Preliminary Results

27th Jul 2009 07:00



For Immediate Release

27 July 2009

DQ ENTERTAINMENT PLC

('DQE' or the 'Group')

Preliminary Results for the Year Ended 31 March 2009

DQ Entertainment plc, a leading animation and game art content production company, today announces its preliminary results for the year ended 31 March 2009. 

Tapaas Chakravarti, Chairman & CEO of DQE, commented:

"Against a back drop of uncertainty within the media sector, our full year results once again show the quality of our products and the resilience of our business model. We have continued to see DQE move up the value chain from a service provider to that of a co-production partner and now to a developer of its own intellectual property. Our revenue base is becoming increasingly diverse and our brand and reputation more wide-spread.

Whilst we remain frugal in our expenditure, especially during these uncertain economic times, we believe our industry remains well placed to grow and therefore expect the current financial year to be another year of continued progress, largely driven by DQE's strong global market position."

For further information please contact:

DQ Entertainment Plc Tapaas Chakravarti, Chairman & CEO Niranjan Prasad, VP Corporate Affairs  Tel: +91 40 235 53726	Buchanan Communications Mark Edwards /Jeremy Garcia / Miranda Higham  Tel: +44 20 7466 5000
Religare Hichens, Harrison Plc Vineeta Manchanda  Tel : +44 20 7382 4662	Blomfield Corporate Finance Limited (a 100% subsidiary of Religare Hichens, Harrison Plc) Alan MacKenzie /Peter Trevelyan-Clark /  Derek Crowhurst  Tel : +44 20 7489 4500

  Preliminary Results for the Year Ended 31 March 2009

Chairman's Statement

Introduction

I am pleased to report our preliminary results for the year ended 31 March 2009. During the last twelve months we have been active across a number of key areas of our business. We have continued to expand our operating facilities both in India and in other territories whilst developing several iconic brands in partnership with global industry leading broadcasters, distributors and producers.

The Group remains focused in moving up the value chain and, as such, is strengthening its Global IP Division to build more global intellectual property rights ("IPRs") and the Licensing & Distribution Division to exploit various opportunities available, including merchandising & publishing.

Growth Strategy

DQE's management team remains committed to delivering long term growth. In order to maximise the current market opportunity, we have identified the following strategic goals to drive our business forward:

maximise the value of IPRs through collaborating with global partners via co-productions, joint ventures and strategic alliances;

develop IPRs controlled and owned by DQE and capitalise on additional revenue streams, including branding and merchandising;

explore new markets (including India) in order to increase the Group's client base and global footprint;

broaden DQE's service offering to include live action content by taking advantage of the Group's strong reputation for entertainment content production and distribution;

invest in and capitalise on the best local talent and encourage closer ties with the international entertainment community; and

ensure the Company has access to capital to maintain continued pace of growth for at least the next 3 years and to exploit relevant business opportunities as and when they are presented.

Financial Overview

Group turnover for the period increased by 34% to US$ 32.2m (2008: US $24.1m). During the year ended 31 March 2009, the Rupee had mixed fortunes against various currencies; depreciating considerably against the US Dollar, whilst not changing significantly against the Euro and appreciating against Sterling. As a consequence, although the growth rate of sales was higher at 54% in the local currency (i.e. Rupee), the growth of Group sales in the reporting currency (i.e. in US Dollars) was 34%. The revenue split between the production and distribution was 95% (2008: 96%) and 5% (2008: 4%) respectively, reinforcing the Group's focus on strengthening its investments in strategic IPRs.

EBITDA has grown to US $13.9 million (being 'operating result before financing costs' of US$ 7.8 million and 'depreciation/amortization costs' of US$ 6.1 million) resulting in an increase of 92% and reflecting the growth in real terms. The profit before tax for the year was at US$ 5.1 million which included a non cash loss on account of foreign exchange fluctuation of US$ 1.2 million as against an adjusted profit before tax of US$ 3.0 million (arrived as profit before tax of US$ 7.4 million less the non-recurring gain of US$ 4.4 million) signifying a growth of 71%. 

The "net financing costs" of US$ 2.5 million (US$ 0.7 million) consists of a non-cash foreign exchange expense of US$ 1.2 million. This has arisen due to the restatement of a US Dollar Term Loan to a subsidiary within the Group, whose functional currency is Indian Rupees. In compliance with International Accounting Standards, the outstanding balance of this loan has been restated at the US Dollar / Indian Rupee exchange rate, at the reporting date, and the resulting unrealised loss been recognised and subsequently reported under the reporting currency. Cash and cash equivalents stood at US$ 4.6 million after the investment in the expansion of facilities and an adjustment of the foreign exchange loss of US$ 4.2 million.

Investment in the expansion of facilities has been largely completed while investment in IPRs remains ongoing. The benefits of these investments will be seen over the coming years through the delivery of a number of exciting projects that the Board believes will help the Group to meet challenges in the market. 

DQE continues to enjoy an excellent relationship with its customers and broadcasters. Recent partnerships and deals continue to reinforce our position as a trust player in the industry. DQE's market position continues to remain positive and its order book position stands currently a US$ 92.5 million to be delivered over the next two years.

Operations Review

Global IP Division

In line with DQE's vision to bring to life classical and iconic brands and partner with leading broadcasters in the entertainment sphere, the Global IP Division has endeavored to create its own 100% home grown global productions. 

International Content:

The Jungle Book 

On 5 May 2009, DQE announced it had signed a co-production deal with Paris-based entertainment group MoonScoop for a new original 3D animated TV series of The Jungle Book.

The 3D CGI project comprises 52 x 11-minute animated episodes of animated series and a 60-minute TV feature in conjunction with ZDF Group (Germany), TF1 Group (France), MoonScoop (France), BBC (UK), Disney (Asia), NBC Universal and ABC (Australia). The project has a Euro 9.2 million production budget.

Adapted from the original writings of Rudyard Kipling, this global co-production is led by DQE, providing the Group with majority global rights including TV on all platforms of distribution, home video, video-on-demand, publishing, merchandising and all forms of licensing, including apparel, toys, furnishings, stationery, back-to-school products and many more.

Lassie

On 25 June 2009, DQE in association with Classic Media announced it had signed a co-development agreement with M6 (France) and ZDF Group (Germany) for an animated series featuring Lassie. Lassie, the Collie dog that made its debut on the small screen in 1954, will appear once again on TV in 26 x 22 minute episodes for a 3D CGI series.

The original Lassie TV series ran for 19 seasons and aired in more than 100 countries, making Lassie one of the most enduring figures in entertainment history. 

Indian Content

DQE's Global IP Division team secured contracts for the production of three animated TV features of Indian content with Turner Entertainment Networks Asia ("TENA") (Cartoon Network) (Hong Kong), which will premiere on TENA's leading children's channels in India in 2009. 

Having successfully completed two of three television features, including Balkand and Ravan, the division is now focusing on delivering additional TV features based on the detective stories written by the famous Nobel Prize and Oscar winner laureate, Satyajit Ray.

As previously announced Omkar, a 70-minute 2D animated TV feature will tell the story of Shiva and his greatness narrated by Parvati - Shiva's wife, Nandi, Narad Muni and few others. This series is currently in production and will be broadcast in 2009.

Discussions with Disney are in an advanced stage for Mysteries of Feluda, a TV series based on Satyajit Ray's famous detective stories that have commanded very strong interest. DQE is confident on concluding distribution agreements with a number of leading broadcasters from Asia for Feluda.

After successful agreements with TENA and others, the Global IP Division continues to remain upbeat and is in talks with various other broadcasters to finalise similar deals.

Licensing and Distribution:

DQE's Licensing and Distribution Division (L&D) has successfully closed strategically important deals with leading broadcasters including TENA, Nickelodeon and Disney for its IPRs, signifying a strong start as a revenue generating division of the Group.

Highlights of the agreements signed to date include:

The 100% home grown global production comprises: 52 x 11minute episode animated series and a 60-minute TV feature based on The Jungle Book; partners include: ZDF Group (Germany), TF1 Group (France), NBC Universal (UK), Disney (Asia), ABC (Australia) and BBC (UK).

Little Nick, co-produced by DQE, has been acquired by Walt Disney Television (India). 

An exclusive broadcasting deal with TENA to show the 3D animated series Iron Man across Asia. The series will be broadcast on TENA's leading children's channel, Cartoon Network, in 2010 across the entire South Asia and South East Asia region. 

Three content deals with TENA on the exciting Indian mythological TV features, namely Balkand, Ravan and Omkar, exclusively produced by DQE. 

The non-exclusive distribution rights to season one of the animated children's TV series "Todd World" (26 x 22-minute episodes) were sold to JIM JAM TV via Taffy Entertainment.

Twisted Whiskers, a CGI animated TV series comprising 52 x 11-minute episodes, has been acquired by Disney (Singapore) & Disney Channel (India) for South East Asian countries and the Indian Sub-Continent. 

Casper's Scare School, an animated TV series has been acquired by Nickelodeon (Viacom 18). 

Ratman, an animated TV series in traditional 2D animation comprising 52 x 11-minute episodes and Sandra, an animated TV series in Digital animation format comprising 52 x 11-minute episodes, have been acquired by Disney Channel (India) for the Indian Sub-Continent, including Bangladesh, Bhutan, India, Nepal, Maldives, Pakistan, and Sri Lanka.

Merchandising

Our strategy within the L&D division is to focus, develop and potentially exploit the circa US $ 187 billion merchandising market for our iconic brands such as the Jungle Book and many other IPs co-owned by DQE in its territories. The merchandising market world-wide is growing at a steady rate of 14-15% p.a. and positioning DQE to take advantage of its co-ownership of major iconic brands demonstrates the flexibility of our business model. We believe the market opportunities for merchandising should yield good results over the coming years.

The children's entertainment market is fast gaining pace in India, and apart from television and cinema, 'child centric' broadcasters are focusing their energy towards building a strong foothold in the licensing and merchandising space. The emergence of organized retail in India has set this process in motion and is laying the foundation of a new era for kid's entertainers.

Our L&D Division is upbeat on capitalizing on India & Asia's huge potential market for merchandising. Along with manufacturers of branded apparel including shoes and toys, we will start to exploit the financial value of such rights, use the character designs and artwork for merchandise, and thus address and further enhance stakeholder value. Currently, DQE is distributing product through Moser Baer, the largest distributor in the Indian market, with over 10,000 direct and 70,000 indirect outlets.

Training and Development

DQE has been conducting in-house training in the animation, gaming and production management arena since its inception. Our objective is to impart creative skill sets to our associates in order to execute animation and gaming production at international quality standards.

