Out-of-tune EMI posts £1.03bn losses
EMI, the music group owned by private equity firm Terra Firma, was hit by an operating loss of £1.03bn last year and today admitted it was in danger of breaching its banking covenants.
The swing from a £2m profit to a loss at the group, whose performers include Kylie Minogue and Bats for Lashes, was attributed to writing down the value of the group’s artists and catalogue. The write down included a £1bn impairment charge and restructuring costs of £136m.
The group filed its accounts yesterday for the 12 months to the end of March 2009. It revealed net loss of £1.6bn for the year to the end of March, despite revenues of £1.5bn, was up from £412m the previous year.
EMI said in its results that there is likely to be a significant shortfall against bank covenants at the end of March and admitted talks were ongoing with shareholders over raising additional funding.
EMI, snapped up by private equity tycoon Guy Hands for £4bn at the height of the private equity bubble in 2007, said the slump in sales of CDs as well as the value of digital and online music markets forced it to revaluate its catalogue.
In the accounts, accountants KPMG said there was “material uncertainty which may cast significant doubt on the Group’s ability to continue as a going concern”.
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