EX-99.2 3 d175367dex992.htm EX-99.2

Exhibit 99.2

Interim Condensed Consolidated Financial Statements of

CGI INC.

For the three and six months ended March 31, 2021 and 2020

(unaudited)

Interim Consolidated Statements of Earnings

For the three and six months ended March 31

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

|  |  |  |  | Three months ended March 31 |  |  | Six months ended March 31 |
|  | Notes |  |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
|  |  |  |  | $ |  |  | $ |  |  | $ |  |  | $ |
Revenue |  |  | 8 |  |  |  | 3,078,540 |  |  |  | 3,131,141 |  |  |  | 6,097,981 |  |  |  | 6,185,888 |
Operating expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Costs of services, selling and administrative |  |  |  |  |  |  | 2,593,743 |  |  |  | 2,645,600 |  |  |  | 5,120,217 |  |  |  | 5,225,374 |
Acquisition-related and integration costs |  |  | 6c |  |  |  | 848 |  |  |  | 31,097 |  |  |  | 5,587 |  |  |  | 51,331 |
Restructuring costs |  |  |  |  |  |  | — |  |  |  | 443 |  |  |  | — |  |  |  | 31,621 |
Net finance costs |  |  |  |  |  |  | 26,231 |  |  |  | 26,628 |  |  |  | 53,409 |  |  |  | 53,350 |
Foreign exchange (gain) loss |  |  |  |  |  |  | (1,529 | ) |  |  | 2,295 |  |  |  | (4,288 | ) |  |  | 3,162 |
|  |  |  |  |  |  | 2,619,293 |  |  |  | 2,706,063 |  |  |  | 5,174,925 |  |  |  | 5,364,838 |
Earnings before income taxes |  |  |  |  |  |  | 459,247 |  |  |  | 425,078 |  |  |  | 923,056 |  |  |  | 821,050 |
Income tax expense |  |  |  |  |  |  | 118,034 |  |  |  | 110,230 |  |  |  | 238,392 |  |  |  | 216,009 |
Net earnings |  |  |  |  |  |  | 341,213 |  |  |  | 314,848 |  |  |  | 684,664 |  |  |  | 605,041 |
Earnings per share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Basic earnings per share |  |  | 5c |  |  |  | 1.36 |  |  |  | 1.19 |  |  |  | 2.70 |  |  |  | 2.28 |
Diluted earnings per share |  |  | 5c |  |  |  | 1.34 |  |  |  | 1.18 |  |  |  | 2.66 |  |  |  | 2.24 |

See Notes to the Interim Condensed Consolidated Financial Statements.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 1

Interim Consolidated Statements of Comprehensive Income

For the three and six months ended March 31

(in thousands of Canadian dollars) (unaudited)

|  | Three months ended March 31 |  |  | Six months ended March 31 |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
|  | $ |  |  | $ |  |  | $ |  |  | $ |
Net earnings |  |  | 341,213 |  |  |  | 314,848 |  |  |  | 684,664 |  |  |  | 605,041 |
Items that will be reclassified subsequently to net earnings (net of income taxes): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net unrealized (losses) gains on translating financial statements of foreign operations |  |  | (308,493 | ) |  |  | 470,348 |  |  |  | (386,807 | ) |  |  | 506,138 |
Net gains (losses) on cross-currency swaps and on translating long-term debt designated as hedges of net investments in foreign operations |  |  | 82,805 |  |  |  | (96,867 | ) |  |  | 160,618 |  |  |  | (102,929 | )
Deferred (costs) gains of hedging on cross-currency swaps |  |  | (1,435 | ) |  |  | 16,069 |  |  |  | (4,979 | ) |  |  | 16,432 |
Net unrealized gains (losses) on cash flow hedges |  |  | 8,138 |  |  |  | (24,722 | ) |  |  | (1,693 | ) |  |  | (27,403 | )
Net unrealized losses on financial assets at fair value through other comprehensive income |  |  | (830 | ) |  |  | (39 | ) |  |  | (1,022 | ) |  |  | (189 | )
Items that will not be reclassified subsequently to net earnings (net of income taxes): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net remeasurement (losses) gains on defined benefit plans |  |  | (7,631 | ) |  |  | 46,833 |  |  |  | 7,127 |  |  |  | 26,822 |
Other comprehensive (loss) income |  |  | (227,446 | ) |  |  | 411,622 |  |  |  | (226,756 | ) |  |  | 418,871 |
Comprehensive income |  |  | 113,767 |  |  |  | 726,470 |  |  |  | 457,908 |  |  |  | 1,023,912 |

See Notes to the Interim Condensed Consolidated Financial Statements.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 2

Interim Consolidated Balance Sheets

(in thousands of Canadian dollars) (unaudited)

|  |  |  |  | As at |  |  | As at |
|  | Notes |  |  | March 31, 2021 |  |  | September 30, 2020 |
|  |  |  |  | $ |  |  | $ |
Assets |  |  |  |  |  |  |  |  |  |  |  |
Current assets |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 7c and 9 |  |  |  | 1,339,794 |  |  |  | 1,707,985 |
Accounts receivable |  |  |  |  |  |  | 1,119,371 |  |  |  | 1,219,302 |
Work in progress |  |  |  |  |  |  | 1,037,434 |  |  |  | 1,075,252 |
Current financial assets |  |  | 9 |  |  |  | 24,428 |  |  |  | 18,500 |
Prepaid expenses and other current assets |  |  |  |  |  |  | 165,577 |  |  |  | 160,406 |
Income taxes |  |  |  |  |  |  | 451 |  |  |  | 29,363 |
Total current assets before funds held for clients |  |  |  |  |  |  | 3,687,055 |  |  |  | 4,210,808 |
Funds held for clients |  |  |  |  |  |  | 784,022 |  |  |  | 725,178 |
Total current assets |  |  |  |  |  |  | 4,471,077 |  |  |  | 4,935,986 |
Property, plant and equipment |  |  |  |  |  |  | 346,710 |  |  |  | 372,946 |
Right-of-use assets |  |  |  |  |  |  | 616,489 |  |  |  | 666,865 |
Contract costs |  |  |  |  |  |  | 234,732 |  |  |  | 239,376 |
Intangible assets |  |  |  |  |  |  | 500,265 |  |  |  | 521,462 |
Other long-term assets |  |  |  |  |  |  | 182,051 |  |  |  | 163,739 |
Long-term financial assets |  |  |  |  |  |  | 150,320 |  |  |  | 156,569 |
Deferred tax assets |  |  |  |  |  |  | 113,562 |  |  |  | 113,484 |
Goodwill |  |  |  |  |  |  | 8,104,724 |  |  |  | 8,379,931 |
|  |  |  |  |  |  | 14,719,930 |  |  |  | 15,550,358 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities |  |  |  |  |  |  |  |  |  |  |  |
Accounts payable and accrued liabilities |  |  |  |  |  |  | 957,916 |  |  |  | 1,025,963 |
Accrued compensation |  |  |  |  |  |  | 762,276 |  |  |  | 672,775 |
Current portion of long-term debt |  |  |  |  |  |  | 583,267 |  |  |  | 310,764 |
Deferred revenue |  |  |  |  |  |  | 561,985 |  |  |  | 426,393 |
Income taxes |  |  |  |  |  |  | 173,278 |  |  |  | 136,928 |
Current portion of lease liabilities |  |  |  |  |  |  | 168,448 |  |  |  | 178,720 |
Provisions |  |  |  |  |  |  | 112,589 |  |  |  | 175,632 |
Current derivative financial instruments |  |  | 9 |  |  |  | 16,130 |  |  |  | 8,328 |
Total current liabilities before clients’ funds obligations |  |  |  |  |  |  | 3,335,889 |  |  |  | 2,935,503 |
Clients’ funds obligations |  |  |  |  |  |  | 780,448 |  |  |  | 720,322 |
Total current liabilities |  |  |  |  |  |  | 4,116,337 |  |  |  | 3,655,825 |
Long-term debt |  |  |  |  |  |  | 2,789,237 |  |  |  | 3,276,331 |
Long-term income taxes |  |  |  |  |  |  | 5,673 |  |  |  | 6,720 |
Long-term lease liabilities |  |  |  |  |  |  | 649,300 |  |  |  | 697,650 |
Long-term provisions |  |  |  |  |  |  | 25,683 |  |  |  | 23,888 |
Other long-term liabilities |  |  |  |  |  |  | 179,128 |  |  |  | 185,374 |
Long-term derivative financial instruments |  |  | 9 |  |  |  | 69,537 |  |  |  | 56,622 |
Deferred tax liabilities |  |  |  |  |  |  | 108,602 |  |  |  | 158,341 |
Retirement benefits obligations |  |  |  |  |  |  | 207,484 |  |  |  | 225,447 |
|  |  |  |  |  |  | 8,150,981 |  |  |  | 8,286,198 |
Equity |  |  |  |  |  |  |  |  |  |  |  |
Retained earnings |  |  |  |  |  |  | 4,359,822 |  |  |  | 4,703,642 |
Accumulated other comprehensive income |  |  | 4 |  |  |  | 318,954 |  |  |  | 545,710 |
Capital stock |  |  | 5a |  |  |  | 1,617,715 |  |  |  | 1,761,873 |
Contributed surplus |  |  |  |  |  |  | 272,458 |  |  |  | 252,935 |
|  |  |  |  |  |  | 6,568,949 |  |  |  | 7,264,160 |
|  |  |  |  |  |  | 14,719,930 |  |  |  | 15,550,358 |

