Telehop Announces First Quarter 2012 Financial Results

TORONTO, May 29, 2012 /CNW/ - Telehop Communications Inc. ("Telehop" or the "Company"), (TSX-V: HOP) today announces financial results for the first quarter ended March 31, 2012 in accordance with International Financial Reporting Standards ("IFRS").

The first three months of 2012 the company has realized a number of changes and improvements which will help to accelerate the growth of the company in the future:

  • Completion and successful transition to new upgraded switch technology and increased capacity to expand customers base.
  • Operating expenses were down $242,818 or 18% due to a strong focus on cost reduction and efficiencies over the entire business.
  • Increased sales focus on driving sales of subscription services such as Long Distance, VoIP Phone and High Speed Internet.

FINANCIAL OVERVIEW

Consolidated Highlights Three months ended March 31,
  2012 2011
Revenue $2,448,700 $2,671,104
Gross margin $1,027,191 $1,138,532
Gross margin % 42% 43%
EBITDA1 $(41,123) $(147,599)
Operating income (loss) $(69,596) $(202,382)
Net loss $(93,560) $(157,980)
Basic and diluted loss per share $(0.01) $(0.01)
       
      Earnings before interest, taxes, depreciation and amortization ("EBITDA") should not be considered as a substitute for net loss determined in accordance with IFRS. A reconciliation of EBITDA to net loss is detailed in a separate section.  EBITDA is a standard used in the telecommunications industry to assist in understanding and comparing operating results.  The Company believes that EBITDA is a useful measure of the Company's ability to service debt, invest in capital equipment or distribute dividends to its shareholders.
       

Revenue decreased by 8% to $2.4 million in the first quarter of 2012 compared to $2.7 million in 2011. This decrease was driven by declines in casual calling and wholesale services, which were partially offset by growth in subscription services. Lower casual calling revenue was lower year over year due to the shift in customer pattern from using traditional landline services to using wireless services and online long distance competitors such as Skype.  The decline in quarter over quarter wholesale revenue can be attributed to aggressive price competition and multiple entrants in the market.  Subscription revenue will continue to be the driving force for next quarter's earnings with more product choices and features, price plans and marketing initiatives geared towards subscriber acquisition and retention.

The decrease in gross margin was primarily due to a decline in revenue coupled with increased telecommunication costs related to the new switch implementation and customer migration.

EBITDA increased by $107,954 in the first quarter 2012, compared to the first quarter in 2011. The increase in EBITDA was primarily attributable to overall cost savings initiatives across the company.

A complete financial reporting package, including the 2011 Audited Annual Consolidated Financial Statements and Notes to the Financial Statements and MD&A, is available at our corporate website (www.telehop.com), at SEDAR website www.sedar.com or via email to investorinquiry@telehop.com or via phone at 416-494-4490.

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained herein regarding the Company and its plans constitute "forward-looking statements" within the meaning of Canadian securities laws.  By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties.  The forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any performance or achievement expressed or implied by such forward-looking statements.  We direct you to our Company's Management's Discussion and Analysis filed for the period ended December 31, 2011.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

____________________________

About Telehop

Telehop Communications Inc. (TSX-V: HOP), was founded and headquartered in Toronto, Ontario, in 1993, and has grown into one of the largest alternative telecommunications providers to both residential and business customers.

Telehop originally began offering residential and business two-way monthly 'flat rate' calling services in the Greater Toronto area between communities where a call would otherwise be a long distance call. In 1994, Telehop became one of Canada's few Equal Access Long Distance Providers, allowing it to offer its customers full service long distance calling globally at significantly lower rates. The Canadian Radio-television and Telecommunications Commission ("CRTC") has licensed Telehop as a Class "A" telecommunications carrier. 

Telehop's dedication and priority is providing residential and businesses with exceptional phone services at competitive rates without sacrificing quality service.

 

SOURCE Telehop Communications Inc.

For further information:

Company Contact:
Mr. Rajiv Jagota
President and CEO
(416) 494 4490
rjagota@telehop.com

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