Annual Report  
and Accounts  
2007
Entertainment Rights Plc. Colet Court, 100 Hammersmith Road, London W6 7JP
Tel: +44(0)20 8762 6200 Fax: +44(0)20 8762 6299 www.entertainmentrights.com
Entertainment Rights Plc  Annual Report and Accounts 2007  Operating and Financial Review 
01 Highlights
02 Chairman’s Statement
05 Chief Executive Officer’s Statement
06 Chief Commercial & Creative Director’s Review
14 Chief Finance & Operations Director’s Review
 
Governance 
18 Board of Directors 
19 Report of the Directors
23 Corporate Governance
27 Statement of Directors’ Responsibilities
28 Remuneration Report
34 Report of the Independent Auditors
 
Financial Statements 
36 Consolidated Income Statement
36 Consolidated Statement of Recognised  
 Income and Expense
37 Consolidated Balance Sheet
38 Consolidated Cash Flow Statement
39 Notes to the Financial Statements – Group
73 Company Balance Sheet
74 Notes to the Financial Statements – Company
 Entertainment Rights Plc Annual Report and Accounts 2007 
Directors and Advisers
Directors
Roderick Bransgrove (Non-Executive Chairman) 
Nicholas Phillips (Chief Executive Officer) 
Elizabeth Gaines CA (Chief Finance & Operations Director) 
Jane Smith (Chief Commercial & Creative Director) 
Irvin Fishman FCA (Non-Executive Director)  
Craig Hemmings (Non-Executive Director) 
Julian Paul FCA (Non-Executive Director)
Secretary and Registered Office
Irvin Fishman FCA 
58-60 Berners Street 
London W1T 3JS
Stockbrokers 
Altium Securities 
30 St James’s Square 
London SW1Y 4AL
Collins Stewart Europe Limited  
88 Wood Street  
London EC2V 7QR 
Auditors
KPMG Audit Plc 
8 Salisbury Square 
London EC4Y 8BB
Bankers
Bank of Scotland plc 
PO Box No 5 
The Mound 
Edinburgh EH1 1YZ
Solicitors
Lawrence Graham LLP 
4 More London Riverside 
London SE1 2AU
Registrars
Computershare Services plc 
PO Box 82 
The Pavilions 
Bridgwater Road 
Bristol BS99 7NH 
0870 703 6271
Company registration number 2402919
Corporate website: www.entertainmentrights.com  Entertainment Rights Plc Annual Report and Accounts 2007 
1
Financial Highlights: 
m	 Revenue increased 129% to £68.1m (2006: £29.7m) reflecting the successful integration of Classic Media
m	 Revenue as measured on a constant currency basis increased 134% to £69.5m (2006: £29.7m)
m	 Underlying EBITDA* increased 106% to £31.8m (2006: £15.5m)
m	 Underlying operating profit** increased 107% to £22.5m (2006: £10.9m)
m	 Operating profit increased 61% to £16.4m (2006: £10.2m)
m	 Underlying profit before tax** increased 45% to £12.6m (2006: £8.7m) 
m	 Net debt at year end was £107.9m (2006: £33.7m) with all bank covenants met
12 months to 31 December (£m)  2007 2007 2006 Change vs Change  vs   
  Constant   Reported % Constant 
   Currency***    Currency %
Group revenue 68.1 69.5 29.7 129% 134%
Underlying EBITDA* 31.8 32.5 15.5 106% 111%
Underlying operating profit** 22.5 23.2 10.9 107% 113%
Operating profit 16.4 17.1 10.2 61% 67%
Underlying profit before tax** 12.6 14.1 8.7 45% 62%
Profit before tax 7.9 9.5 7.8 1% 21%
Underlying EPS (pence)** 0.91 1.05 1.70 -47% -38%
Basic EPS (pence) 0.49 0.63 1.50 -67% -58%
Operational Highlights:
 
m	 Acquisition of US-based Classic Media completed in January 2007, now fully integrated and cost  
 synergies realised
m	 Significant increase in sales of the newly re-launched The Original Christmas Classics™ DVD box set in the USA
m	 Postman Pat® brand re-launch, Postman Pat® Special Delivery Service (SDS), is underway with the new series  
 currently in production and scheduled to launch on the BBC this autumn 
m	 The new animated series of George of the Jungle™ launched on Cartoon Network in the USA in January 2008  
 with strong initial ratings success
*  Excluding share option charge (IFRS 2), aborted acquisition costs (2006), non-recurring re-branding costs, ceased operations and integration and reorganisation costs (2007).
**  Excluding share option charge (IFRS 2), aborted acquisition costs (2006), non-recurring re-branding costs, ceased operations and integration and reorganisation costs (2007) and the charge  
 for changes in fair value of financial instruments.
***  Constant currency represents the 2007 results translated at US dollar 2.002 and euro 1.487, restated using the same actual average exchanges rates as the results reported for the 12 months  
 ended 31 December 2006 (US dollar 1.947 and euro 1.473).  Entertainment Rights Plc Annual Report and Accounts 2007 
Chairman’ s 
Statement
Overview 
I am pleased to present the results for the year 
ended 31 December 2007.  Despite difficult 
trading conditions owing to DVD distribution 
issues in the UK and a decline in consumer 
confidence, particularly in the USA, the 
Group delivered a strong performance and 
achieved the majority of its objectives. Over 
the past four years, the Group has expanded 
geographically from a wholly UK-based 
enterprise to a group with operations in the 
world’s two largest media markets, the UK 
and the USA, as well as a significant presence 
in the international media market.  Over the 
same period, Group revenue has grown from 
£25.5m in 2004 to £68.1m in 2007.
During the year under review, the size of 
our business more than doubled following 
the acquisition of Classic Media Holdings, 
Inc. (“Classic Media”) in January 2007.  The 
acquisition resulted in a significant integration 
task and the Board has been very pleased with 
the outcome of the integration.  The Classic 
Media business has been greatly enhanced 
by the application of ER’s brand management 
skills and expertise.  It is testament to this 
expertise that the re-branded Christmas 
Classics DVD titles delivered significant 
growth in revenue in 2007.   
In January 2008, the Company announced 
that its exclusive DVD distributor, Universal 
Pictures (UK) Limited (“UPUK”), had 
encountered difficulties in the manufacture 
and supply of DVDs to UK retailers.  This was 
a development that was outside the control of 
the Company.  As a result of these difficulties, 
agreed release dates during November 
and December 2007 were not met and this 
impacted negatively on the Group’s results in 
the important fourth quarter trading period.  
The operational difficulties encountered with 
UPUK during the last quarter of 2007 have 
now been resolved and UPUK continues to 
supply and distribute ER’s DVD products 
to UK retailers.  ER is pursuing appropriate 
remedies for the losses incurred as a result 
of UPUK’s failure to supply DVDs in the last 
quarter of 2007.
Financials
The results for the year to 31 December 
2007 demonstrate that the Group made 
solid progress in many areas of the business, 
most notably the successful integration of 
Classic Media.  Whilst the overall profitability 
of the Group was below expectations, this 
should not detract from the considerable 
achievements that were realised during the 
period.
Group revenue increased by 129% to £68.1m 
(2006: £29.7m) and underlying profit before 
tax increased by 45% to £12.6m (2006: 
£8.7m).  Group operating profit increased to 
£16.4m (2006: £10.2m) and profit before tax 
increased to £7.9m (2006: £7.8m).  During 
the year, sterling appreciated against the US 
2
Rod Bransgrove Chairman George of the Jungle
TM
 
Sold into more than 100 territories worldwide
One of the highest rating shows on Cartoon Network US (boys 6-9 years)
A consistent top five rating show on Nicktoons in the UK
3
dollar with a resulting impact on earnings.  
At constant exchange rates, Group revenue 
would have increased by 134% to £69.5m 
and underlying profit before tax would have 
increased by 62% to £14.1m.
Underlying EBITDA increased by 106% to 
£31.8m (2006: £15.5m).  At constant exchange 
rates, underlying EBITDA would have been 
£0.7m higher at £32.5m representing an 
increase on the prior year of 111%.
Net debt at the year end was £107.9m and 
was in line with the Board’s expectations 
following the acquisition of Classic Media.  
Operating cash generation in the year was 
99% of operating profits.  The Group’s gross 
bank debt facilities are £129.7m and the 
Group had cash resources at the year end 
of £21.7m.  The Group met all of its banking 
covenants during the period under review.
The Group is in a strong financial position 
and well positioned to focus on driving the 
organic growth of its substantial portfolio of 
intellectual property assets to ensure that, 
over the medium-term, we deliver the value 
that shareholders rightly expect.
Group Development
ER’s business model is robust and the 
acquisition of Classic Media in January 2007 
has already proven itself to be a significant 
strategic acquisition for the Company. 
One year on and the Classic Media brand 
portfolio has greatly benefited from ER’s 
international brand management and sales 
distribution expertise resulting in a number 
of key agreements being signed during the 
year.  These include a pan-European toy deal 
with Giochi Preziosi for Casper the Friendly 
 
Ghost®, licensing agreements for Hot Stuff® 
in Germany, France and South Africa and the 
appointment of a toy partner for Lassie® in 
Germany.  George of the Jungle™ has seen 
strong television sales with deals secured in 
Germany, Latin America (Disney Channel) 
and France.
Growing from its strong position in the US 
market, the roll-out of the VeggieTales® 
faith-and-values based brand from Big Idea 
has commenced with a focus on positioning 
VeggieTales® as the leading pre-school 
brand in the Christian retail market in key 
English-speaking territories.
Classic Media has significantly strengthened 
ER’s existing operations and the acquisition 
has had a transformational impact in 
positioning ER as a global family and 
entertainment media business.
People
On 18 March 2008 the Company announced 
that Nick Phillips had been appointed Chief 
Executive Officer with immediate effect and 
that Mike Heap, the former Chief Executive 
Officer, had resigned.  The Board looks 
forward to working with Nick to develop and 
enhance the Company’s presence as a global 
media company and would like to thank Mike 
for his significant contribution during the past 
nine years.
There have been a number of changes to 
the executive leadership team during 2007 
and the first quarter of 2008.  In May 2007,  Deborah Dugan (ex-President of Disney 
Publishing Worldwide) was appointed 
President and CEO of Entertainment Rights 
North America.  More recently, in March 
2008, Andrew Kerr was appointed Executive 
Director, Consumer Products and Marketing, 
International reporting to Jane Smith, Chief 
Commercial & Creative Director.  Andrew was 
previously Executive Vice President, Global 
Licensing & Marketing at Ragdoll Worldwide 
Limited and was instrumental in developing 
the hugely successful licensing programme 
for In the Night Garden.
The Board remains committed to the best 
practices of corporate governance and its 
composition will be reviewed with regard to 
the independence and relevant skills of the 
non-executive directors.
Our employees around the world have 
worked hard during the year and have 
fuelled the success of the business.  They 
deserve our thanks for their commitment and 
enthusiasm.
Offer Update
Further to the announcement on 21 January 
2008 and the update on 18 March 2008, the 
Board confirms that the preliminary talks with 
interested parties are continuing.  These 
discussions may or may not lead to an offer 
being made for the Company. There can be 
no certainty that any offer for the Company, if 
made, will be at a level which would receive 
sufficient support from shareholders.
Dividend
We believe that shareholders will be best 
served by a continuing focus on investment in 
the ongoing development of ER.  Therefore, 
the Board is not proposing a dividend for 
2007.  We will continue to keep the payment 
of dividends under review.
Current Trading & Outlook
Despite the setback in the UK in the last 
quarter of 2007 and the increasing uncertainty 
in global economic conditions, the Group 
remains committed to its strategy of building 
a powerful and resilient global family and 
children’s entertainment business.  There are 
a number of exciting developments planned 
for 2008 for our key brands including the 
launch of Postman Pat® Special Delivery 
Service.  In keeping with prior years, the 
Group remains weighted to the fourth 
quarter.
The Board remains committed to a programme 
of business improvement which will, in time, 
deliver the returns expected and is pleased to 
have secured the services of Nick Phillips as 
Chief Executive Officer to lead the Company 
into its next stage of development.  
Due to the current volatility in financial 
markets and the economic outlook for the 
US economy, the Board remains cautious in 
its outlook. However, it expects the Group 
to continue to build on the progress made 
during 2007.
Rod Bransgrove 
Chairman 
8 April 2008
4
 Entertainment Rights Plc Annual Report and Accounts 2007  5
Chief Executive  
Officer’ s  
Statement
Nick Phillips Chief Executive Officer
Entertainment Rights has a business model 
that is the envy of many in the media sector.  
What makes ER unique is that it owns, controls 
or manages rights to its key intellectual 
property assets, enabling the Company to 
generate revenue across all forms of media, 
including television content, consumer 
products, home entertainment, feature films, 
computer gaming, digital rights, stage shows 
and music.  This is a significant contrast to 
other specialist media companies where the 
exploitation of rights is often limited to more 
narrowly defined revenue streams.
The ER business has undergone a tremendous 
amount of change during the past 12 months.  
I see a lot of strength in the business and I 
intend to spend time reviewing the business 
over the coming months in order to fully 
understand the opportunities available to 
the Group and, working with the Board, 
to determine where the Group’s future 
investment should be focused.
I am looking forward to working with the ER 
team.  The brand portfolio is second to none 
and, with footprints in the world’s two largest 
media markets, the opportunities for further 
growth in the evolving media landscape are 
apparent.  
Nick Phillips 
Chief Executive Officer
8 April 2008
Rupert Bear
®
 
Sold into 190 territories worldwide
A consistent top five rating show on Milkshake in the UK (boys 4-6 years)
Nintendo DS and PS2 games available in more than 14 territories 
  Chief Commercial & 
Creative Director’ s 
Review
Jane Smith Chief Commercial & Creative  Director
Overview 
ER owns one of the most extensive 
independent portfolios of children’s and 
family intellectual property assets in the 
world. The diverse portfolio of contemporary 
classic and new children’s brands includes 
Rupert Bear®, Postman Pat®, Basil 
Brush®, He–Man® and Where’s Wally?®, 
as well as iconic US brands such as Lassie®,  
The Lone Ranger®, Casper the Friendly 
Ghost® and leading faith-and-values based 
children’s and family brand VeggieTales®.
During 2007, the Company has successfully 
exploited its extensive library of over 
3,600 hours of high-quality children’s and 
family programming around the globe 
across television distribution, licensing 
and merchandising, live events, home 
entertainment, music and digital media. 
The global entertainment and media 
industry continues to grow and is forecast 
to increase from $1.3 trillion in 2005 to $1.8 
trillion in 2010**.  Nearly every segment of 
the entertainment and media industry is 
shifting from physical distribution to digital 
distribution of content.  As that trend 
continues, digital and mobile distribution 
will become a significant component of the 
entertainment and media market, fuelled by 
rising broadband and wireless subscription 
numbers.  ER is extremely well placed to 
capture incremental revenue opportunities as 
it continues to successfully exploit its brands 
and content across multiple platforms, 
including video-on-demand (“VOD”), online, 
mobile, broadband and gaming. 
We believe our strong brands, combined with 
high-quality content enables ER to distribute 
our content across multiple platforms, giving 
us a unique ability to continue to deliver 
growth and value to shareholders.
ER has a number of agreements in negotiation 
with major US studios to option its properties 
and characters for worldwide theatrical film 
production and distribution.   The benefits to 
6
(** Source PwC “Global Entertainment and Media Outlook 2006 – 2010’’ Report)
 Entertainment Rights Plc Annual Report and Accounts 2007  7
a brand from the release of a major theatrical 
film are significant and ER expects to benefit 
from these agreements in the medium-term.
In 2007, the Company acquired the iconic and 
globally-recognised brand Where’s Wally?® 
and plans are underway for this unique brand, 
which will be unveiled at the forthcoming 
MIPCOM TV market in October 2008.  A 
combination of live-action and new animated 
content is in development with a strong bias 
towards global multi-platform exploitation. 
Commercial Highlights
Global Content & Distribution
ER has a leading position in the  global  
children’s and family programming 
distribution market.  ER’s in-house TV 
distribution team sells programmes interna-
tionally to broadcasters around the world and 
the production process allows for the creation 
of both long-form and short-form content, 
creating numerous digital opportunities for 
broadcasters as well as online, VOD, IPTV 
and mobile opportunities.  The content 
portfolio now stands at over 3,600 hours 
of children’s and family programming and 
continues to expand across a range of 
demographics from pre-school, children’s 
and family programming to pre-teen and 
teenagers.  
ER’s programming is licensed to more than 
170 territories around the world including the 
key markets of the UK, USA, China, Japan, 
India, Russia, France, Germany and Italy.
2007 saw a very strong pipeline of new content 
with productions including Basil’s Swap 
Shop™ for BBC2, George of the Jungle™ for 
Cartoon Network (USA and Europe), Casper’s 
Scare School™ with Moonscoop for TF1 in 
France, Postman Pat® SDS for the BBC, 3-2-1 
Penguins!®  for the qubo® programming 
block on NBC Saturday mornings in the USA, 
The Wonderful Wizard of Ha’s™ at Big 
Idea and Guess with Jess® for the BBC and 
Treehouse.  The development and creation 
of new content is a key component of the 
Group’s strategy, as, in addition to driving 
revenue opportunities, new content keeps a 
brand fresh and contemporary with today’s 
consumers.  
The new series of Rupert Bear® has been 
sold to over 100 territories and currently airs 
on Super RTL (Germany), RAI Sat (Italy) and 
France 5.  In Germany, Rupert Bear® has 
become an overnight success and is already 
ranked as one of the highest rating pre-school 
shows on Super RTL.
In December 2007, the BBC commissioned 
Basil’s Swap Shop™, a new studio-based 
live entertainment show hosted by Basil 
Brush®.  The show is a revival of the classic 
Multi-Coloured Swap Shop and offers a mix of 
 
Casper’s Scare School
TM
 
Series sold into 80 territories and movie sold into 160 territories 
worldwide
A remarkable 95% brand awareness in the USA
PS2 game released in March 2008 8
interactive and comedy-based entertainment, 
sketches and games.  The new thirteen-part 
series premiered live on BBC2 as part of its 
Saturday morning line-up in January 2008 to 
high audience figures and ER is introducing 
the format to international broadcasters at 
the MIPTV media market in April 2008. 
ER has an enviable reputation as a distributor 
of content, both owned and on behalf of 
third parties.  ER is committed to securing 
new third-party content and this will continue 
to be a priority in 2008 and beyond.  ER 
already has in place partnerships with leading 
global toy companies Hasbro and Mattel.  
During 2007, ER secured the worldwide TV 
distribution rights (excluding North America) 
to the new animated series of Transformers® 
from Hasbro, with the theatrical feature film 
having grossed over $700m at the worldwide 
box office since its release in summer 2007.  
ER has since secured TV broadcast sales for 
the new series and has secured carriage with 
several European TV broadcasters including 
Nickelodeon (UK), Gulli (France) and Super 
RTL (Germany).  
ER continues its partnership with Mattel for 
Mattel’s Barbie® franchise, with two new 
titles released in 2007. Further releases are 
scheduled for 2008 with ER having secured 
the long-term distribution rights to the 2008 
release schedule.  The Barbie® movies 
currently air in over 150 countries and 
consistently deliver outstanding ratings.
Other third-party distribution rights include 
Dinotopia® Quest for the Ruby Sunstone: 
The Movie which ER acquired in summer 
2007. The 75 minute feature-length animated 
movie produced by Hallmark was showcased 
to international broadcasters at October’s 
MIPCOM media market and ER has since 
secured sales in over 30 markets.
In October 2007, ER acquired TV, video and 
merchandising distribution rights for Toopy 
& Binoo™ worldwide (save for the USA 
and Canada for TV and video, and Canada 
for merchandising). With its flexible format, 
the series is an attractive proposition to 
exploit as a strong multi-platform franchise 
as well as offering multiple licensing and 
merchandising opportunities.  Already a 
success on Treehouse in Canada, significant 
TV sales have been secured for Toopy & 
Binoo™, including RAI Sat (Italy), Cartoon 
Network (Latin America), Al Jazeera (Middle 
East) and Media Corp (Singapore).
US Operations
ER’s enhanced presence in the lucrative US 
market following the acquisition of Classic 
Media and Big Idea, underpins the Company’s 
strategy of targeting the children’s and family 
market.
Highlights during 2007 include:
The Original Christmas Classics™ including 
Rudolph The Red-Nosed Reindeer®, 
Frosty The Snowman™ and Santa Claus 
is Comin’ to Town® performed strongly 
at retail delivering an increase in home 
entertainment revenue of 25% on 2006.  This 
increase reflects the impact of the successful 
re-branding exercise undertaken during 2007, 
including extensive consumer research.  By 
applying ER’s brand management discipline 
to these family favourites, ER has experienced 
significant growth from this key revenue 
Where’s Wally?
®
 
Successful global publishing programme translated into 25 languages
Number one on UK children’s book chart following 2008 ‘World Book Day’ 
More than 46 million books sold to date worldwide
 Entertainment Rights Plc Annual Report and Accounts 2007   Entertainment Rights Plc Annual Report and Accounts 2007 
9
stream.  In addition, the three titles delivered 
significant ratings success on network TV 
in the USA, attracting 36 million aggregate 
viewers. The DVDs were supported by 
Classic Media’s first-ever national advertising 
campaign including television, print, radio 
and online exposure for the The Original 
Christmas Classics™.  
The new animated series of George of the 
Jungle™ debuted on Cartoon Network in the 
USA in January 2008 with strong initial ratings.  
International television sales of the series have 
been exceptionally strong across key territories 
including the UK, France and Germany.
Timed for the August 2007 release of the 
Underdog® feature film from Walt Disney 
Pictures, in association with Spyglass 
Entertainment, and for the July DVD launch 
of The Ultimate Underdog™ collection 
Volumes 1-3, Classic Media introduced a 
comprehensive merchandising programme 
around the Underdog® franchise, with over 
13 US licensing partners.  An agreement was 
also secured with the Coca-Cola Company to 
feature Underdog® in a prestigious national 
ad campaign for the Coca-Cola Classic brand, 
unveiled during the highly coveted US 2008 
Super Bowl broadcast.
Licensing and merchandising deals secured 
throughout the year include the master 
category pet food licence for Lassie®.  Other 
highlights included new deals for The Lone 
Ranger® with the brand celebrating its 75th 
anniversary in 2008 as well as for Casper the 
Friendly Ghost® and Gumby®.
After multiple years of double-digit growth 
in book sales, 2007 was a year of category 
expansion for Little Golden Books®, 
confirmed by merchandising agreements with 
high-profile licensees, representing renewals 
and new partnerships. A master toy licensee 
was appointed with Brainytoys to bring Little 
Golden Books® characters to life through 
new collections of electronic toys, figurines, 
plush and more.
Big Idea is the leading owner and creator 
of faith-and-values based programming 
for children and in 2007 the VeggieTales® 
franchise from Big Idea surpassed lifetime 
sales of over 52 million DVDs, over 13 million 
books and over 7 million albums since it was 
founded in 1993.  
Universal Pictures and Big Idea’s feature film 
The Pirates Who Don’t Do Anything™: A 
VeggieTales® Movie was released in the 
USA in January 2008 on over 1,300 screens. 
A multi-million dollar marketing, advertising, 
promotional and publicity campaign in 
conjunction with Universal Pictures led 
up to the movie’s premiere. Timed to the 
Universal Pictures release, Big Idea launched 
an extensive licensing programme featuring 
new movie-themed products including toys, 
apparel and books inspired by the movie.   The 
DVD of the movie is expected to be released 
in autumn 2008.  In October 2007, Big Idea 
released VeggieTales® – The Wonderful 
Wizard of Ha’s™ direct to video and this 
was a hit with the target audience, becoming 
VeggieTales®’s best selling DVD since 2002.
Big Idea is currently finalising production 
of a new series of 3-2-1 Penguins!® with 
its co-production partner in India, UTV.   
Episodes from this new series premiered 
in the USA in October 2007 on qubo®, the 
dedicated children’s block airing on NBC 
Saturday mornings, Telemundo and ION 
TV. The series is also proving popular with 
international broadcasters and has sold to 20 
territories to-date.
UK Operations   
Significant progress has been made in the UK 
operations throughout the year and ER has 
fully co-ordinated its marketing and strategic 
sales efforts across all platforms to exploit, 
strengthen and grow its market presence.  
Key to this is the exploitation of the licensing 
and merchandising rights to its wholly-owned 
or controlled characters and brands including  
Postman Pat®, Rupert Bear®, Guess with 
Jess®, Basil Brush® and Finley The Fire 
Engine™.
Shelf space continues to remain at a 
premium for pre-school products and the 
trend continued throughout 2007. Whilst 
this proved challenging, ER continued to 
successfully exploit its key relationships with 
UK retailers with products available in Asda, 
Mothercare, Tesco, Toys R Us and Woolworths,  10
Postman Pat
®
 
