Exchange rates matter a lot to animation and entertainment distribution company DQ Entertainment (DQE). First of all, the company converts all its global income to Indian rupees at the end of a trading period. Then it converts them to dollars at the average dollar rate over that period. So, although revenues in local currency rose by 5 per cent in the latest six-month period, the 20 per cent depreciation of the rupee against the US dollar since September 2011 wiped these gains out completely.
So why were sales not up more? The answer is that while work for US broadcasters went ahead broadly on time, French and German clients delayed content agreements and particularly on pre-production work in France; work there benefits from a state subsidy. Overall animation production sales were down 17 per cent to $12.8m (£8.1m) while distribution income held steady at $4.5m. Paying more Irish tax of 12.5 per cent on distribution income doubled the tax charge to $506,000.
DQ clearly expects to report better current half-year figures and future releases include Peter Pan in January, albeit four months late, and Lassie and Friends in March. Development of a 3D version of Jungle Book seems to be progressing well and is being helped by a team of "top tier talent". DQ's own Jungle Book season one TV series, which was sponsored by Burger King, is said to be performing well and has more than recouped the $7m (£4.4m) of production costs.
| DQ ENTERTAINMENT (DQE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 30.5p | MARKET VALUE: | £11m | |
| TOUCH: | 30-31p | 12-MONTH HIGH: | 75.25p | LOW: 30.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | 4 | |
| NET ASSET VALUE: | 210¢* | NET DEBT: | 31% | |
| Half-year to 30 Sep | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | 19.9 | 2.71 | 5.76 | nil |
| 2012 | 17.4 | 1.79 | 3.02 | nil |
| % change | -13 | -34 | -48 | - |
| *Includes intangible assets of $89.6m, or 249¢ a share £1=$1.59 | ||||
