17 October 2005
EMI GROUP plc
Trading update - six months ended 30 September 2005
EMI Group is today providing a regular trading update for the six months ended
30 September 2005 in advance of its interim results announcement which is
scheduled for 16 November 2005.
EMI Music has gained market share in the half year period and expects to report
constant currency revenue growth of approximately 4.5%. Revenue growth on a pre
IFRS basis would be approximately 6.5%. The lower growth rate under IFRS
reflects the reclassification to revenue of income from jointly controlled
operations. Revenue growth has been delivered against a backdrop of a weaker
than expected recorded music market and reflects successful releases from a
range of EMI Music artists including Coldplay, Gorillaz, The Rolling Stones,
Paul McCartney, Keith Urban and KT Tunstall. These higher revenues, together
with cost savings from our restructuring programme announced in March 2004, are
expected to more than offset higher marketing costs due to a heavier release
schedule, higher share-based pay and pension charges under IFRS and inflation
in some fixed costs. This is expected to result in a year-on-year improvement
in the divisional operating margin under IFRS of approximately one percentage
EMI Music Publishing is expected to report constant currency revenue growth of
approximately 5.5%. All revenue streams are expected to show growth, with
synchronisation sales continuing to exhibit particular strength. Operating
profit is expected to be approximately in line with the prior year period
reflecting higher share-based pay and pension charges under IFRS and costs
being more first half weighted this year.
Digital revenues in both divisions continue to enjoy very strong growth
Group net debt is expected to be approximately £1.06 billion at the interim
stage, about £60m higher than the prior year interim level due mainly to a
higher working capital outflow reflecting higher September sales. Net finance
costs for the period are expected to be approximately £47m due to higher
interest rates, lower amortisation of swap gains, lower notional net interest
on pension fund assets under IFRS and higher debt.
Overall, the Group expects to report growth of around 9% in profit before tax,
amortisation and exceptional items (`adjusted PBT') for the first half of the
financial year and remains on track to deliver in line with its expectations
for the full financial year.
The figures shown are unaudited and hence may vary from the final numbers that
will be reported.
All figures are at statutory rates unless otherwise stated.
Under IFRS, the share of income that EMI Music earns from the sale of goods by
jointly controlled operations is reclassified as revenue. This was previously
included within Other Operating Income.
All statements relating to profit refer to profit pre exceptional charges,
remeasurements and amortisation of music copyrights and intangibles.
EMI Group plc
Amanda Conroy Corporate Communications +44 20 7795 7529
Claudia Palmer Investor Relations +44 20 7795 7635
Susie Bell Investor Relations +44 20 7795 7971
Sonia Shah Investor Relations +44 20 7795 7625
Brunswick Group LLP
Patrick Handley +44 20 7404 5959