Sold into more than 200 territories worldwide 
‘Special Delivery Service’ to premiere on CBeebies and BBC2 autumn 2008 
Dedicated Postman Pat theatre tour to be launched in the UK spring 2009
tour of Basil of the Caribbean.  Basil Brush® 
also appeared in pantomime and there are 
plans for Basil Brush® to appear in leisure 
attractions throughout the UK from May 2008 
onwards.  This brand activity was supported 
by series six of The Basil Brush Show™ 
airing on the BBC in autumn 2007 as well as 
the launch of Basil’s Swap Shop™ on the 
BBC in January 2008.
With 45 shows already licensed to UK 
broadcasters, ER further strengthened its 
position in its domestic market with a sale 
of Finley The Fire Engine™ to leading 
children’s channel Cbeebies, brand new 
Transformers® Animated to Nickelodeon 
and Casper’s Scare School™ series to 
Cartoon Network.
International Operations
The first half of 2007 saw the integration 
of content and brands from the Classic 
Media portfolio into ER’s international sales 
ensuring the Company’s brands have a strong 
presence on the UK high street.  
The Postman Pat® brand re-launch is 
underway with Postman Pat® Special 
Delivery Service in production for CBeebies 
for transmission in autumn 2008.  Product 
development is now under way with Character 
Options, a leading UK toy company and 
master toy licensee for Postman Pat® 
Special Delivery Service.  An exciting range 
of products including track systems, locations, 
playsets and plush is being developed from 
this much-loved brand and is due to be 
launched at retail in January 2009 giving the 
brand an increased profile.  The toy launch 
will also be supported by a major national TV 
advertising campaign.
Postman Pat® continued his role as 
ambassador for helping children improve their 
reading and writing skills through a successful 
association with the National Literacy Trust. A 
new learning resource for pre-schoolers, the 
‘Postman Pat® Letters Pack’, was developed 
to help parents encourage their children to 
improve their reading and writing skills in a 
fun and entertaining way. 
Rupert Bear® Follow the Magic™ continues 
to be a ratings success on Five’s pre-school 
block, Milkshake.  With 30 licensees on board, 
the brand continues to grow its presence at 
retail with further programming currently in 
development.
Basil Brush® enjoyed a successful year in 
2007 with ER signing a three-year partnership 
with leading live events company Duo 
Entertainment Ltd for the nationwide theatre 
   11
agent for the Postman Pat® brand in Poland, 
Czech Republic and the Baltic States.
The Classic Media brand portfolio has 
benefited from the sales focus of ER’s 
international team and as a result of this 
a number of key deals have been signed.  
These include a pan-European toy deal with 
Giochi Preziosi for Casper the Friendly 
Ghost® and television sales in Germany, 
Australia, Finland, Denmark, Norway and the 
Netherlands, licensing deals for Hot Stuff® 
in Germany, France and South Africa and 
the appointment of a consumer products 
partner for Lassie® in Germany.  George of 
the Jungle™ has seen strong television sales 
with deals secured in Germany, Latin America 
(Disney Channel) and France.
ER’s new dedicated in-house live events team 
has delivered exceptional results with new 
partnerships in place across location-based 
entertainment venues and live theatre for 
brands including Casper the Friendly 
Ghost®, George of the Jungle™, Postman 
Pat® and Basil Brush®.  Showcasing the 
characters in exciting live situations brings 
the brands to life for consumers and 
additionally allows increased retail 
opportunities for product.  
operations and the second half the pursuit 
of new opportunities across international 
markets. ER has successfully managed  to 
increase both brand exposure and revenue 
through new distribution streams.
Internationally, licensing prospects for ER’s 
brands continued to increase with licensed 
product available in 39 territories around 
the world, including the USA, UK, Germany, 
France, Scandinavia, Australia and India.
Postman Pat® is appearing on China’s leading 
broadcaster, CCTV, which has licensed all 80 
x 15 minute episodes for its children’s block, 
CCTV-Kids.  Following the appointment of 
a licensing agent in the region, discussions 
are now at advanced stages with licensees 
to build a strong licensing, merchandise and 
publishing programme in China.
Following the launch of Rupert Bear® - 
Follow the Magic™ at MIPTV in April 2007 
the series has now been sold to over 100 
territories with the show being launched in a 
number of key markets in late 2007.  Home 
entertainment and consumer product roll-out 
plans are in place to support the brand.  In 
Germany, following a successful debut on 
Super RTL, Rupert Bear® is now one of the 
highest rating pre-school shows and plans 
are underway for Rupert Bear® to appear as 
a star attraction at Super RTL’s nationwide live 
tour which will run throughout 2008.
Postman Pat®’s international presence 
continues to grow with new licensing 
agreements secured in Australia and New 
Zealand.  The brand continues to develop 
in Germany where it airs on the number one 
pre-school platform Super RTL, with toy 
products due to be launched at retail in autumn 
2008.  Following a broadcast agreement 
with RTP in Portugal, licences for publishing, 
apparel and back-to-school have been signed 
in this territory.  As a result of television 
placement in a number of key emerging 
markets, including Russia, Latvia and Slovakia, 
Plus License has been appointed as licensing 
    Entertainment Rights Plc Annual Report and Accounts 2007 
Global Digital & Music
ER’s digital business had a very strong 
performance in 2007 with growth coming 
from the computer gaming market.  With 
growth in the global games market estimated 
at 70% between 2006 and 2007 and the value 
of the console and handheld market in the 
USA, Japan and western Europe projected to 
be worth $47 billion by 2011, this represents 
a key category for Entertainment Rights.  The 
inclusion of the Classic Media brands has 
greatly enhanced digital opportunities and 
revenues for the Group.
Autumn 2007 saw the launch of a dedicated 
UK multi-brand e-commerce store for ER’s 
key properties including Postman Pat®, 
Rupert Bear®, Basil Brush® and Jim Jam 
& Sunny™.  The new online store further 
strengthens ER’s multi-platform strategy and 
enables the Company to interact directly with 
consumers.  The Rupert Classic e-commerce 
store performed particularly well in 2007 with 
230% visitor growth from March to December 
and a 42% return rate on sale.
In line with ER’s multi-platform strategy for 
programming, Jim Jam & Sunny™ launched 
in the USA in 2007 on AOL’s kids platform KOL 
Jr., one of the top pre-school broadband sites 
in the USA.  With the population in the USA at 
over 300 million and broadband penetration 
of 60%, this agreement provides an excellent 
platform to introduce Jim Jam & Sunny™ to 
the USA market.  ER continues to work with 
its broadcasting partners to create ER brand 
micro-sites on key broadcaster sites, both in 
the UK and internationally.
Entertainment Rights has secured a number 
of key agreements for its content on digital 
gaming platforms including key brands 
Postman Pat®, Casper the Friendly Ghost®, 
George of the Jungle™, Underdog®, 
Lassie®, Rupert Bear® and Rocky & 
Bullwinkle™.  The eagerly awaited Turok® 
game was released by Touchstone in March 
2008 on the Playstation® 3 and Xbox 360™, 
with over 1 million units shipped at launch.
Where’s Wally?® offers significant 
opportunities in the gaming sector across a 
12
“
“
By 2011 there will be 
140 million mobile TV 
subscribers worldwide, 
generating revenues of 
$4.4 billion, according to 
Screen Digest. 
number of formats including Wii™, Nintendo 
DS™, online and mobile.  Brand plans to 
maximise the intrinsic opportunity of Where’s 
Wally?® for the multi-platform arena are 
well developed and will be implemented 
throughout 2008.
Online video is proving a significant sector 
for further distribution of ER’s portfolio, with 
particular demand for ER’s 1,000 plus hours 
of retro content, deals in place with online 
video providers Joost and Babelgum and 
further deals with key strategic partners in 
negotiation.
The VOD TV market continues to present 
opportunities for ER.  The Company has 
renewed key content agreements with Tiscali 
TV (formerly Homechoice) and BT Vision 
whilst securing new agreements with France 
Telecom for Orange UK and Sofrecom 
Poland. 
With over four billion mobile subscribers 
forecast by 2011 the mobile market offers 
significant growth opportunities for ER.  Key 
agreements have been secured with a number 
of content aggregators on a multi-territory 
basis for ER’s brands including She-Ra™ and 
BraveStarr® on Player X, He-Man® on Arena 
and Ghostbusters™, The Adventures of 
Waldo & Kitty™ and Fat Albert™ on ROK 
in China.  In the USA and Canada, mobile 
aggregator MobiTV continues to distribute 
over 50 hours of ER and Classic Media content 
on Spirit and other US mobile networks. Summary
ER remains extremely buoyant regarding its 
global business aspirations and, with one of 
the most extensive and valuable independent 
portfolios of children’s and family intellectual 
property assets in the world, the Company 
remains focused on strategically pursuing 
new revenue streams across both linear and 
digital platforms to increase profitability.
The commercial and sales success of the 
Group continued during 2007, and 2008 
presents a number of significant brand 
opportunities, including the re-launch of 
Postman Pat®.
ER continues to seek high-quality third-party 
distribution rights to add to its portfolio of 
content, as well as following a strategy of 
investing in its high-margin wholly-owned 
brands.  ER is well positioned to drive organic 
growth across its strong global portfolio of 
assets.
Jane Smith 
Chief Commercial & Creative Director
8 April 2008
13
“
“
ComScore has reported that three-quarters of US internet users 
watched a streamed, progressively downloaded video  
in September 2007. 
 
