MUSIC IS
UNIVERSAL
Annual Report 2022
CONTENTS
ABOUT UMG 4
Foreword
5
Profile
8
Mission
9
Vision
13
Timeline
15
Key figures
17
How UMG adds value
21
Stakeholder Analysis
24
BOARD REPORT: INTRODUCTION
29
Business profile
30
Labels
31
Recorded Music
33
Music Publishing
38
Merchandising
43
BOARD REPORT: STRATEGY
46
Driving growth by putting artists first
47
Technological advancements and new trends
55
Innovation and R&D as key to creating value
58
BOARD REPORT: ORGANIZATIONAL AND REPORTING STRUCTURE
63
BOARD REPORT: FINANCIAL REVIEW
68
1.
Earnings analysis: group and business segments
69
2.
Liquidity and capital resources
78
BOARD REPORT: CORPORATE GOVERNANCE
83
The governance structure
84
The Board
85
The General Meeting
95
Statements of the Board
103
BOARD REPORT: SHAREHOLDER INFORMATION
104
BOARD REPORT: RISK AND RISK MANAGEMENT
110
BOARD REPORT: NON-FINANCIAL INFORMATION
135
Non-Financial Performance
136
Main Material Topics
139
ESG Commitments
143
Regulatory & Standards Alignment
178
Information Tables
194
Verification of Non-Financial Data
199
MUSIC IS UNIVERSAL Annual Report 2022 | 2
NON-EXECUTIVE DIRECTORS REPORT 208
Report of the Non-Executive Directors
209
Remuneration report
217
FINANCIAL STATEMENTS 226
Consolidated Statements 227
Company Statements 290
OTHER INFORMATION 309
Distribution of profits
310
Independent auditor's report
311
APPENDIX 321
Bios Corporate Executives
322
Bios Board of Directors
326
Definitions
332
Cautionary Notice
336
MUSIC IS UNIVERSAL Annual Report 2022 | 3
ABOUT UMG
ABOUT UMG
FOREWORD
WE ARE UNIVERSAL
Dear Fellow Shareholders:
It’s hard to believe that UMG became a freestanding public company just a
year-and-a-half ago. It was, to be sure, a watershed moment in our history, but
we remained focused on what we’ve always done: bringing great artists and
their music to the world; breaking performance records of all kinds everywhere;
and driving the industry forward through creativity, strategic investments
and innovation.
With 2022 in the rearview mirror, I’d like to share with you a few thoughts about
what was an extraordinary year for UMG and also touch upon some of the
challenges and opportunities that lie ahead for us in 2023 and beyond.
In 2022, we reached new levels of success across our operating companies and
territories, driving total revenue growth of 14%, operating profit growth of 8% and
Adjusted EBITDA
1
growth of 12% (all in constant currency).
But we measure our success by so much more than just financial metrics.
Consider these 2022 achievements, among many others around the world:
• On the charts, the performance of our artists and songwriters remained
stellar. So many artists from around the world contributed to our success
in 2022, with standout performances from: Taylor Swift; Olivia Rodrigo; The
Weeknd; The Beatles; Kendrick Lamar; Drake; BTS; Karol G; Angèle; Glass
Animals; Imagine Dragons; Rammstein; Helene Fischer; ABBA; Ado; Elton
John; Eminem; Justin Bieber; King & Prince; Lil Baby; and Billie Eilish, among
many others.
On Spotify: UMG had four of the Top 5 Artists globally; four of the Top 5 in the
U.S.; 7 of the Top 10 in Germany and Italy, including No 1s in both countries;
and the top female artist in France;.
On Apple Music: Universal Music Publishing Group had writer-interests in 9
of the Top 10 most-streamed songs globally.
On YouTube: UMG had 7 of the Top 10 Songs in the U.S.
On the U.S. Billboard charts: We had the No. 1 Song on the Hot 100 year-end
chart and 7 of the Top 10 Albums.
In the UK: UMG had 6 of the Top 10 artists based on OCC data, including No. 1.
• In 2022, UMG and our artists helped strengthen local communities around
the world by: serving those in need more than 20,000 meals; building
community gardens throughout the U.S., Europe and Australasia; conducting
vital education campaigns with organizations such as Mental Health
Coalition; and assisting hundreds of artists save a combinedmillions of
1
As defined in the Appendix to the Annual Report
MUSIC IS UNIVERSAL Annual Report 2022 | 5
ABOUT UMG
dollars in healthcare costs through our partnership with Music Health
Alliance in the U.S.
• UMG’s Task Force for Meaningful Change ('TFMC') continued its
groundbreaking work: funding mentoring programs for the next generation
of Black artists and music industry professionals; investing in community
violence intervention programs; partnering with HBCU medical schools to
widen the Black practitioner pipeline; and helping voters reach the polls by
providing more than 13,000 rides. Through the TFMC, our All Together Now
Foundation, and our Employee Matching Program, UMG contributed to more
than 500 organizations in 2022 alone.
To achieve such astonishing success for both developing and established
artists, and to do so year after year, is no accident. UMG’s unique artist-centric
culture accounts for that repeated success and is at the heart of our company’s
two-fold mission.
Our first, simplest, and yet most difficult imperative is to discover and break new
artists and then sustain their careers over the long-run. The second part of our
mission is to promote a healthy, sustainable and exciting music ecosystem in
which our artists can thrive for years and decades to come.
We fulfill that goal by using our ingenuity to drive the music industry forward
as technology and the world around us keeps changing. That’s exactly the
pioneering approach we took at the advent of streaming. Early on, we saw the
potential inherent in streaming and subscription and jumped right in – leaning
into what was the most profound business model shift the industry had ever
seen, redesigning our global organization, becoming the first to adapt to – and
then thrive in – the streaming era.
Today, what’s become clear to us and to so many artists and songwriters, is that
the economic model for streaming needs to evolve. As technology advances and
platforms grow, there is also a need for business model innovation to keep pace
with change.
Going forward, we will remain focused on innovation that is essential to promote
a healthier, more competitive music ecosystem – one where the creators of
all music content, whether in the form of audio or short-form video, are fairly
compensated. Our sustained and deep involvement with music and artists
will enable us to safely and profitably navigate our way forward through the
industry’s next big shift.
Our past is prologue to a future where the solutions we find and the steps we
take to implement them will contribute to another era of growth for UMG and
the industry at large. Entering this new era of possibility, I am proud to say that
there is no better team of professionals anywhere in the world than the one we
have right here at UMG.
I’m excited for what will be an eventful and prosperous 2023.
SIR LUCIAN GRAINGE, CHAIRMAN AND CEO,
UNIVERSAL MUSIC GROUP
MUSIC IS UNIVERSAL
Annual Report 2022 | 6
2022 CHART HIGHLIGHTS
4 OF THE TOP 5 ARTISTS
TAYLOR SWIFT
DRAKE
THE WEEKND
BTS
SPOTIFY
4 OF THE TOP 5
ARTISTS INCLUDING NO. 1
YOUTUBE
2 OF THE TOP 3 AND
7 OF THE TOP 10 SONGS
BILLBOARD
THE NO. 1 SONG ON
THE HOT 100 AND
7 OF THE TOP 10
ALBUMS ON THE
BILLBOARD 200
BILLBOARD
THE NO. 1 ARTIST ON THE
BILLBOARD JAPAN
“ARTIST 100”
SPOTIFY
THE
NO. 1 FEMALE LATIN
ARTIST OF THE YEAR GLOBALLY
KAROL G
UMPG HAS AN INTEREST IN
9 OF THE TOP 10 AND
66 OF THE TOP 100
SONGS
GFK
ALL OF THE
TOP 4 ALBUMS
AND ALL OF THE
TOP 3 SINGLES
OCC
THE
NO. 1 FEMALE ARTIST
ANGÈLE
5 OF THE TOP 10
INCLUDING THE TOP 2
ARTISTS
IMAGINE DRAGONS
THE WEEKND
OCC
6 OF THE TOP 10
ARTISTS,
INCLUDING NO. 1
Spotify
U.S.
Japan
Latin America
Apple Music
Germany
France
GLOBAL
REGIONAL
Deezer
UK
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 7
RECORDED MUSIC
MUSIC PUBLISHING
MUSIC MERCHANDISING
MUSIC BASED VISUAL ENTERTAINMENT
>3 MILLION RECORDINGS
NEARLY
4 MILLION
OWNED & ADMINISTERED TITLES
>220 ARTISTS / BRANDS
10,000S OF HOURS OF VIDEOS
>4 TRILLION MINUTES OF
CUMULATIVE WATCH TIME OF UMG
CONTENT ON YOUTUBE
WE HAVE A RICH HISTORY
AND HAVE BUILT AN
IRREPLACEABLE
CATALOG OF SONGS
AND RECORDINGS
PROFILE
WE ARE A CATEGORY OF ONE
#1
#2
#1
#1
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 8
ABOUT UMG
MISSION
MORE MUSIC TO MORE PEOPLE
We are Universal Music Group, the world's leading music company.
We exist to shape culture through the power of artistry.
We are a community of entrepreneurs committed to creativity and innovation.
We own and operate a broad array of businesses engaged in recorded music,
music publishing, merchandising, and audiovisual content in more than
60 territories.
We identify and develop recording artists and songwriters, and we produce,
distribute and promote the most critically acclaimed and commercially
successful music to delight and entertain fans around the world.
Our vast catalog of recordings and songs stretches back over a century and
comprises the largest, most diverse and culturally rich collection of music
ever assembled.
As digital technology refashions the world, our unmatched commitment to lead
in developing new services, platforms and business models for the delivery of
music 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 and
employees to serve our communities.
We are the home for music's greatest artists, innovators and entrepreneurs.
Together, we are UMG, the Universal Music Group.
MUSIC IS UNIVERSAL
Annual Report 2022 | 9
MUSIC IS THE SOUNDTRACK
OF OUR LIVES
Source: IFPI ‘Engaging with Music’ 2022
Time spent listening to
music each week
(up from 18.4 hours in
2021)
Listened to music
using subscription
audio streaming
Say music is
important to their
mental health
Have watched a
music livestream
such as a concert
in the last month
That’s the equivalent of listening to
an additional 34 3-minute songs per week
in 2022!
46
%
69
%
32
%
On average
people use
People listen to
Methods to
engage with
music
Different genres of
music on average
Of people say music
is important when
they exercise
6+
8+
Have watched a
music focused
TV show or film
in the last month
Use short form
video apps
58
%
50
%
69
%
HOURS
20.1
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 11
2022 MUSIC ENGAGEMENT MIX
Subscription audio
streaming
(e.g. Spotify Premium,
Apple Music, Melon)
Video streaming
(e.g. YouTube,
Daily Motion,
Niconico)
Music on the radio
(broadcast live, catch
up, internet radio
stations)
Purchased music
(e.g. CDs, vinyl, DVDs,
digital downloads)
Short form video apps
(e.g. TikTok)
Ad-supported
audio streaming
(e.g. ad-supported tiers
of Spotify and Deezer)
Other forms of
music listening
(TV, on-demand premium
video services such as
Netflix, music swapped
with family and friends)
Live music
(including
livestreaming)
24%
19%
17%
10%
8%
8%
6%
4%
Source: IFPI ‘Engaging with Music’ 2022
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 12
ABOUT UMG
VISION
PUTTING ARTISTS FIRST
Artists and songwriters are at the heart of everything we do at Universal
Music Group. Focused on their long-term development, our company is built
to serve their unique needs throughout their careers. Successfully producing
and marketing music requires a significant upfront investment and an ongoing
collaboration. Universal Music Group 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 every step of the way sets us apart. We turn art into hits
and hits into careers. By building a continuum of services and resources 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 world of opportunities to accelerate their careers. We remain by their
side with customized 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 long-term to build and sustain their careers
through continuous engagement, improving lifetime fan value, and enabling
unique access to synchronization, brand partnerships, licensing opportunities
and eCommerce capabilities to monetize fandom.
Our artist-centric approach gives us an unrivalled track record in artist
development and commercial success.
MUSIC IS UNIVERSAL
Annual Report 2022 | 13
WE TURN ART INTO HITS AND
HITS INTO CAREERS
SUPPORT
THE ACT
CREATE
A HIT
BUILD AND
SUSTAIN A
CAREER
• Highly customized campaigns and promotion
• Platform-integrated, targeted marketing
• Top-tier data and insights
• Ability to deliver global reach with coordinated
local activation
• Continuous engagement building lifetime
fan value
• Unique access to synch, brand partnerships
and licensing opportunities
• eCommerce capabilities monetize fandom,
leveraging merchandise & product
development expertise
• 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
SUPPORT
THE ACT
CREATE
A HIT
BUILD AND
SUSTAIN A
CAREER
SUPPORT
THE ACT
CREATE
A HIT
BUILD AND
SUSTAIN A
CAREER
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 14
TIMELINE
JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
Expansion of agreement
with Amazon and Twitch to
offer fans live streams, artist
merchandise, spatial audio,
exclusive experiences and
artist engagement on Twitch.
Launch of an unrecouped advances program
for legacy artists under which UMG will
cease applying unrecouped advances to
royalty statements for certain legacy
featured recording artists and songwriters.
Launch partner for ChartStars, an NFT-based
project of curated digital collectibles with
artist-focused artwork that commemorates
achievements and milestones on the
Billboard Charts.
First-ever credit rating of Baa1/BBB Long
Term Credit Ratings from Moody´s and
S&P, supportive of UMG’s financing
strategy and commitment to maintain-
ing an investment grade rating.
Premier of “ABBA Voyage”, a revolution-
ary concert in which digital avatars of
the band perform their greatest hits in
their very own ABBA Arena at Queen
Elizabeth Olympic Park in London.
Exclusive launch partner for
AI-driven music app Vera, where
users can develop personalized
music stations specifically designed
to improve the lives of people living
with dementia.
Successfully priced €500m of 3.00%
senior unsecured notes due 2027
and €500m of 3.75% senior unse-
cured notes due 2032 to refinance
existing indebtedness.
Acquisition of Frank Zappa’s estate,
including his expansive recordings,
publishing catalog, film archive, and
the complete contents of The Vault,
the storage facility that houses the
late Zappa’s life’s work and name
and likeness rights.
Acquisition of 17-time Grammy Award
winner Sting’s career catalog of songs,
uniting it with his recorded music catalog
at UMG.
Achieved six wins for six different
artists at the 2022 Brit Awards: Dave (Best
Hip Hop/Grime/Rap Act), Billie Eilish
(International Artist of the Year), Sam
Fender (Best Rock/Alternative Act), Becky
Hill (Best Dance Act), Holly Humberstone
(Rising Star Award) and Olivia Rodrigo
(International Song of the Year).
At the 64th Annual Grammy
Awards, Jon Batiste’s
We Are
won Album of the Year and
Olivia Rodrigo was named
Best New Artist.
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 15
TIMELINE
JULY
SEPTEMBER
OCTOBER
NOVEMBER
Announced a new deal
with Meta which expands
revenue sharing and
enhances the Meta
community’s engagement
with UMG’s catalog.
Formation of Virgin Music Group, a new
global division that unifies UMG’s artist
services businesses including Virgin Music
Label & Artist Services, Ingrooves Music
Group and newly acquired mtheory Artist
Partnerships.
Awarded Ukrainian President Volodymyr
Zelensky’s Ukraine Peace Prize in recogni-
tion of UMG’s support for humanitarian
relief efforts in the region and music’s
historic role in fostering peace.
UMG’s Deutsche Grammophon launched
Stage+, a classical music subscription
service featuring exclusive live pre-
mieres; long-form concert and opera
programs; music videos; documentaries
and behind-the-scenes interviews; new
audio releases, as well as albums from
the Deutsche Grammophon and Decca
catalogs in Hi-Res and Dolby Atmos.
Partnered with Elton John, Rocket
Entertainment and Roblox to launch
‘Beyond the Yellow Brick Road’ on Roblox,
a virtual experience offering fans a new
way to enjoy Elton’s timeless music,
express themselves through his iconic
fashion co-created with the community,
and experience his impact on popular
culture in a new, creative, and unique
way.
Acquisition of a 49% stake in indepen-
dent music company [PIAS], following
the formation of a strategic global
alliance between the two companies in
June 2021.
Partnership with Simon Cowell
and Syco Entertainment to create
StemDrop – a new evolution of
musical collaboration, curation
and artist discovery launched
exclusively with TikTok and
Samsung.
Partnership with Mercedes-Benz
and Apple Music to deliver the
ultimate in-car sound experience,
becoming the first non-Apple
devices to offer Spatial Audio with
Dolby Atmos from Apple Music
natively in a vehicle.
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 16
UMG RESULTS
(in € millions)
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
YEAR ENDED DECEMBER 31
REVENUE
2022
10,340
2021 8,504
YoY + 21.6%
constant + 13.6%
Operating Profit
2022
1,600
2021 1,394
YoY + 14.8%
constant + 7.9%
EBITDA
1
2022 2,028
2021 1,686
YoY + 20.3%
constant + 12.5%
EBITDA margin
1
2022 19.6%
2021 19.8%
YoY - 0.2pp
Adjusted EBITDA
1
2022 2,135
2021 1,788
YoY + 19.4%
constant + 11.7%
Adjusted EBITDA margin
1
2022
20.6%
2021 21.0%
YoY - 0.4pp
FINANCIAL KEY FIGURES 2022
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 17
NOTE
% YoY indicates % change year-over-year
% constant indicates % change year-over-year adjusted for constant currency
NOTE
Segment revenue is stated prior to elimination of intersegment transactions
YEAR ENDED DECEMBER 31
REVENUE
2022
7,937
2021 6,822
YoY + 16.3%
constant + 8.8%
REVENUE
2022
1,799
2021 1,335
YoY + 34.8%
constant + 26.3%
REVENUE
2022
618
2021 363
YoY + 70.2%
constant + 54.1%
RECORDED MUSIC
(in € millions)
MUSIC PUBLISHING
(in € millions)
MERCHANDISING AND OTHER
(in € millions)
Subscription and Streaming Revenue + 9.8%
Downloads and Other Digital Revenue - 2.9%
Physical Revenue + 4.1%
License and Other Revenue + 13.4%
RESULTS PER
BUSINESS SEGMENT
(in € millions)
FINANCIAL KEY FIGURES 2022
YoY growth in constant currency
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 18
ENVIRONMENTAL SOCIAL
NON-FINANCIAL KEY FIGURES 2022
GHG EMISSIONS INTENSITY
SCOPE 1 & 2 (market-based)
tCO
2
e/employee 0.91
tCO
2
e/€ million of
revenue 0.88
SCOPE 3
tCO
2
e/employee 35.00
tCO
2
e/€ million of
revenue 33.83
GREEN BUILDINGS
(in % of total m
2
)
Buildings utilizing
renewable electricity
46%
Buildings that have
received an environmental
certification
1
28%
TOTAL GHG EMISSIONS
(MARKET-BASED) (in tCO
2
e)
358,820
SCOPE 1 2,404
SCOPE 2
(location-based) 8,721
SCOPE 2
(market-based) 6,663
SCOPE 3 349,753
TOTAL HEADCOUNT
9,992
Men 4,913
Women 5,079
49% 51%
TOTAL HEADCOUNT
9,505
Men 4,771
Women 4,734
50% 50%
MANAGERS
3,456
Men 1,980
Women 1,476
57% 43%
MANAGERS
2,838
Men 1,663
Women 1,175
59% 41%
1
Environmental certifications include BREEAM, ENERGY STAR, ISO 50001, and LEED.
2022 2021
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 19
ABOUT UMG
KEY CONSOLIDATED FINANCIAL
DATA FOR THE LAST THREE YEARS
Year ended December 31,
2022 2021 2020
Consolidated data
Revenues 10,340 8,504 7,432
EBITDA
1
2,028 1,686 1,487
Adjusted EBITDA
1
2,135 1,788 1,497
Operating profit
2
1,600 1,394 1,230
Net profit attributable to equity holders of
the parent
782 886 1,366
Adjusted net profit
1
1,454 1,271 1,028
Net Cash Position/(Financial Net Debt)
1
(1,810) (2,010) (1,868)
Net cash provided by operating activities before
income tax paid
1,987 1,395 1,133
Free Cash Flow
1
1,086 638 (158)
Dividends paid by UMG N.V. to its shareholders (798) (785) (283)
Per share data
Weighted average number of shares outstanding 1,813 1,813 1,813
Earnings attributable to UMG N.V. shareowners
per share
0.43 0.49 0.75
Adjusted net profit per share
1
0.80 0.70 0.57
1 Non-IFRS measures as defined in the Appendix to the Annual Report.
2 2021 Restated amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements
Inmillions of euros, number of shares inmillions, data per share in euros.
MUSIC IS UNIVERSAL
Annual Report 2022 | 20
INPUT
HOW UMG ADDS VALUE
ESG COMMITTMENTS
ADDED VALUE
PUTTING
ARTISTS FIRST
Industry-Leading
Artist Development,
Marketing and
Promotion
Network of
relationships
Leading position
in music-based
audio-visual
content
Capabilities in
data and analytics
complemented
by scale
Key relationships
with global and
local platforms
supporting
new product
development
Expanding
eCommerce and
direct-to-consumer
businesses
Global presence
with local expertise
around the world
A
R
T
I
S
T
R
Y
I
N
N
O
V
A
T
I
O
N
ENVIRONMENTAL SOCIAL GOVERNANCE
ARTISTRY GOVERNANCE FINANCIAL SOCIAL
ARTISTS & SONGWRITERS FANS BUSINESS PARTNERS SHAREHOLDERS
OUTPUT IMPACT AND VALUE CREATION FOR
E
N
T
R
E
P
R
E
N
E
U
R
S
H
I
P
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 21
INPUT
ARTISTRY
• > 3 million recordings
• ± 4 million owned and
administrated titles
• > 220 artists / brands in
merchandising
• 10,000s hours of videos
GOVERNANCE
• One-tier board
• Board regulations
• RTP policy
• AGM
• Board Committees
• Artist Signings
• Rights Management
• Risk Management
FINANCIAL
• Royalty advance
payments, net of
recoupments: €148 million
• Catalog investments:
€359 million
• SG&A: €2,702 million
SOCIAL
• World leader in music-
based entertainment
• Partnerships with DSPs,
industry organizations,
government agencies and
collection societies
• Total headcount: 9,992
• Offices in 60 countries
• Covering nearly 200
markets
OUTPUT IMPACT AND VALUE CREATION FOR
ARTISTS & SONGWRITERS
• Highly customized
marketing campaigns and
promotion
• Protecting artists’ IP and
rights
• Continuous engagement
building lifetime fan value
• Leveraging new technology
and partnerships to fuel
artistic creativity and
commercial potential
including eCommerce
• Helping artists elevate
their presence and stand
out in a sea of content
• Long-term career
development
• Supporting and
showcasting artist’s
climate advocacy efforts
FANS
• Protecting decades of
catalog and heritage
• Product innovation,
premium products for
super fans and extending
cultural legacy of artist
projects
• Connecting artists to fans
• Creating new fan
experiences through
project innovation
• Preserving and moving
culture
• Supporting communities
• Committing to protect the
planet for future
generations of music
lovers around the world
BUSINESS PARTNERS
• Enabling platform partners
to grow their businesses
by offering the world’s
most sought-after content
• Leveraging new innovative
technologies to expand
the addressable market
for artists
• Partnering with
independent labels and
(start-up) entrepreneurs
• Supporting growth of new
music markets around
the world
• Licensing music for use
in other forms of content
• Engaging on and
advocating for sustainable
business solutions
throughout the value
chain
SHAREHOLDERS
• 2022 Revenue:
€10,340 million
• Operating Profit:
€1,600 million
• Adjusted EBITDA
1
:
€2,135 million
• Net cash provided by
operating activities before
income tax paid:
€1,987 million
• Free Cash Flow
1
:
€1,086 million
• 2022 Dividend: €435 million
interim + €491 million
proposed= €926 million
(Subject to shareholder
approval of final dividend)
• Measuring and managing
climate-related risk
ADDED VALUE
1
as defined in the Appendix to the Annual Report
ENVIRONMENTAL SOCIAL GOVERNANCE
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 22
+8.6% | US$608m
+4.8% | US$10.3bn
+7.7% | US$1.1bn
+15.4% | US$489m
+28.4% | US$1.2bn
+5.4% | US$2.8bn
+14.3% | US$716m
+8.1% | US$474m
+5.4% | US$1.7bn
+2.2% | US$1.5bn
8 CANADA
1 USA
6 FRANCE
9 BRAZIL
5 CHINA
2 JAPAN
7 SOUTH KOREA
10 AUSTRALIA
3 UK
4 GERMANY
RECORDED MUSIC INDUSTRY
- 2022 TOP 10 MARKETS
Global Recorded Music Industry Revenues 2018 to 2022 ($ in billion)
Synchronisation
Performance Rights
Physical
Downloads & Other Digital
Streaming
2018 2019 2020 2021 2022
$8.8 $10.7 $12.7 $15.7 $17.5
$1.6
$4.2
$2.5
$0.5
$1.4
$3.9
$2.4
$0.5
$1.2
$3.8
$2.2
$0.4
$1.1
$4.4
$2.3
$0.5
$0.9
$4.6
$2.5
$0.6
$17.5
$18.9
$20.3
$24.0
$26.2
*
Source: IFPI Global Music Report 2023
CAGR: 10.6%
ABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2022 | 23
ABOUT UMG
STAKEHOLDER ANALYSIS
We actively engage with our stakeholders to provide them with information
about our strategic direction and choices and we seek their input when
evaluating our Environmental, Social and Governance priorities (see Main
Material Topics). This creates sustainable value for our stakeholders and for
us. By promoting two-way communications with our stakeholders and valuing
their input, together we create a strong basis for constructive, long-term
relationships. This intensive interaction enables us to chart and prioritize
the areas they consider crucial. It also gives us insights into the spaces in
which we can create positive impact through our business and operations. We
subsequently focus on these material areas and proactively communicate our
related position and performance.
We have six key stakeholder groups:
1. Artists
2. Fans
3. Employees
4. Distribution Partners
5. Government and Elected Officials
6. Shareholders
ENGAGING WITH OUR STAKEHOLDERS
We see actively and intensively engaging with our key stakeholder groups
as a critical part of being a successful and responsible business. Aligned to
stakeholders’ particular needs and interests, we engage with them in both
formal and informal ways throughout the year.
• How we engage with stakeholders
• Main interests
• Our response and impact
1. Artists
We actively engage with artists to serve their needs by:
• Placing recording artists and songwriters at the heart of everything we do
• Ensuring the teams at each of our labels and divisions maintain close
relationships with artists
• Interacting directly with our artists via our A&R staff and indirectly through
their advisors
• Offering them the choice of the full range of services needed to succeed
creatively and commercially, including marketing, promotion, distribution,
tour support, e-commerce and film & television
Artists' main interests include:
• Investing in their long-term career development and helping them build
sustainable careers
• Making their body of work available to fans
• Helping them connect with fans – old and new – in compelling ways
• Fair compensation for artists and songwriters
• Enabling their direct engagement with fans
• Supporting artists’ creative success
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ABOUT UMG
We respond to these interests and generate impact by:
• Partnering with the broadest network of global, regional and local
distribution partners so artists can share their work with a growing fan
base worldwide
• Working with our distribution partners to achieve fair compensation for
music content
• Fostering creative expression and collaboration within our diverse roster
of artists
• Driving innovation in new technologies that increase music consumption
and let fans experience music in new ways
• Helping our artists to engage with their fans via social media, livestreaming
events, pop-up shops and other in-person experiences
2. Fans
We engage with fans with a view towards:
• Enhancing accessibility to their favorite artists
• Providing premium products for super fans
• Creating new experiences and opportunities for fans to engage with and
experience their favorite artists and music
• Promoting direct relationships to create stronger bonds between artists
and fans
• Responding to fan demands for products
Fans' main interests include:
• Providing access to artist content from the widest range of licensed partners
• Offering the commercial and collectable products that fulfill their demands
• Making fans feel directly connected to their favorite artists
• Providing premium products and experiences for fans
• Supporting artistic creativity
We respond to these interests and generate impact by:
• Investing in A&R to ensure fans have new music and products from their
favorite artists
• Helping fans engage with their favorite artists via social media,
livestreaming events, pop-up shops and other in-person experiences
• Evolving both the fan experience and the creative process through
innovation and technology
• Partnering with the broadest network of global, regional and local
distribution partners and retailers to help artists share their work with
fans worldwide
• Facilitating direct-to-consumer sales through ecommerce and
merchandising opportunities
• Utilizing our production, manufacturing and distribution capabilities to
create premium and deluxe products for fans
3. Employees
We actively engage with employees in multiple ways, including:
• Actively communicating and listening to employees through written and in-
person communications from our People, Inclusion and Culture (PIC) team
• Providing formal (such as career and performance discussions) and
informal channels to encourage open communication and gather feedback
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ABOUT UMG
• Offering employees online resources to help answer their questions quickly
and easily
• Assessing and improving the employee experience and culture in a number
of ways, including by conducting surveys
• Engaging formally through employee forums, such as townhalls, community
conversations and employee resource groups created to strengthen culture,
engagement, retention and belonging
• Responding to employees’ individual needs by offering flexible
work arrangements
Employees’ main interests include:
•
A healthy employee relations environment
• A safe, healthy and respectful workplace environment
• Wellbeing resources and support
• Professional opportunities to thrive and grow
• A culture of innovation, inclusion and wellbeing
• Global talent and tools to engage and enhance employee retention
• A culture of entrepreneurship
• Strong representation, inclusion, equity and belonging across the globe to
drive change within our industry and our communities
• Meaningful experiences, competitive pay practices and progressive benefits
designed to inspire and engage our employees starting day one
We respond to these interests and generate impact by:
• Undertaking ongoing investment in developing our people, including
manager and employee training programs to support learning
and development
• Recognizing great work through fair and competitive rewards
• Building an inclusive and supportive culture in which all employees feel
safe, seen, heard, respected and connected
• Collaborating as part of a global company on shared concerns including
learning, diversity and inclusion, engagement, retention and wellbeing
• Care for our people through various initiatives, acknowledging that a healthy
and resilient workforce is key to our business growth and success
• Tapping into innovation, collaboration, creativity and artistry across UMG
• Encouraging community engagement and philanthropy through volunteer
time off and employee match benefit programs
• Promoting continuous learning and development through mentoring and
targeted development programs with an emphasis on sustaining a culture
of innovation, inclusion and wellbeing
4. Distribution Partners
We actively engage with our distribution partners in multiple ways, including:
• Establishing corporate business development teams to maintain an ongoing
dialogue with distribution partners
• Taking part in regular product innovation discussions, data and analysis
sessions and deal negotiations
• Facilitating label-based UMG teams comprising key account managers
and streaming managers that work with distribution partners on product
implementations, artist-specific projects and initiatives, releases, artist data
and best practices
• Providing legal teams that ensure partners remain in compliance with deal
terms and maintain ongoing dialogue about potential issues
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ABOUT UMG
Distribution partners' main interests include:
• A continued supply of high-quality music-based content for their products
and services
• Artists and song catalogs that appeal to consumers worldwide
• Promotional support to drive engagement on distribution
partners’ platforms
• State-of-the-art systems to deliver content in various formats and ingest
large amounts of data
We respond to these interests and generate impact by:
• Conducting fair negotiations based on honesty and integrity
• Drawing up contracts that clearly define the relationship, terms
and requirements
• Safeguarding data protection and confidentiality with respect to business
trends, new products and features
• Ensuring our recording artists and songwriters are the center of everything
we do by pioneering new services, platforms and business models
• Investing in developing talent and successfully producing music markets
and promoting artists to fans worldwide
• Providing high-quality/high-resolution audiovisual content
5. Government and Elected Officials
We actively engage with governments and elected officials via multiple means
and channels, including:
• Actively educating government and elected officials about the music
ecosystem both through informal meetings and by responding to formal
requests for information (such as public hearings and consultations)
• Advocating for public policies that benefit the music ecosystem and its
members – from artists and songwriters to fans and beyond
• Participating in trade bodies and music-related NGOs and their activities,
including the publication of industry statistics, reports and studies on
relevant issues and the provision of background materials
• Conversing regularly on a broad range of issues affecting the creative
community via our Public Policy team
Government and Elected Officials' main interests include:
• Supporting and preserving culture and art and creative community
• Soft power and national or ethnic pride
• Investment that fuels economic growth and tax revenues to support quality
of living
• High-quality, skilled employment for local population
• International respect for domestic creators, including intellectual property
rights, trade policies and free expression
We respond to these interests and generate impact by:
• Operating music businesses that create employment and generate
economic and fiscal benefits for the communities in which we operate
• Operating a company that supports culture through the creation and
distribution of great music and associated content
• Operating at the highest ethical standards and complying with both the
letter and spirit of all applicable laws and regulations
• Adhering to business practices that treat artists and songwriters and all
creators fairly
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ABOUT UMG
• Fostering a thriving music ecosystem
6. Shareholders
We engage with Shareholders in multiple ways, including:
• Participating in investor meetings and teleconferences
• Publishing interim and annual reports
• Presenting quarterly financial results webcasts with management
Q&A sessions
• Holding Annual General Meetings
• Publicly issuing press releases
• Updating corporate and investor relations websites
• Managing a dedicated email address for inbound queries
• Participating in financial and industry conferences
• Conversing regularly via our Investor Relations team
Shareholders' main interests include:
• Revenue growth drivers and margin development
• Content and capital allocation
• Company strategy and progress updates
• Competitive positioning
• ESG framework and company values
We respond to these interests and generate impact by:
• Including focused messaging on the strategy and growth drivers across
the business
• Furnishing details on our content investments and our strategy around
these investments
• Providing details on both our competitive landscape and ESG strategy,
metrics and progress
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BOARD REPORT
INTRODUCTION
INTRODUCTION
BUSINESS PROFILE
A WORLD LEADER IN MUSIC-
BASED ENTERTAINMENT
UNIVERSAL MUSIC GROUP (UMG) is aworld leader in music-based entertainment
with a broad array of businesses engaged in recorded music, music publishing,
merchandising and audiovisual content. UMG has the broadest global reach of
any music company with a local presence in more than 60 territories covering
nearly 200 markets. Everything we do revolves around supporting artists,
promoting innovation and entrepreneurship, and bringing fans the world's best
music. Our three core business segments work in synergy to lead the dynamic
and ever-changing global music market:
Our RECORDED MUSIC BUSINESS is dedicated to discovering and developing
recording artists and marketing, promoting, distributing, selling and licensing
the music they create. Showcasing an impressive roster of recording artists,
a catalog of timeless performers and a diverse range of labels, our Recorded
Music business is the partner of choice for artists, innovators and
entrepreneurs around the globe. This business also incorporates our
commercial activity in Film & TV and independent artist and label services and
distribution.
UNIVERSAL MUSIC PUBLISHING GROUP (UMPG) is committed to signing,
administering and acquiring rights to musical compositions and licensing them
for use in multiple formats. As one of the world's largest and fastest-growing
music publishing companies, UMPG has a catalog with nearly fourmillion
owned and administered titles and enjoys partnerships with many of the world's
top songwriters.
Bravado, our MERCHANDISING BUSINESS, represents the merchandising rights
of artists and entertainment brands and properties. Providing an end-to-end
merchandising ecosystem, Bravado offers services including sales, licensing,
branding, marketing, eCommerce and creative resources for clients and
innovative experiences for fans worldwide.
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INTRODUCTION
LABELS
MULTI-LABEL STRUCTURE
EMPOWERS ENTREPRENEURSHIP,
ARTISTRY AND DIVERSITY
UMG is home to many of the world's most iconic record labels. Our
multi-label structure empowers entrepreneurship, artistry, and diversity. UMG
encompasses a collection of iconic and world-class labels, spanning all genres
of music, created and led by visionary entrepreneurs.
Our shared passion for discovering recording artists with the talent and
potential to break through an increasinglycompetitive 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. Decentralizedtalent-
spotting across UMG, employing each label's distinctive identity and creative
vision, means we can attract the widest variety of top talent. Healthy
competition drives innovation and evolution. We believe that operating multiple
major frontline labels in markets around the world yields significant benefits.
This is why we continue to develop, revitalize and invest in our label brands.
Our multiple label structure creates a degree of competition even among
UMG labels. We believe that this healthy competition drives innovation and
creativity and keeps our labels continuously evolving to stay at the forefront
of industry trends.
Another benefit of our multiple label structure is that it alleviates short-term
performance pressure on any individual label. The knowledge that the different
UMG labels will collectively have a continuous flow of new content means each
individual label can take a more long-term approach to artist development.
Leveraging mutual benefits and services
Our multiple label structure gives each label the freedom to create and innovate,
while enjoying the benefits of being part of UMG. This is because at UMG,
we negotiate with platform partners, aggregate data and analytics, share best
practices, and centralize certain back-office functions at a company-wide level.
This lets us benefit from our scale, while still operating with the spirit of a
quick-moving, innovative and entrepreneurial company.
Broadening touchpoints with artists and entrepreneurs
through distribution
UMG enjoys longstanding relationships with leading distribution partners,
including, for example, HYBE and Disney, to give our partners’ artists global
reach and best-in-class services. In 2022, we expanded our global distribution
network for independent labels and artists, with the launch of Virgin Music
Group. This unites our premier label & artist service businesses including Virgin
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INTRODUCTION
Music Label & Artist Services, Ingrooves and the recently acquired mtheory Artist
Partnerships within the newly created division. With a unified leadership and
strategy, Virgin Music Group is driving the expansion of UMG’s independent
music capabilities across all business units and regions worldwide. In this
way we are broadening our long-term relationships and partnerships with new
independent artists, labels and entrepreneurs, and further expanding our reach
into new music markets.
UMG announced the acquisition of a 49% stake in independent music company
[PIAS] in December 2022. This was the next step forward following the formation
of a strategic global alliance between the two companies in June 2021. Under
the new agreement, [PIAS] will remain fully independent with opportunities for
future repertoire and distribution partnerships.
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INTRODUCTION
RECORDED MUSIC
RECORDED MUSIC
UMG’s recorded music business discovers and develops artists; supports
the creation of audio and audiovisual content by recording artists; and
markets, distributes, sells and licenses this content across a broad range
of formats and platforms. UMG owns and administers the copyright 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
such as CDs and vinyl records, and from its distribution to music streaming
and subscription platforms. Our recorded music content is also distributed to
consumers through multiple other platforms and forms, including theatrical
films, home entertainment, television productions and video games.
Strength in diversity
HOME TO A DIVERSE SET OF LABELS, BRANDS AND CONTENT
UMG is a leading recorded music company. We’re home to both the world's
premier record labels and groups, and iconic studio facilities. Our roster
of recording artists features a diverse portfolio of both global superstars
and leading local artists from around the world. Artists signed to UMG as
part of our recorded music business span all genres and generations and
include many of the greatest recording artists of all time. UMG’s iconic label
brands include Capitol Music Group, Interscope Geffen A&M, Republic Records,
Island Records, Motown Records, Def Jam Recordings, Universal Music Group
Nashville, Universal Music Latin Entertainment, EMI Records and Polydor. Our
label portfolio also encompasses the world's leading classical and jazz labels,
including Blue Note Records, Decca, Deutsche Grammophon and Verve Label
Group. We’re also home to the world's premiere recording studios, including the
legendary Capitol Studios and Abbey Road.
The addition of Virgin Music Group to our recorded music business in 2022
further expands our diverse portfolio. It brings together our leading label & artist
service businesses including Virgin Music Label & Artist Services and Ingrooves.
Through this portfolio of businesses, we offer a diverse range of premium
and flexible independent label and artist services to entrepreneurs and talent.
These services span the spectrum from global distribution, insights, data and
marketing tools to fully staffed promotion, marketing and artist development
teams at both the regional and global levels. This fosters long-term partnerships
with UMG, and forges paths to success for entrepreneurs, independent labels
and artists.
In addition to recorded music content, UMG offers some 5,000 hours of
audiovisual video content across the globe. Our audiovisual content teams
develop a wide spectrum of film and television content. Our content spans
a diverse mix of genres and eras and features legendary artists represented
within our rich and storied catalog of content and intellectual property. We have
two content divisions at the heart of our audiovisual operation: Mercury Studios,
a multi-faceted content studio and distributor, and Polygram Entertainment,
a premium production company. Beyond these two divisions, we also have
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INTRODUCTION
content operations within our individual labels and other business units. In
2022, Mercury Studios and Polygram Entertainment presented projects including
a four-part documentary series My Life as a Rolling Stone (BBC), Shania: Not Just
a Girl (Netflix) and Zoey’s Extraordinary Christmas (NBC).
Presence spanning the globe
Our recorded music business is both artistically and geographically diverse.
We have offices in more than 60 territories, covering nearly 200 markets.
This means we operate in more territories and markets than any other
recorded music company. Our geographical spread helps us create diversified
revenue streams.
In 2022, North America accounted for 51% of our recorded music revenue.
Europe, Asia, Latin America and the rest of the world represented 28%, 13%, 4%
and 4% of the revenue respectively.
Our extraordinarily diverse roster of artists in turn means we are never reliant
on one artist or even a small number of artists.The top 50 artists only accounted
for 22%, of UMG’s recorded music revenue in 2022.
Diversified revenue streams
Our recorded music business has diversified revenue streams derived from
three main sources:
DIGITAL: We enter into agreements with digital music services to make our
music and audiovisual content available for access in digital formats, such as
streaming and downloads. Our music is streamed on an ad-supported and paid
subscription basis through streaming services. Fans are also able to purchase
downloads of our music by album or individual tracks through download
services. Our music content is also consumed through social media, gaming
and digital fitness platforms, among other emerging digital formats that we are
working to further monetize. We partner with both well-established and
emerging digital music services to provide ever-greater access to audiences
engaging with our music in multiple ways.
PHYSICAL: Our physical recorded music products, including CDs, vinyl records,
cassette tapes, DVDs and Blu-Ray discs, are sold through retailers and
wholesalers both in-store and online. We also sell our products directly to
customers via our UMG websites and artist channels.
LICENSING AND OTHER: We enter into agreements to license the use of 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 when sound
recordings are performed publicly through broadcast of music on television,
radio and cable, and in public spaces such as shops, workplaces, restaurants,
bars and clubs. We also partner with artists to develop their activities outside
the traditional recorded music business, and generate revenue through
participation in these expanded rights, including sponsorship, fan clubs, artist
websites, touring, concert promotion, ticketing and artist and brand
management. We also develop and produce music-based audiovisual content,
such as music documentaries, feature films, theatrical musical productions,
music-based television series and reality shows, which are then licensed for
broadcast.
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INTRODUCTION
Continued growth across all major recorded music revenue streams
in 2022
In 2022, UMG achieved growth across all its major recorded music revenue
streams. Recorded music revenue in 2022 was €7,937million, up 16.3%
compared to 2021, and up 8.8% in constant currency. Subscription and
streaming revenue grew 18.7%, 9.8% in constant currency, with strong 10.0%
constant currency growth in subscription revenue and 9.3% constant currency
growth in ad-supported streaming revenues. While ad-supported revenue was
pressured in the second half of 2022 due to a downturn in the broader ad-
market, fuelled by macroeconomic concerns, ad-supported streaming grew for
the year due to ongoing improvement in ad-based monetization and new and
enhanced deals in social media.
Physical revenue grew by 7.7%, or 4.1% in constant currency, driven by
improvements in both CD and vinyl sales
License and other revenue improved 19.6%, or 13.4% in constant currency, due
to improvements in broadcast and neighboring rights collections, audiovisual
production income and synchronization, live and brand deals.
A world of stars
Our recorded music business operates in more territories and markets than any
other recorded music company. The breadth and depth of our artist roster is
unrivalled. We're the destination of choice for the world's most successful stars
and a magnet for up-and-coming artists. With a roster featuring legends, global
hitmakers, regional stars and breakthrough artists, our artists span generations,
genres, languages, continents and cultures.
UMG’s best-selling artists include global superstars such as J Balvin, Jon
Batiste, Justin Bieber, Luke Bryan, Lewis Capaldi, J. Cole, Daddy Yankee, Drake,
Billie Eilish, Eminem, Selena Gomez, Ariana Grande, Imagine Dragons, Lady
Gaga, Kendrick Lamar, Lang Lang, Lil Baby, Post Malone, Shawn Mendes, Kacey
Musgraves, Katy Perry, Olivia Rodrigo, Chris Stapleton, Taylor Swift, Carrie
Underwood and The Weeknd.
Our roster of artists also includes hugely successful local artists such as Sam
Smith, Glass Animals and Stormzy in the UK, Angèle and Nekfeu in France,
Stromae in Belgium, Rammstein and Helene Fischer in Germany, King & Prince
and Ado in Japan, Eason Chan in China and Karol G and Sebastián Yatra in
Latin America.
Our recorded music artists once again topped the charts in 2022. UMG had four
of the Top 5 global artists on Spotify in 2022 with Taylor Swift, Drake, The Weeknd
and BTS. Drake was the most streamed artist on the platform in the U.S. UMG
also had four of the top five most-viral artists, led by Taylor Swift at number one,
with The Weeknd, BTS and Lana Del Rey also holding top chart positions.
2022 saw UMG artists Imagine Dragons become the most streamed artists on the
Deezer platform. The Weeknd, Eminem, Billie Eilish and Queen also featured in
the Deezer 2022 top-ten.
VEVO’s most watched global artist in 2022 was UMLE Latin superstar Karol G with
2.7billion views during the year, her video for “Provenza,” was the most watched
music clip.
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INTRODUCTION
Our recorded music artists featured prominently in the 2022 year-end U.S.
Billboard charts, with UMG representing seven of the Top 10 albums of the year.
They include Morgan Wallen, two releases from Taylor Swift, Olivia Rodrigo, The
Weeknd, Drake and Disney’s Encanto soundtrack. Glass Animals’ hit song “Heat
Waves” was named the number one song on Billboard’s Hot 100 chart. UMG’s
Republic Records was named Billboard’s “Label of the Year” for the second year
running, based on chart success during 2022.
According to the Official Charts Company, UMG had six of the Top 10 artists in the
UK in 2022, including Taylor Swift at number one, as well as Drake, Eminem and
The Weeknd among others.
In Germany, UMG topped the charts with the top four best-selling albums of
the year, led by Rammstein’s, alongside Helene Fischer, ABBA and Taylor Swift.
UMG also had the top three singles of the year, led by DJ Robin & Schürze’s
“Layla”, and followed by “Heat Waves” from Glass Animals and “Beautiful Girl”
from Luciano, according to GFK.
In Japan, Ado was the top artist on the Billboard Japan year-end "Artist 100"
chart. And in France, Angèle was the top female streaming artist.
In China, Eason Chan’s “Gu Yong Zhe” (“The Lone Warrior”), became the most-
streamed song in UMG China’s history after topping the charts on all major
streaming platforms.
Industry-leading catalog of timeless recordings
Our track record in identifying and partnering with the world's best artists has
given us the industry-leading catalog of recordings and songs. These include
timeless performers such as ABBA, Louis Armstrong, The Beatles, The Beach
Boys, The Bee Gees, Andrea Bocelli, Bon Jovi, James Brown, Neil Diamond, Marvin
Gaye, Guns N’ Roses, Elton John, Bob Marley, Paul McCartney, Nirvana, Luciano
Pavarotti, Queen, The Rolling Stones, Frank Sinatra, Sting, U2,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 61% of recorded music digital and physical revenue in 2022,
while frontline product (content less than three years old) accounted for 39%
of recorded music digital and physical revenue.
Growing share of subscription and advertising-based
streaming models
We play a prominent role in driving the recorded music industry's transition to
paid subscription and advertising-supported streaming models from a physical
and digital ownership model. Our revenues in 2022 reflect this shift, with
streaming and subscription revenue accounting for 66% of UMG’s 2022 recorded
music revenues.
We generate subscription and streaming revenue through partnerships that
enable UMG’s content to be distributed by global, regional and local digital
service providers, including Spotify, Apple Music, YouTube, Amazon, Deezer,
Tencent Music Entertainment and NetEase, among an increasingly important
number of other partners. We also generate subscription and streaming
revenues through a variety of social media platform partners ranging from Meta,
SNAP and TikTok to digital fitness partners including Peloton and Apple Fitness+.
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INTRODUCTION
In addition, we generate revenue through many other partnerships and via
emerging digital music consumption models.
In 2022, UMG’s Deutsche Grammophon label launched Stage+, a classical
music subscription service with a broad offering. Stage+ features exclusive
live premieres, long-form concert and opera programs and music videos, plus
documentaries and behind-the-scenes interviews. Stage+ furthermore presents
new audio releases and albums from the Deutsche Grammophon and Decca
catalogs in immersive audio formats.
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INTRODUCTION
MUSIC PUBLISHING
MUSIC PUBLISHING
Universal Music Publishing Group (UMPG) is UMG’s global music publishing
business and is home to the world's greatest songwriters and song catalog.
We're recognized as one of the largest and fastest-growing music publishing
companies worldwide. Our core activity involves signing, administering and
acquiring rights to musical compositions and licensing them for use in
different formats. We license musical compositions for use in sound recordings,
films, television, advertisements, video games, concerts and other public
performances and for use in printed sheet music and song folios. Our
vast catalog of original music and arrangements has incredible breadth and
diversity. We enjoy longstanding relationships with leading film and television
studios, global brands and digital service providers who use our music and
arrangements in their content and products.
Creating commercial and creative value for songwriters
Songwriters come first at UMPG. We're dedicated to giving them best-in-class
service to maximize royalty streams in the modern-day music industry. To
achieve this, we deploy both the hands-on expertise of the best people in the
industry and cutting-edge technology to maximize opportunity and value for our
songwriters both commercially and creatively. We combine global reach and a
local presence, with teams of local representatives operating in 40 countries.
These teams focus on discovering, signing and developing talent and creating
unique opportunities for success on a local, regional or global scale. This
physical presence is vital in maintaining relationships with collection societies
worldwide to ensure all generated income is accounted for and collected on
behalf of songwriters and copyright holders. As part of the world's largest
music company, we're uniquely positioned to develop collaborative strategies
between publishing and recorded music. All with one aim: to add value for
our songwriters.
Multiple revenue streams
Our music publishing operations derive revenue from five main sources:
PERFORMANCE: The rightsholder receives revenues when the musical
composition is performed publicly through broadcasting of music on television
or radio, and during a live performance at a concert or other venues such as
nightclubs, 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 from
other uses such as in toys or novelty items and merchandise.
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INTRODUCTION
OTHER: The rightsholder receives revenues for use of the musical composition
in sheet music and other uses.
Music publishing achieves increased growth
Music Publishing revenue amounted to €1,799million in 2022, up 34.8% year-
on-year, or 26.3% in constant currency. The continued growth of subscription
and streaming revenue, along with the recovery in synchronisation and
performance revenue, was the main driver behind the overall increase in
music publishing revenue, but revenue also benefited in 2022 from catalog
acquisitions made in prior years.
In 2022, UMPG benefited from two key rulings in the U.S. that were a big win for
the publishing and songwriting community. In July 2022, the Copyright Royalty
Board reaffirmed the 15.1% headline rate increase in royalties paid by streaming
services to publishers for the 2018-22 period following a protracted dispute with
streaming services. This was followed in September with a further increase in
mechanicalroyalty rates to 15.35%, to be paid to songwriters from 2023 to 2027.
This is the result of a long collaborative effort by the NMPA, NSAI, members
of the UMPG team and the wider songwriting community in the U.S. to ensure
recognition and fair pay for our songwriters.
Global scope and local focus in music publishing
We are a global leader in publishing with a vast catalog containing nearly
fourmillion owned and administered copyrights. With 860 employees operating
at 48 offices in 40 countries, we have global scope with a local focus.
In 2022, we launched the UMPGGlobal Creative Group to support our songwriting
community. The group comprises ateam of senior A&R executives across
key territories who identify and expand global creative opportunities for UMPG
songwriters, artists and producers. This group reflects our commitment to
keep innovating our leading A&R publishing strategy. It provides us with
a strong vehicle for empowering UMPG’s creative leadership to accelerate
global talent strategies and maximize high value opportunities for our world-
class songwriters.
A chart-busting year
For the third consecutive year, UMPG-signed songwriter Bad Bunny was the most
streamed global artist on Spotify in 2022. Garnering over18.5billionstreams in
2022, he more than doubled the amount he achieved in 2021. He was joined in
the top five most streamed artists by UMPG signed writers Taylor Swift, Drake
and The Weeknd, all three of whom are also Universal Music Group recording
artists. Bad Bunny’s
Un Verano Sin Ti
was also the most streamed album on
Spotify in 2022. UMPG also had a share in all five of the Top 5 of Spotify’s 2022
most streamed songs globally led by Harry Styles with “As It Was”.
Apple Music named UMPG-signed songwriter Bad Bunny the 2022 Global Artist
of the Year and named his
Un Verano Sin Ti
the most streamed Latin album
of all time on Apple Music. UMPG writers contributed to nineteen of the top
twenty singles of the year on Apple Music, led by “Stay” from The Kid Laroi &
Justin Bieber.
UMPG had a share in four of the top five albums of the year in the U.S. according
to Billboard, and all the top four artists, with Bad Bunny, Taylor Swift, Harry Styles
and Drake. UMPG-signed writers also contributed to all the top five singles of
2022 on the Billboard Year-End Hot 100 Song Chart.
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INTRODUCTION
UMPG won the title of “Publisher of the Year” at three leading awards
competitions in 2022: Music Business Worldwide A&R Awards, BMI Pop Music
Awards and BMI Latin Awards. Our Chairman and CEO, Jody Gerson, received
the prestigious Abe Olman Publishing Award at the 51st Songwriters Hall of
Fame Awards.
We remain the global publisher of choice for film and TV studios. In 2022, we
secured a new landmark deal with Univision, following deals with Banijay and
Moonbug Entertainment in 2021.
2022 also saw some of the world’s greatest songwriters and artists sign
with UMPG, including Dave Bailey (Glass Animals), Clairo, Nicky Youre, Fourtet,
Bicep, film and TV composer Nicholas Britell, and Oscar and Grammy-winning
composer Hildur Guðnadóttir. We also extended our agreement with the estate
of legendary Mexican recording superstar and prolific songwriter Juan Gabriel.
Rich mosaic of songs spanning every era and genre
UMG is home to the greatest songwriters in history. We have a global catalog
containing nearly fourmillion owned and administered copyrights.
Our unrivalled catalog is a rich mosaic of songs spanning myriad eras,
generations, genres and languages. We take a portfolio approach to growing and
managing our catalog. As a result, we have a mix of songwriters from around the
world, with works in our catalog representing every genre – from country to Latin
to pop to urban to K-pop and J-pop. Our catalog is filled with evergreen songs
spanning generations from “Like a Rolling Stone” to “Every Breath You Take” and
from “All I Want for Christmas” to “Staying Alive”. This combines to create an
ever-evolving portfolio that is unmatched in terms of its richness and diversity.
