Peace Arch Entertainment Reports Sharply Higher Second Quarter Revenue and Earnings

Revenue Increases 263% in First Half of FY2001 as Proprietary Programming

Deliveries Reach Record Levels



Apr 27, 2001, 01:00 ET from Peace Arch Entertainment Group Inc.

    VANCOUVER, British Columbia, April 27 /PRNewswire/ -- PEACE ARCH
 ENTERTAINMENT GROUP INC. (Amex:   PAE; Toronto: PAE.A, PAE.B), which creates
 proprietary programming content for worldwide television and the Internet,
 today announced its operating results for the second quarter and first half of
 FY2001.
     For the three months ended February 28, 2001, the Company's revenue
 increased 689% to approximately $21.7 million, when compared with revenue of
 approximately $2.8 million in the quarter ended February 29, 2000.  The
 significant rise in revenue reflects increases in proprietary programming
 activities, which generated 97.1% of Peace Arch's total revenue for the most
 recent quarter.
     Net earnings of $822,000, or $0.19 per diluted share, for the quarter
 ended February 28, 2001, represented a 941% increase when compared with net
 earnings of $79,000, or $0.02 per diluted share, in the second quarter of
 FY2000.  Diluted earnings per share were calculated on 4,696,000 weighted
 average shares outstanding in the most recent quarter, compared with 3,794,000
 weighted average shares in the second quarter of the prior year.
     The Company reported a margin of $2.7 million (12.6% of revenue) from
 proprietary programming in its most recent quarter, compared with a margin of
 $1.2 million, or 41.9% of revenue, on proprietary programming in the prior-
 year period.  The reduction in margin, as a percentage of revenue, primarily
 resulted from changes in the mix of programming delivered.
     Total assets of $72.5 million as of February 28, 2001 were 46% higher than
 a year earlier, largely due to increases in "Productions in Progress" and
 "Investment in Television Programming," which represent the Company's
 inventory of partially completed and completed programs.  Outstanding bank
 debt increased to $14.8 million at the end of the second quarter, compared
 with $8.1 million a year earlier, in order to finance the Company's record
 slate of programming activities.
     Revenue increased 263% to approximately $41.0 million in the six months
 ended February 28, 2001, versus revenue of approximately $11.3 million in the
 first half of FY2000.  Net income rose 236% to $1,492,000, or $0.34 per
 diluted share, in the first half of FY2001, compared with $443,000, or $0.11
 per diluted share, in the corresponding period of the previous fiscal year.
 Diluted earnings per share were calculated on 4,660,000 weighted average
 shares outstanding in the six months ended February 28, 2001, versus 3,790,000
 weighted average shares in the first half of FY2000.
     "Programming delivered during the second quarter of Fiscal 2001 should
 continue to enhance the Company's long-term profit potential," commented Garth
 Albright, Chief Financial Officer of Peace Arch Entertainment Group Inc.
 "During the first half of the current fiscal year, we delivered 10 episodes of
 The Immortal and 12 episodes of Big Sound.  Both series are being produced
 under a treaty co-production agreement between Canada and the United Kingdom,
 thus allowing them to meet the broadcast requirements for national content in
 Canada and throughout the European Union.  We believe this greatly enhances
 the long-term market potential of the shows.  These series exemplify our focus
 upon building a significant library of quality proprietary programming that
 will grow in value for years to come."
     Tim Gamble, President of Peace Arch, noted that "Our second quarter
 results clearly reflect the Company's tremendous programming accomplishments
 and an expanding customer base in the United States and abroad.  During the
 first half of Fiscal 2001 we were in production on episodes of our half-hour
 comedy series, Big Sound; our one-hour action adventure series, The Immortal;
 our one hour documentary series, Animal Miracles with Alan Thicke; and the
 third season of our science fiction series, First Wave.  We were also in
 production on a trilogy of television movies for PAX TV and Hallmark
 Entertainment based on Catherine Marshall's international bestseller, Christy,
 along with two feature-length films, Now and Forever and The Impossible
 Elephant, which are scheduled for release this spring."
     "Peace Arch's record performance during the first six months of this year,
 along with scheduled programming deliveries for the second half of the year,
 support our belief that Fiscal 2001 will be our best year ever," commented
 Juliet Jones, Chief Executive Officer of Peace Arch.  "Looking towards the
 balance of this year and the first part of fiscal 2002, there are a number of
 external factors that have somewhat clouded the short- to intermediate-term
 outlook for our industry.  These factors include a decline in television
 advertising revenues caused by the general economic downturn and the potential
 for an actors' and writers' strike.  However, our continued efforts to develop
 international markets and diversify our programming library, combined with the
 competitive advantages we enjoy by operating in Canada, should allow our
 Company to grow and further increase market share in the future."
     Peace Arch Entertainment Group Inc. creates, develops, produces and
 distributes proprietary television and Internet programming for worldwide
 markets.  The Company is headquartered in Vancouver, British Columbia, and its
 stock trades on the American Stock Exchange under the symbol "PAE"; and on the
 Toronto Stock Exchange under the symbols "PAE.A" and "PAE.B".
     In June 2000, the American Institute of Certified Public Accountants
 issued a Statement of Position 00-2 ("SOP 00-2"), which provides guidance on
 generally accepted accounting principles to all producers or distributors that
 own or hold rights to distribute or exploit films.  SOP-002 is effective for
 financial statements for fiscal years beginning after December 15, 2000.
 Peace Arch has not yet fully adopted the new standard and is currently
 evaluating the impact that such adoption may have on its financial statements.
     A conference call to discuss the Company's operating results is scheduled
 for 4:15 P.M.  Eastern Daylight Time (1:15 P.M. Pacific Standard Time) on
 Friday, April 27, 2001.  The dial-in number is (800) 360-9865.  (Note:
 Investors requiring an international dial-in number should contact RJ Falkner
 & Company, Inc. at 970-349-0846 or 800-377-9893 for such number).  An audio
 replay of the call will be posted on Peace Arch's website (www.peacearch.com)
 approximately two hours after completion of the conference call.
     The call will be hosted by Peace Arch Entertainment Group Inc.'s Chairman
 of the Board, Cameron White, and Chief Financial Officer, Garth Albright.
 
