UNIVERSAL
MUSIC GROUP
ANNUAL REPORT 2023
CONTENTS
ABOUT UMG 4
Foreword
5
Profile
7
Mission
8
Vision
9
Our purpose and values
10
2023 Chart highlights
12
Key figures 2023
19
Financial data for the last three years
21
Non-financial key figures 2023
22
How UMG adds value
24
Year in review
26
Stakeholder Analysis
28
SUSTAINABILITY 33
Our approach
34
BOARD REPORT:
Introduction
39
Business profile
40
Recorded Music
41
Music Publishing
47
Merchandising
50
BOARD REPORT:
Strategy
53
Creativity, innovation, entrepreneurship
54
BOARD REPORT: Organizational and Reporting Structure
64
BOARD REPORT: Financial Review
69
Earnings analysis: group and business segments
70
Liquidity and capital resources
78
BOARD REPORT:
Corporate Governance
83
The governance structure
84
The Board
85
The General Meeting
97
Statements of the Board
106
BOARD REPORT:
Shareholder Information
107
BOARD REPORT: Risk and Risk Management
113
MUSIC IS UNIVERSAL Annual Report 2023 | 2
BOARD REPORT: Non-Financial Information
137
Our Commitments
138
Regulatory & Standards Alignment
178
Information Tables
195
Verification of Non-Financial Data
199
ESG Indexes
209
NON-EXECUTIVE DIRECTORS REPORT 216
Report of the Non-Executive Directors
217
Remuneration report
226
FINANCIAL STATEMENTS 242
Consolidated Statements 243
Company Statements 304
OTHER INFORMATION 325
Distribution of profits
326
Independent auditor's report
327
APPENDIX 339
Bios Corporate Executives
340
Bios Board of Directors
344
Definitions
350
Cautionary Notice
354
MUSIC IS UNIVERSAL Annual Report 2023 | 3
ABOUT UMGABOUT UMG
FOREWORD
WE ARE UNIVERSAL
Dear Fellow Shareholders:
I am proud to report that, once again, Universal Music lead the industry across
the major financial and competitive performance metrics in 2023, at the same
time our artists and songwriters broke records and topped the charts around the
world. And there is so much more of which we can be proud this year.
It had become obvious that if music were to continue to thrive and the
value of artists’ work respected, several important issues would need to be
confronted. As the industry leader we took bold steps to turn our vision into
reality. For example, I have long been vocal about the streaming royalty model’s
shortcomings.A new model was needed, one that would properly reward the
artist-fan relationship and disincentivize fraud and gaming the system. We call
it the “Artist-Centric Model.”
Already, several global platforms have adopted artist-centric principles that will
transform the way artists are compensated for their work.As this new model
becomes widespread, the impact will be profound: a healthier, more equitable
and more vibrant music ecosystem that rewards all artists—be they major, indie
or DIY—at all stages of their careers.
In the same way, we led the way when it came to confronting the challenges
and opportunities of Artificial Intelligence (or AI). Early on in 2023, many
“experts” viewed AI as a looming threat.Our view?Just as we had done with
so many other previous proclamations of doom, we rejected that short-sighted
appraisal.We see AI as also presenting opportunities.And then once again, we
turned opportunities into reality.
We launched our Responsible AI initiative with two goals in mind. First, to
lobby for “guardrails,” public policies setting basic rules for AI.Second, to forge
private-sector partnerships with AI companies.In the past, new technology was
simply released into the world, leaving the music community to develop the
model by which artists would be fairly compensated and their rights protected.
In a sharp break with that past, we formed a historic relationship with YouTube
giving artists a seat at the table before any product goes to market, including
helping to shape AI products’ development and monetization. In addition, our
artists are working with some of the latest AI technology and companies to
enhance and support the creative process and music experiences.
We also advanced initiatives in areas from health and wellness to sustainability
and the environment. I am especially passionate about the intersection of
music and health. Building upon our success in creating a robust fitness
category, we’re now building a commercial category from this powerful
relationship between music and health. After entering more than 40 license
agreements in this space, we produced the first-ever Music + Health Summit,
bringing artists together with health entrepreneurs and neuroscientists.We are
pioneering a new category called “prescription music,” built on scientific and
medical research.It’s cost-effective, non-invasive and drives beneficial results.
MUSIC IS UNIVERSAL
Annual Report 2023 | 5
ABOUT UMGABOUT UMG
Our employees accomplished even more towards promoting positive societal
change.Our All Together Now Foundation, Task Force for Meaningful Change,
Green Team, Unhoused Coalition, and Employee Matching Program contributed
to more than 500 organizations around the world and supported over 1.2million
meals for those in need.
We are also advancing the industry on sustainability.We co-founded the
Music Industry Climate Collective, the music industry alliance to address global
climate change.And we became the first standalone major music company to
win approval of its greenhouse gas emission reduction targets by the Science
Based Targets initiative.
We also continued to expand our presence in high-growth markets—both
through the strength of our companies in those regions as well as the
expansion of Virgin Music Group.We acquired Chabaka Music, a leading MENA-
based company, as well as a majority stake in RS Group in Thailand. In India
we strengthened our position domestically with an exclusive partnership with
Represent, a leading management company.In China we signed new long-term
agreements with superstar Eason Chan and with 2022’s No. 1 IFPI global album
seller Jay Chou, that includes his JVR Music label.
Looking to 2024, both the pace of change and our industry leadership will
increase significantly and on many different fronts.
We will extend the reach of our pioneering artist-centric strategy.Our next
focus will be to grow the pie for all artists, including by strengthening the artist-
fan relationship.
As for AI, we will continue building opportunity for artists, while also leading the
fight to protect them from unethical uses of this technology.
We will keep growing our presence around the world: signing and developing
local artists; providing local labels and entrepreneurs with global promotion,
distribution, and a full suite of artist services; and acquiring local labels,
catalogs, and artist services businesses.
Over recent years, we have been investing in future growth, not just expanding
geographically and leveraging new technologies, but building our e-commerce
and D2C operations.As we continue our investments in A&R and artist
development, we will further evolve our organizational structure to create
efficiencies in other areas of the business, so we can remain nimble and
responsive to opportunities as they arise.
In the face of so much change and opportunity, standing still is never an option.