See Notes to the Interim Condensed Consolidated Financial Statements.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 3

Interim Consolidated Statements of Changes in Equity

For the six months ended March 31

(in thousands of Canadian dollars) (unaudited)

|  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | other |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Retained |  |  | comprehensive |  |  | Capital |  |  | Contributed |  |  | Total |
|  | Notes |  |  | earnings |  |  | income |  |  | stock |  |  | surplus |  |  | equity |
|  |  |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |
Balance as at September 30, 2020 |  |  |  |  |  |  | 4,703,642 |  |  |  | 545,710 |  |  |  | 1,761,873 |  |  |  | 252,935 |  |  |  | 7,264,160 |
Net earnings |  |  |  |  |  |  | 684,664 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 684,664 |
Other comprehensive loss |  |  |  |  |  |  | — |  |  |  | (226,756 | ) |  |  | — |  |  |  | — |  |  |  | (226,756 | )
Comprehensive income |  |  |  |  |  |  | 684,664 |  |  |  | (226,756 | ) |  |  | — |  |  |  | — |  |  |  | 457,908 |
Share-based payment costs |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 23,567 |  |  |  | 23,567 |
Income tax impact associated with stock options |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,784 |  |  |  | 8,784 |
Exercise of stock options |  |  | 5a |  |  |  | — |  |  |  | — |  |  |  | 35,140 |  |  |  | (6,083 | ) |  |  | 29,057 |
Exercise of performance share units |  |  | 5a |  |  |  | — |  |  |  | — |  |  |  | 6,745 |  |  |  | (6,745 | ) |  |  | — |
Purchase for cancellation of Class A subordinate voting shares |  |  | 5a |  |  |  | (1,028,484 | ) |  |  | — |  |  |  | (154,639 | ) |  |  | — |  |  |  | (1,183,123 | )
Purchase of Class A subordinate voting shares held in trusts |  |  | 5a |  |  |  | — |  |  |  | — |  |  |  | (31,404 | ) |  |  | — |  |  |  | (31,404 | )
Balance as at March 31, 2021 |  |  |  |  |  |  | 4,359,822 |  |  |  | 318,954 |  |  |  | 1,617,715 |  |  |  | 272,458 |  |  |  | 6,568,949 |
|  |  |  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |  |
|  |  |  |  |  |  |  | other |  |  |  |  |  |  |  |  |  |
|  |  |  |  | Retained |  |  | comprehensive |  |  | Capital |  |  | Contributed |  |  | Total |
|  | Notes |  |  | earnings |  |  | income |  |  | stock |  |  | surplus |  |  | equity |
|  |  |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |
Balance as at September 30, 2019 |  |  |  |  |  |  | 4,557,855 |  |  |  | 176,694 |  |  |  | 1,903,977 |  |  |  | 245,577 |  |  |  | 6,884,103 |
Adoption of IFRS 16 |  |  |  |  |  |  | (93,873 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (93,873 | )
Balance as at October 1, 2019 |  |  |  |  |  |  | 4,463,982 |  |  |  | 176,694 |  |  |  | 1,903,977 |  |  |  | 245,577 |  |  |  | 6,790,230 |
Net earnings |  |  |  |  |  |  | 605,041 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 605,041 |
Other comprehensive income |  |  |  |  |  |  | — |  |  |  | 418,871 |  |  |  | — |  |  |  | — |  |  |  | 418,871 |
Comprehensive income |  |  |  |  |  |  | 605,041 |  |  |  | 418,871 |  |  |  | — |  |  |  | — |  |  |  | 1,023,912 |
Share-based payment costs |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 19,885 |  |  |  | 19,885 |
Income tax impact associated with stock options |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (15,630 | ) |  |  | (15,630 | )
Exercise of stock options |  |  | 5a |  |  |  | — |  |  |  | — |  |  |  | 48,427 |  |  |  | (8,459 | ) |  |  | 39,968 |
Exercise of performance share units |  |  | 5a |  |  |  | — |  |  |  | — |  |  |  | 8,856 |  |  |  | (8,856 | ) |  |  | — |
Purchase for cancellation of Class A subordinate voting shares |  |  | 5a |  |  |  | (878,202 | ) |  |  | — |  |  |  | (165,315 | ) |  |  | — |  |  |  | (1,043,517 | )
Purchase of Class A subordinate voting shares held in trusts |  |  | 5a |  |  |  | — |  |  |  | — |  |  |  | (55,287 | ) |  |  | — |  |  |  | (55,287 | )
Balance as at March 31, 2020 |  |  |  |  |  |  | 4,190,821 |  |  |  | 595,565 |  |  |  | 1,740,658 |  |  |  | 232,517 |  |  |  | 6,759,561 |

See Notes to the Interim Condensed Consolidated Financial Statements.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 4