     (Note:  The financial statistics included in this release are represented
 in Canadian dollars and are reported in accordance with Generally Accepted
 Accounting Principles in Canada.  On February 28, 2001 the Bank of Canada noon
 spot rate was $0.65 US for each $1.00 Canadian).
 
     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, 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.
 
     Additional information on Peace Arch Entertainment Group can be accessed
 on the Internet at www.peacearch.com.
 
                  For additional information, please contact:
 
                     Garth Albright, CFO at (604) 681-9308
                 Tina Baird, Media Relations at (604) 985-8991
                                       or
  R. J. Falkner & Company, Investor Relations Counsel at (800) 377-9893 or via
                         e-mail at info@rjfalkner.com.
 
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
                                  (unaudited)
 
     (Expressed in thousands of Canadian dollars)
 
                                   February 29,    August 31,    February 28,
                                       2000           2000           2001
     ASSETS                        (unaudited)      (audited)     (unaudited)
 
     Cash and Cash equivalents        $5,585          $4,459        $1,639
     Accounts receivable               1,271           6,236         5,590
     Tax credits receivable           16,949          10,207        17,642
     Productions in progress           2,898          15,637        13,104
     Prepaid expenses and deposits       623             882           485
     Investment in television
      programming                     11,654          15,550        23,157
     Property and equipment            7,007           7,397         7,300
     Deferred costs                      488           1,049           853
     Goodwill and trademarks            3129           2,913         2,760
 
                                    $ 49,604        $ 64,330      $ 72,530
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Bank indebtedness               $ 8,121         $ 5,797      $ 14,826
     Accounts payable and
      accrued liabilities              6,385          10,095        12,093
     Deferred revenue                  2,953           8,338         2,918
     Deferred gain                       349             233           116
     Deferred credit                      --           1,090         1,025
     Future income taxes               1,311             460         1,753
     Debt                              4,130          11,252        11,232
                                      23,249          37,265        43,963
     Shareholders' equity:
      Share capital                   32,368          32,378        32,388
       Authorized:
         100,000,000 Class A Multiple
           Voting Shares Issued -
           1,335,756 (Feb 29, 2000 -
           1,454,583)
         100,000,000 Class B
           Subordinate Voting Shares
           Issued - 2,489,988
           (Feb 29, 2000 - 2,366,163)
         25,000,000 Preference Shares,
           issuable in series
         Issued - nil
     Other paid-up capital               136             467           467
     Deficit                          (6,149)         (5,780)       (4,288)
 
