R esults of Operations Nine months ending March 31 2008 compared to Nine months ending March 31 2007 1 Contract R evenue During the nine months ending March 31 2008 the Fiscal 2008 Interim P eriod the Company had contract revenue of 57502957 representing an increase of 127 when compared to the nine months ending March 31 2007 Fiscal 2007 Interim P eriod Approximately 21095479 of this increase relates primarily to the acquisition of Orbit including Soudure R oyale and to a lesser extent to the acquisition of Drift including the assets of PhylDon Underground drilling sales revenue increased from 19947569 during the Fiscal 2007 Interim P eriod to 31187804 during the Fiscal 2008 Interim P eriod a gain of 56 This was primarily due to the combination of Orbits underground division with the Companys underground division Domestic Surface drilling contract revenue increased from 3213568 during the Fiscal 2007 Interim P eriod to 16481275 during the Fiscal 2008 Interim P eriod Before F ebruary 1 2007 the Company did not have a surface drilling division and so the increase is directly as a result of the acquisition of Orbit Similarly revenue related to international surface work performed by Orbit and Drift was added to the consolidated revenue of the Company during 2007 resulting in revenue of 6074952 from 1254130 during the Fiscal 2007 Interim P eriod R evenue attributable to the sale of drills to unrelated third parties by Soudure R oyale was 3758926 during the Fiscal 2008 Interim P eriod compared to 919900 during fiscal 2007 Interim P eriod Soudure R oyale was acquired as part of the Orbit transaction and so all of this revenue is incremental to the Company when compared to the same period in the prior fiscal year Cost of Contract R evenue and Gross Profit T otal gross profit during the Fiscal 2008 Interim P eriod was 20079924 compared to 7142880 in the Fiscal 2007 Interim P eriod The domestic surface division international surface division including Drift and Soudure R oyale accounted for 5936834 3048455 and 1380754 of gross profit respectively during the Fiscal 2008 Interim P eriod as compared to 1107055 830415 and 327603 respectively during the Fiscal 2007 Interim P eriod These divisions were acquired during 2007 as part of the Orbit transaction accounting for the majority of the increase The balance of the gross profit increase is attributable to the underground division which increased its gross profit during the Fiscal 2008 Interim P eriod compared to the same period in the previous fiscal year by 4836074 The increase in gross profit is a result of i a lowermargin underground contract being replaced with several highermargin contracts ii contractual price increases in the underground segment taking effect and iii the inclusion of Orbits underground drilling division in Companys financial results The Company experienced increases in certain costs during the Fiscal 2007 Interim P eriod specifically labour and consumables which partially offset the gains in price attributable to contractual increases and new contracts However with the combination of the businesses on January 31 2007 the Company was able to enter into a new supply agreement with its primary supplier of consumables Boart L ongyear Limited which is expected to result in significant savings General and Administrative Expenses General and administrative expenses GA was 3543319 during the Fiscal 2008 Interim P eriod an increase of 2057521 compared to the same period in the previous fiscal year The increase is a consequence of the overhead of Orbit and Drift being included in the Fiscal 2008 Interim P eriod financial results As a percent of sales GA was 62 during Fiscal 2008 Interim P eriod and 59 during the Fiscal 2007 Interim P eriod The GA as a percent of sales has been declining as the Company integrates the Orbit and Drift acquisitions and eliminates excess overhead Note 1 F or the purpose of comparison the comparative figures for the nine months ending March 31 2007 have been calculated by add ing the six months ended March 31 2007 of Orbit Garant and the three months ended September 30 2006 of Garant 45