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EMI Group PLC (EMI)

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Monday 24 May, 2004

EMI Group PLC

Final Results


EMI GROUP PLC

PRELIMINARY RESULTS FOR YEAR ENDED 31 MARCH 2004

CONTINUED TO OUTPERFORM THE MUSIC INDUSTRY 

LONDON 24 May 2004: EMI Group plc today announces its preliminary results for
the year ended 31 March 2004:

Outperformed the music industry, gaining share in both recorded music and music
publishing divisions

Global and local creative success with 20 albums selling over 1 million units,
led by Norah Jones, Coldplay, Robbie Williams and Chingy

Rapid growth in revenues from new sources, e.g., DVD, downloads and ring tones

Maintained operating margin while investing in new revenue streams and
technology, and despite difficult market conditions

On track to deliver £50m of annualised savings through the implementation of
outsourced manufacturing and restructuring selected record labels

Cash flow from operations more than double prior year's level and year-end net
debt reduced by £111m (13%)

Full year dividend maintained at 8p

Financial overview

Year ended 31 March 2004 (£m, unless noted)

                                           2004       2003        Change       
                                                                               
                                                (Restated) Reported  Constant  
                                                       (i)           currency  
                                                                               
Group turnover                          2,120.7    2,175.4  (2.5%)    (1.4%)   
                                                                               
Group operating profit (EBITA) (ii)       249.3      254.7  (2.1%)    (0.8%)   
                                                                               
Return on sales (iii)                     11.8%      11.7%                     
                                                                               
Adjusted profit before tax (iv)           163.3      178.8  (8.7%)             
                                                                               
(Loss) / Profit before taxation          (52.8)      323.8                     
                                                                               
Adjusted net profit after tax and         124.3      123.4   0.7%              
minority interests (iv)                                                        
                                                                               
Net (loss) / profit after tax and        (71.6)      234.2                     
minority interests                                                             
                                                                               
Adjusted EPS (v)                          15.8p      15.6p   1.3%              
                                                                               
Adjusted diluted EPS (v, vi)              15.5p      15.6p  (0.6%)             
                                                                               
Basic EPS                                (9.1)p      29.9p                     
                                                                               
Dividend per share                         8.0p       8.0p                     
                                                                               
Operating cash flow                       309.4      117.2                     
                                                                               
Net debt                                  748.7      859.8 (111.1)             
                                                                               

Notes:

Prior year comparatives have been restated for the impact of UITF 38 -
Accounting for ESOP Trusts and UITF 17 (Revised) - Accounting for Share
Schemes.  The prior year impact on EBITA was £0.7m.

Group operating profit (EBITA) is before operating exceptional items,
amortisation of goodwill and music copyrights and HMV.

Return on sales is defined as Group operating profit before operating
exceptional items and amortisation of goodwill and music copyrights as a
percentage of Group turnover.

Adjusted profit before tax and adjusted net profit after tax and minority
interests are before operating, non-operating and finance exceptional items and
amortisation of goodwill and music copyrights and HMV.

Adjusted earnings per share and adjusted diluted earnings per share are before
operating, non-operating and finance exceptional items and amortisation of
goodwill and music copyrights.

Adjusted diluted earning per share treats outstanding share options and the
US$243m convertible bond issued on 3 October 2003 as equity.

EMI Group - continued to outperform industry

Group turnover of £2,120.7m, down 1.4% at constant currency, significantly
outperforming the global music market, which declined by 5.6% when the growing
DVD/music video segment is included and declined by 7.8% for traditional audio
products

Legitimate digital music revenues trebled to over £15m while efforts to contain
piracy have a positive impact

Group operating profit (EBITA) of £249.3m held up well, with a 0.8% decline at
constant currency, even with continuing expenditures to develop artists,
songwriters, new revenue streams and technology

Adjusted PBT of £163.3m down £15.5m due mainly to increased interest charges

Adjusted net profits after tax and minority interests increased to £124.3m

Net loss after tax and minority interests of £71.6m compared with a net profit
of £234.2m in prior year, affected by:

an operating exceptional charge of £138.3m, primarily due to label and roster
reorganisation in EMI Music

a non-operating exceptional charge of £16.5m, with  a charge for exiting
manufacturing in Europe and the US, partially offset by property disposals

a non-operating exceptional gain of £209.7m in prior year, primarily due to the
sale of HMV

Operating cash flow more than doubled to £309.4m from £117.2m

Year-end net debt reduced by £111.1m to £748.7m

Net debt / EBITDA ratio improved to 2.6x from 2.9x

Recorded music - outperformed the industry and gained market share

Turnover of £1,722.8m, down 2.0% at constant currency, significantly
outperforming the industry

Global market share increased to 13.2%, up from 12.7% in the prior year, with
share gains in most regions, including North America, Continental Europe and
Asia

EBITA of £147.4m, a 1.9% decline at constant currency.  Margins held firm even
with ongoing expenditures in new revenue streams and technology programme

North America delivered good growth in sales and substantial improvements in
profitability

Music publishing - delivered strong results

Turnover of £397.9m, growing 1.1% at constant currency, despite pressures from
the recorded music industry

EBITA of £101.9m, an increase of 0.7% at constant currency

Growth in synchronisation and performance income more than offset the weakness
in mechanical income

Eric Nicoli, Chairman, EMI Group, said: "EMI maintained momentum and delivered
good results in a marketplace that has continued to be extremely challenging
but in which we see many exciting opportunities.  We delivered full-year sales
and operating profit close to last year's level while the global market
declined by almost 6% in the same period.  This achievement demonstrates the
strength of both our recorded music and music publishing businesses.

"The Group saw successes from artists and songwriters throughout the world,
with notable results for artists such as Norah Jones, Coldplay, Chingy and
Robbie Williams and songwriters such as Alicia Keys, Pink, Cathy Dennis, Jay-Z
and Eros Ramazzotti.

"We maintained our overall profit margin and substantially improved our cash
flow.  Effective cash management allowed us to invest in building our business
while significantly lowering our year-end net borrowings.  The Board has
maintained the full year dividend at the previous year's level of 8p per share.

"As the financial year drew to a close, we announced a further set of
initiatives to take EMI forward.  We are on track with the implementation of
outsourcing our manufacturing in Europe and the United States and restructuring
selected record labels.  These steps reflect our continued commitment to being
an agile and progressive music content company.

"Our efforts to contain piracy are having a positive impact and we are
experiencing exciting growth in legitimate digital music.  For the first time
in several years, there are encouraging signs of market improvement,
particularly in the US, the world's largest music market.  While some regions
remain difficult, we expect the overall global market to perform better this
year than last.  Having gained market share and invested for the future, and
taking into account our release schedule and savings programme, we view our
prospects for the year ahead with confidence."

                                    ²²²²²²                                     

Enquiries

EMI Group plc

Amanda Conroy  Corporate Communications +44 20 7795 7529
                                                        
Claudia Palmer Investor Relations       +44 20 7795 7635
                                                        
Susie Bell                              +44 20 7795 7971
                                                        

Brunswick Group LLP

Patrick Handley  +44 20 7404 5959
                                 

A live webcast of EMI's presentation to investors and analysts will take place
at 8:30 am (UK time) today, 24 May, and can be accessed via the company's web
site, www.emigroup.com.  An archive will be available for viewing shortly
thereafter.


EMI GROUP PLC

PRELIMINARY RESULTS FOR YEAR ENDED 31 MARCH 2004

FULL STATEMENT

Chairman's statement

In the year ended 31 March 2004, EMI maintained momentum and delivered good
results in a marketplace that has continued to be extremely challenging but in
which we see many exciting opportunities.  We delivered full-year sales and
operating profit (EBITA) close to last year's level while the global market
declined by almost 6% in the same period.  This achievement demonstrates the
strength of both our recorded music and music publishing businesses. 

Encouragingly, we have seen some signs of improvement in the industry with
several important regions, such as the US and UK, returning to growth.  There
were notable signs that the steps we have taken to contain piracy in general,
and illegal downloading in particular, are having a positive impact.  At the
same time, legitimate digital music - such as downloads and mobile ring tones -
became a meaningful revenue stream in the year.

We have continued to strengthen and improve our business, aggressively pursuing
the range of emerging revenue streams and driving greater efficiencies in the
more traditional parts of the business.  Through our operational discipline
over the past year, we maintained our overall EBITA margin and substantially
improved our cash flow. 

EMI Group

For the Group as a whole, turnover of £2,120.7m compared with £2,175.4m last
year.  At constant currency, turnover declined by 1.4%.  On a reported basis,
turnover declined by 2.5% with the adverse impact of the weaker US Dollar
marginally outweighing the benefit of the stronger Euro. 

The Group saw successes from its artists and songwriters throughout the world,
with notable results for artists such as Norah Jones, Coldplay, Chingy and
Robbie Williams and songwriters such as Alicia Keys, Pink, Cathy Dennis, Jay-Z
and Eros Ramazzotti.

Operating profit before exceptional items and amortisation (EBITA) was £249.3m
compared with £254.7m last year.  At constant currency, EBITA declined by
0.8%.  Return on sales increased to 11.8% from 11.7% in the prior year.

The Group is reporting operating exceptional costs totalling £138.3m for the
year.  This charge comprises several elements with the most substantial being
our recorded music division's restructuring of some of its labels and artist
roster, particularly in Continental Europe. 

The Group is also reporting a non-operating exceptional charge of £16.5m.  As
recently announced, our recorded music division is starting to outsource the
manufacture of its products in Europe and the United States.  This withdrawal
from manufacturing results in a charge of £45.5m.  This is partly offset by
gains related to the sales of several properties made throughout the year. 

The net result after taxation, amortisation and exceptional costs and minority
interests was a loss of £71.6m compared to a profit in the previous year of £
234.2m.  Last year's figure included an exceptional after tax profit of £189.6m
from the sale of HMV Group plc shares while this year's included significant
exceptional costs.

Through effective cash management the Group delivered a substantial improvement
in cash flow for the year which enabled us to end the year with net borrowings
£111m (13%) below the previous year's level, even as we invested in building
our business.

On a per share basis, adjusted earnings improved to 15.8p from 15.6p in the
prior year.  On a fully diluted share basis, adjusted earnings were 15.5p. 

