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EMI Group PLC (EMI)

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Monday 21 May, 2007

EMI Group PLC

Final Results


                                                                               
21 May 2007

EMI GROUP PLC PRELIMINARY RESULTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007

  * Underlying Group revenue fell by 15.8% on a reported basis and by 12.1% at
    constant currency
   
  * As announced on 18 April 2007
   
  * EMI Music revenue fell by 15.0% at constant currency
   
  * EMI Music Publishing outperformed the recorded music market with revenue
    declining by only 0.9% at constant currency
   
  * Group digital revenue increased by 46.5% from £112.1m to £164.2m on a
    reported basis representing 9.4% of total underlying Group revenue
   
  * Continued success in finding and breaking long-term talent with top
    performing artists and songwriters in the financial year including:
   
  * EMI Music - Corinne Bailey Rae, Depeche Mode, Herbert Groenemeyer,
    Joss Stone, Keith Urban, Lily Allen, Norah Jones, RBD, Robbie Williams,
    The Beatles, The Kooks, 30 Seconds to Mars and Utada Hikaru
   
  * EMI Music Publishing - Amy Winehouse, Arctic Monkeys, Beyonce, Fergie, Gym
    Class Heroes, James Blunt, Jay-Z, Nelly Furtado, Norah Jones, Scissor
    Sisters and Vasco Rossi
   
  * EMI Music operating margin reduced from 8.7% in the prior year to 3.3%,
    driven primarily by lower sales reflecting tough industry conditions and an
    unprecedented level of stock returns
   
  * EMI Music Publishing operating margin improved from 25.1% to 26.3%, due to
    a reduction in the cost base and favourable revenue mix
   
  * Underlying profit before tax decreased by 60.6% to £62.7m from £159.3m
   
  * Underlying diluted earnings per share decreased to 5.8p from 15.7p
   
  * As announced on 18 April, further dividend payments have been suspended
    until the benefits of the restructuring programme have been fully realised.
    The interim dividend of 2.0p per share has been paid
   
Financial Summary

                                                Year Ended      Year Ended
                                                                          
                                             31 March 2007   31 March 2006
                                                                          
                                                        £m              £m
                                                                          
Underlying Group revenue                           1,751.5         2,079.9
                                                                          
EBITDA(i)                                            174.0           275.8
                                                                          
Group profit from operations (EBITA)(ii)             150.5           250.5
                                                                          
Underlying PBT(iii)                                   62.7           159.3
                                                                          
Total (loss) profit before taxation                (263.6)           118.1
                                                                          
Underlying diluted earnings per share(iv)             5.8p           15.7p
                                                                          
Basic (loss) earnings per share                    (36.3)p           10.9p
                                                                          
Dividend per share                                    8.0p            8.0p
                                                                          
Return on sales(v)                                    8.6%           12.0%
                                                                          
Interest cover(vi)                                    1.9x            3.0x

 (i) EBITDA is Group profit from operations before depreciation, operating     
     exceptional items, amortisation, interest and tax                         
                                                                               
(ii) Group profit from operations (EBITA) is before operating exceptional      
     items, amortisation, interest and tax.                                    
                                                                               
(iii Underlying PBT is before exceptional items, amortisation and tax.         
                                                                               
(iv) Underlying diluted earnings per share is before exceptional items and     
     amortisation.                                                             
                                                                               
 (v) Return on sales is defined as Group profit from operations before         
     operating exceptional items and amortisation as a percentage of Group     
     revenue.                                                                  
                                                                               
(vi) Interest cover is defined as the number of times EBITDA is greater than   
     Group finance charges, excluding non-periodic interest and non-standard   
     charges.                                                                  

Exceptional items include operating exceptional items and financial exceptional
items. Operating exceptional items include impairment of goodwill and
intangible assets, gains/(losses) on disposal of property, plant and equipment
and remeasurement of listed investments. Finance exceptional items include
remeasurement of financial assets and liabilities to be included within finance
charges and exceptional refinancing costs.

Eric Nicoli, CEO of EMI Group, said, "This has been a challenging year for EMI
Group primarily as a result of the worsening market conditions which affected
the entire recorded music industry with revenue declines in every major music
market across the world.

"This led us to implement a restructuring plan which, as well as removing cost
from the business, will fundamentally change the way we do business. Moving
forward, we will realign our investment focus and direct our resources to areas
where we will make higher and more sustainable returns.

"We believe that digital sales will continue to grow strongly and are excited
about the possibilities offered by partnerships and new business models across
both our divisions.

"During the past year, we have multiplied our digital distribution channels by
entering into agreements with partners who will make our music available across
their platforms in many different ways. Our digital activity is extensive and
pro-active and we are open to experimenting with all emerging business models.
In April 2007, we were the first music major to make available a new digital
rights management (DRM)-free premium sound quality download product as part of
our strategy to provide consumers with compelling music propositions.

"We remain confident about our long-term future: while current trading
conditions are difficult, consumers' appetite for music has never been greater.
Although fewer CDs are being purchased, people are consuming more music in more
ways than ever before. We are positioning ourselves to capture these new and
expanding revenue opportunities as we build a progressive music business which
is truly consumer focused and well-equipped for the digital age."

EMI Group plc

Amanda Conroy        Corporate Communications    +44 20 7795 7529          
                                                                           
Pippa Strong         Investor Relations          +44 20 7795 7681          

Brunswick Group LLP

Patrick Handley                                  +44 20 7404 5959          

A live audio webcast of EMI's conference call to investors and analysts will
take place at 8.00am (UK time) on 22 May 2007, and can be accessed via the
Company's web site, www.emigroup.com. An archive will be available for viewing
shortly thereafter.

EMI Group performance review

Recorded music industry

EMI Music operates in a marketplace that continues to undergo significant
change, primarily driven by the rapid development of the digital music
industry. Global digital markets increased by 68.3% in value over the financial
year to account for 13.2% of the total industry, with both mobile and fixed
line platforms enjoying strong growth. Challenging market conditions saw global
physical sales decline by 13.6% over the financial year, resulting in an
overall industry decline of 7.6% for the period.

The digital environment continues to be dynamic with new entrants, new services
and new devices. Consumers are now able to access up to 4m tracks in the
legitimate digital environment enjoying access to 24 hour music stores with
unlimited shelf space.

This year, more people were able to access the digital environment due to the
wide availability of broadband lines and music enabled mobile phones. In the
past year, mobile music in particular has developed strongly, fuelled by new
services such as full audio and video over the air delivery. The last year has
seen significant expansion of mobile entertainment market in the US. Music
videos and user generated content are also gaining in importance bolstered by
the popularity of services such as Yahoo! Music. This is creating new
commercial and promotional opportunities for artist videos. Furthermore, the
way people discover music is changing. The past year has also seen the
increasing popularity of social networking sites. This gives EMI a new way in
which to market artists and is also a valuable resource in gathering
information about consumer preferences. EMI continues to actively explore
commercial opportunities around social networking.

The industry has continued to make progress in combating both physical and
digital piracy. We have had notable legal victories against illegal peer to
peer sites and continued in our efforts to get Internet Service Providers to
take greater responsibility for providing access to unauthorised content from
their sites. Such successes include KaZaa (Australia), Kuro (Taiwan), and
Zoekmp3 (Netherlands). This has improved the business landscape for legitimate
music sales. Today there are over 498 legitimate online music services in over
40 countries.

EMI Music

2006/07 has been a challenging year for EMI Music. Sales declined by 15.0% at
constant currency. This is partly a function of the decline within the total
music industry as well as the disappointing performance of EMI Music's
portfolio compared to the prior year. We generated seventeen 1m+ selling albums
in the year including successes from Norah Jones, The Beatles, Keith Urban,
Corinne Bailey Rae, Bob Seger and Joss Stone. Strong performers digitally
included MIMS, Utada Hikaru, KT Tunstall and OK Go. Total digital revenue
represented 10.4% of total EMI Music revenue in the year.

Profit from operations before exceptional items and amortisation (EBITA)
declined to £44.9m, resulting in an operating margin of 3.3%. This decline in
profitability was driven by the flow through to profits from the reduction in
revenues. In April 2006, we announced a cost savings initiative of £30m for the
Group of which £25m was targeted for EMI Music to be achieved by the end of
2007/08. During 2006/07, the Group achieved £20m of this target which was well
ahead of the planned £10m. In January 2007, we also initiated a far-reaching
restructuring programme to remove £110m from the Group cost base which will be
completed by 31 March 2009. The majority of these cost reductions will be
generated from EMI Music.

Digital technology is multiplying the ways in which we can monetise our music
assets and our key strategic priority is to continue to make our music content
available on all economically attractive platforms, formats and services to
ensure the widest consumer reach. In April 2007, we announced that we were
launching a new premium download product which provides our music at a higher
sound quality and without the restrictions of digital rights management to
consumers. We are the first major recorded music company to do this and it is a
fundamental step towards removing the boundaries for consumers by enabling the
interoperability of digital music between services and devices. Our recent
partnership with Amazon to provide our new premium product in their digital
music store illustrates how the absence of DRM is promoting competition between
digital retailers. By removing DRM, we are able to provide a seamless
experience for the consumer, which we believe will grow the demand for digital
music.

We continued to broaden our digital distribution channels globally by entering
into agreements with partners who will make our music available on their
platforms. During the year, we entered into partnerships including: a
multi-territory deal with Apple; regional partnerships with MTV, Yahoo, Last.fm
and Sony; and national agreements with Amazon in the US, Baidu in China,
Napster in Germany and Playlouder and BT Vision in the UK. In addition to
establishing the right relationships on the right terms, we are at the
forefront of the industry in exploiting the new product, format and windowing
possibilities that digital enables. For example, during the year we distributed
the 30 Seconds to Mars video using the latest Web 2.0 technology. The flash
technology allows users to embed videos within their own wedsites and social
networking pages, with a click through function which allows viewers of the web
page to purchase the tracks and also allows us to generate additional revenue
by putting advertising around the video content. EMI Music repertoire is now
available digitally in 70 countries, up from 56 countries in the prior year. We
believe that we have made significant progress within the digital arena during
the year and that this will enable us to enhance value for our shareholders
through the growth of this market in the future.

EMI Music geographic review

North America

2006/07 has been a challenging year for the North American market, which
declined by 7.7% overall. Digital sales grew strongly by 80.1%, which was
driven, in particular, by the mobile market. This growth has not compensated
for the decline experienced in the physical market. Digital represented 20.8%
of the total market during 2006/07.

Against this difficult backdrop, our North American business experienced a
decline in revenue. We had key successes from US artists, Norah Jones, Keith
Urban, Janet Jackson, 30 Seconds to Mars and Trace Adkins in combination with
the effective marketing and promotion of international releases from The
Beatles, Corinne Bailey Rae and Joss Stone. MIMS is our latest urban
breakthrough act in the region; his debut single has performed very strongly
with 1.3m ring tunes sold and 0.7m tracks downloaded globally in the financial
year.

EMI Music's digital revenue in North America increased by 64% over the year.
Mobile products grew at the fastest rate but online downloads continued to
represent the largest digital segment for the region. EMI Music has
consistently been an innovator of new products and services. Most recently, we
reached an agreement with Amazon, making us the first music major to be in
Amazon's new online music store. We were also the first music major to make its
catalogue of recordings available to Qtrax, which will be the first advertising
supported, legal peer-to-peer music distribution service. During the year, we
provided tracks which were used as pre-loaded content when the Microsoft's Zune
player was launched in November 2006.

We believe it is important to participate across all genres and in North
America we have specific labels dedicated to Country (Capitol Nashville),
Christian (CMG) and Jazz Music (Bluenote). All of these labels are well known
for their ability to attract high calibre talent such as Anita Baker, Amy Grant
and Kenny Rogers. During the year, they generated strong sellers with releases
from Norah Jones, Keith Urban and Chris Tomlin.

In September 2006, we completed the sale and leaseback of the Capitol Tower in
Los Angeles which resulted in an inflow of cash for the Group.

As part of the restructuring we announced in January 2007, we have merged our
two main pop labels in the region, Capitol and Virgin, to form the Capitol
Music Group. The combined artist roster, talent and market share of this new
label group establishes it as one of North America's leading labels. The
restructuring also involves additional overhead reductions throughout our
operations in the region and an increased focus on building our digital
capability.

UK & Ireland

Consistent with the global recorded music market, the UK market experienced
very tough conditions over the last 12 months, particularly in the physical
market which showed significant decline in the fourth quarter. Total physical
sales declined by an estimated 11.8% in the year, while digital sales increased
by 79.7% to give a total market decline of 8.8% over the 2006/07 financial
year. This reflected the weakness in industry sales in the key Christmas period
and continuing price erosion as the specialist retailers began to compete on
price with the supermarkets.

The strength and depth of our UK artist roster was again demonstrated this year
despite the difficult market conditions. Album releases from Robbie Williams
and Corinne Bailey Rae each sold in excess of 2m physical units worldwide and
The Beatles Love album sold 5m worldwide during the year. A number of new UK
artists also broke through to success during the year, most notably The Kooks,
Lily Allen, The Good, The Bad and The Queen and Jamie T. EMI's British artists
had tremendous success in the US with Corinne Bailey Rae and KT Tunstall
breaking through in the year. 12 of the top 40 best-selling UK albums in the US
during 2006 were EMI releases, including seven of the top 12 which is more than
any of our competitors. EMI Music continued to demonstrate its strength in the
compilation market and, in the final quarter of the financial year, it had
three of the top-10 selling compilations.

