EX-99.2

Exhibit 99.2

Interim Condensed Consolidated Financial Statements of

CGI INC.

For the three months ended December 31, 2023 and 2022

(unaudited)

Interim Consolidated Statements of Earnings

For the three months ended December 31

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


	Notes	2023			2022
			$			$
Revenue	10		3,602,970			3,450,272

Operating expenses

Costs of services, selling and administrative			3,019,115			2,899,608

Acquisition-related and integration costs	8c		2,178			19,424

Cost optimization program	6		47,662			—

Net finance costs	7		7,258			18,141

Foreign exchange gain			(378	)		(3,449	)

			3,075,835			2,933,724

Earnings before income taxes			527,135			516,548

Income tax expense			137,339			134,169
Net earnings			389,796			382,379
Earnings per share

Basic earnings per share	5c		1.69			1.62

Diluted earnings per share	5c		1.67			1.60

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			1

Interim Consolidated Statements of Comprehensive Income

For the three months ended December 31

(in thousands of Canadian dollars) (unaudited)


	2023			2022
		$			$
Net earnings		389,796			382,379

Items that will be reclassified subsequently to net earnings (net of income taxes):

Net unrealized gains on translating financial statements of foreign operations		46,891			346,881

Net gains (losses) on cross-currency swaps and on translating long-term debt designated as hedges of net investments in foreign operations		7,634			(63,414	)

Deferred gains of hedging on cross-currency swaps		4,583			5,690

Net unrealized losses on cash flow hedges		(10,688	)		(15,614	)

Net unrealized gains on financial assets at fair value through other comprehensive income		1,852			436

Items that will not be reclassified subsequently to net earnings (net of income taxes):

Net remeasurement losses on defined benefit plans		(1,985	)		(10,309	)
Other comprehensive income		48,287			263,670
Comprehensive income		438,083			646,049

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			2

Interim Consolidated Balance Sheets

(in thousands of Canadian dollars) (unaudited)

Notes

As at

December 31, 2023

As at

September 30, 2023

Assets

Current assets

Cash and cash equivalents

9c and 11

1,132,661

1,568,291

Accounts receivable

1,544,544

1,425,117

Work in progress

1,023,834

1,143,685

Current financial assets

43,882

103,463

Prepaid expenses and other current assets

170,640

198,377

Income taxes

9,396

6,067

Total current assets before funds held for clients

3,924,957

4,445,000

Funds held for clients

611,156

488,727

Total current assets

4,536,113

4,933,727

Property, plant and equipment

378,438

389,276

Right-of-use assets

462,978

482,321

Contract costs

314,178

308,446

Intangible assets

610,880

623,103

Other long-term assets

104,126

84,776

Long-term financial assets

147,460

147,968

Deferred tax assets

119,913

105,432

Goodwill

8,839,367

8,724,450

15,513,453

15,799,499

Liabilities

Current liabilities

Accounts payable and accrued liabilities

910,414

924,659

Accrued compensation and employee-related liabilities

1,098,976

1,100,566

Deferred revenue

477,424

488,761

Income taxes

259,910

250,869

Current portion of long-term debt

468,146

1,158,971

Current portion of lease liabilities

219,588

198,857

Provisions

37,676

24,965

Current derivative financial instruments

7,847

4,513

Total current liabilities before clients’ funds obligations

3,479,981

4,152,161

Clients’ funds obligations

614,077

493,638

Total current liabilities

4,094,058

4,645,799

Long-term debt

1,908,943

1,941,350

Long-term lease liabilities

404,375

443,106

Long-term provisions

18,994

19,198

Other long-term liabilities

270,557

243,592

Long-term derivative financial instruments

6,104

1,700

Deferred tax liabilities

26,191

31,081

Retirement benefits obligations

180,211

163,379

6,909,433

7,489,205

Equity

Retained earnings

6,610,176

6,329,107

Accumulated other comprehensive income

207,262

158,975

Capital stock

1,447,069

1,477,180

Contributed surplus

339,513

345,032

8,604,020

8,310,294

15,513,453

15,799,499

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			3

Interim Consolidated Statements of Changes in Equity

For the three months ended December 31

(in thousands of Canadian dollars) (unaudited)


