Seven Arts Pictures plc
LSE : SAPP

November 12, 2008 12:14 ET

Preliminary Results



                                           SEVEN ARTS PICTURES PLC
                                                      
                                ("Seven Arts", the "Company" or "the Group")

                          PRELIMINARY RESULTS FOR THE 15 MONTHS ENDED 30 JUNE 2008

Seven  Arts  Pictures  Plc  (PLUS:  SAPP  and  OTCBB: SAPXF), the  PLUS-quoted  feature  films  producer  and
distributor, announces its preliminary results for the 15 months ended 30 June 2008.

FINANCIAL HIGHLIGHTS

*       Revenue up 51% to £8,874,197 (2007: £5,879,289)
*       Profit After Tax increased by 107% to £2,006,780 (2007: £967,130)
*       Basic EPS up 19% to 8.51 pence (2007: 7.18 pence)
*       Repayment of approximately £4,000,000 of film finance

OPERATIONAL HIGHLIGHTS

*       4 films delivered during the reporting period up 50% on the year ended 31 March 2007
*       OTC Bulletin Board listing
    
Peter Hoffman, Chief Executive, commented:

"We  are delighted with our achievements to date.  The growth and traction we have attained are a key and  an
exciting step in achieving growth. We look forward to the future with confidence."
                                                      
                                               ---- Ends ----


The Directors of the Issuer accept responsibility for this announcement.


For further information please contact:

Seven Arts Pictures plc US contact:
Peter Hoffman                                         Tel:  +1 323 692 5010
phoffman@7artspictures.com


Seven Arts Pictures plc UK contact:
Elaine New, Finance Director                          Tel: +44 (0) 20 3006 8222
enew@7artspictures.com

Corporate Adviser & Broker
Daniel Stewart & Co Plc
Stewart Dick                                          Tel: + 44 (0) 20 7628 6550







CHIEF EXECUTIVE OFFICER'S STATEMENT

RESULTS

I am pleased to report that gross revenues for Seven Arts Pictures plc rose to £8,874,197 in the 15 months to
30 June 2008 compared to £5,879,289 in the year ended 31 March 2007.
Film  related  revenues in the 15 month period have increased 81% to £6,671,576 from  £3,684,054  in  the  12
months to 31 March 2007.

Profit  after tax increased to £2,006,780 from £967,130 and basic earnings per share increased to 8.51  pence
from 7.18 (fully diluted to 4.65 pence from 2.59).

During  the 15 month period, the Company also repaid a net total of approximately £4,000,000 of film  finance
debt and shareholder's funds increased from £4,555,846 to £6,897,525.

REVIEW OF OPERATIONS

Noise  (starring  Tim Robbins and William Hurt) and Deal (starring Burt Reynolds and Shannon Elizabeth)  both
commenced distribution through ThinkFilm and MGM in the United States respectively in April, 2008.

The  Company  delivered four films in the period ended 30 June 2008 compared with two in the  year  ended  31
March  2007.  These new deliveries were American Summer and Autopsy (both produced by Warren Zide, a producer
of  American  Pie),  Knife Edge (directed by Anthony Hickox and featuring a strong UK cast including  Natalie
Press,  Joan Plowright, Hugh Bonneville and Tasmin Egerton), and A Broken Life (starring Ving Rhames and  Tom
Sizemore).


CORPORATE ACTIVITY AND BOARD CHANGES

The  Company secured a listing on the OTC Bulletin Board on 4 March 2008 and trading volumes in the Company's
shares have increased substantially in September and October 2008.

In May 2008 the Group completed a transaction with Zeus Partners LLP to raise capital for investment into the
production  and  distribution  costs  of  Seven Arts existing  and  future  motion  picture  productions  and
acquisitions.

The  total  investment raised was approximately £134,000,000. Substantially all the net  proceeds  from  that
transaction receivable by Seven Arts, of approximately £ 8,500,000 have been accounted for as a reduction  in
the carrying value of the film costs in the balance sheet.

Accounting  for  the Zeus investments has resulted in the recognition of substantial assets  and  liabilities
arising  from the related financing arrangements.  The impact of the Zeus investments as at 30 June 2008  was
to  increase cash on hand by £56,400,000, to increase debtors falling due within one year by £117,000,000 and
to increase creditors falling due within one year by £173,00,000.

The  cash  proceeds  received  from  the  transaction have  been  principally  used  to  reduce  Seven  Art's
indebtedness,  with  existing  production loan repayments being made in full  to  Cheyne  Capital,  Too  Easy
Entertainment and Blue Rider.

An associate company, Seven Arts Pictures Louisiana, owned by Seven Arts Pictures Inc, was established, in
New Orleans Louisiana USA, as the distribution company for the Group.

Michael  Garstin joined the Company as President and Managing Director in June 2008 and after the period  end
Philip  Kendall  was  appointed as Chairman of the Board in September 2008. Both  bring  extensive  corporate
finance experience and knowledge of the film industry.  Further appointments are expected to be announced  to
further strengthen the Board.

Anthony  Bryan and Rufus Pearl resigned their posts after the period end, and I would like to thank them  for
their contribution to the development of the Group.