 VeggieTales
®
 
One of the highest rating shows on qubo
®
, NBC’s Saturday morning block
More than 52 million DVDs, 13 million books and 7 million albums sold 
to date
Sold into more than 20 territories worldwide  Entertainment Rights Plc Annual Report and Accounts 2007 
14
Chief Finance  
& Operations  
Director’s Review
Elizabeth Gaines Chief Finance & Operations Director
Financial Overview
The results for the year ended 31 December 2007 
demonstrate that considerable achievements 
were made in the year.  Revenue increased by 
129% to £68.1m (2006: £29.7m), underlying 
EBITDA increased by 106% to £31.8m (2006: 
£15.5m) and reported EBITDA increased by 
108% to £30.8m (2006: £14.8m).  Group operating 
profit increased to £16.4m (2006: £10.2m) and 
profit before tax increased to £7.9m (2006: 
£7.8m).  Whilst the overall performance was 
below expectations, the majority of the business 
traded well and performance improved when 
compared with 2006.   The shortfall in underlying 
profit before tax reflects a number of factors, 
namely the DVD manufacturing and supply 
issues encountered in the UK in the last quarter 
of 2007, revenue from US DVD sales in the key 
fourth trading quarter of 2007 being slightly 
below expectations and higher variable market 
interest rates in the second half of the year which, 
whilst ER’s exposure is limited, resulted in higher 
interest charges.
The short-term UK DVD manufacturing and 
distribution issues encountered by ER’s exclusive 
sales and distribution partner, UPUK, impacted 
during the important last quarter of 2007 and 
was a significant setback during a key trading 
period for the business.  This issue has now been 
resolved and the supply of DVDs to UK retailers 
has been restored.  ER is seeking financial 
compensation for the losses incurred. However, 
the timing and amount of compensation cannot 
at this stage be reliably estimated.
Following the acquisition of Classic Media 
in January 2007, the Group’s exposure to 
movements in the US dollar (“USD”) increased.  
The impact of the depreciation of the USD 
during the year under review has been identified 
and adjusted in the constant currency figures in 
order to assist in the comparison of like-for-like 
performance when compared with 2006.  The 
2007 results are translated at an average rate 
for the US dollar of 2.002 and the euro of 1.487, 
compared with USD 1.947 and euro 1.473 for 
2006.  Entertainment Rights Plc Annual Report and Accounts 2007 
15
The integration and reorganisation of Classic 
Media was a significant task.  In addition 
to the operational tasks involved with the 
integration process, exceptional integration, 
reorganisation and re-branding costs of 
£5.4m were incurred.  Included within these 
costs are £2.8m of payments to certain former 
executives of Classic Media for the termination 
of their employment contracts.  The costs 
of termination were paid by the former 
shareholders of Classic Media and were not 
borne by ER.  However, in accordance with 
IFRS 3, these costs are required to be 
recognised by ER as a post-acquisition 
expense.  The benefits of the integration of 
Classic Media did enable the enlarged Group 
to realise financial synergies during the year 
under review.
On an underlying basis, operating profit 
increased 107% to £22.5m (2006: £10.9m), profit 
before tax increased 45% to £12.6m (2006: £8.7m) 
and profit after tax decreased 7% to £6.5m (2006: 
£7.1m).  On an underlying basis and adjusting for 
the impact of USD movements, profit after tax 
was £7.6m representing an increase of 7% on 
comparable 2006 performance.
Net debt at the year end was £107.9m, reflecting 
the restructured borrowing facilities as part of the 
acquisition of Classic Media.  At 31 December 
2007, the Group had available cash resources of 
£21.7m.
Acquisition of Classic Media
The results for the year ended 31 December 
2007 include Classic Media from the date of 
acquisition on 11 January 2007.  The acquisition 
has had a transformational impact on the Group 
and has greatly enhanced the presence of ER 
in the world’s largest media market.  Classic 
Media was acquired for a total consideration of 
£156m consisting of the issuance of £19m of new 
ER shares with the balance in cash.  The cash 
consideration was funded by a placing and open 
offer which raised £69m and the refinancing of 
the enlarged Group’s indebtedness.  
At the time of acquisition, a number of synergies 
were identified representing both revenue 
synergies and cost benefits.  Revenue synergies 
arise from the distribution of Classic’s extensive 
library of programming to international broadcast 
partners utilising ER’s existing international 
sales infrastructure as well as the distribution 
of ER’s content and brands in the lucrative US 
market.  Cost benefits have arisen as a result of 
the restructuring of the senior executive team at 
Classic Media, the combining of ER and Classic 
Media’s trade show representation and the 
closure of Classic Media’s Los Angeles-based 
operations.
Income Statement
During the year, revenue increased 129% to 
£68.1m (2006: £29.7m).  Adjusting for the impact 
of the depreciation in the USD, sales increased 
134% to £69.5m.  The gross margin generated 
on the revenue was 53% (2006: 57%), reflecting 
the combined operating margin of both ER and 
Classic Media.  The reported gross margin is 
calculated by including the amortisation charge 
on intangible assets as a cost of sale.  The 
underlying gross margin before amortisation 
was 66%.
Over 70% of the Group’s revenue in 2007 was 
generated in North & South America. The UK 
generated 14% of Group revenue.  In the year 
under review, the Group recorded growth in all 
of its key territories reflecting the strong sales 
capabilities of the international distribution 
team, the strength of relationships with key 
broadcasters around the world as well as the 
global recognition of ER’s key brands.
Underlying administration expenses were 
£13.4m (2006: £6.1m) after adjusting for one-off 
integration, reorganisation and re-branding 
costs and the share option charge.  The increase 
in underlying administration expenses reflects 
the acquisition of Classic Media.  Entertainment Rights Plc Annual Report and Accounts 2007 
Underlying Performance
In establishing the basis for underlying 
performance, the following items have been 
excluded:
•	 the share option charge of £0.7m  
 (2006: £0.5m) 
•	 the gain on the re-measurement of financial  
 instruments to fair value of £1.5m  
 (2006: loss £0.2m) 
•	 non-recurring items of £5.4m (2006: £0.1m)  
 relating to the integration and restructuring,  
 reorganisation and re-branding of Classic  
 Media.  The 2006 non-recurring item related  
 to aborted acquisition costs.
The non-recurring items during the year consist 
of £2.8m of termination payments to former 
executives of Classic Media which, whilst not 
borne by ER, are required to be recognised 
post-acquisition under IFRS 3.  Integration and 
restructuring costs of £1.2m were incurred as 
a result of the closure of Classic Media’s Los 
Angeles operations and the restructuring of 
the New York operations.  In addition, one-off 
re-branding costs of £1.2m were incurred in the 
re-positioning of the Christmas Classics brand 
in the US market.  Non-recurring costs of £0.2m 
were incurred on the closure of the Lassie Pet 
Products operation in the USA.  This business 
represented a non-core activity of the Group 
and ceased during 2007.  
Key Performance Indicators (“KPIs”)
The Group continues to manage its operational 
performance through the monitoring of a 
number of KPIs.  These include a gross profit 
margin of 53% (2006: 57%), an underlying 
EBITDA of £31.8m (2006: £15.5m), an underlying 
profit before tax of £12.6m (2006: £8.7m) and 
an underlying basic earnings per share of 0.91 
pence (2006: 1.70 pence).  The KPIs for the year 
under review reflect the integration of Classic 
Media and the underlying performance of the 
Group compared with the business strategy.
Intangible Assets and Associated 
Amortisation
During the year, the net book value of intangible 
assets increased from £64m to £161m.  The 
increase reflects the additions on the acquisition 
16
of Classic Media of £88m, investment in 
programming of £16m and additions to copyrights 
of £3m, partly offset by an amortisation charge 
for 2007 of £9m.  
The additions to investment in programming 
reflect the continued investment in core, 
high-margin owned programming, including 
Postman Pat® and Rupert Bear®, as well as 
investment in Classic Media titles, including 
George of the Jungle
TM
, Casper the Friendly 
Ghost® and VeggieTales®.  
The amortisation charge of £9m (2006: £4m) 
reflects the charge made to write down all 
costs associated with copyright and investment 
in programming over a straight-line 20-year 
basis.  Whilst it has been proven that the useful 
economic life of copyright assets is longer 
than 20 years, following a detailed review of 
comparable amortisation policies subsequent to 
the acquisition of Classic Media, it was decided 
to maintain the policy of amortising copyright 
assets on a 20-year straight-line basis.  In addition, 
a decision has been made to simplify the method 
for amortising investment in programming by 
adopting a 20-year straight-line basis.  Previously, 
this class of intangible asset was amortised on 
a revenue forecast basis and the average life of 
the portfolio at December 2006 was 17.3 years. 
To ensure greater transparency, this has been 
simplified to the 20-year straight-line method 
and the impact of this change in estimate is less 
than 5% of the charge for 2007.
Cash Flow / Net Debt
Cash inflow from operations increased to £16.2m 
(2006: £1.2m), representing a conversion of 99% 
of operating profit.  
Investing activities include acquisitions of fixed 
assets together with acquisitions and disposals 
of businesses.  In 2007, ER invested £16.9m in 
copyright acquisitions and new programming 
across its extensive portfolio of intellectual 
property assets.
Net debt at 31 December 2007 was £107.9m, 
representing total gross debt facilities of £129.7m, 
of which £9m remained available to be drawn, as 
well as cash in hand of £12.7m. During the year, 
£65m of the term debt facilities was converted   Entertainment Rights Plc Annual Report and Accounts 2007 
Taxation
The tax charge in the year was £4.4m representing 
an effective rate of 55% of profit before tax (2006: 
21%). The effective rate of tax on underlying profit 
before tax was 48%. The effective rate in 2007 is 
higher than the standard rate of UK corporation 
tax primarily as a result of a higher proportion 
of profits generated from the USA following 
the acquisition of Classic Media. The combined 
federal and state taxes across the jurisdictions 
Classic Media operates in resulted in an effective 
rate of tax of 42% for the US operations.  In 
addition, during the year, the effective rate of tax 
was impacted by the allocation of losses across 
the US and UK and the inability to offset those 
losses.  As part of the Group’s integration of 
Classic Media, the Group has refinanced its US 
investments.  As a result, the Group’s financing 
structure is more efficient.  One consequence of 
this will be that the Group’s effective tax rate is 
expected to be lower in future years.
Earnings per share
Basic earnings per share are 0.49 pence (2006: 
1.5 pence).  Underlying basic earnings per share 
before exceptional and non-recurring items are 
0.91 pence (2006: 1.7pence).  On a constant 
currency basis, underlying basic earnings per 
share are 1.05 pence (2006: 1.7pence).
Elizabeth Gaines
Chief Finance & Operations Director
8 April 2008
17
to USD providing a natural hedge against the 
impact of trading as a result of movements in the 
USD.  All bank covenants were met during the 
period under review.
The Group’s borrowing requirements typically 
peak around September, reflecting the 
seasonality of trading.  In addition, investment 
in new programming typically occurs in the 
first three quarters of the year, with delivery to 
broadcasters occurring at the end of the third 
quarter for the autumn schedule.  During the 
fourth quarter, there tends to be a cash inflow 
reflecting Christmas trading activity followed by 
a further cash inflow in the first quarter of the 
following year from the balance of Christmas 
sales.
Net financing costs for the period were £8.5m 
(2006: £2.4m).  Net interest costs of £9m were 
incurred on the Group’s bank facilities.  The 
Group incurs interest based on fixed margins 
over interbank (“LIBOR”) rates.  In April 2007, 
the Group implemented an interest rate hedging 
strategy through the utilisation of interest rate 
collars which have the effect of limiting the 
exposure to movements in LIBOR rates.  The 
interest rate collar on the sterling-denomi-
nated debt is currently effective as LIBOR has 
exceeded the capped rate of 6% whereas LIBOR 
on the USD-denominated debt is currently 
within the collared interest rate range.  Included 
within the net financing costs are also the fair 
value adjustments to derivatives and unrealised 
foreign exchange movements.
ER will continue to maintain its policy of managing 
its exposure to interest rate and currency 
movements through the implementation of 
appropriate interest and currency hedging 
strategies.  Entertainment Rights Plc Annual Report and Accounts 2007 
18
Board of Directors
Rod Bransgrove is Non-Executive Chairman. 
His background includes founding Imperial 
Pharmaceutical Services Ltd in 1986, which 
merged with Shire Pharmaceuticals Group 
plc (‘‘Shire’’) in September 1995. He remained 
a Non-Executive Director of Shire until June 
1998.  He co-founded The Tidings Trading 
Co Limited in 1996, which merged with 
Entertainment Rights (then Sleepy Kids plc) 
in December 1998 and has been Chairman of 
Entertainment Rights since that date. Current 
directorships include Rose Bowl plc and 
subsidiaries and Pep Tcell Ltd.
Nick Phillips is Chief Executive Officer and 
joined the Company in March 2008. Nick has 
spent his entire career in the media sector and 
was previously Chairman and Chief Executive 
Officer of Warner Music UK Limited. Prior to 
this, Nick served as Managing Director and 
Chairman of Universal Music UK Limited. He 
has also served on the board of the British 
Phonographic Industry and is currently a 
non-executive director of I Media-Cast, a 
Monaco-based company and Edge Group 
Limited. 
Elizabeth Gaines CA MappFin (Macq) is 
Chief Finance & Operations Director and 
joined the Company in August 2002. Elizabeth 
was previously Executive Finance Director 
and Chief Executive Officer of Heytesbury Pty 
Ltd., a private company wholly-owned by the 
Holmes à Court family. Prior to this, Elizabeth 
held senior accounting, planning and investor 
relations roles at Bankwest in Australia and 
Kleinwort Benson in the UK. She qualified as 
a Chartered Accountant with Ernst & Young 
in 1987. Elizabeth holds a Master of Applied 
Finance degree from Macquarie University.
Jane Smith is Chief Commercial & Creative  
Director and joined the Company in December 
1999. Jane has spent her entire career in the 
media sector. Her background in the global 
children’s and family arena includes the Jim 
Henson Organisation as Head of International 
Television Sales; Executive Director of HIT 
Entertainment; Senior Vice President of 
International Sales and Co-production at 
Sunbow Entertainment (New York); and Vice 
President of Flextech Rights.
Irvin Fishman FCA is a Non-Executive 
Director and has been with the Company 
since its formation in 1989. He qualified as 
a Chartered Accountant in 1975 and has 
been a Partner in Auerbach Hope, Chartered 
Accountants since 1978.
Craig Hemmings is a Non-Executive Director. 
He joined the Company in December 
1999 as an Executive Director and became 
a Non-Executive Director in September 
2004. He is currently an executive director 
of a number of private companies in the 
leisure, hotels, gaming and entertainment 
industries.
Julian Paul FCA is a Non-Executive Director, 
appointed in March 1996. From 1991 until 
May 1997 he was Deputy Chairman of Castle 
Communications plc before becoming Deputy 
Chairman of Eagle Rock Entertainment 
Limited, of which he was a co-founder.  Other 
current directorships include Pilat Media 
Global plc, Stagecoach Theatre Arts plc, Ekay 
plc and Edge Performance VCT plc. He is also 
Non-Executive Chairman of Cellcast plc and 
Senior Non-Executive Director of Inspired 
Gaming Group plc. 19
 Entertainment Rights Plc Annual Report and Accounts 2007 
Report of the Directors
The Directors present their Annual Report together 
with the audited financial statements for the year 
ended 31 December 2007.
Principal activities
The principal activity of Entertainment Rights Plc 
(‘the Company’) and its subsidiaries (‘the Group’) 
during the year continues to be that of controlling 
or owning distribution and exploitation rights 
to a broad catalogue of children’s and family 
programming.
The Group exploits its intellectual property 
rights across television distribution, licensing and 
merchandising, home entertainment and digital 
markets.
A detailed review of the Group’s activities is 
provided in the Chief Commercial & Creative 
Director’s Review and the Chief Finance and 
Operations Director’s Review on pages 6 to 17.
Business review and key risks
The information that fulfils the requirements of the 
business review can be found in the Chief Finance 
& Operations Director’s Review on pages 14 to 
17, the Chairman’s Statement on pages 2 to 4, the 
Chief Commercial & Creative Director’s Review on 
pages 6 to 13, the Governance and Responsibility 
section on page 23, the Statement of Directors’ 
Responsibilities on page 27, and notes 25 and 
33 to the Financial Statements in addition to the 
information disclosed within this report.
The Board uses a range of key performance 
indicators to monitor and manage the business and 
to ensure focus is maintained on the key priorities 
of the Group. These are found on page 16 in the 
Chief Finance & Operations Director’s Review.
The Group faces a number of risks and uncertainties. 
The principal risks and uncertainties are listed 
below.
Interest rate fluctuations
The Group has increased its level of borrowings in 
order to fund part of the Classic Media acquisition. 
This increase in borrowings has increased the 
Group’s absolute exposure to interest rate 
fluctuations. The Group manages this risk via 
the utilisation of financial instruments such as 
interest rate derivatives. These include interest 
rate collars as described in note 25 to the Financial 
Statements.
Exchange rate fluctuations
The Group currently operates in several countries 
and is, and will continue to be, exposed to 
foreign currency rate fluctuations. The Group uses 
external advice on currency dealings with its bank. 
Where possible, natural hedges are used and, if 
appropriate, derivatives are considered. Further 
information is provided in note 25 to the Financial 
Statements.
Technological changes
The entertainment industry continues to 
undergo significant changes, primarily due to 
technological developments. Due to the rapid 
growth of technology, shifting consumer tastes 
and the popularity and availability of other forms 
of entertainment, it is impossible to predict the 
overall effect these factors will have on the potential 
revenue from, and profitability of, television and 
home entertainment programming. The Group’s 
library is digitised in order to be exploited across 
all media.
Dependence on retailers and distributors
The retail market for the Group’s licensed consumer 
products and home entertainment products is 
dominated by a number of major retailers and 
distribution partners. If any of these major retailers 
or distributors were to develop financial instability, 
such instability could have an adverse effect on 
the Group’s business, operating results or financial 
condition. Additionally, these major retailers and 
distributors could exert influence on pricing which 
could adversely affect the Group’s profits. The 
Group has direct relationships with key retailers 
and distributors and monitors their performance.
Piracy and counterfeit goods
Piracy of media products, including digital and 
internet piracy and the sale of counterfeit consumer 
products, may decrease revenue received from the 
exploitation of the Group’s products. Entertainment 
content piracy is extensive in many parts of the world 
and is made easier by technological advances.  20
 Entertainment Rights Plc Annual Report and Accounts 2007 
Report of the Directors
Preventative measures and technology are applied 
to products and goods and are monitored with key 
retailers throughout the world.
The Group’s intellectual property rights
A substantial element of the Group’s business 
relies on the use of intellectual property. Whilst 
the Group relies on trademark, copyright and 
other intellectual property laws to establish and 
protect its proprietary rights, it cannot be certain 
that its proprietary rights will not be challenged, 
limited, invalidated or circumvented. Despite 
trademark and copyright protection and similar 
intellectual property protection laws, third parties 
may be able to copy, infringe or otherwise profit 
from its proprietary rights without the Group’s 
authorisation. The risk is mitigated through 
rigorous due diligence, trademark registration and 
protection, in addition to the activities of the in-
house legal department.
Results and dividends
The Income Statement on page 36 shows a profit 
for the year after taxation of £3,535,000 (2006: 
£6,203,000).
The Directors do not recommend payment of a 
dividend (2006: £nil).
Directors
The names and brief biographies of Directors 
holding office at 31 December 2007 are provided 
on page 18.
Mike Heap resigned as Chief Executive Officer on 
17 March 2008 and as a Director on 18 March 2008. 
Nick Phillips was appointed as Chief Executive 
Officer and as a Director on 18 March 2008.
Under Article 102 of the Company’s Articles of 
Association, one-third of the Board are required 
to offer themselves for re-election each year at 
the AGM. Accordingly, Craig Hemmings and Rod 
Bransgrove retire by rotation at this year’s AGM 
and offer themselves for re-election. Nick Phillips, 
being a Director appointed by the Board in the last 
12 months, also offers himself for re-election at the 
AGM.
Details of Directors’ emoluments together with 
Directors’ interests in shares and share options are 
provided in the Remuneration Report on pages 
30 to 33. Other than as disclosed on page 31, no 
Director had any other beneficial interest in either 
the Company or any of its subsidiary undertakings 
at any time during the year.
The Company maintains directors’ and officers’ 
liability insurance.
Share capital
The structure of the Company’s capital is 
represented by ordinary shares. There are no 
specific obligations attached to these shares, or 
any restrictions on the transfer or voting rights 
outside those ordinarily applied. Allotted and 
fully paid share capital at 31 December 2007 
was 732,537,145 Ordinary Shares of 5p each 
(2006:415,055,094). There are no restrictions on the 
voting rights of these shares and details of changes 
in the authorised and allotted share capital are 
provided in note 26 to the Financial Statements.
Substantial shareholdings
The Group was aware as at 7 April 2008 of the 
following interests held directly or indirectly in 
three per cent or more of the Group’s issued share 
capital. 21
 Entertainment Rights Plc Annual Report and Accounts 2007 
 Ordinary Shares 
 of 5p each %
Ashby Manor Limited 125,486,655 17.13
SVG Capital 89,199,534 12.18
SP Classic Holdings Plc 66,867,268 9.13
Capital Research &  
Management Company 51,000,000 6.96
Taube Hudson Stonex  
Partners 37,456,158 5.11
UBS Global Asset  
Management 28,203,584 3.85
Legal & General Investment  
Management 26,218,806 3.58
INVESCO Asset Management 23,378,597 3.19
Annual General Meeting
The notice of the Annual General Meeting is 
set out in a separate circular to shareholders 
accompanying the Annual Report and Accounts 
with an explanation of the resolutions to be 
proposed.
Shareholders will note from the separate Notice 
of Annual General Meeting that they are asked 
to consider and, if thought fit, pass a number of 
resolutions as special business. The majority of 
these resolutions are dealt with as routine business 
at the annual general meetings of most public 
companies.
Employees
The quality and commitment of the Group’s staff 
are crucial to its continued success. Staff policies 
and programmes are designed to encourage staff 
to contribute significantly to the performance of the 
Group, and to reward staff accordingly. The Group 
aims to keep staff informed of developments in the 
Group by way of regular meetings, publications 
and distribution of the Annual Report.
It is the Group’s policy not to discriminate 
between employees on any grounds. Full and fair 
consideration is given to the recruitment, training 
and promotion of disabled people and should 
staff become disabled during the course of their 
employment, efforts would be made to provide 
appropriate retraining.
Supplier payment policy
The Company and the Group does not have 
a standard or code that deals specifically with 
payment of creditors. The Group seeks to agree 
the terms of payment with suppliers and then pays 
in accordance with the agreed terms. At year-end, 
53 days of purchases were outstanding (2006: 50 
days) based on the ratio of trade creditors at the 
end of the period to the amounts invoiced during 
the period by trade creditors.
Charitable and political activities and donations
In conjunction with its characters and brands, the 
Group was involved, during the year, with various 
charities through sponsorship events and product 
donations.
The Group made cash charitable donations 
totalling £36,236 in the year (2006: £200). No 
political donations were made (2006: nil).
Health and safety
The Group recognises the importance of 
safeguarding the health, safety and welfare of 
its employees and has a health and safety policy 
in place. Regular updates are communicated 
to employees and periodic audits have been 
undertaken and resulting recommendations acted 
upon.
Environment policy
The Group recognises the importance of 
environmental responsibility and, where practicable, 
has an environmental policy in place. This includes 
the recycling of paper waste and computer hardware. 
The Board believes the nature of its activities has a 
minimal effect on the environment.
Corporate governance
The Group’s application of the principles of 
corporate governance is separately disclosed on 
pages 23 to 26.
Disclosure of information to auditors
The Directors who held office at the date of 
approval of this Directors’ report confirm that, so 
far as they are each aware, there is no relevant 
audit information of which the Company’s auditors 
are unaware; and each Director has taken all the 
steps that he/she ought to have taken as a Director  22
 Entertainment Rights Plc Annual Report and Accounts 2007 
Report of the Directors
to make himself/herself aware of any relevant audit 
information and to establish that the Company’s 
auditors are aware of that information.
Auditors
In accordance with section 489 of the Companies 
Act 2006, a resolution to re-appoint KPMG Audit 
Plc as auditors is to be proposed at the forthcoming 
Annual General Meeting.
Registered office: 
58-60 Berners Street 
London W1T 3JS
By order of the Board of Directors and signed on 
their behalf by
Irvin Fishman 
Company Secretary 
8 April 2008 23
 Entertainment Rights Plc Annual Report and Accounts 2007 
Corporate Governance
Statement of application of the principles in the 
Combined Code
The Board of Entertainment Rights Plc is 
accountable to the Company’s shareholders for 
good corporate governance and in doing so is 
committed to the principles outlined in the 2006 
FRC Combined Code on Corporate Governance.
The statement below describes how the principles of 
Corporate Governance practised by the Company 
comply with the provisions set out in section 1 of 
the 2006 FRC Combined Code. The Company 
has complied with the 2006 FRC Combined Code 
throughout the financial year except for the fact 
that not all the Non-Executive Directors meet 
all the requirements as set out in the Code, and, 
as noted below, there is no Senior Independent 
Director and formal Annual Performance Review.
The Board of Directors
As at 31 December 2007, the Board comprised 
seven Directors: three Executive Directors and 
four Non-Executive Directors who bring a diversity 
of skills and experience to the Board. The Board 
considers the Non-Executive Directors to be 
independent of management and free from any 
business or other relationships (except for I. 
Fishman in his capacity as Company Secretary) 
which could materially interfere with the exercise 
of their independent judgement.
The Board is accountable to shareholders for 
ensuring that the Group is appropriately managed 
and achieves the strategic objectives agreed by the 
Board. In accordance with the Combined Code, 
the Board has established guidelines requiring 
specific matters to be discussed by the full Board 
of Directors, such as:
l management structure and remuneration
l major acquisitions and disposals
l overall treasury, financing , budget and strategic 
planning
l corporate governance and associated risks and 
controls
The Board meets on average 10 times a year and 
follows a formal agenda. The Board is provided 
with monthly management account packs and 
other relevant information in a timely manner and 
in a form and quality that it considers appropriate 
to enable it to discharge its duties. The balance of 
the Board ensures that no one individual or group 
dominates decisions made by the Board. The 
Directors have access to the advice and services 
of the Company Secretary and there is a written 
procedure for obtaining independent professional 
advice at the Company’s expense.
A third of the Board are subject to re-election 
every year, as are new Directors who must seek re-
election at the first AGM after their appointment. 
Given its small size, changes to the composition of 
the Board are infrequent, however consideration 
is given to ensure that the composition of the 
Board is appropriate for the size and nature of the 
Company.
Meetings attended 2007
 Board Remuneration Audit Nomination
 Meetings Committee Committee Committee
Total number  
of meetings 11 2 2 1
R. Bransgrove 10 1 2 1
M. Heap
1
 11 n/a n/a 1
N. Phillips
2
 n/a n/a n/a n/a
E. Gaines 10 n/a n/a n/a
J. Smith 10 n/a n/a n/a
I. Fishman 8 2 2 n/a
C. Hemmings 10 n/a n/a 1
J. Paul 10 2 2 n/a
1. M. Heap resigned as a Director on 18 March 2008.
2. N. Phillips was appointed as a Director on 18 March 2008.
Performance evaluation
The Directors are constantly evaluated against 
their performance and commitment to their 
roles and duties as Directors. The Chairman 
addresses weakness and, where appropriate, 
seeks resignations of Directors and proposes new 
members to be appointed to the Board. 24
 Entertainment Rights Plc Annual Report and Accounts 2007 
Corporate Governance
Board committees
There are three committees, the Audit Committee, 
the Remuneration Committee and the Nomination 
Committee (the latter established in February 
2007), which are described in detail below. Each 
committee has written terms of reference agreed 
by the Board which are reviewed annually.
The following table shows the Chairman and 
members of each committee.
 Remuneration Audit Nomination
Name Committee Committee Committee
R. Bransgrove 4	 4 4 	Chairman
M. Heap
1
   4
N. Phillips
1
   4
I. Fishman 4 4 	Chairman 
C. Hemmings   4
J. Paul 4 	Chairman 4 
1.  M. Heap retired from the Nomination Committee and N. 
Phillips was appointed on 18 March 2008.
Audit Committee
The Audit Committee, whose terms of reference 
cover matters recommended by the Combined 
Code, comprises R. Bransgrove, I. Fishman and J. 
Paul, and is chaired by I. Fishman. The Committee 
meets at least twice a year. The Committee 
is responsible for monitoring internal control 
throughout the Group, approving the Group’s 
accounting policies and reviewing the interim and 
final financial statements before submission to the 
Board. The auditors have direct access to the Audit 
Committee and are invited to attend two formal 
meetings to review the interim and full-year results. 
The Audit Committee also meets to address the 
annual accounts and important audit, accounting 
and taxation matters as well as compliance with 
legal requirements and it monitors the adequacy 
of the Group’s internal controls and accounting 
policies.
The Board has considered the need for an internal 
audit function but believes that the size of the 
business post-acquisition of Classic Media does 
not, at present, justify a full-time appointment. The 
Board continues to monitor this requirement and 
will act accordingly.
These responsibilities are discharged in part through 
an annual risk assessment, review of management 
accounts and financial statements and meetings 
with external auditors. Further information on 
internal controls is provided below.
In addition, the Audit Committee is responsible 
for ensuring the independence and effectiveness 
of auditors, through comparison with other 
comparable companies’ audit fees and for reviewing 
the scope of the work undertaken. KPMG Audit Plc 
are required to give written confirmation of their 
independence. In addition, non-audit services are 
reviewed and the audit partner is rotated on a 
periodic basis.
The Audit Committee has reviewed arrangements 
for whistleblowing and has put a policy in place 
ensuring that the appropriate procedures are 
followed.
An analysis of fees earned by external auditors is 
provided in note 5 to the Financial Statements.
Remuneration Committee
The Remuneration Committee comprises 
R. Bransgrove, I. Fishman and J. Paul and is 
chaired by J. Paul. The Committee is responsible 
for determining the contract terms, remuneration, 
share options and other benefits of Executive 
Directors. In addition, the Committee agrees the 
parameters of remuneration for the staff.
The Group has received advice from time to time 
from external independent advisers on both 
executive and non-executive remuneration. A 
more detailed review of the policy is set out on 
pages 28 to 33.
Nomination Committee
The Nomination Committee was established in 
February 2007 and is responsible for reviewing 
the structure, size and composition of the Board. 
The members are R. Bransgrove (Chairman), 
C. Hemmings and N. Phillips. M. Heap was a 
member of the Committee until 18 March when 
he tendered his resignation, At this time N. Phillips 
was appointed in his place. The Committee gives 
consideration to succession planning and, before 
appointments are made by the Board, ensures that  25
 Entertainment Rights Plc Annual Report and Accounts 2007 
the roles and capabilities of candidates are defined 
and identified.
Compliance with Combined Code provisions
The Company has complied throughout the year 
with the Code provisions as set out in section 
1 of the Combined Code with the following 
exceptions:
1. Independence of Board Members. I. Fishman 
joined the Company in 1989 and has therefore 
been connected with the Group for more than 
15 years. He is also the Company Secretary 
for the Group. Furthermore, the Group had 
employed C. Hemmings within the last five 
years. In addition, R. Bransgrove has been 
granted a limited number of share options 
as disclosed in the table on page 32 and is a 
significant shareholder in his own right. The 
Board continues to monitor the composition of 
the Board in line with the recommendations of 
the Combined Code. The Board has considered 
the independence of these Directors with 
particular care. All Directors contribute 
significantly through their individual skills and 
their considerable knowledge of both the 
Company and the industry, and they currently 
provide continuity and an overall balance 
to the Board. In particular, they all continue 
to demonstrate a strong independence of 
management in the manner in which they 
discharge their responsibilities as Directors. 
Accordingly, the Board considers that R. 
Bransgrove, C. Hemmings and I. Fishman are 
independent Non-Executive Directors (A.3.1).
2. Senior Independent Director. The Board 
believes that the four Non-Executive Directors 
are sufficiently independent of the Executives 
responsible for the running of the Company’s 
day-to-day business. In addition, the Group 
has a policy of maintaining an active dialogue 
with institutional shareholders through 
individual meetings with senior management, 
during which their views are exchanged and 
then shared with the Board. The Board is of 
the opinion that the appointment of a Senior 
Independent Director would not assist further in 
dialogue with shareholders. Any shareholder is 
free to meet with or discuss any issues that may 
arise with any of the Directors or the Company 
Secretary as they choose at any time. It is felt 
that an additional single point of contact other 
than the Chairman would not be helpful. The 
Board will keep this situation under review 
(A.2.1).
3. Annual Performance Review. Hitherto, there has 
been no formal process covering performance 
evaluation of the Board. However, this is a 
matter that has received the attention of the 
Board and continues to be monitored (A.6).
4. Nomination Committee. In February 2007, a 
Nomination Committee was formed in light 
of the Company’s growth and acquisition of 
Classic Media. Prior to this the Audit Committee 
monitored the Group’s systems and controls, 
which included ensuring the right composition 
of executive management, and reporting any 
issues to the Board. (A.4.1).
Internal control and risk management
The Board is responsible for the Group’s system of 
internal control for safeguarding Company assets 
and shareholder investments. Such a system is 
designed to manage rather than eliminate the 
risk of failure to achieve business objectives and 
can only provide reasonable and not absolute 
assurance against material mis-statement or loss.
As at 31 December 2007, the Board has ensured that 
procedures are in place to review the effectiveness 
of financial, operating and compliance controls 
and risk management. The Board has reviewed 
these procedures and continues to monitor them 
on an ongoing basis.
Key elements of the Group’s system of internal 
control include:
l Clearly defined organisational responsibilities 
and limits of authority, including a formal 
schedule of matters specifically reserved for 
decision by the Board;
l Preparation and approval of a three-year 
business plan within which detailed financial 
analysis and evaluation is undertaken for all 
business opportunities; 26
 Entertainment Rights Plc Annual Report and Accounts 2007 
Corporate Governance
l A comprehensive annual budgeting system that 
requires approval by the Board. The budget is 
formulated through discussions and reviews at 
all levels of operations within the Group in order 
to identify and reflect future trends as closely as 
is possible;
l Monthly management accounts, including an 
analysis of market conditions and benchmarking 
against sector competitors, are produced in a 
timely manner and are reviewed by the Board at 
meetings held regularly. Results for the month 
and the year-to-date are compared with the 
annual budget, with all material movements 
discussed and corrective action taken where 
necessary;
l Procedures for the approval and monitoring 
of capital expenditure within defined authority 
limits;
l Non-financial policies and procedures including 
health and safety, human resources and 
information systems; and
l Emphasis on the experience and training of 
personnel. Reliance is placed on senior levels 
of management to ensure effective control.
During the year, the Company completed the 
integration of Classic Media. A steering committee 
was established to manage this risk due to Classic 
Media’s relative size. In integrating the businesses 
the financial reporting packages were aligned, the 
benefits of which will be realised over the coming 
year. The upgraded financial reporting system 
has improved the system of financial controls by 
standardising report formats and enabling the 
Company to conduct centralised internal reviews. 
In addition, a detailed review of Classic’s library was 
undertaken, reviewing the materials’ broadcast 
quality and format.
The Board has considered the need for an internal 
audit function but believes that the size of the 
business post-acquisition of Classic Media does 
not, at present, justify a full-time appointment. The 
Board continues to monitor this requirement and 
will act accordingly.
Going concern
The Directors have made enquiries and have 
reasonable expectations that the Company and 
the Group have adequate financial resources to 
continue normal operations for the foreseeable 
future. Accordingly, they consider it appropriate to 
adopt the going concern basis for the preparation 
of the financial statements.
Relations with shareholders
The Group values the views of its shareholders 
and recognises their interest in the Group’s 
strategy and performance, Board membership and 
quality of management. It therefore holds regular 
meetings with its institutional shareholders to 
discuss objectives.
The Annual General Meeting is used to 
communicate with private investors and they are 
encouraged to participate. The Chairmen of the 
Audit, Remuneration and Nomination Committees 
are available to answer questions.
Separate resolutions are proposed on each item 
so that they can be given proper consideration 
and there is a resolution to approve the Annual 
Report and Accounts. The Company counts all 
proxy votes and will indicate the level of proxies 
lodged on each resolution after it has been dealt 
with by a show of hands.
Additional corporate information may also 
be viewed on the Company’s website, 
www. entertainmentrights.com 27
 Entertainment Rights Plc Annual Report and Accounts 2007 
Statement of Directors’ responsibilities in respect of the  
Directors’ Report and the Financial Statements
The Directors are responsible for preparing the 
Annual Report and the consolidated and parent 
company financial statements in accordance with 
applicable law and regulations.
Company law requires the Directors to prepare 
consolidated and parent company financial 
statements for each financial year. Under that law 
they are required to prepare the consolidated 
financial statements in accordance with IFRSs as 
adopted by the EU and applicable law and have 
elected to prepare the parent company financial 
statements in accordance with UK accounting 
standards and applicable law (UK Generally 
Accepted Accounting Practice).
The consolidated financial statements are required 
by law and IFRSs as adopted by the EU to present 
fairly the financial position and the performance of 
the Group; the Companies Act 1985 (as amended) 
provides in relation to such financial statements 
that references in the relevant part of that Act to 
financial statements giving a true and fair view are 
references to their achieving a fair presentation.
The parent company financial statements are 
required by law to give a true and fair view of the 
state of affairs of the parent company. 
In preparing each of the consolidated and parent 
company financial statements, the Directors are 
required:
–   to select suitable accounting policies and then 
apply them consistently;
–   to make judgements and estimates that are 
reasonable and prudent;
–   for the consolidated financial statements, 
to state whether they have been prepared in 
accordance with IFRSs as adopted by the EU;
–   for the parent company financial statements, 
to state whether applicable UK Accounting 
Standards have been followed, subject to any 
material departures disclosed and explained in 
the parent company financial statements; and
–   to prepare the financial statements on the 
going concern basis unless it is inappropriate 
to presume that the Group and the parent 
company will continue in business.
The Directors are responsible for keeping proper 
accounting records that disclose with reasonable 
accuracy at any time the financial position of the 
parent company and enable them to ensure that 
its financial statements comply with the Companies 
Act 1985. They have general responsibility for 
taking such steps as are reasonably open to them 
to safeguard the assets of the Group and to prevent 
and detect fraud and other irregularities.
Under applicable law and regulations the Directors 
are also responsible for preparing a Directors’ 
Report, Remuneration report and Corporate 
Governance statement that comply with that law 
and those regulations. 
The Directors are responsible for the maintenance 
and integrity of the corporate and financial 
information included on the Company’s website. 
Legislation in the UK governing the preparation 
and dissemination of financial statements may 
differ from legislation in other jurisdictions.
Irvin Fishman 
Company Secretary 
8 April 2008 28
 Entertainment Rights Plc  Annual Report and Accounts 2007 
Remuneration Report
The following Remuneration Report is in 
compliance with the Companies Act 1985, for which 
the numerical disclosures in relation to Directors’ 
individual remuneration, Directors’ pensions and 
interests in share options have been audited.
In accordance with section 241A of the Companies 
Act 1985, the Board presents the Directors’ 
Remuneration Report for shareholder approval. 
The following report is unaudited except where 
specified.
Committee
The Remuneration Committee comprises J. Paul 
(Chairman), R. Bransgrove and I. Fishman. The 
Group recognises that Directors’ remuneration is 
of legitimate concern to the shareholders and is 
committed to following current best practice.
The Board is responsible for the Company’s 
remuneration policy. The Committee decides, in 
close consultation with the Chief Executive, the 
individual remuneration that applies to Executive 
Directors and Senior Managers. In applying the 
policies, the Committee takes into consideration a 
number of factors, in particular:
l  The need to attract, retain and motivate 
Directors and Senior Managers of the quality 
required by the Company whilst avoiding 
paying in excess of that considered necessary 
for this purpose;
l  The payment of competitive salaries and 
benefits to Directors and Senior Managers with 
reference to comparable companies, taking 
into account relative performance, ensuring 
the alignment of the interests of Directors 
and Senior Management with shareholders to 
produce keen incentives at the highest levels;
l  Eligibility for share option schemes to provide 
long-term incentives to senior individuals whilst 
ensuring that rewards potentially available 
under such schemes are not excessive; and
l  The setting of challenging performance criteria 
reflecting the Group’s objectives in respect of 
share options to ensure that a real improvement 
in the underlying performance of the Group is 
achieved before rewards are realised.
New Bridge Street Consultants have advised 
the Committee directly on matters within the 
Committee’s terms of reference on which the 
Committee chose to consult them.
Remuneration policy
The main elements of the remuneration package 
of Executive Directors are as follows:
Base salary and benefits
The base salary and benefits (which include car 
benefits, life, disability and health insurance) of 
Executive Directors are reviewed annually by the 
Committee, having regard to the overall financial 
and business position of the Group.
Pensions
The Executive Directors either participate in the 
Group’s defined contribution personal pension 
scheme, or the Company contributes to their 
personal pension plans.
Share options
Executive Directors are included in either Inland 
Revenue approved schemes or unapproved 
schemes.
Consistent with the rules of the schemes, the 
vesting of options is generally contingent on 
continued employment for a period of at least three 
years and the achievement of performance targets 
based on the growth of the Company’s earnings 
per share above RPI. The options automatically 
become exercisable following a change of control 
of the Company. Further information is provided 
on page 32.
Annual bonus
The level of annual bonus for 2007 to each 
Executive Director is based on the attainment of 
the annual budgeted performance of the Group 
and individual performance as set out below.
In 2007 each of M. Heap, J. Smith, and E. Gaines 
were entitled to receive an annual bonus in respect 
of the financial year ended 31 December 2007 of 
the Company subject to the attainment of earnings 
before interest, tax, depreciation and amortisation 
of the Company (“EBITDA”) equalling or 
exceeding a target EBITDA figure for the relevant 
financial year set by the Remuneration Committee. 29
 Entertainment Rights Plc Annual Report and Accounts 2007 
The amount of such bonus is 50% of normal basic 
salary on achieving EBITDA, increasing by an 
additional 25% if EBITDA plus 10% is achieved and 
another 25% if EBITDA plus 20% is achieved. The 
maximum bonus for 2007 was potentially 100% of 
normal basic salary.
Chairman and Non-Executive Directors
The remuneration of the Chairman and other Non-
Executive Directors is determined by the Board 
and they do not participate in determining their 
own remuneration. None of the Non-Executive 
Directors receive any pension or other benefits 
from the Company.
Service contracts
Service contracts or consultancy agreements may 
be terminated as follows:
Executive Directors
N. Phillips entered into a service agreement 
effective 18 March 2008, terminable on 12 months’ 
notice by either party (such notice not to be given 
before 18 March 2009).
E. Gaines entered into a service agreement effective 
19 August 2002, terminable on 12 months’ notice 
by either party.
J. Smith entered into a service agreement effective 
1 January 2002, terminable on 12 months’ notice 
by either party.
Non-Executive Directors
I. Fishman (effective 1 July 1998), C. Hemmings 
(effective 13 September 2004) and J. Paul 
(effective 1 July 1998) have engagement letters or 
consultancy agreements subject to termination on 
three months’ notice by either party. R. Bransgrove 
(effective 14 March 2002) has a consultancy deed 
subject to termination on 12 months’ notice by 
either party.
None of the Executive Directors’ service contracts 
contain any specific provision[s] for compensation 
payable upon early termination of such contracts, 
other than a right for the Company to terminate 
the service contract with immediate effect upon 
making a payment to the Executive Director in lieu 
of his/her notice period.  Entertainment Rights Plc  Annual Report and Accounts 2007 
30
Remuneration Report
Directors’ individual remuneration (audited)
Details of individual Directors’ emoluments for the year ended 31 December 2007 and their comparatives 
for 2006 for those who served during the year are set out as follows:
 Salaries/ Bonus  Total Total
 Fees 2007 Benefits 2007 2006
 £ £ £ £ £
Executive     
M. Heap
1
 298,513 150,000   46,455  494,968 407,561
N. Phillips
2
 – – – – –
E. Gaines 218,718 125,000 12,283 356,001 249,343
J. Smith 224,013 100,000 22,908 346,921 281,105
     