The ever-increasing demand for high quality animation and gaming professionals has led to the establishment of the DQ School of Visual Arts with the motto "Inspiring Creativity…Creating Careers". Cutting edge curriculum and teaching methodologies, derived from the experience of executing international productions, run in tandem with evolving industry requirements.

This commitment to training has distinguished DQE from its competitors and has helped it to overcome skill shortage bottlenecks experienced by its peers. 

Production Facilities

DQE currently operates 11 production facilities in India (eight in Hyderabad and one each in Mumbai, Kolkata and Chennai). These centers have been established in line with DQE's philosophy of targeting local talent and supporting local communities. Our aim is to foster local partnerships that benefit the wider community in the longer term.

In addition, the Group has a production facility in Manila, Philippines, as well as sales offices in India, Los Angeles, Paris, Tokyo and Ireland.

Industry Dynamics and Trends

Although the global media sector is expected to be impacted by macroeconomic conditions over the next few years, we believe the entertainment sub-sector, with its ability both to inform and entertain the masses, remains buoyant. The moving image has historically performed well in economic downturns.

With technology driving entertainment, innovative 3D animation is fast becoming an industry obligation, not an option. 

In these difficult times, the cinema is likely to need a 'must-have' factor that will convince audiences to continue to visit. The answer to that need might well be 3D. In 2009, the 3D movie may have its first billion dollar year at the box office. A growing number of movie studios, in addition to DreamWorks, are likely to create all future outputs in 3D. 3D technology is expected to be used in a growing range of genres.

Over the last few years the Indian animation industry has emerged as a significant player in the global animation space. India presents an attractive destination for the animation industry for the following reasons:

large media and entertainment industry;

cost arbitrage; 

strong and established IT-enabled services infrastructure;

strong presence of English speaking manpower;

presence of education infrastructure for developing talent; and

growing domestic demand.

Board changes

On 21 May 2009, DQE announced the sad news that Rusi Brij, one of our non executive directors unexpectedly passed away. Rusi's untimely demise is a tragic loss for his family, friends and colleagues at DQE. His support and monumental courage has touched all our lives. We will always remember him as a symbol of strength and inspiration.

As a consequence, DQE appointed Sanjay Saxena as a Non-Executive Director with effect from 8 June 2009. Mr Saxena, comes on board with over 20 years enormous experience in international banking, asset management, private equity, insurance and wealth management and corporate governance while working with large global corporations - Standard Chartered Bank, American Express Bank, GE Capital, Prudential Corporation, Bharati AXA Life Insurance Company Limited, and AXA Investment Managers Private Limited, Singapre. 

At American Express Bank, as Director and Head Corporate Banking was responsible for business development and strategic planning for its various product offerings. His roles with other organizations include Regional Head of Business Development at Prudential Asia, Vice President & Business Development Head of GE Capital India Ltd. During his association with Prudential Corporation Asia, the assets under management grew from $ 2bn to over 15bn.

Outlook

Despite challenging market conditions, we remain encouraged by the demand for our expertise and our impressive pipeline currently in development. We continue to be associated with some of the most iconic brands and global players in the market in addition to developing our own IPRs.

The outlook for the current financial year remains positive, driven largely by our strong order book visibility (standing at US$ 92.5 million) underpinned by DQE's market leadership position. The Group also believes it will see greater revenue contribution from its Global IP Division and L & D Division, due to the development of our own IPR and through various licensing and distribution agreements.

We therefore believe 2009/10 will be another year of continued growth.

  Statements of Income

For the year ended 31 March 2009

		2008-09			2007-08
	Note	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Revenue	C	32,248	841		24,133	429
Cost of sales		(20,858)	-		(17,651)	-
Gross profit		11,390	841		6,482	429
Other income	D	1,467	-		365	-
Distribution expenses		(598)	-		(219)	(8)
Administrative expenses		(4,311)	(744)		(2,922)	(410)
Other operating expenses		(197)	(52)		(26)	(2)
		(3,639)	(796)		(2,802)	(420)
Operating result before financing costs		7,751	45		3,680	9
Financial income		379	1,395		428	526
Financial expenses		(2,887)	(5)		(1,110)	(19,418)
Net financing costs	E	(2,508)	1,390		(682)	(18,892)
Share of loss of associate	K	(94)	-		-	-
Profit on extinguishment of liability	AC	-	-		4,409	-
Profit/(loss) before tax		5,149	1,435		7,407	(18,883)
Income tax expense	F	(751)	-		(222)	-
Profit/(loss) after tax		4,398	1,435		7,185	(18,883)
Basic and diluted earnings per share for profit attributable to the equity holders of the company during the year (expressed as cents per share)	S
Basic earnings per share		12¢			60¢
Diluted earnings per share		12¢			60¢

  

Balance Sheets

As at 31 March 2009

		2008-09			2007-08
	Note	Group USD'000	Company USD'000		Group USD'000	Company USD'000
ASSETS
Non current assets
Property, plant and equipment	G	9,008	-		11,543	-
Goodwill	H	10,818	-		10,818	-
Intangible assets	I	5,972	-		7,127	-
Advances paid for distribution rights	J	11,625	-		6,520	-
Investment in associate	K	2,673	2,767		3,884	3,884
Investment in subsidiary		-	4		-	5
Loan to subsidiary	L	-	13,032		-	16,937
Deposits	N	579	-		518	-
Total non current assets		40,675	15,803		40,410	20,826
Current assets
Trade and other receivables	O	12,972	3,093		12,508	3,629
Financial assets at fair value through profit or loss	P	6	-		177	-
Cash and cash equivalents	Q	5,887	4,504		17,510	7,057
Total current assets		18,865	7,597		30,195	10,686
Total assets		59,540	23,400		70,605	31,512

  

Balance Sheets

As at 31 March 2009 - continued

		2008-09			2007-08
	Note	Group USD'000	Company USD'000		Group USD'000	Company USD'000
EQUITY AND LIABILITIES
Equity	R
Issued capital		73	73		73	73
Share premium		49,017	49,017		49,017	49,017
Reverse acquisition reserve		1,218	-		1,218	-
Equity component of convertible instruments		1,158	-		1,158	-
Foreign currency translation reserve		(13,290)	(9,469)		(1,660)	(749)
Retained earnings		8,336	(17,448)		3,938	(18,883)
Total stockholders' equity		46,512	22,173		53,744	29,458
Non current liabilities
Deferred tax liability	M	239	-		-	-
Interest-bearing loans and borrowings	V	786	-		5,450	-
Provisions	W	1,012	-		1,289	-
Total non current liabilities		2,037	-		6,739	-
Current liabilities
Trade and other payables	T	3,978	1,227		4,706	2,054
Bank overdraft	U	1,258	-		730	-
Interest-bearing loans and borrowings	V	5,053	-		4,073	-
Income tax payable		183	-		114	-
Provisions	W	519	-		499	-
Total current liabilities		10,991	1,227		10,122	2,054
Total liabilities		13,028	1,227		16,861	2,054
Total stockholders' equity and liabilities		59,540	23,400		70,605	31,512

These financial statements were approved by the Board of Directors and authorised for use on 25 July 2009.

Signed on behalf of the Board of Directors by:

Director Director

Statements of Changes in Equity

GROUP	Equity shares - No of Shares	Equity Shares - Amount USD'000	Share premium USD'000	Reverse acquisition reserve USD'000	Equity component of convertible instruments USD'000	Foreign currency translation reserve USD'000	Stock options outstanding USD'000	Statutory reserve USD'000	Retained earnings USD'000	Total USD'000
Balance as at 31 March 2007	777,095	178	1,511	-	1,060	36	793	932	(4,080)	430
Changes in equity for the year ended 31 March 2008
Profit for the year	-	-	-	-	-	-	-	-	7,185	7,185
Changes in equity due to reverse acquisition	(777,095)	(178)	(293)	-	-	-	-	(932)	932	(471)
Transfer to Reverse acquisition reserve	-	-	(1,218)	1,218	-	-	-	-	-	-
Issue of share capital	35,966,047	73	54,449	-	-	-	-	-	-	54,522
Share issue expenses	-	-	(5,432)	-	-	-	-	-	-	(5,432)
Issue of convertible preference shares	-	-	-	-	98	-	-	-	-	98
Stock options written back	-	-	-	-	-	-	(793)	-	-	(793)
Foreign currency translation	-	-	-	-	-	(1,696)	-	-	-	(1,696)
Effect of correction of errors	-	-	-	-	-	-	-	-	(99)	(99)
Balance as at 31 March 2008	35,966,047	73	49,017	1,218	1,158	(1,660)	-	-	3,938	53,744
Changes in equity for the year ended 31 March 2009
Profit for the year	-	-	-	-	-	-	-	-	4,398	4,398
Foreign currency translation	-	-	-	-	-	(11,630)	-	-	-	(11,630)
Balance as at 31 March 2009	35,966,047	73	49,017	1,218	1,158	(13,290)	-	-	8,336	46,512

  Statements of Changes in Equity - continued

COMPANY	Equity shares - No of Shares	Equity Shares - Amount USD'000	Share premium USD'000	Foreign currency translation reserve   USD'000	Retained earnings USD'000	Total   USD'000
Balance as at 1 April 2007	-	-	-	-	-	-
Changes in equity for the year ended 31 March 2008
Loss for the year	-	-	-	-	(18,883)	(18,883)
Issue of share capital	35,966,047	73	54,449	-	-	54,522
Share issue expenses	-	-	(5,432)	-	-	(5,432)
Foreign currency translation	-	-	-	(749)	-	(749)
Balance as at 31 March 2008	35,966,047	73	49,017	(749)	(18,883)	29,458
Changes in equity for the year ended 31 March 2009
Profit for the year	-	-	-	-	1,435	1,435
Foreign currency translation	-	-	-	(8,720)	-	(8,720)
Balance as at 31 March 2009	35,966,047	73	49,017	(9,469)	(17,448)	22,173

Statements of Cash Flows

For the year ended 31 March 2009

		2008-09			2007-08
	Note	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Cash flows from operating activities
Profit/(loss) for the year before tax		5,149	1,435		7,407	(18,883)
Adjustments for:
Depreciation and amortization		6,170	-		3,555	-
Interest income	E	(379)	(1,395)		(428)	(526)
Interest expense	E	2,887	5		1,205	2
Provisions for employee benefits	X	71	-		584	-
Loss/(gain) on revaluation of fair value through profit or loss on financial assets		145	-		(177)	-
Loss on valuation of financial assets at fair value through profit or loss	E	-	-		-	19,416
Provision for retakes	Y	138	-		229	-
Employee stock options waived	X	-	-		(793)	-
Profit on extinguishment of liability	AC	-	-		(4,409)	-
Gain on foreign exchange fluctuations		(133)	(31)		(239)	(868)
Other provisions		-	-		(13)	-
Share of loss of associate		94	-
Gain on sale of property, plant and equipment		(30)	-		-	-
Operating cash flows before changes in working capital		14,112	14		6,921	(859)
Increase in trade and other receivables		(8,067)	(521)		(6,678)	(3,629)
Employee benefits paid		(28)	-		(39)	-
(Decrease)/increase in trade and other payables		(4,048)	(272)		2,901	2,054
		1,969	(779)		3,105	(2,434)
Income taxes paid		(374)	-		(94)	-
Net cash from/(used in) operating activities		1,595	(779)		3,011	(2,434)

