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EMI Group PLC (EMI)

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Friday 19 November, 2004

EMI Group PLC

Interim Results


19 November 2004

EMI GROUP PLC RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2004

STRONG IMPROVEMENT IN PROFITABILITY

At constant currency:

  * Total operating profit up 8.1%
   
  * 
      + EMI Music operating profit up 18.4%, despite more second-half weighted
        release schedule
       
      + EMI Music Publishing continues steady progress with sales up 1.1% and
        operating profit up 1.7%
       
  * Return on sales improved in both divisions, up 1.2% to 9.5% at Group level
   
  * Adjusted pre-tax profit up 9.0%
   
  * Group turnover declined by 5.4%, reflecting weighting of EMI Music's
    release schedule to H2, with fewer major releases in H1
   
  * Group digital sales more than quadrupled with a six-fold increase in EMI
    Music
   
  * Adjusted diluted earnings per share up 13.4% (up 1.5% on a reported basis)
   
  * Net debt driven by restructuring costs, deferred acquisition spend and the
    phasing of the release schedule
   
  * Interim dividend maintained at 2.0p per share
   
  * On track to meet full year expectations
   
Financial highlights

                                                                Change %       
                                                                               
(£m, unless noted)                        2004       2003   Reported   Constant
                                                                 (i)           
                                                                       Currency
                                                                               
Group turnover                           851.0      960.3      -11.4       -5.4
                                                                               
Total operating profit (ii)               80.1       79.9       +0.3       +8.1
                                                                               
Return on sales (iii)                     9.4%       8.3%                      
                                                                               
Adjusted profit before tax (iv)           36.9       39.8       -7.3       +9.0
                                                                               
Adjusted diluted earnings per share       3.3p       3.2p       +1.5      +13.4
(iv)                                                                           
                                                                               
Basic earnings per share                (0.1)p       1.2p                      
                                                                               
Dividend per share                        2.0p       2.0p                      
                                                                               
Operating cash flow                     (33.7)       45.0                      
                                                                               
Net debt                                 976.2      946.8                      

Notes:

 i. Sterling's recent strength against major currencies had an adverse exchange
    rate impact on reported results
   
ii. Before operating exceptional items and amortisation of goodwill and music
    copyrights and after share of operating profit in associates
   
iii. Total operating profit (see (ii)) as a percentage of Group turnover
   
iv. Before both operating and non-operating exceptional items and amortisation
    of goodwill and music copyrights
   
Eric Nicoli, Chairman, said "EMI has made a significant improvement in the
profitability of both businesses in the first six months of the financial year.
This is driven by our on-going commitment to efficiency improvements and
thoughtful investment, the initial benefits from this year's recorded music
restructuring and the recent outsourcing of our manufacturing in Europe and the
US. The constant currency revenue decline reflects the phasing of our release
schedule which, as expected, is more second-half weighted than it has been in
previous years.

"We have seen an improving trend in the global recorded music industry. The
industry decline of 1.3% for our first six months represents a significant
improvement on the 9.6% decline seen in the same period of the previous year.
The legitimate digital music market continues to expand rapidly and we remain
confident that digital represents a key driver for future industry growth.

"As expected, the second half of our financial year has started well. Releases
from EMI Music during October and November, including new studio albums from A
Perfect Circle and Chingy, greatest hits albums from Robbie Williams, Tina
Turner, Placebo and Blue, and a live album from The Rolling Stones, have all
enjoyed significant success since release. EMI Music turnover for October and
November to date is well ahead of last year, significantly reducing the
first-half decline. For the 12 months to the end of October, we have maintained
our market share.

"EMI Music Publishing is enjoying strong market share improvement in its major
markets and continues to benefit from the expansion of music consumption
through digital channels.

"Given the positive overall trend in the global music market over the past year
and the expected high levels of release activity across the industry in the
months ahead, we are confident that we will see a substantial and very welcome
full-year improvement in the performance of the recorded music market. We are
reaffirming our previously indicated range of 0% to -4% for the market as a
whole.

"We have an especially strong second-half release schedule - in quality as well
as quantity - and we have already seen a significant year-on-year pick up in
our sales since the end of September. This, along with the strong growth of
music DVDs and the explosive growth in our digital market activity, leaves us
well placed to maintain our market share for the full year.

"This trading momentum in recorded music, together with the on-going strength
of EMI Music Publishing and the continuing flow of benefits from our
restructuring initiatives, keeps us well on track to deliver our financial
objectives for the full year.

"EMI is fully focused on results and on continuing to deliver superior
performance. We have the music, strategies and management to do this."

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            
                                                                               
Pam Small                                                                      
                                                                               
Mark Antelme                                                                   

A live webcast of EMI's presentation to investors will take place at 9:00am (UK
time) today, 19 November, and can be accessed via the Company's web site 
www.emigroup.com. An archived version of the webcast will be available for
viewing shortly thereafter.

EMI GROUP PLC RESULTS FOR SIX MONTHS ENDED 30 SEPTEMBER 2004

FULL STATEMENT

Chairman's statement

For the six months to 30 September 2004, Group turnover declined to £851.0m,
reflecting the planned phasing of our recorded music sales for the full
financial year and the negative impact of exchange rate movements during the
period. EMI has significantly improved its underlying level of profitability in
the first half with total operating profit increasing by 8.1% on a constant
currency basis. Return on sales improved to 9.4% from 8.3% in the prior year.

The Group made an adjusted pre-tax profit of £36.9m and adjusted diluted
earnings per share of 3.3p, a 1.5% increase on 3.2p in the prior year.

The Board has declared an interim dividend of 2.0p per share, in line with last
year's level.

Given the global nature of our business, exchange rate movements often have an
impact on our reported results. With Sterling's recent strengthening against
most major currencies including the US Dollar, Euro and Yen, we have
particularly felt the translation impact from currency movements in the first
half. Exchange rate movements reduced Group sales by 6% and reduced total
operating profit by £6.3m.

