UNIVERSALMUSIC GROUPANNUAL REPORT 2023

CONTENTS
ABOUT UMG

4

Foreword
ProfileMissionVisionOur purpose and values
2023 Chart highlights
Key figures 2023
Financial data for the last three years
Non-financial key figures 2023
How UMG adds value
Year in review
Stakeholder Analysis

5
7
8
9
10
12
19
21
22
24
26
28

SUSTAINABILITY

33

BOARD REPORT: Introduction

39

BOARD REPORT: Strategy

53

BOARD REPORT: Organizational and Reporting Structure

64

BOARD REPORT: Financial Review

69

BOARD REPORT: Corporate Governance83

Our approach

34

Business profile
Recorded Music
Music Publishing
Merchandising

40
41
47
50

Creativity, innovation, entrepreneurship

54

Earnings analysis: group and business segments
Liquidity and capital resources

This copy of the annual reportof Universal Music Group N.V. forthe year 2023 is not in the ESEF
format as specified by the European
Commission in Regulatory TechnicalStandard on ESEF (Regulation(EU) 2019/815).

70
78

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

84
85
97
106

BOARD REPORT: Shareholder Information

107

BOARD REPORT: Risk and Risk Management

113

The ESEF reporting package can befound on our website.

MUSIC IS UNIVERSAL Annual Report 2023 | 2

BOARD REPORT: Non-Financial Information

137

NON-EXECUTIVE DIRECTORS REPORT216

FINANCIAL STATEMENTS

242

OTHER INFORMATION325

APPENDIX

339

Our Commitments
Regulatory & Standards Alignment
Information Tables
Verification of Non-Financial Data
ESG Indexes

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

138
178
195
199
209

217
226

243
304

326
327

340
344
350
354

MUSIC IS UNIVERSAL Annual Report 2023 | 3

ABOUT UMG

ABOUT UMG

FOREWORDWE ARE UNIVERSAL
Dear Fellow Shareholders:
I am proud to report that, once again, Universal Music lead the industry acrossthe major financial and competitive performance metrics in 2023, at the sametime our artists and songwriters broke records and topped the charts around theworld. And there is so much more of which we can be proud this year.
It had become obvious that if music were to continue to thrive and thevalue of artists’ work respected, several important issues would need to be
confronted. As the industry leader we took bold steps to turn our vision into
reality. For example, I have long been vocal about the streaming royalty model’s
shortcomings. A new model was needed, one that would properly reward theartist-fan relationship and disincentivize fraud and gaming the system. We callit the “Artist-Centric Model.”Already, several global platforms have adopted artist-centric principles that willtransform the way artists are compensated for their work. As this new model
becomes widespread, the impact will be profound: a healthier, more equitable
and more vibrant music ecosystem that rewards all artists—be they major, indie
or DIY—at all stages of their careers.
In the same way, we led the way when it came to confronting the challenges
and opportunities of Artificial Intelligence (or AI). Early on in 2023, many
“experts” viewed AI as a looming threat. Our view? Just as we had done withso many other previous proclamations of doom, we rejected that short-sighted
appraisal. We see AI as also presenting opportunities. And then once again, we
turned opportunities into reality.
We launched our Responsible AI initiative with two goals in mind. First, tolobby for “guardrails,” public policies setting basic rules for AI. Second, to forge
private-sector partnerships with AI companies. In the past, new technology was
simply released into the world, leaving the music community to develop themodel by which artists would be fairly compensated and their rights protected.
In a sharp break with that past, we formed a historic relationship with YouTube
giving artists a seat at the table before any product goes to market, including
helping to shape AI products’ development and monetization. In addition, ourartists are working with some of the latest AI technology and companies toenhance and support the creative process and music experiences.
We also advanced initiatives in areas from health and wellness to sustainability
and the environment. I am especially passionate about the intersection ofmusic and health. Building upon our success in creating a robust fitness
category, we’re now building a commercial category from this powerfulrelationship between music and health. After entering more than 40 license
agreements in this space, we produced the first-ever Music + Health Summit,
bringing artists together with health entrepreneurs and neuroscientists. We are
pioneering a new category called “prescription music,” built on scientific andmedical research. It’s cost-effective, non-invasive and drives beneficial results.

MUSIC IS UNIVERSAL Annual Report 2023 | 5

ABOUT UMG

Our employees accomplished even more towards promoting positive societal
change. Our All Together Now Foundation, Task Force for Meaningful Change,
Green Team, Unhoused Coalition, and Employee Matching Program contributed
to more than 500 organizations around the world and supported over 1.2 million
meals for those in need.
We are also advancing the industry on sustainability. We co-founded theMusic Industry Climate Collective, the music industry alliance to address global
climate change. And we became the first standalone major music company to
win approval of its greenhouse gas emission reduction targets by the Science
Based Targets initiative.
We also continued to expand our presence in high-growth markets—both
through the strength of our companies in those regions as well as the
expansion of Virgin Music Group. We acquired Chabaka Music, a leading MENAbased company, as well as a majority stake in RS Group in Thailand. In India
we strengthened our position domestically with an exclusive partnership withRepresent, a leading management company. In China we signed new long-term
agreements with superstar Eason Chan and with 2022’s No. 1 IFPI global album
seller Jay Chou, that includes his JVR Music label.
Looking to 2024, both the pace of change and our industry leadership will
increase significantly and on many different fronts.
We will extend the reach of our pioneering artist-centric strategy. Our next
focus will be to grow the pie for all artists, including by strengthening the artistfan relationship.
As for AI, we will continue building opportunity for artists, while also leading thefight to protect them from unethical uses of this technology.
We will keep growing our presence around the world: signing and developing
local artists; providing local labels and entrepreneurs with global promotion,
distribution, and a full suite of artist services; and acquiring local labels,
catalogs, and artist services businesses.
Over recent years, we have been investing in future growth, not just expanding
geographically and leveraging new technologies, but building our e-commerceand D2C operations. As we continue our investments in A&R and artist
development, we will further evolve our organizational structure to create
efficiencies in other areas of the business, so we can remain nimble andresponsive to opportunities as they arise.
In the face of so much change and opportunity, standing still is never an option.
We must continue to fight for our artists and songwriters and stand up for thecreative and commercial value of music. Our vision of the future is filled withpossibilities, and acting on our strategy will make those possibilities real—for
our artists, our employees, our shareholders and the entire music ecosystem.

SIR LUCIAN GRAINGE, CHAIRMAN AND CEO,UNIVERSAL MUSIC GROUP

MUSIC IS UNIVERSAL Annual Report 2023 | 6

ABOUT UMG

WE AREA CATEGORY
OF ONEPROFILEWE HAVE A RICH HISTORYAND HAVE BUILT AN
UNPARALLELED CATALOG OF
SONGS AND RECORDINGS

Nº
Nº
Nº
Nº

1
2
1
1

RECORDED MUSIC>3.2 MILLION
RECORDINGSMUSIC PUBLISHING

4.5 MILLIONOWNED & ADMINISTERED TITLESMUSIC MERCHANDISING>220

ARTISTS / BRANDSMUSIC-BASED VISUAL ENTERTAINMENT

3,300

A LIBRARY OF MORE THAN
TITLES OF
LONG-FORM MUSIC-BASED AUDIOVISUAL CONTENTACROSS 1,350 ARTISTS

11 TRILLIONNEARLYSTREAMS OF
UMG AUDIOVISUAL CONTENT ON SOCIAL MEDIA
PLATFORMS IN 2023
MUSIC IS UNIVERSAL Annual Report 2023 | 7

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 around the world.

We identify and develop recording artists and songwriters, and we produce,
distribute and promote the most critically acclaimed and commerciallysuccessful music to inspire 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 technology refashions the world, our unmatched commitment to lead indeveloping 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 to music’s greatest artists, innovators and entrepreneurs.

TOGETHER,WE ARE UNIVERSAL MUSIC GROUP.

MUSIC IS UNIVERSAL Annual Report 2023 | 8

ABOUT UMG

VISIONPUTTINGARTISTS FIRST
Artists and songwriters are at the heart of everything we do at Universal Music
Group (UMG). 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. UMG invests more in developing talent, and does so with greater
expertise, than any other music company. This investment, combined with our
excellence in marketing and promoting artists globally, means we consistently
lead the industry in breaking new artists.
Putting artists first sets us apart. We turn art into hits and hits into careers.
By building a continuum of services and resources for artists, we've designed
UMG so we can partner with artists at each stage of their careers to provide
them with all the services and resources they need. We start by identifying
the artists with whom we want to partner and presenting them with a worldof opportunities to accelerate their careers. We remain by their side withcustomized campaigns and promotion, platform-integrated targeted marketing,
top-tier data and insights, and global reach with local activation.
We work side-by-side with them over the 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 2023 | 9

ABOUT UMG

OUR
PURPOSEAND VALUESDRIVE A LWAYS PUSH FOR THE NEXT LEVEL OF GREATNESS.

We like to win. But winning is just the beginning. We’re always hungry to do more, regardlessof what we’ve already accomplished. We don’t wait to be shown the way forward; we create it.
We don’t measure our success against our competitors; we push to outdo ourselves.

INSIGHT S EE WHAT OTHERS DON’T SEE.

The bets we make may seem risky to some, but to us they are intuitively obvious. We trust
our gut but question our assumptions. To hone our understanding, we combine data andreal-world experience. We clearly imagine a future that others can’t see, yet.

AUTHENTICITY EXPRESS WHO YOU TRULY ARE AND WHAT YOU BELIEVE.

Music is about so much more than the bottom line. We believe successcomes from investing in genuine artistry and encouraging people to stay true
to themselves. Instead of looking outward, we look inward to uncover what isreal, true, and unique.

CONNECTION D RAW STRENGTH FROM DIVERSE AND MEANINGFUL RELATIONSHIPS.
Our business is built on relationships. We find common ground to connect withartists, fans, partners and each other. We believe no single person can achieveon their own what we can accomplish together. Diverse connections andperspectives make us stronger.

BOLDNESS A CT DECISIVELY WITH OWNERSHIP AND CONVICTION.

We aren’t afraid to make big bets. We don’t wait for others to make a move—we win byacting first and raising the stakes on our own terms. We encourage people to speak out
and voice their ideas. You can’t drive up the scoreboard without taking risks.

CREATIVITY M EET A CHALLENGE IN NEW AND UNEXPECTED WAYS.

We bring creativity in everything we do. Regardless of our role, we constantly ask,

“what if?” and imagine how things could be different. We’re not afraid to be on theleading edge, even if it means throwing out the rules and starting from scratch.

MUSIC IS UNIVERSAL Annual Report 2023 | 10

ABOUT UMG

WE TURN ART INTO HITS
AND HITS INTO CAREERSSUPPORT THE ACT• State-of-the-art studios• World-class collaborators• Cutting-edge visual art and video creative services• Artist financial support, including
significant upfront investment• Career planning

CREATE A HIT• Highly customized campaigns and promotion• Platform-integrated, targeted marketing• Top-tier data and insights• Ability to deliver global reach withcoordinated local activation

BUILD
AND SUSTAINA CAREER• Continuous engagement building lifetime fan value• Unique access to synch, brand partnerships
and licensing opportunities• eCommerce capabilities monetize fandom,
leveraging merchandise & productdevelopment expertiseMUSIC IS UNIVERSAL Annual Report 2023 | 11

ABOUT UMG

2023 CHART HIGHLIGHTSGLOBAL
IFPI#1

9 OF THETOP 10Taylor SwiftSEVENTEEN
Stray Kids

2
3

ARTISTS

4
5
6

Drake
The Weeknd
Morgan Wallen

Spotify#1

6 OF THETOP 10ARTISTS ON SPOTIFY

7 TOMORROW x TOGETHER
8 NewJeans
10 Lana Del Rey

Apple Music
Taylor Swift
The Weeknd
Drake
Feid
Karol G
Lana Del Rey

STREAMED SONGSON APPLE MUSIC

YouTubeUMPG#1ON YOUTUBE,
UMG HAD#1

13 OF THETOP 20 MOST

9 OF THE TOP 10 ALBUMS
AND 6 OF THE TOP 10 SONGSINTEREST IN

3 OF THE TOP 5

ON SPOTIFY

SONGS

U.S.
Spotify

ALL OF THE TOP 4
MOST STREAMEDARTISTS ON SPOTIFYApple Music
Taylor Swift
Drake
Morgan Wallen
The Weeknd

5 OF THE TOP 7

SONGS ON APPLE MUSIC

Billboard

6 OF THE TOP 10

ALBUMS ON THE
BILLBOARD 200 AND
REPUBLIC RECORDSWAS NAMED BILLBOARD’S

TOP LABEL

UMPG#1

INTEREST IN

7 OF THE TOP 10

APPLE MUSIC AND

3

TOP 5

OF THEBILLBOARD HOT 100 SONGWRITERS

FOR THE THIRD CONSECUTIVE YEARMUSIC IS UNIVERSAL Annual Report 2023 | 12

ABOUT UMG

2023 CHART HIGHLIGHTSREGIONALUK
ACCORDING TO THE
OFFICIAL CHARTSCOMPANY, UMG HAD

7

OF THEARTISTS

Germany#1

TOP 106 OF THE TOP 10
ALBUMS ACCORDINGTO GFK#1

DEUTSCHE GRAMMOPHON

7 OF THETOP 10 ALBUMS ON THE
HAD

Japan

5 OF THE TOP 10

GERMAN CLASSICAL CHART#1

ALBUMS ACCORDING TO
BILLBOARD JAPAN

Australia

France5 OF THE TOP 10 TRACKS OVERALL
AND 3 OF THE TOP FIVE
TRACKS ON APPLE MUSICNO. 1 ALBUM FOR 34 WEEKS

Canada(ACROSS 14 UNIQUE ARTISTS)

8 OF THE TOP 10 ALBUMS
Indonesia“TAK SEGAMPANG ITU” BY

NO. 1 ALBUM FOR
33 WEEKS THIS YEAR

UMG HELD THE

ANGGI MARITOWAS TOP SONG OF THE
YEAR ON SPOTIFY

Latin America
KAROL G WON

Philippines

JUAN KARLOS
BECAME THE FIRST ARTISTFROM THE PHILIPPINES TO

TOP 100

ENTER THE
GLOBAL SPOTIFY CHARTS

3 LATIN GRAMMYS AND WAS
VEVO’S MOST WATCHEDARTIST GLOBALLY

Sweden5 OF THE TOP 10 ARTISTS ON SPOTIFYMUSIC IS UNIVERSAL Annual Report 2023 | 13

ABOUT UMG

MUSIC ISTHE SOUNDTRACKOF OUR LIVESSOCIALHOME
TV / FILM

D2C
E-COMMERCELIVEGAMINGCAR

WORKHEALTH/WELLNESSMUSIC IS UNIVERSAL Annual Report 2023 | 14

ABOUT UMG

MUSIC ISTHE SOUNDTRACKOF OUR LIVES
On average people use

7+

48%

listened to music
using subscription
audio streaming48%

of 16-24 yr olds discovera new music artist atleast weekly

methods toengage with
music

73%
listen through licensed audio streaming
services (subscription and ad supported)different genres ofmusic on average

63%
Specific artists = 57%
Specific albums = 42%
Own playlists = 59%
Specific songs =of 16-24 year olds
like discovering older
music that is new tothemof gamers listened
to music while
they played

8+

Listeners areactively choosing themusic they want to listen
to on streaming services

64%

80%

People listen to36%

have watched a music livestream suchas a concert in the last monthTime spent listening to music onsubscription audio streaming
services grew by

7%

Source: IFPI ‘Engaging with Music’ 2023, a study that explores the ways that fans listen to, discover, and engage with music around the world.
In total, over 43,000 internet users were surveyed in 26 countries that make up >90% of global recorded music market revenue.
MUSIC IS UNIVERSAL Annual Report 2023 | 15

ABOUT UMG

2023 MUSICENGAGEMENT MIX

7%

Other forms of music
listening

4%

24%

Live music

Subscription audio
streaming

20.7

9%

Purchased music

HOURS

17%

time spent listening to music eachweek (up from 20.1 hours in 2022)

8%

That’s the equivalent of listening toan additional four 3-minute songs
per week

Ad-supported
audio
streaming

Music on the radio

19%

4%

Social media
platforms

8%Video streaming(e.g. YouTube, Daily Motion,
Niconico)

Short form video apps

Source: IFPI ‘Engaging with Music’ 2023, a study that explores the ways that fans listen to, discover, and engage with music around the world.
In total, over 43,000 internet users were surveyed in 26 countries that make up >90% of global recorded music market revenue.
MUSIC IS UNIVERSAL Annual Report 2023 | 16

ABOUT UMG

MUSIC IS
INCREASINGLY IMPORTANT
TO WELLNESS

71%

41%

SAY MUSIC IS
IMPORTANT TO THEIRMENTAL HEALTH
74% of Millennials

listen to music torelax or unwind

78%

33%

listen to music while
exercising or at the gym

33%

said music helps them relax andcope with stress

30%

21%

listen to music
while travelling23%

listen to music
while hanging out
with friends or family

listen to music
while cooking

87%of people said they would listen
to music to help cope if in thehospital and in pain

listen to music while
taking a bathor shower

28%

listen to musicat a party

27%

listen to musictaking a walk or hike

Source: IFPI ‘Engaging with Music’ 2023, a study that explores the ways that fans listen to, discover, and engage with music around the world.
In total, over 43,000 internet users were surveyed in 26 countries that make up >90% of global recorded music market revenue.
MUSIC IS UNIVERSAL Annual Report 2023 | 17

ABOUT UMG

MUSIC +HEALTHTHE FIRST-EVER MUSIC + HEALTH CONFERENCEPRESENTED BY UMG, THRIVE GLOBAL AND
HAVAS HEALTH WAS HELD IN LOS ANGELES ON
SEPTEMBER 19, 2023.
OUR PARTNERS

Inspired by the personal experiences of Sir Lucian Grainge and Arianna

Huffington (CEO, Thrive Global), the event brought together 280 innovators andindustry leaders to explore the powerful connection between music and health– including music’s potential medical benefits, its role in the next generationof digital therapeutics, and its future implementations for improved quality oflife alongside treatments for serious and chronic medical conditions.

With 40+ partners in the health, wellness, and fitness space, UMG’s industry-leading efforts were at the forefront, and the conference served as a forum for
3 UMG announcements:• Exclusive partnership with Thrive Global’s Thrive Reset- Licensing
UMG’s catalog to Thrive Reset’s stress reduction product to improve users’
well-being and productivity.

• Sollos project launch- UMG’s own health/wellness app combines music
and cognitive science, and proprietary audio technology to support focus,
relaxation and sleep.

• Partnership with soundBrilliance- Selections from UMG’s catalog to be

used in closed clinical trials to promote emotional balance, fitness, quality ofsleep and pain control.

UMG’s steadfast commitment to health, wellness, and fitness is influencing anever evolving digital strategy and approach to the future use cases for music.

1DAY

CONFERENCEHOSTED BY• UMG• THRIVE GLOBAL• HAVAS HEALTH& YOU

ARTIST
ENGAGEMENT BY

12

280

WITH 32 SPEAKERSFROM 21 COMPANIESACROSSTHE HEALTHCARE/
MEDICAL WELLNESSCOMMUNITIESSESSIONSKEYNOTE BY

ATTENDEESSELENA GOMEZ (IGA)
SIR LUCIAN GRAINGEARIANNA HUFFINGTONCHAD LAWSON (VERVE)
CHELSEA CUTLER (REPUBLIC)

MUSIC IS UNIVERSAL Annual Report 2023 | 18

ABOUT UMG

FINANCIAL KEY FIGURES
2023
YEAR ENDED DECEMBER 31

UMG results (in € millions)

REVENUEOPERATING PROFIT
2023

11,108
YoY
constant+7.4%+11.1%

2022+21.6%+13.6%

1,808-10.8%-7.8%

1,600+ 14.8%+ 7.9%

2023

2,028+ 20.3%

YoY+ 12.5%

2022

16.3%

19.6%

-3.3pp- 0.2pp

ADJUSTED EBITDA MARGIN1
2023

2,369
constant

constant

2022

ADJUSTED EBITDA1

YoY-11.4%
-8.3%

YoY

2022

EBITDA MARGIN1
2023

constant

1,418

10,340EBITDA1

YoY

2023+11.0%+14.6%

2022

2023

2,135
+ 19.4%

YoY+ 11.7%

2022

21.3%

20.6%

+0.7pp- 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 2023 | 19

ABOUT UMG

FINANCIAL KEY FIGURES
2023
Results per business segment (in € millions)

YEAR ENDED DECEMBER 31

REVENUE
2023

8,461
RECORDED MUSIC+6.6%+10.2%

YoY
constant

2022
7,937
+ 16.3%+ 8.8%

YoY growth in constant currency
Subscription and Streaming Revenue+10.4%+9.8%

Physical Revenue+19.4%+4.1%

Downloads and Other Digital Revenue
License and Other Revenue-35.7%-2.9%+13.6%+13.4%

2023

2022

REVENUEMUSIC PUBLISHING

1,956
YoY
constant

MERCHANDISINGAND OTHER+8.7%+12.3%

1,799+ 34.8%+ 26.3%REVENUE
2023

706
YoY
constant+14.2%+17.9%

2022
618+ 70.2%+ 54.1%Note% YoY indicates % change year-over-year% constant indicates % change year-over-year adjusted for constant currency
Segment revenue is stated prior to elimination of intersegment transactions
MUSIC IS UNIVERSAL Annual Report 2023 | 20

ABOUT UMG

FINANCIAL DATA FOR THE LAST
THREE YEARSYear ended December 31,

Consolidated data
Revenues
EBITDA1

2023

2022

2021

11,108

10,340

8,504

2,369

2,135

1,788

1,808

Adjusted EBITDA

1

Operating profit

1,418

Net profit attributable to equity holders of
the parent

1,259

Adjusted net profit1

1,595

Net Cash Position/(Financial Net Debt)1

2,028
1,600
782
1,454

1,686
1,394
886
1,271

(1,689)(1,810)(2,010)

2,278

1,987

1,395

1,082

1,086

(798)

638

(785)

1,819

1,813

1,813

0.69

0.43

0.49

Earnings attributable to UMG N.V. shareowners per
share - diluted

0.68

0.43

0.49

Adjusted net profit per share - diluted

0.88
0.87

0.80

0.70

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 - basic

Adjusted net profit per share - basic1

1

(929)

0.80

0.70

1 Non-IFRS measures as defined in the Appendix to the Annual Report.

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

MUSIC IS UNIVERSAL Annual Report 2023 | 21

ABOUT UMG

NON-FINANCIAL KEY FIGURES
2023
ENVIRONMENTAL

SOCIALSCOPE 1 & 2 TARGET PROGRESS in tCO2e (absolute)2023

Scope 1

1,945

2,398

Men

Scope 2 (market-based)

5,627

6,192

Women

We reduced our scope 1 and 2 (market-based) emissions by 12% overprior year and 34% from our 2019 base year.2

49%

SCOPE 3 TARGET PROGRESS in tCO2e (intensity)

MANAGERS4

Total emissions
Absolute emissions in target
boundary

448,319422,594404,282

109

112

We reduced our scope 3 emissions on an intensity basis, by 3% overprior year and 46% from our 2019 base year in tCO2e per million EUR
value added.2

Buildings that transitioned torenewable electricity (additions)
Buildings that have received anenvironmental certification(% of total m2)
Buildings that have received anenvironmental certification (additions)

3
4

2023

3,369
Men
Women

1,939
1,430

58%

GREEN BUILDINGS
Buildings utilizing renewableelectricity (% of total m2)

5,044
5,246

2022
9,992
4,913
5,079

51%

20221

469,588

Emissions in tCO2e/million EUR
value added3

2

10,290

8,590

2023

1

2023

20221

7,572

Total emissions

TOTAL HEADCOUNT

2022
3,456
1,980
1,476

42%

GLOBAL TURNOVER
2023

2022

47%

46%

+9

+8

2023

2022

11.53% 13.95%
VOLUNTARY TURNOVER

28%

30%

+4

+3

2023

7.03%

2022
9.55%

 Y22 emissions were adjusted in accordance with our internal policy to include the addition of new categories resulting from our SBTi validationF
exercise (Category 9: Downstream transportation and distribution, Category 14: Franchises, and Category 15: Investments), as well as dataenhancements and corrections for improved accuracy. Adjustments illustrate year over year progress across our key non-financial indicators.

 e committed to reduce absolute scope 1 and 2 GHG emissions 58% by 2032 from a 2019 base year and reduce scope 3 GHG emissions in ourWtarget boundary 62% per EUR value added within the same time frame. Our scope 3 target boundary includes categories 1-7 (see Environment
section for more information).
“Value added” is defined by the Science Based Targets initiative as earnings before interest and depreciation (EBITDA) + all personnel costs.
 MG initiated a global job architecture project in 2023 to harmonize career leveling and remuneration, contributing to the year-over-year
U
manager variance.

MUSIC IS UNIVERSAL Annual Report 2023 | 22

ABOUT UMG

RECORDED MUSIC INDUSTRY
2023 TOP 10 MARKETS

8 CANADA

6 FRANCE+12.2% | US$660m

5 CHINA+4.4% | US$1.2bn+25.9% | US$1.5bn

4 GERMANY

2 JAPAN

+7.0% | US$1.6bn

3 UK+7.6% | US$2.7bn+8.1% | US$1.9bn

1 USA

7 SOUTH KOREA+7.2% | US$11.0bn+13.1% | US$834m

9 BRAZIL+13.4% | US$574m

10 AUSTRALIA+11.3% | US$506m

GLOBAL RECORDED MUSIC INDUSTRY REVENUES 2016 TO 2023 (IN $ BILLION)*+18.5%
+7.2%

+7.9%

+9.9%

+7.5%

+10.2%

+9.0%

15.8

17.4

18.8

20.1

14.7

2016

2017

2018

2019

2020

23.8

2021

26.0

2022

*
All reporting is translated at average CY 2023 exchange rates. Russia has been excluded from all years.
Source: IFPI Global Music Report 2024

28.6

2023

MUSIC IS UNIVERSAL Annual Report 2023 | 23
MUSIC IS UNIVERSAL Annual Report 2022 | 47

ABOUT UMG

HOW UMG ADDS VALUE OVERVIEWARTISTRY AND CONTENTPEOPLETECHNOLOGYFINANCIAL RESOURCESC PUBLISHING
MUSI

ART
IS
T

TECHNOLOGICALINNOVATIONAND ETHICALAI DEVELOPMENTS

N

INN
O

RY

PUTTINGARTISTS FIRSTTREXPANDED
ECOMMERCE,D2C AND
SUPERFAN
OFFERINGS

EP R

I

P

E

DATA ANDANALYTICSCOMPLEMENTEDBY SCALEGLOBALPRESENCE
WITH LOCAL
EXPERTISE

N
TIO
VA

REC
OR
DE
D

M
US
I

C

ENEUR

SH

ING
DIS
AN
CH
ER
M

ARTIST
DEVELOPMENT,
MARKETING AND
PROMOTIONARTISTCENTRIC
MODEL INNOVATION WITH
DISTRIBUTIONPARTNERSNEWOPPORTUNITIESFOR MUSICMONETIZATIONVALUE CREATION FOR
ARTISTSEMPLOYEES

Environmental

SocialSHAREHOLDERS

DISTRIBUTION PARTNERS

FANS, GOVERNMENT AND SOCIETY

GovernanceMUSIC IS UNIVERSAL Annual Report 2023 | 24

ABOUT UMG

HOW UMG ADDS VALUE INSIGHTSARTISTRY AND CONTENTPEOPLETECHNOLOGYFINANCIAL RESOURCES

Industry leading roster ofartists and songwriters

Total headcount: 10,290

UMX Proprietary Data &Insights Technology Platform

Royalty advance payments,
net of recoupments: €100m

Leading Record Labels
and Brands

Best in Class Management and
A&R Teams

Rights Management Tools

Net cash used for investing
activities: €622m> 3.2 million recordings

Offices in 60 countries

World Class Studios andProduction Facilities± 4.5 million owned andadministrated titles

Learning and Development

AI patents with applications
in marketing and audience
identification and behavior

10,000s hours of videos

Investment in leading
eCommerce platforms

INN

RY

ION
AT
OV

PUTTINGARTISTS FIRST

EN

TR

HI

P

Partnerships and JVs withindependent labels andentrepreneurs

ART
IST

> 220 artists / brands inmerchandising

EP R ENEURSVALUE CREATION FOR
DISTRIBUTIONPARTNERS

FANS, GOVERNMENTAND SOCIETY

Dividends Paid:€929m

Enable platform partners
to grow their businesses
by offering the world’s
most sought-after content

Help connect fans withartists they love

Build and develop
careers aimed
at long-term successTotal Shareholder
Return: 17.5%

Expanded reachthrough partnerships& distribution

Product innovation,
premium products andexperiences for super fans

Improved
employee retention
and wellness

Revenue Growth:
11.1% (const.
currency)

Expand the addressable
market for music

Preserve and advancecultureHelp artists stand out
in a sea of content

Adjusted EBITDA
Growth: 14.6% (const.
currency)

Support developing music
markets around the world

Protect the planet for
future generations ofmusic lovers

Facilitate directconnections
with fans

Adjusted EPS growth:
10.0%

Drive new use cases
for music

Support local communities
and music education

Develop premium
products

Support artist’s social
advocacy efforts

ARTISTSEMPLOYEESSHAREHOLDERS

Artist Costs Paid:€5,152m

Salaries & Benefits
Paid: €2,081m

Protect intellectual
property and rights
Protect artists’catalog and extend
cultural legacy

Improve commercial
success

Demand sustainable
solutions throughout
the supply chain

MUSIC IS UNIVERSAL Annual Report 2023 | 25

ABOUT UMG

YEAR IN REVIEWMARCHBoard of Directors extended the engagement of UMG Chairman
and Chief Executive Officer Sir Lucian Grainge until
May 1, 2028.
Launch of the Human Artistry Campaign, a global
initiative to protect creators’ rights in the age of Artificial
Intelligence (AI), with more than 150 supportingorganizations from 33 countries, including UMG.

JANUARY
Chairman and CEO
Sir Lucian Grainge
calls for a new“artist-centric”
model to transformthe way that artists
and rightsholders
are paid bystreaming services.
Sherry Lansing
named Chairmanof the Board of
Universal Music
Group N.V.

Acquisition of British classical label Hyperion Records. Founded
in 1980, Hyperion joins UMG’s portfolio of world-renowned
classical labels, including Deutsche Grammophon(founded in 1898) and Decca Classics (established in
1929), further reinforcing UMG’s position as the definitive
home for classical music globally.
At the 2023 Japan Gold Disk Awards, King & Prince
won Single of the Year for “Tsukiyomi/
Irodori”, The Beatles werenamed Artist of theYear/International
for a recordbreaking
eighth timeand BTS wasnamed Best
Asian Artist for
the fifthconsecutive year.

MAY
First-of-its-kind strategic
relationship with AI soundwellness company Endel toenable artists and labels tocreate soundscapes fordaily activities like sleep,
relaxation, and focus byharnessing the power of AI.

FEBRUARY

APRIL

JUNE

At the 65th Annual Grammy Awards,
Kendrick Lamar won three Grammys
including Best Rap Album for
Mr. Morale & The Big Steppers andBest Rap Song and Best Rap Performance for “The Heart Part 5,” while
Samara Joy won Best New Artist andBest Jazz Vocal Album for Linger
Awhile.

Global icon Anitta signed to
Republic Records in partnershipwith Universal Music Latin
Entertainment. The signing cameon the heels of her nominationfor Best New Artist at the 2023
Grammy Awards as well as her
Guinness World Record as the“First Solo Latin Artist to Reach#1 on Spotify Globally”.

Successful pricing of€750m of 4.000% seniorunsecured notes due
2031 with the proceeds
being used to refinanceexisting indebtedness.

MUSIC IS UNIVERSAL Annual Report 2023 | 26

ABOUT UMG

YEAR IN REVIEWNOVEMBER
Spotify, the world’s
largest music streaming platform alsoannounced theadoption of a new‘Artist-Centric’streaming model,
beginning early 2024.

AUGUSTInterscope Records
signs multi-platinum
selling 19-year-old
Ivan Cornejo, one of theyoung singer-songwriters
fueling regional Mexicanmusic’s resurgence.
Additionally, Cornejo
signed an exclusive
global publishingagreement with UMPG
shortly afterwards.
UMPG signed
eight-time Grammywinner Jack Antonoff,
who has collaborated
with superstars including
Taylor Swift and Lana
Del Rey, among others.
Additionally, Antonoff
is the lead singer
and songwriter ofthe band, Bleachers.

SEPTEMBER

In a first for astandalone major
music company,
UMG’s greenhouse gas(GHG) emission
reduction targets wereapproved by the Science
Based Targets initiative (SBTi),
the gold standard for establishing corporate climate goals.

UMG and Deezer
announce firstcomprehensive ‘Artist-Centric’agreement
designed tobetter reward themusic that fansvalue.

Universal Music Group
partners with Sony MusicEntertainment and WarnerMusic Inc. to launch the Music
Industry Climate Collective(“MICC”), a new, music industry
alliance to address thepressing challenges andprofound changes in global
climate.

DECEMBER
Strategic global
partnership launched in
China with Jay Chou, theinternationally renowned“King of Mandopop,” andhis prestigious recordlabel JVR Music. Choumade history as the first
Mandarin artist to breakinto the Top 10 of the IFPI
Global Artist Chart andthe first to top its Global
Album Sales Chart for
2022.

JULY

OCTOBER

Health & Wellness partner
MedRhythms, who exclusively
licenses their music from UMG,
receives its FDA approval for its
InTandem device. This becomes
the world’s first prescription digital
therapeutic product that usesmusic, helping patients learn towalk again after debilitating
strokes, with first prescriptions
rolling out in the U.S. in Fall 2023.

Established partnership with YouTube to create a set of principles and bestpractices around the use of AI in the creation of music; launch of a MusicAI Incubator to help study the effect of the technology.
Sir Lucian Grainge, Chairman and CEO of UMG, and Arianna Huffington, CEO,Thrive Global, hosted the first MUSIC + HEALTH summit in Los Angeles inassociation with Havas Health. The summit focused on the direct relationships between music and health, discussed recent research documenting
music’s therapeutic and medical benefits, showcased innovative companies
that are integrating music into fitness & wellbeing products and services,
and introduced new applications for music in thewellness space.
UMPG signing of platinum singer/songwriter
Sabrina Carpenter to an exclusive, worldwide publishing agreement. Carpenter was
one of many UMG signed artists thatfurther expanded their UMG relationshipwith
new publishing agreementsin
2023, including Maggie
Rogers, Niall Horan,
Andrea Bocelli,
Ice Spice and Lana
Del Rey.

MUSIC IS UNIVERSAL Annual Report 2023 | 27

ABOUT UMG

STAKEHOLDER ANALYSIS
We actively engage with our stakeholders in regards to our strategic direction
and seek their input when evaluating our Environmental, Social and Governancepriorities (see Main Material Topics). This creates sustainable value for our
stakeholders and for the company. By promoting two-way communications andvaluing our stakeholders’ input, we create a strong basis for constructive, longterm relationships. This intensive interaction enables us to prioritize the areas
they consider crucial. It also gives us insights into the ways our business andoperations can create positive impact. We subsequently focus on these material
areas and proactively communicate our progress.
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

Active and intensive engagement with our key stakeholder groups is a criticalpart of being a successful and responsible business. Aligned to stakeholders’particular needs and interests, we engage with them in both formal andinformal means throughout the year.
•
How we engage with our stakeholders•
Our stakeholders’ main interests•
How we respond and make 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•
Maintaining close connections with artists at every label and division of
the company•
Interacting with our artists directly via our A&R staff and indirectly throughtheir advisors•
Offering artists a full range of services in order to succeed creatively
and commercially•
Investing in continued artist development at all stages of their careers
Artists' main interests include:•
Their long-term career development and legacy•
Making their body of work widely available to fans•Connecting with fans in new and compelling ways•
Fair compensation for their work•
Building communities to engage directly with their fans•
Sustaining creative successMUSIC IS UNIVERSAL Annual Report 2023 | 28

ABOUT UMG

We respond to these interests and generate impact by:•
Fostering creative expression and collaboration within our diverse rosterof artists•
Partnering with an expansive network of distribution partners so artists canshare their work with a growing global fan base•Working with distribution partners and regulators to achieve faircompensation for music content•
Embracing new technologies that can increase music consumption and
fan engagement•
Creating new and exciting experiences for artists to engage with their fans

2. Fans
We engage with fans with a view towards:
Providing access to their favorite artists•
Meeting their product demands, including developing premium products for•super fans
Promoting direct connections between artists and fans•
Facilitating new experiences for them to engage with their favorite artists•
and music
Fans' main interests include:•
Ubiquitous cross platform access to all music content globally•
To feel directly connected to their favorite artists•
To support their favorite artists’ work and creativity•
Commercial and collectable products to express their fandom•Premium products and experiences for superfans
We respond to these interests and generate impact by:•
Investing in the best A&R teams to drive innovative new music and products•
Helping fans engage with their favorite artists in new and exciting ways•
Driving technological innovation to improve the creative process, and artistfan connections•
Partnering with an expansive network of distribution partners and retailers
to facilitate access to our artists’ music and merchandise•
Enabling direct-to-consumer sales through ecommerce andmerchandising opportunities•
Creating premium consumer products via our production, manufacturing
and distribution arms

3. Employees
We actively engage with employees in multiple ways, including:•
Written and in person communications from our People, Inclusion andCulture (PIC) team•Providing formal and informal feedback channels to encourage open dialog•
Offering online resources to answer questions quickly and easily•
Regularly assessing the employee experience and culture including byconducting surveys•
Holding employee forums, resource groups and events that strengthenculture, engagement, retention and belonging•
Offering flexible work arrangements

MUSIC IS UNIVERSAL Annual Report 2023 | 29

ABOUT UMG

Employees’ main interests include:•
A positive employee relations atmosphere•A safe, healthy and respectful workplace environment•
Resources and support for their wellbeing•
Opportunities to thrive and grow professionally•
A culture of innovation, diversity, inclusion and wellbeing•
Tools to attract, engage, and retain the best in class global talent•
An entrepreneurial and innovative culture•
Power to drive change within the music industry and our communities•
Meaningful work experience, competitive pay, and progressive
benefit packages
We respond to these interests and generate impact by:
Investing in employee training programs to support learning•and development
Rewarding excellent work through fair and competitive incentive awards•
Building a culture in which all employees feel safe, seen, heard, respected•
and connected
Work together to improve learning, diversity and inclusion, engagement,•
retention and wellbeing•
Acknowledging that a healthy and resilient workforce is key to our businessgrowth and success•Tapping into innovation, collaboration, creativity and artistry across
UMG’s businesses•
Inspiring our people to make the world better through community
engagement and philanthropy•
Encouraging a growth mindset through mentoring and programs that
support a culture of innovation

4. Distribution Partners
We actively engage with our distribution partners in multiple ways, including:•Ongoing dialogs with our dedicated digital and corporate businessdevelopment teams•
Regular product innovation discussions, data and analysis sessions anddeal negotiations•
Develop content and marketing plans aligned with growing engagement on
their platform•
Comply with contractual terms and hold ongoing dialogs about issues as
they arise
Distribution partners' main interests include:
A fresh supply of high-quality music-based content for their products•
and services•
Music content that appeals to consumers worldwide•
Marketing support to drive awareness and engagement on their platforms•
State-of-the-art systems to distribute content and ingest large amountsof data
We respond to these interests and generate impact by:•
Conducting negotiations with honesty and integrity•
Executing contracts that clearly define the relationship, terms
and requirements

MUSIC IS UNIVERSAL Annual Report 2023 | 30

ABOUT UMG

•
•

•
•
•

Safeguarding data and confidentiality with respect to business trends,
products and features
Putting artists and songwriters at the center of everything we do by
advocating for new use cases for music, products and services, platforms,
and future-proofed business models
Investing in talent in both developed and emerging music markets
Promoting all UMG artists to fans around the world
Embracing technological advancements that improve sound quality of ourhistoric catalog

5. Government and Elected Officials
We actively engage with governments and elected officials via multiple meansand channels, including:
Educating government and elected officials about the music ecosystem•through informal meetings as well as their formal information requests(such as public hearings and consultations)
Advocating for public policies that benefit the music ecosystem and all•its participants•
Joining music industry trade bodies and NGOs, and contributing to their
publications of statistics, reports and studies on relevant issues and theprovision of background materials•
Speaking out via our public policy team on any issues affecting thecreative community
Government and Elected Officials' main interests include:•
Supporting and preserving culture and art and creative community•
Soft power and national or ethnic pride•
Businesses that drive economic growth and tax revenues to support qualityof living•
High-quality, skilled employment for local population•
Global respect for creators in regard to intellectual property rights, trade
policies and free expression
We respond to these interests and generate impact by:•
Creating employment and generating economic benefits for thecommunities in which we operate•
Supporting culture through the creation and distribution of great music andassociated content•
Operating at the highest ethical standards that comply with all applicablelaws and regulations•
Adhering to business practices that treat artists and songwriters and all
creators fairly

6. Shareholders
We engage with Shareholders in multiple ways, including:•
Conversing directly via investor meetings and teleconferences with ourInvestor Relations team and with management•
Publishing interim and annual reports in a timely manner•
Presenting quarterly financial results webcasts with management
Q&A sessions•
Holding Annual General Meetings to elicit their feedback

MUSIC IS UNIVERSAL Annual Report 2023 | 31

ABOUT UMG

•
•
•
•

Disseminating all notable developments via public press releases
Maintaining UMG corporate and investor relations websites
Responding to all queries via a dedicated IR email address
Participating in financial and industry conferences

Shareholders' main interests include:•
Outlook for revenue growth and margin expansion•
Capital allocation that generates a healthy return on investment•
Reasonable disclosures to analyze the business, and clear presentation offinancial statements•
Strategy and progress updates from management
Talent retention that supports our competitive position•
ESG framework that clearly states company values•
We respond to these interests and generate impact by:
Providing updates on the competitive landscape, strategy, and growth•
drivers across the business
Furnishing details on our capital allocation priorities and rationale•
Disclosing our ESG strategy, KPIs and progress against our targets•

MUSIC IS UNIVERSAL Annual Report 2023 | 32

SUSTAINABILITYSUSTAINABILITYOUR
APPROACH

WE ARE COMMITTED TO SUSTAINABILITYIN OUR BUSINESS AND ACROSS OUR
INDUSTRY, CHANNELING THE COLLECTIVEPASSION OF OUR EMPLOYEES, ARTISTS,
AND FANS TO PROTECT THE PLANET AND
CREATE AN EQUITABLE FUTURE FOR
GENERATIONS TO COME.

Our Environmental, Social and Governance (ESG) framework complies with

the European Union’s Non-Financial Reporting Directive (NFRD) and the Dutch
Corporate Governance Code while our work in each pillar contributes to theUnited Nations Sustainable Development Goals1. UMG’s Board of Directors is

responsible for the oversight of our sustainability program, as well as theintegrity of UMG’s non-financial reporting in accordance with this framework.
The Audit Committee of the Board supports the full Board in relation to these
responsibilities and considers ESG topics as part of its work.

ENVIRONMENTSOCIAL

GOVERNANCE

Advancing climate action
and decarbonization
through leadership andcollective action

Empowering our people
and communities throughculture and creativity

Driving accountability,transparency, and risk
management throughresponsible governance

Recognizing music’s dynamic ability to inspire people and bring them together,
we work with our employees, artists, and fans to drive meaningful change inour communities. We collaborate with our peers to address sector-wide
environmental challenges, deploy targeted programs to expand career

pathways for women and underrepresented groups in the industry, and tap
our future-minded workforce, frontline talent, and powerful network ofcommunity partners to advocate for social justice.

We conducted a comprehensive ESG materiality assessment in 2022 to identify
the environmental, social, and governance topics most material to UMG and
its stakeholders. This year, we further validated our material topics withsubject matter experts and a cross-functional group of over 100 UMG leadersacross our business operations. The subsequent sections of this reporthighlight UMG’s guiding ambitions within each topic area and theeffectiveness of our actions against Our Commitments.

1

 he United Nations’ 2030 Agenda for Sustainable Development was adopted by all Member States in 2015 and provides a shared blueprint forTpeace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs). Learn
more about them here: https://sdgs.un.org/goals.
MUSIC IS UNIVERSAL Annual Report 2023 | 34

SUSTAINABILITY

KEY ACTIONSIN 2023ENVIRONMENTWE STRENGTHENED OUR UNDERSTANDING AND
MANAGEMENT OF GREENHOUSE GAS (GHG) EMISSIONS.
Leadership• Science-Based Target Validation: We became the first major standalone
music company to announce science-based targets approved by the ScienceBased Targets initiative (SBTi). We committed to reduce:• Absolute scope 1 and 2 greenhouse gas (GHG) emissions1 58% by 2032 froma 2019 base year, an ambition which is in line with a 1.5°C trajectory; and,• Scope 3 GHG emissions2 from purchased goods & services, capital goods,

fuel- and energy-related activities, upstream transportation and distribution,
waste generated in operations, business travel, and employee commuting by
62% per EUR value added3 within the same timeframe.

Measurement & Reporting• Decarbonization Pathway: We reduced our scope 1 and 2 (market-based)emissions by 34% from our 2019 base year. We also made progress against our
scope 3 intensity target, achieving a 46% reduction from 2019-2023 in tCO2e
per million EUR value added.

• Carbon Disclosure Project (CDP): We submitted our first CDP report andreceived a B- score, joining corporate climate leaders across the globe in ourcontribution to the world’s most comprehensive environmental dataset.

Collective Action• Scope 3 Industry Guidance: In November 2023, we established the Music

Industry Climate Collective (MICC), as a founding member alongside Sony MusicEntertainment and Warner Music Inc. The MICC’s mission is to develop

comprehensive sectoral guidance for measuring scope 3 GHG emissions,

supporting a consistent approach to boundary-setting and a standardized

methodology. We also laid the groundwork for further industry collaborationin 2024 and beyond, securing advisory support from the American Associationof Independent Music (A2IM) – the trade organization representing more than
600 independently owned record labels across the U.S.

• Stakeholder Engagement: We deepened our engagement with key

stakeholders to drive environmental action, convening internal ESG Working

Groups to reduce our value chain footprint and assembling employees, artist
managers, suppliers, and subject matter experts to support industry

advancements through our UMG x Bravado Sustainability Summit series and
UMG France’s Métamorphoses program.

For details on our Environmental progress and initiatives, please see theEnvironment section of this report.

Scope 1 emissions are direct GHG emissions that occur from sources that are owned or controlled by the company. Scope 2 emissions areindirect GHG emissions from the generation of purchased electricity consumed by the company. See page 25 of the GHG Protocol Corporate
Accounting and Reporting Standard.
2
Scope 3 emissions include other indirect GHG emissions that are a consequence of the activities of the company, but occur from sources
not owned or controlled by the company. See page 25 of the GHG Protocol Corporate Accounting and Reporting Standard.
3
“Value added” is defined by the SBTi as earnings before interest and depreciation (EBITDA) + all personnel costs. See page 24 of the SBTi
Corporate Manual.
1

MUSIC IS UNIVERSAL Annual Report 2023 | 35

SUSTAINABILITY

KEY ACTIONSIN 2023

SOCIALWE DEPLOYED INTERNAL PROGRAMS AND LEVERAGED
EXTERNAL PARTNERSHIPS TO ATTRACT AND RETAINEMPLOYEES, ATTRACT AND RETAIN ARTISTS, AND
REINFORCE OUR CONTINUED FOCUS ON DIVERSITY,
EQUITY, AND INCLUSION.

Our Workforce• Employee Representation: We continued to expand career pathways for

women and underrepresented groups. Worldwide, women make up 51% of ourworkforce. In the U.S., 42% of our workforce is made up of people from one ormore historically excluded ethnic and/or racial backgrounds including American
Indian or Alaska Native, Asian, Black or African American, Latinx, Multiracial andNative Hawaiian or Pacific Islander.

• Diversity and Inclusion Policy: We formalized a new D&I Policy reinforcing
our commitment to building an inclusive culture that values and promotes
diversity and equal opportunity.

• Workforce Development: We rolled out a range of engagement programsfor our global network of employees, bringing together a women’s executive
leadership cohort for the first annual UMShe Summit and convening over

1,000 UMG employees through our inclusion-focused Employee Resource
Group (ERG) events.

• Mental Health Awareness: We launched the “Wellbeing Within Reach”
campaign for Mental Health Awareness Month and expanded access toregionally-specific Employee Assistance Programs (EAPs) – facilitating counselingsessions, in-the-moment support for emotional wellness, self-guided

mindfulness and cognitive behavioral therapy programs, and 24/7 work-life
assistance.

Our Artists• Music Health Alliance: Through our ongoing partnership with the Music

Health Alliance, we helped over 500 artists and songwriters secure life-changing
medical care and save over $5 million in healthcare and insurance costs.

• Artist Advocacy: We amplified artist advocacy efforts, such as supporting

Billie Eilish’s ongoing commitment to environmental action as well as Imagine
Dragons’ frontman Dan Reynolds’ commitment to advancing the rights, safety
and well-being of the LGBTQ+ community.

MUSIC IS UNIVERSAL Annual Report 2023 | 36

SUSTAINABILITY

Our Communities• Corporate Philanthropy: UMG contributed to more than 500 community

organizations and supported over 1.2 million meals for individuals in need.

• Public Health Scholarships: Our Task Force for Meaningful Change (TFMC)
provided more than 50 students with scholarships across Medical Schools of

UNIVERSAL MUSIC GROUP

accredited Historically Black Colleges and Universities (HBCU) in an effort toexpand the number of Black medical practitioners.

• Power of Music Campaign: We teamed up with Music for Dementia andUK Music to develop the Power of Music Report and launch the £1 million Powerof Music Fund, which seeks to use music to improve community health,particularly for those living with dementia.

For details on our Social progress and initiatives, please see the Social sectionof this report.

MUSIC IS UNIVERSAL Annual Report 2023 | 37

SUSTAINABILITY

KEY ACTIONSIN 2023

GOVERNANCE
THE BOARD’S ROLE IN OUR RISK MANAGEMENTFRAMEWORK INVOLVES REVIEWS AND DIALOGUE WITH
MANAGEMENT REGARDING MATERIAL RISK FACTORS FOR
THE COMPANY INCLUDING ENTERPRISE, STRATEGIC,OPERATIONAL, FINANCIAL, AND LEGAL RISK.
Board Oversight and Governance Structure

UMG’s Board is responsible for sustainable long-term value creation, including
the oversight of our sustainability program, as well as the integrity of UMG’s
non-financial reporting. The Audit Committee supports the Board in relation tothese responsibilities and considers ESG topics as part of its work.
UMG’s Annual General Meeting of Shareholders was held on May 11, 2023.
In an endorsement of his strategic vision and leadership, the Shareholders
adopted the re-appointment of UMG’s Chairman and Chief Executive Officer,
Sir Lucian Grainge as Executive Director for an additional five-year term. This
reappointment demonstrates the trust and confidence the Shareholders havein his abilities to steer the company toward continued success and growth.
Additionally, we began to stagger Non-Executive Director retirements as abest practice and in alignment with the Dutch Corporate Governance Code. To
this end, the Board proposed, and Shareholders adopted Non-Executive twoyear re-appointments including Sherry Lansing, Chairman of the Board andIndependent Non-Executive Director and, Luc Van Os, Non-Executive Directorand Audit Committee Chair.

In 2023, the Board adopted the following policies:• STAKEHOLDER ENGAGEMENT: Our Stakeholder Engagement policy laysout our approach to considering stakeholders' interests as part of sustainablelong-term value creation.
• DIVERSITY & INCLUSION: Our D&I policy reinforces our commitment
to building an inclusive culture that values and promotes diversity andequal opportunity.
As we look ahead to 2024, we will remain steadfast in our mission to amplify
the issues that matter most to our stakeholders – while advancing our nonfinancial reporting processes to meet evolving public disclosure requirements.
In 2023, we began our transition from the EU Non-Financial Reporting Directive(NFRD) to the new EU Corporate Sustainability Reporting Directive (CSRD) and weare now in our third year of reporting in compliance with the EU Taxonomy.
With the oversight of an executive steering committee, we are working towards
full CSRD compliance in 2024, including the execution of a double materiality
assessment. We will continue to center music and artistry in all that we do,reinforcing its inherent ability to power positive change.
For details on our Governance progress and initiatives, please see theGovernance section of this report.

MUSIC IS UNIVERSAL Annual Report 2023 | 38

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, music-based merchandise and audiovisual content. UMG
has the broadest global reach of any music company with a local presence
in more than 60 territories covering nearly 200 markets. Everything we dorevolves around supporting artists, promoting innovation, entrepreneurship,sustainability, and bringing fans the world’s most loved music. Our three corebusiness segments work seamlessly to lead the dynamic and ever-changing
global music market:
Our RECORDED MUSIC BUSINESS is dedicated to discovering anddeveloping recording artists and marketing, promoting, distributing, selling, andlicensing the music they create. Showcasing an impressive roster of recording
artists, a catalog of timeless performers, a diverse range of labels and a catalog
of more than three million recordings, our recorded music business isthe partner of choice for artists, innovators, and entrepreneurs around the globe.
This business also incorporates our commercial activity in film & TV andindependent artist and label services and distribution.

UNIVERSAL MUSIC PUBLISHING GROUP (UMPG) is committed to signing,

administering and acquiring rights to musical compositions and licensing themfor use in multiple formats. UMPG works closely with their songwriters at allstages in their careers from early development to the stage where their songs
are played for millions. As one of the world’s largest and fastest-growing music
publishing companies, UMPG has a catalog with nearly four and a half millionowned and administered titles and enjoys partnerships with many of the world’s
top songwriters.

Bravado, our MERCHANDISING BUSINESS, represents the merchandisingrights of artists and entertainment brands and properties. Providing an end-toend merchandising ecosystem, Bravado offers services including sales,
licensing, branding, marketing, eCommerce, and creative resources for clientsand innovative experiences and products for fans and superfans worldwide.

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INTRODUCTION

RECORDED MUSIC

RECORDED MUSIC
UMG’s recorded music business discovers and develops artists; supports thecreation of audio and audiovisual content by recording artists; and markets,
distributes, sells, and licenses this content across a broad range of formats andplatforms. UMG owns and administers copyrights to the audio 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 suchas CDs and vinyl records, and from its distribution to music streaming andsubscription platforms. Our recorded music content is also distributed toconsumers through multiple other platforms and formats, including social
media, health and wellness, theatrical films, home entertainment, television
productions, and video games.

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 roster ofrecording artists features a diverse portfolio of both global superstars andleading local artists from around the world. Artists signed to UMG as part of ourrecorded music business span all musical genres and generations and include
many of the greatest recording artists of all time. UMG’s iconic label brands
include Capitol Music Group, Def Jam Recordings, EMI Records, Interscope
Geffen A&M, Island Records, Motown Records, Polydor, Republic Records,
Universal Music Group Nashville and Universal Music Latin Entertainment. Ourlabel portfolio also encompasses the world’s leading classical and jazz labels,
including Blue Note Records, Decca, Deutsche Grammophon and Verve LabelGroup. We continue to launch new labels in certain key markets where webelieve there to be significant untapped opportunity, such as the launch of EMINorth in Leeds, United Kingdom, in early 2023. We are also home to the world’s
premier recording studios, including the legendary Abbey Road in London andCapitol Studios in Los Angeles.
Through Virgin Music Group, we offer a diverse range of premium andflexible independent label and artist services to entrepreneurs and artists.
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 flexibility offered enables
us to foster long-term partnerships, and forges paths to global success forentrepreneurs, independent labels and artists.

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INTRODUCTION

In addition to recorded music content, UMG develops a wide spectrum ofaudiovisual content for distribution across the globe. Our 5,000 hours ofaudiovisual content spans a diverse mix of genres and eras and featureslegendary artists represented within our rich and storied catalog of content
and intellectual property. We have two content divisions at the heart of ouraudiovisual operations: Mercury Studios, a multi-faceted content studio anddistributor, and Polygram Entertainment, a premium production company.
Beyond these, we also have content operations within our individual labelsand other business units. Some of our key film projects in 2023 included
Love to Love You, Donna Summer (Polygram/HBO), Mixtape (Mercury Studios/Paramount+) and American Symphony featuring Jon Batiste (Mercury Studios/Higher Ground/Netflix).

All corners of 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 wide geographical presence enables us to create
diversified revenue streams. In 2023, North America accounted for 51% of
our recorded music revenue, while Europe, Asia, Latin America and the restof the world represented 28%, 13%, 4% and 4% of the revenue, respectively.
Our extraordinarily diverse roster of artists in turn means that our business’
success is not reliant on one artist or even a small number of artists. The top 50
artists only accounted for 24% of UMG’s recorded music revenue in 2023.

Multi-label structure enables entrepreneurs and encourages
artistic diversity

UMG is home to many of the world’s most iconic record labels. 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 multi-label structure empowers entrepreneurialism,
artistry, and diversity.
UMG encompasses a collection of iconic and world-class labels, spanning
all genres of music, created and led by visionary entrepreneurs. Our sharedpassion for discovering recording artists with the talent and potential to breakthrough an increasingly competitive environment for audience attention is at
the core of who we are and what we do. Each one of these dynamic labels has
a common belief: that an artist they discover and develop 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.
Our multiple label structure creates a degree of competition even between andamong UMG labels. This healthy competition drives innovation and creativity
and keeps our labels continuously evolving to stay at the forefront of industry
trends. This structure also alleviates short-term performance pressure on any
individual label. The fact that the different UMG labels will collectively have acontinuous flow of new content means each individual label can take a more
long-term approach to artist development.

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INTRODUCTION

Leveraging UMG’s scale and expertise

While our multi-label structure gives each label the freedom to create andinnovate, our labels still benefit from the scale and expertise that comes withbeing part of UMG. This is because at UMG, we negotiate with platform partners,
aggregate data and analytics, share best practices, and centralize many backoffice functions at a company-wide level. This lets us benefit from our scale anddrive efficiency, while maintaining the spirit of a quick-moving, innovative andentrepreneurial company.

