AlarmForce Revenue posts record revenues in Second Quarter



    Common shares traded on the Toronto Stock Exchange
    Trading symbol: AF

    TORONTO, June 12 /CNW/ - Joel Matlin, President and CEO, is pleased to
announce results for the second quarter ended April 30, 2007:

    
    -------------------------------------------------------------------------
                          April 30, 2007   April 30, 2006   Change

                         (6 months ended) (6 months ended) (over same period)
                         ---------------- ---------------- ------------------
    Revenue                $ 12,025,000     $ 10,105,000      19%
    Income before
     income taxes          $  1,334,000     $  1,313,000       2%
    Net income             $    840,000     $    827,000       2%

    Cash flow from
     operations excluding
     working capital       $  1,673,000     $  1,520,000      10%

    EBITDA                 $  2,651,000     $  2,408,000      10%
    EBITDA/share           $       0.22     $       0.21       6%

    EBITDA before marketing
     expenses              $  6,639,000     $  5,319,000      25%

    Basic Net
     income/share          $       0.07     $       0.07
    Diluted Net
     income/share          $       0.07     $       0.07
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (*) EBITDA (Earnings Before Interest, Income Taxes, Depreciation, and
        Amortization) is a key measure in the security industry and should
        not be interpreted as GAAP)
    

    Mr. Matlin said that: "AlarmForce closed the first quarter of 2007 with a
total subscriber base of 71,400 accounts, setting a new record level for
quarterly revenues, and bringing total revenues for the first half of 2007 to
over $12 million. Total revenues for the three months ended April 30, 2007
increased to $6,177,000, a 22% increase from the comparative three-month
period in 2006."
    "The company posted net income for the six months ended April 30, 2007 of
$840,000, up by $13,000 from 2006. While revenues reached a record level,
marketing expenses have also increased, which was as we expected, having
budgeted the increase in our 2007 subscriber growth plan. EBITDA, a
performance measure used in the security industry, increased by 10% from the
corresponding prior period. Included in this measure is the effect of the
marketing expenses that drives the company's growth engine. Therefore the
effect of the increased marketing budget results in a drag on operating profit
relative to the prior period. Despite the impact of the growth effect on
profits, every subscriber account added increases the asset value of the
company, and furthermore, the creation of new accounts is being accomplished
by the company without any increase in debt financing."
    Mr. Matlin added: "AlarmForce's growth in subscriber base in the next few
years is expected to translate into higher profits as a result of increasing
monthly recurring revenues. By growing our subscriber base organically rather
than through acquisition of accounts, we expect to be able to grow
efficiently, notwithstanding that our policy is to account for marketing costs
as period expenses. i.e. these costs are expensed rather than being
capitalized in the cost of new subscriber accounts created. However, excluding
the marketing expenses, EBITDA increased by 25% to $6.6 million for the six
months ended April 30, 2007, which indicates the strength of our operating
efficiency and cash flow from recurring revenues."
    "Gross profit for the six months ended April 30, 2007 increased to
$9,343,000, up by 21%. As a percentage of revenue, gross profit amounted to
78%, continuing to benefit from economies of scale from our expanding
subscriber base. We are firmly on track in that the investment in the US
brand-building is being funded entirely from our internal cash flows generated
by our operations in Canada."
    Mr. Matlin ended by saying: "We are very optimistic about the future, as
over the next few years we expect to benefit increasingly from the opportunity
in the US market. Our present base in three States comprises a total
population of over 29 million, expanding our combined opportunity to almost
double that of Canada. Our goal is to continue to expand based on our
strengths, including our two-way voice, wireless technology, the trust of
consumers in our brand, and a sound value proposition, which have delivered a
compounded annual growth rate of 16% to date."

    AlarmForce is Canada's largest manufacturer and installer of two-way
voice home alarms systems and line-cut protection. The Company has offices
serving all major markets in Canada and selected markets in the United States.





For further information:

For further information: Investor Relations Dept., Tel: (416) 445-2001
ext No. 225, Fax: (416) 445-9381, E-mail: investor@alarmforce.com

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AlarmForce Industries Inc.

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