We must continue to fight for our artists and songwriters and stand up for the
creative and commercial value of music. Our vision of the future is filled with
possibilities, and acting on our strategy will make those possibilities real—for
our artists, our employees, our shareholders and the entire music ecosystem.
SIR LUCIAN GRAINGE, CHAIRMAN AND CEO,
UNIVERSAL MUSIC GROUP
MUSIC IS UNIVERSAL
Annual Report 2023 | 6
PROFILE
WE ARE
A CATEGORY
OF ONE
WE HAVE A RICH HISTORY
AND HAVE BUILT AN
UNPARALLELED CATALOG OF
SONGS AND RECORDINGS
Nº
Nº
Nº
Nº
1
1
1
2
>3.2 MILLION
RECORDINGS
RECORDED MUSIC
4.5 MILLION
OWNED & ADMINISTERED TITLES
MUSIC PUBLISHING
>220
ARTISTS / BRANDS
MUSIC MERCHANDISING
A LIBRARY OF MORE THAN 3,300 TITLES OF
LONG-FORM MUSIC-BASED AUDIOVISUAL CONTENT
ACROSS 1,350 ARTISTS
NEARLY 11 TRILLION STREAMS OF
UMG AUDIOVISUAL CONTENT ON SOCIAL MEDIA
PLATFORMS IN 2023
MUSIC-BASED VISUAL ENTERTAINMENT
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 7
We are Universal Music Group, the world’s leading music company.
We exist to shape culture through the power of artistry.
We are a community of entrepreneurs committed to creativity and innovation.
We own and operate a broad array of businesses engaged in recorded music,
music publishing, merchandising, and audiovisual content in more than 60
territories around the world.
We identify and develop recording artists and songwriters, and we produce,
distribute and promote the most critically acclaimed and commercially
successful music to inspire 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 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 to music’s greatest artists, innovators and entrepreneurs.
TOGETHER,
WE ARE UNIVERSAL MUSIC GROUP.
MISSION
MORE MUSIC TO
MORE PEOPLE
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 8
VISION
PUTTING
ARTISTS FIRST
ABOUT UMGABOUT UMG
Artists and songwriters are at the heart of everything we do at Universal Music
Group (UMG). Focused on their long-term development, our company is built
to serve their unique needs throughout their careers. Successfully producing
and marketing music requires a significant upfront investment and an ongoing
collaboration. UMG invests more in developing talent, and does so with greater
expertise, than any other music company. This investment, combined with our
excellence in marketing and promoting artists globally, means we consistently
lead the industry in breaking new artists.
Putting artists first sets us apart. We turn art into hits and hits into careers.
By building a continuum of services and resources for artists, we've designed
UMG so we can partner with artists at each stage of their careers to provide
them with all the services and resources they need. We start by identifying
the artists with whom we want to partner and presenting them with a 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 over the long-term to build and sustain
their careers through continuous engagement, improving lifetime fan value,
and enabling unique access to synchronization, brand partnerships, licensing
opportunities and eCommerce capabilities to monetize fandom.
Our artist-centric approach gives us an unrivalled track record in artist
development and commercial success.
MUSIC IS UNIVERSAL
Annual Report 2023 | 9
OUR
PURPOSE
AND VALUES
DRIVE ALWAYS PUSH FOR THE NEXT LEVEL OF GREATNESS.
We like to win. But winning is just the beginning. We’re always hungry to do more, regardless
of what we’ve already accomplished. We don’t wait to be shown the way forward; we create it.
We don’t measure our success against our competitors; we push to outdo ourselves.
INSIGHT SEE WHAT OTHERS DON’T SEE.
The bets we make may seem risky to some, but to us they are intuitively obvious. We trust
our gut but question our assumptions. To hone our understanding, we combine data and
real-world experience. We clearly imagine a future that others can’t see, yet.
AUTHENTICITY EXPRESS WHO YOU TRULY ARE AND WHAT YOU BELIEVE.
Music is about so much more than the bottom line. We believe success
comes from investing in genuine artistry and encouraging people to stay true
to themselves. Instead of looking outward, we look inward to uncover what is
real, true, and unique.
BOLDNESS ACT DECISIVELY WITH OWNERSHIP AND CONVICTION.
We aren’t afraid to make big bets. We don’t wait for others to make a move—we win by
acting first and raising the stakes on our own terms. We encourage people to speak out
and voice their ideas. You can’t drive up the scoreboard without taking risks.
CREATIVITY MEET A CHALLENGE IN NEW AND UNEXPECTED WAYS.
We bring creativity in everything we do. Regardless of our role, we constantly ask,
“what if?” and imagine how things could be different. We’re not afraid to be on the
leading edge, even if it means throwing out the rules and starting from scratch.
CONNECTION DRAW STRENGTH FROM DIVERSE AND MEANINGFUL RELATIONSHIPS.
Our business is built on relationships. We find common ground to connect with
artists, fans, partners and each other. We believe no single person can achieve
on their own what we can accomplish together. Diverse connections and
perspectives make us stronger.
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 10
WE TURN ART INTO HITS
AND HITS INTO CAREERS
• 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
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 11
2023 CHART HIGHLIGHTS
ALL OF THE TOP 4
MOST STREAMED
ARTISTS ON SPOTIFY
INTEREST IN
7 OF THE TOP 10
APPLE MUSIC AND
3 OF THE TOP 5
BILLBOARD HOT 100 SONGWRITERS
5 OF THE TOP 7
SONGS ON APPLE MUSIC
6 OF THE TOP 10
ALBUMS ON THE
BILLBOARD 200 AND
REPUBLIC RECORDS
WAS NAMED BILLBOARD’S
TOP LABEL
FOR THE THIRD CONSECUTIVE YEAR
Spotify
Billboard
Apple Music
UMPG
GLOBAL
U.S.