Group turnover was down by 5.4% on a constant currency basis. This decline was
entirely driven by EMI Music and the phasing of its release schedule which, as
signalled at the start of the year, will give a higher proportion of our major
releases in the second half of the financial year than in prior years. EMI
Music Publishing delivered a 1.1% increase in turnover on a constant currency
basis.

EMI Music enjoyed first-half success from both newer, developing artists, such
as Joss Stone, Keith Urban and Yellowcard, and also from our more established
artists including The Beastie Boys, Norah Jones, Lenny Kravitz, Hikaru Utada
and Anita Baker.

EMI Music's operating profit increased by an impressive 18.4% at constant
currency with the operating margin up by a full percentage point, despite the
decline in turnover. This improvement in profitability was driven by a number
of factors including the good progress we made with restructuring some of our
labels and the artist roster, especially in Europe, an initiative which was
announced in March 2004. In the first half, we also successfully completed the
outsourcing of our manufacturing in Europe and the US. We remain on track to
deliver the announced annualised cost savings of £50m, of which at least £25m
will be in this financial year and the remainder in the next.

EMI Music Publishing delivered both improved sales and profit in the first half
on a constant currency basis, reaffirming its position as the world's
pre-eminent music publisher. The management team has once again demonstrated
the ability not only to increase the strength of our song catalogue but also to
maximise the uses of these songs. Strong growth in performance and
synchronisation revenues offset weakness in mechanical revenues and, at the
same time, helped to improve return on sales.

During the first half, we continued to see an improving trend in the global
recorded music industry with the decline in the global market reduced to 1.3%
during the period. This represents not only a significant improvement on the
same period last year but, also, an improvement on the second half of the last
financial year. The US market showed attractive growth during the period. The
US industry release schedule for November looks strong and we believe the
market is well positioned structurally for growth going forward. The Japanese
market appears to be stabilising, improving significantly from the same period
last year. The UK market continues to be solid. Continental Europe has been the
most difficult region, experiencing significant declines during the period.

The development of the legitimate digital music marketplace continues to make
significant progress and I am very encouraged to report that EMI's digital
revenues more than quadrupled at constant currency in the first half and now
represent more than 2% of Group turnover. In June, Apple launched its iTunes
service in the UK, France and Germany. Take-up rates of this music service
continue to increase rapidly with the US store now selling more than 200m songs
on an annualised basis. Microsoft launched its digital music offering, MSN
Music, in October. The compatibility of MSN Music with more than 70 mobile
music devices is an important feature which has the potential to take digital
music to the mass consumer. We see many exciting opportunities in mobile music
such as the recent Robbie Williams' offering - this was the first release of an
artist's entire album, plus video content, on a memory card that inserts
directly into a mobile phone. EMI, as a progressive and innovative
music-content company, remains committed to embracing and maximising the
opportunities presented by advances in technology and changes in consumer
trends.

In the first half, the music industry further heightened its campaign to fight
piracy. Most recently the IFPI, which represents the recording industry
worldwide, announced that it had broadened its campaign in Europe and was
taking legal action against illegal music file sharing in the UK and France.
The US industry body, the RIAA, announced a further 750 lawsuits at the end of
October, with a particular focus on university campuses, bringing total
lawsuits to more than 5,700. We continue to believe that industry efforts such
as these, as well as our own actions to protect our music content against
piracy, are making a real difference.

As expected, the second half of our financial year has had a good start.
Releases from EMI Music during October and November, including new studio
albums from A Perfect Circle and Chingy, greatest hits albums from Robbie
Williams, Tina Turner, Placebo and Blue, and a live album from The Rolling
Stones, have all enjoyed significant success since release. EMI Music turnover
for October and November to date is well ahead of last year, significantly
reducing the first-half decline. For the 12 months to the end of October, we
have maintained our market share.

EMI Music Publishing is enjoying strong market share improvement in its major
markets and continues to benefit from the expansion of music consumption
through digital channels.

Given the positive overall trend in the global music market over the past year
and the expected high levels of release activity across the industry in the
months ahead, we are confident that we will see a substantial and very welcome
full-year improvement in the performance of the recorded music market. We are
reaffirming our previously indicated range of 0% to -4% for the market as a
whole.

We have an especially strong second-half release schedule - in quality as well
as quantity - and we have already seen a significant year-on-year pick up in
our sales since the end of September. This, along with the strong growth of
music DVDs and the explosive growth in our digital market activity, leaves us
well placed to maintain our market share for the full year.

This trading momentum in recorded music, together with the on-going strength of
EMI Music Publishing and the continuing flow of benefits from our restructuring
initiatives, keeps us well on track to deliver our financial objectives for the
full year.

EMI is fully focused on results and on continuing to deliver superior
performance. We have the music, strategies and management to do this.

EMI Music

Operating review

For the six months ended 30 September 2004, EMI Music saw a significant
improvement in its level of profitability. Operating profit of £30.9m
represents an increase of 18.4% at constant currency. This reflects continued
focus on tight cost management, benefits flowing through from the further
restructuring of some of our record labels and artist roster as well as the
outsourcing of our manufacturing in Europe and the US.

Turnover of £660.0m in the first half declined by 7.2% on a constant currency
basis and was consistent with the phasing of our releases for the full
financial year. As highlighted at the beginning of the year, we have scheduled
a greater number of our major releases for the second half than in prior years,
including more albums whose sales will be maximised by positioning their
release closer to the Christmas selling season.

We continue to focus on the development of long-term career artists who will
enjoy success with multiple albums. During the first half, we benefited from
this strategy with, in particular, good sell through from Norah Jones' first
and second albums, and both Joss Stone and Keith Urban enjoying strong sales
from new releases as well as previously released albums.

We also continue to drive our catalogue marketing programme and in the first
half had good sales from Dino: The Essential Dean Martin and The Sounds of
Summer from The Beach Boys. Our compilations business also made progress with
Now albums selling extremely well in both the UK and the US.