Interim Consolidated Statements of Cash Flows

For the three and six months ended March 31

(in thousands of Canadian dollars) (unaudited)

|  |  |  | Three months ended March 31 |  |  | Six months ended March 31 |
|  | Notes |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
|  |  |  | $ |  |  | $ |  |  | $ |  |  | $ |
Operating activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net earnings |  |  |  |  | 341,213 |  |  |  | 314,848 |  |  |  | 684,664 |  |  |  | 605,041 |
Adjustments for: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization, depreciation and impairment |  |  |  |  | 124,747 |  |  |  | 130,694 |  |  |  | 257,164 |  |  |  | 263,075 |
Deferred income taxes recovery |  |  |  |  | (38,102 | ) |  |  | (13,763 | ) |  |  | (41,650 | ) |  |  | (10,273 | )
Foreign exchange loss (gain) |  |  |  |  | 5,110 |  |  |  | 3,155 |  |  |  | (4,143 | ) |  |  | 649 |
Share-based payment costs |  |  |  |  | 11,863 |  |  |  | 6,683 |  |  |  | 23,567 |  |  |  | 19,885 |
Net change in non-cash working capital items |  | 7a |  |  | 127,786 |  |  |  | (45,125 | ) |  |  | 250,488 |  |  |  | (16,619 | )
Cash provided by operating activities |  |  |  |  | 572,617 |  |  |  | 396,492 |  |  |  | 1,170,090 |  |  |  | 861,758 |
Investing activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net change in short-term investments |  |  |  |  | — |  |  |  | (1,406 | ) |  |  | 1,473 |  |  |  | (1,591 | )
Business acquisitions (considering the bank overdraft assumed and cash acquired) |  |  |  |  | (1,332 | ) |  |  | (139,451 | ) |  |  | (28,600 | ) |  |  | (272,586 | )
Purchase of property, plant and equipment |  |  |  |  | (33,471 | ) |  |  | (40,037 | ) |  |  | (50,280 | ) |  |  | (69,543 | )
Additions to contract costs |  |  |  |  | (20,544 | ) |  |  | (22,166 | ) |  |  | (34,851 | ) |  |  | (35,728 | )
Additions to intangible assets |  |  |  |  | (30,293 | ) |  |  | (26,951 | ) |  |  | (55,197 | ) |  |  | (50,830 | )
Purchase of long-term investments |  |  |  |  | (551 | ) |  |  | (900 | ) |  |  | (2,466 | ) |  |  | (4,859 | )
Proceeds from sale of long-term investments |  |  |  |  | 577 |  |  |  | 1,236 |  |  |  | 3,186 |  |  |  | 5,380 |
Cash used in investing activities |  |  |  |  | (85,614 | ) |  |  | (229,675 | ) |  |  | (166,735 | ) |  |  | (429,757 | )
Financing activities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net change in unsecured committed revolving credit facility |  |  |  |  | — |  |  |  | (74,738 | ) |  |  | — |  |  |  | (234,623 | )
Increase of long-term debt |  |  |  |  | 23,439 |  |  |  | 1,076,131 |  |  |  | 29,864 |  |  |  | 1,088,869 |
Repayment of long-term debt |  |  |  |  | (2,479 | ) |  |  | (6,303 | ) |  |  | (42,362 | ) |  |  | (27,637 | )
Payment of lease liabilities |  |  |  |  | (50,757 | ) |  |  | (47,723 | ) |  |  | (91,776 | ) |  |  | (89,407 | )
Repayment of debt assumed in business acquisitions |  |  |  |  | — |  |  |  | (10,169 | ) |  |  | — |  |  |  | (23,232 | )
Payment for remaining shares of Acando1 |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (23,123 | )
Purchase of Class A subordinate voting shares held in trusts |  | 5a |  |  | — |  |  |  | (30,372 | ) |  |  | (31,404 | ) |  |  | (55,287 | )
Purchase and cancellation of Class A subordinate voting shares |  | 5a |  |  | (747,068 | ) |  |  | (1,026,337 | ) |  |  | (1,183,123 | ) |  |  | (1,043,517 | )
Issuance of Class A subordinate voting shares |  |  |  |  | 14,329 |  |  |  | 17,305 |  |  |  | 28,840 |  |  |  | 40,076 |
Cash used in financing activities |  |  |  |  | (762,536 | ) |  |  | (102,206 | ) |  |  | (1,289,961 | ) |  |  | (367,881 | )
Effect of foreign exchange rate changes on cash and cash equivalents |  |  |  |  | (59,772 | ) |  |  | 24,798 |  |  |  | (81,585 | ) |  |  | 24,536 |
Net (decrease) increase in cash and cash equivalents |  |  |  |  | (335,305 | ) |  |  | 89,409 |  |  |  | (368,191 | ) |  |  | 88,656 |
Cash and cash equivalents, beginning of period |  |  |  |  | 1,675,099 |  |  |  | 213,078 |  |  |  | 1,707,985 |  |  |  | 213,831 |
Cash and cash equivalents, end of period |  |  |  |  | 1,339,794 |  |  |  | 302,487 |  |  |  | 1,339,794 |  |  |  | 302,487 |

1 Related to a business acquisition made during the year ended September 30, 2019.

Supplementary cash flow information (Note 7).

See Notes to the Interim Condensed Consolidated Financial Statements.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 5

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

1. | Description of business

CGI Inc. (the Company), directly or through its subsidiaries, provides managed information technology (IT) and business process services (BPS), systems integration and consulting, as well as the sale of software solutions to help clients effectively realize their strategies and create added value. 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 Class A subordinate voting 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 interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB). In addition, the interim condensed consolidated financial statements have been prepared in accordance with the accounting policies set out in Note 3, Summary of significant accounting policies, of the Company’s consolidated financial statements for the year ended September 30, 2020 which were consistently applied to all periods presented.

These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of the Company for the year ended September 30, 2020.

The Company’s interim condensed consolidated financial statements for the three and six months ended March 31, 2021 and 2020 were authorized for issue by the Board of Directors on April 27, 2021.

3. | Accounting policies

USE OF JUDGEMENTS AND ESTIMATES

For the period ended March 31, 2021, the Company assessed the impact of the uncertainties around the outbreak of the novel strain of the coronavirus, specifically identified as the COVID-19 pandemic, on its balance sheet carrying amounts. This review required the use of judgements and estimates and resulted in no material impacts.

The future impact of COVID-19 uncertainties could generate, in future reporting periods, a significant risk of material adjustments to the following: revenue recognition, deferred tax assets, estimated losses on revenue-generating contracts, impairment of property, plant and equipment, right-of-use assets, intangible assets and goodwill as well as litigation and claims.

