News

Entertainment One Ltd. announces results for first full year of operations

25 June 2008

Highlights:

• Three significant acquisitions including Contender Entertainment Group (US$97.0 million), Seville Entertainment Inc. (US$4.9 million) and RCV Entertainment (US$62.0 million) position Entertainment One Ltd. as a major player in filmed entertainment distribution
• Acquisition of Navarre Entertainment Inc. in May 2007 for (US$6.5 million) to strengthen music distribution operations in the US
• Strong pipeline of filmed content built through series of output deals with independent producers, including Summit, Yari Film and THINKFilm
• Growing catalogue with over 3,700 film titles across the Group's different markets

TORONTO, June 25 /CNW/ - Entertainment One Ltd. ('E1') (LSE: ETO), the international entertainment content owner and distributor, today announced its results for its first full year of operations as a listed company. Entertainment One listed on AIM on March 29, 2007, after it acquired Entertainment One Income Fund. Financial results for the period focus on pro forma performance of all businesses had they been owned by E1 for the full trading period. Pro forma, revenue was US$577.1 million; pro forma operating EBITDA was US$50.4 million and pro forma underlying EBITDA US$32.7 million. Underlying loss per share basic and diluted of US$0.06 cents.

"During its first full year of operations, Entertainment One made significant strides toward achieving its goal of building a leading independent entertainment content ownership and distribution business which acquires films, television programs and music content and exploits these rights around the world," said Darren Throop, chief executive officer. "By executing several multi-territory acquisitions we have grown our revenues and delivered solid financial performance in line with management expectations. The benefits of building this international distribution infrastructure are already coming through as Entertainment One wins business from independent film producers while exploiting increasing operational efficiency."

Strategic Acquisitions

E1 made a number of strategic acquisitions during its first full year of operations in its Entertainment and Distribution groups. The Entertainment division focuses on the exploitation of content rights in filmed entertainment and music, while the Distribution division focus on the physical distribution of entertainment product in Canada and the U.S.

In the filmed entertainment segment, E1 spent US$164 million on acquisitions during the fiscal year. These acquisitions included:

• Seville Entertainment Inc., which strengthens E1's position in Canada;
• Contender Entertainment Group, which expanded the company's operations into the U.K.; and
• RCV Entertainment, which further expanded E1's operations into Europe.

In addition, E1 has built up an impressive pipeline of filmed content built through a series of output deals with independent producers, including Summit Entertainment, Yari and THINKFilm.

The three-year output deal with Summit Entertainment will deliver approximately 25 movies over the next three years in both the UK and Canada and will be a strong driver of growth. Future titles include "Sex Drive" (starring James Marsden), "Twilight" (starring Kristen Stewart) and "Knowing" (starring Nicholas Cage).

Future releases from Yari Film include "Nothing but the Truth" (starring Kate Beckinsale and Matt Dillon) and from ThinkFilm "Bordertown" (starring Jennifer Lopez and Antonio Banderas). As part of the ThinkFilm deal E1 also acquired ThinkFilm's library rights for Canada. The library of 235 critically-acclaimed and commercially-proven features includes the hit movies "Crouching Tiger, Hidden Dragon" and "The Assassination of Richard Nixon."

Further, the Group has been successful in signing a strong slate of additional film and television properties including "Edge of Darkness" (starring Mel Gibson), "Law Abiding Citizen" (starring Gerard Butler), "The Marc Pease Experience" (starring Ben Stiller), as well as "Eddie the Eagle" (starring Steve Coogan) and "Mr. Nice" (starring Rhys Ifans).

In the music distribution segment, E1's US$6.5 million May 2007 acquisition of Navarre Entertainment Inc. strengthened its music distribution operations in the U.S.

"We look forward to another year of growth with confidence, as we maintain the pace of our acquisition and consolidation strategy," added Mr. Throop.

Global Filmed Entertainment Outlook remains positive

There are substantial opportunities for further consolidation in the English-speaking and European film and TV markets, as the global filmed entertainment outlook remains positive. E1 plans a significant increase in spend on content rights to grow its current scale in international markets.

The results for the period reinforce the combined strength of E1, with the physical distribution business providing a solid foundation for the growth of the filmed entertainment division, which has benefited from the strong performance of acquisitions completed during the period.

Further acquisitions both within new and existing territories are planned which will enhance the credibility of the business in the film and TV market. The company also plans to increase its investment in content rights to complement future acquisitions. E1 plans to spend in excess of US$80 million on content rights in the 2009 financial year, up from US$50 million (on a pro forma basis) in 2008. This increased investment will be focused on all-rights film acquisitions. These will attract increased year-on-year marketing costs as the movies are released theatrically but will drive revenue growth.

The Distribution division is focused on maintaining growth as markets develop including reviewing digital opportunities and will build on this with further improvements in operating efficiencies, in particular focused on stock and working capital management.

The outlook for the balance of the current year is positive, and it is expected there will be further acquisition-led growth, as the business continues to execute its strategy to acquire, own and exploit entertainment rights across the spectrum of distribution channels (including movie theatres, home entertainment, television and digital delivery platforms) through both organic growth and the acquisition of established content ownershp and distribution businesses in the world's developed markets.

About Entertainment One

Entertainment One Ltd. (LSE: ETO) AIM listed, Entertainment One Ltd's strategy is to build a leading global independent entertainment content ownership and distribution business which acquires films, television programmes and music content and exploits these rights in all media throughout the world. E1 has operations in Canada, the U.S, Holland, Belgium and the U.K., where it distributes, acquires and owns filmed entertainment and music content in all media. Entertainment One also owns Koch Entertainment, the largest independent record label in North America and a leading independent distributor of music and video in the United States.

www.entertainmentonegroup.com

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