2.3.      Stock Performance	12
3.     Financial Review	A discussion of year-over-year changes to operating results between the years ended September 30, 2014 and 2013, describing the factors affecting revenue and adjusted EBIT on a consolidated and reportable segment basis, and also by describing the factors affecting changes in the major expense categories. Also discussed are bookings broken down by geography, by vertical market, by contract type and by service type.
	3.1.      Bookings and Book-to-Bill Ratio	14
	3.2.      Foreign Exchange	15
	3.3.      Revenue Distribution	16
	3.4.      Revenue Variation and Revenue by Segment	17
	3.5.      Operating Expenses	19
	3.6.      Adjusted EBIT by Segment	20
	3.7.      Earnings before Income Taxes	22
	3.8.      Net Earnings and Earnings Per Share (“EPS”)	23

4

FISCAL 2014 RESULTS

Section	Contents	Pages
4.     Liquidity	This includes 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 liquidity (days sales outstanding) and capital structure (return on equity, net debt to capitalization, and return on invested capital) are analyzed on a year-over-year basis.
	4.1.      Consolidated Statements of Cash Flows	25
	4.2.      Capital Resources	28
	4.3.      Contractual Obligations	29
	4.4.      Financial Instruments and Hedging Transactions	29
	4.5.      Selected Measures of Liquidity and Capital Resources	30
	4.6.      Off-Balance Sheet Financing and Guarantees	31
	4.7.      Capability to Deliver Results	31
5.     Fourth Quarter  Results	A discussion of year-over-year changes to operating results between the three months ended September 30, 2014 and 2013, describing the factors affecting revenue, adjusted EBIT earnings on a consolidated and reportable segment basis as well as cash from operating activities. Also discussed are bookings for the three months ended September 30, 2014.
	5.1.      Foreign Exchange	33
	5.2.      Revenue Variation and Revenue by Segment	34
	5.3.      Adjusted EBIT by Segment	36
	5.4.      Net Earnings and Earnings Per Share	38
	5.5.      Consolidated Statements of Cash Flows	40
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.	41
7.     Changes in  Accounting Policies	A summary of the new and amended accounting standards adopted and the future accounting standard changes.	42
8.     Critical Accounting  Estimates and  Judgements	A discussion of the estimates and judgements made in the preparation of the audited consolidated financial statements.	44
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.	47
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	48
	10.2.   Legal Proceedings	54

5

Management’s Discussion and Analysis

1. Corporate Overview

1.1. ABOUT CGI

Founded in 1976 and headquartered in Montreal, Canada, CGI is the fifth largest independent information technology (“IT”) and business process services (“BPS”) firm in the world. CGI has approximately 68,000 employees, whom we refer to as members, worldwide. The Company’s client-proximity model provides for CGI services and solutions to be delivered in a number of ways and considering a number of factors: onsite at clients’ premises; or from any combination of onsite, near-shore and/or offshore delivery centers. We also have a number of leading business solutions that support long-term client relationships. Our services are broken down as:

• Consulting - CGI provides a full range of IT and management consulting services, including business transformation, IT strategic planning, business process engineering and systems architecture.

• Systems integration - CGI integrates and customizes leading technologies and software applications to create IT systems that respond to clients’ strategic needs.

• Management of IT and business functions (“outsourcing”) - Clients delegate entire or partial responsibility for their IT or business functions to CGI to achieve significant savings and access the best suited technology, while retaining control over strategic IT and business functions. As part of these agreements, we implement our quality processes and practices to improve the efficiency of the clients’ operations. We may also integrate clients’ operations into our technology network. Finally, we may take on specialized professionals from our clients, enabling our clients to focus on key operations. Services provided as part of an outsourcing contract may include development and integration of new projects and applications; applications maintenance and support; technology infrastructure management(enterprise and end-user computing and network services); transaction and business processing such as payroll, claims processing, and document management services. Outsourcing contracts typically have terms from five to ten years.

CGI offers its end-to-end services to a focused set of industry vertical markets where we have developed extensive and deep subject matter expertise. This allows us to fully understand our clients’ business realities and to have the knowledge and solutions needed to advance their business goals. Our targeted vertical markets include: financial services, government, health, telecommunications & utilities, manufacturing, retail and distribution (“MRD”), which together account for more than 90% of global IT spend.

CGI has a wide range of proprietary business solutions that help shape opportunities and drive value for our clients and shareholders. Examples of these include Enterprise Resource Planning solutions, energy management, credit and debt collections, tax management, claims auditing and fraud detection.

We take great pride in delivering high quality services to our clients. To do so consistently, we have implemented and continue to maintain the International Organization for Standardization (“ISO”) quality program. By designing and implementing rigorous service delivery and quality standards, followed by monitoring and measurement, we are better able to satisfy our clients’ needs. As a measure of the scope of our ISO program, all of CGI’s legacy business units continue to be certified and most of the business units acquired through the acquisition of Logica are certified as well. The work on certifying the remaining business units is in progress.

1.2. VISION AND STRATEGY

At CGI, we have a vision of being a global world-class IT and BPS leader, who helps its clients succeed. This business vision begins with our dream, which is “to create an environment in which we enjoy working together and, as owners, contribute to building a Company we can be proud of.” From this dream we developed our build and buy strategy, comprised of four pillars that combine organic growth (“build”) and acquisitions (“buy”).

6

FISCAL 2014 RESULTS

The first two pillars of our strategy focus on organic growth. The first pillar focuses on smaller contract wins, renewals and extensions. The second involves the pursuit of new large, long-term outsourcing contracts, leveraging our end-to-end services, global delivery model and critical mass.

The third pillar of our growth strategy focuses on the acquisition of smaller firms or niche players. We identify niche acquisitions through a strategic mapping program that systematically searches for targets that will strengthen our vertical market knowledge or increase the richness of our service offerings.

The fourth pillar involves the pursuit of transformational acquisitions focused on expanding our geographic presence and critical mass. This approach further enables us to strengthen our qualifications to compete for large outsourcing contracts. CGI continues to be a consolidator in the IT services industry.

This four-pillar growth strategy has resulted in our ability to build critical mass in key client geographies, gain a deep knowledge of clients’ business sectors and develop specialized practices and innovative solutions.

CGI remains committed to profitable growth and the fundamentals that help all of CGI’s stakeholders succeed; while fulfilling CGI’s strategic objective of doubling the size of the Company.

Today, with a presence in 40 countries, strong expertise in all of our target markets and a complete range of IT services, CGI is able to meet our clients’ business needs anywhere, anytime. While remaining true to our Constitution, CGI continues to adapt to best respond to changes in the IT market, the local and global business climate of clients, and to our professionals’ and shareholders’ expectations.

1.3. COMPETITIVE ENVIRONMENT

As a global provider of end-to-end information technology and business process services, CGI operates in a highly competitive and rapidly evolving global industry. Our competition comprises a variety of global players, from niche companies providing specialized services to other end-to-end service providers, mainly in the U.S., Europe and India, all of whom are competing to deliver some or all of the services we provide.

Recent mergers and acquisition activity has resulted in CGI being positioned as one of the few remaining IT services firms that operates independently of any hardware or software vendor. Our independence allows CGI to deliver the best-suited technology available to our clients.

CGI offers its end-to-end services to a select set of targeted vertical markets in which we have deep business and technical expertise. To compete effectively, CGI focuses on high-end systems integration, consulting and outsourcing where vertical market industry knowledge and expertise are required.

Our business model is designed to listen to the needs of our clients and adapt our offerings to provide the best solutions to meet each client’s unique needs. Our client approach focuses on:

— Local accountability: We live and work near our clients to provide a high level of responsiveness. We speak our clients’ language, understand their business environment, and collaborate with them to meet their goals and advance their business.

— Global capabilities: Our local presence is backed by an expansive global delivery network that ensures our clients have access to resources that best fit their needs and offer proximity.

— Quality processes: Our investment in quality frameworks and rigorous client satisfaction assessments provides for a consistent track record of on-time and on-budget project delivery, enabling our clients to focus on their business objectives.

— Committed experts: Our professionals have vast industry, business and technology expertise to help our clients. In addition, a majority of our professionals are shareholders of the Company, providing an added level of commitment to our clients’ success.

— Practical innovation: We provide a full set of innovative solutions in areas of big data, predictive analytics and mobility, which are complemented by our expertise in business consulting, systems integration and outsourcing services to offer creative business strategies to our clients.

7

Management’s Discussion and Analysis

CGI’s business operations are based on the Management Foundation (the “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 is followed by all our business units and helps in providing a disciplined high standard of quality service to our clients across all of our operations, and additional value to our stakeholders.

There are many factors involved in winning and retaining IT and BPS contracts, including the following: total cost of services; ability to deliver; track record; vertical market expertise; investment in business solutions; local presence; global delivery capability; and the strength of client relationships. CGI compares favourably with its competition with respect to all of these factors.

In summary, CGI’s competitive value proposition encompasses the following: end-to-end IT and BPS capability; expertise and proprietary business solutions in our targeted vertical markets covering the majority of global IT spending; a unique global delivery model, which includes industry leading delivery capabilities; a disciplined Management Foundation; and our focus on client satisfaction which is supported by our client proximity business model.

8

FISCAL 2014 RESULTS

2. Highlights and Key Performance Measures

2.1. FISCAL 2014 HIGHLIGHTS

Key performance figures for the year include:

• Revenue of $10,499.7 million, up 4.1%;

• Adjusted EBIT of $1,356.9 million, up 26.1%;

• Adjusted EBIT margin of 12.9%, up 220 basis points;

• Net earnings prior to specific items¹ of $893.5 million, or diluted EPS of $2.80, up 22.8%;

• Net earnings of $859.4 million, or diluted EPS of $2.69, up 88.5%;

• Cash provided by operating activities of $1,174.8 million, up 75.0%;

• Bookings of $10.2 billion and backlog of $18.2 billion;

• Net debt reduced by $626.6 million;

• Return on invested capital of 14.5%;

• Return on equity of 18.8%.

¹ Specific items include the integration costs related to the acquisition of Logica, the tax adjustments and the resolution of acquisition-related provisions which are discussed on page 20.

2.1.1. Acquisition of Logica plc

On August 20, 2012, CGI completed its acquisition of Logica for 105 pence ($1.63) per ordinary share which is equivalent to a total purchase price of $2.7 billion plus the assumption of Logica’s net debt of $0.9 billion. Subsequent to August 20, 2012, our results incorporated the operations of Logica.

As of September 30, 2014, we completed the integration of Logica, a full year earlier than planned. In addition to the previously announced $525 million program, we actioned an incremental $26.5 million of new opportunities while foreign currency fluctuations unfavorably impacted the program by approximately $24.0 million over the two-year period. In summary, a total of $575.5 million in one-time costs were spent to drive annual savings in excess of $400 million and EPS accretion to CGI.

The following table provides a summary of the integration program:

Summary of the integration program	Total program    as of Q4 2014
(In millions of CAD)
Integration-related provision at the beginning of the program	—
Plus:
Integration-related expenses	575.5
Minus:
Integration-related payments	472.7
Non-cash integration-related costs	7.2
Plus : FX impact a	10.0
Integration-related provision at the end of the year	105.6

^a This amount was recorded in other comprehensive income.

9

Management’s Discussion and Analysis

2.1.2. Long-term Debt

In the first quarter of fiscal 2014, the unsecured revolving credit facility of $1,500.0 million was extended by one year to December 2017. On July 25, 2014, the facility was further extended by another year to December 2018 and can be further extended annually. All other terms and conditions including interest rates and banking covenants remain unchanged.

In April 2014, we repaid the first maturing tranche of the term loan credit facility of $486.7 million using the proceeds from our credit facilities.

In September 2014, the Company entered into a $955 million debt private placement comprised of four tranches of Senior U.S. unsecured notes for US$745 million, and one tranche of Senior euro unsecured note for €85 million, with a weighted average maturity of 7.9 years and a weighted average fixed coupon of 3.62%. The Company used the proceeds of the issuance of the new private placement notes to repay the May 2015 maturing tranche of the term loan credit facility of $494.7 million and the outstanding balance of the credit facilities. Further details are provided in section 4.1.3 of the present document.

10

FISCAL 2014 RESULTS

2.2. SELECTED YEARLY INFORMATION & KEY PERFORMANCE MEASURES

Fiscal 2014 marks the second full year incorporating Logica’s results. Planned as part of our integration activities we have been exiting low margin business to improve our revenue quality. In addition, we have been restructuring the prior Logica operations to align their cost structures to appropriate levels. As a result, our profitability and cash from operating activities have improved. The acquisition of Logica was completed on August 20, 2012, six weeks prior to the end of fiscal 2012. The significant year-over-year changes for fiscal 2012 through fiscal 2013 are primarily attributable to this acquisition.

As at and for the years ended September 30,	2014	2013		2012		Change 2014 / 2013		Change 2013 / 2012
In millions of CAD unless otherwise noted
Growth
Backlog	18,237		18,677		17,647		(440)		1,030
Bookings	10,169		10,310		5,180		(141)		5,130
Book-to-bill ratio	96.8%		102.2%		108.5%		(5.4%)		(6.3)%
Revenue	10,499.7		10,084.6		4,772.5		415.1		5,312.1
Year-over-year growth	4.1%		111.3%		13.0%		(107.2%)		98.3%
Constant currency growth 1	(2.9%)		110.1%		12.1%		(113.0%)		98.0%
Profitability
Adjusted EBIT 2	1,356.9		1,075.6		546.7		281.3		528.9
Adjusted EBIT margin	12.9%		10.7%		11.5%		2.2%		(0.8%)
Net earnings	859.4		455.8		131.5		403.6		324.3
Net earnings margin	8.2%		4.5%		2.8%		3.7%		1.7%
Basic EPS (in dollars)	2.78		1.48		0.50		1.30		0.98
Diluted EPS (in dollars)	2.69		1.44		0.48		1.25		0.96
Liquidity
Cash provided by operating activities	1,174.8		671.3		613.3		503.5		58.0
As a % of revenue	11.2%		6.7%		12.9%		4.5%		(6.2%)
Days sales outstanding 3, 8	43		49		74		(6)		(25)
Capital structure
Net debt 4, 8	2,113.3		2,739.9		3,105.3		(626.6)		(365.4)
Net debt to capitalization ratio 5, 8	27.6%		39.6%		46.5%		(12.0%)		(6.9%)
Return on equity 6	18.8%		12.3%		5.0%		6.5%		7.3%
Return on invested capital 7	14.5%		11.8%		11.4%		2.7%		0.4%
Balance sheet
Cash and cash equivalents, and short-term investments	535.7		106.2		127.6		429.5		(21.4)
Total assets 8	11,234.1		10,879.3		10,690.2		354.8		189.1
Long-term financial liabilities 8, 9	2,748.4		2,489.5		3,228.9		258.9		(739.4)

¹  Constant currency growth is adjusted to remove the impact of foreign currency exchange rate fluctuations. Please refer to page 17 for details.

²  Adjusted EBIT is a measure for which we provide the reconciliation to its closest IFRS measure on page 22.

³  Days sales outstanding (“DSO”) is a measure which is discussed on page 31.

⁴ Net debt is a measure for which we provide the reconciliation to its closest IFRS measure on page 30.

⁵ The net debt to capitalization ratio is a measure which is discussed on page 30.

⁶  The return on equity ratio is a measure which is discussed on page 30.

⁷  The return on invested capital ratio is a measure which is discussed on page 31.

⁸  The reader should note that the figures for fiscal 2012 were restated to reflect the final purchase price allocation adjustments made in fiscal 2013 to the opening balance sheet of Logica.

⁹  Long-term financial liabilities include the long-term portion of the debt and the long-term derivative financial instruments.

11

Management’s Discussion and Analysis

2.3. STOCK PERFORMANCE

2.3.1. Fiscal 2014 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 the S&P/TSX Composite Index, the S&P/TSX 60 Index, the S&P/TSX Capped Information Technology and Midcap Indices, and the Dow Jones Sustainability Index.

TSX	(CDN$)		NYSE	(US$)
Open:		35.84	Open:		34.83
High:		41.47	High:		39.47
Low:		32.71	Low:		29.40
Close:		37.84	Close:		33.77
CDN average daily trading volumes1:		1,545,689	U.S. average daily trading volumes:		267,355

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

2.3.2. Share Repurchase Program

On January 29, 2014, the Company’s Board of Directors authorized and subsequently received the approval from the TSX for the renewal of the Normal Course Issuer Bid (“NCIB”) to purchase up to 21,798,645 Class A subordinate shares for cancellation, representing 10% of the Company’s public float as of the close of business on January 24, 2014. The Class A subordinate shares may be purchased under the NCIB commencing February 11, 2014 and ending on the earlier of February 10, 2015, or the date on which the Company has either acquired the maximum number of Class A subordinate shares allowable under the NCIB, or elects to terminate the NCIB.

12

FISCAL 2014 RESULTS

During fiscal 2014, the Company repurchased 2,837,360 Class A subordinate shares for $111.5 million at an average price of $39.29 under the annual aggregate limit of the previous NCIB. As at September 30, 2014, the Company may purchase up to 21.8 million shares 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 7, 2014:

Capital Stock and Options Outstanding	As at November 7, 2014
Class A subordinate shares	279,479,153
Class B shares	33,272,767
Options to purchase Class A subordinate shares	19,510,102

13

Management’s Discussion and Analysis

3. Financial Review

3.1. BOOKINGS AND BOOK-TO-BILL RATIO

Bookings for the year were $10.2 billion, representing a book-to-bill ratio of 96.8%. The breakdown of the new bookings signed during the year is as follows:

Contract Type
A.	Extensions and renewals	61	%
B.	New business	39	%

Service Type
A.	Management of IT and business functions (outsourcing)	50	%
B.	Systems integration and consulting	50	%

Segment
A.	NSESA	26	%
B.	U.S	19	%
C.	France	15	%
D.	Canada	14	%
E.	U.K	14	%
F.	CEE	11	%
G.	Asia Pacific	1	%

Vertical Markets
A.	Manufacturing, retail & distribution	28	%
B.	Government	28	%
D.	Financial services	20	%
C.	Telecommunications & utilities	16	%
E.	Health	8	%

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; it is instead a key indicator of our future revenue used by the Company’s management to measure growth. For the year ended September 30, 2014, the book-to-bill ratio of our North American operations was at 76.0% while it was at 112.2% for our European operations for a total book-to-bill ratio of 96.8%.

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, 2014	Book-to-bill ratio   for the year ended   September 30,   2014
Total CGI bookings	10,168,998	96.8%
North American bookings	3,371,848	76.0%
U.S.	1,916,498	69.9%
Canada	1,455,350	85.7%
European bookings	6,797,150	112.2%
NSESA	2,610,607	122.4%
France	1,467,329	109.7%
U.K.	1,437,209	104.0%
CEE	1,142,889	109.9%
Asia Pacific	139,116	82.4%

14

FISCAL 2014 RESULTS

3.2. FOREIGN EXCHANGE

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

Closing foreign exchange rates

As at September 30,	2014	2013	Change
U.S. dollar	1.1209	1.0285	9.0%
Euro	1.4156	1.3920	1.7%
Indian rupee	0.0181	0.0164	10.4%
British pound	1.8182	1.6639	9.3%
Swedish krona	0.1554	0.1604	(3.1%)
Australian dollar	0.9791	0.9607	1.9%
Average foreign exchange rates
For the years ended September 30,	2014	2013	Change
U.S. dollar	1.0833	1.0155	6.7%
Euro	1.4700	1.3326	10.3%
Indian rupee	0.0178	0.0180	(1.1%)
British pound	1.7953	1.5846	13.3%
Swedish krona	0.1635	0.1551	5.4%
Australian dollar	0.9971	1.0105	(1.3%)

15

Management’s Discussion and Analysis

3.3. REVENUE DISTRIBUTION

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

                                            

Service Type				Client Geography				Vertical Markets
A.	Management of IT and business			A.	U.S	27%	A.	Government	33%
	functions (outsourcing)		52%	B.	Canada	15%	B.	Manufacturing,
	1.      IT services	41%		C.	U.K	13%		retail & distribution	24%
	2.      Business process services	11%		D.	France	12%	C.	Financial services	18%
				E.	Sweden	9%	D.	Telecommunications & utilities	15%
B.	Systems integration and consulting		48%	F.	Finland	6%	E.	Health	10%
				G.	Rest of the world	18%

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 enterprise to be under common control. The Company considers the federal, regional or local governments each to be a single customer. Our work for the U.S. federal government including its various agencies represented 13.4% of our revenue for fiscal 2014 as compared to 13.8% in fiscal 2013.

16

FISCAL 2014 RESULTS

3.4. REVENUE VARIATION AND REVENUE BY SEGMENT

Our seven segments are based on our geographic delivery model: U.S., NSESA, Canada, France, U.K., CEE and Asia Pacific.

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 2014 and fiscal 2013. The fiscal 2013 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 years ended September 30,						Change
	2014			2013		$			%
In thousands of CAD except for percentages
Total CGI revenue		10,499,692			10,084,624		415,068			4.1%
Variation prior to foreign currency impact		(2.9%	)
Foreign currency impact		7.0%
Variation over previous period		4.1%
U.S.
Revenue prior to foreign currency impact		2,493,426			2,512,530		(19,104	)		(0.8%	)
Foreign currency impact		171,450
U.S. revenue		2,664,876			2,512,530		152,346			6.1%
NSESA
Revenue prior to foreign currency impact		1,944,864			2,010,693		(65,829	)		(3.3%	)
Foreign currency impact		145,376
NSESA revenue		2,090,240			2,010,693		79,547			4.0%
Canada
Revenue prior to foreign currency impact		1,632,794			1,685,723		(52,929	)		(3.1%	)
Foreign currency impact		5,526
Canada revenue		1,638,320			1,685,723		(47,403	)		(2.8%	)
France
Revenue prior to foreign currency impact		1,207,907			1,273,604		(65,697	)		(5.2%	)
Foreign currency impact		125,885
France revenue		1,333,792			1,273,604		60,188			4.7%
U.K.
Revenue prior to foreign currency impact		1,121,213			1,158,520		(37,307	)		(3.2%	)
Foreign currency impact		162,634
U.K. revenue		1,283,847			1,158,520		125,327			10.8%
CEE
Revenue prior to foreign currency impact		968,727			1,003,950		(35,223	)		(3.5%	)
Foreign currency impact		94,806
CEE revenue		1,063,533			1,003,950		59,583			5.9%
Asia Pacific
Revenue prior to foreign currency impact		425,676			439,604		(13,928	)		(3.2%	)
Foreign currency impact		(592	)
Asia Pacific revenue		425,084			439,604		(14,520	)		(3.3%	)

17

Management’s Discussion and Analysis

We ended fiscal 2014 with revenue of $10,499.7 million, an increase of $415.1 million or 4.1% over fiscal 2013. On a constant currency basis, revenue decreased by $290.0 million or 2.9%, as foreign currency rate fluctuations favourably impacted our revenue by $705.1 million or 7.0%. For the current year, the top two vertical markets were government and MRD, which together accounted for approximately 56% of our revenue.

As part of the Company’s strategic focus to continuously improve its revenue quality, and as previously disclosed, we have been exiting low margin business as part of our integration activities. As a result, our yearly revenue has been reduced. Partially offsetting this, new higher quality revenue was booked or existing business expanded and/or extended across the geographies.

3.4.1. U.S.

Revenue in our U.S. segment was $2,664.9 million in fiscal 2014, an increase of $152.3 million or 6.1% over fiscal 2013. On a constant currency basis, revenue decreased by $19.1 million or 0.8%. The decrease in revenue reflects the run-off of a large low margin government project and the ramp down of Federal and state health projects partly offset by the ramp up of work within the financial services vertical markets and the increased sales of IP based business solutions.

For the current year, the top two U.S. vertical markets were government and health, which together accounted for approximately 77% of its revenue.

3.4.2. NSESA

Revenue in our NSESA segment was $2,090.2 million, an increase of $79.5 million or 4.0% over fiscal 2013. On a constant currency basis, revenue decreased by $65.8 million or 3.3%. The decrease in revenue was mainly due to project completions and the run-off of low margin business as previously described, partially offset by the recently awarded multi-year outsourcing contracts.

For fiscal 2014, revenue coming from Sweden and Finland accounted for 74% of this segment while NSESA’s top two vertical markets were MRD and government, which together accounted for approximately 58% of its revenue.

3.4.3. Canada

Revenue in our Canada segment was $1,638.3 million, a decrease of $47.4 million or 2.8% over fiscal 2013. On a constant currency basis, revenue decreased by $52.9 million or 3.1%. The revenue decrease was mainly due to lower work volumes as a result of the expiration of contracts that were partially offset by the start-up of new contracts.

For the current year, Canada’s top two vertical markets were financial services and telecommunication and utilities, which together accounted for approximately 57% of its revenue.

3.4.4. France

Revenue in our France segment was $1,333.8 million, an increase of $60.2 million or 4.7% over fiscal 2013. On a constant currency basis, revenue decreased by $65.7 million or 5.2%. The decrease in revenue was primarily the result of lower work volumes due to the completion of projects and the run-off of low margin business partly offset by the start-up of new contracts.

For the current year, France’s top two vertical markets were MRD and financial services, which together accounted for approximately 65% of its revenue.

3.4.5. U.K.

Revenue in our U.K. segment was $1,283.8 million, an increase of $125.3 million or 10.8% over fiscal 2013. On a constant currency basis, revenue decreased by $37.3 million or 3.2%. The decrease in revenue was due to the run-off of low margin business, partly offset by new and extended contracts within the government vertical market.

For the current year, U.K.’s top two vertical markets were government and MRD, which together accounted for approximately 69% of its revenue.

18

FISCAL 2014 RESULTS

3.4.6. CEE

Revenue in our CEE segment was $1,063.5 million, an increase of $59.6 million or 5.9% over fiscal 2013. On a constant currency basis, revenue decreased by $35.2 million or 3.5%. The decrease in revenue was mostly due to lower work volumes due to the completion of projects within the telecommunication and utilities vertical market as well as the run-off of low margin business as previously described.

For fiscal 2014, revenue coming from the Netherlands and Germany accounted for 87% of this segment while CEE’s top two vertical markets were MRD and government, which together accounted for approximately 57% of its revenue.

3.4.7. Asia Pacific

Revenue in our Asia Pacific segment was $425.1 million, a decrease of $14.5 million or 3.3% over fiscal 2013. On a constant currency basis, revenue decreased by $13.9 million or 3.2%. The decrease in revenue was mainly due to the completion of projects within the Australian MRD vertical markets and the planned run-off of projects within the Middle East, partly offset by the increased use of our Asian delivery centers.

For the current year, Asia Pacific’s top two vertical markets were telecommunications & utilities and MRD, which together accounted for approximately 79% of its revenue.

3.5. OPERATING EXPENSES

For the years ended September 30,	% of				% of					Change
	2014		Revenue		2013			Revenue		$		%
In thousands of CAD except for percentages
Costs of services, selling and administrative		9,129,791		87.0%		9,012,310			89.4%		117,481		1.3	%
Foreign exchange loss (gain)		13,042		0.1%		(3,316	)		(0.0%)		16,358		(493.3	)%

3.5.1. Costs of Services, Selling and Administrative

For the year ended September 30, 2014, costs of services, selling and administrative expenses amounted to $9,129.8 million, an increase of $117.5 million or 1.3% compared to fiscal 2013. The translation of the results of our foreign operations from their local currencies to the Canadian dollar unfavourably impacted costs by $650.4 million, substantially offsetting the favourable translation impact of $705.1 million on revenue. As a percentage of revenue, cost of services, selling and administrative expenses decreased from 89.4% to 87.0%, mainly due to the business synergies achieved through the ongoing integration of Logica.

Compared to fiscal 2013 our costs of services, as a percentage of revenue, remained relatively stable while our selling and administrative expenses decreased as a result of the business synergies achieved through the integration of Logica.

The majority of our costs are denominated in currencies other than the Canadian dollar. The risk of foreign exchange fluctuation impacting the results is substantially mitigated by a natural hedge in matching our costs with revenue denominated in the same currency. In certain cases where there is a substantial imbalance between the costs incurred and the revenue earned in a specific currency, the Company may enter into foreign exchange forward contracts to hedge cash flows.

3.5.2. Foreign Exchange Loss (gain)

The Company, in addition to its natural hedges, has a strategy in place to manage its exposure, to the extent possible, to exchange rate fluctuations through the effective use of derivatives. In fiscal 2014, the foreign exchange loss was mainly attributable to the higher volatility of the exchange rates in Q4 2014, causing losses in the settlement of day-to-day transactions.

19

Management’s Discussion and Analysis

3.6. ADJUSTED EBIT BY SEGMENT

					Change
For the years ended September 30,
	2014		2013		$		%
In thousands of CAD except for percentages
U.S.		303,515		283,690		19,825		7.0%
As a percentage of U.S. revenue		11.4%		11.3%
NSESA		195,400		139,418		55,982		40.2%
As a percentage of NSESA revenue		9.3%		6.9%
Canada		361,136		320,306		40,830		12.7%
As a percentage of Canada revenue		22.0%		19.0%
France		155,695		109,760		45,935		41.9%
As a percentage of France revenue		11.7%		8.6%
U.K.		164,977		102,820		62,157		60.5%
As a percentage of U.K. revenue		12.9%		8.9%
CEE		107,977		67,341		40,636		60.3%
As a percentage of CEE revenue		10.2%		6.7%
Asia Pacific		68,159		52,295		15,864		30.3%
As a percentage of Asia Pacific revenue		16.0%		11.9%
Adjusted EBIT		1,356,859		1,075,630		281,229		26.1%
Adjusted EBIT margin		12.9%		10.7%

Adjusted EBIT for the year was $1,356.9 million, an increase of $281.2 million or 26.1% from the previous year, while the margin increased from 10.7% to 12.9% over the same period. The growth in adjusted EBIT and margin was primarily due to the benefits of the Logica integration program, which focused on resource utilization, profitable revenue and optimizing selling, general and administrative expenses. Adjusted EBIT from our European segments was $692.2 million or an adjusted EBIT margin of 11.2%, up from $471.6 million or 8.0% over the same period of fiscal 2013. Our North American segments contributed $664.7 million in fiscal 2014 compared to $604.0 million for fiscal 2013, or 15.4% of revenue compared to 14.4% over the same period.

Included in these results for fiscal 2014 is $62.1 million of non-recurring benefits related to the resolution of acquisition-related provisions. When excluding the benefits of the adjustments to the acquisition-related provisions, the fiscal 2014 adjusted EBIT for the European segments would have been $630.1 million or an adjusted EBIT margin of 10.2% up from $471.6 million or 8.0% from fiscal 2013.

These benefits came from the adjustment of provisions that were established as part of the purchase price allocation for the Logica acquisition. Subsequent to the finalization of the purchase price allocation such adjustments flow through the statement of earnings. To provide better visibility to our operating performance as well as to provide comparability to previous periods, these adjustments have been specifically segregated and disclosed. In addition, these benefits which are not the result of operating management’s daily activities are excluded from any compensation arrangements.

Examples of the items included in these benefits comprise the resolution of provisions on client contracts, the settlement of tax credits and the early termination of lease agreements.

20

FISCAL 2014 RESULTS

3.6.1. U.S.

Adjusted EBIT in the U.S. segment was $303.5 million for fiscal 2014, an increase of $19.8 million compared to fiscal 2013, while the margin increased from 11.3% to 11.4% over the same period. The increase in adjusted EBIT mainly came from the growth in revenue.

3.6.2. NSESA

Adjusted EBIT in the NSESA segment was $195.4 million for fiscal 2014, an increase of $56.0 million compared to fiscal 2013, while the margin increased from 6.9% to 9.3% over the same period. This increase in adjusted EBIT and margin was mainly the result of the cost synergies realized from the integration program, the implementation of the CGI Management Foundation, the run-off of low margin business as previously described as well as the positive impact coming from a $8.5 million settlement gain on a pension plan obligation. Included in the $56.0 million increase in adjusted EBIT was $15.0 million of non-recurring benefits related to the resolution of acquisition-related provisions mainly for the renegotiation of office leases and client contracts.

3.6.3. Canada

Adjusted EBIT in the Canada segment was $361.1 million for fiscal 2014, an increase of $40.8 million compared to fiscal 2013, while the margin increased from 19.0% to 22.0% over the same period. The improvement in adjusted EBIT and margin reflects the focus on the management of resource utilization over the fiscal year, the improved execution on in-flight projects and some further cost reduction from additional real estate optimization.

3.6.4. France

Adjusted EBIT in the France segment was $155.7 million for fiscal 2014, an increase of $45.9 million compared to fiscal 2013, while the margin increased from 8.6% to 11.7% over the same period. This increase in adjusted EBIT and margin was primarily the result of the cost synergies realized from the integration program, the implementation of the CGI Management Foundation and the run-off of low margin business. France’s adjusted EBIT was also positively impacted by $14.7 million, coming from the non-recurring benefits related to the resolution of acquisition-related provisions mainly for client contracts and the settlement of tax credits.

3.6.5. U.K.

Adjusted EBIT in the U.K. segment was $165.0 million for fiscal 2014, an increase of $62.2 million compared to fiscal 2013, while the margin increased from 8.9% to 12.9%. This increase in adjusted EBIT and margin was mainly the result of the cost synergies realized from the integration program, the implementation of the CGI Management Foundation and the benefits of running-off business that was not meeting our profitability standards. The U.K. adjusted EBIT for fiscal 2014 was also positively impacted by $17.1 million of non-recurring benefits related to the resolution of acquisition-related provisions mainly for the renegotiation of office leases and the settlement of tax credits.

3.6.6. CEE

Adjusted EBIT in the CEE segment was $108.0 million for fiscal 2014, an increase of $40.6 million compared to fiscal 2013, while the margin increased from 6.7% to 10.2% over the same period. This increase in adjusted EBIT and margin was primarily the result of the cost synergies realized from the integration program, the implementation of the CGI Management Foundation as well as the benefits of running-off business that was not meeting our profitability standards. In addition, our year-to-date adjusted EBIT was positively impacted by $14.3 million of non-recurring benefits related to the resolution of acquisition-related provisions mainly for client contracts.

3.6.7. Asia Pacific

Adjusted EBIT in the Asia Pacific segment was $68.2 million for fiscal 2014, an increase of $15.9 million compared to fiscal 2013, while the margin increased from 11.9% to 16.0% over the same period. This increase in adjusted EBIT and margin was mainly the result of the costs synergies realized from the integration program, the implementation of the CGI Management Foundation and the implementation of certain productivity improvements in the global delivery centers.

21

Management’s Discussion and Analysis

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 September 30,													Change
	2014			% of Revenue			2013			% of Revenue			$			%
In thousands of CAD except for percentages
Adjusted EBIT		1,356,859			12.9%			1,075,630			10.7%			281,229			26.1%
Minus the following items:
Integration-related costs		127,341			1.2%			338,439			3.4%			(211,098	)		(62.4%	)
Finance costs		101,278			1.0%			113,931			1.1%			(12,653	)		(11.1%	)
Finance income		(2,010	)		(0.0%	)		(4,362	)		(0.0%	)		2,352			(53.9%	)
Earnings before income taxes		1,130,250			10.8%			627,622			6.2%			502,628			80.1%

3.7.1. Integration-Related Costs

For the years ended September 30, 2014 and 2013 the Company incurred $127.3 million and $338.4 million respectively of integration-related costs. These costs pertain to the restructuring and transformation of Logica’s operations to the CGI operating model.

3.7.2. Finance Costs

Finance costs mainly include the interest on our long-term debt used to finance the Logica acquisition. The decrease in finance costs for the year ended September 30, 2014 mainly came as a result of the repayments made on our outstanding long-term debt.

3.7.3. Finance Income

Finance income includes interest and other investment income related to cash balances, investments, and tax assessments.

22

FISCAL 2014 RESULTS

3.8. NET EARNINGS AND EARNINGS PER SHARE

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

For the years ended September 30,					Change
	2014		2013		$		%
In thousands of CAD except for percentages
Earnings before income taxes		1,130,250		627,622		502,628		80.1%
Income tax expense		270,807		171,802		99,005		57.6%
Effective tax rate		24.0%		27.4%
Net earnings		859,443		455,820		403,623		88.5%
Net earnings margin		8.2%		4.5%
Weighted average number of shares outstanding
Class A subordinate shares and Class B shares (basic)		308,743,126		307,900,034				0.3%
Class A subordinate shares and Class B shares (diluted)		318,927,737		316,974,179				0.6%
Earnings per share (in dollars)
Basic EPS		2.78		1.48		1.30		87.8%
Diluted EPS		2.69		1.44		1.25		86.8%

3.8.1. Income Tax Expense

For the year ended September 30, 2014, the income tax expense was $270.8 million, an increase of $99.0 million compared to $171.8 million in fiscal 2013, while our effective tax rate decreased from 27.4% to 24.0%. The increase in income tax expense was mainly due to the higher earnings before income taxes. The decrease in the income tax rate for fiscal 2014 was due to favourable tax adjustments of $11.9 million mainly resulting from the settlement of tax liabilities from the legacy Logica European operations. The decrease in the income tax rate for fiscal 2014 was also attributable to net unfavorable tax adjustments of $11.1 million in fiscal 2013 which were comprised of a $18.4 million expense resulting from the revaluation of deferred tax assets following the enactment of a future rate reduction in the U.K., of taxes paid on the repatriation of funds from the legacy Logica Indian operations of $7.6 million partly offset by a favorable adjustment of $14.9 million in the U.S. resulting from the expiration of a statute of limitation period.

The table on page 24 shows the year-over-year comparison of the tax rate with the impact of integration-related costs, tax adjustments and benefits related to the resolution of acquisition-related provisions removed.

Based on the enacted rates at the end of fiscal 2014 and our current business mix, we expect our effective tax rate before any significant adjustments to be in the range of 25% to 27% in subsequent periods.

3.8.2. Weighted Average Number of Shares

For fiscal 2014, CGI’s basic and diluted weighted average number of shares increased compared to fiscal 2013 due to the issuance of Class A subordinate shares upon the exercise of stock options, partly offset by the repurchase of 2,837,360 Class A subordinate shares. During the year, 4,999,544 options were exercised.

23

Management’s Discussion and Analysis

3.8.3. Net Earnings and Earnings per Share Prior to Specific Items

Below is a table showing the year-over-year comparison prior to specific items such as the integration-related costs, favourable tax adjustments and benefits related to the resolution of acquisition-related provisions:

						Change
For the years ended September 30,
	2014		2013			$			%
In thousands of CAD except for percentages
Earnings before income taxes		1,130,250		627,622			502,628			80.1%
Add back:
Integration-related costs		127,341		338,439			(211,098	)		(62.4%)
Remove:
Resolution of acquisition-related provisions 1		62,075		—			62,075			—
Earnings before income taxes prior to specific items		1,195,516		966,061			229,455			23.8%
Margin		11.4%		9.6%
Income tax expense		270,807		171,802			99,005			57.6%
Add back:
Tax adjustments 2		11,900		(11,113	)		23,013			(207.1%)
Tax deduction on integration-related costs		29,430		77,707			(48,277	)		(62.1%)
Remove:
Income taxes on the resolution of acquisition-related provisions		10,097		—			10,097			—
Income tax expense prior to specific items		302,040		238,396			63,644			26.7%
Effective tax rate prior to specific items		25.3%		24.7%
Net earnings prior to specific items		893,476		727,665			165,811			22.8%
Net earnings margin		8.5%		7.2%
Weighted average number of shares outstanding
Class A subordinate shares and Class B shares (basic)		308,743,126		307,900,034						0.3%
Class A subordinate shares and Class B shares (diluted)		318,927,737		316,974,179						0.6%
Earnings per share prior to specific items (in dollars)
Basic EPS		2.89		2.36			0.53			22.5%
Diluted EPS		2.80		2.30			0.50			21.7%

¹  The resolution of acquisition-related provisions is discussed on page 20.

²  The tax adjustments are discussed on page 23.

24

FISCAL 2014 RESULTS

4. Liquidity

4.1. CONSOLIDATED STATEMENTS OF CASH FLOWS

CGI’s growth is financed through a combination of our cash flow from operations, borrowing under our existing credit facilities, 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, 2014, cash and cash equivalents were $535.7 million. The following table provides a summary of the generation and use of cash for the years ended September 30, 2014 and 2013.

For the years ended September 30,	2014		2013		Change
In thousands of CAD
Cash provided by operating activities		1,174,835		671,257		503,578
Cash used in investing activities		(321,153)		(233,855)		(87,298)
Cash used in financing activities		(414,064)		(445,971)		31,907
Effect of foreign exchange rate changes on cash and cash equivalents		(10,102)		1,665		(11,767)
Net increase (decrease) in cash and cash equivalents		429,516		(6,904)		436,420

4.1.1. Cash Provided by Operating Activities

For the years ended September 30, 2014, and 2013, cash provided by operating activities was $1,174.8 million compared to $671.3 million, or 11.2% of revenue compared to 6.7% last year. The increase was mainly due to the ongoing improvement in profitability as a result of the integration program being realized and the implementation of the CGI Management Foundation in the European operations. The year-over-year reduction of the integration-related payments in fiscal 2014 also contributed to the increase in cash provided by operating activities. The timing of our working capital inflows and outflows will always have an impact on the cash flow from operations. Excluding the integration-related cash disbursements, the cash provided by operating activities would have been $1,332.8 million in fiscal 2014, representing 12.7% of revenue compared to $977.7 million or 9.7% of revenue last year.

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

For the years ended September 30,	2014		2013		Change
In thousands of CAD
Net earnings		859,443		455,820		403,623
Amortization and depreciation		444,232		435,944		8,288
Other adjustments 1		103,827		61,049		42,778
Cash flow from operating activities before net change in non-cash working  capital items		1,407,502		952,813		454,689
Net change in non-cash working capital items:
Accounts receivable, work in progress and deferred revenue		209,189		(52,830)		262,019
Accounts payable and accrued liabilities, accrued compensation, provisions and  other long-term liabilities		(463,685)		(233,631)		(230,054)
Other 2		21,829		4,905		16,924
Net change in non-cash working capital items		(232,667)		(281,556)		48,889
Cash provided by operating activities		1,174,835		671,257		503,578

¹ Other adjustments are comprised of deferred income taxes, foreign exchange loss (gain) 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.

25

Management’s Discussion and Analysis

For the current year, the Company’s net earnings increased by $403.6 million when compared to fiscal 2013. The increase in net earnings was primarily due to the reduction in integration-related costs, the result of the cost synergies realized as part of the Logica integration program and the implementation of the CGI Management Foundation in the European operations.

The $42.8 million increase coming from the other adjustments was due to the higher deferred income taxes expense as a result of the utilization of previously recognized tax losses due to the increased profitability of our European operations and to the higher volatility of the foreign exchange rates, causing losses in the settlement of day-to-day transactions.

For fiscal 2014, the $209.2 million of cash coming from the accounts receivable, work in progress and deferred revenue was mainly due to a decrease of 6 days in our DSO from 49 days in fiscal 2013 to 43 days this year.

The $52.8 million of cash used in fiscal 2013 for the accounts receivable, work in progress and deferred revenue was mainly the result of the timing of billing milestones on certain large U.S. contracts.

For the current year, the $463.7 million used in cash for the accounts payable and accrued liabilities, accrued compensation, provisions and other long-term liabilities was mostly due to the utilization of $102.6 million for the provision for estimated losses on revenue-generating contracts, the net decrease of $65.0 million for performance-based compensation accruals to our members, the net utilization of $53.7 million for provisions for onerous leases, the net decrease of $35.7 million for provisions for litigation and claims mainly driven by the reversal of unused amounts due to the favorable settlement of claims and finally from the net payments of $30.7 million for integration-related items.

The $233.6 million of cash used in fiscal 2013 for the accounts payable and accrued liabilities, accrued compensation, provisions and other long-term liabilities was due to the utilization of $94.0 million for the estimated losses on revenue-generating contracts, payments of $37.9 million in regards to the legacy Logica restructuring program, payments in connection with the settlement of inherited claims for $31.3 million, payments of $27.0 million for acquisition-related items, partly offset by the net increase of $32.0 million in integration-related provisions. To a lesser extent, the decrease in accounts payable and accrued liabilities came from the transition and transformation of our business practices related to the acquired Logica operations in areas such as the reduction of subcontractors and the implementation of spend management practices.

The following table provides a summary of the movements in the integration-related provision:

For the years ended September 30,	2014		2013
In millions of CAD
Integration-related provision at the beginning of the year		135.8		101.9
Integration-related expenses		127.3		338.4
Integration-related payments		(158.0)		(306.4)
Net impact on non-cash working capital		(30.7)		32.0
Plus: FX impact 1		0.5		9.1
Minus: Non-cash integration-related costs		—		7.2
Integration-related provision at the end of the year		105.6		135.8

¹  The foreign currency translation was recorded in other comprehensive income.

26

FISCAL 2014 RESULTS

4.1.2. Cash Used in Investing Activities

For the years ended September 30, 2014, and 2013, $321.2 million were used in investing activities compared to $233.9 million respectively. The following table provides a summary of the generation and use of cash from investing activities.

For the years ended September 30,	2014			2013			Change
In thousands of CAD
Business acquisition		—			(5,140	)		5,140
Proceeds from sale of property, plant and equipment		13,673			—			13,673
Purchase of property, plant and equipment		(181,471	)		(141,965	)		(39,506	)
Additions to contract costs		(73,900	)		(31,207	)		(42,693	)
Additions to intangible assets		(77,726	)		(71,447	)		(6,279	)
Net change in short-term investments and (purchase) proceeds from sale of long-term investments		(8,106	)		7,727			(15,833	)
Payments received from long-term receivable		6,377			8,177			(1,800	)
Cash used in investing activities		(321,153	)		(233,855	)		(87,298	)

For the current year, we invested $333.1 million in the purchase of property, plant and equipment, the additions of intangible assets and contract costs compared to $244.6 million last year or an increase of $88.5 million which was mostly driven by the ramp-up of new long term contracts.

4.1.3. Cash Used in Financing Activities

For the year ended September 30, 2014, $414.1 million was used in financing activities compared to $446.0 million in fiscal 2013. The following table provides a summary of the generation and use of cash from financing activities.

For the years ended September 30,	2014			2013			Change
In thousands of CAD
Net change in unsecured committed revolving credit facility		(283,049	)		(467,027	)		183,978
Net change in long-term debt		(25,343	)		12,276			(37,619	)
		(308,392	)		(454,751	)		146,359
Settlement of derivative financial instruments		(37,716	)		—			(37,716	)
Purchase of Class A subordinate shares held in trust		(23,016	)		(7,663	)		(15,353	)
Resale of Class A subordinate shares held in trust		1,390			—			1,390
Repurchase of Class A subordinate shares		(111,468	)		(22,869	)		(88,599	)
Issuance of Class A subordinate shares		65,138			39,312			25,826
Cash used in financing activities		(414,064	)		(445,971	)		31,907

During 2014, the Company repaid the first maturing tranche of the term loan credit facility of $486.7 million using the proceeds from the credit facilities. The Company also entered into a $955 million debt private placement comprised of four tranches of Senior U.S. unsecured notes for US$745 million, and one tranche of Senior euro unsecured note for €85 million, with a weighted average maturity of 7.9 years and a weighted average fixed coupon of 3.62%. The Company used the proceeds of the issuance of the new private placement notes to repay the May 2015 maturing tranche of the term loan credit facility of $494.7 million and the outstanding balance of the credit facilities. Following these repayments, the Company used $37.7 million to settle the related floating-to-fixed interest rate swap contracts and the related cross-currency swap contract. During the year, we reduced our long-term debt by $308.4 million while in fiscal 2013, we made net payments of $454.8 million.

For 2014, we repurchased 2,837,360 Class A subordinate shares for $111.5 million under the annual aggregate limit of the previous NCIB, while for fiscal 2013, $22.9 million was used to purchase 723,100 Class A subordinate shares under the NCIB then in effect.

27

Management’s Discussion and Analysis

For fiscal 2014, a net amount of $21.6 million was used to purchase CGI shares under the Company’s Performance Share Unit Plan (the “PSU” Plan) which is part of the compensation package of certain senior executive officers, while for the comparable period of last year, $7.7 million was used to purchase shares under the PSU Plan.

For 2014, we received $65.1 million in proceeds from the exercise of stock options, compared to $39.3 million in fiscal 2013.

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

For fiscal 2014, we had a $10.1 million decrease in cash coming from the effect of foreign exchange rate changes on cash and cash equivalents, while for fiscal 2013 we had a $1.7 million increase. These amounts had no effect on net earnings as they were recorded in other comprehensive income.

4.2. CAPITAL RESOURCES

In thousands of CAD	Total commitment		Available at September 30, 2014		Outstanding at September 30, 2014
Cash and cash equivalents		—		535,715		—
Long-term investments		—		30,689		—
Unsecured committed revolving facilities a		1,500,000		1,463,280		36,720
Total		1,500,000		2,029,684		36,720

^a Consists of Letters of Credit for $36.7 million outstanding on September 30, 2014.

Our cash position and bank lines are sufficient to support our growth strategy. At September 30, 2014, cash and cash equivalents and long-term marketable investments represented $566.4 million.

Cash equivalents typically include term deposits, all with maturities of 90 days or less. Long-term marketable investments include corporate and government bonds with maturities ranging from one to five years, rated “A” or higher.

The amount of capital readily available was $2,029.7 million. The long-term debt agreements contain covenants which require us to maintain certain financial ratios. At September 30, 2014, CGI was in compliance with these covenants.

Total debt decreased by $186.8 million to $2,679.7 million at September 30, 2014, compared to $2,866.6 million at September 30, 2013. The variation was mainly due to the reimbursement of $281.2 million and $981.5 million under the unsecured revolving credit facility and term loan credit facility respectively partially offset by the proceeds of a private placement of US $745 million and EUR85 million for a total of $955 million and an unrealized loss of $87.1 million on foreign exchange translation.

In the first quarter of 2014, the unsecured committed revolving credit facility of $1,500.0 million was extended by one year to December 2017. On July 25, 2014, the facility was further extended by another year to December 2018 and can be further extended annually. All terms and conditions including interest rates and banking covenants remain unchanged.

As at September 30, 2014, CGI had a positive working capital¹ of $89.4 million. The Company has also $1.5 billion available under its unsecured committed revolving facility and is generating a significant level of cash that will allow it to fund its operations and further decrease the amount of debt outstanding in the foreseeable future while maintaining adequate levels of liquidity.

¹  Working capital is defined as total current assets minus total current liabilities.

28

FISCAL 2014 RESULTS

4.3. CONTRACTUAL OBLIGATIONS

We are committed under the terms of contractual obligations with various expiration dates, primarily for the rental of premises, computer equipment used in outsourcing contracts and long-term service agreements. For the year ended September 30, 2014, the Company decreased its commitments by $130.4 million due to real estate optimization, the renegotiation of office leases and the reduction of the long-term debt taken on to acquire Logica in fiscal 2012. These were partly offset by the increase in estimated interest on our long-term debt as a result of the new debt private placement and from the new long-term service agreements signed during the year.

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		2,632,873		48,048		1,162,658		337,010		1,085,157
Estimated interests on long-term debt		477,658		89,709		137,788		105,742		144,419
Finance lease obligations		61,698		32,319		28,506		873		—
Estimated interests on finance lease obligations		2,699		1,494		1,184		21		—
Operating leases
Rental of office space		1,287,438		278,159		459,651		326,096		223,532
Computer equipment		42,153		21,349		17,223		3,427		154
Automobiles		84,091		36,862		33,250		10,151		3,828
Long-term service agreements and other		190,083		74,291		92,875		22,917		—
Total contractual obligations		4,778,693		582,231		1,933,135		806,237		1,457,090

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 $20.1 million for fiscal 2015 as described in note 17 to the 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. We do not hold or use any derivative instruments for trading purposes. Foreign exchange translation gains or losses on the net investments and the effective portions of gains or losses on instruments hedging the net investments are recorded in the consolidated statement of comprehensive income. Any realized or unrealized gains or losses on instruments covering the U.S. denominated debt are also recognized in the consolidated statement of comprehensive income.

We have the following outstanding derivative financial instruments:

Hedges on net investments in foreign operations

— $968.8 million cross-currency swaps in Euro designated as a hedging instrument of the Company’s net investment in European operations ($1,153.7 million as at September 30, 2013)

Cash flow hedges on future revenue

— U.S.$32.0 million foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the U.S. dollar and the Canadian dollar (U.S.$56.8 million as at September 30, 2013)

— U.S.$75.2 million foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the U.S. dollar and the Indian rupee (U.S.$94.4 million as at September 30, 2013)

— $94.6 million foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the Canadian dollar and the Indian rupee ($142.5 million as at September 30, 2013)

— Kr142.6 million foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the Swedish krona and the Indian rupee (kr nil as at September 30, 2013)

29

Management’s Discussion and Analysis

— €121.1 million foreign currency forward contracts to hedge the variability in the expected foreign currency rate between the euro and the British pound (€ nil as at September 30, 2013)

— €15.0 million foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the euro and the Swedish krona (€31.0 million as at September 30, 2013)

Cash flow hedges on unsecured committed term loan credit facility

— $484.4 million interest rate swaps floating-to-fixed ($1,234.4 million as at September 30, 2013)

Fair value hedges on Senior U.S. unsecured notes

— U.S.$250.0 million interest rate swaps fixed-to-floating (U.S.$250.0 million as at September 30, 2013)

Derivatives not designated as hedges

The Company does not have any derivatives not designated as hedges as at September 30, 2014.

The effective portion of the change in the fair value of the derivative instruments is recognized in other comprehensive income and the ineffective portion, if any, in net earnings. During the year ended September 30, 2014, the Company’s hedging relationships were effective.

The Company expects that approximately $4.9 million of the accumulated net gain on all derivative financial instruments designated as cash flow hedges as at September 30, 2014 will be reclassified in the consolidated statements of earnings in the next 12 months.

4.5. SELECTED MEASURES OF LIQUIDITY AND CAPITAL RESOURCES

As at September 30,	2014		2013
In thousands of CAD except for percentages
Reconciliation between net debt and long-term debt including the current portion:
Net debt		2,113,299		2,739,949
Add back:
Cash and cash equivalents		535,715		106,199
Short-term investments		—		69
Long-term investments		30,689		20,333
Long-term debt including the current portion		2,679,703		2,866,550
Net debt to capitalization ratio		27.6%		39.6%
Return on equity		18.8%		12.3%
Return on invested capital		14.5%		11.8%
Days sales outstanding (in days)		43		49

We use the net debt to capitalization ratio as an indication of our financial leverage in order to pursue any large outsourcing contracts, expand global delivery centers, or make acquisitions. On August 20, 2012, we acquired Logica using a combination of debt and stock, causing our net debt to capitalization ratio to increase significantly. At the end of fiscal 2012, our net debt to capitalization ratio was 46.5%, while subsequent repayments resulted in a ratio of 39.6% for fiscal 2013. The net debt to capitalization ratio decreased further to 27.6% for fiscal 2014 due to the increase in equity mainly driven by the net earnings and the net debt repayments as a result of the improved cash generation.

