Indian subsidiary business update

DQ Entertainment plc

("DQE" or the "Group")

Indian subsidiary business update

DQE, a leading animation, gaming, live action entertainment production and distribution company, today announces that its 75 per cent owned subsidiary, DQ Entertainment has published the following business update.

Key business highlights:

·; DQE's prime intellectual property, The Jungle Book - 52x11', 3D TV Series has successfully been produced and delivered. Major co-producers ZDF TV Group - Germany, TF-1 TV Group - France and Moon Scoop - France have agreed the immediate production of a second season.

·; Recent new orders include productions such as 5 Children & IT - 3D TV series, Robin Hood- 'Mischief in Sherwood' - 52x11' 3D TV Series and production of a second season of Little Nicolas 3D TV Series and a second season of Iron Man 3D TV series.

·; Licensing & Merchandising has increased substantially after the successful launch of Jungle Book TV series Season I, in particular in Israel, Italy, Canada, Spain, Germany, France and the UK.

·; Completion of 3D VFX Feature Film - The Prodigies on service to Warner Bros/ Fidelite Films/ Onyx Films, France.

·; Development of DQ Entertainment's feature film pipeline consisting of The Jungle Book, Peter Pan and The Phoenix and the Flying Carpet.

·; Broadcasting agreement of a high end 2D 60 minute animated TV feature Suryaputra Karan with BUENA VISTA INTERNATIONAL, the international distribution arm of Walt Disney Studios.

·; DQE produced 60 minute TV feature 'Suryaputra' was acquired by Disney Channel India to be broadcast on its children's channels for the Indian sub-continent.

·; Broadcasting agreement of a high end 2D animated TV series Mysteries and Feluda with Disney India.

·; New distribution agreement with ZDF Enterprises for a 3D Stereoscopic HD TV series named "5 & IT" as part of a packaged multi million euro deal signed in Hyderabad, India.

·; New co-production agreement with Method Animation, France for a new 3D HD 52x11' series of Robin Hood - 'Mischief in Sherwood'.

·; New co-production agreement for the second series of Le Petit Nicolas with M6 Studios (France) comprising 52 episodes of 13 minutes.

·; Al Jazeera, Middle Eastern Children's Channel("JCCTV") signed exclusive five year broadcasting agreements for 22 Arabic states in relation to three iconic DQE animated productions - 'The Jungle Book', 'New Adventures of Lassie' and 'Mysteries and Feluda'.

·; Broadcasting agreement for The Jungle Book 3D TV series in Italy with RAI DUE ("RAI 2"), an Italian television broadcaster.

·; Produced new 3D stereoscopic feature film "The Prodigies" for Warner Bros, Fidelite Films, Studio 37 and Onyx Films, France. The film was released in France earlier this month and worldwide release is expected shortly.

·; Developing three new 3D stereoscopic feature films for the world market scheduled for release from 2013 onwards:

o The Jungle Book (2013)

o The New Adventures of Peter Pan (2013-14)

o The Phoenix and the Flying Carpet (2014-15)

·; Three year licensing agreement in India with Bio World Merchandising, for 'The Jungle Book'. Bio world has expertise in the licensing, manufacturing and distribution industries to reach an extremely large and powerful audience through various channels like online retail, department and mass market, wholesale departments among others.

·; Publishing licensing deal for 'The Jungle Book' with leading publishers, Editorial Bruno, Spain.

·; Merchandising deal for 'The Jungle Book' with Blue Ocean Entertainment AG ("Blue Ocean"), Germany. Under the terms of the agreement, Blue Ocean will have non-exclusive rights over two years to manufacture, distribute and sell Jungle Book magazines in Germany and Switzerland

·; Exclusive three year toy licensing agreement for 'The Jungle Book' with Spark Toys Ltd (Spark), an Israel based company.

·; Music publishing agreement with London based, Universal Music Publishing International Ltd ("Universal Music").