  Statements of Cash Flows

For the year ended 31 March 2009 - continued

		2008-09			2007-08
	Note	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Cash flows from investing activities
Acquisition of property, plant and equipment		(3,951)	-		(8,600)	-
Acquisition and advances paid for distribution rights		(1,473)	-		(5,901)	-
Proceeds from sale of property, plant and equipment		49	-		-	-
Investment in associate	K	-	-		(3,884)	(3,884)
Investment in subsidiary		-	-		-	(5)
Goodwill	H	-	-		(10,818)	-
Deposits	N	(202)	-		(279)	-
Finance income		442	243		346	204
Net cash (used in)/from investing activities		(5,135)	243		(29,136)	(3,685)
Cash flows from financing activities
Proceeds from issue of share capital		-	-		54,522	54,522
Payments to equity shareholders on capital restructuring		-	-		(471)	-
(Repayments)/proceeds from term loans		(3,176)	-		5,338	-
Issue of term loan	L	-	-		-	(35,912)
Payment to preference shareholders		-	-		(9,692)	-
Proceeds from issue of preference shares		-	-		265	-
Share issue expenses		-	-		(5,432)	(5,432)
Interest paid		(1,202)	(5)		(1,127)	(2)
Net cash (used in)/from financing activities		(4,378)	(5)		43,403	13,176
Net (decrease) / increase in cash and cash equivalents		(7,918)	(541)		17,278	7,057
Cash and cash equivalents at beginning of year	Q	16,780	7,057		(470)	-
Loss on foreign exchange fluctuations		(4,233)	(2,012)		(28)	-

 

Notes to Financial Statements

NOTE A - BASIS OF PREPARATION

1. General Information

DQ Entertainment Plc, (the "Company", or "DQplc") 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 consolidated financial statements for DQ Entertainment (the "Group") and financial statements for the Company have been prepared for the year ended 31 March 2009.

As on 31 March 2009 the following companies formed part of the Group:

Company	Immediate Parent	Country of Incorporation	% of Interest
Subsidiaries
DQ Entertainment (Mauritius) Limited (DQM)	DQ Entertainment Plc	Mauritius	100
DQ Entertainment (International) Private Limited (DQ India) was formerly known as "Animation and Multimedia Private Limited"	DQ Entertainment (Mauritius) Limited	India	100
DQ Entertainment (Ireland) Limited (DQ Ireland)	DQ Entertainment (International) Private Limited	Ireland	100
Associate
Method Animation SAS		France	20

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, 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 currency of the respective Group companies are: 

DQplc  Great British Pound (GBP)

DQM US Dollar (USD)

DQ India Indian Rupee (INR)

DQ Ireland Euro (EURO)

Method Animation SAS Euro (EURO)

  

2. Significant accounting policies

 

(a) Adoption of new and revised standards 

(i) Standards and interpretations effective in the current period

The company has adopted all of the new and revised Standards and Interpretations issued by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee ("IFRIC") of the IASB that are relevant to its operations and effective for accounting periods beginning on 1 April 2008. The adoption of these new and revised Standards and Interpretations has not resulted in changes to the company's accounting policies. 

Two Interpretations issued by the International Financial Reporting Interpretations Committee are effective for the current period.

The principal effects of these changes are as follows:

IFRIC 12: Service Concession Arrangements

Requires that for arrangements falling within the scope of the interpretation (essentially those where the infrastructure assets are not controlled by the operator), the infrastructure assets shall not be recognized as property, plant and equipment of the operator. Rather, depending on the terms of the arrangement, the operator shall recognize a financial asset or an intangible asset or both a financial asset and an intangible asset.

IFRIC 14: IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction

Requires that an economic benefit, in the form of a refund or reduction in future contributions, is available if the entity has an unconditional right to realize the benefit at some point during the life of the plan or when the plan is settled, even if the benefit is not realizable immediately at the end of the reporting period. The economic benefit available in the form of refunds or reductions should be measured, in accordance with the terms of the plan and statutory requirements, at the maximum amount available.

The adoption of these Interpretations has not led to any changes in the Group's accounting policies.

  

(ii) Standards and interpretations in issue not yet adopted

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

Standard or Interpretation		Effective for reporting periods starting on or after
IAS 1	Presentation of Financial Statements - Comprehensive revision including requiring a statement of comprehensive income	1st January 2009
IAS 1	Presentation of Financial Statements - Amendments relating to disclosure of puttable instruments and obligations arising on liquidation	1st January 2009
IAS 1	Presentation of Financial Statements - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 16	Property, Plant and Equipment - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 19	Employee Benefits - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 20	Government Grants and Disclosure of Government Assistance - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 23	Borrowing Costs - Comprehensive revision to prohibit immediate expensing	1st January 2009
IAS 23	Borrowing Costs - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 27	Consolidated and Separate Financial Statements - Consequential amendments arising from amendments to IFRS 3	1st July 2009
IAS 27	Consolidated and Separate Financial Statements - Amendment relating to cost of an investment on first-time adoption	1st January 2009
IAS 27	Consolidated and Separate Financial Statements - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 28	Investments in Associates - Consequential amendments arising from amendments to IFRS 3	1st July 2009
IAS 28	Investments in Associates - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 29	Financial Reporting in Hyperinflationary Economies - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 31	Interests in Joint Ventures - Consequential amendments arising from amendments to IFRS 3	1st July 2009
IAS 31	Interests in Joint Ventures - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 32	Financial Instruments: Presentation - Amendments relating to puttable instruments and obligations arising on liquidation	1st January 2009
IAS 36	Impairment of Assets - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 38	Intangible Assets - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 39	Financial Instruments: Recognition and Measurement - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009

  (ii) Standards and interpretations in issue not yet adopted - continued

IAS 39	Financial Instruments: Recognition and Measurement - Reclassification of Financial assets	1st July 2008
IAS 40	Investment Property - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IAS 41	Agriculture - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st January 2009
IFRS 1	First-time Adoption of International Financial Reporting Standards - Amendment relating to cost of an investment on first-time adoption	1st January 2009
IFRS 2	Share-Based Payment - Amendment relating to vesting conditions and cancellations	1st January 2009
IFRS 3	Business Combinations - Comprehensive revision on applying the acquisition method	1st July 2009
IFRS 5	Non-current Assets Held for Sale and Discontinued Operations - Amendments resulting from May 2008 Annual Improvements to IFRSs	1st July 2009
IFRS 7	Financial instruments - Disclosures - Reclassification of Financial Assets	1st July 2008
IFRS 7	Financial instruments - Disclosures - Amendments enhancing disclosures about fair value and liquidity risk	1st January 2009
IFRS 8	Operating segments	1st January 2009
IFRIC 9	Reassessment of Embedded derivatives	1st July 2009
IFRIC 13	Customer Loyalty Programme	1st July 2008
IFRIC 15	Agreements for the construction of real estate	1st January 2009
IFRIC 16	Hedges of a net investment in a foreign operation	1st October 2008
IFRIC 17	Distributions of non-cash assets to owners	1st July 2009
IFRIC 18	Transfer of assets from customers	1st July 2009

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 effective.

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

(b) Basis of preparation and statement of compliance with International Financial Reporting Standards

The consolidated financial statements have been prepared under applicable International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board (IASB).

The historical financial information incorporates the financial statements of the Group made up to 31 March each year. 

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Chairman's Statement. In addition, note Z to the financial statements includes the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments and hedging activities and its exposures to credit and liquidity risk. The Group has considerable financial resources together with long term contracts with a number of customers and suppliers across different geographic areas and industries. As a consequence, the management believes that the Group is well placed to manage its business risks successfully despite current uncertain economic outlook. After making enquiries, the management has a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

(c) The basis of presentation and accounting policies used in preparing the historical financial information 

These accounting policies have been consistently applied to the results, gains and losses, assets, liabilities and cash flows of all entities included in the consolidated financial statements for all the periods presented unless otherwise stated. The financial statements are presented in United States Dollars (USD), rounded to the nearest thousand unless otherwise indicated. They are prepared on the historical cost basis except for financial instruments, which are carried at their fair values. 

The historical financial information has been prepared on a historical cost basis. In the process of applying the Group's accounting policies, management is required to make judgements, estimates and assumptions that may affect the financial statements. Management believes that the judgements made in the preparation of the historical financial information are reasonable. However, actual outcomes may differ from those anticipated.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. Judgements made by management in the application of IFRSs that have significant effect on the historical financial information and estimates with a significant risk of material adjustment in the next year are discussed in note AF.

(d) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March each year. In respect of associate, the consolidated financial statements incorporate the last audited financial statements not exceeding three months from year ending 31 March 2009.

Intra group balances, transactions and any resulting unrealised gains arising from intragroup transactions are eliminated on consolidation. Unrealised losses resulting from intragroup transactions are also eliminated unless cost cannot be recovered. Amounts reported in the financial statements of the subsidiaries have been adjusted where necessary to ensure consistency with the accounting policies adopted by the Group.

(e) Business combination through reverse acquisition

The acquisition of an existing entity, which will have the power to govern the financial and operating policies of the Group so as to obtain benefits from its activities, will be accounted as a business combination through reverse acquisition. 

In a reverse acquisition, the cost of business combination may be deemed to have been incurred by the legal subsidiary (i.e acquirer for accounting purposes). If the published price of equity instruments of the legal subsidiary is used to determine the cost of combination, a calculation could be made to determine the number of equity instruments the legal subsidiary would have had to issue to provide the same percentage ownership interest of the combined entity to the owners of the legal parent as they have in the combined entity as a result of the reverse acquisition. The fair value of the number of equity instruments so calculated could be used as the cost of combination.

In the event the fair value of equity instruments of the legal subsidiary is not clearly evident, the total fair value of all the issued equity instruments of the legal parent before the business combination could be used as a basis for arriving at the cost of combination.

Business combination through reverse acquisition - continued

Reverse acquisition accounting determines the allocation of the cost of the business combination as at the acquisition date and does not apply to transactions after the combination.

In the event of acquisition of subsidiaries and businesses otherwise than through reverse acquisition, the acquisition will be accounted using the purchase method as set out in IFRS 3. 

