DELOITTE & ASSOCIESERNST & YOUNG et Autres

Universal Music GroupYear ended December 31, 2020

Vivendi SE's statutory auditors' report on Universal Music Group's
combined financial statements

DELOITTE & ASSOCIES
6, place de la Pyramide
92908 Paris-La Defense Cedex
S.A.S. au capital de€ 2 188 160
572028041RCSNan~rra

ERNST & YOUNG et Autres
Tour FirstTSA 14444
92037 Paris-La Defense Cedex
S.A.S. capital variable
438 476 913 R.C.S. Nanterre

Commissaire aux Comptes
Membre de la compagnie
regionale de Versailles et du Centre

Commissaire aux Comptes
Membre de la compagnie
regionale de Versailles et du CentreaUniversal Music GroupYear ended December 31, 2020

Vivendi SE's statutory auditors' report on Universal Music Group's combined financial statements

To the Management Board of Vivendi SE,

OpinionIn our capacity as statutory auditors of Vivendi SE and in accordance with your request in connection
with the partial divestiture by Vivendi of its music business, we have audited the combined financial
statements of Universal Music Group (UMG) as at December 31, 2020. These combined financial
statements comprise the combined statement of financial position as at December 31, 2020, thecombined statement of earnings, the combined statement of comprehensive income, the combined
statement of changes in equity and the combined statement of cash flows for the year then ended, andnotes to the combined financial statements, including a summary of significant accounting policies.
These combined financial statements were reviewed on March 1, 2021 by the Management Board ofVivendi SE, and approved on March 3, 2021 by two empowered members of the Management Board ofVivendi SE.
In our opinion, the accompanying combined financial statements give a true and fair view of the
combined financial position of UMG as at December 31, 2020 and of its combined financial
performance and combined cash flows for the year then ended, in accordance with International
Financial Reporting Standards (IFRS) as adopted by the EU and in accordance with IFRS published by
the International Accounting Standards Board (IASB).

Basis for Opinion
Due to the global crisis related to the Covid-19 pandemic, the combined financial statements havebeen prepared and audited under specific conditions. Indeed, this crisis and the exceptional measurestaken in the context of the state of sanitary emergency have had numerous consequences forcompanies, particularly on their operations and their financing, and have led to greater uncertainties
on their future prospects. Those measures, such as travel restrictions and remote working, have also
had an impact on the companies' internal organization and the performance of our audit procedures

It is in this complex and evolving context that we conducted our audit in accordance with International
Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the
Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are
independent of UMG and Vivendi SE in accordance with the International Code of Ethics forProfessional Accountants (including International Independence Standards) (IESBA Code) together withthe ethical requirements that are relevant to our audit of the combined financial statements in France,
and we have fulfilled our other ethical responsibilities in accordance with these requirements and the
IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.

Emphasis of matter
Without modifying our conclusion, we draw attention to the Note "Basis of preparation of the
Combined Financial Statements", in Section "Accounting conventions used when preparing the
Combined Financial Statements". Our opinion is not modified in respect of this matter.

Responsibilities of Vivendi SE's Management Board and Those Charged with Governance for the
Combined Financial Statements
Vivendi SE's Management Board is responsible for the preparation and fair presentation of the
combined financial statements in accordance with International Financial Reporting Standards (IFRS)
as adopted by the EU and in accordance with IFRS published by the International Accounting Standards
Board (IASB), and for such internal control as management determines is necessary to enable thepreparation of combined financial statements that are free from material misstatement, whether due
to fraud or error.
In preparing the combined financial statements, management is responsible for assessing UMG's ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless management either intends to liquidate UMG or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing Vivendi Group's financial reporting
process.

Auditor's Responsibilities for the Audit of the Combined Financial Statements
Our objectives are to obtain reasonable assurance about whether the combined financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor'sreport that includes our opinion. Reasonable assurance is a high level of assurance but is not aguarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individuallyor in the aggregate, they could reasonably be expected to influence the economic decisions of users
taken on the basis of these combined financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintainprofessional skepticism throughout the audit. We also:•

Identify and assess the risks of material misstatement of the combined financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The riskof not detecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Universal Music Group2

•

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of UMG's internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by management.

•

Conclude on the appropriateness of management's use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to events
or conditions that may cast significant doubt on UMG's ability to continue as a going concern. If weconclude that a material uncertainty exists, we are required to draw attention in our auditor'sreport to the related disclosures in the combined financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditors' report. However, future events or conditions may cause UMG to cease tocontinue as a going concern.

•

Evaluate the overall presentation, structure and content of the combined financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

•

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within UMG to express an opinion on the combined financial statements. We areresponsible for the direction, supervision and performance of the audit of UMG. We remain solely
responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned
scope and timing of UMG's audit and significant audit findings, including any significant deficiencies ininternal control that we identify during our audit.
This report shall be governed by, and construed in accordance with French law. The courts of France
shall have exclusive jurisdiction in relation to any claim or dispute concerning the engagement letter orthis report, and any matter arising from them. Each party irrevocably waives any right it may have toobject to an action being brought in any of those courts and to claim that the action has been brought
in an inconvenient forum or that those courts do not have jurisdiction.

Paris-La Defense, May 7, 2021
The Statutory Auditors
DELOITTE & ASSOCIES

Thierry Queron

Universal Music Group

Geraldine Segond

ERNST & YOUNG et Autres

Jacques Pierres

Claire Pajona

3

UNIVERSLU

IC CiROUP

Audited Combined Financial Statements for the years ended December 31,
2020, 2019 and 2018
Wednesday, March 03, 2021

Wednesday March 03, 2021

AUDITED COMBINED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2020, 2019 AND 2018 ............................... 3
COMBINED STATEMENT OF EARNINGS ...............................................................................................................................................................3
COMBINED STATEMENT OF COMPREHENSIVE INCOME ................................................................................................................................. 4
COMBINED STATEMENT OF FINANCIAL POSITION .......................................................................................................................................... 5
COMBINED STATEMENT OF CASH FLOWS ..........................................................................................................................................................6
COMBINED STATEMENTS OF CHANGES IN EQUITY ......................................................................................................................................... 7
NOTES TO THE COMBINED FINANCIAL STATEMENTS ................................................................................................................................... 10
BASIS OF PREPARATION OF THE COMBINED FINANCIAL STATEMENTS ................................................................................................... .. .. .. .. .. .. .................. 10
NOTE 1
ACCOUNTING POLICIES AND VALUATION METHODS ...................................................................................................................................... 13
NOTE 2NOTE 3

SEGMENT DATA ................................................................................................ ................................................................ .. .. .................. 28
EBIT ................................................................ ...................................................................................................................................... 29

NOTE4
NOTE5
NOTE6
NOTE7

FINANCIAL CHARGES AND INCOME ............................................................................................................................................................ 30
INCOME TAXES .................................... .. .. .. .. .. .. .. .................................................................................................................. .. .................. 31
EARNINGS PER SHARE .............................................................................................................................................................................. 34
CHARGES AND INCOME DIRECTLY RECOGNIZED IN EQUITY ................................... .. .............................................................. .. .. .. .. .................. 34

NOTES
NOTE9
NOTE 10NOTE 11GOODWILL ................................................................................................................................................................ .............................. 35
CONTENT ASSETS AND COMMITMENTS .. .. ................................................................................................................................................. 36
LEASES ................................................................................................................................................................................................... 38
INVESTMENTS IN EQUITY AFFILIATES ................................................................................................................................ .......................... 39

NOTE 12NOTE 13
NOTE 14
NOTE 15

FINANCIAL ASSETS ................................................................................................................................................................ .................. 40
NET WORKING CAPITAL ............................................................................................................................................................................ 42
CASH POSITION, BORROWINGS AND FINANCIAL RISK MANAGEMENT ............................................................................................................. 43
EOUITY ................................................................................................................................................................................................... 45

NOTE 16
NOTE 17PROVISIONS .................................... .. .. .. .. .. .. .. .. .. ............................................ .. ................................................................ .. .. .. .................. 45
EMPLOYEE BENEFITS ................................................................................................................................................................................ 46
SHARE-BASED COMPENSATION PLANS ....................................................................................................................................................... 52

NOTE 18
NOTE 19
NOTE 20

CASH FLOW STATEMENT ......................................................................................................................................................................... 54
RELATED PARTIES .................................... .. .. .. .. .. .. ..................................................................................................................................... 55

NOTE 21
NOTE 22
NOTE 23

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS ............................................................................................................................ 57
LITIGATION ................................................................................................................................................................ .. .. .. .. .. .. .................. 59
LIST OF COMBINED ENTITIES .............. .. .. .. .. .. .. ........................................................ .. .. .. .. ........................................ .. .. .. .. .. .. .. .. .. .. .. .. ............ 60

Universal Music Group/ 2

Wednesday March 03, 2021

Audited Combined Financial Statements for the years
ended December 31, 2020, 2019 and 2018
Combined Statement of Earnings
lin millions of eurosl
Revenues
Cost of revenues
Selling, general and administrative expenses
Restructuring charges
Impairment losses on intangible assets acquired through business combinations
Income from equity affiliates - operational
Earnings before interest and income taxes (EBITIInterest
Income from investments
Other financial income
Other financial charges

Note
2

2
2
11
3
4

2020

Year ended December 31,
2019
7,432
7,159
(3,917)(3,818)(2,265)(2,276)(20)(24)

Of which
Earnings attributable to shareowners
Non-controlling interests

6,023(3,110)(2,062)
(29)

(9)
1,221
(15)

(2l
1,039
14

4
4

603
(28)

5

1,781
(412)
1,369

174
(57)
131
1,170
(195)
975

1,153
(251)
902

1,369

975

902

1,366
3

972
3

897
5

560
Earnings before provision for income taxes
Provision for income taxes
Earnings from continuing operations
Earnings from discontinued operations
Earnings

2018

(1)

821
27
1
333
(29)

332

The accompanying notes are an integral part of the Combined Financial Statements.

Universal Music Group/ 3

Wednesday March 03, 2021

Combined Statement of Comprehensive Income(in millions of euros)

Note

Year ended December 31,
2019

2020

2018

1,369

975

6
2

(24)
(2)

8

(26)

(194)
(6)

44
2

(200)

39

113
4
12
129

(192)

13

129

Total comprehensive income

1,177

988

1,031

Of which
Total comprehensive income attributable to shareowners
Total comprehensive income attributable to non-controlling interests

1,174
2

985
3

1,025
6

Earnings
Actuarial gains/(losses) related to employee defined benefit plans, net
Financial assets at fair value through other comprehensive income
Comprehensive income from equity affiliates, net
Items not subsequently reclassified to profit or loss
Foreign currency translation adjustments
Comprehensive income from equity affiliates, net
Other impacts, net
Items to be subsequently reclassified to profit or loss
Charges and income directly recognized in equity

11

(7)

7

902

The accompanying notes are an integral part of the Combined Financial Statements.

Universal Music Group/ 4

Wednesday March 03, 2021

Combined Statement of Financial Position
December 31,
2019

January, 1
2019

December 31,
2018

8.000

1,488
2,269
1
267
472
88
1,103
367
6,055

1,378
1,808
1
243
454
97
873
353
5,207

1,378
1,808
1
262
na
97
873
330
4.749

79

90

84

84

677
1,088
1
815
326
2,987

591
1,058
28
672
336
2,775

601
994
30
1,260
276
3,245

601
997
30
1,260
276
3,248

10,987

8,830

8,452

7,997

1,432
1,366

2,999
897
3
3,002

3,074
897
3
3,077

December 31,

Note(in millions of euros)

ASSETS
Goodwill
Non-current content assets
Other intangible assets
Property, plant and equipment
Rights-of-use relating to leases
Investments in equity affiliates
Non-current financial assets
Deferred tax assets
Non-current assets
Inventories
Current tax receivables
Current content assets
Trade accounts receivable and other
Current financial assets
Shareowners loans
Cash and cash equivalents
Current assets

8
9

10
11
12
5

9
13
12
14
14

TOTAL ASSETSEQUITY AND LIABILITIES
Combined retained earningsof which earnings attributable to shareowners
Non-controlling interests
Total equity

2020

1,369
3,512
1
254
416
72
1,962
414

15

1,432

2,981
972
3
2,984

Non-current provisions
Long-term borrowings and other financial liabilities
Shareowners borrowings
Deferred tax liabilities
Long-term lease liabilities
Other non-current liabilities
Non-current liabilities

16
14
14
5
10
13

335

437

366

370

2,368
828
447
851
4,830

659
510
106
1,713

608
493
135
1,603

608
na
159
1,138

Current provisions
Short-term borrowings and other financial liabilities
Trade accounts payable and other
Short-term lease liabilities
Current tax payables
Current liabilities

16
14
13
10

137
640
3,843
78
27
4,725

63
15
3,981
86
(12)
4,133

79
17
3,613
90
48
3,847

79
17
3,638
na
48
3,782

Total liabilities

9,555

5,846

5,450

4,920

TOTAL EQUITY AND LIABILITIES

10,987

8,830

8,452

7,997

na: not applicable.
The accompanying notes are an integral part of the Combined Financial Statements.

Universal Music Group/ 5

Wednesday March 03, 2021

Combined Statement of Cash Flows
Year ended December 31,(in millions of eurosl
Operating activities

Note

EBIT

2

Adjustments
Content investments, net

19.1

Gross cash provided by operating activities before income tax paid
Other changes in net working capital
Net cash provided by operating activities before income tax paid
Income tax (paidl/received, net

5.1

Net cash provided by operating activities
Investing activities
Capital expenditures
Purchases of consolidated companies, after acquired cash
Investments in equity affiliates
Increase in financial assets
Investments
Proceeds from sales of property, plant, equipment and intangible assets
Proceeds from sales of consolidated companies, after divested cash
Disposal of equity affiliates
Decrease in financial assets
Divestitures
Dividends received from equity affiliates
Dividends received from unconsolidated companies
Net cash provided by/(used for) investing activities
Financing activities
Distributions to shareowners
Other transactions with shareowners
Dividends paid by consolidated companies to their non-controlling interests
Transactions with shareowners
Setting up of long-term borrowings and increase in other long-term financial liabilities
Principal payment on long-term borrowings and decrease in other long-term financial liabilities
Principal payment on short-term borrowings
Other changes in short-term borrowings and other financial liabilities
Interest paid, net
Other cash items related to financial activities
Transactions on borrowings and other financial liabilities
Repayment of lease liabilities and related interest expenses
Net cash provided by/(used for) financing activities

11
12

12
11

15

of which Shareowners loans
At beginning of the period
At end of the oeriodof which Cash and cash equivalent
At beginning of the period
At end of the oeriod

1,039
201
(4651

821
106
(1611

775
82
857
(1721
685

766

(661
(41
(21
(31
(75)

(751
(50l

(1101
(121

(131
(138)

(134)

11

3
(21

15
27
2

6
7
2

20
2

(46)

(129)

1
(111)

(2831
(111
(51
(299)

{1,0021

179
945
(1981

747

(121

19

(51
(1,007)

(911
217

2
14
(21
14
(831
(1,076)

(571
46
27
(31
13
na
(2,387)

(351
133

(528)

(191
(1,770)

14

1,008

1,536

3,306

14

1,141

1,008

1,536

672

1,260

3,059

815

612

].2li0

336

276

247

326

336

276

4

625
(151
(31

607
10 ; 4Foreign currency translation adjustments of continuing operations

At end of the period

1,221
213
(1,5171
(83)
287
204
(2071
(3)

(9811
(1,4141(51(2,400)Change in cash and cash equivalents and shareowners loans
Cash and cash equivalents and shareowners loans
At beginning of the period

2018

2019

2020

(Bl

na: not applicable.
The accompanying notes are an integral part of the Combined Financial Statements.

Universal Music Group/ 6

Wednesday March 03, 2021

Combined Statements of Changes in Equity
Year ended December 31, 2020

Retained earnings and other
Retained earnings(in millions of euros)

Other comprehensive income

Total equity

BALANCE AS OF DECEMBER 31, 2019
Attributable to Universal Music Group
Attributable to non-controlling interests

3,275
3,272
3

(291)
(290)
(1)

2,984
2,982
2

Contributions by/distributions to shareownersof which Universal Music Group S.A.S. transferred to Vivendi SEof whichDistribution by Universal International Music BV paid to shareowners
Changes in UMG ownership interest in subsidiaries that do not result in a loss of control
CHANGES IN EQUITY ATTRIBUTABLE TO UNIVERSAL MUSIC GROUP (A)(2,711)(2,428)(283)(13)(2,724)-(2,711)(2,428)(283)(13)(2,724)

(5)
(5)
(5)

--

(5)
(5)
(5)

Contributions by (distributions to) non-controlling interests
Dividends paid by subsidiaries to non-controlling interests
CHANGES IN EQUITY ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (B)Earnings
Charges and income directly recognized in equity
TOTAL COMPREHENSIVE INCOME (C)

1,369
1,369

(192)
(192)

1,369
(192)
1,177

TOTAL CHANGES OVER THE PERIOD (A+B+C)
Attributable to Universal Music Group
Attributable to non-controlling interests(1,360)(1,358)
(2)

(192)
(192)
-

(1,552)(1,550)(2)

BALANCE AS OF DECEMBER 31, 2020
Attributable to Universal Music Group
Attributable to non-controlling interests

1,915
1,914
1

(483)
(482)
(1)

1,432
1,432
-

The accompanying notes are an integral part of the Combined Financial Statements.

Universal Music Group / 7

Wednesday March 03, 2021
Year ended December 31, 2019

Retained earnings and other
Retained earnings(in millions of euros)

BALANCE AS OF DECEMBER 31, 2018
Attributable to Universal Music Group
Attributable to non-controlling interests

Other comprehensive income

Total equity

3,389
3,385
4

(312)
(311)
(1)

3,077
3,074
3

(75)
(75)
-

-

(75)
(75)
-

BALANCE AS OF JANUARY 1, 2019
Attributable to Universal Music Group
Attributable to non-controlling interests

3,314
3,310
4

(312)
(311)
(1)

3,002
2,999
3

Contributions by/distributions to shareowners
Distribution by Universal Music Group Inc. and Universal Music Group S.A.S. to Vivendi SE
CHANGES IN EQUITY ATTRIBUTABLE TO UNIVERSAL MUSIC GROUP (A)(1,002)(1,002)(1,002)-(1,002)(1,002)(1,002)

(5)
(5)
(5)

--

(5)
(5)
(5)

Restatements related to the application of IFRS 16
Attributable to shareowners
Attributable to non-controlling interests

Contributions by/distributions to non-controlling interests
Dividends paid by subsidiaries to non-controlling interests
CHANGES IN EQUITY ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (B)Earnings
Charges and income directly recognized in equity
TOTAL COMPREHENSIVE INCOME (C)

975
(7)
968

21
21

975
14
989

TOTAL CHANGES OVER THE PERIOD (A+B+C)
Attributable to Universal Music Group
Attributable to non-controlling interests

(39)
(38)
(1)

21
21
-

(18)
(17)
(1)

BALANCE AS OF DECEMBER 31, 2019
Attributable to Universal Music Group
Attributable to non-controlling interests

3,275
3,272
3

(291)
(290)
(1)

2,984
2,982
2

The accompanying notes are an integral part of the Combined Financial Statements.

