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EMI Group PLC (EMI)

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Tuesday 23 May, 2000

EMI Group PLC

Preliminary Rslts 2000 - Pt 1

EMI Group PLC
23 May 2000                                      

Part 1
                                      
                                EMI Group plc
                          Preliminary Results 2000



EMI Group plc, one of the world's leading music companies, today announces
its results for the year ended 31 March 2000.

                                                                            
                                 Highlights

Financial
-    Turnover up 0.5% to £2,386.5 million
-    EBITDA up 6.9 % to £348.4 million
-    Operating profit up 7.7% to £290.6 million
-    Profit before tax, amortisation and exceptionals up 8.1% to £245.4
     million
-    Net earnings up 29.2% to £158.4 million
-    Full year dividend maintained at 16.0p per share

Recorded Music
-    Operating profit up 7.1% on turnover down 1.2%
-    Market share growth in all regions except North America
-    Management action underway to regain US market share
-    Strong performance in Japan, the world's second largest music market
-    Improved release schedule for 2000/2001

Music Publishing
-    Operating profit up 9.1% on turnover up 11.8%
-    Consistent strong growth across all significant markets
-    Solid performance from new acquisitions Windswept and Hit & Run

New Media Strategy
-    EMI well positioned for internet music sales and distribution
-    Strategic alliances with 15 new media companies already creating
     shareholder value
-    Increasing investment in new media, including programme to digitise all
     music assets

Commenting on the results and future prospects, Eric Nicoli, Chairman, said:

'This has been an encouraging and eventful year for EMI.  Our focus has been
on strengthening our core recorded music and publishing businesses and
preparing to participate in the digital revolution while delivering steady
profit growth.  I am pleased to report that the company is in excellent
shape to grasp the opportunities and deal with the challenges ahead at an
exciting time in the history of the music industry.

'After less than two months of the new fiscal year, trading is on track.
Given our stronger recorded music release schedule and the momentum in our
music publishing business, I am confident that we will make satisfactory
progress in the year ahead.

'I am excited by our proposed 50:50 recorded music and music publishing
venture with Time Warner Inc. The strategic and financial rationale for the
transaction is compelling.  We believe that the geographic, management and
cultural match of EMI and Warner Music Group, the combination of our rosters
and publishing catalogues and the anticipated operational benefits and
synergies will improve our growth prospects and create substantial
shareholder value.'

Enquiries

Eric Nicoli                   EMI Group plc       Tel: 020 7355 4848
Chairman

Tony Bates                    EMI Group plc       Tel: 020 7467 2000
Group Finance Director

Amanda Conroy                 EMI Group plc       Tel: 020 7667 3216
Senior VP                     
Corporate Communications

Louise Charlton               Brunswick           Tel: 020 7404 5959






Preliminary Statement

This was an exciting and eventful year for EMI.  For the group as a whole,
profits before tax, amortisation and exceptional items improved in the year
by 8.1% to £245.4 million.

Group operating profits improved by 7.7% to £290.6 million on turnover
marginally ahead at £2,386.5 million, an encouraging performance in a
worldwide music market experiencing limited growth in the near term.

Net earnings improved by 29.2% to £158.4 million boosted by the profit on
the sale of non-strategic assets including EMI's shareholding in GWR Group
plc.

The Board is recommending a final dividend of 11.75p per share which gives a
total dividend for the year of 16.0p per share.

Both the Recorded Music and Music Publishing divisions improved operating
profits year on year while the overall turnover increase was driven by
significant growth (11.8%) in Music Publishing - enhanced by a first time
contribution from the Windswept and Hit & Run acquisitions - more than
offsetting a small decline (1.2%) in Recorded Music.

In Recorded Music, significant market share gains were made in a number of
important regions.  In Japan, the world's second largest music market, a
string of successful releases resulted in a marked improvement in share.  In
addition, share gains were seen in Europe, Latin America and the rest of Asia.
However, share declined in the important US market.  As a result, the
company's global share fell marginally to 12.5%. Despite this, EMI maintained
its position as the world's third largest record company.

The company has continued to invest heavily in supporting the creative
endeavours of its artists and writers while continuing to improve
operational efficiencies. During the year, a number of initiatives aimed at
reducing the cost base have been progressed. These include a shared services
project and the restructuring of European distribution and manufacturing
operations.