Return on equity is a measure of the return we are generating for our shareholders. ROE increased from 12.3% in fiscal 2013 to 18.8% in fiscal 2014. The increase was mainly due to the higher net earnings over the last four quarters as the benefits of the integration of Logica with CGI were being realized.

30

FISCAL 2014 RESULTS

ROIC is a measure of the Company’s efficiency in allocating the capital under our control to profitable investments. The return on invested capital was 14.5% as at September 30, 2014, compared to 11.8% a year ago. The improvement in the ROIC was mainly the result of our higher after-tax adjusted EBIT compared to last year as the benefits of the integration of Logica with CGI were being realized.

DSO decreased from 49 days as at September 30, 2013 to 43 days at the end of fiscal 2014. 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 fluctuations. We remain committed to manage our DSO within our 45 day target or less.

4.6. OFF-BALANCE SHEET FINANCING AND GUARANTEES

CGI engages in the practice of off-balance sheet financing in the normal course of operations for a variety of transactions such as operating leases for office space, computer equipment and vehicles as well as accounts receivable factoring. 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, guarantees and U.S. Government contracts.

In connection with sales of assets and business divestitures, we may be required to pay counterparties for costs and losses incurred as the result of breaches in representations and warranties, intellectual property right infringement and litigation against counterparties. While some of the agreements specify a maximum potential exposure totalling $10.4 million, others do not specify a maximum amount or limited period. It is impossible 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 consolidated financial statements.

We are also engaged to provide services under contracts with the U.S. Government. The contracts are subject to extensive legal and regulatory requirements and, from time to time, agencies of the U.S. Government investigate whether our operations are being conducted in accordance with these requirements. Generally, the Government has the right to change the scope of, or terminate, these projects at its convenience. The termination or a reduction in the scope of a major government project could have a material adverse effect on our results of operations and financial condition.

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 the bid is awarded. We would also be liable for the performance bonds in the event of default in the performance of our obligations. As at September 30, 2014, we had committed for a total of $55.9 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 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; buying back CGI shares and paying down debt. Funds were also used to expand our global delivery network as more and more of our clients demand lower cost alternatives. In terms of financing, we are well positioned to continue executing our four-pillar growth strategy in fiscal 2015.

Strong and experienced leadership is essential to successfully implement our corporate strategy. CGI has a strong leadership team with members who are highly knowledgeable and have gained a significant amount of experience within 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 Leadership Institute, our own corporate university, to develop leadership, technical and managerial skills inspired by CGI’s roots and traditions.

31

Management’s Discussion and Analysis

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 and issues are addressed immediately. Approximately 45,000 of our members or 70% were 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 Capability Maturity Model Integration quality programs.

32

FISCAL 2014 RESULTS

5. Fourth Quarter Results

5.1. FOREIGN EXCHANGE

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

Average foreign exchange rates

For the three months ended September 30,	2014		2013		Change
U.S. dollar		1.0894		1.0385		4.9%
Euro		1.4427		1.3762		4.8%
Indian rupee		0.0180		0.0167		7.8%
British pound		1.8175		1.6117		12.8%
Swedish krona		0.1568		0.1586		(1.1%	)
Australian dollar		1.0070		0.9517		5.8%

33

Management’s Discussion and Analysis

5.2. REVENUE VARIATION AND 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 2014 and Q4 2013 periods. The Q4 2013 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.

					Change
For the three months ended September 30,
	2014		2013		$		%
In thousands of CAD except for percentages
Total CGI revenue		2,483,669		2,458,207		25,462		1.0%
Variation prior to foreign currency impact		(3.4%)
Foreign currency impact		4.4%
Variation over previous period		1.0%
U.S.
Revenue prior to foreign currency impact		623,231		679,255		(56,024)		(8.2%)
Foreign currency impact		31,864
U.S. revenue		655,095		679,255		(24,160)		(3.6%)
NSESA
Revenue prior to foreign currency impact		438,278		436,905		1,373		0.3%
Foreign currency impact		7,868
NSESA revenue		446,146		436,905		9,241		2.1%
Canada
Revenue prior to foreign currency impact		381,780		407,751		(25,971)		(6.4%)
Foreign currency impact		1,107
Canada revenue		382,887		407,751		(24,864)		(6.1%)
France
Revenue prior to foreign currency impact		297,925		285,414		12,511		4.4%
Foreign currency impact		14,074
France revenue		311,999		285,414		26,585		9.3%
U.K.
Revenue prior to foreign currency impact		282,821		304,334		(21,513)		(7.1%)
Foreign currency impact		38,861
U.K. revenue		321,682		304,334		17,348		5.7%
CEE
Revenue prior to foreign currency impact		243,803		245,683		(1,880)		(0.8%)
Foreign currency impact		11,008
CEE revenue		254,811		245,683		9,128		3.7%
Asia Pacific
Revenue prior to foreign currency impact		108,311		98,865		9,446		9.6%
Foreign currency impact		2,738
Asia Pacific revenue		111,049		98,865		12,184		12.3%

We ended the fourth quarter of fiscal 2014 with revenue of $2,483.7 million, an increase of $25.5 million or 1.0% over the same period of fiscal 2013. On a constant currency basis, revenue decreased by $82.1 million or 3.4%, as foreign currency rate fluctuations favourably impacted our revenue by $107.5 million or 4.4%. For the current quarter, the top two vertical

34

FISCAL 2014 RESULTS

markets were government and MRD, which together accounted for approximately 56% of our revenue. Compared to Q3 2014, revenue from the current quarter has decreased by $183.4 million, mainly due to the expected impact of the vacation period and the unfavourable impact of foreign currency rate fluctuations.

As part of the Company’s strategic focus to continuously improve its revenue quality, and as previously disclosed, we have been exiting low margin business as part of our integration activities. As a result, our quarterly year-over-year revenue has been reduced. Partially offsetting this, new higher quality revenue was booked or existing business expanded and/or extended across the geographies.

5.2.1. U.S.

Revenue in our U.S. segment was $655.1 million in Q4 2014, a decrease of $24.2 million or 3.6% compared to the same period of fiscal 2013. On a constant currency basis, revenue decreased by $56.0 million or 8.2%. The change in revenue reflects the ramp down of Federal and state health projects and the run-off of a large low margin government project partly offset by the increased sales of IP based business solutions.

For the current quarter, the top two U.S. vertical markets were government and health, which together accounted for approximately 77% of its revenue.

5.2.2. NSESA

Revenue from our NSESA segment was $446.1 million in Q4 2014, an increase of $9.2 million compared to the same period of fiscal 2013 while on a constant currency basis, revenue remained relatively stable.

For the current quarter, revenue coming from Sweden and Finland accounted for 73% of this segment while the NSESA’s top two vertical markets were MRD and financial services, which together accounted for approximately 55% of its revenue.

5.2.3. Canada

Revenue in our Canada segment for Q4 2014 was $382.9 million, a decrease of $24.9 million or 6.1% compared to the same period of fiscal 2013. On a constant currency basis, revenue decreased by $26.0 million or 6.4%. The revenue decrease was mainly due to lower work volumes as a result of the expiration of contracts that were partially offset by the start-up of new contracts.

For the current quarter, Canada’s top two vertical markets were financial services and telecommunication and utilities, which together accounted for approximately 57% of its revenue.

5.2.4. France

Revenue from our France segment was $312.0 million in Q4 2014, an increase of $26.6 million or 9.3% compared to the same period of fiscal 2013. On a constant currency basis, revenue increased by $12.5 million or 4.4%. The increase in revenue reflects the bookings in the previous quarters that are now coming on stream and the ramp up of existing engagements, primarily in the MRD and telecommunication & utilities vertical markets.

For the current quarter, France’s top two vertical markets were MRD and financial services, which together accounted for approximately 64% of its revenue.

5.2.5. U.K.

Revenue from our U.K. segment was $321.7 million in Q4 2014, an increase of $17.3 million or 5.7% compared to the same period of fiscal 2013. On a constant currency basis, revenue decreased by $21.5 million or 7.1%. The decrease in revenue mainly reflects the completion of projects within the MRD vertical market and to a lesser extent the run-off of low margin business.

For the current quarter, U.K.’s top two vertical markets were government and MRD, which together accounted for approximately 69% of its revenue.

35

Management’s Discussion and Analysis

5.2.6. CEE

Revenue from our CEE segment was $254.8 million in Q4 2014, an increase of $9.1 million or 3.7% compared to the same period of fiscal 2013 while on a constant currency basis, revenue remained relatively stable.

For the current quarter, revenue coming from the Netherlands and Germany accounted for 87% of this segment while CEE’s top two vertical markets were MRD and government, which together accounted for approximately 58% of its revenue.

5.2.7. Asia Pacific

Revenue from our Asia Pacific segment was $111.0 million in Q4 2014, an increase of $12.2 million or 12.3% compared to the same period of fiscal 2013. On a constant currency basis, revenue increased by $9.4 million or 9.6%. The change in revenue was mainly due to the increased use of our Asian delivery centers, partly offset by the completion of projects within the Australian MRD vertical markets and the planned run-off of projects within the Middle East.

For the current quarter, Asia Pacific’s top two vertical markets were telecommunications & utilities and MRD, which together accounted for approximately 78% of its revenue.

5.3. ADJUSTED EBIT BY SEGMENT

For the three months ended September 30,					Change
	2014		2013		$			%
In thousands of CAD except for percentages
U.S.		97,575		82,965		14,610			17.6	%
As a percentage of U.S. revenue		14.9%		12.2%
NSESA		33,539		43,526		(9,987	)		(22.9	%)
As a percentage of NSESA revenue		7.5%		10.0%
Canada		87,060		80,419		6,641			8.3	%
As a percentage of Canada revenue		22.7%		19.7%
France		39,143		34,974		4,169			11.9	%
As a percentage of France revenue		12.5%		12.3%
U.K.		60,665		35,826		24,839			69.3	%
As a percentage of U.K. revenue		18.9%		11.8%
CEE		26,564		21,697		4,867			22.4	%
As a percentage of CEE revenue		10.4%		8.8%
Asia Pacific		25,678		13,985		11,693			83.6	%
As a percentage of Asia Pacific revenue		23.1%		14.1%
Adjusted EBIT		370,224		313,392		56,832			18.1	%
Adjusted EBIT margin		14.9%		12.7%

Adjusted EBIT for the quarter was $370.2 million, an increase of $56.8 million or 18.1% from Q4 2013, while the margin increased from 12.7% to 14.9% over the same period last year. The adjusted EBIT of our European segments was $185.6 million or a margin of 12.8%, up from $150.0 million or 10.9% from the same period of fiscal 2013. Our North American segments contributed $184.6 million in Q4 2014 compared to $163.4 million in Q4 2013, or a margin of 17.8% compared to the 15.0% margin last year.

Included in these results for the three months ended September 30, 2014 is $34.0 million of non-recurring benefits related to the adjustments of acquisition-related provisions. When excluding the benefits of the adjustments to the acquisition-related provisions, the Q4 2014 adjusted EBIT for the European segments was $151.6 million or an adjusted EBIT margin of 10.5% compared with $150.0 million or 10.9% from the same period of fiscal 2013.

36

FISCAL 2014 RESULTS

These benefits came from the resolution of provisions that were established as part of the purchase price allocation for the Logica acquisition. Subsequent to the finalization of the purchase price allocation such adjustments flow through the statement of earnings. To provide better visibility to our operating performance as well as to provide comparability to previous periods, these adjustments have been specifically segregated and disclosed. In addition, these benefits which are not the result of operating management’s daily activities are excluded from any compensation arrangements.

The items included in these benefits are similar to those described in section 3.6 of the present document.

5.3.1. U.S.

Adjusted EBIT in the U.S. segment was $97.6 million for Q4 2014, an increase of $14.6 million year-over-year, while the margin increased from 12.2% to 14.9%. The increase in adjusted EBIT and margin came primarily from additional sales of IP based solutions and the run-off of a large low margin government project.

5.3.2. NSESA

Adjusted EBIT in the NSESA segment was $33.5 million for Q4 2014, a decrease of $10.0 million year-over-year, while the margin decreased from 10.0% to 7.5%. The decrease in adjusted EBIT and margin primarily reflected the previous year’s positive impact from the reduction of the 2013 performance based compensation accruals in the amount of $16.0 million and, to a lesser extent, the result of the temporary lower utilization rates in Q4 2014 due to the timing of projects completion and the start-up of new contracts. The Q4 2014 adjusted EBIT was also positively impacted by $8.7 million coming from the non-recurring benefits related to the resolution of acquisition-related provisions mainly for the renegotiation of office leases and client contracts.

5.3.3. Canada

Adjusted EBIT in the Canada segment was $87.1 million for Q4 2014, an increase of $6.6 million year-over-year, while the margin increased from 19.7% to 22.7%. The improvement in adjusted EBIT and margin reflects the focus on the management of resource utilization and improved project execution.

5.3.4. France

Adjusted EBIT in the France segment was $39.1 million for Q4 2014, an increase of $4.2 million year-over-year, while the margin increased from 12.3% to 12.5%. This increase in adjusted EBIT and margin was primarily the result of a favorable impact of $7.6 million coming from the non-recurring benefits related to the resolution of acquisition-related provisions mainly for client contracts and the renegotiation of office leases, offset by the unfavorable impact of $4.3 million due to one less working day in Q4 2014.

5.3.5. U.K.

Adjusted EBIT in the U.K. segment was $60.7 million for Q4 2014, an increase of $24.8 million year-over-year, while the margin increased from 11.8% to 18.9%. This increase in adjusted EBIT and margin was mainly the result of the non-recurring benefits related to the resolution of acquisition-related provisions for $11.2 million mainly for the renegotiation of office leases, the additional tax credits on salaries of $4.9 million and to a lesser extent the costs synergies realized from the integration program and the implementation of the CGI Management Foundation.

5.3.6. CEE

Adjusted EBIT in the CEE segment was $26.6 million for Q4 2014, an increase of $4.9 million year-over-year, while the margin increased from 8.8% to 10.4%. This increase in adjusted EBIT and margin was primarily the result of the cost synergies realized from the integration program and the implementation of the CGI Management Foundation. The CEE adjusted EBIT and margin was also positively impacted by a $2.0 million impact coming from the non-recurring benefits related to the resolution of acquisition-related provisions mainly for client contracts and the renegotiation of office leases.

5.3.7. Asia Pacific

Adjusted EBIT in the Asia Pacific segment was $25.7 million for Q4 2014, an increase of $11.7 million year-over-year, while the margin increased from 14.1% to 23.1%. This increase in adjusted EBIT and margin was mainly the result of the costs synergies realized from the integration program and the implementation of the CGI Management Foundation as well as a $4.5 million favourable impact coming from the non-recurring benefits related to the resolution of acquisition-related provisions mainly for client contracts.

37

Management’s Discussion and Analysis

5.4. NET EARNINGS AND EARNINGS PER SHARE

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

						Change
For the three months ended September 30,	2014		2013			$			%
In thousands of CAD except for percentages
Adjusted EBIT		370,224		313,392			56,832			18.1%
Minus the following items:
Integration-related costs		64,259		50,184			14,075			28.0%
Finance costs		22,485		28,184			(5,699	)		(20.2%	)
Finance expense (income)		302		(576	)		878			(152.4%	)
Earnings before income taxes		283,178		235,600			47,578			20.2%
Income tax expense		69,470		94,578			(25,108	)		(26.5%	)
Effective tax rate		24.5%		40.1%						(38.9%	)
Net earnings		213,708		141,022			72,686			51.5%
Margin		8.6%		5.7%						50.9%
Weighted average number of shares
Class A subordinate shares and Class B shares (basic)		310,320,352		309,046,350						0.4%
Class A subordinate shares and Class B shares (diluted)		319,540,764		319,114,642						0.1%
Earnings per share (in dollars)
Basic EPS		0.69		0.46			0.23			50.0%
Diluted EPS		0.67		0.44			0.23			52.3%

For the current quarter, the $47.6 million increase in earnings before income taxes was mainly coming from the $56.8 million increase in adjusted EBIT as described in section 5.3 of the present document and a decrease of $5.7 million in finance costs, partly offset by an increase of $14.1 million in the integration-related costs.

In Q4 2014, the income tax expense was $69.5 million, a decrease of $25.1 million compared to $94.6 million in Q4 2013, while our effective income tax rate decreased from 40.1% to 24.5%. The decrease in the income tax expense and rate was mainly due to $26.0 million of unfavorable adjustments in fiscal 2013 that are comprised of a $18.4 million expense resulting from the revaluation of deferred tax assets following the enactment of a future rate reduction in the U.K. and from taxes paid on the repatriation of funds from the legacy Logica Indian operations of $7.6 million.

As a result of the above-mentioned items, the net earnings were $213.7 million, an increase of $72.7 million compared to $141.0 million last year.

The table on page 39 shows the quarterly year-over-year comparison of the tax rate with the impact of integration-related costs, tax adjustments and benefits related to the resolution of acquisition-related provisions removed.

During the quarter, no Class A subordinate shares were repurchased while 1,002,533 options were exercised.

38

FISCAL 2014 RESULTS

5.4.1. Net Earnings and Earnings per Share Prior to Specific Items

The following table sets out the information supporting the net earnings and earnings per share prior to specific items such as the integration-related costs, adjustments related to tax and the resolution of acquisition-related provisions:

						Change
For the three months ended September 30,
	2014		2013			$			%
Earnings before income taxes		283,178		235,600			47,578			20.2%
Add back:
Integration-related costs		64,259		50,184			14,075			28.0%
Remove:
Resolution of acquisition-related provisions 1		33,991		—			33,991			—
Earnings before income taxes prior to specific items		313,446		285,784			27,662			9.7%
Margin		12.6%		11.6%
Income tax expense		69,470		94,578			(25,108	)		(26.5%	)
Add back:
Tax adjustments 2		—		(26,013	)		26,013			(100.0%	)
Tax deduction on integration-related costs		15,075		3,619			11,456			316.6%
Remove:
Income taxes on the resolution of acquisition-related provisions		5,091		—			5,091			—
Income tax expense prior to specific items		79,454		72,184			7,270			10.1%
Effective tax rate prior to specific items		25.3%		25.3%
Net earnings prior to specific items		233,992		213,600			20,392			9.5%
Net earnings margin		9.4%		8.7%
Weighted average number of shares outstanding
Class A subordinate shares and Class B shares (basic)		310,320,352		309,046,350						0.4%
Class A subordinate shares and Class B shares (diluted)		319,540,764		319,114,642						0.1%
Earnings per share prior to specific items (in dollars)
Basic EPS		0.75		0.69			0.06			8.7%
Diluted EPS		0.73		0.67			0.06			9.0%

¹  The resolution of acquisition-related provisions is discussed on pages 36 and 37.

²  The tax adjustments are discussed on page 38.

39

Management’s Discussion and Analysis

5.5. CONSOLIDATED STATEMENTS OF CASH FLOWS

As at September 30, 2014, cash and cash equivalents were $535.7 million. The following table provides a summary of the generation and use of cash for the quarters ended September 30, 2014 and 2013.

For the three months ended September 30,	2014		2013		Change
In thousands of CAD
Cash provided by operating activities		412,000		166,350		245,650
Cash used in investing activities		(66,439)		(27,062)		(39,377)
Cash provided by (used in) financing activities		47,138		(155,689)		202,827
Effect of foreign exchange rate changes on cash and cash equivalents		11,724		(17,340)		29,064
Net increase (decrease) in cash and cash equivalents		404,423		(33,741)		438,164

5.5.1. Cash Provided by Operating Activities

For Q4 2014, cash provided by operating activities was $412.0 million compared to $166.4 million in Q4 2013, or 16.6% of revenue compared to 6.8% last year. The increase in cash from operating activities was mainly due to an improved DSO and to the growth in net earnings as described in section 5.4 of the present document. The timing of our working capital inflows and outflows will always have an impact on the cash flow from operations. Excluding the $19 million integration-related cash disbursements, the cash provided by operating activities would have been $431 million in Q4 2014, representing 17.4% of revenue compared to $204 million or 8.3% of revenue in Q4 2013.

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

For the three months ended September 30,	2014		2013		Change
In thousands of CAD
Net earnings		213,708		141,022		72,686
Amortization and depreciation		107,877		117,292		(9,415)
Other adjustments 1		37,156		36,224		932
Cash flow from operating activities before net change in non-cash working capital items		358,741		294,538		64,203
Net change in non-cash working capital items:
Accounts receivable, work in progress and deferred revenue		177,898		36,206		141,692
Accounts payable and accrued liabilities, accrued compensation, provisions and		(143,327)		(166,086)		22,759
other long-term liabilities
Other 2		18,688		1,692		16,996
Net change in non-cash working capital items		53,259		(128,188)		181,447
Cash provided by operating activities		412,000		166,350		245,650

¹  Other adjustments are comprised of deferred income taxes, foreign exchange loss (gain) 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 current quarter, as described in section 5.4 of the present document, the Company’s net earnings increased by $72.7 million when compared to Q4 2013.

For Q4 2014, the $177.9 million of cash coming from the accounts receivable, work in progress and deferred revenue was mainly due to a decrease of 4 days in our DSO from 47 days in Q3 2014 to 43 in Q4 2014.

For the current quarter, the $143.3 million used in cash for the accounts payable and accrued liabilities, accrued compensation, provisions and other long-term liabilities was mostly due to the net $85.0 million decrease in accounts payable and accrued liabilities and the net decrease of $47.5 million in accrued compensation that were mainly driven by the reduction in the vacation accruals. These were partly offset by the net increase of $45.2 million in integration-related accruals.

40

FISCAL 2014 RESULTS

6. Eight Quarter Summary

As at and for the three months	Sept. 30,	June 30,	Mar. 31,	Dec. 31,	Sept. 30,	June 30,	Mar. 31,	Dec. 31,
ended,	2014	2014	2014	2013	2013	2013	2013	2012
In millions of CAD unless otherwise noted
Growth
Backlog	18,237	18,781	19,476	19,253	18,677	18,747	18,019	18,281
Bookings	2,049	2,451	2,850	2,818	2,501	2,754	2,210	2,845
Book-to-bill ratio	82.5%	91.9%	105.4%	106.5%	101.7%	107.3%	87.5%	112.3%
Revenue	2,483.7	2,667.0	2,704.3	2,644.7	2,458.2	2,567.3	2,526.2	2,532.9
Year-over-year growth	1.0%	3.9%	7.0%	4.4%	52.7%	141.1%	137.0%	145.4%
Constant currency growth	(3.4%)	(3.9%)	(2.3%)	(1.9%)	48.2%	140.3%	137.1%	147.5%
Profitability
Adjusted EBIT	370.2	342.2	341.5	302.9	313.4	291.2	261.6	209.5
Adjusted EBIT margin	14.9%	12.8%	12.6%	11.5%	12.7%	11.3%	10.4%	8.3%
Net earnings	213.7	225.1	230.9	189.8	141.0	178.2	114.2	22.4
Net earnings margin	8.6%	8.4%	8.5%	7.2%	5.7%	6.9%	4.5%	0.9%
Basic EPS (in dollars)	0.69	0.73	0.75	0.62	0.46	0.58	0.37	0.07
Diluted EPS (in dollars)	0.67	0.71	0.73	0.60	0.44	0.56	0.36	0.07
Liquidity
Cash provided by operating activities	412.0	345.9	350.7	66.3	166.4	133.2	147.2	224.5
As a % of revenue	16.6%	13.0%	13.0%	2.5%	6.8%	5.2%	5.8%	8.9%
Days sales outstanding	43	47	47	55	49	49	46	46
Capital structure
Net debt	2,113.3	2,389.0	2,678.2	2,890.4	2,739.9	2,873.0	2,914.3	2,964.9
Net debt to capitalization ratio	27.6%	32.6%	35.6%	38.9%	39.6%	41.1%	43.0%	44.7%
Return on equity	18.8%	18.1%	17.9%	16.0%	12.3%	4.3%	1.8%	1.7%
Return on invested capital	14.5%	13.3%	13.4%	12.7%	11.8%	12.3%	11.1%	10.9%
Balance sheet
Cash and cash equivalents, and short- term investments	535.7	131.3	133.8	206.5	106.2	165.3	167.7	161.6
Total assets	11,234.1	11,162.2	11,560.4	11,801.0	10,879.3	11,132.8	10,936.6	10,981.8
Long-term financial liabilities	2,748.4	2,164.8	2,562.4	2,796.6	2,489.5	2,648.2	3,093.5	3,162.6

There are factors causing quarterly variances which may not be reflective of the Company’s future performance. First, there is seasonality in SI&C work, and the quarterly performance of these operations is impacted by occurrences such as vacations and the number of statutory holidays in any given quarter. Outsourcing contracts including BPS contracts are affected to a lesser extent by seasonality. Second, the workflow from some clients may fluctuate from quarter to quarter based on their business cycle and the seasonality of their own operations. Third, the savings that we generate for a client on a given outsourcing contract may temporarily reduce our revenue stream from this client, as these savings may not be immediately offset by additional work performed for this client.

In general, cash flow from operating activities could vary significantly from quarter to quarter depending on the timing of monthly payments received from large clients, cash requirements associated with large acquisitions, outsourcing contracts and projects, the timing of the reimbursements for various tax credits as well as profit sharing payments to members and the timing of restructuring cost payments.

Foreign exchange fluctuations can also contribute to quarterly variances as our percentage of operations in foreign countries evolves. The effect from these variances is primarily on our revenue and to a much less extent, on our net margin as we benefit from natural hedges.

41

Management’s Discussion and Analysis

7. Changes in Accounting Policies

The audited consolidated financial statements for the year ended September 30, 2014 include all adjustments that CGI’s management considers necessary for the fair presentation of its financial position, results of operations, and cash flows.

a) NEW STANDARDS AND AMENDMENTS ADOPTED

The following new and amended standards have been adopted by the Company effective October 1, 2013:

IFRS 10 – Consolidated Financial Statements

The new standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included in a company’s consolidated financial statements. The adoption of IFRS 10 did not result in any significant impact on the Company’s consolidated financial statements.

IFRS 12 – Disclosure of Interests in Other Entities

The new standard provides guidance on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and structured entities. The standard requires disclosure of the nature and risks associated with the Company’s interests in other entities and the effects of those interests on its financial position, financial performance and cash flows. The adoption of IFRS 12 did not result in any significant impact on the Company’s consolidated financial statements.

IFRS 13 – Fair Value Measurement

The new standard provides guidance for fair value measurements by providing a definition of fair value and a single source of fair value measurement and disclosure requirements. IFRS 13 applies when other IFRS standards require or permit fair value measurements. The adoption of IFRS 13 did not result in any significant impact on the Company’s consolidated financial statements other than to give rise to additional disclosures.

IAS 1 – Presentation of Financial Statements

The amendment requires grouping together items within the statement of comprehensive income that may be reclassified to the statement of earnings. As a result, the Company has grouped items within its consolidated statements of comprehensive income and accumulated other comprehensive income by items that will and will not be reclassified subsequently to the consolidated statements of earnings.

IAS 19 – Employee Benefits

Two amendments of IAS 19 have been adopted by the Company.

The first amendment requires to adjust the calculation of the financing cost component of defined benefit plans and to enhance disclosure requirements. As a result, the Company calculated a net interest expense or income on the net defined benefit liability or asset. The net interest on the defined benefit liability or asset replaces the interest cost on the defined benefit obligation and the expected return on plan assets. The adoption of IAS 19 did not result in any significant impact on the Company’s consolidated financial statements, other than to give rise to additional disclosures.

The second amendment permits the recognition of certain contributions from employees as a reduction of the service cost in the period in which the related service is rendered. The amendment applies to contributions from employees set out in the formal terms of the plan, linked to service and independent of the number of years of service. The Company has early adopted the amendment of IAS 19 which is effective on or after July 1, 2014. The amendment did not result in any significant impact on the Company’s consolidated financial statements.

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FISCAL 2014 RESULTS

b) FUTURE ACCOUNTING STANDARD CHANGES

The following standards have been issued but are not yet effective:

IFRS 15 - Revenue from Contracts with Customers

In May 2014, the IASB issued IFRS 15, “Revenue from Contracts with Customers”, to specify how and when to recognize revenue as well as requiring the provision of more informative and relevant disclosures. IFRS 15 supersedes IAS 18, “Revenue”, IAS 11, “Construction Contracts”, and other revenue related interpretations. The standard will be effective on October 1, 2017 for the Company with earlier adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

IFRS 9 - Financial Instruments

In July 2014, the IASB amended IFRS 9, “Financial Instruments”, to bring together the classification and measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39, “Financial Instruments: Recognition and Measurement”. The standard supersedes all previous versions of IFRS 9 and will be effective on October 1, 2018 for the Company with earlier application permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

43

Management’s Discussion and Analysis

8. Critical Accounting Estimates and Judgements

The Company’s significant accounting policies are described in Note 3 of the audited consolidated financial statements for the year ended September 30, 2014. The preparation of the consolidated financial statements requires management to make judgements and estimates that affect the reported amounts of assets, liabilities and equity and the accompanying disclosures at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Because the use of judgements and estimates is inherent in the financial reporting process, actual results could differ.

An accounting estimate is considered critical if the estimate requires management to make assumptions about matters that were highly uncertain at the time the estimate was made, if different estimates could reasonably have been used in the period, or changes in the accounting estimates that are reasonably likely to occur, could have a material impact on the presentation of our financial condition, changes in financial condition or results of operations.

Areas impacted by estimates	Consolidated balance sheets	Consolidated statements of earnings
		Revenue	Cost of services, selling and administrative	Income taxes
Revenue recognition 1	ü	ü	ü
Estimated losses on revenue-generating contracts	ü		ü
Goodwill impairment	ü		ü
Business combinations	ü	ü	ü	ü
Income taxes	ü			ü
Litigations and claims	ü	ü	ü

¹  Affects the balance sheet through accounts receivable, work in progress and deferred revenue.

The use of judgments, apart from those involving estimations, that have the most significant effect on the amounts recognized in the financial statements are:

Multiple component arrangements

Assessing whether the deliverables within an arrangement are separately identifiable components requires judgement by management. A component is considered as separately identifiable if it has value to the client on a stand-alone basis. The Company first reviews the contract clauses to evaluate if the deliverable is accepted separately by the client. Then, the Company assesses if the deliverable could have been provided by another vendor and if it would have been possible for the client to decide to not purchase the deliverable.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Management judgment is required concerning uncertainties that exist with respect to the timing of future taxable income required to recognize a deferred tax asset. The Company recognizes an income tax benefit only when it is probable that the tax benefit will be realized in the future. In making this judgement, the Company assesses forecast and the availability of future tax planning strategies.

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FISCAL 2014 RESULTS

Significant estimates about the future and other major sources of estimation uncertainty at the end of the reporting period could have a significant risk of causing a material adjustment to the carrying amounts of the following:

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable net of discounts, volume rebates and sales related taxes.

The Company’s arrangements often include a mix of the services and products. If an arrangement involves the provision of multiple components, the total arrangement value is allocated to each separately identifiable component based on its relative selling price. When estimating selling price of each component, the Company maximizes the use of observable prices which are established using the Company’s prices for same or similar components. When observable prices are not available, the Company estimates selling prices based on its best estimate. The best estimate of selling price is the price at which the Company would normally expect to offer the services or products and is established by considering a number of internal and external factors including, but not limited to, geographies, the Company’s pricing policies, internal costs and margins.

Revenue from systems integration and consulting services under fixed-fee arrangements where the outcome of the arrangements can be estimated reliably is recognized using the percentage-of-completion method over the service periods. The Company uses the labour costs or labour hours to measure the progress towards completion. This method relies on estimates of total expected labour costs or total expected labour hours to complete the service, which are compared to labour costs or labour hours incurred to date, to arrive at an estimate of the percentage of revenue earned to date. Management regularly reviews underlying estimates of total expected labour costs or hours. If the outcome of an arrangement cannot be estimated reliably, revenue is recognized to the extent of arrangement costs incurred that are likely to be recoverable.

Estimated losses on revenue-generating contracts

Estimated losses on revenue-generating contracts may occur due to additional contract costs which were not foreseen at inception of the contract. Contract losses are measured at the amount by which the estimated total costs exceed the estimated total revenue from the contract. The estimated losses on revenue-generating contracts are recognized in the period when it is determined that a loss is probable. Management regularly reviews arrangement profitability and the underlying estimates.

Goodwill impairment

The carrying value of goodwill is tested for impairment annually on September 30, or earlier if events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of each segment has been allocated has been determined based on the its value in use (“VIU”) calculation which includes estimates about their future financial performance based on cash flows approved by management covering a period of five years as the Company generates revenue mainly through long-term contracts. Key assumptions used in the VIU calculations are the discount rate applied and the long-term growth rate of net operating cash flows. In determining these assumptions, management has taken into consideration the current economic environment and its resulting impact on expected growth and discount rates. The cash flow projections reflect management’s expectations of the operating segment’s operating performance and growth prospects in the operating segment’s market. The discount rate applied to an operating segment is the weighted average cost of capital (“WACC”). Management considers factors such as country risk premium, risk-free rate, size premium and cost of debt to derive the WACC.

For goodwill impairment testing purposes, the group of CGUs that represent the lowest level within the Company at which management monitors goodwill is the operating segment level.

Business combinations

Management makes assumptions when allocating the fair value of the consideration to tangible and intangible assets acquired and liabilities assumed. The goodwill recognized is composed of the future economic value associated to acquire work force and synergies with the Company’s operations which are primarily due to reduction of costs and new business opportunities.

The determination of fair value involves making estimates relating to acquired intangible assets, PP&E, litigation, provision for estimated losses on revenue-generating contracts, other onerous contracts and contingency reserves. Estimates include the forecasting of future cash flows and discount rates.

45

Management’s Discussion and Analysis

Income taxes

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Once this assessment is made, the Company considers the analysis of forecast and future tax planning strategies. Such estimates are made based on the forecast by jurisdiction on an undiscounted basis. Management considers factors such as the number of years to include in the forecast period, the history of the taxable profits and availability of tax strategies.

The Company is subject to taxation in numerous jurisdictions and there are transactions and calculations for which the ultimate tax determination is uncertain. When a tax position is uncertain, the Company recognizes an income tax benefit or reduces an income tax liability only when it is probable that the tax benefit will be realized in the future or that the income tax liability is no longer probable. The provision for uncertain tax position is made using the best estimate of the amount expected to be paid based on qualitative assessment of all relevant factors.

Litigations and claims

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Provisions are discounted using a current pre-tax rate when the impact of the time value of money is material.

The accrued litigation and legal claim provisions are based on historical experience, current trends and other assumptions that are believed to be reasonable under the circumstances. Estimates include the period in which the underlying cause of the claim occurred and the degree of probability of an unfavourable outcome.

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FISCAL 2014 RESULTS

9. Integrity of Disclosure

Our management assumes the responsibility for the existence of appropriate information systems, procedures and controls to ensure that information used internally and disclosed externally is complete and reliable.

CGI has a formal corporate disclosure policy whose goal is to raise awareness of the Company’s approach to disclosure among the members of the Board of Directors, senior management and employees.

The Board of Directors has the responsibility under its charter and under the securities laws that govern CGI’s continuous disclosure obligations to oversee CGI’s compliance with its continuous and timely disclosure obligations as well as the integrity of the Company’s internal controls and management information systems. The Board of Directors carries out this responsibility mainly through its Audit and Risk Management Committee.

The Audit and Risk Management Committee of CGI is composed entirely of independent directors who meet the independence and experience requirements of the New York Stock Exchange as well as those that apply under Canadian securities regulation. The responsibilities of our Audit and Risk Management Committee include: a) reviewing of all our public disclosure documents containing audited or unaudited financial information; b) identifying and examining all risks to which we are exposed and reviewing the various policies and practices that are intended to manage those risks; c) reviewing and assessing of the effectiveness of our accounting policies and practices concerning financial reporting; d) reviewing and monitoring our internal control procedures, programs and policies and assessing of the adequacy and effectiveness thereof; e) reviewing the adequacy of our internal audit resources including the mandate and objectives of the internal auditor; f) recommending to the Board of Directors of CGI on the appointment of external auditors, the assertion of the external auditors’ independence, the review of the terms of their engagement as well as pursuing ongoing discussions with them; g) reviewing of the audit procedures; h) reviewing of related party transactions; and i) carrying out such other responsibilities usually attributed to audit and risk committees or as directed by our Board of Directors. In making its recommendation to the Board of Directors in relation to the annual appointment of the external auditor, the Audit and Risk Management Committee will conduct an annual assessment of the external auditor in keeping with the recommendations of the Chartered Professional Accountants of Canada. The initial formal assessment will be concluded in advance of our upcoming Annual General Meeting of shareholders and will be conducted with the assistance of key CGI personnel.

The Company evaluated the effectiveness of its disclosure controls and procedures and internal controls over financial reporting, supervised by and with the participation of the Chief Executive Officer and the Chief Financial Officer as of September 30, 2014. The Chief Executive Officer and Chief Financial Officer concluded that, based on this evaluation, the Company’s disclosure controls and procedures and internal controls over financial reporting were adequate and effective, at a reasonable level of assurance, to ensure that material information related to the Company and its consolidated subsidiaries would be made known to them by others within those entities.

47

Management’s Discussion and Analysis

10. Risk Environment

10.1. RISKS AND UNCERTAINTIES

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

10.1.1. Risks Related to the Market

Economic risk

The level of business activity of our clients, which is affected by economic conditions, has a bearing upon the results of our operations. We can neither predict the impact that current economic conditions will have on our future revenue, nor predict when economic conditions will show meaningful improvement. During an economic downturn, our clients and potential clients may cancel, reduce or defer existing contracts and delay entering into new engagements. In general, companies also decide to undertake fewer IT systems projects during difficult economic times, resulting in limited implementation of new technology and smaller engagements. Since there are fewer engagements in a downturn, competition usually increases and pricing for services may decline as competitors, particularly companies with significant financial resources, decrease rates to maintain or increase their market share in our industry and this may trigger pricing adjustments related to the benchmarking obligations within our contracts. Our pricing, revenue and profitability could be negatively impacted as a result of these factors.

10.1.2. Risks Related to our Industry

The competition for contracts

CGI operates in a global marketplace in which competition among providers of IT services is vigorous. Some of our competitors possess greater financial, marketing, sales resources, and larger geographic scope in certain parts of the world than we do, which, in turn, provides them with additional leverage in the competition for contracts. In certain niche, regional or metropolitan markets, we face smaller competitors with specialized capabilities who may be able to provide competing services with greater economic efficiency. Some of our competitors have more significant operations than we do in lower cost countries that can serve as a platform from which to provide services worldwide on terms that may be more favourable. Increased competition among IT services firms often results in corresponding pressure on prices. There can be no assurance that we will succeed in providing competitively priced services at levels of service and quality that will enable us to maintain and grow our market share.

The availability and retention of qualified IT professionals

There is strong demand for qualified individuals in the IT industry. Hiring and retaining a sufficient amount of individuals with the desired knowledge and skill set may be difficult. Therefore, it is important that we remain able to successfully attract and retain highly qualified professionals and establish an effective succession plan. If our comprehensive programs aimed at attracting and retaining qualified and dedicated professionals do not ensure that we have staff in sufficient numbers and with the appropriate training, expertise and suitable government security clearances required to serve the needs of our clients, we may have to rely on subcontractors or transfers of staff to fill resulting gaps. If our succession plan fails to identify those with potential or to develop these key individuals, we may lose key members and be required to recruit and train these new resources. This might result in lost revenue or increased costs, thereby putting pressure on our earnings.

The ability to continue developing and expanding service offerings to address emerging business demands and technology trends

The rapid pace of change in all aspects of information technology and the continually declining costs of acquiring and maintaining information technology infrastructure mean that we must anticipate changes in our clients’ needs. To do so, we must adapt our services and our solutions so that we maintain and improve our competitive advantage and remain able to provide cost effective services. The market for the services and solutions we offer is extremely competitive and there can be no assurance that we will succeed in developing and adapting our business in a timely manner. If we do not

48

FISCAL 2014 RESULTS

keep pace, our ability to retain existing clients and gain new business may be adversely affected. This may result in pressure on our revenue, profit margin and resulting cash flows from operations.

Infringing on the intellectual property rights of others

Despite our efforts, the steps we take to ensure that our services and offerings do not infringe on the intellectual property rights of third parties may not be adequate to prevent infringement and, as a result, claims may be asserted against us or our clients. We enter into licensing agreements for the right to use intellectual property and may otherwise offer indemnities against liability and damages arising from third-party claims of patent, copyright, trademark or trade secret infringement in respect of our own intellectual property or software or other solutions developed for our clients. In some instances, the amount of these indemnity claims could be greater than the revenue we receive from the client. Intellectual property claims or litigation could be time-consuming and costly, harm our reputation, require us to enter into additional royalty or licensing arrangements, or prevent us from providing some solutions or services. Any limitation on our ability to sell or use solutions or services that incorporate software or technologies that are the subject of a claim could cause us to lose revenue-generating opportunities or require us to incur additional expenses to modify solutions for future projects.

Benchmarking provisions within certain contracts

Some of our outsourcing contracts contain clauses allowing our clients to externally benchmark the pricing of agreed upon services against those offered by other providers in an appropriate peer comparison group. The uniqueness of the client environment is factored in and, if results indicate a difference outside the agreed upon tolerance, we may be required to work with clients to reset the pricing for their services.

Protecting our intellectual property rights

Our success depends, in part, on our ability to protect our proprietary methodologies, processes, know-how, tools, techniques and other intellectual property that we use to provide our services. CGI’s business solutions will generally benefit from available copyright protection and, in some cases, patent protection. Although CGI takes reasonable steps to protect and enforce its intellectual property rights, there is no assurance that such measures will be enforceable or adequate. The cost of enforcing our rights can be substantial and, in certain cases, may prove to be uneconomic. In addition, the laws of some countries in which we conduct business may offer only limited intellectual property rights protection. Despite our efforts, the steps taken to protect our intellectual property may not be adequate to prevent or deter infringement or other misappropriation of intellectual property, and we may not be able to detect unauthorized use of our intellectual property, or take appropriate steps to enforce our intellectual property rights.

10.1.3. Risks Related to our Business

Risks associated with our growth strategy

CGI’s Build and Buy strategy is founded on four pillars of growth: first, organic growth through contract wins, renewals and extensions in the areas of outsourcing and system integration; second, the pursuit of new large outsourcing contracts; third, acquisitions of smaller firms or niche players; and fourth, transformational acquisitions.

Our ability to grow through organic growth and new large outsourcing transactions is affected by a number of factors outside of our control, including a lengthening of our sales cycle for major outsourcing contracts.

Our ability to grow through niche and transformational acquisitions requires that we identify suitable acquisition targets and that we correctly evaluate their potential as transactions that will meet our financial and operational objectives. There can be no assurance that we will be able to identify suitable acquisition candidates and consummate additional acquisitions that meet our economic thresholds, or that future acquisitions will be successfully integrated into our operations and yield the tangible accretive value that had been expected.

If we are unable to implement our Build and Buy strategy, we will likely be unable to maintain our historic or expected growth rates.

The variability of financial results

Our ability to maintain and increase our revenues is affected not only by our success in implementing our Build and Buy strategy, but also by a number of other factors, including: our ability to introduce and deliver new services and products; a lengthened sales cycle; the cyclicality of purchases of technology services and products; the nature of a customer’s

49

Management’s Discussion and Analysis

business; and the structure of agreements with customers. These, and other factors, make it difficult to predict financial results for any given period.

Business mix variations

The proportion of revenue that we generate from shorter-term systems integration and consulting (“SI&C”) projects, versus revenue from long-term outsourcing contracts, will fluctuate at times, affected by acquisitions or other transactions. An increased exposure to revenue from SI&C projects may result in greater quarterly revenue variations.

The financial and operational risks inherent in worldwide operations

We manage operations in numerous countries around the world. The scope of our operations subjects us to various issues that can negatively impact our operations: the fluctuations of currency (see foreign exchange risk); the burden of complying with a wide variety of national and local laws (see regulatory risk); the differences in and uncertainties arising from local business culture and practices; political, social and economic instability including the threats of terrorism, civil unrest, war, natural disasters and pandemic illnesses. Any or all of these risks could impact our global business operations and cause our profitability to decline.

Organizational challenges associated with our size

With the acquisition of Logica, our organization has more than doubled in size with expanded operations in both Europe and Asia. Our culture, standards, core values, internal controls and our policies need to be instilled across the newly acquired businesses as well as maintained within our existing operations. To effectively communicate and manage these standards throughout a large global organization is both challenging and time consuming. Newly acquired businesses may be resistant to change and may remain attached to past methods, standards and practices which may compromise our business agility in pursuing opportunities. Cultural differences in various countries may also present barriers to introducing new ideas or aligning our vision and strategy with the rest of the organization. If we cannot overcome these obstacles in maintaining a strategic bond throughout the Company worldwide, we may not be able to achieve our growth and profitability objectives.

Taxes

In estimating our income tax payable, management uses accounting principles to determine income tax positions that are likely to be sustained by applicable tax authorities. However, there is no assurance that our tax benefits or tax liability will not materially differ from our estimates or expectations. The tax legislation, regulation and interpretation that apply to our operations are continually changing. In addition, future tax benefits and liabilities are dependent on factors that are inherently uncertain and subject to change, including future earnings, future tax rates, and anticipated business mix in the various jurisdictions in which we operate. Moreover, our tax returns are continually subject to review by applicable tax authorities; it is these tax authorities that will make the final determination of the actual amounts of taxes payable or receivable, of any future tax benefits or liabilities and of income tax expense that we may ultimately recognize. Any of the above factors could have a material adverse effect on our net income or cash flows by affecting our operations and profitability, the availability of tax credits, the cost of the services we provide, and the availability of deductions for operating losses as we develop our international service delivery capabilities.

Credit risk with respect to accounts receivable and work in progress

In order to sustain our cash flows and net earnings from operations, we must invoice and collect the amounts owed to us in an efficient and timely manner. Although we maintain provisions to account for anticipated shortfalls in amounts collected, the provisions we take are based on management estimates and on our assessment of our clients’ creditworthiness which may prove to be inadequate in the light of actual results. To the extent that we fail to perform our services in accordance with our contracts and our clients’ reasonable expectations, and to the extent that we fail to invoice clients for our services correctly in a timely manner, our collections could suffer resulting in a direct and adverse effect to our revenue, net earnings and cash flows. In addition, a prolonged economic downturn may cause clients to curtail or defer projects, impair their ability to pay for services already provided, and ultimately cause them to default on existing contracts, in each case, causing a shortfall in revenue and impairing our future prospects.

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FISCAL 2014 RESULTS

Material developments regarding major commercial clients resulting from such causes as changes in financial condition, mergers  or business acquisitions

Consolidation among our clients resulting from mergers and acquisitions may result in loss or reduction of business when the successor business’ information technology needs are served by another service provider or are provided by the successor Company’s own personnel. Growth in a client’s information technology needs resulting from acquisitions or operations may mean that we no longer have a sufficient geographic scope or the critical mass to serve the client’s needs efficiently, resulting in the loss of the client’s business and impairing our future prospects. There can be no assurance that we will be able to achieve the objectives of our growth strategy in order to maintain and increase our geographic scope and critical mass in our targeted markets.

Early termination risk

If we should fail to deliver our services according to contractual agreements, some of our clients could elect to terminate contracts before their agreed expiry date, which would result in a reduction of our earnings and cash flow and may impact the value of our backlog. In addition, a number of our outsourcing contractual agreements have termination for convenience and change of control clauses according to which a change in the client’s intentions or a change in control of CGI could lead to a termination of the said agreements. Early contract termination can also result from the exercise of a legal right or when circumstances that are beyond our control or beyond the control of our client prevent the contract from continuing. In cases of early termination, we may not be able to recover capitalized contract costs and we may not be able to eliminate ongoing costs incurred to support the contract.

Cost estimation risks

In order to generate acceptable margins, our pricing for services is dependent on our ability to accurately estimate the costs and timing for completing projects or long-term outsourcing contracts. In addition, a significant portion of our project-oriented contracts are performed on a fixed-price basis. Billing for fixed-price engagements is carried out in accordance with the contract terms agreed upon with our client, and revenue is recognized based on the percentage of effort incurred to date in relation to the total estimated costs to be incurred over the duration of the respective contract. These estimates reflect our best judgment regarding the efficiencies of our methodologies and professionals as we plan to apply them to the contracts in accordance with the CGI Client Partnership Management Framework (“CPMF”), a process framework which helps ensure that all contracts are managed according to the same high standards throughout the organization. If we fail to apply the CPMF correctly or if we are unsuccessful in accurately estimating the time or resources required to fulfil our obligations under a contract, or if unexpected factors, including those outside of our control, arise, there may be an impact on costs or the delivery schedule which could have an adverse effect on our expected profit margins.

Risks related to teaming agreements and subcontracts

We derive substantial revenues from contracts where we enter into teaming agreements with other providers. In some teaming agreements we are the prime contractor whereas in others we act as a subcontractor. In both cases, we rely on our relationships with other providers to generate business and we expect to do so in the foreseeable future. Where we act as prime contractor, if we fail to maintain our relationships with other providers, we may have difficulty attracting suitable participants in our teaming agreements. Similarly, where we act as subcontractor, if our relationships are impaired, other providers might reduce the work they award to us, award that work to our competitors, or choose to offer the services directly to the client in order to compete with our business. In either case, our business, prospects, financial condition and operating results could be harmed.

Our partners’ ability to deliver on their commitments

Increasingly large and complex contracts may require that we rely on third party subcontractors including software and hardware vendors to help us fulfil our commitments. Under such circumstances, our success depends on the ability of the third parties to perform their obligations within agreed upon budgets and timeframes. If our partners fail to deliver, our ability to complete the contract may be adversely affected, which may have an unfavourable impact on our profitability.

Guarantees risk

In the normal course of business, we enter into agreements that may provide for indemnification and guarantees to counterparties in transactions such as consulting and outsourcing services, business divestitures, lease agreements and financial obligations. These indemnification undertakings and guarantees may require us to compensate counterparties

51

Management’s Discussion and Analysis

for costs and losses incurred as a result of various events, including breaches of representations and warranties, intellectual property right infringement, claims that may arise while providing services or as a result of litigation that may be suffered by counterparties.

Risk related to human resources utilization rates

In order to maintain our profit margin, it is important that we maintain the appropriate availability of professional resources in each of our geographies by having a high utilization rate while still being able to assign additional resources to new work. Maintaining an efficient utilization rate requires us to forecast our need for professional resources accurately and to manage recruitment activities, professional training programs, attrition rates and restructuring programs appropriately. To the extent that we fail to do so, or to the extent that laws and regulations, particularly those in Europe, restrict our ability to do so, our utilization rates may be reduced; thereby having an impact on our revenue and profitability. Conversely, we may find that we do not have sufficient resources to deploy against new business opportunities in which case our ability to grow our revenue would suffer.

Client concentration risk

We derive a significant portion of our revenue from the services we provide to the U.S. federal government and its agencies, and we expect that this will continue for the foreseeable future. In the event that a major U.S. federal government agency were to limit, reduce, or eliminate the business it awards to us, we might be unable to recover the lost revenue with work from other agencies or other clients, and our business, prospects, financial condition and operating results could be materially and adversely affected. Although IFRS considers a national government and its agencies as a single client, our client base in the U.S. government economic sector is in fact diversified with contracts from many different departments and agencies.

Government business risk

Changes in government spending policies or budget priorities could directly affect our financial performance. Among the factors that could harm our government contracting business are the curtailment of governments’ use of consulting and IT services firms; a significant decline in spending by governments in general, or by specific departments or agencies in particular; the adoption of new legislation and/or actions affecting companies that provide services to governments; delays in the payment of our invoices by government payment offices; and general economic and political conditions. These or other factors could cause government agencies and departments to reduce their purchases under contracts, to exercise their right to terminate contracts, to issue temporary stop work orders, or not to exercise options to renew contracts, any of which would cause us to lose future revenue. Government spending reductions or budget cutbacks at these departments or agencies could materially harm our continued performance under these contracts, or limit the awarding of additional contracts from these agencies.

Regulatory risk

Our global operations require us to be compliant with laws in many jurisdictions on matters such as: anticorruption, trade restrictions, immigration, taxation, securities regulation, anti-competition, data privacy and labour relations, amongst others. Complying with these diverse requirements worldwide is a challenge and consumes significant resources. Some of these laws may impose conflicting requirements; we may face the absence in some jurisdictions of effective laws to protect our intellectual property rights; there may be restrictions on the movement of cash and other assets; or restrictions on the import and export of certain technologies; or restrictions on the repatriation of earnings and reduce our earnings, all of which may expose us to penalties for non-compliance and harm our reputation.

Our business with the U.S. federal government and its agencies requires that we comply with complex laws and regulations relating to government contracts. These laws relate to the integrity of the procurement process, impose disclosure requirements, and address national security concerns, among others matters. For instance, we are routinely subject to audits by U.S. government agencies with respect to compliance with these rules. If we fail to comply with these requirements we may incur penalties and sanctions, including contract termination, suspension of payments, suspension or debarment from doing business with the federal government, and fines.

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FISCAL 2014 RESULTS

Legal claims made against our work

We create, implement and maintain IT solutions that are often critical to the operations of our clients’ business. Our ability to complete large projects as expected could be adversely affected by unanticipated delays, renegotiations, and changing client requirements or project delays. Also, our solutions may suffer from defects that adversely affect their performance; they may not meet our clients’ requirements or may fail to perform in accordance with applicable service levels. Such problems could subject us to legal liability, which could adversely affect our business, operating results and financial condition, and may negatively affect our professional reputation. We typically use reasonable efforts to include provisions in our contracts which are designed to limit our exposure to legal claims relating to our services and the applications we develop. We may not always be able to include such provisions and, where we are successful, they may not protect us adequately or may not be enforceable under some circumstances or under the laws of some jurisdictions.

Information and infrastructure risks

Our business often requires that our clients’ applications and information, which may include their proprietary information, be processed and stored on our networks and systems, and in data centres that we manage. Digital information and equipment is subject to loss, theft or destruction, and services that we provide may become temporarily unavailable as a result thereof or upon an equipment or system malfunction. Failures can arise from human error in the course of normal operations, maintenance and upgrading activities, or from hacking, vandalism (including denial of service attacks and computer viruses), theft and unauthorized access by third parties, as well as from power outages or surges, floods, fires, natural disasters or from any other causes. The measures that we take to protect information and software, including both physical and logical controls on access to premises and information and backup systems may prove in some circumstances to be inadequate to prevent the loss, theft or destruction of client information or service interruptions. Such events may expose the Company to financial loss or damages.

Risk of harm to our reputation

CGI’s reputation as a capable and trustworthy service provider and long term business partner is key to our ability to compete effectively in the market for information technology services. The nature of our operations exposes us to the potential loss, unauthorized access to, or destruction of our clients’ information, as well as temporary service interruptions. Depending on the nature of the information or services, such events may have a negative impact on how the Company is perceived in the marketplace. Under such circumstances, our ability to obtain new clients and retain existing clients could suffer with a resulting impact on our revenue and profit.