Non-Executive    
R. Bransgrove 77,308 – – 77,308 70,000
C. Derry
3
 – – – – 4,410
I. Fishman
4
 31,918 – – 31,918 24,000
C. Hemmings
5
 31,692 – – 31,692 20,000
J. Paul
6
 31,570 – – 31,570 24,000
 913,732 375,000 81,646 1,370,378 1,080,419
1. M. Heap resigned as a Chief Executive Officer on 17 March 2008 and as a Director on 18 March 2008.
2. N. Phillips was appointed as Chief Executive Officer and Director on 18 March 2008.
3. C. Derry resigned on 21 March 2006.
4. Paid to Auerbach Hope, Chartered Accountants, for the provision of the services of I. Fishman.
5. Paid to Hemway Limited, for the provision of the services of C. Hemmings.
6. Paid to Julian Paul & Co, Chartered Accountants, for the provision of the services of J. Paul.
The bonuses earned by the Executive Directors were in respect of the successful completion of the 
acquisition of Classic Media in January 2007 and the significant additional workload undertaken by them. No 
performance bonuses were paid in respect of 2007 as the EBTIDA performance target was not achieved.
Directors’ pensions (audited)
Details of individual Directors’ pension payments for the year ended 31 December 2007 and the comparatives 
for 2006 for those who served during the year are set out as follows:
 
    2007 2006
    £ £
Executive  
M. Heap    30,000 30,000
E. Gaines    21,872 17,000
J. Smith    27,495 21,708
    79,367 68,708
No pension payments were made to the Non-Executives Directors.  Entertainment Rights Plc Annual Report and Accounts 2007 
31
Interests in shares
The beneficial interests of the Directors in the shares of the Company were as follows at the beginning and 
end of the financial year ended 31 December 2007, and at 8 April 2008:
 Ordinary Shares of 5p each
 8 April 2008 31 December 2007 1 January 2007
Executive   
M. Heap
1
 n/a 1,739,132 1,086,958
E. Gaines 48,000 48,000 30,000
J. Smith 22,310 22,310 13,944
   
Non-Executive   
R. Bransgrove
2
 19,153,853 19,153,853 19,153,853
I. Fishman
3
 588,564 588,564 367,744
C. Hemmings 221,342 221,342 138,339
J. Paul
4
 1,637,942 1,637,942 1,023,714
 21,672,011 23,411,143 21,814,552
1. M. Heap resigned as Chief Executive Officer on 17 March 2008 and as a Director on 18 March 2008.
2. Pershing Keen Nominees TMCLT holds 3,635,324, Smith & Williamson Nominees holds 2,585,343 and HSBC Global Custody 
Nominee (UK) Limited 982409 holds 12,933,186.
3. The Berners Friendly Society holds all of the ordinary shares beneficially owned by I. Fishman.
4. BNY (OCS) Nominees Limited holds all of the ordinary shares beneficially owned by J. Paul.  Entertainment Rights Plc  Annual Report and Accounts 2007 
32
Remuneration Report
Interests in share options (audited)
Directors’ options over Ordinary Shares of 5p each at 31 December 2007 were as follows:
   Opening    Closing Earliest 
   January Indexation Granted Exercised December exercise Expiry Exercise 
 Scheme Notes 2007 of options
1
 in year in year 2007 date date price
M. Heap
2
                    
  Deed  3 2,602,198 57,704 – – 2,659,902 Dec 1998 Nov 2008 13.50p
  Unapproved  3 1,000,000 22,175 – – 1,022,175 Dec 2004 Dec 2011 17.12p
  Approved 3 437,956 – – – 437,956 Apr 2006 Apr 2013 6.85p
  Unapproved 3 562,044 12,463 – – 574,507 Apr 2006 Apr 2013 6.70p
  Unapproved 3 780,659 17,311 – – 797,970 Jul 2006 Jul 2013 7.88p
  Unapproved 3 2,500,000 55,438 – – 2,555,438 Sep 2007 Sep 2014 10.52p
  Unapproved 4 500,000 11,088 – – 511,088 Apr 2008 Apr 2015 24.02p
  Unapproved 5 1,500,000 33,263 – – 1,533,263 Apr 2009 Mar 2016 35.37p
  Unapproved 5 – – 2,100,000 – 2,100,000 Jan 2010 Dec 2016 30.60p
      9,882,857 209,442 2,100,000 – 12,192,299      
E. Gaines                    
  Approved  3 250,000 – – – 250,000 Sep 2005 Sep 2012 10.50p
  Approved 3 54,744 – – – 54,744 Apr 2006 Apr 2013 6.85p
  Unapproved 3 695,256 15,418 – – 710,674 Apr 2006 Apr 2013 6.70p
  Unapproved 3 2,500,000 55,438 – – 2,555,438 Sep 2007 Sep 2014 10.52p
  Unapproved 4 500,000 11,088 – – 511,088 Apr 2008 Apr 2015 24.02p
  Unapproved 5 1,000,000 22,175 – – 1,022,175 Apr 2009 Mar 2016 35.37p
  Unapproved 5 – – 1,600,000 – 1,600,000 Apr 2009 Mar 2016 30.60p
      5,000,000 104,119 1,600,000 – 6,704,119      
J. Smith                    
  Deed  3 600,000 13,305 – – 613,305 Jan 2000 Jan 2010 24.46p
  Unapproved  3 1,000,000 22,175 – – 1,022,175 Dec 2004 Dec 2011 17.5p
  Approved 3 437,956 - – – 437,956 Apr 2006 Apr 2013 6.85p
  Unapproved 3 562,044 12,463 – (574,507) – Apr 2006 Apr 2013 6.85p
  Unapproved 3 1,040,000 23,062 – – 1,063,062 Jul 2006 Jul 2013 8.05p
  Unapproved 3 2,000,000 44,351 – – 2,044,351 Sep 2007 Sep 2014 10.75p
  Unapproved 4 500,000 11,088 – – 511,088 Apr 2008 Apr 2015 24.55p
  Unapproved 5 1,250,000 27,719 – – 1,277,719 Apr 2009 Mar 2016 36.15p
  Unapproved 5 – – 1,800,000 – 1,800,000 Jan 2010 Dec 2016 30.60p
      7,390,000 154,163 1,800,000 (574,507) 8,769,656      
R. Bransgrove                  
  Unapproved   500,000 11,088 – – 511,088 Dec 2004 Dec 2011 17.12p
C. Hemmings
 Deed  3 600,000 13,305 – – 613,305 Dec 1999 Dec 2009 24.46p
 Unapproved  3 500,000 11,088 – – 511,088 Dec 2004 Dec 2011 17.12p
  Approved 3 437,956 – – – 437,956 Apr 2006 Apr 2013 6.85p
  Unapproved 3 62,044 1,376 – – 63,420 Apr 2006 Apr 2013 6.70p
  Unapproved 3 240,000 5,322 – – 245,322 Jul 2006 Jul 2013 7.88p
      1,840,000 31,091 – – 1,871,091      
Total     24,612,857 509,903 5,500,000 (574,507) 30,048,253
      
1. In the event of any capitalisation issue or rights issue in relation to the share capital of the Company, the number of shares subject 
to the schemes and price per scheme share shall be adjusted by the Board. On 14 December 2006 the Company announced a 3 
for 5 rights issue at a share price of 28.5p. The market price of shares before this announcement was 30.25p. The theoretical ex-
rights price has been calculated at 29.59p. The number of shares to which each option holder is entitled was increased by a factor 
of 1.022. The exercise price of each option will be reduced by a factor of 0.978.
2. All of M. Heap’s options granted up to and including 14 September 2004 are exercisable at any time on or prior to 16 September 
2008, those options granted to him on 22 April 2005 are exercisable on or prior to 21 October 2008 and those options granted 
on 25 April 2006 and 11 January 2007 are exercisable on or prior to 16 March 2009, in each such case (other than the options the 
subject of the Deed) subject to the rules of the scheme and achievement of any performance criteria.
3. Share options where the exercise conditions have been satisfied and where the exercise right is therefore unconditional.  Entertainment Rights Plc Annual Report and Accounts 2007 
33
4. Share options may be exercised only if the Group’s EPS over a three-year period is greater than:
 a. 1.23p for the first third of the options
 b. 2.45p for the second third of the options
 c. 3.68p for the final third of the options
5. Share options may be exercised only if the average annual percentage increase in the Group’s EPS over a three-year period is 
greater than:
  a. average increase in RPI plus 5% for the first third of the options
 b. average increase in RPI plus 7.5% the second third of the options
 c. average increase in RPI plus 10% the final third of the options
Total Shareholder Return vs FTSE SmallCap and FTSE Media & Photography Indices
Source: KPMG Business Data
The above graph shows the Total Shareholder Return (TSR) of the Group against FTSE SmallCap and FTSE 
Media & Photography sectors, which are believed to be the most suitable TSR indices as they contain 
comparable companies and ER itself. TSR is defined as the percentage change over the period in market 
price assuming the reinvestment of income and funding of liabilities of the theoretical holding. TSR has been 
calculated on a daily basis in order to reduce the volatility associated with spot prices.
The market price of the Company’s shares at 31 December 2007 was 15.5p and the range during the year 
was 15p to 36.75p. Apart from the interests disclosed above, none of the Directors had any other interests 
in the share capital of the Company or other Group companies during the year.
By order of The Board of Directors and signed on their behalf by  
Julian Paul
Chairman, Remuneration Committee 
8 April 2008
Five Year Share Price Analysis
-1 0 0 %
-5 0 %
0 %
5 0 %
1 0 0 %
1 5 0 %
2 0 0 %
2 5 0 %
3 0 0 %
3 5 0 %
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
% Change
Entertainment Rights
FTSE – Media & Photography
FTSE SmallCap 34
 Entertainment Rights Plc Annual Report and Accounts 2007 
Report of the Independent Auditors to the Members of 
Entertainment Rights Plc
We have audited the consolidated and parent 
company financial statements (the “financial 
statements’’) of Entertainment Rights Plc for the 
year ended 31 December 2007 which comprise the 
consolidated income statement, the consolidated 
and parent company balance sheets, the 
consolidated cash flow statement, the consolidated 
statement of recognised income and expense and 
the related notes. These financial statements have 
been prepared under the accounting policies set 
out therein. We have also audited the information 
in the Remuneration Report that is described as 
having been audited.
This report is made solely to the Company’s 
members, as a body, in accordance with section 
235 of the Companies Act 1985. Our audit work 
has been undertaken so that we might state to 
the Company’s members those matters we are 
required to state to them in an auditor’s report 
and for no other purpose. To the fullest extent 
permitted by law, we do not accept or assume 
responsibility to anyone other than the Company 
and the Company’s members as a body, for our 
audit work, for this report, or for the opinions we 
have formed.
Respective responsibilities of Directors and 
auditors
The Directors’ responsibilities for preparing the 
Annual Report and the consolidated and parent 
company financial statements in accordance with 
applicable law and International Financial Reporting 
Standards (IFRSs) as adopted by the EU, and for 
preparing the parent company financial statements 
and the Remuneration Report in accordance with 
applicable law and UK Accounting Standards (UK 
Generally Accepted Accounting Practice) are set 
out in the Statement of Directors’ Responsibilities 
on page 27.
Our responsibility is to audit the financial statements 
and the part of the Remuneration Report to be 
audited in accordance with relevant legal and 
regulatory requirements and International Standards 
on Auditing (UK and Ireland).
We report to you our opinion as to whether the 
financial statements give a true and fair view 
and whether the financial statements and the 
part of the Remuneration Report to be audited 
have been properly prepared in accordance with 
the Companies Act 1985 and, as regards the 
consolidated financial statements, Article 4 of the 
IAS Regulation. We also report to you whether in 
our opinion the information given in the Directors’ 
Report is consistent with the financial statements. 
The information given in the Directors’ Report 
includes that specific information presented in 
the Business Review and Key Risks section of the 
Directors’ Report on pages 19 to 20 as well as 
that presented in the Chief Finance & Operations 
Director’s Review, Chairman’s Statement and the 
Chief Commercial & Creative Director’s Review 
that is cross-referenced from the Business Review 
and Key Risks section of the Directors’ Report on 
page 19.
In addition, we report to you if, in our opinion, 
the Company has not kept proper accounting 
records, if we have not received all the information 
and explanations we require for our audit, or if 
information specified by law regarding Directors’ 
remuneration and other transactions is not 
disclosed.
We review whether the Corporate Governance 
Statement reflects the Company’s compliance with 
the nine provisions of the 2006 Combined Code 
specified for our review by the Listing Rules of the 
Financial Services Authority, and we report if it 
does not. We are not required to consider whether 
the Board’s statements on internal control cover 
all risks and controls, or form an opinion on the 
effectiveness of the Group’s corporate governance 
procedures or its risk and control procedures.
We read the other information contained in the 
Annual Report and consider whether it is consistent 
with the audited financial statements. We consider 
the implications for our report if we become 
aware of any apparent misstatements or material 
inconsistencies with the financial statements. 
Our responsibilities do not extend to any other 
information. 35
 Entertainment Rights Plc Annual Report and Accounts 2007
Basis of audit opinion
We conducted our audit in accordance with 
International Standards on Auditing (UK and 
Ireland) issued by the Auditing Practices Board. 
An audit includes examination, on a test basis, of 
evidence relevant to the amounts and disclosures 
in the financial statements and the part of the 
Remuneration Report to be audited. It also 
includes an assessment of the significant estimates 
and judgements made by the Directors in the 
preparation of the financial statements, and of 
whether the accounting policies are appropriate 
to the Group’s and Company’s circumstances, 
consistently applied and adequately disclosed.
We planned and performed our audit so as to 
obtain all the information and explanations which 
we considered necessary in order to provide 
us with sufficient evidence to give reasonable 
assurance that the financial statements and the 
part of the Remuneration Report to be audited are 
free from material misstatement, whether caused 
by fraud or other irregularity or error. In forming our 
opinion we also evaluated the overall adequacy 
of the presentation of information in the financial 
statements and the part of the Remuneration 
Report to be audited.
Opinion
In our opinion:
l the consolidated financial statements give a 
true and fair view, in accordance with IFRSs as 
adopted by the EU, of the state of the Group’s 
affairs as at 31 December 2007 and of its profit 
for the year then ended;
l the consolidated financial statements have 
been properly prepared in accordance with the 
Companies Act 1985 and Article 4 of the IAS 
Regulation;
l the parent company financial statements give 
a true and fair view, in accordance with UK 
Generally Accepted Accounting Practice, of 
the state of the parent company’s affairs as at 
31 December 2007;
l the parent company financial statements 
and the part of the Remuneration Report to 
be audited have been properly prepared in 
accordance with the Companies Act 1985; and
l the information given in the Directors’ Report is 
consistent with the financial statements.
KPMG Audit Plc 
Chartered Accountants 
Registered Auditor
London 
8 April 2008  Entertainment Rights Plc Annual Report and Accounts 2007 
36
Consolidated Income Statement   
for the year ended 31 December
       2007 2006
      Notes   £’000 £’000
Revenue      68,065 29,747
Cost of sales      (32,128) (12,798)
Gross profit      35,937 16,949
Administrative expenses      (19,496) (6,722)
EBITDA      30,876 14,806
Depreciation and amortisation     5  (9,217) (4,462)
Impairment of goodwill and intangible assets      – (117)
Integration and restructuring costs    2  (3,980) –
One-off re-branding costs    3  (1,238) –
Operating profit      16,441 10,227
Financial income    8  1,974 127
Financial expense    8  (10,489) (2,525)
Net financing costs      (8,515) (2,398)
Profit before tax      7,926 7,829
Taxation for the period    9  (4,391) (1,626)
Profit attributable to equity holders of the parent      3,535 6,203
Basic earnings per share    28  0.49p  1.50p
Diluted earnings per share    28  0.47p  1.41p
Consolidated Statement of Recognised Income and Expense
       2007 2006
      Notes   £’000 £’000
Foreign exchange differences on retranslation of foreign operations  26  (3,457) –
Foreign exchange movements on net investment hedges   26  364 –
Net changes in fair value of cash flow hedges recognised in equity  26  (4,341) –
Income and expense recognised directly in equity      (7,434) –
Profit for the period      3,535 6,203
Total recognised income and expense      (3,899) 6,203  Entertainment Rights Plc Annual Report and Accounts 2007
37
Consolidated Balance Sheet 
as at 31 December
       2007 2006
      Notes  £’000 £’000
Assets
Non-current assets
Goodwill    11  97,527 19,542
Investment in programmes    12  102,555 37,256
Programme development costs    12  3,579 1,034
Trademarks and copyrights    12  54,680 25,991
Property, plant and equipment    13  698 392
Deferred tax assets    10  2,821 901
Total non-current assets      261,860 85,116
Current assets
Inventory      2,972 –
Other financial assets    17  – 80
Trade and other receivables    18  50,089 31,149
Cash and cash equivalents    20  12,710 –
Total current assets      65,771 31,229
Total assets      327,631 116,345
Liabilities
Current liabilities
Interest-bearing loans and borrowings    21  (3,740) (6,369)
Other financial liabilities    22  (2,792) –
Trade and other payables    19  (8,330) (3,923)
Accruals and deferred income      (19,810) (9,708)
Provisions    24  (21) (16)
Bank overdraft      – (7,827)
Total current liabilities      (34,693) (27,843)
Net current assets      31,078 3,386
Non-current liabilities
Interest-bearing loans and borrowings    21  (114,894) (19,462)
Deferred tax liabilities    10  (27,729) (3,350)
Trade and other payables    19  (356) –
Provisions      – (30)
Total non-current liabilities      (142,979) (22,842)
Total liabilities      (177,672) (50,685)
Net assets      149,959 65,660
Capital and reserves
Issued share capital    27  36,627 20,752
Share premium    27  105,506 33,388
Merger reserve    27  16,470 16,470
Hedging reserve    27  (4,341) –
Translation reserve    27  (3,093) –
Retained earnings    27  (1,210) (4,950)
Equity attributable to shareholders of the parent      149,959 65,660
Total equity and liabilities      327,631 116,345
The financial statements on pages 36 to 72 were approved by the Board of Directors on 8 April 2008 and 
signed on their behalf by
  