Universal Music Group / 8

Wednesday March 03, 2021
Year ended December 31, 2018

Retained earnings and other
Retained earnings(in millions of euros, except number of shares)

BALANCE AS OF DECEMBER 31, 2017
Attributable to Vivendi SA shareowners
Attributable to non-controlling interests

Other comprehensive income

Total equity

4,933
4,929
4

(487)
(486)
(1)

4,446
4,443
3

(58)
(58)
-

58
58
-

-

BALANCE AS OF JANUARY 1, 2018
Attributable to Universal Music Group
Attributable to non-controlling interests

4,875
4,871
4

(429)
(428)
(1)

4,446
4,443
3

Contributions by/distributions to shareowners
Universal Music Group S.A.S. share capital reduction
Distribution by Universal Music Group Inc. and Universal Music Group S.A.S.
CHANGES IN EQUITY ATTRIBUTABLE TO UNIVERSAL MUSIC GROUP (A)Contributions by/distributions to non-controlling interests
Dividends paid by subsidiaries to non-controlling interests
CHANGES IN EQUITY ATTRIBUTABLE TO NON-CONTROLLING INTERESTS (B)Earnings
Charges and income directly recognized in equity
TOTAL COMPREHENSIVE INCOME (C)TOTAL CHANGES OVER THE PERIOD (A+B+C)
Attributable to Universal Music Group
Attributable to non-controlling interests(2,395)(1,414)(981)(2,395)
(5)
(5)
(5)
902
12
914
(1,486)(1,486)
-

117
117
117
117
-

(2,395)(1,414)(981)(2,395)
(5)
(5)
(5)
902
129
1,031
(1,369)(1,369)-BALANCE AS OF DECEMBER 31, 2018
Attributable to Universal Music Group
Attributable to non-controlling interests

3,389
3,385
4

(312)
(311)
(1)

3,077
3,074
3

Restatements related to the application of IFRS 9, net of income taxes
Attributable to shareowners
Attributable to non-controlling interests

The accompanying notes are an integral part of the Combined Financial Statements.

Universal Music Group / 9

Wednesday March 03, 2021

Notes to the Combined Financial Statements
Universal Music Group (UMG) is the world leader in music-based entertainment, with a broad array of businesses engaged in recorded
music, music publishing, merchandising and audiovisual content in more than 60 countries. Featuring the most comprehensive catalog ofrecordings and songs across every musical genre, UMG identifies and develops artists and produces and distributes the most criticallyacclaimed and commercially successful music in the world. Committed to artistry, innovation and entrepreneurship, UMG fosters thedevelopment of services, platforms and business models in order to broaden artistic and commercial opportunities for its artists and create
new experiences for fans.
The Combined Financial Statements present the financial and accounting situation of UMG together with interests in equity affiliates.
Amounts are reported in euros and all values are rounded to the nearest million.
On March 1, 2021, Vivendi's Management Board examined UMG's Combined Financial Statements for the years ended December 31, 2020,2019 and 2018, and granted power to two of its members to approve such Combined Financial Statements. On March 3, 2021, UMG's
Combined Financial Statements for the years ended December 31 , 2020, 2019 and 2018 were approved by those members of Vivendi' sManagement Board.

Basis of preparation of the Combined Financial Statements
The Combined Financial Statements of Universal Music Group (as defined below) for the fiscal years ended December 31, 2020 have been
prepared by Vivendi SE ("Vivendi") in its capacity as the controlling shareholder of Universal Music Group Inc. ("UMG Inc.") and Universal
International Music B.V. ("UIM B.V.") and their respective subsidiaries (UMG Inc. and UIM B.V. are collectively referred to herein as,"Universal Music Group" or "UMG"), pursuant to Section 7.04. Information and Inspection Rights. of UIM B.V. Shareholders Agreement.
They have been drawn up based on the accounting data of UMG Inc. and UIM B.V. and their respective subsidiaries for the fiscal years endedon December 31, 2020, 2019 and 2018, as approved, and compiled for the preparation of the Vivendi Group's Consolidated Financial
Statements for the relevant fiscal years. UMG's Combined Financial Statements for the fiscal years ended December 31, 2020, 2019 and2018 have been prepared in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Union (EU) andin accordance with IFRS published by the International Accounting Standards Board (IASB), with mandatory application as of December 31 ,2020. Amendments to IFRS standards applicable as from January 1, 2020, had no material impact on UMG's Combined Financial Statements.
As a reminder, UMG applied IFRS 16 with retrospective effect as from January 1, 2019 without restating comparative periods in the
consolidated financial statements. In accordance with IFRS 16, the impact of the change of accounting standard was recorded by UMG in the
opening balance sheet as of January 1, 2019; moreover, UMG applied this change of accounting standard to the Statement of Financial
Position, Statement of Earnings and Statement of Cash Flows in 2019.
As a reminder, in 2018, UMG applied two new accounting standards:• IFRS 15 - Revenue from contracts with customers: in accordance with IFRS 15, as from 2017, UMG applied this change ofaccounting standard to revenues; and• IFRS 9 - Financial instruments: in accordance with IFRS 9, as from 2018, UMG applied this change of accounting standard to theStatement of Earnings and Statement of Comprehensive Income restating its opening balance sheet as of January 1, 2018.
Vivendi is a European company, which since January 7, 2020, has been subject to the provisions of French commercial company law that are
applicable to it in France, including the Council Regulation EC No. 2157 /2001 of October 8, 2001 on the statute for a European company andthe French Commercial Code (Code de commerce).

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Context
On December 31, 2019, Vivendi and a Tencent-led consortium, which includes Tencent Music Entertainment and other financial co-investors,
entered into an agreement for a planned equity investment in Universal Music Group (UMG). This agreement provides for:••the purchase by this consortium of 10% of UMG's share capital, based on an enterprise value of €30 billion for 100% of UMG'sshare capital; andan option for this consortium to acquire, on the same valuation basis, an additional interest of up to 10% of UMG's share capital
until January 15, 2021 .

Sale of a first tranche of 10% of Universal Music Group's share capital
On March 31, 2020, Vivendi completed the sale of 10% of UMG's share capital to a Tencent-led consortium. This transaction resulted in acash inflow of €2,842 million for Vivendi .
As a reminder, on March 31 , 2020, the sale of 10% of UMG's share capital to a Tencent-led consortium was recorded , in accordance withIFRS standards, as a sale of non-controlling interests and therefore has not impacted the Consolidated Financial Statement of Earnings. In
Vivendi's Consolidated Financial Statements, in accordance with IFRS 10, the capital gain on the sale of 10% of UM G's share capital, equal
to the difference between the sale price of €2,842 million and the value of sold non-controlling interests in the Consolidated Financial
Statements of €457 million, was directly recorded as an increase in equity attributable to Vivendi SE shareowners for €2,385 million.
Sale of a second tranche of 10% of Universal Music Group's share capital
On December 17, 2020, the consortium decided to exercise the option to acquire an additional 10% of UMG.
On January 29, 2021, Vivendi completed the sale of the additional 10% of UMG's share capital to a Tencent-led consortium, based on an
enterprise value of €30 billion for 100% of UM G's share capital. This transaction resulted in a cash inflow of €2,847 million for Vivendi.
For information, on January 29, 2021, the sale of an additional 10% of UMG's share capital to a Tencent-led consortium will be recorded, in
accordance with IFRS standards, as a sale of non-controlling interests and therefore will not impact the Consolidated Financial Statement ofEarnings. In Vivendi's Consolidated Financial Statements, in accordance with IFRS 10, the capital gain on the sale will be directly recorded as
an increase in equity attributable to Vivendi SE shareowners.
As from this date, the Tencent-led consortium owns 20% of UMG.
The cash generated by these transactions may be used by Vivendi to reduce its financial debt and to finance acquisitions.
Planned distribution of 60% of Universal Music Group's share capital and its listing on the stock market
On February 13, 2021, Vivendi announced that it will study the planned distribution of 60% of UMG's share capital and its listing by the endof 2021 . This distribution, exclusively in kind, would take the form of an exceptional distribution ("special dividend"). The listing of UMG'sshares, issued by its holding company, would be applied for on the regulated market of Euronext NV in Amsterdam. in a country that has
been one of UMG's historical homes.
A Vivendi Extraordinary Shareholders' Meeting will be called for March 29, 2021, to modify the company's by-laws and make the principle ofthis distribution in kind possible and pursue this project. Subject to a favorable shareholder vote, a Shareholders' Meeting could be called
before the end of 2021 to vote on this distribution of UMG shares.
Minority interest in Universal Music Group's operations in China
In addition, a separate agreement was entered into on March 31, 2020, enabling Tencent Music Entertainment to acquire a minority interestin the share capital of the UMG's subsidiary that owns its Greater China operations.
Scope of combination
The arrangement that constitutes the combined UMG group is not a legal entity in its own right and is made up of entities under the common
control of Vivendi. As of December 31, 2020, UMG principally comprised the entities held directly and indirectly by UMG Inc. and UIM B.V.
The combination scope is presented in Note 23 "List of Combined entities".
Core Business
UMG is the worldwide leader in music, engaged in recorded music, music publishing and merchandising . It owns more than 50 labels
covering all music genres. UMG is home to the greatest local and international artists of all time, including The Beatles, Rolling Stones, U2,
Andrea Bocelli, Lady Gaga, Helene Fischer and more, as well as many of the biggest artists of the year, such as The Weeknd, Billie Eilish.
Post Malone, and Taylor Swift.

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The recorded music business discovers and develops recording artists, marketing and promoting their music across a wide array offormats and platforms. Its activities also extend to other areas, such as live events, sponsorship, film and television.
The music publishing business discovers and develops songwriters and owns and administers the copyright for musical compositions
used in recordings, public performances and related uses, such as films and advertisements.
The merchandising business produces and sells artist-branded and other branded products through multiple sales channels, including
fashion retail, concert touring and the Internet. Its activities also extend to other areas, such as brand rights management.

Accounting conventions used when preparing the combined financial statements
As a reminder, as a first-time adopter, Combined Financial Statements were prepared for UMG for the fiscal years ended December 31,
2018, 2017 and 2016 in accordance with IFRS 1 - First-Time Adoption of International Financial Reporting Standards. In accordance withIFRS 1.D16, if a subsidiary adopts IFRS later than its parent company, the assets and liabilities in the subsidiary's opening balance sheet may
be measured as either:••

the carrying amounts based on the subsidiary's contribution to the parent company's historical consolidated financial statements,
after restating adjustments relating to the consolidation procedures and to the accounting for the business combination in which theparent acquired the subsidiary; or
the carrying amounts as determined in accordance with IFRS 1, applied at the date of the subsidiary's transition to IFRS. In this case,the options in IFRS 1 applied by the subsidiary may differ from those applied by the parent.

Pursuant to the option provided in IFRS 1, UMG's first IFRS combined financial statements were prepared by measuring its assets andliabilities at the carrying amounts, based on UMG's contribution to Vivendi's historical financial statements, after eliminating adjustments
relating to its consolidation by the Vivendi Group and to the impacts of accounting for the business combinations pursuant to which Vivendi
acquired interests in UMG Inc. and UIM B.V. and their subsidiaries. As of January 1, 2016, the net book value of the goodwill arising from
Vivendi 's acquisition of UMG in December 2000 (€3,756 million) as well as the related cumulative translation adjustment (CTA) as ofDecember 31 , 2016, 2017 and 2018 (+€177 million, -€328 million and -€156 million, respectively), and as of December 31, 2019 and 2020 (€70 million and -€417 million, respectively), were reversed through adjustments to retained earnings.
The scope of combination excludes as from January 1, 2016 Vivendi Holding I LLC ("VH I"), which was wholly-owned by UMG Inc. until theend of 2018 but had no impact on UMG's contribution to Vivendi's Statement of Financial Position. Therefore, these Combined Financial
Statements eliminate the statement of income impacts for the years ended December 31, 2018, and 2017 relating to:• the interest expense on a borrowing granted by VH I to UMG Inc.; and• the related income tax effects, if any.
The scope of combination also excludes as from March 19, 2020 Universal Music Group SAS. ("UMG SAS."), which was merged into
Vivendi S.E. as of that date.
lntercompany transactions between UMG and other Vivendi Group's entities

Balances pertaining to current transactions between UMG entities and other entities in the Vivendi Group have been presented on thebalance sheet as third-party assets or liabilities in the Combined Financial Statements. All loans and borrowings between UMG entities andother Vivendi Group entities have been presented as financial assets or liabilities in the Combined Financial Statements.
In accordance with IAS 24 - Related Party Disclosures, transactions between UMG and other Vivendi Group entities are presented in
Note 20 "Related Parties" .
Earnings per share

As the combined UMG is not a legal entity, the number of shares outstanding is not determinable. Consequently, no earnings per share data
is presented in the Combined Financial Statements.
Translation of financial statements of foreign companies

Pursuant to IFRS 1.D13, in the Combined Financial Statements, the cumulative translation adjustment (CTA) accounted for in othercomprehensive income (to be subsequently reclassified to profit or loss) was set to zero as of January 1, 2016. Therefore, the gain or loss on
a subsequent disposal of any foreign operation of the combined UMG only includes translation differences recorded since January 1, 2016.
Except as described above, no adjustment was made in UM G's Combined Financial Statements to UMG's contribution to Vivendi's historicalfinancial statements.

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Note1
1.1

Accounting policies and valuation methods

Compliance with accounting standards

The 2020 UMG's Combined Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS)
as endorsed by the European Union (EU), and in accordance with IFRS published by the International Accounting Standards Board (IASB) withmandatory application as of December 31, 2020.
Amendments to IFRS standards applicable as from January 1, 2020, had no material impact on UMG's Combined Financial Statements.

1.2

Presentation of the Combined Financial Statements

1.2.1

Combined Statement of Earnings

The main line items presented in UMG's Combined Statement of Earnings are revenues, income from equity affiliates, interest, provision forincome taxes, net earnings from discontinued or held for sale operations, and net earnings. The Combined Statement of Earnings presents a
subtotal of Earnings Before Interest and Tax (EBIT) equal to the difference between charges and income (excluding financing activities,
discontinued or held for sale operations, and income taxes).
The charges and income relating to financing activities consist of interest, income from investments, as well as other financial charges andincome as presented in Note 4.
1.2.2

Combined Statement of Cash FlowsNet cash provided by operating activities

Net cash provided by operating activities is calculated using the indirect method based on EBIT. EBIT is adjusted for non-cash items andchanges in net working capital. Net cash provided by operating activities excludes the cash impact of financial charges and income and net
changes in working capital related to property, plant and equipment, and intangible assets.
Net cash used for investing activities

Net cash used for investing activities includes changes in net working capital related to property, plant and equipment. and intangible assets
as well as cash from investments (particularly dividends received from equity affiliates). It also includes any cash flows arising from the gainor loss of control of subsidiaries.
Net cash used for financing activities

Net cash used for financing activities includes net interest paid on borrowings, cash and cash equivalents, bank overdrafts, the cash impactof other items related to financing activities such as premiums from the early redemption of borrowings and the settlement of derivative
instruments, as well as the cash payments for the principal amount of the lease liability and any interest thereon . It also includes cash flows
from changes in ownership interests in a subsidiary that do not result in a loss of control (including increases in ownership interests).
1.2.3

Operating performance of each operating segment and the group

UMG considers Adjusted Earnings Before Interest and Tax (EBITA), Earnings Before Interest and Tax, Depreciation and Amortization (EBITDA)
and Cash Flow From Operations (CFF0), all non-GAAP measures, to be relevant indicators of the group's operating and financial performance.

EDITA
UMG considers EBITA, a non-GAAP measure, to be a relevant measure to assess the performance of its operating segments as reported in
the segment data. It enables UMG to compare the operating performance of operating segments regardless of whether their performance isdriven by the operating segment's organic growth or by acquisitions. To calculate EBITA, the accounting impact of the following items is
excluded from the income from EBIT:• the amortization of intangible assets acquired through business combinations as well as other rights catalogs acquired;• impairment losses on goodwill, other intangibles acquired through business combinations and other rights catalogs acquired; and• other income and charges related to transactions with shareowners (except when directly recognized in equity).

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Wednesday March 03, 2021

EBITDA
UMG considers EBITDA, a non-GMP measure, to be a relevant measure to assess the performance of its operating segments as reported in
the segment data. It enables UMG to compare the operating performance of operating segments regardless of whether their performance isdriven by the operating segment's organic growth or by acquisitions. To calculate EBITDA, the accounting impact of the following items is
excluded from the income from EBIT:• the depreciation of tangible, intangible and right of use assets;• gains/(losses) on the sale of tangible, intangible and right of use assets;• the amortization of intangible assets acquired through business combinations as well as other rights catalogs acquired;• impairment losses on goodwill, other intangibles acquired through business combinations and other rights catalogs acquired;• income from equity affiliates having similar operating activities; and• restructuring charges, and other non-recurring items.

Cash Flow from Operations (CFFO)
UMG considers cash flow from operations (CFFO), a non-GAAP measure, to be a relevant measure to assess the group's operating andfinancial performance. CFFO includes net cash provided by operating activities, before income tax paid, as presented in the Statement of
Cash Flows, dividends received from equity affiliates and unconsolidated companies, as well as cash payments for the principal of the leaseliability and any interest thereon, which are presented as financing activities in the combined statement of cash flows . It also includes
capital expenditures, net that relate to cash used for capital expenditures, net of proceeds from sales of property, plant and equipment, andintangible assets, which are included in net cash used for investing activities, as well as income tax paid.
Net cash provided by operating activities of discontinued operations are excluded from CFFO.

1.2.4

Combined Statement of Financial Position

Assets and liabilities that are expected to be realized, or intended for sale or consumption, within the entity's normal operating cycle(generally 12 months), are recorded as current assets or liabilities. If their maturity exceeds this period, they are recorded as non-current
assets or liabilities. Moreover, certain reclassifications were made to the 2019 and 2018 Combined Statement of Financial Position to
conform to the presentation of the 2020 and 2019 Combined Financial Statements.

1.3

Principles governing the preparation of the Combined Financial Statements

Pursuant to IFRS principles, the Combined Financial Statements have been prepared on a going concern basis, and on a historical cost basis,
with the exception of certain assets and liabilities, for which IFRS 13 - Fair Value Measurement relating to measurement and disclosuresapplies. Relevant categories are detailed below.
The Combined Financial Statements include the financial statements of UMG and its subsidiaries after eliminating intragroup items andtransactions. UMG has a December 31 st year-end. Subsidiaries that do not have a December 31 st year-end prepare interim financial
statements as of that date, except when their year-end falls within the three months preceding December 31 st .
Acquired subsidiaries are included in the Combined Financial Statements of the group as of the date of acquisition.