The Board is recommending a final dividend of 6.0p per share, maintaining a
full-year dividend of 8.0p per share.  This results in a dividend cover very
close to our target of two times.

Recorded music

Our recorded music division delivered another year of solid performance, with
increasing market share and with operating margins holding firm despite the
difficult trading conditions in most regions of the world.  This year's results
are further evidence that the strategy and approach outlined by Alain Levy and
his team in March 2002 are effective.

By delivering high-quality music in a range of formats that appeal to
consumers, EMI's recorded music division achieved sales of £1,722.8m.  At
constant currency, sales were 2.0% lower for the year while the industry saw a
decline of 5.6%.

Operating profit (EBITA) was £147.4m compared to £151.1m last year.  At
constant currency, EBITA was 1.9% lower.  Operating margins were maintained
even as we continued to invest in artist development and technology.  Our North
American business was a key driver of the division's improvement, with numerous
creative successes from artists such as Norah Jones, Chingy, Joss Stone and
Keith Urban and a substantial improvement in profitability for the year. 

Music publishing

Our music publishing division has once again generated strong results,
overcoming the pressures from the recorded music industry.  EMI Music
Publishing produced sales growth of 1.1% at constant currency.  Taking into
account currency movements, sales were just 0.8% lower.  Martin Bandier and his
team continued to drive the business aggressively, seeking out new revenue
streams and additional uses of the songs contained in our impressive
catalogue.  The business achieved growth in performance and synchronisation
revenues that more than offset the downturn in mechanical revenue.

Operating profit (EBITA) was £101.9m compared to £103.6m in the prior year. 
This decline was entirely driven by currency movements.  At constant currency,
EBITA increased by 0.7%. 

In April 2003 we acquired 30% of the Jobete song catalogue, increasing our
stake to 80%.  In April 2004, we acquired the remaining 20% stake for
US$78.3m.  The full ownership of this impressive collection of Motown classics
makes our outstanding publishing catalogue even stronger.

Further strengthening our company

We have undertaken several significant initiatives during the year to
strengthen the company, increase flexibility and position ourselves for the
future.  At the Group level, under the leadership of CFO Roger Faxon, we
successfully restructured our debt, completing a programme in October that
diversified our sources of funding and extended debt maturity.  The strong
acceptance of our debt offerings in the market demonstrated the financial
community's appetite for our credit and confidence in our disciplined approach
to managing the business, now and for the future. 

Our music publishing division's reorganisation programme announced earlier in
the year included headcount reductions and an increased focus on technologies
that provide more automation and efficiency.  Music Publishing also recently
announced a new management structure for its Continental European business that
brings to the centre proven leaders. 

Our recorded music division initiated two important strategic moves at the end
of the year to improve efficiency and effectiveness.  The first involves
outsourcing our manufacturing in Europe and the United States to third
parties.  The second involves restructuring some record labels and the artist
roster, with a particular emphasis on Continental Europe.  These two
initiatives together will deliver annualised savings of at least £50m, with £
25m of that to be realised in the current financial year.

We are also investing in a technology change programme that will not only
upgrade our information systems but will make us increasingly digital in how we
operate, both internally and externally.  This effort will yield further
significant annualised savings.

All of these steps are aimed at improving our agility and effectiveness in an
ever-changing and challenging environment.  We recognise that we must work
relentlessly to enhance our capabilities and approach our market both
aggressively and progressively.

We have seen change in our Board membership over the year.  In November, we
announced that Sir Dominic Cadbury would be retiring from the Board and that
John Gildersleeve would succeed him as Deputy Chairman and Senior Non-Executive
Director on 28 February 2004.  In April, we also saw the addition of Sly Bailey
as a Non-executive Director.  I would like to thank Sir Dominic for his
commitment to the Company and his invaluable guidance and wise counsel over the
past six years.  We are delighted that John and Sly have come on to the Board. 
John brings a wealth of experience from his years at the highly successful
Tesco and, with her media background and leadership of Trinity Mirror, Sly has
developed a true appreciation for balancing creative freedom with commercial
discipline.

Expanding opportunities

In years to come, I believe that we will look back at 2003 as the year that saw
legitimate digital music take off.   Downloading became a compelling consumer
proposition in the spring of 2003 when Apple launched its iTunes Music Store in
America, which sold more than 70m songs in its first year of operation and, at
its current rate, is selling 170m songs on an annualised basis.  A variety of
other companies have now begun selling downloads either on a 'pay as you go'
basis or as part of a subscription service.  Music and mobile phones also came
together in some innovative and exciting ways this year with products such as
musical ring tones and ring tunes.  Consumer demand in this area has been
strong and growing, particularly in Asia and Europe.

At a Group level, we generated over £15m in sales from digital music products
of all kinds in the financial year just ended.  Month-on-month growth has been
accelerating during the year and we anticipate continued attractive growth. 
EMI, as a progressive music content company, is committed to embracing and
profiting from changes in technology and consumer trends.  We are highly
encouraged by the breadth of activity and energy focused on developing the
digital world.

This was also the year when we saw evidence that our efforts to fight piracy
were making a difference - with the levels of online piracy in the US lower by
year-end.  The theft of our content remains widespread, however, so we are
continuing to deploy a variety of measures that have proven successful. 

Of course, these good results and our sustained progress would not have been
possible without the support of all of our stakeholders.  In particular, on
behalf of the Board, I want to pay tribute to the extraordinary dedication and
commitment of my EMI colleagues across the Group and to the remarkable creative
accomplishments of the artists and songwriters associated with our company.

The global music industry continues to undergo unprecedented change.  Our
efforts to contain piracy are having a positive impact and we are experiencing
exciting growth in legitimate digital music.  For the first time in several
years, there are encouraging signs of market improvement, particularly in the
US, the world's largest music market.  While some regions remain difficult, we
expect the overall global market to perform better this year than last.  Having
gained market share and invested for the future, and taking into account our
release schedule and savings programme, we view our prospects for the year
ahead with confidence.

EMI Music operating review

In the year ended 31 March 2004, EMI Music continued on the path of improved
performance.  Operating margins strengthened even with ongoing expenditures to
improve creative output and to develop new revenue streams and IT systems. 
EMI's share of the global recorded music industry sales increased to 13.2% from
12.7%.  North America generated particularly good gains in sales and
profitability.

The backdrop to EMI's performance was a decline in the global recorded music
industry of 5.6%.  These industry figures, compiled by the worldwide recorded
music association, IFPI, now include music video, an area that has generated
attractive growth.  Excluding music video, the global industry for audio
products saw a decline of 7.8%.

The rate of decline moderated over the year with the global recorded music
market (including music video products) falling by over 9% in the first half
and by less than 3% in the second half.  The most significant improvements came
in North America, which grew in the second half, and Japan, which only declined
slightly in the second half.  However, the industry declines in Continental
Europe, South East Asia, and Latin America remained severe throughout the year.

Within this environment, EMI generated sales of £1,722.8m down 2.0% at constant
currency.  Currency effects were negative overall, resulting in a sales decline
of 2.9% on a reported basis.

A range of albums contributed to the sales success.  Our two top-selling albums
came from Norah Jones, whose second album Feels Like Home, released globally in
February, sold over 7.5m units, while her first album, Come Away With Me,
generated sales of over 5.5m units in the financial year just ended and has now
sold over 17m units.  Coldplay's second album, A Rush Of Blood To The Head,
produced sales of almost 3.5m in the year just ended to reach over 9m copies
sold since release.  Two releases, one a CD and one a DVD, from Robbie
Williams, centred around his spectacular Knebworth performance and European
concert tour, together sold over 3.5m units.  Janet Jackson and Japan's Hikaru
Utada both released albums at the end of March and each sold well over 2m
copies in the year just ended. 

The financial year also saw new artists break through to success.  The album
Jackpot from America's Chingy sold over 3m units in the financial year while
albums from Stacie Orrico and Joss Stone each sold over 1.5m copies.  Artists
such as The Thrills, Yellowcard, Lisa Marie Presley and Maksim also had strong
releases with their early EMI albums.

The past year's focus on expanding our DVD music video offerings met with great
success.  An array of new products from artists such as Coldplay, Robbie
Williams, Queen, The Beatles, John Lennon, Herbert Groenemeyer and Vasco Rossi
stimulated substantial growth from this new format. 

Operating profit (EBITA) before central costs was £163.0m compared to £166.4m
in the prior year.  At constant currency, EBITA declined by only £2.4m or
1.4%.  After central costs, reported EBITA was £147.4m, down from £151.1m.

One of the strongest achievements of the period was the continued improvement
in our operations in North America.  Our approach to artist development and
organisational structure has been effective, with this region now delivering
attractive operating margins.  Industry conditions were also a contributing
factor to the stronger performance.  The North American market improved during
the financial year with the first half declining by almost 7% while the second
half experienced growth of over 4%.  Our share of the North American industry
increased to 10.5% for the full year, a gain of 0.5 percentage points.

Within our North American operations, Capitol Records posted a strong increase
in sales with top-selling albums coming from artists such as Chingy, Coldplay,
Westside Connection, Yellowcard and Lisa Marie Presley as well as from The
Beatles and The Beach Boys.  Virgin Records saw artist successes with releases
from Janet Jackson, N*E*R*D, A Perfect Circle, and Stacie Orrico. 

In addition to the spectacular launch of Norah Jones's second album, the Blue
Note Records label contributed strong releases from Van Morrison, Al Green and
Sarah Brightman.  Also producing good sales for the year were Keith Urban,
Dierks Bentley and Trace Adkins of Capitol Nashville as well as Joss Stone and
Fountain of Wayne with the S-Curve Records label. 

Coming off of a strong prior year, EMI's share in the UK and Ireland declined
over the financial year.  Nevertheless, the business continued to perform well
in an industry that experienced growth of 1% for the period and continued to
generate success from releases of established stars as well as newer artists. 
The Live At Knebworth CD and What We Did Last Summer DVD from Robbie Williams
enabled him to build upon his impressive talent as a live performer.  The year
also included major selling albums from Coldplay, Kylie Minogue, Blue, Atomic
Kitten and Radiohead. 