In Music Publishing the company has continued to expand and exploit its
outstanding catalogue and has maintained its track record of earnings
growth.  Significant gains have been made in the buoyant US market, through
both a strong underlying performance and the positive impact of the
Windswept catalogue acquired in July.  In November, the company also
acquired a 51% stake in the Hit & Run catalogue.

EMI believes it is well positioned to take advantage of the many
opportunities presented by new media, with a broad range of international and
local repertoire representing many different musical styles complemented by
its impressive catalogue of past recordings and a high quality library of
over a million publishing copyrights.

During the year, EMI has embarked on a programme of digitising its assets
and forming strategic alliances with a number of new media companies which
are developing new channels for music delivery and are supporting the
infrastructure changes necessary to operate in a digital landscape. In
addition, these transactions have created value for EMI shareholders,
through the acquisition of new media equity stakes in return for access to
content.

The worldwide management teams under Ken Berry and Martin Bandier have been
strengthened and the company believes that it has a good foundation
for future success.

Management is optimistic about the stronger recorded music release schedule
for the current year and is confident that the momentum it has built in
Music Publishing in recent years will be maintained.

On 24 January 2000, EMI announced that an agreement had been reached with
Time Warner Inc to combine EMI Music and Warner Music Group in a 50:50
venture to form Warner EMI Music.  EMI believes that the creation of Warner
EMI Music is its best strategic route and creates more value for EMI
shareholders than other available options.

The proposed combination is conditional on, among other things, EMI
shareholder approval, EMI continuing to qualify for listing on the Official
List of the London Stock Exchange, requisite regulatory clearances in
the EU, US, Japan and Canada, and certain tax clearances.  EMI expects to
issue a circular and listing particulars in connection with the transaction,
which will include notice convening the necessary Extraordinary General
Meeting, during the course of the next month.  Closing of the transaction
continues to be targeted for the second half of 2000.


Business Review - Recorded Music

EMI made progress in a number of important respects in a year in which the
world music market grew by 3.1% in value terms (3.5% in the previous year)
and the recorded music industry faced new challenges as internet
developments highlighted the need to protect music rights.  Operating profit
improved 7.1% on turnover down by 1.2%.

The company's regional creative strategies began to bear fruit.  In Europe
market share rose marginally from 17.0% to 17.1%, with a continued strong
performance in the UK and including some significant gains in Italy,
Scandinavia, France and Spain.

In Japan, despite the market declining by 7.3%, EMI enjoyed strong growth
with continuing success by Utada Hikaru, supported by a number of other
artists including Ringo Sheena, Dreams Come True and Tomoyasu Hotei.

The Asian market outside Japan returned to growth with a 5.1% rise
(following a decline of 14.4% last year) and the EMI businesses gained
share.  In the key market of Taiwan, EMI broke more Mandarin artists to gold
status than any other company.  The region is expected to continue to
recover from the economic crisis of the past two years.

Latin America was also a positive region for the company. A strengthened
regional and national management team delivered market share growth in every
country, most notably in the key market of Brazil.

The US was the only major market in which EMI failed to make progress in the
year.  Although the market grew a healthy 14%, EMI's market share fell from
12.3% to 9.0%. Performance in classics, jazz, Latin and Christian music
continued to be strong but new mainstream pop and R&B releases
underperformed.


The loss in market share in the US more than accounted for EMI's global
market share reduction from 13.2% to 12.5%.

Reflecting the US's importance as a prime source of international repertoire
for the global music market place, EMI has continued to take steps to ensure
that its artist and repertoire teams produce stars who have the ability to
sell internationally.  In the past two years new A&R resources have been added
to the North American portfolio.  However, the time lag between signing and
releasing new records means that the benefits have not yet flowed through.

Last year, the company announced its intention to expand its US presence in
the areas of pop and R&B.  One of the first releases in the new fiscal year
was the platinum soundtrack Romeo Must Die featuring Aaliyah, which was a
product of one of the company's new A&R relationships.  The company remains
optimistic that this and other relationships, together with an improved
release schedule, will bring further success in the US as the year proceeds.