Our digital revenue for 2006/07 in the UK grew by 31% over the prior year with
fixed line downloads increasing by 16%, mobile downloads increasing by 41% and
subscription by 38% over the period. Digital delivery brings many opportunities
for capturing new revenue streams which we continue to explore. For example,
EMI Music UK has entered into a deal with Playlouder MSP to make available its
extensive catalogue via Playlouder's bundled subscription and ISP service.

As part of the restructuring we announced in January 2007, we have scaled back
in all areas and merged some functions of our four UK labels while maintaining
the four imprints. We anticipate that this will take significant costs out of
the business while maintaining excellent specialist A&R skills in each label
that will enable EMI to capitalise on the opportunities for marketing its
recorded music around the world.

Continental Europe

Market conditions in Continental Europe were challenging over the financial
year, with total industry sales declining by 8.3%.

EMI Music delivered a very commendable market share in a tough market
environment. EMI gained market share in Spain, the Netherlands Switzerland,
Austria and Poland while also delivering good results in Greece, Belgium and
Italy. Good performances came from a broad range of established and new
artists. Herbert Groenemeyer sold over 1m units worldwide of his album 12 and
it remained number 1 in the German album charts for five weeks in a row which
has not been accomplished by a local artist since he also achieved this in
2002. French rap artist Diam's achieved the best-selling album in France in
2006 with Dans Ma Bulle, reaching 1m units since its release. Diams also won
Best French Act at the 2006 MTV Europe Music Awards.

We have sustained digital growth in the region during the financial year, with
revenue increasing by 30%. However, our digital growth in Continental Europe is
constrained by the lack of local fixed line retail stores in major markets such
as Benelux and Scandinavia and a lack of marketing support for download stores.
Mobile products represented a greater portion of digital sales in Europe than
in the US or the UK, although fixed line sales still account for the majority
of digital sales. The key issue remained the heavy level of piracy,
particularly in Spain, Greece and Italy. However, EMI Music continues to
explore all profitable digital models. For example, EMI Music has announced an
advertising supported, pan-European agreement with Yahoo!Music, the biggest
online video-on-demand service in the world together with AOL and MTV, to
enable consumers of online services to watch videos from EMI's digital
catalogue free of charge. EMI has also signed a pan-European agreement with
online social community Last.fm, to make music from EMI available to its users
and a deal with Sony to pre-load EMI Music onto the Sony memory stick as well
as a number of pre-load handset deals including with Nokia.

During the year, as part of the cost reduction programme announced in April
2006, the region redeveloped its organisation and business approach to address
changes in consumer trends and the consumption of music including the
establishment of shared service centres for finance processing and advanced CRM
capability and practices, in particular in France and Spain. This programme
will continue with the further restructuring announced in January 2007.

Japan

The Japanese market declined by 2.4% overall during the 2006/07 year with
digital sales representing 12.4% of the overall industry.

Against this backdrop, our Japanese business performed strongly with its market
share improving by 0.6 percentage points. This was driven by successful
releases from Utada Hikaru selling over 1m physical units in the region along
with local releases from DJ Ozma and Glay. International best sellers included
Sarah Brightman and The Beatles. Utada Hikaru also performed phenomenally in
digital format, with the Flavor of Life track selling 4.4m ring tunes in the
financial year and continues to sell strongly. Overall, digital revenue showed
an increase of 69% in the year, with mobile continuing to represent the
majority of total digital sales. Digital revenues represented 19.6% of total
revenue in Japan.

In April 2006, we announced a major restructuring of this business to improve
the efficiency of our operations, to reinvest a proportion of these savings in
the key areas of A&R and marketing, and to introduce a new multi-label
organisational structure. During the year, we have implemented all the
initiatives to ensure that we achieve the associated cost savings by the end of
March 2008. In conjunction with this restructuring, we sold and leased back two
freehold properties in Tokyo, with a substantial cash inflow generated from the
transaction.

In December 2006, EMI announced the purchase from Toshiba of its 45% minority
interest in Toshiba-EMI for £93m. We expect to complete the purchase in the
first half of the 2007/8 financial year and EMI will then own 100% of our
Japanese operations. Owning 100% of the business will provide us with full
strategic flexibility in the region.

South East Asia

The major markets in South East Asia suffered sales declines as physical and
digital piracy continued to take their toll. Overall, our business suffered a
slight decrease in share in the region, but continues to deliver acceptable
profit levels.

EMI's digital growth in the region was robust, with download revenue growing by
a factor of four times and subscription revenue growing by a factor of six
times, as the region experienced a pick up in broadband penetration. We gained
digital market share over the year and digital revenue accounted for nearly 15%
of the region's revenue. Major local releases in the region included Jolin
Tsai, S.H.E, David Tao and ADA Band. Top-selling international artists included
The Beatles and Robbie Williams.

Music in China is an excellent opportunity for us, particularly within digital
formats. During the year, we embraced the growing market in China by being the
first music major to announce a pioneering strategic partnership with Baidu to
launch an advertising-supported, online music streaming service in China, the
first revenue-sharing arrangement between an internet search engine and an
international music company in that country.

We are currently implementing cost reductions in the region as part of our
restructuring programme.

Australasia

Market conditions in Australasia worsened during the 2006/07 financial year.
EMI Music's market share was modestly down. During the year, we generated
releases from local superstars, The 12th Man and Silverchair, as well as
selling international titles from The Beatles, Norah Jones and Robbie Williams.
Our restructuring programme has already been implemented in the region. iTunes
launched in New Zealand during December 2006 and this leaves the region well
placed for growth in the digital market.

Latin America

Our Latin American business had a disappointing 2006/07 year, largely because
of problems experienced in Brazil. In October 2006, an accounting fraud was
discovered in our recorded music operations in Brazil, which had a £9m negative
profit impact. Following our investigation of the events and factors which led
to and contributed to the fraud, we have conducted a thorough review of our
policies and procedures both in Brazil and throughout our operations which we
believe should mitigate the possibility of similar issues in the future. EMI
Music Brazil has also been thoroughly restructured and new senior management
has been appointed. The refocus of the company culture is now well underway.

Local superstars RBD had another good year, selling almost 3m units globally of
their six currently released albums in the financial year. Releases from local
artists Kumbia All Starz and Intocable were also successful, as were the new
artists Fonseca, Shaila, Kudai and teen talent Belinda. The Latin music icon,
Juan Luis Guerra, has recently been signed to EMI-Televisa.

As part of the restructuring plan announced in January 2007, the Latin American
regional head office has been reorganised and each country within the region
now reports directly to EMI Music International.

We believe that EMI's Latin music business, both in Latin America and in the
US, will improve its creative and business performance due to our recent
management changes and to the growing economic development of the Latin
demographic. We are well positioned to develop and exploit this through our
joint venture with Grupo Televisa S.A., the largest broadcaster in Mexico and
the largest Spanish language conglomerate in the world.

Digital revenues for 2006/07 were almost four times larger than in the previous
year and the rising penetration of mobile phones in most of Latin America
provides a great opportunity for the legal distribution of music in the
immediate future. EMI Latin America is focused on its mobile strategy and has
completed a regional deal with Telefonica Movistar as well as most of the
America Movil's carriers throughout the region. It has teamed up with Sony
Ericsson and Nokia for the creation of preloaded content campaigns supporting
the new albums of a number of local and international artists. For example, as
part of the release campaign for Robbie William's Rudebox, his Intensive Care
album was preloaded and sold in 850,000 units of Sony Ericsson handsets.

EMI Classics

EMI and Virgin Classics had a good year during 2006/07 with particular success
in France where they grew their market share by 7% and had a huge hit with The
Miracle of the Voice from the critically acclaimed soprano, Natalie Dessay.
Japan also performed well with the Sarah Brightman Diva collection and Simon
Rattle's recording of The Planets.

The superstar pianist, Evgeny Kissin, has just been signed to EMI Classics
joining other great names such as Nigel Kennedy, Leif Ove Andsnes and Angela
Gheorghiu. Virgin Classics added the brilliant young pianist, David Fray, and
the German soprano, Diana Damrau, to its expanding roster.

EMI Classics is one of the oldest record label's in the world. EMI Classics has
started a drive to tap further into this incredible resource and share it with
music lovers across the globe. In March 2007, EMI Classics and iTunes teamed up
to celebrate the 80th birthday of the late Mstislav Rostropovich,who was one of
the world's greatest cellists. EMI Classics is running an international
campaign in conjunction with iTunes giving music lovers access to his entire
EMI discography as cellist, conductor and pianist.

EMI Music Publishing

EMI Music Publishing once again delivered a solid performance for the financial
year ended 31 March 2007. Profit from operations before exceptional items and
amortisation (EBITA), increased to £105.6m, an increase of 4.2% at constant
currency with operating margin improving to 26.3%. Due to recorded music market
conditions, as well as some phasing of income, revenue decreased by 0.9% at
constant currency to £401.3m. Overall, this performance reflected both the
underlying health and resilience of the business, as well as the early effects
of efficiencies from our comprehensive restructuring programme which, in turn,
is part of the evolution of the business. EMI Music Publishing has implemented
a new strategy that will reshape the business for future growth and flexibility
while, at the same time, building on and holding true to past successes. There
are four key pillars to this strategy: continued excellence in A&R evidenced by
the signing of today's top songwriters; helping to reform the industry's
infrastructure through licensing and rate setting initiatives; further
strengthening our internal capabilities including process and systems
re-engineering; and deepening and expanding our client relationships.

Continued success in signing songwriters is essential for our future
profitability. This year, a broad range of songs, songwriters and products
underpinned our continued ability to sign the world's best songwriters, while
reflecting the quality and depth of the catalogue. Notable successes during the
period included songs by Beyonce, Fergie, Gym Class Heroes, Jay-Z, Norah Jones,
Panic! At The Disco, The Fray, Nelly Furtado, Tool, Young Jeezy, Pink, Amy
Winehouse, Arctic Monkeys, James Blunt, Jamiroquai, Kasabian, My Chemical
Romance, Scissor Sisters, The Fratellis, The Feeling, Andreas Johnson, Estopa,
Silbermond, La Roi Soleil, The Veronicas, and Vasco Rossi.

With the world's best collection of songs, we are working to drive industry
reform in order to ensure that our songwriters are paid for their works.
Nowhere is this more appropriate than in the world of digital revenues.

Digital revenues continued to grow strongly during 2006/07, increasing by 35.5%
at constant currency on the prior year, to £25.3m. Revenues from digital music
are currently classified amongst the various revenue categories - mechanical,
performance, synchronisation and other uses - based on the varying status of
income collection for these new uses in different countries.

The use of songs in mobile phone products remains the most significant early
digital revenue contributor for EMI Music Publishing and continues to enjoy
very strong growth. For the revenue from mobile products, we have seen the
percentage contribution from ring tunes increase significantly during the year
whilst the contribution from ring tones has decreased. This trend is expected
to continue as technology, handsets and networks continue to drive a product
shift in the mobile space. Revenues from digital downloads (up 158.3% at
constant currency in the year), and other newer products, such as video
downloads, have also grown strongly and are starting to contribute more to the
division's growth. EMI Music Publishing remains at the forefront of digital
music by fostering relationships with new media companies at all stages of
development in order to maximise the exploitation of our songwriters' music.

However, growth in digital revenues in music publishing continues to lag the
recorded music industry, reflecting an under-developed industry infrastructure
for the tracking and collection of digital royalties and the lack of agreements
on digital royalty rates for certain products in some regions. EMI Music
Publishing is at the forefront of the industry's effort to ensure that the
right structures and rates are in place to identify and collect fully all past
and future digital revenues. We were pleased to join the `Centralised European
Licensing and Administration Services' initiative, which is based on an
agreement between the UK's MCPS-PRS Alliance and Germany's GEMA collection
societies to establish a pan-European licensing and collection mechanism for
mobile and online digital rights. This pan-European one-stop shop for the
licensing of online rights, which went live in January 2007, is a
groundbreaking initiative in the publishing industry. EMI Music Publishing is
involved in many of industry developments and rate-setting negotiations around
the globe, all in the interest of making sure our songwriters are properly and
fairly paid for their works.

Mechanical revenue

Our mechanical revenues, which are derived from the sale of recorded music,
declined by 6.7% at constant currency, reflecting the continued declines in the
global recorded music market during the same period. Mechanical revenues now
represent 42.6% of total divisional sales on a constant currency basis. On a
regional basis, weaknesses in Eastern Europe and Scandinavia were partially
offset by increases in Southeast Asia, while the US, the UK and Continental
Europe were down marginally.

Performance revenue

Performance revenues, earned when a song is performed live on stage, played in
a bar or other public venue or broadcast on the radio or television, grew by
10.1% at constant currency for the year and now represent 30.0% of divisional
revenues on a constant currency basis. Key drivers of growth in this business
are the chart success of songs from our roster of active songwriters and the
proliferation of new media channels, especially across Europe. On a regional
basis, performance income was particularly strong in the US, reflecting timing
differences and strong underlying growth.