                                      26,355          27,065        28,567
 
                                    $ 49,604        $ 64,330      $ 72,530
 
              /S/W.D. CAMERON WHITE                /S/GARTH ALBRIGHT
              W.D. Cameron White                   Garth Albright
              Chairman and Director                Chief Financial Officer
 
     The accompanying notes are an integral part of the consolidated financial
                                    statements.
 
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
 
               CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
   For the Three and Six Months Ended February 29, 2000 and February 28, 2001
                                  (unaudited)
 
     (Expressed in thousands of Canadian dollars except per share information)
 
                                   3 months ended             6 months ended
                               2000          2001         2000          2001
 
     Revenue                $ 2,752      $ 21,710     $ 11,280      $ 40,974
 
     Expenses:
      Amortization of
       television programming 1,381        18,334        7,400        33,769
      Other costs of
       production and sales     309           422          957         1,266
      Depreciation and
       amortization             132           246          277           491
      Selling, general and
       administrative           846           979        1,665         1,787
      Interest                   96           441          324           995
                               2764        20,422       10,623        38,308
 
     Earnings from operations
      before undernoted         (12)        1,288          657         2,666
     Gain on sale of asset      129            58          216           116
                                129            58          216           116
     Earnings before
      income taxes              117         1,345          873         2,782
     Income taxes                38           524          430         1,290
     Net earnings for
      the period                 79           822          443         1,492
     Deficit beginning of
      period                 (6,228)       (5,110)      (6,592)       (5,780)
     Deficit,
      end of period         $(6,149)      $(4,288)     $(6,149)      $(4,288)
 
     Basic net earnings
      per common share         $0.02        $0.22         $0.11        $0.39
 
     Fully diluted earnings
      per common share         $0.02         $0.19        $0.11        $0.34
 
     Weighted average number
      of shares outstanding
      during the period (000's);
 
         Basic                3,794         3,823        3,790         3,823
         Diluted              3,794         4,696        3,790         4,660
 
   The accompanying notes are an integral part of the consolidated financial
                                  statements.
 
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
   For the Three and Six Months Ended February 29, 2000 and February 28, 2001
                                  (unaudited)
 
     (Expressed in thousands of Canadian dollars)
 
                                   3 months ended             6 months ended
 
                               2000          2001         2000          2001
     Operating activities:
      Net earnings              $79          $822         $443        $1,492
      Items not involving cash:
        Depreciation and
         amortization         1,482        18,600        7,632        34,280
        Future income taxes     225           469          514         1,229
        Gain on sale of
         assets                 (58)          (58)        (165)         (116)
        Accretion of debt
         discount                 8            55           17           110
        Changes in non-cash
          working capital     1,623         2,151          583        (7,280)
                              3,359        22,039        9,024        29,715
 
     Investing activities:
      Investment in
       television
       programming           (1,547)      (22,635)      (8,780)      (41,396)
      Change in deferred
       costs                   (215)          142         (295)           10
      Increase in goodwill
       and trademarks           (20)           (9)         (29)           (9)
     Property and equipment
      acquired                  (32)           (7)         (37)          (47)
                             (1,814)      (22,509)      (9,141)      (41,442)
 
     Financing activities:
      Issue of common
       shares, net              185             9          185             9
      Increase in bank
       indebtedness              57         2,025        1,189         9,029
      Repayment of debt         (64)          (65)        (127)         (131)
 
                                178         1,969        1,247         8,907
 
     Increase (decrease) in
      cash and cash
      equivalents             1,723         1,499        1,130        (2,820)
     Cash and cash
      equivalents, beginning
      of period               3,862           140        4,455         4,459
     Cash and cash
      equivalents, end
      of period             $ 5,585       $ 1,639      $ 5,585       $ 1,639
 
     Supplementary Information:
       Interest paid            154           333          265           693
       Income taxes paid         --            18           --            18
 
     The accompanying notes are an integral part of the consolidated financial
                                    statements.
 