We continue to strengthen our North American business, building on the breadth
and depth of our artist roster. In the first half, we enjoyed success from a
number of creative sources across a range of music genres including: Joss Stone
of S-Curve; break-through acts Yellowcard and Houston of Capitol; country act
Keith Urban of Capitol Nashville; a successful relaunch of Anita Baker by Blue
Note; Christian music singer Steven Curtis Chapman of EMI CMG; and established
artists Lenny Kravitz of Virgin and The Beastie Boys of Capitol.

Our Japanese business delivered a strong performance in the first half
increasing both sales and profitability. Local artists, including Nori
Makihara, Hikaru Utada, Hitomi Yaida, 175R and Miki Imai, had top-selling
albums.

Latin America, while still a small part of the global business, enjoyed a
significant turnaround reporting an almost 50% improvement in first-half sales.

The release schedule in the UK & Ireland was, as expected, particularly light
in the first half resulting in lower sales and profitability in those markets.

In Continental Europe, the combination of ongoing, difficult market conditions
and a lighter release schedule resulted in a sharp decline in sales. We
continue to focus on developing local repertoire and saw good sales from local
artists Vasco Rossi, Tiziano Ferro, Pur, Gyllene Tider and Vikingarna in the
first half. Despite the sales decline, the recent restructuring initiatives,
which are focused on this region, resulted in a reduced cost base and generated
a significant increase in profitability for the first half.

The legitimate digital music market continues to take off with compelling new
products and services being launched. We remain excited about the digital
opportunity and are pleased to report strong growth in our digital revenues
from £2.1m to £12.2m in the first half.

Looking forward, we have a strong second-half release schedule. We have already
made a good start to the half with, in particular, the release of Robbie
Williams' Greatest Hits already selling over 3m copies. We also have Greatest
Hits albums from Kylie Minogue, Tina Turner, Placebo and Blue which, along with
a broad range of music DVD products, are very well positioned for the Christmas
retail season. Other second-half albums will be released by Chingy, A Perfect
Circle, Gorillaz, Coldplay, The Chemical Brothers, Glay, Fountains of Wayne and
Kishidan.

EMI Music Publishing

Operating review

For the six months ended 30 September 2004, EMI Music Publishing further
strengthened its position as the world's largest and most successful music
publishing business. This success reflects our focus on signing songwriters,
who are writing not only the hits of today but the classics of tomorrow, as
well as on maximising the uses for the songs in our catalogue. Turnover of £
191.0m and operating profit of £48.9m represents increases of 1.1% and 1.7%,
respectively, at constant currency.

Mechanical revenues remained under pressure in the first half, particularly
from the lagged impact of conditions in the global recorded music market.
Continued strong growth in performance and synchronisation revenues offset this
weakness in mechanical revenues.

EMI Music Publishing enjoyed strong chart positions in the first half
especially in the US, UK, Germany and France with releases from a range of
songwriters including Usher, Scissor Sisters, Alicia Keys, Jessica Simpson,
Kanye West, Kelis and Jay-Z.

Our synchronisation business grew at a very attractive rate, with sales
increasing by 13.7% at constant currency in the first half. Important new
synchronisation licence agreements were signed with Philips Electronics, Fisher
Price, BMW and Renault. We continue to be successful in licensing our songs to
television shows, including American Idol, The CBS Early Show and the OC in the
US and to films including Bridget Jones: The Edge of Reason, Shark Tale, Spider
Man 2 and Shrek 2.

Digital represents an exciting and fast-growing opportunity for us and, in
particular, in the mobile music marketplace, with ring tones. At EMI Music
Publishing, digital revenues more than doubled in the period from £2.8m to £
6.1m in the prior year and we expect to continue to see attractive growth in
digital going forward.

On a geographic basis, the most notable improvement in profit was seen in our
North American business which enjoyed strong double-digit growth in
performance, synchronisation and other income. Despite a prolonged slide in CD
sales in Germany, our operations there were able to increase profits, led by
strong growth in synchronisation and other revenues, most notably ring tones.
For the rest of Europe, our overall results were mixed. Our Latin America
business saw a marked turnaround in both sales and profitability.

Notable second-half releases include albums from Eminem, Good Charlotte, Sum41,
Robbie Williams and the Rolling Stones.

Financial review

Underlying trading

Group turnover decreased by 5.4% at constant currency in the first half of the
year. This comprised a decrease in first-half sales in EMI Music of 7.2% and an
increase of 1.1% in Music Publishing. The impact on translation of the
strengthening of Sterling against most major currencies during the period
resulted in a further 6.0% decline in turnover against 2003/04. Overall, Group
turnover at weighted average exchange rates declined from £960.3m in 2003/04 to
£851.0m in 2004/05.

In spite of the decrease in turnover, Group operating profit (EBITA)(i) for the
first half grew by 7.6% at constant currency. Both divisions contributed to
this increase. The EMI Music contribution, after allocation of central costs,
grew from £28.2m to £33.4m at constant currency, an increase of 18.4%, whilst
the Music Publishing contribution grew from £51.9m to £52.8m. All geographic
regions contributed to this increase, apart from the UK & Ireland. Particularly
noteworthy were the increases of 7.8% in North America and 1.8% in Continental
Europe. Exchange rate movements also negatively impacted operating profit,
reducing it by 8.0%. Post currency movements, Group operating profit (EBITA)(i)
marginally declined from £80.1m in 2003/04 to £79.8m in 2004/05.

The Group's share of profit before tax on its associated company investments
increased from a loss of £0.2m in 2003/04 to a profit of £0.3m in 2004/05.
Consequently, the total operating profit for the Group increased from £79.9m in
the first half of the prior year to £80.1m this year.

Group finance charges before exceptional items increased from £41.8m in the
first six months of 2003/04 (including £1.7m reported as an exceptional item)
to £43.2m. The increased interest charge was primarily a direct consequence of
the move to longer-term debt.