Risks associated with the integration of new operations

The successful integration of new operations arising from our acquisition strategy or from large outsourcing contracts requires that a substantial amount of management time and attention be focused on integration tasks. Management time that is devoted to integration activities may detract from management’s normal operations focus with resulting pressure on the revenues and earnings from our existing operations. In addition, we may face complex and potentially time-consuming challenges in implementing the uniform standards, controls, procedures and policies across new operations to harmonize their activities with those of our existing business units. Integration activities can result in unanticipated operational problems, expenses and liabilities. If we are not successful in executing our integration strategies in a timely and cost-effective manner, we will have difficulty achieving our growth and profitability objectives.

Internal controls risks

Due to the inherent limitations of internal controls including the circumvention or overriding of controls, or fraud, there can only be reasonable assurance that the Company’s internal controls will detect and prevent a misstatement. If the Company is unable to design, implement, monitor and maintain effective internal controls throughout its different business environments, the efficiency of our operations might suffer, resulting in a decline in revenue and profitability, and the accuracy of our financial reporting could be impaired.

Liquidity and funding risks

The Company’s future growth is contingent on the execution of its business strategy, which, in turn, is dependent on its ability to grow the business organically as well as conclude business acquisitions. By its nature, our growth strategy requires us to fund the investments required to be made using a mix of cash generated from our existing operations, money borrowed

53

Management’s Discussion and Analysis

under our existing or future credit agreements, and equity funding generated by the issuance of shares of our capital stock to counterparties in transactions, or to the general public. Our ability to raise the required funding depends on the capacity of the capital markets to meet our financing needs in a timely fashion and on the basis of interest rates and share prices that are reasonable in the context of profitability objectives. Increasing interest rates, volatility in our share price, and the capacity of our current lenders to meet our liquidity requirements are all factors that may have an adverse effect on our access to the funding we require. If we are unable to obtain the necessary funding, we may be unable to achieve our growth objectives.

Foreign exchange risk

The majority of our revenue and costs are denominated in currencies other than the Canadian dollar. Foreign exchange fluctuations impact the results of our operations as they are reported in Canadian dollars. This risk is partially mitigated by a natural hedge in matching our costs with revenue denominated in the same currency and through the use of derivatives in our hedging strategy. As we continue our global expansion, natural hedges may begin to diminish and the use of hedging contracts exposes us to the risk that financial institutions will fail to perform their obligations under our hedging instruments. Other than the use of financial products to deliver on our hedging strategy, we do not trade derivative financial instruments.

With our expanded presence in Europe, if uncertainty regarding the ability of certain European countries to continue servicing their sovereign debt or if austerity measures persist, the euro may weaken against the Canadian dollar. Similarly, if other currencies of countries where we operate weaken against the Canadian dollar, our consolidated financial results could be materially adversely impaired.

10.2. LEGAL PROCEEDINGS

The Company is involved in legal proceedings, audits, claims and litigation arising in the ordinary course of its business. Certain of these matters seek damages in significant amounts. Although the outcome of such matters is not predictable with assurance, the Company has no reason to believe that the disposition of any such current matter could reasonably be expected to have a material adverse effect on the Company’s financial position, results of operations or the ability to carry on any of its business activities. Please refer to Note 13 and 30 to the audited consolidated financial statements for more detailed information for legal proceedings.

Transfer Agent

Computershare Investor Services Inc.

(800) 564-6253

Investor Relations

Lorne Gorber

Senior Vice-President, Global Communications & Investor Relations

Telephone: (514) 841-3355

lorne.gorber@cgi.com

1350 René-Lévesque Boulevard West

15^th Floor

Montreal, Quebec

H3G 1T4

Canada

54

FISCAL 2014 RESULTS

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55

Consolidated Financial Statements

Management’s and Auditors’ reports

MANAGEMENT’S STATEMENT OF RESPONSIBILITY FOR FINANCIAL REPORTING

The management of CGI Group Inc. (“the Company”) is responsible for the preparation and integrity of the consolidated financial statements and the Management’s Discussion and Analysis (“MD&A”). The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards and necessarily include some amounts that are based on management’s best estimates and judgement. Financial and operating data elsewhere in the MD&A are consistent with that contained in the accompanying consolidated financial statements.

To fulfill its responsibility, management has developed, and continues to maintain, systems of internal controls reinforced by the Company’s standards of conduct and ethics, as set out in written policies to ensure the reliability of the financial information and to safeguard its assets. The Company’s internal control over financial reporting and consolidated financial statements are subject to audit by the independent auditors, Ernst & Young LLP, whose report follows. They were appointed as independent auditors, by a vote of the Company’s shareholders, to conduct an integrated audit of the Company’s consolidated financial statements and of the Company’s internal control over financial reporting. In addition, the Executive Committee of the Company reviews the disclosure of corporate information and oversees the functioning of the Company’s disclosure controls and procedures.

Members of the Audit and Risk Management Committee of the Board of Directors, all of whom are independent of the Company, meet regularly with the independent auditors and with management to discuss internal controls in the financial reporting process, auditing matters and financial reporting issues and formulates the appropriate recommendations to the Board of Directors. The independent auditors have unrestricted access to the Audit and Risk Management Committee. The consolidated financial statements and MD&A have been reviewed and approved by the Board of Directors.

Michael E. Roach	François Boulanger
President and Chief Executive Officer	Executive Vice-President and Chief Financial Officer
November 12, 2014

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FISCAL 2014 RESULTS

Management’s and Auditors’ reports

MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements for external reporting purposes in accordance with accounting principles generally accepted in Canada.

The Company’s internal control over financial reporting includes policies and procedures that:

- Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the assets of the Company;

- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with accounting principles generally accepted in Canada, and that receipts and expenditures are being made only in accordance with authorizations of management and the directors of the Company; and,

- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.

All internal control systems have inherent limitations; therefore, even where internal control over financial reporting is determined to be effective, it can provide only reasonable assurance. Projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As of the end of the Company’s 2014 fiscal year, management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting based on the framework established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework). Based on this assessment, management has determined the Company’s internal control over financial reporting as at September 30, 2014, was effective.

The effectiveness of the Company’s internal control over financial reporting as at September 30, 2014, has been audited by the Company’s independent auditors, as stated in their report appearing on page 58.

Michael E. Roach	François Boulanger
President and Chief Executive Officer	Executive Vice-President and Chief Financial Officer
November 12, 2014

57

Consolidated Financial Statements

Management’s and Auditors’ reports

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING

To the Board of Directors and Shareholders of CGI Group Inc.

We have audited CGI Group Inc.’s (the “Company”) internal control over financial reporting as of September 30, 2014, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) (“the COSO criteria”). The Company’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records, that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2014 based on the COSO criteria.

We also have audited, in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements of the Company as at and for the year ended September 30, 2014, and our report dated November 12, 2014 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP¹

Ernst & Young LLP

Montréal, Canada

November 12, 2014

1. CPA auditor, CA, public accountancy permit No. A112431

58

FISCAL 2014 RESULTS

Management’s and Auditors’ reports

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON FINANCIAL STATEMENTS

To the Board of Directors and Shareholders of CGI Group Inc.

We have audited the accompanying consolidated financial statements of CGI Group Inc. (the “Company”), which comprise the consolidated balance sheets as of September 30, 2014 and 2013 and the consolidated statements of earnings, comprehensive income, changes in equity and cash flows for the years ended September 30, 2014 and 2013, and a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of CGI Group Inc. as at September 30, 2014 and 2013, and its financial performance and its cash flows for the years ended September 30, 2014 and 2013, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

59

Consolidated Financial Statements

Management’s and Auditors’ reports

Other matter

We have also audited, in accordance with the standards of the Public company Accounting Oversight Board (United States), CGI Group Inc.’s internal control over financial reporting as of September 30, 2014, based on the criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (1992 Framework) and our report dated November 12, 2014 expressed an unqualified opinion on the Company’s internal control over financial reporting.

Ernst & Young LLP

Montréal, Canada

November 12, 2014

1. CPA auditor, CA, public accountancy permit No. A112431

60

FISCAL 2014 RESULTS

Consolidated Statements of Earnings

For the years ended September 30

(in thousands of Canadian dollars, except per share data)

	2014		2013
	$		$
Revenue		10,499,692		10,084,624
Operating expenses
Costs of services, selling and administrative (Note 23)		9,129,791		9,012,310
Integration-related costs (Note 26b)		127,341		338,439
Finance costs (Note 25)		101,278		113,931
Finance income		(2,010)		(4,362)
Foreign exchange loss (gain)		13,042		(3,316)
		9,369,442		9,457,002
Earnings before income taxes		1,130,250		627,622
Income tax expense (Note 16)		270,807		171,802
Net earnings		859,443		455,820
Earnings per share (Note 21)
Basic earnings per share		2.78		1.48
Diluted earnings per share		2.69		1.44

See Notes to the Consolidated Financial Statements.

61

Consolidated Financial Statements

Consolidated Statements of Comprehensive Income

For the years ended September 30

(in thousands of Canadian dollars)

	2014		2013
	$		$
Net earnings		859,443		455,820
Items that will be reclassified subsequently to net earnings (net of income taxes):
Net unrealized gains on translating financial statements of foreign operations		221,279		297,761
Net losses on derivative financial instruments and on translating long-term debt designated as hedges of net investments in foreign operations		(100,869)		(143,785)
Net unrealized gains on cash flow hedges		20,729		134
Net unrealized gains (losses) on investments available for sale		941		(1,704)
Items that will not be reclassified subsequently to net earnings (net of income taxes):
Net remeasurement losses		(35,311)		(30,845)
Other comprehensive income		106,769		121,561
Comprehensive income		966,212		577,381

See Notes to the Consolidated Financial Statements.

62

FISCAL 2014 RESULTS

Consolidated Balance Sheets

As at September 30

(in thousands of Canadian dollars)

	2014		2013
	$		$
Assets
Current assets
Cash and cash equivalents (Note 4)		535,715		106,199
Current derivative financial instruments (Note 31)		9,397		1,344
Accounts receivable (Note 5)		1,036,068		1,205,625
Work in progress		807,989		911,848
Prepaid expenses and other current assets		174,137		218,446
Income taxes		8,524		17,233
Total current assets before funds held for clients		2,571,830		2,460,695
Funds held for clients (Note 6)		295,754		222,469
Total current assets		2,867,584		2,683,164
Property, plant and equipment (Note 7)		486,880		475,143
Contract costs (Note 8)		156,540		140,472
Intangible assets (Note 9)		630,074		708,165
Other long-term assets (Note 10)		74,158		58,429
Long-term financial assets (Note 11)		84,077		51,892
Deferred tax assets (Note 16)		323,416		368,217
Goodwill (Note 12)		6,611,323		6,393,790
		11,234,052		10,879,272
Liabilities
Current liabilities
Accounts payable and accrued liabilities		1,060,380		1,119,034
Current derivative financial instruments (Note 31)		4,588		6,882
Accrued compensation		583,979		713,933
Deferred revenue		457,056		508,267
Income taxes		156,283		156,358
Provisions (Note 13)		143,309		223,074
Current portion of long-term debt (Note 14)		80,367		534,173
Total current liabilities before clients’ funds obligations		2,485,962		3,261,721
Clients’ funds obligations		292,257		220,279
Total current liabilities		2,778,219		3,482,000
Long-term provisions (Note 13)		70,586		109,011
Long-term debt (Note 14)		2,599,336		2,332,377
Other long-term liabilities (Note 15)		308,387		434,653
Long-term derivative financial instruments (Note 31)		149,074		157,110
Deferred tax liabilities (Note 16)		155,972		155,329
Retirement benefits obligations (Note 17)		183,753		153,095
		6,245,327		6,823,575
Equity
Retained earnings		2,356,008		1,551,956
Accumulated other comprehensive income (Note 18)		228,624		121,855
Capital stock (Note 19)		2,246,197		2,240,494
Contributed surplus		157,896		141,392
		4,988,725		4,055,697
		11,234,052		10,879,272

See Notes to the Consolidated Financial Statements.

Approved by the Board
	Michael E. Roach	Serge Godin
	Director	Director

63

Consolidated Financial Statements

Consolidated Statements of Changes in Equity

For the years ended September 30

(in thousands of Canadian dollars)

	Retained earnings		Accumulated other comprehensive income		Capital stock		Contributed surplus		Total equity
	$		$		$		$		$
Balance as at September 30, 2013		1,551,956		121,855		2,240,494		141,392		4,055,697
Net earnings		859,443		—		—		—		859,443
Other comprehensive income		—		106,769		—		—		106,769
Comprehensive income		859,443		106,769		—		—		966,212
Share-based payment costs		—		—		—		31,716		31,716
Income tax impact associated with stock options		—		—		—		3,269		3,269
Exercise of stock options (Note 19)		—		—		83,305		(18,380)		64,925
Exercise of performance share units (“PSUs”) (Note 19)		—		—		583		(583)		—
Repurchase of Class A subordinate shares (Note 19)		(55,391)		—		(56,077)		—		(111,468)
Purchase of Class A subordinate shares held in trust (Note 19)		—		—		(23,016)		—		(23,016)
Resale of Class A subordinate shares held in trust (Note 19)		—		—		908		482		1,390
Balance as at September 30, 2014		2,356,008		228,624		2,246,197		157,896		4,988,725
	Retained earnings		Accumulated other comprehensive income		Capital stock		Contributed surplus		Total equity
	$		$		$		$		$
Balance as at September 30, 2012		1,113,225		294		2,201,694		107,690		3,422,903
Net earnings		455,820		—		—		—		455,820
Other comprehensive income		—		121,561		—		—		121,561
Comprehensive income		455,820		121,561		—		—		577,381
Share-based payment costs		—		—		—		31,273		31,273
Income tax impact associated with stock options		—		—		—		15,232		15,232
Exercise of stock options (Note 19)		—		—		51,971		(12,531)		39,440
Exercise of performance share units (“PSUs”) (Note 19)		—		—		272		(272)		—
Repurchase of Class A subordinate shares (Note 19)		(17,089)		—		(5,780)		—		(22,869)
Purchase of Class A subordinate shares held in trust (Note 19)		—		—		(7,663)		—		(7,663)
Balance as at September 30, 2013		1,551,956		121,855		2,240,494		141,392		4,055,697

See Notes to the Consolidated Financial Statements.

64

FISCAL 2014 RESULTS

Consolidated Statements of Cash Flows

For the years ended September 30

(in thousands of Canadian dollars)

	2014		2013
	$		$
Operating activities
Net earnings		859,443		455,820
Adjustments for:
Amortization and depreciation (Note 24)		444,232		435,944
Deferred income taxes (Note 16)		54,360		34,714
Foreign exchange loss (gain)		17,751		(4,938)
Share-based payment costs		31,716		31,273
Net change in non-cash working capital items (Note 27)		(232,667)		(281,556)
Cash provided by operating activities		1,174,835		671,257
Investing activities
Net change in short-term investments		73		11,843
Business acquisition		—		(5,140)
Purchase of property, plant and equipment		(181,471)		(141,965)
Proceeds from sale of property, plant and equipment		13,673		—
Additions to contract costs		(73,900)		(31,207)
Additions to intangible assets		(77,726)		(71,447)
Purchase of long-term investments		(15,059)		(10,518)
Proceeds from sale of long-term investments		6,880		6,402
Payments received from long-term receivable		6,377		8,177
Cash used in investing activities		(321,153)		(233,855)
Financing activities
Net change in unsecured committed revolving credit facility		(283,049)		(467,027)
Increase of long-term debt		1,021,918		80,333
Repayment of long-term debt		(1,047,261)		(68,057)
Settlement of derivative financial instruments (Note 31)		(37,716)		—
Purchase of Class A subordinate shares held in trust (Note 19)		(23,016)		(7,663)
Resale of Class A subordinate shares held in trust		1,390		—
Repurchase of Class A subordinate shares (Note 19)		(111,468)		(22,869)
Issuance of Class A subordinate shares		65,138		39,312
Cash used in financing activities		(414,064)		(445,971)
Effect of foreign exchange rate changes on cash and cash equivalents		(10,102)		1,665
Net increase (decrease) in cash and cash equivalents		429,516		(6,904)
Cash and cash equivalents, beginning of year		106,199		113,103
Cash and cash equivalents, end of year (Note 4)		535,715		106,199

Supplementary cash flow information (Note 27).

See Notes to the Consolidated Financial Statements.

65

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

1. Description of business

CGI Group Inc. (the “Company”), directly or through its subsidiaries, manages information technology (“IT”) services as well as business process services (“BPS”) to help clients effectively realize their strategies and create added value. The Company’s services include the management of IT and business functions (“outsourcing”), systems integration and consulting, as well as the sale of software solutions. The Company was incorporated under Part IA of the Companies Act (Québec) predecessor to the Business Corporations Act (Québec) which came into force on February 14, 2011 and its shares are publicly traded. The executive and registered office of the Company is situated at 1350 René-Lévesque Blvd. West, Montréal, Québec, Canada, H3G 1T4.

2. Basis of preparation

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) and the International Financial Reporting Interpretations Committee interpretations as issued by the International Accounting Standards Board (“IASB”). The accounting policies were consistently applied to all periods presented.

The Company’s consolidated financial statements for the years ended September 30, 2014 and 2013 were authorized for issue by the Board of Directors on November 12, 2014.

3. Summary of significant accounting policies

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions and balances have been eliminated on consolidation.

Subsidiaries are entities controlled by the Company. The Company controls an entity when it is exposed or has right, to variable returns from its involvement with the entity and has the ability to affect those returns through its power over the relevant activities of the entity. Subsidiaries are fully consolidated from the date of acquisition and continue to be consolidated until the date control over the subsidiaries ceases.

BASIS OF MEASUREMENT

The consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities, which have been measured at fair value as described below.

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FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

USE OF JUDGEMENTS AND ESTIMATES

The preparation of the consolidated financial statements requires management to make judgements and estimates that affect the reported amounts of assets, liabilities, equity, the accompanying disclosures at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Because the use of judgements and estimates is inherent in the financial reporting process, actual results could differ.

Significant judgements and estimates about the future and other major sources of estimation uncertainty at the end of the reporting period could have a significant risk of causing a material adjustment to the carrying amounts of the following: deferred tax assets, revenue recognition, estimated losses on revenue-generating contracts, goodwill impairment, business combinations, provisions for income tax uncertainties and litigations and claims.

The use of judgments, apart from those involving estimations, that have the most significant effect on the amounts recognized in the financial statements are:

Multiple component arrangements

Assessing whether the deliverables within an arrangement are separately identifiable components requires judgement by management. A component is considered as separately identifiable if it has value to the client on a stand-alone basis. The Company first reviews the contract clauses to evaluate if the deliverable is accepted separately by the client. Then, the Company assesses if the deliverable could have been provided by another vendor and if it would have been possible for the client to decide to not purchase the deliverable.

Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Management judgment is required concerning uncertainties that exist with respect to the timing of future taxable income required to recognize a deferred tax asset. The Company recognizes an income tax benefit only when it is probable that the tax benefit will be realized in the future. In making this judgement, the Company assesses forecast and the availability of future tax planning strategies.

A description of estimations is included in the respective sections within the Notes to the Consolidated Financial Statements and in Note 3, “Summary of significant accounting policies”.

67

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

REVENUE RECOGNITION, WORK IN PROGRESS AND DEFERRED REVENUE

The Company generates revenue principally through the provision of IT services and BPS as described in Note 1.

The Company provides services and products under arrangements that contain various pricing mechanisms. The Company recognizes revenue when the following criteria are met: there is clear evidence that an arrangement exists, the amount of revenue and related costs can be measured reliably, it is probable that future economic benefits will flow to the Company, the stage of completion can be measured reliably where services are delivered and the significant risks and rewards of ownership, including effective control, are transferred to clients where products are sold. Revenue is measured at the fair value of the consideration received or receivable net of discounts, volume rebates and sales related taxes.

Some of the Company’s arrangements may include client acceptance clauses. Each clause is analyzed to determine whether the earnings process is complete when the service is performed. Formal client sign-off is not always necessary to recognize revenue provided that the Company objectively demonstrates that the criteria specified in the acceptance provisions are satisfied. Some of the criteria reviewed include historical experience with similar types of arrangements, whether the acceptance provisions are specific to the client or are included in all arrangements, the length of the acceptance term and historical experience with the specific client.

Revenue from sales of third party vendor products, such as software licenses, hardware, or services is recorded gross when the Company is a principal to the transaction and is recorded net of costs when the Company is acting as an agent between the client and vendor. Factors generally considered to determine whether the Company is a principal or an agent are if the Company is the primary obligor to the client, if it adds meaningful value to the vendor’s product or service and if it assumes delivery and credit risks.

Relative selling price

The Company’s arrangements often include a mix of the services and products listed below. If an arrangement involves the provision of multiple components, the total arrangement value is allocated to each separately identifiable component based on its relative selling price. When estimating selling price of each component, the Company maximizes the use of observable prices which are established using the Company’s prices for same or similar components. When observable prices are not available, the Company estimates selling prices based on its best estimate. The best estimate of selling price is the price at which the Company would normally expect to offer the services or products and is established by considering a number of internal and external factors including, but not limited to, geographies, the Company’s pricing policies, internal costs and margins. The appropriate revenue recognition method is applied for each separately identifiable component as described below.

Outsourcing

Revenue from outsourcing and BPS arrangements is generally recognized as the services are provided at the contractually stated price, unless there is a better measure of performance or delivery.

Systems integration and consulting services

Revenue from systems integration and consulting services under time and material arrangements is recognized as the services are rendered, and revenue under cost-based arrangements is recognized as reimbursable costs are incurred.

Revenue from systems integration and consulting services under fixed-fee arrangements where the outcome of the arrangements can be estimated reliably is recognized using the percentage-of-completion method over the service periods. The Company uses the labour costs or labour hours to measure the progress towards completion. This method relies on estimates of total expected labour costs or total expected labour hours to complete the service, which are compared to labour costs or labour hours incurred to date, to arrive at an estimate of the percentage of revenue earned to date. Management regularly reviews underlying estimates of total expected labour costs or hours. If the outcome of an arrangement cannot be estimated reliably, revenue is recognized to the extent of arrangement costs incurred that are likely to be recoverable.

Revenue from benefits-funded arrangements is recognized only to the extent that it is probable that the benefit stream associated with the transaction will generate amounts sufficient to fund the value on which revenue recognition is based.

68

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

REVENUE RECOGNITION, WORK IN PROGRESS AND DEFERRED REVENUE (CONTINUED)

Software licenses

Most of the Company’s software license arrangements include other services such as implementation, customization and maintenance. For these types of arrangements, revenue from a software license is recognized upon delivery if it has been identified as a separately identifiable component. Otherwise, it is combined with the implementation and customization services and is accounted for as described in “Systems integration and consulting services” above. Revenue from maintenance services for software licenses sold and implemented is recognized ratably over the term of the maintenance period.

Work in progress and deferred revenue

Amounts recognized as revenue in excess of billings are classified as work in progress. Amounts received in advance of the delivery of products or performance of services are classified as deferred revenue.

Estimated losses on revenue-generating contracts

Estimated losses on revenue-generating contracts may occur due to additional contract costs which were not foreseen at inception of the contract. Contract losses are measured at the amount by which the estimated total costs exceed the estimated total revenue from the contract. The estimated losses on revenue-generating contracts are recognized in the period when it is determined that a loss is probable. The expected loss is first applied to impair the related capitalized contract costs with the excess recorded in accounts payable and accrued liabilities and in other long-term liabilities. Management regularly reviews arrangement profitability and the underlying estimates.

CASH AND CASH EQUIVALENTS

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

FUNDS HELD FOR CLIENTS AND CLIENTS’ FUNDS OBLIGATIONS

In connection with the Company’s payroll, tax filing and claims services, the Company collects funds for payment of payroll, taxes and claims, temporarily holds such funds until payment is due, remits the funds to the clients’ employees, appropriate tax authorities or claim holders, and files federal and local tax returns and handles related regulatory correspondence and amendments. The funds held for clients include cash and long-term bonds. The Company presents the funds held for clients and related obligations separately. Funds held for clients are classified as current assets since, based upon management’s intentions, these funds are held solely for the purpose of satisfying the clients’ funds obligations, which will be repaid within one year of the consolidated balance sheets date.

Interest income earned and realized gains and losses on the disposal of bonds are recorded in revenue in the period that the income is earned, since the collecting, holding and remitting of these funds are critical components of providing these services.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment (“PP&E”), including those under finance leases, are recorded at cost and are depreciated over their estimated useful lives using the straight-line method.

Buildings	10 to 40 years
Leasehold improvements	Lesser of the useful life or lease term
Furniture, fixtures and equipment	3 to 20 years
Computer equipment	3 to 5 years

69

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

LEASES

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognized in PP&E at an amount equal to the fair value of the leased assets or, if lower, the present value of minimum lease payments at the inception of the lease, and then depreciated over the economic useful life of the asset or term of the lease, whichever is shorter. The capital element of future lease payments is included in the consolidated balance sheets within long-term debt. Interest is charged to the consolidated statements of earnings so as to achieve a constant rate of interest on the remaining balance of the liability.

Lease payments under operating leases are charged to the consolidated statements of earnings on a straight-line basis over the lease term. Operating lease incentives are recognized as a reduction in the rental expense over the lease term.

CONTRACT COSTS

Contract costs are mainly incurred when acquiring or implementing long-term outsourcing contracts. Contract costs are comprised primarily of transition costs and incentives.

Transition costs

Transition costs consist of costs associated with the installation of systems and processes incurred after the award of outsourcing contracts, relocation of transitioned employees and exit from client facilities. Under BPS contracts, the costs consist primarily of costs related to activities such as the conversion of the client’s applications to the Company’s platforms. Transition costs are comprised essentially of labour costs, including compensation and related fringe benefits, as well as subcontractor costs.

Incentives

Occasionally, incentives are granted to clients upon the signing of outsourcing contracts. These incentives are granted in the form of cash payments.

Pre-contract costs

Pre-contract costs associated with acquiring or implementing long-term outsourcing contracts are expensed as incurred except where it is virtually certain that the contracts will be awarded and the costs are directly related to the acquisition of the contract. For outsourcing contracts, the Company is virtually certain that a contract will be awarded when the Company is selected by the client following a tender process but the contract has not yet been signed.

Amortization of contract costs

Contract costs are amortized as services are provided. Amortization of transition costs and pre-contract costs is included in costs of services, selling and administrative and amortization of incentives is recorded as a reduction of revenue.

Impairment of contract costs

When a contract is not expected to be profitable, the expected loss is first applied to impair the related capitalized contract costs. The excess of the expected loss over the capitalized contract costs is recorded as estimated losses on revenue-generating contracts in accounts payable and accrued liabilities and in other long-term liabilities. If at a future date the contract returns to profitability, the previously recognized impairment loss must be reversed. First the estimated losses on revenue-generating contracts must be reversed, and if there is still additional projected profitability then any capitalized contract costs that were impaired must be reversed. The reversal of the impairment loss is limited so that the carrying amount does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of amortization, had no impairment loss been recognized for the contract costs in prior years.

70

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

INTANGIBLE ASSETS

Intangible assets consist mainly of internal-use software, business solutions, software licenses and client relationships. Internal-use software, business solutions and software licenses are recorded at cost. Business solutions developed internally and marketed are capitalized when they meet specific capitalization criteria related to technical, market and financial feasibility. Internal-use software developed internally is capitalized when it meets specific capitalization criteria related to technical and financial feasibility and when the Company demonstrates its ability and intention to use it. Internal-use software, business solutions, software licenses and client relationships acquired through business combinations are initially recorded at their fair value based on the present value of expected future cash flows, which involve making estimates about the future cash flows, as well as discount rates.

Amortization of intangible assets

The Company amortizes its intangible assets using the straight-line method over the following estimated useful lives:

Internal-use software	2 to 7 years
Business solutions	2 to 10 years
Software licenses	3 to 8 years
Client relationships and other	2 to 10 years

IMPAIRMENT OF PP&E, INTANGIBLE ASSETS AND GOODWILL

Timing of impairment testing

The carrying values of PP&E, intangible assets and goodwill are reviewed for impairment when events or changes in circumstances indicate that the carrying value may be impaired. The Company assesses at each reporting date whether any such events or changes in circumstances exist. The carrying value of PP&E and intangible assets not available for use and goodwill is tested for impairment annually as at September 30.

Impairment testing

If any indication of impairment exists or when annual impairment testing for an asset is required, the Company estimates the recoverable amount of the asset or cash-generating unit (“CGU”) to which the asset relates to determine the extent of any impairment loss. The recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use (“VIU”) to the Company. The Company mainly uses the VIU. In assessing VIU, estimated future cash flows are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If the recoverable amount of an asset or a CGU is estimated to be less than its carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognized immediately in the consolidated statements of earnings.

Goodwill acquired through business combinations is allocated to the CGU or group of CGUs that are expected to benefit from synergies of the related business combination. The group of CGUs that benefit from the synergies correspond to the Company’s operating segments. For goodwill impairment testing purposes, the group of CGUs that represent the lowest level within the Company at which management monitors goodwill is the operating segment level.

The recoverable amount of each segment has been determined based on the VIU calculation which includes estimates about their future financial performance based on cash flows approved by management covering a period of five years as the Company generates revenue mainly through long-term contracts. Key assumptions used in the VIU calculations are the discount rate applied and the long-term growth rate of net operating cash flows. In determining these assumptions, management has taken into consideration the current economic environment and its resulting impact on expected growth and discount rates. The cash flow projections reflect management’s expectations of the segment’s operating performance and growth prospects in the operating segment’s market. The discount rate applied to an operating segment is the weighted average cost of capital (“WACC”). Management considers factors such as country risk premium, risk-free rate, size premium and cost of debt to derive the WACC. Impairment losses relating to goodwill cannot be reversed in future periods.

71

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

IMPAIRMENT OF PP&E, INTANGIBLE ASSETS AND GOODWILL (CONTINUED)

Impairment testing (continued)

For impaired assets, other than goodwill, an assessment is made at each reporting date as to whether there is any indication that previously recognized impairment losses may no longer exist or may have decreased. If such indication exists, the Company estimates the asset’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of amortization, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the consolidated statements of earnings.

LONG-TERM FINANCIAL ASSETS

Long-term investments presented in long-term financial assets are comprised of bonds which are classified as long-term based on management’s intentions.

BUSINESS COMBINATIONS

The Company accounts for its business combinations using the acquisition method. Under this method the consideration transferred is measured at fair value. Acquisition-related and integration costs associated with the business combination are expensed as incurred. The Company recognizes goodwill as the excess of the cost of the acquisition over the net identifiable tangible and intangible assets acquired and liabilities assumed at their acquisition-date fair values. The fair value allocated to tangible and intangible assets acquired and liabilities assumed are based on assumptions of management. These assumptions include the future expected cash flows arising from the intangible assets identified as client relationships, business solutions, and trademarks. The preliminary goodwill recognized is composed of the future economic value associated to acquired work force and synergies with the Company’s operations which are primarily due to reduction of costs and new business opportunities. The determination of fair value involves making estimates relating to acquired intangible assets, PP&E, litigation, provision for estimated losses on revenue-generating contracts, other onerous contracts and contingency reserves. Estimates include the forecasting of future cash flows and discount rates. Subsequent changes in fair values are adjusted against the cost of acquisition if they qualify as measurement period adjustments. The measurement period is the period between the date of acquisition and the date where all significant information necessary to determine the fair values is available, not to exceed 12 months. All other subsequent changes are recognized in the consolidated statements of earnings.

EARNINGS PER SHARE

Basic earnings per share is based on the weighted average number of shares outstanding during the period. Diluted earnings per share is determined using the treasury stock method to evaluate the dilutive effect of stock options and PSUs.

RESEARCH AND SOFTWARE DEVELOPMENT COSTS

Research costs are charged to earnings in the period in which they are incurred, net of related tax credits. Software development costs are charged to earnings in the year they are incurred, net of related tax credits, unless they meet specific capitalization criteria related to technical, market and financial feasibility.

TAX CREDITS

The Company follows the income approach to account for tax credits, whereby investment tax credits are recorded when there is a reasonable assurance that the assistance will be received and that the Company will comply with all relevant conditions. Under this method, tax credits related to operating expenditures are recorded as a reduction of the related expense and recognized in the period in which the related expenditures are charged to operations. Tax credits related to capital expenditures are recorded as a reduction of the cost of the related asset. The tax credits recorded are based on management’s best estimates of amounts expected to be received and are subject to audit by the taxation authorities.

72

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

INCOME TAXES

Income taxes are accounted for using the liability method of accounting.

Current income taxes are recognized with respect to the amounts expected to be paid or recovered under the tax rates and laws that have been enacted or substantively enacted at the balance sheet date.

Deferred income tax assets and liabilities are determined based on deductible or taxable temporary differences between the amounts reported for financial statement purposes and tax values of the assets and liabilities using enacted or substantively enacted tax rates that will be in effect for the year in which the differences are expected to be recovered or settled. Deferred income tax assets and liabilities are recognized in earnings, other comprehensive income or in equity based on the classification of the item to which they relate.

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Once this assessment is made, the Company considers the analysis of forecast and future tax planning strategies. Such estimates are made based on the forecast by jurisdiction on an undiscounted basis. Management considers factors such as the number of years to include in the forecast period, the history of the taxable profits and availability of tax strategies.

The Company is subject to taxation in numerous jurisdictions and there are transactions and calculations for which the ultimate tax determination is uncertain. When a tax position is uncertain, the Company recognizes an income tax benefit or reduces an income tax liability only when it is probable that the tax benefit will be realized in the future or that the income tax liability is no longer probable. The provision for uncertain tax positions is made using the best estimate of the amount expected to be paid based on qualitative assessment of all relevant factors.

PROVISIONS

Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The Company’s provisions consist of liabilities for leases of premises that the Company has vacated, litigation and claim provisions arising in the ordinary course of business and decommissioning liabilities for operating leases of office buildings. The Company also records restructuring provisions mainly related to business acquisitions.

The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Provisions are discounted using a current pre-tax rate when the impact of the time value of money is material. The increase in the provision due to the passage of time is recognized as finance cost.

The Company accrues provisions for onerous leases which consist of estimated costs associated with vacated premises. The provisions reflect the present value of lease payments in excess of the expected sublease proceeds on the remaining term of the lease.

The accrued litigation and legal claim provisions are based on historical experience, current trends and other assumptions that are believed to be reasonable under the circumstances. Estimates include the period in which the underlying cause of the claim occurred and the degree of probability of an unfavourable outcome.

Decommissioning liabilities pertain to operating leases of office buildings where certain arrangements require premises to be returned to their original state at the end of the lease term. The provision is determined using the present value of the estimated future cash outflows.

Restructuring provisions, consisting of severances, are recognized when a detailed formal plan identifies the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs, an appropriate timeline and has been communicated.

73

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

TRANSLATION OF FOREIGN CURRENCIES

The Company’s consolidated financial statements are presented in Canadian dollars, which is also the parent company’s functional currency. Each entity in the Company determines its own functional currency and items included in the financial statements of each entity are measured using that functional currency. Functional currency is the currency of the primary economic environment in which the entity operates.

Foreign currency transactions and balances

Revenue, expenses and non-monetary assets and liabilities denominated in foreign currencies are recorded at the rate of exchange prevailing at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates prevailing at the balance sheet date. Unrealized and realized translation gains and losses are reflected in the consolidated statements of earnings.

Foreign operations

For foreign operations that have functional currencies different from the Company, assets and liabilities denominated in a foreign currency are translated into Canadian dollars at exchange rates in effect at the balance sheet date. Revenue and expenses are translated at average exchange rates prevailing during the period. Resulting unrealized gains or losses on translating financial statements of foreign operations are reported in other comprehensive income.

For foreign operations with the same functional currency as the Company, monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date and non-monetary assets and liabilities are translated at historical exchange rates. Revenue and expenses are translated at average exchange rates for the period. Translation exchange gains or losses of such operations are reflected in the consolidated statements of earnings.

SHARE-BASED PAYMENTS

Equity-settled plans

The Company operates equity-settled stock option and PSU plans under which the Company receives services from employees and others as consideration for equity instruments.

The fair value of those share-based payments is established on the grant date using the Black-Scholes option pricing model for the stock options and the closing price of Class A subordinate shares of the Company on the Toronto Stock Exchange (“TSX”) for the PSUs. The number of stock options and PSUs expected to vest are estimated on the grant date and subsequently revised on each reporting date. For stock options, the estimation of fair value requires making assumptions for the most appropriate inputs to the valuation model including the expected life of the option and expected stock price volatility. The fair values, adjusted for expectations related to performance conditions and for expected forfeitures, are recognized as share-based payment costs in earnings with a corresponding credit to contributed surplus on a graded-vesting basis over the vesting period.

When stock options are exercised, any consideration paid is credited to capital stock and the recorded fair value of the stock option is removed from contributed surplus and credited to capital stock. When PSUs are exercised, the recorded fair value of PSUs is removed from contributed surplus and credited to capital stock.

Share purchase plan

The Company operates a share purchase plan for eligible employees. Under this plan, the Company matches the contributions made by employees up to a maximum percentage of the employee’s salary. The Company contributions to the plan are recognized in salaries and other member costs within cost of services, selling and administrative.

Cash-settled deferred share units

The Company operates a deferred share unit (“DSU”) plan to compensate the members of the Board of Directors.

The Company measures the compensation granted at the fair value of the liability. The fair value of the liability is established by dividing the total fee payable by the closing price of Class A subordinate shares of the Company on the TSX on the day immediately preceding the fee payment date. Until the liability is settled, the Company remeasures the fair value of the liability at each reporting date using the market value of the shares issued. The DSU liability is presented in accrued compensation and fluctuations in fair value are recognized in salaries and other member costs within cost of services, selling and administrative.

74

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

FINANCIAL INSTRUMENTS

All financial instruments are initially measured at their fair values. Subsequently, financial assets classified as loans and receivables and financial liabilities classified as other liabilities are measured at their amortized cost using the effective interest rate method. Financial assets and liabilities classified as fair value through earnings (“FVTE”) and classified as available for sale are measured subsequently at their fair values.

Financial instruments may be designated on initial recognition as FVTE if any of the following criteria are met: i) the financial instrument contains one or more embedded derivatives that otherwise would have to be accounted for separately; ii) the designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring the financial asset or liability or recognizing the gains and losses on them on a different basis; or iii) the financial asset and financial liability are part of a group of financial assets or liabilities that is managed and its performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. Gains and losses related to periodic revaluations of financial assets and liabilities designated as FVTE are recorded in the consolidated statements of earnings.

The unrealized gains and losses, net of applicable income taxes, on available for sale assets are reported in other comprehensive income. Interest income earned and realized gains and losses on the sale of available for sale assets are recorded in the consolidated statements of earnings.

Transaction costs are comprised primarily of legal, accounting and other costs directly attributable to the issuance of the respective financial assets and liabilities. Transaction costs are capitalized to the cost of financial assets and liabilities classified as other than FVTE.

Financial assets are derecognized if the contractual rights to the cash flows from the financial asset expire or the asset is transferred and the transfer qualifies for derecognition. The transfer qualifies for derecognition if substantially all the risks and rewards of ownership of the financial asset are transferred.

The Company has made the following classifications:

FVTE

Cash and cash equivalents and derivative financial instruments (unless they qualify for hedge accounting, refer to “Derivative Financial Instruments and Hedging Transactions”). In addition, deferred compensation plan assets were designated by management as FVTE upon initial recognition as this reflected management’s investment strategy.

Loans and receivables

Trade accounts receivable, cash included in funds held for clients and long-term receivables.

Available for sale

Long-term bonds included in funds held for clients and in long-term investments.

Other liabilities

Accounts payable and accrued liabilities, accrued compensation, long-term debt and clients’ funds obligations.

75

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

FINANCIAL INSTRUMENTS (CONTINUED)

Fair value hierarchy

Fair value measurements recognized in the balance sheet are categorized in accordance with the following levels:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2: inputs other than quoted prices included in Level 1, but that are observable for the asset or liability, either directly or indirectly; and

Level 3: inputs for the asset or liability that are not based on observable market data.

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS

The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign currency exchange risks.

Derivative financial instruments are initially recognized at fair value at the date the derivative contracts are entered into and are subsequently remeasured to their fair value at the end of each reporting date. The resulting gain or loss is recognized in the consolidated statements of earnings unless the derivative is designated and is effective as a hedging instrument, in which event the timing of the recognition in the consolidated statements of earnings depends on the nature of the hedge relationship.

At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which the Company wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the Company will assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.

The cash flows of the hedging transactions are classified in the same manner as the cash flows of the position being hedged.

NET INVESTMENT HEDGES

Hedges on net investments in foreign operations

The Company uses cross-currency swaps and foreign currency denominated long-term debt to hedge portions of the Company’s net investments in its U.S. and European operations. Foreign exchange translation gains or losses on the net investments and the effective portions of gains or losses on instruments hedging the net investments are recorded in other comprehensive income. To the extent that the hedge is ineffective, such differences are recognized in consolidated statements of earnings. When the hedged net investment is disposed of, the relevant amount in other comprehensive income is transferred to earnings as part of the gain or loss on disposal.

76

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING TRANSACTIONS (CONTINUED)

CASH FLOW HEDGES

Cash flow hedges on future revenue

The Company has entered into various foreign currency forward contracts to hedge the variability in the foreign currency exchange rates.

Cash flow hedge on unsecured committed term loan credit facility

The Company has entered into interest rate swaps to hedge the cash flow exposure of the issued variable rate unsecured committed term loan credit facility. Under the interest rate swaps, the Company receives a variable rate of interest and pays interest at a fixed rate on the notional amount.

The above hedges were documented as cash flow hedges and no component of the derivative contracts’ fair value are excluded from the assessment and measurement of hedge effectiveness. The effective portion of the change in fair value of the derivative financial instruments is recognized in other comprehensive income and the ineffective portion, if any, in the consolidated statements of earnings. The effective portion of the change in fair value of the derivatives is reclassified out of other comprehensive income into the consolidated statements of earnings when the hedged element is recognized in the consolidated statements of earnings.

FAIR VALUE HEDGES

Fair value hedges on Senior U.S. unsecured notes

The Company entered into interest rate swaps to hedge the fair value exposure of the issued fixed rate Senior U.S. unsecured notes. Under the interest rate swaps, the Company receives a fixed rate of interest and pays interest at a variable rate on the notional amount.

The changes in the fair value of the interest rate swaps are recognized in the consolidated statements of earnings as finance costs. The changes in the fair value of the hedged items attributable to the risk hedged is recorded as part of the carrying value of the Senior U.S. unsecured notes and are also recognized in the consolidated statements of earnings as finance costs. If the hedged items are derecognized, the unamortized fair value is recognized immediately in the consolidated statements of earnings.

Derivative financial instruments used as hedging items are recorded at fair value in the consolidated balance sheets under current derivative financial instruments, long-term financial assets or long-term derivative financial instruments. Valuation models, such as discounted cash flow analysis using observable market inputs, are utilized to determine the fair values of the derivative financial instruments.

77

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

EMPLOYEE BENEFITS

The Company operates post-employment benefit plans of both a defined contribution and defined benefit nature.

The cost of defined contribution plans is charged to the consolidated statements of earnings on the basis of contributions payable by the Company during the year.

For defined benefits plans, the defined benefit obligations are calculated by independent actuaries using the projected unit credit method. The retirement benefits obligations in the consolidated balance sheets represent the present value of the defined benefit obligation as reduced by the fair value of plan assets. The retirement benefits assets are recognized to the extent that the Company can benefit from refunds or a reduction in future contributions. Retirement benefit plans that are funded by the payment of insurance premiums are treated as defined contribution plans unless the Company has an obligation either to pay the benefits directly when they fall due or to pay further amounts if assets accumulated with the insurer do not cover all future employee benefits. In such circumstances, the plan is treated as a defined benefit plan.

Insurance policies are treated as plan assets of a defined benefit plan if the proceeds of the policy:

- Can only be used to fund employee benefits;

- Are not available to the Company’s creditors; and

- Either cannot be paid to the Company unless the proceeds represent surplus assets not needed to meet all the benefit obligations or are a reimbursement for benefits already paid by the Company.

Insurance policies that do not meet the above criteria are treated as non-current investments and are held at fair value as long-term financial assets in the consolidated balance sheets.

The actuarial valuations used to determine the cost of defined benefit pension plans and their present value involve making assumptions about discount rates, future salary and pension increases, inflation rates and mortality. Any changes in these assumptions will impact the carrying amount of pension obligations. In determining the appropriate discount rate management considers the interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related pension liability.

The current service cost is recognized in the consolidated statements of earnings as an employee benefit expense. The net interest cost calculated by applying the discount rate to the net defined benefit liability or asset is recognized as net finance cost or income. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in the consolidated statements of earnings. The gains or losses on the settlement of a defined benefit plan are recognized when the settlement occurs.

Remeasurements include actuarial gains and losses, changes in the effect of the asset ceiling and the return on plan assets, excluding the amount included in net interest on the net defined liability or assets. Remeasurements are charged or credited to other comprehensive income in the period in which they arise.

78

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

A) NEW STANDARDS AND AMENDMENTS ADOPTED

The following new and amended standards have been adopted by the Company effective October 1, 2013:

IFRS 10 - Consolidated Financial Statements

The new standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included in a company’s consolidated financial statements. The adoption of IFRS 10 did not result in any significant impact on the Company’s consolidated financial statements.

IFRS 12 - Disclosure of Interests in Other Entities

The new standard provides guidance on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and structured entities. The standard requires disclosure of the nature and risks associated with the Company’s interests in other entities and the effects of those interests on its financial position, financial performance and cash flows. The adoption of IFRS 12 did not result in any significant impact on the Company’s consolidated financial statements.

IFRS 13 - Fair Value Measurement

The new standard provides guidance for fair value measurements by providing a definition of fair value and a single source of fair value measurement and disclosure requirements. IFRS 13 applies when other IFRS standards require or permit fair value measurements. The adoption of IFRS 13 did not result in any significant impact on the Company’s consolidated financial statements other than to give rise to additional disclosures.

IAS 1 - Presentation of Financial Statements

The amendment requires grouping together items within the statement of comprehensive income that may be reclassified to the statement of earnings. As a result, the Company has grouped items within its consolidated statements of comprehensive income and accumulated other comprehensive income by items that will and will not be reclassified subsequently to the consolidated statements of earnings.

IAS 19 - Employee Benefits

Two amendments of IAS 19 have been adopted by the Company.

The first amendment requires to adjust the calculation of the financing cost component of defined benefit plans and to enhance disclosure requirements. As a result, the Company calculated a net interest expense or income on the net defined benefit liability or asset. The net interest on the defined benefit liability or asset replaces the interest cost on the defined benefit obligation and the expected return on plan assets. The adoption of IAS 19 did not result in any significant impact on the Company’s consolidated financial statements, other than to give rise to additional disclosures.

The second amendment permits the recognition of certain contributions from employees as a reduction of the service cost in the period in which the related service is rendered. The amendment applies to contributions from employees set out in the formal terms of the plan, linked to service and independent of the number of years of service. The Company has early adopted the amendment of IAS 19 which is effective on or after July 1, 2014. The amendment did not result in any significant impact on the Company’s consolidated financial statements.

79

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

3. Summary of significant accounting policies (continued)

B) FUTURE ACCOUNTING STANDARD CHANGES

The following standards have been issued but are not yet effective:

IFRS 15 - Revenue from Contracts with Customers

In May 2014, the IASB issued IFRS 15, “Revenue from Contracts with Customers”, to specify how and when to recognize revenue as well as requiring the provision of more informative and relevant disclosures. IFRS 15 supersedes IAS 18, “Revenue”, IAS 11, “Construction Contracts”, and other revenue related interpretations. The standard will be effective on October 1, 2017 for the Company with earlier adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

IFRS 9 - Financial Instruments

In July 2014, the IASB amended IFRS 9, “Financial Instruments”, to bring together the classification and measurement, impairment and hedge accounting phases of the IASB’s project to replace IAS 39, “Financial Instruments: Recognition and Measurement”. The standard supersedes all previous versions of IFRS 9 and will be effective on October 1, 2018 for the Company with earlier application permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements.

80

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

4. Cash and cash equivalents

	As at September 30, 2014		As at September 30, 2013
	$		$
Cash		265,715		105,677
Cash equivalents		270,000		522
		535,715		106,199

5. Accounts receivable

	As at September 30, 2014		As at September 30, 2013
	$		$
Trade		873,466		1,018,990
Other1		162,602		186,635
		1,036,068		1,205,625

¹  Other accounts receivable include refundable tax credits on salaries related to the Québec Development of E-Business program, research and development tax credits and other job and economic growth creation programs available. The tax credits represent approximately $113,511,000 and $110,615,000 of other accounts receivable in 2014 and 2013, respectively.

The fiscal measures under the Québec Development of E-Business program enable corporations with an establishment in the province of Québec that carry out eligible activities in the technology sector to obtain a refundable tax credit equal to 30% of eligible salaries, up to a maximum of $20,000 per year per eligible employee until December 31, 2015. For all eligible salaries incurred after June 4, 2014, the refundable tax credit was reduced to 24% and the maximum of $20,000 per year was maintained until December 31, 2025.

6. Funds held for clients

	As at September 30, 2014		As at September 30, 2013
	$		$
Cash		97,577		34,653
Long-term bonds		198,177		187,816
		295,754		222,469

81

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

7. Property, plant and equipment

	Land and buildings		Leasehold improvements		Furniture, fixtures and equipment		Computer equipment		Total
	$		$		$		$		$
Cost
As at September 30, 2013		62,077		193,221		140,970		485,736		882,004
Additions/transfers		8,962		10,630		19,926		155,939		195,457
Disposals/transfers		—		(6,932)		(38,420)		(34,984)		(80,336)
Foreign currency translation adjustment		1,318		8,323		8,757		16,141		34,539
As at September 30, 2014		72,357		205,242		131,233		622,832		1,031,664
Accumulated depreciation
As at September 30, 2013		6,670		99,015		56,272		244,904		406,861
Depreciation expense (Note 24)		3,275		29,669		26,811		127,131		186,886
Disposals/transfers		—		(6,920)		(35,105)		(24,077)		(66,102)
Foreign currency translation adjustment		197		3,617		5,626		7,699		17,139
As at September 30, 2014		10,142		125,381		53,604		355,657		544,784
Net carrying amount as at September 30, 2014		62,215		79,861		77,629		267,175		486,880
	Land and buildings		Leasehold improvements		Furniture, fixtures and equipment		Computer equipment		Total
	$		$		$		$		$
Cost
As at September 30, 2012		56,638		182,553		134,071		413,613		786,875
Additions/transfers		4,038		16,197		18,570		121,060		159,865
Disposals/transfers		—		(8,276)		(13,941)		(60,767)		(82,984)
Foreign currency translation adjustment		1,401		2,747		2,270		11,830		18,248
As at September 30, 2013		62,077		193,221		140,970		485,736		882,004
Accumulated depreciation
As at September 30, 2012		5,240		76,431		40,992		182,732		305,395
Depreciation expense (Note 24)		1,467		28,299		27,788		118,133		175,687
Disposals/transfers		—		(6,393)		(12,730)		(58,871)		(77,994)
Foreign currency translation adjustment		(37)		678		222		2,910		3,773
As at September 30, 2013		6,670		99,015		56,272		244,904		406,861
Net carrying amount as at September 30, 2013		55,407		94,206		84,698		240,832		475,143

82

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

7. Property, plant and equipment (continued)

Property, plant and equipment include the following assets acquired under finance leases:

	As at September 30, 2014						As at September 30, 2013
	Cost		Accumulated depreciation		Net carrying amount		Cost		Accumulated depreciation		Net carrying amount
	$		$		$		$		$		$
Furniture, fixtures and equipment		15,522		8,744		6,778		15,762		7,218		8,544
Computer equipment		93,375		61,783		31,592		105,112		66,117		38,995
		108,897		70,527		38,370		120,874		73,335		47,539

8. Contract costs

	As at September 30, 2014						As at September 30, 2013
	Cost		Accumulated amortization		Net carrying amount		Cost		Accumulated amortization		Net carrying amount
	$		$		$		$		$		$
Transition costs		356,704		209,186		147,518		291,305		165,705		125,600
Incentives		101,291		92,269		9,022		103,058		88,186		14,872
		457,995		301,455		156,540		394,363		253,891		140,472

83

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

9. Intangible assets

	Internal-use software acquired		Internal-use software internally developed		Business solutions acquired		Business solutions internally developed		Software licenses		Client relationships and other		Total
	$		$		$		$		$		$		$
Cost
As at September 30, 2013		105,002		45,371		123,850		260,072		130,448		862,004		1,526,747
Additions/transfers		4,226		6,499		114		34,759		41,790		—		87,388
Disposals/transfers		(12,170)		(1,307)		(603)		(1,984)		(12,449)		—		(28,513)
Foreign currency translation adjustment		5,628		173		3,354		17,639		4,672		34,355		65,821
As at September 30, 2014		102,686		50,736		126,715		310,486		164,461		896,359		1,651,443
Accumulated amortization
As at September 30, 2013		63,211		40,184		84,644		164,963		82,885		382,695		818,582
Amortization expense (Note 24)		14,264		2,996		12,568		21,467		26,874		114,523		192,692
Disposals/transfers		(12,170)		(1,118)		(121)		(1,980)		(12,197)		—		(27,586)
Foreign currency translation adjustment		4,142		81		2,687		10,635		3,358		16,778		37,681
As at September 30, 2014		69,447		42,143		99,778		195,085		100,920		513,996		1,021,369
Net carrying amount as at September 30, 2014		33,239		8,593		26,937		115,401		63,541		382,363		630,074
	Internal-use software acquired		Internal-use software internally developed		Business solutions acquired		Business solutions internally developed		Software licenses		Client relationships and other		Total
	$		$		$		$		$		$		$
Cost
As at September 30, 2012		87,282		43,237		118,094		233,261		175,932		819,596		1,477,402
Additions/transfers		20,898		2,134		4,826		23,781		27,008		—		78,647
Disposals/transfers		(5,824)		—		(237)		(4,404)		(74,329)		(1,382)		(86,176)
Foreign currency translation adjustment		2,646		—		1,167		7,434		1,837		43,790		56,874
As at September 30, 2013		105,002		45,371		123,850		260,072		130,448		862,004		1,526,747
Accumulated amortization
As at September 30, 2012		42,117		36,100		72,977		147,340		132,629		258,460		689,623
Amortization expense (Note 24)		25,134		4,084		11,097		18,205		20,956		114,505		193,981
Disposals/transfers		(5,608)		—		(493)		(4,396)		(72,241)		(1,382)		(84,120)
Foreign currency translation adjustment		1,568		—		1,063		3,814		1,541		11,112		19,098
As at September 30, 2013		63,211		40,184		84,644		164,963		82,885		382,695		818,582
Net carrying amount as at September 30, 2013		41,791		5,187		39,206		95,109		47,563		479,309		708,165

All intangible assets are subject to amortization.