Expanding touchpoints with artists and entrepreneurs
through distribution

UMG enjoys longstanding relationships with leading distribution partners,
including, for example, Concord, HYBE and Disney, to give our partners’ artists
global reach and best-in-class services. In 2023, we announced an alliance with
BMG under which the companies will explore a range of collaborative initiatives
to further expand opportunities for BMG-signed artists around the world. The
first project under this alliance will be moving the distribution of physicalformats of BMG’s music – including vinyl and CD for thousands of BMG-signed
artists – to UMG’s Commercial Services division, commencing in 2024. Further
collaborations between BMG and UMG are already under discussion from
exploring shared positions on industry matters to joining forces in adjacentbusiness lines.

Diversified revenue streams

Our recorded music business has diversified revenue streams derived fromthree main sources, including:

DIGITAL: We generate subscription and streaming revenue throughpartnerships that enable UMG’s content to be distributed by global, regional andlocal digital service providers, including Spotify, Apple Music, YouTube, Amazon,
Deezer, Tidal, Tencent Music Entertainment and NetEase, among an increasingly
important number of other partners. Our music is streamed on an ad-supported
and paid subscription basis through these streaming services. Fans are alsoable to purchase downloads of our music by album or individual tracks throughdownload services.
We also generate subscription and streaming revenues from social media
platform partners ranging from Meta and YouTube to digital fitness partners
such as Peloton and Apple Fitness+ and beyond. Our music content is also
consumed through short-form video and gaming platforms, among otheremerging digital platforms, all of which we are working to monetize further. We
partner with both established and emerging digital music services to provide
ever-greater access to fans, who are engaging with our music in multiple ways.

PHYSICAL: Our physical recorded music products, including vinyl records, CDs,cassette tapes, and DVDs, are sold through retailers and wholesalers both instore and online. We also sell our products directly to customers via our UMG
websites and artist channels. These direct-to-consumer channels have shownstrong growth and are an increasingly important area of focus for UMG.

LICENSING AND OTHER: We enter into agreements to license the useof sound recordings in combination with visual images, such as in films,
broadcast television or streaming series, television commercials and video
games. As a rightsholder, consistent with local law, we receive royalties whensound recordings are performed publicly through broadcast of music on

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INTRODUCTION

television, radio and cable, and in public spaces such as shops, workplaces,
restaurants, bars and clubs. We also partner with artists to develop theiractivities outside the traditional recorded music business, and generate
revenue through participation in these expanded rights, including sponsorship,
fan clubs, artist websites, touring, concert promotion, ticketing and artist andbrand management. We also develop and produce music-based audiovisualcontent, such as music documentaries, feature films, theatrical musicalproductions, music-based television series and reality shows, which are thenlicensed for distribution.

Continued growth across all major recorded music revenue streams
in 2023
In 2023, UMG achieved growth across all of its major recorded music revenue
streams. Recorded music revenue in 2023 was €8,461 million, up 6.6% year-onyear compared to 2022, or 10.2% in constant currency.

We have played a prominent role in driving the recorded music industry’s
transition to recurring and more predictable paid subscription and advertisingsupported streaming models from a model based solely on physical and digitalpurchases. Streaming and subscription revenue grew 7.1% year-on-year, or
10.4% in constant currency, and accounted for 67% of UMG’s 2023 recorded
music revenues. Subscription revenue saw strong growth of 9.6% year-overyear, or 12.8% in constant currency, driven by continued strong industry
subscriber growth in both developed and emerging music markets, as well as
price increases across certain subscription platforms. Ad-supported streaming
revenues grew 0.4% year-on-year or 3.6% in constant currency, with the growth
somewhat limited in 2023 due to continued, macroeconomic-driven pressure in
the broader advertising market. Engagement with our content on ad-supported
platforms continued to grow meaningfully, and we are focused on driving
improved monetization in this space.
In addition to the growth in streaming and subscription, Physical revenue grewby 14.3% year-on-year, or 19.4% in constant currency, driven by strong newreleases and growth in direct-to-consumer sales. License and other revenue
improved 9.5% year-on-year, or 13.6% in constant currency, as a result of
improved live, brand sponsorship, neigbouring rights and synchronization
income, as well as the timing related benefit of a new licensing deal.

Culture-defining global, regional and domestic superstars

Our recorded music business operates in more territories and markets than any
other recorded music company. The breadth and depth of our artist roster isunrivaled. We’re the destination of choice for the world’s most successful stars
and a clear choice 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, 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, Nicki Minaj, Katy Perry, Olivia Rodrigo, Sam Smith,
Chris Stapleton, Taylor Swift, Shania Twain, Morgan Wallen and The Weeknd. Ourroster of artists also includes hugely successful local artists such as Dave andGlass Animals in the UK, Angèle and SDM in France, Helene Fischer and Herbert
Grönemeyer in Germany, King & Prince and Ado in Japan, Eason Chan in China
and Feid, Karol G and Sebastián Yatra in Latin America. In addition, in 2023,

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INTRODUCTION

we welcomed global icons Anitta and Jay Chou, among many others, to the
UMG family.
Our recorded music artists once again topped the global charts in 2023.
•
According to IFPI, UMG had nine of the Top 10 global artists including Taylor
Swift at No. 1, as well as SEVENTEEN, Stray Kids, Drake, The Weeknd, Morgan
Wallen, TOMORROW x TOGETHER, NewJeans, and Lana Del Rey.
On Spotify, UMG had six of the Top 10 global artists including Taylor Swift at
No. 1, as well as The Weeknd, Drake, Feid, Karol G and Lana Del Rey.
•On Apple Music, UMG had thirteen of the Top 20 global songs, with Morgan
Wallen’s “Last Night” at No. 1.
On YouTube, UMG had three of the top five songs, including Toosii’s Favorite•
Song at No. 1.
On Vevo, Karol G was the ‘Most Watched Artist’ for the third consecutive year.
•
In the U.S., the world’s largest music market, UMG had:
All of the top four most streamed artists on Spotify with Taylor Swift, Drake,•
Morgan Wallen and The Weeknd.
Five of the top seven songs on Apple Music (No. 1 Morgan Wallen “Last•
Night”, Drake & 21 Savage “Rich Flex”, Drake & 21 Savage “Spin Bout U”, Lil
Baby “Freestyle” and Morgan Wallen “You Proof”).
•
Six of the Top 10 albums on the Billboard 200 (No. 1 Morgan Wallen One thing
At A Time, No. 2 Taylor Swift Midnights, Drake, 21 Savage Her Loss, Metro
Boomin Heroes & Villains, Morgan Wallen Dangerous: The Double Album andTaylor Swift Lover).
•Republic Records was named Billboard’s top label for the third
consecutive year.
Around the world:•
According to the Official Charts Company, UMG had seven of the Top 10
artists in the UK, including Taylor Swift at No. 1, Drake and the Weeknd in
the top five. Also in the UK, UMG had all of the three nominees for theprestigious 2024 BRITs Rising Star award, with Island’s The Last Dinner Partytaking the award, marking the third consecutive year a UMG artist has won.
•
In Germany, UMG finished the year with six of the Top 10 albums according
to GFK, including The Rolling Stones’ Hackney Diamonds at No. 1 followedby albums from Metallica, Taylor Swift (two entries), Herbert Grönemeyer andKontra K. Deutsche Grammophon had seven of the Top 10 albums on theGerman classical chart, including the top three.
•
In Japan, UMG had five of the Top 10 albums according to Billboard Japan,
including King & Prince at No. 1. In addition, Ado’s single “Show” held the top
spot on Billboard Japan's weekly streaming chart for 14 consecutive weeks
to finish the year.
•
In France, UMG had five of the Top 10 tracks overall, and three of the Top 5
tracks on Apple Music.
•
In Australia, UMG had the No. 1 album for 34 weeks this year, with albums
from Taylor Swift, Sam Smith, Morgan Wallen, Lana Del Rey, Metallica, Peach
PRC, Lewis Capaldi, Niall Horan, G Flip, Powderfinger, Olivia Rodrigo, Drake,
Troye Sivan and The Rolling Stones.
•
In Canada, UMG had eight of the Top 10 albums, including albums from
Morgan Wallen (No. 1), Taylor Swift, Metro Boomin, and The Weeknd, and held
the No. 1 album for 33 weeks this year.
•
UMG Sweden's Loreen won the Eurovision Song Contest with her single"Tattoo” and UMG had five of the Top 10 artists on Spotify.

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INTRODUCTION

•

•
•
•

At the Latin Grammy’s, Karol G swept three major awards including AlbumOf the Year and Juanes won Best Pop/Rock Album marking his 25th Latin
Grammy award. Feid continued his massive rise in 2023, as the third moststreamed Latin artist on Spotify, while Sebastián Yatra was recognized as“Artist of the Year” at the 2023 RIAA Honors.
In China, Wu Qingfeng’s Mallarme’s Tuesday won “Album of the Year” at theGolden Melody Awards.
In Indonesia, "Tak Segampang Itu" by Anggi Marito was the top song of theyear on Spotify.
Juan Karlos became the first artist from the Philippines to enter the Top 100
Global Spotify Charts with his song “Ere”, which was No. 1 in the Philippines
for 10 weeks.

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, Aerosmith, Louis Armstrong, The Beatles, The
Beach Boys, The Bee Gees, Andrea Bocelli, Bon Jovi, James Brown, Nat King Cole,
Neil Diamond, Marvin Gaye, Guns N’ Roses, Elton John, KISS, Bob Marley, Paul
McCartney, Nirvana, Luciano Pavarotti, Queen, Lionel Richie, The Rolling Stones,
Frank Sinatra, Sting, U2, The Who, Amy Winehouse and Stevie Wonder. This
diverse catalog gives UMG strong and reliable revenue from sales of prior years’
releases. Catalog sales (defined as content older than three years) accounted
for 62% of recorded music digital and physical revenue in 2023, while frontline
product (content less than three years old) accounted for 38% of recorded music
digital and physical revenue.

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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 globally. Our core activities involve: discovering, identifying, anddeveloping some of the best songwriters in the world; publishing and acquiring
rights to musical compositions; and licensing them for use in different formats.
With a global roster of talent spanning genres and geographies, UMPG’s teamworks closely alongside our artists to amplify their careers and build worldwide
success. We license musical compositions for use in sound recordings, films,
television shows, 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 best-in-class service for both global and local songwriters

Songwriters are at the heart of everything we do at UMPG. We are dedicatedto giving them best-in-class service and maximizing their royalty streams. To
achieve this, we deploy both the hands-on expertise of the industry’s best
people and cutting-edge technology to maximize opportunity and value for oursongwriters both commercially and creatively. We combine global reach anda local presence, with 850 employees operating at 48 offices 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 are uniquely positioned to develop collaborative strategies
between publishing and recorded music. All with one aim: to bring value toour songwriters.

Embracing technology to build trust with songwriters

We deploy cutting-edge technology and expert administration services tobenefit our songwriters. Through our highly advanced technology platform,
UMPG Window, 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 andtrust. UMPG Window uses the latest in cloud-indexing technology to provide
comprehensive views of where, when and how songs are consumed around theworld. 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 most major film and TV content studios ranging from Warner Bros.,
NBCUniversal, Disney and HBO to Amazon, MGM, Banijay, Paramount, Lionsgateand Univision, among others. In 2023, we renewed our deals with NBCUniversal,
Paramount, Lionsgate, MGM, and Amazon, among others. This leading positionmeans we represent some of the world’s most iconic film and TV theme songs.

Multiple revenue streams

Our music publishing operations derive revenue from five main
sources, including:

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.

OTHER: The rightsholder receives revenues for use of the musical compositionin sheet music and other uses.
Music publishing is a recurring growth business

Music Publishing revenue amounted to €1,956 million in 2023, up 8.7% year-onyear, or 12.3% in constant currency. The continued growth of subscription andstreaming revenue, along with increases in synchronization and performancerevenue, were the primary drivers of the overall strong performance inMusic Publishing.

Another chart-topping year

Our songwriters continued to top the charts around the world in 2023.
•
On Spotify, UMPG had interest in nine of the Top 10 global albums, including
all of the top five: Un Verano Sin Ti by Bad Bunny, Midnights by Taylor Swift,
SOS by SZA, Starboy by The Weeknd and MAÑANA SERÁ BONITO by KAROL G.
•
UMPG also had interest in six of the Top 10 global songs on Spotify (“Kill Bill”
by SZA, “As It Was” by Harry Styles, “Seven (feat. Latto)” by Jung Kook, “Cruel
Summer” by Taylor Swift, “Calm Down (with Selena Gomez)” by Rema andSelena Gomez and “Anti-Hero” by Taylor Swift).
•
In the U.S., UMPG had three of the top five Billboard Hot 100 Songwriters with
Taylor Swift, Jack Antonoff and SZA.
•
UMPG had interest in seven of the Top 10 most streamed songs in the U.S. on
Apple Music.

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INTRODUCTION

Unparalleled collection of songs in every genre

UMG is home to the greatest songwriters in history. We have a global catalog
containing nearly four-and-a-half million owned and administered copyrights.
Our unrivaled 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 inclusive of 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 “Stayin' 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, Jack Antonoff, ATL
Jacob, Bad Bunny, J Balvin, Beach Boys, Beastie Boys, Bee Gees, Louis Bell,
Irving Berlin, Leonard Bernstein, Jeff Bhasker, Justin Bieber, Benny Blanco,
Nicholas Britell, Chris Brown, Tommy Brown, Mariah Carey, Brandi Carlile, Sabrina
Carpenter, Michael Chabon, Nija Charles, Kenny Chesney, Desmond Child, Cirkut,
The Clash, Dave Cobb, Coldplay, Luke Combs, Alexandre Desplat, Neil Diamond,
Disclosure, Drake, Dua Lipa, Bob Dylan, Billie Eilish, Danny Elfman, Eminem,
Gloria and Emilio Estefan, Omer Fedi, Feid, Florence + the Machine, Fred again..,
Future, Martin Garrix, Selena Gomez, Ariana Grande, Al Green, Josh Groban, Kid
Harpoon, Emile Haynie, Jimi Hendrix, Don Henley, H.E.R., Hit-Boy, Sam Hunt, Ice
Spice, Carly Rae Jepsen, Rodney Jerkins, Tobias Jesso Jr., Billy Joel, Elton John/
Bernie Taupin, Joe Jonas, Alicia Keys, David Kushner, Carin León, Steve Lacy,
Kendrick Lamar, Lana Del Rey, Lil Baby, Lil Yachty, Linkin Park, Logic, Lorde, Demi
Lovato, the Mamas & the Papas, Steve Mac, Maroon 5, Dave Matthews, Megan
Thee Stallion, Shawn Mendes, Metallica, Metro Boomin, Julia Michaels, Miguel,Maren Morris, Mumford & Sons, Nas, Randy Newman, New Order, Pearl Jam, Post
Malone, Elvis Presley, Prince, Quavo, Otis Redding, R.E.M., Red Hot Chili Peppers,
Rex Orange County, Lionel Richie, Maggie Rogers, Rosalía, Carole Bayer Sager,
Gustavo Santaolalla, Schoolboy Q, Carly Simon, Blake Slatkin, Britney Spears, Stax
(East Memphis Music), Sting, Harry Styles, Swedish House Mafia, Taylor Swift,
SZA, Take a Daytrip, Justin Timberlake, Shania Twain, U2, Keith Urban, Michael
Uzowuru, The Weeknd, Jack White, Yahritza, Frank Zappa and Zedd.
Key signings in 2023 included Ice Spice, Lana Del Rey, Lorde, Jack Antonoff,
Fred again.., Lucy Dacus (boygenius), Andrea Bocelli, Maggie Rogers, Sabrina
Carpenter, Brandy Clark, Danny Harle, Stephen Schwartz, Niall Horan, David
Kushner, Stephen Sanchez, Tia Ray, Band Loula, Carin León, Iván Cornejo, Mónica
Vélez, Yahritza, Abel Pintos, Grupo Firme, Jenni Rivera estate, DnB All Stars, Dan
Wilson, Angelica Negron, Kevin Puts and SYCO.

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INTRODUCTION

MERCHANDISING

MERCHANDISING
Developing innovative cultural and retail experiences for fans

Bravado is UMG’s global, full-service merchandise business. With a portfolio
spanning over 220 artists, we hold the leading position in music merchandiseworldwide. Through Bravado, we develop high-quality licensed consumer
products that reflect and reinforce an artist’s brand and identity and present
them to a worldwide audience. Our artists and brands have access to a uniqueend-to-end merchandising ecosystem that brings together creative design,
production, and distribution. We work closely with new and established clientsto create innovative products that are carefully tailored to the brand or 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.
Bravado seeks to advance climate action across the industry and drive progress
toward UMG’s Science-Based Targets. We have created, produced and hosted
UMG x Bravado Sustainability Summits, the first music industry sustainability
summits in LA, London, and New York. The summit series brought together
industry leaders and innovators in sustainable solutions to share ideas anddrive change. In addition, Bravado is committed to its ongoing partnerships with
Products of Change and Three Squares, renowned experts dedicated to guiding
and empowering companies to achieve their sustainability objectives througheducation and support.

Sparking connections with fans

With a focus on building connections between artists and their fans, ourin-house creative development team at Bravado works closely with new andestablished artist-clients to create innovative products carefully tailored to thebrand or artist. Our creative team operates at the intersection of art, music
and fashion – identifying key trends in all three areas and creating compelling
products and experiences that are in tune with today’s culture. As part of aworld-leading music-based entertainment company, we’re uniquely positioned
to create fresh and exciting products that match an artist’s brand and identity.

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INTRODUCTION

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.

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.

Compelling fan experiences

Through pop-ups and unique experiential events, Bravado connects artists
with fans around the world, creating unforgettable moments that maximize fan
engagement. In 2023, Bravado engineered numerous compelling fan experience
which included the Elton John Corner Shop at Selfridges (timed to coincidewith the O2 London leg of the Farewell Yellow Brick Road Tour); BLACKPINK’s
Born Pink London, New York, Los Angeles and Seoul pop-up experiences (incollaboration with Japanese graphic artist, VERDY); Beastie Boys pop-up in New
York, celebrating the iconic location renaming to Beastie Boys Square; Hip Hop
50th celebration timed NYC pop-up with Run DMC, supported by Barriers andAdidas; Olivia Rodrigo’s New York and Los Angeles pop-ups to support therelease of her second album; Billie Eilish’s London pop-up (marking historic
headline slots at Reading and Leeds Festivals); The Rolling Stones x Kid Super
Hackney Diamond collection (available exclusively at RS No. 9 Carnaby Flagshipstore and RS No. 9 pop-ups in New York, Los Angeles and Tokyo); and the
NYC takeover for KISS, celebrating the last two nights of their farewell tour
with activations throughout the city including a pop-up store, Penn Station
Metro Card and digital screens takeover, Taxi Cab wraps, Empire State Building
lighting ceremony, New York Post wraps, Rangers Hockey collaboration, and thedeclaration of KISS Day by NYC Mayor Eric Adams, along with so much more.

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INTRODUCTION

Multiple revenue streams

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 sale of physical merchandise products directly to consumers atconcessions within venues. The right to sell at concession is not limited to
specific tours, Bravado signed artists or music events, but can also encompass
other events within venues.
RETAIL: Sales of physical merchandise 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
product through an online direct-to-consumer channel. This also includes VIP
events and fan clubs, which is the sale of premium experiences and exclusive
access through a direct-to-consumer channel.
Strong growth in 2023

Bravado signs agreements with clients that provide for usage rights of theclient’s name, image and likeness across product categories and distribution
channels. In 2023, Merchandising and other revenue grew to €706 million, up
14.2% year-on-year, or 17.9% in constant currency, driven largely by the growthin direct-to-consumer sales.

Roster of clients with the greatest names in music

Our merchandising 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 andincreased opportunities for artists.
In 2023, Bravado continued to broaden its roster, renewing its relationship with
Taylor Swift, welcoming back Post Malone and signings new deals with artists
including 21 Savage, Anitta, Kali Uchis and Olivia Rodrigo.

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BOARD REPORTSTRATEGYSTRATEGY

CREATIVITY,INNOVATION, ENTREPRENEURSHIPAs the world leader in music, we are guided by our key principles of creativity,
innovation and entrepreneurship, and are driven by a commitment to help
artists and fan communities thrive all over the globe.
As part of our industry leadership, we are focused on: helping to maintaina thriving and sustainable global music ecosystem; redefining the streaming
model to one that creates greater value for artists, fans, music companies
and platforms; and protecting and reinforcing the value of human artistry
and creativity.
UMG’s creative and commercial foundation has a proven track record ofbuilding sustainable long-term value for our stakeholders and is built on a setof key focal points, most notably:Continuing our mission of breaking new artists and songwriters, and•supporting them at every stage of their career to help them achieve theirgreatest creative and commercial potential.
•
Maximizing and protecting the value of our extraordinary catalog, both now
and into the future.
•
Driving growth in subscription and ad-supported streaming revenue aroundthe world.
•
Building winning partnerships with tech innovators to explore howtechnology can be used to drive engagement and discovery, as well as
creating new commercial opportunities for artists.
•
Advancing data and insights, to help fuel that discovery and inform ourability to connect our artists with their fans anywhere in the world.
•
Enhancing our capabilities to comprehensively serve and maximize thevalue of superfans through D2C/eCommerce/product development andincreasing monetization.
With each of these areas creating expansive opportunities, our artists andsongwriters remain the cornerstone for our labels, businesses, and brands. In
addition, we are committed to sustainability in our business and across ourindustry, protecting the planet and creating an equitable future for generations
to come.
Recognizing music’s ability to inspire people and bring them together, we
work with our employees, artists, and fans to drive meaningful change inour communities. We measure our environmental impacts and set targets
to address them while we collaborate with our peers to address sector-wide
environmental challenges. We deploy inclusive programs that expand career
pathways for women and underrepresented groups in the industry, and tap our
futureminded workforce, frontline talent, and powerful network of community
partners to advocate for social justice. Our ambitions and key accomplishments
across our Environment, Social, and Governance (ESG) strategic framework aredetailed in the Non-Financial Information section of this report.
Throughout 2023, UMG has led the way in redefining the model for streaming,
built winning partnerships with tech innovators, seized upon the opportunitiesof new technologies like AI, boosted our presence and capabilities in regional,

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STRATEGY

high-growth markets, discovered new ways to build audience from first-party
data, leveraged our unprecedented catalog even further, and leaned into
consumer, commerce and superfan monetization. And, of course, we broke newartists, time and again, in all categories and in markets around the world. We areproud of the breadth and success of these strategic initiatives and investments.

Driving music's evolution

Music as an industry is constantly evolving. We strongly believe we have theright formula to stay in front of that evolution. During the course of 2023, UMG
once again distinguished itself with our thought leadership, including:•
Pioneering the “Artist-Centric approach” to streaming model innovation,
introduced as a concept by UMG’s Chairman and CEO, Sir Lucian Graingein January 2023, and now being embraced and adopted in various forms bydigital service providers (DSPs) as well as other music companies.
Further advancing our global diversification plans, and the expansion of our•best-in-class partnerships.
Exploring new creative and commercial avenues for monetizing music well•into the future.
Taking industry-leading steps to define and establish Responsible AI for the•
benefit of artists, both in utilizing AI technology to enhance creativity andits monetization, as well as in protecting against its dangers, and ultimately
ensuring that artists are at the center of the discussion.
•
Expanding our core capabilities to facilitate the connection between artists
and fans.
Streaming’s new phase starts with artist-centric & superfans
The Artist-Centric concept spearheaded by the company saw significant
progress in 2023. Its focus is:•
Ensuring that real artists with real fan bases are better recognized andrewarded for the platform engagement they drive and value they create.
•
Protecting an artist’s music and royalties from systematic fraud
and manipulation.
•
Better differentiating music from the flood of noise that has accelerated
in recent years and will continue to do so in the years ahead, all ofwhich undermines the user experience, diminishing discovery and diluting
authentic fan engagement.
Among those collaborating to update the streaming model using Artist-Centric
principles are French streaming service Deezer, which launched its updated
royalty payment model in France in the fourth quarter of 2023, and Spotify, theworld’s largest music streaming platform, which announced in November 2023
that it will adopt a new streaming royalty model beginning in the first quarter of2024. Other platforms that have committed to exploring Artist-Centric principles
include Tidal and SoundCloud, as each platform looks to better reward realengagement by creating a bespoke model that better reflects its own fan-driven
consumption and listening experience.
The big picture: The economics of streaming is a vastly more complex subject
than it was at the infancy of the format nearly two decades ago. As a result some
aspects of the traditional streaming model have become in need of revision.
An updated approach is needed to create better equity for the artists who drive
business for digital service providers, and in 2023, the Artist-Centric approachhas gained momentum as the driver for that change.

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STRATEGY

Why it matters: The work and value of artists is being diluted on digital service
provider platforms by an oversupply of content, much of it merely noise andincreasingly more of it associated with fraud. A situation that will only become
more pronounced as generative AI becomes more widespread. This has served
to drown out the real music that fans actually want to hear. The principles of an
Artist-Centric approach to streaming were conceived to better reward musicalartists and songwriters that inspire audiences and drive the most engagement,
not the bots and white noise diluting that experience.
Unlocking the power of the superfan has been at the heart of UMG’s growthstrategy for many years, utilizing UMG’s best-in-class data to expand our
direct fan audiences and better understand fan behavior. This has allowed us
to innovate and better leverage our iconic catalog to continue to introduce
our artists to new audiences and markets. Consider also that superfans, agrowing and influential category of music enthusiasts, spend 80% more eachmonth on music than the average listener, based on Luminate data. Thesefans drive increased activity both on platforms, but also through UMG’s rapidly
growing direct-to-consumer, ecommerce and merchandising businesses, which
represent a significant opportunity for UMG to grow authentic engagement
between fans and the artists they love.
The details: While there’s a significant degree of consensus about core
objectives and guiding principles, the platforms will decide how they implement
their version of the Artist-Centric model. Some examples of how platforms
are approaching this include: rewarding songs or artists that reach a certain
threshold of listeners or streams; rewarding streams that reflect more active
fan engagement; limiting the impact of non-artist noise content on platforms;
improving fraud detection; and removing incentives for bad actors. Artists
at every stage of their career will benefit from these moves, since they
are prioritizing authentic artist-fan engagement and the value it creates forthe platforms.
What’s ahead: We are determined to work with every digital service provider
to embrace an Artist-Centric approach. It will support all artists regardlessof the scale at which they are operating and regardless of the stage of theircareers. It will enhance artist discovery and it will also significantly benefit
the streaming services themselves by returning them to their core missionof bringing great music to fans. As part of that process, it will promote
subscriber acquisition and retention while reducing operating costs associatedwith valueless content volume.
Global reach — faster & further
UMG continues to expand its repertoire, reach and capabilities in some of theworld’s most exciting, rapidly growing, and dynamic global music markets.
We are committed to expanding our presence and accelerating our growth in
far-reaching regions to discover exciting new music and artists globally, expand
our catalog and repertoire, create opportunities to connect with local music fansand increase market share.
In 2023, UMG focused on strengthening our existing operations and leadership,
signing a series of high-profile artists, partnering with local labels and acquiring
best-in-class local labels and distribution businesses that strengthen our
global catalog and enhance our local and regional capabilities, and create newopportunities for our global roster.

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STRATEGY

Why it matters: Our diverse and long track record of worldwide successes helps
us continually attract new talent to our roster. New talent is indispensablefor our future success. The more those artists reflect the local culture for the
consumers and communities we serve, the more those fans will connect to theirmusic, including in high growth-potential markets like India, the Middle East,
West and Sub-Saharan Africa, or across Greater China.
Expansion strategy: UMG is expanding our global reach by investing in local
markets. We are doing that in three ways: local artist investment; local label
partnerships; and acquisitions.
Local artist investment: Sign and develop local artists, while building a rosterof the best talent each region has to offer, just as we do in more developed
music markets.
Partnerships: Partner strategically with leading local labels, artist managers andentrepreneurial companies to support and boost them with global promotion,
distribution and a full suite of artist services.
In India, UMG strengthened its position domestically with an exclusive
partnership with leading management company Represent and continued tobuild on local success with existing partners including Desi Melodies and TM
Ventures. This year, UM India also partnered with Coca-Cola for Coke Studio
Bharat Season 1, which led to one of the biggest Hits of the year, Khalasi
by Aditya Gadhvi & Achint, topping India’s charts with more than 12 billion
combined views and culminated in Prime Minister Narendra Modi highlighting
the song as an example of introducing Indian culture to the world.
One of the biggest global breakthroughs of the year was for Nigerian Afrobeatssensation Rema, whose track "Calm Down" featuring Selena Gomez became thebiggest Afrobeats song of all time, the first African artist-led track to surpass
one billion Spotify streams and the most viewed video of all time by an African
artist on YouTube. The track, released in Africa through Mavin Records, wasdistributed globally through Virgin Music Group.
Acquisitions: Through M&A, acquire local labels, catalog and artist
services businesses.
In Thailand, a key music Market in Southeast Asia, UMG further expanded its
repertoire in 2023 by acquiring RS Group, a leading Thai music distributor andmanagement company that represents Thailand’s second largest music catalog,
over 10,000 master recordings, 6,000 copyright ownerships, publishing rights,
and licenses spanning four decades.
UMG acquired Chabaka Music, a leading MENA-based company with
unparalleled regional expertise, representing more than 150 independent artists
and local labels that has now been incorporated into Virgin Music Group’s global
distribution network, accelerating UMG’s capabilities and resources in this fastgrowing region.
Of note: We've accelerated our activity in China in recent months throughexecutive hires, new strategic partnerships, and local artist signings.
In September, UMG announced the appointment of Timothy Xu as Chairman and
CEO for Universal Music Greater China. A respected industry executive with an

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STRATEGY

unprecedented track record of success in breaking Chinese artists and talents
across the region, Tim’s arrival brought a renewed focus on A&R and domestic
growth, including a new long-term deal with Eason Chan, and the global signingof music icon Jay Chou and his JVR Music label. Chou was named IFPI’s No. 1
global album seller for 2022.
Universal Music Publishing China also announced global publishing deals
to represent RYCE Entertainment’s expansive catalog, which also includes
rights to several regional K-pop hits, on top of their domestic repertoire andpopular singer-songwriter Tia Ray. It also hosted writing camps for its domestic
songwriters to collaborate with other UMPG signed songwriters from around theworld, creating new opportunities for collaboration.
Explore new monetization opportunities
Music’s powerful new role in Health and Wellness
Building upon our success in creating a robust commercial category infitness, UMG is now leading the industry in exploring creative and commercial
opportunities for music to play an even greater role in health and wellness,having licensed its catalog of music to more than 40+ companies acrossthe field.
The big picture: Today UMG’s music is not only being used to soundtrack
mental well-being, relaxation, meditation and fitness, but UMG is also helping
to pioneer a new category that we call “prescription music,” an evidence-based
health technique built on scientific and medical research, harnessed to be usedalongside treatment for a broad array of serious and chronic medical conditions
including Stroke and Traumatic Brain Injury recovery, Alzheimer’s, Dementia,
Parkinson’s, Anxiety, sleep and mental health conditions, among others.
Why it matters: This year, Health and Wellness partner MedRhythms, who
exclusively licenses their music from UMG, received an FDA license for their
InTandem device created to help patients learn to walk again after debilitating
strokes, becoming the world's first prescription digital therapeutic product thatuses music, with prescriptions rolling out in the U.S. from Fall 2023.
The details: In September, UMG Chairman and CEO, Sir Lucian Grainge andArianna Huffington, CEO of Thrive Global, hosted the first MUSIC + HEALTH
summit in Los Angeles in association with Havas Health, focusing on the
direct relationships between music and health, discussing recent researchdocumenting music’s therapeutic and medical benefits, showcasing innovative
companies that are integrating music into fitness and wellness products
and services, and introducing new applications for music in the space. The
event brought together UMG artists with health entrepreneurs and leading
neuroscientists to advance conversation around this innovative new category.
What’s ahead: During the event, UMG announced new partnerships with Arianna
Huffington’s Thrive Global for UMG to be the exclusive music partner for theirThrive Reset stress management tool, alongside a licensing agreement with
innovative digital therapeutic company soundBrilliance, providing selections
from UMG’s catalog for use in closed clinical trials for music and healthresearch. These trials will use music, psychology, and measurement techniques
to create tools and exercises which empower people to better self-manage
the fundamentals of health: emotional balance, fitness, quality sleep and pain
control. UMG also previewed Sollos, its forthcoming music-centric wellness app

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STRATEGY

that uses cognitive science and proprietary audio technology to support focus,
relaxation and sleep.
In 2023, UMG also announced a first of its kind, strategic relationship with
AI sound wellness company Endel to enable artists and labels to createsoundscapes for daily activities like sleep, relaxation, and focus by harnessing
the power of AI. While it’s a field still in its infancy, this area has the potential
to become an increasingly important component of our strategy in 2024
and beyond.
Bringing our artists and music to gaming
The big picture: UMG has a strong track record of pioneering collaborations that
establish an onramp for artists into the opportunities of the metaverse, gaming
and interactive fan experiences.
UMG has worked with leading partners and platforms to bring first of their kindexperiences in the space to platforms including Roblox, Epic Games (Fortnite)
and Second Life.
The details: In December 2023, UMG announced the launch of Beat Galaxy, aninnovative new music hub on Roblox. Building on several successful activations
on Roblox by UMG artists and labels, Beat Galaxy is a next-generation social
experience centered around music discovery, featuring a fully interactive
community space where fans and newcomers can meet, discover, and share
their favorite artists and music. From towering amplifiers to a 24/7 virtual
club and themed UMG artist takeovers, every aspect of the immersive spaceencourages discovery. The Beat Galaxy experience on Roblox is architected
to become the virtual epicenter for a wide range of UMG labels and artist
integrations, and launched with Interscope Records artist YUNGBLUD.
Early in 2023, UMG’s Republic Records and JYP launched the Twice Square
experience for fans of K-Pop group Twice on Roblox. The experience currently
ranks as the #1 music experience on the platform and at #9 in the most visited
Roblox experiences of all-time, with more than 73 million visitors to date. Other
artist activations on Roblox have included Nicki Minaj, Olivia Rodrigo, Glass
Animals and Baby Queen.
What’s ahead: In the coming year, UMG plans to launch a series of platform
tools and experiences that will further enhance the commercial opportunities
for UMG artists within the Roblox platform and expand accessibility to licensed
music from UMG’s catalog within the platform, as well as pursuing meaningful
opportunities with other partners.
Embracing AI for the good
History has taught us that the emergence of new technologies comes withboth transformative opportunities and inherent risks to traditional businessmodels. Generative artificial intelligence is no exception. In order to addressand harness the rapid acceleration of developments in AI, UMG has developed
a strategy that carefully choreographs offense and defense while placing artists’interests at the center of the conversation.
Fighting infringing AI-generated content, unlicensed training on our catalog of
copyright-protected artist content, and fraud to protect the rights and integrityof artists, both now and in the future, is imperative. At the same time, AI canMUSIC IS UNIVERSAL Annual Report 2023 | 59

STRATEGY

be used to enhance human creativity in music, enriching aspects of what we
do for our artists and their fans. For that reason, UMG has been exploring
the opportunities emerging from this technology for many years, applying AI
for advances in data analytics, marketing tools, enhanced studio and audio
production, while working to protect the long-term value of artistic content.
Indeed, UMG holds a number of AI patents itself.
Why it matters: Placed in a context where artists rights and interests areembraced and advanced, AI will amplify human imagination and enrich musicalcreativity in extraordinary new ways — and we'll need to strike the balance. We
see great potential in Generative AI to inspire and empower a new generationof talent.
Smart collaboration is the start: A groundbreaking example of this approach is
our collaboration with YouTube, the world’s leading video platform, to create
a set of principles and best practices around the use of AI in the creationof music. Announced in August, together we launched a Music AI Incubator,
bringing together a working group of leading UMG artists, songwriters andproducers across multiple genres to help inform how generative AI technology
could potentially be employed in a responsible and ethical manner. Central tothis collective vision is building a safe, responsible and profitable ecosystem formusic and video as technology advances — one where artists and songwriters
can maintain their creative integrity and be compensated fairly.
We have also forged an alliance with BandLab, the world's largest social music
creation platform. The alliance will help advance our shared commitment to
the ethical use of AI and the protection of artists and songwriters across thecreative ecosystem.
As our AI strategy progresses, you'll see more companies committed toresponsible AI development, working with us on solutions that respect artists’right and interests, unlock creativity, explore new commercial opportunities forus, and compensate artists appropriately.
Of note: In October, with help from pioneering AI source separation technology,“Now And Then” the last song from The Beatles – written and sung by John
Lennon, developed and worked on by Paul McCartney, George Harrison andRingo Starr, and now finally finished by Paul and Ringo over four decades later –was released to global acclaim. This was one of many examples of artist-driven
innovation with AI technology to emerge in 2023.
In April, UMG released a new track with our partners at HYBE from theirartist MIDNATT. Using HYBE's proprietary AI voice technology and with theartist's collaboration and consent, the track was simultaneously released in six
languages: Korean, English, Japanese, Chinese, Spanish and Vietnamese withthe goal of offering music fans the opportunity to hear the K-Pop track in theirown local language. It was a fascinating example of how AI can be used to helpmusic reach global audiences and used in exciting ways.
Our strategic relationship with Endel, an AI sound wellness company, is anotherexample of how the responsible use of AI can support and enhance thecreativity of our artists, labels and songwriters. Under our agreement, UMG
artists partnering with Endel and utilizing their proprietary AI technology cancreate soundscapes based on the artist's existing recordings to create new

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STRATEGY

versions that promote listeners' health and wellbeing, opening new commercial
opportunities for our existing and growing catalog.
Guarding against AI’s risks: Rapid technological advancements have enabled
digital manipulation, appropriation and misattribution of an artist’s name,image, likeness, voice and style – the very characteristics that differentiatethem as performers with unique vision and expression. Our challenge andopportunity as an industry is to establish effective tools, incentives and rewards— as well as rules of the road — that enable us to limit AI’s potential downsidewhile promoting its promising upside.
UMG has led the industry in articulating the importance of establishing theperimeters of copyright, to ensure that artists’ creative output continues to berespected for generations to come. UMG supports the Human Artistry Campaign(‘HAC’) and its principles – the HAC is a global initiative formed in early 2023
to protect creators’ rights in the age of AI, with more than 170 supportingorganizations from 40+ countries.
In addition to responsible and ethical AI industry collaborations and thought
leadership, UMG is pursuing the establishment of legislative and regulatory“guardrails” for AI, including backing legislation that would establish a federal
right of publicity in the United States protecting all Americans’ image, likenessand voice – and helping to prevent deepfakes. We are vigorously advocating for
public policies furthering Responsible AI with governments around the globe,
including through multi-stakeholder coalitions and trade bodies, as well as on
our own.
In addition, we are protecting creators’ rights in the AI environment throughlitigation. For example, UMPG, alongside two other music publishers, filed a
copyright infringement lawsuit against Anthropic for its large-scale, wholesale
copying of copyrighted lyrics.
The bottom line: AI will never replace human creativity because it will
always lack the essential spark that drives the most talented artists to dotheir best work. From Mozart to the Beatles to Taylor Swift, genius is neverrandom. Yet, forging a path with the music community will enable us toempower this breathtaking technology responsibly to the benefit of the entire
creative ecosystem.
Expand our core capabilities through innovation and R&D
Innovation is a key element of how we continue to lead at UMG. We are not
only maximizing existing commercial opportunities for our labels and artists,
but also evolving our broad range of businesses to identify future opportunities,
fan behaviors and consumption trends.
Our unmatched commitment to lead in collaborative development of newservices, platforms and business models for the delivery of music andrelated content empowers innovators and promotes new commercial andartistic opportunities.
We harness technological innovation to drive market growth. Through our
expansive alliances and groundbreaking partnerships across the industry, we
enable our artists to monetize their work and build deeper engagement with
their fans. We view innovation as central to our approach to bring more music tomore people around the world. Some of these areas of focus include:

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STRATEGYADVANCE DATA AND INSIGHTS

UMG is advancing our capabilities in data and insights to help fuel discovery
and inform our ability to connect our artists with their fans anywhere in
the world.
A crucial aspect of our focus on innovation is the high priority we place on
operationalizing data and analytics at an industry-leading scale to promote
the interests of our artists. We have made ongoing strategic investments indata and analytics over the past several years, including building a world-classanalytics infrastructure based on cloud technology.
Our data and analytics team comprises analysts, data scientists, and frontend/ back-end coders who develop algorithms to help UMG identify talent
faster and more efficiently than our competition. We have developed innovative
methods to identify tracks that are popular among distinct audience clusters,
and we can quickly detect viral moments, including those driven by social
platforms. We can then tailor our marketing initiatives to the target audience,
which maximizes reach and conversion. Our data scientists have developed aproprietary marketing mix model and a framework for testing causal effects
to help us both optimize our marketing mix and the creative content used toactivate on these channels.

GO DIRECT TO FANS

UMG is committed to exploring ways to strengthen and better serve the artistfan relationship through superfan experiences and products. In recent years,
UMG has advanced the company’s direct-to-consumer strategy and capabilities,
leaning further into e-commerce and focusing efforts towards building anenhanced and holistic fan-centric ecosystem for UMG artists, providing themwith a robust network of tools and services to build comprehensive global
campaigns that will help them reach fans around the world.
The launch of UMG’s own global eCommerce platform has enabled its D2C,
digital goods, merchandise and e-commerce divisions to accelerate and amplify
artists’ ability to create experiential, commerce and content offerings for theirfans. The platform is already supporting hundreds of artist stores globally, withmany more to launch in 2024.
UMG is actively increasing its global audience and customer footprint,
connecting with music fans and superfans around the world in order to retainand deliver subscribers and fans access to the experiences and products theywant the most.
Embrace entrepreneurs to accelerate the next wave of 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 broadly deployed Accelerator Engagement Network.
Since 2017, UMG’s multifaceted Digital Innovation programs — which include 11
active accelerator partners based in entrepreneurial centers around the world —have nurtured and mentored 170 music start-ups, enabling them to raise over$220 million in funding.

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STRATEGY

UMG’s core music DNA — conveyed through incubation, connectivity,
mentorship and the strategic partner network that we can provide startups
and entrepreneurs — is the greatest asset we can provide early-stage
companies. Some examples of companies backed by UMG and its accelerator
program include music and health innovators like MedRhythms, Music Health,soundBrilliance and MediMusic among others.

MUSIC IS UNIVERSAL Annual Report 2023 | 63

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, 2023

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

64

Chairman & Chief Executive Officer

Jody Gerson

63

Chairman & CEO for Universal Music Publishing Group

Philippe Flageul

Jeffrey Harleston

59
63

Eric Hutcherson

54

Boyd Muir

64

Michael Nash

67

Vincent Vallejo

63

Will Tanous

53

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

MUSIC IS UNIVERSAL Annual Report 2023 | 65

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
and creative authorities. She is the first female chairman of a global musiccompany and the first woman to be named CEO of a major music publisher.
Since joining UMPG in 2015, Gerson has transformed the company into theindustry’s best global home to songwriters and a billion-dollar business –more than doubling revenue and substantially increasing profit. Gerson led
UMPG’s historic catalog acquisitions of Bob Dylan, Sting, Neil Diamond andothers. 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,Lana Del Rey.
Coldplay, Justin Bieber, Post Malone, Ariana Grande, H.E.R., Maren Morris, theBee Gees, Prince, and more. Additionally, Gerson jointly oversees Polygram
Entertainment, a film and television development and production division of
UMG which has produced award-winning projects including The Bee Gees: How
to Mend a Broken Heart (HBO), Dear Mama (FX) and HBO’s Music Box series.
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.

MUSIC IS UNIVERSAL Annual Report 2023 | 67

ORGANIZATIONAL AND REPORTING STRUCTURE

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
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.

MUSIC IS UNIVERSAL Annual Report 2023 | 68

BOARD REPORTFINANCIAL REVIEWFINANCIAL REVIEWEARNINGS ANALYSIS: GROUP AND
BUSINESS SEGMENTS
Consolidated Statement of Profit or LossYear ended

December 31,(millions of euros)

2023

2022

Revenues

11,108

10,340

Selling, general and administrative expenses(3,213)(2,702)

Cost of revenues(6,208)

Amortisation and impairment losses on intangible assets(269)(5,753)(285)

Operating profit

1,418

1,600

Financial expenses

(151)

(735)

Financial income

454

303

Income/(loss) from equity affiliates-

Profit before income taxes

1,721

Income taxes

37

(698)
(2)

900

Net profit

(458)

1,263

(115)

Net profit attributable to equity holders of the parent

1,259

782

0.69

0.43

Earnings for the period attributable to equity holders of theparent - diluted

0.68

0.43

Adjusted net profit

1,595

1,454

0.87

0.80

Of which:

Net profit attributable to non-controlling interests

4

785

3

Earnings per share (in euros)

Earnings for the period attributable to equity holders of theparent - basic

Adjusted net profit per share (in euros) - basic1

Adjusted net profit per share (in euros) - diluted

1

0.88

0.80

1 Non-IFRS measures as defined in the Appendix to the Annual Report

MUSIC IS UNIVERSAL Annual Report 2023 | 70

FINANCIAL REVIEW

Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA
Year ended

December 31,(millions of euros)

2023

2022

Operating Profit

1,418

1,600

Amortization and depreciation expense

382

377

(Gain)/loss on sale of assets

(26)

2

Adjustments

Restructuring expenses

41

Impairment (reversal)/charge on intangible assets

(7)

32
17

EBITDA1

1,808

2,028

Adjusted EBITDA1

2,369

2,135

Non-cash share-based compensation expense

561

107

1 As defined in the Appendix to the annual report

Analysis of the Consolidated Statement of Profit or Loss
Revenues
In 2023, UMG’s revenues of €11,108 million were up 7.4% compared to 2022
and up 11.1% at constant currency. This increase was driven by improvements
across all divisions. Recorded Music grew 6.6% year-over-year and 10.2% atconstant currency compared to 2022, Music Publishing was up 8.7% or 12.3% inconstant currency and Merchandising and Other grew by 14.2% year-over-yearor 17.9% in constant currency.
For a detailed analysis of revenues by business segment, please refer to theAnalysis of revenues and operating results by business segment section below
and to Note 3 to the Consolidated Financial Statements for the year ended
December 31, 2023.
Operating results
Analysis of cost of revenues
Year ended December 31,(millions of euros)

2023

2022

Artist costs

5,152

4,704

Cost of Revenues

6,208

5,753

Product costs

1,056

1,049

Cost of Revenues grew by €455 million to €6,208 million in 2023 from€5,753 million in 2022, reflecting the increase in revenues. Cost of revenues as apercentage of revenues increased to 55.9% from 55.6% driven by higher relative
artist costs and despite lower relative product costs.

MUSIC IS UNIVERSAL Annual Report 2023 | 71

FINANCIAL REVIEW

Artist costs increased by €448 million to €5,152 million in 2023 from€4,704 million in 2022 driven by the increase in sales. As a percentage ofrevenues, artists costs increased to 46.4% in 2023 from 45.5% in 2022 as a resultof a higher proportion of Music Publishing revenues that have higher relative
artist costs and from Recorded Music repertoire mix.
Product costs increased by €7 million to €1,056 million in 2023 from
€1,049 million in 2022 reflecting the growth in revenues. Product costs as apercentage of revenues decreased to 9.5% from 10.1% due to revenue mix.
Selling, general and administrative expenses increased by €511 million to€3,213 million in 2023 from €2,702 million in 2022 and increased as a percentageof revenues to 28.9% in 2023 from 26.1% in 2022 due largely to higher non-cash
share-based compensation expenses. Non-cash share-based compensation
expenses increased to €561 million in 2023 from €107 million in 2022, up by€454m following the rollout of the UMG Global Equity Plan beginning in Q4 2022.
Non-cash share-based compensation expense in both years was impacted by
one-time transition awards and the front loading of expense recognition. Cashcompensation savings of €76 million associated with this rollout were reflected
in 2023.
Operating profit was €1,418 million in 2023, compared to €1,600 million for 2022,
a decrease of €182 million, -11.4% or -8.3% at constant currency, driven by
the higher non-cash share based compensation expenses (discussed above)
partly compensated by the increase in revenues. As a percentage of revenues,
operating profit declined to 12.8% in 2023 from 15.5% in 2022.
EBITDA decreased by €220 million, -10.8% or -7.8% at constant currency to€1,808 million in 2023 compared to €2,028 million in 2022 driven by the increasein non-cash share based compensation expenses (discussed above) partly
compensated by the increase in revenues. EBITDA margin decreased by 3.3pp
to 16.3% in 2023 compared to 19.6% in 2022.
Adjusted EBITDA was €2,369 million in 2023 up €234 million, 11.0% or 14.6% atconstant currency compared to €2,135 million in 2022. Adjusted EBITDA marginincreased by 0.7pp to 21.3% in 2023 from 20.6% in 2022.
For a detailed analysis of EBITDA and Adjusted EBITDA by business segment,
please refer to the Analysis of revenues and operating results by businesssegment section below.
Financial results
Financial income and Financial expenses were a net income of €303 million in
2023, compared to a net expense of €698 million for 2022, an improvement of€1,001 million. For 2023, the revaluation of the investments in listed companies
including Spotify and Tencent Music Entertainment was a net income amountof €425 million, compared to a net expense of €617 million for 2022, an
improvement of €1,042 million.
Income taxes
For 2023, income taxes were a net expense of €458 million, compared to a net
expense of €115 million for 2022. This increase notably reflected the increase in
the deferred tax charge relating to the revaluation of the investments in listedcompanies including Spotify and Tencent Music Entertainment (-€111 million

MUSIC IS UNIVERSAL Annual Report 2023 | 72

FINANCIAL REVIEW

expense in 2023, compared to +€166 million benefit in 2022) and the favourable
settlement of tax litigations in 2022 (€90 million income in 2022).
Non-controlling interests
For 2023, earnings attributable to non-controlling interests were €4 million,
slightly higher than the €3 million for 2022.
Net profit attributable to equity holders of the parent
For 2023, net profit attributable to equity holders of the parent amounted to a
profit of €1,259 million (or €0.69 per share - basic), compared to €782 million
for 2022 (or €0.43 per share - basic), an increase of €477 million. Net profit
attributable to equity holders of the parent increased by €477 million, reflecting:the variance in financial results (+€1,001 million) driven by the revaluation•of the investments in Spotify, Tencent Music Entertainment and other listed
investments (+€1,042 million);
partially offset by:
the decline in operating profit (-€182 million) due to the increase in non•cash share based compensation (discussed above); andthe increase in income taxes reported to net income (-€343 million), mainly•
due to the increase in the deferred tax charge relating to the revaluationof the investments in Spotify, Tencent Music Entertainment and other listed
investments and the favourable settlement of tax litigations in 2022.
Adjusted net profit
Adjusted net profit in 2023 amounted to a profit of €1,595 million (or €0.88 pershare - basic), compared to €1,454 million for 2022 (or €0.80 per share - basic), an
increase of €141 million. Adjusted net profit increased by €141 million, including:•the growth in Adjusted EBITDA (+€234 million); partially offset by•
the increase in income taxes reported to adjusted net profit (-€75 million).

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FINANCIAL REVIEW

Analysis of revenues and operating results by business segment
Year ended

December 31,% Change at(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

2023

2022

% Changecurrency

8,461

7,937

6.6%

10.2%

706

618

14.2%

17.9%

1,956

1,799

-

-

8.7%
0.0%

12.3%
0.0%

(15)

(14)

11,108

10,340

7.4%

11.1%

1,618

1,827

(11.4%)(8.5%)

420
43

395

(273)

1,808

36

(230)

2,028

6.3%

19.4%

(18.7%)(10.8%)

9.4%

26.5%

(21.3%)(7.8%)

1 As defined in the Appendix to the Annual Report

MUSIC IS UNIVERSAL Annual Report 2023 | 74

FINANCIAL REVIEW

Recorded Music
Year ended

December 31,% Change atconstant(millions of euros)

2023

2022

% Changecurrency

Subscriptions andstreaming revenue

5,700

5,321

7.1%

10.4%

of which streamingof which subscription

1,425

0.4%
9.6%

3.6%

Downloads and otherdigital revenue

4,275

1,420

12.8%

207

337

(38.6%)(35.7%)

Physical revenue

1,380

1,207

14.3%

19.4%

Recorded Music Revenues

8,461

7,937

6.6%

10.2%

EBITDA1

1,618

1,827

(11.4%)(8.5%)

1,900

7.5%

11.0%

License and other revenue

EBITDA margin

1,174

3,901

1,072

9.5%

19.1%

23.0%

24.1%

23.9%

0.2pp

North America

4,316

4,077

5.9%

Asia

1,118

1,007

11.0%

360

(23.1%)

1

Adjusted EBITDA1

2,042

Adjusted EBITDA margin

1

Recorded music revenues bygeographic area
EuropeLatin America

Rest of the world

Recorded Music Revenues

2,392
358
277

8,461

2,191
302

7,937

(3.9pp)

13.6%

9.2%

9.2%

10.9%

18.5%

19.3%

6.6%

20.6%
(18.0%)
10.2%

1 As defined in the Appendix to the Annual Report

In 2023, Recorded Music revenues were €8,461 million, up 6.6% compared
to 2022, and up 10.2% in constant currency. Subscription revenues grew by
9.6% or 12.8% in constant currency driven by the growth in global subscribers
as well as impact of price increases at certain platforms. Streaming revenue
grew 0.4%, or 3.6% in constant currency as the broader advertising industry
continued to slowly recover. Physical revenue grew 14.3%, or 19.4% in constantcurrency, driven by strong new releases and growth in direct-to-consumer
sales. Downloads and other digital revenue declined by 38.6%, and 35.7% in
constant currency, on last year that included the €71 million benefit from thesettlement of a copyright infringement lawsuit with an internet service provider
also due to the continued decline in download sales. License and other revenue
improved 9.5% or 13.6% in constant currency, as a result of improved live, brandsponsorship, neigbouring rights and synchronization income, as well as thetiming related benefit of a new licensing deal. Top sellers for the year included
Taylor Swift, King & Prince, Morgan Wallen, Karol G and The Weeknd. Top sellers in
the prior-year included Taylor Swift, BTS, the Encanto soundtrack, Olivia Rodrigo
and Morgan Wallen.

MUSIC IS UNIVERSAL Annual Report 2023 | 75

FINANCIAL REVIEW

Recorded Music EBITDA in 2023 of €1,618 million was down €209 million
from €1,827 million in 2022 due to the increase in non-cash share based
compensation partly offset by the growth in revenues. In 2023, EBITDA included€424 million of non-cash share based compensation compared to €73 million of
non-cash share-based compensation expense in 2022.
Adjusted EBITDA for Recorded Music increased by €142 million to €2,042 million
in 2023 from €1,900 million in 2022 as a result of the revenue growth. Adjusted
EBITDA margin increased by 0.2pp to 24.1% of revenues from 23.9% of revenues
in 2022.
Music Publishing
Year ended

December 31,% Change atconstant(millions of euros)

2023

2022

% Changecurrency

Performance revenue

416

371

12.1%

15.9%

Digital revenue

1,128

1,040

8.5%

12.5%

Other revenue

50

55

Synchronisation revenue
Mechanical revenue

254
108

Music Publishing Revenues
EBITDA

1

EBITDA margin

1

Adjusted EBITDA1

Adjusted EBITDA margin

7.6%

10.0%

97

11.3%

1,956

1,799

8.7%

12.3%

420

395

6.3%

9.4%

14.6%

17.8%

(9.1%)

21.5%

22.0%

(0.5pp)

24.0%

22.8%

1.2pp

470

1

236

410

14.9%

(7.4%)

1 As defined in the Appendix to the Annual Report

Music Publishing revenue amounted to €1,956 million in 2023, up 8.7%
year-over-year, or 12.3% in constant currency. Revenues benefited from thecontinued growth in subscription and streaming and an improvement in both
performance and synchronization income. Revenues in 2023 also benefited
from the €53 million accrual for a catch-up payment from certain digital
service providers related to the Copyright Royalty Board Phonorecords III ruling.
Revenues in Q2 of 2022, included the receipt of €98 million higher income than
was accrued at the end of 2021 when UMG adjusted its accounting policy inrelation to certain revenues that are collected through societies.
Music Publishing EBITDA in 2023 of €420 million was up €25 million from€395 million in 2022 driven by the growth in revenues. EBITDA was impacted by€50 million of share based compensation expense in 2023 (€15 million in 2022).
Music Publishing Adjusted EBITDA increased by €60 million to €470 million
in 2023 compared to €410 million in 2022 as a result of the revenue growth.
Adjusted EBITDA margin increased by 1.2pp to 24.0% from 22.8% of revenues
in 2022.

MUSIC IS UNIVERSAL Annual Report 2023 | 76

FINANCIAL REVIEW

Merchandising & Other
Year ended

December 31,% Change atconstant(millions of euros)

2023

2022

% Changecurrency

Merchandising andOther Revenues

706

618

14.2%

17.9%

36

19.4%

26.5%

36

30.6%

38.2%

EBITDA1

43

EBITDA margin1

Adjusted EBITDA1

6.1%

5.8%

6.7%

5.8%

47

Adjusted EBITDA margin

1

0.3pp
0.9pp

1 As defined in the Appendix to the Annual Report

Merchandising and Other revenue grew to €706 million, up 14.2%, or 17.9% in
constant currency driven by the strong growth in direct-to-consumer sales.
Merchandising and Other EBITDA in 2023 of €43 million was up €7 million from€36 million in 2022 due to the improved revenues. EBITDA was impacted by€4 million of share based compensation expense in 2023 (€0 million in 2022).
Merchandising and Other Adjusted EBITDA increased by €11 million to€47 million in 2023 compared to €36 million in 2022. Adjusted EBITDA margins
increased by 0.9pp to 6.7% of revenues from 5.8% of revenues in 2022 due tolower relative product costs resulting from the shift in revenue mix towards
higher margin direct-to-consumer sales.
Corporate
Year ended

December 31,% Change atconstant(millions of euros)

2023

2022

% Changecurrency

EBITDA1

(273)

(230)

18.7%

21.3%

Adjusted EBITDA1

(190)

(211)

(10.0%)(7.8%)EBITDA margin1

Adjusted EBITDA margin1--

1 As defined in the Appendix to the Annual Report

Corporate EBITDA was a net expense of €273 million, compared to a net expenseof €230 million for 2022, a €43 million increase in expense. EBITDA in 2023
included €83 million of non-cash share-based compensation related expenses(€19 million in 2022).
Corporate Adjusted EBITDA was a net expense of €190 million in 2023, a€21 million decrease in expense from the Adjusted EBITDA expense in 2022 of€211 million.