Daniel  Stewart and Company Plc were appointed as PLUS Corporate Adviser and Broker to the Group in September
2008  replacing  St Helens Capital plc. We would like to thank St Helens for their help and advice  over  the
last 15 months on the PLUS market.

An  Employee Benefit Trust was established in October 2008. The trust has acquired the £3 million  preference
shares  previously held by Armadillo Investment Trust in return for a cash payment and the return of the  1.6
million shares the Group held in Armadillo. Both the cash payment and the share value of £800k were loaned to
the  trust  at  a  nominal  interest rate. The trust has requested the conversion  of  the  majority  of  the
preference shares into 10 million ordinary shares in the Group.

OUTLOOK

Current trading remains strong with revenues expected in the current year from Noise and Deal following their
theatrical  and DVD distribution, from the four films recently delivered, and from the Group's library  which
now totals 32 films and which continue to contribute significantly to revenues.

The  Company is currently in principal photography on Night of the Demons (starring Shannon Elizabeth,  Diora
Baird  and  Edward Furlong), a remake of the successful horror series of the 1980's and expects  to  commence
principal photography on Catwalk later this year (starring Julie Ordon, Kevin McKidd and Kevin Zegers).   The
Company  also  expects to deliver Nine Miles Down (starring Adrian Paul and Kate Nauta), Drunkboat  (starring
John  Malkovich), Black Waters of Echo Pond and New Orleans Mon Amour by the close of fiscal year end 30 June
2009.

Winter  Queen  (directed  by  Paul  Verhoeven of Basis Instinct and Total Recall)  is  expected  to  commence
principal photography in March 2009.

With  this increased level of activity and a number of key deliveries in prospect, I am confident that  Seven
Arts  will  enhance its reputation as one of only a few reliable and experienced producers  of  independently
produced motion picture.

Peter Hoffman
CEO


CONSOLIDATED PROFIT AND LOSS ACCOUNTS                         Unaudited                 Audited
                                                     15 months ended 30     Year ended 31 March
                                                              June 2008                    2007
                                                                      £                       £
Turnover                                                      8,874,197               5,879,289
Cost of Sales                                                             
- cost of sales                                             (4,745,295)             (1,052,211)
- amortisation of intangible assets                           (964,640)             (1,711,509)
                                                           ------------            ------------
                                                                          
GROSS PROFIT                                                  3,164,262               3,115,569
                                                                                               
Other operating expenses                                    (2,143,985)             (1,218,531)
                                                           ------------             -----------
                                                                          
OPERATING PROFIT                                              1,020,277               1,897,038
                                                                                               
Share of operating profit in associate                        1,052,969                       -
                                                           ------------             -----------
Profit before interest and taxation                           2,073,246               1,897,038
                                                                                               
Interest payable                                              (343,898)               (388,021)
Interest receivable                                              27,432                  33,857
                                                           ------------            ------------
                                                                                               
Profit on ordinary activities before                          1,756,780               1,542,874
Taxation                                                        250,000               (575,744)
                                                           ------------            ------------
                                                                                               
Retained profit for the period                                2,006,780                 967,130
                                                           ------------            ------------
Earnings per share in pence                                        8.51                    7.18
Diluted earnings per share in pence                                4.65                    2.59
                                                           ------------            ------------
CONSOLIDATED STATEMENT OF                                     Unaudited                 Audited
CHANGES IN EQUITY 
                                                     15 months ended 30     Year ended 31 March
                                                              June 2008                    2007
                                                                      £                       £
                                                                                               
Shareholders' equity at beginning of period                   (194,154)             (3,159,451)
                                                                                               
Share issue                                                     426,000               2,197,368
                                                                                               
Share based payment                                              90,991                  25,297
                                                                                               
Retained profit for period                                    2,006,780                 967,130
                                                                                               
Exchange differences on translation of foreign                (182,092)               (224,498)
operations
                                                           ------------            ------------
                                                                                               
Shareholders' equity at end of period                         2,147,525               (194,154)
                                                           ------------            ------------

CONSOLIDATED CASHFLOW                                         Unaudited                 Audited
                                                     15 months ended 30     Year ended 31 March
                                                              June 2008                    2007
                                                                      £                       £
Cash flow from operating activities                        (56,631,192)               2,322,979
                                                                                               
Returns on investments and servicing of finance               (316,463)             (1,412,885)
                                                                                               
Capital expenditure and financial investment                (5,289,014)             (5,781,206)
                                                                                               
                                                           ------------            ------------
                                                                                               
Cash outflow before financing                              (62,236,669)             (4,871,112)
                                                                                               
Financing                                                   119,174,777               4,178,954
                                                           ------------            ------------
                                                                                               
Increase in cash in the period                               56,938,108               (692,158)
                                                           ------------            ------------



CONSOLIDATED BALANCE SHEETS                                Unaudited                 Audited
                                                        15 months ended         12 months ended 
                                                          30 June 2008           31 March 2007
                                                                 £                       £
Fixed assets                                                                                   
Intangible assets                                            13,374,660               9,013,268
Goodwill                                                      2,603,799               2,655,042
Tangible assets                                                  18,620                  15,554
Investment in associates                                      1,052,969                       -
Investments                                                     800,000                 800,000
                                                        ---------------------------------------
                                                             17,850,048              12,483,864
                                                        ---------------------------------------
Current assets                                                                                 
Debtors: amounts falling due within one year                136,380,269               6,023,646