 
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
     (Dollar amounts in tables expressed in thousands of Canadian dollars)
 
      The unaudited consolidated financial statements and supplemental
      information should be read in conjunction with the Company's audited
      consolidated financial statements contained in our 2000 Annual Report.
 
     1.  Operations
         Based in Vancouver, British Columbia, Canada, Peace Arch Entertainment
         Group Inc., together with its subsidiaries, (collectively, the
         "Company") is a fully integrated television production company that
         produces and distributes film, television, video, webcast and
         interactive programming for world-wide markets.
 
     2.  Segmented Information
         The Company manages its operations in two primary business segments:
         production services for projects in which the Company does not hold a
         financial interest in a film or video program, and proprietary
         programming which is programming the Company owns or in which it holds
         a financial interest.  The Company operates only in Canada, although
         its programs are distributed throughout the world.  Selected
         information for the Company's operating segments, not of inter-company
         amounts, is as follows:
 
                                Production  Proprietary
      2000                        Services  Programming      Other     Total
      Revenue                      $ 1,321      $ 9,833      $ 126  $ 11,280
      Gross profits                    364        2,433        126     2,923
      Total assets                   8,327       41,277         --    49,604
 
      2001
      Revenue                      $ 1,538     $ 39,383       $ 53  $ 40,974
      Gross profits                    272        5,614         53     5,939
      Total assets                   7,296       65,124        110    72,530
 
      Gross profits are comprised of revenue less amortization of television
      programming and other costs of production and sales.
 
     3.  Comparative Figures
         Certain comparative figures have been restated to conform to the basis
         of presentation adopted for the current year.
 
 
                            SUPPLEMENTAL INFORMATION
 
      For the convenience of the reader, operating results for the three and
      six months ended February 29, 2000 and February 28, 2001 have been
      translated into US Dollars using the average exchange rate in effect for
      the periods.  Balance sheet information has been translated into US
      Dollars using the Bank of Canada noon spot rate in effect at the balance
      sheet dates.  These translations are not necessarily representative of
      the amounts that would have been reported if the Company had historically
      reported its financial statements in US Dollars.  In addition, the rates
      utilized are not necessarily indicative of rates in effect at any other
      time.
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
 
                                   US DOLLARS
 
                  Selected Financial and Operating Information
   For the Three and Six Months Ended February 29, 2000 and February 28, 2001
 
     (Reported in accordance with generally accepted accounting Principles in
      Canada)
     (Expressed in thousands of US Dollars except per share information)
 
                               Three Months Ended           Six Months Ended
                               2000          2001         2000          2001
 
     Revenue                  1,888        14,363        7,695        27,008
     Net earnings for
      the period                 54           544          302           983
     EBITDA                     237         1,345        1,006         2,813
     Fully diluted earnings
      per common share       $ 0.01        $ 0.12       $ 0.07        $ 0.22
 
                       Selected Balance Sheet Information
                 As at February 29, 2000 and February 28, 2001
 
     (Reported in accordance with generally accepted accounting principles in
      Canada)
     (Expressed in thousands of US Dollars except per share information
 
                                                         2000           2001
 
     Cash and cash equivalents                          3,630          1,065
     Accounts receivable                                  826          3,634
     Tax credits receivable                            11,017         11,467
     Productions in progress                            1,884          8,518
     Investment in television programming               7,575         15,052
     Property and equipment                             4,554          4,745
     Goodwill and trademarks                            2,034          1,794
 
     Total Assets                                      32,242         47,144
 
     Bank indebtedness                                  5,279          9,637
     Accounts payable and accrued liabilities           4,150          7,860
     Deferred revenue                                   1,919          1,897
     Debt                                               2,685          7,301
     Share capital                                     21,039         21,052
     Deficit                                           (3,997)        (2,787)
     Shareholders' equity                              17,130         18,569
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X81726483
 
