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The absence of any nasty hidden surprises in its full-year results was enough to prompt an increase in Dresdner Kleinwort’s target price for media company Entertainment Rights. Analyst Richard Menezies Gow was pleased that the company had not revealed any deterioration in its debt levels and upped the target price to 10.75p from his previous 8.5p.

There is little for investors to get excited about, however, as this only represents a meagre 2.4% premium on its current 10.5p trading level. The results turned up a 129% increase in full-year sales to £68.1 million, boosted by its acquisition of Classic Media last year, but this only translated to a 1% rise in pre-tax profits to £7.9 million. The real issue is net debt which rose to £107.9 million compared with £33.7 million the year before.

‘Debt remains uncomfortably high, macro trends are unhelpful and management still needs to convince investors of the cash generating potential of the business, but there is value to be unlocked within ER,’ says Menezies Gow. The company said it had been approached by a bidder back in March and Gow says a takeover could be on the cards.