FUTURE ACCOUNTING STANDARD CHANGES

The following standards have been issued but are not yet effective as of March 31, 2021:

LIBOR reform with amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16

In August 2020, the IASB issued Interest Rate Benchmark Reform-Phase 2, which amends IFRS 9 Financial Instruments, IAS 39 Financial Instruments: Recognition and Measurement, IFRS 7 Financial Instruments: Disclosures and IFRS 16 Leases. The amendments complement those issued in 2019 and focus on the effects on financial statements when a company replaces the old interest rate benchmark with an alternative benchmark rate as a result of the reform. The standard will be effective on October 1, 2021 for the Company. The Company is currently evaluating the impact of this standard on its financial statements.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 6

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

4. | Accumulated other comprehensive income

|  | As at |  |  | As at |
|  | March 31, 2021 |  |  | September 30, 2020 |
|  | $ |  |  | $ |
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 $46,001 ($56,239 as at September 30, 2020) |  |  | 615,997 |  |  |  | 1,002,804 |
Net losses on cross-currency swaps and on translating long-term debt designated as hedges of net investments in foreign operations, net of accumulated income tax recovery of $39,160 ($63,692 as at September 30, 2020) |  |  | (256,844 | ) |  |  | (417,462 | )
Deferred gains of hedging on cross-currency swaps, net of accumulated income tax expense of $3,271 ($4,049 as at September 30, 2020) |  |  | 9,074 |  |  |  | 14,053 |
Net unrealized losses on cash flow hedges, net of accumulated income tax recovery of $3,359 ($2,554 as at September 30, 2020) |  |  | (7,628 | ) |  |  | (5,935 | )
Net unrealized gains on financial assets at fair value through other comprehensive income, net of accumulated income tax expense of $979 ($1,291 as at September 30, 2020) |  |  | 3,318 |  |  |  | 4,340 |
Items that will not be reclassified subsequently to net earnings: |  |  |  |  |  |  |  |
Net remeasurement losses on defined benefit plans, net of accumulated income tax recovery of $17,181 ($18,920 as at September 30, 2020) |  |  | (44,963 | ) |  |  | (52,090 | )
|  |  | 318,954 |  |  |  | 545,710 |

For the six months ended March 31, 2021, $1,011,000 of the net unrealized losses on cash flow hedges, net of income tax recovery of $573,000, previously recognized in other comprehensive income were reclassified in the consolidated statements of earnings ($7,737,000 of the net unrealized gains on cash flow hedges, net of income tax expense of $2,503,000, were reclassified for the six months ended March 31, 2020).

For the six months ended March 31, 2021, $5,104,000 of the deferred gains of hedging on cross-currency swaps, net of income tax expense of $1,840,000 were also reclassified in the consolidated statements of earnings ($12,341,000 and $1,054,000, respectively were reclassified for the six months ended March 31, 2020).

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 7

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

5. | Capital stock, share-based payments and earnings per share

a) | Capital stock

|  | Class A subordinate voting shares |  |  | Class B multiple voting shares |  |  |  |  |  | Total |
|  | Number |  |  | Carrying value |  |  | Number |  |  | Carrying value |  |  | Number |  |  | Carrying value |
|  |  |  |  | $ |  |  |  |  |  | $ |  |  |  |  |  | $ |
As at September 30, 2020 |  |  | 230,690,875 |  |  |  | 1,721,491 |  |  |  | 28,945,706 |  |  |  | 40,382 |  |  |  | 259,636,581 |  |  |  | 1,761,873 |
Issued upon exercise of stock options1 |  |  | 618,225 |  |  |  | 35,140 |  |  |  | — |  |  |  | — |  |  |  | 618,225 |  |  |  | 35,140 |
Performance share units (PSUs) exercised2 |  |  | — |  |  |  | 6,745 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,745 |
Purchased and cancelled3 |  |  | (12,360,665 | ) |  |  | (154,639 | ) |  |  | — |  |  |  | — |  |  |  | (12,360,665 | ) |  |  | (154,639 | )
Purchased and held in trusts4 |  |  | — |  |  |  | (31,404 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (31,404 | )
Conversion of shares5 |  |  | 2,500,000 |  |  |  | 3,488 |  |  |  | (2,500,000 | ) |  |  | (3,488 | ) |  |  | — |  |  |  | — |
As at March 31, 2021 |  |  | 221,448,435 |  |  |  | 1,580,821 |  |  |  | 26,445,706 |  |  |  | 36,894 |  |  |  | 247,894,141 |  |  |  | 1,617,715 |

1 | The carrying value of Class A subordinate voting shares includes $6,083,000 ($8,459,000 for the six months ended March 31, 2020), which corresponds to a reduction in contributed surplus representing the value of accumulated compensation costs associated with the stock options exercised during the period.

2 | During the six months ended March 31, 2021, 112,985 PSUs were exercised (154,318 during the six months ended March 31, 2020) with a recorded value of $6,745,000 ($8,856,000 during the six months ended March 31, 2020) that was removed from contributed surplus. As at March 31, 2021, 1,439,644 Class A subordinate voting shares were held in trusts under the PSU plans (1,246,408 as at March 31, 2020).

3 | On January 26, 2021, the Company’s Board of Directors authorized and subsequently received the regulatory approval from the Toronto Stock Exchange (TSX), for the renewal of the Normal Course Issuer Bid (NCIB) for the purchase for cancellation of up to 19,184,831 Class A subordinate voting shares on the open market through the TSX, the New York Stock Exchange (NYSE) and/or alternative trading systems or otherwise pursuant to exemption orders issued by securities regulators. The Class A subordinate voting shares are available for purchase for cancellation commencing on February 6, 2021 until no later than February 5, 2022, or on such earlier date when the Company has either acquired the maximum number of Class A subordinate voting shares allowable under the NCIB or decided not to make any further purchases for cancellation under it.

| During the three months ended March 31, 2021, the Company purchased for cancellation 4,204,865 Class A subordinate voting shares from the Caisse de dépôt et placement du Québec for a cash consideration of $400,000,000 (6,008,905 and $600,000,000, respectively during the three months ended March 31, 2020). The excess of the purchase price over the carrying value in the amount of $310,048,000 was charged to retained earnings ($471,455,000 during the three months ended March 31, 2020). The purchase was made pursuant to an exemption order issued by the Autorité des marchés financiers and is considered within the annual aggregate limit that the Company is entitled to purchase under its current NCIB.

| In addition, during the six months ended March 31, 2021, the Company purchased for cancellation 8,155,800 Class A subordinate voting shares (4,596,559 during the six months ended March 31, 2020) under its previous and current NCIB for a cash consideration of $783,123,000 ($443,517,000 for the six months ended March 31, 2020) and the excess of the purchase price over the carrying value in the amount of $718,436,000 ($406,747,000 for the six months ended March 31, 2020) was charged to retained earnings.

4 | During the six months ended March 31, 2021, the trustees, in accordance with the terms of the PSU plans and Trust Agreements, purchased 309,606 Class A subordinate voting shares of the Company on the open market (525,331 during the six months ended March 31, 2020) for a cash consideration of $31,404,000 ($55,287,000 during the six months ended March 31, 2020).

5 | On March 1, 2021, the Co-founder and Advisor to the Executive Chairman of the Board of the Company, also a related party of the Company, converted a total of 2,500,000 Class B multiple voting shares into 2,500,000 Class A subordinate voting shares.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 8

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

5. | Capital stock, share-based payments and earnings per share (continued)

b) | Share-based payments

i) | 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 voting shares to certain employees, officers and directors of the Company and its subsidiaries. The exercise price is established by the Board of Directors and is equal to the closing price of the Class A subordinate voting shares on the TSX on the day preceding the date of the grant. Stock options vest annually over four years from the date of the grant conditionally upon achievement of performance objectives and must be exercised within a ten-year period, except in the event of retirement, termination of employment or death.