The Group tax charge before exceptional items decreased from £11.8m to £8.6m in
the first half of the year. The 2003/04 tax charge was reduced by a tax credit
on exceptional items of £5.8m resulting in a net charge in that half year of £
6.0m. As in prior years, the underlying tax rate used in the calculation of the
tax charge for the first half year is the proforma rate for the full year. For
2004/05, the rate is 23.4%.

The Group's adjusted profit on ordinary activities after taxation(ii) increased
from £28.0m in 2003/04 to £28.3m in 2004/05.

The adjusted basic earnings per share(ii) was 3.2p in the first half of 2004/
05, the same as in the prior year. Adjusted diluted earnings per share, the
calculation of which includes the impact of the potential conversion of
convertible bonds (and related bond interest) together with the possible
exercise of dilutive share options, increased over the same period from 3.2p to
3.3p.

Other items affecting earnings

Amortisation of goodwill and copyrights, including that on associates, amounted
to £26.2m in the first half in comparison with £24.5m last year. This increase
is almost entirely attributable to the acquisition of, and accounting for, the
final tranche of Jobete.

The Group is reporting net operating exceptional costs of £nil and
non-operating exceptional income of £0.7m, as against a charge of £21.8m and a
credit of £20.5m, respectively, in the first half of the prior year. The
operating exceptional costs in 2003/04 comprised £16.9m in respect of product
returns resulting from a retail destocking programme in Japan (following a
sharp market deterioration and exacerbated by amended trading terms) and £4.9m
in respect of a business reorganisation in Music Publishing. The non-operating
exceptional income in each half year resulted from gains on property sales.

The minority interest share of profit reversed from a credit of £2.9m in the
prior-year first half to a charge of £3.2m in 2004/05. This primarily reflected
the increase in profit in TOEMI, our Japanese recorded music business.

In recognition of the solid results in a demanding marketplace, the Board has
declared an interim dividend of 2.0p per share, in line with the interim
dividend last year.

Reported results

Group operating profit is £53.6m in comparison with £33.9m in the first six
months of 2003/04. The increase is largely the consequence of a decrease in the
operating net exceptional charge from £21.8m in the first half of 2003/04 to £
nil in 2004/05.

Profit on ordinary activities before taxation was £11.4m in the first half of
2004/05 as against £12.3m in the equivalent period of 2003/04.

Cash flow and net borrowings

The net cash outflow from operating activities of £33.7m for this year compares
with an inflow of £45.0m in the first half of the prior year. The outflow this
year was driven by exceptional expenditure relating to the restructuring and
outsourcing initiatives announced in March and an adverse working capital
movement of £89.9m reflecting the phasing of the release cycle at the balance
sheet date.

After net interest payments of £63.3m, tax payments of £17.5m, dividends to
shareholders and minorities of £16.6m and net investment expenditure of £80.0m,
the increase in net debt was £211.1m. After currency exchange losses of £18.0m
and a £1.6m issue of new capital, net debt was £976.2m, an increase of £227.5m
from £748.7m at 31 March 2004.

Notes:

 i. Group operating profit (EBITA) is before operating exceptional items and
    amortisation of goodwill and music copyrights and before share of operating
    profit in associates
   
ii. Before both operating and non-operating exceptional items and amortisation
    of goodwill and music copyrights
   
ATTACHMENTS

EMI GROUP PLC INTERIM REPORT 2004/05 (unaudited)

(a)      Financial highlights for the six months ended 30 September 2004.     
                                                                              
(b)      Consolidated profit and loss account for the six months ended 30     
         September 2004.                                                      
                                                                              
(c)      Consolidated balance sheet at 30 September 2004.                     
                                                                              
(d)      Statement of total recognised gains and losses for the six months    
         ended 30 September 2004.                                             
                                                                              
(d)      Reconciliation of movements in shareholders' funds for the six months
         ended 30 September 2004.                                             
                                                                              
(e)      Consolidated cash flow statement for the six months ended 30         
         September 2004.                                                      
                                                                              
(f)      Notes to the consolidated cash flow statement for the six months     
         ended 30 September 2004.                                             
                                                                              
(g)-(j)  Notes to the accounts for the six months ended 30 September 2004.    

                                                                Attachment (a)

FINANCIAL HIGHLIGHTS

for the six months ended 30 September 2004 (unaudited)

                                                     Six months      Six months
                                                          ended           ended
                                                   30 September    30 September
                                                           2004            2003
                                                                               
                                                                       Restated
                                                                               
                                         Notes               £m              £m
                                                                               
Group turnover                             2              851.0           960.3
                                                                               
EBITDA (i)                                                 91.3            99.1
                                                                               
Total operating profit (ii)                                80.1            79.9
                                                                               
Adjusted PBT(iii)                                          36.9            39.8
                                                                               
Profit before taxation                                     11.4            12.3
                                                                               
Adjusted diluted earnings per share                        3.3p            3.2p
(iv)                                                                           
                                                                               
Basic earnings per share                                 (0.1)p            1.2p
                                                                               
Dividend per share                         6               2.0p            2.0p
                                                                               
Return on sales (v)                                        9.4%            8.3%
                                                                               
Interest cover (vi)                                        2.1x            2.5x

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

                                                                 Attachment (b)

CONSOLIDATED PROFIT AND LOSS ACCOUNT

for the six months ended 30 September 2004 (unaudited)

                                          Six months ended     Six months ended
                                         30 September 2004    30 September 2003
                                                                               
                                        Total Before excep      Before    Total
                                                   items & excep items         
                                                    amortn    & amortn Restated
                                                                               
                                                              Restated         
                                                                               
                                           £m           £m          £m       £m
                                                                               
Group turnover (note 2)                 851.0        851.0       960.3    960.3
                                                                               
Group operating profit before            79.8         79.8        80.1     80.1
exceptional items and amortisation                                             
                                                                               
Operating exceptional items (note 3)        -            -           -   (21.8)
                                                                               