84

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

10. Other long-term assets

	As at September 30, 2014		As at September 30, 2013
	$		$
Insurance contracts held to fund defined benefit pension and life assurance arrangements - reimbursement rights (Note 17)		22,415		20,856
Retirement benefits assets (Note 17)		8,737		9,175
Deferred financing fees		4,474		3,856
Long-term maintenance agreements		15,004		6,653
Deposits		11,773		9,960
Other		11,755		7,929
		74,158		58,429

11. Long-term financial assets

	As at September 30, 2014		As at September 30, 2013
	$		$
Deferred compensation plan assets (Note 31)		31,151		24,752
Long-term investments		30,689		20,333
Long-term receivables		7,403		4,289
Derivative financial assets (Note 31)		14,834		2,518
		84,077		51,892

12. Goodwill

The Company completed the annual impairment test as at September 30, 2014 and did not identify any impairment.

The variations in goodwill were as follows:

	U.S.		NSESA		Canada		France		U.K.		CEE		Asia Pacific		Total
	$		$		$		$		$		$		$		$
As at September 30, 2013		1,370,399		1,274,667		1,111,702		805,891		827,291		715,011		288,829		6,393,790
Foreign currency translation adjustment		121,513		(1,844)		—		14,328		64,599		7,985		10,952		217,533
As at September 30, 2014		1,491,912		1,272,823		1,111,702		820,219		891,890		722,996		299,781		6,611,323

85

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

12. Goodwill  (continued)

Key assumptions in goodwill impairment testing

The key assumptions for the CGUs are disclosed in the following table:

As at September 30, 2014	U.S.		NSESA		Canada		France		U.K.		CEE		Asia Pacific
	%		%		%		%		%		%		%
Assumptions
Pre-tax WACC		11.2		12.2		9.0		10.6		10.2		10.6		21.7
Long-term growth rate of net operating cash flows1		2.0		1.9		2.0		1.9		1.8		1.6		2.0
As at September 30, 2013	U.S.		NSESA		Canada		France		U.K.		CEE		Asia Pacific
	%		%		%		%		%		%		%
Assumptions
Pre-tax WACC		10.0		12.5		7.6		10.8		10.7		10.5		20.1
Long-term growth rate of net operating cash flows1		2.0		2.0		2.0		2.0		2.0		2.0		2.0

¹ The long-term growth rate is based on published industry research.

86

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

13. Provisions

	Onerous leases1		Litigations and claims2		Decommissioning liabilities3		Restructuring4		Total
	$		$		$		$		$
As at September 30, 2013		94,022		65,418		54,256		118,389		332,085
Additional provisions		14,118		3,351		1,770		100,354		119,593
Utilized amounts		(44,174)		(14,133)		(1,560)		(122,130)		(181,997)
Reversals of unused amounts		(24,275)		(24,984)		(12,574)		(6,081)		(67,914)
Discount rate adjustment and imputed interest		605		—		525		—		1,130
Foreign currency translation adjustment		5,353		1,941		2,364		1,340		10,998
As at September 30, 2014		45,649		31,593		44,781		91,872		213,895
Current portion		17,203		31,593		8,542		85,971		143,309
Non-current portion		28,446		—		36,239		5,901		70,586
	Onerous leases1		Litigations and claims2		Decommissioning liabilities3		Restructuring4		Total
	$		$		$		$		$
As at September 30, 2012		88,670		91,669		53,366		143,120		376,825
Additional provisions		36,687		—		1,722		249,799		288,208
Utilized amounts		(34,490)		(31,332)		(2,375)		(284,106)		(352,303)
Reversals of unused amounts		(1,683)		—		(1,958)		—		(3,641)
Discount rate adjustment and imputed interest		646		—		572		—		1,218
Foreign currency translation adjustment		4,192		5,081		2,929		9,576		21,778
As at September 30, 2013		94,022		65,418		54,256		118,389		332,085
Current portion		41,668		65,418		7,735		108,253		223,074
Non-current portion		52,354		—		46,521		10,136		109,011

¹  As at September 30, 2014, the timing of cash outflows relating to these provisions ranges between one and nine years (one and ten years as at September 30, 2013) and was discounted at a weighted average rate of 1.35% (1.15% as at September 30, 2013). For the year ended September 30, 2014, a net amount of $1,503,000 of integration costs ($31,899,000 for the year ended September 30, 2013) was accounted for in the provision for onerous leases (Note 26b). The reversals of unused amounts are mostly due to the sublease in the period of previously vacated premises, as well as favorable lease terminations.

²  As at September 30, 2014, litigations and claims include provisions related to tax exposure (other than those related to income tax), contractual disputes, employee claims and other of $15,661,000, $7,433,000 and $8,499,000, respectively (as at September 30, 2013, $34,409,000, $15,434,000 and $15,575,000, respectively). The reversals of unused amounts are mostly due to the favorable settlement of tax exposures and contractual disputes.

³  As at September 30, 2014, the decommissioning liability was based on the expected cash flows of $45,834,000 ($56,454,000 as at September 30, 2013) and was discounted at a weighted average rate of 0.94% (0.93% as at September 30, 2013). The timing of the settlement of these obligations ranges between one and nine years as at September 30, 2014 (one and ten years as at September 30, 2013).

⁴  For the year ended September 30, 2014, a net amount of $94,273,000 of integration costs ($249,799,000 for the year ended September 30, 2013) was accounted for in the provision for restructuring (Note 26b).

87

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

14. Long-term debt

	As at September 30, 2014		As at   September 30, 2013
	$		$
Senior U.S. unsecured notes repayable by tranches of $95,277 (U.S.$85,000) in 2016, $156,926 (U.S.$140,000) in 2018 and $280,225 (U.S.$250,000) in 20211		522,220		475,787
Senior unsecured notes repayable by tranches of $44,836 (U.S.$40,000) in 2019, $61,650 (U.S.$55,000) in 2021, $336,270 (U.S.$300,000) in 2024, $392,315 (U.S. $350,000) in 7 yearly payments of U.S.$50,000 from 2018 to 2024 and $120,326, (€85,000) in 20212		954,317		—
Unsecured committed revolving credit facility3		—		254,818
Unsecured committed term loan credit facility4		1,001,752		1,974,490
Obligations repayable in blended monthly installments maturing at various dates until 2019, bearing a weighted average interest rate of 3.01% (3.27% in 2013)		117,680		79,446
Obligations under finance leases repayable in blended monthly installments maturing at various dates until 2019, bearing a weighted average interest rate of 3.66% (3.46% in 2013)		61,698		67,928
Other long-term debt		22,036		14,081
		2,679,703		2,866,550
Current portion		80,367		534,173
		2,599,336		2,332,377

¹  As at September 30, 2014, an amount of $532,428,000 was drawn, less fair value adjustments relating to interest rate swaps designated as fair value hedges and financing fees for a total of $10,208,000. The private placement financing with U.S. institutional investors is comprised of three tranches of Senior U.S. unsecured notes, with a weighted average maturity of 5.4 years and a weighted average interest rate of 4.57%. The Senior U.S. unsecured notes contain covenants that require the Company to maintain certain financial ratios (Note 32). As at September 30, 2014, the Company was in compliance with these covenants.

²  During the year ended September 30, 2014, the Company signed a private placement financing. As at September 30, 2014, an amount of $955,397,000 was drawn, less financing fees of $1,080,000. The private placement is comprised of four tranches of Senior U.S. unsecured notes and one tranche of Senior euro unsecured note, with a weighted average maturity of 7.9 years and a weighted average interest rate of 3.62%. The Senior unsecured notes contain covenants that require the Company to maintain certain financial ratios (Note 32). As at September 30, 2014, the Company was in compliance with these covenants.

³  In the first quarter of 2014, the unsecured committed revolving credit facility of $1,500,000,000 was extended by one year to December 2017. On July 25, 2014, the facility was further extended by another year to December 2018 and can be further extended annually. All other terms and conditions including interest rates and banking covenants remain unchanged.

Under the four-year unsecured committed revolving credit facility, amounts can be drawn at banker’s acceptance, LIBOR or Canadian prime; plus a variable margin that is determined based on the Company’s leverage ratio. As at September 30, 2014, no amount was drawn upon this facility. Also, an amount of $36,720,000 has been committed against this facility to cover various letters of credit issued for clients and other parties. The revolving credit facility contains covenants that require the Company to maintain certain financial ratios (Note 32). As at September 30, 2014, the Company was in compliance with these covenants.

⁴  As at September 30, 2014, an amount of $1,005,332,000 was drawn, less financing fees of $3,580,000. The term loan credit expires on May 2016. The term loan credit facility bears interest at Bankers’ acceptance, LIBOR or to a lesser extent, Canadian prime; plus a variable margin that is determined based on the Company’s leverage ratio. As at September 30, 2014, the margin paid was 1.5% for LIBOR and Banker’s acceptance and 0.50% for the Canadian prime portion. The term loan credit facility contains covenants that require the Company to maintain certain financial ratios (Note 32). As at September 30, 2014, the Company was in compliance with these covenants.

During the year ended September 30, 2014, the Company repaid in advance, without penalty, the May 2014 and the May 2015 maturing tranches of the unsecured committed term loan credit facility for a total amount of $486,745,000 and $494,712,000, respectively. Following these repayments, the Company settled related floating-to-fixed interest rate swaps with notional amounts of $450,000,000 and $300,000,000 and related floating-to-floating cross currency swap with a notional amount of $184,900,000 (Note 31).

88

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

14. Long-term debt (continued)

Principal repayments on long-term debt, excluding fair value hedges and financing fees, over the forthcoming years are as follows:

					$
Less than one year						48,048
Between one and two years						1,043,394
Between two and five years						456,274
Beyond five years						1,085,157
Total principal payments on long-term debt						2,632,873
Minimum finance lease payments are as follows:	Principal		Interest		Payment
	$		$		$
Less than one year		32,319		1,494		33,813
Between one and two years		20,477		846		21,323
Between two and five years		8,902		359		9,261
Beyond five years		—		—		—
Total minimum finance lease payments		61,698		2,699		64,397

15. Other long-term liabilities

	As at September 30, 2014		As at September 30, 2013
	$		$
Deferred revenue		151,989		225,482
Estimated losses on revenue-generating contracts1		42,804		78,390
Deferred compensation plan liabilities (Note 17)		31,633		25,253
Deferred rent		67,169		85,858
Other		14,792		19,670
		308,387		434,653

¹  The current portion of estimated losses on revenue-generating contracts included in accounts payable and accrued liabilities is $84,747,000 as at September 30, 2014 ($138,700,000 at September 30, 2013).

89

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

16. Income taxes

	Year ended September 30
	2014			2013
	$			$
Current income tax expense
Current income tax expense in respect of the current year		250,403			157,822
Adjustments recognized in the current year in relation to the income tax expense of prior years		(33,956	)		(20,734)
Total current income tax expense		216,447			137,088
Deferred income tax expense
Deferred income tax expense relating to the origination and reversal of temporary differences		60,488			36,253
Deferred income tax expense relating to changes in tax rates		(1,520	)		27,708
Adjustments recognized in the current year in relation to the deferred income tax expense of prior years		23,948			(818)
Recognition of previously unrecognized temporary differences		(28,556	)		(28,429)
Total deferred income tax expense		54,360			34,714
Total income tax expense		270,807			171,802

The Company’s effective income tax rate on income from continuing operations differs from the combined Federal and Provincial Canadian statutory tax rate as follows:

	Year ended September 30
	2014		2013
	%		%
Company’s statutory tax rate		26.9		26.9
Effect of foreign tax rate differences		(0.3)		(1.5)
Final determination from agreements with tax authorities and expirations of statutes of limitations		(0.9)		(3.4)
Non-deductible and tax exempt items		0.2		1.0
Recognition of previously unrecognized temporary differences		(2.5)		(4.5)
Effect of integration-related costs		(0.1)		2.9
Minimum income tax charge		0.8		1.6
Impact on future tax assets and liabilities resulting from tax rate changes		(0.1)		4.4
Effective income tax rate		24.0		27.4

90

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

16. Income taxes (continued)

The continuity of deferred income tax balances is as follows:

	As at September 30, 2013		Recognized in earnings		Recognized in other comprehensive income		Recognized in equity		Foreign currency translation adjustment and other		As at September 30, 2014
			$		$		$		$		$
Accounts payable, accrued liabilities and other long-term liabilities		69,497		6,685		—		—		3,789		79,971
Tax benefits on losses carried forward		300,536		(44,065)		—		—		12,663		269,134
Accrued compensation		68,908		(5,356)		—		(9,542)		3,396		57,406
Retirement benefits obligations		21,958		726		12,940		—		(309)		35,315
Allowance for doubtful accounts		5,274		(1,445)		—		—		(2)		3,827
PP&E, contract costs, intangible assets and other long-term assets		(150,418)		(2,432)		—		—		(7,742)		(160,592)
Work in progress		(43,217)		(9,762)		—		—		(3,089)		(56,068)
Goodwill		(41,326)		(2,798)		—		—		(2,633)		(46,757)
Refundable tax credits on salaries		(21,821)		3,855		—		—		—		(17,966)
Cash flow hedges		4,173		(1,424)		(5,247)		—		81		(2,417)
Other liabilities		(676)		1,656		2,182		—		2,429		5,591
Deferred income taxes, net		212,888		(54,360)		9,875		(9,542)		8,583		167,444
	As at September 30, 2012		Recognized in earnings		Recognized in other comprehensive income		Recognized in equity		Foreign currency translation adjustment and other		As at September 30, 2013
	$		$		$		$		$		$
Accounts payable, accrued liabilities and other long-term liabilities		96,992		(27,724)		—		—		229		69,497
Tax benefits on losses carried forward		289,323		(10,920)		—		—		22,133		300,536
Accrued compensation		38,518		12,992		—		15,232		2,166		68,908
Retirement benefits obligations		17,448		(2,750)		7,749		—		(489)		21,958
Allowance for doubtful accounts		2,046		3,228		—		—		—		5,274
PP&E, contract costs, intangible assets and other long-term assets		(162,950)		17,932		—		—		(5,400)		(150,418)
Work in progress		(25,382)		(17,107)		—		—		(728)		(43,217)
Goodwill		(35,244)		(4,644)		—		—		(1,438)		(41,326)
Refundable tax credits on salaries		(17,783)		(4,038)		—		—		—		(21,821)
Cash flow hedges		4,379		(696)		(217)		—		707		4,173
Other liabilities		(6,110)		(987)		4,479		—		1,942		(676)
Deferred income taxes, net		201,237		(34,714)		12,011		15,232		19,122		212,888

The deferred income taxes are presented as follows in the consolidated balance sheets:

	As at September 30, 2014			As at September 30, 2013
	$			$
Deferred tax assets		323,416			368,217
Deferred tax liabilities		(155,972	)		(155,329)
Deferred income taxes, net		167,444			212,888

91

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

16. Income taxes (continued)

As at September 30, 2014, the Company had $1,718,494,000 ($1,920,600,000 as at September 30, 2013) in tax losses carried forward and other temporary differences, of which $152,700,000 ($231,199,000 as at September 30, 2013) expire at various dates up to 2032 and $1,565,794,000 ($1,689,401,000 as at September 30, 2013) have no expiry dates. The Company recognized a deferred tax asset of $413,134,000 ($460,800,000 as at September 30, 2013) on the losses carried forward and other temporary differences and recognized a valuation allowance of $144,000,000 ($160,264,000 as at September 30, 2013). The resulting net deferred tax asset of $269,134,000 ($300,536,000 as at September 30, 2013) is the amount that is more likely than not to be realized, based on deferred tax liabilities reversal and future taxable profits.

As at September 30, 2014, the Company has not recorded deferred tax liabilities on undistributed earnings of its foreign subsidiaries when they are considered indefinitely reinvested, unless it is probable that these temporary differences will reverse. Upon distribution of these earnings in the form of dividends or otherwise, the Company may be subject to taxes. The temporary differences associated with investments in subsidiaries for which a deferred tax liability has not been recognized amount to $1,434,101,000 ($934,176,000 as at September 30, 2013).

The cash and cash equivalents held by foreign subsidiaries were $356,147,000 as at September 30, 2014 ($16,400,000 as at September 30, 2013). The tax implications and impact on the Company’s liquidities related to its repatriation will not affect the Company’s liquidity.

17. Employee benefits

The Company operates various post-employment plans, including defined benefit and defined contribution pension plans as well as other benefit plans for its employees.

DEFINED BENEFIT PLANS

The Company operates defined benefit pension plans primarily for the benefit of employees in U.K., Germany, France, with smaller plans in other countries. The benefits are based on pensionable salary and years of service. U.K. and Germany plans are funded with the assets held in separate funds. The plan in France is unfunded.

The defined benefit plans expose the Company to interest risk, inflation risk, longevity risk, currency risk and market investment risk.

The following description focuses mainly on plans registered in U.K., Germany and France.

U.K.

In U.K., the Company has three defined benefit pension plans, CMG U.K. Pension Scheme, Logica U.K. Pension & Life Assurance Scheme and Logica Defined Benefit Pension Plan.

The CMG U.K. Pension scheme is closed to new members and for accrual. The Logica U.K. Pension & Life Assurance Scheme is still open but only for employees who come from the civil service with protected pensions. Logica Defined Benefit Pension Plan was created to mirror the Electricity Industry pension scheme and was created for employees that worked for National Grid and Welsh Water with protected benefits.

Both the Logica U.K. Pension & Life Assurance Scheme and Logica Defined Benefit Pension Plan are employer and employee based contribution plans.

92

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

17. Employee benefits (continued)

DEFINED BENEFIT PLANS (CONTINUED)

U.K. (CONTINUED)

The trustees are the custodians of the defined benefit pension plans and are responsible for the plan administration, including investment strategies. The trustees review periodically the investment and the asset allocation policies. As such, CMG U.K. Pension Scheme policy is to target an allocation of 45% to return-seeking assets such as equities and 55% to matching assets such as bonds; Logica Defined Benefit Pension plan policy is to invest 25% of the Plan’s assets in equities and 75% in bonds; Logica U.K. Pension & Life Assurance Scheme target is to invest 20% of the Scheme’s assets in equities and 80% in bonds. CMG U.K. Pension Scheme investment policy is currently being revised.

U.K. Pensions Act 2004 requires that full formal actuarial valuations are carried out at least every three years to determine the contributions that the Company should pay in order for the plan to meet its statutory objective, taking into account the assets already held. In the interim years, the trustees need to obtain estimated funding updates unless the scheme has less than 100 members in total.

The latest funding actuarial valuations of the CMG U.K. Pension Scheme as well as the Logica U.K. Pension & Life Assurance Scheme were performed in September 2012 and reported a deficit of $112,209,000 for the CMG U.K. Pension Scheme and $4,000 for the Logica U.K. Pension & Life Assurance Scheme. A recovery plan was proposed for the CMG U.K. Pension Scheme reflecting contributions of $12,926,000 per year (plus $1,436,000 per year for expenses) for 9 years ending in August 2023.

The next funding actuarial valuation for the Logica Defined Benefit Pension Plan will be available in 2015. In the meantime, the Company continues to contribute to the plan, in line with the last actuarial valuation, the monthly payments of $108,000 to cover for the deficit and about $9,000 to cover administrative fees.

Germany

In Germany, the Company is a participating employer in numerous defined benefit pension plans which are all closed to new members. In the majority of the plans, upon retirement of employees, the benefits are in the form of a monthly pension and in a few plans, the employees will receive an indemnity in the form of a lump-sum payment. Half of the plans are bound by collective bargaining agreements. There are no mandatory funding requirements. The plans are funded by the contributions made by the Company. In some plans, insurance policies are taken out to fund retirement benefit plans that do not qualify as plan assets and that are presented as reimbursement rights.

France

In France, the retirement indemnities are provided in accordance with the Labor Code. Upon retirement, employees will receive an indemnity (depending on the salary and seniority in the Company) in the form of a lump-sum payment.

93

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

17. Employee benefits (continued)

DEFINED BENEFIT PLANS (CONTINUED)

The following table presents amounts for post-employment benefits plans included in the consolidated balance sheets:

As at September 30, 2014	U.K.		Germany		France		Other		Total
	$		$		$		$		$
Defined benefit obligations		(643,857)		(78,035)		(42,540)		(49,370)		(813,802)
Fair value of plan assets		601,313		11,582		—		25,891		638,786
		(42,544)		(66,453)		(42,540)		(23,479)		(175,016)
Fair value of reimbursement rights		—		21,418		—		997		22,415
Net liability recognized in the balance sheet		(42,544)		(45,035)		(42,540)		(22,482)		(152,601)
Presented as:
Other long-term assets (Note 10)
Insurance contracts held to fund defined benefit pension and life assurance arrangements - reimbursement rights		—		21,418		—		997		22,415
Retirement benefits assets		8,737		—		—		—		8,737
Retirement benefits obligations		(51,281)		(66,453)		(42,540)		(23,479)		(183,753)
		(42,544)		(45,035)		(42,540)		(22,482)		(152,601)
As at September 30, 2013	U.K.		Germany		France		Other		Total
	$		$		$		$		$
Defined benefit obligations		(521,505)		(64,655)		(29,970)		(434,783)		(1,050,913)
Fair value of plan assets		491,717		10,539		—		404,737		906,993
		(29,788)		(54,116)		(29,970)		(30,046)		(143,920)
Fair value of reimbursement rights		—		20,234		—		622		20,856
Net liability recognized in the balance sheet		(29,788)		(33,882)		(29,970)		(29,424)		(123,064)
Presented as:
Other long-term assets (Note 10)
Insurance contracts held to fund defined benefit pension and life assurance arrangements - reimbursement rights		—		20,234		—		622		20,856
Retirement benefits assets		8,813		—		—		362		9,175
Retirement benefits obligations		(38,601)		(54,116)		(29,970)		(30,408)		(153,095)
		(29,788)		(33,882)		(29,970)		(29,424)		(123,064)

94

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

17. Employee benefits (continued)

DEFINED BENEFIT PLANS (CONTINUED)

Defined benefit obligations	U.K.		Germany		France		Other		Total
	$		$		$		$		$
As at September 30, 2013		521,505		64,655		29,970		434,783		1,050,913
Obligations extinguished on settlement		—		—		—		(383,816)		(383,816)
Settlement gain		—		—		—		(8,449)		(8,449)
Current service cost		1,103		864		2,805		2,998		7,770
Interest cost		24,495		2,336		1,099		2,541		30,471
Actuarial losses due to change in financial assumptions1		42,766		11,491		6,929		3,304		64,490
Actuarial gains due to change in demographic assumptions1		—		—		—		(48)		(48)
Actuarial losses (gains) due to experience1		16,531		(194)		2,211		(1,117)		17,431
Past service cost		—		—		(128)		—		(128)
Plan participant contributions		228		52		—		245		525
Benefits paid from the plan		(11,789)		(403)		—		(2,147)		(14,339)
Benefits paid directly by employer		—		(1,427)		(495)		(974)		(2,896)
Foreign currency translation adjustment1		49,018		661		149		2,050		51,878
As at September 30, 2014		643,857		78,035		42,540		49,370		813,802
Defined benefit obligation of unfunded plans		—		—		42,540		18,736		61,276
Defined benefit obligation of funded plans		643,857		78,035		—		30,634		752,526
As at September 30, 2014		643,857		78,035		42,540		49,370		813,802

¹ Amounts recognized in other comprehensive income.

Settlement

During the year ended September 30, 2014, the defined benefit pension plan Stichting Pensioenfonds CMG in Netherlands was settled as the Company signed an agreement with an insurance company to cover residual benefits and was no longer exposed to risks in respect of this plan. The obligations and assets extinguished on settlement amounted to $366,311,000.

In Norway, a defined benefit plan was terminated and replaced by a defined contribution plan in 2014. The plan settled when each member received an individual insurance paid up policy. The obligations and assets extinguished on settlement amounted to $17,505,000 and the Company recorded a settlement gain of $8,449,000.

95

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

17. Employee benefits (continued)

DEFINED BENEFIT PLANS (CONTINUED)

Defined benefit obligations	U.K.		Germany		France		Other		Total
	$		$		$		$		$
As at September 30, 2012		437,585		58,314		27,092		392,041		915,032
Current service cost		1,096		1,060		2,943		3,422		8,521
Interest cost		20,335		2,232		912		14,888		38,367
Curtailment gain		—		—		(4,371)		—		(4,371)
Actuarial losses (gains) due to change in financial assumptions1		53,236		(910)		(262)		(1,654)		50,410
Actuarial losses due to change in demographic assumptions1		—		—		—		2,281		2,281
Actuarial losses (gains) due to experience1		141		(405)		974		(764)		(54)
Termination benefits		310		—		—		—		310
Plan participant contributions		271		—		—		288		559
Benefits paid from the plan		(13,509)		(429)		—		(11,143)		(25,081)
Benefits paid directly by employer		—		(1,084)		(88)		(1,409)		(2,581)
Foreign currency translation adjustment1		22,040		5,877		2,770		36,833		67,520
As at September 30, 2013		521,505		64,655		29,970		434,783		1,050,913
Defined benefit obligation of unfunded plans		—		—		29,970		11,302		41,272
Defined benefit obligation of funded plans		521,505		64,655		—		423,481		1,009,641
As at September 30, 2013		521,505		64,655		29,970		434,783		1,050,913

¹ Amounts recognized in other comprehensive income.

96

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

17. Employee benefits (continued)

DEFINED BENEFIT PLANS (CONTINUED)

Plan assets and reimbursement rights	U.K.		Germany		France		Other		Total
	$		$		$		$		$
As at September 30, 2013		491,717		30,773		—		405,359		927,849
Assets distributed on settlement		—		—		—		(383,816)		(383,816)
Interest income on plan assets		23,430		1,123		—		1,635		26,188
Employer contributions		17,396		2,031		495		4,251		24,173
Return on assets excluding interest income1		35,646		597		—		(521)		35,722
Plan participants contributions		228		52		—		245		525
Benefits paid from the plan		(11,789)		(403)		—		(2,147)		(14,339)
Benefits paid directly by employer		—		(1,427)		(495)		(457)		(2,379)
Administration expenses paid from the plan		(1,566)		—		—		(6)		(1,572)
Foreign currency translation adjustment1		46,251		254		—		2,345		48,850
As at September 30, 2014		601,313		33,000		—		26,888		661,201
Plan assets		601,313		11,582		—		25,891		638,786
Reimbursement rights		—		21,418		—		997		22,415
As at September 30, 2014		601,313		33,000		—		26,888		661,201
Plan assets and reimbursement rights	U.K.		Germany		France		Other		Total
	$		$		$		$		$
As at September 30, 2012		433,727		27,480		—		364,034		825,241
Interest income on plan assets		20,504		1,087		—		14,228		35,819
Employer contributions		16,937		1,992		88		3,584		22,601
Return on assets excluding interest income1		13,885		(461)		—		619		14,043
Plan participants contributions		271		—		—		288		559
Benefits paid from the plan		(13,509)		(1,014)		—		(11,143)		(25,666)
Benefits paid directly by employer		—		(1,084)		(88)		(1,409)		(2,581)
Administration expenses paid from the plan		(1,619)		—		—		(238)		(1,857)
Foreign currency translation adjustment1		21,521		2,773		—		35,396		59,690
As at September 30, 2013		491,717		30,773		—		405,359		927,849
Plan assets		491,717		10,539		—		404,737		906,993
Reimbursement rights		—		20,234		—		622		20,856
As at September 30, 2013		491,717		30,773		—		405,359		927,849

¹  Amounts recognized in other comprehensive income.

97

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

17. Employee benefits (continued)

DEFINED BENEFIT PLANS (CONTINUED)

The plan assets at the end of the year consist of:

As at September 30, 2014	U.K.		Germany		France		Other		Total
	$		$		$		$		$
Quoted equities		216,044		—		—		190		216,234
Quoted bonds		352,305		—		—		9,543		361,848
Property		29,897		—		—		1,371		31,268
Cash		3,067		—		—		215		3,282
Other1		—		11,582		—		14,572		26,154
		601,313		11,582		—		25,891		638,786
As at September 30, 2013	U.K.		Germany		France		Other		Total
	$		$		$		$		$
Quoted equities		181,463		—		—		2,214		183,677
Quoted bonds		283,186		—		—		20,805		303,991
Property		23,529		—		—		4,936		28,465
Cash		3,539		—		—		2,948		6,487
Other1		—		10,539		—		373,834		384,373
		491,717		10,539		—		404,737		906,993

¹ Other is mainly composed of various insurance policies to cover some of the defined benefit obligations.

Plan assets do not include any ordinary shares of the Company, property occupied by the Company or any other assets used by the Company.

The following table summarizes the expense1 recognized in the consolidated statements of earnings:

	Year ended September 30
	2014			2013
	$			$
Current service cost		7,770			8,521
Curtailment gain		—			(4,371)
Settlement gain		(8,449	)		—
Past service cost		(128	)		—
Termination benefits		—			310
Net interest on net defined benefit liability or asset		4,283			2,548
Administration expenses		1,572			1,857
		5,048			8,865

¹  The expense was presented as a recovery of costs of services, selling and administrative for an amount of $807,000 and as finance costs for an amount of $5,855,000 ($5,981,000 and $4,405,000, respectively for the year ended September 30, 2013), with a curtailment gain of nil presented in integration-related costs ($1,521,000 for the year ended September 30, 2013).

98

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

17. Employee benefits (continued)

DEFINED BENEFIT PLANS (CONTINUED)

Actuarial assumptions

The following are the principal actuarial assumptions at the reporting date (expressed as weighted averages). The assumed discount rates, future salary and pension increases, inflation rates and mortality all have a significant effect on the accounting valuation.

As at September 30, 2014	U.K.		Germany		France		Other
	%		%		%		%
Discount rate		3.85		2.50		2.50		4.20
Future salary increases		3.25		2.50		2.00		5.50
Future pension increases		3.10		1.80		—		—
Inflation		3.25		2.00		2.00		2.90
As at September 30, 2013	U.K.		Germany		France		Other
	%		%		%		%
Discount rate		4.40		3.60		3.60		3.70
Future salary increases		3.35		2.50		2.00		5.30
Future pension increases		3.19		1.75		—		—
Inflation		3.35		2.00		2.00		2.10
The average longevity over 65 of a member presently at age 45 and 65 are as follows:
As at September 30, 2014					U.K.		Germany
					(in years)
Longevity at age 65 for current members
Males						22.4		19.0
Females						23.8		23.0
Longevity at age 45 for current members
Males						24.4		22.0
Females						25.9		25.4
As at September 30, 2013					U.K.		Germany
					(in years)
Longevity at age 65 for current members
Males						22.4		19.0
Females						23.8		23.0
Longevity at age 45 for current members
Males						24.3		21.4
Females						25.9		25.4

99

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

17. Employee benefits (continued)

DEFINED BENEFIT PLANS (CONTINUED)

Actuarial assumptions (continued)

Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience in each countries. Mortality assumptions for the most significant countries are based on the following post-retirement mortality tables for the years ended September 30, 2014 and 2013: (1) U.K.: 110% PNXA00 (year of birth) plus CMI_2011 projections with 1% p.a. minimum long term improvement rate and (2) Germany: Heubeck RT2005G.

The following table shows the sensitivity of the defined benefit obligations to changes in these assumptions, all other actuarial assumptions remaining unchanged:

As at September 30, 2014	U.K.		Germany		France
	$		$		$
Increase of 0.25% in the discount rate		(28,480)		(2,757)		(1,849)
Decrease of 0.25% in the discount rate		30,292		2,913		1,952
Salary increase of 0.25%		931		642		1,999
Salary decrease of 0.25%		(913)		(568)		(1,900)
Pension increase of 0.25%		8,759		1,120		—
Pension decrease of 0.25%		(9,248)		(1,081)		—
Increase of 0.25% in inflation		22,873		1,152		1,999
Decrease of 0.25% in inflation		(21,707)		(1,098)		(1,900)
Increase of one year in life expectancy		15,039		2,482		—
Decrease of one year in life expectancy		(15,124)		(2,517)		—
As at September 30, 2013	U.K.		Germany		France
	$		$		$
Increase of 0.25% in the discount rate		(21,118)		(2,674)		(1,286)
Decrease of 0.25% in the discount rate		23,052		1,784		1,357
Salary increase of 0.25%		715		528		1,390
Salary decrease of 0.25%		(700)		(468)		(1,322)
Pension increase of 0.25%		7,095		928		—
Pension decrease of 0.25%		(7,490)		(896)		—
Increase of 0.25% in inflation		16,235		1,440		1,390
Decrease of 0.25% in inflation		(14,107)		(632)		(1,322)
Increase of one year in life expectancy		10,504		1,673		—
Decrease of one year in life expectancy		(10,626)		(1,719)		—

The sensitivity analysis above have been based on a method that extrapolates the impact on the defined benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the year.

The weighted average durations of the defined benefit obligations are as follows:

	Year ended September 30
	2014		2013
	(in years)
U.K.		19		17
Germany		15		17
France		18		18
Other		14		17

100

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

17. Employee benefits (continued)

DEFINED BENEFIT PLANS (CONTINUED)

The Company expects to contribute $20,140,000 to defined benefit plans during the next year, of which $17,217,000 relates to the U.K. plans, and $2,923,000 relating to the other plans. The contributions will include new benefit accruals and deficit recovery payments.

DEFINED CONTRIBUTION PLANS

The Company also operates defined contribution retirement plans. In some countries, contributions are made into state pension plans. The pension cost expense for defined contribution plans amounted to $217,980,000 in 2014 ($207,616,000 in 2013).

In addition, in Sweden the Company contributes to a multi-employer plan, Alecta SE pension plan, which is a defined benefit pension plan. This pension plan is classified as a defined contribution plan as sufficient information is not available to use defined benefit accounting. Alecta lacks the possibility of establishing an exact distribution of assets and provisions to the respective employers. The Company’s proportion of the total contributions to the plan is 0.87% and the Company’s proportion of the total number of active members in the plan is 0.64%.

Alecta uses a collective funding ratio to determine the surplus or deficit in the pension plan. Any surplus or deficit in the plan will affect the amount of future contributions payable. The collective funding is the difference between Alecta’s assets and the commitments to the policyholders and insured individuals. The collective solvency is normally allowed to vary between 125% and 155%, with the target being 140%. At September 30, 2014, Alecta’s collective funding ratio was 146% (145% in 2013). The plan expense was $45,044,000 in 2014 ($38,598,000 in 2013). The Company expects to contribute $43,707,000 to the plan during the next year.

OTHER BENEFIT PLANS

The Company maintains two non-qualified deferred compensation plans covering some of its U.S. management. One of these plans is an unfunded plan and the deferred compensation liability totaled $482,000 as at September 30, 2014 ($501,000 as at September 30, 2013). The other plan is a funded plan for which a trust was established so that the plan assets could be segregated; however, the assets are subject to the Company’s general creditors in the case of bankruptcy. The assets composed of investments vary with employees’ contributions and changes in the value of the investments. The change in liability associated with the plan is equal to the change of the assets. The assets in the trust and the associated liabilities totaled $31,151,000 as at September 30, 2014 ($24,752,000 as at September 30, 2013).

The deferred compensation plans assets and liabilities are presented in long-term financial assets and other long-term liabilities, respectively.

101

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

18. Accumulated other comprehensive income

	As at September 30, 2014		As at September 30, 2013
	$		$
Items that will be reclassified subsequently to net earnings:
Net unrealized gains on translating financial statements of foreign operations, net of accumulated income tax expense of $31,986 as at September 30, 2014 ($18,818 as at September 30, 2013)		511,689		290,410
Net losses on derivative financial instruments and on translating long-term debt designated as hedges of net investments in foreign operations, net of accumulated income tax recovery of $37,024 as at September 30, 2014 ($21,349 as at September 30, 2013)		(238,583)		(137,714)
Net unrealized gains (losses) on cash flow hedges, net of accumulated income tax expense of $2,162 as at September 30, 2014 (net of accumulated income tax recovery of $3,085 as at September 30, 2013)		14,520		(6,209)
Net unrealized gains on investments available for sale, net of accumulated income tax expense of $942 as at September 30, 2014 ($617 as at September 30, 2013)		2,576		1,635
Items that will not be reclassified subsequently to net earnings:
Net remeasurement losses, net of accumulated income tax recovery of $18,728 as at September 30, 2014 ($5,788 as at September 30, 2013)		(61,578)		(26,267)
		228,624		121,855

For the year ended September 30, 2014, $22,000 of the net unrealized gains previously recognized in other comprehensive income, net of income tax expense of $133,000, were reclassified to net earnings for derivative financial instruments designated as cash flow hedges ($1,967,000 of the net unrealized losses net of income tax recovery of $1,601,000 for the year ended September 30, 2013).

102

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

19. Capital stock

Authorized, an unlimited number without par value:

First preferred shares, carrying one vote per share, ranking prior to second preferred shares, Class A subordinate shares and Class B shares with respect to the payment of dividends;

Second preferred shares, non-voting, ranking prior to Class A subordinate shares and Class B shares with respect to the payment of dividends;

Class A subordinate shares, carrying one vote per share, participating equally with Class B shares with respect to the payment of dividends and convertible into Class B shares under certain conditions in the event of certain takeover bids on Class B shares;

Class B shares, carrying ten votes per share, participating equally with Class A subordinate shares with respect to the payment of dividends and convertible at any time at the option of the holder into Class A subordinate shares.

For 2014 and 2013, the Class A subordinate and the Class B shares varied as follows:

	Class A subordinate shares				Class B shares				Total
	Number		Carrying value		Number		Carrying value		Number		Carrying value
			$				$				$
As at September 30, 2012		273,771,106		2,154,807		33,608,159		46,887		307,379,265		2,201,694
Issued upon exercise of stock options1		3,765,982		51,971		—		—		3,765,982		51,971
Repurchased and cancelled2		(723,100)		(5,780)		—		—		(723,100)		(5,780)
Purchased and held in trust3		—		(7,663)		—		—		—		(7,663)
PSUs exercised4		—		272		—		—		—		272
Conversion of shares5		335,392		468		(335,392)		(468)		—		—
As at September 30, 2013		277,149,380		2,194,075		33,272,767		46,419		310,422,147		2,240,494
Issued upon exercise of stock options1		4,999,544		83,305		—		—		4,999,544		83,305
Repurchased and cancelled2		(2,837,360)		(56,077)		—		—		(2,837,360)		(56,077)
Purchased and held in trust3		—		(23,016)		—		—		—		(23,016)
Resale of shares held in trust3		—		908		—		—		—		908
PSUs exercised4		—		583		—		—		—		583
As at September 30, 2014		279,311,564		2,199,778		33,272,767		46,419		312,584,331		2,246,197

¹  The carrying value of Class A subordinate shares includes $18,380,000 ($12,531,000 in 2013), which corresponds to a reduction in contributed surplus representing the value of accumulated compensation costs associated with the stock options exercised during the year.

²  On January 29, 2014, the Company’s Board of Directors authorized the renewal of a Normal Course Issuer Bid (“NCIB”) for the purchase of up to 21,798,645 Class A subordinate shares during the next year (20,685,976 in 2013) for cancellation on the open market through the TSX. The Class A subordinate shares were available for purchase commencing February 11, 2014, until no later than February 10, 2015, or on such earlier date when the Company completes its purchases or elects to terminate the NCIB. During the year ended September 30, 2014, the Company repurchased 2,490,660 Class A subordinate shares from the Caisse de dépôt et placement du Québec for a cash consideration of $100,000,000. The excess of the purchase price over the carrying value in the amount of $46,675,000 was charged to retained earnings. In accordance with the requirements of TSX, the repurchased shares have been taken into account in calculating the annual aggregate limit that the Company is entitled to repurchase under its previous NCIB. In addition, during the year ended September 30, 2014, the Company repurchased 346,700 Class A subordinate shares under the previous NCIB (723,100 in 2013) for a cash consideration of $11,468,000 ($22,869,000 in 2013). The excess of the purchase price over the carrying value, in the amount of $8,716,000 ($17,089,000 in 2013), was charged to retained earnings.

³  The trustee, in accordance with the terms of the PSU plan and a Trust Agreement, purchased 619,888 Class A subordinate shares of the Company on the open market for $23,016,000 during the year ended September 30, 2014 (336,849 Class A subordinate shares for $7,663,000 during the year ended September 30, 2013). During the year ended September 30, 2014, the trustee sold 35,576 Class A subordinate shares that were held in trust on the open market in accordance with the terms of the PSU plan. The excess of proceeds over the carrying value of the Class A subordinate shares, in the amount of $482,000, resulted in an increase of contributed surplus. For the year ended September 30, 2013, the trustee did not sell any Class A subordinate shares.

⁴  During the year ended September 30, 2014, 22,858 PSUs were exercised (14,020 during the year ended September 30, 2013) with a recorded average fair value of $583,000 ($272,000 as at September 30, 2013) that was removed from contributed surplus. As at September 30, 2014, 1,748,149 Class A subordinate shares were held in trust under the PSU plan (1,186,695 as at September 30, 2013) (Note 20b).

⁵  During the year ended September 30, 2013, a shareholder converted 335,392 Class B shares into 335,392 Class A subordinate shares. No class B shares were converted during the year ended September 30, 2014.

103

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

20. Share-based payments

a) Stock options

Under the Company’s stock option plan, the Board of Directors may grant, at its discretion, stock options to purchase Class A subordinate shares to certain employees, officers, directors and consultants of the Company and its subsidiaries. The exercise price is established by the Board of Directors and is equal to the closing price of the Class A subordinate shares on the TSX on the day preceding the date of the grant. Stock options generally vest over four years from the date of grant conditionally upon achievement of objectives and must be exercised within a ten-year period, except in the event of retirement, termination of employment or death. As at September 30, 2014, 43,616,083 Class A subordinate shares have been reserved for issuance under the stock option plan.

The following table presents information concerning all outstanding stock options granted by the Company:

			2014			2013
	Number of options		Weighted average exercise price per share	Number of options		Weighted average exercise price per share
		$			$
Outstanding, beginning of year	20,209,569		16.45	18,617,230		12.69
Granted	5,973,451		37.15	7,196,903		23.89
Exercised	(4,999,544)		12.99	(3,765,982)		10.47
Forfeited	(1,438,920)		26.45	(1,825,447)		19.77
Expired	(16,450)		7.85	(13,135)		11.42
Outstanding, end of year	19,728,106		22.88	20,209,569		16.45
Exercisable, end of year	8,890,504		14.13	10,955,235		11.70

The weighted average share price at the date of exercise for share options exercised in 2014 was $37.78 ($29.47 in 2013).

The following table summarizes information about outstanding stock options granted by the Company as at September 30, 2014:

				Options outstanding				Options exercisable
Range of exercise price		Number of options		Weighted average remaining contractual life (years)		Weighted average exercise price		Number of options		Weighted average exercise price
$						$				$
	7.00 to 8.55		490,915		1.66		8.08		490,915		8.08
	9.05 to 10.05		1,634,331		4.00		9.31		1,634,331		9.31
	10.11 to 11.80		993,269		3.03		11.38		993,269		11.38
	12.54 to 13.26		2,282,150		5.00		12.56		2,282,150		12.56
	14.48 to 15.96		2,631,359		6.00		15.48		1,880,357		15.48
	19.28 to 22.52		830,466		7.00		19.79		436,086		19.83
	23.65 to 32.57		5,192,158		8.22		23.91		1,126,898		23.99
	34.68 to 38.79		5,673,458		9.28		37.17		46,498		36.60
			19,728,106		7.03		22.88		8,890,504		14.13

104

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

20. Share-based payments (continued)

a) Stock options (continued)

The fair value of stock options granted in the year and the weighted average assumptions used in the calculation of their fair value on the date of grant using the Black-Scholes option pricing model were as follows:

	Year ended September 30
	2014		2013
Grant date fair value ($)		7.98		4.98
Dividend yield (%)		0.00		0.00
Expected volatility (%)1		23.92		23.67
Risk-free interest rate (%)		1.53		1.29
Expected life (years)		4.00		4.00
Exercise price ($)		37.15		23.89
Share price ($)		37.15		23.89

¹  Expected volatility was determined using statistical formulas and based on the weekly historical average of closing daily share prices over the period of the expected life of stock option.

b) Performance share units

Under the PSU plan, the Board of Directors may grant PSUs to senior executives and other key employees (“participants”) which entitle them to receive one Class A subordinate share for each PSU. The vesting performance conditions are determined by the Board of Directors at the time of each grant. PSUs expire on the business day preceding December 31 of the third calendar year following the end of the fiscal year during which the PSU award was made, except in the event of retirement, termination of employment or death. Granted PSUs vest annually over a period of four years from the date of grant conditionally upon achievement of objectives.

Class A subordinate shares purchased in connection with the PSU plan are held in trust for the benefit of the participants. The trust, considered as a structured entity, is consolidated in the Company’s consolidated financial statements with the cost of the purchased shares recorded as a reduction of capital stock (Note 19).

The following table presents information concerning the number of outstanding PSUs granted by the Company:

Outstanding as at September 30, 2012	863,866
Granted1	805,921
Exercised	(14,020)
Forfeited	(469,072)
Outstanding as at September 30, 2013	1,186,695
Granted1	619,888
Exercised	(22,858)
Forfeited	(35,576)
Outstanding as at September 30, 2014	1,748,149

¹  The PSUs granted in 2014 had a grant date fair value of $36.15 per unit ($23.65 in 2013).

105

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

20. Share-based payments (continued)

c) Share Purchase plan

Under the Share purchase plan, the Company contributes to the Share purchase plan an amount equal to a percentage of the employee’s basic contribution, up to a maximum of 3.5%. An employee may make additional contributions in excess of the basic contribution however the Company does not match contributions in the case of such additional contributions. The employee and Company contributions are remitted to an independent plan administrator who purchases Class A subordinate shares on the open market on behalf of the employee through either the TSX or New York Stock Exchange.

d) Deferred share unit plan

Under the DSU plan, the Board of Directors may grant DSUs to members of the Board of Directors (“participants”). DSUs are granted with immediate vesting and must be exercised no later than December 15 of the calendar year immediately following the calendar year during which the participant ceases to act as a Director. Each DSU entitles the holder to receive a cash payment equal to the closing price of Class A subordinate shares on the TSX on the payment date.

e) Share-based payment costs

The share-based payment expense recorded in cost of services, selling and administrative expenses is as follows:

	Year ended September 30
	2014		2013
		$		$
Stock options		18,383		19,631
PSUs		13,333		11,642
Share purchase plan		69,500		52,542
DSUs		1,109		2,205
		102,325		86,020

21. Earnings per share

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

					2014						2013
	Net earnings		Weighted average number of shares outstanding1		Earnings per share		Net earnings		Weighted average number of shares outstanding1		Earnings per share
		$				$		$				$
Basic		859,443		308,743,126		2.78		455,820		307,900,034		1.48
Dilutive stock options and PSUs2				10,184,611						9,074,145
		859,443		318,927,737		2.69		455,820		316,974,179		1.44

¹  The 2,837,360 Class A subordinate shares repurchased and 1,748,149 Class A subordinate shares held in trust during the year ended September 30, 2014 (723,100 and 1,186,695, respectively, during year ended September 30, 2013), were excluded from the calculation of weighted average number of shares outstanding as of the date of transaction.

²  The calculation of the diluted earnings per share excluded 5,648,757 stock options for the year ended September 30, 2014 (19,994 for the year ended September 30, 2013), as they were anti-dilutive.

106

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

22. Construction contracts in progress

Revenue from systems integration and consulting services under fixed-fee arrangements where the outcome of the arrangements can be estimated reliably is recognized using the percentage-of-completion method over the service periods. The Company uses the labour costs or labour hours to measure the progress towards completion. If the outcome of an arrangement cannot be estimated reliably, revenue is recognized to the extent of arrangement costs incurred that are likely to be recoverable.

Amounts recognized as revenue in excess of billings are classified as work in progress. Amounts received in advance of the delivery of products or performances of services are classified as deferred revenue.

The status of the Company’s construction contracts still in progress at the end of the reporting period was as follows:

	As at		As at
	September 30, 2014		September 30, 2013
		$		$
Recognized as:
Revenue in the respective year		1,575,593		1,634,739
Recognized as:
Amounts due from customers under construction contracts1		289,838		311,733
Amounts due to customers under construction contracts		(153,962)		(209,890)

¹  As at September 30, 2014, retentions held by customers for contract work in progress amounted to $50,425,000 ($38,133,000 as at September 30, 2013).

23. Costs of services, selling and administrative

	Year ended September 30
	2014		2013
		$		$
Salaries and other member costs1		6,215,991		5,954,032
Hardware, software and data center related costs		786,360		864,687
Professional fees and other contracted labour		1,260,955		1,311,323
Property costs		398,560		410,197
Amortization and depreciation (Note 24)		435,775		416,889
Other operating expenses		32,150		55,182
		9,129,791		9,012,310

¹  Net of tax credits of $121,114,000 in 2014 ($95,911,000 in 2013).

107

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

24. Amortization and depreciation

	Year ended September 30
	2014		2013
		$		$
Depreciation of PP&E1		186,886		175,687
Amortization of intangible assets		192,692		185,309
Amortization of contract costs related to transition costs		56,197		55,893
Included in costs of services, selling and administrative (Note 23)		435,775		416,889
Amortization of contract costs related to incentives (presented as a reduction of revenue)		5,889		8,151
Amortization of internal-use software (presented in integration-related costs)		—		8,672
Amortization of deferred financing fees (presented in finance costs)		1,185		1,186
Amortization of premiums and discounts on investments related to funds held for clients (presented net as a reduction of revenue)		1,383		1,046
		444,232		435,944

¹  Depreciation of PP&E acquired under finance leases was $23,822,000 in 2014 ($21,102,000 in 2013).

25. Finance costs

	Year ended September 30
	2014		2013
		$		$
Interest on long-term debt		92,581		104,502
Net interest cost on the net defined benefit plans (Note 17)		5,855		4,405
Other finance costs		2,842		5,024
		101,278		113,931

26. Investments in subsidiaries

2014 TRANSACTIONS

There were no acquisitions or significant disposals for the year ended September 30, 2014.

2013 TRANSACTIONS

There were no acquisitions or significant disposals for the year ended September 30, 2013.

108

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

26. Investments in subsidiaries (continued)

2012 TRANSACTIONS

a) Modifications to purchase price allocation

During the year ended September 30, 2013, the Company finalized the purchase price allocation and made adjustments relating to the acquisition of Logica. The prior period figures had been retrospectively revised in 2013 as follows:

	Purchase price allocation, as originally reported		Adjustments and reclassifications		Final purchase price allocation
		$		$		$
Assets
Current assets1		1,374,838		(72,333)		1,302,505
Property, plant and equipment		250,808		(19,169)		231,639
Contract costs		71,697		948		72,645
Intangible assets		603,683		(68,620)		535,063
Other long-term assets		87,789		(1,667)		86,122
Deferred tax assets		197,210		126,571		323,781
Goodwill		3,276,172		265,324		3,541,496
		5,862,197		231,054		6,093,251
Liabilities
Current liabilities		(1,546,273)		(285,657)		(1,831,930)
Debt2		(808,775)		—		(808,775)
Deferred tax liabilities		(43,616)		22,472		(21,144)
Long-term provisions		(182,880)		86,570		(96,310)
Retirement benefits obligations		(113,526)		—		(113,526)
Other long-term liabilities		(426,864)		(54,439)		(481,303)
		(3,121,934)		(231,054)		(3,352,988)
Bank overdraft assumed, net		(57,883)		—		(57,883)
Net assets acquired		2,682,380		—		2,682,380
Cash consideration		2,676,912				2,676,912
Consideration payable3		5,468				5,468

¹  The current assets include accounts receivable with a fair value of $866,816,000 which approximates the gross amount due under the contracts.

² The fair value of the assumed debt in the business acquisition at August 20, 2012 was $808,775,000. In 2012, the Company repaid Logica’s debt for an amount of $891,354,000, less settlement of foreign currency forward contracts of $50,171,000 resulting in a loss of $83,632,000, which was recorded in acquisition-related and integration costs.

³ Paid during the year ended September 30, 2013.

109

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

26. Investments in subsidiaries (continued)

2012 TRANSACTIONS (CONTINUED)

a) Modifications to purchase price allocation (continued)

IMPACT ON CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 2012

The following represents the revised consolidated balance sheet as at September 30, 2012 which reflects the final purchase price allocation adjustments and the related additional reclassifications applied to the consolidated balance sheet as at September 30, 2012. A discussion of the adjustments and resulting impact for year ended September 30, 2012 are presented further below.

	As originally reported			Adjustments and reclassifications		Foreign exchange on adjustments		Final
		$			$		$		$
Assets
Current assets
Cash and cash equivalents		113,103			—		—		113,103
Short-term investments		14,459			—		—		14,459
Accounts receivable		1,446,149	A		(32,273)		(941)		1,412,935
Work in progress		744,482	A		(45,819)		(1,531)		697,132
Prepaid expenses and other current assets		244,805	A		(8,840)		(3)		235,962
Income taxes		24,650	I		14,599		628		39,877
Total current assets before funds held for clients		2,587,648			(72,333)		(1,847)		2,513,468
Funds held for clients		202,407			—		—		202,407
Total current assets		2,790,055			(72,333)		(1,847)		2,715,875
Property, plant and equipment		500,995	A, B, F		(19,169)		(346)		481,480
Contract costs		167,742	A		948		(40)		168,650
Intangible assets		858,892	C		(68,620)		(2,493)		787,779
Other long-term assets		96,351	A		(1,667)		(59)		94,625
Deferred tax assets		219,590	I		126,571		2,528		348,689
Goodwill		5,819,817			265,324		7,993		6,093,134
		10,453,442			231,054		5,736		10,690,232
Liabilities
Current liabilities
Accounts payable and accrued liabilities		1,156,737	A, H		124,680		4,614		1,286,031
Accrued compensation		539,779	D		(16,695)		(520)		522,564
Deferred revenue		443,596	A		90,792		1,514		535,902
Income taxes		177,030	I		(58)		(10)		176,962
Provisions		160,625	E, F, J		86,938		3,124		250,687
Current portion of long-term debt		52,347			—		—		52,347
Total current liabilities before clients’ funds obligations		2,530,114			285,657		8,722		2,824,493
Clients’ funds obligations		197,986			—		—		197,986
Total current liabilities		2,728,100			285,657		8,722		3,022,479
Long-term provisions		216,507	E, F		(86,570)		(3,799)		126,138
Long-term debt		3,196,061			—		—		3,196,061
Other long-term liabilities		601,232	A, D, G, H		54,439		1,450		657,121
Deferred tax liabilities		171,130	I		(22,472)		(1,206)		147,452
Retirement benefits obligations		118,078			—		—		118,078
		7,031,108			231,054		5,167		7,267,329
Equity
Retained earnings		1,113,225			—		—		1,113,225
Accumulated other comprehensive (loss) income		(275)			—		569		294
Capital stock		2,201,694			—		—		2,201,694
Contributed surplus		107,690			—		—		107,690
		3,422,334			—		569		3,422,903
		10,453,442			231,054		5,736		10,690,232

110

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

26. Investments in subsidiaries (continued)

2012 TRANSACTIONS (CONTINUED)

a) Modifications to purchase price allocation (continued)

IMPACT ON CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 2012 (CONTINUED)

A. Contract accounting

The Company obtained supplementary information and reviewed estimates related to client contracts and made reclassifications. As a result, accounts receivable, work in progress, prepaid expenses and other current assets, property, plant and equipment and other long-term assets decreased by an amount of $32,273,000, $13,663,000, $8,840,000, $8,947,000, $1,667,000, respectively while contract costs, accounts payable and accrued liabilities as well as long-term deferred revenue, estimated losses on revenue-generating contracts and other within other long-term liabilities increased by an amount of $948,000, $4,482,000, $29,638,000, $142,173,000 and $8,514,000, respectively.