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

Outstanding as at September 30, 2020 |  |  | 8,934,097 |
Granted |  |  | 993,840 |
Exercised (Note 5a) |  |  | (618,225 | )
Forfeited |  |  | (581,638 | )
Outstanding as at March 31, 2021 |  |  | 8,728,074 |

The weighted average fair value of stock options granted during the six months ended March 31 and the weighted average assumptions used in the calculation of their fair value on the date of the grant using the Black-Scholes option pricing model were as follows:

|  | 2021 |  |  | 2020 |
Grant date fair value ($) |  |  | 16.75 |  |  |  | 17.72 |
Dividend yield (%) |  |  | 0.00 |  |  |  | 0.00 |
Expected volatility (%)1 |  |  | 20.76 |  |  |  | 16.58 |
Risk-free interest rate (%) |  |  | 0.40 |  |  |  | 1.55 |
Expected life (years) |  |  | 4.00 |  |  |  | 4.00 |
Exercise price ($) |  |  | 97.84 |  |  |  | 110.73 |
Share price ($) |  |  | 97.84 |  |  |  | 110.73 |

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 options.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  |  | 9 |

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

5. | Capital stock, share-based payments and earnings per share (continued)

b) | Share-based payments (continued)

ii) | Performance share units (PSUs)

The Company operates two PSU plans with similar terms and conditions. Under both plans, the Board of Directors may grant PSUs to certain employees and officers which entitle them to receive one Class A subordinate voting 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. Conditionally upon achievement of performance objectives, granted PSUs under the first plan vest annually over a period of four years from the date of the grant and granted PSUs under the second plan vest at the end of the four-year period.

Class A subordinate voting shares purchased in connection with the PSU plans are held in trusts for the benefit of the participants. The trusts, considered as structured entities, are consolidated in the Company’s consolidated financial statements with the cost of the purchased shares recorded as a reduction of capital stock (Note 5a).

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

Outstanding as at September 30, 2020 |  |  | 1,231,470 |
Granted1 |  |  | 669,018 |
Exercised (Note 5a) |  |  | (112,985 | )
Forfeited |  |  | (356,699 | )
Outstanding as at March 31, 2021 |  |  | 1,430,804 |

1 | The PSUs granted in the period had a grant date fair value of $94.00 per unit.

c) | Earnings per share

The following table sets forth the computation of basic and diluted earnings per share for the three and six months ended March 31:

|  |  |  |  |  |  |  | 2021 |  |  |  |  |  | Three months ended March 31 2020 |
|  | Net earnings |  |  | Weighted average number of shares outstanding1 |  |  | Earnings per share |  |  | Net earnings |  |  | Weighted average number of shares outstanding1 |  |  | Earnings per share |
|  |  | $ |  |  |  |  |  |  |  | $ |  |  |  | $ |  |  |  |  |  |  |  | $ |
Basic |  |  | 341,213 |  |  |  | 250,199,106 |  |  |  | 1.36 |  |  |  | 314,848 |  |  |  | 263,638,028 |  |  |  | 1.19 |
Net effect of dilutive stock options and PSUs2 |  |  |  |  |  |  | 3,766,591 |  |  |  |  |  |  |  |  |  |  |  | 4,138,847 |  |  |  |  |
|  |  | 341,213 |  |  |  | 253,965,697 |  |  |  | 1.34 |  |  |  | 314,848 |  |  |  | 267,776,875 |  |  |  | 1.18 |
|  |  |  |  |  |  |  | 2021 |  |  |  |  |  | Six months ended March 31 2020 |
|  | Net earnings |  |  | Weighted average number of shares outstanding1 |  |  | Earnings per share |  |  | Net earnings |  |  | Weighted average number of shares outstanding1 |  |  | Earnings per share |
|  |  | $ |  |  |  |  |  |  |  | $ |  |  |  | $ |  |  |  |  |  |  |  | $ |
Basic |  |  | 684,664 |  |  |  | 253,592,671 |  |  |  | 2.70 |  |  |  | 605,041 |  |  |  | 265,933,573 |  |  |  | 2.28 |
Net effect of dilutive stock options and PSUs2 |  |  |  |  |  |  | 3,682,033 |  |  |  |  |  |  |  |  |  |  |  | 4,577,000 |  |  |  |  |
|  |  | 684,664 |  |  |  | 257,274,704 |  |  |  | 2.66 |  |  |  | 605,041 |  |  |  | 270,510,573 |  |  |  | 2.24 |

1 | During the three months ended March 31, 2021, 7,705,965 Class A subordinate voting shares purchased for cancellation and 1,439,644 Class A subordinate voting shares held in trusts were excluded from the calculation of the weighted average number of shares outstanding as of the date of the transaction (10,436,164 and 1,246,408, respectively during the three months ended March 31, 2020). During the six months ended March 31, 2021, 12,360,665 Class A subordinate voting shares purchased for cancellation and 1,439,644 Class A subordinate voting shares held in trusts were excluded from the calculation of the weighted average number of shares outstanding as of the date of the transaction (10,605,464 and 1,246,408, respectively during the six months ended March 31, 2020).

2 | The calculation of the diluted earnings per share excluded 1,315,340 stock options for the three and six months ended March 31, 2021 (914,521 for the three and six months ended March 31, 2020), as they were anti-dilutive.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  |  | 10 |

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

6. | Investments in subsidiaries

a) | Business acquisition realized in the current fiscal year

The Company made the following acquisition during the six months ended March 31, 2021:

| – | On December 31, 2020, the Company acquired the assets of Harris, Mackessy & Brennan, Inc.’s Professional Services Division, for a purchase price of $30,340,000. Based in the United States, the division focused on high-end technology consulting and services for commercial and government clients and is headquartered in Columbus, Ohio.

This acquisition was made to further expands CGI’s footprint in the region and to complement CGI’s proximity model and expertise across key sectors, including utilities and energy, manufacturing, retail, insurance and government.

b) | Business acquisitions realized in the prior fiscal year

During the three months ended March 31, 2021, the Company finalized the fair value of assets acquired and liabilities assumed for TeraThink Corporation with no significant adjustments.

During the six months ended March 31, 2021, the Company finalized the fair value of assets acquired and liabilities assumed for SCISYS Group Plc and Meti Logiciels et Services SAS with no significant adjustments.

c) | Acquisition-related and integration costs

During the three and six months ended March 31, 2021, the Company expensed $848,000 and $5,587,000, respectively, for acquisition-related and integration costs. These amounts include acquisition-related costs of nil and integration costs of $848,000 and $5,587,000, respectively. The integration costs mainly include terminations of employment of nil and $750,000, respectively, accounted for in restructuring provisions, as well as other integration costs of $848,000 and $4,837,000, respectively.