Newer artists including The Thrills, Athlete, Kelis and Jamelia delivered sales
and chart success in the UK & Ireland.  Duran Duran's Greatest offered a
collection of the group's major hits as they began a world tour and received
the "Outstanding Contribution to Music" award at The Brits.  The Beatles album
Let it Be…Naked provided consumers with Paul McCartney's original "back to
basics" concept for this album and sold in excess of 3m units worldwide in the
financial year.

In Continental Europe, our businesses gained share under difficult industry
conditions.  Overall, the regional market had worsening sales, down by over 13%
for the financial year.  The larger markets in Germany, France, Denmark, Sweden
and Portugal were particularly challenging as they each registered declines in
excess of the regional average. 

The Italian artist Tiziano Ferro, the German artist Wir Sind Helden and the
French act Air all had new releases that sold well in the financial year. 
Other regional successes of the year included Reamonn, IAM, Mina, Caparezza,
Pur, Jane Birkin, Camela and Gyllene Tider.  The albums from Norah Jones,
Robbie Williams, Coldplay, Placebo, Blue, Joss Stone and Jamelia were all well
received by consumers in Continental Europe.

As announced at the end of the financial year, we are undertaking a
restructuring of some of our labels and artist rosters in Continental Europe. 
In a number of smaller countries, we are consolidating marketing through a
single department in each country which will support the releases from both
Capitol and Virgin.  The roster within Europe is also being rebalanced to
ensure the optimal focus on those artists with the greatest potential both
locally and globally.  The steps taken in Continental Europe are designed to
maximise flexibility, efficiency and effectiveness in these changing markets.

Our Japanese business ended the year on a higher note, offsetting much of the
disappointment of the first half.  Industry conditions improved during the
year.  In the early part of the first half, there was an unprecedented level of
returns for the industry as retailers undertook a major destocking, exacerbated
by amended trading terms.  As a result, we took a £16.7m exceptional charge. 
Returns have now declined back to their more normal levels.  We have also taken
a range of steps which we believe will ensure that similar events do not
recur.  The Japanese industry ended the financial year down by over 6%, a lower
rate of decline than seen in the prior year.

A stronger slate of releases in the second half as well as good reception of
DVD products enabled us to gain share in Japan for the full year.  The Single
Collection from Hikaru Utada sold in excess of 2.5m units in the financial
year.  Other successes came from 175R, Glay, Kishidan, Dreams Come True, Hitomi
Yaida as well as the American artist Stacie Orrico, Janet Jackson, Norah Jones,
Radiohead and Thalia.  An album of Queen hits, Queen Jewels, was developed to
co-ordinate with a popular local television series, generating sales of over
1.2m copies.

EMI continued to invest in its business in South East Asia and generated sales
growth in the region despite challenging industry conditions.  The overall
market saw a decline of almost 9% in the financial year primarily driven by
steep declines in India and South Korea.  The Chinese industry saw growth of
over 11% for the year and the markets in Malaysia, Indonesia and the
Philippines also experienced growth during the year. 

The Latin American recorded music industry continued to struggle throughout the
year, with a decline of almost 17%.  The markets of Mexico, Brazil and Colombia
declined sharply while Argentina experienced growth from the prior year. 

We continue to reposition our business to excel whatever the industry
conditions.  An important move to increase our flexibility is our recently
announced decision to outsource the manufacture of our products in Europe and
the United States.  We have entered into long-term supply agreements with
MediaMotion and Cinram International Inc. for the supply of CDs and DVDs. 
MediaMotion will manufacture product for those EMI entities currently serviced
from our facility in Uden, The Netherlands, while a Cinram facility in the US
will manufacture for those EMI companies that currently receive product from
our Jacksonville, Illinois operations. 

These two market-priced supply agreements have been structured to deliver the
lowest possible unit cost to EMI over their full term.  As a result of these
transactions, our manufacturing costs will not only be reduced, but will also
become fully variable, thus insulating the business from the effects of
changing volumes. 

We also continue to make progress in transforming the way we manage our
business through an intensive investment in technology.  This multi-year
technology change programme will make us increasingly digital in the way that
we operate both internally and externally and should yield significant
financial benefits.

We have been extremely active in combating piracy in all its forms around the
world and we have made good progress in containing the level of theft. 
Nevertheless, piracy - both physical and online - continues to be a major
problem for the industry.  A flood of cheap blank CD-Rs, mainly from Asia, has
fuelled physical piracy in many parts of the world and has contributed to
industry declines.  In the online world, the recent series of lawsuits pursued
by the industry in the United States appears to have increased awareness and
lowered levels of illegal file-sharing but, while this programme has now been
expanded to other parts of the world, the piracy problem remains substantial. 

Our commitment to slowing the theft of our product is very strong and we have
put in place a worldwide infrastructure to address these important issues.  We
will continue to invest in preventative technology measures, government
lobbying and consumer education in the coming years.  

Importantly, there are now more legitimate online services to meet consumers'
digital demands.  This year saw a dramatic increase in the digital products
offered to which consumers responded very positively.  In Asia and Europe,
mobile music products such as ring tones met with great acceptance, while in
North America, music downloads became popular as several compelling services
were launched during the year.  Online subscription services appealed to
consumers in both the United States and Europe.  We have been pursuing these
new revenue streams aggressively and have been working to make hundreds of
thousands of EMI tracks available to consumers.  Sales from digital music have
been growing impressively over the last 18 months, with revenues of £700k in
the six months ended March 2003, together with £2.1m and £5.6m in the first and
second halves, respectively, of the financial year just ended.  We continue to
organise our business to take the best advantage of these trends and drive the
development of digital music.

Looking ahead to the current financial year, we expect our industry to continue
undergoing substantial change globally.  It is difficult at this stage to
predict the overall performance of the industry and how the varied markets
around the world will fare.  Our piracy initiatives are having an impact.  We
are also encouraged that the development of digital music offerings has begun
on a broader scale, although it is too early to forecast the rate and scope of
consumer acceptance.  Importantly, we feel that the company is on a good track
creatively, with focused artist development together with effective marketing
and promotion of their repertoire.  With our continued emphasis on delivering
high-quality music, we aim to make good progress in a more favourable
environment.

EMI Music Publishing operating review

EMI Music Publishing has once again delivered strong results in a challenging
environment, demonstrating the high quality of our song catalogue and our
ability to identify and develop new uses for our songs.  The business produced
sales of £397.9m for the full year, down 0.8% from the prior year.  The decline
was entirely driven by exchange, particularly the weakening US Dollar, and
exchange overall had a negative impact.  Excluding currency effects, EMI Music
Publishing generated sales growth of 1.1%. 

Songs contributing to this year's success included those from songwriters such
as Norah Jones, Alicia Keys, Pink, matchbox twenty, N*E*R*D, Sean Paul, Enrique
Iglesias, Jay-Z, Cathy Dennis, Busted and Sting.

Operating profit (EBITA) before central costs was £105.5m compared to £107.1m
in the prior year.  As with sales, the decline was attributable to exchange. 
Operating margin at constant currency was 26.5% compared with 26.7% in the
prior year as variations in mix offset the positive effects of tight cost
control.  After central costs, reported EBITA was £101.9m, down from £103.6m. 
Excluding the effects of currency movements, operating profit after central
costs rose by 0.7%. 

Growth in sales on a constant currency basis was achieved from developing
revenue streams and by garnering additional uses of the songs in our publishing
catalogue.  Given the ongoing decline in the global recorded music industry,
EMI continued to drive growth from performance and synchronisation income while
also advancing the use of songs in digital applications such as ring tones.

EMI continued to reduce its reliance on mechanical revenues, which are
primarily derived from the sales of recorded music.  For the first time,
mechanical revenues were less than 50% of total publishing revenues.  Our
mechanical royalties declined year-on-year by 4.4% at constant currency, less
than the global recorded music industry decline of 5.6%.  This continued
outperformance of the industry demonstrates the successful creative focus of
the business, resulting from our strategy of signing talented songwriters,
singer/songwriters and producer/songwriters across genres and territories
coupled with our ability to bring about re-recordings of songs from our
existing catalogue.

Performance revenues, earned from commercial uses such as live concerts, radio,
television, shops, pubs or sporting events, grew 3.5% at constant currency. 
This type of royalty income has achieved growth in each of the past six years
and now represents almost 26% of worldwide revenues.  This global growth is
propelled by our strong share of top-playing songs, an increase in media
outlets and channels as well as improved efficiency in the collection of
publishing revenues by the national societies.

Synchronisation revenues, which are generated from the use of songs in
audiovisual works such as advertisements, television programmes, films,
computer games and in mobile phones, grew strongly by over 19% at constant
currency from the prior year.  Synchronisation income contributed over 16% of
worldwide music publishing revenues.  EMI has been especially aggressive in
driving synchronisation revenue by focusing resources on meeting the needs of
the creators and music producers in developing their audiovisual works.  We
have been particularly successful at building this revenue stream in the United
States and have begun expanding this approach to our operations in other parts
of the world.

EMI's songs are also used in a range of other forms such as merchandise, print,
karaoke and theatre productions.  We Will Rock You and Mamma Mia continued to
be successful shows in the US and UK, and opened recently in other countries
such as Spain and Australia.  Rod Stewart's Tonight's The Night opened in
London during the year.  Songs licensed by EMI feature in all of these
productions. 

We saw a strong increase in the use of our songs in digital applications during
the financial year, with digital music contributing over £7m to our revenues,
up more than 130% from the prior year.  Most of this revenue was generated from
mobile products such as ring tones, with the contribution from other new
formats, such as downloads, so far remaining small.  Revenues from digital
music are classified amongst the various income types - mechanical,
performance, synchronisation, and other - and the classification often varies
amongst countries, depending on the varying roles of the collecting societies
in these new uses.

Our North American business grew both sales and operating profit on a local
currency basis.  The three primary income categories - mechanical, performance
and synchronisation - all achieved growth in this region for the full year.  
Synchronisation income grew particularly strongly as vehicles such as the Music
Spa and the business-to-business Internet site enabled better marketing to
creators of audiovisual works.

In the UK, early market share gains during the year were eroded in the fourth
quarter limiting full year sales growth.  In Continental Europe, our Italian
business generated good growth in all income types.  Germany and France
performed well despite the significant declines in the recorded music industry
in those countries. 

