Interim Results

DQ Entertainment plc

('DQE' or the 'Group')

Interim Results for the six months ended 30 September 2011

DQ Entertainment plc (AIM: DQE), a leading animation, gaming, live action entertainment production and distribution company, today announces its interim results for the six months ended 30 September 2011.

Financial Highlights:

·; Revenue up 6% to US$19.88m (2110 : US $18.73m)

·; EBITDA up 19% to US$8.18m (2010 : US$6.88m)*

·; Profit after tax up 53% at US$2.46m (2010 : US$1.60m)

·; Order book currently at US$155.03m** (2010: US$140m)

·; Cash and cash equivalents of US$7.06m (2010 : US$20.50m)

* EBITDA is calculated by adding depreciation and amortisation expenses to the operating results before financing costs

**Includes contracted forward production revenues and signed licensing and distribution deals

Productions successfully completed and delivered:

·; Tara Duncan: 26 x 22' 2D TV series with Moonscoop, (France), M6 Studios - (France)

·; Balkand 2 & 3: 70 mins each TV features with Turner Group (Asia)

·; Suryaputra: 60 mins TV feature with Disney (India)

New projects signed:

·; 5 & IT: 52 x 11' 3D HD TV series with Yowza Digital Inc (Canada) and La Fabrique D'Image (Luxembourg)

·; Escape Hockey - with Imira (Spain)

·; Franco and Formula Fun - Formula Fun Entertainment Limited (UK) and Telegael (Ireland)

·; Robin Hood - Mischief in Sherwood: 52x11' 3D TV series, with Method Animation (France).

New productions commenced during the period:

·; The Jungle Book, Season 2: ZDF TV (Germany), TF-1 TV (France) and Moon Scoop (France) have agreed for the immediate production of another '52x11'episodes of the highly acclaimed 3D TV series.

·; Peter Pan: 26 x 22' - 3D HD Stereoscopic TV series with ZDF Group ( Germany) and Method Animation (France) supported by France Televisions, De Agostini Group (Italy), ATV (Turkey) and B Channel (Indonesia)

·; Lassie & Friends: 52 x 11' 2D TV series with Classic Media (USA) and ZDF Enterprises (Germany)

·; Charlie Chaplin: 104 x 6' 3D HD TV series with Method Animation (France) and MK2 (France)

·; Little Nick, Season 2: 52x12', 3D HD TV series, with M6 Studios (France)

·; Iron Man, Season 2: 26 x 22' 3D TV series with Marvel Entertainment (USA) & Method Animation, (France).

·; Casper Season 2: 52 x 11' 3D CGI Animated Series, with Classic Media (USA), Moonscoop & TF1-(France), Harvey Entertainment (USA)

Chairman's Statement

Having established itself as a developer, producer and co-producer of iconic animated television series, films and home videos, such as The Jungle Book, Charlie Chaplin, Peter Pan, 5 Children & IT, Iron Man, Casper, Little Nicolas, Little Prince, Lassie & Friends, both in partnership with international and national broadcasters, distributors, licensees and large independent producers, especially in Europe and the USA, DQE has now embarked on the production of 3D stereoscopic theatrical feature films.

DQE's dynamic yet low risk business model of developing classical iconic intellectual properties (IP's), using co-production opportunities with marquee partners across the globe and expanding its distribution network worldwide, has enabled the Group to achieve sustained growth and create value for our customers, partners and shareholders.

Over the years DQE has successfully demonstrated its ability to execute forward thinking strategies and capitalise on the global opportunities in the entertainment market place. Timely movement up the value chain of IP development has placed DQE in a unique position as being Asia's first integrated entertainment production and distribution company, focused on 360 degree monetisation of its IP's across all platforms.

DQE has revenue visibility over the coming five years with more than 40 TV series in the development pipeline together with three animated feature films: The Jungle Book, The New Adventures of Peter Pan and The Phoenix and the Flying Carpet, each due to be released from 2013 onwards.

We believe that new age digital frontiers and new media avenues will create further opportunities for us to license our IP's and exploit our programming library worldwide.

Tapaas Chakravarti, Chairman & CEO, said:

 "As the global economic outlook remains subdued, we remain focused on creating the highest quality of content for the kids' entertainment segment worldwide and strive to distribute that content in strategic and profitable ways.