Synchronisation revenue

Synchronisation revenue, which is generated by the use of songs in audiovisual
works such as advertisements, television programmes, films, computer games and
in mobile phones, increased by 5.6% at constant currency, resulting in more
than 12 years of consecutive growth. From the record level achieved in 2005/06,
EMI Music Publishing was able to drive meaningful growth in synchronization by
gaining greater penetration in multiple channels, particularly in the US and
the UK. This growth is an early reflection of our strategy to deepen and
broaden our customer relationships with licensors of music. Significant
licences were issued worldwide for a number of major advertising campaigns,
including Toyota, Kirin Beer, Pantene, General Electric, Maxwell House, Ford,
Verizon, Proctor & Gamble, Starwood, Macy's, Pier 1 and O2.

Other revenue

Other revenue typically represents about 10% of revenues, although the absolute
amount can vary significantly from year to year. An important driver of the
change in other revenue in recent years has been revenue gained from stepped up
efforts in enforcing proper use of our copyrights. By their nature, these
revenues tend to be irregular and unpredictable, accounting for the overall
decline on a constant currency basis in this revenue category.

EMI Group future outlook

The recorded music market continues to undergo significant change as it becomes
increasingly digitised. At this stage, uncertainty exists as to the timing and
extent of future market development. We have seen physical sales declining at a
significantly faster rate than the industry had anticipated but the Company
remains positive on the long-term trends for the industry and, in particular,
that there will be continued strong demand for digital music products of all
types. We believe that the launch of our DRM-free, superior sound quality
downloads, will boost sales of digital music and help unlock the many
opportunities of the digital market. Our premium download product will be
available with various retail partners including iTunes, Amazon, VirginMega and
Telenor. We are currently in negotiations with many other retail services for
the launch of this product.

In January 2007, we announced a restructuring programme and an update to our
strategy to secure sustainable growth in underlying profits and cash flow.
These initiatives will generate annualised cost savings of £110m and we expect
£76m of these savings to be achieved by March 2008, with the full run rate
being reflected in the financial results for the year to 31 March 2009.

We will continue to invest significantly in A&R to allow a continuing strong
focus on artist and songwriter development. We are also investing to develop
further our digital expertise so that we remain positioned at the forefront of
the industry in capitalising on the opportunities arising from the market's
evolution.

In the current financial year, EMI Music is planning releases from Kasey
Chambers, Korn, Kylie Minogue, Lenny Kravitz, LeToya, M, Moby, Raphael, Thalia,
The Chemical Brothers and Vasco Rossi. EMI Music Publishing expects to see
releases from songwriters including Alicia Keys, Ashlee Simpson, Arctic
Monkeys, Chris Cornell, Kanye West, Kelly Clarkson, Shiny Toy Guns, The Police,
The Used and White Stripes. We have a world renowned catalogue in both EMI
Music and EMI Music Publishing and we will continue to exploit them for the
benefit of all stakeholders.

Financial review for the year ended 31 March 2007

Revenue

Reported underlying Group revenue decreased by 15.8% or £328.4m to £1,751.5m.
Excluding the effects of unfavourable currency movements the decrease was 12.1%
or £252.2m. The unfavourable exchange movement was largely driven by an
increase in the weighted average rate of the US Dollar against Sterling from
$1.78 last year to $1.90 in 2006/07.

At constant currency, revenue in EMI Music declined by 15.0%, with notable
decreases in North America, UK and Ireland and Latin America.

At constant currency, revenue in EMI Music Publishing was down 0.9% versus the
prior year due mainly to declines in physical mechanical sales as well as minor
phasing adjustments. The 6.7% decrease in mechanical revenue was largely offset
by solid growth in performance and synchronisation revenues.

Group digital revenue increased to £164.2m from £112.1m in the prior year, an
increase of 46.5%. Digital revenue represented 9.4% of total underlying Group
revenue for the year.

Costs

The underlying gross margin, after distribution costs, declined from 37.2% to
34.9%. This is the result of a gross margin decline in the Music division.
Royalty, copyright manufacturing and distribution costs are all largely
variable with revenue and have decreased in absolute terms in the year.
Marketing and promotion costs, however, were lower in absolute terms but 2.6
percentage points higher as a percentage of total sales. Controlling marketing
spend is a key area of focus for the Music business this year.

In April 2006, we announced a cost saving initiative to deliver £30m of
annualised savings for the Group. During 2006/07, we achieved £20m of savings,
well ahead of the £10m planned, and we remain on course for the full £30m in
2007/08.

In January 2007, we announced a comprehensive restructuring programme to
realign our investment approach and streamline our operations. This programme
will deliver £110m of annualised savings with £76m currently anticipated to be
achieved in 2007/08.

Profit from operations

Group profit from operations (EBITA)(i) decreased by £100.0m or 39.9% from £
250.5m to £150.5m. Excluding exchange, the decrease in EBITA was £94.6m or
37.8%. Group operating margin decreased from 12.0% to 8.6% in the year.

EMI Music delivered EBITA of £44.9m, a decline of £100.2m or 68.2% at constant
currency on the prior year. This decrease in EBITA was largely driven by the
revenue declines particularly in North America, UK and Ireland and Latin
America mentioned above. The operating margin reduced from 8.7% to 3.3%.

EMI Music Publishing generated EBITA of £105.6m, a growth of 4.2% at constant
currency on the prior year. Operating margin improved from 25.1% to 26.3%,
reflecting the partial effects of the restructuring programme and its
efficiencies.

The Group's share of profit in its associated company investments increased
from £1.0m in 2005/06 to £1.8m in 2006/07. Consequently, the total underlying
profit from operations for the Group is £152.3m this year compared to £251.5m
last year.

Notes:

(i) Group profit from operations (EBITA) is before exceptional items and
amortisation and before share of profit in associates.

Group finance charges, excluding exceptional finance charges, reduced by £2.6m
to £89.6m. This reflected a 3.2% decrease in average net borrowings, an
increase in pension fund interest receivable offset by higher rates in three of
our major funding territories (US, UK and Europe).

Underlying profit before tax declined by 60.6% from £159.3m to £62.7m,
reflecting the reduction in revenue and underlying profit from operations
discussed above.

The Group underlying tax rate, before amortisation and exceptional items, was
22% against 17.6% in the prior year. The increased rate reflected a movement in
profitability towards countries where there were higher tax rates together with
losses in territories where we cannot recognise the loss. This was offset by
the settlement of prior liabilities.

As a result of the above, the Group's underlying profit after taxation
decreased from £131.2m to £48.9m, a decrease of 62.7%.

Underlying basic earnings per share(ii) was 5.8p, a decrease of 10.4p from the
prior year. Underlying 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, decreased from 15.7p to 5.8p.

Notes:

(ii) Before exceptional items and amortisation.

Other items affecting earnings

Exceptional items and amortisation comprise operating exceptional costs,
finance exceptional costs and amortisation of music copyrights and intangibles.

The Group is reporting operating exceptional costs of £256.3m compared with
income of £4.0m in the prior year. Operating exceptional costs are net of a £
50.2m gain on disposal of property (including the sale and leaseback
transactions completed for our offices in Tokyo and the Capitol Tower in Los
Angeles) and a gain following settlement of an infringement case with
Bertelsmann AG in March. The exceptional costs include £191.5m for our
restructuring programmes announced in April 2006 and January 2007 (largely
headcount and roster reduction) and the results of our balance sheet review
announced on 12 January 2007 and concluded as anticipated on 31 March 2007. The
review resulted in a charge of £164.0m reported as exceptional this year. The
final elements of this year's exceptional cost are a £0.2m loss on revaluation
of investments and £7.6m for aborted corporate transactions.

The Group is reporting finance exceptional net costs relating to remeasurements
and refinancing costs of £17.3m compared to net income of £4.7m last year.
Finance exceptionals include the loss on revaluation to fair value of the
convertible bond derivative of £5.7m (2005/06: £4.1m gain), the loss on
revaluation of the Eurobond embedded call feature of £21.3m (2005/06 £8.2m
gain) and the foreign exchange gain on Euro borrowings of £8.1m (2005/06: £4.1m
loss). The finance exceptional net costs for 2006/07 include exceptional
refinancing costs of £1.1m in connection with the refinancing programme carried
out in March 2007 (2005/06: £5.2m refinancing programme carried out in July
2005).

Amortisation and impairment of music copyrights and other intangibles amounted
to £52.7m in comparison with £49.9m last year.

The minority interest cost reduced from a charge of £3.9m in the previous year
to a charge of £1.5m this year. This was the consequence of reduced
profitability in the Music business in Japan in which there was a 45% minority
share for eight and a half months of the year. In December 2006, we agreed to
acquire the 45% minority share from Toshiba for approximately £93m. The cash
cost is due to be paid in the first half of 2007/08.

The loss attributable to members of the Company was (£288.5)m in comparison
with an attributable profit last year of £86.1m.

As announced in April 2007, the Board is suspending dividend payments until the
benefits of the restructuring process have been fully realised. The interim
dividend of 2p per share was paid on 2 April 2007.

Reported results

Total Group loss from operations (including share of associates) was £(156.7)m
in comparison with a profit of £205.6m last year. This decrease was entirely
due to the decline in revenue compounded by exceptional costs of £309.0m this
year compared to £45.9m last year.

Total loss before taxation was £(263.6)m compared to a profit of £118.1m in the
prior year. This decrease reflected the reduction in Group profit from
operations above and a change in the finance exceptional from net income to a
net cost.

Cash flow and net borrowings

Improvement in cash conversion and overall cash management remains a key area
of focus for the Group. The net cash inflow from operating activities was £
7.3m, a significant reduction from last year's inflow of £188.3m, reflecting a
significant working capital outflow in the Music division as a result of
changes in trading patterns, the costs of our restructuring programme announced
in January 2007 and the lower EBITA reported this year.

After the net cash inflow from operating activities, we had cash inflows of £
65.8m for investment activity and cash inflows of £85.1m for financing activity
including an outflow of £50.8m for dividends. Taking into account the gain on
exchange of foreign currency denominated borrowings of £43.7m, year-end net
debt increased by £24.7m from £879.5m to £904.2m.

The net cash inflow from operations after investing activities has approximated
the operating result of both divisions in recent years.

ATTACHMENTS

EMI GROUP PLC FINANCIAL STATEMENTS 2006/07

(a)      Financial summary for the year ended 31 March 2007.                
                                                                            
(b)      Group consolidated income statement for the year ended 31 March    
         2007.                                                              
                                                                            
(c)      Group consolidated balance sheet at 31 March 2007.                 
                                                                            
(d)      Group consolidated statement of recognised income and expense for  
         the year ended 31 March 2007.                                      
                                                                            
(e)      Group consolidated cash flow statement for the year ended 31 March 
         2007.                                                              
                                                                            
(f)      Note to the Group consolidated cash flow statement for the year    
         ended 31 March 2007.                                               
                                                                            
(g)-(m)  Group accounting policies                                          
                                                                            
(n)-(w)  Notes to the Group financial statements for the year ended 31 March
         2007.                                                              

FINANCIAL SUMMARY

for the year ended 31 March 2007

                                                    Year ended     Year ended
                                                                             
                                                 31 March 2007  31 March 2006
                                                                             
                                                            £m             £m
                                                                             
Underlying revenue                                     1,751.5        2,079.9
                                                                             
Underlying EBITDA (i)                                    174.0          275.8
                                                                             
Underlying Group profit from                             150.5          250.5
operations (EBITA) (ii)                                                      
                                                                             
Underlying PBT (iii)                                      62.7          159.3
                                                                             
Total (loss) profit before taxation                    (263.6)          118.1
                                                                             
Underlying diluted earnings per share                     5.8p          15.7p
(iv)                                                                         
                                                                             
Basic (loss) earnings per share                        (36.3)p          10.9p
                                                                             
Dividends per share                                       8.0p           8.0p
                                                                             
Return on sales (v)                                       8.6%          12.0%
                                                                             
Interest cover (vi)                                       1.9x           3.0x

 (i)  Underlying EBITDA is Group profit from operations before depreciation and
      exceptional items and amortisation.                                      
                                                                               
(ii)  Underlying Group profit from operations (EBITA) is before exceptional    
      items and amortisation.                                                  
                                                                               
(iii) Underlying PBT is before exceptional items and amortisation.             
                                                                               
(iv)  Underlying diluted earnings per share is before exceptional items and    
      amortisation.                                                            
                                                                               
 (v)  Return on sales is defined as Group profit from operations before        
      exceptional items and amortisation as a percentage of Group revenue.     
                                                                               
(vi)  Interest cover is defined as the number of times EBITDA is greater than  
      Group net finance charges excluding finance exceptional items.           

Exceptional items include operating exceptional items and finance exceptional
items. Operating exceptional items include impairment of goodwill, gains
(losses) on disposal of property, plant and equipment and remeasurement of
listed investments. Finance exceptional items include remeasurement of
financial assets and liabilities to be included within finance charges and
exceptional refinancing costs.

