Peace Arch(R) Entertainment Group Inc. Reports Second Quarter Fiscal 2008 Results

Year to Date Revenues Increase From $31.6 Million to $38.0 Million, With Record Growth in Home Entertainment Division

TORONTO -- (MARKET WIRE) -- 04/14/08 -- Peace Arch Entertainment Group Inc. (AMEX: PAE) (TSX: PAE) today announced operating results for its second quarter of fiscal 2008, ending February 29, 2008. The Company reported revenues of $20.8 million versus $20.3 million for the same period last year, with revenues for the six months ended February 29, 2008 up $6.4 million to $38.0 million compared to $31.6 million last year.

Peace Arch reported a net loss of $(936,000), or $(0.02) per diluted share for the three months ended February 29, 2008, compared to net earnings of $1.2 million, or $0.03 per diluted share for the same period last year. For the six months ended February 29, 2008, the net loss was $(2.1) million or $(0.05) per diluted share, as compared to net earnings of $863,000, or $0.02 per diluted share last year. Included in last year's Q2 result was a gain of $957,000 from the settlement of an outstanding dispute with a co-financier of a television series. The loss during the quarter and year to date can be explained in part by a decrease in revenues in the motion picture segment primarily due to a delay in product delivery, and higher interest expense from increased production loans and loan arrangement fees paid for new loan facilities negotiated during the period.

"We are pleased to be back on track with a timely reporting of our second quarter results," said Jeff Sagansky, Chief Executive Officer of Peace Arch Entertainment. "Our Home Entertainment and Television divisions continue to thrive, and with the expected delivery of major titles like 'Winged Creatures' and 'The Deal' during our third quarter, we believe our Motion Picture operation will soon contribute meaningful revenues and positive earnings."

During the quarter, the Company delivered 4 films and 21 episodes of 4 television series, compared to the delivery of 16 episodes of television programming for the same period of the prior year. The films delivered were "Time Bomb," "Just Business," "Shred 2," and "Bitten." The Home Entertainment segment reported strong revenues and earnings in the quarter, driven by the continuing success of higher quality product such as "The Tudors" on DVD as compared to last year.

During the second quarter, the Company achieved several key milestones in support of its strategic growth initiatives:

* The television segment delivered 21 episodes of programming compared to 16 episodes last year, including the first 4 episodes of Season II of the ten-hour dramatic television series "The Tudors," compared to 5 episodes of Season I for the same period last year.

* Feature film "The Deal" had its world premiere at the prestigious Sundance Film Festival in Park City, Utah.

* Acquired exclusive Canadian distribution rights to 32 films from First Look Studios, 5 of which are "An American Crime," "Smiley Face," "Day of the Dead," "Finding Rin Tin Tin" and "The Amateurs," to be distributed through Theatrical DVD, Video-on-Demand and Television, with the remaining 27 on Television.

* "The Tudors" earned two Golden Globe award nominations -- "Best Dramatic Television Series," and "Best Actor in a Dramatic Series" for Jonathan Rhys Myers.

* Completed the acquisition of the remaining 59.99% of the shares of Dufferin Gate Productions Inc.

* Completed agreement with Canada's largest independent music publisher, Ole, for worldwide music rights to several film and television properties.

* "Luna: Spirit of the Whale" was nominated for Canadian Film and Television Production Associations' prestigious "Indie Award."

Subsequent to the second quarter ended February 29, 2008, the following significant transactions occurred:

* "The Last Hit Man" received the Best Feature prize at the Canadian Film Fest, the only event of its kind dedicated to celebrating Canadian filmmakers.

As at February 29, 2008, Peace Arch's total shares outstanding was 48,752,533 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.

We will hold an investor conference call on Wednesday, April 16, 2008, at 11 am Eastern, to discuss the Company's financial performance for the second quarter ending February 29, 2008. Callers within the United States can access the conference call by calling (877) 407-9205; when prompted tell the operator you would like to connect to the "Peace Arch Entertainment conference call." International callers can dial (201) 689-8054.

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(R) 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) ------------------------------------------------------------------------- February 29 August 31 2008 2007

Assets 166,663 150,207 ------------ ----------Liabilities 122,015 103,091 ------------ ----------Shareholders' Equity 44,648 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 Ended Six Months Ended February February February February 29, 2008 28, 2007 29, 2008 28,2007 Restated Restated

Revenues Motion Picture 1,196 6,245 3,346 10,705 Television 8,207 7,476 12,235 8,662 ------------------- -------------------Home Entertainment 11,375 6,555 22,368 12,239 ------------------- ------------------- 20,778 20,276 37,949 31,606 ------------------- -------------------Expenses Amortization of investment in film and television programming, and other production costs 8,002 10,937 12,667 15,287 Home entertainment direct costs 7,561 4,247 15,564 8,496 Selling, general and administrative 4,624 2,443 8,642 4,214 Stock and warrant-based compensation costs 284 478 531 597 Other amortization 357 199 710 323 ------------------- ------------------- 20,828 18,304 38,114 28,917

(Loss) earnings before the Undernoted (50) 1,972 (165) 2,689

Interest income 296 407 738 667 Interest expense (1,229) (1,231) (2,898) (2,053) Foreign exchange gain (loss) 202 (348) 558 (665) Legal settlement - 957 - 957 Loss on settlement of obligations - - - (13) ------------------- -------------------(Loss) earnings before income taxes (781) 1,757 (1,767) 1,582

Income tax expense (155) (521) (294) (719) ------------------- -------------------(Loss) earnings for the period (936) 1,236 (2,061) 863 =================== ================== Net (loss) earnings per common share Basic (0.02) (0.02) 0.04 0.03 Diluted (0.05) (0.05) 0.02 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) ------------------------------------------------------------------------- February February February February 29, 2008 28, 2007 29, 2008 28,2007 Restated Restated

Deficit - beginning of period (16,582) (9,655) (15,309) (9,182)

Adjustment for implementation of new accounting standards - - (67) -Preference share dividends (105) (104) (186) (204) Net (loss) earnings for the period (936) 1,236 (2,061) 863 ------------------- -------------------Deficit - end of period (17,623) (8,523) (17,623) (8,523)

Consolidated Statements of Comprehensive (loss) Income Unaudited - Prepared by Management -------------------------------------------------------------------------(In thousands of Canadian dollars) ------------------------------------------------------------------------- February February February February 29, 2008 28, 2007 29, 2008 28,2007 Restated Restated

Net (loss) earnings for the period (936) 1,236 (2,061) 863 Other comprehensive loss

Unrealized foreign currency translation losses on net assets of self-sustaining foreign operations (304) - (1,582) - ------------------- -------------------Comprehensive (loss) income for the period (1,240) 1,236 (3,643) 863 =================== ==================

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Contact:

Roy Bodner Vice President Public Relations Peace Arch Entertainment 310-776-7200 rbodner@peacearch.com

2008-04-14 23:02:38 0335560 MARKETWIRE