The deals concluded by our teams with market leaders such as Disney, ZDF Group, Germany, TF1 and France TV, Universal Group etc. demonstrate the power of the strategic actions taken by your company to strengthen our business model. We have sought to become more self-reliant by focusing on becoming a global content distributor and amongst the first companies with multiple 3D stereoscopic TV and feature production integrated pipelines. We have increased our ability to monetise our content across geographies through licensing and merchandising based on the intellectual properties owned and developed by us. Some of the recently concluded licensing deals with Sunmate USA, The Planeta Junior Italia, part of D Augustini Group, Italy and Blue Ocean Entertainment AG, Germany, the home distribution deal with Sony Pictures Entertainment Films, India as well as pre-sale deals with leading international broadcasters stand testimony to our success in de-risking our company for the future, while maximising our revenues over a sustained period of time.

Development of our feature film, The Jungle Book, is progressing at a steady pace with lead writing by Billy Frolick (Madagascar fame) and storyboard direction by Dan Shefelman (Ice Age fame). The New Adventures of Peter Pan with lead writing by Philip LaZebnik (Mulan, Pocahontas, Prince of Egypt fame) is also in development. We have on board, Eric Rollman - a 25-year veteran of animation and recently President of Marvel Animation and prior President, Fox Family/Saban Productions - as Executive producer, for both these films.

Meanwhile we continue to strengthen our position in the international markets by delivering high quality content such as Little Prince-52x11 TV series, The Prodigies-80' 3D stereoscopic feature film (distributed by Warner Bros), Casper-2 and Iron Man-2, our own IP-The Jungle Book in second season and several other classical and iconic TV series, capitalising on the creativity and quality demonstrated by our teams. Going forward, the Board of Directors are optimistic that DQE's new developments in the digital space will further strengthen its position as a market leader in international markets, while delivering sustained value to shareholders."

Operational Highlights:

·; MIPCOM 2011: MIPCOM is one of the world's leading 'content market' for creating, co-producing, buying, selling, financing and distributing entertainment across all platforms at a global level. Conducted in Cannes (France) every year, this years' MIPCOM was particularly successful for DQE as the Group agreed several co- production and distribution deals for its various properties including The Jungle Book, 5 & IT, Lassie & Friends, The Little Prince, Little Nick, Iron Man, Galactik Football, Feluda, Ravan, Balkand, Omkar. Further details of these strategic co-production and licensing deals are provided below.

·; 5 & IT: 52 x 11 - 3D CGI TV series aimed at children aged 6-10 years old is being co-produced by DQE together with Yowza Digital Inc. and La Fabrique D' Image (Luxembourg). JCCTV and Nickelodeon (India) have acquired the broadcasting rights for this new series in 22 countries.

·; Co-production of Franco and Formula Fun: DQE signed a co-production agreement with Formula Fun Entertainment Limited ("FFE") in the UK and Telegael in Ireland to co-produce a new CGI (computer-generated imagery) animated pre-school series based on the award-winning property, 'Franco and Formula Fun'. The series is expected to be available for broadcast in early 2013.

·; DQE to co-produce Escape Hockey:  DQE along with Imira Entertainment - a leading Spanish production and distribution company specialising in youth programming, Enne Entertainment Studios and Spanish broadcaster TVE have joined as co-production partners on a new 3D animated series Escape Hockey.

·; Licensing & Distribution: Increased momentum has been registered on the DQE Licensing & Merchandising business after the successful launch of The Jungle Book. DQE has signed licensing and merchandising deals with various licensees such as Sunmate USA, The Planeta Junior Italia, part of D Augustini Group, Italy, Blue Ocean Entertainment AG, Germany and home distribution deals with Sony Pictures Entertainment Films, India and ATV Turkey, for The Jungle Book, Iron Man-2, Casper 2, Lassie & Friends and the new season of Galactik Football etc.

Licensing and Distribution (L&D):

DQE's business model of co-producing and development of its IP library has enabled us to leverage on the licensing and distribution income generated from our co-production investments and IP. The Group has built a library of over 600 hours of international programs for distribution and licensing globally for TV, home entertainment and merchandising.