Group operating profit before            79.8         79.8        80.1     58.3
amortisation                                                                   
                                                                               
Amortisation                           (26.2)            -           -   (24.4)
                                                                               
Group operating profit (notes 2&3)       53.6         79.8        80.1     33.9
                                                                               
Share of operating profits (losses) in    0.3          0.3       (0.2)    (0.3)
associated undertakings                                                        
                                                                               
Total operating profit                   53.9         80.1        79.9     33.6
                                                                               
Non-operating exceptional items (note     0.7            -           -     20.5
3)                                                                             
                                                                               
Profit before finance charges            54.6         80.1        79.9     54.1
                                                                               
Group finance charges (inc. associated (43.2)       (43.2)      (40.1)   (41.8)
undertakings) (note 4)                                                         
                                                                               
Profit on ordinary activities before     11.4         36.9        39.8     12.3
taxation                                                                       
                                                                               
Taxation on profit on ordinary          (8.6)        (8.6)      (11.8)    (6.0)
activities (note 5)                                                            
                                                                               
Profit on ordinary activities after       2.8         28.3        28.0      6.3
taxation                                                                       
                                                                               
Minority interests (equity)             (3.2)                               2.9
                                                                               
(Loss) profit attributable to members   (0.4)                               9.2
of the Holding Company                                                         
                                                                               
Dividends (equity) (note 6)            (15.8)                            (15.5)
                                                                               
Transfer from profit and loss reserve  (16.2)                             (6.3)
                                                                               

Earnings per share (EPS)                  Six months ended     Six months ended
                                         30 September 2004    30 September 2003
                                                                               
                                                                       Restated
                                                                               
Basic earnings per Ordinary Share                   (0.1)p                 1.2p
(note 7)                                                                       
                                                                               
Diluted earnings per Ordinary Share                   0.0p                 1.2p
                                                                               
Adjusted basic earnings per Ordinary                  3.2p                 3.2p
Share (note 7)                                                                 
                                                                               
Adjusted diluted earnings per Ordinary                3.3p                 3.2p
Share (note 7)                                                                 
                                                                               
Adjusted earnings are included as they provide a better understanding of the   
underlying trading performance of the Group on a normalised basis.             

Average exchange rates for the period     Six months ended     Six months ended
                                         30 September 2004    30 September 2003
                                                                               
US$ to £1                                             1.81                 1.62
                                                                               
Euro to £1                                            1.49                 1.43
                                                                               
Yen to £1                                           198.78               189.03
                                                                               
The results for the period have been translated into Sterling at the           
appropriate average exchange rates.                                            

                                                                 Attachment (c)

CONSOLIDATED BALANCE SHEET

at 30 September 2004 (unaudited)

                                                            At 30         At 30
                                                   September 2004     September
                                                                           2003
                                                                               
                                                                       Restated
                                                                               
                                                               £m            £m
                                                                               
Fixed assets                                                                   
                                                                               
Music copyrights                                            434.3         450.3
                                                                               
Goodwill                                                     33.6          57.6
                                                                               
Tangible fixed assets                                       198.8         266.5
                                                                               
Investments                                                  21.1          21.8
                                                                               
                                                            687.8         796.2
                                                                               
Current assets                                                                 
                                                                               
Stocks                                                       29.1          37.1
                                                                               
Debtors, including deferred taxation                        796.0         875.8
                                                                               
Investments: liquid funds                                     2.7           1.1
                                                                               
Cash at bank and in hand and cash deposits                  152.8         127.5
                                                                               
                                                            980.6       1,041.5
                                                                               
Creditors: amounts falling due within one year                                 
                                                                               
Borrowings                                                 (21.0)        (49.5)
                                                                               
Other creditors                                         (1,103.7)     (1,163.7)
                                                                               
                                                        (1,124.7)     (1,213.2)
                                                                               
Net current liabilities                                   (144.1)       (171.7)
                                                                               
Total assets less current liabilities                       543.7         624.5
                                                                               
Creditors: amounts falling due after more than                                 
one year                                                                       
                                                                               
Borrowings                                              (1,110.7)     (1,025.9)
                                                                               
Other creditors                                            (71.9)       (112.9)
                                                                               
                                                        (1,182.6)     (1,138.8)
                                                                               
Provisions for liabilities and charges                    (108.7)        (89.7)
                                                                               
                                                          (747.6)       (604.0)
                                                                               
Capital and reserves                                                           
                                                                               
Called-up share capital                                     110.6         110.4
                                                                               
Share premium account                                       447.2         445.8
                                                                               
Capital redemption reserve and other reserves               752.9         733.5
                                                                               
Profit and loss reserve                                 (2,125.6)     (1,984.7)
                                                                               
Equity shareholders' funds                                (814.9)       (695.0)
                                                                               
Minority interests (equity)                                  67.3          91.0
                                                                               
                                                          (747.6)       (604.0)

Period-end exchange rates                                                      
                                                                               
                                             At 30 September 2004         At 30
                                                                      September
                                                                           2003
                                                                               
US$ to £1                                                    1.81          1.66
                                                                               
Euro to £1                                                   1.46          1.43
                                                                               
Yen to £1                                                  199.44        185.60
                                                                               
The balance sheet has been translated into Sterling at the appropriate         
period-end exchange rates.                                                     

                                                                 Attachment (d)

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

for the six months ended 30 September 2004 (unaudited)

                                                  Six months   Six months ended
                                                       ended  30 September 2003
                                                30 September                   
                                                        2004           Restated
                                                                               
                                                  £m      £m        £m       £m
                                                                               
(Loss) profit for the period                           (0.4)                9.2
                                                                               
Currency retranslation - Group                (16.9)              11.1         
                                                                               
Currency retranslation - associated                -             (0.2)         
undertakings                                                                   
                                                                               
Other recognised gains and losses                     (16.9)               10.9
                                                                               
Total recognised gains and losses relating            (17.3)               20.1
to the period                                                                  