In addition, certain reclassifications for presentation purposes were done. As a result, accounts payable and accrued liabilities and current deferred revenue increased by an amount of $114,253,000 and $90,792,000, respectively while work in progress, long-term deferred revenue and estimated losses on revenue-generating contracts within other long-term liabilities decreased by an amount of $32,156,000, $131,751,000 and $105,450,000, respectively.

B. Buildings

The Company refined the assumptions related to the fair value of buildings acquired. As a result, property, plant and equipment decreased by an amount of $2,377,000.

C. Intangible assets

The Company refined the assumptions related to cash flows. As a result, internal-use software increased by an amount of $5,918,000 while business solutions and client relationships decreased by an amount of $3,966,000 and $70,572,000, respectively.

D. Accrued compensation

The Company adjusted the accrued compensation provision. As a result, accrued compensation decreased by an amount of $16,695,000 while other within other long-term liabilities increased by an amount of $5,488,000.

E. Litigations and claims

The Company obtained supplementary information, reviewed estimates and settled claims that have been agreed upon by both parties for a social security and contractual dispute claim against the Company. As a result, current and non-current provisions for litigations decreased by an amount of $708,000 and $18,144,000, respectively.

In addition, the Company made certain reclassifications from non-current provisions to current provisions for an amount of $86,884,000.

F. Lease provisions

The Company refined the assumptions related to the discount rate, sublease rental cash flows and costs to restore premises at the end of the lease period. As a result, onerous leases within current provisions decreased by an amount of $3,704,000 while onerous lease and decommissioning liabilities within non-current provisions and decommissioning liabilities within current provisions increased by an amount of $9,681,000, $13,777,000 and $1,405,000. Additionally, leasehold improvements within property, plant and equipment decreased by an amount of $7,845,000.

G. Fair value of client contracts

The Company refined the assumptions related to the discount rate and the expected amount and timing of future cash flows related to client contracts. As a result, long-term deferred revenue within other long-term liabilities increased by an amount of $67,507,000.

111

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

26. Investments in subsidiaries (continued)

2012 TRANSACTIONS (CONTINUED)

a) Modifications to purchase price allocation (continued)

IMPACT ON CONSOLIDATED BALANCE SHEET AS AT SEPTEMBER 30, 2012 (CONTINUED)

H. Fair value of lease contracts

The Company refined the assumptions related to the discount rate and rental rates in effect at the acquisition date of lease contracts. As a result, deferred rent within accounts payable and accrued liabilities and within other long-term liabilities increased by an amount of $5,945,000 and $38,320,000.

I. Income taxes

The Company obtained supplementary information concerning income tax provisions. As a result, income taxes payable decreased by an amount of $28,280,000. The related income tax impact of the adjustments to purchase price allocation on income taxes receivable and deferred tax liabilities was a decrease by an amount of $7,501,000 and $6,972,000, respectively while deferred tax assets and income taxes payable increased by an amount of $142,071,000 and $6,122,000, respectively.

In addition, for presentation purposes, reclassifications were made from income taxes payable to income taxes receivable for an amount of $22,100,000 and from deferred tax assets to deferred tax liabilities for an amount of $15,500,000.

J. Restructuring

The Company refined the assumptions related to restructuring provisions assumed in the acquisition. As a result, expected restructuring costs within current and non-current provisions increased by an amount of $3,061,000 and decreased by an amount of $5,000,000, respectively.

b) Integration-related costs

During the year ended September 30, 2014, the previously announced integration program of $525,000,000 was increased by $26,500,000 to include new opportunities and by $24,000,000 to consider foreign currency impact.

During the year ended September 30, 2014, the Company expensed $127,341,000 ($338,439,000 during the year ended September 30, 2013) of the announced program. This amount included net integration costs for the termination of employees to transform the operations of Logica to the Company’s operating model of $94,273,000 ($249,799,000 during the year ended September 30, 2013) (Note 13), costs related to onerous leases of $1,503,000 ($31,899,000 during the year ended September 30, 2013) (Note 13) and other integration costs of $31,565,000 ($56,741,000 during the year ended September 30, 2013).

During the year ended September 30, 2014, the Company paid in total $157,998,000 ($306,433,000 during the year ended September 30, 2013) related to the integration program and $4,537,000 ($37,937,000 during the year ended September 30, 2013), related to the restructuring program of Logica announced before the acquisition, on December 14, 2011. During the year ended September 30, 2014, the non-cash integration costs of $nil ($7,151,000 during the year ended September 30, 2013) included amortization expense of $nil ($8,672,000 during the year ended September 30, 2013) and curtailment gain of $nil ($1,521,000 during the year ended September 30, 2013).

112

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

27. Supplementary cash flow information

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

	2014		2013
	$		$
Accounts receivable		205,945		280,146
Work in progress		161,270		(169,035)
Prepaid expenses and other assets		42,555		17,499
Long-term financial assets		(4,230)		(2,742)
Accounts payable and accrued liabilities		(113,537)		(231,169)
Accrued compensation		(151,573)		164,166
Deferred revenue		(158,026)		(163,941)
Provisions		(132,735)		(67,055)
Other long-term liabilities		(65,840)		(99,573)
Retirement benefits obligations		(17,181)		(7,646)
Derivative financial instruments		(650)		966
Income taxes		1,335		(3,172)
		(232,667)		(281,556)
b)   Non-cash operating, investing and financing activities related to operations are as follows for the years ended September 30:
	2014		2013
	$		$
Operating activities
Accounts receivable		(199)		(412)
Prepaid expenses and other assets		(3,792)		(4,180)
		(3,991)		(4,592)
Investing activities
Purchase of property, plant and equipment		(12,878)		(12,909)
Additions of intangible assets		(1,074)		(4,948)
Additions of long-term financial assets		(7,788)		(1,852)
		(21,740)		(19,709)
Financing activities
Increase in obligations under finance leases		24,458		11,745
Increase in obligations other than finance leases		1,074		12,144
Issuance of shares		199		412
		25,731		24,301
c)   Interest paid and received and income taxes paid are classified within operating activities and are as follows for the years ended September 30:
	2014		2013
	$		$
Interest paid		103,127		104,981
Interest received		903		3,550
Income taxes paid		182,531		131,552

113

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

28. Segmented information

The following presents information on the Company’s operations based on its current management structure managed through seven operating segments which are based on the geographic delivery model, namely: United States of America (“U.S.”); Nordics, Southern Europe and South America (“NSESA”); Canada; France (including Luxembourg and Morocco); United Kingdom (“U.K.”); Central and Eastern Europe (primarily the Netherlands and Germany) (“CEE”); the Asia Pacific (including Australia, India, Philippines and the Middle east).

											Year ended September 30, 2014
	U.S.		NSESA		Canada		France		U.K.		CEE		Asia Pacific		Total
	$		$		$		$		$		$		$		$
Segment revenue		2,664,876		2,090,240		1,638,320		1,333,792		1,283,847		1,063,533		425,084		10,499,692
Earnings before integration- related costs, finance costs, finance income and income tax expense1		303,515		195,400		361,136		155,695		164,977		107,977		68,159		1,356,859
Integration-related costs																(127,341)
Finance costs																(101,278)
Finance income																2,010
Earnings before income taxes																1,130,250

¹  Total amortization and depreciation of $443,047,000 included in the U.S., NSESA, Canada, France, U.K., CEE and Asia Pacific operating segments was $114,106,000, $81,793,000, $84,403,000, $34,575,000, $75,853,000, $29,314,000 and $23,003,000, respectively for the year ended September 30, 2014.

											Year ended September 30, 2013
	U.S.		NSESA		Canada		France		U.K.		CEE		Asia Pacific		Total
	$		$		$		$		$		$		$		$
Segment revenue		2,512,530		2,010,693		1,685,723		1,273,604		1,158,520		1,003,950		439,604		10,084,624
Earnings before integration- related costs, finance costs, finance income and income tax expense1		283,690		139,418		320,306		109,760		102,820		67,341		52,295		1,075,630
Integration-related costs																(338,439)
Finance costs																(113,931)
Finance income																4,362
Earnings before income taxes																627,622

¹  Total amortization and depreciation of $426,086,000 included in the U.S., NSESA, Canada, France, U.K., CEE and Asia Pacific operating segments was $103,520,000, $78,095,000, $99,899,000, $30,855,000, $52,417,000, $34,899,000 and $26,401,000, respectively for the year ended September 30, 2013.

The accounting policies of each operating segment are the same as those described in the summary of significant accounting policies (Note 3). Intersegment revenue is priced as if the revenue was from third parties.

114

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

28. Segmented information (continued)

GEOGRAPHIC INFORMATION

The following table provides information for PP&E, contract costs and intangible assets based on their location:

	As at September 30, 2014	As at September 30, 2013
	$	$
U.S.	296,587	288,307
Canada	254,240	289,248
U.K.	240,455	210,089
France	101,477	125,056
Sweden	98,496	96,608
Finland	58,245	66,408
Germany	56,958	55,786
Netherlands	44,454	50,016
Rest of the world	122,582	142,262
	1,273,494	1,323,780

The following table provides revenue information based on the client’s location:

	2014	2013
	$	$
U.S.	2,803,326	2,650,540
Canada	1,614,511	1,670,190
U.K.	1,391,943	1,271,405
France	1,309,568	1,257,473
Sweden	913,110	909,977
Finland	665,845	571,682
Netherlands	527,010	507,638
Germany	384,765	353,967
Rest of the world	889,614	891,752
	10,499,692	10,084,624

INFORMATION ABOUT SERVICES

The following table provides revenue information based on services provided by the Company:

	2014	2013
	$	$
Outsourcing
IT Services	4,342,370	4,474,203
BPS	1,118,117	1,143,069
Systems integration and consulting	5,039,205	4,467,352
	10,499,692	10,084,624

MAJOR CLIENT INFORMATION

Contracts with the U.S. federal government and its various agencies accounted for $1,404,093,000 (13.4%) of revenues included within the U.S. segment for the year ended September 30, 2014 ($1,392,286,000 (13.8%) for the year ended September 30, 2013).

115

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

29. Related party transactions

a) Transactions with subsidiaries

Balances and transactions between the Company and its subsidiaries have been eliminated on consolidation. The Company owns 100% of the equity interests of its principal subsidiaries.

The Company’s principal subsidiaries whose revenues, based on the geographic delivery model, represent more than 3% of the consolidated revenues are as follows:

Name of subsidiary	Country of incorporation
Conseillers en gestion et informatique CGI Inc.	Canada
CGI Information Systems and Management Consultants Inc.	Canada
CGI Technologies and Solutions Inc.	United States
Stanley Associates, Inc.	United States
CGI Federal Inc.	United States
CGI Information Systems and Management Consultants Private Limited	India
CGI France SAS	France
CGI Nederland BV	Netherlands
CGI (Germany) GmbH & Co KG	Germany
CGI Suomi Oy	Finland
CGI Sverige AB	Sweden
CGI IT UK Limited	United Kingdom

b) Compensation of key management personnel

Compensation of key management personnel, defined as the Board of Directors and the Executive Vice-President and Chief Financial Officer, was as follows:

	2014		2013
	$		$
Short-term employee benefits		4,972		8,940
Share-based payments		15,609		13,715

116

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

30. Commitments, contingencies and guarantees

a) Commitments

At September 30, 2014, the Company is committed under the terms of operating leases with various expiration dates up to 2023, primarily for the rental of premises and computer equipment used in outsourcing contracts, in the aggregate amount of approximately $1,413,682,000. The future minimum lease payments under non-cancellable operating leases are due as follows:

	$
Less than one year		336,370
Between one and two years		273,707
Between two and five years		576,091
Beyond five years		227,514

The majority of the lease agreements are renewable at the end of the lease period at market rates. The lease expenditure charged to the earnings, during the year was $306,428,000 ($326,140,000 in 2013), net of sublease income of $26,128,000 ($25,851,000 in 2013). As at September 30, 2014, the total future minimum sublease payments expected to be received under non-cancellable sublease were $100,745,000 ($110,823,000 as at September 30, 2013).

The Company entered into long-term service and other agreements representing a total commitment of $190,083,000. Minimum payments under these agreements are due as follows:

	$
Less than one year		74,291
Between one and two years		62,372
Between two and five years		53,420
Beyond five years		—

b) Contingencies

From time to time, the Company is involved in legal proceedings, audits, claims and litigation which primarily relate to tax exposure, contractual disputes and employee claims arising in the ordinary course of its business. Certain of these matters seek damages in significant amounts and will ultimately be resolved when one or more future events occur or fail to occur. Although the outcome of such matters is not predictable with assurance, the Company has no reason to believe that the disposition of any such current matter could reasonably be expected to have a materially adverse impact on the Company’s financial position, results of operations or the ability to carry on any of its business activities. Claims for which there is a probable unfavourable outcome are recorded in provisions (Note 13).

In addition, the Company is engaged to provide services under contracts with the U.S. Government. The contracts are subject to extensive legal and regulatory requirements and, from time to time, agencies of the U.S. Government investigate whether the Company’s operations are being conducted in accordance with these requirements. Generally, the Government has the right to change the scope of, or terminate, these projects at its convenience. The termination or reduction in the scope, of a major government project could have a materially adverse effect on the results of operations and financial condition of the Company.

117

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

30. Commitments, contingencies and guarantees (continued)

c) Guarantees

Sale of assets and business divestitures

In connection with the sale of assets and business divestitures, the Company may be required to pay counterparties for costs and losses incurred as the result of breaches in representations and warranties, intellectual property right infringement and litigation against counterparties. While some of the agreements specify a maximum potential exposure of approximately $10,411,000 in total, 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. No amount has been accrued in the consolidated balance sheets relating to this type of indemnification as at September 30, 2014. The Company does not expect to incur any potential payment in connection with these guarantees that could have a materially adverse effect on its consolidated financial statements.

Other transactions

In the normal course of business, the Company may provide certain clients, principally governmental entities, with bid and performance bonds. In general, the Company would only be liable for the amount of the bid bonds if the Company refuses to perform the project once the bid is awarded. The Company would also be liable for the performance bonds in the event of default in the performance of its obligations. As at September 30, 2014, the Company provided for a total of $55,911,000 of these bonds. To the best of its knowledge, the Company is in compliance with its performance obligations under all service contracts for which there is a performance or bid bond, and the ultimate liability, if any, incurred in connection with these guarantees would not have a materially adverse effect on the Company’s consolidated results of operations or financial condition.

Moreover, the Company has letters of credit for a total of $85,959,000 in addition to the letters of credit covered by the unsecured committed revolving credit facility (Note 14). These guarantees are required in some of the Company’s contracts with customers.

118

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

31. Financial instruments

FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The following table presents financial liabilities measured at amortized cost categorized using the fair value hierarchy:

			As at September 30, 2014				As at September 30, 2013
	Level		Carrying amount		Fair value		Carrying amount		Fair value
			$		$		$		$
Financial liabilities for which fair value is disclosed
Other liabilities
Senior U.S. and euro unsecured notes		Level 2		1,476,537		1,528,724		475,787		510,667
Unsecured committed revolving credit facility		Level 2		—		—		254,818		254,162
Unsecured committed term loan credit facility		Level 2		1,001,752		1,005,792		1,974,490		1,984,773
Other long-term debt		Level 2		22,036		20,276		14,081		12,269
				2,500,325		2,554,792		2,719,176		2,761,871
The following table presents financial assets and liabilities measured at fair value categorized using the fair value hierarchy:
	Level		As at September 30, 2014				As at September 30, 2013
					$				$
Financial assets
Financial assets at fair value through earnings
Cash and cash equivalents		Level 2				535,715				106,199
Deferred compensation plan assets		Level 1				31,151				24,752
						566,866				130,951
Derivative financial instruments designated as hedging instruments
Current derivative financial instruments		Level 2				9,397				1,344
Long-term derivative financial instruments		Level 2				14,834				2,518
						24,231				3,862
Available for sale
Long-term bonds included in funds held for clients		Level 2				198,177				187,816
Long-term investments		Level 2				30,689				20,333
						228,866				208,149
Financial liabilities
Derivative financial instruments designated as hedging instruments
Current derivative financial instruments		Level 2				4,588				6,882
Long-term derivative financial instruments		Level 2				149,074				157,110
						153,662				163,992

There have been no transfers between Level 1 and Level 2 for the years ended September 30, 2014 and 2013.

119

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

31. Financial instruments (continued)

FAIR VALUE MEASUREMENTS (CONTINUED)

The following table summarizes the fair value of outstanding derivative financial instruments:

			As at September		As at September
	Recorded in derivative financial instruments		30, 2014		30, 2013
			$		$
Hedges on net investments in foreign operations
$968,800 cross-currency swaps in euro designated as a hedging instrument of the Company’s net investment in European operations ($1,153,700 as at September 30, 2013)		Long-term liabilities		136,203		137,795
Cash flow hedges on future revenue
U.S.$32,000 foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the U.S. dollar and the Canadian dollar (U.S. $56,800 as at September 30, 2013)		Current assets		—		1,078
		Long-term assets		—		300
		Current liabilities		1,651		—
		Long-term liabilities		605		—
U.S.$75,216 foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the U.S. dollar and the Indian rupee (U.S.$94,436 as at September 30, 2013)		Current assets		1,226		—
		Long-term assets		1,586		—
		Current liabilities		1,963		3,705
		Long-term liabilities		1,153		4,079
$94,600 foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the Canadian dollar and the Indian rupee ($142,528 as at September 30, 2013)		Current assets		4,276		266
		Long-term assets		5,937		838
		Current liabilities		475		2,605
		Long-term liabilities		45		1,549
Kr142,600 foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the Swedish krona and the Indian rupee (kr nil as at September 30, 2013)		Current assets		1		—
		Current liabilities		16		—
		Long-term liabilities		32		—
€121,100 foreign currency forward contracts to hedge the variability in the expected foreign currency rate between the euro and the British pound (€nil as at September 30, 2013)		Current assets		3,894		—
		Long-term assets		7,311		—
€15,000 foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the euro and the Swedish krona (€31,000 as at September 30, 2013)		Current liabilities		483		11
		Long-term liabilities		183		52
€nil foreign currency forward contracts to hedge the variability in the expected foreign currency exchange rate between the euro and the Moroccan dirham (€17,000 as at September 30, 2013)		Long-term assets		—		26
		Current liabilities		—		149
		Long-term liabilities		—		54
Cash flow hedges on unsecured committed term loan credit facility
$484,400 interest rate swaps floating-to-fixed ($1,234,400 as at September 30, 2013)		Long-term assets		—		1,354
		Current liabilities		—		412
		Long-term liabilities		943		537
Fair value hedges on Senior U.S. unsecured notes
U.S.$250,000 interest rate swaps fixed-to-floating (U.S. $250,000 as at September 30, 2013)		Long-term liabilities		9,910		13,044

120

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

31. Financial instruments (continued)

FAIR VALUE MEASUREMENTS (CONTINUED)

Valuation techniques used to value financial instruments are as follows:

- The fair value of Senior U.S. and euro unsecured notes, the unsecured committed revolving credit facility, the unsecured committed term loan credit facility and the other long-term debt is estimated by discounting expected cash flows at rates currently offered to the Company for debts of the same remaining maturities and conditions;

- The fair value of long-term bonds included in funds held for clients and in long-term investments is determined by discounting the future cash flows using observable inputs, such as interest rate yield curves or credit spreads, or according to similar transactions on an arm’s-length basis;

- The fair value of foreign currency forward contracts is determined using forward exchange rates at the end of the reporting period;

- The fair value of cross-currency swaps and interest rate swaps is determined based on market data (primarily yield curves, exchange rates and interest rates) to calculate the present value of all estimated flows.

As at September 30, 2014, there were no changes in valuation techniques.

The Company expects that approximately $4,928,000 of the accumulated net unrealized gain on derivative financial instruments designated as cash flow hedges as at September 30, 2014 will be reclassified in the consolidated statements of earnings in the next 12 months.

During the year ended September 30, 2014, the Company’s hedging relationships were effective.

MARKET RISK

Market risk incorporates a range of risks. Movements in risk factors, such as interest rate risk and currency risk, affect the fair values of financial assets and liabilities.

Interest rate risk

The Company is exposed to interest rate risk on a portion of its long-term debt (Note 14) and holds interest rate swaps that mitigate this risk on the unsecured committed term loan credit facility. Under the interest rate swaps, the Company receives a variable rate of interest and pays interest at a fixed rate on the notional amount.

The Company also has interest rate swaps whereby the Company receives a fixed rate of interest and pays interest at a variable rate on the notional amount of its Senior U.S. unsecured notes. These swaps are being used to hedge the exposure to changes in the fair value of the debt.

The Company analyzes its interest rate risk exposure on an ongoing basis using various scenarios to simulate refinancing or the renewal of existing positions. Based on these scenarios, a change in the interest rate of 1% would not have had a significant impact on net earnings and comprehensive income.

Currency risk

The Company operates internationally and is exposed to risk from changes in foreign currency exchange rates. The Company mitigates this risk principally through foreign currency denominated debt and use of derivative financial instruments. The Company enters into foreign currency forward contracts to hedge forecasted cash flows or contractual cash flows in currencies other than the functional currency of its subsidiaries. The Company has entered into foreign currency forward contracts to hedge the variability in various foreign currency exchange rates on future U.S. dollar, Canadian dollar, euro and Swedish krona revenues.

The Company hedges a portion of the translation of the Company’s net investments in its U.S. and European operations into Canadian dollar with unsecured committed revolving credit facility, Senior U.S. and euro unsecured notes.

121

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

31. Financial instruments (continued)

MARKET RISK (CONTINUED)

The Company also hedges a portion of the translation of the Company’s net investments in its European operations with fixed-to-fixed and floating-to-floating cross-currency swaps. These swaps convert Canadian dollar based fixed and variable interest payments to euro based fixed and variable interest payments associated with the notional amount. During the year ended September 30, 2014, the Company settled a floating-to-floating cross-currency swap for a net amount of $28,924,000. The loss on settlement was recognized in other comprehensive income and will be transferred to earnings when the net investment is disposed of.

During the year ended September 30, 2014, the Company entered into a foreign currency forward contract to hedge the net investment in its U.S. operations. The foreign currency forward contract was subsequently settled for an amount of $8,792,000. The loss on settlement was recognized in other comprehensive income and will be transferred to earnings when the net investment is disposed of.

Hedging relationships are designated and documented at inception and quarterly effectiveness assessments are performed during the year.

In addition, to mitigate foreign exchange risk arising from transactions denominated in currencies other than the Company’s functional currency, assets and liabilities not denominated in the functional currencies are hedged economically. During the year ended September 30, 2013, a fair value gain on the cross-currency swap amounted to $21,325,000 and was offsetting a translation exchange loss on the unsecured committed term loan credit facility of $21,600,000. A fair value loss of $6,992,000 on the foreign currency forward contracts was also offsetting a translation exchange gain. The gains and losses on the economic hedges and the hedged instruments were recorded in foreign exchange gain in the consolidated statements of earnings. As at September 30, 2013, these contracts were terminated, and no such transactions occurred for the year ended September 30, 2014.

The Company is mainly exposed to fluctuations in the Swedish krona, U.S. dollar, the euro and the British pound. The following table details the Company’s sensitivity to a 10% strengthening of the Swedish krona, U.S. dollar, the euro and the British pound foreign currency rates on net earnings and comprehensive income against the Canadian dollar. The sensitivity analysis on net earnings presents the impact of foreign currency denominated financial instruments and adjusts their translation at period end for a 10% strengthening in foreign currency rates. The sensitivity analysis on other comprehensive income presents the impact of a 10% strengthening in foreign currency rates on the fair value of foreign currency forward contracts designated as cash flow hedges and on net investment hedges.

							2014									2013
	Swedish krona impact		U.S. dollar impact		euro impact		British pound impact			Swedish krona impact		U.S. dollar impact		euro impact		British pound impact
(Decrease) increase in net earnings		(402)		(1,178)		7,787		(73	)		11,548		6,682		5,921		55
Decrease in other comprehensive income		(2,171)		(149,474)		(143,468)		—			—		(71,751)		(150,066)		—

122

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

31. Financial instruments (continued)

LIQUIDITY RISK

Liquidity risk is the risk that the Company is not able to meet its financial obligations as they fall due or can do so only at excessive cost. The Company’s activities are financed through a combination of the cash flows from operations, borrowing under existing credit facilities, the issuance of debt and the issuance of equity. One of management’s primary goals is to maintain an optimal level of liquidity through the active management of the assets and liabilities as well as the cash flows.

The following table summarizes the carrying amount and the contractual maturities of both the interest and principal portion of significant financial liabilities. All amounts contractually denominated in foreign currency are presented in Canadian dollar equivalent amounts using the period-end spot rate.

As at September 30, 2014	Carrying amount		Contractual cash flows		Less than one   year		Between one and two years		Between two and five years		Beyond five years
	$		$		$		$		$		$
Non-derivative financial liabilities
Accounts payable and accrued liabilities		1,060,380		1,060,380		1,060,380		—		—		—
Accrued compensation		583,979		583,879		583,879		—		—		—
Senior U.S. & euro unsecured notes		1,476,537		1,912,490		58,900		58,900		571,595		1,223,095
Unsecured committed term loan credit facility		1,001,752		1,051,603		27,732		1,023,871		—		—
Obligations other than finance leases		117,680		124,475		42,838		36,394		45,243		—
Obligations under finance leases		61,698		64,397		33,813		21,323		9,261		—
Other long-term debt		22,036		22,036		8,286		3,726		3,562		6,462
Clients’ funds obligations		292,257		292,257		292,257		—		—		—
Derivative financial liabilities
Cash flow hedges on future revenue		(17,625)
Outflow				6,959		4,731		2,113		115		—
(Inflow)				(26,041)		(9,658)		(9,415)		(6,968)		—
Cross-currency swaps		136,203
Outflow				1,140,662		21,686		1,118,976		—		—
(Inflow)				(1,023,136)		(32,566)		(990,570)		—		—
Interest rate swaps		10,853
Outflow				848,249		16,687		498,726		28,697		304,139
(Inflow)				(879,626)		(20,053)		(502,440)		(41,950)		(315,183)
		4,745,750		5,178,584		2,088,912		1,261,604		609,555		1,218,513

123

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

31. Financial instruments (continued)

LIQUIDITY RISK (CONTINUED)

As at September 30, 2013	Carrying amount		Contractual cash flows		Less than one   year		Between one and two years		Between two and five years		Beyond five years
	$		$		$		$		$		$
Non-derivative financial liabilities
Accounts payable and accrued liabilities		1,119,034		1,119,034		1,119,034		—		—		—
Accrued compensation		713,933		713,933		713,933		—		—		—
Senior U.S. unsecured notes		475,787		643,324		22,308		22,308		149,547		449,161
Unsecured committed revolving credit facility		254,818		273,935		6,000		6,000		261,935		—
Unsecured committed term loan credit facility		1,974,490		2,105,910		544,955		536,547		1,024,408		—
Obligations other than finance leases		79,446		84,392		21,940		24,861		37,449		142
Obligations under finance leases		67,928		71,200		23,870		24,459		22,470		401
Other long-term debt		14,081		14,081		5,023		1,129		2,972		4,957
Clients’ funds obligations		220,279		220,279		220,279		—		—		—
Derivative financial liabilities
Cash flow hedges on future revenue		9,696
Outflow				13,523		6,740		4,679		2,104		—
(Inflow)				(2,746)		(1,367)		(631)		(748)		—
Cross-currency swaps		137,795
Outflow				1,356,654		25,153		231,178		1,100,323		—
(Inflow)				(1,248,720)		(37,835)		(220,777)		(990,108)		—
Interest rate swaps		12,639
Outflow				1,596,637		474,184		318,714		515,635		288,104
(Inflow)				(1,625,755)		(475,879)		(321,066)		(526,778)		(302,032)
		5,079,926		5,335,681		2,668,338		627,401		1,599,209		440,733

As at September 30, 2014, the Company holds cash and cash equivalents, short-term investments and long-term investments of $566,404,000 ($126,601,000 as at September 30, 2013). The Company also has available $1,463,280,000 in unsecured committed revolving credit facility ($1,210,630,000 as at September 30, 2013). The funds held for clients of $295,754,000 ($222,469,000 as at September 30, 2013) fully cover the clients’ funds obligations. As at September 30, 2014, accounts receivable amount to $1,036,068,000 ($1,205,625,000 as at September 30, 2013). Given the Company’s available liquid resources as compared to the timing of the payments of liabilities, management assesses the Company’s liquidity risk to be low.

124

FISCAL 2014 RESULTS

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

31. Financial instruments (continued)

CREDIT RISK

The Company takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, short-term investments, accounts receivable and long-term investments. The maximum exposure of credit risk is generally represented by the carrying amount of these items reported on the consolidated balance sheets.

Cash equivalents consist mainly of highly liquid investments, such as money market funds and term deposits, as well as bankers’ acceptances and bearer deposit notes issued by major banks (Note 4). The Company has deposited its cash and cash equivalents with reputable financial institutions, from which management believes the risk of loss to be remote.

The Company is exposed to credit risk in connection with short-term investments, long-term investments through the possible inability of borrowers to meet the terms of their obligations. The Company mitigates this risk by investing primarily in high credit quality corporate and government bonds with a credit rating of A or higher.

The Company has accounts receivable derived from clients engaged in various industries including governmental agencies, finance, telecommunications, manufacturing and utilities that are not concentrated in any specific geographic area. These specific industries may be affected by economic factors that may impact accounts receivable. However, management does not believe that the Company is subject to any significant credit risk in view of the Company’s large and diversified client base. Overall, management does not believe that any single industry or geographic region represents a significant credit risk to the Company. The following table sets forth details of the age of accounts receivable that are past due:

	2014		2013
		$		$
Not past due		716,435		814,054
Past due 1-30 days		86,796		109,942
Past due 31-60 days		29,133		43,909
Past due 61-90 days		15,012		32,309
Past due more than 90 days		30,982		21,022
		878,358		1,021,236
Allowance for doubtful accounts		(4,892)		(2,246)
		873,466		1,018,990

The carrying amount of accounts receivable is reduced by an allowance account and the amount of the loss is recognized in the consolidated statements of earnings within costs of services, selling and administrative. When a receivable balance is considered uncollectible, it is written off against the allowance for doubtful accounts. Subsequent recoveries of amounts previously written off are credited against costs of services, selling and administrative in the consolidated statements of earnings.

125

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

For the years ended September 30, 2014 and 2013

(tabular amounts only are in thousands of Canadian dollars, except per share data)

32. Capital risk management

The Company is exposed to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives for growth. The main objectives of the Company’s risk management process are to ensure that risks are properly identified and that the capital base is adequate in relation to these risks.

The Company manages its capital to ensure that there are adequate capital resources while maximizing the return to shareholders through the optimization of the debt and equity balance. As at September 30, 2014, total managed capital was $8,234,832 ($7,048,848 as at September 30, 2013). Managed capital consists of long-term debt, including the current portion (Note 14), cash and cash equivalents (Note 4), short-term investments, long-term investments (Note 11) and shareholders’ equity. The basis for the Company’s capital structure is dependent on the Company’s expected business growth and changes in the business environment. When capital needs have been specified, the Company’s management proposes capital transactions for the approval of the Company’s Audit and Risk Management Committee and Board of Directors. The capital risk policy remains unchanged from prior periods.

The Company monitors its capital by reviewing various financial metrics, including the following:

- Debt/Capitalization

- Net Debt/Capitalization

- Debt/EBITDA

Debt represents long-term debt, including the current portion. Net debt, capitalization and EBITDA are additional measures. Net debt represents debt (including the impact of the fair value of derivative financial instruments) less cash and cash equivalents, short-term investments and long-term investments. Capitalization is shareholders’ equity plus debt. EBITDA is calculated as earnings from continuing operations before income taxes, interest expense on long-term debt, depreciation, amortization and integration-related costs. The Company believes that the results of the current internal ratios are consistent with its capital management objectives.

The Company is subject to external covenants on its Senior U.S. and euro unsecured notes and unsecured committed term loan credit facility. The ratios are as follows:

- A leverage ratio, which is the ratio of total debt to EBITDA for the four most recent quarters¹.

- An interest and rent coverage ratio, which is the ratio of the EBITDAR for the four most recent quarters to the total interest expense and the operating rentals in the same periods. EBITDAR, a non-GAAP measure, is calculated as EBITDA before rent expense¹.

- In the case of the Senior U.S. and euro unsecured notes, a minimum net worth is required, whereby shareholders’ equity, excluding foreign exchange translation adjustments included in accumulated other comprehensive income, cannot be less than a specified threshold.

These ratios are calculated on a consolidated basis.

The Company is in compliance with these covenants and monitors them on an ongoing basis. The ratios are also reviewed quarterly by the Company’s Audit and Risk Management Committee. The Company is not subject to any other externally imposed capital requirements.

¹  In the event of an acquisition, the available historical financial information of the acquired Company will be used in the computation of the ratios.

126

FISCAL 2014 RESULTS

Shareholder information

Shareholder information listing

IPO: 1986

Toronto Stock Exchange, April 1992: GIB.A

New York Stock Exchange, October 1998: GIB

Number of shares outstanding as of September 30, 2014:

279,311,564 Class A subordinate shares

33,272,767 Class B shares

High/low of share price from October 1, 2013

to September 30, 2014:

	TSX (CDN$)		NYSE (U.S.$)
High:		41.47		39.47
Low:		32.71		29.40

The certifications by CGI’s Chief Executive Officer and Chief Financial Officer concerning the quality of the Company’s public disclosure in accordance with the requirements of National Instrument 52-109 are filed with securities regulators in Canada on SEDAR (sedar.com); similar certifications pursuant to Rule 13a-14 of the U.S. Exchange Act of 1934 and Section 302 of the Sarbanes-Oxley Act of 2002 are included as exhibits to our Form 40-F filed with the US Securities and Exchange Commission on EDGAR (sec.gov); and the certification required by Section 303A.12 of the NYSE Listed Company Manual is filed annually with the New York Stock Exchange. CGI’s corporate governance practices do not differ in any significant way from those required of domestic companies under New York Stock Exchange listing standards and are set out in the in the report of the Corporate Governance Committee contained in the Management Proxy Circular, which is filed with Canadian and U.S. securities authorities and is available on SEDAR and EDGAR, respectively, as well as on CGI’s website (cgi.com).

Auditors

Ernst & Young LLP

Transfer agent

Computershare Trust Company of Canada

100 University Avenue, 9th Floor

Toronto, Ontario M5J 2Y1

Telephone: 1 800 564-6253

www.investorcentre.com/service

Investor relations

For further information about the Company, additional copies of this report or other financial information, please contact:

CGI Group Inc.

Investor Relations

Email: ir@cgi.com

Twitter: CGI_IR

Web: cgi.com/investors

1350 René-Lévesque Blvd West

Montréal, Québec H3G 1T4

Canada

Tel.: 514-841-3200

Annual general meeting of shareholders

Wednesday, January 28, 2015 at 11:00 a.m.

Le Ritz-Carlton Montréal

Oval Room

1228 Sherbrooke Street West

Montréal, Québec H3G 1H6

Canada

A live webcast of the Annual General Meeting will be available via cgi.com/investors. Complete instructions for viewing the webcast will be available on CGI’s website. To vote by phone or by using the Internet, please refer to the instructions provided in the CGI Management Proxy Circular.

The online version of CGI’s annual report is available at cgi.com/investors.

Le rapport annuel 2014 de CGI est aussi publié en français et disponible sur cgi.com/investisseurs.

127

Consolidated Financial Statements)

[This page intentionally left blank]

128

Founded in 1976, CGI is a global IT and business process services provider delivering high-quality business consulting, systems integration and managed services. With 68,000 professionals in 40 countries, CGI has an industry-leading track record of delivering 95% of projects on time and within budget, aligning our teams with clients’ business strategies to achieve top-to-bottom line results.
cgi.com
© 2014 CGI Group Inc.

EX-99.2

EXHIBIT 99.2

Notice of Annual General Meeting

of Shareholders

To be held in Montreal, Quebec, Canada

on Wednesday, January 28, 2015

at 11:00 a.m.

at the

Ritz Carlton Hotel

Oval Room

1228 Sherbrooke Street West

Montreal, Quebec

Canada

Record Date: Friday, December 12, 2014

Proxy cut-off date and time:

11:00 a.m. Montreal Time on Tuesday, January 27, 2015

Letter to Shareholders

&

MANAGEMENT PROXY CIRCULAR

Dated December 12, 2014

These securityholder materials are being sent to both registered and non-registered owners of the securities. If you are a non-registered owner, and the issuer or its agent has sent these materials directly to you, your name and address and information about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf.

By choosing to send these materials to you directly, the issuer (and not the intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions.

TABLE OF CONTENTS

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS	iv
Record Date to Determine Shareholders Eligible to Vote and Attend the Meeting	iv
LETTER TO SHAREHOLDERS	v
Annual General Meeting and Proxy Voting	vi
MANAGEMENT PROXY CIRCULAR	1
NOTICE AND ACCESS	1
PROXIES	1
Solicitation of Proxies	1
Appointment and Revocation of Proxies	2
Record Date	2
Voting by Registered Shareholders	2
Voting by Non-Registered Shareholders	3
VOTING SHARES AND PRINCIPAL HOLDERS OF VOTING SHARES	3
Class A Subordinate Voting Shares and Class B Shares	3
First Preferred Shares	5
Second Preferred Shares	5
Principal Holders of Class A Subordinate Voting Shares and Class B Shares	6
BUSINESS TO BE TRANSACTED AT THE MEETING	7
NOMINEES FOR ELECTION AS DIRECTORS	9
COMMITTEE REPORTS	17
REPORT OF THE HUMAN RESOURCES COMMITTEE	17
Executive Compensation Discussion and Analysis	17
Executive Compensation Policy	17
The Human Resources Committee of the Board of Directors	17
Executive Compensation Related Fees	19
Compensation Policy and Process for the 2014 Fiscal Year	19
Composition of Reference Groups	19
Executive Compensation Components	20
Compensation Awarded to the Named Executive Officers in Fiscal 2014	27
Performance Graph	28
Compensation of Named Executive Officers	29
Net Total Compensation Table	29

ii

Summary Compensation Table	30
Key Features of CGI’s Long Term Incentive Plans	31
Share Option Plan	31
Equity Compensation Plan Information as of September 30, 2014	34
Performance Share Unit Plan	34
COMPENSATION OF DIRECTORS	35
Board of Directors and Standing Committee Fees	35
Directors’ Compensation Table	36
Stock Options and Deferred Stock Units Granted to Directors	36
Stock Options Held by Directors	37
INDEBTEDNESS OF DIRECTORS AND NAMED EXECUTIVE OFFICERS	38
REPORT OF THE CORPORATE GOVERNANCE COMMITTEE	39
Corporate Governance Practices	39
CGI’s Shareholders	39
Majority Voting Policy	39
Mandate, Structure and Composition of the CGI Board of Directors	40
Role and Responsibilities of the Executive Chairman and of the CEO	41
Role and Responsibilities of the Lead Director and Standing Committee Chairs	42
Criteria for Tenure on the CGI Board of Directors	42
Nomination Process for the Board of Directors	48
Board of Directors Participation in Strategic Planning	48
Guidelines on Disclosure of Information	49
Directors’ Compensation	49
Codes of Ethics and Business Conduct	49
Relationship with Shareholders and Decisions Requiring their Consent	50
REPORT OF THE AUDIT AND RISK MANAGEMENT COMMITTEE	52
External Auditors’ Independence	52
Auditor Independence Policy	52
Annual External Auditor Assessment	54
Fees Billed by the External Auditors	54
Related Party Transactions	54
OTHER BUSINESS TO BE TRANSACTED AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS	55
ADDITIONAL INFORMATION	55
APPROVAL BY THE DIRECTORS	55

iii  

APPENDIX A	56
Stock Options and Share-Based Awards Held by Named Executive Officers	56
APPENDIX B	58
Stock Options and Share-Based Awards Held by Directors	58
APPENDIX C	64
Shareholder Proposals	64
Proposal Number One – Advisory Vote on the Compensation of Senior Executives	64
Proposal Number Two – Information on Director Qualifications	65
Proposal Number Three – Abolition of Stock Options for Directors	66
Proposal Number Four – Abolition of Stock Options	66

iv

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

Montreal, Quebec, December 12, 2014

Notice is hereby given that an Annual General Meeting of Shareholders (the “Meeting”) of CGI GROUP INC. (“CGI” or the “Company”) will be held at the Ritz Carlton Hotel in the Oval Room, 1228 Sherbrooke Street West, in Montreal, Quebec, Canada, on Wednesday, January 28, 2015, at 11:00 a.m. (Montreal time) for the following purposes:

1) to receive the report of the directors, together with the consolidated balance sheet and statements of earnings, comprehensive income, changes in equity and cash flows, and the auditors’ report for the fiscal year ended September 30, 2014;

2) to elect directors;

3) to appoint auditors and authorize the Audit and Risk Management Committee to fix their remuneration;

4) to consider shareholder Proposal Number One – Advisory Vote on the Compensation of Senior Executives – attached as Appendix C; and

5) to transact such other business as may properly come before the Meeting or any adjournment thereof.

The Meeting will be broadcast live on the Company’s web site at www.cgi.com. The webcast will also be archived afterwards.

CGI has opted to use the Notice and Access rules adopted by Canadian securities regulators to reduce the volume of paper in the Meeting materials distributed for the Annual General Meeting of Shareholders. Instead of receiving the enclosed Management Proxy Circular with the form of proxy or voting instruction form, shareholders received a Notice of Meeting with instructions for accessing the remaining Meeting materials online. This Management Proxy Circular and other relevant materials are available via the internet at www.envisionreports.com/gib2014 or on the Canadian Securities Administrators’ site at www.sedar.com.

Proxies submitted by mail, phone or internet must be received by Computershare Investor Services Inc. by 11:00 a.m., Montreal time, on Tuesday, January 27, 2015. Alternatively, shareholders who miss the phone and internet proxy return deadline may still submit a paper proxy which must be received by the Corporate Secretary of the Company prior to the Meeting or any adjournment thereof.

    By order of the Board of Directors,

    André Imbeau

    Founder, Vice-Chairman of the Board

    and Corporate Secretary

We wish to have as many shares as possible represented and voted at the Meeting, and for this reason, if you are unable to attend the Meeting in person, we would kindly ask you to (i) complete and return the form of proxy or voting instruction form in the postage prepaid envelope provided for that purpose, (ii) vote by phone, or (iii) vote using the internet. Instructions on how to vote by phone or by using the internet are provided in the Management Proxy Circular.

Record Date to Determine Shareholders Eligible to Vote and Attend the Meeting

Only persons shown on the register of shareholders at the close of business on Friday, December 12, 2014, or their proxy holders, will be entitled to attend the Meeting and vote. The register of shareholders is kept by CGI’s transfer agent, Computershare Investor Services Inc.

v

LETTER TO SHAREHOLDERS

Dear fellow shareholders,

At CGI we are totally committed to providing high-value services to our clients. Our results speak for themselves. We deliver 95% of our projects on time and on budget whereas statistics show that, overall, 18% of IT projects fail, 74% experience schedule overruns, and 59% exceed budgeted costs.¹

We achieve our goal by applying best practices and management tools that we have developed over the years in a methodical and consistent way. These are contained in our Management Foundation, which is a set of key elements that define and guide the management of the Company. It includes management frameworks for our three stakeholders: our customers, our shareholders and our employees, whom we call members. Each of our frameworks requires, among other key processes, that we measure the satisfaction levels of each group so as to ensure that we continuously improve our service delivery capabilities. Their input allows us to continually strive to meet or exceed their expectations and always maintain a consistent balance among their respective interests.

The development of an ownership mentality among our members is one of the keys to our success. Our members have traditionally made up one of the largest shareholder groups in the Company and continue to represent a very significant presence among our shareholders. At the present time, 70% of our members participate in the CGI Share Purchase Plan. In that way, our members become owners in every sense of the word and therefore reap the benefits of owning a customer-focused company whose interests are closely aligned with those of its customers, its shareholders, and its members.

Our success begins and ends with client satisfaction. The components of our Management Foundation contribute to the excellent client satisfaction scores we earn. Our unique approach ensures both quality and consistency of execution in all our operations, and this has allowed us to achieve ISO 9001 certification for approximately 97% of our operations.

The market for our services remains strong, and our sustained growth means that we are better placed than at any time in our history to provide services to our clients with truly global reach. Our client proximity model together with our sharp focus on clearly delineated vertical markets means that we develop a fundamental understanding of our clients’ needs. In addition, we have centres strategically located to optimize delivery to our clients, so that while we operate globally, we remain singularly focused on interacting with our clients locally.

Our client focus begins in our local offices and extends throughout the business all the way to our board room. Our directors are selected for their expertise in our vertical markets and in our geographic segments, as well as for their financial literacy and business acumen. The composition of our Board of Directors is yet another key ingredient in CGI’s recipe for continued success.

As you learn more about the Company you will come to appreciate that CGI’s foundation is rock solid and that we have a robust and stable platform for continued growth. The scope of our operations, the enduring quality of our governance structures, and our well-defined business processes have been designed for exceptional financial strength and sustainable long-term success.

We encourage you to read our 2014 annual audited consolidated financial statements, Management’s Discussion and Analysis, and Management Proxy Circular in order to become better acquainted with CGI. We are confident that, as you come to know us, you will appreciate the strength of our commitment to our three stakeholders including you, our shareholders. CGI was built to last.

1 Standish Group Report 2012; www.standishgroup.com

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Annual General Meeting and Proxy Voting

On behalf of CGI’s Board of Directors, management and members, we invite you to attend the Annual General Meeting of Shareholders that will be held at the Ritz-Carlton Hotel, in the Oval Room, 1228 Sherbrooke Street West, Montreal, Quebec, Canada, on Wednesday, January 28, 2015, at 11:00 a.m. (Montreal time).

The items of business are described in this Notice of Annual General Meeting of Shareholders and Management Proxy Circular.

At the Annual General Meeting of Shareholders, you will have the opportunity to hear CGI’s senior leadership discuss the highlights of our performance in 2014. You will also hear about our plans for the future and will have the opportunity to ask any questions you may have about your Company.

If you are unable to attend the meeting we encourage you to exercise the power of your proxy by voting your shares by mail, by phone or by using the internet as outlined in the enclosed Management Proxy Circular.

Yours sincerely,

Serge Godin	Thomas P. d’Aquino
Founder and Executive	Lead Director
Chairman of the Board

MANAGEMENT PROXY CIRCULAR

This Management Proxy Circular is provided in relation to the solicitation of proxies by the management of CGI GROUP INC. (the “Company” or “CGI”) for use at the Annual General Meeting of Shareholders (the “Meeting”) of the Company which will be held on Wednesday, January 28, 2015, and at any adjournment thereof. Unless otherwise indicated, the information provided in this Management Proxy Circular that relates to financial information is provided as of September 30, 2014, all other information is provided as of December 12, 2014, and all currency amounts are shown in Canadian dollars.

NOTICE AND ACCESS

CGI has opted to use the new Notice and Access rules adopted by Canadian securities regulators to reduce the volume of paper in the materials distributed for the Annual General Meeting of Shareholders. Instead of receiving this Management Proxy Circular with the form of proxy or voting instruction form, shareholders received a Notice of Meeting with instructions for accessing the remaining materials online. CGI sent the Notice of Meeting and proxy form directly to registered shareholders, and the Notice of Meeting and voting instruction form directly to non-objecting beneficial owners. CGI intends to pay for intermediaries to deliver the Notice of Meeting, voting instruction form and other materials to objecting beneficial owners.

This Management Proxy Circular and other relevant materials are available via the internet at www.envisionreports.com/gib2014 or on the Canadian Securities Administrators’ site at www.sedar.com.

If you would like to receive a paper copy of the current materials by mail, you must request one. There is no charge to you for requesting a copy. Registered shareholders and non-objecting beneficial shareholders may call toll free at 1-866-962-0498 within North America or +1 (514) 982-8716 outside North America and enter the control number as indicated on the Notice of Meeting to request a paper copy of the materials for the Meeting. Objecting beneficial shareholders may request a paper copy of the materials by calling Broadridge Investor Communication Solutions, Canada toll-free at 1-877-907-7643.

To ensure you receive the materials in advance of the voting deadline and Meeting date, all requests must be received not later than January 14, 2015. If you do request the current materials, please note that another Voting Instruction Form or Proxy Form will not be sent; please retain the one received with the Notice of Meeting for voting purposes.

To obtain paper copies of the materials after the Meeting date, please contact CGI’s Investor Relations department as follows:

Investor Relations

CGI Group Inc.

1350 René-Lévesque Blvd. West

15th Floor

Montreal, Quebec

Canada

H3G 1T4

Tel.: (514) 841-3200

PROXIES

Solicitation of Proxies

The solicitation of proxies will be made primarily by mail for registered and beneficial shareholders and by e-mail and e-delivery for participants in the Company’s Share Purchase Plan. Proxies may also be solicited personally by e-mail or by telephone by members of the Company at minimal cost. The Company does not expect to pay any compensation for the solicitation of proxies, but will pay brokers and other persons holding shares for other reasonable expenses for sending proxy materials to beneficial owners in order to obtain voting instructions. The Company has not retained the services of any third party to solicit proxies. Should it decide to do so, the fees payable to the proxy solicitor are not expected to exceed $50,000. The Company will bear all expenses in connection with the solicitation of proxies.

The persons whose appointment to act under the form of proxy solicited by the management of the Company are all directors of the Company.

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In order to be voted at the Meeting, a proxy must be received by the Corporate Secretary of the Company prior to the Meeting or any adjournment thereof.

The persons whose names are printed on the form of proxy will vote all the shares in respect of which they are appointed to act in accordance with the instructions given on the form of proxy. In the absence of a specified choice in relation to any matter to be voted on at the Meeting, or if more than one choice is indicated, the shares represented by the form of proxy will be voted:

FOR the election as directors of the fourteen persons nominated in this Management Proxy Circular;

FOR the appointment of Ernst & Young LLP as auditors; and

AGAINST Proposal Number One – Advisory Vote on the Compensation of Senior Executives.

Every proxy given to any person in the form of proxy that accompanies the Notice of Meeting will confer discretionary authority with respect to amendments or variations to the items of business identified in the Notice of Meeting and with respect to any other matters that may properly come before the Meeting.

Appointment and Revocation of Proxies

Every shareholder has the right to appoint a person to act on his or her behalf at the Meeting other than the persons whose names are printed in the form of proxy that accompanies the Notice of Meeting. To exercise this right, the shareholder should insert the nominee’s name in the space provided for that purpose in the form of proxy or prepare another proxy in proper form appointing the nominee. The paper form of proxy or internet voting are the only voting options for shareholders who wish to appoint a person as proxy other than the nominees named on the form of proxy.

A proxy may be revoked at any time by the person giving it to the extent that it has not yet been exercised. A proxy may be revoked by filing a written notice with the Corporate Secretary of the Company. The powers of the proxy holders may also be revoked if the shareholder attends the Meeting in person and so requests.

Record Date

Only persons shown on the register of shareholders at the close of business on Friday, December 12, 2014, or their proxy holders, will be entitled to attend the Meeting and vote. The register of holders of Class A subordinate voting shares is kept by CGI’s transfer agent, Computershare Investor Services Inc.

Voting by Registered Shareholders

Registered shareholders, rather than returning the form of proxy by mail or hand delivery, may vote by phone or by using the internet. Proxies submitted by mail, phone or internet must be received by Computershare Investor Services Inc. by 11:00 a.m., Montreal time, on Tuesday, January 27, 2015. Alternatively, shareholders who miss the phone and internet proxy return deadline may still submit a paper proxy which must be received by the Corporate Secretary of the Company prior to the Meeting or any adjournment thereof.

Telephone Voting

If a shareholder wishes to vote by phone, a touch-tone phone must be used to transmit voting preferences to a toll free number. Shareholders must follow the instructions of the voice-response system and refer to the form of proxy they received in the mail which provides the toll free number, the holder account number and the proxy control number which are located on the front side of the proxy form.

Internet Voting

If a shareholder elects to vote using the internet, the shareholder must access the following web site: www.investorvote.com. Shareholders must follow the instructions that appear on the screen and refer to the form of proxy they received in the mail which provides the holder account number and the proxy control number which are located on the front side of the proxy form.

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Voting by Non-Registered Shareholders

Non-registered shareholders or “beneficial shareholders” are holders whose shares are held on their behalf through a ‘‘nominee’’ such as a bank, a trust company, a securities broker or other financial institution. Most of CGI’s shareholders hold their shares in this way. Non-registered or beneficial shareholders must seek instructions from their nominees as to how to complete their voting instruction form if they wish to vote their shares themselves. Non-registered or beneficial shareholders who received or who were given access to this Management Proxy Circular in a mailing from their nominee must adhere to the voting instructions provided to them by their nominee.

Since CGI’s registrar and transfer agent, Computershare Investor Services Inc., may not have a complete record of the names of the Company’s non-registered shareholders, the transfer agent may not have knowledge of a non-registered shareholder’s right to vote, unless the nominee has appointed the non-registered shareholder as proxyholder. Non-registered shareholders who wish to vote in person at the Meeting must insert their own name in the space provided on the voting instruction form, and adhere to the signing and return instructions provided by their nominee. By doing so, non-registered shareholders are instructing their nominee to appoint them as proxyholder.

VOTING SHARES AND PRINCIPAL HOLDERS OF VOTING SHARES

The Company’s authorized share capital consists of an unlimited number of First Preferred Shares (“First Preferred Shares”), issuable in series, an unlimited number of Second Preferred Shares (“Second Preferred Shares”), issuable in series, an unlimited number of Class A subordinate voting shares (“Class A subordinate voting shares”) and an unlimited number of Class B shares (multiple voting) (“Class B shares”), all without par value, of which, as of December 12, 2014, 280,336,500 Class A subordinate voting shares and 33,272,767 Class B shares were issued and outstanding.

The following summary of the material features of the Company’s authorized share capital is given subject to the detailed provisions of its articles of incorporation.

Class A Subordinate Voting Shares and Class B Shares

Voting Rights

The holders of Class A subordinate voting shares are entitled to one vote per share and the holders of Class B shares are entitled to ten votes per share. As of December 12, 2014, 45.7% and 54.3% of the aggregate voting rights are attached to the outstanding Class A subordinate voting shares and Class B shares, respectively.