GROUP CONSOLIDATED INCOME STATEMENT

for the year ended 31 March 2007

                                   Year ended 31 March 2007  Year ended 31 March
                                                                            2006
                                                                                
                                           Total Underlying Underlying     Total
                                                                                
                                              £m         £m         £m        £m
                                                                                
Revenue                                  1,808.3    1,751.5    2,079.9   2,079.9
                                                                                
Group profit from operations before        207.3      150.5      250.5     250.5
exceptional items and amortisation                                              
                                                                                
Exceptional charge and amortisation      (416.0)          -          -    (53.3)
                                                                                
Exceptional income                          50.2          -          -       7.4
                                                                                
Share of profits from associates             1.8        1.8        1.0       1.0
                                                                                
Profit from operations*                  (156.7)      152.3      251.5     205.6
                                                                                
Finance charges                                                                 
                                                                                
Finance income                              79.3       63.0       57.4      71.4
                                                                                
Finance costs                            (186.2)    (152.6)    (149.6)   (158.9)
                                                                                
Total net finance charges                (106.9)     (89.6)     (92.2)    (87.5)
                                                                                
Profit (loss) before taxation            (263.6)       62.7      159.3     118.1
                                                                                
Overseas                                  (33.4)     (23.8)     (33.1)    (33.1)
                                                                                
UK                                          10.0       10.0        5.0       5.0
                                                                                
Total taxation                            (23.4)     (13.8)     (28.1)    (28.1)
                                                                                
Profit (loss) from continuing            (287.0)       48.9      131.2      90.0
operations after taxation                                                       
                                                                                
Attributable to:                                                                
                                                                                
Equity holders of the parent             (288.5)                            86.1
                                                                                
Minority interest                            1.5                             3.9
                                                                                
* The following items are included within                                       
Profit from operations                                                          
                                                                                
Cost of sales                          (1,270.9)  (1,069.8)  (1,230.4) (1,280.3)
                                                                                
Distribution costs                        (69.9)     (69.9)     (75.0)    (75.0)
                                                                                
Gross Profit                               467.5      611.8      774.5     724.6
                                                                                
Administration expenses                  (681.6)    (466.9)    (532.4)   (533.5)
                                                                                
Other operating income, net                 55.6        5.6        8.4      13.5
                                                                                

Earnings per share      Year ended 31 March 2007       Year ended 31 March 2006
(EPS)                                                                          
                                                                               
Basic (loss) earnings per Ordinary Share (36.3)p                          10.9p
(note 6)                                                                       
                                                                               
Diluted (loss) earnings per Ordinary     (36.3)p                          10.5p
Share (note 6)                                                                 
                                                                               
Underlying basic earnings per Ordinary      5.8p                          16.2p
Share (note 6)                                                                 
                                                                               
Underlying diluted earnings per Ordinary    5.8p                          15.7p
Share (note 6)                                                                 
                                                                               
Underlying 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        Year ended 31        Year ended 31 March 2006
the year                             March 2007                                
                                                                               
US Dollar to £1                            1.90                            1.78
                                                                               
Euro to £1                                 1.48                            1.47
                                                                               
Yen to £1                                223.20                          203.69
                                                                               
The results for the year have been translated into Sterling at the appropriate 
average exchange rates.                                                        

** Exceptional items and amortisation include operating exceptional items,
amortisation and finance exceptional items and tax on the exceptional items.
See the Group accounting policies section of these financial statements for
definitions of these terms and for examples of the types of transactions that
may fall into each category.

GROUP CONSOLIDATED BALANCE SHEET

for the year ended 31 March 2007

                                                      At 31 March   At 31 March
                                                             2007          2006
                                                                               
                                                               £m            £m
                                                                               
ASSETS                                                                         
                                                                               
Non-current assets                                                             
                                                                               
Music copyrights and intangibles                            305.7         389.3
                                                                               
Goodwill                                                     28.9          43.0
                                                                               
Property, plant and equipment                               132.0         196.8
                                                                               
Investments in associates                                     8.1           8.8
                                                                               
Financial assets                                             20.1          56.3
                                                                               
Deferred taxation                                            12.0          22.8
                                                                               
Other receivables                                             3.7           4.4
                                                                               
                                                            510.5         721.4
                                                                               
Current assets                                                                 
                                                                               
Inventories                                                  30.4          37.2
                                                                               
Advances                                                    217.9         330.1
                                                                               
Trade receivables                                           289.6         408.5
                                                                               
Corporation tax recoverable                                  15.9          16.7
                                                                               
Other receivables                                           100.8         110.3
                                                                               
Financial assets                                              0.2           0.3
                                                                               
Investments: liquid funds                                     1.5           1.6
                                                                               
Cash and cash equivalents                                   331.7         190.9
                                                                               
                                                            988.0       1,095.6
                                                                               
Total assets                                              1,498.5       1,817.0
                                                                               
LIABILITIES                                                                    
                                                                               
Non-current liabilities                                                        
                                                                               
Financial liabilities                                   (1,317.0)     (1,149.7)
                                                                               
Other payables                                              (6.5)         (9.5)
                                                                               
Deferred taxation                                           (3.7)         (5.1)
                                                                               
Pension provisions                                         (42.2)        (31.1)
                                                                               
                                                        (1,369.4)     (1,195.4)
                                                                               
Current liabilities                                                            
                                                                               
Financial liabilities                                      (12.3)        (22.6)
                                                                               
Other payables                                          (1,044.7)     (1,149.0)
                                                                               
Current tax liability                                     (112.2)       (143.1)
                                                                               
Other provisions for liabilities and charges              (110.9)        (33.5)
                                                                               
                                                        (1,280.1)     (1,348.2)
                                                                               
Total liabilities                                       (2,649.5)     (2,543.6)
                                                                               
NET LIABILITIES                                         (1,151.0)       (726.6)
                                                                               
EQUITY                                                                         
                                                                               
Capital and reserves                                                           
                                                                               
Share capital                                               112.0         110.7
                                                                               
Share premium account                                       455.4         447.8
                                                                               
Capital redemption reserve                                  495.8         495.8
                                                                               
Foreign exchange reserve                                     19.5        (17.1)
                                                                               
Other reserves                                              214.7         206.4
                                                                               
Retained earnings                                       (2,451.0)     (2,019.0)
                                                                               
Equity attributable to equity holders of the            (1,153.6)       (775.4)
parent                                                                         
                                                                               
Minority interests (equity)                                   2.6          48.8
                                                                               
TOTAL EQUITY                                            (1,151.0)       (726.6)

Year end exchange rates                                                       
                                                                              
                                                At 31 March 2007   At 31 March
                                                                          2006
                                                                              
US Dollar to £1                                             1.97          1.73
                                                                              
Euro to £1                                                  1.47          1.43
                                                                              
Yen to £1                                                 231.53        204.66
                                                                              
The balance sheet has been translated into Sterling at the appropriate year   
end exchange rates.                                                           
                                                                              

GROUP CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

for the year ended 31 March 2007

                                                      At 31 March   At 31 March
                                                             2007          2006
                                                                               
                                                               £m            £m
                                                                               
Income and expense recognised directly in equity                               
                                                                               
Revaluation of music copyrights and intangibles                 -           4.8
                                                                               
Exchange difference on retranslation of foreign              32.5        (21.2)
operations                                                                     
                                                                               
Pension funds: actuarial gains and losses                  (26.6)          58.3
                                                                               
Gains (losses) on the revaluation to fair value of            1.4         (0.9)
available-for-sale investments                                                 
                                                                               
Net income directly recognised in equity                      7.3          41.0
                                                                               
Profit for the year                                       (287.0)          90.0
                                                                               
Total recognised income and expense for the year          (297.7)         131.0
                                                                               
Attributable to:                                                               
                                                                               
Equity holders of the parent                              (277.1)         126.4
                                                                               
Minority interest                                           (2.6)           4.6
                                                                               
Total recognised income and expense for the year          (279.7)         131.0

GROUP CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 March 2007

                                                         2007              2006
                                                                               
                                                           £m                £m
                                                                               
Cash flows from operating activities                                           
                                                                               
Cash receipts from operations                         1,909.4           1,982.4
                                                                               
Cash used in operations                             (1,862.8)         (1,754.3)
                                                                               
Tax paid                                               (39.3)            (39.8)
                                                                               
Net cash generated from operating activities              7.3             188.3
                                                                               
Cash flows from investing activities                                           
                                                                               
Purchase of businesses, net of cash acquired            (3.1)             (6.9)
                                                                               
Deferred consideration paid                             (5.4)             (0.9)
                                                                               
Purchase of associates                                  (0.9)             (0.3)
                                                                               
Disposal of associates                                    0.6                 -
                                                                               
Purchase of music copyrights and intangibles            (4.8)             (4.1)
                                                                               
Disposal of music copyrights and intangibles              6.8               7.3
                                                                               
Purchase of property, plant and equipment              (26.9)            (30.2)
                                                                               
Disposal of property, plant and equipment                92.8              16.3
                                                                               
Purchase of other investments                           (0.6)                 -
                                                                               
Dividends received from investments                       4.6                 -
                                                                               
Dividends received from associated undertakings           0.6               1.0
                                                                               
Disposal of other investments                             0.3               5.9
                                                                               
Interest received                                         1.8               9.3
                                                                               
Net cash generated from (used in) investing           65.8                (2.6)
activities                                                                     
                                                                               
Cash flows from financing activities                                           
                                                                               
Issue of ordinary share capital                           3.6               0.6
                                                                               
Purchase of own shares                                  (5.5)             (0.5)
                                                                               
Equity dividends paid                                  (50.8)            (61.2)
                                                                               
Dividends paid to minorities                            (3.2)             (2.5)
                                                                               
Financing:                                                                     
                                                                               
New loans                                               453.9             207.8
                                                                               
Loans repaid                                          (206.5)           (277.6)
                                                                               
Capital element of finance lease repayments             (1.2)             (0.6)
                                                                               
Interest paid                                         (104.5)           (111.6)
                                                                               
Interest element of finance lease repayments            (0.7)             (0.7)
                                                                               
Net cash generated from (used in) financing              85.1           (246.3)
activities                                                                     
                                                                               
Net increase (decrease) in cash and cash                158.2            (60.6)
equivalents                                                                    
                                                                               
Cash and cash equivalents at the beginning of the       171.3             229.1
year                                                                           
                                                                               
Exchange gains (losses) on cash and cash                (7.3)               2.8
equivalents in the year                                                        
                                                                               
Cash and cash equivalents at the end of the year        322.2             171.3
                                                                               
Cash and cash equivalents at the end of the year                               
comprise of:                                                                   
                                                                               
Cash at bank and in hand                                331.7             190.9
                                                                               
Overdrafts                                              (9.5)            (19.6)
                                                                               
                                                        322.2             171.3

NOTE TO THE GROUP CONSOLIDATED CASH FLOW STATEMENT

for the year ended 31 March 2007

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

                                                          2007             2006
                                                                               
                                                            £m               £m
                                                                               
Group (loss) profit from operations (before share      (158.5)            204.6
of profit in associates)                                                       
                                                                               
Depreciation and impairment charge                        38.6             26.4

                                                                               
Gain on disposal of property, plant and equipment       (56.5)            (9.4)
and music copyrights and intangibles                                           
                                                                               
Amortisation and impairment of music copyrights and       52.7             49.9
intangibles                                                                    
                                                                               
Impairment of goodwill                                    15.1                -
                                                                               
Remeasurements - revaluation to fair value of              0.2            (2.6)
listed investments                                                             
                                                                               
Share-based payment transactions                           5.0              4.9
                                                                               
Amounts provided                                         158.1             18.2
                                                                               
Provisions utilised                                     (72.7)           (36.1)
                                                                               
(Increase) decrease in inventories                         4.3            (7.3)
                                                                               
(Increase) decrease in receivables                       196.3           (74.1)
                                                                               
Increase (decrease) in payables                        (136.0)             53.6
                                                                               
Net cash generated from operations                        46.6            228.1
                                                                               
Tax paid                                                (39.3)           (39.8)
                                                                               
Net cash generated from operating activities               7.3            188.3

Authorisation of financial statements

The financial statements of EMI Group plc and its subsidiaries (the "Group")
for the year ended 31 March 2007 were authorised for issue by the board of
Directors on 21 May 2007 and the balance sheet was signed on the board's behalf
by Eric Nicoli and Martin Stewart. EMI Group plc is a public limited company
incorporated and domiciled in England and Wales. The Company's ordinary shares
are traded on the London Stock Exchange.

Basis of preparation

The consolidated financial information comprises the accounts of the Company
and its subsidiaries which have been prepared in accordance with applicable
International Financial Reporting Standards (IFRSs) as adopted by the European
Union as they apply it to the financial statements of the Group for the year
ended 31 March 2007. The Group's principal accounting policies under IFRS are
set out below.

Where applicable, prior year figures have been adjusted to disclose them on the
same basis as current year figures. The most significant adjustment relates to
the classification of financial assets and financial liabilities which were
previously classified within financial derivatives, other investments and
borrowings on the balance sheet; these have been reclassified to financial
assets and financial liabilities to more accurately reflect the nature of the
assets and liabilities.

This preliminary financial information for the year ended 31 March 2007 does
not constitute statutory accounts under S.235 of the Companies Act 1985. The
statutory accounts for the year have not yet been delivered to the registrar of
companies but include the auditor's report which was unqualified and did not
contain a statement under S.237 (2 or 3) of the Companies Act 1985. The
preliminary financial information for the year ended 31 March 2006 did not
constitute statutory accounts under S.235 but those accounts have been filed
with the registrar of companies with an unqualified audit report.