 

SOURCE Peace Arch Entertainment Group Inc.
    VANCOUVER, British Columbia, April 27 /PRNewswire/ -- PEACE ARCH
 ENTERTAINMENT GROUP INC. (Amex:   PAE; Toronto: PAE.A, PAE.B), which creates
 proprietary programming content for worldwide television and the Internet,
 today announced its operating results for the second quarter and first half of
 FY2001.
     For the three months ended February 28, 2001, the Company's revenue
 increased 689% to approximately $21.7 million, when compared with revenue of
 approximately $2.8 million in the quarter ended February 29, 2000.  The
 significant rise in revenue reflects increases in proprietary programming
 activities, which generated 97.1% of Peace Arch's total revenue for the most
 recent quarter.
     Net earnings of $822,000, or $0.19 per diluted share, for the quarter
 ended February 28, 2001, represented a 941% increase when compared with net
 earnings of $79,000, or $0.02 per diluted share, in the second quarter of
 FY2000.  Diluted earnings per share were calculated on 4,696,000 weighted
 average shares outstanding in the most recent quarter, compared with 3,794,000
 weighted average shares in the second quarter of the prior year.
     The Company reported a margin of $2.7 million (12.6% of revenue) from
 proprietary programming in its most recent quarter, compared with a margin of
 $1.2 million, or 41.9% of revenue, on proprietary programming in the prior-
 year period.  The reduction in margin, as a percentage of revenue, primarily
 resulted from changes in the mix of programming delivered.
     Total assets of $72.5 million as of February 28, 2001 were 46% higher than
 a year earlier, largely due to increases in "Productions in Progress" and
 "Investment in Television Programming," which represent the Company's
 inventory of partially completed and completed programs.  Outstanding bank
 debt increased to $14.8 million at the end of the second quarter, compared
 with $8.1 million a year earlier, in order to finance the Company's record
 slate of programming activities.
     Revenue increased 263% to approximately $41.0 million in the six months
 ended February 28, 2001, versus revenue of approximately $11.3 million in the
 first half of FY2000.  Net income rose 236% to $1,492,000, or $0.34 per
 diluted share, in the first half of FY2001, compared with $443,000, or $0.11
 per diluted share, in the corresponding period of the previous fiscal year.
 Diluted earnings per share were calculated on 4,660,000 weighted average
 shares outstanding in the six months ended February 28, 2001, versus 3,790,000
 weighted average shares in the first half of FY2000.
     "Programming delivered during the second quarter of Fiscal 2001 should
 continue to enhance the Company's long-term profit potential," commented Garth
 Albright, Chief Financial Officer of Peace Arch Entertainment Group Inc.
 "During the first half of the current fiscal year, we delivered 10 episodes of
 The Immortal and 12 episodes of Big Sound.  Both series are being produced
 under a treaty co-production agreement between Canada and the United Kingdom,
 thus allowing them to meet the broadcast requirements for national content in
 Canada and throughout the European Union.  We believe this greatly enhances
 the long-term market potential of the shows.  These series exemplify our focus
 upon building a significant library of quality proprietary programming that
 will grow in value for years to come."
     Tim Gamble, President of Peace Arch, noted that "Our second quarter
 results clearly reflect the Company's tremendous programming accomplishments
 and an expanding customer base in the United States and abroad.  During the
 first half of Fiscal 2001 we were in production on episodes of our half-hour
 comedy series, Big Sound; our one-hour action adventure series, The Immortal;
 our one hour documentary series, Animal Miracles with Alan Thicke; and the
 third season of our science fiction series, First Wave.  We were also in
 production on a trilogy of television movies for PAX TV and Hallmark
 Entertainment based on Catherine Marshall's international bestseller, Christy,
 along with two feature-length films, Now and Forever and The Impossible
 Elephant, which are scheduled for release this spring."
     "Peace Arch's record performance during the first six months of this year,
 along with scheduled programming deliveries for the second half of the year,
 support our belief that Fiscal 2001 will be our best year ever," commented
 Juliet Jones, Chief Executive Officer of Peace Arch.  "Looking towards the
 balance of this year and the first part of fiscal 2002, there are a number of
 external factors that have somewhat clouded the short- to intermediate-term
 outlook for our industry.  These factors include a decline in television
 advertising revenues caused by the general economic downturn and the potential
 for an actors' and writers' strike.  However, our continued efforts to develop
 international markets and diversify our programming library, combined with the
 competitive advantages we enjoy by operating in Canada, should allow our
 Company to grow and further increase market share in the future."
     Peace Arch Entertainment Group Inc. creates, develops, produces and
 distributes proprietary television and Internet programming for worldwide
 markets.  The Company is headquartered in Vancouver, British Columbia, and its
 stock trades on the American Stock Exchange under the symbol "PAE"; and on the
 Toronto Stock Exchange under the symbols "PAE.A" and "PAE.B".
     In June 2000, the American Institute of Certified Public Accountants
 issued a Statement of Position 00-2 ("SOP 00-2"), which provides guidance on
 generally accepted accounting principles to all producers or distributors that
 own or hold rights to distribute or exploit films.  SOP-002 is effective for
 financial statements for fiscal years beginning after December 15, 2000.
 Peace Arch has not yet fully adopted the new standard and is currently
 evaluating the impact that such adoption may have on its financial statements.
     A conference call to discuss the Company's operating results is scheduled
 for 4:15 P.M.  Eastern Daylight Time (1:15 P.M. Pacific Standard Time) on
 Friday, April 27, 2001.  The dial-in number is (800) 360-9865.  (Note:
 Investors requiring an international dial-in number should contact RJ Falkner
 & Company, Inc. at 970-349-0846 or 800-377-9893 for such number).  An audio
 replay of the call will be posted on Peace Arch's website (www.peacearch.com)
 approximately two hours after completion of the conference call.
     The call will be hosted by Peace Arch Entertainment Group Inc.'s Chairman
 of the Board, Cameron White, and Chief Financial Officer, Garth Albright.
 
