EMI Group's new annual report reveals operational improvements, deep losses and continued dangers associated with its debt load. The company had profit from operations of £121 million ($189.5 million) for the year ending March 2010, up from just £7 million ($10.9 million) in the previous financial year.

Net loss (after all deductions and expenses) improved to £512 million ($800 million) from £1.56 billion ($2.34 billion) in the prior year, according to figures released today (Aug. 18) by Maltby Capital Limited, the parent company of the British music major.

There was plenty of additional positive news in the figures, with overall revenue climbing to £1.65 billion ($2.5 billion) from £1.56 billion ($2.43 billion), while operating cash flow has risen 55% to £250 million ($391.5 million). EBITDA (earnings before interest, taxes, depreciation, and amortization) grew by 14% from £293 million ($458.6 million) to £334 million ($523.3 million).

EMI's publishing division reported a 2.1% year on year rise in revenue, climbing to £478 million ($748 million), while revenues at its recorded music division were up 6.5% to £1.17 billion ($1.83 billion).

But, despite the major's improved performance, EMI still faces "considerable financial challenges," warns Stephen Alexander, chairman of Maltby Capital, in the report.

The latest accounts state that EMI Group has £3 billion ($4.69 billion) of debt outstanding that falls for repayment between 2014 and 2017.

Although the music business generates enough revenue to meet interest repayments on its colossal debt, says Alexander, "further equity cures may well be required, particularly in March 2011" in order for the company to "address a set of banking covenants that tighten steadily over the years."

Earlier this year, EMI's managing company Terra Firma invested £105 million in equity funding to meet the March 2010 covenant tests in the EMI Music division.

Commenting on the report, Alexander said in a statement: "This report shows the very real operational progress that EMI has made in the past three years, in the face of the serious challenges faced by the music industry and the wider economy."

Roger Faxon, CEO of EMI Group, added: "There is a clear opportunity ahead for EMI as a whole to develop a structure and approach that recognizes the realities of the music environment, and that truly delivers success for the creative talent that the company is privileged to represent."

"The operating performance we delivered in the year under review gives us a strong platform, and I'm looking forward to working with our great staff and artists to develop the business further," Faxon went on to say.

According to the report, The Beatles were EMI's best-selling artist for the year ending March 2010, with its re-mastered catalog, released Sept. 2009, boosting the act's total sales to over 10 million units in the 2009/2010 financial year.

Lady Antebellum, signed to EMI's Capitol Nashville label, was the major's top seller in the United States.