Our Japanese business delivered growth in both performance and synchronisation
revenues that more than offset a decline in mechanical income. 

During the year, we undertook a reorganisation programme with the objectives of
both increasing efficiency and lowering costs.  Key components include
headcount reduction and the decommissioning of systems.  The cost in the year
was £6.6m, £4.9m of which was taken in the first half.  The cost has been
reported as an operating exceptional item.  This programme provided savings of
£2.7m in the financial year just ended. 

In the current financial year, we announced a new management structure for our
operations in Continental Europe and a strengthening of the leadership team
overseeing the region. 

The acquisition of a further 30% stake in Jobete was completed in April 2003
and the final 20% stake was acquired in April 2004.  EMI purchased the initial
50% stake in Jobete in 1997.  We are delighted to now own 100% of this
extraordinary catalogue which contains more than 15,000 classic Motown
standards.  The catalogue has some of the best-known songs of the 1960s and
1970s such as I Heard it Through the Grapevine, My Girl, Stop! In the Name of
Love, You are the Sunshine of My Life and I'll Be There. 

For the current financial year, we expect to see continuing pressure on
mechanical royalties due to the anticipated declines or softness in certain
regions of the global recorded music industry.  Regardless, we continue to
exploit aggressively our impressive catalogue of songs - whether they be
current hits or the classics created years ago - in a range of commercial
uses. 

Financial review

The year ended 31 March 2004 was one of continued strengthening of the Group. 
Against a backdrop of its primary market falling for the fourth consecutive
year, the Group is delivering a set of results that demonstrate outperformance
in the year and investment for the future.

Group turnover fell by £54.7m, including a decrease of £23.9m from exchange on
translation.  At constant currency, turnover in EMI Music Publishing was up by
1.1% while that of EMI Music fell by 2.0%.  By region, turnover increased in
Asia Pacific in both absolute terms and at constant currency, largely
reflecting the results of our new ventures in EMI Music in China, Hong Kong,
Taiwan and Korea.  Turnover in the largest region, North America, increased at
constant currency, but with the weaker US Dollar, the reported turnover
declined for the region.  On the other hand, in Continental Europe, the
stronger Euro partially masked a significant, but better than market, fall in
turnover at constant currency.

Group operating profit (EBITA) fell by 2.1% from £254.7m (restated) to £
249.3m.  Before the impact of exchange movements the decline was £2.1m or
0.8%.  EMI Music Publishing has again posted a record result, with EBITA
growing by 0.7% at constant currency.  The £2.4m adverse exchange movement on
the divisional result is largely due to the movement in the US Dollar.  In
spite of market weaknesses, EMI Music's EBITA declined £2.8m or 1.9% down on
prior year at constant currency.  These global results were positively impacted
by a substantial increase in profitability in the North American recorded music
business.

Group EBITA margin increased from 11.7% to 11.8%, further evidence of the
Group's determination not to chase unprofitable sales and its ability to
control costs.  Gross margins after distribution costs increased to 35.3% from
34.3% with EMI Music making further significant reductions in the marketing
spend as a percent of sales.

Group turnover for the second half was down 4.4% from the same period last
year, with lower sales in the UK and Europe.  Excluding the effects of currency
movements, the decline was only 2.2%.

Group EBITA for the second half was down 3.5% from the same period last year. 
However, this was largely driven by exchange, particularly the US Dollar.  On a
constant currency basis, second-half profits were down 1.7%.

Recurring Group finance charges rose by £9.8m to £85.9m, notwithstanding a fall
in average net borrowings.  The increase is partly the consequence of the
refinancing programmes carried out in 2002 and 2003 which resulted in
longer-term, better balanced, funding, albeit with higher interest rates, and
partly the consequence of the downgrade in credit rating in March 2003.

Adjusted profit before tax fell from £178.8m to £163.3m, in large measure
because of these increases in finance charges.

Other items affecting earnings

The Group tax rate, before amortisation and exceptional items, fell further,
from 25% last year to 19.9%.  The major contributors to this improvement are
the increase in profitability of the Group's North American businesses, where
there are brought-forward losses available for offset, and lower results in
Japan and Continental Europe - our highest tax-paying territories.

Amortisation of copyrights and goodwill increased from £42.7m to £50.9m,
reflecting the further investment in the Jobete music publishing catalogue and
the investment in the new recorded music businesses in South East Asia.

The Group has taken a number of operating exceptional charges in the year.  On
31 March 2004, the Group announced a major change programme for the recorded
music division.  One element of this was a repositioning project comprising a
reduction in staff of approximately 600, mainly in Continental Europe, and the
releasing of approximately 290 artists from the roster. The costs of this
element of the change programme amount to £84.5m and are reported as an
operating exceptional item in the year.

In addition, we have taken a non-cash charge of £22.6m as a result of
impairment reviews on certain of our intangible assets.  At the half-year we
reported exceptional costs in respect of the product returns resulting from the
retail destocking programme in Japan, consequent upon the sharp market
deterioration, exacerbated by amended trading terms.  These amount to £16.7m. 
Also at the half-year, we announced a business reorganisation programme in EMI
Music Publishing, the full-year cost of which is £6.6m.  Finally, we incurred
costs of £7.9m in our proposed transaction with Warner Music in the Autumn of
2003.  The above transactions aggregate to £138.3m and are reported as
operational exceptional cost.

Three items are reported as non-operating exceptionals.  The outsourcing of
manufacture in the United States and in Europe consisted of two transactions,
which were completed on 30 and 31 March 2004 and provide that, after a
transition phase, EMI will source its physical product from third parties under
market-priced supply arrangements.  The principal benefits to the Group are the
conversion of a largely fixed cost into an entirely variable one, lowering risk
and generating a working capital benefit.  The one-off cost of the outsourcing
project is £45.5m and, as it is a fundamental restructuring, it is reported as
a non-operating exceptional item in the year.  Staffing levels will fall by
approximately 900 as a result of the outsourcing project. 

In addition, we have sold a number of properties around the world during the
year as we continue to divest non-core assets.  The gains on sale of these
fixed assets amount to £24.0m and are reported as non-operating exceptional as
required by FRS 3 - Reporting the Financial Performance.  Finally under this
heading, an overprovision of £5.0m in respect of the HMV sale in the prior year
has been released.

Within finance charges, an amount of £10.2m has been reported as a finance
exceptional charge relating to the refinancing programme completed in October
2003.

The minority interest cost has reversed from a cost of £6.4m last year to a
credit of £0.9m this year.  This is the consequence of the loss, after
exceptional items, reported by the recorded music business in Japan, in which
there is a 45% minority, and the purchase of the minority shareholding in
Jobete.

The overall result was a loss of £71.6m against a profit last year of £234.2m. 
Last year the income from exceptional transactions, net of tax, was a £150.2m
benefit, whereas this year the cost of similarly reported items is a £152.2m
charge.

This year we have adopted UITF 38 - Accounting for ESOP Trusts and UITF 17
(Revised) - Accounting for Share Schemes which requires that the profit and
loss account charge is based on the market value of the shares at the date of
grant. The adoption of this new standard required that the overall result we
declared last year was restated, resulting in an increase in reported net
profit after tax and minority interests for the year ended March 2003 to £
234.2m from £229.7m.  

Adjusted earnings per share were 15.8p, compared with 15.6p. On a fully-diluted
basis treating outstanding convertible debt and outstanding share options as
equity, adjusted earnings per share were 15.5p.  The Board is recommending a
final dividend of 6.0p per share to give a total dividend of 8.0p per share, in
line with last year.

Cash flow and net borrowings

The net cash inflow from operating activities was £309.4m, significantly up on
the prior year total of £117.2m.  We had cash outflows of £98.9m for finance
charges, £30.6m for taxation, £62.7m of dividends and £66.3m of investment
activity, giving an overall cash inflow before exchange differences of £50.9m. 
The weakening of the US Dollar, in which currency over half of our borrowings
are denominated, against Sterling gave rise to an exchange benefit of £60.6m. 
Aggregating the two components results in a reduction in year-end net debt of £
111.1m, down from £859.8m to £748.7m.

Pensions

EMI maintains a number of defined benefit plans around the world, the largest
of which is in the UK.  The triennial valuation of that plan as at 31 March
2003 was received during the year and revealed, on the prudent funding basis
used by the Trustee, that the market value of the assets was sufficient to
cover 91% of the benefits that have accrued.  It became apparent during the
year that 31 March 2003 was a date very close to the low point in valuation
terms of the equity markets throughout the world.  Taking this into account,
the Group has decided to resume annual contributions of in respect of future
service to the UK fund with effect from 1 April 2004.

Treasury matters

Funding

During the year the Group restructured its debt significantly.  Five
interconnected programme components were implemented.  The Group issued both €
425m 8.625% Senior Notes due 2013 and US$243.3m Guaranteed Convertible Bonds
due 2010, unless previously redeemed, converted or purchased and cancelled. 
The Group cancelled its existing short-term revolving credit bank facilities
due 2005 and entered into a new £250m revolving credit facility due 2007.  The
overall impact of these wide-reaching changes is to lengthen the average debt
maturity to 7.1 years from 5.1 years and to balance the borrowing currency
between the US Dollar, the Euro and the Pound Sterling more in line with the
Group's business.

Policy and risk

Treasury activity is carried out under a framework of policies and guidelines
approved by the Board.  The Board reviewed the policy framework during the year
and approved the few changes proposed.  Control and authority is delegated to
the Treasury Management Committee, chaired by the Group Chief Financial
Officer.

Financial instruments held by the Group comprise derivatives, borrowings, cash
and liquid resources and other financial assets and liabilities, whose purpose
is to raise finance for the Group's operations.  Treasury policies prohibit
their use for speculative purposes.

The Group borrows in various currencies and uses swaps, caps and collars to
manage interest rate exposure.  The Group policy for the first part of the year
was that a minimum of 25% and a maximum of 75% of the Group's net borrowings
should be at fixed/capped rates.  This policy was reviewed and amended by the
Audit Committee in December 2003 to a minimum of 25% of the Group's term
borrowings should be at fixed/capped rates.