     (Note:  The financial statistics included in this release are represented
 in Canadian dollars and are reported in accordance with Generally Accepted
 Accounting Principles in Canada.  On February 28, 2001 the Bank of Canada noon
 spot rate was $0.65 US for each $1.00 Canadian).
 
     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, 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.
 
     Additional information on Peace Arch Entertainment Group can be accessed
 on the Internet at www.peacearch.com.
 
                  For additional information, please contact:
 
                     Garth Albright, CFO at (604) 681-9308
                 Tina Baird, Media Relations at (604) 985-8991
                                       or
  R. J. Falkner & Company, Investor Relations Counsel at (800) 377-9893 or via
                         e-mail at info@rjfalkner.com.
 
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
                                  (unaudited)
 
     (Expressed in thousands of Canadian dollars)
 
                                   February 29,    August 31,    February 28,
                                       2000           2000           2001
     ASSETS                        (unaudited)      (audited)     (unaudited)
 
     Cash and Cash equivalents        $5,585          $4,459        $1,639
     Accounts receivable               1,271           6,236         5,590
     Tax credits receivable           16,949          10,207        17,642
     Productions in progress           2,898          15,637        13,104
     Prepaid expenses and deposits       623             882           485
     Investment in television
      programming                     11,654          15,550        23,157
     Property and equipment            7,007           7,397         7,300
     Deferred costs                      488           1,049           853
     Goodwill and trademarks            3129           2,913         2,760
 
                                    $ 49,604        $ 64,330      $ 72,530
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Bank indebtedness               $ 8,121         $ 5,797      $ 14,826
     Accounts payable and
      accrued liabilities              6,385          10,095        12,093
     Deferred revenue                  2,953           8,338         2,918
     Deferred gain                       349             233           116
     Deferred credit                      --           1,090         1,025
     Future income taxes               1,311             460         1,753
     Debt                              4,130          11,252        11,232
                                      23,249          37,265        43,963
     Shareholders' equity:
      Share capital                   32,368          32,378        32,388
       Authorized:
         100,000,000 Class A Multiple
           Voting Shares Issued -
           1,335,756 (Feb 29, 2000 -
           1,454,583)
         100,000,000 Class B
           Subordinate Voting Shares
           Issued - 2,489,988
           (Feb 29, 2000 - 2,366,163)
         25,000,000 Preference Shares,
           issuable in series
         Issued - nil
     Other paid-up capital               136             467           467
     Deficit                          (6,149)         (5,780)       (4,288)
 
