Mark Sweney 

EMI reports pre-tax losses of £349m

Label boss dismisses impairment charge as 'accounting issue', hailing the results as an 'incredibly strong performance'. By Mark Sweney
  
  

EMI has reported a pre-tax loss of £349m in the year to the end of March, as a reasonable revenue and profit performance was dragged down by a writedown in the value of its businesses when they were sold to Universal Music and a music publishing consortium including Sony.

The music company, home to artists including Katy Perry, the Beatles and Coldplay, reported a slight year-on-year increase in revenues to £1.47bn.

EMI reported a pre-tax loss of £349m, down from £529m in the previous year, as it booked a £372m non-cash charge writing down the value of its two divisions, recorded music and publishing.

When EMI signed agreements to sell its recorded music and publishing businesses in November last year, to Universal and a consortium including Sony respectively, it was required to write down what it had estimated the value of its catalogues and goodwill to be as a result.

Stripping out the impact of this, as well as a £37m restructuring charge relating to staff cuts, EMI reported underlying earnings before interest, tax, depreciation and amortisation (Ebitda) of £290m. This represents a fall of 5.22% year-on-year.

On a similar basis operating profit rose from £69m to £133m year-on-year.

In an email to staff, seen by MediaGuardian, Roger Faxon, the chief executive of EMI, hailed the results as an "incredibly strong performance... set against the backdrop of a challenging state of the music market and wider economic conditions".

He dismissed the impairment charge as "just an accounting issue" hailing the adjusted operating profit figure as an "astonishing achievement in this market".

EMI's recorded music division saw revenues rise just under 2% year-on-year, despite a decline of 8.1% in the overall market for physical CDs, to £1.03bn thanks to artists including Katy Perry, Coldplay and Beastie Boys. EMI Publishing managed to keep revenues "broadly flat" at £434m.

In terms of profits, of the total adjusted Ebitda figure of £290m the company made last year, EMI Recorded Music delivered £158m, down from £169m while EMI Publishing made £132m, down from £137m.

Faxon's email also gave insight into the most up-to-date performance of the business, revealing that in the three months to the end of June EMI Music's sales were up 3.7% year-on-year while Ebitda rose by £6.6m.

No base figure was given from which Ebitda has increased.

"These results are a demonstration of the success of how our strategy has really helped us to enhance the way we connect our artists and writers with a worldwide audience," said Faxon. "This isn't a success story that you're seeing at other music companies. It's our job to make sure that these businesses are ideally positioned for the next stage of their storied histories under new ownership."

EMI's cash position eroded by £178m to £270m, primarily due to repaying £250m of debt.

Universal Music is currently facing regulatory scrutiny of its £1.2bn deal to buy EMI's recorded music operation in the US and Europe.

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