Over the next 3 years, DQE intends to accelerate growth on the L & D front, working closely with various licensees to maximise the benefit from opportunities presenting themselves, in particular those coinciding with the broadcast of TV series on leading worldwide networks.

DQE has signed over 30 merchandising deals for The Jungle Book including back to school products, novelisation, outdoor products, party supplies and toys with well-known licensee companies across the globe such as Hachette, Mookie Toys, Nestle, Burger Ranch and School Pack in countries like France, Israel, Germany and the UK.

In addition, more than 40 broadcasting deals have been signed with companies including Walt Disney, Sony Pictures, Media Corp - Singapore, Turner Group, Nickelodeon, Noga Communications for TV series such as The Jungle Book, Casper, Twisted Whiskers, Pet Pals, Balkand, Suryaputra, Mysteries & Feluda.

The following are a selection of the major licensing and distribution deals concluded over the past few months:

• Multi-million dollar licensing and distribution deal with SMC Entertainment Inc., a division of Sun-Mate Corporation Inc., USA for 'The Jungle Book' Season One;

• Acquisition deal concluded with Global TV, Indonesia to broadcast multiple properties including the 3D TV Series 5 and IT (52x11'), Iron Man season 2 (52x11') and Casper season 2 (52x11') in Indonesia over a period of 4 years;

• TV licensing deal with ATV Turkey for the acquisition of Lassie & Friends (52 x11') and the new season of 3D Galactik Football (26x22') for broadcast in Turkey;

• Home distribution deal with Sony Pictures Entertainment Films, India for The Jungle Book, Iron Man, Feluda, Ravan, Balkand and Omkar;

• Exclusive broadcasting agreement with Sun TV Network Ltd for The Little Prince & Little Nick;

• Licensing agreement with Bimbambom, Israel and DuMont, Germany for The Jungle Book;

• Publishing deal with B. Jain Group, India for The Jungle Book;

• The Planeta Junior Italia, part of D Augustini Group, Italy, have been appointed as the licensing and merchandising agents for The Jungle Book in Italy, San Marino, Vatican City, Malta and Italian speaking Switzerland, Greece and Cyprus;

• Licensing agreement with Blue Ocean Entertainment AG, Germany for The Jungle Book;

• 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 of 5 & IT as part of a packaged multi million euro deal signed in Hyderabad, India;

• Al Jazeera, Middle Eastern Children's Channel signed an exclusive five year broadcasting agreement for 22 Arabic states in relation to three iconic DQE animated productions - 'The Jungle Book', 'New Adventures of Lassie' and 'Mysteries and Feluda';

• Exclusive three year toy licensing agreement for 'The Jungle Book' with Spark Toys Ltd, Israel.

• Music publishing agreement with London based, Universal Music Publishing International Ltd;

• Three year licensing agreement in India with Bio World Merchandising, for 'The Jungle Book';

• Licensing deal for 'The Jungle Book' with TV Mania Gmbh to manufacture and distribute apparels and accessories for babies, kids and teenagers;

• Licensing deal for 'The Jungle Book' with C. Riethmuller GmbH (Riethmuller), Germany for the distribution of branded party products in Germany, Austria and Switzerland;

• Licensing deal for 'The Jungle Book' with the leading card makers Universal Cards, (Universal) Germany; and

• Home video distribution deal for the 3D animated TV series 'The Jungle Book' by Play Records Marketing & Distribution Ltd, Israel.

For further information, please contact:

Contact

***

Condensed Consolidated Income Statement

Condensed Consolidated Statement of Comprehensive Income

Total comprehensive income attributable to:

Condensed Consolidated Balance Sheet

Condensed Consolidated Balance Sheet (continued)

These financial statements were approved by the Board of Directors and authorised for use on 11 November 2011.

Signed on behalf of the Board of Directors by:

Director Director

Condensed Consolidated Statement of Changes in Equity for the period ended 30 September 2011

Condensed Consolidated Statement of Cash Flows for the period ended 30 September 2011

Condensed Consolidated Statement of Cash Flows for the period ended 30 September, 2011 (continued)

Notes to Condensed Consolidated Financial Statements

NOTE A - BASIS OF PREPARATION

1. General information

DQ Entertainment plc (the 'Company' or "DQ plc") is a company domiciled and incorporated in the Isle of Man on 19 April 2007 and was admitted to the Alternative Investment Market of London Stock Exchange on 18 December 2007. The Company raised approximately USD 54 million (£26.83 million) at listing (before Admission costs).

