Phonetime Releases 2005 Audited Financial Statements
30 April 2006
Phonetime Inc. (TSX VENTURE:PHD), a leading Canadian supplier of long distance telecommunication services, today announced the release of its audited financial statements for the year ended December 31, 2005.
Revenue for the year ended December 31, 2005 was $17.6 million vs. $18.2 million in the same period of the prior year, a decline of 3.5%. Revenue for the 4th quarter of 2005 was $4.9 million vs. $3.9 million in the same quarter of 2004 - an increase of 26%, which reflected a trend of quarter over quarter revenue improvements commencing in the second quarter of 2005. Gross profit for 2005 rose to $6.6 million from $6.5 million in 2004 and gross profit margin increased to 37.5% in 2005 from 35.6% in 2004, although net profit fell to $102,000 in 2005 from $500,000 in 2004, as operating expenses increased. Cash generated from operating activities increased by approximately $441,000. The Company's operations are entirely funded by cash flow from operations and it has no outstanding bank debt or long term debt. In 2005, Phonetime improved its balance sheet by eliminating its long term debt and by tightening its financial controls as evidenced by its current ratio, which increased to 1.34:1 as at December 31, 2005 compared to 1.18:1 at the end of the prior year.
In 2005, Phonetime successfully continued the transition of its business from relying solely on the highly competitive, low-margin pre-paid calling card business to growing its Call Select subsidiary (of which Phonetime owns 80%) to $4.9 million in 2005 from just $490,000 in 2004, an increase of 1000%. Phonetime also successfully commenced offering VoIP services to wholesale business customers and by the end of the year, Phonetime was delivering 30 million minutes of highly profitable wholesale traffic per month.
To pave the way to future growth and continued profits, the Company increased its investment in Call Select by: extending its accounts receivable, thereby enabling it to add thousands of new customers throughout 2005; acquiring BeeTel Communications Inc. a private company located in Surrey, British Columbia (see Phonetime's Press Release dated May 17, 2005) and vending its operations into Call Select; and by funding the expansion of Call Select's call centre in Vancouver from 50 seats to 80 seats.
In addition to its investment in Call Select, Phonetime grew its Canadian telecom network to 36 Metropolitan Areas by adding 12 new cities. As a result, Phonetime now operates one of the largest private telecom networks in Canada which has the capacity to process up to 3 billion minutes of traffic annually and covers over 80% of the country's population. The investments in Call Select and the expansion of its telecom network directly contributed to Phonetime's increased operating expenses in 2005 and its decline in net profits for the year.
Remarking on the Company's 2005 results, Wayne Silver, the President and CEO of Phonetime stated, "We are pleased with our overall 2005 performance. We are now seeing the impact of our successful transition into a diversified telecom company, with a growing "1+" business and a profitable VoIP wholesale division to complement our well-established phone card operations."
About Phonetime and Call Select
Licensed as a Class A, International Carrier by the CRTC, Phonetime operates one of Canada's largest and most advanced private long-distance and VoIP telecommunications networks with points-of-presence in 36 Canadian urban areas. Phonetime's wholesale network currently has the capacity to process over 3 billion minutes of traffic annually and is rapidly emerging as a cost effective wholesale backbone for VoIP service providers, including ILECs, CLECs, PTTs, and IPLECs world-wide.
Phonetime also markets its own competitively priced, branded calling cards (including Nuvo, Bravo, Lucky 888, Eureka, Hot and Call Value) across the country. These are distributed to consumer markets from more than 4,000 retail outlets, including Petro-Canada, Shell Canada, and Business Depot/Staples as well as through many Private Label distributors. With offices in Toronto, Montreal and Vancouver, Phonetime provides retail customers with multi-lingual customer service - an important competitive advantage.
Phonetime's Call Select subsidiary provides 1+ Equal Access and Dial Around long distance services to ethnic markets across Canada and serves as a platform for the Company's long-term diversification plan. Since its establishment, it has enabled Phonetime to deliver a wide range of new services in the higher margin and relatively stable post-paid market.
Note: This news release contains forward-looking information. Actual future results may differ materially. All figures are in Canadian dollars. The risks, uncertainties, and other factors that could influence actual results are described in the Company's annual report to shareholders.
The TSX Venture Exchange has neither approved nor disapproved the information contained herein.
Contacts:Phonetime Inc.Ian HochbergDirector(416) 505-4382ian@phonetime.com
Phonetime Inc.Wayne SilverPresident and CEO(905) 361-8304wayne@phonetime.com
SOURCE: Phonetime Inc.
Source: marketwire
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