MUSIC IS
UNIVERSAL

Annual Report 2022

CONTENTS
ABOUT UMG

This copy of the annual reportof Universal Music Group N.V. forthe year 2022 is not in the ESEFformat as specified by

the European Commission in

4

Foreword
ProfileMissionVisionTimeline
Key figures
How UMG adds value
Stakeholder Analysis

5
8
9
13
15
17
21
24

BOARD REPORT: INTRODUCTION

29

Business profile
LabelsRecorded Music
Music Publishing
Merchandising

30
31
33
38
43

BOARD REPORT: STRATEGY

46

Driving growth by putting artists first
Technological advancements and new trends
Innovation and R&D as key to creating value

47
55
58

BOARD REPORT: ORGANIZATIONAL AND REPORTING STRUCTURE

63

BOARD REPORT: FINANCIAL REVIEW

68

1. Earnings analysis: group and business segments
2. Liquidity and capital resources

69
78

BOARD REPORT: CORPORATE GOVERNANCE

83

The governance structure
The Board
The General Meeting
Statements of the Board

84
85
95
103

BOARD REPORT: SHAREHOLDER INFORMATION

104

BOARD REPORT: RISK AND RISK MANAGEMENT

110

BOARD REPORT: NON-FINANCIAL INFORMATION

135

Non-Financial Performance
Main Material Topics
ESG Commitments
Regulatory & Standards Alignment
Information Tables
Verification of Non-Financial Data

136
139
143
178
194
199

Regulatory Technical Standard

on ESEF (Regulation (EU) 2019/815).
The ESEF reporting package canbe found on our website

MUSIC IS UNIVERSAL Annual Report 2022 | 2

NON-EXECUTIVE DIRECTORS REPORT208

FINANCIAL STATEMENTS226

OTHER INFORMATION

309

APPENDIX

321

Report of the Non-Executive Directors
Remuneration report

Consolidated Statements
Company Statements

Distribution of profits
Independent auditor's report

Bios Corporate Executives
Bios Board of Directors
Definitions
Cautionary Notice

209
217

227
290

310
311

322
326
332
336

This copy of the annual reportof Universal Music Group N.V. forthe year 2022 is not in the ESEFformat as specified by

the European Commission inRegulatory Technical Standard

on ESEF (Regulation (EU) 2019/815).
The ESEF reporting package canbe found on our website

MUSIC IS UNIVERSAL Annual Report 2022 | 3

ABOUT UMG

ABOUT UMG

FOREWORDWE ARE UNIVERSAL
Dear Fellow Shareholders:
It’s hard to believe that UMG became a freestanding public company just a
year-and-a-half ago. It was, to be sure, a watershed moment in our history, but
we remained focused on what we’ve always done: bringing great artists andtheir music to the world; breaking performance records of all kinds everywhere;
and driving the industry forward through creativity, strategic investments
and innovation.
With 2022 in the rearview mirror, I’d like to share with you a few thoughts about
what was an extraordinary year for UMG and also touch upon some of thechallenges and opportunities that lie ahead for us in 2023 and beyond.
In 2022, we reached new levels of success across our operating companies andterritories, driving total revenue growth of 14%, operating profit growth of 8% andAdjusted EBITDA1 growth of 12% (all in constant currency).
But we measure our success by so much more than just financial metrics.
Consider these 2022 achievements, among many others around the world:•
On the charts, the performance of our artists and songwriters remained
stellar. So many artists from around the world contributed to our successin 2022, with standout performances from: Taylor Swift; Olivia Rodrigo; The
Weeknd; The Beatles; Kendrick Lamar; Drake; BTS; Karol G; Angèle; Glass
Animals; Imagine Dragons; Rammstein; Helene Fischer; ABBA; Ado; Elton
John; Eminem; Justin Bieber; King & Prince; Lil Baby; and Billie Eilish, among
many others.
On Spotify: UMG had four of the Top 5 Artists globally; four of the Top 5 in the
U.S.; 7 of the Top 10 in Germany and Italy, including No 1s in both countries;
and the top female artist in France;.
On Apple Music: Universal Music Publishing Group had writer-interests in 9of the Top 10 most-streamed songs globally.
On YouTube: UMG had 7 of the Top 10 Songs in the U.S.
On the U.S. Billboard charts: We had the No. 1 Song on the Hot 100 year-end
chart and 7 of the Top 10 Albums.
In the UK: UMG had 6 of the Top 10 artists based on OCC data, including No. 1.
•

1

In 2022, UMG and our artists helped strengthen local communities aroundthe world by: serving those in need more than 20,000 meals; building
community gardens throughout the U.S., Europe and Australasia; conducting
vital education campaigns with organizations such as Mental Health
Coalition; and assisting hundreds of artists save a combined millions of
As defined in the Appendix to the Annual Report

MUSIC IS UNIVERSAL Annual Report 2022 | 5

ABOUT UMG

dollars in healthcare costs through our partnership with Music HealthAlliance in the U.S.
•

UMG’s Task Force for Meaningful Change ('TFMC') continued its
groundbreaking work: funding mentoring programs for the next generationof Black artists and music industry professionals; investing in community
violence intervention programs; partnering with HBCU medical schools towiden the Black practitioner pipeline; and helping voters reach the polls by
providing more than 13,000 rides. Through the TFMC, our All Together Now
Foundation, and our Employee Matching Program, UMG contributed to morethan 500 organizations in 2022 alone.

To achieve such astonishing success for both developing and establishedartists, and to do so year after year, is no accident. UMG’s unique artist-centricculture accounts for that repeated success and is at the heart of our company’s
two-fold mission.
Our first, simplest, and yet most difficult imperative is to discover and break new
artists and then sustain their careers over the long-run. The second part of our
mission is to promote a healthy, sustainable and exciting music ecosystem inwhich our artists can thrive for years and decades to come.
We fulfill that goal by using our ingenuity to drive the music industry forward
as technology and the world around us keeps changing. That’s exactly thepioneering approach we took at the advent of streaming. Early on, we saw thepotential inherent in streaming and subscription and jumped right in – leaning
into what was the most profound business model shift the industry had everseen, redesigning our global organization, becoming the first to adapt to – andthen thrive in – the streaming era.
Today, what’s become clear to us and to so many artists and songwriters, is thatthe economic model for streaming needs to evolve. As technology advances andplatforms grow, there is also a need for business model innovation to keep pacewith change.
Going forward, we will remain focused on innovation that is essential to promotea healthier, more competitive music ecosystem – one where the creators of
all music content, whether in the form of audio or short-form video, are fairly
compensated. Our sustained and deep involvement with music and artists
will enable us to safely and profitably navigate our way forward through theindustry’s next big shift.
Our past is prologue to a future where the solutions we find and the steps wetake to implement them will contribute to another era of growth for UMG and
the industry at large. Entering this new era of possibility, I am proud to say that
there is no better team of professionals anywhere in the world than the one wehave right here at UMG.
I’m excited for what will be an eventful and prosperous 2023.
SIR LUCIAN GRAINGE, CHAIRMAN AND CEO,UNIVERSAL MUSIC GROUP

MUSIC IS UNIVERSAL Annual Report 2022 | 6

ABOUT UMG

2022 CHART HIGHLIGHTSGLOBAL

SpotifyApple Music

4 OF THE TOP 5 ARTISTS

UMPG HAS AN INTEREST INTAYLOR SWIFTDRAKETHE WEEKND
BTS

9 OF THE TOP 10 AND
66 OF THE TOP 100

Deezer5 OF THE TOP 10
INCLUDING THE TOP 2
ARTISTSIMAGINE DRAGONS
THE WEEKNDSONGSREGIONAL

U.S.

GermanyUK

SPOTIFYGFKOCC

ALL OF THE

6 OF THE TOP 10

4 OF THE TOP 5
ARTISTS INCLUDING NO. 1

TOP 4 ALBUMSARTISTS,AND ALL OF THE

INCLUDING

TOP 3 SINGLESYOUTUBE2 OF THE TOP 3 AND
7 OF THE TOP 10 SONGS

NO. 1

BILLBOARD

NO. 1 SONG ON
THE HOT 100 AND
7 OF THE TOP 10
THE

ALBUMS ON THE

BILLBOARD

200
THE

Latin America

Japan

FranceBILLBOARD

OCC

NO. 1 ARTIST ON THE
BILLBOARD JAPAN“ARTIST 100”

THE

NO. 1 FEMALE ARTISTANGÈLESPOTIFY

NO. 1

THE
FEMALE LATIN
ARTIST OF THE YEAR GLOBALLY
KAROL G

MUSIC IS UNIVERSAL Annual Report 2022 | 7

ABOUT UMG

PROFILEWE ARE A CATEGORY OF ONE

WE HAVE A RICH HISTORYAND HAVE BUILT AN
IRREPLACEABLECATALOG OF SONGSAND RECORDINGS

#1
#2
#1
#1

RECORDED MUSIC>3 MILLION RECORDINGSMUSIC PUBLISHING

4 MILLIONNEARLYOWNED & ADMINISTERED TITLESMUSIC MERCHANDISING>220 ARTISTS / BRANDSMUSIC BASED VISUAL ENTERTAINMENT

10,000S OF HOURS OF VIDEOS>4 TRILLION MINUTES OF

CUMULATIVE WATCH TIME OF UMG
CONTENT ON YOUTUBE

MUSIC IS UNIVERSAL Annual Report 2022 | 8

ABOUT UMG

MISSION

MORE MUSIC TO MORE PEOPLE
We are Universal Music Group, the world's leading music company.
We exist to shape culture through the power of artistry.
We are a community of entrepreneurs committed to creativity and innovation.
We own and operate a broad array of businesses engaged in recorded music,
music publishing, merchandising, and audiovisual content in more than
60 territories.
We identify and develop recording artists and songwriters, and we produce,
distribute and promote the most critically acclaimed and commerciallysuccessful music to delight and entertain fans around the world.
Our vast catalog of recordings and songs stretches back over a century andcomprises the largest, most diverse and culturally rich collection of music
ever assembled.
As digital technology refashions the world, our unmatched commitment to leadin developing new services, platforms and business models for the delivery ofmusic and related content empowers innovators and allows new commercial
and artistic opportunities to flourish.
Knowing that music, a powerful force for good in the world, is unique in its
ability to inspire people and bring them together, we work with our artists andemployees to serve our communities.
We are the home for music's greatest artists, innovators and entrepreneurs.
Together, we are UMG, the Universal Music Group.

MUSIC IS UNIVERSAL Annual Report 2022 | 9

ABOUT UMG

MUSIC IS THE SOUNDTRACKOF OUR LIVES

HOME
WORK
LIVE
ORIGINAL CONTENT

CAR

TV / FILM

HEALTH/FITNESSSOCIALDTC E-COMMERCEGAMING

MUSIC IS UNIVERSAL Annual Report 2022 | 10

ABOUT UMG

MUSIC IS THE SOUNDTRACKOF OUR LIVES

On averagepeople use

20.1

HOURS Time spent listening tomusic each week
(up from 18.4 hours in
2021)

That’s the equivalent of listening toan additional 34 3-minute songs per week
in 2022!

6+

46%

Methods toengage withmusic

Listened to music
using subscription
audio streaming

69%

People listen to
Say music is
important to theirmental health58%

Different genres ofmusic on average50%
Use short form
video apps

Have watched amusic focused
TV show or filmin the last month

69%

8+

32%

Have watched amusic livestreamsuch as a concert
in the last month

Of people say music
is important when
they exercise

Source: IFPI ‘Engaging with Music’ 2022
MUSIC IS UNIVERSAL Annual Report 2022 | 11

ABOUT UMG

2022 MUSIC ENGAGEMENT MIX

6%

Other forms ofmusic listening(TV, on-demand premium
video services such as
Netflix, music swappedwith family and friends)

4%

Live music(including
livestreaming)

24%

Subscription audio
streaming(e.g. Spotify Premium,Apple Music, Melon)

8%Ad-supported
audio streaming(e.g. ad-supported tiersof Spotify and Deezer)

8%

Short form video apps
(e.g. TikTok)

19%

Video streaming(e.g. YouTube,
Daily Motion,
Niconico)

10%

Purchased music(e.g. CDs, vinyl, DVDs,
digital downloads)

17%

Music on the radio(broadcast live, catch
up, internet radio
stations)

Source: IFPI ‘Engaging with Music’ 2022
MUSIC IS UNIVERSAL Annual Report 2022 | 12

ABOUT UMG

VISIONPUTTING ARTISTS FIRST
Artists and songwriters are at the heart of everything we do at Universal
Music Group. Focused on their long-term development, our company is built
to serve their unique needs throughout their careers. Successfully producing
and marketing music requires a significant upfront investment and an ongoingcollaboration. Universal Music Group invests more in developing talent, anddoes so with greater expertise, than any other music company. This investment
combined with our excellence in marketing and promoting artists globallymeans we consistently lead the industry in breaking new artists.
Putting artists first every step of the way sets us apart. We turn art into hits
and hits into careers. By building a continuum of services and resources forartists, we've designed UMG so we can partner with artists at each stage of theircareers to provide them with all the services and resources they need. We startby identifying the artists with whom we want to partner and presenting themwith a world of opportunities to accelerate their careers. We remain by theirside with customized campaigns and promotion, platform-integrated targetedmarketing, top-tier data and insights and global reach with local activation.
We work side-by-side with them long-term to build and sustain their careers
through continuous engagement, improving lifetime fan value, and enabling
unique access to synchronization, brand partnerships, licensing opportunities
and eCommerce capabilities to monetize fandom.
Our artist-centric approach gives us an unrivalled track record in artist
development and commercial success.

MUSIC IS UNIVERSAL Annual Report 2022 | 13

ABOUT UMG

WE TURN ART INTO HITS AND
HITS INTO CAREERSSUPPORT
THE ACTSUPPORT
THE ACT• State-of-the-art studios• World-class collaborators•C utting-edge visual art and video
creative services

SUPPORT
THE ACT•A
 rtist financial support, including
significant upfront investment• Career planning

CREATEA HITCREATEA HIT•H ighly customized campaigns and promotion• Platform-integrated, targeted marketing• Top-tier data and insights•A bility to deliver global reach with coordinatedlocal activation

CREATEA HIT•C ontinuous engagement building lifetime

BUILD ANDSUSTAIN A
CAREER

fan value•U nique access to synch, brand partnerships
and licensing opportunities• e Commerce capabilities monetize fandom,
leveraging merchandise & productdevelopment expertise

BUILD ANDSUSTAIN A
CAREER

BUILD ANDSUSTAIN A
CAREER

MUSIC IS UNIVERSAL Annual Report 2022 | 14

ABOUT UMG

TIMELINE
MARCH
Launch of an unrecouped advances program
for legacy artists under which UMG willcease applying unrecouped advances toroyalty statements for certain legacy
featured recording artists and songwriters.

JANUARY
Expansion of agreementwith Amazon and Twitch tooffer fans live streams, artist
merchandise, spatial audio,
exclusive experiences andartist engagement on Twitch.

Launch partner for ChartStars, an NFT-based
project of curated digital collectibles withartist-focused artwork that commemorates
achievements and milestones on the
Billboard Charts.

MAY
First-ever credit rating of Baa1/BBB Long
Term Credit Ratings from Moody´s andS&P, supportive of UMG’s financing
strategy and commitment to maintaining an investment grade rating.
Premier of “ABBA Voyage”, a revolutionary concert in which digital avatars of
the band perform their greatest hits intheir very own ABBA Arena at Queen
Elizabeth Olympic Park in London.

FEBRUARY

APRIL

JUNE

Acquisition of 17-time Grammy Awardwinner Sting’s career catalog of songs,
uniting it with his recorded music catalog
at UMG.

At the 64th Annual Grammy
Awards, Jon Batiste’s We Are
won Album of the Year andOlivia Rodrigo was named
Best New Artist.

Exclusive launch partner for
AI-driven music app Vera, whereusers can develop personalizedmusic stations specifically designed
to improve the lives of people livingwith dementia.

Achieved six wins for six different
artists at the 2022 Brit Awards: Dave (BestHip Hop/Grime/Rap Act), Billie Eilish(International Artist of the Year), Sam
Fender (Best Rock/Alternative Act), Becky
Hill (Best Dance Act), Holly Humberstone(Rising Star Award) and Olivia Rodrigo(International Song of the Year).

Successfully priced €500m of 3.00%
senior unsecured notes due 2027
and €500m of 3.75% senior unsecured notes due 2032 to refinanceexisting indebtedness.
Acquisition of Frank Zappa’s estate,including his expansive recordings,
publishing catalog, film archive, andthe complete contents of The Vault,
the storage facility that houses thelate Zappa’s life’s work and nameand likeness rights.

MUSIC IS UNIVERSAL Annual Report 2022 | 15

ABOUT UMG

TIMELINESEPTEMBER
Formation of Virgin Music Group, a new
global division that unifies UMG’s artist
services businesses including Virgin Music
Label & Artist Services, Ingrooves Music
Group and newly acquired mtheory Artist
Partnerships.

JULY
Announced a new deal
with Meta which expands
revenue sharing andenhances the Meta
community’s engagementwith UMG’s catalog.

Awarded Ukrainian President Volodymyr
Zelensky’s Ukraine Peace Prize in recognition of UMG’s support for humanitarianrelief efforts in the region and music’s
historic role in fostering peace.

OCTOBER
Partnership with Simon Cowelland Syco Entertainment to create
StemDrop – a new evolution ofmusical collaboration, curation
and artist discovery launched
exclusively with TikTok andSamsung.
Partnership with Mercedes-Benz
and Apple Music to deliver theultimate in-car sound experience,
becoming the first non-Appledevices to offer Spatial Audio with
Dolby Atmos from Apple Music
natively in a vehicle.

NOVEMBER
UMG’s Deutsche Grammophon launchedStage+, a classical music subscription
service featuring exclusive live premieres; long-form concert and opera
programs; music videos; documentaries
and behind-the-scenes interviews; newaudio releases, as well as albums fromthe Deutsche Grammophon and Decca
catalogs in Hi-Res and Dolby Atmos.

Partnered with Elton John, Rocket
Entertainment and Roblox to launch‘Beyond the Yellow Brick Road’ on Roblox,
a virtual experience offering fans a new
way to enjoy Elton’s timeless music,
express themselves through his iconic
fashion co-created with the community,and experience his impact on popular
culture in a new, creative, and uniqueway.
Acquisition of a 49% stake in independent music company [PIAS], following
the formation of a strategic global
alliance between the two companies inJune 2021.

MUSIC IS UNIVERSAL Annual Report 2022 | 16

ABOUT UMG

FINANCIAL KEY FIGURES 2022
UMG RESULTS(in € millions)

REVENUE
2022
2021

YEAR ENDED DECEMBER 31

10,3408,504Operating Profit
2022
2021

YoY

+ 21.6%

YoY

constant+ 13.6%constant

EBITDA1
2022
2021

2,028
1,686

YoY

+ 20.3%

constant+ 12.5%

1,600
1,394
+ 14.8%+ 7.9%EBITDA margin1
2022
2021

19.6%
19.8%
- 0.2pp

YoY

Adjusted EBITDA1

Adjusted EBITDA margin1

2022

2022

2021

2,135
1,788

YoY

+ 19.4%

constant+ 11.7%

2021

20.6%
21.0%

YoY

- 0.4pp

NOTE% YoY indicates % change year-over-year% constant indicates % change year-over-year adjusted for constant currency
1

as defined in the Appendix to the Annual Report
MUSIC IS UNIVERSAL Annual Report 2022 | 17

ABOUT UMG

FINANCIAL KEY FIGURES 2022
RESULTS PER
BUSINESS SEGMENT(in € millions)

RECORDED MUSIC(in € millions)

YEAR ENDED DECEMBER 31

REVENUE
2022
2021
YoY

MUSIC PUBLISHING(in € millions)+ 16.3%

constant+ 8.8%REVENUE

1,799
1,335

2022
2021

MERCHANDISING AND OTHER(in € millions)

7,937
6,822

YoY

+ 34.8%constant+ 26.3%REVENUE

618
363

2022
2021
YoY

+ 70.2%constant+ 54.1%

YoY growth in constant currency
Subscription and Streaming Revenue + 9.8%
Downloads and Other Digital Revenue - 2.9%
Physical Revenue + 4.1%

License and Other Revenue + 13.4%

NOTE% YoY indicates % change year-over-year% constant indicates % change year-over-year adjusted for constant currency
NOTE
Segment revenue is stated prior to elimination of intersegment transactions
MUSIC IS UNIVERSAL Annual Report 2022 | 18

ABOUT UMG

NON-FINANCIAL KEY FIGURES 2022

ENVIRONMENTAL

SOCIAL
2022
TOTAL HEADCOUNTTOTAL GHG EMISSIONS(MARKET-BASED) (in tCO2e)358,820SCOPE 1
2,404
SCOPE 2
(location-based) 8,721

Men
Women

SCOPE 2
(market-based)
SCOPE 3

6,663
349,753

49%

SCOPE 1 & 2 (market-based)
tCO2e/employee
0.91
tCO2e/€ million ofrevenue
0.88
SCOPE 3tCO2e/employee
tCO2e/€ million ofrevenue

TOTAL HEADCOUNT

9,992
4,913
5,079
51%

MANAGERS

GHG EMISSIONS INTENSITY

Men

35.00

Women

57%

33.83

2021

Men
Women

50%

9,505
4,771
4,734
50%

MANAGERS

3,456
1,980
1,476
43%

Men
Women

59%

2,838
1,663
1,175
41%

GREEN BUILDINGS(in % of total m2)
Buildings utilizing
renewable electricity

46%

Buildings that havereceived an environmental
certification1

28%

1

Environmental certifications include BREEAM, ENERGY STAR, ISO 50001, and LEED.

MUSIC IS UNIVERSAL Annual Report 2022 | 19

ABOUT UMG

KEY CONSOLIDATED FINANCIALDATA FOR THE LAST THREE YEARSYear ended December 31,

Consolidated data
Revenues
EBITDA1

2022

2021

2020

10,340

8,504

7,432

2,135

1,788

1,497

2,028

Adjusted EBITDA

1

Operating profit2

1,600

Net profit attributable to equity holders of
the parent

782

Adjusted net profit1

1,454

Net Cash Position/(Financial Net Debt)1

Net cash provided by operating activities before
income tax paid
Free Cash Flow1

Dividends paid by UMG N.V. to its shareholders
Per share data

Weighted average number of shares outstanding
Earnings attributable to UMG N.V. shareowners
per share
Adjusted net profit per share1

1,686
1,394
886
1,271

1,487
1,230
1,366
1,028

(1,810)(2,010)(1,868)

1,987

1,395

1,133

1,086
(798)

638

(785)

(158)

1,813

1,813

1,813

0.43

0.49

0.75

0.80

0.70

0.57

(283)

1 Non-IFRS measures as defined in the Appendix to the Annual Report.
2 2021 Restated amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements

In millions of euros, number of shares in millions, data per share in euros.

MUSIC IS UNIVERSAL Annual Report 2022 | 20

ABOUT UMG

HOW UMG ADDS VALUEINPUTARTISTRY

GOVERNANCE

FINANCIALSOCIALADDED VALUE

Industry-Leading
Artist Development,
Marketing andPromotion
Global presencewith local expertisearound the world

T

R

IP

PUTTINGARTISTS FIRST

EP

H

EN

Capabilities indata and analytics
complemented
by scale

INN
O

Y
TR

N
TIO
VA

AR
TI
S

Network of
relationships

RENEURS

Leading positionin music-based
audio-visualcontent

Key relationships
with global andlocal platforms
supporting
new productdevelopment

ExpandingeCommerce anddirect-to-consumer
businesses

ESG COMMITTMENTS

ENVIRONMENTAL

SOCIAL

GOVERNANCE

OUTPUT IMPACT AND VALUE CREATION FOR

ARTISTS & SONGWRITERS

FANS

BUSINESS PARTNERSSHAREHOLDERSMUSIC IS UNIVERSAL Annual Report 2022 | 21

ABOUT UMG

INPUT
ARTISTRY

GOVERNANCE

FINANCIAL• ± 4 million owned and• Board regulations

payments, net of• > 3 million recordings
administrated titles• > 220 artists / brands inmerchandising• 10,000s hours of videos• One-tier board

SOCIAL• R
 oyalty advance• RTP policy• AGM• World leader in music• Partnerships with DSPs,€359 million

government agencies and• C atalog investments:• Board Committees• Artist Signings• SG&A: €2,702 million• Rights Management

based entertainment

recoupments: €148 million

industry organizations,collection societies• Total headcount: 9,992• Risk Management• Offices in 60 countries•C overing nearly 200
markets

ADDED

ENVIRONMENTAL

VALUE

SOCIAL

GOVERNANCE

OUTPUT IMPACT AND VALUE CREATION FOR

ARTISTS & SONGWRITERS

FANS

BUSINESS PARTNERS

marketing campaigns andcatalog and heritage

to grow their businesses• Highly customized• Protecting decades ofpromotion• Product innovation,rights• Protecting artists’ IP and• Continuous engagementbuilding lifetime fan value€10,340 million• Operating Profit:

super fans and extending everaging new innovative•L

projects

the addressable market• Adjusted EBITDA1:€2,135 million• Net cash provided by• Creating new fan•P artnering withincome tax paid:

project innovation(start-up) entrepreneurs

premium products for

cultural legacy of artist• Connecting artists to fansartistic creativity andexperiences throughmost sought-after content
technologies to expand
for artists

independent labels and€1,600 million

operating activities before€1,987 million

including eCommerce• Preserving and moving

 upporting growth of new•S• Free Cash Flow1:€1,086 million

their presence and stand• Supporting communities

the worldinterim + €491 million• Long-term career

planet for futurecommercial potential• Helping artists elevateout in a sea of content
development• Supporting andshowcasting artist’s

culturemusic markets aroundproposed= €926 million(Subject to shareholder

advocating for sustainable• Measuring and managing•L icensing music for use

generations of music•E ngaging on andlovers around the world• 2022 Dividend: €435 million

in other forms of content• Committing to protect theclimate advocacy efforts1• 2022 Revenue:

by offering the world’s• Leveraging new technology
and partnerships to fuel•E
 nabling platform partners

SHAREHOLDERS

business solutions

throughout the value

approval of final dividend)climate-related risk

chain

as defined in the Appendix to the Annual Report
MUSIC IS UNIVERSAL Annual Report 2022 | 22

ABOUT UMG

RECORDED MUSIC INDUSTRY- 2022 TOP 10 MARKETS

8 CANADA

6 FRANCE+8.6% | US$608m

5 CHINA+7.7% | US$1.1bn+28.4% | US$1.2bn

4 GERMANY

2 JAPAN

+2.2% | US$1.5bn

3 UK+5.4% | US$2.8bn+5.4% | US$1.7bn

1 USA

7 SOUTH KOREA+4.8% | US$10.3bn+14.3% | US$716m

9 BRAZIL+15.4% | US$489m

10 AUSTRALIA+8.1% | US$474m

0.6%

1
CAGR:

$17.5

$18.9
$0.5

$2.5

$0.4

$2.4
$3.9

$4.2

$0.6
$0.5

$20.3
$0.5

$26.2

$24.0

$2.5

$2.3

$2.2

$4.4

$3.8

$1.1

$4.6
$0.9

$1.2

$1.4

$1.6

$8.8

$10.7

$12.7

$15.7

$17.5

2018

2019

2020

2021

2022

Synchronisation
Performance Rights
Physical
Downloads & Other Digital
Streaming

Global Recorded Music Industry Revenues 2018 to 2022 ($ in billion)*

Source: IFPI Global Music Report 2023
MUSIC IS UNIVERSAL Annual Report 2022 | 23

ABOUT UMG

STAKEHOLDER ANALYSIS
We actively engage with our stakeholders to provide them with information
about our strategic direction and choices and we seek their input whenevaluating our Environmental, Social and Governance priorities (see Main
Material Topics). This creates sustainable value for our stakeholders and forus. By promoting two-way communications with our stakeholders and valuing
their input, together we create a strong basis for constructive, long-term
relationships. This intensive interaction enables us to chart and prioritize
the areas they consider crucial. It also gives us insights into the spaces inwhich we can create positive impact through our business and operations. We
subsequently focus on these material areas and proactively communicate ourrelated position and performance.
We have six key stakeholder groups:

1.
2.
3.
4.
5.
6.

Artists
Fans
Employees
Distribution Partners
Government and Elected Officials
Shareholders

ENGAGING WITH OUR STAKEHOLDERS
We see actively and intensively engaging with our key stakeholder groups
as a critical part of being a successful and responsible business. Aligned to
stakeholders’ particular needs and interests, we engage with them in bothformal and informal ways throughout the year.
•
How we engage with stakeholders•
Main interests•
Our response and impact

1. Artists
We actively engage with artists to serve their needs by:•
Placing recording artists and songwriters at the heart of everything we do•
Ensuring the teams at each of our labels and divisions maintain close
relationships with artists•
Interacting directly with our artists via our A&R staff and indirectly throughtheir advisors•
Offering them the choice of the full range of services needed to succeed
creatively and commercially, including marketing, promotion, distribution,
tour support, e-commerce and film & television
Artists' main interests include:•
Investing in their long-term career development and helping them build
sustainable careers•
Making their body of work available to fans•
Helping them connect with fans – old and new – in compelling ways•
Fair compensation for artists and songwriters•
Enabling their direct engagement with fans•
Supporting artists’ creative successMUSIC IS UNIVERSAL Annual Report 2022 | 24

ABOUT UMG

We respond to these interests and generate impact by:•Partnering with the broadest network of global, regional and local
distribution partners so artists can share their work with a growing fanbase worldwide•
Working with our distribution partners to achieve fair compensation formusic content•
Fostering creative expression and collaboration within our diverse rosterof artists•
Driving innovation in new technologies that increase music consumption
and let fans experience music in new ways•
Helping our artists to engage with their fans via social media, livestreaming
events, pop-up shops and other in-person experiences

2. Fans
We engage with fans with a view towards:•
Enhancing accessibility to their favorite artists•
Providing premium products for super fans•Creating new experiences and opportunities for fans to engage with andexperience their favorite artists and music•
Promoting direct relationships to create stronger bonds between artists
and fans•
Responding to fan demands for products
Fans' main interests include:•
Providing access to artist content from the widest range of licensed partners•
Offering the commercial and collectable products that fulfill their demands•
Making fans feel directly connected to their favorite artists•
Providing premium products and experiences for fans•
Supporting artistic creativity
We respond to these interests and generate impact by:•
Investing in A&R to ensure fans have new music and products from theirfavorite artists•
Helping fans engage with their favorite artists via social media,
livestreaming events, pop-up shops and other in-person experiences•
Evolving both the fan experience and the creative process throughinnovation and technology•
Partnering with the broadest network of global, regional and local
distribution partners and retailers to help artists share their work withfans worldwide•
Facilitating direct-to-consumer sales through ecommerce andmerchandising opportunities•
Utilizing our production, manufacturing and distribution capabilities tocreate premium and deluxe products for fans

3. Employees
We actively engage with employees in multiple ways, including:•
Actively communicating and listening to employees through written and inperson communications from our People, Inclusion and Culture (PIC) team•Providing formal (such as career and performance discussions) andinformal channels to encourage open communication and gather feedback

MUSIC IS UNIVERSAL Annual Report 2022 | 25

ABOUT UMG

•
•
•

•

Offering employees online resources to help answer their questions quickly
and easily
Assessing and improving the employee experience and culture in a numberof ways, including by conducting surveys
Engaging formally through employee forums, such as townhalls, community
conversations and employee resource groups created to strengthen culture,engagement, retention and belonging
Responding to employees’ individual needs by offering flexible
work arrangements

Employees’ main interests include:
A healthy employee relations environment••
A safe, healthy and respectful workplace environment•
Wellbeing resources and support•
Professional opportunities to thrive and grow•A culture of innovation, inclusion and wellbeing•
Global talent and tools to engage and enhance employee retention•
A culture of entrepreneurship•
Strong representation, inclusion, equity and belonging across the globe todrive change within our industry and our communities•
Meaningful experiences, competitive pay practices and progressive benefits
designed to inspire and engage our employees starting day one
We respond to these interests and generate impact by:•
Undertaking ongoing investment in developing our people, including
manager and employee training programs to support learningand development•
Recognizing great work through fair and competitive rewards•
Building an inclusive and supportive culture in which all employees feelsafe, seen, heard, respected and connected•
Collaborating as part of a global company on shared concerns including
learning, diversity and inclusion, engagement, retention and wellbeing•
Care for our people through various initiatives, acknowledging that a healthy
and resilient workforce is key to our business growth and success•Tapping into innovation, collaboration, creativity and artistry across UMG•
Encouraging community engagement and philanthropy through volunteer
time off and employee match benefit programs•
Promoting continuous learning and development through mentoring andtargeted development programs with an emphasis on sustaining a cultureof innovation, inclusion and wellbeing

4. Distribution Partners
We actively engage with our distribution partners in multiple ways, including:•Establishing corporate business development teams to maintain an ongoing
dialogue with distribution partners•
Taking part in regular product innovation discussions, data and analysis
sessions and deal negotiations•
Facilitating label-based UMG teams comprising key account managers
and streaming managers that work with distribution partners on productimplementations, artist-specific projects and initiatives, releases, artist data
and best practices•
Providing legal teams that ensure partners remain in compliance with deal
terms and maintain ongoing dialogue about potential issues

MUSIC IS UNIVERSAL Annual Report 2022 | 26

ABOUT UMG

Distribution partners' main interests include:•
A continued supply of high-quality music-based content for their products
and services•
Artists and song catalogs that appeal to consumers worldwide•
Promotional support to drive engagement on distribution
partners’ platforms•
State-of-the-art systems to deliver content in various formats and ingest
large amounts of data
We respond to these interests and generate impact by:•
Conducting fair negotiations based on honesty and integrity•
Drawing up contracts that clearly define the relationship, terms
and requirements•
Safeguarding data protection and confidentiality with respect to businesstrends, new products and features•
Ensuring our recording artists and songwriters are the center of everything
we do by pioneering new services, platforms and business models•
Investing in developing talent and successfully producing music markets
and promoting artists to fans worldwide•
Providing high-quality/high-resolution audiovisual content

5. Government and Elected Officials
We actively engage with governments and elected officials via multiple meansand channels, including:•
Actively educating government and elected officials about the music
ecosystem both through informal meetings and by responding to formal
requests for information (such as public hearings and consultations)•
Advocating for public policies that benefit the music ecosystem and its
members – from artists and songwriters to fans and beyond•
Participating in trade bodies and music-related NGOs and their activities,
including the publication of industry statistics, reports and studies on
relevant issues and the provision of background materials•
Conversing regularly on a broad range of issues affecting the creative
community via our Public Policy teamGovernment and Elected Officials' main interests include:•
Supporting and preserving culture and art and creative community•
Soft power and national or ethnic pride•
Investment that fuels economic growth and tax revenues to support qualityof living•
High-quality, skilled employment for local population•
International respect for domestic creators, including intellectual property
rights, trade policies and free expression
We respond to these interests and generate impact by:•Operating music businesses that create employment and generate
economic and fiscal benefits for the communities in which we operate•
Operating a company that supports culture through the creation anddistribution of great music and associated content•
Operating at the highest ethical standards and complying with both theletter and spirit of all applicable laws and regulations•
Adhering to business practices that treat artists and songwriters and all
creators fairly

MUSIC IS UNIVERSAL Annual Report 2022 | 27

ABOUT UMG•

Fostering a thriving music ecosystem

6. Shareholders
We engage with Shareholders in multiple ways, including:•Participating in investor meetings and teleconferences•
Publishing interim and annual reports•
Presenting quarterly financial results webcasts with management
Q&A sessions•
Holding Annual General Meetings•
Publicly issuing press releases•
Updating corporate and investor relations websites•
Managing a dedicated email address for inbound queries•Participating in financial and industry conferences•
Conversing regularly via our Investor Relations teamShareholders' main interests include:•
Revenue growth drivers and margin development•
Content and capital allocation•
Company strategy and progress updates•
Competitive positioning•
ESG framework and company values
We respond to these interests and generate impact by:•
Including focused messaging on the strategy and growth drivers acrossthe business•
Furnishing details on our content investments and our strategy aroundthese investments•
Providing details on both our competitive landscape and ESG strategy,
metrics and progress

MUSIC IS UNIVERSAL Annual Report 2022 | 28

BOARD REPORTINTRODUCTIONINTRODUCTION

BUSINESS PROFILE

A WORLD LEADER IN MUSICBASED ENTERTAINMENTUNIVERSAL MUSIC GROUP (UMG) is a world leader in music-based entertainment

with a broad array of businesses engaged in recorded music, music publishing,merchandising and audiovisual content. UMG has the broadest global reach ofany music company with a local presence in more than 60 territories covering
nearly 200 markets. Everything we do revolves around supporting artists,
promoting innovation and entrepreneurship, and bringing fans the world's bestmusic. Our three core business segments work in synergy to lead the dynamic
and ever-changing global music market:

Our RECORDED MUSIC BUSINESS is dedicated to discovering and developing
recording artists and marketing, promoting, distributing, selling and licensing
the music they create. Showcasing an impressive roster of recording artists,a catalog of timeless performers and a diverse range of labels, our RecordedMusic business is the partner of choice for artists, innovators andentrepreneurs around the globe. This business also incorporates ourcommercial activity in Film & TV and independent artist and label services anddistribution.
UNIVERSAL MUSIC PUBLISHING GROUP (UMPG) is committed to signing,
administering and acquiring rights to musical compositions and licensing themfor use in multiple formats. As one of the world's largest and fastest-growing
music publishing companies, UMPG has a catalog with nearly four million
owned and administered titles and enjoys partnerships with many of the world's
top songwriters.

Bravado, our MERCHANDISING BUSINESS, represents the merchandising rights
of artists and entertainment brands and properties. Providing an end-to-end
merchandising ecosystem, Bravado offers services including sales, licensing,branding, marketing, eCommerce and creative resources for clients andinnovative experiences for fans worldwide.

MUSIC IS UNIVERSAL Annual Report 2022 | 30

INTRODUCTIONLABELS

MULTI-LABEL STRUCTUREEMPOWERS ENTREPRENEURSHIP,ARTISTRY AND DIVERSITY
UMG is home to many of the world's most iconic record labels. Our
multi-label structure empowers entrepreneurship, artistry, and diversity. UMG
encompasses a collection of iconic and world-class labels, spanning all genresof music, created and led by visionary entrepreneurs.
Our shared passion for discovering recording artists with the talent andpotential to break through an increasingly competitive environment foraudience attention is at the core of who we are and what we do. Each one ofthese dynamic labels has a common belief: that an artist they discover anddevelop will change and drive culture around the world.
This approach produces many benefits. Our collection of dynamic enterprises
enables us to effectively cover the music market across all genres and styles,
with each label having its own unique culture and history. Decentralized talentspotting across UMG, employing each label's distinctive identity and creative
vision, means we can attract the widest variety of top talent. Healthy
competition drives innovation and evolution. We believe that operating multiple
major frontline labels in markets around the world yields significant benefits.
This is why we continue to develop, revitalize and invest in our label brands.
Our multiple label structure creates a degree of competition even among
UMG labels. We believe that this healthy competition drives innovation andcreativity and keeps our labels continuously evolving to stay at the forefrontof industry trends.
Another benefit of our multiple label structure is that it alleviates short-term
performance pressure on any individual label. The knowledge that the different
UMG labels will collectively have a continuous flow of new content means eachindividual label can take a more long-term approach to artist development.

Leveraging mutual benefits and services

Our multiple label structure gives each label the freedom to create and innovate,while enjoying the benefits of being part of UMG. This is because at UMG,
we negotiate with platform partners, aggregate data and analytics, share bestpractices, and centralize certain back-office functions at a company-wide level.
This lets us benefit from our scale, while still operating with the spirit of aquick-moving, innovative and entrepreneurial company.

Broadening touchpoints with artists and entrepreneurs
through distribution

UMG enjoys longstanding relationships with leading distribution partners,
including, for example, HYBE and Disney, to give our partners’ artists global
reach and best-in-class services. In 2022, we expanded our global distribution
network for independent labels and artists, with the launch of Virgin Music
Group. This unites our premier label & artist service businesses including VirginMUSIC IS UNIVERSAL Annual Report 2022 | 31

INTRODUCTION

Music Label & Artist Services, Ingrooves and the recently acquired mtheory Artist
Partnerships within the newly created division. With a unified leadership andstrategy, Virgin Music Group is driving the expansion of UMG’s independent
music capabilities across all business units and regions worldwide. In thisway we are broadening our long-term relationships and partnerships with new
independent artists, labels and entrepreneurs, and further expanding our reach
into new music markets.
UMG announced the acquisition of a 49% stake in independent music company[PIAS] in December 2022. This was the next step forward following the formationof a strategic global alliance between the two companies in June 2021. Under
the new agreement, [PIAS] will remain fully independent with opportunities for
future repertoire and distribution partnerships.

MUSIC IS UNIVERSAL Annual Report 2022 | 32

INTRODUCTION

RECORDED MUSIC

RECORDED MUSIC
UMG’s recorded music business discovers and develops artists; supports
the creation of audio and audiovisual content by recording artists; andmarkets, distributes, sells and licenses this content across a broad rangeof formats and platforms. UMG owns and administers the copyright to theaudio and audiovisual recordings created by recording artists signed to UMG’s
iconic labels.
We generate revenue through the physical sales of this content in formats
such as CDs and vinyl records, and from its distribution to music streaming
and subscription platforms. Our recorded music content is also distributed toconsumers through multiple other platforms and forms, including theatricalfilms, home entertainment, television productions and video games.

Strength in diversity
HOME TO A DIVERSE SET OF LABELS, BRANDS AND CONTENT
UMG is a leading recorded music company. We’re home to both the world's
premier record labels and groups, and iconic studio facilities. Our rosterof recording artists features a diverse portfolio of both global superstars
and leading local artists from around the world. Artists signed to UMG aspart of our recorded music business span all genres and generations andinclude many of the greatest recording artists of all time. UMG’s iconic label
brands include Capitol Music Group, Interscope Geffen A&M, Republic Records,
Island Records, Motown Records, Def Jam Recordings, Universal Music Group
Nashville, Universal Music Latin Entertainment, EMI Records and Polydor. Ourlabel portfolio also encompasses the world's leading classical and jazz labels,
including Blue Note Records, Decca, Deutsche Grammophon and Verve LabelGroup. We’re also home to the world's premiere recording studios, including thelegendary Capitol Studios and Abbey Road.
The addition of Virgin Music Group to our recorded music business in 2022
further expands our diverse portfolio. It brings together our leading label & artist
service businesses including Virgin Music Label & Artist Services and Ingrooves.
Through this portfolio of businesses, we offer a diverse range of premiumand flexible independent label and artist services to entrepreneurs and talent.
These services span the spectrum from global distribution, insights, data andmarketing tools to fully staffed promotion, marketing and artist development
teams at both the regional and global levels. This fosters long-term partnerships
with UMG, and forges paths to success for entrepreneurs, independent labels
and artists.
In addition to recorded music content, UMG offers some 5,000 hours ofaudiovisual video content across the globe. Our audiovisual content teams
develop a wide spectrum of film and television content. Our content spansa diverse mix of genres and eras and features legendary artists represented
within our rich and storied catalog of content and intellectual property. We have
two content divisions at the heart of our audiovisual operation: Mercury Studios,a multi-faceted content studio and distributor, and Polygram Entertainment,a premium production company. Beyond these two divisions, we also haveMUSIC IS UNIVERSAL Annual Report 2022 | 33

INTRODUCTION

content operations within our individual labels and other business units. In
2022, Mercury Studios and Polygram Entertainment presented projects including
a four-part documentary series My Life as a Rolling Stone (BBC), Shania: Not Justa Girl (Netflix) and Zoey’s Extraordinary Christmas (NBC).

Presence spanning the globe

Our recorded music business is both artistically and geographically diverse.
We have offices in more than 60 territories, covering nearly 200 markets.
This means we operate in more territories and markets than any otherrecorded music company. Our geographical spread helps us create diversified
revenue streams.
In 2022, North America accounted for 51% of our recorded music revenue.
Europe, Asia, Latin America and the rest of the world represented 28%, 13%, 4%
and 4% of the revenue respectively.
Our extraordinarily diverse roster of artists in turn means we are never reliant
on one artist or even a small number of artists. The top 50 artists only accounted
for 22%, of UMG’s recorded music revenue in 2022.

Diversified revenue streams

Our recorded music business has diversified revenue streams derived fromthree main sources:
DIGITAL: We enter into agreements with digital music services to make ourmusic and audiovisual content available for access in digital formats, such as
streaming and downloads. Our music is streamed on an ad-supported and paid
subscription basis through streaming services. Fans are also able to purchasedownloads of our music by album or individual tracks through download
services. Our music content is also consumed through social media, gamingand digital fitness platforms, among other emerging digital formats that we areworking to further monetize. We partner with both well-established andemerging digital music services to provide ever-greater access to audiences
engaging with our music in multiple ways.
PHYSICAL: Our physical recorded music products, including CDs, vinyl records,
cassette tapes, DVDs and Blu-Ray discs, are sold through retailers andwholesalers both in-store and online. We also sell our products directly tocustomers via our UMG websites and artist channels.
LICENSING AND OTHER: We enter into agreements to license the use of soundrecordings in combination with visual images, such as in films, broadcast
television or streaming series, television commercials and video games. Asa rightsholder, consistent with local law, we receive royalties when soundrecordings are performed publicly through broadcast of music on television,
radio and cable, and in public spaces such as shops, workplaces, restaurants,
bars and clubs. We also partner with artists to develop their activities outside
the traditional recorded music business, and generate revenue throughparticipation in these expanded rights, including sponsorship, fan clubs, artist
websites, touring, concert promotion, ticketing and artist and brandmanagement. We also develop and produce music-based audiovisual content,such as music documentaries, feature films, theatrical musical productions,music-based television series and reality shows, which are then licensed forbroadcast.

MUSIC IS UNIVERSAL Annual Report 2022 | 34

INTRODUCTION

Continued growth across all major recorded music revenue streams
in 2022
In 2022, UMG achieved growth across all its major recorded music revenue
streams. Recorded music revenue in 2022 was €7,937 million, up 16.3%
compared to 2021, and up 8.8% in constant currency. Subscription andstreaming revenue grew 18.7%, 9.8% in constant currency, with strong 10.0%
constant currency growth in subscription revenue and 9.3% constant currency
growth in ad-supported streaming revenues. While ad-supported revenue waspressured in the second half of 2022 due to a downturn in the broader admarket, fuelled by macroeconomic concerns, ad-supported streaming grew for
the year due to ongoing improvement in ad-based monetization and new andenhanced deals in social media.
Physical revenue grew by 7.7%, or 4.1% in constant currency, driven by
improvements in both CD and vinyl sales
License and other revenue improved 19.6%, or 13.4% in constant currency, due
to improvements in broadcast and neighboring rights collections, audiovisual
production income and synchronization, live and brand deals.

A world of stars

Our recorded music business operates in more territories and markets than any
other recorded music company. The breadth and depth of our artist roster isunrivalled. We're the destination of choice for the world's most successful stars
and a magnet for up-and-coming artists. With a roster featuring legends, global
hitmakers, regional stars and breakthrough artists, our artists span generations,genres, languages, continents and cultures.
UMG’s best-selling artists include global superstars such as J Balvin, Jon
Batiste, Justin Bieber, Luke Bryan, Lewis Capaldi, J. Cole, Daddy Yankee, Drake,
Billie Eilish, Eminem, Selena Gomez, Ariana Grande, Imagine Dragons, Lady
Gaga, Kendrick Lamar, Lang Lang, Lil Baby, Post Malone, Shawn Mendes, Kacey
Musgraves, Katy Perry, Olivia Rodrigo, Chris Stapleton, Taylor Swift, Carrie
Underwood and The Weeknd.
Our roster of artists also includes hugely successful local artists such as Sam
Smith, Glass Animals and Stormzy in the UK, Angèle and Nekfeu in France,
Stromae in Belgium, Rammstein and Helene Fischer in Germany, King & Princeand Ado in Japan, Eason Chan in China and Karol G and Sebastián Yatra in
Latin America.
Our recorded music artists once again topped the charts in 2022. UMG had fourof the Top 5 global artists on Spotify in 2022 with Taylor Swift, Drake, The Weeknd
and BTS. Drake was the most streamed artist on the platform in the U.S. UMG
also had four of the top five most-viral artists, led by Taylor Swift at number one,with The Weeknd, BTS and Lana Del Rey also holding top chart positions.
2022 saw UMG artists Imagine Dragons become the most streamed artists on the
Deezer platform. The Weeknd, Eminem, Billie Eilish and Queen also featured in
the Deezer 2022 top-ten.
VEVO’s most watched global artist in 2022 was UMLE Latin superstar Karol G with
2.7 billion views during the year, her video for “Provenza,” was the most watchedmusic clip.

MUSIC IS UNIVERSAL Annual Report 2022 | 35

INTRODUCTION

Our recorded music artists featured prominently in the 2022 year-end U.S.
Billboard charts, with UMG representing seven of the Top 10 albums of the year.
They include Morgan Wallen, two releases from Taylor Swift, Olivia Rodrigo, The
Weeknd, Drake and Disney’s Encanto soundtrack. Glass Animals’ hit song “HeatWaves” was named the number one song on Billboard’s Hot 100 chart. UMG’s
Republic Records was named Billboard’s “Label of the Year” for the second year
running, based on chart success during 2022.
According to the Official Charts Company, UMG had six of the Top 10 artists in the
UK in 2022, including Taylor Swift at number one, as well as Drake, Eminem and
The Weeknd among others.
In Germany, UMG topped the charts with the top four best-selling albums of
the year, led by Rammstein’s, alongside Helene Fischer, ABBA and Taylor Swift.
UMG also had the top three singles of the year, led by DJ Robin & Schürze’s“Layla”, and followed by “Heat Waves” from Glass Animals and “Beautiful Girl”
from Luciano, according to GFK.
In Japan, Ado was the top artist on the Billboard Japan year-end "Artist 100"chart. And in France, Angèle was the top female streaming artist.
In China, Eason Chan’s “Gu Yong Zhe” (“The Lone Warrior”), became the moststreamed song in UMG China’s history after topping the charts on all major
streaming platforms.

Industry-leading catalog of timeless recordings

Our track record in identifying and partnering with the world's best artists has
given us the industry-leading catalog of recordings and songs. These include
timeless performers such as ABBA, Louis Armstrong, The Beatles, The BeachBoys, The Bee Gees, Andrea Bocelli, Bon Jovi, James Brown, Neil Diamond, MarvinGaye, Guns N’ Roses, Elton John, Bob Marley, Paul McCartney, Nirvana, Luciano
Pavarotti, Queen, The Rolling Stones, Frank Sinatra, Sting, U2, Amy Winehouseand Stevie Wonder.
This diverse catalog gives UMG strong and reliable revenue from sales ofprior years’ releases. Catalog sales (defined as content older than three years)
accounted for 61% of recorded music digital and physical revenue in 2022,
while frontline product (content less than three years old) accounted for 39%
of recorded music digital and physical revenue.

Growing share of subscription and advertising-based
streaming models

We play a prominent role in driving the recorded music industry's transition to
paid subscription and advertising-supported streaming models from a physicaland digital ownership model. Our revenues in 2022 reflect this shift, withstreaming and subscription revenue accounting for 66% of UMG’s 2022 recorded
music revenues.
We generate subscription and streaming revenue through partnerships thatenable UMG’s content to be distributed by global, regional and local digital
service providers, including Spotify, Apple Music, YouTube, Amazon, Deezer,
Tencent Music Entertainment and NetEase, among an increasingly importantnumber of other partners. We also generate subscription and streaming
revenues through a variety of social media platform partners ranging from Meta,
SNAP and TikTok to digital fitness partners including Peloton and Apple Fitness+.

MUSIC IS UNIVERSAL Annual Report 2022 | 36

INTRODUCTION

In addition, we generate revenue through many other partnerships and via
emerging digital music consumption models.
In 2022, UMG’s Deutsche Grammophon label launched Stage+, a classicalmusic subscription service with a broad offering. Stage+ features exclusive
live premieres, long-form concert and opera programs and music videos, plus
documentaries and behind-the-scenes interviews. Stage+ furthermore presents
new audio releases and albums from the Deutsche Grammophon and Decca
catalogs in immersive audio formats.

MUSIC IS UNIVERSAL Annual Report 2022 | 37

INTRODUCTION

MUSIC PUBLISHINGMUSIC PUBLISHING
Universal Music Publishing Group (UMPG) is UMG’s global music publishingbusiness and is home to the world's greatest songwriters and song catalog.
We're recognized as one of the largest and fastest-growing music publishingcompanies worldwide. Our core activity involves signing, administering andacquiring rights to musical compositions and licensing them for use indifferent formats. We license musical compositions for use in sound recordings,
films, television, advertisements, video games, concerts and other public
performances and for use in printed sheet music and song folios. Our
vast catalog of original music and arrangements has incredible breadth anddiversity. We enjoy longstanding relationships with leading film and television
studios, global brands and digital service providers who use our music andarrangements in their content and products.

Creating commercial and creative value for songwriters

Songwriters come first at UMPG. We're dedicated to giving them best-in-classservice to maximize royalty streams in the modern-day music industry. To
achieve this, we deploy both the hands-on expertise of the best people in theindustry and cutting-edge technology to maximize opportunity and value for oursongwriters both commercially and creatively. We combine global reach and alocal presence, with teams of local representatives operating in 40 countries.
These teams focus on discovering, signing and developing talent and creating
unique opportunities for success on a local, regional or global scale. This
physical presence is vital in maintaining relationships with collection societies
worldwide to ensure all generated income is accounted for and collected onbehalf of songwriters and copyright holders. As part of the world's largest
music company, we're uniquely positioned to develop collaborative strategies
between publishing and recorded music. All with one aim: to add value forour songwriters.

Multiple revenue streams

Our music publishing operations derive revenue from five main sources:
PERFORMANCE: The rightsholder receives revenues when the musicalcomposition is performed publicly through broadcasting of music on television
or radio, and during a live performance at a concert or other venues such asnightclubs, bars, restaurants, hotels and retailers.

DIGITAL: The rightsholder receives revenues when musical compositions are

distributed through audio and visual streaming services, download services,
social networks and other digital music services.

MECHANICAL: The rightsholder receives revenues for musical compositions
embodied in recordings sold in any physical format or configuration such as
CDs, vinyl and DVDs.
SYNCHRONIZATION: The rightsholder receives revenues for the right to use

the musical composition in combination with visual images such as in films or
television programs, television commercials and video games as well as fromother uses such as in toys or novelty items and merchandise.

MUSIC IS UNIVERSAL Annual Report 2022 | 38

INTRODUCTIONOTHER: The rightsholder receives revenues for use of the musical compositionin sheet music and other uses.

Music publishing achieves increased growthMusic Publishing revenue amounted to €1,799 million in 2022, up 34.8% yearon-year, or 26.3% in constant currency. The continued growth of subscription
and streaming revenue, along with the recovery in synchronisation andperformance revenue, was the main driver behind the overall increase inmusic publishing revenue, but revenue also benefited in 2022 from catalog
acquisitions made in prior years.
In 2022, UMPG benefited from two key rulings in the U.S. that were a big win forthe publishing and songwriting community. In July 2022, the Copyright Royalty
Board reaffirmed the 15.1% headline rate increase in royalties paid by streaming
services to publishers for the 2018-22 period following a protracted dispute withstreaming services. This was followed in September with a further increase inmechanical royalty rates to 15.35%, to be paid to songwriters from 2023 to 2027.
This is the result of a long collaborative effort by the NMPA, NSAI, membersof the UMPG team and the wider songwriting community in the U.S. to ensure
recognition and fair pay for our songwriters.

Global scope and local focus in music publishing

We are a global leader in publishing with a vast catalog containing nearlyfour million owned and administered copyrights. With 860 employees operating
at 48 offices in 40 countries, we have global scope with a local focus.
In 2022, we launched the UMPG Global Creative Group to support our songwriting
community. The group comprises a team of senior A&R executives across
key territories who identify and expand global creative opportunities for UMPG
songwriters, artists and producers. This group reflects our commitment tokeep innovating our leading A&R publishing strategy. It provides us witha strong vehicle for empowering UMPG’s creative leadership to accelerate
global talent strategies and maximize high value opportunities for our worldclass songwriters.

A chart-busting year

For the third consecutive year, UMPG-signed songwriter Bad Bunny was the moststreamed global artist on Spotify in 2022. Garnering over 18.5 billion streams in
2022, he more than doubled the amount he achieved in 2021. He was joined in
the top five most streamed artists by UMPG signed writers Taylor Swift, Drakeand The Weeknd, all three of whom are also Universal Music Group recording
artists. Bad Bunny’s Un Verano Sin Ti was also the most streamed album on
Spotify in 2022. UMPG also had a share in all five of the Top 5 of Spotify’s 2022
most streamed songs globally led by Harry Styles with “As It Was”.
Apple Music named UMPG-signed songwriter Bad Bunny the 2022 Global Artistof the Year and named his Un Verano Sin Ti the most streamed Latin albumof all time on Apple Music. UMPG writers contributed to nineteen of the top
twenty singles of the year on Apple Music, led by “Stay” from The Kid Laroi &Justin Bieber.
UMPG had a share in four of the top five albums of the year in the U.S. according
to Billboard, and all the top four artists, with Bad Bunny, Taylor Swift, Harry Styles
and Drake. UMPG-signed writers also contributed to all the top five singles of2022 on the Billboard Year-End Hot 100 Song Chart.

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INTRODUCTION

UMPG won the title of “Publisher of the Year” at three leading awards
competitions in 2022: Music Business Worldwide A&R Awards, BMI Pop MusicAwards and BMI Latin Awards. Our Chairman and CEO, Jody Gerson, received
the prestigious Abe Olman Publishing Award at the 51st Songwriters Hall of
Fame Awards.
We remain the global publisher of choice for film and TV studios. In 2022, wesecured a new landmark deal with Univision, following deals with Banijay andMoonbug Entertainment in 2021.
2022 also saw some of the world’s greatest songwriters and artists signwith UMPG, including Dave Bailey (Glass Animals), Clairo, Nicky Youre, Fourtet,
Bicep, film and TV composer Nicholas Britell, and Oscar and Grammy-winningcomposer Hildur Guðnadóttir. We also extended our agreement with the estateof legendary Mexican recording superstar and prolific songwriter Juan Gabriel.

Rich mosaic of songs spanning every era and genre

UMG is home to the greatest songwriters in history. We have a global catalog
containing nearly four million owned and administered copyrights.
Our unrivalled catalog is a rich mosaic of songs spanning myriad eras,
generations, genres and languages. We take a portfolio approach to growing andmanaging our catalog. As a result, we have a mix of songwriters from around theworld, with works in our catalog representing every genre – from country to Latin
to pop to urban to K-pop and J-pop. Our catalog is filled with evergreen songs
spanning generations from “Like a Rolling Stone” to “Every Breath You Take” andfrom “All I Want for Christmas” to “Staying Alive”. This combines to create anever-evolving portfolio that is unmatched in terms of its richness and diversity.
Our music publishing catalog includes some of the world’s most popular songs
from major songwriters and artists such as ABBA, Adele, Axwell & Ingrosso,
J Balvin, The Beach Boys, Beastie Boys, The Bee Gees, Irving Berlin, Leonard
Bernstein, Justin Bieber, Benny Blanco, Chris Brown, Mariah Carey, Brandi Carlile,
Kenny Chesney, Coldplay, DaBaby, Jason Derulo, Neil Diamond, Disclosure,
Drake, Dua Lipa, Bob Dylan, Billie Eilish, Eminem, Gloria and Emilio Estefan,
Florence + the Machine, Future, Selena Gomez, Ariana Grande, Al Green, Josh
Groban, Halsey, Jimi Hendrix, H.E.R., Imagine Dragons, Carly Rae Jepsen, Billy
Joel, Elton John/Bernie Taupin, Jonas Brothers, Alicia Keys, Kendrick Lamar, Lil
Baby, Lil Yachty, Linkin Park, Logic, Demi Lovato, The Mamas & the Papas, Steve
Mac, Maroon 5, Dave Matthews, Megan Thee Stallion, Shawn Mendes, Metallica,
Miguel, Nicki Minaj, Maren Morris, Mumford & Sons, Pearl Jam, Post Malone,
Quavo, Otis Redding, R.E.M., Red Hot Chili Peppers, Rex Orange County, Rosalía,
Carly Simon, Britney Spears, Harry Styles, Taylor Swift, SZA, Shania Twain, Justin
Timberlake, U2, Keith Urban, Jack White, and Zedd.
We expanded our catalog further in 2022 to include songs written by global
icons whose works represent the most timeless and important songs in history.
UMPG announced the acquisition of 17-time Grammy Award winner Sting’s
career catalog of music in February 2022. This historic, worldwide agreement
encompasses the entirety of both his solo works and works created with The
Police. This landmark deal unites Sting’s song catalog with his recordings
at UMG.
2022 also saw UMG and UMPG announce the acquisition of the entiretyof Neil Diamond’s historic song catalog and the rights to recordings fromMUSIC IS UNIVERSAL Annual Report 2022 | 40

INTRODUCTION

throughout his career. This includes 110 unreleased tracks, an unreleased
album and archival long form videos. This comprehensive deal brings together
Neil Diamond’s entire body of work and expands his existing relationship with
UMG and UMPG.
UMG additionally entered into an agreement with the Zappa Trust to acquireFrank Zappa’s estate. This includes his expansive publishing catalog of iconic
songs, film archive, and the complete contents of The Vault, the storage facility
that houses the late Zappa’s life’s work and name and likeness rights.
We also announced in 2022 an expansive, long-term partnership with The
Weeknd - one of the most commercially successful and critically acclaimed
recording artists and songwriters of the last decade. This new long-term deal
will take effect when his existing commitment expires. Based on this new
relationship, we will administer all his future works and songwriting catalog.
We entered into an expanded relationship with Authentic Brands Group (ABG),a global brand owner, marketing and entertainment company, and owner ofElvis Presley Enterprises. Under this exclusive global publishing deal, we will
represent the historic song catalog of Elvis Presley.
UMPG furthermore entered into an exclusive global publishing agreement tofully represent the iconic song catalog of Irving Berlin. We have served as
his catalog administrator outside of the U.S. since 2012 and this deal further
expands our relationships with Berlin’s estate. One of the greatest songwriters
in American history, Berlin composed more than 1,500 songs over his 60-year
career. Under the expanded agreement, we exclusively represent his catalog
of renowned classics including “Anything You Can Do,” “Puttin’ On The Ritz,”“There’s No Business Like Show Business,” and Guinness World Records’
longtime best-selling single “White Christmas.”
In 2022, Universal Music Publishing China signed an exclusive global publishingagreement with China-based RYCE Publishing. RYCE is the publishing unit ofmusic and entertainment company RYCE Entertainment. Spanning a massive
catalog of over 700 songs, the landmark deal sees UMP China exclusively lead
global administration responsibilities. The deal encompasses administeringsome of the country’s all-time best-sellers and tracks, which have helped
establish Chinese Pop (C-Pop) as a global force, and the rights in China to asizeable song catalog of popular Korean K-Pop songs.

Bringing songwriters transparency, integrity and trust

We deploy cutting-edge technology and expert administration services tobenefit our songwriters. UMPG Window is our highly advanced technology
platform through which we provide our songwriters and clients with real-time
information on earnings, royalty and copyright data. This advanced system
reflects UMPG’s longstanding commitment to transparency, integrity and trust.
UMPG Window uses the latest in cloud-indexing technology to provide
comprehensive views of where, when and how songs are consumed aroundthe world. UMPG Window also features: one-click, no-fee advances; international
royalty ‘pipeline’ income views; society registration information, status, andfull copyright details on all works; comprehensive film and TV information forworks used and royalties earned; and numerous other powerful tools to help oursongwriters and clients.

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INTRODUCTION

Partnering with top film and TV content studios

We’re a leading publisher in the film and television business. UMPG partners
with leading film and TV content studies ranging from Warner Bros., NBC
Universal, Disney and HBO to MGM, Banijay, Paramount, Lionsgate, Viacom, andSTX. We further expanded our portfolio of partnerships with the addition of a new
global partnership with Univision.
This leading position means we represent some of the world's most iconic film
and TV theme songs. With the unstoppable rise of video content, major content
publishers from gaming to TV to motion pictures turn to us to help them build
the soundtracks for their projects.

MUSIC IS UNIVERSAL Annual Report 2022 | 42

INTRODUCTION

MERCHANDISINGECOSYSTEM UNITING CREATIVEDESIGN, PRODUCTION
AND DISTRIBUTION
Bravado is UMG’s global, full-service merchandising business. With a portfolio
spanning more than 220 artists, we hold the leading position in music
merchandising worldwide. Through Bravado, we develop high-quality licensed
consumer products that reflect and reinforce an artist’s brand and identity andpresents them to a worldwide audience. Our artists and brands have access toa unique end-to-end merchandising ecosystem that brings together creative
design, production, and distribution. We work closely with new and establishedclients to create innovative products that are carefully tailored to the brandor artist.
Our products include apparel and accessories, home goods, toys, games, luxury
goods, food and other retail merchandise. They are sold through selected retail
outlets and Web-based stores, both directly and through third parties, and onlive tours. By tapping into UMG’s global network, we can offer a comprehensive
range of services, including sales, licensing, branding, marketing, eCommerceand creative resources. Our focus is on building connections between fans andartists by creating and developing innovative cultural and retail experiences forfans worldwide.
Our merchandising revenues are derived from four main sources:
TOURING INCOME: Sales of physical merchandise products directly to consumers

at venues during tours. This also includes concession income, which is the saleof physical merchandise products directly to consumers at concessions withinvenues. The right to sell at concession is not limited to specific tours, Bravadosigned artists or music events, but can also encompass other events withinvenues.

RETAIL: Sales of physical merchandising products to wholesalers and retailers.
LICENSING: Fees received from third party licensees to use our merchandisingrights in products sold by or sub-licensed by the licensee.

ECOMMERCE/DIRECT-TO-CONSUMER: Sales of physical merchandise productthrough an online direct-to-consumer channel. This also includes VIP eventsand fan clubs, which is the sale of premium experiences and exclusive accessthrough a direct-to-consumer channel.

In 2022, our merchandising business realized exceptionally strong growth,particularly from touring income, as global touring resumed following COVIDrelated shutdowns during much of 2020 and 2021.
In total, Merchandising and Other revenue grew to €618 million, up 70.2%, or
54.1% in constant currency, driven by the growth in touring related revenue.

MUSIC IS UNIVERSAL Annual Report 2022 | 43

INTRODUCTION

Roster of clients with the greatest names in music

Bravado signs agreements with clients that provide for usage rights of theclient's name, image and likeness across product categories and distribution
channels. In return, clients receive a royalty or a share of the proceeds for all
items sold. Services can include merchandising, direct-to-consumer products
and campaigns, touring, brand and retail licensing and distribution.

Our roster of clients includes some of the biggest names in music. We provide
merchandising services for leading artists including Aerosmith, Ariana Grande,Billie Eilish, Blackpink, Bob Marley, Elton John, Guns N’ Roses, Justin Bieber,
Kiss, Lady Gaga, Queen, Selena Gomez, Taylor Swift, The Rolling Stones, Shawn
Mendes, The Weeknd and The Who. A number of Bravado artists are also
signed across other UMG businesses, allowing for synergies and increased
opportunities for artists.
In 2022, Bravado entered into partnership with The Beatles to represent thelegendary band's North American rights and to develop new merchandise
opportunities for The Beatles across retail, licensing and e-commerce. The
new agreement reunites the band's merchandise business with their recorded
music catalog for a unified brand strategy. Avril Lavigne, Demi Lovato, Illenium,
Fletcher, Lauren Daigle, The Scorpions, Shania Twain, and Stormzy were also
added to the Bravado roster in 2022.

Sparking connections with fans

Our in-house creative development team at Bravado designs products thatreflect the client's vision and spark connections with fans. Our creative team
operates at the intersection between art, music and fashion. They identify
key trends in all three areas and create compelling products and experiencesthat are in tune with today's culture. As part of a world leading music-based
entertainment company, we're uniquely positioned to create fresh and exciting
products that match an artist's brand and identity.

Touring

At Bravado we create physical merchandise products to sell at venues directly
to consumers during tours. In 2022, we achieved strong growth through postCOVID touring. Our merchandise was sold during numerous tours including
Billie Eilish, Blackpink, Elton John, Imagine Dragons, Justin Bieber, Lady Gaga,
The Rolling Stones and The Weeknd.

Global Retail

We have developed the most extensive global distribution network in theindustry. Our strong direct relationships in the retail sector and ability to curate
a mix of products and experiences hold the key to our success. Our global
and in-market local teams work in close collaboration to manage our brands
consistently and effectively across all markets and countries. Thanks to thislocalized approach, our activities are tailored to each individual market toachieve maximum reach and results.
In 2022, we once again focused on realizing a distinctive and successful offering
during the holiday shopping season. We launched dozens of holiday marketing
campaigns for artists including The Rolling Stones, BLACKPINK and Lady Gaga.
We further expanded our physical presence in the global retail space in 2022.
During the year under review, we continued to develop RS No. 9. It is ourMUSIC IS UNIVERSAL Annual Report 2022 | 44

INTRODUCTION

physical The Rolling Stones store in the heart of London that showcases
collaborations with brands including Kirk Originals, Nixon watches and Umbro.

Collaborations

In 2022, we continued to explore new and exciting ways to enlarge consumer
audiences for our clients. We spurred collaborations between premiere brands
and our clients. These unique collaborations included: 2Pac and Fila; Doja Cat
and House Party; Freddie Mercury and Hugo Boss; The Rolling Stones and theRoyal Mint, the official maker of UK coins; and The Who and Pretty Green.

Licensing

Our licensing services extend the scale and scope of our brands into categories
beyond apparel and traditional consumer products. We leverage dynamic
partnerships across a range of platforms and categories from footwear andaccessories to gaming and spirits. Working closely within an extensive global
network of best-in-class licensees, we develop dynamic brand partnerships thatreach new and diverse audience segments without diluting the artist's brand.

Consumer Experience

Through surprise pop-ups and other unique events, we connect fans and theirfavorite artists more directly and create unforgettable moments that maximize
customer engagement.
In 2022, we created a number of fun consumer experiences. This included
presenting pop-up shops for the 1975, Blackpink, Conan Grey, Justin Bieber,Queen, and Stormzy, in partnership with 0207 Def Jam. 2022 also saw us createeven larger fan experiences, such as partnering to produce the Tupac Shakur
Wake Me When I’m Free Museum that included Tupac Shakur’s Powamekka
Café by Fixins Soul Kitchin. Another highpoint of the year was Elton John’s
LA TakeOver that included a unique pop-up installation at the Los Angeles
flagship store of luxury multi-brand retailer The Webster. In 2022, we alsobrought about partnerships with companies including Monty’s Good Burger and
Urban Outfitters.
Bravado curated a range of enhanced concert experiences in 2022. We
created these experiences for clients such as Kevin Hart, Def Leppard, andKISS. The experiences included artist meet and greets, photo ops, backstage
tours, access to the artist soundcheck, VIP hospitality lounges, and exclusive
VIP merchandise.

MUSIC IS UNIVERSAL Annual Report 2022 | 45

BOARD REPORTSTRATEGYSTRATEGYDRIVING GROWTH BY PUTTINGARTISTS FIRST
Putting recording artists and songwriters first. It’s how we achieve longterm growth and success. That’s why our artist-centric approach forms thefoundation of our global strategy. Everything we do revolves around discovering,developing, breaking, retaining and advancing the careers of recording artists
and songwriters with the potential for lasting success. Our strategy to sign
the most promising artists, build relationships with established artists, invest
in new music and local artists, broaden the music marketplace, expand
eCommerce, and spur innovation serves as our roadmap to sustained growth.
Our strategic course is further guided by our commitment to help the artist andfan communities in which we do business (see the “Non-Financial Information”
section of this report).

Retaining and expanding relationships with artists

Leveraging our industry-leading A&R, marketing and promotion capabilities
enables us to sign talented recording artists and songwriters. We partner withthem to both build successful careers and to enhance the enduring value of ourcatalog across genres and geographies.
Retaining and expanding relationships with artists with whom we havepartnered for many years is a top strategic priority. We achieve this throughfocused efforts, resources and expertise – especially in value-added services
such as merchandising, branding and sponsorship, film and television
production and eCommerce.
The expansion of our global partnership with The Weeknd in 2022 is an inspiring
example of these efforts. The deal expands his long-standing relationship with
UMG across recorded music with Republic Records, music publishing with
UMPG, and merchandise and audiovisual projects with Bravado.
These far-reaching partnerships reflect our value proposition to artists. Our
strategic aim is to continue expanding these relationships as an avenue for thecontinued growth of our business.

Engaging our networks to benefit our artists

The power of our network of relationships is a key differentiator. It is
instrumental to our ability to build the finest roster of artists, songwriters
and other creative partners. We are proud to be the first choice for a range
of industry leaders, including music and entertainment companies, artist
representatives and consumer brands.
These partnerships, which span a range of activities from music distribution to
publishing administration and beyond, dovetail with our “Artists First” approach:
we tap into these relationships to broaden opportunities for our current artists
and identify new artist talent to expand the scope of our A&R capability.
In recorded music, we have deep, long-term partnerships with independent
record labels including Disney, Concord, Roc Nation, Big Machine, HYBE andQuality Control, in addition to the hundreds of independent labels and artists

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STRATEGY

around the world who work with UMG’s Virgin Music Group – which includes
Virgin Music Label & Artist Services and Ingrooves.
These relationships are mutually beneficial, capitalizing on UMG’s global
infrastructure to empower artists by helping them reach the broadest set ofmusic fans.
As a music publisher, we have positioned ourselves as a leading rights
administrator for the world’s most prominent film and TV studios, including
Banijay, HBO, Lionsgate, MGM, NBC Universal, Paramount, STX, Univision, Viacom,
Walt Disney, Warner Bros. and many more.
Through our relationships, we also partner with dozens of the world’s leading
brands to further engage our artists and fans and to help our partners
authentically and strategically build their brands. We’ve entered into multiyear global sponsorships with top brands, including Citibank, Lenovo, Marriott,
Microsoft and Pokémon.
In 2022, we focused on creating consumer product partnerships between our
artists and high-profile brands, such as Coca-Cola, Samsung, Sprite, FIFA, Legoand DHL.

Leveraging eCommerce and direct-to-consumer businesses toengage directly with fans

We tap into major opportunities to utilize our vast amount of consumer data andinsights to expand our eCommerce and direct-to-consumer businesses globally
across all of our business segments. Through our direct-to-consumer business,
we enhance direct relationships with fans, empower unique experiences andbolster our proprietary data.
We have billions of touchpoints with music fans across digital services andplatforms around the world. This makes us as UMG uniquely positioned tounderstand music fans and their tastes. Music superfans have historicallyspent more on the artists and music they love than the average customer.
They still purchase physical media on a large scale, as reflected in surging
sales of vinyl records and artist merchandise. UMG’s global physical operations
teams, labels, and supply chain partners work together to develop and rollout increasingly sustainable physical audio offerings for artists and theirfans including recycled vinyl, board-based CD packages, plastic overwrap
alternatives, and plant-based closure stickers.
However, with paid subscription services becoming the dominant form of music
consumption, we do see the digital spend differences between superfans andaverage customers flattening. On the other hand, superfans continue to outspend average consumers on digital music experiences just as they havealways done with physical merchandise. This is why we are strategically
expanding our direct-to-consumer efforts to meet this growing demand. This
includes the sale of non-fungible tokens (NFTs), digital goods and other virtual
products. For example, KINGSHIP, a virtual supergroup created by UMG’s 10:22PM
label, released a Key Card NFT that spent six consecutive months in the top 5 on
Billboards Music NFT chart in 2022.
We follow a holistic direct-to-consumer strategy that complements partner
platforms, optimally serves fans and grows direct audience connections. Our
approach focuses on reaching fans with compelling eCommerce opportunities

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STRATEGY

wherever they engage with our artists, from specialty websites to massively
scaled partner platforms.
Our approach includes five key areas:
EXPANDED ECOMMERCE ECOSYSTEM: Reaching fans through frequently visited

websites and other platforms.

PRODUCT DESIGN AND DEVELOPMENT: Creating best-in-class music merchandise

to drive and fulfill demand.

DROP TACTICS: Presenting elevated experiences around product drops to capture

audience and build artist-fan engagement.

MARKETING STRATEGY: Developing globally coordinated media plans to reachexisting fans and appeal to new consumers.
AUDIENCE DEVELOPMENT: Building long-term relationships with music fans,generating loyalty and increasing the lifetime value of a consumer.

The elements of this strategy are dynamic. Whether it’s pricing, supply chainor audience outreach, we actively review and respond to both new data andinsights and technological advancements.

Supporting innovation and expanding into new product offerings

At UMG, we promote innovation across the digital ecosystem throughpartnerships in new product categories and active engagement to support ourpartners’ evolution.
Our strategy is to maximize opportunities for introducing new products, services
and revenue streams across segments spanning fitness, health/medical, social
media, gaming, livestreaming, voice and other categories.
IMMERSIVE AUDIO: UMG is carrying out a multi-year project with Dolby to develop

the most important evolution in music listening in decades: Immersive Audio.
This breakthrough technology dramatically improves the listening experiencefor consumers.