	Notes	Retained earnings			Accumulated other comprehensive income		Capital stock			Contributed surplus			Total equity
			$			$		$			$			$

Balance as at September 30, 2023			6,329,107			158,975		1,477,180			345,032			8,310,294

Net earnings			389,796			—		—			—			389,796

Other comprehensive income			—			48,287		—			—			48,287

Comprehensive income			389,796			48,287		—			—			438,083

Share-based payment costs			—			—		—			18,762			18,762

Income tax impact associated with share-based payments			—			—		—			6,066			6,066

Exercise of stock options	5a		—			—		32,114			(5,283	)		26,831

Exercise of performance share units	5a		1,089			—		11,765			(25,064	)		(12,210	)

Purchase for cancellation of Class A subordinate voting shares	5a		(109,816	)		—		(7,143	)		—			(116,959	)

Purchase of Class A subordinate voting shares held in trusts	5a		—			—		(66,847	)		—			(66,847	)
Balance as at December 31, 2023			6,610,176			207,262		1,447,069			339,513			8,604,020

	Notes	Retained earnings			Accumulated other comprehensive income		Capital stock			Contributed surplus			Total equity
			$			$		$			$			$

Balance as at September 30, 2022			5,425,005			39,746		1,493,169			314,804			7,272,724

Net earnings			382,379			—		—			—			382,379

Other comprehensive loss			—			263,670		—			—			263,670

Comprehensive income			382,379			263,670		—			—			646,049

Share-based payment costs			—			—		—			16,259			16,259

Income tax impact associated with share-based payments			—			—		—			5,841			5,841

Exercise of stock options	5a		—			—		37,416			(6,310	)		31,106

Exercise of performance share units	5a		(3,030	)		—		12,962			(23,254	)		(13,322	)

Unrealized commitment to purchase Class A subordinate voting shares			1,276			—		103			—			1,379

Purchase of Class A subordinate voting shares held in trusts	5a		—			—		(74,455	)		—			(74,455	)

Balance as at December 31, 2022			5,805,630			303,416		1,469,195			307,340			7,885,581

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			4

Interim Consolidated Statements of Cash Flows

For the three months ended December 31

(in thousands of Canadian dollars) (unaudited)


	Notes		2023			2022

				$			$
Operating activities
Net earnings				389,796			382,379

Adjustments for:

Amortization, depreciation and impairment				133,206			124,260

Deferred income tax recovery				(14,068	)		(22,204	)

Foreign exchange gain				(4,259	)		(1,481	)

Share-based payment costs				18,762			16,259

Gain on lease terminations				—			(2,362	)

Net change in non-cash working capital items and others		9a		53,735			108,423

Cash provided by operating activities				577,172			605,274

Investing activities

Net change in short-term investments				(31,055	)		(96	)

Business acquisitions (net of cash acquired)		8		(49,391	)		(3,998	)

Loan receivable				1,782			(21,469	)

Purchase of property, plant and equipment				(28,496	)		(41,271	)

Additions to contract costs				(21,921	)		(20,692	)

Additions to intangible assets				(34,956	)		(31,345	)

Purchase of long-term investments				—			(87,025	)

Proceeds from sale of long-term investments				15,204			14,924

Cash used in investing activities				(148,833	)		(190,972	)

Financing activities

Increase of long-term debt				—			948

Repayment of long-term debt		11		(673,263	)		(2,878	)

Settlement of derivative financial instruments		11		18,087			—

Payment of lease liabilities		11		(32,950	)		(35,618	)

Repayment of debt assumed from business acquisition				—			(56,994	)

Purchase for cancellation of Class A subordinate voting shares		5a		(126,136	)		(10,291	)

Issuance of Class A subordinate voting shares		5a		26,831			31,106

Purchase of Class A subordinate voting shares held in trusts		5a		(66,847	)		(74,455	)

Withholding taxes remitted on the net settlement of performance share units		5a		(12,210	)		(13,322	)

Net change in clients’ funds obligations				120,592			52,379

Cash used in financing activities				(745,896	)		(109,125	)

Effect of foreign exchange rate changes on cash, cash equivalents and cash included in funds held for clients				(12,732	)		33,486

Net (decrease) increase in cash, cash equivalents and cash included in funds held for clients				(330,289	)		338,663