The condensed consolidated financial statements of the Company for the six months period ended 30 September 2011, comprises the financial Information of the Company, its subsidiaries and associate (together referred to as the 'Group').

As at 30 September 2011 the following companies formed part of the Group:

The Company's registered address is 15-19, Athol Street, Douglas, Isle of Man.

The Group is primarily engaged in the business of providing traditional and digital animation for television, home video, feature films and the like, and game art development. The Group also is engaged in exploitation of its distribution rights to broadcasters, television channels, home video distributors and others.

The functional currencies of the respective Group companies are:

2. Significant accounting policies

The accompanying condensed consolidated financial information of the Company have been presented for the six months ended 30 September 2011 along with comparatives for the six months ended 30 September 2010 and the year ended 31 March 2011. Condensed consolidated interim financial statements have been prepared on an accruals basis of accounting using accounting policies consistent with IAS-34 'Interim Financial Reporting' as issued by the International Accounting Standards Board ('IASB').

NOTE A - BASIS OF PREPARATION (continued)

2. Significant accounting policies (continued)

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2011, which have been prepared in accordance with International Financial Reporting Standards ('IFRS).

In the opinion of management, all adjustments, which are of a normal recurring nature and necessary for a fair presentation, have been included. The Company has chosen to present the condensed consolidated financial position & condensed consolidated income statement, condensed consolidated comprehensive income statement, condensed consolidated statement of cash flows and condensed consolidated statement of changes in shareholders' equity along with selected explanatory notes. Accordingly, certain information and note disclosures normally included in annual financial statements prepared in accordance with IFRS have been condensed or omitted, although the Company believes that the disclosures made are adequate to make the information presented not misleading. These condensedconsolidated financial statements have been prepared using the same accounting policies that were applied in the preparation of the Company's annual financial statements for the year ended 31 March 2011.

The directors have had regard to the 12 month period from the date of approval of the interim financial statements and have reviewed the forecasted cash flows. The Company has been cash generative in the interim period and has sufficient resources to meet its ongoing liabilities as they fall due. Consequently the directors confirm the appropriateness of the going concern basis of preparation of these condensed consolidated financial statements.

NOTE B - STANDARDS AND INTERPRETATIONS NOT YET APPLIED

The following new Standards and Interpretations, which are yet to become mandatory, have not been applied in the Company's Financial Statements.

Based on the Company's current business model and accounting policies, management does not expect any material impact on the Company's financial statements when any of the other standards or interpretations becomes

The Company does not intend to apply any of these pronouncements early.

NOTE C - SEGMENT REPORTING

Segment information is presented in respect of the Group's business and geographical segments. The primary format, business segments, is based on the Group's management and internal reporting structure.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly interest-bearing loans, borrowings and expenses, and corporate assets and expenses.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period.

Business segments

The Company comprises the following main business segments:

Animation:

The production services rendered to production houses and training rendered for acquiring skills for production services in relation to the production of animated television series and movies.

Gaming:

The services provided for the contents in Console / Mobile / other platforms.

Distribution:

The revenue generated from the exploitation of the distribution rights of animated television series and movies acquired by the Company

The following is an analysis of the Company's revenue and results by operating segment for the periods under review:

NOTE D - CASH AND CASH EQUIVALENTS

NOTE E - FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS

Financial assets at fair value through profit or loss comprise of plain vanilla currency option contracts held by the Group as at 30 September 2011. The fair value of these derivative instruments is as follows:

NOTE F - INTANGIBLE ASSETS

NOTE G - ADVANCES PAID FOR DISTRIBUTION RIGHTS

Advances paid for distribution rights include amounts paid to the producers for acquisition of the distribution rights and amounts incurred on internally generated intellectual property rights pending for capitalisation. These advances are transferred to distribution rights on completion of the entire production activities and when the asset is ready for exploitation.