MUSIC IS UNIVERSAL Annual Report 2023 | 77

FINANCIAL REVIEWLIQUIDITY AND
CAPITAL RESOURCES
Financial Net Debt
Year ended

December 31,(millions of euros)

2023

2022

Cash and cash equivalents

413

439

-

(125)

(1,808)(1,004)

Derivative financial assets

Drawn revolving credit facilities
Bank overdrafts
Bonds

Commercial papers
Other

Borrowings at amortized cost
Financial Net Debt1

2

(26)

(197)
(73)

(2,104)(1,689)

1

(1)

(929)
(191)

(2,250)(1,810)

1 As defined in the Appendix to the Annual Report

Changes in the Financial Net Debt
As of December 31, 2023, UMG’s Financial Net Debt amounted to -€1,689 million
compared to Financial Net Debt of -€1,810 million as of December 31 ,2022, i.e.,a decrease in net debt of €121 million. This change was mainly attributable tothe following:•
Net cash provided by operating activities of €1,885 million;
partially offset by:•
in June and July 2023, UMG paid the final dividend with respect to fiscal year
2022 of €492 million;•in October and November 2023, UMG paid an interim dividend with respect
to fiscal year 2023 of €437 million;•
Net cash used for investing activities of -€622 million primarily due tothe €330 million net purchase of consolidated companies, equity affiliates
and financial assets relating to several strategic investments in theyear, €178 million investment in Music Publishing and Recorded Music
catalogues and €121 million investment in other intangible and capital
expenditure; and•repayment of €94 million in relation to lease liabilities and related interestand €87 million in other interest and financing related payments.
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.

MUSIC IS UNIVERSAL Annual Report 2023 | 78

FINANCIAL REVIEW

Equity portfolio
As of December 31, 2023, UMG held a portfolio of listed non-controlling equity
interests (including Spotify) with an aggregate market value of approximately€1,227 million (before taxes), compared to €597 million as of December 31,
2022. The increase in market value during 2023 was due to the fluctuation inshare price of our listed investments most notably of Spotify. As at February
29, the aggregate market value of these listed investments had increased toapproximately €1,671 million (before taxes).

MUSIC IS UNIVERSAL Annual Report 2023 | 79

FINANCIAL REVIEWCash flow analysis
Year ended December 31,(millions of euros)

2023

20221

Operating activities
Operating profit

1,418

1,600

Adjustments

796

568

Royalty advances payments, net of recoupments

(100)

(148)

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

2,114

2,020

164

(33)

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

2,278

1,987

Income tax paid

(393)

(255)

Net cash provided by/(used for) operating activities

1,885

1,732

Catalogue investments

(178)

(359)

Other intangible assets investments

(74)

(60)

Capital expenditures

(47)

(33)

Purchases of consolidated companies, after acquired cash

(97)

(22)

Investments in equity affiliates

(81)

(22)

Other changes in net working capital

Investing activities

Purchase of financial assets

(154)

(36)

Investments

(631)

(532)

Proceeds from sales of consolidated companies, after divested cash

1-

Proceeds from sale of financial assets

1

9Divestitures2

9

Dividends received from equity affiliates

4

2

Dividends received from investments

3

1

(622)

(520)

(929)

(798)

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

(2)

(2)

Transactions with shareowners

(931)

(800)

Proceeds from borrowings

6,647

5,938

Repayments of borrowings(6,815)(6,359)

(77)

(30)

Interest, net
Other cash items related to financing activities

(10)

4

Transactions on borrowings and other financial liabilities

(255)

(447)

Repayment of lease liabilities

(80)

(86)

Payment of interest of lease liabilities

(14)

(14)

(1,280)(1,347)

(17)

(135)

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

(34)

1

Change in cash and cash equivalents

(51)

(134)

At beginning of the period

438

572

At end of the period

387

438

Cash and cash equivalents

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

MUSIC IS UNIVERSAL Annual Report 2023 | 80

FINANCIAL REVIEW

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

December 31,(millions of euros)

2023

2022

Net cash provided by/(used for) operating activities

1,885

1,732

(94)

(100)

Net cash provided by/(used for) investing activities

Repayment of lease liabilities and related interest expenses
Interest, net

Other cash items related to financing activities
Free Cash Flow

1

(622)
(77)
(10)

1,082

(520)
(30)
4

1,086

1 As defined in the Appendix to the Annual Report

Net cash provided by operating activities before income tax
For 2023, Net cash provided by operating activities before income tax amounted
to an inflow of €2,278 million compared to an inflow of €1,987 million for 2022,
an improvement of €291 million. This increase was mainly attributable to thefollowing items:•
the increase in Adjustments (+€228 million) including the offset of the noncash share based compensation expense reflected in Operating profit net ofthe employee tax withheld (see breakdown of Adjustments in the Appendix);•
the reduction in Royalty advances payments net of recoupments(+€48 million) due to the timing of major artist renewals and higher
recoupments; and•the favourable variance in Other changes in net working capital(+€197 million) including timing of digital advance receipts;
partially offset by•
the decrease in Operating profit (-€182 million).
Net cash provided by operating activities
Net cash provided by operating activities in 2023 amounted to an inflow of€1,885 million compared to an inflow €1,732 million for 2022, an improvementof €153 million. Net cash provided by operating activities before income tax in
2023 was €291 million higher than in 2022 but income tax paid in 2023 was€138 million greater than in 2022 in part due to the €62 million in refunds from
litigation received in 2022.
Net cash used for investing activities
Net cash used for investing activities in 2023 was a €622 million net outflow
compared to a €520 million net outflow for 2022, an increased outflow of€102 million. The net purchase of consolidated companies, equity affiliates andfinancial assets was €259 million higher than in 2022 and represented various
strategic investments entered into during the year. Catalogue investments in
2023 were lower than in 2022 (+€181 million) due to the timing of deals but
investment in other intangible assets and capital expenditure was higher(-€28 million).

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FINANCIAL REVIEWNet cash used for financing activities
Net cash used for financing activities in 2023 was a €1,280 million net outflow
compared to a €1,347 million net outflow for 2022, a decreased outflow of€67 million. This was mainly attributable to the following items:•
a net repayment of borrowing in 2023 of €168 million compared to€421 million in 2022 (+€253 million);•higher dividend payments in 2023 (-€131 million); and•higher interest payments, repayment of lease liabilities and other cash
items related to financing activities of €181 million in 2023 compared to€126 million in 2022 (-€55 million).
Free Cash Flow
Free Cash Flow in 2023 was a €1,082 million net inflow compared to a
€1,086 million net inflow for 2022, a decrease of €4 million. Net cash provided
by operating activities improved by €153 million compared to 2022 but this wasoffset by greater net cash used for investing activities (-€102 million) and higher
interest payments, repayment of lease liabilities and other cash items related tofinancing activities (-€55 million) in 2023 compared to 2022.

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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 theNetherlands. The Shares (as defined in the Shareholder information section
under ‘Share capital’) were first admitted to listing and trading on Euronext
Amsterdam (the Listing), the regulated market of Euronext Amsterdam N.V.,
on September 21, 2021. The Company has a one-tier board (the Board), whichcurrently comprises of two executive directors (the Executive Directors) andeleven 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 20, 2022 (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 under ‘Compliance with theCode--Deviations’ 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 under ‘The Board’) as a separate item.
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 onsustainable long-term value creation by the Company and formulating astrategy as well as specific objectives in line with this view, identifying andmanaging the risks associated with the Company’s strategy and business,
appointing and dismissing the senior internal auditor, annually assessing theway in which the internal audit function fulfills its responsibility and ensuringthat such assessment is performed by an independent third party at least every
five years, approving the internal audit plan, giving account of the effectivenessof the design and operation of the internal risk management and control
systems, ensuring compliance with all applicable laws and regulations andthe Company’s corporate governance structure and preparing, approving andsigning the (semi-annual) financial statements and Board report and approving
the annual budget and major capital expenditures in excess thereof.
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 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 the external auditor(s) 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, one of whom, being Haim Saban, was appointed to theBoard by the General Meeting on May 11, 2023:

Name

Function

Sir Lucian Grainge

Executive Director, Chairman and Chief Executive Officer

Sherry Lansing

Non-Executive Director, Chairman of the Board

Vincent Vallejo

Antoine Fiévet
Bill Ackman

Cathia Lawson-Hall
Cyrille Bolloré
Haim Saban

James Mitchell
Luc van Os

Manning Doherty

Margaret FrerejeanTaittinger
Nicole Avant

Executive Director, Deputy Chief Executive
Officer, Corporate
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
Non-Executive Director

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, reappointments and retirements of Non-Executive
Directors occurring all at the same time so as to ensure continued experienceon the Board. Currently, the terms of office of eight (out of eleven) Non-Executive
Directors lapse at the close of the annual General Meeting to be held in 2024,
and it is the intention that the use of the retirement schedule will result in amore staggered replacement of the Non-Executive Directors over time.

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CORPORATE GOVERNANCE

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

Name

Initial appointment date

Reappointment dateTerm

End of current term

Sherry Lansing

May 12, 2022

May 11, 2023

Second term

Antoine Fiévet

September 20, 2021

First term

Until annual General Meeting
to be held in 2025

Bill Ackman

May 12, 2022

First term

Cathia Lawson-Hall

September 20, 2021

First term

Cyrille Bolloré

May 12, 2022

First term

Haim Saban

May 11, 2023

First term

James Mitchell

September 20, 2021

First term

Luc van Os

September 20, 2021

Manning Doherty

September 20, 2021

First term

Margaret FrerejeanTaittinger

September 20, 2021

First term

May 12, 2022

First term

Nicole Avant

May 11, 2023

Second term

Until annual General Meeting
to be held in 2024
Until annual General Meeting
to be held in 2024
Until annual General Meeting
to be held in 2024
Until annual General Meeting
to be held in 2024
Until annual General Meeting
to be held in 2025
Until annual General Meeting
to be held in 2024
Until annual General Meeting
to be held in 2025
Until annual General Meeting
to be held in 2024
Until annual General Meeting
to be held in 2024
Until annual General Meeting
to be held 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 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 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.

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CORPORATE GOVERNANCE

James Mitchell and Manning Doherty have been appointed at thedesignation of the Tencent-led consortium such in accordance with theRelationship Agreement.

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 or 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 (or executive) board of an associated issuing
institution 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 (or executive) board of a company in which
an Executive Director is a supervisory (or non-executive) board member;•
has temporarily performed management (or executive) duties during theprevious 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; or•is a member of the management (or executive) board or supervisory (ornon-executive) 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 of a one-tier board) of another large Dutch company or foundation. The
number of a Non-Executive Director’s supervisory (or non-executive) positionsof large Dutch companies or foundations shall be limited to a maximum of five,
for which purpose the chairmanship of a supervisory board (or of a one-tierboard) of another large Dutch company or foundation counts twice. Executive
Directors shall not pursue the candidacy for a supervisory (or non-executive) orsimilar position in companies other than subsidiaries of the Company without
the Board’s prior approval. Such position may not conflict with the Company's
interests. Other important positions held by a Director shall be notified to
the Board.

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CORPORATE GOVERNANCE

Diversity and inclusion

For the workforce as a whole, diversity and inclusion is dealt with in the
Code of Conduct, which encourages an inclusive environment that promotes
individual expression, creativity, innovation and achievement and emphasizes
that within UMG diverse backgrounds and skills are valued as well as individual
differences in race, ethnicity, gender or gender identity, sexual orientation,
disability, religious affiliation, age, experience and thought.
For the Board and senior management, the Company has also adopted aseparate diversity and inclusion policy (the D&I Policy) as per articles 2:142b
and 2:166 of the Dutch Civil Code and best practice provision 2.1.5 of the Code,laying down the elements of a diverse and inclusive composition of the Boardand senior management.
As set out in the D&I Policy, the Company acknowledges the benefits ofgreater diversity, including with regards to gender or gender identity, age,nationality, ethnicity and cultural or other background, and remains committed
to ensuring that the Directors and senior management bring a wide range ofexpertise, experience, competencies, other personal qualities and perspectives.
All nominations for appointments to the Board and senior management will bemade based on merit against objective criteria, in the context of the overallbalance of expertise, experience, competencies, other personal qualities andperspectives that are needed for the Company to remain effective.

The Board
With respect to the Board, the Company is committed to promoting diversity
and inclusion in the boardroom and to ensuring that all Directors are able tocontribute to Board discussions and has the aspiration:•••

to improve or safeguard gender diversity among the Non-Executive
Directors, such that at least one third of the Non-Executive Directors is
female and at least one third of the Non-Executive Directors is male,thereby at all times taking into account the Dutch statutory gender diversity
requirements with regards to non-executive directors.
to improve gender diversity among the Executive Directors, such that atleast one Executive Director is female and at least one Executive Director ismale in the event that there are three (or more) Executive Directors.
to improve or safeguard diversity with regards to age, nationality, ethnicity
and cultural or other background as well as to create and maintain avariation in expertise, experience, competencies, other personal qualities
and perspectives within the Board.

The Company is further committed to considering candidates for Non-Executive
Director positions from a wide pool, including candidates with no prior publicly
listed company board level experience.
The Nomination Committee (as defined under ‘The Board––Committees’) is
responsible for supporting the Board in applying the D&I Policy with respect
to the composition of the Board by annually assessing the Board’s sizeand composition and, as part thereof, for considering (i) with respect to the
Directors in general, the level of diversity with regards to expertise, experience,competencies, other personal qualities, perspectives, gender or gender identity,age, nationality, ethnicity and cultural or other background, and (ii) with respect
to the Non-Executive Directors in particular, the level of independence, ahead ofmaking recommendations to the Board for any proposed changes. In addition,

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CORPORATE GOVERNANCE

the Nomination Committee is required to consider the benefits of all aspects
of diversity, without compromises as to the caliber of the candidate Directors,
when identifying candidate Directors to be nominated for appointment to
the Board.
The senior management
With respect to the senior management, the Company is committed topromoting diversity and inclusion among the senior managers and has
the aspiration:•
to improve gender diversity among the senior managers, such that by
December 31, 2026, at least 20% of the senior managers is female, which
would reflect a 2.5% increase compared to December 31, 2023, and at least
20% of the senior managers is male; andto improve or safeguard diversity with regards to age, nationality, ethnicity•
and cultural or other background as well as to create and maintain avariation in expertise, experience, competencies, other personal qualities
and perspectives within the senior management.
For purposes of the D&I Policy and the aspirations laid down therein, the senior
management is currently comprised of 63 senior managers.
Overview
The following table provides an overview of the composition of the Executive
Directors, Non-Executive Directors and senior managers by gender:

Non-Executive Directors

Executive Directors

Female0

Female4

Female112Total female and male

11

Total female and male63

% male64% male

83

Male

2

% female0

Total female and male
% maleSenior Managers

100

Male

% female

7

36

Male

% female

The current composition of the Board is considered to be diverse with regards
to age, nationality, ethnicity and cultural or other background as well as tohave a variation in expertise, experience, competencies, other personal qualities
and perspectives. With the appointment of Haim Saban to the Board, thediversity has further increased, including with regards to age and nationality
but also with regards to expertise and experience. Even though the female
representation on the Board decreased because of Anna Jones' resignation fromthe Board, with women representing 36% of all Non-Executive Directors, thecurrent composition of the Non-Executive Directors is considered to be in linewith the gender diversity requirements included in the D&I Policy and Dutch law.
While the current composition of the senior management is also considered
to be diverse, the Company acknowledges that there is room for improvement,
especially with regards to gender diversity. Although such improvement cannot
happen overnight, especially since the senior managers are typically committed
to the Company for the long term, the Company has the aspiration that by
December 31, 2026, at least 20% of the senior managers is female, which would
reflect a 2.5% increase compared to December 31, 2023.

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52
17

CORPORATE GOVERNANCE

Actions to improve diversity and inclusion
The Company believes that the best way to foster an environment where
original ideas are generated and creativity can flourish is to build an inclusive
workplace that attracts and promotes talent from diverse backgrounds andcultures. Key actions from the Company’s plan to foster, and further enhance,such an environment are set out in the Non-Financial Information section
under ‘Our commitments--Social’ and include:
Embracing cultural differences and raising awareness•
The Company recognizes many cultural milestones and historicallysignificant events.
The Company’s employee resource groups (ERGs) provide a platform for•underrepresented employees to network, share experiences and help
shape employee programming, and play a crucial role in supporting theCompany’s commitment to fostering inclusion and belonging.
Attracting and retaining talent
To attract the next generation of talent, the Company hosts internship•programs, allowing students, including from certain minority-serving
institutions, to take part in such programs.
•
The Company provides inclusive interviewing training to further support
its goal of championing inclusion and belonging throughout theemployee lifecycle.
•
The Company is putting in place a workforce data insights initiative, which
includes the implementation of a global job architecture and a quarterly
review of workforce changes, including turnover, to allow it to improve andprioritize its talent attraction and retention programs.
Enhancing employee experience and development•
To obtain feedback on the employee experience, the Company uses
a series of employee lifecycle surveys as well as exit surveys. The
insights so obtained are turned into actions to further enhance theemployee experience.
•
To cultivate leadership, the Company offers multiple programs specificallydeveloped to drive leadership preparedness, including among certain
underrepresented groups.
•
While the Company already offers a broad range of employee development
opportunities, it plans to further expand the number of initiatives, including
to programs centered on career conversations and personal development,
plans for future workforce needs and plans to link personal development tospecific skills with career paths.
Ensuring equitable pay practices
The Company supports equitable pay practices through the implementation•of a global job architecture, in which individual pay reflects experience,skillset, performance against goals and scope of responsibilities but does
not differentiate on the basis of protected characteristics.
Supporting employee wellbeing•
As the Company is committed to enhancing its appeal as an employer andcreating a positive and healthy workplace, it provides programming andsupport for a Company-wide culture of physical health, mental health andoverall wellbeing. The Company has in place regionally-specific employee
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CORPORATE GOVERNANCE

in-the-moment support for emotional wellness, self-guided mindfulness,cognitive behavioral therapy programs and work-life assistance.
Mitigating measures•
As the Company promotes a respectful workplace, where harassment anddiscrimination have no place, the Company offers multiple options for
employees to seek guidance and report potential instances of misconduct,
including concerns related to harassment and discrimination, without fear
for retaliation.

Conflicts of interest and related party transactions

A Director may not take part in the discussion and/or decision-making processof the Board where it concerns (i) a transaction in respect of which he or she
has a direct or indirect personal conflict of interest with the Company or one ofits subsidiaries (a conflict of interest) or (ii) a related party transaction in which
he or she is involved. If the Board is unable to take a decision as a result of all
Directors being unable to take part in the discussion and/or decision-making
process of the Board due to a conflict of interest or due to all Directors being
involved in a related party transaction, the decision shall nevertheless be takenby the Board.
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. In accordance with the RPT Policy, (i) any
transaction in respect of which a Director has a (potential) conflict of interest
that is of material significance to the Company and/or the Director concerned(a Code RPT) or (ii) any material related party transaction in which a Director isinvolved and that is not entered into in the ordinary course of business andunder normal market conditions (a DCC RPT, and together with a Code RPT, a
Related Party Transaction) must be approved by the Board.
In accordance with the RPT Policy, a Director shall promptly notify any (potential)
Related Party Transaction to the Chairman of the Board; the Chairman of theBoard shall promptly notify any (potential) Related Party Transaction to theVice-Chairman of the Board. In so notifying the Chairman of the Board or theVice-Chairman of the Board, the Director concerned must provide all relevant
information, including information relevant to the situation concerning any
close family member.
In accordance with best practice provisions 2.7.3 and 2.7.4 of the Code, any Code
RPT must be approved by the Board, entered into on terms which are customaryin the market, and published in the Board report together with a statement of
the conflict of interest and a declaration that best practice provisions 2.7.3 and2.7.4 of the Code have been complied with.
In accordance with best practice provision 2.7.5 of the Code, 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 of material significanceto the Company and/or the natural or legal person concerned must be approvedby the Board, entered into on terms which are customary in the market andpublished in the Board report together with a declaration that best practiceprovision 2.7.5 of the Code has been complied with.

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CORPORATE GOVERNANCE

In 2023, neither any Code RPTs nor any transactions between the Company anda natural or legal person who or which holds at least 10% of the issued sharecapital of the Company that was of material significance to the Company and/or
the natural or legal person concerned have been entered into.
In Note 24 ‘Related parties’ to the consolidated financial statements, details of
all related party transactions (including DCC RPTs, if any) are set out.

Resolutions subject to approval of the Board

In addition to Related Party Transactions, which require the approval of theBoard as set out under ‘The Board––Conflicts of interest and related party
transactions’, 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

The remuneration of the Executive Directors and Non-Executive Directors
shall be determined by the Board with due observance of the remuneration
policies for the Executive Directors and Non-Executive Directors, respectively.
The Executive Directors shall not participate in the discussion and/or decisionmaking process regarding the determination of the remuneration of the
Executive Directors. The remuneration policies as well as the main elements of
the agreements with Sir Lucian Grainge and Vincent Vallejo are available on theinvestor relations part of the UMG website. In the Remuneration report, detailsof the individual remuneration of the Executive Directors and Non-Executive
Directors are set out.

Severance

Under his employment agreement, Sir Lucian Grainge is entitled to severance
payments as set out in the Remuneration report under ‘Severance payments
and termination provisions--Sir Lucian Grainge’ in the event of (i) terminationof his employment agreement by Universal Music Group, Inc. (i.e., theformal employer of Sir Lucian Grainge) without cause, (ii) non-renewal of his
employment agreement by Universal Music Group, Inc. or (iii) termination of his
employment agreement by Sir Lucian Grainge for good reason, which includes
a change in control (as defined in the Remuneration report under 'Severance
payments and termination provisions--Sir Lucian Grainge’).
Under his management services agreement, Vincent Vallejo is not entitledto any severance payments in the event of termination or non-renewal ofhis management services agreement; he is, however, entitled to severance
payments in accordance with Dutch law.

Directors’ and 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

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CORPORATE GOVERNANCE

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.
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 shalladvise the Board in relation to its responsibilities, shall undertake preparatory
work for the Board’s decision-making regarding the supervision of the integrityand quality of the Company’s financial and sustainability reporting and theeffectiveness of the Company’s internal risk management and control systems
and shall prepare 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 theBoard on, the effectiveness of the design and operation of the internal risk
management and control systems, including supervising the enforcement of
all applicable laws and regulations and supervising the effect of the Codeof Conduct, (ii) supervising the preparation and submission of financial andsustainability information by the Company, (iii) supervising the compliancewith recommendations, comments and observations of the internal auditor,
the external auditor(s) and any other external party involved in the auditingof the sustainability reporting, (iv) instructing the external auditor(s) and theinternal audit function to inform the Executive Directors and the chair of the
Audit Committee without delay if it or they discover(s) or suspect(s) an instanceof misconduct or irregularity, (v) supervising the functioning of the internal
audit function, (vi) ensuring that the way in which the internal audit function
fulfills its responsibility is assessed by an independent third party at least
every five years, (vii) supervising the policy of the Company on tax planning,(viii) supervising the financing of the Company, (ix) supervising the applicationsof information and communication technology, including risks relating toMUSIC IS UNIVERSAL Annual Report 2023 | 94

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cybersecurity and data protection and risks relating to new technologies, (x)maintaining frequent contact and supervising the relationship with the internal
auditor, the external auditor(s) and any other external party involved in theauditing of the sustainability reporting, (xi) implementing the procedure for theselection of the external auditor(s) and submitting a recommendation to the
Non-Executive Directors for the (re)appointment or dismissal of the external
auditor(s) by the General Meeting, (xii) informing the Board of the outcome ofthe statutory audit and explaining how the statutory audit contributed to theintegrity of the financial reporting and what the role of the Audit Committee
was in that process, (xiii) monitoring the financial reporting and submitting
recommendations or proposals to ensure its integrity, (xiv) determining whether,and if so, how the external auditor(s) shall be involved in the content andpublication of financial reports other than the financial statements, (xv) issuinga recommendation on the appointment and dismissal of the senior internal
auditor, (xvi) submitting a proposal to the Board for the engagement of theexternal auditor(s) to audit the financial statements, and (xvii) considering
and, where appropriate, approving for recommendation to the Board the (semiannual) financial statements, the annual budget and major capital expendituresof 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 of the Audit
Committee as a whole shall have competence relevant to the sector in which theCompany 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
meeting shall be a majority of the members of the Audit Committee. The Audit
Committee shall meet with the external auditor(s) 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
auditor(s) shall in principle attend the meetings of the Audit Committee, unlessthe 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 shall advise the Board in relation to its responsibilities, shallundertake preparatory work for the Board’s decision-making regarding thedetermination of the remuneration of the individual Executive Directors andNon-Executive Directors, with due observance of the remuneration policies for
the Executive Directors and Non-Executive Directors, respectively, and shallprepare 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 with regard to the Executive
Directors and Non-Executive Directors, to be tabled at the annual General
Meeting for adoption and (ii) annually preparing the remuneration report, to betabled at the annual General Meeting for a non-binding advisory vote.

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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 shall advise the Board in relation to its responsibilities, shallundertake preparatory work for the Board’s decision-making and shall prepare
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) annually assessing the size and composition of the Board, andmaking a proposal for the profile for Non-Executive Directors, (iii) annually
evaluating the functioning of the Board as a whole, the individual Directors
and the various committees, ensuring that such evaluation periodically takes
place under the supervision of an external expert and reporting on this to
the Board, (iv) formulating succession plans and drawing up a retirement
schedule, (v) making recommendations for the (re)appointment of Directors and(vi) supervising the policy of the Board on the selection 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.
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 (the Market
Disclosure Committee), consisting of seven members, which is responsible forthe timely and accurate disclosure of all information that is required to be sodisclosed to the market in order to meet the applicable legal and regulatory
obligations and requirements arising from the Listing.
The Market Disclosure Committee shall meet whenever necessary to fulfill its
responsibilities and meetings can be called by and at the request of anyof the members 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 thefinancial statements, (iv) the discussion of the dividend policy and the proposal
to distribute dividends, (v) the discharge of the Directors for the performanceof their duties, (vi) the (re)appointment of Directors, (vii) the adoption of the
remuneration policies for the Executive Directors and Non-Executive Directors
insofar as any adjustments to the remuneration policies so require or four years
after their former adoption, (viii) the appointment of the external auditor(s), 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 paid-up and called-up part of theshare capital 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 2023 | 97

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 toconvene a General Meeting as set out under ‘The General Meeting––Annual andextraordinary 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 auditor(s) is or 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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•
•
•
•
•
•
•
•
•
•

the authorization of the Board to acquire Shares on behalf of the Company
the reduction of the issued share capital of the Company
the (re)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 auditor(s)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 of the General Meeting (unless the resolution would be
adopted unanimously during a General Meeting where the entire issued sharecapital 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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Each Shareholder has a pre-emptive right in proportion to the aggregate numberof 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.
On May 12, 2022, the General Meeting approved the 2022 UMG Global Equity
Plan (as defined in the Shareholder information section under ‘2022 UMG Global
Equity Plan’) as well as the issuance of Shares or the granting of rights to
subscribe for Shares in order to give effect to awards granted under the 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 theCompany as at May 12, 2022 and, to the extent necessary, the exclusion of thestatutory 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 a committee of theBoard 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 paid-up and calledup part of 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 the Company acquires, holds or on which it holds a right of pledge or
which are held by a subsidiary does not exceed 50% of the issued share capitalof the Company and (iii) the Board has been authorized to acquire Shares onbehalf of the Company by the General Meeting. Such authorization is valid fora maximum period of eighteen months and as part of the authorization, theGeneral Meeting must specify the number of Shares that may be acquired aswell as the manner in which and the price range within which the Shares may
be acquired. Such authorization is not required if the Company acquires fully
paid-up Shares for the purpose of transferring such Shares to employees of
the Company or of a group company under an equity compensation plan. Any
acquisition of Shares that are not fully paid-up shall be null and void.
In calculating the amount of any dividend distribution on the Shares, Shares
held by the Company shall be disregarded, unless such Shares are encumberedMUSIC IS UNIVERSAL Annual Report 2023 | 100

CORPORATE GOVERNANCE

with 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 11, 2023, the General Meeting resolved to grant the Board the authority
to cause the Company to acquire Shares up to a maximum number of Shares
representing 10% of the issued share capital of the Company as at May 11, 2023,
through purchases effected on a stock exchange or otherwise, for a period ofeighteen months, including for the purpose of effecting potential share buyback
programs in an efficient manner. The price shall range between an amountequal to the nominal value of the Shares and an amount equal to 110% of theshare price, whereby the share price shall be understood to mean the average ofthe highest quoted price for each Share during the five trading days prior to thedate of 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 auditor(s)The General Meeting appoints the external auditor(s) to audit the financial
statements. The Non-Executive Directors submit a nomination for theappointment of the external auditor(s) 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 timeafter 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 organized an
auditor selection procedure in the second half of 2022 which was led by aselection committee designated by the Audit Committee for such purpose.
Having completed the auditor selection procedure in the first quarter of 2023,

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the Non-Executive Directors, at the recommendation of the Audit Committee,
consequently nominated Ernst & Young Accountants LLP for appointment by theGeneral Meeting as the Company's external auditor for the financial years 2023
up to and including 2025, and on May 11, 2023, the General Meeting appointed
Ernst & Young Accountants LLP accordingly.

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 and NonExecutive Directors and the amendment of the Articles, the powers of the Board(in particular the power to issue Shares and to cause the Company to acquire
Shares), any material agreement to which the Company is a party and whichcomes into force or is amended or terminated upon a change of control over theCompany following a takeover offer, and any agreement between the Company
and a Director or employee providing for compensation if his or her employment
is terminated because of a takeover offer. 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 this Corporate 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.

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 4, 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. However, the Company deems
that this deviation does not negatively impact the ability of these Non-Executive
Directors to perform their duties critically and independently given the shortMUSIC IS UNIVERSAL Annual Report 2023 | 102

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period during which they were involved in the executive management of theCompany 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.
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).
Best practice provision 2.2.1 of the Code
The Company does not comply with (the second sentence of) best practiceprovision 2.2.1 of the Code, which recommends that a management board
member may be reappointed for a term of not more than four years at atime, now that the General Meeting, on May 11, 2023, reappointed Sir Lucian
Grainge as an Executive Director for a period ending on May 1, 2028. At
the recommendation of the Nomination Committee, the Board made its (nonbinding) nomination for the reappointment of Sir Lucian Grainge for such an
extended period in order to align the term of his appointment as an Executive
Director with the term of his employment agreement.
Best practice provision 2.2.2 of the Code
The Company does not comply with (the first sentence of) best practice provision
2.2.2 of the Code, which recommends that a supervisory board member isappointed for a period of four years and may then be reappointed once foranother four-year period, now that all Non-Executive Directors have been
appointed or reappointed by the General Meeting for a period of two years inorder to comply with the base scenario under the Articles.
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. However, the Company deems that thisdeviation does not negatively impact his ability to perform his duties criticallyand independently given the short period during which he was involved in theexecutive management of the Company prior to, and primarily in preparation for,the Listing.
Because of Anna Jones' resignation from the Board on September 30, 2023, andthe consequent termination of her committee membership, the Company nolonger complies with (the second sentence of) best practice provision 2.3.4 of
the Code, which recommends that more than half of the members of eachcommittee should be independent, now that two out of four of the Audit

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Committee members, being Cathia Lawson-Hall and Luc van Os, are considered
non-independent within the meaning of best practice provision 2.1.8 of the Codeand two out of four Remuneration Committee members, being Cyrille Bolloré
and James Mitchell, are considered non-independent within the meaning ofbest practice provision 2.1.8 of the Code. This deviation is intended to be of atemporary nature only as the Board intends to appoint another independent
Non-Executive Director to the Audit Committee and Remuneration Committee inthe course of the financial year 2024.
Best practice provision 2.3.6 item (ii) of the Code
Because of Anna Jones' resignation from the Board on September 30, 2023,
and the consequent termination of her vice-chairmanship of the Board, theCompany no longer complies with best practice provision 2.3.6 item (ii) of theCode, which recommends that a vice-chairman is elected. This deviation isintended to be of a temporary nature only as the Board intends to appoint
another Non-Executive Director as Vice-Chairman of the Board in the courseof the financial year 2024.
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 granted, they should beheld for at least five years after the grant date. Although the awards granted
to the Executive Directors under the 2022 UMG Global Equity Plan are (andwill be) subject to (multiple-year) time-based and/or performance-based vesting
requirements as set out in Note 23 'Share-based compensation plans' to theconsolidated financial statements, there is no requirement that Shares should
continue to be held once vested. Considering that the Company operates in ahighly competitive environment, requiring the Executive Directors to hold theShares for at least five years after the grant date could meaningfully reduce theperceived value of the awards for motivational and retention purposes, without
reducing the cost to the Shareholders in terms of dilution, while the vesting
requirements attached to the awards are already efficacious at aligning the
Executive Directors’ and Shareholders’ interests.
Best practice provision 3.1.2 item (vii) of the Code
The Company does not comply with best practice provision 3.1.2 item (vii) of
the Code, which recommends that if share options are being granted, theyshould not be exercisable during the first three years after they are granted.
Although the performance stock options (the PSOs) granted under the 2022
UMG Global Equity Plan to Sir Lucian Grainge are subject to (multiple-year)
time-based and performance-based vesting requirements, half of them could
become exercisable within the first three years after they are granted. On eachof the first four anniversaries of the grant date, one fourth of the PSOs will vest;in addition, one third of the PSOs will become eligible for exercise if the firstshare price hurdle of €26.50 is met, one third of the PSOs will become eligible
for exercise if the second share price hurdle of €30.00 is met, and one thirdof the PSOs will become eligible for exercise if the third share price hurdle of€38.00 is met. Only those PSOs that have vested due to the passage of time andhave become eligible for exercise due to a share price hurdle having been met
become exercisable.

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CORPORATE GOVERNANCE

Best practice provision 3.2.3 of the CodeSir Lucian Grainge is entitled to severance payments as set out in the
Remuneration report under ‘Severance payments and termination provisions’in the event of (i) termination of his employment agreement by Universal Music
Group, Inc. (i.e., the formal employer of Sir Lucian Grainge) without cause, (ii)
non-renewal of his employment agreement by Universal Music Group, Inc. or(iii) termination of his employment agreement by Sir Lucian Grainge for goodreason, which severance payments are in excess of (the fixed remuneration
component of) one year's salary. Accordingly, the Company does not comply
with best practice provision 3.2.3 of the Code, which recommends that any
severance payments in the event of dismissal should not exceed (the fixed
remuneration component of) one year’s salary or be awarded in the event thatthe employment agreement is terminated by the management board member.
However, as the recommended severance payments are inconsistent withindustry practices in the primary fields in which the Company competes fortalent, i.e., the fields of United States media, entertainment and tech, complying
with best practice provision 3.2.3 of the Code could be detrimental to Executive
Director recruitment and retention. Accordingly, at the time of renewal of Sir
Lucian Grainge's employment agreement, it was decided to agree to a severance
arrangement, which is in deviation of best practice provision 3.2.3 of the Code.

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 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 under ‘The General Meeting’.
•
The information concerning the composition and functioning of the Boardand its committees is set out under ‘The Board’ and in the Report of the
Non-Executive Directors under ‘Composition’ and ‘Committees’.
•
The information concerning the D&I Policy is set out under ‘The Board––
Diversity and inclusion’ and in the Report of the Non-Executive Directors
under ‘Diversity and inclusion’.
•
The information concerning the inclusion of the information required by the
Dutch Decree on Article 10 of the Takeover Directive is set out 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 2023:•
the Board report provides sufficient insight into any failings in theeffectiveness of the internal risk management and control systems withregard to the risks associated with the strategy and activities of theCompany and its affiliated enterprise, which in any case include strategic,
operational, compliance and reporting risks.
the internal risk management and control systems provide reasonable•assurance 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 associated with the strategy and•activities of the Company and its affiliated enterprise and uncertainties thatare 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 2023 give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and theundertakings included in the consolidation as a whole for the financial
year 2023.
•
the Board report provides a true and fair view of the position as at December
31, 2023 and of the performance of the business during the financial year
2023 of the Company and the undertakings, details of which have been
included in the financial statements 2023.
•
the Board report includes a description of the principal risks that theCompany faces.
The Board, Hilversum, March 28, 2024
Sir Lucian Grainge
Vincent Vallejo
Sherry Lansing
Antoine Fiévet
Bill Ackman
Cathia Lawson-Hall
Cyrille Bolloré

Haim Saban
James Mitchell
Luc van Os
Manning Doherty
Margaret Frerejean-Taittinger
Nicole Avant

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BOARD REPORTSHAREHOLDER INFORMATIONSHAREHOLDER INFORMATIONSHARE CAPITAL
The authorized share capital of the Company amounts to €27,000 million 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, 2023, the issued share capital of the Company amounted
to €18,216,654,410 and was divided into 1,821,665,441 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, 2023:

Shareholder

Notification date

Capital interest

W.A. Ackman

October 31, 2023

10.251

June 30, 2023

19.92%3

FMR LLC

July 25, 2023

Concerto Partners LLC

2Vivendi SE

2

V. Bolloré2

June 30, 2023

September 22, 2021

3.00%
9.98%

18.01%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 Each of V. Bolloré, Vivendi SE and Concerto Partners LLC has notified a percentage of voting rights in the
Company of ~48% based on a voting agreement included in the Relationship Agreement.
3 Held via Scherzo Investment B.V. and Concerto Investment B.V.
4 Held via Bolloré Participations SE, Omnium Bolloré, Financière V, Sofibol, Compagnie de l’Odet, Bolloré SE andCompagnie de Cornouaille.

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 under ‘Dividend Policy’. Accordingly, the parties are considered to haveconcluded a voting agreement and are therefore required to aggregate theirvoting rights in the Company as set out in note 2 to the table above.

Change of control

The Company’s €2 billion revolving credit facility agreement and the Company’s€500 million bilateral revolving credit facility agreement each (potentially) entitle
each bank to claim early repayment of the amounts borrowed by it to theCompany in the event of a change of control over the Company (as defined in
the relevant revolving credit facility agreement).
In addition, the final terms of the €750 million 4.00% senior notes due June 13,
2031, the final terms of the €500 million 3.00% senior notes due June 30, 2027
and the final terms of the €500 million 3.75% senior notes due June 30, 2032
each entitle a holder of a note to require the Company to redeem or, at theCompany’s option, purchase such note at such note’s nominal amount together
with (an amount equal to) accrued interest in the event of a change of control
over the Company (as defined in the terms and conditions of the notes).

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SHAREHOLDER INFORMATION

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 theextent 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 paid-up andcalled-up 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, and subject to all applicablelaws, the Company intends to, on an annual basis, pay dividends to all
Shareholders, on a pro rata basis in two semi-annual instalments, in theaggregate amount of no less than 50% of the Company’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

MUSIC IS UNIVERSAL Annual Report 2023 | 110

SHAREHOLDER INFORMATION

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.
On June 6, 2023, the Company paid a final dividend of €0.27 per Share, bringing
the total dividend for the financial year 2022 to €0.51 per Share.
On October 27, 2023, the Company paid an interim dividend of €0.24 per Share,
and the Board now proposes that on June 11, 2024, the Company pays a final
dividend of €0.27 per Share, such proposal to be approved at the annual General
Meeting to be held on May 16, 2024. If approved, this would bring the total
dividend for the financial year 2023 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 13, 2023, the Company issued €750 million of 4.00% senior notes due
June 13, 2031, and 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 areadmitted to trading on Euronext Amsterdam. The proceeds have been used forthe refinancing of indebtedness and payment of transaction fees and expenses.
Negotiable European Commercial Paper program
On June 16, 2023, the Company extended its €1 billion 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
Shareholders (including potential Shareholders and other investors) and aims
to keep Shareholders updated by informing them clearly, accurately and ina timely manner about its strategy, performance and other matters anddevelopments that could be relevant to their investment 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 2023, the share price was €25.81 and themarket capitalization was €47.0 billion. The average daily trading volume in 2023
was €34.4 million or 1.5 million Shares.

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SHAREHOLDER INFORMATION

Share price information

2023

Market capitalization at year-end (€ billion)

47.0

Lowest closing price (May 31, 2023, €)18.50

Closing price year-end (€)

25.81

Highest closing price (December 18, 2023, €)26.29

Total shareholder return

17.5%

Average daily trading volume on Euronext (shares)

1.5 million

30
25
20
15
10
5
0

January 2023

April

July

December

Per share data

2023

Dividend (€): 0.24 interim + 0.27 proposed final

0.51

EPS - diluted (€)

0.68

EPS - basic (€)

Adjusted EPS - basic (€)

0.69
0.88

Adjusted EPS - diluted (€)

0.87

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.

MUSIC IS UNIVERSAL Annual Report 2023 | 112

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.
Risk appetite

Very low

Low

MediumHigh

Very highBehavior towards risk

AversePrudent

Balanced

Considerable

Seeking

Strategic
e.g. Competition, Streaming & Subscription
adoption. Reliance on DSP’s, Piracy

Operational
e.g. Attract & retain talent, Cybersecurity,
Geopolitical instability & economic downturn

Financiale.g. Access to financing, Change in Tax Laws

Compliance (Laws & Regulations)e.g. Intellectual Property, Data Protection,
Government regulations, Changes in laws &regulations

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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 managed. To enhance and coordinate risk assurance across the company,a Governance, Risk and Compliance working group has been established in 2022
that has continued to meet on a periodic basis in 2023 to review and monitor
UMG's risk and control 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 2023 | 115

RISK AND RISK MANAGEMENTThe ICF is being monitored by the second line of defense Controls Assurancefunction through controls testing and other monitoring activities. Internal Audit
undertakes regular risk-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. Through upgrading its systems(including computer hardware infrastructure), adding additional financial andmanagement controls as well as enhancing reporting systems and procedures.
Management will continue to make further improvements in 2024, which will be
aimed at, amongst other things:
Implementing company wide third party governance, risk and•compliance software.
Optimizing the level of monitoring of the risk and control systems.
•
Optimizing enterprise risk management and a coordinated risk•
assurance process.
Continue improving the quality and in particular the level of documentation•of key controls across primary business processes.

Compliance and Integrity

As the world’s leading music company, UMG recognizes that we have a
responsibility to lead by example and ensure that all of our actions anddecisions are based on honesty and integrity. UMG’s global Code of Conduct sets
our foundation that how we conduct business is as important as 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 byprotecting 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 and regulations related to bribery and corruption; marketing andadvertising; fair purchase practices and international trade regulations.
4. SETTING THE RIGHT TONE IN OUR COMMUNITIES by protecting theenvironment and 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 the
Code of Conduct annually and must certify compliance with the Code of Conduct
on an annual basis. The Code of Conduct is available in the investor relations
section of UMG’s public website.

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RISK AND RISK MANAGEMENT

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.
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 2023, no reports were received related to bribery or
corruption and there were no known instances of bribery or corruption.
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 2023.
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

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RISK AND RISK MANAGEMENT

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 2023, 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 UMG’s business and industry, and that, alone or in
combination with other events or circumstances, could have a material adverse
effect on UMG’s business, results and financial position.
In making this selection, UMG has considered circumstances such as theprobability of the risk materializing on the basis of the current state of affairs,
the potential impact which the materialization of the risk could have on
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.
While UMG believes that the risks and uncertainties described below are the key
material risks and uncertainties concerning its business and industry, they are
not the only risks and uncertainties relating to UMG.
Other risks, events, facts or circumstances not presently known to UMG, or that
the UMG currently deems to be immaterial could, individually or cumulatively,
prove to be important and may have a significant negative impact on its
business, results and financial position. The risk factors below have been

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RISK AND RISK MANAGEMENT

divided into categories; however, some risk factors appear in more than
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
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
High
High
High

Moderate
Low

Moderate

Changes in tax laws

Moderate

Loss of intellectual property rights

Low

Data protection complianceModerate

Governmental and regulatory challenges

High

Changes in laws and regulations

Moderate

Moderate
Low

High

Moderate
High

Moderate
Moderate
Moderate
Low
Low

Moderate
High
High

ModerateHigh

For each of the risks set out below, UMG 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 UMG'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.
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.

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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,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.

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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 to UMG because they
offset declines in downloads and physical sales and represent a growing areaof UMG’s recorded music business. In 2023, UMG generated €5,700 million ofrevenue from subscription music services and ad- supported streaming, ascompared to €5,321 million in 2022.
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 CD sales, and subsequently downloads. Technological developments, andother factors, may in the future negatively impact streaming or otherwise
disrupt, the music industry.
Vast quantities of low-quality content delivered daily to digital platforms(including via the use of generative AI) increase the challenges for marketingmusic to fans and policing infringements. Additionally, technology aroundstreaming manipulation, fraud and hacking is becoming increasingly refinedand subscription streaming services are vulnerable which could undermine
consumer confidence and cause revenue loss.

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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
and help develop new regional and local streaming and subscription partners.
UMG also spearheaded the re-imagining of the subscription streaming model,
encouraging digital partners to tackle streaming manipulation and fraud, andto evolve the revenue model to reward real artists that drive engagement andretention on streaming platforms. UMG plays an active role in promoting thecontinued development of new digital services and consumer offerings in orderto support a competitive, healthy and increasingly global market, as well as
in developing and growing new categories for exploitation of digital music,
including fitness and wellness. 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 2023, the top 50 music services accounted for 98%
of UMG’s recorded music digital revenue, as compared to 96% in 2022. In 2023,
70% of UMG’s recorded music revenue was derived from digital channels, ascompared to 71% in 2022.
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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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 andretention for all of these platforms. UMG’s world-renowned catalog, which iscontinuously growing through UMG’s proven ability to develop and break new
artists, makes UMG an important partner for platforms. The introduction of
new products, services and revenue streams across segments spanning voice,fitness, wellness, social media, gaming, live streaming, brand partnerships,
start-ups and other categories helps to further mitigate the reliance on a limited
number of digital 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, welness, social media gaming, live streaming, brand partnerships,
start-ups and other categories.
As discussed above, UMG also spearheaded the re-imagining of the subscription
streaming model.
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.

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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,and more countries around the world have developed legitimate businessmodels to monetize music. In addition, UMG’s business model is increasingly
focused on developing business in new high-growth music markets. For
example, in 2023, we strengthened our global presence through new activities,
acquisitions, label launches and key partnerships in United Arab Emirates andThailand. However, if UMG’s music does not continue to have appeal in various
countries, UMG’s results of operations could be adversely impacted and its
investments in new jurisdictions could fail to generate returns for UMG in linewith expectations. Additionally, UMG may not be successful in identifying andsigning the most promising artists in these markets, which may negatively
impact UMG’s competitive position in these geographies, its prospects and its
ability to generate returns in these markets.
In countries in which UMG currently conducts, or may in the future conduct,its businesses, UMG’s operations, growth strategy and development may be
negatively impacted as a result of less developed digital, internet and mobile
network infrastructure. UMG’s success, particularly streaming revenues, dependon the continued development and use of internet by consumers to accessmusic as well as increasing high-speed internet and smartphone penetration.
If internet access or smartphone penetration in these markets develops slower
than expected, or is stalled, UMG’s growth strategy 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 2023, 62% of UMG’s physical & digitalrecorded music revenues came from local repertoires in their own countries, ascompared to 62% in 2022. Prior to entering a new market, UMG teams carefully
identify areas of risk and develop a business case and strategic plan.
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

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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.
In addition, while UMG embraces responsible and innovative artificial
intelligence and is optimistic about the potential benefits and opportunities
brought by AI, technology to create AI-generated music and images has
introduced new challenges for the protection of intellectual property andartist rights. These include intellectual property infringement through theunauthorised reproduction of copyrighted works to train AI technology, which
in turn enables the creation of AI generated works that infringe intellectual
property rights and embody unauthorised renditions of artist voices, images
and likenesses.
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.
In addition, we are protecting creators’ rights in the AI environment throughlitigation. For example, UMPG, alongside two other music publishers, filed a
copyright infringement lawsuit against Anthropic for its large-scale, wholesale
copying of copyrighted lyrics. See also risk factor ‘Loss of intellectual
property rights’.

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
are important to the UMG’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 UMG were to unexpectedly lose a member of its key management, its businessactivities, results of operations, financial position and prospects could bematerially 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 attract and retain talent.
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.
In addition, in 2022, UMG established an Equity Plan to provide long-term
incentives to senior employees which are linked to value creation and designed
to attract, retain and motivate the best possible workforce.
Cybersecurity
Cybersecurity presents ongoing risks that could adversely impact UMG’s global
data and operations.While no such attack has had a material adverse effect on
its business in the past, UMG’s systems may be vulnerable to damage fromsuch attacks in the future.
UMG processes personal data related to customers, employees, business
partners, artists, and vendors. UMG also maintains sensitive confidential
business information of itself and, in some cases, counterparties, as well as
intellectual property including rights in music recordings and compositions thatin some cases are not yet released. UMG relies on both its computer systems
and those of its service providers for day-to-day operations and to manage
these kinds of critical business data. No computer system is immune fromattacks 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 inplace. A compromise of its security systems that results in the loss or exposureof personal data, confidential information, or intellectual property could
lead to operational disruptions and significant expenditures to address theincident. Such a compromise could lead to the loss of competitively sensitive
information, theft of funds, reputational harm, litigation and investigations,
legal expenses, liability, penalties, or the imposition of ongoing monitoring or
audit requirements which may create operational disruptions and/or significant
expenditures. Any of the foregoing may adversely impact UMG’s business,
results of operations, financial position, and prospects.
Risk response
UMG employs multiple layers of cybersecurity defenses to protect assets,systems, and employees from cyberattacks. These controls 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.
UMG has further implemented controls to enhance remote access security,
augment visibility to network behavior, and improve cybersecurity control
governance. It has implemented a cross-functional process to identify andimprove incident response procedures and increase testing for evolving attack
vectors such as social engineering.
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.

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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 pandemics, including the COVID-19 pandemic,
are all factors that can influence the prevailing macroeconomic conditions
and affect UMG’s business. Economic growth and consumer confidence areimportant for UMG’s growth and strategy.
Continuing in 2023, 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 further
increases of interest rates in the future. 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
by major central banks. Increased inflation may impact the disposable income
and shopping habits of our customers which may in turn affect the demandfor our products and services and our ability to maintain our revenues in linewith targets and expectations. 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, which makes UMG less dependent on one particular growth driver.
Furthermore, music consumption is relatively inexpensive compared to otherforms of media entertainment, and DSP providers generally make all content
available, thus not requiring multiple subscriptions. In the past music
consumption proved to be resilient in macro-economic downturns and so far wehave not seen any material impact from the global economic downturn on UMG
results (despite lower ad-funded streaming income growth as the advertisingindustry was impacted by the difficult economic environment).
Geopolitical instability
UMG’s results of operations, cash flows and financial condition may be
adversely affected by geopolitical instability. Unfavourable conditions candepress revenues in any given market and prompt actions that adversely affectour business and/or financial performance.
Sanctions and other measures imposed in response to the Russia-Ukraine
conflict have increased global economic and political uncertainty. In addition,
on October 7, 2023, Hamas led attacks against Israel. In response to the attacks,
Israel formally declared war on Hamas and the armed conflict in Israel and Gaza
is ongoing.
While neither our operations in Russia nor Israel constitute a materialpart of our business, the significant escalation or expansion of theseMUSIC IS UNIVERSAL Annual Report 2023 | 127

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conflicts, including but not limited to the imposition of economic sanctions
or devaluation of local currencies, could increase economic instability anddisruption both inside those countries and across their regions. The extent
and duration of the military action, sanctions and resulting market disruptions
could be significant and could potentially have substantial impact on the global
economy for an unknown period of time. As a result of UMG’s revenue profile
being very geographically diverse, any such downturn in the global economy
that reduces the disposal income of UMG’s customers may in turn have anegative impact on UMG’s revenues.
Risk response
Since our announcement on 8 March 2022, UMG's operation in Russia continued
to be suspended. Although revenues and EBITDA in Russia and Ukraine in 2022
and 2023 were not material and therefore this suspension only had a minor
impact on the Company, UMG has no way to predict the progress or outcome ofsuch conflict.
UMG monitors political and general societal changes and, where necessary,develops response strategies to such events. Furthermore, music consumption
has proven to be resilient in macro-economic downturns in the past and so
far UMG has not experienced any material impact arising from the effect ofsanctions. Consequently any extension of sanctions is perceived as having aminimal 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, or failure in, UMG’s IT system could adversely
impact UMG’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 UMG’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 UMG’s or UMG’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
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 UMG
outsources its business continuity or disaster recovery operations, it is at riskof the vendor’s unresponsiveness in the event of breakdowns in UMG’s systems,
which could cause delays in recovering service.

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Furthermore, performance issues, system interruptions or other failures in the
UMG’s IT systems could expose UMG to potential liability to pay damages aswell as reputational harm, additional operating expenses to remediate the IT
failures and exposure to other losses or other liabilities, all of which could havea material adverse effect on UMG’s business, financial condition and resultsof operations.
Risk response
UMG continues to invest in the maintenance, upgrading and testing of its IT
infrastructure and technology network, in addition to maturation of failover andoverall Tech recovery plans to minimize the risk impact of disruption.UMG also
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 UMG’scapacity in the coming twelve months to have ready access to cash and cash
equivalents and available confirmed credit facilities and to generate sufficient
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 UMG’s financial requirements andis used as back up for a €1 billion NEU commercial paper program. The RCF
was extended from April 2026 to April 2028. In June and July 2023, UMG issued
successfully a €750 million bond with an 8- year maturity and a JPY 7 billion
private placement with a 15- year maturity, respectively.
UMG's average debt maturity is 5 years, its liquidity remains above € 2 billion
and the fixed-rate debt ratio remains above 85%.
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
fluctuations could cause expenses to increase as a percentage of net sales,affecting profitability and cash flows.

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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 UMG’s tax position could adversely affect
UMG’s results of operations and financial condition.
Given the international footprint of the UMG’s operations globally, UMG is
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 theapplication, administration or interpretation of any applicable tax laws or
regulations, could subject UMG to additional or increased tax payments, and inturn have a material adverse effect on UMG’s business, financial condition andresults of operations. If UMG’s tax positions are challenged by tax authorities,
the potential imposition of additional or increased taxes could require UMG to
pay taxes that UMG currently does not collect or pay or increase the costs of
UMG's services to track and collect such taxes, which could in turn increase
UMG’s costs of operations or the UMG’s effective tax rate and have a negative
effect on UMG’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 UMG’s operations, UMG may be particularly impacted bychanges to regulations relating to transfer pricing and withholding taxes on therepatriation 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 positions taken either for transactions, compliance and accounting purposes
are conservative any change in tax rates or tax basis might be mitigated.
Therefore, UMG’s tax procedures follow this governance and there is a process
in place to implement and monitor compliance with them. These procedures
comply with tax rules in countries where UMG operates as well as withrequirements enacted by supra-national organizations, such as OECD and theEuropean Union. These procedures take into account the spirit of the laws andare updated each time it is needed in order to incorporate any change of tax
law or tax regulation impacting UMG. The Group Tax Department and financeteams 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 which sets out the controls established to assess andmonitor tax risk for direct and indirect taxes (e.g., corporate income tax, transfer
pricing, VAT, wage tax and tax accounting).

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RISK AND RISK MANAGEMENTThe 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 such rights
depend on the laws and regulations of the many jurisdictions in which 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.
Furthermore, notwithstanding any potential benefit of AI, new challenges
for protecting our intellectual property and other rights of our artists andsongwriters may also arise from AI generated music. The resulting new formof intellectual property infringement is caused by unauthorised reproductionof copyrighted works, names, images, likeness and voices of UMG’s artists andsongwriters to “train” AI applications to create unauthorised derivative works.
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
or administrative bodies. UMG also works through lobbying (both directly andMUSIC IS UNIVERSAL Annual Report 2023 | 131

RISK AND RISK MANAGEMENT

through trade associations) to influence any changes so that they do not
negatively affect the business or broader music industry and its stakeholders.
For example, UMG supports the Human Artistry Campaign (‘HAC’) and its
principles – the HAC is a global initiative formed in early 2023 to protect creators’rights in the age of AI, with more than 170 supporting organizations from40+ countries.
In addition to responsible and ethical AI industry collaborations and thought
leadership, UMG is pursuing the establishment of legislative and regulatory“guardrails” for AI, including backing legislation that would establish a federal
right of publicity in the United States protecting all Americans’ image, likenessand voice – and helping to prevent deepfakes. We are vigorously advocating for
public policies furthering Responsible AI with governments around the globe,
including through multi-stakeholder coalitions and trade bodies, as well as on
our own.
In addition, we are protecting creators’ rights in the AI environment throughlitigation. For example, UMPG, alongside two other music publishers, filed a
copyright infringement lawsuit against Anthropic for its large-scale, wholesale
copying of copyrighted lyrics.
Data protection compliance
UMG’s business is subject to an increasing number of global laws, regulations,rules, and other obligations governing data protection in addition to contractual
obligations to business partners.
These restrictions and obligations govern the collection, use, retention,
disclosure, transfer, and security of data by UMG and its subsidiaries.
Operations impacted by these laws include consumer-facing operations suchas eCommerce, online advertising, direct marketing, website operation, andsocial media activities, as well as internal operations such as human resources
activities, management of royalties and artist relations, IT activities, andtransfers of data among UMG’s subsidiaries.
Regulatory, media, and political scrutiny of data protection compliance
continues to grow. This attention is further intensified by the emergence ofpowerful artificial intelligence tools that create legal, ethical, and societal risk.
The legal landscape is also becoming more complex, with an ever-evolving
landscape of laws and regulations. Major new legislation by US states,
the European Union, and China among others has further increased thecomplexity and risk of data protection laws. These laws, and the ways in whichauthorities interpret and enforce them, may be inconsistent from jurisdiction
to jurisdiction. Complying with changing requirements may cause UMG to incur
substantial costs, change its business practices, modify its product and service
offerings, and forego business opportunities.
In particular, the United States has seen a significant emergence of state-level
privacy laws as well as increased enforcement by federal agencies such as theFederal Trade Commission. California, where UMG’s operational headquarters
are located, continues to implement the strictest privacy requirements in the
United States, including recent passage of the DELETE Act. Eleven other states
have passed privacy laws that are either in effect or will be in the near future.