ON YOUTUBE,
UMG HAD
3 OF THE TOP 5
SONGS
YouTube
#
1
#
1
6 OF THE
TOP 10
ARTISTS ON SPOTIFY
Taylor Swift
The Weeknd
Drake
Feid
Karol G
Lana Del Rey
Taylor Swift
Drake
Morgan Wallen
The Weeknd
Spotify
#
1
13 OF THE
TOP 20 MOST
STREAMED SONGS
ON APPLE MUSIC
Apple Music
#
1
UMPG
INTEREST IN 9 OF THE TOP 10 ALBUMS
AND 6 OF THE TOP 10 SONGS
ON SPOTIFY
9 OF THE
TOP 10
ARTISTS
IFPI
#
1
Taylor Swift
2 SEVENTEEN
3 Stray Kids
4 Drake
5 The Weeknd
6 Morgan Wallen
7 TOMORROW x TOGETHER
8 NewJeans
10 Lana Del Rey
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 12
2023 CHART HIGHLIGHTS
NO. 1 ALBUM FOR 34 WEEKS
(ACROSS 14 UNIQUE ARTISTS)
Australia
5 OF THE TOP 10 ARTISTS ON SPOTIFY
Sweden
5 OF THE TOP 10 TRACKS OVERALL
AND 3 OF THE TOP FIVE
TRACKS ON APPLE MUSIC
France
KAROL G WON
3 LATIN GRAMMYS AND WAS
VEVO’S MOST WATCHED
ARTIST GLOBALLY
Latin America
REGIONAL
“ TAK SEGAMPANG ITU” BY
ANGGI MARITO
WAS TOP SONG OF THE
YEAR ON SPOTIFY
Indonesia
JUAN KARLOS
BECAME THE FIRST ARTIST
FROM THE PHILIPPINES TO
ENTER THE TOP 100
GLOBAL SPOTIFY CHARTS
Philippines
ACCORDING TO THE
OFFICIAL CHARTS
COMPANY, UMG HAD
7
OF THE TOP 10
ARTISTS
UK
#
1
5 OF THE TOP 10
ALBUMS ACCORDING TO
BILLBOARD JAPAN
Japan
#
1
6 OF THE TOP 10
ALBUMS ACCORDING
TO GFK
DEUTSCHE GRAMMOPHON
HAD 7 OF THE
TOP 10 ALBUMS ON THE
GERMAN CLASSICAL CHART
Germany
#
1
8 OF THE TOP 10 ALBUMS
UMG HELD THE NO. 1 ALBUM FOR
33 WEEKS THIS YEAR
Canada
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 13
Time spent listening to music on
subscription audio streaming
services grew by
7
%
of 16-24 year olds
like discovering older
music that is new to
them
of 16-24 yr olds discover
a new music artist at
least weekly
48
%
64
%
People listen to
different genres of
music on average
8+
listened to music
using subscription
audio streaming
48
%
have watched a music livestream such
as a concert in the last month
36
%
listen through licensed audio streaming
services (subscription and ad supported)
73
%
On average people use
methods to
engage with
music
7+
of gamers listened
to music while
they played
80
%
MUSIC IS
THE SOUNDTRACK
OF OUR LIVES
Listeners are
actively choosing the
music they want to listen
to on streaming services
Specific songs =
63%
Specific artists = 57%
Specific albums = 42%
Own playlists = 59%
Source: IFPI ‘Engaging with Music’ 2023, a study that explores the ways that fans listen to, discover, and engage with music around the world.
In total, over 43,000 internet users were surveyed in 26 countries that make up >90% of global recorded music market revenue.
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 15
Subscription audio
streaming
That’s the equivalent of listening to
an additional four 3-minute songs
per week
time spent listening to music each
week (up from 20.1 hours in 2022)
HOURS
20.7
Ad-supported
audio
streaming
Video streaming
(e.g. YouTube, Daily Motion,
Niconico)
Short form video apps
Social media
platforms
Music on the radio
Purchased music
Live music
Other forms of music
listening
24%
8%
19%
8%
4%
17%
9%
4%
7%
2023 MUSIC
ENGAGEMENT MIX
Source: IFPI ‘Engaging with Music’ 2023, a study that explores the ways that fans listen to, discover, and engage with music around the world.
In total, over 43,000 internet users were surveyed in 26 countries that make up >90% of global recorded music market revenue.
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 16
listen to music
while travelling
21
%
listen to music
while hanging out
with friends or family
23
%
of people said they would listen
to music to help cope if in the
hospital and in pain
87
%
said music helps them relax and
cope with stress
78
%
listen to music
while cooking
33
%
listen to music while
taking a bath
or shower
30
%
listen to music
at a party
28
%
74% of Millennials
SAY MUSIC IS
IMPORTANT TO THEIR
MENTAL HEALTH
71
%
listen to music while
exercising or at the gym
33
%
listen to music to
relax or unwind
41
%
Source: IFPI ‘Engaging with Music’ 2023, a study that explores the ways that fans listen to, discover, and engage with music around the world.
In total, over 43,000 internet users were surveyed in 26 countries that make up >90% of global recorded music market revenue.
listen to music
taking a walk or hike
27
%
MUSIC IS
INCREASINGLY IMPORTANT
TO WELLNESS
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 17
Inspired by the personal experiences of Sir Lucian Grainge and Arianna
Huffington (CEO, Thrive Global), the event brought together 280 innovators and
industry leaders to explore the powerful connection between music and health
– including music’s potential medical benefits, its role in the next generation
of digital therapeutics, and its future implementations for improved quality of
life alongside treatments for serious and chronic medical conditions.
With 40+ partners in the health, wellness, and fitness space, UMG’s industry-
leading efforts were at the forefront, and the conference served as a forum for
3 UMG announcements:
• Exclusive partnership with Thrive Global’s Thrive Reset- Licensing
UMG’s catalog to Thrive Reset’s stress reduction product to improve users’
well-being and productivity.
• Sollos project launch- UMG’s own health/wellness app combines music
and cognitive science, and proprietary audio technology to support focus,
relaxation and sleep.
• Partnership with soundBrilliance- Selections from UMG’s catalog to be
used in closed clinical trials to promote emotional balance, fitness, quality of
sleep and pain control.
UMG’s steadfast commitment to health, wellness, and fitness is influencing an
ever evolving digital strategy and approach to the future use cases for music.
MUSIC +
HEALTH
THE FIRST-EVER MUSIC + HEALTH CONFERENCE
PRESENTED BY UMG, THRIVE GLOBAL AND
HAVAS HEALTH WAS HELD IN LOS ANGELES ON
SEPTEMBER 19, 2023.