Our music publishing catalog includes some of the world’s most popular songs
from major songwriters and artists such as ABBA, Adele, Axwell & Ingrosso,
J Balvin, The Beach Boys, Beastie Boys, The Bee Gees, Irving Berlin, Leonard
Bernstein, Justin Bieber, Benny Blanco, Chris Brown, Mariah Carey, Brandi Carlile,
Kenny Chesney, Coldplay, DaBaby, Jason Derulo, Neil Diamond, Disclosure,
Drake, Dua Lipa, Bob Dylan, Billie Eilish, Eminem, Gloria and Emilio Estefan,
Florence + the Machine, Future, Selena Gomez, Ariana Grande, Al Green, Josh
Groban, Halsey, Jimi Hendrix, H.E.R., Imagine Dragons, Carly Rae Jepsen, Billy
Joel, Elton John/Bernie Taupin, Jonas Brothers, Alicia Keys, Kendrick Lamar, Lil
Baby, Lil Yachty, Linkin Park, Logic, Demi Lovato, The Mamas & the Papas, Steve
Mac, Maroon 5, Dave Matthews, Megan Thee Stallion, Shawn Mendes, Metallica,
Miguel, Nicki Minaj, Maren Morris, Mumford & Sons, Pearl Jam, Post Malone,
Quavo, Otis Redding, R.E.M., Red Hot Chili Peppers, Rex Orange County, Rosalía,
Carly Simon, Britney Spears, Harry Styles, Taylor Swift, SZA, Shania Twain, Justin
Timberlake, U2, Keith Urban, Jack White, and Zedd.
We expanded our catalog further in 2022 to include songs written by global
icons whose works represent the most timeless and important songs in history.
UMPG announced the acquisition of 17-time Grammy Award winner Sting’s
career catalog of music in February 2022. This historic, worldwide agreement
encompasses the entirety of both his solo works and works created with The
Police. This landmark deal unites Sting’s song catalog with his recordings
at UMG.
2022 also saw UMG and UMPG announce the acquisition of the entirety
of Neil Diamond’s historic song catalog and the rights to recordings from
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INTRODUCTION
throughout his career. This includes 110 unreleased tracks, an unreleased
album and archival long form videos. This comprehensive deal brings together
Neil Diamond’s entire body of work and expands his existing relationship with
UMG and UMPG.
UMG additionally entered into an agreement with the Zappa Trust to acquire
Frank Zappa’s estate. This includes his expansive publishing catalog of iconic
songs, film archive, and the complete contents of The Vault, the storage facility
that houses the late Zappa’s life’s work and name and likeness rights.
We also announced in 2022 an expansive, long-term partnership with The
Weeknd - one of the most commercially successful and critically acclaimed
recording artists and songwriters of the last decade. This new long-term deal
will take effect when his existing commitment expires. Based on this new
relationship, we will administer all his future works and songwriting catalog.
We entered into an expanded relationship with Authentic Brands Group (ABG),
a global brand owner, marketing and entertainment company, and owner of
Elvis Presley Enterprises. Under this exclusive global publishing deal, we will
represent the historic song catalog of Elvis Presley.
UMPG furthermore entered into an exclusive global publishing agreement to
fully represent the iconic song catalog of Irving Berlin. We have served as
his catalog administrator outside of the U.S. since 2012 and this deal further
expands our relationships with Berlin’s estate. One of the greatest songwriters
in American history, Berlin composed more than 1,500 songs over his 60-year
career. Under the expanded agreement, we exclusively represent his catalog
of renowned classics including “Anything You Can Do,” “Puttin’ On The Ritz,”
“There’s No Business Like Show Business,” and Guinness World Records’
longtime best-selling single “White Christmas.”
In 2022, Universal Music Publishing China signed an exclusive global publishing
agreement with China-based RYCE Publishing. RYCE is the publishing unit of
music and entertainment company RYCE Entertainment. Spanning a massive
catalog of over 700 songs, the landmark deal sees UMP China exclusively lead
global administration responsibilities. The deal encompasses administering
some of the country’s all-time best-sellers and tracks, which have helped
establish Chinese Pop (C-Pop) as a global force, and the rights in China to a
sizeable song catalog of popular Korean K-Pop songs.
Bringing songwriters transparency, integrity and trust
We deploy cutting-edge technology and expert administration services to
benefit our songwriters. UMPG Window is our highly advanced technology
platform through which we provide our songwriters and clients with real-time
information on earnings, royalty and copyright data. This advanced system
reflects UMPG’s longstanding commitment to transparency, integrity and trust.
UMPG Window uses the latest in cloud-indexing technology to provide
comprehensive views of where, when and how songs are consumed around
the world. UMPG Window also features: one-click, no-fee advances; international
royalty ‘pipeline’ income views; society registration information, status, and
full copyright details on all works; comprehensive film and TV information for
works used and royalties earned; and numerous other powerful tools to help our
songwriters and clients.
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INTRODUCTION
Partnering with top film and TV content studios
We’re a leading publisher in the film and television business. UMPG partners
with leading film and TV content studies ranging from Warner Bros., NBC
Universal, Disney and HBO to MGM, Banijay, Paramount, Lionsgate, Viacom, and
STX. We further expanded our portfolio of partnerships with the addition of a new
global partnership with Univision.
This leading position means we represent some of the world's most iconic film
and TV theme songs. With the unstoppable rise of video content, major content
publishers from gaming to TV to motion pictures turn to us to help them build
the soundtracks for their projects.
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INTRODUCTION
MERCHANDISING
ECOSYSTEM UNITING CREATIVE
DESIGN, PRODUCTION
AND DISTRIBUTION
Bravado is UMG’s global, full-service merchandising business. With a portfolio
spanning more than 220 artists, we hold the leading position in music
merchandising worldwide. Through Bravado, we develop high-quality licensed
consumer products that reflect and reinforce an artist’s brand and identity and
presents them to a worldwide audience. Our artists and brands have access to
a unique end-to-end merchandising ecosystem that brings together creative
design, production, and distribution. We work closely with new and established
clients to 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 on
live tours. By tapping into UMG’s global network, we can offer a comprehensive
range of services, including sales, licensing, branding, marketing, eCommerce
and creative resources. Our focus is on building connections between fans and
artists by creating and developing innovative cultural and retail experiences for
fans worldwide.
Our merchandising revenues are derived from four main sources:
TOURING INCOME: Sales of physical merchandise products directly to consumers
at venues during tours. This also includes concession income, which is the sale
of physical merchandise products directly to consumers at concessions 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 merchandising products to wholesalers and retailers.
LICENSING: Fees received from third party licensees to use our merchandising
rights 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.
In 2022, our merchandising business realized exceptionally strong growth,
particularly from touring income, as global touring resumed following COVID-
related shutdowns during much of 2020 and 2021.
In total, Merchandising and Other revenue grew to €618million, up 70.2%, or
54.1% in constant currency, driven by the growth in touring related revenue.
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INTRODUCTION
Roster of clients with the greatest names in music
Bravado signs agreements with clients that provide for usage rights of the
client's name, image and likeness across product categories and distribution
channels. In return, clients receive a royalty or a share of the proceeds for all
items sold. Services can include merchandising, direct-to-consumer products
and campaigns, touring, brand and retail licensing and distribution.
Our roster of clients includes some of the biggest names in music. We provide
merchandising services for leading artists including Aerosmith, Ariana Grande,
Billie Eilish, Blackpink, Bob Marley, Elton John, Guns N’ Roses, Justin Bieber,
Kiss, Lady Gaga, Queen, Selena Gomez, Taylor Swift, The Rolling Stones, Shawn
Mendes, The Weeknd and The Who. A number of Bravado artists are also
signed across other UMG businesses, allowing for synergies and increased
opportunities for artists.
In 2022, Bravado entered into partnership with The Beatles to represent the
legendary band's North American rights and to develop new merchandise
opportunities for The Beatles across retail, licensing and e-commerce. The
new agreement reunites the band's merchandise business with their recorded
music catalog for a unified brand strategy. Avril Lavigne, Demi Lovato, Illenium,
Fletcher, Lauren Daigle, The Scorpions, Shania Twain, and Stormzy were also
added to the Bravado roster in 2022.
Sparking connections with fans
Our in-house creative development team at Bravado designs products that
reflect the client's vision and spark connections with fans. Our creative team
operates at the intersection between art, music and fashion. They identify
key trends in all three areas and create compelling products and experiences
that are in tune with today's culture. As part of a world leading music-based
entertainment company, we're uniquely positioned to create fresh and exciting
products that match an artist's brand and identity.
Touring
At Bravado we create physical merchandise products to sell at venues directly
to consumers during tours. In 2022, we achieved strong growth through post-
COVID touring. Our merchandise was sold during numerous tours including
Billie Eilish, Blackpink, Elton John, Imagine Dragons, Justin Bieber, Lady Gaga,
The Rolling Stones and The Weeknd.
Global Retail
We have developed the most extensive global distribution network in the
industry. 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 this
localized approach, our activities are tailored to each individual market to
achieve maximum reach and results.
In 2022, we once again focused on realizing a distinctive and successful offering
during the holiday shopping season. We launched dozens of holiday marketing
campaigns for artists including The Rolling Stones, BLACKPINK and Lady Gaga.
We further expanded our physical presence in the global retail space in 2022.
During the year under review, we continued to develop RS No. 9. It is our
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INTRODUCTION
physical The Rolling Stones store in the heart of London that showcases
collaborations with brands including Kirk Originals, Nixon watches and Umbro.
Collaborations
In 2022, we continued to explore new and exciting ways to enlarge consumer
audiences for our clients. We spurred collaborations between premiere brands
and our clients. These unique collaborations included: 2Pac and Fila; Doja Cat
and House Party; Freddie Mercury and Hugo Boss; The Rolling Stones and the
Royal Mint, the official maker of UK coins; and The Who and Pretty Green.
Licensing
Our licensing services extend the scale and scope of our brands into categories
beyond apparel and traditional consumer products. We leverage dynamic
partnerships across a range of platforms and categories from footwear and
accessories to gaming and spirits. Working closely within an extensive global
network of best-in-class licensees, we develop dynamic brand partnerships that
reach new and diverse audience segments without diluting the artist's brand.
Consumer Experience
Through surprise pop-ups and other unique events, we connect fans and their
favorite artists more directly and create unforgettable moments that maximize
customer engagement.
In 2022, we created a number of fun consumer experiences. This included
presenting pop-up shops for the 1975, Blackpink, Conan Grey, Justin Bieber,
Queen, and Stormzy, in partnership with 0207 Def Jam. 2022 also saw us create
even larger fan experiences, such as partnering to produce the Tupac Shakur
Wake Me When I’m Free Museum that included Tupac Shakur’s Powamekka
Café by Fixins Soul Kitchin. Another highpoint of the year was Elton John’s
LA TakeOver that included a unique pop-up installation at the Los Angeles
flagship store of luxury multi-brand retailer The Webster. In 2022, we also
brought about partnerships with companies including Monty’s Good Burger and
Urban Outfitters.
Bravado curated a range of enhanced concert experiences in 2022. We
created these experiences for clients such as Kevin Hart, Def Leppard, and
KISS. The experiences included artist meet and greets, photo ops, backstage
tours, access to the artist soundcheck, VIP hospitality lounges, and exclusive
VIP merchandise.
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BOARD REPORT
STRATEGY
STRATEGY
DRIVING GROWTH BY PUTTING
ARTISTS FIRST
Putting recording artists and songwriters first. It’s how we achieve long-
term growth and success. That’s why our artist-centric approach forms the
foundation of our global strategy. Everything we do revolves around discovering,
developing, breaking, retaining and advancing the careers of recording artists
and songwriters with the potential for lasting success. Our strategy to sign
the most promising artists, build relationships with established artists, invest
in new music and local artists, broaden the music marketplace, expand
eCommerce, and spur innovation serves as our roadmap to sustained growth.
Our strategic course is further guided by our commitment to help the artist and
fan communities in which we do business (see the “Non-Financial Information”
section of this report).
Retaining and expanding relationships with artists
Leveraging our industry-leading A&R, marketing and promotion capabilities
enables us to sign talented recording artists and songwriters. We partner with
them to both build successful careers and to enhance the enduring value of our
catalog across genres and geographies.
Retaining and expanding relationships with artists with whom we have
partnered for many years is a top strategic priority. We achieve this through
focused efforts, resources and expertise – especially in value-added services
such as merchandising, branding and sponsorship, film and television
production and eCommerce.
The expansion of our global partnership with The Weeknd in 2022 is an inspiring
example of these efforts. The deal expands his long-standing relationship with
UMG across recorded music with Republic Records, music publishing with
UMPG, and merchandise and audiovisual projects with Bravado.
These far-reaching partnerships reflect our value proposition to artists. Our
strategic aim is to continue expanding these relationships as an avenue for the
continued growth of our business.
Engaging our networks to benefit our artists
The power of our network of relationships is a key differentiator. It is
instrumental to our ability to build the finest roster of artists, songwriters
and other creative partners. We are proud to be the first choice for a range
of industry leaders, including music and entertainment companies, artist
representatives and consumer brands.
These partnerships, which span a range of activities from music distribution to
publishing administration and beyond, dovetail with our “Artists First” approach:
we tap into these relationships to broaden opportunities for our current artists
and identify new artist talent to expand the scope of our A&R capability.
In recorded music, we have deep, long-term partnerships with independent
record labels including Disney, Concord, Roc Nation, Big Machine, HYBE and
Quality Control, in addition to the hundreds of independent labels and artists
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STRATEGY
around the world who work with UMG’s Virgin Music Group – which includes
Virgin Music Label & Artist Services and Ingrooves.
These relationships are mutually beneficial, capitalizing on UMG’s global
infrastructure to empower artists by helping them reach the broadest set of
music fans.
As a music publisher, we have positioned ourselves as a leading rights
administrator for the world’s most prominent film and TV studios, including
Banijay, HBO, Lionsgate, MGM, NBC Universal, Paramount, STX, Univision, Viacom,
Walt Disney, Warner Bros. and many more.
Through our relationships, we also partner with dozens of the world’s leading
brands to further engage our artists and fans and to help our partners
authentically and strategically build their brands. We’ve entered into multi-
year global sponsorships with top brands, including Citibank, Lenovo, Marriott,
Microsoft and Pokémon.
In 2022, we focused on creating consumer product partnerships between our
artists and high-profile brands, such as Coca-Cola, Samsung, Sprite, FIFA, Lego
and DHL.
Leveraging eCommerce and direct-to-consumer businesses to
engage directly with fans
We tap into major opportunities to utilize our vast amount of consumer data and
insights to expand our eCommerce and direct-to-consumer businesses globally
across all of our business segments. Through our direct-to-consumer business,
we enhance direct relationships with fans, empower unique experiences and
bolster our proprietary data.
We havebillions of touchpoints with music fans across digital services and
platforms around the world. This makes us as UMG uniquely positioned to
understand music fans and their tastes. Music superfans have historically
spent more on the artists and music they love than the average customer.
They still purchase physical media on a large scale, as reflected in surging
sales of vinyl records and artist merchandise.UMG’s global physical operations
teams, labels, and supply chain partners work together to develop and roll
out increasingly sustainable physical audio offerings for artists and their
fans including recycled vinyl, board-based CD packages, plastic overwrap
alternatives, and plant-based closure stickers.
However, with paid subscription services becoming the dominant form of music
consumption, we do see the digital spend differences between superfans and
average customers flattening. On the other hand, superfans continue to out-
spend average consumers on digital music experiences just as they have
always done with physical merchandise. This is why we are strategically
expanding our direct-to-consumer efforts to meet this growing demand. This
includes the sale of non-fungible tokens (NFTs), digital goods and other virtual
products. For example, KINGSHIP, a virtual supergroup created by UMG’s 10:22PM
label, released a Key Card NFT that spent six consecutive months in the top 5 on
Billboards Music NFT chart in 2022.
We follow a holistic direct-to-consumer strategy that complements partner
platforms, optimally serves fans and grows direct audience connections. Our
approach focuses on reaching fans with compelling eCommerce opportunities
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STRATEGY
wherever they engage with our artists, from specialty websites to massively
scaled partner platforms.
Our approach includes five key areas:
EXPANDED ECOMMERCE ECOSYSTEM: Reaching fans through frequently visited
websites and other platforms.
PRODUCT DESIGN AND DEVELOPMENT: Creating best-in-class music merchandise
to drive and fulfill demand.
DROP TACTICS: Presenting elevated experiences around product drops to capture
audience and build artist-fan engagement.
MARKETING STRATEGY: Developing globally coordinated media plans to reach
existing fans and appeal to new consumers.
AUDIENCE DEVELOPMENT: Building long-term relationships with music fans,
generating loyalty and increasing the lifetime value of a consumer.
The elements of this strategy are dynamic. Whether it’s pricing, supply chain
or audience outreach, we actively review and respond to both new data and
insights and technological advancements.
Supporting innovation and expanding into new product offerings
At UMG, we promote innovation across the digital ecosystem through
partnerships in new product categories and active engagement to support our
partners’ evolution.
Our strategy is to maximize opportunities for introducing new products, services
and revenue streams across segments spanning fitness, health/medical, social
media, gaming, livestreaming, voice and other categories.
IMMERSIVE AUDIO: UMG is carrying out a multi-year project with Dolby to develop
the most important evolution in music listening in decades: Immersive Audio.
This breakthrough technology dramatically improves the listening experience
for consumers.
Dolby’s Immersive Audio format, branded Atmos, creates a music experience
that lets UMG reinvigorate classics from our vast, industry-leading catalog. It
also gives our artists a much wider sonic palette for expressing themselves
through both current releases and new projects developed to take advantage of
this expanded soundscape.
Years of investment and innovation have been put into achieving this
advancement. We’ve created purpose-built state-of-the-art recording suites
at our iconic studios, including Capitol Studios and Abbey Road, and trained
the world’s top engineers to optimally utilize this new technology. We are
also conducting an extensive campaign to educate artists and estates on the
limitless creative opportunities Immersive Audio provides.
Consumers who experience it, love it, with 8 out of 10 saying it is “much better
quality than traditional stereo audio” and 90% saying they will likely listen to an
artists’ music longer if it is in immersive format.
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STRATEGY
As opportunities to experience this groundbreaking technology increase, so
will consumer adoption. In 2022, UMG, along with Apple and Mercedes-Benz,
announced that Mercedes will be the first automaker to natively offer Spatial
Audio with Dolby Atmos from Apple Music. We expect similar announcements to
follow from other automakers.
Spatial Audio is also not limited to the car or home audio systems as new
headsets from Apple, Sony, Samsung and many others increasingly incorporate
the technology and make the immersive experience available to hundreds
ofmillions of consumers.
In 2022, The Beatles’ 1966 masterpiece
Revolver
was released for the first time in
immersive audio. Taylor Swifts’
Midnights
was also released in Atmos and broke
the all-time record for the biggest album released in Spatial Audio on Apple
Music worldwide.
Stage+, the classical music subscription service launched by UMG’s Deutsche
Grammophon in 2022, also features new audio releases, and select titles from
the Deutsche Grammophon and Decca catalogs in immersive audio formats.
SOCIAL MEDIA: Starting with our landmark 2017 commercial partnership with
Facebook, we accelerated our leadership position through innovative new
agreements with additional social media players. Our success in the social
media segment is reflected in the fact that UMG’s artists are regularly the most-
followed recording artists across social media platforms like Facebook,
Instagram and YouTube, as demonstrated on the website www.musicfuels.com.
In 2022, UMG renewed its global agreements with Meta and Amazon, the
latter including Twitch. This further expands our social media partnership
portfolio and the opportunities, both for our artists and labels, and the
creator community.
In January 2022, we expanded our global agreement with Amazon, which
includes their livestream social platform Twitch. Twitch and UMG are now
collaborating to create new innovative opportunities for artists and labels and
to engage fans and new audiences creatively and commercially. 3point5, UMG’s
official Twitch channel launched in October 2022.
In July 2022, we announced a new deal with Meta that expands revenue sharing
and enhances the Meta community’s engagement with UMG’s catalog.
We announced a new partnership between UMG, UMG’s Republic Records, Simon
Cowell and Syco Entertainment in October 2022. Within this collaboration, we are
creating StemDrop, a groundbreaking new evolution in musical collaboration,
curation and artist discovery which has been launched exclusively with
TikTok and Samsung as partners. Creators are provided with music ‘stems’
accompanied by an in-app production tool within TikTok. They’re invited to
create, record and share their own versions of a brand-new song “Red Lights”,
which has been written especially for the project by the hit songwriting team
led by the legendary Max Martin. This has resulted inmillions of views and
thousands of submissions. StemDrop serves as an incubator for new talent,
artistry and creativity – with further song drops to follow in the future.
These agreements enhance our strategy of monetizing social engagement and
deepening relationships between fans and artists.
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HEALTH & FITNESS: Since launching our Peloton partnership in 2017, we’ve led
the industry in crafting new licensing models for integrating music within
the thriving health and fitness category. We have new and expanded
partnerships with Equinox+, Liteboxer, Barry’s Bootcamp, Calm, CLMBR, Muru
Health, SATS, STEEZY, Stryde and Zygo.
In June 2022, we were named as the exclusive launch partner for an AI-driven
music app for the care of people affected by dementia. The app, called Vera,
was developed and launched by Music Health, a Music Wellness Technology
innovator. Vera is an intuitive music intervention tool that lets users access the
entire UMG catalog to develop personalized music stations specifically designed
to improve the lives of people living with dementia.
2022 also saw UMG partner with Y7 Studio to launch the Internet’s first digital
yoga platform. It features synced music integrated into all classes that can be
accessed through a new digital-only subscription or omnichannel membership.
We serve as the exclusive music partner of the digital platform. In this role
we enable an immersive yoga experience driven by both today’s biggest hits
and the most iconic songs of all time from the company’s roster of award-
winning artists.
In 2022, we collaborated with the subscription-based VR fitness app
Supernatural, becoming an official music partner and participating in the debut
of the Supernatural Artist Series that presents new Meta Quest/Oculus-ready
workouts choreographed to artist playlists.
Abbey Road Studios announced in November 2022 that MediMusic is the 18th
start-up to join its music incubation program Abbey Road Red. MediMusic is
a platform that dispenses music as medicine to help with the symptoms of
dementia, anxiety and pain. It delivers music chosen using its proprietary
algorithms and digital fingerprints - soon to be informed by machine learning.
In 2022, an IFPI study found that 69% of people believe that music is important
to their mental health, and 69% called music an important part of their exercise
routine. UMG is excited by the idea of using music for medical and health
purposes. We will continue to expand our relationships in this space over the
coming years.
GAMING: We are actively harnessing mass audience participation in the game
segment as we advance strategic engagement of the metaverse opportunity that
is developing in the gaming space.
We carried out a number of innovative projects in this space in 2022. One project
entailed partnering with Elton John, Rocket Entertainment and Roblox to launch
“Beyond the Yellow Brick Road” on Roblox. It is a virtual experience that gives
fans a new way to enjoy Elton John’s timeless music, and to express themselves
through his iconic fashion co-created with the community. “Beyond the Yellow
Brick Road” provides a unique vehicle for experiencing Elton John’s impact on
popular culture in a new, creative, and unique way.
In another example from 2022, Meta hosted
Post Malone‘s Twelve Carat
Toothache: A VR Experience
. The 40-minute concert film premiered in Venues
within Horizon Worlds, a free online virtual reality app where users can enjoy VR
events together via Meta Quest headsets. This immersive experience helps drive
a deeper connection between artists and fans in a virtual world.
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Universal Music Japan announced in September 2022 that it is collaborating
with The Pokémon Company to launch the Pokémon Music Collective. This
project features a series of new music by artists inspired by the game music
and sounds of the Pokémon video game universe. J-pop music producer
and artist imase kicked off the series with his track “Utau.” The Pokémon
Music Collective project will continue to release new songs by artists from
different genres.
VOICE: UMG is a pioneer in the field of voice. Since serving as a launch partner
for Amazon’s voice-activated music service in 2016, we have played a key role
in expanding voice-activated music to hundreds ofmillions of smart speakers
around the world via Amazon, Apple, Google and other partners.
LIVESTREAMING: We continue to work with our artists to create compelling and
creative live streaming experiences for fans. In September 2022, Billie Eilish’s
Happier Than Ever
world tour concluded with a special livestream on Apple
Music. The concert was produced by Interscope Films and captured during one
of her five stops at London’s famed O2 Arena earlier in the summer of 2022.
In November 2022,
Elton John Live: Farewell From Dodger Stadium
was the first
ever global live stream on Disney+.The exclusive stream from Los Angeles saw
the icon close out the North American leg of his Farewell Yellow Brick Road Tour.
Bringing talented local artists to the world’s fans
As demonstrated by the global explosion of reggaeton from Latin America and
the popularity of K-pop far beyond Asia, the next big global hit could come from
anywhere in the world. This is why local A&R is essential to a successful global
strategy. By deploying our international resources, we bring talented local artists
to the world’s fans.
The diversification of music industry revenue sources across the
globe elevates the importance of fostering local talent
At UMG, we provide artists and labels of all sizes with the opportunity and
services needed to succeed in the global music market. This in turn increases
our success and visibility across all major markets and continents.
Our A&R teams sign and identify artists with the potential to grow from
local success to regional and eventually international success. 62% of UMG’s
physical & digital recorded music revenues came from local repertoires in their
own countries. Our expansion strategy in Africa, Asia, Europe and MENA (Middle
East & North Africa) continued to produce positive results in the year under
review. In 2022, we strengthened our global presence through new activities,
acquisitions, label launches and key partnerships in India, Greater China,
Malaysia, Thailand, Vietnam, the Philippines and across Africa.
India
Universal Music India (UMI) acquired a majority stake in TM Ventures, one
of India’s leading music and entertainment companies, in 2022.UMI and TM
Ventures are working in partnership across the company’s talent management,
entertainment consultancy and live/events businesses. Through this majority
stake acquisition, UMG is reinforcing our leading role in India’s music scene.
The music sector in India is growing rapidly due to more than half of its
population being under 30 years of age. Other drivers of this growth include
the rising penetration of smartphones, access to reliable high-speed, low-cost
internet service and the proliferation of sophisticated and well-capitalized
streaming partners.
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In February 2022, Universal Music India & Universal Music South Asia launched
Def Jam India, a new frontline label to support the best hip hop talent and
culture emerging from the region.
In April 2022, UMI released the first global single from Indian superstar Badshah,
a collaboration with Colombian reggaeton superstar J.Balvin that helped him
reach audiences in 173 countries.
UMI released new music madein popular regional dialects across South Asia
through its wide range of domestic labels which now includes Def Jam India,
VYRL Originals and theVYRL Punjabi, Haryanvi and Bhojpuri labels.
China
Universal Music Greater China (UMGC) launched Capitol Records Chinain March
2022. This further grows our position in China following the launch of Republic
Records and the relaunch of EMI and Polygram China in 2021. Capitol Records
China is a new frontline label that focuses on signing and developing Chinese
music talent. Following its launch, Capitol Records China and Astralwerks
announced a global licensing and distribution partnership with Live Nation’s
Electronic Asia’s (LNEA) Fabled Records label.
Africa
UMG announced the creation of Blue Note Africa in March 2022. It’s a new
imprint dedicated to signing jazz artists from across the African continent.
In June 2022, UMG launched Virgin Music Label & Artist Services in Africa. This
division focuses on supporting the next wave of independent artists, labels,
influencers, and entrepreneurs from the region. It launched with more than
15,000 titles in its catalog and more than fifty label partners from 25 countries.
Southeast Asia
Universal Music Vietnam entered into a partnership with multi-channel network
and media company METUB in 2022. The collaboration focused on the launch of
the new monoX label. MonoX finds and develops Vietnamese talent and aims to
break artists globally.
Universal Music Thailand entered an expanded partnership with Thailand’s
music label Hype Train Group in 2022. The label is a springboard for Thai artists
wishing to export their creativity to music lovers around the world.
Growing local and regional partnerships
We are significantly increasing our digital footprint and promoting competition
by effectively partnering with local digital platforms while expanding global
streaming partnerships into new markets. In recent years, we have expanded
our partnership network across India, Asia, Africa, Latin America and other
strategically important, fast-growth markets.
In 2022, UMG partnered with African music services Mdundo and Audiomack to
license the services across key African territories. These follow an expansive
deal with Boomplay, the continents biggest streaming platform in 2021, making
UMG’s music content available in 47 countries.
In China, UMG licensed Qishui, a streaming service from Bytedance for mainland
China. We also renewed and expanded our license with Bilibili, a leading Chinese
video sharing service to include User Generated Content monetization in 2022.
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Elsewhere in Asia, during the year under review we expanded our relationship
with Trebel to include Indonesia and Malaysia, Zing in Vietnam and Rakuten
in Japan. In Korea, Spotify launched a new tier for their market previously only
available to local partners. 2022 also saw Spotify introduce Premium Mini in
Indonesia as a new offering.
By licensing new platforms and expanding existing partnerships, we play an
active part in developing new music markets. These collaborations enable us to
create opportunities for promoting our local domestic and global roster of talent
around the world.
Our total footprint of several hundred local, regional and global digital music
service providers enables us to bring the music of UMG artists to consumers in
every corner of the globe.
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TECHNOLOGICAL ADVANCEMENTS AND NEW TRENDS
HARNESSING THE POWER
OF TECHNOLOGICAL
TRANSFORMATION
The world is undergoing a profound technological transformation and the music
industry is playing a pivotal role in harnessing and promoting this development.
At UMG, our ability to adapt and incorporate technological advancements and
associated consumer trends into our offerings and operations is paramount to
our success. New technologies play an important role both behind the scenes
in music creation, product development, infrastructure and artist services.
Leveraging technological advancements also bolsters our engagement with
user-facing partner platforms and product offerings.
The music industry has grown significantly in recent years. This growth has
been driven primarily by a dramatic increase in the number of paid subscribers
of digital streaming services. While physical sales remain significant in
some markets - including collectable formats like vinyl, which is enjoying a
recent resurgence - we’ve seen a clear shift in music consumption from an
ownership model, with consumers buying CDs or downloads, to an access model
that features subscription and ad-supported streaming formats. We believe
streaming will continue to revolutionize the music experience for consumers
and propel ongoing transformation of our industry in the coming years.
Leveraging technology for new monetization formats
We have established numerous strong partnerships in subscription-based and
ad-supported streaming with the aim of enabling our artists to monetize their
work and create deeper engagement with their fans in these categories. The
rise of subscription and ad-supported models enables UMG to monetize legal
music consumption in markets that have few commercial outlets or that were
previously dominated by piracy. This far-reaching monetization helps us fulfill
our Artists First approach by helping artists achieve fair compensation for their
work, while enjoying unsurpassed global distribution.
Growing opportunities through expanded connectivity
Even with the robust growth in recent years, we believe streaming is still in
the early stages of global penetration. There remains a substantial opportunity
for further expansion in tandem with the growth in the scale and number
ofstreaming services, including in established streaming markets that have
room for significant growth of both subscription and ad-supported streaming.
This trend is furthermore driven by continuing expansion and upgrading of
internet infrastructure, ongoing technological innovations across devices and
formats such as voice-controlled speakers and connected cars, intersections
with social media and gaming, and audiovisual product evolutions. All these
developments serve to deepen fans’ engagement with and consumption
of music.
The ever-expanding scope of consumer choices in entertainment means there
is increasing competition for attention. However, music benefits from the shift
to “always online” consumption of media because it can extend into many
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components of consumer lifestyles, while becoming more personalized. For
example, music can be customized for individual listener preferences during
fitness activities, gaming, studying, working from home, family gatherings and
sleep. Enabling this further is a combination of data processing and back-
and front-end technologies, such as systems that analyze and identify musical
features of songs or that learn listener preferences and adapt the music or
make intelligent recommendations.
Connectivity has also enabled growth in online concerts. Improved technologies
allow for low latency, high-resolution streams of live or scheduled pre-recorded
artist performances to reach large numbers of simultaneous viewers.
Tapping into technological innovations to drive market growth
We harness technological advancements to stimulate market growth in two
ways. First, we are leveraging format innovation to create new opportunities for
our artists. Secondly, we’re aiming to expand the current addressable market by
capitalizing on the proliferation of connected devices.
We believe new technological advancements in the areas of social media, digital
health/fitness and gaming offer exciting new market opportunities.
Other potential areas for future growth include music products and experiences
developed for metaverse and Web3 platforms. These range from streaming
within metaverse services, to digital merchandise and collectibles. We harness
technological advancements to stimulate market growth in two ways. First, we
leverage format innovation to create new opportunities for our artists. Secondly,
we expand the current addressable market by capitalizing on the proliferation of
connected devices.
Echoing the way smartphones dramatically expanded access to music and
fueled an increase in music streaming, we expect the ongoing evolution
of Smart Audio Devices, including ‘wearables’ (smart watches), ‘hearables’
(earbuds), Smart TVs, and Connected Cars, to increase music engagement
and consumption.
More consumers are using more devices to listen to music. We believe that
the use of multiple devices is expanding listening hours by bringing music
into more facets of consumers’ lives. The different consumption modes these
devices enable are also broadening the range of music to which consumers are
exposed and diversifying and deepening consumers’ relationship with music.
Smart speakers enable consumers to easily access music through voice
activation and are fueling further growth in streaming, facilitating conversion
of more casual listeners into paid subscribers.
Partnering with digital service providers to develop a thriving
global market
UMG holds a strong position in the digital music ecosystem thanks to our
track record of pioneering new deals, major partnerships and key technology
agreements. We work closely with digital service providers worldwide and are
the largest supplier of content to most of the digital music service providers.
As such, our artist content serves as a key driver of customer acquisition and
retention for all these platforms.
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We play an active role in promoting the continued development of new
digital services and consumer offerings to support a competitive, healthy and
increasingly global market. We’ve entered into agreements with several hundred
global, regional and local digital service providers worldwide. In this way we
actively support these services to present innovative new ways to engage
consumers and connect our artists with their fans and new audiences.
Our portfolio of partnerships includes agreements in three high-growth BRIC
countries (Brazil, India and China, having closed UMG’s operations in Russia
in 2022), Latin America, Africa, the Middle East, Eastern Europe and Southeast
Asia.These partnerships tap into technological advancements to make music
more accessible to fans around the world.
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INNOVATION AND R&D AS KEY TO
CREATING VALUE
Innovation is intrinsic to everything we do at UMG. Our unmatched commitment
to lead in the collaborative development of new services, platforms and
business models for the delivery of music and related content empowers
innovators and taps into new commercial and artistic opportunities. We harness
technological innovation to drive market growth. Our aim is always to create
new opportunities for our artists. Through our expansive social media alliances
and groundbreaking partnerships across the industry, we enable our artists to
monetize their work and build deeper engagement with their fans. We place
innovation at the heart of our approach to bring more music to more people
across the globe.
Seizing opportunities in immersive audio
UMG began working closely with Dolby Laboratories Inc. in 2016 to expand
their existing film and television technology to create an immersive listening
experience known today as Dolby Atmos Music.Dolby Atmos Music is a state-
of-the-art technology that places and moves sound around the audience,
including overhead, to truly immerse listeners in music. Our collaboration with
Dolby extends across an ecosystem of music creation, content preparation for
delivery to our distribution partners and the full array of music products offering
consumers a full immersive sound scape from headphones to home speakers
and automobiles.
Together, we developed mix rooms in our recording studios specifically designed
for creating immersive music, a suite of robust mixing tools and innovative
techniques. We also provided industry-wide training, building on our well-
established tradition of excellence in music production and audio innovation at
the world-renowned Capitol Studios and Abbey Road Studios. Most importantly,
we engaged with our artists and their creative production teams to provide
leadership in creating richer and more fully immersive music experiences.
As a result of these efforts, more and more of UMG’s new releases and catalogs
are available in Dolby Atmos Music and spatial audio on platforms including
Amazon Music and Apple Music.
Most frontline new releases today are delivered in Atmos “day and date”
alongside stereo versions. This includes Taylor Swift’s album
Midnights
, which
is an example of a high-profile album released in both formats simultaneously
at launch.By the end of 2022, UMG had delivered Dolby Atmos Music versions
for 80% of our top 50 streaming artists and nearly half of UMG’s streaming
consumption has Atmos mixes available.
We provide artists with the best tools and creative capabilities that enable them
to tell their musical stories in the highest-quality and most immersive way
possible. This lets their fans experience music in the way the artist intended
when recording in the studio or performing live. These higher-quality formats
give our artists the opportunity to bring their music to the world in exciting
new ways. We now actively participate in the Dolby Atmos Music format with
more than 1,100 artists delivering new music releases and catalog titles in this
new format.
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In association with Dolby, we are collaborating through broad-based industry
alliances covering all the components of the value chain. We’re dedicated to
providing music listeners with the highest quality of audio at home, in their cars
and on their phones. In addition to Tidal, Apple and Amazon, we have existing
collaborations with Klipsch, Sonos, Mercedes, Lucid, Tesla, Bose, Harman/Kardon
and Samsung.
A compelling example of cross-sector collaboration is Mercedes Benz’s
partnership with Apple Music and UMG. Announced in October 2022, Mercedes
Benz is leveraging this partnership to become the first to offer Spatial Audio with
Dolby Atmos from Apple Music natively in the latest MBUX generation vehicles
equipped with the Burmester® high-end 4D and 3D sound system. UMG is also
enabling our recording artists to base their Dolby Atmos Music song approval
process on how the final mix sounds in a Mercedes
-Benz. In line with this, we
introduced the seal “Approved in a Mercedes-Benz” as a gold standard of sound.
UMG is also setting up a studio environment in Sindelfingen, Germany, based on
its Capitol Studios’ Studio C, which is a major global reference music studio for
Dolby Atmos mixing.
Propelling the expansion of voice-activated music
UMG continues to help propel the expansion of voice-activated music. We’ve
been at the forefront of developments in this field from the outset, serving
as a launch partner for the Amazon Echo music service in 2016. Building on
these advancements, we expect the existing addressable streaming market to
be expanded through the penetration of Smart Audio Devices – “wearables”
(smart watches) and “hearables” (earbuds) – Smart TVs and Connected Cars.
These developments increase engagement and consumption and support new
listening behaviors, which in turn creates a powerful driver for customer
acquisition and retention.
Leveraging new formats to create new opportunities
The consumption of short-form music and music-based video content has
grown rapidly in recent years, driven by the growth of global social video
applications. These platforms enable incremental consumption of music
appealing to diverse, and often younger, audiences. They give artists new
creative ways to reconfigure the path to fan engagement. Short-form and
music-based video content has also become increasingly popular on social
media platforms such as Facebook, Instagram, Snapchat, TikTok and YouTube.
This further illustrates the growing number of potential platforms artists can
leverage to gain exposure and deepen connections with their fans.
UMG is an industry leader in creating social media alliances and developing
innovative partnerships. We’ve played a pioneering role in forging relationships
in this space. We unlocked the monetization opportunity for licensed music in
the social sphere through a landmark partnership with Facebook in 2017. This
made us the first major music company to license our catalog for videos and
social features across Facebook and Instagram.
Turning data into results
We place high priority 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-class analytics infrastructure based on
cloud technology.
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Our data and analytics team comprises analysts, data scientists, and front-end/
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
utilize patented Ingrooves technology to quickly detect viral moments (including
those driven by social platforms such as TikTok). In addition, we tap into the
far-reaching experience and expertise of our best-in-class A&R and marketing
teams to make our data more powerful. This enables us to tailor our marketing
initiatives to target the right audiences to maximize reach and conversion.
Our data scientists have developed a proprietary marketing mix model and a
framework for testing causal effects to help us both optimize our marketing mix
and the creative content used to activate on these channels. This helps us boost
marketing ROI, maximizing results while reducing unnecessary spend.
Putting data to work for artists
UMG conducts research and development to employ data that was previously
unavailable. We harness data and analytics at an unparalleled scale to give our
artists greater insight than ever before. By putting information to work for our
artists, we help them track performance across platforms and territories and
personalize marketing to target individual listeners. We leverage our own data
in conjunction with inputs and metrics from key platformsto identify promising
artists and help them break.
Our data and analytics team has developed UMX – a collection of data
and business intelligence products. These data applications let us keep
delivering the most relevant market insights to our creative partners in an ever-
changing environment.
We continually update the UMX-Suite to ensure our artists and their managers
have prompt access to time critical information. These updates provide valuable
information on everything from when a track is added to a playlist and when
and where consumption spikes to how much notable engagement a social post
is generating.
We’ve launched multiple apps within the UMX Suite that empower A&R and help
them make investment decisions quicker. This drives marketing effectiveness
and extracts maximum value from our Intellectual Property.
Our Universal Music Artists (UMA) mobile app helps artists and managers
understand their fans, by giving them a unique global, 360-degree view of
their audiences. It’s the first app to provide artists with a global, personalized
view of their audience across all major streaming servicesand social media
platforms. It lets artists and their management see the location of their fans by
country and city, which helps them plan tours and other engagements, identify
tracks that work best with specific audiences and tailor their social posts to
maximize engagement.
We’ve also created a newsfeed feature within the UMA app. It maintains a
history of milestones and is continually updated with the latest news. This
provides our artists with a valuable source of information that enables them
to respond quickly and effectively to new developments.
We completed the roll-out of the UMPG Window app developed by Universal
Music Publishing Group (UMPG) in 2022. It is the leading royalty portal that
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provides UMPG songwriters and clients with instant access to clear, complete
and real-time earnings and data.
The UMA app and the UMPG Window are two of many examples of how we deploy
research and development to put artists first. With the data we collect across our
extensive portfolio of partners, reinforced by data from our direct connections
with fans, we havebillions of touchpoints with music consumers. No other
music business, single platform or recorded music company has access to the
unique combination of multiplatform and direct-to-consumer data that we have
at UMG. This wealth of data gives our artists unparalleled global, market-wide
context and insight.
Bringing recording artists into the metaverse
UMG was one of the first companies to take steps into the new metaverse world.
We have now built up a strong track record of pioneering collaborations that
establish an onramp for artists into the opportunities of the metaverse.
In 2022, we marked another metaverse milestone through our collaboration with
Elton John and Rocket Entertainment to launch ‘Elton John Presents: Beyond the
Yellow Brick Road’ on Roblox. It’s a global online platform connectingmillions
of people through shared experiences. Developed with Roblox creators, the
virtual experience offers fans a new way to enjoy his timeless music, express
themselves through his iconic fashion co-created with the community, and
experience Elton’s impact on popular culture. The experience includes Elton’s
iconic digital fashion and photographs of memorable moments, interactive
challenges set to his greatest hit songs, daily scavenger hunts and trivia
quizzes. The Roblox community was also invited to a special performance that
took place within the ‘Beyond the Yellow Brick Road’ experience on Roblox
around Elton’s final ever U.S. shows at LA’s Dodger stadium in November 2022.
Pioneering in Web3 with digital goods and NFTs
UMG is a leader in developing and releasing innovative digital goods and non-
fungible tokens, or NFTs, that create new opportunities for our artists and
labels, while building strong fan communities. This includes deals with some
of the leading companies in the space, including Curio, Snowcrash, Billboard
Chartstars, Sandbox and Limewire, among others.
KINGSHIP, the NFT supergroup created by UMG’s 10:22PM Web3-focused record
label, sold out a collection of 5,000 NFT Key Cards that provide access to the
group’s virtual world. Since their release, the Key Cards spent six consecutive
months in the top 5 on Billboard’s Music NFT chart in 2022. A follow-up drop
of 5,200 NFTs were distributed to existing Key Card holders to introduce a new
character. In September 2022, Hit-Boy and James Fauntleroy, two chart-topping
and award-winning music producers and songwriters, signed on as KINGSHIP’s
co-executive producers and sonic creative team, overseeing the evolution of the
group’s music direction and sound.
2022 also saw M&Ms’ parent company Mars Inc. and 10:22PM launch a first-of-its
kind collaboration to release collectible KINGSHIP boxes of M&Ms that include
the candies becoming an integral part of the group’s metaverse narrative. The
10,000 collectible KINGSHIP boxes of M&Ms sold-out within 78 hours and Mars
Inc. featured the group for a week on the company’s electronic billboard in
Times Square in New York City.
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Embracing entrepreneurs to accelerate the next wave
of transformation
With a view to our industry’s future, UMG continues to advance our role as
industry leader in promoting entrepreneurship. We do this through a wide
range of digital innovation programs, including Abbey Road Red. In addition, we
drive innovation through a wide Accelerator Engagement Network. It’s a growing
program spanning 12 accelerator partners based in entrepreneurial centers
around the world, including APX By Axel Springer and Porsche (Germany), Baita
Accelerator (Brazil), Berkeley SkyDeck (U.S.), Chinaccelerator (China), LeanSquare
(Belgium), LINCC (France), MassChallenge Israel (Israel), MassChallenge Mexico
(Mexico), Melbourne Accelerator Program (Australia), SparkLabs Global Ventures
(Korea), Startup Wise Guys (Estonia) and The Music Den (Canada). Since its
establishment in 2017, the Accelerator Engagement Network has nurtured and
mentored more than 154 music-tech startups that have raised over $189million
in funding.
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BOARD REPORT
ORGANIZATIONAL AND REPORTING STRUCTURE
ORGANIZATIONAL AND REPORTING STRUCTURE
ORGANIZATIONAL AND
REPORTING STRUCTURE
The following structure chart illustrates the simplified structure of the Group as
at December 31st, 2022
UNIVERSAL INTERNATIONAL MUSIC B.V.
The Netherlands
Corporate Executives
The Group is managed by corporate executives (the Corporate Executives).
The current Corporate Executives consists of nine key members, each of whom
oversees a specific aspect of the business. The persons set forth below are the
current members of the Corporate Executives.
Name
Age Position
Sir Lucian Grainge 63 Chairman & Chief Executive Officer
Philippe Flageul 58 Executive Vice President, Controller
Jody Gerson 62 Chairman & CEO for Universal Music Publishing Group
Jeffrey Harleston 62 General Counsel and Executive Vice President of
Business & Legal Affairs
Eric Hutcherson 53 Executive Vice President, Chief People and
Inclusion Officer
Boyd Muir 63 Executive Vice President, Chief Financial Officer and
President of Operations
Michael Nash 66 Executive Vice President, Chief Digital Officer
Will Tanous 52 Executive Vice President, Chief Administrative Officer
Vincent Vallejo 62 Deputy Chief Executive Officer, Corporate
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ORGANIZATIONAL AND REPORTING STRUCTURE
Set out below are brief summaries of the biographies of the members of the
Corporate Executives:
Sir Lucian Grainge (Chairman and Chief Executive Officer)
Sir Lucian Grainge has spent his entire career in the music industry and has
signed and worked with many worldwide stars, including ABBA, Jay Z, Elton
John, Katy Perry, Queen, Rihanna, The Rolling Stones, Sam Smith, U2 and Amy
Winehouse, among many others. Over the span of four decades, he has not
only pioneered new approaches to the signing and development of the world’s
most successful recording artists and songwriters but he has consistently
championed the development of innovative business models and partnerships
with a wide range of technology and media partners around the world. He has
transformed UMG into the most successful company in the history of the music
industry, 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 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.
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 and
reporting 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 he
served 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 Master
of 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 and
supply 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 music company
and the first woman to be named CEO of a major music publisher. Since
joining UMPG in 2015, Gerson has transformed the company into the industry’s
best global home to songwriters and abillion-dollar business – more than
doubling revenue and substantially increasing profit. Gerson led UMPG’s historic
catalog acquisitions of Bob Dylan, Sting, Neil Diamond and Frank Zappa. She
has signed and works with the world’s biggest superstars including Elton John,
Taylor Swift, Harry Styles, Kendrick Lamar, Bad Bunny, Adele, The Weeknd,Billie
Eilish, SZA, Rosalia, Drake, Steve Lacy, Alicia Keys, Coldplay, Justin Bieber, Post
Malone, Ariana Grande, H.E.R., Maren Morris, the Bee Gees, Prince, and more.
Gerson cofounded nonprofit She Is The Music and serves on Boardsforthe
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 the
development of corporate policies, including the coordination of UMG’s
government 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 Iran-
Contra 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 to
focus 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, retain
and 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 Administration
from the University of Massachusetts-Amherst.
Boyd Muir (Executive Vice President, Chief Financial Officer and President
of Operations)
Working seamlessly across the corporate and creative aspects of UMG’s
operations, Boyd Muir is responsible for overseeing many of UMG’s corporate
operations including global finance. Muir led the strategic physical-to-digital
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ORGANIZATIONAL AND REPORTING STRUCTURE
reshaping of the Company’s businesses, and he has played a key role in several
of 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, a
division 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 around
the 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 for
his 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 Director
of the Madison Project, the music industry’s first digital distribution trial, and
he 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 business
strategy, overseeing several major strategic and corporate endeavors, as
well 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 was
central in all of the company’s major corporate initiatives, including: the sale
of 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 Association
of America and is a graduate of Georgetown University in Washington D.C.
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BOARD REPORT
FINANCIAL REVIEW
FINANCIAL REVIEW
1.EARNINGS ANALYSIS: GROUP
AND BUSINESS SEGMENTS
1.1 Consolidated Statement of Profit or Loss
Year ended
December 31,
(inmillions of euros) 2022 2021
Restated
1
Revenues 10,340 8,504
Cost of revenues (5,753) (4,608)
Selling, general and administrative expenses (2,702) (2,327)
Amortisation and impairment losses on intangible assets (285) (175)
Operating profit 1,600 1,394
Financial income 37 143
Financial expenses (735) (377)
(698) (234)
Income/(loss) from equity affiliates (2) 5
Profit before income taxes 900 1,165
Income taxes (115) (277)
Net profit 785 888
Of which:
Net profit attributable to equity holders of the parent 782 886
Net profit attributable to non-controlling interests 3 2
Earnings per share (in euros)
Basic, earnings for the period attributable to equity holders of
the parent
0.43 0.49
Diluted earnings for the period attributable to equity holders
of the parent
0.43 0.49
Adjusted net profit 1,454 1,271
Adjusted net profit per share (in euros) - basis
2
0.80 0.70
Adjusted net profit per share (in euros) - diluted
2
0.80 0.70
1 Restated amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements
2 Non-IFRS measures as defined in the Appendix to the Annual Report
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FINANCIAL REVIEW
Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA
Year ended
December 31,
(inmillions of euros) 2022 2021
Operating Profit
1
1,600 1,394
Adjustments
Amortization and depreciation expense 377 277
Restructuring expenses 32 20
(Gain)/loss on sale of assets 2 (2)
Impairment on intangible assets 17 -
Other non-recurring items - (3)
EBITDA
2
2,028 1,686
Non-cash share-based compensation expense 107 79
One time direct-listing related expenses - 23
Adjusted EBITDA
2
2,135 1,788
1 2021 Restated amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements
2 As defined in the Appendix to the annual report
1.2 Analysis of the Condensed Statement of Earnings
1.2.1 Revenues
In 2022, UMG’s revenues of €10,340million were up 21.6% compared to 2021
and up 13.6% at constant currency. This increase was driven by improvements
across all divisions. Recorded Music grew 8.8% at constant currency compared
to 2021, Music Publishing was up 26.3% and Merchandising and Other grew
by 54.1%.
For a detailed analysis of revenues by business segment, please refer to Section
1.3 below and to Note 3 to the Consolidated Financial Statements for the year
ended December 31, 2022.
1.2.2 Operating results
Analysis of cost of revenues
Year ended December 31,
(inmillions of euros) 2022 2021
Artist costs 4,704 3,800
Product costs 1,049 808
Cost of Revenues 5,753 4,608
Cost of Revenues grew by €1,145million to €5,753million in 2022 from
€4,608million in 2021 reflecting the increase in revenues and the unfavourable
impact of foreign currency exchange rate movements driven by the
strengthening of the U.S. Dollar. Cost of revenues as a percentage of revenues
increased to 55.6% from 54.2% driven by higher relative artist and product costs.
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FINANCIAL REVIEW
Artist costs increased by €904million from €3,800million in 2021 to
€4,704million in 2022 driven by the increase in sales and the unfavourable
impact of foreign currency exchange rate movements. As a percentage of
revenues, artists costs increased from 44.7% in 2021 to 45.5% in 2022 as a result
of a higher proportion of Music Publishing revenues that have higher relative
artist costs.
Product costs increased by €241million to €1,049million in 2022 from
€808million in 2021 reflecting the growth in revenues and the unfavourable
impact of foreign currency exchange rate movements. Product costs as a
percentage of revenues increased to 10.1% from 9.5% driven by the change in
mix of revenues and especially the greater proportion of merchandising sales.
Selling, general and administrative expenses increased by €375million to
€2,702million in 2022 from €2,327million in 2021 but reduced as a percentage
of revenues to 26.1% in 2022 from 27.4% in 2021 due to operating leverage.
Selling, general and administrative expenses in 2022 included €107million in
non-cash share-based compensation expenses. In 2021, selling, general and
administrative expenses included €102million in one-time direct-listing related
expenses and non-cash share-based compensation expenses.
Operating profit was €1,600million in 2022, compared to €1,394million for
2021, an increase of €206million +14.8% or +7.9% at constant currency, driven
by the growth in revenues. As a percentage of revenues, operating profit
declined to 15.5% in 2022 from 16.4% in 2021 due to higher relative cost of
revenues and amortization partially offset by lower relative selling, general and
administrative expenses.
EBITDA increased by €342million to €2,028million in 2022 compared to
€1,686million in 2021 driven by the increase in revenues. EBITDA margin
decreased by 0.2pp to 19.6% in 2022 compared to 19.8% in 2021.
Adjusted EBITDA was €2,135million in 2022 up €347million compared to
€1,788million in 2021. Adjusted EBITDA margin decreased by 0.4pp to 20.6% in
2022 from 21.0% in 2021.
For a detailed analysis of EBITDA and Adjusted EBITDA by business segment,
please refer to Section 1.3 below.
1.2.3 Financial results
Financial income and Financial expenses were a net expense of €698million
in 2022, compared to a net expense of €234million for 2021, an increase of
€464million. For 2022, the revaluation of the investments in listed companies
including Spotify and Tencent Music Entertainment was a net expense amount
of €617million, compared to a net expense of €315million for 2021, an increase
of €302million. In 2021, UMG benefited from a €98million gain on disposal of
Alamo Records.
1.2.4 Income taxes
For 2022, income taxes were a net expense of €115million, compared to a net
expense of €277million for 2021. This decrease notably reflected the decrease in
the deferred tax charge relating to the revaluation of the investments in listed
companies including Spotify and Tencent Music Entertainment (+€166million,
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FINANCIAL REVIEW
compared to +€71million for 2021) and the favourable settlement of tax
litigations (+€90million income compared to -€11million expense in 2021).