Dolby’s Immersive Audio format, branded Atmos, creates a music experiencethat lets UMG reinvigorate classics from our vast, industry-leading catalog. It
also gives our artists a much wider sonic palette for expressing themselves
through both current releases and new projects developed to take advantage ofthis expanded soundscape.
Years of investment and innovation have been put into achieving thisadvancement. We’ve created purpose-built state-of-the-art recording suites
at our iconic studios, including Capitol Studios and Abbey Road, and trained
the world’s top engineers to optimally utilize this new technology. We arealso conducting an extensive campaign to educate artists and estates on thelimitless creative opportunities Immersive Audio provides.
Consumers who experience it, love it, with 8 out of 10 saying it is “much better
quality than traditional stereo audio” and 90% saying they will likely listen to an
artists’ music longer if it is in immersive format.

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STRATEGY

As opportunities to experience this groundbreaking technology increase, so
will consumer adoption. In 2022, UMG, along with Apple and Mercedes-Benz,announced that Mercedes will be the first automaker to natively offer Spatial
Audio with Dolby Atmos from Apple Music. We expect similar announcements tofollow from other automakers.
Spatial Audio is also not limited to the car or home audio systems as newheadsets from Apple, Sony, Samsung and many others increasingly incorporate
the technology and make the immersive experience available to hundredsof millions of consumers.
In 2022, The Beatles’ 1966 masterpiece Revolver was released for the first time inimmersive audio. Taylor Swifts’ Midnights was also released in Atmos and broke
the all-time record for the biggest album released in Spatial Audio on AppleMusic worldwide.
Stage+, the classical music subscription service launched by UMG’s Deutsche
Grammophon in 2022, also features new audio releases, and select titles fromthe Deutsche Grammophon and Decca catalogs in immersive audio formats.
SOCIAL MEDIA: Starting with our landmark 2017 commercial partnership with
Facebook, we accelerated our leadership position through innovative newagreements with additional social media players. Our success in the social
media segment is reflected in the fact that UMG’s artists are regularly the mostfollowed recording artists across social media platforms like Facebook,
Instagram and YouTube, as demonstrated on the website www.musicfuels.com.

In 2022, UMG renewed its global agreements with Meta and Amazon, thelatter including Twitch. This further expands our social media partnership
portfolio and the opportunities, both for our artists and labels, and thecreator community.
In January 2022, we expanded our global agreement with Amazon, which
includes their livestream social platform Twitch. Twitch and UMG are now
collaborating to create new innovative opportunities for artists and labels andto engage fans and new audiences creatively and commercially. 3point5, UMG’s
official Twitch channel launched in October 2022.
In July 2022, we announced a new deal with Meta that expands revenue sharing
and enhances the Meta community’s engagement with UMG’s catalog.
We announced a new partnership between UMG, UMG’s Republic Records, Simon
Cowell and Syco Entertainment in October 2022. Within this collaboration, we are
creating StemDrop, a groundbreaking new evolution in musical collaboration,
curation and artist discovery which has been launched exclusively with
TikTok and Samsung as partners. Creators are provided with music ‘stems’
accompanied by an in-app production tool within TikTok. They’re invited tocreate, record and share their own versions of a brand-new song “Red Lights”,
which has been written especially for the project by the hit songwriting teamled by the legendary Max Martin. This has resulted in millions of views andthousands of submissions. StemDrop serves as an incubator for new talent,artistry and creativity – with further song drops to follow in the future.
These agreements enhance our strategy of monetizing social engagement anddeepening relationships between fans and artists.

MUSIC IS UNIVERSAL Annual Report 2022 | 50

STRATEGYHEALTH & FITNESS: Since launching our Peloton partnership in 2017, we’ve led

the industry in crafting new licensing models for integrating music within
the thriving health and fitness category. We have new and expanded
partnerships with Equinox+, Liteboxer, Barry’s Bootcamp, Calm, CLMBR, Muru
Health, SATS, STEEZY, Stryde and Zygo.

In June 2022, we were named as the exclusive launch partner for an AI-driven
music app for the care of people affected by dementia. The app, called Vera,
was developed and launched by Music Health, a Music Wellness Technology
innovator. Vera is an intuitive music intervention tool that lets users access theentire UMG catalog to develop personalized music stations specifically designed
to improve the lives of people living with dementia.
2022 also saw UMG partner with Y7 Studio to launch the Internet’s first digitalyoga platform. It features synced music integrated into all classes that can beaccessed through a new digital-only subscription or omnichannel membership.
We serve as the exclusive music partner of the digital platform. In this role
we enable an immersive yoga experience driven by both today’s biggest hits
and the most iconic songs of all time from the company’s roster of awardwinning artists.
In 2022, we collaborated with the subscription-based VR fitness app
Supernatural, becoming an official music partner and participating in the debutof the Supernatural Artist Series that presents new Meta Quest/Oculus-readyworkouts choreographed to artist playlists.
Abbey Road Studios announced in November 2022 that MediMusic is the 18th
start-up to join its music incubation program Abbey Road Red. MediMusic isa platform that dispenses music as medicine to help with the symptoms ofdementia, anxiety and pain. It delivers music chosen using its proprietaryalgorithms and digital fingerprints - soon to be informed by machine learning.
In 2022, an IFPI study found that 69% of people believe that music is importantto their mental health, and 69% called music an important part of their exercise
routine. UMG is excited by the idea of using music for medical and healthpurposes. We will continue to expand our relationships in this space over the
coming years.
GAMING: We are actively harnessing mass audience participation in the gamesegment as we advance strategic engagement of the metaverse opportunity thatis developing in the gaming space.
We carried out a number of innovative projects in this space in 2022. One project
entailed partnering with Elton John, Rocket Entertainment and Roblox to launch“Beyond the Yellow Brick Road” on Roblox. It is a virtual experience that gives
fans a new way to enjoy Elton John’s timeless music, and to express themselves
through his iconic fashion co-created with the community. “Beyond the Yellow
Brick Road” provides a unique vehicle for experiencing Elton John’s impact on
popular culture in a new, creative, and unique way.
In another example from 2022, Meta hosted Post Malone‘s Twelve Carat
Toothache: A VR Experience. The 40-minute concert film premiered in Venues
within Horizon Worlds, a free online virtual reality app where users can enjoy VR
events together via Meta Quest headsets. This immersive experience helps drivea deeper connection between artists and fans in a virtual world.

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STRATEGY

Universal Music Japan announced in September 2022 that it is collaboratingwith The Pokémon Company to launch the Pokémon Music Collective. This
project features a series of new music by artists inspired by the game music
and sounds of the Pokémon video game universe. J-pop music producer
and artist imase kicked off the series with his track “Utau.” The PokémonMusic Collective project will continue to release new songs by artists fromdifferent genres.
VOICE: UMG is a pioneer in the field of voice. Since serving as a launch partner

for Amazon’s voice-activated music service in 2016, we have played a key rolein expanding voice-activated music to hundreds of millions of smart speakers
around the world via Amazon, Apple, Google and other partners.
LIVESTREAMING: We continue to work with our artists to create compelling andcreative live streaming experiences for fans. In September 2022, Billie Eilish’s
Happier Than Ever world tour concluded with a special livestream on AppleMusic. The concert was produced by Interscope Films and captured during oneof her five stops at London’s famed O2 Arena earlier in the summer of 2022.
In November 2022, Elton John Live: Farewell From Dodger Stadium was the firstever global live stream on Disney+. The exclusive stream from Los Angeles saw
the icon close out the North American leg of his Farewell Yellow Brick Road Tour.

Bringing talented local artists to the world’s fans

As demonstrated by the global explosion of reggaeton from Latin America andthe popularity of K-pop far beyond Asia, the next big global hit could come fromanywhere in the world. This is why local A&R is essential to a successful global
strategy. By deploying our international resources, we bring talented local artists
to the world’s fans.

The diversification of music industry revenue sources across theglobe elevates the importance of fostering local talent

At UMG, we provide artists and labels of all sizes with the opportunity andservices needed to succeed in the global music market. This in turn increases
our success and visibility across all major markets and continents.
Our A&R teams sign and identify artists with the potential to grow fromlocal success to regional and eventually international success. 62% of UMG’s
physical & digital recorded music revenues came from local repertoires in theirown countries. Our expansion strategy in Africa, Asia, Europe and MENA (Middle
East & North Africa) continued to produce positive results in the year underreview. In 2022, we strengthened our global presence through new activities,
acquisitions, label launches and key partnerships in India, Greater China,
Malaysia, Thailand, Vietnam, the Philippines and across Africa.
India
Universal Music India (UMI) acquired a majority stake in TM Ventures, one
of India’s leading music and entertainment companies, in 2022. UMI and TM
Ventures are working in partnership across the company’s talent management,
entertainment consultancy and live/events businesses. Through this majority
stake acquisition, UMG is reinforcing our leading role in India’s music scene.
The music sector in India is growing rapidly due to more than half of its
population being under 30 years of age. Other drivers of this growth include
the rising penetration of smartphones, access to reliable high-speed, low-costinternet service and the proliferation of sophisticated and well-capitalized
streaming partners.

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STRATEGYIn February 2022, Universal Music India & Universal Music South Asia launched
Def Jam India, a new frontline label to support the best hip hop talent andculture emerging from the region.
In April 2022, UMI released the first global single from Indian superstar Badshah,a collaboration with Colombian reggaeton superstar J.Balvin that helped himreach audiences in 173 countries.
UMI released new music made in popular regional dialects across South Asia
through its wide range of domestic labels which now includes Def Jam India,
VYRL Originals and the VYRL Punjabi, Haryanvi and Bhojpuri labels.
China
Universal Music Greater China (UMGC) launched Capitol Records China in March
2022. This further grows our position in China following the launch of Republic
Records and the relaunch of EMI and Polygram China in 2021. Capitol Records
China is a new frontline label that focuses on signing and developing Chinesemusic talent. Following its launch, Capitol Records China and Astralwerks
announced a global licensing and distribution partnership with Live Nation’sElectronic Asia’s (LNEA) Fabled Records label.
Africa
UMG announced the creation of Blue Note Africa in March 2022. It’s a new
imprint dedicated to signing jazz artists from across the African continent.
In June 2022, UMG launched Virgin Music Label & Artist Services in Africa. Thisdivision focuses on supporting the next wave of independent artists, labels,
influencers, and entrepreneurs from the region. It launched with more than
15,000 titles in its catalog and more than fifty label partners from 25 countries.
Southeast Asia
Universal Music Vietnam entered into a partnership with multi-channel networkand media company METUB in 2022. The collaboration focused on the launch of
the new monoX label. MonoX finds and develops Vietnamese talent and aims tobreak artists globally.
Universal Music Thailand entered an expanded partnership with Thailand’smusic label Hype Train Group in 2022. The label is a springboard for Thai artists
wishing to export their creativity to music lovers around the world.

Growing local and regional partnerships

We are significantly increasing our digital footprint and promoting competition
by effectively partnering with local digital platforms while expanding global
streaming partnerships into new markets. In recent years, we have expanded
our partnership network across India, Asia, Africa, Latin America and otherstrategically important, fast-growth markets.
In 2022, UMG partnered with African music services Mdundo and Audiomack tolicense the services across key African territories. These follow an expansive
deal with Boomplay, the continents biggest streaming platform in 2021, making
UMG’s music content available in 47 countries.
In China, UMG licensed Qishui, a streaming service from Bytedance for mainland
China. We also renewed and expanded our license with Bilibili, a leading Chinese
video sharing service to include User Generated Content monetization in 2022.

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STRATEGY

Elsewhere in Asia, during the year under review we expanded our relationshipwith Trebel to include Indonesia and Malaysia, Zing in Vietnam and Rakuten
in Japan. In Korea, Spotify launched a new tier for their market previously only
available to local partners. 2022 also saw Spotify introduce Premium Mini inIndonesia as a new offering.
By licensing new platforms and expanding existing partnerships, we play anactive part in developing new music markets. These collaborations enable us tocreate opportunities for promoting our local domestic and global roster of talentaround the world.
Our total footprint of several hundred local, regional and global digital music
service providers enables us to bring the music of UMG artists to consumers inevery corner of the globe.

MUSIC IS UNIVERSAL Annual Report 2022 | 54

STRATEGYTECHNOLOGICAL ADVANCEMENTS AND NEW TRENDS

HARNESSING THE POWER
OF TECHNOLOGICAL
TRANSFORMATION
The world is undergoing a profound technological transformation and the musicindustry is playing a pivotal role in harnessing and promoting this development.
At UMG, our ability to adapt and incorporate technological advancements andassociated consumer trends into our offerings and operations is paramount toour success. New technologies play an important role both behind the scenes
in music creation, product development, infrastructure and artist services.
Leveraging technological advancements also bolsters our engagement withuser-facing partner platforms and product offerings.
The music industry has grown significantly in recent years. This growth has
been driven primarily by a dramatic increase in the number of paid subscribersof digital streaming services. While physical sales remain significant insome markets - including collectable formats like vinyl, which is enjoying a
recent resurgence - we’ve seen a clear shift in music consumption from anownership model, with consumers buying CDs or downloads, to an access modelthat features subscription and ad-supported streaming formats. We believe
streaming will continue to revolutionize the music experience for consumers
and propel ongoing transformation of our industry in the coming years.

Leveraging technology for new monetization formats

We have established numerous strong partnerships in subscription-based andad-supported streaming with the aim of enabling our artists to monetize theirwork and create deeper engagement with their fans in these categories. The
rise of subscription and ad-supported models enables UMG to monetize legalmusic consumption in markets that have few commercial outlets or that werepreviously dominated by piracy. This far-reaching monetization helps us fulfill
our Artists First approach by helping artists achieve fair compensation for theirwork, while enjoying unsurpassed global distribution.

Growing opportunities through expanded connectivity

Even with the robust growth in recent years, we believe streaming is still inthe early stages of global penetration. There remains a substantial opportunity
for further expansion in tandem with the growth in the scale and numberof streaming services, including in established streaming markets that haveroom for significant growth of both subscription and ad-supported streaming.
This trend is furthermore driven by continuing expansion and upgrading ofinternet infrastructure, ongoing technological innovations across devices andformats such as voice-controlled speakers and connected cars, intersections
with social media and gaming, and audiovisual product evolutions. All thesedevelopments serve to deepen fans’ engagement with and consumptionof music.
The ever-expanding scope of consumer choices in entertainment means there
is increasing competition for attention. However, music benefits from the shift
to “always online” consumption of media because it can extend into many

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STRATEGY

components of consumer lifestyles, while becoming more personalized. For
example, music can be customized for individual listener preferences during
fitness activities, gaming, studying, working from home, family gatherings andsleep. Enabling this further is a combination of data processing and backand front-end technologies, such as systems that analyze and identify musicalfeatures of songs or that learn listener preferences and adapt the music ormake intelligent recommendations.
Connectivity has also enabled growth in online concerts. Improved technologies
allow for low latency, high-resolution streams of live or scheduled pre-recorded
artist performances to reach large numbers of simultaneous viewers.

Tapping into technological innovations to drive market growth

We harness technological advancements to stimulate market growth in two
ways. First, we are leveraging format innovation to create new opportunities forour artists. Secondly, we’re aiming to expand the current addressable market bycapitalizing on the proliferation of connected devices.
We believe new technological advancements in the areas of social media, digital
health/fitness and gaming offer exciting new market opportunities.
Other potential areas for future growth include music products and experiencesdeveloped for metaverse and Web3 platforms. These range from streaming
within metaverse services, to digital merchandise and collectibles. We harness
technological advancements to stimulate market growth in two ways. First, weleverage format innovation to create new opportunities for our artists. Secondly,
we expand the current addressable market by capitalizing on the proliferation ofconnected devices.
Echoing the way smartphones dramatically expanded access to music andfueled an increase in music streaming, we expect the ongoing evolutionof Smart Audio Devices, including ‘wearables’ (smart watches), ‘hearables’(earbuds), Smart TVs, and Connected Cars, to increase music engagement
and consumption.
More consumers are using more devices to listen to music. We believe thatthe use of multiple devices is expanding listening hours by bringing music
into more facets of consumers’ lives. The different consumption modes thesedevices enable are also broadening the range of music to which consumers are
exposed and diversifying and deepening consumers’ relationship with music.
Smart speakers enable consumers to easily access music through voiceactivation and are fueling further growth in streaming, facilitating conversionof more casual listeners into paid subscribers.

Partnering with digital service providers to develop a thriving
global market

UMG holds a strong position in the digital music ecosystem thanks to ourtrack record of pioneering new deals, major partnerships and key technology
agreements. We work closely with digital service providers worldwide and are
the largest supplier of content to most of the digital music service providers.
As such, our artist content serves as a key driver of customer acquisition andretention for all these platforms.

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STRATEGY

We play an active role in promoting the continued development of new
digital services and consumer offerings to support a competitive, healthy andincreasingly global market. We’ve entered into agreements with several hundred
global, regional and local digital service providers worldwide. In this way weactively support these services to present innovative new ways to engage
consumers and connect our artists with their fans and new audiences.
Our portfolio of partnerships includes agreements in three high-growth BRIC
countries (Brazil, India and China, having closed UMG’s operations in Russia
in 2022), Latin America, Africa, the Middle East, Eastern Europe and Southeast
Asia. These partnerships tap into technological advancements to make music
more accessible to fans around the world.

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STRATEGYINNOVATION AND R&D AS KEY TO
CREATING VALUE
Innovation is intrinsic to everything we do at UMG. Our unmatched commitment
to lead in the collaborative development of new services, platforms andbusiness models for the delivery of music and related content empowers
innovators and taps into new commercial and artistic opportunities. We harness
technological innovation to drive market growth. Our aim is always to create
new opportunities for our artists. Through our expansive social media alliancesand groundbreaking partnerships across the industry, we enable our artists tomonetize their work and build deeper engagement with their fans. We placeinnovation at the heart of our approach to bring more music to more people
across the globe.

Seizing opportunities in immersive audio

UMG began working closely with Dolby Laboratories Inc. in 2016 to expand
their existing film and television technology to create an immersive listening
experience known today as Dolby Atmos Music. Dolby Atmos Music is a stateof-the-art technology that places and moves sound around the audience,
including overhead, to truly immerse listeners in music. Our collaboration with
Dolby extends across an ecosystem of music creation, content preparation fordelivery to our distribution partners and the full array of music products offering
consumers a full immersive sound scape from headphones to home speakers
and automobiles.
Together, we developed mix rooms in our recording studios specifically designed
for creating immersive music, a suite of robust mixing tools and innovativetechniques. We also provided industry-wide training, building on our wellestablished tradition of excellence in music production and audio innovation at
the world-renowned Capitol Studios and Abbey Road Studios. Most importantly,
we engaged with our artists and their creative production teams to provide
leadership in creating richer and more fully immersive music experiences.
As a result of these efforts, more and more of UMG’s new releases and catalogs
are available in Dolby Atmos Music and spatial audio on platforms including
Amazon Music and Apple Music.
Most frontline new releases today are delivered in Atmos “day and date”
alongside stereo versions. This includes Taylor Swift’s album Midnights, which
is an example of a high-profile album released in both formats simultaneously
at launch. By the end of 2022, UMG had delivered Dolby Atmos Music versions
for 80% of our top 50 streaming artists and nearly half of UMG’s streaming
consumption has Atmos mixes available.
We provide artists with the best tools and creative capabilities that enable themto tell their musical stories in the highest-quality and most immersive way
possible. This lets their fans experience music in the way the artist intended
when recording in the studio or performing live. These higher-quality formats
give our artists the opportunity to bring their music to the world in exciting
new ways. We now actively participate in the Dolby Atmos Music format withmore than 1,100 artists delivering new music releases and catalog titles in thisnew format.

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STRATEGY

In association with Dolby, we are collaborating through broad-based industry
alliances covering all the components of the value chain. We’re dedicated toproviding music listeners with the highest quality of audio at home, in their carsand on their phones. In addition to Tidal, Apple and Amazon, we have existing
collaborations with Klipsch, Sonos, Mercedes, Lucid, Tesla, Bose, Harman/Kardon
and Samsung.
A compelling example of cross-sector collaboration is Mercedes Benz’s
partnership with Apple Music and UMG. Announced in October 2022, Mercedes
Benz is leveraging this partnership to become the first to offer Spatial Audio with
Dolby Atmos from Apple Music natively in the latest MBUX generation vehicles
equipped with the Burmester® high-end 4D and 3D sound system. UMG is alsoenabling our recording artists to base their Dolby Atmos Music song approval
process on how the final mix sounds in a Mercedes-Benz. In line with this, we
introduced the seal “Approved in a Mercedes-Benz” as a gold standard of sound.
UMG is also setting up a studio environment in Sindelfingen, Germany, based on
its Capitol Studios’ Studio C, which is a major global reference music studio for
Dolby Atmos mixing.

Propelling the expansion of voice-activated music

UMG continues to help propel the expansion of voice-activated music. We’ve
been at the forefront of developments in this field from the outset, serving
as a launch partner for the Amazon Echo music service in 2016. Building onthese advancements, we expect the existing addressable streaming market to
be expanded through the penetration of Smart Audio Devices – “wearables”(smart watches) and “hearables” (earbuds) – Smart TVs and Connected Cars.
These developments increase engagement and consumption and support newlistening behaviors, which in turn creates a powerful driver for customer
acquisition and retention.

Leveraging new formats to create new opportunities

The consumption of short-form music and music-based video content has
grown rapidly in recent years, driven by the growth of global social video
applications. These platforms enable incremental consumption of music
appealing to diverse, and often younger, audiences. They give artists new
creative ways to reconfigure the path to fan engagement. Short-form andmusic-based video content has also become increasingly popular on social
media platforms such as Facebook, Instagram, Snapchat, TikTok and YouTube.
This further illustrates the growing number of potential platforms artists canleverage to gain exposure and deepen connections with their fans.
UMG is an industry leader in creating social media alliances and developing
innovative partnerships. We’ve played a pioneering role in forging relationships
in this space. We unlocked the monetization opportunity for licensed music in
the social sphere through a landmark partnership with Facebook in 2017. This
made us the first major music company to license our catalog for videos andsocial features across Facebook and Instagram.

Turning data into results

We place high priority on operationalizing data and analytics at an industryleading scale to promote the interests of our artists. We have madeongoing strategic investments in data and analytics over the past several
years, including building a world-class analytics infrastructure based on
cloud technology.

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STRATEGY

Our data and analytics team comprises analysts, data scientists, and front-end/back-end coders who develop algorithms to help UMG identify talent faster andmore efficiently than our competition. We have developed innovative methods
to identify tracks that are popular among distinct audience clusters, and we
utilize patented Ingrooves technology to quickly detect viral moments (including
those driven by social platforms such as TikTok). In addition, we tap into the
far-reaching experience and expertise of our best-in-class A&R and marketing
teams to make our data more powerful. This enables us to tailor our marketing
initiatives to target the right audiences to maximize reach and conversion.
Our data scientists have developed a proprietary marketing mix model and aframework for testing causal effects to help us both optimize our marketing mix
and the creative content used to activate on these channels. This helps us boost
marketing ROI, maximizing results while reducing unnecessary spend.

Putting data to work for artists

UMG conducts research and development to employ data that was previously
unavailable. We harness data and analytics at an unparalleled scale to give ourartists greater insight than ever before. By putting information to work for our
artists, we help them track performance across platforms and territories andpersonalize marketing to target individual listeners. We leverage our own datain conjunction with inputs and metrics from key platforms to identify promising
artists and help them break.
Our data and analytics team has developed UMX – a collection of data
and business intelligence products. These data applications let us keep
delivering the most relevant market insights to our creative partners in an everchanging environment.
We continually update the UMX-Suite to ensure our artists and their managers
have prompt access to time critical information. These updates provide valuable
information on everything from when a track is added to a playlist and when
and where consumption spikes to how much notable engagement a social postis generating.
We’ve launched multiple apps within the UMX Suite that empower A&R and help
them make investment decisions quicker. This drives marketing effectivenessand extracts maximum value from our Intellectual Property.
Our Universal Music Artists (UMA) mobile app helps artists and managers
understand their fans, by giving them a unique global, 360-degree view of
their audiences. It’s the first app to provide artists with a global, personalized
view of their audience across all major streaming services and social media
platforms. It lets artists and their management see the location of their fans bycountry and city, which helps them plan tours and other engagements, identify
tracks that work best with specific audiences and tailor their social posts tomaximize engagement.
We’ve also created a newsfeed feature within the UMA app. It maintains ahistory of milestones and is continually updated with the latest news. This
provides our artists with a valuable source of information that enables themto respond quickly and effectively to new developments.
We completed the roll-out of the UMPG Window app developed by Universal
Music Publishing Group (UMPG) in 2022. It is the leading royalty portal thatMUSIC IS UNIVERSAL Annual Report 2022 | 60

STRATEGY

provides UMPG songwriters and clients with instant access to clear, complete
and real-time earnings and data.
The UMA app and the UMPG Window are two of many examples of how we deploy
research and development to put artists first. With the data we collect across our
extensive portfolio of partners, reinforced by data from our direct connections
with fans, we have billions of touchpoints with music consumers. No othermusic business, single platform or recorded music company has access to theunique combination of multiplatform and direct-to-consumer data that we haveat UMG. This wealth of data gives our artists unparalleled global, market-wide
context and insight.

Bringing recording artists into the metaverse

UMG was one of the first companies to take steps into the new metaverse world.
We have now built up a strong track record of pioneering collaborations that
establish an onramp for artists into the opportunities of the metaverse.
In 2022, we marked another metaverse milestone through our collaboration with
Elton John and Rocket Entertainment to launch ‘Elton John Presents: Beyond the
Yellow Brick Road’ on Roblox. It’s a global online platform connecting millions
of people through shared experiences. Developed with Roblox creators, thevirtual experience offers fans a new way to enjoy his timeless music, express
themselves through his iconic fashion co-created with the community, andexperience Elton’s impact on popular culture. The experience includes Elton’s
iconic digital fashion and photographs of memorable moments, interactive
challenges set to his greatest hit songs, daily scavenger hunts and trivia
quizzes. The Roblox community was also invited to a special performance thattook place within the ‘Beyond the Yellow Brick Road’ experience on Roblox
around Elton’s final ever U.S. shows at LA’s Dodger stadium in November 2022.

Pioneering in Web3 with digital goods and NFTs

UMG is a leader in developing and releasing innovative digital goods and nonfungible tokens, or NFTs, that create new opportunities for our artists andlabels, while building strong fan communities. This includes deals with someof the leading companies in the space, including Curio, Snowcrash, Billboard
Chartstars, Sandbox and Limewire, among others.
KINGSHIP, the NFT supergroup created by UMG’s 10:22PM Web3-focused recordlabel, sold out a collection of 5,000 NFT Key Cards that provide access to thegroup’s virtual world. Since their release, the Key Cards spent six consecutive
months in the top 5 on Billboard’s Music NFT chart in 2022. A follow-up dropof 5,200 NFTs were distributed to existing Key Card holders to introduce a new
character. In September 2022, Hit-Boy and James Fauntleroy, two chart-topping
and award-winning music producers and songwriters, signed on as KINGSHIP’s
co-executive producers and sonic creative team, overseeing the evolution of thegroup’s music direction and sound.
2022 also saw M&Ms’ parent company Mars Inc. and 10:22PM launch a first-of-its
kind collaboration to release collectible KINGSHIP boxes of M&Ms that include
the candies becoming an integral part of the group’s metaverse narrative. The
10,000 collectible KINGSHIP boxes of M&Ms sold-out within 78 hours and Mars
Inc. featured the group for a week on the company’s electronic billboard inTimes Square in New York City.

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STRATEGY

Embracing entrepreneurs to accelerate the next waveof transformation

With a view to our industry’s future, UMG continues to advance our role asindustry leader in promoting entrepreneurship. We do this through a wide
range of digital innovation programs, including Abbey Road Red. In addition, we
drive innovation through a wide Accelerator Engagement Network. It’s a growing
program spanning 12 accelerator partners based in entrepreneurial centersaround the world, including APX By Axel Springer and Porsche (Germany), Baita
Accelerator (Brazil), Berkeley SkyDeck (U.S.), Chinaccelerator (China), LeanSquare(Belgium), LINCC (France), MassChallenge Israel (Israel), MassChallenge Mexico(Mexico), Melbourne Accelerator Program (Australia), SparkLabs Global Ventures(Korea), Startup Wise Guys (Estonia) and The Music Den (Canada). Since its
establishment in 2017, the Accelerator Engagement Network has nurtured andmentored more than 154 music-tech startups that have raised over $189 million
in funding.

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BOARD REPORTORGANIZATIONAL AND REPORTING STRUCTURE

ORGANIZATIONAL AND REPORTING STRUCTURE

ORGANIZATIONAL AND
REPORTING STRUCTURE
The following structure chart illustrates the simplified structure of the Group as
at December 31st, 2022

UNIVERSAL INTERNATIONAL MUSIC B.V.
The Netherlands

Corporate Executives

The Group is managed by corporate executives (the Corporate Executives).
The current Corporate Executives consists of nine key members, each of whom
oversees a specific aspect of the business. The persons set forth below are thecurrent members of the Corporate Executives.

Name

Age

Position

Sir Lucian Grainge

63

Chairman & Chief Executive Officer

Jody Gerson

62

Chairman & CEO for Universal Music Publishing Group

Philippe Flageul

Jeffrey Harleston

58
62

Eric Hutcherson

53

Boyd Muir

63

Michael Nash

66

Vincent Vallejo

62

Will Tanous

52

Executive Vice President, Controller

General Counsel and Executive Vice President of
Business & Legal Affairs
Executive Vice President, Chief People andInclusion Officer

Executive Vice President, Chief Financial Officer andPresident of Operations
Executive Vice President, Chief Digital Officer

Executive Vice President, Chief Administrative Officer
Deputy Chief Executive Officer, Corporate

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ORGANIZATIONAL AND REPORTING STRUCTURE

Set out below are brief summaries of the biographies of the members of the
Corporate Executives:
Sir Lucian Grainge (Chairman and Chief Executive Officer)
Sir Lucian Grainge has spent his entire career in the music industry and has
signed and worked with many worldwide stars, including ABBA, Jay Z, Elton
John, Katy Perry, Queen, Rihanna, The Rolling Stones, Sam Smith, U2 and Amy
Winehouse, among many others. Over the span of four decades, he has not
only pioneered new approaches to the signing and development of the world’s
most successful recording artists and songwriters but he has consistently
championed the development of innovative business models and partnerships
with a wide range of technology and media partners around the world. He hastransformed UMG into the most successful company in the history of the musicindustry, both competitively and financially, and his vision and leadership is
widely recognized as having returned the entire industry to growth after many
years of decline. In 2011, he led UMG’s successful acquisition of the recorded
music assets of the legendary British music company EMI, revitalizing its
iconic Capitol Records, and, in the process, further strengthening UMG’s position
as the global leader in music. A native of London, Sir Lucian was bestowed
with a knighthood in 2016 by Her Majesty Queen Elizabeth II in the Queen’s
90th Birthday Honours list for accomplishments in the music industry andleadership through its challenging times, contributions to British business andinward investment, as well as his development of innovative business models,
technology and media partnerships that have expanded UMG’s global presence.
He serves on the board of Northeastern University in Boston, Massachusetts.
Vincent Vallejo (Deputy Chief Executive Officer, Corporate)
Based at the Company’s corporate headquarters in Hilversum, Netherlands andreporting to UMG’s Chairman and Chief Executive Officer Sir Lucian Grainge,
Vincent Vallejo led a number of corporate initiatives related to the Company’s
listing on the Euronext NV in Amsterdam. Vallejo joined UMG in 2021 and has
worked closely across UMG matters since he joined Vivendi in 1998, where heserved most recently as SVP, Audit & Special Projects. Prior to joining Vivendi,
Vallejo held positions at AGF-ALLIANZ France (Deputy CFO) and Ernst & Young
Paris and Madrid. He received an MBA from Montpellier University and a Masterof Science from Cornell-Essec, CergyPontoise, France.
Philippe Flageul (Executive Vice President, Controller)
Philippe Flageul is responsible for overseeing many aspects of UMG’s finance
operations, including accounting, tax, treasury, risk management and IT andsupply chain finance. He also oversees UMG’s global procurement. Flageul
joined UMG in 2015 from Bolloré Group, where he worked for more than two
decades as CFO of the industrial division and Chairman of IER. Philippe holds an
MBA from EDHEC.

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ORGANIZATIONAL AND REPORTING STRUCTURE

Jody Gerson (Chairman & CEO for Universal Music Publishing Group)
Jody Gerson is one of music’s most respected, accomplished executives andcreative authorities. She is the first female chairman of a global music company
and the first woman to be named CEO of a major music publisher. Sincejoining UMPG in 2015, Gerson has transformed the company into the industry’s
best global home to songwriters and a billion-dollar business – more thandoubling revenue and substantially increasing profit. Gerson led UMPG’s historic
catalog acquisitions of Bob Dylan, Sting, Neil Diamond and Frank Zappa. She
has signed and works with the world’s biggest superstars including Elton John,
Taylor Swift, Harry Styles, Kendrick Lamar, Bad Bunny, Adele, The Weeknd, Billie
Eilish, SZA, Rosalia, Drake, Steve Lacy, Alicia Keys, Coldplay, Justin Bieber, Post
Malone, Ariana Grande, H.E.R., Maren Morris, the Bee Gees, Prince, and more.
Gerson cofounded nonprofit She Is The Music and serves on Boards for the
USC Annenberg Inclusion Initiative, The Rock & Roll Hall of Fame, the National
Music Publishers Association, The Archer School for Girls and New Roads School.
Gerson executive produced numerous acclaimed film/TV projects, including
HBO’s ‘The Bee Gees: How Can You Mend a Broken Heart’ and HBO’s ‘Music Box’series, and produced feature films ‘Drumline’ and ‘ATL.’
Jeffrey Harleston (General Counsel and Executive Vice President, Business &Legal Affairs)
Jeffrey Harleston is responsible for the global oversight of all business
transactions, contracts and litigation. He is additionally responsible for thedevelopment of corporate policies, including the coordination of UMG’sgovernment relations, trade and anti-piracy activities, to ensure a unified
strategy across the Company’s divisions. Harleston joined the Company in 1993
at MCA Records, after serving as Associate Independent Counsel for the IranContra Investigation and prior to that as an Associate at Covington & Burling
LLP. Harleston serves as co-chair of UMG’s Task Force for Meaningful Change,
where he leads a group of influential executives from across the Company tofocus on issues regarding inclusion and social justice. Harleston also serves on
the boards of the Recording Industry Association of America (RIAA), MusiCares,
Williams College and the Harvard-Westlake School. He received a B.A. in Political
Science from Williams College and a J.D. from the University of California,
Berkeley School of Law.
Eric Hutcherson (Executive Vice President, Chief People and Inclusion Officer)
With a focus on people, culture and inclusion, Eric Hutcherson leads a global
team across UMG’s record labels, publishing division and operating companies
to align talent functions, amplify the Company’s entrepreneurial-based culture,accelerate diversity and inclusion across all levels and territories, attract, retainand develop talent, accelerate the Company’s social justice initiatives and build
on UMG’s successful track-record of driving innovation by recruiting employees
who bring new ideas, perspectives and skillsets. Prior to joining UMG, he was
EVP, Chief Human Resources Officer of the National Basketball Association (NBA)where he managed a team that drove the NBA’s global workforce strategy.
Hutcherson earned a bachelor’s degree in Political Science from New York
University and a master’s degree in Sports Management and Administrationfrom the University of Massachusetts-Amherst.
Boyd Muir (Executive Vice President, Chief Financial Officer and Presidentof Operations)
Working seamlessly across the corporate and creative aspects of UMG’soperations, Boyd Muir is responsible for overseeing many of UMG’s corporate
operations including global finance. Muir led the strategic physical-to-digital

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ORGANIZATIONAL AND REPORTING STRUCTURE

reshaping of the Company’s businesses, and he has played a key role in severalof UMG’s most prominent acquisitions, including Sanctuary Group and V2 Music
Group, as well as the Company’s successful acquisition of EMI, Ingrooves Music
Group and Epic Rights, among others. Muir joined UMG in 1994 and previously
served as Chief Financial Officer for Universal Music Group International, adivision that managed UMG’s businesses in more than 50 countries.
Michael Nash (Executive Vice President, Chief Digital Officer)
Michael Nash supervises UMG’s digital business development activities aroundthe world, manages strategic relationships with the Company’s largest partners,
and oversees global digital licensing, as well as numerous innovation initiatives.
Nash has worked at the forefront of media and technology convergence forhis entire career as an executive, entrepreneur and producer. Before joining
UMG in 2015, he served as a strategic advisor to Warner Music Group, as well
as several digital media startups; prior to that, he served as WMG’s Executive
Vice President of Digital Strategy and Business Development, responsible for
WMG's global digital business. Prior to WMG, Nash was the Executive Directorof the Madison Project, the music industry’s first digital distribution trial, andhe was the founding CEO of Inscape, an interactive entertainment and games
publishing joint venture backed by Time Warner.
Will Tanous (Executive Vice President, Chief Administrative Officer)
Will Tanous plays a key role in the development of the Company’s businessstrategy, overseeing several major strategic and corporate endeavors, aswell as managing worldwide external and internal communications, global
public policy, investor and government relations, event functions and social
responsibility. Prior to joining UMG in 2013, Tanous served as Executive Vice
President of Communications & Marketing for Warner Music Group where he wascentral in all of the company’s major corporate initiatives, including: the saleof WMG to Access Industries, Inc.; WMG’s initial public offering on the New York
Stock Exchange in 2005; and the sale of WMG by Time Warner Inc. to a private
equity consortium. He serves on the board of the Recording Industry Associationof America and is a graduate of Georgetown University in Washington D.C.

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BOARD REPORTFINANCIAL REVIEWFINANCIAL REVIEW

1. EARNINGS ANALYSIS: GROUP
AND BUSINESS SEGMENTS
1.1 Consolidated Statement of Profit or LossYear ended

December 31,(in millions of euros)

2022

2021
Restated1

Revenues

10,340

Selling, general and administrative expenses(2,702)

Cost of revenues(5,753)

Amortisation and impairment losses on intangible assets

(285)

8,504

(4,608)(2,327)(175)

Operating profit

1,600

1,394

Financial expenses

(735)

(377)

Financial income

37

Income/(loss) from equity affiliates

(698)

(234)

900

1,165

785

888

(2)

Profit before income taxes
Income taxes(115)

Net profit
Of which:

Net profit attributable to equity holders of the parent

143

5

(277)

782

886

0.43

0.49

Diluted earnings for the period attributable to equity holdersof the parent

0.43

0.49

Adjusted net profit

1,454

1,271

0.80

0.70

Net profit attributable to non-controlling interests3

2

Earnings per share (in euros)

Basic, earnings for the period attributable to equity holders of
the parent

Adjusted net profit per share (in euros) - basis

2

Adjusted net profit per share (in euros) - diluted2

0.80

0.70

1 Restated amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements
2 Non-IFRS measures as defined in the Appendix to the Annual Report

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FINANCIAL REVIEW

Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA
Year ended

December 31,(in millions of euros)

2022

Operating Profit1

Adjustments

Amortization and depreciation expense
Restructuring expenses

2021

1,600

1,394

377

277

2

(2)

32

(Gain)/loss on sale of assets

Impairment on intangible assets

17

Other non-recurring items-

EBITDA2

2,028

Non-cash share-based compensation expense

107

One time direct-listing related expenses-

Adjusted EBITDA2

2,135

20
-

(3)

1,686
79
23

1,788

1 2021 Restated amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements
2 As defined in the Appendix to the annual report

1.2 Analysis of the Condensed Statement of Earnings
1.2.1 Revenues
In 2022, UMG’s revenues of €10,340 million were up 21.6% compared to 2021
and up 13.6% at constant currency. This increase was driven by improvements
across all divisions. Recorded Music grew 8.8% at constant currency compared
to 2021, Music Publishing was up 26.3% and Merchandising and Other grewby 54.1%.
For a detailed analysis of revenues by business segment, please refer to Section
1.3 below and to Note 3 to the Consolidated Financial Statements for the year
ended December 31, 2022.

1.2.2 Operating results
Analysis of cost of revenues
Year ended December 31,(in millions of euros)

2022

2021

Artist costs

4,704

3,800

Cost of Revenues

5,753

4,608

Product costs

1,049

808

Cost of Revenues grew by €1,145 million to €5,753 million in 2022 from
€4,608 million in 2021 reflecting the increase in revenues and the unfavourable
impact of foreign currency exchange rate movements driven by thestrengthening of the U.S. Dollar. Cost of revenues as a percentage of revenues
increased to 55.6% from 54.2% driven by higher relative artist and product costs.

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FINANCIAL REVIEW

Artist costs increased by €904 million from €3,800 million in 2021 to€4,704 million in 2022 driven by the increase in sales and the unfavourable
impact of foreign currency exchange rate movements. As a percentage ofrevenues, artists costs increased from 44.7% in 2021 to 45.5% in 2022 as a resultof a higher proportion of Music Publishing revenues that have higher relative
artist costs.
Product costs increased by €241 million to €1,049 million in 2022 from€808 million in 2021 reflecting the growth in revenues and the unfavourable
impact of foreign currency exchange rate movements. Product costs as apercentage of revenues increased to 10.1% from 9.5% driven by the change inmix of revenues and especially the greater proportion of merchandising sales.
Selling, general and administrative expenses increased by €375 million to€2,702 million in 2022 from €2,327 million in 2021 but reduced as a percentageof revenues to 26.1% in 2022 from 27.4% in 2021 due to operating leverage.
Selling, general and administrative expenses in 2022 included €107 million in
non-cash share-based compensation expenses. In 2021, selling, general andadministrative expenses included €102 million in one-time direct-listing related
expenses and non-cash share-based compensation expenses.
Operating profit was €1,600 million in 2022, compared to €1,394 million for
2021, an increase of €206 million +14.8% or +7.9% at constant currency, driven
by the growth in revenues. As a percentage of revenues, operating profit
declined to 15.5% in 2022 from 16.4% in 2021 due to higher relative cost ofrevenues and amortization partially offset by lower relative selling, general andadministrative expenses.
EBITDA increased by €342 million to €2,028 million in 2022 compared to€1,686 million in 2021 driven by the increase in revenues. EBITDA margindecreased by 0.2pp to 19.6% in 2022 compared to 19.8% in 2021.
Adjusted EBITDA was €2,135 million in 2022 up €347 million compared to€1,788 million in 2021. Adjusted EBITDA margin decreased by 0.4pp to 20.6% in2022 from 21.0% in 2021.
For a detailed analysis of EBITDA and Adjusted EBITDA by business segment,
please refer to Section 1.3 below.

1.2.3 Financial results
Financial income and Financial expenses were a net expense of €698 million
in 2022, compared to a net expense of €234 million for 2021, an increase of€464 million. For 2022, the revaluation of the investments in listed companies
including Spotify and Tencent Music Entertainment was a net expense amountof €617 million, compared to a net expense of €315 million for 2021, an increaseof €302 million. In 2021, UMG benefited from a €98 million gain on disposal of
Alamo Records.

1.2.4 Income taxes
For 2022, income taxes were a net expense of €115 million, compared to a net
expense of €277 million for 2021. This decrease notably reflected the decrease in
the deferred tax charge relating to the revaluation of the investments in listedcompanies including Spotify and Tencent Music Entertainment (+€166 million,

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FINANCIAL REVIEW

compared to +€71 million for 2021) and the favourable settlement of tax
litigations (+€90 million income compared to -€11 million expense in 2021).

1.2.5 Non-controlling interests
For 2022, earnings attributable to non-controlling interests were €3 million,
slightly higher than the €2 million for 2021.

1.2.6 Net profit attributable to equity holders of the parent
For 2022, net profit attributable to equity holders of the parent amounted toa profit of €782 million (or €0.43 per share - basic), compared to €886 million
for 2021 (or €0.49 per share - basic), a decrease of €104 million. Net profit
attributable to equity holders of the parent decreased by €104 million, reflecting:•
The variance in financial results (-€464 million) of which the revaluation of
the investments in Spotify and Tencent Music Entertainment (-€302 million),while the prior year included the gain on disposal of Alamo Records (€98 million).
partially offset by:•
The growth in operating profit (+€206 million)•
The decrease in income taxes reported to net income (+€162 million), mainly
due to the decrease in the deferred tax charge relating to the revaluationof the investments in Spotify and Tencent Music Entertainment and thefavourable settlement of tax litigations.

1.2.7 Adjusted net profit
Adjusted net profit in 2022 amounted to a profit of €1,454 million (or €0.80 per
share - basic), compared to €1,271 million for 2021 (or €0.70 per share - basic), an
increase of €183 million. Adjusted net profit increased by €183 million, including:•
The growth in Adjusted EBITDA (+€347 million)•
The increase in income taxes reported to adjusted net profit (-€102 million)

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FINANCIAL REVIEW

1.3 Analysis of revenues and operating results by business segment
Year ended

December 31,% Changeat(in millions of euros)

Revenues

Recorded Music

Music Publishing

Merchandising & Other
Corporate Centre

Elimination of intersegment transactions
Total UMG
EBITDA1

Recorded Music

Music Publishing

Merchandising & Other
Corporate Centre
Total UMG

constant

2022

2021

% Changecurrency

7,937

6,822

16.3%

8.8%

618

363

70.2%

1,799
-

1,335
-

34.8%

26.3%

0.0%

0.0%

54.1%

(14)

(16)

10,340

8,504

21.6%

1,827

1,614

13.2%

16

125.0%

111.8%

1,686

20.3%

12.5%

395
36

(230)

2,028

307

(251)

28.7%
8.4%

13.6%
5.5%

20.4%
16.4%

1 As defined in the Appendix to the Annual Report

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FINANCIAL REVIEW

1.3.1 Recorded Music
Year ended

December 31,%

Changeatconstant(in millions of euros)

2022

2021

% Changecurrency

Subscriptions and streaming revenue

5,321

4,481

18.7%

9.8%

of which subscription

3,901

3,295

18.4%

10.0%

7.7%

4.1%

of which streaming

Downloads and other digital revenue

1,420
337

1,186
324

19.7%
4.0%

9.3%

(2.9%)

Physical revenue

1,207

1,121

Recorded Music Revenues

7,937

6,822

16.3%

19.6%

13.4%

EBITDA1

1,827

1,614

13.2%

5.5%

17.7%

9.7%

License and other revenue

EBITDA margin

1,072

896

8.8%

23.0%

23.7%

(0.7pp)

23.9%

23.7%

0.2pp

North America

4,077

3,392

20.2%

6.6%

Asia

1,007

896

12.4%

14.0%

20.8%

15.0%

1

Adjusted EBITDA1

1,900

Adjusted EBITDA margin

1

Recorded music revenues bygeographic area
EuropeLatin America

Rest of the world

Recorded Music Revenues

2,191
302
360

7,937

1,614

2,020
216
298

6,822

8.5%

39.8%
16.3%

7.5%

28.0%
8.8%

1 As defined in the Appendix to the Annual Report

In 2022, Recorded Music revenues were €7,937 million, up 16.3% compared to2021, and up 8.8% in constant currency. Subscription and streaming revenue
grew 18.7%, or 9.8% in constant currency, with growth in both subscription
and ad-supported streaming revenues. Physical revenue grew 7.7%, or 4.1%
in constant currency, driven by strong new releases and growth in directto-consumer sales. Downloads and other digital revenue grew by 4.0%, but
declined by 2.9% in constant currency, and included the benefit from thesettlement of a copyright infringement lawsuit with an internet service provider
but was impacted by the the continued decline in download sales. License andother revenue improved 19.6% or 13.4% in constant currency, as a result of
the ongoing recovery of live activities and improvements in synchronization
income. Top sellers for the year included Taylor Swift, BTS, the Encantosoundtrack, Olivia Rodrigo, Morgan Wallen and The Beatles. Top sellers in theprior-year included Olivia Rodrigo, Justin Bieber, BTS, The Weeknd, Morgan
Wallen and ABBA.
Recorded Music EBITDA in 2022 of €1,827 million was up €213 million from
€1,614 million in 2021 driven by the growth in revenues but was impacted in
2022 by €73 million of share-based compensation expense (€0 million in 2021).

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FINANCIAL REVIEW

Adjusted EBITDA for Recorded Music increased by €286 million to €1,900 million
in 2022 from €1,614 million in 2021 as a result of the revenue growth. Adjusted
EBITDA margin increased by 0.2pp to 23.9% of revenues from 23.7% of revenues
in 2021 due to operating leverage.

1.3.2 Music Publishing
Year ended

December 31,%

Changeatconstant(in millions of euros)

2022

2021

% Changecurrency

Performance revenue

371

297

24.9%

18.2%

1,040

698

49.0%

38.7%

Synchronisation revenue
Digital revenue

Mechanical revenue
Other revenue

Music Publishing Revenues
EBITDA1

EBITDA margin

1

Adjusted EBITDA

1

Adjusted EBITDA margin1

236
97
55

199
95
46

18.6%
2.1%

19.6%

10.3%
(1.0%)

14.6%

1,799

1,335

34.8%

26.3%

395

307

28.7%

20.4%

33.6%

25.0%

22.0%

23.0%

(1.0pp)

22.8%

23.0%

(0.2pp)410

307

1 As defined in the Appendix to the Annual Report

Music Publishing revenue amounted to €1,799 million in 2022, up 34.8%
year-over-year, or 26.3% in constant currency. Revenues benefited fromthe continued growth in subscription and streaming, an improvement insynchronization income and from the benefit of catalog acquisitions. Revenues
also benefited from the receipt during the year of higher income than was
accrued at the end of 2021 when UMG adjusted its accounting policy in relation
to certain revenues that are collected through societies. In prior years, theserevenues were recognized when the relevant collection society notified UMG
of the usage by the end customer and collectability was assured. Recognitionof that revenue is now based on an accrual for the best available estimate ofwhen the usage occurs and the amount of consideration which is probable tobe collected.
Music Publishing EBITDA in 2022 of €395 million was up €88 million from€307 million in 2021 driven by the growth in revenues. EBITDA was impacted by€15 million of share based compensation expense in 2022 (€0 million in 2021).
Music Publishing Adjusted EBITDA increased by €103 million to €410 million
in 2022 compared to €307 million in 2021 as a result of the revenue growth.
Adjusted EBITDA margin fell 0.2pp to 22.8% from 23.0% of revenues in 2021.

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FINANCIAL REVIEW

1.3.3 Merchandising & Other
Year ended

December 31,% Changeatconstant(in millions of euros)

2022

2021

% Changecurrency

Merchandising and Other Revenues

618

363

70.2%

54.1%

16

125.0%

111.8%

16

125.0%

111.8%EBITDA

36

1

EBITDA margin1

Adjusted EBITDA1

5.8%

4.4%

5.8%

4.4%

36

Adjusted EBITDA margin

1

1.4pp
1.4pp

1 As defined in the Appendix to the Annual Report

Merchandising and Other revenue grew to €618 million, up 70.2%, or 54.1% inconstant currency, as touring-related merchandising revenue, benefited fromthe return of live touring post-COVID.
Merchandising and Other EBITDA and Adjusted EBITDA in 2022 of €36 million wasup €20 million from €16 million in 2021 due to the improved revenues and lower
artist costs. EBITDA and Adjusted EBITDA margins have increased by 1.4pp to5.8% of revenues from 4.4% of revenues in 2021 due to operating leverage andlower artist costs and despite the shift in revenue mix towards lower-margin
touring-related revenue.

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FINANCIAL REVIEW

1.3.4 Corporate
Year ended

December 31,%

Change%atconstant(in millions of euros)

2022

2021

Changecurrency

EBITDA1

(230)

(251)

8.4%

16.4%

(211)

(149)

(41.6%)(27.9%)EBITDA margin1-

Adjusted EBITDA1

Adjusted EBITDA margin

1

-

-

1 As defined in the Appendix to the Annual Report

Corporate EBITDA was a net expense of €230 million, compared to a net expenseof €251 million for 2021, a €21 million decrease in expense. EBITDA in 2022
included €19 million of non-cash share-based compensation related expenses
and in 2021 included €102 million of one-time direct listing and non-cash
share-based compensation related expenses.
Corporate Adjusted EBITDA was a net expense of €211 million in 2022,a €62 million increase in expense from the Adjusted EBITDA in 2021 of€149 million due to unfavourable currency movements, incremental corporate
costs associated with operating as a stand-alone listed company and theimpact of reopening post-COVID, including higher travel costs.

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FINANCIAL REVIEW

2. LIQUIDITY AND CAPITALRESOURCES
2.1 Financial Net Debt
Year ended

December 31,(in millions of euros)

2022

2021

Cash and cash equivalents

439

585

-

(998)

Derivative financial assets
Term loan

Drawn revolving credit facilities

1

-

(125)

(1,447)

Bonds(1,004)

-

Other

(191)

Bank overdrafts

Commercial papers
Borrowings at amortized cost
Financial Net Debt1

(1)

(929)

(2,250)(1,810)

(13)
-

(137)

(2,595)(2,010)

1 As defined in the Appendix to the Annual Report

2.1.1 Changes in the Financial Net Debt
As of December 31, 2022, UMG’s Financial Net Debt amounted to -€1,810 million
compared to Financial Net Debt of -€2,010 million as of December 31 ,2021, i.e.,a decrease in net debt of €200 million. This change was mainly attributable tothe following:•
Net cash provided by operating activities of €1,732 million
This was offset by the following:•
In June 2022 UMG paid the final dividend with respect to fiscal year 2021 of€363 million•
In October 2022 UMG paid an interim dividend with respect to fiscal year
2022 of €435 million•
Net cash used for investing activities of -€520 million primarily due
to the €359 million investment in music publishing and recorded
music catalogues, €93 million investment in other intangible and capital
expenditure and €71 million net purchase of consolidated companies,
equity affiliates and financial assets•
Repayment of €100 million in relation to lease liabilities•
The €78 million favourable currency movements
UMG believes that the cash flow generated by its operating activities, its cash
surpluses, net of amounts used to reduce UMG’s debt, as well as funds available
through undrawn bank credit facilities and additional funding opportunities will
be sufficient to cover expenses and investments necessary for its operations, its
debt service, the payment of income taxes, the distribution of dividends, as wellas its investment projects, if any, for the next 12 months.

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FINANCIAL REVIEW

2.1.2 Equity portfolio
As of December 31, 2022, UMG held a portfolio of listed non-controlling equity
interests (including Spotify) with an aggregate market value of approximately€597 million (before taxes), compared to €1,413 million as of December 31,
2021. The reduction in market value during 2022 was due to the fluctuation inshare price of our listed investments most notably of Spotify. As at February
28, the aggregate market value of these listed investments had increased toapproximately €809 million (before taxes).

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FINANCIAL REVIEW

2.2 Cash flow analysis
Year ended December 31,(in millions of euros)

2022

2021
Restated1

Operating activities
Operating profit
Adjustments

1,600

1,394

461

280

Royalty advances payments, net of recoupments

(148)

(364)

Gross cash provided by/(used for) operating activities before income tax paid

1,913

1,310

Other changes in net working capital

Net cash provided by/(used for) operating activities before income tax paid

74

85

1,987

1,395

Income tax paid

(255)

(255)

Net cash provided by/(used for) operating activities

1,732

1,140

Catalogue investments

(359)

(388)

Other intangible assets investments

(60)

(48)

Capital expenditures

(33)

(13)

Purchases of consolidated companies, after acquired cash

(22)

(11)

Investments in equity affiliates

(22)

(28)

Purchase of financial assets

(36)

(43)

Investments

(532)

(531)

-

6

Proceeds from sales of consolidated companies, after divested cash-

117

Proceeds from sale of financial assets

914

Divestitures

9

137

Dividends received from equity affiliates

2

2

Dividends received from investments

1

1

(520)

(391)

(798)

(785)

Investing activities

Proceeds from sales of property, plant, equipment and intangible assets

Net cash provided by/(used for) investing activities
Financing activities
Distributions to shareowners
Dividends paid by consolidated companies to their non-controlling interests

Transactions with shareowners

(2)

(2)

(800)

(787)

Proceeds from borrowings

5,938

3,176

Repayments of borrowings(6,359)(3,624)

(30)

(17)

Interest, net
Other cash items related to financing activities

4(8)

Transactions on borrowings and other financial liabilities

(447)

(473)

Repayment of lease liabilities

(86)

(70)

Payment of interest of lease liabilities

(14)

(16)

(1,347)(1,346)

(135)

(597)

Net cash provided by/(used for) financing activities
Net change in cash and cash equivalents
Foreign currency translation adjustments

1

32

(134)

(565)

At beginning of the period

572

1,137

At end of the period

438

572

Change in cash and cash equivalents
Cash and cash equivalents

1 Restated amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements

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FINANCIAL REVIEW

Reconciliation of cash provided by operating activities to Free
Cash Flow
Year ended

December 31,(in millions of euros)

2022

2021

Net cash provided by/(used for) operating activities1

1,732

1,140

Repayment of lease liabilities and related interest expenses

(100)

(86)

Net cash provided by/(used for) investing activities
Interest, net

Other cash items related to financing activities
Free Cash Flow

2

(520)
(30)
4

1,086

(391)
(17)
(8)

638

1 2021 Restatement amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements
2 As defined in the Appendix to the Annual Report

2.2.1 Net cash provided by operating activities before income tax
For 2022, changes in net cash provided by operating activities before income tax
amounted to an inflow of €1,987 million compared to an inflow of €1,395 million
for 2021, an improvement of €592 million. This increase was mainly attributable
to the following items:•
The increase in operating profit (+€206 million)•
The reduction in royalty advances payments net of recoupments(+€216 million) due to the timing of major artist renewals andhigher recoupments•
The favourable variance in adjustments (+€181 million) on higher
amortization and impairment in 2022 and favourable movementin provisions
partially offset by:•
The unfavourable variance in other working capital (-€11 million)

2.2.2 Net cash provided by operating activities
Net cash provided by operating activities in 2022 amounted to an inflow of€1,732 million compared to an inflow €1,140 million for 2021, an improvementof €592 million due to the €592 million increase in changes in net cash provided
by operating activities before income tax, while income tax paid in 2022 was inline with 2021.

2.2.3 Net cash used for investing activities
Net cash used for investing activities in 2022 was a €520 million net outflow
compared to a €391 million net outflow for 2021, an increased outflow of€129 million as 2021 benefited from higher proceeds from sales of investments(-€128 million) that in 2021 included the sale of Alamo Records for €102 million.
Catalogue investments in 2022 were lower than in 2021 (+€29 million) due
to the timing of deals but investment in other intangible assets and capital
expenditure was higher (-€32 million).

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FINANCIAL REVIEW

2.2.4 Net cash used for financing activities
Net cash used for financing activities in 2022 was a €1,347 million net outflow
compared to a €1,346 million net outflow for 2021, an increased outflow of€1 million. This was mainly attributable to the following items:•
A reduction in debt in 2022 of €421 million compared in 2021 of €448 million(+€27 million)•
Higher dividend payments in 2022 (-€13 million)•
Higher interest payments, repayment of lease liabilities and other cash
items related to financing activities of €126 million in 2022 compared to€111 million in 2021 (-€15 million)

2.2.5 Free Cash Flow
Free Cash Flow in 2022 was a €1,086 million net inflow compared to a€638 million net inflow for 2021, an improvement of €448 million. This
improvement was predominantly due to the improvement in net cash provided
by operating activities (+€592 million) offset by higher net cash used forinvesting activities (-€129 million) and higher interest payments, repayment oflease liabilities and other cash items related to financing activities (-€15 million)
in 2022 compared to 2021.

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BOARD REPORTCORPORATE GOVERNANCE

CORPORATE GOVERNANCE

THE GOVERNANCE STRUCTURE
Universal Music Group N.V. (UMG or the Company) is a public limited
liability company (naamloze vennootschap) incorporated under the laws of
the Netherlands. The Shares (as defined below in the Shareholder information
section under ‘Share capital’) were first admitted to listing and trading onEuronext Amsterdam (the Listing), the regulated market of Euronext Amsterdam
N.V., on September 21, 2021. The Company has a one-tier board (the Board),
which currently comprises of two executive directors (the Executive Directors)
and eleven non-executive directors (the Non-Executive Directors and, together
with the Executive Directors, the Directors). The Executive Directors are primarily
responsible for all day-to-day operations of the Company. The Non-Executive
Directors supervise the Executive Directors’ policy and performance of duties
and the Company’s general course of affairs and business, and render advice
and direction to the Executive Directors. The Directors furthermore perform
any duties allocated to them under or pursuant to the law or the Company’s
articles of association (the Articles). Each Director has a duty to the Company toproperly perform the duties allocated to him or her and to act in the Company’s
corporate interests. Under Dutch law, the Company’s corporate interests extend
to the interests of all of the Company’s stakeholders, including the Company’s
shareholders (the Shareholders), creditors, customers and employees.
The Company acknowledges the importance of good corporate governance andcomplies with most of the principles and best practice provisions of the Dutch
Corporate Governance Code of December 8, 2016 (the Code), the full text ofwhich can be found on www.mccg.nl. Deviations from any of the principles andbest practice provisions of the Code are explained below under ‘Compliancewith the Code’ in accordance with the Code’s ‘comply or explain’ principle.
Substantial changes in the Company’s corporate governance structure and in
the Company’s compliance with the Code, if any, will be dealt with at the annual
General Meeting (as defined below under ‘The Board’) as a separate item. On
December 20, 2022, a revised version of the Code was published, which will apply
as of the financial year 2023.
The annual report also includes the information that the Company is required
to disclose pursuant to the Dutch Decree on Article 10 of the Takeover Directive(Besluit artikel 10 overnamerichtlijn) and the Dutch Decree on the Content of theBoard Report (Besluit inhoud bestuursverslag).

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CORPORATE GOVERNANCE

THE BOARDThe Board is the executive and supervisory body of the Company. It is entrustedwith the management of the Company, it supervises the general course of
affairs of and the business affiliated with the Company and is responsible forthe continuity of the Company. The Board is accountable for these matters to
the Company’s general meeting of shareholders (the General Meeting (being thecorporate body or, where the context so requires, the physical meeting)).
The Board’s responsibilities include, among others, developing a view on longterm value creation by the Company and formulating a strategy in line withthis view, identifying and managing the risks associated with the Company’s
strategy and business, appointing and dismissing the senior internal auditor,
annually assessing the way in which the internal audit function fulfills
its responsibility, approving the internal audit plan, giving account to theeffectiveness of the design and operation of the internal risk management andcontrol systems, ensuring compliance with all applicable laws and regulations
and the Company’s corporate governance structure and preparing the (semiannual) financial statements and Board report and approving the annual budget
and important capital investments.
The Board may perform all acts necessary or useful for achieving the Company’s
objectives, with the exception of those acts that are prohibited pursuant to
the law or the Articles. Pursuant to the Articles, the Board may allocate its
duties and powers among the Directors pursuant to the Board Regulations (asdefined below under ‘The Board––Board Regulations’) or otherwise in writing,provided that the following duties and powers may not be allocated to the
Executive Directors: (i) supervising the performance of the Executive Directors,(ii) making a nomination for the appointment of Directors, (iii) determining
an Executive Director’s remuneration and (iv) instructing an auditor to audit
the financial statements. Regardless of an allocation of duties and powers,
all Directors remain collectively responsible for the proper management andstrategy of the Company (including the supervision thereof in the case of the
Non-Executive Directors).

Board Regulations

The Board has drawn up regulations dealing with its internal organizationand setting out, among others, the role and responsibilities of the Board, its
composition and size and the manner in which its meetings should be held
(the Board Regulations). The Board Regulations are available on the investor
relations part of the UMG website.

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CORPORATE GOVERNANCE

Composition

The Articles provide that the Board shall consist of one or more Executive
Directors and one or more Non-Executive Directors. The number of Executive
Directors and the number of Non-Executive Directors shall be determined by
the Board. The Board currently comprises of two Executive Directors and eleven
Non-Executive Directors, four of whom, being Sherrry Lansing, Bill Ackman,
Cyrille Bolloré and Nicole Avant, were appointed to the Board by the General
Meeting on May 12, 2022:

Name

Function

Sir Lucian Grainge

Executive Director, Chairman and Chief Executive Officer

Sherry Lansing

Non-Executive Director, Chairman of the Board

Vincent Vallejo
Anna Jones

Antoine Fiévet
Bill Ackman

Cathia Lawson-Hall
Cyrille Bolloré

James Mitchell
Luc van Os

Manning Doherty

Margaret FrerejeanTaittinger
Nicole Avant

Executive Director, Deputy Chief Executive Officer

Non-Executive Director, Vice-Chairman of the Board
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director

Judy Craymer CBE acted as Non-Executive Director and Chairman of the Board
until January 10, 2023, on which date she decided to resign from the Board to
focus on her activities as a film and theater producer.

Appointment and appointment term

The Executive Directors and Non-Executive Directors are appointed as such by
the General Meeting at the non-binding nomination of the Board. A nominationby the Board shall state whether a person is nominated for appointment
as Executive Director or Non-Executive Director. The person so nominatedis appointed by a resolution adopted by the General Meeting with a simple
majority of the votes cast. A Director shall be appointed for a maximum
period of two years, provided, however, that his or her term of office shalllapse immediately after the close of the annual General Meeting held in thesecond year after his or her appointment. A Director may be reappointed with
due observance of the preceding sentences. At the proposal of the Board, theGeneral Meeting may resolve to deviate from the maximum period of two years.
The Articles provide that each Non-Executive Director may be in office for a
maximum period of twelve years, unless at the proposal of the Board theGeneral Meeting resolves otherwise. A Non-Executive Director’s term of officeshall lapse in accordance with a retirement schedule drawn up by the Board to
avoid, as much as possible, retirements of Non-Executive Directors occurring
all at the same time so as to ensure continued experience on the Board.
Currently, the Non-Executive Directors’ terms of office all lapse at the close of
the annual General Meeting to be held in 2024 but it is the intention that theuse of the retirement schedule will result in a staggered replacement of the
Non-Executive Directors.

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The initial appointment dates of the Non-Executive Directors and the end of
their current terms are as follows:

Name

Appointment date

End of current term

Sherry Lansing

May 12, 2022

Until annual General Meeting to beheld in 2024

Anna Jones

September 20, 2021

Antoine Fiévet

September 20, 2021

Bill Ackman

May 12, 2022

Cathia Lawson-Hall

September 20, 2021

Cyrille Bolloré

May 12, 2022

James Mitchell

September 20, 2021

Luc van Os

September 20, 2021

Manning Doherty

September 20, 2021

Margaret FrerejeanTaittinger
Nicole Avant

September 20, 2021
May 12, 2022

Until annual General Meeting to beheld in 2024
Until annual General Meeting to beheld in 2024
Until annual General Meeting to beheld in 2024
Until annual General Meeting to beheld in 2024
Until annual General Meeting to beheld in 2024
Until annual General Meeting to beheld in 2024
Until annual General Meeting to beheld in 2024
Until annual General Meeting to beheld in 2024
Until annual General Meeting to beheld in 2024
Until annual General Meeting to beheld in 2024

In accordance with the Relationship Agreement, which was co-signed by theCompany for agreement and acknowledgement, the Tencent-led consortium(consisting of Concerto Investment B.V. and Scherzo Investment B.V.) has theright to designate up to two Non-Executive Directors for appointment by theGeneral Meeting until the close of the annual General Meeting to be held in
2024, subject to the Tencent-led consortium holding at least 181,324,116 Shares(the Threshold Stake). Moreover, the parties to the Relationship Agreement haveagreed to vote in favor of the appointment of a person designated by theTencent-led consortium in case one of the Non-Executive Directors appointed
at the designation of the Tencent-led consortium no longer serves as a NonExecutive Director during the period until the close of the annual General
Meeting to be held in 2024.
Should at any time during the period until the close of the annual General
Meeting to be held in 2024, (i) the Tencent-led consortium own in the aggregate
less than the Threshold Stake, but still 50% or more of the Threshold Stake, theTencent-led consortium shall procure that one of the Non-Executive Directors
appointed at the designation of the Tencent-led consortium resigns and (ii) the
Tencent-led consortium own in the aggregate less than 50% of the Threshold
Stake, the Tencent-led consortium shall procure that both of the Non-Executive
Directors appointed at the designation of the Tencent-led consortium resign.
James Mitchell and Manning Doherty have been appointed at thedesignation of the Tencent-led consortium such in accordance with theRelationship Agreement.

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Suspension and dismissal

The General Meeting may at all times suspend or dismiss any Director. The
Board may at all times suspend an Executive Director. A suspension may be
extended one or more times but may not last longer than three months inaggregate. If at the end of that period, no decision has been taken on thetermination of the suspension or on a dismissal, the suspension shall end. A
suspension can be terminated by the General Meeting at any time.

Independence

A Non-Executive Director shall not be considered independent if such NonExecutive Director, his or her spouse, registered partner or life companion,(foster) child or relative by blood or marriage up to the second degree:•
has been an employee of the Company or Executive Director or an employee
or member of the management board of an associated company in the five
years prior to his or her appointment•
receives personal financial compensation from the Company or an
associated company, other than the compensation received for the work
performed as a Non-Executive Director and in so far as this is not in keepingwith the normal course of business•has had an important business relationship with the Company or an
associated company in the year prior to the appointment•
is a member of the management board of a company in which an Executive
Director is a member of the supervisory board•
has temporarily performed management duties during the previous twelve
months in the absence or incapacity of Executive Directors•
has a shareholding of at least 10% in the issued share capital of theCompany, taking into account the shareholding of natural persons or legal
entities cooperating with him or her on the basis of an express or tacit,
verbal or written agreement•
is a member of the management board or supervisory board – or is a
representative in some other way – of a legal entity which holds at least
10% of the issued share capital of the Company unless the legal entity is
a subsidiary
The independency of Non-Executive Directors is assessed prior to theirnomination for appointment to the Board and, thereafter, annually.

Limitations on supervisory or non-executive positions

The number of an Executive Director’s supervisory or non-executive positionsof large Dutch companies or foundations shall be limited to a maximum of two.
An Executive Director may not be the chairperson of a supervisory board or ofa one-tier board of another large Dutch company or foundation. The numberof a Non-Executive Director’s supervisory or non-executive positions of large
Dutch companies or foundations shall be limited to a maximum of five, forwhich purpose the chairmanship of a supervisory board or of a one-tier board
counts twice. Directors shall not pursue the candidacy for a supervisory or
non-executive or similar position in companies other than subsidiaries of theCompany without the Board’s prior approval.

Diversity

The Board has drawn up a diversity policy (the Diversity Policy) as per bestpractice provision 2.1.5 of the Code as well as a profile for Non-Executive
Directors (the Profile) as per best practice provision 2.1.1 of the Code, laying
down the elements of a diverse composition. As set out in the Diversity Policy,
the Board acknowledges the benefits of greater diversity, including gender,MUSIC IS UNIVERSAL Annual Report 2022 | 88

CORPORATE GOVERNANCE

nationality, ethnicity and age diversity, and remains committed to ensuring thatthe Directors bring a wide range of skills, knowledge, experience, backgroundand perspectives. All nominations for appointment will be made on merit
against objective criteria, in the context of the overall balance of skills andbackground that the Board needs to maintain in order to remain effective. The
Board is committed to ensuring that, in accordance with the Diversity Policy,
at least one third of the Board consists of women and at least one third of theBoard consists of men, as well as to increasing the nationality, ethnicity and age
diversity. The Board is further committed to ensuring that the composition of theBoard has a good balance in terms of skills, knowledge, experience, backgroundand perspectives and to considering candidates from a wide pool, including
candidates with no prior publicly listed company experience.
The Nomination Committee (as defined below under ‘The Board––Committees’)
is responsible for supporting the Board in applying the Diversity Policyby annually reviewing the Board’s composition and effectiveness and inconsidering the balance of skills, experience and independence of the Board.
In addition, it is required to consider the benefits of all aspects of diversity, but
without compromise as to the caliber of Directors, when identifying candidates
to be nominated for appointment.
The Board considers its current composition in line with the objectives of theDiversity Policy, and with women representing 38% of all Directors and 45% of
the Non-Executive Directors also in line with the gender diversity requirements
included in the Diversity Policy and Dutch law (as set out below), respectively.
In addition, the Board considers that with the appointment of the four new NonExecutive Directors, being Sherry Lansing, Bill Ackman, Cyrille Bolloré and Nicole
Avant, to the Board, both the ethnicity and age diversity have increased.
As per January 1, 2022, Dutch law requires that (i) at a Dutch publicly listedcompany, at least one third of the supervisory or non-executive directors
consist of women and at least one third of the supervisory or non-executive
directors consist of men, and (ii) a large Dutch company sets appropriate andambitious gender diversity targets for the company's top and sub-top, develops
an action plan and reports on progress made to the Social and Economic
Council (Sociaal-Economische Raad). As the Company, as per January 1, 2023,
officially qualifies as a large Dutch company now that it on two consecutive
balance sheet dates has met the relevant criteria, it will - going forward - also
report on the latter requirement in the Board report.

Conflicts of interest

A Director shall not participate in the discussion and/or decision-making
process of the Board where it concerns a transaction in respect of which heor she has a direct or indirect personal conflict of interest with the Company.
If there is such conflict of interest in respect of all Directors, the decision shallnevertheless be taken by the Board.
In accordance with best practice provisions 2.7.3 and 2.7.4 of the Code and aslaid down in the Board Regulations and the RPT Policy (as defined below under‘The Board––Related party transactions’), a Director having a (potential) conflictof interest in a transaction that is of material significance shall immediately
report such conflict of interest to the Chairman of the Board (and, in the case of
an Executive Director, also to the other Executive Directors) and shall provide all
relevant information, including information relevant to the situation concerning
his or her spouse, registered partner or other life companion, (foster) childMUSIC IS UNIVERSAL Annual Report 2022 | 89

CORPORATE GOVERNANCE

and relative by blood or marriage up to the second degree. In the case of
the Chairman of the Board having such conflict of interest, he or she shallimmediately report such conflict of interest to the Vice-Chairman of the Board.
Any such transaction must be entered into on terms which are customary inthe market, approved by the Board and published in the Board report together
with a statement of the conflict of interest and a declaration that best practiceprovisions 2.7.3 and 2.7.4 of the Code have been complied with.
Any transaction between the Company and a natural or legal person who or
which holds at least 10% of the issued share capital of the Company that is ofmaterial significance must be entered into on terms which are customary in themarket, approved by the Board and published in the Board report together with astatement that best practice provision 2.7.5 of the Code has been complied with.
The only related party transaction in which there was a (potential) conflict ofinterest (within the meaning of the Code) that was of material significance was
the following: as part of the Tencent-led consortium’s acquisition of its stakein UMG, Tencent Music Entertainment was originally granted a call option toacquire up to 25% (but no less than 20%) of the share capital of the holding
company which controls UMG’s Greater China operations. As the exercise period
was due to expire, the call option was amended as follows: (i) the counterparty
has become Tencent Holdings, (ii) Tencent Holdings has the option to acquire
up to 12.5% (but no less than 10%) of the share capital of the holding company
which controls UMG's Greater China operations, and (iii) Tencent Holdings has 24months from the date of granting to exercise the amended call option.
In Note 24 ‘Related parties’ to the consolidated financial statements, detailsof all related party transactions are set out. In respect of the related party
transactions in which there was a conflict of interest (within the meaning of
the Code) that was of material significance, best practice provisions 2.7.3, 2.7.4
and 2.7.5 of the Code have been complied with if such transactions were enteredinto after the date of the Listing.

Related party transactions

The Board has drawn up a related party transactions policy (the RPT Policy) forthe purpose of providing a procedure that prevents related parties from taking
advantage of their position as well as adequate protection for the interests of
the Company and its stakeholders. The RPT Policy stipulates when a transaction
qualifies as a related party transaction (within the meaning of article 2:167
paragraph 3 of the Dutch Civil Code (Burgerlijk Wetboek)) and provides thata related party transaction must be approved by the Board in case it is notentered into in the ordinary course of business and on terms which arecustomary in the market. A Director shall not participate in the discussion
and/or decision-making process of the Board if he or she is involved in a related
party transaction. A related party transaction that was concluded in the ordinary
course of business and on terms which are customary in the market shall be
periodically assessed by the Board.
In Note 24 ‘Related parties’ to the consolidated financial statements, details of
all related party transactions (whether or not within the meaning of article 2:167
paragraph 3 of the Dutch Civil Code) are set out.

Resolutions subject to approval of the Board

In addition to transactions involving a conflict of interest and related party
transactions, which require the approval of the Board as set out above underMUSIC IS UNIVERSAL Annual Report 2022 | 90

CORPORATE GOVERNANCE‘The Board––Conflicts of interest’ and ‘The Board––Related party transactions’,
respectively, in accordance with the Board Regulations, the Company does notenter into any transaction with a value in excess of €300,000,000 that relates
to (i) a disposal, sale or acquisition of all or a portion of investments in any
company, business or group created or to be created, whatever its legal form,(ii) a proposal or approach to a third party concerning a significant transaction
involving the Company or any of its subsidiaries, and (iii) a financing activity(including a bank loan, overdraft, vendor financing, asset securitization program,pension fund or transaction involving a joint venture or minority interest) andthe granting of a guarantee or security right, without the approval of the Board.

Remuneration

On September 20, 2021, the General Meeting adopted the remuneration policies
for the Executive Directors and Non-Executive Directors. The remuneration of
the Executive Directors and Non-Executive Directors shall be determined by the
Board with due observance of the applicable remuneration policy. The Executive
Directors shall not participate in the discussion and/or decision-making process
regarding the determination of the remuneration of the Executive Directors. The
remuneration policies are available on the investor relations part of the UMG
website. In the Remuneration report, details of the individual remuneration of
the Executive Directors and Non-Executive Directors are set out.