At the date of authorisation of these financial statements the following
Standards and Interpretations which have not been applied in these financial
statements were in issue but not yet effective:

International Accounting Standards (IAS / IFRS) Effective from date

IFRS 7 Financial Instruments: Disclosures 1 January 2007

IFRS 8 Operating Segments 1 January 2009

IAS 1 Amendment - Presentation of Financial Statements: Capital Disclosures 1
January 2007

International Financial Reporting Interpretations Committee (IFRIC)

IFRIC 8 Scope of IFRS 2 1 May 2006

IFRIC 9 Reassessment of Embedded Derivatives 1 June 2006

IFRIC 11 IFRS 2 - Group and Treasury Share Transactions 1 March 2007

The Directors anticipate that the adoption of these Standards and
Interpretations in future periods will have no material impact on the financial
statements of the Group in the period of initial application. The exception is
for IFRS 7 where additional disclosures on financial instruments, their
significance and the nature and the extent of risks that they give rise to are
required. More specifically the Group will need to disclose the fair values of
its financial instruments and its risk exposure in greater detail. There will
be no effect on the reported income or net assets. The Group expects to adopt
the above standards for the year ending 31 March 2008 with the exception of
IFRS 8 which it expects to adopt for the year ending 31 March 2010.

The significant accounting policies and key assumptions of the future that have
a significant risk of causing material adjustments have been detailed within
the notes to the financial statements.

All amounts in the financial statements are rounded to the nearest £0.1m unless
otherwise indicated.

Basis of consolidation

The consolidated financial statements comprise the financial statements of EMI
Group plc and its subsidiaries for the year ended 31 March 2007.

All intercompany balances and transactions, including unrealised profits and
losses arising from intra-group transactions, have been eliminated in full.

Subsidiaries are consolidated from the date on which control is transferred to
the Group and cease to be consolidated from the date on which control is
transferred out of the Group. Where there is a loss of control of a subsidiary,
the consolidated financial statements include the results for the part of the
reporting year during which EMI Group plc has control.

For purchases of minority interest in subsidiaries the Group applies the
'equity concept method'. Under this method, the entire difference between the
cost of the additional interest in the subsidiary and the minority interest's
share of the assets and liabilities reflected in the consolidated balance sheet
at the date of acquisition of the minority interests is reflected as being a
transaction between owners.

Foreign currency translation

Sterling (£) is the functional currency of the parent undertaking and the
presentational currency of the Group. The functional currency of subsidiaries,
joint ventures and associated companies ("foreign operations") is the currency
of the primary economic environment in which they operate.

Transactions in foreign currencies are initially recorded in the functional
currency at the rate ruling on the date of the transaction. Monetary assets and
liabilities denominated in foreign currencies are translated at the functional
currency rate of exchange ruling at the balance sheet date. All differences are
taken to the income statement with the exception of differences on foreign
currency borrowings that provide a hedge against a net investment in a foreign
operation. These are taken directly to equity until the disposal of the net
investment, at which time they are recognised in the income statement. Tax
charges and credits attributable to exchange differences on those borrowings
are also dealt with in equity. Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using the exchange rates
at the dates of the initial transactions. Non-monetary items measured at fair
value in a foreign currency are translated using the exchange rates at the date
when the fair values were determined.

The assets and liabilities of foreign operations are translated into sterling
at the rate of exchange ruling at the balance sheet date and their income
statements are translated at the weighted average exchange rates for the
period. The exchange differences arising on the retranslation of foreign
operations are taken directly to a separate component of equity. On disposal of
a foreign operation, the deferred cumulative amount recognised in equity
relating to that particular foreign operation is recognised in the income
statement.

Business combinations and goodwill

The purchase method of accounting is used to account for the acquisition of
subsidiaries. The cost of an acquisition is measured as the fair value of the
assets given, equity instruments issued and liabilities incurred or assumed at
the date of exchange, plus costs directly attributable to the acquisition.
Identifiable assets acquired, and liabilities and contingent liabilities
assumed, in a business combination are measured initially at their fair values
at the acquisition date, irrespective of the extent of any minority interest.
The excess of the cost of the acquisition over the fair value of the Group's
share of the identifiable net assets acquired is recorded as goodwill.

Goodwill on acquisition is initially measured at cost. Following initial
recognition, goodwill is measured at cost less any accumulated impairment
losses.

Due to the adoption of IFRS 3 Business Combinations from 1 April 2003, goodwill
on acquisitions from 1 April 2003 is not amortised and goodwill already carried
in the balance sheet is not amortised from 1 April 2003. Goodwill is reviewed
for impairment annually, or more frequently if events or changes in
circumstances indicate that the carrying value may be impaired.

For an asset, such as goodwill, that does not generate largely independent cash
flows, the recoverable amount, which is the higher of fair value less cost to
sell and value in use, is determined for the smallest identifiable group of
assets including that asset that generates cash inflows that are largely
independent of the cash inflows from other assets or groups of assets (a `cash
generating unit').

Intangible assets

Intangible assets include music copyrights and other intangibles. Intangible
assets acquired separately are capitalised at cost, whilst those acquired as
part of a business acquisition are capitalised at fair value at the date of
acquisition.

Following initial recognition, intangible assets with finite lives are
amortised on a systematic basis over their economic useful lives. These lives
are estimated on an individual basis at periods of anything up to and including
20 years. Intangible assets are tested for impairment if events or changes in
circumstances indicate that the carrying value may be impaired. Useful lives
are examined on an annual basis and adjustments, where applicable, are made on
a prospective basis.

Intangible assets created within the business that cannot be distinguished from
the cost of developing the business as a whole are not capitalised. Any
relevant expenditure is charged against profit from operations in the period in
which the expenditure is incurred.

Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation
and any impairment in value. Depreciation is calculated on a straight line
basis to write off the cost, less residual value, of assets over the estimated
useful life of the asset. The annual rates used are:

Freehold buildings 2%

Property held under finance leases and leasehold improvements Lower of lease
term and useful economic life

Plant, equipment and vehicles 10 - 331/3%

The carrying values of property, plant and equipment are reviewed for
impairment when events or changes in circumstances indicate that the carrying
value may not be recoverable. Where an indicator of impairment exists, the
Group makes an estimate of the recoverable amount, which is the higher of the
asset's net selling price and value in use. Where

the carrying amount of an asset exceeds its recoverable amount, the asset is
considered impaired and is written down to its recoverable amount.

Assets are derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising
on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying value of the asset) is included in the
income statement in the period in which the item is derecognised.

Assets are held at historical cost with the exception that certain properties
in the subsidiary undertaking Toshiba-EMI Limited were carried at revalued
amounts that were frozen until their disposal during the financial year ended
31 March 2007. This frozen carrying value was deemed cost in the case of these
properties.

Leases

Assets which are held under a finance lease, which transfers to the Group
substantially all the risks and benefits incidental to ownership of the leased
item, are capitalised at the inception of the lease, with a corresponding
liability being recognised for the fair value of the leased asset or, if lower,
at the present value of the minimum lease payments. Lease payments are
apportioned between finance charges and a reduction of the lease liability so
as to achieve a constant rate of interest on the remaining balance of the lease
liability. Capitalised leased assets are depreciated over the shorter of the
estimated useful life of the asset and the lease term.

Leases where the lessor retains substantially all the risks and benefits of
ownership of the asset are classified as operating leases. Operating lease
payments are recognised as an expense in the income statement on a straight
line basis over the lease term.

Investments in joint ventures and associates

The Group's investments in its associates are accounted for using the equity
method. The investment is carried in the balance sheet at cost plus
post-acquisition changes in the Group's share of net assets of the associate,
less any impairment in value or dividends received. The Group's share of the
results after interest and tax of the associate are included in profit from
operations. When an associate has recognised a change in net assets other than
through the income statement, the Group recognises its share of the change and
discloses it, when applicable, in the statement of recognised income and
expense.

The Group has a number of jointly controlled operations where there is no
separate legal entity. The expenses that the Group incurs, and the share of the
income that the Group earns from the sale of goods by these jointly controlled
operations, are included in the income statement. The assets that the Group
controls, and the liabilities that the Group incurs, in respect of these
jointly controlled operations are included in the balance sheet.

Financial assets

Financial assets are recognised when the Group becomes party to the contracts
that give rise to them and are classified as financial assets at fair value
through profit or loss; loans and receivables; held-to-maturity investments; or
as available-for-sale financial assets, as appropriate. The Group determines
the classification of its financial assets at initial recognition and
re-evaluates this designation at each financial year end. When financial assets
are recognised initially, they are measured at fair value, being the
transaction price, in the case of financial assets not at fair value through
profit or loss, directly attributable transaction costs.

Those investments classified as held-to-maturity or available-for-sale are
designated as non-current assets. Available-for-sale investments are held on
the balance sheet at fair value, with any changes in value being recognised in
equity. When fair value is not available, the available-for-sale investments
are held on the balance sheet at cost less any impairment in value.
Held-to-maturity investments are held on the balance sheet at cost less any
impairment in value.

Those investments classified as fair value through profit and loss are
designated as current assets and are held on the balance sheet at fair value,
with any changes in fair value being recognised in the income statement along
with gains or losses on disposal.

Inventories

Inventories are valued at the lower of cost and net realisable value.

Advances

In the ordinary course of business the Group pays advances and other expenses
recoupable from future royalties to performing artists, songwriters, producers
and third party repertoire owners. The amounts paid are carried at cost less
recoupment and less an allowance for any unrecoupable amounts. The allowance is
based on past revenue performance, current popularity and projected revenue.

Advances are recoupable during the business operating cycle. All advances are
therefore reported as current assets, including advances recoupable more than
12 months after the balance sheet date.

Trade receivables

Trade receivables, which generally have 30-90 day terms, are recognised and
carried at the originally invoiced amount less an allowance for any doubtful
debts. An estimate for doubtful debts is made when collection of the full
amount is no longer probable. Bad debts are written off when identified.

Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in
hand and short-term deposits with an original maturity of three months or less.
For the purpose of the consolidated cash flow statement, cash and cash
equivalents consist of cash at bank and in hand and short term deposits net of
outstanding bank overdrafts

Financial liabilities

Borrowings

All loans and borrowings are initially recognised at the fair value of the
consideration received net of issue costs associated with the borrowing. After
initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost using the effective interest method. Amortised cost
is calculated by taking into account any issue costs and any discount or
premium on settlement. Gains and losses on derecognition are recognised in
finance charges.

Hedge accounting is adopted where derivatives, such as "fixed to floating"
interest rate swaps, are held as fair value hedges against fixed interest rate
borrowings. Under fair value hedge accounting, fixed interest rate borrowings
are revalued at each balance sheet date by the change in fair value
attributable to the interest rate risk being hedged.

Financial derivatives

The Group uses derivative financial instruments such as interest rate swaps and
foreign currency contracts to hedge risks associated with interest and exchange
rate fluctuations. Such derivative financial instruments are stated at fair
value. The fair values of interest rate swaps and foreign currency contracts
are determined by reference to market rates for similar instruments.

Hedges are classified as fair value hedges when they hedge the exposure to
changes in the fair value of a recognised asset or liability.

In relation to fair value hedges (e.g. fixed to floating interest rate swaps
held as fair value hedges against fixed interest rate borrowings) which meet
the conditions for hedge accounting, any gain or loss from remeasuring the
hedging instrument at fair value is recognised immediately in the income
statement. Any gain or loss on the hedged item attributable to the hedged risk
is adjusted against the carrying amount of the hedged item and recognised in
the income statement.

For derivatives that do not qualify for hedge accounting, any gains or losses
arising from changes in fair value are taken directly to the income statement.

Net investment hedges

The Group designates certain foreign currency borrowings as hedges of net
investments in foreign operations. Any gain or loss on foreign currency
borrowings designated in an effective hedging relationship is recognised in
equity; any gain or loss relating to an ineffective portion of the hedge is
recognised immediately in the income statement.

Gains and losses accumulated in equity are included in the income statement on
disposal or impairment of the foreign operation.

Convertible bond

The component of the guaranteed convertible bonds that exhibits characteristics
of a liability is recognised as a liability in the balance sheet, net of issue
costs. On issue of the guaranteed convertible bonds, the fair value of the
liability component was determined using a market rate for an equivalent
non-convertible bond. This amount is carried as a liability on an amortised
cost basis until extinguished on conversion or redemption. As the convertible
bonds are denominated in US dollars but are convertible to sterling shares, the
remainder of the proceeds is allocated to the conversion option that is
recognised and included as a derivative liability, net of issue costs. The
value of the conversion option is revalued to fair value at each balance sheet
date, with movements in fair value reflected as finance costs or finance
income.

Issue costs were apportioned between the liability and derivative components of
the guaranteed convertible bonds based on the allocation of proceeds to the
liability and derivative components when the instruments were first recognised.

Embedded call feature

The host contract of the €425m 8.625% senior notes allows the Group to redeem
the debt at fixed redemption prices on or after 15 October 2008.