1.2.5 Non-controlling interests
For 2022, earnings attributable to non-controlling interests were €3million,
slightly higher than the €2million for 2021.
1.2.6 Net profit attributable to equity holders of the parent
For 2022, net profit attributable to equity holders of the parent amounted to
a profit of €782million (or €0.43 per share - basic), compared to €886million
for 2021 (or €0.49 per share - basic), a decrease of €104million. Net profit
attributable to equity holders of the parent decreased by €104million, reflecting:
• The variance in financial results (-€464million) of which the revaluation of
the investments in Spotify and Tencent Music Entertainment (-€302million),
while the prior year included the gain on disposal of Alamo Records (-
€98million).
partially offset by:
• The growth in operating profit (+€206million)
• The decrease in income taxes reported to net income (+€162million), mainly
due to the decrease in the deferred tax charge relating to the revaluation
of the investments in Spotify and Tencent Music Entertainment and the
favourable settlement of tax litigations.
1.2.7 Adjusted net profit
Adjusted net profit in 2022 amounted to a profit of €1,454million (or €0.80 per
share - basic), compared to €1,271million for 2021 (or €0.70 per share - basic), an
increase of €183million. Adjusted net profit increased by €183million, including:
• The growth in Adjusted EBITDA (+€347million)
• The increase in income taxes reported to adjusted net profit (-€102million)
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FINANCIAL REVIEW
1.3 Analysis of revenues and operating results by business segment
Year ended
December 31,
(inmillions of euros) 2022 2021 % Change
% Change
at
constant
currency
Revenues
Recorded Music 7,937 6,822 16.3% 8.8%
Music Publishing 1,799 1,335 34.8% 26.3%
Merchandising & Other 618 363 70.2% 54.1%
Corporate Centre - - 0.0% 0.0%
Elimination of inter-
segment transactions
(14) (16)
Total UMG 10,340 8,504 21.6% 13.6%
EBITDA
1
Recorded Music 1,827 1,614 13.2% 5.5%
Music Publishing 395 307 28.7% 20.4%
Merchandising & Other 36 16 125.0% 111.8%
Corporate Centre (230) (251) 8.4% 16.4%
Total UMG 2,028 1,686 20.3% 12.5%
1 As defined in the Appendix to the Annual Report
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FINANCIAL REVIEW
1.3.1 Recorded Music
Year ended
December 31,
(inmillions of euros) 2022 2021 % Change
%
Change
at
constant
currency
Subscriptions and streaming revenue 5,321 4,481 18.7% 9.8%
of which streaming 1,420 1,186 19.7% 9.3%
of which subscription 3,901 3,295 18.4% 10.0%
Downloads and other digital revenue 337 324 4.0% (2.9%)
Physical revenue 1,207 1,121 7.7% 4.1%
License and other revenue 1,072 896 19.6% 13.4%
Recorded Music Revenues 7,937 6,822 16.3% 8.8%
EBITDA
1
1,827 1,614
13.2% 5.5%
EBITDA margin
1
23.0% 23.7% (0.7pp)
Adjusted EBITDA
1
1,900 1,614
17.7% 9.7%
Adjusted EBITDA margin
1
23.9% 23.7% 0.2pp
Recorded music revenues by
geographic area
North America 4,077 3,392 20.2% 6.6%
Europe 2,191 2,020 8.5% 7.5%
Asia 1,007 896 12.4% 14.0%
Latin America 302 216 39.8% 28.0%
Rest of the world 360 298 20.8% 15.0%
Recorded Music Revenues 7,937 6,822 16.3% 8.8%
1 As defined in the Appendix to the Annual Report
In 2022, Recorded Music revenues were €7,937million, up 16.3% compared to
2021, and up 8.8% in constant currency. Subscription and streaming revenue
grew 18.7%, or 9.8% in constant currency, with growth in both subscription
and ad-supported streaming revenues. Physical revenue grew 7.7%, or 4.1%
in constant currency, driven by strong new releases and growth in direct-
to-consumer sales. Downloads and other digital revenue grew by 4.0%, but
declined by 2.9% in constant currency, and included the benefit from the
settlement of a copyright infringement lawsuit with an internet service provider
but was impacted by the the continued decline in download sales. License and
other revenue improved 19.6% or 13.4% in constant currency, as a result of
the ongoing recovery of live activities and improvements in synchronization
income. Top sellers for the year included Taylor Swift, BTS, the Encanto
soundtrack, Olivia Rodrigo, Morgan Wallen and The Beatles. Top sellers in the
prior-year included Olivia Rodrigo, Justin Bieber, BTS, The Weeknd, Morgan
Wallen and ABBA.
Recorded Music EBITDA in 2022 of €1,827million was up €213million from
€1,614million in 2021 driven by the growth in revenues but was impacted in
2022 by €73million of share-based compensation expense (€0million in 2021).
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FINANCIAL REVIEW
Adjusted EBITDA for Recorded Music increased by €286million to €1,900million
in 2022 from €1,614million in 2021 as a result of the revenue growth. Adjusted
EBITDA margin increased by 0.2pp to 23.9% of revenues from 23.7% of revenues
in 2021 due to operating leverage.
1.3.2 Music Publishing
Year ended
December 31,
(inmillions of euros) 2022 2021 % Change
%
Change
at
constant
currency
Performance revenue 371 297 24.9% 18.2%
Synchronisation revenue 236 199 18.6% 10.3%
Digital revenue 1,040 698 49.0% 38.7%
Mechanical revenue 97 95 2.1% (1.0%)
Other revenue 55 46 19.6% 14.6%
Music Publishing Revenues 1,799 1,335 34.8% 26.3%
EBITDA
1
395 307
28.7% 20.4%
EBITDA margin
1
22.0% 23.0% (1.0pp)
Adjusted EBITDA
1
410 307
33.6% 25.0%
Adjusted EBITDA margin
1
22.8% 23.0% (0.2pp)
1 As defined in the Appendix to the Annual Report
Music Publishing revenue amounted to €1,799million in 2022, up 34.8%
year-over-year, or 26.3% in constant currency. Revenues benefited from
the continued growth in subscription and streaming, an improvement in
synchronization income and from the benefit of catalog acquisitions. Revenues
also benefited from the receipt during the year of higher income than was
accrued at the end of 2021 when UMG adjusted its accounting policy in relation
to certain revenues that are collected through societies.In prior years, these
revenues were recognized when the relevant collection society notified UMG
of the usage by the end customer and collectability was assured. Recognition
of that revenue is now based on an accrual for the best available estimate of
when the usage occurs and the amount of consideration which is probable to
be collected.
Music Publishing EBITDA in 2022 of €395million was up €88million from
€307million in 2021 driven by the growth in revenues. EBITDA was impacted by
€15million of share based compensation expense in 2022 (€0million in 2021).
Music Publishing Adjusted EBITDA increased by €103million to €410million
in 2022 compared to €307million in 2021 as a result of the revenue growth.
Adjusted EBITDA margin fell 0.2pp to 22.8% from 23.0% of revenues in 2021.
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FINANCIAL REVIEW
1.3.3 Merchandising & Other
Year ended
December 31,
(inmillions of euros) 2022 2021 % Change
% Change
at
constant
currency
Merchandising and Other Revenues 618 363 70.2% 54.1%
EBITDA
1
36 16
125.0% 111.8%
EBITDA margin
1
5.8% 4.4% 1.4pp
Adjusted EBITDA
1
36 16
125.0% 111.8%
Adjusted EBITDA margin
1
5.8% 4.4% 1.4pp
1 As defined in the Appendix to the Annual Report
Merchandising and Other revenue grew to €618million, up 70.2%, or 54.1% in
constant currency, as touring-related merchandising revenue, benefited from
the return of live touring post-COVID.
Merchandising and Other EBITDA and Adjusted EBITDA in 2022 of €36million was
up €20million from €16million in 2021 due to the improved revenues and lower
artist costs. EBITDA and Adjusted EBITDA margins have increased by 1.4pp to
5.8% of revenues from 4.4% of revenues in 2021 due to operating leverage and
lower artist costs and despite the shift in revenue mix towards lower-margin
touring-related revenue.
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FINANCIAL REVIEW
1.3.4 Corporate
Year ended
December 31,
(inmillions of euros) 2022 2021
%
Change
%
Change
at
constant
currency
EBITDA
1
(230) (251) 8.4% 16.4%
EBITDA margin
1
- -
Adjusted EBITDA
1
(211) (149) (41.6%) (27.9%)
Adjusted EBITDA margin
1
- -
1 As defined in the Appendix to the Annual Report
Corporate EBITDA was a net expense of €230million, compared to a net expense
of €251million for 2021, a €21million decrease in expense. EBITDA in 2022
included €19million of non-cash share-based compensation related expenses
and in 2021 included €102million of one-time direct listing and non-cash
share-based compensation related expenses.
Corporate Adjusted EBITDA was a net expense of €211million in 2022,
a €62million increase in expense from the Adjusted EBITDA in 2021 of
€149million due to unfavourable currency movements, incremental corporate
costs associated with operating as a stand-alone listed company and the
impact of reopening post-COVID, including higher travel costs.
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FINANCIAL REVIEW
2.LIQUIDITY AND CAPITAL
RESOURCES
2.1 Financial Net Debt
Year ended
December 31,
(inmillions of euros) 2022 2021
Cash and cash equivalents 439 585
Derivative financial assets 1 -
Term loan - (998)
Drawn revolving credit facilities (125) (1,447)
Bank overdrafts (1) (13)
Bonds (1,004) -
Commercial papers (929) -
Other (191) (137)
Borrowings at amortized cost (2,250) (2,595)
Financial Net Debt
1
(1,810) (2,010)
1 As defined in the Appendix to the Annual Report
2.1.1 Changes in the Financial Net Debt
As of December 31, 2022, UMG’s Financial Net Debt amounted to -€1,810million
compared to Financial Net Debt of -€2,010million as of December 31 ,2021, i.e.,
a decrease in net debt of €200million. This change was mainly attributable to
the following:
• Net cash provided by operating activities of €1,732million
This was offset by the following:
• In June 2022 UMG paid the final dividend with respect to fiscal year 2021 of
€363million
• In October 2022 UMG paid an interim dividend with respect to fiscal year
2022 of €435million
• Net cash used for investing activities of -€520million primarily due
to the €359million investment in music publishing and recorded
music catalogues, €93million investment in other intangible and capital
expenditure and €71million net purchase of consolidated companies,
equity affiliates and financial assets
• Repayment of €100million in relation to lease liabilities
• The €78million favourable currency movements
UMG believes that the cash flow generated by its operating activities, its cash
surpluses, net of amounts used to reduce UMG’s debt, as well as funds available
through undrawn bank credit facilities and additional funding opportunities will
be sufficient to cover expenses and investments necessary for its operations, its
debt service, the payment of income taxes, the distribution of dividends, as well
as its investment projects, if any, for the next 12 months.
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FINANCIAL REVIEW
2.1.2 Equity portfolio
As of December 31, 2022, UMG held a portfolio of listed non-controlling equity
interests (including Spotify) with an aggregate market value of approximately
€597million (before taxes), compared to €1,413million as of December 31,
2021. The reduction in market value during 2022 was due to the fluctuation in
share price of our listed investments most notably of Spotify. As at February
28, the aggregate market value of these listed investments had increased to
approximately €809million (before taxes).
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FINANCIAL REVIEW
2.2 Cash flow analysis
Year ended December 31,
(inmillions of euros) 2022 2021
Restated
1
Operating activities
Operating profit 1,600 1,394
Adjustments 461 280
Royalty advances payments, net of recoupments (148) (364)
Gross cash provided by/(used for) operating activities before income tax paid 1,913 1,310
Other changes in net working capital 74 85
Net cash provided by/(used for) operating activities before income tax paid 1,987 1,395
Income tax paid (255) (255)
Net cash provided by/(used for) operating activities 1,732 1,140
Investing activities
Catalogue investments (359) (388)
Other intangible assets investments (60) (48)
Capital expenditures (33) (13)
Purchases of consolidated companies, after acquired cash (22) (11)
Investments in equity affiliates (22) (28)
Purchase of financial assets (36) (43)
Investments (532) (531)
Proceeds from sales of property, plant, equipment and intangible assets - 6
Proceeds from sales of consolidated companies, after divested cash - 117
Proceeds from sale of financial assets 9 14
Divestitures 9 137
Dividends received from equity affiliates 2 2
Dividends received from investments 1 1
Net cash provided by/(used for) investing activities (520) (391)
Financing activities
Distributions to shareowners (798) (785)
Dividends paid by consolidated companies to their non-controlling interests (2) (2)
Transactions with shareowners (800) (787)
Proceeds from borrowings 5,938 3,176
Repayments of borrowings (6,359) (3,624)
Interest, net (30) (17)
Other cash items related to financing activities 4 (8)
Transactions on borrowings and other financial liabilities (447) (473)
Repayment of lease liabilities (86) (70)
Payment of interest of lease liabilities (14) (16)
Net cash provided by/(used for) financing activities (1,347) (1,346)
Net change in cash and cash equivalents (135) (597)
Foreign currency translation adjustments 1 32
Change in cash and cash equivalents (134) (565)
Cash and cash equivalents
At beginning of the period 572 1,137
At end of the period 438 572
1 Restated amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements
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FINANCIAL REVIEW
Reconciliation of cash provided by operating activities to Free
Cash Flow
Year ended
December 31,
(inmillions of euros) 2022 2021
Net cash provided by/(used for) operating activities
1
1,732 1,140
Net cash provided by/(used for) investing activities (520) (391)
Repayment of lease liabilities and related interest expenses (100) (86)
Interest, net (30) (17)
Other cash items related to financing activities 4 (8)
Free Cash Flow
2
1,086 638
1 2021 Restatement amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements
2 As defined in the Appendix to the Annual Report
2.2.1 Net cash provided by operating activities before income tax
For 2022, changes in net cash provided by operating activities before income tax
amounted to an inflow of €1,987million compared to an inflow of €1,395million
for 2021, an improvement of €592million. This increase was mainly attributable
to the following items:
• The increase in operating profit (+€206million)
• The reduction in royalty advances payments net of recoupments
(+€216million) due to the timing of major artist renewals and
higher recoupments
• The favourable variance in adjustments (+€181million) on higher
amortization and impairment in 2022 and favourable movement
in provisions
partially offset by:
• The unfavourable variance in other working capital (-€11million)
2.2.2 Net cash provided by operating activities
Net cash provided by operating activities in 2022 amounted to an inflow of
€1,732million compared to an inflow €1,140million for 2021, an improvement
of €592million due to the €592million increase in changes in net cash provided
by operating activities before income tax, while income tax paid in 2022 was in
line with 2021.
2.2.3 Net cash used for investing activities
Net cash used for investing activities in 2022 was a €520million net outflow
compared to a €391million net outflow for 2021, an increased outflow of
€129million as 2021 benefited from higher proceeds from sales of investments
(-€128million) that in 2021 included the sale of Alamo Records for €102million.
Catalogue investments in 2022 were lower than in 2021 (+€29million) due
to the timing of deals but investment in other intangible assets and capital
expenditure was higher (-€32million).
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2.2.4 Net cash used for financing activities
Net cash used for financing activities in 2022 was a €1,347million net outflow
compared to a €1,346million net outflow for 2021, an increased outflow of
€1million. This was mainly attributable to the following items:
• A reduction in debt in 2022 of €421million compared in 2021 of €448million
(+€27million)
• Higher dividend payments in 2022 (-€13million)
• Higher interest payments, repayment of lease liabilities and other cash
items related to financing activities of €126million in 2022 compared to
€111million in 2021 (-€15million)
2.2.5 Free Cash Flow
Free Cash Flow in 2022 was a €1,086million net inflow compared to a
€638million net inflow for 2021, an improvement of €448million. This
improvement was predominantly due to the improvement in net cash provided
by operating activities (+€592million) offset by higher net cash used for
investing activities (-€129million) and higher interest payments, repayment of
lease liabilities and other cash items related to financing activities (-€15million)
in 2022 compared to 2021.
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BOARD REPORT
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE
THE GOVERNANCE STRUCTURE
Universal Music Group N.V. (UMG or the Company) is a public limited
liability company (
naamloze vennootschap
) incorporated under the laws of
the Netherlands. The Shares (as defined below in the Shareholder information
section under ‘Share capital’) were first admitted to listing and trading 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),
which currently comprises of two executive directors (the
Executive Directors)
and eleven non-executive directors (the Non-Executive Directors and, together
with the Executive Directors, the Directors). The Executive Directors are primarily
responsible for all day-to-day operations of the Company. The Non-Executive
Directors supervise the Executive Directors’ policy and performance of duties
and the Company’s general course of affairs and business, and render advice
and direction to the Executive Directors. The Directors furthermore perform
any duties allocated to them under or pursuant to the law or the Company’s
articles of association (the Articles). Each Director has a duty to the Company to
properly 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 and
complies with most of the principles and best practice provisions of the Dutch
Corporate Governance Code of December 8, 2016 (the Code), the full text of
which can be found on www.mccg.nl. Deviations from any of the principles and
best practice provisions of the Code are explained below under ‘Compliance
with the Code’ in accordance with the Code’s ‘comply or explain’ principle.
Substantial changes in the Company’s corporate governance structure and in
the Company’s compliance with the Code, if any, will be dealt with at the annual
General Meeting (as defined below under ‘The Board’) as a separate item. On
December 20, 2022, a revised version of the Code was published, which will apply
as of the financial year 2023.
The annual report also includes the information that the Company is required
to disclose pursuant to the Dutch Decree on Article 10 of the Takeover Directive
(
Besluit artikel 10 overnamerichtlijn
) and the Dutch Decree on the Content of the
Board Report (
Besluit inhoud bestuursverslag
).
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CORPORATE GOVERNANCE
THE BOARD
The Board is the executive and supervisory body of the Company. It is entrusted
with the management of the Company, it supervises the general course of
affairs of and the business affiliated with the Company and is responsible for
the continuity of the Company. The Board is accountable for these matters to
the Company’s general meeting of shareholders (the General Meeting (being the
corporate body or, where the context so requires, the physical meeting)).
The Board’s responsibilities include, among others, developing a view on long-
term value creation by the Company and formulating a strategy in line with
this view, identifying and managing the risks associated with the Company’s
strategy and business, appointing and dismissing the senior internal auditor,
annually assessing the way in which the internal audit function fulfills
its responsibility, approving the internal audit plan, giving account to the
effectiveness of the design and operation of the internal risk management and
control systems, ensuring compliance with all applicable laws and regulations
and the Company’s corporate governance structure and preparing the (semi-
annual) financial statements and Board report and approving the annual budget
and important capital investments.
The Board may perform all acts necessary or useful for achieving the Company’s
objectives, with the exception of those acts that are prohibited pursuant to
the law or the Articles. Pursuant to the Articles, the Board may allocate its
duties and powers among the Directors pursuant to the Board Regulations (as
defined below under ‘The Board––Board Regulations’) or otherwise in writing,
provided that the following duties and powers may not be allocated to the
Executive Directors: (i) supervising the performance of the Executive Directors,
(ii) making a nomination for the appointment of Directors, (iii) determining
an Executive Director’s remuneration and (iv) instructing an auditor to audit
the financial statements. Regardless of an allocation of duties and powers,
all Directors remain collectively responsible for the proper management and
strategy 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 organization
and setting out, among others, the role and responsibilities of the Board, its
composition and size and the manner in which its meetings should be held
(the Board Regulations). The Board Regulations are available on the investor
relations part of the UMG website.
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CORPORATE GOVERNANCE
Composition
The Articles provide that the Board shall consist of one or more Executive
Directors and one or more Non-Executive Directors. The number of Executive
Directors and the number of Non-Executive Directors shall be determined by
the Board. The Board currently comprises of two Executive Directors and eleven
Non-Executive Directors, four of whom, being Sherrry Lansing, Bill Ackman,
Cyrille Bolloré and Nicole Avant, were appointed to the Board by the General
Meeting on May 12, 2022:
Name Function
Sir Lucian Grainge Executive Director, Chairman and Chief Executive Officer
Vincent Vallejo Executive Director, Deputy Chief Executive Officer
Sherry Lansing Non-Executive Director, Chairman of the Board
Anna Jones Non-Executive Director, Vice-Chairman of the Board
Antoine Fiévet Non-Executive Director
Bill Ackman Non-Executive Director
Cathia Lawson-Hall Non-Executive Director
Cyrille Bolloré Non-Executive Director
James Mitchell Non-Executive Director
Luc van Os Non-Executive Director
Manning Doherty Non-Executive Director
Margaret Frerejean-
Taittinger Non-Executive Director
Nicole Avant Non-Executive Director
Judy Craymer CBE acted as Non-Executive Director and Chairman of the Board
until January 10, 2023, on which date she decided to resign from the Board to
focus on her activities as a film and theater producer.
Appointment and appointment term
The Executive Directors and Non-Executive Directors are appointed as such by
the General Meeting at the non-binding nomination of the Board. A nomination
by the Board shall state whether a person is nominated for appointment
as Executive Director or Non-Executive Director. The person so nominated
is 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 shall
lapse immediately after the close of the annual General Meeting held in the
second year after his or her appointment. A Director may be reappointed with
due observance of the preceding sentences. At the proposal of the Board, the
General 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 the
General Meeting resolves otherwise. A Non-Executive Director’s term of office
shall lapse in accordance with a retirement schedule drawn up by the Board to
avoid, as much as possible, retirements of Non-Executive Directors occurring
all at the same time so as to ensure continued experience on the Board.
Currently, the Non-Executive Directors’ terms of office all lapse at the close of
the annual General Meeting to be held in 2024 but it is the intention that the
use of the retirement schedule will result in a staggered replacement of the
Non-Executive Directors.
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CORPORATE GOVERNANCE
The initial appointment dates of the Non-Executive Directors and the end of
their current terms are as follows:
Name Appointment date End of current term
Sherry Lansing May 12, 2022
Until annual General Meeting to be
held in 2024
Anna Jones September 20, 2021
Until annual General Meeting to be
held in 2024
Antoine Fiévet September 20, 2021
Until annual General Meeting to be
held in 2024
Bill Ackman May 12, 2022
Until annual General Meeting to be
held in 2024
Cathia Lawson-Hall September 20, 2021
Until annual General Meeting to be
held in 2024
Cyrille Bolloré May 12, 2022
Until annual General Meeting to be
held in 2024
James Mitchell September 20, 2021
Until annual General Meeting to be
held in 2024
Luc van Os September 20, 2021
Until annual General Meeting to be
held in 2024
Manning Doherty September 20, 2021
Until annual General Meeting to be
held in 2024
Margaret Frerejean-
Taittinger September 20, 2021
Until annual General Meeting to be
held in 2024
Nicole Avant May 12, 2022
Until annual General Meeting to be
held in 2024
In accordance with the Relationship Agreement, which was co-signed by the
Company for agreement and acknowledgement, the Tencent-led consortium
(consisting of Concerto Investment B.V. and Scherzo Investment B.V.) has the
right to designate up to two Non-Executive Directors for appointment by the
General 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 have
agreed to vote in favor of the appointment of a person designated by the
Tencent-led consortium in case one of the Non-Executive Directors appointed
at the designation of the Tencent-led consortium no longer serves as a Non-
Executive Director during the period until the close of the annual General
Meeting to be held in 2024.
Should at any time during the period until the close of the annual General
Meeting to be held in 2024, (i) the Tencent-led consortium own in the aggregate
less than the Threshold Stake, but still 50% or more of the Threshold Stake, the
Tencent-led consortium shall procure that one of the Non-Executive Directors
appointed at the designation of the Tencent-led consortium resigns and (ii) the
Tencent-led consortium own in the aggregate less than 50% of the Threshold
Stake, the Tencent-led consortium shall procure that both of the Non-Executive
Directors appointed at the designation of the Tencent-led consortium resign.
James Mitchell and Manning Doherty have been appointed at the
designation of the Tencent-led consortium such in accordance with the
Relationship Agreement.
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CORPORATE GOVERNANCE
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 in
aggregate. If at the end of that period, no decision has been taken on the
termination 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 Non-
Executive Director, his or her spouse, registered partner or life companion,
(foster) child or relative by blood or marriage up to the second degree:
• has been an employee of the Company or Executive Director or an employee
or member of the management board of an associated company in the five
years prior to his or her appointment
• receives personal financial compensation from the Company or an
associated company, other than the compensation received for the work
performed as a Non-Executive Director and in so far as this is not in keeping
with the normal course of business
• has had an important business relationship with the Company or an
associated company in the year prior to the appointment
• is a member of the management board of a company in which an Executive
Director is a member of the supervisory board
• has temporarily performed management duties during the previous twelve
months in the absence or incapacity of Executive Directors
• has a shareholding of at least 10% in the issued share capital of the
Company, taking into account the shareholding of natural persons or legal
entities cooperating with him or her on the basis of an express or tacit,
verbal or written agreement
• is a member of the management board or supervisory board – or is a
representative in some other way – of a legal entity which holds at least
10% of the issued share capital of the Company unless the legal entity is
a subsidiary
The independency of Non-Executive Directors is assessed prior to their
nomination 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 positions
of 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 positions of 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-tier board
counts twice. Directors shall not pursue the candidacy for a supervisory or
non-executive or similar position in companies other than subsidiaries of the
Company without the Board’s prior approval.
Diversity
The Board has drawn up a diversity policy (the Diversity Policy) as per best
practice provision 2.1.5 of the Code as well as a profile for Non-Executive
Directors (the Profile) as per best practice provision 2.1.1 of the Code, laying
down the elements of a diverse composition. As set out in the Diversity Policy,
the Board acknowledges the benefits of greater diversity, including gender,
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CORPORATE GOVERNANCE
nationality, ethnicity and age diversity, and remains committed to ensuring that
the Directors bring a wide range of skills, knowledge, experience, background
and perspectives. All nominations for appointment will be made on merit
against objective criteria, in the context of the overall balance of skills and
background that the Board needs to maintain in order to remain effective. The
Board is committed to ensuring that, in accordance with the Diversity Policy,
at least one third of the Board consists of women and at least one third of the
Board consists of men, as well as to increasing the nationality, ethnicity and age
diversity. The Board is further committed to ensuring that the composition of the
Board has a good balance in terms of skills, knowledge, experience, background
and perspectives and to considering candidates from a wide pool, including
candidates with no prior publicly listed company experience.
The Nomination Committee (as defined below under ‘The Board––Committees’)
is responsible for supporting the Board in applying the Diversity Policy
by annually reviewing the Board’s composition and effectiveness and in
considering the balance of skills, experience and independence of the Board.
In addition, it is required to consider the benefits of all aspects of diversity, but
without compromise as to the caliber of Directors, when identifying candidates
to be nominated for appointment.
The Board considers its current composition in line with the objectives of the
Diversity Policy, and with women representing 38% of all Directors and 45% of
the Non-Executive Directors also in line with the gender diversity requirements
included in the Diversity Policy and Dutch law (as set out below), respectively.
In addition, the Board considers that with the appointment of the four new Non-
Executive Directors, being Sherry Lansing, Bill Ackman, Cyrille Bolloré and Nicole
Avant, to the Board, both the ethnicity and age diversity have increased.
As per January 1, 2022, Dutch law requires that (i) at a Dutch publicly listed
company, at least one third of the supervisory or non-executive directors
consist of women and at least one third of the supervisory or non-executive
directors consist of men, and (ii) a large Dutch company sets appropriate and
ambitious gender diversity targets for the company's top and sub-top, develops
an action plan and reports on progress made to the Social and Economic
Council (
Sociaal-Economische Raad
). As the Company, as per January 1, 2023,
officially qualifies as a large Dutch company now that it on two consecutive
balance sheet dates has met the relevant criteria, it will - going forward - also
report on the latter requirement in the Board report.
Conflicts of interest
A Director shall not participate in the discussion and/or decision-making
process of the Board where it concerns a transaction in respect of which he
or she has a direct or indirect personal conflict of interest with the Company.
If there is such conflict of interest in respect of all Directors, the decision shall
nevertheless be taken by the Board.
In accordance with best practice provisions 2.7.3 and 2.7.4 of the Code and as
laid down in the Board Regulations and the RPT Policy (as defined below under
‘The Board––Related party transactions’), a Director having a (potential) conflict
of interest in a transaction that is of material significance shall immediately
report such conflict of interest to the Chairman of the Board (and, in the case of
an Executive Director, also to the other Executive Directors) and shall provide all
relevant information, including information relevant to the situation concerning
his or her spouse, registered partner or other life companion, (foster) child
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and relative by blood or marriage up to the second degree. In the case of
the Chairman of the Board having such conflict of interest, he or she shall
immediately report such conflict of interest to the Vice-Chairman of the Board.
Any such transaction must be entered into on terms which are customary in
the market, approved by the Board and published in the Board report together
with a statement of the conflict of interest and a declaration that best practice
provisions 2.7.3 and 2.7.4 of the Code have been complied with.
Any transaction between the Company and a natural or legal person who or
which holds at least 10% of the issued share capital of the Company that is of
material significance must be entered into on terms which are customary in the
market, approved by the Board and published in the Board report together with a
statement that best practice provision 2.7.5 of the Code has been complied with.
The only related party transaction in which there was a (potential) conflict of
interest (within the meaning of the Code) that was of material significance was
the following: as part of the Tencent-led consortium’s acquisition of its stake
in UMG, Tencent Music Entertainment was originally granted a call option to
acquire up to 25% (but no less than 20%) of the share capital of the holding
company which controls UMG’s Greater China operations. As the exercise period
was due to expire, the call option was amended as follows: (i) the counterparty
has become Tencent Holdings, (ii) Tencent Holdings has the option to acquire
up to 12.5% (but no less than 10%) of the share capital of the holding company
which controls UMG's Greater China operations, and (iii) Tencent Holdings has 24
months from the date of granting to exercise the amended call option.
In Note 24 ‘Related parties’ to the consolidated financial statements, details
of all related party transactions are set out. In respect of the related party
transactions in which there was a conflict of interest (within the meaning of
the Code) that was of material significance, best practice provisions 2.7.3, 2.7.4
and 2.7.5 of the Code have been complied with if such transactions were entered
into after the date of the Listing.
Related party transactions
The Board has drawn up a related party transactions policy (the RPT Policy) for
the purpose of providing a procedure that prevents related parties from taking
advantage of their position as well as adequate protection for the interests of
the Company and its stakeholders. The RPT Policy stipulates when a transaction
qualifies as a related party transaction (within the meaning of article 2:167
paragraph 3 of the Dutch Civil Code (
Burgerlijk Wetboek
)) and provides that
a related party transaction must be approved by the Board in case it is not
entered into in the ordinary course of business and on terms which are
customary in the market. A Director shall not participate in the discussion
and/or decision-making process of the Board if he or she is involved in a related
party transaction. A related party transaction that was concluded in the ordinary
course of business and on terms which are customary in the market shall be
periodically assessed by the Board.
In Note 24 ‘Related parties’ to the consolidated financial statements, details of
all related party transactions (whether or not within the meaning of article 2:167
paragraph 3 of the Dutch Civil Code) are set out.
Resolutions subject to approval of the Board
In addition to transactions involving a conflict of interest and related party
transactions, which require the approval of the Board as set out above under
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CORPORATE GOVERNANCE
‘The Board––Conflicts of interest’ and ‘The Board––Related party transactions’,
respectively, in accordance with the Board Regulations, the Company does not
enter 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) and
the granting of a guarantee or security right, without the approval of the Board.
Remuneration
On September 20, 2021, the General Meeting adopted the remuneration policies
for the Executive Directors and Non-Executive Directors. The remuneration of
the Executive Directors and Non-Executive Directors shall be determined by the
Board with due observance of the applicable remuneration policy. The Executive
Directors shall not participate in the discussion and/or decision-making process
regarding the determination of the remuneration of the Executive Directors. The
remuneration policies are available on the investor relations part of the UMG
website. In the Remuneration report, details of the individual remuneration of
the Executive Directors and Non-Executive Directors are set out.
Severance
In the event of termination by the Company without cause or termination by
Sir Lucian Grainge for good reason, Sir Lucian Grainge and Vincent Vallejo are
entitled to severance payments as set out in the Remuneration report under
‘Severance Payments’.
Directors’ & officers’ liability insurance policy and indemnity
The Executive Directors and Non-Executive Directors as well as certain officers
are insured under a directors’ and officers’ liability insurance policy taken out
by the Company against damages resulting from their conduct when acting in
their capacities as Directors or officers with coverage and terms customary for a
publicly listed company of the size of the Company. Although the policy provides
for broad coverage, the Executive Directors, Non-Executive Directors and officers
may become subject to uninsured liabilities.
In addition, pursuant to the Articles, the Company has agreed to indemnify each
Executive Director and each Non-Executive Director for any claim against him or
her that he or she may derive from exercising his or her duties as an Executive
Director or Non-Executive Director, provided that he or she acted in good faith
and in a manner he or she reasonably believed to be in, or not opposed to, the
best interests of the Company or out of his or her mandate and, with respect to
any 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 three
committees 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 these
committees is to prepare the decision-making of the Board.
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The Board has drawn up regulations for each committee, setting out the role and
responsibilities of the committee concerned, its composition and size and the
manner 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 the
committees, the number of meetings held and the main items discussed at
such meetings.
The Audit Committee
According to the regulations of the Audit Committee, the Audit Committee
advises the Board in relation to its responsibilities, undertakes preparatory
work for the Board’s decision-making regarding the supervision of the integrity
and quality of the Company’s financial reporting and the effectiveness of
the Company’s internal risk management and control systems and prepares
resolutions of the Board in relation thereto.
In addition to the foregoing, the Audit Committee’s main responsibilities
include: (i) supervising and monitoring, and discussing with and advising
the Board on, the effectiveness of the design and operation of the
internal risk management and control systems and supervising the effect
of the Code of Conduct, (ii) supervising the preparation and submission
of financial information by the Company, (iii) supervising the compliance
with recommendations and observations of the internal auditor and external
auditors, (iv) supervising the functioning of the internal audit department, (v)
supervising the Company’s tax policy, (vi) supervising the financing of the
Company, (vii) supervising the applications of information and communication
technology, including risks relating to cybersecurity, (viii) maintaining frequent
contact and supervising the relationship with the external auditors, (ix)
implementing the procedure for the selection of the external auditors
and submitting a recommendation to the Non-Executive Directors for the
(re)appointment or dismissal of the external auditors by the General Meeting,
(x) informing the Board of the outcome of the statutory audit and explaining how
the statutory audit contributed to the integrity of financial reporting and what
the role of the Audit Committee was in that process, (xi) monitoring the financial
reporting process and submitting recommendations or proposals to ensure its
integrity, (xii) determining whether, and if so, how the external auditors shall
be involved in the content and publication of financial reports other than the
financial statements, (xiii) issuing a recommendation on the appointment and
dismissal of the senior internal auditor, (xiv) submitting a proposal to the Board
for the external auditors’ engagement to audit the financial statements, and
(xv) considering and, where appropriate, approving the (semi-annual) financial
statements, the annual budget and major capital expenditures of the Company.
The Audit Committee shall consist of at least three members appointed by the
Board from among its Non-Executive Directors. More than half of the members
of 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 shall
have competence in accounting and/or auditing and the members as a whole
shall have competence relevant to the sector in which the Company operates.
The Audit Committee shall hold at least four meetings per year and whenever
one or more of its members have requested a meeting. The quorum of any
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CORPORATE GOVERNANCE
meeting shall be a majority of the members of the Audit Committee. The
Audit Committee shall meet with the external auditors as often as it considers
necessary, but at least once a year, outside the presence of the Executive
Directors. The Chief Financial Officer, the internal auditor and the external
auditors shall attend the meetings of the Audit Committee, unless the Audit
Committee determines otherwise. The Audit Committee shall decide whether
and, if so, when the Chairman of the Board shall attend its meetings.
The Remuneration Committee
According to the regulations of the Remuneration Committee, the Remuneration
Committee advises the Board in relation to its responsibilities, undertakes
preparatory work for the Board’s decision-making regarding the determination
of the remuneration of the individual Executive Directors and Non-Executive
Directors, with due observance of the remuneration policies for the Executive
Directors and Non-Executive Directors, respectively, and prepares resolutions of
the Board in relation thereto.
In addition to the foregoing, the Remuneration Committee’s main
responsibilities include: (i) at least every four years submitting a proposal to the
Board for the remuneration policies to be pursued and (ii) annually preparing
the remuneration report, to be tabled at the annual General Meeting.
The Remuneration Committee shall consist of at least three members appointed
by the Board from among its Non-Executive Directors. More than half of
the 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 the
Remuneration Committee.
The Nomination Committee
According to the regulations of the Nomination Committee, the Nomination
Committee advises the Board in relation to its responsibilities, undertakes
preparatory work for the Board’s decision-making and prepares resolutions of
the Board in relation thereto.
In addition to the foregoing, the Nomination Committee’s main responsibilities
include: (i) drawing up selection criteria and appointment procedures for the
Directors, (ii) periodically assessing the size and composition of the Board, and
making a proposal for a composition profile of the Non-Executive Directors, (iii)
periodically assessing the functioning of the individual Directors and the Board
as a whole, and reporting on this to the Board, (iv) making recommendations for
(re)appointments of Directors and (v) supervising the policy of the Board on 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 of
the members of the Nomination Committee shall be independent within the
meaning of best practice provision 2.1.8 of the Code.
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The Nomination Committee shall hold at least two meetings per year 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 Nomination Committee.
The Market Disclosure Committee
The Board has also appointed a market disclosure committee, consisting of
seven members, which is responsible for the timely and accurate disclosure of
all information that is required to be so disclosed to the market in order to meet
the applicable legal and regulatory obligations and requirements arising from
the Listing.
The market disclosure committee shall meet at such times as shall be
necessary or appropriate, as determined by the chair of the market disclosure
committee or, in his or her absence, by any other member of the market
disclosure committee. The market disclosure committee is not a committee of
the Board although its members are appointed by the Board.
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THE GENERAL MEETING
Annual and extraordinary General Meetings
The Shareholders exercise their rights through annual and extraordinary
General Meetings.
Annual General Meetings
The annual General Meeting shall be held within six months after the end of
the financial year. The agenda of the annual General Meeting typically includes
the following (discussion or voting) items: (i) the discussion of the annual
report, (ii) the consideration of the remuneration report, (iii) the adoption of
the financial statements, (iv) the discussion of the dividend policy and the
proposal to distribute dividends, (v) the discharge of the Directors for the
performance of their duties, (vi) the filling of any vacancies, (vii) the 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
auditors, and (ix) any other items brought forward by the Board.
Extraordinary General Meetings
Extraordinary General Meetings shall be held as often as the Board deems
necessary. In addition, one or more of the Shareholders representing
individually or jointly at least 10% of the issued share capital of the Company
are entitled to request the Board in writing that a General Meeting is convened,
the request setting out in detail the items to be discussed. If the Board has not
taken the steps necessary to ensure that a General Meeting can be held within
eight weeks of the request, the relevant Shareholder or Shareholders may at
its or their request be authorized by a Dutch court in summary proceedings to
convene a General Meeting. In any event, a General Meeting shall be held to
discuss any requisite measures within three months of it becoming apparent
to the Board that the shareholders’ equity of the Company has decreased to an
amount equal to or lower than 50% of the issued and called-up part of the share
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 the
General 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 be
forced to include a voting item on the agenda of the General Meeting where
the voting item concerns a matter which does not lie within the powers of the
General Meeting. In accordance with best practice provision 4.1.6 of the Code, the
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Shareholders are expected to only exercise the right of including an item on the
agenda 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 the
agenda of the General Meeting that may result in a change in the Company’s
strategy (via, for example, a change in the composition of the Board), the Board
may invoke a response time. The possibility to invoke a response time also
applies to a request of such Shareholder or Shareholders to be authorized
to convene a General Meeting as set out above under ‘The General Meeting––
Annual and extraordinary General Meetings––Extraordinary General Meetings’.
Chairperson of the General Meeting
The General Meeting shall be presided over by the Chairman of the Board or
another Director designated for that purpose by the Board. If the Chairman
of 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, the
General Meeting itself shall appoint a chairperson of the General Meeting.
The chairperson has all powers necessary to ensure the orderly and efficient
conduct of the General Meeting. The chairperson decides on all matters relating
to admission to the General Meeting and may admit third parties to the General
Meeting. The Directors are in any event authorized to attend the General
Meeting, in which they have an advisory vote. The external auditors are also
authorized to attend the General Meeting.
Participation
Each Shareholder is entitled, in person or represented by a proxy authorized in
writing, 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 so
in 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 cast
its vote prior to the General Meeting by means of electronic communication or
letter. 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 the
General Meeting. All resolutions of the General Meeting shall be adopted by a
simple majority of the votes cast, unless Dutch law or the Articles require a
qualified majority. Some resolutions require a qualified majority if less than half
of the issued share capital of the Company is present or represented at the
General 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 to
designate 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 or
rights to subscribe for Shares (and to designate the Board as the competent
body 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 appointment of Executive Directors and Non-Executive Directors
• the suspension and dismissal of Executive Directors and Non-
Executive Directors
• the adoption of the remuneration policies for the Executive Directors and
Non-Executive Directors
• the adoption of the financial statements
• the appointment of the external auditors
• the distribution of dividends
• the amendment of the Articles
• the dissolution of the Company
No resolutions may be adopted on items other than those that have been
included on the agenda (unless the resolution would be adopted unanimously
during a General Meeting where the entire issued share capital of the Company
is present or represented).
Resolutions of the Board regarding a significant change in the identity or
character of the Company or its business are subject to the approval of the
General 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 the
Company or a subsidiary with any other legal person or company or as a
fully-liable general partner in a partnership, provided that the conclusion or
cancellation of such cooperation is of material significance to the Company
• the acquisition or disposal of a participation in the issued share capital
of a company with a value of at least one third of the assets, as shown
in the consolidated balance sheet with explanatory notes according to the
most 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 made
available to the Shareholders, which then have the opportunity to provide their
comments 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 not
exceeding 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 the
Board, remain authorized to issue Shares if such is specifically stipulated in
the resolution of the General Meeting designating the Board as the competent
body 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 body
to 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 amount
of 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 resolution
of 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 not
exceeding 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 the
General 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 Board
and requires a qualified majority of at least two thirds of the votes cast if less
than half of the issued share capital of the Company is present or represented
at the General Meeting. The foregoing applies by analogy to the granting of rights
to subscribe for Shares.
The Board has not been designated as the competent body to issue Shares
and/or to limit or exclude the pre-emptive right by the General Meeting. However,
on May 12, 2022, the General Meeting did resolve to issue Shares or grant rights
to subscribe for Shares in order to give effect to awards granted under the 2022
UMG Global Equity Plan (as defined below in the Shareholder information section
under ‘2022 UMG Global Equity Plan’) to employees of the Company and its
subsidiaries and to Executive Directors up to a total amount of 5% of the issued
share capital of the Company as at May 12, 2022 and, to the extent necessary,
to exclude the statutory pre-emptive right with respect to such Shares or rights
to subscribe for Shares. The actual number of Shares to be issued or rights
to subscribe for Shares to be granted in order to give effect to awards granted
under the 2022 UMG Global Equity Plan is determinable by the Board (or a
committee of the Board designated for such purpose).
Acquisition of Shares
The Company cannot subscribe for Shares. The Company may, however,
acquire fully paid-up Shares for no consideration or under universal title of
succession. In addition, the Company may acquire fully paid-up Shares against
consideration if (i) the shareholders’ equity of the Company less the acquisition
price of the Shares does not fall below the sum of the issued and called-up 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 capital of the
Company and (iii) the Board has been authorized to acquire Shares on behalf of
the Company by the General Meeting. Such authorization is valid for a maximum
period of eighteen months and as part of the authorization, the General Meeting
must specify the number of Shares that may be acquired as well 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.
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In calculating the amount of any dividend distribution on the Shares, Shares
held by the Company shall be disregarded, unless such Shares are encumbered
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 of
pledge 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 acquired
by the Company or a subsidiary. In determining how many votes can be cast,
how many Shareholders are present or represented or which part of the issued
share capital of the Company is present or represented at the General Meeting,
no account shall be taken of Shares in respect of which no votes can be cast.
On May 12, 2022, the General Meeting resolved to grant the Board the authority
to acquire Shares on behalf of the Company up to a total amount of 10% of
the issued share capital of the Company as at May 12, 2022, through purchases
effected on a stock exchange or otherwise, for a period of eighteen months,
including for the purpose of effecting potential share buyback programs in
an efficient manner. The price shall range between an amount equal to the
nominal value of the Shares and an amount equal to 110% of the share price,
whereby the share price shall be understood to mean the average of the highest
quoted price for each Share during the five trading days prior to the date
of acquisition as published in the Daily Official List (
Officiële Prijscourant
) of
Euronext Amsterdam.
Reduction of the issued share capital of the Company
At the proposal of the Board, the General Meeting may resolve to reduce
the 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 an
amendment of the Articles. A resolution of the General Meeting to reduce the
issued 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 the
Company is present or represented at the General Meeting.
Appointment of the external auditors
The General Meeting appoints the external auditors to audit the financial
statements. The Non-Executive Directors submit a nomination for the
appointment of the external auditors to the General Meeting, upon the
recommendation of the Audit Committee. Unless it concerns the renewal
of an audit engagement, the recommendation of the Audit Committee shall
be prepared following a selection procedure (an auditor selection procedure)
organized by the Company under the responsibility of the Audit Committee in
accordance with Regulation (EU) No 537/2014 of the European Parliament and of
the Council of April 16, 2014 on specific requirements regarding statutory audit
of public-interest entities.
Pursuant to the non-binding guidelines of the Committee of European Auditing
Oversight Bodies on the appointment of statutory auditors or audit firms by
public-interest entities adopted on March 16, 2021 (the Guidelines), a publicly
listed company who has become a public-interest entity for the first time after
having already appointed an external auditor is required to organize an auditor
selection procedure as soon as possible. In order to comply with the Guidelines
and to move from a dual external auditor structure to a single external auditor
structure, which is more in line with Dutch market practice, the Company -
under the responsibility of the Audit Committee - initiated an auditor selection
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CORPORATE GOVERNANCE
procedure in the second half of 2022 which was led by a selection committee
designated by the Audit Committee for such purpose.
Amendment of the Articles
At the proposal of the Board, the General Meeting may resolve to amend the
Articles. If a proposal to amend the Articles is to be submitted to the General
Meeting, the convocation notice must state so and a copy of the proposal,
including the verbatim text thereof, must be made available at the Company’s
office for inspection by, and must be made available free of charge to, the
Shareholders 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, the
Board 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, the
rules governing the appointment and dismissal of Executive Directors and
Non-Executive Directors and the amendment of the Articles, the powers of
the Board (in particular the power to issue Shares and to acquire Shares on
behalf of the Company), any material agreement to which the Company is a
party and which automatically comes into force or is amended or terminated
upon a change of control over the Company 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 and
complies 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 of
the principles and best practice provisions of the Code are explained below 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 a separate item. On December 20, 2022, a revised version of the Code
was published, which will apply as of the financial year 2023.
Deviations
Best practice provision 2.1.7 item (i) of the Code
As James Mitchell, Luc van Os and Manning Doherty were all Executive Directors
(as from February 26, 2021, December 2, 2020 and February 26, 2021, respectively)
prior to being appointed as Non-Executive Directors by the General Meeting,
effective September 20, 2021, the Company does not comply with best practice
provision 2.1.7 item (i) of the Code, which recommends that at most one Non-
Executive Director is a former Executive Director. Since they have all been
appointed for a period of more than two years, this deviation will continue
for more than one financial year and may not be of a temporary nature.
However, the Company deems that this deviation does not negatively impact
the ability of these Non-Executive Directors to perform their duties critically and
independently given the short period during which they were involved in the
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CORPORATE GOVERNANCE
executive management of the Company prior to, and primarily in preparation for,
the Listing.
Best practice provision 2.1.7 item (ii) of the Code
Since six out of eleven Non-Executive Directors, being Bill Ackman, Cathia
Lawson-Hall, Cyrille Bolloré, James Mitchell, Luc van Os and Manning Doherty,
are considered non-independent within the meaning of best practice provision
2.1.8 of the Code, the Company does not comply with best practice provision 2.1.7
item (ii) of the Code, which recommends that less than half of the Non-Executive
Directors should be non-independent. Since they have all been appointed for a
period of (more than) two years, this deviation will continue for more than one
financial year and may not be of a temporary nature.
Best practice provision 2.1.7 item (iii) of the Code
Since two Non-Executive Directors, being James Mitchell and Manning Doherty,
have been appointed by the General Meeting at the designation of the Tencent-
led consortium, they are considered to be affiliated with or representing a (group
of affiliated) shareholder(s) holding, directly or indirectly, more than 10% of the
issued share capital of the Company and as such, the Company does not comply
with best practice provision 2.1.7 item (iii) of the Code, which recommends
that at most one Non-Executive Director is considered to be affiliated with or
representing such (group of affiliated) shareholder(s). Since they have been
appointed for a period of more than two years, this deviation will continue
for more than one financial year. However, since the right of the Tencent-led
consortium to designate two Non-Executive Directors for appointment by the
General Meeting will contractually end after the close of the annual General
Meeting to be held in 2024 as set out above under ‘The Board––Appointment and
term of appointment’, this deviation may be of a temporary nature only.
Best practice provision 2.3.4 of the Code
Since 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 be
chaired by a former Executive Director. Since he has been appointed for a
period of more than two years, this deviation will continue for more than one
financial year and may not be of a temporary nature. However, the Company
deems that this deviation does not negatively impact his ability to perform his
duties critically and independently given the short period during which he was
involved in the executive management of the Company prior to, and primarily in
preparation for, the Listing.
Because of Judy Craymer CBE's resignation from the Board on January 10,
2023, and the consequent termination of her Board committee membership,
the Company no longer complies with (the second sentence of) best practice
provision 2.3.4 of the Code, which recommends that more than half of the
members of each committee should be independent, now that two out of four
of the Remuneration Committee members, being Cyrille Bolloré and James
Mitchell, are considered non-independent within the meaning of best practice
provision 2.1.8 of the Code. This deviation will likely be of a temporary nature
only as the Board intends to appoint another independent Non-Executive
Director to the Remuneration Committee in the course of the financial year 2023.
Best practice provision 3.1.2 item (vi) of the Code
The Company does not comply with best practice provision 3.1.2 item (vi) of
the Code, which recommends that if shares are being awarded, they should
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CORPORATE GOVERNANCE
be held for at least five years after the award date. Although awards granted
under the 2022 UMG Global Equity Plan to Executive Directors are (and will be)
subject to (multiple year) vesting requirements as set out in Note 23 'Share-
based compensation plans' to the consolidated financial statements, there is no
requirement that Shares should continue to be held once vested.
Best practice provision 3.2.3 of the Code
Sir Lucian Grainge shall be paid two years’ salary, target bonus, pension
contributions, car allowance, protection compensation, health and welfare
benefits and €1,950,839 for lost value of Vivendi restricted stock units in a
lump sum in the event of termination by the Company without cause or
termination by Sir Lucian Grainge for good reason, and Vincent Vallejo shall
be paid base salary, target bonus, contractually agreed exceptional premiums
and any unpaid retention bonus or other bonuses in a lump sum for the
period remaining on his initial two and half year fixed term agreement in the
event of termination by the Company without cause. Accordingly, the Company
does not comply with (the first sentence of) best practice provision 3.2.3 of
the Code, which recommends that any severance in the event of dismissal
should not exceed one year’s salary. However, as the recommended severance
is inconsistent with industry practices in the primary markets in which the
Company competes for talent, such as the United States, complying with best
practice provision 3.2.3 of the Code could be detrimental to Executive Director
recruitment and retention. As the Company may decide to respect these legacy
severance arrangements, which were already in place prior to the date of the
Listing, this deviation may continue for more than one financial year and may
not be of a temporary nature.
Corporate governance statement
Pursuant to the Dutch Decree on the Content of the Board Report, the Company
is required to publish a statement concerning its approach to corporate
governance and compliance with the Code. The information required to be
included in this statement can be found in the following sections of the
annual report:
• The information concerning compliance with the Code is set out above
under ‘Compliance with the Code’.
• The information concerning the Company’s internal risk management and
control systems relating to the financial reporting process is set out in the
Risk and Risk Management section.
• The information concerning the functioning of the General Meeting and its
powers and rights is set out above under ‘The General Meeting’.
• The information concerning the composition and functioning of the Board
and its committees is set out above under ‘The Board’ and in the Report of
the Non-Executive Directors under ‘Composition’ and ‘Committees’.
• The information concerning the Company’s diversity policy is set out
above under ‘The Board––Diversity’ and in the Report of the Non-Executive
Directors under ‘Diversity’.
• The information concerning the inclusion of the information required by the
Dutch Decree on Article 10 of the Takeover Directive is set out above under
‘Dutch Decree on Article 10 of the Takeover Directive’.
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CORPORATE GOVERNANCE
STATEMENTS OF THE BOARD
In control statement
In accordance with best practice provision 1.4.3 of the Code, the Board is of the
opinion that for the financial year 2022:
• the Board report provides sufficient insight into any failings in the
effectiveness of the internal risk management and control systems.
• 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 and uncertainties that are
relevant to the expectation of the Company’s continuity for the period of
twelve months after the preparation of the Board report.
It should be noted that the foregoing does not imply that these systems and
these procedures provide absolute assurance as to the realization of operational
and 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 (
Wet
op het financieel toezicht
), the Board confirms that, to the best of its knowledge:
• the financial statements 2022 give a true and fair view of the
assets, liabilities, financial position and result of the Company and the
undertakings included in the consolidation as a whole for the financial
year 2022.
• the Board report provides a true and fair view of the position as at December
31, 2022 and of the performance of the business during the financial year
2022 of the Company and the undertakings, details of which have been
included in the financial statements 2022.
• the Board report includes a description of the principal risks that the
Company faces.
The Board
Sir Lucian Grainge
Vincent Vallejo
Sherry Lansing
Anna Jones
Antoine Fiévet
Bill Ackman
Cathia Lawson-Hall
Hilversum, March 30, 2023
Cyrille Bolloré
James Mitchell
Luc van Os
Manning Doherty
Margaret Frerejean-Taittinger
Nicole Avant
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BOARD REPORT
SHAREHOLDER INFORMATION
SHAREHOLDER INFORMATION
SHARE CAPITAL
The authorized share capital of the Company amounts to €27,000,000,000 and
is 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 from
one onwards.
As at December 31, 2022, the issued share capital of the Company amounted
to €18,135,127,420 and was divided into 1,813,512,742 Shares, the Company held
214,235 Shares in treasury and no depositary receipts for Shares were issued
with the cooperation of the Company.