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RISK AND RISK MANAGEMENT

These state laws are similar but not identical, creating additional sources ofcomplexity and potential costs to UMG.
Any perceived or actual failure by UMG, including its third-party service
providers, to protect confidential data or any material noncompliance with dataprotection laws could reduce UMG’s ability to attract and retain customers,
artists, and other business relationships and counterparties and result in
litigation or other actions being brought 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 turnhave an adverse impact on UMG’s business, prospects, financial condition andresults of operations.
Noncompliance, or even allegations of noncompliance, with these laws or
UMG’s public statements or contracts in these areas, could lead regulators or
private actors to institute investigations into or proceedings against UMG. These
investigations or proceedings may entail legal costs and reputational harm for
UMG, and if defense of such proceedings is unsuccessful even in part, UMG mayface significant penalties, liability, or ongoing monitoring or audit requirements.
Risk response
UMG maintains a global data protection compliance program including
personnel dedicated to managing data protection risk. UMG’s data protection
team partners with personnel throughout the organization to identify andmitigate data protection risks.
Recent initiatives include updates or improvements to privacy disclosures,
governance and data management processes, data subject rights processes,
employee training, cross-border data transfer agreements, supplier contract
terms, internal audit procedures, and incident response processes.
UMG’s data protection compliance program prioritizes streamlined global rules
and processes to manage increasingly complex requirements. This improves
the efficiency of compliance efforts and reflects the interconnected nature of
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
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 14% of UMG’s revenue in 2023 (2022: 14%), andmechanical royalties are an expense for its recorded music business (except ininstances when digital service providers pay such mechanical royalties directly
to publishers), representing 0.8% of UMG’s revenue in 2023 (2022: 0.7%). In the
United States, compulsory mechanical royalty rates are set every five years
pursuant to an administrative process under the U.S. Copyright Act, unlessrates are determined through industry negotiations, and performance royalty
rates are most commonly, but not exclusively, determined by negotiations byperforming rights organizations, which in the U.S. include American Society ofComposers, Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI), theMUSIC IS UNIVERSAL Annual Report 2023 | 133

RISK AND RISK MANAGEMENT

Society of European Stage Authors and Composers (SESAC), and Global Music
Rights, LLC (GMR). ASCAP and BMI are subject to a consent 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 typically basedon a percentage of wholesale prices for physical products and based on apercentage of consumer prices for digital formats. Performance royalty rates are
typically negotiated 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
and music publishing income sources through collecting societies or legallyprescribed 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

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RISK AND RISK MANAGEMENT(effective 2023-2027), and resulted in the highest rates to songwriters in thehistory of the CRB.
Changes in laws and regulations
Changes in laws and regulations, including those relating to intellectual
property rights, and legal proceedings that UMG is, or which it could become
party to, 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, user privacy, data and consumer protection, antitrust andcompetition, among others. In addition, various governments currently haveunder consideration, and may in the future adopt, new laws, regulations andpolicies regarding a wide variety of matters that could directly or indirectly
affect UMG’s business and operations, 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 insignificant respects, and the enforcement of such laws can be inconsistentand unpredictable. This could impact UMG’s ability to operate its business invarious jurisdictions and undertake activities that UMG believes is beneficial toits business. For example:•
The UK Parliamentary Select Committee on Digital, Culture, Media andSport issued its advisory report on July 15, 2021, as part of an inquiry
to examine “what economic impact music streaming is having on artists,
record labels and the sustainability of the wider music industry”. The
report recommended to the UK government a number of actions to regulate
music companies, including on issues related to artist and songwritercompensation, which could hinder or add cost to the companies’ operations.
•
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 new laws and regulations, by thethreat that additional laws or regulations may be forthcoming and by changes
in existing laws or changes in interpretation of existing laws by courts andregulators. For example, legislation was introduced in California that would
amend California Labor Code Section 2855 such that UMG’s ability to recoverdamages from certain artists that fail to deliver on their contractually promised

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RISK AND RISK MANAGEMENT

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 or enforce 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 May 13, 2021, individual and putative classaction claims were filed against UMG Recordings, Inc. in the U.S. District Court
for the Central District of California for breach of contract and fraud related tocertain royalty calculations.
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OUR COMMITMENTSNON-FINANCIAL INFORMATIONOUR COMMITMENTS

ENVIRONMENT

UMG IS COMMITTED TOADVANCING CLIMATEACTION ACROSS THE
MUSIC INDUSTRY.
Our efforts to reduce our environmental footprint start with rigorous
measurement and reporting systems, which in turn allow us to set targets,measure progress, and ensure continuous improvement of environmental
performance across our value chain.
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 our environmental impacts.

Material Topic:
GHG Emissions.
See Material Topics in the Governance section for more information.

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NON-FINANCIAL INFORMATIONMANAGING OUR FOOTPRINT
Measurement & Analysis

Deeply committed to understanding our impact, UMG’s GHG inventory is themost comprehensive of any major music company. Our GHG footprint iscalculated in line with the GHG Protocol Corporate Accounting and ReportingStandard and includes an analysis of our most relevant scope 1, scope
2 (location-based and market-based), and scope 3 emissions sources. We
continue to enhance our methodology while also taking a leading role indeveloping standardized definitions and approaches where they may be lacking
within our industry.

FY23 Greenhouse Gas Emissions
Scope 1 <1%

Scope 2 (market based) 1%
Scope 3 98%
UMG’s
GHG emissions

477,160
tons of CO2e

Purchased goods and services 60%
Capital goods 4%
Fuel- and energy-related activities 1%
Upstream transportation and distribution 11%
Waste generated in operations <1%
Business travel 11%
Employee commuting 1%
Downstream transportation and distribution <1%
End-of-life treatment of sold products 1%
Franchises 2%
Investments 7%

Science-Based Targets Progress

Our GHG Management Plan provides the framework from which we’ve set
targets to measure the performance of our climate-related initiatives. UMG’s
near-term emissions reduction targets were approved by the Science-Based
Targets initiative (SBTi) in October and we deployed actionable roadmaps across
key business functions by which we will achieve our goals. Our science-basedtargets cover scope 1 & 2 (market-based) emissions and the following scope
3 emissions categories: purchased goods and services, capital goods, fueland energy-related activities, upstream transportation and distribution, waste
generated in operations, business travel, and employee commuting.

Science-Based Target

FY19

FY23

Reduction
FY19-FY23

Reduction
Target by 2032

Scope 1 & 2 (market-based)(absolute tCO2e)11,454

7,572

-34%

-58%

Scope 3
(tCO2e per million EUR
value added)

200

109

-46%

-62%

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NON-FINANCIAL INFORMATIONSCIENCE-BASED TARGETS APPROVED BY SBTIThe Science-Based Targets initiative (SBTi) calls on companies toestablish 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 is committed to achieving ambitious GHG emissions targets acrossall scopes and has outlined a pathway to:•

Reduce absolute scope 1 and 2 GHG emissions 58% by 2032 from a2019 base year1, in line with a 1.5°C pathway; and•Reduce scope 3 GHG emissions from purchased goods & services,
capital goods, fuel- and energy-related activities, upstream
transportation and distribution, waste generated in operations,business travel, and employee commuting by 62% per EUR value
added2 within the same timeframe.

1 SBTi allows flexibility in base year selection to consider circumstances that may make a given
year's emissions unrepresentative (e.g., the COVID-19 pandemic). At the time of our assessment, UMG
considered 2019 its most representative year of normal operations prior to the effects of the pandemic.
2 “Value added" is defined by the SBTi as earnings before interest and depreciation (EBITDA) + all
personnel costs. See page 24 of the SBTi Corporate Manual.

In 2024, we will publish our carbon transition plan for climate change mitigationin line with CSRD requirements. Additionally, we will develop GHG reduction
initiatives for key business units to build accountability and engagement acrossthe company. We will continue to prioritize environmental data collection andquality assurance efforts to achieve and report progress against our targets and
GHG initiatives.
We will also continue to evaluate and manage our climate-related risks basedon the Task Force on Climate-related Financial Disclosures (TCFD) guidance.
TCFD was created by the Financial Stability Board (FSB), an international bodythat monitors and makes recommendations about the global financial system,
to develop recommendations on the types of information that companies
should disclose to support investors, lenders, and insurance underwriters inappropriately assessing and pricing risks related to climate change.
In 2022, we conducted our first TCFD adoption and scenario analysis to provide a
qualitative review of potential climate-related risks, inform strategic planning,and enhance transparency with respect to climate risk disclosures. Due tothe nature of our business, the study concluded that there are no climaterelated risks resulting in high or critical impact to UMG’s operations across theevaluated scenarios and time horizons (see our TCFD disclosure). We plan to
conduct our next TCFD review no later than 2025.

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NON-FINANCIAL INFORMATION

Scope 1 & 2 GHG Emissions

EMISSIONS REDUCTION ROADMAPOur scope 1 & 2 emissions reduction roadmap is driven by:
Renewable Energy

Green Buildings

Fleet Electrification

Prioritizing the
procurement of
renewable energy
for our offices
and facilities.

Evaluating andinvesting inopportunities forenvironmental
certifications andstandards that
seek to optimize
energy efficiency.

Transitioning tohybrid orelectric vehicles.

In 2023, our achievements include:•

Our scope 1 & 2 (market-based) emissions decreased by 12%
from 20221 due to reductions in natural gas, steam/imported heat,electricity, diesel, domestic fuel oil, and refrigerant consumption.

•

We transitioned nine new properties to renewable electricity and
47% of our direct operations (by m2 area) are now powered byelectricity from renewable sources.

•

Four new properties obtained environmental certifications.

•

We increased the number of electric vehicles from six to 14.

1 FY22 emissions were adjusted in accordance with our internal policy to include data enhancements andcorrections for improved accuracy. Adjustments illustrate year over year progress across our key nonfinancial indicators. For more information, please see the Non-Financial Reporting Methodology section.

UMG’s Global Procurement team supported the transition of electricity contracts
powering UMG's offices, studios and other facilities to renewable energy inline with our science-based target. We conducted a global assessment of ourenergy demand and developed a roadmap to accelerate renewable electricity
procurement in 2024.

THIS YEAR, ABBEY ROAD STUDIOS INITIATED
A CONTRACT FOR 100% GREEN GAS1 AND THE RS NO 9
CARNABY STORE TRANSITIONED TO 100% RENEWABLE
ENERGY GUARANTEES OF ORIGIN (REGO)2.
1

2

100% green gas is created via a process called Anaerobic Digestion where bacteria breaks downorganic matter in the absence of oxygen (Source: 100Green).
The REGO scheme provides transparency to consumers about the proportion of electricity that
suppliers source from renewable electricity (Source: Office of Gas and Electricity Markets).

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NON-FINANCIAL INFORMATIONOur commitment to clean energy and green building practices is alreadyreflected within our new builds and regional hubs. In 2023, our Santa Monica
headquarters and studios, our London headquarters, and Abbey Road Studios
continued to source 100% renewable electricity.
To support energy reduction, our London headquarters switched off energy
during the weekends and powered down all meeting room equipment over a
two-month period, resulting in a 20% decrease in electricity consumption and a
59% decrease in steam/imported heat consumption from 2022 to 2023.
Looking ahead, we will accelerate these efforts through innovative technology
integration. As part of the world-famous Capitol Tower building renovation,
the mechanical systems are being upgraded to the latest technology that will
reduce energy demand. UMG is installing energy-efficient HVAC systems andboilers, new LED lighting and controls, and new elevator drive motors andcontrol systems. Additionally, variable speed water pumps and low-flow toilets
and sinks will be installed to reduce water consumption.

Scope 3 GHG Emissions

EMISSIONS REDUCTION ROADMAPOur scope 3 emissions reduction roadmap is driven by:
Supplier Engagement

Transportation& Logistics

Sustainable
Product Innovation

Urging key suppliers
to adopt renewableenergy sources,
establish sciencebased targets for theiroperations, andsupport dataenhancements that
we use in our scope 3
emissionscalculations.

Developing
initiatives to reduce
emissions fromthe transportationand distribution of
our products andbusiness travel.

Understanding thefull lifecycle impactsof our products
and packaging
and pursuingmaterial anddesign innovations
that enhancetheir circularity
and sustainability.

This year, our Global Technology team continued its efforts to migrate to cloudbased operations, aligning with cloud partners who have committed to 100%
renewable energy procurement by 2025. We also deepened our engagement withphysical audio and merchandise suppliers – strengthening the environmental
criteria expected of these partners and expanding our GHG data collection
program to better understand and mitigate our physical product footprint.

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NON-FINANCIAL INFORMATION

IN 2023, WE ENGAGED WITH OUR SUPPLIERS IN VARIOUS
WAYS, INCLUDING THROUGH GHG REPORTING,SUSTAINABILITY SURVEYS, AND OUR SUSTAINABILITYSUMMITS.
We continued to work with our global network of transportation and distribution
partners to optimize our logistics operations. Examples of relevant strategic
initiatives include:•

Establishing regional distribution hubs to minimize shipping distances;•

Consolidating shipments to reduce frequency of transportation;•

Enabling the selection of lower emissions transportation modes over air
freight via advanced procurement and calendarized milestones; and•Supporting carbon neutral shipping programs and ground transport
fleet electrification.

WE REDUCED OUR UPSTREAM LOGISTICS EMISSIONS BY
10% FROM 2022-2023 BY SHIFTING TO MORESUSTAINABLE TRANSPORTATION MODES.
See "Supply Chain Management" in the Governance section for more
information on our responsible supply chain program and our roadmap todeeper supplier engagement in 2024 and beyond.

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NON-FINANCIAL INFORMATION

BUSINESS SPOTLIGHT:

MERCURYSTUDIOSUMG BUSINESSES AROUND THE
GLOBE ARE DOING THEIR PART TO
REDUCE THE GHG FOOTPRINT OFCOMPANY OPERATIONS.

Since its launch in 2021, UMG’s Mercury Studios has demonstrated a steadfast
commitment to decarbonization, with its industry-leading sustainability
program shortlisted for this year’s Screen International “Sustainability
Initiative” Award. Key strategies include:

LEADERSHIP COMMITMENT 	The organization pledged to make 100% of its productions sustainable,

and its business-specific Environmental Policy sets out a clear plan for
decarbonization.

STAKEHOLDER EDUCATION 	All Mercury Studios team members complete sustainability training – and talent,management, and labels are engaged in sustainable production practices.

GHG REDUCTION MEASURES 	A 1% optional contribution on all production budgets allows for moresustainable production choices, and 100% of productions have elected toparticipate since program activation. GHG reduction activities include thehiring of local crews to reduce travel emissions, selecting low- or zero-carbon
vehicles, partnering with hotels that use renewable energy, going paperless,and providing reusable cups and water bottles to avoid the use of single-use
plastic bottles on set.

SUPPLIER ENGAGEMENT 	A sustainability survey has been developed to measure environmental practices
and metrics across the Mercury Studios supply chain, inform procurement
decisions, and surface opportunities for deeper engagement.

INDUSTRY COLLABORATION 	Mercury Studios is a member of the BAFTA ‘albert’ consortium, which seeks to
reduce the environmental impact of productions and amplify content that

supports a sustainable future. Albert-certified productions include: If These

Walls Could Sing, My Life as a Rolling Stone, and Lang Lang Plays Disney.

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NON-FINANCIAL INFORMATIONREIMAGINING OUR PRODUCTS& PACKAGING
UMG is committed to understanding the full lifecycle impacts of our
products and packaging, and identifying ways to reduce our physical productfootprint through innovation, sustainable choices, waste reduction, andsupplier engagement.
We leverage internal ESG Working Groups to drive progress across these areas.
The Universal Music Manufacturing & Logistics (UML) Working Group focuseson physical audio products – which range from vinyl to CDs and DVDs – andthe Bravado Working Group focuses on merchandise for artists and fans. For
more information on UMG's ESG Working Groups, see "ESG Integration" in the
Governance section.

Physical Audio

UMG continues to pursue design innovations and integrate sustainability
considerations into our physical audio decision-making, ranging from materials
selection to product weight.
We are exploring solutions for greener vinyl production – from innovative
manufacturing to improved recycling initiatives and new materials sourcing. In
2023, we engaged key partners in testing alternatives to PVC (polyvinyl chloride,the plastic used in vinyl production) and non-traditional manufacturing
processes. We also strengthened our product end-of-life initiatives – reducing
cycle times, minimizing obsolete inventory, and expanding our reuse andrecycling partnerships for vinyl and optical discs.

OUR VINYL MANUFACTURED DISCS ARE COMPOSED OF AN AVERAGE 20%
REGRIND MATERIAL – A PROCESS WHEREBY PRODUCTION WASTE MATERIAL
AND/OR DEFECTIVE RECORDS ARE INTERNALLY RECYCLED AND MIXED WITH
NEW PVC FOR PRESSING.
WE’VE COMMITTED TO DIVERT 100% OF PHYSICAL MUSIC SCRAP FROM THE
LANDFILL THROUGH REUSE AND RECYCLING PARTNERSHIPS FOR VINYL AND
OPTICAL DISCS.

Our physical audio teams continue to engage our labels and supply chain
partners in the adoption of more sustainable audio packaging – including
board-based CD packages and plastic alternatives. In France, the optical discGreenpack is now the standard format for UMG France frontline local releases
with a single disc. UMG France’s Greenpack is made of a Forest StewardshipCouncil (FSC) certified digisleeve with bio-sourced cellophane and vegetablebased ink.
To accelerate these efforts, this year’s Bravado Sustainability Summit in London
included a panel presentation around physical audio products and packaging.

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NON-FINANCIAL INFORMATION

Featuring UMG’s key vinyl suppliers, the discussion signaled demand forsustainable innovation and demonstrated our commitment to enhanced datatransparency around the environmental impacts of our products – and to
exploring new approaches in vinyl manufacturing.

Merchandise

Bravado, UMG’s merchandising arm, is a key driver in our sustainable productefforts. This year, Bravado developed an innovative apparel catalog for artist
campaigns in partnership with upcycling organizations. Featuring clothing
made with recycled materials, organic cotton certified through the Global
Organic Textile Standard (GOTS) and direct-to-garment printing, the catalog
empowers artists to align their merchandise with eco-friendly options.
Bravado also offers sustainable merchandise across its retail footprint. Its
London flagship store, RS No 9 Carnaby, incorporates recycled and organic
fibers into 80% of all new products. Bravado’s eco-packaging program supports
UMG’s commitment to sustainable material selection, serving to eliminate
four million plastic bags from the marketplace every year. In lieu of plastic,
direct-to-consumer products are packaged using compostable bags, cartons
made from recyclable paper, and 100% recycled-content mailers.
In tandem with its sustainable material initiatives, Bravado implements circular
processes and manufacturing innovations to reduce the lifecycle impacts of its
merchandise. Textile recycling organizations across the globe are key partners
in this effort, serving to transform apparel into recycling components that canbe reused for different products across a variety of industries. Bravado also
has incorporated photo approvals for its product sampling, reducing physicalwaste from the manufacturing process as well as the emissions associatedwith sample transportation. The integration of Print-On-Demand (POD) systems,
through which products are printed as they are ordered, also serves to mitigate
Bravado’s manufacturing waste.

IN 2023, LORDE’S MERCHANDISE FEATURED 100% RECYCLED COTTON,BILLIE EILISH’S EUROPEAN TOUR COLLECTION FEATURED A CUSTOM
60% RECYCLED AND 40% ORGANIC COTTON BLEND, AND THE ROLLINGSTONES’ CORE COLLECTION FEATURED 50% RECYCLED COTTON AND 50%
ORGANIC COTTON.
WE HAVE DIVERTED NEARLY 500,000 LBS. OF PRODUCT FROM THE LANDFILLVIA FIBER RECLAMATION AND MATERIAL-SPECIFIC RECYCLING SINCE 2019.
IN THE UK, WE HAVE REDUCED PHYSICAL RETAIL SAMPLES BY 65% SINCE
2021 BY UTILIZING PHOTO APPROVALS.

Bravado continues to leverage a robust community donation program. Since
2017, Bravado has partnered with Delivering Good to donate and distribute over
500,000 articles of merchandise though a network of agency partners. Delivering
Good unites retailers, manufacturers, foundations, and individuals to support
individuals impacted by poverty and tragedy.

MUSIC IS UNIVERSAL Annual Report 2023 | 147

NON-FINANCIAL INFORMATIONDRIVING INDUSTRY
TRANSFORMATION
Industry Leadership

UMG is the first major music company to receive SBTi validation for ourscience-based GHG emission reduction targets. This milestone reinforces ourdetermination to continue delivering pacesetting change on one of the mostimportant public health issues of this era.
UMG’s commitment to combat the climate crisis is anchored by strong
external partnerships and peer collaboration. This year, we co-founded the
new Music Industry Climate Collective (MICC), joining forces with Sony MusicEntertainment and Warner Music Inc. to develop guidance for scope 3 GHG
calculations, aiming to establish a uniform approach to measuring GHG
emissions across the industry. To date, MICC has completed the first draft ofthe guidance and initiated calls for wider industry participation through anadvisory council composed of independent record labels, value chain partners,
and climate experts.
MICC will further develop the guidance through an inclusive multi-stakeholder
process in 2024. The American Association of Independent Music (A2IM), thenot-for-profit trade organization representing a diverse community of morethan 600 independently owned record labels operating within the United States,
will serve as a MICC advisor, providing recommendations on how best to include
small-to-medium-sized businesses in the initiative.
Our collaboration with MICC is an extension of our continued support of
the Music Climate Pact, an industry collaborative aiming to transform theglobal recorded music sector 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.
UMG was also a founding signatory of the Music Climate Pact in 2021.

Artist Advocacy

We support our artists as they advocate for environmental causes and promoteawareness of the climate crisis to their fans. This year, to shine a lighton artist efforts, we teamed up with REVERB to create the annual Universal
Music Group x REVERB Amplifier Award – which recognizes the artist best
exemplifying the commitment to, and achievement of, measurable steps toreduce their environmental footprint and support nonprofit causes throughdirect fan engagement.
The inaugural award was presented to Billie Eilish at Sir Lucian Grainge’s 2023
Artist Showcase held over Grammy weekend in Los Angeles. Selected for her
trailblazing advocacy for sustainability and the environmental movement, Eilishutilizes her platform to magnify and bring attention to the work of nonprofit
organizations, while engaging her fans and the music industry in meaningful
climate action.

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BUSINESS SPOTLIGHT:

UMG X
BRAVADOIN 2023, WE LAUNCHED THE UMG X
BRAVADO SUSTAINABILITY SUMMITSERIES, THE FIRST OF ITS KIND IN
OUR INDUSTRY.

Taking place in Los Angeles, London, and New York, the series convened
decision-makers and sustainability leaders from Bravado, physical productteams, leadership, artist teams, industry groups, and value chain partners
to explore how UMG can use its influence at the crossroads of music andmerchandise to advance the global climate action movement.
The program facilitated a meaningful dialogue around Bravado and UMG’sshared sustainability vision, as well as industry advancements in the physicalproduct and merchandise arenas. The diverse speaker lineup, including Maggie
Baird of Team Billie Eilish and Support & Feed, highlighted innovative strategies
to maximize impact and amplify engagement with partners, artists, and fans.
Also this year, to coincide with the European Sustainable Development Week,
UMG France launched the Métamorphoses program, a monthly series aiming
to inspire our business in a focused and constructive way. The series engaged
employees via a roundtable masterclass structure and featured internal andexternal speakers. This year’s program included:•

October: Cross-functional sessions covering environmentally friendly
changes already implemented as well as objectives and prospects acrossIT, manufacturing, distribution, merchandising, live and brands.

•

November: Discussions around the definition of ecology and how it impacts
the business landscape.

•December: Programming focused on the role of artists and new narratives
for a positive ecology that engages and creates agency.

Métamorphoses is set to run each month throughout 2024.

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NON-FINANCIAL INFORMATIONOUR COMMITMENTS

SOCIAL

UMG’S PURPOSE IS TO SHAPE CULTURE
THROUGH THE POWER OF ARTISTRY.
Through our shared passion for music, we make connections, build

relationships, and support a broad variety of content creation. Our global

employees, our artists and songwriters, their fans, and the diverse communities
we reach are critical to our success.

We are committed to investing in our workplace and embracing diversity

and inclusion in our operations. We will continue to support the health andwellbeing of our employees and artists, while leveraging our global platform
to drive positive impact across our communities.

MANAGING THROUGH OUR VALUES
UMG’s six core values shape how our employees make great things.
Our values engage employees in a shared mission supporting ourcommitments to each other and our artists.

CREATIVITY T hinking differently about how we lead.
CONNECTION Understanding ourselves and others.
AUTHENTICITY U
 nlocking the potential of our people.
INSIGHT Aligningefforts to achieve better outcomes.
BOLDNESS R
 aising the bar on our conversations.
DRIVE F ueling initiative through aspiration.

Material Topics:
Attraction and Retention of Artists | Attraction and Retention of Employees | Diversity, Equity, and Inclusion.
See Material Topics in the Governance section for more information.

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NON-FINANCIAL INFORMATIONINVESTING IN OUR WORKPLACE
Diversity, Equity & Inclusion

We believe that the best way to foster an environment where original ideas are
generated and creativity can flourish is to build an inclusive workplace that

attracts and promotes people from diverse backgrounds and cultures – one thatreflects and supports the incredible diversity of our artist roster and audiences.
In 2023, we formalized a new Diversity & Inclusion policy, reinforcing ourcommitment to building an inclusive culture that values and promotes diversity
and equal opportunity.

GLOBAL TURNOVERTOTAL STAFF
2023

		

		

10,290
5,044
5,246

Men
Women

2023

2022

11.53%

9,992
4,913
5,079

51%

MANAGERS1

2023

		

3,369

Men
Women

7.03%

2022
9.55%

SENIOR MANAGEMENT2
2023

		

13.95%VOLUNTARY TURNOVER
		

49%

2022

1,939
1,430

58%

2022

		

3,456

		

1,980

Men

1,476
42%

U.S. RACE / ETHNICITY3American Indian or Alaska Native
AsianBlack or African American
LatinxMultiracial
Native Hawaiian or Pacific Islander
White

2022

52
11

-

63

Women
83%

2023

-

17%
TOTAL

0.5%
11%
12%
14%
4%
0.5%
58%
TOTAL U.S. WORKFORCE

1
2

3	

UMG initiated a global job architecture project in 2023 to harmonize career leveling and remuneration, contributing to the year-over-year
manager variance.
For purposes of UMG’s D&I Policy, senior management is comprised of: (i) the executive directors of the Board (the Executive Directors),
including the Chairman and Chief Executive Officer (the Chairman and CEO), (ii) the Chairman and CEO’s direct reports who lead a label orbusiness or with a primary function, (iii) for other key labels or businesses, their leaders and in some instances, certain of their direct reports,and (iv) key large function leaders. This is UMG’s first year reporting these figures.
Race and ethnicity reporting is based on U.S. data only, as laws on collecting race and ethnicity data differ outside of the U.S. The 2023
numbers account for 3,670 employees in the U.S.
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BUSINESS SPOTLIGHT:EMPLOYEERESOURCEGROUPSI N 2023, OVER 1,000 UMG
EMPLOYEES ATTENDED EVENTSHOSTED BY OUR ERGS TO DRIVE
AWARENESS AND CREATECULTURAL IMPACT.

As a company, we celebrate cultural milestones across the globe and highlighthistorically significant events by offering educational programs that support
anti-hate in all its forms. In 2023, we recognized milestones and events
including Holocaust Remembrance, Black History Month, International Women’sDay, the 50th Anniversary of Hip Hop, the launch of uDiscover Music’s
Spanish Editorial site, and PRIDE, with celebrations featuring artists across the
UMG roster.
Internally, Employee Resource Groups (ERGs) play a crucial role in supporting
our commitment to representation and fostering inclusion and belonging
across the company. Our ERGs provide a platform for underrepresented
employees to network, share experiences, influence employee programming,and advocate for diversity and inclusion efforts. All employees are encouraged
to become members or allies and participate in events that celebrate a variety ofcultures and traditions.
UMG has 23 ERG chapters globally, including:• BLACK LABEL: Fosters community and cultivates leaders at UMG, whilecelebrating Black culture across the music industry.
• CULTURA: Celebrates the diversity and unity of Latinx and Hispanic
people by promoting cultural awareness, supporting Latinx communities, andempowering current and future Latinx and Hispanic leaders at UMG.
• PRISM: Cultivates a space to build community and celebrate LGBTQ+

identifying individuals and allies within UMG and across the music industry.

• UTOPIAA: Provides a community and platform for employees that identify as
Asian American & Pacific Islander (AAPI) and their allies.

• WOMEN’S NETWORK: Serves to advance the position of women in theindustry by providing a support system that allows members to express
themselves and realize their goals – both professional and personal.
In November, the Board of Directors from Black Label, Cultura, PRISM, UTOPIAA
and Women’s Network convened for a targeted ERG Summit. The Summit
celebrated ERG achievements and focused on formalizing future-driven ERG
charters and mission statements to enhance their reach and influence among
employees in 2024 and beyond.

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Key 2023 programs included:•L egends & Legacy: In recognition of Black History Month, Rock & Roll Hallof Fame inductee, James ‘Jimmy Jam’ Harris III, joined Black Label for an
inspiring conversation on his legacy, longevity, and life.

•F or The Culture: Black Label hosted a social mixer celebrating Juneteenth,
the 50th Anniversary of Hip Hop, and Black Music Month. The event served tohonor the genre that shapes and shifts culture – highlighting the incredible
influence Black music has had on the world.

• National
Hispanic Heritage Month: Cultura kicked off National Hispanic
Heritage Month at our Santa Monica office with food, music, and prizes.

U.S. Representative Veronica Escobar (D-TX) joined us for a discussion on theorigins of Hispanic Heritage Month and the impact of the Latin and Hispanic
communities on modern societies.

• VIVA LA MÚSICA: In partnership with uDiscover Música, Cultura hosted an

event with cocktails, food, live salsa lessons, and giveaways to celebrate Latin
Heritage Month and the launch of uDiscover Music’s Spanish Editorial Site.

•L oud & Proud Showcase: PRISM and Black Label joined together with3point5/॰1824 to sponsor a Pride and Black Music Month celebration

featuring artists across the UMG roster. The Loud & Proud Showcase featured

performances by G Flip, Kidd Kenn, and Allison Ponthier.
•M y Friend’s Place Volunteer Opportunity: PRISM and UMG’s Corporate

Communications team came together with Support and Feed to volunteer at
My Friend’s Place in Hollywood – preparing meals and donations for thecenter’s homeless youth.

•N Y Music Industry Social Mixer: Our first New York event launched our

UTOPIAA NY Chapter and showcased the evolution of the ERG, demonstrating
how UMG continues to foster growth and diversity for the AAPI community.

•E xecutive Panel & Performance: UTOPIAA spotlighted key AAPI

executives and talent across UMG while showcasing AAPI-owned brands withfree product tastings.

• Women’s History Month Panel: Women’s Network joined forces with thePeople, Inclusion & Culture team, ॰1824, and UMShe to host a panel centeredaround “Embracing Equity Through Advocacy.”•B lack Women In Music Panel: In June, Women’s Network observed Black

Music Month with the annual Black Women in Music Panel. Professionals andartists discussed their journeys and shared stories of triumph and success.

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NON-FINANCIAL INFORMATION

Talent Attraction and Retention

UMG's commitment to inclusion and belonging is reflected in our search for the
best, most passionate talent.
This year, we rolled out new programs and strengthened existing initiatives
to attract and foster interest among the next generation of music industry
employees, including the expansion of our UMG Internship Program, which
hosted over 240 summer interns from more than 110 universities. Additional
initiatives included:•

Historically Black Colleges and Universities (HBCU) Support: UMG’s Task
Force for Meaningful Change (TFMC) continued to provide job training
opportunities and early career development support to students fromHistorically Black Colleges and Universities (HBCU) through variousorganizations. The HBCU Legacy Fellowship hosted over 90 students throughtraining and development opportunities and “experienceships.”•

Technology Pathways: Seeking to expand music careers beyond the
traditional, we introduced Technology Pathways, a nine-month on-the-job
training program with dedicated mentors for college students interested indata science, business intelligence, and data engineering.

•°1824 Creative Pathways: UMG’s °1824 creative solutions team continued toconnect artists and brands with today’s youth culture, while also providing
part-time roles to university students, including skilled work in content
creation, creator partnerships, publicity, A&R, and strategic partnerships.
°1824 has placed 200 of their student employees into full-time roles, with
100+ retained at UMG and partner companies since the program's inception.

Across our operations, we expanded inclusive interviewing training to further
support our goal of championing inclusion and belonging throughout ourcompany's culture, and in the UK, we offered specialized training for new andexisting employees with neurodiverse talents.

Employee Experience and Development

At UMG, we seek excellence in everything we do – our artistry, our product, andour workplace. To help us succeed, we’ve created an employee culture focusedon continual advancement so we can better serve our communities and build
our business.
While more employees returned to the office in 2023, UMG continues to support
hybrid and remote work environments, providing home office setups andreimbursements to ensure each employee has the ability to work effectively.
Employee listening is how we "pass the mic". We issue a series of employee
surveys and broader audience pulse surveys to help us capture the individual
employee voice, effectively assess critical areas of the employee experience,and efficiently turn insights into action. 2023 saw over 1,000 responses tothese surveys, and based on employee feedback, we are planning to roll out
additional, targeted programs that are centered on career conversations andpersonal development.

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NON-FINANCIAL INFORMATIONAs a company, we encourage dialogue between our managers and employees
to drive clarity, transparency, and performance. This year, we expanded apilot program from the U.S. into several global territories to support ongoing
manager and employee conversations. For example, UMG Australia’s versionof this program, the Tempo initiative, facilitates regular check-ins and talentreviews between managers and employees to reflect on expected outcomes,
development opportunities, and key achievements.
In addition to our focus on productive dialogue, we offer a broad rangeof digital and in-person learning opportunities to retain our top talent andfoster career growth within the company. This year, we scaled our Learning
Management Software (LMS) across the majority of global territories. The global
software application hosts centralized upskilling and reskilling opportunities
and provides a platform for territories to upload their regional-specificlearning content.

IN 2023, UMG DELIVERED OVER 100,000 HOURS
OF TRAINING AND OFFERED MORE THAN 500 COURSESTO EMPLOYEES.
Cultivating leadership is a foundational element of UMG’s workforce
development approach, and many of our programs are specificallydeveloped to drive leadership preparedness, including targeted programs forunderrepresented groups. This commitment helps foster a culture of belonging
and boosts the capacity for the innovation. Key programs include:•

UMShe: Our 9-month women’s executive leadership program is designed
for rising senior leaders who are looking to advance to the next step intheir careers. The program features monthly interactive workshops, 1:1
executive mentorship, a peer support network, and the opportunity topitch innovative business solutions to senior executives. This year, 46% ofprogram participants were promoted within six months of completing the
program, illustrating our commitment to retaining our talent while providing
career opportunities through skill development and executive exposure.

•

Women in A&R: The Women in A&R initiative encourages women to pivot
into A&R departments at labels. It provides first-hand experience on how tonurture talent and guide the record making process, offering A&R mentor
support, 1:1 executive coaching, and bespoke workshops. This year, seven
UMG employees participated in the program and four have transitioned into
A&R roles at UK frontline labels.

•

ASCEND | The Power of Choice: Our 9-month ASCEND executive leadershipand acceleration program engages employees representing Employee
Resource Group (ERG) communities. Selected participants who are currently
in director or senior director roles receive mentoring, professional
development, and senior leadership exposure through collaborative
workshops, coaching, and executive sponsorship.

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NON-FINANCIAL INFORMATION•

MixHer: Introduced in 2023, MixHer is a one-of-a-kind Dolby Atmos training
and certification program for female-identifying mixers and engineers
powered by She Is The Music, Bose Corporation, Dolby Laboratories, The
Recording Academy, ENGINEEARS & the legendary East Iris Studios.

•

Emerging Leader Program: Offered to all employees, the Emerging
Leader Program supports career growth by providing resources aroundcommunicating ideas, decision-making, giving feedback, and preparing tolead a team.

•

6 Strings of Management: Our flagship leadership program is designed
to equip people managers with frameworks to effectively engage theirteams and successfully manage performance and people. The cohort groups
engage in a series of topics over three months, including introduction to
manager practices, communication styles, setting goals and delegations,bringing out the best in their team, performance feedback, and careerconversations. Over 160 people managers have completed this program.

•6 Accelerator: Introduced in 2023, 6 Accelerator is an executive leadershipcohort program focused on amplifying core skills central to the role ofsenior leaders. The program provides frameworks to deepen self-discovery,align team effort with business vision, and execute on business strategy.

UMSHE LEADS SUMMIT: A PATH TO INCLUSION AND GROWTHThe UMShe Leads initiative held its inaugural summit this year, anannual multi-day event dedicated to uplifting a cohort of 30 women fromacross the company.
The program included a networking lunch with Republic Records cofounders and executives to share the historic label’s legacy, and acomprehensive design thinking course covering topics such as tacklingcomplex challenges creatively, strength in decision making, and thepower of leveraging your authentic voice to devise innovative solutions.
The course emphasized the value of diversity in design teams, illustrating
how different perspectives can lead to groundbreaking ideas. Additionally,
the Summit featured remarks from UMG’s Global E-Commerce andBravado executives to introduce the UMShe Leads cohort’s capstone
project. Following the Summit, 100% of participants indicated that theyfelt more connected and would recommend the program to a colleague.

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NON-FINANCIAL INFORMATIONSUPPORTING EMPLOYEE AND
ARTIST WELLBEING
Compensation & Benefits

UMG’s compensation structure provides a framework that supports ourefforts to attract and retain highly qualified employees while incentivizing
and rewarding long-term, sustainable growth within the company. Ourcompensation structure is guided by three principles:1.

Focus on company performance by including at-risk pay for executives andlinkage of performance objectives with UMG’s strategy.

2.

Maintain competitiveness with relevant markets to support UMG’s ability to
attract, retain, and motivate high-caliber talent.

3.

Support our employees’ career progression and ensure internally equitable
pay practices through a new global job architecture, in which individual
pay levels may differ by employee to reflect experience, skillset,
performance against goals, and scope of responsibilities but not by
ethnicity, race, gender, religion, disability, sexual orientation, or otherintersectionality points.

Our incentive programs allow employees to participate in the success thatthey help create. We offer a global short-term incentive plan for most exempt
and/or senior employees, an Annual Incentive Program (AIP), and an annual
discretionary bonus program for individuals who are not in the AIP. Additionally,
all eligible UMG employees received UMG shares (or the cash equivalent) in
October as part of their one-time Restricted Stock Unit equity award.
Globally, our company benefits are suited for the diverse needs of
our employees and support a companywide culture of physical health,mental health awareness, and overall wellbeing. In addition to competitivecompensation structures, our total rewards program is central to ourstrategy for enhancing our appeal as an employer and creating a positive,
healthy workplace.
In the United States, UMG’s medical plans provide unlimited access tomental health services at no cost when using network providers. We offer
comprehensive family support programs and prioritize women’s health throughtargeted benefits. UMG provides 12 weeks of paid family leave time as well
as benefits that cover travel for employees and eligible dependents for fertilityrelated medical care. Other family care benefits include family planning, egg
freezing and fertility support, adoption and surrogacy, maternity support, breast
milk shopping for working mothers, and menopause support. Unexpectedcircumstances arise and we have benefits to help minimize family disruptions,
including backup childcare when schools close. Additionally, virtual tutoring
and college coaching help parents and their children navigate individual
learning assistance or college-related tasks.
Employees and their immediate family members also receive an annual
Wellbeing Allowance to fund a wide array of additional services, including
fitness equipment, gym memberships, massages, financial software, and travel.
Additionally, we’ve tailored our medical plans to provide focused support forMUSIC IS UNIVERSAL Annual Report 2023 | 157

NON-FINANCIAL INFORMATION

chronic conditions such as diabetes and high blood pressure, and even those
who suffer from musculoskeletal pain.
To balance work and personal time, several UMG territories reinstated “Summer
Fridays.” During the Summer months, participating employees were able tolimit Friday meetings, and unless facing a pressing business requirement,
step away from their laptops in the early afternoons. Several territories alsooffered a Wellbeing Day to encourage employees to care for their physical andmental health.
We believe there is a connection between individual wellbeing, caring forothers, and serving and supporting our communities. Annually, in the U.S.,
employees may take two days off to volunteer for the charitable cause of theirchoice. To support our focus on wellbeing, this year also saw UMG continue
to expand access to regionally-specific Employee Assistance Programs (EAPs).
Among other offerings, these programs facilitated counseling sessions, in-themoment support for emotional wellness, self-guided mindfulness and cognitive
behavioral therapy programs, and 24/7 work-life assistance.

THE WHOLE YOU
In the U.S., our experiential wellbeing program “The Whole You” provides
UMG employees with access to quality-of-life tools around UMG’sfoundational pillars of health. 2023 highlights included:•

Mental Health: We launched the “Wellbeing Within Reach” campaign
for Mental Health Awareness Month, featuring a robust calendar ofactivations, events, and resources like mental health hotlines andprograms tailored for diverse communities.

•

Physical Health: We continued to provide employees with accessto virtual fitness classes via partnerships with local instructors aswell as mindfulness and meditation platforms, which have seen
significant engagement rates.

•

Family: We continue to support employees and their time with family
through initiatives like Summer Fridays, Wellbeing Day, and our
December Winter Break.

UNIVERSAL MUSIC GERMANY WAS AWARDED TOP
EMPLOYER 2023 IN TERMS OF FAMILY-FRIENDLINESS BY
FREUNDIN X KUNUNU AND MOST WANTED EMPLOYER BYZEIT X KUNUNU.

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Elevating Artists
Artist-Centric Culture
Artists and songwriters are at the heart of everything we do, and ourprimary mission is to help them achieve their greatest creative andcommercial potential.
Our first imperative is to discover and break new artists – and then tosustain their careers by promoting a healthy, sustainable, and exciting music
ecosystem in which they can thrive for decades to come. To support thiscommitment, we are constantly pursuing unexplored avenues of creativeand commercial possibilities – leveraging our ingenuity to create newrevenue streams and help artists reach their greatest potential in an everchanging industry.
In the current digital marketplace, streaming platforms are adding some
120,000 tracks per day. With such a vast number of tracks flooding theplatforms, the critical contributions of many artists are becoming undervalued,
as consumers are increasingly being guided by algorithms to lower-quality
functional content. This leads to a less fulfilling experience for the consumer,
diminished compensation flowing to artists who are driving the businessmodels of the platforms, and fewer cultural moments that fans can collectively
share. Ultimately, there is a growing disconnect between the devotion of fansto the artists whom they value and the subscription structures applied bystreaming platforms.
To address this imbalance, we are actively exploring artist-centric solutions
with platforms including Deezer, Spotify, Tidal, and SoundCloud. Through ourcollaborative efforts, we seek to:•

Reward Real Artists: Find ways to better reward artists whose content drives
value to platforms.

•

Clean Up Clutter: Take steps to limit non-artist noise content, including
sounds, functional music, and thirty-second AI tracks that are designed to
profit inappropriately from the artist royalty pool.

•

Enhance Anti-Fraud Efforts: More aggressively identify and inhibit
fraudulent behavior, as fraudulent streams divert royalties away from artists
at a significant scale.

The overarching theme of UMG’s advocacy is that all creators deserve faircompensation, regardless of the platform on which fans enjoy their art. As welook ahead to 2024, we will continue to innovate and collaborate with others
across the music ecosystem to drive long-term growth and create value formusic fans, the artists they love, and our platform partners.

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Artist Wellbeing & Support
At UMG, our commitment to artists extends beyond supporting and amplifying
their creative visions.
Our over three-year relationship with the nonprofit, Music Health Alliance(MHA), has proven to be a strong partnership. More than 500 UMG and UMPG
artists, songwriters and their families have received life-changing medical careand saved more than $5 million in healthcare costs, including reductions inmedical bills, medication costs, and health insurance premiums as well as
grants and lowered deductibles/out-of-pocket maximum costs. In 2023, MHA
grew their mental health focus due to a significant increase of mental healthcare support needed within the artist and songwriter community, providing $60K
in Mental Health Fund grants, and helping to coordinate more than 700 artist
counseling sessions.
2023 also saw UMG continue to support artists through partnerships with
the American Federation of Musicians (AFM) and the Screen Actors GuildAssociation of Featured Theatrical and Recording Artists (SAG-AFTRA). Our
support enables the music industry’s largest contributions to the organizations’respective health and pension funds, which provide studio musicians andbackground vocalists access to sustained health insurance and retirement
benefits that might otherwise be unattainable.
Our commitment to artist welfare and support is further bolstered by our
ongoing collaboration with Help Musicians, a UK philanthropic organization
serving musicians at all stages of their career through business advice as well
as physical, mental, and financial health services.
In 2022, Universal Music UK (UMUK) joined forces with Help Musicians to launch
the “Co-Pilot” program, a ground-breaking musicians’ mentoring network. In
contrast with professions that require specific study paths, musicians do nothave a clear blueprint for career success, and while digital platforms provide
more options for music creators, deciphering and using them to maximum
effect can be overwhelming. In 2023, the Co-Pilot initiative supported 118
mentoring partnerships to help musicians navigate the ever-changing musicindustry. A total of 32 UMG employees served as mentors and an additional 40
have committed to join the program in 2024.

LOVELOUD'S DAY ON THE HILL
UMG supports our artists as they stand up for equality.
On October 18, Imagine Dragons’ frontman Dan Reynolds, along with agroup of supporting artists, visited U.S. Members of Congress to sharethe story of Reynolds’ LOVELOUD Foundation and advocate on behalf of
the LGBTQ+ community. Throughout the day, the LOVELOUD advocates
met with several U.S. policymakers – including various U.S. Senatorsand representatives and the White House Office of Public Engagement’s
Director – on ways to advance the rights, safety, and wellbeing of
the community, while improving access to mental health care for
LGBTQ+ youth.

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NON-FINANCIAL INFORMATIONDiverse & Inclusive Content
At UMG, our commitment to diversity, inclusion, and belonging extends fromour operations to our content. We use our global platform to shine a light on
diverse stories and local repertoires, leveraging the power of artistry to build
more equitable and open societies. Examples of 2023 initiatives include:•

Sounds of the Future: In honor of Black Music Month, the UMG Task Forcefor Meaningful Change (TFMC) launched the community-centered Soundsof the Future campaign to celebrate the powerful creative legacies of Blackmusic, artists, and executives. As part of the campaign, the TFMC supported
over 30 organizations working to cultivate and preserve Black music for
future generations.

•Black Story: Launched by Universal Music Recordings (UMR) in 2022, Black
Story continued to pay tribute to trailblazing Black UK artists. This year the
campaign featured 10 vinyl releases, 20 digital releases, and four animatedshort form music videos. Dedicated social channels were launched in
October to align with the UK’s Black History Month.

•

100% Her: UMG continued to support 100% Her, an initiative launched in2019 to provide long-term career development opportunities for women andnon-binary individuals working in production music – shining a light on
their voice, talent and works.

•

Irruk Birruk: UMG Australia continued to support “Irruk Birruk” (“Yesterday”
in the language of the Yorta Yorta people), a global distribution solution forotherwise unavailable legacy recordings from Australian Indigenous andTorres Strait Islander artists. The initiative successfully delivered over 100
global tracks in 2023.

•

Afrikaans Concerts: UMG South Africa supported a series of concerts acrossthe country to promote the Afrikaans language and music – a small genre
facing a dwindling number of showcases. The effort, designed to foster
inclusivity, included four major shows that were collectively attended bymore than 130,0000 people.

•

Waiata Anthems: UMG New Zealand continued to take a leading role in
the Waiata Anthems movement, a pan-industry campaign to incorporate
the local indigenous language “te reo Māori” in contemporary music. This
year saw the program hire a cohort of Māori interns, and in 2024 theinitiative will hire a team of Māori executives to run the new emerging artist
excellence initiative.

•

Universal Music Recordings (UMR) Retail Campaigns: In the UK, UMR
continued to include a diverse balance of artists and genres in its retailcampaigns, as demonstrated by April’s UMR Record Store Day list, in which
nearly 60% of releases were by female, Black, or LGBTQ+ artists.

UMG’s creative strategy and intelligence teams directly interface with ouraudiences and communities on an ongoing basis to ensure that the creativeideas for UMG labels and artists are inclusive and reflective of society,resonating with the many different audiences with whom our artists connect.

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NON-FINANCIAL INFORMATIONSUPPORTING OUR COMMUNITIESCorporate 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 and environmental issues and create positive,
systemic change.
In the U.S., the Universal Music All Together Now Foundation (UMATNF) works
to advance systemic change through investment in education, health andwellness, and racial equity and justice. Integral UMATNF programs include
the UMG Unhoused Coalition, the UMG Green Team, and the Task Forcefor Meaningful Change (TFMC). This year, each program continued to rollout innovative initiatives and support UMG’s growing network of community
partners to address widespread social and environmental challenges.

IN 2023, UMG CONTRIBUTED TO MORE THAN 500
COMMUNITY ORGANIZATIONS AND SUPPORTED OVER
1.2 MILLION MEALS FOR INDIVIDUALS IN NEED.
UMG Unhoused Coalition
The UMG Unhoused Coalition mission is to intersect policy and philanthropy tobetter serve the needs of those unhoused in our communities. The Coalition
works to strengthen education and advocacy as well as deliver resources andlocal support, including the following 2023 initiatives:•

Community Collection Boxes: Permanent collection boxes were placed in
UMG offices in New York, Nashville, Los Angeles, and Miami to collect avariety of seasonally appropriate items and were delivered to charities on amonthly basis.

•

Back(pack) to Basics Campaign: The Coalition activated a companywide
campaign seeking to meet the needs of underserved students by supplying
new school supplies, providing meals to fight food insecurity, and urging
UMG employees to shop purpose-driven brands that give back to students
in need. Backpacks and school supplies were distributed across the U.S.

•

Covenant House Partnership: The Coalition strengthened its partnershipwith Covenant House, a nonprofit dedicated to helping youth overcome
homelessness and human trafficking. Members of Republic Records created
and launched artist development workshops for Covenant House youth.
These workshops included hands on experiences, resume building andcareer advice. In addition, UMG sponsored and participated in Covenant
House’s 2023 Sleep Out in Times Square, and our executives and artists
participated in their Night of Covenant Stars events.

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NON-FINANCIAL INFORMATION

UMG Green TeamThe UMG Green Team plays an important role in driving environmental
awareness, supporting artist advocacy, and implementing internal and external
initiatives to promote climate action in our workplace and in our communities.
Some highlights include:•

Go Green Challenge: The Green Team organized its second annual Earth
Month Go Green Challenge in April. UMG employees and business units
were encouraged to adopt a series of actions to reduce their daily carbon
footprints, and impacts were tracked via an online leaderboard. For every
action completed, UMG purchased a one-tonne carbon offset from a verified
project of the employee’s choice. In collaboration with partner Captain
Planet, a community garden at Brooklyn Urban Garden Charter School isbeing developed in the name of this year’s challenge winner, Verve Records.

•

UMG x Dreamville Community Garden: The Green Team launched the UMG
x Dreamville garden in Atlanta, expanding UMG’s network of community
gardens across the U.S., UK, France, Australia, and New Zealand. Additionally,
Green Team members collaborated with the Mental Health Coalition todeliver a coordinated social media campaign around the mental healthbenefits of gardening.

•Green Team x PRISM Venice Beach Cleanup: The Green Team joined forces
with environmental nonprofit Heal the Bay and UMG’s PRISM ERG for a beachcleanup in Los Angeles at Venice Beach.

•

Tree Planting Series: In partnership with TreePeople and Trees NY, the Green
Team hosted two urban tree planting events in Los Angeles and New York
City. The group also partnered with TreePeople to host a Lunch & Learn on
urban heat and climate resilience strategies.

MUSIC IS UNIVERSAL Annual Report 2023 | 163

NON-FINANCIAL INFORMATIONCORPORATE PHILANTHROPY ACROSS UMG'S GLOBAL NETWORK
UMG territories outside the U.S. have developed independent
philanthropic initiatives to support both global and regional causes.
In the UK, the Universal Music UK Sound Foundation (UMUKSF) focuseson lifting up the next generation of talent across the region. Since its
inception, UMUKSF has donated more than €9 million towards musiceducation, including funding for over 10,000 young people and schools
to buy musical instruments. UMUKSF has bursaries at 11 music colleges
throughout the UK and Ireland – and supports the music departments of
23 secondary schools.
UMUK also continues to expand its partnership with East London Arts
& Music (ELAM), which began in 2014, to support the next generation oftalent. ELAM is a free school for 16-19-year-olds founded by Will Kennard,
one half of EMI recording artists Chase & Status. In addition to offering
masterclasses, mentorship, curriculum guidance, and work experience
to many of the school’s pupils, valuable relationships form between theschool and UMG’s A&R teams. This year, ELAM alumni who are signed to
UMUK labels earned numerous recognitions. Stella Quaresma and Renée
Downer, members of FLO (Island), won the prestigious BRIT Rising StarAward 2023, and Tendai (0207 Def Jam) was nominated for Rising Star at
this year’s Ivor Novello awards.
In addition to expanding its youth programming, this year UMUK teamed
up with Music for Dementia and UK Music to develop the Power ofMusic Report, which seeks to use music to improve community health,particularly for those living with dementia. To further support this aim,in 2023 UMUK launched the Power of Music Fund, a £1 million fundfor community groups, as well as the dynamic Music Can platform, an
information hub about music and dementia that highlights local support,
training, and resources.
In South Africa, UMG supported four non-governmental organizations(NGOs), ranging from a public interest law center driving social justice
to an organization providing toy libraries to marginalized communities.
Universal Music New Zealand continued to support Music Helps, the New
Zealand music industry charity that uses the power of music to help
people in need.

MUSIC IS UNIVERSAL Annual Report 2023 | 164

NON-FINANCIAL INFORMATIONTASK FORMEANINGFULFORCE CHANGE
The Task Force for Meaningful Change (TFMC) – a voluntary group of music
executives and employees from UMG’s corporate center, labels, and global

companies - was launched in 2020 to support Black and other marginalized
UNIVERSAL MUSIC GROUP

communities worldwide.

Established in the wake of global uprisings against systemic racism, criminal
justice reform is an ongoing priority of TFMC in addition to advancing equity
in the music industry. Every year TFMC deepens its work in the criminal

justice space – leveraging UMG’s position in the industry to uplift, amplify,
and support community organizations, policies, and initiatives working toprotect and contribute to long-term change.

TFMC also supports other issue areas that disproportionally impact Black
communities. In 2021, the Task Force named its first “super priority” aseducation with a focus on classrooms. Although education has been one of
the few pathways for Black people to overcome systemic racism, many ofAmerica’s public school systems still fail to prioritize and meet the challenges,
realities, needs, and aspirations of Black children. TFMC invests in classrooms,
programs, nonprofits, institutions, and projects aimed at decreasing theopportunity and achievement gaps between Black students and theircounterparts. Additionally, the Task Force cultivates spaces to support music
executives and emerging Black creatives in expanding their knowledge andskill sets.

2023 saw TFMC deepen its criminal justice reform and education-focused

work, while also strengthening community partnerships and contributing
emergency aid around the world.

Among other initiatives, TFMC’s 2023 efforts included:

PUBLIC HEALTHSCHOLARSHIPS• TFMC provided support for over 50 scholarships across the four accredited

HBCU Medical Schools – Howard University College of Medicine, Morehouse

School of Medicine, Meharry Medical College, and Charles R. Drew Universityof Medicine and Science – seeking to expand the number of Black medical
practitioners.

PARTNERSHIPS FOR SYSTEMIMPACTED INDIVIDUALS• To support criminal justice reform, the Task Force partnered withorganizations working in the community violence intervention andmeaningful re-entry work space to provide wraparound services,
mentorship, and mental health support.

MUSIC IS UNIVERSAL Annual Report 2023 | 165

NON-FINANCIAL INFORMATIONTASK FORMEANINGFULFORCE CHANGE
PARTNERSHIPS FOR
FOOD SECURITY• Addressing food insecurity across the globe was one of TFMC’s three giving
strategies this year. The Task Force prioritized support for organizations

providing vulnerable communities with access to year-round, zero-cost,and nutrient-dense foods – including Feeding America, Harlem Grown,and Hashtag Lunchbag.

MUSIC MAKERS OFTOMORROW SESSION• TFMC hosted a music career session in Long Beach, California, in partnershipwith the Boys and Girls Club Long Beach and Long Beach City College. With

over 100 underserved youth in attendance, the organization partnered with
Interscope Records and No Name Recordings to bring hometown artist,singer, songwriter Shady Blu to share her story and career journey to inspire
the next generation of young people in music.

KING CENTER SUPPORT• The Task Force partnered with the King Center, the nonviolent social changeorganization founded by Coretta Scott King, for its Be Love Day – a powerful

day of global activism that aims to disrupt hate with compassion, courage,
and community through virtual conversations and workshops that equip

individuals to confront racism with action. UMG supported the Be Love Day

playlist and donated over 1,500 care packages for the unhoused in Atlanta.

DREAMWAKERS SUPPORT• The Task Force continued its second year of partnership with Dreamwakers,

an organization working with 4th to 12th graders in rural and systematicallyunder-resourced schools. Several TFMC members across our record labels
and business units led “flashchats” - virtual classroom music industry

career sessions. This year, more than 83% of students who participated in

flashchats attended under-resourced schools in areas of low socioeconomic
status, and over 84% of impacted classrooms were composed primarily ofstudents from one or more historically excluded ethnic and/or racial
backgrounds.

KNOW YOUR RIGHTSCAMP SUPPORT• TFMC supported education and empowerment camps for Black and Brown

EMERGENCY AID RELIEF• The Task Force responded to thousands of people around the world impacted

youth across the country – using the power of music to connect young
people with future opportunities.

by tragedies. UMG donated to multiple organizations around the world for
emergency support.