Severance

In the event of termination by the Company without cause or termination by
Sir Lucian Grainge for good reason, Sir Lucian Grainge and Vincent Vallejo areentitled to severance payments as set out in the Remuneration report under‘Severance Payments’.

Directors’ & officers’ liability insurance policy and indemnity

The Executive Directors and Non-Executive Directors as well as certain officers
are insured under a directors’ and officers’ liability insurance policy taken out
by the Company against damages resulting from their conduct when acting intheir capacities as Directors or officers with coverage and terms customary for a
publicly listed company of the size of the Company. Although the policy provides
for broad coverage, the Executive Directors, Non-Executive Directors and officers
may become subject to uninsured liabilities.
In addition, pursuant to the Articles, the Company has agreed to indemnify each
Executive Director and each Non-Executive Director for any claim against him or
her that he or she may derive from exercising his or her duties as an Executive
Director or Non-Executive Director, provided that he or she acted in good faithand in a manner he or she reasonably believed to be in, or not opposed to, thebest interests of the Company or out of his or her mandate and, with respect toany criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful.

Committees

The Board has appointed from among its Non-Executive Directors threecommittees to assist it in discharging its responsibilities: an audit committee(the Audit Committee), a remuneration committee (the Remuneration
Committee) and a nomination committee (the Nomination Committee). Without
prejudice to the collegiate responsibility of the Board, the duty of thesecommittees is to prepare the decision-making of the Board.

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The Board has drawn up regulations for each committee, setting out the role andresponsibilities of the committee concerned, its composition and size and themanner in which its meetings should be held. These regulations are available
on the investor relations part of the UMG website.
The Report of the Non-Executive Directors states the composition of thecommittees, the number of meetings held and the main items discussed atsuch meetings.

The Audit Committee

According to the regulations of the Audit Committee, the Audit Committee
advises the Board in relation to its responsibilities, undertakes preparatory
work for the Board’s decision-making regarding the supervision of the integrityand quality of the Company’s financial reporting and the effectiveness of
the Company’s internal risk management and control systems and prepares
resolutions of the Board in relation thereto.
In addition to the foregoing, the Audit Committee’s main responsibilities
include: (i) supervising and monitoring, and discussing with and advising
the Board on, the effectiveness of the design and operation of theinternal risk management and control systems and supervising the effectof the Code of Conduct, (ii) supervising the preparation and submissionof financial information by the Company, (iii) supervising the compliancewith recommendations and observations of the internal auditor and external
auditors, (iv) supervising the functioning of the internal audit department, (v)supervising the Company’s tax policy, (vi) supervising the financing of theCompany, (vii) supervising the applications of information and communication
technology, including risks relating to cybersecurity, (viii) maintaining frequentcontact and supervising the relationship with the external auditors, (ix)
implementing the procedure for the selection of the external auditorsand submitting a recommendation to the Non-Executive Directors for the(re)appointment or dismissal of the external auditors by the General Meeting,(x) informing the Board of the outcome of the statutory audit and explaining how
the statutory audit contributed to the integrity of financial reporting and what
the role of the Audit Committee was in that process, (xi) monitoring the financial
reporting process and submitting recommendations or proposals to ensure its
integrity, (xii) determining whether, and if so, how the external auditors shallbe involved in the content and publication of financial reports other than thefinancial statements, (xiii) issuing a recommendation on the appointment anddismissal of the senior internal auditor, (xiv) submitting a proposal to the Boardfor the external auditors’ engagement to audit the financial statements, and(xv) considering and, where appropriate, approving the (semi-annual) financial
statements, the annual budget and major capital expenditures of the Company.
The Audit Committee shall consist of at least three members appointed by the
Board from among its Non-Executive Directors. More than half of the membersof the Audit Committee, including the chair of the Audit Committee, shall be
independent within the meaning of best practice provision 2.1.8 of the Code.
The Audit Committee may not be chaired by the Chairman of the Board or by
a former Executive Director. At least one member of the Audit Committee shallhave competence in accounting and/or auditing and the members as a wholeshall have competence relevant to the sector in which the Company operates.
The Audit Committee shall hold at least four meetings per year and whenever
one or more of its members have requested a meeting. The quorum of any

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meeting shall be a majority of the members of the Audit Committee. The
Audit Committee shall meet with the external auditors as often as it considers
necessary, but at least once a year, outside the presence of the Executive
Directors. The Chief Financial Officer, the internal auditor and the external
auditors shall attend the meetings of the Audit Committee, unless the Audit
Committee determines otherwise. The Audit Committee shall decide whether
and, if so, when the Chairman of the Board shall attend its meetings.

The Remuneration Committee

According to the regulations of the Remuneration Committee, the Remuneration
Committee advises the Board in relation to its responsibilities, undertakes
preparatory work for the Board’s decision-making regarding the determinationof the remuneration of the individual Executive Directors and Non-Executive
Directors, with due observance of the remuneration policies for the Executive
Directors and Non-Executive Directors, respectively, and prepares resolutions of
the Board in relation thereto.
In addition to the foregoing, the Remuneration Committee’s main
responsibilities include: (i) at least every four years submitting a proposal to theBoard for the remuneration policies to be pursued and (ii) annually preparing
the remuneration report, to be tabled at the annual General Meeting.
The Remuneration Committee shall consist of at least three members appointed
by the Board from among its Non-Executive Directors. More than half ofthe members of the Remuneration Committee shall be independent within
the meaning of best practice provision 2.1.8 of the Code. The Remuneration
Committee may not be chaired by the Chairman of the Board or by a former
Executive Director.
The Remuneration Committee shall hold at least two meetings per year
and whenever one or more of its members have requested a meeting.
The quorum of any meeting shall be a majority of the members of theRemuneration Committee.

The Nomination Committee

According to the regulations of the Nomination Committee, the Nomination
Committee advises the Board in relation to its responsibilities, undertakes
preparatory work for the Board’s decision-making and prepares resolutions of
the Board in relation thereto.
In addition to the foregoing, the Nomination Committee’s main responsibilities
include: (i) drawing up selection criteria and appointment procedures for the
Directors, (ii) periodically assessing the size and composition of the Board, andmaking a proposal for a composition profile of the Non-Executive Directors, (iii)
periodically assessing the functioning of the individual Directors and the Board
as a whole, and reporting on this to the Board, (iv) making recommendations for(re)appointments of Directors and (v) supervising the policy of the Board on theselection criteria and appointment procedures for senior management.
The Nomination Committee shall consist of at least three members appointed
by the Board from among its Non-Executive Directors. More than half ofthe members of the Nomination Committee shall be independent within themeaning of best practice provision 2.1.8 of the Code.

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The Nomination Committee shall hold at least two meetings per year andwhenever one or more of its members have requested a meeting. The quorum of
any meeting shall be a majority of the members of the Nomination Committee.

The Market Disclosure Committee

The Board has also appointed a market disclosure committee, consisting ofseven members, which is responsible for the timely and accurate disclosure of
all information that is required to be so disclosed to the market in order to meet
the applicable legal and regulatory obligations and requirements arising fromthe Listing.
The market disclosure committee shall meet at such times as shall benecessary or appropriate, as determined by the chair of the market disclosurecommittee or, in his or her absence, by any other member of the market
disclosure committee. The market disclosure committee is not a committee of
the Board although its members are appointed by the Board.

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THE GENERAL MEETING
Annual and extraordinary General Meetings

The Shareholders exercise their rights through annual and extraordinary
General Meetings.

Annual General Meetings

The annual General Meeting shall be held within six months after the end of
the financial year. The agenda of the annual General Meeting typically includes
the following (discussion or voting) items: (i) the discussion of the annual
report, (ii) the consideration of the remuneration report, (iii) the adoption of
the financial statements, (iv) the discussion of the dividend policy and the
proposal to distribute dividends, (v) the discharge of the Directors for the
performance of their duties, (vi) the filling of any vacancies, (vii) the adoptionof the remuneration policies for the Executive Directors and Non-Executive
Directors insofar as any adjustments to the remuneration policies so requireor four years after their former adoption, (viii) the appointment of the external
auditors, and (ix) any other items brought forward by the Board.

Extraordinary General Meetings

Extraordinary General Meetings shall be held as often as the Board deems
necessary. In addition, one or more of the Shareholders representing
individually or jointly at least 10% of the issued share capital of the Company
are entitled to request the Board in writing that a General Meeting is convened,
the request setting out in detail the items to be discussed. If the Board has nottaken the steps necessary to ensure that a General Meeting can be held withineight weeks of the request, the relevant Shareholder or Shareholders may atits or their request be authorized by a Dutch court in summary proceedings toconvene a General Meeting. In any event, a General Meeting shall be held todiscuss any requisite measures within three months of it becoming apparent
to the Board that the shareholders’ equity of the Company has decreased to an
amount equal to or lower than 50% of the issued and called-up part of the sharecapital of the Company.

Place

According to the Articles, General Meetings shall be held in Amsterdam,
Rotterdam, Hilversum or Haarlemmermeer (including Schiphol Airport).

Convocation

A General Meeting is convened by the Board by means of a convocation
notice, which must be given at least forty-two days before the day of theGeneral Meeting.

Right to include items on the agenda

One or more of the Shareholders representing individually or jointly at least 3%of the issued share capital of the Company are entitled to request the Company
in writing that an item is included on the agenda of the General Meeting. The
request must be sufficiently motivated and received by the Company at least
sixty days before the day of the General Meeting. The Company cannot beforced to include a voting item on the agenda of the General Meeting wherethe voting item concerns a matter which does not lie within the powers of theGeneral Meeting. In accordance with best practice provision 4.1.6 of the Code, theMUSIC IS UNIVERSAL Annual Report 2022 | 95

CORPORATE GOVERNANCE

Shareholders are expected to only exercise the right of including an item on theagenda of the General Meeting after having consulted the Board in that respect.

Response time

If one or more of the Shareholders request that an item is included on theagenda of the General Meeting that may result in a change in the Company’s
strategy (via, for example, a change in the composition of the Board), the Board
may invoke a response time. The possibility to invoke a response time also
applies to a request of such Shareholder or Shareholders to be authorized
to convene a General Meeting as set out above under ‘The General Meeting––
Annual and extraordinary General Meetings––Extraordinary General Meetings’.

Chairperson of the General Meeting

The General Meeting shall be presided over by the Chairman of the Board or
another Director designated for that purpose by the Board. If the Chairmanof the Board is not present at the General Meeting and no other Director
has been designated by the Board to preside over the General Meeting, theGeneral Meeting itself shall appoint a chairperson of the General Meeting.
The chairperson has all powers necessary to ensure the orderly and efficient
conduct of the General Meeting. The chairperson decides on all matters relating
to admission to the General Meeting and may admit third parties to the General
Meeting. The Directors are in any event authorized to attend the General
Meeting, in which they have an advisory vote. The external auditors are also
authorized to attend the General Meeting.

Participation

Each Shareholder is entitled, in person or represented by a proxy authorized inwriting, to attend and address the General Meeting and to exercise its voting
rights. Each Shareholder may exercise such rights if it is a Shareholder on
the record date, which is the twenty-eighth day before the day of the General
Meeting, and it has notified the Company in writing of its intention to do soin the manner and by the date specified in the convocation notice. The Board
may determine that a Shareholder entitled to exercise its voting rights may castits vote prior to the General Meeting by means of electronic communication orletter. Votes cast in accordance with the previous sentence rank equal to votes
cast at the General Meeting.
Each Share confers the right on the holder thereof to cast one vote at theGeneral Meeting. All resolutions of the General Meeting shall be adopted by asimple majority of the votes cast, unless Dutch law or the Articles require aqualified majority. Some resolutions require a qualified majority if less than halfof the issued share capital of the Company is present or represented at theGeneral Meeting. No special control rights are attached to the Shares. There are
no restrictions on the exercise of voting rights under Dutch law or the Articles
nor, as far as the Company is aware, under the Relationship Agreement.
The General Meeting has authority to adopt resolutions concerning, among
others, the following matters:•
the issue of Shares or the granting of rights to subscribe for Shares (and todesignate the Board as the competent body to issue Shares or to grant rights
to subscribe for Shares)•
the limitation or exclusion of the pre-emptive right in relation to Shares orrights to subscribe for Shares (and to designate the Board as the competentbody to limit or exclude the pre-emptive right in relation to Shares or rights
to subscribe for Shares)

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CORPORATE GOVERNANCE

•
•
•
•
•
•
•
•
•
•

the authorization of the Board to acquire Shares on behalf of the Company
the reduction of the issued share capital of the Company
the appointment of Executive Directors and Non-Executive Directors
the suspension and dismissal of Executive Directors and NonExecutive Directors
the adoption of the remuneration policies for the Executive Directors andNon-Executive Directors
the adoption of the financial statements
the appointment of the external auditors
the distribution of dividends
the amendment of the Articles
the dissolution of the Company

No resolutions may be adopted on items other than those that have been
included on the agenda (unless the resolution would be adopted unanimously
during a General Meeting where the entire issued share capital of the Company
is present or represented).
Resolutions of the Board regarding a significant change in the identity or
character of the Company or its business are subject to the approval of theGeneral Meeting. Such changes include in any event:•the transfer of the business or practically the entire business to a third party•
the conclusion or cancellation of any long-lasting cooperation of theCompany or a subsidiary with any other legal person or company or as afully-liable general partner in a partnership, provided that the conclusion orcancellation of such cooperation is of material significance to the Company•
the acquisition or disposal of a participation in the issued share capitalof a company with a value of at least one third of the assets, as shownin the consolidated balance sheet with explanatory notes according to themost recently adopted consolidated financial statements, by the Company
or a subsidiary

Minutes

Minutes of the proceedings at the General Meeting shall be kept by a secretary
who shall be designated by the chairperson of the General Meeting. Within
three months after the end of the General Meeting, the minutes shall be madeavailable to the Shareholders, which then have the opportunity to provide theircomments in the three months thereafter. The minutes shall then be adopted by
the chairperson and the secretary and signed by them as evidence thereof.

Issue of Shares and limitation or exclusion of pre-emptive right

The General Meeting is authorized to issue Shares. The General Meeting may
designate the Board as the competent body to issue Shares and to determine
the issue price and other conditions of the issue for a specified period notexceeding five years (which period can be extended from time to time for further
periods not exceeding five years). Such designation must state the number of
Shares that may be so issued. The General Meeting shall, in addition to theBoard, remain authorized to issue Shares if such is specifically stipulated in
the resolution of the General Meeting designating the Board as the competentbody to issue Shares. A resolution of the General Meeting to issue Shares and a
resolution of the General Meeting designating the Board as the competent bodyto issue Shares can only be adopted at the proposal of the Board. The foregoing
applies by analogy to the granting of rights to subscribe for Shares but does not
apply to the issue of Shares to a person exercising previously granted rights to
subscribe for Shares.

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CORPORATE GOVERNANCE

Each Shareholder has a pre-emptive right in proportion to the aggregate amountof its Shares upon an issue of Shares. The pre-emptive right does not apply
to: (i) Shares issued to employees of the Company or of a group company,(ii) Shares issued against payment other than in cash and (iii) Shares issued
to a person exercising previously granted rights to subscribe for Shares. The
pre-emptive right may be limited or excluded by a resolution of the General
Meeting. The pre-emptive right may also be limited or excluded by a resolutionof the Board if the Board has been designated as the competent body to limit or
exclude the pre-emptive right by the General Meeting for a specified period notexceeding five years (which period can be extended from time to time for further
periods not exceeding five years), and the Board has also been designated as
the competent body to issue Shares by the General Meeting. A resolution of theGeneral Meeting to limit or exclude the pre-emptive right and a resolution of
the General Meeting designating the Board as the competent body to limit or
exclude the pre-emptive right can only be adopted at the proposal of the Boardand requires a qualified majority of at least two thirds of the votes cast if lessthan half of the issued share capital of the Company is present or represented
at the General Meeting. The foregoing applies by analogy to the granting of rights
to subscribe for Shares.
The Board has not been designated as the competent body to issue Shares
and/or to limit or exclude the pre-emptive right by the General Meeting. However,on May 12, 2022, the General Meeting did resolve to issue Shares or grant rights
to subscribe for Shares in order to give effect to awards granted under the 2022
UMG Global Equity Plan (as defined below in the Shareholder information section
under ‘2022 UMG Global Equity Plan’) to employees of the Company and its
subsidiaries and to Executive Directors up to a total amount of 5% of the issued
share capital of the Company as at May 12, 2022 and, to the extent necessary,
to exclude the statutory pre-emptive right with respect to such Shares or rights
to subscribe for Shares. The actual number of Shares to be issued or rights
to subscribe for Shares to be granted in order to give effect to awards granted
under the 2022 UMG Global Equity Plan is determinable by the Board (or acommittee of the Board designated for such purpose).

Acquisition of Shares

The Company cannot subscribe for Shares. The Company may, however,acquire fully paid-up Shares for no consideration or under universal title ofsuccession. In addition, the Company may acquire fully paid-up Shares against
consideration if (i) the shareholders’ equity of the Company less the acquisition
price of the Shares does not fall below the sum of the issued and called-up partof the share capital of the Company and any reserves that must be maintained
pursuant to Dutch law, (ii) the aggregate nominal value of the Shares which theCompany acquires, holds or on which it holds a right of pledge or which areheld by a subsidiary does not exceed 50% of the issued share capital of theCompany and (iii) the Board has been authorized to acquire Shares on behalf of
the Company by the General Meeting. Such authorization is valid for a maximum
period of eighteen months and as part of the authorization, the General Meetingmust specify the number of Shares that may be acquired as well as the mannerin which and the price range within which the Shares may be acquired. Suchauthorization is not required if the Company acquires fully paid-up Shares forthe purpose of transferring such Shares to employees of the Company or of agroup company under an equity compensation plan. Any acquisition of Sharesthat are not fully paid-up shall be null and void.

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CORPORATE GOVERNANCE

In calculating the amount of any dividend distribution on the Shares, Shares
held by the Company shall be disregarded, unless such Shares are encumberedwith a right of pledge or usufruct. Furthermore, the Company or a subsidiary
may not cast votes in respect of Shares held by it or on which it holds a right ofpledge or usufruct. However, a holder of a right of pledge or usufruct on Shares
held by the Company or a subsidiary may cast votes in respect of such Shares,
if the right of pledge or usufruct was created before the Shares were acquiredby the Company or a subsidiary. In determining how many votes can be cast,
how many Shareholders are present or represented or which part of the issued
share capital of the Company is present or represented at the General Meeting,no account shall be taken of Shares in respect of which no votes can be cast.
On May 12, 2022, the General Meeting resolved to grant the Board the authority
to acquire Shares on behalf of the Company up to a total amount of 10% of
the issued share capital of the Company as at May 12, 2022, through purchases
effected on a stock exchange or otherwise, for a period of eighteen months,
including for the purpose of effecting potential share buyback programs inan efficient manner. The price shall range between an amount equal to thenominal value of the Shares and an amount equal to 110% of the share price,whereby the share price shall be understood to mean the average of the highest
quoted price for each Share during the five trading days prior to the dateof acquisition as published in the Daily Official List (Officiële Prijscourant) ofEuronext Amsterdam.

Reduction of the issued share capital of the Company

At the proposal of the Board, the General Meeting may resolve to reducethe issued share capital of the Company by (i) cancelling Shares held by
the Company or (ii) reducing the nominal value of the Shares by way of anamendment of the Articles. A resolution of the General Meeting to reduce theissued share capital of the Company requires a qualified majority of at least
two-thirds of the votes cast if less than half of the issued share capital of theCompany is present or represented at the General Meeting.

Appointment of the external auditors

The General Meeting appoints the external auditors to audit the financial
statements. The Non-Executive Directors submit a nomination for theappointment of the external auditors to the General Meeting, upon therecommendation of the Audit Committee. Unless it concerns the renewalof an audit engagement, the recommendation of the Audit Committee shallbe prepared following a selection procedure (an auditor selection procedure)organized by the Company under the responsibility of the Audit Committee inaccordance with Regulation (EU) No 537/2014 of the European Parliament and of
the Council of April 16, 2014 on specific requirements regarding statutory auditof public-interest entities.
Pursuant to the non-binding guidelines of the Committee of European Auditing
Oversight Bodies on the appointment of statutory auditors or audit firms by
public-interest entities adopted on March 16, 2021 (the Guidelines), a publicly
listed company who has become a public-interest entity for the first time after
having already appointed an external auditor is required to organize an auditor
selection procedure as soon as possible. In order to comply with the Guidelines
and to move from a dual external auditor structure to a single external auditor
structure, which is more in line with Dutch market practice, the Company under the responsibility of the Audit Committee - initiated an auditor selection

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CORPORATE GOVERNANCE

procedure in the second half of 2022 which was led by a selection committee
designated by the Audit Committee for such purpose.

Amendment of the Articles

At the proposal of the Board, the General Meeting may resolve to amend the
Articles. If a proposal to amend the Articles is to be submitted to the General
Meeting, the convocation notice must state so and a copy of the proposal,
including the verbatim text thereof, must be made available at the Company’s
office for inspection by, and must be made available free of charge to, theShareholders until after the close of the General Meeting. An amendment of the
Articles requires a notarial deed.

Dutch Decree on Article 10 of the Takeover Directive

Pursuant to the Dutch Decree on Article 10 of the Takeover Directive, theBoard report needs to include information on, among others, the Company’s
share capital structure, any restrictions on voting rights and the transfer of
Shares, substantial shareholdings in the Company, any special control rights
attached to the Shares, any system of control regulating equity plans, therules governing the appointment and dismissal of Executive Directors andNon-Executive Directors and the amendment of the Articles, the powers of
the Board (in particular the power to issue Shares and to acquire Shares onbehalf of the Company), any material agreement to which the Company is aparty and which automatically comes into force or is amended or terminatedupon a change of control over the Company following a takeover offer, andany agreement between the Company and a Director or employee providing forcompensation if his or her employment is terminated because of a takeoveroffer. The information that needs to be included in the Board report pursuant
to the Dutch Decree on Article 10 of the Takeover Directive is included in thisCorporate governance section and in the Shareholder information section.

Compliance with the Code

The Company acknowledges the importance of good corporate governance andcomplies with most of the principles and best practice provisions of the Code,the full text of which can be found on www.mccg.nl. Deviations from any ofthe principles and best practice provisions of the Code are explained below inaccordance with the Code’s ‘comply or explain’ principle. Substantial changes
in the Company’s corporate governance structure and in the Company’s
compliance with the Code, if any, will be dealt with at the annual General
Meeting as a separate item. On December 20, 2022, a revised version of the Codewas published, which will apply as of the financial year 2023.

Deviations
Best practice provision 2.1.7 item (i) of the CodeAs James Mitchell, Luc van Os and Manning Doherty were all Executive Directors(as from February 26, 2021, December 2, 2020 and February 26, 2021, respectively)
prior to being appointed as Non-Executive Directors by the General Meeting,effective September 20, 2021, the Company does not comply with best practiceprovision 2.1.7 item (i) of the Code, which recommends that at most one NonExecutive Director is a former Executive Director. Since they have all been
appointed for a period of more than two years, this deviation will continue
for more than one financial year and may not be of a temporary nature.
However, the Company deems that this deviation does not negatively impact
the ability of these Non-Executive Directors to perform their duties critically andindependently given the short period during which they were involved in theMUSIC IS UNIVERSAL Annual Report 2022 | 100

CORPORATE GOVERNANCE

executive management of the Company prior to, and primarily in preparation for,the Listing.
Best practice provision 2.1.7 item (ii) of the CodeSince six out of eleven Non-Executive Directors, being Bill Ackman, Cathia
Lawson-Hall, Cyrille Bolloré, James Mitchell, Luc van Os and Manning Doherty,
are considered non-independent within the meaning of best practice provision
2.1.8 of the Code, the Company does not comply with best practice provision 2.1.7
item (ii) of the Code, which recommends that less than half of the Non-Executive
Directors should be non-independent. Since they have all been appointed for aperiod of (more than) two years, this deviation will continue for more than one
financial year and may not be of a temporary nature.
Best practice provision 2.1.7 item (iii) of the CodeSince two Non-Executive Directors, being James Mitchell and Manning Doherty,
have been appointed by the General Meeting at the designation of the Tencentled consortium, they are considered to be affiliated with or representing a (groupof affiliated) shareholder(s) holding, directly or indirectly, more than 10% of theissued share capital of the Company and as such, the Company does not comply
with best practice provision 2.1.7 item (iii) of the Code, which recommends
that at most one Non-Executive Director is considered to be affiliated with or
representing such (group of affiliated) shareholder(s). Since they have been
appointed for a period of more than two years, this deviation will continue
for more than one financial year. However, since the right of the Tencent-led
consortium to designate two Non-Executive Directors for appointment by theGeneral Meeting will contractually end after the close of the annual General
Meeting to be held in 2024 as set out above under ‘The Board––Appointment andterm of appointment’, this deviation may be of a temporary nature only.
Best practice provision 2.3.4 of the CodeSince the Audit Committee is chaired by Luc van Os, a former Executive Director,
the Company does not comply with (the first sentence of) best practice provision
2.3.4 of the Code, which recommends that the Audit Committee should not bechaired by a former Executive Director. Since he has been appointed for aperiod of more than two years, this deviation will continue for more than one
financial year and may not be of a temporary nature. However, the Company
deems that this deviation does not negatively impact his ability to perform his
duties critically and independently given the short period during which he wasinvolved in the executive management of the Company prior to, and primarily in
preparation for, the Listing.
Because of Judy Craymer CBE's resignation from the Board on January 10,2023, and the consequent termination of her Board committee membership,
the Company no longer complies with (the second sentence of) best practiceprovision 2.3.4 of the Code, which recommends that more than half of themembers of each committee should be independent, now that two out of fourof the Remuneration Committee members, being Cyrille Bolloré and James
Mitchell, are considered non-independent within the meaning of best practiceprovision 2.1.8 of the Code. This deviation will likely be of a temporary nature
only as the Board intends to appoint another independent Non-Executive
Director to the Remuneration Committee in the course of the financial year 2023.
Best practice provision 3.1.2 item (vi) of the Code
The Company does not comply with best practice provision 3.1.2 item (vi) of
the Code, which recommends that if shares are being awarded, they should

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CORPORATE GOVERNANCE

be held for at least five years after the award date. Although awards granted
under the 2022 UMG Global Equity Plan to Executive Directors are (and will be)
subject to (multiple year) vesting requirements as set out in Note 23 'Sharebased compensation plans' to the consolidated financial statements, there is norequirement that Shares should continue to be held once vested.
Best practice provision 3.2.3 of the CodeSir Lucian Grainge shall be paid two years’ salary, target bonus, pension
contributions, car allowance, protection compensation, health and welfare
benefits and €1,950,839 for lost value of Vivendi restricted stock units in alump sum in the event of termination by the Company without cause or
termination by Sir Lucian Grainge for good reason, and Vincent Vallejo shallbe paid base salary, target bonus, contractually agreed exceptional premiums
and any unpaid retention bonus or other bonuses in a lump sum for theperiod remaining on his initial two and half year fixed term agreement in theevent of termination by the Company without cause. Accordingly, the Company
does not comply with (the first sentence of) best practice provision 3.2.3 of
the Code, which recommends that any severance in the event of dismissal
should not exceed one year’s salary. However, as the recommended severance
is inconsistent with industry practices in the primary markets in which theCompany competes for talent, such as the United States, complying with bestpractice provision 3.2.3 of the Code could be detrimental to Executive Director
recruitment and retention. As the Company may decide to respect these legacy
severance arrangements, which were already in place prior to the date of the
Listing, this deviation may continue for more than one financial year and may
not be of a temporary nature.

Corporate governance statement

Pursuant to the Dutch Decree on the Content of the Board Report, the Company
is required to publish a statement concerning its approach to corporate
governance and compliance with the Code. The information required to be
included in this statement can be found in the following sections of theannual report:•
The information concerning compliance with the Code is set out above
under ‘Compliance with the Code’.
•
The information concerning the Company’s internal risk management andcontrol systems relating to the financial reporting process is set out in the
Risk and Risk Management section.
•
The information concerning the functioning of the General Meeting and its
powers and rights is set out above under ‘The General Meeting’.
•
The information concerning the composition and functioning of the Boardand its committees is set out above under ‘The Board’ and in the Report of
the Non-Executive Directors under ‘Composition’ and ‘Committees’.
•
The information concerning the Company’s diversity policy is set out
above under ‘The Board––Diversity’ and in the Report of the Non-Executive
Directors under ‘Diversity’.
•
The information concerning the inclusion of the information required by the
Dutch Decree on Article 10 of the Takeover Directive is set out above under‘Dutch Decree on Article 10 of the Takeover Directive’.

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CORPORATE GOVERNANCE

STATEMENTS OF THE BOARD
In control statement
In accordance with best practice provision 1.4.3 of the Code, the Board is of theopinion that for the financial year 2022:•
the Board report provides sufficient insight into any failings in theeffectiveness of the internal risk management and control systems.
•
the internal risk management and control systems provide reasonableassurance that the financial reporting does not contain any
material inaccuracies.
•
based on the current state of affairs, it is justified that the financial
reporting is prepared on a going concern basis.
•the Board report states those material risks and uncertainties that are
relevant to the expectation of the Company’s continuity for the period of
twelve months after the preparation of the Board report.
It should be noted that the foregoing does not imply that these systems andthese procedures provide absolute assurance as to the realization of operationaland strategic business objectives or that they can prevent all misstatements,
inaccuracies, errors, fraud and non-compliance with all applicable laws
and regulations.
For a detailed description of the internal risk management and control
systems and the principal risks identified, please refer to the Risk and Risk
Management section.
Responsibility statement
In accordance with article 5:25c(2)(c) of the Dutch Financial Supervision Act (Wetop het financieel toezicht), the Board confirms that, to the best of its knowledge:•
the financial statements 2022 give a true and fair view of theassets, liabilities, financial position and result of the Company and theundertakings included in the consolidation as a whole for the financial
year 2022.
•
the Board report provides a true and fair view of the position as at December
31, 2022 and of the performance of the business during the financial year
2022 of the Company and the undertakings, details of which have been
included in the financial statements 2022.
•
the Board report includes a description of the principal risks that theCompany faces.
The Board
Sir Lucian Grainge
Vincent Vallejo
Sherry Lansing
Anna Jones
Antoine Fiévet
Bill Ackman
Cathia Lawson-Hall

Cyrille Bolloré
James Mitchell
Luc van Os
Manning Doherty
Margaret Frerejean-Taittinger
Nicole Avant

Hilversum, March 30, 2023

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BOARD REPORTSHAREHOLDER INFORMATIONSHAREHOLDER INFORMATIONSHARE CAPITAL
The authorized share capital of the Company amounts to €27,000,000,000 andis divided into 2,700,000,000 ordinary shares with a nominal value of €10 per
Share (the Shares). All Shares are registered and numbered consecutively fromone onwards.
As at December 31, 2022, the issued share capital of the Company amounted
to €18,135,127,420 and was divided into 1,813,512,742 Shares, the Company held
214,235 Shares in treasury and no depositary receipts for Shares were issued
with the cooperation of the Company.
All Shares rank pari passu with each other. There are no restrictions on thetransferability of the Shares under Dutch law or the Articles nor, as far as theCompany is aware, under the Relationship Agreement.

Relationship Agreement

On September 8, 2021, Vivendi SE, Concerto Investment B.V., Scherzo Investment
B.V., Compagnie de l’Odet and Compagnie de Cornouaille entered into a
relationship agreement (the Relationship Agreement), which was co-signed by
the Company for agreement and acknowledgement.
Further details on the Relationship Agreement are set out in the Corporate
governance section under ‘The Board––Appointment and appointment term’and ‘The General Meeting––Annual and extraordinary General Meetings––
Participation’, above under ‘Share capital’ and below under ‘Substantial
shareholdings’ and ‘Dividend policy’.

Substantial shareholdings

Pursuant to the Dutch Financial Supervision Act, Shareholders are required
to notify the Dutch Authority for the Financial Markets (Autoriteit Financiële
Markten) (the AFM) in the event that they acquire or lose the disposal of acapital interest (and/or voting rights) in the Company as a result of which theirpercentage of capital interest (and/or voting rights) in the Company reaches,
exceeds or falls below one of the following thresholds: 3%, 5%, 10%, 15%, 20%,
25%, 30%, 40%, 50%, 60%, 75% and 95%. The requirement to notify the AFM
also applies in the event that their percentage of capital interest (and/or voting
rights) in the Company passively reaches, exceeds or falls below one of thethresholds due to a change in the issued share capital of (and/or voting rightsin) the Company.

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SHAREHOLDER INFORMATION

According to the AFM register, the following Shareholders have notified the AFMof their capital interest in the Company as at December 31, 2022:

Shareholder

Notification date

Capital interest

FMR LLC

November 11, 2022

3.02%

September 22, 2021

18.01%3

W.A. Ackman
V. Bolloré

2

Vivendi SE

2

Concerto Partners LLC2

November 1, 2022

September 22, 2021
September 22, 2021

10.27%1
10.03%
20%4

1 Held via PS VII Master L.P. (This percentage is based on notifications reflected in the AFM’s Executive and
Non-Executive Directors register rather than in the AFM’s Substantial Shareholdings register.)
2 On September 22, 2021, each of V. Bolloré, Vivendi SE and Concerto Partners LLC has notified a percentage ofvoting rights in the Company of 48.03% based on a voting agreement included in the Relationship Agreement.
3 Held via Bolloré Participations SE, Omnium Bolloré, Financière V, Sofibol, Compagnie de l’Odet, Bolloré SE andCompagnie de Cornouaille.
4 Held via Scherzo Investment B.V. and Concerto Investment B.V.

It is possible that the stated percentages of capital interest differ from the actual
percentages of capital interest as the Shareholders may only be required to
notify the AFM in the event that their percentage of capital interest reaches,
exceeds or falls below one of the thresholds.
In the Relationship Agreement, the parties have agreed to, among others,
consult with one another prior to each General Meeting in order to form andexercise, to the extent possible, a common view and vote in respect of thevarious items related to the subjects included in and the obligations of theparties under the Relationship Agreement concerning the right of the Tencentled consortium to designate up to two Non-Executive Directors for appointmentby the General Meeting as set out in the Corporate governance section under‘The Board––Appointment and term of appointment’ and the dividend policy as
set out below under ‘Dividend Policy’. Accordingly, the parties are considered
to have concluded a voting agreement and are therefore required to aggregate
their voting rights in the Company as set out in note 2 to the table above.

Change of control

The Company’s facilities agreement (potentially) entitles each bank to claim
early repayment of the amounts borrowed by it to the Company in the event ofa change of control over the Company (as defined in the facilities agreement).
In addition, the final terms of the 3.00% senior notes due June 30, 2027 as wellas the final terms of the 3.75% senior notes due June 30, 2032 each entitle aholder of a note to require the Company to redeem or, at the Company’s option,purchase such note at such note’s nominal amount together with (an amountequal to) accrued interest in the event of a change of control over the Company(as defined in the terms and conditions of the notes).

2022 UMG Global Equity PlanOn May 12, 2022, the General Meeting approved the 2022 Universal Music Group
Global Equity Plan (the 2022 UMG Global Equity Plan) as well as the issuance ofShares or the granting of rights to subscribe for Shares in order to give effectto awards granted under the 2022 UMG Global Equity Plan to employees of theCompany and its subsidiaries and to Executive Directors up to a total amountof 5% of the issued share capital of the Company as at May 12, 2022 and, to theMUSIC IS UNIVERSAL Annual Report 2022 | 106

SHAREHOLDER INFORMATION

extent necessary, the exclusion of the statutory pre-emptive right with respect
to such Shares or rights to subscribe for Shares. The actual number of Shares tobe issued or rights to subscribe for Shares to be granted in order to give effectto awards granted under the 2022 UMG Global Equity Plan is determinable by the
Board (or a committee of the Board designated for such purpose). The 2022 UMG
Global Equity Plan is available on the investor relations part of the UMG website.
The purpose of the 2022 UMG Global Equity Plan is to provide long-term
incentives to employees of the Company and its subsidiaries and to Executive
Directors which are linked to value creation for Shareholders and, whereappropriate, the achievement of certain long-term strategic and financial
goals through a variety of awards designed to attract, retain and motivate
the best possible workforce. In addition, the 2022 UMG Global Equity Plan
aims to afford employees of the Company and its subsidiaries and Executive
Directors the opportunity to acquire and maintain ownership of Shares, thereby
strengthening and aligning their concern for the interests of the Company andits stakeholders.
In Note 23 'Share-based compensation plans' to the consolidated financial
statements, details of the various awards are set out.

Dividend policy

The distribution of profits shall be made after the adoption of the financial
statements by the General Meeting from which it appears that the distributionis allowed. The Company may only make distributions to the extent theshareholders’ equity of the Company exceeds the sum of the issued and calledup part of the share capital of the Company and any reserves that must be
maintained pursuant to Dutch law.
In accordance with the Relationship Agreement, the Company intends to, on
an annual basis, pay dividends to all Shareholders, on a pro rata basis in two
semi-annual instalments, in the aggregate amount of no less than 50% of theCompany’s net profits, subject to agreed non-cash items, calculated as follows:•
consolidated net profits of the most recent audited consolidated financial
statements as of December 31 prepared in accordance with EU IFRS; plus•(a) any loss arising on any change in fair value of any intangible assets,tangible assets or financial assets, (b) any amortization or impairment ofintangible assets, (c) share-based compensation expenses, (d) net losses
related to non-consolidated companies consolidated under the equity
method, (e) net losses related to minority interests, (f) net provisions
for inventories and (g) any unrealized loss related to derivative financial
instruments; minus•(h) any gain arising on any change in fair value of any intangible assets,tangible assets or financial assets, (i) any unrealized gain related toderivative financial instruments, (j) income or reversal related to sharebased compensation, (k) net profits related to non-consolidated companies
consolidated under the equity method and (l) net profits related tominority interests.
The Company intends to pay an interim dividend in the fourth quarter of eachfinancial year after the publication of the semi-annual financial report, and a
final dividend in the second quarter of the following financial year following
adoption of the financial statements by the General Meeting.

MUSIC IS UNIVERSAL Annual Report 2022 | 107

SHAREHOLDER INFORMATIONOn June 8, 2022, the Company paid a final dividend of €0.20 per Share, bringing
the total dividend for the financial year 2021 to €0.40 per Share.
On October 28, 2022, the Company paid an interim dividend of €0.24 per Share,
and the Board now proposes that on June 6, 2023, the Company pay a final
dividend of €0.27 per Share, such proposal to be approved at the annual General
Meeting to be held on May 11, 2023. If approved, this would bring the total
dividend for the financial year 2022 to €0.51 per Share.

Capital events
Credit ratings
On May 31, 2022, the Company announced that it had been assigned a Baa1
long-term credit rating and a Prime-2 short-term credit rating with stable
outlook by Moody's, as well as a BBB long-term credit rating and an A-2 shortterm credit rating with stable outlook by S&P.
Euro Medium Term Note program
On June 30, 2022, the Company issued €500 million of 3.00% senior notes due
June 30, 2027 as well as €500 million of 3.75% senior notes due June 30, 2032
under its Euro Medium Term Note program. The notes are admitted to tradingon Euronext Amsterdam. The proceeds have been used for the refinancing ofindebtedness and payment of transaction fees and expenses.
Negotiable European Commercial Paper program
On June 30, 2022, the Company set up its 1 billion Euro Negotiable European
Commercial Paper program. The Company uses this financing for general
corporate purposes.

Investor Relations

UMG is committed to maintaining an open and constructive dialogue with the
Shareholders. UMG aims to keep the Shareholders updated by informing themclearly, accurately and in a timely manner about its strategy, performanceand other matters and developments that could be relevant to theirinvestment decisions.

SharesOn September 21, 2021, the Shares were admitted to listing and trading onEuronext Amsterdam (ticker symbol UMG). The Shares are included in a numberof indices, including the AEX, which index reflects the twenty-five largest andmost actively traded companies on Euronext Amsterdam in terms of free float
market capitalization. At year-end 2022, the share price was €22.51 and themarket capitalization was €40.8 billion. The average daily trading volume in 2022
was €38.7 million or 1.8 million Shares.
2022

Share price information

Market capitalization at year-end (€ billion)

40.8

Lowest closing price (October 11, 2022, €)17.25

Closing price year-end (€)

22.51

Highest closing price (April 14, 2022, €)Total shareholder return

24.89

Average daily trading volume on Euronext (shares)(7.4%)

1.8 million

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SHAREHOLDER INFORMATION

30
25
20
15
10
5
0

January 2022

April

July

December

Per share data

2022

Dividend (€): 0.24 interim + 0.27 proposed final

0.51

Adjusted EPS (€)

0.80

Reported EPS (€)

0.43

Contact

Further information on UMG is available from the Investor Relations
department, which can be reached by telephone: +31 35 799 4200 orby email: investorrelations@umusic.com. Further shareholder information
is available on the investor relations part of the UMG website:
https://investors.universalmusic.com.

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BOARD REPORTRISK AND RISK MANAGEMENTRISK AND RISK MANAGEMENT

UMG has a diverse portfolio of brands, music labels, artists, established(predictable) and developing businesses, all spread across different geographiesand business structures. Whilst this level of diversification generally spreads
risk across our business, it is critically important that the Company manages
risks in a proactive and responsible way to ensure we can deliver on our multifaceted growth strategies.
The Company’s risk management is designed to provide reasonable assurance
that strategic and operational objectives are met, legal requirements arecomplied with, and the integrity of the Company’s financial reporting andrelated disclosures is safeguarded. However, there can be no absoluteassurance that our risk management will avoid or mitigate all risks that UMG
faces. The material risks are described in Risk Factors.

Risk Appetite

The Board of Directors and management seek to manage risks consistently
within the risk appetite. UMG’s risk appetite differs depending on the type ofrisk, ranging from averse to a seeking approach. We believe we must operate
within the dynamics of the music industry and take risks needed to ensure
we continually revitalize our offerings for our artists and the way we work.
At the same time, UMG attaches prime importance to integrity, sustainability
and compliance with laws and regulations. Risk appetite for the four main risk
categories is visualized below.
UMG does not classify these risks in order of importance.

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RISK AND RISK MANAGEMENT

Governance, Risk and Compliance

The Company has an Internal Control Framework (ICF) modelled upon the COSO
(Committee of Sponsoring of the Treadway Commission) 2013 framework. The
ICF incorporates risk assessment, control activities and monitoring into ourbusiness practices at entity wide and functional levels.
For the organization of risk management and internal control systems, wehave adopted a ‘Three lines of defense’ model (see chart below) to provide
reasonable assurance that risks to achieving important objectives are identified
and mitigated. To enhance and coordinate risk assurance across the company,a Governance, Risk and Compliance working group has been established in
2022 that meets on a periodic basis to review and monitor UMG's risk andcontrol environment.

Monitoring and Assurance

A key element of our ICF is monitoring and assurance. The Company uses acomprehensive business planning and performance review process to monitor
the Company’s performance. This process covers the adoption of strategy,
budgeting and the reporting of current and projected results. The company
assesses business performance according to both financial and non-financial(including sustainability) targets.
All our businesses are required to maintain and manage a sound internal
control environment with robust policies, procedures and controls and strong
financial discipline.
In order to meet business needs and the requirements of the Dutch Corporate
Governance Code, the Company has a Group-wide management certification
process in place, which requires that the designated executive management
team member at each of the reporting entities send attestation letters on aperiodic basis to both the Corporate Financial Reporting Group (quarterly) andthe Controls Assurance Function (semi-annually). Summarized, these lettersconfirm whether the reporting entities have incorporated the ICF in the local
control policies and procedures and where deficiencies, non-adherence or
breaches to the controls and/or procedures were found, that these have beenreported and that the necessary remedial action has been undertaken to ensurethat the internal control systems remain effective in preventing and detecting
fraud and error.
Both the Controls Assurance and Internal Audit functions help to ensure that
the Company maintains and improves the integrity and effectiveness of thesystem of risk management and internal control.

MUSIC IS UNIVERSAL Annual Report 2022 | 112

RISK AND RISK MANAGEMENTThe ICF is being monitored by the second line of defense Controls Assurancefunction through controls testing activities. Internal Audit undertakes regularrisk-based audits in accordance with the audit plan as approved by the UMG
Audit Committee.

Continuous ICF Improvements

Management continues to invest in the further improvement of the risk andinternal control systems in the Company. Built on the basis of the existingrisk and controls mechanisms in place prior to the separation from Vivendi
S.A., management has continued to upgrade its systems, including computer
hardware infrastructure, adding additional financial and management controls,
reporting systems and procedures and hire additional accounting, finance,internal control, internal audit and information technology staff. Management
will continue to make further improvements in 2023, which will be aimed at,amongst other things:•
Driving business ownership of risks and controls•
Optimizing the level of monitoring of the risk and control systems•
Maturing the enterprise risk management program•
Optimizing the IT general controls framework•
Continue improving the quality and in particular the level of documentationof key controls across primary business processes

Compliance and Integrity

As the world’s leading music company, UMG recognizes that we have a
responsibility to set the right tone, lead by example, and ensure that all of ouractions and decisions are based on honesty and integrity. UMG’s global Codeof Conduct sets our foundation that how we conduct business is as importantas our results. The Code of Conduct outlines the key responsibilities for all our
employees, officers, members of the board of directors, and (where permitted)
third party consultants and advisors or representatives and requires:•
Honesty in all of our actions and decisions•
Treating everyone with respect•
Following the law and UMG policies when conducting company business•Seeking guidance when we are not certain about the right thing to do•
Speaking up when we see a problem
We meet these requirements by focusing on four key principles:
1. SETTING THE RIGHT TONE WITH OUR PEOPLE by valuing diversity and inclusion;
promoting a respectful, safe and healthy workplace; and by protecting
human rights.
2.

SETTING THE RIGHT TONE FOR OUR COMPANY by properly disclosing or
avoiding any conflicts of interests and monitoring the receipt of gifts.

3.

SETTING THE RIGHT TONE IN THE MARKETPLACE by following laws andregulations related to bribery and corruption; marketing and advertising; fairpurchase practices and international trade regulations.

4.

SETTING THE RIGHT TONE IN OUR COMMUNITIES by protecting the environmentand contributing to our communities.

The Code of Conduct provides all employees a road map of how to make ethicalchoices and how to comply with our legal and regulatory obligations. Most
importantly, it provides guidance on when and where to seek guidance or toreport a potential compliance breach. All UMG employees are trained on theMUSIC IS UNIVERSAL Annual Report 2022 | 113

RISK AND RISK MANAGEMENT

Code of Conduct and must certify compliance with the Code of Conduct on anannual basis. The Code of Conduct is available in the investor relations sectionof UMG’s public website.
Our compliance obligations are overseen by our Compliance department aswell as our Control Assurance department, Internal Audit department andour Finance department. An internal control framework, including policies,
procedures and financial discipline underpins our risk management. The
Control Assurance department regularly conduct independent testing, whereas
the Internal Audit department has integrated reviewing and objective andcritical audits. Both departments ensure that UMG controls are followed and are
sufficient to provide an appropriate control landscape.
Corruption and Bribery
UMG is committed to complying with all applicable laws in each of thecountries in which we operate, including compliance with laws relating toanti-corruption and bribery. UMG does not tolerate any form of corruption
or bribery within its organization. Non-compliance with laws and regulations,
including anti-corruption, bribery and related laws could expose the Group tolegal liability and may negatively impact the Company’s reputation, financial
position, results of operations and/or prospects. These risks may manifest
themselves in interactions with government bodies, trade associations, and in
the merchandising division.
The Company has implemented a number of measures to counter the
aforementioned risks. UMG’s stance against, and prohibition of, corruption andbribery is covered not only in its Code of Conduct but also in its global standalone anti-corruption and lobbying policy, which applies globally to all of UMG’semployees and its directors. In addition to the annual Code of Conduct training,
all employees in all UMG territories are periodically expected to complete
training specifically on the topic of anti-corruption.
UMG’s anti-corruption compliance program provides risk mitigation guidanceon matters including, but not limited to: interactions with government officials;
conflicts of interest; political contributions/lobbying activities/charitable giving;
gifts/travel and entertainment; and proper maintenance of books and records.
Employees are offered a multitude of ways to raise any concerns of anticorruption and bribery, including dedicated reporting channels for conflicts ofinterest and gifts/hospitality, in addition to the option to use UMG’s dedicatedwhistleblower reporting line or by making direct reports to supervisors, theGeneral Counsel, or the Chief Compliance Officer.
Where relevant, UMG will take appropriate action in response to any allegations
or reports of misconduct, including investigations, disciplinary action and/or
criminal or civil procedures. The compliance department and internal audit
department regularly monitor the effectiveness of the company’s anticorruption and bribery compliance program. UMG has a dedicated ethics
committee to ensure compliance with the Code. The Chief Compliance Officer
provides regular reports to the ethics committee of any material potential
violations of the Code, including anti-corruption and bribery, the status of any
investigations, and the outcome of any investigations. The ethics committee
and the internal audit department will further notify the audit committee of
the Board and the Board, itself, as required, depending on the circumstancesof the potential violation. In 2022, no reports were received related to bribery or
corruption and there were no known instances of bribery or corruption.

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RISK AND RISK MANAGEMENT

Fraud Risk
The Company maintains a global fraud risk register that summarizes risks
and compensating measures. The global fraud risk assessment is an annual
process and was performed in the latter half of 2022.
The Company’s stance with regard to integrity is clearly outlined in its
Code of Conduct, as also explained in this Risk Management chapter. Any
incidents of fraud and theft within the Company will be promptly investigated,
reported and, where appropriate, lead to disciplinary actions (from warnings to
immediate terminations). In addition, we carry out in-depth investigations of(possible) fraud cases, which may lead to an intermediate update of the fraud
risk assessment.
Whistleblowing Policy and Reporting
UMG’s Code of Conduct and our standalone Whistleblowing Policy (which
can also be found in the investor relations section of UMG’s public website:
https://investors.universalmusic.com/governance) provide numerous options for
employees to seek guidance and report potential breaches of the Code of
Conduct, including contacting the company’s Chief Compliance Officer orGeneral Counsel directly. Additionally, UMG provides a global reporting line,
through a third-party provider. The global compliance and ethics hotline isavailable 24 hours a day, seven days a week via telephone or the internet.
Reports can be made in all the languages in which we do business and may bemade anonymously in those jurisdictions which permit anonymous reporting.
The whistleblower hotline is available not only to UMG employees but third
parties as well. Reports are maintained as confidentially as possible (or fully
confidentially as may be required by law) and are investigated. In 2022, there
were no substantiated reports of significant financial reporting, accounting,fraud or ethical (including human rights) violations.
Additionally, the Compliance Department maintains and monitors email boxes
dedicated to reporting potential conflicts of interest.
Prohibition Against Retaliation
In order to encourage reporting of potential breaches of the Code of Conduct
or other company policies, we prohibit retaliation of any kind against anyone
who makes a complaint or report of a potential violation of law or policy in goodfaith. Engaging in retaliation is itself a violation of our Code and may result in
disciplinary action, up to and including termination of employment.

Risk Factors

UMG’s business and the industry in which it operates, are subject to a numberof risks. UMG believes that the risk factors as set out below, are the key risks anduncertainties concerning the Group’s business and industry, and that, alone
or in combination with other events or circumstances, could have a material
adverse effect on the Group’s business, results and financial position.
In making this selection, the Group has considered circumstances such as
the probability of the risk materializing on the basis of the current state ofaffairs, the potential impact which the materialization of the risk could haveon the Group’s business, results and financial position, and the attention thatmanagement would, on the basis of current expectations, have to devote tothese risks if they were to materialize.

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RISK AND RISK MANAGEMENT

While the Group believes that the risks and uncertainties described below are
the key material risks and uncertainties concerning the Group’s business andindustry, they are not the only risks and uncertainties relating to the Group.
Other risks, events, facts or circumstances not presently known to the Group,or that the Group currently deems to be immaterial could, individually or
cumulatively, prove to be important and may have a significant negative impact
on the Group’s business, results and financial position. The risk factors below
have been divided into categories; however, some risk factors appear in morethan one category.

Risk

Likelihood

ImpactChallenge to attract, sign and retain successful artists and/or absence of superstar releases
in a highly competitive and evolving industry

High

Moderate

Decline in streaming revenue, subscription adoption and digital marketshare
Digital service provider dependency

Moderate

Competition in evolving markets

Moderate

Moderate

High

Moderate

Inability to timely adapt to trends and developments in the markets in which UMG operates
Piracy and content protection

Challenge to attract and retain internal talent
Impact of COVID-19
Cybersecurity

Changes in global economic and financial conditions
Geopolitical Instability

Dependency on information technology systems
Access to and cost of financing
Currency fluctuations

Moderate
High

Moderate
Moderate
High
High
High

Moderate
Low

Moderate

Changes in tax laws

Moderate

Loss of intellectual property rights

Low

Data protection complianceModerate

Governmental and regulatory challenges

Changes in laws and regulations; legal proceedings

High

Moderate

Moderate
Low

High

Moderate
Low

High

Moderate
Moderate
Moderate
Low
Low

Moderate
High
High

ModerateHigh

For each of the risks set out below, the Group has indicated examples of the
programs, processes and controls which are designed to help manage andmitigate the risks. These risk responses are designed to manage risks towards,
and should be read in conjunction with, the Risk Appetite as described above.
It is however possible that these initiatives may not be successful in limiting
fully or partly the occurrence and impact of the risks on the Group’s business,
results and financial position.

Strategic Risks
Challenge to attract, sign and retain successful artists and/or absence ofsuperstar releases in a highly competitive and evolving industry.
UMG may be unable to compete successfully in the highly competitive industry
and markets in which it operates and UMG’s business may be adversely affected
if UMG fails to identify, attract, sign and retain successful recording artists andsongwriters or by the absence of superstar releases.

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RISK AND RISK MANAGEMENT

The industry in which UMG operates is highly competitive, influenced byconsumer preferences and rapidly evolving. UMG’s competitive position isdependent on identifying, attracting, signing and retaining recording artists
and songwriters who are or will become commercially successful, who havelong-term potential, whose music is well received, whose subsequent music isdemanded by consumers and whose music will continue to generate sales aspart of its catalog for years to come.
UMG faces competition from traditional music industry players as well as new
entrants, including investment funds whose investment thesis includes making
acquisitions of collections of musical compositions, or “catalog acquisitions”.
UMG is also dependent on signing and retaining songwriters who are capable ofwriting songs that will be the popular hits of today and the classics of tomorrow.
UMG’s competitive position is dependent on its continuing ability to attractand develop such recording artists and songwriters whose work can achievea high degree of popularity and thereafter continue to create music and songs
to retain, engage and expand their fan base.
UMG uses external sources of data provided by streaming platforms or otherexternal providers. Limitations to access of such data could adversely impact
UMG’s capability of identifying future talents and therefore negatively affect its
business. While UMG is required to devote significant time and investment tosigning, retaining and developing artists, the returns on these activities are
influenced by a number of factors, including factors outside of the controlof UMG, and are uncertain at the time of investment. To the extent that the
expected returns from these activities fail to materialize or are not in line withexpectations, this may negatively impact UMG’s results and financial position.
UMG’s competitors may become more successful at signing, marketing andpromoting recording artists, for example if UMG’s competitors increase theamounts they spend to discover, or to market and promote, recording artists
and songwriters or reduce the prices of their music in an effort to expand
market share, which may adversely impact UMG’s business, results andfinancial position.
UMG’s recorded music business is to a large extent dependent on rapid
and significant technological developments in order to remain competitive,
including access to, selection and viability of new technologies, and
UMG’s recorded music business is subject to potential pressure fromcompetitors as a result of technological developments modifying the nature of
UMG’s competition.
In addition, changing business practices, particularly due to the emergenceof new technologies and access to a global network of consumers, has andcould further result in artists choosing to make content available to consumers
directly without being affiliated with a label or an intermediary, or could resultin music services playing some of the roles that UMG has traditionally played. In
this regard, UMG also competes with certain of the music distribution platforms
who distribute the works of artists and songwriters without the involvement oflabels or intermediaries.
Adapting to, and competing with, rapid technological advancements require
substantial investment of time and resources; however, such investment does
not guarantee UMG’s success in developing, implementing, transitioning to,MUSIC IS UNIVERSAL Annual Report 2022 | 117

RISK AND RISK MANAGEMENT

competing with, utilizing or defending against new technology. Any failure
by UMG to accurately anticipate customers’ changing needs and emerging
technological trends could significantly harm UMG’s competitive position andresults of operations.
If UMG is unable to remain competitive as a result of technologicaldevelopments, this could have a material adverse effect on UMG’s business,
results and financial position.
Risk response
With regard to the development of recording artists and songwriters, UMG
believes that traditional, high-touch, full-service label deals with its portfolioof world- renowned labels provide the most long-term value to an artist
and greatly increase the commercial success, consumer base and longevity
potential for artists at every stage of their careers. These deals provide
for the full suite of professional expertise and global resources of a majorlabel, including a comprehensive approach to content creation, organic
artist development, timing, marketing, promotion, financial investment, andforward planning.
UMG is pioneering partnerships with new platforms, continuing the decadeslong fight for copyright protections all around the world while combatting
piracy in its many forms and creating commercial environments for artists incountries where commerce in music was basically non-existent; UMG continues
investing in the next generation of creative leaders.
UMG has consistently demonstrated the value it represents to an artist’s
success. Producing and marketing music successfully requires significant
upfront investment and involves collaborating with the best writers andproducers. UMG invests more money and expertise through its staff of industry
specialists than any other recorded music company in signing and developing
talent. Combining these investments and expertise with UMG’s excellence inmarketing and in promoting artists globally, enables UMG to consistently leadthe industry in breaking artists.
UMG’s diverse range of artists and labels helps the business consistently cater
to changing consumer trends. As a result of having such a broad array of artists
and labels, UMG is not reliant on one artist, or on a small number of artists, togenerate revenue in any given year.
Decline in streaming revenue and/or subscription adoption.
UMG’s business may be adversely affected should streaming and subscription
adoption or revenue fail to grow or grow less rapidly than UMG anticipates.
Revenues from subscription music services are important. In 2022, UMG
generated €5,321 million of revenue from subscription music services and adsupported streaming, as compared to €4,481 million in 2021.
Consumption formats in the music industry are susceptible to technologicaladvancements and changing consumer preferences around how music isaccessed, as illustrated in recent years by the global decline in revenue
derived from downloads and CD sales. These, and other factors, may inthe future negatively impact subscription and ad-supported streaming, forexample where newer formats become more popular with consumers. The
uses of technology are constantly evolving, and it may not be possible toMUSIC IS UNIVERSAL Annual Report 2022 | 118

RISK AND RISK MANAGEMENT

foresee the ways in which technology could be used to disrupt, the musicindustry, for example through the use of artificial inteligence and non-fungible
tokens. Additionally, technology around streaming manipulation, fraud andhacking is becoming increasingly refined and subscription streaming services
are particularly vulnerable which could undermine consumer confidence andcause revenue loss.
If UMG’s subscription or streaming revenue fails to grow, grows less rapidly thanit has over the past several years or declines, UMG’s recorded music businessmay experience reduced levels of revenue and operating income. Additionally,slower growth in streaming adoption or revenue is also likely to have a negative
impact on UMG’s music publishing business, which generates a significant
portion of its revenue from sales and other uses of recorded music.
Risk response
UMG continues to actively and successfully work with existing streaming andsubscription partners to develop existing and create new revenue streams andhelp develop new regional and local streaming and subscription partners. UMG
plays an active role in promoting the continued development of new digital
services and consumer offerings in order to support a competitive, healthy
and increasingly global market. UMG has agreements with several hundred
global and local digital service providers around the world, establishing legal
consumption of music in markets with high levels of piracy that previously
didn’t have legitimate commercial outlets, including the high-growth countries
Brazil, India, China, Latin America, Africa, the Middle East, Eastern Europe andSoutheast Asia. These partnerships have made music more accessible to fansaround the world, offering a free-to-use option for consumers as an alternative
to pirated content, with additional upsell opportunities created.
The result of UMG’s leadership position, as well as its willingness to embrace
new business partners and spearhead the development of new businessmodels around the world, has resulted in an expanded market for music
consumption and monetization, benefiting artists, fans, platform partners andmusic companies.
Digital service provider dependency.
UMG relies on digital service providers for the online distribution and marketingof its music on the basis of contractual terms that are subject to change.
UMG derives an increasing portion of its revenues from the distribution of music
through digital distribution channels and partners with several hundred music
services around the world. In 2022, the top 50 music services accounted for 96%
of UMG’s recorded music digital revenue. In 2022, 71% of UMG’s recorded music
revenue was derived from digital channels.
UMG currently enters into relatively short-term agreements with digital musicstreaming services. There can be no assurance that UMG will be able to renew
or enter into new agreements with any digital music service. The terms of these
agreements, including the rates that UMG receives pursuant to them and thebasis for calculation of those rates, may change as a result of changes in theindustry or changes in the law, or for other reasons. Decreases in rates orchanges to other terms of agreements with digital music streaming services
could adversely impact UMG’s business, prospects, financial condition andresults of operations.

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RISK AND RISK MANAGEMENT

UMG’s music is also promoted by the digital music services on playlists curated
by such services or generated from their algorithms (or a combination of both).
Any unfavorable changes made by such service providers to their algorithms
or to the terms on which they market or promote UMG’s music could adversely
affect UMG’s revenues, operating results and financial position.
Risk response
While a number of digital service providers compete with each other in themusic industry around the world, they all seek to work closely with UMG,
the largest supplier of content to all of the digital service providers. This isbecause UMG’s artist content is a key driver of customer acquisition for all ofthese platforms. UMG’s world-renowned catalog, which is continuously growing
through UMG’s proven ability to develop and break new artists, makes UMG
an important customer acquisition partner for platforms. The introduction of
new products, services and revenue streams across segments spanning voice,fitness, social media, gaming, live streaming, brand partnerships, startups andother categories helps to further mitigate the reliance on a limited number ofdigital service providers.
Competition in evolving markets.
UMG may be unable to compete successfully in the evolving markets in which it
operates or unable to execute its business strategy.
UMG expects to increase revenues and cash flow through a business strategy
which requires, among other things, continuing to maximize the long-termvalue of its music by expanding the licensing partners with which UMG
works and diversifying its revenue streams by partnering with an increasingarray of new businesses that benefit from the use of music content toengage consumers.
The success of these initiatives relies on adequate third-party supportand requires UMG to accurately forecast and keep up with technologicaldevelopments and consumer preferences relating to platforms and may require
UMG to implement new business models or adapt to new distribution platforms.
If UMG is unable to implement its strategy successfully or properly react
to changes in consumer preference, then its financial condition, results ofoperations and cash flows could be adversely affected.
Risk response
UMG is a key promotor of innovation across the digital ecosystem throughpartnerships in new product categories and through proactive efforts to cause
its partners to evolve and innovate. UMG maximizes opportunities to introduce
new products, services and revenue streams in various segments spanningvoice, fitness, social media gaming, live streaming, brand partnerships, startups and other categories.
UMG’s strategy includes efforts to grow revenues from new digital platforms,
including fitness and video games, and through business arrangements with
non-traditional partners, including social media platforms.
In 2022, UMG expanded and enhanced its landmark commercial partnershipwith Meta, reached agreement with Twitch to foster the creation of artist andlabel channels, and announced a global strategic partnership with Songclip.

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RISK AND RISK MANAGEMENT

UMG continued to lead the industry in crafting new licensing models for
integrating music within the thriving health and fitness category, entering into
new deals with partners such as Music Health for its Vera app, Y7 Studioand SATS.
Inability to timely adapt to trends and developments in the markets in which
UMG operates.
UMG operates in many jurisdictions around the world and therefore is subject
to a variety of trends, developments and limitations in those jurisdictions, which
could affect it adversely.
UMG has offices engaged in recorded music, music publishing, merchandisingand audiovisual content in more than 60 territories around the world. UMG’slocal presences have become increasingly important as the popularity of musicoriginating from a country’s own language and culture is very significant, andmore countries around the world have developed legitimate business models
to monetize music. In addition, UMG’s business model is increasingly focusedon developing business in new high-growth music markets. For example, in
2022, we strengthened our global presence through new activities, acquisitions,label launches and key partnerships in India, Greater China, Malaysia, Thailand,
Vietnam, The Philippines and across Africa. However, if UMG’s music does notcontinue to have appeal in various countries, UMG’s results of operations could
be adversely impacted and its investments in new jurisdictions could fail togenerate returns for UMG in line with expectations. Additionally, UMG may not
be successful in identifying and signing the most promising artists in thesemarkets, which may negatively impact UMG’s competitive position in thesegeographies, its prospects and its ability to generate returns in these markets.
In countries in which the Group currently conducts, or may in the
future conduct, its businesses, the Group’s operations, growth strategy anddevelopment may be negatively impacted as a result of less developed digital,
internet and mobile network infrastructure. The Group’s success, particularly
streaming revenues, depend on the continued development and use of internetby consumers to access music as well as increasing high-speed internet
and smartphone penetration. If internet access or smartphone penetration inthese markets develops slower than expected, or is stalled, the Group’s growthstrategy could be adversely affected.
Further, depending on the customs and norms in various markets, UMG’spresence in and generation of revenues from other countries may require UMG
to accept longer accounts receivable settlement cycles and may subject UMG todifficulties in collecting its accounts receivables.
Risk response
UMG is committed to shaping culture through artistry and is responsive tothe needs and ambitions of local talent. UMG’s expansion strategy in markets
around the world is already bearing fruit. In 2022, 62% of UMG’s physical& digital recorded music revenues came from local repertoires in their own
countries. Prior to entering a new market, UMG teams carefully identify areasof risk and develop a business case and strategic plan, which are presented
to and approved by the UMG Executive Management Board and the UMG
Investment Committee.

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Piracy and content protection.
Piracy continues to adversely impact UMG’s business and content protection isa key focus of UMG’s business.
Technological advances and the conversion of music into digital formats havemade it easy to create, transmit and distribute high-quality unauthorized copies
of music in a manner that does not provide an economic return for UMG or
its artists and songwriters. This includes “stream-ripping” to access UMG’smusic illegally through the internet. In a 2022 IFPI survey of 44,000 internet
users across 22 countries, 40% of respondents aged 16-24 admitted using illegal
stream-ripping services, the leading form of music piracy. Organized industrial
piracy may also lead to decreased revenues and/or slowed growth of revenues.
The impact of piracy on legitimate music revenues and subscriptions ishard to quantify, but UMG believes that illegal file sharing and other forms
of unauthorized activity, including stream manipulation, have a substantial
negative impact on music revenues. If UMG is not successful in its content
protection efforts as discussed below, its business, results of operations,financial condition and prospects may suffer.
Risk response
UMG invests significant resources in combatting the many forms of piracy
of its music including through litigation, lobbying and interdiction. UMG also
encourages its digital partners to support UMG’s content protection efforts by
taking direct action against unauthorized activity on their platforms.

Operational risks
Challenge to attract and retain internal talent.
UMG’s ability to operate effectively could be impaired if it fails to attract andretain its executive officers and other key personnel.
UMG’s success depends, in part, upon the continuing contributions of its
executive officers and key operational and creative personnel, led by its
Chairman and Chief Executive Officer. These executive officers and key
personnel possess significant experience within the music industry and theirestablished personal connections and relationships in the music industry areimportant to the Group’s operations. UMG competes with other music andentertainment companies, record labels, digital service providers, technology
companies and other companies for top talent, including executive officers andother key personnel.
If the Group were to unexpectedly lose a member of the Group’s key
management, its business activities, results of operations, financial positionand prospects could be materially and adversely affected.
Risk response
UMG is an established brand with both an attractive name and business
reputation in the talent market. UMG has taken proactive and preventative
measures to retain talent as UMG adapts to the ‘Future of Work.’
UMG has added more offerings geared towards equitable professional
development across UMG’s diverse employee community. These include
tailored programming and resources, such as renowned guest instructors, andexecutive coaches to prepare employees for the next level of their career at

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UMG. The initiatives are geared towards incentivizing early and mid-career
employee retention, which are the groups most susceptible to risk.
UMG established an Equity Plan, designed to align senior employees withthe long-term growth results of the business. The intention of the plan is tostrengthen retention, motivation, and long term behavior.
Impact of COVID-19.
UMG’s results of operations, cash flows and financial condition have been andmay continue to be adversely impacted by the COVID-19 pandemic.
Certain of the measures taken by national and regional governments, including,stay-at-home orders and limitations on indoor and outdoor gatherings havenegatively affected UMG’s business. For example, the extended pause overlive concert tours adversely impacted UMG’s sale of tour merchandise which
resulted in a decline in revenue from UMG’s merchandising business in
2020. UMG’s merchandising segment relies on vendors outside of the UnitedStates and therefore, faces risks inherent in purchasing from foreign suppliers,
including the COVID-19 pandemic on the supply chain.
The limitations on live concert touring have also adversely impacted music
publishing performance revenues. The stay-at-home orders also resulted in
the cessation of or significant delay in the production of motion pictures
and television programs, which negatively affected licensing revenue in UMG’srecorded music business and synchronization revenue in its music publishingbusiness. It has been widely reported that early in the COVID-19 pandemic,
advertisers temporarily reduced their advertising spend. This resulted in acorresponding initial decline in ad-supported streaming revenue in UMG’srecorded music business and, to a lesser extent, recorded music licensing
revenue and music publishing synchronization, performance and mechanicalad-supported streaming revenue. UMG’s physical sales rely in part on
distribution and retailing of CDs or vinyl through major retail chains and local
shops. Shop closures and stay-at-home orders negatively affected physicalsales of music through major retail chains and local shops, and any future
measures, whether globally or in specific countries, may continue to have anegative effect on these sales channels.
Notwithstanding recent developments with respect to vaccines for COVID-19,
given the global scale, severity and duration of the COVID-19 pandemic, itstrajectory is difficult to predict. The COVID-19 pandemic is expected to continue
to materially and adversely affect the global economy, creating risk around thetiming and collectability of UMG’s accounts receivable and possibly leading
to a decline in consumer discretionary spending which, in turn, could havea negative impact on UMG’s results of operations, cash flows and financial
position. Stay-at-home and shelter-in-place orders, business closures, travel
restrictions, supply chain disruptions, employee illness or quarantines, andother extended periods of interruption to its business have resulted and could
continue to result in disruptions to UMG’s operations. Any worsening of the
COVID-19 pandemic, ineffectiveness of the vaccination efforts or the spread of
any new variants of the coronavirus could result in additional material adverse
impact on its business, financial condition, results of operations and prospects.
Risk response
UMG’s touring and retail merchandise sales were significantly impacted during
the COVID-19 pandemic. UMG was able to offset the negative impact of theMUSIC IS UNIVERSAL Annual Report 2022 | 123

RISK AND RISK MANAGEMENTCOVID-19 pandemic with a significant increase in subscription and streaming
revenues and UMG eCommerce business. In 2022, UMG benefited from thereturn of live income and touring related merchandising revenues (as manymarkets removed restrictions) in addition to the continued growth in othersegments of the business.
In the event that the COVID-19 pandemic and its related effects continue on
an extended basis globally, UMG would continue to look for ways to evolve anddevelop its business in an effort to offset the associated negative effects andavoid a material negative impact to its business.
Cybersecurity
Cyberattacks are an ever-present risk that, could adversely impact UMG’s dataand operations.
UMG may be subject to cyberattacks, including phishing, malware, andransomware. While no such attack has had a material adverse effect on its
business in the past, there can be no assurance with regard to potential futureattacks and UMG’s systems may be vulnerable to damage from such attacks.
In addition, UMG collects and processes personal information about its
customers and potential customers, employees, artists and vendors. UMG
also maintains sensitive confidential business information of itself and, insome cases, counterparties. It holds content covered intellectual property
rights including rights in music recordings and compositions, and further
including not-yet-released music. UMG relies on both its computer systems
and those of service providers for its operations and to manage these kindsof data. No computer system is immune from attacks or other incidents,
and UMG’s system may be vulnerable to, or may have suffered unknown,security breaches by computer hackers and others that attempt to penetrate
or otherwise defeat the security measures that it has in place. A compromise of
its security systems that results in the loss or exposure of personal information,
confidential information, or content including not-yet-released music and thatcompromises the integrity of UMG’s information, causes UMG’s systems tooperate in a way that UMG does not intend, or affects the availability ofsuch systems or information for use, may lead to operational disruptions andsignificant expenditures to address the incident. In addition, any vulnerabilities
found in UMG’s systems, the loss of competitively sensitive information, theft offunds, reputational harm, litigation and investigations, legal expenses, liability,
penalties, or the imposition of ongoing monitoring or audit requirements may
also lead to operational disruptions and/or significant expenditures. Any of theforegoing may adversely impact UMG’s business, results of operations, financial
position and prospects.
Risk response
UMG employs multiple layers of security controls to protect our assets, systems,
and employees from malicious cyberattacks and actors. These layers include
broad deployment of advanced authentication controls including multi-factor
authentication, deprecation of privileged service accounts, active network andsystem monitoring, centralized logging, and incident response and business
continuity planning.
Our Global Security Office (GSO) has created an Insider Threat program tocontinually review and refine gathered data on internal activity. The program
identifies, tracks, and mitigates suspicious internal activity including attempts

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to exfiltrate data. If an incident is detected UMG deploys a robust crossfunctional security incident response team (SIRT) involving members of its
security, technology, legal, communications, and risk teams to holisticallyaddress the technical and non-technical risks of a security incident.
UMG conducts regular security training including regular phishing trainingof all employees and a blend of online and in-person training covering
general security as well as application and developer security. It has
implemented additional non-technical measures including cyber insurance
policies, security incident simulations, and audits to mitigate the risks of an
adverse cybersecurity event.
Changes in global economic and financial conditions
A decrease in global economic growth, an extended recession, sustained highinflation rates or other periods of declining economic conditions, either globallyor in any of the markets in which UMG operates, could adversely affect UMG’sresults from operations, cash flows and financial conditions.
A significant portion of UMG’s revenue relies on consumers spending
discretionary funds on leisure activities, such as music subscriptions, CDs,
vinyl albums and artist merchandise. The state of the economy, inflation,
deflation, political uncertainty, the availability of consumer credit, taxation,
unemployment, and the impact of the COVID-19 pandemic are all factorsthat can influence the prevailing macroeconomic conditions and affect UMG’sbusiness. Economic growth and consumer confidence are important for UMG’s
growth and strategy.
Since early 2022, a number of countries, including most major economies in
Europe and North America, have reported high inflation. Concurrently, central
banks in such countries have raised or discussed the possibility of raisinginterest rates in order to fight such inflation. Such increases in interest rates
may reduce growth or result in a global or regional recession. Further market
volatility may occur as inflation continues to rise and markets respond to theinterest rate increases and the cessation of quantitative easing programmes bymajor central banks. Each of these events may negatively impact discretionary
funds available to consumers for leisure activities, and as a result may
negatively impact UMG’s revenues.
Risk response
UMG benefits from a diverse set of growth drivers, such as DSP penetration
growth, social media platforms, health/fitness applications, gaming, and Audio
Video. Thus making UMG less dependent on one particular growth driver.
Furthermore, music consumption is relatively cheap compared to other forms of
media entertainment, generally DSP providers make all content available, thus
not requiring multiple subscriptions. In the past music consumption proved tobe resilient in macro-economic downturns and so far we have not seen any
material impact from the global economic downturn on UMG results (despite
lower ad-funded streaming income growth as the advertising industry was
impacted by the difficult economic environment).
Geopolitical instability
UMG’s results of operations, cash flows and financial condition may be
adversely impacted by trends, developments and other events in othercountries. Unfavorable conditions can depress revenues in any given market
and prompt promotional or other actions that adversely affect our margins.

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RISK AND RISK MANAGEMENTIn February 2022, Russia military forces invaded Ukraine and significant
international sanctions against Russia were triggered.
As a response to Russia's actions in Ukraine there has been an unprecedented
expansion of sanction programs by the U.S., the UK, the EU, Japan and Canada toname but a few. (i) Blocking sanctions and removal from the "SWIFT" (worldwide
Interbank payment system) applied against State Owned and Private Russian
Financial Institutions. (ii) Blocking sanctions against Russian & Belarusian
Individuals with government connections, and politicians. (iii) Blocking Russia'sforeign currency reserves, expansion of sectorial sanctions, access to capital
markets, export and trade restrictions and bans on Russian Imports.
The situation continues to evolve and the U.S., the UK, and the EU andother countries may implement additional sanctions against Russia andBelarus. Such additional sanctions and measures in conjunction with thosepre-existing could further adversely affect the global economy which could
potentially increase UMG's costs and reduce the amount of disposable income
available to UMG's customers and therefore could adversely affect UMG's resultsfrom operations.
Risk response
On 8 March 2022, UMG announced the suspension of operations and the closingof its offices in Russia, effective immediately. Revenues and EBITDA in Russia
and Ukraine in 2021 were not material to UMG’s revenues and therefore thissuspension only had a minimal impact on the Company. However, the extent
and duration of the military action, sanctions and resulting market disruptions
could potentially have substantial impact on the global economy.
Music consumption proved to be resilient in macro-economic downturns in thepast and so far UMG has not experienced any material impact arising from theeffect of the sanctions, consequently any extension of sanctions is perceived ashaving a minimal impact on UMG's result from operations.
Dependency on information technology systems.
UMG’s operations are dependent on its information technology and information
systems, and any disruption to the Group’s IT system or failures in the Group’s
IT systems could adversely impact the Group’s operations.
The integrity, reliability and operational performance of UMG’s information
technology (IT) infrastructure and technology network are critical to its
operations. UMG relies upon the capacity, reliability, and security of its IT
hardware and software infrastructure and its ability to expand and update thisinfrastructure in response to changing needs.
Certain elements of the IT systems infrastructure on which UMG depends areoutsourced to third parties. The services and functions provided by these third
parties are critical to the Group’s business and include (but are not limited to)storage, data processing and network.
The availability of UMG’s IT platforms and other services may be interrupted bydamage or disruption to the Group’s or the Group’s third-party service providers’IT systems, which may be caused by, for example hardware or software defects,
human error, unauthorized access, fire, power loss, natural hazards, the impact
of war and terrorism, disasters or similarly disruptive events, as well as planned

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upgrades and improvements which may be subject to developmental delay or
fail to be effective.
While UMG has in place business continuity procedures, there can be noassurance that these will be fully successful in preventing all disruptions to
the availability of UMG’s IT platforms or other services. To the extent the Groupoutsources its business continuity or disaster recovery operations, it is at riskof the vendor’s unresponsiveness in the event of breakdowns in the Group’ssystems, which could cause delays in recovering service.
Furthermore, performance issues, system interruptions or other failures in theGroup’s IT systems could expose the Group to potential liability to pay damages
as well as reputational harm, additional operating expenses to remediate the
IT failures and exposure to other losses or other liabilities, all of which could
have a material adverse effect on the Group’s business, financial condition andresults of operations.
Risk response
UMG maintains what it considers to be an appropriate level of insurance against
some of these risks. UMG’s insurance coverage may not cover all of the costs
and liabilities it incurs as the result of any such interruptions or failures of its
IT systems, and if its business continuity and/or disaster recovery plans do noteffectively and timely resolve issues resulting from a disruption UMG may suffermaterial adverse effects on its business.