All Shares rank
pari passu
with each other. There are no restrictions on the
transferability of the Shares under Dutch law or the Articles nor, as far as the
Company 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 a
capital interest (and/or voting rights) in the Company as a result of which their
percentage 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 the
thresholds due to a change in the issued share capital of (and/or voting rights
in) the Company.
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SHAREHOLDER INFORMATION
According to the AFM register, the following Shareholders have notified the AFM
of their capital interest in the Company as at December 31, 2022:
Shareholder Notification date Capital interest
FMR LLC November 11, 2022 3.02%
W.A. Ackman November 1, 2022 10.27%
1
V. Bolloré
2
September 22, 2021 18.01%
3
Vivendi SE
2
September 22, 2021 10.03%
Concerto Partners LLC
2
September 22, 2021 20%
4
1 Held via PS VII Master L.P. (This percentage is based on notifications reflected in the AFM’s Executive and
Non-Executive Directors register rather than in the AFM’s Substantial Shareholdings register.)
2 On September 22, 2021, each of V. Bolloré, Vivendi SE and Concerto Partners LLC has notified a percentage of
voting rights in the Company of 48.03% based on a voting agreement included in the Relationship Agreement.
3 Held via Bolloré Participations SE, Omnium Bolloré, Financière V, Sofibol, Compagnie de l’Odet, Bolloré SE and
Compagnie de Cornouaille.
4 Held via Scherzo Investment B.V. and Concerto Investment B.V.
It is possible that the stated percentages of capital interest differ from the actual
percentages of capital interest as the Shareholders may only be required to
notify the AFM in the event that their percentage of capital interest reaches,
exceeds or falls below one of the thresholds.
In the Relationship Agreement, the parties have agreed to, among others,
consult with one another prior to each General Meeting in order to form and
exercise, to the extent possible, a common view and vote in respect of the
various items related to the subjects included in and the obligations of the
parties under the Relationship Agreement concerning the right of the Tencent-
led consortium to designate up to two Non-Executive Directors for appointment
by the General Meeting as set out in the Corporate governance section under
‘The Board––Appointment and term of appointment’ and the dividend policy as
set out below under ‘Dividend Policy’. Accordingly, the parties are considered
to have concluded a voting agreement and are therefore required to aggregate
their voting rights in the Company as set out in note 2 to the table above.
Change of control
The Company’s facilities agreement (potentially) entitles each bank to claim
early repayment of the amounts borrowed by it to the Company in the event of
a change of control over the Company (as defined in the facilities agreement).
In addition, the final terms of the 3.00% senior notes due June 30, 2027 as well
as the final terms of the 3.75% senior notes due June 30, 2032 each entitle a
holder of a note to require the Company to redeem or, at the Company’s option,
purchase such note at such note’s nominal amount together with (an 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).
2022 UMG Global Equity Plan
On 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 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 the Company as at May 12, 2022 and, to the
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SHAREHOLDER INFORMATION
extent necessary, the exclusion of the statutory pre-emptive right with respect
to such Shares or rights to subscribe for Shares. The actual number of Shares 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 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, where
appropriate, 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 and
its 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 distribution
is allowed. The Company may only make distributions to the extent the
shareholders’ equity of the Company exceeds the sum of the issued and called-
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, the Company intends to, on
an annual basis, pay dividends to all Shareholders, on a
pro rata
basis in two
semi-annual instalments, in the aggregate amount of no less than 50% of 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 of
intangible 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 to
derivative financial instruments, (j) income or reversal related to share-
based compensation, (k) net profits related to non-consolidated companies
consolidated under the equity method and (l) net profits related to
minority interests.
The Company intends to pay an interim dividend in the fourth quarter of each
financial 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.
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On June 8, 2022, the Company paid a final dividend of €0.20 per Share, bringing
the total dividend for the financial year 2021 to €0.40 per Share.
On October 28, 2022, the Company paid an interim dividend of €0.24 per Share,
and the Board now proposes that on June 6, 2023, the Company pay a final
dividend of €0.27 per Share, such proposal to be approved at the annual General
Meeting to be held on May 11, 2023. If approved, this would bring the total
dividend for the financial year 2022 to €0.51 per Share.
Capital events
Credit ratings
On May 31, 2022, the Company announced that it had been assigned a Baa1
long-term credit rating and a Prime-2 short-term credit rating with stable
outlook by Moody's, as well as a BBB long-term credit rating and an A-2 short-
term credit rating with stable outlook by S&P.
Euro Medium Term Note program
On June 30, 2022, the Company issued €500million of 3.00% senior notes due
June 30, 2027 as well as €500million of 3.75% senior notes due June 30, 2032
under its Euro Medium Term Note program. The notes are admitted to trading
on Euronext Amsterdam. The proceeds have been used for the refinancing of
indebtedness and payment of transaction fees and expenses.
Negotiable European Commercial Paper program
On June 30, 2022, the Company set up its 1billion Euro Negotiable European
Commercial Paper program. The Company uses this financing for general
corporate purposes.
Investor Relations
UMG is committed to maintaining an open and constructive dialogue with the
Shareholders. UMG aims to keep the Shareholders updated by informing them
clearly, accurately and in a timely manner about its strategy, performance
and other matters and developments that could be relevant to their
investment decisions.
Shares
On September 21, 2021, the Shares were admitted to listing and trading on
Euronext Amsterdam (ticker symbol UMG). The Shares are included in a number
of indices, including the AEX, which index reflects the twenty-five largest and
most actively traded companies on Euronext Amsterdam in terms of free float
market capitalization. At year-end 2022, the share price was €22.51 and the
market capitalization was €40.8billion. The average daily trading volume in 2022
was €38.7million or 1.8million Shares.
Share price information
2022
Market capitalization at year-end (€billion) 40.8
Lowest closing price (October 11, 2022, €) 17.25
Highest closing price (April 14, 2022, €) 24.89
Closing price year-end (€) 22.51
Total shareholder return (7.4%)
Average daily trading volume on Euronext (shares) 1.8million
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January 2022 April
July
December
30
25
20
15
10
5
0
Per share data 2022
Dividend (€): 0.24 interim + 0.27 proposed final 0.51
Reported EPS (€) 0.43
Adjusted EPS (€) 0.80
Contact
Further information on UMG is available from the Investor Relations
department, which can be reached by telephone: +31 35 799 4200 or
by email: [email protected]. Further shareholder information
is available on the investor relations part of the UMG website:
https://investors.universalmusic.com.
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RISK 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 geographies
and 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 multi-
faceted growth strategies.
The Company’s risk management is designed to provide reasonable assurance
that strategic and operational objectives are met, legal requirements are
complied with, and the integrity of the Company’s financial reporting and
related disclosures is safeguarded. However, there can be no absolute
assurance 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 of
risk, ranging from averse to a seeking approach. We believe we must operate
within the dynamics of the music industry and take risks needed to ensure
we continually revitalize our offerings for our artists and the way we work.
At the same time, UMG attaches prime importance to integrity, sustainability
and compliance with laws and regulations. Risk appetite for the four main risk
categories is visualized below.
UMG does not classify these risks in order of importance.
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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 our
business practices at entity wide and functional levels.
For the organization of risk management and internal control systems, we
have adopted a ‘Three lines of defense’ model (see chart below) to provide
reasonable assurance that risks to achieving important objectives are identified
and mitigated. To enhance and coordinate risk assurance across the company,
a Governance, Risk and Compliance working group has been established in
2022 that meets on a periodic basis to review and monitor UMG's risk and
control environment.
Monitoring and Assurance
A key element of our ICF is monitoring and assurance. The Company uses a
comprehensive 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 a
periodic basis to both the Corporate Financial Reporting Group (quarterly) and
the Controls Assurance Function (semi-annually). Summarized, these letters
confirm 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 been
reported and that the necessary remedial action has been undertaken to ensure
that 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 the
system of risk management and internal control.
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RISK AND RISK MANAGEMENT
The ICF is being monitored by the second line of defense Controls Assurance
function through controls testing 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 and
internal control systems in the Company. Built on the basis of the existing
risk and controls mechanisms in place prior to the separation from Vivendi
S.A., management has continued to upgrade its systems, including computer
hardware infrastructure, adding additional financial and management controls,
reporting systems and procedures and hire additional accounting, finance,
internal control, internal audit and information technology staff. Management
will continue to make further improvements in 2023, which will be aimed at,
amongst other things:
• Driving business ownership of risks and controls
• Optimizing the level of monitoring of the risk and control systems
• Maturing the enterprise risk management program
• Optimizing the IT general controls framework
• Continue improving the quality and in particular the level of 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 set the right tone, lead by example, and ensure that all of our
actions and decisions 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 by protecting
human rights.
2. SETTING THE RIGHT TONE FOR OUR COMPANY by properly disclosing or
avoiding any conflicts of interests and monitoring the receipt of gifts.
3. SETTING THE RIGHT TONE IN THE MARKETPLACE by following laws and
regulations related to bribery and corruption; marketing and advertising; fair
purchase practices and international trade regulations.
4. SETTING THE RIGHT TONE IN OUR COMMUNITIES by protecting the environment
and contributing to our communities.
The Code of Conduct provides all employees a road map of how to make ethical
choices and how to comply with our legal and regulatory obligations. Most
importantly, it provides guidance on when and where to seek guidance or to
report a potential compliance breach. All UMG employees are trained on the
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Code of Conduct 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.
Our compliance obligations are overseen by our Compliance department as
well as our Control Assurance department, Internal Audit department and
our Finance department. An internal control framework, including policies,
procedures and financial discipline underpins our risk management. The
Control Assurance department regularly conduct independent testing, whereas
the Internal Audit department has integrated reviewing and objective and
critical audits. Both departments ensure that UMG controls are followed and are
sufficient to provide an appropriate control landscape.
Corruption and Bribery
UMG is committed to complying with all applicable laws in each of the
countries in which we operate, including compliance with laws relating to
anti-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 to
legal 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 and
bribery is covered not only in its Code of Conduct but also in its global stand-
alone anti-corruption and lobbying policy, which applies globally to all of UMG’s
employees 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 guidance
on 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 anti-
corruption and bribery, including dedicated reporting channels for conflicts of
interest and gifts/hospitality, in addition to the option to use UMG’s dedicated
whistleblower reporting line or by making direct reports to supervisors, the
General 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 anti-
corruption 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 circumstances
of the potential violation. In 2022, no reports were received related to bribery or
corruption and there were no known instances of bribery or corruption.
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RISK AND RISK MANAGEMENT
Fraud Risk
The Company maintains a global fraud risk register that summarizes risks
and compensating measures. The global fraud risk assessment is an annual
process and was performed in the latter half of 2022.
The Company’s stance with regard to integrity is clearly outlined in its
Code of Conduct, as also explained in this Risk Management chapter. Any
incidents of fraud and theft within the Company will be promptly investigated,
reported and, where appropriate, lead to disciplinary actions (from warnings to
immediate terminations). In addition, we carry out in-depth investigations of
(possible) fraud cases, which may lead to an intermediate update of the fraud
risk assessment.
Whistleblowing Policy and Reporting
UMG’s Code of Conduct and our standalone Whistleblowing Policy (which
can also be found in the investor relations section of UMG’s public website:
https://investors.universalmusic.com/governance) provide numerous options for
employees to seek guidance and report potential breaches of the Code of
Conduct, including contacting the company’s Chief Compliance Officer or
General Counsel directly. Additionally, UMG provides a global reporting line,
through a third-party provider. The global compliance and ethics hotline is
available 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 be
made anonymously in those jurisdictions which permit anonymous reporting.
The whistleblower hotline is available not only to UMG employees but third
parties as well. Reports are maintained as confidentially as possible (or fully
confidentially as may be required by law) and are investigated. In 2022, there
were no substantiated reports of significant financial reporting, accounting,
fraud or ethical (including human rights) violations.
Additionally, the Compliance Department maintains and monitors email boxes
dedicated to reporting potential conflicts of interest.
Prohibition Against Retaliation
In order to encourage reporting of potential breaches of the Code of Conduct
or other company policies, we prohibit retaliation of any kind against anyone
who makes a complaint or report of a potential violation of law or policy in good
faith. 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 number
of risks. UMG believes that the risk factors as set out below, are the key risks and
uncertainties concerning the Group’s business and industry, and that, alone
or in combination with other events or circumstances, could have a material
adverse effect on the Group’s business, results and financial position.
In making this selection, the Group has considered circumstances such as
the probability of the risk materializing on the basis of the current state 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 that
management would, on the basis of current expectations, have to devote to
these risks if they were to materialize.
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RISK AND RISK MANAGEMENT
While the Group believes that the risks and uncertainties described below are
the key material risks and uncertainties concerning the Group’s business and
industry, they are not the only risks and uncertainties relating to the Group.
Other risks, events, facts or circumstances not presently known to the Group,
or that the Group currently deems to be immaterial could, individually or
cumulatively, prove to be important and may have a significant negative impact
on the Group’s business, results and financial position. The risk factors below
have been divided into categories; however, some risk factors appear in more
than one category.
Risk Likelihood Impact
Challenge 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 Moderate Moderate
Digital service provider dependency Moderate Moderate
Competition in evolving markets High Moderate
Inability to timely adapt to trends and developments in the markets in which UMG operates Moderate Low
Piracy and content protection High High
Challenge to attract and retain internal talent Moderate Moderate
Impact of COVID-19 Moderate Low
Cybersecurity High High
Changes in global economic and financial conditions High Moderate
Geopolitical Instability High Moderate
Dependency on information technology systems Moderate Moderate
Access to and cost of financing Low Low
Currency fluctuations Moderate Low
Changes in tax laws Moderate Moderate
Loss of intellectual property rights Low High
Data protection compliance Moderate High
Governmental and regulatory challenges High Moderate
Changes in laws and regulations; legal proceedings Moderate High
For each of the risks set out below, the Group has indicated examples of the
programs, processes and controls which are designed to help manage and
mitigate the risks. These risk responses are designed to manage risks towards,
and should be read in conjunction with, the Risk Appetite as described above.
It is however possible that these initiatives may not be successful in limiting
fully or partly the occurrence and impact of the risks on the Group’s business,
results and financial position.
Strategic Risks
Challenge to attract, sign and retain successful artists and/or absence of
superstar 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 and
songwriters or by the absence of superstar releases.
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The industry in which UMG operates is highly competitive, influenced by
consumer preferences and rapidly evolving. UMG’s competitive position is
dependent on identifying, attracting, signing and retaining recording artists
and songwriters who are or will become commercially successful, who have
long-term potential, whose music is well received, whose subsequent music is
demanded by consumers and whose music will continue to generate sales as
part of its catalog for years to come.
UMG faces competition from traditional music industry players as well as new
entrants, including investment funds whose investment thesis includes making
acquisitions of collections of musical compositions, or “catalog acquisitions”.
UMG is also dependent on signing and retaining songwriters who are capable of
writing 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 attract
and develop such recording artists and songwriters whose work can achieve
a 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 other
external 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 to
signing, retaining and developing artists, the returns on these activities are
influenced by a number of factors, including factors outside of the control
of 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 with
expectations, this may negatively impact UMG’s results and financial position.
UMG’s competitors may become more successful at signing, marketing and
promoting recording artists, for example if UMG’s competitors increase the
amounts 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 and
financial 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 from
competitors as a result of technological developments modifying the nature of
UMG’s competition.
In addition, changing business practices, particularly due to the emergence
of new technologies and access to a global network of consumers, has and
could further result in artists choosing to make content available to consumers
directly without being affiliated with a label or an intermediary, or could result
in 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 of
labels 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,
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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 and
results of operations.
If UMG is unable to remain competitive as a result of technological
developments, this could have a material adverse effect on UMG’s business,
results and financial position.
Risk response
With regard to the development of recording artists and songwriters, UMG
believes that traditional, high-touch, full-service label deals with its portfolio
of 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 major
label, including a comprehensive approach to content creation, organic
artist development, timing, marketing, promotion, financial investment, and
forward planning.
UMG is pioneering partnerships with new platforms, continuing the decades-
long fight for copyright protections all around the world while combatting
piracy in its many forms and creating commercial environments for artists in
countries 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 and
producers. 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 in
marketing and in promoting artists globally, enables UMG to consistently lead
the 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, to
generate revenue in any given year.
Decline in streaming revenue and/or subscription adoption.
UMG’s business may be adversely affected should streaming and subscription
adoption or revenue fail to grow or grow less rapidly than UMG anticipates.
Revenues from subscription music services are important. In 2022, UMG
generated €5,321million of revenue from subscription music services and ad-
supported streaming, as compared to €4,481million in 2021.
Consumption formats in the music industry are susceptible to technological
advancements and changing consumer preferences around how music is
accessed, as illustrated in recent years by the global decline in revenue
derived from downloads and CD sales. These, and other factors, may in
the future negatively impact subscription and ad-supported streaming, for
example where newer formats become more popular with consumers. The
uses of technology are constantly evolving, and it may not be possible to
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foresee the ways in which technology could be used to disrupt, the music
industry, for example through the use of artificial inteligence and non-fungible
tokens. Additionally, technology around streaming manipulation, fraud and
hacking is becoming increasingly refined and subscription streaming services
are particularly vulnerable which could undermine consumer confidence and
cause revenue loss.
If UMG’s subscription or streaming revenue fails to grow, grows less rapidly than
it has over the past several years or declines, UMG’s recorded music business
may 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 and
subscription partners to develop existing and create new revenue streams and
help develop new regional and local streaming and subscription partners. UMG
plays an active role in promoting the continued development of new digital
services and consumer offerings in order to support a competitive, healthy
and increasingly global market. UMG has agreements with several hundred
global and local digital service providers around the world, establishing legal
consumption of music in markets with high levels of piracy that previously
didn’t have legitimate commercial outlets, including the high-growth countries
Brazil, India, China, Latin America, Africa, the Middle East, Eastern Europe and
Southeast Asia. These partnerships have made music more accessible to fans
around 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 business
models around the world, has resulted in an expanded market for music
consumption and monetization, benefiting artists, fans, platform partners and
music companies.
Digital service provider dependency.
UMG relies on digital service providers for the online distribution and marketing
of its music on the basis of contractual terms that are subject to change.
UMG derives an increasing portion of its revenues from the distribution of music
through digital distribution channels and partners with several hundred music
services around the world. In 2022, the top 50 music services accounted for 96%
of UMG’s recorded music digital revenue. In 2022, 71% of UMG’s recorded music
revenue was derived from digital channels.
UMG currently enters into relatively short-term agreements with digital music
streaming 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 the
basis for calculation of those rates, may change as a result of changes in the
industry or changes in the law, or for other reasons. Decreases in rates or
changes to other terms of agreements with digital music streaming services
could adversely impact UMG’s business, prospects, financial condition and
results 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 the
music 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 is
because UMG’s artist content is a key driver of customer acquisition for all of
these platforms. UMG’s world-renowned catalog, which is continuously growing
through UMG’s proven ability to develop and break new artists, makes UMG
an important customer acquisition partner for platforms. The introduction of
new products, services and revenue streams across segments spanning voice,
fitness, social media, gaming, live streaming, brand partnerships, startups 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-term
value of its music by expanding the licensing partners with which UMG
works and diversifying its revenue streams by partnering with an increasing
array of new businesses that benefit from the use of music content to
engage consumers.
The success of these initiatives relies on adequate third-party support
and requires UMG to accurately forecast and keep up with technological
developments 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 of
operations and cash flows could be adversely affected.
Risk response
UMG is a key promotor of innovation across the digital ecosystem through
partnerships 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 spanning
voice, fitness, social media gaming, live streaming, brand partnerships, start-
ups and other categories.
UMG’s strategy includes efforts to grow revenues from new digital platforms,
including fitness and video games, and through business arrangements with
non-traditional partners, including social media platforms.
In 2022, UMG expanded and enhanced its landmark commercial partnership
with Meta, reached agreement with Twitch to foster the creation of artist and
label channels, and announced a global strategic partnership with Songclip.
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UMG continued to lead the industry in crafting new licensing models for
integrating music within the thriving health and fitness category, entering into
new deals with partners such as Music Health for its Vera app, Y7 Studio
and SATS.
Inability to timely adapt to trends and developments in the markets in which
UMG operates.
UMG operates in many jurisdictions around the world and therefore is subject
to a variety of trends, developments and limitations in those jurisdictions, which
could affect it adversely.
UMG has offices engaged in recorded music, music publishing, merchandising
and audiovisual content in more than 60 territories around the world. UMG’s
local presences have become increasingly important as the popularity of music
originating from a country’s own language and culture is very significant, and
more countries around the world have developed legitimate business models
to monetize music. In addition, UMG’s business model is increasingly focused
on developing business in new high-growth music markets. For example, in
2022, we strengthened our global presence through new activities, acquisitions,
label launches and key partnerships in India, Greater China, Malaysia, Thailand,
Vietnam, The Philippines and across Africa. However, if UMG’s music does 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 line with expectations. Additionally, UMG may not
be successful in identifying and signing 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 the Group currently conducts, or may in the
future conduct, its businesses, the Group’s operations, growth strategy and
development may be negatively impacted as a result of less developed digital,
internet and mobile network infrastructure. The Group’s success, particularly
streaming revenues, depend on the continued development and use of internet
by consumers to access music 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, the Group’s growth
strategy could be adversely affected.
Further, depending on the customs and norms in various markets, UMG’s
presence in and generation of revenues from other countries may require UMG
to accept longer accounts receivable settlement cycles and may subject UMG to
difficulties in collecting its accounts receivables.
Risk response
UMG is committed to shaping culture through artistry and is responsive to
the needs and ambitions of local talent. UMG’s expansion strategy in markets
around the world is already bearing fruit. In 2022, 62% of UMG’s physical
& digital recorded music revenues came from local repertoires in their own
countries. Prior to entering a new market, UMG teams carefully identify areas
of risk and develop a business case and strategic plan, which are presented
to and approved by the UMG Executive Management Board and the UMG
Investment Committee.
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Piracy and content protection.
Piracy continues to adversely impact UMG’s business and content protection is
a key focus of UMG’s business.
Technological advances and the conversion of music into digital formats have
made 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’s
music 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 is
hard to quantify, but UMG believes that illegal file sharing and other forms
of unauthorized activity, including stream manipulation, have a substantial
negative impact on music revenues. If UMG is not successful in its content
protection efforts as discussed below, its business, results of operations,
financial condition and prospects may suffer.
Risk response
UMG invests significant resources in combatting the many forms of piracy
of its music including through litigation, lobbying and interdiction. UMG also
encourages its digital partners to support UMG’s content protection efforts by
taking direct action against unauthorized activity on their platforms.
Operational risks
Challenge to attract and retain internal talent.
UMG’s ability to operate effectively could be impaired if it fails to attract and
retain 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 their
established personal connections and relationships in the music industry are
important to the Group’s operations. UMG competes with other music and
entertainment companies, record labels, digital service providers, technology
companies and other companies for top talent, including executive officers and
other key personnel.
If the Group were to unexpectedly lose a member of the Group’s key
management, its business activities, results of operations, financial position
and prospects could be materially and adversely affected.
Risk response
UMG is an established brand with both an attractive name and business
reputation in the talent market. UMG has taken proactive and preventative
measures to retain talent as UMG adapts to the ‘Future of Work.’
UMG has added more offerings geared towards equitable professional
development across UMG’s diverse employee community. These include
tailored programming and resources, such as renowned guest instructors, and
executive coaches to prepare employees for the next level of their career at
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UMG. The initiatives are geared towards incentivizing early and mid-career
employee retention, which are the groups most susceptible to risk.
UMG established an Equity Plan, designed to align senior employees with
the long-term growth results of the business. The intention of the plan is to
strengthen retention, motivation, and long term behavior.
Impact of COVID-19.
UMG’s results of operations, cash flows and financial condition have been and
may continue to be adversely impacted by the COVID-19 pandemic.
Certain of the measures taken by national and regional governments, including,
stay-at-home orders and limitations on indoor and outdoor gatherings have
negatively affected UMG’s business. For example, the extended pause over
live concert tours adversely impacted UMG’s sale of tour merchandise which
resulted in a decline in revenue from UMG’s merchandising business in
2020. UMG’s merchandising segment relies on vendors outside of the United
States and therefore, faces risks inherent in purchasing from foreign suppliers,
including the COVID-19 pandemic on the supply chain.
The limitations on live concert touring have also adversely impacted music
publishing performance revenues. The stay-at-home orders also resulted in
the cessation of or significant delay in the production of motion pictures
and television programs, which negatively affected licensing revenue in UMG’s
recorded music business and synchronization revenue in its music publishing
business. It has been widely reported that early in the COVID-19 pandemic,
advertisers temporarily reduced their advertising spend. This resulted in a
corresponding initial decline in ad-supported streaming revenue in UMG’s
recorded music business and, to a lesser extent, recorded music licensing
revenue and music publishing synchronization, performance and mechanical
ad-supported streaming revenue. UMG’s physical sales rely in part on
distribution and retailing of CDs or vinyl through major retail chains and local
shops. Shop closures and stay-at-home orders negatively affected physical
sales of music through major retail chains and local shops, and any future
measures, whether globally or in specific countries, may continue to have a
negative effect on these sales channels.
Notwithstanding recent developments with respect to vaccines for COVID-19,
given the global scale, severity and duration of the COVID-19 pandemic, its
trajectory is difficult to predict. The COVID-19 pandemic is expected to continue
to materially and adversely affect the global economy, creating risk around the
timing and collectability of UMG’s accounts receivable and possibly leading
to a decline in consumer discretionary spending which, in turn, could have
a negative impact on UMG’s results of operations, cash flows and financial
position. Stay-at-home and shelter-in-place orders, business closures, travel
restrictions, supply chain disruptions, employee illness or quarantines, and
other extended periods of interruption to its business have resulted and could
continue to result in disruptions to UMG’s operations. Any worsening of the
COVID-19 pandemic, ineffectiveness of the vaccination efforts or the spread of
any new variants of the coronavirus could result in additional material adverse
impact on its business, financial condition, results of operations and prospects.
Risk response
UMG’s touring and retail merchandise sales were significantly impacted during
the COVID-19 pandemic. UMG was able to offset the negative impact of the
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COVID-19 pandemic with a significant increase in subscription and streaming
revenues and UMG eCommerce business. In 2022, UMG benefited from the
return of live income and touring related merchandising revenues (as many
markets removed restrictions) in addition to the continued growth in other
segments of the business.
In the event that the COVID-19 pandemic and its related effects continue on
an extended basis globally, UMG would continue to look for ways to evolve and
develop its business in an effort to offset the associated negative effects and
avoid a material negative impact to its business.
Cybersecurity
Cyberattacks are an ever-present risk that, could adversely impact UMG’s data
and operations.
UMG may be subject to cyberattacks, including phishing, malware, and
ransomware. While no such attack has had a material adverse effect on its
business in the past, there can be no assurance with regard to potential future
attacks and UMG’s systems may be vulnerable to damage from such attacks.
In addition, UMG collects and processes personal information about its
customers and potential customers, employees, artists and vendors. UMG
also maintains sensitive confidential business information of itself and, in
some cases, counterparties. It holds content covered intellectual property
rights including rights in music recordings and compositions, and further
including not-yet-released music. UMG relies on both its computer systems
and those of service providers for its operations and to manage these kinds
of data. No computer system is immune from attacks or other incidents,
and UMG’s system may be vulnerable to, or may have suffered unknown,
security breaches by computer hackers and others that attempt to penetrate
or otherwise defeat the security measures that it has in place. A compromise of
its security systems that results in the loss or exposure of personal information,
confidential information, or content including not-yet-released music and that
compromises the integrity of UMG’s information, causes UMG’s systems to
operate in a way that UMG does not intend, or affects the availability of
such systems or information for use, may lead to operational disruptions and
significant expenditures to address the incident. In addition, any vulnerabilities
found in UMG’s systems, 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 may
also lead to 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 security controls to protect our assets, systems,
and employees from malicious cyberattacks and actors. These layers include
broad deployment of advanced authentication controls including multi-factor
authentication, deprecation of privileged service accounts, active network and
system monitoring, centralized logging, and incident response and business
continuity planning.
Our Global Security Office (GSO) has created an Insider Threat program to
continually review and refine gathered data on internal activity. The program
identifies, tracks, and mitigates suspicious internal activity including attempts
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to exfiltrate data. If an incident is detected UMG deploys a robust cross-
functional security incident response team (SIRT) involving members of its
security, technology, legal, communications, and risk teams to holistically
address the technical and non-technical risks of a security incident.
UMG conducts regular security training including regular phishing training
of all employees and a blend of online and in-person training covering
general security as well as application and developer security. It has
implemented additional non-technical measures including cyber insurance
policies, security incident simulations, and audits to mitigate the risks of an
adverse cybersecurity event.
Changes in global economic and financial conditions
A decrease in global economic growth, an extended recession, sustained high
inflation rates or other periods of declining economic conditions, either globally
or in any of the markets in which UMG operates, could adversely affect UMG’s
results from operations, cash flows and financial conditions.
A significant portion of UMG’s revenue relies on consumers spending
discretionary funds on leisure activities, such as music subscriptions, CDs,
vinyl albums and artist merchandise. The state of the economy, inflation,
deflation, political uncertainty, the availability of consumer credit, taxation,
unemployment, and the impact of the COVID-19 pandemic are all factors
that can influence the prevailing macroeconomic conditions and affect UMG’s
business. Economic growth and consumer confidence are important for UMG’s
growth and strategy.
Since early 2022, a number of countries, including most major economies in
Europe and North America, have reported high inflation. Concurrently, central
banks in such countries have raised or discussed the possibility of raising
interest rates in order to fight such inflation. Such increases in interest rates
may reduce growth or result in a global or regional recession. Further market
volatility may occur as inflation continues to rise and markets respond to the
interest rate increases and the cessation of quantitative easing programmes by
major central banks. Each of these events may negatively impact discretionary
funds available to consumers for leisure activities, and as a result may
negatively impact UMG’s revenues.
Risk response
UMG benefits from a diverse set of growth drivers, such as DSP penetration
growth, social media platforms, health/fitness applications, gaming, and Audio
Video. Thus making UMG less dependent on one particular growth driver.
Furthermore, music consumption is relatively cheap compared to other forms of
media entertainment, generally DSP providers make all content available, thus
not requiring multiple subscriptions. In the past music consumption proved to
be resilient in macro-economic downturns and so far we have not seen any
material impact from the global economic downturn on UMG results (despite
lower ad-funded streaming income growth as the advertising industry was
impacted by the difficult economic environment).
Geopolitical instability
UMG’s results of operations, cash flows and financial condition may be
adversely impacted by trends, developments and other events in other
countries.Unfavorable conditions can depress revenues in any given market
and prompt promotional or other actions that adversely affect our margins.
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In February 2022, Russia military forces invaded Ukraine and significant
international sanctions against Russia were triggered.
As a response to Russia's actions in Ukraine there has been an unprecedented
expansion of sanction programs by the U.S., the UK, the EU, Japan and Canada to
name but a few. (i) Blocking sanctions and removal from the "SWIFT" (worldwide
Interbank payment system) applied against State Owned and Private Russian
Financial Institutions. (ii) Blocking sanctions against Russian & Belarusian
Individuals with government connections, and politicians. (iii) Blocking Russia's
foreign currency reserves, expansion of sectorial sanctions, access to capital
markets, export and trade restrictions and bans on Russian Imports.
The situation continues to evolve and the U.S., the UK, and the EU and
other countries may implement additional sanctions against Russia and
Belarus. Such additional sanctions and measures in conjunction with those
pre-existing could further adversely affect the global economy which could
potentially increase UMG's costs and reduce the amount of disposable income
available to UMG's customers and therefore could adversely affect UMG's results
from operations.
Risk response
On
8 March 2022, UMG announced the suspension of operations and the closing
of its offices in Russia, effective immediately. Revenues and EBITDA in Russia
and Ukraine in 2021 were not material to UMG’s revenues and therefore this
suspension only had a minimal impact on the Company.However, the extent
and duration of the military action, sanctions and resulting market disruptions
could potentially have substantial impact on the global economy.
Music consumption proved to be resilient in macro-economic downturns in the
past and so far UMG has not experiencedany material impact arising from the
effect of the sanctions, consequently any extension of sanctions is perceived as
having a minimal impact on UMG's result from operations.
Dependency on information technology systems.
UMG’s operations are dependent on its information technology and information
systems, and any disruption to the Group’s IT system or failures in the Group’s
IT systems could adversely impact the Group’s operations.
The integrity, reliability and operational performance of UMG’s information
technology (IT) infrastructure and technology network are critical to its
operations. UMG relies upon the capacity, reliability, and security of its IT
hardware and software infrastructure and its ability to expand and update this
infrastructure in response to changing needs.
Certain elements of the IT systems infrastructure on which UMG depends are
outsourced to third parties. The services and functions provided by these third
parties are critical to the Group’s business and include (but are not limited to)
storage, data processing and network.
The availability of UMG’s IT platforms and other services may be interrupted by
damage or disruption to the Group’s or the Group’s third-party service providers’
IT systems, which may be caused by, for example hardware or software defects,
human error, unauthorized access, fire, power loss, natural hazards, the impact
of war and terrorism, disasters or similarly disruptive events, as well as planned
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upgrades and improvements which may be subject to developmental delay or
fail to be effective.
While UMG has in place business continuity procedures, there can be no
assurance that these will be fully successful in preventing all disruptions to
the availability of UMG’s IT platforms or other services. To the extent the Group
outsources its business continuity or disaster recovery operations, it is at risk
of the vendor’s unresponsiveness in the event of breakdowns in the Group’s
systems, which could cause delays in recovering service.
Furthermore, performance issues, system interruptions or other failures in the
Group’s IT systems could expose the Group to potential liability to pay damages
as well as reputational harm, additional operating expenses to remediate the
IT failures and exposure to other losses or other liabilities, all of which could
have a material adverse effect on the Group’s business, financial condition and
results of operations.
Risk response
UMG maintains what it considers to be an appropriate level of insurance against
some of these risks. UMG’s insurance coverage may not cover all of the costs
and liabilities it incurs as the result of any such interruptions or failures of its
IT systems, and if its business continuity and/or disaster recovery plans do not
effectively and timely resolve issues resulting from a disruption UMG may suffer
material 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 the
Group’s capacity 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 €2billion confirmed syndicated financing package
(RCF) which provides the necessary funds to cover the Group’s financial
requirements. A €1billion term loan was repaid by UMG following the successful
Issuance of 2 bonds rated BBB/Baa1 for a total amount of €1billion. UMG average
debt maturity is 4 years.
Currency fluctuations
Unfavorable currency exchange rate fluctuations could adversely affect UMG’s
results of operations.
A significant portion of UMG’s assets, liabilities, revenues and costs are
denominated 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 then-
applicable exchange rates. Consequently, increases and decreases in the value
of 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 in
their original currency. These translations could result in significant changes
to its results of operations from period to period. In addition, exchange rate
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fluctuations could cause expenses to increase as a percentage of net sales,
affecting profitability and cash flows.
Risk response
From time to time, UMG enters into foreign exchange contracts to hedge the risk
of unfavorable foreign currency exchange rate movements. UMG seeks to hedge
currency transaction risks by offsetting opposing cash flows (natural hedging)
and using derivative hedges.
Changes in tax laws
Changes in tax laws or challenges to the Group’s tax position could adversely
affect the Group’s results of operations and financial condition.
Given the international footprint of the Group’s operations globally, the Group
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
the application, administration or interpretation of any applicable tax laws or
regulations, could subject the Group to additional or increased tax payments,
and in turn have a material adverse effect on the Group’s business, financial
condition and results of operations. If the Group’s tax positions are challenged
by tax authorities, the potential imposition of additional or increased taxes
could require the Group to pay taxes that the Group currently does not collect or
pay or increase the costs of the Group’s services to track and collect such taxes,
which could in turn increase the Group’s costs of operations or the Group’s
effective tax rate and have a negative effect on the Group’s business, financial
condition and results of operations
Moreover, any change in the tax law, such as an increase of tax rate or a change
in determination of tax basis, could have a material adverse impact. Given the
international nature of the Group’s operations, the Group may be particularly
impacted by changes to regulations relating to transfer pricing and withholding
taxes on the repatriation of funds.
Risk response
The Tax Policy supervised and approved by the Audit Committee states that
UMG has a very low tolerance to tax risk. The application of this guidance
alleviates the potential adverse impact of any change either in the application,
administration or interpretation by tax administration or tax courts. Moreover, as
position taken either for transactions, compliance and accounting purposes are
conservative any change in tax rates or tax basis might be mitigated.
Therefore, the Group’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
with requirements enacted by supra-national organizations, such as OECD and
the European Union. These procedures are 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 finance teams are in charge of establishing,
maintaining and overseeing these policies. The aim is to file all the required
tax-relevant returns with the appropriate Tax Authorities in a correct, timely
and complete manner. To ensure this happens, (tax) compliance & reporting
processes are monitored through the Tax Risk and Control Framework which
sets out the controls established to assess and monitor tax risk for direct and
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indirect taxes (e.g., corporate income tax, transfer pricing, VAT, wage tax and
tax accounting).
The Group Tax Department monitors proposed changes in taxation legislation
and ensures these are taken into account when considering the operations
and compliance. For this purpose, the Group Tax Department employs qualified
tax professionals who follow carefully any change in tax law or tax regulations,
with the assistance of qualified and reputable external advisors with requisite
qualifications and reputation.
Laws and regulations
Loss of intellectual property rights
The success of UMG’s business depends on its ability to obtain, maintain,
protect and enforce its trademarks, copyrights and other intellectual property
rights around the world.
UMG’s intellectual property rights, as well as its ability to enforce its intellectual
property rights depend on the laws and regulations of the many jurisdictions 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 the
claim 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 the
potential reputational damage, it could be forced to pay monetary damages, to
obtain a license, or to cease using certain intellectual property or technologies.
Additionally, artists signed by UMG may seek to challenge and dispute the
scope or term of intellectual property rights under their contracts entered
into with UMG, including potential disputes as to the application and effect of
technological developments and new formats to access music.
Any of the foregoing may cause UMG to suffer economic loss and reputational
damage, which would adversely affect UMG’s business, results of operations,
financial condition and prospects.
Risk response
In order to obtain, maintain, protect and enforce its intellectual property
rights, UMG takes a variety of measures, including maintaining a staff
of senior intellectual property and litigation lawyers, engaging lawyers in
different jurisdictions covering different fields of law and if necessary,
conducting litigation or proceedings before courts, governmental authorities or
administrative bodies.
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Data Protection Compliance
UMG’s business is subject to a variety of European, U.S. and other
supranational and domestic laws, rules, policies and other obligations regarding
data protection.
UMG is subject to laws, regulations, rules, and other obligations governing data
protection in jurisdictions around the world. These laws impose restrictions on
the way UMG and its counterparties may collect, use, retain, secure, disclose,
and transfer data. These laws may shape, for example, how UMG engages in
eCommerce transactions or other transactions with consumers; how it operates
its online properties; how UMG engages in direct and behavioral advertising,
email marketing, mobile marketing, and social media activities; and UMG’s
internal operations in areas such as employment and how it transfers data
among its subsidiaries. Further, UMG makes statements about its use and
disclosure of data through its privacy policies, information on its websites and
press statements. UMG may also have contractual obligations regarding the use
of data with its counterparties.
Data protection compliance is the subject of intense media, political, and
regulatory scrutiny. Several jurisdictions in which UMG is active have
recently passed laws in these areas, and other jurisdictions are considering
imposing additional restrictions. These laws, and the ways in which authorities
interpret and enforce them, continue to develop and may be inconsistent
from jurisdiction to jurisdiction. Complying with emerging and changing
requirements may cause UMG to incur substantial costs, change its
business practices, modify its product and service offerings, and forego other
business opportunities.
For example, UMG is subject to extensive European regulations on privacy,
information security and data protection, the main and most relevant of
which relate to the collection, protection and use of personal and business
data, including Regulation (EU) 2016/679 on the protection of natural persons
with regard to the processing of personal data and on the free movement of
such data (the General Data Protection Regulation - the “GDPR”), the Directive
2002/58/EC of the European Parliament and of the Council of July 12, 2002
concerning the processing of personal data and the protection of privacy
in the electronic communications sector (Directive on privacy and electronic
communications), the UK GDPR (the retained EU law version of the GDPR) and
the United Kingdom’s Data Protection Act 2018, and national laws implementing
each of them.
The GDPR, which has applied since May 25, 2018, is directly applicable in all
member states of the European Economic Area (the “Member States”). The
GDPR has increased both the number, and restrictive nature, of the obligations
binding on UMG for the collection, storage and processing of personal data. In
particular, the GDPR establishes a tiered approach to penalties for breach, which
enables the relevant authorities to impose fines for some infringements of up to
€20million, or 4% of annual worldwide turnover.
In the United States, UMG is subject to overlapping federal and state laws
governing privacy, data protection and security. For example, state data breach
notification laws or consumer protection laws generally mandate the rules
that must be followed in the event of the unauthorized disclosure of personal
information. One of the most significant state privacy laws, the California
Consumer Privacy Act, as amended by the California Privacy Rights Act,
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establishes actionable rights for stipulated parties relating to data handled by
covered entities such as UMG, as well as obligations on covered entities relating
to privacy disclosures, data handling, and more. Other states including Virginia,
Colorado, Utah, and Connecticut have implemented laws generally similar to the
CCPA. UMG is also subject to regulatory authorities, such as the Federal Trade
Commission (“FTC”), and self-regulatory requirements, such as the Payment
Card Industry Data Security Standard (“PCI DSS”) and Swift Customer Security
Programme (“Swift CSP”). The FTC is authorized to enforce prohibitions on “unfair
or deceptive acts or practices,” to include a company’s violations of its own
privacy policies or commitments, or security or privacy practices that the FTC
deems fundamentally “unfair”. The PCI DSS are a set of payment-related data
security requirements the violation of which can result in fines or restrictions
on the ability to process transactions. Generally distinct from state privacy laws,
some state laws also impose separate requirements regarding the handling of
payment card information.
Additionally, any perceived or actual failure by UMG, including its third-party
service providers, to protect confidential data or any material noncompliance
with data protection laws could cause customers to lose trust in UMG, reduce
UMG’s ability to attract and retain customers, artists and other business
relationships and counterparties and result in litigation or other actions 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 turn have an adverse impact on UMG’s
business, prospects, financial condition and results of operations.
Noncompliance, or even allegations of noncompliance, with these laws or
UMG’s public statements or contracts in these areas, could lead government
entities, supervisory authorities or private actors to institute investigations
into or proceedings against UMG. These investigations or proceedings may
entail legal costs and reputational harm, and if defense of such proceedings
is unsuccessful even in part, UMG may face significant penalties, liability, or
ongoing monitoring or audit requirements.
Risk response
UMG maintains a comprehensive data protection compliance program and
personnel dedicated to managing data protection risk. UMG’s data protection
teams partner with legal, technology, and business personnel throughout the
organization to identify and mitigate data protection compliance risks.
Recent data protection compliance initiatives include updates or improvements
to privacy disclosures, policies and procedures, data subject rights
processes, employee training, data governance, cross-border data transfer
agreements, supplier contract terms, internal audit procedures, and incident
response processes.
To manage increasing complexity, UMG strives to streamline compliance
through a global approach to data protection. This approach improves the
efficiency of compliance efforts and reflects the global 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 by
government entities or by local third-party collecting societies throughout
the world and rates on other income streams may be set by governmental
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proceedings or be subject to legislative intervention, which may limit
its profitability.
Mechanical royalties and performance royalties (on both physical and digital
sales) are two of the main sources of income for UMG’s music publishing
business, accounting for under 14% of UMG’s revenue in 2022, and mechanical
royalties are an expense for its recorded music business, representing 0.7% of
UMG’s revenue in 2022. In the United States, compulsory mechanical royalty
rates are set every five years pursuant to an administrative process under the
U.S. Copyright Act, unless rates are determined through industry negotiations,
and performance royalty rates are determined by negotiations by performing
rights organizations, which in the U.S. include American Society of Composers,
Authors and Publishers (ASCAP), Broadcast Music, Inc. (BMI) and the Society of
European Stage Authors and Composers (SESAC). 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 an
industry-wide basis (or for multi-territorial online licensing, on a repertoire-
specific basis but still necessarily in partnership with collecting societies as
rights holders) and may be subject to mandatory collecting regimes. In most
territories outside the United States, mechanical royalties are based on a
percentage of wholesale prices for physical products and based on a percentage
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 the
United 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 not
limited 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 legally
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prescribed rate-setting processes are set at levels which are not favorable or
economically viable for UMG, this could have an adverse impact on its business,
prospects, financial condition and results of operations.
Risk response
The diversified nature of UMG’s business between types of sources of income
and geographies mitigates the impact to UMG in case any individual country
were to implement laws that could adversely affect the income that flows
to UMG.
The rate setting process by the Copyright Royalty Board (CRB) in the United States
was recently concluded to fix mechanical royalty rates for the next five years,
and the result was the most favorable to the Music Publishing community ever.
Changes in laws and regulations
Changes in laws and regulations, including those relating to intellectual
property rights, and lawsuits that UMG is already, or which it could become
involved, may have an adverse effect on UMG’s business.
UMG’s business is subject to a variety of laws and regulations in jurisdictions
around the world, including those relating to intellectual property, content
regulation, consumer protection, antitrust and competition, among others. In
addition, various governments currently have under consideration, and may
in the future adopt, new laws, regulations and policies regarding a wide
variety of matters that could directly or indirectly affect UMG’s business 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 in significant respects, and the enforcement
of such laws can be inconsistent and unpredictable. This could impact UMG’s
ability to operate its business in various jurisdictions and undertake activities
that UMG believes is beneficial to its business. For example:
• The European Union (EU) adopted the Directive on Copyright in the Digital
Single Market (the Copyright Directive) in 2019 to modernize EU copyright
rules. 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 enactment
of 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, other
Member States are considering (and, in the case of Germany, Austria and
Belgium, have implemented) legislation that differs significantly from the
Copyright Directive in letter and spirit – and which would not only undo the
benefit 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 are
still in the process of transposing the Copyright Directive into domestic
legislation. It therefore remains unclear how Article 17 of the Copyright
Directive will be applied in the different Member States.
UMG could also be adversely affected by changes in interpretation of existing
laws by courts and regulators. For example, a bill had been introduced in
California that would amend California Labor Code Section 2855 (Section 2855)
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such that UMG’s ability to recover damages from certain artists that fail to
deliver on their contractually promised recordings after more than seven years
may be hindered. While that proposed legislation did not become law, similar
measures could be introduced in the future. Similarly changes in the area of
copyright law, in particular, could directly or indirectly affect UMG’s operations,
the ownership of UMG’s content assets or UMG’s ability to maintain, protect 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 February 5, 2019, a purported class action
lawsuit was filed against UMG Recordings, Inc. on behalf of a putative class
of all recording artists who had requested the termination of purported grants
of U.S. copyrights to UMG pursuant to Section 203 of the U.S. Copyright Act; on
May 13, 2021, individual and putative class action claims were filed against
UMG Recordings, Inc. in the U.S. District Court for the Central District of
California for breach of contract and fraud; and on January 4, 2023, individual
and putative class action claims were filed against UMG Recordings, Inc. for
breach of contract, breach of the duty of good faith and fair dealing, and
unjust enrichment.
Litigation and proceedings before courts or governmental authorities, whether
or not UMG is involved in such proceedings, may serve as precedents that could
adversely affect UMG’s operations, ownership of content assets or intellectual
property rights. UMG could incur substantial costs to comply with new or
modified laws and regulations or substantial penalties or other liabilities
if it fails to comply. UMG could also be required by such laws to change
or limit certain of its business practices, which could impact its ability to
generate revenues.
Any of the foregoing may adversely impact UMG’s business, prospects,
financial condition and results of operations. See Note 25 “Litigation” in the
Notes 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 relevant
laws and changes in laws, and the company also works through lobbying (both
directly 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 and
disputes. 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, to
help build good precedents and avoid bad ones.
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BOARD REPORT
NON-FINANCIAL INFORMATION
ENVIRONMENT
SOCIAL
GOVERNANCE
ADVANCING CLIMATE ACTION ACROSS THE INDUSTRY
EMPOWERING OUR PEOPLE AND COMMUNITIES THROUGH CULTURE AND
CREATIVITY
DRIVING ACCOUNTABILITY, TRANSPARENCY, AND RISK MANAGEMENT THROUGH
RESPONSIBLE GOVERNANCE
NON-FINANCIAL PERFORMANCE
ESG Strategy
AT UMG, WE ARE COMMITTED TO SUSTAINABILITY NOT
ONLY IN OUR BUSINESS AND ACROSS OUR INDUSTRY, BUT
ALSO IN CHANNELING THE COLLECTIVE PASSION AND
COMMITMENT OF OUR EMPLOYEES, ARTISTS, AND FANS
TO PROTECT THE PLANET AND CREATE AN EQUITABLE
FUTURE FOR GENERATIONS TO COME.
Our environment, social, and governance (ESG) approach is anchored in data
integrity and transparency, with a focus on the issues of material importance to
our stakeholders. Our dedicated ESG function integrates sustainability across
the company by executing a comprehensive ESG management system,
convening cross-functional working groups, leading sustainability education
and engagement efforts, and supporting independent action.
Our ESG framework is organized into three core areas underpinning our current
initiatives and reporting efforts:
NON-FINANCIAL INFORMATION
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NON-FINANCIAL INFORMATION
Key 2022 Accomplishments and 2023 Priorities
UMG’s evolving ESG strategy resonates with current social and environmental
issues, keeping pace with industry best practice and societal expectations
around sustainability and inclusion. In 2022, we invested time and resources
into expanding our internal ESG activities and building out the infrastructure
to support robust company-wide engagement. We focused on fine-tuning
our strategic framework and management system in an effort to strengthen
our commitments and assure concordance with prevailing ESG disclosure
frameworks. Key accomplishments included:
• Materiality Assessment: We updated our ESG Materiality Assessment to
align our impact areas, resources, and KPIs with stakeholder expectations,
our enterprise risk management processes, and the strategic positioning of
our business.
• Task Force on Climate Related Financial Disclosures (TCFD) Adoption &
Scenario Analysis: We conducted our first TCFD Scenario Analysis to provide
a qualitative review of potential climate-related risks, inform strategic
planning, and enhance our transparency with respect to climate risk
disclosures. Due to the nature of our business, the analysis revealed that
there are no climate-related risks resulting in High or Critical impact to
UMG’s operations across the evaluated scenarios and time horizons (see our
TCFD disclosure).
• Greenhouse Gas (GHG) Management Plan: We expanded our GHG reporting
efforts to account for physical supply chain impacts and completed a
comprehensive GHG Inventory in preparation for our science-based target
validation in 2023.
• Strategy Execution: We continued to mobilize sustainability working
groups across different business functions and execute programming to
operationalize our commitments.
• Supplier Engagement: We continued to engage with our physical and
digital supply chain partners to obtain ESG data and develop collaborative
industry partnerships.
• Task Force for Meaningful Change (TFMC) Impact Report: We released our
first TFMC Global Impact Report – highlighting the Task Force’s key initiatives
in the ongoing fight for equality, justice, and inclusion.
Our progress in 2022 was driven by our commitment to rigorous measurement
and reporting. In a time when society’s expectations of companies
have never been higher, we strive to communicate openly and honestly
about our sustainability performance and align our efforts with leading
international frameworks.
UMG’s 2022 reporting complies with the Non-Financial Reporting Directive
(NFRD) and EU Taxonomy requirements. Our work aligns with various
frameworks and standards, including TCFD, Global Reporting Initiative (GRI),
Sustainability Accounting Standards Board (SASB), and Carbon Disclosure Project
(CDP). Additionally, we map our initiatives to the United Nations Sustainable
Development Goals (UN SDGs).
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NON-FINANCIAL INFORMATION
As we look ahead to the coming year, we will continue to strengthen our
non-financial public disclosure process. We have an opportunity – and a
responsibility – to leverage the power of music to drive meaningful change, and
we will remain steadfast in our mission to amplify the issues that matter most
to our people, artists, and fans. Key commitments include:
• Transition from the NFRD to the Corporate Sustainability Reporting Directive
(CSRD): We will begin implementation of the European Union’s CSRD.
• Science-Based Target Validation: We will submit our science-based target to
the Science Based Targets initiative (SBTi) for validation.
• Environmental and Working Group Policies: We will roll out a global
environmental policy and build a sustainability charter and supporting
policies for each of our working groups to provide a formalized framework
for future objectives and actions.
• Supply Chain Survey: We will embed policies and practices around GHG
management, energy use, and human rights into the procurement process
alongside a formalized sustainability survey.
• Music Industry Climate Collective (MICC): We will collaborate with our peers
via the new MICC to develop a standardized methodology for measuring GHG
emissions across the industry.
Home to groundbreaking talent and a future-minded workforce, we will persist
on our journey to become a more environmentally sustainable, inclusive, and
ethical company.
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NON-FINANCIAL INFORMATION
MAIN MATERIAL TOPICS
2022 Materiality Assessment
Approach
In 2022, UMG conducted a comprehensive ESG Materiality Assessment to
identify our most significant environmental, social, and governance topics. The
exercise refreshed findings from our 2018 Risk & Materiality Assessment and
will serve to inform ongoing developments to our ESG strategy, KPIs, and goals.
We engaged third-party experts to support the assessment’s stakeholder
engagement efforts and ensure an objective approach to measurement and
analysis activities. Guided by the Global Reporting Initiative (GRI) methodology
and industry best practice, the exercise was conducted via a four-step process:
1. Topic Identification: We drafted a comprehensive list of ESG topics to
evaluate, informed by international reporting standards, desktop research,
and an internal review. Topics were mapped to ESG reporting frameworks
and ratings criteria.
2. Topic Prioritization: We prioritized and streamlined the topics based
on interviews with UMG management and research, including peer
benchmarking, media analysis, and investor requests.
3. Material Topic Validation: We validated our material topic list via a
series of stakeholder workshops, including interviews with 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
◦ Universal Music Publishing Group
4. ESG Strategy Integration: We synthesized, consolidated, and internally
socialized the results of the Materiality Assessment to inform our ESG
activities and reporting efforts moving forward.
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NON-FINANCIAL INFORMATION
Materiality Matrix
Topics were evaluated based on their importance to business, referring to risks
and opportunities for business performance, as well as their importance to
stakeholders, referring to expectations and interests of business stakeholders.
Potential impacts of each topic were considered across the broader economy,
environment, and society at large.
Out of our initial list of 53 topics, we identified 7 topics of the highest
importance, considered UMG’s most material topics. These include one
environmental topic, three social topics, and three governance topics – as
illustrated in our Materiality Matrix.