The interest of minority shareholders in the acquiree is initially measured at the minority's proportion of the net fair value of the assets, liabilities and contingent liabilities recognised.

(f) Goodwill

(i) Recognition and initial measurement

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of the business combination over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group's interest in the net fair value of the acquiree's identifiable assets, liabilities and contingent liabilities exceed the cost of the business combination, the excess is recognised immediately in profit or loss.

(ii) Subsequent measurement

Goodwill is not subject to amortisation but is tested for impairment annually and is measured at cost less accumulated impairment losses, if any. 

(g) Investment in associate

An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements using the equity method of accounting, except when the investment is classified as held for sale, in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations. Under the equity method, investments in associates are carried in the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group's share of the net assets of the associate, less any impairment in the value of individual investments. Losses of an associate in excess of the Group's interest in that associate (which includes any long-term interests that, in substance, form part of the Group's net investment in the associate) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate. Any excess of the cost of acquisition over the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised as goodwill. The goodwill is included within the carrying amount of the investment and is assessed for impairment as part of that investment. Any excess of the Group's share of the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is recognised immediately in profit or loss.

Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate.

  (h) Foreign currency

(i) Translation to presentation currency

The functional currency of the respective Group companies is: 

DQ plc  Great British Pound (GBP)

DQM US Dollar (USD)

DQ India Indian Rupee (INR)

DQ Ireland Euro (EURO)

Method Animation SAS Euro (EURO)

At the reporting date the assets and liabilities of the Group are translated into the presentation currency, which is in US Dollars (USD) at the rate of exchange ruling at the balance sheet date and the income statement is translated at the weighted average exchange rate for the year.

Although the functional currency of the ultimate holding company DQ plc is GBP, the presentation currency of the Group is not GBP as majority of the operations of the group are transacted in currencies other than GBP.

The USD:INR exchange rates used to translate the INR financial information into the presentation currency of USD were as follows:

2009 2008

Closing rate at 31 March 52.1743  39.9451

Average rate for the year ended 31 March 46.4682 40.2856

The GBP:USD exchange rates used to translate the GBP financial information into the presentation currency of USD were as follows:

2009 2008

Closing rate at 31 March 1.42140 1.99510

Average rate for the year ended 31 March 1.72166 2.00758

The EURO:USD exchange rates used to translate the EURO financial information into the presentation currency of USD were as follows:

2009 

Closing rate at 31 March 1.3208

Average rate for the period from 12 November 2008 to 31 March 2009 1.3112

(ii) Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to functional currency at foreign exchange rates ruling at the dates the fair value was determined.

(iii) Financial statements of foreign operations

The assets and liabilities of the Group's subsidiaries and other entities controlled by the Group based outside the Isle of Man ("foreign operations") are translated into USD at the exchange rates prevailing at the balance sheet date. The income and expenses of foreign operations are translated into USD at average exchange rates prevailing during the year. Exchange differences arising on translation of foreign operations are recognised directly in equity as foreign currency translation reserve.

(i) Derivative financial instruments 

The Group uses derivative financial instruments to manage its exposure to foreign exchange risks arising from operational activities. The Group does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognised at fair value. The subsequent gain or loss on remeasurement to fair value is recognised immediately in profit or loss. 

The fair value of forward exchange contracts is their quoted market price at the balance sheet date, being the present value of the quoted forward price.

(j) Property, plant and equipment

(i) Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. 

Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised within "other gains and losses" for gains and "other operating expenses" for losses in the statement of income.

(ii) Leased assets

Leases in terms of which the Group assumes substantially all the risks and rewards of ownership are classified as finance leases. The assets acquired by way of finance lease are stated at an amount equal to the lower of its fair value and the present value of the minimum lease payments at inception of the lease, less accumulated depreciation. Lease payments are accounted for as described in accounting policy 2 (w).

 

(iii) Subsequent costs

The Group recognises in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Group and the cost of the item can be measured reliably. Replaced parts are de-recognised with any profit/(loss) on disposal recognised immediately in the income statement. All other costs are recognised in the income statement as an expense as incurred.

(iv) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction and production of qualifying assets are capitalised as part of the costs of those assets. Qualifying assets are those that necessarily take a substantial period of time to prepare for their intended use. Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their use. All other borrowing costs are expensed in the period in which they are incurred.

 

Property, plant and equipment - continued

(v) Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated. The estimated useful lives are as follows:

computer hardware and software 3 - 6 years

equipment including office equipment 6 - 10 years

fixtures and fittings 10 years

vehicles 4 years

Lease acquisition cost and leasehold improvements are depreciated over the primary period of the lease or estimated useful lives of the assets whichever is less. Assets under construction are not depreciated, as they are not ready for use. 

The depreciation methods, useful lives and residual value, are reassessed annually.

(k) Intangible assets

(i) Distribution rights

Distribution rights that are acquired by the Group are stated at cost less accumulated amortisation and impairment losses. 

(ii) Advance paid for distribution rights

Advances paid for distribution rights include amounts paid to the producers for acquisition of the distribution rights. These advances are transferred to distribution rights on completion of the entire production activities and when the asset is ready for exploitation. No amortisation is charged on these advances until they are transferred to the distribution rights. Up to that point, they are assessed annually for impairment.

(iii) Projects under development

Direct or indirect expenses incurred on the Development of Projects in order to create Intellectual Property or Content, which are exploited on any form of media are capitalized as an intangible asset under development in accordance with IAS 38 (intangible assets). In the event, the project is not scheduled for production within three years, or project is abandoned, the carrying value of the Development Rights would be expensed in the year in which such project is discontinued or abandoned.

(iv) Subsequent expenditure

Subsequent expenditure on capitalised intangible assets is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure is expensed as incurred.

(v) Amortisation

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets. Intangible assets are amortised from the date they are available for use. The estimated useful lives are the term of the licensing agreement or 10 years which ever is less except in the case of theatrical release of live action movies where the rights are amortised over the estimated useful lives of these intangible assets. The estimated life of these assets is 5 years or the period of license whichever is less.

Useful lives for individual assets are determined based on the nature of the asset, its expected use, the length of the legal agreement or patent and the period over which the asset is expected to generate economic benefits for the Group ("economic life").

 (l) Trade and other receivables

Trade receivables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method. They are as reduced by appropriate allowances for estimated irrecoverable amounts. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original term of the receivable. The amount of the provision is the difference between the carrying amount and the recoverable amount and this difference is recognised in the income statement.

(m) Inventories

Inventories are stated at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The cost of inventories is based on the first-in first-out principle and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

(n) Cash and cash equivalents

Cash and cash equivalents comprise cash balances, cash in transit and call deposits and are carried in the balance sheet at cost. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

(o) Impairment

The carrying amounts of the Group's assets, other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Impairment losses recognised in respect of cash-generating units are allocated to reduce the carrying amount of assets in the unit on a pro rata basis.

(i) Calculation of recoverable amount

The recoverable amount of the Group's receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate (i.e. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted. The recoverable amount of other assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

(ii) Reversals of impairment

An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. In respect of other assets impairment losses are reversed when there is an indication that the impairment loss may no longer exist and if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

 (p) Share capital

(i) Ordinary shares 

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.

(ii) Dividends

Dividends are recognised as a liability in the period in which they are declared.

(q) Compound financial instruments

Compound financial instruments issued by the Group comprise of convertible debenture and convertible preference shares that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value. The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts.

Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The equity component of a compound financial instrument is not remeasured subsequent to initial recognition. Interest, dividends, losses and gains relating to the financial liability are recognised in profit or loss. Distributions to the equity holders are recognised against equity, net of any tax benefit.

(r) Interest-bearing loans and borrowings

Interest-bearing loans and borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.

(s) Employee benefits

(i) Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred.

(ii) Defined benefit plans

The Group's net obligation in respect of gratuity, which include amounts payable to employees on termination, resignation or retirement on completion of a minimum service period with the Group, and compensated absences, which include amounts payable to employees on utilisation of accumulated leave balances during the service period or encashment at the time of termination, resignation or retirement, is calculated estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted. The discount rate is the yield at the balance sheet date on government bonds that have maturity dates approximating to the terms of the Group's obligations. The calculation is performed by a qualified actuary using the projected unit credit method. Expected cost of compensated absences by way of sick leave is recognised in the income statement.

When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees is recognised as an expense in the income statement on a straight-line basis over the average period until the benefits become vested. To the extent that the benefits vest immediately, the expense is recognised immediately in the income statement.

Defined benefit plans - continued

All actuarial gains and losses as at 1 April 2004, the date of transition to IFRSs, were recognised. In respect of actuarial gains and losses that arise subsequent to 1 April 2004 in calculating the Group's obligation in respect of a plan, to the extent that any cumulative unrecognised actuarial gain or loss exceeds 10 per cent of the greater of the present value of the defined benefit obligation and the fair value of plan assets, that portion is recognised in the income statement over the expected average remaining working lives of the employees participating in the plan. Otherwise, the actuarial gain or loss is not recognised.

(iii) Share-based payment transactions

The share option programme allows Group employees to acquire shares of the Group. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using the 'Black Scholes' model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest.

(t) Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability. Provisions for retakes are recognised wherever they are considered to be material. 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 from customers are expected to be received by the Group within a period of 3 months from the final delivery and hence the provision is not discounted. 

A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract are lower than the unavoidable cost of meeting its obligations under the contract.

(u) Trade and other payables

Trade payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method.

(v) Revenue recognition

(i) Production service fee and licensing revenue

Revenue represents amounts receivable for production and imparting production training skill services rendered and is recognised in the income statement in proportion to the stage of completion of the transaction at the balance sheet date. The stage of completion can be measured reliably and is assessed by reference to work completed as on the balance sheet date. The Group uses the services performed to date as a percentage of total services to be performed as the method for determining the stage of completion. Where services are in progress and where the amounts invoiced exceed the revenue recognised, the excess is shown as deferred income. Where the revenue recognised exceeds the invoiced amount, the amounts are classified as unbilled revenue.

The stage of completion for each project is estimated by the management at the onset of the project by breaking each project into specific activities and estimating the efforts required for the completion of each activity. Revenue is then allocated to each activity based on the proportion of efforts required to complete the activity in relation to the overall estimated efforts. The management's estimates of the efforts required in relation to the stage of completion, determined at the onset of the project, are revisited at the balance sheet date and any material deviations from the initial estimate are recognised in the income statement.

  Production service fee and licensing revenue - continued

The Group's services are performed by a determinable number of acts over the duration of the project and hence revenue is not recognised on a straight-line basis.

Contract costs that are not probable of being recovered are recognised as an expense immediately.