Rod Bransgrove – Non-Executive Chairman Elizabeth Gaines – Chief Finance & Operations Director  38
 Entertainment Rights Plc Annual Report and Accounts 2007 
Consolidated Cash Flow Statement 
for the year ended 31 December
       2007 2006
      Notes  £’000 £’000
Cash flow from operating activities
Profit before tax      7,926 7,829
Adjustments for:
Financial income and expense    8  8,515 2,398
Depreciation of property, plant and equipment    13  378 239
Amortisation of intangible assets    12  8,839 4,223
Impairment loss on goodwill and other intangible assets     – 117
Share-based payment charges    23  688 526
Operating cash flows before movements in working capital     26,346 15,332
Decrease in inventory      911 –
(Decrease) in trade and other payables      (1,445) (5,754)
(Increase) in trade and other receivables      (10,564) (8,344)
Cash generated from operations      15,248 1,234
Income taxes received      992 –
Net cash inflow from operating activities      16,240 1,234
Cash flows from investing activities
Payments to acquire intangible assets      (16,849) (11,847)
Payments to acquire property plant and equipment      (366) (117)
Acquisition of subsidiary undertakings including cash acquired   15  (132,845) –
Net cash used in investing activities      (150,060) (11,964)
Cash flows from financing activities
Proceeds from share issues      68,769 –
Proceeds from new borrowings      128,770 6,396
Repayment of borrowings      (36,017) (1,522)
Interest received      374 127
Interest paid      (7,219) (2,090)
Net cash generated from financing activities      154,677 2,911
Net increase / (decrease) in cash and cash equivalents     20,857 (7,819)
Cash and cash equivalents at start of year      (7,827) 111
Net effect of foreign exchange      (320) (119)
Cash and cash equivalents at end of year    20  12,710 (7,827)  Entertainment Rights Plc Annual Report and Accounts 2007 
39
1. Accounting policies
Entertainment Rights Plc (the “Company”) is a company incorporated in the UK.
Statement of compliance
The Group financial statements consolidate the results and assets and liabilities of the Company and 
its subsidiaries (together referred to as the “Group”). The parent company financial statements present 
information about the Company as a separate entity and not about its group.
The Group financial statements have been prepared and approved by the Directors in accordance with 
International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”). The Company has 
elected to prepare its parent company financial statements in accordance with UK GAAP; these are presented 
on pages 73 to 83.
The Group has adopted IFRS 7 ’Financial Instruments: Disclosures’, and the complementary amendment to 
IAS 1 ’Presentation of Financial Statements – Capital Disclosures’ which introduces new disclosures relating 
to financial instruments.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods 
presented in these Group financial statements.
Basis of preparation
These financial statements have been prepared on the historical cost basis except that derivative for financial 
instruments which have been stated in accordance with IAS 39.
Judgements made by the Directors in the application of these accounting policies that have significant effect 
on the financial statements and estimates principally relate to impairment reviews and the share option 
valuation and are discussed in note 33.
EBITDA is computed before integration and restructuring costs and one-off re-branding costs, which are 
explained in notes 2 and 3 respectively.
Going concern
The Group and the Company believe there are adequate financial resources to continue normal operations 
for the foreseeable future. Accordingly, a going concern basis for the preparation of the financial statements 
has been adopted.
Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the 
financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, 
potential voting rights that presently are exercisable are taken into account. The financial statements of 
subsidiaries are included in the consolidated financial statements from the date that control commences 
until the date that control ceases.
Jointly controlled entities
Joint ventures are those entities over whose activities the Group has joint control, established by contractual 
agreement and requiring unanimous consent for strategic financial and operating decisions. Joint ventures 
are accounted for using the equity method (equity accounted investees) and are initially recognised at 
cost. The consolidated financial statements include the Group’s share of the income and expenses and 
equity movements of equity accounted investees from the date that significant influence or joint control 
commences until the date that significant influence or joint control ceases. When the Group’s share of losses 
Notes to the Financial Statements – Group  Entertainment Rights Plc Annual Report and Accounts 2007 
Notes to the Financial Statements – Group
40
exceeds its interest in an equity accounted investee, the carrying amount of that interest (including any long-
term investments) is reduced to nil and the recognition of further losses is discontinued.
Transactions eliminated on consolidation
Intra-group balances, and any unrealised income and expenses arising from intra-group transactions, are 
eliminated in preparing the consolidated financial statements.
Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of Group entities at 
exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to 
the functional currency at the exchange rate at that date.
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.
Foreign currency differences arising on retranslation are recognised in profit or loss, except for differences 
arising on the retranslation of a financial liability designated as a hedge of the net investment in a foreign 
operation.
Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on 
acquisition, are translated into sterling at exchange rates at the reporting date. The income and expenses of 
foreign operations are translated into sterling at average rates of exchange for the period.
Foreign currency differences are recognised directly in the translation reserve within equity.
Hedge of net investment in foreign operations
Foreign currency differences arising on the retranslation of a financial liability designated as a hedge of a net 
investment in a foreign operation are recognised directly in equity, in the translation reserve, to the extent 
that the hedge is effective. To the extent that the hedge is ineffective, such differences are recognised in 
profit or loss. When the hedged net investment is disposed of, the cumulative amount in equity is transferred 
to profit or loss as an adjustment to the profit or loss on disposal.
Revenue
Television distribution and production
Income recognised represents the value of licence fees including withholding tax but excluding VAT. The 
Group’s policy is to recognise the income and associated royalty payable when all of the following criteria 
are met:
l A licence agreement has been signed by both parties;
l The licensee is able to freely exploit its rights;
l The licensor has no remaining performance obligations;
l The arrangement is fixed and determinable;
l Collection of the arrangement fee is reasonably assured; and
l Delivery to the broadcaster has occurred.
Any licence fees received in advance which do not meet all of the above criteria are included in deferred 
income until the above criteria are met.  Entertainment Rights Plc Annual Report and Accounts 2007 
41
Consumer products: licensing and video
Revenue from licence and video sales is recognised on the date that the licence revenue is contracted or 
royalties declared by licensees. Up-front fixed fees are recognised as revenue on contract signature if the 
following additional criteria are met:
l The contract is non-cancellable;
l The licensee is able to exploit its rights freely; and
l The Company has no significant remaining obligations to perform under the contract.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any provision for 
impairment in value.
Depreciation is charged to the income statement on all property, plant and equipment in order to write off 
their cost on a straight-line basis over their expected useful lives. The estimated useful lives are as follows:
Short leasehold improvements Over period of lease
Office equipment 4-10 years
Fixtures and fittings 4 years
Motor vehicles 4 years
Intangible assets
Goodwill
All business combinations are accounted for by applying the purchase method. In respect of business 
combinations that have occurred since 31 March 2004, goodwill arising on the acquisition of subsidiary 
undertakings represents the excess of the cost of the acquisition over the fair value of the net identifiable 
assets, liabilities and contingent liabilities acquired. Identifiable intangible assets are those which can be 
sold separately or which arise from legal rights regardless of whether those rights are separable.
In respect of acquisitions prior to 31 March 2004, goodwill is included at transition date on the basis of its 
deemed cost, which represents the amount recorded under UK GAAP which was broadly comparable save 
that only separable intangible assets were recognised and goodwill was amortised.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating 
units (“CGUs”) and is not amortised as it has an indefinite useful economic life (“UEL”), but instead is tested 
annually for impairment. Any impairment losses are recognised immediately in the income statement.
Negative goodwill
Negative goodwill is credited to the income statement in the period in which it arises.
Other intangible assets
Other intangible assets acquired by the Group are stated at cost less accumulated amortisation except 
those acquired as part of a business combination which are shown at fair value at the date of acquisition less 
accumulated amortisation.
Trademarks and copyrights
A charge is made to write down the cost of trademarks and copyrights on a straight-line basis over their 
finite useful lives of up to 20 years. The estimated useful lives for determining the amortisation charge are 
reviewed annually.
Costs incurred by the Group which are associated with an acquired right, title or trademark, are capitalised 
in accordance with IAS 38.  Entertainment Rights Plc Annual Report and Accounts 2007 
Notes to the Financial Statements – Group
42
Investment in programmes and programme development costs
Investment in programmes, including acquired programme rights and distribution advances, is stated at 
amortised cost less any provision for impairment.
Investments in programmes that are in development and for which the realisation of expenditure can be 
reasonably determined, are classified in accordance with IAS 38 as programme development costs under 
non-current assets. On first exploitation of the property the cost of investment is re-classified as investment 
in programmes.
Development costs incurred by the Group which are associated with a specific property are capitalised in 
accordance with IAS 38. Such capitalised costs include third-party costs and direct labour.
A charge is made to write down the costs of completed programmes and acquired programme rights on a 
straight-line basis over their finite useful lives of up to 20 years.
Any assets which subsequently do not meet the recognition criteria in IAS 38 prior to transfer to investment 
in programmes are derecognised.
The method used to calculate amortisation for investment in programmes has been revised in the year, 
please refer to note 12 for details.
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 charged to the 
income statement as incurred.
Impairment
In accordance with IAS 36, the Group tests goodwill annually for impairment, or more frequently if there are 
indications that goodwill may be impaired. Other intangible assets are tested when there are indications of 
impairment.
An impairment loss is recognised whenever the carrying amount of a CGU exceeds its recoverable amount. 
Impairment losses are recognised in cost of sales in the income statement.
Impairment losses recognised in respect of CGUs are allocated firstly to reduce the carrying amount of 
any related goodwill and then to reduce the carrying amount of the other assets in the CGU on a pro-rata 
basis.
Calculation of recoverable amount
The recoverable amount of an asset is the greater of its fair value (less any selling costs) and its 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.
Reversals of impairment
An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is 
reversed if circumstances show that the recoverable amount is greater than the impaired carrying 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.  Entertainment Rights Plc Annual Report and Accounts 2007 
43
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on 
the first-in-first-out principle, and includes expenditure incurred in acquiring the inventories, production or 
conversion costs and other costs incurred in bringing them to their existing location and condition. Inventory 
is comprised of video cassettes, digital versatile discs (“DVDs”), and finished audio products.
Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs 
of completion and selling expenses.
Financial instruments
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans 
and borrowings, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition 
non-derivative instruments are measured as described below.
Cash and cash equivalents comprise cash balances and call and term deposits. 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 purposes of the cash flow statement.
Other non-derivative financial instruments are measured at amortised cost using the effective interest 
method, less any impairment losses.
Derivative financial instruments
The Group holds derivative financial instruments to hedge its foreign currency and interest rate exposures. 
Derivatives are measured initially at fair value. Subsequent to initial recognition, derivatives are measured at 
fair value, and changes therein are accounted for as described below.
Changes in the fair value of the derivative hedging instrument designated as a cash flow hedge are recognised 
directly in equity to the extent that the hedge is effective. To the extent that the hedge is ineffective, changes 
in fair value are recognised in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated 
or exercised, then hedge accounting is discontinued prospectively. The cumulative gain or loss previously 
recognised in equity remains there until the forecast transaction occurs. The amount recognised in equity is 
transferred to profit or loss in the same period that the hedged item affects profit or loss.
Hedge accounting is not applied to derivative instruments that economically hedge monetary assets and 
liabilities denominated in foreign currencies. The gain or loss on re-measurement of such derivatives to fair 
value is recognised immediately in the income statement.
Determination of fair values
Fair values have been determined for measurement and/or disclosure purposes based on the following 
methods:
Trade and other receivables
The fair value of non-current trade and other receivables is estimated as the present value of future cash 
flows, discounted at the market rate of interest at the reporting date.  Entertainment Rights Plc Annual Report and Accounts 2007 
Notes to the Financial Statements – Group
44
Derivatives
The fair value of forward foreign exchange contracts is estimated by discounting the difference between the 
contractual forward amount and the net amount payable determined from exchange rates at the reporting 
date.
The fair value of interest rate derivatives is based upon direct market valuations obtained from the treasury 
service of the Group’s bank.
Non-derivative financial liabilities
Fair value, which is determined for disclosure purposes only, is based upon valuations obtained from the 
Group’s bank.
Classification of financial instruments issued by the Group
Financial instruments issued by the Group are treated as equity (ie. forming part of shareholders’ funds) only 
to the extent that they meet the following two conditions:
a) they include no contractual obligations upon the Company (or Group as the case may be) to deliver cash 
or other financial assets or to exchange financial assets or financial liabilities with another party under 
conditions that are potentially unfavourable to the Company (or Group); and
b) where the instrument will or may be settled in the Company’s own equity instruments, it is either a 
non-derivative that includes no obligation to deliver a variable number of the company’s own equity 
instruments or is a derivative that will be settled by the Company exchanging a fixed amount of cash or 
other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where 
the instrument so classified takes the legal form of the Company’s own shares, the amounts presented 
in these financial statements for called up share capital and share premium account exclude amounts in 
relation to those shares.
Employee benefits
Defined Contribution plans
The Group operates a defined contribution personal pension scheme for all UK employees. This covers all 
full-time employees who have elected to participate in the plan, following the completion of three months 
of service with the Group. All US employees are entitled to participate in a defined contribution scheme.
Obligations for contributions to defined contribution pension plans are recognised as an expense in the 
income statement as incurred.
Share-based payments
The share option programme allows Group employees to acquire shares of the Company; these awards 
are granted by the Company. 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 binomial 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 except where forfeiture is due only to share prices not achieving the threshold for 
vesting.
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   Entertainment Rights Plc Annual Report and Accounts 2007 
45
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.
Taxation
The tax charge for the periods presented comprises current and deferred tax. Taxation 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.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or 
substantively enacted at the reporting date, and any adjustment to tax payable in respect of prior periods.
Film relief is accounted under IAS 12 as a deduction from current tax and unused relief is recognised as a 
deferred tax asset subject to its meeting the recognition criteria for deferred tax assets.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities 
for financial reporting purposes and the amounts used for taxation purposes. The following temporary 
differences are not provided for: initial recognition of goodwill; initial recognition of assets or liabilities that 
affect neither accounting nor taxable profit other than in a business combination, and differences relating 
to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. 
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.
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.
Finance and operating leases
Rentals paid under operating leases are charged to the profit and loss on a straight-line basis over the period 
of the lease. The Group does not currently have any leases which could be classified as finance leases.
Financial income and expense
Finance income comprises interest income on funds invested, changes in the fair value of financial assets 
at fair value through profit or loss and gains on hedging instruments that are recognised in profit or loss. 
Interest income is recognised as it accrues in profit or loss.
Finance expense comprises interest expense on borrowings, changes in the fair value of financial assets at 
fair value through profit or loss and losses on hedging instruments that are recognised in profit or loss. All 
borrowing costs are recognised in profit or loss using the effective interest method. Foreign exchange gains 
and losses are reported on a net basis.
Accounting standards issued but not adopted
The following Adopted IFRSs were available for early application but have not been applied by the Group 
in these financial statements:
l IFRS 8 ‘Operating Segments’, applicable for years commencing on or after 1 January 2009. The application 
of IFRS 8 would not have affected the balance sheets or income statement as it is only concerned with 
disclosure.
Earning 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 Company by the weighted   Entertainment Rights Plc Annual Report and Accounts 2007 
Notes to the Financial Statements – Group
46
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 dilutive effect of share options granted to employees.
Segment reporting
A segment is a distinguishable component of the Group that is engaged either in providing related products 
or services (business segment), or in providing products or services within a particular economic environment 
(geographical segment), which is subject to risks and returns that are different from those of other segments. 
Segment information is presented in respect of the Group’s business and geographical segments. The Group’s 
primary format for segment reporting is based on a single business segment. In presenting information on 
the basis of geographical segments, segment revenue is based on the geographical location of customers. 
Segment assets are based on the geographical location of the assets.
Inter-segment pricing is determined on an arm’s length basis.
Segment revenue, assets and capital expenditure include items directly attributable to a segment as well as 
those that can be allocated on a reasonable basis.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and 
equipment and intangible assets other than goodwill.
One-off significant items
One-off significant items, as disclosed on the face of the income statement, are items which due to their 
material and non-recurring nature have been classified separately in order to draw them to the attention of 
the reader of the accounts and to show more accurately the underlying profits of the Group.
2. Integration and restructuring costs
Prior to completion of the acquisition of Classic Media Holdings, Inc. (“Classic Media”), the former 
shareholders of Classic Media reached agreement with certain former executives on the termination of 
their employment contracts with Classic Media. The amounts paid in compensation to these executives 
were negotiated between the former shareholders and executives with no involvement from Entertainment 
Rights Plc (“ER”). The costs of termination were not borne by ER, as an adjustment was made to the purchase 
consideration paid for Classic Media to deduct the cost of these payments. However, as the relevant 
termination agreements were conditional upon completion of the acquisition of Classic Media by ER, IFRS 3 
requires that these costs are recognised by ER as a post-acquisition expense and not as a liability of Classic 
Media at the time of acquisition by ER.
Accordingly, compensation payments totalling $5.6m (£2.8m) are included within integration and restructuring 
costs. Other costs relating to the integration and restructuring of Classic Media include $0.8m (£0.4m) of 
costs relating to the closure of the Los Angeles office, associated redundancy costs and recruitment costs 
for replacement staff in New York, legal and professional fees of £0.2m and staff-related costs (such as travel 
relating to integration projects and further recruitment costs) of £0.6m.  Entertainment Rights Plc Annual Report and Accounts 2007 
47
3. One-off re-branding costs
The Original Christmas Classics
TM
 DVD box-set is the key brand within Classic Media. Following the acquisition 
of Classic Media in January 2007, the concept of the box-set was changed and delivered through updated 
packaging resulting in a significant one-off investment in marketing. This increased the overall positioning 
of the brand. Significant research was undertaken and the cover of the key DVD triple pack changed to a 
“hero” concept rather than the signature red pack.
4. Segmental information
The Group’s activities are in one business segment, namely the commercialisation of children’s characters 
and brands. There are no other significant classes of business, either singularly or in aggregate.
The geographical split of assets by source is:
        2007 2006
        £’000 £’000
USA      201,031 –
UK      126,600 116,345
       327,631 116,345
The total capital expenditure is:
        2007 2006
        £’000 £’000
USA      7,624 –
UK      11,768 14,041
       19,392 14,041
Geographical split of revenues by destination is provided as follows:
        2007 2006
        £’000 £’000
UK      9,808 12,724
Rest of Europe      6,522 4,392
North America and South America      48,668 11,872
Rest of world      3,067 759
       68,065 29,747  Entertainment Rights Plc Annual Report and Accounts 2007 
Notes to the Financial Statements – Group
48
5. Expenses
Included in the profit for the period are the following:
        2007 2006
        £’000 £’000
Depreciation of owned property, plant and equipment     378 239
Amortisation of investment in programmes      5,650 2,575
Amortisation of trademarks and copyrights      3,189 1,648
Impairment loss on goodwill and other intangible assets     – 117
Operating lease rentals – rent, office equipment and motor vehicles    903 541
Aborted acquisition costs      – 119
Discontinued Lassie Pet Products operation      193 –
Integration and restructuring costs      3,980 –
One-off rebranding costs      1,238 –
Auditors’ remuneration
– audit of these financial statements       170 82
– audit of financial statements of subsidiaries pursuant to legislation    25 25
– other services relating to taxation      12 83
– other services      59 17
Amounts paid to the Company’s auditor in respect of services to the Company, other than the audit of the 
Company’s financial statements, have not been disclosed as the information is required to be disclosed 
instead on a consolidated basis.
£114,500 (2006: £1,050,000) was paid to the auditors in relation to the acquisition of Classic Media. These 
costs have been capitalised in the cost of acquisition.
6. Directors’ emoluments
Detailed disclosure of Directors’ individual remuneration and share options are provided in the Remuneration 
Report on pages 30 to 33.
        2007 2006
        £’000 £’000
Directors’ emoluments      1,198 1,080
Company contributions to pension schemes      79 69
Amounts paid to third parties in respect of Directors’ services     172 68
       1,449 1,217
Pension contributions are currently paid either to Directors’ personal pension schemes or to the Company 
scheme.  Entertainment Rights Plc Annual Report and Accounts 2007 
49
7. Staff numbers and costs
The average number of employees (including Executive Directors) employed by the Group during the year 
was:
        2007 2006
Administration      89 45
Sales and consumer products      43 25
Production      27 16
       159 86
 
