EMI Group has reported a loss of £757 million ($1.2 billion) for the year ending March 31, citing the “continuing underperformance from EMI Music.” That compares to a loss of £287 million ($454.5 million) in the previous year.
Revenue plunged to £1.45 billion ($2.3 billion) from £1.8 billion ($2.85 billion) a year earlier.
The company says the slump in revenue was down to a weak release schedule, stating that only three EMI albums sold more than one million copies in the period, while two “Now” albums each passed a million sales. In the previous year, EMI had 18 million-sellers.
EMI had an adjusted EBITDA of £164 million ($259.7 million), down 5% on the previous year. There was a further £192 million ($304 million) charge from the re-valuation of balance sheet assets and liabilities, restructuring costs of £123 million ($194.9 million), depreciation of £109 million ($172.7 million) and £520 million ($823.7 million) of net financing costs.
In its annual review, the company said it was being “open about the difficulties we have faced and still face.” An interim report later this year will set out EMI’s new strategy and plans for the future.
The annual review was prepared by Maltby Capital, the investment vehicle used by Terra Firma to buy EMI. Maltby oversees the EMI businesses and provides a corporate governance role.
“The main factor behind the very large loss was continued operational poor performance, but more particularly accounting factors, in particular the revaluation of the balance sheet and the requirement to mark assets and liabilities to fair values,” said Maltby chairman Lord Birt in the report.
He added: “Operating performance for the full year continued to be poor and this reflected long-term weaknesses in EMI Music.
“EMI’s operational performance has improved significantly during the first seven and a half months of Maltby ownership and we expect the six months results ended 30 September 2008 to show year on year improvement.
“EMI now has a stronger balance sheet and team with which to start a new era.”
