M ANAGEMENT ’ S DISCUSSION AND ANALYSIS (continued) 18 Orbit G arant 2012 annual rep O rt SUMMARY ANALYSIS OF FISCAL 2011 COMPARED TO FISCAL 2010 (Figures for fscal 2011 have been restated to comply with IFRS. Fiscal 2010 remains unchanged as previously reported under Canadian GAAP.) Revenue for the fscal year ended June 30, 2011 was $127.7 million compared to $110.0 million for fscal 2010, representing an increase of $17.7 million or 16.2%. Adjusted gross margins for fscal 2011 were 27.6%, compared to 30.6% for fscal 2010. Total gross proft during fscal 2011 was $28.5 million, compared to $33.6 million for fscal 2010, representing a dec rease of 15.3%. The decline was a result of a more competitive pricing environment due to prevailing market conditions at that time. Net earnings for fscal 2011 totalled $11.4 million, or $0.35 per share ($0.34 per share diluted), compared to $12.6 million, or $0.38 per share (basic and diluted) in fscal 2010. OVERALL PERFORMANCE SUMMARY OF QUARTERLY RESULTS (1) Fiscal 2012 Fiscal 2011 * ($ millions) June 30 Mar. 31 Dec. 31 Sept. 30 June 30 Mar. 31 Dec. 31 Sept. 30 Contract revenue* 43.6 41.7 32.4 37.1 41.0 33.4 25.9 27.4 Gross proft* 7.7 10.0 7.1 8.9 10.1 6.8 5.9 5.7 Gross margin % 17.7 23.9 21.7 24.0 24.7 20.4 22.9 20.5 Adjusted Gross margin % (2) 22.6 29.4 28.3 29.5 29.2 25.7 29.1 26.1 Net earnings* 1.3 3.5 1.9 3.7 4.6 2.3 2.3 2.2 EBITDA (3) * 5.5 8.3 5.8 8.3 9.3 6.0 5.4 5.3 Net earnings per common share ($) – Basic 0.04 0.10 0.06 0.11 0.14 0.07 0.07 0.07 – Diluted 0.04 0.10 0.05 0.11 0.13 0.07 0.07 0.07 (1) F i g u r e s f o r f s c a l 2 0 1 1 have been restated to comply with IFRS. (2) Refects gross margin, excluding amortization expenses. See “Reconciliation of non-IFRS fnancial measures” (3) E B I T D A S e e “ R e c o n c i l iation of non-IFRS fnancial measures” SEASONALITY The Company’s revenue shows some seasonal trends. In the underground drilling division, scheduled mine shut-downs over holiday and summer periods at some locations reduce revenue during these periods. In the domestic surface drilling division, weather condi tions in the spring and fall seasons often cause drilling programs to pause or be planned around the seasonal fuctuations. Similarly, i n the international surface drilling division, weather conditions at certain times of the year make drilling diffcult, resulting in revenue fuc tuations. ANALYSIS OF T h E FOURT h QUARTER OF FISCAL 2012 COMPARED TO FISCAL 2011 Contract revenue Revenue for the fourth quarter of the fscal year ended June 30, 2012 (“Q4 FY2012”) totalled $43.6 million, an increase of $2.6 million or 5.9% compared to the quarter ended June 30, 2011 (“Q4 FY2011”). The number of metres drilled decreased to 402,126 in Q4 FY2012 from 426,525 in Q4 FY2011. The Company’s average revenue per meter drilled in Q4 FY2012 was $105.83 compared to $94.12 in Q4 FY2011. Domestic drilling revenue was $38.9 million in Q4 FY2012, compared to $33.8 million in Q4 FY2011, representing an increase of 14.7%, refecting higher revenue per metre drilled and the contribution from L antech Drilling. Most of the increase was attributable to the Company’s new Lantech Drilling operations. International drilling revenue was $4.7 million in Q4 FY2012 compared to $7.3 million in Q4 FY2011, a decrease of 35.1%, due to lower demand for drilling services.