On issue of the €425m 8.625% senior notes, the fair value of the liability
component was determined using market rates. This amount is carried as a
liability on an amortised cost basis until extinguished on redemption. The
difference between the fair value of the liability component and fair value of
the senior notes represents the embedded call feature that is recognised and
included as a financial asset on the balance sheet. The call feature is
revalued to fair value at each balance sheet date, with movements in fair value
reflected as exceptional finance costs or exceptional finance income.

Provisions

Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, when it is probable that an outflow
of resources embodying economic benefits will be required to settle the
obligation and when a reliable estimate can be made of the amount of the
obligation. Where the Group expects some or all of a provision to be
reimbursed, for example under an insurance contract, the reimbursement is
recognised as a separate asset but only when the reimbursement is virtually
certain. The expense relating to any provision is presented in the income
statement net of any reimbursement. If the effect of the time value of money on
the quantification of the provision is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects
current market assessments of the

time value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the
passage of time is recognised as finance costs.

Pensions and other employee benefits

The Group operates three major defined benefit pension schemes, plus a number
of smaller defined benefit pension schemes. The cost of providing benefits
under the schemes is determined separately for each scheme using the projected
unit actuarial valuation method.

Liabilities of the schemes are discounted by the current rate of return of an
AA-rated corporate bond of equivalent term and currency to the liabilities.
Assets of the schemes are measured at fair value at the balance sheet date.
Actuarially calculated surpluses or deficits on the defined benefit schemes are
included within the consolidated balance sheet. The current service cost of
each of the schemes is charged against profit from operations. Expected returns
on defined benefit scheme assets and interest on defined benefit scheme
liabilities are included as finance income and finance costs respectively. With
effect from 1 April 2004, the Group adopted the amendment to IAS 19 Employee
Benefits that permits actuarial gains and losses to be charged or credited
directly to equity through the statement of recognised income and expense.

In addition, the Group operates a number of defined contribution schemes.
Contributions to defined contribution schemes are charged to the income
statement as incurred.

Employee benefits other than post-employment benefits that can be carried
forward if they have not been used are accrued as they are earned until the
benefit is paid or used. Those employee benefits that are foregone if not taken
at the time are expensed when incurred.

Revenue

Revenue is recognised to the extent that it is probable that the economic
benefits will flow to the Group and the revenue can be reliably measured. The
following specific recognition criteria must also be met before revenue is
recognised:

- Sale of goods: revenue is recognised when the significant risks and rewards
of ownership of the goods have passed to the buyer and can be reliably
measured. Revenue is measured at fair value after making provision in respect
of expected future returns of goods and services supplied by the Group prior to
the balance sheet date;

- Royalty and other income: all royalty and other income is recognised when it
has been earned and can be reliably measured.

Interest income is recognised when it has been earned and can be reliably
measured.

Share-based payments

The share option programme allows certain Group employees to acquire shares of
the Company. The fair value of options granted is recognised as an employee
expense with a corresponding increase in equity. The fair value is measured at
grant date and the expense is spread over the period during which the employees
become unconditionally entitled to the options. The fair value of the options
granted is measured using a binomial lattice model, taking into account the
terms and conditions upon which the options were granted.

The amount recognised as an expense reflects the extent to which the vesting
period has expired and the Group's best estimate of the number of awards that
will ultimately vest. No expense is recognised for awards that do not
ultimately vest, except for awards where the vesting is conditional upon a
market condition, which are treated as vesting irrespective of whether or not
the market condition is satisfied, provided that all other performance
conditions are satisfied.

Employees of certain subsidiaries of the Group participate in the employee
share incentive plans and the Group has an employee share trust to satisfy
non-transferable options granted to executives and senior employees. Shares in
the Group held by the employee share trust are treated as treasury shares and
presented in the balance sheet as a deduction from equity.

The Group has taken advantage of the transitional provisions of IFRS 2 in
respect of equity-settled awards and has applied IFRS 2 only to equity-settled
awards granted after 7 November 2002 that had not vested on or before 1 January
2005.

Finance charges

Finance costs comprise interest payable on borrowings calculated using the
effective interest rate method, foreign exchange losses and losses on hedging
instruments that are recognised in the income statement and interest payable on
defined benefit pension scheme liabilities.

Finance income comprises interest receivable on funds invested calculated using
the effective interest rate method, dividend income, foreign exchange gains and
gains on hedging instruments that are recognised in the income statement and
interest receivable on defined benefit pension scheme assets.

Income tax

Income tax on the profit or loss for the period comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity, in which case it is
recognised in equity.

Current tax is the expected tax payable on the taxable income for the period,
using tax rates enacted or substantively enacted at the balance sheet date and
any adjustment to tax payable in respect of previous periods.

Deferred tax is recognised for all temporary differences between the carrying
amounts of assets and liabilities for financial reporting purposes and the tax
base. The following temporary differences are not provided for: the initial
recognition of goodwill or of assets or liabilities that affect neither
accounting nor taxable profit that is not a business combination; and temporary
differences relating to investments in subsidiaries, joint ventures and
associates where the timing of the reversal of the temporary difference can be
controlled and to the extent that it is probable that the temporary difference
will not reverse in the foreseeable future. The amount of deferred tax provided
is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantially
enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised.

Segments

A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products, or services within a particular economic environment that
are subject to risks, and returns that are different from those segments
operating in other economic environments.

Exceptional items and amortisation

Exceptional items and amortisation are excluded from underlying results in
order to provide a better understanding of the normalised trading of the Group.
The Group considers that such items would fall into either of two categories:
operating exceptional items and amortisation; and finance exceptional items.

The Group defines operating exceptional items and amortisation as items which
derive either from events or transactions that it considers fall outwith the
ordinary activities of the Group or from events or transactions that fall
within the ordinary activities of the Group but which, individually or, if of a
similar type, in aggregate, need to be disclosed separately by virtue of their
size or incidence if the financial statements are to give a true and fair view.
Similarly, the Group defines finance exceptional items as items which derive
either from events or transactions that it considers fall outwith the ordinary
financing activities of the Group or from events or transactions that fall
within the ordinary financing activities of the Group but which, individually
or, if of a similar type, in aggregate, need to be disclosed separately by
virtue of their size or incidence if the financial statements are to give a
true and fair view.

Events or transactions that the Group would consider as falling outwith its
ordinary activities could include, but are not limited to: the revaluation and/
or disposal of property, plant and equipment; the revaluation and/or disposal
of held-to-maturity or available-for-sale investments or investments at fair
value through profit and loss; the disposal and/or closure of a business,
jointly controlled operation or associate; and the costs of a fundamental
reorganisation or restructuring. Events or transactions that the Group would
consider as falling within its ordinary activities but which need to be
disclosed separately could include, but are not limited to: the amortisation
and impairment of music copyrights and intangibles; the impairment of goodwill;
and the impairment of the cost of an investment in a business, jointly
controlled operation or associate. Events or transactions that the Group would
consider as falling outwith its ordinary financing activities could include,
but are not limited to: gains or losses on the revaluation of derivative
financial instruments; gains or losses on the retranslation of foreign
currency-denominated borrowings to the extent that they do not provide a hedge
against foreign currency-denominated investments; and gains or losses from the
ineffectiveness of the interest rate swaps hedge. Events or transactions that
the Group would consider as falling within its ordinary financing activities
but which need to be disclosed separately could include, but are not limited
to, costs incurred as part of the Group's refinancing programmes.

1. Segmental analysis

At 31 March 2007, the Group is organised on a worldwide basis into two main        
business segments - Music and Music Publishing. These divisions are the basis      
on which the Group reports its primary segment information.                        
                                                                                   
Results                                                                            
                                                                                   
                                                    2007                       2006
                                                                                   
                                  EMI  EMI Music   Total     EMI  EMI Music   Total
                                Music Publishing           Music Publishing        
                                                                                   
                                   £m         £m      £m      £m         £m      £m
                                                                                   
Segment underlying revenue    1,350.2      401.3 1,751.5 1,660.3      419.6 2,079.9
                                                                                   
Segment exceptional              28.4       28.4    56.8       -          -       -
revenue                                                                            
                                                                                   
                              1,378.6      429.7 1,808.3 1,660.3      419.6 2,079.9
                                                                                   
Group profit (loss) from         44.9      105.6   150.5   145.1      105.4   250.5
operations before                                                                  
exceptional items and                                                              
amortisation                                                                       
                                                                                   
Segmental operating                                                                
exceptional items and                                                              
amortisation:                                                                      
                                                                                   
Amortisation of music           (9.6)     (43.1)  (52.7)   (3.6)     (46.3)  (49.9)
copyrights and intangibles                                                         
                                                                                   
Other exceptional items       (227.3)     (17.5) (244.8)     0.6      (0.2)     0.4
                                                                                   
Segmental result              (192.0)       45.0 (147.0)   142.1       58.9   201.0
                                                                                   
Share of profit from              1.0        0.8     1.8   (0.1)        1.1     1.0
associates                                                                         
                                                                                   
Non-segmental operating                           (11.5)                        3.6
exceptional items and                                                              
amortisation                                                                       
                                                                                   
Group profit from                                (156.7)                      205.6
operations                                                                         
                                                                                   
Total net finance charges                        (106.9)                     (87.5)
                                                                                   
Profit (loss) before                             (263.6)                      118.1
taxation                                                                           
                                                                                   
Taxation                                          (23.4)                     (28.1)
                                                                                   
Profit (loss) from                               (287.0)                       90.0
continuing operations                                                              
after taxation                                                                     
                                                                                   
Other segmental items included in the income statement include:                    
                                                                                   
Depreciation                   (18.9)      (2.9)  (21.8)  (20.7)      (2.9)  (23.6)
                                                                                   
Amortisation of music           (3.4)     (41.9)  (45.3)   (3.5)     (44.3)  (47.8)
copyrights and intangibles                                                         
                                                                                   
Impairment of music             (6.1)      (1.2)   (7.3)       -      (2.0)   (2.0)
copyrights and intangibles                                                         
                                                                                   
Impairment of goodwill           14.0          -    14.0       -          -       -
                                                                                   
Headcount and roster          (130.1)     (15.3) (145.4)       -          -       -
reduction                                                                          
                                                                                   
Impairment of tangible        (115.9)     (16.0) (131.9)       -          -       -
assets                                                                             
                                                                                   
Write down of inventories      (17.0)          -  (17.0)       -          -       -
                                                                                   
Provision for other            (22.8)      (0.3)  (23.1)       -          -       -
liabilities                                                                        
                                                                                   
Impairment of property              -          -       -   (0.9)      (0.2)   (1.1)
                                                                                   
Release of overprovision            -          -       -   (2.3)          -   (2.3)
for reorganisation costs                                                           
changed in prior years                                                             
                                                                                   
Reorganisation costs                -          -       -     2.3          -     2.3
                                                                                   

1. Segmental analysis (continued)

Assets and liabilities                                                               
                                                                                     
                                                    2007                         2006
                                                                                     
                                EMI  EMI Music     Total     EMI  EMI Music     Total
                              Music Publishing             Music Publishing          
                                                                                     
                                 £m         £m        £m      £m         £m        £m
                                                                                     
Segment assets                628.9      458.7   1,087.6   926.3      578.0   1,504.3
                                                                                     
Investment: associates          5.0        2.5       7.5     5.9        2.3       8.2
                                                                                     
Unallocated assets                                 403.4                        304.5
                                                                                     
Consolidated total assets                        1,498.5                      1,817.0
                                                                                     
Segmental liabilities       (764.2)    (276.1) (1,040.3) (898.1)    (282.4) (1,180.5)
                                                                                     
Unallocated liabilities                        (1,609.2)                    (1,363.1)
                                                                                     
Consolidated total                             (2,649.5)                    (2,543.6)
liabilities                                                                          
                                                                                     
Other segment items included in the balance sheet include:                           
                                                                                     
Capital expenditure            21.7       10.0      31.7    25.5        8.8      34.3
                                                                                     
Average employees (No.)       4,818        640     5,458   5,672        640     6,312
                                                                                     
Profit from operations is analysed instead of profit before taxation as finance      
charges are borne centrally and are not allocated to the operating businesses.       
                                                                                     
The Group's two business segments operate in six main geographical areas, even       
though they are managed on a worldwide basis.                                        
                                                                                     
                                                                                 2007
                                                                                     
                            United Rest of    Latin   North    Asia    Other    Total
                           Kingdom  Europe  America America Pacific                  
                                                                                     
                                £m      £m       £m      £m      £m       £m       £m
                                                                                     
Segment underlying           283.5   570.1     48.1   517.4   311.0     21.4  1,751.5
revenue                                                                              
                                                                                     
Segment exceptional            5.6     8.1      1.2    36.9     5.0        -     56.8
revenue                                                                              
                                                                                     
                             289.1   578.2     49.3   554.3   316.0     21.4  1,808.3
                                                                                     
Segment assets               204.1   258.1     36.3   441.6    79.2     68.3  1,087.6
                                                                                     
Investment: associates           -     0.4        -     5.9     1.2        -      7.5
                                                                                     
Unallocated assets               -       -        -       -       -        -    403.4
                                                                                     
Consolidated total           204.1   258.5     36.3   447.5    80.4     68.3  1,498.5
assets                                                                               
                                                                                     
Capital expenditure           11.4     5.8      0.4    10.9     2.4      0.8     31.7
                                                                                     
Average Employees (No.)      1,079   1,235      266   1,843     911      124    5,458
                                                                                     

1. Segmental analysis (continued)

                                                                            2006
                                                                                
                            United   Rest   Latin   North    Asia  Other   Total
                           Kingdom     of America America Pacific               
                                   Europe                                       
                                                                                
                                £m     £m      £m      £m      £m     £m      £m
                                                                                
Segment revenue              348.0  630.2    84.4   649.1   338.8   29.4 2,079.9
                                                                                
Segment assets               267.1  288.5    58.8   657.5   155.6   76.8 1,504.3
                                                                                
Investment: associates           -    0.4       -     6.6     1.2      -     8.2
                                                                                
Unallocated assets               -      -       -       -       -      -   304.5
                                                                                
Consolidated total assets    267.1  288.9    58.8   664.1   156.8   76.8 1,817.0
                                                                                
Capital expenditure           15.3    6.9     0.6     8.7     2.2    0.6    34.3
                                                                                
Average Employees (No.)      1,201  1,393     311   2,034   1,241    132   6,312
                                                                                

Unallocated assets and liabilities include financial derivatives, corporation
tax, deferred tax and net borrowings. These items are managed centrally and are
not allocated to the operating businesses.