Worldwide a total of 30 EMI albums sold over 1 million units from artists
including Utada Hikaru, Backstreet Boys, George Michael, Britney Spears,
Tina Turner, Queen, Garth Brooks, The Chemical Brothers, Lenny Kravitz and
D'Angelo as well as the UK's Volume 44 in the Now That's What I Call Music
hits compilation series.  The classical division increased sales by over 20%
with best selling artists including Sarah Brightman, Placido Domingo and Sir
Simon Rattle.

EMI's global release schedule for the current year includes new albums from
many of its  major artists, including Utada Hikaru, Robbie Williams, Spice
Girls, Radiohead, Richard Ashcroft, Lenny Kravitz, Janet Jackson, Thalia,
Snoop Dogg and Sarah Brightman.


New Media

New media developments represent considerable growth opportunities for the
music industry which the company believes outweigh the potential risks of
piracy.  EMI is remodelling its business in order to maximise the
opportunities and benefits of the new environment.  This involves digitising
100% of its global content, developing business models for digital downloading
and exploring important new marketing and promotion opportunities.

The company has recently announced the first phase of its digital download
programme, which will be launched in July 2000.

EMI continues to build business relationships in the new media area with
third parties who have technology expertise and consumer access channels that
are complementary to its traditional business.  During the year, agreements
were signed with a total of 15 companies involved in new media activities
ranging from internet sites to live concert webcasting and internet radio
channels.  In most cases, an equity stake was taken as part of the agreement. 
The company saw significant income from this new strategy which was reinvested
to build our new media infrastructure and capabilities.

The internet and related technologies present challenges to the music
industry's ability to protect its investment in music copyrights. EMI, in
conjunction with a number of other companies including representatives of
the music and consumer electronics industries, has been supporting the
Secure Digital Music Initiative.

This forum, which involves over 180 companies from around the world, has the
objective of establishing voluntary standards for the secure transmission of
music over the internet.  The forum has recently published its first set of
standards and many companies in the music, information technology and
consumer electronics industries have adopted them.  The extent to which
these standards prove effective in containing piracy of new recordings will
depend on the comprehensiveness and durability of these and other
protections and the level of compliance by hardware and software producers.

There have been significant legislative developments taken through the
European Copyright Directive and E-Commerce Directive that are currently
moving through the European Parliament and in the US from the Digital
Millennium Copyright Act.  Legislative action supported by litigation to
prevent abuse of music company rights is crucial to the future of the music
industry.  However, EMI believes that it is essential to develop business
models that provide protected access to its musical content in a manner that
is convenient and acceptable to the music consumer.

Business Review - Music Publishing

EMI Music Publishing delivered excellent results for the year, with turnover
increasing by 11.8%.  Net publisher's share rose 9.7% and operating profit
by 9.1%.  These results reflect strong underlying growth together with
first time contributions from catalogue acquisitions such as Windswept
and Hit & Run, as well as continued geographic expansion and significant
investment in IT to increase the company's internet presence.

Music Publishing pursues multiple strategies including active investment in
local acts, the acquisition of new catalogue when financially viable, and
the creation of a wide range of opportunities for its songwriters - through
the licensing of songs for advertising, films and television and through
digital delivery and the internet.

Music Publishing had another good year in the US.  Revenues from mechanical,
performance and synchronisation were each well ahead of last year's levels.
The strong mechanical revenues in the US came from artists such as TLC,
Blink 182, Matchbox Twenty and the Goo Goo Dolls.  The strategy of signing
writer/producers such as Rodney Jerkins (Whitney Houston, Destiny's Child)
and Sean 'Puffy' Combs (Notorious B.I.G and Jennifer Lopez) also produced
excellent results. In addition, the matching of songwriter Rob Thomas from
Matchbox Twenty with Carlos Santana resulted in the worldwide hit and Grammy-
winning Song of the Year Smooth.

The US business also benefited from the acquisition in July of nearly 40,000
active titles from the Windswept Pacific catalogue, including such
historically pivotal rock and roll titles as Shout, Louie Louie and Mony
Mony and strong offerings of doo-wop, disco and Latin songs. The catalogue
offers great potential for future growth opportunities and has the added
benefit of including the rights to the Spice Girls' songs.