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

for the six months ended 30 September 2004 (unaudited)

                                              Six months ended Six months ended
                                                  30 September     30 September
                                                          2004             2003
                                                                               
                                                                       Restated
                                                                               
                                                            £m               £m
                                                                               
Opening shareholders' funds                            (784.0)          (693.1)
                                                                               
Prior year adjustment                                        -            (7.3)
                                                                               
Opening shareholders' funds - restated                 (784.0)          (700.4)
                                                                               
(Loss) profit for the period                             (0.4)              9.2
                                                                               
Dividends (equity) (note 6)                             (15.8)           (15.5)
                                                                               
Goodwill - disposals and adjustments                     (0.3)                -
                                                                               
Other recognised gains and losses                       (16.9)             10.9
                                                                               
Employee Benefit Trust transactions                        0.9              0.8
                                                                               
Shares issued                                              1.6                -
                                                                               
Net (decease) increase in shareholders' funds           (30.9)              5.4
                                                                               
Closing shareholders' funds                            (814.9)          (695.0)

                                                                 Attachment (e)

CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 September 2004 (unaudited)

                                                      Six months     Six months
                                                           ended          ended
                                                    30 September   30 September
                                                            2004           2003
                                                                               
                                                              £m             £m
                                                                               
Net cash (outflow) inflow from operating                  (33.7)           45.0
activities (note a)                                                            
                                                                               
Dividends received from associated undertakings                -              -
                                                                               
Returns on investments and servicing of finance                                
                                                                               
Net interest paid                                         (63.3)         (57.8)
                                                                               
Dividends paid to minorities                               (0.9)          (2.9)
                                                                               
Net cash outflow from returns on investments and          (64.2)         (60.7)
servicing of finance                                                           
                                                                               
Tax paid                                                  (17.5)         (14.5)
                                                                               
Net cash (outflow) inflow from capital                    (11.9)           17.0
expenditure and financial investment                                           
                                                                               
Net cash outflow from acquisitions and disposals          (68.1)         (82.2)
(note 8)                                                                       
                                                                               
Equity dividends paid                                     (15.7)         (15.7)
                                                                               
Net cash outflow before management of liquid             (211.1)        (111.1)
resources and financing                                                        
                                                                               
Issue of ordinary share capital                              1.6              -
                                                                               
Management of liquid resources (note b)                    (0.4)          (1.7)
                                                                               
Financing: New loans (note b)                               81.2          201.0
                                                                               
           Loans repaid (note b)                          (44.5)         (79.1)
                                                                               
Net cash inflow from management of liquid                   37.9          120.2
resources and financing                                                        
                                                                               
(Decrease) increase in cash (note b)                     (173.2)            9.1

Reconciliation of net cash flow to movement in net debt                        
                                                                               
                                                Six months ended     Six months
                                                                          ended
                                               30 September 2004   30 September
                                                                           2003
                                                                               
                                                              £m             £m
                                                                               
(Decrease) increase in cash                              (173.2)            9.1
                                                                               
Cash outflow from increase in liquid                         0.4            1.7
resources                                                                      
                                                                               
Cash inflow from increase in loans                        (81.2)        (201.0)
                                                                               
Cash outflow from repayment of loans                        44.5           79.1
                                                                               
Change in net debt resulting from cash                   (209.5)        (111.1)
flows                                                                          
                                                                               
Loans acquired                                                 -          (0.4)
                                                                               
Exchange differences                                      (18.0)           24.5
                                                                               
Movement in net debt                                     (227.5)         (87.0)
                                                                               
Net debt at beginning of period                          (748.7)        (859.8)
                                                                               
Net debt at end of period                                (976.2)        (946.8)

                                                                 Attachment (f)

NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 September 2004 (unaudited)

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

                                                     Six months      Six months
                                                          ended           ended
                                                   30 September    30 September
                                                           2004            2003
                                                                               
                                                                       Restated
                                                                               
                                                             £m              £m
                                                                               
Group operating profit                                     53.6            33.9
                                                                               
Depreciation charge                                        11.5            19.0
                                                                               
Amortisation charge:                                                           
                                                                               
     Music copyrights                                      24.1            22.3
                                                                               
     Goodwill                                               2.1             2.1
                                                                               
ESOP transactions                                           1.2           (0.4)
                                                                               
Amounts provided                                            3.3             3.9
                                                                               
Provisions utilised                                      (39.6)          (21.1)
                                                                               
(Increase) decrease in working capital:                                        
                                                                               
     Stock                                                (0.7)           (0.9)
                                                                               
     Debtors                                               12.4            39.9
                                                                               
     Creditors                                          (101.6)          (53.7)
                                                                               
Net cash (outflow) inflow from operating                 (33.7)            45.0
activities                                                                     

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

                              At  Cash flow Acquisitions   Exchange       At 30
                                                           movement   September
                         1 April             (disposals)                   2004
                            2004                                               
                                                                               
                              £m         £m           £m         £m          £m
                                                                               
Cash at bank and in        342.7    (187.3)            -      (2.9)       152.5
hand                                                                           
                                                                               
Overdrafts                (32.5)       14.1            -        0.7      (17.7)
                                                                               
Cash                       310.2    (173.2)            -      (2.2)       134.8
                                                                               
Debt due after more    (1,058.0)     (36.6)            -     (16.0)   (1,110.6)
than one year                                                                  
                                                                               
Debt due within one        (3.3)      (0.1)            -        0.1       (3.3)
year                                                                           
                                                                               
Finance leases             (0.1)          -            -          -       (0.1)
                                                                               
Financing              (1,061.4)    (36.7)*            -     (15.9)   (1,114.0)
                                                                               
Investments: liquid          1.8        0.8            -        0.1         2.7
funds                                                                          
                                                                               
Cash deposits                0.7      (0.4)            -          -         0.3
                                                                               
Liquid resources             2.5        0.4            -        0.1         3.0
                                                                               
Total                    (748.7)    (209.5)            -     (18.0)     (976.2)
                                                                               