Debtors: amounts falling due after more than                  1,312,692                 663,626
one year

Cash at bank and in hand                                     56,942,856                   4,748
                                                        ---------------------------------------
                                                                                               
                                                            194,635,817               6,692,020
Creditors: amounts falling due within one year            (202,212,116)             (8,312,453)

                                                        ---------------------------------------
                                                                                               
Net current liabilities                                     (7,576,299)             (1,620,433)
                                                                                               
Total assets less current liabilities                        10,273,749              10,863,431
                                                                                               
Creditors: amounts falling due after more than              (3,376,224)             (6,307,585)
one year
                                                         --------------------------------------
                                                                                               
Total assets less current liabilities                         6,897,525               4,555,846
                                                         --------------------------------------
                                                         --------------------------------------
                                                                                               
                        
Called up share capital                                      10,150,500              10,017,000
Share premium account                                         2,130,686               1,838,186
Share-based payments                                            116,288                  25,297
Convertible debt                                              1,750,000               1,750,000
Profit and loss account                                     (7,249,949)             (9,074,637)
                                                         --------------------------------------
                                                                                               
Shareholders' funds                                           6,897,525               4,555,846

                                                         --------------------------------------
                                                         --------------------------------------
Equity                                                        2,147,525               (194,154)
Non-equity                                                    4,750,000               4,750,000
                                                         --------------------------------------
                                                                                               
                                                              6,897,525               4,555,846
                                                         --------------------------------------
                                                         --------------------------------------



NOTES

1.PREPARATION OF FINANCIAL INFORMATION

The  financial information set out in this announcement does not constitute the Company's statutory financial
statements as defined in Section 240 of the Companies Act 1985 for the 15 month period ended 30 June 2008 and
the  year  ended  31 March 2007. A copy of the statutory financial statements prepared under  United  Kingdom
Generally Accepted Accounting Principles (UK GAAP) for the year ended 31 March 2007 has been delivered to the
Registrar  of  Companies  and those for the fifteen month period ended 30 June  2008  will  be  delivered  to
shareholders prior to the Company's Annual General Meeting.

The  financial  information  for the fifteen month period ended 30 June 2008  has  been  prepared  using  the
accounting policies which are consistent with those adopted in the audited financial statements for the  year
ended  31 March 2007 and after taking into account any accounting standards issued since that date,  none  of
which have resulted in any changes to the accounting policies of the Company.

The  financial statements for the fifteen month period ended 30 June 2008 will be finalised on the  basis  of
the  financial information presented by the Directors in this preliminary announcement. Whilst  the  auditors
have  not  yet  reported on the financial statements for the fifteen month period ended 30  June  2008,  they
anticipate  issuing an unqualified report which will not contain statements under Section 237(2) and  (3)  of
the Companies Act 1985.

The  financial information for the year ended 31 March 2007 is derived from the statutory accounts  for  that
year.

The auditors issued an unqualified report in respect of these financial statements.

The  financial information set out in this announcement has been agreed by the auditors and was  approved  by
the Board of Directors on 23 October 2008.

The Directors do not recommend the payment of a dividend.

2. TAX

The Group is subject to corporation tax at standard rates.


3. EARNINGS PER SHARE

The  basic  and  diluted  earnings per share figures are calculated  using  the
following profit for the period:

                                                                                  2008          2007
                                                                                    £             £

Retained profit for the period                                                  2,006,780      967,130
                                                                                ______________________


The  basic earnings per ordinary share are calculated based on the weighted average number of shares in issue
of  23,575,579 (2007:  13,474,411). The  weighted  average  number  of  shares  in  issue  is  calculated  by
time-apportioning the shares in issue during the 15 month period.

The  diluted  earnings per ordinary share are calculated based on the weighted average number  of  shares  in
issue  plus  the  weighted average number of potential ordinary shares, which amounted to  43,164,615  (2007:
37,270,575):



                                                                     2008              2007
                                                                      No.              No.

 Weighted average number of ordinary shares for the                 23,575,579         13,474,411
 purposes of basic earnings per share

 Effect of dilutive potential ordinary shares:
 - convertible preference shares                                    12,000,000         12,000,000
 - convertible debt                                                  7,000,000         11,767,671
 - share options                                                       589,036             28,493

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

Weighted average number of  ordinary  shares for the                43,164,615         37,270,575
purposes of diluted earnings per share
                                                                   -------------------------------


4. The audited financial statements for the period ended 30 June 2008 will shortly be posted to shareholders
and copies will be available for a period free of charge from the Company's registered office at Crosswall, 1
America Square, London, EC3N 2SG.


5. The Annual General Meeting of the Company will be held at 11am on 15 December 2008 at the Company's
registered office at Crosswall, 1 America Square London, EC3N 2SG.




Contact Information

  • Seven Arts Pictures plc