The aggregate payroll costs of these employees (including Executive Directors) were as follows:
        2007 2006
        £’000 £’000
Wages and salaries      8,003 3,959
Social security costs      746 471
Pension costs      446 150
Share options charge      688 526
       9,883 5,106
Of this total, £2,586,000 (2006: £736,000) has been capitalised in investment in programmes and programme 
development costs.
The Group operates a defined contribution personal pension scheme. The charge for the year represents 
those contributions payable to this scheme and other personal pension schemes.
8. Finance income and expense
        2007 2006
        £’000 £’000
Finance income
Bank interest receivable      371 127
Net gain on re-measurement of interest rate collars to fair value     1,577 –
Other interest income      26 –
Net foreign exchange gain      – –
       1,974 127
        2007 2006
       £’000  £’000
Finance expense
Bank loans and overdrafts      9,423 2,039
Net foreign exchange loss      957 265
Net loss on re-measurement of forward foreign exchange contract to fair value   29 –
Net loss on re-measurement of foreign exchange option to fair value    19 216
Net loss on re-measurement of interest rate swap to fair value     61 5
       10,489 2,525  Entertainment Rights Plc Annual Report and Accounts 2007 
Notes to the Financial Statements – Group
50
9. Taxation for the period
Income tax expense
        2007 2006
       £’000  £’000
Current tax expense:
UK corporation tax charge      – 79
Double tax relief      – (79)
Foreign tax current year charge      2,094 79
Foreign tax prior year charge       43 –
Adjustments in respect of prior periods      44 –
Total current tax       2,181 79
Deferred tax expense:
Origination and reversal of temporary differences      1,550 2,129
Reduction in tax rate      (198) –
Adjustments in respect of prior periods      858 (582)
Total deferred tax      2,210 1,547
Income tax expense in income statement      4,391 1,626
Reconciliation of effective tax rate
        2007 2006
        £’000 £’000
Profit / (loss) before tax      7,926 7,829
Notional taxation charge at the UK Corporation tax rate of 30% (2006: 30%)   2,378 2,349
Effect of tax rates in foreign jusridictions      2,058 –
Items not deductible for tax purposes      (793) 73
Tax on share options exercised      (94) (83)
Deferred tax arising on share options      32 (69)
Utilisation of tax shield on acquisition of Woodland Animations     – (32)
Utilisation of unrecognised tax losses      – (30)
UK deferred tax at 28%      (92) –
Current tax adjustments in respect of prior periods      44 –
Deferred tax adjustments in respect of prior periods      858 (582)
Total tax in income statement      4,391 1,626
In the year ended 31 December 2007 the effective tax rate on profits was 55% (2006: 21%).
Income tax recognised directly in equity
        2007 2006
        £’000 £’000
Deferred tax arising on share options      (483) 11
Effect of movements in exchange rates       420  –
Total tax recognised directly in equity      (63) 11  Entertainment Rights Plc Annual Report and Accounts 2007 
51
Factors that may affect future tax charges
The Group has £1.7m (2006: £0.2m) of unrecognised tax losses that may be available for relief against future 
trading profits. The UK corporation tax rate will have been reduced to 28% from 1 April 2008. The effect of 
this rate change is taken account of in the proof of tax table above.
As part of the Group’s integration of Classic Media, the Group has refinanced its US investments. As a result, 
the Group’s financing structure is more efficient. One consequence of this will be that the Group’s effective 
tax rate is expected to be lower in future years.
10. Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities 
Deferred tax assets and liabilities are attributable to the following:
  Assets Liabilities
     2007 2006 2007 2006
     £’000 £’000 £’000  £’00
Property, plant and equipment    74 149 (3,091) –
Intangible assets    – – (21,787) (3,350)
Employee benefits    222 752 – –
Overseas tax relief available against future profits    235 – – –
Tax losses recognised    1,500 – – –
Temporary differences on items taxed on a cash basis   790 – – –
Deferred income    – – (2,851) –
Tax assets / (liabilities)    2,821 901 (27,729) (3,350)
Movement in deferred tax during the year
   Assumed with
   the acquisition
 1 January of Classic Recognised Recognised 31 December
 2007 Media in income in equity 2007
 £’000 £’000 £’000 £’000 £’000
Property, plant and equipment 149 (2,788) (437) 59 (3,017)
Intangible assets (3,350) (17,287) (1,525) 375 (21,787)
Employee benefits 752 – (47) (483) 222
Overseas tax relief available against future profits – – 235 – 235
Tax losses recognised – 462 1,052 (14) 1,500
Temporary differences on items taxed on a cash basis – 990 (177) (23) 790
Deferred income – (1,563) (1,311) 23 (2,851)
  (2,449) (20,186) (2,210) (63) (24,908)  Entertainment Rights Plc Annual Report and Accounts 2007 
Notes to the Financial Statements – Group
52
Movement in deferred tax during the prior year
  1 January Recognised Recognised 31 December
  2006 in income in equity 2006
  £’000 £’000 £’000 £’000
Property, plant and equipment  105 44 – 149
Intangible assets  (1,690) (1,660) – (3,350)
Employee benefits  672 69 11 752
   (913) (1,547) 11 (2,449)
11. Goodwill
         £’000
Cost 
At 1 January 2006        28,990
Additions        –
At 31 December 2006        28,990
At 1 January 2007        28,990
Additions        –
Acquisition through business combinations       79,773
Effect of movements in exchange rates        (1,788)
At 31 December 2007        106,975
Amortisation 
At 1 January 2006        9,444
Impairment        4
At 31 December 2006        9,448
At 1 January 2007        9,448
Impairment        –
At 31 December 2007        9,448
Net book value
At 31 December 2007        97,527
At 31 December 2006        19,542
At 1 January 2006        19,546
 
Goodwill acquired in a business combination is allocated at acquisition to CGUs. Following the acquisition 
of Classic Media, the Group has rationalised its CGUs. In  the past the Group has classified each brand as 
an individual CGU. Titles are now aggregated based on genre, as rights are often sold together and it is not 
possible to identify cash flows at the title level.
In identifying appropriate CGUs, key brands (such as Postman Pat®, Rupert Bear® and Basil Brush®) have 
been treated as individual CGUs. Titles with a specific genre or market (such as values-based programming 
for Big Idea titles, live-action programming for titles featuring non-animinated characters such as Lassie®, pre-  Entertainment Rights Plc Annual Report and Accounts 2007 
53
school programming for titles aimed at the 3-5 age range, and animated for other cartoon-based titles) have 
been grouped together.
The CGUs which constitute a signficant component of goodwill include animated features (£50m), values-
based programming (£9.6m) and live-action features (£7.8m).
In accordance with stated accounting policy, goodwill is tested for impairment annually, or more frequently 
if there are indicators that goodwill may be impaired. In the current year, all CGUs had a recoverable amount 
equal to their value in use. No impairment was identified during the year.
Key assumptions on which management has based its cash flow projections are those regarding forecast 
profit, discount rates and growth rates for each CGU, as follows:
l Forecast profit is initially derived from either the five-year strategic plan or from historic profits, taking 
into account the most recent budget, as appropriate, extrapolated by 5% pa for the initial five years.
l Yearly growth rates in the five years subsequent to these forecasts are estimated to be 5%, 3% for the 
next five years and a declining rate of 10% thereafter, where appropriate.
l Amounts are discounted using the Group’s pre-tax cost of capital of 10%.
l A full allocation of overheads is made to each CGU.  Entertainment Rights Plc Annual Report and Accounts 2007 
54
12. Intangible assets
   Programme 
 Investment in development Trademarks
 programmes costs and copyrights Total
  £’000 £’000 £’000 £’000
Cost
At 1 January 2006 38,690 1,508 32,963 73,161
Additions 13,161 701 36 13,898
Reclassification 1,092 (1,092) – –
Derecognition – (83) – (83)
At 31 December 2006 52,943 1,034 32,999 86,976
At 1 January 2007 52,943 1,034 32,999 86,976
Additions 9,378 6,625 3,023 19,026
Reclassification 6,936 (6,936) – –
Derecognition – (22) – (22)
Acquisition through business combinations 55,896 2,944 29,519 88,360
Effect of movements in exchange rates (1,236) (66) (652) (1,955)
At 31 December 2007 123,917 3,579 64,889 192,385
Amortisation 
At 1 January 2006  13,034 – 5,325 18,359
Charge for the year 2,575 – 1,648 4,223
Impairment 78 – 35 113
At 31 December 2006 15,687 – 7,008 22,695
At 1 January 2007 15,687 – 7,008 22,695
Charge for the year 5,650 – 3,189 8,839
Impairment – – – –
Effect of movements in exchange rates 25 – 12 37
At 31 December 2007 21,362 – 10,209 31,571
Net book value
At 31 December 2007 102,555 3,579 54,680 160,814
At 31 December 2006 37,256 1,034 25,991 64,281
At 1 January 2006 25,656 1,508 27,638 54,802
Amortisation and impairment charges
The amortisation and impairment charges are recognised in cost of sales. No impairment was identified 
during the year. The key assumptions on which management has based it s cash flow projections are as 
described in note 11.
Notes to the Financial Statements – Group  Entertainment Rights Plc Annual Report and Accounts 2007 
55
Change in estimates
In the interests of greater clarity for the users of the financial statements, the amortisation charge relating to 
investment in programmes balances has been calculated on a simpler, straight-line basis over their useful 
life of up to 20 years. Revenue forecasting is no longer used as an alternative method for calculation of the 
amortisation charge in situations where it would result in a UEL of less than 20 years. The charge for the year 
is £5.7 million. If calculated on the previously employed basis the charge for the year would have been £6.0 
million. The impact in future periods is expected to be similar to that in the current year.
13. Property, plant and equipment
  Fixtures,
 Short fittings
 leasehold and office
  improvements equipment Total
  £’000 £’000 £’000
Cost
At 1 January 2006 158 1,169 1,327
Additions – 143 143
At 31 December 2006 158 1,312 1,470
At 1 January 2007 158 1,312 1,470
Additions 1 365 366
Acquisition through business combinations 8 318 326
Effect of movements in exchange rates – (6) (6)
At 31 December 2007 167 1,989 2,156
Depreciation
At 1 January 2006 94 745 839
Charge for the year 12 227 239
At 31 December 2006 106 972 1,078
At 1 January 2007 106 972 1,078
Charge for the year 16 362 378
Effect of movements in exchange rates – 2 2
At 31 December 2007 122 1,336 1,458
Net book value
At 31 December 2007 45 653 698
At 31 December 2006 52 340 392
At 1 January 2006 64 424 488
At 31 December 2007 there were no assets held under finance leases (2006: nil).
14. Investment in subsidiaries
A list of the principal subsidiaries of the Group can be found in note 37.  Entertainment Rights Plc Annual Report and Accounts 2007 
56
15. Acquisition of business
Business combinations are accounted for under the acquisition method. There were no business combinations 
in 2006.
On 11 January 2007, ER acquired the entire share capital of Classic Media. Classic Media is the US-based 
owner and distributor of children’s and family programming and related character-based intellectual 
properties. Classic Media exploits its rights through a range of sales channels including home video sales, 
TV licensing and merchandising. Classic Media has an extensive library of approximately 3,500 episodes of 
programming which includes well-known brands such as Casper the Friendly Ghost®, Mr. Magoo®, Richie 
Rich®, Rudolph The Red-Nosed Reindeer®, Lone Ranger®, Lassie®, Underdog®, Pat the Bunny™, Lamb 
Chop®, Rocky & Bullwinkle™, Dick Tracy™, Gerald McBoing Boing®, Roger Ramjet™ and George of the 
Jungle™.
ER acquired the entire share capital of Classic Media for a total consideration of £155.8m plus directly 
attributable expenses of £3.8m. Payment of the purchase price comprised the issue of 66,867,268 
Entertainment Rights Plc shares valued at £19.2m based on the closing share price on 10 January 2007 and 
£136.6m in cash. In addition to the placement of 249,033,056 shares on the London Stock Exchange, the 
Group refinanced its indebtedness with Bank of Scotland.
In the period from acquisition to 31 December 2007, Classic Media contributed £22m to the consolidated 
gross profit of the Group. Had the acquisition occurred on 1 January 2007 the estimated revenue for the 
Group would have been £0.2m higher and gross profit would have remained unchanged.
The acquired net assets of Classic Media are set out in the table below:
   Book value  
 Book value Alignment of before  Fair value to
 before accounting acquisition Fair value Entertainment
 acquisition policies under IFRS adjustments Rights Plc
  £’000 £’000 £’000 £’000 £’000
Property, plant and equipment 373 (47) 326 – 326
Intangible assets 41,265 2,308 43,573 44,786 88,359
Inventories – 3,979 3,979 – 3,979
Trade and other receivables 12,937 (4,874) 8,063 72 8,135
Cash and cash equivalents 7,150 – 7,150 – 7,150
Other assets 6,954 (3,903) 3,051 – 3,051
Trade and other payables (1,915) – (1,915) – (1,915)
Accruals and deferred income (8,313) 3,938 (4,375) (2,740) (7,115)
Other liabilities (3,394) – (3,394) – (3,394)
Current tax asset 1,474 – 1,474 – 1,474
Deferred tax liability (2,369) (530) (2,899) (17,287) (20,186)
Net assets and liabilities 54,162 871 55,033 24,831 79,864
Goodwill on acquisition      79,773
Directly attributable costs      (3,838)
Consideration paid      155,799
Notes to the Financial Statements – Group  Entertainment Rights Plc Annual Report and Accounts 2007 
57
The figure in the cash flow statement relating to the acquisition of subsidiary undertakings is made up as 
follows:
 £’000
Total consideration 155,799
Directly attributable costs paid in the period 3,420
Non-cash consideration (19,224)
Classic Media’s cash at acquisition (7,150)
Net outflow per cash flow statement 132,845
Classic Media’s carrying amounts prior to acquisition were recorded under US GAAP . The alignment of 
accounting policy adjustments restate the opening book values under IFRS. The values of assets and 
liabilities recognised on acquisition are their estimated fair values.
The intangible assets recognised at their fair value of £88.4m include the character rights portfolio, library 
exploitation rights, distribution agreements with third parties and Classic Media’s distribution agreement 
with J. Ward. The valuation was performed by an external valuer and was based on future discounted cash 
flows under the income approach, supported by an estimated asset (or cost) approach as a reasonableness 
check, where appropriate. The key assumptions on which the cash flow projections were based are as 
follows:
l Forecast revenue was derived from management’s five-year forecast, taking into account the most recent 
historical data, reflecting a 1.25% pa growth in revenue for the initial five years. Royalty rates of between 
10% and 12% were applied, based on arm’s length royalty rates from independent sources.
l 	 Perpetual growth rates ranging between nil and 2% were applied depending on the outlook and 
prospects for each CGU.
l 	 Amounts were discounted using an estimated WACC for Classic Media in its entirety as a business 
enterprise, on a going concern basis, being 14%.
l 	 A full allocation of general and administrative expenses was made to each CGU.
The fair value adjustment to deferred tax liability is the deferred tax impact of the fair value adjustments to 
intangible assets.
The fair value adjustment to accruals and deferred income represents the provision made against the joint 
venture in Children’s Network Venture LLC (“qubo®”) as discussed in note 16.
The fair value adjustment to trade and other receivables represents the release of a bad debt provision for 
a debtor from whom cash was received during the year.
The goodwill recognised represents the wider strategic benefits of the acquisition to ER. This includes the 
increased opportunities available to ER to increase sales of the existing pre-transaction portfolio in the USA 
through Classic Media’s contacts, networks, and relationships with broadcasters, retailers and licensees. 
There is also the opportunity to increase international sales of Classic Media properties which, prior to 
acquisition, had been largely derived from the USA. Other factors included within goodwill include cost 
savings as a result of the combination of marketing and trade event activities as well as the benefits of 
purchasing power across the enlarged Group. These factors, in combination with the existing ER assets, 
generate the goodwill on acquisition.  Entertainment Rights Plc Annual Report and Accounts 2007 
58
16. Investments in joint ventures
The joint interest in qubo® was acquired as part of the acquisition of Classic Media. The Group holds a 
12.25% share in the joint venture. In accordance with the stated accounting policy, the Group’s interest in the 
joint venture is accounted for using the equity method. The Group is committed to further non-contingent 
capital contributions of $2.1m which have been fully accrued for.
Based on the projections received at the date of acquisition and subsequent performance, no financial 
benefit is anticipated from the venture. Therefore a provision has been made for the full value of the 
investment on the date of acquisition, including the remaining capital contributions.
The Group’s share of the after-tax losses of this joint venture during the year was £806k. This has not been 
taken to the income statement since the investment is fully provided for.
17. Other financial assets
 2007 2006
 £’000 £’000
Interest rate swap at fair value through profit or loss – 61
Forward foreign exchange contracts – 19
 – 80
The Group’s exposures to credit, currency and interest rate risks relating to other financial assets are disclosed 
in note 25.
18. Trade and other receivables
 2007 2006
 £’000 £’000
Amounts falling due within one year:
Trade receivables 29,594 4,286
Other receivables 1,866 3,145
Prepayments and accrued income 15,231 22,456
 46,691 29,887
Amounts falling due after more than one year:
Other receivables      105 –
Prepayments and accrued income      3,293 1,262
       3,398 1,262
      50,089 31,149
Trade receivables are shown net of provisions for bad and doubtful debts amounting to £2,135,000 (2006: 
£337,000).
The Group’s exposures to credit and currency risks and impairment losses relating to trade and other 
receivables are disclosed in note  25.
Notes to the Financial Statements – Group  Entertainment Rights Plc Annual Report and Accounts 2007 
59
19. Trade and other payables
 2007 2006
 £’000 £’000
Amounts falling due within one year:
Trade payables 6,604 3,809
Non-trade payables 1,726 114
 8,330 3,923
Amounts falling due after more than one year:
Non-trade payables 356 –
 8,686 3,923
The Group’s exposures to currency and liquidity risks are disclosed in note 25.
20. Cash, cash equivalents and bank overdrafts
 2007 2006
 £’000 £’000
Cash 12,710 1,697
Overdraft – (9,524)
 12,710 (7,827)
The Group’s exposures to interest rate risk and a sensitivity analysis for financial assets and liabilities are 
disclosed in note 25.
21. 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 25.
2007
     Term Working
      Loans Capital Total
      £’000 £’000 £’000
Within 1 year     3,740 – 3,740
Between 1 and 2 years     5,735 – 5,735
Between 2 and 5 years     28,189 11,000 39,189
Greater than 5 years     71,992 – 71,992
Total as at 31 December 2007     109,656 11,000 120,656
Unutilised amount     – 9,000 9,000
     109,656 20,000 129,656  Entertainment Rights Plc Annual Report and Accounts 2007 
60
2006
     Term Working
      Loans Capital Total
      £’000 £’000 £’000
Within 1 year     6,369 7,827 14,196
Between 1 and 2 years     5,394 – 5,394
Between 2 and 5 years     9,503 – 9,503
Greater than 5 years      4,750 – 4,750
Total as at 31 December 2006     26,016 7,827 33,843
Unutilised amount     – 673 673
      26,016 8,500 34,516
On 10 January 2007, the Group repaid the term loans and working capital facilities then outstanding. On the 
same day the Group drew down new term loans of £110m and entered into a new working capital facility 
of £20m. The bank loans contain certain covenants and certain events of default which are customary in 
agreements of this type. These include interest cover, debt cover and cash flow cover. As at the reporting 
date the Group complied with its banking requirements.
As at 31 December 2007 borrowing costs of £2,022,000 (2006: £185,000) were set off against the term loans 
and working capital facility.
Bank of Scotland has a fixed and floating charge over all the Group’s assets as security for the term loan and 
working capital facility.
The expiry date of the unused borrowing facilities is as follows:
      Working Working
      capital capital
       facility  facility
       2007 2006
       £’000 £’000
Within 1 year      – 673
Between 1 and 2 years      – –
Between 2 and 5 years      9,000 –
Greater than 5 years      – –
       9,000 673
22. Other financial liabilities
       2007 2006
       £’000 £’000
Interest rate collars used for hedging      2,764 –
Forward foreign exchange contracts      28 –
       2,792 –
The Group’s exposures to credit, liquidity, currency and interest rate risks relating to other financial liabilities 
are disclosed in note 25.
Notes to the Financial Statements – Group  Entertainment Rights Plc Annual Report and Accounts 2007 
61
23. Employee benefits
Defined contribution plans 
The Group operates a number of defined contribution pension plans. The total expense relating to these 
plans in the current year was £446,000 (2006: £150,000).
Share-based payments 
At the balance sheet date, the Company operated two share option schemes, an Inland Revenue approved 
scheme and an unapproved scheme. Directors and all of the employees of the Group are eligible to 
participate in the approved and unapproved schemes. Details of the ordinary shares which are subject to 
Directors’ options are disclosed in the Remuneration Report on pages 32 to 33. 
Having served a minimum period of six months, all UK employees are entitled to participate in an Inland 
Revenue approved scheme up to a value of £30,000 and thereafter in the unapproved scheme. In order to 
be consistent with the rules of the schemes, the vesting of options is generally contingent on continued 
employment for a period of at least three years, and the employee has a seven-year period within which 
to exercise the options. The exercise price is determined by reference to the market price based on the 
average of the closing price on the five days prior to grant.
The number and weighted average exercise prices of share options for employees are as follows:
 Weighted  Weighted
 average Number average Nubmber
 exercise of exercise of
  price  options price options
  2007 2007 2006 2006
Outstanding at the beginning of the period 18.10 31,968,294 13.98 28,034,843
Indexed at the beginning of the period 17.76 32,585,030 13.98 28,034,843
Forfeited during the period nil nil nil nil
Exercised during the period (10.74) (1,581,726) (14.72) (1,463,117)
Granted during the period 30.68 12,343,490 35.96 6,140,000
Lapsed during the period (30.61) (970,339) (16.55) (743,432)
Outstanding at the end of the period 21.49 42,376,455 18.10 31,968,294
Exercisable at the end of the period 10.06 16,433,556 13.28 14,186,294
The weighted average share price at the date of exercise of share options exercised during the period was 
30.47p (2006: 33.50p).  Entertainment Rights Plc Annual Report and Accounts 2007 
62
The options outstanding at the year end have exercise prices in the range of 6.85p to 36.65p and a weighted 
average contractual life of seven years remaining.
2007
Grant Date 01 Jan 07 03 Apr 07 03 Apr 07 02 May 07 14 May 07 08 Nov 07 08 Nov 07
Scheme Unapproved Approved Unapproved  Unapproved   Unapproved  Approved  Unapproved
 1994 1994 1994 2007 2007 1994 2007
Number of Options 5,500,000 663,322 946,678 1,724,713 2,500,000 284,744 724,033
Fair value at measurement date 12.39p 14.56p 14.56p 13.26p 13.31p 7.33p 7.33p
Weighted average share price 29.75p 33.75p 33.75p 31.50p 32.00p 18.50p 18.50p
Exercise price 30.60p 33.75p 33.75p 31.70p 32.45p 20.05p 20.05p
Expected volatility  41.0% 40.9% 40.9% 39.8% 39.6% 39.8% 39.8%
Risk-free interest rate 5.0% 5.3% 5.3% 5.4% 5.4% 4.8% 4.8%
2006 
Grant Date   30 Mar 06 30 Mar 06 25 Apr 06 27 Oct 06 27 Oct 06
Scheme   Approved Unapproved Unapproved Approved  Unapproved
   1994 1994 1994 1994 1994
Number of Options   822,642 1,437,358 3,750,000 100,000 30,000
Fair value at measurement date   19.75p 19.75p 18.48p 14.14p 14.14p
Weighted average share price   37.75p 37.75p 36.00p 31.00p 31.00p
Exercise price   36.05p 36.05p 36.15p 29.00p 29.00p
Expected volatility    48.10% 48.10% 47.20% 42.10% 42.10%
Risk-free interest rate   4.40% 4.40% 4.70% 4.90% 4.90%
The fair value of services received in return for share options granted is measured by reference to the fair 
value of those share options. The estimate of the fair value of the services received is measured based on a 
binomial model, based on the following assumptions:
l The contractual life of the options is in accordance with the scheme rules, such that they vest after three 
years and have a maximum exercise period of ten years;
l The expected volatility is wholly based on the historic volatility (calculated based on the weighted 
average remaining life of the share options), adjusted for any expected changes to future volatility due 
to publicly available information;
l A zero dividend yield;
l The risk-free rate is based on the relevant government bond yield;
l The early exercise ratio is assumed to be 1.5:1;
l The employees’ exit rate prior to vesting is 10% and 5% post-vesting;
l The Directors’ exit rate prior to vesting is assumed to be nil and 5% post-vesting;
l	 The likelihood that the performance criteria will be achieved is 80%, where appropriate.
The total expense recognised in administrative costs for the period arising from share based payments is 
as follows:
       2007 2006
       £’000 £’000
Equity-settled share based payment expense      688 526
 