OUR PARTNERS
• UMG
• THRIVE GLOBAL
• HAVAS HEALTH
& YOU
ARTIST
ENGAGEMENT BY
SELENA GOMEZ (IGA)
CHAD LAWSON (VERVE)
CHELSEA CUTLER (REPUBLIC)
SIR LUCIAN GRAINGE
ARIANNA HUFFINGTON
KEYNOTE BY
1
DAY
CONFERENCE
HOSTED BY
WITH 32 SPEAKERS
FROM 21 COMPANIES
12
SESSIONS
ACROSS
THE HEALTHCARE/
MEDICAL WELLNESS
COMMUNITIES
280
ATTENDEES
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 18
FINANCIAL KEY FIGURES
2023
REVENUE
2023 2022
11,108 10,340
YoY
+7.4% +21.6%
constant
+11.1% +13.6%
EBITDA
1
2023 2022
1,808 2,028
YoY
-10.8% + 20.3%
constant
-7.8% + 12.5%
ADJUSTED EBITDA
1
2023 2022
2,369 2,135
YoY
+11.0% + 19.4%
constant
+14.6% + 11.7%
OPERATING PROFIT
2023 2022
1,418 1,600
YoY
-11.4% + 14.8%
constant
-8.3% + 7.9%
EBITDA MARGIN
1
2023 2022
16.3% 19.6%
YoY
-3.3pp - 0.2pp
ADJUSTED EBITDA MARGIN
1
2023 2022
21.3% 20.6%
YoY
+0.7pp - 0.4pp
Note
% YoY indicates % change year-over-year
% constant indicates % change year-over-year adjusted for constant currency
1
as defined in the Appendix to the Annual Report
UMG results (in € millions) YEAR ENDED DECEMBER 31
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 19
FINANCIAL KEY FIGURES
2023
Note
% YoY indicates % change year-over-year
% constant indicates % change year-over-year adjusted for constant currency
Segment revenue is stated prior to elimination of intersegment transactions
YEAR ENDED DECEMBER 31Results per business segment (in € millions)
MUSIC PUBLISHING
RECORDED MUSIC
MERCHANDISING
AND OTHER
REVENUE
2023 2022
8,461 7,937
YoY
+6.6% + 16.3%
constant
+10.2% + 8.8%
YoY growth in constant currency
Subscription and Streaming Revenue +10.4% +9.8%
Downloads and Other Digital Revenue -35.7% -2.9%
Physical Revenue +19.4% +4.1%
License and Other Revenue +13.6% +13.4%
REVENUE
2023 2022
1,956 1,799
YoY
+8.7% + 34.8%
constant
+12.3% + 26.3%
REVENUE
2023 2022
706 618
YoY
+14.2% + 70.2%
constant
+17.9% + 54.1%
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 20
ABOUT UMGABOUT UMG
FINANCIAL DATA FOR THE LAST
THREE YEARS
Year ended December 31,
2023 2022 2021
Consolidated data
Revenues 11,108 10,340 8,504
EBITDA
1
1,808 2,028 1,686
Adjusted EBITDA
1
2,369 2,135 1,788
Operating profit 1,418 1,600 1,394
Net profit attributable to equity holders of
the parent
1,259 782 886
Adjusted net profit
1
1,595 1,454 1,271
Net Cash Position/(Financial Net Debt)
1
(1,689) (1,810) (2,010)
Net cash provided by operating activities before
income tax paid
2,278 1,987 1,395
Free Cash Flow
1
1,082 1,086 638
Dividends paid by UMG N.V. to its shareholders (929) (798) (785)
Per share data
Weighted average number of shares outstanding 1,819 1,813 1,813
Earnings attributable to UMG N.V. shareowners per
share - basic
0.69 0.43 0.49
Earnings attributable to UMG N.V. shareowners per
share - diluted
0.68 0.43 0.49
Adjusted net profit per share - basic
1
0.88 0.80 0.70
Adjusted net profit per share - diluted
1
0.87 0.80 0.70
1 Non-IFRS measures as defined in the Appendix to the Annual Report.
Note: Inmillions of euros, number of shares inmillions, data per share in euros.
MUSIC IS UNIVERSAL
Annual Report 2023 | 21
NON-FINANCIAL KEY FIGURES
2023
ENVIRONMENTAL SOCIAL
1
FY22 emissions were adjusted in accordance with our internal policy to include the addition of new categories resulting from our SBTi validation
exercise (Category 9: Downstream transportation and distribution, Category 14: Franchises, and Category 15: Investments), as well as data
enhancements and corrections for improved accuracy. Adjustments illustrate year over year progress across our key non-financial indicators.
2
We committed to reduce absolute scope 1 and 2 GHG emissions 58% by 2032 from a 2019 base year and reduce scope 3 GHG emissions in our
target boundary 62% per EUR value added within the same time frame. Our scope 3 target boundary includes categories 1-7 (see Environment
section for more information).
3
“Value added” is defined by the Science Based Targets initiative as earnings before interest and depreciation (EBITDA) + all personnel costs.
4
UMG initiated a global job architecture project in 2023 to harmonize career leveling and remuneration, contributing to the year-over-year
manager variance.
49% 51%
TOTAL HEADCOUNT
2023 2022
10,290 9,992
Men
5,044 4,913
Women 5,246 5,079
SCOPE 1 & 2 TARGET PROGRESS in tCO
2
e (absolute)
2023 2022
1
Total emissions 7,572 8,590
Scope 1 1,945 2,398
Scope 2 (market-based) 5,627 6,192
We reduced our scope 1 and 2 (market-based) emissions by 12% over
prior year and 34% from our 2019 base year.
2
58% 42%
MANAGERS
4
2023 2022
3,369 3,456
Men
1,939 1,980
Women 1,430 1,476
GLOBAL TURNOVER
2023 2022
11.53% 13.95%
SCOPE 3 TARGET PROGRESS in tCO
2
e (intensity)
2023 2022
1
Total emissions 469,588 448,319
Absolute emissions in target
boundary 422,594 404,282
Emissions in tCO
2
e/million EUR
value added
3
109 112
We reduced our scope 3 emissions on an intensity basis, by 3% over
prior year and 46% from our 2019 base year in tCO
2
e per million EUR
value added.