Financial risks
Access to and cost of financing
Risks related to access to and cost of financing are assessed based on theGroup’s capacity in the coming twelve months to have ready access to cash
and cash equivalents and available confirmed credit facilities and to generatesufficient cash flows and proceeds from sales to cover debt repayments,
dividend payouts and financial commitments.
Risk response
UMG has access to a €2 billion confirmed syndicated financing package(RCF) which provides the necessary funds to cover the Group’s financial
requirements. A €1 billion term loan was repaid by UMG following the successful
Issuance of 2 bonds rated BBB/Baa1 for a total amount of €1 billion. UMG averagedebt maturity is 4 years.
Currency fluctuations
Unfavorable currency exchange rate fluctuations could adversely affect UMG’sresults of operations.
A significant portion of UMG’s assets, liabilities, revenues and costs aredenominated in currencies other than Euros, in particular U.S. Dollars.
To prepare UMG’s Financial Statements, UMG must translate those assets,
liabilities, revenues and expenses into Euros from such currencies at thenapplicable exchange rates. Consequently, increases and decreases in the valueof the Euro as compared to such other currencies will affect the amount of these
items in the UMG Financial Statements, even if their value has not changed intheir original currency. These translations could result in significant changes
to its results of operations from period to period. In addition, exchange rate

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fluctuations could cause expenses to increase as a percentage of net sales,affecting profitability and cash flows.
Risk response
From time to time, UMG enters into foreign exchange contracts to hedge the riskof unfavorable foreign currency exchange rate movements. UMG seeks to hedge
currency transaction risks by offsetting opposing cash flows (natural hedging)and using derivative hedges.
Changes in tax laws
Changes in tax laws or challenges to the Group’s tax position could adversely
affect the Group’s results of operations and financial condition.
Given the international footprint of the Group’s operations globally, the Groupis subject to tax laws and regulations in more than 60 countries where it
operates. Adverse developments in applicable tax laws or regulations, or any
change in the position by the relevant tax authorities or tax courts regarding
the application, administration or interpretation of any applicable tax laws or
regulations, could subject the Group to additional or increased tax payments,
and in turn have a material adverse effect on the Group’s business, financial
condition and results of operations. If the Group’s tax positions are challenged
by tax authorities, the potential imposition of additional or increased taxes
could require the Group to pay taxes that the Group currently does not collect or
pay or increase the costs of the Group’s services to track and collect such taxes,
which could in turn increase the Group’s costs of operations or the Group’s
effective tax rate and have a negative effect on the Group’s business, financial
condition and results of operations
Moreover, any change in the tax law, such as an increase of tax rate or a change
in determination of tax basis, could have a material adverse impact. Given theinternational nature of the Group’s operations, the Group may be particularly
impacted by changes to regulations relating to transfer pricing and withholding
taxes on the repatriation of funds.
Risk response
The Tax Policy supervised and approved by the Audit Committee states that
UMG has a very low tolerance to tax risk. The application of this guidance
alleviates the potential adverse impact of any change either in the application,
administration or interpretation by tax administration or tax courts. Moreover, as
position taken either for transactions, compliance and accounting purposes areconservative any change in tax rates or tax basis might be mitigated.
Therefore, the Group’s tax procedures follow this governance and there isa process in place to implement and monitor compliance with them. These
procedures comply with tax rules in countries where UMG operates as well aswith requirements enacted by supra-national organizations, such as OECD and
the European Union. These procedures are updated each time it is needed inorder to incorporate any change of tax law or tax regulation impacting UMG.
The Group Tax Department and finance teams are in charge of establishing,
maintaining and overseeing these policies. The aim is to file all the required
tax-relevant returns with the appropriate Tax Authorities in a correct, timely
and complete manner. To ensure this happens, (tax) compliance & reporting
processes are monitored through the Tax Risk and Control Framework whichsets out the controls established to assess and monitor tax risk for direct andMUSIC IS UNIVERSAL Annual Report 2022 | 128

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indirect taxes (e.g., corporate income tax, transfer pricing, VAT, wage tax andtax accounting).
The Group Tax Department monitors proposed changes in taxation legislationand ensures these are taken into account when considering the operations
and compliance. For this purpose, the Group Tax Department employs qualified
tax professionals who follow carefully any change in tax law or tax regulations,with the assistance of qualified and reputable external advisors with requisite
qualifications and reputation.

Laws and regulations
Loss of intellectual property rights
The success of UMG’s business depends on its ability to obtain, maintain,
protect and enforce its trademarks, copyrights and other intellectual property
rights around the world.
UMG’s intellectual property rights, as well as its ability to enforce its intellectual
property rights depend on the laws and regulations of the many jurisdictions inwhich it conducts business, which are not consistent across jurisdictions. An
inability to obtain, maintain, protect or enforce its intellectual property rights
could harm UMG’s brand or brand recognition and adversely affect its business,
prospects, financial condition and results of operations.
In addition, if UMG is alleged to have infringed, misappropriated or otherwise
violated the intellectual property rights of a third party (even where such claims
are without merit), any litigation to defend the claim could be costly and would
divert the time and resources of management, regardless of the merits of theclaim and whether the claim is settled out of court or determined in its favor.
There can be no assurance that UMG would prevail in any such litigation. If
UMG were to lose a litigation relating to intellectual property, in addition to thepotential reputational damage, it could be forced to pay monetary damages, toobtain a license, or to cease using certain intellectual property or technologies.
Additionally, artists signed by UMG may seek to challenge and dispute thescope or term of intellectual property rights under their contracts enteredinto with UMG, including potential disputes as to the application and effect oftechnological developments and new formats to access music.
Any of the foregoing may cause UMG to suffer economic loss and reputational
damage, which would adversely affect UMG’s business, results of operations,financial condition and prospects.
Risk response
In order to obtain, maintain, protect and enforce its intellectual property
rights, UMG takes a variety of measures, including maintaining a staff
of senior intellectual property and litigation lawyers, engaging lawyers in
different jurisdictions covering different fields of law and if necessary,conducting litigation or proceedings before courts, governmental authorities oradministrative bodies.

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Data Protection Compliance
UMG’s business is subject to a variety of European, U.S. and othersupranational and domestic laws, rules, policies and other obligations regarding
data protection.
UMG is subject to laws, regulations, rules, and other obligations governing dataprotection in jurisdictions around the world. These laws impose restrictions on
the way UMG and its counterparties may collect, use, retain, secure, disclose,
and transfer data. These laws may shape, for example, how UMG engages in
eCommerce transactions or other transactions with consumers; how it operates
its online properties; how UMG engages in direct and behavioral advertising,email marketing, mobile marketing, and social media activities; and UMG’sinternal operations in areas such as employment and how it transfers data
among its subsidiaries. Further, UMG makes statements about its use anddisclosure of data through its privacy policies, information on its websites andpress statements. UMG may also have contractual obligations regarding the useof data with its counterparties.
Data protection compliance is the subject of intense media, political, andregulatory scrutiny. Several jurisdictions in which UMG is active haverecently passed laws in these areas, and other jurisdictions are considering
imposing additional restrictions. These laws, and the ways in which authorities
interpret and enforce them, continue to develop and may be inconsistentfrom jurisdiction to jurisdiction. Complying with emerging and changing
requirements may cause UMG to incur substantial costs, change its
business practices, modify its product and service offerings, and forego otherbusiness opportunities.
For example, UMG is subject to extensive European regulations on privacy,
information security and data protection, the main and most relevant of
which relate to the collection, protection and use of personal and business
data, including Regulation (EU) 2016/679 on the protection of natural persons
with regard to the processing of personal data and on the free movement ofsuch data (the General Data Protection Regulation - the “GDPR”), the Directive
2002/58/EC of the European Parliament and of the Council of July 12, 2002
concerning the processing of personal data and the protection of privacyin the electronic communications sector (Directive on privacy and electronic
communications), the UK GDPR (the retained EU law version of the GDPR) andthe United Kingdom’s Data Protection Act 2018, and national laws implementing
each of them.
The GDPR, which has applied since May 25, 2018, is directly applicable in all
member states of the European Economic Area (the “Member States”). The
GDPR has increased both the number, and restrictive nature, of the obligations
binding on UMG for the collection, storage and processing of personal data. In
particular, the GDPR establishes a tiered approach to penalties for breach, whichenables the relevant authorities to impose fines for some infringements of up to€20 million, or 4% of annual worldwide turnover.
In the United States, UMG is subject to overlapping federal and state laws
governing privacy, data protection and security. For example, state data breach
notification laws or consumer protection laws generally mandate the rulesthat must be followed in the event of the unauthorized disclosure of personal
information. One of the most significant state privacy laws, the California
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establishes actionable rights for stipulated parties relating to data handled bycovered entities such as UMG, as well as obligations on covered entities relating
to privacy disclosures, data handling, and more. Other states including Virginia,
Colorado, Utah, and Connecticut have implemented laws generally similar to the
CCPA. UMG is also subject to regulatory authorities, such as the Federal Trade
Commission (“FTC”), and self-regulatory requirements, such as the Payment
Card Industry Data Security Standard (“PCI DSS”) and Swift Customer Security
Programme (“Swift CSP”). The FTC is authorized to enforce prohibitions on “unfair
or deceptive acts or practices,” to include a company’s violations of its own
privacy policies or commitments, or security or privacy practices that the FTC
deems fundamentally “unfair”. The PCI DSS are a set of payment-related data
security requirements the violation of which can result in fines or restrictions
on the ability to process transactions. Generally distinct from state privacy laws,some state laws also impose separate requirements regarding the handling of
payment card information.
Additionally, any perceived or actual failure by UMG, including its third-party
service providers, to protect confidential data or any material noncompliancewith data protection laws could cause customers to lose trust in UMG, reduce
UMG’s ability to attract and retain customers, artists and other business
relationships and counterparties and result in litigation or other actions beingbrought against UMG. Lastly, if third parties that UMG works with, such as UMG’s
suppliers, violate applicable laws or UMG’s policies, such violations may also
put UMG data at risk and could in turn have an adverse impact on UMG’sbusiness, prospects, financial condition and results of operations.
Noncompliance, or even allegations of noncompliance, with these laws or
UMG’s public statements or contracts in these areas, could lead government
entities, supervisory authorities or private actors to institute investigations
into or proceedings against UMG. These investigations or proceedings may
entail legal costs and reputational harm, and if defense of such proceedings
is unsuccessful even in part, UMG may face significant penalties, liability, or
ongoing monitoring or audit requirements.
Risk response
UMG maintains a comprehensive data protection compliance program andpersonnel dedicated to managing data protection risk. UMG’s data protection
teams partner with legal, technology, and business personnel throughout theorganization to identify and mitigate data protection compliance risks.
Recent data protection compliance initiatives include updates or improvements
to privacy disclosures, policies and procedures, data subject rights
processes, employee training, data governance, cross-border data transfer
agreements, supplier contract terms, internal audit procedures, and incident
response processes.
To manage increasing complexity, UMG strives to streamline compliancethrough a global approach to data protection. This approach improves theefficiency of compliance efforts and reflects the global interconnected natureof UMG’s artists, fans, and business operations.
Governmental and regulatory challenges
A significant portion of UMG’s revenues are subject to regulation either bygovernment entities or by local third-party collecting societies throughout
the world and rates on other income streams may be set by governmental

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proceedings or be subject to legislative intervention, which may limit
its profitability.
Mechanical royalties and performance royalties (on both physical and digitalsales) are two of the main sources of income for UMG’s music publishingbusiness, accounting for under 14% of UMG’s revenue in 2022, and mechanicalroyalties are an expense for its recorded music business, representing 0.7% of
UMG’s revenue in 2022. In the United States, compulsory mechanical royalty
rates are set every five years pursuant to an administrative process under the
U.S. Copyright Act, unless rates are determined through industry negotiations,and performance royalty rates are determined by negotiations by performing
rights organizations, which in the U.S. include American Society of Composers,
Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI) and the Society ofEuropean Stage Authors and Composers (SESAC). ASCAP and BMI are subject to aconsent decree rate-setting process if negotiations are unsuccessful.
The Antitrust Division of the U.S. Department of Justice (the DOJ) has previously
reviewed its consent decrees with ASCAP and BMI and, while in January
2021, the DOJ announced that it would take no further action to modify or
terminate such decrees, there is no guarantee that the DOJ will not choose
to review such decrees in the future. Changes to the mechanical royalty rate,
the performance royalty rates or consent decrees governing the U.S. performing
rights organizations could potentially impact the profitability of UMG’s music
publishing business.
Outside of the United States, mechanical rates are typically negotiated on anindustry-wide basis (or for multi-territorial online licensing, on a repertoirespecific basis but still necessarily in partnership with collecting societies asrights holders) and may be subject to mandatory collecting regimes. In mostterritories outside the United States, mechanical royalties are based on apercentage of wholesale prices for physical products and based on a percentage
of consumer prices for digital formats. Performance royalty rates are typicallynegotiated between the collecting society and the individual licensee. The
mechanical and performance royalty rates set pursuant to such processes may
adversely affect UMG by limiting its ability to increase the profitability of its
music publishing and/or recorded music businesses.
The performance royalty rates received by UMG’s recorded music business in
the United States for webcasting and satellite radio are set every five years
by an administrative process under the U.S. Copyright Act unless rates are
determined through industry negotiations. In most jurisdictions outside theUnited States, UMG’s recorded music business receives payment for the public
performance and broadcast of its sound recordings via collecting societies, with
rates generally set by industry agreement or rate setting tribunal. In certain
jurisdictions, governments either have, are proposing or face certain pressure to
introduce legislation which may introduce and/or extend mandatory collective
licensing and direct remuneration claims for certain rights, such as (but notlimited to) the introduction of an additional remuneration right for performers
for the so-called “making available” of sound recordings on digital services.
As revenues continue to shift from physical to diversified distribution channels,
it is important that UMG receives fair value for all of the uses of its intellectual
property as its business model now depends upon multiple revenue streams
from multiple sources. To the extent that the rates set for recorded music
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prescribed rate-setting processes are set at levels which are not favorable oreconomically viable for UMG, this could have an adverse impact on its business,
prospects, financial condition and results of operations.
Risk response
The diversified nature of UMG’s business between types of sources of income
and geographies mitigates the impact to UMG in case any individual country
were to implement laws that could adversely affect the income that flows
to UMG.
The rate setting process by the Copyright Royalty Board (CRB) in the United States
was recently concluded to fix mechanical royalty rates for the next five years,
and the result was the most favorable to the Music Publishing community ever.
Changes in laws and regulations
Changes in laws and regulations, including those relating to intellectual
property rights, and lawsuits that UMG is already, or which it could become
involved, may have an adverse effect on UMG’s business.
UMG’s business is subject to a variety of laws and regulations in jurisdictions
around the world, including those relating to intellectual property, content
regulation, consumer protection, antitrust and competition, among others. In
addition, various governments currently have under consideration, and may
in the future adopt, new laws, regulations and policies regarding a wide
variety of matters that could directly or indirectly affect UMG’s business andoperations, the ownership of UMG’s content assets or UMG’s ability to maintain,
protect or enforce its intellectual property rights. Furthermore, laws in various
jurisdictions differ from each other in significant respects, and the enforcementof such laws can be inconsistent and unpredictable. This could impact UMG’s
ability to operate its business in various jurisdictions and undertake activities
that UMG believes is beneficial to its business. For example:•
The European Union (EU) adopted the Directive on Copyright in the Digital
Single Market (the Copyright Directive) in 2019 to modernize EU copyrightrules. The Copyright Directive includes a number of relevant provisions,
including Article 17, which clarifies the EU copyright safe harbor requiring
Online Content Sharing Service Providers (OCSSPs or online platforms
that host user-generated content) to employ “effective and proportionate”
measures to prevent unauthorized use of copyrighted materials. The EU’s
Member States must implement the Copyright Directive via enactmentof domestic legislation. While some Member States (such as France, The
Netherlands, Hungary, Denmark and Malta, among others) are implementing
the Copyright Directive’s Article 17 faithfully to the legislative intent, otherMember States are considering (and, in the case of Germany, Austria andBelgium, have implemented) legislation that differs significantly from the
Copyright Directive in letter and spirit – and which would not only undo thebenefit of Article 17 but also potentially disrupt existing licensing models.
Several national implementations may need to be amended following a
recent European Court of Justice decision, while other jurisdictions arestill in the process of transposing the Copyright Directive into domestic
legislation. It therefore remains unclear how Article 17 of the Copyright
Directive will be applied in the different Member States.
UMG could also be adversely affected by changes in interpretation of existinglaws by courts and regulators. For example, a bill had been introduced in
California that would amend California Labor Code Section 2855 (Section 2855)

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RISK AND RISK MANAGEMENT

such that UMG’s ability to recover damages from certain artists that fail todeliver on their contractually promised recordings after more than seven years
may be hindered. While that proposed legislation did not become law, similar
measures could be introduced in the future. Similarly changes in the area of
copyright law, in particular, could directly or indirectly affect UMG’s operations,the ownership of UMG’s content assets or UMG’s ability to maintain, protect orenforce its intellectual property rights.
In addition, UMG is currently involved in and could become involved in a
number of lawsuits, disputes or investigations initiated by consumers, business
partners, competitors, artists, governmental entities, tax authorities and third
parties. Such lawsuits, disputes or investigations may relate to, inter alia,
copyright infringement, contractual disputes, employment disputes, antitrust
and tax disputes. For example, on February 5, 2019, a purported class action
lawsuit was filed against UMG Recordings, Inc. on behalf of a putative classof all recording artists who had requested the termination of purported grantsof U.S. copyrights to UMG pursuant to Section 203 of the U.S. Copyright Act; on
May 13, 2021, individual and putative class action claims were filed against
UMG Recordings, Inc. in the U.S. District Court for the Central District ofCalifornia for breach of contract and fraud; and on January 4, 2023, individual
and putative class action claims were filed against UMG Recordings, Inc. forbreach of contract, breach of the duty of good faith and fair dealing, andunjust enrichment.
Litigation and proceedings before courts or governmental authorities, whether
or not UMG is involved in such proceedings, may serve as precedents that could
adversely affect UMG’s operations, ownership of content assets or intellectual
property rights. UMG could incur substantial costs to comply with new or
modified laws and regulations or substantial penalties or other liabilities
if it fails to comply. UMG could also be required by such laws to change
or limit certain of its business practices, which could impact its ability togenerate revenues.
Any of the foregoing may adversely impact UMG’s business, prospects,
financial condition and results of operations. See Note 25 “Litigation” in theNotes to the Consolidated Financial Statements for additional information on
legal proceedings.
Risk Response
UMG has a structure to oversee the company's compliance with all relevantlaws and changes in laws, and the company also works through lobbying (bothdirectly and through trade associations) to influence any changes so that they
do not negatively affect the business or broader music industry and its key
stakeholders. In addition, UMG maintains a staff of senior litigation lawyers
and may engage external lawyers to assist with lawsuits, investigations anddisputes. To the extent that changes in laws are the result of litigation, UMG has
a program of strategic litigation, both at the trade association and direct level, tohelp build good precedents and avoid bad ones.

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BOARD REPORTNON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATIONNON-FINANCIAL PERFORMANCEESG Strategy

AT UMG, WE ARE COMMITTED TO SUSTAINABILITY NOTONLY IN OUR BUSINESS AND ACROSS OUR INDUSTRY, BUT
ALSO IN CHANNELING THE COLLECTIVE PASSION AND
COMMITMENT OF OUR EMPLOYEES, ARTISTS, AND FANSTO PROTECT THE PLANET AND CREATE AN EQUITABLE
FUTURE FOR GENERATIONS TO COME.
Our environment, social, and governance (ESG) approach is anchored in data

integrity and transparency, with a focus on the issues of material importance toour stakeholders. Our dedicated ESG function integrates sustainability acrossthe company by executing a comprehensive ESG management system,

convening cross-functional working groups, leading sustainability educationand engagement efforts, and supporting independent action.

Our ESG framework is organized into three core areas underpinning our current
initiatives and reporting efforts:

ENVIRONMENTADVANCING CLIMATE ACTION ACROSS THE INDUSTRYSOCIALEMPOWERING OUR PEOPLE AND COMMUNITIES THROUGH CULTURE AND
CREATIVITY

GOVERNANCE
DRIVING ACCOUNTABILITY, TRANSPARENCY, AND RISK MANAGEMENT THROUGHRESPONSIBLE GOVERNANCE

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NON-FINANCIAL INFORMATION

Key 2022 Accomplishments and 2023 Priorities
UMG’s evolving ESG strategy resonates with current social and environmental
issues, keeping pace with industry best practice and societal expectations
around sustainability and inclusion. In 2022, we invested time and resources
into expanding our internal ESG activities and building out the infrastructure
to support robust company-wide engagement. We focused on fine-tuning
our strategic framework and management system in an effort to strengthen
our commitments and assure concordance with prevailing ESG disclosure
frameworks. Key accomplishments included:•

Materiality Assessment: We updated our ESG Materiality Assessment toalign our impact areas, resources, and KPIs with stakeholder expectations,
our enterprise risk management processes, and the strategic positioning ofour business.

•

Task Force on Climate Related Financial Disclosures (TCFD) Adoption &Scenario Analysis: We conducted our first TCFD Scenario Analysis to provide
a qualitative review of potential climate-related risks, inform strategicplanning, and enhance our transparency with respect to climate risk
disclosures. Due to the nature of our business, the analysis revealed that
there are no climate-related risks resulting in High or Critical impact to
UMG’s operations across the evaluated scenarios and time horizons (see our
TCFD disclosure).

•

Greenhouse Gas (GHG) Management Plan: We expanded our GHG reporting
efforts to account for physical supply chain impacts and completed acomprehensive GHG Inventory in preparation for our science-based target
validation in 2023.

•

Strategy Execution: We continued to mobilize sustainability working
groups across different business functions and execute programming tooperationalize our commitments.

•

Supplier Engagement: We continued to engage with our physical anddigital supply chain partners to obtain ESG data and develop collaborative
industry partnerships.

•

Task Force for Meaningful Change (TFMC) Impact Report: We released our
first TFMC Global Impact Report – highlighting the Task Force’s key initiatives
in the ongoing fight for equality, justice, and inclusion.

Our progress in 2022 was driven by our commitment to rigorous measurement
and reporting. In a time when society’s expectations of companies
have never been higher, we strive to communicate openly and honestly
about our sustainability performance and align our efforts with leadinginternational frameworks.
UMG’s 2022 reporting complies with the Non-Financial Reporting Directive(NFRD) and EU Taxonomy requirements. Our work aligns with various
frameworks and standards, including TCFD, Global Reporting Initiative (GRI),
Sustainability Accounting Standards Board (SASB), and Carbon Disclosure Project(CDP). Additionally, we map our initiatives to the United Nations Sustainable
Development Goals (UN SDGs).

MUSIC IS UNIVERSAL Annual Report 2022 | 137

NON-FINANCIAL INFORMATIONAs we look ahead to the coming year, we will continue to strengthen our
non-financial public disclosure process. We have an opportunity – and a
responsibility – to leverage the power of music to drive meaningful change, andwe will remain steadfast in our mission to amplify the issues that matter mostto our people, artists, and fans. Key commitments include:•

Transition from the NFRD to the Corporate Sustainability Reporting Directive(CSRD): We will begin implementation of the European Union’s CSRD.

•

Science-Based Target Validation: We will submit our science-based target to
the Science Based Targets initiative (SBTi) for validation.

•

Environmental and Working Group Policies: We will roll out a global
environmental policy and build a sustainability charter and supporting
policies for each of our working groups to provide a formalized frameworkfor future objectives and actions.

•

Supply Chain Survey: We will embed policies and practices around GHG
management, energy use, and human rights into the procurement process
alongside a formalized sustainability survey.

•

Music Industry Climate Collective (MICC): We will collaborate with our peers
via the new MICC to develop a standardized methodology for measuring GHG
emissions across the industry.

Home to groundbreaking talent and a future-minded workforce, we will persist
on our journey to become a more environmentally sustainable, inclusive, andethical company.

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NON-FINANCIAL INFORMATION

MAIN MATERIAL TOPICS
2022 Materiality Assessment
Approach
In 2022, UMG conducted a comprehensive ESG Materiality Assessment to
identify our most significant environmental, social, and governance topics. The
exercise refreshed findings from our 2018 Risk & Materiality Assessment andwill serve to inform ongoing developments to our ESG strategy, KPIs, and goals.
We engaged third-party experts to support the assessment’s stakeholder
engagement efforts and ensure an objective approach to measurement andanalysis activities. Guided by the Global Reporting Initiative (GRI) methodology
and industry best practice, the exercise was conducted via a four-step process:1.

Topic Identification: We drafted a comprehensive list of ESG topics toevaluate, informed by international reporting standards, desktop research,
and an internal review. Topics were mapped to ESG reporting frameworks
and ratings criteria.

2.

Topic Prioritization: We prioritized and streamlined the topics basedon interviews with UMG management and research, including peerbenchmarking, media analysis, and investor requests.

3.

Material Topic Validation: We validated our material topic list via aseries of stakeholder workshops, including interviews with subject matter
experts and UMG employees representing a cross-section of business
operations, including:
◦
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4.

BravadoBusiness & Legal Affairs
Corporate Executives
Digital Operations
Global Communications
Global Compliance
Global Ecommerce & Business Development
Global Finance
Global Information Security
Global Royalties Revenue Optimization
Global Technology
Internal Audit
People, Inclusion & Culture
Privacy
Public Policy & Government Affairs
Studios
Universal Music Logistics
Universal Music Publishing GroupESG Strategy Integration: We synthesized, consolidated, and internallysocialized the results of the Materiality Assessment to inform our ESG
activities and reporting efforts moving forward.

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NON-FINANCIAL INFORMATION

Materiality Matrix
Topics were evaluated based on their importance to business, referring to risks
and opportunities for business performance, as well as their importance tostakeholders, referring to expectations and interests of business stakeholders.
Potential impacts of each topic were considered across the broader economy,
environment, and society at large.
Out of our initial list of 53 topics, we identified 7 topics of the highest
importance, considered UMG’s most material topics. These include one
environmental topic, three social topics, and three governance topics – asillustrated in our Materiality Matrix.

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NON-FINANCIAL INFORMATION

Material Topics
Material Topic

Description

Environmental Topic

Greenhouse Gas (GHG) Emissions
Given the potential for regulatory disclosure and oversight in Europe and the U.S., themanagement of our Scope 1, 2, and 3 GHG emissions is critical for ensuring environmental
compliance, managing our reputational risks, and identifying innovation opportunities.
This topic impacts our direct operations as well as stakeholders across our value chain,
particularly suppliers who contribute to our Scope 3 footprint.

Social Topics

Attraction and Retention of Artists
Artists are at the core of UMG’s business. Our traditional full-service A&R approach,portfolio of world-renowned labels, diversity of genres, and robust content and copyrightprotection measures will continue to drive long-term value for our artists and increase
their commercial success, consumer base, and longevity potential. However, increasing
compensation and emerging shorter-term deal structures may impact our long-term
assessments. This topic impacts our direct operations as well as stakeholders across ourvalue chain, especially our artists, fans, and the creative community. This topic is also
considered in the Risk and Risk Management section of this report.
Attraction and Retention of Employees
UMG is powered by the talents of our people. The management and advancementof employee wellbeing, development, compensation and benefits, and engagement
strengthen our workforce by attracting and retaining top talent at all levels. This topic
impacts our direct operations as well as stakeholders across our value chain, particularly
our employee base as well as the communities in which we operate. This topic is also
considered in the Risk and Risk Management section of this report.
Diversity, Equity and Inclusion
Cultivating work environments that are welcoming, inclusive, free of discrimination, andpromote a diversity of perspectives and backgrounds increases our resilience as acompany as well as the creativity behind our products and services. This topic impacts
our direct operations as well as stakeholders across our value chain and is closely tied tothe attraction and retention of artists and employees.

Governance Topics

Privacy and Cybersecurity
UMG’s business is subject to a variety of European, U.S., and other supranational anddomestic laws, rules, and policies regarding privacy and cybersecurity. The protectionof sensitive, confidential, and proprietary company and customer data is essential
for upholding stakeholder trust, managing regulatory requirements, and maintaining
competitive advantages. This topic impacts our direct operations as well as stakeholders
across our value chain, particularly our Privacy and Global Security teams and third-party
technology providers. This topic is also considered in the Risk and Risk Management
section of this report.
Piracy and Content Protection
Security of content against piracy or theft is a key focus of our business. New forms ofpiracy continue to evolve, reflecting changing technology and market conditions. This topic
impacts our direct operations and various stakeholders across our value chain, especiallyour Business & Legal Affairs team. This topic is also considered in the Risk and Risk
Management section of this report.
Supply Chain Management
Oversight and active management of our supply chain allows us to more effectively control
our Scope 3 GHG emissions more efficiently and adhere to regulatory requirements, as wellas promote product innovation, human rights, diversity, and local economies. This topic
impacts our direct operations as well as stakeholders across our value chain, especiallyour global supplier networks.

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NON-FINANCIAL INFORMATION

The table below illustrates changes to our material topic list resulting from the2022 Assessment.

Category

2022 Material Topic List

2021 Material Topic List

Environmental

GHG Emissions

Environmental Intensity of Activities

SocialAttraction and Retention of Artists

Attraction and Retention of Artists

Attraction and Retention of Employees
Diversity, Equity, and Inclusion

Governance

Privacy and Cybersecurity

Piracy and Content Protection
Supply Chain Management

Attraction and Retention of Employees

Privacy and Data Security
Responsible Content

Reporting on Material Topics
Our 2022 ESG Materiality Assessment surfaced the topics most material to
UMG, as defined by our stakeholders, subject matter experts, and business
operations leads. Our coordinated non-financial reporting system, overseen
by UMG’s central ESG department and powered by a network of contributors
representing the territories in which we operate, serves to measure the impactsof and evaluate UMG’s approach to managing our most material topics. The
subsequent sections of this report highlight UMG’s guiding ambitions withineach topic area and describe the effectiveness of actions linked to ourstrategic commitments.
As we open 2023, UMG will begin to incorporate the requirements of the
EU’s CSRD, including a double materiality assessment inclusive of impact andfinancial materiality aspects.

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NON-FINANCIAL INFORMATIONESG COMMITMENTS

UMG is committed to advancing climate action across the recorded musicindustry. Our efforts to combat climate change start with rigorous measurement
and reporting systems, which in turn allow us to set targets, measure progress,and ensure continuous improvement of our environmental performance acrossour value chain.
This year, in collaboration with our leaders and employees worldwide, we
deepened our commitment to study and report on our impact, conducting themost comprehensive analysis of GHG emissions for any major recorded musiccompany to date.
This undertaking was not without its challenges and imperfections, one being
the lack of established definitions and standards within our sector. In somecases, given the uniqueness of our products, we developed our own criteria
under the guidance of our experts. From here, we aim to develop a meaningfulcarbon reduction and removal program in 2023.

Scope Category

2022 GHG

Emissions (tCO2e)% of Total GHG
Emissions(market-based)

Scope 1

2,404

1%Scope 2 (market-based)

6,633

2%

Scope 2 (location-based)
Scope 3Purchased goods and services
Capital goods

Fuel- and energy-related activities

Upstream transportation and distribution
Waste generated in operations
Business travel

Employee commuting

End-of-life treatment of sold products

8,721
349,753249,293
2,641
3,821

43,678388

35,457
11,511
2,964

-

97%
69%
1%
1%

12%
<1%
10%
3%
1%

In addition to measuring and mitigating our environmental impact, we arecommitted to using our influence to accelerate environmental solutions andraise public awareness about climate issues. We empower our employees tocreate sustainable change from within, support our artists in speaking up aboutclimate issues, and strive to communicate openly and honestly with music
lovers around the world about the environmental impacts of the recorded
music industry.

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NON-FINANCIAL INFORMATIONManaging Our Footprint
GHG EMISSIONS MEASUREMENT & REPORTING
Our GHG inventory is calculated in line with the GHG Protocol Corporate
Accounting and Reporting Standard and includes Scope 1, 2, and 3 emissions.
This year, we expanded our Scope 3 inventory to include a comprehensive
analysis of our most relevant emissions sources. The analysis was completed
for four years, beginning with the last full pre-pandemic year (2019) in order toestablish our baseline and allow for meaningful comparisons over time.
In addition to enhancing our Scope 3 reporting efforts, we developed acomprehensive GHG Management Plan in preparation for our science-basedtarget validation. Our GHG Management Plan provides a framework by which
we will measure the performance and effectiveness of our climate-related risk
management efforts in the near- and long-terms.

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NON-FINANCIAL INFORMATION

Science-Based Targets

The Science Based Targets initiative (SBTi) calls on companies to establish
low-carbon pathways in alignment with the goals of the Paris Agreement- to limit the rise in global temperatures to below 1.5°C by 2100. UMG
has committed to submitting a carbon reduction target for SBTi validationin 2023.

UMG will continue to prioritize environmental data collection and quality
assurance efforts – both as a business and as a part of the entertainment
industry. In particular, we are committed to working with our peers to better
understand the environmental impact of our products and the recorded
music lifecycle, using quantifiable data to inform responsibility allocations andreduction measures as the music distribution landscape evolves.
GHG EMISSIONS REDUCTION
As we continue to refine our measurement processes, we will remain steadfast
on our journey to mitigate emissions – both within our direct operations andacross our value chain.
To reduce our Scope 1 and 2 footprint, UMG prioritizes the procurement of
renewable energy for our offices and facilities.

‘ACROSS OUR GLOBAL PORTFOLIO, 46% OF OUR DIRECT OPERATIONS (BY M2 AREA) ARE
POWERED BY ELECTRICITY FROM RENEWABLE SOURCES, INCLUDING OUR SANTAMONICA HEADQUARTERS AND STUDIOS, OUR LONDON HEADQUARTERS, AND ABBEY
ROAD STUDIOS.’
To support Scope 3 emissions mitigation, our Travel Task Force has developed aseries of sustainability programs to increase personal agency and awarenessacross our employee base. UMG’s new travel booking platform enables
employees to view the carbon impacts of their airfare, hotel, and car hire options
during the booking process – helping them understand how their businesstravel affects UMG’s environmental footprint while encouraging the selection of
low-carbon travel options.

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NON-FINANCIAL INFORMATION

Regional Spotlight: Universal Music UK (UM UK)

UMG businesses around the globe are doing their part to reduce the
GHG footprint of company operations, and we consider local initiatives
to be important markers from which we will continue to build ourpriorities. In 2022, UM UK implemented a number of carbon reduction
programs, including:•Business Travel Reduction: 2022 travel budgets were set at 60% of 2019budgets to decrease emissions associated with business travel.

•

Green Facilities: Our 4 Pancras Square building in London, a certified
BREEAM Outstanding building, continued to serve as the region’s
primary office. 2022 operations at this location and at Abbey Road
Studios were powered by 100% renewable electricity.

•

Shipment Optimization: Physical product parcels were consolidatedwith stock from multiple labels to reduce the shipping footprint fromwarehouse to retail.

•Low-Carbon Commuting: Biking to the office was encouraged througha “Cycle to Work” campaign, which featured information about plotting
safe bike routes and accessing the secure bike park and showers.

•

Green Transportation: A levy was paid on employee car service
journeys to support the taxi provider’s emissions reduction plan andzero emissions fleet commitment.

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NON-FINANCIAL INFORMATION

Reimagining Our Products & Packaging
We are committed to understanding the full lifecycle impacts of our products
and packaging, and to pursuing material and design innovations that enhancetheir sustainability features.
SUSTAINABLE MATERIALS
Physical products, including vinyl, CD/DVDs, and merchandise, remain a coreelement of UMG’s business. UMG’s global physical operations teams, labels,
and supply chain partners work together to develop and roll out increasingly
sustainable physical audio offerings for artists and their fans including recycled
vinyl, board-based CD packages, plastic overwrap alternatives, and plant-based
closure stickers.

‘OVER 600,000 UNITS OF BILLIE EILISH'S "HAPPIER THAN EVER" WERE PRODUCED ON
RECYCLED VINYL. IN ADDITION, WE PRODUCED NEARLY 10 MILLION UNITSINCORPORATING AT LEAST 15% RECYCLED COMPOUND AND 74% OF OUR TOP 10
INTERNATIONAL RELEASES WERE PRODUCED ON 140G INSTEAD OF THE HEAVIER 180G
VINYL DISCS.’
In 2022, we saw Bravado, our global merchandising arm, expand its partnerships
with numerous upcycling organizations to create a sustainable apparelcatalog for artist campaigns. The catalog features clothing made with recycledmaterials, certified organic cotton, and direct-to-garment printing. Bravado also
continues to offer sustainable merchandise across its retail footprint. Its London
flagship store, RS No. 9 Carnaby, incorporates recycled and organic fibers into
50% of all new products.
In addition to sustainable apparel initiatives, Bravado remains committed to afront-line eco-packaging program. Bravado’s direct-to-consumer products are
currently packaged using compostable bags, cartons made from recyclable
paper, and 100% recycled-content mailers.

Artist Collaborations

Bravado, in collaboration with Billie Eilish, Lorde, the 1975, and Shawn
Mendes, released a series of sustainable merchandise collections to raiseawareness about climate action. Utilizing materials ranging from 100%
reclaimed cotton waste to organic and recycled fiber blends, collection
campaigns feature educational components around sustainable apparelas well as opportunities for fans to upcycle their unwanted garments.

PRODUCT LIFECYCLE
In tandem with our sustainable material initiatives, UMG implements circular
processes and manufacturing innovations to reduce the waste footprint of ourphysical products.
On a global level, we are committed to diverting 100% of physical music scrap
from landfills and have established partnerships with Debrand to support thereuse, repurposing, and recycling of vinyl and optical discs. With a focus
on the customer-use and end-of-life phases of the product lifecycle, UMG
Australia is currently engaging with the Australian Recording Industry (ARIA)

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NON-FINANCIAL INFORMATION

Board to highlight the need for a collective recycling initiative across all musiccompanies and media disc retailers.
To reduce the waste footprint of UMG merchandise, in 2022 Bravado adopted
a policy allowing photo approvals for most product sampling, eliminating theneed to ship samples. This serves to reduce excess physical waste from the
manufacturing process as well as carbon emissions associated with sample
transportation. The integration of Print-On-Demand (POD) systems, throughwhich products are printed as they are ordered, also mitigates manufacturing
waste. Additionally, Bravado has fostered multi-year partnerships with textile
recycling organizations across the globe.

‘SINCE 2019, BRAVADO’S TEXTILE RECYCLING PARTNERS HAVE DIVERTED OVER 320,000
POUNDS OF PRODUCT FROM THE LANDFILL VIA FIBER RECLAMATION AND MATERIALSPECIFIC RECYCLING.’
Driving Industry Transformation
INDUSTRY LEADERSHIP
UMG’s commitment to combat the climate crisis is anchored by strong external
partnerships and peer collaboration. As a founding member of the new Music
Industry Climate Collective (MICC), in 2023 we will work with Sony Music andWarner Music to develop GHG Sectoral Guidance that will serve as the industry
standard for Scope 3 emissions reporting.
Our collaboration with MICC is an evolution of our continued participationin the Music Climate Pact, an industry collaborative aiming to transform theglobal recorded music industry by reducing emissions across our value chains,
empowering employees to create meaningful change from within, supporting
artists in speaking up about climate issues, and communicating openly andhonestly with music lovers around the world about our environmental impacts.

Billie Eilish x OverheatedWe support our artists as they advocate for environmental causes
and promote awareness of the climate crisis to their fans. In 2022,
UMG’s Mercury Live served as the streaming partner for Billie Eilish’s
Overheated conference – a landmark multi-day event focused on climatechange. The conference featured a diverse lineup of young activists andprominent speakers from the world of science, energy, fashion, music,
and technology.

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NON-FINANCIAL INFORMATIONEMPLOYEE ENGAGEMENT
While UMG’s dedicated ESG function oversees our sustainability policies andreporting efforts, employee-led Green Teams play an important role in driving
environmental awareness, supporting artist advocacy, and implementing
both internal and external initiatives. This year’s regional Green Team
activities included:•

Eco-Anxiety Roadmap: To coincide with Earth Day, the U.S. Green Team
partnered with The Mental Health Coalition (MHC) to launch a new mental
health roadmap focused on climate change, eco-anxiety, and climate
justice. The Roadmap to Climate Change Mental Health was designed to help
the public navigate mental health issues that may be triggered or worsenedby eco-anxiety and climate trauma.

•

Go Green Challenge: The U.S. Green Team organized its first annual Earth
Month Go Green Challenge. Employees were encouraged to adopt a seriesof actions to reduce their daily carbon footprints, and their impacts
were tracked via an online leaderboard. For every action completed, UMG
purchased a one tonne carbon offset from a verified project of theemployee’s choice.

•Green Week Programming: UM UK’s Team Green celebrated Earth Month byorganizing Green Week, featuring sessions on sustainable merchandise, theenvironmental impact of NFTs, and UMG’s response to the climate crisis.
Programming included a guided bird walk as well as educational content
from the UM UK café, which offers vegan menu options and loyalty points forthe use of reusable cups.

‘UMG U.S. EMPLOYEES TOOK OVER 3,000 GO GREEN CHALLENGE ACTIONS ANDSUPPORTED A PORTFOLIO OF VERIFIED CARBON OFFSET PROJECTS TO AMPLIFY THEIR
REDUCTIONS.’
Across UMG’s global footprint, 2022 saw the launch of a coordinated community
garden initiative. The U.S. Green Team partnered with Goodr and Captain Planet
to create the UMe Community Learning Garden at a local elementary schoolin Los Angeles, serving as a space for students to engage in inquiry-driven,project-based learning while deepening their understanding of how natural
systems work. Gardens were also established in the UK, France, Australia, and
New Zealand. In 2023, the project is expected to expand to additional territories,
including Brazil, India, Italy, the Netherlands, and South Africa, among others.

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NON-FINANCIAL INFORMATIONESG COMMITMENTS

UMG is committed to empowering our people and communities through culture
and creativity. This focus extends to our employees, our artists, and the diverse
communities we reach.
Through dedicated task forces, recruiting initiatives, and employee development
programs, UMG is focused on establishing workplaces where diversity is valued.
Understanding the collective power of our audience, we also strive to cultivate
relationships with artists who share our values and empower them to use theirinfluence to inspire positive change. We believe in supporting ambitious, multifaceted creative content that promotes all cultures and perspectives. Throughthe very nature of our business, we strive to leverage the power of culture andcreativity to build more open, equitable societies.

‘UMG DERIVES ITS STRENGTH AS
A COMPANY FROM OUR PEOPLE – AND
IN TURN, THE PASSIONATE AND
INNOVATIVE EXCELLENCE OF OURWORKFORCE FEEDS THE SUCCESSOF OUR ARTISTS AND SONGWRITERS.
LOOKING AHEAD, WE WILL CONTINUETO BUILD ON OUR STRENGTHS, LIFT UPOUR COMMUNITIES, CELEBRATE OUR
DIVERSITY, AND FOSTER
THE ENTREPRENEURIAL THINKING THATKEEPS OUR BUSINESS THRIVING.’
ERIC HUTCHERSON, EXECUTIVE VICE PRESIDENT,CHIEF PEOPLE AND INCLUSION OFFICERMUSIC IS UNIVERSAL Annual Report 2022 | 150

NON-FINANCIAL INFORMATION

Empowering Our People
Our business is driven by the commitment and ingenuity of our people. Our
People, Inclusion & Culture (PIC) team supports the UMG employee experienceand ensures that the values of our company align with the values of our people.
Within PIC, specialized teams and voluntary task forces work in tandem to foster
thriving careers and maximize capability building.
We attract and retain top talent by offering competitive compensation packages
as well as additional opportunities for employees to participate in the successthat they help create.

Employee Equity Award

2022 saw UMG grant all eligible employees a one-time Equity Award of 100
shares of UMG Common Stock as a “thank you” for their efforts.

EARLY CAREER AND TALENT ACQUISITION
This year, our Talent Acquisition team focused on updating our recruitment
strategy to meet UMG’s evolving business needs. We researched and leveraged
internal and external people analytics to understand the skills and capabilities
needed for the future, and we crafted multiple iterations of our employee value
proposition to allow us to stand out in today’s hyper-competitive talent market.
In combination with a revamped go-to-market strategy, 2022 also saw our TalentAcquisition team amplify its impact with innovative technology integrations.
Our new end-to-end recruiting management application reduces recruitingbottlenecks, improves recruiter efficiency, promotes faster hiring, and increases
in-house sourcing. Our talent experience platform serves to automate workflows
and scale the hiring process, expand our candidate pools, and reduce bias in
the hiring process by removing geographic, time, and administrative barriers.

Bonus Tracks

Dedicated to meeting future executive talent among high school students,
UMG's Bonus Tracks after-school program includes weekly sessions
during which students learn about the basic workings of a contemporary
record label and have the opportunity to network with label executives whoshare their knowledge and experiences. Bonus Tracks began in 2018 in
Los Angeles in partnership with Capitol Records, expanded to Nashville inpartnership with CCMG in 2019, expanded to New York in 2022, and plans tobring music education to Atlanta and Detroit in 2023.

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Educating young people about our business remains a vital element of
UMG’s recruitment efforts. In 2022, we developed and implemented a range ofprograms to attract and inspire the next generation of talent, including:•Internship Pipeline: In the U.S., we hosted over 200 interns and placed
top performing graduates in full-time positions across Marketing, Creative
Content and Production, Strategic Partnerships, A&R, and Technology
functions. UMG Brazil also continued to provide internship opportunities forteenagers from poverty-stricken areas.

•

Mirri Mirri Partnership: UMG Australia continued its partnership with Mirri
Mirri, an Indigenous Cultural Awareness Organization, with plans to onboard
an indigenous Internship cohort in 2023.

•

Learnership Initiative: UMG South Africa launched a mentorship program inwhich 20 local youth participated in on-the-job training to learn about thebusiness side of the music industry. The territory also partnered with theSouth African Performing Rights Association to give unemployed youth theopportunity to receive an accredited certificate and work experience througha formalized training program.

•

New Graduate Job Boards: UMG Japan advertised job vacancies on careersites exclusively dedicated to new graduates.

To evaluate the effectiveness of our hiring initiatives, we release a Hiring
Manager Satisfaction Survey to maintain a real-time understanding of Hiring
Manager experience with the Talent Acquisition organization, earning asatisfaction score of 87%. New employees also receive a survey asking themto rank their hiring experience throughout the recruitment lifecycle.

‘IN 2022, UMG RECEIVED SATISFACTION SCORES OF 95% RELATED TO THE EMPLOYEEONBOARDING EXPERIENCE AND 90% WITH RESPECT TO EMPLOYEE ENGAGEMENT AT
THE 90-DAY MARK.’In combination with the continuous evaluation of industry trends and relevantmarket intelligence, these exchanges will continue to inform the TalentAcquisition team’s initiatives, priorities, and structure.

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Hiring a Diverse Workforce

At UMG, we champion diversity, inclusion, and belonging with every hire.
2022 initiatives included:•

Inclusive Interviewing Training: We launched Inclusive Interviewing
Training as part of our People Development & Organizational
Effectiveness Open Enrollment. Our goal for 2023 is to roll the
program out to all hiring managers and certify the entire TalentAcquisition team.

•Specialized Job Boards: We partnered with specialized job boards which
strive to fix the employment gap for talent from underrepresented
communities in the creative industry. All of our job postings integrate
our inclusion statement.

•

Historically Black Colleges and Universities (HBCU) Support: We
participated in the HBCU Caucus Partnership Challenge, led by U.S.
Congresswoman Alma Adams (NC). The Challenge was created by theCongresswoman in 2017 to strengthen public-private investments in
HBCUs in an effort to ensure their future sustainability, increase careerprospects for their students, and advance diversity and inclusion
within all sectors of employment.

•

Congressional Black Caucus Workshop: We joined forces with theCongressional Black Caucus to host the 00:30 for 30:00 Career
Development Workshop – a virtual opportunity for young Black
professionals to receive interviewing and resume building tips froma panel of UMG recruiters and executives. Participating candidates
submitted a 30-second elevator pitch for the chance to earn a 30minute meeting with a UMG executive.

•

Neurodiversity Training: We focused on attracting and embracing thetalents of individuals with autism, dyslexia, ADHD, and other formsof neurocognitive variation by collaborating with partners to offer
neurodiversity training and support for new and existing employees.

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NON-FINANCIAL INFORMATIONCAREER DEVELOPMENT
In addition to our expansive recruitment programs, we understand thatworkforce engagement and development is critical to ensuring longterm success.
Employee listening is how we pass the mic. Our Employee Listening Strategy
helps us match expectations with opportunities throughout the employment
lifecycle and is designed to consistently capture the individual employee voice,effectively assess critical areas of the employee experience, and efficiently
turn insights into action. We continuously issue Lifecycle Surveys - New Hire,
90-Day New Hire, and Exit - to collect key information along the employee
journey, as well as Engagement and Pulse Surveys to measure progress against
our objectives. The survey readouts are a valuable tool that help improve ourretention efforts.
We also offer a broad range of learning opportunities to retain our top
talent, facilitate career growth, and promote a culture of care, creativity,and innovation.

‘UMG EMPLOYEES DEVOTED 74,456 HOURS TO TRAINING IN 2022.’
To support development from the very start of employment, all newhires are registered to complete regionally-specific UMG training modules
and acclimation activities. These dynamic resources leverage enterprisetechnologies, company policies, benefits, rewards, and inclusion awareness.
UMG Australia deploys its introductory training via a mobile app that promotes
continual improvement of the hiring process by automatically administering
new hire surveys to collect feedback at various intervals.
Following employee onboarding, our regional offices provide tailored
programming on a quarterly basis to create opportunities around soft andtechnical skill building. Popular topics include “Effective Communication in the
Workplace,” “Challenging Conversions, Setting Goals,” “Careers & Connections,
Everyday Inclusion, Creating Psychological Safety,” and “Banishing Imposter
Syndrome.” Programming also includes cross-functional business acumen
workshops that provide additional opportunities for managers to increase theirknowledge and share it with peers.

Learning Management SoftwareThis year, upskilling and reskilling took priority as UMG launched alearning management software (LMS) in select territories. Featuring over
300 digital courses, the global software application provides a framework
for all aspects of the learning process. We intend to further scale thistechnology across the company in 2023.

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Cultivating leadership is another foundational element of UMG’s workforce
development approach. In 2022, key programs included:•

The Emerging Leader Program: Based on years of internal feedback,
we launched The Emerging Leader Program, a fully digital and selfpaced leadership development initiative designed to upskill individual
contributors who aspire to become leaders. The program supports career
growth by providing resources around communicating ideas, decisionmaking, giving feedback, and preparing to lead a team.

•

Career Development Studio: We expanded the Career Development Studio, a
self-help online portal created to encourage internal mobility. The studiofeatures resources, planners, and assessment tools for employees tocustomize their career journeys.

•

6 Strings of Management: We continued to strengthen the 6 Stringsof Management. As our flagship leadership development program, theinitiative is designed to equip first-time people managers with frameworks
to effectively engage their teams. Participants learn how to lead inclusively,
understand their communication style, identify ways to bring out the bestin their team, and set goals and coach performance to deliver results.
In surveying the 2022 cohort, 93% said they applied their learnings, 92%
said the program improved their communication with direct reports, and
74% said they conducted “stay interviews” with their teams following
the program.

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NON-FINANCIAL INFORMATIONEMPLOYEE HEALTH & WELLBEING
Health and wellbeing are central to our strategy for enhancing our appeal as an
employer, improving creativity, and motivating and retaining our employees.
Our experiential wellbeing program, The Whole You, continues to provide UMG
employees with access to quality-of-life tools, information, and activations
addressing mental, physical, and financial health - as well as community andfamily needs. The program offers a variety of resources, including webinars,
panels, and self-paced learning modules.
In 2022, we launched a new partnership with a health and wellbeing
platform available to all U.S. employees and their dependents. The platform
provides diverse offerings, such as 1:1 coaching, therapy sessions, and guided
meditations. As part of the collaboration, we hosted more than a dozen sessions
over an 8-month period addressing topics ranging from “Stress & Burnout” to“Coping with Loneliness.”
Additionally, UMG U.S. doubled its Wellbeing Allowance, a program that supports
the overall wellbeing of U.S. employees and their immediate family members by
funding a wide array of services. Employees were also given Wellbeing Day off in
October, early release on Wellbeing Fridays throughout the year, and a two-week,
company-wide Winter Break in December. We also closed U.S. offices for Election
Day to ensure that all of our employees had the time they needed to vote andparticipate in the electoral process.
Across our global footprint, additional health and wellbeing initiatives included:•

Employee Assistance: UMG employees across Australia, Germany, the UK,
and the U.S. were granted access to regional Employee Assistance Programs.

•

Gympass Access: UMG Brazil provided employees access to the
Gympass Platform, a complete wellness system offering therapy sessions,parameterization and sleeping assistance, nutrition guidance, motivation,
financial resources, physical activities, and classes for children and family.

•

VITALITY Benefit: UMG South Africa implemented the VITALITY program,an additional benefit to medical insurance for 100% of permanent
employees. VITALITY tracks wellness indicators via an app and sets
customized goals for each individual.

•

Mental Health Programming: UM UK provided targeted programming andresources to honor World Mental Health Day and Mental Health Awareness
week, including therapist sessions focused on “Improving Connection andBelonging” as well as community meet-ups and art therapy classes.

As part of our commitment to health and wellbeing, UMG provides
comprehensive family support programs, including fertility, egg freezing,
pregnancy, miscarriage, adoption, and mental health support. Our childcare andeldercare partnerships reflect UMG’s focus on delivering best-in-class benefits.

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Family Friendly Employer

UMG Germany was awarded Top Employer 2022 for “family friendliness” byfreundin x kununu.

We also remain steadfast in our commitment to the safety of employees in
the workplace. We communicate and reinforce our Work, Health, and Safety
programs and policies, which include arrangements for first aid and emergency
procedures, key contacts to raise any work-related health and safety concerns,
and incident reporting procedures.
FUTURE OF WORK
Due to the COVID-19 pandemic, many of our employees are now fully immersed
in a hybrid working model. Through UMG’s Future of Work Strategy, we continue
to ensure that company leaders and employees have access to the necessary
tools and resources to be effective in this changing work environment.
Hybrid, mobile, and remote employees are offered furniture, lighting, andhome office supplies through a dedicated UMG purchase program, and we are
currently identifying a partner to assess and advise on proper ergonomic setup
for hybrid workers.
We have also tailored the UMG learning journey to focus on specificcommunication and relationship skills to build a cohesive and productive
hybrid workforce that continues to deliver the creative results for which we are
known. We offer courses ranging from “Leading a Hybrid Team,” which prepares
managers to support their hybrid teams, to “Hybrid Working: Connection,
Collaboration & Wellbeing,” which helps employees navigate new routines intheir work weeks and the challenges of staying connected, productive, andcollaborative in a geographically dispersed workforce.
As our workplace needs continue to evolve, we understand that employee
feedback is critical in shaping our policies and priorities. In 2022, UM UK
conducted an internal survey to better understand employees’ attitudes andfeelings on a range of topics related to hybrid working, informing its approach toworkplace flexibility programs that boost creativity and collaboration. Dedicatedquiet spaces were added to the UK office footprint for neurodiverse employees,
and remote employees were given financial support to setup ergonomic
home offices.
UMG Japan also conducted a series of surveys to understand how its various
departments work remotely versus in-person, as well as issues and challenges
within current workstyles. Feedback was leveraged to introduce tools andequipment to make hybrid working more comfortable, including the integrationof Zoom booths into regional offices.

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DIVERSITY, INCLUSION, & BELONGING
At UMG, we believe that the best way to foster an environment where originalideas are generated and innovation can flourish is to create a workplace that
attracts and promotes people from diverse backgrounds and cultures – one thatreflects and supports the incredible diversity of our artist roster.
Through dedicated practices and engagement opportunities, we are committed
to the inclusion of all employees, with an underlying focus on creating equitable
access to resources for communities of people who are Asian and PacificIslander, Black, Hispanic and Latinx, Native American and Indigenous, LGBTQIA+,
and women.
UMG’s inclusion learning strategy promotes a culture of development thatis welcoming and supportive of courageous dialogue across differences.
In addition to PIC-led training and coaching sessions, UMG encourages
participation in Employee Resource Groups (ERGs): employee-led affinity
groups that aim to create a true sense of belonging through guest speakers,
expert panels, celebration of cultural events and holidays, and professional
development workshops. Groups include the UMG Women’s Network, UTOPIAA(Asian American & Pacific Islander), Black Label (African American), Cultura(Latinx and Hispanic), and PRISM (LGBTQIA+) with locally branded chapters acrossthe globe.
In 2022, UMG strengthened the connections across our global ERG footprint
with the launch of the new Global PRISM Network, a network of LGBTQIA+ ERGs
from the U.S., Canada, and Germany that convene on a regular basis to amplify
local activations during key community celebration months. The Global PRISM
Network also serves as a resource-sharing system across territories.

‘IN 2022, WOMEN MADE UP 51% OF OUR WORKFORCE, 43% OF UMG'S MANAGERS WEREWOMEN AND 45% OF UMG’S NON-EXECUTIVE DIRECTORS WERE WOMEN, INCLUDINGTHE CHAIRMAN OF THE BOARD.’At the nexus of our employee development efforts and our focus on diversity,
inclusion, and belonging is our commitment to driving leadership among
women and other underrepresented groups. This commitment helps foster aculture of belonging and boosts the capacity for the innovation on which ourbusiness lines depend. In 2022, key programs included:•Black Leadership Academy Experience Program: We partnered with external
expertise and launched a six-month learning journey supporting early
professionals, mid-level managers, and senior executives to accelerate theprogress of underrepresented talent.

•Management Accelerator Program: We implemented the Management
Accelerator Program for mid-career managers who are typically three to fivelevels below the C-suite and aspire to take the challenging leap into seniorleadership roles. The program focuses on building core management andleadership capabilities needed to lead successful businesses and teams.

•

Leadership Essentials Program: We rolled out the Leadership Essential
Program for early careerists and individual contributors with up to seven

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years of experience in the workforce who aspire to become team and people
leaders. The program sharpens core business understanding, dives into
effective day-to-day leadership and execution, examines self-leadership,
and provides a robust network of peers and experts.
•

ASCEND Development Program: In partnership with our People Development& Organizational Effectiveness team, UMG’s Task Force for Meaningful
Change (TFMC) launched ASCEND, our first differentiated development
program. The initiative provides support, development, and senior executive
exposure to Black employees at the Director and Senior Director Level. We
saw a 16% promotion rate among graduates, and in 2023 we will expand theprogram to all affinity groups.

•

U.M.She LEADS: In 2021, we launched our first-ever women’s executive
leadership preparation program, which was designed for rising seniorleaders looking to advance to the next stage in their career. The inaugural2021-2022 cohort represented a diverse set of leaders from across ourrecord labels and business units, with participants ranging from Senior
Managers to Senior Vice Presidents. In 2022, 46% of women who participatedwere promoted within a year.

•

U.M.She & The Women’s Network Peer Coaching Circles: We piloted peer
coaching circles with cross functional teams at all levels. Participants
met monthly with peer mentoring circles organized by career levels
and common interests. Discussions focused on topics such as building
confidence, the power of play, and reciprocity.

•

Women in A&R Program: We devised, implemented, and rolled out the
Women in A&R program to encourage women to pivot into A&R departments
at labels.

•

Women in Tech Mentorship Program: We launched our Women in Tech
mentorship program, which strives to promote gender diversity in tech andto connect talented professionals across the industry.

UMG is committed to diversity and inclusion, to creating professional growth
opportunities for our employees, and to raising the percentage of people fromunderrepresented groups within top roles and throughout our company. In 2022,
we expanded our workforce representation disclosures by looking deeper into
gender, race, and ethnicity data.

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NON-FINANCIAL INFORMATIONAs we look ahead to 2023, we are committed to continuing the research thathelps us better understand representation within our workforce, artist roster,and supplier portfolio1,2.

1

2

In 2022, UMG updated its turnover rate formulas to align with guidance from the Corporate
Sustainability Reporting Directive (CSRD). The global turnover rate is calculated as follows: Numberof departures of employees on permanent contracts in year Y / Total number of employees on
permanent contracts as of December 31 in year Y. Turnover by gender was not calculated in 2021.
Gender categories are based on our global workforce, and race and ethnicity categories are basedon U.S. reporting requirements, as laws on collecting race and ethnicity data differ outside of
the U.S. The 2022 numbers account for 9,992 full-time employees globally and 3,565 full-time
employees in the U.S. for the race/ethnicity numbers.

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NON-FINANCIAL INFORMATIONEMPLOYEE GIVING
At the center of UMG’s employee experience is a culture of care and community
service. We encourage our employees to participate in a variety of philanthropic
endeavors that benefit surrounding communities and inspire connectivity.
Donation matching remains a core element of UMG’s employee giving approach.
In the U.S., we offer a 150% super-match contribution for all qualifying
donations made by employees on #GivingTuesday.

‘IN 2022, UMG U.S. EMPLOYEES GAVE HUNDREDS OF INDIVIDUAL DONATIONSIN SUPPORT OF ORGANIZATIONS INCLUDING WORLD CENTRAL KITCHEN AND ST. JUDECHILDREN’S RESEARCH HOSPITAL. U.S. EMPLOYEES ALSO VOLUNTEERED NEARLY 1,000
HOURS OF THEIR TIME TO CAUSES THEY CARED ABOUT.’
To encourage staff volunteering, the U.S. Volunteer Time Off (VTO) Policy provides
employees with up to 16 hours paid time off to volunteer with accredited nonprofits. The VTO Policy aims to make our communities stronger by providing ourpeople with the opportunity to help those in need. Sharing this ambition, UM
UK’s Staff Charity Committee promotes participation in its annual Give A Day
initiative, which encourages staff to take a day off of work to volunteer for aregistered charity.
Across the globe, UMG territories also engage in a number of regionally specificphilanthropic initiatives, many of which support underprivileged women andchildren in local communities. Among other endeavors, 2022 saw UM UK initiate
a food bank drive and UMG South Africa provide direct support of the Frida
Hartley shelter for women and children through employee volunteering and the
donation of critical supplies.

#MLKDayofService

Consistent with Dr. Martin Luther King, Jr.’s legacy of service, UMG U.S.
employees are encouraged to mark the King holiday by performing a
day of service. In 2022, the Universal Music All Together Now Foundation
created and issued an #MLKDayofService toolkit – highlighting volunteer
opportunities with organizations fighting for constructive change, as wellas learning resources and social media graphics to spread awareness of
the #MLKDayofService campaign.

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Elevating Artists
UMG'S UNIQUE ARTIST-CENTRIC CULTURE
Once again, UMG’s unrivaled roster of artists and songwriters turned in a stellar
performance in the charts in 2022 – including both developing and establishedartists, and across genres and geographies. Our artists are collectively the mosttalented, visionary, and popular in music – and they have a special connection
with fans around the world.
That connection doesn’t “just happen.” It comes as a result of our unique artistcentric culture, which drives the partnership between UMG’s labels, publisher,and business units on one hand, and the artists and songwriters on the other.
We apply this artist-centric culture through our company’s two-fold mission.
Our first, and most difficult imperative, is to discover and break new artists
and then sustain their careers over the long run. To accomplish this goal, we
offer a supportive ecosystem that places artists at the heart of our activities.
This includes a broad spectrum of businesses – from recorded music andmusic publishing to audio and visual content licensing, merchandising, live
performances, audiovisual and film production, data analysis, digital innovation,
distribution, marketing, communication advisory services, branding, and more.
Understanding that we only succeed when our artists succeed, our artists
remain at the center of everything we do throughout their careers. UMG
continues to innovate and implement front-line programs that help our artists
reach their greatest potential, both creatively and commercially. We support
artists at every stage of their development, from discovery and continuing
throughout the lifecycle of their careers.
The second part of our mission is to promote a healthy, sustainable, andexciting music ecosystem in which our artists can thrive for years to come.
As technology continues to evolve at breakneck speed, we pursue unexploredartist-centric avenues of creative and commercial possibilities.
Given our increasingly dynamic marketplace, Universal Music Group for Brands(UMGB), our dedicated brand partnerships team, found new ways for artists
to connect with their fans across social platforms. By facilitating artist andbrand collaborations to create socially relevant content, we helped artists breakinto new markets, reach new fans, and earn non-recorded income – a key
differentiation factor for UMG. UMGB also launched the new UMusic media
network, further benefiting artists with premium media sales from YouTube
content. Through UMGB partnerships and innovations, we continue to offset
substantial marketing costs for our artists and our labels.
As the digital business model continues to evolve, we actively advocate forartists, other creators, and a robust music ecosystem in the public policy
sphere. An overarching theme of UMG’s advocacy is that all creators deserve
fair compensation regardless of the platform on which fans enjoy their art. We
have championed numerous legislative and government initiatives toward thisgoal, including the U.S. Music Modernization Act, the EU Copyright Directive, and
the American Music Fairness Act, which has been an ongoing policy effort forover a decade.

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Importantly, and in order to align our artists’ experience with our value
proposition, we also provide transparency in artist compensation. UMG invests
in the infrastructure and technology to maintain secure online access points
for artists and songwriters to view data on the consumption of their music– as well as information about their royalties – at any time and from any
computer or mobile device. These systems and applications provide significant
data, including detailed royalty data, proprietary streaming and social media
reporting, and trend analysis.
ARTIST WELLBEING & SUPPORTAt UMG, music - and the artists and songwriters who create that music – areat the center of all we do. Our commitment extends beyond supporting andamplifying their creative vision.
Through our continued partnership with the non-profit Music Health Alliance(MHA), nearly 300 UMG and UMPG artists, songwriters, and their families received
life-changing medical care and saved $3.7M in healthcare costs, including
reductions in medical bills, medication costs, and health insurance premiums
as well as grants and lowered deductibles/out-of-pocket maximum costs. In
addition, MHA provided 23 Mental Health Fund grants and helped coordinate
more than one hundred counseling sessions.
In 2022, UMG launched its worldwide goodwill program benefiting certain legacy
recording artists and songwriters with unrecouped balances. Under the ongoingprogram, eligible creators and their immediate heirs who have not received
any payments since January 1, 2000, will begin receiving royalties, subject tocertain conditions.
Relatedly, UMG’s Royalty Artist Assistance Program continues to assist ourpartners in need. The program offers featured artists in financial needwith the ability to request advances on royalty payments during times offinancial hardship.
Additional UMG initiatives address artists’ mental health and wellbeing. For
example, recognizing that the life of an artist can present unique challenges
and stressors, UM UK created a bespoke program to provide partner artists
with a confidential space to support their personal development, wellbeing, andmental health. In addition to confidential counseling services provided by an inhouse BACP-registered counsellor with over 20 years of experience in the musicindustry, the service includes referrals to other kinds of professional wellbeing
services and assistance as needed. The program supports artists at all stages of
their careers and provides a resource for UMG staff working with an artist to flag
potential concerns with a trained professional.

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Universal Music UK Artist Counseling Highlights•

Initial wellbeing check-ins to provide support and guidance to all
emerging artists, ensuring they have the right support to develop
and thrive.

•

Helping artists cope with challenges that may appear as their career
evolves, including:
◦
◦
◦
◦
◦
◦
◦

Lack of boundaries
Success and failure
Online harassment and abuse
Identity competition and comparison
Maintaining a private and public self
Rejection
Sudden fame

Our artist welfare and support efforts are further bolstered by UMG’s partnershipwith Help Musicians, a UK service philanthropy serving musicians at all stagesof their career through:
•
•
•
•
•

Business and career advice and counselingSupport for artists suffering from injury, illness, or other physicalhealth issues
Mental health services
Short-term financial assistance
Help for those suffering from bullying and harassment

In 2022, UMG partnered with Help Musicians to launch the “Co-Pilot”
program, a groundbreaking musicians’ mentoring network. The Co-Pilot
initiative matches UMG employee mentors with musicians to share knowledge,
skills, and expertise. 2022 saw 32 UMG mentors actively engage with theprogram, with many of the mentorship relationships continuing beyond theprogram’s culmination.
Importantly, our commitment to artist wellbeing and welfare extends to nonfeatured artists as well. For example, UMG’s longstanding partnership with
our partners at the American Federation of Musicians (AFM) and the Screen
Actors Guild-Association of Featured Theatrical and Recording Artists (SAGAFTRA) in the U.S. enables the music industry’s largest contributions to theirrespective health and pension funds. These funds provide studio musicians
and background vocalists access to sustained health insurance and retirement
benefits that might otherwise be unattainable.

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DIVERSE & INCLUSIVE CONTENT
At UMG, we value diversity, inclusion, and belonging in both our operations andour content. We use our global platform to shine a light on diverse stories andlocal repertoires, leveraging the power of artistry to build more equitable andopen societies. Examples of 2022 initiatives include:•

Black Story: Universal Music Recordings (UMR) launched “Black Story,” acampaign to highlight and pay tribute to trailblazing Black UK artists.
UMR engaged talented up-and-coming Black UK-based animators to create
bespoke artistic videos celebrating the music of Gabrielle, Incognito, Ms.
Dynamite, and Soul II Soul – with more to be released in 2023.

•

National Coming Out Day: In celebration of the UK’s “National Coming Out
Day 2022,” UMR released a “Pride Can’t Be Silenced” vinyl, which includes
classic songs from trailblazing LGBTQIA+ icons, artists, and allies, such as
Queen, Elton John, Spice Girls, and Kylie Minogue.

•

Hear Her Voice: To mark International Women’s Day, UMR launched “Hear
Her Voice,” a six-part podcast series featuring interviews with womenfrom across the industry representing voices for change and celebrating
sisterhood. Hosted by broadcaster Laura Whitmore, guests included Self
Esteem, Nicola Roberts, CHVRCHES’ Lauren Mayberry, Jamz Supernova, Yola,
KT Tunstall, and Olivia Dean.

•

Equalise: In addition, on International Women’s Day, our Abbey Road Studios
opened its Angel Studios to the next generation of female artists andcreatives for a free day of panel talks and masterclasses. Rachel Holmberg,
Decca’s Senior Head of A&R, joined Jo Digby, UM UK’s Head of Learning &Development, for a discussion on all things A&R. Char Grant, 0207 Def Jam’s
A&R Director, spoke on a panel discussing recording essentials.

•

Game Changers: Commissioned by the Olympics, Rebel Labs created “Game
Changers,” which went live for International Women’s Day. The six-partmini-docuseries, presented by TikTok influencer Sherice Banton, focused on
important women in sports who have paved the way and created positivechange, all set to an empowering soundtrack by Celeste and Ellie Goulding.

•

Irruk Birruk: UMG Australia launched a global distribution solution forotherwise unavailable legacy recordings from Australian Indigenous andTorres Strait Islander artists. Titled “Irruk Birruk” (“Yesterday” in thelanguage of the Yorta Yorta people), the overall aim of the project is toensure that Indigenous and Torres Strait Islander songs and stories are
not lost to history and that the ownership of their copyrights stays withthe creators.

•

Waiata Anthems: UMG New Zealand (UMG NAZ) continued to take a leadingrole in the Waiata Anthems movement, a pan-industry campaign toincorporate the local indigenous language “te reo Māori” in contemporary
music. In partnership with Dame Hinewehi Mohi, UMG NZ oversees funding
for recordings, encourages and supports industry-wide label A&R strategies
to deliver more music in te reo Māori, and manages the marketing andpromotion for the annual Waiata Athems Week and the artists participatingin the celebration with their releases.

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NON-FINANCIAL INFORMATION•Black Girls Rock: In the U.S., UMG is the sole underwriter of the Kennedy
Center for the Performing Arts’ Black Girls Rock Fest, a significant platform
to showcase the talents, vision, and innovation of female artists of color
around the world.

UMG supports and works closely with a number of institutions that recognize,celebrate, and preserve iconic, diverse, and groundbreaking music. In the U.S.,
UMG is a supporter of the Kennedy Center for the Performing Arts and was proud
to celebrate three UMG artists recognized during the prestigious 2022 Kennedy
Center Honors Ceremony, including pioneer Motown recording artist Gladys
Knight. UMG also works closely with the National Museum of African American
Music, the only museum of its kind dedicated to preserving and celebrating thehistory of Black music in America. UMG’s General Counsel and EVP of Business &Legal Affairs, Jeff Harleston, serves as a valued member of the museum’s Boardof Directors.
Honoring diverse and inclusive content also means protecting the rights of
those who create it. After several state prosecutors in the U.S. admitted rap
lyrics as “evidence” of a defendant’s guilt in court, UMG joined with others in
the music community to push for legislation to protect the artistic freedom of
songwriters and artists by limiting the admissibility of lyrics in a criminal trial.
Our advocacy efforts were successful in the state of California and continuefederally and in other states around the country.
UMG’s creative strategy and intelligence teams directly interface with ouraudiences and communities to ensure that the creative ideas for UMG labels
and artists are inclusive and reflective of society, resonating with the manydifferent audiences with whom our artists connect.

Preserving Musical Heritage

Recognizing music’s profound historic role in humanity, we work to help
preserve and honor our rich and diverse musical past – which provides
insights into who we are as a culture today.
For example, through our continuing partnership with the U.S. Libraryof Congress, we provide historic master recordings to the Library’s
audiovisual division. Launched in 2011, when we donated the firstmajor collection of studio master materials to the Library (more than
200,000 historic master music recordings), we continue to contributesamples regularly.
We also fully fund the EMI Archive Trust – one of the world’s largest
and most diverse music and technology archives. Established in 1996 topreserve the history of EMI, its collections cover an extraordinary journey
through the history of sound, not just in the United Kingdom, but aroundthe world. The archive, which is currently applying for UNESCO World
Heritage status, has many original and priceless artifacts and tells thestory of British and global history, starting with the early recorded musicindustry and the role that EMI (originally The Gramophone Company)
played in the emerging industry’s development and globalization, from
1897 through 1946.

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In tandem with our strategic partnerships, UMG’s vast catalogs of cultural works
are preserved and restored through the ongoing efforts of our archive team. This
year, accomplishments included:•

Audio Preservation & Restoration: More than 4,100 physical audio assets
were restored and digitized. That number encompasses a wide variety of
projects, including more than 600 tapes preserved as part of our efforts
to restore and digitize our most vulnerable audio formats. These formats
include digital multi-tracks and high-resolution analog tapes, both at riskof physical deterioration and technical obsolescence. Other preservation
efforts included digitization work on the catalogs of artists such as the
Bee Gees, Frank Sinatra, Keyshia Cole, blink-182, George Strait, Mary J. Blige,
Counting Crows, Beck, James Brown, and David Bowie, among many others.

•

Video & Film Preservation: We completed metadata entries and physicalassessments on 4,597 video assets, of which 2,022 were subsequently
digitized. An additional 700 assets were digitized as part of our efforts tosafeguard fragile video formats, including preservation of the entirety of four
formats at risk of technical obsolescence. Our film collection saw 400 reels
getting preserved due either to the urgency of their physical condition or
their historical importance. Among these reels are moving pictures of artists
such as the Beach Boys, Nine Inch Nails, Neil Diamond, John Lennon, Dr.
Dre, Frank Sinatra, George Strait, Heart, Janet Jackson, MC Hammer, Rihanna,
Reba McEntire, Snoop Dogg, The Roots, and many more.

•

Image & Artwork Preservation: Our efforts in photo archival continued,
and in total we preserved 31,858 images from across our collections.
Included in these efforts were photos collected for the Beach Boys 60th
anniversary, some of which ultimately became contributions to the Beach
Boys exhibition showcased at the Morrison Hotel Gallery. A partnership withBlue Note resulted in the acquisition of the Francis Wolff photo archive, amassive photo collection which greatly augmented our existing archive. This
undertaking involved the transportation, digitization, and metadata tagging
of approximately 17,000 images.