Cash, cash equivalents and cash included in funds held for clients, beginning of period				1,838,083			1,471,184

Cash, cash equivalents and cash included in funds held for clients, end of period				1,507,794			1,809,847

Cash composition:

Cash and cash equivalents				1,132,661			1,324,835

Cash included in funds held for clients				375,133			485,012

See Notes to the Interim Condensed Consolidated Financial Statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			5

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

(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, business and strategic IT consulting and systems integration services, as well as 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 material accounting policies, of the Company’s consolidated financial statements for the year ended September 30, 2023 which were consistently applied to all periods presented, except for the new accounting standard amendments adopted on October 1, 2023, as described below in Note 3, Accounting policies.

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, 2023.

The Company’s interim condensed consolidated financial statements for the three months ended December 31, 2023 and 2022 were authorized for issue by the Board of Directors on January 30, 2024.

3.	Accounting policies

ADOPTION OF ACCOUNTING STANDARD

The following standard amendments have been adopted by the Company on October 1, 2023:

Definition of Accounting Estimates – Amendments to IAS 8

In February 2021, the IASB amended IAS 8 Accounting Policies, Changes in Accounting estimates and Errors to introduce a definition of accounting estimates and to help entities distinguish changes in accounting policies from changes in accounting estimates. This distinction is important because changes in accounting policies must be applied retrospectively while changes in accounting estimates are accounted for prospectively.

Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12

In May 2021, the IASB amended IAS 12 Income Taxes, to narrow the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.

The implementation of these standard amendments resulted in no impact on the Company’s interim condensed consolidated financial statements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			6

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

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

3.	Accounting policies (continued)

FUTURE ACCOUNTING STANDARD CHANGES

The following standard amendments have been issued and will be effective as of October 1, 2024 for the Company, with earlier application permitted. The Company is currently evaluating the impact of these standard amendments on its consolidated financial statements.

Classification of Liabilities as Current or Non-current and Information about long-term debt with covenants – Amendments to IAS 1

In January 2020, the IASB amended IAS 1 Presentation of Financial Statements, clarifying that the classification of liabilities as current or non-current is based on existing rights at the end of the reporting period, independent of whether the Company will exercise its right to defer settlement of a liability. Subsequently, in October 2022, the IASB introduced additional amendments to IAS 1, emphasizing that covenants for long-term debt, regardless whether the covenants were compliant after the reporting date, should not affect debt classification; instead, companies are required to disclose information about these covenants in the notes accompanying their financial statements.

Supplier finance arrangements - Amendments to IAS 7 and IFRS 7

In May 2023, the IASB amended IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures to introduce new disclosure requirements to enhance the transparency on supplier finance arrangements and their impact on the Company’s liabilities, cash flows and liquidity exposure. The new disclosure requirements will include information such as terms and conditions, the carrying amount of liabilities, the range of payment due dates, non-cash changes and liquidity risk information around supplier finance arrangements.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			7

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

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

4.	Accumulated other comprehensive income


	As at December 31, 2023			As at September 30, 2023
		$			$

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 $43,495 ($44,867 as at September 30, 2023)		581,212			534,321

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 $52,635 ($49,991 as at September 30, 2023)		(318,015	)		(325,649	)

Deferred gains of hedging on cross-currency swaps, net of accumulated income tax expense of $2,645 ($1,754 as at September 30, 2023)		18,124			13,541

Net unrealized gains on cash flow hedges, net of accumulated income tax expense of $404 ($3,953 as at September 30, 2023)		836			11,524

Net unrealized losses on financial assets at fair value through other comprehensive income, net of accumulated income tax recovery of $619 ($1,189 as at September 30, 2023)		(1,560	)		(3,412	)

Items that will not be reclassified subsequently to net earnings:

Net remeasurement losses on defined benefit plans, net of accumulated income tax recovery of $25,653 ($25,173 as at September 30, 2023)		(73,335	)		(71,350	)

		207,262			158,975

For the three months ended December 31, 2023, $5,809,000 of the net unrealized gains on cash flow hedges, net of income tax expense of $2,064,000, previously recognized in other comprehensive income, were reclassified in the consolidated statements of earnings ($3,510,000 and $1,197,000, respectively, were reclassified for the three months ended December 31, 2022).