1.3.1

Use of estimates

The preparation of Combined Financial Statements in compliance with IFRS requires the group's management to make certain estimates andassumptions that they consider reasonable and realistic. Although these estimates and assumptions are regularly reviewed by UMG's
Management, based, in particular, on past or anticipated achievements, facts and circumstances may lead to changes in these estimates andassumptions which could have an impact on the reported amount of group assets, liabilities, equity or earnings.
The main estimates and assumptions relate to the measurement of:• revenue : estimates of provisions for returns and price guarantees (please refer to Note 1.3.4.2);• goodwill and other intangible assets: valuation methods used to identify intangible assets acquired through business combinations(please refer to Note 1.3.5.1);• goodwill, intangible assets with indefinite useful lives and assets in progress: assumptions relating to impairment tests performedon each of the group's cash-generating units (CGUs), future cash flows and discount rates are updated annually (please refer toNotes 1.3.5.7 and 8);• UMG content assets: estimates of the future performance of beneficiaries who received advances are recognized in the Statement of
Financial Position (please refer to Notes 1.3.5.2 and 9);• provisions: risk estimates, performed on an individual basis, noting that the occurrence of events during the course of procedures
may lead to a risk reassessment at any time (please refer to Notes 1.3.8 and 16);
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•
•
•

•
•

1.3.2

employee benefits: assumptions are updated annually, such as the probability of employees remaining within the group until
retirement, expected changes in future compensation, the discount rate and the inflation rate (please refer to Notes 1.3.8 and 17);
share-based compensation: assumptions are updated annually, such as the estimated term, volatility and the estimated dividend
yield (please refer to Notes 1.3.10 and 18);
lease liabilities and right-of-use assets, at the commencement date of each lease contract (please refer to Notes 1.3.5.6 and 10):assessing the lease term that relates to the non-cancellable period of the lease, taking into account all options to extend thelease that UMG is reasonably certain to exercise and all options to terminate the lease that UMG is reasonably certain not toexercise; andestimating the lessee's incremental borrowing rate, taking into account their residual lease term and their duration to reflect
the interest rate of a loan with a similar payment profile to the lease payments.
deferred taxes: estimates used for the recognition of deferred tax assets are updated annually with factors such as expected tax
rates and future tax results of the group (please refer to Notes 1.3.9 and 5); andcertain financial instruments: valuation method at fair value is defined according to the three following classification levels (pleaserefer to Notes 1.3.5.8, 1.3.7, 12 and 14):
- Level 1: fair value measurement based on quoted prices in active markets for identical assets or liabilities;- Level 2: fair value measurement based on observable market data (other than quoted prices included under Level 1); and- Level 3: fair value measurement based on valuation techniques using inputs for the asset or liability that are not based on
observable market data.
The fair value of trade accounts receivable and other, cash and cash equivalents, and trade accounts payable is a reasonableestimate of fair value, due to the short maturity of these instruments.
Principles of combination

For a list of UMG's major subsidiaries, joint ventures and associated entities, please refer to Note 23.
Consolidation
All companies in which UMG has a controlling interest, namely those in which it has the power to govern financial and operational policies
to obtain benefits from their operations, are fully consolidated.
Control, as defined by IFRS 10 - Consolidated Financial Statements, is based on the three criteria below to be fulfilled cumulatively to assess
if the parent company exercises control :• a parent company has power over a subsidiary when the parent company has existing rights that give it the current ability to direct
the relevant activities of the subsidiary, i.e., the activities that significantly affect the subsidiary's returns. Power may arise fromexisting or potential voting rights or contractual arrangements. Voting rights must be substantial, i.e., exercisable at any time without
limitation, particularly during decision-making processes related to significant activities. Assessment of the exercise of power
depends on the nature of the subsidiary's relevant activities, the internal decision-making process, and the allocation of rights among
the subsidiary's other shareowners;• the parent company is exposed, or has rights, to variable returns from its involvement with the subsidiary which may vary as a resultof the subsidiary's performance. The concept of returns is broadly defined and includes, among other things, dividends and othereconomic benefit distributions, changes in the value of the investment in the subsidiary, economies of scale, and business synergies;
and• the parent company has the ability to use its power to affect the returns. Exercising power without having any impact on returns
does not qualify as control.
Consolidated Financial Statements of a group are presented as if the group was a single economic entity with two categories of owners:(i) the owners of the parent company (UMG shareowners) and (ii) the owners of non-controlling interests (minority shareholders of thesubsidiaries). A non-controlling interest is defined as the interest in a subsidiary that is not attributable, whether directly or indirectly, to aparent company. As a result, changes to a parent company's ownership interest in a subsidiary that do not result in a loss of control only
impact equity, as control of the economic entity does not change. Hence, in the event of the acquisition of an additional interest in aconsolidated entity after January 1, 2009, UMG recognizes the difference between the acquisition price and the carrying value of noncontrolling interests acquired as a change in equity attributable to UMG shareowners. Conversely, any acquisition of control achieved instages or a loss of control gives rise to profit or loss in the statement of earnings.
Accounting for joint arrangements
IFRS 11 - Joint Arrangements establishes principles for financial reporting by parties to a joint arrangement.
In a joint arrangement, parties are bound by a contractual arrangement giving these parties joint control of the arrangement. An entity that isa party to an arrangement shall assess whether the contractual arrangement gives all the parties or a group of the parties control of thearrangement collectively. Once it has been established that all the parties or a group of the parties collectively control the arrangement, joint

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control exists only when decisions about the relevant activities require the unanimous consent of the parties that collectively control thearrangement.
Joint arrangements are classified into two categories:• joint operations: these are joint arrangements whereby the parties that have joint control of the arrangement have rights to theassets, and obligations for the liabilities, relating to the arrangement. Those parties are called joint operators. A joint operator shallrecognize 100% of wholly-owned assets/liabilities, expenses/revenues of the joint operation, and its share of any of those items
held jointly; and• joint ventures: these are joint arrangements whereby the parties that have joint control of the arrangement have rights to the net
assets of the arrangement. Those parties are called joint venturers. Each joint venturer shall recognize its interest in a joint venture
as an investment and shall account for that investment using the equity method in accordance with IAS 28 - Investments in
Associates and Joint Ventures (please refer below).
Equity accounting
Entities over which UMG exercises significant influence as well as joint ventures are accounted for under the equity method.
Significant influence is deemed to exist when UMG holds, whether directly or indirectly, at least 20% of the voting rights in an entity unless
it can be clearly established that UMG does not exercise a significant influence. Significant influence can be evidenced through further
criteria, such as representation on the entity's board of directors or equivalent governing body, participation in policy-making of financial andoperational processes, material transactions with the entity or the interchange of managerial personnel.
1.3.3

Foreign currency translation

The Combined Financial Statements are presented in millions of euros. The presentation currency of UMG is the euro.
Foreign currency transactions
Foreign currency transactions are initially recorded in the functional currency of the entity at the exchange rate prevailing at the date of thetransaction. At the closing date, foreign currency monetary assets and liabilities are translated into the entity's functional currency at theexchange rate prevailing on that date. All foreign currency differences are expensed, with the exception of differences resulting fromborrowings in foreign currencies which constitute a hedge of the net investment in a foreign entity. These differences are al located directly
to charges and income directly recognized in equity until the divestiture of the net investment.
Financial statements denominated in a foreign currency
Except in cases of significant exchange rate fluctuation, financial statements of subsidiaries, joint ventures or other associated entities forwhich the functional currency is not the euro are translated into euros as follows: the Combined Statement of Financial Position is translated
at the exchange rate at the end of the period, and the Combined Statement of Earnings and the Combined Statement of Cash Flows aretranslated using average monthly exchange rates for the period. The resulting translation gains and losses are recorded as foreign currencytranslation differences in charges and income directly recognized in equity. In accordance with IFRS 1, UMG elected to reverse theaccumulated foreign currency translation differences against retained earnings as of January 1, 2016. These foreign currency translationdifferences resulted from the translation into euros of the financial statements of subsidiaries that use foreign currencies as their functional
currencies. Consequently, these adjustments are not applied to earnings on the subsequent divestiture of subsidiaries, joint ventures or
associates whose functional currency is not the euro.
1.3.4

Revenues and associated costs

Revenues from contracts with customers are recorded when performance obligations promised in the contract are satisfied, and for an
amount for which it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur. Revenues
are reported net of discounts.
UMG has made the accounting of intellectual property licensing revenues a major point of attention.
Intellectual property licensing (musical works)
These licenses transfer to a customer either a right to use an entity's intellectual property as it exists at the point in time at which thelicense is granted (static license), or a right to access an entity's intellectual property as it exists throughout the license period (dynamic
license).
Revenues are accounted for when the performance obligation promised in the contract is satisfied (static license) or over time uponsatisfaction (dynamic license), i.e., when the seller transfers the risks and rewards of the right to use/access the intellectual property and thecustomer obtains control of the use/access of that license. Consequently, revenues from static licenses are recognized at the point in time
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when the license is transferred and the customer is able to use and benefit from the license. Revenues from dynamic licenses are accounted
for over time, over the license period from the date the customer is able to use and benefit from the license.

Analysis of the Agent/Principal relationship in sales transactions involving a third party
If the nature of the entity's undertaking is a performance obligation to provide the specified goods or services itself, then the entity acts on
its own behalf and it is "principal" in the sale transaction: it accounts for revenue the gross amount of consideration to which it expects to beentitled in exchange for the goods or services provided, and the commission due to the third-party as cost of revenues. If the entity arranges
for a third-party to provide the goods or services specified in the contract, then it recognizes as revenues the net amount of consideration towhich it expects to be entitled in exchange for the goods or services provided.

1.3.4.1 Revenue recognition by business segment
Recorded Music
The sales of recorded music (physical, digital downloading or streaming) are intellectual property licenses granted by UMG to distributors ordigital platforms and which give them certain rights over the company's musical works. In its relationship with the distributor/digitalplatform and the end customer, UMG cannot be "principal", as the distributor or the digital platform is responsible for setting the transfer ofcontrol conditions of the right of use granted by the license to the end customer (broadcasting, price setting and conditions for reselling thephysical devices).
Physical sales of recorded music (CDs, DVDs and Vinyls)

These intellectual property licenses are static licenses transferring to the customer a right to use UMG's recordings as they exist at the point
in time at which the license is granted, i.e., on the physical device sold.
Revenues from the physical sales of recorded music, net of a provision for estimated returns (please refer to Note 1.3.4.2) and rebates, if any,
are accounted for, either: (i) upon the sale to the distributor, at the shipping point for products sold free on board (FOB) or on delivery for
products sold free on destination; or (ii) upon the sale to the final customer for consignment sales.
Digital sales of recorded music, via downloading or streaming by subscription or free of charge

These intellectual property licenses are generally dynamic licenses providing a right to access the entire catalog of recorded music as itexists throughout the license period considering potential add-ons to, or withdrawals from, the catalog during that period.
The consideration paid by the digital platform is variable in the form of a sales-based or a usage-based royalty. Revenues are then accounted
for when these subsequent sales or usages occur. Revenues from digital sales of recorded music, for which UMG has sufficient, accurate,
and reliable data from digital platforms, are recognized at the end of the month in which the sale or usage is made by the end customer. If
such data is not available, revenues are recognized when the digital platform notifies UMG of the sale or usage by the end customer.
For digital sales of recorded music streaming by subscription or free of charge, certain contracts may include a non-refundable minimum
guarantee which is generally recoupable and is in substance an advance payment. In the case of a dynamic license, the minimum guarantee
is spread over the period to which it relates and takes into account the amount of royalties that are actually recoupable. The minimum
guarantee is hence apportioned in accordance with the accounting for these royalties.

Music publishingMusic publishing relates to the use by a third party of the copyrights on musical works owned or administered by UMG, which areintellectual property licenses that UMG grants to the third party and which provides a right to access a catalog of recorded music, as these
intellectual property licenses are dynamic licenses.
The consideration paid by the third-party, notably a collection society (e.g., a company for the collective management of intellectual property
rights) is variable in the form of a royalty based on the usage by the third party. The variable consideration being accounted for when these
subsequent usages occur, revenues from music publishing are accounted for when the collection society notifies UMG of the usage by theend customer and collectability is assured.

Merchandising
Revenues from merchandising are recognized either upon sale to the end customer, from direct sales during touring, concessions and overthe internet; on delivery for sales by a third-party distributor; when a contract is signed; or when an invoice has been issued and thecollectability is assured for sales of rights attached to merchandising products.

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1.3.4.2 Other
Provisions for estimated returns and price guarantees are deducted from sales of products to customers through distributors. The
provisions are estimated based on past sales statistics and take into account the economic environment and product sales forecast to final
customers.
Selling, general and administrative expenses primarily include salaries and employee benefits, consulting and service fees, insurance
costs, travel and entertainment expenses, administrative department costs, provisions for receivables and other operating expenses.
Advertising costs are expensed when incurred.
Slotting fees and cooperative advertising expenses are recorded as a reduction in revenues. However, cooperative advertising istreated as a marketing expense and expensed when its expected benefit is individualized and can be estimated.
1.3.5

Assets

1.3.5.1

Goodwill and business combinations

Business combinations from January 1, 2009
Pursuant to IFRS 1, UMG elected not to restate business combinations that occurred prior to January 1, 2016. Business combinations arerecorded using the acquisition method. Under this method, upon the initial consolidation of an entity over which the group has acquired
exclusive control:• the identifiable assets acquired, and the liabilities assumed are recognized at their fair value on the acquisition date; and• non-controlling interests are measured either at fair value or at the non-controlling interest's proportionate share of the acquiree's
net identifiable assets. This option is available on a transaction-by-transaction basis.
On the acquisition date, goodwill is initially measured as the difference between:(i) the fair value of the consideration transferred, plus the amount of non-controlling interests in the acquiree and, in a businesscombination achieved in stages, the acquisition-date fair value of the previously held equity interest in the acquiree; and(ii) the net fair value of the identifiable assets and liabilities assumed on the acquisition date.
The measurement of non-controlling interests at fair value results in an increase in goodwill up to the extent attributable to these interests,
thereby leading to the recognition of a "full goodwill". The purchase price allocation shall be performed within 12 months after theacquisition date. If goodwill is negative, it is recognized in the Statement of Earnings. Subsequent to the acquisition date, goodwill ismeasured at its initial amount less recorded accumulated impairment losses (please refer to Note 1.3.5.7 below).
In addition, the following principles are applied to business combinations:• on the acquisition date, to the extent possible, goodwill is allocated to each cash-generating unit likely to benefit from the businesscombination;• contingent consideration in a business combination is recorded at fair value on the acquisition date, and any subsequent adjustment
occurring after the purchase price allocation period is recognized in the Statements of Earnings;• acquisition-related costs are recognized as expenses when incurred;• in the event of the acquisition of an additional interest in a subsidiary, UMG recognizes the difference between the acquisition priceand the carrying value of non-controlling interests acquired as a change in equity attributable to UMG shareowners; and• goodwill is not amortized.
Business combinations prior to January 1. 2009IFRS 3, as published by the IASB in March 2004, retained the acquisition method. However, its provisions differed from those of its revised
standard in respect of the following main items:• minority interests were measured at their proportionate share of the acquiree' s net identifiable assets as there was no option formeasurement at fair value;• contingent consideration was recognized in the cost of acquisition only if the payment was likely to occur and the amounts could be
reliably measured;• transaction costs that were directly attributable to the acquisition formed part of acquisition costs; and• in the event of the acquisition of an additional interest in a subsidiary, the difference between the acquisition cost and the carrying
value of minority interests acquired was recognized as goodwill.

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1.3.5.2 Content assets

Royalty advances to artists, songwriters, and co-publishers are capitalized as an asset when their current popularity and past performances
provide a reasonable basis to conclude that the probable future recoupment of such royalty advances against earnings otherwise payable tothem is reasonably assured. Royalty advances are recognized as an expense as subsequent royalties are earned by the artist, songwriter or
co-publisher. Any portion of capitalized royalty advances not deemed to be recoverable against future royalties is expensed during the period
in which the loss becomes evident. These expenses are recorded in cost of revenues.
Royalties earned by artists, songwriters, and co-publishers are recognized as an expense in the period during which the sale of the productoccurs, less a provision for estimated returns.
Music rights and catalogs include music catalogs, artists' contracts and music publishing rights acquired. The annual review of the value ofthe intangible assets, undertaken by UMG at year-end 2016 led to a change in the amortization method of music rights and catalogs as fromJanuary 1, 2017, which notably resulted in an extension of the amortization period from 15 to 20 years.
1.3.5.3 Research and development costs

Research costs are expensed when incurred. Development expenses are capitalized when the feasibility and, in particular, profitability of the
project can reasonably be considered certain.
Cost of internal use software

Direct internal and external costs incurred for the development of computer software for internal use, including website development costs,
are capitalized during the application development stage. Application development stage costs generally include software configuration,coding, installation and testing. Costs of significant upgrades and enhancements resulting in additional functionality are also capitalized.
These capitalized costs are amortized over 5 to 10 years. Maintenance, minor upgrades, and enhancement costs are expensed as they are
incurred.
1.3.5.4 Other intangible assets

Intangible assets separately acquired are recorded at cost, and intangible assets acquired in connection with a business combination arerecorded at their fair value at the acquisition date. The historical cost model is applied to intangible assets after they have been recognized.
Assets with an indefinite useful life are not amortized but are subject to an annual impairment test. Amortization is accrued for assets with afinite useful life. Useful life is reviewed at the end of each reporting period.
Other intangible assets include trade names, customer bases and licenses. By contrast, music catalogs, trade names, subscribers' bases andmarket shares generated internally are not recognized as intangible assets.
1.3.5.5 Property, plant and equipment

Property, plant and equipment are carried at historical cost less any accumulated depreciation and impairment losses. Historical cost
includes the acquisition cost or production cost, costs directly attributable to transporting an asset to its physical location and preparing it for
its operational use, the estimated costs relating to the demolition and the collection of property, plant and equipment, and the rehabilitationof the physical location resulting from the incurred obligation.
When property, plant and equipment include significant components with different useful lives, they are recorded and amortized separately.
Amortization is calculated using the straight-line method based on the estimated useful life of the assets. Useful lives of the main
components are reviewed at the end of each reporting period and are as follows:• buildings: 5 to 40 years;• equipment and machinery: 3 to 8 years; and• other: 2 to 10 years.
After initial recognition, the cost model is applied to property, plant and equipment.
UMG has elected not to apply the option available under IFRS 1, involving the remeasurement of certain property, plant and equipment attheir fair value as of January 1, 2016.

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1.3.5.6 Leases

UMG applies IFRS 16 with retrospective effect as from January 1, 2019 without restating comparative periods in the combined financial
statements.
As licenses of intellectual property granted by a lessor and rights held by a lessee under licensing agreements being excluded from the scopeof IFRS 16, the main lease contracts for UMG correspond to real estate leases for which UMG is the lessee.
Real estate leases for which UMG is the lessee are recorded at the commencement date and result in the recognition of a lease liability
equal to the present value of future lease payments against a right-of-use asset relating to leases.
The determination of the lease liability as of January 1, 2019 was made by:
1)

2)

3)

analyzing operating leases for which contractual obligations were disclosed as off-balance sheet commitments until
December 31, 2018 (please refer to Note 21 "Contractual obligations and other commitments" to UMG's Combined
Financial Statements for the fiscal years ended December 31, 2018, 2017 and 2016, pages 51 and 52);
assessing the lease term that relates to the non-cancellable period of the lease, and taking into account all options toextend the lease which UMG is reasonably certain to exercise and all options to terminate the lease which UMG isreasonably certain not to exercise. UMG determined that real estate lease terms in France are generally nine years; andestimating the incremental borrowing rate as of January 1, 2019 of each lease contract, taking into account their residual
lease term at this date and their duration to reflect the interest rate of a loan with a similar payment profile to the lease
payments.