Revenue from the licensing of distribution rights (including withholding tax) is recognised on a straight line basis over the term of the licensing agreement where there is an ongoing performance obligation and in the case of the license fee from co-production rights on the date declared by the licensee. Revenue from licensing of distribution rights is recognised at the time of sale under a non cancellable contract which permits the licensee to exploit those rights freely and the Group has no remaining obligations to perform.

No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due.

(ii) Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and the grants will be received.

Grants that compensate the Group for the cost of an asset are recognised on receipt by way of deduction from the carrying cost of the asset. The grant is recognised as income over the life of the depreciable asset by way of a reduced depreciation charge. 

Grants that compensate the Group for expenses incurred are recognised as reduction from relevant head of expense in the income statement on a systematic basis in the same periods in which the expenses are incurred.

(w) Expenses

(i) Operating lease payments

Payments made under non-cancellable operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Payments made under cancellable operating leases are recognised as expense in the period in which they are incurred.

(ii) Finance lease payments

Minimum lease payments are apportioned between the finance charge and the reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

(iii) Net financing costs

Net financing costs comprise interest payable on borrowings calculated using the effective interest rate method, dividends on redeemable preference shares, interest receivable on funds invested and foreign exchange gains and losses that are recognised in the income statement.

Interest income is recognised in the income statement as it accrues, using the effective interest method. The interest expense component of finance lease payments is recognised in the income statement using the effective interest rate method.

Foreign currency gains and losses are reported on a net basis.

(x) Income tax

Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

  Income tax - continued

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

(y)  Earnings per share

The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares, which comprise convertible notes, convertible preference shares and share options granted to employees.

(z) Segment reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments.

(aa) Voluntary changes in accounting policies and corrections of prior period errors

The Group presents all retrospective application of voluntary changes in the accounting policies and retrospective restatement to correct prior period errors as far as practical to conform to IAS 8 with relevant disclosures.

(ab) Financial instruments

Financial instruments comprise investments in equity and debt securities, trade receivables, unbilled revenues, loans to subsidiaries, cash and cash equivalents, bank borrowings and trade payable. Financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs.

  

NOTE B -  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 Group 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 animation 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 Group.

Segment revenue and segment result

	Segment Revenue		Segment Result
	2008-09 USD'000	2007-08 USD'000	2008-09 USD'000	2007-08 USD'000
Animation	29,193	21,398	17,399	9,946
Gaming	1,441	1,774	931	1,214
Distribution	1,614	961	(793)	267
	32,248	24,133	17,537	11,427
Unallocated Expenses			(12,388)	(4,020)
Profit before tax			5,149	7,407
Income tax expense			(751)	(222)
Profit for the year			4,398	7,185

  

SEGMENT REPORTING - continued

Segment assets and liabilities

	Assets		Liabilities
	2008-09 USD'000	2007-08 USD'000	2008-09 USD'000	2007-08 USD'000
Animation	10,469	10,822	1,446	2,266
Gaming	676	190	78	69
Distribution	17,945	13,647	6	-
Total of all segments	29,090	24,659	1,530	2,335
Unallocated	30,450	45,946	11,498	14,526
Consolidated	59,540	70,605	13,028	16,861

Other segment information

	Depreciation and amortisation		Additions to non-current assets
	2008-09 USD'000	2007-08 USD'000	2008-09 USD'000	2007-08 USD'000
Animation	-	-	-	-
Gaming	-	-	-	-
Distribution	2,330	694	10,356	5,061
	2,330	694	10,356	5,061

Geographical segments

The animation, gaming and distribution segments are managed on a worldwide basis, but operate in three principal geographical areas: America, Europe and Others.

The Group's revenue from external customers and information about its segment assets by geographical location are detailed below

	Revenue from external customers		Segment assets		Acquisition of segment assets
	2008-09 USD'000	2007-08 USD'000	2008-09 USD'000	2007-08 USD'000	2008-09 USD'000	2007-08 USD'000
America	13,403	9,901	3,625	3,929	-	-
Europe	16,501	14,102	7,410	6,968	-	-
Others	2,344	130	48,505	59,708	14,441	12,785
	32,248	24,133	59,540	70,605	14,441	12,785

NOTE C - REVENUE

	2008-09			2007-08
	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Revenue from animation and gaming	30,634	-		23,172	-
Revenue from distribution	1,614	-		961	-
Service income	-	841		-	429
	32,248	841		24,133	429

NOTE D - OTHER INCOME

	2008-09			2007-08
	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Gain on foreign exchange movements`	1,356	-		149	-
Gain on valuation of financial assets at fair value through profit or loss	-	-		177	-
Other income	111	-		39	-
	1,467	-		365	-

NOTE E - NET FINANCING COSTS

	2008-09			2007-08
	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Interest income	379	1,395		428	526
Financial income	379	1,395		428	526
Interest on convertible debentures	-	-		(71)	-
Interest on short term borrowings and other financing costs	(608)	(5)		(322)	(2)
Loss on valuation of financial assets at fair value through profit or loss	-	-		-	(19,416)
Interest on term loans	(632)	-		(705)	-
Net foreign exchange loss	(1,647)	-		(12)	-
Financial expenses	(2,887)	(5)		(1,110)	(19,418)
Net financing costs	(2,508)	1,390		(682)	(18,892)

  NOTE F - INCOME TAX EXPENSE

			2008-09 Group USD'000	2007-08 Group USD'000
Current tax expense
Current tax (MAT)			482	222
			482	222
Deferred tax expense
Origination and reversal of temporary differences			434	420
Benefit of tax losses recognized			(165)	(420)
			269	-
Total income tax expense in income statement			751	222

Reconciliation of effective tax rate

			2008-09 Group USD'000	2007-08 Group USD'000
Profit before tax			5,149	7,407
Indian corporate income tax rate			33.99%	33.99%
Income tax at standard rate			1,750	2,518
Differences on account of items taxed at zero/lower rates			(999)	(2,296)
Tax charge			751	222

CURRENT TAX EXPENSE

DQplc is liable to Manx corporate tax at the 0% rate.

DQM is liable to Mauritian corporate tax at the general rate of 15%, although in respect of its overseas income, after an available credit of 80% of the tax payable, the effective rate is reduced to 3%.

DQ India enjoys exemption of its taxable profits from export profits from production as per the provisions of section 10A of the Indian Income Tax Act, 1961. However, as per the provisions of section 115JB of the Indian Income Tax Act, 1961, relating to Minimum Alternate Tax (MAT), companies whose tax liability was less than 10% of the book profits was deemed to have a tax liability equivalent to 10% of the book profits derived as per Income Statement. The amount paid under section 115JB is allowed to be adjusted against tax liabilities in the succeeding seven financial years. Till the financial year 2006-07, companies which enjoyed exemption under section 10A were outside the ambit of the provisions of section 115JB. However, by way of an amendment in the Finance Act 2007 such companies were brought within the provisions of MAT under section 115JB and were liable to pay tax of at least 10%.

Consequently DQ India's current tax expense for the FY: 2008-09 of USD 482 Thousand (FY: 2007-08: USD 222 Thousand) represents the amount of MAT payable and can be carried forward and adjusted against income tax liability (other than MAT tax provision) in the next seven financial years.

NOTE G - PROPERTY, PLANT AND EQUIPMENT

	Computer hardware and software	Equipment	Fixtures and furniture	Leasehold improvements	Vehicles	Assets under construction	Total
	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000	USD'000
Cost
Balance at 1 April 2007	8,436	506	770	314	267	330	10,623
Acquisitions	746	-	-	-	193	6,785	7,724
Disposals	(334)	-	-	-	-	-	(334)
Transfers	4,442	31	180	82	-	(4,735)	-
Translation adjustment	779	46	69	28	26	46	994
Balance at 31 March 2008	14,069	583	1,019	424	486	2,426	19,007
Balance at 1 April 2008	14,069	583	1,019	424	486	2,426	19,007
Acquisitions	50	25	1	16	-	3,993	4,085
Disposals	(1,101)	(8)	(33)	-	-	-	(1,142)
Transfers	4,949	110	157	429	-	(5,645)	-
Translation adjustment	(3,724)	(151)	(252)	(148)	(114)	(388)	(4,777)
Balance at 31 March 2009	14,243	559	892	721	372	386	17,173
Depreciation
Balance at 1 April 2007	3,935	147	190	155	91	-	4,518
Depreciation charge for the year	2,544	77	88	54	98	-	2,861
Disposals	(334)	-	-	-	-	-	(334)
Translation adjustment	364	15	17	14	9	-	419
Balance at 31 March 2008	6,509	239	295	223	198	-	7,464
Balance at 1 April 2008	6,509	239	295	223	198	-	7,464
Depreciation charge for the year	3,460	88	137	91	98	-	3,874
Disposals	(1,089)	(6)	(28)	-	-	-	(1,123)
Translation adjustment	(1,785)	(65)	(81)	(62)	(57)	-	(2,050)
Balance at 31 March 2009	7,095	256	323	252	239	-	8,165
Carrying amounts
At 31 March 2008	7,560	344	724	201	288	2,426	11,543
At 31 March 2009	7,148	303	569	469	133	386	9,008

PROPERTY, PLANT AND EQUIPMENT - continued

Security

At 31 March 2009 properties with a carrying amount of USD 9,008 Thousand (31 March 2008 USD 11,543 thousand) are secured to borrowings from banks.

Property, plant and equipment under construction

During the year ended 31 March 2007, the Group has paid USD 317 Thousand towards acquisition of land for the construction of new premises for its business. During the year this land is allotted to the Group on a lease for a primary period of 33 years, which can be renewed for a further period of 33 years and is forming part of the leasehold improvements. 

NOTE H - GOODWILL

Goodwill arising on consolidation of subsidiaries

An amount of USD 10,818 Thousand represents goodwill arising on consolidation of financial statements of the Company's subsidiaries. Goodwill represents the excess amount paid over the nominal value of the shares of DQ India, which DQM acquired from certain shareholders.

	2008-09 Group USD'000	2007-08 Group USD'000
Cost
Opening balance	10,818	-
Add: Acquisitions through business combination	-	10,818
Closing balance	10,818	10,818

The Group tests for impairment of goodwill annually or more frequently if there are any indications that impairment may have arisen. The recoverable amount of Cash Generating Unit ("CGU") is determined based on the higher of fair values less costs to sell and value-in-use calculations. The key assumptions for the value-in-use calculations are those regarding discount rates and long term growth rates. The discount rate is based on the risk free rate of interest on government of India bonds, while growth rates are based on management's experience and expectations and do not exceed the long term average growth rate for the region in which the CGU operates. These calculations use cash flow projections based on financial budgets approved by the management. Cash flows are extrapolated using the estimated growth rates. No impairment losses were recognised in 2008-09 (2007-08: Nil).

