Result of General Meeting

DQ Entertainment plc

("DQE" or the "Company")

Result of General Meeting

DQ Entertainment plc (AIM:DQE), a leading animation, gaming, live action, entertainment production and distribution company, is pleased to announce that all resolutions proposed at the General Meeting held at 2:30 p.m. today were duly passed by shareholders.

Accordingly, application has been made for the 13,697,000 Second Placing Shares to be admitted to trading on AIM and dealings are expected to commence at 8.00 a.m. on 10 April 2013.

For the purposes of the Financial Conduct Authority's Disclosure and Transparency Rules ("DTRs"), the Company announces that following the issue of the Second Placing Shares, the Company will have 56,263,047 Ordinary Shares in issue.

The Company has no ordinary shares held in treasury. The total number of voting rights in the Company will therefore be 56,263,047. This figure may therefore be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the DTRs.

Terms defined in the Circular published by the Company on 14 March 2013 shall have the same meaning in this announcement unless the context requires otherwise.

For further information, please contact:

Reasons for the Placing:

DQE is an award winning global producer and distributor of animation and visual effects for feature films, TV, video, internet, mobile and next generation console games. Since the Company's admission to AIM in 2007, DQE has expanded its product mix from that of a pure outsourcing animation service provider to being an integrated entertainment production and distribution group that owns a portfolio of IP rights.

Having established itself as a producer of quality animated content for television, the Group has increasingly focused on the production of high definition 3D stereoscopic animations, and most recently, of animated feature films. The first feature film being developed and produced from DQE's IP is The Jungle Book. The Board considers the production of The Jungle Book feature film to be a natural step in further commercialising the property, having successfully produced The Jungle Book TV Series Season 1, with Season 2 in production.

The proceeds of the Placing, which will total up to approximately £3.7 million/US$5.6 million after expenses, will provide replacement working capital to certain divisions within the Group from which funds have been used to finance The Jungle Book feature film pilot and to purchase new hardware and software.

Current trading and prospects:

DQE results for the year ended 31 March 2012

For the financial year ended 31 March 2012, the Group achieved increased revenues of US$47.2 million (2011: US$45.3 million) and a 36.0 per cent. increase in profit before tax to US$9.8 million (2011: US$7.2 million).

DQE results for the six months ended 30 September 2012

During the six months ended 30 September 2012, the Group recorded revenues of US$17.4 million (2011: US$19.9 million). As the Group's financial results are presented in US$ (a non-functional currency of the Group), the 20 per cent. depreciation of INR against the US$ since September 2011 significantly adversely distorted the underlying operating results, since revenue increased by 5 per cent. in INR terms.

The Group's operations and revenues represents are principally generated from animation production. Historically, revenue for the first half of the year approximates 35 per cent. to 40 per cent. of the full year result. However there was a decline in the incremental growth of revenues from production services in the six months ended 30 September 2012 for two reasons:

1. Deliberate slow-down of deliveries in order to recover overdue payments; and

2. Delay in commissioning of new projects due to the present global depressed market conditions.

Licensing and distribution revenues currently represent approximately 23 per cent. of total revenues and have increased at a CAGR of 88 per cent. over the last four years. The Board remains confident that further licensing and distribution revenues can be generated from the existing deals executed for Jungle Book Seasons 1 & 2 and other IP such as Peter Pan, Lassie, 5 & IT which are already in development.

During the half year, the Company repaid loans of US$9.4 million (US$4. 7 million net) and invested US$3.9 million for development of its IP, US$3.2 million of which is related to the pre-production of the 'The Jungle Book' feature film. As at the date of this Circular, DQE has spent approximately US$8.0 million in total on 'The Jungle Book' feature film. This part explains the reduction in cash and cash equivalents as at 30 September 2012 to negative US$6.1 million (March 2012: US$6.4 million).

DQE India results for the nine months ended 31 December 2012

DQE India, which is 75 per cent. owned by DQE, announced its un-audited financial results for the nine months ended 31 December 2012, prepared under Indian GAAP, on 15 February 2013. This showed revenue of US$25.9 million (2011: US$28.6 million), EBIDTA of US$11.0 million (2011: US$11.8 million) and profit after taxation of US$2.6 million (2011: US$4.7 million).

The comparative figures for DQE India for 2011 were significantly improved due to the recognition of distribution revenue of US$3.4m in relation to a four year, non-cancellable licensing and merchandising contract. Under Indian GMP and IFRS, non-cancellable licensing revenues must be recognised immediately and not spread over the licence term. This resulted in an unbudgeted gain of US$3 million during the quarter ended 31 December 2011.