Subdivision or Consolidation

The Class A subordinate voting shares or Class B shares may not be subdivided or consolidated unless simultaneously the Class B shares or the Class A subordinate voting shares, as the case may be, are subdivided or consolidated in the same manner and in such an event, the rights, privileges, restrictions and conditions then attaching to the Class A subordinate voting shares and Class B shares shall also attach to the Class A subordinate voting shares and Class B shares as subdivided or consolidated.

Rights upon Liquidation

Upon liquidation or dissolution of the Company or any other distribution of its assets among its shareholders for the purposes of winding up its affairs, all the assets of the Company available for payment or distribution to the holders of Class A subordinate voting shares and holders of Class B shares will be paid or distributed equally, share for share.

Conversion Rights of Class A Subordinate Voting Shares in Specific Circumstances

Subject to what is hereinafter set out, if a take-over bid or exchange bid or an issuer bid, other than an exempt bid (as defined in the articles of incorporation of the Company), for the Class B shares is made to the holders of Class B shares without being made simultaneously and on the same terms and conditions to the holders of Class A subordinate voting shares, each Class A subordinate voting share shall become convertible into one Class B share, at the holder’s option, in order to entitle the holder to accept the offer from the date it is made. However, this right of conversion shall be deemed not to come into effect if the offer is not completed by its offeror or if the senior executives and full-time employees of the Company or its subsidiaries and any corporate entity

4

under the control of one or more of such senior executives, as owners, as a group, of more than 50% of the outstanding Class B shares, do not accept the offer.

The articles of incorporation of the Company contain a complete description of the types of bids giving rise to the rights of conversion, provide certain procedures to be followed to perform the conversion and stipulate that upon such a bid, the Company or the transfer agent will communicate in writing to the holders of Class A subordinate voting shares full details as to the bid and the manner of exercising the right of conversion.

Conversion of Class B Shares

Each Class B share may, from time to time, at the holder’s option, be converted into one Class A subordinate voting share.

Issue of Class B Shares

The Company’s articles of incorporation provide for pre-emptive rights in favour of holders of Class B shares. Therefore, the Company may not issue Class A subordinate voting shares or securities convertible into Class A subordinate voting shares without offering, in the manner determined by the Board of Directors, to each holder of Class B shares, pro rata to the number of Class B shares it holds, the right to subscribe concurrently with the issue of Class A subordinate voting shares or of securities convertible into Class A subordinate voting shares, as the case may be, an aggregate number of Class B shares or securities convertible into Class B shares, as the case may be, sufficient to fully maintain its proportion of voting rights associated with the Class B shares. The consideration to be paid for the issuance of each Class B share or security convertible into Class B shares, as the case may be, shall be equal to the issue price of each Class A subordinate voting share or security convertible into Class A subordinate voting shares then issued.

The pre-emptive rights do not apply in the case of the issuance of Class A subordinate voting shares or securities convertible into Class A subordinate voting shares:

• in payment of stock dividends;

• pursuant to the stock option plans or share purchase plans of the Company;

• further to the conversion of Class B shares into Class A subordinate voting shares pursuant to the articles of incorporation of the Company; or

• further to the exercise of the conversion, exchange or acquisition rights attached to securities convertible into Class A subordinate voting shares.

Any holder of Class B shares may assign its pre-emptive rights to other holders of Class B shares.

Dividends

The Class A subordinate voting shares and Class B shares participate equally, share for share, in any dividend which may be declared, paid or set aside for payment thereon. In fiscal 2014, considering, among other matters, the needs for reinvestment in the Company’s operations, the scope of investment projects, the repayment of the Company’s debt, and the repurchase of outstanding Class A subordinate voting shares under the Company’s Normal Course Issuer Bid, the Board of Directors determined that the Company, in keeping with its long-standing practice, would not pay a dividend. The Board of Directors re-evaluates the Company’s dividend policy annually.

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Amendments

The rights, privileges, conditions and restrictions attaching to the Class A subordinate voting shares or Class B shares may respectively be amended if the amendment is authorized by at least two-thirds of the votes cast at a meeting of holders of Class A subordinate voting shares and Class B shares duly convened for that purpose. However, if the holders of Class A subordinate voting shares as a class or the holders of Class B shares as a class were to be affected in a manner different from that of the other classes of shares, such amendment shall, in addition, be authorized by at least two-thirds of the votes cast at a meeting of holders of shares of the class of shares so affected in a different manner.

Rank

Except as otherwise provided hereinabove, each Class A subordinate voting share and each Class B share carry the same rights, rank equally in all respects and are to be treated by the Company as if they constituted shares of a single class.

Normal Course Issuer Bid

On January 29, 2014, the Board of Directors authorized the renewal of a Normal Course Issuer Bid (the “Issuer Bid”) and the purchase of up to 10% of the public float of the Company’s Class A subordinate voting shares as at January 24, 2014. The Issuer Bid enables the Company to purchase on the open market through the facilities of the Toronto Stock Exchange and certain alternative markets up to 21,798,645 Class A subordinate voting shares for cancellation. As at January 24, 2014, there were 276,181,109 Class A subordinate voting shares of the Company outstanding of which approximately 79% were widely held. The Company was authorized to purchase Class A subordinate voting shares under the Issuer Bid commencing on February 11, 2014 and may continue to do so until February 10, 2015, or until such earlier date when the Company completes its purchases or elects to terminate the Issuer Bid. As of December 12, 2014, the Company had not purchased any Class A subordinate voting shares under the Issuer Bid. A copy of the Company’s Notice of Intention to make a Normal Course Issuer Bid may be obtained free of charge from CGI’s Investor Relations department. See the heading Additional Information at the end of this document.

First Preferred Shares

The First Preferred Shares may be issued from time to time in one or more series and the Board of Directors of the Company has the right to determine, by resolution, the designation, rights, privileges, restrictions and conditions attaching to each series. The First Preferred Shares of each series rank equal to the First Preferred Shares of all other series and rank prior to the Second Preferred Shares, the Class A subordinate voting shares and Class B shares with respect to payment of dividends and repayment of capital. The holders of First Preferred Shares are entitled to receive notice of and attend any shareholders’ meetings and are entitled to one vote per share. As of December 12, 2014, no First Preferred Shares were outstanding.

Second Preferred Shares

The Second Preferred Shares may be issued from time to time in one or more series and the Board of Directors has the right to determine, by resolution, the designation, rights, privileges, restrictions and conditions attaching to each series. The Second Preferred Shares of each series rank equal to all other Second Preferred Shares of all other series and rank prior to the Class A subordinate voting shares and Class B shares with respect to payment of dividends and repayment of capital. The Second Preferred Shares are non-voting. As of December 12, 2014, no Second Preferred Shares were outstanding.

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Principal Holders of Class A Subordinate Voting Shares and Class B Shares

As of December 12, 2014, to the knowledge of the directors and executive officers of the Company, the only persons who beneficially owned, directly or indirectly, or exercised control or direction over 10% or more of CGI’s outstanding Class A subordinate voting shares or Class B shares were Serge Godin, André Imbeau, the Caisse de dépôt et placement du Québec (the “Caisse”), and FMR LLC (Fidelity Investments). Their holdings are set out in the tables that follow.

Name	Shares – Class “A”		Shares – Class “B”		Shares – Class “A” and “B”
	Number	%	Number	%	Total % of Equity	Total Number of Votes	Total % of   Vote
Serge Godin	13,124(a)	0.00%			0.00%	13,124	0.00%
			23,007,351(b)	69.15%	7.34%	230,073,510	37.53%
			5,209,156(c)	15.66%	1.66%	52,091,560	8.50%
			360,582(d)	1.08%	0.11%	3,605,820	0.59%
Total	13,124	0.00%	28,577,089	85.89%	9.11%	285,784,014	46.62%

(a)	These shares are owned directly or indirectly by Mr. Godin.
(b)	These shares are owned by Distinction Capital Inc., a company controlled by Mr. Godin.
(c)	These shares are owned by 3727912 Canada Inc., a company controlled by Mr. Godin.
(d)	These shares are owned by 9164-7586 Québec Inc., a company controlled by Mr. Godin.

Name	Shares – Class “A”		Shares – Class “B”		Shares – Class “A” and “B”
	Number	%	Number	%	Total % of Equity	Total Number of Votes	Total % of   Vote
André Imbeau	267,724(a)	0.10%			0.09%	267,724	0.04%
			3,477,071(b)	10.45%	1.11%	34,770,710	5.67%
			798,588(c)	2.40%	0.25%	7,985,880	1.30%
Total	267,724	0.10%	4,275,659	12.85%	1.45%	43,024,314	7.01%

(a)	These shares are owned directly or indirectly by Mr. Imbeau.
(b)	These shares are owned by 9088-0832 Québec Inc., a company controlled by Mr. Imbeau.
(c)	These shares are owned by 9102-7003 Québec Inc., a company controlled by Mr. Imbeau.

CGI’s Investor Relations department regularly surveys the Company’s largest institutional shareholders.

The following table sets out, as at December 12, 2014, the top ten institutional holders of CGI’s Class A subordinate voting shares, based on the shareholder identification data available to the Company.

Name	Shares – Class “A”		Shares – Class “B”		Shares – Class “A” and “B”
	Number	%	Number	%	Total % of Equity	Total Number of Votes	Total % of   Vote
Caisse de dépôt et placement du Québec	58,174,038	20.75%	-	-	18.55%	58,174,038	9.49%
FMR LLC (Fidelity Investments)	30,125,000	10.75%	-	-	9.61%	30,125,000	4.91%
BlackRock Asset Management Canada Limited	12,460,000	4.44%	-	-	3.97%	12,460,000	2.03%
CI Investments Inc.	10,335,000	3.69%	-	-	3.30%	10,335,000	1.69%
Invesco Advisers, Inc.	9,400,000	3.35%	-	-	3.00%	9,400,000	1.53%
1832 Asset Management L.P.	7,403,173	2.64%	-	-	2.36%	7,403,173	1.21%
BMO Capital	6,540,000	2.33%	-	-	2.09%	6,540,000	1.07%

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Name	Shares – Class “A”		Shares – Class “B”		Shares – Class “A” and “B”
	Number	%	Number	%	Total % of Equity	Total Number of Votes	Total % of   Vote
Markets (US)
Fiera Capital Corporation	6,075,000	2.17%	-	-	1.94%	6,075,000	0.99%
TD Securities Inc.	5,679,129	2.03%	-	-	1.81%	5,679,129	0.93%
Connor, Clark & Lunn Investment Management Ltd.	5,640,000	2.01%	-	-	1.80%	5,640,000	0.92%

As of December 12, 2014, the directors and officers of the Company, as a group, beneficially owned, directly or indirectly, or exercised control or direction over, 3,259,457 Class A subordinate voting shares and 33,272,767 Class B shares representing respectively 1.16% of the issued and outstanding Class A subordinate voting shares and 100% of the issued and outstanding Class B shares.

BUSINESS TO BE TRANSACTED AT THE MEETING

The following items of business will be presented to the shareholders at the Meeting:

1.     Presentation of the Annual Audited Consolidated Financial Statements

The annual audited consolidated financial statements for the fiscal year ended September 30, 2014 and the report of the auditors will be placed before the Meeting. The annual audited consolidated financial statements were mailed with the Notice of Meeting to shareholders who requested them. Additional copies of the fiscal 2014 annual audited consolidated financial statements may be obtained from CGI upon request and will be available at the Meeting.

2.     Election of Directors

Fourteen directors are to be elected to hold office until the close of the next Annual General Meeting of Shareholders or until their successor is elected or appointed. Each of the persons presented in this Management Proxy Circular is proposed to be nominated as a director of the Company and each nominee has agreed to serve as a director if elected.

The persons named as proxies in the proxy form intend to cast the votes represented by proxy at the Meeting FOR the election as directors of the fourteen persons nominated in this Management Proxy Circular unless shareholders direct otherwise.

3.     Appointment of Auditors

The Board of Directors recommends that Ernst & Young LLP be appointed as the auditors of the Company to hold office until the next Annual General Meeting of Shareholders or until their successors are appointed. Ernst & Young LLP were first appointed as the Company’s auditors at the Annual General Meeting of Shareholders held on January 27, 2010.

The persons named as proxies in the proxy form intend to cast the votes represented by proxy at the Meeting FOR the appointment of Ernst & Young LLP as auditors and to vote to authorize the Audit and Risk Management Committee to fix the remuneration of the auditors unless shareholders direct otherwise.

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4.     Shareholder Proposals

Four shareholder proposals have been submitted by the Mouvement d’éducation et de défense des actionnaires (“Médac”). Médac is a not for profit company whose registered office is situated at 82 Sherbrooke Street West, in Montreal, Quebec, Canada, H2X 1X3, holding 100 Class A subordinate voting shares that it acquired on February 13, 2014.

The fourth proposal was withdrawn by Médac following discussions with the Company. The three remaining proposals (the “Proposals”) are enclosed below as Appendix C, along with the responses of the CGI Board of Directors. As agreed with Médac, only Proposal Number One – Advisory Vote on the Compensation of Senior Executives – will be presented at the Meeting for a vote by the Company’s shareholders.

The persons named as proxies in the proxy form intend to cast the votes represented by proxy at the Meeting AGAINST the adoption of Proposal Number One – Advisory Vote on the Compensation of Senior Executives – unless shareholders direct otherwise.

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NOMINEES FOR ELECTION AS DIRECTORS

The persons whose names are printed in the form of proxy intend to vote for the election as directors of the proposed nominees whose names are set forth in the following table. Each director elected will hold office until the next Annual General Meeting of Shareholders or until that director’s successor is duly elected or appointed, unless the office is earlier vacated.

The information below lists the name of each candidate proposed by the Board of Directors on the recommendation of the Corporate Governance Committee for election as a director; whether the director has been determined by the Board of Directors to be independent of, or related to, the Company; whether the candidate complies with the Company’s share ownership guideline; the candidate’s age; the principal occupation; the municipality, province or state, and country of residence; the year when the person first became a director; their standing committee memberships; the skills the director brings to the Board of Directors based on the Board of Directors skills matrix; the number of shares of the Company beneficially owned, directly or indirectly, or over which control or direction is exercised; the number of Deferred Stock Units (“DSUs”) of the Company (see the heading Stock Options and Deferred Stock Units Granted to Directors later in this document); the number of stock options of the Company held (see the heading Share Option Plan later in this document); and the number of Performance Share Units (“PSUs”) of the Company held (see the heading Performance Share Unit Plan later in this document); as well as the other companies on whose board of directors the candidate serves.

By filling in the form of proxy, shareholders may vote for all directors or choose to withhold their vote from some or all of the directors proposed for election.

Information relating to shares, DSUs, stock options, and PSUs beneficially owned, or over which control or direction is exercised has been provided by each of the candidates as of December 12, 2014.

Alain Bouchard

Independent director, complies with the share ownership guideline

Age 65

Lorraine, Quebec, Canada

Director since 2013

				Governance Risk and Compliance
Operational Literacy				Financial Literacy			Governance  and Human  Resources
Executive   Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk
ü		Global	Retail and distribution	ü	ü	ü	ü

Member of the Human Resources Committee

Class A subordinate voting shares: 17,500 (*)

Deferred Stock Units: 3,043 (+)

Stock options: 13,902 (‡)

Mr. Bouchard is Founder and Executive Chairman of the Board and a director of Alimentation Couche-Tard Inc., a company listed on the Toronto Stock Exchange that operates more than 13,000 convenience stores in Canada, the United States, Europe and ten other countries worldwide (China, Guam, Honduras, Hong Kong, Indonesia, Japan, Macau, Mexico, Vietnam, the Philippines, and the United Arab Emirates). The company is the largest independent convenience store operator in North America in terms of number of company-operated stores. Mr. Bouchard founded the company in 1980, led its growth, and has more than 45 years of experience in the retail industry.

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Bernard Bourigeaud

Independent director, complies with the share ownership guideline

Age 70

Waterloo, Belgium

Director since 2008

				Governance Risk and Compliance
Operational Literacy				Financial Literacy			Governance  and Human  Resources
Executive   Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk
ü	ü	Global	Multiple vertical markets	ü	Expert	ü	ü

Member of the Human Resources Committee

Class A subordinate voting shares: 10,000 (*)

Deferred Stock Units: 1,497 (+)

Stock options: 18,330 (‡)

Mr. Bourigeaud, a chartered professional accountant, is Chairman of BJB Consulting, a CEO to CEO consultancy business. Until September 2007, Mr. Bourigeaud was Chairman of Atos Origin S.A., a leading global IT services company which he founded through a chain of successful mergers which began in 1991. Prior to that, he spent 11 years at Deloitte, Haskins and Sells where he was the head of the management consulting group. Mr. Bourigeaud holds positions on various boards including the board of advisors of Jefferies International Limited. In December 2011, Mr. Bourigeaud was appointed non-executive Chairman of Oberthur Technologies Holding and non-executive Vice-Chairman of Oberthur Technologies SA. He is also an international operating partner of Advent International and President of CEPS (Centre d’Etude et Prospective Stratégique). Mr. Bourigeaud is an Affiliate Professor at HEC School of Management in Paris and a member of HEC’s International Advisory Board. In 2004, he was appointed Chevalier de la Légion d’Honneur.

Jean Brassard

Independent director, complies with the share ownership guideline

Age 70

Verdun (Nuns’ Island), Quebec, Canada

Director since 1978

				Governance Risk and Compliance
Operational Literacy				Financial Literacy			Governance  and Human  Resources
Executive   Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk
ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü

Member of the Audit and Risk Management Committee

Class A subordinate voting shares: 228,027 (*)

Class B shares: 420,019 (*)

Deferred Stock Units: 13,195 (+)

Stock options: 40,838 (‡)

Mr. Brassard has had an extensive career as an IT professional practitioner and senior manager. He joined the Company in 1978 as a Vice-President and led the development and implementation of major IT projects in all economic sectors served by CGI. He became President and Chief Operating Officer in January 1997 and was Vice-Chairman of the Company’s Board of Directors for 25 years. Mr. Brassard contributed significantly to CGI’s international profitable growth until he retired in 2000.

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Robert Chevrier

Independent director, complies with the share ownership guideline

Age 71

Verdun (Nuns’ Island), Quebec, Canada

Director since 2003

				Governance Risk and Compliance
Operational Literacy				Financial Literacy			Governance  and Human  Resources
Executive   Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk
ü		Global	Retail and distribution	ü	Expert	ü	ü

Chair of the Human Resources Committee

Class A subordinate voting shares: 10,000 (*)

Deferred Stock Units: 34,948 (+)

Stock options: 79,679 (‡)

Mr. Chevrier is President of Roche Management Co. Inc., a holding and investment company. A chartered professional accountant, he was previously Chairman and Chief Executive Officer of Rexel Canada Inc. (formerly Westburne Inc.). Mr. Chevrier is Chair of the Board of Directors of Uni-Select Inc. and Executive Chairman of the Board of Rona Inc.

Dominic D’Alessandro

Independent director, complies with the share ownership guideline

Age 67

Toronto, Ontario, Canada

Director since 2010

				Governance Risk and Compliance
Operational Literacy				Financial Literacy			Governance  and Human  Resources
Executive   Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk
ü		Global	Financial services	ü	Expert	ü	ü

Member of the Human Resources Committee

Class A subordinate voting shares: 10,000 (*)

Deferred Stock Units: 14,865 (+)

Stock options: 44,234 (‡)

Mr. D’Alessandro, a fellow of the Institute of Chartered Accountants, was President and Chief Executive Officer of Manulife Financial Corporation from 1994 until 2009. During his tenure, Manulife undertook a dramatic expansion of its operations and emerged as one of the world’s leading life insurers. In recognition of his achievements, Mr. D’Alessandro was named by his peers Canada’s Outstanding CEO for 2002 and was named Canada’s Most Respected CEO for 2004. He is an Officer of the Order of Canada. Mr. D’Alessandro is also a director of Suncor Energy Inc.

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Paule Doré

Independent director, complies with the share ownership guideline

Age 63

Outremont, Quebec, Canada

Director since 1995

				Governance Risk and Compliance
Operational Literacy				Financial Literacy			Governance  and Human  Resources
Executive   Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk
ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü

Member of the Corporate Governance Committee

Class A subordinate voting shares: 99,774 (*)

Deferred Stock Units: 5,098 (+)

Stock options: 27,142 (‡)

Mrs. Doré joined CGI in 1990 as Vice-President Communications and Human Resources, and was Executive Vice-President and Chief Corporate Officer and Secretary until September of 2006 when she assumed the role of Advisor to the Founder and Executive Chairman, a position she held until her retirement in August of 2009. Mrs. Doré is also a director of Cogeco Inc. and Héroux Devtek Inc.

Richard B. Evans

Independent director, complies with the share ownership guideline

Age 67

San Francisco, California, USA

Director since 2009

				Governance Risk and Compliance
Operational Literacy				Financial Literacy			Governance  and Human  Resources
Executive   Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk
ü		Global	Multiple vertical markets	ü	ü	ü	ü

Member of the Audit and Risk Management Committee

Class A subordinate voting shares: 10,000 (*)

Deferred Stock Units: 16,123 (+)

Stock options: 49,249 (‡)

Prior to his retirement in April 2009, Mr. Evans was Executive Director of London-based Rio Tinto plc and Melbourne-based Rio Tinto Ltd. While with Rio Tinto, he was Chief Executive of Rio Tinto Alcan. Prior to that, he was President and Chief Executive Officer of Alcan Inc. until its acquisition by Rio Tinto in October of 2007. He is now Chairman of the Board of Constellium Inc., and is also a director of Noranda Aluminum Holding Corp. and Tyhee Gold Corp.

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Julie Godin

Director related to CGI, complies with the share ownership guideline

Age 39

Verdun (Nun’s Island), Quebec, Canada

Director since 2013

				Governance Risk and Compliance
Operational Literacy				Financial Literacy
Executive  Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk	Governance  and Human Resources
ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü

Class A subordinate voting shares: 5,851 (*)

Stock options: 154,810 (‡)

Ms. Godin is CGI’s Executive Vice-President, Global Human Resources and Strategic Planning, and is therefore a related director. She has led CGI’s global human resources group since 2009 and the Company’s strategic planning process since 2011. Ms. Godin oversees the development of enterprise-wide human resources policies, programs and processes and their application across all CGI business units around the world, and is also responsible for CGI’s leadership, organizational development and strategic planning initiatives and programs.

Serge Godin

Director related to CGI, complies with the share ownership guideline

Age 65

Westmount, Quebec, Canada

Director since 1976

				Governance Risk and Compliance
Operational Literacy				Financial Literacy
Executive  Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk	Governance  and Human Resources
ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü

Class A subordinate voting shares: 13,124 (*)

Class B shares: 28,577,089 (*)

Stock options: 1,399,005 (‡)

Performance Share Units: 893,187 (§)

As a Co-Founder of CGI, Executive Chairman of the Board and a key member of CGI’s senior leadership team, Serge Godin is a related director. Mr. Godin also owns a majority interest in CGI’s Class B shares (see Principal Holders of Class A Subordinate Voting Shares and Class B Shares earlier in this document). Under Mr. Godin’s leadership, CGI has grown to become the fifth largest independent information technology and business process services firm in the world. Mr. Godin is a member of the Order of Canada and the Ordre national du Québec. In 2008, he was inducted into the Canadian Business Hall of Fame, and, in 2011, he received the Conference Board of Canada’s Honorary Associate Award, the Board’s highest honor. Mr. Godin has been chosen to receive the International Horatio Alger Award in 2015, a prestigious award presented by the Horatio Alger Association of Distinguished Americans to honor individuals who have succeeded in spite of adversity and who encourage young people to pursue their dreams through higher education.

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Timothy J. Hearn

Independent director, complies with the share ownership guideline

Age 70

Calgary, Alberta, Canada

New candidate for election as director

				Governance Risk and Compliance
Operational Literacy				Financial Literacy
Executive  Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk	Governance  and Human Resources
ü		Global	Manufacturing, retail and distribution	ü	ü	ü	ü

Class A subordinate voting shares: 7,500 (*)

Mr. Hearn is Chairman of the consulting, investment management, and philanthropic organization Hearn & Associates, and was, until March 2008, the Chairman and Chief Executive Officer of Imperial Oil Limited. Mr. Hearn has over 40 years’ experience in the oil and gas industry and in the course of his career he held executive leadership positions in Canada and abroad having spent 10 years with Exxon Mobil Corporation heading global businesses while living in the United States, and Asia. He is a past Chairman and an honorary director of the C.D. Howe Institute, and a member of the Joint Public Advisory Committee (JPAC) of the Commission for Environmental Cooperation (CEC). Mr. Hearn is also a director of the Royal Bank of Canada, and ARC Resources Ltd.

André Imbeau

Director related to CGI, complies with the share ownership guideline

Age 65

Beloeil, Quebec, Canada

Director since 1976

				Governance Risk and Compliance
Operational Literacy				Financial Literacy
Executive  Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk	Governance  and Human Resources
ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü

Class A subordinate voting shares: 267,724 (*)

Class B shares: 4,275,659 (*)

Stock options: 117,808 (‡)

Performance Share Units: 7,923 (§)

Mr. Imbeau co-founded CGI in 1976 and was, until July 2006, Executive Vice-President and Chief Financial Officer. He now acts as Founder, Vice-Chairman of the Board and Corporate Secretary, and as Advisor to the Founder and Executive Chairman of the Board, and is therefore a related director. Mr. Imbeau holds an interest in the Company’s Class B shares (see the heading Principal Holders of Class A Subordinate Voting Shares and Class B Shares earlier in this document). His financial and operational expertise and deep understanding of CGI’s operations are important assets to the Company’s Board of Directors.

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Gilles Labbé

Independent director, complies with the share ownership guideline

Age 58

Montreal, Quebec, Canada

Director since 2010

				Governance Risk and Compliance
Operational Literacy				Financial Literacy
Executive  Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk	Governance  and Human Resources
ü	ü	Global	Manufacturing and distribution	ü	Expert	ü	ü

Chair of the Audit and Risk Management Committee

Class A subordinate voting shares: 25,000 (*)

Deferred Stock Units: 11,754 (+)

Stock options: 38,012 (‡)

Mr. Labbé is President and Chief Executive Officer, and a director, of Héroux Devtek Inc., a Canadian company specializing in the design, development, manufacture, repair, and overhaul of landing gear systems and components for the Aerospace market. He has held these positions since June 2000. Prior to the acquisition of Devtek in that year, Mr. Labbé was President and Chief Executive Officer and a director of Héroux Inc. since 1989. A Fellow of the Institute of Chartered Accountants, Mr. Labbé is the recipient of numerous business awards and is also a director of the Aerospace Industries Association of Canada, and Aéro Montreal.

Michael E. Roach

Director related to CGI, complies with the share ownership guideline

Age 62

Westmount, Quebec, Canada

Director since 2006

				Governance Risk and Compliance
Operational Literacy				Financial Literacy
Executive  Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk	Governance  and Human Resources
ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü

Class A subordinate voting shares: 884,798 (*)

Stock options: 1,883,380 (‡)

Performance Share Units: 893,187 (§)

As President and Chief Executive Officer of CGI, Michael E. Roach is a related director. Mr. Roach has served as President and CEO since 2006. Prior to this role, he served as President and Chief Operating Officer, a role he assumed in 2002. Mr. Roach joined CGI in 1998 from a major telecommunications company where he held a number of leadership positions and spearheaded the outsourcing of the company’s IT operations into CGI. He sits on the boards of directors of the Conference Board of Canada and is also a member of the Canadian Council of Chief Executives. Mr. Roach was recognized as “Most Innovative CEO” for 2014 by Canadian Business magazine.

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Joakim Westh

Independent director, complies with the share ownership guideline

Age 53

Stockholm, Sweden

Director since 2013

				Governance Risk and Compliance
Operational Literacy				Financial Literacy
Executive  Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk	Governance  and Human Resources
ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü

Member of the Audit and Risk Management Committee

Stock options: 7,813 (‡)

Mr. Westh is an independent director sitting on the boards of directors of several leading Nordic companies. Until 2009, Mr. Westh was a Senior Vice-President and executive team member at LM Ericsson AB with responsibility for strategy, operational excellence and sourcing. Mr. Westh is well-known as a leading expert in the fields of technology and management, particularly in Scandinavia. He is also a director of Saab Group, Swedish Match AB, and Absolent AB.

(*) Number of shares beneficially owned, or controlled, or directed, directly or indirectly.

(+) For more information concerning DSUs, please refer to the heading Compensation of Directors later in this document.

(‡) For more information concerning stock options, please refer to the headings Share Option Plan and Compensation of Directors later in this document.

(§) For more information concerning PSUs, please refer to the heading Performance Share Unit Plan later in this document.

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COMMITTEE REPORTS

REPORT OF THE HUMAN RESOURCES COMMITTEE

Executive Compensation Discussion and Analysis

Executive Compensation Policy

CGI’s executive compensation policy emphasizes incentive compensation linked to business success to ensure that the financial interests of the Company’s executives are closely aligned with those of shareholders. CGI measures business success on the basis of profit and growth as well as client and member satisfaction.

CGI’s compensation policy is rooted in its fundamental belief that a company with an inspiring dream, uncompromising integrity, a caring human resources philosophy and solid values is better able to attract and respond to the profound aspirations of high-calibre, competent people. These people in turn will deliver high-quality services, in keeping with the Company’s profitability objectives. The growth and profitability generated as a result will allow CGI to continue to offer its shareholders value for their investment.

This belief drives the Company’s compensation programs, which are designed to attract and retain the key talent CGI needs to remain competitive in a challenging market and achieve continued and profitable growth for shareholders.

In keeping with CGI’s compensation policy, the same principles that are used to determine the compensation of the named executive officers (the CEO, the CFO and the three other most highly compensated executive officers of the Company, hereafter referred to as the “Named Executive Officers”) are also applied to all management team members, taking into account the results of their respective business units. In the case of CGI’s senior executives, there is an added emphasis on closely aligning executives’ financial interests with those of shareholders through incentive compensation.

This report outlines the main features of CGI’s executive compensation policy and programs.

The Human Resources Committee of the Board of Directors

The Committee reviews management’s proposals and makes recommendations to the Board of Directors of the Company in relation to the compensation of certain senior executives, including the entitlements under short and long-term incentive and benefit plans and the corporate objectives that the Founder and Executive Chairman of the Board, the President and Chief Executive Officer and other senior executive officers are responsible for meeting. It is similarly responsible for approving and making recommendations in relation to the compensation of the Company’s outside directors and succession plans for senior executive officers.

The Committee is made up of Messrs. Robert Chevrier, Chair of the Committee, Alain Bouchard, Bernard Bourigeaud and Dominic D’Alessandro, all of whom are independent directors. The Committee met four times in fiscal 2014. Mr. Chevrier’s role and responsibilities as Chair of the Committee are described later in this document in the report of the Corporate Governance Committee under the heading Role and Responsibilities of the Lead Director and Standing Committee Chairs.

Each of the members of the Committee has significant experience in the role of chief executive officer that includes ample experience in matters relating to human resources management and executive compensation. Mr. Chevrier was Chairman and Chief Executive Officer of Rexel Canada Inc. (formerly Westburne Inc.), Mr. Bouchard was President and Chief Executive Officer and is now Founder and Executive Chairman of the Board of Alimentation Couche-Tard Inc., Mr. Bourigeaud was Chairman and Chief Executive Officer of Atos Origin S.A., and Mr. D’Alessandro was President and Chief Executive Officer of Manulife Financial Corporation.

The role and responsibilities of the Committee are contained in the Committee’s charter. The Committee’s charter forms part of CGI’s Fundamental Texts and the charter is incorporated by reference in this Management Proxy Circular (see the heading Mandate, Structure and Composition of the CGI Board of Directors later in this document) and is available on CGI’s web site at www.cgi.com. The role and responsibilities of the Committee include:

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(a) Advising the Board of Directors on human resources planning;

(b) Reviewing and advising the Board of Directors on management’s succession plans for executive officers, with special emphasis on the Executive Chairman of the Board and Chief Executive Officer succession;

(c) Reviewing and advising the Board of Directors on CGI’s compensation philosophy and policies, including the remuneration strategy and remuneration policies for the executive officer level as proposed by the Executive Chairman of the Board and the Chief Executive Officer;

(d) Making recommendations to the Board of Directors for the appointment of the Executive Chairman of the Board, the Chief Executive Officer and other executive officers, and the corporate objectives which the Executive Chairman of the Board and such other executive officers, as the case may be, are responsible for meeting, as well as the assessment of the Executive Chairman of the Board and of the Chief Executive Officer against these objectives;

(e) Monitoring of the Executive Chairman of the Board’s performance and providing advice and counsel in the execution of his duties;

(f) Reviewing and advising the Board of Directors on CGI’s overall remuneration plan including the adequacy and form of compensation realistically reflecting the responsibilities and risks of the position for the Executive Chairman of the Board and for the Chief Executive Officer of the Company and, in that regard, considering appropriate information, including information from the Board of Directors with respect to the overall performance of the Executive Chairman of the Board and of the Chief Executive Officer;

(g) Reviewing and advising the Board of Directors on the remuneration for executive officers, annual adjustment to executive salaries, and the design and administration of short and long-term incentive plans, stock options, benefits and perquisites as proposed by the Executive Chairman of the Board and the Chief Executive Officer;

(h) Reviewing and advising the Board of Directors on employment and termination arrangements for senior management;

(i) Making recommendations on the adoption of new, or significant modifications to, pay and benefit plans;

(j) Recommending the appointment of new officers as appropriate;

(k) Reviewing and advising the Board of Directors on significant organizational changes;

(l) Reviewing and approving the Committee’s executive compensation report to be contained in the Company’s annual Management Proxy Circular;

(m) Reviewing and advising the Board of Directors on management development programs for the Company;

(n) Reviewing and advising the Board of Directors on special employment contracts or arrangements with officers of the Company, if any, including any contracts relating to change of control; and

(o) Reviewing and advising the Board of Directors on the remuneration for members of the Board of Directors and its committees, including the adequacy and form of compensation realistically reflecting the responsibilities and risks of the positions, and recommending changes where applicable.

The Committee also performs such other duties as are from time to time assigned to it by the Board of Directors.

The Committee reports to the Board of Directors on its proceedings, the reviews it undertakes, and its recommendations.

In executing its mandate, the Committee retains the services of Towers Watson, the Company’s external human resources consultant. Towers Watson was first retained to provide consulting services in 1995. Towers Watson’s mandate is to:

• Provide the Committee with information on market trends and best practices on executive and director compensation;

• Develop recommendations on the composition of the reference groups of companies used as the basis for determining the compensation of the directors, the Founder and Executive Chairman of the Board, the President and Chief Executive Officer and other senior executive officers of the Company;

• Conduct market research and provide the Committee with data and analysis on compensation practices of reference groups to allow the Company to align its compensation policy with the market as it applies to the directors, the Founder and Executive Chairman of the Board, the President and Chief Executive Officer and other senior executive officers; and

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• Review the design of the annual and long-term incentive programs and provide data and analysis on reference groups’ practices in this area.

To ensure the quality of services provided to the Committee by its external advisor, as well as the external advisor’s independence, the Committee has established the following processes as part of its annual work plan:

• Once a year or as required, each of the external advisors retained by the Committee will provide to the Committee a statement of the services to be provided to the Committee at its request and those to be provided at the request of management for the purpose of enabling the Committee to pre-approve all services to be provided by the external advisor;

• The Committee may request from each external advisor information concerning the advisor’s organizational structure and employees who provide services to the Committee so that the Committee may agree with the advisor on measures to address any real or perceived conflicts of interest that may arise from the services provided by the advisor to the Company at the request of management; and

• The Committee reviews the independence policy annually to ensure that it continues to meet the Committee’s requirements.

Executive Compensation Related Fees

During the years ended September 30, 2014 and 2013, CGI’s external human resources consultant billed the following fees for its services:

Service retained	Fees billed
	2014		2013
Advice in relation to executive compensation and the compensation of directors(a)	$	169,671		$115,622
All other fees(b)	$	451,809		$1,016,323
Total fees billed	$	621,480		$1,131,945

(a)     All fees billed by the human resources consultant for the years ended September 30, 2014 and 2013 were related to recurring work for the Committee.

(b)     The other fees billed by the human resources consultant for the year ended September 30, 2014 were mainly in relation to global rewards, compensation programs, human resources policies, retirement plans and health and group benefit plans. The other fees billed by the human resources consultant for the year ended September 30, 2013 were mainly in relation to global talent and rewards issues and health and group benefits.

Compensation Policy and Process for the 2014 Fiscal Year

Composition of Reference Groups

To determine appropriate compensation levels, the Named Executive Officers’ positions are compared with similar positions within a reference group made up of companies leading their industry. These companies include information technology consulting firms and companies similar to CGI with regard to size, and operational and managerial complexity. The Committee reviews the composition of the reference groups annually.

With 84% of its 2014 revenues generated outside Canada, as well as constant international expansion, CGI must ensure that it offers competitive compensation in the challenging markets in which it operates and recruits high-performing executives. All of the Company’s major competitors are based either in the U.S. or Europe and they compete against CGI both in Canada and internationally.

In response to this market reality, the Committee based Named Executive Officers’ compensation for the year ended September 30, 2014 on the U.S. market for executives based in Canada and the U.S., on the UK market for the executive based in the U.K., and on the Australian market for the executive based in Australia.

The following disclosure relates to the Company’s compensation policy in effect for the fiscal year ended September 30, 2014.

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The selection criteria used to determine the composition of the comparator groups are the following:

• Autonomous and publicly-traded companies;

• Large number of professionals;

• Growing companies;

• High-end IT consulting, systems integration, IT outsourcing and business solutions providers;

• International scope;

• Companies for which IT is very strategic; and

• Participation in the data bank for the U.S., the U.K. or other geographies maintained by Towers Watson, the Company’s external human resources consultant, as the case may be.

Each company in the following table meets at least one of the foregoing criteria:

U.S. Comparator Group: 16 companies

Accenture plc Atos SE Automatic Data Processing, Inc. CACI International Inc. Cap Gemini SA Cognizant Technology Solutions Corporation Computer Sciences Corporation Experian plc Fidelity National Information Services Inc. Fiserv, Inc. Indra Sistemas SA SAIC, Inc. SNC-Lavalin Group Inc. Tata Consultancy Services Limited Unisys Corporation Xerox Corporation

UK Comparator Group: 14 companies

Accenture plc Agilent Technologies Inc Atos SE BT Group plc Cap Gemini SA Cognizant Technology Solutions Corporation Computer Sciences Corporation Groupe Steria SCA Hewlett-Packard Company International Business Machines Corp. Indra Sistemas SA Tieto OYJ Unisys Corporation Verizon Communications Inc.

Australian Comparator Group: 6 companies

ASG Group Limited DWS Limited Oakton Limited	SMS Management & Technology LTD UXC Limited Unidentified(a)
(a)     For confidentiality reasons, this peer company’s name was not disclosed to the Company.

The foregoing comparator groups were used to determine the compensation of the Named Executive Officers for the fiscal year ended September 30, 2014.

Executive Compensation Components

CGI’s total executive compensation is made up of five components: base salary, short-term incentive plan, long-term incentive plan, benefits and perquisites. In keeping with the Company’s values, incentive compensation and share ownership are emphasized to ensure that executives’ interests are aligned with CGI’s profitability and growth objectives, which in turn results in increased value for all shareholders under normal market conditions. CGI’s Named Executive Officers do not participate in any defined benefit pension plans.

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Component	Description	Alignment with Reference Group
Base salary	Annual base salary based on each executive’s responsibilities, competencies and contribution to the Company’s success.	Aligned with median base salary offered in the reference group, while allowing for compensation above the median to recognize an executive’s exceptional and sustained contribution to the Company’s success.
Short-term incentive plan	Annual bonus based on the achievement of business objectives in accordance with CGI’s Profit Participation Plan (details are provided later in this document).	Aligned with median short-term incentives of the reference group, when business objectives are met.
Long-term incentive plan	Grants under the Share Option Plan and awards under the Performance Share Unit Plan based on achievement of business objectives (details are provided later in this document).	Aligned with median total compensation of the reference group, or above the median to recognize an executive’s exceptional performance, when business objectives are met.
Benefits	Group benefits and employer contributions under the Share Purchase Plan.	Aligned with median benefits of the reference group.
Perquisites	Company car and related expenses, tax services, health insurance, and medical exams are the principal perquisites.	Aligned with median perquisites of the reference group.
Total compensation		Aligned with the median of the reference group while allowing for total compensation above the median to recognize an executive’s exceptional performance, when business objectives are met.

The following table shows for each Named Executive Officer the compensation components as a percentage of total compensation, at target levels for the short term and long term incentives, for the year ended September 30, 2014:

Name and title	Base salary	CGI Profit    Participation    Plan	Long-term    incentive	Benefits and    perquisites
Serge Godin Founder and Executive Chairman of the Board	11.69%	23.37%	64.46%	0.48%
Michael E. Roach President and Chief Executive Officer	11.56%	23.12%	63.76%	1.56%
R. David Anderson(a) Executive Vice-President and Chief Financial Officer	18.44%	18.44%	62.29%	0.83%
Timothy W. Gregory President, United Kingdom	39.58%	23.75%	28.35%	8.32%
Colin Holgate President, Asia Pacific	41.01%	20.50%	33.09%	5.40%

              (a)    Mr. Anderson retired from his role as Chief Financial Officer on September 30, 2014.

The Founder and Executive Chairman of the Board and the President and Chief Executive Officer may from time to time exercise their discretion to recommend to the Committee and the Board of Directors that incentive compensation under the Profit Participation Plan, and the performance-based vesting of stock options under the Share Option Plan for Employees, Officers and Directors of CGI Group Inc. and its Subsidiaries (the “Share Option Plan”) and of PSUs under the Performance Share Unit Plan for the Executive Chairman, the Executive Vice-Chairman, the President and Chief Executive Officer and Other Designated Participants of CGI Group Inc.

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(the “PSU Plan”), be adjusted in order to ensure that actual profit participation and vested stock options are equitable and balance the interests of each of the Company’s stakeholders based on the overall performance of the Company and exceptional market conditions.

Base Salary

The base salaries paid to Named Executive Officers are reviewed every year based on each executive’s scope of responsibilities, competencies and contribution to the Company’s success. The objective of CGI’s compensation policy for base salaries is to align them with the median base salary in the reference group, while allowing for compensation to rise above the median in recognition of a particular executive’s exceptional and sustained contribution to the Company’s success. As part of the methodology used for fiscal 2014, Named Executive Officers’ positions were compared with generic positions in the compensation databases for the U.S, the U.K. and Australia maintained by Towers Watson, the Company’s external human resources consultant. When differences in the level and scope of responsibilities for the comparable generic executive position are observed, the value of the generic position is adjusted to ensure that there is an appropriate basis for comparison.

Profit Participation Plan: Annual Bonus

The Named Executive Officers participate in CGI’s Profit Participation Plan, a short-term incentive plan that pays an annual bonus based on achievement of business objectives as approved at the beginning of the fiscal year by the Board of Directors on the recommendation of the Committee. The Profit Participation Plan is designed to provide CGI’s management and members with an incentive to increase the profitability and growth of the Company.

The Committee makes a recommendation to the Board of Directors in relation to the payment of bonuses to the Named Executive Officers under the Profit Participation Plan based on the Company’s achievement of performance objectives.

Individual incentive awards are based on the executive’s target bonus under the Profit Participation Plan and the achievement of objectives. The target bonus varies as a percentage of base salary depending on the executive’s position. The target bonus is then adjusted in accordance with a performance factor that is directly linked to the level of achievement of business objectives set out in the Company’s annual plan. Executive bonus targets are reviewed annually to ensure they remain aligned with the Company’s compensation policy and continue to be competitive with CGI’s applicable reference group.

Performance Factor

The performance factor used to adjust each Named Executive Officer’s target bonus is based on two separate measures: profitability and growth. Achievement of profitability and growth objectives determines the performance factor that is applied to calculate the annual bonus. Such adjustment may result in a reduction or an increase in the bonus. In the latter case, the payout may not exceed two times the target award.

The profitability performance factor is based on the degree of achievement of the net earnings margin objective approved by the Board of Directors as part of the Company’s annual budget and strategic plan. The growth performance factor is based on the degree of achievement of the year-over-year percentage revenue growth objective also approved by the Board of Directors as part of the Company’s annual budget and strategic plan.

We ensure that only factors that are the results of actual management operation activities are taken into account in the application of performance factors for compensation purposes. The performance factors for achievement of results between levels are prorated.

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The performance factors for profitability and growth are determined by applying the following formula.

Profitability		X	Revenue
Net earnings margin	Profitability Performance Factor		Revenue	Revenue Performance Factor
Budgeted margin objectives on a  scale of four levels	0		Budgeted revenue objectives on a  scale of four levels	0
	0.5			1.0
	1.0			1.25
	1.33			1.5

For instance, to determine the payout under the Company’s Profit Participation Plan, the following formula is used:

SALARY times TARGET BONUS times PROFITABILITY PERFORMANCE FACTOR times REVENUE PERFORMANCE FACTOR

The effect of the formula for fiscal 2014 was to place importance on meeting both the growth and the profitability objectives. If either of such key minimum thresholds is not met, no bonus is paid under the plan.

In the case of Presidents of Strategic Business Units, half of their target bonus was based on the formula above while the other half was determined based on the performance of the business units for which they are responsible using the same performance measures.

CGI does not disclose specific performance objectives because it considers that the information would place it at a significant competitive disadvantage if the objectives became known. Disclosing the specific performance objectives that are set as part of the Company’s annual budget and strategic planning process would expose CGI to serious prejudice and negatively impact its competitive advantage. For example, to the extent that the Company’s performance objectives became known, its ability to negotiate accretive business agreements would be significantly impaired, putting incremental pressure on its profit margins. In addition, we believe that disclosing performance objectives would be inconsistent with CGI’s policy of not providing guidance to the market and limiting all other forward-looking information.

Achievement of the performance objectives presents a meaningful challenge for the Company’s management team since the Company consistently sets ambitious goals as part of its annual budget and strategic planning process. The payouts to the Named Executive Officers for fiscal 2014, 2013, and 2012 of compensation that was subject to performance objectives averaged 62.6% of the target compensation at risk, which clearly indicates the difficulty of achieving the performance objectives.

The table below shows the portion of the total compensation at risk that was paid out to the Named Executive Officers for the 2014 fiscal year.

Name and title	Percentage of total     compensation         at risk	Percentage payout for     fiscal 2014(a)
Serge Godin Founder and Executive Chairman of the Board	87.83%	44.80%
Michael E. Roach President and Chief Executive Officer	86.88%	44.80%
R. David Anderson(b) Executive Vice-President and Chief Financial Officer	80.73%	47.10%

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Name and title	Percentage of total     compensation         at risk	Percentage payout for     fiscal 2014(a)
Timothy W. Gregory President, United Kingdom	52.10%	75.73%
Colin Holgate President, Asia Pacific	53.59%	82.24%
(a)     This percentage shows the proportion of the Named Executive Officer’s compensation at risk that was actually earned, based on the achievement of objectives, including the performance-based vesting of the Company’s stock options and, where applicable, PSUs.
(b)     Mr. Anderson retired from his role as Chief Financial Officer on September 30, 2014.

The total aggregate compensation paid to the Named Executive Officers as indicated in the Net Total Compensation Table and in the Summary Compensation Table later in this document, is in keeping with the Company’s compensation policy as described earlier in this document and, overall, the net total compensation was below the median of the reference group at approximately 84% of the median target total compensation of the reference group, resulting from the operation of the pay for performance policy.

The Committee is responsible for ensuring that CGI’s executive compensation policies do not expose the Company to significant risks such as providing incentives for senior executives to engage in business strategies that could yield compensation for the executive while placing the Company in financial jeopardy.

The Committee considers that the Company’s executive compensation policies, particularly those that relate to the portion of compensation for which the achievement of performance measures apply, do not expose the Company to risks that could have a material adverse effect on the Company. The short term and long term incentive performance-based compensation components require that the Company’s profitability objectives be met. Business strategies that impair the Company’s profitability, whether in the short or long term, will not result in payouts to the executive team. Since the measures are based on generally accepted accounting principles (“GAAP”) measures, which in the case of the Company are International Financial Reporting Standards (“IFRS”), the results are subject to the same controls over financial reporting and disclosure controls and procedures that apply to the disclosure of the Company’s financial results. These controls include controls and procedures that are designed to protect against, and provide early warning of, fraud and falsification.

All of the Company’s senior executives and directors are required to prepare and file reports disclosing their trading activities in the Company’s securities, including derivative instruments, and the Company prepares and files the reports on their behalf. The Company therefore monitors all securities transactions by its senior executives and directors and also requires that they pre-clear their transactions with the Company. Although the Company does not have a policy that prevents a senior executive from hedging his or her exposure to a decrease in the value of the Company’s shares, in the event that a senior executive or director intended to hedge their exposure, the matter would be brought to the Company’s attention.

Long-Term Incentive Plans

CGI’s long term incentive plans include the Share Option Plan and the PSU Plan. In line with practices among certain of the Company’s peers, the Company’s compensation policy is to grant, on a case by case basis, either stock options issued under the Share Option Plan or PSUs awarded under the PSU Plan as the long term incentive component of certain of its senior executives’ compensation.

Share Option Plan

CGI’s executives participate in the Share Option Plan. Like the Profit Participation Plan and the PSU Plan, the Share Option Plan is designed to ensure that executives’ interests are closely aligned with those of all shareholders. The Share Option Plan is designed in accordance with the Company’s ownership philosophy.

The Company’s practice is to apply performance-based vesting rules for all stock options granted under the Share Option Plan as part of the Company’s long-term incentive program. CGI’s general grant of stock options is made at the beginning of the fiscal year. The percentage of stock options that become eligible to vest is based on the degree of achievement of profitability and revenue growth objectives. Stock options that do not become eligible to vest are forfeited and cancelled.

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Stock options that have become eligible to vest then vest on a time basis as follows: one-quarter when the fiscal year’s results are approved, one quarter on the second anniversary of the grant, one-quarter on the third anniversary of the grant, and the final quarter on the fourth anniversary of the grant.

See the heading Key Features of CGI’s Long Term Incentive Plans later in this document for a summary of the features of the Share Option Plan.

Stock Options Granted in Fiscal 2014

During fiscal 2014, 127,895 stock options were granted to the Named Executive Officers. The number of stock options granted was determined based on the long-term compensation value required to align the Named Executive Officer’s total compensation with the Company’s compensation policy.

The number of stock options granted is a function of the current year’s compensation objectives and, for that reason, previous grants of stock option based awards are not taken into account when considering the annual grant of incentive stock options.

All the stock options granted as part of the long-term incentive plan for fiscal 2014 were granted for a term of ten years and were eligible to vest based on the achievement of profitability and growth objectives for the year ended September 30, 2014. The details of these grants are shown in the table entitled Stock Options held by Named Executive Officers which appears in Appendix A.

Based on the degree of achievement of profitability and growth objectives of the Company and the Named Executive Officers’ respective Strategic Business Units during fiscal 2014, 80.52% of the stock options granted to two of the Named Executive Officers in respect of the long-term incentive awards for fiscal 2014 became eligible to vest.

Grant Date Fair Value

The grant date fair value for compensation purposes for the fiscal 2014, 2013 and 2012 grants of stock options was determined by applying a Black-Scholes value of $7.35, $4.98 and $5.52 respectively as the grant date fair value for the stock options. The following table sets out the key assumptions and estimates used to determine the stock options’ grant date fair values.

Stock Option Valuation Methods for Compensation Purposes
Assumptions	Black Scholes Pricing Method
	2014	2013	2012
Grant date fair value ($)	7.35	4.98	5.52
Dividend yield (%)	0.00	0.00	0.00
Expected volatility (%)	23.41	23.67	27.63
Risk-free interest rate (%)	1.50	1.29	1.20
Expected life (years)	4.00	4.00	4.75
Exercise Price ($)	34.95	23.89	19.71

The accounting fair value of the stock options is determined in accordance with IFRS 2 using the Black-Scholes stock option pricing model and therefore complies with the requirements under GAAP.

For the three years ended September 30, 2014, 2013 and 2012 the grant date fair value for executive compensation purposes, the grant date fair value for accounting purposes, and the differences in fair values are shown in the following table:

Fiscal Year	Black-Scholes Value for         compensation purposes	Black-Scholes Value for         accounting purposes	Difference
2014	$7.35	$7.98	$0.63
2013	$4.98	$4.98	$0.00
2012	$5.52	$4.67	$0.85

The fair value of the stock option grants presented in the Summary Compensation Table later in this document was based on the fair value estimated immediately prior to the grant date using the Black-Scholes option pricing model. The difference between the values for compensation and accounting purposes results from the

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calculation of the fair value in accordance with GAAP which uses a weighted average exercise price, as well as adjustments to the expected life assumption made subsequent to the grant date for accounting purposes, whereas the fair value for compensation purposes is a one-time measurement based on assumptions made immediately prior to the grant.

Performance Share Unit Plan

The PSU Plan is designed to ensure that executives’ interests are closely aligned with those of all shareholders and is similar in function to the Share Option Plan in that the plan is designed in accordance with the Company’s ownership philosophy.

PSUs have performance-based vesting rules that are the same as those that apply to stock options granted under the Share Option Plan. The PSUs are part of the Company’s long-term incentive program and serve the same purpose as stock options. CGI’s general award of PSUs is made at the beginning of the fiscal year. The percentage of PSUs that become eligible to vest is based on the degree of achievement of the same profitability and revenue growth objectives as for stock options. PSUs that do not become eligible to vest are forfeited and cancelled.

See the heading Key Features of CGI’s Long Term Incentive Plans later in this document for a summary of the features of the PSU Plan.

Performance Share Units Awarded in Fiscal 2014

During fiscal 2014, 619,888 PSUs were awarded to certain of the Named Executive Officers. The number of PSUs granted was determined based on the long-term compensation value required to align the Named Executive Officer’s total compensation with the Company’s compensation policy.

All PSUs awarded as part of the long-term incentive plan for 2014 were granted for a term of three years following the calendar year in which they became eligible to vest, and were eligible to vest based on the achievement of profitability and growth objectives for the year ended September 30, 2014. The details of these awards are shown in the Net Total Compensation Table and in the Summary Compensation Table later in this document.

Based on the degree of achievement of profitability and growth objectives during fiscal 2014, 61.05% of the PSUs awarded to the Named Executive Officers in respect of the long-term incentive awards for fiscal 2014 became eligible to vest.

A table showing all outstanding unvested PSU awards held by the Company’s Named Executive Officers as at September 30, 2014 as well as the market value of such unvested PSUs is provided in Appendix A.

Award Date Fair Value

The award date fair value for compensation purposes for the fiscal 2014, 2013, and 2012 awards of PSUs was determined by applying a factor of 0.75 to the award date price of the Class A subordinate voting shares underlying the PSUs. This discount method was suggested by Towers Watson, the Company’s external human resources consultant, because in its databanks of companies that make up the Company’s comparator groups, such performance discount methods are used when performance vesting conditions are required for the PSU unitholder.

The accounting fair value of the PSUs was determined in accordance with IFRS 2 as the market value of the underlying Class A subordinate voting shares on the award date. The stock-based compensation cost related to PSUs recorded in costs of services, selling and administrative expenses for fiscal 2014, 2013, and 2012 takes into account the actual result of the performance-based vesting and amortizes the resulting net PSU value over the four-year vesting period.