As of January 1, 2019, regarding the main impacts, it is specified that• for some leases, as permitted by IFRS 16, at the date of transition, UMG used hindsight; and• UMG has applied the practical expedient provided by IFRS 16 to exclude initial direct costs from the measurement of the right-ofuse asset at the date of initial application.
For each lease, the lease term assessment and incremental borrowing rate estimate are determined at the commencement date.
After initial recognition, the liability is:• increased by the effect of undiscounting (interest expense on lease liabilities);• decreased by the cash out for lease payments; and• reassessed in the event of an amendment to the lease contract.
The right-of-use asset is recognized at cost at the effective date. The cost of the right-of-use asset includes:• the lease liability;• the initial direct costs (incremental costs of obtaining the lease);• payments made prior to the commencement date less lease incentives received from the lessor;• dismantling and restoration costs (measured and recognized in accordance with IAS 37); and• the amortization period used is the lease term.
The lease liability is a current or non-current operating liability excluded from the calculation of Financial Net Debt. Depreciation of right-ofuse assets is included in Adjusted Earnings Before Interest and Income Taxes (EBITA) and excluded from earnings before interest and tax
depreciation and amortization (EBITDA). The effect of undiscounting the lease liability (interest expense on lease liabilities) is included inother financial charges. Cash payments for the principal of the lease liability and any interest thereon, which are presented as financing
activities in the condensed statement of cash flows, impact Cash Flow From Operations (CFFO).
1.3.5.7 Asset impairment

Each time events or changes in the economic environment indicate a risk of impairment of goodwill, other intangible assets, property, plantand equipment, and assets in progress, UMG re-examines the value of these assets. In addition, in accordance with applicable accounting
standards, goodwill, other intangible assets with an indefinite useful life, and intangible assets in progress are all subject to an annual
impairment test undertaken in the fourth quarter of each fiscal year. This impairment test is performed to compare the recoverable amount ofeach Cash Generating Unit (CGU) or, if necessary, group of CGUs to the carrying value of the corresponding assets (including goodwill). A
CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from otherassets or groups of assets. UMG operates through different media and content businesses. Each business offers different products andservices that are marketed through various channels. CGUs are independently defined at each business level, corresponding to the group
operating segments. For a description of UMG's CGUs and groups of CGUs, please refer to Note 8.
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The recoverable amount is determined for each individual asset as the higher of: (i) its value in use; and (ii) its fair value (less costs to sell) as
described hereafter. If the asset does not generate cash inflows that are largely independent of other assets or groups of assets, therecoverable amount is determined for the group of assets. In particular, an impairment test is performed by UMG for each CGU or group of
CGUs, depending on the level at which UMG Management measures return on operations.
The value in use of each asset or group of assets is determined, subject to exceptions. as the discounted value of future cash flows(Discounted Cash Flow method (DCF) by using cash flow projections consistent with the budget of the following year and the most recent
forecasts prepared by the operating segments.
Applied discount rates are determined by reference to available external sources of information, usually based on financia I institutions'benchmarks, and reflect the current assessment by UMG of the time value of money and risks specific to each asset or group of assets.
Perpetual growth rates used for the evaluation are those used to prepare budgets for each CGU or group of CGUs, and beyond the period
covered, are consistent with growth rates estimated by the business by extrapolating growth rates used in the budgets, without exceeding
the long-term average growth rate for the markets in which the group operates.
The fair value (less costs to sell) is the price that would be received from the sale of an asset or group of assets in an orderly transaction
between market participants at the measurement date, less costs to sell. These values are generally determined based on market data (stock
market prices or comparison with similar listed companies, with the value attributed to similar assets or companies in recent transactions)or, in the absence of such data, based on discontinued cash flows.
If the recoverable amount is lower than the carrying value of an asset or group of assets, an impairment loss equal to the difference isrecognized in EBIT. In the case of a group of assets, this impairment loss is first recorded against goodwill.
The impairment losses recognized in respect of property, plant and equipment, and intangible assets (other than goodwill) may be reversed ina later period if the recoverable amount becomes greater than the carrying value, within the limit of impairment losses previously recognized.
Impairment losses recognized in respect of goodwill cannot be reversed at a later date.
1.3.5.8 Financial assets

Financial assets are initially recognized at fair value corresponding, in general, to the consideration paid, which is best evidenced by theacquisition cost (including associated acquisition costs, if any). Thereafter, financial assets are measured at fair value or at amortized costdepending on which financial asset category they belong to.
From January 1, 2018, financial assets are classified into the accounting categories "financial assets at amortized cost", "financial assets atfair value through other comprehensive income" and "financial assets at fair value through profit or loss".
This classification depends on the entity's business model for managing the financial assets and on contractual terms enabling to determine
whether the cash flows are solely payments of principal and interest (SPPI). The financial assets that contain an embedded derivative should
be considered in full to determine whether their cash flows are SPPI.
Financial assets at fair value

These include financial assets at fair value through other comprehensive income, derivative financial instruments with a positive value(please refer to Note 1.3.7) and other financial assets measured at fair value through profit or loss. Most of these financial assets areactively traded in organized financial markets, as their fair value is calculated by reference to the published market price at the period end.
Fair value is estimated for financial assets which do not have a published market price on an active market. As a last resort, when a reliable
estimate of fair value cannot be made using valuation techniques in the absence of an active market, the group values financial assets at
historical cost, less any impairment losses.
Financial assets at fair value through other comprehensive income include:•

Unconsolidated companies that are not held for trading: UMG elected to classify these into the category "fair value through othercomprehensive income". Unrealized gains and losses on financial assets at fair value through other comprehensive income arerecognized in charges and income directly recognized in equity until the financial asset is sold, collected or removed from theStatement of Financial Position in another way, at which time the accumulated gain or loss previously reported in charges andincome directly recognized in equity is transferred to retained earnings and never reclassified to profit or loss. Dividends andinterest received from unconsolidated companies are recognized in profit or loss.

•

Debt instruments held within a business model whose objective is achieved by both collecting contractual cash flows and selling
financial assets, and whose contractual terms give rise on specified dates to cash flows that are solely payments of principal andinterest on the principal amount outstanding. Unrealized gains and losses on financial assets at fair value through othercomprehensive income are recognized in charges and income directly recognized in equity until the financial asset is sold, collected

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or removed from the Statement of Financial Position in other ways, at which time the accumulated gain or loss previously reported
in charges and income directly recognized in equity is expensed in other financial charges and income.
Other financial assets measured at fair value through profit or loss mainly consist of assets held for trading which UMG intends to sell in thenear future (primarily marketable securities) and other financial assets unless it is measured at amortized cost or at fair value through othercomprehensive income. Unrealized gains and losses on these assets are recognized in other financial charges and income.
Financial assets at amortized cost

Financial assets at amortized cost consist of debt instruments held within a business model whose objective is to hold financial assets tocollect contractual cash flows that are solely payments of principal and interest on the principal amount outstanding. At the end of eachperiod, these assets are measured at amortized cost using the effective interest method. If there is objective evidence that an impairment
loss has been incurred, the amount of this loss, measured as the difference between the financial asset's carrying value and its recoverable
amount (equal to the present value of estimated future cash flows discounted at the financial asset's initial effective interest rate), is
recognized in profit or loss. Impairment losses may be reversed if the recoverable amount of the asset subsequently increases in the future .
Impairment of financial assets
UMG assesses the expected credit loss associated with its financial assets recognized at amortized cost and debt instruments recognized atfair value through other comprehensive income on a prospective basis. A loss allowance for expected credit loss based on probability ofdefault is recognized at initial recognition . The loss allowance is updated for changes in these expected credit losses at each reporting date
to reflect changes in credit risk since initial recognition .
To assess whether there has been a significant increase in credit risk, UMG compares the credit risk at the reporting date with the credit risk
at the date of initial recognition based on reasonable forward-looking information and events, including credit ratings if available, significant
adverse economic changes (actual or expected), financial or business environment that are expected to result in a material change in the
borrower's ability to meet its obligations.
1.3.5.9 Inventories

Inventories are valued at the lower of cost or net realizable value. Cost comprises purchase costs, production costs and other supply andpackaging costs. These are usually calculated using the weighted average cost method. Net realizable value is the estimated selling price inthe normal course of business, less estimated completion costs and selling costs.
1.3.5.10 Trade accounts receivable

Trade accounts receivable are initially recognized at fair value, which is generally equal to their nominal value. Expected loss rates on tradereceivables are calculated by the relevant operating entities over their lifetime from initial recognition and are based on historical data that
also incorporates forward-looking information. In addition. account receivables from customers subject to insolvency proceedings orcustomers with whom UMG is involved in litigation or a dispute are generally impaired in full.
1.3.5.11 Cash and cash equivalents

The "cash and cash equivalents" category, defined in accordance with IAS 7, consists, on the one hand, of cash in banks and remunerated or
unremunerated demand deposits which corresponds to cash, and, on the other hand monetary UCITS and other highly liquid investmentswith initial maturities of generally three months or less which correspond to cash equivalents.
Investments in securities, investments with initial maturities of more than three months without an early termination option and bankaccounts subject to restrictions (blocked accounts), other than restrictions due to regulations specific to a country or activity sector (e.g.,exchange controls). are not classified as cash equivalents but as financial assets.
Moreover, the historical performances of the investments are monitored regularly to confirm their cash equivalents accounting classification.
1.3.6

Assets held for sale and discontinued operations

A non-current asset or a group of assets and liabilities is held for sale when its carrying value may be recovered principally through its
divestiture and not by its continued utilization. To meet this definition, the asset must be available for immediate sale and the divestituremust be highly probable. These assets and liabilities are recognized as assets held for sale and liabilities associated with assets held for
sale, without offset. The related assets recorded as assets held for sale are valued at the lowest value between the fair value (net ofdivestiture fees) and the carrying value (i.e., at their cost less accumulated depreciation and impairment losses), and they are no longer
depreciated.
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An operation is qualified as discontinued when it represents a separate major line of business and the criteria for classification as an asset
held for sale have been met or when UMG has sold the asset. Discontinued operations are reported on a single line of the Statement ofEarnings for the periods reported, comprising the earnings after tax of discontinued operations until divestiture and the gain or loss after tax
on sale or fair value measurement, less costs to divest the assets and liabilities of the discontinued operations. In addition, cash flows
generated by discontinued operations are reported on a separate line of the Statement of Combined Cash Flows for the relevant periods.
1.3.7

Financial liabilities

Long-term and short-term borrowings and other financial liabilities include:• bonds and credit facilities, as well as various other borrowings (including commercial paper and debt related to finance leases) andrelated accrued interest;• obligations arising out of commitments to purchase non-controlling interests;• bank overdrafts; and• the negative value of other derivative financial instruments. Derivatives with positive values are recorded as financial assets in theStatement of Financial Position .
Borrowings

All borrowings are initially accounted for at fair value net of transaction costs directly attributable to the borrowing. Borrowings bearing
interest are subsequently valued at amortized cost, applying the effective interest method. The effective interest rate is the internal yieldrate that discounts future cash flows over the term of the borrowing. In addition, where the borrowing comprises an embedded derivative(e.g., an exchangeable bond) or an equity instrument (e.g., a convertible bond), the amortized cost is calculated for the debt component only,
after separation of the embedded derivative or equity instrument. In the event of a change in expected future cash flows (e.g., redemption
occurs earlier than initially expected), the amortized cost is adjusted against earnings to reflect the value of the new expected cash flows,
discounted at the initial effective interest rate.
Commitments to purchase non-controlling interests

UMG may have committed to purchase the non-controlling interests of some of the minority shareowners of its fully consolidated
subsidiaries. These purchase commitments may be optional (e.g., put options) or mandatory (e.g., forward purchase contracts).
The following accounting treatment has been applied in respect of commitments made on or after January 1, 2009:• upon initial recognition, the commitment to purchase non-controlling interests is recognized as a financial liability for the present
value of the purchase price under the put option or forward purchase contract, mainly offset by the book value of non-controllinginterests and the remaining balance through equity attributable to UMG shareowners;• subsequent changes to the value of the commitment are recognized as a financial liability through an adjustment to equity
attributable to UMG shareowners; and• upon maturity of the commitment, if the non-controlling interests are not purchased, the previously recognized entries are reversed; if
the non-controlling interests are purchased, the amount recognized in financial liabilities is reversed, offset by the cash outflow
relating to the purchase of the non-controlling interests.
Derivative financial instruments

UMG uses derivative financial instruments to manage and reduce its exposure to fluctuations in interest rates, and foreign currency
exchange rates. All instruments are either listed on organized markets or traded over-the-counter with highly-rated counterparties. These
instruments include interest rate and currency swaps, and forward exchange contracts. All these derivative financial instruments are used
for hedging purposes. At the inception of the hedging relationship there is the formal designation and documentation of the hedging
relationship and the entity's risk management objective and strategy for undertaking the hedge.
Derivatives are initially measured at fair value on the settlement date and are subsequently remeasured at fair value on each succeeding
reporting date. The recognition of subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument
and, if applicable, the nature of the hedged item and the type of hedging relationship designated. When these contracts qualify as hedges
for accounting purposes, gains and losses arising on these contracts are offset in earnings against the gains and losses relating to thehedged item.
When forward contracts are used as hedging instruments, UMG only qualifies as hedging instruments the change in the fair value of theforward contract related to the variation of the spot exchange rate. Changes in the forward points are excluded from the hedging relationshipand are recognized in the financial result.

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Fair value hedge
When the derivative financial instrument hedges exposures to fluctuations in the fair value of an asset or a liability recognized in theStatement of Financial Position or of a firm commitment which is not recognized in the Statement of Financial Position, it is a fair value
hedge. The instrument is remeasured at fair value in earnings, with the gains or losses arising on remeasurement of the hedged portion of
the hedged item offset on the same line of the Statement of Earnings, or, as part of a forecasted transaction relating to a non-financial asset
or liability, at the initial cost of the asset or liability.
Cash flow hedge
When the derivative financial instrument hedges cash flows, it is a cash flow hedge. The hedging instrument is remeasured at fair value andthe portion of the gain or loss that is determined to be an effective hedge is recognized through charges and income directly recognized inequity, whereas its ineffective portion is recognized in earnings; when the hedged item is realized, accumulated gains and losses recognizedin equity are released to the Statement of Earnings and recorded on the same line as the hedged item; as part of a forecasted transaction ona non-financial asset or liability, they are recognized at the initial cost of the asset or liability.
Net investment hedge
When the derivative financial instrument hedges a net investment in a foreign operation, it is recognized in the same way as a cash flow
hedge. Derivative financial instruments which do not qualify as a hedge for accounting purposes are remeasured at fair value and resulting
gains and losses are recognized directly in earnings, without remeasurement of the underlying instrument.
Furthermore, income and expenses relating to foreign currency instruments used to hedge highly probable budget exposures and firm
commitments contracted pursuant to the acquisition of editorial content rights (including sports, audiovisual and film rights) are recognized in
EBIT. In all other cases, gains and losses arising on the fair value remeasurement of instruments are recognized in other financial charges
and income.
1.3.8

Other liabilities

Provisions
Provisions are recognized when, at the end of the reporting period, UMG has a legal obligation (statutory, regulatory or contractual) or aconstructive obligation, as a result of past events, and it is probable that an outflow of resources embodying economic benefits will be
required to settle the obligation and the obligation can be reliably estimated . Where the effect of the time value of money is material,
provisions are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value ofmoney. If the amount of the obligation cannot be reliably estimated, no provision is recorded and a disclosure is made in the Notes to the
Combined Financial Statements.
Employee benefit plans
In accordance with the laws and practices of each country in which it operates. UMG participates in, or maintains, employee benefit plansproviding retirement pensions, post-retirement health care, life insurance and post-employment benefits to eligible employees, former
employees, retirees and such of their beneficiaries who meet the required conditions. Retirement pensions are provided for substantially all
employees through defined contribution plans, which are integrated with local social security and multi-employer plans, or defined benefit
plans, which are generally managed via group pension plans. The plan funding policy implemented by the group is consistent with applicablegovernment funding requirements and regulations.
Defined contribution plans
Contributions to defined contribution and multi-employer plans are expensed during the year.
Defined benefit plans
Defined benefit plans may be funded by investments in various instruments such as insurance contracts or equity and debt investment
securities, excluding shares in any UMG entity or debt instruments.
Pension expenses and defined benefit obligations are calculated by independent actuaries using the projected unit credit method. Thismethod is based on annually updated assumptions, which include the probability of employees remaining with UMG until retirement,
expected changes in future compensation and an appropriate discount rate for each country in which UMG maintains a pension plan. The
assumptions adopted, and the means of determining these assumptions. are presented in Note 17. A provision is recorded in the Statementof Financial Position equal to the difference between the actuarial value of the related benefits (actuarial liability) and the fair value of any
associated plan assets, and this includes past service costs and actuarial gains and losses.

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The cost of defined benefit plans consists of three components recognized as follows:• the service cost is included in selling, general and administrative expenses. It comprises current service cost, past service cost
resulting from a plan amendment or a curtailment, immediately recognized in profit and loss, and gains and losses on settlement;• the financial component, recorded in other financial charges and income, consists of the undiscounting of the obligation, less the
expected return on plan assets determined using the discount rate retained for the valuation of the benefit obligation; and• the remeasurements of the net defined benefit liability (asset), recognized in items of other comprehensive income not reclassified
as profit and loss, mainly consist of actuarial gains and losses, i.e., changes in the present value of the defined benefit obligation andplan assets resulting from changes in actuarial assumptions and experience adjustments (representing the differences between the
expected effect of some actuarial assumptions applied to previous valuations and the effective impact).
Where the value of plan assets exceeds benefit obligations, a financial asset is recognized up to the present value of future refunds and the
expected reduction in future contributions.
Some other post-employment benefits, such as life insurance and medical coverage (mainly in the United States) are subject to provisions
which are assessed through an actuarial calculation comparable to the method used for pension provisions.
1.3.9

Deferred taxes

Differences existing at closing between the tax base value of assets and liabilities and their carrying value in the Combined Statement of
Financial Position give rise to temporary differences. Pursuant to the liability method, these temporary differences result in the accounting of:• deferred tax assets, when the tax base value is greater than the carrying value (expected future tax saving); and• deferred tax liabilities, when the tax base value is lower than the carrying value (expected future tax expense).
Deferred tax assets and liabilities are measured at the expected tax rates for the year during which the asset will be realized or the liability
settled, based on tax rates (and tax regulations) enacted or substantially enacted by the closing date. They are reviewed at the end of eachyear, in line with any changes in applicable tax rates.
Deferred tax assets are recognized for all deductible temporary differences, tax loss carry-forwards and unused tax credits, insofar as it isprobable that a taxable profit will be available, or when a current tax liability exists to make use of those deductible temporary differences,
tax loss carry-forwards and unused tax credits, except where the deferred tax asset associated with the deductible temporary difference isgenerated by initial recognition of an asset or liability in a transaction which is not a business combination, and that, at the transaction date,does not impact earnings, nor tax income or loss.
For deductible temporary differences resulting from investments in subsidiaries, joint ventures and other associated entities, deferred tax
assets are recorded to the extent that it is probable that the temporary difference will reverse in the foreseeable future and that a taxable
profit will be available against which the temporary difference can be utilized.
The carrying value of deferred tax assets is reviewed at each closing date, and revalued or reduced to the extent that it is more or lessprobable that a taxable profit will be available to allow the deferred tax asset to be utilized. When assessing the probability of a taxable
profit being available, account is taken, primarily, of prior years' results, forecasted future results, non-recurring items unlikely to occur in the
future and the tax strategy. As such, the assessment of the group's ability to utilize tax losses carried forward is to a large extent judgmentbased. If the future taxable results of the group proved to differ significantly from those expected, the group would be required to increase or
decrease the carrying value of deferred tax assets with a potentially material impact on the group's Statement of Financial Position andStatement of Earnings.
Deferred tax liabilities are recognized for all taxable temporary differences, except where the deferred tax liability results from goodwill or
initial recognition of an asset or liability in a transaction which is not a business combination, and that, at the transaction date, does not
impact earnings, tax income or loss.
For taxable temporary differences resulting from investments in subsidiaries, joint ventures and other associated entities, deferred tax
liabilities are recorded except to the extent that both of the following conditions are satisfied: the parent, investor or venturer is able tocontrol the timing of the reversal of the temporary difference and it is probable that the temporary difference will not be reversed in theforeseeable future.
Current tax and deferred tax shall be charged or credited directly to equity, and not earnings, if the tax relates to items that are credited or
charged directly to equity.