MUSIC IS UNIVERSAL Annual Report 2023 | 166

NON-FINANCIAL INFORMATIONTASK FORMEANINGFULFORCE CHANGECORPORATE LEADERSHIPAWARDSTFMC’s work earned national recognition in the U.S., with honors including:• 2023 Higginbotham Corporate Leadership Award,

Lawyers’ Committee on Civil Rights Under the Law• 2023 Social Impact Award, Black Music Action Coalition• 2023 Black Star Award, African Communities Together

TFMC SUPPORT BY PILLARTFMC GLOBAL GIVING

Some organizations that TFMC supported include:
Music Industry

Criminal JusticeReform• Atlanta
Music Project• Blues
Foundation•B rooklyn Academy of Music•E
 ast of River
Boys and Girls
Steelband, Inc.
•M
 emphis Music
Initiative• SoulsvilleFoundation• Sphinx Museum•B uried Alive
Project• Community
Connections
for Youth, Inc.
•L
 ife After Justice• Releasing
Aging People
in Prison•S cholarCHIPS, Inc.
•V
 era Institute ofJustice•W . Haywood
Burns InstituteZero Hunger

Spotlight Giving• BGCA ofGreater Dallas• Blessings ina Backpack• Harlem Grown• Hunger Task
Force
• Kids
Gardening• Partnershipfor a Health
America• WE CHARITY•A ugust Wilson
African American
Cultural Center•B lack Genius
Foundation•B lacks in
Technology
Foundation• GirlTrek
Incorporated•R oots Wounds
Words•S tudio Museumin Harlem

Additionally, outside of the U.S., our global giving program supported
organizations that focus on education, music, and zero hunger.
United Kingdom

CanadaLatin America• Appeal• Music Masters• Magic Breakfast•H aven on
Queensway•N orth York
Harvest Food Bank• Productions
Rever en Coulers•A sociación Mexicana de Bancos
de Alimentos, A.C. (RED BAMX)•F
 undación Educación yCooperación, Educo•R e-food 4 Good – Associação
de Solidariedade Social

MUSIC IS UNIVERSAL Annual Report 2023 | 167

NON-FINANCIAL INFORMATION

Employee Giving

At the center of UMG’s employee experience is a culture of care andcommunity service. We encourage our employees to actively participate in
our philanthropic endeavors, serving to benefit surrounding communities andinspire connectivity.
Donation matching remains a core element of UMG’s employee giving approach.
In the U.S., we offer a 100% match throughout the year, and a 150%
super-match contribution for all qualifying donations made by employees
on #GivingTuesday. In 2023, U.S. employee donations supported hundreds oforganizations on #GivingTuesday, including World Central Kitchen, St. JudeChildren’s Research Hospital, the LA Regional Food Bank, City of Hope.

UMG DONATED TO OVER 400 ORGANIZATIONS ON#GIVINGTUESDAY.
Across our global network, UMG territories also engage in coordinated employee
giving initiatives. After a devastating earthquake hit Turkey and Syria in
February, Universal Music Germany launched an employee-driven fundraising
campaign to collect donations for the UNICEF “Emergency Aid for Children in
the Syrian-Turkish Border Area” project. Every employee donation was doubled
by UMG.
We also encourage and create space for 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 ourcommunities stronger by providing our people with the opportunity to help
those in need.

U.S. EMPLOYEES VOLUNTEERED NEARLY 1,500 HOURSOF THEIR TIME IN 2023.
Sharing this ambition, UMUK’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 a registered charity.

MUSICIANS MAKING A DIFFERENCE
Now in its 9th year, Universal Music Australia’s alliance with theMusicians Making a Difference (MMAD) organization continues to engage
employees through skilled volunteering and activity-based volunteering
opportunities. Our support has enabled MMAD to reduce youth
homelessness, poverty, and addiction, break negative cycles, address
mental health, and increase employment and education pathways.

MUSIC IS UNIVERSAL Annual Report 2023 | 168

NON-FINANCIAL INFORMATIONOUR COMMITMENTS

GOVERNANCE

AT UMG, OUR COMMITMENT TORESPONSIBLE GOVERNANCE SERVES AS
THE FOUNDATION OF OUR BUSINESS.
At UMG, we fundamentally view our ESG efforts not as separate from, but asa central component of our business strategy. Responsible governance isessential to serving our key stakeholders, and we are committed to upholding

the principles of accountability, transparency, fairness, responsibility and risk
management in all that we do.

Putting our commitment into practice, we carry out our business activities incompliance with applicable regulations and base our business conduct andrelations with external parties on ethical standards. These standards guidebusiness development, maintain stakeholder trust, prevent and manage risks,and support our global performance.

SHAREHOLDER RIGHTS SUMMARY
01 One Share One Vote02 	Voting Standard

We have a simple majority voting standard unless Dutch law requires aqualified majority

03 	Director Elections

We have tiered Board elections with most Board members serving two-year
terms and standing for elections at every other year04 	Proxy AccessOne or more Shareholders representing individually or jointly at least 3%of the issued share capital of the Company may propose relevant items on
the agenda of the General Meeting05 	Rights to Call a Meeting

One more Shareholders representing individually or jointly at least 10% of
the issued share capital of the Company are entitled to request the Boardin writing that a General Meeting is convened

Material Topics:
Privacy and Cybersecurity | Privacy and Content Protection | Supply Chain Management.
See Material Topics in this section for more information.

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NON-FINANCIAL INFORMATIONOPERATING WITH INTEGRITYESG Integration

UMG’s Board is responsible for sustainable long-term value creation, including
the oversight of our sustainability program, as well as the integrity of
UMG’s non-financial reporting. The Audit Committee supports the Board
in relation to these responsibilities and covers ESG topics on its agenda.
UMG’s Global ESG department is responsible for developing and updating
our sustainability strategy, measuring performance, driving compliance withsustainability-related regulations, and briefing the Board on these activities.
Global ESG integrates sustainable business practices across the company
by executing a comprehensive ESG management system. We mobilize crossfunctional ESG Working Groups to operationalize sustainability commitments
within each group’s sphere of influence – through KPI monitoring, target
setting, and program implementation. This year, the ESG Working Group Charter
formalized these responsibilities and set the foundation for deeper engagementin 2024 and beyond.
Key ESG Working Groups include:••••

BravadoGlobal Travel
People, Inclusion and Culture (PIC)
Universal Music, Manufacturing & Logistics (UML)

Material Topics

We strive to communicate openly and honestly about our sustainability
performance. Our reporting efforts comply with the EU Non-Financial Reporting
Directive (NFRD) and the Dutch Corporate Governance Code and align withleading international standards, including the Global Reporting Initiative (GRI),
the Sustainability Accounting Standards Board (SASB), the Carbon Disclosure
Project (CDP), and the United Nations Sustainable Development Goals1 (UN SDGs).
Our non-financial reporting approach – and the strategic framework that it
stems from – is anchored in data integrity and transparency with a focus on
the issues of material importance to our stakeholders.
In 2022, we conducted a materiality assessment to identify the ESG topics
most material to UMG. Topics were evaluated based on their importance tobusiness as well as their importance to stakeholders, and the potential impactsof each topic were considered across the broader economy, environment, andsociety at large. Out of our initial list of 53 topics, we identified 7 topics of thehighest importance, considered UMG’s most material topics. Our coordinatednon-financial reporting system, managed by the Global ESG department andpowered by contributors representing the territories in which we operate,
serves to measure the impacts of and evaluate UMG’s approach to managing
these topics.

1

The United Nations' 2030 Agenda for Sustainable Development was adopted by all Member Statesin 2015 and provides a shared blueprint for peace and prosperity for people and the planet, now
and into the future. At its heart are the 17 Sustainable Development Goals (SDGs). Learn more
about them here: https://sdgs.un.org/goals.

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NON-FINANCIAL INFORMATION

MATERIALITY MATRIXVERY HIGH PRIORITY

IMPORTANCE TO STAKEHOLDERS

Attraction andretention of
employees

Attraction andretention of artists

HIGH PRIORITY
Supply chain
management

Greenhouse gas(GHG) emissions

Privacy andcybersecurity
Diversity, equity
and inclusion
Piracy andcontent protection

MEDIUM PRIORITY

IMPORTANCE TO BUSINESSENVIRONMENT

Material Topics

SOCIAL

GOVERNANCE

Description

ENVIRONMENTAL TOPIC 	Greenhouse Gas (GHG) Emissions

Given the potential for regulatory disclosure and oversight in Europe and the
U.S., the management of our scope 1, 2, and 3 GHG emissions is critical for

ensuring environmental compliance, managing our reputational risks, andidentifying 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.

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NON-FINANCIAL INFORMATION

Material Topics

Description

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 copyright protection measures will continue to drive long-termvalue for our artists and increase their commercial success, consumer base,and longevity potential. This topic impacts our direct operations as well as
stakeholders across our value chain, especially our artists, fans, and thecreative 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 advancement of employee wellbeing, development, compensation and benefits, andengagement 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, and promote a diversity of perspectives and backgrounds increases

our resilience as a company as well as the creativity behind our products andservices. This topic impacts our direct operations as well as stakeholders

across our value chain and is closely tied to the attraction and retention ofartists and employees.

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NON-FINANCIAL INFORMATION

Material Topics

Description

GOVERNANCE TOPICS 	
Privacy and Cybersecurity

UMG’s business is subject to a variety of European, U.S., and othersupranational and domestic laws, rules, and policies regarding privacy andcybersecurity. The protection of sensitive, confidential, and proprietarycompany 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 ourvalue 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 of piracy continue to evolve, reflecting changing technology and market
conditions. This topic impacts our direct operations and various stakeholders

across our value chain, especially our 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 and adhere to regulatory

requirements, as well as promote product innovation, human rights, diversity,and local economies. This topic impacts our direct operations as well as

stakeholders across our value chain, especially our global supplier networks.

MUSIC IS UNIVERSAL Annual Report 2023 | 173

NON-FINANCIAL INFORMATIONBusiness Ethics & Compliance

While our ESG management system and non-financial reporting framework
serve to drive and monitor sustainability performance, our commitment to
responsible governance is anchored by UMG’s Code of Conduct.
Based on applicable regulations, the principles and best practices of the Dutch
Corporate Governance Code, UMG’s Code of Conduct operationalizes our corevalues and sets out the foundational principles that inform how we do business,
including our commitment to respecting human rights in every aspect of ourwork. Our Code of Conduct presents a guide to behave with honesty and integrityand earn and maintain the confidence and respect of all our stakeholders –investors, artists and songwriters, business partners, fans, and beyond.
Our Code of Conduct governs all businesses, divisions, and departments within
UMG’s global presence. Every person conducting business for UMG must follow
the Code of Conduct, including employees, members of the Board, and third
parties, such as consultants, independent contractors, and company advisors
or representatives.

UMG’S CODE OF CONDUCT IS AVAILABLE IN 22
LANGUAGES AND EMPLOYEES WORLDWIDE CERTIFY
THEIR COMPLIANCE WITH THE CODE OF CONDUCT EVERY
YEAR.
We educate our employees on company policies and expectations via a suiteof courses, which are deployed globally and regionally. In 2023, topics included
the Code of Conduct, Anti-bribery, Antitrust, ESG, Fraud Awareness, Information
Security, Preventing Harassment, Radio Promotion Compliance, and Healthand Safety.
We comply with the EU Taxonomy disclosures related to Minimum Social
Safeguards (see the EU Taxonomy section) and we are committed tocontinuing to strengthen our compliance protocols and compulsory trainings
as regulations continue to evolve. UMG’s Whistleblowing Policy explains theappropriate reporting procedures as well as the process by which we investigate
reports of misconduct and, when appropriate, take corrective actions.

Privacy & Cybersecurity

UMG maintains the trust of our artists and partners through the ethicaland compliant collection, use, and sharing of data. Technology, security, andcompliance teams work to continuously improve processes and technologies tominimize risk and optimize UMG’s use of data and technology.
As a global company, we are subject to a growing number of privacy andcybersecurity laws. Non-compliance might have significant legal, financial, andreputational effects on UMG. To uphold stakeholder trust and comply withprivacy and cybersecurity regulations, we have developed and implemented a
program designed to identify and mitigate regulatory risks. Key elements of thisprogram include training, policies, and procedures for handling data, reviewsof supplier engagements, processes and tools for responding to privacy rights
requests, processes for compliant international transfers of data, and responseplans for legal compliance related to security incidents.

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NON-FINANCIAL INFORMATION

We employ a layered approach to protecting our assets, systems, and employees
from malicious cyberattacks and bad actors. Our Global Security Office (GSO)
Governance group is responsible for companywide 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
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.
GSO’s primary focus areas include:•

Enhanced Remote Access Support: UMG is enhancing remote accesssecurity to limit access to UMG resources and systems to registered devices.
This supplements the company's existing two-factor authentication andaccess controls by protecting against social engineering attacks that target
login processes.

•

Augmented Visibility: Augmented visibility continues to be a criticalcomponent of UMG’s cybersecurity protections, by ensuring that unusual
activity and anomalous behavior by internal systems and users will be
detected and investigated as quickly as possible. This includes more robust
24x7 monitoring, alerting, and escalation of potential incidents.

•

Governance and Cyber Controls: UMG is formally establishing a crossfunctional cyber controls program, by creating, documenting, and educating
employees regarding company cyber standards, control requirements, andcyber control testing and auditing. Strategic partners in this effort include
GSO, Global Technology, PIC, Legal, Privacy, Internal Audit, and key membersof the businesses.

To maintain program effectiveness, UMG leverages a combination of a robust
security incident response team (SIRT), regular penetration testing focusing on
both technical and social engineering vulnerabilities, and regular testing of key
cyber controls. GSO Governance continues to apply a rigorous exception process
to allow UMG businesses to surface practices and systems that cannot comply
with official policy for tracking and mitigation.
As the risks to data security continue to increase, UMG will further adapt,
improve, and strengthen our privacy and cybersecurity governance, processes,
and procedures.

Piracy & Content Protection

At UMG, we are fully dedicated to protecting the creative works of our artists
and songwriters. Beginning in 2002, we were the first major music company tocreate a Content Protection department, which serves to identify threats andcreate strategies and workflows to stop them. In collaboration with global tradeorganizations, our content protection initiatives span several areas:•

Label Support: Content Protection is the primary point of contact for labels
who require content to be removed from DSPs and aggregators, including
copyright infringement, unauthorized remixes, mis-labelled uploads, andnon-UMG tracks that have been tagged with a UMG artist. This work ensuresthat only authorized tracks exist on DSPs and are correctly attributed.

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NON-FINANCIAL INFORMATION•

Pre-Release Protection: Releases face the highest level of risk during the
pre-release phase, when producers and sound engineers collaborate aheadof production. Ever since the COVID-19 pandemic, this collaboration isincreasingly 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 spot and remove leaked
content to minimize risks of further unauthorized distribution.

•

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.

•

Merchandising: Due to its popularity and affiliation with UMG artists,
Bravado merchandise is often counterfeited or impersonated. Content
protection works closely with Bravado to remove infringing products frommajor online marketplaces and retailers. In addition to our merchandise
protection, we also protect our brands and artist likenesses from being usedwithout authorization within digital environments.

•

UMPG: Content Protection supports UMPG by removing unauthorized covers,
masters, and live recordings - as well as infringing uses of our publishingrights. Supporting UMPG directly ensures that we can remove unauthorized
content quickly and avoid duplication.

Steered by our Content Protection team, we engage with internal and external
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.

MUSIC IS UNIVERSAL Annual Report 2023 | 176

NON-FINANCIAL INFORMATION

Supply Chain Management

In addition to embedding ESG initiatives across our operations, UMG engages
our supply chain in company efforts. We work with suppliers to measure andreduce the environmental footprint of our value chain, and we expect 100% of
our partners to share our commitment to protecting human rights.
We continue to incorporate the UMG Supplier Social Responsibility Policy into
manufacturing agreements. The Policy is anchored in 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, theChildren’s Rights and Business Principles established by UNICEF, the UN Global
Compact, and Save the Children principles. In addition to adhering to the
Policy, Bravado – our global merchandising arm - mandates that all criticalmanufacturing suppliers are current with social compliance audits and aretimely in resolving any corrective actions and certification renewals.

THE UMG SUPPLIER SOCIAL RESPONSIBILITY POLICY IS
INCORPORATED INTO OVER 100 CONTRACTS GLOBALLY INCLUDING E-COMMERCE, FAME HOUSE, UML, AND
BRAVADO AGREEMENTS.
This year, we laid the groundwork for deeper engagement across our diverse
network of suppliers. We assembled employees, artist managers, and value
chain partners to support industry advancements through our UMG x Bravado
Sustainability Summit series, taking place in Los Angeles, London, and New York(see "Merchandise" in the Environment section).
We also updated the environmental, social, and ethical criteria expectedof our partners and developed a roadmap for the implementation of a
new environmental exhibit – to be incorporated into manufacturing partner
agreements – accompanied by formalized reporting requirements, including a
supplier survey whereby environmental management systems and future plans
within key impact areas will be disclosed. Fame House, UMG’s artist-centric
digital marketing service, has already rolled out the survey to its supply base– leveraging results to refine its responsible sourcing processes and identify
opportunities to scale sustainable initiatives and technologies.

IN 2023, FAME HOUSE CONVENED ITS KEY SUPPLIERS
IN CONVERSATION AROUND SUSTAINABILITY AND 62%
RESPONDED TO THE UMG SUSTAINABILITY SURVEY.
In the coming year, UMG will continue to strengthen our responsible sourcing
program and prioritize supply chain engagement across all facets of thecompany. Suppliers are integral to our business, and we are dedicated toworking alongside our partners at every level of the value chain to collectively
advance sustainability.

MUSIC IS UNIVERSAL Annual Report 2023 | 177

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 component of
the EU Action Plan on Sustainable Finance, which supports this ambition, is tosteer cash flows toward sustainable investments.
In accordance with European Regulation 2020/852 of June 18, 2020 and 'Besluit
bekendmaking niet- financiële informatie', UMG is obligated to disclose theTaxonomy-eligible, Taxonomy non-eligible, and Taxonomy-aligned turnover,capital expenditures, and operating expenditures for economic activities
relating to the Taxonomy's six environmental objectives.
EU Taxonomy Objectives and Scope
The EU Taxonomy Regulation serves as a standardized and mandatoryclassification system to determine which economic activities are consideredenvironmentally sustainable in the European Union (EU). The results of thisclassification are reported annually on a company-specific basis.
Article 9 of EU Taxonomy regulation identifies six (6) environmental objectives:
1.
2.
3.
4.
5.
6.

Climate change mitigation (CCM)
Climate change adaption (CCA)
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,
the EU Taxonomy Regulation distinguishes between Taxonomy-eligible andTaxonomy-aligned 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.

New regulations came into force in 2023 that added new economic activities
to be considered for the Taxonomy and amended previous regulations andeconomic activities.

MUSIC IS UNIVERSAL Annual Report 2023 | 178

NON-FINANCIAL INFORMATIONEU Taxonomy disclosure requirements for 2023 reporting are:•

The proportion of Taxonomy-eligible and Taxonomy non-eligible economic
activities in Key Performance Indicators (as identified in Delegate Regulation(EU) 2021/2139, Delegated Regulation (EU) 2022/1214, Delegated Regulation(EU) 2023/2485, and Delegated Regulation (EU) 2023/2486)•

The proportion of Taxonomy-aligned activities in KPIs for CCA and CCM as
defined in Delegate Act (EU) 2021/2139, amended by Delegated Regulation(EU) 2023/2485•

Qualitative information relevant for disclosures, including accounting
policy, assessment of compliance with Regulation (EU) 2020/852, andcontextual information about KPIs (Disclosures Delegate Act (EU) 2021/2178,
Article 10)

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 Delegated Regulation (EU) 2021/2178 (Annex I, Section 1.1).

TurnoverCapEx1

OpEx1

Numerator

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.

Denominator

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 related to a capital plan or purchase of output from taxonomy-aligned economic activities such as individual
measures enabling target activities to become low-carbon, activities leading to greenhouse gas emissions reductions, or individual renovation measures planned to
be implemented and operational within eighteen (18) months.

The financial information for calculating the metrics was gathered from
UMG’s financial reporting system, excluding intercompany transactions. Eligible
economic activities identified are currently only under the CCM, CCA, andcircular economy objectives. Where 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 2023, UMG did not issue sustainability-linked bonds or debt securities tofinance Taxonomy-aligned activities.

MUSIC IS UNIVERSAL Annual Report 2023 | 179

NON-FINANCIAL INFORMATION

Assessment of Compliance with Regulation (EU) 2020/852
For 2023, 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 17% and does notmeet the substantial contribution criteria, therefore eligible CapEx is notconsidered aligned•

OpEx: Taxonomy-eligible OpEx is calculated at less than 1% and is notconsidered material

Turnover KPI
The basis of the turnover KPI covers UMG business activities as of December
31, 2023. 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 the conclusion of not eligible
reached in 2022 continues to apply.
The percentage for Taxonomy-eligible turnover amounts to zero. There are no
revenue activities eligible or assessed for alignment.
Nevertheless, UMG is committed to contributing to sustainable businessconduct, including measuring and managing climate-related risk, supportingand showcasing artists' climate advocacy efforts, and engaging in andadvocating for sustainable business solutions throughout the value chain.
CapEx KPI
Under the EU 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 the
CCM and CCA (7.2 Renovation of existing buildings, 7.7 Acquisition andownership of buildings), and circular economy (3.2 Renovation of existingbuildings) objectives.

MUSIC IS UNIVERSAL Annual Report 2023 | 180

NON-FINANCIAL INFORMATIONThe breakdown by type of CapEx is as follows:
FY23

FY23

FY22

FY22

Activity 3.2

Activity 7.7

Activity 7.2

Activity 7.7

Additions to PPE, leases, and intangible assets

40

46

22

2

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

-

-

-

-

40

46

22

2

(in millions of euros)

and 7.2

Acquisitions through business combinations

Total Taxonomy-eligible CapEx

-

-

-

-

Alignment Assessment
3.2 Renovation of existing buildings
For 2023, alignment will only be reported for CCM and CCA (excluding any newactivities added to regulations in 2023).
7.2 Renovation of existing buildings
UMG has assessed the substantial contribution criteria and evaluated that theleasehold improvements conducted to meet UMG's business needs do not meetthe substantial contribution criteria for climate change mitigation or climatechange adaptation under Activity 7.2.
7.7 Acquisition and ownership of buildings
For 2023, twelve (12) leased locations were identified as eligible under the
EU Taxonomy criteria. While UMG developed a validation approach using
internationally recognized energy certificates and primary energy demand (PED)
measures, there was insufficient national and regional data for the twelve(12) locations to determine energy performance. Therefore, the new leases did
not meet the energy performance requirements under substantial contribution
criteria for climate change mitigation or substantial contribution for climatechange adaptation 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 2023, 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 Annex I, Section
1.1.3.2 and discloses the numerator as equal to zero.

MUSIC IS UNIVERSAL Annual Report 2023 | 181

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.

Turnover
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering
year 2023
Substantial Contribution
Criteria

Turnover (3)Proportionof Turnover,year 2023 (4)Climate Change Adaptation (6)Water (7)Pollution (8)Circular economy (9)Biodiversity (10)Year
Climate Change Mitigation (5)Financial year 2023

millionsof euros

%

Y; N;
N/EL
(b) (c)Y; N;
N/EL(b) (c)Y; N;
N/EL(b) (c)Y; N;
N/EL(b) (c)Y; N;
N/EL(b) (c)Y; N;
N/EL(b) (c)

€0

0%

N/A

N/A

N/A

N/A

N/A

N/A

€0

0%

0%

0%

0%

0%

0%

0%

Of which enabling

€0

0%

0%

0%

0%

0%

0%

0%

Of which transitional

€0

0%

0%

Economic Activities (1)Code (2)Text
A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)
No activities

N/A

Turnover of environmentally sustainable activities(Taxonomy-aligned) (A.1)

A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

No activities

N/A

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

€0

0%

N/A

N/A

N/A

N/A

N/A

N/A

Turnover of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities) (A.2)

€0

0%

0%

0%

0%

0%

0%

0%

A. Turnover of Taxonomy eligible
activities (A.1 + A.2)

€0

0%

0%

0%

0%

0%

0%

0%

Turnover of Taxonomynon-eligible activities€ 11,108

100%

TOTAL

€ 11,108100%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIESMUSIC IS UNIVERSAL Annual Report 2023 | 182

NON-FINANCIAL INFORMATION

Turnover
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering
year 2023
DNSH criteria (“Does Not
Significantly Harm”)

Y/N

Minimum Safeguards (17)Y/N

Categorytransitional
activity(20)

Biodiversity (16)Water (13)Y/N

Category
enabling
activity(19)

Circular Economy (15)

Climate Change Adaptation (12)Text

Proportion of
Taxonomyaligned (A.1.)
or -eligible(A.2.)
turnover, year
2022
(18)

Pollution (14)

Economic Activities (1)Climate Change Mitigation (11)Financial year 2023

Y/N

Y/N

Y/N

Y/N

%

E

T

N/A

N/A

A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
No activities

N/A

N/A

N/A

N/A

N/A

N/A

N/A

0%

Turnover of environmentally sustainable
activities (Taxonomy-aligned) (A.1)

N/A

N/A

N/A

N/A

N/A

N/A

N/A

0%

Of which enabling

N/A

N/A

N/A

N/A

N/A

N/A

N/A

0%

Of which transitional

N/A

N/A

N/A

N/A

N/A

N/A

N/A

0%

E
T

A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL; N/EL (f)No activities

0%

Turnover of Taxonomy-eligible but notenvironmentally sustainable activities(not Taxonomy-aligned activities) (A.2)

0%

A. Turnover of Taxonomy eligible
activities (A.1 + A.2)

0%

MUSIC IS UNIVERSAL Annual Report 2023 | 183

NON-FINANCIAL INFORMATION

CapEx
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering
year 2023
Substantial Contribution
Criteria

CapEx (3)

Proportionof CapEx, year
2023 (4)Climate Change Adaptation (6)Water (7)Pollution (8)Circular economy (9)Biodiversity (10)Year
Climate Change Mitigation (5)Financial year 2023

millionsof euros

%

Y; N;
N/EL
(b) (c)Y; N;
N/EL(b) (c)Y; N;
N/EL(b) (c)Y; N;
N/EL(b) (c)Y; N;
N/EL(b) (c)Y; N;
N/EL(b) (c)

€0

0%

N/A

N/A

N/A

N/A

N/A

N/A

€0

0%

0%

0%

0%

0%

0%

0%

Of which enabling

€0

0%

0%

0%

0%

0%

0%

0%

Of which transitional

€0

0%

0%

Economic Activities (1)Code (2)Text
A. TAXONOMY-ELIGIBLE ACTIVITIES

A.1. Environmentally sustainable activities (Taxonomy-aligned)
No activities

N/A

CapEx of environmentally sustainable activities(Taxonomy-aligned) (A.1)

A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

Renovation of existing buildings

CCM 7.2

€ 40

8%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

Acquisition and ownership of buildings

CCM 7.7

€ 46

9%

EL

N/EL

N/EL

N/EL

N/EL

N/EL

CapEx of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities) (A.2)

€ 86

17%

100%

0%

0%

0%

0%

0%

A. CapEx of Taxonomy eligible
activities (A.1 + A.2)

€ 86

17%

100%

0%

0%

0%

0%

0%

CapEx of Taxonomynon-eligible activities

€ 406

83%

TOTAL

€ 492

100%

B. TAXONOMY-NON-ELIGIBLE ACTIVITIESMUSIC IS UNIVERSAL Annual Report 2023 | 184

NON-FINANCIAL INFORMATION

CapEx
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering
year 2023
DNSH criteria (“Does Not
Significantly Harm”)

Y/N

Minimum Safeguards (17)Y/N

Categorytransitional
activity(20)

Biodiversity (16)Water (13)Y/N

Category
enabling
activity(19)

Circular Economy (15)

Climate Change Adaptation (12)Text

Proportion of
Taxonomyaligned (A.1.)
or -eligible(A.2.)CapEx, year
2022
(18)

Pollution (14)

Economic Activities (1)Climate Change Mitigation (11)Financial year 2023

Y/N

Y/N

Y/N

Y/N

%

E

T

N/A

N/A

A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
No activities

N/A

N/A

N/A

N/A

N/A

N/A

N/A

0%

CapEx of environmentally sustainable
activities (Taxonomy-aligned) (A.1)

N/A

N/A

N/A

N/A

N/A

N/A

N/A

0%

Of which enabling

N/A

N/A

N/A

N/A

N/A

N/A

N/A

0%

Of which transitional

N/A

N/A

N/A

N/A

N/A

N/A

N/A

0%

E
T

A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL;
N/EL
(f)

EL; N/EL (f)Renovation of existing buildings

9%

Acquisition and ownership of buildings

1%

CapEx of Taxonomy-eligible but notenvironmentally sustainable activities(not Taxonomy-aligned activities) (A.2)

10%

A. CapEx of Taxonomy eligible
activities (A.1 + A.2)

10%

Prospects
Not all sustainability efforts are recognized yet under the EU Taxonomy
Regulation. For more information about UMG’s sustainability initiatives,
including our commitment to support industry transformation and thevalidation of our science-based targets, please see the Environment section ofthis report.
Management is committed to monitoring EU Taxonomy developments closely
and to assessing new requirements as the basis for its annual disclosures.

MUSIC IS UNIVERSAL Annual Report 2023 | 185

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, in 2022 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 internal risk
management systems. The Audit Committee oversees ESG topics and covers
them in its agenda, including climate-related risks.
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.

MUSIC IS UNIVERSAL Annual Report 2023 | 186

NON-FINANCIAL INFORMATIONThe Senior Vice President of Global ESG & Sustainability participates in twomonthly 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 2023 | 187

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 — suchas those proposed by the EU’s Non-Financial Reporting Directive(NFRD) and its successor, the Corporate Sustainability Reporting
Directive (CSRD), as well as the EU Taxonomy and the UnitedStates Securities and Exchange Commission (SEC) — 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 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
revenues, physical product emissions account for a large
portion (44%) of total scope 3 emissions in 2023. Physicalproduct emissions include emissions from the manufacturing,logistics, and end-of-life treatment of vinyl, optical, andmerchandise products.

Low

Moderate

Moderate

Reputation

Reputational or legal implications around failure to meetenvironmental targets or other sustainability goals.
UMG has set near-term science-based targets. 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 products and services and may erode
shareholder value.

Low

Low

Moderate

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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.
Medium to Long term
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,
47% of UMG’s direct operations (by m2 area) are powered by electricity
from renewable sources. In addition, UMG actively pursues internationallyrecognized environmental certifications, such as BREEAM, LEED, and
ENERGY STAR. In 2023, 28% of UMG’s direct operations (by m2 area) havereceived environmental certifications.

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 2023 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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NON-FINANCIAL INFORMATION

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 2023, we became the first major standalone music company to announce
science-based targets approved by the Science-Based Targets initiative (SBTi).
We committed to reduce:•

Absolute scope 1 and 2 greenhouse gas (GHG) emissions 58% by 2032 from a2019 base year, an ambition which is in line with a 1.5°C trajectory.

•

Scope 3 GHG emissions from purchased goods & services, capital
goods, fuel- and energy-related activities, upstream transportation anddistribution, waste generated in operations, business travel, and employee
commuting by 62% per EUR value added1 within the same timeframe.

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.
This year we also updated our comprehensive GHG Inventory and Management
Plan and improved the configuration of our data collection system. Our
GHG Management Plan provides a framework by which we will measure theperformance and effectiveness of our climate-related risk management efforts
in the near and long-terms.
1“Value added" is defined by the SBTi as earnings before interest and depreciation (EBITDA) + all
personnel costs. See page 24 of the SBTi Corporate Manual.

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NON-FINANCIAL INFORMATIONOur 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.
The 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

On-site generated renewable energy
Natural gas

Domestic fuel oil

Steam/imported heat used for space heating
Diesel used by the fleet of vehicles

Gasoline used by the fleet of vehicles
Total energy consumption
Waste

MWh

2023

14,72320221

15,467MWh

11,09811,307

MWh GCV

5,155

6,061

MWh

liters
MWh

79

68

4,896
3,980

5,319
5,414

liters111,614

157,381GJ

126,126

152,686

liters332,334

274,327

Professional WEEE produced

metric tonnes

26

26

Non-hazardous waste produced

metric tonnes

1,828

1,659

metric tonnes

53

67

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

Merchandise scrap waste produced

Merchandise scrap waste recycled or recovered

Hazardous waste (excluding WEEE) produced

metric tonnes
metric tonnes
metric tonnes
metric tonnes

22

813
50

1

24

756
59
1

1 FY22 environmental indicators were adjusted in accordance with our internal policy to include data enhancements and corrections for improved accuracy. Adjustments
illustrate year over year progress across our key non-financial indicators. For more information, please see the Non-Financial Reporting Methodology section inthis report.

MUSIC IS UNIVERSAL Annual Report 2023 | 195

NON-FINANCIAL INFORMATIONGreenhouse Gas Emissions

Unit

2023

20221

Scope 1 greenhouse gas emissions2

tCO2e

1,945

2,398

Stationary sources

tCO2e

967

1,402

12

13

Mobile sources

tCO2e

Of which refrigerants

tCO2e

Of which domestic fuel oil

tCO2e

Of which natural gas

Scope 2 greenhouse gas emissions (location-based)3

tCO2e

977

996

12

283

943

1,106

7,557

7,323

tCO2e

8,272

tCO2e

715

8,247

Of which electricity (including electricity from renewable sources)

tCO2e

Scope 2 greenhouse gas emissions (market-based)

tCO2e

5,627

6,192

tCO2e

715

924

Of which steam/imported heat4

Of which electricity (including electricity from renewable sources)
Of which steam/imported heat

Scope 3 greenhouse gas emissions

5

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 9: Downstream transportation and distribution
Category 12: End-of-life treatment of sold products
Category 14: Franchises

Category 15: Investments

6

tCO2e

924

4,912

5,268

tCO2e

469,588448,319tCO2e

19,94812,468

tCO2e
tCO2e

287,537

290,622

3,443

3,595

tCO2e

51,41957,006tCO2e

53,71834,109

tCO2e

1,910

1,652

tCO2e
tCO2e
tCO2e
tCO2e
tCO2e

493

6,036

440

6,042

4,454
8,218

32,412

3,568
8,399

30,4181 FY22 emissions were adjusted in accordance with our internal policy to include the addition of new categories resulting from our SBTi validation exercise (Category
9: Downstream transportation and distribution, Category 14: Franchises, and Category 15: Investments), as well as data enhancements and corrections for improved
accuracy. Adjustments illustrate year over year progress across our key non-financial indicators. For more information, please see the Non-Financial Reporting
Methodology section in this report.
2 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.
3 Scope 2 includes indirectly emitted greenhouse gas emissions resulting from the use of purchased electricity, steam/imported heat, and cooling. Scope 2 location-basedreflects the average emissions intensity of grids on which energy consumption occurs.
4 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.
5 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.
6 Emissions are calculated using the data available as at Q3 2023 for Investments in equity affiliates to allow time for data validation, consolidation, and reporting.

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NON-FINANCIAL INFORMATION

Social Indicators

2023% of Total

2022

Headcount% of Total

Headcount

Total Headcount10,290

100%

9,992

100%

Men

5,044

49%

4,913

49%

Managers

Of which managers

Women

Of which managers

Permanent employees
Temporary employees
By Geographic Region
Africa

3,369

33%

1,939

19%

5,246

51%

1,430

14%

9,627

94%

663

6%

108

1%

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

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

North America

4,051

39%

3,951

39%

Asia-Pacific

1,540

15%

1,498

15%

Total hires/new arrivals

1,736

17%

2,133

21%

Total departures

1,460

14%

1,614

16%

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

280

4,311

7%

208

2%

123

1%

34

0%

68

1%

350

265

4,161

1,626
1,295
887
212
99
35
62

3%

42%

16%
13%
9%
2%
1%
0%
1%

3%

319

144

1%

174

2%

9,897

96%

8,992

90%

2,522

25%

3,721

37%

327

Training hours

11%

677

Number of staff trained in languages

Number of staff who have received other types of training

13%

1,110

4,759

Number of staff trained in management

42%

1,296

Number of staff trained in soft skills

Number of staff trained in hard skills/technical skills

3%

46%
3%

3,892
287

3%

39%
3%

1,455

14%

1,471

15%

101,660-

74,456

-

948

9%

1,420

14%

1 Compliance training topics included Code of Conduct, Anti-bribery, Antitrust, ESG, Fraud Awareness, Information Security, Preventing Harassment, Radio Promotion
Compliance, and Health and Safety. Training timetables and topics offered are region and/or function specific where needed.

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NON-FINANCIAL INFORMATION

2023

Absenteeism

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

2022

3,049

30%

2,748

28%

23,806-

19,740-54,568

Of which for illness

Of which for maternity, paternity and adoption leave

24,269Health and Safety

Headcount-

46,793-24,257

Number of workplace accidents resulting in lost work time11-

Number of fatal accidents0-

Number of days lost due to workplace accidents

42

Frequency rate

0.62

1

Severity rate2

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

Part-time employees
Global Turnover rate – Permanent Headcount3
Voluntary Turnover rate – Resignations

Involuntary Turnover rate – Permanent Headcount

Global Turnover rate - Permanent Headcount, Women5Involuntary Turnover rate - Permanent Headcount, Women

-

-

0.58

-

-

1

-

0

-

-

-

0

-

-

0

-

-

4

-

9,972

97%

9,709

97%

11.53%-

13.95%

-

4.50%

-

4.39%

-

7.94%

5

0

351

4

12.43%

5

-

-

1

7.03%

4

10

3

318

Turnover-0.02034

1

Full-time employees

-

-

-

0

Organization of Working Time

Voluntary Turnover rate - Resignations, Women

0.00237-% of Total

Headcount

4.49%

3%

-

283

9.55%

-

14.13%

-

3.07%

-

3%

11.06%-

1 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.
2 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.
3 UMG updated its turnover rate formulas in 2022 to align with guidance from the Corporate Sustainability Reporting Directive (CSRD). 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).
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.

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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 reviewed and updated annually to ensure the consistent application ofdefinitions and rules for data gathering, validation, and consolidation.
Reporting Scope Overview
Unless otherwise indicated, the data is consolidated as of December 31, 2023.
The limited assurance engagement pertains to the select consolidated data for2023 and does not cover prior year 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.

Social Reporting Scope
The social reporting scope for workforce demographics indicators covers
all UMG employees, unless otherwise indicated. Scope for qualitative nonworkforce demographic indicators applies to the following territories, unlessotherwise indicated: Australia, France, Germany, Japan, Latin America, South
Africa, the United Kingdom and the United States.
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
GRI is the independent, international organization that helps businesses and other organizations
take responsibility for their impacts, by providing them with the global common language tocommunicate those impacts. (www.globalreporting.org).
SASB Standards help companies disclose relevant sustainability information to their investors(https://sasb.ifrs.org).

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NON-FINANCIAL INFORMATION

Environmental Reporting Scope
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 2023, the reporting scope applied to 56
countries and 160 properties, which represents 97% of our property portfolio
and covers all of our employee base geographically. Properties in scope forenvironmental reporting include UMG offices/facilities and studios with active
leases in 2023. Properties are considered out of scope if they meet one of thefollowing criteria: the property closed prior to 2023 and UMG does not have an
active lease; the property is under construction; or the property is land.
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’sapproach is to collect global data for scope 3 emissions, where available. In
cases where global data is not easily obtained, UMG reduces its scope to cover
its top five territories (United States, United Kingdom, Japan, Germany, andFrance), which represent material revenue for UMG’s operating companies (seeNote 3. Segment data). UMG’s boundary is 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.
Scope 3 Inventory

Scope 3 Category1

2023

2022

Category 1 – Purchased Goods and Services

Included

IncludedCategory 3 - Fuel- and Energy-related Activities

Included

IncludedCategory 2 - Capital Goods

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

Category 7 - Employee Commuting

Category 9 – Downstream Transportation and Distribution
Category 12 - End-of-Life Treatment of Sold Products
Category 14 – Franchises

2

Category 15 – Investments

Included
Included
Included
Included
Included
Included
Included
Included
Included

Included
Included
Included
Included
Included

Not Included
Included

Not Included
Not Included

1 Our scope 3 science-based target boundary includes the following categories: purchased goods and services; capital goods; fuel and energy-related activities; upstream
transportation and distribution; waste generated in operations; business travel; and employee commuting.
2 Category 14 - Franchises was previously disclosed as “not relevant” in the 2022 annual report. Based on instruction from the Science-based Targets Initiative (SBTi),
UMG added this category in 2023 to include emissions associated with the licensing of intellectual property for use in physical products manufactured and sold by
third parties, particularly related to emissions for licensed merchandise. Category 14 emissions are also included in the adjusted GHG emissions figures for prioryear reporting.

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NON-FINANCIAL INFORMATION

Scope 3 Exclusions

Scope 3 Category

Relevance to UMG

Category 8 - Upstream Leased Assets

Not Relevant - emissions from leased assets are reported in scope 1 and scope 2

Category 11 - Use of Sold Products

Not Relevant - UMG does not sell products with direct use-phase emissions

Category 10 - Processing of Sold Products
Category 13 - Downstream Leased Assets

Not Relevant - UMG does not sell intermediate products

Not Relevant - UMG does not lease assets to other entities

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 emissions 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.
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.
Social Indicators (Workforce Demographics)
Headcount
Headcount-related indicators are expressed in number of employees at
December 31, 2023.
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.

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NON-FINANCIAL INFORMATION

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.
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 Indicators
Greenhouse 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 the useof electricity, steam/imported heat, 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 which energy consumption occurs. Scope 2 market-based considers
the tariffs and energy mix of UMG’s sites which UMG has specificallychosen, taking into consideration the confirmed use of electricity fromrenewable sources including wind, solar, geothermal, biomass, and hydrothrough 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, downstream
transportation and distribution, end-of-life treatment of sold products,
franchises, and investments.

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NON-FINANCIAL INFORMATIONGreenhouse 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•

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.
Data is requested for Q1-Q3 and estimates are applied for Q4 to allow time fordata validation, consolidation, and reporting. Estimation of emissions follows
one of the two methodologies:
1.

Historical Average: uses quarterly activity data for previous years to
calculate the historical average ratio of total Q1-Q3 to Q4 activity data. Thisratio is then applied to the Q1-Q3 activity data in 2023 to estimate for Q4.

2.

Current Year Average: estimates Q4 activity volume using the average(mean) quarterly activity volume for Q1-Q3 in 2023.

The Historical Average method is preferred because it considers seasonal
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 consider data from as many previous years as possible, with the 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.

1
2
3
4
5
6

7

Department for Business, Energy & Industrial Strategy (BEIS) Conversion Factors
IEA Emission Factors
United States Environmental Protection Agency (EPA) eGrid Factors
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 2023 | 203

NON-FINANCIAL INFORMATION

Reporting Tools, Consolidation, and Controls
UMG utilizes a global data collection and consolidation platform forenvironmental and social demographics reporting. The platform is designed toinclude mathematical coherency checks to ensure data consistency 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.

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NON-FINANCIAL INFORMATION

Limited Assurance Report of the Independent Auditor on
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 accompanying annual report for the year 2023 of Universal Music Group N.V.
at Hilversum.
Based on our procedures performed and the assurance information obtained,
nothing has come to our attention that causes us to believe that the selectedindicators are not prepared, in all material respects, in accordance with theapplicable criteria as included in the section “Criteria”.
The selected indicators are disclosed in the Information Tables section of theannual report and consist of:•••

Global Turnover rate – Permanent HeadcountVoluntary Turnover rate – Resignations
Greenhouse gas emissions◦
Scope 1 emissions◦
Scope 2 emissions (location-based and market-based)◦
Scope 3 emissions (Categories 1, 2, 3, 4, 5, 6, 7, 9, 12, 14 and 15)

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 ofbeoordeling van historische financiële informatie (attest-opdrachten)’(Assurance engagements other than audits or reviews of historical financial
information (attestation engagements)). Our responsibilities in this regard
are further described in the section ‘Our responsibilities for the assurance
engagement on the selected indicators’ 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
with respect 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 forProfessional Accountants).
We believe that the assurance evidence we have obtained is sufficient andappropriate to provide a basis for our conclusion.
Criteria
The criteria applied for the preparation of the selected indicators are the criteria
developed by Universal Music Group N.V. and are disclosed in the Non-Financial
Reporting Methodology section of the annual report.
The comparability of selected indicators between entities and over time may
be affected by the absence of a uniform practice on which to draw, to evaluate

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NON-FINANCIAL INFORMATION

and measure this information. This allows for the application of different, but
acceptable, measurement techniques.
Consequently, the selected indicators need to be read and understood together
with the criteria applied.
Corresponding Information Not Assured
The selected indicators “Scope 1 emissions”, “Scope 2 emissions (locationbased and market-based)” and “Scope 3 emissions (Categories 1, 2, 3, 4, 5, 6, 7, 9,
12, 14 and 15)” for the baseline year 2019, “Scope 3 emissions (Categories 9, 14
and 15)” prior to 2023, and any restatements of 2022 data have not been part ofan assurance engagement. Consequently, the corresponding selected indicatorsand thereto related disclosures for “Scope 1 emissions”, “Scope 2 emissions(location-based and market-based)” and “Scope 3 emissions (Categories 1, 2,
3, 4, 5, 6, 7, 9, 12, 14 and 15)” for the baseline year 2019, “Scope 3 emissions(Categories 9, 14 and 15)” prior to 2023, and any restatements of 2022 data are
not assured. Our conclusion is not modified in respect of this matter.
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.
In the selected indicators, the calculations to determine “Scope 3 emissions(Categories 1, 2, 3, 4, 5, 6, 7, 9, 12, 14 and 15)” include assumptions and sourcesfrom third parties. The assumptions and sources used are disclosed in the NonFinancial Reporting Methodology section of the annual report. We have assessedthat these assumptions and external sources are plausible and appropriate, but
we have not performed procedures on the content of these assumptions andexternal sources.
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 of these matters.
Responsibilities of the Board of Directors for the Selected Indicators
The Executive Directors of the Board of Directors are responsible for the
preparation of the selected indicators in accordance with the criteria as
included in the section “Criteria”. The Executive Directors are also responsible
for selecting and applying the criteria and for determining that these criteria aresuitable for the legitimate information needs of the intended users, considering
applicable law and regulations related to reporting. The choices made by the
Executive Directors regarding the scope of the selected indicators and thereporting policy are summarized in the Non-Financial Reporting Methodology
section of the annual report.
Furthermore, the Executive Directors are responsible for such internal control as
they determine is necessary to enable the preparation of the selected indicatorsthat are free from material misstatement, whether due to fraud or error.
The Non-Executive Directors of the Board of Directors are responsible foroverseeing the reporting process of the selected indicators of Universal Music
Group N.V.

MUSIC IS UNIVERSAL Annual Report 2023 | 206

NON-FINANCIAL INFORMATIONOur Responsibilities for the Assurance Engagement on the Selected Indicators
Our responsibility is to plan and perform the assurance engagement in amanner that allows us to obtain sufficient and appropriate assurance evidence
for our conclusion.
Our assurance engagement is aimed to obtain a limited level of assurance
to determine the plausibility of the selected indicators. The procedures varyin nature and timing from, and are less in extent than for, a reasonableassurance engagement. The level of assurance obtained in a limited assurance
engagement is therefore substantially less than the assurance that is obtained
when a reasonable assurance engagement is performed.
We apply the ’Nadere voorschriften kwaliteitssystemen’ (NVKS, regulations for
quality management systems) and accordingly maintain a comprehensive
system of quality management including documented policies and procedures
regarding compliance with ethical requirements, professional standards andother relevant legal and regulatory requirements.
Our assurance engagement included amongst others:
•

•

•

•

Performing an analysis of the external environment and obtaining an
understanding of the sector, insight into relevant sustainability themes andissues and the characteristics of the company as far as relevant to theselected indicators
Evaluating the appropriateness of the criteria applied, their consistent
application and related disclosures on the selected indicators. This
includes the evaluation of the reasonableness of estimates made by the
Executive Directors
Obtaining through inquiries a general understanding of the internal
control environment, the reporting processes, the information systems andthe entity’s risk assessment process relevant to the preparation of theselected indicators, without obtaining assurance information about theimplementation or testing the operating effectiveness of controls
Identifying areas of the selected indicators where misleading or unbalanced
information or a material misstatement, whether due to fraud or error,
is likely to arise. Designing and performing further assurance procedures
aimed at determining the plausibility of the selected indicators responsive
to this risk analysis. These procedures consisted amongst others of:◦
Making inquiries of management and relevant staff at corporate andbusiness level responsible for the sustainability strategy, policy andresults relating to the selected indicators◦
Interviewing relevant staff responsible for providing the information
for, carrying out controls on, and consolidating the data in theselected indicators◦
Assessing the suitability and plausibility of assumptions and sourcesfrom third parties used for the calculation underlying “Scope 3
emissions (Categories 1, 2, 3, 4, 5, 6, 7, 9, 12, 14 and 15)” as includedin the Information Tables section of the annual report and further
explained in the Non-Financial Reporting Methodology section of theannual report.
◦
Obtaining assurance evidence that the selected indicators reconcile
with underlying records of Universal Music Group N.V.
◦
Reviewing, on a limited sample basis, relevant internal andexternal documentation◦
Considering the data and trends

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NON-FINANCIAL INFORMATION••

Reading the information in the annual report that is not included in thescope of our assurance engagement to identify material inconsistencies, ifany, with the selected indicators
Considering whether the selected indicators are presented and disclosed
free from material misstatement in accordance with the criteria applied

Amsterdam, 28 March 2024
Ernst & Young Accountants LLP
R.T.H. Wortelboer

MUSIC IS UNIVERSAL Annual Report 2023 | 208

NON-FINANCIAL INFORMATIONESG INDEXESGRI Index

This report was prepared in accordance with the GRI 2021 Sustainability
Reporting Standards. Responses are omitted where data may be unavailable ordue to confidentiality constraints.

Disclosure

GRI 2: General Disclosures 2021

Reference

2-1 Organizational details

See the The Governance Structure section and the UMG Organization website.

2-2 Entities includedin the organization’ssustainability reporting

See "Reporting Scope Overview" in the Non-Financial Reporting Methodology section andNote 26. List of consolidated entitites. The entities included in UMG's non-financial reportingalign with the entities included in UMG's financial reporting.

2-3 Reporting period, frequency
and contact point

This report covers sustainability activities from January 1, 2023 to December 31, 2023.
The non-financial reporting schedule is repeated annually and aligns with the financial
reporting schedule. Contact investorrelations@umusic.com for questions.

2-4 Restatements of information

See the Information Tables section. The restatements of 2022 figures illustrate UMG's yearover-year progress across key non-financial indicators.

2-5 External assurance

See the Limited Assurance Report of the Independent Auditor on Selected
Indicators section.

2-6 Activities, value chain andother business relationships

See the About UMG section.

2-7 Employees

See the Social Indicators section and "Social Indicators (Workforce Demographics)" in the
Non-Financial Reporting Methodology section. Reporting on the breakdown of employee
categories by region and gender is omitted based on information availability.

2-9 Governance structure
and composition

See the Our Approach, The Governance Structure, The Board, and Bios Board of Directors
sections. Additionally, please see the Board of Directors and Committees pages on the UMG
Investor Relations website.

2-10 Nomination and selection of
the highest governance body

See The Board section, Nomination Committee Regulations (pp.1-4), and Board Diversity
Policy (p.1).

2-11 Chair of the highest
governance bodySee "Corporate Executives" in the Organizational and Reporting Structure section and Board
Regulations (pp. 6-10; 16-18).

2-12 Role of the highest
governance body in overseeing
the management of impacts

See "ESG Integration" in the Governance section and "Responsibilities of the Board of
Directors for the Selected Indicators" in the Limited Assurance Report of the Independent
Auditor on Selected Indicators section.

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NON-FINANCIAL INFORMATION

Disclosure

GRI 2: General Disclosures 2021

Reference

2-13 Delegation of responsibility for
managing impacts

See "ESG Integration" in the Governance section.

2-14 Role of the highest governancebody in sustainability reporting

See "ESG Integration" and "Material Topics" in the Governance section and"Responsibilities of the Board of Directors for the Selected Indicators" in the Limited
Assurance Report of the Independent Auditor on Selected Indicators section.

2-15 Conflicts of interest

See "Conflicts of Interest and Related Party Transactions" in The Board section and
Board Regulations (pp. 16-18).

2-16 Communication ofcritical concerns

See the Risk and Risk Management section and Whistleblowing Policy. Reporting on thenumber and nature of critical concerns communicated to the Board is omitted basedon confidentiality constraints.

2-17 Collective knowledge of thehighest governance bodySee "ESG Integration" in the Governance section and Board Regulations (p. 13).

2-18 Evaluation of the performance ofthe highest governance bodySee the Limited Assurance Report of the Independent Auditor on Selected
Indicators section.

2-19 Remuneration policies

See the Remuneration Report section, Note 23. Share-based compensation plans, and"Compensation & Benefits" in the Social section. Additionally, please see Executive
Directors Remuneration Policy and Non-Executive Directors Remuneration Policy.

2-20 Process todetermine remuneration

See the Remuneration Report section, Note 23. Share-based compensation plans, and"Compensation & Benefits" in the Social section. Additionally, please see Executive
Directors Remuneration Policy and Non-Executive Directors Remuneration Policy.

2-21 Annual total compensation ratio

See "Remuneration and Company Performance Development" in the Remuneration
Report section.

2-22 Statement on sustainable
development strategy

See the We are Universal section.

2-23 Policy commitments

See "Key Actions in 2023" in the Sustainability section, the Our Commitments section,and "Operating with Integrity" in the Governance section.

2-24 Embedding policy commitments

See the Our Commitments section and "Operating with Integrity" in the
Governance section.

2-25 Processes to remediate
negative impacts

See the Our Commitments section, Risk and Risk Management section, andWhisteblowing Policy.

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NON-FINANCIAL INFORMATION

Disclosure

GRI 2: General Disclosures 2021

Reference

2-26 Mechanisms for seeking
advice and raising concerns

See the Risk and Risk Management section and Whisteblowing Policy.

2-28 Membership associations

UMG is a member of several membership and industry associations, including
environmentally-focused coalitions (such as the Music Climate Pact and the Music
Industry Climate Collective (MICC)), global trade bodies (such as the International
Federation of the Phonographic Industry (IFPI) and the International Confederation of Music
Publishers (ICMP)), national groups (like the Recording Industry Association of America(RIAA) and the National Music Publishers Association (NMPA) in the U.S.), and many othersin the countries where we operate.

2-29 Approach to
stakeholder engagement

See the Stakeholder Analysis section.

2-30 Collective
bargaining agreements

See the Social Indicators section. Reporting on the global percentage of employees coveredby collective bargaining agreements is omitted based on information availability.

GRI 3: Material Topics 2021
3-1 Process to determinematerial topics

See "Material Topics" in the Governance section. Material topics were defined by subject
matter experts and UMG employees representing a cross-section of business operations,
including: Bravado; Business & 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; and Universal Music Publishing Group.

3-2 List of material topics

See "Material Topics" in the Governance section.

3-3 Management ofmaterial topics

See "Material Topics" in the Governance section and Our Commitments section.

GRI 302: Energy 2016

302-1 Energy consumption within
the organization

See the Environmental Indicators and Non-Financial Reporting Methodology sections.

302-4 Reduction ofenergy consumption

See the Environmental Indicators and Non-Financial Reporting Methodology sections.

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NON-FINANCIAL INFORMATION

Disclosure

Reference

GRI 305: Emissions 2016305-1 Direct (Scope 1) GHG emissions See the Greenhouse Gas Emissions and Non-Financial Reporting Methodology sections.
Reporting on gases included in the calculation is omitted based on data availability. UMG
does not generate any CO2 emissions from bioenergy use/production and/or biomass
feedstock production for bioenergy.
305-2 Energy indirect (Scope 2)
GHG emissions

See the Greenhouse Gas Emissions and Non-Financial Reporting Methodology sections.
Reporting on gases included in the calculation is omitted based on data availability.

305-3 Other indirect (Scope 3)
GHG emissions

See the Greenhouse Gas Emissions and Non-Financial Reporting Methodology sections.
Reporting on gases included in the calculation is omitted based on data availability.
For scope 3 value chain emissions, UMG currently does not have any agreements with
suppliers to use bio-based sources of fuel in the production of our purchased goods
and services.

305-4 GHG emissions intensity

See the Non-financial Key Figures 2023 section. Reporting on gases included in thecalculation is omitted based on data availability.

305-5 Reduction of GHG emissions

See the Greenhouse Gas Emissions section and "Managing Our Footprint" in theEnvironment section.

GRI 308: Supplier Environmental Assessment 2016308-1 New suppliers thatwere screened using
environmental criteria

See "Supply Chain Management" in the Governance section. The percentage of new
suppliers that were screened using environmental criteria is omitted due to information
availability, but we plan to work towards collecting and reporting this information in
the future.

308-2 Negative environmental
impacts in the supply chain andactions taken

See "Supply Chain Management" in the Governance section. Reporting on number ofsuppliers assessed, number of impacts identified, and percentage of suppliers identified
as having negative impacts omitted based on confidentiality constraints.

GRI 401: Employment 2016

401-1 New employee hires andemployee turnoverSee the Social Indicators section. Reporting on the breakdown of hiring by age, gender,and region is omitted based on information availability. Reporting on the breakdown of
turnover by age group and region is omitted based on information availability.

401-2 Benefits provided to full-time
employees that are not provided totemporary or part-time employees

See "Compensation & Benefits" in the Social section and UMG Careers website.

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NON-FINANCIAL INFORMATION

Disclosure

GRI 404: Training and Education 2016

Reference

404-1 Average hours of training per year
per employee

See the Social Indicators section. Reporting on the breakdown of training hours bygender and employee category is omitted based on information availability.

404-2 Programs for upgrading employee
skills and transition assistance programs

See "Employee Experience and Development" in the Social section.

GRI 405: Diversity and Equal Opportunity 2016405-1 Diversity of governance bodies
and employees

GRI 414: Supplier Social Assessment 2016

See the Social Indicators section and "Diversity, Equity & Inclusion" in the Social
section. Reporting on the breakdown of governance bodies and employees by age
group is omitted based on information availability.