2
GREEN BUILDINGS
2023 2022
Buildings utilizing renewable
electricity (% of total m
2
) 47% 46%
Buildings that transitioned to
renewable electricity (additions)
+9 +8
Buildings that have received an
environmental certification
(% of total m
2
) 28% 30%
Buildings that have received an
environmental certification (additions)
+4 +3
VOLUNTARY TURNOVER
2023 2022
7.03% 9.55%
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 22
MUSIC IS UNIVERSAL Annual Report 2022 | 47
+12.2% | US$660m
+7.2% | US$11.0bn
+4.4% | US$1.2bn
+13.4% | US$574m
+25.9% | US$1.5bn
+7.6% | US$2.7bn
+13.1% | US$834m
+11.3% | US$506m
+8.1% | US$1.9bn
+7.0% | US$1.6bn
8 CANADA
1 USA
6 FRANCE
9 BRAZIL
5 CHINA
2 JAPAN
7 SOUTH KOREA
10 AUSTRALIA
3 UK
4 GERMANY
RECORDED MUSIC INDUSTRY
2023 TOP 10 MARKETS
2016 2017 2018 2019 2020 2021 2022 2023
14.7
15.8
17.4
18.8
20.1
23.8
26.0
28.6
+7.5%
+9.9%
+7.9%
+7.2%
+18.5%
+9.0%
+10.2%
*
All reporting is translated at average CY 2023 exchange rates. Russia has been excluded from all years.
Source: IFPI Global Music Report 2024
GLOBAL RECORDED MUSIC INDUSTRY REVENUES 2016 TO 2023 (IN $ BILLION)*
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 23
SocialEnvironmental
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PUTTING
ARTISTS FIRST
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ARTIST
DEVELOPMENT,
MARKETING AND
PROMOTION
GLOBAL
PRESENCE
WITH LOCAL
EXPERTISE
ARTIST-
CENTRIC
MODEL INNOVA-
TION WITH
DISTRIBUTION
PARTNERS
NEW
OPPORTUNITIES
FOR MUSIC
MONETIZATION
EXPANDED
ECOMMERCE,
D2C AND
SUPERFAN
OFFERINGS
DATA AND
ANALYTICS
COMPLEMENTED
BY SCALE
TECHNO-
LOGICAL
INNOVATION
AND ETHICAL
AI DEVELOP-
MENTS
HOW UMG ADDS VALUE -
OVERVIEW
VALUE CREATION FOR
Governance
ARTISTS EMPLOYEES SHAREHOLDERS DISTRIBUTION PARTNERS FANS, GOVERNMENT AND SOCIETY
ARTISTRY AND CONTENT PEOPLE TECHNOLOGY FINANCIAL RESOURCES
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 24
HOW UMG ADDS VALUE -
INSIGHTS
PUTTING
ARTISTS FIRST
E
N
T
R
E
P
R
E
N
E
U
R
S
H
I
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A
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I
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ARTISTRY AND CONTENT PEOPLE TECHNOLOGY FINANCIAL RESOURCES
Industry leading roster of
artists and songwriters
Total headcount: 10,290 UMX Proprietary Data &
Insights Technology Platform
Royalty advance payments,
net of recoupments: €100m
Leading Record Labels
and Brands
Best in Class Management and
A&R Teams
Rights Management Tools Net cash used for investing
activities: €622m
> 3.2 million recordings Offices in 60 countries World Class Studios and
Production Facilities
± 4.5 million owned and
administrated titles
Learning and Development AI patents with applications
in marketing and audience
identification and behavior
10,000s hours of videos Investment in leading
eCommerce platforms
> 220 artists / brands in
merchandising
Partnerships and JVs with
independent labels and
entrepreneurs
VALUE CREATION FOR
ARTISTS EMPLOYEES SHAREHOLDERS
DISTRIBUTION
PARTNERS
FANS, GOVERNMENT
AND SOCIETY
Artist Costs Paid:
€5,152m
Salaries & Benefits
Paid: €2,081m
Dividends Paid:
€929m
Enable platform partners
to grow their businesses
by offering the world’s
most sought-after content
Help connect fans with
artists they love
Protect intellectual
property and rights
Build and develop
careers aimed
at long-term success
Total Shareholder
Return: 17.5%
Expanded reach
through partnerships
& distribution
Product innovation,
premium products and
experiences for super fans
Protect artists’
catalog and extend
cultural legacy
Improved
employee retention
and wellness
Revenue Growth:
11.1% (const.
currency)
Expand the addressable
market for music
Preserve and advance
culture
Help artists stand out
in a sea of content
Adjusted EBITDA
Growth: 14.6% (const.
currency)
Support developing music
markets around the world
Protect the planet for
future generations of
music lovers
Facilitate direct
connections
with fans
Adjusted EPS growth:
10.0%
Drive new use cases
for music
Support local communities
and music education
Improve commercial
success
Develop premium
products
Support artist’s social
advocacy efforts
Demand sustainable
solutions throughout
the supply chain
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 25
MARCH
Board of Directors extended the engagement of UMG Chairman
and Chief Executive Officer Sir Lucian Grainge until
May 1, 2028.
Launch of the Human Artistry Campaign, a global
initiative to protect creators’ rights in the age of Artificial
Intelligence (AI), with more than 150 supporting
organizations from 33 countries, including UMG.
Acquisition of British classical label Hyperion Records. Founded
in 1980, Hyperion joins UMG’s portfolio of world-renowned
classical labels, including Deutsche Grammophon
(founded in 1898) and Decca Classics (established in
1929), further reinforcing UMG’s position as the definitive
home for classical music globally.
At the 2023 Japan Gold Disk Awards, King & Prince
won Single of the Year for “Tsukiyomi/
Irodori”, The Beatles were
named Artist of the
Year/International
for a record-
breaking
eighth time
and BTS was
named Best
Asian Artist for
the fifth-
consecutive year.
MAY
First-of-its-kind strategic
relationship with AI sound
wellness company Endel to
enable artists and labels to
create soundscapes for
daily activities like sleep,
relaxation, and focus by
harnessing the power of AI.
JUNE
Successful pricing of
€750m of 4.000% senior
unsecured notes due
2031 with the proceeds
being used to refinance
existing indebtedness.
