AlarmForce Industries Inc.

AlarmForce Industries Inc.

February 28, 2005 17:43 ET

AlarmForce Posts $ 7.9 Million In Operating Cash Flow In 2004




FEBRUARY 28, 2005 - 17:43 ET

AlarmForce Posts $ 7.9 Million In Operating Cash Flow
In 2004

TORONTO, ONTARIO--(CCNMatthews - Feb. 28, 2005) - AlarmForce Industries
Inc. (TSX:AF) - Joel Matlin, President and CEO is pleased to announce
annual results for the year ended October 31, 2004.

2004 2003(a) Change
(Year ended) (Year ended) (Year over Year)

Revenue 14,450,129 11,986,086 +21%
EBITDA(b) 6,595,255 5,203,087 +27%
Cash flows from
operating activities 7,906,761 5,251,930 +51%
Cash flow per share 0.75 0.58 +29%
Diluted cash flow
per share 0.72 0.54 +33%
Income before taxes 2,517,754 1,940,371 +30%
Net income 1,275,986 1,301,509 -2%
Net income/share 0.120 0.144 -17%
Diluted Net income
per share 0.116 0.134 -13%
EBITDA/share 0.62 0.58 +7%
Diluted EBITDA
per share 0.60 0.54 +11%

(a) Restated to reflect the change in accounting policy in 2004
(b) Earnings before interest, taxes depreciation and amortization as
reconciled to GAAP earnings in management's discussion and
analysis of annual results

Referring to the financial results for 2004, Mr. Matlin said that:
"AlarmForce recorded the best ever growth with cash flows of almost $8
million and revenues of $14.5 million. The account base today stands
over 50,000 accounts which is a milestone in our history of
year-over-year growth. We continue to grow organically as a result of
our ever-expanding brand recognition, and our total operating cash flows
were up 51% in 2004."

"We closed two private placements on a bought deal basis, issuing
2,000,000 new common shares in 2004 which resulted in a dilution factor.
Despite the increase in outstanding and issued shares, diluted cash flow
per share was up 33% in 2004. The net proceeds are to be deployed for US

"A new accounting method adopted retroactively, was reflected in the
reported figures for 2004 and 2003 and had the effect of decreasing the
reported amounts of certain revenue and income figures. Under the new
accounting standard, sales of add-on equipment installed in the
customer's home are recognized in revenue over the four year contract
term of the subscriber monitoring contract. Previously this revenue,
which represents about 7% of total revenues, was recognized when
received on installation."

"We are seeing a surge in organic account creation, which is driving the
company's margins and profit up. Gross margin as a percentage of revenue
rose from 74% to 79%, proving that significant economies of scale are
being realized through growth. Income from operations represented by
EBITDA, and income before taxes increased by 27% and 30% respectively.
Net income decreased by 2% due to the tax effect of certain non
deductible amortization expenses. Diluted net income per share decreased
by 13% due to the effect of increases in the number of shares
outstanding. The tremendous growth opportunities that lie ahead are
backed by a solid balance sheet and an outstanding team to implement our
business plan."

"Our new office in Charlotte, NC, which opened after the end of the
year, represents the first phase of our US expansion and I am pleased to
advise that the State of North Carolina has recently granted AlarmForce
an alarm business operating license. We look forward to reporting on the
progress in future quarters. Our goal is to leverage the AlarmForce
infrastructure and central station, and to increase economies of scale
even further over the next five years."

On the company's future outlook, Mr. Matlin said: "In closing, the
record level of growth in monitored subscriber accounts, operating
efficiency and gross margins, made 2004 an unqualified success for
AlarmForce. In 2005, we will continue to see impressive results and are
confident that our financial capitalization, credit facility and cash
flows are sufficient to finance capital and operating requirements into
the foreseeable future."

AlarmForce Industries Inc. is Canada's largest manufacturer and
installer of two-way voice home alarm systems and line-cut protection
with offices across Canada and over 50,000 subscribers.


Contact Information

    AlarmForce Industries Inc.
    Investors Relations Dept.
    (416) 445-2001 ext#225
    (416) 445-9381 (FAX)