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Supporting Our Communities
CORPORATE PHILANTHROPY
UMG believes in the power of music to inspire action. Using the collective
strength of our community – including everyone from employees to artists andsongwriters to fans – UMG supports organizations around the globe that are
making strides to address social issues and create positive, systemic change.

‘AMONG OUR TASK FORCE FOR MEANINGFUL CHANGE, OUR ALL TOGETHER NOW
FOUNDATION, AND OUR EMPLOYEE MATCHING PROGRAM, WE CONTRIBUTED TO MORE
THAN 500 ORGANIZATIONS IN 2022.’
In the U.S., the Universal Music All Together Now Foundation (UMATNF) works toadvance systemic change through investment in three core areas:
1.
2.
3.

Education
Health and Wellness
Racial Equity and Justice

UMATNF includes the Task Force for Meaningful Change, the UMG Green Team,and the UMG Unhoused Coalition. In 2022, UMATNF:•

Built broader awareness of key issues through roundtable discussions,newsletters, social media toolkits, and more to empower and activate ourcommunity of employees, artists, and fans.

•

Mobilized deep, meaningful engagement through community service andvolunteer action to respond to drive impact and lasting change.

•

Provided direct financial support to an ecosystem of communitybased organizations.

The UMG Unhoused Coalition mission is to intersect policy and philanthropy
to better serve the needs of those unhoused in our communities, and works
to strengthen education and advocacy as well as deliver resources andlocal support.
Among other policy initiatives, this year saw UMATNF provide support andsocial media expertise for California’s #VoteYesOn28 campaign, the generalelection ballot initiative aiming to establish a permanent and sustainablefunding source for arts and music education in public schools. Notably, thecampaign’s most viewed and valuable social media asset was produced by
UMG and ultimately supported by Katy Perry. Because the measure passed withoverwhelming support, California will now steer about $800 million more eachyear – nearly double the prior amount – into art and music programs in K-12
public schools, with campuses in low-income communities receiving a larger
share of funding.
In the UK, UMG supports the Universal Music UK Sound Foundation (UMUKSF), an
independently funded charity that focuses on lifting up the next generation oftalent across the region.
UM UK also maintains its partnership with East London Arts & Music (ELAM),
the free school for 16-19-year-olds founded in 2014 by Will Kennard, one half

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of EMI recording artists Chase & Status. In addition to offering masterclasses,
mentorship, curriculum guidance, and work experience to many of the school’s
pupils, there are links between the school and UMG’s A&R and People teams.
UM UK record labels have signed talent from ELAM, including Chrissi (Island),Stella and Renée from FLO (Island), Sekou (Island), and Tendai (0207 Def Jam). FLO(Listen Generously/Island) was recognized this year as the “UK’s most exciting
new girl group.”
Marking another longstanding partnership, UMG Australia’s alliance with theMusicians Making a Difference (MMAD) charity is now in its 8th year. UMG
Australia's support has enabled MMAD to reduce youth homelessness, poverty
and addiction, break negative cycles, address mental health, and increase
employment and education pathways.

Support for Ukraine

In light of the recent conflict in Ukraine, this year UMG supported several
organizations and campaigns dedicated to bringing humanitarian relief tothe Ukrainian people, including:•Stand Up for Ukraine: UMG Executive Vice President Michele Anthony
played a central role in Global Citizen’s “Stand Up for Ukraine” global
social media rally in April, which brought together hundreds ofthousands of global citizens, including many UMG artists, to help raise
more than $10 billion for Ukrainian refugee relief through the EU’s
pledging summit.

•

A Concert for Ukraine: UMG labels Decca Classics and Deutsche
Grammophon partnered with New York’s Metropolitan Opera to release“A Concert for Ukraine,” a special concert and album recorded live at
the Met. Conducted by Music Director Yannick Nézet-Séguin, the album
opens with the National Anthem of Ukraine, featuring Ukrainian bassbaritone and Lindemann Young Artist Vladyslav Buialskyi. Proceedsfrom the sale of http://www.helpukraine.centerthe album were donatedto charities supporting relief efforts.

•

Sting’s Re-Recording of Hit Song: UMG artist Sting re-recorded his hit
song “Russians,” with profits benefiting www.helpukraine.center, avolunteer storage center established by Ukrainian business owners toreceive humanitarian and medical aid from around the world.

•

Reverberate Ukraine: Island Records partnered with Kyiv-based visual
artist Alexey Kondakov to create five NFT artworks in support of World
Central Kitchen, an NGO helping to feed people on the frontline in
Ukraine and neighboring countries. The “Reverberate Ukraine” NFTs
were auctioned by Bonhams Fine Art Auctioneers and UM UK released
limited-edition screen prints.

•

NGO Partnerships: We supported a wide range of NGOs bringing aid
to refugees in the region, including the International Red Cross,the International Rescue Committee, International Medical Corps,
and CARE.

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NON-FINANCIAL INFORMATIONSOCIAL JUSTICE & EQUITY
The fight for inclusion and social justice remains a pillar of UMG’s impact
efforts. In 2020, we launched the Task Force for Meaningful Change (TFMC) –a voluntary group of music executives and employees from UMG’s corporate
center, labels, and global companies – that works to support marginalized
communities across six verticals:
1.
2.
3.
4.
5.
6.

Aid/Charitable Giving
Global Impact
Internal/Institutional Change
Legislative/Public Policy
Partners
Programming/Curation

This year marks the release of UMG’s first TFMC Global Impact Report –highlighting the Task Force’s driving initiatives in the ongoing fight for equality,
justice, and inclusion. Additional 2022 milestones included:•

Public Health Scholarships: TFMC partnered with four accredited HBCU
Medical Schools – Howard University College of Medicine, Morehouse Schoolof Medicine, Meharry Medical College, and Charles R. Drew University of
Medicine and Science – as part of 2022's super priority focus on publichealth. With $200,000 in scholarships routed to each of the four schools,
the program’s goal was to increase access to community-oriented andculturally competent healthcare and support projects, organizations, andinitiatives that widen the Black medical student and practitioner pipeline.

•

Pull up to the Polls: TFMC’s ongoing education and civic engagement
initiative aims to increase voter turnout in every election. In 2022, we
supported participation in the U.S. midterm election by helping register 7,833
eligible voters with our partner, Voto Latino, and worked with partners NAACP
and YMCA to provide 13,081 rides to/from the polls. We also encouraged UMG
employees to support the program by sharing Pull Up to the Polls on theirsocials, volunteering for the When We All Vote texting campaign, and serving
as Social Media Monitors to help protect voters from online disinformation.

•

Voting Rights Educational Workshops: To increase education andengagement around the electoral process, we also developed Voting Rights
Workshop Series that featured a panel of National voting rights experts andcivic engagement toolkits for eligible voters across UMG.

•

Fast Forward with Generation Works: TFMC UK partnered with
Generation Works to develop a unique opportunity for young musicians
to access recording space and receive mentorship from musicindustry experts, including A&R, production, management, and digitalmarketing professionals.

•

Primary Schools Workshop Series: TFMC UK produced a series ofinteractive workshops to showcase classical instruments and repertoirefrom marginalized Black classical composers, performed by Black andethnically diverse musicians from Decus Ensemble. The workshops wereconducted in partnership with Live Music Now in six London primaryschools with high percentages of pupils from minority ethnic backgroundswith limited or no classical music tuition.

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Rap Lyrics on Trial: TFMC endorsed state and federal legislation limiting theability to use lyrics as evidence against defendants in criminal trials.

•

Emergency Gives: TFMC responded to natural disasters, gun violencetragedies, and the water crisis in Mississippi with monetary support
exceeding $200,000.

•

Charitable Donations: TFMC supported over 70 organizations in the U.S. thisyear, with additional donations made to organizations in Latin America,
Canada, Africa, and the UK.

TFMC continues to prioritize its support of criminal justice reform while also
making financial contributions in the music industry and humanitarian aid
and relief where unforeseen tragedies and national disasters disproportionately
impact vulnerable communities. With nationally renowned experts recruited
to serve as advisors every year, the Task Force ensures a targeted strategy ofmeasurable impact. With regard to criminal justice reform, 2022 saw TFMC workwith relevant public leaders and formerly incarcerated and system-impacted
individuals to develop the following goals:
1.

Reducing the number of individuals in the criminal justice system by
driving funding to Community Violence Intervention projects that are
Black or POC-led and that integrate formerly incarcerated persons into
their approach.

2.

Improving opportunities for formerly incarcerated persons by supporting
meaningful reentry work that provides wraparound services, mentorship,and mental health support to system-impacted individuals.

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Below is an illustrative list of organizations that the TFMC supported this year:

The TFMC also supported the following organizations as part of its spotlight andglobal giving initiatives this year:

Spotlight and Holiday Gives

Global Giving

The Hidden Genius Project

The African Presidential Leadership Center (South Africa)

Code2040

Missions of Hope International (Kenya)

Black Girls Movement

The Destiny Trust (Nigeria)

The King Center

Four Brown Girls (Canada)Black Boys CodeShelley Cares Foundation (Canada)

The National Council of Negro Women

Fundación Solidaridad y Compromiso (Colombia)

Global Fund for Women

Proyecto Daniel (Costa Rica)

National Coalition of 100 Black Women

Casa Alianza (Mexico)

The Marsha P. Johnson Institute

The Reading Agency (UK)Black and Pink National

Nordoff Robbins Music Therapy (UK)WE ARE R.I.S.E.

Pickni Uniforms (UK)MUSIC IS UNIVERSAL Annual Report 2022 | 172

NON-FINANCIAL INFORMATIONESG COMMITMENTS

UMG believes that responsible governance is essential to a strong businessand to best serve our key stakeholders including our investors, employees,
artists, songwriters, partners, and others. We are committed to the principles
of accountability, transparency, fairness, responsibility, and risk management
across the company and its activities, and our commitment to responsible
governance serves as the foundation of our business strategy. We view
our ESG efforts not as separate from, but as a central component of, ourbusiness strategy.
Accordingly, we carry out our business activities not only in compliance withlegal and regulatory standards, but more fundamentally we base our businessconduct and relations with third parties on ethical standards. These standards
guide our business development, maintain stakeholder trust, prevent andmanage risks we face, and support our global performance.

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Operating With Integrity
BUSINESS ETHICS & COMPLIANCE
UMG is committed to responsible governance. Grounded in applicable laws, aswell as the principles and best practices of the Dutch Corporate Governance
Code, UMG’s core values are operationalized in our Code of Conduct, which sets
out the foundational principles that inform how we do business. Our Code of
Conduct presents a guide to behave with honesty and integrity and earn andmaintain the confidence and respect of all our stakeholders – investors, artists
and songwriters, business partners, fans, and beyond.
Every business, division, and department within UMG worldwide is coveredby the Code. Every person conducting business for UMG must follow theCode, including employees, members of the Board of Directors, and third
parties, such as consultants, independent contractors, and company advisors
or representatives.
We educate our employees on company policies and expectations via a suiteof courses, including the Code of Conduct, Criminal Finance, Human Trafficking,Insider Trading, Information Security, Preventing Harrassment, Radio Promotion
Compliance, and Health and Safety. Training timetables and topics offered are
region and/or function specific where needed.

‘UMG’S CODE OF CONDUCT HAS BEEN TRANSLATED INTO 21 LANGUAGES ANDEMPLOYEES WORLDWIDE MUST CERTIFY THEIR COMPLIANCE WITH IT EVERY YEAR.
IN 2022, 90% OF OUR WORKFORCE RECEIVED FURTHER TRAINING ON COMPLIANCE
TOPICS.’PRIVACY & CYBERSECURITY
UMG is committed to maintaining the trust of our artists and partners throughthe ethical and compliant collection, use, and sharing of data. UMG’s Global
Technology organization works to leverage state-of-the-art processes andtechnologies to minimize exposure and ensure that we continually enhance thesecurity of our systems.
As a global company, we are subject to a number of local and regional
privacy laws, and non-compliance might have significant legal, financial,
and reputational effects on the company. To uphold our stakeholders’ trustand ensure compliance with privacy regulations, we have developed andimplemented a program designed to identify and mitigate privacy risks. Keyelements of this program include our Code of Conduct training, policies
and procedures for handling personal data, reviews of supplier engagements
and projects, processes and tools for responding to privacy rights requests,
processes for compliant international transfers of personal data, and responseplans for security incidents involving personal data.
We employ a layered approach to protecting our assets, systems, and employees
from malicious cyberattacks and actors. Our Global Security Office (GSO)
Governance group is responsible for company-wide cybersecurity policies andstandard development, cybersecurity education (including regular phishing andother security training), and compliance monitoring. Over the last decade, GSO
has developed a mature cybersecurity program that encompasses aggressive

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vulnerability management, centralized log collection, use of a 24x7 managed
security service provider, a robust security incident response process, regular
penetration testing, and extensive use of threat management and threat
hunting teams.
2022 saw GSO focus on:•

Augmented Visibility: Augmented visibility through the addition anddeployment of tools including User and Endpoint Behavior Analytics (UEBA),
data exfiltration monitoring, regular security controls validation, and central
legacy system logs for monitoring, analysis, and forensics.

•

Insider Threat Program: Creation of the Insider Threat program, tasked withanalysis of the above new tools and investigation of anomalous businessnetwork activity that could indicate the presence of malicious actors.

•

Compliance Monitoring Subgroup: Creation of the Compliance Monitoring
subgroup within GSO Governance, tasked with regular contact withall critical business functions to ensure compliance with company
cybersecurity policies and standards, ranging from the company website
deployment standard to requirements for laptop and desktop image
secure builds.

To ensure program effectiveness, GSO engages a robust security incident
response team (SIRT) for identification, tracking, and remediation of security
incidents. The group also documents penetration test results for dissemination
to affected system owners for resolution, and all exceptions are documented,
regularly reviewed, and retired as appropriate. In addition, GSO Governance has
a robust exception process to allow UMG businesses to surface practices andsystems that cannot comply with official policy.
As the value and risks of data continue to increase, UMG will further adapt,
improve, and strengthen our privacy and cybersecurity governance, processes,
and procedures.

‘IN 2002, UMG WAS THE FIRST MAJOR RECORDED MUSIC COMPANY TO CREATE
A CONTENT PROTECTION DEPARTMENT, TASKED WITH IDENTIFYING PIRACY AND
COUNTERFEITING THREATS, WHILE ALSO DEVELOPING STRATEGIES AND WORKFLOWSTO MITIGATE THEM.’PIRACY & CONTENT PROTECTION
At UMG, we are fully dedicated to protecting the creative works of our artists
and songwriters. In collaboration with global trade organizations, our content
protection initiatives span several areas:•

Pre-Release Protection: Releases face the highest level of risk during the
pre-release phase, when producers and sound engineers collaborate aheadof production. As a result of the COVID-19 pandemic, this collaboration
is increasingly taking place remotely, raising the risk of interception andpossible leaks. We advise on the best security practices and work withstakeholders, external platforms, and websites to remove leaked content tominimize risks of further unauthorized distribution.

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Post-Release Protection: Once content has been released, infringing uploads
and posts frequently occur on sites without a license. By identifying andremoving these sites, posts, and uploads, we increase each release's value
over time. Additionally, as part of this workstream, we identify unlicensed
sites that present a commercial opportunity for UMG.

•

Emerging Markets: As markets grow in emerging territories, so does therisk of leaks in those regions. We work with our international tradeorganizations to build content protection strategies and workstreams that
support the development of emerging music markets. By removing illegal
websites, posts, and uploads, we help direct users within emerging markets
to legitimate content sources to enhance their listening experience andprotect UMG revenue streams.

•

Mobile Applications: Apps are the new internet. Many markets went directly
to mobile apps, and in those that didn't, our target audience has moved
to them. We have a dedicated team focused on mobile app piracy thatworks alongside our trade organizations to detect and remove infringing
applications and content globally across all major application stores. We
treat mobile application piracy as one of our priority initiatives and haveestablished working groups to coordinate resources and enforce against
infringers in this area.

Steered by our content protection department, we engage with internal andexternal stakeholders to help identify and analyze risks to UMG content, brands,
labels, and artists. We also work closely with our digital business team tobring new platforms to the negotiating table. We have developed specialized
workflows to remove unauthorized posts and have built bespoke software tocollect release information and project rulesets globally, thereby maximizing ourlabels' marketing and promotional efforts and preserving the integrity of ourartists’ creations.

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Respecting Human Rights Across the Value Chain
The UMG Code of Conduct sets forth the foundation as to how UMG conducts
business, including as it relates to human rights. UMG expects all people to betreated with dignity and respect by:•

Never tolerating human rights abuses such as child labor, slavery, humantrafficking, and unsafe or unfair work practices at our operations•

Conducting business with partners, suppliers, and customers who share ourcommitment to protecting human rights•

Speaking up when we see or suspect human rights violations

SUPPLY CHAIN MANAGEMENT
In addition to embedding ESG initiatives within our operations, UMG also
engages our supply chain in our efforts. We work with our suppliers to measure
and reduce the environmental footprint of our value chain, and we expect all ofour partners to share our commitment to protecting human rights.
Our Bravado team, which is responsible for developing and marketing ourlicensed merchandise, continues to incorporate the UMG Supplier Social
Responsibility Policy into its manufacturing agreements. The policy is anchoredin internationally recognized standards including the UN Guiding Principles on
Business and Human Rights, the OECD Guidelines for Multinational Enterprises,
the UNESCO Convention on the Protection and Promotion of the Diversity of
Cultural Expressions, the Children’s Rights and Business Principles establishedby UNICEF, the UN Global Compact, and Save the Children principles. In addition
to adhering to the Policy, Bravado mandates that all critical manufacturing
suppliers are current with social compliance audits and are timely in resolving
any corrective actions and certification renewals.
To enhance supplier engagement, 2022 saw Bravado conduct a comprehensive
assessment of its sustainable supplier program. In 2023, Bravado will leverageassessment results to incorporate a sustainability Statement of Ambition into
its manufacturer agreements, alongside a formalized sustainability survey thatwill be used to gather information and improve the sourcing process.
We will continue to build upon these practices as we advance UMG’s companywide responsible sourcing program.

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NON-FINANCIAL INFORMATIONREGULATORY &STANDARDS ALIGNMENTEU Taxonomy
The European Commission has set ambitious sustainability targets with theoverarching aim to be a net zero continent by 2050. An important purpose of the
EU Action Plan on Sustainable Finance, which supports this ambition, is to steer
cash flows toward sustainable investments.
In accordance with European Regulation 2020/852 of June 18, 2020, and'Besluit bekendmaking niet- financiële informatie' for 2022, UMG is subject tothe obligation to disclose the Taxonomy-eligible, non-eligible, and Taxonomyaligned turnover, capital expenditures, and operating expenditures for economic
activities relating to the Taxonomy's climate change mitigation and climatechange adaptation environmental objectives.
EU Taxonomy Objectives and Scope
The Taxonomy regulation serves as a standardized and mandatory classification
system to determine which economic activities are considered environmentally
sustainable in the European Union (EU). The results of this classification arereported annually on a company-specific basis.
Article 9 of the Taxonomy regulation identifies six environmental objectives:
1.
2.
3.
4.
5.
6.

Climate change mitigation
Climate change adaption
Sustainable use and protection of water and marine resources
Transition to a circular economy
Pollution prevention and control
Protection and restoration of biodiversity and ecosystems

Regarding the classification of an activity as environmentally sustainable, theTaxonomy regulation distinguishes between Taxonomy-eligible and Taxonomyaligned activities:•

Activities are Taxonomy-eligible if they match the description of theactivity included in Delegated Acts supplementing Regulation (EU) 2020/852
of the European Parliament, irrespective of whether they fulfill thealignment criteria.

•

Activities are Taxonomy-aligned if they fulfill the Taxonomy criteria for theactivity. In this case, they make a substantial contribution to the respective
environmental objective (fulfill the substantial contribution criteria), cause
no significant harm to any of the other environmental objectives (Do No
Significant Harm, DNSH), and observe and comply with the minimum social
safeguards for human rights, corruption, taxation, and fair competition.

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Accounting Policies
The table below provides the basis for the numerator and denominator of EU
Taxonomy-eligibility and alignment for Turnover, CapEx, and OpEx as defined in
the Disclosure Delegated Act Annex I Section 1.1.

Numerator

Denominator

TurnoverCapEx1

OpEx1

Revenue derived from products
and/or services associatedwith EU Taxonomy-eligible/aligned activities.

Capital expenditures that are
related to assets or processes
associated with EU Taxonomyeligible/aligned activities.

Operating expenses that are related toassets or processes associated with EU
Taxonomy-eligible/aligned activities.

Revenue recorded in
the consolidated financial
statements under IFRS asper Revenue Accounting policy
described in the consolidated
financial statements.

Additions to tangible andintangible assets recordedin the consolidated financial
statements under IFRS during thefinancial year, considered before
depreciation, amortization, andany re-measurements.

Direct non-capitalized costs recorded in
the consolidated financial statements
under IFRS that relate to R&D,
building renovation measures, shortterm leases, maintenance and repair(excluding expenses reported as costof sales), and any other direct
expenditures relating to the day-to-day
servicing of PPE assets.

1 None of the capital or operating expenditures relate to a capital plan or purchase of output from Taxonomy-aligned economic activities such as: individual measuresenabling target activities to become low-carbon, activities leading to greenhouse gas emissions reductions, or individual renovation measures planned to be
implemented and operational within 18 months.

The financial information for calculating the metrics was gathered from
UMG’s financial reporting system, excluding intercompany transactions. Eligible
economic activities identified currently only contribute to the climate change
mitigation objective. Still, should they contribute to several environmental
objectives, the numerator would only consider the allocation of revenues andexpenditures to one environmental objective so that double counting is avoided.
In 2022, UMG did not issue sustainability linked bonds or debt securities tofinance Taxonomy alignment activities.
Assessment of Compliance with Regulation (EU) 2020/852
For 2022, UMG assessed eligibility and alignment under each KPI and concludes
as follows, with subsequent explanations for each KPI.
•

Turnover: No revenue activities are eligible or assessed for alignment•

CapEx: Taxonomy-eligible CapEx is calculated at 10% and does notmeet the substantial contribution criteria, therefore eligible CapEx is notconsidered aligned•

OpEx: Taxonomy OpEx is calculated at less than 1% and is notconsidered materialMUSIC IS UNIVERSAL Annual Report 2022 | 179

NON-FINANCIAL INFORMATION

Turnover KPI
The basis of the turnover KPI covers UMG business activities as of December
31, 2022. The turnover denominator is reconciled with the revenue recordedin Note 2 of the Consolidated Financial Statements under IFRS as per therevenue accounting policy described in the Notes to the Consolidated Financial
Statements. It consists of revenue from Recorded Music, Music Publishing,
Merchandising and other.
Management analyzed the EU Taxonomy Regulation text, the EU Taxonomy
Climate Delegated Act, including supplemental notices in the form of FAQs,
approved by the EU Commission, publications by the Platform on Sustainable
Finance, and peer disclosures to test whether these activities should beconsidered eligible under Arts, Entertainment, and Recreation. Based on theprocedures performed, management confirms that the conclusion reached in
2021 continues to apply.
The percentage for Taxonomy-eligible turnover amounts to zero. There are no
revenue activities eligible or assessed for alignment. In 2022, UMG's businessmodel did not generate revenue from climate change-related activities.
Nevertheless, UMG is committed to contributing to sustainable businessconduct, including measuring and managing climate-related risk, supportingand showcasing artists' climate advocacy efforts, and engaging on andadvocating for sustainable business solutions throughout the value chain.
CapEx KPI
Under the Taxonomy Regulation, the total CapEx covers additions to tangible
and intangible assets during the financial year considered before depreciation,amortization, and any re-measurements recognized by UMG according to IAS16,
IFRS16, and IAS38, including those resulting from revaluations and impairments
for the relevant financial year and excluding fair value changes. Total CapEx(denominator) can be reconciled with the sum of the lines ’Additions’ disclosed
in Note 9 Changes in content assets and other intangibles (excluding royalty
advances), Note 10 Property, Plant and Equipment (PPE), and Note 11 Leases
within the consolidated financial statements.
For UMG, most of the CapEx relates to additions to catalogs and otherintangibles, which are not eligible. The eligible CapEx comes from the capitalized
cost of renovations and leased assets (EU Taxonomy activities under climatechange mitigation objective: 7.2 Renovation of existing buildings and 7.7
Acquisition and ownership of buildings).

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NON-FINANCIAL INFORMATIONThe breakdown by type of CapEx is as follows:(in millions of euros)

Activity

Activity

Additions to PPE, leases, and intangible assets

22

2

Expenses incurred for Taxonomy-aligned activities and as
part of CapEx-plan

-

-

22

2

Acquisitions through business combinations

Total Taxonomy-eligible CapEx

7.2

-

7.7

-

Compared to 2021, investments in non-eligible CapEx (mainly catalogs)
decreased, resulting in 2% higher eligibility.
Alignment Assessment
7.2 Renovation of existing buildings
UMG has assessed the substantial contribution criteria and evaluated thatthe leasehold improvements conducted to meet UMG's business needs do not
qualify as major renovations. UMG concludes it does not meet the substantial
contribution criteria for climate change mitigation under activity 7.2.
7.7 Acquisition and ownership of buildings
UMG’s properties are located worldwide and an energy performance certificate(EPC), a European certification, is not typically available outside the EU. No
eligible properties were located within the EU. UMG developed a validation
approach through other internationally recognized certificates and primaryenergy demand (PED) measures. Two new leases were identified as eligible
under the EU Taxonomy criteria representing 0.88% of the total m2 area of
UMG’s property portfolio, 3% of UMG’s total energy use, and 2% of UMG’s global
headcount at December 31, 2022. The new leases did not meet the energy
performance requirements under substantial contribution criteria for climatechange mitigation and are not further assessed for alignment.
OpEx-KPIThe OpEx denominator includes direct, non-capitalized costs for researchand development expenses, building renovation measures, short-term leasing,maintenance and repair expenses, and any other direct expenditure relating to
the day-to-day servicing of assets of property, plant, and equipment necessary
to ensure the continued and effective functioning of such assets.
For UMG, most of the Taxonomy OpEx relates to the maintenance of buildings,
assets used in business operations, and short-term leases.
The nature of UMG’s business model relates to people and the arts and is notcentered around tangible assets. In 2022, UMG calculated Taxonomy OpEx at lessthan 1% of the total cost of sales. Management concludes that Taxonomy OpEx
is not material for UMG’s business model. UMG makes use of the materiality
exemption for the OpEx KPI as per the Disclosure Delegated Act Annext I, Section
1.1.3.2 and discloses the numerator as equal to zero.

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NON-FINANCIAL INFORMATIONEU Taxonomy KPI Disclosure Tables
The KPI tables below summarize the outcome of UMG’s Turnover and CapEx
assessment. UMG makes use of the materiality exemption, and the OpEx table
is excluded.

EU Taxonomy – CapEx

Substantial contribution
criteria%%

Taxonomy-aligned proportion of CapEx, 2022

Biodiversity and ecosystems%

Minimum safeguards Y/NPollution%

Biodiversity and ecosystems Y/NCircular economy%

Pollution Y/NWater and marine resources%

Circular economy Y/NClimate change adaptation%

Water and marine resources Y/NClimate change mitigation%
0%

Climate change adaptation Y/N

Proportion of CapEx

0

Climate change mitigation Y/NAbsolute CapEx €M

Code(s)Economic activities

DNSH criteria(Do no significant harm)

A. Taxonomy-eligible activities
A.1 Environmentally sustainable
activities (taxonomy-aligned)
No taxonomy-aligned activities
CapEx of environmentally
sustainable activities(taxonomy-aligned) (A.1)

0%

A.2 Taxonomy-eligible but not
taxonomy-aligned activities
Renovation of existing buildings

7.2

21

9%

Acquisition and ownershipof buildings

7.7

2

1%

23

10%

23

10%

226

90%

249

100%

CapEx of taxonomy-eligible
but not taxonomy-aligned
activities (A.2)
Total (A.1 + A.2)

0%

B. Taxonomy-non-eligible activities
CapEx of taxonomy-non-eligible
activities (B)Total (A + B)
Numbers may not sum due to rounding

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NON-FINANCIAL INFORMATIONEU Taxonomy – Turnover
Substantial contribution
criteria%%

Taxonomy-aligned proportion of turnover, 2022

Biodiversity and ecosystems%

Minimum safeguards Y/NPollution%

0%

Biodiversity and ecosystems Y/NCircular economy%

0

Pollution Y/NWater and marine resources%0%

Circular economy Y/NClimate change adaptation%0

Water and marine resources Y/NClimate change mitigation%
0%

Climate change adaptation Y/N

Proportion of turnover0

Climate change mitigation Y/NAbsolute turnover €M

Code(s)Economic activities

DNSH criteria(Do no significant harm)

A. Taxonomy-eligible activities
A.1 Taxonomy-aligned activities
No taxonomy-aligned activities
Turnover of taxonomy-aligned
activities) (A.1)
A.2 Taxonomy-eligible but not
taxonomy-aligned activities
No taxonomy-eligible but not
taxonomy-aligned activities
Turnover of taxonomy-eligible
but not taxonomy-aligned
activities (A.2)
Total (A.1 + A.2)
B. Taxonomy-non-eligible activities
Turnover of taxonomy-noneligible activities (B)Total (A + B)

10,340 100%
10,340 100%

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NON-FINANCIAL INFORMATION

Prospects
Not all sustainability efforts are yet recognized under the Taxonomy Regulation.
For more information about UMG’s sustainability initiatives, including ourlandmark commitment to support industry transformation and set sciencebased targets, please see the Environment section of this report.
From fiscal year 2023 onwards, more extensive analysis will be required
to determine eligibility and alignment for the remaining four environmental
objectives. Management is committed to monitoring EU Taxonomy
developments closely and to assessing new requirements as the basis for its
annual disclosures.

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NON-FINANCIAL INFORMATION

Task Force on Climate-Related Financial Disclosures (TCFD)
The Task Force on Climate-Related Financial Disclosures (TCFD) was establishedin 2015 by the Financial Stability Board to identify the information needed byinvestors, lenders, and other key financial stakeholders to appropriately assess
and price climate-related risks and opportunities. In 2017, the TCFD released
climate-related financial disclosure recommendations designed to facilitate theprovision of information to support informed capital allocation.
The disclosure recommendations and this disclosure are structured aroundfour thematic areas in which companies operate:
1.
2.
3.
4.

Governance
Strategy
Risk management
Metrics and targets

As recommended by TCFD guidance, this year UMG engaged 10 different crossfunctional groups with responsibility for or visibility into risk management,
production, logistics, procurement, technology, and security among others, for
input gathering and review.
This is the company’s first TCFD report, in which it discloses the impacts ofclimate change through a comprehensive climate-related scenario analysis
and an assessment of physical and transitional climate-related risks
and opportunities.
As this was our first TCFD assessment, the scenario analysis is qualitativein nature, and we will evolve our modeling to include the quantitative andfinancial impacts of each risk in future years. Please see Environmental
Indicators for a summary of the key quantitative environmental indicators
currently monitored by UMG. Additional KPIs may be found throughout theEnvironment section of this report.
Governance
The Board is responsible for ESG oversight and management of ESGrelated risks. Compliance with ESG-related regulations is monitored by
UMG management and external auditors. The Audit Committee advises andsupports the Board in relation to its responsibilities as a supervisor for the
integrity of UMG’s financial reporting, non-financial reporting, and internalrisk management systems. The Audit Committee oversees ESG topics andcovers them in its agenda, including climate-related risks, at minimum, on anannual basis.
Management is responsible for assessing and managing climate-related risks
and opportunities at several position levels and committees, including the
Chief Financial Officer and President of Operations; the Executive Vice President,
Controller; the Chief Financial Officer North America; and the Senior Vice
President, Global ESG & Sustainability.
In 2022, Management briefed the Board’s Audit Committee on ESG, including
UMG’s carbon emissions for FY2019-2021, UMG’s commitment to the ScienceBased Target initiative, and on the regulatory environment relevant tothe company.

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NON-FINANCIAL INFORMATION

In addition, the Senior Vice President of Global ESG & Sustainability participatesin two monthly steering-level meetings as well as recurring business unit
working group meetings:
1.

Monthly Governance, Risk, and Compliance Committee (GRC) Meetings

The purpose of these meetings is to issue an update on ESG matters, including
climate-related issues. The GRC committee meetings are led by the Headof Internal Audit and the committee members are composed of executive
leadership across risk management, including:
•
•
•
•
•
•
•
•
•
•
•
•

General Counsel and EVP, Business & Legal Affairs
EVP, Chief Compliance Officer and Employment Counsel
SVP, Chief Security Officer
SVP, Global Financial Reporting & Analysis
SVP, IT Strategy
SVP, Head of People Operations & Systems
VP, Commercial Insurance & Risk Management
SVP, Business Affairs & Compliance
VP, Investor Relations
VP, Internal Audit & Control Assurance
SVP, Business & Legal Affairs
VP, Business & Legal Affairs

2.

Monthly ESG Meetings for General Counsel and EVP, Business & Legal Affairs

The group functions as an internal oversight committee and the SVP, Global
ESG & Sustainability informs the group on ESG issues to advocate forchanges in business-as-usual processes. The SVP, Global ESG & Sustainability
also uses these meetings to improve governance and increase awarenessaround ESG performance improvements, including climate-related issues. The
meeting convenes:
•
•
•
•
•
•
•
•
•
•

EVP, Chief Compliance Officer and Employment Counsel
EVP, Chief People and Inclusion Officer
EVP, Controller
CFO, North America
EVP, and SVP, Public Affairs, Public Policy & Government Relations
EVP, Head of Investor Relations and VP Investor Relations
SVP, Head of People Experience
SVP, Business & Legal Affairs and Compliance
SVP, and VP, Business & Legal Affairs
EVP, Global Communications

As UMG prepares for implementation of the EU’s Corporate Sustainability
Reporting Directive, we plan to further integrate the outcomes of theclimate scenario analysis into the company’s governance structure, policies,
and processes.
Strategy
UMG conducted a climate scenario analysis by applying multiple, varying
future emissions scenarios to allow a comprehensive exploration of risks
and opportunities for the business. Climate scenarios from two leadingorganizations, the Intergovernmental Panel on Climate Change (IPCC) and theMUSIC IS UNIVERSAL Annual Report 2022 | 186

NON-FINANCIAL INFORMATIONInternational Energy Agency (IEA), were selected to provide consistency andcomparability in the analyses and disclosure.
For transition risks and opportunities, UMG applied:•

A 1.5◦C emissions scenario (IEA Net Zero by 2050)

For physical risks, UMG applied:•••

A low emissions scenario (IPCC SSP1-2.6)
A mid-range scenario (IPCC SSP2-4.5)
A worst-case scenario (IPCC SSP5-8.5)

For each scenario, three time horizons were considered:•••

Short (2023-2026)
Medium (2027-2034)
Long-term (2035-2050)

Climate-related risks were identified and assessed in terms of exposure leveland severity. UMG’s business resiliency and existing mitigation measures werealso considered to determine the business impact for each risk. Risks thathave a low impact imply that these are already sufficiently managed as partof existing processes and/or UMG’s exposure level is low. Risks identified withhigher impact may require additional mitigation or adaptation strategies.
Each risk was assessed based on three criteria:•

Likelihood of occurrence: determined for each time frame, estimated based
upon current trajectory of regional and global developments.

•

Severity of impact: potential worst-case influence of the hazard
independent of likelihood and assuming no relevant business, strategy, andfinancial planning.

•

Existing resiliency measures: based on the current resiliency measures inplace including relevant business, strategy, and financial planning.

The levels of impact are defined as follows:•

Low impact: risks are managed as part of existing processes•

Moderate impact: risks require additional adaptation planning andmitigation responses•

High impact: risks are likely to require significant pivot of business strategy
or operational protocols•

Critical impact: risks require major pivot to business, strategy, or
financial planning

The impact assessment of UMG’s risks identified only Low and Moderate-level
impacts. There were no risks resulting in High or Critical impact to UMG’soperations across all scenarios and time horizons.

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NON-FINANCIAL INFORMATION

Climate-related opportunities were also identified to highlight potential benefits
to UMG’s profitability and reputation. The list of Transition Risks, Physical Risks,
and Climate-related Opportunities may be found in Tables 1, 2, and 3 below,
respectively. UMG expects to evolve the scenario analysis to model the financial
impacts of each risk in future years.
Table 1 - Transition Risks
Time Horizon
Category

Risk

Short

MediumLong

Policy & Legal

Increased overall operational costs due to direct GHG emissionsrelated compliance and other indirect effects of regulations.
The introduction of GHG emissions reporting requirements —such as those proposed by the United States Securities andExchange Commission, the EU’s Non-Financial Reporting Directive(NFRD) and its successor, the Corporate Sustainability Reporting
Directive (CSRD), as well as the EU Taxonomy — mandated
emissions reductions requirements, and/or mandatory carbon
pricing in regions where UMG operates, may result in increased
operational costs of data collection or resources required tocomply with GHG emissions requirements. Additional indirect
policy & regulation may lead to financial and/or reputational
consequences — both the EU and the U.S. have proposed
laws and/or documentation updates to restrict the use of
unsubstantiated claims around product or company sustainability(e.g., greenwashing or greenlabeling), and may require thatcompanies show evidence against standard frameworks orrequirements for any claims that are made.

Low

Moderate

Moderate

Financial, legal, and reputational impacts from any failure or
alleged failure to comply with climate-related laws or regulations.
Failure to comply with climate-related laws or regulations may
result in fines and affect UMG’s ability to sell our products andservices or operate in specific markets. It may also deteriorate
UMG’s brand perception. In the EU specifically, penalties fornoncompliance include public declaration of noncompliance andadministrative financial sanctions.

Low

Low

Low

Impact on operational efficiencies and financial burden due toregional differences in regulations across regions.
Due to the vast nature of the global regulatory landscape, UMG
may be required to align with multiple regulations. This may
require additional resources and operational adjustments tocomply. Specifically, when comparing U.S. and EU regulations,
there are varying levels of disclosure related to Scope 3 emissions
and differing requirements around materiality assessments. For
example, the State of California will be requiring all plastic
packaging to be recyclable or compostable by 2032, while the
UK instituted a plastic packaging tax, and the EU is requiring
increased recyclability of plastic packaging. These differences andpotential conflicts in regional regulations pose an operational andfinancial risk.

Low

Low

Low

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NON-FINANCIAL INFORMATION

Table 1 - Transition Risks
Time Horizon
Category

Risk

Short

MediumLong

Technology/Market

Increased costs to transition to more sustainable materials
and technologies.
Shifting to increasingly sustainable alternative materials andmanufacturing processes for UMG’s products may increase capitaland operational costs. This shift may arise from changing
consumer and artist demand toward sustainable products andmay also affect UMG’s revenue from physical products. Whilephysical recorded music revenues represent 12% of total UMG

Low

Moderate

Moderate

Reputational or legal implications around failure to meetenvironmental targets or other sustainability goals.
UMG intends to set near-term science-based targets for validation
to the Science Based Targets initiative in 2023. Inability to act
or lack of progress toward this or other voluntary or mandated
sustainability goals, including making misleading claims (e.g.,greenwashing or green labeling), may impact shareholder andstakeholder concerns in material ESG topic areas, such as
attraction and retention of artists and employees. Customer brandperception may also be adversely affected, which can influence
UMG’s ability to sell our products and services and may erode
shareholder value.

Low

Low

Moderaterevenues, physical product emissions account for a large portion(44%) of total Scope 3 emissions. Physical product emissions
include emissions from the manufacturing, logistics, and end-oflife treatment of vinyl, optical, and merchandise products.
Reputation

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NON-FINANCIAL INFORMATION

Table 2 - Physical Risks
Time Horizon
Category

Risk

Short

MediumLong

Acute/Chronic

Business interruption and increased CapEx due to physicallydamaged facilities and production shutdowns.
Climate events and storms may cause business interruption
losses and increased CapEx due to physically damaged
facilities, personal injuries of employees, interruption ofenergy power systems, and shutdowns leading to production
interruption and inability to respond to demand for anindefinite period.

Low/
Moderate
dependingon hazards

Low/
Moderate
dependingon hazards

Low/
Moderate
dependingon hazards

Acute/Chronic

Impact on operations due to disruptions in the supply chain.
Disruptions in the supply chain due to climate-related events
may impact UMG as we are highly dependent on our suppliers
to meet the needs of stakeholders. If significant disruptions
occur in the supply chain, UMG may be at risk of revenue
loss and reputational issues resulting from stakeholder
expectations not being met. Customer brand perception
may also be adversely affected which can influence UMG’s
ability to sell our products and services and may erode
shareholder value.

Moderate

Moderate

Moderate

Acute

Increased operational costs from cooling load.
Higher average temperatures and increased frequency of heatwaves as a result of climate change may require an increased
need for cooling for the safety of UMG’s workforce andpreservation of products and equipment, leading to higher
operational costs.

Low

Low

Moderate

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NON-FINANCIAL INFORMATION

Table 3 - Transition Opportunities & Time Horizons
Opportunity Category

Opportunity

Time Horizon

Resource Efficiency

Decreased operational costs from resource efficiency.
Investing in updated assets and technology may result in reduced
operational costs, improved energy efficiency of facilities, decreased
energy usage, and reduced emissions for UMG. Across our global
portfolio, 46% of UMG’s direct operations (by m2 area) are powered byelectricity from renewable sources. In addition, UMG actively pursues
internationally recognized environmental certifications, such as BREEAM,
LEED, and EnergyStar. In 2022, 28% of UMG’s direct operations (by m2 area)
have received environmental certifications, with additional certifications
currently being pursued as part of leasehold improvement measures in
Nashville and Berlin.

Medium to Long term

Energy Source

Decreased operational costs from switching to renewable energy sources. Short to Long term
Shifting to renewable energy sources such as wind and solar may
result in financial savings and emissions reductions. Experts anticipate
that renewable energy rates will follow a downward trend as access torenewable generation increases and fossil fuels become more expensive.
An internal study of UMG's 2022 electricity costs in North America
revealed the average price for electricity differed by only €0.08 per kilowatt
hour between standard and renewable electricity.

Products and Services

Increased revenue from sustainable products and services.
Investing in and helping to advance sustainability-related research(including finding alternatives to energy intensive distribution modes
and products), may allow UMG to get ahead of trends, innovate,
and develop more sustainable products and services (e.g., increased
regional sourcing, using a higher percentage of reground vinyl,
designing eco-friendly packaging, developing an alternative to jewelcases, and circular opportunities to reduce product waste), and drive
demand for these products, leading to increased revenues and positive
reputational impacts.

Medium to Long termMarketIncreased revenue from stakeholder engagement and collaboration.
Engaging with stakeholders on sustainability initiatives may increase
positive perception of UMG compared to competitors and position
our artists and labels as a sustainable and responsible choices.
Pursuing collaboration opportunities (with peers, artists, partners, andvendors) may also create more sustainable processes and products forthe industry as a whole and help to drive wider behavioral changewith respect to the cultural norms, thinking, and politics surrounding
climate change.

Medium to Long termMarketDecreased supply chain disruption due to sustainability engagement.
Engaging vendors to increase sustainability and transparency throughthe supply chain may result in decreased emissions and build
resilience against potential physical climate risks. For UMG, this may
include incorporating sustainability criteria into third party management
processes from RFP through contract language and inviting our tier one
strategic partners to set science-based targets.

Medium to Long term

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The analysis was extended to the value chain by assessing the climate maturity
for six key suppliers. Three of these suppliers were observed to be advancedin their climate-risk consideration. Those requiring additional engagement
and communication to align with, and support UMG’s climate goals werealso identified. UMG may model future value chain engagement strategies on
successful efforts working with our top suppliers on sustainability topics.
Informed by the first iteration of the climate-scenario analysis, UMG will
monitor the evolution of these scenarios to ensure the most up-to-date climate
science and actual emissions evolution are considered. This will also enable
the evaluation of the associated business impact to be refined and enhanced
over time.
Risk Management
Climate-related risks and opportunities are identified and assessed on an
ongoing basis as part of UMG’s business-as-usual approach. UMG’s processes
for managing climate-related risks depend on each business unit’s operations,funneled through risk management leaders and designed around businessresiliency. UMG utilizes direct experience and historical climate trends toinform strategy and mitigation plans across the company. Critical business
units, such as Global IT, Universal Music Logistics, and Global Security Office,have unique climate risk management processes and tools integrated into
existing frameworks.
As UMG prepares for implementation of the EU’s Corporate Sustainability
Reporting Directive, we plan to further integrate the outcomes of the climate
scenario analysis into the enterprise risk-management process and business
continuity planning.
Metrics & Targets
In 2021, UMG made a commitment to set GHG emissions reduction targets inaccordance with the Science Based Targets initiative – the leading voluntary
framework to set emissions reduction targets.
UMG has calculated our GHG emissions inventory as of 2019 (our baseyear) across Scope 1, Scope 2, and all relevant upstream and downstream
Scope 3 categories. The organization has an ongoing annual commitment tofully quantify and disclose GHG emissions deemed relevant and material tothe business.
In 2022, UMG developed a comprehensive GHG Inventory and Management
Plan and implemented a new data collection system. Our GHG Management
Plan provides a framework by which we will measure the performance andeffectiveness of our climate-related risk management efforts in the nearand long-terms.
Our coordinated non-financial reporting system, overseen by UMG’s central
ESG department and powered by a network of contributors representing theterritories in which we operate, serves to measure our GHG impact and anannual ESG survey serves to collect additional ESG commitments and KPIs
across the organization.
A summary of KPIs and initiatives can be found in the Environment,
Environmental Indicators, and Greenhouse Gas Emissions sections of
this report.

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NON-FINANCIAL INFORMATIONThe Path Forward
UMG is committed to the continued integration of climate-related risks andopportunities across relevant business operations, strategy, and financial
planning areas, and we will evolve our scenario analysis in future years tomodel the financial impacts of each risk.
We aim to continuously enhance our understanding of the possible impactsof climate-related risks and opportunities to which we are exposed, enabling
the company to remain resilient to risks, and positioning UMG to actualize
opportunities in the transition to a low-carbon economy.

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NON-FINANCIAL INFORMATIONINFORMATION TABLES
Environmental Indicators
Unit

Energy Consumption

Electricity from standard sources

Electricity from renewable sources
Natural gas

Domestic fuel oil

Steam used for space heating

Diesel used by the fleet of vehicles

Gasoline used by the fleet of vehicles
Total energy consumption
Waste

MWh

2022

2021

17,271

13,681

6,022

2,342

MWh

11,345liters5,335

MWh GCV
MWh

5,734

7,982
1,381
5,645

liters157,014135,130GJ

160,026

119,7901

liters272,828

250,183

Professional WEEE produced

metric tonnes

26

20

Non-hazardous waste produced

metric tonnes

1,548

1,057

metric tonnes

67

43

Professional WEEE recycled or recovered
Non-hazardous waste recycled or recovered

Merchandise scrap waste produced2

Merchandise scrap waste recycled or recovered

Hazardous waste (excluding WEEE) produced

metric tonnes
metric tonnes
metric tonnes
metric tonnes

24

756
59

1

11

761
39
1

1 Total energy consumption has been restated for 2021 to reflect a correction to the energy conversions from liters to GJ, resulting in a 12% increase from our priordisclosure. The consumption of electricity, natural gas, domestic fuel oil, steam, diesel, and gasoline are converted to GJ and summed for the total energy consumption.
2 This indicator was added in 2022 as part of the expansion of our Scope 3 inventory and includes merchandise scrap waste reported by Bravado U.S.

MUSIC IS UNIVERSAL Annual Report 2022 | 194

NON-FINANCIAL INFORMATIONGreenhouse Gas Emissions
Unit

2022

2021

Scope 1 greenhouse gas emissions1

tCO2e

2,404

1,6682

Stationary sources

tCO2e

1,413

780

tCO2e

14

Mobile sources

tCO2e

Of which refrigerants

tCO2e

Of which domestic fuel oil
Of which natural gas

991
300

tCO2e

1,099

Of which electricity (including electricity from renewable sources)

tCO2e

7,742

Scope 2 greenhouse gas emissions (market-based)

tCO2e

Scope 2 greenhouse gas emissions (location-based)3
Of which steam

5

Of which electricity (including electricity from renewable sources)
Of which steam

Scope 3 greenhouse gas emissions6

Category 1: Purchased goods and services
Category 2: Capital goods

Category 3: Fuel- and energy-related activities

Category 4: Upstream transportation and distribution
Category 5: Waste generated in operations
Category 6: Business travel

Category 7: Employee commuting

Category 12: End-of-life treatment of sold products

tCO2e

tCO2e
tCO2e
tCO2e

888
347
4

429

8,721

7,1144

979

964

6,663
5,684
979

6,150

5,5444
4,580
964

tCO2e

349,753

352,459

tCO2e

2,641

5,339

tCO2e
tCO2e

249,293
3,821

289,585
3,021

tCO2e

43,67827,091tCO2e35,457

10,222

tCO2e

2,964

2,517

tCO2e
tCO2e

388

11,511

155

14,5291 Scope 1 represents greenhouse gas emissions from operations directly controlled by UMG, including those associated with the consumption of natural gas and domestic
fuel oil and the leakage of refrigerants during normal air-conditioning operation. The emissions related to transport from consumption from mobile sources, including
directly owned vehicles and vehicles on long-term leases over which UMG has operational control.
2 Total Scope 1 emissions have been restated for 2021 to reflect a correction to emission factors for R-401a and diesel fuel.
3 Scope 2 includes indirectly emitted greenhouse gas emissions resulting from the use of purchased electricity, steam, and cooling. Scope 2 location-based reflects theaverage emissions intensity of grids on which energy consumption occurs.
4 Total Scope 2 emissions (location- and market-based) have been restated for 2021 to reflect a correction for the IEA emission factors in nine countries and updates
to our methodology. Our updated methodology for location-based emissions applies U.S. Environmental Protection Agency (EPA) eGrid Factors for the United States and
DEFRA Conversion Factors for the United Kingdom. Our updated methodology for market-based emissions applies Green-e Residual Mix Factors for the United States and
AIB/RE-DISS Residual Mix Factors for European countries.
5 Scope 2 market-based considers the tariffs and energy mix of UMG’s sites which UMG has specifically chosen, taking into consideration the confirmed use of electricity
from renewable sources including wind, solar, geothermal, biomass, and hydro through onsite generation and certified renewable electricity through a supplier tariff.
6 Scope 3 includes external indirect greenhouse gas emissions from non-owned sources within UMG’s value chain. Scope 3 categories were calculated based on theGreenhouse Gas Protocol, their relevance to UMG, materiality, and data availability. For more information, please see the Non-Financial Reporting Methodology section inthis report.

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NON-FINANCIAL INFORMATION

Social Indicators2022% of Total

2021

Headcount% of Total

Headcount

Total Headcount

9,992

100%

9,505

100%

Men

4,913

49%

4,771

50%

Managers

Of which managers

Women

Of which managers

Permanent employees
Temporary employees
By Geographic Region
Africa

3,456
1,980
5,079
1,476
9,286
706
117

35%
20%
51%
15%
93%
7%
1%

2,838
1,663
4,734
1,175
8,785
720
131

30%
18%
50%
12%
92%
8%
2%

North America

3,951

39%

3,542

37%

Asia-Pacific

1,498

15%

1,441

15%

Total hires/new arrivals

2,133

21%

1,751

18%

Total departures

1,614

16%

1,425

15%

South and Central America
EuropeArrivals and Departures
Of which permanent contracts
Of which permanent contracts
Of which resignation

Of which termination

Of which redundancy
Of which retirement
Of which otherOf which temporary contracts

Career Development

Number of temporary contracts transformed into permanent contracts
Training

Number of staff trained on compliance topics1

265

4,161

1,626
1,295
887
212
99
35

42%

16%
13%
9%
2%
1%

3,992

1,224
1,167
730
188
165

4%

42%

13%
12%
8%
2%
2%

<1%

3%

258

3%

174

2%

87

1%

8,992

90%

8,829

93%

3,721

37%

1,842

19%

62

319

3,892

Number of staff trained in languages

287

0%

399

32

Number of staff trained in soft skills

Number of staff trained in hard skills/technical skills

3%

1%

39%
3%

52

3,079
232

1%

32%
2%

Number of staff trained in management

1,471

15%

1,310

14%

Training hours

74,456-

71,602-

Number of staff who have received other types of training

1,420

14%

1,476

16%

MUSIC IS UNIVERSAL Annual Report 2022 | 196

NON-FINANCIAL INFORMATION

2022

Absenteeism

Number of employees with at least one day absent
Days absent – total

Of which for illness

Of which for maternity, paternity and adoption leave

Health and Safety

Number of workplace accidents resulting in lost work time

2,748

28%

19,740-46,79324,257

Employee Relations and Collective Bargaining Agreements (France)
Collective bargaining agreements signed or renewed

Of which relating to compensation and employee savings plans
Of which relating to working conditions

Of which related to other formal agreements
Of which related to saving schemes

Organization of Working Time
Full-time employees

Part-time employees

24%

20,547-44,651-

20,768

-

0

-

0

-

0.58

Severity rate

2,240

-

2

Frequency rate3

% of Total

Headcount

-

351

2

2021

10

Number of days lost due to workplace accidents
Number of fatal accidents% of Total

Headcount

0.02034

-

5

-

0.12

-

-

0.00031

4

-

3

-

0

-

2

-

0
0
4
9,709
283

97%
3%

-

0

-

1

-

0
9,215
290

97%
3%

1 Compliance training topics included Code of Conduct, Criminal Finance, Human Trafficking, Insider Trading, Information Security, Preventing Harrassment, Radio
Promotion Compliance, and Health and Safety. Training timetables and topics offered are region and/or function specific where needed.
2 The frequency rate is calculated as follows: (Number of workplace accidents resulting in lost work time × 1,000,000) / (Average annual headcount x annual hours actually
worked). The frequency rate of workplace accidents is based on the GRI formula for the rate of recordable work-related injuries (GRI 403-9). UMG’s formula only measures
workplace accidents resulting in lost work time, whereas GRI includes other metrics in the rate, such as death and significant injury or ill health diagnosed by a physician
or other licensed healthcare professional. UMG uses a rate based on 1,000,000 hours worked because it is more suitable for larger organizations according to the guidancein GRI 403: Occupational Health and Safety 2018.
3 The severity rate is calculated as follows: (Number of days lost due to workplace accidents x 1,000) / (Average annual headcount x annual hours actually worked). The
severity rate formula is based on the definition for lost day rate in GRI 403: Occupational Health and Safety. The severity rate represents the number of days lost due toworkplace accidents for 1,000 worked hours.

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NON-FINANCIAL INFORMATION

Total Staff

Global Turnover rate – Permanent Headcount1

Voluntary Turnover rate – Resignations

2022

2021

9,992

9,505

13.95%

13.28%2

4.39%

-

9.55%

Involuntary Turnover rate – Permanent Contracts

4

Global Turnover rate - Permanent Headcount, Women5

Voluntary Turnover rate - Permanent Headcount, Women

5

Involuntary Turnover rate - Permanent Headcount, Women5

8.31%314.13%

-

3.07%

-

11.06%-

1 UMG updated its turnover rate formulas to align with guidance from the Corporate Sustainability Reporting Directive (CSRD). The global turnover rate is calculated asfollows: (Number of departures of employees on permanent contracts in year Y / Total number of employees on permanent contracts as of December 31 in year Y).
2 The global turnover rate has been restated for 2021 to align with guidance from the CSRD. The restated global turnover rate for 2021 is 1% lower than the rate reported in
our prior year disclosure.
3 The voluntary turnover rate has been restated for 2021 to align with guidance from the CSRD. The restated voluntary turnover rate for 2021 is 0.1% lower than the ratereported in our prior year disclosure.
4 This indicator was added in 2022 to allow UMG to evaluate the turnover rates by involuntary departures such as dismissal, retirement, and death.
5 These indicators were added in 2022 to allow UMG to evaluate the turnover rates by gender.

MUSIC IS UNIVERSAL Annual Report 2022 | 198

NON-FINANCIAL INFORMATIONVERIFICATION OF NONFINANCIAL DATA
Non-Financial Reporting Methodology
Reference Frameworks
The reporting of non-financial information is based on national andinternational references: the European Union (EU) Directive on Non-Financial
Reporting (2014/95/EU)1; the Greenhouse Gas (GHG) Protocol Corporate Accounting
and Reporting Standard2; the guidelines of the Global Reporting Initiative (GRI)3
and Sustainability Accounting Standards Board (SASB)4; and the United Nations
Sustainable Development Goals (UN SDGs).
ESG Framework Indicators
The reporting framework for UMG’s environmental, social, and governance data
is updated annually and ensures the consistent application of definitions andrules for data gathering, validation, and consolidation.
Reporting Scope
Unless otherwise indicated, the data is consolidated as of December 31, 2022.
The limited assurance engagement pertains to the consolidated data for 2022
and does not cover 2021 restatements.
The reporting scope was established in accordance with EU Directive 2014/95/EU.
Changes in reporting scope are the result of acquisitions and/or disposals
of consolidated business units or site level changes between January 1 andDecember 31 of the relevant reporting year:•

In the case of a disposal during the reporting year, the data for the company
is not recognized in the scope of that year.

•

In the case of an acquisition during the reporting year, the data forthe company is consolidated into the reporting in the year following its
acquisition, unless that company can provide the required information
for the current reporting year. The acquired company’s headcount isincorporated into the scope of the current reporting year.

1

2
3

4

Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending
Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain
large undertakings and groups
Greenhouse Gas Protocol Corporate Accounting and Reporting Standard
The GRI has not verified the content of this report or the validity of the information provided
therein (www.globalreporting.org).
SASB Standards guide the disclosure of financially material sustainability information bycompanies to their investors (https://www.sasb.org/).

MUSIC IS UNIVERSAL Annual Report 2022 | 199

NON-FINANCIAL INFORMATIONSOCIAL REPORTING SCOPE
The social reporting scope for workforce demographics indicators covers all
UMG employees, unless otherwise indicated. The scope for non-workforce
demographic indicators applies to eight major territories, including Australia,
Brazil, France, Germany, Japan, South Africa, the United Kingdom, and the UnitedStates, unless otherwise indicated.
ENVIRONMENTAL REPORTING SCOPE
Scope 1 and 2 Emissions
Scope 1 and 2 emissions are calculated for all sites within UMG’s operational
control. The environmental reporting scope is primarily driven by the status of
UMG’s owned and leased properties. In 2022, the reporting scope applied to 58
countries and 149 properties.
Properties in scope for environmental reporting include UMG offices and studios
with active leases in 2022. Properties are considered out of scope if they meet
one of the following criteria: the property closed prior to 2022 and UMG does nothave an active lease; the property is under construction; or the property is land.
Scope 3 Emissions
Scope 3 emissions are consolidated using the operational control approach.
Scope 3 categories were calculated based on the GHG Protocol Corporate
Standard, their relevance to UMG, materiality, and data availability.
UMG’s approach was to collect global data for Scope 3 emissions, whereavailable. In cases where global data was not easily obtained, UMG reduced its
scope to cover its top five territories (United States, United Kingdom, France,
Germany, and Japan), which represent material revenue for UMG’s operatingcompanies. UMG’s boundary was set to include its three core businesssegments (Recorded Music, Music Publishing, and Merchandising) and core
physical products (physical audio and merchandise).
The table below indicates the change in UMG’s Scope 3 GHG Inventory comparedwith the prior year. During 2022, UMG pursued the normalization of its
emissions accounting treatment starting with our 2019 base year. This results
in a restatement of prior public reporting for those years and an enhanced,
comprehensive accounting policy to support the basis for target-setting:
Scope 3 Inventory
Scope 3 Category

2022

2021

Category 1 – Purchased Goods and Services

Included

IncludedCategory 3 - Fuel and Energy-related Activities

Included

Not Included

Category 2 - Capital Goods

Category 4 - Upstream Transportation and Distribution
Category 5 - Waste Generated in Operations
Category 6 - Business Travel

Category 7 - Employee Commuting

Category 12 - End-of-Life Treatment of Sold Products

Included
Included
Included
Included
Included
Included

Not Included
Not Included
Included
Included

Not Included
Not Included

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NON-FINANCIAL INFORMATION

Scope 3 Exclusions
Scope 3 Category

Relevance to UMG

Category 8 - Upstream Leased Assets

Not relevant

Category 10 - Processing of Sold Products

Not relevant

Category 9 – Downstream Transportation and Distribution
Category 11 - Use of Sold Products

Category 13 - Downstream Leased Assets
Category 14 - Franchises

Category 15 - Investments

Relevant - will be added in 2023
Not relevant
Not relevant
Not relevant

Relevant - will be added in 2023

The table above contains the Scope 3 categories that are currently excluded
from UMG's GHG Inventory. While UMG recognizes the impact of digital
streaming and the live sector within the music ecosystem, these are notincluded within UMG’s GHG Inventory boundary.
The GHG Protocol guidance for Category 11 - Use of Sold Products, along withexpert guidance UMG received, indicate that emissions associated with digital
streaming are considered indirect use phase emissions of UMG's products andare therefore optional to calculate as part of our GHG Inventory. Additionally,
indirect emissions cannot be considered when setting science-based targets
per the Science Based Targets initiative criteria.
We expect to study the impact of live sector further in 2023 to understandwhether any emissions related to artist performances should be evaluated forinclusion in our boundary.
Methodological Details and Limits in Relation to Indicators
Environmental, social, and governance indicators may generally reflect
methodological limits due to the lack of harmonization of international andnational definitions and legislation, or due to the qualitative and therefore
subjective nature of certain data. Our sector lacks strong, common definitions
and standards. In some cases, given the uniqueness of our products, wedeveloped our own criteria under the guidance of our experts.

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NON-FINANCIAL INFORMATIONSOCIAL INDICATORS (WORKFORCE DEMOGRAPHICS)
Headcount
Headcount-related indicators are expressed in number of employees at
December 31.
TurnoverIn anticipation of the change in European standards from EU Directive
2014/95/EU to the Corporate Sustainability Reporting Directive (CSRD), UMG
updated its turnover rate formulas to align with guidance from the CSRD1. The
resulting change is a 1% decrease in the global turnover rate and a 0.1%
decrease in the voluntary turnover rate compared to the rates reported in ourprior year disclosure.

Turnover Rate

2021 Restated Rate

2021 Prior Year Disclosure

Global Turnover

13.28%

14.33%1

Voluntary Turnover

8.31%

8.44%2

1 The global turnover rate was calculated using the following formula in our prior year disclosure: [(Number ofpeople hired on permanent contracts in year Y + Number of departures of people on permanent contracts inyear Y + Number of temporary contracts converted to permanent contracts) / 2] / Total employees on permanentcontracts at December 31 in year Y-1.
2 The voluntary turnover rate was calculated using the following formula in our prior year disclosure: Numberof resignations of people on permanent contracts in year Y / Total employees on permanent contracts at
December 31 in year Y-1.

Global turnover rate
Under the CSRD guidance, the global turnover rate numerator is the aggregate of
the number of employees on permanent contracts who leave voluntarily or due
to dismissal, retirement, or death in service. The denominator of the rate is thetotal number of employees on permanent contracts during the reporting period.
The global turnover rate is calculated as follows:
Number of departures of employees on permanent contracts in year Y / Total
number of employees on permanent contracts as of December 31 in year Y.
Voluntary turnover rate
The voluntary turnover rate allows UMG to consider departures resulting fromthe resignation of permanent employees.
The voluntary turnover rate is calculated as follows:
Number of resignations of employees on permanent contracts in year Y / Total
number of employees on permanent contracts at December 31 in year Y.

1

See page 38 of the Draft European Sustainability Reporting Standards (ESRS) S1 Own workforce.

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NON-FINANCIAL INFORMATION

Involuntary turnover rate
The involuntary turnover rate allows UMG to consider departures resulting frominvoluntary separations of permanent employees.
The involuntary turnover rate is calculated as follows:
Number of involuntary separations (such as dismissal, retirement, or deathin service) of employees on permanent contracts in year Y / Total number of
employees on permanent contracts as of December 31 in year Y .
ENVIRONMENTAL INDICATORSGreenhouse gas emissions are calculated in line with the GHG Protocol
Corporate Accounting and Reporting Standard and reported into three scopes:•

Scope 1: Represents greenhouse gas emissions from operations directly
controlled by UMG, including those associated with the consumption ofnatural gas and domestic heating fuel and the leakage of refrigerants during
normal air-conditioning operation. The emissions related to transport fromconsumption from mobile sources, including directly owned vehicles andvehicles on long-term leases over which UMG has operational control.

•

Scope 2: Includes indirect greenhouse gas emissions resulting from theuse of electricity, steam, and cooling. As per the GHG Protocol, UMG
considers both location-based and market-based Scope 2 emissions. Scope
2 location-based reflects the average emissions intensity of grids on whichenergy consumption occurs. Scope 2 market-based considers the tariffs
and energy mix of UMG’s sites which UMG has specifically chosen, taking
into consideration the confirmed use of electricity from renewable sources
including wind, solar, geothermal, biomass, and hydro through onsite
generation and certified renewable electricity through a supplier tariff.

•

Scope 3: Includes external indirect greenhouse gas emissions from
non-owned sources within UMG’s value chain. These include emissions
from purchased goods and services, capital goods, fuel- and energyrelated activities, upstream transportation and distribution, waste generated
in operations, business travel, employee commuting, and end-of-life
treatment of sold products.

Greenhouse gas emissions are calculated using emission factors that are
the most accurate and available at the time of reporting. Emission factor
sources include:•

Scope 1: Department for Business, Energy & Industrial Strategy (BEIS)
Conversion Factors1•

Scope 2 (Location-based): IEA Emission Factors2, United States
Environmental Protection Agency (EPA) eGrid Factors3, and BEIS
Conversion Factors

1
2
3

Department for Business, Energy & Industrial Strategy (BEIS) Conversion Factors
IEA Emission Factors
United States Environmental Protection Agency (EPA) eGrid Factors

MUSIC IS UNIVERSAL Annual Report 2022 | 203

NON-FINANCIAL INFORMATION•

Scope 2 (Market-based): IEA Emission Factors, BEIS Conversion Factors, AIB/RE-DISS Residual Mix Factors4, and Green-e Residual Mix Factors5•

Scope 3: Comprehensive Environmental Data Archive (CEDA)
environmentally extended input-output (EEIO) database6, ecoinvent Lifecycle
Analysis (LCA) database7, and BEIS Conversion Factors, among other sources

Data is primarily sourced internally within UMG. Where possible, primarydata (mass, distance, energy) has been collected directly from suppliers orinternal business units within UMG. Energy consumption is converted into CO2
equivalents using recognized emissions factors from the indicated databases.
Where primary data is not available, secondary data (spend data, extrapolations,benchmarks) are used to calculate greenhouse gas emissions.
Due to the timing in 2022, data is requested for Q1-Q3 and estimates are applied
for Q4 to allow for data validation, consolidation, and reporting. Estimation ofemissions follows one of the two methodologies:
1.

Historical Average: uses quarterly activity data for previous years(2019-2021) to calculate the historical average ratio of total Q1-Q3 to Q4
activity data. This ratio is then applied to the Q1-Q3 activity data in 2022
to estimate.

2.

Current Year Average: estimates Q4 activity volume using the average(mean) quarterly activity volume for Q1-Q3.

The Historical Average method is preferred because it takes into accountseasonal differences in business activity. However, this methodology is only
feasible if activity data is available at quarterly granularity (at a minimum) in
previous years.
If the Historical Average methodology is feasible, the calculated average ratio
should take into account data from as many previous years as possible, withthe average ratio weighted by total activity per year. For emissions sources
where previous year data is not available at quarterly granularity, a Current Year
Average is applied.
Reporting Tools, Consolidation, and Controls
In 2022, UMG implemented a new global data collection and consolidation
platform for environmental and social demographics reporting. The platform
is designed to include mathematical coherency checks to ensure dataconsistency and flag any potentially abnormal variation during the
input process.
Each reporting entity conducts an initial validation and consistency check of
their submission. The Environmental, Social & Governance (ESG) department
performs a second coherency check and validation during the consolidation
process. Lastly, a trend analysis is conducted, sense checked with businessleaders, and variance explanations are documented.

4
5
6

7

AIB/RE-DISS Residual Mix Factors
Green-e Residual Mix Factors
Comprehensive Environmental Data Archive (CEDA) environmentally extended input-output(EEIO) databaseecoinvent Lifecycle Analysis (LCA) databaseMUSIC IS UNIVERSAL Annual Report 2022 | 204

NON-FINANCIAL INFORMATION

Limited Assurance Report of the Independent Auditor on Universal
Music Group's Selected Indicators

To: The Shareholders and Non-Executive Directors of Universal Music Group N.V.
Our Conclusion
We have performed a limited assurance engagement on selected indicators in
the annual report for the year 2022 of Universal Music Group N.V. at Hilversum.
Based on our procedures performed and the evidence obtained, nothing hascome to our attention that causes us to believe that the selected indicators are
not prepared, in all material respects, in accordance with the reporting criteria
as included in the ‘Reporting Criteria’ section of our report.
The selected indicators are disclosed in the Information Tables section of theannual report and consist of:•••"Global turnover rate""Voluntary turnover rate""Greenhouse gas emissions (Scope 1, Scope 2 location-based and Scope 2
market-based, and Scope 3 categories 1, 2, 3, 4, 5, 6, 7, and 12)"Basis for our Conclusion
We have performed our limited assurance engagement on the selectedindicators in accordance with Dutch law, including Dutch Standard 3000A'Assurance-opdrachten anders dan opdrachten tot controle of beoordeling vanhistorische financiële informatie (attest-opdrachten)’ (Assurance engagements
other than audits or reviews of historical financial information (attestation
engagements)). Our responsibilities under this standard are further describedin the ‘Our Responsibilities for the Assurance Engagement on the Selected
Indicators’ section of our report.
We are independent of Universal Music Group N.V. in accordance with the“Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten” (ViO, Code of Ethics for Professional Accountants, a regulation withrespect to independence). This includes that we do not perform any activities
that could result in a conflict of interest with our independent assurance
engagement. Furthermore, we have complied with the “Verordening gedrags- en
beroepsregels accountants” (VGBA, Dutch code of ethics).
We believe that the assurance evidence we have obtained is sufficient andappropriate to provide a basis for our conclusion.
Reporting Criteria
The reporting criteria used for the preparation of the selected indicators are thereporting criteria developed by Universal Music Group N.V. and disclosed in the
Non-Financial Reporting Methodology section of the annual report.
The absence of an established practice on which to draw, evaluate, and measure
the selected indicators allows for different, but acceptable, measurement
techniques and can affect comparability between entities and over time.
Consequently, the selected indicators need to be read and understood together
with the reporting criteria used.

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NON-FINANCIAL INFORMATION

Unassured Corresponding Information
No assurance engagement has been performed on the selected indicator:“Scope 3 categories 1, 2, 3, 4, 5, 6, 7, and 12" for the period prior to2022. Consequently, the corresponding selected indicator and thereto related
disclosures for the period prior to 2022 is not assured.
Limitations to the Scope of our Assurance Engagement
Our assurance engagement is restricted to the selected indicators. We have not
performed assurance procedures on any other information as included in theannual report in light of this engagement.
The references to external sources or websites are not part of our assurance
engagement on the selected indicators. We therefore do not provide assurance
on this information.
Our conclusion is not modified in respect to these matters.
Responsibilities of the Board of Directors and the Non-Executive Directors for
the Selected Indicators
The Board of Directors is responsible for the preparation of the selectedindicators in accordance with the reporting criteria as included in the ‘Reporting
Criteria’ section of our report. The Board of Directors is solely responsible forselecting and applying these reporting criteria, taking into account applicablelaw and regulations related to reporting. In this context, the Board of Directors
is responsible for the identification of the intended users and the criteria
being applicable for their purposes. The choices made by the Board of
Directors regarding the scope of the selected indicators and the reporting policy
are summarized in the Non-Financial Reporting Methodology section of theannual report.
Furthermore, the Board of Directors is responsible for such internal control as
it determines is necessary to enable the preparation of the selected indicatorsthat are free from material misstatement, whether due to error or fraud.
The Non-Executive Directors are responsible for overseeing the reporting
process of the selected indicators of Universal Music Group N.V.
Our Responsibilities for the Assurance Engagement on the Selected Indicators
Our responsibility is to plan and perform our limited assurance engagement
in a manner that allows us to obtain sufficient and appropriate assurance
evidence for our conclusion.
Procedures performed to obtain a limited level of assurance are aimed todetermine the plausibility of information and vary in nature and timing
from, and are less in extent, than for a reasonable assurance engagement.
The level of assurance obtained in a limited assurance engagement istherefore substantially less than the assurance obtained in a reasonableassurance engagement.
We apply the 'Nadere voorschriften kwaliteitssystemen' (NVKS, Regulations for
quality management systems) and accordingly maintain a comprehensive
system of quality control including documented policies and procedures
regarding compliance with ethical requirements, professional standards, andother relevant legal and regulatory requirements.

MUSIC IS UNIVERSAL Annual Report 2022 | 206

NON-FINANCIAL INFORMATION

The procedures of our limited assurance engagement included, among others:
•

•

•

•

Performing an analysis of the external environment and obtaining an
understanding of the sector, insight into relevant sustainability themes
and issues, relevant laws and regulations, and the characteristics of thecompany as far as relevant to the selected indicators.
Evaluating the appropriateness of the reporting criteria used, theirconsistent application, and related disclosures on the selected indicators.
This includes the evaluation of the reasonableness of estimates made by
the Board of Directors.
Obtaining through inquiries a general understanding of internal control,
reporting processes, and information systems relevant to the preparationof the selected indicators, without obtaining evidence about implementationor testing the operating effectiveness of controls.
Identifying areas of the selected indicators with a higher risk of misleadingor unbalanced information or material misstatements, whether due to fraud
or errors. Designing and performing further assurance procedures aimed atdetermining the plausibility of the selected indicators responsive to this risk
analysis. These further assurance procedures consisted, among others, of:◦Interviewing the Board of Directors and relevant staff at the corporate
and business level responsible for the strategy, policy, and results
relating to the selected indicators.
◦
Interviewing relevant staff responsible for providing the information for,carrying out internal control procedures on, and consolidating the datain the selected indicators.
◦
Obtaining assurance information that the selected indicators reconcile
with underlying records of the company.
◦
Reviewing, on a limited test basis, relevant internal andexternal documentation.
◦
Performing an analytical review of the data and trends.

Amsterdam, 30 March 2023
Ernst & Young Accountants LLP
R.T.H. Wortelboer

MUSIC IS UNIVERSAL Annual Report 2022 | 207

NON-EXECUTIVEDIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORTREPORT OF THE NONEXECUTIVE DIRECTORSAs the Non-Executive Directors, we are responsible for supervising the
Executive Directors’ policy and performance of duties and the Company’s
general course of affairs and business, and rendering advice and direction
to the Executive Directors. In performing our duties, we are guided by
the Company’s corporate interests, which extend to the interests of all of
the Company’s stakeholders, including the Shareholders and the Company’s
creditors, customers and employees.

Composition

The Board has a one-tier board structure and currently comprises two Executive
Directors and eleven Non-Executive Directors, four of whom, being Sherry
Lansing, Bill Ackman, Cyrille Bolloré and Nicole Avant, were appointed to theBoard by the General Meeting on May 12, 2022:

Name

Function

Sir Lucian Grainge

Executive Director, Chairman and Chief Executive Officer

Sherry Lansing

Non-Executive Director, Chairman of the Board

Vincent Vallejo
Anna Jones

Antoine Fiévet
Bill Ackman

Cathia Lawson-Hall
Cyrille Bolloré

James Mitchell
Luc van Os

Manning Doherty

Margaret FrerejeanTaittinger
Nicole Avant

Executive Director, Deputy Chief Executive Officer

Non-Executive Director, Vice-Chairman of the Board
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director

Judy Craymer CBE acted as Non-Executive Director and Chairman of the Board
until January 10, 2023, on which date she decided to resign from the Board to
focus on her activities as a film and theater producer.
All of the Executive Directors and Non-Executive Directors were appointed assuch by the General Meeting for a period until the close of the annual General
Meeting to be held in 2024.

Diversity

The elements of a diverse composition are laid down in the Diversity Policy as
per best practice provision 2.1.5 of the Code as well as in the Profile as per bestpractice provision 2.1.1 of the Code. In accordance with the Diversity Policy, theNon-Executive Directors are committed to ensuring that at least one third of
the Board consists of women and at least one third of the Board consists ofmen, as well as to increasing the nationality, ethnicity and age diversity. The

MUSIC IS UNIVERSAL Annual Report 2022 | 209

NON-EXECUTIVE DIRECTORS REPORT

Non-Executive Directors are further committed to ensuring that the compositionof the Board has a good balance in terms of skills, knowledge, experience,
background and perspectives and to considering candidates from a wide pool,including candidates with no prior publicly listed company experience.
The elements as laid down in the Diversity Policy and Profile are all importantdrivers in the selection procedure and will all be considered when filling avacancy. However, when filling a vacancy, the qualifications of a candidate andthe requirements for the position shall in principle always prevail.
The Non-Executive Directors consider that their current composition is diversein terms of skills, knowledge, experience, background and perspectives but also
in terms of gender, nationality and age. There are six male and five female
Non-Executive Directors, six nationalities (American, British, Canadian, Dutch,
French and Togolese) and age ranges between 37 and 78.