NOTE H - OTHER FINANCIAL ASSETS

NOTE I - INTEREST BEARING LOANS AND BORROWINGS

Interest bearing loans and borrowings comprise the following:

NOTE J - NOTE J - PROVISION FOR RETAKES

Retakes include creative changes to the final product delivered to the customer, performed on the specific request of the customer at the Group's own cost. Requests for retakes will be accepted from customers by the Group for a maximum period of three months from the final delivery and hence the provision is not discounted.

NOTE K - PERSONNEL COSTS

Details of personnel expenses included in cost of sales, administrative and distribution expenses are as follows:

NOTE L - NET FINANCING COSTS

NOTE M - EARNINGS PER SHARE ("EPS")

Profit attributable to ordinary shareholders

The Group does not have any dilutive instruments for the period ended 30 September 2011, 30 September 2010 and for the year ended 31 March, 2011 and as such Diluted EPS equals Basic EPS.

NOTE N - NON - CONTROLLING INTERESTS

NOTE O - EQUITY

a) Ordinary shares

DQ plc presently has only one class of ordinary shares. For all matters submitted to vote in the shareholders' meeting, every holder of ordinary shares, as reflected in the records of the Company on the date of the shareholders' meeting, has one vote in respect of each share held. All shares are equally eligible to receive dividends and the repayment of capital in the event of liquidation of the Company.

The Company has authorised share capital of 50,000,000 equity shares of 0.1 pence each.

Issue of ordinary shares

Share premium - The amount received by the company over and above the par value of shares issued is shown under this head.

The share premium reserve can be utilised by the Company for the declaration of bonus shares and for offsetting incremental costs directly attributable to the issues of new shares

 b) Reserves

Translation reserve - Assets, liabilities, income, expenses and cash flows are translated into USD (presentation currency) from Indian Rupees (functional currency of DQ India), Euros (functional currency of DQ Ireland) and Great British Pounds (functional currency of DQ plc). The exchange difference arising out of the period-end translation is debited or credited to foreign currency translation reserve.

The movements in this reserve are set out below:

Exchange differences relating to the translation of the net assets of the Group's foreign operations from their functional currencies to the Group's presentation currency (i.e. USD) are recognised directly in other comprehensive income and accumulated in the foreign currency translation reserve.

Accumulated earnings - Accumulated earnings include all current and prior period results as disclosed in the income statement. The movements in the accumulated earnings are set out below:

The accumulated earnings are in the nature of distributable reserves for the purposes of distribution of dividend.

Other Reserves - The Reverse Acquisition Reserve, Equity component of convertible instruments and Capital Redemption Reserve are non-distributable in nature.

NOTE P - CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

NOTE Q - RELATED PARTIES

Identity of related parties

DQ plc has a related party relationship with its directors, executive officers, subsidiaries and associate.

DQ plc does not have any ultimate controlling entity.

Related parties and their relationships

a) Subsidiaries

DQ Entertainment (Mauritius) Limited (with effect from 27 November 2007)

DQ Entertainment (International) Limited (with effect from 18 February 2008)

DQ Entertainment (Ireland) Limited (with effect from 12 November 2008)

b) Associate

Method Animation SAS (with effect from 28 March 2008)

RELATED PARTIES -

c) Key management personnel

Mr. Tapaas Chakravarti - Director

Mr. K. Balasubramanian - Director

Ms. Theresa Plummer - Director

Mr. Anthony BM (Tony) Good - Director

d) Relatives of key management personnel with whom DQ India had transactions during the period - Mrs. Rashmi Chakravarti (wife of Mr. Tapaas Chakravarti)

e) Relationship with Common Director ( Galaway Films Ltd)

Trading transactions

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below.

Revenue from production from related parties was at prices arising out of the Group's usual trade practices. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No expense has been recognised in the period for bad or doubtful debts in respect of the amounts owed by related parties.

Compensation of key management personnel

Directors of the company and their immediate relatives control 14.47 per cent of the voting shares of the company.

The remuneration of directors and other members of key management during the period were as follows:

Other related party transactions

Remuneration paid to relatives of key management personnel during the period was USD 33,000 (30 September 2010: USD26,000; 31 March 2011: USD 65,000) and the outstanding balance as at 30 September 2011 was USD 5,000 (30 September 2010: USD 5,000 and 31 March 2011: USD 5,000).