Companies: ERT   

Much has been made of Entertainment Rights purchase of Woodland Animations Ltd, a buy that gives ER the rights to, amongst others, that loveable kiddies cartoon character Postman Pat. ER will pay £5.1m in total, which should give it access to Woodland's annual royalty revenues of £895,000 and pre-tax profits of £430,000. The acquisition is the second major purchase this year for ER. Back in April it purchased Link Licensing for £15m, a venture that owned around 440 hours of children's TV and had a developed consumer products business. The acquisition of Link (funded in part by loan notes worth £6.36m) enabled ER to hoist turnover to £3.7m in the half year to June, although pre-tax losses were still substantial, coming in at £851,000. Moreover, prior to the Postman Pat deal (which will be funded almost entirely in loan notes) the group had cash in the bank of £4.4m, was owed a further £3.9m, but had debts of £9.4m due for repayment before June 2002. A bank borrowing facility of £9m should ensure that it does not run into difficulties, but it is fair to say that the management must now spend time consolidating the businesses it has rather than acquiring more companies on the back of loan note deals. At 14p the prospective p/e for this year is 25.5. High enough.

Entertainment Rights	LSE	£5.35m	0.73p	-0.02p
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