                                      26,355          27,065        28,567
 
                                    $ 49,604        $ 64,330      $ 72,530
 
              /S/W.D. CAMERON WHITE                /S/GARTH ALBRIGHT
              W.D. Cameron White                   Garth Albright
              Chairman and Director                Chief Financial Officer
 
     The accompanying notes are an integral part of the consolidated financial
                                    statements.
 
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
 
               CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
   For the Three and Six Months Ended February 29, 2000 and February 28, 2001
                                  (unaudited)
 
     (Expressed in thousands of Canadian dollars except per share information)
 
                                   3 months ended             6 months ended
                               2000          2001         2000          2001
 
     Revenue                $ 2,752      $ 21,710     $ 11,280      $ 40,974
 
     Expenses:
      Amortization of
       television programming 1,381        18,334        7,400        33,769
      Other costs of
       production and sales     309           422          957         1,266
      Depreciation and
       amortization             132           246          277           491
      Selling, general and
       administrative           846           979        1,665         1,787
      Interest                   96           441          324           995
                               2764        20,422       10,623        38,308
 
     Earnings from operations
      before undernoted         (12)        1,288          657         2,666
     Gain on sale of asset      129            58          216           116
                                129            58          216           116
     Earnings before
      income taxes              117         1,345          873         2,782
     Income taxes                38           524          430         1,290
     Net earnings for
      the period                 79           822          443         1,492
     Deficit beginning of
      period                 (6,228)       (5,110)      (6,592)       (5,780)
     Deficit,
      end of period         $(6,149)      $(4,288)     $(6,149)      $(4,288)
 
     Basic net earnings
      per common share         $0.02        $0.22         $0.11        $0.39
 
     Fully diluted earnings
      per common share         $0.02         $0.19        $0.11        $0.34
 
     Weighted average number
      of shares outstanding
      during the period (000's);
 
         Basic                3,794         3,823        3,790         3,823
         Diluted              3,794         4,696        3,790         4,660
 
   The accompanying notes are an integral part of the consolidated financial
                                  statements.
 
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
   For the Three and Six Months Ended February 29, 2000 and February 28, 2001
                                  (unaudited)
 
     (Expressed in thousands of Canadian dollars)
 
                                   3 months ended             6 months ended
 
                               2000          2001         2000          2001
     Operating activities:
      Net earnings              $79          $822         $443        $1,492
      Items not involving cash:
        Depreciation and
         amortization         1,482        18,600        7,632        34,280
        Future income taxes     225           469          514         1,229
        Gain on sale of
         assets                 (58)          (58)        (165)         (116)
        Accretion of debt
         discount                 8            55           17           110
        Changes in non-cash
          working capital     1,623         2,151          583        (7,280)
                              3,359        22,039        9,024        29,715
 
     Investing activities:
      Investment in
       television
       programming           (1,547)      (22,635)      (8,780)      (41,396)
      Change in deferred
       costs                   (215)          142         (295)           10
      Increase in goodwill
       and trademarks           (20)           (9)         (29)           (9)
     Property and equipment
      acquired                  (32)           (7)         (37)          (47)
                             (1,814)      (22,509)      (9,141)      (41,442)
 
     Financing activities:
      Issue of common
       shares, net              185             9          185             9
      Increase in bank
       indebtedness              57         2,025        1,189         9,029
      Repayment of debt         (64)          (65)        (127)         (131)
 
                                178         1,969        1,247         8,907
 
     Increase (decrease) in
      cash and cash
      equivalents             1,723         1,499        1,130        (2,820)
     Cash and cash
      equivalents, beginning
      of period               3,862           140        4,455         4,459
     Cash and cash
      equivalents, end
      of period             $ 5,585       $ 1,639      $ 5,585       $ 1,639
 
     Supplementary Information:
       Interest paid            154           333          265           693
       Income taxes paid         --            18           --            18
 
     The accompanying notes are an integral part of the consolidated financial
                                    statements.
 