During the three and six months ended March 31, 2020, the Company expensed $31,097,000 and $51,331,000, respectively, for acquisition-related and integration costs. These amounts included acquisition-related costs of $962,000 and $6,545,000, respectively, and integration costs of $30,135,000 and $44,786,000, respectively. The acquisition-related costs consisted mainly of professional fees incurred for the acquisitions. The integration costs mainly included terminations of employment of $22,512,000 and $31,607,000, respectively, accounted for in restructuring provisions, as well as other integration costs of $7,623,000 and $13,179,000, respectively.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  |  | 11 |

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

7. | Supplementary cash flow information

a) | Net change in non-cash working capital items is as follows for the three and six months ended March 31:

|  | Three months ended March 31 |  |  | Six months ended March 31 |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
|  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |
Accounts receivable |  |  | 156,466 |  |  |  | 166,336 |  |  |  | 58,741 |  |  |  | (15,033 | )
Work in progress |  |  | (70,909 | ) |  |  | (77,716 | ) |  |  | (2,675 | ) |  |  | 20,338 |
Prepaid expenses and other assets |  |  | (12,312 | ) |  |  | (38,659 | ) |  |  | (32,080 | ) |  |  | 9,926 |
Long-term financial assets |  |  | 649 |  |  |  | 8,562 |  |  |  | (10,413 | ) |  |  | 3,552 |
Accounts payable and accrued liabilities |  |  | (113,759 | ) |  |  | (87,206 | ) |  |  | (39,458 | ) |  |  | (4,429 | )
Accrued compensation |  |  | 163,607 |  |  |  | (5,511 | ) |  |  | 117,698 |  |  |  | (71,360 | )
Deferred revenue |  |  | 76,063 |  |  |  | 2,647 |  |  |  | 164,996 |  |  |  | 35,035 |
Income taxes |  |  | (3,534 | ) |  |  | (21,993 | ) |  |  | 57,039 |  |  |  | 16,634 |
Provisions |  |  | (46,128 | ) |  |  | (7,517 | ) |  |  | (59,806 | ) |  |  | 4,755 |
Long-term liabilities |  |  | (2,852 | ) |  |  | (13,717 | ) |  |  | (2,669 | ) |  |  | (13,235 | )
Derivative financial instruments |  |  | 80 |  |  |  | (37 | ) |  |  | (46 | ) |  |  | (59 | )
Retirement benefits obligations |  |  | (19,585 | ) |  |  | 29,686 |  |  |  | (839 | ) |  |  | (2,743 | )
|  |  | 127,786 |  |  |  | (45,125 | ) |  |  | 250,488 |  |  |  | (16,619 | )

b) | Net interest paid and income taxes paid are classified within operating activities and are as follows for the three and six months ended March 31:

|  | Three months ended March 31 |  |  | Six months ended March 31 |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
|  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |
Net interest paid |  |  | 41,858 |  |  |  | 45,773 |  |  |  | 67,174 |  |  |  | 71,658 |
Income taxes paid |  |  | 139,941 |  |  |  | 136,697 |  |  |  | 198,005 |  |  |  | 196,788 |

c) | Cash and cash equivalents consisted of unrestricted cash as at March 31, 2021 and September 30, 2020.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  |  | 12 |

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

8. | Segmented information

The following tables present information on the Company’s operations which are managed through the following nine operating segments, namely: Western and Southern Europe (primarily France and Portugal); United States (U.S.) Commercial and State Government; Canada; U.S. Federal; United Kingdom (U.K.) and Australia; Central and Eastern Europe (primarily Germany and the Netherlands); Scandinavia; Finland, Poland and Baltics; and Asia Pacific Global Delivery Centers of Excellence (mainly India and Philippines) (Asia Pacific).

The operating segments reflect the current management structure and the way that the chief operating decision-maker, who is the President and Chief Executive Officer of the Company, evaluates the business.

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | For the three months ended March 31, 2021 |
|  | Western and Southern Europe |  |  | U.S. Commercial and State Government |  |  | Canada |  |  | U.S. Federal |  |  | U.K. and Australia |  |  | Central and Eastern Europe |  |  | Scandinavia |  |  | Finland, Poland and Baltics |  |  | Asia Pacific |  |  | Eliminations |  |  | Total |
|  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |
Segment revenue |  |  | 513,588 |  |  |  | 430,825 |  |  |  | 443,756 |  |  |  | 399,639 |  |  |  | 345,073 |  |  |  | 336,940 |  |  |  | 273,807 |  |  |  | 198,213 |  |  |  | 166,543 |  |  |  | (29,844 | ) |  |  | 3,078,540 |
Segment earnings before acquisition-related and integration costs, net finance costs and income tax expense1 |  |  | 74,305 |  |  |  | 61,436 |  |  |  | 98,007 |  |  |  | 55,919 |  |  |  | 62,016 |  |  |  | 36,155 |  |  |  | 17,454 |  |  |  | 28,169 |  |  |  | 52,865 |  |  |  | — |  |  |  | 486,326 |
Acquisition-related and integration costs (Note 6c) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (848 | )
Net finance costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (26,231 | )
Earnings before income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 459,247 |
1Total amortization and depreciation of $124,344,000 included in the Western and Southern Europe, U.S. Commercial and State Government, Canada, U.S. Federal, U.K. and Australia, Central and Eastern Europe, Scandinavia, Finland, Poland and Baltics and Asia Pacific segments is $15,937,000, $17,108,000, $15,890,000, $12,219,000, $14,342,000, $17,139,000, $15,646,000, $9,404,000 and $6,659,000, respectively for the three months ended March 31, 2021. |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | For the three months ended March 31, 2020 |
|  | Western and Southern Europe |  |  | U.S. Commercial and State Government |  |  | Canada |  |  | U.S. Federal |  |  | U.K. and Australia |  |  | Central and Eastern Europe |  |  | Scandinavia |  |  | Finland, Poland and Baltics |  |  | Asia Pacific |  |  | Eliminations |  |  | Total |
|  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |  |  |  | $ |
Segment revenue |  |  | 528,472 |  |  |  | 468,109 |  |  |  | 435,462 |  |  |  | 416,884 |  |  |  | 344,436 |  |  |  | 309,547 |  |  |  | 294,279 |  |  |  | 201,496 |  |  |  | 168,814 |  |  |  | (36,358 | ) |  |  | 3,131,141 |
Segment earnings before acquisition-related and integration costs, restructuring costs, net finance costs and income tax expense1 |  |  | 84,936 |  |  |  | 69,601 |  |  |  | 91,552 |  |  |  | 49,325 |  |  |  | 53,376 |  |  |  | 30,549 |  |  |  | 24,349 |  |  |  | 31,896 |  |  |  | 47,662 |  |  |  | — |  |  |  | 483,246 |
Acquisition-related and integration costs (Note 6c) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (31,097 | )
Restructuring costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (443 | )
Net finance costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (26,628 | )
Earnings before income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 425,078 |

1Total amortization and depreciation of $130,482,000 included in the Western and Southern Europe, U.S. Commercial and State Government, Canada, U.S. Federal, U.K. and Australia, Central and Eastern Europe, Scandinavia, Finland, Poland and Baltics and Asia Pacific segments is $15,205,000, $19,581,000, $16,659,000, $10,273,000, $16,733,000, $19,705,000, $16,970,000, $9,119,000 and $6,237,000, respectively for the three months ended March 31, 2020.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  |  | 13 |