The Group faces currency exposure from exchange rate fluctuation against
Sterling.  Balance sheet exposures are hedged to the extent that overseas
liabilities, including borrowings, provide a natural hedge.  Group policy is
neither to undertake additional balance sheet hedging measures, nor to hedge
profit and loss account translation exposure.  Transaction exposures are
hedged, where there are material items that have a high probability of
occurring, with the use of forward exchange rate contracts.

Adoption of International Financial Reporting Standards (IFRS)

The Group expects to publish its first financial statements under IFRS for the
six months to 30 September 2005 and for the year ending 31 March 2006.  The
Group is undertaking a detailed review of the impact of IFRS.  This involves
assessing the impact of IFRS on existing accounting policies, ensuring that the
appropriate management and financial reporting systems are in place to meet
with the requirements and communicating the impact of IFRS, both internally and
externally.

 

At the date of this report, the Group has made significant progress on
converting to IFRS.  The conversion project is ongoing and further developments
with IFRS will continue to be addressed as they arise.  The Group will be fully
prepared for the transition in 2005.

Note: Industry growth and share figures based on industry data from the IFPI
and include audio and video music product unless otherwise noted.


ATTACHMENTS

EMI GROUP PLC FINANCIAL STATEMENTS 2003/04

(a)     Financial highlights for the year ended 31 March 2004.                 
                                                                               
(b)     Consolidated profit and loss account for the year ended 31 March 2004. 
                                                                               
(d)     Consolidated balance sheet at 31 March 2004.                           
                                                                               
(e)     Statement of total recognised gains and losses for the year ended 31   
        March 2004.                                                            
                                                                               
(e)     Reconciliation of movements in shareholders' funds for the year ended  
        31 March 2004.                                                         
                                                                               
(f)     Consolidated cash flow statement for the year ended 31 March 2004.     
                                                                               
(g),    Notes to the consolidated cash flow statement for the year ended 31    
(h)     March 2004.                                                            
                                                                               
(i)-(p) Notes to the accounts for the year ended 31 March 2004.                
                                                                               


  Attachment (a)
                

FINANCIAL HIGHLIGHTS

for the year ended 31 March 2004

                                           2004     2003 
                                                         
                                                Restated 
                                                         
                                             £m       £m 
                                                         
Group turnover                          2,120.7  2,175.4 
                                                         
EBITDA  (i)                               284.3    297.7 
                                                         
Group operating profit (EBITA)  (ii)      249.3    254.7 
                                                         
Adjusted PBT (iii)                        163.3    178.8 
                                                         
(Loss)/Profit before taxation            (52.8)    323.8 
                                                         
Adjusted basic earnings per share (iv)    15.8p    15.6p 
                                                         
Basic earnings per share                 (9.1)p    29.9p 
                                                         
Dividends per share                        8.0p     8.0p 
                                                         
Return on sales  (v)                      11.8%    11.7% 
                                                         
Interest cover  (vi)                       3.3x     3.9x 
                                                         

 (i)  EBITDA is Group operating profit before operating exceptional items,     
      depreciation and amortisation of goodwill and music copyrights.          
                                                                               
(ii)  Group operating profit (EBITA) is before operating exceptional items and 
      amortisation of goodwill and music copyrights.                           
                                                                               
(iii) Adjusted PBT is before operating and non-operating exceptional items,    
      amortisation of goodwill and music copyrights and HMV.                   
                                                                               
(iv)  Adjusted diluted earnings per share is before operating and non-operating
      exceptional items, amortisation of goodwill and music copyrights.        
                                                                               
 (v)  Return on sales is defined as Group operating profit before operating    
      exceptional items and amortisation of goodwill and music copyrights as a 
      percentage of Group turnover.                                            
                                                                               
(vi)  Interest cover is defined as the number of times EBITDA is greater than  
      Group finance charges, excluding exceptional items.                      
                                                                               


  Attachment (b)
                

CONSOLIDATED PROFIT AND LOSS ACCOUNT

for the year ended 31 March 2004

                                                    2004                   2003
                                                                               
                                                                               
                                                                               
                                               EMI Group    EMI Group          
                                               (excl.HMV    (excl.HMV          
                                                  Group)       Group)          
                                                                               
                                            Before excep Before excep          
                                                 items &      items &          
                                                  amortn       amortn     Total
                                                                               
                                      Total                  Restated  Restated
                                                                               
                                         £m           £m           £m        £m
                                                                               
TURNOVER:                                                                      
                                                                               
     Total including joint          2,120.7      2,120.7      2,175.4   2,240.9
venture (HMV Group plc -                                                       
discontinued)                                                                  
                                                                               
      Less:joint venture turnover         -            -            -    (65.5)
                                                                               
Group turnover (note 2)             2,120.7      2,120.7      2,175.4   2,175.4
                                                                               
Group operating profit before         249.3        249.3                       
exceptional items and                                                          
amortisation                                                                   
                                                                               
Operating exceptional items         (138.3)            -                       
                                                                               
Group operating profit before         111.0        249.3                       
amortisation                                                                   
                                                                               
Amortisation                         (50.9)            -                       
                                                                               
Group operating profit  (note 2)       60.1        249.3        254.7     190.9
                                                                               
Share of operating profit in              -            -            -       0.4
joint venture (HMV Group plc -                                                 
discontinued)                                                                  
                                                                               
Share of operating profits            (0.3)        (0.1)          0.2       0.1
(losses) in associated                                                         
undertakings                                                                   
                                                                               
Total operating profit                 59.8        249.2        254.9     191.4
                                                                               
Non-operating exceptional items      (16.5)            -            -     209.7
                                                                               
Profit before finance charges          43.3        249.2        254.9     401.1
                                                                               
Finance charges                                                                
                                                                               
     Group (including associated     (96.1)       (85.9)       (76.1)    (76.1)
undertakings)                                                                  
                                                                               
     Joint venture (HMV Group plc         -            -            -     (1.2)
- discontinued)                                                                
                                                                               
Total finance charges (note 4)       (96.1)       (85.9)       (76.1)    (77.3)
                                                                               
Loss (profit) on ordinary            (52.8)        163.3        178.8     323.8
activities before taxation                                                     
                                                                               
Taxation on profit on ordinary                                                 
activities (note 5)                                                            
                                                                               
     Group                           (19.7)       (32.5)       (45.1)    (83.5)
                                                                               
     Joint venture (HMV Group plc         -            -            -       0.3
- discontinued)                                                                
                                                                               
Loss (profit) on ordinary            (72.5)        130.8        133.7     240.6
activities after taxation                                                      
                                                                               
Minority interests (equity)             0.9        (6.5)       (10.3)     (6.4)
                                                                               
Loss (profit) attributable to        (71.6)        124.3        123.4     234.2
members of the Holding                                                         
                                                                               
     Company                                                                   
                                                                               
Dividends (equity) (note 6)          (62.5)                              (62.8)
                                                                               
Transfer (from) to profit & loss    (134.1)                               171.4
reserve                                                                        
                                                                               
Cost of sales                     (1,404.7)    (1,286.0)    (1,331.2) (1,376.7)
                                                                               
Distribution costs                   (92.0)       (85.1)       (98.7)    (98.7)
                                                                               
Administration expenses             (583.5)      (530.7)      (528.2)   (544.0)
                                                                               
Other operating income, net            19.6         30.4         37.4      34.9
                                                                               

Earnings per share (EPS)                                           2004   2003
                                                                              
Basic earnings per Ordinary Share (note 7)                       (9.1)p  29.9p
                                                                              
Diluted earnings per Ordinary Share (note 7)                     (9.1)p  29.9p
                                                                              
Adjusted basic earnings per Ordinary Share (note 7)               15.8p  15.6p
                                                                              
Adjusted diluted earnings per Ordinary Share (note 7)             15.5p  15.6p
                                                                              
Adjusted earnings are included as they provide a better understanding of the  
underlying trading performance of the Group on a normalised basis.            
                                                                              

Attachment (c)
              

CONSOLIDATED PROFIT AND LOSS ACCOUNT

for the year ended 31 March 2004

Average exchange rates for the year                            2004       2003
                                                                              
US$ to £1                                                      1.70       1.55
                                                                              
Euro to £1                                                     1.45       1.55
                                                                              
Yen to £1                                                    191.67     187.89
                                                                              
The results for the year have been translated into Sterling at the appropriate
average exchange rates.                                                       
                                                                              


Attachment (d)
              

CONSOLIDATED BALANCE SHEET

At 31 March 2004

                                                                 2004      2003
                                                                               
                                                                       Restated
                                                                               
                                                                   £m        £m
                                                                               
Fixed assets                                                                   
                                                                               
Music copyrights                                                448.7     451.2
                                                                               
Goodwill                                                         31.8      56.2
                                                                               
Tangible fixed assets                                           202.7     289.4
                                                                               
Investments                                                      19.3      22.2
                                                                               
                                                                702.5     819.0
                                                                               
Current assets                                                                 
                                                                               
Stocks                                                           28.1      36.4
                                                                               
Debtors: amounts falling due within one year                    722.6     831.3
                                                                               
Debtors: amounts falling due after more than one year            88.3     138.6
                                                                               
Investments: liquid funds (note 8)                                1.8       0.5
                                                                               
Cash at bank & in hand and cash deposits (note 8)               343.4     100.2
                                                                               
                                                              1,184.2   1,107.0
                                                                               
Creditors: amounts falling due within one year                                 
                                                                               
Borrowings (note 8)                                            (35.8)    (38.5)
                                                                               
Other creditors                                             (1,353.5) (1,365.0)
                                                                               
                                                            (1,389.3) (1,403.5)
                                                                               
Net current liabilities                                       (205.1)   (296.5)
                                                                               
Total assets less current liabilities                           497.4     522.5
                                                                               
Creditors: amounts falling due after more than one year                        
                                                                               
Borrowings (including, in the Group in 2004, convertible    (1,058.1)   (922.0)
debt of £126.0m) (note 8)                                                      
                                                                               
Other creditors                                                (12.9)    (58.1)
                                                                               
                                                            (1,071.0)   (980.1)
                                                                               
Provisions for liabilities and charges (note 9)               (142.8)   (109.9)
                                                                               
                                                              (716.4)   (567.5)
                                                                               