  NOTE - I INTANGIBLE ASSETS 

		2008-09 Group USD'000	2007-08 Group USD'000
Cost
Opening balance		8,492	4,738
Acquisitions		2,908	3,311
Disposals		-	-
Translation adjustment		(2,308)	443
Closing Balance		9,092	8,492
Amortisation
Opening balance		1,365	612
Amortisation expense		994	694
Impairment losses charged to profit or loss		1,336	-
Disposals		-	-
Translation adjustment		(575)	59
Closing Balance		3,120	1,365
Carrying amounts
At beginning of year		7,127	4,126
At end of year		5,972	7,127

Intangible assets are distribution rights representing the unamortized value of costs incurred in acquiring distribution rights. The Group started acquiring these rights from the year 2003-04 and to date twenty three series of Animation rights have been acquired for different territories across the globe. The Group has started receiving revenues from exploitation of rights from the previous year. The Group has performed testing for impairment of intangibles which resulted in an impairment loss of USD 1,336 Thousand (31 March 2008: nil) on account of recoverable amount of intangibles being less that its carrying amount. 

The amortisation and impairment loss is recognised as cost of sales in the income statement.

NOTE J - 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 for 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.

		2008-09 Group USD'000	2007-08 Group USD'000
Opening Balance		6,520	4,373
Acquisitions		10,356	5,061
Transfers to distribution rights		(2,908)	(3,311)
Translation adjustment		(2,343)	397
Closing Balance		11,625	6,520

  NOTE K - INVESTMENT IN ASSOCIATE

On 28 March 2008 the Company has acquired 20% equity stake in Method Animation, SAS (the "Associate"), for a consideration of USD 3,884 Thousand. For the purpose of applying equity method of accounting, as the financial year of Associate ends on 31 December, the financial statements as of 31 December 2008 of the Associate, adjusted for significant transactions occurred between 31 December 2008 and 31 March 2009, have been used. 

Details of acquisition and the accounting for the Associate's share of profits/losses are as follows:

	2008-09			2007-08
	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Opening balance	3,884	3,884		-	-
Consideration paid for the acquisition	-	-		3,884	3,884
Cost of acquisition	3,884	3,884		3,884	3,884
Share of post acquisition loss (net of income tax)	(94)	-		-	-
Translation adjustment	(1,117)	(1,117)		-	-
Closing balance	2,673	2,767		3,884	3,884

The summarised financial information as at and for the year ended 31 March 2009 is as follows:

	2008-09 USD'000	2007-08 USD'000
Ownership share	20%	20%
Assets	39,312	45,402
Adjustment to the fair value	-	9,777
Assets - restated	39,312	55,179
Liabilities	(28,719)	(40,310)
Revenue	8,904	-
Loss	470	-

Goodwill of USD 910 Thousand arose on acquisition of 20% equity stake in the associate during the prior year and is included in the carrying cost of the investment.

NOTE L - LOAN TO SUBSIDIARY

As per the shareholders' loan agreement DQplc has given an interest free loan amounting to USD 35,912 Thousand to its subsidiary DQM.

Fair value on initial recognition of the loan has amounted to USD 19,296 Thousand assuming an interest rate of 8% per annum and repayment period of 10 years. As at 31 March 2009, the fair value of the loan outstanding amounted to USD 13,032 Thousand (31 March 2008: USD 16,937 Thousand).

DQM shall repay the Loan Amount to DQplc at such time and on such terms and conditions as may be mutually agreed between them.

	2008-09 Company USD'000	2007-08 Company USD'000
Opening balance	16,937	-
Loan to subsidiary	-	35,912
Loss on fair valuation	-	(19,296)
Interest accrued	1,169	321
Translation adjustment	(5,074)	-
Closing balance	13,032	16,937

NOTE M - DEFERRED TAX ASSETS AND LIABILITIES

Recognised deferred tax assets and liabilities of the Group

Deferred tax assets and liabilities of the Group are attributable to the following:

	Assets		Liabilities		Net
	2008-09 USD'000	2007-08 USD'000	2008-09 USD'000	2007-08 USD'000	2008-09 USD'000	2007-08 USD'000
Property, plant and equipment	-	-	(1,220)	(973)	(1,220)	(973)
Intangible assets	-	-	(437)	(581)	(437)	(581)
Employee benefits	403	419	-	-	403	419
Tax value of loss carry forwards recognized	1,015	1,135	-	-	1,015	1,135
Net tax assets/(liabilities)	1,418	1,554	(1,657)	(1,554)	(239)	-

Unrecognised deferred tax assets of the Group

Deferred tax assets of the Group have not been recognised in respect of the following items:

		2008-09 USD'000	2007-08 USD'000
Business losses		-	438
Unabsorbed depreciation		-	59
		-	497

Further, DQ India is exempt from income tax on profits from export production as it is eligible for tax holiday under the Indian Tax laws until the year ending 31 March 2010 and hence temporary differences which arise during the tax holiday period are recognised at the expected tax rate when these differences reverse, being zero.

 

Movement in temporary differences during the year

	Balance as at 1 April 2008	Recognised in income statement	Recognised in equity	Translation adjustment	Balance as at 31 March 2009
	USD'000	USD'000	USD'000	USD'000	USD'000
Property, plant and equipment	(973)	(534)	-	287	(1,220)
Intangible assets	(581)	8	-	136	(437)
Employee benefits	419	92	-	(108)	403
Tax value of carry forward tax losses	1,135	165	-	(285)	1,015
Net tax assets/(liabilities)	-	(269)	-	30	(239)

	Balance as at 1 April 2007	Recognised in income statement	Recognised in equity	Translation adjustment	Balance as at 31 March 2008
	USD'000	USD'000	USD'000	USD'000	USD'000
Property, plant and equipment	(555)	(364)	-	(54)	(973)
Intangible assets	(331)	(217)	-	(33)	(581)
Employee benefits	234	161	-	24	419
Tax value of carry forward tax losses	652	420	-	63	1,135
Net tax assets/(liabilities)	-	-	-	-	-

  NOTE N - DEPOSITS

Deposits represent amounts paid to various government agencies for the use of services including electricity, water and telephone supplied by these agencies. These amounts are refundable to the Group on the termination of the services with these agencies.

NOTE O - TRADE AND OTHER RECEIVABLES

	2008-09			2007-08
	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Trade receivables	7,967	998		5,792	426
Unbilled revenue	3,526	-		5,221	-
Prepayments	207	30		443	50
Other receivables	1,272	2,065		1,052	3,153
	12,972	3,093		12,508	3,629

Total trade receivables (net of allowances) held by the Group at 31 March 2009 amounted to USD 7,967 Thousand (31 March 2008: USD 5,792 Thousand) comprising of USD 1,778 Thousand being above 120 days (31 March 2008: USD 5 Thousand). 

The ageing analysis of trade receivables is given below:

		2008-09			2007-08
		Group USD'000	Company USD'000		Group USD'000	Company USD'000
Less than 30 days		3,360	308		3,995	426
30 - 60 days		2,444	154		1,437	-
60 - 90 days		197	232		294	-
90 - 120 days		188	-		61	-
Greater than 120 days		1,778	304		5	-
		7,967	998		5,792	426

Allowance for doubtful debts is made by the Group for trade receivables beyond 180 days & where the Group is of the opinion that the amount is not recoverable. As of 31 March 2009, amount of trade receivables beyond 180 days was USD 753 (31 March 2008: USD nil). Historically the Group has recovered all its trade receivables.

NOTE P - 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 31 March 2009. The fair value of these derivative instruments is as follows:

		2008-09 Group USD'000	2007-08 Group USD'000
Foreign exchange option contracts		6	177
		6	177

  NOTE Q - CASH AND CASH EQUIVALENTS

	2008-09			2007-08
	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Cash and bank balances	1,321	240		3,163	604
Call deposits	4,566	4,264		14,347	6,453
Cash and cash equivalents	5,887	4,504		17,510	7,057
Bank overdraft	(1,258)	-		(730)	-
Cash and cash equivalents in the statement of cash flows	4,629	4,504		16,780	7,057

NOTE R - EQUITY

a)  Ordinary shares

DQplc 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 an authorized share capital of 50,000,000 equity shares of 0.1 pence each.

Issue of ordinary shares

	2008-09		2007-08
	Group	Company	Group	Company
Number of shares in thousands
Opening balance	35,966	35,966	777	-
Changes due to reverse acquisition	-	-	(777)	-
Issued for cash	-	-	35,966	35,966
Closing balance	35,966	35,966	35,966	35,966

	2008-09		2007-08
	Group USD'000	Company USD'000	Group USD'000	Company USD'000
Share capital
Opening balance	73	73	178	-
Changes due to reverse acquisition	-	-	(178)	-
Issued for cash	-	-	73	73
Closing balance - fully paid	73	73	73	73

	2008-09		2007-08
	Group USD'000	Company USD'000	Group USD'000	Company USD'000
Share premium
Opening balance	49,017	49,017	1,511	-
Changes due to reverse acquisition	-	-	(293)	-
Transfer to reverse acquisition reserve	-	-	(1,218)	-
Issued for cash	-	-	54,449	54,449
Share issue expenses	-	-	(5,432)	(5,432)
Closing balance	49,017	49,017	49,017	49,017

  EQUITY - continued

b)  Reserves

Translation reserve - Assets, liabilities, income, expenses and cash flows are translated in to USD (presentation currency) from Indian Rupees (functional currency of DQ India), Euros (functional currency of DQ Ireland) and Great British Pounds (functional currency of DQplc). The exchange difference arising out of the year-end translation is being debited or credited to Foreign Currency Translation Reserve, which is amounting to USD (11,630) Thousand (31 March 2008: USD (1,696) Thousand).

Translation reserve

	2008-09		2007-08
	Group USD'000	Company USD'000	Group USD'000	Company USD'000
Opening balance	(1,660)	(749)	36	-
Increase/(decrease) during the year	(11,630)	(8,720)	(1,696)	749
Closing balance	(13,290)	(9,469)	(1,660)	(749)

Accumulated earnings - Accumulated earnings amounting to USD 8,336 Thousand (31 March 2008: USD 3,938 Thousand) include all current and prior period results as disclosed in the income statement.

	2008-09		2007-08
	Group USD'000	Company USD'000	Group USD'000	Company USD'000
Opening balance	3,938	(18,883)	(4,080)	-
Profit/(loss) for the year	4,398	1,435	7,185	(18,883)
Transfer from statutory reserve	-	-	932	-
Closing balance	8,336	(17,448)	4,037	(18,883)
Effect of correction of errors	-	-	(99)	-
Closing balance - as restated	8,336	(17,448)	3,938	(18,883)

NOTE S - EARNINGS PER SHARE ("EPS")

Profit attributable to ordinary shareholders

		2008-09	2007-08
Profit attributable to ordinary shareholders	USD'000	4,398	7,185
Weighted average number of ordinary shares outstanding during the year (in thousands)		35,966	11,902
Basic EPS (cents)		12	60
Diluted EPS (cents)		12	60

The Group does not have any dilutive instruments for the year ended 31 March 2009 and as such Diluted EPS equals Basic EPS.