For the three months ended December 31, 2023, $2,978,000 of the deferred gains of hedging on cross-currency swaps, net of income tax expense of $455,000, were also reclassified in the consolidated statements of earnings ($3,196,000 and $488,000, respectively, were reclassified for the three months ended December 31, 2022).


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			8

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

(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, 2023		206,714,497			1,440,286			26,445,706		36,894		233,160,203			1,477,180

Release of shares held in trusts¹		—			11,765			—		—		—			11,765

Purchased and held in trusts¹		—			(66,847	)		—		—		—			(66,847	)

Issued upon exercise of stock options²		462,843			32,114			—		—		462,843			32,114

Purchased and cancelled³		(943,250	)		(7,143	)		—		—		(943,250	)		(7,143	)
As at December 31, 2023		206,234,090			1,410,175			26,445,706		36,894		232,679,796			1,447,069

¹	During the three months ended December 31, 2023,143,523 shares held in trust were released (163,266 during the three months ended December 31, 2022) with a recorded value of $11,765,000 ($12,962,000 during the three months ended December 31, 2022) that was removed from contributed surplus.

During the three months ended December 31, 2023, the Company settled the withholding tax obligations of the employees under the performance share unit (PSU) plans for a cash payment of $12,210,000 ($13,322,000 during the three months ended December 31, 2022).

During the three months ended December 31, 2023, the trustees, in accordance with the terms of the PSU plans and Trust Agreements, purchased 463,364 Class A subordinate voting shares of the Company on the open market (640,052 during the three months ended December 31, 2022) for a cash consideration of $66,847,000 ($74,455,000 during the three months ended December 31, 2022).

As at December 31, 2023, 2,629,584 Class A subordinate voting shares were held in trusts under the PSU plans (2,318,495 as at December 31, 2022 and 2,309,743 as at September 30, 2023).

The carrying value of Class A subordinate voting shares includes $5,283,000 which corresponds to a reduction in contributed surplus representing the value of accumulated compensation costs associated with the stock options exercised during the three months ended December 31, 2023 ($6,310,000 during the three months ended December 31, 2022).

On January 30, 2024, the Company’s Board of Directors authorized, subject to regulatory approval from the Toronto Stock Exchange (TSX), the renewal of CGI’s Normal Course Issuer Bid (NCIB) for the purchase for cancellation of up to 20,457,737 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 may be available for purchase for cancellation commencing on February 6, 2024 until no later than February 5, 2025, 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 elects to terminate the bid.

During the three months ended December 31, 2023, the Company purchased for cancellation 874,700 Class A subordinate voting shares (nil during the three months ended December 31, 2022) under its current NCIB for a cash consideration of $116,959,000 and the excess of the purchase price over the carrying value in the amount of $109,816,000 was charged to retained earnings.

During the three months ended December 31, 2023, the Company paid for and cancelled 68,550 Class A subordinate voting shares under its current NCIB, with a carrying value of $558,000 and for a total consideration of $9,177,000, which were purchased but not cancelled as at September 30, 2023 (100,100, $778,000 and $10,291,000, respectively, during the three months ended December 31, 2022, which were purchased, or committed to be purchased, but not cancelled as at September 30, 2022).


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			9

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

(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)	Performance share units (PSUs)

During the three months ended December 31, 2023, 796,242 PSUs were granted, 229,573 were exercised and 192,918 were forfeited. The PSUs granted in the period had a weighted average grant date fair value of $137.89 per unit.

ii)

Stock options

During the three months ended December 31, 2023, 462,843 stock options were exercised (Note 5a) and 3,528 were forfeited.

c)	Earnings per share

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


	2023						2022
	Net earnings		Weighted average number of shares outstanding¹		Earnings per share		Net earnings		Weighted average number of shares outstanding¹		Earnings per share

		$				$		$				$

Basic		389,796		230,298,674		1.69		382,379		236,126,560		1.62

Net effect of dilutive stock options and PSUs²				3,598,608						3,310,204

Diluted		389,796		233,897,282		1.67		382,379		239,436,764		1.60

During the three months ended December 31, 2023, 943,250 Class A subordinate voting shares purchased for cancellation and 2,629,584 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 (100,100 Class A subordinate voting shares paid for and cancelled and 2,318,495 Class A subordinate voting shares held in trusts were excluded from the calculation during the three months ended December 31, 2022).