FEBRUARY
At the 65th Annual Grammy Awards,
Kendrick Lamar won three Grammys
including Best Rap Album for
Mr. Morale & The Big Steppers
and
Best Rap Song and Best Rap Perfor-
mance for “The Heart Part 5,” while
Samara Joy won Best New Artist and
Best Jazz Vocal Album for
Linger
Awhile
.
APRIL
Global icon Anitta signed to
Republic Records in partnership
with Universal Music Latin
Entertainment. The signing came
on the heels of her nomination
for Best New Artist at the 2023
Grammy Awards as well as her
Guinness World Record as the
“First Solo Latin Artist to Reach
#1 on Spotify Globally”.
JANUARY
Chairman and CEO
Sir Lucian Grainge
calls for a new
“artist-centric”
model to transform
the way that artists
and rightsholders
are paid by
streaming services.
Sherry Lansing
named Chairman
of the Board of
Universal Music
Group N.V.
YEAR IN REVIEW
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 26
JULY
Health & Wellness partner
MedRhythms, who exclusively
licenses their music from UMG,
receives its FDA approval for its
InTandem device. This becomes
the world’s first prescription digital
therapeutic product that uses
music, helping patients learn to
walk again after debilitating
strokes, with first prescriptions
rolling out in the U.S. in Fall 2023.
DECEMBER
Strategic global
partnership launched in
China with Jay Chou, the
internationally renowned
“King of Mandopop,” and
his prestigious record
label JVR Music. Chou
made history as the first
Mandarin artist to break
into the Top 10 of the IFPI
Global Artist Chart and
the first to top its Global
Album Sales Chart for
2022.
OCTOBER
Established partnership with YouTube to create a set of principles and best
practices around the use of AI in the creation of music; launch of a Music
AI Incubator to help study the effect of the technology.
Sir Lucian Grainge, Chairman and CEO of UMG, and Arianna Huffington, CEO,
Thrive Global, hosted the first MUSIC + HEALTH summit in Los Angeles in
association with Havas Health. The summit focused on the direct relation-
ships between music and health, discussed recent research documenting
music’s therapeutic and medical benefits, showcased innovative companies
that are integrating music into fitness & wellbeing products and services,
and introduced new applications for music in the
wellness space.
UMPG signing of platinum singer/songwriter
Sabrina Carpenter to an exclusive, world-
wide publishing agreement. Carpenter was
one of many UMG signed artists that
further expanded their UMG relationship
with new publishing agreements
in 2023, including Maggie
Rogers, Niall Horan,
Andrea Bocelli,
Ice Spice and Lana
Del Rey.
AUGUST
Interscope Records
signs multi-platinum
selling 19-year-old
Ivan Cornejo, one of the
young singer-songwriters
fueling regional Mexican
music’s resurgence.
Additionally, Cornejo
signed an exclusive
global publishing
agreement with UMPG
shortly afterwards.
UMPG signed
eight-time Grammy
winner Jack Antonoff,
who has collaborated
with superstars including
Taylor Swift and Lana
Del Rey, among others.
Additionally, Antonoff
is the lead singer
and songwriter of
the band, Bleachers.
NOVEMBER
Spotify, the world’s
largest music stream-
ing platform also
announced the
adoption of a new
‘Artist-Centric’
streaming model,
beginning early 2024.
In a first for a
standalone major
music company,
UMG’s greenhouse gas
(GHG) emission
reduction targets were
approved by the Science
Based Targets initiative (SBTi),
the gold standard for estab-
lishing corporate climate goals.
Universal Music Group
partners with Sony Music
Entertainment and Warner
Music Inc. to launch the Music
Industry Climate Collective
(“MICC”), a new, music industry
alliance to address the
pressing challenges and
profound changes in global
climate.
SEPTEMBER
UMG and Deezer
announce first
comprehen-
sive ‘Art-
ist-Centric’
agreement
designed to
better reward the
music that fans
value.
YEAR IN REVIEW
ABOUT UMGABOUT UMG
MUSIC IS UNIVERSAL Annual Report 2023 | 27
ABOUT UMGABOUT UMG
STAKEHOLDER ANALYSIS
We actively engage with our stakeholders in regards to our strategic direction
and seek their input when evaluating our Environmental, Social and Governance
priorities (see Main Material Topics). This creates sustainable value for our
stakeholders and for the company. By promoting two-way communications and
valuing our stakeholders’ input, we create a strong basis for constructive, long-
term relationships. This intensive interaction enables us to prioritize the areas
they consider crucial. It also gives us insights into the ways our business and
operations can create positive impact. We subsequently focus on these material
areas and proactively communicate our progress.
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
Active and intensive engagement with our key stakeholder groups is 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 means throughout the year.