Independence

The Non-Executive Directors endorse the principle that their composition shallbe such that they are able to act independently and critically vis-à-vis eachother, the Executive Directors and any particular interests.
Given the recentness of the Listing, the Non-Executive Directors are of theopinion that, in the context of preserving the continuity of UMG and ensuring
a focus on long-term value creation, it is in the Company’s corporate interestsand in the interests of the Company’s stakeholders that among the NonExecutive Directors, there is a fair and adequate representation of persons who
are affiliated with or representing a (group of affiliated) shareholder(s) holding,
directly or indirectly, more than 10% of the issued share capital of the Company,
even if those persons are considered non-independent within the meaning ofbest practice provision 2.1.8 of the Code.
Currently, five out of eleven Non-Executive Directors are considered nonindependent on the aforementioned basis, being:•
Bill Ackman to whom more than 10% of the issued share capital of theCompany is attributed by virtue of his control over Pershing Square CapitalManagement L.P., i.e. the investment adviser to the collective investment
vehicles through which that shareholding is held.
•
Cathia Lawson-Hall who is a member of the supervisory board of Vivendi SE
which holds more than 10% of the issued share capital of the Company.
•
Cyrille Bolloré who is the Chairman and Chief Executive Officer of the BolloréGroup, one of the Company's largest shareholders, as well as a memberof the supervisory board of Vivendi SE which holds more than 10% of theissued share capital of the Company.
•
James Mitchell who is a representative of the Tencent-led consortium whichholds approximately 20% of the issued share capital of the Company.
•
Manning Doherty who is a representative of the Tencent-led consortium
which holds approximately 20% of the issued share capital of the Company.
In addition, three out of eleven Non-Executive Directors (two of whom are thesame as above) are considered non-independent on the basis of being former
Executive Directors, being:•
James Mitchell who was an Executive Director in the period from February
26, 2021 until September 20, 2021.
•
Luc van Os who was an Executive Director in the period from December 4,2020 until September 20, 2021.

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NON-EXECUTIVE DIRECTORS REPORT•

Manning Doherty who was an Executive Director in the period from February
26, 2021 until September 20, 2021.

Accordingly, six out of eleven Non-Executive Directors are considered nonindependent, however, the other Non-Executive Directors, who are independent,
including the Chairman of the Board, are comfortable that Bill Ackman, Cathia
Lawson-Hall, Cyrille Bolloré, James Mitchell, Luc van Os and Manning Doherty
are nonetheless able to act independently and critically.

Remuneration

On September 20, 2021, the General Meeting adopted the remuneration policy for
the Non-Executive Directors. The remuneration of the Non-Executive Directors
shall be determined by the Board with due observance of the remuneration
policy. The remuneration policy is available on the investor relations part of the
UMG website. In the Remuneration report, details of the individual remunerationof the Non-Executive Directors are set out.

Board meetings and activities
Meetings
During 2022, the Board held six meetings, three of which were in-person
meetings and three of which took place via video calls. The meetings wereattended by both the Executive Directors and the Non-Executive Directors aswell as by several of the corporate executives and other senior executives,
as appropriate.
Among the items discussed were the annual report, the semi-annual financial
report, the quarterly results, the accompanying press releases, the external
auditors’ findings and audit report, the reappointment of the external auditors,
the external auditors’ engagement, the (final and interim) dividend proposals,
the annual budget and business plan, the 2022 UMG Global Equity Plan andthe implementation thereof, the remuneration of the Executive Directors, thenomination for appointment of the four new Non-Executive Directors, being
Sherry Lansing, Bill Ackman, Cyrille Bolloré and Nicole Avant, to the Board,business updates, the strategy, investor relations updates, committee updates,
the refinancing of the Company, including by means of issuances under the
Negotiable European Commercial Paper program and the Euro Medium Term
Note program, the capital allocation and any related party transactions.
Long-term value creation
The Board, who is responsible for developing a view on long-term value
creation by the Company and for formulating a strategy in line with this view,
regularly discussed the Company’s strategy and also spent two full days at theCompany’s operational headquarters in Santa Monica, United States of America,
to spend time with some of UMG’s senior executives to learn more about themusic business. In addition, the Board is responsible for approving the annual
budget as well as any transaction with a value in excess of €300,000,000.
Education
Shortly following their appointment to the Board by the General Meeting on May
12, 2022, the four new Non-Executive Directors attended an educational session
on their responsibilities as directors of a public limited liability company
incorporated under the laws of the Netherlands, which shares are admitted tolisting on Euronext Amsterdam, the regulated market of Euronext Amsterdam
N.V. In addition, all new committee members were able to attend an educationalMUSIC IS UNIVERSAL Annual Report 2022 | 211

NON-EXECUTIVE DIRECTORS REPORT

session on the relevant committee’s main responsibilities under Dutch law andthe regulations of the relevant committee.
Evaluation
In the second half of 2022, the Board, under the direction of the Nomination
Committee, conducted a self-assessment to evaluate its own functioning aswell as the functioning of the various committees and the individual Directors.
As part of the assessment, the Board completed an evaluation form, covering
topics such as information provision, frequency and quality of meetings, Boardand committee compositions, functioning of the Board, the various committees
and the individual Directors and access to the Company secretariat. The results
and feedback of the assessment were first discussed during a Nomination
Committee meeting and then shared with the Board, outside the presence of
the Executive Directors, in the beginning of 2023. Where considered necessary,or of added value, the chair of the Nomination Committee also had one-on-one
sessions with the individual Directors to discuss their individual functioning.
With the results and feedback, the Board identified opportunities for growth andimprovement as well as specific educational and information needs.
Share positions
According to the AFM register, the following Executive Directors and NonExecutive Directors held a capital interest and/or voting rights in the Company
as at December 31, 2022:

Shareholder

Notification date

Capital interest

Voting rights

Sir Lucian Grainge

September 23, 2021

11,49911,499Bill Ackman

November 1, 2022

186,274,786

186,274,786

Vincent Vallejo

Cathia Lawson-Hall
Cyrille Bolloré
Luc van Os

December 14, 2022

September 23, 2021
May 12, 2022

September 23, 2021

99,2702,356

24,000105

91,7701

2,356

24,000105

1 Held via PS VII Master L.P.

Committees

The Board has appointed from among its Non-Executive Directors threecommittees to assist it in discharging its responsibilities: the Audit Committee,
the Remuneration Committee and the Nomination Committee. Without prejudice
to the collegiate responsibility of the Board, the duty of these committees is toprepare the decision-making of the Board.
The Board has drawn up regulations for each committee, setting out the role andresponsibilities of the committee concerned, its composition and size and themanner in which its meetings should be held. These regulations are available
on the investor relations part of the UMG website.
The current composition of the committees is detailed in the following table:

MUSIC IS UNIVERSAL Annual Report 2022 | 212

NON-EXECUTIVE DIRECTORS REPORT

Audit Committee

Sherry Lansing
Anna Jones

Antoine Fiévet
Bill Ackman

Cathia Lawson-Hall
Cyrille Bolloré

James Mitchell
Luc van Os

Manning Doherty

MemberMemberMemberChair

Margaret Frerejean- Member
Taittinger
Nicole Avant

Remuneration

Nomination

MemberMemberCommittee

Chair

Committee

MemberMemberMemberMemberChairMemberJudy Craymer CBE was a member of the Remuneration Committee andNomination Committee until January 10, 2023, on which date she decided toresign from the Board.
The Audit Committee
The Audit Committee advises the Board in relation to its responsibilities,
undertakes preparatory work for the Board’s decision-making regarding thesupervision of the integrity and quality of the Company’s financial reporting
and the effectiveness of the Company’s internal risk management and control
systems and prepares resolutions of the Board in relation thereto.
In addition to the foregoing, the Audit Committee’s main responsibilities
include: (i) supervising and monitoring, and discussing with and advising
the Board on, the effectiveness of the design and operation of theinternal risk management and control systems and supervising the effectof the Code of Conduct, (ii) supervising the preparation and submissionof financial information by the Company, (iii) supervising the compliancewith recommendations and observations of the internal auditor and external
auditors, (iv) supervising the functioning of the internal audit department, (v)supervising the Company’s tax policy, (vi) supervising the financing of theCompany, (vii) supervising the applications of information and communication
technology, including risks relating to cybersecurity, (viii) maintaining frequentcontact and supervising the relationship with the external auditors, (ix)
implementing the procedure for the selection of the external auditorsand submitting a recommendation to the Non-Executive Directors for the(re)appointment or dismissal of the external auditors by the General Meeting,(x) informing the Board of the outcome of the statutory audit and explaining how
the statutory audit contributed to the integrity of financial reporting and what
the role of the Audit Committee was in that process, (xi) monitoring the financial
reporting process and submitting recommendations or proposals to ensure its
integrity, (xii) determining whether, and if so, how the external auditors shallbe involved in the content and publication of financial reports other than thefinancial statements, (xiii) issuing a recommendation on the appointment anddismissal of the senior internal auditor, (xiv) submitting a proposal to the Boardfor the external auditors’ engagement to audit the financial statements, and(xv) considering and, where appropriate, approving the (semi-annual) financial
statements, the annual budget and major capital expenditures of the Company.

MUSIC IS UNIVERSAL Annual Report 2022 | 213

NON-EXECUTIVE DIRECTORS REPORTIn 2022, the Audit Committee held five meetings, two of which were in-person
meetings and three of which took place via video calls. The meetings wereattended by the Audit Committee members as well as by the Chief Financial
Officer, the Controller, the Head of Internal Audit, the external auditors and othercorporate and/or senior executives, as appropriate.
Among the items discussed were the annual report, the semi-annual financial
report, the quarterly results, the accompanying press releases, the external
auditors’ findings and audit report, the reappointment of the external auditors,
the external auditors’ engagement, the external audit plan, the (final andinterim) dividend proposals, the financing of the Company, the annual budget
and business plan, the internal audit and internal control departments, theinternal audit plans, the annual risk assessment, compliance, information andcommunication technology and ESG. Outside of its official meetings, the Audit
Committee also regularly discussed the auditor selection procedure which wasorganized by the Company, under the responsibility of the Audit Committee, inthe second half of 2022 and which was led by a selection committee designatedby the Audit Committee for such purpose.
In addition, the chair of the Audit Committee had regular update meetings with
the Chief Financial Officer, the Head of Internal Audit, other corporate and/or
senior executives within the Company and the external auditors.
The Audit Committee members attended an educational session on the Audit
Committee’s main responsibilities under Dutch law and the regulations of the
Audit Committee.
Within the Audit Committee, Cathia Lawson-Hall is considered to havecompetence in accounting and/or auditing and the Audit Committee members
as a whole are considered to have competence relevant to the sector in which
the Company operates.
The Remuneration Committee
The Remuneration Committee advises the Board in relation to its
responsibilities, undertakes preparatory work for the Board’s decisionmaking regarding the determination of the remuneration of the individual
Executive Directors and Non-Executive Directors, with due observance of the
remuneration policies for the Executive Directors and Non-Executive Directors,
respectively, and prepares resolutions of the Board in relation thereto.
In addition to the foregoing, the Remuneration Committee’s main
responsibilities include: (i) at least every four years submitting a proposal to theBoard for the remuneration policies to be pursued and (ii) annually preparing
the remuneration report, to be tabled at the annual General Meeting.
In 2022, the Remuneration Committee held four meetings, two of which werein-person meetings and two of which took place via video calls. The meetings
were attended by the Remuneration Committee members as well as by the
Chief People and Inclusion Officer and other corporate and/or senior executives,
as appropriate.
Among the items discussed were the 2022 UMG Global Equity Plan and theimplementation thereof, the remuneration report and the remuneration of the
Executive Directors and Non-Executive Directors.

MUSIC IS UNIVERSAL Annual Report 2022 | 214

NON-EXECUTIVE DIRECTORS REPORTIn addition, the chair of the Remuneration Committee had regular update
meetings with the Chief People and Inclusion Officer and other corporate and/or
senior executives within the Company.
The Nomination Committee
The Nomination Committee advises the Board in relation to its responsibilities,
undertakes preparatory work for the Board’s decision-making and prepares
resolutions of the Board in relation thereto.
In addition to the foregoing, the Nomination Committee’s main responsibilities
include: (i) drawing up selection criteria and appointment procedures for the
Directors, (ii) periodically assessing the size and composition of the Board, andmaking a proposal for a composition profile of the Non-Executive Directors, (iii)
periodically assessing the functioning of the individual Directors and the Board
as a whole, and reporting on this to the Board, (iv) making recommendations for(re)appointments of Directors and (v) supervising the policy of the Board on theselection criteria and appointment procedures for senior management.
In 2022, the Nomination Committee held four meetings, two of which were inperson meetings and two of which took place via video calls. The meetings wereattended by the Nomination Committee members as well as by the GeneralCounsel and other corporate and/or senior executives, as appropriate.
Among the items discussed were the nomination for appointment of the four
new Non-Executive Directors, being Sherry Lansing, Bill Ackman, Cyrille Bolloré
and Nicole Avant, to the Board, the composition of the committees, (the results
and feedback of the assessment of) the functioning of the Board, the various
committees and the individual Directors and the retirement schedule andsuccession planning.
Attendance and availability
The table below provides an overview of the attendance rate of the individual
Non-Executive Directors at the Board and committee meetings. Attendance isexpressed as a number of meetings attended out of the number of meetings
held during 2022.

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NON-EXECUTIVE DIRECTORS REPORT

Board

Audit Committee

Judy Craymer CBE 6 - 6
Sherry Lansing

2-2

Antoine Fiévet

4-6

Anna JonesBill Ackman

Cathia LawsonHall

5-6
2-2
6-6

5-5
1-2
5-5

Cyrille Bolloré

2-2

Luc van Os

6-6

5-5

6-6

2-2

James Mitchell
Manning Doherty
MargaretFrerejeanTaittinger

Nicole Avant

6-6
6-6

Remuneration

Nomination

4-4

3-4

Committee

2-2
4-4
2-2
2-2
2-2

2-2

Committee

4-4

2-2

2-2

2-2
2-2
2-2
4-4

2-2

All Non-Executive Directors have had sufficient time available for their
responsibilities as evidenced by their prompt responses to e-mails, theiravailability for meetings, educational sessions and calls and their wellpreparedness for and active participation in such meetings, sessions and calls.
Where a Non-Executive Director was not available for a particular meeting,he or she was given the opportunity to provide input beforehand and was
updated afterwards. At all Board and committee meetings, there was a quorum
present, such in accordance with the Board Regulations or the regulations of
the committees.

Appreciation

As the Non-Executive Directors, we wish to express our gratitude to the
Executive Directors and all UMG employees for their hard work and dedicationin 2022.
The Non-Executive Directors
Sherry Lansing
Anna Jones
Antoine Fiévet
Bill Ackman
Cathia Lawson-Hall
Cyrille Bolloré
James Mitchell
Luc van Os
Manning Doherty
Margaret Frerejean-Taittinger
Nicole Avant

Hilversum, March 30, 2023

MUSIC IS UNIVERSAL Annual Report 2022 | 216

NON-EXECUTIVE DIRECTORS REPORTREMUNERATION REPORTThis remuneration report offers insight into the remuneration provided to theCompany’s Executive Directors and Non-Executive Directors during 2022.
The General Meeting on September 20, 2021 adopted the remuneration policies
for the Executive Directors (the Executive Directors' Remuneration Policy) andNon-Executive Directors (the Non-Executive Directors' Remuneration Policy),
outlining the framework to determine the remuneration for the Executive
Directors and Non-Executive Directors, respectively. Where, however, legacy
arrangements are in place for the Executive Directors prior to being appointed
to the Board, the Executive Directors’ Remuneration Policy allows thesearrangements to be respected. For 2022, the remuneration of the Executive
Directors continues to reflect the legacy arrangements contractually agreed witheach Executive Director prior to being appointed to the Board. To further clarify,
the Board had no input on such legacy arrangements.
This remuneration report has been prepared in accordance with article 2:135bof the Dutch Civil Code and the Dutch Corporate Governance Code. It will bepresented for an advisory vote to shareholders at the annual General Meeting to
be held on May 11, 2023.

The Remuneration for the Executive Directors in 2022
In 2022, the Executive Directors were as follows:

Executive Director

Position

Sir Lucian Grainge

Chairman and Chief Executive Officer (CEO)Vincent Vallejo

Deputy Chief Executive Officer, Corporate

Executive Directors’ Remuneration Policy

Pursuant to the Executive Directors’ Remuneration Policy, the Board, atthe recommendation of the Remuneration Committee, determines the
remuneration of the Executive Directors. The remuneration structure for
Executive Directors consists of the following elements:
•
•
•
•
•

Base salary
Short-term incentives
Long-term incentives
Retirement and other post-employment benefits
Benefits

The Executive Directors’ Remuneration Policy provides a compensation
framework that allows the Company to attract, motivate and retain highly
qualified Executive Directors and to incentivize and reward long-term,
sustainable growth of the Company. The compensation offered under the
Executive Directors’ Remuneration Policy provides for periodic re-benchmarking
against peer companies, considering compensation levels and trends in themarket as well as relevant remuneration standards. As explained above,
however, the current Executive Directors' remuneration continues to be subject
to legacy arrangements contractually agreed before the Listing and the adoptionof the Executive Directors’ Remuneration Policy and, therefore, when setting

MUSIC IS UNIVERSAL Annual Report 2022 | 217

NON-EXECUTIVE DIRECTORS REPORT

their remuneration for 2022, these legacy arrangements were applied. As aresult of the continuing legacy arrangements, the Board did not re-benchmark
the remuneration of the Executive Directors in 2022.

Summary Overview of the Key Remuneration Elements andApproach to Remuneration for 2022

The table below sets out the key elements of the remuneration provided in the
Executive Directors’ Remuneration Policy versus the remuneration approachin 2022.

MUSIC IS UNIVERSAL Annual Report 2022 | 218

NON-EXECUTIVE DIRECTORS REPORT

Element

Key remuneration elements per

Remuneration approach for 2022

Base salary

Fixed level of cash compensation, aligned Pursuant to each Executive Director’swith the Executive Director’s experience
contract, base salaries are as follows:
and scope of responsibilities

Executive Directors’ Remuneration Policy••

Short-term incentive (STI)

Variable compensation paid annually incash, shares, or a combination thereof,
subject to the achievement of annually
pre-established objectives to ensure
executive alignment with, and motivate
achievement of, the annual businesspriorities for the applicable year

STI for Executive Directors in 2022 wasbased on STI structure agreed in theirpre-Listing contracts with the Company's
previous owner, Vivendi, as follows:•

Target STI of up to 300% of base salary,maximum STI of 200% of target•

Long-term incentive (LTI)

Variable compensation payable in cash,
shares, or a combination thereof,
subject to pre-established objectives
and/or continued employment to retain
Executive Directors necessary to execute
the Company’s strategy, to alignthe financial interests of Executive
Directors with those of shareholders,
and reward delivery of long-term
performance objectives and shareholder
value creation

Chairman and CEO: €15,412,990
Deputy CEO: €960,000

Chairman and CEO: (i) an annual cash
bonus equal to 1% of UMG’s EBITA for the
relevant financial year; and (ii)a contingent cash bonus of €10,275,327,
subject to UMG meeting specific financial
and non-financial targets
Deputy CEO: target cash bonus of 50%
of annual base salary with a minimum
payout of 0% and a maximum payout
potential of two times the target bonus
amount, subject to the achievement ofspecific financial targets

No LTI was granted to the Executive Directors
in 2022 since they remained under their preListing contracts

LTI grant value is capped at 500% ofbase salary
Retirement and other postemployment benefits

Customary retirement income andseverance benefits to provide future
income security, aligned with relevantmarket levels

For Chairman and CEO, the pension
allowance equals 20% of base salary, cappedat €1,512,049, per year, for a total potential
maximum pension allowance of €302,410.
The Deputy CEO, participates in the local UMG
pension plan

Benefits

Customary and market competitive
arrangements to compensate for any
reasonable costs incurred or perks
required for the performance of
their duties

Covers health and welfare, housing
allowance, tax equalization, life insurance,
security, and home leave

MUSIC IS UNIVERSAL Annual Report 2022 | 219

NON-EXECUTIVE DIRECTORS REPORT

Short-Term Incentive

For 2022, in accordance with his contract, Sir Lucian Grainge was entitled toreceive: (i) an annual cash bonus in an amount equal to 1% of UMG’s 2022
EBITA, which was paid in 2023; and (ii) a contingent cash bonus, subject to
UMG meeting specific financial and non-financial targets. For 2022, Sir Lucian
Grainge’s contingent cash bonus was subject to meeting one of the following
performance measures: UMG's year-over-year EBITA, maintaining market shareof the U.S. recorded music market and success of UMG's exclusively signed
artists on the Billboard 100 or 200 chart.
Vincent Vallejo, in accordance with his contract, was eligible for a target bonusof 50% of annual base salary.
For 2022, Vincent Vallejo’s short-term incentive was based on the following
performance metrics:••

UMG Adjusted EBITDA1 (50% weighting)
UMG Cash Flow from Operations (CFFO) (50% weighting)

Performance Metric

WeightingThreshold1 (50% Payout)

Target1 (100% Payout)

Maximum1 (200% Payout)

ActualAdjusted EBITDA

50%€1,875.2 M€1,973.9 M€2,072.6 M€1,981.0 M2

CFFO

Total

50%

€1,164.7 M€1,226.0 M€1,287.3 M€1,244.9 M

Earned %

2

53.5%
65.4%

118.9%

1 0% below threshold; Straight-line interpolation between targets.
2 Actual 2022 restated at constant 2022 financial plan FX rates.

In 2022, actual UMG Adjusted EBITDA performance was between target andmaximum and actual UMG Cash Flow from Operations was between target andmaximum. As a result, Vincent Vallejo’s resulting actual bonus was 118.9% oftarget or €570,929.

Long-Term Incentive

The Company did not grant Executive Directors any annual LTI in 2022. Their
legacy contracts do not provide for any annual compensation to be paid in theform of LTI.

Special One-Time Awards

Prior to the Listing, Vivendi granted the Deputy CEO Vivendi equity awards inthe form of performance shares payable in Vivendi stock. These Vivendi equity
awards were not adjusted to offset the impact of the spin-off, following the
Listing, and the value of these Vivendi equity awards significantly decreased
as a result. To make the Deputy CEO whole and compensate him for theloss of value of these Vivendi equity awards, upon recommendation of theRemuneration Committee and in accordance with the mandate granted by
the General Meeting on May 12, 2022, the Board granted the Deputy CEO 7,500
restricted stock units on November 30, 2022 under the 2022 UMG Global Equity
Plan, vesting one year from grant in accordance with our Executive Directors'
Remuneration Policy.

1

Reflects the Adjusted EBITDA as defined in the Appendix in the Annual Report

MUSIC IS UNIVERSAL Annual Report 2022 | 220

NON-EXECUTIVE DIRECTORS REPORT

Malus and Claw-back

In 2022, no application of claw-back was applied on any kind of variable
payments for the Executive Directors.

Severance Payments

No severance payments were made to any Executive Director in 2022.
Executive Directors are entitled to the following legacy severance benefits
contractually agreed in their contracts:••

Sir Lucian Grainge: two years’ salary, target bonus, pension contributions,car allowance, protection compensation and health and welfare benefits and€1,950,839 for lost value of Vivendi restricted stock units in a lump sum incase of termination by Sir Lucian Grainge for good reason or by the Company
without cause, subject to signing a release agreement.
Vincent Vallejo: pay out of remainder of fixed term contract includingbase salary, target bonus, contractually agreed exceptional premiums,
and any unpaid retention bonus or other bonuses in a lump sum, incase of termination by the Company without cause. If terminated, therestricted stock units awarded in 2022 would be paid out pro-rata under theprovisions of the 2022 UMG Global Equity Plan covering death, retirement,or redundancy.

Total Remuneration1

Total remuneration of the Executive Directors is presented in the table below.
For Sir Lucian Grainge who is compensated in U.S. Dollars, the year-over-yearincrease in total remuneration includes the impact of FX rate volatility where
the average 2021 USD to EUR FX rate was 0.84 and the 2022 USD to EUR FX rate
was 0.95, for an approximate impact of +13%. On a constant currency basis, Sir
Lucian Grainge's total remuneration increased by approximately 3%.

1

The Remuneration Table includes information and figures that are audited as part of Note 24 of
the Annual Consolidated Financial Statements and Note 11 of the Company Financial Statements

MUSIC IS UNIVERSAL Annual Report 2022 | 221

NON-EXECUTIVE DIRECTORS REPORT

Proportion

Name

Fixed

Reported

remune-year

fixed –

variable

Total

remune-remune-rationVariable remuneration

Benefits and one-off amounts

Base Salary

Short-Term
Incentive

LongTerm
Incentive

Retirement
Benefits

Other
Benefits

Other
Payments

rationration1

Sir Lucian
Grainge,
Chairmanand CEO2

2022€15,412,990€28,768,466€0€302,410€2,807,202€0€47,291,068

39% / 61%

Vincent
Vallejo,Deputy CEO

2022€960,000€570,929€0€41,053€83,739€968,7504€2,624,471

41% / 59%2021

€13,192,829

2021€720,000€24,673,885€602,859

€0

€0

€03

€2,994,992

€03

€0

€62,8385€40,861,707€800,0004

40% / 60%

€2,185,698

36% / 64%

1 The Chairman and CEO and the Deputy CEO participated in Vivendi share schemes prior to the Listing that are not included. Reference is made to pages 131 to 133 of theCompany's prospectus dated September 14, 2021, which is available on the investor relations part of the UMG website (the Prospectus) for further details.
2 In addition, other payments were made by Vivendi in connection with but not limited to the Listing. Reference is made to pages 129 and 131 of the Prospectus that outline
the following payments: €17,530,000 for the Tencent-led Consortium acquiring an additional 10% of the Shares, €20,909,789 for the Pershing Entities acquiring their 10%
interest in the Company and €194,982,887 for the Listing.
3 For 2021, Retirement Benefits were included as part of Other Benefits. For 2022, we have separated Retirement Benefits into its’ own column. For 2021, the Chairman andCEO’s Retirement Benefits amount was €268,686, included in the 2021 Other Benefits amount of €2,994,992. For 2021, the Deputy CEO’s Retirement Benefits amount was€25,243, of which €9,900 was included in the 2021 Other Benefits amount of €62,838 and €15,343 of 2021 Retirement Benefits was excluded.
4 Amounts reflect the recognition awards paid in 2021 and 2022 by UMG in connection with the Listing and, for 2022, the value of the one-time LTI award for the lost valueof Vivendi equity awards in connection with the Listing which was granted on November 30, 2022 at €22.50 of €168,750. Additionally, in February 2023, the Deputy CEO has
received a €800,000 cash retention payment, which will be included in the 2023 remuneration disclosures.
5 For 2021, Other Benefits excluded €6,750 for company car related expenses.

Share-Based Remuneration

Total share-based remuneration of the Executive Directors in 2022 is presented
in the table below:

The main conditions of share award plans

Information regarding reported financial year
OpeningbalanceDuring the year

Closing Balance
SharesSharesawardedawardedNameof Director,
position

Specificationof planVincent
2022 UMG
Vallejo,GlobalDeputy CEO Equity Plan

Performance

Award

N/A

11/30/2022 11/30/2023 N/Aperioddate

Vesting

End ofdate

holding
periodSharesat thebeginningof

SharesShares

0

7,500

0

the yearawardedvestedsubject toandSharesastounvesteda performance of year
condition

end

0

7,500

subjecta holding
periodN/A

1
As noted in the Corporate Governance section under ‘Compliance with the Code’, the Deputy CEO's Shares, once vested, are notsubject to a holding period.

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NON-EXECUTIVE DIRECTORS REPORT

Remuneration and Company Performance Development

The overview below provides insight into the development of the remunerationof the Executive Directors, Company performance and employee pay. For Sir
Lucian Grainge who is compensated in U.S. Dollars, the year-over-year increase
in total remuneration includes the impact of FX rate volatility where the average2021 USD to EUR FX rate was 0.84 and the 2022 USD to EUR FX rate was 0.95,
for an approximate impact of +13%. On a constant currency basis, Sir Lucian
Grainge's total remuneration increased by approximately 3%.

Element

Remuneration

Chairman and CEO

Annual Change
Deputy CEO

2

Annual Change

Company performance

Adjusted EBITDA (in millions of euros)

Annual Change

Average annual remuneration on an FTE basis of employees
Average annual

3

Annual Change

20211

20221

€ 40,861,707€ 47,291,068€ 2,630,851€ 2,624,471€ 1,788€ 2,135€ 131,961€ 142,039

Not applicableNot applicableNot applicableNot applicable

16%
0%

19%

8%

1 The information in this table regards the financial years 2021 and 2022 only, as 2021 was the first financial year for UMG as a publicly listed company.
2 In the table above, the Deputy CEO was employed by UMG effective April 2021. Accordingly, the remuneration for 2021 has been updated and annualized from €2,185,698 to€2,630,851 for year-over-year comparison purposes.
3 Reflects the total personnel costs reported in Note 4, adjusted to be aptly comparable with the remuneration of Executive Directors disclosed above.

MUSIC IS UNIVERSAL Annual Report 2022 | 223

NON-EXECUTIVE DIRECTORS REPORTThe Remuneration for the Non-Executive Directors in 2022

The fee structure for Non-Executive Directors has been designed to ensurethat UMG attracts, retains and appropriately compensates a diverse andinternationally experienced group of Non-Executive Directors. In 2022, the NonExecutive Directors’ remuneration for participating in the Board and Board
committees was as follows:••••€90,000 per annum for performing their role as a Non-Executive Director€50,000 per annum for performing the role of Chairman of the Board€20,000 per annum for performing their role as a member of a
Board committee€10,000 per annum for performing the role of chair of a Board committee.

Total Remuneration1

Total remuneration of the Non-Executive Directors paid in 2022 is presented in
the table below:

Board1

Commencement Date

J.S.J. Craymer

9/20/2021

A.K. Jones

9/20/2021

A.R.J.C. Fiévet
W.A. Ackman

2

C.F.L. Lawson-Hall
C.M.C. Bolloré
J.G. Mitchell

2

L.A.J. Van Os

M.L. Doherty2

M. FrerejeanTaittinger
N.A. Avant

S.L. Lansing

Chairman

9/20/2021

Vice-Chairman

5/12/2022

MemberMember

9/20/2021

Member

5/12/2022

Member

9/20/2021

Member

9/20/2021
9/20/2021

5/12/2022

MemberMemberMemberMemberChairMemberMemberMember

9/20/2021

Audit

Committee1

Member

5/12/2022

MemberRemuneration

Nomination

2022 Remuneration

MemberMember

180,000

Committee1

Chair

Committee1

MemberMember

110,000
140,0000

120,000
67,329

Member0

MemberMember(in euros)

130,0000

Chair

140,000

Member

67,32967,3291 Composition of the Board and Board committees as of December 31, 2022.
2 Voluntarily elected to not receive any Non-Executive Director remuneration in 2022.

1

The Remuneration Table contains information and figures that are audited as part of Note 24 of
the Annual Consolidated Financial Statements and Note 11 of the Company Financial Statements.

MUSIC IS UNIVERSAL Annual Report 2022 | 224

NON-EXECUTIVE DIRECTORS REPORT

Year-Over-Year % Change
Non-Executive Directors

2022 vs. 2021

1

J.S.J. Craymer

0%

A.R.J.C. Fiévet

0%

A.K. Jones

0%

W.A. Ackman

N/A

C.M.C. Bolloré

N/A

2

C.F.L. Lawson-Hall

0%

J.G. Mitchell

0%2

L.A.J. Van Os

0%

M.L. Doherty

0%2

M. Frerejean-Taittinger

0%

N.A. Avant

N/A

S.L. Lansing

N/A

1 2021 remuneration amounts have been annualized for purposes of calculating the year-over-year
percentage change.
2 Voluntarily elected to not receive any Non-Executive Director remuneration in 2022.

Remuneration is reviewed annually and is not linked to the price of the
Shares or UMG’s performance. Each Non-Executive Director is also entitled
to reimbursement of reasonable expenses incurred in connection with theattendance of Board and Board committee meetings. The Non-Executive
Directors are not entitled to receive any compensation on termination of their
appointment and are not entitled to participate in the Company’s bonus orpension schemes.
The Non-Executive Directors are subject to confidentiality undertakings without
limitation in time. They are not subject to non-compete restrictive covenants.

2021 Remuneration Report Shareholders' Voting Results

Last year, 71.02% of the Shareholders supported the 2021 remuneration report
exceeding the required threshold for approval under Dutch law. After the annual
General Meeting held on May 12, 2022, UMG engaged with Shareholders tounderstand their perspective on the 2021 remuneration report and solicit overall
feedback about our Executive Director pay design and practices. Feedback
was gathered and reviewed within the context that there are existing legacy
contracts with each Executive Director in place from prior to the Listing and theadoption of the Executive Directors’ Remuneration Policy.

Deviation from Remuneration Policies

UMG did not deviate from the Remuneration Policies. The Executive Directors
are subject to legacy arrangements contractually agreed before the Listing andthe adoption of the Executive Directors’ Remuneration Policy and, therefore,
when setting their remuneration for 2022 these legacy arrangements havebeen applied.

MUSIC IS UNIVERSAL Annual Report 2022 | 225

FINANCIAL STATEMENTS

Consolidated Statements
Contents of Consolidated Statements
Consolidated Statement of Profit or Loss

228

Consolidated Statement of Financial Position

230

Consolidated Statement of Comprehensive Income
Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

Notes to the Consolidated Financial Statements
Note 1.

General information

Note 3.

Segment data

Note 2.
Note 4.
Note 5.
Note 6.
Note 7.
Note 8.
Note 9.
Note 10.
Note 11.
Note 12.
Note 13.
Note 14.
Note 15.
Note 16.
Note 17.
Note 18.
Note 19.
Note 20.
Note 21.
Note 22.
Note 23.
Note 24.
Note 25.
Note 26.
Note 27.
Note 28.
Note 29.

Basis of preparation

229
231
232
233

233
234
251

Cost of revenues and selling, general andadministrative expenses

255

Income taxes

257

Financial income and expenses

256

Earnings per share

260

Goodwill

260

Property, plant and equipment

264

Content assets (catalogues and royalty advances) andother intangibles

262

Leases265

Capital and financial risk management

267

Investments in equity affiliates
Trade and other receivables

Trade and other accounts payable
Cash position and borrowings

Contractual obligations and other commitments

266
271
271
272

273

Financial assets and liabilities

274

Expenses and income directly recognized in equity

278

Post-retirement employee benefits

279

EquityProvisions

277

278

Share-based compensation plans

281

Litigation

287

Related parties

List of consolidated entities
Statutory auditors fees
Audit exemptions

Subsequent events

284
287
288
288
289

FINANCIAL STATEMENTSCONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 2022

Consolidated Statement of Profit or LossYear ended December 31,(in millions of euros)

Note

2022

2021
Restated1

Revenues

Cost of revenues

Selling, general and administrative expenses

Amortisation and impairment losses on intangible assets
Operating profit

Financial income

Financial expenses

3

10,3404(2,702)

4
8,9
3
5
5

Income/(loss) from equity affiliates

12

Income taxes

6

Profit before income taxes
Net profit
Of which:

Net profit attributable to equity holders of the parent
Net profit attributable to non-controlling interests

Earnings per share (in euros)

Basic, earnings for the period attributable to equity holders of the parent

Diluted earnings for the period attributable to equity holders of the parent(5,753)(4,608)

(285)

(175)

1,600
37

(735)

7

(2,327)
1,394
143

(377)

(698)

(234)

900

1,165

785

888

(2)

(115)

5

(277)

782

886

0.43

0.49

3

7

8,504

0.43

2

0.49

1 Restated amounts are presented in Note 2.3.

CONSOLIDATED STATEMENT OF PROFIT OR LOSSMUSIC IS UNIVERSAL Annual Report 2022 | 228

FINANCIAL STATEMENTS

Consolidated Statement ofComprehensive Income
Year ended December 31,(in millions of euros)Note

Net profit

Actuarial gains/(losses) related to employee defined benefit plans, net of tax

2022

2021

785

888

8

2

36

Financial assets at fair value through other comprehensive income, net of tax
Items not subsequently reclassified to profit or loss, net of tax

44

(5)

(3)

Foreign currency translation adjustments

184

218

Items to be subsequently reclassified to profit or loss, net of tax

190

223

1,019

1,108

1,016

1,106

Comprehensive income/(loss) from equity affiliates, net of tax

Income and expenses directly recognised in equity, net of tax
Total comprehensive income, net of tax

Of which

Total comprehensive income attributable to equity holders of the parent
Total comprehensive income attributable to non-controlling interests

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

6

20

234

3

5

220

2

MUSIC IS UNIVERSAL Annual Report 2022 | 229

FINANCIAL STATEMENTS

Consolidated Statement of Financial
Position
Year ended December 31,(in millions of euros)

Goodwill

Non-current royalty advances
Catalogues

Other intangible assets

Note

1,578

1,480

3, 9

3,058

2,982

3, 9
9

10

Investments in equity affiliates

12

Non-current financial assets
Deferred income tax assets
Other non-current assets

11
18
6

Non-current assets
Inventories

Current tax receivables

Current royalty advances

Trade and other receivables
Cash and cash equivalents
Current assets

3, 9

13, 14
16

TOTAL ASSETS
Shareowners equity

Non-controlling interests

19

Total equity

Non-current provisions

21

Deferred tax liabilities

6

Long-term borrowings and other financial liabilities
Long-term lease liabilities

Other non-current liabilities
Non-current liabilities
Current provisions

Short-term borrowings and other financial liabilities
Trade and other payables

Short-term lease liabilities
Current tax payables

2021

8

Property, plant and equipment
Right of use assets

2022

1,593
119

1,536
96

167

167

156

109

318

388

690

1,592

8

6

348

404

8,035

8,760

163

99

984

844

4

3

2,014

1,803

3,604

3,334

11,63912,094

2,351

2,030

2,352

2,030

291

355

439

1

585

-

16

1,113

2,277

11

346

421

18
21

580
437

769

2,767

4,672

103

80

16

1,137

11

77

13, 15

850

318

5,150

4,875

53

39

80

Current liabilities

6,520

5,392

Total liabilities

9,287

10,064TOTAL EQUITY AND LIABILITIES

11,63912,094CONSOLIDATED STATEMENT OF FINANCIAL POSITIONMUSIC IS UNIVERSAL Annual Report 2022 | 230

FINANCIAL STATEMENTS

Consolidated Statement of Cash Flows
Year ended December 31,(in millions of euros)

Note

2022

2021
Restated1

Operating activities
Operating profit
Adjustments

Royalty advances payments, net of recoupments

Gross cash provided by/(used for) operating activities before income tax paid

3

13

Other changes in net working capital

13

Income tax paid

6

Net cash provided by/(used for) operating activities before income tax paid
Net cash provided by/(used for) operating activities
Investing activities

Catalogue investments

Other intangible assets investments
Capital expenditures

Purchases of consolidated companies, after acquired cash

10

Investments in equity affiliates

Proceeds from sales of property, plant, equipment and intangible assets
Proceeds from sale of financial assets

Net cash provided by/(used for) investing activities
Financing activities

Distributions to shareowners

Dividends paid by consolidated companies to their non-controlling interests

19

Transactions with shareowners
Proceeds from borrowings

Payment of interest of lease liabilities

Net cash provided by/(used for) financing activities

Change in cash and cash equivalents
Cash and cash equivalents
At beginning of the period
At end of the period

(359)

(388)

(33)

(13)

(60)
(22)

11
11

85

(255)

(48)
(11)
(28)
(43)

(532)

(531)

-

117

9

137

1

1

2

6

14
2

(520)

(391)

(798)

(785)

(800)

(787)

(2)

4

(2)

3,176

(3,624)
(17)
(8)

(447)

(473)

(14)

(16)

(86)

(70)

(1,347)(1,346)

(135)

(597)

16

(134)

(565)

16

572

1,137

Net change in cash and cash equivalents

Foreign currency translation adjustments

1,140

(30)

Other cash items related to financing activities
Repayment of lease liabilities

1,732

(255)

(6,359)Interest, net

Transactions on borrowings and other financial liabilities

1,395

74

5,938

Repayments of borrowings

(364)

1,987

9

12

280

1,310

-

Proceeds from sales of consolidated companies, after divested cash

Dividends received from investments

(148)

1,394

1,913

(36)

Investments

Dividends received from equity affiliates

461

(22)

Purchase of financial assets

Divestitures

1,600

16

1

438

32

572

1 Restated amounts are presented in Note 2.3.

CONSOLIDATED STATEMENT OF CASH FLOWSMUSIC IS UNIVERSAL Annual Report 2022 | 231

FINANCIAL STATEMENTS

Consolidated Statement of Changes in
EquityYear ended December 31, 2022
NumberNote(in millions of euros)(in thousands)

BALANCE AS OF DECEMBER 31, 2021

equity, net of tax

Share-based compensation plans

23

Retained

Shareowners

sharesearnings

equity

Non-

Total

Controlling

equityinterest

14,941(12)(31,033)

2,030

-

2,030

-

-

-

-

782

782

3

785

-

-

-

-

234

234

-

234

-

-

-

-

1,016

1,016

3

1,019

-

-

-

-

(798)

(798)

(2)

(800)

TOTAL COMPREHENSIVE INCOME
19

in capital

Treasury

18,13420

Dividends paid and payable by UMG N.V.

capitalpaid-

1,813,376

Net profit
Income and expenses directly recognized in

Additional

Shareof shares

137

1

(6)

7

101

103

-

103

TOTAL CHANGES OVER THE PERIOD

137

1

(6)

7

(697)

(695)

(2)

(697)

BALANCE AS OF DECEMBER 31, 2022

1,813,513

18,135

14,935(5)(30,714)

2,351

1

2,352

Year ended December 31, 2021
NumberNote(in millions of euros)

Shareof shares

capital(in thousands)

Additional
paidin capital

Treasury

Retained

Shareowners

sharesearnings

equity

Non-

Total

Controlling

equityinterest

BALANCE AS OF DECEMBER 31, 2020

-

-

-

-

1,634

1,634

-

1,634

Net profit

-

-

-

-

886

886

2

888

-

-

-

-

220

220

-

220

-

-

-

-

1,106

1,106

2

1,108

-

-

-

-

(785)

(785)

(2)

(787)

1,847,874

18,47914,521-(33,000)---(34,633)

(346)

346

-

-

-

-

-

135

1

29

(12)

12

30

-

30

-

-

45

-

-

45

-

45

TOTAL CHANGES OVER THE PERIOD

1,813,376

18,134

14,941(12)(33,773)

(710)

(2)

(712)

BALANCE AS OF DECEMBER 31, 2021

1,813,376

18,134

14,941(12)(31,033)

2,030

-

2,030

Income and expenses directly recognizedin equity, net of tax

20

TOTAL COMPREHENSIVE INCOME

Dividends paid and payable by UMG N.V.

19

Contributions by shareowners of their UIM
B.V. and UMG Inc. shares to UMG B.V.
Reduction in number of shares andeffective capital contribution
Share-based compensation plans

23

Share-based compensation plans settled
by Vivendi

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYMUSIC IS UNIVERSAL Annual Report 2022 | 232

FINANCIAL STATEMENTS

Notes to the Consolidated
Financial Statements
Note 1. General information
Universal Music Group N.V. is a public company with limited liability incorporated under the laws of the Netherlands
and listed on Euronext Amsterdam under the symbol ‘UMG.AS’. As used herein, the term UMG ("The Group") is used for
Universal Music Group N.V. (‘the Company’) and its subsidiaries within the meaning of Section 2:24b of the Dutch Civil
Code. UMG’s statutory seat is located in Amsterdam and its principal office is located at:‘s-Gravelandseweg 80,
1217 EW Hilversum The Netherlands.
UMG is the worldwide leader in music, engaged in recorded music, music publishing and merchandising. It owns morethan 50 labels covering all music genres. UMG is home to some of 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 thebiggest artists of the year, such as Taylor Swift, BTS, Olivia Rodrigo, Encanto OST and Morgan Wallen.
•••

The recorded music business discovers and develops recording artists, marketing and promoting their music acrossa wide array of formats 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 formusical 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 asbrand rights management.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 233

FINANCIAL STATEMENTS

Note 2. Basis of preparation
2.1. Statement of compliance
The Consolidated financial statements have been prepared in accordance with International Financial ReportingStandards (IFRS) as issued by the International Accounting Standards Board (IASB), IFRS as endorsed by the European
Union (EU) and comply with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code. IFRS as endorsed by the EU
differs in some respects from IFRS as issued by the IASB. The differences have no impact on the Consolidated financial
statements for the years presented.
The Consolidated financial statements are prepared by the Board of Management of UMG and authorized for issue on
March 30, 2023 and will be submitted for adoption to the Annual General Meeting of Shareholders on May 11, 2023.

2.2. Basis of preparation and consolidation
The Consolidated financial statements are:•••prepared on a historical cost basis, unless stated otherwise
are presented in millions of euros, and rounded to the nearest million, unless stated otherwise
prepared on the basis that UMG will continue to operate as a going concern

The Consolidated financial statements comprise the financial statements of the UMG N.V. and its subsidiaries as at
31 December 2022.
Separation from Vivendi
Until February 26, 2021, the arrangement that constituted the combined UMG Group was not a legal entity in its own
right and was made up of entities under the common control of Vivendi. Until this date, UMG’s scope of combination
principally comprised the entities held directly and indirectly by UMG Inc. and UIM B.V.
On February 26, 2021, in UMG B.V.’s Consolidated financial statements, the contribution of €33,000 million was
directly recorded as an increase in equity attributable to UMG B.V. shareowners (€18,500 million in share capital and€14,500 million in additional paid-in capital), and the contribution of €33,000 million was fully neutralized in UMG B.V.’sretained earnings. The reorganization of its shareholding structure, which is a common control business combination,
has no impact on UMG’s scope of combination or consolidation.
On September 21, 2021, the shares of Universal Music Group N.V. (UMG N.V.) started trading on the regulated marketof Euronext Amsterdam. Vivendi completed the distribution in kind of UMG shares to Vivendi shareholders on thebasis of one UMG N.V. share for every eligible Vivendi share. The detachment date (ex-date) of the distribution in kind
was September 21, 2021. Settlement occurred on September 23, 2021. UMG B.V. was converted to UMG N.V. on thisdate accordingly.
Following this transaction and as at December 31, 2022, Vivendi held 10.13% of the share capital of UMG N.V. Transactions
with Vivendi are still qualified as transactions with related parties under IAS 24 and are disclosed as such in these
Consolidated financial statements. Commercial relationships among UMG and Vivendi subsidiaries prior and upon theseparation, are conducted on an arm's length basis on terms and conditions similar to those which would be offered bythird parties.
Subsidiaries
Subsidiaries are all companies over which UMG has control. Control over an entity exists when UMG is exposed to, or has
right to, variable returns from its involvement with the entity and has the ability to affect those returns through its powerover the entity. Subsidiaries are fully consolidated from the date on which control commences until the date on which
control ceases.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 234

FINANCIAL STATEMENTS

Intra-group balances and transactions, any unrealized gains and losses or income and expenses arising from intragroup transactions are eliminated in preparing the Consolidated financial statements. Unrealized gains arising fromtransactions with associates and joint ventures are eliminated against the investment to the extent of UMG’s interest in
the investee. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there is noevidence of impairment.
Significant events in the period and accounting estimates and judgements
Impact of global events
The Russia-Ukraine dispute created and magnified multiple threats to the global economic recovery from COVID‒19
in 2022. Surging inflation and unemployment rates, economic sanctions, supply-chain disruptions causing rise ofcommodities prices, and, as a result, volatile financial markets created an adverse change to the business environmentfor UMG.
However, in 2022 UMG has demonstrated resilience of its activities to continue to best serve and entertain its customers.
UMG continuously monitors the current and potential consequences of the crisis and continues to make every effort toensure the continuity of its activities.
During its financial reporting process, UMG assessed the influence of the global events on the application of its
accounting policies.
Climate change
UMG does not expect that climate change-related risks will have significant impact on the Group and would qualitatively
influence management's decisions.
Accounting estimates and judgements
Application of the accounting policies requires judgements that impact the amounts recognised. All significant
judgements and estimates are disclosed in the notes to the Consolidated financial statements. Information andconsiderations regarding areas of significant judgements and estimates have been included in the table below. It isreasonably possible, that outcomes of these judgements and estimates within the next financial year are different fromthe assumptions, which could require a material adjustment to the carrying amount of the asset or liability affected.

Area

Significant judgement

RevenueSignificant judgement is required to identify performance obligations undercontracts with customers, whether these performance obligations are satisfied 2.4.5. Revenues andat a point of time or overtime, and probability that collectability is assured and associated costs
significant reversal will not occur.

Uncertain tax
positions anddeferred taxes

Judgement in assessing the uncertainty of whether it is probable that ataxation authority will accept or revise the uncertain tax treatment and, future
results enabling realisation of deferred taxes.

2.4.21. Income taxes

Lease liabilities andright-of-use assets

Judgement in determining the lease term of contracts with renewal andtermination options at the commencement date of each lease contract.

2.4.11. Leases

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note

MUSIC IS UNIVERSAL Annual Report 2022 | 235

FINANCIAL STATEMENTS

Area

Significant estimate

Note

Revenue

Estimation on the timing of the consequent usage and the amounts that areprobable to be collected.

2.4.5. Revenues andassociated costs

Intangible assets,
including goodwill
and content assets

Assumptions relating to impairment tests performed on each of the Group’s
cash-generating units (CGUs) or intangible assets, future cash flows anddiscount rates are updated annually. Estimation of (remaining) useful life forintangible assets, other than goodwill.

2.4.8. Goodwill and 2.4.9.
Intangible assets, otherthan goodwill

Provisions

Estimating the likelihood and timing of potential cash flows relating to royalty
claims and litigation.

2.4.19. Provisions

Artistroyalty advances

Estimates of the future performance of artists and repertoire owners whoare paid advances that are recognized in the Consolidated Statement of
Financial Position.

2.4.9. Intangible assets,other than goodwill

Share-based
payments - PSUs

Estimation of the grant date fair value and number of equity instruments.

2.4.22. Sharebased payments

Pension liability

Assumptions for discount rates, future pension increases and life expectancy
to calculate the defined benefit obligation.

2.4.20. Employee
benefit plans

For more details on these significant judgement areas and resulting estimates refer to the accounting policies below.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 236

FINANCIAL STATEMENTS

2.3. Financial statement presentation changes and prior years restatements
During 2022 UMG made prior year restatements and updated, compared to the 2021 Consolidated financial statements,
the presentation of the Consolidated Statement of Profit or Loss, the Consolidated Statement of Cash Flows and theConsolidated Statement of Changes in Equity for and as at December 31, 2021 to further improve transparency andreadability of these statements in line with market practice.
Updates in the Consolidated Statement of Profit or Loss relate to a restatement of amortisation expense from selling,
general and administrative expenses into its own line item and the reclassification of Income and losses from equity
affiliates from within Operating profit to be reported outside of Operating profit to reflect that they do not constituteoperating activities of UMG. Details on the impact on 2021 comparatives for the year ended December 31, 2021 ispresented in the table below.
December 31, 2021
Presentation

Before Changes

Revenues

Cost of revenues

After Changes

Changes

8,504-(2,502)

175-(4,608)

-

(175)

(175)

Operating profit

1,399

(5)

1,394

Financial expenses

(377)

-

(377)

Selling, general and administrative expenses

Amortisation and impairment losses on intangible assets
Income/(loss) from equity affiliates
Financial income

Income/(loss) from equity affiliates
Profit before income taxes
Income taxes
Net profit
Of which:

Net profit attributable to equity holders of the parent
Net profit attributable to non-controlling interests(4,608)

8,504

5

143

(234)

(5)
-

-

1,165

-

888

(277)

-

886
2

143

(234)

5

888

-

-

-

1,165

(2,327)

-

5

(277)

886
2

The Consolidated Statement of Cash Flows includes the same reclassification of income and losses from equity affiliatesfrom Operating profit and adjustments as well as a retrospective adjustment to the comparative period in relation to
the cash flows resulting from bank overdrafts which are repayable on demand. In prior years, cash flows related tobank overdrafts repayable on demand were reported together with borrowings movements as cash flows from financing
activities. Bank overdrafts are now presented in cash and cash equivalents at the beginning and end of the period.
Repayments of the principal and interest of lease liabilities were previously reporting together under repayment of leaseliabilities. These cash flows are now presented separately as part of cash flows from financing activities.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 237

FINANCIAL STATEMENTS

December 31, 2021
Before Changes

Operating activities

Restatement

After Changes

Operating profit

1,399

(5)

1,394

Royalty advances payments, net of recoupments

(364)

-

(364)

Adjustments

275

Gross cash provided by/(used for) operating activities before income tax paid

1,310

Net cash provided by/(used for) operating activities before income tax paid

1,395

Net cash provided by/(used for) operating activities

1,140

Net cash provided by/(used for) investing activities(391)

Other changes in net working capital
Income tax paid

Financing activities

Transactions with shareowners
Proceeds from borrowings

Repayments of borrowings
Interest, net

Other cash items related to financing activities

Transactions on borrowings and other financial liabilities
Repayment of lease liabilities

Payment of interest of lease liabilities

85

(255)

(787)

5

-

1,310

-

1,395

-

1,140

-

(391)

-

-

3,185

(9)

(17)

-

(3,624)
(8)

(464)
(86)

280

85

(255)

(787)

3,176

-

(3,624)

-

(8)

(9)

16

(17)

(473)
(70)

-

(16)

(9)

(1,346)

Net change in cash and cash equivalents

(588)

(9)

(597)

Change in cash and cash equivalents

(556)

(9)

(565)

1,141

(4)

1,137

Net cash provided by/(used for) financing activities
Foreign currency translation adjustments
Cash and cash equivalents
At beginning of the period
At end of the period(1,337)
32

585

-

(13)

(16)

32

572

Updates to the Consolidated Statement of Changes in Equity relate to moving the presentation to a columnar format toimprove the readability of the statement.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 238

FINANCIAL STATEMENTS

2.4. Material accounting policy information
2.4.1. Foreign currency
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 the transaction. At the closing date, foreign currency monetary assets and liabilities aretranslated into the entity's functional currency at the exchange rate prevailing on that date with foreign currency
differences recorded to profit and loss.
Financial statements denominated in a foreign currency
Except in cases of significant exchange rate fluctuation, financial statements of subsidiaries, joint ventures or otherassociated entities for which the functional currency is not the euro are translated into euros as follows: the Consolidated
Statement of Financial Position is translated at the exchange rate at the end of the period, and the Consolidated
Statement of Profit or Loss and the Consolidated Statement of Cash Flows are translated using average monthly exchange
rates for the period. The resulting translation gains and losses are recorded as foreign currency translation differencesin expenses and income directly recognized in equity. In 2022, UMG did not have any significant foreign operations in
hyper-inflationary economies.

2.4.2. Earnings per share
UMG presents basic and diluted earnings per share (EPS) data for its shares. Basic EPS is calculated by dividing the net
profit or loss attributable to shareholders of UMG by the weighted average number of shares outstanding during the year,
adjusted for the weighted average number of own shares held in the year. Diluted EPS is determined by dividing the profit
or loss attributable to shareholders by the weighted average number of shares outstanding, adjusted for the weighted
average number of own shares held in the year and for the effects of all dilutive potential shares which comprise sharerights granted to employees.

2.4.3. Consolidated Statement of Cash Flows
The Consolidated Statement of Cash Flows is prepared using the indirect method starting from Operating profit. Dividends
received from equity affiliates and investments are included in the investing cash flow. It also includes any cash flows
arising from the gain or loss of control of subsidiaries. Interest paid, including interest paid on lease liability, is includedin the financing activities.

2.4.4. Accounting for associates and joint ventures
Associates are entities in which UMG has significant influence, but not control or joint control. Significant influenceis generally obtained by ownership of more than 20% but less than 50% of the voting rights. Joint ventures are thearrangements in which UMG has joint control.
UMG’s investments in associates and joint ventures are accounted for using the equity method of accounting, meaning
they are initially recognised at cost. The Consolidated financial statements include UMG’s share of the net profit or loss of
the associates and joint ventures whereby the result is determined using the accounting policies of UMG. When UMG’sshare of losses exceeds the carrying amount of the associate or joint venture, the carrying amount is reduced to nil andrecognition of further losses is discontinued except to the extent that UMG has an obligation or has made a payment onbehalf of the associate or joint venture.

2.4.5. Revenues and associated costs
Revenues from contracts with customers are recorded when performance obligations promised in the contract aresatisfied, 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.

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FINANCIAL STATEMENTS

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 timeat which the license 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) orover time upon satisfaction (dynamic license), i.e., when the seller transfers the control over the right to use/access theintellectual property and the customer obtains control of the use/access of that license. Consequently, revenues fromstatic licenses are recognized at the point in time when the license is transferred and the customer is able to use andbenefit from the license. Revenues from dynamic licenses are accounted for over time, over the license period from thedate the customer is able to use and benefit from the license and in line with the sale or usage.
Consideration received in the current year, which represents income from ordinary activities related to the prior years, isrecorded within revenue, unless it was accrued before. Court settlements in relation to the unauthorized usage of UMG's
intellectual property in previous years are recorded in revenue as they relate to activities carried out within the ordinary
course of business.
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, thenthe entity acts on its own behalf and it is “principal” in the sale transaction: it accounts for revenue the gross amount ofconsideration to which it expects to be entitled 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 to which it expects to be entitled in
exchange for the goods or services provided.
Financing Component
UMG does not adjust the transaction price for the effects of significant financing component if, at contract inception,
it is expected that the period between customer payment and the transfer of goods or services is one year or less.
This applies to the majority of sales transactions. The transaction price may be variable due to discounts, rebates, orsimilar arrangements. In determining the transaction price UMG considers the fair value of any non-cash consideration.
Revenue is only recognized for the part of the consideration for which it is highly probable that a significant reversal in
the amount of cumulative revenue recognized will not occur. Judgement is required in determining the probability andlevel of discounts and rebates that will be granted. The estimate is updated throughout the term of the contract.
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 or digital platforms and which give them certain rights over UMG's musical works.
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 and rebates, if any, areaccounted for, either: (i) upon the sale to the distributor, at the shipping point for products sold free on board (FOB) or ondelivery 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 catalogue ofrecorded music as it exists throughout the license period considering potential add-ons to, or withdrawals from, thecatalogue 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

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FINANCIAL STATEMENTS

which UMG has sufficient, accurate, and reliable data from digital platforms, are recognized at the end of the month inwhich the sale or usage is made by the end customer.
For digital sales of recorded music streaming by subscription or free of charge, certain contracts may include a nonrefundable minimum guarantee which is generally recoupable and is in substance an advance payment. In the caseof a dynamic license, the minimum guarantee is spread over the period to which it relates and takes into accountthe amount of royalties that are actually recoupable. The minimum guarantee are apportioned in accordance with theaccounting 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 are intellectual property licenses that UMG grants to the third party and which provides a right to access acatalogue of recorded music, as these intellectual property licenses are dynamic licenses. For these contracts, revenues
are recognised on the basis of sales and usage royalties, using the best available estimate on the timing of theconsequent usage and the amounts that are probable to be collected.
Merchandising
Revenues from merchandising are recognized when control has been passed either upon sale to the end customer, fromdirect sales during touring, concessions and over the internet; on delivery for sales by a third-party distributor; or forsales of rights attached to merchandising products when a contract is signed and collectability is probable and on asales and usage basis.
Provisions for estimated returns and price guarantees are deducted from sales of products to customers throughdistributors. The provisions are estimated based on past sales statistics and take into account the economic
environment and product sales forecast to final customers.
Associated costs of revenues
Cost of revenues primarily includes product costs and artists costs.
Selling, general and administrative expenses primarily include salaries and employee benefits, consulting and service
fees, insurance costs, travel and entertainment expenses, depreciation of capital expenditure and right of use assets,administrative department costs, value allowances for receivables, restructuring expenses and other operating expenses
and are expensed when incurred.
Advertising costs are expensed when incurred.
Slotting fees and cooperative advertising expenses are recorded as a reduction in revenues. However, cooperative
advertising is not treated as a reduction of transaction price but marketing expense and expensed when it is distinct
and can be estimated.

2.4.6. Operating segments
The operating segments are Recorded Music, Music Publishing and Merchandising. The segments are organized based on
the nature of the business. ‘Corporate Centre’ represents amounts not allocated to the operating segments and includes
certain costs related to central activities as well as group enabling functions.
The operating segment reporting follows the internal reporting used by Management of UMG, to manage the business,
assess the performance based on the available financial information and to allocate the resources. The most important
performance measure are EBITDA and Adjusted EBITDA (see definitions in the Appendix to the Annual Report) as
management believes this is key in evaluating the results of the segments relative to other companies that operate
within the same industry. However, Management also receives information about the segment's revenue and assets.
Inter-segment pricing is determined on an arm's length basis. Segment results, assets and liabilities include items
directly attributable to a segment as well as those that can be allocated on a reasonable basis.

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FINANCIAL STATEMENTS

2.4.7. Business combinations
UMG accounts for business combinations using the acquisition method when the acquired set of activities and assets
meets the definition of a business and control is transferred to the Group. In determining whether a particular setof activities and assets is a business, UMG assesses whether the set of assets and activities acquired includes, at aminimum, an input and substantive process and whether the acquired set has the ability to produce outputs.
Business combinations are recorded using the acquisition method. Under this method, upon the initial consolidation ofan entity over which UMG has acquired exclusive control:••

the identifiable assets acquired, and the liabilities assumed are recognized at their fair value on the acquisition
date; andnon-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.

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 Statement of Profit
or Loss. Acquisition-related costs are recognized as expenses when incurred.

2.4.8. Goodwill
Goodwill represents the difference between the fair value of the net assets acquired and the transaction price of theacquisition. Goodwill arising on the acquisition of associates and joint ventures is included in the carrying amount of theassociates and joint ventures.
Subsequently goodwill is measured at its initial amount less accumulated impairment losses. On the acquisition date, tothe extent possible, goodwill is allocated to each cash-generating unit likely to benefit from the business combination.

2.4.9. Intangible assets, other than goodwill
Content assets include royalty advances to artists, songwriters and co-publishers as well as recorded music and music
publishing catalogues, artists’ contracts and rights. Music catalogues, trade names, subscribers’ bases and market
shares generated internally are not recognized as intangible assets.
Intangible assets separately acquired are recorded at cost, and intangible assets acquired in a business combination arerecorded at their fair value at the acquisition date. Amortisation is charged to profit or loss on a straight-line basis overthe estimated useful life. UMG believes that straight-line depreciation most accurately reflects the expected pattern ofconsumption of the future economic benefits embodied in these intangible assets.
Management needs to estimate the (remaining) useful lives of such intangible assets. Useful lives are determined basedon the expected pattern of the future earnings and the period of the contractual arrangements. Useful life is reviewed at
the end of each reporting period.
Music catalogues and publishing rights
The majority of the music catalogues are amortised over 20 years on a straight-line basis. Some significant catalogues
can be amortized over longer period of time.
Advances to artists and repertoire owners
Royalty advances to artists, songwriters, and co-publishers are capitalized as an asset when their current popularity andpast performances provide a reasonable basis to conclude that the probable future recoupment of such royalty advances
against earnings otherwise payable to them 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.

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FINANCIAL STATEMENTS

Other intangible assets
Other intangibles mainly includes software for internal use. Direct internal and external costs incurred for thedevelopment of software for internal use, are capitalized during the development stage if the resulting product orprocess is technically and commercially feasible, cost can be reliably measured, UMG has sufficient resources and theintention to complete its development. Research costs are expensed when incurred. Costs of significant upgrades andenhancements resulting in additional functionality are also capitalized.
The software for internal use is generally amortized over 3 years and included within amortisation expense.

2.4.10. Property, plant and equipment
Property, plant and equipment are carried at historical cost less any accumulated depreciation and impairment losses.
Land and assets under construction are not depreciated. Depreciation is calculated using the straight-line method basedon the estimated useful life of the assets. Leasehold improvements are depreciated over a period not longer than thelease term. 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; andother: 2 to 10 years.

2.4.11. Leases
The main lease contracts for UMG correspond to real estate leases for which UMG is the lessee. Real estate leases forwhich UMG is the lessee are recorded at the commencement date and result in the recognition of a lease liability equal tothe present value of future lease payments against a right-of-use asset relating to leases.
Right-of-use assets
Right-of-use assets are initially measured at cost, less any accumulated depreciation and impairment losses, andadjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of leaseliabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement dateless any lease incentives received. The recognized right-of-use assets are depreciated on a straight-line basis over the
shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
UMG recognizes lease liabilities initially measured at the present value of future lease payments over the lease term. The
lease payments include in-substance fixed payments (less any lease incentives), variable lease payments that dependon an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also
include payments of penalties for terminating a lease, if UMG has the option to terminate and it is reasonably certain that
this option will be exercised. In calculating the present value of lease payments, UMG uses the incremental borrowing
rate at the lease commencement date if the interest rate implicit in the lease is not readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the in-substance fixed lease payments.
Short-term leases and leases of low-value assets
UMG applies the short-term lease recognition exemption to the real-estate leases with a lease term of 12 months
or less from the commencement date and do not contain a purchase option. It also applies the lease of low-value
assets recognition exemption to leases of office chattels and other equipment that are considered of low value. Lease
payments on short-term leases and leases of low-value assets are recognized as expense on a straight-line basis overthe lease term.
Estimates in accounting for leases
UMG determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option
to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease,

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FINANCIAL STATEMENTS

if it is reasonably certain not to be exercised. When determining the lease term, UMG considers all relevant facts andcircumstances that create an economic incentive to exercise an extension option, or not to exercise a termination option.
These circumstances include UMG’s real estate planning.
In estimating the lessee’s incremental borrowing rate, UMG takes into account the residual lease term and its duration toreflect the interest rate of a loan with a similar payment profile to the lease payments.

2.4.12. Impairment of non-financial assets
Each time events or changes in the economic environment indicate a risk of impairment of goodwill, content assets
and other intangible assets, property, plant and equipment, investments in associates and joint ventures, rights-of-use
assets, UMG re-examines the value of these assets. In addition, in accordance with applicable accounting standards,
goodwill and intangible assets in progress are all subject to an annual impairment test undertaken in the fourth quarterof each fiscal year. This impairment test is performed to compare the recoverable amount of each Cash Generating Unit
(CGU) to the carrying value of the corresponding assets (including goodwill). A CGU is the smallest identifiable groupof assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups ofassets. UMG operates through different content businesses. Each business offers different products and services that aremarketed through various channels. CGUs for goodwill correspond to the UMG's operating segments.
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 otherassets or groups of assets, the recoverable amount is determined for the group of assets. In particular, in the case of
goodwill, an impairment test is performed by UMG for each CGU.
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
financial 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, 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 UMG 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 anorderly 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 tothe difference is recognized in Operating profit. In the case of operating segments, 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 in a 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 bereversed at a later date.

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FINANCIAL STATEMENTS

2.4.13. Financial assets
Financial assets are initially recognized at fair value corresponding, in general, to the consideration paid, which is best
evidenced by the acquisition cost (including transaction costs, if any). Thereafter, financial assets are measured at fairvalue or at amortized cost depending on which financial asset category they belong to.
Financial assets are classified into the accounting categories “financial assets at amortized cost”, “financial assets at fairvalue through other comprehensive income” and “financial assets at fair value through profit or loss”.
This classification depends on UMG‘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 assetsthat contain an embedded derivative are considered in full to determine whether their cash flows are SPPI.
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or havebeen transferred and UMG has transferred substantially all the risks and rewards of ownership.
Financial assets at fair value
These include financial assets at fair value through other comprehensive income, derivative financial instruments with apositive value 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 priceat 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 absenceof an active market, UMG values financial assets at historical cost, less any impairment losses.
These financial assets are recognized initially on trade date when UMG becomes a party to the contractual provisions of
the instrument. Dividend income is recognised when the UMG's right to receive payment is established.
Financial assets at amortized cost
Financial assets at amortised cost include trade receivables, other receivables, loans issued and bank deposits which are
not cash equivalents. Loans, receivables and deposits are recognized on the date they are originated.
Financial assets at amortized cost consist of debt instruments as described above held within a business model whose
objective is to hold financial assets to collect contractual cash flows that are solely payments of principal and intereston the principal amount outstanding. At the end of each period, these assets are measured at amortized cost using theeffective interest method.

2.4.14. Impairment of financial assets
UMG assesses the expected credit loss associated with its financial assets recognized at amortized cost on a prospective
basis. A loss allowance for expected credit loss based on probability of default 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 businessenvironment that are expected to result in a material change in the borrower's ability to meet its obligations.
Trade accounts receivable are initially recognised at their transaction price. Expected loss rates on trade receivables andcontract assets are calculated by the relevant operating entities over their lifetime from initial recognition and are basedon historical data that also incorporates forward-looking information. In addition, account receivables from customers
subject to insolvency proceedings or customers with whom UMG is involved in litigation or a dispute are generally
impaired in full.

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FINANCIAL STATEMENTS

2.4.15. Cash and cash equivalents
Cash and cash equivalents include all cash balances and short-term highly liquid investments with an original maturityof three months or less that are readily convertible into known amounts of cash.
Bank overdrafts form an integral part of UMG’s cash management and often fluctuate from being positive to overdrawn
and are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.
Investments in securities, investments with initial maturities of more than three months without an early termination
option and bank accounts subject to restrictions (blocked accounts), other than restrictions due to regulations specific toa country or activity sector (e.g., exchange controls), are not classified as cash equivalents but as financial assets.

2.4.16. Financial liabilities
A liability is recognized when UMG becomes party to a contract. Regular way purchases and sales of financial
instruments are accounted for at the trade date. Initial measurement of financial liabilities is at fair value, including
any attributable transaction costs. Financial liabilities are all classified and subsequently measured at amortized cost,
except for financial liabilities at fair value via profit and loss, for example derivatives or contingent consideration ina business acquisition. Such contingent consideration shall subsequently be measured at fair value with changes
recognized in profit or loss. For the financial liabilities subsequently measured at amortised cost the effective interest
method is applied. The effective interest rate is the internal yield rate that discounts future cash flows over the termof the financial instrument. In addition, where the financial liability comprises an embedded derivative or an equity
instrument, the amortized cost is calculated for the debt component only, after separation of the embedded derivativeor equity instrument, if the embedded derivative is not closely related to the host contract and therefore needs tobe separated.

2.4.17. Derivative financial instruments
Derivative financial instruments are recognised initially at fair value. Subsequent accounting for derivatives depends onwhether or not the derivatives are designated as hedging instrument in a cash flow, fair value or net investment hedge.
Derivatives with positive fair values are recorded as assets and negative fair values as liabilities. UMG did not apply
hedge accounting to the derivatives in 2021 and 2022.
UMG measures all derivative financial instruments at fair value derived from market prices of the instruments or
calculated as the present value of the estimated future cash flows based on observable interest yield curves, basis
spread and foreign exchange rates. These calculations are tested for reasonableness by comparing the outcome of theinternal valuation with the valuation received from the counterparty.

2.4.18. Inventories
Inventories are valued at the lower of cost or net realizable value. Cost comprises purchase costs, production costs andother supply and packaging costs. These are usually calculated using the weighted average cost method. Net realizablevalue is the estimated selling price in the normal course of business, less estimated completion costs and selling costs.
Inventories at UMG mostly comprise of finished goods.

2.4.19. Provisions
Provisions are recognized when, at the end of the reporting period, UMG has a legal obligation (statutory, regulatory
or contractual) or a constructive 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. Wherethe 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 of money. If the amount of the obligation
cannot be reliably estimated, no provision is recorded and a disclosure is made in the Notes to the Consolidated
Financial Statements. Significant judgment is required in determining the amount and probability of resources outflow
and discount rates used to calculate the present value of this outflow.

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FINANCIAL STATEMENTS

Provisions for royalty audit claims
Up to the completion of the royalty claim audit, the timing and the amount of the potential pay-outs is uncertain. UMG
makes its best possible estimate of the outcome using any available data, including history of claims with rights owners.
When the estimate is performed for large homogeneous claims and contract terms, the statistical valuation method
is used.
Litigation provisions
In the ordinary course of business, UMG may be involved in a number of legal and arbitration proceedings andadministrative actions. The costs which may result from these proceedings are accrued at the reporting date if UMG
has a present obligation toward a third party resulting from a past event and it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and the amount of that liability can be quantified
or estimated within a reasonable range. The amount of provision recorded is based on a case-by-case assessment of therisk level, and events arising during the course of legal proceedings may require a reassessment of this risk at any time.

2.4.20. Employee benefit plans
Defined contribution plans
Contributions to defined contribution and multi-employer plans are expensed during the year when related services
are provided.
Defined benefit plans
Defined benefit plans may be funded by investments in various instruments such as insurance contracts or equity anddebt 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. This method 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 discount rate is 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 based on relevant rate indices. The expected return on plan assets is estimated by using the selected discountrate to value the obligations of the previous year.
The calculation is performed separately for each plan. A provision is recorded in the Statement of 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.
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 expenses and income, consists of the unwinding of the interest
component of the discount, less the expected return on plan assets determined using the discount rate retained forthe 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 valueof the defined benefit obligation and plan assets resulting from changes in actuarial assumptions and experience
adjustments (representing the differences between the expected effect of some actuarial assumptions applied toprevious 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.

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FINANCIAL STATEMENTS

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 forpension provisions.

2.4.21. Income taxes
Differences existing at closing between the tax base value of assets and liabilities and their carrying value in theConsolidated 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 each year, 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 is probable that a taxable profit will be available, or when a current tax liability exists to make useof those deductible temporary differences, tax loss carry-forwards and unused tax credits, except where the deferred tax
asset associated with the deductible temporary difference is generated by initial recognition of an asset or liability in atransaction which is not a business combination, and that, at the transaction date, does not impact net profit, nor tax
income or loss.
For deductible temporary differences resulting from investments in subsidiaries, joint ventures and other associatedentities, deferred tax assets are recorded to the extent that it is probable that the temporary difference will reverse in theforeseeable 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 ismore or less probable 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 UMG's ability
to utilize tax losses carried forward is to a large extent judgement-based. If the future taxable results of UMG proved todiffer significantly from those expected, UMG would be required to increase or decrease the carrying value of deferred tax
assets with a potentially material impact on UMG's Statement of Financial Position and Statement of Profit or Loss.
Deferred tax liabilities are recognized for all taxable temporary differences, except where the deferred tax liability resultsfrom 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 net profit, tax income or loss.
For taxable temporary differences resulting from investments in subsidiaries, joint ventures and other associatedentities, deferred tax liabilities are recorded except to the extent that both of the following conditions are satisfied: theparent, investor or venturer is able to control the timing of the reversal of the temporary difference and it is probable thatthe temporary difference will not be reversed in the foreseeable future.
Current tax and deferred tax shall be charged or credited directly to equity, and not profit if the tax relates to items thatare credited or charged directly to equity. Current tax liabilities not expected to be paid within the next 12 months arerecorded as long term current tax liability.

2.4.22. Share-based payments
Equity-settled share-based compensation expense is recognized as a personnel cost over the vesting period of theaward at the fair value of the equity instruments granted at the grant date with a corresponding increase in equity. In
cases when grant date occurs after the employees to whom the equity instruments were granted have begun rendering
services (for example, if a grant of equity instruments is subject to shareholder approval), UMG estimates the grant datefair value of the equity instruments by estimating the fair value of the equity instruments at the end of the reporting

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 248

FINANCIAL STATEMENTS

period, for the purposes of recognising the services received during the period between service commencement date andgrant date. Once the date of grant has been established, UMG revises the earlier estimate so that the amounts recognisedfor services received in respect of the grant are ultimately based on the grant date fair value of the equity instruments.
Fair value of the shares granted is fixed at the grant date and is equal to the share price at the grant date with adeduction for the aggregate discounted value of the dividends that will not be received over the vesting period, unlessthe conditions of the plan prescribe compensation for the vesting period dividends, and after taking into account thediscount for non-transferability during the retention period.
The cumulative expense recognized for equity-settled transactions at each reporting date reflects the extent to which
the vesting period has expired and UMG’s best estimate of the number of equity instruments that will ultimately
vest. The expense or credit in the Statement of Profit or Loss for a period represents the movement in cumulative
expense recognized as at the beginning and end of that period. Service and non-market performance conditions are
not considered when determining the grant date fair value of awards, but the likelihood of the conditions being met
is assessed as part of UMG’s best estimate of the number of equity instruments that will ultimately vest. Market
performance conditions are reflected within the grant date fair value.

2.4.23. Related parties
A related party is a person or an entity that is related to UMG. These include both people and entities that have, orare subject to, the influence or control of UMG (e.g. key management personnel). Transactions with related parties areaccounted for in accordance with the requirements of relevant IFRSs and take into account the substance as well as thelegal form.

2.4.24. Contingent liabilities
Non-financial guarantees are accounted for as a contingent liability until such time it becomes probable that UMG will be
required to make a payment under the guarantee.
Contingent liabilities are possible or present obligations of sufficient uncertainty that it does not quality for recognition
as a provision, unless it is assumed in a business combination. Contingent liabilities are reviewed continuously toassess whether an outflow of resources has become probable.

2.4.25. Financial guarantees
Financial guarantee is a contract that requires the issuer to make specified payments to reimburse the holder for a loss
it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Financial guarantees are initially recognised at fair value and are subject to the expected credit loss model, and a credit
loss is recognized for expected cash shortfalls.

