Peace Arch® Entertainment Group Inc. Reports First Quarter Fiscal 2008 Results Revenues Increase From $11 Million to $17 Million, Validating High Growth Strategy for International Entertainm

SOURCE:

Peace Arch Entertainment Group Inc.

2008-03-31 20:59:00

Peace Arch® Entertainment Group Inc. Reports First Quarter Fiscal 2008 Results

Revenues Increase From $11 Million to $17 Million, Validating High Growth Strategy for International Entertainm

TORONTO–( EMWNews – March 31, 2008) – Peace Arch Entertainment Group Inc. (AMEX: PAE)

(TSX: PAE) today announced operating results for its first quarter of

fiscal 2008, ending November 30, 2007, that reported revenues of $17.2

million versus $11.3 million for the same period last year.

The Company’s revenues for the three months ended November 30, 2007 were

$17.2 million up significantly from $11.3 million last year. The growth in

revenues reflects an increase primarily in Home Entertainment which

includes new revenues from the acquisition of Trinity in the U.S.

Peace Arch reported net loss of $(1.1) million, or $(0.03) per diluted

share in the three months ended November 30, 2007, compared to a net loss

of $(373,000), or $(0.02) per diluted share for the same period last year.

Included in net loss for the three months ended November 30, 2007 was $1.7

million of interest expense compared to $822,000 in the same period last

year. The increase in interest expense is due to the increase in

production loans, and loan arrangement fees paid for new loan facilities in

the quarter.

During the quarter, the Company delivered three films, one

made-for-television movie and twenty-two episodes of three television

series, compared to the delivery of one film, one made-for-television movie

and ten episodes of two television series for the same period of the prior

year. The films delivered were “The Last Hit Man,” “The Four Horsemen,”

and “Grindstone Rd” and the made-for-television movie delivered was “Ace of

Hearts.” The Company is currently in production of “The Tudors” season II,

a 10-hour dramatic mini-series focusing on the tumultuous years of King

Henry VIII’s nearly forty year reign of England. The Home Entertainment

segment reported both strong revenues and earnings in the quarter.

During the first quarter, the Company achieved several key milestones in

support of its strategic growth initiatives as follows:

* Elected prominent entertainment industry veteran Jeffrey Sagansky as

Co-Chairman of the board and elected John Flock, President, to the board of

directors.

* Completed a sale of certain distribution rights excluding North America

with Sony Pictures Home Entertainment for the second season of the

television program series “The Tudors” focusing on the tumultuous years of

King Henry VIII’s nearly 40 year reign of England.

* The television series “The Tudors” received two Creative Emmy® Awards

from the Academy of Television Arts & Sciences. The Emmy Awards were given

for “Outstanding Costumes for a Series” and “Outstanding Original Movie

Title Theme Music.”

* Longtime Showtime acquisitions executive Larry Greenberg joined Peace

Arch as Senior Vice President, Acquisition and is based in Peace Arch’s Los

Angeles office.

* Acquired worldwide distribution rights to the following mini-series and

films: “Guns,” “The Babysitters,” and “The Devil’s Mercy.”

* Acquired Canadian distribution rights to four films from Insight Film

Studios, “Numb,” “When a Man Falls in the Forest,” “Operation Espionage,”

and “Higher Education.”

* Acquired exclusive distribution rights to Uwe Boll’s epic adventure film

“In the Name of The King.”

* Acquired exclusive North American distribution rights to crime thriller

“Towards Darkness” starring Emmy winning actress America Ferrera.

* “Chapter 27” won debut feature prize at the Zurich Film Festival for

director Jarrett Schaefer.

* Appointment of entertainment industry veteran Jeffrey Sagansky as Interim

CEO.

Subsequent to the first quarter ended November 30, 2007, the following

significant transactions occurred:

* Completion of the acquisition of the remaining 59.99% of the shares of

Dufferin Gate Productions Inc.

* Financing agreement with key shareholders in the amount of $2.7 million

for general corporate purposes.

As at November 30, 2007, Peace Arch’s total shares outstanding was

48,340,420 Common Shares (excluding 222,689 shares in escrow) and 4,347,825

Series I Preference Shares and 4,347,825 Series II Preference Shares. The

Company also has outstanding 801,000 Common Share purchase warrants.

As disclosed in its annual financial statements, the Company’s audit

opinion for the year ended August 31, 2007 contained a going concern

qualification.

Our next conference call will take place subsequent to the release of our

second quarter financial statements for the period ending February 28,

2007.