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1.3.10Share-based compensation

With the aim of aligning the interests of executive management and employees of Vivendi with its shareholders' interests by providing themwith an additional incentive to improve Vivendi's performance and increase its share price on a long-term basis, Vivendi maintains several
share-based compensation plans (share purchase plans, performance share plans and bonus share plans) or other equity instruments basedon the value of the Vivendi share price (stock options), which are settled either in equity instruments or in cash. Grants under these plans areapproved by Vivendi's Management and Supervisory Boards. In addition, the definitive grant of stock options and performance shares is
contingent upon the achievement of specific performance objectives set by Vivendi 's Management and Supervisory Boards. Moreover, all
granted plans are conditional upon active employment at the vesting date.
In addition, Dailymotion set up a long-term incentive plan for certain key executives of Vivendi and certain of its subsidiaries, including UMG,
for a five year period until June 30, 2020.
Please refer to Note 18 for details of the features of these plans.
Share-based compensation is recognized as a personnel cost at the fair value of the equity instruments granted. This expense is spread overthe vesting period, i.e., three years for stock option plans and for performance share plans (two years for performance shares granted before
June 24, 2014), and two years for Vivendi 's bonus share plans, other than in specific cases.
Vivendi uses a binomial model to assess the fair value of such instruments. This method relies on assumptions updated at the valuation datesuch as the calculated volatility of the relevant shares, the discount rate corresponding to the risk-free interest rate, the expected dividend
yield, and the probability of relevant managers and employees remaining employed within the group until the exercise of their rights.
However, depending on whether the instruments granted are equity-settled or cash-settled, the valuation and recognition of the expense will
differ:Equity-settled instruments:• the expected term of the option granted is deemed to be the mid-point between the vesting date and the end of the contractual term;• the value of the instruments granted is estimated and fixed at grant date; and• the expense is recognized with a corresponding increase in equity.
Cash-settled instruments:• the expected term of the instruments granted is deemed to be equal to one-half of the residual contractual term of the instrument forvested rights, and to the average of the residual vesting period at the remeasurement date and the residual contractual term of the
instrument for unvested rights;• the value of instruments granted is initially estimated at grant date and is then re-estimated at each reporting date until the payment
date and the expense is adjusted pro rata taking into account the vested rights at each such reporting date;• the expense is recognized as a provision; and• moreover, as plans settled in cash are primarily denominated in US dollars, the value fluctuates based on the EUR/USO exchange
rate.

The cost of share-based compensation is allocated to UMG, pro rata to the number of equity instruments or equivalent instruments granted
to their managers and employees.

1.4

Related parties

UMG's related parties are those companies over which UMG exercises exclusive control, joint control or significant influence, UMG
shareowners exercising joint control over joint ventures, non-controlling interests exercising significant influence over UMG subsidiaries,
UMG corporate officers, management and directors and companies over which the latter exercise exclusive control, joint control, or
significant influence.
The transactions with subsidiaries over which UMG exercises control are eliminated within the intersegment transactions (a list of UMG'smajor consolidated entities is set out in Note 23). Moreover, commercial relationships among UMG subsidiaries, aggregated in operating
segments, are conducted on an arm's length basis on terms and conditions similar to those which would be offered by third parties. A portionof the operating costs of Vivendi SE's headquarters is allocated to UMG.

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1.5

Contractual obligations and contingent assets and liabilities

Once a year, UMG and its subsidiaries prepare detailed reports on all contractual obligations, commercial and financial commitments andcontingent obligations, for which they are jointly and severally liable and that are material to the group. These detailed reports are updated
by the relevant departments and reviewed by senior management on a regular basis. To ensure completeness, accuracy and consistency ofthese reports, some dedicated internal control procedures are carried out, including (but not limited to) the review of:• minutes of meetings of the shareholders, board and executive and other relevant committee meetings in respect of matters such as
contracts, litigation, and authorizations of asset acquisitions or divestitures;• pledges and guarantees with banks and financial institutions;• pending litigation, claims (in dispute) and environmental matters as well as related assessments for unrecorded contingencies withinternal and/or external legal counsels;• tax examiner's reports and, if applicable, notices of reassessments and tax expense analyses for prior years;• insurance coverage for unrecorded contingencies with the risk management department and insurance agents and brokers withwhom the group contracted;• related-party transactions for guarantees and other given or received commitments; and• more generally, major contracts and agreements.

1.6

New IFRS standards and IFRIC interpretations that have been published but are not yet effective

Among IFRS standards and IFRIC interpretations issued by the IASB/IFRS IC and endorsed by the European Union as of the date of approvalof these Combined Financial Statements, that are not yet effective, and which UMG has not elected for early adoption, the main standards
which may have an impact on UMG are the amendments to the IFRS 9 - Financial Instruments, IFRS 7 - Financial Instruments: Disclosuresand IFRS 16 - Leases standards which relate to the Interest Rate Benchmark Reform (Phase 2). These amendments which apply mandatorily
from January 1, 2021, were issued by the IASB on August 27, 2020, endorsed by the EU on January 13, 2021, and published in the Official
Journal of the EU on January 14, 2021 .
UMG is currently assessing the potential impact of applying these amendments to the Statement of Earnings, the aggregate comprehensive
income, the Statement of Financial Position, the Statement of Cash Flows, and the content of the Notes to UMG's Combined Financial
Statements.

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Wednesday March 03, 2021

Note2
2.1

Segment data

Operating segment data

The group management evaluates the performance of its business segments and allocates necessary resources to them based on certain
operating performance indicators {segment earnings and cash flow from operations). EBITDA and EBITA reflect the earnings of each businesssegment, as defined in Note 1.2.3.
lntersegment commercial operations are conducted on an arm's-length basis on terms and conditions similar to those which would beoffered by third parties.
Main aggregates of the Statement of Earnings
Recorded music

Music publishing

Merchandisingand otherYear ended December 31, 2020
Revenues

5,967

1,186

292

EBITDA

1,360(in millions of euros)

269

Corporate center

Elimination ofintersegment
transactions

Total

(13)

7,432

21

(163)

1,487

(206)

1,329

1,259

257

19

Revenues

5,634

1,052

489

EBITDA

1,156

250

25

(164)

1,267

EBITA

1,057

239

24

(196)

1,124

Revenues

4,828

941

273

EBITDA

873

214

15

(123)

979

EBITA

823

209

15

(145)

902

2020

Year ended December 31 ,
2019
1,221
1,039

EBITA
Year ended December 31, 2019

(16)

7,159

Year ended December 31, 2018
(19)

6,023

Reconciliation of EBIT to EBITA and to EBITDA(in millions of euros)
EBIT{a)2018
821

Adjustments
Amortization of intangible assets acquired through business combinations
Impairment losses on intangible assets acquired through business combinations (a)Other charges and income
EBITA

108

85

80

1,329

1,124

1
902

20

24

29

69
59
9
1,487

64
53
2
1,267

na
46
1
979

Adjustments
Restructuring charges (a)Sale of tangible and intangible assets
Right-of-use - Depreciation of tangible assets
Depreciation
Other non-recurring items
EBITDAna: not applicable.
a.

As reported in the Combined Statement of Earnings.

Recorded music revenues by geographic area
Recorded music revenues broken down by customer location:2020(in millions of euros)

North America
EuropeAsia
Latin America
Rest of the world
Recorded music revenues

2,940
1,789
801
181
256
5,967

49%
30%
14%
3%
4%
100%

Year ended December 31,
2019
2,636
47%
1,742
31%
771
14%
184
3%
301
5%
5,634
100%

2018
2,224
1,580
618
153
253
4,828

46%
33%
13%
3%
5%
100%

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Wednesday March 03, 2021

2.2

Segment assets and liabilities

Segment assets by geographic area

Segment assets include goodwill, content assets, other intangible assets, property, plant and equipment, rights-of-use relating to leases,
equity affiliates, financial assets, inventories, shareowners loans and trade accounts receivable and other.
(in millions of euros)

North America
EuropeAsia/Pacific
Latin America
Rest of the world
Total segment assets

December 31, 2020
5,669
55%
4,214
41%
305
3%
46
1%
12
10,246100%

December 31, 2019
4,406
54%
3,367
41%
292
4%
50
1%
13
8,128
100%

December 31, 2018
3,891
53%
3,192
43%
246
3%
54
1%
9
7,392
100%

Segment liabilities

Segment liabilities include provisions. other non-current liabilities. short-term and long-term lease liabilities and trade accounts payable andother. Segment liabilities amounted to €5,691 million as of December 31, 2020, compared to €5, 184 million as of December 31, 2019,€4,775 million as of January 1, 2019 and €4,246 million as of December 31, 2018.

Note3

EBIT

Personnel costs and average employee numbers(in millions of euros)

Salaries
Social security and other employment charges
Wages and expenses
Share-based compensation plans
Employee benefit plans
Other
Personnel costs

Note

18
17

Year ended December 31,
2019
984
127
1,111
10
5
39
37
14
15
1,261
1,168

2020
---1,059
139
1,198

Annual averaqe number of full-time equivalent employees {in thousands)

8.8

8.4

2018
876
119
995
4
32
18
1,049

7.9

Additional information on operating expenses

Advertising costs amounted to €143 million in 2020, €156 million in 2019 and €139 million in 2018.
LeviesLevies amounted to €17 million in 2020, €11 million in 2019 and €13 million in 2018.

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Note4

Financial charges and income

Interest(in millions of euros)(Charge)/lncome
Interest expense on borrowings
Interest income from cash. cash equivalents and investments
Interesta.

Year ended December 31 ,
2019

2020

(20) (a)
5

2018

14
14

(15)

27

27

Notably included interest expense on borrowings from Vivendi SE, please refer to Note 14.

Other financial income and charges(in millions of euros)
Capital gain on financial investments (a)Effect of undiscounting assets (b)Expected return on plan assets related to employee benefit plans
Foreign exchange gain
Other
Other financial income
Capital losses on financial investments (a)Downside adjustment on financial investments
Effect of undiscounting liabilities (b)Interest cost related to employee benefit plans
Interest expenses on lease liabilities
Foreign exchange loss
Other
Other financial charges
Net total

Note

17 .2

17.2

2020
----

591

Year ended December 31,
2019
168

3

4

9
603

2
174
(15)
(11)
(1)

(1)
(5)
(18)
(4)
(28)

575

2018
312
18
3

333
(1)
(19)

(7)

(7)

(19)
(1)
(3)
(57)
117

na
(1)
(1)
(29)

304

na: not applicable.
b.

Included the revaluation of the interests in Spotify and Tencent Music Entertainment for a net amount of €591 million (compared to€139 million in 2019 and €312 million in 2018).

c.

In accordance with applicable accounting standards, where the effect of the time value of money is material, assets and liabilities are
initially recorded in the Statement of Financial Position in an amount relating to the present value of the expected revenues andexpenses. At the end of each subsequent period, the present value of such assets and liabilities is adjusted to account for the passageof time.

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Wednesday March 03, 2021

Notes
5.1

Income taxes

Provision for income taxes and income tax paid by geographic area

Provision for income taxes(in millions of eurosl(Charge)/lncome
Current
United States
FranceRest of Europe
Rest of the world
DeferredUnited States
FranceRest of Europe (a)Rest of the world
Provision for income taxesa.

Year ended December 31,
2019

2020

2018

(105)
(17)
(61)
(96)
(279)

(50)
(27)
(7)
(71)
(155)

(81)
(18)
(49)
(63)
(211)

7
2
(144)
2
(133)
(412)

22
(4)
(61)
3

38
1
(81)
2

(40)

(40)

(195)

(251)

Included the deferred tax charge relating to the revaluation gain recorded through profit or loss related to the investments in Spotify andTencent Music Entertainment for an aggregate amount of -€142 million in 2020, compared to -€36 million in 2019 and -€72 million in
2018.

Income tax paid(in millions of euroslUnited States
France (b)Rest of Europe
Rest of the world
Income tax (paid)/collected

(80)
(17)

Year ended December 31 .
2019
(76)
(20)

------'--(5--'-1)
(207)

(39)
(172)

2020

~m

=======~7l2018(69) (a)(22)(57) (c)
(50)
(198)

a.

Included payments in the United States to Vivendi and its subsidiaries for prior periods for -€38 million.

b.

Included payments in France to Vivendi related to the French tax group for -€13 million paid in 2020, -€16 million paid in 2019 and-€18 million paid in 2018. Following the sale of 10% of UMG by Vivendi on March 31 , 2020, French entities of UMG exited Vivendi's
French tax group with retroactive effect as of January 1, 2020. Starting in 2021, French entities of UMG will pay their income taxes to
French tax authorities.

c.

Included payments in the United Kingdom to Vivendi and its subsidiaries for prior periods for -€33 million.

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Wednesday March 03, 2021

5.2

Effective tax rate2020

(in millions of euros, except%)

Earnings (before non-controlling interests)

Year ended December 31,
2019
1,369
975

2018

902

Eliminations
Income from equity affiliates
Provision for income taxes
Earnings from continuing operations before provision for income taxes

French statutory tax rate
Theoretical provision for income taxes based on French statutory tax rate

9
412
1.790
32,02%
(573)

2
195
1,172
34.43%
(404)

251
1,154
34.43%
(397)

161
4
9

184
(3)
19
3
(40)
(17)
(251)

21.7%

Reconciliation of the theoretical and effective provision for income taxes
Earnings tax rates differences
Impacts of the changes in tax rates
Use or recognition of tax losses
Adjustments to tax expense from previous years
Withholding taxes
Other
Provision for income taxes

(37)
14
(412)

164
(8)
32
63
(35)
(7)
(195)

Effective tax rate

23.0%

16.6%

10

Excluding previous years' adjustments to income tax expense, the effective tax rate would have been 23.6% in 2020, 22.0% in 2019 and22.0% in 2018.

5.3

Deferred tax assets and liabilities

Changes in deferred tax assets/(liabilities), net(in millions of euros)

Opening balance of deferred tax assets/(liabilities), net
Provision for income taxes
Charges and income directly recorded in equity
Other business combinations
Changes in foreign currency translation adjustments and other
Closing balance of deferred tax assets/(liabilities), net

2020
(292)
(133)
(3)
(1)
15
(414)

Year ended December 31,2019(255) (a)
(40)
9
(2)
(4)
(292)

2018
(201)
(40)

(37) (bl(278)

a.

As of January 1, 2019, deferred tax assets included the impact of the restatements related to the application of the new accounting
standard IFRS 16 - Leases for +€23 million.

b.

Certain reclassifications were made to the Combined Financial Statements for the year ended December 31, 2018 to conform to thepresentation of the Combined Financial Statements for the year ended December 31, 2019.

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Wednesday March 03, 2021
Components of deferred tax assets and liabilities(in millions of euros)
Deferred tax assets

Recognizable deferred taxes
Tax attributes (a)Of which Universal Music US and its subsidiaries (b)Universal Music UK and its subsidiaries
Universal Music France and its subsidiaries
Universal Music and its subsidiaries in the rest of Europe
Universal Music and its subsidiaries in the rest of the world
Other
Of which non-deductible provisions
employee benefits
working capital
Total gross deferred tax assets
Deferred taxes, unrecognized
Tax attributes (a)Of which Universal Music US and its subsidiaries (b)Universal Music UK and its subsidiaries
Universal Music France and its subsidiaries
Universal Music and its subsidiaries in the rest of Europe
Universal Music and its subsidiaries in the rest of the world
Other
Total deferred tax assets, unrecognized
Recorded deferred tax assets
Deferred tax liabilities
Asset revaluations (c)Working capital
Financial Instruments (d)OtherRecorded deferred tax liabilities
Deferred tax assets/(liabilities), net

December 31 ,2020

December 31 ,2019

January 1,
2019

188
95
46
3
23
21
429
44
32
161
617

240
139
47
3
25
26
385
69
33
142
625

336
214
50
4
27
41
395
72
26
146
731

(179)
(95)
(43)
(3)
(17)
(21)
(24)
414

(229)
(139)
(43)
(3)
(18)
(26)
(29)
(258)
367

(328)
(214)
(46)
(4)
(23)
(41)
(50)
(378)
353

(201)
(129)
(434)
(64)
(828)

(240)
(128)
(221)
(70)
(659)

(236)
(132)
(171)
(69)
(608)

(414)

(292)

(255)

(203)

a.

As shown in this table, the amounts of tax attributes were estimated at the end of the relevant fiscal years. As a result, the amount oftax attributes shown in this table and the amount reported to tax authorities at the time of the filing of the tax returns may differ, and if
necessary, may need to be adjusted in this table at the end of the following year.

b.

Primarily related to deferred tax assets recognizable in respect of tax credits carried forward by UMG Inc. in the United States as headof the US tax group, i.e., $114 million as of December 31, 2020 (compared to $154 mill ion as of December 31, 2019, and $244 million asof December 31 , 2018), taking into account the estimated impact (-$40 million) of transactions for the year 2020, but before taking into
account the final contingent outcome of ongoing tax audits.

c.

These tax liabilities, stemming from asset revaluations and resulting from the purchase price allocation of entities acquired by UMG,
are cancelled upon amortization or divestiture of the related assets and do not and will not generate any current tax liabilities.

d.

Primarily related to the deferred tax liabilities stemming from the revaluation of the investments in Spotify and Tencent MusicEntertainment.

5.4

Tax litigation

In the normal course of their business, UMG is subject to tax audits by the relevant tax authorities in the countries in which it conducts or
has conducted business. Various tax authorities have proposed adjustments to the financial results reported by UMG for fiscal year 2019 andprior years, under statutes of limitation applicable to UMG. In litigation situations, UMG's policy is to pay the taxes it intends to contest, andto seek a refund through appropriate legal proceedings. Regarding ongoing tax audits, no provision is recorded where the impact that could
result from an unfavorable outcome cannot be reliably assessed. To date, UMG believes that these tax audits are unlikely to have a material
impact on the group's financial position or liquidity.

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Wednesday March 03, 2021

Note&

Earnings per share

As the combined group was not a legal entity constituted as of December 31, 2020, 2019 and 2018, the number of shares outstanding is notdeterminable. Consequently, no earnings per share data is presented in the Combined Financial Statements.

Note7

Charges and income directly recognized in equity

Details of changes in equity related to other comprehensive income
Items not subsequently reclassified
to profit or loss

(in millions of euros)
Balance as of January 1, 2018
Charges and income directly recognized in equity
Items to be reclassified to profit or loss
Tax effectBalance as of December 31, 2018
Charges and income directly recognized in equity
Items to be reclassified to profit or loss
Tax effectBalance as of December 31, 2019
Charges and income directly recognized in equity

Items to be reclassified to profit or loss
Tax effectBalance as of December 31, 2020a.

Actuarial
gains/{losses)
related to
employee defined
benefit plans (a)Financialassets at fairvalue throughothercomprehensive
income(15)

Items to be
subsequently
reclassified to profit
or loss
Foreign currencytranslation
adjustments

Other
comprehensive
income fromequityaffiliates, net

Othercomprehensive
income

(381)

(8)

113

4

(15)
(2)

(268)

(4)

44

2

(312)
12

(48)

(17)

8

3

(224)
(194)

(2)
(6)

9
(291)
(189)

(418)

(8)

(483)

(25)

(429)
117

na
(25)
(32)

9

(2)

(1)

(42)

(15)

(3)

Please refer to Note 17.

Universal Music Group/ 34

Wednesday March 03, 2021

Notes

Goodwill(in millions of euros)

Goodwill, gross
Impairment losses
Goodwill

8.1

December 31, 2020
1,451
(82)
1,369

December 31, 2019
1,577
(89)
1,488

December 31, 2018
1,466
(88)
1,378

December 31, 2020

December 31, 2019
1,378

December 31, 2018
1,308

Changes in goodwill(in millions of euros)

Opening balance
Impairment losses
Business combinations
Changes in foreign currency translation adjustments and other (b)Closing balance

1,488

7
(126)
1,369

76 (a)
34
1,488

14
56
1,378

a.

Notably included the provisional goodwill attributable to lngrooves consolidated by Universal Music Group (UMG) as from March 15,
2019.

b.

Notably included the foreign currency translation of the dollar (USO) against the euro.