• How we engage with our stakeholders
• Our stakeholders’ main interests
• How we respond and make impact
1. Artists
We actively engage with artists to serve their needs by:
• Placing recording artists and songwriters at the heart of everything we do
• Maintaining close connections with artists at every label and division of
the company
• Interacting with our artists directly via our A&R staff and indirectly through
their advisors
• Offering artists a full range of services in order to succeed creatively
and commercially
• Investing in continued artist development at all stages of their careers
Artists' main interests include:
• Their long-term career development and legacy
• Making their body of work widely available to fans
• Connecting with fans in new and compelling ways
• Fair compensation for their work
• Building communities to engage directly with their fans
• Sustaining creative success
MUSIC IS UNIVERSAL
Annual Report 2023 | 28
ABOUT UMGABOUT UMG
We respond to these interests and generate impact by:
• Fostering creative expression and collaboration within our diverse roster
of artists
• Partnering with an expansive network of distribution partners so artists can
share their work with a growing global fan base
• Working with distribution partners and regulators to achieve fair
compensation for music content
• Embracing new technologies that can increase music consumption and
fan engagement
• Creating new and exciting experiences for artists to engage with their fans
2. Fans
We engage with fans with a view towards:
•
Providing access to their favorite artists
•
Meeting their product demands, including developing premium products for
super fans
•
Promoting direct connections between artists and fans
•
Facilitating new experiences for them to engage with their favorite artists
and music
Fans' main interests include:
•
Ubiquitous cross platform access to all music content globally
• To feel directly connected to their favorite artists
• To support their favorite artists’ work and creativity
• Commercial and collectable products to express their fandom
• Premium products and experiences for superfans
We respond to these interests and generate impact by:
• Investing in the best A&R teams to drive innovative new music and products
• Helping fans engage with their favorite artists in new and exciting ways
• Driving technological innovation to improve the creative process, and artist-
fan connections
• Partnering with an expansive network of distribution partners and retailers
to facilitate access to our artists’ music and merchandise
• Enabling direct-to-consumer sales through ecommerce and
merchandising opportunities
• Creating premium consumer products via our production, manufacturing
and distribution arms
3. Employees
We actively engage with employees in multiple ways, including:
• Written and in person communications from our People, Inclusion and
Culture (PIC) team
• Providing formal and informal feedback channels to encourage open dialog
• Offering online resources to answer questions quickly and easily
• Regularly assessing the employee experience and culture including by
conducting surveys
• Holding employee forums, resource groups and events that strengthen
culture, engagement, retention and belonging
• Offering flexible work arrangements
MUSIC IS UNIVERSAL
Annual Report 2023 | 29
ABOUT UMGABOUT UMG
Employees’ main interests include:
• A positive employee relations atmosphere
• A safe, healthy and respectful workplace environment
• Resources and support for their wellbeing
• Opportunities to thrive and grow professionally
• A culture of innovation, diversity, inclusion and wellbeing
• Tools to attract, engage, and retain the best in class global talent
• An entrepreneurial and innovative culture
• Power to drive change within the music industry and our communities
• Meaningful work experience, competitive pay, and progressive
benefit packages
We respond to these interests and generate impact by:
•
Investing in employee training programs to support learning
and development
•
Rewarding excellent work through fair and competitive incentive awards
•
Building a culture in which all employees feel safe, seen, heard, respected
and connected
•
Work together to improve learning, diversity and inclusion, engagement,
retention and wellbeing
• Acknowledging that a healthy and resilient workforce is key to our business
growth and success
• Tapping into innovation, collaboration, creativity and artistry across
UMG’s businesses
• Inspiring our people to make the world better through community
engagement and philanthropy
• Encouraging a growth mindset through mentoring and programs that
support a culture of innovation
4. Distribution Partners
We actively engage with our distribution partners in multiple ways, including:
• Ongoing dialogs with our dedicated digital and corporate business
development teams
• Regular product innovation discussions, data and analysis sessions and
deal negotiations
• Develop content and marketing plans aligned with growing engagement on
their platform
• Comply with contractual terms and hold ongoing dialogs about issues as
they arise
Distribution partners' main interests include:
•
A fresh supply of high-quality music-based content for their products
and services
• Music content that appeals to consumers worldwide
• Marketing support to drive awareness and engagement on their platforms
• State-of-the-art systems to distribute content and ingest large amounts
of data
We respond to these interests and generate impact by:
• Conducting negotiations with honesty and integrity
• Executing contracts that clearly define the relationship, terms
and requirements
MUSIC IS UNIVERSAL
Annual Report 2023 | 30
ABOUT UMGABOUT UMG
• Safeguarding data and confidentiality with respect to business trends,
products and features
• Putting artists and songwriters at the center of everything we do by
advocating for new use cases for music, products and services, platforms,
and future-proofed business models
• Investing in talent in both developed and emerging music markets
• Promoting all UMG artists to fans around the world
• Embracing technological advancements that improve sound quality of our
historic catalog
5. Government and Elected Officials
We actively engage with governments and elected officials via multiple means
and channels, including:
•
Educating government and elected officials about the music ecosystem
through informal meetings as well as their formal information requests
(such as public hearings and consultations)
•
Advocating for public policies that benefit the music ecosystem and all
its participants
• Joining music industry trade bodies and NGOs, and contributing to their
publications of statistics, reports and studies on relevant issues and the
provision of background materials
• Speaking out via our public policy team on any issues affecting the
creative community
Government and Elected Officials' main interests include:
• Supporting and preserving culture and art and creative community
• Soft power and national or ethnic pride
• Businesses that drive economic growth and tax revenues to support quality
of living
• High-quality, skilled employment for local population
• Global respect for creators in regard to intellectual property rights, trade
policies and free expression
We respond to these interests and generate impact by:
• Creating employment and generating economic benefits for the
communities in which we operate
• Supporting culture through the creation and distribution of great music and
associated content
• Operating at the highest ethical standards that comply with all applicable
laws and regulations
• Adhering to business practices that treat artists and songwriters and all
creators fairly
6. Shareholders
We engage with Shareholders in multiple ways, including:
• Conversing directly via investor meetings and teleconferences with our
Investor Relations team and with management
• Publishing interim and annual reports in a timely manner
• Presenting quarterly financial results webcasts with management
Q&A sessions
• Holding Annual General Meetings to elicit their feedback
MUSIC IS UNIVERSAL
Annual Report 2023 | 31
ABOUT UMGABOUT UMG
• Disseminating all notable developments via public press releases
• Maintaining UMG corporate and investor relations websites
• Responding to all queries via a dedicated IR email address
• Participating in financial and industry conferences
Shareholders' main interests include:
• Outlook for revenue growth and margin expansion
• Capital allocation that generates a healthy return on investment
• Reasonable disclosures to analyze the business, and clear presentation of
financial statements
• Strategy and progress updates from management
•
Talent retention that supports our competitive position
•
ESG framework that clearly states company values
We respond to these interests and generate impact by:
•
Providing updates on the competitive landscape, strategy, and growth
drivers across the business
•
Furnishing details on our capital allocation priorities and rationale
•
Disclosing our ESG strategy, KPIs and progress against our targets
MUSIC IS UNIVERSAL Annual Report 2023 | 32
WE ARE COMMITTED TO SUSTAINABILITY
IN OUR BUSINESS AND ACROSS OUR
INDUSTRY, CHANNELING THE COLLECTIVE
PASSION OF OUR EMPLOYEES, ARTISTS,
AND FANS TO PROTECT THE PLANET AND
CREATE AN EQUITABLE FUTURE FOR
GENERATIONS TO COME.