414-1 New suppliers that were screenedusing social criteria

See "Supply Chain Management" in the Governance section. The percentageof new suppliers that were screened using social criteria is omitted due toinformation availability, but we plan to work towards collecting and reporting thisinformation in the future.

414-2 Negative social impacts in the supply
chain and actions taken

See "Supply Chain Management" in the Governance section. Reporting on
number of suppliers assessed, number of impacts identified, and percentage
of suppliers identified as having negative impacts omitted based on
confidentiality constraints.

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NON-FINANCIAL INFORMATIONSASB Index
This index was prepared in accordance with the SASB Media & Entertainment
and Internet Media & Services Standards. Responses are omitted where data
may be unavailable or due to confidentiality constraints.

Disclosure

Media Pluralism

Reference

SV-ME-260a.1 Percentage of gender and racial/ethnic
group representation for (1) management, (2)professionals, and (3) all other employees

See "Diversity, Equity & Inclusion" in the Social section and
the Social Indicators section. Reporting on the breakdownof management by racial/ethnic group is omitted based on
information availability.

SV-ME-260a.2 Description of policies and procedures toensuring pluralism in news media content

See "Diverse & Inclusive Content" in the Social section.

Intellectual Property Protection & Media Piracy

SV-ME-520a.1 Description of approach to ensuring
intellectual property (IP) protection

Activity Metrics

SV-ME-000.B Total number of media productions andpublications produced

Environmental Footprint of Hardware Infrastructure
TC-IM-130a.1 (1) Total energy consumed, (2) percentage
grid electricity, and (3) percentage renewable

See "Laws and Regulations" in the Risk and Risk Management
section, "Operating with Integrity" and "Piracy & Content Protection"in the Governance section, and Code of Conduct (pp. 22-24).

See the Profile section.

See the Environmental Indicators section, "Managing Our Footprint"
in the Environment section, and the Non-Financial Reporting
Methodology section.

Data Privacy, Advertising Standards & Freedom of Expression

TC-IM-220a.1 Description of policies and practices relating See "Laws and Regulations" in the Risk and Risk Management
to behavioural advertising and user privacy
section, "Operating with Integrity" and "Privacy & Cybersecurity"in the Governance section, Code of Conduct (pp. 25, 32), andPrivacy Policy.

Data Security

TC-IM-230a.2 Description of approach to identifying andaddressing data security risks, including use of thirdparty cybersecurity standards

Employee Recruitment, Inclusion & Performance

TC-IM-330a.3 Percentage of gender and racial/ethnic
group representation for (1) management, (2) technicalstaff, and (3) all other employees

Activity Metrics

TC-IM-000.A Entity-defined measure of user activity

See "Laws and Regulations" in the Risk and Risk Management
section and "Operating with Integrity" and "Privacy & Cybersecurity"in the Governance section.

See "Diversity, Equity & Inclusion" in the Social section and
the Social Indicators section. Reporting on the breakdownof management by racial/ethnic group is omitted based on
information availability.

See the Music Engagement Mix section.

MUSIC IS UNIVERSAL Annual Report 2023 | 214

NON-FINANCIAL INFORMATIONUN SDG Index
The United Nations’ 2030 Agenda for Sustainable Development was adopted
by all Member States in 2015 and provides a shared blueprint for peace andprosperity for people and the planet, now and into the future. At its heart are
the 17 Sustainable Development Goals (SDGs), which are an urgent call for action
by all countries - developed and developing - in a global partnership. They
recognize that ending poverty and other deprivations must go hand-in-handwith strategies that improve health and education, reduce inequality, and spur
economic growth – all while tackling climate change and working to preserve
our oceans and forests.
Our Commitments align with the United Nations Sustainable Development Goals(UN SDGs), as demonstrated in the table below.

SectionUN SDG Mapping

Environment

Managing Our Footprint•••

Goal 7: Affordable and Clean Energy
Goal 12: Responsible Consumption and Production
Goal 13: Climate Action

Reimagining Our Products & Packaging••

Goal 12: Responsible Consumption and Production
Goal 13: Climate Action

Driving Industry Transformation••

Goal 12: Responsible Consumption and Production
Goal 13: Climate Action

Investing In Our Workplace

•
•
•
•
•

Goal 4: Quality Education
Goal 5: Gender Equality
Goal 8: Decent Work and Economic Growth
Goal 9: Industry, Innovation and Infrastructure
Goal 10: Reduced Inequalities

Supporting Employee and Artist Wellbeing

•
•
•
•
•

Goal 3: Good Health and Well-being
Goal 5: Gender Equality
Goal 8: Decent Work and Economic Growth
Goal 9: Industry, Innovation and Infrastructure
Goal 10: Reduced Inequalities

Supporting Our Communities

•
•
•
•
•
•

Goal 3: Good Health and Well-being
Goal 4: Quality Education
Goal 5: Gender Equality
Goal 8: Decent Work and Economic Growth
Goal 9: Industry, Innovation and Infrastructure
Goal 10: Reduced Inequalities••

Goal 16: Peace, Justice and Strong Institutions
Goal 17: Partnerships for the Goals

SocialGovernanceOperating With Integrity

MUSIC IS UNIVERSAL Annual Report 2023 | 215

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, one of whom, being Haim Saban,
was appointed to the Board by the General Meeting on May 11, 2023:

Name

Function

Sir Lucian Grainge

Executive Director, Chairman and Chief
Executive Officer

Vincent Vallejo
Sherry Lansing
Antoine Fiévet
Bill Ackman

Cathia Lawson-Hall
Cyrille Bolloré
Haim Saban

James Mitchell
Luc van Os

Manning Doherty

Margaret Frerejean-Taittinger
Nicole Avant

Executive Director, Deputy Chief Executive
Officer, Corporate

Non-Executive Director, 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
Non-Executive Director

Effective September 30, 2023, Anna Jones, former Non-Executive Director,
resigned from the Board to focus on new professional commitments.

Diversity and inclusion

The elements of a diverse and inclusive composition of the Board are laid downin the D&I Policy as per articles 2:142b and 2:166 of the Dutch Civil Code andbest practice provision 2.1.5 of the Code. In accordance with the D&I Policy, theNon-Executive Directors are committed to promoting diversity and inclusionin the boardroom and to ensuring that all Non-Executive Directors are able tocontribute to Board discussions.

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NON-EXECUTIVE DIRECTORS REPORT

They furthermore have the aspiration:•
to improve or safeguard gender diversity among the Non-Executive
Directors, such that at least one third of the Non-Executive Directors is
female and at least one third of the Non-Executive Directors is male,thereby at all times taking into account the Dutch statutory gender diversity
requirements with regards to non-executive directors.
•
to improve or safeguard diversity with regards to age, nationality, ethnicity
and cultural or other background as well as to create and maintain avariation in expertise, experience, competencies, other personal qualities
and perspectives among the Non-Executive Directors.
The Non-Executive Directors are further committed to considering candidates
for Non-Executive Director positions from a wide pool, including candidates withno prior publicly listed company board level experience.
The elements as laid down in the D&I Policy with respect to the composition of
the Board are all important drivers in the selection procedure and will all beconsidered when identifying a candidate for a Non-Executive Director position.
However, when identifying a candidate, the qualifications of such candidate
and the requirements for the Non-Executive Director position shall in principle
always prevail.
The Non-Executive Directors consider that their current composition is diverse
with regards to age, nationality, ethnicity and cultural or other background andhas a variation in expertise, experience, competencies, other personal qualities
and perspectives, and with women representing 36% of all Non-Executive
Directors, also in line with the gender diversity requirements included in the
D&I Policy and Dutch law. Among the Non-Executive Directors, there are sevennationalities (American, British, Canadian, Dutch, French, Israeli and Togolese)and age ranges between 38 and 79.

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 shareholder base of the Company, the Non-Executive Directors areof the opinion that, in the context of preserving the continuity of UMG andensuring a focus on sustainable long-term value creation, it is in the Company’s
corporate interests and in the interests of the Company’s stakeholders thatamong the Non-Executive Directors, there is a fair and adequate representationof persons who are affiliated with or representing a (group of affiliated)shareholder(s) holding, directly or indirectly, approximately 10% or more of theissued share capital of the Company, even if those persons are considered nonindependent within the meaning of best 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 approximately 10% of the issued share capital of the Company.

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NON-EXECUTIVE DIRECTORS REPORT•••

Cyrille Bolloré who is the Chairman and Chief Executive Officer of the BolloréGroup, one of the Company’s largest shareholders, as well as a member ofthe supervisory board of Vivendi SE which holds approximately 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.
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 2023, the Board held seven meetings, four 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 corporate 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
auditor’s findings and audit report, the auditor selection procedure and thenomination for appointment of Ernst & Young Accountants LLP as the external
auditor for the financial years 2023 up to and including 2025, the external
auditor’s engagement, the (final and interim) dividend proposals, the annual
budget and business plan, the implementation of the 2022 UMG Global Equity
Plan, the remuneration of the Executive Directors, including the selectionof appropriate performance metrics and targets, and of the Non-Executive
Directors, the extension and amendment of Sir Lucian Grainge’s employment
agreement and Sir Lucian Grainge’s nomination for reappointment as Executive
Director for a period of five years ending on May 1, 2028, the nomination forappointment of Haim Saban as (a new) Non-Executive Director, the nominationfor (early) reappointment of Sherry Lansing, Anna Jones and Luc van Os as Non-

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NON-EXECUTIVE DIRECTORS REPORT

Executive Directors, strategy and business updates, including on the Company's
artist-centric approach and initiatives, its response to the opportunities andrisks of (generative) artificial intelligence and its expansion strategy, investor
relations updates, committee updates, the financing of the Company, including
the new issuance under the Euro Medium Term Note program, and any
significant or related party transactions.
Sustainable long-term value creation
The Board, who is responsible for developing a view on sustainable long-termvalue creation by the Company and for formulating a strategy as well as specificobjectives in line with this view, has on numerous occasions spent considerable
time discussing the Company’s strategy, in particular the Company’s artistcentric approach and initiatives, its response to the opportunities and risks of(generative) artificial intelligence and its expansion strategy, at its meetings. 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 his appointment to the Board by the General Meeting on May
11, 2023, Haim Saban attended an educational session on his responsibilities
as a non-executive director of a public limited liability company incorporated
under the laws of the Netherlands, which shares are admitted to listing onEuronext Amsterdam, the regulated market of Euronext Amsterdam N.V.
Evaluation
In the second half of 2023, the Board, under the direction of the Nomination
Committee, conducted a self-assessment to evaluate its own functioning as wellas the functioning of the various committees and the individual Directors. As
part of the assessment, each Director completed an evaluation form, covering
topics such as information provision, frequency and quality of meetings,
Board and committee compositions, functioning of the Board, the various
committees and the individual Directors and access to the Company secretariat,
and was interviewed by an external expert. The results and feedback of theassessment were first discussed among the Chairman of the Board, the chairof the Nomination Committee and the external expert, following which they
were shared with the Nomination Committee members during an executive
session of the Nomination Committee at the end of 2023 (which session was
also attended by the external expert), and consequently with the full Board
during one of its meetings in the first quarter of 2024. Where considerednecessary, or of added value, the chair of the Nomination Committee also had
one-on-one sessions with the individual Directors to discuss their functioning.
With the results and feedback, the Board identified opportunities for growthand improvement as well as specific educational and information needs. The
main conclusion was that since its installation at the time of the Listing,the Board has matured, which has resulted in an improved functioning of
the Board, the various committees and the individual Directors, both in andoutside of meetings. As a result, meetings have become more productive andthe communication among the Directors as well as with the Company has
improved. One point of attention that emerged as part of the assessment was
the composition of the committees, which has since become and will remain arecurring item on the agenda of the Nomination Committee and Board until it
has been appropriately addressed.

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NON-EXECUTIVE DIRECTORS REPORT

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, 2023:

Shareholder

Notification date

Sir Lucian Grainge

November 22, 2023

Bill Ackman1

October 31, 2023

Vincent Vallejo

Cathia Lawson-Hall
Cyrille Bolloré
Luc van Os

November 30, 2023
September 23, 2021

Shares

RSUs

PSUs

PSOs

Voting rights

11,499.00

2,928,540.19

471,013.86

8,624,917.00

11,499.00

186,811,111.00

-

-

-

186,811,111.00-

24,000.00

97,150.00

7,684.58

2,356.00

May 12, 2022

24,000.00

September 23, 2021

105.00

-

-

-

-

-

-

-

-

-

-

97,150.00
2,356.00
105.00

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:

Audit

Committee

Sherry Lansing

Antoine Fiévet

MemberCathia Lawson-Hall

MemberBill Ackman

Cyrille Bolloré

James Mitchell
Luc van Os

Chair

Margaret Frerejean-Taittinger

MemberManning Doherty
Nicole Avant

Remuneration

Nomination

MemberMemberCommittee

Chair

Committee

MemberMemberMemberMemberChairMember

The Audit Committee
The Audit Committee shall advise the Board in relation to its responsibilities,
shall undertake preparatory work for the Board’s decision-making regarding
the supervision of the integrity and quality of the Company’s financial andsustainability reporting and the effectiveness of the Company’s internal risk

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NON-EXECUTIVE DIRECTORS REPORT

management and control systems and shall prepare 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 theBoard on, the effectiveness of the design and operation of the internal risk
management and control systems, including supervising the enforcement of
all applicable laws and regulations and supervising the effect of the Codeof Conduct, (ii) supervising the preparation and submission of financial andsustainability information by the Company, (iii) supervising the compliancewith recommendations, comments and observations of the internal auditor,
the external auditor(s) and any other external party involved in the auditingof the sustainability reporting, (iv) instructing the external auditor(s) and theinternal audit function to inform the Executive Directors and the chair of the
Audit Committee without delay if it or they discover(s) or suspect(s) an instanceof misconduct or irregularity, (v) supervising the functioning of the internal
audit function, (vi) ensuring that the way in which the internal audit function
fulfills its responsibility is assessed by an independent third party at least every
five years, (vii) supervising the policy of the Company on tax planning, (viii)
supervising the financing of the Company, (vix) supervising the applicationsof information and communication technology, including risks relating tocybersecurity and data protection and risks relating to new technologies, (x)maintaining frequent contact and supervising the relationship with the internal
auditor, the external auditor(s) and any other external party involved in theauditing of the sustainability reporting, (xi) implementing the procedure for theselection of the external auditor(s) and submitting a recommendation to the
Non-Executive Directors for the (re)appointment or dismissal of the external
auditor(s) by the General Meeting, (xii) informing the Board of the outcome ofthe statutory audit and explaining how the statutory audit contributed to theintegrity of the financial reporting and what the role of the Audit Committee
was in that process, (xiii) monitoring the financial reporting and submitting
recommendations or proposals to ensure its integrity, (xiv) determining whether,and if so, how the external auditor(s) shall be involved in the content andpublication of financial reports other than the financial statements, (xv) issuinga recommendation on the appointment and dismissal of the senior internal
auditor, (xvi) submitting a proposal to the Board for the engagement of theexternal auditor(s) to audit the financial statements, and (xvii) considering
and, where appropriate, approving for recommendation to the Board the (semiannual) financial statements, the annual budget and major capital expendituresof the Company.
In 2023, the Audit Committee held five meetings, three of which were in-person
meetings and two 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 auditor(s) andother corporate and 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
auditor’s findings and audit report, the auditor selection procedure and thenomination for appointment of Ernst & Young Accountants LLP as the external
auditor for the financial years 2023 up to and including 2025, the external
auditor’s engagement, the external audit plan, the (final and interim) dividend
proposals, the annual budget and business plan, the financing of the Company,
including the new issuance under the Euro Medium Term Note program, theMUSIC IS UNIVERSAL Annual Report 2023 | 222

NON-EXECUTIVE DIRECTORS REPORT

Company’s tax planning policy, compliance, the Internal Audit and Controls
Assurance departments, the internal audit plan and the annual risk and fraud
risk assessments.
In the first two months of 2023, the Audit Committee also regularly discussed,
outside of its official meetings, the auditor selection procedure which wasorganized by the Company, under the responsibility of the Audit Committee, andwhich was led by a selection committee designated by the Audit Committee forsuch purpose. In addition, the chair of the Audit Committee had regular update
meetings with the Chief Financial Officer, the Head of Internal Audit, othercorporate and senior executives, as appropriate, and the external auditor(s).
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 shall advise the Board in relation to its
responsibilities, shall undertake 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 shall prepare 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 with regard to the Executive
Directors and Non-Executive Directors, to be tabled at the annual General
Meeting for adoption and (ii) annually preparing the remuneration report, to betabled at the annual General Meeting for a non-binding advisory vote.
In 2023, the Remuneration Committee held three meetings, two of which werein-person meetings and one of which took place via video call. The meetings
were attended by the Remuneration Committee members as well as by the
Chief People and Inclusion Officer and other corporate and senior executives,
as appropriate.
Among the items discussed were the remuneration report, the remunerationof the Executive Directors, including the selection of appropriate performance
metrics and targets, and of the Non-Executive Directors and the extension andamendment of Sir Lucian Grainge’s employment agreement.
In addition, the chair(s) of the Remuneration Committee had regular update
meetings with the Chief People and Inclusion Officer and other corporate andsenior executives, as appropriate.
The Nomination Committee
The Nomination Committee shall advise the Board in relation to its
responsibilities, shall undertake preparatory work for the Board’s decisionmaking and shall prepare 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) annually assessing the size and composition of the Board, andMUSIC IS UNIVERSAL Annual Report 2023 | 223

NON-EXECUTIVE DIRECTORS REPORT

making a proposal for the profile for Non-Executive Directors, (iii) annually
evaluating the functioning of the Board as a whole, the individual Directors andthe various committees, ensuring that such evaluation periodically takes place
under the supervision of an external expert and reporting on this to the Board,(iv) formulating succession plans for Directors and drawing up a retirement
schedule, (v) making recommendations for the (re)appointment of Directors and(vi) supervising the policy of the Board on the selection criteria and appointment
procedures for senior management.
In 2023, the Nomination Committee held six meetings, two of which were inperson meetings and four of which took place via video calls. The meetings
were attended by the Nomination Committee members as well as by the GeneralCounsel and other corporate and senior executives, as appropriate.
Among the items discussed were the nomination for appointment ofHaim Saban as (a new) Non-Executive Director, the nomination for (early)
reappointment of Sherry Lansing, Anna Jones and Luc van Os as Non-Executive
Directors, the composition of the committees, (the results and feedback of theassessment of) the functioning of the Board, the various committees and theindividual Directors, the search for new candidates for Non-Executive Director
positions and the succession planning and retirement schedule.
Attendance and availability
The following table 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 2023.

Board

Sherry Lansing

7-7Bill Ackman

7-7Antoine Fiévet

Cathia Lawson-Hall
Cyrille Bolloré
Haim Saban

James Mitchell
Luc van Os

Manning Doherty

Margaret Frerejean-Taittinger
Nicole Avant

Audit

Committee

7-7

5-5

7-7

5-5

7-7
2-2
7-7
7-7

5-5

7-7

5-5

6-7
6-7

Remuneration

Nomination

3-3

5-5

Committee

1-1Committee

6-6

3-3
3-3
6-6
6-6
5-6

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.

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NON-EXECUTIVE DIRECTORS REPORTAppreciation

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 2023.

The Non-Executive Directors
Sherry Lansing
Antoine Fiévet
Bill Ackman
Cathia Lawson-Hall
Cyrille Bolloré
Haim Saban
James Mitchell
Luc van Os
Manning Doherty
Margaret Frerejean-Taittinger
Nicole Avant

Hilversum, March 28, 2024

MUSIC IS UNIVERSAL Annual Report 2023 | 225

NON-EXECUTIVE DIRECTORS REPORTREMUNERATION REPORTThis remuneration report offers insight into the remuneration provided to the
Executive Directors and Non-Executive Directors during 2023.
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. In addition, as discussed
further below, the General Meeting on May 11, 2023 approved a supplement to
the Executive Directors’ Remuneration Policy in respect of Sir Lucian Grainge's
remuneration package. The supplement applies to Sir Lucian Grainge only anddoes not affect the remuneration of any other Executive Director.
Unless the context provides otherwise, references in this remuneration
report to the Executive Directors’ Remuneration Policy refer to the policy
as supplemented on May 11, 2023. Where legacy arrangements were inplace for the Executive Directors prior to their appointment to the Board, theExecutive Directors’ Remuneration Policy allows such legacy arrangements tobe respected. The current Remuneration Committee and 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 16, 2024.

Executive Directors’ Remuneration Policy

The objective of the Executive Directors’ Remuneration Policy is to provide
a compensation framework that allows UMG to attract, motivate and retain
highly qualified Executive Directors and to incentivize and reward long-term,
sustainable growth of UMG. In order to ensure that the Executive Directors'
Remuneration Policy is aligned with UMG’s identity, mission and core values,
it is built on the following principles:•
Focus on Company performance by including at-risk pay for the
Executive Directors•
Linkage of performance objectives with UMG’s strategy•
Alignment of Shareholders’ interests with Executive Directors’compensation design•
Ensure competitiveness with relevant markets to support UMG’s ability to
attract, retain, and motivate high caliber talent•
Support a simple and transparent framework

MUSIC IS UNIVERSAL Annual Report 2023 | 226

NON-EXECUTIVE DIRECTORS REPORT

Summary Overview of the Key Remuneration Elements andApproach to the Remuneration for 2023

In 2023, 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

On March 30, 2023, Sir Lucian Grainge entered into an extension of his prioremployment agreement (the Legacy Agreement). The amended and extended
employment agreement (the Current Agreement) runs until May 1, 2028.
Sir Lucian Grainge’s Legacy Agreement, effective for 2023 from January 1,
2023 through March 30, 2023, and Vincent Vallejo’s remuneration for 2023
continued to be subject to legacy arrangements contractually agreed prior totheir appointment to the Board.
The table below sets out the key elements of the remuneration provided in the
Executive Directors’ Remuneration Policy versus the remuneration approach in2023 for Sir Lucian Grainge under both the Legacy Agreement (until effectivenessof the Current Agreement) and the Current Agreement, and for Vincent Vallejo
under his management services agreement. Sir Lucian Grainge’s compensation
is denominated in US dollars and is reflected throughout this Remuneration
Report remuneration report in both euros and US dollars based on the averagemonthly US dollar to euro exchange rate in 2023 of 0.924.

Element

Key remuneration elements per Executive Directors’

Remuneration approach for 2023

Remuneration Policy
Base salary

Fixed cash compensation, aligned with the Executive

Chairman and CEO:

Directors’ experience and scope of responsibilities andintended to attract and retain Executive Directors
necessary to execute the Company's strategy (as set out
above under ‘Strategy’).

Short-term

Variable compensation payable annually in cash, shares,

incentive (STI)1

or a combination thereof, subject to the achievement ofannually pre-established objectives to ensure Executive
Director alignment with, and motivate the achievement of,
the annual business priorities for the relevant year.
On-target STI of up to 300% of annual base salary;maximum STI payout of no more than 200% of target
bonus amount for overachievement of targets.

Legacy Agreement
Annualized €16,186,369

Current Agreement€4,620,343

Deputy CEO:

€960,000

Chairman and CEO:Legacy Agreement

Current Agreement

EBITA Bonus:

Target bonus:

Annual cash bonus equal to

Annual cash bonus with a target

1% of UMG’s EBITA for the

payout of €9,240,685, a minimum

relevant (eliminated entirely forpayout of €0 and a maximum

2023 under the Current Agreement)

payout of €13,861,028 (300% ofbase salary), subject to theContingent Bonus:

achievement of specific financial

Annual contingent cash bonus

targets detailed below.

equal to €10,790,913 subject to
UMG meeting specific financial andnon-financial targets (paid pro rata

MUSIC IS UNIVERSAL Annual Report 2023 | 227

NON-EXECUTIVE DIRECTORS REPORT

Element

Key remuneration elements per Executive Directors’

Remuneration approach for 2023

Remuneration Policy

for 2023 for the period that theLegacy Agreement was in effect, i.e.,from January 1, 2023 through March
31, 2023).
Deputy CEO:
Annual cash bonus with a target payout of €480,000 (50% of base salary), a minimum
payout of €0 and a maximum payout of €960,000 (100% of base salary), subject to theachievement of specific financial targets.

Long-term

Variable compensation payable annually in cash, shares,

incentive (LTI)1

or a combination thereof, subject to the achievementof annually pre-established objectives and/or continued
services to retain Executive Directors necessary to

Chairman and CEO:Legacy Agreement
None

Current Agreement
Annual Award:€18,481,370 in a combination

execute the Company’s strategy, to align the interests ofof restricted stock units (RSUs)

Executive Directors with those of Shareholders and otherand performance stock units

stakeholders, and to reward delivery of long-term value(PSUs), subject to the achievement

creation linked to the Company’s strategy and strengthenof specific financial targets

alignment with the interests of Shareholders.

detailed below.

LTI grant value is capped at 500% of annual base salary.

One-Time Transition Award:€92,406,852, 50% in the formof RSUs which vest in equal
installments over 5 years and 50%
in performance stock options (PSOs)
which vests in equal installments
over 4 years and are exercisable
only when the share price meetslevels detailed below.
Deputy CEO:

Retirement andCustomary retirement income and severance benefits

other post-

to provide future income security, aligned with relevant

employment

market levels.

benefits

No annual LTI grant

Chairman and CEO:
Agreement2 unchanged: Pension allowance equals 20% of annual base salary, cappedat €1,478,510 per year, for a total potential maximum pension allowance of €295,702
per year.

Deputy CEO:
Agreement unchanged: Participates in the local UMG pension plan.

Other benefits

Customary and market competitive arrangements to

Chairman and CEO:

compensate for any reasonable costs incurred or perks

Agreement unchanged: Covers, among other things, health and welfare, housing

required for the performance of their duties.

allowance, automobile, tax equalization, security, and home leave.

Deputy CEO:
Agreement unchanged: Covers health and welfare, housing allowance, automobile, tax
consultation and life insurance.

1 When establishing the Threshold, Target and Maximum goals for the Short-Term and Long-Term Incentive goals, scenario analysis was conducted whereby the potential
achievement of these various goals and their alignment to our strategic financial goals assisted in determining that the final goals were appropriate.
2 Additional severance detail under the Severance Payments and Termination Provisions section below

MUSIC IS UNIVERSAL Annual Report 2023 | 228

NON-EXECUTIVE DIRECTORS REPORTThe Remuneration for the Executive Directors in 2023
CEO Employment Agreement
As discussed in the 2022 remuneration report, the Legacy Agreement reflected
the arrangements contractually agreed with Sir Lucian Grainge prior to his
appointment to the Board. Such legacy arrangements did not always alignwith the Executive Directors’ Remuneration Policy but were allowed as the
Executive Directors’ Remuneration Policy permits deviations in respect oflegacy arrangements.
The aim of the Current Agreement is to better align Sir Lucian Grainge’s
remuneration package with the Executive Directors’ Remuneration Policy, andwith Shareholders’ interests, including a change to a more performance-based
and share-based remuneration package. When determining the remuneration
package to be offered to Sir Lucian Grainge under the Current Agreement, theBoard took into consideration its belief that retaining, securing and incentivizing
Sir Lucian Grainge, who has a unique position of leadership in the musicindustry and has a longstanding relationship with, and knowledge of, UMG
and its business, would be in the best interests of the Company and its
stakeholders. The Board also took into consideration Sir Lucian Grainge’s
remuneration and other benefits under the Legacy Agreement, including what
was payable if the Legacy Agreement was not renewed. Furthermore, theBoard considered that the remuneration offered to Sir Lucian Grainge should
be competitive compared to CEOs of other companies in the fields of media,
entertainment and tech, which are largely headquartered in the U.S. andtherefore examined the compensation practices of the following companies aspart of its due diligence:
Activision Blizzard, Inc.

Altice USA, Inc.

DISH Network Corporation

Electronic Arts Inc.

Sirius XM Holdings Inc.

Warner Music Group Corp.

Live Nation Entertainment, Inc.

Netflix, Inc.

Discovery, Inc.

Fox Corporation

News Corporation

These considerations, along with discussions with Sir Lucian Grainge, led
to the Current Agreement with a remuneration package as set out inthis remuneration report. As certain elements of the Current Agreement
relating to termination and severance benefits continued to deviate from thethen applicable Executive Directors’ Remuneration Policy, the Board, at therecommendation of the Remuneration Committee, proposed that Shareholders
be given an opportunity to approve a supplement to the Executive Directors’
Remuneration Policy. The supplement, upon approval, would ensure that theCurrent Agreement would fall within the scope of the Executive Directors’
Remuneration Policy. The General Meeting on May 11, 2023 approved the
supplement to the Executive Directors’ Remuneration Policy in respect of Sir
Lucian Grainge.
As discussed above and in further detail below, the Current Agreement resultsin Sir Lucian Grainge having a significant portion of his remuneration be
performance-based (i.e., subject to the achievement of annually pre-establishedobjectives) and share-based (i.e., aligned with Shareholders’ interests generally)
as follows:

MUSIC IS UNIVERSAL Annual Report 2023 | 229

NON-EXECUTIVE DIRECTORS REPORTCEO ANNUAL TARGET PAY

14%
28.5%

Salary

RSU

57%

29%

Stock-Based
Compensation

TargetAnnual Bonus

28.5%
Target PSU

57.5%

Performance-Based
Compensation

Deputy CEO Employment Agreement
The remuneration of Vincent Vallejo for 2023 continues to reflect the legacy
arrangements contractually agreed with him prior to his appointment to theBoard under his management services agreement.

Key Remuneration Elements and Approach to Remunerationfor 2023

The following is a discussion of the key remuneration elements of 2023 for eachof the Executive Directors.
Base Salary
Base salary provides competitive fixed cash compensation reflective of the
Executive Director’s skills, experience, scope of responsibilities and the externalmarket. The following sets out the 2023 base salary for each Executive Director,
as well as the relative changes to the 2022 base salary:

Executive Director

Actual 2022

Actual 20231% Change

Sir Lucian Grainge€15,412,990€7,511,849-51.3%

Vincent Vallejo€960,000€960,000

0.0%

1 Reflects Sir Lucian Grainge base salary under the Legacy Agreement for the first three months of 2023 and his
new base salary under the Current Agreement effective as of April 1, 2023

The decrease in the 2023 base salary for Sir Lucian Grainge reflects histransition from an all-cash remuneration package to an updated remuneration
package with equity where a significant portion of his total remuneration
package is performance-based and share-based.
Short-Term Incentive
In order to motivate the Executive Directors to achieve the annual businesspriorities for the relevant year and tie a portion of their annual remuneration
to Company performance, each Executive Director is eligible for an annual
short-term incentive bonus under their employment or management services
agreements based on the achievement of certain financial growth objectives.

MUSIC IS UNIVERSAL Annual Report 2023 | 230

NON-EXECUTIVE DIRECTORS REPORTFor 2023, the annual short-term incentive bonus target for each Executive
Director was as follows:

Executive Director

Target Percentage of Base Salary

Target Amount

Sir Lucian Grainge

200.0%€9,240,685

Vincent Vallejo

50.0%€480,000

For 2023, Sir Lucian Grainge was measured on the following performance
metrics and performance results:

Performance Metric

Weighting

Revenue GrowthTarget(100% Payout1)

50%

Adjusted EBITDA Growth

7.2%

50%

Total

16.6%

Maximum(150% Payout1)

10.4%

Actual

13.3%

22.4%

18.9%

Earned %150.0%
119.9%
134.9%

1 Payout percentage of target bonus amountThe target for each performance metric aligns with the Company’s annual
budget, as approved by the Board. The Board determined, as provided under
Sir Lucian Grainge’s Current Agreement, the threshold level of achievement
required for any payout of the annual short-term incentive bonus at 90%
of target, where achievement of the threshold level would result in a 50%
payout. Achievement of less than the threshold level would result in a 0%
payout. In addition, the Board determined the level of achievement required for
maximum payout of the annual short-term incentive bonus. In accordance with
Sir Lucian Grainge’s Current Agreement, the maximum payout is €13,861,028,
or 150% of target. Payout results for performance between threshold/target andtarget/maximum are linearly interpolated.

For 2023, Vincent Vallejo was measured on the following performance metrics
and performance results:

Performance Metric

WeightingTargetMaximum

ActualEarned %Revenue Growth

50%

7.2%

10.4%

13.3%

200.0%

Adjusted EBITDA Growth
Total

50%

(100% Payout1)

16.6%(200% Payout1)

22.4%

18.9%

139.6%
169.8%

1 Payout percentage of target bonus amountMUSIC IS UNIVERSAL Annual Report 2023 | 231

NON-EXECUTIVE DIRECTORS REPORT

Sir Lucian Grainge's Legacy Agreement
For 2023, under the terms of the Legacy Agreement, Sir Lucian Grainge wasentitled to receive an annual cash bonus in an amount equal to 1% of UMG’s
2023 EBITA (the EBITA Bonus), which was eliminated under the terms of theCurrent Agreement. In addition, Sir Lucian Grainge was also entitled to anannual contingent cash bonus in an amount equal to €10,790,913, subject to
UMG meeting specific financial and non-financial performance measures (theContingent Bonus). The Contingent Bonus was subject to meeting one of thefollowing performance measures: UMG’s year-over-year EBITA, market share of
the U.S. recorded music market and success of UMG’s exclusively signed artists
on the Billboard 100 or 200 chart. Under the terms of the Current Agreement, theamount of the Contingent Bonus was €2,697,728.
Long-Term Incentive
As discussed in further detail below, in 2023, Sir Lucian Grainge received an
Annual Award, a One-Time Transition Award, and a one-time RSU award for thelost value of Vivendi equity awards in connection with the Listing (a Special
One-Time Award). In 2023, Vincent Vallejo received a Special One-Time Award.
Annual Award
Under the terms of the Current Agreement, Sir Lucian Grainge is entitled to anannual grant of RSUs and PSUs with an aggregate equity value of €18,481,370,
with no more than 50% of the grant being in the form of PSUs. The RSUs aretime-based and vest ratably over 3 years. The PSUs are performance-based
where payout depends on the level of achievement of performance metrics
that are determined by the Board. The target for each performance metric will
be no less favorable than the Company’s annual budget, as approved by the
Board. The maximum payout of the PSUs is 200% of target and the minimum
payout for the threshold level of achievement will be no less favorable than 50%
payout for 90% achievement of the target performance levels. Performance atless than 90% of target will result in a 0% payout under the PSUs.

In 2023, Sir Lucian received the following:

Type

Grant size

Performance metrics and vesting requirements

RSU€9,240,685

Requires continued services; vests ratably over 3 years

PSU€9,240,6851 Requires continued services; vests 100% after 3 years

Metrics● 50.0% to vest based on 3-year Adjusted EBITDA CAGR target● 25.0% to vest based on 3-year Revenue CAGR target● 25.0% to vest based on 3-year Relative TSR (Total Shareholder
Return) target
1 Reflects the economic value of the underlying award as opposed to the accounting value under IFRS2With respect to the PSUs, the Board selected these performance metrics, which
represent key performance indicators used by the Company, to provide afoundation for long-term growth and promote long-term value creation.

MUSIC IS UNIVERSAL Annual Report 2023 | 232

NON-EXECUTIVE DIRECTORS REPORTThe targets for Revenue CAGR and Adjusted EBITDA CAGR are not disclosed as
doing so could create competitive harm. The Relative TSR targets measure theCompany’s share price performance against the S&P 500 Media & Entertainment
Index and are as follows:

MetricThreshold (50% payout)

Target (100% payout)

Maximum (200% payout)

Relative TSR

25th percentile

50th percentile

75th percentile

One-Time Transition Award
Under the terms of the Current Agreement, in order to transition Sir Lucian
Grainge from an all-cash remuneration package to a combination of cash
and equity, with a significant portion of such equity performance-based, Sir
Lucian Grainge is entitled to a one-time €92,406,852 equity grant (the One-TimeTransition Award), as follows:

Type

Grant size

Performance metrics and vesting requirements

RSU€46,203,426

PSO€46,203,426

Requires continued services; vests ratably
over 5 years

Requires continued services; vests ratably
over 4 years and become exercisable1 if
the Company achieves the following shareprice hurdles:● 1/3rd of vested PSOs at €26.502● 1/3rd of vested PSOs at €30.002● 1/3rd of vested PSOs at €38.002

1 Strike price is as of the closing stock price on April 30, 2023
2 Based on a 30-day average closing share price and must be achieved within the term of the Current Agreement
ending May 1, 2028

Special One-Time Awards
Prior to the Listing, Vivendi granted Sir Lucian Grainge and Vincent Vallejo equity
awards in the form of performance shares payable in Vivendi stock. These
Vivendi equity awards were not adjusted to offset the impact of the spin-off
in connection with the Listing, and the value of these Vivendi equity awards
significantly decreased as a result. To make Sir Lucian Grainge and Vincent
Vallejo whole and compensate them for the loss of value of these Vivendi
equity awards, upon recommendation of the Remuneration Committee, theBoard granted the following to each Executive Director:

MUSIC IS UNIVERSAL Annual Report 2023 | 233

NON-EXECUTIVE DIRECTORS REPORT

Executive Director

Number of RSUs

Sir Lucian Grainge

30,000Vincent Vallejo

30,00040,0007,500

Vesting requirements

Requires continued services; vests in 1
year from grantRequires continued services; vests in 1
year from grantMalus and Claw-back

In 2023, no application of claw-back was applied on any kind of variable
payments for the Executive Directors.

Severance Payments and Termination Provisions

In 2023, no severance payments were made to the Executive Directors.
Sir Lucian Grainge
Sir Lucian Grainge is entitled to the following severance benefits under his
Current Agreement in case Universal Music Group, Inc. (UMG, Inc.) terminates
Sir Lucian Grainge’s employment without ‘Cause’, Sir Lucian Grainge terminates
his employment for ‘Good Reason’, or in case of ‘Non-Renewal’ of Sir Lucian
Grainge’s Current Agreement (as defined below):
1. a lump-sum cash amount equal to Sir Lucian Grainge’s unpaid base salaryearned up to the date of his termination of employment plus an amountequal to two years of base salary.
2. a lump-sum cash amount equal to the unpaid portion of any earned
bonuses with respect to the last fiscal year ended prior to the date of
Sir Lucian Grainge’s termination of employment plus the €9,240,685 target
annual bonus for the year in which Sir Lucian Grainge’s termination of
employment occurs plus two years of the €9,240,685 target annual bonus.
3. a lump-sum cash amount equal to the amount that UMG, Inc. would
have paid during the 2 years following Sir Lucian Grainge’s terminationof employment (based on rates in effect at the time of termination of
employment) to provide Sir Lucian Grainge with the benefits he would havebeen entitled to receive under the additional pension allowance and thebroad base of benefit plans in which Sir Lucian Grainge may participate,provided that such amount will not include any vacation benefits.
4. each equity award outstanding at the termination of Sir Lucian Grainge’s
employment, with each such equity award vesting on a pro rata basis inaccordance with the terms of the applicable equity award agreement, exceptthat Sir Lucian Grainge will be deemed to be continuously employed for aperiod of 2 years from the date of termination for ’Good Reason’, ’without
Cause’ or following a ’Non-Renewal’, with any performance-based equity
awards continuing to vest for a period of 2 years from the date of
termination and such vested portion of applicable performance-based
equity awards to be settled at target.
‘Good Reason’ includes:
1. removal of Sir Lucian Grainge from his position as an Executive Director or
as Chairman and CEO of UMG, Inc. or the Company resulting in a material
diminution in Sir Lucian Grainge’s authority, duties or responsibilities, or in
the budget over which Sir Lucian Grainge retains authority.

MUSIC IS UNIVERSAL Annual Report 2023 | 234

NON-EXECUTIVE DIRECTORS REPORT

2.
3.

4.

5.

6.
7.

the requirement for Sir Lucian Grainge to report to anyone with materiallyless authority, duties or responsibilities;
a material decrease in Sir Lucian Grainge’s authority, duties or
responsibilities, including, but not limited to, a material adverse change
to Sir Lucian Grainge’s authority, duties or responsibilities as they relate
to managing Sir Lucian Grainge’s direct reports or Sir Lucian Grainge’s
involvement in setting UMG’s annual budget or UMG’s strategy.
a reduction in Sir Lucian Grainge’s base salary or target bonus or annual
equity award constituting a material diminution in Sir Lucian Grainge’s basecompensation as determined for purposes of Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations and guidance
promulgated thereunder.
the requirement that Sir Lucian Grainge’s principal place of employment
be located other than at the principal offices of UMG, Inc. located in Los
Angeles, California, provided that such change in location is a materialchange in the geographic location at which Sir Lucian Grainge must provide
his services as determined for purposes of Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations and guidance
promulgated thereunder.
a material breach by UMG, Inc. of the Current Agreement (whether or nototherwise set forth in clauses (1) — (5) above).
a ‘Change in Control’.

A ’Change in control’ is defined as a change in the ownership of the Company,
which occurs on the date that any one person would be entitled to, directly or
indirectly, exercise at least 30% of the votes in a General Meeting (PredominantControl) (which would pursuant to Dutch law trigger a mandatory public takeoveroffer for all of the outstanding Shares); provided, however that no change incontrol will be considered to exist (i) if the voting power of any one person,
or more than one person acting in concert, who at the date of the Current
Agreement was already entitled to exercise 30% or more of the votes in a
General Meeting increases, and (ii) if the person who acquired PredominantControl loses such Predominant Control within 30 days of acquiring it, unlessthe Person who acquired Predominant Control has exercised its voting rights inthat 30-day period.
‘Cause’ has a commonly used meaning.
‘Non-Renewal’ means the expiration of the Current Agreement, with UMG, Inc.
not having made an offer of employment on terms at least as favorable as theterms set forth in the Current Agreement at least 90 days before the expiration
date of the Current Agreement.
In addition, Sir Lucian Grainge cannot compete against UMG for 24 months
following any termination of employment (whether by UMG or by Sir Lucian
Grainge) and following expiration of the term of his Current Agreement. In
cases where Sir Lucian Grainge is entitled thereto, the severance payment isalso considered consideration for the non-competition.
Vincent Vallejo
Vincent Vallejo’s management services agreement converted into an indefiniteterm agreement on October 1, 2023. His management services agreement does
not provide for a severance payment, but he is eligible for severance underDutch law.

MUSIC IS UNIVERSAL Annual Report 2023 | 235

NON-EXECUTIVE DIRECTORS REPORT

Total Remuneration1

Total remuneration of the Executive Directors is presented in the tablebelow. For Sir Lucian Grainge, the increase in remuneration year-over-year
is primarily driven by the transition to a more performance-based and sharebased remuneration package. The equity remuneration in the table below
reflects the grant value of awards.

year

Name

Reported

Proportion
Fixed

fixed –
Variable remuneration

rationBase Salary

One-Time

Retire-Long-Term

Transition

ment

Other

Other

Incentive

IncentiveAward

Benefits

Benefits

Payments

2023€7,511,849€15,163,413€18,481,3704

Grainge,2022€15,412,990€28,768,466

2021€13,192,829

Vincent

2023

Vallejo,and CEO2,3

DeputyCEO

Benefits and one-off amounts

Short-Term

Sir Lucian
ChairmanTotalvariable

remuneration1

remuneration

remune-€92,406,8524,5€295,702€2,973,670€1,981,0006€138,813,856

8% / 92%€0€302,410€2,807,202€0€47,291,068

39% / 61%

€24,673,885

€0

€07

€2,994,992€0€40,861,707

40% / 60%

€960,000€815,040€0€41,053€57,596€948,5758€2,822,264

38% / 62%2022

€960,000€570,929€0€41,053€83,739€968,7508€2,624,471

41% / 59%2021

€720,000€602,859€0€0€800,000€2,185,698

36% / 64%7

€62,83898

1 Sir Lucian Grainge and Vincent Vallejo 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 For 2023, Sir Lucian Grainge’s remuneration has been converted from US dollars into euros using a monthly average FX rate of 0.924.
3 In addition, other payments were made by Vivendi to Sir Lucian Grainge in 2021 in connection with but not limited to the Listing. Reference is made to pages 129 and 131of 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.
4 Sir Lucian Grainge’s Long-Term Incentive and One-Time Transition Award reflect the grant value as of the grant date (April 30, 2023 at a grant price of €19.81). As of
December 31, 2023, Sir Lucian Grainge has not versted any of his awards.
5 The One-Time Transition Award will not be applicable in subsequent years. As of December 31, 2023, Sir Lucian Grainge has not vested any of his awards and has notachieved any of the stock price hurdles associated with his PSOs.
6 Special One-Time Award amount reflects the number of units granted on April 30, 2023 at €19.81 per share.
7 For 2021, Retirement Benefits were included as part of Other Benefits. For 2022 and 2023, Retirement Benefits were separated into their own column. For 2021, Sir Lucian
Grainge’s Retirement Benefits amount was €268,686, included in the 2021 Other Benefits amount of €2,994,992. For 2021, Vincent Vallejo’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.
8 Amounts reflect the recognition awards paid in 2021 and 2022 in connection with the Listing and a cash retention payment paid in 2023. In addition, for 2022, amounts
reflect the value of the Special One-Time Award which was granted on November 30, 2022 at €22.50 per share and for 2023, the value of the Special One-Time Award which
was granted on April 30, 2023 at €19.81 per share.
9 For 2021, Other Benefits excluded €6,750 for company car related expenses.

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 2023 | 236

NON-EXECUTIVE DIRECTORS REPORT

Share-Based Remuneration

Total share-based remuneration of the Executive Directors in 2023 is presented
in the table below:

The main conditions of share award plans

Information regarding reported financial year
Opening

Vincent

2022

Vallejo,

UMG

DeputyGlobalCEO

EquityUnits awarded and unvested as of year end

Units subject to a holding period

N/A

N/A

N/A

0

30,000738

0030,738

N/A

RSU

N/A

4/30/2023

4/30/2024

N/A

N/A

N/A

0

30,000738

0030,738

N/A

RSU

N/A

4/30/2023

4/30/20242

N/A

N/A

N/A

0

40,000984

0040,984

N/A

RSU

N/A

4/30/2023

4/30/20263

N/A

N/A

N/A

0

459,700

11,31400471,014N/A

4/30/2023

4/30/20264

N/A

N/A

N/A

0

459,700

11,3140

471,014471,014

N/A

N/A

0

2,355,065

N/A

8,624,917 8,624,917

N/A

PSU

1/1/2023 12/31/2025

2

Added

4/30/20242

Equivalents

4/30/2023

Dividend

N/A

Performance period

Units subject to a performance conditionCEO

Units vested

PlanUnits awarded

EquityUnits awarded at the beginning of the year

andGlobalStrikePrice

Chairman

Expire Date

Grainge,

UMG

End of holding period1

LucianVesting date

2022

Closing BalanceAward date

Sir

During the year

RSU

Award typeSpecification of plan

Name of Director, position

balance

RSU

N/A

4/30/2023

4/30/20285

N/A

N/A

0

2,298,496

56,569

0

PSO

N/A

4/30/2023

4/30/2027

N/A 4/30/2033 €19.81

08,624,917

0

0

RSU

N/A

11/30/2022

11/30/20232

N/A

N/A

N/A

7,500

0

185

7,685

0

0

N/A

RSU

N/A

4/30/2023

4/30/20242

N/A

N/A

N/A

0

7,500

185

0

0

7,685

N/A

6

Plan

1 As noted in the Corporate Governance section under ‘Compliance with the Code’, Shares, once vested, are not subject to a holding period.
2 Special One-Time Award
3 RSUs awarded as part of Sir Lucian Grainge's 2023 Annual Award, vesting 1/3 annually
4 PSUs awarded as part of Sir Lucian Grainge's 2023 Annual Award which vest 100% after 3 years if performance metrics are met
5 50% of the One-Time Transition Award, which vests 1/5 annually
6 50% of the One-Time Transition Award, which vests 1/4 annually and are only exercisable if the following share price hurdles are met: 1/3 at €26.50, 1/3 at €30.00, and 1/3
at €38.00

MUSIC IS UNIVERSAL Annual Report 2023 | 237

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 as of
the Listing in 2021. For Sir Lucian Grainge, the year-over year increase intotal remuneration from 2022 to 2023 was primarily driven by the One-TimeTransition Award. As noted above, the One-Time Transition Award consists of€46,203,426 of RSUs, which vest ratably over 5 years and €46,203,426 of PSOs,
which vest ratably over 4 years and which become exercisable only after thepassage of time and achieving the aforementioned share price hurdles.

Element

Remuneration

Chairman and CEO

Annual change
Deputy CEO

2

Annual Change

2021

2022

20231

€40,861,707€47,291,068€64,274,250€2,630,851€2,624,471€2,686,990€1,788€2,135€2,369Not applicable

19%

11%

€131,961€142,039€180,684

310

333

356

Not applicableNot applicable

16%
0%

36%
2%

Company performance

Adjusted EBITDA (in millionsof euros)

Annual Change

Average annual remuneration
on an FTE basis of employees
Average annual

3

Annual ChangeInternal Pay Ratio

Annual Change

Not applicable

8%
8%

27%
7%

1 Equity remuneration is based on the annual total remuneration as reported in the Consolidated Financial Statements included in the Annual Report in accordance with
IFRS. In contrast, the Total Remuneration Table reflects 2023 equity awards at grant value.
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 2023 | 238

NON-EXECUTIVE DIRECTORS REPORTThe Remuneration for the Non-Executive Directors in 2023

The remuneration structure for Non-Executive Directors has been designed toensure that UMG attracts, motivates and retains highly qualified Non-Executive
Directors, while aligning with the Non-Executive Directors Remuneration Policy.
In order to ensure that the Remuneration Policy is aligned with the Company’s
identity, mission and core values, it is built on the following principles:•
The program is simple and transparent.
•
Non-Executive Directors should be compensated competitively against
market, considering the level of work required for a company that is similarin size, scope, and complexity to UMG.
•
Non-Executive Directors’ remuneration is differentiated, as appropriate, fordiffering Board committee responsibilities and time commitments.
In order to ensure independent supervision, remuneration of Non-Executive•
Directors is fixed and not dependent on the Company’s financial results.
In 2023, the Non-Executive Directors’ remuneration for serving on the Board andBoard 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 Chair 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 Remuneration

Total remuneration of the Non-Executive Directors paid in 2023 is presented in
the table below:

A.R.J.C. Fiévet
A.K. Jones

2

C.F.L. Lawson-Hall
C.M.C. Bolloré
H. Saban

J.G. Mitchell

J.S.J. Craymer

4

M. Frerejean-Taittinger
M.L. Doherty

3

N.A. Avant

Board1

Committee1

Audit

Remuneration

9/20/2021

MemberMemberChair

9/20/2021

MemberMember

5/11/2023

Member

9/20/2021
5/12/2022
9/20/2021

3

L.A.J. Van Os

Commencement Date

9/20/2021

Member

9/20/2021

Member

9/20/2021

W.A. Ackman

5/12/2022
3

Member

9/20/2021

5/12/2022

S.L. Lansing

Member

5/12/2022

MemberCommittee1

Nomination
Committee1

105,000
110,000
110,000
62,691

MemberChairMemberChairMember

0

4,500

Chair

MemberMember(in euros)

115,589

MemberMember2023 Remuneration

120,000
140,000
0

Member

110,000

Member0

Member

175,417

1 Composition of the Board and Board committees as of December 31, 2023.
2 Anna Jones resigned from the Board effective September 30, 2023.
3 Voluntarily elected to not receive any Non-Executive Director remuneration in 2023.
4 Judy Cramer resigned from the Board effective January 10, 2023

MUSIC IS UNIVERSAL Annual Report 2023 | 239

NON-EXECUTIVE DIRECTORS REPORT

Remuneration Development

A.R.J.C. Fiévet
A.K. Jones

2023/20221

2022 vs. 2021

5%

0%

-8%

0%

-25%

2

C.F.L. Lawson-Hall
C.M.C. Bolloré
H. Saban

J.G. Mitchell

3

J.S.J. Craymer4

N/A

N/A

N/A

-98%

L.A.J. Van Os-8%

M. Frerejean-Taittinger

0%

M.L. Doherty

N/A

S.L. Lansing

59%

3

N.A. Avant

W.A. Ackman

3

0%

0%

N/A

1

N/A
0%
0%
0%
0%

0%

N/A

N/A

N/A

N/A

1 2022 and 2021 remuneration amounts have been annualized for purposes of calculating the year-overyear change
2 Anna Jones resigned from the Board effective September 30, 2023.
3 Voluntarily elected to not receive any Non-Executive Director remuneration in 2023
4 Judy Cramer resigned from the Board effective January 10, 2023

The Non-Executive Directors’ remuneration is fixed and not dependent on
the Company’s financial results. Non-Executive Directors are also entitled
to reimbursement of reasonable expenses incurred in connection with theperformance of their duties for the Company. 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 or pension schemes.

Other items
2022 Remuneration Report and Supplement to Remuneration Policy
Shareholders’ Voting Results

Last year, 58.96% of the Shareholders supported the 2022 remuneration report
and 59.03% approved the supplement to the Company’s existing Executive
Directors Remuneration Policy in respect of Sir Lucian Grainge. After the annual
General Meeting held on May 11, 2023, UMG engaged with Shareholders tounderstand their perspective on the 2022 remuneration report and solicit overall
feedback about the Executive Director pay design and practices. Feedback wasgathered and reviewed within the context that there were legacy arrangementswith each Executive Director in place from prior to their appointment to theBoard. Shareholders expressed their desire to see Sir Lucian Grainge signed toa new long-term agreement, and to better align Sir Lucian Grainge’s financial
interests with that of Shareholders by including equity as a meaningfulcomponent of the new agreement. Shareholders also requested that more
information be provided on the peer group used to structure the Current
Agreement, as well as increased disclosure on the performance metrics used
to award both short-term and long-term incentives. UMG believes the Current
Agreement reached with Sir Lucian Grainge, as well as this remuneration report,
reflect the feedback received from Shareholders.

MUSIC IS UNIVERSAL Annual Report 2023 | 240

NON-EXECUTIVE DIRECTORS REPORT

Deviation from Executive Directors' Remuneration Policy

In 2023, the Board temporarily deviated from the Executive Directors’
Remuneration Policy to enter into Sir Lucian Grainge's Current Agreement
which contained certain elements that were outside the scope of the thenapplicable Executive Directors’ Remuneration Policy. The temporary deviations
from the Executive Directors’ Remuneration Policy related to Sir Lucian Grainge's
termination and severance benefits under the Current Agreement, which arealso described in this remuneration report. Entering into the Current Agreement
and thus deviating from the Executive Directors’ Remuneration Policy allowed
UMG to retain and secure Sir Lucian Grainge as UMG's Chairman and CEO.
The Board considered retaining and securing Sir Lucian Grange as UMG's
Chairman and CEO to be in the best interest of UMG and its stakeholders, asalso explained in the explanatory notes to the agenda for the annual General
Meeting held on May 11, 2023.
1

For these reasons, retaining and securing Sir Lucian Grainge as UMG’s Chairman
and CEO was deemed such an exceptional circumstance that deviating from the
Executive Directors’ Remuneration Policy was deemed necessary to serve UMG'slong-term interests and sustainability.
As deviations from the Executive Directors’ Remuneration Policy may only betemporary in nature, the Board, at the recommendation of the Remuneration
Committee, proposed to seek approval from the General Meeting for a
supplement to the Executive Directors’ Remuneration Policy at the annual
General Meeting held on May 11, 2023. As described in detail in the explanatory
notes to the agenda for the annual General Meeting held on May 11, 2023,
the supplement to the Executive Directors’ Remuneration Policy includes thoseelements of the Current Agreement that deviated from the Executive Directors’
Remuneration Policy so that the remuneration and benefits awarded to Sir
Lucian Grainge under the Current Agreement would fall within the scope of the
Executive Directors’ Remuneration Policy upon approval of the supplement by
the General Meeting. The supplement to the Executive Directors’ Remuneration
Policy was adopted at the annual General Meeting held on May 11, 2023.1

1

UMGNV_2023_AGM_Agenda

MUSIC IS UNIVERSAL Annual Report 2023 | 241

FINANCIAL STATEMENTS

FINANCIAL STATEMENTSCONSOLIDATED STATEMENTSCONTENTS OF CONSOLIDATED STATEMENTS
Consolidated Statement of Profit or Loss

244

Consolidated Statement of Comprehensive Income

245

Consolidated Statement of Cash Flows

247

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

246
248

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

249

Note 1.

General information

Note 2.

Basis of preparation

249

Note 3.

Segment data

Note 4.

Cost of revenues and selling, general andadministrative expenses

Note 5.

250

Financial income and expenses

Note 6.

Income taxes

Note 7.

Earnings per share

Note 8.

Goodwill

Note 9.

Content assets (catalogues and royalty advances) andother intangibles

Note 10.

269
270
271
274

Property, plant and equipment

275
276
278

Note 11.

Leases

Note 12.

Investments in equity affiliates

Note 13.

Capital and financial risk management

Note 14.

Trade and other receivables

Note 15.

Trade and other accounts payable

Note 16.

Cash position and borrowings

Note 17.

Contractual obligations and other commitments

Note 18.

Financial assets and liabilities

Note 19.

EquityNote 20.

Expenses and income directly recognized in othercomprehensive income

Note 21.

265

279
280
280
284
285
285
287
288

Provisions

Note 22.

Post-retirement employee benefits

Note 23.

Share-based compensation plans

Note 24.

Related parties

Note 25.

Litigation

Note 26.

List of consolidated entities

Note 27.

Statutory auditors fees

Note 28.

Audit exemptions

Note 29.