2.5. Accounting policy changes
2.5.1. Accounting policy changes originating from the IFRS amendments
The following accounting policy changes originating from the IFRS amendments became effective as at 1 January 2022,
however, the impact from their adoption on the Consolidated financial statements of UMG is not material:•
Reference to the Conceptual Framework – Amendments to IFRS 3•
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16•
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37•
Annual Improvements to IFRS Standards 2018-2020, including;◦
IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a first-time adopter◦
IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial liabilities

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 249

FINANCIAL STATEMENTS

UMG applied IFRS Practice Statement 2 - Disclosure of Accounting Policies in its Consolidated financial statements.
The Practice Statement provides an overview of the general characteristics of materiality, presents a four-step processcompanies may follow in making materiality judgements when preparing their financial statements and provides
guidance on how to make materiality judgements in specific circumstances, namely, how to make materiality
judgements about prior-period information, errors and covenants, and in the context of interim reporting.
UMG used the guidance of the Practice Statement 2 to optimise its material accounting policy information disclosure
to include only material accounting policy information. Accounting policy information is material if, when considered
together with other information included in an entity's financial statements, it can reasonably be expected toinfluence decisions that the primary users of general purpose financial statements make on the basis of thosefinancial statements.

2.5.2. Impact of standards issued but not yet effective
The new and amended standards and interpretations that are issued up to the date of issuance of UMG's financial
statements which are effective for the periods starting January 1, 2023 are disclosed below. UMG intends to adopt these
new and amended standards and interpretations, if applicable, when they become effective.
•
IFRS 17 (including the June 2020 amendments to IFRS 17) Insurance Contracts•
Amendments to IAS 8 Definition of Accounting Estimates•
Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The amendment to IAS 12 ‘Deferred Tax related to Assets and Liabilities arising from a Single Transaction’ related to
the recognition of deferred tax when UMG accounts for transactions, such as leases or decommissioning obligations, byrecognizing both an asset and a liability. UMG is still investigating the impact of the adoption of IAS 12 amendments on
its Consolidated financial statements.
UMG do not expect that the adoption of all other the standards and amendments listed above will have a material impact
on the financial statements of the Group in future periods.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 250

FINANCIAL STATEMENTS

Note 3. Segment data
Operating segment data

The operating segment reporting follows the internal reporting used by Management of UMG, to manage the business,
assess the performance based on the available financial information and to allocate the resources. The most important
performance measure are EBITDA and Adjusted EBITDA, non-IFRS measures as management believes this is key inevaluating the results of the segments relative to other companies that operate within the same industry. EBITDA and
Adjusted EBITDA are defined in the Appendix of the annual report.

Main aggregates of the Statement of profit or loss

(in millions of euros)

Note

Year ended December 31, 2022

Recorded

Music

Music

Merchandising

Publishing

Corporate

and other

centre

7,937

1,787

616

Revenues

7,937

1,799

618
36

(211)

(73)

(15)

-

EBITDA

Amortisation anddepreciation expense

Adjusted EBITDA
Non-cash share-based
compensation expense
One time direct-listing
related expenses

10,340-(14)

10,340

-

(19)

-

(107)

-

-

-

-

-

1,827

395

36

(230)

-

2,028

(204)

(162)

(2)

(9)

-

(377)

(29)

(1)

-

(1)

(2)

(1)

-

(32)

-

(17)

-

-

-

(17)

-

-

-

-

-

-

1,900
23

Restructuring expenses

Gain/(loss) on sale of assets
Impairment on
intangible assets

Other non-recurring items

Operating profit

Financial income

1,593

Financial expenses
Income/(loss) fromequity affiliates

Profit before income taxes

12

410

215

2

-

32

-

Total

-

-

1

intersegment
transactions

External revenue

Intercompany revenue

Elimination of

-

-

(240)

(14)
-

-

-

-

2,135

(2)

1,600
37

(735)
(2)
900

1 2022 External revenues includes a €71 million benefit in Recorded Music from the settlement of a copyright infringement lawsuit with an internet service provider that
represents revenue other than revenue from contracts with customers.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 251

FINANCIAL STATEMENTS(in millions of euros)

Note

Year ended December 31, 2021

Recorded

Music

Music

Merchandising

Publishing

Corporate

and other

centreElimination ofintersegment
transactions

External revenue

6,821

1,322

361

-

Revenues

6,822

1,335

363

-

Total

-

8,504

16

-

(149)

(16)
-

8,504

1,788

-

-

(79)

-

(79)

-

-

-

(23)

-

(23)

EBITDA

1,614

307

16

(251)

-

1,686

Amortisation anddepreciation expense

(148)

(95)

(2)

(32)

-

(277)

(18)

(2)

-

-

-

(20)

-

-

-

-

-

-

3

-

-

-

-

3

Intercompany revenue

1

Adjusted EBITDA

1,614

Non-cash share-based
compensation expense
One time direct-listing
related expenses

23

Restructuring expenses

Gain/(loss) on sale of assets

2

Impairment on
intangible assets

Other non-recurring items
Operating profit

Financial income

1,453

13

2

307

-

-

-

210

(16)

-

14

-

-

(283)

-

Financial expenses

2

1,394
143

(377)

Income/(loss) fromequity affiliates

5

Profit before income taxes1

1,165

1 Restated amounts are presented in Note 2.3.

Revenues by geographic area

UMG has a global network and operates in local countries, which enables it to maintain the relationships with clients andto understand the local market, legal and other conditions. As a result, the geographic basis of the operating companies
is the basis in determining the split of revenues from external customers per geographical areas.

(in millions of euros)

Year ended December 31,

Year ended December 31,

2022

2021

U.S.

5,163

50%

4,082

48%

Japan

699

7%

628

7%

UK

936

Germany

499

France399

Rest of the world1

Total revenues

2,644

10,340

9%
5%
4%

25%

100%

785
465
388

2,156

8,504

9%
6%
5%

25%

100%

1 Revenues for the Netherlands was €229 million in 2022 and €183 million in 2021.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 252

FINANCIAL STATEMENTS

Disaggregated revenue information
Recorded Music
Year ended December 31,(in millions of euros)

2022

2021

Streaming revenue

1,420

1,186

337

324

Subscription revenue

Downloads and other digital revenue1

3,901

3,295

Physical revenue

1,207

1,121

Recorded Music revenue

7,937

6,822

License and other revenue

1,072

896

1 2022 Downloads and other digital revenue includes a €71 million benefit from the settlement of a copyright infringement lawsuit with an internet service provider that
represents revenue other than revenue from contracts with customers.

Music Publishing
Year ended December 31,(in millions of euros)

2022

2021

Performance revenue

371

297

Digital revenue

1,040

698

Other revenue

55

Synchronisation revenue
Mechanical revenue
Music Publishing revenue

236

199

97

1,799

95
46

1,335

Subscriptions and streaming represents the largest type of recorded music revenue and is recognised over time andis 51% (53% in 2021) of total UMG revenues. Physical recorded music revenues are recognised at a point in time andrepresent 12% (13% in 2021) of total UMG revenues.
Other Recorded Music revenues mostly include neighbouring rights income which are recognized over time.
Merchandising revenue is recognised at a point in time. Music Publishing revenue is mostly recognised over time.
In 2022, UMG had 3 customers that each individually represented over 10% of total revenues (2 customers in 2021) andwhich represented total revenues of 18%, 12% and 10% respectively (18%, 12% and 9% in 2021). Each customer reports
revenues in both Recorded Music and Music Publishing segments.
The amount of revenue recognized for the year ended December 31, 2022 from performance obligations satisfied (orpartially satisfied) in previous periods amounts to €197 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 253

FINANCIAL STATEMENTS

Segment assets
Segment assets by Segment

Segment assets that are reported to the executive board include items that are directly attributable to a segment aswell as those that can be allocated on a reasonable basis. Unallocated assets mainly comprise of cash and deferred tax
assets which are managed at the Group level.

(in millions of euros)

Year ended December 31, 2022
Goodwill

Royalty advances, noncurrent
Catalogues

Note

Recorded

Music

Music

769

100

-

1,578

9

938

441

214

-

1,593

9

1,247

1,811

-

-

3,058

9

23

23

-

73

119

Right of use relating
to leases

11

311

9

Other assets

Total

centre709

10Royalty advances, current

Corporate

and other8

Property, plant & equipment
Other intangible assets

Merchandising

Publishing

Total segment assets1
Unallocated assets

152

-

10

4

1

2

318

464

476

44

-

984

5,984

4,145

407

2,140

5

616

48

227

312

Total assets

Year ended December 31, 2021
Goodwill

Royalty advances, noncurrent
Catalogues

653

727

100

-

1,480

9

877

559

100

-

1,536

9

1,165

1,817

-

-

2,982

9

24

21

-

51

96

235

Right of use relating
to leases

11

Other assets

791

8

10

Royalty advances, current

3,031

10,848
11,639Property, plant & equipment
Other intangible assets

167

9

Total segment assets1
Unallocated assets

111

-

50

27

-

126

421

362

61

6,399

3,988

297

2,913

Total assets

6

469

36

-

191

418

167

388
844

3,609

11,102
992

12,094

1 Total segment assets in the Netherlands was €931 million in 2022 (€1,769 million in 2021).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 254

FINANCIAL STATEMENTS

Content assets by segment
December 31, 2022
(in millions of euros)

Note

Recorded

Music

Music

Catalogues (of music and publishing rights)

Royalty advances (to artists and repertoire owners)

Publishing

1,811
917

258

-

3,058

938

441

214

1,593

2,649

2,728

258

5,635

2,185

2,252

214

4,651

Non-current
Current

Content assets, net

464

9Current content assets

464

Non-current content assets

Total

and other

1,247
1,402

Of which:

Merchandising

476

2,577

44

476

984

44

984

December 31, 2021
(in millions of euros)

Note

Catalogues (of music and publishing rights)

Royalty advances (to artists and repertoire owners)

Non-current
Content assets, net

Current content assets

Non-current content assets

Music

Music

Publishing

9

Merchandising

Total

and other

1,165

1,817
921

161

-

2,982

877

559

100

1,536

2,463

2,738

161

5,362

2,042

2,376

100

4,518

1,298

Of which:
Current

Recorded

421
421

362

61

362

61

2,380

844
844

Note 4. Cost of revenues and selling, general and administrative
expenses
Year ended December 31,(in millions of euros)

Note

Included in cost of revenues:
Artist costs

Product costs

Personnel costs

Depreciation of tangible assets

Depreciation of right of use assets
Personnel costs

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2021

4,704

3,800

30

27

35

34

1,537

1,380

1,049

Of which:

Included in selling, general and administrative expenses:

2022

10
11

74

808

68

MUSIC IS UNIVERSAL Annual Report 2022 | 255

FINANCIAL STATEMENTS

Personnel costs and average employee numbers
Year ended December 31,(in millions of euros)

Note

Salaries

Social security and other employment expenses

2022

2021

1,202

1,117

1,369

1,265

48

41

167

Wages and expenses

Share-based compensation plans

23

Employee defined benefit plans

22

Employee defined contribution plans
Other

Personnel costs

128

79

6

16

1,567

Annual average number of full-time equivalent employees (in thousands)

148

9.5

5

17

1,407

9.1

Note 5. Financial income and expenses
Year ended December 31,(in millions of euros)

Note

Interest income from cash, cash equivalents and other20

Change in fair value of financial instruments through profit or loss
Gain on disposal of consolidated companies

Expected return on plan assets related to employee benefit plans

Gain on derivative instruments at fair value through profit or loss

22
1

Foreign exchange gain
Other

Interest expense on borrowings

Interest cost related to employee benefit plans
Interest expenses on lease liabilities
Foreign exchange loss
Cost of finance
Other

Financial expenses

Net total financial income and (expenses)

22
11

6

23

3

3

-

13

98
-

-

11

37

143

(654)

(320)

(47)

Change in fair value of financial instruments through profit or loss

2021

-

1

Financial income

Unwinding of interest component

2022

(1)
(6)

2

(21)
(1)
(5)

(14)

(16)

(9)

(11)

(735)

(377)

(1)
(3)

(698)

-

(3)

(234)

1 The net gain on derivative instruments at fair value through profit or loss relates to foreign exchange forward contracts that did not qualify for hedge accounting.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 256

FINANCIAL STATEMENTS

Note 6. Income taxes
Income taxes and income tax paid by geographic area
Year ended December 31,(in millions of euros)

2022

2021

United States

(185)

(141)

Rest of Europe

(127)

(47)

(Expense)/income
Current

United Kingdom
Rest of the world
DeferredUnited States

United Kingdom
Rest of Europe

Rest of the world1
Income taxes

(24)
(11)

(347)

(14)

(117)

(319)

9

(4)

(1)

16

35

3

189

232

(115)

27

42

(277)

1 Included the deferred tax charge relating to the revaluation gain recorded through profit or loss related to the investments in Spotify, Tencent Music Entertainment andother investments for an aggregate amount of €166 million in 2022, compared to €71 million expense in 2021.

Income tax paid
Year ended December 31,(in millions of euros)

2022

2021

United States

(187)

(139)

Rest of Europe

(36)

(37)

United Kingdom
Rest of the world1

Income tax (paid)/collected

(22)
(10)

(255)

(20)
(59)

(255)

1 Includes refunds of €62 million related to two litigations finalised before tax courts in 2022 (the 2021 amount includes €3 million payments as assessed forthese litigations).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 257

FINANCIAL STATEMENTS

Effective tax rate
Year ended December 31,(in millions of euros)

2022

2021

Net profit

785

888

(Income)/loss from equity affiliates
Income taxes

Profit before income taxes excluding (income)/loss from equity affiliates

Dutch statutory tax rate

2

115

902

(5)

277

1,160

25.8%

25.0%

Earnings tax rate differences

59

32

Use or recognition of tax attributes1,2

19

Settled tax litigations3

90

(11)

-

(48)

State taxes (net of Federal Income Tax benefit)

(29)

(25)

Provision for income taxes

(115)

(277)

Theoretical provision for income taxes based on Dutch statutory tax rate
Reconciliation of the theoretical and effective provision for income taxes
Impacts of the changes in tax rates

Adjustments to tax expense from previous years
Withholding taxes

United States tax components

Base Erosion and Anti-Abuse tax (BEAT) addback2

Foreign Derived Intangible Income (FDII) deduction
Other

Effective tax rate

(233)

(290)

1

(14)
83

26

8

(72)

(56)

31

(10)

12.7%

22
22

23.9%

1 Tax attributes includes tax losses and tax credits, both for the use of previously unrecognized attributes as for prior years attributes recognised this year for expectedutilisation in future years.
2 In 2021 in the United States the benefit of €80 million on the utilisation of tax attributes is, by virtue of how the tax rules apply, largely offset by the Base Erosion andAnti-Abuse Tax addback. In 2022, there is no addback due to a low amount of tax attributes used.
3 This represents the beneficial impact of two litigations finalised before tax courts in 2022 (the 2021 amount reflects the accrual recorded for these litigations in 2021).

Excluding previous years’ adjustments and the impacts of the tax litigations to income tax expense, the effective tax ratewould have been 27.8% in 2022 and 24.1% in 2021.

Deferred tax assets and liabilities
Changes in deferred tax assets/(liabilities), net
Year ended December 31,(in millions of euros)

2022

2021

Opening balance of deferred tax assets/(liabilities)

(446)

(482)

Expenses and income directly recorded in equity

(14)

4

Income taxes

Other business combinations

Changes in foreign currency translation adjustments and other
Closing balance of deferred tax assets/(liabilities), net

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

231

-

(3)

(232)

42
-

(10)

(446)

MUSIC IS UNIVERSAL Annual Report 2022 | 258

FINANCIAL STATEMENTS

Components of deferred tax assets and liabilities
Year ended December 31,(in millions of euros)

2022

2021

Tax attributes1

98

111

Universal Music US and its subsidiaries

88

Deferred tax assets

Recognizable deferred taxes

Of which

Universal Music UK and its subsidiaries

51

61

Universal Music and its subsidiaries in the rest of the world

20

20

Universal Music and its subsidiaries in the rest of Europe

19

22

Other

358

415

non-deductible provisions

61

49

working capital

149

158

Total gross deferred tax assets

456

526

Tax attributes1

(82)

(103)

Universal Music US and its subsidiaries

(6)

(5)

Of which

employee benefits

37

Other

111

Deferred taxes, unrecognized

Of which

21

187

Universal Music UK and its subsidiaries

(38)

(59)

Universal Music and its subsidiaries in the rest of the world

(20)

(20)

Universal Music and its subsidiaries in the rest of Europe

(18)

Other

(26)

Total deferred tax assets, unrecognized

(19)
(19)

(108)

(122)

Asset revaluations2

(198)

(204)

Financial instruments3

(124)

(351)

Recorded deferred tax assets

348

Deferred tax liabilities
Working capital

(163)

Other

(95)

Recorded deferred tax liabilities(580)

Deferred tax assets/(liabilities), net

(232)

404

(226)
(69)

(850)
(446)

1 As shown in this table, the amounts of gross tax attributes (including tax losses and tax credits) were estimated at the end of the relevant fiscal years. As a result, theamount of tax 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. Deferred tax assets have not been recognised in respect of gross tax attributes for € 1,279 million (2021:€ 1,346 million), as it is not probable that there will be future taxable profits within the entities against which these can be utilised.
2 These tax liabilities, stemming from asset revaluations and resulting from the purchase price allocation of entities acquired by UMG, are cancelled upon amortization ordivestiture of the related assets and do not and will not generate any current tax liabilities.
3 Primarily related to the deferred tax liabilities stemming from the revaluation of the investments in Spotify, Tencent Music Entertainment and other investments.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 259

FINANCIAL STATEMENTS

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 ordinary adjustments to thefinancial results reported by UMG for fiscal year 2021 and prior years, under statutes of limitation applicable to UMG.
In litigation situations, UMG's policy is to pay the taxes it intends to contest, and to seek a refund through appropriate
legal proceedings. Regarding ongoing tax audits, no provision is recorded where the impact that could result from an
unfavourable outcome cannot be reliably assessed. To date, UMG believes that these tax audits are unlikely to have amaterial impact on the Group's financial position or liquidity

Note 7. Earnings per share
Year ended December 31,(in millions of euros and shares)

2022

2021

Net profit attributable to equity holders of the parent

782

886

Weighted average number of shares outstanding (after deduction of treasury shares) during
the year

1,813

1,813

Diluted weighted average number of shares

1,816

1,814

0.43

0.49

Potential dilutive effects related to share-based compensation
Earnings per share (in euros)
Basic earnings per share

Diluted earnings per share

3

1

0.43

0.49

Note 8. Goodwill
Changes in goodwill
Year ended December 31,(in millions of euros)

2022

2021

Goodwill, gross

1,567

1,451

Goodwill, net

1,480

1,369

19

9

Balance as at January 1
Accumulated impairment losses

Changes in book value:
Acquisitions

Impairment losses

Foreign currency translation adjustments
Total changes

(87)

(7)

86

(82)

-

102

98

111

Goodwill, gross

1,678

1,567

Goodwill, net

1,578

1,480

Balance as at December 31
Accumulated impairment losses

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(100)

(87)

MUSIC IS UNIVERSAL Annual Report 2022 | 260

FINANCIAL STATEMENTS

Goodwill by cash generating unit
Year ended December 31,(in millions of euros)

2022

2021

Recorded Music

709

653

Music Publishing769

Merchandising & Other

100

Closing balance

1,578

727
100

1,480

Cash generating units

For impairment testing, goodwill is allocated to cash-generating units, which represent the lowest level at which the
goodwill is monitored internally for management purposes. The cash-generating units correspond to the operating
segments. UMG’s financial reporting is managed at the level of operating segments consistent across the music industry(Recorded Music, Music Publishing, and Merchandising). UMG test goodwill at the cash-generating units level whichcorresponds to the operating segments as disclosed in Note 3 above.

Goodwill impairment test

UMG conducted the full annual impairment test in the fourth quarter of 2022.
The goodwill was tested for impairment by comparing it with a recoverable amount. The recoverable amount isdetermined 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 acquisitiontransactions). For a description of the methods used for the impairment test, please refer to Note 2.
Key assumptions used in the impairment tests for the cash-generating units were sales growth rates and the rates used
for discounting the projected cash flows. These cash flow projections were determined using management's internal
forecasts that cover an initial period of 2023 to 2027 that matches the period used for our strategic planning process, after
which a terminal value was calculated. The sales growth rates used to estimate cash flows are based on:•
past performance, including the label pool revenue forecasts derived from commercial agreements with customers;•
external market growth assumptions among which is the overall population and corresponding growth in streaming
penetration rate among the population;•
expected market share developments;•
industry long-term growth averages.

Key assumptions
2022
Compound

In % per year

Annual Revenue
Growth2023-2027

Recorded Music

Music Publishing
Merchandising

2021

Extrapolation

revenue growthrate after 2027

5.0%

3.9%

10.8%

Pre-tax

discount rates

CompoundAnnual Revenue
Growth2022-2026

Extrapolation

revenue growthrate after 2026

Pre-tax

discount rates

3.4%

8.2%

7.3%

2.5%

6.9%

2.0%

8.2%

9.4%

2.5%

6.9%

3.4%

8.2%

5.6%

2.5%

6.9%

The annual impairment test for Recorded Music, Music Publishing and Merchandising showed significant headroom andmanagement did not identify an impairment for these CGUs. The sensitivity analysis around the key assumptions in
the impairment tests have indicated that a reasonably possible change in any of the assumptions would not cause therecoverable amount to be less than the carrying value. Impairment losses presented in the tables above relates to adisposal of a minor operation within Music Publishing.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 261

FINANCIAL STATEMENTS

Note 9. Content assets (catalogues and royalty advances) and otherintangibles
Net book value
December 31, 2022

(in millions of euros)

Asset value, grossAccumulated

amortisation andimpairment losses

Net book value

Catalogues (of music and publishing rights)

5,732(2,674)

3,058

Content assets

8,309(2,674)

5,635

Royalty advances (to artists and repertoire owners)
Other intangible assets

2,577
489

-

(370)

2,577
119

December 31, 2021

(in millions of euros)

Asset value, grossAccumulated

amortisation andimpairment losses

Net book value

Catalogues (of music and publishing rights)

5,284(2,302)

2,982

Content assets

7,664(2,302)

5,362

Royalty advances (to artists and repertoire owners)
Other intangible assets

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2,380
437

-

(341)

2,380
96

MUSIC IS UNIVERSAL Annual Report 2022 | 262

FINANCIAL STATEMENTS

Changes in content assets and other intangibles
Catalogues (ofmusic and

Balance December 31, 2020
Amortisation
Impairment
Additions

Disposals

Recoupments

Business combinations

Changes in foreign currency translation adjustments
and other
Balance December 31, 2021
Amortisation
Impairment
Additions

Disposals

Recoupments

Business combinations

Changes in foreign currency translation adjustments
and other
Balance December 31, 2022

Otherartists andpublishing(in millions of euros)

Royaltyadvances (torepertoirerights)Total

intangibles

owners)

2,330

(144)

1,859

79

4,268

-

(31)

630

1,434

48

2,112

-

(1,046)-(1,046)

166

133

-

299

2,982

2,380

96

5,458

(10)

-

-

(10)

-

(233)

-

-

(175)
-

-

(35)

137

1,187

54

1,378

-

(1,122)--

1(1,122)

179

132

3

314

3,058

2,577

119

5,754

(3)
6

-

-

(268)

(3)
7

Royalty advance payments, net on the Consolidated Statement of Cash Flows consists of additions and recoupments fromthe changes in content assets table above.
The significant music catalogues and publishing rights were acquired through business combinations of BMG Publishing(BMG) and EMI Recorded Music (EMI). The BMG catalogue was acquired in 2007 with a fair value of €1,241 million
and has carrying amount of €378 million (2021: €413 million) with a remaining useful life of 5 and 35 years for therespective catalogue components. The EMI catalogue was acquired in 2012 with a fair value of €1,046 million, and has
a carrying amount of €548 million (2021: €553 million) with a remaining useful life of 10 and 40 years for the respective
catalogue components.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 263

FINANCIAL STATEMENTS

Note 10. Property, plant and equipment(in millions of euros)Land

and machinery

234

111

Cost

Balance as at January 1, 2022
Additions

4

Transfers and reclassifications
Changes in foreign currency translation
adjustments and other
Balance as at December 31, 2022

Depreciation and impairment losses
Balance as at January 1, 2022
Depreciation during the year

Changes in foreign currency translation
adjustments and other

Assets under

74
1

5

Total

construction

9

428

24

33

(5)

(4)

(2)

3

(13)
(1)

(12)

3

3

2

1

9

241

119

78

20

458

(120)

(90)

(51)

-

(261)

5

3

3

-

11

(18)

Disposals

Other

fixed assets

45

Disposals

(10)

(7)

-

-

(35)

(2)

(2)

(2)

-

(6)

(135)

(99)

(57)

-

(291)

114

21

23

9

167

and buildings

and machinery

220

77

65

19

4

15

3

(22)
-

(4)

11

16

3

8

38

234

111

74

9

428

(103)

(59)

(43)

-

(205)

-

-

-

-

-

Balance as at December 31, 2022
Carrying amountAs at January 1

As at December 31(in millions of euros)

Equipment

and buildings

106

Cost

Balance as at January 1, 2021
Additions

Transfers and reclassifications
Disposals

Changes in foreign currency translation
adjustments and other
Balance as at December 31, 2021

Depreciation and impairment losses
Balance as at January 1, 2021
Depreciation during the year
Disposals

Changes in foreign currency translation
adjustments and other
Balance as at December 31, 2021
Carrying amountAs at January 1

As at December 31

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Land

20

Equipment

3

(4)

(18)

3
-

(10)

21

Other

20

Assets under

fixed assets

Total

construction

3
-

(6)

167

4

-

381
13
-

(34)

1

(21)

(2)

-

(22)

(120)

(90)

(51)

-

(261)

117

18

22

19

176

114

21

23

9

167

MUSIC IS UNIVERSAL Annual Report 2022 | 264

FINANCIAL STATEMENTS

Note 11. Leases
Changes in the rights-of-use
Year ended December 31,(in millions of euros)

2022

2021

Opening balance

388

416

Additions25

32

Depreciation

(74)

(68)

Disposals

(26)

(12)

Closing balance

318

388

Foreign currency translations and other5

20

Lease liabilities
Year ended December 31,(in millions of euros)

Note

2022

2021

Opening balance

501

525

Disposals

(26)

(15)

(100)

(86)

(86)

(70)

Additions

Accretion of interest
Payments

Of which interest

Of which principal

Foreign currency translations and other
Closing balance

26

5

14

(14)
8

423

32
16

(16)
29

501

Maturity of lease liabilities
Year ended December 31,(in millions of euros)

Maturity< 1 year

2022

77

2021

80

Between 1 and 5 years

228

256

Lease liabilities

423

501

> 5 years

118

165

Cash outflow for leases and lease-related expenses

Total cash outflow and expenses for the leases of real-estate with maturity shorter than 12 months and expense relating
to low-value assets recorded in the Statement of Profit or Loss amounted to €18 million for the year ended December 31,
2022 (compared to €13 million for the year ended December 31, 2021).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 265

FINANCIAL STATEMENTS

Note 12. Investments in equity affiliates
UMG has certain interests in joint ventures and companies where UMG has significant influence. The main company
over which UMG had significant influence at the reporting date was Vevo LLC (Vevo). Vevo is a global music videos andentertainment services platform and its country of incorporation is the United States. UMG owns 49.2% of the votinginterest and the carrying amount of this investment was €74 million on December 31, 2022 (2021: €70 million).

Change in value of investments in equity affiliates
Year ended December 31,(in millions of euros)

2022

2021

Opening balance

109

72

-

-

Acquisitions

Business combinations
Write-downs

Income/(loss) from equity affiliates

Change in other comprehensive income
Dividends

Translation difference
Closing balance

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

47
(2)

28

-

(2)

5

(2)

(2)

156

109

6
-

5
1

MUSIC IS UNIVERSAL Annual Report 2022 | 266

FINANCIAL STATEMENTS

Note 13. Capital and financial risk management
Capital risk management

UMG objectives when managing capital are to safeguard UMG’s ability to continue to create value for shareholders,
support the sustainable growth of the Group, and to maintain an optimal capital structure that optimizes its cost ofcapital. As a result, UMG endeavours to maintain a satisfactory economic return for its shareholders and guarantee
economic access to external sources of funds.
On 31 May 2022, UMG NV announced Baa1/BBB Long Term Credit Ratings from Moody’s and S&P. These investment grade
ratings are the financial covenants UMG committed to sustaining. In relation to the EUR RCF, if UMG does not have theseratings by Moody’s and S&P or a comparable rating from an internationally recognized credit rating agency, its Leverage
Ratio shall be equal to or below 4.0x.
UMG and its subsidiaries are not subject to external capital requirements, other than the financial covenants as
disclosed above.
To support this strategic goal, UMG management remains focused on the robust performance of the Free Cash Flow,a non-IFRS measure as defined in the definitions in the Appendix to the Annual Report, and effective Working Capitalmanagement, details on both are presented below.

Free cash flow
Year ended December 31,(in millions of euros)

2022

2021

Operating profit1

1,600

1,394

Amortisation and depreciation expense
Impairment expense

Changes in provision, net(Gain)/loss on sale of assets
Other non-recurring items
Adjustments

1

377
17
65
2
-

461

277

-

8

(2)
(3)

280

Royalty advance payments, net of recoupments

(148)

(364)

Net cash provided by/(used for) operating activities before income tax paid

1,987

1,395

Net cash provided by/(used for) operating activities

1,732

1,140

Repayment of lease liabilities and related interest expenses

(100)

(86)

Other changes in net working capital
Income tax paid

Net cash provided by/(used for) investing activities
Interest, net

Other cash items related to financing activities
Free cash flow

74

(255)

(520)
(30)
4

1,086

85

(255)

(391)
(17)
(8)

638

1 Restated as described in Note 2.3.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 267

FINANCIAL STATEMENTS

Changes in working capital
Changes

Changes in

DecemberBusiness

operating31, 2021

working capital1(in millions of euros)

Inventories3

in foreign

December

Other2currency

combinationstranslation

31, 2022

adjustments

Trade accounts receivableand other

99

62

-

2

-

163

1,803

203

1

11

(4)

2,014

Trade accounts receivable

550

22

1

4

3

580

1,902

265

1

13

(4)

2,177

(4,875)

(333)

(2)

(113)

173

(5,150)

(769)

(6)

(3)

(14)

355

(437)

(5,644)

(339)

(5)

(127)

528

(5,587)

Of which:

Expected credit losses

Working capital assets

Trade accounts payable
and other
Other noncurrent liabilities

Working capital liabilities
Net working capital

(46)

(14)

(3,742)

-

(74)

(4)

-

(2)

(114)

524

(62)

(3,410)

1 Excludes content investments.
2 Mainly includes the change in net working capital relating to content investments, capital expenditures and other investments.
3 Total inventory obsolescence expense for the period was €69 million.

Decemberworking capital1(in millions of euros)in foreign

Business

operating31, 2020

Inventories3

Changes

Changes in

December

Other2currency

combinationstranslation

31, 2021

adjustments

Trade accounts receivableand other

79

17

-

3

-

99

1,641

126

-

40

(4)

1,803

Trade accounts receivable

538

17

-

12

(17)

550

1,720

143

-

43

(4)

1,902

(4,126)

(226)

-

(201)

(322)

(4,875)

(851)

(2)

-

(19)

103

(769)

(4,977)

(228)

-

(220)

(219)

(5,644)

Of which:

Expected credit losses

Working capital assets

Trade accounts payable
and other
Other noncurrent liabilities

Working capital liabilities
Net working capital(62)(3,257)

9

(85)

-

-

(1)

(177)

8

(223)

(46)

(3,742)

1 Excludes content investments.
2 Mainly includes the change in net working capital relating to content investments, capital expenditures and other investments.
3 Total inventory obsolescence expense for the period was €40 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 268

FINANCIAL STATEMENTS

Financial risk management
UMG business activities expose the Group to a variety of risks associated with financial instruments, including credit risk,
liquidity risk, interest rate risk, foreign currency risk and market risks.
These risks are inherent to how UMG operates as a multinational with locally operating subsidiaries. To manage theserisks, UMG has developed specific policies. The essence of measuring the performance of these policies is to strike abalance between managing risks and contributing to the financial results of UMG. UMG policies are risk-adverse in thatregard. Enforcement of procedures related to financial risk management is carried out by UMG Group Treasury in linewith the guiding principles of the Group Treasury Policies.
Credit risk
Credit risk can be defined as the risk of loss arising from the failure of a counterparty to perform its obligations undera contract.
Credit risk maximum exposure is equal to the carrying amounts of Trade and other receivables, refer to Note 14, and Cashposition and borrowings, refer to Note 16, as presented in the Statement of Financial Position. Also, for the derivatives andassets at fair value via profit and loss, the maximum exposure to credit risk at the end of the reporting period is equal tothe carrying amount, refer to Note 18 Financial assets and liabilities. The maximum credit risk exposure on guarantees
issued corresponds to their nominal amounts, as presented in Note 17 Contractual obligations and other commitments.
UMG aims to centralize its cash management with its Tier 1 banks, of which all the banks have credit ratings of minimumof A-.
UMG performs ongoing evaluations of the financial and non-financial condition of UMG customers and adjusts credit
limits when appropriate. In instances where a customer's creditworthiness is determined not to be sufficient to grant therequired credit limit, there are several mitigation tools that can be utilized to close the gap, including reducing payment
terms, cash on delivery, prepayments and pledges on assets.
UMG’s operational subsidiaries have set up procedures and systems to track their trade accounts receivable and recover
outstanding amounts. In addition, some subsidiaries have insured their main client credit risks worldwide with a leading
credit insurer.
Liquidity risk
Liquidity risk is the risk that UMG will not be able to meet its financial obligations as they fall due.
The primary objective of liquidity management is providing sufficient cash to enable UMG to meet its liabilities when due,
under normal and stressed conditions, without incurring losses.
Neither the aged receivables of individual customers, nor the profile of the accounts receivable portfolio per segment,
impose a significant threat to UMG’s liquidity planning.
UMG Treasury provides for the short-term day-to-day cash management needs of the Group by organizing sweeps
between international cash poolings. For medium term financing requirements, UMG Group Treasury determines theGroup's overall debt position and its planned evolution based on the Group’s 13-month rolling cash forecast. A liquidity
analysis is performed to ensure the proper funding is in place to face medium-term needs.
Cash is extracted from countries outside the cash pooling through dividends or thanks to upstream loans. Cash is pooled
up to UMG NV from all territories participating in the international cash pooling.
The objectives of liquidity management are to repay the external debt at the level of UMG NV (€ debt) and to pay the UMG
NV dividend to the Group's shareholders. The list of permitted banks for liquidity management includes eight banks withminimum rating of A-.
The liquidity analysis includes a buffer of €400 million to provide for intra-month treasury swings and the incompressible
treasury float. Adequate bank facilities are available as backup for Commercial paper. The maturity schedule for long-

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 269

FINANCIAL STATEMENTS

term external debt is maintained above 3 years. UMG Treasury ensures central compliance with financial covenants,pari-passu, and negative pledge clauses.
Total cash and cash equivalents position as at December 31, 2022, is disclosed in Note 16 Cash positions and borrowings.
Contractual obligations and their timing are disclosed in Note 17 Contractual obligations and other commitments. In
addition, as at December 31, 2022, UMG has undrawn Revolving Credit Facilities (RCF) of €1,266 million.
Market risk
Market risk is the possibility that an entity will experience losses due to factors that affect the financial markets. Market
risk includes currency risk and interest rate risk as addressed below, but also risk of change in fair value of the financial
instruments, including those traded on the active markets. As at December 31, 2022, UMG held financial instruments
measured at fair value as disclosed in Note 18, where the exposure of the risk and sensitivity are presented.
UMG risk management policies cover refinancing risk to ensure that under any market circumstances, UMG canrefinance its debt on time and a reasonable cost. The objectives of refinancing risk management are to benefit from
sufficient flexibility granted by the access to various capital markets (EUR CPs and Bonds) and the ability to sell assets to
not rely solely on bank borrowings or commercial paper.
Interest rate risk
Interest rate risk is the risk of the fair value or future cash flows of a financial instrument fluctuating because of changes
in the market interest rates. Financial instruments included in the borrowings create an inherent interest rate risk.
UMG seeks to limit the period over which interest rates on debt are exposed. The preferred method of hedging interest
rate risk is issuing long term fixed-rate bonds. The use of interest-rate plain vanilla derivatives is also authorized. The listof authorized instruments includes interest rate swaps, FRAs, caps, and floors.
As for currency risk management, interest rate hedging operations are handled solely by UMG Treasury according to
the Group’s strategic goals set by the Group Chief Financial Officer. The speculative use of interest rate derivatives isstrictly prohibited.
As of December 31, 2022, UMG had a ratio of fixed-rate debt to total outstanding debt of approximately 79%, including
lease liabilities. A sensitivity analysis conducted in January 2023 on the gross debt portfolio shows that if short term
EURIBOR were to increase instantaneously by 0.5% from their level of December 31, 2022, with all other variables held
constant, the total change in annualized interest expense result would be €5 million.
Foreign currency risk
As any multinational group, UMG faces various types of foreign exchange transactional exposures on committed andexpected cash in and outflows, denominated in a currency other than the respective functional currencies of UMG
entities. Subsequently, UMG also faces translational risk, which is the risk resulting from the translation of foreign
operations into the euro. The main currencies that drive the foreign currency risk of UMG are U.S. Dollar, British Poundand Japanese Yen.
UMG’s exposure to FX transactional risk is greatly limited due to the offsetting of inflows/outflows in the different
currencies to the extent possible as a natural hedge. UMG Treasury mainly manages foreign exchange rate risk exposure
on balance sheet positions, primarily cash concentration in various currencies at the top cash pooling entity. Treasury's
foreign exchange risk management policy is to hedge recognized assets and liabilities nominated in foreign currencies
above a predefined threshold. UMG uses forward exchange rate contracts and foreign exchange swaps to manage thisexposure. All material foreign currency balance sheet exposures are offset by derivatives, so potential foreign currency
rate fluctuations as of December 31, 2022 would have no significant impacts on UMG’s financial results. In 2022, UMG did
not apply hedge accounting to these derivatives. Currency derivatives are not used for speculative purposes. The average
maturity of these contracts is one month.
The table below summarises the net nominal value of the foreign currency balance sheet exposure and foreign exchange
rate derivatives used to offset it as of December 31, 2022.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 270

FINANCIAL STATEMENTS(in millions of euros)

Nominal value of Balance sheet exposure
Foreign exchange rate derivatives
Net exposure

USD

GBP

294

(294)
-

JPY

366

(366)
-

Other

271

Total

392

(271)

(392)

-

-

1,323

(1,323)-Note 14. Trade and other receivables
Year ended December 31,(in millions of euros)

2022

2021

Trade receivables

1,765

1,598

Trade receivables, net of value allowance

2,014

1,803

Other receivables

249

205

Out of the total amount of trade receivables, €1,247 million (2021: €1,094 million) was recognized as accrued revenue as at
31 December, 2022.
Year ended December 31,(in millions of euros)

2022

2021

Current

1,698

1,543

21

11

Overdue 0-30 days

Overdue 31-150 days
Overdue >150 days

Trade receivables, net of value allowance

46
-

1,765

44
-

1,598

For the movements of the expected credit loss allowance and the credit risk management policies and procedures of
UMG please refer to Note 13 Capital and financial risk management.

Note 15. Trade and other accounts payableYear ended December 31,(in millions of euros)

2022

2021

Trade accounts payable

138

146

Music royalties to artists and repertoire owners
Accrued expenses
Other payables

3,523

3,020

711

936

401

385

Trade and other accounts payable

4,773

4,487

Trade accounts payable and other

5,150

4,875

Contract liabilities

377

388

Out of the total amount of €388 million recognized in contract liabilities at the beginning of 2022, €320 million has beenrecognized as revenue for the year ended December 31, 2022.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 271

FINANCIAL STATEMENTS

Note 16. Cash position and borrowings
Cash position
Year ended December 31,(in millions of euros)

2022

2021

Cash and cash equivalents

439

585

Cash and cash equivalents in the statement of cash flows1

438

572

Bank overdrafts

(1)

(13)

1 Restated as described in Note 2.3.

UMG operates in a number of territories where regulations do not authorise participation of local entities to the UMG
global cash pooling. Only dividends and intra-group invoices are available to extract cash from these territories. The
amount of cash held by UMG entities in these countries amounted to €373 million as of December 31, 2022.

Borrowings and other financial liabilities
December 31, 2022
(in millions of euros)

Bonds

Total

Long-term

December 31, 2021
Short-term

Total

Long-term

1,004

987

17

Drawn revolving
credit facilities

-

998

798

200

125

125

-

1,447

1,447

-

Commercial papers
Bank overdrafts

929

-

929

-

-

Other

1

Borrowings at
amortized cost

191

1

190

137

32

105

2,250

1,113

1,137

2,595

2,277

318

Cash and cash equivalents

(439)

-

(439)

(585)

-

(585)

Net debt

1,810

Term facility

Derivative financial assets

-

(1)

-

-

-

1

(1)

-

Short-term

13

-

2,010

-

-

-

-

-

13

-

New borrowings

In February 2022, UMG entered into a short-term floating rate USD 500 million revolving credit facility. At maturity on
November 14, 2022, the facility was extended to November 14, 2023. The facility was renewed for USD 500 million and is
stepping down to USD 350 million by December 30, 2022. By December 31, 2022, no drawing was made from the facility.
On June 30, 2022, UMG issued €500 million of senior unsecured notes due on June 30, 2027 with a coupon of 3.00% and€500 million of senior unsecured notes due on June 30, 2032 with a coupon of 3.75%. On July 1, 2022, the net proceedsfrom the issuance of the unsecured senior notes of €1 billion were used to fully repay the Term loan. See Note 13 for
information on covenants associated with new borrowings.
On July 8, 2022, UMG established a EUR commercial paper program. Under the Program, UMG may issue, from time totime, commercial paper notes up to a maximum aggregate amount of €1 billion. The proceeds from the issuance will be
used firstly to pay down UMG’s revolving credit facility and manage short-term liquidity needs from the Group.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 272

FINANCIAL STATEMENTS

Movements of borrowings
Drawn
Term

revolvingfacility

credit(in millions of euros)
Balance December 31, 2020
New borrowings
Repayments
Translation differences andother movements
Balance December 31, 2021
New borrowings
Repayments
Translation differences andother movements
Balance December 31, 2022

Bonds

Vivendi SE

UMG own

Vivendi SE

creditcreditBank

Commercial

Otherborrowings

lines

lines

overdrafts

papers

debt

drawn

drawn

facilities

Total

-

-

-

2,368

422

213

5

-

1

3,009

998

1,981

-

-

40

20

9

-

137

3,185

-

(556)

-

(2,368)

(465)

(235)

-

-

-

(3,624)

-

22

-

-

3

2

(1)

-

(1)

25

998

1,447

-

-

-

-

13

-

137

2,595

8

1,722

1,004

-

-

-

1

3,117

87

5,939

(1,006)(3,126)

-

-

-

-

(13)

(2,188)(34)(6,367)

-

82

-

-

-

-

-

-

1

83

-

125

1,004

-

-

-

1

929

191

2,250

Note 17. Contractual obligations and other commitments
UMG’s material contractual obligations and contingent assets and liabilities include:•
Contractual content commitments. UMG routinely commits to pay agreed amounts to artists and other parties upondelivery of content or other products (“Creative talent and employment agreements”). Until the artist or the otherparty has delivered his or her content or until the recoupment of an advance, UMG discloses its obligation as an
off-balance sheet commitment;•
Certain contractual obligations relating to the UMG’s business operations, including leases and off-balance sheet
commercial commitments, such as long-term service contracts and purchase or investment commitments; and•Commitments related to UMG’s financing: term loan and drawn committed bank credit facilities.

Contractual obligations

The table below analyses UMG’s financial liabilities into relevant maturity groupings based on their contractual
maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12
months equal their carrying balances as the impact of discounting is not significant. Interest on long-term debt is basedon floating rate adjustments according to market expectations.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 273

FINANCIAL STATEMENTS

Total minimum future
payments as of

Minimum future payments as of December 31, 2022
Payments due in(in millions of euros)

Total

1 year

2-5 years

After 5 years

December 31, 2021

Borrowings and otherfinancial liabilities

2,506

1,272

640

594

2,618

Music royalties to artists andrepertoire owners

472

90

257

125

562

3,542

3,523

12

7

3,034

470

259

197

14

757

1,156

950

31

175

1,425

8,146

6,094

1,137

915

8,396

Contractual
content commitments

1,562

836

701

25

1,570

Total off-balance
sheet commitments

247

74

150

23

71

1,809

910

851

48

1,641

Total

9,955

7,004

1,988

963

10,037

Lease liabilities

Creative talent and employment
agreements and others
Other payables

Consolidated statement offinancial position items

Other commitments

Note 18. Financial assets and liabilities
The following table shows the carrying amounts and fair values of financial assets and liabilities according to their fairvalue hierarchy. Based on the nature, maturity or the magnitude of the amounts, UMG considers that the fair valueof trade and other receivables, short-term deposits, loans receivable, borrowings, trade and other payables are notmaterially different from their carrying value.
Fair value hierarchy is based on the transparency of the inputs used and is as follows:•
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),
being for example, price on the last transactions on over-the-counter (OTC) markets; and•Level 3: fair value measurement based on valuation techniques using inputs for the asset or liability that are notbased on observable market data.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 274

FINANCIAL STATEMENTS

December 31, 2022
Fair value(in millions of euros)

Financial assets at fair value through profit and loss
Listed equity securities

Unlisted equity securities
Warrants

Other financial assets

Trade and other receivables

Financial assets at fair value through othercomprehensive income
Listed equity securities through OCI

Carrying

Level 11amountLevel 2

597

597

-

-

-

51
1

-

Level 3

-

-

36

-

1

-

15
-

Unlisted equity securities

19

1

1

-

19

Trade and other receivables

2,013

-

-

-

Total financial assets

2,704

598

37

34

Trade and other payables(5,150)---Borrowings, excluding bank overdrafts and bonds(1,262)---Financial assets at amortised cost
Other financial assets

Financial liabilities at amortised cost
Bonds

Other non-current liabilities
Total financial liabilities

22

-

-

(1,004)

(987)

(437)

-

(7,853)

(987)

-

-

-

-

-

1 Includes transfer of €31 million of equity securities from level 2 to level 1.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 275

FINANCIAL STATEMENTS

December 31, 2021
Fair value
Carrying(in millions of euros)

Level 1amountFinancial assets at fair value through profit and loss
Listed equity securities

Unlisted equity securities

Level 2

1,413

1,413

19

-

44

Warrants

Other financial assets

68

Trade and other receivables-

Financial assets at fair value through othercomprehensive income
Listed equity securities through OCI

Level 3

-

-

44

-

57

-

19

-

-

11

-

-

Unlisted equity securities

16

-

-

-

16

Trade and other receivables

1,803

-

-

-

Total financial assets

3,395

1,413

120

27

(4,875)

-

-

-

(769)

-

-

-

Financial assets at amortised cost
Other financial assets-

32

Financial liabilities at amortised cost
Trade and other payables

Borrowings, excluding bank overdrafts and bonds-(2,582)Other non-current liabilities
Total financial liabilities--(8,226)

-

-

-

-

-

-

-

Listed equity portfolio
December 31, 2022
Numberof shares
held

Ownership
interest(inTencent
Music Entertainment

purchaseprice1,2

Stockmarketprice

Carrying

ChangeCumulativeovercaptialin valuevalue

the period(€/share)thousands)

Spotify

Averageunrealized

gain/(loss)3

Sensitivity

at +/- 10 pts(in millions of euros)

6,487

3.30%

6.58

74.41

483

(856)

440

+48/-48

12,246

0.76%

na

7.80

96

22

96

+10/-10

Other
Total

18

597

18

(816)

18

554

1 Includes acquisition fees and taxes.
2 na: not applicable.
3 Includes revaluation losses, net of liabilities, of €617 million in 2022 as recognized in Note 5.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 276

FINANCIAL STATEMENTS

December 31, 2021
Numberof shares
held

Ownership
interest(inTencent
Music Entertainment

purchaseprice1,2

Stockmarketprice

Carrying

ChangeCumulativeovercaptialin valuevalue

the period(€/share)thousands)

Spotify

Averageunrealized

gain/(loss)3

Sensitivity

at +/- 10 pts(in millions of euros)

6,487

3.37%

6.58

206.38

1,339

(330)

1,296

+134/-134

12,246

0.74%

na

6.04

74

(119)

74

+7/-7

1,413

(449)

1,370

Total

1 Includes acquisition fees and taxes.
2 na: not applicable.
3 Includes revaluation losses, net of liabilities, of €315 million in 2021 as recognized in Note 5.

Note 19. Equity
Share capital

UMG has an authorized share capital of €27,000 million divided into 2,700,000,000 ordinary shares with a nominal valueof €10 per share. On December 31, 2022, the issued and fully paid share capital consisted of 1,813,512,742 ordinary shareswith a nominal value of €10 per share (2021: 1,813,375,796 ordinary shares with a nominal value of €10 per share).

Additional paid-in capital

Additional paid-in capital represents the premium paid in excess of the par value of shares at the time of the issuance of
new shares.

Treasury shares

As at December 31, 2022, UMG held 214,235 shares (2021: 466,783 shares) as Treasury shares for the purpose of delivering
on a share-based executive incentive plan, refer to Note 23 for more details.

Retained Earnings
Dividend Distribution
On May 12, 2022 the shareholders approved a dividend distribution of €0.20 per ordinary share, corresponding to a total
distribution of €363 million, payable in June 2022.
On July 27, 2022 the directors approved an interim dividend distribution of €0.24 per ordinary share, corresponding to a
total distribution of €435 million payable in October 2022.
UMG plans to annually declare and pay dividends to all holders of the Shares on a pro-rata basis in two semi-annual
instalments, in the aggregate amount of no less than 50% of UMG's net profits realized during the relevant financial year,
subject to agreed non-cash items. UMG intends to pay an interim dividend in the fourth quarter of each financial year,
after the publication of the half-year figures of the Group, and a final dividend in the second quarter of the following
financial year, to be paid following approval of the UMG's financial statements at its Annual General Meeting.
A proposal will be submitted to the 2022 Annual General Meeting of Shareholders to pay a dividend of €0.27 per ordinary
share corresponding to a total distribution of €491 million, in cash, from the 2022 retained earnings, payable in Q2 2023.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 277

FINANCIAL STATEMENTS

Note 20. Expenses and income directly recognized in equity
Details of changes in equity related to other comprehensive income
Items not subsequently reclassified
to profit & loss

Actuarial gains/(in millions of euros)

Financialassets at(losses) related

fair value

definedotherto employee

benefit plans

Balance as of December 31, 2020

Expenses and income directly recognizedin equity
Tax effectBalance as of December 31, 2021

Expenses and income directly recognizedin equity
Tax effectBalance as of December 31, 2022

Items to be subsequently reclassified to profit & loss

Other

Foreigncomprehensive

currency

throughincome fromtranslation

comprenhensive

equity affiliates,

adjustments

netincomeOther

comprehensive
income

(42)

(15)

(418)

(8)

(483)

(6)

-

218

5

217

1

2

-

-

3

(47)

(13)

(200)

(3)

(263)

49

8

184

6

247

(13)

(11)

-

(5)

-

(16)

-

3

(13)

(29)

Note 21. Provisions
Year ended December 31,(in millions of euros)

Post-retirement employee benefits
Royalty audit claims

Deferred employee compensation
Restructuring costs
Litigations
Other

Provisions

Deduction of current provisions
Non-current provisions

Note

2022

2021

22

166

220

31

27

126
16
5

50

116
12
4

56

394

435

291

355

(103)

(80)

Based on the historical utilisation rate, UMG expects the royalty audit claims provision will be utilized mainly within thenext 5 years.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 278

FINANCIAL STATEMENTS

Movements in provisions(in millions of euros)

Restructuring

Litigation

Royalty audit claims

Other

Balance as at January 1, 2022

12

4

116

Utilizations

(18)

-

(19)

Changes in foreign currencytranslation adjustments(1)

1

Balance as at December 31, 2022

16

Non-current-

Additions26

Releases

Current

56

188

(9)

(46)

5

21

26

5

126

50

197

5

65

44

114

-

(3)

-

16

Total

-

39

(10)

(15)

(8)

61

6

55

(26)

83

Note 22. Post-retirement employee benefits
In accordance with the laws and practices of each country in which it operates, UMG participates in, or maintains,
employee benefit plans providing retirement pensions, post-retirement health care, life insurance and other postemployment benefits to eligible (former) employees and such of their beneficiaries who meet the required conditions.
Post-retirement benefits are provided for substantially all employees through defined contribution plans, which areintegrated with local social security, or defined benefit plans, which are generally managed via group pension plans.
The plan funding policy implemented by UMG is consistent with applicable government funding requirements andregulations. Refer to Note 4 for the contribution to defined contribution plans. Post-employment benefits covered in thisnote relate to defined-benefit pension and other post-retirement defined benefit plans, including medical plans and life
insurance. The benefits provided by these plans are based on employees’ years of service and compensation levels.
Refer to the table below for the present value of the net defined benefit obligations and plan assets per country as at
31 December.
2021

2022
(in millions of euros)

Fair value of

Obligation

Germany

134

United States

19

Total

194

United Kingdom
Other

Net obligation/plan assets

1

40(asset)Fair value of

Obligation

(2)

132

183

-

19

20

(41)

153

-

(39)

1
1

Net obligation/plan assets(asset)

(1)

182

-

20

(219)

208

171

(169)

53

(49)

427

2
4

Germany

The post-retirement benefit plans in Germany aim to provide pension benefits to eligible (former) employees and suchof their beneficiaries who meet certain conditions. The total obligation as presented above includes multiple plans, fromwhich three are material. These plans are closed to new entrants since 2003 and earlier. In accordance with current
regulations, these plans are not funded and are not covered by the plan assets. The main risks for UMG relate to changes
in discount rates.

United Kingdom

In 2021, the largest post-retirement benefit plan related to pension benefits in the United Kingdom for the eligible
participants. In December 2017, the fund purchased a buy-in insurance policy, covering pension benefits. This insurance

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 279

FINANCIAL STATEMENTS

policy is an asset to the plan. In late 2021, UMG paid the true-up premium to the insurance company to complete theplan buyout. Following the completion of the final administrative actions, the final settlement of the scheme has beenreflected in 2022.

United States

The defined benefit liability in the United States mainly relates to the post-retirement medical care benefits. Postretirement medical benefit plans in the United States are not covered by plan assets in accordance with local laws
and practices.

Cash flow impact for 2023

In 2023 UMG expects a cash outflow of €14 million in relation to all defined benefit plans.

Net defined benefit liability

Movements of the net defined benefit obligation for the year ended on December 31, are presented in the table below.
2021

2022

(in millions of euros)

Note

Opening balance

Current service cost
Other

Interest cost

Expected return on plan assets

Impact on other financial income

Included in the statement of profit
or loss

5

4

Actuarial losses/(gains) related to:Experience adjustments
Financial assumptions

Included in othercomprehensive income

Contributions by employers

20

assets

-

-

(1)

1

-

-

3

2

1

3

3
6
-

-

3
-

6

2
1
5
-

-

2
1
5

6

(3)

(3)

(3)

3

5

(3)

(3)

(3)

9

(3)

6

7

(2)

5

10

51

61

4

(1)

3

1

-

1

-

-

-

(111)

(100)

51

(49)

7

(1)

6

-

(12)

(12)

-

(19)

(19)

12

-

(17)

17

-

153

427

(219)

(12)

194

(41)

-

38

(2)
9

-

2

(9)

3

-

208

219

156

provisions for employee
benefit plans

3

2

-

9

assets related to employee
benefit plans(asset)-(9)wholly unfunded benefits1

assetsNet

obligation/

216

Foreign currency and otherwholly or partly funded benefitsof plan

(207)

121

of which

Fair value

423

(121)

Closing balance

Obligation(asset)Benefits paid by the fund

Benefits paid by the employerNetobligation/

208

(111)

Demographic assumptionsof plan

(219)

-

5

Fair value

427

3(Gain)/loss on settlements

Impact on selling & administrative

Obligation

208
(13)

(12)

166

220

1 Included a current liability of €14 million as of December 31, 2022 and €15 million as of December 31, 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 280

FINANCIAL STATEMENTS

Assumptions used in the valuation of the net defined benefit liability

The mortality tables used for UMG’s major defined benefit schemes in Germany are Richttafeln 2018 G K. Heubeck.
Other key assumptions used in the valuation of the net defined benefit plans liability are: rate of compensation increase,
discount rate, and expected return on plan assets. The assumptions used to calculate the defined-benefit obligation as ofDecember 31 were as follows:

Germany

Discount rate

Rate of compensation increase(weighted average)

United Kingdom

Weighted average ofUnited States

all plans

2022

2021

2022

2021

2022

2021

2022

2021

3.75%

0.75%

4.25%

2.00%

5.00%

3.00%

3.58%

1.30%

2.50%

1.75%

na

na

na

na

1.93%

0.90%

10.4

16.6

Duration of the benefit obligation(in years)
na: not applicable.

During 2022, worldwide interest rates increased significantly and this has been reflected in higher discount rates. As
such, most defined benefit plans experienced large gains on the financial assumptions.
A 50 basis point increase (or a 50 basis point decrease, respectively) to the 2022 discount rate would have led toa decrease of €0.7 million in pre-tax expense (or an increase of €0.8 million, respectively) and would have led to adecrease in the defined benefit obligation of €9.3 million (or an increase of €10.1 million, respectively), assuming all otherassumptions remain unchanged.

Pension plan assets allocation
Year ended December 31,(in millions of euros)

2022

2021

Insurance contracts

55%

89%

Debt securities

14%

3%

Equity securities

Diversified funds
Cash and other
Total

20%

4%

0%

11%

100%

1%
3%

100%

Note 23. Share-based compensation plans
In May 2022, UMG received formal approval from its shareholders to implement an equity plan, the UMG Global Equity
Plan. Under the plan, Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) are granted to senior executives
to align the interests of the employees of UMG with its shareholders’ interests by providing them with an additional
incentive to improve UMG's performance and increase its share price on a long-term basis. In addition, the Annual
Incentive Plan (AIP) for these senior executives was modified such that all or a portion of the payment under the plan
may be settled in equity at the discretion of UMG.

UMG Restricted Stock Units (RSUs)

Starting in the last quarter of 2022, and continuing for each year of service under the term of their contracts, senior
executives are granted RSUs being a right to receive shares upon vesting. The awards have vesting periods of 2.5 to 8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 281

FINANCIAL STATEMENTS

years and will vest in 3 equal instalments, if the service condition is fulfilled. The total number of RSUs granted was
7.29 million and the grant date weighted-average UMG N.V. share market price was €19.44.
In addition, a one-off RSU award was granted to senior executives with on average 18 months vesting period in 2 equal
instalments. The total number of these RSUs granted was 9.43 million and the grant date weighted-average UMG N.V.
share market price was €19.84.
There was a small number of RSUs granted with slightly different service conditions. The grant date weighted-average
UMG's share market price was €19.33 per share corresponding to the total fair value of €6 million of such awards.
The share rights are dividend-bearing during the service period. The total expense for these awards recognised in 2022
was €74 million and the total equity reserve at year end was €78 million.

UMG Performance Stock Units (PSUs)

Starting in the last quarter of 2022, and continuing for each year of service under the term of their contracts, senior
executives are granted PSUs being a right to receive shares upon vesting. The vesting of these rights is subject to theperformance of UMG or operating units within UMG against specific internal and market performance conditions overa three-calendar year period and continued service over three years by the employee. The share rights are dividendbearing during the performance period.
The total number of shares delivered with respect to these PSU’s can range from 0% to 200% of the number of
PSUs granted based on the performance during the performance period. Performance conditions are tailored to eachparticipant. The performance conditions include target compound annual growth rate for revenues (Revenue CAGR),
adjusted earnings before interest, taxes, depreciation, and amortization (Adjusted EBITDA CAGR) and relative total
shareholder return (TSR).
The total number of PSUs granted was 1.72 million and the grant date weighted-average UMG N.V. fair value per share was€21.37 and incorporates a market performance condition.
In addition, a small number of PSU awards with slightly different service and performance conditions were granted during2022. The estimated grant date UMG's share market price is €22.51 per share corresponding to the total fair value of€24 million of such awards.
The total expense and equity reserve for the above awards recognised in and as at year end 2022 was €5 million.

Annual Incentive Program (AIP)

In the last quarter of 2022, the AIP for senior executives, which was previously settled only in cash and accrued
throughout the year, was modified to allow UMG the choice of whether to settle in cash or shares of UMG N.V. or a
combination of cash and shares. Such modification did not change the fair value of the award compared to the previously
accrued AIP payable. UMG expects to settle 50% of the 2022 AIP in cash and 50% in shares. UMG has a constructive
obligation to settle 50% of the award in cash. The total AIP expense for the full calendar year starting January 1, 2022,
being the start of the service period for the award, was €42 million with the cash-settled AIP accrual amounting to 50% of
the total expense.
The vesting conditions of the AIP awards are a one-year service period and certain internally measured performance
conditions including Adjusted EBITDA and cash flow from operations (CFFO). The amount received can vary between 0%
and 200% of the on-target amount based on the actual performance against these performance criteria.
The estimated grant date value is based on UMG's share market price at €22.51 per share corresponding to the total fairvalue of €21 million for the equity-settled portion of the total AIP.

Estimated future tax obligation

An estimate of the amount that UMG expects to transfer to the tax authority to settle the employees’ tax obligation in
relation to all RSU, PSU and AIP was €51 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 282

FINANCIAL STATEMENTS

All Employee Award

In October 2022, each eligible employee of UMG was granted 100 shares to be vested at the end of the one year service
period. The grant date share price was €18.85 per share. A total of 0.88 million shares was granted. A total expense andequity reserve of €4 million was recognised in and as at year end 2022.

UMG shares granted upon separation from Vivendi and direct listing on the Euronext Amsterdam

In 2021, upon listing of UMG on the Euronext Amsterdam, a number of UMG executives were granted 3,181,754 UMG
shares in total pursuant to the award by Vivendi with vesting conditions related, amongst other things, to the UMG’sadmission to the Euronext Amsterdam. The grant date fair value of these shares was estimated at €16.54 per share,
primarily based on the enterprise value of €30,000 million determined in connection with the sale of an additional 10%of the share capital of Universal Music Group (UMG) to a Tencent-led consortium in December 2020. These awards fully
vested at the listing date and were settled in UMG’s shares held by Vivendi post-separation. UMG recognised an expenseof €45 million in profit and loss for the year ended December 31, 2021. The awards were fully vested in 2021 and hence
there was no further cost of this award in 2022.
A total of 762,095 UMG shares, constituting a recognition award, were granted and vested to the Executive Vice President,
Chief Financial Officer and President of Operations, Boyd Muir immediately after the UMG’s listing date. These shares
will settle over three years, from which one third was settled in 2021, a further third was settled in 2022 on the firstanniversary of UMG listing and the final third is expected to settle on the second anniversary of the UMG listing. The
grant date fair value of these shares was estimated at UMG’ share market price as of that date and was €25.25 per share.
UMG recognised an expense of €19 million in profit and loss for the year ended December 31, 2021. The awards were fully
vested in 2021 and hence there was no further cost of this award in 2022. There is a total equity reserve of €11 million asat year end 2022 (2021: €15 million).

Vivendi Share Awards

Prior to the separation, Vivendi annually granted performance awards to certain UMG executives. These awards aresettled with Vivendi’s own shares or cash. Subject to certain performance conditions, these performance awards vest at
the end of a three-year service period and are settled after an additional two-year retention period. Vivendi continued tomaintain performance share plans for UMG participants in 2021 and 2022. The total expense recognised by UMG in 2022
in relation to these plans was €1 million (2021: €1 million).

UMG-Vivendi Performance Awards

In 2021, to compensate for any effect of the distribution on the Vivendi share price, UMG announced that it will issue
its own shares for every Vivendi share earned by the UMG participants of the Vivendi’s performance share plans, whichwere granted in 2017 – 2020, while UMG was part of Vivendi. The amount of Vivendi shares (and accordingly UMG sharesin 1-to-1 ratio) estimated to be vested for the 2020 ongoing plan will be further adjusted at the end of the original
performance period of Vivendi’s performance share plans. In relation to this award a total expense of €2 million wasrecognised in 2022 (2021: €14 million) and total equity reserve of €15 million (2021: €14 million) as at year end 2022.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 283

FINANCIAL STATEMENTS

Note 24. Related parties
UMG’s related parties include the Corporate Executives and non-executive board members

Corporate Executive compensation

As of December 31, 2022 and 2021, UMG's Corporate Executives are comprised of 9 (2021: 9) members, of which 2 (2021: 2)
were Executive Directors on the UMG N.V. board. The Corporate executives are as defined in the Appendix of the Annual
Report. The Executive directors are also members of the UMG N.V. board. Their aggregate compensation is presented in
the table below.
Year ended December 31, 2022
(in millions of euros)

Other Corporate
Executives

Executive

Corporate

Directors

Executives

Short-term employee benefits

18

50

68

Other long-term benefits

-

-

-

Post-employment benefits-

Termination benefits--

Share-based payments-

33

Corporate Executives

-

-

51

33

50

101

Year ended December 31, 2021
(in millions of euros)

Other Corporate
Executives

Executive

Corporate

Directors

Executives

Short-term employee benefits

30

43

73

Other long-term benefits

-

-

-

Post-employment benefits
Termination benefits

Share-based payments
Corporate Executives

-

45

75

-

2

45

-

47

120

Refer to the Remuneration Report section in the Annual Report for more detail.

Non-executive board compensation

As of December 31, 2022 UMG's non-executive board received director fees of €1 million (2021: €0.2 million).

Other related-party transactions

Other related parties include:•companies fully consolidated by UMG. The transactions between these companies have been eliminated for the
preparation of UMG’s Annual Financial Statements;•
companies over which UMG exercises a significant influence or has joint control;•
all companies that are controlled or jointly controlled by Corporate Executives or their close relatives;•
minority shareholders exercising a significant influence over UMG’s subsidiaries; and•all companies that have a significant influence over UMG.
As of December 31, 2022, transactions with Vivendi are still qualified as transactions with related parties under IAS
24. Commercial relationships among UMG and Vivendi subsidiaries prior and upon the separation, are conducted on
an arm’s length basis on terms and conditions similar to those which would be offered by third parties. During 2021,

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 284

FINANCIAL STATEMENTS

a portion of the management fees, share-based compensation plans and other costs of Vivendi SE’s headquarters isallocated to UMG.
UMG distributes its cash surpluses to shareowners through dividends and share capital reductions (please refer toNote 19 Equity). Vivendi and UMG entered into a transition and services agreement in connection with the separation, theterms of which Vivendi and its subsidiaries will provide to UMG, and UMG will provide to Vivendi and its subsidiaries, on
an interim, transitional basis various services as applicable, including but not limited to: (i) a limited selection of treasury
related services and applications; (ii) a limited selection of accounting services and accounting software related services
and applications; (iii) taxation related services; and (iv) certain employee related principles in connection with the direct
listing on the Euronext Amsterdam.
The balances and transactions with the parties described above are summarised in the table below:
December 31, 2022
(in millions of euros)

Associates

Shareholders

Other

Total

Statement of Financial Position
AssetsCash and cash equivalents

-

-

-

-

-

Trade accounts receivable

49

6

Royalty advances

-

-

-

55

-

25

25

-

-

1

-

1

275

13

-

288

Selling, general and administrative expenses

(2)

(3)

Financial expenses-

Loans receivable
Liabilities

Long-term borrowings and other financial liabilities
Trade accounts payable

17

-

17
-

Statement of Profit or Loss
Revenue

Cost of revenues

Financial income

Services billed by Shareholders included in profit and loss
Management fees

Share-based compensation plans

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

-

-

(4)

-

-

-

-

-

-

(1)

-

-

(4)

(5)
-

(1)

MUSIC IS UNIVERSAL Annual Report 2022 | 285

FINANCIAL STATEMENTS

December 31, 2021
(in millions of euros)

Associates

Shareholders

Other

Total

Statement of Financial Position
AssetsCash and cash equivalents--

Trade accounts receivable31

4Royalty advances-

Loans receivable
Liabilities

Long-term borrowings and other financial liabilities
Trade accounts payable

-

-

-

-

-

35

-

21

21

-

-

-

-

-

-

-

(2)

(12)

(14)

252

10

-

262

-

(14)

Statement of Profit or Loss
Revenue

Cost of revenues

-

(12)

(9)

-

2

-

Selling, general and administrative expenses(4)

Financial expenses

-

(10)

-

-

Financial income

Services billed by Shareholders included in profit and loss
Management fees

Share-based compensation plans

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

-

(10)

(1)

(21)
2

-

(10)

-

-

-

(1)

MUSIC IS UNIVERSAL Annual Report 2022 | 286

FINANCIAL STATEMENTS

Note 25. Litigation
In the normal course of its business, Universal Music Group is subject to various lawsuits, arbitrations andgovernmental, administrative or other proceedings (collectively referred to herein as “Legal Proceedings”). However, basedon the information currently available, UMG believes that the outcome from these Legal Proceedings will not have amaterial impact on UMG's consolidated results of operations and financial position.

Note 26. List of consolidated entities
The Consolidated financial statements comprise the assets and liabilities of approximately 365 legal entities. Set out
below is a list of material subsidiaries, representing more than 75% of UMG's consolidated sales.
All the entities are 100% owned.

Legal entity namePrincipal country of business

Universal Music Group N.V.

Netherlands

Universal Music Group, Inc.

United States

UMG Recordings, Inc.

United States

Universal Music Group Holdings, Inc.

United States

Universal International Music B.V.

Netherlands

Universal Music Entertainment GmbHGermany

Universal Music LLC

Japan

Universal Music Holdings Ltd.

United Kingdom

Universal Music Group Treasury S.A.S.

France

UMG does not have subsidiaries that have non-controlling interests that are material for its Consolidated
financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 287

FINANCIAL STATEMENTS

Note 27. Statutory auditors fees
Fees for audit services include the audit of the financial statements of the UMG and its subsidiaries. Fees for other audit
services include review of interim financial statements, sustainability, and other audits. Fees for tax services include tax
compliance and tax advice. Fees for other non-audit services include agreed-upon procedures and advisory services.
Fees for tax and other non-audit services are related to the network outside the Netherlands and are in accordance withlocal independence regulation.
Year ended December 31,(in millions of euros)

2022
Deloitte

2021
Ernst & Young

Deloitte

Ernst & Young

Accountants B.V.

Accountants LLP

Accountants B.V.

Accountants LLP

Audit of UMG and its subsidiaries

4

6

4

4

Tax services

-

-

-

-

Other statutory services

Other non-audit services
Total1

-

4

-

6

-

-

-

-

4

4

1 Total fees charged by the Dutch organization of Deloitte and Ernst & Young were €2 million (2021: €1 million) and €2 million (2021: €2 million) respectively.

Note 28. Audit exemptions
UMG has provided guarantees to the following subsidiaries, incorporated in the Netherlands, under the registerednumber indicated, under section 403 of Book 2 of the Dutch Civil Code. As these companies’ financial data is consolidated
within these financial statements, the Dutch entities are allowed to prepare abridged financial statements which are
exempt from publication and audit.

Name

Company
NumberUniversal International Music B.V.

31018439

Universal Music Publishing B.V.

32101966

Universal Music Publishing International B.V.
CMHL B.V.

Universal Production Music B.V.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

31037866
32140273
85798479

MUSIC IS UNIVERSAL Annual Report 2022 | 288

FINANCIAL STATEMENTS

Note 29. Subsequent events
In January 2023, UMG entered into an agreement with the owners of the Capitol Records building (the Property). As partof the agreement UMG contributed €37 million as a capital contribution and lent €60 million to the venture while theProperty owners contributed the Property into the venture.
In February 2023, the Revolving Credit Facility agreement was amended with a new maturity date being April 26, 2028.
Around the date when these financial statements were authorised for issue, UMG was in the process of signing a new
short-term floating rate €500 million revolving credit facility.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 289

Company Statements
Contents of Company Statements
Company Statement of Profit or Loss and Other Comprehensive Income

291

Company Statement of Cash Flows

293

Company Statement of Financial Position

Company Statement of Changes in Equity

Notes to the Company Financial Statements
Note 1.

General information

Note 3.

Dividend income

Note 2.
Note 4.
Note 5.
Note 6.
Note 7.
Note 8.
Note 9.

Note 10.
Note 11.
Note 12.
Note 13.

Basis of preparation

292
294

295

295
295

299

General and administrative expenses

299

Investments in subsidiaries

300

Cash position and borrowings

301

Financial income and expenses

Current and non-current financial assets
Contractual obligations and other commitments
Equity

300

301
303

304

Related parties

307

Subsequent events

308

Statutory audit fees

307

FINANCIAL STATEMENTS

Company Statement of Profit or Loss andOther Comprehensive Income
Year ended December 31,(in millions of euros)

Dividend income

General and administrative expenses
Operating profit

Financial income

Financial expenses

Profit/(loss) before income taxes

Note

2022

2021

3

-

785

(4)

762

4
5
5

(4)

36

(45)

(23)
13

(10)

(13)

765

Net profit/(loss) after income taxes

(16)

765

Net profit/(loss) attributable to equity holders of the Company

(16)

765

Income taxes

Total comprehensive income attributable to equity holders of the Company

COMPANY STATEMENT OF PROFIT OR LOSS AND OTHERCOMPREHENSIVE INCOME

(3)

(16)

-

765

MUSIC IS UNIVERSAL Annual Report 2022 | 291

FINANCIAL STATEMENTS

Company Statement of Financial Position
Year ended December 31,(in millions of euros)

Note

2022

2021

-

1

33,00033,00034,97735,180

333

262

343

315

TOTAL ASSETS

35,32035,495

Share capital

18,135

18,134(5)(12)

Property, plant and equipment
Right of use assets

Investments in subsidiaries

Non-current financial assets
Non-current assets

Current financial assets

Cash and cash equivalents
Current assets

6
7
7
8

Additional paid-in capital

1,976

10

14,935

Treasury shares

Retained earnings

1

(721)

1

2,178

53

14,941(8)

Total equity

10

32,34433,055Long-term borrowings

8

1,112

1,848

1,113

1,849

1,856

584

Current liabilities

1,863

591

Total liabilities

2,976

2,440

TOTAL EQUITY AND LIABILITIES

35,32035,495Long-term lease liabilities
Non-current liabilities

Short-term borrowings

Trade and other payables

COMPANY STATEMENT OF FINANCIAL POSITION

8

1

7

1

7

MUSIC IS UNIVERSAL Annual Report 2022 | 292

FINANCIAL STATEMENTS

Company Statement of Cash Flows
Year ended December 31,(in millions of euros)

Note

2022

2021

Operating profit

(4)

762

Adjustments for accrued interest(3)

3Operating activities
Changes in net working capital-

7

Net cash provided by/(used for) operating activities before income tax paid

(7)

772

Net cash provided by/(used for) operating activities

(10)

772

-

(1)

Income tax paid

(3)

Investing activities

Capital expenditures

Increase in financial assets

Proceeds from financial assets
Interest received

7
7

Net cash provided by/(used for) investing activities
Financing activities

Distributions to equity holders

10

Proceeds from borrowings

8

Interest paid

8

Transactions with shareowners
Repayments of borrowings
Net cash provided by/(used for) financing activities

8

Change in cash and cash equivalents
Cash and cash equivalents
At beginning of the period
At end of the period

COMPANY STATEMENT OF CASH FLOWS(5)(2,368)

34

7

200

8

-

229

(2,362)

(798)

(785)

(798)

5,573

(5,018)
(19)

(785)

2,842

(410)
(4)

(262)

1,643

53

-

(43)

8

-

10

53

53

MUSIC IS UNIVERSAL Annual Report 2022 | 293

FINANCIAL STATEMENTS

Company Statement of Changes in Equity
Year ended December 31, 2022
Numberof shares

Additional
paid-

Treasury

Retained

Share capitalin capitalsharesearnings

Total equity

1,813,376

18,134

14,941(12)(8)

33,055Net loss

-

-

-

-

(16)

(16)

TOTAL COMPREHENSIVE INCOME

-

-

-

-

(16)

(16)

(in
(in millions of euros)

Note

thousands)

BALANCE AS OF DECEMBER 31, 2021

Dividends paid

10

-

-

-

-

(798)

(798)

Share-based compensation plans

10

137

1

(6)

7

101

103

TOTAL CHANGES OVER THE PERIOD

137

1

(6)

7

(713)

(711)

BALANCE AS OF DECEMBER 31, 2022

1,813,513

18,135

14,935(5)(721)

32,344

Year ended December 31, 2021
Numberof shares

Additional
paid-

Treasury

Retained

Share capitalin capitalsharesearnings

Total equity

100

-

-

-

-

-

Net profit

-

-

-

-

765

765

TOTAL COMPREHENSIVE INCOME

-

-

-

-

765

765

(100)

-

-

-

-

-

-

-

-

-

(785)

(785)

1,847,874

18,47914,521--33,000(34,633)

(346)

346

-

-

-

135

1

29

(12)

12

30

-

-

45

-

-

45

TOTAL CHANGES OVER THE PERIOD

1,813,276

18,134

14,941(12)(8)

33,055BALANCE AS OF DECEMBER 31, 2021

1,813,376

18,134

14,941(12)(8)

33,055(in(in millions of euros)

Note

thousands)

BALANCE AS OF DECEMBER 31, 2020

Share cancellation
Dividends paid

10

Contributions by shareowners of their UIM B.V.
and UMG Inc. shares to UMG B.V.
Reduction in number of shares and effective
capital contribution
Share-based compensation plans

10

Share-based compensation plans settled
by Vivendi

COMPANY STATEMENT OF CHANGES IN EQUITYMUSIC IS UNIVERSAL Annual Report 2022 | 294

FINANCIAL STATEMENTS

Notes to the Company
Financial Statements
Note 1. General information
Universal Music Group N.V. (“the Company”) is a public company with limited liability incorporated under the laws of theNetherlands and listed on Euronext Amsterdam under the ticker symbol ‘UMG AS’.
The Company was formed to ultimately act as a holding company for Universal Music Group (“UMG”).
The Company’s official seat (statutaire zetel) is in Amsterdam, The Netherlands, and the Company’s principal office islocated at 's-Gravelandseweg 80, 1217 EW Hilversum The Netherlands. The Company is registered with the Dutch Chamberof commerce under number 81106661.
Incorporation
The Company was incorporated on December 4, 2020. On February 26, 2021, the Company obtained all of the shares of
Universal International Music B.V. and Universal Music Group, Inc. from Vivendi and the consortium led by Tencent by
issuing new shares, to its shareholders. Refer to the Statement of Changes in Equity.
This internal reorganization of the shareholding structure of UMG was scheduled as part of the agreement signed in
December 2019 by Vivendi and the Tencent-led consortium, a prerequisite for the company’s planned listing on thestock market.
The prospectus relating to the admission to listing and trading of the shares of the Company on Euronext Amsterdam wasapproved by the Dutch Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) on September 14, 2021
and is available on the Company’s websites.
On September 21, 2021, the shares of the Company started trading on the regulated market of Euronext Amsterdam.