8.2

Goodwill impairment test

Goodwill cannot be allocated on a non-arbitrary basis to UMG's individual cash-generating units (sale of recorded music; exploitation ofmusic publishing rights; merchandising and artist services), but only to a group of cash-generating units. As a result, the lowest level within
UMG at which goodwill is monitored for internal management purposes comprises a portion of the cash-generating units to which the
goodwill relates, but to which it cannot be allocated. Goodwill is therefore tested at the level of UMG.
In 2018, 2019 and 2020, UMG was tested for impairment by comparing its carrying amount (including goodwill) with its recoverable amount.
The recoverable amount is determined as the higher of the value in use determined by the discounted value of future cash flows (Discounted
Cash Flow method (DCF)) and the fair value (less costs to sell), determined on the basis of market data (stock market prices, comparable
listed companies, comparison with the value attributed to similar assets or companies in recent acquisition transactions). For a description of
the methods used for the impairment test, please refer to Note 1.3.5.7.
During the fourth quarter of each year, the goodwill impairment test was performed based on valuations of recoverable amounts determined:
in 2020 and 2019, referring to a recent transaction (please refer to the precision below) and in 2018 through internal valuations. As a result,the Management concluded that, as of December 31, 2018, 2019 and 2020, the recoverable amount tested significantly exceeded its carrying
value.
Presentation of key assumptions used for the determination of recoverable amounts
In 2018, the Management ensured that the recoverable amount exceeded the carrying value on the basis of market data only, as a businessplan was not available at the time of the re-examination of the value of goodwill. To achieve the highest possible valuation for UMG, given
the favorable change in the international music market, driven in particular by the strong development of subscription streaming services,
Vivendi stated in 2018 that it is willing to sell up to 50% of UMG's share capital to one or more strategic partners and that such process
could be completed within an 18-month timeframe.
On December 31, 2019, Vivendi and a consortium of investors led by Tencent entered into an agreement providing the sale of 10% of UMG'sshare capital, based on an enterprise value of €30 billion for 100% of UMG's share capital, with the option to acquire, until January 15,2021 , on the same valuation basis, an additional amount of up to 10% of UM G's share capital. On March 31, 2020, Vivendi sold 10% of
UMG's share capital to the Tencent-led consortium. On December 17, 2020, the consortium exercised the option to acquire an additional
10% of UMG. On January 29, 2021, Vivendi sold an additional 10% of UM G's share capital to the Tencent-led consortium based on the same
enterprise value of €30 billion for 100% of UM G's share capital.
On this basis, the Management ensured that the recoverable amount exceeded the carrying value.

Universal Music Group/ 35

Wednesday March 03, 2021

Note9
9.1

Content assets and commibnents

Content assets(in millions of euros)

Music catalogs and publishing rights
Advances to artists and repertoire owners
Merchandising contracts and artists services
Content assets
Deduction of current content assets
Non-current content assets

Content assets,
gross
4,345
1,859
20

December 31, 2020
Accumulated amortizationand impairment losses(2,015)

Content assets
2,330
1,859

(20)

6,224

(2,035)4,189(2,035)

3,512

(677)

(677)

5,547

December 31, 2019(in millions of euros)

Music catalogs and publishing rights
Advances to artists and repertoire owners
Merchandising contracts and artists services
Content assets
Deduction of current content assets
Non-current content assets

Content assets,
gross

Accumulated amortizationand impairment losses

Content assets

3,670
1,266
22

(2,076)

4,958(2,098)

2.860

4,367

(2,098)2,269

Content assets,
gross
3,312
1,045
20

Accumulated amortizationand impairment losses(1,948)4,377(1,968)2,409(1,968)

1,808

1,594
1,266

(22)

(591)

(591)

December 31, 2018
(in millions of euros)

Music catalogs and publishing rights
Advances to artists and repertoire owners
Merchandising contracts and artists services
Content assets
Deduction of current content assets
Non-current content assets

Content assets
1,364
1,045

(20)

(601)

(601)

3,776

Changes in content assets(in millions of euros)

Opening balance
Amortization of content assets acquired through business combinations
Impairment losses on content assets acquired through business combinations
Increase
Decrease
Business combinations
Changes in foreign currency translation adjustments and other
Closing balanceYear ended December 31,
2019

2020

2018

2,860

2,409

2,042

(108)

(84)

(79)

2,541
(1 ,024)
(80)

1,483
(1,018)
23
47

974
(812)
3
281

4,189

2.860

2,409

Universal Music Group/ 36

Wednesday March 03, 2021

9.2

Contractual content commitments

Commitments given recorded in the Statement of Financial Position: content liabilities
Content liabilities are mainly recorded in "Trade accounts payable and other" or in "Other non-current liabilities" whether they are current or
non-current, as applicable.

(in millions of euros)
Music royalties to artists and repertoire owners
Creative talent, employment agreements and others
Content liabilities

Minimum future payments as of December 31, 2020
Due inTotal
2021
2022 - 2025 After 2025
2,315
2,305
10
456
204
247
5

2,771

2,509

257

5

Total minimum future payments as ofDecember 31, 2019
2,264
288

December 31, 2018
2,049
283

2,552

2,332

Off-balance sheet commitments: creative talent, employment agreements and others
Universal Music Group (UMG) routinely commits to pay agreed amounts to artists and other parties upon delivery of content or otherproducts ("Creative talent and employment agreements"). Until the artist or the other party has delivered his or her content or until the
repayment of an advance, UMG discloses its obligation as an off-balance sheet given commitment. While the artist or the other party is
obligated to deliver content or another product to UMG (these arrangements are generally exclusive), this counterpart cannot be reliably
determined and, thus, is not reported in received commitments.

(in millions of euros)
Given content commitments
Received content commitments
Total net

Minimum future payments as of December 31, 2020
Due inTotal
2021
2022 - 2025
After 2025
1,337
732
578
27
na
na
na
na

1,337

732

578

27

Total minimum future payments as ofDecember 31, 2019
1,329
na

December 31, 2018
1,172
na

1,329

1,172

na: not available.

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Wednesday March 03, 2021

Note 10

Leases

As from January 1, 2019, Universal Music Group (UMG) applies the new accounting standard IFRS 16 - Leases. In accordance with IFRS 16,
the impact of the change of accounting standard was recorded in the opening balance sheet as of January 1, 2019. For a detailed
description, please refer to Note 1.3.5.6

10.1

Rights-of-use relating to leases

As of December 31, 2020, the rights-of-use relating to leases amounted to €416 million (€472 million as of December 31 , 2019 and€454 million as of January 1, 2019) less the accumulated amortization and impairment losses for €329 million as of December 31, 2020(€287 million as of December 31 , 2019 and €222 million as of January 1, 2019). These rights-of-use relate to real estate leases.
Changes in the rights-of-use
Year ended December 31,
2020
2019

(in millions of euros)

Opening balance
Depreciation
Acquisitions/increase
Sales/decrease
Business combinations
Foreign currency translations and other
Closing balance

10.2

472

454

(69)
39

(64)
59

(26)
416

472

23

Lease liabilities

Reconciliation between off-balance sheet leases as of December 31, 2018 and lease liabilities as of January 1, 2019(in millions of euros)

Off-balance sheet leases as of December 31, 2018
Lease with a remaining lease term of less than 12 months (short-term lease)
Leases of low-value assets
Variable lease payments (excluding indexed leases)
Reasonably certain renewal/extension and termination options
Others
Undiscounted lease payments as of January 1, 2019
Effect of discounting
Residual value guarantee
Non-lease components
Operating lease liabilities as of January 1, 2019
Financing lease liabilities
Total of lease liabilities as of January 1, 2019

671
(7)

36
(21)

679
(96)

583
583

Maturity of lease liabilities

The maturity of lease liabilities is based on assumptions, notably made upon the initial application of IFRS 16.
(in millions of euros)

Maturity< 1 year
Between 1 and 5 years> 5 years
Lease liabilities

10.3

December 31, 2020

December 31, 2019

January 1, 2019

78

86

90

265
182

315
195

334

525

596

583

159

Lease-related expenses

Lease-related expenses recorded in the Statement of Earnings amounted to €88 million in 2020 (compared to €83 million in 2019 and€67 million in 2018 relating to operating leases under IAS 17).

Universal Music Group/ 38

Wednesday March 03, 2021

Note 11

Investments in equity affiliates

As of December 31, 2020, 2019 and 2018, the main company accounted for by Universal Music Group under the equity method was Vevo (apremium music video and entertainment platform).
(in millions of eurosl

Vevo
lngrooves Music Group (a)Other

Voting interest
December 31, 2020 and 2019
49.4%
100%
na

Voting interest
December 31, 2018
49.4%
22.9%
na

Net carrying value of equity affiliates
December 31, 2020 December 31, 2019 December 31, 2018
62
78
81
~

~

6

10

10

10

72

88

97

na: not applicable.
a.

On March 15, 2019, UMG acquired the remaining interest in lngrooves Music Group, an innovative music distribution and marketingcompany which complements UMG's existing relationships with the global independent music community.

Change in value of investments in equity affiliates(in millions of euros)

Opening balance
Acquisitions
Business combinations
Income from equity affiliates
Change in other comprehensive income
Dividends received
Other
Closing balancea.

Year ended December 31,
2019

2020

2018

88

97

96

(9)
(6)
(2)

(2)
2
(2)
(7) (a)

(1)
4
(2)

72

88

97

On March 15, 2019, UMG acquired the remaining interest in lngrooves Music Group.

Universal Music Group/ 39

Wednesday March 03, 2021

Note 12(in millions of eurosl

Financial assets
Total

December 31, 2020
Non-current
Current

Financial assets at fair value through profit or loss
Term deposits
Level 1 - Listed equity securities
1,862
Level 2Unlisted equity securities
43
Derivative financial instruments
Level 3 - Other financial assets
Financial assets at fair value through other comprehensive income
Level 1 - Listed equity securities
Level 2 - Unlisted equity securities
Level 3 - Unlisted equity securities
14
Financial assets at amortized cost
44
1,963
Financial assets(in millions of eurosl

Total

Financial assets at fair value through profit or loss
Term deposits
Level 1 - Listed equity securities
789
Level 2Unlisted equity securities
Derivative financial instruments
20
Level 3 - Other financial assets
Financial assets at fair value through other comprehensive income
Level 1 - Listed equity securities
2
Level 2 - Unlisted equity securities
Level 3 - Unlisted equity securities
23
Financial assets at amortized cost
69
Financial assets
903

December 31, 2019Non-current
Current

Total

1,862

1,000

1,000

43

43

43

14

14
72
1,131

43
1,962

14
27
28

45
1,103

December 31, 2018
Non-current
Current

789

20

2

30
30

23
39
873

The three classification levels for the measurement of financial assets at fair value are defined in Note 1.3.1.

Universal Music Group/ 40

Wednesday March 03, 2021

Listed equity portfolio
December 31, 2020

Spotify (b)Tencent Music Entertainment (c)Other

Number ofshares held

Ownership
interest(in thousands)
6,487
12,246

3.37%
0.74%

Averagepurchaseprice (a)Stockmarketprice(€/share I
6.58
257.34
na
15.74

Total

Carrying
value

1,669
193
1,862

Cumulative
unrealized
capitalgain/(loss)(in millions of eurosl
1,627
798
64
193
(1)
1,820
861

Change invalue over theperiodSensitivity
at +/-10 pts+167/-167+19/-19

December 31, 2019

Spotify (b)Tencent Music Entertainment (c)Other

Number ofshares held

Ownership
interest

Averagepurchaseprice (a)Stockmarketprice(in thousands)
6,487
12,246

3.62%
0.82%

6.58
na

(€/share I
134.36
10.55

Total

Carrying
value

871
129
1,001

Cumulative
unrealized
capitalgain/(loss)(in millions of eurosl
225
829
(13)
129
(2)
210
959

Change invalue over theperiodSensitivity
at +/-10 pts+87 /-87+13/-13

December 31 , 2018
Number ofshares held

Ownership
interest

Averagepurchaseprice (a)(in thousands)
Spotify (b)Tencent Music Entertainment (c)
Other

6,487
12,246Stockmarketprice

Carryingvalue(€/share I

3.59%
0.82%

6.58
na

99.70
11 .61

Total

Cumulative
unrealized
capitalgain/(loss)(in millions of eurosl

Change invalue over theperiod

647
142
2

344
97

604
142
3

791

441

749

Sensitivity
at +/-10 pts+65/-65+14/-14

na: not applicable.
a.

Includes acquisition fees and taxes.

b.

Spotify shares have been listed since April 3, 2018.

c.

Tencent Music Entertainment shares have been listed since December 12, 2018.

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Wednesday March 03, 2021

Note 13

Net working capital

Changes in net working capital

December 31,
2019(in millions of euros)

Inventories
Trade accounts receivable and otherOf which trade accounts receivable
trade accounts receivable write-offs
Working capital assets
Trade accounts payable and other
Other non-current liabilities
Working capital liabilities
Net working capital

90
1,058
507
(42)
1,148
3,981
106
4,087
(2,939)January 1,
2019 (d)(in millions of euros)

Inventories
Trade accounts receivable and otherOf which trade accounts receivable
trade accounts receivable write-offs
Working capital assets
Trade accounts payable and other
Other non-current liabilities
Working capital liabilities
Net working capital

84
994
548
(52)
1,078
3,613
135
3.748
(2,670)

2

2
(1)
6
5
(3)

414
(287)

Changes inoperatingworking
capital (a)December 31,
2017
71
919
524
(46)
990
3,023
111
3,134
(2,144)

14
(1)
(30)
(7)
13
181
11
192
(179)

Changes inforeigncurrencytranslation
adjustments
2
14
4
(1)
16
68
2
70
(54)

Business
combinations

4
31
(49)
11
35
118
118
(83)

Changes inforeigncurrencytranslation
adjustments
(5)
(54)
(20)
3
(59)
(241)
(17)
(258)
199

Business
combinations

(6)
133
62
(8)
127
413

Changes inoperatingworking
capital (a)(in millions of eurosl

Inventories
Trade accounts receivable and otherOf which trade accounts receivable
trade accounts receivable write-offs
Working capital assets
Trade accounts payable and other
Other non-current liabilities
Working capital liabilities
Net working capital

Changes inoperatingworking
capital (a)

9
11
9
50
(1)

49
(40)

Business
combinations

4
3

Changes inforeigncurrencytranslation
adjustments
2
13
4

4
12
12
(8)

15
48
4
52
(37)

December 31,
2020

Other (b)

(51)
(12)
(15)
(51)
(309) (c)755 (c)446(497)

December 31 ,2019

Other (b)

10
(7)
10
132 (c)
(30)
102
(92)

Other (b)

(3)
62
47

59
374 (c)
33
407
(348)

79
1,088
538
(62)
1,167
3,843
851
4,694
(3,527)

90
1,058
507
(42)
1,148
3,981
106
4,087
(2,939)December 31,
2018
84
997
548
(52)
1,081
3,638
159
3.797
(2,716)a.

Excludes content investments.

b.

Mainly includes the change in net working capital relating to content investments, capital expenditures and other investments.

c.

Included royalties provisions for €279 million as of December 31, 2020, €83 million as of December 31, 2019 and €130 million as ofDecember 31, 2018.

d.

As from January 1, 2019, Vivendi applies the new accounting standard IFRS 16 - Leases.

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Wednesday March 03, 2021
Trade accounts receivable and otherCredit risk
Universal Music Group does not consider there to be a significant risk of non-recovery of trade accounts receivables for its businesssegments: the large individual customer base, the broad variety of customers and markets, as well as the geographic diversity of its businesssegments enable UMG to minimize the risk of credit concentration related to trade accounts receivable.
Trade accounts payable and otherNote(in millions of eurosl

Trade accounts payable
Music royalties to artists and repertoire owners
Other
Trade accounts payable and other

Note 14

9.2

December 31, 2020
121
2,305
1,417
3,843

December 31, 2019
132
2,251
1,598
3,981

January 1, 2019
120
2,037
1,456
3,613

Cash position, borrowings and financial risk management

Cash position
Universal Music Group (UMG)'s cash position comprises cash and cash equivalents, as well as loans to Vivendi classified as current financial
assets. As defined by Vivendi, money market funds relate to financial investments, which satisfy the ANC's and AMF's decision released in
November 2018.
(in millions of eurosl

Loans to Vivendi SEof which Universal Music Group Treasury S.A.S.
Universal Music Group S.A.S.
Cash and cash equivalents (a)of which cash equivalents
cash
Cash positiona.

December 31, 2020
815

December 31, 2019
672

December 31 , 2018
1,260

815

623
49

1,192
68

326

336

276

220
106

248
88

190
86

1,141

1,008

1,536

Included cash not centralized by Vivendi SE for €317 million as of December 31, 2020, €333 million as of December 31, 2019 and€249 million as of December 31, 2018. Vivendi SE centralizes daily cash surpluses ("cash pooling") of all controlled entities (a) which
are not subject to local regulations restricting the transfer of financial assets, or (b) which are not subject to other contractual
agreements.

Borrowings and other financial liabilities
Universal Music Group Inc. bank credit facilities
Universal Music Group Inc. (UMG Inc.) is now an additional borrower under five of Vivendi SE's eight bilateral credit facilities up to theaggregate limit of €750 million. As of December 31, 2020, drawings made by UMG Inc. were €422 million (drawings made in US dollars).
In addition, UMG Inc. has its own credit facilities maturing in September 2021 for an aggregate amount of $570 million, i.e. €466 million asof December 31, 2020 including a committed credit facility of €245 million. As of December 31, 2020, drawings made by UMG Inc. were€213 million (drawings made in US dollars), of which €131 million on the committed credit facility.

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Wednesday March 03, 2021
Universal Music Group borrowings and intra-group investments with Vivendi SE
In addition to drawings made by UMG Inc. on bank credit facilities, Universal International Music B.V. borrows from Vivendi SE, andUniversal Music Group Treasury places its cash surpluses with Vivendi SE.

(in millions of eurosl

Shareowners borrowings (a)Credit lines drawn by UMG Inc. (b)Bank overdrafts
Other
Borrowings at amortized cost
Derivative financial instruments
Borrowings and other financial liabilities

December 31, 2020
LongShortTotal
term
term
2,368
2,368
635
635
5
5
1
1
3,009
2,369
640

3,009

2,369

December 31, 2019LongShortTotal
term
term

640

14

December 31, 2018
LongShortTotal
term
term

14

17

17

15

1

14

18

1

17

15

1

14

18

1

17

a.

Corresponds to Universal International Music B.V.'s borrowing from Vivendi SE, maturing in 2027.

b.

Corresponds to credit lines drawn by UMG Inc. for €213 million on UMG Inc. credit lines and €422 million on Vivendi SE credit lines.

Investment risk and counterparty risk

UMG's daily cash surpluses are centralized by Vivendi SE (cash pooling) and the investment policy is managed by Vivendi's Financing andTreasury Department.
Liquidity risk

UMG manages the liquidity risk by continually supervising the cash flow projections and the actual cash flow.
Interest rate risk

UMG's interest rate risk was not material as of December 31, 2020, 2019 and 2018.
Foreign currency risk
(in millions of eurosl

December 31 . 2020

December 31. 2019

634
6
640

15

18

15

18

20

59
(63)
(4)

Euro - EUR
US dollar - USO
OtherNominal value of borrowings before hedging
Currencv swaps USO
Other currency swaps
Net total of hedging instruments (a)Euro - EUR
US dollar - USO
OtherNominal value of borrowings after hedging

a.

(3)
(36)
(39)

(39)
637
42
640

(19)

December 31. 2018

1
1
(20)
34

(4)
(59)
81

15

18

Notional amounts of hedging instruments translated into euros at the closing rates.

UMG's foreign currency risk management is centralized by Vivendi SE's Financing and Treasury Department in order to obtain the benefits
associated with internal hedging and to optimize the volume of external hedging issued from financial institutions. The foreign currency
hedging instruments set up have non-significant notional amounts. In addition, Vivendi SE may hedge foreign currency exposure resulting
from foreign-currency denominated financial assets and liabilities.
Moreover, due to their non-significant nature, net exposures related to UMG's net working capital (internal flows of royalties as well as
external purchases) are generally not hedged. The associated risks are settled at the end of each month by translating the amounts into thefunctional currency of the relevant operating entities.
Derivative financial instruments recognized in assets amounted to nil as of December 31, 2020, €1 million as of December 31, 2019 and€5 million as of December 31 , 2018.