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NON-FINANCIAL INFORMATION
Material Topics
Material Topic Description
Environmental Topic Greenhouse Gas (GHG) Emissions
Given the potential for regulatory disclosure and oversight in Europe and the U.S., the
management of our Scope 1, 2, and 3 GHG emissions is critical for ensuring environmental
compliance, managing our reputational risks, and identifying innovation opportunities.
This topic impacts our direct operations as well as stakeholders across our value chain,
particularly suppliers who contribute to our Scope 3 footprint.
Social Topics Attraction and Retention of Artists
Artists are at the core of UMG’s business. Our traditional full-service A&R approach,
portfolio of world-renowned labels, diversity of genres, and robust content and copyright
protection measures will continue to drive long-term value for our artists and increase
their commercial success, consumer base, and longevity potential. However, increasing
compensation and emerging shorter-term deal structures may impact our long-term
assessments. This topic impacts our direct operations as well as stakeholders across our
value chain, especially our artists, fans, and the creative community. This topic is also
considered in the Risk and Risk Management section of this report.
Attraction and Retention of Employees
UMG is powered by the talents of our people. The management and advancement
of employee wellbeing, development, compensation and benefits, and engagement
strengthen our workforce by attracting and retaining top talent at all levels. This topic
impacts our direct operations as well as stakeholders across our value chain, particularly
our employee base as well as the communities in which we operate. This topic is also
considered in the Risk and Risk Management section of this report.
Diversity, Equity and Inclusion
Cultivating work environments that are welcoming, inclusive, free of discrimination, and
promote a diversity of perspectives and backgrounds increases our resilience as a
company as well as the creativity behind our products and services. This topic impacts
our direct operations as well as stakeholders across our value chain and is closely tied to
the attraction and retention of artists and employees.
Governance Topics Privacy and Cybersecurity
UMG’s business is subject to a variety of European, U.S., and other supranational and
domestic laws, rules, and policies regarding privacy and cybersecurity. The protection
of sensitive, confidential, and proprietary company and customer data is essential
for upholding stakeholder trust, managing regulatory requirements, and maintaining
competitive advantages. This topic impacts our direct operations as well as stakeholders
across our value chain, particularly our Privacy and Global Security teams and third-party
technology providers. This topic is also considered in the Risk and Risk Management
section of this report.
Piracy and Content Protection
Security of content against piracy or theft is a key focus of our business. New forms 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 more efficiently 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.
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NON-FINANCIAL INFORMATION
The table below illustrates changes to our material topic list resulting from the
2022 Assessment.
Category 2022 Material Topic List 2021 Material Topic List
Environmental GHG Emissions Environmental Intensity of Activities
Social Attraction and Retention of Artists Attraction and Retention of Artists
Attraction and Retention of Employees Attraction and Retention of Employees
Diversity, Equity, and Inclusion
Governance Privacy and Cybersecurity Privacy and Data Security
Piracy and Content Protection Responsible Content
Supply Chain Management
Reporting on Material Topics
Our 2022 ESG Materiality Assessment surfaced the topics most material to
UMG, as defined by our stakeholders, subject matter experts, and business
operations leads. Our coordinated non-financial reporting system, overseen
by UMG’s central ESG department and powered by a network of contributors
representing the territories in which we operate, serves to measure the impacts
of and evaluate UMG’s approach to managing our most material topics. The
subsequent sections of this report highlight UMG’s guiding ambitions within
each topic area and describe the effectiveness of actions linked to our
strategic commitments.
As we open 2023, UMG will begin to incorporate the requirements of the
EU’s CSRD, including a double materiality assessment inclusive of impact and
financial materiality aspects.
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NON-FINANCIAL INFORMATION
ESG COMMITMENTS
UMG is committed to advancing climate action across the recorded music
industry. Our efforts to combat climate change start with rigorous measurement
and reporting systems, which in turn allow us to set targets, measure progress,
and ensure continuous improvement of our environmental performance across
our value chain.
This year, in collaboration with our leaders and employees worldwide, we
deepened our commitment to study and report on our impact, conducting the
most comprehensive analysis of GHG emissions for any major recorded music
company to date.
This undertaking was not without its challenges and imperfections, one being
the lack of established definitions and standards within our sector. In some
cases, given the uniqueness of our products, we developed our own criteria
under the guidance of our experts. From here, we aim to develop a meaningful
carbon reduction and removal program in 2023.
Scope Category
2022 GHG
Emissions (tCO
2
e)
% of Total GHG
Emissions
(market-based)
Scope 1 2,404 1%
Scope 2 (location-based) 8,721 -
Scope 2 (market-based) 6,633 2%
Scope 3 349,753 97%
Purchased goods and services 249,293 69%
Capital goods 2,641 1%
Fuel- and energy-related activities 3,821 1%
Upstream transportation and distribution 43,678 12%
Waste generated in operations 388 <1%
Business travel 35,457 10%
Employee commuting 11,511 3%
End-of-life treatment of sold products 2,964 1%
In addition to measuring and mitigating our environmental impact, we are
committed to using our influence to accelerate environmental solutions and
raise public awareness about climate issues. We empower our employees to
create sustainable change from within, support our artists in speaking up about
climate issues, and strive to communicate openly and honestly with music
lovers around the world about the environmental impacts of the recorded
music industry.
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NON-FINANCIAL INFORMATION
Managing Our Footprint
GHG EMISSIONS MEASUREMENT & REPORTING
Our GHG inventory is calculated in line with the GHG Protocol Corporate
Accounting and Reporting Standard and includes Scope 1, 2, and 3 emissions.
This year, we expanded our Scope 3 inventory to include a comprehensive
analysis of our most relevant emissions sources. The analysis was completed
for four years, beginning with the last full pre-pandemic year (2019) in order to
establish our baseline and allow for meaningful comparisons over time.
In addition to enhancing our Scope 3 reporting efforts, we developed a
comprehensive GHG Management Plan in preparation for our science-based
target validation. Our GHG Management Plan provides a framework by which
we will measure the performance and effectiveness of our climate-related risk
management efforts in the near- and long-terms.
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NON-FINANCIAL INFORMATION
Science-Based Targets
The Science Based Targets initiative (SBTi) calls on companies to establish
low-carbon pathways in alignment with the goals of the Paris Agreement
- to limit the rise in global temperatures to below 1.5°C by 2100. UMG
has committed to submitting a carbon reduction target for SBTi validation
in 2023.
UMG will continue to prioritize environmental data collection and quality
assurance efforts – both as a business and as a part of the entertainment
industry. In particular, we are committed to working with our peers to better
understand the environmental impact of our products and the recorded
music lifecycle, using quantifiable data to inform responsibility allocations and
reduction measures as the music distribution landscape evolves.
GHG EMISSIONS REDUCTION
As we continue to refine our measurement processes, we will remain steadfast
on our journey to mitigate emissions – both within our direct operations and
across our value chain.
To reduce our Scope 1 and 2 footprint, UMG prioritizes the procurement of
renewable energy for our offices and facilities.
To support Scope 3 emissions mitigation, our Travel Task Force has developed a
series of sustainability programs to increase personal agency and awareness
across our employee base. UMG’s newtravelbooking platform enables
employees to view the carbon impacts of their airfare, hotel, and car hire options
during the booking process – helping them understand how their business
travel affects UMG’s environmental footprint while encouraging the selection of
low-carbon travel options.
‘
ACROSS OUR GLOBAL PORTFOLIO, 46% OF OUR DIRECT OPERATIONS (BY M
2
AREA) ARE
POWERED BY ELECTRICITY FROM RENEWABLE SOURCES, INCLUDING OUR SANTA
MONICA HEADQUARTERS AND STUDIOS, OUR LONDON HEADQUARTERS, AND ABBEY
ROAD STUDIOS.’
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NON-FINANCIAL INFORMATION
Regional Spotlight: Universal Music UK (UM UK)
UMG businesses around the globe are doing their part to reduce the
GHG footprint of company operations, and we consider local initiatives
to be important markers from which we will continue to build our
priorities. In 2022, UM UK implemented a number of carbon reduction
programs, including:
• Business Travel Reduction: 2022 travel budgets were set at 60% of 2019
budgets to decrease emissions associated with business travel.
• Green Facilities: Our 4 Pancras Square building in London, a certified
BREEAM Outstanding building, continued to serve as the region’s
primary office. 2022 operations at this location and at Abbey Road
Studios were powered by 100% renewable electricity.
• Shipment Optimization: Physical product parcels were consolidated
with stock from multiple labels to reduce the shipping footprint from
warehouse to retail.
• Low-Carbon Commuting: Biking to the office was encouraged through
a “Cycle to Work” campaign, which featured information about plotting
safe bike routes and accessing the secure bike park and showers.
• Green Transportation: A levy was paid on employee car service
journeys to support the taxi provider’s emissions reduction plan and
zero emissions fleet commitment.
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Reimagining Our Products & Packaging
We are committed to understanding the full lifecycle impacts of our products
and packaging, and to pursuing material and design innovations that enhance
their sustainability features.
SUSTAINABLE MATERIALS
Physical products, including vinyl, CD/DVDs, and merchandise, remain a core
element of UMG’s business. UMG’s global physical operations teams, labels,
and supply chain partners work together to develop and roll out increasingly
sustainable physical audio offerings for artists and their fans including recycled
vinyl, board-based CD packages, plastic overwrap alternatives, and plant-based
closure stickers.
In 2022, we saw Bravado, our global merchandising arm, expand its partnerships
with numerous upcycling organizations to create a sustainable apparel
catalog for artist campaigns. The catalog features clothing made with recycled
materials, certified organic cotton, and direct-to-garment printing. Bravado also
continues to offer sustainable merchandise across its retail footprint. Its London
flagship store, RS No. 9 Carnaby, incorporates recycled and organic fibers into
50% of all new products.
In addition to sustainable apparel initiatives, Bravado remains committed to a
front-line eco-packaging program. Bravado’s direct-to-consumer products are
currently packaged using compostable bags, cartons made from recyclable
paper, and 100% recycled-content mailers.
Artist Collaborations
Bravado, in collaboration with Billie Eilish, Lorde, the 1975, and Shawn
Mendes, released a series of sustainable merchandise collections to raise
awareness about climate action. Utilizing materials ranging from 100%
reclaimed cotton waste to organic and recycled fiber blends, collection
campaigns feature educational components around sustainable apparel
as well as opportunities for fans to upcycle their unwanted garments.
PRODUCT LIFECYCLE
In tandem with our sustainable material initiatives, UMG implements circular
processes and manufacturing innovations to reduce the waste footprint of our
physical products.
On a global level, we are committed to diverting 100% of physical music scrap
from landfills and have established partnerships with Debrand to support the
reuse, repurposing, and recycling of vinyl and optical discs. With a focus
on the customer-use and end-of-life phases of the product lifecycle, UMG
Australia is currently engaging with the Australian Recording Industry (ARIA)
‘
OVER 600,000 UNITS OF BILLIE EILISH'S "HAPPIER THAN EVER" WERE PRODUCED ON
RECYCLED VINYL. IN ADDITION, WE PRODUCED NEARLY 10MILLION UNITS
INCORPORATING AT LEAST 15% RECYCLED COMPOUND AND 74% OF OUR TOP 10
INTERNATIONAL RELEASES WERE PRODUCED ON 140G INSTEAD OF THE HEAVIER 180G
VINYL DISCS.’
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Board to highlight the need for a collective recycling initiative across all music
companies and media disc retailers.
To reduce the waste footprint of UMG merchandise, in 2022 Bravado adopted
a policy allowing photo approvals for most product sampling, eliminating the
need to ship samples. This serves to reduce excess physical waste from the
manufacturing process as well as carbon emissions associated with sample
transportation. The integration of Print-On-Demand (POD) systems, through
which products are printed as they are ordered, also mitigates manufacturing
waste. Additionally, Bravado has fostered multi-year partnerships with textile
recycling organizations across the globe.
Driving Industry Transformation
INDUSTRY LEADERSHIP
UMG’s commitment to combat the climate crisis is anchored by strong external
partnerships and peer collaboration. As a founding member of the new Music
Industry Climate Collective (MICC), in 2023 we will work with Sony Music and
Warner Music to develop GHG Sectoral Guidance that will serve as the industry
standard for Scope 3 emissions reporting.
Our collaboration with MICC is an evolution of our continued participation
in the Music Climate Pact, an industry collaborative aiming to transform the
global recorded music industry by reducing emissions across our value chains,
empowering employees to create meaningful change from within, supporting
artists in speaking up about climate issues, and communicating openly and
honestly with music lovers around the world about our environmental impacts.
Billie Eilish x Overheated
We support our artists as they advocate for environmental causes
and promote awareness of the climate crisis to their fans. In 2022,
UMG’s Mercury Live served as the streaming partner for Billie Eilish’s
Overheated conference – a landmark multi-day event focused on climate
change. The conference featured a diverse lineup of young activists and
prominent speakers from the world of science, energy, fashion, music,
and technology.
‘SINCE 2019, BRAVADO’S TEXTILE RECYCLING PARTNERS HAVE DIVERTED OVER 320,000
POUNDS OF PRODUCT FROM THE LANDFILL VIA FIBER RECLAMATION AND MATERIAL-
SPECIFIC RECYCLING.’
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EMPLOYEE ENGAGEMENT
While UMG’s dedicated ESG function oversees our sustainability policies and
reporting efforts, employee-led Green Teams play an important role in driving
environmental awareness, supporting artist advocacy, and implementing
both internal and external initiatives. This year’s regional Green Team
activities included:
• Eco-Anxiety Roadmap: To coincide withEarth Day, the U.S. Green Team
partnered with The Mental Health Coalition (MHC) to launch a new mental
health roadmap focused on climate change, eco-anxiety, and climate
justice.The Roadmap to Climate Change Mental Health was designed to help
the public navigate mental health issues that may be triggered or worsened
by eco-anxiety and climate trauma.
• Go Green Challenge: The U.S. Green Team organized its first annual Earth
Month Go Green Challenge. Employees were encouraged to adopt a series
of actions to reduce their daily carbon footprints, and their impacts
were tracked via an online leaderboard. For every action completed,UMG
purchased a one tonne carbon offsetfrom a verified project of the
employee’s choice.
• Green Week Programming: UM UK’s Team Green celebrated Earth Month by
organizing Green Week, featuring sessions on sustainable merchandise, the
environmental impact of NFTs, and UMG’s response to the climate crisis.
Programming included a guided bird walk as well as educational content
from the UM UK café, which offers vegan menu options and loyalty points for
the use of reusable cups.
Across UMG’s global footprint, 2022 saw the launch of a coordinated community
garden initiative. The U.S. Green Team partnered with Goodr and Captain Planet
to create the UMeCommunityLearningGarden at a local elementary school
in Los Angeles, serving as a space for students to engage in inquiry-driven,
project-based learning while deepening their understanding of how natural
systems work. Gardens were also established in the UK, France, Australia, and
New Zealand. In 2023, the project is expected to expand to additional territories,
including Brazil, India, Italy, the Netherlands, and South Africa, among others.
‘
UMG U.S. EMPLOYEES TOOK OVER 3,000 GO GREEN CHALLENGE ACTIONS AND
SUPPORTED A PORTFOLIO OF VERIFIED CARBON OFFSET PROJECTS TO AMPLIFY THEIR
REDUCTIONS.’
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ESG COMMITMENTS
UMG is committed to empowering our people and communities through culture
and creativity. This focus extends to our employees, our artists, and the diverse
communities we reach.
Through dedicated task forces, recruiting initiatives, and employee development
programs, UMG is focused on establishing workplaces where diversity is valued.
Understanding the collective power of our audience, we also strive to cultivate
relationships with artists who share our values and empower them to use their
influence to inspire positive change. We believe in supporting ambitious, multi-
faceted creative content that promotes all cultures and perspectives. Through
the very nature of our business, we strive to leverage the power of culture and
creativity to build more open, equitable societies.
‘UMG DERIVES ITS STRENGTH AS
A COMPANY FROM OUR PEOPLE – AND
IN TURN, THE PASSIONATE AND
INNOVATIVE EXCELLENCE OF OUR
WORKFORCE FEEDS THE SUCCESS
OF OUR ARTISTS AND SONGWRITERS.
LOOKING AHEAD, WE WILL CONTINUE
TO BUILD ON OUR STRENGTHS, LIFT UP
OUR COMMUNITIES, CELEBRATE OUR
DIVERSITY, AND FOSTER
THE ENTREPRENEURIAL THINKING THAT
KEEPS OUR BUSINESS THRIVING.’
ERIC HUTCHERSON, EXECUTIVE VICE PRESIDENT,
CHIEF PEOPLE AND INCLUSION OFFICER
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Empowering Our People
Our business is driven by the commitment and ingenuity of our people. Our
People, Inclusion & Culture (PIC) team supports the UMG employee experience
and ensures that the values of our company align with the values of our people.
Within PIC, specialized teams and voluntary task forces work in tandem to foster
thriving careers and maximize capability building.
We attract and retain top talent by offering competitive compensation packages
as well as additional opportunities for employees to participate in the success
that they help create.
Employee Equity Award
2022 saw UMG grant all eligible employees a one-time Equity Award of 100
shares of UMG Common Stock as a “thank you” for their efforts.
EARLY CAREER AND TALENT ACQUISITION
This year, our Talent Acquisition team focused on updating our recruitment
strategy to meet UMG’s evolving business needs.We researched and leveraged
internal and external people analytics to understand the skills and capabilities
needed for the future, and we crafted multiple iterations of our employee value
proposition to allow us to stand out in today’s hyper-competitive talent market.
In combination with a revamped go-to-market strategy, 2022 also saw our Talent
Acquisition team amplify its impact with innovative technology integrations.
Our new end-to-end recruiting management application reduces recruiting
bottlenecks, improves recruiter efficiency, promotes faster hiring, and increases
in-house sourcing. Our talent experience platform serves to automate workflows
and scale the hiring process, expand our candidate pools, and reduce bias in
the hiring process by removing geographic, time, and administrative barriers.
Bonus Tracks
Dedicated to meeting future executive talent among high school students,
UMG's Bonus Tracks after-school program includes weekly sessions
during which students learn about the basic workings of a contemporary
record label and have the opportunity to network with label executives who
share their knowledge and experiences. Bonus Tracks began in 2018 in
Los Angeles in partnership with Capitol Records, expanded to Nashville in
partnership with CCMG in 2019, expanded to New York in 2022, and plans to
bring music education to Atlanta and Detroit in 2023.
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Educating young people about our business remains a vital element of
UMG’s recruitment efforts. In 2022, we developed and implemented a range of
programs to attract and inspire the next generation of talent, including:
• Internship Pipeline: In the U.S., we hosted over 200 interns and placed
top performing graduates in full-time positions across Marketing, Creative
Content and Production, Strategic Partnerships, A&R, and Technology
functions. UMG Brazil also continued to provide internship opportunities for
teenagers from poverty-stricken areas.
• Mirri Mirri Partnership: UMG Australia continued its partnership with Mirri
Mirri, an Indigenous Cultural Awareness Organization, with plans to onboard
an indigenous Internship cohort in 2023.
• Learnership Initiative: UMG South Africa launched a mentorship program in
which 20 local youth participated in on-the-job training to learn about the
business side of the music industry. The territory also partnered with the
South African Performing Rights Association to give unemployed youth the
opportunity to receive an accredited certificate and work experience through
a formalized training program.
• New Graduate Job Boards: UMG Japan advertised job vacancies on career
sites exclusively dedicated to new graduates.
To evaluate the effectiveness of our hiring initiatives, we release a Hiring
Manager Satisfaction Survey to maintain a real-time understanding of Hiring
Manager experience with the Talent Acquisition organization, earning a
satisfaction score of 87%. New employees also receive a survey asking them
to rank their hiring experience throughout the recruitment lifecycle.
In combination with the continuous evaluation of industry trends and relevant
market intelligence, these exchanges will continue to inform the Talent
Acquisition team’s initiatives, priorities, and structure.
‘
IN 2022, UMG RECEIVED SATISFACTION SCORES OF 95% RELATED TO THE EMPLOYEE
ONBOARDING EXPERIENCE AND 90% WITH RESPECT TO EMPLOYEE ENGAGEMENT AT
THE 90-DAY MARK.’
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Hiring a Diverse Workforce
At UMG, we champion diversity, inclusion, and belonging with every hire.
2022 initiatives included:
• Inclusive Interviewing Training: We launched Inclusive Interviewing
Training as part of our People Development & Organizational
Effectiveness Open Enrollment. Our goal for 2023 is to roll the
program out to all hiring managers and certify the entire Talent
Acquisition team.
• Specialized Job Boards: We partnered with specialized job boards which
strive to fix the employment gap for talent from underrepresented
communities in the creative industry. All of our job postings integrate
our inclusion statement.
• Historically Black Colleges and Universities (HBCU) Support: We
participated in the HBCU Caucus Partnership Challenge, led by U.S.
Congresswoman Alma Adams (NC). The Challenge was created by the
Congresswoman in 2017 to strengthen public-private investments in
HBCUs in an effort to ensure their future sustainability, increase career
prospects for their students, and advance diversity and inclusion
within all sectors of employment.
• Congressional Black Caucus Workshop: We joined forces with the
Congressional Black Caucus to host the 00:30 for 30:00 Career
Development Workshop – a virtual opportunity for young Black
professionals to receive interviewing and resume building tips from
a panel of UMG recruiters and executives. Participating candidates
submitted a 30-second elevator pitch for the chance to earn a 30-
minute meeting with a UMG executive.
• Neurodiversity Training: We focused on attracting and embracing the
talents of individuals with autism, dyslexia, ADHD, and other forms
of neurocognitive variation by collaborating with partners to offer
neurodiversity training and support for new and existing employees.
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CAREER DEVELOPMENT
In addition to our expansive recruitment programs, we understand that
workforce engagement and development is critical to ensuring long-
term success.
Employee listening is how we pass the mic. Our Employee Listening Strategy
helps us match expectations with opportunities throughout the employment
lifecycle and is designed to consistently capture the individual employee voice,
effectively assess critical areas of the employee experience, and efficiently
turn insights into action. We continuously issue Lifecycle Surveys - New Hire,
90-Day New Hire, and Exit - to collect key information along the employee
journey, as well as Engagement and Pulse Surveys to measure progress against
our objectives. The survey readouts are a valuable tool that help improve our
retention efforts.
We also offer a broad range of learning opportunities to retain our top
talent, facilitate career growth, and promote a culture of care, creativity,
and innovation.
To support development from the very start of employment, all new
hires are registered to complete regionally-specific UMG training modules
and acclimation activities. These dynamic resources leverage enterprise
technologies, company policies, benefits, rewards, and inclusion awareness.
UMG Australia deploys its introductory training via a mobile app that promotes
continual improvement of the hiring process by automatically administering
new hire surveys to collect feedback at various intervals.
Following employee onboarding, our regional offices provide tailored
programming on a quarterly basis to create opportunities around soft and
technical skill building. Popular topics include “Effective Communication in the
Workplace,” “Challenging Conversions, Setting Goals,” “Careers & Connections,
Everyday Inclusion, Creating Psychological Safety,” and “Banishing Imposter
Syndrome.” Programming also includes cross-functional business acumen
workshops that provide additional opportunities for managers to increase their
knowledge and share it with peers.
Learning Management Software
This year, upskilling and reskilling took priority as UMG launched a
learning management software (LMS) in select territories. Featuring over
300 digital courses, the global software application provides a framework
for all aspects of the learning process. We intend to further scale this
technology across the company in 2023.
‘UMG EMPLOYEES DEVOTED 74,456 HOURS TO TRAINING IN 2022.’
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Cultivating leadership is another foundational element of UMG’s workforce
development approach. In 2022, key programs included:
• The Emerging Leader Program: Based on years of internal feedback,
we launched The Emerging Leader Program, a fully digital and self-
paced leadership development initiative designed to upskill individual
contributors who aspire to become leaders. The program supports career
growth by providing resources around communicating ideas, decision-
making, giving feedback, and preparing to lead a team.
• Career Development Studio: We expanded the Career Development Studio, a
self-help online portal created to encourage internal mobility. The studio
features resources, planners, and assessment tools for employees to
customize their career journeys.
• 6 Strings of Management: We continued to strengthen the 6 Strings
of Management. As our flagship leadership development program, the
initiative is designed to equip first-time people managers with frameworks
to effectively engage their teams. Participants learn how to lead inclusively,
understand their communication style, identify ways to bring out the best
in their team, and set goals and coach performance to deliver results.
In surveying the 2022 cohort, 93% said they applied their learnings, 92%
said the program improved their communication with direct reports, and
74% said they conducted “stay interviews” with their teams following
the program.
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EMPLOYEE HEALTH & WELLBEING
Health and wellbeing are central to our strategy for enhancing our appeal as an
employer, improving creativity, and motivating and retaining our employees.
Our experiential wellbeing program, The Whole You, continues to provide UMG
employees with access to quality-of-life tools, information, and activations
addressing mental, physical, and financial health - as well as community and
family needs. The program offers a variety of resources, including webinars,
panels, and self-paced learning modules.
In 2022, we launched a new partnership with a health and wellbeing
platform available to all U.S. employees and their dependents. The platform
provides diverse offerings, such as 1:1 coaching, therapy sessions, and guided
meditations. As part of the collaboration, wehosted more than a dozen sessions
over an 8-month period addressing topics ranging from “Stress & Burnout” to
“Coping with Loneliness.”
Additionally, UMG U.S. doubled its Wellbeing Allowance, a program that supports
the overall wellbeing of U.S. employees and their immediate family members by
funding a wide array of services. Employees were also given Wellbeing Day off in
October, early release on Wellbeing Fridays throughout the year, and a two-week,
company-wide Winter Break in December. We also closed U.S. offices for Election
Day to ensure that all of our employees had the time they needed to vote and
participate in the electoral process.
Across our global footprint, additional health and wellbeing initiatives included:
• Employee Assistance: UMG employees across Australia, Germany, the UK,
and the U.S. were granted access to regional Employee Assistance Programs.
• Gympass Access: UMG Brazil provided employees access to the
Gympass Platform, a complete wellness system offering therapy sessions,
parameterization and sleeping assistance, nutrition guidance, motivation,
financial resources, physical activities, and classes for children and family.
• VITALITY Benefit: UMG South Africa implemented the VITALITY program,
an additional benefit to medical insurance for 100% of permanent
employees.VITALITY tracks wellness indicators via an app and sets
customized goals for each individual.
• Mental Health Programming: UM UK provided targeted programming and
resources to honor World Mental Health Day and Mental Health Awareness
week, including therapist sessions focused on “Improving Connection and
Belonging” as well as community meet-ups and art therapy classes.
As part of our commitment to health and wellbeing, UMG provides
comprehensive family support programs, including fertility, egg freezing,
pregnancy, miscarriage, adoption, and mental health support. Our childcare and
eldercare partnerships reflect UMG’s focus on delivering best-in-class benefits.
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Family Friendly Employer
UMG Germany was awarded Top Employer 2022 for “family friendliness” by
freundin x kununu.
We also remain steadfast in our commitment to the safety of employees in
the workplace. We communicate and reinforce our Work, Health, and Safety
programs and policies, which include arrangements for first aid and emergency
procedures, key contacts to raise any work-related health and safety concerns,
and incident reporting procedures.
FUTURE OF WORK
Due to the COVID-19 pandemic, many of our employees are now fully immersed
in a hybrid working model. Through UMG’s Future of Work Strategy, we continue
to ensure that company leaders and employees have access to the necessary
tools and resources to be effective in this changing work environment.
Hybrid, mobile, and remote employees are offered furniture, lighting, and
home office supplies through a dedicated UMG purchase program, and we are
currently identifying a partner to assess and advise on proper ergonomic setup
for hybrid workers.
We have also tailored the UMG learning journey to focus on specific
communication and relationship skills to build a cohesive and productive
hybrid workforce that continues to deliver the creative results for which we are
known. We offer courses ranging from “Leading a Hybrid Team,” which prepares
managers to support their hybrid teams, to “Hybrid Working: Connection,
Collaboration & Wellbeing,” which helps employees navigate new routines in
their work weeks and the challenges of staying connected, productive, and
collaborative in a geographically dispersed workforce.
As our workplace needs continue to evolve, we understand that employee
feedback is critical in shaping our policies and priorities. In 2022, UM UK
conducted an internal survey to better understand employees’ attitudes and
feelings on a range of topics related to hybrid working, informing its approach to
workplace flexibility programs that boost creativity and collaboration. Dedicated
quiet spaces were added to the UK office footprint for neurodiverse employees,
and remote employees were given financial support to setup ergonomic
home offices.
UMG Japan also conducted a series of surveys to understand how its various
departments work remotely versus in-person, as well as issues and challenges
within current workstyles. Feedback was leveraged to introduce tools and
equipment to make hybrid working more comfortable, including the integration
of Zoom booths into regional offices.
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DIVERSITY, INCLUSION, & BELONGING
At UMG, we believe that the best way to foster an environment where original
ideas are generated and innovation can flourish is to create a workplace that
attracts and promotes people from diverse backgrounds and cultures – one that
reflects and supports the incredible diversity of our artist roster.
Through dedicated practices and engagement opportunities, we are committed
to the inclusion of all employees, with an underlying focus on creating equitable
access to resources for communities of people who are Asian and Pacific
Islander, Black, Hispanic and Latinx, Native American and Indigenous, LGBTQIA+,
and women.
UMG’s inclusion learning strategy promotes a culture of development that
is welcoming and supportive of courageous dialogue across differences.
In addition to PIC-led training and coaching sessions, UMG encourages
participation in Employee Resource Groups (ERGs): employee-led affinity
groups that aim to create a true sense of belonging through guest speakers,
expert panels, celebration of cultural events and holidays, and professional
development workshops. Groups include the UMG Women’s Network, UTOPIAA
(Asian American & Pacific Islander), Black Label (African American), Cultura
(Latinx and Hispanic), and PRISM (LGBTQIA+) with locally branded chapters across
the globe.
In 2022, UMG strengthened the connections across our global ERG footprint
with the launch of the new Global PRISM Network, a network of LGBTQIA+ ERGs
from the U.S., Canada, and Germany that convene on a regular basis to amplify
local activations during key community celebration months. The Global PRISM
Network also serves as a resource-sharing system across territories.
At the nexus of our employee development efforts and our focus on diversity,
inclusion, and belonging is our commitment to driving leadership among
women and other underrepresented groups. This commitment helps foster a
culture of belonging and boosts the capacity for the innovation on which our
business lines depend. In 2022, key programs included:
• Black Leadership Academy Experience Program: We partnered with external
expertise and launched a six-month learning journey supporting early
professionals, mid-level managers, and senior executives to accelerate the
progress of underrepresented talent.
• Management Accelerator Program: We implemented the Management
Accelerator Program for mid-career managers who are typically three to five
levels below the C-suite and aspire to take the challenging leap into senior
leadership roles. The program focuses on building core management and
leadership capabilities needed to lead successful businesses and teams.
• Leadership Essentials Program: We rolled out the Leadership Essential
Program for early careerists and individual contributors with up to seven
‘
IN 2022, WOMEN MADE UP 51% OF OUR WORKFORCE, 43% OF UMG'S MANAGERS WERE
WOMEN AND 45% OF UMG’S NON-EXECUTIVE DIRECTORS WERE WOMEN, INCLUDING
THE CHAIRMAN OF THE BOARD.’
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years of experience in the workforce who aspire to become team and people
leaders. The program sharpens core business understanding, dives into
effective day-to-day leadership and execution, examines self-leadership,
and provides a robust network of peers and experts.
• ASCEND Development Program: In partnership with our People Development
& Organizational Effectiveness team, UMG’s Task Force for Meaningful
Change (TFMC) launched ASCEND, our first differentiated development
program. The initiative provides support, development, and senior executive
exposure to Black employees at the Director and Senior Director Level.We
saw a 16% promotion rate among graduates, and in 2023 we will expand the
program to all affinity groups.
• U.M.She LEADS: In 2021, we launched our first-ever women’s executive
leadership preparation program, which was designed for rising senior
leaders looking to advance to the next stage in their career. The inaugural
2021-2022 cohort represented a diverse set of leaders from across our
record labels and business units, with participants ranging from Senior
Managers to Senior Vice Presidents. In 2022, 46% of women who participated
were promoted within a year.
• U.M.She & The Women’s Network Peer Coaching Circles: We piloted peer
coaching circles with cross functional teams at all levels. Participants
met monthly with peer mentoring circles organized by career levels
and common interests. Discussions focused on topics such as building
confidence, the power of play, and reciprocity.
• Women in A&R Program: We devised, implemented, and rolled out the
Women in A&R program to encourage women to pivot into A&R departments
at labels.
• Women in Tech Mentorship Program: We launched our Women in Tech
mentorship program, which strives to promote gender diversity in tech and
to connect talented professionals across the industry.
UMG is committed to diversity and inclusion, to creating professional growth
opportunities for our employees, and to raising the percentage of people from
underrepresented groups within top roles and throughout our company. In 2022,
we expanded our workforce representation disclosures by looking deeper into
gender, race, and ethnicity data.
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As we look ahead to 2023, we are committed to continuing the research that
helps us better understand representation within our workforce, artist roster,
and supplier portfolio
1,2
.
1
In 2022, UMG updated its turnover rate formulas to align with guidance from the Corporate
Sustainability Reporting Directive (CSRD). The global turnover rate is calculated as follows: 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. Turnover by gender was not calculated in 2021.
2
Gender categories are based on our global workforce, and race and ethnicity categories are based
on U.S. reporting requirements, as laws on collecting race and ethnicity data differ outside of
the U.S. The 2022 numbers account for 9,992 full-time employees globally and 3,565 full-time
employees in the U.S. for the race/ethnicity numbers.
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EMPLOYEE GIVING
At the center of UMG’s employee experience is a culture of care and community
service. We encourage our employees to participate in a variety of philanthropic
endeavors that benefit surrounding communities and inspire connectivity.
Donation matching remains a core element of UMG’s employee giving approach.
In the U.S., we offer a 150% super-match contribution for all qualifying
donations made by employees on #GivingTuesday.
To encourage staff volunteering, the U.S. Volunteer Time Off (VTO) Policy provides
employees with up to 16 hours paid time off to volunteer with accredited non-
profits. The VTO Policy aims to make our communities stronger by providing our
people with the opportunity to help those in need. Sharing this ambition, UM
UK’s Staff Charity Committee promotes participation in its annual Give A Day
initiative, which encourages staff to take a day off of work to volunteer for a
registered charity.
Across the globe, UMG territories also engage in a number of regionally specific
philanthropic initiatives, many of which support underprivileged women and
children in local communities. Among other endeavors, 2022 saw UM UK initiate
a food bank drive and UMG South Africa provide direct support of the Frida
Hartley shelter for women and children through employee volunteering and the
donation of critical supplies.
#MLKDayofService
Consistent with Dr. Martin Luther King, Jr.’s legacy of service, UMG U.S.
employees are encouraged to mark the King holiday by performing a
day of service. In 2022, the Universal Music All Together Now Foundation
created and issued an #MLKDayofService toolkit – highlighting volunteer
opportunities with organizations fighting for constructive change, as well
as learning resources and social media graphics to spread awareness of
the #MLKDayofService campaign.
‘IN 2022, UMG U.S. EMPLOYEES GAVE HUNDREDS OF INDIVIDUAL DONATIONS
IN SUPPORT OF ORGANIZATIONS INCLUDING WORLD CENTRAL KITCHEN AND ST. JUDE
CHILDREN’S RESEARCH HOSPITAL. U.S. EMPLOYEES ALSO VOLUNTEERED NEARLY 1,000
HOURS OF THEIR TIME TO CAUSES THEY CARED ABOUT.’
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Elevating Artists
UMG'S UNIQUE ARTIST-CENTRIC CULTURE
Once again, UMG’s unrivaled roster of artists and songwriters turned in a stellar
performance in the charts in 2022 – including both developing and established
artists, and across genres and geographies. Our artists are collectively the most
talented, visionary, and popular in music – and they have a special connection
with fans around the world.
That connection doesn’t “just happen.” It comes as a result of our unique artist-
centric culture, which drives the partnership between UMG’s labels, publisher,
and business units on one hand, and the artists and songwriters on the other.
We apply this artist-centric culture through our company’s two-fold mission.
Our first, and most difficult imperative, is to discover and break new artists
and then sustain their careers over the long run. To accomplish this goal, we
offer a supportive ecosystem that places artists at the heart of our activities.
This includes a broad spectrum of businesses – from recorded music and
music publishing to audio and visual content licensing, merchandising, live
performances, audiovisual and film production, data analysis, digital innovation,
distribution, marketing, communication advisory services, branding, and more.
Understanding that we only succeed when our artists succeed, our artists
remain at the center of everything we do throughout their careers. UMG
continues to innovate and implement front-line programs that help our artists
reach their greatest potential, both creatively and commercially. We support
artists at every stage of their development, from discovery and continuing
throughout the lifecycle of their careers.
The second part of our mission is to promote a healthy, sustainable, and
exciting music ecosystem in which our artists can thrive for years to come.
As technology continues to evolve at breakneck speed, we pursue unexplored
artist-centric avenues of creative and commercial possibilities.
Given our increasingly dynamic marketplace, Universal Music Group for Brands
(UMGB), our dedicated brand partnerships team, found new ways for artists
to connect with their fans across social platforms. By facilitating artist and
brand collaborations to create socially relevant content, we helped artists break
into new markets, reach new fans, and earn non-recorded income – a key
differentiation factor for UMG. UMGB also launched the new UMusic media
network, further benefiting artists with premium media sales from YouTube
content. Through UMGB partnerships and innovations, we continue to offset
substantial marketing costs for our artists and our labels.
As the digital business model continues to evolve, we actively advocate for
artists, other creators, and a robust music ecosystem in the public policy
sphere. An overarching theme of UMG’s advocacy is that all creators deserve
fair compensation regardless of the platform on which fans enjoy their art. We
have championed numerous legislative and government initiatives toward this
goal, including the U.S. Music Modernization Act, the EU Copyright Directive, and
the American Music Fairness Act, which has been an ongoing policy effort for
over a decade.
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Importantly, and in order to align our artists’ experience with our value
proposition, we also provide transparency in artist compensation. UMG invests
in the infrastructure and technology to maintain secure online access points
for artists and songwriters to view data on the consumption of their music
– as well as information about their royalties – at any time and from any
computer or mobile device. These systems and applications provide significant
data, including detailed royalty data, proprietary streaming and social media
reporting, and trend analysis.
ARTIST WELLBEING & SUPPORT
At UMG, music - and the artists and songwriters who create that music – are
at the center of all we do. Our commitment extends beyond supporting and
amplifying their creative vision.
Through our continued partnership with the non-profit Music Health Alliance
(MHA), nearly 300 UMG and UMPG artists, songwriters, and their families received
life-changing medical care and saved $3.7M in healthcare costs, including
reductions in medical bills, medication costs, and health insurance premiums
as well as grants and lowered deductibles/out-of-pocket maximum costs. In
addition, MHA provided 23 Mental Health Fund grants and helped coordinate
more than one hundred counseling sessions.
In 2022, UMG launched its worldwide goodwill program benefiting certain legacy
recording artists and songwriters with unrecouped balances. Under the ongoing
program, eligible creators and their immediate heirs who have not received
any payments since January 1, 2000, will begin receiving royalties, subject to
certain conditions.
Relatedly, UMG’s Royalty Artist Assistance Program continues to assist our
partners in need. The program offers featured artists in financial need
with the ability to request advances on royalty payments during times of
financial hardship.
Additional UMG initiatives address artists’ mental health and wellbeing. For
example, recognizing that the life of an artist can present unique challenges
and stressors, UM UK created a bespoke program to provide partner artists
with a confidential space to support their personal development, wellbeing, and
mental health. In addition to confidential counseling services provided by an in-
house BACP-registered counsellor with over 20 years of experience in the music
industry, the service includes referrals to other kinds of professional wellbeing
services and assistance as needed. The program supports artists at all stages of
their careers and provides a resource for UMG staff working with an artist to flag
potential concerns with a trained professional.
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Universal Music UK Artist Counseling Highlights
• Initial wellbeing check-ins to provide support and guidance to all
emerging artists, ensuring they have the right support to develop
and thrive.
• Helping artists cope with challenges that may appear as their career
evolves, including:
◦ Lack of boundaries
◦ Success and failure
◦ Online harassment and abuse
◦ Identity competition and comparison
◦ Maintaining a private and public self
◦ Rejection
◦ Sudden fame
Our artist welfare and support efforts are further bolstered by UMG’s partnership
with Help Musicians, a UK service philanthropy serving musicians at all stages
of their career through:
• Business and career advice and counseling
• Support for artists suffering from injury, illness, or other physical
health issues
• Mental health services
• Short-term financial assistance
• Help for those suffering from bullying and harassment
In 2022, UMG partnered with Help Musicians to launch the “Co-Pilot”
program, a groundbreaking musicians’ mentoring network. The Co-Pilot
initiative matches UMG employee mentors with musicians to share knowledge,
skills, and expertise. 2022 saw 32 UMG mentors actively engage with the
program, with many of the mentorship relationships continuing beyond the
program’s culmination.
Importantly, our commitment to artist wellbeing and welfare extends to non-
featured artists as well. For example, UMG’s longstanding partnership with
our partners at the American Federation of Musicians (AFM) and the Screen
Actors Guild-Association of Featured Theatrical and Recording Artists (SAG-
AFTRA) in the U.S. enables the music industry’s largest contributions to their
respective health and pension funds. These funds provide studio musicians
and background vocalists access to sustained health insurance and retirement
benefits that might otherwise be unattainable.
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DIVERSE & INCLUSIVE CONTENT
At UMG, we value diversity, inclusion, and belonging in both our operations and
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 2022 initiatives include:
• Black Story: Universal Music Recordings (UMR) launched “Black Story,” a
campaign to highlight and pay tribute to trailblazing Black UK artists.
UMR engaged talented up-and-coming Black UK-based animators to create
bespoke artistic videos celebrating the music of Gabrielle, Incognito, Ms.
Dynamite, and Soul II Soul – with more to be released in 2023.
• National Coming Out Day: In celebration of the UK’s “National Coming Out
Day 2022,” UMR released a “Pride Can’t Be Silenced” vinyl, which includes
classic songs from trailblazing LGBTQIA+ icons, artists, and allies, such as
Queen, Elton John, Spice Girls, and Kylie Minogue.
• Hear Her Voice: To mark International Women’s Day, UMR launched “Hear
Her Voice,” a six-part podcast series featuring interviews with women
from across the industry representing voices for change and celebrating
sisterhood. Hosted by broadcaster Laura Whitmore, guests included Self
Esteem, Nicola Roberts, CHVRCHES’ Lauren Mayberry, Jamz Supernova, Yola,
KT Tunstall, and Olivia Dean.
• Equalise: In addition, on International Women’s Day, our Abbey Road Studios
opened its Angel Studios to the next generation of female artists and
creatives for a free day of panel talks and masterclasses. Rachel Holmberg,
Decca’s Senior Head of A&R, joined Jo Digby, UM UK’s Head of Learning &
Development, for a discussion on all things A&R. Char Grant, 0207 Def Jam’s
A&R Director, spoke on a panel discussing recording essentials.
• Game Changers: Commissioned by the Olympics, Rebel Labs created “Game
Changers,” which went live for International Women’s Day. The six-part
mini-docuseries, presented by TikTok influencer Sherice Banton, focused on
important women in sports who have paved the way and created positive
change, all set to an empowering soundtrack by Celeste and Ellie Goulding.
• Irruk Birruk: UMG Australia launched a global distribution solution for
otherwise unavailable legacy recordings from Australian Indigenous and
Torres Strait Islander artists. Titled “Irruk Birruk” (“Yesterday” in the
language of the Yorta Yorta people), the overall aim of the project is to
ensure that Indigenous and Torres Strait Islander songs and stories are
not lost to history and that the ownership of their copyrights stays with
the creators.
• Waiata Anthems: UMG New Zealand (UMG NAZ) 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. In partnership with Dame Hinewehi Mohi, UMG NZ oversees funding
for recordings, encourages and supports industry-wide label A&R strategies
to deliver more music in te reo Māori, and manages the marketing and
promotion for the annual Waiata Athems Week and the artists participating
in the celebration with their releases.
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• Black Girls Rock: In the U.S., UMG is the sole underwriter of the Kennedy
Center for the Performing Arts’ Black Girls Rock Fest, a significant platform
to showcase the talents, vision, and innovation of female artists of color
around the world.
UMG supports and works closely with a number of institutions that recognize,
celebrate, and preserve iconic, diverse, and groundbreaking music. In the U.S.,
UMG is a supporter of the Kennedy Center for the Performing Arts and was proud
to celebrate three UMG artists recognized during the prestigious 2022 Kennedy
Center Honors Ceremony, including pioneer Motown recording artist Gladys
Knight. UMG also works closely with the National Museum of African American
Music, the only museum of its kind dedicated to preserving and celebrating the
history of Black music in America. UMG’s General Counsel and EVP of Business &
Legal Affairs, Jeff Harleston, serves as a valued member of the museum’s Board
of Directors.
Honoring diverse and inclusive content also means protecting the rights of
those who create it. After several state prosecutors in the U.S. admitted rap
lyrics as “evidence” of a defendant’s guilt in court, UMG joined with others in
the music community to push for legislation to protect the artistic freedom of
songwriters and artists by limiting the admissibility of lyrics in a criminal trial.
Our advocacy efforts were successful in the state of California and continue
federally and in other states around the country.
UMG’s creative strategy and intelligence teams directly interface with our
audiences and communities to ensure that the creative ideas for UMG labels
and artists are inclusive and reflective of society, resonating with the many
different audiences with whom our artists connect.
Preserving Musical Heritage
Recognizing music’s profound historic role in humanity, we work to help
preserve and honor our rich and diverse musical past – which provides
insights into who we are as a culture today.
For example, through our continuing partnership with the U.S. Library
of Congress, we provide historic master recordings to the Library’s
audiovisual division. Launched in 2011, when we donated the first
major collection of studio master materials to the Library (more than
200,000 historic master music recordings), we continue to contribute
samples regularly.
We also fully fund the EMI Archive Trust – one of the world’s largest
and most diverse music and technology archives. Established in 1996 to
preserve the history of EMI, its collections cover an extraordinary journey
through the history of sound, not just in the United Kingdom, but around
the world. The archive, which is currently applying for UNESCO World
Heritage status, has many original and priceless artifacts and tells the
story of British and global history, starting with the early recorded music
industry and the role that EMI (originally The Gramophone Company)
played in the emerging industry’s development and globalization, from
1897 through 1946.
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In tandem with our strategic partnerships, UMG’s vast catalogs of cultural works
are preserved and restored through the ongoing efforts of our archive team. This
year, accomplishments included:
• Audio Preservation & Restoration: More than 4,100 physical audio assets
were restored and digitized. That number encompasses a wide variety of
projects, including more than 600 tapes preserved as part of our efforts
to restore and digitize our most vulnerable audio formats.These formats
include digital multi-tracks and high-resolution analog tapes, both at risk
of physical deterioration and technical obsolescence. Other preservation
efforts included digitization work on the catalogs of artists such as the
Bee Gees, Frank Sinatra, Keyshia Cole, blink-182, George Strait, Mary J. Blige,
Counting Crows, Beck, James Brown, and David Bowie, among many others.
• Video & Film Preservation: We completed metadata entries and physical
assessments on 4,597 video assets, of which 2,022 were subsequently
digitized. An additional 700 assets were digitized as part of our efforts to
safeguard fragile video formats, including preservation of the entirety of four
formats at risk of technical obsolescence. Our film collection saw 400 reels
getting preserved due either to the urgency of their physical condition or
their historical importance. Among these reels are moving pictures of artists
such as the Beach Boys, Nine Inch Nails, Neil Diamond, John Lennon, Dr.
Dre, Frank Sinatra, George Strait, Heart, Janet Jackson, MC Hammer, Rihanna,
Reba McEntire, Snoop Dogg, The Roots, and many more.
• Image & Artwork Preservation: Our efforts in photo archival continued,
and in total we preserved 31,858 images from across our collections.
Included in these efforts were photos collected for the Beach Boys 60th
anniversary, some of which ultimately became contributions to the Beach
Boys exhibition showcased at the Morrison Hotel Gallery. A partnership with
Blue Note resulted in the acquisition of the Francis Wolff photo archive, a
massive photo collection which greatly augmented our existing archive. This
undertaking involved the transportation, digitization, and metadata tagging
of approximately 17,000 images.
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Supporting Our Communities
CORPORATE PHILANTHROPY
UMG believes in the power of music to inspire action. Using the collective
strength of our community – including everyone from employees to artists and
songwriters to fans – UMG supports organizations around the globe that are
making strides to address social 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 three core areas:
1. Education
2. Health and Wellness
3. Racial Equity and Justice
UMATNF includes the Task Force for Meaningful Change, the UMG Green Team,
and the UMG Unhoused Coalition. In 2022, UMATNF:
• Built broader awareness of key issues through roundtable discussions,
newsletters, social media toolkits, and more to empower and activate our
community of employees, artists, and fans.
• Mobilized deep, meaningful engagement through community service and
volunteer action to respond to drive impact and lasting change.
• Provided direct financial support to an ecosystem of community-
based organizations.
The UMG Unhoused Coalition mission is to intersect policy and philanthropy
to better serve the needs of those unhoused in our communities, and works
to strengthen education and advocacy as well as deliver resources and
local support.
Among other policy initiatives, this year saw UMATNF provide support and
social media expertise for California’s #VoteYesOn28 campaign, the general
election ballot initiative aiming to establish a permanent and sustainable
funding source for arts and music education in public schools. Notably, the
campaign’s most viewed and valuable social media asset was produced by
UMG and ultimately supported by Katy Perry. Because the measure passed with
overwhelming support, California will now steer about $800million more each
year – nearly double the prior amount – into art and music programs in K-12
public schools, with campuses in low-income communities receiving a larger
share of funding.
In the UK, UMG supports the Universal Music UK Sound Foundation (UMUKSF), an
independently funded charity that focuses on lifting up the next generation of
talent across the region.
UM UK also maintains its partnership with East London Arts & Music (ELAM),
the free school for 16-19-year-olds founded in 2014 by Will Kennard, one half
‘
AMONG OUR TASK FORCE FOR MEANINGFUL CHANGE, OUR ALL TOGETHER NOW
FOUNDATION, AND OUR EMPLOYEE MATCHING PROGRAM, WE CONTRIBUTED TO MORE
THAN 500 ORGANIZATIONS IN 2022.’
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of EMI recording artists Chase & Status. In addition to offering masterclasses,
mentorship, curriculum guidance, and work experience to many of the school’s
pupils, there are links between the school and UMG’s A&R and People teams.
UM UK record labels have signed talent from ELAM, including Chrissi (Island),
Stella and Renée from FLO (Island), Sekou (Island), and Tendai (0207 Def Jam). FLO
(Listen Generously/Island) was recognized this year as the “UK’s most exciting
new girl group.”
Marking another longstanding partnership, UMG Australia’s alliance with the
Musicians Making a Difference (MMAD) charity is now in its 8th year.UMG
Australia's support has enabled MMAD to reduce youth homelessness, poverty
and addiction, break negative cycles, address mental health, and increase
employment and education pathways.
Support for Ukraine
In light of the recent conflict in Ukraine, this year UMG supported several
organizations and campaigns dedicated to bringing humanitarian relief to
the Ukrainian people, including:
• Stand Up for Ukraine: UMG Executive Vice President Michele Anthony
played a central role in Global Citizen’s “Stand Up for Ukraine” global
social media rally in April, which brought together hundreds of
thousands of global citizens, including many UMG artists, to help raise
more than $10billion for Ukrainian refugee relief through the EU’s
pledging summit.
• A Concert for Ukraine: UMG labels Decca Classics and Deutsche
Grammophon partnered with New York’s Metropolitan Opera to release
“A Concert for Ukraine,” a special concert and album recorded live at
the Met. Conducted by Music Director Yannick Nézet-Séguin, the album
opens with the National Anthem of Ukraine, featuring Ukrainian bass-
baritone and Lindemann Young Artist Vladyslav Buialskyi. Proceeds
from the sale of http://www.helpukraine.centerthe album were donated
to charities supporting relief efforts.
• Sting’s Re-Recording of Hit Song: UMG artist Sting re-recorded his hit
song “Russians,” with profits benefiting www.helpukraine.center, a
volunteer storage center established by Ukrainian business owners to
receive humanitarian and medical aid from around the world.
• Reverberate Ukraine: Island Records partnered with Kyiv-based visual
artist Alexey Kondakov to create five NFT artworks in support of World
Central Kitchen, an NGO helping to feed people on the frontline in
Ukraine and neighboring countries. The “Reverberate Ukraine” NFTs
were auctioned by Bonhams Fine Art Auctioneers and UM UK released
limited-edition screen prints.
• NGO Partnerships: We supported a wide range of NGOs bringing aid
to refugees in the region, including the International Red Cross,
the International Rescue Committee, International Medical Corps,
and CARE.
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SOCIAL JUSTICE & EQUITY
The fight for inclusion and social justice remains a pillar of UMG’s impact
efforts. In 2020, we launched the Task Force for Meaningful Change (TFMC) –
a voluntary group of music executives and employees from UMG’s corporate
center, labels, and global companies – that works to support marginalized
communities across six verticals:
1. Aid/Charitable Giving
2. Global Impact
3. Internal/Institutional Change
4. Legislative/Public Policy
5. Partners
6. Programming/Curation
This year marks the release of UMG’s first TFMC Global Impact Report –
highlighting the Task Force’s driving initiatives in the ongoing fight for equality,
justice, and inclusion. Additional 2022 milestones included:
• Public Health Scholarships: TFMC partnered with four accredited HBCU
Medical Schools – Howard University College of Medicine, Morehouse School
of Medicine, Meharry Medical College, and Charles R. Drew University of
Medicine and Science – as part of 2022's super priority focus on public
health. With $200,000 in scholarships routed to each of the four schools,
the program’s goal was to increase access to community-oriented and
culturally competent healthcare and support projects, organizations, and
initiatives that widen the Black medical student and practitioner pipeline.
• Pull up to the Polls: TFMC’s ongoing education and civic engagement
initiative aims to increase voter turnout in every election. In 2022, we
supported participation in the U.S. midterm election by helping register 7,833
eligible voters with our partner, Voto Latino, and worked with partners NAACP
and YMCA to provide 13,081 rides to/from the polls. We also encouraged UMG
employees to support the program by sharing Pull Up to the Polls on their
socials, volunteering for the When We All Vote texting campaign, and serving
as Social Media Monitors to help protect voters from online disinformation.