* Cash flow on financing of £36.7m is split between new loans of £(81.2)m and  
loans repaid of £44.5m.                                                        
                                                                               
The Group has cash and liquid resources balances of £33.9m held with banks     
within the UK and £121.6m held with banks outside, but freely transferable to, 
the UK.                                                                        
                                                                               
The following definitions have been used:                                      
                                                                               
Cash: Cash in hand and deposits repayable on demand if available within 24     
hours without penalty, including overdrafts.                                   
                                                                               
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 (g)

NOTES TO THE FINANCIAL STATEMENTS

for the six months ended 30 September 2004 (unaudited)

NOTE 1 - ACCOUNTING POLICIES - basis of preparation

The interim financial information comprises the accounts of the Company and its
subsidiaries prepared under the historic cost convention and in accordance with
applicable accounting standards. During the financial year ended 31 March 2004,
the Urgent Issues Tasks Force issued UITF38 - Accounting for ESOP Trusts and   
UITF 17 (Revised) - Employee Share Schemes. Both were early adopted by the     
Group with effect from 1 April 2003 and the comparative figures for the period 
ended 30 September 2003 have been restated where appropriate. The results for  
the six months ended 30 September 2004 and 30 September 2003 represent         
continuing operations, except where expressly stated on the consolidated profit
and loss account and in the notes to the financial statements.                 
                                                                               
The interim financial information has been prepared on the basis of the        
accounting policies set out in the Group's financial statements for the year   
ended 31 March 2004. Statutory accounts for the year ended 31 March 2004, which
incorporate an unqualified auditor's report, have been filed with the Registrar
of Companies.                                                                  
                                                                               

NOTE 2 - SEGMENTAL ANALYSES

                                    Six months ended 30          Six months ended 30
                                         September 2004               September 2003
                                                                                    
                             Recorded      Music  Total Recorded      Music    Total
                                Music Publishing           Music Publishing Restated
                                                        Restated   Restated         
                                                                                    
                                   £m         £m     £m       £m         £m       £m
                                                                                    
By class of business:                                                               
                                                                                    
Group turnover                  660.0      191.0  851.0    758.6      201.7    960.3
                                                                                    
Group operating profit           30.9       48.9   79.8     28.2       51.9     80.1
before exceptional items and                                                        
amortisation                                                                        
                                                                                    
Operating exceptional items     (3.5)     (22.7) (26.2)   (20.6)     (25.6)   (46.2)
and amortisation                                                                    
                                                                                    
Group operating profit           27.4       26.2   53.6      7.6       26.3     33.9
                                                                                    
Non-operating exceptional         0.7          -    0.7     20.5          -     20.5
items                                                                               
                                                                                    
Share of operating profits          -        0.3    0.3    (0.5)        0.2    (0.3)
(losses) in associated                                                              
undertakings                                                                        
                                                                                    
Finance charges                                  (43.2)                       (41.8)
                                                                                    
Profit on ordinary                                 11.4                         12.3
activities before taxation                                                          
                                                                                    
Operating assets                 64.3      403.1  467.4    197.2      406.5    603.7

                                                                 Attachment (h)

NOTES TO THE FINANCIAL STATEMENTS continued

for the six months ended 30 September 2004 (unaudited)

NOTE 2 - SEGMENTAL ANALYSES continued

                                            Six months ended 30 September 2004
                                                                              
                        United Rest of   Latin   North    Asia    Other  Total
                       Kingdom  Europe America America Pacific                
                                                                              
                            £m      £m      £m      £m      £m       £m     £m
                                                                              
By origin:                                                                    
                                                                              
Group turnover           117.9   241.4    23.5   287.0   172.1      9.1  851.0
                                                                              
Group operating profit     9.2    16.5     0.2    41.9    10.7      1.3   79.8
before exceptional                                                            
items and amortisation                                                        
                                                                              
Operating exceptional                                                   (26.2)
items and amortisation                                                        
                                                                              
Group operating profit                                                    53.6
                                                                              
Non-operating                                                              0.7
exceptional items                                                             
                                                                              
Share of operating                                                         0.3
profits in associated                                                         
undertakings                                                                  
                                                                              
Finance charges                                                         (43.2)
                                                                              
Profit on ordinary                                                        11.4
activities before                                                             
taxation                                                                      
                                                                              
Operating assets          53.4     5.8     2.0   308.0    97.3      0.9  467.4

                                             Six months ended 30 September 2003    
                                                                                   
                       United  Rest of    Latin    North     Asia    Other    Total
                      Kingdom   Europe  America  America  Pacific Restated Restated
                     Restated Restated Restated Restated Restated                  
                                                                                   
                           £m       £m       £m       £m       £m       £m       £m
                                                                                   
By origin:                                                                         
                                                                                   
Group turnover          129.3    303.0     16.8    328.5    173.8      8.9    960.3
                                                                                   
Group operating          22.3     17.0    (5.4)     43.6      1.7      0.9     80.1
profit (loss) before                                                               
exceptional items                                                                  
and amortisation                                                                   
                                                                                   
Operating                                                                    (46.2)
exceptional items                                                                  
and amortisation                                                                   
                                                                                   
Group operating                                                                33.9
profit                                                                             
                                                                                   
Non-operating                                                                  20.5
exceptional items                                                                  
                                                                                   
Share of operating                                                            (0.3)
losses in associated                                                               
undertakings                                                                       
                                                                                   
Finance charges                                                              (41.8)
                                                                                   
Profit on ordinary                                                             12.3
activities before                                                                  
taxation                                                                           
                                                                                   
Operating assets         45.0     64.2      3.7    358.0    127.5      5.3    603.7

Operating profit is analysed instead of profit before taxation as finance      
charges are borne centrally and are not allocated to the operating businesses. 
Operating assets include deferred consideration of £1.2m (2003/04: £25.7m):    
this amount is not conditional upon the satisfaction of future performance     
criteria.                                                                      