2. Exceptional items and amortisation



Exceptional items and amortisation are excluded from underlying results in
order to provide a better understanding of the normalised trading of the Group,
and include operating exceptional items and amortisation and finance
exceptional items. The Group has responded to the unprecedented decline in the
global markets for physical product by implementing a series of strategic
remedies. The cost of these remedies in accounting terms is as reported below.
Amongst the strategic remedies are headcount and roster reductions and a change
in estimating methodology for advances.

Certain other transactions are reported below because they fall within the
Group's definition of Exceptional items and amortisation as per the accounting
policies section of the financial statements.

(i) Operating exceptional items and                                            
amortisation                                                                   
                                                                               
                                                           2007            2006
                                                                               
                                                             £m              £m
                                                                               
Restructuring and reorganisation costs:                                        
                                                                               
Headcount and roster reduction                          (149.1)               -
                                                                               
Impairment of goodwill 1                                 (15.1)               -
                                                                               
Impairment of tangible assets                           (131.9)               -
                                                                               
Write down of inventories                                (17.0)                
                                                                               
Provision for other liabilities                          (42.4)               -
                                                                               
Reorganisation costs in respect of prior year                 -           (2.3)
reorganisation programmes                                                      
                                                                               
Release of overprovision for reorganisation                   -             2.3
costs charged in prior years                                                   
                                                                               
Income from Bertelsmann litigation settlement              56.8               -
                                                                               
Net gain on sale of property, plant and                    50.2             1.5
equipment                                                                      
                                                                               
Gain on disposal of business                                  -             1.0
                                                                               
Gain (loss) on revaluation to fair value of               (0.2)             2.6
investments at fair value through profit and                                   
loss                                                                           
                                                                               
Property impairment                                           -           (1.1)
                                                                               
Amortisation and impairment of music copyrights          (52.7)          (49.9)
and intangibles                                                                
                                                                               
Cost incurred in connection with the possible             (6.4)               -
transaction with Warner Music Group                                            
                                                                               
Costs of defending abortive bid approach                  (1.2)               -
                                                                               
Total                                                   (309.0)          (45.9)

1 Impairment of goodwill includes £1.1m (2006: £nil) relating to goodwill in
associates.

2. Exceptional items and amortisation (continued)



The attributable taxation charge relating to operating exceptional items and
amortisation is £9.6m (2006: £nil). The share of the operating exceptional
items and amortisation attributable to minority interests is £1.2m (2006: £
0.1m).

(ii) Finance exceptional items                                                 
                                                                               
                                                           2007            2006
                                                                               
                                                             £m              £m
                                                                               
Fair value revaluation of convertible bond                (5.7)             4.1
derivative liability                                                           
                                                                               
Fair value revaluation of interest rate swaps               5.2             1.4
                                                                               
Fair value revaluation of forward purchase of             (1.3)               -
JPY                                                                            
                                                                               
Fair value revaluation of Eurobond call feature          (21.3)             8.2
derivative asset                                                               
                                                                               
Foreign exchange on unhedged Euro borrowings                8.1           (4.1)
                                                                               
Foreign exchange on unhedged foreign currency               3.0             0.3
borrowings                                                                     
                                                                               
Amortisation of fair value adjustment (US$500m            (4.2)               -
8.375% guaranteed notes)                                                       
                                                                               
Exceptional refinancing costs                             (1.1)           (5.2)
                                                                               
Total                                                    (17.3)             4.7

The attributable taxation charge relating to finance exceptional items is £nil
(2006: £nil).

3. Finance charges

                                                           2007            2006
                                                                               
                                                             £m              £m
                                                                               
Finance costs:                                                                 
                                                                               
Interest payable on bank overdrafts and loans              98.6            92.8
                                                                               
Interest payable on other loans                             5.1             7.4
                                                                               
Interest payable on finance leases                          0.7             0.7
                                                                               
                                                          104.4           100.9
                                                                               
Interest payable on defined benefit pension                48.2            48.7
scheme liabilities                                                             
                                                                               
                                                          152.6           149.6
                                                                               
Finance income:                                                                
                                                                               
Interest receivable on bank balances                      (1.8)           (2.1)
                                                                               
Other interest receivable                                     -           (0.3)
                                                                               
                                                          (1.8)           (2.4)
                                                                               
Expected return from defined benefit pension             (61.2)          (55.0)
scheme assets                                                                  
                                                                               
Underlying finance charges                               (63.0)          (57.4)
                                                                               
Net finance charges                                        89.6            92.2
                                                                               
Finance exceptional items (see Note 2)                     17.3           (4.7)
                                                                               
Total net finance charges                                 106.9            87.5

4. Taxation

                                                           2007            2006
                                                                               
                                                             £m              £m
                                                                               
Current tax                                                15.2            23.8
                                                                               
Deferred tax                                                8.2             4.3
                                                                               
                                                           23.4            28.1
                                                                               
The tax on the Group's profit before tax differs from the theoretical amount   
that would arise using the weighted average tax rate applicable to profits of  
the consolidated companies as follows:                                         
                                                                               
Profit before tax                                       (263.6)           118.1
                                                                               
Tax calculated at domestic rates applicable to           (96.5)            45.8
profits in the respective countries at 36.6%                                   
(2006: 38.8%)                                                                  
                                                                               
Effects of:                                                                    
                                                                               
Expenses not deductible for tax purposes                   92.4            19.5
                                                                               
Utilisation of previously unrecognised tax                (2.3)          (42.3)
losses                                                                         
                                                                               
Tax losses for which no deferred income tax                51.5            16.9
asset was recognised                                                           
                                                                               
Adjustment in respect of prior years                     (21.7)          (11.8)
                                                                               
Total tax charged in the Income Statement                  23.4            28.1

5. Dividends (equity)

                                            2007      2006      2007       2006
                                                                               
                                       Per share Per share        £m         £m
                                                                               
Ordinary dividends:                                                            
                                                                               
2006/2005 final dividend                    6.0p      6.0p      47.5       47.2
                                                                               
2006/2005 interim dividend                  2.0p      2.0p      15.7       15.7
                                                                               
Total                                       8.0p      8.0p      63.2       62.9

The interim dividend of 2.0p per share was paid on 3 April 2006 to shareholders
on the register at the close of business on 13 January 2006. The final dividend
of 6.0p per share was paid on 2 October 2006 to shareholders on the register at
the close of business on 21 July 2006.

An interim dividend of 2.0p per Ordinary Share was paid on 2 April 2007 to
shareholders on the register at the close of business on 12 January 2007. As
announced on 18 April 2007, the Board has decided to suspend further dividend
payments until the benefits of the restructuring process, announced on 12
January 2007, have been fully realised. The Board will keep the situation under
review.

6. Earnings per Ordinary share

                                                           2007           2006
                                                                              
Earnings per Ordinary Share is calculated using                               
the following:                                                                
                                                                              
Earnings                                              £(288.5)m         £86.1m
                                                                              
Underlying earnings                                      £46.2m        £127.4m
                                                                              
Basic                                                                         
                                                                              
Weighted average number of Ordinary Shares               794.8m         786.8m
                                                                              
Diluted                                                                       
                                                                              
Adjusted weighted average number of Ordinary             794.8m         874.2m
Shares                                                                        
                                                                              
Diluted underlying                                                            
                                                                              
Adjusted weighted average number of Ordinary             802.4m         874.2m
Shares                                                                        
                                                                              
The adjusted weighted average number of Ordinary Shares used in the diluted   
underlying earnings per share calculations, 802.4m (2006: 874.2m), is the     
weighted average number of Ordinary shares, 794.8m (2006: 786.8m), adjusted by
the effects of dilutive share options, 7.6m (2006: 8.5m).                     
                                                                              
The number of Ordinary Shares arising from the conversion of convertible bond 
options, 78.9m (2006: nil), is not included in the calculation of the diluted 
underlying earnings per share because of its anti-dilutive effect. However, it
was included in the calculation of the diluted earnings per share calculation 
in 2006 because of its dilutive effect. It is also excluded in the calculation
of diluted earnings per share in 2007 because it is anti-dilutive.            

Reconciliation of adjusted earnings                                           
                                                                              
                                     Year ended 31 March   Year ended 31 March
                                                    2007                  2006
                                                                              
                                            £m Per Share          £m Per Share
                                                                              
Earnings/basic EPS                     (288.5)   (36.3)p        86.1     10.9p
                                                                              
Dilutive adjustments:                                                         
                                                                              
Convertible bond - attributable               -        -         5.4    (0.3)p
interest cost* and dilution                                                   
                                                                              
Dilutive share options - dilution             -     0.0p           -    (0.1)p
                                                                              
Earnings adjusted for effects of        (288.5)  (36.3)p        91.5     10.5p
dilution / diluted EPS                                                        

* Including fair value revaluation of convertible bond derivative liability
included within finance exceptional items.

Reconciliation from basic to underlying basic and underlying diluted earnings 
per share                                                                     
                                                                              
                                     Year ended 31 March   Year ended 31 March
                                                    2007                  2006
                                                                              
                                            £m Per Share          £m Per Share
                                                                              
Earnings/basic EPS                     (288.5)   (36.3)p        86.1     10.9p
                                                                              
Exceptional items and amortisation:                                           
                                                                              
Operating exceptional items and          250.8     31.6p       (4.0)    (0.5)p
attributable taxation                                                         
                                                                              
Amortisation of music copyrights and      45.4      5.7p        47.9      6.1p
intangibles                                                                   
                                                                              
Impairment of music copyrights and         7.3      0.9p         2.0      0.3p
intangibles                                                                   
                                                                              
Impairment of goodwill                    15.1      1.9p           -      0.0p
                                                                              
Minority interest in operating           (1.0)    (0.1)p         0.4      0.1p
exceptional items and attributable                                            
taxation                                                                      
                                                                              
Minority interest in amortisation of     (0.2)    (0.1)p       (0.3)    (0.1)p
music copyrights and intangibles                                              
                                                                              
Finance exceptional items                 17.3      2.2p       (4.7)    (0.6)p
                                                                              
Underlying earnings / underlying          46.2      5.8p       127.4     16.2p
basic EPS                                                                     
                                                                              
Dilutive adjustments:                                                         
                                                                              
Convertible bond- attributable                -        -         9.5    (0.4)p
interest cost and dilution                                                    
                                                                              
Dilutive share options - dilution             -     0.0p           -    (0.1)p
                                                                              
Underlying earnings adjusted for           46.2     5.8p       136.9     15.7p
effects of dilution / underlying                                              
diluted EPS                                                                   

7. Financial liabilities

                                                              2007         2006
                                                                               
                                                                £m           £m
                                                                               
Non-current                                                                    
                                                                               
US$500m 8.375% guaranteed notes                              252.0        287.7
                                                                               
£325m 8.25% Sterling bonds                                   324.0        323.1
                                                                               
US$243.3m 5.25% guaranteed convertible bonds                 109.4        121.1
                                                                               
€425m 8.625% senior notes                                    280.1        300.0
                                                                               
Long-term committed facilities - term loan *                 245.3        (1.5)
                                                                               
Term loan                                                        -          2.0
                                                                               
                                                           1,210.8      1,032.4
                                                                               
Finance leases                                                15.8         17.0
                                                                               
Interest rate swaps - fair value hedge                         8.8         13.6
                                                                               
Convertible bond derivative                                   81.6         86.7
                                                                               
                                                           1,317.0      1,149.7
                                                                               
Current                                                                        
                                                                               
Overdrafts                                                     9.5         19.6
                                                                               
Term loan                                                        -          1.2
                                                                               
Forward currency contracts                                     1.5            -
                                                                               
Finance leases                                                 1.3          1.8
                                                                               
                                                              12.3         22.6
                                                                               
Total financial liabilities                                1,329.3      1,172.3

* Includes issue costs of syndicated loan facility of £14.7m (2006: £1.5m).