For the three years ended September 30, 2014, 2013 and 2012 the award date fair value for executive compensation purposes, the award date fair value for accounting purposes, and the differences in fair values are shown in the following table:

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Fiscal Year	Value for compensation purposes	Value for accounting purposes	Difference
2014	$26.25	$36.15	$9.90
2013	$17.74	$23.65	$5.91
2012	$14.78	$19.71	$4.93

The difference between the value used for compensation purposes disclosed above and that used for accounting purposes results from the fact that for accounting purposes there is no recognition of a performance discount at the date of grant but a recognition of the actual performance vesting condition at the date of the performance vesting.

Incentive Plan Awards – Value Vested or Earned During the Year

Name	Option-based       awards – Value       vested during the       year(a)       ($)	Share-based awards –      Value vested during      the year(b)      ($)	Non-equity incentive plan   compensation – Value earned during  the year ($)
Serge Godin	2,429,819	-	-
Michael E. Roach	2,429,819	-	-
R. David Anderson(c)	990,810	-	-
Timothy W. Gregory	515,894	-	256,369(d)
Colin Holgate	308,863	-	264,855(e)

(a)	The stock options that vested during the 2014 fiscal year were the performance-based stock options granted in the 2011, 2012, and 2013 fiscal years that became eligible to vest and for which the exercise prices were $15.49, $19.71, and $23.65 respectively. One-quarter of the stock options granted for fiscal 2011, and one-quarter of the stock options granted for fiscal 2012 vested on October 1, 2013 when the closing price of the shares was $36.55 and one-quarter of the stock options granted for fiscal 2013 vested on November 13, 2013 when the closing price of the shares was $37.62.
(b)	The share-based awards for fiscal 2014 are PSUs. 61.05%, 95.3%, and 35.6% of the PSUs granted for the 2014, 2013 and 2012 fiscal years respectively became eligible to vest. The participants who are Named Executive Officers elected to defer the acquisition of their PSUs in accordance with the PSU Plan.
(c)	Mr. Anderson retired from his role as Chief Financial Officer on September 30, 2014.
(d)	Mr. Gregory is paid in British pounds sterling. The amounts shown are in Canadian dollars converted on the basis of the average exchange rate used to present expense information in the Company’s annual audited consolidated financial statements which was CAD$1.7953, CAD$1.5846, and CAD$1.5878, for each British pound in 2014, 2013 and 2012 respectively. Please refer to the disclosure concerning the foreign exchange rates used for financial reporting purposes on page 15 of the Management’s Discussion and Analysis for the fiscal year ended September 30, 2014 under the heading Foreign Exchange.
(e)	Mr. Holgate is paid in Australian dollars. The amounts shown are in Canadian dollars converted on the basis of the average exchange rate used to present expense information in the Company’s annual audited consolidated financial statements which was CAD$0.9971, CAD$1.0105, and CAD$1.0368, for each Australian dollar in 2014, 2013 and 2012 respectively. Please refer to the disclosure concerning the foreign exchange rates used for financial reporting purposes on page 15 of the Management’s Discussion and Analysis for the fiscal year ended September 30, 2014 under the heading Foreign Exchange.

Compensation Awarded to the Named Executive Officers in Fiscal 2014

The compensation paid to the Named Executive Officers for the fiscal year ended September 30, 2014 was determined according to the Company’s executive compensation policy described earlier in this document that applies to all executives. All compensation was paid in accordance with the policy.

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Performance Graph

The following graph compares the annual variations in the total cumulative return on CGI’s Class A subordinate voting shares with the total cumulative return of the S&P/TSX and NASDAQ stock indexes for the past five fiscal years of the Company.

CGI’s approach to compensation, as discussed earlier in this document under the heading Executive Compensation Policy, is designed to promote long-term growth and profitability, with a strong focus on share ownership and profit-sharing. CGI’s management team, including the Named Executive Officers, are compensated on the basis of metrics that the Company considers to be fundamental, namely the Company’s growth and profitability, rather than on the basis of factors tied to the performance of the Company’s shares in the market.

For the two-year period ended on September 30, 2011, the compensation paid to the CEO and CFO increased, reflecting CGI’s need to adjust compensation levels for the Company’s Named Executive Officers to reflect global markets in order to ensure CGI’s ability to attract and retain the highly qualified staff it needs to compete effectively. For fiscal 2012, the total compensation paid to the CEO and CFO year over year declined by approximately 50% reflecting the operation of CGI’s compensation policy based on financial performance. For fiscal 2013, the increase in compensation to the Named Executive Officers resulted from an increase in base salaries commensurate with the increased scope of responsibilities and accountabilities as the size of the Company more than doubled as a result of the acquisition of Logica plc, as well as payouts under the short term and long term incentive programs that are based on the degree of achievement of performance objectives. For fiscal 2014, the reduction in total compensation for the Founder and Executive Chairman, the President and Chief Executive Officer and the Executive Vice-President and Chief Financial Officer reflects the operation of the pay-for-performance aspect of the Company’s executive compensation policy with an average incentive-based compensation payout of approximately 46% of the compensation at risk. The payout for the remaining two Named Executive Officers averaged approximately 79% of the compensation at risk which reflects the performance of the respective Strategic Business Units they lead.

Since 1986, the year the Company became publicly listed, the price of CGI’s Class A subordinate voting shares increased on average by approximately 18% per year. Over the five-year period ended on September 30, 2014, the price of the Company’s shares increased by more than 300%. The percentage increase in the share price is extremely significant when compared to the evolution of the total compensation of the Executive Chairman, CEO, and CFO over the same period.

As mentioned earlier in this document, the compensation awarded to the Named Executive Officers is well in line with the Company’s compensation policy. The resulting net aggregate compensation paid to the Named Executive Officers for fiscal 2014 is below the median of the reference group at approximately 84% of the median target total compensation of the reference group, resulting from the operation of the pay-for-performance policy.

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Compensation of Named Executive Officers

The Net Total Compensation Table and the Summary Compensation Table that follow show detailed information on actual net total compensation, and total compensation for regulatory purposes, respectively, for Serge Godin, Founder and Executive Chairman of the Board, Michael E. Roach, President and Chief Executive Officer, R. David Anderson, Executive Vice-President and Chief Financial Officer, who retired from his role as Chief Financial Officer on September 30, 2014, as well as for the two other Named Executive Officers for services rendered during the fiscal years ended September 30, 2014, 2013, and 2012.

The regulatory requirements that determine the content of the Summary Compensation Table can result in a substantial overstatement of the compensation awarded to CGI’s Named Executive Officers. The overstatement arises because the regulation requires that for stock options and share based compensation amounts, the amount of compensation shown must be the grant date fair value. In the case of CGI’s compensation policies, all long term incentive compensation, including all stock option awards and share based compensation awards, is performance-based. To the extent that stock options and PSUs awarded for the fiscal year in question fail to become eligible to vest as a result of the degree of achievement of performance objectives, the stock options and PSUs are forfeited and cancelled.

The following table shows the amount by which the combined value of the stock option grant and of the PSU award must be reduced to reflect the net compensation amount attributable to the long-term incentive component of compensation disclosed in the Summary Compensation Table later in this document. The table is necessary to communicate the true, actual total compensation earned by each of the Named Executive Officers.

Net Total Compensation Table

Name and Principal Position as     at September 30, 2014	Year	Summary Compensation Table Total compensation ($)	Performance- based vesting reduction(a) ($)		Net total compensation ($)
Serge Godin	2014	8,524,359		(2,793,103)	5,731,256
Founder and	2013	8,818,066		(264,575)	8,553,491
Executive Chairman of the Board	2012	4,760,013		(2,069,121)	2,690,892
Michael E. Roach	2014	8,645,303		(2,793,103)	5,852,200
President and Chief	2013	8,937,585		(264,575)	8,373,010
Executive Officer	2012	5,762,246		(2,951,178)	2,811,068
R. David Anderson(b) Executive Vice- President and Chief Financial Officer	2014	3,228,734		(960,514)	2,268,220
	2013	4,231,824		(101,799)	4,130,025
	2012	2,317,488		(1,066,232)	1,251,256
Timothy W. Gregory President, United Kingdom	2014	1,432,270		(85,152)	1,347,118
	2013	1,470,692		(5,788)	1,464,904
	2012	774,329		(238,022)	536,307
Colin Holgate President, Asia Pacific	2014	1,472,953		(97,932)	1,375,021
	2013	1,509,339		(4,536)	1,504,803
	2012	174,607		-	174,607

(a)

The vesting eligibility conditions for the stock options granted and PSUs awarded as part of the long-term incentive for the fiscal year ended September 30, 2014 were based solely on the Company’s performance. On the basis of the degree of achievement of profitability and growth objectives, 61.05% of the PSUs and stock options became eligible to vest. In the case of Messrs. Gregory and Holgate, the performance-based vesting of their stock options also depended on the performance results at the Strategic Business Unit level, resulting in 80.52% of their stock options becoming eligible to vest. Stock options and PSUs that did not become eligible to vest based on such performance were forfeited and cancelled. The reduction amount shown is the dollar value required to be deducted from the fair value of the grants and awards to reflect accurately the net value of the stock option grant and PSU award for the Named Executive Officer as part of his total compensation for the 2014 fiscal year.

(b)

Mr.   Anderson retired from his role as Chief Financial Officer on September 30, 2014.

The following table shows the compensation paid to the Company’s Named Executive Officers for regulatory purposes.

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As noted above, securities regulations require that for stock options and share based compensation amounts, the amount of compensation to be disclosed must be the grant date fair value. In the case of CGI’s compensation policies, all long term incentive compensation, including all stock option awards and share based compensation awards are performance-based. A number of stock options and PSUs awarded to Named Executive Officers do not become eligible to vest as a result of the degree of achievement of performance objectives, and those stock options and PSUs are then forfeited and cancelled. To that extent the total compensation amount shown in this table overstates the true total compensation received by the Company’s Named Executive Officers.

Summary Compensation Table

Name and Principal  Position as at September 30,  2014	Year	Salary ($)	Share- based awards(a) ($)	Option- based awards(b) ($)	Non-equity incentive plan compensa- tion Annual incentive plans ($)	Pension value ($)	All other compen- sation(c) ($)	Total compen- sation ($)
Serge Godin  Founder and  Executive Chairman of the Board	2014	1,300,000	7,170,443	-	-	-	53,916		8,524,359
	2013	1,250,000	5,925,372	-	1,585,132	-	57,562		8,818,066
	2012	995,900	3,700,518	-	-	-	46,688		4,760,013
Michael E. Roach  President and Chief  Executive Officer	2014	1,300,000	7,170,443	-	-	-	174,859(d)		8,645,303
	2013	1,250,000	5,925,372	-	1,585,132	-	177,081(d)		8,937,585
	2012	1,005,806	4,582,575	-	-	-	173,865(d)		5,762,246
R. David Anderson(e)  Executive Vice-  President and Chief  Financial Officer	2014	730,000	2,465,828	-	-	-	32,907		3,228,734
	2013	720,000	2,444,281	-	1,032,518	-	35,025		4,231,824
	2012	600,836	1,655,640	-	-	-	36,733		2,317,488
Timothy W. Gregory(f)  President, United Kingdom	2014	610,402	-	437,207	256,369	-	128,292		1,432,270
	2013	530,841	-	494,180	358,993	-	86,678		1,470,692
	2012	396,950	-	331,199	-	-	46,180		774,329
Colin Holgate(g)  President, Asia Pacific	2014	623,188	-	502,821	264,855	-	82,090		1,472,953
	2013	572,448	-	440,522	434,825	-	61,543		1,509,339
	2012	155,795	-	-	-	-	18,812		174,607

(a) The award date fair value used for determining the number of PSUs awarded to Named Executive Officers as a component of their total compensation was determined using the pricing model suggested by Towers Watson that yielded grant date fair values of $26.25 for fiscal 2014, $17.74 for fiscal 2013, and $14.78 for fiscal 2012. The fair value of the PSUs for accounting purposes was the market value of the Class A subordinate voting shares on the award date resulting in an award date fair value for accounting purposes of $36.15 for fiscal 2014, $23.65 for fiscal 2013 and $19.71 for fiscal 2012. Please refer to the heading Award Date Fair Value earlier in this document for an explanation of the differences between fair values, and the reasons behind the choice of valuation methods. The PSUs awarded to the Named Executive Officers include the PSUs awarded as part of the long term incentive grant, and the PSUs awarded as part of the special incentive grant for the integration of Logica plc. Please refer to the heading Stock Options Granted in Fiscal 2014 earlier in this document.

(b) The grant date fair value used for determining the number of stock options issued to Named Executive Officers as a component of their total compensation was determined using the Black-Scholes stock option pricing model that yielded a grant date fair value of $7.35 for fiscal 2014, $4.98 for 2013, and $5.52 for 2012. The fair value of the stock options for accounting purposes was determined using the Black-Scholes stock option pricing model that yielded a grant date fair value of $7.98, $4.98, and $4.67, in fiscal 2014, 2013 and 2012 respectively. Please refer to the heading Grant Date Fair Value earlier in this document for an explanation of the difference between fair values, and the reasons behind the choice of valuation models.

(c) This amount includes the Company’s contribution under the CGI Share Purchase Plan, the contribution towards health insurance benefits and related insurance coverage, but, except as shown in note (d), excludes the value of perquisites and other personal benefits which in the aggregate is less than $50,000 or 10% of the aggregate salary and bonus under the Profit Participation Plan for the particular fiscal year which is therefore not required to be disclosed.

(d) These amounts include the Company’s contribution under the CGI Share Purchase Plan, the contribution towards health insurance benefits and related insurance coverage, as well as perquisites totalling $116,385.78 of which the only component in excess of 25% of the total amount was an amount of $72,000 paid in each year towards housing costs for Mr. Roach.

(e) Mr. Anderson retired from his role as Chief Financial Officer on September 30, 2014

(f) Mr. Gregory is paid in British pounds sterling. The amounts shown (other than those for stock option-based compensation) are in Canadian dollars converted on the basis of the average exchange rate used to present expense information in the Company’s annual audited consolidated financial statements which was CAD$1.7953, CAD$1.5846, and CAD$1.5878, for each British pound in fiscal 2014, 2013 and 2012 respectively. Please refer to the disclosure concerning the foreign exchange rates used for financial reporting purposes on page 15 of the Management’s Discussion and Analysis for the fiscal year ended September 30, 2014 under the heading Foreign Exchange.

(g) Amounts earned by Mr. Holgate from Logica plc and its affiliates prior to the acquisition by the Company are excluded. Mr. Holgate is paid in Australian dollars. The amounts shown are in Canadian dollars converted on the basis of the average exchange rate used to present expense information in the Company’s annual audited consolidated financial statements which was CAD$0.9971,

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CAD$1.0105, and CAD$1.0368, for each Australian dollar in fiscal 2014, 2013 and 2012 respectively. Please refer to the disclosure concerning the foreign exchange rates used for financial reporting purposes on page 15 of the Management’s Discussion and Analysis for the fiscal year ended September 30, 2014 under the heading Foreign Exchange.

Termination Benefits

The entitlement of the Named Executive Officers in the case of termination of employment is the same as that which applies to all members under the laws of the jurisdiction that applies to their employment. The provisions that apply to termination of employment under the Share Option Plan and under the Performance Share Unit Plan apply in the same way to all participants under those plans and they described below under the headings Share Option Plan and Performance Share Unit Plan.

Key Features of CGI’s Long Term Incentive Plans

Share Option Plan

The Share Option Plan is governed by the Board of Directors. The Committee makes recommendations to the Board of Directors in relation to the Share Option Plan and to grants of stock options, and is responsible for overseeing its administration. The Board of Directors has the ultimate and sole power and authority to grant stock options under the Share Option Plan and to interpret the terms and conditions of stock options that have been granted. The Board of Directors grants stock options by identifying the members, directors, and officers who are to receive stock options, including the number of stock options, the subscription price, the stock option period and the vesting conditions. The determinations, designations, decisions and interpretations of the Board of Directors are binding and final. Management of the Company looks after the day to day administration of the Share Option Plan.

The total number of Class A subordinate voting shares authorized to be issued under the Share Option Plan is 53,600,000 representing, as at December 12, 2014, 17.09% of the currently issued and outstanding Class A subordinate voting shares and Class B shares. The maximum number of stock options that may be issued in the aggregate to any single individual under the Share Option Plan cannot exceed five percent of the total number of Class A subordinate voting shares and Class B shares issued and outstanding at the time of the grant. The number of Class A subordinate voting shares issuable to insiders in aggregate, at any time, pursuant to the Share Option Plan and any other securities-based compensation arrangement cannot exceed 10% of the Class A subordinate voting shares and Class B shares issued and outstanding. The number of Class A subordinate voting shares issued to insiders within any one-year period pursuant to the Share Option Plan and any other securities-based compensation arrangement cannot exceed 10% of the Class A subordinate voting shares and Class B shares issued and outstanding. As at December 12, 2014, stock options for an aggregate of 19,600,259 Class A subordinate voting shares are outstanding pursuant to the Share Option Plan, representing 6.25% of the currently issued and outstanding Class A subordinate voting shares and Class B shares.

Under the Share Option Plan, the Board of Directors may at any time amend, suspend or terminate the Share Option Plan, in whole or in part, subject to obtaining any required approval from the Toronto Stock Exchange, the Company’s shareholders or other regulatory authorities. More detailed information on the rules for amending the Share Option Plan is provided later in this document under the heading Amending Formula. Stock options may not be assigned, pledged or otherwise encumbered with the exception of bequests made in wills or otherwise in accordance with the laws relating to successions.

Under the Share Option Plan, the Board of Directors, on the recommendation of the Committee, may grant to eligible participants stock options to purchase Class A subordinate voting shares. The exercise price of the stock options granted is determined by the Board of Directors and cannot be lower than the closing price for Class A subordinate voting shares on the Toronto Stock Exchange on the trading day immediately preceding the day on which the stock option is granted. The Board of Directors also determines the applicable stock option period and vesting rules.

Employees, officers, and directors of the Company may receive stock options under the Share Option Plan. The Board of Directors, on the recommendation of the Committee, has determined that stock options will no longer be granted to outside directors beginning with the 2016 fiscal year.

Stock options that have been granted under the Share Option Plan cease to be exercisable upon the expiry of the term which cannot exceed ten years from the date of the grant.

Upon resignation or termination, stock options that have not vested are forfeited, and vested stock options must be exercised during a 90 day period.

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Employees who retire, directors who leave the Board of Directors, and the estates of deceased stock option holders benefit from the automatic vesting of stock options that have become eligible to vest in accordance with performance-based vesting rules, but that have yet to vest due to time-based vesting. Those stock options must be exercised within 90 days in the case of retirement or 180 days if the stock option holder dies, subject to the extension of the exercise periods explained in more detail below. The Board of Directors, on the recommendation of the Committee, has the discretion to vary these periods and to accelerate the vesting period, provided that the maximum term for any stock option is ten years from the time it is granted.

The Company does not currently provide any financial assistance to participants under the Share Option Plan.

Extension of Exercise Periods

Blackout Periods

In keeping with CGI’s Policy on Insider Trading and Blackout Periods, stock options must not be exercised by reporting insiders when a trading blackout period is in effect.

The policy is designed to ensure that reporting insiders and CGI members who have access to undisclosed material information regarding CGI comply with insider trading laws. Under the policy, those who normally have access to undisclosed material information may only trade in CGI securities within the period beginning on the third business day following the release of CGI’s quarterly financial results and fiscal year-end results and ending at the close of business on the fourteenth calendar day preceding the end of the following fiscal quarter.

Blackout periods may also be prescribed from time to time as a result of special circumstances relating to the Company when insiders should be precluded from trading in its securities.

If the date on which a stock option expires occurs during a blackout period or within ten business days after the last day of a blackout period, the date of expiry of the stock option will be the tenth business day following the termination of the blackout period.

Extensions for Length of Service

Retiring members, directors and officers, as well as the estates of deceased stock option holders earn one day of extension for every three days of service to the Company, up to a maximum extension period of three years. The extension period is earned pro-rata day by day during the stock option holder’s service to the Company. The extension period for length of service cannot extend the life of a stock option beyond the period of time determined by the Board of Directors as the stock option term which may not exceed ten years from the date of grant.

Amending Formula

The Board of Directors, on the recommendation of the Committee, may amend, suspend or terminate the Share Option Plan, or amend any term of an issued and outstanding stock option provided that no amendment, suspension or termination may be made without:

• obtaining approval of the shareholders of the Company, except when approval is not required under the terms of the plan, as explained in more detail below;

• obtaining any required approval of any applicable regulatory authority or stock exchange; and

• in the case of issued and outstanding stock options, obtaining the consent or, subject to regulatory approval, the deemed consent of the concerned optionee in the event that the amendment materially prejudices the optionee’s rights.

Shareholder approval is not required with respect to the following amendments, in as much as the amendment is in accordance with applicable regulatory requirements:

• changing the eligibility for, and limitations on, participation in the Share Option Plan;

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• modifying the periods during which stock options may be exercised, subject to (i) the stock option period terminating on or before the tenth anniversary of the date of the grant of the stock option and subject to the effect of blackout periods, and (ii) a maximum stock option exercise period extension of three years;

• changing the terms on which stock options may be granted and exercised including, without limitation, the provisions relating to the price at which shares may be purchased under the plan to the extent that the subscription price is not reduced, vesting, expiry, assignment and the adjustments to be made in the event of certain changes such as stock splits that affect all shareholders;

• making amendments that are necessary to comply with applicable law or the requirements of any applicable regulatory authority or stock exchange;

• correcting or rectifying any ambiguity, defective provision, error or omission in the Share Option Plan; and

• changing the provisions of the Share Option Plan that relate to its administration.

Finally, any amendment that would reduce the subscription price of an issued and outstanding stock option, lead to a significant or unreasonable dilution of the outstanding shares, extend the expiry date of stock options held by insiders beyond the exercise periods contemplated under the Share Option Plan, or provide additional material benefits to insiders of the Company automatically requires shareholder approval.

If the amendment that reduces the subscription price of any outstanding stock option held by an insider or extends the expiry date of stock options held by an insider beyond the exercise periods contemplated under the Share Option Plan, the approval of the shareholders of the Company, other than the relevant insiders, must be obtained.

Amendments to the Share Option Plan Adopted in 2014

Amendments to the Share Option Plan were approved by the Board of Directors on November 12, 2014.

The amendments related to:

• clarifying that options issued under the Share Option Plan cannot be re-priced without requiring shareholder approval;

• removing the possibility of granting stock options to consultants;

• removing the possibility of granting shares to employees, officers and directors of entities which do not qualify as “related entities” under applicable Canadian securities legislation;

• clarifying the sections dealing with the extension periods for the benefit of retirees, estates, and departing directors (without extending or modifying their rights);

• aligning administration provisions with current practices; and

• other minor clarifications.

Shareholder approval was not required for these amendments in accordance with the amending provisions of the Share Option Plan and applicable stock exchange rules.

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Equity Compensation Plan Information as of September 30, 2014

The following table shows the total number of shares to be issued upon the exercise of outstanding stock options under all of CGI’s equity-based compensation plans, their weighted average exercise price, and the number of shares available for future issuance.

Plan Category	Number of Class A subordinate voting shares to be issued upon the exercise of outstanding stock options (#)	Weighted-average exercise price of outstanding stock options ($)	Number of Class A subordinate voting shares remaining available for future issuance under equity compensation plans (excluding shares issuable under outstanding stock options) (#)
Equity compensation plans approved by securityholders	19,662,939	22.86	21,448,273
Equity compensation plans not approved by securityholders
Total	19,662,939	22.86	21,448,273

Performance Share Unit Plan

The PSU Plan is governed by the Board of Directors and the Committee makes recommendations to the Board of Directors in relation to the PSU Plan and to awards of PSUs. The Board of Directors has the ultimate and sole power and authority to award PSUs under the PSU Plan and to interpret the terms and conditions of PSUs that have been awarded. The Committee is responsible for the administration of the PSU Plan, and management looks after its day to day implementation.

Under the PSU Plan, the Board of Directors may at any time amend, suspend or terminate the PSU Plan, in whole or in part. PSUs may not be assigned, pledged or otherwise encumbered with the exception of bequests made in wills, or otherwise in accordance with the laws relating to successions.

Under the PSU Plan, the Board of Directors, on the recommendation of the Committee, may award PSUs to executives and to other participants that it determines are eligible. Each PSU entitles the participant to receive one Class A subordinate voting share, subject to the degree of achievement of the profitability and revenue growth objectives set by the Board of Directors as part of the Company’s annual budget and strategic planning process. The number of PSUs awarded is determined based on the dollar amount of long-term compensation required to align the participant’s total compensation with the Company’s compensation policy, and takes into account stock options granted under the Share Option Plan.

Within 90 days after an award of PSUs, the plan trustee purchases in the open market the shares required to be delivered to the participants on settlement. The plan trustee holds the shares in trust for the purposes of the PSU Plan.

On each settlement entitlement date, the PSU Plan participants receive from the plan trustee a number of Class A subordinate voting shares equal to the number of PSUs that have vested. Participants may elect to defer the settlement of PSUs to a later date not later than the expiry date of the PSUs.

Upon resignation or termination, PSUs that have not become eligible to vest are forfeited, and PSUs that have become eligible to vest are settled on the date of resignation or termination, as the case may be.

Participants who retire and the estates of deceased participants benefit from the automatic vesting of PSUs that have become eligible to vest in accordance with performance-based vesting rules, but that have yet to vest due to time-based vesting. Those PSUs are settled on the date of retirement or death, as the case may be and the plan trustee remits the Class A subordinate voting shares as soon as practicable thereafter.

PSUs expire on the business day preceding December 31 of the third calendar year following the end of the fiscal year during which the PSU award is made. On the expiry date, all remaining PSUs in the participant’s account that are eligible to vest but that have not yet vested are automatically vested and settled.

The Company does not provide any financial assistance to participants under the PSU Plan.

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COMPENSATION OF DIRECTORS

Board of Directors and Standing Committee Fees

Ms. Julie Godin and Messrs. Serge Godin, André Imbeau and Michael E. Roach are not compensated for their roles as directors of the Company.

The compensation paid to outside directors for the year ended September 30, 2014 was adjusted by increasing the Board retainer from $90,000 to $100,000 with the amount of the increase to be paid in DSUs. In addition, the annual retainer for the Chairs of the Audit and Risk Management Committee and Human Resources Committee increased to $15,000. The resulting elements of directors’ compensation are set out in the following table:

Component	Amount
Board retainer	$100,000
Lead Director retainer	$15,000
Committee annual retainer
Members	$2,000
Audit and Risk Management Committee Chair	$15,000
Human Resources Committee Chair	$15,000
Governance Committee Chair	$10,000
Per-meeting fees
Board of Directors	$1,500
Audit and Risk Management Committee	$2,500
Human Resources Committee	$2,500
Corporate Governance Committee	$2,500

The first $50,000 in retainer fees is paid as a rule in DSUs and beginning in January 2015, directors will be able to elect to receive all or a portion of their per-meeting fees in DSUs as well. However, a director may elect to receive the equivalent of his or her mandatory portion in cash instead of in DSUs if i) the director is not a resident of Canada for income tax purposes, or ii) the director purchases in the open market the same number of Class A subordinate voting shares he or she would have received in the form of DSUs, or iii) the director is otherwise exempted by the Board of Directors.

Directors who must travel long distances to attend meetings of the Board of Directors and standing committees also receive long distance travel allowances.

For the year ended September 30, 2014, the compensation paid to the directors was as follows:

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Directors’ Compensation Table

Name	Fees earned         ($)	Share-         based         awards(a)          ($)	Option-based     awards(b)(c) ($)	All other             compensation(d)             ($)	Total           ($)
Alain Bouchard	121,000	102,000	69,377	-	190,377
Bernard Bourigeaud(e)	132,532	83,798	51,413	21,898	205,843
Jean Brassard	125,000	102,000	69,186	-	194,186
Robert Chevrier	135,500	115,000	74,110	-	209,610
Dominic D’Alessandro	122,500	102,000	69,377	-	191,877
Thomas P. d’Aquino	148,000	125,000	78,601	-	226,601
Paule Doré	125,000	50,000	48,510	-	173,510
Richard B. Evans(e)	136,897	109,490	71,442	16,431	224,770
Julie Godin	-	-	257,250	382,712	639,962
Serge Godin	Mr. Godin’s compensation is set out in the Net Total Compensation Table and in the Summary Compensation Table earlier in this document
André Imbeau	-	-	29,400	317,762	347,162
Gilles Labbé	133,250	115,000	74,345	-	207,595
Michael E. Roach	Mr. Roach’s compensation is set out in the Net Total Compensation Table and in the Summary Compensation Table earlier in this document
Joakim Westh(e)	132,524	-	29,400	87,592	249,516

(a) The column shows the dollar value of DSUs issued to the director. The DSUs paid are in lieu of a portion of the fees earned by the director shown in the fees column based on the director’s decision to receive a percentage of his or her retainer fees in DSUs instead of cash. The DSU value is therefore already included in the fee remuneration shown in the fee column and is not in addition to that remuneration.

(b) 4,000 performance-based stock options are granted to the outside directors annually. The remaining stock options are issued in proportion to the DSUs that the director chooses to receive. See the heading Stock Options and Deferred Stock Units Granted to Directors below. All such stock options are valued for the purpose of the Directors’ Compensation Table using the same Black-Scholes stock option pricing model as used for Named Executive Officers in the Summary Compensation Table earlier in this document. The fair value of the stock options for accounting purposes was determined using the Black-Scholes stock option pricing model that yielded a grant date fair value of $7.35 for 2014. Please refer to the heading Grant Date Fair Value earlier in this document.

(c) 61.05% of the 4,000 annual performance-based stock option grant became eligible to vest in the 2014 fiscal year. Stock options that did not become eligible to vest based on such performance were forfeited and cancelled. A proportionate reduction amount of $11,451 is required to be deducted from the grant date fair value for the annual grant of 4,000 stock options to reflect accurately the net value of the stock option grant for the director as part of his or her total compensation for the 2014 fiscal year. See the heading Stock Options Granted in Fiscal 2014 earlier in this document.

(d) Messrs. Bourigeaud, Evans and Westh are paid in U.S. dollars at par, based on the same fee arrangement as other outside directors. The amounts shown (other than those for option-based compensation) are in Canadian dollars converted on the basis of the average exchange rate used to present expense information in the Company’s annual audited consolidated financial statements which was CAD$1.0833 for each U.S. dollar for 2014. Please refer to the disclosure concerning the foreign exchange rates used for financial reporting purposes on page 15 of the Management’s Discussion and Analysis for the fiscal year ended September 30, 2014 under the heading Foreign Exchange.

(e) The amounts shown as “All other compensation” for Messrs. Bourigeaud, Evans and Westh are in respect of long distance travel allowances, and for Ms. Godin and Mr. Imbeau are amounts received as remuneration in respect of their service as an executive and an officer of the Company, respectively.

Stock Options and Deferred Stock Units Granted to Directors

Up until the 2015 fiscal year members who join the Board of Directors for the first time are entitled to a grant of 4,000 stock options on the date of their election or appointment. In addition, members of the Board of Directors receive annually a grant of 4,000 stock options. These stock options are granted to directors under the Share Option Plan.

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For the fiscal year ended September 30, 2014, members of the Board of Directors were entitled to choose to receive part or all of their retainer fees in DSUs. Effective as of January 2015, directors will be entitled to receive their per-meeting fees in DSUs as well. The number of DSUs credited to a director on each fee payment date is equal to the amount of the retainer due to be paid in DSUs divided by the closing price of CGI’s Class A subordinate voting shares on the Toronto Stock Exchange on the day immediately preceding the retainer payment date. Once credited, the value at any time of the number of DSUs credited to a director’s DSU account is determined based on the market price of CGI’s Class A subordinate voting shares.

Directors are required to receive the first $50,000 of the annual retainer entirely in DSUs. However, a director may elect to receive the equivalent of his or her mandatory portion in cash instead of in DSUs if i) the director is not a resident of Canada for income tax purposes or ii) the director purchases in the open market the same number of CGI Class A subordinate voting shares he or she would have received in the form of DSUs, or iii) the director is otherwise exempted by the Board of Directors.

The value of DSUs credited to the director’s account is payable only upon the director ceasing to be a member of the Board of Directors. The amount paid at the time of redemption corresponds to the number of DSUs accumulated by the member multiplied by the closing price of the Class A subordinate voting shares on the payment date selected by the director. Directors may select a redemption date for the DSUs subsequent to the date on which they cease to be members of the Board of Directors, but such date cannot be later than December 15 of the calendar year following the year in which they leave the Board of Directors. The amount is paid in cash and is subject to applicable withholding taxes.

For each DSU credited in lieu of cash fees, the director receives two stock options under the Share Option Plan. Each stock option is issued with a ten-year exercise period and vests at the time of grant. The exercise price is equal to the closing price of CGI’s Class A subordinate voting shares on the Toronto Stock Exchange on the trading day immediately preceding the date of the grant.

The vesting of the 4,000 stock options granted to the members of the Board of Directors during the year ended September 30, 2014 under the Share Option Plan depended on the degree of achievement of profitability and growth objectives. The performance targets required to be met in order for the stock options to vest were the same as those set for the Named Executive Officers, but without taking into account the performance of the Strategic Business Units. Based on the degree of achievement of profitability and growth objectives for the fiscal year ended September 30, 2014, 61.05% of the stock options became eligible to vest. One-quarter of the stock options eligible to vest based on the achievement of the objectives vested on November 12, 2014 when the results for the fiscal year ended September 30, 2014 were approved by the Board of Directors, one-quarter will vest on October 1, 2015, one-quarter will vest on October 1, 2016, and the final quarter will vest on October 1, 2017. Stock options that did not become eligible to vest as a result of the vesting conditions were forfeited and cancelled.

The Board of Directors has determined that stock options will no longer be granted to directors beginning with the 2016 fiscal year.

Stock Options Held by Directors

A table showing all outstanding stock options held by the members of the Board of Directors who are not Named Executive Officers as at September 30, 2014 as well as the in-the-money-value of such stock options and the aggregate value of DSUs that are vested but remain unpaid is provided in Appendix B.

Incentive Plan Awards – Value Vested or Earned During the Year

Name	Option-based awards – Value vested         during the year ($)	Share-based awards Value vested during the year(a) ($)	Non-equity incentive plan     compensation  – Value earned during the year ($)
Alain Bouchard	10,892(b)(c)	102,000	-
Bernard Bourigeaud	34,703(b)(c)	83,798	-
Jean Brassard	34,624(b)(c)	102,000	-
Robert Chevrier	34,755(b)(c)	115,000	-
Dominic D’Alessandro	34,624(b)(c)	102,000	-
Thomas P. d’Aquino	34,856(b)(c)	125,000	-

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Name	Option-based awards – Value vested     during the year     ($)	Share-based awards     Value vested during     the year(a)     ($)	Non-equity incentive plan compensation – Value earned during the year ($)
Paule Doré	34,101(b)(c)	50,000	-
Richard B. Evans	34,681(b)(c)	109,490	-
Julie Godin	279,859(b)(c)	-	85,000
Serge Godin	Mr. Godin’s compensation is set out in the Net Total Compensation Table and in the Summary Compensation Table earlier in this document
André Imbeau	579,589(b)(c)	-	-
Gilles Labbé	34,755(b)(c)	115,000	-
Michael E. Roach	Mr. Roach’s compensation is set out in the Net Total Compensation Table and in the Summary Compensation Table earlier in this document
Joakim Westh	9,864(b)	-	-

(a)	The share-based awards are DSUs. See the heading Stock Options and Deferred Stock Units Granted to Directors earlier in this document.
(b)	The stock options that vested during the 2014 fiscal year were the performance-based stock options granted in the 2011, 2012, and 2013 fiscal years that became eligible to vest and for which the exercise prices were $15.49, $19.71, and $23.65 respectively. One-quarter of the stock options granted for fiscal 2011, and one-quarter of the stock options granted for fiscal 2012 vested on October 1, 2013 when the closing price of the shares was $36.55 and one-quarter of the stock options granted for fiscal 2013 vested on November 13, 2013 when the closing price for the shares was $37.62.
(c)	The remaining stock options are stock options that directors received as a result of the receipt of DSUs. See the heading Stock Options and Deferred Stock Units Granted to Directors earlier in this document. Those stock options vested at the time of grant. Since the stock option exercise price is equal to the closing price of the shares on the Toronto Stock Exchange on the trading day preceding the date of grant, the value at the time of vesting reflects the positive difference, if any, between the closing price of the shares on the grant date and the exercise price.

INDEBTEDNESS OF DIRECTORS AND NAMED EXECUTIVE OFFICERS

As of December 12, 2014, no directors, Named Executive Officers, former directors or former senior officers of the Company were indebted to the Company.

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REPORT OF THE CORPORATE GOVERNANCE COMMITTEE

The Corporate Governance Committee of the Board of Directors has responsibility for all corporate governance matters including making recommendations to the Board of Directors in relation to composition of the Board of Directors and its standing committees. The Committee also administers the self-assessment process for the Board, its standing committees and individual directors.

The Committee is composed of Mrs. Paule Doré and Mr. Thomas P. d’Aquino, Lead Director and Chair of the Committee, both of whom are independent directors.

Mr. d’Aquino has decided that he will not seek re-election at the 2015 Annual General Meeting of Shareholders and as a result of that decision, his term as a director, as Chair of the Committee, and as Lead Director, will come to an end at the time of the Meeting. A new Chair of the Committee and a new Lead Director will be appointed by the Board of Directors following the election of directors at the Meeting.

The Committee met five times during fiscal 2014.

The role and responsibilities of the Chair of the Committee are described under the heading Role and Responsibilities of the Lead Director and Standing Committee Chairs later in this document.

Corporate Governance Practices

Adherence to high standards of corporate governance is a hallmark of the way CGI conducts its business. The disclosure that follows sets out CGI’s corporate governance practices.

CGI’s corporate governance practices conform to those followed by U.S. domestic companies under the New York Stock Exchange listing standards.

CGI’s Shareholders

CGI’s shareholders are the first and most important element in the Company’s governance structures and processes. At each Annual General Meeting of Shareholders, the Company’s shareholders elect the members of the Company’s Board of Directors and give them a mandate to manage and oversee the management of the Company’s affairs for the coming year. Shareholders have the option of withholding their votes from individual directors, should they wish to do so.

In the normal course of operations, certain corporate actions which may be material to CGI are initiated from time to time by the Company’s senior management and, at the appropriate time, are submitted to CGI’s Board of Directors for consideration and approval. When appropriate, such matters are also submitted for consideration and approval by CGI’s shareholders. All such approvals are sought in accordance with the charters of the Board of Directors and standing committees, CGI’s corporate governance practices and applicable corporate and securities legislation. Messrs. Serge Godin and André Imbeau, respectively CGI’s Founder and Executive Chairman of the Board, and CGI’s Founder, Vice-Chairman of the Board and Corporate Secretary, are members of the Board of Directors of CGI and, as of December 12, 2014, beneficially owned, directly or indirectly, or exercised control or direction over, shares of CGI representing respectively 46.62% and 7.01% of the votes attached to all of CGI’s outstanding voting shares.

Majority Voting Policy

On April 29, 2014 the Board of Directors, on the recommendation of the Committee, adopted a Majority Voting Policy for Directors (the “Policy”). The purpose of the Policy is to ensure that the Board of Directors of the Company remains composed of directors elected by a majority of the votes cast in favour of their election.

In an uncontested election of directors of the Company, a nominee for election to the Board of Directors must offer to resign by tendering a resignation letter to the Chairman of the Board of Directors following the shareholders meeting at which the election took place if the number of votes that have been withheld from the director is greater than the number of votes cast in favour of the director. The Committee will meet promptly following the receipt of the resignation to consider the director’s offer to resign.

The Committee will recommend to the Board of Directors that the resignation be accepted unless the Committee determines that circumstances exist that justify the Committee’s recommendation that the resignation not be accepted. In making its recommendation the Committee will consider all the factors it considers to be relevant to

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its recommendation including, without limitation, the needs of the Company, of the Board of Directors and of its standing committees; the Company’s corporate governance practices; the reasons given by shareholders who withheld votes from the director; the director’s qualifications; the director’s contribution to the Board of Directors; and the length of the director’s service.

The Board of Directors will act on the Committee’s recommendation within ninety days following the shareholders’ meeting at which the director was elected. In deciding whether to accept the recommendation of the Committee, the Board of Directors will consider the factors examined by the Committee and may in addition consider any information it considers in its sole discretion to be relevant to its decision.

Following its decision, the Board of Directors will issue a press release concerning its decision, and giving the reasons for not accepting the resignation if that is the case.

A director who is required to offer a resignation in accordance with the Policy may attend and address the meeting or meetings of the Committee and of the Board of Directors convened to consider the resignation but shall withdraw from the meeting during the deliberations and shall not vote on the matter. A director who fails to offer to resign in accordance with the Policy will not be re-nominated by the Board of Directors for election by the shareholders.

Mandate, Structure and Composition of the CGI Board of Directors

The Committee and the Board of Directors are of the view that the size and composition of the Board of Directors and its standing committees are well suited to the circumstances of the Company and allow for the efficient functioning of the Board of Directors as an independent decision-making body.

Board of Directors and Committee Charters

Each standing committee operates according to its charter approved by the Board of Directors which sets out the committee’s duties and responsibilities.

The Board of Directors charter and the charter of each of the standing committees require that the charters be reviewed annually. As part of that process each standing committee undertakes a review of its mandate and tables any recommendations for changes with the Corporate Governance Committee at its September meeting each year. The Committee reviews the submissions of the standing committees and also reviews the Board of Directors charter. The Committee then makes a recommendation to the Board of Directors based on the conclusion of the review. The Board of Directors takes the Committee’s recommendation into account in making such changes as it determines to be appropriate.

The Board of Directors and standing committee charters are contained in CGI’s Fundamental Texts which may be found as Appendix A to CGI’s 2014 Annual Information Form which was filed with the Canadian securities regulatory authorities and which is available at www.sedar.com and on CGI’s web site at www.cgi.com. A copy of the 2014 Annual Information Form will be provided promptly to shareholders upon request. The charters are hereby incorporated by reference from the Fundamental Texts as follows:

•    Board of Directors Charter	page 15
•    Corporate Governance Committee Charter	page 23
•    Human Resources Committee Charter	page 29
•    Audit and Risk Management Committee Charter	page 34

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The following table summarizes the structure, responsibilities and membership of each of the Company’s standing committees.

COMMITTEE	MEMBERSHIP
Audit and Risk Management Committee Composed entirely of independent directors, the Audit and Risk Management Committee: is mandated by the Board of Directors to recommend the appointment of the external auditors and the terms of their engagement; reviews with the auditors the scope of the audit; reviews with the auditors and management the effectiveness of the Company’s accounting policies and practices, the Company’s internal control procedures, programs and policies and the adequacy and effectiveness of the Company’s internal controls over the accounting and financial reporting systems; reviews related party transactions; and reviews the Company’s interim and annual audited consolidated financial statements and all public disclosure documents containing audited or unaudited financial information and recommends their approval by the Board of Directors.	Gilles Labbé (Chair) Jean Brassard Richard B. Evans Joakim Westh
Corporate Governance Committee Composed entirely of independent directors, the Corporate Governance Committee: is responsible for developing the Company’s approach to governance issues and the Company’s response to corporate governance requirements and guidelines; reviews the composition of the Board of Directors, its standing committees and members and recommends Board nominees; carries out the annual Board of Directors self-assessment process; oversees the orientation and continuing education program for directors; and helps to maintain an effective working relationship between the Board of Directors and management.	Thomas P. d’Aquino (Chair) Paule Doré
Human Resources Committee Composed entirely of independent directors, the Human Resources Committee: is responsible for reviewing the compensation of certain senior executives of the Company and for making recommendations to the Board of Directors in respect thereto; and performs functions such as reviewing the Company’s succession planning and such other matters that the Committee may consider suitable with respect to compensation or as may be specifically directed by the Board of Directors from time to time.	Robert Chevrier (Chair) Alain Bouchard Bernard Bourigeaud Dominic D’Alessandro

Role and Responsibilities of the Executive Chairman and of the CEO

Elected by the shareholders, the Board of Directors has delegated to management the responsibility for day-to-day management of the business of the Company in accordance with the Company’s Operations Management Framework which has been adopted by the Board of Directors. The Operations Management Framework sets out the overall authority of the Company’s management team as well as the level of management approval required for the various types of operations and transactions that make up the ordinary course of the Company’s business.

The Executive Chairman’s role allows Mr. Serge Godin to devote his time to the development and implementation of strategic initiatives, including strengthening the Company’s partnerships with existing clients and fostering key relationships that lead to new business, including large outsourcing contracts and strategic acquisitions. The nature of the Executive Chairman’s responsibilities are such that he is a senior executive officer of the Company and is not an independent chairman of the Board.

All operational and corporate functions, other than the office of the Chairman and the corporate secretariat which report to the Executive Chairman, report to the CEO who reports directly to the Board of Directors. The CEO, jointly with the management team, develops the strategies and corporate objectives which are approved by the Board of Directors. Each year the Human Resources Committee assesses the performance of the senior executive team in achieving the objectives and makes recommendations to the Board of Directors in relation to the vesting of stock options and PSUs and the payment of bonuses to the Named Executive Officers under the Company’s Profit Participation Plan.

Taken together, the Operations Management Framework and the corporate objectives approved by the Board of Directors annually define the scope of management’s authority and responsibilities, including those of the Executive Chairman and of the CEO, in relation to the Company’s day to day operations and the attainment of its objectives. The Executive Chairman and the CEO table reports to the Board of Directors at each regularly scheduled Board meeting and their performance relative to objectives is assessed annually. Ultimately, the Board of Directors reports to the shareholders at the Annual General Meeting of Shareholders.

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Role and Responsibilities of the Lead Director and Standing Committee Chairs

Lead Director

Mr. Thomas P. d’Aquino, an independent member of the Board of Directors, is currently CGI’s Lead Director. Given that Mr. d’Aquino’s term as Lead Director will end when he leaves the Board of Directors on January 28, 2015, the Board of Directors will select a replacement to act in that capacity following the Meeting.

The Charter of the Board of Directors, which is incorporated by reference in this Management Proxy Circular (see the heading Mandate, Structure and Composition of the CGI Board of Directors earlier in this document), requires that the Board of Directors appoint a Lead Director from among the independent directors. The Lead Director is responsible for ensuring that the Board of Directors acts independently of the Company’s management and is alert to its obligations to the shareholders.

In fulfilling his responsibilities, the Lead Director provides input to the Executive Chairman in the preparation of Board of Directors meeting agendas, sets the agenda for, and chairs the meetings of, the independent directors, and leads the annual self-evaluation process for the Board of Directors.

In conjunction with the Executive Chairman, the Lead Director facilitates the effective and transparent interaction of Board members and management. The Lead Director also provides feedback to the Executive Chairman and acts as a sounding board with respect to strategies, accountability, relationships and other matters.

Standing Committee Chairs

The role and responsibilities of each of the Chairs of the standing committees of the Board of Directors are set forth in the charter of each committee. The standing committee charters are incorporated by reference in this Management Proxy Circular (see the heading Mandate, Structure and Composition of the CGI Board of Directors earlier in this document).

The Chair of each committee is responsible for leading the committee’s work and, in that capacity, ensuring that the committee’s structure and mandate are appropriate and adequate to support the fulfilment of its responsibilities, that the committee has adequate resources as well as timely and relevant information to support its work, and that the scheduling, organization and procedures of committee meetings provide adequate time for the consideration and discussion of relevant issues. The committee Chair is responsible for ensuring that the effectiveness of the committee is assessed on a regular basis.

The Committee Chair presides the committee’s meetings and works with the Corporate Secretary, the Executive Chairman and the Company’s relevant executive officers in setting both the calendar of the committee’s meetings and the agendas for each meeting and has the authority to convene special meetings of the committee. The committee Chair acts as liaison with the Company’s management in relation to the committee’s work program and ensures that the committee reports to the full Board of Directors at each subsequent meeting of the Board of Directors in relation to the committee’s deliberations, decisions and recommendations.

Criteria for Tenure on the CGI Board of Directors

Each year, the Committee reviews all of the Company’s corporate governance practices as part of an exercise that takes place well in advance of the annual preparation and review of the Company’s Management Proxy Circular, so that such practices, including those that govern the conditions for tenure on the Board of Directors, receive careful consideration apart from the year-end and the preparation cycle for the Annual General Meeting of Shareholders.

Independence

CGI’s corporate governance practices require that a majority of the members of CGI’s Board of Directors be independent. This means that they must be and remain free from any material ties to the Company, its management and its external auditors that could, or could reasonably be perceived to, materially interfere with the directors’ ability to act in the best interests of the Company, and otherwise in keeping with industry best practices and the definitions of independence applicable under stock exchange and securities regulators’ governance guidelines and rules.

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The Board of Directors has concluded that the position of Lead Director, in place since 1996, ensures that the Board of Directors is able to act independently of management in an effective manner. The Lead Director holds regular meetings of the outside directors, as well as regular meetings of the independent directors without related directors present. The Lead Director held six meetings of the independent directors during the year ended September 30, 2014.

The Board of Directors has determined that the directors identified as being independent in this Management Proxy Circular do not have interests in or relationships with CGI or with any of CGI’s significant shareholders that could, or could reasonably be perceived to, materially interfere with the directors’ ability to act in the best interests of the Company, and that they are therefore independent under the applicable guidelines and rules.

The independence of the Board of Directors and its standing committees is further enhanced by their ability to engage outside advisors as needed. In addition, individual directors may also retain the services of outside advisors with the authorization of the Chair of the Corporate Governance Committee.

Shareholders of CGI, or any person who has an interest in the Company, who wish to contact CGI’s non-management or independent directors may do so by e-mail sent to lead_director@cgi.com or by using the contact page for the Lead Director on CGI’s website at www.cgi.com.

Expertise and Financial and Operational Literacy

CGI’s corporate governance practices require that all members of CGI’s Board of Directors be both financially and operationally literate. The financial literacy of individual Board members need not be as extensive as that of members who sit on CGI’s Audit and Risk Management Committee. Having operational literacy means that the director must have substantial experience in the execution of day to day business decisions and strategic business objectives acquired as a result of meaningful past experience as a chief executive officer or as a senior executive officer in another capacity but with a broad responsibility for operations.

The directors’ experience and subject matter expertise is examined by the Committee annually when it reviews and makes recommendations to the Board of Directors in relation to succession planning for the Board of Directors in the context of the Board of Directors and standing committee self-evaluation process (see the heading Participation in the Annual Self-Assessment Process later in this document). Expertise in the industry vertical markets in which the Company operates (financial services; government; health; telecommunications and utilities; and manufacturing, retail and distribution), operational expertise and literacy, and financial literacy make up the key criteria that are used to select candidates for Board membership, to review and determine the composition of CGI’s Board, and to assess the performance of directors annually as part of the annual Board of Directors and standing committee self-evaluation process. The Board of Directors’ objective in relation to its composition is to ensure that it has expert representation for each of the Company’s targeted vertical markets.

The members of the Board of Directors who serve on the Company’s Audit and Risk Management Committee must be operationally literate and be financially literate in the sense of having the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by CGI’s financial statements, and otherwise in keeping with applicable governance standards under applicable securities laws and regulations.

The Committee and the Board of Directors have determined that all members of the Audit and Risk Management Committee are financially literate and that the Committee Chair, Mr. Gilles Labbé, has financial expertise as required by the New York Stock Exchange corporate governance rules and the rules adopted by the U.S. Securities and Exchange Commission (“SEC”) in accordance with the Sarbanes Oxley Act of 2002. Mr. Labbé is a Fellow of the Institute of Chartered Accountants.

The remaining members of the Audit and Risk Management Committee, Messrs. Jean Brassard, Richard B. Evans, and Joakim Westh are financially literate in the sense that they have the knowledge and skills necessary to allow them to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by CGI’s financial statements.

Mr. Jean Brassard acquired his financial literacy as a result of having served as CGI’s Chief Operating Officer until his retirement in October 2000.

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Mr. Richard B. Evans acquired his financial literacy while serving as Chief Executive of Rio Tinto Alcan (and as President and Chief Executive Officer of Alcan Inc. prior to its acquisition by Rio Tinto plc). In his role as Chief Executive Officer he was responsible for the supervision of the chief financial officer of the company and was ultimately responsible for operations as well as accounting and financial reporting.

Mr. Joakim Westh acquired his financial literacy while serving as Senior Vice-President, Head of Group Function Strategy and Operational Excellence of LM Ericsson AB, and prior to that position as a Group Vice-President for Assa Abloy AB in the capacity of Chairman of the Board of the company’s German subsidiary. Mr. Westh also serves on the audit committees of Saab Group and Swedish Match AB.

The following table presents a skills matrix for each of the Company’s directors.

					Governance Risk and Compliance
	Operational Literacy				Financial Literacy
Director	Executive  Leadership	Consulting   Services and IT Industry	Geography	Vertical market	Finance	Accounting	Risk	Governance and Human Resources
Alain Bouchard	ü		Global	Retail and distribution	ü	ü	ü	ü
Bernard Bourigeaud	ü	ü	Global	Multiple vertical markets	ü	Expert	ü	ü
Jean Brassard	ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü
Robert Chevrier	ü		Global	Retail and distribution	ü	Expert	ü	ü
Dominic D’Alessandro	ü		Global	Financial services	ü	Expert	ü	ü
Paule Doré	ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü
Richard B. Evans	ü		Global	Multiple vertical markets	ü	ü	ü	ü
Julie Godin	ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü
Serge Godin	ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü
Timothy J. Hearn	ü		Global	Manufacturing, retail and distribution	ü	ü	ü	ü
André Imbeau	ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü
Gilles Labbé	ü	ü	Global	Manufacturing and distribution	ü	Expert	ü	ü
Michael E. Roach	ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü
Joakim Westh	ü	ü	Global	Multiple vertical markets	ü	ü	ü	ü

Attendance at Board and Standing Committee Meetings

The Committee monitors director attendance and, in addition to considering attendance in relation to the recommendation for directors to be proposed for election at the Annual General Meeting of Shareholders, the Committee discloses the attendance record for all directors in the Management Proxy Circular. The overall attendance rate for CGI’s Board of Directors for fiscal 2014 was 95% for the Board of Directors, 95% for the Audit and Risk Management Committee, 100% for the Human Resources Committee and 100% for the Corporate Governance Committee. Detailed meeting and attendance information is provided in the following table.