Capital and reserves                                                           
                                                                               
Called-up share capital                                         110.4     110.4
                                                                               
Share premium account                                           445.8     445.8
                                                                               
Capital redemption reserve                                      495.8     495.8
                                                                               
Other reserves                                                  255.7     235.7
                                                                               
Profit & loss reserve                                       (2,091.7) (1,988.1)
                                                                               
Equity shareholders' funds                                    (784.0)   (700.4)
                                                                               
Minority interests (equity)                                      67.6     132.9
                                                                               
                                                              (716.4)   (567.5)
                                                                               

Year-end exchange rates                                                     
                                                                            
                                                          2004          2003
                                                                            
US$ to £1                                                 1.84          1.58
                                                                            
Euro to £1                                                1.50          1.45
                                                                            
Yen to £1                                               191.20        187.50
                                                                            
The balance sheet has been translated into Sterling at the appropriate      
year-end exchange rates.                                                    
                                                                            

Attachment (e)
              

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

for the year ended 31 March 2004

                                                             2004          2003
                                                                               
                                                                       Restated
                                                                               
                                                        £m     £m     £m     £m
                                                                               
(Loss) profit for the financial year                                           
                                                                               
Group                                                      (71.3)         234.6
                                                                               
Joint venture (HMV Group plc - discontinued)                    -         (0.5)
                                                                               
Associates                                                  (0.3)           0.1
                                                                               
Loss (profit) for the financial year                       (71.6)         234.2
                                                                               
Currency translation - Group*                         28.0        (13.5)       
                                                                               
Revaluation of property and music copyright           20.7             -       
                                                                               
Other recognised gains (losses)                              48.7        (13.5)
                                                                               
Total recognised gains and losses relating to the          (22.9)         220.7
year                                                                           
                                                                               
Prior year adjustment                                         4.5              
                                                                               
Total recognised gains and losses                          (18.4)              
                                                                               
*Net currency losses of £4.5m (2003: gains of £7.6m) which relate to foreign   
currency borrowings to finance investment overseas and the related tax charge  
of £nil (2003: £nil), have been included within the Group currency translation 
movement on reserves.                                                          
                                                                               

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

for the year ended 31 March 2004

                                                          2004             2003
                                                                               
                                                    £m      £m     £m        £m
                                                                               
Opening shareholders' funds -as reported               (693.1)        (1,030.2)
                                                                               
Prior year adjustment                                    (7.3)           (13.8)
                                                                               
Opening shareholders' funds - restated                 (700.4)        (1,044.0)
                                                                               
Loss (profit) for the financial year            (71.6)          229.7          
                                                                               
Prior year adjustment                                -            4.5          
                                                                               
Dividends (equity) (note 6)                     (62.5)         (62.8)          
                                                                               
Other recognised gains (losses)                   48.7         (13.5)          
                                                                               
Goodwill adjustments                                 -          183.7          
                                                                               
Employee Benefit Trust transactions                1.8            2.0          
                                                                               
Net (decrease) increase in shareholders' funds          (83.6)            343.6
for the year                                                                   
                                                                               
Closing shareholders' funds                            (784.0)          (700.4)
                                                                               


Attachment (f)
              

CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 March 2004

                                                                   2004    2003
                                                                               
                                                                     £m      £m
                                                                               
Net cash inflow from operating activities                         309.4   117.2
                                                                               
Dividends received from associates                                    -     0.1
                                                                               
Returns on investments and servicing of finance                                
                                                                               
Net interest paid                                                (95.4)   (4.6)
                                                                               
Dividends paid to minorities                                      (3.5)   (6.5)
                                                                               
Net cash outflow from returns on investments and servicing of    (98.9)  (11.1)
finance                                                                        
                                                                               
Tax paid                                                         (30.6)  (38.7)
                                                                               
Capital expenditure and financial investment                                   
                                                                               
Purchase of music copyrights                                      (5.1)   (7.6)
                                                                               
Sale of music copyrights                                            0.4     1.2
                                                                               
Purchase of tangible fixed assets                                (51.3)  (68.5)
                                                                               
Sale of tangible fixed assets                                      78.0     9.3
                                                                               
Purchase of investments: own shares                               (0.3)   (0.8)
                                                                               
Purchase of fixed asset investments                                   -  (10.4)
                                                                               
Sale of fixed asset investments                                     1.0    35.6
                                                                               
Loans repaid by associated undertakings                               -     0.7
                                                                               
Net cash inflow (outflow) from capital expenditure and financial   22.7  (40.5)
investment                                                                     
                                                                               
Acquisitions and disposals                                                     
                                                                               
Purchase of businesses net of cash acquired                      (73.3)  (22.4)
                                                                               
Disposal of joint venture (HMV Group plc - discontinued)              -   209.5
                                                                               
Deferred consideration paid                                      (16.1)   (1.0)
                                                                               
Disposal of subsidiary undertaking                                    -   (0.7)
                                                                               
Purchase of associated undertakings                                   -   (1.8)
                                                                               
Disposal of associated undertakings                                 0.4     2.2
                                                                               
Net cash (outflow) inflow from acquisitions and disposals        (89.0)   185.8
                                                                               
Equity dividends paid                                            (62.7)  (29.4)
                                                                               
Net cash inflow before management of liquid resources and          50.9   183.4
                                                                               
     financing                                                                 
                                                                               
Management of liquid resources (note b)                           (1.7)     1.1
                                                                               
Financing (note b)                                                187.0 (154.9)
                                                                               
Net cash inflow (outflow) from management of liquid resources     185.3 (153.8)
and                                                                            
                                                                               
     financing                                                                 
                                                                               
Increase in cash (note b)                                         236.2    29.6
                                                                               

Reconciliation of net cash flow to movement in net debt                      
                                                                             
                                                               2004      2003
                                                                             
                                                                 £m        £m
                                                                             
Increase in cash                                              236.2      29.6
                                                                             
Cash outflow (inflow) from increase (decrease) in liquid        1.7     (1.1)
resources                                                                    
                                                                             
Cash (inflow) from increase in loans                        (398.5)   (603.5)
                                                                             
Cash outflow from repayment of loans                          211.5     758.4
                                                                             
Change in net debt resulting from cash flows                   50.9     183.4
                                                                             
Loans acquired                                                (0.4)     (4.3)
                                                                             
Exchange differences                                           60.6      19.0
                                                                             
Movement in net debt                                          111.1     198.1
                                                                             
Net debt at beginning of year                               (859.8) (1,057.9)
                                                                             
Net debt at end of year                                     (748.7)   (859.8)
                                                                             


Attachment (g)
              

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 March 2004

a) Reconciliation of operating profit to net cash flow from operating
activities:

                                                 2004     2003
                                                              
                                                      Restated
                                                              
                                                   £m       £m
                                                              
Group operating profit                           60.1    190.9
                                                              
Depreciation charge                              35.0     43.0
                                                              
Amortisation charge:                                          
                                                              
     Music copyrights                            46.9     39.0
                                                              
     Goodwill                                     4.0      3.7
                                                              
Exceptional non cash write - down                43.1        -
                                                              
Goodwill write-down - subsidiaries               18.1     12.1
                                                              
Music copyrights write-down                       4.5      6.5
                                                              
Current asset investment write-down                 -      2.5
                                                              
Amounts provided                                 73.4      9.7
                                                              
Provisions utilised:                                          
                                                              
     Disposals and fundamental reorganisations      -    (1.6)
                                                              
     Other                                     (36.1)   (83.7)
                                                              
(Increase) decrease in working capital:                       
                                                              
     Stock                                      (8.0)      2.4
                                                              
     Debtors                                     59.8   (94.8)
                                                              
     Creditors                                    8.6   (12.5)
                                                              
Net cash inflow from operating activities       309.4    117.2
                                                              

b) Analysis of movement in the Group's net borrowings

                               At    Cash Acquisitions     Exchange At 31 March
                                     flow            /     movement        2004
                         31 March                                              
                             2003            disposals                         
                                                                               
                               £m      £m           £m           £m          £m
                                                                               
Cash at bank and in          99.9   245.4          0.4        (3.0)       342.7
hand                                                                           
                                                                               
Overdrafts                 (25.0)   (9.6)            -          2.1      (32.5)
                                                                               
Cash                         74.9   235.8          0.4        (0.9)       310.2
                                                                               
Debt due after more       (920.5) (198.9)            -         61.4   (1,058.0)
than one year                                                                  
                                                                               
Debt due within one        (12.8)     9.8        (0.4)          0.1       (3.3)
year                                                                           
                                                                               
Finance leases              (2.2)     2.1            -            -       (0.1)
                                                                               
Financing                 (935.5) (187.0)        (0.4)         61.5   (1,061.4)
                                                                               
Investments: liquid           0.5     1.3            -            -         1.8
funds                                                                          
                                                                               
Cash deposits                 0.3     0.4            -            -         0.7
                                                                               
Liquid resources              0.8     1.7            -            -         2.5
                                                                               
Total                     (859.8)    50.5            -         60.6     (748.7)
                                                                               

Cash flow on financing of £(187.0)m is split between new loans of £(398.5)m,   
loans repaid of £209.4m and the capital element of finance leases repaid of £  
2.1m.                                                                          
                                                                               


Attachment (h)
              

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 March 2004

                              At    Cash    Acquisitions/    Exchange        At
                                    flow        disposals    movement          
                         1 April                                       31 March
                            2002                                           2003
                                                                               
                              £m      £m               £m          £m        £m
                                                                               
Cash at bank and in         84.4    13.8                -         1.7      99.9
hand                                                                           
                                                                               
Overdrafts                (40.7)    15.8                -       (0.1)    (25.0)
                                                                               
Cash                        43.7    29.6                -         1.6      74.9
                                                                               
Debt due after more      (371.3) (558.4)                -         9.2   (920.5)
than one year                                                                  
                                                                               
Debt due within one      (729.5)   712.4            (4.3)         8.6    (12.8)
year                                                                           
                                                                               
Finance leases             (2.8)     0.9                -       (0.3)     (2.2)
                                                                               
Financing*             (1,103.6)   154.9            (4.3)        17.5   (935.5)
                                                                               
Investments: liquid          0.7   (0.2)                -           -       0.5
funds                                                                          
                                                                               