Interest rate swaps

The notional principal amounts of the outstanding interest rate swap contracts
at 31 March 2007 were £542.9m (2006: £586.2m). At 31 March 2007 the fixed
interest rates vary from 8.38% to 8.63% (2006: 8.38% to 8.63%) and the main
floating rates are 3 month LIBOR + 465 basis points and 3 month EURIBOR + 440
basis points (2006: 3 month LIBOR + 465 basis points and 3 month EURIBOR + 440
basis points ). The fair value of the interest rate swaps is equal to the book
value.

Convertible bond

The US$243.3m 5.25% guaranteed convertible bond which was issued in October
2003 is repayable in October 2010. The bonds are convertible into US$1,000
Preference Shares of the issuer which will be exchangeable immediately upon
issue for Ordinary Shares in the Company. The number of Ordinary Shares for
which a Preference Share may be exchanged will be determined by dividing the
paid-up value of the Preference Share, translated into Sterling at the fixed
rate of US$1.5957, by the exchange price initially set at 193.38p per Ordinary
Share. Conversion by the holder at 193.38p per Ordinary Share may occur after
11 November 2003 until seven days prior to the final redemption date.
Conversion by the issuer, after 16 October 2007, of all but not part, may occur
if the average price per Ordinary Share on at least 20 dealing days in any
period of 30 consecutive dealing days has been 130p; or at any time if 85% or
more of the aggregate principal amount has been previously purchased, redeemed
or cancelled. Redemption by the issuer, after 16 October 2007, may occur if the
same aggregate principal amount has been previously purchased, redeemed or
cancelled. Redemption by the holder, after 16 October 2007, may occur if the
same conditions which apply to conversion by the issuer are met. Final
redemption is on 2 October 2010 at 100% of principal and accrued interest.

Convertible bond derivative

On issue of the guaranteed convertible bond, the fair value of the liability
component was determined using a market rate for an equivalent non-convertible
bond. As the convertible bond is denominated in US Dollars but convertible into
Sterling shares, the remainder of the proceeds were allocated to the conversion
option that is recognised and included as a derivative liability, net of issue
costs. The value of the call feature is revalued to fair value at each balance
sheet date, with movements in the fair value reflected as finance costs or
finance income.

Forward Currency Contract

In December 2006 the Company entered into an agreement to purchase Toshiba's
45% minority interest in its subsidiary, Toshiba-EMI Limited. Given the Group's
policy not to hedge trading transaction exposure apart from materially large
one-

off items that have a high degree of certainty of occurring, this large firm
commitment was hedged by means of a forward currency contract.

7. Financial liabilities (continued)


Revolving Credit Facilities

In March 2007 the Group replaced its existing £450m revolving credit facility
with a new £700m credit facility due 29th May 2009. The new credit facility
also provides the financing for the purchase of the TOEMI minority and the
costs associated with the restructuring project. This resulted in exceptional
refinancing costs of £1.1m (2006: £5.2m) in respect of the write off of issue
costs of the £450m revolving credit facility.

Borrowings under the new £700m credit facility are governed by certain
financial covenants based on the results and financial position of the Group,
including the requirement that the interest coverage ratio and the leverage
ratio (each as defined in the credit agreement) remain within certain limits.
The covenants are tested, for the prior twelve month period as appropriate, at
each balance sheet date. The Group is currently in compliance with both
covenants.

The new £700m credit facility has two tranches, a £400m term loan facility and
a £300m revolving credit facility. The term loan of £245.3m was drawn under the
new credit facility in March 2007 (2006: July 2004 to December 2005). One
single repayment will be made in May 2009. The loan carries a floating rate of
interest, whose margin over LIBOR is determined by a leverage ratio grid (net
borrowings/EBITDA as defined in the credit facility), currently set at LIBOR +
2.5%. In March 2006 there was a term loan of £3.2m drawn under a separate
facility which was prepaid and cancelled during the year.

Other financial liabilities

On 11 March 2003 Moody's Investor Service downgraded the Group's credit rating
from Baa2 to Ba1. As a consequence the coupon of the £325m 8.25% Sterling bonds
was increased from 8.25% to 9.75% with effect from 20 May 2003.

At 31 March 2007 the Group had available £452.3m (2006: £437.1m) of undrawn
committed borrowing facilities in respect of which all conditions precedent had
been met.

All the Group's financial liabilities (excluding finance leases) are unsecured.

Year ended 31 March 2007                                                       
                                                                               
                Current Effective Within   1-2   2-3   3-4   4-5   More   Total
                coupon  interest  1 year years years years years than 5        
                 rate     rate                                    years        
                                                                               
                                      £m    £m    £m    £m    £m     £m      £m
                                                                               
Fixed Rate                                                                     
                                                                               
US$500m 8.375%   8.375%     8.49%      -     - 252.0     -     -      -   252.0
guaranteed                                                                     
notes                                                                          
                                                                               
£325m 8.25%       9.75%     9.92%      - 324.0     -     -     -      -   324.0
Sterling bonds                                                                 
                                                                               
US$243.3m 5.25%   5.25%     9.30%      -     -     - 109.4     -      -   109.4
guaranteed                                                                     
convertible                                                                    
bonds                                                                          
                                                                               
€425m 8.625%     8.625%     8.94%      -     -     -     -     -  280.1   280.1
senior notes                                                                   
                                                                               
Finance leases                       1.3   1.3   1.4   1.5   1.6   10.0    17.1
                                                                               
                                     1.3 325.3 253.4 110.9   1.6  290.1   982.6
                                                                               
Floating rate                                                                  
                                                                               
Overdrafts                           9.5     -     -     -     -      -     9.5
                                                                               
Term loan                              -     - 245.3     -     -      -   245.3
                                                                               
Interest rate swaps -                  -     -   7.4     -     -    1.4     8.8
long term commitments                                                          
                                                                               
Forward                              1.5     -     -     -     -      -     1.5
currency                                                                       
contract                                                                       
                                                                               
                                    11.0     - 252.7     -     -    1.4   265.1
                                                                               
Year ended 31 March 2006                                                       
                                                                               
                Current Effective Within   1-2   2-3   3-4   4-5   More   Total
                coupon  interest  1 year years years years years than 5        
                 rate     rate                                    years        
                                                                               
                                      £m    £m    £m    £m    £m     £m      £m
                                                                               
Non-current                                                                    
                                                                               
US$500m 8.375%   8.375%     8.49%      -     -     - 287.7     -      -   287.7
guaranteed                                                                     
notes                                                                          
                                                                               
£325m 8.25%       9.75%     9.92%      -     - 323.1     -     -      -   323.1
Sterling bonds                                                                 
                                                                               
US$243.3m 5.25%   5.25%     9.30%      -     -     -     - 121.1      -   121.1
guaranteed                                                                     
convertible                                                                    
bonds                                                                          
                                                                               
€425m 8.625%     8.625%     8.94%      -     -     -     -     -  300.0   300.0
senior notes                                                                   
                                                                               
Long-term                              -     -     -     - (1.5)      -   (1.5)
committed                                                                      
facilities*                                                                    
                                                                               
Finance leases                       1.8   1.8   1.9   1.9   1.6    9.8    18.8
                                                                               
                                     1.8   1.8 325.0 289.6 121.2  309.8 1,049.2
                                                                               
Floating rate                                                                  
                                                                               
Overdrafts                          19.6     -     -     -     -      -    19.6
                                                                               
Term loan                            1.2   2.0     -     -     -      -     3.2
                                                                               
Interest rate swaps - fair value       -     -     -     -     -   13.6    13.6
hedge (excluding accrued                                                       
interest)                                                                      
                                                                               
                                    20.8   2.0     -     -     -   13.6    36.4

7. Financial liabilities (continued)


Credit risk

The Group's principal financial assets are bank balances, cash and trade and
other receivables.

The Group's credit risk is primarily attributable to its trade and other
receivables. The amounts presented in the balance sheet are net of allowances
for doubtful debts. Such an allowance is made where there is an identified loss
event which, based on previous experience, is evidence of a reduction in the
recoverability of the debt.

The credit risk on bank balances is limited because the counterparties are
financial institutions with high credit ratings assigned by international
credit rating agencies.

The Group has no significant concentration of credit risk, with exposure spread
over a large number of geographically dispersed counterparties.

Net Investment in foreign operations

During the year the Group borrowed Japanese Yen totalling JPY 22,300m with a
carrying value of £107.1m, in March 2007 all of these borrowings were repaid.
In April 2006 borrowings of JPY 11,500m (£55.8m) were designated as a hedge of
the Group's net investment in its Japanese subsidiaries, hedging the Group's
exposure to foreign exchange risk on these investments. Upon repayment in March
2007, the borrowings were dedesignated as a hedge and the gain on retranslation
of the borrowing hedge transferred to equity to offset the loss on translation
of the net investment in the Japanese subsidiaries, whilst the translation gain
on the remaining borrowings (£3.0m) was immediately recognised in profit and
loss (finance exceptional items).

Fair values of financial assets and liabilities

The fair value of publicly traded borrowings has been calculated using the
appropriate market prices at the balance sheet date. For the borrowings which
are not publicly traded, the fair value has been calculated by discounting
their future cash flows at the appropriate market rate. The directors estimate
the fair value of the Group's borrowings to be as follows:

                                              Book value             Fair value
                                                                               
                                           2007     2006        2007       2006
                                                                               
                                             £m       £m          £m         £m
                                                                               
Financial assets                                                               
                                                                               
Held-to-maturity investments                3.2      7.9         3.2        7.9
                                                                               
Available-for-sale-investments              7.8      7.1         7.8        7.1
                                                                               
Interest rate swaps - fair value hedge        -     11.0           -       11.0
(excluding accrued interest)                                                   
                                                                               
€425m 8.625% senior notes embedded          9.1     30.3         9.1       30.3
call feature                                                                   
                                                                               
Investments at fair value through           0.2      0.3         0.2        0.3
profit and loss                                                                
                                                                               
                                           20.3     56.6        20.3       56.6
                                                                               
Financial liabilities                                                          
                                                                               
Loans and overdrafts                        9.5     19.6         9.5       19.6
                                                                               
US$500m 8.375% guaranteed notes           252.0    287.7       266.0      306.0
                                                                               
£325m 8.25% Sterling bonds                324.0    323.1       337.1      348.0
                                                                               
US$243.3m 5.25% guaranteed                109.4    121.1       119.4      133.5
convertible bonds                                                              
                                                                               
€425m 8.625% senior notes                 280.1    300.0       323.9      368.1
                                                                               
Long-term committed facilities                -    (1.5)           -      (1.5)
                                                                               
Term loan                                 245.3      3.2       245.3        3.2
                                                                               
Finance leases                             17.1     18.8        17.1       18.8
                                                                               
Interest rate swaps                         8.8     13.6         8.8       13.6
                                                                               
Foreign currency contract                   1.5        -         1.5          -
                                                                               
Convertible bond derivative                81.6     86.7        81.6       86.7
                                                                               
                                        1,329.3  1,172.3     1,410.2    1,296.0

Fair value hedges

The Group holds equivalent US Dollar nominal value interest rate swaps matching
the coupon and the term of the US$500m 8.375% guaranteed notes effectively
converting the interest basis of the issue to floating rate (set in arrears).
See Note 15 for the derivative portion of the borrowing. From 1 April 2006,
this swap was designated as a hedge for hedge accounting purposes.

7. Financial liabilities (continued)


The Group holds equivalent Euro nominal value interest rate swaps matching the
coupon and the term of the €425m 8.625% senior notes effectively converting the
interest basis of the issue to floating rate (set in arrears).

8. Other provisions for liabilities and charges

                          Trading  Employee Acquisition   Disposal and     Total
                                   Benefits                fundamental          
                                                    and reorganisation          
                                                                                
                                            integration                         
                                                                                
                               £m        £m          £m             £m        £m
                                                                                
At 1 April 2006              27.2       0.8         5.1            0.4      33.5
                                                                                
Currency retranslation      (2.6)         -           -              -     (2.6)
                                                                                
Provisions utilised        (65.1)     (0.3)       (4.5)          (0.1)    (70.0)
                                                                                
Charged (released)          150.0       0.2           -          (0.2)     150.0
                                                                                
At 31 March 2007            109.5       0.7         0.6            0.1     110.9
                                                                                
Current portion:                                                                
                                                                                
At 1 April 2006              27.2       0.8         5.1            0.4      33.5
                                                                                
At 31 March 2007            109.5       0.7         0.6            0.1     110.9
                                                                                
Total:                                                                          
                                                                                
At 1 April 2006              27.2       0.8         5.1            0.4      33.5
                                                                                
At 31 March 2007            109.5       0.7         0.6            0.1     110.9

Trading

Trading provisions include royalty audit charged through profit from operations
before operating exceptional items and amortisation. They also include
restructuring and reorganisation provisions charged through operating

exceptional items.

Employee benefits

This provision relates to long term benefits and termination benefits.

Disposal and fundamental reorganisation

This provision relates to the reorganisation costs for the closure and/or sale
of EMI's manufacturing businesses in North America and Europe.

Acquisition and integration

This provision relates to acquisition and integration costs that were created
for earnouts. Earnouts are contractual commitments under which the seller of a
business is entitled to additional future compensation based if the acquired
business achieves certain future financial targets.

a d v e r t i s e m e n t