AlarmForce Announces Record Fourth Quarter Results for 2010

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

TORONTO, Jan. 27 /CNW/ - TSX - Trading symbol - AF

AlarmForce Industries Inc., Canada's largest manufacturer and installer of live two-way voice home alarms systems, is pleased to announce annual results for the year ended October 31, 2010:

       
  October 31, 2010 October 31, 2009 Change
  (year ended) (year ended) (year over year)
Revenue $ 37,187,000 $34,133,000 +9%
Gross profit $ 28,954,000 $26,101,000 +11%
Income before income taxes $ 7,052,000 $ 5,673 ,000 +24%
Net income $ 4,782,000 $ 3,780 ,000 +27%
Cash flow from operations $ 7,209,000 $ 6,467,000 +11%
Cash flow from operations excluding working capital $ 8,294 ,000 $ 6,718,000 +23%
EBITDA $ 10,813,000 $ 9,057,000 +19%
EBITDA/share $ 0.88 $ 0.74 +19%
Basic Net income / share $0.39 $0.31 +25%
Diluted Net income / share $0.39 $0.31 +25%

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

EBITDA is defined as earnings before interest expenses, income taxes, depreciation and amortization. EBITDA is a standard measure used in the security industry to assist in understanding and comparing operating results and is often referred to by our competitors. Management views EBITDA as an important measure of operating performance of the Company. Yet, since it does not have any standardized meaning defined by Canadian GAAP, it may not be considered in isolation of GAAP measures such as net income/loss or cash flows, as a measure of liquidity. The Company, however, utilizes these measures in making operating decisions and assessing its performance. Management believes this to be an important measure, as it allows the Company to assess its ongoing business without the impact of depreciation or amortization expenses. Since EBITDA is not a defined term under Canadian GAAP, it is unlikely to be comparable to similar measures presented by other issuers.

Joel Matlin, President and CEO, announced that AlarmForce Industries Inc. added over 23,800 new accounts in the fiscal year ended October 31, 2010, closing with a subscriber base of 113,500 accounts.

He stated that, "The net growth rate in the total subscriber base was 11%, which generated additional monthly recurring revenues for the Company and resulted in a record $37.2 million of total revenues. The increase in revenues from the previous year was $3.0 million or 9%. Gross profit increased by 11% for the year, and as a percentage of sales it increased from 76% to 78%. The growth in subscribers, accompanied by the increase in operating efficiency reflected in the gross profit margin, helped us to achieve a record for income and earnings per share in 2010."

Earnings per share increased from 31 cents per share to 39 cents per share, the highest recorded in our 22 years of business. Net income was up by 27%, increasing by approximately $1 million to $4.8 million in 2010. We are continuing to grow new subscribers profitably, fueling growth in earnings at a higher rate than subscriber growth and revenues. Corresponding to the growth in subscribers and recurring revenues, the income before taxes increased from $5.7 million to $7.1 million, a record figure, up by 24%. EBITDA increased by 19% from $9.1 million to $10.8 million. We achieved these increases in spite of the impact of higher research and development expenses in 2010. The reported figures are net of the cost of research and development expenses on the video product which amounted to $0.8 million in 2010.

Due to the fact that we create organic accounts, rather than acquiring existing accounts, the costs of all our advertising programs are expensed, reducing operating income and EBITDA in that given year. Therefore, as an alternative indicator, the results may also be compared by excluding marketing expenses. Excluding these expenses, EBITDA increased from $18.1 million to $20.1 million in 2010, an 11% increase.

Our cash flow from operations increased by 23% to $8.3 million before the impact of increases in working capital, and increased by 11% to $7.2 million after the impact of working capital requirements, which reflects the timing of expenditures related to growth. Cash used for investing activities totaled $8.9 million for the year and cash used for debt repayment totaled $1.1 million.

We have continued to finance all expenditures for growth in subscriber installations and brand expansion in the US out of internal cash flows, resulting in no outstanding debt and a strong balance sheet, which will allow us to pursue our goals in the next few years. Our cash requirements include expenditures for the development and marketing of our application-based remote video system. In addition, we are continually enhancing our sales and customer support staff to facilitate the growth.

We estimate the development of the application-based remote video system to be completed in the first half of 2011 and we intend to advertise and launch our enhanced services in the second half of the year. The enhanced services will be offered to both existing AlarmForce subscribers and to new subscribers in the general consumer market, in all our service territories. This expansion of our market reach is a significant, natural extension of our brand. AlarmForce provides security and personal emergency response monitoring and related services to residential and commercial subscribers throughout Canada and selected centers across the United States. The Company is a leading provider of two-way voice alarm systems in Canada and sole provider of AlarmPlus, a wireless line-cut protection system. More information about the Company's products and services can be found at www.alarmforce.com.



SOURCE Alarmforce Industries Inc.

For further information:

Investor Relations Department
Tel: (416) 445-2001 ext. 225
Fax: (416) 445-9381
investorrelations@alarmforce.com

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Alarmforce Industries Inc.

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