European sales were also higher with significant increases in the UK,
Germany and Italy.  The UK showed improvement across all revenue streams,
boosted by Genesis and Phil Collins' songs in the recently acquired Hit &
Run catalogue.  Germany's higher mechanical income was helped by artists
such as Echt and Stefan Raab, while Italy's results reflected strong
mechanical receipts from local repertoire, strong synchronisation income and
the acquisition of the back catalogue of the European superstar Eros
Ramazzotti during the year.

In Japan, the company achieved outstanding success with songs written or
performed by local superstars such as Utada Hikaru and Kenji Ozawa, against
the backdrop of a declining market.  As the music publishing assets grow,
the group is looking for cost reductions, particularly keeping overheads
under control. In Japan, Fujipacific was taken on during the year to manage
the business in the territory, achieving cost savings while maintaining
EMI's control over its catalogue.

During recent years, the emerging markets of Eastern Europe, Asia and Latin
America have been under considerable economic pressure.  Even so, EMI has
invested in these markets to build strong and growing businesses and the
results for the year are evidence of the benefits of these investments.  EMI
opened its regional Latin American office in Miami and increased its
investment in Latin repertoire generally.  As a result, it saw major success
from Latin writer/artists such as Enrique Iglesias and the rock band Mana.

As the number of radio and TV stations around the world increases so does
their demand for music, driving growth in all aspects of EMI's publishing
business.  In particular, the company believes there are good growth
opportunities for synchronisation licensing, as expenditures on advertising
and motion picture and television productions continue to increase.

EMI Music Publishing intends to remain at the forefront of exploring the
opportunities and responding to the challenges created by the internet. In
addition to its strong financial performance, EMI is also proud to have
received some of the major music publisher awards around the world -
including the prestigious Publisher of the Year from both ASCAP and BMI.
EMI believes that its roster of songwriters, rich catalogue and award-
winning team mean ensure that the company is well positioned for continued
future growth.

Financial Review


Trading and Profit Before Tax

               Turnover                       Operating profit*
              ------------------------------------------------------------
£m               2000      1999   Change        2000      1999      Change    

Recorded       
Music         2,032.5   2,057.0   (1.2)%       195.1     182.2        7.1%

Music      
Publishing      354.0     316.5   11.8%         95.5      87.5        9.1%
              ------------------------------------------------------------

Group total   2,386.5   2,373.5    0.5%        290.6     269.7        7.7%
              ------------------------------------------------------------
 
                                                    
Return on                                 
sales           12.2%     11.4%

* Before amortisation and exceptional items

Full year

In total, Group Turnover for the year increased 0.5% to £2,386.5m, with
exchange on translation having a significant impact by region but no overall
impact.

Recorded Music turnover for the year was down 1.2%, with growth in market
share in all regions except North America.  Sales in Asia, particularly Japan,
were significantly up on last year due to EMI's strength in domestic
repertoire.  Last year's strong US release schedule was not repeated, leading
to lower turnover in North America.

Music Publishing sales increased by 11.8% with a strong overall performance
being enhanced by acquisitions including the Windswept and Hit & Run
catalogues and reflecting strong growth in US mechanical, performance and
synchronisation income.  The European performance was also strong,
particularly in the UK, Germany and Italy.

Group Operating Profit (EBITA) was up 7.7% at £290.6m, with exchange on
translation again having a significant impact by region but no overall
impact.  Adding back depreciation gives EBITDA for the year of £348.4m, a
6.9% improvement over last year (1999: £326.0m).

Operating profit improved at Recorded Music by 7.1% to £195.1m.  Profits
improved in all regions except North America, driven primarily by increased
sales and the first profits from EMI's new media strategy (including £24.7m
from musicmaker.com).  Within North America, US profits fell reflecting both
lower sales and further investment into the label infrastructure.  Music
Publishing operating profits improved by 9.1% with a strong overall
performance enhanced by acquisitions.


Second half

Total Group Turnover for the second half of £1,306.4m was £73.1m lower than
last year with foreign exchange losses on translation accounting for £31.5m
of the change.