As reported previously, DQE India's revenue and profitability has a clear seasonal pattern similar to that of the rest of the global animation industry, whereby approximately 60 per cent. to 70 per cent. of deliveries occur during the first three quarters of the year with approximately 30 per cent. to 40 per cent. of annual revenue being generated in the fourth quarter of the financial year.

During the quarter ended 31 December 2012, there was a foreign exchange gain for DQE India of US$1.5 million (2011: US$0.7 million gain). This gain comprises US$1 .3m of realised gain and US$0.2 million of unrealised gain.

The liquidity squeeze in the global financial markets has impacted DQE, resulting in delays in recoveries of receivables. The Group is making considerable efforts to reduce the amount of its receivables and is confident that by 31 March 2013 its receivables position will have improved substantially.

The Company draws down on bank debt secured against pre-sales and/or minimum guarantee amounts stipulated in the broadcasting and co-production contracts it has entered into. This security mitigates the gearing risk. As the Group has evolved away from pure animation services revenues into the exploitation of IP rights, be it minority or majority owned by the Group, the increase in Group debt has been managed and is not required by the Group for general working capital purposes.

Demand for the Group's services remains strong and it continues to develop a healthy pipeline across its production, licensing and distribution activities. Based on current trading and for the reasons explained above, the Board anticipates that revenues for the year ending 31 March 2013 will be comparable to those in 2012, whilst profit before tax will be similar to, or marginally higher than 2012.

The Group's key strategic objectives are:

• Global release of The Jungle Book feature film in 2015

• Proposed commencement of dividend policy (see below for further details)

• Exploitation through newer delivery formats including the development of apps and interactive games

• As an independent producer, to offer a diversified range of services from script to screen, including:

• Capitalising on 3D stereoscopic theatrical animations

• Continued focus on co-production business of TV series

• Accelerate growth in TV licensing and distribution, particularly through the acquisition of new iconic properties.

Commencement of Dividend Policy:

The Board is pleased to announce that it intends to pay a final dividend in respect of the financial year ending 31 March 2014. Further details of the proposed dividend and dividend policy will be provided in due course, but the Board currently anticipates that between 10 per cent. to 15 per cent. of the Company's profit after tax will be made available for distribution to shareholders each financial year.

Directors' participation in the Placing

The majority of the Board of Directors are participating in the Placing, having agreed to subscribe for Placing Shares at the Placing Price, as set out below:

Recommendation

The Directors unanimously believe that the Placing is in the best interests of the Company and its shareholders as a whole and recommend Shareholders to vote in favour of the Resolutions, as they intend to do in respect of their own beneficial holdings of 4,643,357 Ordinary Shares, equivalent to approximately 10.9 per cent. of the aggregate of the current issued share capital of the Company and the number of First Placing Shares.

The Company has also received irrevocable undertakings to vote in favour of the Resolutions from certain shareholders who together hold 25.3 per cent. of the aggregate of the Company's current issued share capital and the number of First Placing Shares.

The Jungle Book Feature Film

For the Jungle Book Feature film, DQE has appointed an experienced team of talent from the world of feature animation, which includes Screenwriter Billy Fralick ("Madagascar" and "Holy Cow"). Co-Directors Jun Falkenstein ("The Tigger Movie", "The Smurfs" and "Despicable Me") and Kevin Johnson ("Alvin and the Chipmunks: Chipwrecked", "Harry Potter & The Sorcerer's Stone", "Astro Boy" and "Stuart Little").

The film is being produced by DQE under the supervision of Tapaas Chakravarti, Chairman and Founder of DQE, together with Eric S. Rollman, CEO of Rollman Entertainment, Inc., (former President of Marvel Animation and Saban/Fox Family Productions) and Rouhini Jaswal, Vice President (Intellectual Properties) of DQE, as Executive Producers. The film is targeted to be released in 2015.

The scripting and the sizzle reel (pilot) have been completed. DQE has had initial discussions with some of the major distributors in the US as well as feature film financing companies. DQE is currently in advanced negotiations for the financing of US$40 million for the production of The Jungle Book, through a film fund managed by a company specialising in motion picture financing, funding and consulting on worldwide distribution of films. Should these negotiations successfully result in an agreement being entered into, DQE expects that this counterparty will also assist DQE in securing theatrical distribution with a major North American distributor.

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