SOURCE: Peace Arch Entertainment Group Inc.

March 17, 2008 21:37 ET

Peace Arch Entertainment Reports Record Revenue Growth for Fiscal 2007

$61.8 Million in Revenues, a 191% Increase Over 2006, Underscores Success of Strategic Initiatives to Transition Into a Fully Integrated Entertainment Company

TORONTO--(Marketwire - March 17, 2008) - Peace Arch Entertainment Group Inc. (TSX: PAE) (AMEX: PAE), an integrated global entertainment company, today announced operating results for the year ended August 31, 2007. The results include record revenues of $61.8 million, a $40.5 million or 191% increase over the previous year's revenues of $21.3 million, demonstrating the success of the Company's initiatives to increase global distribution of its films, television programming and home entertainment products.



--  Concludes fiscal 2007 with record $61.8 million in revenues, a 191%
    increase over 2006.
--  Reports record year of production with delivery of 12 feature films,
    43 episodes of television programming and 9 made-for-TV movies
--  Announces strategic initiatives to accelerate gains in overall
    performance and growth

Peace Arch reported a net loss of $(5.7) million, or $(0.17) per diluted share in fiscal 2007, compared to a net loss of $(4.6) million, or $(0.21) per diluted share for fiscal 2006. Included in the results for the year is a $6.3 million write down in programming in the motion picture segment, attributable almost entirely to film projects produced or developed by Peace Arch prior to fiscal 2005. Excluding this write down, earnings from operations were $3.5 million and earnings before income taxes were $1.6 million, which reflects the positive results from both acquisitions and organic growth executed as part of the Company's business plan.

"It took longer than we expected to release our year-end statements because of circumstances we previously disclosed," said Jeff Sagansky, Chairman and Chief Executive Officer of Peace Arch Entertainment. "While we understand the uncertainty this delay has caused, in light of those circumstances management wanted to assure our Board, our shareholders and the financial community that our review was thorough, accurate, and complete. Now that we have reached the end of that process, we can focus on the story behind fiscal 2007, which is the success of the Peace Arch team in increasing the volume and improving the quality of our product supply while expanding our worldwide distribution and sales capabilities."

During fiscal 2007, the Company increased productivity to deliver 12 new feature films, and had 12 additional features in production at year-end. The Company delivered nine made for television movies and 43 episodes of television programming during the year, including ten hours of its award winning series "The Tudors." The Company had five television series and one television movie in production at year-end. This rate of production shows significant growth over fiscal 2006, when Peace Arch delivered 10 feature films, 10 episodes of television programming and three made-for-television movies.

"Overall, during 2007 Peace Arch filled its sales and distribution pipeline with a diverse array of highly commercial content, and the Company expects to see the financial results of those efforts as these projects are brought to market in fiscal 2008 and 2009," said Mr. Sagansky. "We also diversified our revenue streams and enhanced our asset base by acquiring the Castle Hill/Dream film library, the Trinity Home Entertainment U.S. DVD distribution business and Dufferin Gate Productions' production services operation and facility. Our investment in 2007 has provided a solid groundwork for a strong 2008, during which we expect to further improve our business model by increasing our North American theatrical distribution capabilities and expanding our television production activities while continuing to look for accretive acquisitions of content and distribution channels."

On February 28, 2008 Peace Arch announced its intention to restate its year ended August 31, 2006 and its unaudited results for the first three quarters of 2007. The impact of these adjustments on the Company's net earnings for the year ended August 31, 2006 amounts to a decrease of $499,000. For the periods ended November 30, 2006, February 28, 2007 and May 31, 2007, these adjustments result in decreases in net earnings of $459,000, $1,003,000 and $775,000, respectively.

As a result of various audit adjustments relating to the year ended August 31, 2007 and restatement relating to fiscal 2006, the Company has also determined that there were a number of control deficiencies that amounted to material weaknesses in internal control over financial reporting as at August 31, 2007. These deficiencies and the steps the Company is taking to improve its internal controls and remediate those material weaknesses are identified in the Company's MD&A and Item 15 of Form 20F filed with the U.S. Securities Exchange Commission.

As disclosed in its Financial Statements, the Company's audit opinion for the year ended August 31, 2007 contains a going concern qualification.

The Company's MD&A together with its full Financial Statements and Note Disclosure, which are an integral part of those statements, can be found at

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 For more investor-oriented information about Peace Arch Entertainment, visit For current stock price quotes and news, visit To view an Investor Fact Sheet, visit To read a transcript of a recent Peace Arch investor conference call or listen to an archived recording, please visit

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
As at August 31, 2007 and 2006
(In thousands of Canadian dollars)

                                                     2007            2006

Assets                                            150,207          83,219
                                               ----------       ---------
Liabilities                                       103,091          66,087
                                               ----------       ---------
Shareholders' Equity                               47,116          17,132
                                               ----------       ---------

Consolidated Statements of Earnings (Loss)
Unaudited -- Prepared by Management
For the years ended August 31, 2007, 2006 and 2005
(In thousands of Canadian dollars, except per share amounts)

                                               2007      2006       2005
Motion Picture                               13,966     9,399      9,200
Television                                   25,622     2,265      1,547
Home Entertainment                           22,199     9,594          -
                                             61,787    21,258     10,747


Amortization of investment in film and
television programming, and other production
costs                                        27,671     7,787      8,636

Writedown of investment in film and
television programming                        6,320       468          -

Home entertainment direct costs              15,663     7,538          -

Selling, general and administrative          12,568     6,893      3,486

Stock and warrant-based compensation costs    1,535     1,368        257

Other amortization                              802       347         74
                                             64,559    24,401     12,453
Loss before the undernoted                   (2,772)   (3,143)    (1,706)

Interest income                               1,539     1,126        818
Interest expense                             (4,477)   (3,372)      (953)
Gain on sale of asset                             -        44         98
Foreign exchange gain                           457       659        679
(Loss) gain on settlement of obligations       (409)      (41)     2,560
Legal settlement                                957         -          -

(Loss) earnings before income taxes and
non-controlling interest                     (4,705)   (4,727)     1,496

Income tax (expense) recovery                  (979)      108          -
Non-controlling interest                          -         -        (47)
Net (loss) earnings for the year             (5,684)   (4,619)     1,449
(Loss) earnings per common share
Basic                                        $(0.17)   $(0.21)     $0.07
Diluted                                      $(0.17)   $(0.21)     $0.07

Peace Arch Entertainment Group Inc.
Consolidated Statements of Deficit
Unaudited -- Prepared by Management
For the years ended August 31, 2007, 2006 and 2005
(In thousands of Canadian dollars)

                                               2007     2006        2005

Deficit - beginning of year                  (9,182)  (4,255)    (35,442)

Effect of adoption of Accounting Guideline-15     -        -          53
Reduction in stated capital                       -        -      29,707
Preference share dividends                     (443)    (308)        (22)
Net (loss) earnings for the year             (5,684)  (4,619)      1,449
Deficit - end of year                       (15,309)  (9,182)     (4,255)

The Notes to these Financial Statements and the Annual MD&A, which can be found at:, are an integral part of these financial statements.

Contact Information

  • Contact:
    Roy Bodner
    Senior Vice President
    Marketing and Communications
    Peace Arch Entertainment
    (310) 776-7208
    Email Contact: Email Contact


    Financial Communications
    Trilogy Capital Partners
    Ryon Harms
    (800) 592-6067
    Email Contact: Email Contact