• Voting Rights Educational Workshops: To increase education and
engagement around the electoral process, we also developed Voting Rights
Workshop Series that featured a panel of National voting rights experts and
civic engagement toolkits for eligible voters across UMG.
• Fast Forward with Generation Works: TFMC UK partnered with
Generation Works to develop a unique opportunity for young musicians
to access recording space and receive mentorship from music
industry experts, including A&R, production, management, and digital
marketing professionals.
• Primary Schools Workshop Series: TFMC UK produced a series of
interactive workshops to showcase classical instruments and repertoire
from marginalized Black classical composers, performed by Black and
ethnically diverse musicians from Decus Ensemble. The workshops were
conducted in partnership with Live Music Now in six London primary
schools with high percentages of pupils from minority ethnic backgrounds
with limited or no classical music tuition.
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• Rap Lyrics on Trial: TFMC endorsed state and federal legislation limiting the
ability to use lyrics as evidence against defendants in criminal trials.
• Emergency Gives: TFMC responded to natural disasters, gun violence
tragedies, and the water crisis in Mississippi with monetary support
exceeding $200,000.
• Charitable Donations: TFMC supported over 70 organizations in the U.S. this
year, with additional donations made to organizations in Latin America,
Canada, Africa, and the UK.
TFMC continues to prioritize its support of criminal justice reform while also
making financial contributions in the music industry and humanitarian aid
and relief where unforeseen tragedies and national disasters disproportionately
impact vulnerable communities.With nationally renowned experts recruited
to serve as advisors every year, the Task Force ensures a targeted strategy of
measurable impact. With regard to criminal justice reform, 2022 saw TFMC work
with relevant public leaders and formerly incarcerated and system-impacted
individuals to develop the following goals:
1. Reducing the number of individuals in the criminal justice system by
driving funding to Community Violence Intervention projects that are
Black or POC-led and that integrate formerly incarcerated persons into
their approach.
2. Improving opportunities for formerly incarcerated persons by supporting
meaningful reentry work that provides wraparound services, mentorship,
and mental health support to system-impacted individuals.
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Below is an illustrative list of organizations that the TFMC supported this year:
The TFMC also supported the following organizations as part of its spotlight and
global giving initiatives this year:
Spotlight and Holiday Gives
Global Giving
The Hidden Genius Project
Code2040
Black Girls Movement
The King Center
Black Boys Code
The National Council of Negro Women
Global Fund for Women
National Coalition of 100 Black Women
The Marsha P. Johnson Institute
Black and Pink National
WE ARE R.I.S.E.
The African Presidential Leadership Center (South Africa)
Missions of Hope International (Kenya)
The Destiny Trust (Nigeria)
Four Brown Girls (Canada)
Shelley Cares Foundation (Canada)
Fundación Solidaridad y Compromiso (Colombia)
Proyecto Daniel (Costa Rica)
Casa Alianza (Mexico)
The Reading Agency (UK)
Nordoff Robbins Music Therapy (UK)
Pickni Uniforms (UK)
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ESG COMMITMENTS
UMG believes that responsible governance is essential to a strong business
and to best serve our key stakeholders including our investors, employees,
artists, songwriters, partners, and others. We are committed to the principles
of accountability, transparency, fairness, responsibility, and risk management
across the company and its activities, and our commitment to responsible
governance serves as the foundation of our business strategy. We view
our ESG efforts not as separate from, but as a central component of, our
business strategy.
Accordingly, we carry out our business activities not only in compliance with
legal and regulatory standards, but more fundamentally we base our business
conduct and relations with third parties on ethical standards. These standards
guide our business development, maintain stakeholder trust, prevent and
manage risks we face, and support our global performance.
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Operating With Integrity
BUSINESS ETHICS & COMPLIANCE
UMG is committed to responsible governance. Grounded in applicable laws, as
well as the principles and best practices of the Dutch Corporate Governance
Code, UMG’s core values are operationalized in our Code of Conduct, which sets
out the foundational principles that inform how we do business. Our Code of
Conduct presents a guide to behave with honesty and integrity and earn and
maintain the confidence and respect of all our stakeholders – investors, artists
and songwriters, business partners, fans, and beyond.
Every business, division, and department within UMG worldwide is covered
by the Code. Every person conducting business for UMG must follow the
Code, including employees, members of the Board of Directors, and third
parties, such as consultants, independent contractors, and company advisors
or representatives.
We educate our employees on company policies and expectations via a suite
of courses, including the Code of Conduct, Criminal Finance, Human Trafficking,
Insider Trading, Information Security, Preventing Harrassment, Radio Promotion
Compliance, and Health and Safety. Training timetables and topics offered are
region and/or function specific where needed.
PRIVACY & CYBERSECURITY
UMG is committed to maintaining the trust of our artists and partners through
the ethical and compliant collection, use, and sharing of data.UMG’s Global
Technology organization works to leverage state-of-the-art processes and
technologies to minimize exposure and ensure that we continually enhance the
security of our systems.
As a global company, we are subject to a number of local and regional
privacy laws, and non-compliance might have significant legal, financial,
and reputational effects on the company. To uphold our stakeholders’ trust
and ensure compliance with privacy regulations, we have developed and
implemented a program designed to identify and mitigate privacy risks. Key
elements of this program include our Code of Conduct training, policies
and procedures for handling personal data, reviews of supplier engagements
and projects, processes and tools for responding to privacy rights requests,
processes for compliant international transfers of personal data, and response
plans for security incidents involving personal data.
We employ a layered approach to protecting our assets, systems, and employees
from malicious cyberattacks and actors. Our Global Security Office (GSO)
Governance group is responsible for company-wide cybersecurity policies and
standard development, cybersecurity education (including regular phishing and
other security training), and compliance monitoring.Over the last decade, GSO
has developed a mature cybersecurity program that encompasses aggressive
‘
UMG’S CODE OF CONDUCT HAS BEEN TRANSLATED INTO 21 LANGUAGES AND
EMPLOYEES WORLDWIDE MUST CERTIFY THEIR COMPLIANCE WITH IT EVERY YEAR.
IN 2022, 90% OF OUR WORKFORCE RECEIVED FURTHER TRAINING ON COMPLIANCE
TOPICS.’
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vulnerability management, centralized log collection, use of a 24x7 managed
security service provider, a robust security incident response process, regular
penetration testing, and extensive use of threat management and threat
hunting teams.
2022 saw GSO focus on:
• Augmented Visibility: Augmented visibility through the addition and
deployment of tools including User and Endpoint Behavior Analytics (UEBA),
data exfiltration monitoring, regular security controls validation, and central
legacy system logs for monitoring, analysis, and forensics.
• Insider Threat Program: Creation of the Insider Threat program, tasked with
analysis of the above new tools and investigation of anomalous business
network activity that could indicate the presence of malicious actors.
• Compliance Monitoring Subgroup: Creation of the Compliance Monitoring
subgroup within GSO Governance, tasked with regular contact with
all critical business functions to ensure compliance with company
cybersecurity policies and standards, ranging from the company website
deployment standard to requirements for laptop and desktop image
secure builds.
To ensure program effectiveness, GSO engages a robust security incident
response team (SIRT) for identification, tracking, and remediation of security
incidents. The group also documents penetration test results for dissemination
to affected system owners for resolution, and all exceptions are documented,
regularly reviewed, and retired as appropriate. In addition, GSO Governance has
a robust exception process to allow UMG businesses to surface practices and
systems that cannot comply with official policy.
As the value and risks of data continue to increase, UMG will further adapt,
improve, and strengthen our privacy and cybersecurity governance, processes,
and procedures.
PIRACY & CONTENT PROTECTION
At UMG, we are fully dedicated to protecting the creative works of our artists
and songwriters. In collaboration with global trade organizations, our content
protection initiatives span several areas:
• Pre-Release Protection: Releases face the highest level of risk during the
pre-release phase, when producers and sound engineers collaborate ahead
of production. As a result of the COVID-19 pandemic, this collaboration
is increasingly taking place remotely, raising the risk of interception and
possible leaks. We advise on the best security practices and work with
stakeholders, external platforms, and websites to remove leaked content to
minimize risks of further unauthorized distribution.
‘
IN 2002, UMG WAS THE FIRST MAJOR RECORDED MUSIC COMPANY TO CREATE
A CONTENT PROTECTION DEPARTMENT, TASKED WITH IDENTIFYING PIRACY AND
COUNTERFEITING THREATS, WHILE ALSO DEVELOPING STRATEGIES AND WORKFLOWS
TO MITIGATE THEM.’
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• Post-Release Protection: Once content has been released, infringing uploads
and posts frequently occur on sites without a license. By identifying and
removing 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 the
risk of leaks in those regions. We work with our international trade
organizations 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 and
protect 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 that
works 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 have
established working groups to coordinate resources and enforce against
infringers in this area.
Steered by our content protection department, 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 to
bring new platforms to the negotiating table.We have developed specialized
workflows to remove unauthorized posts and have built bespoke software to
collect release information and project rulesets globally, thereby maximizing our
labels' marketing and promotional efforts and preserving the integrity of our
artists’ creations.
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Respecting Human Rights Across the Value Chain
The UMG Code of Conduct sets forth the foundation as to how UMG conducts
business, including as it relates to human rights. UMG expects all people to be
treated with dignity and respect by:
• Never tolerating human rights abuses such as child labor, slavery, human
trafficking, and unsafe or unfair work practices at our operations
• Conducting business with partners, suppliers, and customers who share our
commitment to protecting human rights
• Speaking up when we see or suspect human rights violations
SUPPLY CHAIN MANAGEMENT
In addition to embedding ESG initiatives within our operations, UMG also
engages our supply chain in our efforts. We work with our suppliers to measure
and reduce the environmental footprint of our value chain, and we expect all of
our partners to share our commitment to protecting human rights.
Our Bravado team, which is responsible for developing and marketing our
licensed merchandise, continues to incorporate the UMG Supplier Social
Responsibility Policy into its 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, the Children’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 mandates that all critical manufacturing
suppliers are current with social compliance audits and are timely in resolving
any corrective actions and certification renewals.
To enhance supplier engagement, 2022 saw Bravado conduct a comprehensive
assessment of its sustainable supplier program. In 2023, Bravado will leverage
assessment results to incorporate a sustainability Statement of Ambition into
its manufacturer agreements, alongside a formalized sustainability survey that
will be used to gather information and improve the sourcing process.
We will continue to build upon these practices as we advance UMG’s company-
wide responsible sourcing program.
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REGULATORY &
STANDARDS ALIGNMENT
EU Taxonomy
The European Commission has set ambitious sustainability targets with the
overarching aim to be a net zero continent by 2050. An important purpose of the
EU Action Plan on Sustainable Finance, which supports this ambition, is to steer
cash flows toward sustainable investments.
In accordance with European Regulation 2020/852 of June 18, 2020, and
'Besluit bekendmaking niet- financiële informatie' for 2022, UMG is subject to
the obligation to disclose the Taxonomy-eligible, non-eligible, and Taxonomy-
aligned turnover, capital expenditures, and operating expenditures for economic
activities relating to the Taxonomy's climate change mitigation and climate
change adaptation environmental objectives.
EU Taxonomy Objectives and Scope
The Taxonomy regulation serves as a standardized and mandatory classification
system to determine which economic activities are considered environmentally
sustainable in the European Union (EU). The results of this classification are
reported annually on a company-specific basis.
Article 9 of the Taxonomy regulation identifies six environmental objectives:
1. Climate change mitigation
2. Climate change adaption
3. Sustainable use and protection of water and marine resources
4. Transition to a circular economy
5. Pollution prevention and control
6. Protection and restoration of biodiversity and ecosystems
Regarding the classification of an activity as environmentally sustainable, the
Taxonomy regulation distinguishes between Taxonomy-eligible and Taxonomy-
aligned activities:
• Activities are Taxonomy-eligible if they match the description of the
activity included in Delegated Acts supplementing Regulation (EU) 2020/852
of the European Parliament, irrespective of whether they fulfill the
alignment criteria.
• Activities are Taxonomy-aligned if they fulfill the Taxonomy criteria for the
activity. In this case, they make a substantial contribution to the respective
environmental objective (fulfill the substantial contribution criteria), cause
no significant harm to any of the other environmental objectives (Do No
Significant Harm, DNSH), and observe and comply with the minimum social
safeguards for human rights, corruption, taxation, and fair competition.
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Accounting Policies
The table below provides the basis for the numerator and denominator of EU
Taxonomy-eligibility and alignment for Turnover, CapEx, and OpEx as defined in
the Disclosure Delegated Act Annex I Section 1.1.
Turnover CapEx
1
OpEx
1
Numerator Revenue derived from products
and/or services associated
with EU Taxonomy-eligible/
aligned activities.
Capital expenditures that are
related to assets or processes
associated with EU Taxonomy-
eligible/aligned activities.
Operating expenses that are related to
assets or processes associated with EU
Taxonomy-eligible/aligned activities.
Denominator Revenue recorded in
the consolidated financial
statements under IFRS as
per Revenue Accounting policy
described in the consolidated
financial statements.
Additions to tangible and
intangible assets recorded
in the consolidated financial
statements under IFRS during the
financial year, considered before
depreciation, amortization, and
any re-measurements.
Direct non-capitalized costs recorded in
the consolidated financial statements
under IFRS that relate to R&D,
building renovation measures, short-
term leases, maintenance and repair
(excluding expenses reported as cost
of sales), and any other direct
expenditures relating to the day-to-day
servicing of PPE assets.
1 None of the capital or operating expenditures relate to a capital plan or purchase of output from Taxonomy-aligned economic activities such as: individual 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 18 months.
The financial information for calculating the metrics was gathered from
UMG’s financial reporting system, excluding intercompany transactions. Eligible
economic activities identified currently only contribute to the climate change
mitigation objective. Still, should they contribute to several environmental
objectives, the numerator would only consider the allocation of revenues and
expenditures to one environmental objective so that double counting is avoided.
In 2022, UMG did not issue sustainability linked bonds or debt securities to
finance Taxonomy alignment activities.
Assessment of Compliance with Regulation (EU) 2020/852
For 2022, UMG assessed eligibility and alignment under each KPI and concludes
as follows, with subsequent explanations for each KPI.
• Turnover: No revenue activities are eligible or assessed for alignment
• CapEx: Taxonomy-eligible CapEx is calculated at 10% and does not
meet the substantial contribution criteria, therefore eligible CapEx is not
considered aligned
• OpEx: Taxonomy OpEx is calculated at less than 1% and is not
considered material
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Turnover KPI
The basis of the turnover KPI covers UMG business activities as of December
31, 2022. The turnover denominator is reconciled with the revenue recorded
in Note 2 of the Consolidated Financial Statements under IFRS as per the
revenue 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 be
considered eligible under Arts, Entertainment, and Recreation. Based on the
procedures performed, management confirms that the conclusion reached in
2021 continues to apply.
The percentage for Taxonomy-eligible turnover amounts to zero. There are no
revenue activities eligible or assessed for alignment. In 2022, UMG's business
model did not generate revenue from climate change-related activities.
Nevertheless, UMG is committed to contributing to sustainable business
conduct, including measuring and managing climate-related risk, supporting
and showcasing artists' climate advocacy efforts, and engaging on and
advocating for sustainable business solutions throughout the value chain.
CapEx KPI
Under the Taxonomy Regulation, the total CapEx covers additions to tangible
and intangible assets during the financial year considered before depreciation,
amortization, and any re-measurements recognized by UMG according to IAS16,
IFRS16, and IAS38, including those resulting from revaluations and impairments
for the relevant financial year and excluding fair value changes. Total CapEx
(denominator) can be reconciled with the sum of the lines ’Additions’ disclosed
in Note 9 Changes in content assets and other intangibles (excluding royalty
advances), Note 10 Property, Plant and Equipment (PPE), and Note 11 Leases
within the consolidated financial statements.
For UMG, most of the CapEx relates to additions to catalogs and other
intangibles, which are not eligible. The eligible CapEx comes from the capitalized
cost of renovations and leased assets (EU Taxonomy activities under climate
change mitigation objective: 7.2 Renovation of existing buildings and 7.7
Acquisition and ownership of buildings).
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The breakdown by type of CapEx is as follows:
(inmillions of euros) Activity
7.2
Activity
7.7
Additions to PPE, leases, and intangible assets 22 2
Acquisitions through business combinations - -
Expenses incurred for Taxonomy-aligned activities and as
part of CapEx-plan
- -
Total Taxonomy-eligible CapEx 22 2
Compared to 2021, investments in non-eligible CapEx (mainly catalogs)
decreased, resulting in 2% higher eligibility.
Alignment Assessment
7.2 Renovation of existing buildings
UMG has assessed the substantial contribution criteria and evaluated that
the leasehold improvements conducted to meet UMG's business needs do not
qualify as major renovations. UMG concludes it does not meet the substantial
contribution criteria for climate change mitigation under activity 7.2.
7.7 Acquisition and ownership of buildings
UMG’s properties are located worldwide and an energy performance certificate
(EPC), a European certification, is not typically available outside the EU. No
eligible properties were located within the EU. UMG developed a validation
approach through other internationally recognized certificates and primary
energy demand (PED) measures. Two new leases were identified as eligible
under the EU Taxonomy criteria representing 0.88% of the total m
2
area of
UMG’s property portfolio, 3% of UMG’s total energy use, and 2% of UMG’s global
headcount at December 31, 2022. The new leases did not meet the energy
performance requirements under substantial contribution criteria for climate
change mitigation and are not further assessed for alignment.
OpEx-KPI
The OpEx denominator includes direct, non-capitalized costs for research
and 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 not
centered around tangible assets. In 2022, UMG calculated Taxonomy OpEx at less
than 1% of the total cost of sales. Management concludes that Taxonomy OpEx
is not material for UMG’s business model. UMG makes use of the materiality
exemption for the OpEx KPI as per the Disclosure Delegated Act Annext I, Section
1.1.3.2 and discloses the numerator as equal to zero.
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EU Taxonomy – CapEx
Substantial contribution
criteria
DNSH criteria
(Do no significant harm)
Economic activities
Code(s)
Absolute CapEx
Proportion of CapEx
Climate change mitigation
Climate change adaptation
Water and marine resources
Circular economy
Pollution
Biodiversity and ecosystems
Climate change mitigation
Climate change adaptation
Water and marine resources
Circular economy
Pollution
Biodiversity and ecosystems
Minimum safeguards
Taxonomy-aligned proportion of CapEx, 2022
€M
%
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
A. Taxonomy-eligible activities
A.1 Environmentally sustainable
activities (taxonomy-aligned)
No taxonomy-aligned activities
CapEx of environmentally
sustainable activities
(taxonomy-aligned) (A.1)
0 0% 0%
A.2 Taxonomy-eligible but not
taxonomy-aligned activities
Renovation of existing buildings 7.2 21 9%
Acquisition and ownership
of buildings
7.7 2 1%
CapEx of taxonomy-eligible
but not taxonomy-aligned
activities (A.2)
23 10%
Total (A.1 + A.2) 23 10% 0%
B. Taxonomy-non-eligible activities
CapEx of taxonomy-non-eligible
activities (B)
226 90%
Total (A + B) 249 100%
Numbers may not sum due to rounding
NON-FINANCIAL INFORMATION
EU 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.
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EU Taxonomy – Turnover
Substantial contribution
criteria
DNSH criteria
(Do no significant harm)
Economic activities
Code(s)
Absolute turnover
Proportion of turnover
Climate change mitigation
Climate change adaptation
Water and marine resources
Circular economy
Pollution
Biodiversity and ecosystems
Climate change mitigation
Climate change adaptation
Water and marine resources
Circular economy
Pollution
Biodiversity and ecosystems
Minimum safeguards
Taxonomy-aligned proportion of turnover, 2022
€M
%
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
%
A. Taxonomy-eligible activities
A.1 Taxonomy-aligned activities
No taxonomy-aligned activities
Turnover of taxonomy-aligned
activities) (A.1)
0 0%
A.2 Taxonomy-eligible but not
taxonomy-aligned activities
No taxonomy-eligible but not
taxonomy-aligned activities
Turnover of taxonomy-eligible
but not taxonomy-aligned
activities (A.2)
0 0%
Total (A.1 + A.2) 0 0%
B. Taxonomy-non-eligible activities
Turnover of taxonomy-non-
eligible activities (B)
10,340 100%
Total (A + B) 10,340 100%
NON-FINANCIAL INFORMATION
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Prospects
Not all sustainability efforts are yet recognized under the Taxonomy Regulation.
For more information about UMG’s sustainability initiatives, including our
landmark commitment to support industry transformation and set science-
based targets, please see the Environment section of this report.
From fiscal year 2023 onwards, more extensive analysis will be required
to determine eligibility and alignment for the remaining four environmental
objectives. Management is committed to monitoring EU Taxonomy
developments closely and to assessing new requirements as the basis for its
annual disclosures.
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Task Force on Climate-Related Financial Disclosures (TCFD)
The Task Force on Climate-Related Financial Disclosures (TCFD) was established
in 2015 by the Financial Stability Board to identify the information needed by
investors, 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 the
provision of information to support informed capital allocation.
The disclosure recommendations and this disclosure are structured around
four thematic areas in which companies operate:
1. Governance
2. Strategy
3. Risk management
4. Metrics and targets
As recommended by TCFD guidance, this year UMG engaged 10 different cross-
functional 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 of
climate 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 qualitative
in nature, and we will evolve our modeling to include the quantitative and
financial 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 the
Environment section of this report.
Governance
The Board is responsible for ESG oversight and management of ESG-
related risks. Compliance with ESG-related regulations is monitored by
UMG management and external auditors. The Audit Committee advises and
supports 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, at minimum, on an
annual basis.
Management is responsible for assessing and managing climate-related risks
and opportunities at several position levels and committees, including the
Chief Financial Officer and President of Operations; the Executive Vice President,
Controller; the Chief Financial Officer North America; and the Senior Vice
President, Global ESG & Sustainability.
In 2022, Management briefed the Board’s Audit Committee on ESG, including
UMG’s carbon emissions for FY2019-2021, UMG’s commitment to the Science-
Based Target initiative, and on the regulatory environment relevant to
the company.
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In addition, the Senior Vice President of Global ESG & Sustainability participates
in two monthly steering-level meetings as well as recurring business unit
working group meetings:
1. Monthly Governance, Risk, and Compliance Committee (GRC) Meetings
The purpose of these meetings is to issue an update on ESG matters, including
climate-related issues. The GRC committee meetings are led by the Head
of 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 for
changes in business-as-usual processes. The SVP, Global ESG & Sustainability
also uses these meetings to improve governance and increase awareness
around 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 the
climate 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 leading
organizations, the Intergovernmental Panel on Climate Change (IPCC) and the
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International Energy Agency (IEA), were selected to provide consistency and
comparability 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 level
and severity. UMG’s business resiliency and existing mitigation measures were
also considered to determine the business impact for each risk. Risks that
have a low impact imply that these are already sufficiently managed as part
of existing processes and/or UMG’s exposure level is low. Risks identified with
higher 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, and
financial planning.
• Existing resiliency measures: based on the current resiliency measures in
place 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 and
mitigation 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’s
operations across all scenarios and time horizons.
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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 Medium Long
Policy & Legal Increased overall operational costs due to direct GHG emissions-
related compliance and other indirect effects of regulations.
The introduction of GHG emissions reporting requirements —
such as those proposed by the United States Securities and
Exchange Commission, the EU’s Non-Financial Reporting Directive
(NFRD) and its successor, the Corporate Sustainability Reporting
Directive (CSRD), as well as the EU Taxonomy — mandated
emissions reductions requirements, and/or mandatory carbon
pricing in regions where UMG operates, may result in increased
operational costs of data collection or resources required to
comply 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 that
companies show evidence against standard frameworks or
requirements for any claims that are made.
Low Moderate Moderate
Financial, legal, and reputational impacts from any failure or
alleged failure to comply with climate-related laws or regulations.
Failure to comply with climate-related laws or regulations may
result in fines and affect UMG’s ability to sell our products and
services or operate in specific markets. It may also deteriorate
UMG’s brand perception. In the EU specifically, penalties for
noncompliance include public declaration of noncompliance and
administrative financial sanctions.
Low Low Low
Impact on operational efficiencies and financial burden due to
regional 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 to
comply. 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 and
potential conflicts in regional regulations pose an operational and
financial risk.
Low Low Low
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Table 1 - Transition Risks
Time Horizon
Category Risk Short Medium Long
Technology/Market Increased costs to transition to more sustainable materials
and technologies.
Shifting to increasingly sustainable alternative materials and
manufacturing processes for UMG’s products may increase capital
and operational costs. This shift may arise from changing
consumer and artist demand toward sustainable products and
may also affect UMG’s revenue from physical products. While
physical recorded music revenues represent 12% of total UMG
revenues, physical product emissions account for a large portion
(44%) of total Scope 3 emissions. Physical product emissions
include emissions from the manufacturing, logistics, and end-of-
life treatment of vinyl, optical, and merchandise products.
Low Moderate Moderate
Reputation Reputational or legal implications around failure to meet
environmental targets or other sustainability goals.
UMG intends to set near-term science-based targets for validation
to the Science Based Targets initiative in 2023. Inability to act
or lack of progress toward this or other voluntary or mandated
sustainability goals, including making misleading claims (e.g.,
greenwashing or green labeling), may impact shareholder and
stakeholder concerns in material ESG topic areas, such as
attraction and retention of artists and employees. 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.
Low Low Moderate
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Table 2 - Physical Risks
Time Horizon
Category Risk Short Medium Long
Acute/Chronic Business interruption and increased CapEx due to physically
damaged 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 of
energy power systems, and shutdowns leading to production
interruption and inability to respond to demand for an
indefinite period.
Low/
Moderate
depending
on hazards
Low/
Moderate
depending
on hazards
Low/
Moderate
depending
on 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 heat
waves as a result of climate change may require an increased
need for cooling for the safety of UMG’s workforce and
preservation of products and equipment, leading to higher
operational costs.
Low Low Moderate
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Table 3 - Transition Opportunities & Time Horizons
Opportunity Category Opportunity Time Horizon
Resource Efficiency Decreased operational costs from resource efficiency.
Investing in updated assets and technology may result in reduced
operational costs, improved energy efficiency of facilities, decreased
energy usage, and reduced emissions for UMG. Across our global
portfolio, 46% of UMG’s direct operations (by m
2
area) are powered by
electricity from renewable sources. In addition, UMG actively pursues
internationally recognized environmental certifications, such as BREEAM,
LEED, and EnergyStar. In 2022, 28% of UMG’s direct operations (by m
2
area)
have received environmental certifications, with additional certifications
currently being pursued as part of leasehold improvement measures in
Nashville and Berlin.
Medium to Long term
Energy Source Decreased operational costs from switching to renewable energy sources.
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 to
renewable generation increases and fossil fuels become more expensive.
An internal study of UMG's 2022 electricity costs in North America
revealed the average price for electricity differed by only €0.08 per kilowatt
hour between standard and renewable electricity.
Short to Long term
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 jewel
cases, and circular opportunities to reduce product waste), and drive
demand for these products, leading to increased revenues and positive
reputational impacts.
Medium to Long term
Market Increased 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, and
vendors)may also create more sustainable processes and products for
the industry as a whole and help to drive wider behavioral change
with respect to the cultural norms, thinking, and politics surrounding
climate change.
Medium to Long term
Market Decreased supply chain disruption due to sustainability engagement.
Engaging vendors to increase sustainability and transparency through
the supply chain may result in decreased emissions and build
resilience against potential physical climate risks. For UMG, this may
include incorporating sustainability criteria into third party management
processes from RFP through contract language and inviting our tier one
strategic partners to set science-based targets.
Medium to Long term
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The analysis was extended to the value chain by assessing the climate maturity
for six key suppliers. Three of these suppliers were observed to be advanced
in their climate-risk consideration. Those requiring additional engagement
and communication to align with, and support UMG’s climate goals were
also 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 business
resiliency. UMG utilizes direct experience and historical climate trends to
inform strategy and mitigation plans across the company. Critical business
units, such as Global IT, Universal Music Logistics, and Global Security Office,
have unique climate risk management processes and tools integrated into
existing frameworks.
As UMG prepares for implementation of the EU’s Corporate Sustainability
Reporting Directive, we plan to further integrate the outcomes of the climate
scenario analysis into the enterprise risk-management process and business
continuity planning.
Metrics & Targets
In 2021, UMG made a commitment to set GHG emissions reduction targets in
accordance with the Science Based Targets initiative – the leading voluntary
framework to set emissions reduction targets.
UMG has calculated our GHG emissions inventory as of 2019 (our base
year) across Scope 1, Scope 2, and all relevant upstream and downstream
Scope 3 categories. The organization has an ongoing annual commitment to
fully quantify and disclose GHG emissions deemed relevant and material to
the business.
In 2022, UMG developed a comprehensive GHG Inventory and Management
Plan and implemented a new data collection system. Our GHG Management
Plan provides a framework by which we will measure the performance and
effectiveness of our climate-related risk management efforts in the near-
and long-terms.
Our coordinated non-financial reporting system, overseen by UMG’s central
ESG department and powered by a network of contributors representing the
territories in which we operate, serves to measure our GHG impact and an
annual 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.
MUSIC IS UNIVERSAL
Annual Report 2022 | 192
NON-FINANCIAL INFORMATION
The Path Forward
UMG is committed to the continued integration of climate-related risks and
opportunities across relevant business operations, strategy, and financial
planning areas, and we will evolve our scenario analysis in future years to
model the financial impacts of each risk.
We aim to continuously enhance our understanding of the possible impacts
of 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.
MUSIC IS UNIVERSAL Annual Report 2022 | 193
NON-FINANCIAL INFORMATION
INFORMATION TABLES
Environmental Indicators
Unit 2022 2021
Energy Consumption
Electricity from standard sources MWh 17,271 13,681
Electricity from renewable sources MWh 11,345 7,982
Natural gas MWh GCV 6,022 2,342
Domestic fuel oil liters 5,335 1,381
Steam used for space heating MWh 5,734 5,645
Diesel used by the fleet of vehicles liters 157,014 135,130
Gasoline used by the fleet of vehicles liters 272,828 250,183
Total energy consumption GJ 160,026 119,790
1
Waste
Professional WEEE produced metric tonnes 26 20
Professional WEEE recycled or recovered metric tonnes 24 11
Non-hazardous waste produced metric tonnes 1,548 1,057
Non-hazardous waste recycled or recovered metric tonnes 756 761
Merchandise scrap waste produced
2
metric tonnes 67 43
Merchandise scrap waste recycled or recovered metric tonnes 59 39
Hazardous waste (excluding WEEE) produced metric tonnes 1 1
1 Total energy consumption has been restated for 2021 to reflect a correction to the energy conversions from liters to GJ, resulting in a 12% increase from our prior
disclosure. The consumption of electricity, natural gas, domestic fuel oil, steam, diesel, and gasoline are converted to GJ and summed for the total energy consumption.
2 This indicator was added in 2022 as part of the expansion of our Scope 3 inventory and includes merchandise scrap waste reported by Bravado U.S.
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NON-FINANCIAL INFORMATION
Greenhouse Gas Emissions
Unit 2022 2021
Scope 1 greenhouse gas emissions
1
tCO
2
e 2,404 1,668
2
Mobile sources tCO
2
e 991 888
Stationary sources tCO
2
e 1,413 780
Of which refrigerants tCO
2
e 300 347
Of which domestic fuel oil tCO
2
e 14 4
Of which natural gas tCO
2
e 1,099 429
Scope 2 greenhouse gas emissions (location-based)
3
tCO
2
e 8,721 7,114
4
Of which electricity (including electricity from renewable sources) tCO
2
e 7,742 6,150
Of which steam tCO
2
e 979 964
Scope 2 greenhouse gas emissions (market-based)
5
tCO
2
e 6,663 5,544
4
Of which electricity (including electricity from renewable sources) tCO
2
e 5,684 4,580
Of which steam tCO
2
e 979 964
Scope 3 greenhouse gas emissions
6
tCO
2
e 349,753 352,459
Category 1: Purchased goods and services tCO
2
e 249,293 289,585
Category 2: Capital goods tCO
2
e 2,641 5,339
Category 3: Fuel- and energy-related activities tCO
2
e 3,821 3,021
Category 4: Upstream transportation and distribution tCO
2
e 43,678 27,091
Category 5: Waste generated in operations tCO
2
e 388 155
Category 6: Business travel tCO
2
e 35,457 10,222
Category 7: Employee commuting tCO
2
e 11,511 14,529
Category 12: End-of-life treatment of sold products tCO
2
e 2,964 2,517
1 Scope 1 represents greenhouse gas emissions from operations directly controlled by UMG, including those associated with the consumption of natural gas and domestic
fuel oil and the leakage of refrigerants during normal air-conditioning operation. The emissions related to transport from consumption from mobile sources, including
directly owned vehicles and vehicles on long-term leases over which UMG has operational control.
2 Total Scope 1 emissions have been restated for 2021 to reflect a correction to emission factors for R-401a and diesel fuel.
3 Scope 2 includes indirectly emitted greenhouse gas emissions resulting from the use of purchased electricity, steam, and cooling. Scope 2 location-based reflects the
average emissions intensity of grids on which energy consumption occurs.
4 Total Scope 2 emissions (location- and market-based) have been restated for 2021 to reflect a correction for the IEA emission factors in nine countries and updates
to our methodology. Our updated methodology for location-based emissions applies U.S. Environmental Protection Agency (EPA) eGrid Factors for the United States and
DEFRA Conversion Factors for the United Kingdom. Our updated methodology for market-based emissions applies Green-e Residual Mix Factors for the United States and
AIB/RE-DISS Residual Mix Factors for European countries.
5 Scope 2 market-based considers the tariffs and energy mix of UMG’s sites which UMG has specifically chosen, taking into consideration the confirmed use of electricity
from renewable sources including wind, solar, geothermal, biomass, and hydro through onsite generation and certified renewable electricity through a supplier tariff.
6 Scope 3 includes external indirect greenhouse gas emissions from non-owned sources within UMG’s value chain. Scope 3 categories were calculated based on the
Greenhouse Gas Protocol, their relevance to UMG, materiality, and data availability. For more information, please see the Non-Financial Reporting Methodology section in
this report.
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NON-FINANCIAL INFORMATION
Social Indicators
2022 % of Total
Headcount
2021 % of Total
Headcount
Total Headcount 9,992 100% 9,505 100%
Managers 3,456 35% 2,838 30%
Men 4,913 49% 4,771 50%
Of which managers 1,980 20% 1,663 18%
Women 5,079 51% 4,734 50%
Of which managers 1,476 15% 1,175 12%
Permanent employees 9,286 93% 8,785 92%
Temporary employees 706 7% 720 8%
By Geographic Region
Africa 117 1% 131 2%
North America 3,951 39% 3,542 37%
South and Central America 265 3% 399 4%
Asia-Pacific 1,498 15% 1,441 15%
Europe 4,161 42% 3,992 42%
Arrivals and Departures
Total hires/new arrivals 2,133 21% 1,751 18%
Of which permanent contracts 1,626 16% 1,224 13%
Total departures 1,614 16% 1,425 15%
Of which permanent contracts 1,295 13% 1,167 12%
Of which resignation 887 9% 730 8%
Of which termination 212 2% 188 2%
Of which redundancy 99 1% 165 2%
Of which retirement 35 0% 32 <1%
Of which other 62 1% 52 1%
Of which temporary contracts 319 3% 258 3%
Career Development
Number of temporary contracts transformed into permanent contracts 174 2% 87 1%
Training
Number of staff trained on compliance topics
1
8,992 90% 8,829 93%
Number of staff trained in soft skills 3,892 39% 3,079 32%
Number of staff trained in hard skills/technical skills 3,721 37% 1,842 19%
Number of staff trained in languages 287 3% 232 2%
Number of staff trained in management 1,471 15% 1,310 14%
Number of staff who have received other types of training 1,420 14% 1,476 16%
Training hours 74,456 - 71,602 -
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NON-FINANCIAL INFORMATION
2022 % of Total
Headcount
2021 % of Total
Headcount
Absenteeism
Number of employees with at least one day absent 2,748 28% 2,240 24%
Days absent – total 46,793 - 44,651 -
Of which for illness 19,740 - 20,547 -
Of which for maternity, paternity and adoption leave 24,257 - 20,768 -
Health and Safety
Number of workplace accidents resulting in lost work time 10 - 2 -
Number of days lost due to workplace accidents 351 - 5 -
Number of fatal accidents 0 - 0 -
Frequency rate
2
0.58 - 0.12 -
Severity rate
3
0.02034 - 0.00031 -
Employee Relations and Collective Bargaining Agreements (France)
Collective bargaining agreements signed or renewed 4 - 3 -
Of which relating to compensation and employee savings plans 0 - 0 -
Of which relating to working conditions 0 - 2 -
Of which related to other formal agreements 0 - 1 -
Of which related to saving schemes 4 - 0 -
Organization of Working Time
Full-time employees 9,709 97% 9,215 97%
Part-time employees 283 3% 290 3%
1 Compliance training topics included Code of Conduct, Criminal Finance, Human Trafficking, Insider Trading, Information Security, Preventing Harrassment, Radio
Promotion Compliance, and Health and Safety. Training timetables and topics offered are region and/or function specific where needed.
2 The frequency rate is calculated as follows: (Number of workplace accidents resulting in lost work time × 1,000,000) / (Average annual headcount x annual hours actually
worked). The frequency rate of workplace accidents is based on the GRI formula for the rate of recordable work-related injuries (GRI 403-9). UMG’s formula only measures
workplace accidents resulting in lost work time, whereas GRI includes other metrics in the rate, such as death and significant injury or ill health diagnosed by a physician
or other licensed healthcare professional. UMG uses a rate based on 1,000,000 hours worked because it is more suitable for larger organizations according to the guidance
in GRI 403: Occupational Health and Safety 2018.
3 The severity rate is calculated as follows: (Number of days lost due to workplace accidents x 1,000) / (Average annual headcount x annual hours actually worked). The
severity rate formula is based on the definition for lost day rate in GRI 403: Occupational Health and Safety. The severity rate represents the number of days lost due to
workplace accidents for 1,000 worked hours.
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NON-FINANCIAL INFORMATION
2022 2021
Total Staff 9,992 9,505
Global Turnover rate – Permanent Headcount
1
13.95% 13.28%
2
Voluntary Turnover rate – Resignations 9.55% 8.31%
3
Involuntary Turnover rate – Permanent Contracts
4
4.39%
-
Global Turnover rate - Permanent Headcount, Women
5
14.13% -
Voluntary Turnover rate - Permanent Headcount, Women
5
11.06% -
Involuntary Turnover rate - Permanent Headcount, Women
5
3.07% -
1 UMG updated its turnover rate formulas to align with guidance from the Corporate Sustainability Reporting Directive (CSRD). The global turnover rate is calculated as
follows: (Number of departures of employees on permanent contracts in year Y / Total number of employees on permanent contracts as of December 31 in year Y).
2 The global turnover rate has been restated for 2021 to align with guidance from the CSRD. The restated global turnover rate for 2021 is 1% lower than the rate reported in
our prior year disclosure.
3 The voluntary turnover rate has been restated for 2021 to align with guidance from the CSRD. The restated voluntary turnover rate for 2021 is 0.1% lower than the rate
reported in our prior year disclosure.
4 This indicator was added in 2022 to allow UMG to evaluate the turnover rates by involuntary departures such as dismissal, retirement, and death.
5 These indicators were added in 2022 to allow UMG to evaluate the turnover rates by gender.
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NON-FINANCIAL INFORMATION
VERIFICATION OF NON-
FINANCIAL DATA
Non-Financial Reporting Methodology
Reference Frameworks
The reporting of non-financial information is based on national and
international references: the European Union (EU) Directive on Non-Financial
Reporting (2014/95/EU)
1
; the Greenhouse Gas (GHG) Protocol Corporate Accounting
and Reporting Standard
2
; the guidelines of the Global Reporting Initiative (GRI)
3
and Sustainability Accounting Standards Board (SASB)
4
; and the United Nations
Sustainable Development Goals (UN SDGs).
ESG Framework Indicators
The reporting framework for UMG’s environmental, social, and governance data
is updated annually and ensures the consistent application of definitions and
rules for data gathering, validation, and consolidation.
Reporting Scope
Unless otherwise indicated, the data is consolidated as of December 31, 2022.
The limited assurance engagement pertains to the consolidated data for 2022
and does not cover 2021 restatements.
The reporting scope was established in accordance with EU Directive 2014/95/EU.
Changes in reporting scope are the result of acquisitions and/or disposals
of consolidated business units or site level changes between January 1 and
December 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 for
the 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 is
incorporated into the scope of the current reporting year.
1
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
2
Greenhouse Gas Protocol Corporate Accounting and Reporting Standard
3
The GRI has not verified the content of this report or the validity of the information provided
therein (www.globalreporting.org).
4
SASB Standards guide the disclosure of financially material sustainability information by
companies to their investors (https://www.sasb.org/).
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NON-FINANCIAL INFORMATION
SOCIAL REPORTING SCOPE
The social reporting scope for workforce demographics indicators covers all
UMG employees, unless otherwise indicated. The scope for non-workforce
demographic indicators applies to eight major territories, including Australia,
Brazil, France, Germany, Japan, South Africa, the United Kingdom, and the United
States, unless otherwise indicated.
ENVIRONMENTAL REPORTING SCOPE
Scope 1 and 2 Emissions
Scope 1 and 2 emissions are calculated for all sites within UMG’s operational
control. The environmental reporting scope is primarily driven by the status of
UMG’s owned and leased properties. In 2022, the reporting scope applied to 58
countries and 149 properties.
Properties in scope for environmental reporting include UMG offices and studios
with active leases in 2022. Properties are considered out of scope if they meet
one of the following criteria: the property closed prior to 2022 and UMG does not
have an active lease; the property is under construction; or the property is land.
Scope 3 Emissions
Scope 3 emissions are consolidated using the operational control approach.
Scope 3 categories were calculated based on the GHG Protocol Corporate
Standard, their relevance to UMG, materiality, and data availability.
UMG’s approach was to collect global data for Scope 3 emissions, where
available. In cases where global data was not easily obtained, UMG reduced its
scope to cover its top five territories (United States, United Kingdom, France,
Germany, and Japan), which represent material revenue for UMG’s operating
companies. UMG’s boundary was set to include its three core business
segments (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 compared
with the prior year. During 2022, UMG pursued the normalization of its
emissions accounting treatment starting with our 2019 base year. This results
in a restatement of prior public reporting for those years and an enhanced,
comprehensive accounting policy to support the basis for target-setting:
Scope 3 Inventory
Scope 3 Category 2022 2021
Category 1 – Purchased Goods and Services Included Included
Category 2 - Capital Goods Included Not Included
Category 3 - Fuel and Energy-related Activities Included Not Included
Category 4 - Upstream Transportation and Distribution Included Not Included
Category 5 - Waste Generated in Operations Included Included
Category 6 - Business Travel Included Included
Category 7 - Employee Commuting Included Not Included
Category 12 - End-of-Life Treatment of Sold Products Included Not Included
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NON-FINANCIAL INFORMATION
Scope 3 Exclusions
Scope 3 Category Relevance to UMG
Category 8 - Upstream Leased Assets Not relevant
Category 9 – Downstream Transportation and Distribution Relevant - will be added in 2023
Category 10 - Processing of Sold Products Not relevant
Category 11 - Use of Sold Products Not relevant
Category 13 - Downstream Leased Assets Not relevant
Category 14 - Franchises Not relevant
Category 15 - Investments Relevant - will be added in 2023
The table above contains the Scope 3 categories that are currently excluded
from UMG's GHG Inventory. While UMG recognizes the impact of digital
streaming and the live sector within the music ecosystem, these are not
included within UMG’s GHG Inventory boundary.
The GHG Protocol guidance for Category 11 - Use of Sold Products, along with
expert guidance UMG received, indicate that emissions associated with digital
streaming are considered indirect use phase emissions of UMG's products and
are therefore optional to calculate as part of our GHG Inventory. Additionally,
indirect emissions cannot be considered when setting science-based targets
per the Science Based Targets initiative criteria.
We expect to study the impact of live sector further in 2023 to understand
whether any emissions related to artist performances should be evaluated for
inclusion in our boundary.
Methodological Details and Limits in Relation to Indicators
Environmental, social, and governance indicators may generally reflect
methodological limits due to the lack of harmonization of international and
national 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, we
developed our own criteria under the guidance of our experts.
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NON-FINANCIAL INFORMATION
SOCIAL INDICATORS (WORKFORCE DEMOGRAPHICS)
Headcount
Headcount-related indicators are expressed in number of employees at
December 31.
Turnover
In anticipation of the change in European standards from EU Directive
2014/95/EU to the Corporate Sustainability Reporting Directive (CSRD), UMG
updated its turnover rate formulas to align with guidance from the CSRD
1
. The
resulting change is a 1% decrease in the global turnover rate and a 0.1%
decrease in the voluntary turnover rate compared to the rates reported in our
prior year disclosure.
Turnover Rate
2021 Restated Rate 2021 Prior Year Disclosure
Global Turnover 13.28% 14.33%
1
Voluntary Turnover 8.31% 8.44%
2
1 The global turnover rate was calculated using the following formula in our prior year disclosure: [(Number of
people hired on permanent contracts in year Y + Number of departures of people on permanent contracts in
year Y + Number of temporary contracts converted to permanent contracts) / 2] / Total employees on permanent
contracts at December 31 in year Y-1.
2 The voluntary turnover rate was calculated using the following formula in our prior year disclosure: Number
of resignations of people on permanent contracts in year Y / Total employees on permanent contracts at
December 31 in year Y-1.
Global turnover rate
Under the CSRD guidance, the global turnover rate numerator is the aggregate of
the number of employees on permanent contracts who leave voluntarily or due
to dismissal, retirement, or death in service. The denominator of the rate is the
total number of employees on permanent contracts during the reporting period.
The global turnover rate is calculated as follows:
Number of departures of employees on permanent contracts in year Y / Total
number of employees on permanent contracts as of December 31 in year Y.
Voluntary turnover rate
The voluntary turnover rate allows UMG to consider departures resulting from
the resignation of permanent employees.
The voluntary turnover rate is calculated as follows:
Number of resignations of employees on permanent contracts in year Y / Total
number of employees on permanent contracts at December 31 in year Y.
1
See page 38 of the Draft European Sustainability Reporting Standards (ESRS) S1 Own workforce.
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NON-FINANCIAL INFORMATION
Involuntary turnover rate
The involuntary turnover rate allows UMG to consider departures resulting from
involuntary separations of permanent employees.
The involuntary turnover rate is calculated as follows:
Number of involuntary separations (such as dismissal, retirement, or death
in 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 of
natural gas and domestic heating fuel 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.
• Scope 2: Includes indirect greenhouse gas emissions resulting from the
use of electricity, steam, and cooling. As per the GHG Protocol, UMG
considers both location-based and market-based Scope 2 emissions. Scope
2 location-based reflects the average emissions intensity of grids on which
energy consumption occurs. Scope 2 market-based considers the tariffs
and energy mix of UMG’s sites which UMG has specifically chosen, taking
into consideration the confirmed use of electricity from renewable sources
including wind, solar, geothermal, biomass, and hydro through onsite
generation and certified renewable electricity through a supplier tariff.
• Scope 3: Includes external indirect greenhouse gas emissions from
non-owned sources within UMG’s value chain. These include emissions
from purchased goods and services, capital goods, fuel- and energy-
related activities, upstream transportation and distribution, waste generated
in operations, business travel, employee commuting, and end-of-life
treatment of sold products.
Greenhouse gas emissions are calculated using emission factors that are
the most accurate and available at the time of reporting. Emission factor
sources include:
• Scope 1: Department for Business, Energy & Industrial Strategy (BEIS)
Conversion Factors
1
• Scope 2 (Location-based): IEA Emission Factors
2
, United States
Environmental Protection Agency (EPA) eGrid Factors
3
, and BEIS
Conversion Factors
1
Department for Business, Energy & Industrial Strategy (BEIS) Conversion Factors
2
IEA Emission Factors
3
United States Environmental Protection Agency (EPA) eGrid Factors
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NON-FINANCIAL INFORMATION
• Scope 2 (Market-based): IEA Emission Factors, BEIS Conversion Factors, AIB/
RE-DISS Residual Mix Factors
4
, and Green-e Residual Mix Factors
5
• Scope 3: Comprehensive Environmental Data Archive (CEDA)
environmentally extended input-output (EEIO) database
6
, ecoinvent Lifecycle
Analysis (LCA) database
7
, and BEIS Conversion Factors, among other sources
Data is primarily sourced internally within UMG. Where possible, primary
data (mass, distance, energy) has been collected directly from suppliers or
internal business units within UMG. Energy consumption is converted into CO
2
equivalents using recognized emissions factors from the indicated databases.
Where primary data is not available, secondary data (spend data, extrapolations,
benchmarks) are used to calculate greenhouse gas emissions.
Due to the timing in 2022, data is requested for Q1-Q3 and estimates are applied
for Q4 to allow for data validation, consolidation, and reporting. Estimation of
emissions follows one of the two methodologies:
1. Historical Average: uses quarterly activity data for previous years
(2019-2021) to calculate the historical average ratio of total Q1-Q3 to Q4
activity data. This ratio is then applied to the Q1-Q3 activity data in 2022
to estimate.
2. Current Year Average: estimates Q4 activity volume using the average
(mean) quarterly activity volume for Q1-Q3.
The Historical Average method is preferred because it takes into account
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 take into account 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.
Reporting Tools, Consolidation, and Controls
In 2022, UMG implemented a new global data collection and consolidation
platform for environmental and social demographics reporting. The platform
is designed to include mathematical coherency checks to ensure 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 business
leaders, and variance explanations are documented.
4
AIB/RE-DISS Residual Mix Factors
5
Green-e Residual Mix Factors
6
Comprehensive Environmental Data Archive (CEDA) environmentally extended input-output
(EEIO) database
7
ecoinvent Lifecycle Analysis (LCA) database
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NON-FINANCIAL INFORMATION
Limited Assurance Report of the Independent Auditor on Universal
Music Group's Selected Indicators
To: The Shareholders and Non-Executive Directors of Universal Music Group N.V.
Our Conclusion
We have performed a limited assurance engagement on selected indicators in
the annual report for the year 2022 of Universal Music Group N.V. at Hilversum.
Based on our procedures performed and the evidence obtained, nothing has
come to our attention that causes us to believe that the selected indicators are
not prepared, in all material respects, in accordance with the reporting criteria
as included in the ‘Reporting Criteria’ section of our report.
The selected indicators are disclosed in the Information Tables section of the
annual report and consist of:
• "Global turnover rate"
• "Voluntary turnover rate"
• "Greenhouse gas emissions (Scope 1, Scope 2 location-based and Scope 2
market-based, and Scope 3 categories 1, 2, 3, 4, 5, 6, 7, and 12)"
Basis for our Conclusion
We have performed our limited assurance engagement on the selected
indicators in accordance with Dutch law, including Dutch Standard 3000A
'Assurance-opdrachten anders dan opdrachten tot controle of beoordeling van
historische financiële informatie (attest-opdrachten)’ (Assurance engagements
other than audits or reviews of historical financial information (attestation
engagements)). Our responsibilities under this standard are further described
in the ‘Our Responsibilities for the Assurance Engagement on the Selected
Indicators’ section of our report.
We are independent of Universal Music Group N.V. in accordance with the
“Verordening inzake de onafhankelijkheid van accountants bij assurance-
opdrachten” (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).
We believe that the assurance evidence we have obtained is sufficient and
appropriate to provide a basis for our conclusion.
Reporting Criteria
The reporting criteria used for the preparation of the selected indicators are the
reporting criteria developed by Universal Music Group N.V. and disclosed in the
Non-Financial Reporting Methodology section of the annual report.
The absence of an established practice on which to draw, evaluate, and measure
the selected indicators allows for different, but acceptable, measurement
techniques and can affect comparability between entities and over time.
Consequently, the selected indicators need to be read and understood together
with the reporting criteria used.
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Annual Report 2022 | 205
NON-FINANCIAL INFORMATION
Unassured Corresponding Information
No assurance engagement has been performed on the selected indicator:
“Scope 3 categories 1, 2, 3, 4, 5, 6, 7, and 12" for the period prior to
2022. Consequently, the corresponding selected indicator and thereto related
disclosures for the period prior to 2022 is not assured.
Limitations to the Scope of our Assurance Engagement
Our assurance engagement is restricted to the selected indicators. We have not
performed assurance procedures on any other information as included in the
annual report in light of this engagement.
The references to external sources or websites are not part of our assurance
engagement on the selected indicators. We therefore do not provide assurance
on this information.
Our conclusion is not modified in respect to these matters.
Responsibilities of the Board of Directors and the Non-Executive Directors for
the Selected Indicators
The Board of Directors is responsible for the preparation of the selected
indicators in accordance with the reporting criteria as included in the ‘Reporting
Criteria’ section of our report. The Board of Directors is solely responsible for
selecting and applying these reporting criteria, taking into account applicable
law and regulations related to reporting. In this context, the Board of Directors
is responsible for the identification of the intended users and the criteria
being applicable for their purposes. The choices made by the Board of
Directors regarding the scope of the selected indicators and the reporting policy
are summarized in the
Non-Financial Reporting Methodology section of the
annual report.
Furthermore, the Board of Directors is responsible for such internal control as
it determines is necessary to enable the preparation of the selected indicators
that are free from material misstatement, whether due to error or fraud.
The Non-Executive Directors are responsible for overseeing the reporting
process of the selected indicators of Universal Music Group N.V.
Our Responsibilities for the Assurance Engagement on the Selected Indicators
Our responsibility is to plan and perform our limited assurance engagement
in a manner that allows us to obtain sufficient and appropriate assurance
evidence for our conclusion.
Procedures performed to obtain a limited level of assurance are aimed to
determine the plausibility of information and vary in nature and timing
from, and are less in extent, than for a reasonable assurance engagement.
The level of assurance obtained in a limited assurance engagement is
therefore substantially less than the assurance obtained in a reasonable
assurance engagement.
We apply the 'Nadere voorschriften kwaliteitssystemen' (NVKS, Regulations for
quality management systems) and accordingly maintain a comprehensive
system of quality control including documented policies and procedures
regarding compliance with ethical requirements, professional standards, and
other relevant legal and regulatory requirements.
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NON-FINANCIAL INFORMATION
The procedures of our limited assurance engagement included, among others:
• Performing an analysis of the external environment and obtaining an
understanding of the sector, insight into relevant sustainability themes
and issues, relevant laws and regulations, and the characteristics of the
company as far as relevant to the selected indicators.
• Evaluating the appropriateness of the reporting criteria used, their
consistent application, and related disclosures on the selected indicators.