²	The calculation of the diluted earnings per share excluded nil stock options for the three months ended December 31, 2023 (13,260 during the three months ended December 31 2022, as they were anti-dilutive).

6. Cost optimization program

During the year ended September 30, 2023, the Company initiated a cost optimization program to accelerate actions to rightsize its real estate portfolio globally and improve operational efficiencies, including the increased use of automation and global delivery, focused on administrative activities.

During the three months ended December 31, 2023, the Company recorded $47,662,000 of costs (nil during the three months ended December 31, 2022), which includes costs for terminations of employment of $31,153,000, accounted for in severance provisions, and costs of vacating leased premises of $16,509,000.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			10

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

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

7.	Net finance costs



	Three months ended December 31

	2023			2022

		$			$

Interest on long-term debt		12,748			14,005

Interest on lease liabilities		7,389			7,161

Net interest costs on net defined benefit obligations or assets		1,983			1,091

Other finance costs		2,151			1,049

Finance costs		24,271			23,306

Finance income		(17,013	)		(5,165	)

		7,258			18,141

8.	Investments in subsidiaries

a)	Acquisitions and disposals

On October 10, 2023, the Company acquired all of the outstanding units of Momentum Industries Holdings, LLC. (Momentum), for a purchase price of $54,145,000. Momentum is an IT and business consulting firm specializing in digital transformation, data and analytics and managed services, based in the U.S. and headquartered in Miami, Florida. The acquisition is reported under the U.S. Commercial and State Government operating segment. The purchase price is mainly allocated to goodwill that is deductible for tax purposes, and represents the future economic value associated with the acquired workforce and synergies with the Company’s operations, as well as client relationships. The purchase price allocation is preliminary and is expected to be completed as soon as management gathers all the significant information available that is considered necessary in order to finalize this allocation.

This acquisition was made to further expand CGI’s footprint in the region and to complement CGI’s proximity model.

Cash acquired as part of the acquisition represented $5,072,000. As at December 31, 2023, an amount of $2,030,000 of the consideration remains payable.

b)	Business acquisitions realized in the prior fiscal year

During the three months ended December 31, 2023, the Company paid $2,348,000 related to an acquisition realized in a prior fiscal year.

c)	Acquisition-related and integration costs

During the three months ended December 31, 2023, the Company incurred $2,178,000 of acquisition-related and integration costs ($19,424,000 during the three months ended December, 2022). These costs were mainly related to vacating leased premises of $798,000 ($1,337,000 during the three months ended December, 2022), cost of rationalizing the redundancy of employment of $232,000 ($7,289,000 during the three months ended December, 2022) and other integration costs, such as professional fees and training activities for $1,148,000 ($10,798,000 during the three months ended December 31, 2022, including $3,825,000 of costs in relation to the mandatory repayment of long-term debt).


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			11

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

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

9.	Supplementary cash flow information

a)	Net change in non-cash working capital items and others is as follows for three months ended December 31:


	2023			2022

		$			$

Accounts receivable		(104,094	)		(151,462	)

Work in progress		123,704			161,589

Prepaid expenses and other assets		32,248			8,472

Long-term financial assets		(12,964	)		(2,012	)

Accounts payable and accrued liabilities		(626	)		10,135

Accrued compensation and employee-related liabilities		(24,869	)		(98,146	)

Deferred revenue		5,191			94,481

Income taxes		11,386			82,800

Provisions		11,761			(4,519	)

Long-term liabilities		14,637			9,413

Derivative financial instruments		(92	)		(159	)

Retirement benefits obligations		(2,547	)		(2,169	)

		53,735			108,423

b)	Interest paid and received and income taxes paid are classified within operating activities and are as follows for the three months ended December 31:


	2023		2022

		$		$

Interest paid		18,662		16,225

Interest received		22,809		9,072

Income taxes paid		125,253		68,481

c)	Cash and cash equivalents consisted of unrestricted cash as at December 31, 2023 and September 30, 2023.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			12

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

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

10.