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

8. | Segmented information (continued)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | For the six months ended March 31, 2021 |
|  | Western and Southern Europe |  |  | U.S. Commercial and State Government |  |  | Canada |  |  | U.S. Federal |  |  | U.K. and Australia |  |  | Central and Eastern Europe |  |  | Scandinavia |  |  | Finland, Poland and Baltics |  |  | Asia Pacific |  |  | Eliminations |  |  | Total |
|  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |
Segment revenue |  |  | 993,908 |  |  |  | 867,249 |  |  |  | 873,520 |  |  |  | 810,625 |  |  |  | 672,868 |  |  |  | 655,326 |  |  |  | 548,346 |  |  |  | 406,214 |  |  |  | 328,424 |  |  |  | (58,499 | ) |  |  | 6,097,981 |
Segment earnings before acquisition-related and integration costs, net finance costs and income tax expense1 |  |  | 140,543 |  |  |  | 128,563 |  |  |  | 197,051 |  |  |  | 110,820 |  |  |  | 120,829 |  |  |  | 78,114 |  |  |  | 41,612 |  |  |  | 59,200 |  |  |  | 105,320 |  |  |  | — |  |  |  | 982,052 |
Acquisition-related and integration costs (Note 6c) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (5,587 | )
Net finance costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (53,409 | )
Earnings before income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 923,056 |
1Total amortization and depreciation of $255,376,000 included in the Western and Southern Europe, U.S. Commercial and State Government, Canada, U.S. Federal, U.K. and Australia, Central and Eastern Europe, Scandinavia, Finland, Poland and Baltics and Asia Pacific segments is $34,473,000, $35,654,000, $31,418,000, $25,074,000, $27,801,000, $34,777,000, $31,835,000, $21,521,000 and $12,823,000, respectively for the six months ended March 31, 2021. Amortization includes impairments in Western and Southern Europe for $3,058,000 related to a business solution and in Finland, Poland and Baltics for $3,490,000 related to contract costs. These assets were no longer expected to generate future economic benefits. |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | For the six months ended March 31, 2020 |
|  | Western and Southern Europe |  |  | U.S. Commercial and State Government |  |  | Canada |  |  | U.S. Federal |  |  | U.K. and Australia |  |  | Central and Eastern Europe |  |  | Scandinavia |  |  | Finland, Poland and Baltics |  |  | Asia Pacific |  |  | Eliminations |  |  | Total |
|  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |  |  | $ |
Segment revenue |  |  | 1,022,005 |  |  |  | 916,083 |  |  |  | 871,431 |  |  |  | 838,829 |  |  |  | 670,273 |  |  |  | 607,326 |  |  |  | 597,481 |  |  |  | 400,519 |  |  |  | 329,631 |  |  |  | (67,690 | ) |  |  | 6,185,888 |
Segment earnings before acquisition-related and integration costs, restructuring costs, net finance costs and income tax expense1 |  |  | 158,580 |  |  |  | 137,035 |  |  |  | 191,008 |  |  |  | 105,490 |  |  |  | 101,129 |  |  |  | 61,895 |  |  |  | 47,875 |  |  |  | 61,601 |  |  |  | 92,739 |  |  |  | — |  |  |  | 957,352 |
Acquisition-related and integration costs (Note 6c) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (51,331 | )
Restructuring costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (31,621 | )
Net finance costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (53,350 | )
Earnings before income taxes |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 821,050 |

1 | Total amortization and depreciation of $262,610,000 included in the Western and Southern Europe, U.S. Commercial and State Government, Canada, U.S. Federal, U.K. and Australia, Central and Eastern Europe, Scandinavia, Finland, Poland and Baltics and Asia Pacific segments is $30,230,000, $39,893,000, $34,133,000, $20,520,000, $34,361,000, $39,784,000, $34,059,000, $17,388,000 and $12,242,000, respectively for the six months ended March 31, 2020.

The accounting policies of each operating segment are the same as those described in Note 3, Summary of significant accounting policies, of the Company’s consolidated financial statements for the year ended September 30, 2020. Intersegment revenue is priced as if the revenue was from third parties.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 14

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

8. | Segmented information (continued)

GEOGRAPHIC INFORMATION

The following table provides external revenue information based on the client’s location which is different from the revenue presented under operating segments, due to the intersegment revenue, for the three and six months ended March 31:

|  | Three months ended March 31 |  |  |  |  | Six months ended March 31 |
|  | 2021 |  |  | 2020 |  |  |  |  | 2021 |  |  | 2020 |
|  | $ |  |  | $ |  |  |  |  | $ |  |  | $ |
Western and Southern Europe |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
France |  |  | 452,482 |  |  |  | 467,231 |  |  |  |  |  | 873,652 |  |  |  | 899,204 |
Others |  |  | 60,611 |  |  |  | 61,976 |  |  |  |  |  | 117,916 |  |  |  | 124,716 |
|  |  | 513,093 |  |  |  | 529,207 |  |  |  |  |  | 991,568 |  |  |  | 1,023,920 |
U.S.1 |  |  | 855,646 |  |  |  | 902,465 |  |  |  |  |  | 1,724,177 |  |  |  | 1,789,932 |
Canada |  |  | 477,001 |  |  |  | 465,992 |  |  |  |  |  | 941,611 |  |  |  | 931,020 |
U.K. and Australia |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.K. |  |  | 380,501 |  |  |  | 382,435 |  |  |  |  |  | 743,050 |  |  |  | 743,574 |
Australia |  |  | 16,552 |  |  |  | 12,823 |  |  |  |  |  | 33,018 |  |  |  | 28,199 |
|  |  | 397,053 |  |  |  | 395,258 |  |  |  |  |  | 776,068 |  |  |  | 771,773 |
Central and Eastern Europe |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Germany |  |  | 204,561 |  |  |  | 183,497 |  |  |  |  |  | 395,003 |  |  |  | 356,527 |
Netherlands |  |  | 122,080 |  |  |  | 118,234 |  |  |  |  |  | 239,850 |  |  |  | 232,990 |
Others |  |  | 20,037 |  |  |  | 18,089 |  |  |  |  |  | 39,058 |  |  |  | 36,258 |
|  |  | 346,678 |  |  |  | 319,820 |  |  |  |  |  | 673,911 |  |  |  | 625,775 |
Scandinavia |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sweden |  |  | 207,781 |  |  |  | 221,568 |  |  |  |  |  | 416,636 |  |  |  | 450,973 |
Others |  |  | 77,561 |  |  |  | 87,227 |  |  |  |  |  | 154,797 |  |  |  | 174,800 |
|  |  | 285,342 |  |  |  | 308,795 |  |  |  |  |  | 571,433 |  |  |  | 625,773 |
Finland, Poland and Baltics |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Finland |  |  | 193,075 |  |  |  | 198,856 |  |  |  |  |  | 396,358 |  |  |  | 395,981 |
Others |  |  | 9,392 |  |  |  | 9,125 |  |  |  |  |  | 19,012 |  |  |  | 18,928 |
|  |  | 202,467 |  |  |  | 207,981 |  |  |  |  |  | 415,370 |  |  |  | 414,909 |
Asia Pacific |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Others |  |  | 1,260 |  |  |  | 1,623 |  |  |  |  |  | 3,843 |  |  |  | 2,786 |
|  |  | 1,260 |  |  |  | 1,623 |  |  |  |  |  | 3,843 |  |  |  | 2,786 |
|  |  | 3,078,540 |  |  |  | 3,131,141 |  |  |  |  |  | 6,097,981 |  |  |  | 6,185,888 |

1 | External revenue included in the U.S. Commercial and State Government and U.S. Federal operating segments was $452,816,000 and $402,830,000, respectively for the three months ended March 31, 2021 ($479,913,000 and $422,552,000, respectively for the three months ended March 31, 2020). In addition, external revenue included in the U.S. Commercial and State Government and U.S. Federal operating segments was $905,925,000 and $818,252,000, respectively for the six months ended March 31, 2021 ($939,604,000 and $850,328,000, respectively for the six months ended March 31, 2020).