This includes the evaluation of the reasonableness of estimates made by
the Board of Directors.
• Obtaining through inquiries a general understanding of internal control,
reporting processes, and information systems relevant to the preparation
of the selected indicators, without obtaining evidence about implementation
or testing the operating effectiveness of controls.
• Identifying areas of the selected indicators with a higher risk of misleading
or unbalanced information or material misstatements, whether due to fraud
or errors. Designing and performing further assurance procedures aimed at
determining the plausibility of the selected indicators responsive to this risk
analysis. These further assurance procedures consisted, among others, of:
◦ Interviewing the Board of Directors and relevant staff at the corporate
and business level responsible for the strategy, policy, and results
relating to the selected indicators.
◦ Interviewing relevant staff responsible for providing the information for,
carrying out internal control procedures on, and consolidating the data
in the selected indicators.
◦ Obtaining assurance information that the selected indicators reconcile
with underlying records of the company.
◦ Reviewing, on a limited test basis, relevant internal and
external documentation.
◦ Performing an analytical review of the data and trends.
Amsterdam, 30 March 2023
Ernst & Young Accountants LLP
R.T.H. Wortelboer
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NON-EXECUTIVE
DIRECTORS REPORT
NON-EXECUTIVE DIRECTORS REPORT
REPORT OF THE NON-
EXECUTIVE DIRECTORS
As the Non-Executive Directors, we are responsible for supervising the
Executive Directors’ policy and performance of duties and the Company’s
general course of affairs and business, and rendering advice and direction
to the Executive Directors. In performing our duties, we are guided by
the Company’s corporate interests, which extend to the interests of all of
the Company’s stakeholders, including the Shareholders and the Company’s
creditors, customers and employees.
Composition
The Board has a one-tier board structure and currently comprises two Executive
Directors and eleven Non-Executive Directors, four of whom, being Sherry
Lansing, Bill Ackman, Cyrille Bolloré and Nicole Avant, were appointed to the
Board by the General Meeting on May 12, 2022:
Name
Function
Sir Lucian Grainge Executive Director, Chairman and Chief Executive Officer
Vincent Vallejo Executive Director, Deputy Chief Executive Officer
Sherry Lansing Non-Executive Director, Chairman of the Board
Anna Jones Non-Executive Director, Vice-Chairman of the Board
Antoine Fiévet Non-Executive Director
Bill Ackman Non-Executive Director
Cathia Lawson-Hall Non-Executive Director
Cyrille Bolloré Non-Executive Director
James Mitchell Non-Executive Director
Luc van Os Non-Executive Director
Manning Doherty Non-Executive Director
Margaret Frerejean-
Taittinger Non-Executive Director
Nicole Avant Non-Executive Director
Judy Craymer CBE acted as Non-Executive Director and Chairman of the Board
until January 10, 2023, on which date she decided to resign from the Board to
focus on her activities as a film and theater producer.
All of the Executive Directors and Non-Executive Directors were appointed as
such by the General Meeting for a period until the close of the annual General
Meeting to be held in 2024.
Diversity
The elements of a diverse composition are laid down in the Diversity Policy as
per best practice provision 2.1.5 of the Code as well as in the Profile as per best
practice provision 2.1.1 of the Code. In accordance with the Diversity Policy, the
Non-Executive Directors are committed to ensuring that at least one third of
the Board consists of women and at least one third of the Board consists of
men, as well as to increasing the nationality, ethnicity and age diversity. The
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Non-Executive Directors are further committed to ensuring that the composition
of the Board has a good balance in terms of skills, knowledge, experience,
background and perspectives and to considering candidates from a wide pool,
including candidates with no prior publicly listed company experience.
The elements as laid down in the Diversity Policy and Profile are all important
drivers in the selection procedure and will all be considered when filling a
vacancy. However, when filling a vacancy, the qualifications of a candidate and
the requirements for the position shall in principle always prevail.
The Non-Executive Directors consider that their current composition is diverse
in terms of skills, knowledge, experience, background and perspectives but also
in terms of gender, nationality and age. There are six male and five female
Non-Executive Directors, six nationalities (American, British, Canadian, Dutch,
French and Togolese) and age ranges between 37 and 78.
Independence
The Non-Executive Directors endorse the principle that their composition shall
be such that they are able to act independently and critically vis-à-vis each
other, the Executive Directors and any particular interests.
Given the recentness of the Listing, the Non-Executive Directors are of the
opinion that, in the context of preserving the continuity of UMG and ensuring
a focus on long-term value creation, it is in the Company’s corporate interests
and in the interests of the Company’s stakeholders that among the Non-
Executive Directors, there is a fair and adequate representation of persons who
are affiliated with or representing a (group of affiliated) shareholder(s) holding,
directly or indirectly, more than 10% of the issued share capital of the Company,
even if those persons are considered non-independent within the meaning of
best practice provision 2.1.8 of the Code.
Currently, five out of eleven Non-Executive Directors are considered non-
independent on the aforementioned basis, being:
• Bill Ackman to whom more than 10% of the issued share capital of the
Company is attributed by virtue of his control over Pershing Square Capital
Management L.P., i.e. the investment adviser to the collective investment
vehicles through which that shareholding is held.
• Cathia Lawson-Hall who is a member of the supervisory board of Vivendi SE
which holds more than 10% of the issued share capital of the Company.
• Cyrille Bolloré who is the Chairman and Chief Executive Officer of the Bolloré
Group, one of the Company's largest shareholders, as well as a member
of the supervisory board of Vivendi SE which holds more than 10% of the
issued share capital of the Company.
• James Mitchell who is a representative of the Tencent-led consortium which
holds 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 the
same as above) are considered non-independent on the basis of being former
Executive Directors, being:
• James Mitchell who was an Executive Director in the period from February
26, 2021 until September 20, 2021.
• Luc van Os who was an Executive Director in the period from December 4,
2020 until September 20, 2021.
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• 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 non-
independent, 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 remuneration
of the Non-Executive Directors are set out.
Board meetings and activities
Meetings
During 2022, the Board held six meetings, three of which were in-person
meetings and three of which took place via video calls. The meetings were
attended by both the Executive Directors and the Non-Executive Directors as
well as by several of the corporate executives and other senior executives,
as appropriate.
Among the items discussed were the annual report, the semi-annual financial
report, the quarterly results, the accompanying press releases, the external
auditors’ findings and audit report, the reappointment of the external auditors,
the external auditors’ engagement, the (final and interim) dividend proposals,
the annual budget and business plan, the 2022 UMG Global Equity Plan and
the implementation thereof, the remuneration of the Executive Directors, the
nomination for appointment of the four new Non-Executive Directors, being
Sherry Lansing, Bill Ackman, Cyrille Bolloré and Nicole Avant, to the Board,
business updates, the strategy, investor relations updates, committee updates,
the refinancing of the Company, including by means of issuances under the
Negotiable European Commercial Paper program and the Euro Medium Term
Note program, the capital allocation and any related party transactions.
Long-term value creation
The Board, who is responsible for developing a view on long-term value
creation by the Company and for formulating a strategy in line with this view,
regularly discussed the Company’s strategy and also spent two full days at the
Company’s operational headquarters in Santa Monica, United States of America,
to spend time with some of UMG’s senior executives to learn more about the
music business. In addition, the Board is responsible for approving the annual
budget as well as any transaction with a value in excess of €300,000,000.
Education
Shortly following their appointment to the Board by the General Meeting on May
12, 2022, the four new Non-Executive Directors attended an educational session
on their responsibilities as directors of a public limited liability company
incorporated under the laws of the Netherlands, which shares are admitted to
listing on Euronext Amsterdam, the regulated market of Euronext Amsterdam
N.V. In addition, all new committee members were able to attend an educational
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session on the relevant committee’s main responsibilities under Dutch law and
the regulations of the relevant committee.
Evaluation
In the second half of 2022, the Board, under the direction of the Nomination
Committee, conducted a self-assessment to evaluate its own functioning as
well as the functioning of the various committees and the individual Directors.
As part of the assessment, the Board completed an evaluation form, covering
topics such as information provision, frequency and quality of meetings, Board
and committee compositions, functioning of the Board, the various committees
and the individual Directors and access to the Company secretariat. The results
and feedback of the assessment were first discussed during a Nomination
Committee meeting and then shared with the Board, outside the presence of
the Executive Directors, in the beginning of 2023. Where considered necessary,
or of added value, the chair of the Nomination Committee also had one-on-one
sessions with the individual Directors to discuss their individual functioning.
With the results and feedback, the Board identified opportunities for growth and
improvement as well as specific educational and information needs.
Share positions
According to the AFM register, the following Executive Directors and Non-
Executive Directors held a capital interest and/or voting rights in the Company
as at December 31, 2022:
Shareholder
Notification date Capital interest Voting rights
Sir Lucian Grainge September 23, 2021 11,499 11,499
Vincent Vallejo December 14, 2022 99,270 91,770
Bill Ackman November 1, 2022 186,274,786 186,274,786
1
Cathia Lawson-Hall September 23, 2021 2,356 2,356
Cyrille Bolloré May 12, 2022 24,000 24,000
Luc van Os September 23, 2021 105 105
1 Held via PS VII Master L.P.
Committees
The Board has appointed from among its Non-Executive Directors three
committees 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 to
prepare the decision-making of the Board.
The Board has drawn up regulations for each committee, setting out the role and
responsibilities of the committee concerned, its composition and size and the
manner 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:
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Audit Committee Remuneration
Committee
Nomination
Committee
Sherry Lansing Member Member
Anna Jones Member Chair
Antoine Fiévet Member
Bill Ackman Member
Cathia Lawson-Hall Member
Cyrille Bolloré Member
James Mitchell Member
Luc van Os Chair
Manning Doherty Member
Margaret Frerejean-
Taittinger
Member Chair
Nicole Avant Member
Judy Craymer CBE was a member of the Remuneration Committee and
Nomination Committee until January 10, 2023, on which date she decided to
resign from the Board.
The Audit Committee
The Audit Committee advises the Board in relation to its responsibilities,
undertakes preparatory work for the Board’s decision-making regarding the
supervision of the integrity and quality of the Company’s financial reporting
and the effectiveness of the Company’s internal risk management and control
systems and prepares resolutions of the Board in relation thereto.
In addition to the foregoing, the Audit Committee’s main responsibilities
include: (i) supervising and monitoring, and discussing with and advising
the Board on, the effectiveness of the design and operation of the
internal risk management and control systems and supervising the effect
of the Code of Conduct, (ii) supervising the preparation and submission
of financial information by the Company, (iii) supervising the compliance
with recommendations and observations of the internal auditor and external
auditors, (iv) supervising the functioning of the internal audit department, (v)
supervising the Company’s tax policy, (vi) supervising the financing of the
Company, (vii) supervising the applications of information and communication
technology, including risks relating to cybersecurity, (viii) maintaining frequent
contact and supervising the relationship with the external auditors, (ix)
implementing the procedure for the selection of the external auditors
and submitting a recommendation to the Non-Executive Directors for the
(re)appointment or dismissal of the external auditors by the General Meeting,
(x) informing the Board of the outcome of the statutory audit and explaining how
the statutory audit contributed to the integrity of financial reporting and what
the role of the Audit Committee was in that process, (xi) monitoring the financial
reporting process and submitting recommendations or proposals to ensure its
integrity, (xii) determining whether, and if so, how the external auditors shall
be involved in the content and publication of financial reports other than the
financial statements, (xiii) issuing a recommendation on the appointment and
dismissal of the senior internal auditor, (xiv) submitting a proposal to the Board
for the external auditors’ engagement to audit the financial statements, and
(xv) considering and, where appropriate, approving the (semi-annual) financial
statements, the annual budget and major capital expenditures of the Company.
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NON-EXECUTIVE DIRECTORS REPORT
In 2022, the Audit Committee held five meetings, two of which were in-person
meetings and three of which took place via video calls. The meetings were
attended by the Audit Committee members as well as by the Chief Financial
Officer, the Controller, the Head of Internal Audit, the external auditors and other
corporate and/or senior executives, as appropriate.
Among the items discussed were the annual report, the semi-annual financial
report, the quarterly results, the accompanying press releases, the external
auditors’ findings and audit report, the reappointment of the external auditors,
the external auditors’ engagement, the external audit plan, the (final and
interim) dividend proposals, the financing of the Company, the annual budget
and business plan, the internal audit and internal control departments, the
internal audit plans, the annual risk assessment, compliance, information and
communication technology and ESG. Outside of its official meetings, the Audit
Committee also regularly discussed the auditor selection procedure which was
organized by the Company, under the responsibility of the Audit Committee, in
the second half of 2022 and which was led by a selection committee designated
by the Audit Committee for such purpose.
In addition, the chair of the Audit Committee had regular update meetings with
the Chief Financial Officer, the Head of Internal Audit, other corporate and/or
senior executives within the Company and the external auditors.
The Audit Committee members attended an educational session on the Audit
Committee’s main responsibilities under Dutch law and the regulations of the
Audit Committee.
Within the Audit Committee, Cathia Lawson-Hall is considered to have
competence in accounting and/or auditing and the Audit Committee members
as a whole are considered to have competence relevant to the sector in which
the Company operates.
The Remuneration Committee
The Remuneration Committee advises the Board in relation to its
responsibilities, undertakes preparatory work for the Board’s decision-
making regarding the determination of the remuneration of the individual
Executive Directors and Non-Executive Directors, with due observance of the
remuneration policies for the Executive Directors and Non-Executive Directors,
respectively, and prepares resolutions of the Board in relation thereto.
In addition to the foregoing, the Remuneration Committee’s main
responsibilities include: (i) at least every four years submitting a proposal to the
Board for the remuneration policies to be pursued and (ii) annually preparing
the remuneration report, to be tabled at the annual General Meeting.
In 2022, the Remuneration Committee held four meetings, two of which were
in-person meetings and two of which took place via video calls. The meetings
were attended by the Remuneration Committee members as well as by the
Chief People and Inclusion Officer and other corporate and/or senior executives,
as appropriate.
Among the items discussed were the 2022 UMG Global Equity Plan and the
implementation thereof, the remuneration report and the remuneration of the
Executive Directors and Non-Executive Directors.
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NON-EXECUTIVE DIRECTORS REPORT
In addition, the chair of the Remuneration Committee had regular update
meetings with the Chief People and Inclusion Officer and other corporate and/or
senior executives within the Company.
The Nomination Committee
The Nomination Committee advises the Board in relation to its responsibilities,
undertakes preparatory work for the Board’s decision-making and prepares
resolutions of the Board in relation thereto.
In addition to the foregoing, the Nomination Committee’s main responsibilities
include: (i) drawing up selection criteria and appointment procedures for the
Directors, (ii) periodically assessing the size and composition of the Board, and
making a proposal for a composition profile of the Non-Executive Directors, (iii)
periodically assessing the functioning of the individual Directors and the Board
as a whole, and reporting on this to the Board, (iv) making recommendations for
(re)appointments of Directors and (v) supervising the policy of the Board on the
selection criteria and appointment procedures for senior management.
In 2022, the Nomination Committee held four meetings, two of which were in-
person meetings and two of which took place via video calls. The meetings were
attended by the Nomination Committee members as well as by the General
Counsel and other corporate and/or senior executives, as appropriate.
Among the items discussed were the nomination for appointment of the four
new Non-Executive Directors, being Sherry Lansing, Bill Ackman, Cyrille Bolloré
and Nicole Avant, to the Board, the composition of the committees, (the results
and feedback of the assessment of) the functioning of the Board, the various
committees and the individual Directors and the retirement schedule and
succession planning.
Attendance and availability
The table below provides an overview of the attendance rate of the individual
Non-Executive Directors at the Board and committee meetings. Attendance is
expressed as a number of meetings attended out of the number of meetings
held during 2022.
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NON-EXECUTIVE DIRECTORS REPORT
Board Audit Committee Remuneration
Committee
Nomination
Committee
Judy Craymer CBE 6 - 6 4 - 4 3 - 4
Sherry Lansing 2 - 2 2 - 2
Anna Jones 5 - 6 5 - 5 4 - 4
Antoine Fiévet 4 - 6 1 - 2 2 - 2
Bill Ackman 2 - 2 2 - 2
Cathia Lawson-
Hall
6 - 6 5 - 5 2 - 2
Cyrille Bolloré 2 - 2 2 - 2
James Mitchell 6 - 6 4 - 4 2 - 2
Luc van Os 6 - 6 5 - 5 2 - 2
Manning Doherty 6 - 6 2 - 2
Margaret
Frerejean-
Taittinger
6 - 6 2 - 2 2 - 2 4 - 4
Nicole Avant 2 - 2 2 - 2
All Non-Executive Directors have had sufficient time available for their
responsibilities as evidenced by their prompt responses to e-mails, their
availability for meetings, educational sessions and calls and their well-
preparedness for and active participation in such meetings, sessions and calls.
Where a Non-Executive Director was not available for a particular meeting,
he or she was given the opportunity to provide input beforehand and was
updated afterwards. At all Board and committee meetings, there was a quorum
present, such in accordance with the Board Regulations or the regulations of
the committees.
Appreciation
As the Non-Executive Directors, we wish to express our gratitude to the
Executive Directors and all UMG employees for their hard work and dedication
in 2022.
The Non-Executive Directors
Sherry Lansing
Anna Jones
Antoine Fiévet
Bill Ackman
Cathia Lawson-Hall
Cyrille Bolloré
James Mitchell
Luc van Os
Manning Doherty
Margaret Frerejean-Taittinger
Nicole Avant
Hilversum, March 30, 2023
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NON-EXECUTIVE DIRECTORS REPORT
REMUNERATION REPORT
This remuneration report offers insight into the remuneration provided to the
Company’s Executive Directors and Non-Executive Directors during 2022.
The General Meeting on September 20, 2021 adopted the remuneration policies
for the Executive Directors (the Executive Directors' Remuneration Policy) and
Non-Executive Directors (the Non-Executive Directors' Remuneration Policy),
outlining the framework to determine the remuneration for the Executive
Directors and Non-Executive Directors, respectively. Where, however, legacy
arrangements are in place for the Executive Directors prior to being appointed
to the Board, the Executive Directors’ Remuneration Policy allows these
arrangements to be respected. For 2022, the remuneration of the Executive
Directors continues to reflect the legacy arrangements contractually agreed with
each Executive Director prior to being appointed to the Board. To further clarify,
the Board had no input on such legacy arrangements.
This remuneration report has been prepared in accordance with article 2:135b
of the Dutch Civil Code and the Dutch Corporate Governance Code. It will be
presented for an advisory vote to shareholders at the annual General Meeting to
be held on May 11, 2023.
The Remuneration for the Executive Directors in 2022
In 2022, the Executive Directors were as follows:
Executive Director
Position
Sir Lucian Grainge Chairman and Chief Executive Officer (CEO)
Vincent Vallejo Deputy Chief Executive Officer, Corporate
Executive Directors’ Remuneration Policy
Pursuant to the Executive Directors’ Remuneration Policy, the Board, at
the recommendation of the Remuneration Committee, determines the
remuneration of the Executive Directors. The remuneration structure for
Executive Directors consists of the following elements:
• Base salary
• Short-term incentives
• Long-term incentives
• Retirement and other post-employment benefits
• Benefits
The Executive Directors’ Remuneration Policy provides a compensation
framework that allows the Company to attract, motivate and retain highly
qualified Executive Directors and to incentivize and reward long-term,
sustainable growth of the Company. The compensation offered under the
Executive Directors’ Remuneration Policy provides for periodic re-benchmarking
against peer companies, considering compensation levels and trends in the
market as well as relevant remuneration standards. As explained above,
however, the current Executive Directors' remuneration continues to be subject
to legacy arrangements contractually agreed before the Listing and the adoption
of the Executive Directors’ Remuneration Policy and, therefore, when setting
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NON-EXECUTIVE DIRECTORS REPORT
their remuneration for 2022, these legacy arrangements were applied. As a
result of the continuing legacy arrangements, the Board did not re-benchmark
the remuneration of the Executive Directors in 2022.
Summary Overview of the Key Remuneration Elements and
Approach to Remuneration for 2022
The table below sets out the key elements of the remuneration provided in the
Executive Directors’ Remuneration Policy versus the remuneration approach
in 2022.
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NON-EXECUTIVE DIRECTORS REPORT
Element Key remuneration elements per
Executive Directors’ Remuneration Policy
Remuneration approach for 2022
Base salary Fixed level of cash compensation, aligned
with the Executive Director’s experience
and scope of responsibilities
Pursuant to each Executive Director’s
contract, base salaries are as follows:
• Chairman and CEO: €15,412,990
• Deputy CEO: €960,000
Short-term incentive (STI) Variable compensation paid annually in
cash, shares, or a combination thereof,
subject to the achievement of annually
pre-established objectives to ensure
executive alignment with, and motivate
achievement of, the annual business
priorities for the applicable year
Target STI of up to 300% of base salary,
maximum STI of 200% of target
STI for Executive Directors in 2022 was
based on STI structure agreed in their
pre-Listing contracts with the Company's
previous owner, Vivendi, as follows:
• Chairman and CEO: (i) an annual cash
bonus equal to 1% of UMG’s EBITA for the
relevant financial year; and (ii)
a contingent cash bonus of €10,275,327,
subject to UMG meeting specific financial
and non-financial targets
• Deputy CEO: target cash bonus of 50%
of annual base salary with a minimum
payout of 0% and a maximum payout
potential of two times the target bonus
amount, subject to the achievement of
specific financial targets
Long-term incentive (LTI) Variable compensation payable in cash,
shares, or a combination thereof,
subject to pre-established objectives
and/or continued employment to retain
Executive Directors necessary to execute
the Company’s strategy, to align
the financial interests of Executive
Directors with those of shareholders,
and reward delivery of long-term
performance objectives and shareholder
value creation
LTI grant value is capped at 500% of
base salary
No LTI was granted to the Executive Directors
in 2022 since they remained under their pre-
Listing contracts
Retirement and other post-
employment benefits
Customary retirement income and
severance benefits to provide future
income security, aligned with relevant
market levels
For Chairman and CEO, the pension
allowance equals 20% of base salary, capped
at €1,512,049, per year, for a total potential
maximum pension allowance of €302,410.
The Deputy CEO, participates in the local UMG
pension plan
Benefits Customary and market competitive
arrangements to compensate for any
reasonable costs incurred or perks
required for the performance of
their duties
Covers health and welfare, housing
allowance, tax equalization, life insurance,
security, and home leave
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NON-EXECUTIVE DIRECTORS REPORT
Short-Term Incentive
For 2022, in accordance with his contract, Sir Lucian Grainge was entitled to
receive: (i) an annual cash bonus in an amount equal to 1% of UMG’s 2022
EBITA, which was paid in 2023; and (ii) a contingent cash bonus, subject to
UMG meeting specific financial and non-financial targets. For 2022, Sir Lucian
Grainge’s contingent cash bonus was subject to meeting one of the following
performance measures: UMG's year-over-year EBITA, maintaining market share
of the U.S. recorded music market and success of UMG's exclusively signed
artists on the Billboard 100 or 200 chart.
Vincent Vallejo, in accordance with his contract, was eligible for a target bonus
of 50% of annual base salary.
For 2022, Vincent Vallejo’s short-term incentive was based on the following
performance metrics:
• UMG Adjusted EBITDA
1
(50% weighting)
• UMG Cash Flow from Operations (CFFO) (50% weighting)
Performance Metric
Weighting Threshold
1
(50% Payout) Target
1
(100% Payout) Maximum
1
(200% Payout) Actual Earned %
Adjusted EBITDA 50% €1,875.2 M €1,973.9 M €2,072.6 M €1,981.0 M
2
53.5%
CFFO 50% €1,164.7 M €1,226.0 M €1,287.3 M €1,244.9 M
2
65.4%
Total 118.9%
1 0% below threshold; Straight-line interpolation between targets.
2 Actual 2022 restated at constant 2022 financial plan FX rates.
In 2022, actual UMG Adjusted EBITDA performance was between target and
maximum and actual UMG Cash Flow from Operations was between target and
maximum. As a result, Vincent Vallejo’s resulting actual bonus was 118.9% of
target or €570,929.
Long-Term Incentive
The Company did not grant Executive Directors any annual LTI in 2022. Their
legacy contracts do not provide for any annual compensation to be paid in the
form of LTI.
Special One-Time Awards
Prior to the Listing, Vivendi granted the Deputy CEO Vivendi 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, following the
Listing, and the value of these Vivendi equity awards significantly decreased
as a result. To make the Deputy CEO whole and compensate him for the
loss of value of these Vivendi equity awards, upon recommendation of the
Remuneration Committee and in accordance with the mandate granted by
the General Meeting on May 12, 2022, the Board granted the Deputy CEO 7,500
restricted stock units on November 30, 2022 under the 2022 UMG Global Equity
Plan, vesting one year from grant in accordance with our Executive Directors'
Remuneration Policy.
1
Reflects the Adjusted EBITDA as defined in the Appendix in the Annual Report
MUSIC IS UNIVERSAL Annual Report 2022 | 220
NON-EXECUTIVE DIRECTORS REPORT
Malus and Claw-back
In 2022, no application of claw-back was applied on any kind of variable
payments for the Executive Directors.
Severance Payments
No severance payments were made to any Executive Director in 2022.
Executive Directors are entitled to the following legacy severance benefits
contractually agreed in their contracts:
• Sir Lucian Grainge: two years’ salary, target bonus, pension contributions,
car allowance, protection compensation and health and welfare benefits and
€1,950,839 for lost value of Vivendi restricted stock units in a lump sum in
case of termination by Sir Lucian Grainge for good reason or by the Company
without cause, subject to signing a release agreement.
• Vincent Vallejo: pay out of remainder of fixed term contract including
base salary, target bonus, contractually agreed exceptional premiums,
and any unpaid retention bonus or other bonuses in a lump sum, in
case of termination by the Company without cause. If terminated, the
restricted stock units awarded in 2022 would be paid out pro-rata under the
provisions of the 2022 UMG Global Equity Plan covering death, retirement,
or redundancy.
Total Remuneration
1
Total remuneration of the Executive Directors is presented in the table below.
For Sir Lucian Grainge who is compensated in U.S. Dollars, the year-over-year
increase in total remuneration includes the impact of FX rate volatility where
the average 2021 USD to EURFX rate was 0.84 and the 2022 USD to EURFX rate
was 0.95, for an approximate impact of +13%. On a constant currency basis, Sir
Lucian Grainge's total remuneration increased by approximately 3%.
1
The Remuneration Table includes information and figures that are audited as part of Note 24 of
the Annual Consolidated Financial Statements and Note 11 of the Company Financial Statements
MUSIC IS UNIVERSAL Annual Report 2022 | 221
NON-EXECUTIVE DIRECTORS REPORT
Name
Reported
year
Fixed
remune-
ration
Variable remuneration Benefits and one-off amounts
Total
remune-
ration
1
Proportion
fixed –
variable
remune-
ration
Base Salary Short-Term
Incentive
Long-
Term
Incentive
Retire-
ment
Benefits
Other
Benefits
Other
Payments
Sir Lucian
Grainge,
Chairman
and CEO
2
2022 €15,412,990 €28,768,466 €0 €302,410 €2,807,202 €0 €47,291,068 39% / 61%
2021 €13,192,829 €24,673,885 €0 €0
3
€2,994,992 €0 €40,861,707 40% / 60%
Vincent
Vallejo,
Deputy CEO
2022 €960,000 €570,929 €0 €41,053 €83,739 €968,750
4
€2,624,471 41% / 59%
2021 €720,000 €602,859 €0 €0
3
€62,838
5
€800,000
4
€2,185,698 36% / 64%
1 The Chairman and CEO and the Deputy CEO participated in Vivendi share schemes prior to the Listing that are not included. Reference is made to pages 131 to 133 of the
Company's prospectus dated September 14, 2021, which is available on the investor relations part of the UMG website (the Prospectus) for further details.
2 In addition, other payments were made by Vivendi in connection with but not limited to the Listing. Reference is made to pages 129 and 131 of the Prospectus that outline
the following payments: €17,530,000 for the Tencent-led Consortium acquiring an additional 10% of the Shares, €20,909,789 for the Pershing Entities acquiring their 10%
interest in the Company and €194,982,887 for the Listing.
3 For 2021, Retirement Benefits were included as part of Other Benefits. For 2022, we have separated Retirement Benefits into its’ own column. For 2021, the Chairman and
CEO’s Retirement Benefits amount was €268,686, included in the 2021 Other Benefits amount of €2,994,992. For 2021, the Deputy CEO’s Retirement Benefits amount was
€25,243, of which €9,900 was included in the 2021 Other Benefits amount of €62,838 and €15,343 of 2021 Retirement Benefits was excluded.
4 Amounts reflect the recognition awards paid in 2021 and 2022 by UMG in connection with the Listing and, for 2022, the value of the one-time LTI award for the lost value
of Vivendi equity awards in connection with the Listing which was granted on November 30, 2022 at €22.50 of €168,750. Additionally, in February 2023, the Deputy CEO has
received a €800,000 cash retention payment, which will be included in the 2023 remuneration disclosures.
5 For 2021, Other Benefits excluded €6,750 for company car related expenses.
Share-Based Remuneration
Total share-based remuneration of the Executive Directors in 2022 is presented
in the table below:
Name
of Director,
position
The main conditions of share award plans Information regarding reported financial year
Opening
balance During the year Closing Balance
Specification
of plan
Performance
period
Award
date
Vesting
date
End of
holding
period
Shares
awarded
at the
beginning
of
the year
Shares
awarded
Shares
vested
Shares
subject to
a performance
condition
Shares
awarded
and
unvested
as
of year
end
Shares
subject
to
a holding
period
Vincent
Vallejo,
Deputy CEO
2022 UMG
Global
Equity Plan N/A 11/30/2022 11/30/2023 N/A 0 7,500 0 0 7,500 N/A
1
As noted in the Corporate Governance section under ‘Compliance with the Code’, the Deputy CEO's Shares, once vested, are not
subject to a holding period.
MUSIC IS UNIVERSAL Annual Report 2022 | 222
NON-EXECUTIVE DIRECTORS REPORT
Remuneration and Company Performance Development
The overview below provides insight into the development of the remuneration
of the Executive Directors, Company performance and employee pay. For Sir
Lucian Grainge who is compensated in U.S. Dollars, the year-over-year increase
in total remuneration includes the impact of FX rate volatility where the average
2021 USD to EURFX rate was 0.84 and the 2022 USD to EURFX rate was 0.95,
for an approximate impact of +13%. On a constant currency basis, Sir Lucian
Grainge's total remuneration increased by approximately 3%.
Element 2021
1
2022
1
Remuneration
Chairman and CEO €40,861,707 €47,291,068
Annual Change Not applicable 16%
Deputy CEO
2
€2,630,851 €2,624,471
Annual Change
Not applicable 0
%
Company performance
Adjusted EBITDA (inmillions of euros) €1,788 €2,135
Annual Change
Not applicable 19
%
Average annual remuneration on an FTE basis of employees
Average annual
3
€131,961 €142,039
Annual Change
Not applicable 8
%
1 The information in this table regards the financial years 2021 and 2022 only, as 2021 was the first financial year for UMG as a publicly listed company.
2 In the table above, the Deputy CEO was employed by UMG effective April 2021. Accordingly, the remuneration for 2021 has been updated and annualized from €2,185,698 to
€2,630,851 for year-over-year comparison purposes.
3 Reflects the total personnel costs reported in Note 4, adjusted to be aptly comparable with the remuneration of Executive Directors disclosed above.
MUSIC IS UNIVERSAL Annual Report 2022 | 223
NON-EXECUTIVE DIRECTORS REPORT
The Remuneration for the Non-Executive Directors in 2022
The fee structure for Non-Executive Directors has been designed to ensure
that UMG attracts, retains and appropriately compensates a diverse and
internationally experienced group of Non-Executive Directors. In 2022, the Non-
Executive Directors’ remuneration for participating in the Board and Board
committees was as follows:
• €90,000 per annum for performing their role as a Non-Executive Director
• €50,000 per annum for performing the role of Chairman of the Board
• €20,000 per annum for performing their role as a member of a
Board committee
• €10,000 per annum for performing the role of chair of a Board committee.
Total Remuneration
1
Total remuneration of the Non-Executive Directors paid in 2022 is presented in
the table below:
Commencement Date
Board
1
Audit
Committee
1
Remuneration
Committee
1
Nomination
Committee
1
2022 Remuneration
(in euros)
J.S.J. Craymer 9/20/2021 Chairman Member Member 180,000
A.R.J.C. Fiévet 9/20/2021 Vice-Chairman Member 110,000
A.K. Jones 9/20/2021 Member Member Chair 140,000
W.A. Ackman
2
5/12/2022 Member Member 0
C.F.L. Lawson-Hall 9/20/2021 Member Member 120,000
C.M.C. Bolloré 5/12/2022 Member Member 67,329
J.G. Mitchell
2
9/20/2021 Member Member 0
L.A.J. Van Os 9/20/2021 Member Chair 130,000
M.L. Doherty
2
9/20/2021 Member Member 0
M. Frerejean-
Taittinger 9/20/2021
Member Member Chair 140,000
N.A. Avant 5/12/2022 Member Member 67,329
S.L. Lansing 5/12/2022 Member Member 67,329
1 Composition of the Board and Board committees as of December 31, 2022.
2 Voluntarily elected to not receive any Non-Executive Director remuneration in 2022.
1
The Remuneration Table contains information and figures that are audited as part of Note 24 of
the Annual Consolidated Financial Statements and Note 11 of the Company Financial Statements.
MUSIC IS UNIVERSAL Annual Report 2022 | 224
NON-EXECUTIVE DIRECTORS REPORT
Year-Over-Year % Change
Non-Executive Directors 2022 vs. 2021
1
J.S.J. Craymer 0%
A.R.J.C. Fiévet 0%
A.K. Jones 0%
W.A. Ackman
2
N/A
C.F.L. Lawson-Hall 0%
C.M.C. Bolloré N/A
J.G. Mitchell
2
0%
L.A.J. Van Os 0%
M.L. Doherty
2
0%
M. Frerejean-Taittinger 0%
N.A. Avant N/A
S.L. Lansing N/A
1 2021 remuneration amounts have been annualized for purposes of calculating the year-over-year
percentage change.
2 Voluntarily elected to not receive any Non-Executive Director remuneration in 2022.
Remuneration is reviewed annually and is not linked to the price of the
Shares or UMG’s performance. Each Non-Executive Director is also entitled
to reimbursement of reasonable expenses incurred in connection with the
attendance of Board and Board committee meetings. The Non-Executive
Directors are not entitled to receive any compensation on termination of their
appointment and are not entitled to participate in the Company’s bonus or
pension schemes.
The Non-Executive Directors are subject to confidentiality undertakings without
limitation in time. They are not subject to non-compete restrictive covenants.
2021 Remuneration Report Shareholders' Voting Results
Last year, 71.02% of the Shareholders supported the 2021 remuneration report
exceeding the required threshold for approval under Dutch law. After the annual
General Meeting held on May 12, 2022, UMG engaged with Shareholders to
understand their perspective on the 2021 remuneration report and solicit overall
feedback about our Executive Director pay design and practices. Feedback
was gathered and reviewed within the context that there are existing legacy
contracts with each Executive Director in place from prior to the Listing and the
adoption of the Executive Directors’ Remuneration Policy.
Deviation from Remuneration Policies
UMG did not deviate from the Remuneration Policies. The Executive Directors
are subject to legacy arrangements contractually agreed before the Listing and
the adoption of the Executive Directors’ Remuneration Policy and, therefore,
when setting their remuneration for 2022 these legacy arrangements have
been applied.
MUSIC IS UNIVERSAL
Annual Report 2022 | 225
Consolidated Statements
Contents of Consolidated Statements
Consolidated Statement of Profit or Loss 228
Consolidated Statement of Comprehensive Income 229
Consolidated Statement of Financial Position 230
Consolidated Statement of Cash Flows 231
Consolidated Statement of Changes in Equity 232
Notes to the Consolidated Financial Statements 233
Note 1. General information 233
Note 2. Basis of preparation 234
Note 3. Segment data 251
Note 4. Cost of revenues and selling, general and
administrative expenses
255
Note 5. Financial income and expenses 256
Note 6. Income taxes 257
Note 7. Earnings per share 260
Note 8. Goodwill 260
Note 9. Content assets (catalogues and royalty advances) and
other intangibles
262
Note 10. Property, plant and equipment 264
Note 11. Leases 265
Note 12. Investments in equity affiliates 266
Note 13. Capital and financial risk management 267
Note 14. Trade and other receivables 271
Note 15. Trade and other accounts payable 271
Note 16. Cash position and borrowings 272
Note 17. Contractual obligations and other commitments 273
Note 18. Financial assets and liabilities 274
Note 19. Equity 277
Note 20. Expenses and income directly recognized in equity 278
Note 21. Provisions 278
Note 22. Post-retirement employee benefits 279
Note 23. Share-based compensation plans 281
Note 24. Related parties 284
Note 25. Litigation 287
Note 26. List of consolidated entities 287
Note 27. Statutory auditors fees 288
Note 28. Audit exemptions 288
Note 29. Subsequent events 289
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 2022
Consolidated Statement of Profit or Loss
Year ended December 31,
(inmillions of euros) Note 2022 2021
Restated
1
Revenues 3 10,340 8,504
Cost of revenues 4 (5,753 ) (4,608 )
Selling, general and administrative expenses 4 (2,702 ) (2,327 )
Amortisation and impairment losses on intangible assets 8,9 (285 ) (175 )
Operating profit 3 1,600 1,394
Financial income 5 37 143
Financial expenses 5 (735 ) (377 )
(698 ) (234 )
Income/(loss) from equity affiliates 12 (2 ) 5
Profit before income taxes 900 1,165
Income taxes 6 (115 ) (277 )
Net profit 785 888
Of which:
Net profit attributable to equity holders of the parent 782 886
Net profit attributable to non-controlling interests 3 2
Earnings per share (in euros)
Basic, earnings for the period attributable to equity holders of the parent 7 0.43 0.49
Diluted earnings for the period attributable to equity holders of the parent 7 0.43 0.49
1 Restated amounts are presented in Note 2.3.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
MUSIC IS UNIVERSAL Annual Report 2022 | 228
FINANCIAL STATEMENTS
Consolidated Statement of
Comprehensive Income
Year ended December 31,
(inmillions of euros) Note 2022 2021
Net profit 785 888
Actuarial gains/(losses) related to employee defined benefit plans, net of tax 36 (5 )
Financial assets at fair value through other comprehensive income, net of tax 8 2
Items not subsequently reclassified to profit or loss, net of tax 44 (3 )
Foreign currency translation adjustments 184 218
Comprehensive income/(loss) from equity affiliates, net of tax 6 5
Items to be subsequently reclassified to profit or loss, net of tax 190 223
Income and expenses directly recognised in equity, net of tax 20 234 220
Total comprehensive income, net of tax 1,019 1,108
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
MUSIC IS UNIVERSAL Annual Report 2022 | 229
FINANCIAL STATEMENTS
Consolidated Statement of Financial
Position
Year ended December 31,
(inmillions of euros) Note 2022 2021
Goodwill 8 1,578 1,480
Non-current royalty advances 3, 9 1,593 1,536
Catalogues 3, 9 3,058 2,982
Other intangible assets 9 119 96
Property, plant and equipment 10 167 167
Right of use assets 11 318 388
Investments in equity affiliates 12 156 109
Non-current financial assets 18 690 1,592
Deferred income tax assets 6 348 404
Other non-current assets 8 6
Non-current assets 8,035 8,760
Inventories 163 99
Current tax receivables 4 3
Current royalty advances 3, 9 984 844
Trade and other receivables 13, 14 2,014 1,803
Cash and cash equivalents 16 439 585
Current assets 3,604 3,334
TOTAL ASSETS 11,639 12,094
Shareowners equity 19 2,351 2,030
Non-controlling interests 1 -
Total equity 2,352 2,030
Non-current provisions 21 291 355
Long-term borrowings and other financial liabilities 16 1,113 2,277
Deferred tax liabilities 6 580 850
Long-term lease liabilities 11 346 421
Other non-current liabilities 18 437 769
Non-current liabilities 2,767 4,672
Current provisions 21 103 80
Short-term borrowings and other financial liabilities 16 1,137 318
Trade and other payables 13, 15 5,150 4,875
Short-term lease liabilities 11 77 80
Current tax payables 53 39
Current liabilities 6,520 5,392
Total liabilities 9,287 10,064
TOTAL EQUITY AND LIABILITIES 11,639 12,094
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
MUSIC IS UNIVERSAL Annual Report 2022 | 230
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
Year ended December 31,
(inmillions of euros) Note 2022 2021
Restated
1
Operating activities
Operating profit 3 1,600 1,394
Adjustments 13 461 280
Royalty advances payments, net of recoupments (148 ) (364 )
Gross cash provided by/(used for) operating activities before income tax paid 1,913 1,310
Other changes in net working capital 13 74 85
Net cash provided by/(used for) operating activities before income tax paid 1,987 1,395
Income tax paid 6 (255 ) (255 )
Net cash provided by/(used for) operating activities 1,732 1,140
Investing activities
Catalogue investments (359 ) (388 )
Other intangible assets investments (60 ) (48 )
Capital expenditures 10 (33 ) (13 )
Purchases of consolidated companies, after acquired cash (22 ) (11 )
Investments in equity affiliates (22 ) (28 )
Purchase of financial assets (36 ) (43 )
Investments (532 ) (531 )
Proceeds from sales of property, plant, equipment and intangible assets - 6
Proceeds from sales of consolidated companies, after divested cash - 117
Proceeds from sale of financial assets 9 14
Divestitures 9 137
Dividends received from equity affiliates 12 2 2
Dividends received from investments 1 1
Net cash provided by/(used for) investing activities (520 ) (391 )
Financing activities
Distributions to shareowners 19 (798 ) (785 )
Dividends paid by consolidated companies to their non-controlling interests (2 ) (2 )
Transactions with shareowners (800 ) (787 )
Proceeds from borrowings 5,938 3,176
Repayments of borrowings (6,359 ) (3,624 )
Interest, net (30 ) (17 )
Other cash items related to financing activities 4 (8 )
Transactions on borrowings and other financial liabilities (447 ) (473 )
Repayment of lease liabilities 11 (86 ) (70 )
Payment of interest of lease liabilities 11 (14 ) (16 )
Net cash provided by/(used for) financing activities (1,347 ) (1,346 )
Net change in cash and cash equivalents (135 ) (597 )
Foreign currency translation adjustments 1 32
Change in cash and cash equivalents 16 (134 ) (565 )
Cash and cash equivalents
At beginning of the period 16 572 1,137
At end of the period 16 438 572
1 Restated amounts are presented in Note 2.3.
CONSOLIDATED STATEMENT OF CASH FLOWS
MUSIC IS UNIVERSAL Annual Report 2022 | 231
FINANCIAL STATEMENTS
Consolidated Statement of Changes in
Equity
Year ended December 31, 2022
(inmillions of euros)
Note
Number
of shares
(in thousands)
Share
capital
Additional
paid-
in capital
Treasury
shares
Retained
earnings
Shareowners
equity
Non-
Controlling
interest
Total
equity
BALANCE AS OF DECEMBER 31, 2021 1,813,376 18,134 14,941 (12 ) (31,033 ) 2,030 - 2,030
Net profit - - - - 782 782 3 785
Income and expenses directly recognized in
equity, net of tax
20 - - - - 234 234 - 234
TOTAL COMPREHENSIVE INCOME - - - - 1,016 1,016 3 1,019
Dividends paid and payable by UMG N.V.
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
Year ended December 31, 2021
(inmillions of euros)
Note
Number
of shares
(in thousands)
Share
capital
Additional
paid-
in capital
Treasury
shares
Retained
earnings
Shareowners
equity
Non-
Controlling
interest
Total
equity
BALANCE AS OF DECEMBER 31, 2020 - - - - 1,634 1,634 - 1,634
Net profit - - - - 886 886 2 888
Income and expenses directly recognized
in equity, net of tax
20 - - - - 220 220 - 220
TOTAL COMPREHENSIVE INCOME - - - - 1,106 1,106 2 1,108
Dividends paid and payable by UMG N.V.
19 - - - - (785 ) (785 ) (2 ) (787 )
Contributions by shareowners of their UIM
B.V. and UMG Inc. shares to UMG B.V.
1,847,874 18,479 14,521 - (33,000 ) - - -
Reduction in number of shares and
effective capital contribution
(34,633) (346 ) 346 - - - - -
Share-based compensation plans
23 135 1 29 (12 ) 12 30 - 30
Share-based compensation plans settled
by Vivendi
- - 45 - - 45 - 45
TOTAL CHANGES OVER THE PERIOD 1,813,376 18,134 14,941 (12 ) (33,773 ) (710 ) (2 ) (712 )
BALANCE AS OF DECEMBER 31, 2021 1,813,376 18,134 14,941 (12 ) (31,033 ) 2,030 - 2,030
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
MUSIC IS UNIVERSAL Annual Report 2022 | 232
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements
Note 1. General information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
Note 20. Expenses and income directly recognized in equity
Details of changes in equity related to other comprehensive income
Items not subsequently reclassified
to profit & loss
Items to be subsequently reclassified to profit & loss
(in millions of euros)
Actuarial gains/
(losses) related
to employee
defined
benefit plans
Financial
assets at
fair value
through
other
comprenhensive
income
Foreign
currency
translation
adjustments
Other
comprehensive
income from
equity affiliates,
net
Other
comprehensive
income
Balance as of December 31, 2020 (42) (15) (418) (8) (483)
Expenses and income directly recognized
in equity
(6) - 218 5 217
Tax effect 1 2 - - 3
Balance as of December 31, 2021 (47) (13) (200) (3) (263)
Expenses and income directly recognized
in equity
49 8 184 6 247
Tax effect (13) - - - (13)
Balance as of December 31, 2022 (11) (5) (16) 3 (29)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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Company Statements
Contents of Company Statements
Company Statement of Profit or Loss and Other Comprehensive Income 291
Company Statement of Financial Position 292
Company Statement of Cash Flows 293
Company Statement of Changes in Equity 294
Notes to the Company Financial Statements 295
Note 1. General information 295
Note 2. Basis of preparation 295
Note 3. Dividend income 299
Note 4. General and administrative expenses 299
Note 5. Financial income and expenses 300
Note 6. Investments in subsidiaries 300
Note 7. Current and non-current financial assets 301
Note 8. Cash position and borrowings 301
Note 9. Contractual obligations and other commitments 303
Note 10. Equity 304
Note 11. Related parties 307
Note 12. Statutory audit fees 307
Note 13. Subsequent events 308
FINANCIAL STATEMENTS
Company Statement of Profit or Loss and
Other Comprehensive Income
Year ended December 31,
(inmillions of euros) Note 2022 2021
Dividend income 3 - 785
General and administrative expenses 4 (4) (23)
Operating profit (4) 762
Financial income 5 36 13
Financial expenses 5 (45) (10)
Profit/(loss) before income taxes (13) 765
Income taxes (3) -
Net profit/(loss) after income taxes (16) 765
Net profit/(loss) attributable to equity holders of the Company (16) 765
Total comprehensive income attributable to equity holders of the Company (16) 765
COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
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FINANCIAL STATEMENTS
Company Statement of Financial Position
Year ended December 31,
(inmillions of euros) Note 2022 2021
Property, plant and equipment - 1
Right of use assets 1 1
Investments in subsidiaries 6 33,000 33,000
Non-current financial assets 7 1,976 2,178
Non-current assets 34,977 35,180
Current financial assets 7 333 262
Cash and cash equivalents 8 10 53
Current assets 343 315
TOTAL ASSETS 35,320 35,495
Share capital 18,135 18,134
Additional paid-in capital 14,935 14,941
Treasury shares (5) (12)
Retained earnings (721) (8)
Total equity 10 32,344 33,055
Long-term borrowings 8 1,112 1,848
Long-term lease liabilities 1 1
Non-current liabilities 1,113 1,849
Short-term borrowings 8 1,856 584
Trade and other payables 7 7
Current liabilities 1,863 591
Total liabilities 2,976 2,440
TOTAL EQUITY AND LIABILITIES 35,320 35,495
COMPANY STATEMENT OF FINANCIAL POSITION
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FINANCIAL STATEMENTS
Company Statement of Cash Flows
Year ended December 31,
(inmillions of euros) Note 2022 2021
Operating activities
Operating profit (4) 762
Changes in net working capital - 7
Adjustments for accrued interest (3) 3
Net cash provided by/(used for) operating activities before income tax paid
(7)
772
Income tax paid (3) -
Net cash provided by/(used for) operating activities (10) 772
Investing activities
Capital expenditures - (1)
Increase in financial assets 7 (5) (2,368)
Proceeds from financial assets 7 200 -
Interest received 34 7
Net cash provided by/(used for) investing activities 229 (2,362)
Financing activities
Distributions to equity holders 10 (798) (785)
Transactions with shareowners
(798) (785)
Proceeds from borrowings 8 5,573 2,842
Repayments of borrowings 8 (5,018) (410)
Interest paid 8 (19) (4)
Net cash provided by/(used for) financing activities (262) 1,643
Change in cash and cash equivalents (43) 53
Cash and cash equivalents
At beginning of the period 8 53 -
At end of the period 8 10 53
COMPANY STATEMENT OF CASH FLOWS
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FINANCIAL STATEMENTS
Company Statement of Changes in Equity
Year ended December 31, 2022
(inmillions of euros) Note
Number
of shares
(in
thousands)
Share capital
Additional
paid-
in capital
Treasury
shares
Retained
earnings Total equity
BALANCE AS OF DECEMBER 31, 2021 1,813,376 18,134 14,941 (12) (8) 33,055
Net loss - - - - (16) (16)
TOTAL COMPREHENSIVE INCOME - - - - (16) (16)
Dividends paid
10 - - - - (798) (798)
Share-based compensation plans
10 137 1 (6) 7 101 103
TOTAL CHANGES OVER THE PERIOD 137 1 (6) 7 (713) (711)
BALANCE AS OF DECEMBER 31, 2022 1,813,513 18,135 14,935 (5) (721) 32,344
Year ended December 31, 2021
(inmillions of euros) Note
Number
of shares
(in
thousands)
Share capital
Additional
paid-
in capital
Treasury
shares
Retained
earnings Total equity
BALANCE AS OF DECEMBER 31, 2020 100 - - - - -
Net profit - - - - 765 765
TOTAL COMPREHENSIVE INCOME - - - - 765 765
Share cancellation
(100) - - - - -
Dividends paid
10 - - - - (785) (785)
Contributions by shareowners of their UIM B.V.
and UMG Inc. shares to UMG B.V.
1,847,874 18,479 14,521 - - 33,000
Reduction in number of shares and effective
capital contribution
(34,633) (346) 346 - - -
Share-based compensation plans
10 135 1 29 (12) 12 30
Share-based compensation plans settled
by Vivendi
- - 45 - - 45
TOTAL CHANGES OVER THE PERIOD 1,813,276 18,134 14,941 (12) (8) 33,055
BALANCE AS OF DECEMBER 31, 2021 1,813,376 18,134 14,941 (12) (8) 33,055
COMPANY STATEMENT OF CHANGES IN EQUITY
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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 the
Netherlands 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 is
located at 's-Gravelandseweg 80, 1217 EW Hilversum The Netherlands. The Company is registered with the Dutch Chamber
of commerce under number 81106661.
Incorporation
The Company was incorporated on December 4, 2020. On February 26, 2021, the Company obtained all of the shares of
Universal International Music B.V. and Universal Music Group, Inc. from Vivendi and the consortium led by Tencent by
issuing new shares, to its shareholders. Refer to the Statement of Changes in Equity.
This internal reorganization of the shareholding structure of UMG was scheduled as part of the agreement signed in
December 2019 by Vivendi and the Tencent-led consortium, a prerequisite for the company’s planned listing on the
stock market.
The prospectus relating to the admission to listing and trading of the shares of the Company on Euronext Amsterdam was
approved by the Dutch Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) on September 14, 2021
and is available on the Company’s websites.
On September 21, 2021, the shares of the Company started trading on the regulated market of Euronext Amsterdam.
Note
2.Basis of preparation
2.1 Statement of compliance
For the year ended December 31, 2022, the Company have prepared its financial statements in accordance with the
International Financial Reporting Standards (IFRS) as issued by International Accounting Standards Board (IASB), IFRS as
endorsed by the European Union (EU) and with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code. The
Company financial statements are prepared by the Board of Management of the Company and authorized for issue on
March 30, 2023 and will be submitted for adoption to the Annual General Meeting of Shareholders on May 11, 2023.
2.2 Basis of measurement
The Company financial statements were prepared using the same accounting policies as set out in the notes to
the consolidated financial statements at December 31, 2022 (the “Consolidated financial statements”), except for the
measurement of the investments as presented under Note 2.6 in the Company financial statements. The accounting
policies were consistently applied to all periods presented.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
2.3 Foreign currency translation
The Company financial statements are presented inmillions 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 the
transaction. At the closing date, foreign currency monetary assets and liabilities are translated into the entity’s functional
currency at the exchange rate prevailing on that date with foreign currency differences recorded to profit and loss.
2.4 Recent accounting developments
The 2022 accounting policy changes originated from the IFRS amendments, which became effective as at 1 January 2022,
however, the impact from their adoption on the Company financial statements of UMG N.V. was not material. For the full
list of such IFRS amendments refer to the Consolidated financial statements.
The Company applied IFRS Practice Statement 2 - Disclosure of Accounting Policies in its financial statements. UMG
N.V. used the guidance of the Practice Statement 2 to optimise its material accounting policy information disclosure to
include only material accounting policy information.
New IFRS standards and IFRIC interpretations in issue but not yet effective
The new and amended standards and interpretations that are issued up to the date of issuance of the Company's
financial statements which are effective for the periods starting January 1, 2023 are disclosed below. The Company
intends to adopt these new and amended standards and interpretations, if applicable, when they become effective.
• IFRS 17 (including the June 2020 amendments to IFRS 17) Insurance Contracts
• Amendments to IAS 8 Definition of Accounting Estimates
• Amendments to IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The Company does not expect that the adoption of all other the standards and amendments listed above will have a
material impact on the financial statements of the Group in future periods.
2.5 Significant judgements and estimates
The preparation of Company financial statements in compliance with IFRS requires management to make certain
judgements and estimates that they consider reasonable and realistic. Although these judgements and estimates are
regularly reviewed by management, based, in particular, on past or anticipated achievements, facts and circumstances
may lead to changes in these judgements and estimates which could have an impact on the reported amount of group
assets, 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 forward-
looking information and events, including credit ratings if available, significant adverse economic changes (actual or
expected), financial or business environment that are expected to result in a material change in the borrower's ability
to meet its obligations is used to assess whether there is significant increase in credit risk, refer to Note 2.9 and 2.11.