The weighted average number of shares of 11,902 thousands reported under 2007-08 represents 35,966 thousands of shares held for the period from 18 December 2007 to 31 March 2008.

  NOTE T- TRADE AND OTHER PAYABLES

	2008-09			2007-08
	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Trade payables	1,003	618		1,734	-
Deferred income	477	-		682	-
Non-trade payables and accrued expenses	2,498	609		2,290	2,054
	3,978	1,227		4,706	2,054

Ageing analysis of trade payables is as follows:

	2008-09			2007-08
	Group USD'000	Company USD'000		Group USD'000	Company USD'000
Less than three months	1,003	618		1,723	-
Three to twelve months	-	-		11	-
One to five years	-	-		-	-
Greater than five years	-	-		-	-
	1,003	618		1,734	-

NOTE U - BANK OVERDRAFT

Secured bank overdraft facility:

	2008-09 Group USD'000	2007-08 Group USD'000
Amount used	1,258	730
Amount unused	275	772
	1,533	1,502

NOTE V - INTEREST-BEARING LOANS AND BORROWINGS

This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings. For more information about the Group's exposure to interest rate and foreign currency risk, see note Z.

		2008-09 Group USD'000	2007-08 Group USD'000
Non-current liabilities
Secured bank loans		656	5,280
Redeemable convertible preference shares		130	170
		786	5,450
Current liabilities
Current portion of secured bank loans		5,053	4,073
		5,053	4,073

  INTEREST-BEARING LOANS AND BORROWINGS - continued

The borrowings are repayable as follows:
		2008-09 Group USD'000	2007-08 Group USD'000
On demand or within one year		5,075	4,073
In the second year		649	3,225
In the third to fifth years inclusive		137	2,270
After five years		-	-
		5,861	9,568
Unrealised direct issue cost of secured bank loan		(22)	(45)
		5,839	9,523
Less: Amount due for settlement within twelve months (shown under current liabilities)		5,053	4,073
Amount due for settlement after twelve months		786	5,450

The secured bank loans are secured over properties with a carrying amount of USD 9,008 Thousand (31 March 2008: USD 11,543 Thousand).

The interest rate for two of the loans is pegged at a factor to the bank's Prime Lending Rate, while in respect of other loans they are pegged at a factor to LIBOR.

191,723 1% redeemable non-cumulative preference shares were issued on 12 December 2007 and 12,044 1% redeemable non-cumulative preference shares were issued on 18 February 2008 at an issue price of equivalent USD 0.254 per share. 

The Group shall be entitled, at its option, to call for redemption of all or part of the Preference Shares in one or more tranches, at a redemption price of equivalent USD 0.254 per share plus an amount equal to any accrued but unpaid dividend on such Preference Shares.

Compound financial instruments

	Redeemable convertible preference shares
	Group
	USD'000
Balance at 1 April 2007	11,489
Proceeds from issue	265
Reduction due to reverse acquisition	(11,489)
Amount classified as equity	(98)
Translation adjustment	3
Balance at 31 March 2008	170
Balance at 1 April 2008	170
Translation adjustment	(40)
Balance at 31 March 2009	130

  INTEREST-BEARING LOANS AND BORROWINGS - continued

1% Redeemable Optionally Convertible Non Cumulative Preference Shares (Preference Shares):

These shares are issued by DQ India with the following terms and conditions: 

Dividends: Each Preference Share shall carry an annual preference dividend of 1% (one percent) per annum, such dividends to be non cumulative and payable annually prior to the payment of dividends on the equity shares. The Preference Shares being non-cumulative in nature, any dividend unpaid for any financial year shall not be carried forward and/or accumulate in the next financial year. No dividend shall be paid on the Equity Shares if the preference dividends or any portion thereof on Preference Shares are in arrears.

Redemption: DQ India shall be entitled, at its option to call for redemption of all or part of the Preference Shares in or more tranches, at a redemption price of USD 0.248 per Preference Share plus an amount equal to any accrued but unpaid dividend on such Preference Shares ("Redemption Price").

Conversion: After the expiry of twenty four months from the date of issuance of the Preference Shares and to the extent the Preference Shares have not been redeemed by DQ India, the holders of the Preference Shares shall be entitled, at their option to call for conversion for all or part of such Preference Shares in one or more tranches into Equity Shares at a conversion ratio of 1:1, i.e., issue and allotment of 1 (One) Equity Share for each converted Preference Share.

Maturity: The Preference Shares shall (unless converted into Equity Shares or redeemed in the manner stated above) be redeemed at the Redemption Price at the expiry of sixty months from the date of issuance thereof.

Ranking and Pari-passu: The Preference Shares shall inter-se rank pari passu, and shall at all times rank senior to the Equity Shares in regard to the payment of dividends.

NOTE W - PROVISIONS

Provisions include the following:

		2008-09 Group USD'000	2007-08 Group USD'000
Current employee benefits (note X)		63	64
Provision for retakes (note Y)		456	435
		519	499
Non-current employee benefits (note X)		1,012	1,289

  NOTE X - EMPLOYEE BENEFITS

The defined benefit obligations of the Group include gratuity and compensated absences. Gratuity represents amounts payable to the employees, at the time of termination, resignation or retirement from services, on completion of a minimum service period of 5 years with the Group. The amount of gratuity payable to an employee is equal to the product of 15 days salary and the number of completed years of service or part thereof in excess of 6 months.

Compensated absences represent amounts payable to employees on utilisation of accumulated leave balances during service with the Group or encashment of such accumulated leave balances on termination, resignation or retirement from the services. Maximum leave available for encashment on termination, resignation or retirement is 60 days.

			2008-09 USD'000	2007-08 USD'000
Present value of unfunded obligations			604	587
Recognised liability for defined benefit obligations			604	587
Liability for compensated absences			471	766
Total employee benefit liability			1,075	1,353

Movements in the net liability for defined benefit obligations recognised in the balance sheet

			2008-09 USD'000	2007-08 USD'000
Present value of unfunded obligations			587	345
Expense recognised in the income statement (see below)			323	240
Actuarial gains			(137)	(16)
Contributions to defined benefit obligations			(12)	(14)
Translation adjustment			(157)	32
Present value of unfunded obligations			604	587

Employee benefits recognised in the balance sheet are as follows:

		2008-09 USD'000	2007-08 USD'000
Current employee benefits		63	64
Non-current employee benefits		1,012	1,289
		1,075	1,353

Expense recognised in the income statement

		2008-09 USD'000	2007-08 USD'000
Current service costs		283	210
Interest on obligation		40	30
Actuarial gains		(137)	(16)
		186	224

  EMPLOYEE BENEFITS - continued

The expense is recognised in the following line items in the income statement:

		2008-09 USD'000	2007-08 USD'000
Cost of sales		176	212
General and administrative expenses		10	12
		186	224

Liability for defined benefit obligations

Principal actuarial assumptions at the balance sheet date:

		2008-09 USD'000	2007-08 USD'000
Discount rate at 31 March		8.00%	8.00%
Future salary increases		4%	6%
Withdrawal rate
Age group (in years): 18-30		10%	10%
31-40		5%	5%
41-45		3%	3%
46 and above		2%	2%

Mortality: Standard table of Life Insurance Corporation of India (1994-96) was used for mortality rate. 

Personnel costs

			2008-09 USD'000	2007-08 USD'000
Wages and salaries			12,601	11,090
Contributions to defined contribution plans			969	897
Increase in liability for defined benefit plans			186	224
(Decrease)/increase in liability for compensated absences			(114)	360
Equity-settled transactions			-	(793)
			13,642	11,778

NOTE Y - PROVISION FOR RETAKES

		2008-09 Group USD'000	2007-08 Group USD'000
Opening balance		435	188
Provisions made during the year		529	489
Provisions used during the year		(33)	(105)
Provisions reversed during the year		(358)	(155)
Translation adjustment		(117)	18
Closing balance		456	435

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 from customers are expected to be received by the Group within a period of three months from the final delivery and hence the provision is not discounted.

  NOTE Z - FINANCIAL INSTRUMENTS

The Group's major financial instruments during the year comprised bank loans, call deposits, options and forward foreign exchange contracts. The principal objective of these financial instruments is to finance the Group's operations, to manage the interest rate risk arising from its sources of finance and to minimise the impact of fluctuations in exchange rates on future cash flows. The Group's other financial instruments consist of trade receivables and trade payables, which arise directly from its operations. 

The Group regularly reviews its exposure to interest, liquidity and foreign currency risk. Where appropriate the Group will take action, in accordance with a Board approved Treasury Policy, to minimise the impact on the business of movements in interest rates and currency rates.

The Group only enters into derivative instruments with bankers to ensure appropriate counterparty credit quality.

Capital risk management

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the borrowings disclosed in note V, cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in notes Q and R respectively.

Gearing ratio

The Group's management reviews the capital structure on a semi-annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Group has a target gearing ratio of 1:1 determined as the proportion of net debt to equity.

The gearing ratio at the year end was as follows:

		2008-09 Group USD'000	2007-08 Group USD'000
Debt (i)		7,097	10,253
Cash and cash equivalents		(5,887)	(17,510)
Net debt		1,210	-
Equity (ii)		46,512	53,744
Net debt to equity ratio		0.03	-

(i) Debt is defined as long and short-term borrowings, as detailed in note V.

(ii) Equity includes all capital and reserves of the Group.

Credit risk

The Group's principal financial assets are cash and bank balances, trade and other receivables and currency derivative financial instruments.

The credit risk on liquid funds and currency derivative financial instruments is limited because the counterparties are banks with high creditߛratings assigned by international creditߛrating agencies.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers. The Group does not require collateral in respect of financial assets. 

The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group's maximum exposure to credit risk.

  FINANCIAL INSTRUMENTS - continued

At 31 March 2009 there was concentration of credit risk in one customer to the extent of 52% of the total trade receivables. However the Group does not foresee any credit risk, as 82% of the receivable from such customer is less than 180 days.

Investments are allowed only in liquid securities and only with counterparties that have a credit rating equal to or better than the Group and hence management does not expect any counterparty to fail to meet its obligations.

Liquidity risk

The Group keeps its short, medium and long term funding requirements under constant review. Its policy is to have sufficient committed funds available to meet medium term requirements, with flexibility and headroom to make minor acquisitions for cash if the opportunity should arise.

The table below analyses the Group's financial liabilities which will be settled on a net basis into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. 