Segmented information

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

The operating segments reflect the 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. Effective October 1, 2023, as part of the cost optimization program, the Company centralized some internal administrative activities under a corporate function, which were previously presented in revenue under the Asia Pacific segment. The Company has restated the Asia Pacific segmented information for the comparative period to conform with this change.

For the three months ended December 31, 2023

Western
and
Southern
Europe

U.S.
Commercial
and State
Government

Canada

U.S.
Federal

Scandinavia
and Central
Europe

U.K. and
Australia

Finland,
Poland
and
Baltics

Northwest
and
Central-
East
Europe

Asia
Pacific

Eliminations

Total

Segment revenue

653,055

558,992

499,204

483,238

421,994

371,317

218,888

204,480

233,310

(41,508

)

3,602,970

Segment earnings before acquisition-related and integration costs, cost optimization program, net finance costs and income tax expense¹

86,670

70,377

120,099

69,938

37,769

62,591

27,025

33,904

75,860

—

584,233

Acquisition-related and integration costs (Note 8c)

(2,178

)

Cost optimization program (Note 6)

(47,662

)

Net finance costs (Note 7)

(7,258

)

Earnings before income taxes

527,135

Total amortization and depreciation of $121,494,000 included in the Western and Southern Europe, U.S. Commercial and State Government, Canada, U.S. Federal, Scandinavia and Central Europe, U.K. and Australia, Finland, Poland and Baltics, Northwest and Central-East Europe and Asia Pacific segments is $18,272,000, $22,107,000, $14,207,000, $11,872,000, $17,884,000, $11,006,000, $9,655,000, $9,547,000 and $6,944,000, respectively, for the three months ended December 31, 2023.


							For the three months ended December 31, 2022
	Western and Southern Europe		U.S. Commercial and State Government		Canada		U.S. Federal		Scandinavia and Central Europe		U.K. and Australia		Finland, Poland and Baltics		Northwest and Central- East Europe		Asia Pacific		Eliminations			Total

		$		$		$		$		$		$		$		$		$		$			$

Segment revenue		628,128		566,013		506,373		464,029		398,203		329,947		203,258		178,101		217,977		(41,757	)		3,450,272

Segment earnings before acquisition-related and integration costs, net finance costs and income tax expense¹		77,404		82,282		119,002		73,145		31,107		45,100		29,218		25,866		70,989		—			554,113

Acquisition-related and integration costs (Note 8c)																							(19,424	)

Net finance costs (Note 7)																							(18,141	)

Earnings before income taxes																							516,548

Total amortization and depreciation of $124,053,000 included in the Western and Southern Europe, U.S. Commercial and State Government, Canada, U.S. Federal, Scandinavia and Central Europe, U.K. and Australia, Finland, Poland and Baltics, Northwest and Central-East Europe and Asia Pacific segments is $20,561,000, $19,353,000, $13,815,000, $15,956,000, $21,542,000, $9,077,000, $8,973,000, $7,540,000 and $7,236,000, respectively, for the three months ended December 31, 2022.

The accounting policies of each operating segment are the same as those described in Note 3, Summary of material accounting policies, of the Company’s consolidated financial statements for the year ended September 30, 2023. Intersegment revenue is priced as if the revenue was from third parties.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			13

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

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

10.

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 months ended December 31:


	2023		2022
		$		$
Western and Southern Europe

France		568,210		549,942
Spain		30,380		28,047
Portugal		28,217		27,179

Others		15,289		12,241
		642,096		617,409

U.S.¹		1,097,288		1,068,308

Canada		544,374		550,618

Scandinavia and Central Europe

Germany		237,338		207,687
Sweden		181,851		177,977

Norway		27,384		35,179
		446,573		420,843

U.K. and Australia

U.K.		404,412		369,944

Australia		18,067		21,396
		422,479		391,340

Finland, Poland and Baltics

Finland		213,476		201,810

Others		17,368		9,174
		230,844		210,984

Northwest and Central-East Europe

Netherlands		156,907		133,272
Denmark		21,888		24,755
Czech Republic		21,742		15,976

Others		14,725		15,874
		215,262		189,877

Asia Pacific

Others		4,054		893

		4,054		893

		3,602,970		3,450,272

¹	External revenue included in the U.S. Commercial and State Government and U.S. Federal operating segments was $611,890,000 and $485,398,000, respectively, for the three months ended December 31, 2023 ($602,072,000 and $466,236,000, respectively, for the three months ended December 31, 2022).