Subsequent events

290
291
291
292
294
298
300
300
301
301
302

MUSIC IS UNIVERSAL Annual Report 2023 | 243

FINANCIAL STATEMENTSCONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 2023

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

Revenues

Cost of revenues

Selling, general and administrative expenses

Amortisation and impairment losses on intangible assets
Operating profit

Note

2023

2022

3

11,108

10,340

4(3,213)(2,702)

4

8,9(6,208)(269)(5,753)
(285)

3

1,418

1,600

5

(151)

(735)

Income/(loss) from equity affiliates

12-

Income taxes

6

Financial income

Financial expenses

Profit before income taxes
Net profit

5

Of which:

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

Earnings per share (in euros)

Earnings for the period attributable to equity holders of the parent - basic

Earnings for the period attributable to equity holders of the parent - diluted

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

454

303

1,721

7

(698)
(2)

900

(458)

(115)

1,259

782

0.69

0.43

1,263

4

7

37

0.68

785

3

0.43

MUSIC IS UNIVERSAL Annual Report 2023 | 244

FINANCIAL STATEMENTS

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

Net profit

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

2023

2022

1,263

785

(1)

8

(3)

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

(4)

36

44

Foreign currency translation adjustments

(150)

184

Net gain/(loss) on hedge of net investment

8-

Other comprehensive income/(loss) from equity affiliates, net of tax
Items to be subsequently reclassified to profit or loss, net of tax
Other comprehensive income/(loss), 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

(4)

20

6

(146)

190

1,113

1,019

1,109

1,016

(150)

4

234

3

MUSIC IS UNIVERSAL Annual Report 2023 | 245

FINANCIAL STATEMENTS

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

Goodwill

Note

1,624

1,578

3, 9

3,020

3,058

3, 9

Other intangible assets

3, 9Property, plant and equipment
Right of use assets

Investments in equity affiliates
Non-current financial assets
Deferred income tax assets
Other non-current assets

10
11
12
18
6

Non-current assets
Inventories

Current tax receivables

2022

8

Non-current royalty advances
Catalogues

2023

1,574
180
177
316
222

1,436
479

7

1,593
119
167
318
156
690
348
8

9,035

8,035

210

163

36

4

Current royalty advances

3, 9

1,060

984

Trade and other receivables

13, 14

2,246

2,014

4,056

3,604

13,091

11,639

2,962

2,351

2,983

2,352

Other current financial assets
Cash and cash equivalents
Current assets

18
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

91

413

21

300

-

439

1

291

16

1,826

1,113

11

324

346

18

676
715

3,841

21

122

13, 15

5,711

16
11

580
437

2,767
103

278

1,137

86

77

70

5,150
53

Current liabilities

6,267

6,520

Total liabilities

10,1089,287

TOTAL EQUITY AND LIABILITIES

13,091

11,639CONSOLIDATED STATEMENT OF FINANCIAL POSITIONMUSIC IS UNIVERSAL Annual Report 2023 | 246

FINANCIAL STATEMENTS

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

Operating activities
Operating profit
Adjustments

Royalty advances payments, net of recoupments

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

Note

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 consolidated companies, after divested cash

12

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

Net cash provided by/(used for) financing activities

11

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

2,278

1,987

1,885

1,732

(178)

(359)

(47)

(33)

(393)

(74)
(97)

(33)

(255)

(60)
(22)
(22)
(36)

(631)

(532)

1

9

-

2

9

3

1

4

2

(622)

(520)

(929)

(798)

(931)

(800)

(2)

(2)

5,938

(6,359)
(30)
4

(255)

(447)

(14)

(14)

(80)

(86)

(1,280)(1,347)

(17)

(135)

16

(51)

(134)

16

438

572

Net change in cash and cash equivalents

Foreign currency translation adjustments

2,020

164

(10)

11

568

2,114

(77)

Other cash items related to financing activities

Payment of interest of lease liabilities

(148)

796

(6,815)Interest, net

Repayment of lease liabilities

(100)

6,647

Repayments of borrowings

Transactions on borrowings and other financial liabilities

1,600

1

Proceeds from sale of financial assets

Dividends received from investments

1,418

(154)

Investments

Dividends received from equity affiliates

20221

(81)

Purchase of financial assets

Divestitures

2023

16

(34)

387

1

438

1 Reclassified amounts are presented in Note 2.3.

CONSOLIDATED STATEMENT OF CASH FLOWSMUSIC IS UNIVERSAL Annual Report 2023 | 247

FINANCIAL STATEMENTS

Consolidated Statement of Changes in
EquityYear ended December 31, 2023
NumberNote(millions of euros)(in thousands)

BALANCE AS OF DECEMBER 31, 2022

other comprehensive income, net of tax

capitalpaidin capital

Treasury

Retained

Shareowners

sharesearnings

equity

Non-

Total

Controlling

equityinterest

1,813,513

18,135

14,935(5)(30,714)

2,351

1

2,352

-

-

-

-

1,259

1,259

4

1,263

-

-

-

-

(150)

(150)

-

(150)

-

-

-

-

1,109

1,109

4

1,113

(2)

(931)

Net profit
Income and expenses directly recognized in

Additional

Shareof shares

20

TOTAL COMPREHENSIVE INCOME

Dividends paid and payable by UMG N.V.

19

-

-

-

-

(929)

(929)

Share-based compensation plans

23

8,152

82

59

-

317

458

-

458

NCI on acquired catalogue

-

-

-

-

-

-

18

18

Recognition of put option liability on NCI

-

-

-

-

(27)

(27)

-

(27)

TOTAL CHANGES OVER THE PERIOD

8,152

82

59

-

(639)

(498)

16

(482)

BALANCE AS OF DECEMBER 31, 2023

1,821,665

18,217

14,994(5)(30,244)

2,962

21

2,983

Year ended December 31, 2022
NumberNote(millions of euros)

Net profit
Income and expenses directly recognizedin other comprehensive income, net of tax

capital(in thousands)

BALANCE AS OF DECEMBER 31, 2021

20

TOTAL COMPREHENSIVE INCOME

Additional

Shareof shares

paidin capital

Treasury

Retained

Shareowners

sharesearnings

equity

Non-

Total

Controlling

equityinterest

1,813,376

18,134

14,941(12)(31,033)

2,030

-

2,030

-

-

-

-

782

782

3

785

-

-

-

-

234

234

-

234

-

-

-

-

1,016

1,016

3

1,019

Dividends paid and payable by UMG

19

-

-

-

-

(798)

(798)

(2)

(800)

Share-based compensation plans

23

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITYMUSIC IS UNIVERSAL Annual Report 2023 | 248

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, Drake, King & Prince, Morgan Wallen and The Weeknd.
•••

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 2023 | 249

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 28, 2024 and will be submitted for adoption to the Annual General Meeting of Shareholders on May 16, 2024.

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 2023.
Seperation 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.
Subsidiaries
Subsidiaries are all companies over which UMG has control. Control over an entity exists when UMG is exposed, or has
rights, to variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully consolidated from the date on which control commences until the date on
which control ceases.
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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 250

FINANCIAL STATEMENTS

Significant events in the period and accounting estimates and judgements
Impact of global events
Global economic conditions continue to show a high degree of uncertainty because of several factors, including recent
geopolitical events and conflicts. Inflation rates and interest rates globally remain high, with associated impacts oncommodity prices, foreign exchange rates and other macroeconomic factors. Nevertheless, UMG’s operations continue todemonstrate resilience in the face of these economic headwinds. UMG will continue to monitor economic developments
and impact on the Group’s operations and financial position.
Climate change
UMG considered the impact of climate related risks on the financial reporting judgements, estimates or assumptions
used in preparing the Consolidated financial statements with no material impact identified for the year ending
31 December 2023.
UMG identified and assessed climate related risks in terms of exposure level and severity in our TCFD report. UMG
assessed transition risks (including: potential increased operation costs due to compliance or indirect effects ofregulations; risks from failure to comply with regulations or goals/targets; risks on operational efficiencies due toregulations; potential increased costs to more sustainable materials & technologies) and physical risks (including:business interruption and increased CapEx due to damaged facilities and production shutdowns; impact on operations
due to supply chain disruptions; operational costs from cooling load). The analysis of UMG’s risks identified only Low
and Moderate-level impacts. There were no risks resulting in High or Critical impact to UMG’s operations and therefore
UMG does not expect that climate change-related risks will have significant impact on the Group and would qualitatively
influence management's decisions.
In 2023 UMG’s near-term science-based targets (designed to measure the performance of our climate-related reduction
initiatives) were approved by the SBTi. UMG has assessed the short term financial impact of achieving the near-termemissions targets and these would not have a material impact on the financial statements.
Note for details on UMG’s near term emissions targets and climate-related risks refer to the Non-Financial Information
section in this Annual Report.
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 over time, and probability that collectability is assured
associated costs
and 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.

2.4.20. 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.

2.4.10. Leases

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note

MUSIC IS UNIVERSAL Annual Report 2023 | 251

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.

2.4.7. Goodwill and 2.4.8.
Content assets andother intangibles

Provisions

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

2.4.18. 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.

2.4.8. Content assets
and other intangibles

Sharebased payments

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

2.4.21. Sharebased payments

Pension liability

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

2.4.19. Employee
benefit plans

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

2.3. Financial statement presentation changes
During 2023 UMG made a prior year presentation change and updated, compared to the 2022 Consolidated financial
statements, the presentation of the Consolidated Statement of Cash Flows to further improve transparency andreadability of these statements.
The update to the Consolidated Statement of Cash Flows relates to a reclassificiation of the prior year non-cash sharebased compensation expense from other changes in working capital line to the adjustments line. Details on the impact
on 2022 comparatives for the year ended December 31, 2022 is presented in the table below.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 252

FINANCIAL STATEMENTS

Year ended December 31, 2022
Before Changes

Operating activities
Operating profit

1,600Royalty advances payments, net of recoupments(148)

Adjustments

Presentation

461

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

1,913

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

1,987

Net cash provided by/(used for) operating activities

1,732

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

After Changes

Changes

-

1,600

-

(148)

107

568

107

2,020

-

1,987

-

1,732

(520)

-

(520)

(1,347)-(1,347)

Net change in cash and cash equivalents

(135)

-

(135)

Change in cash and cash equivalents

(134)

-

(134)

-

572

Other changes in net working capital
Income tax paid

Foreign currency translation adjustments
Cash and cash equivalents
At beginning of the period
At end of the period

74

(107)

(255)

-

1

572
438

-

-

(33)

(255)

1

438

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
The assets and liabilities of foreign operations with functional currencies other than the Euro are translated using
exchange rates prevailing at the reporting date. The income and expenses of foreign operations are translatedusing monthly average exchange rates which approximate prevailing exchange rates at the dates of the underlying
transactions. The resulting translation gains and losses are recognised in other comprehensive income and presented
within equity. For foreign operations that are not wholly-owned subsidiaries, the proportionate share of the translationdifferences are allocated to non-controlling interests. The cumulative amount in the translation reserve is (either fully or
partly) reclassified to the income statement upon disposal (either fully or partly) or liquidation.
In 2023, 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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 253

FINANCIAL STATEMENTS

average number of own shares held in the year and for the effects of all dilutive potential shares which comprise sharerights and options 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.
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,then the entity acts on its own behalf and it is “principal” in the sale transaction: it accounts for revenue as the grossamount of consideration to which it expects to be entitled in exchange for the goods or services provided, and thecommission due to the third-party as cost of revenues. If the entity arranges for a third-party to provide the goods orservices specified in the contract, then it recognizes as revenues the net amount of consideration to which it expects tobe entitled in exchange for the goods or services provided.

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Financing Component and other
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. Thisapplies to the majority of sales transactions.
The transaction price may be variable due to discounts, rebates, or similar arrangements. In determining the transaction
price UMG considers the fair value of any non-cash consideration. Revenue is only recognized for the part of theconsideration 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 and level 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 streaming by paid subscription, ad-supported or downloading.
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, forwhich 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 via paid subscription or ad-supported streaming, certain contracts may include a
non-refundable minimum guarantee which is generally recoupable and is in substance an advance payment. In thecase of 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 is 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.

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FINANCIAL STATEMENTS

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. 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.
Under this the acquisition method, upon the initial consolidation of an entity over which UMG has acquired
exclusive control:•
the identifiable assets acquired, and the liabilities assumed are recognized at their fair values on the acquisition
date; and•non-controlling interests are measured either at fair value or at the non-controlling interest's proportionate share of
the acquiree’s net identifiable assets. This option is available on a transaction-by-transaction basis.
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.

2.4.7. Goodwill
Goodwill represents the difference between the fair value of the net assets acquired and the transaction price ina business combination. Goodwill arising on the acquisition of associates and joint ventures is included in theircarrying amounts.
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.

2.4.8. Content assets and other intangibles
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.

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FINANCIAL STATEMENTS

Useful lives are determined based on the asset’s expected pattern of the future earnings and the period of thecontractual arrangements. Useful lives are 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 a 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.
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.

2.4.9. 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 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.

2.4.10. 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.

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FINANCIAL STATEMENTS

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 or 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 orless 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 an expense on a straight-line basis over thelease 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,
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.

2.4.11. 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, by the Discounted Cash Flowmethod (DCF) 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 of the asset or group ofassets. 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 ofsuch data, based on discontinued cash flows.

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FINANCIAL STATEMENTS

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.

2.4.12. 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.

2.4.13. 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,

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FINANCIAL STATEMENTS

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.

2.4.14. 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.

2.4.15. 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 through profit or loss, for example derivatives or contingent consideration
in a 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.

2.4.16. 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 instruments 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 2022. Beginning in 2023, foreign currency translation risks are hedged to a limited
extent, as the underlying currency positions are generally considered to be long-term in nature. If a hedge is enteredinto, it is accounted for as a net investment hedge.
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.

2.4.17. 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.

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FINANCIAL STATEMENTS

2.4.18. 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.
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.

2.4.19. 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; andNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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FINANCIAL STATEMENTS•

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.
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.

2.4.20. 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.

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FINANCIAL STATEMENTS

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.

2.4.21. Share-based payments
Equity-settled share-based compensation expense is recognized as a personnel cost over the vesting period of the award
at the fair value of the equity instruments granted at the grant date with a corresponding increase in equity. For cases
in which the 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
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.

2.4.22. 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.

2.4.23. 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.

2.4.24. 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, with a credit
loss is recognized for expected cash shortfalls.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 263

FINANCIAL STATEMENTS

2.5. Accounting policy changes
2.5.1. Accounting policy changes originating from the IFRS amendments
UMG has amended its accounting policies for new or amended IFRS standards and interpretations that became effective
as of 1 January 2023. None of these new or amended standards and interpretations had a material impact on adoption.
These are:•
IFRS 17 Insurance Contracts•
Definition of Accounting Estimates – Amendments to IAS 8•
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12•
International Tax Reform - Pillar Two Model Rules – Amendments to IAS 12
UMG has not early adopted any standards, interpretations or amendments that have been issued but are notyet effective.
In March 2022, the Organisation for Economic Co-operation and Development (OECD) released technical guidance on its
15% global minimum tax agreed as the Pillar Two. The Company has significant operations in several jurisdictions where
the Pillar Two rules will firstly become in effect as of financial years starting in 2024. On May 23, 2023, the IASB issued
International Tax Reform—Pillar Two Model Rules – Amendments to IAS 12. These amendments introduced a mandatory
temporary exception to IAS 12 recognition and disclosure requirements resulting from tax laws enacted or substantively
enacted to implement the (OECD) Pillar Two tax reform.

2.5.2. Impact of standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuanceof UMG's financial statements are disclosed below. UMG intends to adopt these new and amended standards andinterpretations, if applicable, when they become effective.
•
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures, effective
1 January 2024•
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback, effective 1 January 2024•
Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current
and Non-current Liabilities with Covenants, effective 1 January 2024•
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, effective
1 January 2025
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures
The amendments, effective for UMG beginning on January 1, 2024, require an entity to provide certain information about
the impact of supplier finance arrangements on liabilities and cash flows. UMG does not expect that adoption of thisstandard will have a material impact on the Consolidated financial statements.
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
The amendments, effective for UMG beginning on January 1, 2024, specify how a seller-lessee measures the lease liability
arising in a sale and leaseback transaction so that it does not recognise any amount of the gain or loss that relates to theright of use retained. UMG does not expect that adoption of this standard will have a material impact on the Consolidated
financial statements.
Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current andNon-current Liabilities with Covenants
The amendments, effective for UMG beginning on January 1, 2024, clarify the criteria for determining whether to classify
a liability as current or non-current. The amendments also include additional disclosure requirements for liabilities
classified as non-current where an entity's right to defer settlement depends on future compliance with a loan covenant
within a 12-month period. UMG does not expect that adoption of this standard will have a material impact on theConsolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 264

FINANCIAL STATEMENTS

Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rate: Lack of Exchangeability
The amendments, effective for UMG on January 1, 2025, specify how an entity should assess whether a currency is
exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The amendments
also require disclosure of information that enables users of financial statements to understand the impact of acurrency not being exchangeable. UMG is currently assessing the impact the amendments will have on the Consolidated
financial statements.

Note 3. Segment data
Operating segment data

The segment reporting that follows is aligned with internal reporting used by UMG Management to assess UMG’s
performance. UMG’s operating segments are organised by nature of the business and are the same as its reportablesegments: Recorded Music, Music Publishing and Merchandising and Other. Each of these is described at Note 1.
Corporate centre represent amounts not allocated to the operating segments and includes certain costs related to central
activities as well as group enabling functions. Management also receives information about the segment's revenue andassets. 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.
Segment EBITDA and Adjusted EBITDA are included in these disclosures because they are the primary measuresof profit or loss used by UMG Management to assess each segment’s performance and make decisions aboutallocating resources. EBITDA and Adjusted EBITDA are non-IFRS measures defined in the Appendix of the Annual Reportaccompanying these Consolidated financial statements.

Main aggregates of the Statement of profit or loss

(millions of euros)

Note

Year ended December 31, 2023

Recorded

Music

Music

Merchandising

Publishing

Corporate

and other

centre

8,461

1,943

704

Revenues

8,461

1,956

706
47

(190)

(424)

(50)

EBITDA

1,618

Amortisation anddepreciation expense

Non-cash share-based
compensation expense

11,108-(15)

11,108

(4)

(83)

-

(561)

420

43

(273)

-

1,808

(217)

(156)

(2)

(7)

-

(382)

(34)

(2)

-

(5)

-

(41)

-

7

-

-

-

7

1,393

269

41

(285)

-

1,418

2,042
23

Restructuring expenses

Gain/(loss) on sale of assets

Impairment reversal/(charge)
on intangible assets
Operating profit

Financial income

26

Financial expenses
Income/(loss) fromequity affiliates

Profit before income taxes

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

13

470

-

2

-

-

Total

-

-

Adjusted EBITDA

intersegment
transactions

External revenue

Intercompany revenue

Elimination of

-

-

(15)
-

-

-

2,369

26

454

(151)
1,721

MUSIC IS UNIVERSAL Annual Report 2023 | 265

FINANCIAL STATEMENTS

Note(millions of euros)

Year ended December 31, 2022

Recorded

Music

Music

Merchandising

Publishing

Corporate

and other

centre

7,937

1,787

616

-

Revenues1

7,937

1,799

618

10,340

36

-

(211)

(14)

10,340

(73)

(15)

-

(19)

-

(107)

EBITDA

1,827

395

36

(230)

-

2,028

Amortisation anddepreciation expense

(204)

(162)

(2)

(9)

-

(377)

(29)

(1)

-

(1)

(2)

(1)

-

(32)

-

(17)

-

-

-

(17)

1,593

215

32

(240)

-

1,600

1,900

Non-cash share-based
compensation expense

23

Restructuring expenses

Gain/(loss) on sale of assets

Impairment reversal/(charge)
on intangible assets
Operating profit

Financial income

Total

-

-

Adjusted EBITDA

intersegment
transactions

External revenue

Intercompany revenue

Elimination of

12

2

410

-

-

(14)
-

-

-

2,135

-

Financial expenses

(2)

37

(735)

Income/(loss) fromequity affiliates(2)

Profit before income taxes

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.

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.

(millions of euros)

Year ended December 31,

Year ended December 31,

2023

2022

U.S.

5,579

50%

5,163

50%

Japan

768

7%

699

7%

UK

941

Germany

576

France444

Rest of the world1

Total revenues

2,800

11,108

9%
5%
4%

25%

100%

936
499
399

2,644

10,340

9%
5%
4%

25%

100%

1 Revenues for the Netherlands was €179 million in 2023 and €229 million in 2022.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 266

FINANCIAL STATEMENTS

Disaggregated revenue information
Recorded Music
Year ended December 31,(millions of euros)

2023

Streaming revenue

Subscription revenue

2022

1,425

1,420

207

337

4,275

Downloads and other digital revenue1

3,901

Physical revenue

1,380

1,207

Recorded Music revenue

8,461

7,937

License and other revenue

1,174

1,072

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,(millions of euros)

Performance revenue

2023

2022

416

371

Digital revenue

1,128

1,040

Other revenue

50

55

Synchronisation revenue
Mechanical revenue
Music Publishing revenue

254
108

1,956

236
97

1,799

Subscriptions and streaming represents the largest type of recorded music revenue and is recognised over time andis 51% (51% in 2022) of total UMG revenues. Physical recorded music revenues are recognised at a point in time andrepresent 12% (12% in 2022) 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 2023, UMG had 3 customers that each individually represented over 10% of total revenues (3 customers in 2022) andwhich represented total revenues of 19%, 11% and 10% respectively (18%, 12% and 10% in 2022). Each customer reports
revenues in both Recorded Music and Music Publishing segments.
The amount of revenue recognized for the year ended December 31, 2023 from performance obligations satisfied (orpartially satisfied) in previous periods amounts to €203 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 267

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.

(millions of euros)

Year ended December 31, 2023
Goodwill

Royalty advances, noncurrent
Catalogues

Note

Recorded

Music

Music

Merchandising

Publishing

Corporate

and otherTotal

centre

8

779

745

100

-

1,624

9

862

508

204

-

1,574

9

1,335

1,685

-

-

3,020

9

50

31

-

99

180

Property, plant & equipment

10

Right of use relating
to leases

11

310

4

-

2

316

9

520

481

59

-

1,060

7,192

4,211

417

343

12,163

Other intangible assets

Royalty advances, current
Other assets

Total segment assets1
Unallocated assets

165

3,171

4

753

-

54

8

234

Total assets

Year ended December 31, 2022
Goodwill

Royalty advances, noncurrent
Catalogues

709

769

100

-

1,578

9

938

441

214

-

1,593

9

1,247

1,811

-

-

3,058

9

23

23

-

73

119

311

Right of use relating
to leases

11

Other assets

928

8

10

Royalty advances, current

4,212

13,091

Property, plant & equipment
Other intangible assets

177

9

Total segment assets1
Unallocated assets

152

-

10

4

1

2

464

476

44

5,984

4,145

407

2,140

Total assets

5

616

48

-

227

312

167

318
984

3,031

10,848791

11,6391 Total segment assets in the Netherlands was €1,607 million in 2023 (€931 million in 2022).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 268

FINANCIAL STATEMENTS

Content assets by segment
December 31, 2023
(millions of euros)

Note

Recorded

Music

Music

Catalogues (of music and publishing rights)

Royalty advances (to artists and repertoire owners)

Publishing

1,685
989

263

-

3,020

862

508

204

1,574

2,717

2,674

263

5,654

2,197

2,193

204

Non-current
Current

Content assets, net

520

9Current content assets

520

Non-current content assets

Total

and other

1,335
1,382

Of which:

Merchandising

481

2,634

59

481

1,060

59

1,060
4,594

December 31, 2022
(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

1,247

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

1,402

Of which:
Current

Recorded

464
464

476

44

476

44

2,577

984
984

Note 4. Cost of revenues and selling, general and administrative
expenses
Year ended December 31,(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

2022

5,152

4,704

33

30

34

35

2,048

1,537

1,056

Of which:

Included in selling, general and administrative expenses:

2023

10
11

72

1,049

74

MUSIC IS UNIVERSAL Annual Report 2023 | 269

FINANCIAL STATEMENTS

Personnel costs and average employee numbers
Year ended December 31,(millions of euros)

Note

Salaries

Social security and other employment expenses
Wages and expenses

23

Employee defined benefit plans

22

Other

2022

1,196

1,202

1,405

1,369

52

48

209

Share-based compensation plans

Employee defined contribution plans

2023

Personnel costs

600

128

2

22

2,081

Annual average number of full-time equivalent employees (in thousands)

167

10.0

3

19

1,567

9.5

Note 5. Financial income and expenses
Year ended December 31,(millions of euros)

Note

Interest income from cash, cash equivalents and other

Change in fair value of financial instruments through profit or loss
Expected return on plan assets related to employee benefit plans

Gain on derivative instruments at fair value through profit or loss1

22

Income from investments

2023

2022

14

20

1

3

431
5
3

-

13
1

Financial income

454

Change in fair value of financial instruments through profit or loss

(14)

(654)

(7)

(6)

Interest expense on borrowings

Unwinding of interest component

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)

(91)

22
11

(1)

37

(47)
(1)

(14)

(14)

(7)

(9)

(11)
(6)

(151)
303

(1)
(3)

(735)
(698)

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 2023 | 270

FINANCIAL STATEMENTS

Note 6. Income taxes
Income taxes and income tax paid by geographic area
Year ended December 31,(millions of euros)

2023

2022

U.S.

(224)

(185)

Rest of Europe

(117)

(127)

(476)

(347)

(Expense)/income
Current
UK(30)

Rest of the world(105)

Deferred1
U.S.

(24)
(11)

89

UK

9

12

Rest of Europe

Rest of the world

(1)

(105)

189

18

232

22

Income taxes

(458)

35

(115)

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 listed investments for an aggregate expense amount of €111 million in 2023, compared to €166 million benefit in 2022.

Income tax paid
Year ended December 31,(millions of euros)

2023

2022

U.S.

(208)

(187)

Rest of Europe

(57)

(36)

UK

Rest of the world1

Income tax (paid)/collected

(30)
(98)

(393)

(22)
(10)

(255)

1 The 2022 amount includes €62 million in refunds from litigations before court.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 271

FINANCIAL STATEMENTS

Effective tax rate
Year ended December 31,(millions of euros)

2023

2022

Net profit /(loss) from continuing operations

1,263

785

(Income)/loss from equity affiliates
Income taxes

Profit before income taxes excluding (income)/loss from equity affiliates

Dutch statutory tax rate

-

2

458

1,721

115

902

25.8%

25.8%

7

33

Use or recognition of tax attributes1

16

19

Settled tax litigations2-90

Theoretical provision for income taxes based on Dutch statutory tax rate
Reconciliation of the theoretical and effective provision for income taxes
Corporate tax rate differences

Impacts of the changes in tax rates

Adjustments to tax expense from previous years
Non-deductible expenses

Withholding taxes (net of Corporate Income tax benefit)
United States tax components

Foreign Derived Intangible Income (FDII) deduction
Other

Provision for income taxes
Effective tax rate

(444)

(233)

(3)

1

6

21

(19)

(8)

(58)

(56)

37
-

(458)

26.6%

31

(13)

(115)

12.7%

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 This represents the beneficial impact of two litigations finalised before tax courts in 2022.

Excluding previous years’ adjustments and the impacts of the tax litigations to income tax expense, the effective tax ratewould have been 27.9% in 2023 and 27.3% in 2022.

Deferred tax assets and liabilities
Changes in deferred tax assets/(liabilities), net
Year ended December 31,(millions of euros)

2023

2022

Opening balance of deferred tax assets/(liabilities)

(232)

(446)

25

(14)

Income taxes

Expenses and income directly recorded in equity and other comprehensive income
Changes in foreign currency translation adjustments and other
Closing balance of deferred tax assets/(liabilities), net

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

18

(8)

(197)

231

(3)

(232)

MUSIC IS UNIVERSAL Annual Report 2023 | 272

FINANCIAL STATEMENTS

Components of deferred tax assets and liabilities
Year ended December 31,(millions of euros)

2023

2022

89

98

Deferred tax assets

Recognizable deferred taxes
Tax attributes1

Of which

Universal Music US and its subsidiaries

78

Universal Music UK and its subsidiaries

45

51

Universal Music and its subsidiaries in the rest of the world

18

20

Universal Music and its subsidiaries in the rest of Europe

19

Other

Of which

non-deductible provisions

610

448

87

61

148

149

employee benefits

120

Other

255

working capital

Set-off deferred tax(137)

Total gross deferred tax assets
Deferred taxes, unrecognized
Tax attributes1

Of which

Universal Music US and its subsidiaries

19

37

201
(90)

562

456

(64)

(82)

(6)

(6)

Universal Music UK and its subsidiaries

(23)

(38)

Universal Music and its subsidiaries in the rest of the world

(18)

(20)

Universal Music and its subsidiaries in the rest of Europe

(17)

Other

(19)

Total deferred tax assets, unrecognized

(18)
(26)

(83)

(108)

Asset revaluations2

(172)

(198)

Financial instruments3

(286)

(124)

Recorded deferred tax assets

479

Deferred tax liabilities
Working capital

(172)

Other

(183)

Set-off deferred tax

137

Recorded deferred tax liabilities4(676)

Deferred tax assets/(liabilities), net5

(197)

348

(163)
(185)
90

(580)
(232)

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. €19 million of the unrecognized gross tax attributes will expire within 5 years. In addition to the unrecognizeddeferred tax assets in this table, deferred tax assets have not been recognised in respect of gross tax attributes for €1,069 million (2022: €1,279 million), as it is notprobable 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.
4 No liability has been recorded for the withholding tax to be suffered on any group entities' future dividend distributions of available earnings as of December 31, 2023 as
the impact is not material.
5 As a result of applying the Deferred Tax related to Assets and Liabilities arising from a Single Transaction - Amendments to IAS 12 the December 31, 2022 balances show agross up of the previously recorded net deferred tax assets on leases (from €26 million to €106 million) as well as a deferred tax liability of €80 million (previously nil). As alegally enforceable right to offset exists with the same taxation authority these positions have been ultimately netted.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 273

FINANCIAL STATEMENTS

Pillar Two

UMG has carried out a study on the financial impact of the Pillar Two rules on future years. Based on the currently
available information UMG estimates that this impact is not material. UMG will closely monitor the legislative
developments and guidance issued to assess potential changes in the impact on the Pillar Two rules.

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 in 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 a material impact on theGroup's financial position or liquidity.

Note 7. Earnings per share
Year ended December 31,(millions of euros and shares, except per share data)

2023

2022

Net profit attributable to equity holders of the parent

1,259

782

Weighted average number of shares outstanding (after deduction of treasury shares) during
the year

1,819

1,813

Diluted weighted average number of shares

23

1,842

3

1,816

0.69

0.43

Potential dilutive effects related to share-based compensation
Earnings per share (in euros)
Basic earnings per share

Diluted earnings per share

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

0.68

0.43

MUSIC IS UNIVERSAL Annual Report 2023 | 274

FINANCIAL STATEMENTS

Note 8. Goodwill
Changes in goodwill
Year ended December 31,(millions of euros)

2023

2022

Goodwill, gross

1,678

1,567

Goodwill, net

1,578

1,480

Acquisitions

93

19

Foreign currency translation adjustments(47)

Balance as at January 1
Accumulated impairment losses

Changes in book value:
Impairment losses
Total changes

(100)

(87)

-

(7)

86

46

98

Goodwill, gross

1,720

1,678

Goodwill, net

1,624

1,578

Balance as at December 31
Accumulated impairment losses

(96)

(100)

Goodwill by cash generating unit
Year ended December 31,(millions of euros)

2023

2022

Recorded Music

779

709

Merchandising & Other

100

100

Music Publishing
Closing balance

745
1,624

769
1,578

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 as disclosed in Note 3 above.

Goodwill impairment test

UMG conducted the full annual impairment test in the fourth quarter of 2023.
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. In 2023 and 2022, therecoverable amounts of cash generating units were determined using their value in use.
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 2024 to 2028 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:

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 275

FINANCIAL STATEMENTS

•
•
•
•

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
2023
Compound

In % per year

Annual Revenue
Growth2024-2028

Recorded Music

Music Publishing
Merchandising2022

Extrapolation

revenue growthrate after 2028

6.6%

5.9%
9.1%

Pre-tax

discount rates

CompoundAnnual Revenue
Growth2023-2027

Extrapolation

Pre-tax

revenue growthdiscount rates

rate after 2027

3.3%

10.0%

5.0%

3.4%

9.8%

2.1%

10.0%

10.8%

2.0%

9.8%

3.3%

10.0%

3.9%

3.4%

9.8%

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 in 2022 presented in the tables above relates
to a disposal of a minor operation within Music Publishing.

Note 9. Content assets (catalogues and royalty advances) and otherintangibles
Net book value
December 31, 2023

(millions of euros)

Asset value, grossAccumulated

amortisation andimpairment losses

Net book value

Catalogues (of music and publishing rights)

5,845(2,825)

3,020

Content assets

8,479(2,825)

5,654Royalty advances (to artists and repertoire owners)
Other intangible assets

2,634
585

-

(405)

2,634
180

December 31, 2022

(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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2,577
489

-

(370)

2,577
119

MUSIC IS UNIVERSAL Annual Report 2023 | 276

FINANCIAL STATEMENTS

Changes in content assets and other intangibles

Catalogues (ofmusic and

Balance December 31, 2021
Amortisation
Impairment
Additions

Disposals

Recoupments

Business combinations

Changes in foreign currency translation adjustments
and other
Balance December 31, 2022
Amortisation
Impairment
Additions

Disposals

Recoupments

Business combinations

Changes in foreign currency translation adjustments
and other
Balance December 31, 2023

assetsintangibles

repertoirerights)Total intangible

Otherartists andpublishing(millions of euros)

Royaltyadvances (to& advances

owners)

2,982

(233)

2,380

96

5,458

-

(35)

137

1,187

54

1,378

-

(1,122)-

1-(1,122)

179

132

3

314

3,058

2,577

119

5,754

7

-

-

7

(10)
(3)
6

(236)

-

-

-

(40)

(268)
(10)
(3)
7

(276)

264

1,319

103

1,686

-

(1,201)-(1,201)

(91)

(61)

(2)

(154)

3,020

2,634

180

5,834

(1)

19

-

-

(1)

19

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 €308 million (2022: €378 million) with a remaining useful life of 4 and 34 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 €559 million (2022: €626 million) with a remaining useful life of 9 and 39 years for the respective
catalogue components.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 277

FINANCIAL STATEMENTS

Note 10. Property, plant and equipment(millions of euros)Land

and machinery

241

119

Cost

Balance as at January 1, 2023
Additions

3

Transfers and reclassifications

17

Other

Assets under

fixed assets

3

Total

construction

78

20

3

47

(15)

(6)

1

(34)
-

(37)

(3)

(1)

(2)

-

(6)

242

122

74

24

462

(135)

(99)

(57)

-

(291)

15

15

6

-

36

2

1

1

-

4

(136)

(92)

(57)

-

(285)

106

20

21

20

167

and buildings

and machinery

234

111

Changes in foreign currency translation
adjustments and other
Balance as at December 31, 2023

Depreciation and impairment losses
Balance as at January 1, 2023
Depreciation during the year

(18)

Disposals

Changes in foreign currency translation
adjustments and other
Balance as at December 31, 2023
Carrying amountAs at January 1

As at December 31

106

Cost

Balance as at January 1, 2022
Additions

Transfers and reclassifications
Disposals

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
Disposals

Changes in foreign currency translation
adjustments and other
Balance as at December 31, 2022
Carrying amountAs at January 1

As at December 31

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Land

4
5

16

458

38

(16)

Disposals(millions of euros)

Equipment

and buildings

(9)

(7)

30

Equipment

4

Other

-

24

Assets under

fixed assets

1

177

Total

construction

74

(34)

9

24

428
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)

5

17

-

(10)

(7)

-

-

(35)

(2)

(2)

(2)

-

(6)

(135)

(99)

(57)

-

(291)

114

21

23

9

167

106

20

21

20

167

MUSIC IS UNIVERSAL Annual Report 2023 | 278

FINANCIAL STATEMENTS

Note 11. Leases
Changes in the rights-of-use
Year ended December 31,(millions of euros)

2023

2022

Opening balance

318

388

Additions78

25

Depreciation(72)

Disposals

Foreign currency translations and other

(74)

(1)

(26)

316

318

(7)

Closing balance5

Lease liabilities
Year ended December 31,(millions of euros)

Note

Opening balance
Additions

Disposals

Accretion of interest
Payments

Of which interest

Of which principal

Foreign currency translations and other
Closing balance

2023

2022

423

501

(1)

(26)

(94)

(100)

(80)

(86)

77

5

14

(14)

26

(9)

410

14

(14)
8

423

Maturity of lease liabilities
Year ended December 31,(millions of euros)

Maturity< 1 year

2023

86

2022

77

Between 1 and 5 years

217

228

Lease liabilities

410

423

> 5 years

107

118

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 €19 million for the year ended December 31,
2023 (compared to €18 million for the year ended December 31, 2022).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 279

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 €68 million on December 31, 2023 (2022: €74 million).

Change in value of investments in equity affiliates
Year ended December 31,(millions of euros)

2023

2022

Opening balance

156

109

-

(2)

Acquisitions

Write-downs

Income/(loss) from equity affiliates

74-

Change in other comprehensive income(4)

Translation difference-

Dividends

Closing balance

47

(2)
6

(4)

(2)

222

156

-

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 maintain a capital structure that optimizes its cost of capital. As aresult, UMG endeavours to maintain a satisfactory economic return for its shareholders and guarantee economic accessto external sources of funds.
During 2023, UMG maintained its Baa1/BBB Long Term Credit Ratings from Moody's and S&P. The syndicated RCF financial
covenant requires that UMG maintain Baa2/BBB long term ratings with Moody’s and S&P.
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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 280

FINANCIAL STATEMENTS

Free cash flow
Year ended December 31,(millions of euros)

2023

2022

Operating profit

1,418

1,600

429

107

Amortisation and depreciation expense382

Non-cash share-based compensation expense, net of employees tax withheld
Impairment (reversal)/charge on intangible assets

377

(7)

Changes in provision, net

1718(Gain)/loss on sale of assets

65

(26)

Adjustments

796

2

568

Royalty advance payments, net of recoupments

(100)

(148)

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

2,278

1,987

Net cash provided by/(used for) operating activities

1,885

1,732

(94)

(100)

Other changes in net working capital

164

Income tax paid

(393)

Net cash provided by/(used for) investing activities(622)

Repayment of lease liabilities and related interest expenses
Interest, net(77)

Other cash items related to financing activities(10)

Free cash flow

1,082

(33)

(255)

(520)
(30)
4

1,086

Changes in working capital

December31, 2022

in foreign

Business

operatingworking capital1(millions of euros)

Inventories3

Changes

Changes in

December

Other2currency

combinationstranslation

31, 2023

adjustments

Trade accounts receivableand other

163

52

-

(5)

-

210

2,014

309

3

(41)

(39)

2,246

Trade accounts receivable

580

102

3

(16)

(23)

646

Of which:

Expected credit losses

Working capital assets

Trade accounts payable
and other
Other noncurrent liabilities

Working capital liabilities
Net working capital

(62)

2,177

13

361

(1)
3

(46)

(39)

2,456

(5,150)

(527)

(9)

134

(159)

(5,711)

(437)

2

(40)

5

(245)

(715)

(5,587)

(525)

(49)

139

(404)

(6,426)(3,410)

(164)

(46)

2

93

(1)

(443)

(49)

(3,970)

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 €59 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 281

FINANCIAL STATEMENTS

Decemberworking capital1(millions of euros)in foreign

Business

operating31, 2021

Inventories3

Changes

Changes in

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)

(226)

(2)

(113)

66

(5,150)

(769)

(6)

(3)

(14)

355

(437)

(5,644)

(232)

(5)

(127)

421

(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)(3,742)

(14)

33

-

(4)

-

(114)

(2)

417

(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.

Financial risk management
UMG business activities expose the Group to financial risks, including credit risk, liquidity risk, and market risk. Market
risk comprises three types of risk: interest rate risk, foreign currency risk and other price 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-averse 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 is the risk that one party to a financial instrument will cause a financial loss for the other party by falling todischarge an obligation.
UMG's maximum credit risk exposure is equal to the carrying amounts of Trade and other receivables, refer to Note 14,
and Cash position and borrowings, refer to Note 16, as presented in the Statement of Financial Position. Also, for thederivatives and assets at fair value via profit and loss, the maximum exposure to credit risk at the end of the reporting
period is equal to the carrying amount, refer to Note 18 . The maximum credit risk exposure on guarantees issued
corresponds to their nominal amounts, as presented in Note 17 .
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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 282

FINANCIAL STATEMENTS

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 pooled up to UMG NV from all territories participating in the international cash pooling arrangement. Cash is
extracted from countries outside the cash pooling through dividends or upstream loans.
The objectives of liquidity management are to repay UMG's external debt and to pay UMG's dividend to the Group's
shareholders. The list of permitted banks for liquidity management includes nine banks with minimum 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 longterm external debt is maintained above 3 years and the current average maturity for long term external debt is 5 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, 2023, is disclosed in Note 16. Contractual obligations andtheir timing are disclosed in Note 17. In addition, as at December 31, 2023, UMG has undrawn Revolving Credit Facilities(RCF) of €2,301 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. At December 31, 2023, 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 capital markets (in particular, Euro commercial papers, private placement
and bond markets) and not rely solely on bank borrowings.
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 borrowings create an inherent interest rate risk.
UMG seeks to limit the period over which it is exposed to interest rate risk on the Group's borrowings. The preferred
method of hedging interest rate risk is issuing long-term fixed-rate bonds. The use of interest-rate plain vanilladerivatives is also authorized. The list of 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.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 283

FINANCIAL STATEMENTS

As of December 31, 2023, UMG had a ratio of fixed-rate debt to total outstanding debt of approximately 85%. A sensitivity
analysis conducted in January 2024 on the gross debt portfolio shows that if short term EURIBOR were to increase
instantaneously by 0.5% from their level of December 31, 2023, with all other variables held constant, the total change inannualized interest expense result would be €1 million.
Foreign currency risk
As any multinational group, UMG is exposed to transactional foreign currency risk on committed and forecast cash flows,that are denominated in a currency other than the transacting entity's functional currency. UMG is also exposed totranslational risk, resulting from the translation of foreign operations into Euros. The main currencies that drive UMG'sforeign currency risk are U.S. Dollar, British Pound and Japanese Yen.
UMG’s exposure to foreign exchange transactional risk is greatly limited due to the offsetting of inflows and outflows
in local currencies to the extent possible as a natural hedge. UMG Treasury mainly manages foreign currency risk
exposure on balance sheet positions, primarily cash concentrations in non-Euro currencies held under the Group's
cash pooling arrangements. UMG Treasury's foreign currency risk management policy is to hedge recognized assets andliabilities denominated in foreign currencies above a predefined threshold. UMG uses forward exchange rate contracts
and foreign exchange swaps to manage this exposure. All material foreign currency balance sheet exposures are offset
by derivatives, so potential foreign currency rate fluctuations as of December 31, 2023 would have no significant impacts
on UMG’s financial results. UMG did not apply hedge accounting to these derivatives in 2023 or 2022. 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, 2023.

(millions of euros)

Nominal value of Balance sheet exposure
Foreign exchange rate derivatives
Net exposure

USD

GBP

535

(535)
-

JPY

475

(475)
-

Other

106

Total

412

(106)

(412)

-

-

1,528

(1,528)-

Beginning in 2023, foreign currency translation risks are hedged to a limited extent, as the underlying currency
positions are generally considered to be long-term in nature. If a hedge is entered into, it is accounted for as a net
investment hedge.

Note 14. Trade and other receivables
Year ended December 31,(millions of euros)

2023

2022

Trade receivables

1,986

1,765

Trade receivables, net of value allowance

2,246

2,014

Other receivables

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

260

249

MUSIC IS UNIVERSAL Annual Report 2023 | 284

FINANCIAL STATEMENTS

Year ended December 31,(millions of euros)

2023

2022

Current

1,895

1,698

25

21

Overdue 0-30 days

Overdue 31-150 days
Overdue >150 days

Trade receivables, net of value allowance

58

8

1,986

46
-

1,765

For the movements of the expected credit loss allowance and the credit risk management policies and procedures of
UMG please refer to Note 13.

Note 15. Trade and other accounts payableYear ended December 31,(millions of euros)

Trade accounts payable

Music royalties to artists and repertoire owners
Accrued expenses
Other payables

2023

118

2022

138

3,944

3,523

852

711

389

401

Trade and other accounts payable

5,303

4,773

Trade accounts payable and other

5,711

5,150

Current contract liabilities

408

377

Out of the total amount of €377 million recognized in contract liabilities at the beginning of 2023, €321 million has beenrecognized as revenue for the year ended December 31, 2023. The total amount of current and non-current contract
liabilities as at December 31, 2023 is €428 million.

Note 16. Cash position and borrowings
Cash position
Year ended December 31,(millions of euros)

2023

2022

Cash and cash equivalents

413

439

Cash and cash equivalents in the statement of cash flows

387

438

Bank overdrafts

(26)

(1)

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 €394 million as of December 31, 2023.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 285

FINANCIAL STATEMENTS

Borrowings and other financial liabilities
December 31, 2023
(millions of euros)

Total

Bonds

December 31, 2022

Long-term

Short-term

Total

Long-term

Short-term

1,808

1,774

34

1,004

987

17

-

-

-

125

125

-

Commercial papers

197

-

197

929

-

929

Other

Borrowings at
amortized cost

73

52

21

191

1

190

2,104

1,826

278

2,250

1,113

1,137

Cash and cash equivalents

(413)

-

(413)

(439)

-

(439)

Net debt

1,689

Drawn revolving
credit facilities
Bank overdrafts

Derivative financial assets

26

-

(2)

26

-

1

(2)

-

(1)

1

-

1,810

(1)

New borrowings

In July 2023, UMG issued ¥7 billion (€45 million) of senior notes due on July 5, 2038 with a coupon of 1.61%.
In June 2023, UMG issued €750 million of senior unsecured notes due on June 13, 2031 with a coupon of 4.00%.
In March 2023, UMG entered into a short-term bilateral floating rate €500 million revolving credit facility. The facility
matures 12 months from the signing date.
In February 2023, UMG extended the original maturity of the syndicated floating rate €2 billion revolving credit facility. The
maturity date was extended for two years up to April 26, 2028. All other conditions remained unchanged.

Movements of borrowings

Drawn
Term facility(millions of euros)
Balance December 31, 2021

revolving

Bonds

creditBank

Commercial

overdrafts

papersOther debt

Total

facilities
998

New borrowings

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)

Translation differences and other movements

-

82

-

-

-

1

83

Balance December 31, 2022

-

125

1,004

1

929

191

2,250

New borrowings

-

1,075

794

26

4,738

34

6,667

Repayments-(1,200)-(1)(5,469)(145)(6,815)

Translation differences and other movements

-

-

10

-

(1)

(7)

2

Balance December 31, 2023

-

-

1,808

26

197

73

2,104

Repayments

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 286

FINANCIAL STATEMENTS

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. Until the artist or the other party has delivered his or her content or until therecoupment 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.
Total minimum future
payments as of

Minimum future payments as of December 31, 2023
Payments due in(millions of euros)

Total

1 year

2-5 years

After 5 years

December 31, 2022

Borrowings and otherfinancial liabilities

2,449

274

735

1,440

2,506

Music royalties to artists andrepertoire owners

463

94

251

118

472

3,957

3,944

13

-

3,542

603

362

240

1

470

Consolidated statement offinancial position items

1,411

949

55

407

1,156

8,883

5,623

1,294

1,966

8,146

Contractual
content commitments

1,595

815

737

43

1,562

Total off-balance
sheet commitments

287

82

135

70

244

1,882

897

872

113

1,806

Total

10,765

6,520

2,166

2,079

9,952

Lease liabilities

Creative talent and employment
agreements and others
Other payables

Other commitments

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 287

FINANCIAL STATEMENTS

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; andLevel 3: fair value measurement based on valuation techniques using inputs for the asset or liability that are not•based on observable market data.
December 31, 2023
Fair value(millions of euros)

Financial assets at fair value through profit and loss
Listed equity securities
Other financial assets

Trade and other receivables

Financial assets at fair value through othercomprehensive income
Listed equity securities through OCI

Carrying

Level 1amountLevel 2

1,227

1,227

-

-

75

Level 3

-

-

55
-

-

20

-

Unlisted equity securities

20

-

-

-

20

Trade and other receivables

2,246

-

-

-

Total financial assets

3,773

1,227

55

40

(4)

(4)

-

-

(30)

-

-

-

-

-

-

Financial assets at amortised cost
Other financial assets

Financial liabilities at fair value through profit and loss
Trade and other payables

Other non-current liabilities

Financial liabilities at amortised cost
Trade and other payables
Bonds

Borrowings, excluding bank overdrafts and bonds
Other non-current liabilities
Total financial liabilities

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

205

(35)
(5,707)(1,808)
(270)
(680)

(8,504)--(5)(1,808)-(1,817)

-

-

-

-

-

(30)

MUSIC IS UNIVERSAL Annual Report 2023 | 288

FINANCIAL STATEMENTS

December 31, 2022
Fair value
Carrying(millions of euros)

Level 11amountFinancial assets at fair value through profit and loss
Listed equity securities
Other financial assets

Level 2

597

597

1

-

51

Trade and other receivables

Financial assets at fair value through othercomprehensive income
Listed equity securities through OCI

Level 3

-

-

31

-

20

1

-

Unlisted equity securities

19

1

1

-

19

Trade and other receivables

2,013

-

-

-

Total financial assets

2,704

598

32

39

-

-

-

-

-

-

-

-

-

-

Financial assets at amortised cost
Other financial assets-

22

Financial liabilities at fair value through profit and loss
Trade and other payables

Other non-current liabilities--

Financial liabilities at amortised cost
Trade and other payables(5,150)Borrowings, excluding bank overdrafts and bonds(1,245)

Bonds

Other non-current liabilities

-

-

-

(7,836)

-

-

(987)

(437)

Total financial liabilities--(1,004)

-

-

-

(987)

-

-

-

1 Includes transfer of €31 million of equity securities from level 2 to level 1.

Listed equity portfolio
December 31, 2023
Numberof shares
held

Ownership
interest(thousands)

Spotify

Tencent
Music Entertainment

Averagepurchaseprice1,2

Stockmarketprice

Carrying

ChangeCumulativeovercaptialin valuevalue

unrealized

the period(€/share)gain/(loss)3

Sensitivity

at +/- 10 pts(millions of euros)

6,487

3.27%

6.58

171.36

1,112

629

1,069

+111/-111

12,246

0.78%

na

8.22

101

5

101

+10/-10

14

(4)

14

Other
Total

1,227

630

1,184

1 Includes acquisition fees and taxes.
2 na: not applicable.
3 Includes revaluation gains, net of liabilities, of €425 million in 2023 as recognized in Note 5.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 289

FINANCIAL STATEMENTS

December 31, 2022
Numberof shares
held

Ownership
interest(thousands)

Spotify

Tencent
Music Entertainment

Averagepurchaseprice1,2

Stockmarketprice

Carrying

ChangeCumulativeovercaptialin valuevalue

the period(€/share)unrealized

gain/(loss)3

Sensitivity

at +/- 10 pts(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

18

18

18

Other
Total

597

(816)

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.

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, 2023, the issued and fully paid share capital consisted of 1,821,665,441 ordinary shareswith a nominal value of €10 per share (2022: 1,813,512,742 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, 2023, UMG held 214,235 shares (2022: 214,235 shares) as Treasury shares.

Retained Earnings
Dividend Distribution
On May 11, 2023 the shareholders approved a dividend distribution of €0.27 per ordinary share, corresponding to a total
distribution of €492 million, payable in June 2023.
On July 26, 2023 the directors approved an interim dividend distribution of €0.24 per ordinary share, corresponding to a
total distribution of €437 million payable in October 2023.
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 2024 Annual General Meeting of Shareholders to pay a dividend of €0.27 per ordinary
share corresponding to a total distribution of €492 million, in cash, from the 2023 retained earnings, payable in Q2 2024.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 290

FINANCIAL STATEMENTS

Note 20. Expenses and income directly recognized in othercomprehensive income
Details of changes in equity related to other comprehensive income
Items not subsequently reclassified
to profit & loss

Financial

Actuarial gains/assets at(losses) related

fair value

definedotherto employee(millions of euros)

benefit plans

Balance as of December
31, 2021

Items to be subsequently reclassified to profit & loss

Other

Foreigncurrency

through

Net gain/(losses)

equity affiliates,

net investment

income fromtranslation

comprenhensive

comprehensive

adjustments

netincomeon hedge of

Othercomprehensive
income

(47)

(13)

(200)

(3)

-

(263)

49

8

184

6

-

247

(13)

-

-

-

-

(13)

(11)

(5)

(16)

3

-

(29)

Expenses andincome directly
recognized in othercomprehensive income

(5)

(1)

(150)

(4)

8

(152)

Balance as of December
31, 2023

2

-

-

-

-

2

(14)

(6)

(166)

(1)

8

(179)

Expenses andincome directly
recognized in othercomprehensive income
Tax effectBalance as of December
31, 2022

Tax effectNote 21. Provisions
Year ended December 31,(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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note

2023

2022

22

166

166

31

31

129
19
21
56

422

(122)
300

126
16
5

50

394

(103)
291

MUSIC IS UNIVERSAL Annual Report 2023 | 291

FINANCIAL STATEMENTS

Based on the historical utilisation rate, UMG expects the royalty audit claims provision will be utilized mainly within thenext 5 years.

Movements in provisions(millions of euros)

Restructuring

Litigation

Balance as at January 1, 2023

16

Utilizations(24)

Royalty audit claims

Other

Total

5

126

50

197

-

(20)

(14)

(58)

-

-

(3)

10

7

Balance as at December 31, 2023

19

21

129

56

225

Non-current

-

5

70

47

122

Additions
Releases

Changes in foreign currencytranslation adjustments
Current

27

16

-

-

19

43

16

(17)

16

(6)

59

9

102

(23)

103

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.
2022

2023
(millions of euros)

Fair value of

Obligation

Net obligation/plan assets(asset)Fair value of

Obligation

Net obligation/plan assets(asset)Germany

136

(1)

135

134

(2)

132

Other

38

(35)

3

41

(39)

2

U.S.

Total

of which

18

192

assets related to employee
benefit plansliabilities for employee
benefit plans

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

-

(36)

18

156

19

194

-

(41)

19

153

(10)

(13)

166

166

MUSIC IS UNIVERSAL Annual Report 2023 | 292

FINANCIAL STATEMENTS

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 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 2024

In 2024 UMG expects a cash outflow of €13 million in relation to all defined benefit plans.

Net defined benefit obligations/(assets)

Movements of the net defined benefit obligations and plan assets for the year ended on December 31, are presented in
the table below.
2022

2023
Note

(millions of euros)

Opening balance

Current service cost

(Gain)/loss on settlements

4

Other

Impact on selling &administrative expenses

Obligation

Expected return on plan assets

Obligation(asset)

-

-

-

-

-

-

7
-

-

-

-

7

6

(1)

8

Experience adjustments

(3)

-

(3)

Demographic assumptions

(1)

-

(3)

6

10

51

1

-

-

5

(100)

-

(12)

(12)

Benefits paid by the employer

(12)

12

-

Closing balance

192

(36)

Foreign currency and otherof whichwholly or partly funded benefits
wholly unfunded benefits

1

assets related to employee
benefit plans

(2)

4

-

2

156

33

-

(121)
(12)
(9)

194

3

61

-

(111)

51

(49)

(12)

(12)

12

-

121
9

(41)

1

-

153

38

159

liabilities for employee benefit plans

6

9

5

2

-

3

(3)

(1)

(2)

-

-

6

-

Benefits paid by the fund

-

3

(3)

(111)

Contributions by employers

-

(3)

9

20

-

-

3

9

9

3

2

6

Included in othercomprehensive income(asset)208(1)

Financial assumptions

assetsNet

obligation/

(219)

7

Actuarial losses/(gains) related to:of plan

427

2

(1)

Included in the statement of profit
or loss

Fair value

153

-

(1)

Impact on other financial income

5

assetsNet

obligation/

(41)

2
-

5

of plan

194

2Interest cost

Fair value

156
(10)

(13)

166

166

1 Included a current liability of €13 million as of December 31, 2023 and €14 million as of December 31, 2022

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 293

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 weighted-average assumptions used to calculate the definedbenefit obligation as of December 31 were as follows:
Germany
2023

U.S.
2022

2023

Weighted average of all plans
2022

2023

2022

Discount rate

3.50%

3.75%

5.28%

5.00%

3.51%

3.58%

Rate of compensation increase

2.50%

2.50%

na

na

2.39%

1.93%

Inflation rate

Duration of the benefit obligation(in years)

2.00%

2.00%

na

na

2.00%

2.00%

9.6

10.4

na: not applicable.

A 50 basis point increase (or a 50 basis point decrease, respectively) to the 2023 discount rate would have led to adecrease in the defined benefit obligation of €9.1 million (or an increase of €9.9 million, respectively), assuming all otherassumptions remain unchanged.

Pension plan assets allocation
Year ended December 31,(millions of euros)

2023

2022

Insurance contracts

54%

55%

Debt securities

15%

14%

Equity securities

Diversified funds
Cash and other
Total

21%
0%

10%

100%

20%
0%

11%

100%

Note 23. Share-based compensation plans
In 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 alignthe interests of the employees of UMG with its shareholders’ interests by providing them with an additional incentive toimprove 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 inequity at the discretion of UMG. In 2023, the equity plan was extended to additional executives and a number of senior
management personnel, resulting in the issuance of additional RSUs, PSUs and also Performance Stock Options (PSOs).

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, certain
senior executives and senior management are granted RSUs, being a right to receive shares upon vesting. The awards
have vesting periods of 2.5 to 8 years and will vest in 3 equal instalments if the service condition is fulfilled. The total
number of RSUs granted as at December 31, 2023 was 17.06 million and the grant date weighted-average UMG N.V. sharemarket price was €21.50.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 294

FINANCIAL STATEMENTS

In addition, a one-off RSU award was granted to certain senior executives and senior management with an average 15
months vesting period in 2 equal instalments. The total number of these RSUs granted was 9.66 million and the grant
date weighted-average UMG N.V. share market price was €21.18.
There was a number of RSUs granted with slightly different service conditions. The grant date weighted-average UMG
share market price was €22.67 per share corresponding to the total fair value of €51 million of such awards.
The share rights are dividend-bearing during the service period. The total expense for these awards recognised in 2023
was €469 million (2022: €74 million) and the total equity reserve at December 31, 2023 was €308 million (2022: €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, certain
senior executives and senior management are granted PSUs, being a right to receive shares upon vesting. The vesting ofthese rights is subject to service, market and non-market performance conditions.
For these PSUs, the total number of shares delivered will range from 0% to 200% of the number of PSUs granted basedon certain performance conditions tailored to each participant. These include non-market performance conditions: target
compound annual growth rate for revenues (Revenue CAGR) and Adjusted EBITDA (Adjusted EBITDA CAGR) and a market
performance condition: relative total shareholder return (TSR). In addition, the employee must remain in continued
service for a three-year period. The share rights are dividend-bearing during the performance period.
The total number of PSUs granted as at December 31, 2023 is 5.09 million and the weighted average grant date fair value
per award was €25.45. The grant date fair value was estimated taking into account the market performance condition.
There was a small number of PSU awards with slightly different service and performance conditions. The estimated grant
date UMG share market price of €25.81 per share corresponding to the total fair value of €18 million of such awards.
The total expense for these awards recognised in 2023 was €47 million (2022: €5 million) and the total equity reserve at
December 31, 2023 was €52 million (2022: €5 million).

