• Ebitda more than trebled to £163 million (2008: £51 million)* **
• Operating cash inflow of £190 million (2008: cash outflow of £142 million)
• Turnover up 4% to £1,072 million
• Market share broadly maintained at 9.5% (2008: 9.7%)
* Unless otherwise stated, the figures in this release are based on statutory exchange rates
** Figures are unaudited
During a year of significant change and reorganisation throughout the business EMI Music has registered strong growth in profits and cash flow in the year to end-March, its first full year under Terra Firma’s ownership
Ebitda rose over 200% to £163 million. This was driven by a £48 million year on year reduction in the cost of returns, strong cost management which has now been embedded in the company and overhead savings from the significant restructuring undertaken during 2008. The business is firmly on track to deliver the £200m of cost savings identified at the time of acquisition.
Most importantly the company generated operating cash flow of £190 million during the year, in sharp contrast to the cash outflow of £142 million it recorded in 2008. As a result the business generated free cash flow of £58 million, before costs incurred as a result of the restructuring. Cash generation and working capital management have been targeted as key areas by the group’s management.
This sharp improvement in the group’s operating performance was achieved against an increase of only 4% in net sales to £1,072 million. Excluding the currency impact, sales were down 10%, slightly more than the contraction in the overall market. The group broadly maintained its market share at approximately 9.5%. Market share in the US increased by 1.5 percentage points
These results were achieved in a physical market that declined aggressively due to structural changes in the global retail environment.
As well as the improving operating performance EMI has started to rejuvenate its creative output.
Best sellers during the year were led by Coldplay’s Viva La Vida, the industry’s most successful album globally in 2008. EMI’s other top releases were from a mix of new and established artists including Katy Perry, Lily Allen, Darius Rucker and Herbert Grönemeyer.
Creatively, the current year is off to a strong start with the new album from Depeche Mode, Sounds of the Universe, debuting at number one in 20 countries. The company’s release schedule for the year includes new albums from Air, Alice in Chains, Corinne Bailey Rae, Beastie Boys, Bebe, Glay, Gorillaz, David Guetta, Norah Jones, LeToya, Massive Attack, Kylie Minogue, Willie Nelson, 30 Seconds to Mars, KT Tunstall, Keith Urban and Robbie Williams. On 9 September, EMI will release the original Beatles catalogue, digitally re-mastered for the first time, the same date as the widely anticipated ‘The Beatles: Rock Band’ video game.
New signings releasing debut albums include Adelita’s Way, Hockey, Mpho, My Favorite Highway, Priscilla Renea and Sabrina Starke.
During the year the company continued its drive to develop new revenue streams to counteract the continuing decline in physical CD sales. Overall non-physical sales (including digital, licensing and rights) represented over 35% of EMI Music’s income, compared with just 20% in the prior year.
Commenting on the performance, Elio Leoni-Sceti, Chief Executive of EMI Music, said: “I am very pleased we have delivered this strong operating performance and would like to thank all the staff and artists whose talent, creativity and hard work made it possible. These results are an important first step in building EMI’s future. We cannot afford to be complacent however since there is still a great deal of work to be done to restore EMI to its former greatness and we are doing it in the face of challenging economic conditions. Looking ahead we have some exciting new releases coming up, a much deeper understanding of the music consumer and a new engaged relationship with our artists to build on. Now it has established this platform, EMI can look to the future with confidence and optimism.”
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