Quarterly Results for DQE International

DQ Entertainment plc

("DQE" or the "Group")

Indian subsidiary financial results (under Indian GAAP) for the three months ended 30 June 2010 and business update

DQE, a leading animation, gaming, live action entertainment production and distribution company, today announces that its subsidiary, DQ Entertainment (International) Limited ("DQE International" or "the Company"), the equity shares of which are listed and traded on the Bombay Stock Exchange Limited ("BSE") has filed with the BSE on 13 August 2010, its un-audited financial results for the three months ended 30 June 2010.

Full details of the DQE International un-audited results are available from the DQE International section of the BSE website (www.bseindia.com).

Business update

The revenue of INR 239.12m for the first quarter is in line with the company's plan for the financial year 2010-11 and in trend as per the previous years.

The loss for the quarter was Rs 109.76m. The key reasons for this were:

o fluctuations of the Rupee with the other currencies resulting in an exchange loss of INR 46.34m on account of adverse movement of foreign currency rates against the Rupee; and

o Most of our costs are linked to manpower cost and hence any increase or decrease in the top line has a disproportionate impact on our quarter-on-quarter profitability.

On account of the seasonality of our business activities, which is in tune with the global industry trends the Directors believe that:

o During the year 2010-11, DQE International will continue to focus on development and co-development of branded and popular intellectual properties (IP) and 360 degree monetisation of the IP across various platforms of content distribution;

o The quarterly performance is not indicative of the annual performance and the Company is confident of achieving its targets for the financial year end as has been the trend in previous years; and

o The performance of the Company has to be viewed on an annual basis and not quarter-on-quarter or in any way prorated.

With a strong order book on place and new orders coming being received on a regular basis, DQE International is riding on the global and Indian animation and media industry growth. This trend leaves us confident on the basis of execution at production level and increasing growth of licensing revenues will help us to achieve and maintain growth for 2010-11.

Quarterly revenue analysis - 2006 to 2010

To demonstrate the trends and seasonality of DQE International's business activities, the table below details percentage of annual revenues as generated on a quarterly basis for each of the last five years:

Key Growth Drivers

The consistent revenue growth of DQE International at a CAGR of 39.18% over the last five years and profitability growth at a CAGR of 90.97% has been on account of the following established competitive strengths:

Unique business platform: Proprietary ERP solutions developed in-house for production tracking and resources management enables DQE to execute and manage multiple projects simultaneously as well to integrate the creative functions directly with other operational functions within the organisation.

Upside from Co-productions: DQE's co-ownership of IPs and co-production model for iconic brands not only gives it leverage to assured service revenue for production, but also a share in the rights for exploitation of the IPs globally. DQE holds over 450 hours of programming which will steadily increase with DQE's library of global IP's in production. DQE's philosophy of raising the majority of production budgets with global pre-sales remains for all projects.

Vertically integrated business model: A fully integrated business model offering solutions from script to screen comprising pre-production, production, post-production, distribution, licensing and merchandising.

High standards leading to repeat business: Highest international quality standards and timely deliveries by its professional, creative and highly motivated workforce has resulted in repeat business from our global client - partners. Testimonies to this are the repeat orders DQE has executed for Walt Disney Television Animation, Nickelodeon and many others.

Strong management bandwidth: DQE has over the years built a very dynamic and efficient management team of professionals who have varied industry experience and very strong relationships within the group and its partners, clients and employees.

Impressive list of clients: DQE has established a diverse client-partner base consisting of over 100 major producers, licensees and distributors from Europe, the USA, the UK and Asian countries: Walt Disney Animation Group - worldwide, multiplex of Disney channels, Nickelodeon Animation Studio Inc. USA, Electronic Arts - USA, Marvel Comics, American Greetings, NBC Universal and BBC Group-UK, Public broadcaster-France Television(F2, F3, F4,F5), TF1 TV and TF1 Enterprises - France, M6 TV and distribution, France, Canal+ - France, ZDF TV & ZDF Enterprises as well as WDR TV Group - Germany, ABC Australia, Al Jazeera -Middle East, TVO/Tele Quebec - Canada, Turner Asia including Cartoon Network and POGO to name but a few. The wide spread client - partner base has helped in spreading the business risk.

Positive Macro Environment: The global M&E market, as a whole, will grow by 5.0 per cent compounded annually for the forecast period to 2014 reaching US$1.7 trillion, up from US$1.3 trillion in 2009. Rapidly advancing technology and software applications have facilitated animation to become more life-like and realistic. The quality of animation movies has greatly improved with the incorporation of 3D. Over 17 large 3D stereoscopic feature films are in production in Hollywood alone triggering tremendous growth of animated content consumption. Animated feature films, since the first success of Toy Story 1 in 1997, have not looked back and have increased today into a phenomena of entertainment covering not only children but the whole family. The box office collections of recently released 3D stereoscopic feature films like Avatar (USD 2.73bn in first 8 weeks), How to Train your Dragon (USD 479m), Alice in Wonderland (USD 1.02bn in first 8 weeks), Toy Story 3 (USD 576m in first 3 weeks) and Shrek - 3 (USD 791m) are a clear indication of market potential for productions of this nature. The stereoscopic pipeline required to produce these movies is available with very few companies.

Ability to adapt to changing technology instantly: We at DQE have watched the changing technical and creative landscape and have brought about changes even before markets have reacted to it. Evidence of this is the 3D Stereoscopic technology which we have implemented before many of our competitors. Recent examples using said technology are Peterpan, Little Prince, Jungle Book TV Movie, Charlie Chaplin (for television) and 'The Prodigies' theatrical feature film being produced for Onyx/Warner Bros, and 'The Jungle Book' feature film that we have been working on for the last three years.

Contact

Company Website : http://www.dqentertainment.com

Notes :

1)The financial results are prepared in accordance with the principles and procedures for the preparation and presentation of consolidated financial statements as set out in the Accounting Standard on Consolidated Financial Statements mandated by Rule 3 of the Companies (Accounting Standards) Rules, 2006, the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India.

2)Clause 41 of the Listing Agreement requires companies to either publish standalone or consolidated financial results in the newspapers and this choice is to be exercised during the first quarter of the financial year. The Company, in compliance with this provision, has opted to publish the consolidated financial results. The standalone financial results will, however, be made available to the Stock Exchanges where the Company's shares are listed and will also be posted on the Company's website.

3)The details of funds raised through Initial Public Offering (IPO) and utilisation of said funds are as follows:

*As on 30 June 2010 unutilised funds have been temporarily invested in short term liquid scheme of mutual funds.

4) There were no investor complaints pending at the beginning and at the end of the quarter. The Company has received and resolved 80 investor complaints during the quarter ended 30 June 2010.

5) The above results have been reviewed by the Audit Committee and approved by the Board of Directors of the Company at its meeting held on 13 August 2010. The statutory auditors of the Company have carried out a Limited Review of the Consolidated results for the quarter ended 30 June 2010.

6) Figures of the corresponding quarter of the previous year have not been given since such figures were not compiled. Corresponding previous year end figures have been regrouped / reclassified wherever necessary.