Note 2. Basis of preparation
2.1 Statement of compliance

For the year ended December 31, 2022, the Company have prepared its financial statements in accordance with theInternational Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB), IFRS as
endorsed by the European Union (EU) and with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code. The
Company financial statements are prepared by the Board of Management of the Company and authorized for issue on
March 30, 2023 and will be submitted for adoption to the Annual General Meeting of Shareholders on May 11, 2023.

2.2 Basis of measurement

The Company financial statements were prepared using the same accounting policies as set out in the notes tothe consolidated financial statements at December 31, 2022 (the “Consolidated financial statements”), except for themeasurement of the investments as presented under Note 2.6 in the Company financial statements. The accounting
policies were consistently applied to all periods presented.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 295

FINANCIAL STATEMENTS

2.3 Foreign currency translation

The Company financial statements are presented in millions of euros, unless stated otherwise. The functional currency of
the Company is euro.

Foreign currency
Foreign currency transactions are initially recorded in the euros 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 the exchange rate prevailing on that date with foreign currency differences recorded to profit and loss.

2.4 Recent accounting developments

The 2022 accounting policy changes originated from the IFRS amendments, which became effective as at 1 January 2022,
however, the impact from their adoption on the Company financial statements of UMG N.V. was not material. For the fulllist of such IFRS amendments refer to the Consolidated financial statements.
The Company applied IFRS Practice Statement 2 - Disclosure of Accounting Policies in its financial statements. UMG
N.V. used the guidance of the Practice Statement 2 to optimise its material accounting policy information disclosure toinclude only material accounting policy information.
New IFRS standards and IFRIC interpretations in issue but not yet effective
The new and amended standards and interpretations that are issued up to the date of issuance of the Company's
financial statements which are effective for the periods starting January 1, 2023 are disclosed below. The Company
intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.
• IFRS 17 (including the June 2020 amendments to IFRS 17) Insurance Contracts• Amendments to IAS 8 Definition of Accounting Estimates• Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The Company does not expect that the adoption of all other the standards and amendments listed above will have amaterial impact on the financial statements of the Group in future periods.

2.5 Significant judgements and estimates

The preparation of Company financial statements in compliance with IFRS requires management to make certain
judgements and estimates that they consider reasonable and realistic. Although these judgements and estimates are
regularly reviewed by management, based, in particular, on past or anticipated achievements, facts and circumstances
may lead to changes in these judgements and estimates which could have an impact on the reported amount of groupassets, liabilities, equity or profit.
The main significant judgements relate to the measurement of:•Investment in subsidiaries: valuation method used to identify the recoverable amount of the asset, refer to Note 2.7;
The main significant estimates relate to the measurement of:•Investments in subsidiaries: assumptions on the recoverable amount of the asset, refer to Note 2.7;•
Expected credit losses on loans receivable and financial guarantees: estimation of loss allowance requires
assessment of the probability of default on the part of the borrower on a prospective basis. Reasonable forwardlooking 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 is used to assess whether there is significant increase in credit risk, refer to Note 2.9 and 2.11.
For more on financial guarantees, refer to note 2.14.

2.6 Investments in subsidiaries and dividend income

Investments in subsidiaries are stated at cost, less impairment.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 296

FINANCIAL STATEMENTS

Dividend income from the Company's subsidiaries is recognized in the statement of profit or loss when the right toreceive payment is established.

2.7 Impairment of investments in subsidiaries

At each reporting date, the Company assesses whether there is an indication that investments in subsidiaries may
be impaired. If any such indication exists, the Company makes an estimate of the asset's recoverable amount. The
recoverable amount is defined as the higher of the fair value of the investment less costs to sell and its value in
use. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and iswritten down to its recoverable amount. The recoverable amount of investments in subsidiaries are determined basedon discounted cash flow models and key assumptions are disclosed in Note 8 of the Consolidated financial statements.
Any resulting impairment is recognized in the income statement. An assessment is made at each reporting date as
to whether there is any indication that previously recognized impairment losses may no longer exist or may havedecreased. If such an indication exists, the Company makes an estimate of the recoverable amount. A previously
recognized impairment loss is reversed only if there has been a change in the estimates used to determine theasset's recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amountof the asset is increased to its recoverable amount, up to a maximum of the carrying amount that would have been
determined if no impairment loss had been recognized for the asset in prior periods. Such a reversal is recognized in theincome statement.

2.8 General and administrative expenses

General and administrative expenses primarily include salaries and employee benefits, consulting and service fees,
overhead recharges, insurance costs, travel and entertainment expenses, administrative department costs, provisions
for receivables and other operating expenses and are expensed when incurred.

2.9 Loans receivable

Loans receivable are initially recognized at fair value and subsequently measured at amortized cost using the effective
interest rate method, less any value allowances.
The Company assesses the expected credit loss associated with the loans receivable on a prospective basis. A loss
allowance for expected credit loss based on probability of default 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 sinceinitial recognition. To assess whether there has been a significant increase in credit risk, the Company compares thecredit 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 meetits obligations.

2.10 Cash and cash equivalents

Cash and cash equivalents include all cash balances and short-term highly liquid investments with an original maturityof three months or less that are readily convertible into known amounts of cash.
There are no liens, pledges, collateral or restrictions on cash and cash equivalents. Cash and cash equivalents do notinclude amounts in UMG cash management pools.

2.11 Financial liabilities

A liability is recognized when the Company becomes party to a contract. Financial liabilities of the Company are allclassified as subsequently measured at amortized cost and measured using the effective interest rate method.
Transaction costs relating to financial liabilities
Non-recurring costs incurred at inception of financial liabilities are loan origination fees by substance and are directly
attributable to the issue of the financial liability and would not be otherwise incurred. These costs also form integral partof the effective interest.
These costs are to be capitalised and recognised going forward as an adjustment to the effective interest rate forthe bonds.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 297

FINANCIAL STATEMENTS

2.12 Related parties

A related party is a person or an entity that is related to UMG. These include both people and entities that have, orare subject to, the influence or control of UMG (e.g. key management personnel). Transactions with related parties areaccounted for in accordance with the requirements of relevant IFRSs and take into account the substance as well as thelegal form.

2.13 Contingent assets and liabilities

Contingent liabilities are possible or present obligations of sufficient uncertainty that do not qualify for recognition asa provision, unless it is assumed in a business combination. Contingent liabilities are reviewed continuously to assess
whether an outflow of resources has become probable.

2.14 Financial guarantees

Financial guarantee is a contract that requires the issuer to make specified payments to reimburse the holder for a loss
it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Issued financial guarantees are initially recognised at fair value and are subject to the expected credit loss model, and acredit loss is recognized for expected cash shortfalls.
Non-financial guarantees are accounted for as a contingent liability until such time it becomes probable that UMG will be
required to make a payment under the guarantee.

2.15 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 collectionof property, plant and equipment, and the rehabilitation of the physical location resulting from the incurred obligation.
When property, plant and equipment include significant components with different useful lives, they are recorded anddepreciated separately. Depreciation 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.

2.16 Leases

The lease contracts for the Company correspond to real estate leases for which the Company is the lessee. Real estateleases for which the Company is the lessee are recorded at the commencement date and result in the recognition of alease liability equal to the present value of future lease payments against a right-of-use asset relating to leases.
Right-of-use assets
Right-of-use assets are initially measured at cost, less any accumulated depreciation and impairment losses, andadjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of leaseliabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement dateless any lease incentives received. The recognized right-of-use assets are depreciated on a straight-line basis over the
shorter of its estimated useful life and the lease term. Amounts received for leasehold improvements are depreciatedover a period not longer than the lease term. Right-of-use assets are subject to impairment.
Lease liabilities
The Company recognizes lease liabilities initially measured at the present value of future lease payments over the lease
term. The lease payments include in-substance fixed payments (less any lease incentives), variable lease paymentsthat depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include payments of penalties for terminating a lease, if the Company has the option to terminate and it
is reasonably certain that this option will be exercised. In calculating the present value of lease payments, the Company

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 298

FINANCIAL STATEMENTS

uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is notreadily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the in-substance fixed lease payments.
Significant judgements in accounting for leases
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by
an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate
the lease, if it is reasonably certain not to be exercised. When determining the lease term, the Company considers all
relevant facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise atermination option.

Note 3. Dividend income
Dividend income for the year ended December 31, 2022 amounted to €0 (2021: €785 million and related to dividends from
Universal International Music B.V.).

Note 4. General and administrative expenses
General and administrative costs consisted of the following:
Year ended December 31,(in millions of euros)

2022

2021

Salaries

96Social security and other employment expenses

1-

PensionWages and expenses

Legal and professional fees1
Audit fees

-

-

10

6

4

3

7

5

Other2(17)

Annual average number of full-time equivalent employees, of which none worked fromoutside of the Netherlands.

4

23

35

27

Total

9

1 Legal and professional fees mainly relate to listing fees and expenses for legal, financial and consulting services.
2 Other consists of employee and service costs charged to and from subsidiaries.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 299

FINANCIAL STATEMENTS

Note 5. Financial income and expenses
Financial income and expenses consisted of the following:
Year ended December 31,(in millions of euros)Interest income from intercompany loans

Financial income

2022

2021

36

13

36

Interest expense on borrowings(36)

Financial expenses(45)

Cost of finance

13

(6)

(9)

(4)

(10)

Note 6. Investments in subsidiaries
Investments in subsidiaries consist of the following investments:
Net carrying value
Year ended December 31,(in millions of euros)

Voting % interest

Universal International Music B.V.; Hilversum; The Netherlands

100

Universal Music Group, Inc.; Santa Monica; USA

100

2022

2021

18,15018,15033,00033,00014,85014,850

Net result and equity as per most recent adopted financial statements:

Universal International Music B.V.1
Universal Music Group, Inc.

2

Net Result

Shareholders' Equity

Year ended December 31,

Year ended December 31,

2021

2020

2021

2020

(68)

727

6,498

7,202

931

560

3,358

1,960

1 In millions of euros
2 In millions of US dollars

For a list of indirect subsidiaries and other group entities, refer to note 26 of the Consolidated Financial Statements.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 300

FINANCIAL STATEMENTS

Note 7. Current and non-current financial assets
At December 31, 2022, current and non-current financial assets consist primarily of loans receivable of €2,174 million(2021: €2,372 million) from Universal International Music B.V. (“UIM”). These loans were issued primarily for the purpose ofrefinancing of debt granted by Vivendi SE to UIM. Loans receivable are denominated in Euro.
The principal amount of the first loan is €800 million (2021: €1,000 million) and it is repayable in 5 yearly instalments(€200 million) on 1 October of each year. The first instalment was paid on 1 October 2022. The loan bears interest at a rateof EURIBOR 3 months plus margin. Margin for 2022 was set at 1.03% (2021: 1.03%).
The second loan, being in principle a credit facility, consists of a commitment of €2,000 million, of which a total amountof €1,368 million have been drawn at December 31, 2022 (2021: €1,368 million) and bears interest at a rate of EURIBOR
1 month plus margin. Margin for 2022 was set at 1.13% (2021: 1.13%). UIM may utilize the facility, to be made available
within 1 business day upon written request. The loan is fully repayable on 6 July 2026.
The current part of the loans receivable consists of the €200 million receivable under the term loan on 1 October 2023
from UIM; accrued interest on the term loan of €5 million and accrued interest on the credit facility of €1 million. Other
non-current financial assets consist of capitalized bank fees of €8 million paid to banks as part of obtaining the credit
facility as disclosed in Note 8, less amortization over the term of the facility.
Other current financial assets consisted of the following:
Year ended December 31,(in millions of euros)

Current intercompany receivables

Other intercompany receivables related to share-based compensation

2022

2021

18

14

126

59

108

45

Current intercompany receivables primarily consist of a short-term receivable from Universal Music Group, Inc for
expenses paid on behalf of Universal Music Group, Inc.
Refer to Note 23 of the Consolidated Financial Statements for more details on share-based compensation.
The Company is exposed to credit risk embedded in these loans receivable and being the credit risk of UIM. The
Company assessed potential credit losses on the loans receivable based on the expected credit loss model (“ECL”),
which is designed to be forward-looking. The ECL estimates were unbiased and included reasonable and supportable
information about past events, current conditions, and forecasts of future economic conditions. UMG Treasury reportingand forecasting proves sufficient cash generated from the operation of the subsidiary to fulfill these borrowings. The
effect of the recognized expected credit losses is negligible. The loans are performing in accordance with the agreements.

Note 8. Cash position and borrowings
Cash position

Cash and cash equivalents amounted to €10 million at December 31, 2022 (2021: €53 million) and were denominatedin Euro.
Credit risk associated with cash and cash equivalents is considered limited as the counterparties are leading national
and international banks.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 301

FINANCIAL STATEMENTS

Borrowings
December 31, 2022
(in millions of euros)

Bonds

Total

Long-term

Short-term

1,004

987

Drawn revolving
credit facility

125

125

Intercompany payable

910-

Term facility

Commercial papers

-

929
2,968

December 31, 2021

-

Total

17

Long-term-

Short-term

-

-

-

998

798

200

-

1,050

1,050

-

910

384

-

384

-

929

1,112

1,856

-

2,432

-

1,848

-

584

New borrowings
On June 30, 2022, the Company issued €500 million of senior unsecured notes due on June 30, 2027 with a coupon of
3.00% and €500 million of senior unsecured notes due on June 30, 2032 with a coupon of 3.75%. On July 1, 2022, the net
proceeds from the issuance of the unsecured senior notes of €1 billion were used to fully repay the Term loan.
On July 8, 2022, the Company established a EUR commercial paper program. Under the Program, the Company may issue,
from time to time, commercial paper notes up to a maximum aggregate amount of €1 billion. The proceeds from theissuance will be used firstly to pay down the Company's revolving credit facility and manage short-term liquidity needsfrom UMG.
In 2021, the Company entered into a syndicated euro-nominated term loan of EUR 1,000 million maturing yearly for 20%of the amount, as well as the multi-currency revolving credit facility (RCF) for approximately EUR 2,000 million, both with
two one-year extension options.
The committed multi-currency RCF bears interest at a variable rate based on the relevant EURIBOR and LIBOR respectively
with zero-floor plus a margin and EUR commercial paper program bears variable interest rates of EURIBOR plus margin.
The margin was 0.36% as of December 31, 2022 (2021: 0.6%) and is subject to adjustment based on the level of Net Debt to
EBITDA ratio as at every financial year-end.
The intercompany payable consist of a short-term payable to Universal Music Group Treasury S.A.S. under a CashManagement Agreement.
Financial covenants
On 31 May 2022, UMG NV announced Baa1/BBB Long Term Credit Ratings from Moody’s and S&P. These investment grade
ratings are the financial covenants UMG committed to sustaining. If UMG does not have these ratings by Moody’s and S&P
or a comparable rating from an internationally recognized credit rating agency, its financial net debt to EBITDA ratio shallbe equal to or below 4.0x. No other financial covenants are imposed on the Company by any of the borrowings.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 302

FINANCIAL STATEMENTS

Movements of borrowings
The movements in borrowings were as follows:(in millions of euros)

Drawn

Term facility

Balance December 31, 2020

credit facility

-

-

(410)

-

-

1,460

Balance December 31, 2021

998

1,050

(1,006)(1,843)New borrowings
Repayments

Balance December 31, 2022

8-

company payable

-

998

-

Inter-

papers-New borrowings
Repayments

Commercial

Bonds

revolving

-

918

1,004

125

1,004

-

-

-

384

2,842

-

384

2,432

-

(5,037)

-

3,117

-

Total

526

(2,188)
929

910

(410)

5,573

2,968

Interest rate risk is the risk of the fair value or future cash flows of a financial instrument fluctuating because of changes
in the market interest rates. Financial instruments included in the borrowings create an inherent interest rate risk.
UMG seeks to limit the period over which interest rates on debt are exposed. The preferred method of hedging interest
rate risk is issuing long term fixed-rate bonds. The use of interest-rate plain vanilla derivatives is also authorized. The listof authorized instruments includes Interest rate swaps, FRAs, caps, and floors.
As of December 31, 2022, UMG had a ratio of fixed-rate debt to total outstanding net debt of approximately 49%, including
lease liabilities. A sensitivity analysis conducted in January 2023 on the gross debt portfolio shows that if short term
EURIBOR were to increase instantaneously by 0.5% from their level of December 31, 2022, with all other variables held
constant, the annualized interest expense would be €5 million.

Note 9. Contractual obligations and other commitments
The table below analyzes the Company's material financial liabilities into relevant maturity groupings based on theircontractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due
within 12 months equal their carrying balances as the impact of discounting is not significant. Interest on Long-term
debt is based on floating rate adjustments according to market expectations.

Contractual obligations
Total minimum future

Minimum future payments as of December 31, 2022

payments as ofPayments due in(in millions of euros)

Drawn revolving credit facility
Term loan
Bonds

Commercial papers
Lease liabilities

NOTES TO THE COMPANY FINANCIAL STATEMENTS

Total

1 year

2-5 years

December 31, 2021

After 5 years

128

125

3

-

1,055

1,263

34

635

594

-

-

-

-

-

-

934

934

2,325

1,093

-

-

638

-

594

1,030
-

1

2,086

MUSIC IS UNIVERSAL Annual Report 2022 | 303

FINANCIAL STATEMENTS

Liquidity risk

The Company is exposed to the liquidity risk. Liquidity risk management ensures the ability to meet financial obligations
as they fall due.
The primary objective of liquidity management is providing for sufficient cash and cash equivalents to enable theCompany to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company.
The loans receivable bear interest at an interest rate higher than the interest rate on the borrowings from the banks. The
Company believes that the cash flow generated by the operations of its investments, its cash surpluses, net of amounts
used to reduce UMG's debt, as well as funds available through undrawn committed bank credit facilities will be sufficient
to cover cash outflows necessary for its operations as well as its debt service for the foreseeable future.
Over the course of the year, fluctuations occur in the working capital needed to finance operations. The Company strives
to have a good liquidity position at all times and optimize daily cash management. Moreover, the Company strictly
controls working capital by optimizing billing and collection.

Financial guarantees

At December 31, 2022, the Company provided guarantees over certain debt of the following subsidiaries: Universal Music
Group Treasury S.A.S. €142 million; Universal Music Ltda. (Brazil) €83 million; Universal Music AB (Sweden) €7 million. No
material allowances for credit losses were recognized in the Statement of Financial Position for both years presented,
as the expected credit loss estimation was insignificant and the loans are fully performing in accordance with theagreements. Financial guarantees were measured at fair value on initial recognition.
For intercompany financial guarantees issued by the Company no material expected credit loss was estimated andtherefore the financial guarantees are not recognised. In addition, the Company provided guarantees to several
subsidiaries in the UK and The Netherlands.
The Company has provided guarantees to the following Universal Music Group subsidiaries, incorporated in the
Netherlands, under the registered number indicated, under section 403 of Book 2 of the Dutch Civil Code.

Name

Company Number

Universal International Music B.V.

31018439

Universal Music Publishing B.V.

32101966

Universal Music Publishing International B.V.
CMHL B.V.

Universal Production Music B.V.

31037866
32140273
85798479

Note 10. Equity
Share capital

The Company has an authorized share capital of €27,000,000,000, divided into 2,700,000,000 ordinary shares with anominal value of €10 per share. On December 31, 2022, the issued and fully paid share capital consisted of 1,813,512,742
ordinary shares with a nominal value of €10 per share (2021: 1,813,375,796 ordinary shares with a nominal value of €10
per share).

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 304

FINANCIAL STATEMENTS

The following table summarizes the changes in the number of issued and fully paid up shares of the Company for theyear ended December 31, 2022:

Ordinary Shares

Issued and fully paid up shares as at December 31, 2021

1,813,375,796

Issued and fully paid up shares as at December 31. 2022

1,813,512,742

Shares issued1

136,946

1 In 2022, the Company issued 136,946 shares for the purpose of delivering on the share-based executive incentive plan, refer to Note 23 of the Consolidated Financial
Statements for more details.

Additional paid-in capital

Share premium represents the premium paid in excess of the par value of shares at the time of the issuance of newshares. Since the value of the contribution exceeded the par value of the shares, the balance constituted share premium.

Treasury shares

As at December 31, 2022 the Company held 214,235 shares (2021: 466,783) as Treasury shares for the purpose of deliveringon the share-based executive incentive plan, refer to Note 23 of the Consolidated Financial Statements for more details.

Dividend distribution

A proposal will be submitted to the 2023 Annual General Meeting of Shareholders to pay a dividend of €0.27 per ordinary
share corresponding to a total distribution of €491 million, in cash, from the 2022 retained earnings reserve (or if dividend
exceeds is from the free distributable reserves) of the Company, payable in Q2 2023.
On May 12, 2022 the shareholders approved a dividend distribution of €0.20 per ordinary share, corresponding to a total
distribution of €363 million, payable in June 2022.
On July 27, 2022, the shareholders approved a dividend distribution of €0.24 per ordinary share, corresponding to a total
distribution of €435 million, payable in October 2022.
The Company plans to annually declare and pay dividends to all holders of the Shares on a pro rata basis in two
semi-annual instalments, in the aggregate amount of no less than 50% of the Company's net profits realized during therelevant financial year, subject to agreed non-cash items. The Company intends to pay an interim dividend in the fourth
quarter of each financial year, after the publication of the half-year figures of the Company, and a final dividend in thesecond quarter of the following financial year, to be paid following approval of the Company's financial statements at its
annual General Meeting.
Pursuant to Dutch law, limitations exist relating to the distribution of shareholders’ equity up to at least the total amountof the share capital, the legal reserve, as well as other reserves mandated per the Company Articles of Association.
At December 31, 2022, the legal and non-distributable reserves of the Company amounted to €18,135 million (2021:€18,134 million).

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 305

FINANCIAL STATEMENTS

Reconciliation of equity and net (loss)/profit
Year ended

December 31,(in millions of euros)

2022

Equity attributable to Universal Music Group equity holders in the Consolidated financial statements as at
31 December, 2022
Combined equity pre-incorporation

2,351(1,634)Intra-group restructuring upon incorporation

33,000

Cumulative results of subsidiaries in the Consolidated financial statements(1,704)Equity in the Company financial statements as at December 31, 2022

32,344

Cumulative dividend

785

Cumulative charges and income directly recognized in equity in the Consolidated financial statements(454)

The reconciliation of equity and net(loss)/profit as per the Consolidated financial statements to equity and net (loss)/profit
as per the Company financial statements is provided below:
Year ended

December 31,(in millions of euros)

2022

Net (loss)/profit attributable to equity holders of the parent in the Consolidated financial statements

782

Results of subsidiaries in the Consolidated financial statements(798)

Net (loss)/profit in the Company financial statements as at December 31, 2022

(16)

Year ended

December 31,(in millions of euros)

2021

Equity attributable to Universal Music Group equity holders in the Consolidated financial statements as at
31 December, 2021
Combined equity pre-incorporation as at 31 December, 2020
Intra-group restructuring upon incorporation

2,030(1,634)33,000Results of subsidiaries in the Consolidated financial statements(906)

Dividend

Charges and income directly recognized in equity in the Consolidated financial statements
Equity in the Company financial statements as at December 31, 2021

785

(220)

33,055

Year ended

December 31,(in millions of euros)2021

Net (loss)/profit attributable to equity holders of the parent in the Consolidated financial statements

886

Results of subsidiaries in the Consolidated financial statements(906)

Net (loss)/profit in the Company financial statements as at December 31, 2021

765

Dividend Income

NOTES TO THE COMPANY FINANCIAL STATEMENTS

785

MUSIC IS UNIVERSAL Annual Report 2022 | 306

FINANCIAL STATEMENTS

Note 11. Related parties
Detailed information on the remuneration of the Board of Directors and senior management is included in the “Corporate
Governance” and “Remuneration of Directors” sections to the Annual Report. Also refer to note 24 Related Parties of theConsolidated financial statements.

Executive management compensation

As of December 31, 2022 there were 2 (2021: 2) Executive Directors on the UMG N.V board. Their aggregate compensation ispresented in the table below.
Year ended December 31,(in millions of euros)

2022

Short-term employee benefits

2021

3

2

3

2

The Chairman and CEO is directly remunerated by another group company and this remuneration is not recharged to
the Company.

Non-executive board compensation

As of December 31, 2022, UMG's non-executive board received director fees of €1 million (2021: €0.2 million).

Other related-party transactions

Other related parties include:•
Overhead costs recharged from and to Universal International Music B.V. to a net amount of €17 million.
Disclosed under “Other” in Note 4;•
Investments in subsidiaries (Note 6);•Long term receivables from Universal International Music B.V. (Note 7);•
Financial income on loans granted (Note 5);•
Intercompany payables (Note 8);•
Financial Guarantees provided to subsidiaries (Note 9);•
Guarantee fees received to the amount of €1 million on guarantees provided to subsidiaries (Note 9);Note 12. Statutory audit fees
The fees for services provided by the Company’s independent auditors, Ernst & Young Accountants LLP and Deloitte
Accountants B.V, and its member firms and/or affiliates, consisted of the following:
Year ended December 31,(in millions of euros)

2022
Deloitte

Audit FS
Total

NOTES TO THE COMPANY FINANCIAL STATEMENTS

2021
Ernst & Young

Deloitte

Ernst & Young

Accountants B.V.

Accountants LLP

Accountants B.V.

Accountants LLP

2

2

2

1

2

2

2

1

MUSIC IS UNIVERSAL Annual Report 2022 | 307

FINANCIAL STATEMENTS

Note 13. Subsequent events
In February 2023, the Revolving Credit Facility agreement was amended with a new maturity date being April 26, 2028.
Around the date when these financial statements were authorised for issue, UMG N.V. was in the process of signing a new
short-term floating rate €500 million revolving credit facility.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2022 | 308

OTHER INFORMATIONOTHER INFORMATION

DISTRIBUTION OF PROFITS
Pursuant to article 32 of the Articles, the distribution of profits shall be madeafter the adoption of the financial statements by the General Meeting fromwhich it appears that the distribution is allowed. The Company may only make
distributions to the extent the shareholders’ equity of the Company exceeds thesum of the issued and called-up part of the share capital of the Company andany reserves that must be maintained pursuant to Dutch law.
The Board may determine which part of the profits shall be reserved, with due
observance of the dividend policy. The General Meeting may resolve to distributeany part of the profits remaining after such reservation. If the General Meeting
does not resolve to distribute these profits in whole or in part, such profits (orany profits remaining after distribution) shall also be reserved.
Subject to Dutch law, the Board may resolve to make an interim distributionof profits, provided that it appears from an interim statement of assets andliabilities signed by the Board that the shareholders’ equity of the Company
exceeds the sum of the issued and called-up part of the share capital of theCompany and any reserves that must be maintained pursuant to Dutch law.
The Board, or the General Meeting, at the proposal of the Board, may resolve thata distribution shall not be paid in whole or in part in cash but in kind or in
the form of Shares or that Shareholders shall be given the option to receive the
distribution in cash or in kind or in the form of Shares (and with due observanceof the Articles), and may determine the conditions under which such option canbe given to the Shareholders.
Any distribution shall be made pro rata to the respective shareholdings. In
calculating the amount of any distribution, Shares held by the Company shallbe disregarded, unless such Shares are encumbered with a right of pledge or aright of usufruct.
The Board, or the General Meeting, at the proposal of the Board, may resolve
to make distributions from the share premium reserve or other distributablereserves maintained by the Company.

MUSIC IS UNIVERSAL Annual Report 2022 | 310

OTHER INFORMATIONINDEPENDENT AUDITORS’ REPORTTo the shareholders and the non-executive directors of Universal Music Group N.V.

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 2022 INCLUDED IN THE ANNUAL REPORTOur opinion

We have audited the financial statements for the financial year ended

December 31, 2022 of Universal Music Group N.V. (‘the company’ or ‘UMG’)based in Amsterdam.

In our opinion the accompanying financial statements give a true and fair viewof the financial position of Universal Music Group N.V. as at December 31, 2022
and of its result and its cash flows for 2022 in accordance with International

Financial Reporting Standards as adopted by the European Union (EU IFRS), theInternational Financial Reporting Standards as issued by the IASB (IFRS) andwith Part 9 of Book 2 of the Dutch Civil Code.
The financial statements comprise:• the consolidated and company statement of financial position as at
December 31, 2022.

• the following statements for the year ended 31 December 2022: theconsolidated and company profit and loss, comprehensive income, changes
in equity and cash flows.

• the notes comprising a summary of the significant accounting policies andother explanatory information.

Basis for our opinion

We conducted our audit in accordance with Dutch law, including the Dutch

Standards on Auditing. Our responsibilities under those standards are further
described in the Our responsibilities for the audit of the financial statements
section of our report.

We are independent of Universal Music Group N.V. in accordance with the

EU Regulation on specific requirements regarding statutory audit of public-

interest entities, the “Wet toezicht accountantsorganisaties” (Wta, Audit firms

supervision act), the “Verordening inzake de onafhankelijkheid van accountants
bij assurance-opdrachten” (ViO, Code of Ethics for Professional Accountants,

a regulation with respect to independence) and other relevant independence
regulations in the Netherlands. Furthermore, we have complied with the“Verordening gedrags- en beroepsregels accountants” (VGBA, Dutch Codeof Ethics.

We believe the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.

MUSIC IS UNIVERSAL Annual Report 2022 | 311

OTHER INFORMATIONINFORMATION IN SUPPORT OF OUR OPINION
We designed our audit procedures in the context of our audit of the financial
statements as a whole and in forming our opinion thereon. The following

information in support of our opinion and any findings were addressed inthis context, and we do not provide a separate opinion or conclusion onthese matters.

Our understanding of the business

Universal Music Group N.V. is a music company which operates worldwide

in over more than 100 countries. The group is structured in components, andwe tailored our group audit approach accordingly. We paid specific attention in
our audit to a number of areas driven by the operations of the group and ourrisk assessment.

We determined materiality and identified and assessed the risks of material

misstatement of the financial statements, whether due to fraud or error in orderto design audit procedures responsive to those risks and to obtain audit

evidence that is sufficient and appropriate to provide a basis for our opinion.

Materiality

Based on our professional judgement we determined the materiality forthe financial statements as a whole at € 75 million (2021: € 60 million). The

materiality is based on profit before tax and amounts to 8,3% of profit before
taxes (and 5% of profit before taxes normalized for the changes in fair valueof financial instruments).

We agreed with the non-executive directors that misstatements in excess of€3,75 million, which are identified during the audit, would be reported to them,as well as smaller misstatements that in our view must be reported on
qualitative grounds.

Scope of the group audit

Universal Music Group N.V. is at the head of a group of entities. The financial

information of this group is included in the consolidated financial statements.
Our joint group audit mainly focused on significant group entities in terms ofsize and financial interest or where significant risks or complex activities were

present, leading us to involve component auditors for component entities in the
United States, the United Kingdom, Japan, France and Germany.

Because we are ultimately responsible for the opinion, we are also responsiblefor directing, supervising and performing the group audit. In this respect wehave determined the nature and extent of the audit procedures to be carried out
for group entities. Decisive were the size and/or the risk profile of the group

entities or operations. On this basis, we selected group entities for which an
audit or review had to be carried out on the complete set of financial

information or specific items. Our joint ISA 600 procedures included a

combination of physical and remote working paper reviews for France, Germany,
Japan, United Kingdom and the United States of America, and virtual and live

meetings with the component auditors and component management. We also
jointly reviewed component audit team deliverables for the countries listed

above to gain a sufficient understanding of the work performed based on our
instructions. For smaller components, we have jointly performed review
procedures or specific audit procedures at group level.

MUSIC IS UNIVERSAL Annual Report 2022 | 312

OTHER INFORMATION

Assets

PBT
13%

15%

29%

Revenues

56%

17%
43%

49%
38%

40%

• Full scope• Specific scope• Other procedures
We jointly performed audit procedures at group level on areas like the groupshared service center, the consolidation, disclosures, impairment testing for

goodwill and other non-current assets, financial instruments, acquisitions anddivestments, share-based compensation, loans and borrowings and equity

investments. Furthermore, we performed review procedures or specific audit
procedures at other group entities.

By performing the procedures mentioned above at components of the group,

together with additional procedures at group level, we have been able to obtainsufficient and appropriate audit evidence about the group’s financial

information to provide an opinion on the consolidated financial statements.

Teaming and the use of specialists

We ensured that the audit teams both at group and at component levels

included the appropriate skills and competences which are needed for the auditof a listed client in the Media and Entertainment industry. We included

specialists in the areas of IT audit, income tax, forensics, sustainability,
treasury, share based payments, valuations and employee benefits.

Our focus on climate-related risks and the energy transition

Climate change and the energy transition are high on the public agenda.

Issues such as CO2 reduction impact financial reporting, as these issues entail

risks for the business operation, the valuation of assets (‘stranded assets’) andprovisions or the sustainability of the business model and access to financial
markets of companies with a larger CO2 footprint.

The board of directors summarized Universal Music Group N.V.’s commitments
and obligations, and reported in the section Non-Financial Performance of theboard report how the company is addressing climate-related and environmental
risks. Furthermore, we refer to the section ESG commitments of the board report

where the board of directors disclose its assessment and implementation plans
in connection to climate-related risks and the effects of energy transition.

As part of our audit of the financial statements, we evaluated the extent to whichclimate-related risks and the effects of the energy transition and the company’scommitments are taken into account in estimates and significant assumptions.
Furthermore, we read the board report and considered whether there is any

material inconsistency between the non-financial information as included in
the sections Financial review, Shareholders information and Risk & Risk
management and the financial statements.

MUSIC IS UNIVERSAL Annual Report 2022 | 313

OTHER INFORMATION

Based on the audit procedures performed, we do not deem climate-related risks
to have a material impact on the financial reporting judgements, estimates orsignificant assumptions as at 31 December 2022.

Our focus on fraud and non-compliance with laws and regulations

Our responsibility
Although we are not responsible for preventing fraud or non-compliance and wecannot be expected to detect non-compliance with all laws and regulations, it is
our responsibility to obtain reasonable assurance that the financial statements,
taken as a whole, are free from material misstatement, whether caused by fraud
or error. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion,forgery, intentional omissions, misrepresentations, or the override of internal
control.
Our audit response related to fraud risks
We identified and assessed the risks of material misstatements of the financial
statements due to fraud. During our audit we obtained an understanding of thecompany and its environment and the components of the system of internal
control, including the risk assessment process and management’s process forresponding to the risks of fraud and monitoring the system of internal control
and how the non-executive directors exercise oversight, as well as theoutcomes.
We refer to the section risk and risk management of the board report for theboard’s (fraud) risk assessment and the audit committee section of the non-executive directors’ report in which the non-executive directors reflect on this(fraud) risk assessment.

We evaluated the design and relevant aspects of the system of internal control
and in particular the fraud risk assessment, as well as the code of conduct,whistle blower procedures and incident registration. We evaluated the design
and the implementation and, where considered appropriate, tested theoperating effectiveness, of internal controls designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors

with respect to financial reporting fraud, misappropriation of assets and bribery

and corruption, in close co-operation with our forensic specialists. We evaluatedwhether these factors indicate that a risk of material misstatement due to fraud
is present.

We incorporated elements of unpredictability in our audit. We also considered

the outcome of our other audit procedures and evaluated whether any findings
were indicative of fraud or non-compliance.

As in all of our audits, we addressed the risks related to management overrideof controls. For these risks we have performed procedures among others toevaluate key accounting estimates for management bias that may represent

a risk of material misstatement due to fraud, in particular relating to important
judgment areas and significant accounting estimates as disclosed in Note 2.2
to the financial statements. We have also used data analysis to identify andaddress high-risk journal entries and evaluated the business rationale (or thelack thereof) of significant extraordinary transactions, including those withrelated parties.

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OTHER INFORMATION

When identifying and assessing fraud risks, we presumed that there are risks

of fraud in revenue recognition. We considered, amongst others, the company’s
revenue related significant contracts signed in 2022 with third parties and theaccompanying accounting treatment of terms and conditions within thesecontracts. We designed and performed our audit procedures relating to revenue

recognition responsive to this presumed fraud risk. These risks did however not
require significant auditor’s attention.

We considered available information and made enquiries of relevant executives,
directors, internal controls compliance, internal audit, legal, human resources
and regional directors and the non-executive directors.

Our audit response related to risks of non-compliance withlaws and regulations

We performed appropriate audit procedures regarding compliance with theprovisions of those laws and regulations that have a direct effect on thedetermination of material amounts and disclosures in the financial statements.
Furthermore, we assessed factors related to the risks of non-compliance withlaws and regulations that could reasonably be expected to have a material effecton the financial statements, through inquiry of key management personnel, theboard of directors, reading minutes, inspection of internal audit and compliancereports, and performing substantive tests of details of classes of transactions,account balances or disclosures. We also involved our forensic specialists.
We also inspected lawyers’ letters and correspondence with regulatory

authorities and remained alert to any indication of (suspected) non-compliancethroughout the audit. Finally, we obtained written representations that all known
instances of non-compliance with laws and regulations have been disclosed
to us.

Our audit response related to going concern

As disclosed in section ‘Basis of preparation and consolidation’ in Note 2.2 tothe financial statements, the financial statements have been prepared on agoing concern basis. When preparing the financial statements, the board of

directors made a specific assessment of the company’s ability to continue asa going concern and to continue its operations for the foreseeable future.

We discussed and evaluated the specific assessment with the board of directors
exercising professional judgment and maintaining professional skepticism.

We considered whether the board’s going concern assessment, based on our
knowledge and understanding obtained through our audit of the financial

statements or otherwise, contains all relevant events or conditions that may

cast significant doubt on the company’s ability to continue as a going concern.
Based on our procedures performed, we did not identify material uncertainties
about going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However, future events or conditions may cause
a company to cease to continue as a going concern.

MUSIC IS UNIVERSAL Annual Report 2022 | 315

OTHER INFORMATION

Our key audit matters

Key audit matters are those matters that, in our professional judgment,

were of most significance in our audit of the financial statements. We havecommunicated the key audit matters to the non-executive directors. The key
audit matters are not a comprehensive reflection of all matters discussed.

The prior year key audit matter ‘First year joint audit’ is no longer included

because this is our second-year audit. The prior year key audit matter ‘Estimate

associated with the publishing and recorded music broadcast revenues that arecollected through collecting societies’ was included because the company
updated its accounting policy in the prior year resulting in retrospective
adjustments to reflect the impact. This is no longer applicable in 2022.

Valuation of Royalty advances to artists and repertoire owners
Risk

Our audit approach

Key observations

The company provides royalty advances to artists
in order to support the artist in future performances.
As of December 31, 2022, the total amount of royalty
advances amounted to EUR 2,6 billion (2021:
EUR 2,4 billion).

We obtained an understanding of the processes of making the
aforementioned estimate and the related accounting policies.
We evaluated the company’s accounting policies for recognition
and measurement of royalty advances for compliance with IAS
38 ‘Intangible assets’. Furthermore, we performed, amongst
others, the following audit procedures:
We obtained an understanding of and evaluated the design
and implementation of the relevant internal controls over thevaluation of royalty advances;
We obtained the contracts and supporting documentation
for payments related to material royalty advances during
the year;
We traced the recoupment during the year to supporting
documentation on a sample basis and peformed backtestingby comparing the recoupment during the year with priorperiod estimates;
We evaluated the recoverability of exposed advances bychallenging the assumptions used by the board in theirrecoverability analysis. This includes agreeing royalty rates
applied in the calculation to the applicable artist agreements
and testing the assumptions of future earnings made bymanagement;
We carried out recoverability analysis to assess theappropriateness of current vs. non-current classificationsof advances.

Applying the
aforementioned
materiality, we did not
identify any reportablefindings in the board’s
assessment of theroyalty advances andthe disclosures innotes 2.2, 2.4.9 andnote 9.

As described in note 2.4.9 and note 9 to the financial
statements, these 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
future recoupment of such royalty advances against
future earnings otherwise payable to them isreasonably assured. Any portion of capitalized royalty
advances not deemed to be recoverable against
future royalties is expensed during the period inwhich the loss becomes evident.
As described in note 2.2 to the financial statements,
the significant judgements in making the estimate
whether capitalized royalty advances are recoverable
against future royalties mainly relate to theestimated future earnings performance ofbeneficiaries who received advances.
We consider this to be a key audit matter based on
the significant judgements in making the estimate.

•
•
•
•

•

MUSIC IS UNIVERSAL Annual Report 2022 | 316

OTHER INFORMATIONREPORT ON THE OTHER INFORMATION INCLUDEDIN THE ANNUAL REPORTThe annual report contains other information in addition to the financial
statements and our auditor’s report thereon.

Based on the following procedures performed, we conclude that the otherinformation:• is consistent with the financial statements and does not contain material
misstatements• contains the information as required by Part 9 of Book 2 of the Dutch Civil Codefor the board report and the other information as required by Part 9 of Book 2 of

the Dutch Civil Code and as required by Sections 2:135b and 2:145 sub section 2of the Dutch Civil Code for the remuneration report.

We have read the other information. Based on our knowledge and understanding
obtained through our audit of the financial statements or otherwise, we haveconsidered whether the other information contains material misstatements.

By performing these procedures, we comply with the requirements of Part 9 ofBook 2 and Section 2:135b sub-Section 7 of the Dutch Civil Code and the Dutch

Standard 720. The scope of the procedures performed is substantially less than
the scope of those performed in our audit of the financial statements.

The board of directors is responsible for the preparation of the other information,
including the board report in accordance with Part 9 of Book 2 of the Dutch Civil
Code and other information required by Part 9 of Book 2 of the Dutch Civil Code.
The board of directors and the non-executive directors are responsible for

ensuring that the remuneration report is drawn up and published in accordancewith Sections 2:135b and 2:145 sub section 2 of the Dutch Civil Code.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
AND ESEF
Engagement

We were engaged by the general meeting as auditors of Universal Music Group
N.V. on 20 September 2021, as of the audit for the year 2021 and have operated
as statutory auditor ever since that date.

No prohibited non-audit services

We have not provided prohibited non-audit services as referred to in Article 5(1)of the EU Regulation on specific requirements regarding statutory audit ofpublic-interest entities.

European Single Electronic Format (“ESEF”)

Universal Music Group N.V. has prepared the annual report in ESEF. The

requirements for this are set out in the Delegated Regulation (EU) 2019/815

with regard to regulatory technical standards on the specification of a single
electronic reporting format (hereinafter: the RTS on ESEF).

In our opinion the annual report prepared in the XHTML format, including the(partially) marked-up consolidated financial statements as included in thereporting package by Universal Music Group N.V., complies in all material
respects with the RTS on ESEF.

MUSIC IS UNIVERSAL Annual Report 2022 | 317

OTHER INFORMATIONThe board of directors is responsible for preparing the annual report, including

the financial statements, in accordance with the RTS on ESEF, whereby the boardof directors combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether
the annual report in this reporting package complies with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including

Dutch Standard 3950N ’Assurance-opdrachten inzake het voldoen aan decriteria voor het opstellen van een digitaal verantwoordingsdocument’(assurance engagements relating to compliance with criteria for digital
reporting). Our examination included amongst others:• obtaining an understanding of the entity’s financial reporting process,including the preparation of the reporting package• identifying and assessing the risks that the annual report does not comply

in all material respects with the RTS on ESEF and designing and performing

further assurance procedures responsive to those risks to provide a basis forour opinion, including:• obtaining the reporting package and performing validations to determine

whether the reporting package containing the Inline XBRL instance document
and the XBRL extension taxonomy files, has been prepared in accordancewith the technical specifications as included in the RTS on ESEF

• examining the information related to the consolidated financial statementsin the reporting package to determine whether all required mark-ups havebeen applied and whether these are in accordance with the RTS on ESEF.

DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL
STATEMENTS
Responsibilities of the board of directors and the non-executive
directors for the financial statements

The board of directors is responsible for the preparation and fair presentation of

the financial statements in accordance with EU-IFRS, IFRS and Part 9 of Book 2 of
the Dutch Civil Code. Furthermore, the board of directors is responsible for suchinternal control as the board of directors determines is necessary to enable thepreparation of the financial statements that are free from material
misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, the board of directors is

responsible for assessing the company’s ability to continue as a going concern.
Based on the financial reporting framework mentioned, the board of directors
should prepare the financial statements using the going concern basis ofaccounting unless the board of directors either intends to liquidate thecompany or to cease operations, or has no realistic alternative but to do so.

The board of directors should disclose events and circumstances that may castsignificant doubt on the company’s ability to continue as a going concern in thefinancial statements.

The non-executive directors are responsible for overseeing the company’s
financial reporting process.

MUSIC IS UNIVERSAL Annual Report 2022 | 318

OTHER INFORMATION

Our responsibilities for the audit of the financial statements

Our objective is to plan and perform the audit engagement in a manner thatallows us to obtain sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance,
which means we may not detect all material errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial

statements. The materiality affects the nature, timing and extent of our audit
procedures and the evaluation of the effect of identified misstatements on
our opinion.

We have exercised professional judgment and have maintained professional
skepticism throughout the audit, in accordance with Dutch Standards on
Auditing, ethical requirements and independence requirements.

The ‘Information in support of our opinion’ section above includes aninformative summary of our responsibilities and the work performed as
the basis for our opinion.

Our audit further included among others:• Performing audit procedures responsive to the risks identified, and obtaining
audit evidence that is sufficient and appropriate to provide a basis for our
opinion• Obtaining an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances, but not forthe purpose of expressing an opinion on the effectiveness of the company’s
internal control• Evaluating the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by
the board of directors• Evaluating the overall presentation, structure and content of the financial
statements, including the disclosures• Evaluating whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation

Communication

We communicate with the non-executive directors regarding, among othermatters, the planned scope and timing of the audit and significant audit

findings, including any significant findings in internal control that we identify
during our audit.

In this respect we also submit an additional report to the audit committee inaccordance with Article 11 of the EU Regulation on specific requirements

regarding statutory audit of public-interest entities. The information included inthis additional report is consistent with our audit opinion in this auditor’s report.
We provide the non-executive directors with a statement that we havecomplied with relevant ethical requirements regarding independence, andto communicate with them all relationships and other matters that may

reasonably be thought to bear on our independence, and where applicable,
related safeguards.

MUSIC IS UNIVERSAL Annual Report 2022 | 319

OTHER INFORMATION

From the matters communicated with the non-executive directors, we

determine the key audit matters: those matters that were of most significance inthe audit of the financial statements. We describe this matter in our auditor’sreport unless law or regulation precludes public disclosure about the matter orwhen, in extremely rare circumstances, not communicating the matter is in the
public interest.

Amsterdam, March 30, 2023
Ernst & Young Accountants LLP

Deloitte Accountants B.V.

Was signed on the original:

Was signed on the original:

J-L Geutjes

I.A. Buitendijk

MUSIC IS UNIVERSAL Annual Report 2022 | 320

APPENDIXAPPENDIX

BIOS CORPORATE EXECUTIVES
Sir Lucian Grainge

CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Sir Lucian Grainge has spent his entire career in the music industry and has
signed and worked with many worldwide stars, including ABBA, Jay Z, Elton
John, Katy Perry, Queen, Rihanna, The Rolling Stones, Sam Smith, U2 and Amy
Winehouse, among many others. During the span of four decades, he not only
pioneered new approaches to the signing and development of the world’s mostsuccessful recording artists and songwriters, he also consistently championed
the development of innovative business models and partnerships with a wide
range of technology and media partners around the world. He has transformed
Universal Music Group (UMG) into the most successful company in the historyof the music industry, both competitively and financially, and his vision andleadership is widely recognized as having returned the entire industry to
growth after years of decline. In 2011, he led UMG’s successful acquisitionof the recorded music assets of the legendary British music company EMI,
revitalizing its iconic Capitol Records, and, in the process, further strengthening
UMG’s position as the global leader in music. A native of London, Sir Lucian
was bestowed with a knighthood in 2016 by Her Majesty Queen Elizabeth II
in the Queen’s 90th Birthday Honours list for accomplishments in the musicindustry and leadership through its challenging times, contributions to British
business and inward investment, as well as his development of innovative
business models, technology and media partnerships that have expanded
UMG’s global presence.

Philippe Flageul

EXECUTIVE VICE PRESIDENT, CONTROLLER
Philippe Flageul is responsible for overseeing many aspects of UMG’s finance
operations, including accounting, tax, treasury, risk management and IT andsupply chain finance. He also oversees UMG’s global procurement. Flageul
joined UMG in 2015 from Bolloré Group, where he worked for more than two
decades as CFO of the industrial division and Chairman of IER. Philippe holds an
MBA from EDHEC.

MUSIC IS UNIVERSAL Annual Report 2022 | 322

APPENDIX

Jody Gerson

CHAIRMAN AND CEO, UNIVERSAL MUSIC PUBLISHING GROUP
Jody Gerson is one of music’s most respected, accomplished executives andcreative authorities. She is the first female chairman of a global music company
and the first woman to be named CEO of a major music publisher. Sincejoining UMPG in 2015, Gerson has transformed the company into the industry’s
best global home to songwriters and a billion-dollar business – more thandoubling revenue and substantially increasing profit. Gerson led UMPG’s historic
catalog acquisitions of Bob Dylan, Sting, Neil Diamond and Frank Zappa. She
has signed and works with the world’s biggest superstars including Elton John,
Taylor Swift, Harry Styles, Kendrick Lamar, Bad Bunny, Adele, The Weeknd, Billie
Eilish, SZA, Rosalia, Drake, Steve Lacy, Alicia Keys, Coldplay, Justin Bieber, Post
Malone, Ariana Grande, H.E.R., Maren Morris, the Bee Gees, Prince, and more.
Gerson cofounded nonprofit She Is The Music and serves on Boards for the
USC Annenberg Inclusion Initiative, The Rock & Roll Hall of Fame, the National
Music Publishers Association, The Archer School for Girls and New Roads School.
Gerson executive produced numerous acclaimed film/TV projects, including
HBO’s ‘The Bee Gees: How Can You Mend a Broken Heart’ and HBO’s ‘Music Box’series, and produced feature films ‘Drumline’ and ‘ATL.’

Jeffrey Harleston

GENERAL COUNSEL AND EXECUTIVE VICE PRESIDENT OF BUSINESS ANDLEGAL AFFAIRS
Jeffrey Harleston is responsible for the global oversight of all business
transactions, contracts and litigation. He is additionally responsible for thedevelopment of corporate policies, including the coordination of UMG’sgovernment relations, trade and anti-piracy activities, to ensure a unified
strategy across the Company’s divisions. Harleston joined the Company in 1993
at MCA Records, after serving as Associate Independent Counsel for the IranContra Investigation and prior to that as an Associate at Covington & Burling
LLP. Harleston serves as co-chair of UMG’s Task Force for Meaningful Change,
where he leads a group of influential executives from across the Company tofocus on issues regarding inclusion and social justice. Harleston also serves on
the boards of the Recording Industry Association of America (RIAA), MusiCares,
Williams College and the Harvard-Westlake School. He received a B.A. in Political
Science from Williams College and a J.D. from the University of California,
Berkeley School of Law.

MUSIC IS UNIVERSAL Annual Report 2022 | 323

APPENDIX

Eric Hutcherson

EXECUTIVE VICE PRESIDENT, CHIEF PEOPLE AND INCLUSION OFFICER
With a focus on people, culture and inclusion, Eric Hutcherson leads a global
team across UMG’s record labels, publishing division and operating companies
to align talent functions, amplify the Company’s entrepreneurial-based culture,accelerate diversity and inclusion across all levels and territories, attract, retainand develop talent, accelerate the Company’s social justice initiatives and build
on UMG’s successful track-record of driving innovation by recruiting employees
who bring new ideas, perspectives and skillsets. Prior to joining UMG, he was
EVP, Chief Human Resources Officer of the National Basketball Association (NBA)where he managed a team that drove the NBA’s global workforce strategy.
Hutcherson earned a bachelor’s degree in Political Science from New York
University and a master’s degree in Sports Management and Administrationfrom the University of Massachusetts-Amherst.

Boyd Muir

EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND PRESIDENT
OF OPERATIONSWorking seamlessly across the corporate and creative aspects of UMG’soperations, Boyd Muir is responsible for overseeing many of UMG’s corporate
operations including global finance. Muir led the strategic physical-to-digital
reshaping of the Company’s businesses, and he has played a key role in severalof UMG’s most prominent acquisitions, including Sanctuary Group and V2 Music
Group, as well as the Company’s successful acquisition of EMI, Ingrooves Music
Group and Epic Rights, among others. Muir joined UMG in 1994 and previously
served as Chief Financial Officer for Universal Music Group International, adivision that managed UMG’s businesses in more than 50 countries.

Michael NashEXECUTIVE VICE PRESIDENT, CHIEF DIGITAL OFFICER
Michael Nash supervises UMG’s digital business development activities aroundthe world, manages strategic relationships with the Company’s largest partners,
and oversees global digital licensing, as well as numerous innovation initiatives.
Nash has worked at the forefront of media and technology convergence forhis entire career as an executive, entrepreneur and producer. Before joining
UMG in 2015, he served as a strategic advisor to Warner Music Group, as well
as several digital media startups; prior to that, he served as WMG’s Executive
Vice President of Digital Strategy and Business Development, responsible for
WMG's global digital business. Prior to WMG, Nash was the Executive Directorof the Madison Project, the music industry’s first digital distribution trial, andhe was the founding CEO of Inscape, an interactive entertainment and games
publishing joint venture backed by Time Warner.

MUSIC IS UNIVERSAL Annual Report 2022 | 324

APPENDIX

Will Tanous

EXECUTIVE VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER
Will Tanous plays a key role in the development of the Company’s businessstrategy, overseeing several major strategic and corporate endeavors, aswell as managing worldwide external and internal communications, global
public policy, investor and government relations, event functions and social
responsibility. Prior to joining UMG in 2013, Tanous served as Executive Vice
President of Communications & Marketing for Warner Music Group where he wascentral in all of the Company’s major corporate initiatives, including: the saleof WMG to Access Industries, Inc.; WMG’s initial public offering on the New York
Stock Exchange in 2005; and the sale of WMG by Time Warner Inc. to a private
equity consortium. He serves on the board of the Recording Industry Associationof America and is a graduate of Georgetown University in Washington D.C.

Vincent Vallejo

DEPUTY CHIEF EXECUTIVE OFFICER, CORPORATE
Vincent Vallejo is Deputy Chief Executive Officer, Corporate for Universal Music
Group. Based at the Company’s corporate headquarters in Hilversum, theNetherlands and reporting to UMG’s Chairman and Chief Executive Officer, Sir
Lucian Grainge CBE, Vallejo is leading a number of corporate initiatives related
to the Company’s listing on Euronext Amsterdam. Vallejo has worked closely
across UMG matters since joining Vivendi in 1998, most recently as SVP, Audit& Special Projects. Prior to joining Vivendi, Vallejo held positions at AGF-ALLIANZFrance (Deputy CFO) and Ernst & Young Paris and Madrid. Vallejo received an
MBA from Montpellier University and a Master of Science from Cornell-Essec,
Cergy-Pontoise, France.

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APPENDIX

BIOS BOARD OF DIRECTORS
Sir Lucian Grainge

Male, Age: 63, Nationality: British
CHAIRMAN AND CHIEF EXECUTIVE OFFICER AND EXECUTIVE DIRECTOR
Sir Lucian Grainge has spent his entire career in the music industry and has
signed and worked with many worldwide stars, including ABBA, Jay Z, Elton
John, Katy Perry, Queen, Rihanna, The Rolling Stones, Sam Smith, U2 and Amy
Winehouse, among many others. During the span of four decades, he not only
pioneered new approaches to the signing and development of the world’s mostsuccessful recording artists and songwriters, he also consistently championed
the development of innovative business models and partnerships with a wide
range of technology and media partners around the world. He has transformed
Universal Music Group (UMG) into the most successful company in the historyof the music industry, both competitively and financially, and his vision andleadership is widely recognized as having returned the entire industry to
growth after years of decline. In 2011, he led UMG’s successful acquisitionof the recorded music assets of the legendary British music company EMI,
revitalizing its iconic Capitol Records, and, in the process, further strengthening
UMG’s position as the global leader in music. A native of London, Sir Lucian
was bestowed with a knighthood in 2016 by Her Majesty Queen Elizabeth II
in the Queen’s 90th Birthday Honours list for accomplishments in the musicindustry and leadership through its challenging times, contributions to British
business and inward investment, as well as his development of innovative
business models, technology and media partnerships that have expanded
UMG’s global presence.

Vincent Vallejo

Male, Age: 62, Nationality: French
DEPUTY CHIEF EXECUTIVE OFFICER, CORPORATE AND EXECUTIVE DIRECTOR
Vincent Vallejo is Deputy Chief Executive Officer, Corporate for Universal Music
Group. Based at the Company’s corporate headquarters in Hilversum, theNetherlands and reporting to UMG’s Chairman and Chief Executive Officer, Sir
Lucian Grainge CBE, Vallejo is leading a number of corporate initiatives related
to the Company’s listing on Euronext Amsterdam. Vallejo has worked closely
across UMG matters since joining Vivendi in 1998, most recently as SVP, Audit& Special Projects. Prior to joining Vivendi, Vallejo held positions at AGF-ALLIANZFrance (Deputy CFO) and Ernst & Young Paris and Madrid. Vallejo received an
MBA from Montpellier University and a Master of Science from Cornell-Essec,
Cergy-Pontoise, France.

MUSIC IS UNIVERSAL Annual Report 2022 | 326

APPENDIX

Sherry Lansing

Female, Age: 78, Nationality: American
CHAIRMAN OF THE BOARD AND INDEPENDENT NON-EXECUTIVE DIRECTOR
Sherry Lansing is the founder and CEO of The Sherry Lansing Foundation,an organization dedicated to funding and raising awareness for cancer
research, health, public education, and encore career opportunities. Lansing has
extensive knowledge regarding the creative industries, including but not limited
to audio/visual content. During a nearly 30-year career in the motion picturebusiness, Lansing was involved in the production, marketing, and distributionof more than 200 films, including Academy Award winners Forrest Gump,
Braveheart, and Titanic. In 1980, she became the first woman to head a major
film studio when she was appointed President of 20th Century Fox. Later, as
an independent producer, she was responsible for such successful films as
Fatal Attraction, The Accused, School Ties, Indecent Proposal, and Black Rain.
Returning to the executive ranks in 1992, Lansing was named Chairman and CEO
of Paramount Pictures and began an unprecedented tenure that lasted morethan 12 years. Lansing graduated cum laude with a Bachelor of Science Degreefrom Northwestern University in 1966.

Anna Jones

Female, Age: 48, Nationality: British
VICE CHAIRMAN OF THE BOARD AND INDEPENDENT NON-EXECUTIVE DIRECTOR
Anna Jones is the co-founder and Non-Executive Director of AllBright, the global
women’s network and members' club founded in 2017 to connect, upskill andinspire professional women. She has more than 15 years of experience inleadership roles with broad and deep expertise in content, digital disruption,
strategic growth and business transformation. Prior to founding AllBright, Jones
served as CEO of Hearst Magazines UK from 2014 to 2017, where she oversaw 24
media brands that together formed a network of content and experiences acrossmultiple platforms that reached a quarter of all UK adults. As Hearst Magazines
UK’s Chief Operating Officer from 2011 to 2014, she had strategic and operational
responsibility for the business overall, following the acquisition and integrationof Hachette Filipacchi in 2011. Jones has additionally served on the board of
the Creative Industries Federation, a national membership organisation for the
public arts, cultural education and creative industries, from 2015 to 2019. Jones
holds a Bachelor of Arts degree in International Business Management from
Newcastle University.

Antoine Fiévet

Male, Age 59, Nationality: French
INDEPENDENT NON-EXECUTIVE DIRECTOR
Antoine Fiévet is the Chairman and CEO of the Bel Group, a world leader inbranded cheese and a major player in the healthy snack market with 33
production sites and a distribution network spanning nearly 120 countries.
His three decades of professional experience include 20 years as Bel Group’s
CEO, where he has additionally served as Chairman since 2009. Under
Fiévet’s leadership, Bel Group adopted concrete actions to address sustainableagriculture, healthy food, responsible packaging, the fight against climatechange and product accessibility. Fiévet received a graduate degree from
Université Paris II Panthéon Assas and an undergraduate degree from Institut
Supérieur de Gestion.

MUSIC IS UNIVERSAL Annual Report 2022 | 327

APPENDIX

Bill Ackman

Male, Age: 56, Nationality: American
NON-EXECUTIVE DIRECTOR
Bill Ackman is the CEO of Pershing Square Capital Management, L.P., an
investment firm he founded in 2003. Ackman is Chairman of The Howard
Hughes Corporation (NYSE:HHC). He serves as a member of the Investor Advisory
Committee on Financial Markets for the Federal Reserve Bank of New York, andas a member of the Board of Dean’s Advisors of the Harvard Business School.
He served as Chairman and CEO of Pershing Square Tontine Holdings, Ltd.
(NYSE:PSTH), a special purpose acquisition company, from July 2020 to July 2022.
Ackman is co-trustee of the Pershing Square Foundation, a family foundation.
Ackman received an MBA from the Harvard Business School and a Bachelor ofArts magna cum laude from Harvard College.

Cathia Lawson-Hall

Female, Age: 51, Nationality: French and Togolese
NON-EXECUTIVE DIRECTOR
Cathia Lawson-Hall is Head of Coverage and Investment Banking for Africa for
Société Générale, where she oversees the overall relationship and strategic
consulting with governments, large corporates and financial institutions in
Africa. Previously, she served as Managing Director, Co-Head of Debt CapitalMarkets for corporates in France, Belgium and Luxembourg. Lawson-Hall joined
Société Générale in 1999 as a financial analyst covering the telecommunications
and media sectors before moving into financial consulting. She has more than
25 years of experience in financial services, starting as a corporate financeprofessor at the University of Paris-Dauphine. Lawson-Hall is the founding
member of the acquisition committee of African Modern and Contemporary
Art at Centre Georges Pompidou, world leading museum of modern andcontemporary art. She sits on the board of directors of The Amis du Centre
Pompidou, the first patrons of the museum who contribute to the enrichmentof the collections of the institution. Lawson-Hall holds a Master’s degree and a
postgraduate degree in Finance from Paris Dauphine University in France.

MUSIC IS UNIVERSAL Annual Report 2022 | 328

APPENDIX

Cyrille BolloréMale, Age: 37, Nationality: French
NON-EXECUTIVE DIRECTOR
Cyrille Bolloré serves as the Chairman and Chief Executive Officer of BolloréGroup, a family-controlled holding company which is among UMG’s largest
investors and among the 500 largest companies in the world with focusedinvestments in transportation and logistics, communication, electricity storage
and solutions. At Bolloré Group, he additionally serves as Chairman of Bolloré
Transport & Logistics Corporate, Chairman of the Board of Directors of Bolloré
Energy, Chairman of BlueElec, Chairman of the Supervisory Board of Sofibol,
Chairman of the Management Board of Compagnie du Cambodge, and ViceChairman of Compagnie de l’Odet, as a Director of Bolloré Participations SE,
Financière V, Omnium Bolloré, Société Industrielle et Financière de l’Artois,
Financière du Champ de Mars, SFA SA, Nord Sumatra Investissements, andPlantations des Terres Rouges, as a permanent representative on the Boardsof Financière Moncey, Bolloré Logistics, and Sogetra, and as a member of theSupervisory Board of JCDecaux Bolloré Holding. In addition, Bolloré serves asa director on the boards of several prominent companies, including on the
Supervisory Board of Vivendi SE, and also serves on the Board of Socfinasia
and Socfin, and as a permanent representative on the Board of Socfinaf. Bolloré
is a graduate of Paris Dauphine University, and holds a Master’s degree in
economics and management, with a major in finance.

James MitchellMale, Age: 49, Nationality: British
NON-EXECUTIVE DIRECTORJames Mitchell is a Senior Executive Vice President and Chief Strategy Officerof Tencent Holdings Limited (HKEX:0700), where he has worked since July 2011.
Mitchell has also served as the Chairman and Non-Executive director of theboard of China Literature Limited (HKEX:0772) since June 2017. He is also a
director of certain other listed companies including Frontier Developments Plc(AIM:FDEV), NIO Inc. (NYSE:NIO, HKEX:09866) and Tencent Music Entertainment
Group (NYSE:TME), and of various unlisted companies. Prior to joining Tencent,Mitchell was a managing director at Goldman Sachs. Mitchell received a
Bachelor of Arts degree from Oxford University and holds a Chartered Financial
Analyst Certification.

Luc Van Os

Male, Age: 56, Nationality: Dutch
NON-EXECUTIVE DIRECTOR
Luc van Os is co-owner of Misset Uitgeverij, a B2B publisher of multi-media
brands for the agricultural sector, and of Rendement Uitgeverij, a B2B multimedia publisher specialized in HR, fiscal and salary information. Previously,
he served for 12 years as CEO of Hearst Netherlands and its predecessors,
home to titles including Harper’s Bazaar, Elle, Quote and Cosmopolitan. Prior toserving as CEO, he held different leadership roles at Hearst and its predecessors,
Hachette Filipacchi Media and Quote Media. Under his leadership, Hearst
became the largest upscale magazine publisher in the Netherlands. Van Os is
also a member of the Supervisory Board of VNO-NCW, the national employers
association in the Netherlands.

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APPENDIX

Manning Doherty

Male, Age: 50, Nationality: Canadian
NON-EXECUTIVE DIRECTOR
Manning Doherty is Managing Director of GIC Pte Ltd., Singapore’s sovereign
wealth fund, where he sits in the Integrated Strategies Group that primarily
focuses on public and private debt and equity investments globally. Doherty isa bilingual investment professional, whose career spans senior roles in equity
research, private equity and special situation investment and monitoring in
Asia and the U.S. Prior to GIC, he served as Managing Director of Mount Kellett
Capital from 2011 to 2015 and Managing Director of Oaktree Capital Managementfrom 2006 to 2011. Doherty has specialized knowledge in providing strategic
review to develop adjacent business lines; improvement of KPI monitoringand decision making; broadening Company contacts across industry; and theevaluation of strategic M&A and corporate finance actions. Doherty holds an
MBA from The Wharton School at the University of Pennsylvania, where he also
earned a Master’s degree in International Studies from the Lauder Institute.
He also holds a Bachelor of Arts degree from Queen’s University in Kingston,Ontario in Canada.

Margaret Frerejean-Taittinger

Female, Age: 37, Nationality: American
INDEPENDENT NON-EXECUTIVE DIRECTOR
Margaret Frerejean-Taittinger is the co-founder of French Bloom, a company
that specializes in organic alcohol-free sparkling wines. Serving as Chief
Marketing Officer, Frerejean-Taittinger has successfully positioned French
Bloom as the market leader of the super-premium 0.0% category with presence
in more than 20 markets. Previously, she served as International Development
Manager for the Michelin Guide, the renowned restaurant rating system thatpublishes its yearly selections in over 35 countries. In this role, FrerejeanTaittinger led the expansion of the Michelin Guide working towards doublingits international footprint over a period of five years. Prior to Michelin, she
served as the Director of Communications and Marketing for Laboratories
Surface-Paris, a beauty company that specializes in cosmeceutical skincare.
Frerejean-Taittinger also spent eight years in the International Development
field, addressing cross-sector challenges to sustainable development with afocus on education and micro-finance in East Africa. Frerejean-Taittinger holds
a Master of Development Practice from L’Institut d'Etudes Politiques de Paris(Sciences Po), where she graduated Summa Cum Laude.

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APPENDIX

Nicole Avant

Female, Age: 55, Nationality: American
INDEPENDENT NON-EXECUTIVE DIRECTOR
Nicole Avant served as the 13th U.S. Ambassador to The Bahamas after being
nominated by President Barack Obama and unanimously confirmed by the U.S.
Senate, becoming the youngest as well as the first African American woman tohold the position. In addition to her international diplomatic work, Ambassador
Avant brings deep commercial insight and knowledge of the media industries.
Most recently, she has focused her efforts on developing films and televisionand produced the critically acclaimed and award-winning documentary, The
Black Godfather, for Netflix. Previously, she served as Vice President of InteriorMusic Publishing and currently serves on the Board of Membership Collective
Group, Inc., the holding company of the Soho House social clubs. Throughout
her career, Ambassador Avant has also pursued an array of business andphilanthropic ventures. Ambassador Avant graduated with a Bachelor of Arts
Degree in Communications from California State University, Northridge in 1991.

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APPENDIX

DEFINITIONSIn this Annual Report release, UMG presents certain financial measures when
discussing UMG’s performance that are not measures of financial performanceor liquidity under IFRS (“non-IFRS”). These non-IFRS measures (also known
as alternative performance measures) are presented because management
considers them important supplemental measures of UMG’s performance andbelieves that they are widely used in the industry in which UMG operates asa means of evaluating a company’s operating performance and liquidity. UMG
believes that an understanding of its sales performance, profitability, financial
strength and funding requirements is enhanced by reporting the following nonIFRS measures. All non-IFRS measures should be considered in addition to,and not as a substitute for, other IFRS measures of operating and financial
performance as presented in UMG’s Consolidated Financial Statements andthe related Notes. In addition, it should be noted that other definitions andcalculations for these non-IFRS measures that differ from those used by UMG,
thereby affecting comparability.

EBITDA and EBITDA margin

UMG considers EBITDA and EBITDA margin, non-IFRS measures, to be relevantmeasures 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 is driven by theoperating segment’s organic growth or by acquisitions. EBITDA margin is EBITDA
divided by revenue.
To calculate EBITDA, the accounting impact of the following items is excluded
from Operating Profit:i. amortization of intangible assets
ii. impairment losses on goodwill and other intangibles
iii. other income and expenses related to transactions with shareowners(except when directly recognized in equity)
iv. depreciation of tangible assets including right of use assetsv. (gains)/losses on the sale of tangible assets, included right of use assets andintangible assets
vi. restructuring expenses
vii. other non-recurring items

Adjusted EBITDA and Adjusted EBITDA margin

The difference between EBITDA and Adjusted EBITDA consists of non-cash
share-based compensation expenses and certain one-time items that are
deemed by management to be significant and incidental to normal businessactivity. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue.
UMG considers Adjusted EBITDA and Adjusted EBITDA margin, non-IFRS
measures, to be relevant measures to assess performance of its operating
segments excluding items that may be incidental to normal business activity.

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APPENDIX

Adjusted Net Profit/Adjusted Net Profit per share

UMG considers the use of Adjusted net profit appropriate as UMG uses it as
the basis for the Adjusted net profit per share (in EUR) – diluted, both of which
are non-IFRS measures. Adjusted net profit may be subject to limitations as ananalytical tool for investors, as it excludes certain items and therefore does notreflect the expense associated with such items, which may be significant andhave a significant effect on UMG’s net profit.

The accounting impact of the following items is excluded from Net profit
attributable to equity holders of the parent:
i. amortization of catalogues
ii. impairment losses on goodwill and intangible assets
iii. other charges and income related to transactions with shareowners
iv. financial income and expenses, excluding interest and income
from investments
v. earnings from discontinued operations
vi. non-cash share-based compensation expenses
vii. certain one-time items that are deemed by management to be significant
and incidental to normal business activity
viii. income taxes and adjustments attributable to non-controlling interests
ix. non-recurring tax items

Financial Net Debt

UMG considers financial net debt, a non-IFRS measure, to be a relevant indicatorof the group’s liquidity and capital resources. UMG management uses thisindicator for reporting, management and planning purposes. Financial Net Debt
is calculated as the sum of:i. cash and cash equivalents, as reported in the Consolidated Statement of
Financial Position, including (i) cash in banks and deposits, whether or notcompensated, corresponding to cash, and (ii) money market funds
ii. cash management financial assets, included in the Consolidated Statementof Financial Position under “financial assets”, relating to financial
investments, which do not satisfy the criteria for classification as cash
equivalents set forth in IAS 7
iii. derivative financial instruments, net (assets and liabilities) where theunderlying instruments are Financial Net Debt items, as well as cash
deposits securing borrowings included in the Consolidated Statement of
Financial Position under “financial assets”
less:i. the value of borrowings at amortized cost as reported in the Consolidated
Statement of Financial Position

Free Cash Flow

UMG defines Free Cash Flow as net cash provided by/(used for) operating
activities plus net cash provided by/(used for) investing activities, lessrepayment of lease liabilities, interest, net and other cash items related tofinancing activities. UMG considers free cash flow, a non-IFRS measure, to be arelevant indicator of the group’s cashflow generated to fund dividend payments
and repayment of debt. Free Cash Flow is not a measure of performance
calculated in accordance with IFRS and therefore it should not be considered inisolation of, or as a substitute for cash flow provided by operating activities as ameasure of liquidity. Free Cash Flow, as we calculate it, may not be comparable

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APPENDIX

to similarly titled measures employed by other companies. In addition, Free
Cash Flow does not necessarily represent funds available for discretionary use
and is not necessarily a measure of our ability to fund our cash needs.

Reconciliation of net profit attributable to equity holders of theparent to adjusted net profit
Year ended,

December 31(in millions of euros)

2022

2021

Net profit attributable to equity holders of the parent1

782

886

Financial income and expenses, excluding interest andincome from investments

671

220

Certain one time items

107

(11)

79

17

-

Non-cash share-based compensation expense
2

Impairment of intangible assets
Amortization of catalogues

233

144

(90)

-

Income tax on adjustments(255)

Adjusted Net Profit

1,454

Non-recurring tax items

23

(81)

1,271

1 As reported in the Consolidated Statement of Profit or Loss
2 Certain one time items in 2022 includes interest income in relation to the one-time non-recurring tax item andin 2021 related to expenses related to the direct listing of UMG on the Euronext Amsterdam.

Adjusted net profit per share
Year ended December 31,(in millions of euros)

Adjusted net profit
Number of shares

2022

basic

1,454

2021

diluted

1,454

basic

1,271

diluted

1,271

1Weighted average number ofshares outstanding

1,813

1,813

1,813

1,813

-

3

-

1

1,813

1,816

1,813

1,814

0.80

0.80

0.70

0.70

Potential dilutive effects related tosharebased compensation

Adjusted weighted average numberof shares

Adjusted net profit per share (in euros)

1 As reported in Note 7 of the Consolidated Financial Statements.

Net cash provided by operating activities - Adjustments

Operating profit includes certain non-cash items that are adjusted to get to the
Net cash provided by operating activities as follows:

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APPENDIX

Year ended,

December 31(in millions of euros)

2022

2021

Amortization and depreciation expense

377

Changes in provisions, net

65

Impairment of intangible assets(Gain)/loss on sale of assets
Other non-recurring items
Adjustments

17

277
-

8

2

(2)

461

280

-

(3)

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APPENDIXCAUTIONARY NOTICE
Forward-looking statements

The annual report contains statements that may constitute forward-looking
statements with respect to UMG’s financial condition, results of operations,business, strategy and plans. Such forward-looking statements may be
identified by the use of words such as ‘profit forecast’, ‘expect’, ‘estimate’,‘project’, ‘anticipate’, ‘should’, ‘intend’, ‘plan’, ‘probability’, ‘risk’, ‘target’, ‘goal’,‘objective’, ‘will’, ‘endeavour’, ‘optimistic’, ‘prospects’ and similar expressions
or variations on such expressions. Although UMG believes that suchforwardlooking statements are based on reasonable assumptions, they are
not guarantees of future performance. Actual results may differ materiallyfrom such forward-looking statements as a result of a number of risks anduncertainties, many of which are related to factors that are outside UMG’scontrol, including, but not limited to, UMG’s inability to compete successfully
and to identify, attract, sign and retain successful recording artists andsongwriters, failure of streaming and subscription adoption or revenue to growor to grow less rapidly than anticipated, UMG’s reliance on digital service
providers, UMG’s inability to execute its business strategy, the global nature of
UMG’s operations, UMG’s inability to protect its intellectual property and against
piracy, UMG’s inability to attract and retain key personnel, changes in laws andregulations and the other risks described in the annual report. Accordingly,
UMG cautions readers against placing undue reliance on such forward-looking
statements. Such forward-looking statements are made as of the date of theannual report. UMG disclaims any intention or obligation to provide, updateor revise any such forward-looking statements, whether as a result of new
information, future events or otherwise.

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