·; Licensing agreement with TV Mania Gmbh through DQE's merchandising agents in France, TF1 Enterprises. Under the terms of the agreement, TV Mania will have the right to manufacture and distribute Jungle Book apparels and accessories for babies, kids and teenagers over a two year period. DQE will receive a royalty on revenues generated under this agreement, estimated to be €1 million over the two year term, in addition to a minimum guaranteed amount.

Financial impact of above new contracts

Management estimate the above described:

·; New co-production agreements in respect of 5&IT, Robin Hood, Jungle Book Season 2 and Little Nick 2, will generate additional revenues approximating Rs 138 Cr (USD 30.7 million) over the production cycle of 12-24 months.

·; New licensing and merchandising agreements described above will generate additional revenues approximating Rs. 29.9 Cr (USD 6.6 million) over a four year period. Management envisage signing a second cycle of new agreements in approximately four years' time.

·; The majority of licensing and merchandising agreements since 1 April 2011 relate to 'The Jungle Book' whereas current negotiations are for other properties such as New Adventures of Peter Pan, Iron Man, Casper season 2, Little Nick seasons 1 & 2, 5&IT, Lassie & Friends, Charlie Chaplin and Feluda.

Awards & recognitions:

·; The first season of Little Nicolas, co-produced by DQE with M6 Studios (France) and Method animation, France was awarded "THE BEST TV PRODUCTION AWARD" in the animated TV series category for the year 2010-11 in the 50th Annecy Film Festival, France.

·; DQE received the Excellence Award as the Top Indian ITES Company in the State of Andhra Pradesh on 31 March. The award was presented to Chairman and CEO Tapaas Chakravarti by Sri.N.Kiran Kumar Reddy, Hon'ble Chief Minister of Andhra Pradesh.

Contact:

About DQE

DQE is one of the leading producers of animation, visual effects, game art and live action entertainment content for the global media and entertainment industry. With a workforce of approx 3500 permanent employees and a global client - partner base of over 100 producers, distributors, broadcasters and licensors including Walt Disney Group, Universal Pictures, Nickelodeon Animation Studios Inc., Electronic Arts, Marvel Comics, American Greetings, , BBC Group, M6/ France TV Group / TF-1 - leading broadcasting and Distribution groups from France, ZDF TV and ZDF Enterprises - leading Distributors/ broadcaster and global distributor from Germany, ABC Australia, Al Jazeera - Arabic nations, Disney Channels - Asia, Cartoon Network Group and many more world-wide.

DQE has produced/co-produced and distributed iconic brands such as Iron Man - the first 3D animated TV series, Twisted Whiskers, Mikido, Casper, Pinky & Perky, second season of Large Family, third season of Mickey Mouse Club House, First and Second Season of Madagascar TV Series and is now co-producing properties like Little Prince and Little Nick with major international broadcasters and producers. DQE has a library of over 500 hours of international programs for distribution and licensing globally for TV, home entertainment, merchandising and publishing is on fast track.

While several Indian IPs like Mysteries & Feluda, Omkar, Balkand I, II and III with International Broadcasters have had a successful run.

DQE has also announced the development of a series of animated short films for television in collaboration with French production companies Method Animation and MK2. DQE, Method Animation and MK2 announced the production and worldwide distribution and exploitation of an animated version of 104 six-minute episodes inspired by the legendary film icon Charlie Chaplin‟s Hollywood films.

DQE has received over 35 awards including EMMY, at several national and international forums fostering creativity and excellence. E & Y Entrepreneur of the Year - 2009 India Awards, The UK Broadcast Awards 2010, Sichuan TV Festival International "Gold Panda" Awards, 11 Emmy nominations and 1 The Emmy Award, administered by the National Academy of Television Arts & Sciences , USA for Tutenstein Animated production. The Jungle Book produced by DQE has recently been nominated in 5 categories at the cartoons on the bay - Pulcinella awards to be held in Italy in April2011.