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"This is a disappointment for us all."
—— Eric Nicoli, EMI Group Chairman

EMI FINDS ITS MONEY MEN

Faxon, Ells Score CFO Posts as Stock Drops 14%

Roger Faxon, who for the past three years has been Chief Financial Officer of EMI Music Publishing, has been appointed as CFO, EMI Group, and a main Board Director. In his new role, Faxon reports directly to Eric Nicoli, EMI Group's Chairman.

In addition, Stuart Ells will join the company as CFO, EMI Recorded Music, reporting to Alain Levy, the division's Chairman/CEO. Ells, who is currently CFO and a Director of Andrew Lloyd Webber's Really Useful Group, will take up his new role by the end of February.

EMI also issued its second profits warning in six months Tuesday (2/5), causing its stock to drop 6.44% for the day, closing at 305p. The company said specifically that sales were underperforming in the U.S. and Japan. The good news was that publishing, 15% of EMI's business, is on track to beat last year's results.

EMI, which had warned last September that full-year profits would dive 20%, said pre-tax profits for the year to March 31, 2002, would be about 150 million pounds ($213 million). This compares with current market forecasts that range between 160 and 207 million pounds.

"This is a disappointment for us all," Nicoli said in the trading statement.

Shares in EMI, which have recovered from a year low of 206 pence last September in the wake of the first warning, were marked down 14% to 280 pence in pre-opening trade, which values the group at around 2.24 billion pounds.

Levy, who has been looking to extract cost savings from the sprawling group, said while missing its target was not good news, the key for EMI was how the group shapes up for the future.

"We are in the middle of a major redesign of EMI Recorded Music which will result in a reduction in our cost base, but will also make us more efficient and more competitive in order to drive growth," Levy said in the trading statement.

Meanwhile, Faxon and Ells succeed Tony Bates, who, since January 2000, has combined the role of Group Finance Director with that of Executive VP and CFO of EMI Recorded Music. Bates is leaving the company by mutual agreement. He will stay with the Group until May in order to ensure a smooth handover of his responsibilities.

A successor for Faxon at EMI Music Publishing will be announced in due course, the company said.

"As part of the continuing process of re-structuring, we have decided to reallocate roles and responsibilities at the top of the finance function," said Nicoli. "We now need senior finance executives focused separately on the demands of the Group role and on our drive to reshape the recorded music business."

Faxon has been CFO and Exec VP of EMI Music Publishing in New York since 1999. During that time he has worked closely with Martin Bandier, Chairman/CEO of EMI Music Publishing, to extend EMI's position as the world's leading music publishing company and grow operating profit by 20%. In addition to overseeing the publishing division's financial affairs, he has also been responsible for strategy, planning, administration and human resources, and for all of its Latin American and Asian publishing operations.

Nicoli added: "I am very pleased to welcome Roger to the Board. His strong grasp of the financial management needs of our company makes him ideally equipped to take on the Group responsibilities. His experience of both the recorded music and the music publishing businesses will be valuable in his new role and to our on-going strategic deliberations."

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