 
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
     (Dollar amounts in tables expressed in thousands of Canadian dollars)
 
      The unaudited consolidated financial statements and supplemental
      information should be read in conjunction with the Company's audited
      consolidated financial statements contained in our 2000 Annual Report.
 
     1.  Operations
         Based in Vancouver, British Columbia, Canada, Peace Arch Entertainment
         Group Inc., together with its subsidiaries, (collectively, the
         "Company") is a fully integrated television production company that
         produces and distributes film, television, video, webcast and
         interactive programming for world-wide markets.
 
     2.  Segmented Information
         The Company manages its operations in two primary business segments:
         production services for projects in which the Company does not hold a
         financial interest in a film or video program, and proprietary
         programming which is programming the Company owns or in which it holds
         a financial interest.  The Company operates only in Canada, although
         its programs are distributed throughout the world.  Selected
         information for the Company's operating segments, not of inter-company
         amounts, is as follows:
 
                                Production  Proprietary
      2000                        Services  Programming      Other     Total
      Revenue                      $ 1,321      $ 9,833      $ 126  $ 11,280
      Gross profits                    364        2,433        126     2,923
      Total assets                   8,327       41,277         --    49,604
 
      2001
      Revenue                      $ 1,538     $ 39,383       $ 53  $ 40,974
      Gross profits                    272        5,614         53     5,939
      Total assets                   7,296       65,124        110    72,530
 
      Gross profits are comprised of revenue less amortization of television
      programming and other costs of production and sales.
 
     3.  Comparative Figures
         Certain comparative figures have been restated to conform to the basis
         of presentation adopted for the current year.
 
 
                            SUPPLEMENTAL INFORMATION
 
      For the convenience of the reader, operating results for the three and
      six months ended February 29, 2000 and February 28, 2001 have been
      translated into US Dollars using the average exchange rate in effect for
      the periods.  Balance sheet information has been translated into US
      Dollars using the Bank of Canada noon spot rate in effect at the balance
      sheet dates.  These translations are not necessarily representative of
      the amounts that would have been reported if the Company had historically
      reported its financial statements in US Dollars.  In addition, the rates
      utilized are not necessarily indicative of rates in effect at any other
      time.
 
                      PEACE ARCH ENTERTAINMENT GROUP INC.
 
                                   US DOLLARS
 
                  Selected Financial and Operating Information
   For the Three and Six Months Ended February 29, 2000 and February 28, 2001
 
     (Reported in accordance with generally accepted accounting Principles in
      Canada)
     (Expressed in thousands of US Dollars except per share information)
 
                               Three Months Ended           Six Months Ended
                               2000          2001         2000          2001
 
     Revenue                  1,888        14,363        7,695        27,008
     Net earnings for
      the period                 54           544          302           983
     EBITDA                     237         1,345        1,006         2,813
     Fully diluted earnings
      per common share       $ 0.01        $ 0.12       $ 0.07        $ 0.22
 
                       Selected Balance Sheet Information
                 As at February 29, 2000 and February 28, 2001
 
     (Reported in accordance with generally accepted accounting principles in
      Canada)
     (Expressed in thousands of US Dollars except per share information
 
                                                         2000           2001
 
     Cash and cash equivalents                          3,630          1,065
     Accounts receivable                                  826          3,634
     Tax credits receivable                            11,017         11,467
     Productions in progress                            1,884          8,518
     Investment in television programming               7,575         15,052
     Property and equipment                             4,554          4,745
     Goodwill and trademarks                            2,034          1,794
 
     Total Assets                                      32,242         47,144
 
     Bank indebtedness                                  5,279          9,637
     Accounts payable and accrued liabilities           4,150          7,860
     Deferred revenue                                   1,919          1,897
     Debt                                               2,685          7,301
     Share capital                                     21,039         21,052
     Deficit                                           (3,997)        (2,787)
     Shareholders' equity                              17,130         18,569
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X81726483
 
 SOURCE  Peace Arch Entertainment Group Inc.