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Note 15

EquityUniversal Music Group (UMG) distributes its cash surpluses to shareowners through dividends and share capital reductions:(in millions of eurosl

Contributions by/distribution to shareownersof which Universal Music Group S.A.S. transferred to Vivendi SE
Distribution by Universal International Music 8.V paid to shareowners
Distribution by Universal Music Group Inc. paid to Vivendi SE
Universal Music Group S.A.S. share capital reduction
Changes in UMG ownership interest in subsidiaries that do not result in aloss of control
Changes in equity attributable to Universal Music Groupa.

December 31, 2020
December 31, 2019
2,711
1,002
2,428 (a)
283
244
758

December 31 , 2018
981

246
735
1,414

13
2,724

1,002

2,395

On March 19, 2020, Universal Music Group SAS. was dissolved, with universal transmission of its property to Vivendi S.E.

Note 16

Provisions(in millions of euros)

Note

Employee benefits (a)Restructuring costs
Litigations
Other (b)Provisions

22

Deduction of current provisions
Non-current provisions

December 31, 2020
258
11
4
199
472
(137)
335

December 31, 2019
272
13
12
203
500
(63)
437

January 1, 2019
244
10
15
176
445
(79)
366

a.

Included deferred employee compensation as well as provisions for defined employee benefit plans (€225 million as of December 31 ,2020, €232 million as of December 31, 2019 and €212 million as of January 1, 2019), but excluded employee termination reserves
recorded under restructuring costs.

b.

Notably included litigation provisions for which the amount and nature are not detailed because such disclosure could be prejudicial to
Universal Music Group.

Changes in provisions(in millions of eurosl

Opening balance
Addition
Utilization
ReversalBusiness combinations
Divestitures, changes in foreign currency translation adjustments and other
Closing balance

2020

Year ended December 31,
2019
445 (a)
500
85
73
(74)
(53)
(43)
(23)
4
472

58
500

2018
513
95
(100)
(15)
(44) (b)449a.

In accordance with the new accounting standard IFRS 16 - Leases, the impact of the change of accounting standard was recorded in
the opening balance sheet as of January 1, 2019. For a detailed description, please refer to Notes 1.3.5.6 and 10.

b.

Certain reclassifications were made to the Combined Financial Statements for the year ended December 31, 2018, to conform to thepresentation of the Combined Financial Statements for the year ended December 31, 2019.

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Wednesday March 03, 2021

Note 17
17.1

Employee benefits

Analysis of expenses related to employee benefit plans

The table below provides information about the cost of employee benefit plans, excluding its financial component. The total cost of defined
benefit plans is set forth in Note 17.2.2 below.
Year ended December 31,
2020(in millions of eurosl

Employee defined contribution plans
Employee defined benefit plans

2019

36
3
-----39

Employee benefit plans

17.2

Employee defined benefit plans

17.2.1

Assumptions used in the evaluation and sensitivity analysis

2018
34
3
37

29
3

32

Discount rate, expected return on plan assets, and rate of compensation increase
The assumptions underlying the valuation of defined benefit plans were made in compliance with the accounting policies presented in
Note 1.3.8 and have been applied consistently for several years. Demographic assumptions (including notably the rate of compensation
increase) are company specific. Financial assumptions (notably the discount rate) are determined by independent actuaries and otherindependent advisors and are reviewed by Vivendi SE. The discount rate is therefore determined for each country by reference to yields on
notes issued by investment grade companies having a credit rating of AA and maturities identical to that of the valued plans, generally basedon relevant rate indices. The discount rates selected are therefore used, at year-end, to determine a best estimate by Vivendi SE of expected
trends in future payments from the first benefit payments.
In accordance with IAS 19, the expected return on plan assets is estimated by using the selected discount rate to value the obligations of theprevious year.

In weighted average
Post-retirement benefits

Pension benefits
Discount rate (a)Rate of compensation increase
Duration of the benefit obligation (in years)

2020
1.1%
0.9%
16.9

2019
1.0%
0.9%
17.3

2018
1.9%
2.2%
16.1

2020
2.3%

2019
2.8%

2018
3.8%

na

na

na

11.4

11.7

11 .6

na: not applicable.
a.

A 50 basis point increase (or a 50 basis point decrease, respectively) to the 2020 discount rate would have led to a decrease of€1.1 million in pre-tax expense (or an increase of €1 .0 million, respectively) and would have led to a decrease in the obligations ofpension and post-retirement benefits of €32 million (or an increase of €37 million, respectively).

Assumptions used in accounting for pension benefits, by country
United States
Discount rate
Rate of compensation increase (weighted average)

United Kingdom

2020
2.50%

2019
3.00%

2018
4.00%

2020
1.50%

2019
1.75%

na

na

na

na

na

Japan
Discount rate
Rate of compensation increase (weighted average)

Germany
2018
2.75%
3.50%

2020
0.75%
1.75%

2019
0.50%
1.75%

2018
1.50%
1.75%

Netherlands

2020

2019

2018

2020

2019

2018

0.50%

0.25%

0.50%

0.75%

0.50%

1.50%

1.60%

1.60%

1.53%

na

na

na

na: not applicable.

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Wednesday March 03, 2021

Assumptions used in accounting for post-retirement benefits, by country
United States
Discount rate
Rate of compensation increase

2020
2.50%

2019
3.00%

2018
4.00%

na

na

na

na: not applicable.
Allocation of pension plan assets
December 31, 2020
Equity securities
Debt securities
Diversified funds
Insurance contracts
Real estate
Cash and other
Total

December 31 , 2019

December 31, 2018

4%
3%
1%
88%

4%
2%
1%
90%

5%
3%
1%
88%

4%
100%

3%
100%

3%
100%

Pension plan assets are mainly financial assets actively traded in organized financial markets.
These assets do not include occupied buildings or assets used by the group, nor shares or debt instruments of Vivendi.
Cost evolution of post-retirement benefits
For the purpose of measuring post-retirement benefits, Vivendi assumed the annual growth in the per capita cost of covered health carebenefits would slow down from 5.9% for the under 65 years of age and 65 years of age and older categories in 2020, to 4.6% in 2028 forthese categories. In 2020, a one-percentage-point increase in the assumed cost evolution rates would have increased post-retirement benefit
obligations by €2.2 million and the pre-tax expense by €0.1 million. Conversely, a one-percentage-point decrease in the assumed costevolution rates would have decreased post-retirement benefit obligations by €1 .9 million and the pre-tax expense by €0.1 million.
17.2.2Analysis of the expense recorded and of the amount of benefits paid
Post-retirement benefits

Pension benefits(in millions of eurosl

Current service cost
Past service cost
(Gains)/losses on settlements
Other
Impact on selling, administrative and general
expenses

Interest cost
Expected return on plan assets
Impact on other financial charges and income
Net benefit cost recognized in profit or loss

2020

2019
3

2

2018
2

3

3

4
(3)
1

4

2020

Total
3

2

2018
2

3

3

3

3

7

6

(4)
3
6

(3)
3
6

5
(3)
2

8
(4)

(3)

4
7

4
7

1
1

2019

1
1

2018

1
1

2020

2019

5

7

In 2020 benefits paid amounted to (i) €15 million with respect to pensions (€16 million in 2019 and €16 million in 2018). of which €1 million
paid by pension funds (€1 million in 2019 and €1 million in 2018). and (ii) €1 million paid with respect to post-retirement benefits (€1 million
in 2019 and €1 million in 2018).

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Wednesday March 03, 2021

17.2.3

Analysis of net benefit obligations with respect to pensions and post-retirement benefits

Changes in value of benefit obligations, fair value of plan assets, and funded status(in millions of eurosl

Opening balance
Current service cost
Past service cost
(Gains)/losses on settlements
Other
Impact on selling, administrative and general expenses
Interest cost
Expected return on plan assets
Impact on other financial charges and income
Net benefit cost recognized in profit or loss
Experience qains/(losses) (a)Actuarial gains/(losses) related to changes in demographic assumptions
Actuarial gains/(losses) related to changes in financial assumptions
Adjustment related to asset ceiling
Actuarial gains/(losses) recognized in other comprehensive income

Contributions by plan participantsContributions by employers
Benefits paid by the fund
Benefits paid by the employer
Business combinations
Divestitures of businesses
Transfers
Foreign currency translation and other
Closing balanceof which wholly or partly funded benefits
wholly unfunded benefits (b)of which assets related to employee benefit plansprovisions for employee benefit plans (c)Employee defined benefit plans
Year ended December 31, 2020
Benefit obligation
Fair value of planNet
assets(provision)/asset
recorded in thestatement offinancial position(A)(B)(B)-(A)
Note
(224)
440
216
(3)
3

(3)
(5)

5
3

3
(2)
(5)

1
1

(1)
(5)

5
7
12

(1)
(15)

16

12

(1)
(15)

(3)

(9)

423
212
211

207

(6)
(216)

9
(225)

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Wednesday March 03, 2021

(in millions of euros)

Employee defined benefit plans
Year ended December 31, 2019
Benefit obligation
Fair value of planNet
(provision)/asset
assetsrecorded in thestatement offinancial position(A)(B)(B)-(A)
Note

376

Opening balance
Current service cost
Past service cost
(Gains)/losses on settlements
Other
Impact on selling, administrative and general expenses
Interest cost
Expected return on plan assets
Impact on other financial charges and income
Net benefit cost recognized in profit or loss

(203)

(21

(1)
8

4

(1)
(3)
(8)

4
(4)

(7)

Experience i:iains/(losses) (a)Actuarial gains/(losses) related to changes in demographic assumptions
Actuarial gains/(losses) related to changes in financial assumptions (d)Adjustment related to asset ceiling
Actuarial gains/(losses) recognized in other comprehensive income
Contributions by plan participantsContributions by employers
Benefits paid by the fund
Benefits paid by the employer
Business combinations
Divestitures of businesses
Transfers
Foreign currency translation and other
Closing balanceof which wholly or partly funded benefits
wholly unfunded benefits (b)of which assets related to employee benefit plansprovisions for employee benefit plans (c)

173

2

33
58

32
(1)
(58)

(27)

(1)
(15)

13
(1)
(15)

10
440

10
216

13

(224)

224
216
8

16

(232)

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Wednesday March 03, 2021

(in millions of euros)
Opening balance

Current service cost
Past service cost
(Gains)/losses on settlements
Other
Impact on selling, administrative and general expenses
Interest cost
Expected return on plan assets
Impact on other financial charges and income

Employee defined benefit plans
Year ended December 31. 2018
Benefit obligation
Fair value of planNet
assets(provision)/asset
recorded in thestatement offinancial position(A)(B)-(A)(Bl
Note-----(213)
390
177
2
(21

(1)

7
3

(1)
(3)
(7)

3
(4)
(7)

Net benefit cost recognized in profit or loss

Experience i:iains/(losses) (a)Actuarial gains/(losses) related to changes in demographic assumptions
Actuarial gains/(losses) related to changes in financial assumptions
Adjustment related to asset ceiling

(11

(6)

(51

3

(3)

(8)

8

Actuarial gains/(losses) recognized in other comprehensive income

Contributions by plan participantsContributions by employers
Benefits paid by the fund
Benefits paid by the employer
Business combinations
Divestitures of businesses
Transfers
Foreign currency translation and other

17
(1)

(1)

(16)

(16)

Closing balance

376

173

of which wholly or partly funded benefits
wholly unfunded benefits (b)of which assets related to employee benefit plansprovisions for employee benefit plans (c)

177
199
16

17

(203)

9
(212)

a.

Includes the impact on the benefit obligations resulting from the difference between actuarial assumptions at the previous year-end andeffective benefits during the year, and the difference between the expected return on plan assets at the previous year-end and theactual return on plan assets during the year.

b.

In accordance with local laws and practices, certain plans are not covered by plan assets. As of December 31 , 2020, 2019 and 2018,such plans principally comprised supplementary pension plans in the United States, pension plans in Germany and post-retirement
benefit plans in the United States.

c.

Included a current liability of €16 million as of December 31, 2020, €15 million as of December 31, 2019, and €13 million as ofDecember 31, 2018.

d.

In 2019, included €63 million attributable to a decrease in discount rates, of which €24 million relating to Germany, €4 million to theNetherlands and €32 million relating to the United Kingdom.

Universal Music Group/ 50

Wednesday March 03, 2021

Benefit obligation, fair value of plan assets, and funded status detailed by country
Pension benefits (a)December 31 ,(in millions of euros)

Benefit obligation
US companies
UK companies (b)German companies (c)Japanese companies
Dutch companies
Other
Fair value of plan assets
US companies
UK companies (b)German companies (c)Japanese companies
Dutch companies
Other
Net provision
US companies
UK companies (b)German companies (c)Japanese companies
Dutch companies
Other

2020

2019

Post-retirement benefits
December 31,

2018

2020

2019

Total
December 31 ,

2018

2020

5

5

4

16

18

14

159
184
24
17
15
--404

168
198
24
18
6
419

129
184
22
15
6
360

3

3

2

19

21

16

156

163

2

2

31

21
162
184
24
17
15
---

2019

2018

23
171
198
24
18

18
131
184
22
15

6

6

423

440

376

125

156

163

125

2

2

2

2

30
15

31

17

32
18

17

32
18

30
15

207

216

173

207

216

173

(5)
(3)

(5)
(5)

(4)
(4)

(18)

(182)

(196)

7

(14)
(197)

(16)

(18)

(14)

(21)

(23)

(3)

(3)

(2)

(6)

(8)

(6)

(182)

(182)

(196)

(182)

8

8

7

8

8

(5)
(203)

(5)
(187)

(14)
(216)

(5)
(224)

(5)
(203)

======(19=) ======(21=) ======(16=)

a.

No employee defined benefit plan individually exceeds 10% of the aggregate value of the obligations and net provisions under theseplans, except for three pension plans in Germany individually exceeding between 10% and 11 % of the aggregate value of theobligations, and 21 % and 22% of the net provisions.

b.

In December 2017, the UMPGS fund in the United Kingdom purchased a buy-in insurance policy, covering pension benefits. This
insurance policy is an asset to the UMGPS plan. It was purchased following the exercise by some beneficiaries of the right to exit the
UMGPS plan against a payment in cash. UMG continues to cover the benefits with regards to the remaining beneficiaries of the plan. In
principle, the benefit obligations are equal to the plan's assets, and no net pension liability is recorded in the Combined Statement of
Financial Position.

c.

Relates to retirement benefits in Germany for eligible employees, former employees and retirees, and such of their beneficiaries who
met the required conditions. Those plans are closed to new entrants. In accordance with current regulations in relation to the funding
policy of this type of plan, those plans are not funded . The main risks for the group relate to changes in discount rates.

17.2.4

Benefits estimation and future payments

For 2021, hedge fund contributions and benefit payments by UMG to retirees are estimated at €15 million in respect of pensions, of which€3 million relates to pension funds, and at €1 million in respect of post-retirement benefits.
Estimates of future benefit payments to beneficiaries by the relevant pension funds or by UMG (in nominal value for the following 10 years)
are as follows:(in millions of euros)

2021
2022
2023
2024
2025
2026-2030

Pension benefits

16
13
13
13
12
60

Post-retirement
benefits

5

Universal Music Group/ 51

Wednesday March 03, 2021

Note 18

Share-based compensation plans

18.1

Plans granted by Vivendi

18.1.1Equity-settled instruments

Transactions relating to outstanding instruments that occurred in 2018, 2019 and 2020 were as follows:
Stock options
Number of outstanding
Weighted average strike priceof outstanding stock options
stock options(in thousands)(in euros)

Balance as of December 31, 2017
GrantedExercised / Issued
Forfeited
Cancelled
Balance as of December 31, 2018
GrantedExercised / Issued
Forfeited
Cancelled
Balance as of December 31, 2019
GrantedExercised / Issued
Forfeited
Cancelled
Balance as of December 31, 2020

2,427

Acquired/ Exercisable as of December 31, 2020
Rights acquired as of December 31, 2020

257
257

(572) (a)
(380)

1,475
(789) (a)(90)596(263) (a)(76)
257 (c)Performance shares
Number of outstanding
performance shares(in thousands)

963

17.1
na
19.1
20.2
na
15.6
na
15.8
16.1
na
15.2
na
16.0
15.8
na
14.2

(29)
1,009
200
(73)
na
(14)
1,122
163
(276)
na
(55) (b)954 (d)

14.2
14.2

388

=========

205
(130)
na

na: not applicable.
a.

In 2020, beneficiaries exercised stock options at the weighted average stock market price of €23.0 (compared to €25.0 for stock options
exercised in 2019 and €21.9 for stock options exercised in 2018).

b.

At its meeting held on February 13, 2020, after a review by the Vivendi SE Corporate Governance, Nominations and Remuneration
Committee, the Supervisory Board of Vivendi SE approved the achievement level of objectives set for the cumulative fiscal years 2017,2018 and 2019 for the performance share plan granted in 2017. It was confirmed that all the criteria had been met with a maxi mum rateof 100%. However, given that the negative impact of the situation in Italy was not reflected in the financial results, the Supervisory
Board of Vivendi SE decided to confirm the final grant of the 2017 performance share plan only up to 75% of the initial grant.
Consequently, 55,250 rights to performance shares, which were granted in 2017, were cancelled.

c.

At the stock market price on December 31 , 2020, the cumulated intrinsic value of remaining stock options to be exercised wasestimated at €3 million.

d.

The weighted-average remaining period before delivering performance shares was 2.0 years.

Outstanding stock options as of December 31, 2020
Range of strike prices

Number(in thousands)

Under€17€17-€18
More than €18

Weighted average strikeprice

Weighted averageremaining life(in euros)(in years)

144
113

11 .8
17.2

1.3
0.3

257

14.2

0.9

Universal Music Group/ 52

Wednesday March 03, 2021

Performance share plans
On February 13, 2020, Vivendi SE granted to UMG employees and executive management 163 thousand performance shares (200 thousand
granted on February 14, 2019 and 205 thousand granted on May 17, 2018).
As of February 13, 2020, the share price was €25.19 and the expected dividend yield was 2.38% (compared to €22.60 and 2.21 % respectively
as of February 14, 2019, and to €23.03 and 1.95% respectively as of May 17, 2018). After taking into account the cost associated with theretention period of the shares (described below), the discount for non-transferability was set at 7.0% of the share price as of February 13,2020 (compared to 7.9% in 2019 and 8.1% in 2018). Consequently, the fair value of each granted performance share was estimated at€21 .68 (compared to €19.37 in 2019 and €19.85 in 2018), corresponding to an aggregate fair value of the plan of €4 million (compared to€4 million in 2019 and €4 million in 2018).
Subject to satisfaction of the performance criteria, performance shares definitely vest at the end of a three-year period, subject to thepresence of the beneficiaries in the group (vesting period), and the shares must be held by the beneficiaries for an additional two-year period(retention period). The compensation cost is recognized on a straight-line basis over the vesting period. The accounting methods that are
applied to estimate and recognize the value of these granted plans are described in Note 1.3.10.
Satisfaction of the objectives that determine the definitive grant of performance shares is assessed over a three-year consecutive period
based on the following performance criteria:• Internal indicators (with a weighting of 70%):
the adjusted net income per share (50%) (compared to the group's earnings before interest and income taxes - EBIT (35%) in 2018);
andthe group's cash flow from operations after interest and income tax paid - CFAIT (20%) (compared to 35% in 2018).
• External indicators (with a weighting of 30%) tied to changes in Vivendi's share price compared to the STOXX® Europe Media index(20%) and to the CAC 40 index (10%).
The granted shares correspond to the same class of common shares making up the share capital of Vivendi SE, and as a result, at the end of
the three-year vesting period, beneficiaries will be entitled to the dividends and voting rights attached to these shares. The compensation
cost recognized corresponds to the estimated value of the equity instruments granted to the beneficiary, and is equal to the difference
between the fair value of the shares to be received and the aggregate discounted value of the dividends that were not received over thevesting period.
In 2020, the charge recognized with respect to all performance share plans amounted to €3 million, compared to €4 million in 2019 and€3 million in 2018.