Notes to the Financial Statements – Group  Entertainment Rights Plc Annual Report and Accounts 2007 
63
24. Provisions
        Onerous 
       Lease
        £’000
At 1 January 2007       46
Provisions utilised during the year       (25)
At 31 December 2007       21
Current       21
Non-current       –
        21
 
Onerous lease
The onerous lease provision relates to a warehouse facility in Coventry and is being unwound over a period 
of seven years from the date of the acquisition of TellTale Productions Ltd, being the end of the current lease 
period.
25. Financial instruments
Financial risk management
The Group has exposure to credit, liquidity and market risks from its use of financial instruments.
The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk 
management framework.
The Group’s risk management policies are established to identify and analyse the risks faced by the Group, 
to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management 
policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities. 
The Group, through its training and management standards and procedures, aims to develop a disciplined 
and constructive control environment in which all employees understand their roles and obligations. The 
Group Audit Committee oversees management’s compliance with the Group’s risk management policies 
and procedures and reviews the adequacy of the risk management framework in relation to the risks faced 
by the Group.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails 
to meet its contractual obligations, and arises principally from the Group’s receivables from customers and 
transactions with the Group’s bank.
Trade and other receivables
Exposure to financial counterparty credit risk is managed by the Group’s credit control team, by establishing 
and maintaining relationships with customers. The Group is exposed to customers ranging from government-
owned broadcasters to privately-owned licensees and the underlying local economic and sovereign risks 
vary throughout the world. The Group’s exposure to credit risk is influenced mainly by the individual 
characteristics of each customer. The demographics of the Group’s customer base, including the default 
risk of the industry and country in which customers operate, has less influence on credit risk. Geographically, 
67% of the Group’s debtors are located in the USA, 30% in Europe and 3% in the rest of the world.  Entertainment Rights Plc Annual Report and Accounts 2007 
64
Each new customer is analysed individually for creditworthiness before the Group’s standard payment terms 
are offered. Purchase limits are established for each customer and customers that fail to meet the Group’s 
benchmark creditworthiness may transact with the Group only on a prepayment basis. Customers that are 
graded as high risk are placed on a restricted customer list. The Group does not require collateral in respect 
of trade and other receivables.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect 
of trade and other receivables. The main component of this allowance is a specific loss component that 
relates to individual exposures.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The 
Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient 
liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring 
unacceptable losses or risking damage to the Group’s reputation. The Group produces regular short- and 
long-term cash flow forecasts which assist it in monitoring cash flow requirements. As part of its financing 
arrangements with the Group’s bank the Group has access to a £20 million revolving credit facility that can 
be drawn down to meet short-term financing needs. Interest on this facility is payable at a rate of LIBOR 
plus 150 basis points.
Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, 
will affect the Group’s results or the value of its holdings of financial instruments. The objective of market 
risk management is to manage and control market risk exposures within acceptable parameters, while 
optimising the return.
The Group buys and sells derivatives in order to manage market risks. Generally, the Group seeks to apply 
hedge accounting in order to manage volatility in profit or loss.
Currency risk
The Group is exposed to currency risk on sales, purchases and borrowings that are denominated in a 
currency other than the respective functional currencies of Group entities, primarily sterling and US dollars. 
The currencies in which these transactions are primarily denominated are euro and US dollars.
Where appropriate the Group uses forward foreign exchange contracts to hedge its currency risk, to-date 
these have had a maturity of less than one year from inception. When necessary, forward foreign exchange 
contracts are rolled over at maturity.
Interest on borrowings is denominated in currencies that match the cash flows generated by the underlying 
operations of the Group, being sterling and US dollars. This provides an economic hedge and no derivatives 
are entered into.
In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures 
that its net exposure is kept to an acceptable level by selling foreign currencies at spot rates when necessary 
to address short-term imbalances.
A portion of the Group’s investment in its US subsidiaries is hedged by US dollar-denominated secured 
bank loans, which mitigate the currency risk arising from the subsidiaries’ net assets.
Interest rate risk
The Group has entered into interest rate collars in order to mitigate its exposure to changes in interest 
rates.
Notes to the Financial Statements – Group  Entertainment Rights Plc Annual Report and Accounts 2007 
65
Hedge accounting
On 13 June 2007 the Group adopted hedge accounting.
Interest rate collars with notional principal amounts of £104.7m, whose fair values are included in other 
financial liabilities, have been designated as cash flow hedges against £104.7m of the Group’s term loans. 
Since the adoption of hedge accounting, given that the hedges are deemed to be highly effective, changes 
in the fair values of the collars have been taken to the hedging reserve in equity. Prior to the adoption of 
hedge accounting, changes in the fair values of the collars were included in financial income and expense 
in the income statement.
Term loans with principal amounts of $128.3m (£64.7m) have been designated as a hedge against the 
Group’s investment in $128.3m of the net assets of Classic Media. Since the adoption of hedge accounting, 
given that the hedge is deemed to be highly effective, foreign exchange movements relating to the term 
loans have been taken to the translation reserve in equity. Prior to the adoption of hedge accounting, 
foreign exchange movements relating to the terms loans were included in financial income and expense in 
the income statement.
The following table indicates the periods in which the cash flows associated with derivatives that are cash 
flow hedges are expected to occur (and when they are expected to have an impact upon profit or loss) 
(2006: nil):
2007  Expected     More
 Carrying cash 6 months 6-12 1-2 2-5 than
 amount flows or less months years years 5 years 
 £’000 £’000 £’000 £’000 £’000 £’000 £’000
Interest rate collars (2,764) 25 25 – – – –
 (2,764) 25 25 – – – –
Capital management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market 
confidence and to sustain future development of the business. The Board also monitors the level of dividends 
to ordinary shareholders.
There were no changes to the Group’s approach to capital management during the year. Neither the 
Company nor any of its subsidiaries are subject to externally imposed capital requirements.
Credit risk
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure 
to credit risk at the reporting date was:
      2007 2006
       £’000 £’000
Financial assets at fair value through profit or loss      – 80
Trade and other receivables      50,089 31,149
Cash and cash equivalents      12,710 –
       62,799 31,229  Entertainment Rights Plc Annual Report and Accounts 2007 
66
The maximum exposure to credit risk for trade and other receivables at the reporting date by segment 
was:
      2007 2006
       £’000 £’000
USA      21,019 –
UK      29,070 31,149
       50,089 31,149
Impairment losses
The ageing of trade receivables at the reporting date was as follows:
 Gross  Gross
 amount  Impairment amount Impairment
 2007 2007 2006 2006
 £’000 £’000 £’000  £’000
Not past due 35,773 (89) 23,807 –
Past due 0-30 days 592 – 607 –
Past due 31-60 days 4,016 – 1,400 –
Past due 61-90 days 1,484 – 371 –
Past due 91 days to one year 7,887 (1,332) 1,408 –
More than one year 1,344 (714) 372 (337)
 51,095 (2,135) 27,965 (337)
The movement in the allowance for impairment in respect of trade receivables during the year was as 
follows:
      2007 2006
      £’000  £’000
At 1 January      337 98
Provision assumed at acquisition of Classic Media      796 –
Impairment loss recognised      1,002 239
At 31 December      2,135 337
Based on historic default rates, the Group believes that no impairment is necessary in respect of trade 
receivables not past due or past due by up to one year. Save for the above, no other financial assets are 
considered to be impaired.
The allowance account in respect of trade receivables is used to record impairment losses unless the 
Group is satisfied that no recovery of the amount owing is possible; at that point the amount is considered 
irrecoverable and written off against the financial asset directly. At 31 December 2007 the Group does not 
have any collective impairments on its trade receivables (2006: nil).
Notes to the Financial Statements – Group  Entertainment Rights Plc Annual Report and Accounts 2007 
67
Liquidity risk
The following are the contractual maturities of financial liabilities, including estimated interest payments:
2007 Carrying Contractual 6 months 6-12 1-2 2-5 More than
 amount cash flows or less months years years 5 years
  £’000 £’000 £’000 £’000 £’000 £’000 £’000
Non-derivative financial liabilities
Secured bank loans 120,656 168,166 5,673 6,896 14,235 60,428 80,935
Trade and other payables 8,686 8,686 8,325 5 356 – –
Bank overdraft – – – – – – –
Provisions 21 21 12 9 – – –
Derivative financial liabilities
Forward foreign exchange contracts:
Outflow 28 2,519 2,519 – – – –
Inflow – (2,465) (2,465) – – – –
Interest rate collars used for hedging 2,764 (25) (25) – – – –
  132,155 176,902 14,039 6,910 14,591 60,428 80,935
2006 Carrying Contractual 6 months 6-12 1-2 2-5 More than
 amount cash flows or less months years years 5 years
  £’000 £’000 £’000 £’000 £’000 £’000 £’000
Non-derivative financial liabilities
Secured bank loans 26,017 26,230 26,230 – – – –
Trade and other payables 3,923 3,923 3,923 – – – –
Bank overdraft 9,524 9,524 9,524 – – – –
Provisions 46 46 13 12 21 – –
Derivative financial liabilities
Forward foreign exchange contracts:
Outflow – – – – – – –
Inflow – – – – – – –
Interest rate collars used for hedging – – – – – – –
  39,510 39,723 39,690 12 21 – –
 
Currency risk
Sensitivity analysis
It is estimated that a general decrease of one percentage point in the value of sterling against other 
currencies would have increased the Group’s profit before tax by approximately £1.2m for the year ended 
31 December 2007 (2006: £0.1m). 
Interest rate risk
Sensitivity analysis
At 31 December 2007, it is estimated that a general increase of one percentage point in interest rates would 
decrease the Group’s profit before tax by approximately £0.5m (2006: £0.3m). Interest rate derivatives have 
been included in this calculation.  Entertainment Rights Plc Annual Report and Accounts 2007 
68
Fair values
The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance 
sheet, are as follows:
    Carrying Fair Carrying Fair
     amount value amount value
     2007 2007 2006 2006
     £’000 £’000 £’000 £’000
Financial assets at fair value through profit or loss    – – 80 80
Loans and receivables    50,089 50,089 31,149 31,149
Cash and cash equivalents    12,710 12,710 – –
Interest rate collars used for hedging    (2,764) (2,764) – –
Financial liabilities at fair value through profit or loss    (28) (28) – –
Secured bank loans    (118,634) (120,656) (25,831) (26,017)
Trade and other payables    (8,686) (8,686) (13,631) (13,631)
Bank overdraft    – – (7,827) (7,827)
     (67,313) (69,335) (16,060) (16,246)
The basis for determining fair values is disclosed in note 1.
26. Share capital
  2007  2006
  Number £ Number £
Authorised: Ordinary Shares of 5p each 1,007,000,000 50,350,000 550,000,000 27,500,000
Allotted, called up and fully paid Ordinary Shares of 5p each 732,537,145 36,626,857 415,055,094 20,752,755
 
Notes to the Financial Statements – Group  Entertainment Rights Plc Annual Report and Accounts 2007 
69
27. Reconciliation of movements in capital and reserves
  Share Premium Merger Hedging Translation Retained
 Capital Share Reserve Reserve Reserve Earnings Total
  £’000 £’000 £’000 £’000 £’000 £’000 £’000
At 1 January 2006  20,678 33,244 16,470 – – (11,690) 58,702
Profit for the period – – – – – 6,203 6,203
Share option charge – – – – – 526 526
Exercise of share options 74 144 – – – – 218
Deferred tax on share options – – – – – 11 11
At 31 December 2006 20,752 33,388 16,470 – – (4,950) 65,660
At 1 January 2007  20,752 33,388 16,470 – – (4,950) 65,660
Issue of share capital 12,453 58,522 – – – – 70,975
Issue of shares on acquisition 3,343 15,881 – – – – 19,224
Share issue costs – (2,376) – – – – (2,376)
Share option charge – – – – – 688 688
Exercise of share options 79 91 – – – – 170
Deferred tax on share options – – – – – (483) (483)
Re-measurement of deferred tax on  
 share options to 28% – – – – – – –
Movement on cash flow hedges – – – (4,341) – – (4,341)
Foreign exchange on net investment hedge – – – – 364 – 364
Foreign exchange on translation 
 of foreign operation – – – – (3,457) – (3,457)
Profit for the period – – – – – 3,535 3,535
At 31 December 2007 36,627 105,506 16,470 (4,341) (3,093) (1,210) 149,959
Merger reserve
In 1999, following the acquisition of Dot Films Limited, Seer Magic Limited, Boom Boom Limited and 
Carrington Productions International Limited, the excess of the consideration over the nominal value of 
shares was credited to the merger meserve in accordance with s131 of the Companies Act 1985.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash 
flow hedging instruments related to hedged transactions that have not yet occurred.
Translation reserve
The translation reserve comprises all foreign currency differences arising from the translation of the financial 
statements of foreign operations as well as from the translation of liabilities that hedge Company’s net 
investment in a foreign subsidiary.  Entertainment Rights Plc Annual Report and Accounts 2007 
70
Notes to the Financial Statements – Group
28. Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on the consolidated profit after tax for the 
period of £3,535,000 (2006: £6,203,000 ) and on the weighted average number of ordinary shares in issue 
during the period of 722,571,589 (2006: 414,541,333).
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out 
below:
    
