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TORONTO, April 12, 2012 /CNW/ - Telehop Communications Inc. ("Telehop" or the "Company"), today announces financial results for the fourth quarter and year ended December 31, 2011 in accordance with International Financial Reporting Standards ("IFRS"). 2011 has been a year of challenges and changes that will better position the company going forward.  The following outlines the Company's progress throughout 2011: -- Launch of cable internet service in February 2011 to complement subscriber based services -- Appointment of a new President and Chief Executive Officer in April 2011, bringing a new brand of leadership focused on marketing and operational improvements -- Shareholders' ratification of Company's direction during its AGM in May 2011 -- Successful resolution of an outstanding marketing litigation in July 2011 -- Fulfillment of its legacy financial obligation to the Estate of Telehop's founder in August 2011 -- Successful capital raise in September 2011 through a fully subscribed rights offering raising $293 thousand, net of fees -- Purchase of a new switch in October 2011 which provides "carrier-grade" technology, enhances the quality of the Company's existing services, and will allow the company to branch through new products and services -- Three-year leasing agreement signed with a major Telecommunications company to house the new switch and enhance the Company's existing network infrastructure expiring September 2014 FINANCIAL OVERVIEW The financial overview should be read in conjunction with our 2011 and 2010 Audited Annual Consolidated Financial Statements and Notes to the Financial Statements, Management's Discussion and Analysis ("MD&A") and our quarterly interim financial statements and other recent securities filings available on SEDAR at www.sedar.com. The financial information presented herein has been prepared on the basis of IFRS and is expressed in Canadian dollars unless otherwise stated. Comparative amounts for 2010 included in this earnings release have been conformed to reflect our adoption of IFRS, with effect from January 1, 2010. Periods prior to January 1, 2010 have not been conformed and are prepared in accordance with Canadian generally accepted accounting principles ("GAAP"). Summary of operating results: Three months ended Years ended December 31, December 31, 2011 2010 2011 2010 Revenue $2,366,956 $2,868,654 $10,386,220 $11,758,098 Gross margin $803,983 $1,303,317 $4,322,431 $5,078,438 Gross margin % 34% 45% 42% 43% EBITDA1 $(380,599) $55,463 $(749,678) $99,396 Operating $(602,192) $13,752 $(1,104,682) $(167,190) income (loss) Net loss $(945,515) $(115,929) $(1,329,578) $(274,076) Basic and $(0.06) $(0.01) $(0.09) $(0.02) 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 12% to $10.4 million in 2011 compared to $11.8 million in 2010. This decrease was driven by declines in casual calling and wholesale services, which were partially offset by growth
in our subscription and prepaid calling cards products. 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.  In the fourth quarter of 2011, the Company reduced its accrual for casual calling revenue by $282 thousand based on management's evaluation of the recoverability of the estimate set up from the prior year.  This adjustment added to the year over year decline in casual calling revenues.  The decline in year over year wholesale revenue can be attributed to aggressive price competition and multiple entrants in the market. Subscription revenue, including Home Phone, increased year over year in line to Company strategy and expectations.  Subscription revenue will continue to be the driving force for next year's earnings with more product choices and features, price plans and marketing initiatives geared towards subscriber acquisition and retention.  Prepaid calling cards were a new product re-launched in 2011 and revenue generated from this product has not been significant. Gross margin decreased by 15% to 4.3 million in 2011 compared to $5.1 million in 2010.  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.  Gross margin as a percentage of revenue was 42% in 2011, compared to 43% in 2010.  This 1% drop was in line with the effects of the adjustments noted. EBITDA decreased to $(750) thousand in 2011, compared to $99 thousand in 2010. The decrease in EBITDA was primarily attributable to reduction in the estimate of the accrual for casual calling revenue from prior year ($282 thousand), duplicate network costs for the new switch migration ($37 thousand), costs related to prepaid calling card product line ($208 thousand) and proxy fights and dissident shareholders costs ($72 thousand). EBITDA is reconciled to net loss as follows: Three months ended Year ended December 31, December 31, 2011 2010 2011 2010 Net loss $(945,515) $(115,929) $(1,329,578) $(274,076) Add: Amortization 216,085 44,807 346,721 267,823 and depreciation Finance income 15,843 1,651 18,886 6,907 and finance costs Income taxes 332,988 124,934 214,293 98,742 EBITDA $(380,599) $55,463 $(749,678) $99,396 Operating cash flows generated for 2011 totaled $192 thousand, compared to cash usage of $311 thousand in 2010, arising from lowering of trade and other receivables through receipt of payments, and better payment terms with vendors.  In late 2011, the Company entered into a 2-year master purchase and sale agreement where certain receivables are factored and advanced upon presentation of verified invoices, with the balance after interest and fees received upon payment by customers.  This factoring facility also helped with the positive operating cash flow for 2011. The results of operations for Q4 2011 included the impact of the following significant transactions - $282 thousand adjustment for the estimate of casual calling revenue set up from the prior year, $37 thousand in duplicate telecommunication costs, $16 thousand related to litigation and other settlements, $183 thousand additional depreciation due to a change in the estimated useful lives and impairment of certain property and equipment, and an increase in the valuation allowance in the amount of $208 thousand for the future tax assets recorded from prior years. Throughout 2011, we focused on our strategic priorities, resulting in putting the Company in an improved position to execute our strategy and objectives in 2012.  We aim to continue to better our services to our customers, to reach more markets, and to further optimize our operating costs.  We remain committed to managing our working capital and to improving our operating cash flow for the business in the coming years. 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. , 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.     Telehop Communications Inc. CONTACT: Company Contact:Mr. Rajiv JagotaPresident and CEO(416) 494 4490rjagota@telehop.com

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