18.1.2

Employee stock purchase and leveraged plans

On July 21, 2020, Vivendi SE carried out an employee shareholding plan through the sale of treasury shares under an employee stock
purchase plan and leveraged plan, reserved for UMG's employees and retirees. The Vivendi shares were previously repurchased by Vivendi
SE pursuant to the authorization granted at the Vivendi's General Shareholders' Meeting of April 15, 2019.
On July 17, 2019 and July 19, 2018, Vivendi SE made capital increases through employee stock purchase plans and leveraged plans whichgave UMG's employees and retirees an opportunity to subscribe for Vivendi shares.
These shares, which are subject to certain sale or transfer restrictions during a five-year period, are subscribed to at a discount of up to 15%
on the average opening market price for Vivendi shares during the 20 trading days preceding the date of the Management Board meeting
which set the subscription price for the new shares to be issued . The difference between the subscription price for the shares and the shareprice on that date represents the benefit granted to the beneficiaries. In addition, Vivendi applied a discount for non-transferability during afive-year period, which is deducted from the benefit granted to the employees. The value of the subscribed shares is estimated and fixed at
the date on which the subscription price for the new shares to be issued is set.
The applied valuation assumptions were as follows:
Grant date
Data at grant date:
Share price (in euros)
Expected dividend yieldRisk-free interest rate
5-year interest rate in fine
Repo rate
Discount for non-transferability per share

2020
June 182019
June 142018
June 18

22.77

21 .572.09%-0.11%
3.81%
0.36%
17.49%

20.58
1.94%

2.64%

-0.48%
3.91%
0.36%
18.64%-0.21%

3.93%
0.36%
18.44%

Universal Music Group/ 53

Wednesday March 03, 2021
Under the employee stock purchase plan (ESPP), 33 thousand shares were acquired for in 2020 through a company mutual fund (Fonds
Commun de Placement d'Entreprise) at a price of €16.554 per share (compared to 19 thousand shares at a price of €21.106 per sharesubscribed for in 2019 and 23 thousand shares at a price per share of €19.327 subscribed for in 2018).
The benefit granted to the beneficiaries, which is equal to the positive difference between the acquisition price and the stock price at theend of the subscription period on June 18, 2020 (discount of 27.3%), was higher than the discount for non-transferability (18.6%). In 2020,
the charge recognized with respect to the employee stock purchase plan amounted to €65 thousand. In 2019 and 2018, no charges wererecognized, as the benefit granted, which is equal to the positive difference between the subscription price and the stock price at the end of
subscription period on June 14, 2019 and on June 18, 2018 (discount of 13.8% and of 10.4% in 2018), was lower than the discount for nontransferability (19.3% and 17.49% in 2018).
Under the leveraged plan, 2,613 thousand shares were acquired in 2020 through a company mutual fund at a price of €16.554 per share(compared to 1,796 thousand shares were subscribed for in 2019 through a company mutual fund at a price of €21 .106 per share and1,847 thousand shares at a price of €19.327 in 2018). The leveraged plan entitles employees and retirees of UMG and its French and foreignsubsidiaries to acquire Vivendi shares at a discounted price and to ultimately receive the capital gain (calculated pursuant to the terms andconditions of the plan) equal to 10 shares for each subscribed share. A financial institution mandated by Vivendi hedges this transaction. In
addition, 193 thousand shares were acquired for as part of an employee shareholding plan implemented for employees of the group's
Japanese subsidiaries (compared to 151 thousand shares subscribed for in 2019 and 193 thousand shares subscribed for in 2018).
In 2020, the charge recognized with respect to the leveraged plan amounted to €6 million, compared to €1 million in 2019, and €1 million in
2018.

18.2

Dailymotion's long-term incentive plan

In 2015, Vivendi implemented a long-term incentive plan for a five-year period until June 30, 2020 for certain key executives of Vivendi andcertain of its subsidiaries, including Universal Music Group. This plan was tied to the growth of Dailymotion's enterprise value compared toits acquisition value, as measured as of June 30, 2020, based upon an independent expertise. In the event of an increase in Dailymotion'svalue, the amount of the compensation with respect to the incentive plan was capped at a percentage of such increase, depending on thebeneficiary. Within the six months following June 30, 2020, the plan had to be settled in cash, if applicable.
As of June 30, 2020, the plan has expired without any charges having been recognized and without any cash payments having been made.

Note 19
19.1

Cash Flow Statement

Adiustments
Year ended December 31,(in millions of eurosl

Items related to operating activities with no cash impact
Amortization and depreciation of intangible and tangible assets
Change in provision, net
Income from equity affiliates - operational
Proceeds from sales of property, plant, equipment and intangible assets
Adjustments

19.2

Note

11

2020

2018

2019
236
(331
9

202
(41
2

126
(221

213

201

106

Investing and financing activities with no cash impact

In 2020, 2019 and 2018, there were no significant investing and financing activities with no cash impact.

Universal Music Group/ 54

Wednesday March 03, 2021

Note20Related parties

Universal Music Group (UMG)'s related parties are the key executive managers and other related parties including:• companies fully consolidated by UMG. The transactions between these companies have been eliminated for the preparation of
UMG's Combined Financial Statements;• companies over which UMG exercises a significant influence;• all companies in which key executive managers or their close relatives hold significant voting rights;• minority shareholders exercising a significant influence over UMG's subsidiaries;• Vivendi Corporate and its consolidated entities (the "Vivendi Group"), as well as its related parties; and• Bollore Group and its related parties, given that Vivendi has been fully consolidated by Bollore Group since April 26, 2017.

20.1

Executive management compensation

As of December 31, 2020, 2019 and 2018, UMG's Executive Management Board is comprised of 11 members. Their aggregate compensation
is presented in the table below.
(in millions of eurosl

Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payments
Executive management compensation

2020
111 .3
2.6

2.9
116.8

Year ended December 31,
2019
71.4
1.4

2.8
75.6

2018
49.0
1.3

2.1
52.4

Universal Music Group/ 55

Wednesday March 03, 2021

20.2

Other related-party transactions

UMG's other related parties include companies over which UMG exercises a significant influence (e.g., Vevo and Duzy Dom). They also
include Vivendi Corporate, its consolidated entities (e.g., Canal+ Group and Havas Group) and its related parties (e.g., Telecom Italia andBanijay Group Holding), as well as Bollore Group, its subsidiaries and its related parties.
(in millions of eurosl

December 31, 2020

December 31 , 2019

December 31, 2018

61
31

n

V

10

11

8

9

5

2

1
9

AssetsTrade accounts receivable and otherOf which Vevo
DuzyDom
Telecom Italia
Havas Group
Vivendi Corporate

19

Current financial assets
Of which Vivendi Corporate

55Liabilities
Non-operating liabilities
Of which Vivendi Corporate

(4)
(4)

1

Trade accounts payable and otherOf which Havas Group
Vivendi Corporate
Bo/lore Group
Canal+ Group
Vivendi Village(1)

Income tax payable
Of which Vivendi Corporate

11
11

6

3
3

Year ended December 31,
2019

2020
Statement of earnings
Operating income
Of which Vevo
DuzyDom
Telecom Italia
Canal+ Group
Havas Group
Vivendi Corporate
Vivendi Village

191
164
13

183
156
13
2

3
3

2018
179
152
11

4
3

7

6

4

1

Financial income
Of which Vivendi Corporate

(17)

7

25

(17)

7

25

Operating expenses
Of which Havas Group
Canal+ Group
Vivendi Corporate
Bo/lore Group
Vivendi Village
Banijay Group Holding
lngrooves Music Group (a)

(48)
(11)

(43)
(9)
(3)

(30)
(5)

(24)

(44)
(7)
(5)
(20)

(3)
(1)

na

(1)
(7)

na: not applicable.
a.

On March 15, 2019, UMG acquired the remaining interest in lngrooves Music Group.

Moreover, UMG's borrowings to Vivendi amounted to €2,368 million as of December 31, 2020. In addition, UMG's loans to Vivendi amounted
to €815 million as of December 31, 2020, €672 million as of December 31, 2019 and €1,260 million as of December 31, 2018 (please refer toNote 14).
UMG distributes its cash surpluses to shareowners through dividends and share capital reductions (please refer to Note 15).
Universal Music Group/ 56

Wednesday March 03, 2021

20.3

Services billed by Vivendi Corporate
Year ended December 31,
2020(in millions of euroslManagement fees
Share-based compensation plans
Other
Services billed by Vivendi Corporate

Note21

2019

2018

(15)
(10)
(10)
-----~
(35)

(14)
(5)
(8)
(27)

======

(11)
(4)
(8)
(23)

Contractual obligations and other commitments

Universal Music Group (UMG)'s material contractual obligations and contingent assets and liabilities include:•

certain contractual obligations relating to the group's business operations, such as content commitments (please refer to Note 9.2),
contractual obligations and commercial commitments recorded in the Statement of Financial Position, including leases and offbalance sheet commercial commitments, such as long-term service contracts and purchase or investment commitments;
commitments related to UMG's consolidation scope made under acquisitions or divestitures such as share purchase or salecommitments, contingent assets and liabilities subsequent to given or received commitments related to the divestiture or acquisitionof shares, commitments under shareholders' agreements and collateral and pledges granted to third parties over UMG's assets;commitments related to UMG's financing: undrawn confirmed bank credit facilities as well as the management of interest rate,
foreign currency and liquidity risks; andcontingent assets and liabilities resulting from legal proceedings in which UMG and/or its subsidiaries are either plaintiff ordefendant (please refer to Note 22).

•

•
•

21.1

Contractual obligations and commercial commitments(in millions of eurosl

Borrowings and other financial liabilities
Leases liabilities (a)Content liabilities

Minimum future payments as of December 31, 2020
Payments due inNote
2022 - 2025
Total
2021
After 2025
640
78
2,509

265
257

6,305
1,337
(3,975)(2,638)3;J.2.7732(2,030)(1,298)523
578(1,945)(1,367)

na

na

na

3,667

1,929

(844)

9.2

Consolidated statement of financial
position items

Contractual content commitments
Commercial commitments

3,009
525
2,771

9.2

Net off-balance sheet commitments

Operatini:i leases and subleases (a)Total

Total minimum future payments as ofDecember 31 , 2019

December 31 , 2018

2,368
182
5

15
596
2,552

18
2,332

2,555
27

3,163
1,329
(1,676)
(347)

2,350
1,172
(733)
439

na

na

2,582

2,816

674
3,463

27

na

na: not applicable.
a.

As from January 1, 2019, UMG applies the new accounting standard IFRS 16 - Leases. In accordance with IFRS 16, the impact of thechange of accounting standard was recorded in the Statement of Financial Position as of January 1, 2019. For a detailed description,please refer to Notes 1 and 10. Assessing the lease term relates to the non-cancellable period of the lease, and taking into account all
options to extend the lease that UMG is reasonably certain to exercise and all options to terminate the lease that UMG is reasonably
certain not to exercise.

Off-balance sheet commercial commitments(in millions of eurosl

Given commercial commitments
Received commercial commitments (a)Net totala.

Minimum future payments as of December 31, 2020
Due inTotal
2021
2022 - 2025
After 2025
46
(4,021)(3,975)31(2,061)(2,030)15(1,960)(1,945)

Total minimum future payments as ofDecember 31, 2019

December 31, 201882
(1,758)(1,676)

60
(793)
(733)

Includes minimum guarantees to be received by UMG pursuant to distribution agreements entered into with third parties, notably digitalplatforms.
Universal Music Group/ 57

Wednesday March 03, 2021

21.2

Other commitments given or received relating to operations

Given commitments amounted cumulatively to €10 million as of December 31, 2020, €23 million as of December 31, 2019 and €15 million asof December 31, 2018.
Received commitments amounted cumulatively to €1 million as of December 31, 2020, €31 million as of December 31, 2019 and €10 million
as of December 31, 2018.

21.3

Contingent assets and liabilities subsequent to given or received commitments related to thedivestiture or acquisition of shares

Several guarantees given during prior years in connection with asset acquisitions or disposals have expired. However, the time periods or
statute of limitations of certain guarantees relating, among other things, to employees, environment and tax liabilities, in consideration ofshare ownership, or given notably in connection with the winding-up of certain businesses or the dissolution of entities are still in effect. To
the best of UMG's knowledge, no material claims for indemnification against such liabilities have been made to date.
In addition, when settling disputes and litigation, UMG regularly delivers commitments for damages to third parties, which are customary fortransactions of this type.

Contingent liabilities
As of December 31, 2020, 2019 and 2018, there was no material contingent liabilities.

Contingent assets
As part of the acquisition of EMI Recorded Music in September 2012, UMG received commitments from Citi relating to full pension
obligations in the United Kingdom . UMG also received warranties relating to losses stemming from taxes and litigation claims, in particular
those relating to pension obligations in the United Kingdom. These commitments and warranties are not limited in time.

21.4

Shareholders' agreements

Under existing shareholders' or investors' agreements, UMG holds certain rights (e.g., pre-emptive rights and rights of first offer) that give it
control over the capital structure of its consolidated companies having minority shareholders. Conversely, UMG has granted similar rights tothese other shareholders in the event that it sells its interests to third parties.
Moreover, pursuant to other shareholders' agreements or the bylaws of other consolidated entities, equity affiliates or unconsolidated
interests, UMG or its subsidiaries have given or received certain rights (pre-emptive and other rights) entitling them to maintain theirshareholder's rights.

21.5

Collaterals and pledges

As of December 31 , 2020, 2019 and 2018, no material asset in UMG's Statement of Financial Position was subject to a pledge or mortgage
for the benefit of third parties.

Universal Music Group/ 58

Wednesday March 03, 2021

Note22

Litigation

In the normal course of its business, Universal Music Group is subject to various lawsuits, arbitrations and governmental, administrative orother proceedings (collectively referred to herein as "Legal Proceedings").
The costs which may result from these Legal Proceedings are only recognized as provisions when they are likely to be incurred and when the
obligation can reasonably be quantified or estimated, in which case, the amount of the provision represents UMG's best estimate of the risk
and is based on a case-by-case assessment of the risk level, provided that UMG may, at any time, reassess such risk if events occur during
such proceedings. Provisions recorded by UMG for all claims and litigation were €4 million as of December 31 , 2020, €12 million as ofDecember 31, 2019 and €15 million as of December 31, 2018 (please refer to Note 16).
To the company's knowledge, there are no Legal Proceedings or any facts of an exceptional nature (including any pending or threatened
proceedings in which it is a defendant), which may have or have had in the previous 12 months a material effect on the company and on its
group's financial position, profit, business and property, other than those described herein.
The status of proceedings disclosed hereunder is described as of March 1st, 2021 .
Soundgarden, Hole, Steve Earle and the estates of Tom Petty and Tupac Shakur against UMG
On June 21 , 2019, the groups Soundgarden and Hole, Steve Earle, Tom Petty's ex-wife and Tupac Shakur's estate filed a class action lawsuit
against UMG in the Central District Court of California relating to a 2008 fire that allegedly destroyed thousands of archived recordings.
The plaintiffs allege that UMG breached the terms of the contracts with the artists by failing to adequately protect the recordings. It is also
argued that the Group should have shared the settlement proceeds received as a result of its negotiations with the insurance companies and
NBC Universal. On July 17, 2019, UMG filed a motion to dismiss the lawsuit. On August 16, 2019, the plaintiffs filed an amended complaint
removing Hole as a plaintiff, and adding a number of claims. On September 6, 2019, UMG filed a new motion to dismiss. On March 13 and23, 2020, most of the plaintiffs withdrew from the case, leaving Jane Petty (Tom Petty's ex-wife) as the only remaining plaintiff. On April 6,
2020, the Court granted UMG's motion to dismiss and dismissed Jane Petty's claims.
However, Jane Petty is seeking to pursue the case. On April 16, 2020, she filed an application for class certification and, on April 27, 2020,
she filed a second amended complaint. On May 18, 2020, UMG filed a motion to dismiss. The Court has yet to rule on this motion.
John Waite, Syd Straw, The Dickies, Kasim Sulton and The Dream Syndicate against UMG Recordings, Inc.
On February 5, 2019, a class action lawsuit was filed against UMG Recordings, Inc. on behalf of a putative class of all recording artists who
had requested the termination of their contracts with UMG pursuant to Section 203 of the Copyright Act which allows, under certain
conditions, a creator who has contractually transferred the rights to his or her work to a third party to terminate such contract after 35 years.
The complaint seeks to have the Court recognize the termination of the contracts of the artists involved in the litigation and also alleges
copyright infringement, as UMG continued to use the recordings after the purported end date of the contract. On May 3, 2019, UMG
Recordings filed a motion to dismiss. On June 15, 2019, the plaintiffs filed a First Amended Complaint adding artists Syd Straw, Kasim
Sulton and The Dickies as additional plaintiffs. On August 31, 2020, a second Amended Complaint was filed, adding the Dream Syndicate as
an additional plaintiff. On September 30, 2020, UMG and Capitol filed a response in which they made a counterclaim against plaintiffs Joe
Ely and Syd Straw, alleging that they had exploited certain recordings without authorization. On November 18, 2020, following a settlement
reached between UMG and Joe Ely, the Court acknowledged Joe Ely's withdrawal from the proceedings.
UMG Recordings, Inc. and Universal Music Publishing Group (along with the other major labels and publishers) against Cox
Communications, Inc. and CoxCom LLC
On July 31 , 2018, a complaint for copyright infringement was filed by UMG Recordings, Inc. and Universal Music Publishing Group (alongwith the other major labels and publishers including Sony and Warner) against Cox Communications, an Internet access and service provider,and its parent company CoxCom, for knowingly inducing and supporting copyright infringement by its customers, contrary to the provisions of
the Digital Millennium Copyright Act (DMCA), which requires an Internet service provider to implement a termination policy against its
repeat infringing customers. At the end of the trial, which took place in December 2019, the jury awarded the plaintiffs $1 billion in damages.
Cox filed a motion seeking to reduce the amount of damages awarded to the plaintiffs. On January 21, 2021, the motion was dismissed, andthe judge upheld the jury's verdict in the amount of $1 billion. Cox has indicated that it will appeal against this decision and has posted
security to stay the execution of the judgment pending the appeal.

Universal Music Group/ 59

Wednesday March 03, 2021

Note23

List of combined entities

The number of entities consolidated or accounted for under the equity method by UMG was 388 as of December 31, 2020, 368 as ofDecember 31, 2019 and 363 as of December 31, 2018. The major entities are presented in the table below.

Universal Music Group, Inc.
Universal Music Group Holdings, Inc.
UMG Recordings, Inc.
Vevo
Universal International Music B.V. (a)Universal Music Entertainment GmbH
Universal Music LLC
Universal Music France S.A.S.
Universal Music Holdings Ltd.
EMI Group Worldwide Holding Ltd.
Universal Music Group Treasury S.A.S.

Country
United States
United States
United States
United States
Netherlands
Germany
Japan
FranceUnited Kingdom
United Kingdom
FranceYears ended December 31 , 2020, 2019 and 2018
Accounting Method
Voting Interest
Ownership Interest
C
C
E

100%
100%
49.4%

100%
100%
49.4%

C
C
C
C
C
C

100%
100%
100%
100%
100%
100%

100%
100%
100%
100%
100%
100%

C: consolidated; E: equity affiliates.
a.

On March 19, 2020, Universal Music Group SAS. was dissolved, with universal transmission of its property to Vivendi S.E.

Universal Music Group/ 60