For more on financial guarantees, refer to note 2.14.
2.6 Investments in subsidiaries and dividend income
Investments in subsidiaries are stated at cost, less impairment.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
Dividend income from the Company's subsidiaries is recognized in the statement of profit or loss when the right to
receive 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 is
written 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 recognized impairment losses may no longer exist or may have
decreased. If such an indication exists, the Company makes an estimate of the recoverable amount. A previously
recognized impairment loss is reversed only if there has been a change in the estimates used to determine the
asset's recoverable amount since the last impairment loss was recognized. If that is the case, the carrying amount
of the asset is increased to its recoverable amount, up to a maximum of the carrying amount that would have been
determined if no impairment loss had been recognized for the asset in prior periods. Such a reversal is recognized in 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 since
initial recognition. To assess whether there has been a significant increase in credit risk, the Company compares the
credit risk at the reporting date with the credit risk at the date of initial recognition based on reasonable forward-looking
information and events, including credit ratings if available, significant adverse economic changes (actual or expected),
financial or business environment that are expected to result in a material change in the borrower's ability to meet
its obligations.
2.10 Cash and cash equivalents
Cash and cash equivalents include all cash balances and short-term highly liquid investments with an original maturity
of 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 not
include 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 all
classified as subsequently measured at amortized cost and measured using the effective interest rate method.
Transaction costs relating to financial liabilities
Non-recurring costs incurred at inception of financial liabilitiesare loan origination fees by substance and are directly
attributable to the issue of the financial liability and would not be otherwise incurred. These costs also form integral part
of the effective interest.
These costs are to be capitalised and recognised going forward as an adjustment to the effective interest rate for
the bonds.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
2.12 Related parties
A related party is a person or an entity that is related to UMG. These include both people and entities that have, or
are subject to, the influence or control of UMG (e.g. key management personnel). Transactions with related parties are
accounted for in accordance with the requirements of relevant IFRSs and take into account the substance as well as the
legal form.
2.13 Contingent assets and liabilities
Contingent liabilities are possible or present obligations of sufficient uncertainty that do not qualify for recognition as
a provision, unless it is assumed in a business combination. Contingent liabilities are reviewed continuously to assess
whether an outflow of resources has become probable.
2.14 Financial guarantees
Financial guarantee is a contract that requires the issuer to make specified payments to reimburse the holder for a loss
it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Issued financial guarantees are initially recognised at fair value and are subject to the expected credit loss model, and a
credit loss is recognized for expected cash shortfalls.
Non-financial guarantees are accounted for as a contingent liability until such time it becomes probable that UMG will be
required to make a payment under the guarantee.
2.15 Property, plant and equipment
Property, plant and equipment are carried at historical cost less any accumulated depreciation and impairment losses.
Historical cost includes the acquisition cost or production cost, costs directly attributable to transporting an asset to its
physical location and preparing it for its operational use, the estimated costs relating to the demolition and the collection
of property, plant and equipment, and the rehabilitation of the physical location resulting from the incurred obligation.
When property, plant and equipment include significant components with different useful lives, they are recorded and
depreciated separately. Depreciation is calculated using the straight-line method based on the estimated useful life of
the assets. Useful lives of the main components are reviewed at the end of each reporting period and are as follows:
• buildings: 5 to 40 years;
• equipment and machinery: 3 to 8 years; and
• other: 2 to 10 years.
After initial recognition, the cost model is applied to property, plant and equipment.
2.16 Leases
The lease contracts for the Company correspond to real estate leases for which the Company is the lessee. Real estate
leases for which the Company is the lessee are recorded at the commencement date and result in the recognition of a
lease liability equal to the present value of future lease payments against a right-of-use asset relating to leases.
Right-of-use assets
Right-of-use assets are initially measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any 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 estimated useful 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 payments
that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include payments of penalties for terminating a lease, if the Company has the option to terminate and it
is reasonably certain that this option will be exercised. In calculating the present value of lease payments, the Company
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
uses the incremental borrowing rate at the lease commencement date if the interest rate implicit in the lease is not
readily determinable.
After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced
for the lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification, a change
in the lease term, a change in the in-substance fixed lease payments.
Significant judgements in accounting for leases
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by
an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate
the lease, if it is reasonably certain not to be exercised. When determining the lease term, the Company considers all
relevant facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise a
termination option.
Note 3.Dividend income
Dividend income for the year ended December 31, 2022 amounted to €0 (2021: €785million and related to dividends from
Universal International Music B.V.).
Note 4.General and administrative expenses
General and administrative costs consisted of the following:
Year ended December 31,
(inmillions of euros) 2022 2021
Salaries 9 6
Pension - -
Social security and other employment expenses 1 -
Wages and expenses 10 6
Legal and professional fees
1
7 5
Audit fees 4 3
Other
2
(17) 9
Total 4 23
Annual average number of full-time equivalent employees, of which none worked from
outside of the Netherlands. 35 27
1 Legal and professional fees mainly relate to listing fees and expenses for legal, financial and consulting services.
2 Other consists of employee and service costs charged to and from subsidiaries.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
Note 5.Financial income and expenses
Financial income and expenses consisted of the following:
Year ended December 31,
(inmillions of euros) 2022 2021
Interest income from intercompany loans 36 13
Financial income 36 13
Interest expense on borrowings (36) (6)
Cost of finance (9) (4)
Financial expenses (45) (10)
Note 6.Investments in subsidiaries
Investments in subsidiaries consist of the following investments:
Net carrying value
Year ended December 31,
(inmillions of euros) Voting % interest 2022 2021
Universal International Music B.V.; Hilversum; The Netherlands 100 18,150 18,150
Universal Music Group, Inc.; Santa Monica; USA 100 14,850 14,850
33,000 33,000
Net result and equity as per most recent adopted financial statements:
Net Result
Shareholders' Equity
Year ended December 31, Year ended December 31,
2021 2020 2021 2020
Universal International Music B.V.
1
(68) 727 6,498 7,202
Universal Music Group, Inc.
2
931 560 3,358 1,960
1 Inmillions of euros
2 Inmillions 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
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FINANCIAL STATEMENTS
Note 7.Current and non-current financial assets
At December 31, 2022, current and non-current financial assets consist primarily of loans receivable of €2,174million
(2021: €2,372million) 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 principal amount of the first loan is €800million (2021: €1,000million) and it is repayable in 5 yearly instalments
(€200million) on 1 October of each year. The first instalment was paid on 1 October 2022. The loan bears interest at a rate
of EURIBOR 3 months plus margin. Margin for 2022 was set at 1.03% (2021: 1.03%).
The second loan, being in principle a credit facility, consists of a commitment of €2,000million, of which a total amount
of €1,368million have been drawn at December 31, 2022 (2021: €1,368million) and bears interest at a rate of EURIBOR
1 month plus margin. Margin for 2022 was set at 1.13% (2021: 1.13%). UIM may utilize the facility, to be made available
within 1 business day upon written request. The loan is fully repayable on 6 July 2026.
The current part of the loans receivable consists of the €200million receivable under the term loan on 1 October 2023
from UIM; accrued interest on the term loan of €5million and accrued interest on the credit facility of €1million. Other
non-current financial assets consist of capitalized bank fees of €8million paid to banks as part of obtaining the credit
facility as disclosed in Note 8, less amortization over the term of the facility.
Other current financial assets consisted of the following:
Year ended December 31,
(inmillions of euros) 2022 2021
Current intercompany receivables 18 14
Other intercompany receivables related to share-based compensation 108 45
126 59
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 reporting
and forecasting proves sufficient cash generated from the operation of the subsidiary to fulfill these borrowings. The
effect of the recognized expected credit losses is negligible. The loans are performing in accordance with the agreements.
Note
8.Cash position and borrowings
Cash position
Cash and cash equivalents amounted to €10million at December 31, 2022 (2021: €53million) and were denominated
in Euro.
Credit risk associated with cash and cash equivalents is considered limited as the counterparties are leading national
and international banks.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
Borrowings
December 31, 2022 December 31, 2021
(inmillions of euros) Total Long-term Short-term Total Long-term Short-term
Bonds 1,004 987 17 - - -
Term facility - - - 998 798 200
Drawn revolving
credit facility 125 125 - 1,050 1,050 -
Commercial papers 929 - 929 - - -
Intercompany payable 910 - 910 384 - 384
2,968 1,112 1,856 2,432 1,848 584
New borrowings
On June 30, 2022, the Company issued €500million of senior unsecured notes due on June 30, 2027 with a coupon of
3.00% and €500million of senior unsecured notes due on June 30, 2032 with a coupon of 3.75%. On July 1, 2022, the net
proceeds from the issuance of the unsecured senior notes of €1billion were used to fully repay the Term loan.
On July 8, 2022, the Company established a EURcommercial paper program. Under the Program, the Company may issue,
from time to time, commercial paper notes up to a maximum aggregate amount of €1billion. The proceeds from the
issuance will be used firstly to pay down the Company's revolving credit facility and manage short-term liquidity needs
from UMG.
In 2021, the Company entered into a syndicated euro-nominated term loan of EUR1,000million maturing yearly for 20%
of the amount, as well as the multi-currency revolving credit facility (RCF) for approximately EUR2,000million, both with
two one-year extension options.
The committed multi-currency RCF bears interest at a variable rate based on the relevant EURIBOR and LIBOR respectively
with zero-floor plus a margin and EURcommercial paper program bears variable interest rates of EURIBOR plus margin.
The margin was 0.36% as of December 31, 2022 (2021: 0.6%) and is subject to adjustment based on the level of Net Debt to
EBITDA ratio as at every financial year-end.
The intercompany payable consist of a short-term payable to Universal Music Group Treasury S.A.S. under a Cash
Management Agreement.
Financial covenants
On 31 May 2022, UMG NV announced Baa1/BBB Long Term Credit Ratings from Moody’s and S&P. These investment grade
ratings are the financial covenants UMG committed to sustaining. If UMG does not have these ratings by Moody’s and S&P
or a comparable rating from an internationally recognized credit rating agency, its financial net debt to EBITDA ratio shall
be equal to or below 4.0x. No other financial covenants are imposed on the Company by any of the borrowings.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2022 | 302
FINANCIAL STATEMENTS
Movements of borrowings
The movements in borrowings were as follows:
(inmillions of euros)
Term facility
Drawn
revolving
credit facility
Bonds
Commercial
papers
Inter-
company payable
Total
Balance December 31, 2020 - - - - - -
New borrowings 998 1,460 - - 384 2,842
Repayments - (410) - - - (410)
Balance December 31, 2021 998 1,050 - - 384 2,432
New borrowings 8 918 1,004 3,117 526 5,573
Repayments (1,006) (1,843) - (2,188) - (5,037)
Balance December 31, 2022 - 125 1,004 929 910 2,968
Interest rate risk is the risk of the fair value or future cash flows of a financial instrument fluctuating because of changes
in the market interest rates. Financial instruments included in the borrowings create an inherent interest rate risk.
UMG seeks to limit the period over which interest rates on debt are exposed. The preferred method of hedging interest
rate risk is issuing long term fixed-rate bonds. The use of interest-rate plain vanilla derivatives is also authorized. The list
of authorized instruments includes Interest rate swaps, FRAs, caps, and floors.
As of December 31, 2022, UMG had a ratio of fixed-rate debt to total outstanding net debt of approximately 49%, including
lease liabilities. A sensitivity analysis conducted in January 2023 on the gross debt portfolio shows that if short term
EURIBOR were to increase instantaneously by 0.5% from their level of December 31, 2022, with all other variables held
constant, the annualized interest expense would be €5million.
Note
9.Contractual obligations and other commitments
The table below analyzes the Company's material 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 based on floating rate adjustments according to market expectations.
Contractual obligations
Minimum future payments as of December 31, 2022
Total minimum future
payments as of
Payments due in
December 31, 2021
(inmillions of euros) Total 1 year 2-5 years After 5 years
Drawn revolving credit facility 128 125 3 - 1,055
Term loan - - - - 1,030
Bonds 1,263 34 635 594 -
Commercial papers 934 934 - - -
Lease liabilities - - - - 1
2,325 1,093 638 594 2,086
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2022 | 303
FINANCIAL STATEMENTS
Liquidity risk
The Company is exposed to the liquidity risk. Liquidity risk management ensures the ability to meet financial obligations
as they fall due.
The primary objective of liquidity management is providing for sufficient cash and cash equivalents to enable the
Company to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable
losses or risking damage to the Company.
The loans receivable bear interest at an interest rate higher than the interest rate on the borrowings from the banks. The
Company believes that the cash flow generated by the operations of its investments, its cash surpluses, net of amounts
used to reduce UMG's debt, as well as funds available through undrawn committed bank credit facilities will be sufficient
to cover cash outflows necessary for its operations as well as its debt service for the foreseeable future.
Over the course of the year, fluctuations occur in the working capital needed to finance operations. The Company strives
to have a good liquidity position at all times and optimize daily cash management. Moreover, the Company strictly
controls working capital by optimizing billing and collection.
Financial guarantees
At December 31, 2022, the Company provided guarantees over certain debt of the following subsidiaries: Universal Music
Group Treasury S.A.S. €142million; Universal Music Ltda. (Brazil) €83million; Universal Music AB (Sweden) €7million. 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 the
agreements. 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 and
therefore the financial guarantees are not recognised. In addition, the Company provided guarantees to several
subsidiaries in the UK and The Netherlands.
The Company has provided guarantees to the following Universal Music Group subsidiaries, incorporated in the
Netherlands, under the registered number indicated, under section 403 of Book 2 of the Dutch Civil Code.
Name
Company Number
Universal International Music B.V. 31018439
Universal Music Publishing International B.V. 31037866
Universal Music Publishing B.V. 32101966
CMHL B.V. 32140273
Universal Production Music B.V. 85798479
Note 10.Equity
Share capital
The Company has an authorized share capital of €27,000,000,000, divided into 2,700,000,000 ordinary shares with a
nominal value of €10 per share. On December 31, 2022, the issued and fully paid share capital consisted of 1,813,512,742
ordinary shares with a nominal value of €10 per share (2021: 1,813,375,796 ordinary shares with a nominal value of €10
per share).
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2022 | 304
FINANCIAL STATEMENTS
The following table summarizes the changes in the number of issued and fully paid up shares of the Company for the
year ended December 31, 2022:
Ordinary Shares
Issued and fully paid up shares as at December 31, 2021 1,813,375,796
Shares issued
1
136,946
Issued and fully paid up shares as at December 31. 2022 1,813,512,742
1 In 2022, the Company issued 136,946 shares for the purpose of delivering on the share-based executive incentive plan, refer to Note 23 of the Consolidated Financial
Statements for more details.
Additional paid-in capital
Share premium represents the premium paid in excess of the par value of shares at the time of the issuance of 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, 2022 the Company held 214,235 shares (2021: 466,783) as Treasury 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.
Dividend distribution
A proposal will be submitted to the 2023 Annual General Meeting of Shareholders to pay a dividend of €0.27 per ordinary
share corresponding to a total distribution of €491million, in cash, from the 2022 retained earnings reserve (or if dividend
exceeds is from the free distributable reserves) of the Company, payable in Q2 2023.
On May 12, 2022 the shareholders approved a dividend distribution of €0.20 per ordinary share, corresponding to a total
distribution of €363million, payable in June 2022.
On July 27, 2022, the shareholders approved a dividend distribution of €0.24 per ordinary share, corresponding to a total
distribution of €435million, payable in October 2022.
The Company plans to annually declare and pay dividends to all holders of the Shares on a pro rata basis in two
semi-annual instalments, in the aggregate amount of no less than 50% of the Company's net profits realized during the
relevant 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 the
second quarter of the following financial year, to be paid following approval of the Company's financial statements at its
annual General Meeting.
Pursuant to Dutch law, limitations exist relating to the distribution of shareholders’ equity up to at least the total amount
of the share capital, the legal reserve, as well as other reserves mandated per the Company Articles of Association.
At December 31, 2022, the legal and non-distributable reserves of the Company amounted to €18,135million (2021:
€18,134million).
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2022 | 305
FINANCIAL STATEMENTS
Reconciliation of equity and net (loss)/profit
Year ended
December 31,
(inmillions of euros) 2022
Equity attributable to Universal Music Group equity holders in the Consolidated financial statements as at
31 December, 2022
2,351
Combined equity pre-incorporation (1,634)
Intra-group restructuring upon incorporation 33,000
Cumulative dividend 785
Cumulative results of subsidiaries in the Consolidated financial statements (1,704)
Cumulative charges and income directly recognized in equity in the Consolidated financial statements (454)
Equity in the Company financial statements as at December 31, 2022 32,344
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,
(inmillions of euros) 2022
Net (loss)/profit attributable to equity holders of the parent in the Consolidated financial statements 782
Results of subsidiaries in the Consolidated financial statements (798)
Net (loss)/profit in the Company financial statements as at December 31, 2022 (16)
Year ended
December 31,
(inmillions of euros) 2021
Equity attributable to Universal Music Group equity holders in the Consolidated financial statements as at
31 December, 2021
2,030
Combined equity pre-incorporation as at 31 December, 2020 (1,634)
Intra-group restructuring upon incorporation 33,000
Results of subsidiaries in the Consolidated financial statements (906)
Dividend 785
Charges and income directly recognized in equity in the Consolidated financial statements (220)
Equity in the Company financial statements as at December 31, 2021 33,055
Year ended
December 31,
(inmillions of euros) 2021
Net (loss)/profit attributable to equity holders of the parent in the Consolidated financial statements 886
Results of subsidiaries in the Consolidated financial statements (906)
Dividend Income 785
Net (loss)/profit in the Company financial statements as at December 31, 2021 765
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2022 | 306
FINANCIAL STATEMENTS
Note 11.Related parties
Detailed information on the remuneration of the Board of Directors and senior management is included in the “Corporate
Governance” and “Remuneration of Directors” sections to the Annual Report. Also refer to note 24 Related Parties of the
Consolidated financial statements.
Executive management compensation
As of December 31, 2022 there were 2 (2021: 2) Executive Directors on the UMG N.V board. Their aggregate compensation is
presented in the table below.
Year ended December 31,
(inmillions of euros) 2022 2021
Short-term employee benefits 3 2
3 2
The Chairman and CEO is directly remunerated by another group company and this remuneration is not recharged to
the Company.
Non-executive board compensation
As of December 31, 2022, UMG's non-executive board received director fees of €1million (2021: €0.2million).
Other related-party transactions
Other related parties include:
• Overhead costs recharged from and to Universal International Music B.V. to a net amount of €17million.
Disclosed under “Other” in Note 4;
• Investments in subsidiaries (Note 6);
• Long term receivables from Universal International Music B.V. (Note 7);
• Financial income on loans granted (Note 5);
• Intercompany payables (Note 8);
• Financial Guarantees provided to subsidiaries (Note 9);
• Guarantee fees received to the amount of €1million on guarantees provided to subsidiaries (Note 9);
Note
12.Statutory audit fees
The fees for services provided by the Company’s independent auditors, Ernst & Young Accountants LLP and Deloitte
Accountants B.V, and its member firms and/or affiliates, consisted of the following:
Year ended December 31,
(inmillions of euros) 2022 2021
Deloitte
Accountants B.V.
Ernst & Young
Accountants LLP
Deloitte
Accountants B.V.
Ernst & Young
Accountants LLP
Audit FS 2 2 2 1
Total 2 2 2 1
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2022 | 307
FINANCIAL STATEMENTS
Note 13.Subsequent events
In February 2023, the Revolving Credit Facility agreement was amended with a new maturity date being April 26, 2028.
Around the date when these financial statements were authorised for issue, UMG N.V. was in the process of signing a new
short-term floating rate €500million revolving credit facility.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2022 | 308
OTHER INFORMATION
OTHER INFORMATION
DISTRIBUTION OF PROFITS
Pursuant to article 32 of the Articles, the distribution of profits shall be made
after the adoption of the financial statements by the General Meeting from
which it appears that the distribution is allowed. The Company may only make
distributions to the extent the shareholders’ equity of the Company exceeds the
sum of the issued and called-up part of the share capital of the Company and
any 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 distribute
any 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 (or
any profits remaining after distribution) shall also be reserved.
Subject to Dutch law, the Board may resolve to make an interim distribution
of profits, provided that it appears from an interim statement of assets and
liabilities signed by the Board that the shareholders’ equity of the Company
exceeds the sum of the issued and called-up part of the share capital of the
Company 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 that
a 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 observance
of the Articles), and may determine the conditions under which such option can
be 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 shall
be disregarded, unless such Shares are encumbered with a right of pledge or a
right 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 distributable
reserves maintained by the Company.
MUSIC IS UNIVERSAL
Annual Report 2022 | 310
INDEPENDENT AUDITORS’ REPORT
To the shareholders and the non-executive directors of Universal Music Group N.V.
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 2022 INCLUDED IN THE ANNUAL REPORT
Our opinion
We have audited the financial statements for the financial year ended
December 31, 2022 of Universal Music Group N.V. (‘the company’ or ‘UMG’)
based in Amsterdam.
In our opinion the accompanying financial statements give a true and fair view
of the financial position of Universal Music Group N.V. as at December 31, 2022
and of its result and its cash flows for 2022 in accordance with International
Financial Reporting Standards as adopted by the European Union (EU IFRS), the
International Financial Reporting Standards as issued by the IASB (IFRS) and
with Part 9 of Book 2 of the Dutch Civil Code.
The financial statements comprise:
• the consolidated and company statement of financial position as at
December 31, 2022.
• the following statements for the year ended 31 December 2022: the
consolidated and company profit and loss, comprehensive income, changes
in equity and cash flows.
• the notes comprising a summary of the significant accounting policies and
other explanatory information.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch
Standards on Auditing. Our responsibilities under those standards are further
described in the
Our responsibilities for the audit of the financial statements
section of our report.
We are independent of Universal Music Group N.V. in accordance with the
EU Regulation on specific requirements regarding statutory audit of public-
interest entities, the “Wet toezicht accountantsorganisaties” (Wta, Audit firms
supervision act), the “Verordening inzake de onafhankelijkheid van accountants
bij assurance-opdrachten” (ViO, Code of Ethics for Professional Accountants,
a regulation with respect to independence) and other relevant independence
regulations in the Netherlands. Furthermore, we have complied with the
“Verordening gedrags- en beroepsregels accountants” (VGBA, Dutch Code
of Ethics.
We believe the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 311
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 in
this context, and we do not provide a separate opinion or conclusion on
these matters.
Our understanding of the business
Universal Music Group N.V. is a music company which operates worldwide
in over more than 100 countries. The group is structured in components, and
we tailored our group audit approach accordingly. We paid specific attention in
our audit to a number of areas driven by the operations of the group and our
risk assessment.
We determined materiality and identified and assessed the risks of material
misstatement of the financial statements, whether due to fraud or error in order
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
Based on our professional judgement we determined the materiality for
the financial statements as a whole at € 75 million (2021: € 60 million). The
materiality is based on profit before tax and amounts to 8,3% of profit before
taxes (and 5% of profit before taxes normalized for the changes in fair value
of financial instruments).
We agreed with the non-executive directors that misstatements in excess of
€3,75 million, which are identified during the audit, would be reported to them,
as well as smaller misstatements that in our view must be reported on
qualitative grounds.
Scope of the group audit
Universal Music Group N.V. is at the head of a group of entities. The financial
information of this group is included in the consolidated financial statements.
Our joint group audit mainly focused on significant group entities in terms of
size and financial interest or where significant risks or complex activities were
present, leading us to involve component auditors for component entities in the
United States, the United Kingdom, Japan, France and Germany.
Because we are ultimately responsible for the opinion, we are also responsible
for directing, supervising and performing the group audit. In this respect we
have determined the nature and extent of the audit procedures to be carried out
for group entities. Decisive were the size and/or the risk profile of the group
entities or operations. On this basis, we selected group entities for which an
audit or review had to be carried out on the complete set of financial
information or specific items. Our joint ISA 600 procedures included a
combination of physical and remote working paper reviews for France, Germany,
Japan, United Kingdom and the United States of America, and virtual and live
meetings with the component auditors and component management. We also
jointly reviewed component audit team deliverables for the countries listed
above to gain a sufficient understanding of the work performed based on our
instructions. For smaller components, we have jointly performed review
procedures or specific audit procedures at group level.
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 312
We jointly performed audit procedures at group level on areas like the group
shared 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 and equity
investments. Furthermore, we performed review procedures or specific audit
procedures at other group entities.
By performing the procedures mentioned above at components of the group,
together with additional procedures at group level, we have been able to obtain
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 the audit
of a listed client in the Media and Entertainment industry. We included
specialists in the areas of IT audit, income tax, forensics, sustainability,
treasury, share based payments, valuations and employee benefits.
Our focus on climate-related risks and the energy transition
Climate change and the energy transition are high on the public agenda.
Issues such as CO
2
reduction impact financial reporting, as these issues entail
risks for the business operation, the valuation of assets (‘stranded assets’) and
provisions or the sustainability of the business model and access to financial
markets of companies with a larger CO
2
footprint.
The board of directors summarized Universal Music Group N.V.’s commitments
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 commitments of the board report
where the board of directors disclose its assessment and implementation plans
in connection to climate-related risks and the effects of energy transition.
As part of our audit of the financial statements, we evaluated the extent to which
climate-related risks and the effects of the energy transition and the company’s
commitments are taken into account in estimates and significant assumptions.
Furthermore, we read the board report and considered whether there is any
material inconsistency between the non-financial information as included in
the sections Financial review, Shareholders information and Risk & Risk
management and the financial statements.
•
Full scope
•
Specific scope
•
Other procedures
Assets PBT Revenues
15%
29%
56%
13%
49%
38%
17%
43%
40%
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 313
Based on the audit procedures performed, we do not deem climate-related risks
to have a material impact on the financial reporting judgements, estimates or
significant assumptions as at 31 December 2022.
Our focus on fraud and non-compliance with laws and regulations
Our responsibility
Although we are not responsible for preventing fraud or non-compliance and we
cannot be expected to detect non-compliance with all laws and regulations, it is
our responsibility to obtain reasonable assurance that the financial statements,
taken as a whole, are free from material misstatement, whether caused by fraud
or error. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal
control.
Our audit response related to fraud risks
We identified and assessed the risks of material misstatements of the financial
statements due to fraud. During our audit we obtained an understanding of the
company 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 the section risk and risk management of the board report for the
board’s (fraud) risk assessment and the audit committee section of the non-
executive directors’ report in which the non-executive directors reflect on this
(fraud) risk assessment.
We evaluated the design and relevant aspects of the system of internal control
and in particular the fraud risk assessment, as well as the code of conduct,
whistle blower procedures and incident registration. We evaluated the design
and the implementation and, where considered appropriate, tested the
operating 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 evaluated
whether these factors indicate that a risk of material misstatement due to fraud
is present.
We incorporated elements of unpredictability in our audit. We also considered
the outcome of our other audit procedures and evaluated whether any findings
were indicative of fraud or non-compliance.
As in all of our audits, we addressed the risks related to management override
of controls. For these risks we have performed procedures among others to
evaluate key accounting estimates for management bias that may represent
a risk of material misstatement due to fraud, in particular relating to important
judgment areas and significant accounting estimates as disclosed in Note 2.2
to the financial statements. We have also used data analysis to identify and
address high-risk journal entries and evaluated the business rationale (or the
lack thereof) of significant extraordinary transactions, including those with
related parties.
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 314
When identifying and assessing fraud risks, we presumed that there are risks
of fraud in revenue recognition. We considered, amongst others, the company’s
revenue related significant contracts signed in 2022 with third parties and the
accompanying accounting treatment of terms and conditions within these
contracts. We designed and performed our audit procedures relating to revenue
recognition responsive to this presumed fraud risk. These risks did however not
require significant auditor’s attention.
We considered available information and made enquiries of relevant executives,
directors, internal controls compliance, internal audit, legal, human resources
and regional directors and the non-executive directors.
Our audit response related to risks of non-compliance with
laws and regulations
We performed appropriate audit procedures regarding compliance with the
provisions of those laws and regulations that have a direct effect on the
determination of material amounts and disclosures in the financial statements.
Furthermore, we assessed factors related to the risks of non-compliance with
laws and regulations that could reasonably be expected to have a material effect
on the financial statements, through inquiry of key management personnel, the
board of directors, reading minutes, inspection of internal audit and compliance
reports, and performing substantive tests of details of classes of transactions,
account balances or disclosures. We also involved our forensic specialists.
We also inspected lawyers’ letters and correspondence with regulatory
authorities and remained alert to any indication of (suspected) non-compliance
throughout 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
the financial 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’s going concern assessment, based on our
knowledge and understanding obtained through our audit of the financial
statements or otherwise, contains all relevant events or conditions that may
cast significant doubt on the company’s ability to continue as a going concern.
Based on our procedures performed, we did not identify material uncertainties
about going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in
the financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or conditions may cause
a company to cease to continue as a going concern.
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 315
Valuation of Royalty advances to artists and repertoire owners
Risk Our audit approach Key observations
The company provides royalty advances to artists
in order to support the artist in future performances.
As of December 31, 2022, the total amount of royalty
advances amounted to EUR 2,6 billion (2021:
EUR 2,4 billion).
As described in note 2.4.9 and note 9 to the financial
statements, these advances to artists, songwriters
and co-publishers are capitalized as an asset when
their current popularity and past performances
provide a reasonable basis to conclude that the
future recoupment of such royalty advances against
future earnings otherwise payable to them is
reasonably assured. 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.
As described in note 2.2 to the financial statements,
the significant judgements in making the estimate
whether capitalized royalty advances are recoverable
against future royalties mainly relate to the
estimated future earnings performance of
beneficiaries who received advances.
We consider this to be a key audit matter based on
the significant judgements in making the estimate.
We obtained an understanding of the processes of making the
aforementioned estimate and the related accounting policies.
We evaluated the company’s accounting policies for recognition
and measurement of royalty advances for compliance with IAS
38 ‘Intangible assets’. Furthermore, we performed, amongst
others, the following audit procedures:
•
We obtained an understanding of and evaluated the design
and implementation of the relevant internal controls over the
valuation of royalty advances;
•
We obtained the contracts and supporting documentation
for payments related to material royalty advances during
the year;
•
We traced the recoupment during the year to supporting
documentation on a sample basis and peformed backtesting
by comparing the recoupment during the year with prior
period estimates;
•
We evaluated the recoverability of exposed advances by
challenging the assumptions used by the board in their
recoverability analysis. This includes agreeing royalty rates
applied in the calculation to the applicable artist agreements
and testing the assumptions of future earnings made by
management;
•
We carried out recoverability analysis to assess the
appropriateness of current vs. non-current classifications
of advances.
Applying the
aforementioned
materiality, we did not
identify any reportable
findings in the board’s
assessment of the
royalty advances and
the disclosures in
notes 2.2, 2.4.9 and
note 9.
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 have
communicated the key audit matters to the non-executive directors. The key
audit matters are not a comprehensive reflection of all matters discussed.
The prior year key audit matter ‘First year joint audit’ is no longer included
because this is our second-year audit. The prior year key audit matter ‘Estimate
associated with the publishing and recorded music broadcast revenues that are
collected through collecting societies’ was included because the company
updated its accounting policy in the prior year resulting in retrospective
adjustments to reflect the impact. This is no longer applicable in 2022.
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 316
REPORT ON THE 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.
Based on the following procedures performed, we conclude that the other
information:
• is consistent with the financial statements and does not contain material
misstatements
• contains the information as required by Part 9 of Book 2 of the Dutch Civil Code
for the board report and the other information as required by Part 9 of Book 2 of
the Dutch Civil Code and as required by Sections 2:135b and 2:145 sub section 2
of the Dutch Civil Code for the remuneration report.
We have read the other information. Based on our knowledge and understanding
obtained through our audit of the financial statements or otherwise, we have
considered whether the other information contains material misstatements.
By performing these procedures, we comply with the requirements 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 the financial statements.
The board of directors is responsible for the preparation of the other information,
including the board report in accordance with Part 9 of Book 2 of the Dutch Civil
Code and other information required by Part 9 of Book 2 of the Dutch Civil Code.
The board of directors and the non-executive directors are responsible for
ensuring that the remuneration report is drawn up and published in 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 of
public-interest entities.
European Single Electronic Format (“ESEF”)
Universal Music Group N.V. has prepared the annual report in ESEF. The
requirements for this are set out in the Delegated Regulation (EU) 2019/815
with regard to regulatory technical standards on the specification of a single
electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion the annual report prepared in the XHTML format, including the
(partially) marked-up consolidated financial statements as included in the
reporting package by Universal Music Group N.V., complies in all material
respects with the RTS on ESEF.
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 317
The board of directors is responsible for preparing the annual report, including
the financial statements, in accordance with the RTS on ESEF, whereby the board
of directors combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether
the annual report in this reporting package complies with the RTS on ESEF.
We performed our examination in accordance with Dutch law, including
Dutch Standard 3950N ’Assurance-opdrachten inzake het voldoen aan 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 the financial statements
The board of directors is responsible for the preparation and fair presentation of
the financial statements in accordance with EU-IFRS, IFRS and Part 9 of Book 2 of
the Dutch Civil Code. Furthermore, the board of directors is responsible for such
internal control as the board of directors determines is necessary to enable the
preparation of the financial statements that are free from material
misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, the board of directors is
responsible for assessing the company’s ability to continue as a going concern.
Based on the financial reporting framework mentioned, the board of directors
should prepare the financial statements using the going concern basis 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 cast
significant doubt on the company’s ability to continue as a going concern in the
financial statements.
The non-executive directors are responsible for overseeing the company’s
financial reporting process.
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 318
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that
allows us to obtain sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance,
which means we may not detect all material errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these financial
statements. The materiality affects the nature, timing and extent of our audit
procedures and the evaluation of the effect of identified misstatements on
our opinion.
We have exercised professional judgment and have maintained professional
skepticism throughout the audit, in accordance with Dutch Standards on
Auditing, ethical requirements and independence requirements.
The ‘Information in support of our opinion’ section above includes 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, and obtaining
audit evidence that is sufficient and appropriate to provide a basis for our
opinion
• Obtaining an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the company’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 other
matters, the planned scope and timing of the audit and significant audit
findings, including any significant findings in internal control that we identify
during our audit.
In this respect we also submit an additional report to the audit committee 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 have
complied with relevant ethical requirements regarding independence, and
to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable,
related safeguards.
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 319
From the matters communicated with the non-executive directors, we
determine the key audit matters: those matters that were of most significance in
the audit of the financial statements. We describe this matter in our auditor’s
report unless law or regulation precludes public disclosure about the matter or
when, in extremely rare circumstances, not communicating the matter is in the
public interest.
Amsterdam, March 30, 2023
Ernst & Young Accountants LLP Deloitte Accountants B.V.
Was signed on the original: Was signed on the original:
J-L Geutjes I.A. Buitendijk
OTHER INFORMATION
MUSIC IS UNIVERSAL Annual Report 2022 | 320
APPENDIX
APPENDIX
BIOS CORPORATE EXECUTIVES
Sir Lucian Grainge
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
Sir Lucian Grainge has spent his entire career in the music industry and has
signed and worked with many worldwide stars, including ABBA, Jay Z, Elton
John, Katy Perry, Queen, Rihanna, The Rolling Stones, Sam Smith, U2 and Amy
Winehouse, among many others.During the span of four decades, he not only
pioneered new approaches to the signing and development of the world’s most
successful 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 history
of the music industry, both competitively and financially, and his vision and
leadership is widely recognized as having returned the entire industry to
growth after 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 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 and
supply 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 music company
and the first woman to be named CEO of a major music publisher. Since
joining UMPG in 2015, Gerson has transformed the company into the industry’s
best global home to songwriters and abillion-dollar business – more than
doubling revenue and substantially increasing profit. Gerson led UMPG’s historic
catalog acquisitions of Bob Dylan, Sting, Neil Diamond and Frank Zappa. She
has signed and works with the world’s biggest superstars including Elton John,
Taylor Swift, Harry Styles, Kendrick Lamar, Bad Bunny, Adele, The Weeknd,Billie
Eilish, SZA, Rosalia, Drake, Steve Lacy, Alicia Keys, Coldplay, Justin Bieber, Post
Malone, Ariana Grande, H.E.R., Maren Morris, the Bee Gees, Prince, and more.
Gerson cofounded nonprofit She Is The Music and serves on Boardsforthe
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 AND
LEGAL AFFAIRS
Jeffrey Harleston is responsible for the global oversight of all business
transactions, contracts and litigation. He is additionally responsible for the
development of corporate policies, including the coordination of UMG’s
government 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 Iran-
Contra 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 to
focus 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, retain
and 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 Administration
from the University of Massachusetts-Amherst.
Boyd Muir
EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND PRESIDENT
OF OPERATIONS
Working seamlessly across the corporate and creative aspects of UMG’s
operations, 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 several
of 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, a
division 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 around
the 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 for
his 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 Director
of the Madison Project, the music industry’s first digital distribution trial, and
he was the founding CEO of Inscape, an interactive entertainment and games
publishing joint venture backed by Time Warner.
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Annual Report 2022 | 324
APPENDIX
Will Tanous
EXECUTIVE VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER
Will Tanous plays a key role in the development of the Company’s business
strategy, overseeing several major strategic and corporate endeavors, as
well 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 was
central in all of the Company’s major corporate initiatives, including: the sale
of 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 Association
of 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, the
Netherlands 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-ALLIANZ
France (Deputy CFO) and Ernst & Young Paris and Madrid. Vallejo received an
MBA from Montpellier University and a Master of Science from Cornell-Essec,
Cergy-Pontoise, France.
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APPENDIX
BIOS BOARD OF DIRECTORS
Sir Lucian Grainge
Male, Age: 63, Nationality: British
CHAIRMAN AND CHIEF EXECUTIVE OFFICER AND EXECUTIVE DIRECTOR
Sir Lucian Grainge has spent his entire career in the music industry and has
signed and worked with many worldwide stars, including ABBA, Jay Z, Elton
John, Katy Perry, Queen, Rihanna, The Rolling Stones, Sam Smith, U2 and Amy
Winehouse, among many others.During the span of four decades, he not only
pioneered new approaches to the signing and development of the world’s most
successful 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 history
of the music industry, both competitively and financially, and his vision and
leadership is widely recognized as having returned the entire industry to
growth after 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 and leadership through its challenging times, contributions to British
business and inward investment, as well as his development of innovative
business models, technology and media partnerships that have expanded
UMG’s global presence.
Vincent Vallejo
Male, Age: 62, Nationality: French
DEPUTY CHIEF EXECUTIVE OFFICER, CORPORATE AND EXECUTIVE DIRECTOR
Vincent Vallejo is Deputy Chief Executive Officer, Corporate for Universal Music
Group. Based at the Company’s corporate headquarters in Hilversum, the
Netherlands 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-ALLIANZ
France (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: 78, Nationality: American
CHAIRMAN OF THE BOARD AND INDEPENDENT NON-EXECUTIVE DIRECTOR
Sherry Lansing is the founder and CEO of The Sherry Lansing Foundation,
an organization dedicated to funding and raising awareness for cancer
research, health, public education, and encore career opportunities. Lansing has
extensive knowledge regarding the creative industries, including but not limited
to audio/visual content. During a nearly 30-year career in the motion picture
business, Lansing was involved in the production, marketing, and distribution
of 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 more
than 12 years. Lansing graduated cum laude with a Bachelor of Science Degree
from Northwestern University in 1966.
Anna Jones
Female, Age: 48, Nationality: British
VICE CHAIRMAN OF THE BOARD AND INDEPENDENT NON-EXECUTIVE DIRECTOR
Anna Jones is the co-founder and Non-Executive Director of AllBright, the global
women’s network and members' club founded in 2017 to connect, upskill and
inspire professional women. She has more than 15 years of experience in
leadership roles with broad and deep expertise in content, digital disruption,
strategic growth and business transformation. Prior to founding AllBright, Jones
served as CEO of Hearst Magazines UK from 2014 to 2017, where she oversaw 24
media brands that together formed a network of content and experiences across
multiple platforms that reached a quarter of all UK adults. As Hearst Magazines
UK’s Chief Operating Officer from 2011 to 2014, she had strategic and operational
responsibility for the business overall, following the acquisition and integration
of Hachette Filipacchi in 2011. Jones has additionally served on the board of
the Creative Industries Federation, a national membership organisation for the
public arts, cultural education and creative industries, from 2015 to 2019. Jones
holds a Bachelor of Arts degree in International Business Management from
Newcastle University.
Antoine Fiévet
Male, Age 59, Nationality: French
INDEPENDENT NON-EXECUTIVE DIRECTOR
Antoine Fiévet is the Chairman and CEO of the Bel Group, a world leader in
branded cheese and a major player in the healthy snack market with 33
production sites and a distribution network spanning nearly 120 countries.
His three decades of professional experience include 20 years as Bel Group’s
CEO, where he has additionally served as Chairman since 2009. Under
Fiévet’s leadership, Bel Group adopted concrete actions to address 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 an undergraduate degree from Institut
Supérieur de Gestion.
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APPENDIX
Bill Ackman
Male, Age: 56, Nationality: American
NON-EXECUTIVE DIRECTOR
Bill Ackman is the CEO of Pershing Square Capital Management, L.P., an
investment firm he founded in 2003. Ackman is Chairman of The Howard
Hughes Corporation (NYSE:HHC). He serves as a member of the Investor Advisory
Committee on Financial Markets for the Federal Reserve Bank of New York, 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 the Pershing Square Foundation, a family foundation.
Ackman received an MBA from the Harvard Business School and a Bachelor of
Arts magna cum laude from Harvard College.
Cathia Lawson-Hall
Female, Age: 51, Nationality: French and Togolese
NON-EXECUTIVE DIRECTOR
Cathia Lawson-Hall is Head of Coverage and Investment Banking for Africa for
Société Générale, where she oversees the overall relationship and strategic
consulting with governments, large corporates and financial institutions in
Africa. Previously, she served as Managing Director, Co-Head of Debt Capital
Markets for corporates in France, Belgium and Luxembourg. Lawson-Hall joined
Société Générale in 1999 as a financial analyst covering the telecommunications
and media sectors before moving into financial consulting. She has more than
25 years of experience in financial services, starting as a corporate finance
professor at the University of Paris-Dauphine. Lawson-Hall is the founding
member of the acquisition committee of African Modern and Contemporary
Art at Centre Georges Pompidou, world leading museum of modern and
contemporary art. She sits on the board of directors of The Amis du Centre
Pompidou, the first patrons of the museum who contribute to the enrichment
of the collections of the institution. Lawson-Hall holds a Master’s degree and a
postgraduate degree in Finance from Paris Dauphine University in France.
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APPENDIX
Cyrille Bolloré
Male, Age: 37, Nationality: French
NON-EXECUTIVE DIRECTOR
Cyrille Bolloré serves as the Chairman and Chief Executive Officer of Bolloré
Group, a family-controlled holding company which is among UMG’s largest
investors and among the 500 largest companies in the world with focused
investments in transportation and logistics, communication, electricity storage
and solutions. At Bolloré Group, he additionally serves as Chairman of Bolloré
Transport & Logistics Corporate, Chairman of the Board of Directors of Bolloré
Energy, Chairman of BlueElec, Chairman of the Supervisory Board of Sofibol,
Chairman of the Management Board of Compagnie du Cambodge, and Vice-
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, and
Plantations des Terres Rouges, as a permanent representative on the Boards
of Financière Moncey, Bolloré Logistics, and Sogetra, and as a member of the
Supervisory Board of JCDecaux Bolloré Holding. In addition, Bolloré serves as
a director on the boards of several prominent companies, including on the
Supervisory Board of Vivendi SE, and also serves on the Board of Socfinasia
and Socfin, and as a permanent representative on the Board of Socfinaf. Bolloré
is a graduate of Paris Dauphine University, and holds a Master’s degree in
economics and management, with a major in finance.
James Mitchell
Male, Age: 49, Nationality: British
NON-EXECUTIVE DIRECTOR
James Mitchell is a Senior Executive Vice President and Chief Strategy Officer
of Tencent Holdings Limited (HKEX:0700), where he has worked since July 2011.
Mitchell has also served as the Chairman and Non-Executive director of the
board of China Literature Limited (HKEX:0772) since June 2017. He is also a
director of certain other listed companies including Frontier Developments Plc
(AIM:FDEV), NIO Inc. (NYSE:NIO, HKEX:09866) and Tencent Music Entertainment
Group (NYSE:TME), and of various unlisted companies. Prior to joining Tencent,
Mitchell was a managing director at Goldman Sachs. Mitchell received a
Bachelor of Arts degree from Oxford University and holds a Chartered Financial
Analyst Certification.
Luc Van Os
Male, Age: 56, Nationality: Dutch
NON-EXECUTIVE DIRECTOR
Luc van Os is co-owner of Misset Uitgeverij, a B2B publisher of multi-media
brands for the agricultural sector, and of Rendement Uitgeverij, a B2B multi-
media 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 to
serving as CEO, he held different leadership roles at Hearst and its predecessors,
Hachette Filipacchi Media and Quote Media. Under his leadership, Hearst
became the largest upscale magazine publisher in the Netherlands. Van Os is
also a member of the Supervisory Board of VNO-NCW, the national employers
association in the Netherlands.
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APPENDIX
Manning Doherty
Male, Age: 50, Nationality: Canadian
NON-EXECUTIVE DIRECTOR
Manning Doherty is Managing Director of GIC Pte Ltd., Singapore’s sovereign
wealth fund, where he sits in the Integrated Strategies Group that primarily
focuses on public and private debt and equity investments globally. Doherty is
a bilingual investment professional, whose career spans senior roles in equity
research, private equity and special situation investment and monitoring in
Asia and the U.S. Prior to GIC, he served as Managing Director of Mount Kellett
Capital from 2011 to 2015 and Managing Director of Oaktree Capital Management
from 2006 to 2011. Doherty has specialized knowledge in providing strategic
review to develop adjacent business lines; improvement of KPI monitoring
and decision making; broadening Company contacts across industry; and the
evaluation of strategic M&A and corporate finance actions. Doherty holds an
MBA from The Wharton School at the University of Pennsylvania, where he also
earned a Master’s degree in International Studies from the Lauder Institute.
He also holds a Bachelor of Arts degree from Queen’s University in Kingston,
Ontario in Canada.
Margaret Frerejean-Taittinger
Female, Age: 37, Nationality: American
INDEPENDENT NON-EXECUTIVE DIRECTOR
Margaret Frerejean-Taittinger is the co-founder of French Bloom, a company
that specializes in organic alcohol-free sparkling wines. Serving as Chief
Marketing Officer, Frerejean-Taittinger has successfully positioned French
Bloom as the market leader of the super-premium 0.0% category with presence
in more than 20 markets. Previously, she served as International Development
Manager for the Michelin Guide, the renowned restaurant rating system that
publishes its yearly selections in over 35 countries. In this role, Frerejean-
Taittinger led the expansion of the Michelin Guide working towards doubling
its 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 a
focus on education and micro-finance in East Africa. Frerejean-Taittinger holds
a Master of Development Practice from L’Institut d'Etudes Politiques de Paris
(Sciences Po), where she graduated Summa Cum Laude.
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APPENDIX
Nicole Avant
Female, Age: 55, Nationality: American
INDEPENDENT NON-EXECUTIVE DIRECTOR
Nicole Avant served as the 13th U.S. Ambassador to The Bahamas after being
nominated by President Barack Obama and unanimously confirmed by the U.S.
Senate, becoming the youngest as well as the first African American woman to
hold the position. In addition to her international diplomatic work, Ambassador
Avant brings deep commercial insight and knowledge of the media industries.
Most recently, she has focused her efforts on developing films and television
and produced the critically acclaimed and award-winning documentary, The
Black Godfather, for Netflix. Previously, she served as Vice President of Interior
Music Publishing and currently serves on the Board of Membership Collective
Group, Inc., the holding company of the Soho House social clubs. Throughout
her career, Ambassador Avant has also pursued an array of business and
philanthropic ventures. Ambassador Avant graduated with a Bachelor of Arts
Degree in Communications from California State University, Northridge in 1991.
MUSIC IS UNIVERSAL Annual Report 2022 | 331
APPENDIX
DEFINITIONS
In this Annual Report release, UMG presents certain financial measures when
discussing UMG’s performance that are not measures of financial performance
or liquidity under IFRS (“non-IFRS”). These non-IFRS measures (also known
as alternative performance measures) are presented because management
considers them important supplemental measures of UMG’s performance and
believes that they are widely used in the industry in which UMG operates as
a 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 non-
IFRS 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
the related Notes. In addition, it should be noted that other definitions and
calculations for these non-IFRS measures that differ from those used by UMG,
thereby affecting comparability.
EBITDA and EBITDA margin
UMG considers EBITDA and EBITDA margin, non-IFRS measures, to be relevant
measures to assess the performance of its operating segments as reported in
the segment data. It enables UMG to compare the operating performance of
operating segments regardless of whether their performance is driven by the
operating segment’s organic growth or by acquisitions. EBITDA margin is EBITDA
divided by revenue.
To calculate EBITDA, the accounting impact of the following items is excluded
from Operating Profit:
i. amortization of intangible assets
ii. impairment losses on goodwill and other intangibles
iii. other income and expenses related to transactions with shareowners
(except when directly recognized in equity)
iv. depreciation of tangible assets including right of use assets
v. (gains)/losses on the sale of tangible assets, included right of use assets and
intangible assets
vi. restructuring expenses
vii. other non-recurring items
Adjusted EBITDA and Adjusted EBITDA margin
The difference between EBITDA and Adjusted EBITDA consists of non-cash
share-based compensation expenses and certain one-time items that are
deemed by management to be significant and incidental to normal business
activity. Adjusted EBITDA margin is Adjusted EBITDA divided by revenue.
UMG considers Adjusted EBITDA and Adjusted EBITDA margin, non-IFRS
measures, to be relevant measures to assess performance of its operating
segments excluding items that may be incidental to normal business activity.
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APPENDIX
Adjusted Net Profit/Adjusted Net Profit per share
UMG considers the use of Adjusted net profit appropriate as UMG uses it as
the basis for the Adjusted net profit per share (in EUR) – diluted, both of which
are non-IFRS measures. Adjusted net profit may be subject to limitations as 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 a significant effect on UMG’s net profit.
The accounting impact of the following items is excluded from Net profit
attributable to equity holders of the parent:
i. amortization of catalogues
ii. impairment losses on goodwill and intangible assets
iii. other charges and income related to transactions with shareowners
iv. financial income and expenses, excluding interest and income
from investments
v. earnings from discontinued operations
vi. non-cash share-based compensation expenses
vii. certain one-time items that are deemed by management to be significant
and incidental to normal business activity
viii. income taxes and adjustments attributable to non-controlling interests
ix. non-recurring tax items
Financial Net Debt
UMG considers financial net debt, a non-IFRS measure, to be a relevant indicator
of the group’s liquidity and capital resources. UMG management uses this
indicator 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 not
compensated, corresponding to cash, and (ii) money market funds
ii. cash management financial assets, included in the Consolidated Statement
of 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 the
underlying 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, less
repayment of lease liabilities, interest, net and other cash items related to
financing activities. UMG considers free cash flow, a non-IFRS measure, to be a
relevant indicator of the group’s cashflow generated to fund dividend payments
and repayment of debt. Free Cash Flow is not a measure of performance
calculated in accordance with IFRS and therefore it should not be considered in
isolation of, or as a substitute for cash flow provided by operating activities as a
measure of liquidity. Free Cash Flow, as we calculate it, may not be comparable
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APPENDIX
to similarly titled measures employed by other companies. In addition, Free
Cash Flow does not necessarily represent funds available for discretionary use
and is not necessarily a measure of our ability to fund our cash needs.
Reconciliation of net profit attributable to equity holders of the
parent to adjusted net profit
Year ended,
December 31
(inmillions of euros) 2022 2021
Net profit attributable to equity holders of the parent
1
782 886
Financial income and expenses, excluding interest and
income from investments
671 220
Non-cash share-based compensation expense 107 79
Certain one time items
2
(11) 23
Impairment of intangible assets 17 -
Amortization of catalogues 233 144
Income tax on adjustments (255) (81)
Non-recurring tax items (90) -
Adjusted Net Profit 1,454 1,271
1 As reported in the Consolidated Statement of Profit or Loss
2 Certain one time items in 2022 includes interest income in relation to the one-time non-recurring tax item and
in 2021 related to expenses related to the direct listing of UMG on the Euronext Amsterdam.
Adjusted net profit per share
Year ended December 31,
(inmillions of euros) 2022 2021
basic diluted basic diluted
Adjusted net profit 1,454 1,454 1,271 1,271
Number of shares
1
Weighted average number of
shares outstanding
1,813 1,813 1,813 1,813
Potential dilutive effects related to
sharebased compensation
- 3 - 1
Adjusted weighted average number
of shares
1,813 1,816 1,813 1,814
Adjusted net profit per share (in euros) 0.80 0.80 0.70 0.70
1 As reported in Note 7 of the Consolidated Financial Statements.
Net cash provided by operating activities - Adjustments
Operating profit includes certain non-cash items that are adjusted to get to the
Net cash provided by operating activities as follows:
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APPENDIX
Year ended,
December 31
(inmillions of euros) 2022 2021
Amortization and depreciation expense 377 277
Impairment of intangible assets 17 -
Changes in provisions, net 65 8
(Gain)/loss on sale of assets 2 (2)
Other non-recurring items - (3)
Adjustments 461 280
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APPENDIX
CAUTIONARY NOTICE
Forward-looking statements
The annual report contains statements that may constitute forward-looking
statements with respect to UMG’s financial condition, results of operations,
business, strategy and plans. Such forward-looking statements may be
identified by the use of words such as ‘profit forecast’, ‘expect’, ‘estimate’,
‘project’, ‘anticipate’, ‘should’, ‘intend’, ‘plan’, ‘probability’, ‘risk’, ‘target’, ‘goal’,
‘objective’, ‘will’, ‘endeavour’, ‘optimistic’, ‘prospects’ and similar expressions
or variations on such expressions. Although UMG believes that such
forwardlooking statements are based on reasonable assumptions, they are
not guarantees of future performance. Actual results may differ materially
from such forward-looking statements as a result of a number of risks and
uncertainties, many of which are related to factors that are outside UMG’s
control, including, but not limited to, UMG’s inability to compete successfully
and to identify, attract, sign and retain successful recording artists and
songwriters, failure of streaming and subscription adoption or revenue to grow
or 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 and
regulations 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 the
annual report. UMG disclaims any intention or obligation to provide, update
or revise any such forward-looking statements, whether as a result of new
information, future events or otherwise.
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