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			14

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

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

10.

Segmented information (continued)

INFORMATION ABOUT SERVICES

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


	2023		2022
		$		$

Managed IT and business process services		1,971,844		1,842,203

Business and strategic IT consulting and systems integration services		1,631,126		1,608,069

		3,602,970		3,450,272

MAJOR CLIENT INFORMATION

Contracts with the U.S. federal government and its various agencies, included within the U.S. Federal operating segment, accounted for $480,897,000 and 13.3% of revenues for the three months ended December 31, 2023 ($460,495,000 and 13.3% for the three months ended December 31, 2022).

11.

Financial instruments

FAIR VALUE

All financial instruments are initially measured at their 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, long-term receivables within long-term financial assets, short-term investments included in funds held for clients, accounts payable and accrued liabilities, accrued compensation and employee-related liabilities, long-term debt and clients’ funds obligations.

Fair value through earnings (FVTE)

Cash, cash equivalents, cash included in funds held for clients, derivative financial instruments and deferred compensation plan assets within long-term financial assets.

Fair value through other comprehensive income (FVOCI)

Short-term investments included in current financial assets, long-term bonds included in funds held for clients and 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.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			15

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

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

11.

Financial instruments (continued)

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 the 2014 U.S. Senior Notes, the 2021 U.S. Senior Notes, the 2021 CAD Senior 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 cash flows;

The fair value of cash, cash equivalents, cash included in funds held for clients and short-term investments included in current financial assets 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 three months ended December 31, 2023.

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 December 31, 2023

As at September 30, 2023

Level

Carrying
amount

Fair value

Carrying
amount

Fair value

2014 U.S. Senior Notes

Level 2

462,255

457,323

473,808

464,806

2021 U.S. Senior Notes

Level 2

1,310,190

1,157,535

1,342,714

1,132,649

2021 CAD Senior Notes

Level 2

596,728

537,374

596,550

503,984

Other long-term debt

Level 2

7,916

7,496

10,363

9,839

2,377,089

2,159,728

2,423,435

2,111,278

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.

In December 2023, the Company repaid in full the unsecured committed term loan credit facility of U.S. $500,000,000, for a total amount of $670,350,000. The Company also settled the related cross currency swaps with a notional amount of $670,039,000 for a net gain of $18,087,000, for which $311,000 related to the cash flow hedge was recorded in net finance costs and $17,776,000 related to the net investment hedge was recognized in other comprehensive income and will be transferred to earnings when the net investment is disposed of.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			16

Notes to the Interim Condensed Consolidated Financial Statements

For the three months ended December 31, 2023 and 2022

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

11.

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 December 31, 2023

As at September 30, 2023

Financial assets

FVTE

Cash and cash equivalents

Level 2

1,132,661

1,568,291

Cash included in funds held for clients

Level 2

375,133

269,792

Deferred compensation plan assets

Level 1

98,542

88,076

1,606,336

1,926,159

Derivative financial instruments designated as hedging instruments

Current derivative financial instruments included in current financial assets

Level 2

Cross-currency swaps

28,038

83,626

Foreign currency forward contracts

7,457

12,505

Long-term derivative financial instruments

Level 2

Cross-currency swaps

11,976

16,130

Foreign currency forward contracts

2,031

5,875

49,502

118,136

FVOCI

Short-term investments included in current financial assets

Level 2

8,387

7,332

Long-term bonds included in funds held for clients

Level 2

126,023

138,935

Long-term investments

Level 2

17,225

17,113

151,635

163,380

Financial liabilities

Derivative financial instruments designated as hedging instruments

Current derivative financial instruments

Level 2

Cross-currency swaps

4,309

2,183

Foreign currency forward contracts

3,538

2,330

Long-term derivative financial instruments

Level 2

Foreign currency forward contracts

6,104

1,700

13,951

6,213

There were no transfers between Level 1 and Level 2 during the three months ended December 31, 2023.


CGI Inc. – Interim Condensed Consolidated Financial Statements for the three months ended December 31, 2023 and 2022			17