Management targets margins and consumer credit requirements to deliver
positive operating income and EBITDA
TORONTO, Aug. 23, 2012 /CNW/ - Telehop Communications Inc. ("Telehop" or the "Company"), (TSX-V: HOP)
today announced its financial performance during the second quarter
ended June 30, 2012.
During the second quarter of 2012, the Company increased EBITDA to
$27,149 from $(141,760) and increased operating income to $5,210 from
an operating loss of $(178,929) during the same period last year.
This is the first quarter in six quarters that the Company has been
EBITDA and operating income positive.
The Company has focused on increasing gross margins specifically on the
Retail revenue, reducing low margin wholesale customers and tightening
credit requirements to the entire installed base. Continued performance
improvements are expected as the Company has developed a more
sophisticated marketing database to gain further customer insights and
drive programs to increase the average revenue per user and reduce
"We are beginning to see a return on our efforts over the past year,"
said Rajiv Jagota, President CEO, Telehop. "The structure and programs
are now in place for us to move ahead on a constructive footing. We
look forward to making further progress as we execute on our plan for
The Company's financials reflected a number of events of note. Details
of these events are summarized below:
Telecommunication customer payment of $102,863 was delayed until July
3rd resulting in higher accounts receivable levels and lower cash
provided by operating activities,
Additional second quarter costs incurred in the amount of $32,907 as a
result of termination costs for prior executive.
Three months ended June 30
Six months ended June 30
Gross margin %
Operating income (loss)
Net income (loss)
Basic and diluted loss per share
1 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 9.9% to $2.4 million in the second quarter of 2012
compared to $2.7 million in 2011. This decrease was driven by declines
mainly in lower margin and credit challenged wholesale services. Retail
revenues declined 4.4% as a result of increased credit requirements for
new customers along with decrease in subscription services. To combat
this decline the Company has repriced its home phone offering in August
to a much simpler three tier plan offering unlimited calling.
Subscription revenue and the launch of the new #100 mobile phone calling
services will be the driving force for next quarter's earnings with
simple product choices and features, price plans and marketing
initiatives geared towards subscriber retention and cross promotion.
The increase in gross margin was primarily due to a decline in wholesale
revenue coupled with decreased telecommunication costs related to the
new switch implementation.
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 firstname.lastname@example.org 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.
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
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:
Mr. Rajiv Jagota
President and CEO
(416) 494 4490