Cash deposits                1.3   (0.9)                -       (0.1)       0.3
                                                                               
Liquid resources             2.0   (1.1)                -       (0.1)       0.8
                                                                               
Total                  (1,057.9)   183.4            (4.3)        19.0   (859.8)
                                                                               
*Cash flow on financing of £154.9m is split between new loans of £(603.5)m,    
loans repaid of £757.5m and the capital element of finance leases repaid of £  
0.9m.                                                                          
                                                                               
The following definitions have been used:                                      
                                                                               
Cash: Overdrafts, cash in hand and deposits repayable on demand if available   
within 24 hours without penalty.                                               
                                                                               
Liquid resources: Investments and deposits, other than those included as cash, 
which are readily convertible into known amounts of cash.                      
                                                                               
Financing: Borrowings, less overdrafts which have been treated as cash.        
                                                                               


Attachment (i)
              

NOTES TO THE ACCOUNTS

for the year ended 31 March 2004

NOTE 1 - ACCOUNTING POLICIES - basis of preparation

The consolidated financial statements are prepared under the historical cost   
convention and in accordance with applicable accounting standards.  The results
for the years ended 31 March 2004 and 31 March 2003 represent continuing       
operations, except where expressly stated on the consolidated profit and loss  
account and in the notes to the accounts.                                      
                                                                               
The financial statements have been prepared on the basis of the accounting     
policies set out in the Group's accounts for the year ended 31 March 2004.     
                                                                               
This announcement does not constitute the Group's financial statements for the 
year ended 31 March 2004.  The financial statements for the year ended 31 March
2004 have not yet been delivered to the Registrar.  However the auditor has    
issued an unqualified audit report on the financial statements for this year.  
                                                                               

NOTE 2 - SEGMENTAL ANALYSES

                                                     2004                  2003
                                                                               
                                                                       Restated
                                                                               
                                    Turnover    Operating Turnover    Operating
                                                   Profit                Profit
                                                                               
                                                       £m                    £m
                                                                               
By class of business:                                                          
                                                                               
Recorded Music                       1,722.8        147.4  1,774.2        151.1
                                                                               
Music Publishing                       397.9        101.9    401.2        103.6
                                                                               
Group                                2,120.7        249.3  2,175.4        254.7
                                                                               
Operating exceptional items and                   (189.2)                (63.8)
amortisation*                                                                  
                                                                               
Group operating profit                               60.1                 190.9
                                                                               
By origin:                                                                     
                                                                               
United Kingdom                         308.6         53.6    330.9         69.2
                                                                               
Rest of Europe                         651.1         62.0    660.5         88.8
                                                                               
Latin America                           44.6        (1.8)     51.0        (2.5)
                                                                               
North America                          671.9         99.2    706.1         68.6
                                                                               
Asia Pacific                           423.6         32.5    409.9         27.7
                                                                               
Other                                   20.9          3.8     17.0          2.9
                                                                               
Group                                2,120.7        249.3  2,175.4        254.7
                                                                               
By destination                                                                 
                                                                               
United Kingdom                         304.4                 316.8             
                                                                               
Rest of Europe                         649.2                 675.3             
                                                                               
Latin America                           21.5                  46.3             
                                                                               
North America                          678.9                 707.4             
                                                                               
Asia Pacific                           422.1                 406.7             
                                                                               
Other                                   44.6                  22.9             
                                                                               
Group                                2,120.7               2,175.4             
                                                                               

*Comprises operating exceptional items of £(138.3)m (2003: £(21.1)m) and       
amortisation of goodwill and music copyrights of £(50.9)m (2003: £(42.7)m).    
                                                                               
The split of operating exceptional items and amortisation of goodwill and music
copyrights is as follows:                                                      
                                                                               
i) By class of business - Recorded Music £(132.7)m (2003: £(21.1)m), Music     
Publishing £(56.5)m (2003: £(42.7)m)                                           
                                                                               
ii) By origin - United Kingdom £(38.9)m (2003: £(15.7)m); Rest of Europe £     
(58.0)m (2003: £(10.9)m); Latin America £(1.1)m (2003: £nil; North America £   
(62.3)m (2003: £(37.2)m); Asia Pacific £(25.1)m (2003: £0.3m) and other £(3.8)m
(2003: £(0.3)m).                                                               
                                                                               


Attachment (j)
              

NOTES TO THE ACCOUNTScontinued

for the year ended 31 March 2004

NOTE 2 - SEGMENTAL ANALYSEScontinued

                                            2004                          2003
                                                                              
                        Operating        Average      Operating        Average
                          Assets/      Employees         Assets      Employees
                                                                              
                    (Liabilities)                                             
                                                                              
                                              £m                            £m
                                                                              
By class of                                                                   
business:                                                                     
                                                                              
Recorded Music             (45.7)          7,373          180.6          7,439
                                                                              
Music Publishing            343.7            623          401.9            649
                                                                              
Group                       298.0          7,996          582.5          8,088
                                                                              
By origin:                                                                    
                                                                              
United Kingdom               17.8          1,199           79.0          1,162
                                                                              
Rest of Europe             (52.3)          2,338            2.8          2,510
                                                                              
Latin America               (0.6)            324            7.1            324
                                                                              
North America               256.8          2,464          374.0          2,573
                                                                              
Asia Pacific                 76.7          1,403          113.7          1,382
                                                                              
Other                       (0.4)            268            5.9            137
                                                                              
Group                       298.0          7,996          582.5          8,088
                                                                              

Operating assets include deferred consideration of £70.0m (2003:£35.3m). This  
amount is not conditional upon the satisfaction of future performance criteria.
                                                                               

The reconciliation of operating assets to net liabilities is as                
follows:                                                                       
                                                                               
                                                                   2004    2003
                                                                               
                                                                     £m      £m
                                                                               
 Operating assets                                                 298.0   582.5
                                                                               
 Tax, dividends and net interest payable                        (265.7) (290.2)
                                                                               
          Capital employed                                         32.3   292.3
                                                                               
          Net borrowings                                        (748.7) (859.8)
                                                                               
          Net liabilities                                       (716.4) (567.5)
                                                                               



Attachment (k)
              

NOTES TO THE ACCOUNTScontinued

for the year ended 31 March 2004

NOTE 3 - EXCEPTIONAL ITEMS

(i) Operating exceptional items

                                                                  2004     2003
                                                                               
                                                                       Restated
                                                                               
                                                                    £m       £m
                                                                               
Impact of retail destocking in Japan, including amended         (16.7)        -
returns terms                                                                  
                                                                               
Restructuring and reorganisation costs                                         
                                                                               
    Music Publishing : headcount reduction and system            (6.6)        -
write-offs                                                                     
                                                                               
    Recorded Music : headcount and roster reduction and other   (84.5)    (6.0)
*                                                                              
                                                                               
Asset impairment and other **                                   (22.6)   (21.1)
                                                                               
Release of overprovision for reorganisation costs charged in         -      6.0
prior year                                                                     
                                                                               
Proposed acquisition of Warner Music - deal costs                (7.9)        -
                                                                               
Total                                                          (138.3)   (21.1)
                                                                               

*Including costs of headcount reduction (£51.7m), roster reduction (£20.6m),   
vacant property provisions and asset write-downs (£3.5m), distribution changes 
and integration (£4.6m) and other (£4.1m).                                     
                                                                               
** Including write-downs of music copyrights (£4.5m) and goodwill (£18.1m)     
(2003: music copyrights (£6.5m), goodwill (£12.1m) and current asset           
investments (£2.5m))                                                           
                                                                               
The attributable taxation credit relating to operating exceptional items is £  
14.4m (2003: £nil).                                                            
                                                                               
Assets have been written down to their net realisable value or to a discounted 
cash flow projection. Discount rates of 6% to 14% have been applied in the     
impairment reviews completed during the year. The discount rates are           
appropriate to the divisions and the assets being valued.                      
                                                                               
The share of the operating exceptional items attributable to minority interests
is £7.2m (2003: £0.8m).                                                        
                                                                               

(ii) Non-operating exceptional items

                                                                    2004   2003
                                                                               
                                                                      £m     £m
                                                                               
Losses on the sale and closure of manufacturing business *        (45.5)      -
                                                                               
Net gain on sale of fixed assets and investments **                 24.0   19.7
                                                                               
Profit on sale of HMV Group plc, including goodwill of £262.5m **    5.0  215.2
*                                                                              
                                                                               
Loss on sale of subsidiary undertaking, including goodwill of £        - (25.2)
8.4m                                                                           
                                                                               
Total                                                             (16.5)  209.7
                                                                               
* Including costs of redundancies (£11.8m), losses on sale or decommissioning  
of fixed assets (£12.1m), losses on sales of stocks (£12.0m) and integration   
costs (£9.6m).                                                                 
                                                                               
** Comprises gains / (losses) of sale of properties (2003 - including a        
provision for loss on disposal of £(1.8)m and a gain on sale of Viva Media of £
28.0m).                                                                        
                                                                               
*** In 2004 comprises the release of a provision to cover our pension liability
no longer required.                                                            
                                                                               
The attributable taxation charge relating to non-operating exceptional items is
£1.6m (2003: £38.4m).                                                          
                                                                               

(iii) Finance exceptional charge

                                                                      2004 2003
                                                                               
                                                                        £m   £m
                                                                               
Costs incurred as part of the Group's refinancing programme (Note   (10.2)    -
4)                                                                             
                                                                               
Total                                                               (10.2)    -
                                                                               


Attachment (l)
              

NOTES TO THE ACCOUNTScontinued

for the year ended 31 March 2004

NOTE 4 - FINANCE CHARGES

                                                       2004  2004  2003  2003
                                                                             
                                                         £m    £m    £m    £m
                                                                             
Interest payable on:                                                         
                                                                             
     Bank overdrafts and loans                         72.3        61.8      
                                                                             
     Other                                             17.3        18.6      
                                                                             
                                                             89.6        80.4
                                                                             
Interest receivable on:                                                      
                                                                             
     Bank balances                                    (2.0)       (2.3)      
                                                                             
     Other                                            (1.7)       (2.0)      
                                                                             
                                                            (3.7)       (4.3)
                                                                             
