Film maker Winchester warns of tough times

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The aim-listed film group Winchester Entertainment yesterday indicated a modest recovery after having announced that the past year's losses had widened to £11m.

While the company said conditions would "not be easy" for the business over the coming 12 months, it said it thought it had seen "the low point" in its fortunes. "The foundations are laid for future years' prosperity."

Winchester Entertainment specialises in films such as Lantana, Baise Moi and Slap her she's French. It also has a development deal with Los Angeles-based The Donner Company - owned by Richard Donner, the director of Lethal Weapon and Timeline, and Lauren Schuler Donner, the producer of X-Men and X-Men 2.

In the year to 31 March, Winchester Entertainment posted a pre-tax loss of £11.2m compared to an £8.3m loss a year before. Sales fell 22 per cent to £5.1m.

"Quite clearly, these are not pleasing results," chairman Huw Davies said. But he said that, while losses in the first half totalled £9m, losses in the second half of the year amounted to only £2.2m.

"There is reason to believe that our interim results announced in December 2002 marked the low point in the company's fortunes," he said, adding the company was now in a "prime position" to benefit from any recovery in market conditions.

Last week, Winchester Entertainment said it was buying Cobalt Pictures from its founders John Muse, of the US private equity group Hicks, Muse, Tate & Furst, and Alton Irby, a founder of the private investment group Tricon.

Cobalt has international sales rights on a number of films including Ben Kingsley's latest, House of Sand and Fog and Kevin Costner's forthcoming movie Open Range.