 2007 2006
  Total Total
   £’000  £’000
Profit after taxation 3,535 6,203
Basic earnings per ordinary share
Earnings available to ordinary shareholders 3,535 6,203
Weighted average number of shares in issue 722,571,589 414,541,333
Basic earnings per share (pence) 0.49p  1.50p
Diluted earnings per ordinary share
Earnings available to ordinary shareholders 3,535 6,203
Weighted average number of shares in issue 722,571,589 414,541,333
Effect of dilutive securities – options 23,327,382 26,517,874
Diluted earnings per share (pence) 0.47p  1.41p
Underlying earnings per share
Earnings available to ordinary shareholders 3,535 6,203
Share options charge 688 526
Fair value of derivatives (1,028) 223
Aborted acquisition costs – 119
Integration and restructuring costs 2,480 –
One-off rebranding costs 755 –
Operations disposed of 118 –
  6,548 7,071
Weighted average number of shares in issue 722,571,589 414,541,333
Underlying earnings per share (pence) 0.91p  1.70p  Entertainment Rights Plc Annual Report and Accounts 2007 
71
29. Operating leases
As at 31 December 2007, the Group was committed to payments under the following non-cancellable 
operating leases in respect of rent, office equipment and motor vehicles:
       2007 2006
       £’000 £’000
Within 1 year      900 543
Between 2 and 5 years      2,330 2,029
Greater than 5 years      1,235 1,729
       4,465 4,301
During the year £903,000 was recognised as an expense in the income statement in respect of operating 
leases (2006: £541,000). There are no restrictions placed upon the Group by entering into these leases.
The Group was not committed to any finance lease obligations.
30. Related party transactions
Professional services were rendered by Auerbach Hope during the year. These are related party transactions 
by virtue of the fact that Non-Executive Director, Irvin Fishman is an executive in this practice. The amounts 
involved are as follows:
Director Practice Charge for Year Outstanding
I. Fishman Auerbach Hope £6,060 nil
The key management personnel of the Group are the Directors. Details of Directors’ emoluments are 
disclosed in the Remuneration Report on page 30.
31. Capital commitments
       2007 2006
       £’000 £’000
Contracted but not provided for      8,246 4,063
The committed amounts at 31 December 2007 related to investment in programmes and are expected to 
be settled within two years.
32. Contingent liabilities
The Group has no bank guarantees outstanding at 31 December 2007 (2006: nil).
33. Accounting estimates and judgements
As stated in note 10, a deferred tax asset relating to tax losses of £1.5m has been recognised in the period. 
This is based on the assumption that sufficient taxable profits will be generated in the future against which 
these losses can be utilised.
As stated in note 11, the carrying value of CGUs and amortisation of investment in programming is 
based on discounted future cash flow estimates and historical profits via an annual impairment test. The 
assumptions used in the calculation include estimated growth rates and forecast sales plans.  Entertainment Rights Plc Annual Report and Accounts 2007 
72
Notes to the Financial Statements – Group
As stated in note 15, the carrying value of intangible assets acquired with Classic Media is meaured at fair 
value at the date of acquisition. This valuation was performed by an external valuer. Key assumptions used 
in this calculation include growth rates, forecasted sales and discount rates.
As stated in notes 15 and 16, the joint venture in qubo® was fully provided against at the date of acquisition 
of Classic Media. The assessment that the joint venture does not represent any future economic benefit to 
the Group is based on future cash flow projections and results to date.
As stated in note 23, the fair value of services received in return for share options granted is measured by 
reference to the fair value of share options granted. The estimate of the fair value of the services received 
is measured based on a binomial model, the assumptions for which are disclosed in the note.
34. Post-balance sheet events
Mike Heap resigned as Chief Executive Officer on 17 March 2008 and as a Director on 18 March 2008. Nick 
Phillips was appointed as Chief Executive Officer and as a Director on 18 March 2008.  Entertainment Rights Plc Annual Report and Accounts 2007 
73
Company Balance Sheet
as at 31 December
      2007 2006
    Notes  £’000 £’000
Fixed assets
Tangible assets    36  384 392
Investments    37  178,715 22,829
      179,099 23,221
Current assets
Other financial assets    38  – 80
Debtors – amounts falling due within one year    39  55,467 51,726
Cash at bank and in hand      3,922 –
Total current assets      59,389 51,806
Creditors: amounts falling due within one year    40  (8,226) (21,012)
Net current assets      51,163 30,794
Total assets less current liabilities      230,262 54,015
Creditors: amounts falling due after more than one year   41  (114,894) (19,462)
Net assets      115,368 34,553
Capital and reserves
Called up share capital    46  36,627 20,752
Share premium account    46  105,506 33,388
Merger reserve    46  16,470 16,470
Other reserves    46  (4,341) –
Profit and loss account    46  (38,894) (36,057)
Equity shareholders’ funds      115,368 34,553
The financial statements on pages 73 to 83 were approved by the Board of Directors on 8 April and signed 
on their behalf by
Rod Bransgrove – Non-Executive Chairman Elizabeth Gaines – Chief Finance & Operations Director  Entertainment Rights Plc Annual Report and Accounts 2007 
74
Notes to the Financial Statements – Company
35. Accounting policies
Basis of accounting
These financial statements have been prepared under the historical cost convention and in accordance with 
applicable United Kingdom accounting standards. A summary of significant accounting policies applied 
is set out below. These financial statements have been prepared on the historical cost basis except that 
derivative financial instruments are stated at their fair value.
Judgements made by the Directors in the application of these accounting policies that have significant 
effect on the financial statements and estimates principally relate to recognition of deferred tax assets and 
the share option valuation and are discussed in note 33.
New accounting standards
During the year the Company adopted UITF 41 ‘Scope of FRS 20 – Share-Based Payments’. This interpretation 
provides guidance on the application of FRS 20 which has resulted in the Company reflecting the charge 
relating to shares granted to a subsidiary’s employees in the cost of investment in that subsidiary undertaking, 
with a corresponding increase in equity.
Tangible fixed assets
Tangible fixed assets are stated at cost less depreciation.
Depreciation is provided on all tangible fixed assets in order to write off their cost on a straight-line basis 
over their expected useful lives. The rates adopted are as follows:
Short leasehold improvements Over period of lease
Office equipment 4-10 years
Fixtures and fittings 4 years
Motor vehicles 4 years
Financial instruments
Under FRS 29, the Company is exempt from the requirement to disclose financial instruments on the grounds 
that the results of the Company are included in publicly available consolidated financial statements which 
include disclosures that comply with this standard.
Hedge accounting
On 13 June 2007 the Company adopted hedge accounting.
Interest rate collars with notional principal amounts of £104.7m, whose fair values are included in other 
financial liabilities, have been designated as cash flow hedges against £104.7m of the Company’s term loans. 
Since the adoption of hedge accounting, given that the hedges are deemed to be highly effective, changes 
in the fair values of the collars have been taken to the hedging reserve in equity. Prior to the adoption of 
hedge accounting, changes in the fair values of the collars were included in the loss for the period.
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated into sterling at the rate of 
exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling and 
recorded at the rate ruling at the date of the transactions. All exchange differences arising from the above 
are included 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.  Entertainment Rights Plc Annual Report and Accounts 2007 
75
Taxation
The charge for taxation is based on the profit for the year and takes into account taxation deferred because 
of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred 
taxation is provided on all timing differences that have arisen but not reversed by the balance sheet date, 
except as otherwise required by FRS 19.
Operating leases
Rentals paid under operating leases are charged to the profit and loss on a straight-line basis over the 
period of the lease.
Share-based payments
The share option programme allows Company employees to acquire shares of the Company; these awards 
are granted by the Company. 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 binomial 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 except where forfeiture is due only to share prices not achieving the threshold for 
vesting.
Pension costs
The Company operates a defined contribution personal pension scheme for all employees. This covers all 
full-time employees who have elected to participate in the plan, following the completion of three months 
of service with the Company.
Investments in subsidiary undertakings
Investments in subsidiary undertakings are stated at cost and reviewed for impairment if there are indications 
that the carrying value may not be recoverable.
Cash flow statement
As the ultimate holding company publishes a consolidated cash flow statement in which the Company’s 
cash flows are consolidated and all of the Company’s share capital is held within the Group, the Company is 
exempt from the requirement to prepare a cash flow statement, as permitted by FRS 1.
Related parties
Under FRS 8 – Related Party Disclosures, the Company is exempt from the requirement to disclose 
transactions with other entities within the Group headed by Entertainment Rights Plc.  Entertainment Rights Plc Annual Report and Accounts 2007 
76
36. Tangible fixed assets
   Fixtures
 Short fittings and
 leasehold office
 improvements equipment Total
  £’000 £’000 £’000
Cost
At 1 January 2007 158 1,312 1,470
Additions – 156 156
At 31 December 2007 158 1,468 1,626
Depreciation
At 1 January 2007 106 972 1,078
Charge for the year 8 156 164
At 31 December 2007 114 1,128 1,242
Net book value
At 31 December 2007 44 340 384
At 31 December 2006 52 340 392
At 31 December 2007 there were no assets held under finance leases (2006: nil).
37. Fixed asset investments
       Shares in
       subsidiary
       undertakings
        £’000
Cost  
At 1 January 2007       43,041
Additions       155,798
Share option charge re employees of foreign subsidiaries      88
At 31 December 2007       198,927
Provisions  
At 1 January 2007 and 31 December 2007       20,212
Net book value  
At 31 December 2007       178,715
At 31 December 2006       22,829
Notes to the Financial Statements – Company  Entertainment Rights Plc Annual Report and Accounts 2007 
77
The Company’s principal subsidiaries are as follows:
       Country of
Subsidiary       incorporation
Entertainment Rights Distribution Limited       UK
Link Licensing Limited       UK
The Sleepy Kid Company Limited       UK
Woodland Animations Limited       UK
Classic Media, Inc       USA
Big Idea, Inc       USA
Harvey Entertainment, Inc       USA
Golden Key Home Video, Inc       USA
All of the above are wholly-owned, directly or indirectly, by the Company and are included in the consolidated 
financial statements of the Group. Details of all Entertainment Rights companies will be annexed to the next 
Annual Return of Entertainment Rights Plc filed with the UK Registrar of Companies.
On 11 January 2007, ER acquired the entire share capital of Classic Media. Classic Media is the US-based 
owner and distributor of children’s and family programming and related character-based intellectual 
properties. Classic Media exploits its rights through a range of sales channels including home video sales, 
TV licensing and merchandising. Classic Media has an extensive library of approximately 3,500 episodes of 
programming which includes well-known brands such as Casper the Friendly Ghost®, Mr. Magoo®, Richie 
Rich®, Rudolph The Red-Nosed Reindeer®, Lone Ranger®, Lassie®, Underdog®, Pat the Bunny™, Lamb 
Chop®, Rocky & Bullwinkle™, Dick Tracy™, Gerald McBoing Boing®, Roger Ramjet™ and George of the 
Jungle™.
ER acquired the entire share capital of Classic Media for a total consideration of US$302.2m (£155.8m) plus 
directly attributable expenses of US$7.6m (£3.8m). Payment of the purchase price comprised the issue of 
66,867,268 Entertainment Rights Plc shares valued at US$37.3m (£19.2m) based on the closing share price 
on 10 January 2007 and US$264.9m (£136.6m) in cash. In addition to the placement of 249,033,056 shares on 
the London Stock Exchange, the Group refinanced its indebtedness with Bank of Scotland.
38. Other financial assets
       2007 2006
       £’000 £’000
Interest rate swap at fair value through profit or loss      – 61
Forward foreign exchange contracts      – 19
       – 80
   Entertainment Rights Plc Annual Report and Accounts 2007 
78
39. Debtors
       2007 2006
       £’000 £’000
Amounts falling due within one year:
Amounts owed by Group undertakings      54,215 48,751
Trade debtors      – 263
Deferred tax asset      1,252 149
Other debtors      – 267
Prepayments and accrued income      – 2,296
       55,467 51,726
40. Creditors: amounts falling due within one year
      2007 2006
       £’000 £’000
Term loans      3,740 6,369
Bank overdraft      – 9,504
Interest rate collars used for hedging      2,764 – 
Forward foreign exchange contracts      28 – 
Trade creditors      – 3,809
Other taxation and social security      – –
Amounts owed to Group undertakings       1,694 1,096
Accruals and deferred income      – 234
       8,226 21,012
As at 31 December 2007 borrowing costs of £2,022,000 (2006: £185,000) were set off against the term loans 
and working capital facility.
Bank of Scotland has a fixed and floating charge over all the Company’s assets as security for the term loan 
and working capital facility.
41. Creditors: amounts falling due after more than one year
       2007 2006
       £’000 £’000
Term loans      114,894 19,462
       114,894 19,462
Notes to the Financial Statements – Company  Entertainment Rights Plc Annual Report and Accounts 2007 
79
42. Provision for deferred taxation
 Assets Liabilities
     2007 2006 2007 2006
     £’000  £’000 £’000  £’000
Accelerated capital allowances    74 149 – –
Tax losses    1,178 – – –
Tax assets / (liabilities)    1,252 149 – –
Movement in deferred tax during the year
  Origination
  and reversal 
 1 January of timing 31 December
 2007 differences 2007 
 £’000 £’000 £’000
Accelerated capital allowances 149 (75) 74
Tax losses – 1,178 1,178
  149 1,103 1,252
43. Operating leases
As at 31 December 2007, the Company was committed to payments under the following non-cancellable 
operating leases in respect of rent, office equipment and motor vehicles:
Operating lease commitments:  
       2007 2006
       £’000 £’000
Within 1 year      9 12
Between 1 and 5 years      28 35
Greater than 5 years      494 494
       531 541
The Group was not committed to any finance lease obligations.
44. Capital commitments
       2007 2006
       £’000 £’000
Investment in programmes
Contracted but not provided for      – –  Entertainment Rights Plc Annual Report and Accounts 2007 
80
45. Share capital
   2007  2006
  Number £ Number £
Authorised: ordinary shares of 5p each 1,007,000,000 50,350,000 550,000,000 27,500,000
Allotted, called up and fully paid ordinary shares of 5p each 732,537,145 36,626,857 415,055,094 20,752,755
46. Reconciliation of movements in capital and reserves
  Share Share Merger Hedging Profit Total Total
 Capital Premium Reserve Reserve and Loss 2007 2006
  £’000 £’000 £’000 £’000 £’000 £’000 £’000
As at 1 January 2007  20,752 33,388 16,470 – (36,057) 34,553 49,080
Issue of share capital  12,453 58,522 – – – 70,975 218
Issue of shares on acquisition  3,343 15,881 – – – 19,224 –
Share issue costs  – (2,376) – – – (2,376) –
Share option charge  – – – – 776 776 526
Exercise of share options  79 91 – – – 170 –
Movement on cash flow hedges  – – – (4,341) – (4,341) –
Profit/(loss) for the period  – – – – (3,613) (3,613) (15,271)
As at 31 December 2007  36,627 105,506 16,470 (4,341) (38,894) 115,368 34,553
Merger reserve
In 1999, following the acquisition of Dot Films Limited, Seer Magic Limited, Boom Boom Limited and 
Carrington Productions International Limited, the excess of the consideration over the nominal value of 
shares was credited to the merger reserve in accordance with s131 of the Companies Act 1985.
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash 
flow hedging instruments related to hedged transactions that have not yet occurred.
47. Directors’ emoluments
Detailed disclosure of Directors’ individual remuneration and share options are given in the Remuneration 
report on pages 30 to 33.
       2007 2006
       £’000 £’000
Directors’ emoluments      1,198 1,080
Company contributions to pension schemes      79 69
Amounts paid to third parties in respect of Directors’ services     172 68
       1,449 1,217
Pension contributions are currently paid either to Directors’ personal pension schemes, or to the Company 
scheme.
Notes to the Financial Statements – Company  Entertainment Rights Plc Annual Report and Accounts 2007 
81
48. Staff numbers and costs
The average number of employees (including Executive Directors) employed by the Group during the year 
was:
       2007 2006
Administration      44 45
Sales and consumer products      25 25
Production      15 16
       84 86
The aggregate payroll costs of these persons were as follows:
       2007 2006
       £’000 £’000
Staff costs (including Executive Directors)
Wages and salaries      4,326 3,959
Social security costs      438 471
Pension costs      131 150
Share options charge      688 526
       5,583 5,106
A management charge is made to subsidiary companies, allocating the payroll costs across the Group.
The Company operates a defined contribution personal pension scheme. The charge for the year represents 
those contributions payable to this scheme and other personal pension schemes.
49. Share-based payments 
At the balance sheet date, the Company operated two share option schemes, an Inland Revenue 
approved scheme and an unapproved scheme. Directors and all of the employees of the Group 
are eligible to participate in the approved and unapproved schemes. Details of the ordinary shares 
which are subject to Directors’ options are disclosed in the Remuneration Report on pages 32 to 33.  
 
Having served a minimum period of six months, all UK employees are entitled to participate in an Inland 
Revenue approved scheme up to a value of £30,000 and thereafter in the unapproved scheme. In order to 
be consistent with the rules of the schemes, the vesting of options is generally contingent on continued 
employment for a period of at least three years, and the employee has a seven-year period within which 
to exercise the options. The exercise price is determined by reference to the market price based on the 
average of the closing price on the five days prior to grant.  Entertainment Rights Plc Annual Report and Accounts 2007 
82
The number and weighted average exercise prices of share options for employees are as follows:
 Weighted  Weighted  
 average Number average Number 
 exercise of exercise of 
 price options price options 
  2007 2007 2006 2006
Outstanding at the beginning of the period 18.10 31,968,294 13.98 28,034,843
Indexed at the beginning of the period 17.76 32,585,030 13.98 28,034,843
Forfeited during the period nil nil nil nil
Exercised during the period (10.74) (1,581,726) (14.72) (1,463,117)
Granted during the period 30.68 12,343,490 35.96 6,140,000
Lapsed during the period (30.61) (970,339) (16.55) (743,432)
Outstanding at the end of the period 21.49 42,376,455 18.10 31,968,294
Exercisable at the end of the period 10.06 16,433,556 13.28 14,186,294
The weighted average share price at the date of exercise of share options exercised during the period was 
30.47p (2006: 33.50p).
The options outstanding at the year end have exercise prices in the range of 6.85p to 36.65p and a weighted 
average contractual life of seven years remaining.
2007
Grant Date 01 Jan 07 03 Apr 07 03 Apr 07 02 May 07 14 May 07 08 Nov 07 08 Nov 07
 Unapproved Approved Unapproved  Unapproved   Unapproved  Approved  Unapproved
Scheme 1994 1994 1994 2007 2007 1994 2007
Number of Options 5,500,000 663,322 946,678 1,724,713 2,500,000 284,744 724,033
Fair value at measurement date 12.39p 14.56p 14.56p 13.26p 13.31p 7.33p 7.33p
Weighted average share price 29.75p 33.75p 33.75p 31.50p 32.00p 18.50p 18.50p
Exercise price 30.60p 33.75p 33.75p 31.70p 32.45p 20.05p 20.05p
Expected volatility  41.0% 40.9% 40.9% 39.8% 39.6% 39.8% 39.8%
Risk-free interest rate 5.0% 5.3% 5.3% 5.4% 5.4% 4.8% 4.8%
2006 
Grant Date   30 Mar 06 30 Mar 06 25 Apr 06 27 Oct 06 27 Oct 06
   Approved Unapproved Unapproved Approved  Unapproved
Scheme   1994 1994 1994 1994 1994
Number of Options   822,642 1,437,358 3,750,000 100,000 30,000
Fair value at measurement date   19.75p 19.75p 18.48p 14.14p 14.14p
Weighted average share price   37.75p 37.75p 36.00p 31.00p 31.00p
Exercise price   36.05p 36.05p 36.15p 29.00p 29.00p
Expected volatility    48.10% 48.10% 47.20% 42.10% 42.10%
Risk-free interest rate   4.40% 4.40% 4.70% 4.90% 4.90%
Notes to the Financial Statements – Company  Entertainment Rights Plc Annual Report and Accounts 2007 
83
The fair value of services received in return for share options granted is measured by reference to the fair 
value of those share options. The estimate of the fair value of the services received is measured based on a 
binomial model, based on the following assumptions:
l The contractual life of the options is in accordance with the scheme rules, such that they vest after three 
years and have a maximum exercise period of ten years;
l The expected volatility is wholly based on the historic volatility (calculated based on the weighted 
average remaining life of the share options), adjusted for any expected changes to future volatility due 
to publicly available information;
l A zero dividend yield;
l The risk-free rate is based on the relevant government bond yield;
l The early exercise ratio is assumed to be 1.5:1;
l The employees’ exit rate prior to vesting is 10% and 5% post-vesting;
l The Directors’ exit rate prior to vesting is assumed to be nil and 5% post-vesting;
l The likelihood that the performance criteria will be achieved is 80%, where appropriate.
The total expense recognised in administrative costs for the period arising from share based payments is 
as follows:
       2007 2006
       £’000 £’000
Equity-settled share based payment expense      688 526
50. Loss on ordinary activities after taxation
As permitted by section 230 of the Companies Act 1985, the parent company’s profit and loss account has 
not been included in these financial statements. The Company’s loss on ordinary activities after tax for the 
year ended 31 December 2007 amounted to £3,613,000 (2006: £15,271,000 loss).
51. Related party transactions
Professional services were rendered by Auerbach Hope during the year. These are related party transactions 
by virtue of the fact that Non-executive Director, Irvin Fishman is an executive in this practice. The amounts 
involved are as follows:
Director Practice Charge for Year Outstanding
I. Fishman Auerbach Hope £6,060 nil
The key management personnel of the Group are the Directors. Details of Directors’ emoluments are 
disclosed in the Remuneration Report on page 30.
52. Post-balance sheet events
Mike Heap resigned as Chief Executive Officer on 17 March 2008 and as a Director on 18 March 2008. Nick 
Phillips was appointed as Chief Executive Officer and as a Director on 18 March 2008.  Entertainment Rights Plc Annual Report and Accounts 2007 
84
Legal Notices
3-2-1 Penguins™: © Big Idea, Inc. 3-2-1 Penguins™, character 
names, likenesses, and other indicia are trademarks of Big Idea, 
Inc. All rights reserved.
Adventures of Waldo Kitty, The: © 1975 Entertainment Rights 
Plc. All Rights Reserved.
Barbie Movies: © Mattel, Inc. All Rights Reserved.
Basil Brush®: © 2003 Ivan Owen’s Estate and Peter Firmin under 
exclusive licence to Entertainment Rights Plc. All Rights reserved. 
Basil’s Swap Shop © 2008 BBC. ™ BBC and Ivan Owen’s Estate 
and Peter Firmin. All Rights reserved. 
BraveStarr®: © 1987 Entertainment Rights Plc. All Rights 
Reserved.
Casper The Friendly Ghost: © 1997 Harvey Comics Inc. All 
characters and related indicia are trademarks of a copyright by 
Harvey Comics Inc. A Harvey Entertainment Company. All Rights 
Reserved.
Casper’s Scare School: © 2008 Classic Media, Inc. CASPER 
and associated character names, images and related indicia are 
trademarks of and copyrighted by Harvey Entertainment, Inc. All 
rights reserved.
Dick Tracy™: Dick Tracy © Tribune Media Services, Inc. Licensed 
by Classic Media, Inc. All rights reserved.
Dinotopia: © 2005 RHI Entertainment Inc. Distributed exclusively 
by Entertainment Rights Distribution Limited. 
Fat Albert and the Cosby kids™: Series I/II © 1972/1984 William 
H. Cosby, Jr. Under exclusive License to Entertainment Rights 
Plc. All Rights Reserved. Fat Albert and the Cosby kids and all 
character names and likenesses are trademarks of William H. 
Cosby, Jr.
Finley the Fire Engine™: © 2005 Mair Pictures International 
GmbH & Co Productions.
George of the Jungle™: © 2006 Bullwinkle Studios, LLC 
GEORGE OF THE JUNGLE and associated character names, 
images and other indicia are trademarks of and copyrighted by 
Ward Productions, Inc. Used by permission. All rights reserved.
Gerald McBoing Boing™: © Classic Media, Inc. GERALD 
MCBOING BOING™ and associated character names, images 
and other indicia are trademarks of and copyrighted by Classic 
Media, Inc. All rights reserved. 
Ghostbusters (Animated): © 1986 Entertainment Rights Plc. All 
Rights Reserved.
Guess with Jess®: © 2006 Woodland Animations Limited, a 
division of Entertainment Rights Plc. All Rights Reserved.
Gumby®: ™ and © Prema Toy Co. GUMBY and Gumby 
characters are registered trademarks of Prema Toy Co,. Inc. All 
Rights Reserved. Co-licensed by Heat Licensings, Inc. and Classic 
Media, Inc., an Entertainment Rights Group Company.
He-Man® and the Masters of the Universe®: Series I/II © 
1983/1984 Entertainment Rights Plc; Characters © 1983/1984 
Mattel Inc.; All Rights Reserved. He-Man and the Masters of the 
Universe and other character names are trademarks of Mattel, 
Inc. Used with Permission.
Hot Stuff: © Harvey Entertainment, Inc. HOT STUFF, its 
logos, names and related indicia are trademarks of Harvey 
Entertainment, Inc. All rights reserved.
Jim Jam and Sunny™: © 2006 Entertainment Rights Plc. All 
Rights Reserved.
LambChop®: LAMB CHOP AND FRIENDS TM & © Classic 
Media, Inc.
Little Golden Books: TM and Copyright © 2006 Random House, 
Inc. Licensed by Classic Media, Inc.
LASSIE and associated characters: TM & © Classic Media, Inc.
Lone Ranger®, The: © Classic Media Inc. All Rights Reserved.
Mr. Magoo®: © Classic Media, Inc. MR. MAGOO and associated 
character names, images and other indicia are trademarks of 
and copyrighted by UPA Productions of America, Inc. All rights 
reserved.
Pat the Bunny™: PAT THE BUNNY © PENK, Inc. All rights 
reserved. PAT THE BUNNY® is a registered trademark of Random 
House, Inc. and PENK, Inc. All rights reserved.
Postman Pat®: © 2003 Woodland Animations Ltd, a division of 
Entertainment Rights Plc. All Rights Reserved.
Richie Rich®: © Harvey Entertainment, Inc. RICHIE RICH, its 
logos, names and related indicia are trademarks of Harvey 
Entertainment, Inc. All rights reserved.
Rocky & Bullwinkle™: ROCKY AND BULLWINKLE AND FRIENDS 
TM & © Ward Productions, Inc. Licensed by Bullwinkle Studios, 
LLC. All rights reserved.
Roger Ramjet™: © Classic Media, Inc. ROGER RAMJET and 
associated names and indicia are trademarks of and copyrighted 
by Classic Media, Inc. All rights reserved.
Rupert Bear®: © 2006 Entertainment Rights Plc / Express 
Newspapers. All Rights Reserved.
She-Ra®, Princess of Power®: Series I/II © 1985/1987 
Entertainment Rights Plc; Characters © 1985/1987 Mattel Inc.; All 
Rights Reserved. She-Ra, Princess of Power and other character 
names are trademarks of Mattel, Inc. Used with Permission. 
Underdog Show, The: © Golden Books Publishing Company, Inc. 
UNDERDOG and associated names and images are Trademarks 
of Golden Books Publishing Company, Inc.
Rudolph the Red-Nosed Reindeer®: © and ® The Rudolph Co., 
L.P . “Rudolph the Red-Nosed Reindeer” animated program © 
1964, renewed 1992 Classic Media, Inc. All rights reserved. Under 
license to GT Merchandising & Licensing Corp.
Frosty the Snowman™: Frosty the Snowman animated program 
© 1969, renewed 1997 Classic Media, Inc. Character names, 
images and other indicia are trademarks of Classic Media, Inc.
Santa Claus is Comin’ to Town®: Santa Claus Is Comin’ To 
Town animated program © 1970, renewed 1998 Classic Media, 
Inc. Character names, images and other indicia are trademarks 
of Classic Media, Inc.
The Pirates Who Don’t Do Anything: © 2007 Veggie Pirates 
Productions LLC. VEGGIETALES®, character names, likenesses, 
and other indicia are trademarks of Big Idea, Inc. All rights 
reserved.
The Wonderful Wizard of Ha’s: © 2007 Big Idea Inc. 
VEGGIETALES®, character names, likenesses, and other indicia 
are trademarks of Big Idea, Inc. All rights reserved.
Toopy & Binoo™: © Specta Animation 2005 - 2007.
Transformers Animated: © 2007 Cartoon Network. A Time 
Warner Company. All Rights Reserved.
TUROK TM & © Classic Media, Inc.
VeggieTales®: © Big Idea, Inc. VEGGIETALES®, character 
names, likenesses, and other indicia are trademarks of Big Idea, 
Inc. All rights reserved.
Where’s Wally?®: © Martin Handford from the Where’s Wally? 
books published by Walker Books Ltd., London. Characters and 
other images are used under licence from Entertainment Rights 
Distribution Limited. All rights reserved. Operating and Financial Review 
01 Highlights
02 Chairman’s Statement
05 Chief Executive Officer’s Statement
06 Chief Commercial & Creative Director’s Review
14 Chief Finance & Operations Director’s Review
 
Governance 
18 Board of Directors 
19 Report of the Directors
23 Corporate Governance
27 Statement of Directors’ Responsibilities
28 Remuneration Report
34 Report of the Independent Auditors
 
Financial Statements 
36 Consolidated Income Statement
36 Consolidated Statement of Recognised  
 Income and Expense
37 Consolidated Balance Sheet
38 Consolidated Cash Flow Statement
39 Notes to the Financial Statements – Group
73 Company Balance Sheet
74 Notes to the Financial Statements – Company
 Entertainment Rights Plc Annual Report and Accounts 2007 
Directors and Advisers
Directors
Roderick Bransgrove (Non-Executive Chairman) 
Nicholas Phillips (Chief Executive Officer) 
Elizabeth Gaines CA (Chief Finance & Operations Director) 
Jane Smith (Chief Commercial & Creative Director) 
Irvin Fishman FCA (Non-Executive Director)  
Craig Hemmings (Non-Executive Director) 
Julian Paul FCA (Non-Executive Director)
Secretary and Registered Office
Irvin Fishman FCA 
58-60 Berners Street 
London W1T 3JS
Stockbrokers 
Altium Securities 
30 St James’s Square 
London SW1Y 4AL
Collins Stewart Europe Limited  
88 Wood Street  
London EC2V 7QR 
Auditors
KPMG Audit Plc 
8 Salisbury Square 
London EC4Y 8BB
Bankers
Bank of Scotland plc 
PO Box No 5 
The Mound 
Edinburgh EH1 1YZ
Solicitors
Lawrence Graham LLP 
4 More London Riverside 
London SE1 2AU
Registrars
Computershare Services plc 
PO Box 82 
The Pavilions 
Bridgwater Road 
Bristol BS99 7NH 
0870 703 6271
Company registration number 2402919
Corporate website: www.entertainmentrights.com Annual Report  
and Accounts  
2007
Entertainment Rights Plc. Colet Court, 100 Hammersmith Road, London W6 7JP
Tel: +44(0)20 8762 6200 Fax: +44(0)20 8762 6299 www.entertainmentrights.com
Entertainment Rights Plc  Annual Report and Accounts 2007