Recorded Music turnover was down £98.7m or 8.2% at £1,111.1m, following
particularly strong performances last year in both Japan and the US.  Music
Publishing turnover was up £25.6m or 15.1% to £195.3m with acquisitions
boosting strong performances in the US and UK.

Total Group Operating Profit for the second half of £171.5m was £7.0m lower
than last year including foreign exchange losses of £7.1m.

Recorded Music operating profit was down £14.0m or 10.7% at £116.7m mainly
as a result of lower sales.  Music Publishing operating profit was up £7.0m
or 14.6% at £54.8m reflecting the good US performance and recent
acquisitions.

Group Finance Charges of £50.3m were £5.9m higher than last year (1999:
£44.4m).  This cost consists of two main elements: interest charges on
borrowings, and other interest and fees.  Interest on borrowings was
unchanged year on year, with improved treasury management strategies
offsetting the acquisition driven increase in average borrowings.  Other
interest and fees have increased by £6.3m, as the £7.1m received last year
in conjunction with the loan to HMV Media Group was not repeated this year.

EMI has a 42.65% investment in HMV Media Group, the music and book
retailer.  This investment yielded a net contribution to pre-tax profits of
£4.3m (1999: £2.5m).  Within this result, EMI's share of Joint Venture
Operating Profit for the year was down 8.0% to £27.7m with a strong
performance from the HMV music stores being offset by a disappointing
performance from the Waterstone's book stores and the first year start-up
losses from the internet operations of both businesses.

The fall in operating profits was however more than offset by a 15.2%
reduction in Joint Venture Finance Charges to £23.4m.

As a result of the increase in operating profit, finance charges and EMI's
share of its joint venture and associates' pre-tax profits, Adjusted Profit
Before Tax (ie profit before tax, amortisation and exceptionals) increased by
8.1% to £245.4m (1999: £227.1m).

As a result of the acquisition of the Windswept and Hit & Run catalogues,
copyright amortisation increased by £6.6m to £33.5m (1999: £26.9m).
Goodwill amortisation for the year was £1.1m (1999: £0.4m).  This gave a
total Amortisation Charge for the year of £34.6m (1999: £27.3m).

The Operating Exceptional Charge of £4.0m (1999: £nil) consists mainly of
integration costs associated with the Windswept acquisition.

During the year EMI sold its shares in GWR Group PLC (GWR), realising a
profit on the disposal of this investment in a non-core business.  EMI also
sold its Italian manufacturing and distribution operation and its German
distribution operation at a small cost.  These transactions gave rise to a
net Non-Operating Exceptional Gain of £42.5m (1999: £3.7m).

The Tax Rate, before amortisation and exceptional items, fell to 30.0% from
30.9% in 1999.  A lower tax rate at HMV Media Group, the ACT benefit of
paying Foreign Income Dividends in prior years and further tax planning
initiatives more than offset the negative impact of increased earnings in
countries with higher tax rates, especially Japan.

As a result of Recorded Music's good performance in Japan, where Toshiba is
our minority partner, the Minority Interest Charge this year has increased
from £9.2m to £17.9m.

Net earnings increased by 29.2% to £158.4m.

Adjusted Diluted Earnings per Share increased by 3.8% to 19.2p (1999: 18.5p)
reflecting the changes in adjusted PBT, taxation and minority interests
described above.

The Board is recommending a Final Dividend of 11.75p, to maintain the total
dividend for the year at 16.0p. Dividend Cover has increased to 1.2 times.

Cash flow and net borrowings

EBITDA of £348.4m less additional working capital and provision movements of
£101.9m (mainly artist advances) generated a net cash inflow from operating
activities of £246.5m. In addition, £81.0m was received from the sale of fixed
asset investments (mainly GWR).  Cash outflows included £53.5m invested in
fixed assets and copyrights, £47.4m of interest, £100.5m in taxation, £158.1m
of dividends (including £33m for the delayed 1998/99 interim dividend), and
£170.2m spent on acquisitions and disposals (Windswept, Hit and Run and
Blackground).  Other net cash inflows totalled £6.2m.  As a result, Net
Borrowings rose by £196.0m to £921.2m at year-end (1999: £725.2m).  Interest
cover at the end of the year was a healthy 6.9 times.



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