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 15

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

8. | Segmented information (continued)

INFORMATION ABOUT SERVICES

The following table provides revenue information based on services provided by the Company for the three and six months ended March 31:

|  | Three months ended March 31 |  |  |  |  |  | Six months ended March 31 |
|  | 2021 |  |  | 2020 |  |  |  |  |  | 2021 |  |  | 2020 |
|  | $ |  |  | $ |  |  |  |  |  | $ |  |  | $ |
Systems integration and consulting |  |  | 1,383,117 |  |  |  | 1,457,673 |  |  |  |  |  |  |  | 2,728,167 |  |  |  | 2,856,040 |
Managed IT and business process services |  |  | 1,695,423 |  |  |  | 1,673,468 |  |  |  |  |  |  |  | 3,369,814 |  |  |  | 3,329,848 |
|  |  | 3,078,540 |  |  |  | 3,131,141 |  |  |  |  |  |  |  | 6,097,981 |  |  |  | 6,185,888 |

MAJOR CLIENT INFORMATION

Contracts with the U.S. federal government and its various agencies, included within the U.S. Federal operating segment, accounted for $386,499,000 and 12.6% of revenues for the three months ended March 31, 2021 ($400,486,000 and 12.8% for the three months ended March 31, 2020) and $779,475,000 and 12.8% of revenues for the six months ended March 31, 2021 ($794,548,000 and 12.8% for the six months ended March 31, 2020).

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 16

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

9. | Financial instruments

FAIR VALUE

All financial instruments are initially measured at fair value and are subsequently classified either at amortized cost, at fair value through earnings or at fair value through other comprehensive income.

The Company has made the following classifications:

Amortized cost

Trade accounts receivable, cash included in funds held for clients, long-term receivables within long-term financial assets, accounts payable and accrued liabilities, accrued compensation, long-term debt and clients’ funds obligations.

Fair value through earnings (FVTE)

Cash and cash equivalents, derivative financial instruments and deferred compensation plan assets within long-term financial assets.

Fair value through other comprehensive income (FVOCI)

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

FAIR VALUE HIERARCHY

Fair value measurements recognized in the consolidated balance sheet are classified 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.

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.

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 facilities 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;

| - | The fair value of cash and cash equivalents is determined using observable quotes; and

| - | The fair value of deferred compensation plan assets within long-term financial assets is based on observable price quotations and net assets values at the reporting date.

There were no changes in valuation techniques during the six months ended March 31, 2021.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 17

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

9. | Financial instruments (continued)

FAIR VALUE MEASUREMENTS (CONTINUED)

The following table presents the financial liabilities included in the long-term debt measured at amortized cost categorized using the fair value hierarchy:

|  |  |  |  | As at March 31, 2021 |  |  | As at September 30, 2020 |
|  | Level |  |  | Carrying amount |  |  | Fair value |  |  | Carrying amount |  |  | Fair value |
|  |  |  |  | $ |  |  | $ |  |  | $ |  |  | $ |
Senior U.S. and euro unsecured notes |  |  | Level 2 |  |  |  | 1,141,362 |  |  |  | 1,204,904 |  |  |  | 1,211,965 |  |  |  | 1,297,632 |
Other long-term debt |  |  | Level 2 |  |  |  | 32,678 |  |  |  | 31,983 |  |  |  | 44,842 |  |  |  | 43,536 |
|  |  |  |  |  |  | 1,174,040 |  |  |  | 1,236,887 |  |  |  | 1,256,807 |  |  |  | 1,341,168 |

For the remaining financial assets and liabilities measured at amortized cost, the carrying values approximate the fair values of the financial instruments given their short term maturity.

During the three months ended March 31, 2021, the Company extended the two-year unsecured committed term loan credit facility, entered into during the year ended September 30, 2020, by one year to March 2023. There were no material changes in the terms and conditions including interest rates and banking covenants.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 18

Notes to the Interim Condensed Consolidated Financial Statements

For the three and six months ended March 31, 2021 and 2020

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

9. | Financial instruments (continued)

FAIR VALUE MEASUREMENTS (CONTINUED)

The following table presents financial assets and liabilities measured at fair value categorized using the fair value hierarchy:

|  | Level |  | As at March 31, 2021 |  |  | As at September 30, 2020 |
|  |  |  | $ |  |  | $ |
Financial assets |  |  |  |  |  |  |  |  |  |
FVTE |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  | Level 2 |  |  | 1,339,794 |  |  |  | 1,707,985 |
Deferred compensation plan assets |  | Level 1 |  |  | 78,013 |  |  |  | 73,156 |
|  |  |  |  | 1,417,807 |  |  |  | 1,781,141 |
Derivative financial instruments designated as hedging instruments |  |  |  |  |  |  |  |  |  |
Current derivative financial instruments included in current financial assets |  | Level 2 |  |  |  |  |  |  |  |
Cross-currency swaps |  |  |  |  | 7,656 |  |  |  | — |
Foreign currency forward contracts |  |  |  |  | 13,306 |  |  |  | 17,027 |
Interest rate swaps |  |  |  |  | 3,466 |  |  |  | — |
Long-term derivative financial instruments |  | Level 2 |  |  |  |  |  |  |  |
Cross-currency swaps |  |  |  |  | 25,549 |  |  |  | 25,362 |
Foreign currency forward contracts |  |  |  |  | 5,700 |  |  |  | 8,636 |
Interest rate swaps |  |  |  |  | — |  |  |  | 6,180 |
|  |  |  |  | 55,677 |  |  |  | 57,205 |
FVOCI |  |  |  |  |  |  |  |  |  |
Short-term investments included in current financial assets |  | Level 2 |  |  | — |  |  |  | 1,473 |
Long-term bonds included in funds held for clients |  | Level 2 |  |  | 137,771 |  |  |  | 148,470 |
Long-term investments |  | Level 2 |  |  | 20,116 |  |  |  | 22,612 |
|  |  |  |  | 157,887 |  |  |  | 172,555 |
Financial liabilities |  |  |  |  |  |  |  |  |  |
Derivative financial instruments designated as hedging instruments |  |  |  |  |  |  |  |  |  |
Current derivative financial instruments |  | Level 2 |  |  |  |  |  |  |  |
Cross-currency swaps |  |  |  |  | 13,442 |  |  |  | 5,320 |
Foreign currency forward contracts |  |  |  |  | 2,688 |  |  |  | 3,008 |
Long-term derivative financial instruments |  | Level 2 |  |  |  |  |  |  |  |
Cross-currency swaps |  |  |  |  | 63,381 |  |  |  | 52,275 |
Foreign currency forward contracts |  |  |  |  | 6,156 |  |  |  | 4,347 |
|  |  |  |  | 85,667 |  |  |  | 64,950 |

There were no transfers between Level 1 and Level 2 during the six months ended March 31, 2021.

CGI Inc. – Interim Condensed Consolidated Financial Statements for the three and six months ended March 31, 2021 and 2020 |  | 19