For full Financial Statements, Note Disclosure and MD&A, please refer to

the Company’s filings, which are available at: www.sedar.com and

www.sec.gov.

About Peace Arch® Entertainment Group Inc.

Peace Arch Entertainment produces and acquires feature films, television

and home entertainment content for distribution to worldwide markets. Peace

Arch owns one of the largest libraries of top quality independent feature

films in the world, featuring more than 1000 classic and contemporary

titles. For additional information, please visit www.peacearch.com.

Forward-Looking Statements

This press release includes statements that may constitute forward-looking

statements, usually containing the words “believe,” “estimate,” “project,”

“expect,” or similar expressions. These statements are made pursuant to the

safe harbor provisions of the Private Securities Litigation Reform Act of

1995. Forward-looking statements inherently involve risks and uncertainties

that could cause actual results to differ materially from the

forward-looking statements. Factors that would cause or contribute to such

differences include, but are not limited to, continued acceptance of the

Company’s products and services in the marketplace, competitive factors,

dependence upon third-party vendors, availability of capital and other

risks detailed in the Company’s periodic report filings with the Securities

and Exchange Commission. By making these forward-looking statements, the

Company undertakes no obligation to update these statements for revisions

or changes after the date of this release.


Peace Arch Entertainment Group Inc.

Consolidated Balance Sheet Highlights

Unaudited - Prepared by Management

--------------------------------------------------------------------

(In thousands of Canadian dollars)





                                           November 30     August 31

                                                  2007          2007

Assets                                         166,257       150,207

                                           -----------     ---------

Liabilities                                    121,159       103,091

                                           -----------     ---------

Shareholders' Equity                            45,098        47,116

                                           -----------     ---------



Peace Arch Entertainment Group Inc.

Consolidated Statements of Loss

Unaudited -- Prepared by Management

--------------------------------------------------------------------

(In thousands of Canadian dollars, except per share amounts)



                                          Three Months  Three Months

                                              Ended         Ended

                                           November 30   November 30

                                                  2007          2006

                                                            Restated



Revenues

Motion Picture                                   2,150         4,460

Television                                       4,028         1,185

Home Entertainment                              10,993         5,685

                                     --------------------------------

                                                17,171        11,330

                                     --------------------------------

Expenses



Amortization of investment in film

and television programming, and

other production costs                           4,665         4,350

Home entertainment direct costs                  8,003         4,249

Selling, general and administrative              4,018         1,771

Stock and warrant-based compensation costs         247           119

Other amortization                                 353           124

                                     --------------------------------

                                                17,286        10,613

                                     --------------------------------



Earnings (loss) before the undernoted            (115)           717



Interest income                                    442           260

Interest expense                               (1,669)         (822)

Foreign exchange gain (loss)                       356         (317)

Loss on settlement of obligations                    -          (13)

                                     --------------------------------

Loss before income taxes                         (986)         (175)

Income tax expense                               (139)         (198)

                                     --------------------------------

Net loss for the period                        (1,125)         (373)

                                     --------------------------------

Net loss per common share

Basic and Diluted                              $(0.03)       $(0.02)

                                     --------------------------------



The accompanying notes are an integral part of these consolidated

financial statements



Peace Arch Entertainment Group Inc.

Consolidated Statements of Deficit

Unaudited - Prepared by Management

--------------------------------------------------------------------

(In thousands of Canadian dollars)

                                          Three Months  Three Months

                                              Ended         Ended

                                           November 30   November 30

                                                 2007           2006

                                                            Restated





Deficit -- beginning of period               (15,309)        (9,182)



Adjustment for implementation of new

accounting standards                             (67)             -

Preference share dividends                       (81)          (100)

Net loss for the period                       (1,125)          (373)

                                              ----------------------

Deficit -- end of period                     (16,582)        (9,655)

                                              ----------------------



Consolidated Statements of

Comprehensive Loss

Unaudited -- Prepared by Management

--------------------------------------------------------------------

(In thousands of Canadian dollars)



                                          Three Months   Three Months

                                              Ended          Ended

                                          November 30    November 30

                                                 2007           2006

                                                            Restated



Net loss for the period                       (1,125)          (373)

Other comprehensive loss



     Unrealized foreign currency

     translation losses on net assets of

     self-sustaining foreign operations       (1,278)             -

                                              ----------------------

Comprehensive loss for the period             (2,403)          (373)

                                              ----------------------



The accompanying notes are an integral part of these consolidated

financial statements

Contact:

Roy Bodner
Vice President Public Relations
Peace Arch Entertainment
(310) 450-1711

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