Board and Standing Committee Meetings and Attendance Year ended September 30, 2014
				Committee Meetings Attended
	Board Meetings Attended			Audit	5 regular meetings
				Governance	3 regular meetings
	6 regular meetings				2 special meetings
Director	1 special meeting			Human Resources	4 regular meetings
Alain Bouchard	6 of 7	86%	Human Resources		4 of 4	100%
Bernard Bourigeaud	6 of 7	86%	Human Resources		4 of 4	100%
Jean Brassard	7 of 7	100%	Audit		5 of 5	100%
Robert Chevrier	7 of 7	100%	Human Resources (Chair)		4 of 4	100%
Dominic D’Alessandro	7 of 7	100%	Human Resources		4 of 4	100%
Thomas P. d’Aquino	7 of 7	100%	Governance (Chair)		5 of 5	100%
Paule Doré	7 of 7	100%	Governance		5 of 5	100%
Richard B. Evans	7 of 7	100%	Audit		5 of 5	100%
Julie Godin	6 of 7	86%
Serge Godin (Chair)	7 of 7	100%

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Board and Standing Committee Meetings and Attendance Year ended September 30, 2014
			Committee Meetings Attended
Director	Board Meetings Attended     6 regular meetings 1 special meeting		Audit     Governance     Human Resources	5 regular meetings 3 regular meetings 2 special meetings 4 regular meetings
André Imbeau	7 of 7	100%
Gilles Labbé	6 of 7	86%	Audit (Chair)	5 of 5	100%
Michael E. Roach	7 of 7	100%
Joakim Westh	6 of 7	86%	Audit	4 of 5	80%

Share Ownership Guideline for Directors

A share ownership guideline was adopted for directors on June 15, 2004. CGI’s directors are required to hold at least 10,000 Class A subordinate voting shares or DSUs within the later of i) three years of their election or appointment to the Board of Directors and ii) three years from the adoption of the guideline on June 15, 2004. All directors’ holdings respect the guideline.

The share ownership on the part of the Company’s outside directors as of December 12, 2014 and the date on which their holding must meet the minimum level of share ownership are set out in the following table.

Outside Directors’ Share Ownership(a)
Director	Fiscal Year	Number of Class A subordinate voting shares	Number of DSUs	Total Number of shares and DSUs	Total “at risk” value of shares and DSUs(b)	Shares or DSUs to be acquired to meet minimum ownership level	Date by which minimum ownership level must be met
Alain Bouchard	2014	17,500	3,043	20,543	$829,732	n.a.	Complies with the ownership guideline
	2013	7,500	923	8,423	$301,628
	Change	10,000	2,120	12,120	$528,104
Bernard Bourigeaud	2014	10,000	1,497	11,497	$464,364	n.a.	Complies with the ownership guideline
	2013	10,000	-	10,000	$358,100
	Change	-	1,497	1,497	$106,264
Jean Brassard(c)	2014	228,027	13,195	241,222	$9,742,957	n.a.	Complies with the ownership guideline
	2013	228,027	10,405	238,432	$8,538,250
	Change	-	2,790	2,790	$1,204,707
Robert Chevrier	2014	10,000	34,948	44,948	$1,815,450	n.a.	Complies with the ownership guideline
	2013	10,000	31,802	41,802	$1,496,930
	Change	-	3,146	3,146	$318,520
Dominic D’Alessandro	2014	10,000	14,865	24,865	$1,004,297	n.a.	Complies with the ownership guideline
	2013	10,000	12,745	22,745	$814,498
	Change	-	2,120	2,120	$189,799
Thomas P. d’Aquino	2014	-	34,881	34,881	$1,408,844	n.a.	Complies with the ownership guideline
	2013	-	32,283	32,283	$1,156,054
	Change	-	2,598	2,598	$252,789
Paule Doré	2014	99,774	5,098	104,872	$4,235,780	n.a.	Complies with the ownership
	2013	99,774	3,730	103,504	$3,706,478

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Outside Directors’ Share Ownership(a)
Director	Fiscal Year	Number of Class A subordinate voting shares	Number of DSUs	Total Number of shares and DSUs	Total “at risk” value of shares and DSUs(b)	Shares or DSUs to be acquired to meet minimum ownership level	Date by which minimum ownership level must be met
	Change	-	1,368	1,368	$529,302		guideline
Richard B. Evans	2014	10,000	16,123	26,123	$1,055,108	n.a.	Complies with the ownership guideline
	2013	10,000	13,867	23,867	$854,677
	Change	-	2,256	2,256	$200,431
Gilles Labbé	2014	25,000	11,754	36,754	$1,484,494	n.a.	Complies with the ownership guideline
	2013	25,000	9,364	34,364	$1,230,575
	Change	-	2,390	2,390	$253,919
Joakim Westh	2014	-	-	-	-	10,000	April 29, 2016
	2013	-	-	-	-
	Change	-	-	-	-

(a) 2014 information is provided as of December 12, 2014 and 2013 information is provided as of December 13, 2013.

(b) Based on the closing prices of the Company’s shares on the Toronto Stock Exchange on December 12, 2014 and December 13, 2013 respectively.

(c) The number of shares shown for Mr. Brassard combines the Class A subordinate voting shares and Class B shares that he owns or controls, directly or indirectly.

Availability and Workload

The Board of Directors has endorsed the Committee’s recommendation not to adopt formal guidelines on the number of boards or committees on which independent directors may sit on the basis that the contribution of each director to the work of the Board of Directors forms part of the Board of Directors self-assessment process and that arbitrary limits might not serve the interests of the Company.

Mr. Richard B. Evans serves on the audit committee of one other company, Mr. Westh sits on two other audit committees, and Mr. Labbé is President and Chief Executive Officer and a director, of Héroux Devtek Inc., an aerospace and industrial products manufacturer. Mr. Brassard does not sit on any other audit committees. The Board of Directors and the Committee have determined that none of the Committee members’ commitments impair their capacity to serve the Company’s Audit and Risk Management Committee effectively.

Conflicts of Interest

A process is in place for directors to acknowledge annually CGI’s Code of Ethics and Business Conduct in the same way as officers and members do. All directors have also declared their interests in all other companies where they serve as directors or officers. The Board of Directors has endorsed the Committee’s recommendation to maintain the practice of having directors tender their resignation for consideration upon a major change in their principal occupation.

Participation in the Orientation and Continuing Education Program

Each new director participates in a formal orientation and continuing education program. The program consists of a detailed presentation of the Company’s current three-year strategic plan, coupled with a series of meetings between the new director and i) the Founder and Executive Chairman of the Board, ii) the Lead Director, iii) the President and Chief Executive Officer, iv) the Chair of each standing committee to which the director will be assigned, and v) other key senior executive officers of the Company. Depending on the director’s experience and background and the results of the executive meetings, additional meetings may be scheduled. In addition to the executive briefings, new directors receive the CGI Director Reference Binder, a comprehensive set of documents containing both public and non-public information concerning the Company, which includes detailed information in relation to the Company; its operations; financial condition; management structure; policies and public disclosure record; the work programs and minutes of past meetings of the Board of Directors and of its standing committees; biographies of CGI’s key senior officers; materials related to the director’s duties and responsibilities, including, a

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synopsis of the Company’s insurance coverage for directors and officers liability; and the Company’s process for reporting transactions in its shares carried out by its reporting insiders.

In addition to the formal orientation program, the continuing education program includes presentations on a variety of topics of interest, including on recent developments in the global information technology market, which are provided to the Board of Directors on a regular basis. Detailed presentations are also made to the standing committees of the Board of Directors on technical subjects such as the application of accounting principles in the preparation of the Company’s financial statements, corporate governance rules and practices, and trends in executive and directors’ compensation.

Directors also receive updates on business and governance initiatives as well as responses to questions raised by the members of the Board of Directors from time to time. Directors who wish to do so may make arrangements with the Corporate Secretary to participate, at CGI’s expense, in board-level industry associations or conferences, to attend continuing education courses that are relevant to their role as a director of the Company or otherwise to pursue activities that contribute in a meaningful way to the value they bring to the Board of Directors.

Members of the Board of Directors are invited to attend CGI’s annual Leadership Conference where the bottom-up strategic planning cycle begins, as well as sessions of the Leadership Institute’s training program for the Company’s managers.

Participation in the Annual Self-Assessment Process

The Lead Director, in concert with the Committee, coordinates an annual self-assessment of the effectiveness of the Board of Directors as a whole, of the standing committees of the Board, and of the contribution of individual directors. The Committee is also responsible for establishing the competencies, skills and personal qualities it seeks in new Board members with a view to adding value to the Company, and directors are assessed against the contribution they are expected to make. This assessment is based on an annual questionnaire to which directors respond.

Once the responses are received, the Lead Director compiles and analyses the results. He then discusses the self-assessments with each director. Following the one-on-one discussions with directors, the Lead Director reviews the overall results of the self-assessment process with the Founder and Executive Chairman of the Board, and with the Chairs of the standing committees. The Committee then meets to review the results of the self-assessment process and subsequently presents the final result to the Board of Directors for discussion.

The Board of Directors reviews the assessment of its performance and the recommendations provided by the Committee annually with the objective of increasing the Board’s effectiveness in carrying out its responsibilities. The Board of Directors takes appropriate action based on the results of the review process.

Retirement Age and Director Term Limits

The Board of Directors has endorsed the Committee’s recommendation not to adopt a formal retirement age or term limits for directors.

CGI’s success is due in large measure to the Company’s experience and expertise in its vertical markets. The selection criteria for CGI’s Board of Directors which are explained earlier in this document under the heading Expertise and Financial and Operational Literacy recognize this and are designed to ensure that the Company has subject matter experts on the Board of Directors who can effectively provide intelligence, experience, expertise and business and operational insight into each of the Company’s industry vertical markets. Imposing a term limit or an arbitrary retirement age would unnecessarily expose the Company to losing valuable resources that could not be easily replaced. The Committee and the Board of Directors are therefore of the view that a mandatory retirement age or term limits might arbitrarily and needlessly deprive the Board of Directors of valuable talent.

As with the other aspects of CGI’s corporate governance practices, director term limits and the Board of Directors retirement policy are reviewed annually. When the time comes to discuss term limits or a retirement age, the directors who would be affected in the event that such limits were adopted withdraw from the meeting and abstain from voting on the matter.

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Nomination Process for the Board of Directors

The shareholders are responsible for electing CGI’s directors. The responsibility for proposing candidates for election by the shareholders lies with the Board of Directors. The Board of Directors relies on the nomination recommendations of the Committee.

Based on the results of the Board of Directors self-evaluation (see the heading Participation in the Annual Self-Assessment Process earlier in this document) or on its own assessment from time to time of the needs of the Company, the Committee may recommend that the composition of the Board or its standing committees be varied in order to ensure that it continues to serve the best interests of the Company and to ensure an appropriate succession of directors. By way of example, when it is appropriate to do so, additional directors may be appointed to committees so as to ensure that knowledge is passed along in order to facilitate a smooth transition should the need arise.

When changes to Board of Directors composition are required, potential candidates are identified either through referrals from directors or senior management, or with the assistance of third parties. The selection of nominees from among the potential candidates is based on the candidate’s expertise and knowledge in the industry vertical markets in which the Company operates and their operational and financial literacy based on the Board of Directors skills matrix (see the heading Expertise and Financial and Operational Literacy earlier in this document). The Committee, the Founder and Executive Chairman of the Board, and the Lead Director consult with each other with respect to the actions to be taken and the necessary steps are then taken to interview the candidates and confirm their willingness to serve on the Board of Directors.

Once the selection of candidates is made, the Committee recommends to the Board of Directors that the candidate or candidates be either appointed by the Board of Directors if there is a vacancy to be filled or if there is a need to increase the size of the Board of Directors, or be nominated for election at the next meeting of shareholders.

Under the terms of a Registration Rights Agreement between the Company and the Caisse de dépôt et placement du Québec (the “Caisse”) entered into as of August 20, 2012 in the context of the acquisition of Logica plc, the Caisse has the right, as long as it beneficially owns or exercises control or direction over 15% or more of the outstanding Class A subordinate voting shares, to recommend to CGI one nominee to be part of any slate of directors proposed for election by CGI and to be included in a proxy circular relating to the election of directors of CGI, provided that the nominee shall have no material relationship with CGI or the Caisse, that he or she shall be eligible to serve as a director under CGI’s articles and laws of incorporation, and that his or her nomination shall be subject to a favourable recommendation of the Committee. CGI has no shareholder’s agreement with the Caisse and the Caisse has not yet exercised its right to recommend a nominee for election to the Board of Directors.

Board of Directors Participation in Strategic Planning

The Board of Directors is directly and closely involved in the preparation and approval of CGI’s rolling three-year strategic plan which is reviewed and assessed annually by the Board of Directors.

CGI has adopted a bottom-up process for budgeting and strategic planning in order to ensure that the resulting business plan is as closely attuned as possible to maximizing the Company’s business opportunities and mitigating operational and other risks. The Board of Directors receives a detailed briefing early in the planning process covering all aspects of CGI’s strategic planning so that the directors are in a position to contribute to the process in a meaningful way before the final business plan has taken shape.

In keeping with CGI’s three-year rolling strategic planning process, the strategic plan begins with the initiatives, directions and priorities identified at the business unit level by the Company’s management team that are shared at the Company’s annual Leadership Conference. The plan is then presented to the directors in July for review and discussion. In the next step, the plan is refined by management and is subsequently presented to the Board of Directors for approval in September. The rolling three-year planning process provides a meaningful opportunity for the directors to contribute to the strategic planning process. In addition to the formal planning process, every Board meeting agenda features a standing item entitled Directors’ Round Table that serves as a forum for continuing free-ranging discussion between the Board and management in relation to the Company’s strategic direction.

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Guidelines on Disclosure of Information

CGI’s Guidelines on Timely Disclosure of Material Information and Transactions in Securities of CGI by Insiders adopted by the Board of Directors (the “Guidelines”) set out the essential principles underlying the Company’s disclosure practices in keeping with the rules of regulatory authorities and best disclosure practices.

Under the Guidelines, the Board of Directors has the responsibility to oversee the content of the Company’s major communications to its shareholders and the investing public. The Board of Directors believes that it is management’s role to communicate on behalf of the Company with its shareholders and the investment community. The Company maintains an effective investor relations process to respond to shareholder questions and concerns. In 2004, the Company adopted the CGI Shareholder Partnership Management Framework (“SPMF”). The SPMF structures the processes and information flows between CGI and its shareholders as well as with the investment community, including both the buy-side (institutional investors) and sell-side (investment dealers) research analysts. CGI obtained ISO 9001 certification for the application of the SPMF in the Company’s operations.

As part of the SPMF process, CGI conducts a survey of sell-side analysts and institutional shareholders every year as a means of measuring shareholder satisfaction. The survey is designed to provide insights into investor sentiment and to improve the investor relations program.

The SPMF annual assessment conducted during the 2014 fiscal year returned an overall score for CGI of 7.95 out of 10 which compares favourably to the average score for other public companies of 6.65 out of 10.

Following the assessment, suggestions for improvement received in the course of the survey are acted upon as a means of assuring continuous improvement.

The Board of Directors reviews and, where required, approves statutory disclosure documents prior to their dissemination to the market and to the Company’s shareholders.

The Charter of the Board of Directors which is incorporated by reference in this Management Proxy Circular (see the heading Mandate, Structure and Composition of the CGI Board of Directors earlier in this document) provides that directors’ duties include the oversight of the integrity of the Company’s internal control and management information systems. The Audit and Risk Management Committee has the primary responsibility under its charter to review the internal control and management information systems of the Company. The Committee reports to the Board of Directors in that regard.

Directors’ Compensation

The Human Resources Committee reviews directors’ compensation periodically. In determining directors’ remuneration, the Committee considers the directors’ compensation offered by the companies comprised in the reference group of companies used as a guide in determining compensation matters, and the risks and responsibilities that the directors of the Company assume in keeping with the roles of the Board of Directors and of the standing committees. See the heading Compensation of Directors in the report of the Human Resources Committee earlier in this document.

Codes of Ethics and Business Conduct

CGI’s Code of Ethics and Business Conduct and its Executive Code of Conduct are contained in CGI’s Fundamental Texts which may be found as Appendix A to CGI’s 2014 Annual Information Form which was filed with the Canadian securities regulatory authorities and which is available at www.sedar.com and on CGI’s web site at www.cgi.com. A copy of the 2014 Annual Information Form will be provided promptly to shareholders upon request.

The Board of Directors monitors compliance with the Code of Ethics and Business Conduct, which includes the Anti-Corruption Policy, and under the Board of Directors charter is responsible for any waivers of the codes’ provisions granted to directors or officers. No such waivers have been granted to date.

It is the Committee that is principally responsible for the annual review of the Code of Ethics and Business Conduct, overseeing compliance with the code of ethics, reviewing any request to waive or exempt from its application, and making recommendations on these matters to the Board of Directors.

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Under the terms of the Code of Ethics and Business Conduct, all of CGI’s members are required to comply with the code and to see that it is complied with. The code requires that infractions be reported to management or alternatively to the Chair of the Audit and Risk Management Committee and the Corporate Secretary.

The Board of Directors has established procedures approved by the Audit and Risk Management Committee for the receipt, retention, and treatment of complaints regarding accounting, internal accounting control or auditing matters, and corruption, as well as other breaches of the Code of Ethics and Business Conduct, of the Anti-Corruption Policy, or of the Executive Code of Conduct. In that regard, the Company adopted the CGI Serious Ethical Incidents Reporting Policy which allows members who wish to submit a complaint to do so via a third party ethics reporting hotline and secure web site which assures that members who wish to preserve their anonymity are able to do so with confidence. The Audit and Risk Management Committee is primarily responsible for receiving and dealing with these incident reports. A report on the process and on incident reports received is provided quarterly to the Audit and Risk Management Committee by the Executive Vice-President and Chief Legal Officer.

A program for the integration of new members ensures that new members receive an orientation that familiarizes them with CGI’s policies, their responsibilities as members and the benefits to which they are entitled. In order to ensure that all of CGI’s members are aware of the importance that the Company attaches to compliance with the Code of Ethics and Business Conduct, each new member is informed about the code and the process for reporting ethics breaches, and is required to undertake in writing to comply with the code. In countries where local law is an impediment to a formal undertaking, members are asked to acknowledge the code. This written undertaking or acknowledgement, as the case may be, is renewed annually at the same time as the member’s evaluation.

CGI’s Leadership Institute regularly provides an intensive series of courses designed to ensure that new managers are familiar with CGI’s methods of operation and its policies, including the Code of Ethics and Business Conduct and the process for reporting breaches.

In addition, the Company provides an internet portal that ensures that all members have access to the Company’s policies, including the code of ethics and the process for reporting breaches.

These measures are in addition to quarterly reports tabled with the Audit and Risk Management Committee by the internal audit department, the internal controls review function, and the legal department on matters for which they are responsible. These reports may include reports of breaches of the code of ethics when such breaches are raised in internal audit mandates or in claims made against the Company.

In addition to CGI’s Code of Ethics and Business Conduct, CGI’s principal executive and financial officers, including the Founder and Executive Chairman of the Board, the Founder, Vice-Chairman of the Board and Corporate Secretary, the President and Chief Executive Officer and the Executive Vice-President and Chief Financial Officer, the principal accounting officer or controller, and other persons performing similar functions, are subject to CGI’s Executive Code of Conduct which they are required to review and acknowledge on an annual basis.

CGI Federal Inc., the Company’s operating subsidiary that provides services to the U.S. federal government, has adopted policies and procedures to comply with specific requirements under U.S. Federal government procurement laws and regulations.

Relationship with Shareholders and Decisions Requiring their Consent

In keeping with CGI’s policy of seeking to align the interests of its three stakeholder groups (see the Letter to Shareholders on page v earlier in this document), CGI implemented the SPMF which forms part of the Company’s ISO certification. See the heading Guidelines on Disclosure of Information earlier in this document for a more detailed discussion of the SPMF.

In the normal course of operations certain corporate actions which may be material to CGI are initiated from time to time by the Company’s senior management and, at the appropriate time, are submitted to CGI’s Board of Directors for consideration and approval. When appropriate, such matters are also submitted for consideration and approval by CGI’s shareholders. All such approvals are sought in accordance with the charters of the Board of Directors and standing committees, CGI’s corporate governance principles and applicable corporate and securities legislation. Messrs. Serge Godin and André Imbeau, respectively CGI’s Founder and Executive Chairman of the Board and Founder, Vice-Chairman of the Board and Corporate Secretary, are members of the Board of Directors of CGI and, as of December 12, 2014, beneficially owned, directly or indirectly, or controlled or

51

directed shares of CGI representing respectively 46.62% and 7.01% of the votes attached to all of CGI’s outstanding voting shares.

52

REPORT OF THE AUDIT AND RISK MANAGEMENT COMMITTEE

The Audit and Risk Management Committee of the Board of Directors is composed entirely of independent directors who meet the independence and experience requirements of National Instrument 52-110 adopted by the Canadian Securities Administrators as well as those of the New York Stock Exchange and of the U.S. Securities and Exchange Commission.

The Committee is composed of Mr. Gilles Labbé, Chair of the Committee, and Messrs. Jean Brassard, Richard B. Evans, and Joakim Westh. The Committee met five times during fiscal 2014. Mr. Labbé’s role and responsibilities as Chair of the Committee are described earlier in this document in the report of the Corporate Governance Committee under the heading Role and Responsibilities of the Lead Director and Standing Committee Chairs.

The role and responsibilities of the Committee are contained in the Committee’s charter. The Committee’s charter forms part of CGI’s Fundamental Texts and the charter is incorporated by reference in this Management Proxy Circular (see the heading Mandate, Structure and Composition of the CGI Board of Directors earlier in this document) and is available on CGI’s web site at www.cgi.com. The role and responsibilities of the Committee include:

(a) reviewing all public disclosure documents containing audited or unaudited financial information concerning CGI;

(b) identifying and examining the financial and operating risks to which the Company is exposed, reviewing the various policies and practices of the Company that are intended to manage those risks, and reporting on a regular basis to the Board of Directors concerning risk management;

(c) reviewing and assessing the effectiveness of CGI’s accounting policies and practices concerning financial reporting;

(d) reviewing and monitoring CGI’s internal control procedures, programs and policies and assessing their adequacy and effectiveness;

(e) reviewing the adequacy of CGI’s internal audit resources including the mandate and objectives of the internal auditor;

(f) recommending to the Board of Directors the appointment of the external auditors, asserting the external auditors’ independence, reviewing the terms of their engagement, assessing the quality of their performance, and pursuing ongoing discussions with them;

(g) reviewing all related party transactions in accordance with the rules of the New York Stock Exchange and other applicable laws and regulations;

(h) reviewing the audit procedures including the proposed scope of the external auditors’ examinations; and

(i) performing such other functions as are usually attributed to audit committees or as directed by the Board of Directors.

The Committee fulfilled all aspects of its mandate for the fiscal year ended September 30, 2014.

External Auditors’ Independence

The Committee is required to assert the independence of CGI’s external auditors and, to this end, entertains discussions with the external auditors on applicable criteria and obtains yearly confirmations from them as to their independence.

Auditor Independence Policy

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

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Performance of Services

Services are either acceptable services or prohibited services.

The acceptable services are: (a) audit and review of financial statements, (b) prospectus work, (c) audit of pension plans, (d) special audits on control procedures, (e) tax planning services on mergers and acquisitions activities, (f) due diligence relating to mergers and acquisitions, (g) tax services related to transfer pricing, (h) sales tax planning, (i) research and interpretation related to taxation, (j) research relating to accounting issues, (k) proposals and related services for financial structures and large tax planning projects, (l) preparation of tax returns, and (m) all other services that are not prohibited services.

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

Governance Procedures

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

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

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

• The Committee can pre-approve envelopes for certain services to pre-determined dollar limits on a quarterly basis;

• Once pre-approved by the Committee, the Executive Vice-President and Chief Financial Officer may approve the services prior to the engagement;

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

• At each meeting of the Committee, a consolidated summary of all fees by service type is presented including a breakdown of fees incurred within each of the pre-approved envelopes.

Key Participants’ Responsibilities

Management and the Committee are the Company’s two key participants for the purposes of the Company’s Auditor Independence Policy.

The primary responsibilities of management are: (a) creating and maintaining a policy that follows applicable auditor independence standards, (b) managing compliance with the policy, (c) reporting to the Committee all mandates to be granted to the external auditors, and (d) monitoring and approving services to be performed within the pre-approved envelopes.

The primary responsibilities of the Committee are: (a) nominating the external auditors for appointment by the Company’s shareholders, (b) approving fees for audit services, (c) approving the auditor independence policy and amendments to the policy, (d) monitoring management’s compliance with the policy, (e) obtaining yearly confirmations of independence from the external auditors, (f) monitoring audit partner rotation requirements, (g) monitoring the twelve-month “cooling off” period when hiring members of the audit engagement team in a financial reporting oversight role, (h) reviewing the appropriateness of required audit fee disclosure, (i) interpreting the policy in the event that its application is unclear, and (j) approving all auditor mandates or pre-approving envelopes for specific services.

Under the Auditor Independence Policy, the Committee has the ultimate responsibility to assert the independence of CGI’s external auditors.

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Annual External Auditor Assessment

The Committee instituted an annual assessment process to assist the Committee in making its recommendation to the Board of Directors in relation to the appointment of the Company’s external auditors. The process was initiated in November of 2014 and was completed prior to the Committee’s recommendation that was made on December 2, 2014.

The annual external auditors assessment is based on the recommendations of Chartered Professional Accountants Canada in collaboration with the Canadian Public Accountability Board. The process is expected to provide an additional element of structure for the Committee in making its recommendation and to help in identifying areas for improvement for the external audit firm and the Company’s audit processes.

Following the completion of the annual assessment, the Committee recommended to the Board of Directors that Ernst & Young LLP be proposed for re-appointment by the Company’s shareholders at the Meeting.

Fees Billed by the External Auditors

During the years ended September 30, 2014 and 2013, CGI’s external auditors invoiced the following fees for their services:

Service retained	Fees billed
	2014	2013
Audit fees	$7,946,682	$8,442,468
Audit related fees(a)	$1,055,796	$1,144,061
Tax fees(b)	$596,072	$2,282,078
All other fees(c)	-	$249,629
Total fees billed	$9,598,550	$12,118,236

(a)	The audit related fees billed by the external auditors for the years ended September 30, 2014 and 2013 were in relation to service organization control procedures audits and assistance, and information technology assistance services, and 401(k) and special audits.
(b)	The tax fees billed by the external auditors for the years ended September 30, 2014 and 2013 were in relation to tax compliance, advisory services and human capital services.
(c)	The other fees billed by the external auditors for the year ended September 30, 2013 were in relation to other advisory services.

Related Party Transactions

The Committee is responsible under its charter for reviewing and making recommendations to the Board of Directors in relation to any transaction in which a director or a member of senior management has an interest. To the extent that it is necessary to do so, the Committee may retain outside advisors to assist it in reviewing related party transactions.

For more important transactions, the Board of Directors generally establishes an ad hoc committee made up entirely of independent directors that is mandated to review the transaction and to make a recommendation to the Board of Directors. Such committee may retain independent legal and accounting advisors to assist in reviewing the transaction.

Whether it is the Committee or an ad hoc committee, the committee mandated with reviewing the transaction tables its report with the Board of Directors and it is the Board of Directors that has the responsibility of approving the transaction if it determines that it is appropriate to do so.

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OTHER BUSINESS TO BE TRANSACTED AT THE ANNUAL GENERAL MEETING OF SHAREHOLDERS

Management of the Company is not aware of any matter to be submitted at the Meeting other than the matters set forth in the Notice of Meeting. Every proxy given to any person in the form of proxy that accompanied the Notice of Meeting will confer discretionary authority with respect to amendments or variations to the items of business identified in the Notice of Meeting and with respect to any other matters that may properly come before the Meeting.

ADDITIONAL INFORMATION

The Company will provide to any person, upon request to the Corporate Secretary, a copy of this Management Proxy Circular, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in this Management Proxy Circular.

Additional financial and other information relating to the Company is included in its 2014 audited annual and unaudited quarterly financial statements, annual and quarterly Management’s Discussion and Analysis of Financial Position and Results of Operations and other continuous disclosure documents which are available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. For additional copies of this Management Proxy Circular, for a copy of the Company’s Notice of Intention in relation to its Normal Course Issuer Bid, or other financial information, please contact Investor Relations by sending an e-mail to ir@cgi.com, by visiting the Investors section on the Company’s web site at www.cgi.com or by contacting us by mail or telephone:

Investor Relations

CGI Group Inc.

1350 René-Lévesque Blvd. West

15^th Floor

Montreal, Quebec, Canada

H3G 1T4

Tel.: (514) 841-3200

APPROVAL BY THE DIRECTORS

The Board of Directors has approved the content and the delivery of this Management Proxy Circular.

Serge Godin

Founder and Executive

Chairman of the Board

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APPENDIX A

Stock Options and Share-Based Awards Held by Named Executive Officers

The following tables show all outstanding stock options and share-based awards held by the Named Executive Officers as at September 30, 2014.

	Option-based Awards				Share-based Awards
Name and title	Number of     securities     underlying      unexercised     options(a)     (#)	Option      exercise      price      ($)	Option expiration date	Value of unexercised in-     the-money options(b) ($)	Number of shares or units of shares that have not vested(a) (#)	Market or payout value of share- based awards that have not vested(b)(c) ($)	Market Payout value of vested share- based awards not paid out  or distributed ($)
Serge Godin Founder and Executive Chairman of the Board
	468,750	9.31	October 1, 2018	13,373,438
	468,750	12.54	September 30, 2019	11,859,375
	461,505	15.49	September 30, 2020	10,314,637
					731,206	27,668,835
Total:				35,547,449	731,206	27,668,835
	Option-based Awards				Share-based Awards
Name and title	Number of     securities     underlying     unexercised     options(a) (#)	Option  exercise  price  ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of  shares or  units of  shares that  have  not  vested(a)   (#)	Market or payout value of share- based awards that have not vested(b)(c) ($)	Market Payout value of vested share- based awards not paid out or distributed ($)
Michael E. Roach, President and Chief Executive Officer
	437,500	11.39	October 1, 2017	11,571,875
	468,750	9.31	October 1, 2018	13,373,438
	515,625	12.54	September 30, 2019	13,045,313
	461,505	15.49	September 30, 2020	10,314,637
					731,206	27,668,835
Total:				48,305,262	731,206	27,668,835
	Option-based Awards				Share-based Awards
Name and title	Number of     securities     underlying     unexercised     options(a)     (#)	Option  exercise  price  ($)	Option expiration date	Value of unexercised in-   the-money options(b) ($)	Number of  shares or  units of  shares that  have  not  vested(a)  (#)	Market or payout value of share- based awards that have not vested(b)(c) ($)	Market Payout value of vested share- based award not paid out or distributed ($)
R. David Anderson, Executive Vice-President and Chief Financial Officer
	171,875	12.54	September 30, 2019	4,348,438
	188,188	15.49	September 30, 2020	4,206,002
					262,883	9,947,493
Total:				8,554,439	262,883	9,947,493

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	Option-based Awards				Share-based Awards
Name and title	Number of   securities   underlying    unexercised   options(a)   (#)	Option  exercise  price ($)	Option expiration date	Value of unexercised in-     the-money options(b) ($)	Number of shares or units of shares that have  not vested(a) (#)	Market or payout value of share- based awards that have not vested(b)(c) ($)	Market Payout value of vested share- based awards not paid out or distributed ($)
Timothy W. Gregory, President, United Kingdom
	18,750	15.49	September 30, 2020	419,063
	16,880	19.71	September 30, 2021	306,034
	50,000	23.65	November 26, 2022	709,500
	49,066	23.65	November 26, 2022	696,247
	59,484	36.15	September 30, 2023	100,528
	100,000	37.82	September 22, 2024	2,000
Total:				2,233,371
	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying unexercised options(a) (#)	Option exercise price ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of shares or units of shares that have  not vested(a) (#)	Market or payout value of share- based awards that have  not vested(b)(c) ($)	Market Payout value of vested share- based awards not paid out or distributed ($)
Colin Holgate President, Asia Pacific
	50,000	23.65	November 26, 2022	709,500
	38,436	23.65	November 26, 2022	545,407
	68,411	36.15	September 30, 2023	115,615
	100,000	37.82	September 22, 2024	2,000
Total:				1,372,521

(a) Shows stock options and share-based awards held as at the end of the fiscal year ended September 30, 2014.

(b) Based on $37.84, the closing price of the Company’s Class A subordinate voting shares on the Toronto Stock Exchange on September 30, 2014.

(c) Shows the market value for the aggregate number of PSUs held as at the end of the fiscal year ended September 30, 2014.

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APPENDIX B

Stock Options and Share-Based Awards Held by Directors

The following tables show all outstanding stock options held by the members of the Board of Directors who are not Named Executive Officers as at September 30, 2014 as well as the in-the-money-value of such stock options. The outside members of the Board of Directors are also eligible to receive DSUs. See the heading Stock Options and Deferred Stock Units Granted to Directors in the Management Proxy Circular earlier in this document. All DSUs are fully vested at the time of issuance.

The corresponding information for directors who are also Named Executive Officers may be found in Appendix A.

	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying   unexercised   options(a) (#)	Option   exercise   price ($)	Option expiration date	Value of unexercised in-   the-money options(b) ($)	Number of shares or units of   shares that   have not vested(a) (#)	Market or payout value of share- based awards   that have not   vested ($)	Market Payout value of vested share- based awards   not paid out or   distributed(b)(c) ($)
Alain Bouchard
	3,813	27.28	April 28, 2023	40,265
	650	30.79	July 10, 2023	4,583
	4,000	36.15	September 30, 2023	6,760
	1,198	38.41	October 16, 2023	0
	1,471	34.68	January 22, 2024	4,648
	1,410	36.17	April 16, 2024	2,355
	1,360	37.50	July 23, 2024	462
	4,000	37.82	September 22, 2024	80
							115,147
Total:				59,153			115,147
	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying unexercised options(a) (#)	Option exercise price ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of shares or units of shares that have not vested (#)	Market or payout value of share- based awards that have not vested ($)	Market Payout value of vested share- based awards not paid out or distributed(b)(c) ($)
Bernard Bourigeaud
	834	9.31	October 1, 2018	23,794
	834	9.31	October 1, 2018	23,794
	1,666	12.54	September 30, 2019	42,150
	2,500	15.49	September 30, 2020	55,875
	1,688	19.71	September 30, 2021	30,603
	3,813	23.65	November 26, 2022	54,106
	4,000	36.15	September 30, 2023	6,760
	1,537	36.17	April 16, 2024	2,567
	1,458	37.50	July 23, 2024	496
	4,000	37.82	September 22, 2024	80
							56,646
Total:				240,225			56,646
	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying unexercised options(a) (#)	Option exercise price ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of shares or units of shares that have not vested (#)	Market or payout value of share- based awards that have not vested ($)	Market Payout value of vested share- based awards not paid out  or distributed(b)(c) ($)
Jean Brassard
	2,500	15.49	September 30, 2020	55,875
	1,997	19.28	January 27, 2021	37,064
	1,897	20.30	April 24, 2021	33,273
	1,877	20.51	July 28, 2021	32,528

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	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying   unexercised   options(a) (#)	Option   exercise   price ($)	Option expiration date	Value of unexercised in-   the-money options(b) ($)	Number of shares or units of   shares that   have not vested (#)	Market or payout value of share- based awards   that have not   vested ($)	Market Payout value of vested share- based awards   not paid out or   distributed(b)(c) ($)
Jean Brassard
	1,688	19.71	September 30, 2021	30,603
	1,995	19.30	October 20, 2021	36,987
	1,986	19.39	January 26, 2022	36,642
	1,807	21.31	April 19, 2022	29,870
	1,605	23.99	July 26, 2022	22,229
	1,472	26.16	October 18, 2022	17,193
	3,813	23.65	November 26, 2022	54,106
	1,577	24.41	January 23, 2023	21,179
	277	27.12	February 13, 2023	2,969
	1,690	26.62	April 17, 2023	18,962
	1,462	30.79	July 10, 2023	10,307
	4,000	36.15	September 30, 2023	6,760
	1,172	38.41	October 16, 2023	0
	1,471	34.68	January 22, 2024	4,648
	1,410	36.17	April 16, 2024	2,355
	1,360	37.50	July 23, 2024	462
	4,000	37.82	September 22, 2024	80
							473,984
Total:				454,095			473,984
	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying unexercised options(a) (#)	Option exercise price ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of shares or units of shares that have not vested (#)	Market or payout value of share- based awards that have not vested ($)	Market Payout value of vested share- based awards not paid out or distributed(b)(c) ($)
Robert Chevrier
	1,756	7.69	January 21, 2015	52,943
	964	7.00	April 29, 2015	29,730
	922	7.32	July 8, 2015	28,139
	808	8.35	October 14, 2015	23,828
	4,000	8.55	October 21, 2015	117,160
	771	9.40	January 20, 2016	21,927
	4,000	7.72	November 20, 2016	120,480
	1,062	10.36	April 13, 2017	29,184
	932	11.80	July 20, 2017	24,269
	2,500	11.39	October 1, 2017	66,125
	1,024	10.74	October 26, 2017	27,750
	1,095	10.05	February 1, 2018	30,430
	1,143	11.64	April 11, 2018	29,947
	1,353	10.90	August 1, 2018	36,450
	2,500	9.31	October 1, 2018	71,325
	1,630	9.05	October 24, 2018	46,928
	1,706	10.11	January 30, 2019	47,307
	3,376	10.85	April 24, 2019	91,118
	3,573	10.67	July 31, 2019	97,078
	2,500	12.54	September 30, 2019	63,250
	2,903	13.26	October 22, 2019	71,356
	2,659	14.48	January 28, 2020	62,114
	2,099	15.51	April 22, 2020	46,871
	2,033	14.76	July 29, 2020	46,922
	2,500	15.49	September 30, 2020	55,875
	1,880	15.96	October 21, 2021	41,134
	2,204	19.28	January 27, 2021	40,906
	2,094	20.30	April 24, 2021	36,729
	2,072	20.51	July 28, 2021	35,908
	1,688	19.71	September 30, 2021	30,603
	2,202	19.30	October 20, 2021	40,825
	2,192	19.39	January 26, 2022	40,442

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	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying   unexercised   options(a) (#)	Option   exercise   price ($)	Option expiration date	Value of unexercised in-   the-money options(b) ($)	Number of shares or units of   shares that   have not vested (#)	Market or payout value of share- based awards   that have not   vested ($)	Market Payout value of vested share- based awards   not paid out or   distributed(b)(c) ($)
Robert Chevrier
	1,994	21.31	April 19, 2022	32,961
	1,772	23.99	July 26, 2022	24,542
	1,625	26.16	October 18, 2022	18,980
	3,813	23.65	November 26, 2022	54,106
	1,741	24.41	January 23, 2023	23,382
	277	27.12	February 13, 2023	2,969
	1,878	26.62	April 17, 2023	21,071
	1,624	30.79	July 10, 2023	11,449
	4,000	36.15	September 30, 2023	6,760
	1,302	38.41	October 16, 2023	0
	1,658	34.68	January 22, 2024	5,239
	1,590	36.17	April 16, 2024	2,655
	1,533	37.50	July 23, 2024	521
	4,000	37.82	September 22, 2024	80
							1,293,863
Total:				1,809,771			1,293,863
	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying unexercised options(a) (#)	Option exercise price ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of shares or units of   shares that   have not vested (#)	Market or payout value of share- based awards that have not vested ($)	Market Payout value of vested share- based awards not paid out or distributed(b)(c) ($)
Dominic D’Alessandro
	2,500	14.69	January 26, 2020	57,875
	1,192	15.51	April 22, 2020	26,617
	1,762	14.76	July 29, 2020	40,667
	2,500	15.49	September 30, 2020	55,875
	1,629	15.96	October 21, 2020	35,643
	1,997	19.28	January 27, 2021	37,064
	1,897	20.30	April 24, 2021	33,273
	1,877	20.51	July 28, 2021	32,528
	1,688	19.71	September 30, 2021	30,603
	1,995	19.30	October 20, 2021	36,987
	1,986	19.39	January 26, 2022	36,642
	1,807	21.31	April 19, 2022	29,870
	1,605	23.99	July 26, 2022	22,229
	1,471	26.16	October 18, 2022	17,181
	3,813	23.65	November 26, 2022	54,106
	1,577	24.41	January 23, 2023	21,179
	277	27.12	February 13, 2023	2,969
	1,728	26.62	April 17, 2023	19,388
	1,494	30.79	July 10, 2023	10,533
	4,000	36.15	September 30, 2023	6,760
	1,198	38.41	October 16, 2023	0
	1,471	34.68	January 22, 2024	4,648
	1,410	36.17	April 16, 2024	2,355
	1,360	37.50	July 23, 2024	462
	4,000	37.82	September 22, 2024	80
							562,492
Total:				615,537			562,492

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	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying unexercised     options(a) (#)	Option exercise   price ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of shares or units of  shares that   have not vested (#)	Market or payout value of share- based awards  that have not   vested ($)	Market Payout value of vested share- based awards not paid out or   distributed(b)(c) ($)
Thomas P. d’Aquino
	625	15.49	September 30, 2020	13,969
	2,386	19.28	January 27, 2021	44,284
	2,408	20.30	April 24, 2021	42,236
	2,438	20.51	July 28, 2021	42,251
	1,688	19.71	September 30, 2021	30,603
	2,591	19.30	October 20, 2021	48,037
	2,579	19.39	January 26, 2022	47,583
	2,223	21.31	April 19, 2022	36,746
	1,917	23.99	July 26, 2022	26,550
	1,758	26.16	October 18, 2022	20,533
	3,813	23.65	November 26, 2022	54,106
	1,884	24.41	January 23, 2023	25,302
	277	27.12	February 13, 2023	2,969
	2,010	26.62	April 17, 2023	22,552
	1,867	30.79	July 10, 2023	13,162
	4,000	36.15	September 30, 2023	6,760
	1,497	38.41	October 16, 2023	0
	1,802	34.68	January 22, 2024	5,694
	1,728	36.17	April 16, 2024	2,886
	1,667	37.50	July 23, 2024	567
	4,000	37.82	September 22, 2024	80
							1,319,897
			Total:	486,872			1,319,897
	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying   unexercised     options(a) (#)	Option exercise   price ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of shares or units of   shares that   have not vested (#)	Market or payout value of share- based awards   that have not   vested ($)	Market Payout value of vested share- based awards  not paid out or  distributed(b)(c) ($)
Paule Doré
	2,500	12.54	September 30, 2019	63,250
	2,500	15.49	September 30, 2020	55,875
	648	19.28	January 27, 2021	12,027
	616	20.30	April 24, 2021	10,805
	609	20.51	July 28, 2021	10,554
	1,688	19.71	September 30, 2021	30,603
	648	19.30	October 20, 2021	12,014
	645	19.39	January 26, 2022	11,900
	587	21.31	April 19, 2022	9,703
	521	23.99	July 26, 2022	7,216
	478	26.16	October 18, 2022	5,583
	3,813	23.65	November 26, 2022	54,106
	512	24.41	January 23, 2023	6,876
	277	27.12	February 13, 2023	2,969
	751	26.62	April 17, 2023	8,426
	650	30.79	July 10, 2023	4,583
	4,000	36.15	September 30, 2023	6,760
	521	38.41	October 16, 2023	0
	721	34.68	January 22, 2024	2,278
	691	36.17	April 16, 2024	1,154
	667	37.50	July 23, 2024	227
	4,000	37.82	September 22, 2024	80
							180,497
			Total:	316,990			180,497

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	Option-based Awards				Share-based Awards
Name and title	securities	exercise	Option expiration date	the-money options(b)	shares or	payout value	value of
Richard B. Evans
	2,500	12.54	September 30, 2019	63,250
	2,500	12.54	September 30, 2019	63,250
	44	13.26	October 22, 2019	1,082
	1,796	14.48	January 28, 2020	41,955
	1,676	15.51	April 22, 2020	37,425
	1,762	14.76	July 29, 2020	40,667
	2,500	15.49	September 30, 2020	55,875
	1,629	15.96	October 21, 2020	35,643
	1,997	19.28	January 27, 2021	37,064
	1,825	20.30	April 24, 2021	32,011
	1,779	20.51	July 28, 2021	30,830
	1,688	19.71	September 30, 2021	30,603
	2,024	19.30	October 20, 2021	37,525
	2,034	19.39	January 26, 2022	37,527
	1,798	21.31	April 19, 2022	29,721
	1,629	23.99	July 26, 2022	22,562
	1,441	26.61	October 18, 2022	16,182
	3,813	23.65	November 26, 2022	54,106
	1,554	24.41	January 23, 2023	20,870
	277	27.12	February 13, 2023	2,969
	1,724	26.62	April 17, 2023	19,343
	1,539	30.79	July 10, 2023	10,850
	4,000	36.15	September 30, 2023	6,760
	1,207	38.41	October 16, 2023	0
	1,576	34.68	January 22, 2024	4,980
	1,507	36.17	April 16, 2024	2,517
	1,430	37.50	July 23, 2024	486
	4,000	37.82	September 22, 2024	80
							610,094
			Total:	736,134			610,094
	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying   unexercised     options(a) (#)	Option   exercise     price ($)	Option expiration date	Value of unexercised in-     the-money options(b) ($)	Number of shares or units of   shares that     have not vested(a) (#)	Market or   payout value     of share-   based awards     that have not vested(b)(c) ($)	Market Payout     value of vested  share - based awards not paid out or distributed ($)
Julie Godin
	9,375	12.54	September 30, 2019	237,188
	9,375	15.49	September 30, 2020	209,531
	6,330	19.71	September 30, 2021	114,763
	33,363	23.65	November 26, 2022	473,421
	25,000	23.65	November 26, 2022	354,750
	35,000	37.11	November 12, 2023	25,550
	50,000	37.82	September 22, 2024	1,000
			Total:	1,416,203
	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying   unexercised     options(a) (#)	Option   exercise     price ($)	Option expiration date	Value of unexercised in-     the-money options(b) ($)	Number of shares or units of   shares that     have not vested(a) (#)	Market or payout value of share-   based awards     that have not vested(b)(c) ($)	Market Payout     value of vested share - based awards not paid out or distributed ($)
André Imbeau
	107,553	15.49	September 30, 2020	2,403,810
	3,813	23.65	November 26, 2022	54,106
	4,000	36.15	September 30, 2023	6,760
					22,854	864,795
			Total:	2,464,676	22,854	864,795

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	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying unexercised options(a) (#)	Option exercise price ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of shares or units of shares that have not vested (#)	Market or payout value of share- based awards that have not vested ($)	Market Payout value of vested share- based awards not paid out or distributed(b)(c) ($)
Gilles Labbé
	2,500	14.69	January 26, 2020	57,875
	596	15.51	April 22, 2020	13,309
	881	14.76	July 29, 2020	20,333
	2,500	15.49	September 30, 2020	55,875
	815	15.96	October 21, 2020	17,832
	1,349	19.28	January 27, 2021	25,037
	1,281	20.30	April 24, 2021	22,469
	1,268	20.51	July 28, 2021	21,974
	1,688	19.71	September 30, 2021	30,603
	1,347	19.30	October 20, 2021	24,973
	1,315	19.39	January 26, 2022	24,262
	1,278	21.31	April 19, 2022	21,125
	1,172	23.99	July 26, 2022	16,232
	1,075	26.16	October 18, 2022	12,556
	3,813	23.65	November 26, 2022	54,106
	1,152	24.41	January 23, 2023	15,471
	277	27.12	February 13, 2023	2,969
	1,925	26.62	April 17, 2023	21,599
	1,665	30.79	July 10, 2023	11,738
	4,000	36.15	September 30, 2023	6,760
	1,334	38.41	October 16, 2023	0
	1,658	34.68	January 22, 2024	5,239
	1,590	36.17	April 16, 2024	2,655
	1,533	37.50	July 23, 2024	521
	4,000	37.82	September 22, 2024	80
							444,771
			Total:	485,597			444,771
	Option-based Awards				Share-based Awards
Name and title	Number of securities underlying     unexercised     options(a) (#)	Option   exercise   price ($)	Option expiration date	Value of unexercised in- the-money options(b) ($)	Number of shares or units of   shares that   have not vested (#)	Market or payout value of share-  based awards  that have not vested ($)	Market Payout value of vested share- based awards not paid out or  distributed(b)(c)  ($)
Joakim Westh
	3,813	27.28	April 28, 2023	40,265
	4,000	36.15	September 30, 2023	6,760
	4,000	37.82	September 22, 2024	80
			Total:	47,105

(a) Shows stock options held as at the end of the fiscal year ended September 30, 2014.

(b) Based on $37.84, the closing price of the Company’s Class A subordinate voting shares on the Toronto Stock Exchange on September 30, 2014.

(c) Shows the aggregate payout value of DSUs held as at the end of the fiscal year ended September 30, 2014.

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APPENDIX C

Shareholder Proposals

Proposal Number One – Advisory Vote on the Compensation of Senior Executives

It is proposed that the board of directors adopt a policy setting out that the compensation policy for its five most senior executives shall be submitted to a shareholder advisory vote.

Currently, the shareholders of CGI Group Inc. cannot express their opinion on the corporation’s senior executive compensation policies. Today, close to one hundred companies offer their shareholders such an opportunity.

It seems that many shareholders are concerned about the company’s compensation policy because, at the last annual general meeting, 14% voted against the resolution to approve the replenishment of the shares reserved for issuance under the Share Option Plan for Employees, Officers and Directors of CGI Group Inc. and its Subsidiaries.

An advisory vote on the compensation of senior executives is a basic element of good relations with shareholders and allows the Board of Directors to ensure that shareholders are satisfied with its compensation policy and that it maintains a good dialogue with its shareholders, without regard to the number of shares they hold which preserves the good reputation of the company with its various stakeholders and the financial community. It also avoids excessive withholding of votes in the case of directors who serve on compensation committees which may affect their reputation as a director, when shareholders do not have access to an advisory vote to express their dissatisfaction. It is our view that dissatisfaction with respect to a compensation policy should be expressed with respect to the Board of Directors as a whole and not with respect to certain directors.

Board of Directors Response

Devising a compensation policy and related practices as a solid foundation for a successful business is a challenging task that takes a deep understanding of the business and its competitive environment to ensure that our overall compensation approach serves the best interests of the Company.

Shareholders elect directors annually to perform that critical oversight role on their behalf. CGI’s Board of Directors has established a Human Resources Committee made up of independent directors who have expertise in human resources management, as well as access to expert advice, comparative data and best practices in the establishment and oversight of executive compensation policy and practices.

As such, CGI’s directors devised an executive compensation policy that emphasizes incentive compensation linked to business success, thereby ensuring that the financial interests of the Company’s executives are closely aligned with those of shareholders. CGI measures business success on the basis of profit and growth as well as client and member satisfaction. This belief drives the Company’s compensation programs, which are designed to attract and retain the key talent CGI needs to remain competitive in a challenging market and achieve continued and profitable growth for shareholders.

Advisory votes, by their binary yes or no nature, do not provide meaningful insight to the Board of Directors and therefore accomplish little to promote a meaningful dialogue with shareholders. The current Canadian regulatory context prevents public companies from knowing who their shareholders really are. In addition, the rules forbidding selective disclosure similarly militate against discussions with interest groups.

The advisory vote process also raises the question of whether all shareholders should benefit from the same voting rights. Studies have shown that, on average, shares of North American public companies are held for short periods of time, often less than six months. A review of applicable legislation to distinguish between short term speculators and investors who have an interest in the long term interests of companies would therefore be in order before the rights of all shareholders are broadened.

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Furthermore, several institutional investors exercise their voting power based on recommendations by investor services firms, thereby essentially delegating their voting rights to such organizations. Our experience has been that these firms’ one-size-fits-all approach and the quality of their research can be deficient. Advisory firms are also often in blatant conflicts of interest as they provide corporate governance advisory services while also making voting recommendations based on the practices that they advocate. These considerations raise concerns that should also be addressed before considering expanding shareholder rights.

We therefore believe that our directors, whose fiduciary duties include ensuring that the Company’s executive compensation policies and practices are the best fit for the Company’s business in the competitive arena in which it operates, are uniquely qualified and positioned to effectively play this important governance function in an effective manner.

The Board of Directors therefore recommends that shareholders vote against Proposal Number One.

Proposal Number Two – Information on Director Qualifications

It is proposed that the Management Proxy Circular provide more information on the directors’ skills as well as the continuing education they receive.

In order to provide shareholders with a better appreciation of the skills that nominee directors bring to the Board, a fair number of companies present a table describing the nominees’ experience and skills. In addition, some companies disclose the continuing education courses that directors have taken, which allows shareholders to appreciate whether the directors are remaining current with respect to evolving requirements relating to financial disclosure, risk management, governance, ethics, and executive compensation policy. This type of information allows shareholders to gain a better appreciation for the quality of the candidates proposed for election. We cite the following disclosure concerning a candidate taken from the most recent Management Proxy Circular of the Toronto Dominion Bank:

These best practices are strongly encouraged by the Canadian Coalition for Good Governance.

Board of Directors Response

CGI already provides detailed disclosure concerning our directors’ participation in continuing education initiatives. The information is presented in our Management Proxy Circular in the report of the Corporate Governance Committee under the heading Participation in the Orientation and Continuing Education Program.

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However, we have added a skills matrix to the disclosure concerning our corporate governance practices showing the skills that each of our directors contributes to the CGI Board of Directors. The information is presented in our Management Proxy Circular in the report of the Corporate Governance Committee under the heading Expertise and Financial and Operational Literacy.

We have also added the skillset to each director’s biography in the Management Proxy Circular, in the same format as the one used in the skills matrix.

On the basis of these changes made to our Management Proxy Circular, and following discussions with the Mouvement d’éducation et de défense des actionnaires (“Médac”), it was agreed that Proposal Number Two would not be submitted to the Meeting for a vote.

Proposal Number Three – Abolition of Stock Options for Directors

It is proposed that the Board of Directors abolish the practice of granting stock options to its directors.

At the present time, directors who join the Board of Directors for the first time are eligible, at the time of their election, to receive a grant of 4,000 stock options. In addition, the members of the Board of Directors receive each year a grant of 4,000 stock options.

It is our view that the best way to align the interests of directors with those of shareholders is to require a minimum shareholding. That is the position taken by the Caisse and Desjardins in this matter, we cite the position taken by Desjardins²:

“They will vote AGAINST the creation of stock option plans for managers or directors, and will vote AGAINST any addition to existing plans, except for start-up and small cap companies”

While the practice may have been useful in the first years of the company’s existence as a result of its limited means to compensate its directors, there is no longer a reason to do so. This may lead to excessive risk-taking and conflicts of interest between the directors and the company.

Board of Directors Response

Following ongoing discussions with certain of the Company’s shareholders as part of a process initiated two years ago, as well as more recent exchanges with Médac, the Board of Directors has undertaken to cease its practice of granting stock options to its outside directors beginning with the 2016 fiscal year.

On that basis, and following discussions with Médac, it was agreed that Proposal Number Three would not be submitted to the Meeting for a vote.

Proposal Number Four – Abolition of Stock Options

This proposal was presented to the Company by Médac but withdrawn after discussions between the Company and Médac.

²Policy on the exercise of proxy voting rights, Desjardins Funds, 2014, Desjardins Wealth Management http://fondsdesjardins.com/information/droit_vote_en.pdf

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