Liquidity risk

Group	Less than one month	One to three months	Three to twelve months	One to five years	Greater than five years	Total
31 March 2009
Interest bearing loans and borrowings (note V)	527	1,264	3,262	786	-	5,839
Trade and other payables	3,116	71	464	327	-	3,978
	3,643	1,335	3,726	1,113	-	9,817
31 March 2008
Interest bearing loans and borrowings (note V)	91	729	3,253	5,495	-	9,568
Trade and other payables	4,535	46	125	-	-	4,706
	4,626	775	3,378	5,495	-	14,274

Interest rate risk

The Group regularly evaluates profile of borrowings and the associated interest rates. The Group does not foresee any significant risk because of the level of exposure.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variables held constant, on the Group's net profit before tax (through the impact on floating rate borrowings). 

	Increase/(decrease) in basis points	Effect on Group net profit before tax USD'000
2008-09
Increase	100	(73)
Decrease	(100)	73
2007-08
Increase	100	(73)
Decrease	(100)	73

FINANCIAL INSTRUMENTS - continued

Effective interest rates

In respect of income-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rates and the maturity profiles of their carrying amounts at the balance sheet date: 

	2008-09 USD'000					2007-08 USD'000
	Effective		On demand			Effective		On demand
	Interest		Less than	1 - 5	More than	interest		Less than	1 -5	More than
	Rate	Total	1 year	years	5 years	rate	Total	1 year	years	5 years
Financial assets
Cash and bank balances	-	1,321	1,321	-	-	-	3,163	3,163	-	-
Call deposits	4% - 10%	4,566	4,566	-	-	4% - 10%	14,347	14,347	-	-
Trade and other receivables	-	12,972	12,972	-	-	-	12,508	12,508	-	-
Deposits	-	579	-	579	-	-	518	-	518	-
		19,438	18,859	579	-		30,536	30,018	518	-
Financial liabilities
US dollar floating rate loan	5% - 9%	4,877	4,342	535	-	5% - 9%	7,315	2,477	4,838	-
Rupee floating rate loan	9% - 13.54%	832	710	122	-	9% - 13.54%	2,038	1,596	442	-
Redeemable convertible preference shares	8%	130	-	130	-	8%	170	-	170	-
Bank overdraft	11% - 13.50%	1,258	1,258	-	-	11% - 13.50%	730	730	-	-
Trade and other payables	-	3,978	3,651	327	-	-	4,706	4,706	-	-
		11,075	9,961	1,114	-		14,959	9,509	5,450	-

FINANCIAL INSTRUMENTS - continued

Currency risk

The Group is exposed to currency risk on sales, purchase of fixed assets, overseas outsourcing and borrowings that are denominated in currencies other than the Indian Rupee. The currencies giving rise to this risk are primarily Euros and U.S. Dollars.

The Group uses currency forward exchange contracts and currency option contracts to manage its foreign currency risk. The Group has currency option contracts as at the balance sheet date details of which are given in note P.

The financial instruments of the Group include the following amounts, which are denominated in the following foreign currencies:

	2008-09 USD'000				2007-08 USD'000
	Euro	USD	Other	Total	Euro	USD	Other	Total
Assets
Cash and bank balances	486	640	195	1,321	962	799	1,402	3,163
Call deposits	-	4,264	302	4,566	-	-	14,347	14,347
Trade and other receivables	7,322	3,730	1,920	12,972	3,647	1,557	7,304	12,508
Liabilities
Trade and other payables	7	40	3,931	3,978	-	62	4,644	4,706
Borrowings  - current	-	4,343	710	5,053	-	2,477	1,596	4,073
- non current	-	535	251	786	-	4,838	612	5,450

Currency risk table

The following table demonstrates the sensitivity to a reasonably possible change in currency rates, with all other variables held constant, on the Group's net profit before tax (through the impact on currency rate changes between the INR: USD for Group and USD: GBP for Company). 

	Group		Company
	Increase/(decrease) in value of INR	Effect on Group net profit before tax USD'000	Increase/(decrease) in value of USD	Effect on Company net profit before tax USD'000
2008-09
Increase	INR 1	(108)	10¢	78
Decrease	(INR 1)	113	(10¢)	(78)
2007-08
Increase	INR 1	(179)	10¢	896
Decrease	(INR 1)	189	(10¢)	(990)

FINANCIAL INSTRUMENTS - continued

Fair values

The fair values together with the carrying amounts shown in the balance sheet are as follows:

	Carrying	Fair	Carrying	Fair
	Amounts	Value	Amounts	value
	2008-09 USD'000	2008-09 USD'000	2007-08 USD'000	2007-08 USD'000
Investment in associate	2,673	2,673	3,884	3,884
Deposits	579	579	518	518
Trade and other receivables	12,972	12,972	12,508	12,508
Financial assets at fair value through profit and loss	6	6	177	177
Cash and cash equivalents	5,887	5,887	17,510	17,510
Secured bank loans	(5,709)	(5,709)	(9,353)	(9,351)
Redeemable convertible preference shares	(130)	(130)	(170)	(170)
Trade and other payables	(3,978)	(3,978)	(4,706)	(4,706)
Bank overdraft	(1,258)	(1,258)	(730)	(730)
	11,042	11,042	19,638	19,640
Unrecognised gains		-		2

Estimation of fair values

The following summarises the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table.

Interest-bearing loans and borrowings

Fair value is calculated based on discounted expected future principal and interest cash flows. For vehicle loans, the fair value is estimated as the present value of future cash flows, discounted at market interest rates for homogeneous vehicle loans. The estimated fair values reflect change in interest rates.

Cash and cash equivalents

The Group considers that the carrying amount of cash and cash equivalents approximates their fair value.

Convertible debentures and redeemable convertible preference shares

The fair value for the liability portion of the instrument is based on the prevailing market rates for a similar term non-convertible instrument.

Trade and other receivables / payables

The Group considers that the carrying amount of trade and other receivables / payables approximates their fair values.

  NOTE AA - OPERATING LEASES

Leases as lessee

The Group leases a number of office and residential facilities under cancellable operating leases. The leases typically run for a period of 2 - 9 years, with an option to renew the lease after that date. Lease payments are increased every year to reflect market rentals. None of the leases includes contingent rentals. The Group does not have an option to purchase the leased asset at the expiry of the lease period.

Payments recognised as an expense

	2008-09 USD'000	2007-08 USD'000
Minimum lease payments	969	656
	969	656

NOTE AB - CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

	2008-09 Group USD'000	2007-08 Group USD'000
Capital commitments:
Purchase of property, plant and equipment	5	55
Purchase of distribution rights	827	2,232
Contingent liabilities:
Outstanding letters of credit for capital investments	6,068	6,723
Bonds executed in favour of Indian customs and excise authorities	714	879
Claims not acknowledged as debts*	185	-

*Claims against the Group not acknowledged as debts amounting to USD 185 Thousand comprise of demand from Indian Income Tax authorities on account of non deduction of withholding tax relating to certain overseas payments. The Group has made payments aggregating to USD 87 Thousand against the demand and is contesting the demand and filed an appeal with the relevant appellate authorities.

NOTE AC - EXCEPTIONAL ITEM

Sl	Particulars	Amount USD'000	2007-08
1	Extinguishment of liability on Preference Share Capital & Convertible Debentures	4,409	The outstanding liability towards 8% Redeemable Optionally Convertible Cumulative Preference Share Capital and 6% Convertible Debentures of DQ Entertainment Limited were extinguished at the time of reverse acquisition. The excess of the outstanding liability over the payment made and the amount of the 1% Redeemable Optionally Convertible Non Cumulative Preference Shares as per the reverse acquisition has been recognized during FY 2007-08

  NOTE AD - RELATED PARTIES

Identity of related parties

DQplc has a related party relationship with its directors, executive officers, subsidiaries and associate. DQplc 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) Private 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)

c) Key management personnel

Mr. Tapaas Chakravarti - Director

Mr. K. Balasubrahmanyam - Director

Mr. Michael Herlihy - Director

Late Rusi Brij - Director (passed away on 20 May 2009)

Ms. Theresa Plummer - Director

Mr. Anthony BM (Tony) Good - Director

d) Relatives of Key Management Personnel with whom DQ India had transactions during the year - Mrs. Rashmi Chakravarti (wife of Mr. Tapaas Chakravarti)

Trading transactions

Transactions between DQplc 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 Animation		Amounts owed by related party
	2008-09 USD'000	2007-08 USD'000	2008-09 USD'000	2007-08 USD'000
Associate	7,739	80	4,122	2,103

Revenue from production from related parties were 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 year are as follows:

		2008-09 USD'000	2007-08 USD'000
Short term benefits		553	390
Post employment benefits		-	-
Other long term benefits		-	-
Share-based payments		-	-
		553	390
Outstanding balance		142	56

  RELATED PARTIES - continued

Other related party transactions

Remuneration paid to relatives of key management personnel during the year was USD 61 Thousand (31 March 2008: USD 19 Thousand) and the outstanding balance as at 31 March 2009 was USD 3 Thousand (31 March 2008: USD 1 Thousand).

NOTE AE - AUDITORS' REMUNERATION

Details of the auditors' remuneration are as follows:

		2008-09 Group USD'000	2007-08 Group USD'000
Statutory audit fees		51	57
Tax audit fee		2	3
Other services		45	38
		98	98

NOTE AF - ACCOUNTING ESTIMATES AND JUDGEMENTS

Management discussed the development, selection and disclosure of the Group's critical accounting policies and estimates and the application of these policies and estimates.

The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions, which may differ from actual results in future. Management is also required to use its discretion as to the application of the accounting principles used to prepare these statements. 

Convertible financial instruments

In accordance with IAS 32 'Financial Instruments: Disclosure and Presentation' management is required to assess the liability component of any compound financial instruments. Such an assessment requires management to consider the characteristics of similar financial instruments without conversion options. In the absence of any such instruments being in issue by the Group management must estimate what those characteristics would be.

Revenue recognition

The Group recognises revenue in accordance with the accounting policy in 2(v) (i). When recognising revenue, management is required to estimate the stage of completion with such estimates being revisited at each balance sheet date. Material deviations are recognised in the income statement of the current period unless an error is identified in which case prior periods are revised in accordance with IAS 8 'Accounting Policies, Changes in Accounting Estimates and Errors'.

  Notice: 

The financial information set out above does not constitute the group's statutory accounts for the year ended 31 March 2009, but is derived from those accounts. Statutory accounts for the year ended 31 March 2009 will be delivered to the Registrar of Companies following the Company's annual general meeting. The auditors have reported on those accounts and their report was unqualified.

ENDFR EAPXKAFSNEFE

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Related Shares:

DQE.L