Group finance charges (including associates)                 85.9        76.1
                                                                             
Joint venture finance charges (HMV Group plc -                  -         1.2
                                                                             
     discontinued)                                                           
                                                                             
Exceptional finance costs                                    10.2           -
                                                                             
Total                                                        96.1        77.3
                                                                             
Finance charges for associates are £nil (2003: £nil).                        
                                                                             


Attachment (m)
              

NOTES TO THE ACCOUNTScontinued

for the year ended 31 March 2004

NOTE 5  - TAXATION

                                                                    2004   2003
                                                                               
                                                                      £m     £m
                                                                               
Current tax:                                                                   
                                                                               
     UK corporation tax                                              5.3   37.7
                                                                               
     Double taxation relief                                        (5.3)  (4.9)
                                                                               
                                                                       -   32.8
                                                                               
     Withholding tax                                                 9.5    8.5
                                                                               
     Other foreign tax                                              17.4   49.4
                                                                               
     Adjustment in respect of prior periods                        (2.8) (11.5)
                                                                               
     Joint venture                                                     -  (0.3)
                                                                               
     Total current tax                                              24.1   78.9
                                                                               
Deferred tax:                                                                  
                                                                               
     Origination and reversal of timing differences                (4.5)    4.2
                                                                               
Others:                                                                        
                                                                               
     Associated undertakings                                         0.1    0.1
                                                                               
Tax on profit on ordinary activities                                19.7   83.2
                                                                               
There is a tax credit on exceptional items of £(12.8)m (2003:                  
charge of £38.4m)                                                              
                                                                               

NOTE 6 - DIVIDENDS (equity)

                                             2004      2003  2004  2003
                                                                       
                                        Per share Per share    £m    £m
                                                                       
Ordinary dividends (net)                                               
                                                                       
    Interim                                 2.00p     2.00p  15.8  15.8
                                                                       
    Adjustment to 2004 and 2003 interim         -         - (0.1)     -
                                                                       
    Proposed final                          6.00p     6.00p  47.1  47.2
                                                                       
    Adjustment to 2003 and 2002 final           -         - (0.3) (0.2)
                                                                       
                                            8.00p     8.00p  62.5  62.8
                                                                       

Subject to the approval of shareholders, the final dividend of 6.00p per share
will be paid on 1 October 2004 to shareholders on the register at the close of
business on 3 September 2004.


Attachment (n)
              

NOTES TO THE ACCOUNTScontinued

for the year ended 31 March 2004

NOTE 7 - EARNINGS PER ORDINARY SHARE

                                                                   2004    2003
                                                                               
                                                                     £m      £m
                                                                               
Earnings per Ordinary Share is calculated as follows:                          
                                                                               
     Earnings                                                    (71.6)   234.2
                                                                               
     Adjusted earnings                                            124.3   122.7
                                                                               
Basic                                                                          
                                                                               
     Weighted average number of Ordinary Shares in issue         784.4m  784.0m
                                                                               
Diluted                                                                        
                                                                               
     Adjusted weighted average number of Ordinary Shares         826.5m  784.4m
                                                                               
The adjusted weighted average number of Ordinary Shares used in the diluted    
earnings per share calculations, 826.5m (2003: 784.4m), is the weighted average
number of Ordinary Shares in issue, 784.4m (2003: 784.0m), plus adjustments for
dilutive share options, 2.9m (2003: 0.4m) plus adjustments for convertible bond
options, 39.2m (2003: nil)                                                     
                                                                               
Adjusted earnings are included as they provide a better understanding of the   
underlying trading performance of the Group on a normalised basis.             
                                                                               

RECONCILIATION OF ADJUSTED EARNINGS                                            
                                                                               
                                                            2004           2003
                                                                               
                                                     £m      Per    £m      Per
                                                           Share          Share
                                                                               
Earnings/basic EPS                               (71.6)   (9.1)p 234.2    29.9p
                                                                               
Adjustments:                                                                   
                                                                               
     Exceptional items and attributable           152.2    19.3p (150.4) (19.3)
taxation                                                                      p
                                                                               
     Amortisation of goodwill and music            51.1     6.5p    42.8   5.5p
copyrights                                                                     
                                                                               
     Minority interest (re music copyright        (0.4)     0.0p   (3.9) (0.5)p
amortisation)                                                                  
                                                                               
     Minority interest (re operating              (7.0)   (0.9)p       -      -
exceptional items)                                                             
                                                                               
Adjusted earnings/adjusted EPS                    124.3    15.8p 122.7    15.6p
                                                                               
Convertible bond attributable interest cost and     3.7   (0.3)p   n/a      n/a
dilution                                                                       
                                                                               
Adjusted earnings/adjusted diluted EPS            128.0    15.5p 122.7    15.6p
                                                                               


Attachment (o)
              

NOTES TO THE ACCOUNTScontinued

for the year ended 31 March 2004

NOTE 8 - BORROWINGS

                                                                2004      2003
                                                                              
                                                                  £m        £m
                                                                              
LONG-TERM BORROWINGS                                                          
                                                                              
Bank loans and debt finance                                   1059.1     922.4
                                                                              
Finance leases                                                   0.1       1.5
                                                                              
Less: repayable within one year                                (1.1)     (1.9)
                                                                              
Total long-term borrowings                                   1,058.1     922.0
                                                                              
SHORT-TERM BORROWINGS                                                         
                                                                              
Loans and overdrafts                                            34.7      35.9
                                                                              
Finance leases                                                     -       0.7
                                                                              
Short-term element of long-term loans                            1.1       1.9
                                                                              
Total short-term borrowings                                     35.8      38.5
                                                                              
Total borrowings                                             1,093.9     960.5
                                                                              
Liquid funds:                                                                 
                                                                              
 Investments: liquid funds                                     (1.8)     (0.5)
                                                                              
 Cash at bank and in hand and cash deposits                  (343.4)   (100.2)
                                                                              
Net borrowings                                                 748.7     859.8
                                                                              
On 2 and 3 October 2003 the Group completed a major restructuring of its      
borrowings.  Five separate but related transactions were completed: (a) the   
issue of €425m 8.625% Senior Notes due 2013; (b) the issue of US$243.3m       
Guaranteed Convertible Bonds due 2010; (c) the cancellation of the existing   
revolving credit bank facilities due 2005; (d) the finalisation of a new £250m
revolving credit bank facility due 2007; and (e) prepayment of US$25m Senior  
Notes due 2012 and US$31.25m Senior Notes due 2009.                           
                                                                              
Long-term borrowings include £nil (2003: £166.8m) of borrowings repayable     
within one year, which are drawings under long-term committed facilities and, 
therefore, have been classified as such.  Long-term borrowings are stated     
after deduction of issue costs which are capitalised and amortised over the   
term of the borrowing.  Issue costs are defined as incremental costs that are 
incurred directly in connection with the issue of a capital instrument and    
include arrangements and underwriting fees.                                   
                                                                              
Under their banking arrangements, overdraft and cash balances of the Company  
and of certain subsidiaries are pooled or offset and cross-guaranteed.  Such  
pooling and offsets are reflected in the Group balance sheet as appropriate.  
                                                                              
The Group has cash balances of £210.0m held with banks within the UK and £    
135.2m held with banks outside, but freely transferable to, the UK.           
                                                                              

Maturity analysis of long-term borrowings:                                     
                                                                               
                                                                     2004  2003
                                                                               
                                                                       £m    £m
                                                                               
Amounts falling due after more than one year are repayable as                  
follows:                                                                       
                                                                               
           Between one and two years                                  2.0 169.1
                                                                               
           Between two and five years                               385.7  59.6
                                                                               
           After five years:                                                   
                                                                               
                  By instalments                                        -  39.3
                                                                               
                  Other                                             670.4 654.0
                                                                               
                                                                  1,058.1 922.0
                                                                               
The amount of debt, any of which falls due for payment after more than five    
years, is £670.4m (2003: £693.3m).                                             
                                                                               


Attachment (p)
              

NOTES TO THE ACCOUNTScontinued

for the year ended 31 March 2004

NOTE 9 - OTHER PROVISIONS FOR LIABILITIES AND CHARGES

                      Trading Pensions     Disposal &    Acquisition and  Total
                                          fundamental        integration       
                                                                               
                                              reorg'n                          
                                                                               
                           £m       £m             £m                 £m     £m
                                                                               
At 31 March 2003         50.5     33.4            7.4               13.1  104.4
                                                                               
Currency                (4.1)    (1.3)          (1.4)              (0.5)  (7.3)
retranslation                                                                  
                                                                               
Provisions utilised    (29.6)    (6.5)              -              (9.3) (45.4)
                                                                               
Charged against:                                                               
                                                                               
 Operating profit        67.7      5.7              -                  -   73.4
                                                                               
 Non-operating              -        -           21.7                  -   21.7
 exceptional items                                                             
                                                                               
 Non-operating              -        -          (5.0)                  -  (5.0)
 exceptional HMV                                                               
                                                                               
Reclassification        (2.3)        -          (2.4)                  -  (4.7)
                                                                               
At 31 March 2004         82.2     31.3           20.3                3.3  137.1
                                                                               

Trading provisions include royalty audit and other trading provisions charged  
through operating profit before exceptional items, it also includes            
restructuring and reorganisation provisions charged through operating          
exceptional items.  £63.5m of the £82.2m are restructuring and reorganisation  
provisions which will be utilised in the short term (2003: £19.5m of £50.5m).  
                                                                               
The majority of the disposal and fundamental reorganisation provision will be  
utilised in the short term.                                                    
                                                                               
The pension provisions arise in overseas companies in respect of state schemes 
and employees covered by the Group's unfunded schemes.                         
                                                                               

NOTE 10 - INVESTMENTS

The Group is considered to have acquired the 50% of Jobete Music Co., Inc.     
which it did not previously own on 10 April 2003.  The consideration was       
payable in two tranches, US$ 109.3m on 10 April 2003 and US$78.3m on 1 April   
2004 . It had acquired an initial 50% of Jobete Music Co., Inc. in 1997.       
Jobete Music Co., Inc. owns the Jobete song catalogue, one of the world's      
premier music publishing catalogues containing the classic standards of the    
Motown era.