Annual Incentive Program (AIP)In 2022, the AIP for senior executives, which was previously settled only in cash and accrued throughout the year, wasmodified to allow UMG the choice of whether to settle in cash, shares, or a combination of the two. 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 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, 2023, being the start of the service period for the 2023 award, was€47 million (2022: €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, revenue 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 number of shares granted is based on the total value of the award and UMG’s share price on 15 March. The total fairvalue of the equity-settled portion of the total AIP is €25 million (2022: €21 million).

UMG Performance Stock Options (PSOs)

During the first half of 2023, PSOs were granted to a senior executive.
The PSOs are subject to a service condition and a market condition. Under the service condition, the options will vest
annually in four substantially equal instalments on each of the first four anniversaries of the grant date, subject tothe senior executive’s continued employment by UMG on those dates. The market condition requires that certain stock
price hurdles be met before the PSOs become exercisable. The stock price hurdles are met as follows: one-third of the
PSOs each becomes exercisable at hurdle prices of €26.50, €30.00 and €38.00, respectively, based on the preceding 30-day
average closing price of UMG N.V. shares. The senior executive must be employed by UMG on the occurrence of the stock
price hurdles. As a result, the PSOs vest at the later of completion of service condition or the stock price hurdle. Awards

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 295

FINANCIAL STATEMENTS

will forfeit if the relevant stock price hurdle is not met in the five-year period following the grant date. The PSOs will
be equity-settled.
The PSOs were granted on March 30, 2023 at a total fair value of €45.9 million ($50 million), the grant date fair value
used for recognising the expense on these awards. In accordance with the PSO terms, the number of options issued wasdetermined at a later valuation date, April 30, 2023. As of this valuation date, a Monte Carlo simulation was performed todetermine the number of options to be issued so that the per unit fair values summed in total to the grant date fair value.
The valuation exercise simulated the stock price of UMG over the contractual term, taking into account the terms andconditions on which the options were granted, expected dividend distributions and the historical volatility of UMG. UMG’shistorical volatility was also benchmarked against the long-term volatility of other listed groups considered comparable
to UMG.
The number and weighted average exercise price (WAEP) of, and movements in, share options during 2023 wereas follows:
2023
Number (thousands)

Outstanding at 1 January

WAEP

-

Granted during the year

Forfeited during the year

8,625

€ 19.81-na-

Exercised during the year
Expired during the year-

Outstanding at 31 December

8,625

Exercisable at 31 December

na

-

na
na

€ 19.81na

The weighted average remaining contractual life for the share options outstanding as at December 31, 2023 was
4.34 years.
The weighted average fair value of options granted during the year was €5.3.
The range of exercise prices for options outstanding at the end of the year was €19.81.
The following table lists additional inputs to the Monte Carlo model used for the PSOs for the 2023 awards granted:

2023

Dividend yield (%)

2.00

Expected volatility (%)

34.60

Weighted average share price at valuation date (€)

19.81

Risk free interest rate (%)

2.64

The dividend distribution during the lifetime of the option has been estimated based on historical and forecasted dataand is not necessarily indicative of yield patterns that may occur. The expected volatility reflects the assumption thatthe historical volatility over a period similar to the life of the options is indicative of future trends, which also may notnecessarily be the actual outcome.
The total expense for these awards recognised in 2023 was €10 million and the total equity reserve at year end was€10 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 296

FINANCIAL STATEMENTS

Estimated future tax obligation

An estimate of the amount that UMG expects to transfer to tax authorities to settle the employees’ tax obligations inrelation to all RSU, PSU, PSO and AIP is €439 million (2022: €51 million).

All Employee Award

In October 2022, each eligible employee of UMG was granted 100 shares to be vested at the end of one-year service
period. The grant date share price was €17.25 per share. A total of 0.75 million shares was granted with the majority
vesting in October 2023.
The total expense for these awards recognised in 2023 was €9 million (2022: €4 million) and the total equity reserve atyear end was €0 million (2022: €4 million).

UMG shares granted upon separation from Vivendi and direct listing on the Euronext Amsterdam

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 settled in 2023 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 2023. The final tranche was settled in 2023. There is a
total equity reserve of €0 million as at year end 2023 (2022: €11 million).

Vivendi Share Awards

In 2023, UMG recognised €0 million expense (2022: €1 million) relating to legacy Vivendi share based payment plans forawards granted prior to UMG’s separation from Vivendi. No additional awards will be granted from these plans.

UMG-Vivendi Performance Awards

In 2021, to compensate for any effect of the UMG separation on the Vivendi share price, UMG announced that it will
issue its own shares for every Vivendi share earned by the UMG participants of Vivendi’s performance share plans,
which were granted in 2017 – 2020 while UMG was part of Vivendi. The amount of Vivendi shares (and accordingly UMG
shares in 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 €0 million wasrecognised in 2023 (2022: €2 million) and total equity reserve of €2 million (2022: €15 million) as at year end 2023.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 297

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, 2023, UMG's Corporate Executives are comprised of 9 (2022: 9) members, of which 2 (2022: 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 thetable below.
Year ended December 31, 2023
(millions of euros)

Other Corporate
Executives

Executive

Corporate

Directors

Executives

Short-term employee benefits

18

29

47

Other long-term benefits

2

-

2

Share-based payments

70

38

108

Post-employment benefits-

Termination benefits--

Corporate Executives

-

-

90

-

67

157

Year ended December 31, 2022
(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
Corporate Executives

-

33

51

-

-

-

50

-

33

101

Refer to the Remuneration Report section in the Annual Report for more detail.

Non-executive board compensation

As of December 31, 2023 UMG's non-executive board received director fees of €1 million (2022: €1 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, 2023, transactions with Vivendi are still qualified as transactions with related parties under IAS 24.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 298

FINANCIAL STATEMENTS

UMG distributes its cash surpluses to shareowners through dividends and share capital reductions (please refer toNote 19 ). Vivendi and UMG had previously entered into a transition and services agreement in connection with theseparation, the terms of which Vivendi and its subsidiaries will provide to UMG, and UMG will provide to Vivendi and its
subsidiaries, on an interim, various transitional basis 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 inconnection with the direct listing on the Euronext Amsterdam. This transaction and services agreement ceased in thefirst half of 2023.
The balances and transactions with the parties described above are summarised in the table below:
December 31, 2023
(millions of euros)

Associates

Shareholders

Other

Total

Statement of Financial Position
AssetsTrade accounts receivable

Non-current financial assets
Royalty advances

Trade accounts payable
Revenue

Cost of revenues

4

1

-

-

-

105

Liabilities

Statement of Profit or Loss

52

-

57

-

105

-

-

-

-

-

268

8

2

278

(2)

(2)

-

(4)

-

-

-

-

-

Selling, general and administrative expenses
Services billed by Shareholders included in profit and loss
Share-based compensation plans

-

-

-

December 31, 2022
(millions of euros)

Associates

Shareholders

Other

Total

Statement of Financial Position
AssetsTrade accounts receivable

49

6

-

55

Royalty advances

-

-

25

25

-

1

-

1

275

13

-

288

(2)

(3)

Non-current financial assets
Liabilities

Trade accounts payable

Statement of Profit or Loss
Revenue

Cost of revenues

Selling, general and administrative expenses
Services billed by Shareholders included in profit and loss
Share-based compensation plans

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

17

-

-

-

(4)

(1)

-

-

-

17

(4)

(5)
(1)

MUSIC IS UNIVERSAL Annual Report 2023 | 299

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 372 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 2023 | 300

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,(millions of euros)

2023

2022

Ernst & Young

Deloitte

Ernst & Young

Accountants LLP

Accountants B.V.

Accountants LLP

Audit of UMG and its subsidiaries

8

4

6

Tax services

-

-

-

Other statutory services

Other non-audit services
Total1

-

8

-

-

-

-

4

6

1 At the 2023 AGM, Ernst & Young Accountants LLP was appointed as the sole external auditor of UMG from 2023 to 2025. Total fees charged by the Dutch organization of
Ernst & Young was €4 million (2022: €2 million). Total fees charged by the Dutch organization of Deloitte in 2022 was €2 million.

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 2023 | 301

FINANCIAL STATEMENTS

In addition UMG has provided guarantees to the following subsidiaries, incorporated in Germany, under the registerednumber indicated, under section 264 paragraph 3 of the German Commercial Code. The financial data for thesecompanies are also consolidated within these financial statements therefore the German entities are allowed to prepare
abridged financial statements which are exempt from publication and audit.

Company

Name

NumberArabella Musikverlag GmbHHRB 110271

Deutsche Grammophon Gesellschaft mbH

HRB 138012

Centre Stage Artist Management GmbHHRB 66733

Dreiklang-Dreimasken, Bühnen- und Musikverlag Gesellschaft mit beschränkter Haftung
G. RICORDI & Co. Bühnen- und Musikverlag GmbH

Musik Edition Discoton, Gesellschaft mit beschränkter HaftungRob. Forberg Musikverlag GmbH
Rondor Musikverlag G.m.b.H.
Sheffield Music GmbH

UNIVERSAL / MCA Music Publishing GmbH
Universal Music Entertainment GmbH
Universal Music GmbH

Universal Music Publishing GmbH

Universal Production Music GmbHHRB 110736
HRB 153334
HRB 110249
HRB 153343
HRB 89705

HRB 221164
HRB 85574
HRB 86559

HRB 158632
HRB 87411

HRB 113037

Note 29. Subsequent events
In February 2024, UMG announced agreements to invest in Chord Music Partners (“Chord”), NTWRK and Mavin Global(“Mavin”). Total cash consideration for these investments will be approximately €450 million. UMG expects to account for
its investments in Chord and NTWRK as associates using the equity method. UMG expects to account for its investment in
Mavin as a business combination. The NTWRK and Chord transactions closed in March 2024 while the Mavin transaction
remains subject to regulatory approval and is expected to close later in 2024.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 302

COMPANY STATEMENTS

FINANCIAL STATEMENTS

COMPANY STATEMENTSCONTENTS OF COMPANY STATEMENTS
Company Statement of Profit or Loss and Other Comprehensive Income

305

Company Statement of Cash Flows307

Company Statement of Financial Position

Company Statement of Changes in Equity

306
308

NOTES TO THE COMPANY FINANCIAL STATEMENTS

309

Note 1.

General information

Note 2.

Basis of preparation

309

Note 3.

General and administrative expenses

Note 4.

Financial income and expenses

Note 5.

Investments in subsidiaries

Note 6.

Current and non-current financial assets

Note 7.

Cash position and borrowings

Note 8.

Contractual obligations and other commitments

Note 9.

EquityNote 10.

Related parties

Note 11.

Statutory audit fees

Note 12.

Subsequent events

309
314
314
315
316
317
319
320
323
323
324

MUSIC IS UNIVERSAL Annual Report 2023 | 304

FINANCIAL STATEMENTS

Company Statement of Profit or Loss andOther Comprehensive Income
Year ended December 31,(millions of euros)

Note

2023

2022

General and administrative expenses

3

(7)

(4)

Financial income

4

Operating profit

Financial expenses

Profit/(loss) before income taxes

4

(7)

43

(142)

(4)

36

(45)

(106)

(13)

Profit/(loss) after income taxes

(79)

(16)

Net loss attributable to equity holders of the Company

(79)

(16)

Income taxes

Total comprehensive loss attributable to equity holders of the Company

COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

27

(79)

(3)

(16)

MUSIC IS UNIVERSAL Annual Report 2023 | 305

FINANCIAL STATEMENTS

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

Right of use assets

Investments in subsidiaries

Non-current financial assets
Deferred tax assets

Note

2023

5

35,9306

Non-current assets

1

6

30

2022

1

33,0001,976-

35,967

34,977

66

333

67

343

TOTAL ASSETS

36,03435,320Share capital

18,217

18,135Current financial assets

Cash and cash equivalents
Current assets

67Additional paid-in capital

14,994

Treasury Shares

Retained earnings

1(5)(1,442)

10

14,935(5)(721)

Total equity

9

31,76432,344Long-term borrowings

7

1,774

1,112

1,775

1,113

2,490

1,856

Current liabilities

2,495

1,863

Total liabilities

4,270

2,976

TOTAL EQUITY AND LIABILITIES

36,03435,320Long-term lease liabilities
Non-current liabilities

Short-term borrowings

Trade and other payables

COMPANY STATEMENT OF FINANCIAL POSITION

7

1

5

1

7

MUSIC IS UNIVERSAL Annual Report 2023 | 306

FINANCIAL STATEMENTS

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

Note

2023

2022

Operating profit

(7)

(4)

Adjustments for accrued interest-(3)

Operating activities
Changes in net working capital(7)-

Net cash used for operating activities before income tax paid

(14)

(7)

Net cash provided by/(used for) operating activities

(18)

(10)

-

(5)

Income tax paid

Investing activities

Increase in financial assets

Proceeds from financial assets
Interest received

(4)

6
6

Proceeds from subsidiaries on issuance of Share Based Payments awards
Net cash provided by/(used for) investing activities
Financing activities

Distributions to equity holders

9

Proceeds from borrowings

7

Transactions with shareowners
Repayments of borrowings
Interest paid

7

Other cash items related to financial activities

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

COMPANY STATEMENT OF CASH FLOWS

-

200

495

-

43

7

34

538

229

(929)

(798)

(929)

7,198

(798)

5,573

(6,669)(5,018)

(6)

-

(127)

(19)

(533)

(262)

10

53

(13)

7

(3)

(3)

(43)

10

MUSIC IS UNIVERSAL Annual Report 2023 | 307

FINANCIAL STATEMENTS

Company Statement of Changes in Equity
Year ended December 31, 2023
NumberAdditional
paid-

Treasury

Retained

Share Capitalin capitalshares

Earnings

Total equity

1,813,513

18,135

14,935(5)(721)

32,344

Net loss

-

-

-

-

(79)

(79)

TOTAL COMPREHENSIVE INCOME

-

-

-

-

(79)

(79)

of shares(millions of euros)

Note(thousands)

BALANCE AS OF DECEMBER 31, 2022

Dividends paid

9

-

-

-

-

(929)

(929)

Share-based compensation plans

9

8,152

82

59

-

287

428

TOTAL CHANGES OVER THE PERIOD

8,152

82

59

-

(642)

(501)

BALANCE AS OF DECEMBER 31, 2023

1,821,665

18,217

14,994(5)(1,442)

31,764

Year ended December 31, 2022
NumberAdditional
paid-

Treasury

Retained

Share Capitalin capitalshares

Earnings

Total equity

1,813,376

18,134

14,941(12)(8)

33,055Net loss

-

-

-

-

(16)

(16)

TOTAL COMPREHENSIVE INCOME

-

-

-

-

(16)

(16)

-

-

-

-

(798)

(798)

of shares(millions of euros)

Note(thousands)

BALANCE AS OF DECEMBER 31, 2021

Dividends paid

9

Share-based compensation plans

9

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

COMPANY STATEMENT OF CHANGES IN EQUITYMUSIC IS UNIVERSAL Annual Report 2023 | 308

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.
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, 2023, 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 28, 2024 and will be submitted for adoption to the Annual General Meeting of Shareholders on May 16, 2024.

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, 2023 (the “Consolidated financial statements”), except for themeasurement of the investments as presented under Note 2.4 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 2023 | 309

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 2023 accounting policy changes originated from the IFRS amendments, which became effective as at 1 January 2023,
however, the impact from their adoption on the Company financial statements of UMG N.V. was not material.
Accounting policy changes originating from the IFRS amendments
The Company has amended its accounting policies for new or amended IFRS standards and interpretations that became
effective as of 1 January 2023. None of these new or amended standards and interpretations had a material impact on
adoption. These are:
IFRS 17 Insurance Contracts•
Definition of Accounting Estimates – Amendments to IAS 8•
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12••
International Tax Reform - Pillar Two Model Rules – Amendments to IAS 12
The Company has not early adopted any standards, interpretations or amendments that have been issued but are notyet effective.
In March 2022, the Organisation for Economic Co-operation and Development (OECD) released technical guidance on its
15% global minimum tax agreed as the Pillar Two. The Company has significant operations in several jurisdictions where
the Pillar Two rules will firstly become in effect as of financial years starting in 2024. On May 23, 2023, the IASB issued
International Tax Reform—Pillar Two Model Rules – Amendments to IAS 12. These amendments introduced a mandatory
temporary exception to IAS 12 recognition and disclosure requirements resulting from tax laws enacted or substantively
enacted to implement the (OECD) Pillar Two tax reform.
Impact of standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance ofCompany's financial statements are disclosed below. The Company intends to adopt these new and amended standards
and interpretations, if applicable, when they become effective.
•
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures, effective
1 January 2024•
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback, effective 1 January 2024•
Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current
and Non-current Liabilities with Covenants, effective 1 January 2024•
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, effective
1 January 2025
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures
The amendments, effective for the Company beginning on January 1, 2024, require an entity to provide certain
information about the impact of supplier finance arrangements on liabilities and cash flows. The Company does notexpect that adoption of this standard will have a material impact on the financial statements.
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
The amendments, effective for the Company beginning on January 1, 2024, specify how a seller-lessee measures thelease liability arising in a sale and leaseback transaction so that it does not recognise any amount of the gain or loss
that relates to the right of use retained. The Company does not expect that adoption of this standard will have a material
impact on its financial statements.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 310

FINANCIAL STATEMENTS

Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current andNon-current Liabilities with Covenants
The amendments, effective for the Company beginning on January 1, 2024, clarify the criteria for determining whether
to classify a liability as current or non-current. The amendments also include additional disclosure requirements forliabilities classified as non-current where an entity's right to defer settlement depends on future compliance with a loan
covenant within a 12-month period. The Company does not expect that adoption of this standard will have a material
impact on the Consolidated financial statements.
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rate: Lack of Exchangeability
The amendments, effective for the Company on January 1, 2025, specify how an entity should assess whether acurrency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The
amendments also require disclosure of information that enables users of financial statements to understand the impactof a currency not being exchangeable. The Company is currently assessing the impact the amendments will have on its
financial statements.

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

Investments in subsidiaries are stated at cost, less impairment.
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 based on
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 recognizedimpairment losses may no longer exist or may have decreased. If such an indication exists, the Company makes anestimate of the recoverable amount. A previously recognized impairment loss is reversed only if there has been a change
in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognized. If thatis the case, the carrying amount of the asset is increased to its recoverable amount, up to a maximum of the carrying

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 311

FINANCIAL STATEMENTS

amount that would have been determined if no impairment loss had been recognized for the asset in prior periods. Sucha reversal is recognized in the income 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 and 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 an integral
part of the effective interest.
These costs are to be capitalised and recognised going forward as an adjustment to the effective interest rate forthe bonds.

2.12 Related parties

A related party is a person or an entity that is related to the Company. These include both people and entities that have,or are subject to, the influence or control of the Company (e.g. key management personnel). Transactions with relatedparties are accounted for in accordance with the requirements of relevant IFRSs and take into account the substance aswell as the legal form.

2.13 Contingent 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.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

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FINANCIAL STATEMENTS

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 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 measured at cost, less any accumulated depreciation and impairment losses, and adjusted forany remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized,
initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives
received. The recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimateduseful life and the lease term. Amounts received for leasehold improvements are depreciated over 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
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 or a change in the in-substance fixed lease payments.
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.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 313

FINANCIAL STATEMENTS

Note 3. General and administrative expenses
General and administrative costs consisted of the following:
Year ended December 31,(millions of euros)

2023

2022

Salaries

109Social security and other employment expenses

1

1

Pension--Wages and expenses

11

10

Audit fees

44Legal and professional fees1

10

7

Other

(18)

(17)

Annual average number of full-time equivalent employees, of which none worked fromoutside of the Netherlands.

39

35

2

Total

7

4

1 Legal and professional fees mainly relate to legal, financial and consulting services.
2 Other consists of employee and service costs charged to and from subsidiaries.

Note 4. Financial income and expenses
Financial income and expenses consisted of the following:
Year ended December 31,(millions of euros)Interest income from intercompany loans

Financial income

2023

2022

43

36

43

36

Interest expense on borrowings

(134)

(36)

Financial expenses

(142)

(45)

Cost of finance

NOTES TO THE COMPANY FINANCIAL STATEMENTS

(8)

(9)

MUSIC IS UNIVERSAL Annual Report 2023 | 314

FINANCIAL STATEMENTS

Note 5. Investments in subsidiaries
Investments in subsidiaries consist of the following investments:
Net carrying value
Year ended December 31,(millions of euros)

Voting % interest

Universal International Music B.V.; Hilversum; The Netherlands

100

Universal Music Group, Inc.; Santa Monica; USA

100

2023

2022

21,08018,15035,93033,00014,85014,850On June 1, 2023, the Company made non-stipulated share premium contributions of €2,175 million and €755 million to
Universal International Music B.V. Refer to Note 6 and 7.
Net result and equity as per the 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,

2022

2021

2022

2021

(480)

(68)

6,018

6,498

714

931

3,925

3,358

1 Millions of euros
2 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 2023 | 315

FINANCIAL STATEMENTS

Note 6. Current and non-current financial assets
At December 31, 2022, current and non-current financial assets consisted primarily of loans receivable of €2,174 million
from Universal International Music B.V. (“UIM”). These loans were issued primarily for the purpose of refinancing of debt
granted by Vivendi SE to UIM. Loans receivable are denominated in Euro.
The first loan bore interest at a rate of EURIBOR 3 months plus margin. Margin for 2023 was set at 1.03% (2022: 1.03%).
On June 1,2023, the Company contributed the full receivable, including accrued interest, with a total book value of€805 million, to UIM as a non-stipilated share premium contribution, without the issue of shares in the capital of UIM.
The second loan bore interest at a rate of EURIBOR 1 month plus margin. Margin for 2023 was set at 1.13% (2022: 1.13%).
On June 1,2023, the Company contributed the full receivable, including accrued interest, with a total book value of€1,370 million, to UIM as a non-stipilated share premium contribution, without the issue of shares in the capital of UIM.
Other non-current financial assets consist of capitalized bank fees of €6 million paid to banks as part of obtaining thecredit facility as disclosed in Note 7, less amortization over the term of the facility.
Other current financial assets consisted of the following:
Year ended December 31,(millions of euros)

Current intercompany receivables

Other intercompany receivables related to share-based compensation

2023

2022

19

18

47

66

108

126

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.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 316

FINANCIAL STATEMENTS

Note 7. Cash position and borrowings
Cash position
Year ended December 31,(millions of euros)

2023

2022

1

10

(3)

10

Cash and cash equivalents
Bank overdrafts(4)

Cash and cash equivalents in the statement of cash flows-

Borrowings
December 31, 2023
(millions of euros)

Bonds

Drawn revolving
credit facilities

Commercial papers

Intercompany payable
Bank overdrafts

Total

Long-term

December 31, 2022
Short-term

Total

Long-term

Short-term

1,808

1,774

34

1,004

987

17

-

-

-

125

125

-

2,255

-

2,255

910

-

1,774

2,490

197
4

4,264

-

197
4

929
-

2,968

-

1,112

929
910

-

1,856

New borrowings
In July 2023, the Company issued ¥7 billion (€45 million) of senior notes due on July 5, 2038 with a coupon of 1.61%.
In June 2023, the Company issued €750 million of senior unsecured notes due on June 13, 2031 with a coupon of 4.00%.
In March 2023, the Company entered into a short-term bilateral floating rate €500 million revolving credit facility. The
facility matures 12 months from the signing date.
In February 2023, the Company extended the original maturity of the syndicated floating rate €2 billion revolving credit
facility. The maturity date was extended for two years up to April 26, 2028. All other conditions remained unchanged
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 the EUR commercial paper program bears variable interest rates of EURIBOR plus
margin. The margin was 0.24% as of December 31, 2023 (2022: 0.36%) 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
During 2023, the Company maintained its Baa1/BBB Long Term Credit Ratings from Moody's and S&P. The syndicated RCF
financial covenant requires that UMG maintain Baa2/BBB long term ratings with Moody’s and S&P.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 317

FINANCIAL STATEMENTS

Movements of borrowings
The movements in borrowings were as follows:

Drawn

Term

(millions of euros)

Revolving

Facility

Balance December 31, 2021
New borrowings
Repayments

Balance December 31, 2022
New borrowings
Repayments

Non-stipulated sharepremium contribution

Translation differences andother movements
Balance December 31, 2023

Credit

Bank

Bonds

Overdrafts

Facility

998

1,050

(1,006)(1,843)

-

1,075

8

-

-

Total

payable384-(2,188)-(5,037)

794

4

4,738

591

7,202

-

125

1,004

-

(1,200)

-

-

-

-

-

Inter-

company

-

1,004

-

Papers-918-

Commercial

10

1,808

-

3,117

526

2,432

5,573

929

910

-

(5,469)-(6,669)

-

-

755

755

-

4

(1)

197

-

2,256

2,968

9

4,265

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.
The Company 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 list of authorized instruments includes Interest rate swaps, FRAs, caps, and floors.
As of December 31, 2023, the Company had a ratio of fixed-rate debt to total outstanding net debt of approximately 87%,
including lease liabilities. A sensitivity analysis conducted in January 2024 on the gross debt portfolio shows that if shortterm EURIBOR were to increase instantaneously by 0.5% from their level of December 31, 2023, with all other variables
held constant, the additional annualized interest expense would be €1 million.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 318

FINANCIAL STATEMENTS

Note 8. 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, 2023

payments as ofPayments due in(millions of euros)

Drawn revolving credit facility
Term Loan
Bonds

Commercial Papers
Lease liabilities

Total

1 year

2-5 years

December 31, 2022

After 5 years

-

-

-

-

128

2,239

64

735

1,440

1,263

-

-

201

201

2,440

265

-

-

-

735

-

1,440

-

934
-

2,325

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 Company believes that the cash flow generated by the operations of its investments, its cash surpluses, net ofamounts 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, 2023, the Company provided guarantees over certain debt of the following subsidiaries: Universal Music
Group Treasury S.A.S. €190 million; Universal Music Ltda. (Brazil) €86 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, Germany 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.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 319

FINANCIAL STATEMENTS

Name

Company Number

Universal International Music B.V.

31018439

Universal Music Publishing B.V.

32101966

Universal Music Publishing International B.V.

31037866

CMHL B.V.

32140273

Universal Production Music B.V.

85798479

The Company is head of the fiscal unity of Universal Music Group in the Netherlands. As a result, the Company is liable
for the tax liability of the fiscal unity in the Netherlands.
In addition UMG has provided guarantees to the following subsidiaries, incorporated in Germany, under the registerednumber indicated, under section 264 paragraph 3 of the German Commercial Code.

Name

Company Number

Arabella Musikverlag GmbHHRB 110271

Deutsche Grammophon Gesellschaft mbH

HRB 138012

Centre Stage Artist Management GmbHHRB 66733

Dreiklang-Dreimasken, Bühnen- und Musikverlag Gesellschaft mit beschränkter Haftung
G. RICORDI & Co. Bühnen- und Musikverlag GmbH

Musik Edition Discoton, Gesellschaft mit beschränkter HaftungRob. Forberg Musikverlag GmbH
Rondor Musikverlag G.m.b.H.
Sheffield Music GmbH

UNIVERSAL / MCA Music Publishing GmbH
Universal Music Entertainment GmbH
Universal Music GmbH

Universal Music Publishing GmbH

Universal Production Music GmbHHRB 110736
HRB 153334
HRB 110249
HRB 153343
HRB 89705

HRB 221164
HRB 85574
HRB 86559

HRB 158632
HRB 87411

HRB 113037

Note 9. Equity
Share capital

The Company has an authorized share capital of €27,000 million, divided into 2,700,000,000 ordinary shares with anominal value of €10 per share. On December 31, 2023, the issued and fully paid share capital consisted of 1,821,665,441
ordinary shares with a nominal value of €10 per share (2022: 1,813,512,742 ordinary shares with a nominal value of €10
per share).
The following table summarizes the changes in the number of issued and fully paid up shares of the Company for theyear ended December 31, 2023:

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 320

FINANCIAL STATEMENTS

Ordinary Shares

Issued and fully paid up shares as at December 31, 2022

1,813,512,742

Shares issued

8,152,699

1Issued and fully paid up shares as at December 31. 2023

1,821,665,441

1 In 2023, the Company issued 8,152,699 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

Additional paid-in capital represents the premium paid in excess of the par value of shares at the time of the issuanceof new shares. Since the value of the contribution exceeded the par value of the shares, the balance constituted
share premium.

Treasury shares

As at December 31, 2023 the Company held 214,235 shares (2022: 214,235) as Treasury shares.

Dividend distribution

On May 11, 2023 the shareholders approved a dividend distribution of €0.27 per ordinary share, corresponding to a total
distribution of €492 million, payable in June 2023.
On July 26, 2023 the directors approved an interim dividend distribution of €0.24 per ordinary share, corresponding to a
total distribution of €437 million payable in October 2023.
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.
A proposal will be submitted to the 2024 Annual General Meeting of Shareholders to pay a dividend of €0.27 per ordinary
share corresponding to a total distribution of €492 million, in cash, from the 2023 retained earnings of the Company,
payable in Q2 2024.
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, 2023, the legal and non-distributable reserves of the Company amounted to €18,217 million (2022:€18,135 million).

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 321

FINANCIAL STATEMENTS

Reconciliation of equity and net (loss)/profit
Year ended

December 31,(millions of euros)

2023

Equity attributable to Universal Music Group equity holders in the Consolidated financial statements as at
December 31, 2023
Combined equity pre-incorporation

2,962(1,634)Intra-group restructuring upon incorporation

33,000

Cumulative results of subsidiaries in the Consolidated financial statements(3,042)Equity in the Company financial statements as at December 31, 2023

31,764

Cumulative dividend income received

785

Cumulative charges and income directly recognized in equity in the Consolidated financial statements(307)

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,(millions of euros)2023

Net (loss)/profit attributable to equity holders of the parent in the Consolidated financial statements
Results of subsidiaries in the Consolidated financial statements

Net (loss)/profit in the Company financial statements as at December 31, 2023

1,259

(1,338)(79)

Year ended

December 31,(millions of euros)

2022

Equity attributable to Universal Music Group equity holders in the Consolidated financial statements as at
December 31, 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 income received

785

Cumulative charges and income directly recognized in equity in the Consolidated financial statements(454)Year ended

December 31,(millions of euros)

2022

Net (loss)/profit attributable to equity holders of the parent in the Consolidated financial statements
Results of subsidiaries in the Consolidated financial statements

Net (loss)/profit in the Company financial statements as at December 31, 2022

NOTES TO THE COMPANY FINANCIAL STATEMENTS

782

(798)

(16)

MUSIC IS UNIVERSAL Annual Report 2023 | 322

FINANCIAL STATEMENTS

Note 10. 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, 2023 there were 2 (2022: 2) Executive Directors on the UMG N.V board. Their aggregate compensation ispresented in the table below.
Year ended December 31,(millions of euros)

2023

Short-term employee benefits

2022

3

3

3

3

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, 2023, UMG's non-executive board received director fees of €1 million (2022: €1 million).

Other related-party transactions

Other related parties include:•
Overhead costs recharged from and to Universal International Music B.V. to a net income amount of €25 million.
Disclosed under “Other” in Note 3;•
Investments in subsidiaries (Note 5);•Long term receivables from Universal International Music B.V. (Note 6);•
Financial income on loans granted (Note 4);•
Intercompany payables (Note 7);•
Financial Guarantees provided to subsidiaries (Note 8);•
Guarantee fees received on guarantees provided to subsidiaries (Note 8);

Note 11. Statutory audit fees
The fees for services provided by the Company’s independent auditors, Ernst & Young Accountants LLP and its member
firms and/or affiliates, consisted of the following:
2022

2023
(millions of euros)

Audit of the Company
Total

NOTES TO THE COMPANY FINANCIAL STATEMENTS

Ernst & Young

Accountants LLP

4

4

Deloitte

Accountants B.V.

2

2

Ernst & Young

Accountants LLP

2

2

MUSIC IS UNIVERSAL Annual Report 2023 | 323

FINANCIAL STATEMENTS

Note 12. Subsequent events
The Company has evaluated subsequent events and no events have been identified that could have a material impact on
its financial statements.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

MUSIC IS UNIVERSAL Annual Report 2023 | 324

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 paid-up 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 paid-up 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 2023 | 326

OTHER INFORMATIONINDEPENDENT AUDITOR'S REPORT
To: the shareholders and non-executive directors of Universal Music Group N.V.

Report on the audit of the financial statements 2023 included in theannual report
Our opinion
We have audited the financial statements for the financial year ended December
31, 2023 of Universal Music Group N.V. based in Amsterdam, the Netherlands.
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, 2023
and of its result and its cash flows for 2023 in accordance with International
Financial Reporting Standards (IFRSs) as issued by the International AccountingStandards Board (IASB), IFRSs as adopted in the European Union (EU-IFRSs) 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, 2023•
The following statements for 2023: the consolidated and company thestatements of profit or loss, comprehensive income, changes in equity andcash flows•
The notes comprising material accounting policy information and otherexplanatory 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. (the company) in accordancewith the EU Regulation on specific requirements regarding statutory audit ofpublic-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit
firms supervision act), the Verordening inzake de onafhankelijkheid vanaccountants 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 Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion.
Information 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.

MUSIC IS UNIVERSAL Annual Report 2023 | 327

OTHER INFORMATIONOur understanding of the business
Universal Music Group N.V. is a music company which operates worldwide inover more than 100 countries. The group is structured in components, and wetailored 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 inorder to 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

Materiality

Benchmarkapplied€90 million (2022: € 75 million)
5% of profit before income taxes normalized for the changes in fairvalue financial instruments

We determined materiality based on our understanding of theCompany’s business and our perception of the financial informationneeds of users of the financial statements. We considered profit
Explanation before income taxes normalized for the changes in fair value offinancial instruments as an important metric for users of thefinancial statements. The benchmark applied and the percentage
used are in line with our 2022 audit.

We have also taken into account misstatements and/or possible misstatementsthat in our opinion are material for the users of the financial statements for
qualitative reasons.
We agreed with non-executive directors that misstatements in excess of€4.5 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.
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 carriedout for group entities. Decisive were the size and/or the risk profile of thegroup 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. We have:•
Performed audit procedures ourselves 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
and divestments, share-based compensation, loans and borrowings, equity
investments and taxes.

MUSIC IS UNIVERSAL Annual Report 2023 | 328

OTHER INFORMATION••

Used the work of other auditors when auditing the in-scope entities locatedin the United States, the United Kingdom, Japan, France and Germany.
Our ISA 600 procedures included a combination of physical and remote
working paper reviews for the entities above, including meetings withthe component auditors and component management. We also reviewed
component audit team deliverables for the entities listed above to gain asufficient understanding of the work performed based on our instructions.
Performed review procedures or specific audit procedures at othergroup entities.

In total these procedures represent 95% of the group’s total assets, 100% of
profit before income taxes and 94% of gross revenues.
By performing the procedures mentioned above at components of the group,
together with additional procedures at group level, we have been able toobtain sufficient 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 theaudit of a listed client in the Media and Entertainment industry. We included
specialists in the areas of IT audit, forensics, sustainability, share based
payments, income tax, 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 and provisions or
the sustainability of the business model and access to financial markets ofcompanies with a larger CO2 footprint.
The board of directors summarized the Universal Music Group N.V.’scommitments and obligations, and reported in the section Non-Financial
Performance of the board report how the company is addressing climate-related
and environmental risks. Furthermore, we refer to the section ESG commitmentsof the board report where the board of directors disclose its assessment andimplementation plans in connection to climate-related risks and the effects ofenergy transition.
As part of our audit of the financial statements, we evaluated the extent
to which climate-related risks and the effects of the energy transition andthe company’s commitments and (constructive) obligations, are taken into
account in estimates and significant assumptions. Furthermore, we read theboard report and considered whether there is any material inconsistency
between the non-financial information as included in the sections Introduction,
Strategy, Organizational and Reporting Structure, Financial Review, Corporate
Governance, Shareholders Information, Risk and Risk Management, NonFinancial Information and the financial statements.
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 December 31, 2023.

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OTHER INFORMATION

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 byfraud 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 ofinternal 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
for responding to the risks of fraud and monitoring the system of internal
control and how the non-executive directors exercise oversight, as well as
the outcomes.
We refer to section Risk and Risk management of the board report forboard’s (fraud) risk assessment and the Audit Committee section of the nonexecutive directors’ report in which 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 thedesign 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.
We addressed the risks related to management override of controls, as thisrisk is present in all companies. For these risks we have performed procedures
among other things to evaluate key accounting estimates for management biasthat 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 and address high-risk journal entries and evaluated thebusiness rationale (or the lack thereof) of significant extraordinary transactions,
including those with related parties.

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OTHER INFORMATION

The following fraud risk identified required significant attention during
our audit.

Presumed risk of fraud in revenue recognition

Fraud risk

Our audit
approach

We presumed that there are risks of fraud in revenue recognition.
We evaluated that the contractual agreements and conditions ofstreaming and subscription revenue in particular give rise tosuch risks.

We describe the audit procedures responsive to the presumed riskof fraud in revenue recognition in the description of our audit
approach for the key audit matter Revenue recognition for streaming
and subscriptions.

We considered available information and made enquiries of relevant executives,
directors, internal audit, legal, compliance, human resources and regional
directors and the non-executive directors.
The fraud risks we identified, enquiries and other available information did notlead to specific indications for fraud or suspected fraud potentially materially
impacting the view of the financial statements.
Our audit response related to risks of non-compliance with laws 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 from our general industry experience, throughdiscussions with the board of directors and key management personnel, reading
minutes, inspection of internal audit and compliance reports, and performing
substantive tests of details of classes of transactions, account balances ordisclosures. 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 to thefinancial statements, the financial statements have been prepared on a going
concern basis. When preparing the financial statements, the board of directors
made a specific assessment of the company’s ability to continue as a 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 of director’s going concern assessment,
based on our knowledge and understanding obtained through our audit of thefinancial statements or otherwise, contains all relevant events or conditions

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OTHER INFORMATION

that may cast significant doubt on the company’s ability to continue as a 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.
Based on our procedures performed, we did not identify material uncertainties
about going concern. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may
cause a company to cease to continue as a going concern.
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.
In comparison with previous year, two new key audit matters, revenue
recognition of streaming and subscription revenue and the valuation of themusic catalogues, have been defined as included below.

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OTHER INFORMATION

Revenue recognition for streaming and subscriptions

Risk

The streaming and subscription revenues of the Company are driven
through global digital contracts. The total amount of streaming andsubscription revenue recognized for the year ended December 31,
2023 amount to EUR 5.7 billion (2022: EUR 5.3 billion).
As described in note 2.4.5 and note 3, revenues from contracts withcustomers are recognized when performance obligations included in
the contract are satisfied, and for an amount for which it is highly
probable that a significant reversal in the amount of cumulative
revenue recognized will not occur.
There is a risk of management influencing revenue recognition
through override of streaming and subscription revenue controls forthese contracts.
As described in note 2.2, significant judgement is required to
identify performance obligations under contracts with customers andto determine whether these performance obligations are satisfied,among other factors.

Our audit
approach

We consider this to be a key audit matter due to the complexity of
the contractual terms and conditions and the significant judgements
applied by management in its revenue recognition.

Our audit procedures included, among others, evaluating theappropriateness of the Company's revenue recognition policies for
streaming and subscription revenue in accordance with IFRS 15'Revenue from Contracts with Customers' and whether the policies
have been applied consistently or whether changes, if any, areappropriate in the circumstances.
We performed the following procedures, among others:
•

•
•

•

•

We gained insight in the process for identifying and accounting
for specific revenue terms and conditions included in contracts
with digital sales partners.
We evaluated the design and implementation of controls that
address the identified risk.
We performed contract reviews on significant contracts withdigital sales partners in order to verify if these are recognizedin accordance with IFRS 15.
We evaluated management’s judgement on revenue recognition
for specific contractual terms, based on the relevant digitalrevenue contracts and reconciled this to revenue recorded in thefinancial administration.
We also evaluated the adequacy of the disclosures provided by
the Company in Notes 2.2, 2.4.5 and 3.

We did not identify any material misstatements in the revenueKeyobservations recorded in the year, either due to fraud or error.

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OTHER INFORMATION

Valuation of royalty advances to artists and repertoire owners

Risk

The Company provides royalty advances to artists in order to support
the artist in future performances. As of December 31, 2023, thetotal amount of royalty advances amounted to EUR 2.6 billion (2022:
EUR 2.6 billion).
As described in note 2.4.8 and note 9 to the financial statements,
these advances to artists, songwriters and co-publishers arecapitalized as an asset when their current popularity and past
performances provide a reasonable basis to conclude that a future
recoupment of such royalty advances against future earnings
otherwise payable to them is reasonably assured. Any portion ofcapitalized royalty advances not deemed to be recoverable against
future royalties is expensed during the period in which the loss
becomes evident.
As described in note 2.2 to the financial statements, the significant
judgements applied by management, in estimating whether
capitalized royalty advances are recoverable against future royalties,
mainly relate to the estimated future earnings performance ofbeneficiaries who received advances.

Our audit
approach

We consider this to be a key audit matter based on the significant
judgements applied by management in determining the estimatedroyalty advances.

As part of our audit procedures, we obtained an understandingof the estimation process and management's application of therelated accounting policies. Specifically, we evaluated the Company's
accounting policy over recognition and measurement of royalty
advances in accordance with IAS 38 'Intangible assets'. Furthermore
we performed, among others, the following audit procedures:
•

•
•
•

•

•

We obtained an understanding of the process and estimation
models for determining the future projections relating toartist advances.
We evaluated the contracts and payments relating to material
royalty advances during the year.
We tested the recoupment of new and existing royalty advances
capitalized with material net exposure as at December 31, 2023.
We evaluated the recoverability of exposed advances and related
future contractual commitments by performing sensitivity
analyses on historical recoupment run-rates to assess theassumptions made by management in its artists' advancerecoverability analysis.
We assessed the classification of advances between Non-current
royalty advances and Current royalty advances recorded on the
Company’s statement of financial position.
We assessed the adequacy of the disclosures in notes 2.2, 2.4.8
and note 9.

Applying the aforementioned materiality, we did not identify anyKeyobservations reportable findings in the board of director’s assessment of theroyalty advances.

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OTHER INFORMATION

Valuation of music catalogues

Risk

The Company has presented music catalogues on the balance
sheet as of December 31, 2023 amounting to EUR 3.0 billion (2022:
EUR 3.1 billion).
As described in note 2.4.8, music catalogues are recognized at cost,and music catalogues acquired in a business combination arerecorded at their fair value at the acquisition date. Amortisation
expense is charged on a straight-line basis over the estimated usefullife. Annually, impairment tests are performed to compare the future
cash flows of each music catalogue against the carrying amount.
As described in note 2.2, the Company identifies a significant
estimate relating to the assumptions in the impairment tests
performed as well as the determination of the (remaining) useful life
for the music catalogues.

Our audit
approach

As the related amounts of the music catalogues presented
are significant and the estimation involved includes significant
judgement applied by management, we consider this a key
audit matter.

As part of our audit procedures, we obtained an understandingof the estimation process to determine the valuation of themusic catalogues and the Company's application of the related
accounting policies. We evaluated the Conmpany's accounting
policies over recognition and measurement of music catalogues forcompliance with IAS 36 'Impairment of assets' and IAS 38 ' Intangible
assets'. Additionally, we performed, among others, the following
audit procedures:
•

•

•

•

We obtained an understanding of management's process todetermine the qualitative and quantitative factors supporting thecatalogues' useful life, such as the asset's expected pattern offuture earnings and the period of the contractual arrangements.
We assessed the historical revenues associated with thosecatalogues, along with forecasted revenues, in order to assess
the appropriateness of the catalogues’ (remaining) useful life
We evaluated management’s impairment indicator assessment
over catalogues, if any impairment indicators identified bymanagement we evaluated the impairment assessment todetermine whether any impairment should be recorded during
the year ended December 31, 2023.
We assessed the adequacy of the disclosures in notes 2.2, 2.4.8
and note 9 to the financial statements.

Applying the aforementioned materiality, we did not identify anyKeyobservations reportable findings in the board of director’s impairment assessment
and valuation of music catalogues.

Report on other information included in the annual report

The annual report contains other information in addition to the financial
statements and our auditor’s report thereon.

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OTHER INFORMATION

Based on the following procedures performed, we conclude that theother information:•
Is consistent with the financial statements and does not containmaterial misstatements•
Contains the information as required by Part 9 of Book 2 of the Dutch Civil
Code for the management report and the other information as required byPart 9 of Book 2 of the Dutch Civil Code and as required by Sections 2:135band 2:145 sub-section 2 of the Dutch Civil Code for the remuneration report.
We have read the other information. Based on our knowledge andunderstanding obtained through our audit of the financial statements orotherwise, we have considered whether the other information contains
material misstatements. By performing these procedures, we comply with therequirements of Part 9 of Book 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 thefinancial statements.
The board of directors is responsible for the preparation of the otherinformation, including the management 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 andpublished in accordance with 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 Reporting 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
the reporting package by Universal Music Group N.V., complies in all material
respects with the RTS on ESEF.
The 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 theannual report in this reporting package complies with the RTS on ESEF.

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OTHER INFORMATION

We performed our examination in accordance with Dutch law, including Dutch
Standard 3950N, ”Assurance-opdrachten inzake het voldoen aan de criteria
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
for our 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 accordance with the technical specifications as included in
the RTS on ESEF
Examining the information related to the consolidated financial◦
statements in the reporting package to determine whether all required
mark-ups have been 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 thefinancial statements
The board of directors is responsible for the preparation and fair presentationof the financial statements in accordance with IFRSs as issued by the IASB,
EU-IFRSs and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the boardof directors is responsible for such internal control as the board of directors
determines is necessary to enable the preparation of the financial statementsthat 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 of accounting unless the board of directors either intends to liquidate
the company 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.

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 toinfluence the economic decisions of users taken on the basis of these financial

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OTHER INFORMATION

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 an informative
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, andobtaining 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•to design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of thecompany’s internal control
Evaluating the appropriateness of accounting policies used and the•reasonableness 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 tothe audit committee in accordance with Article 11 of the EU Regulation on
specific requirements regarding statutory audit of public-interest entities. The
information included in this 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.
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 these matters 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 28, 2024
Ernst & Young Accountants LLP
Signed by F.J. Blenderman

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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.

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APPENDIX

Jody Gerson

CHAIRMAN AND CEO, UNIVERSAL MUSIC PUBLISHING GROUP
Jody Gerson is one of music’s most respected, accomplished executives
and creative authorities. She is the first female chairman of a global musiccompany and the first woman to be named CEO of a major music publisher.
Since joining UMPG in 2015, Gerson has transformed the company into theindustry’s best global home to songwriters and a billion-dollar business –more than doubling revenue and substantially increasing profit. Gerson led
UMPG’s historic catalog acquisitions of Bob Dylan, Sting, Neil Diamond andothers. 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,Lana Del Rey.
Coldplay, Justin Bieber, Post Malone, Ariana Grande, H.E.R., Maren Morris, theBee Gees, Prince, and more. Additionally, Gerson jointly oversees Polygram
Entertainment, a film and television development and production division of
UMG which has produced award-winning projects including The Bee Gees: How
to Mend a Broken Heart (HBO), Dear Mama (FX) and HBO’s Music Box series.
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.

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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.

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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: 64, 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: 63, 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.

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APPENDIX

Sherry Lansing

Female, Age: 79, 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.

Antoine Fiévet

Male, Age 60, 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, and as Chairman since 2009. Under Fiévet’s leadership, Bel Group adopted
concrete actions to address sustainable agriculture, healthy food, responsible
packaging, the fight against climate change and product accessibility. Fiévet
received a graduate degree from Université Paris II Panthéon Assas and anundergraduate degree from Institut Supérieur de Gestion.

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APPENDIX

Bill Ackman

Male, Age: 57, 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 Howard Hughes
Holdings Inc. (NYSE:HHH), and Chairman and CEO of Pershing Square SPARC
Holdings, Ltd., a special purpose acquisition rights company. He serves asa member of the Investor Advisory Committee on Financial Markets for
the Federal Reserve Bank of New York, and as 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 thePershing Square Foundation, a family foundation. Ackman received an MBA fromthe Harvard Business School and a Bachelor of Arts magna cum laude from
Harvard College.

Cathia Lawson-Hall

Female, Age: 52, Nationality: French and Togolese
NON-EXECUTIVE DIRECTOR
Cathia Lawson-Hall has over 25 years' experience in the financial sector. She
was Head of Coverage and Investment Banking for Africa at Société Générale,in charge of the overall relationship and strategic advisory with governments,
large corporates and financial institutions in Africa. Previously, she served as
Managing Director, Co-Head of Debt Capital Markets for corporates in France,
Belgium and Luxembourg. Lawson-Hall is also a member of the Board of
Directors of two listed companies, Vivendi SE and Endeavour Mining Plc. She
is also an independent director of Agence Française de Développement (AFD)and sits on the board of directors of 'Amis du Centre Pompidou', the first
patrons of the museum who contribute to the enrichment of the collectionsof the institution. Lawson-Hall was one of six recipients, alongside the Mayorof London, Sadiq Khan, of a Diversity Award in 2017 awarded by the think tank
"Club XXIe-Siècle" in the "Career path" category. In 2015, Lawson-Hall was voted
Manager of the Year at the sixth edition of La Tribune Women's Awards. LawsonHall holds a Master’s degree and a postgraduate degree in Finance from Paris
Dauphine University.

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APPENDIX

Cyrille BolloréMale, Age: 38, 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 theBoard of Directors of Bolloré Energy, Chairman of the Supervisory Board of
Sofibol, Chairman of the Management Board of Compagnie du Cambodge, andVice-Chairman 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, and as a member of the Supervisory Board of JCDecaux
Bolloré Holding. In addition, Bolloré serves as a director on the boards ofseveral 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 amajor in Finance.

Haim Saban

Male, Age 79, Nationality: American and Israeli
INDEPENDENT NON-EXECUTIVE DIRECTOR
Haim Saban is an entrepreneur with more than four decades of experiencebuilding successful media and telecommunication businesses. He is the
Chairman and CEO of Saban Capital LLC, a private Los Angeles-based investment
firm that spans operations in real estate, venture capital, film and music.
In partnership with News Corp. and Rupert Murdoch, Saban co-founded Fox
Family Worldwide in 1996, creating a global television, broadcasting, production,
distribution and merchandising company. In 2001, Walt Disney Co. acquired Fox
Family for an enterprise value of USD 5.3 billion. Saban founded Saban CapitalGroup (SCG) and led an investor group in 2003 to buy a controlling stake in
ProSiebenSat.1 Media, Germany’s largest broadcaster. He served as Chairmanof its Supervisory Board and in 2007 oversaw the sale of the controlling stake
to KKR and Permira at a USD 7.5 billion valuation, representing five times theinitial investment. In 2005, SCG and Apax Partners acquired a controlling stakein Bezeq, Israel’s largest telecom company, which they sold to Eurocom Groupat a valuation of more than four-and-a-half times the initial investment five
years later. SCG led the acquisition in 2007 of Univision Communications, theleading Spanish-language media company in the U.S. for which Saban served
as Chairman. SCG continues to make minority and controlling investments inearly stage private and public companies, including Epic Games, Keshet, Kite
Pharma and Roblox, among others; feature film projects through Saban Films;
and private equity investments in companies, including Celestial Tiger. In 2019,
SCG launched Saban Music Group, a global independent recorded music andpublishing company, which partnered in 2020 with UMG for distribution.

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APPENDIXJames MitchellMale, Age: 50, 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 Chairman and Non-Executive Director of the Boardof China Literature Limited (HKEX:0772) since June 2017. He is also a director ofcertain other listed companies including Frontier Developments Plc (AIM:FDEV)
and Tencent Music Entertainment Group (NYSE:TME, HKEX:1698), 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: 57, 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.

Manning Doherty

Male, Age: 51, Nationality: Canadian
NON-EXECUTIVE DIRECTOR
Manning Doherty is a Managing Director of GIC Pte Ltd., a Singaporean sovereign
wealth fund. He is the Head of the Infrastructure Group (North America),
investing across the capital structure in infrastructure and related industries.
Doherty's career spans senior roles in equity research, private equity andspecial situation investing in Asia and the U.S. Prior to GIC, he served as
Managing Director of Mount Kellett Capital and as Managing Director of Oaktree
Capital Management. As an active investor, Doherty assists companies withstrategic reviews to develop adjacent business lines, improve KPI monitoringand decision making, and supplement the evaluation of strategic M&A andcorporate finance actions. He holds an MBA from The Wharton School anda Master’s degree in International Studies from the Lauder Institute at the
University of Pennsylvania. He also holds a Bachelor of Arts degree from Queen’s
University in Kingston, Ontario.

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APPENDIX

Margaret Frerejean-Taittinger

Female, Age: 38, 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 30 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.

Nicole Avant

Female, Age: 56, Nationality: American
INDEPENDENT NON-EXECUTIVE DIRECTOR
Nicole Avant is the best selling author of “Think You’ll Be Happy - Moving
Through Grief with Grit, Grace and Gratitude”. She 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 to hold the position. In addition to
her international diplomatic work, Ambassador Avant brings deep commercial
insight and knowledge of the media and entertainment industries having
worked in the music business for over 25 years and serving as Vice President ofInterior Music Publishing, founded by her father, entertainment mogul, Clarence
Avant. Ambassador Avant currently focuses her efforts in film and television
production and has produced the critically acclaimed and award winning films“The Black Godfather” and “Trees of Peace”. Ambassador Avant also serveson the Board of Soho House & Co, Inc. Throughout her career, Ambassador
Avant has also pursued an array of business and philanthropic ventures.
Ambassador Avant graduated with a Bachelor of Arts degree in Communications
from California State University, Northridge.

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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 indicators) 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 and therelated Notes. In addition, it should be noted that other companies may havedefinitions and calculations for these non-IFRS measures that differ from thoseused by UMG, thereby affecting comparability.

EBITDA and EBITDA margin

UMG considers EBITDA and EBITDA margin, non-IFRS measures, to be relevantmeasures to assess its operating performance and 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 theirperformance is driven by the operating segment’s organic growth or byacquisitions. It excludes restructuring expenses, which may impact period-toperiod comparability. 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 on goodwill and other intangibles;iii. depreciation of tangible assets including right of use assets;iv. (gains)/losses on the sale of tangible assets, included right of use assets andintangible assets; andv. restructuring expenses.

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
activities excluding items that may be incidental to normal business activity
and excluding non-cash share based compensation which may impact periodto-period comparability.

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APPENDIX

Adjusted Net Profit/Adjusted Net Profit per share

UMG's use of Adjusted net profit is 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 an analytical
tool for investors, as it excludes certain items and therefore does not reflect
the expense associated with such items, which may be significant and have asignificant 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 of goodwill and intangible assets;iii.
financial income and expenses, excluding interest and income
from investments;iv.
earnings from discontinued operations;v.
non-cash share-based compensation expense;vi.
certain one-time items that are deemed by management to besignificant and incidental to normal business activity;
vii.
income tax impact on the above adjustments;
viii.
non-recurring tax items; andix.
adjustments attributable to non-controlling interests.

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 paid, net and other cash items related
to financing activities. UMG considers Free Cash Flow, a non-IFRS measure, to bea relevant indicator of its cash flow generated to fund dividend payments andrepayment of debt. Free Cash Flow is not a measure of performance calculated
in accordance with IFRS and therefore it should not be considered in isolation of,or as a substitute for cash flow provided by operating activities as a measure ofliquidity. Free Cash Flow, as we calculate it, may not be comparable to similarly

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APPENDIX

titled measures employed by other companies. In addition, Free Cash Flowdoes not necessarily represent funds available for discretionary use and is notnecessarily 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(millions of euros)2023

Net profit attributable to equity holders of the parent1

1,259

782

Financial income and expenses, excluding interest andincome from investments

(377)

671

561

107

(7)

17

Non-cash share-based compensation expense
Certain one time items

2022

-

2

Impairment (reversal)/charge of intangible assets
Amortization of catalogues

236

Non-recurring tax items-

Income tax on adjustments
Adjusted Net Profit

(11)

233

(77)

(255)

1,595

1,454

(90)

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.

Adjusted net profit per share
Year ended December 31,(millions of euros)

Adjusted net profit

Number of shares1

Weighted average number ofshares outstanding

2023

basic

1,595

Adjusted net profit per share (in euros)

diluted

1,595

basic

1,454

diluted

1,454

1,819

1,819

1,813

1,813

-

23

-

3

1,819

1,842

1,813

1,816

0.88

0.87

0.80

0.80

Potential dilutive effects related tosharebased compensation

Adjusted weighted average numberof shares

2022

1 As reported in Note 7 of the Consolidated Financial Statements.

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APPENDIX

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:Year ended,

December 31(millions of euros)

2023

Amortization and depreciation expense

Non-cash share-based compensation expense, net of
employees tax withheld
Impairment (reversal)/charge of intangible assets
Changes in provisions, net(Gain)/loss on sale of assets
Adjustments

2022

382

377

(7)

17

(26)

2

429

18

796

107

65
568

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APPENDIXCAUTIONARY NOTICE
Forward-looking statements

The annual report may contain statements that 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 such forwardlooking statements are based on reasonable assumptions, they are notguarantees of future performance. Actual results may differ materially fromsuch 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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