                                                                 Attachment (i)

NOTES TO THE FINANCIAL STATEMENTS continued

for the six months ended 30 September 2004 (unaudited)

NOTE 3 - EXCEPTIONAL ITEMS

(i) Operating exceptional items

                                                      Six months     Six months
                                                           ended          ended
                                                                               
                                                    30 September   30 September
                                                            2004           2003
                                                                               
                                                              £m             £m
                                                                               
Impact of retail destocking in Japan, including                -         (16.9)
amended returns terms                                                          
                                                                               
Release of overprovision for reorganisation                  2.6              -
costs charged in prior year                                                    
                                                                               
Reorganisation costs*                                      (2.6)          (4.9)
                                                                               
Total                                                          -         (21.8)
                                                                               
The attributable tax benefit is £nil (2003/04: £                               
7.4m).                                                                         

* The 2004/05 costs refer to headcount reduction in Recorded Music, (2003/04 -
headcount reduction and system write offs in Music Publishing).

(ii) Non-operating exceptional items

                                                      Six months     Six months
                                                           ended          ended
                                                                               
                                                    30 September   30 September
                                                            2004           2003
                                                                               
                                                              £m             £m
                                                                               
Net gain on sale of fixed assets                             0.7           20.5
                                                                               
Total                                                        0.7           20.5
                                                                               
The attributable tax charge is £nil (2003/04: £                                
1.6m).                                                                         

NOTE 4 - FINANCE CHARGES

                                                    Six months     Six months  
                                                         ended          ended  
                                                                               
                                                  30 September   30 September  
                                                          2004           2003  
                                                                               
                                                            £m             £m  
                                                                               
Interest payable on:                                                           
                                                                               
     Bank overdrafts and loans                            37.9           33.5  
                                                                               
     Other                                                 6.3            7.6  
                                                                               
                                                          44.2           41.1  
                                                                               
Interest receivable on:                                                        
                                                                               
     Bank balances                                       (0.9)          (0.9)  
                                                                               
     Other                                               (0.1)          (0.1)  
                                                                               
                                                         (1.0)          (1.0)  
                                                                               
Group finance charges (including associated               43.2           40.1  
undertakings)                                                                  
                                                                               
Exceptional refinancing costs                                -            1.7  
                                                                               
Total                                                     43.2           41.8  
                                                                               
Finance charges for associated undertakings are                                
£nil (2003/04: £nil).                                                          
                                                                               
Finance charges include £3.4m (2003/04: £1.7m) of one-off costs, charges or    
expenses that are not continuing, regular or periodic.                         

                                                                 Attachment (j)

NOTES TO THE FINANCIAL STATEMENTS continued

for the six months ended 30 September 2004 (unaudited)

NOTE 5 - TAXATION

The tax charge for the six months ended 30 September 2004 has been calculated  
by reference to the proforma tax rate for the year ending 31 March 2005. The   
total tax charge of £8.6m (2003/04: £6.0m) includes £nil on exceptional items  
(2003/04: £5.8m credit).                                                       

NOTE 6 - DIVIDENDS (equity)

                                                      Six months     Six months
                                                           ended          ended
                                                                               
                                                    30 September   30 September
                                                            2004           2003
                                                                               
                                                              £m             £m
                                                                               
Ordinary dividends:                                                            
                                                                               
Interim                                                     15.7           15.8
                                                                               
Adjustment to the 2004 final dividend                        0.1              -
                                                                               
Adjustment to the 2003 final dividend                          -          (0.3)
                                                                               
Total                                                       15.8           15.5
                                                                               
The interim dividend of 2.0p per share will be paid on 1 April 2005 to         
shareholders on the register at the close of business on 4 March 2005.         

NOTE 7 - EARNINGS PER ORDINARY SHARE (EPS)

                                                    Six months Six months ended
                                                         ended                 
                                                                   30 September
                                                  30 September             2003
                                                          2004                 
                                                                       Restated
                                                                               
                                                    £m     Per      £m      Per
                                                         share            share
                                                                               
Earnings/basic EPS                               (0.4)  (0.1)p     9.2     1.2p
                                                                               
Adjustments:                                                                   
                                                                               
Exceptional items and attributable taxation      (0.7)  (0.1)p   (2.8)   (0.3)p
                                                                               
Amortisation of goodwill and music copyrights     26.2    3.4p    24.5     3.1p
                                                                               
Minority interest (music copyright                   -       -   (1.1)   (0.2)p
amortisation)                                                                  
                                                                               
Minority interest (operating exceptional items       -       -   (4.4)   (0.6)p
and attributable taxation)                                                     
                                                                               
Adjusted earnings/adjusted EPS                    25.1    3.2p    25.4     3.2p
                                                                               
Convertible bond interest                          3.5    0.1p       -        -
                                                                               
Adjusted earnings/adjusted diluted EPS            28.6    3.3p    25.4     3.2p
                                                                               
Basic                                                                          
                                                                               
Weighted average number of Ordinary Shares in           785.3m           784.3m
issue                                                                          
                                                                               
Diluted                                                                        
                                                                               
Weighted average number of Ordinary Shares              872.4m           785.1m
                                                                               
The weighted average number of Ordinary Shares used in the diluted earnings    
per share calculations, 872.4m (2003/04: 785.1m), is the weighted average      
number of Ordinary Shares in issue, 785.3m (2003/04: 784.3m), plus adjustments 
for dilutive share options, 8.3m (2003/04: 0.8m), plus adjustments for         
convertible bonds, 78.8m (2003/04: nil).                                       
                                                                               
Adjusted earnings are included as they provide a better understanding of the   
underlying trading performance of the Group on a normalised basis.             

NOTE 8 - INVESTMENTS

During the period, the Group made deferred consideration payments of £64.3m    
relating to acquisitions made in prior years.                                  
                                                                               
A further £3.0m was invested in buying out minority shareholders in the period.