Our Environmental, Social and Governance (ESG) framework complies with
the European Union’s Non-Financial Reporting Directive (NFRD) and the Dutch
Corporate Governance Code while our work in each pillar contributes to the
United Nations Sustainable Development Goals
1
. UMG’s Board of Directors is
responsible for the oversight of our sustainability program, as well as the
integrity of UMG’s non-financial reporting in accordance with this framework.
The Audit Committee of the Board supports the full Board in relation to these
responsibilities and considers ESG topics as part of its work.
ENVIRONMENT SOCIAL GOVERNANCE
Advancing climate action
and decarbonization
through leadership and
collective action
Empowering our people
and communities through
culture and creativity
Driving accountability,
transparency, and risk
management through
responsible governance
Recognizing music’s dynamic ability to inspire people and bring them together,
we work with our employees, artists, and fans to drive meaningful change in
our communities. We collaborate with our peers to address sector-wide
environmental challenges, deploy targeted programs to expand career
pathways for women and underrepresented groups in the industry, and tap
our future-minded workforce, frontline talent, and powerful network of
community partners to advocate for social justice.
We conducted a comprehensive ESG materiality assessment in 2022 to identify
the environmental, social, and governance topics most material to UMG and
its stakeholders. This year, we further validated our material topics with
subject matter experts and a cross-functional group of over 100 UMG leaders
across our business operations. The subsequent sections of this report
highlight UMG’s guiding ambitions within each topic area and the
effectiveness of our actions against Our Commitments.
OUR
APPROACH
1
The United Nations’ 2030 Agenda for Sustainable Development was adopted by all Member States in 2015 and provides a shared blueprint for
peace and prosperity for people and the planet, now and into the future. At its heart are the 17 Sustainable Development Goals (SDGs). Learn
more about them here: https://sdgs.un.org/goals.
SUSTAINABILITYSUSTAINABILITY
MUSIC IS UNIVERSAL Annual Report 2023 | 34
ENVIRONMENT
WE STRENGTHENED OUR UNDERSTANDING AND
MANAGEMENT OF GREENHOUSE GAS (GHG) EMISSIONS.
KEY ACTIONS
IN 2023
Leadership
• Science-Based Target Validation: We became the first major standalone
music company to announce science-based targets approved by the Science-
Based Targets initiative (SBTi). We committed to reduce:
• Absolute scope 1 and 2 greenhouse gas (GHG) emissions
1
58% by 2032 from
a 2019 base year, an ambition which is in line with a 1.5°C trajectory; and,
• Scope 3 GHG emissions
2
from purchased goods & services, capital goods,
fuel- and energy-related activities, upstream transportation and distribution,
waste generated in operations, business travel, and employee commuting by
62% per EUR value added
3
within the same timeframe.
Measurement & Reporting
• Decarbonization Pathway: We reduced our scope 1 and 2 (market-based)
emissions by 34% from our 2019 base year. We also made progress against our
scope 3 intensity target, achieving a 46% reduction from 2019-2023 in tCO2e
per million EUR value added.
• Carbon Disclosure Project (CDP): We submitted our first CDP report and
received a B- score, joining corporate climate leaders across the globe in our
contribution to the world’s most comprehensive environmental dataset.
Collective Action
• Scope 3 Industry Guidance: In November 2023, we established the Music
Industry Climate Collective (MICC), as a founding member alongside Sony Music
Entertainment and Warner Music Inc. The MICC’s mission is to develop
comprehensive sectoral guidance for measuring scope 3 GHG emissions,
supporting a consistent approach to boundary-setting and a standardized
methodology. We also laid the groundwork for further industry collaboration
in 2024 and beyond, securing advisory support from the American Association
of Independent Music (A2IM) – the trade organization representing more than
600 independently owned record labels across the U.S.
• Stakeholder Engagement: We deepened our engagement with key
stakeholders to drive environmental action, convening internal ESG Working
Groups to reduce our value chain footprint and assembling employees, artist
managers, suppliers, and subject matter experts to support industry
advancements through our UMG x Bravado Sustainability Summit series and
UMG France’s
Métamorphoses
program.
For details on our Environmental progress and initiatives, please see the
Environment section of this report.
1
Scope 1 emissions are direct GHG emissions that occur from sources that are owned or controlled by the company. Scope 2 emissions are
indirect GHG emissions from the generation of purchased electricity consumed by the company. See page 25 of the GHG Protocol Corporate
Accounting and Reporting Standard.
2
Scope 3 emissions include other indirect GHG emissions that are a consequence of the activities of the company, but occur from sources
not owned or controlled by the company. See page 25 of the GHG Protocol Corporate Accounting and Reporting Standard.
3
“Value added” is defined by the SBTi as earnings before interest and depreciation (EBITDA) + all personnel costs. See page 24 of the SBTi
Corporate Manual.
SUSTAINABILITYSUSTAINABILITY
MUSIC IS UNIVERSAL Annual Report 2023 | 35
WE DEPLOYED INTERNAL PROGRAMS AND LEVERAGED
EXTERNAL PARTNERSHIPS TO ATTRACT AND RETAIN
EMPLOYEES, ATTRACT AND RETAIN ARTISTS, AND
REINFORCE OUR CONTINUED FOCUS ON DIVERSITY,
EQUITY, AND INCLUSION.
Our Workforce
• Employee Representation: We continued to expand career pathways for
women and underrepresented groups. Worldwide, women make up 51% of our
workforce. In the U.S., 42% of our workforce is made up of people from one or
more historically excluded ethnic and/or racial backgrounds including American
Indian or Alaska Native, Asian, Black or African American, Latinx, Multiracial and
Native Hawaiian or Pacific Islander.
• Diversity and Inclusion Policy: We formalized a new D&I Policy reinforcing
our commitment to building an inclusive culture that values and promotes
diversity and equal opportunity.
• Workforce Development:
We rolled out a range of engagement programs
for our global network of employees, bringing together a women’s executive
leadership cohort for the first annual UMShe Summit and convening over
1,000 UMG employees through our inclusion-focused Employee Resource
Group (ERG) events.
• Mental Health Awareness: We launched the “Wellbeing Within Reach”
campaign for Mental Health Awareness Month and expanded access to
regionally-specific Employee Assistance Programs (EAPs) – facilitating counseling
sessions, in-the-moment support for emotional wellness, self-guided
mindfulness and cognitive behavioral therapy programs, and 24/7 work-life
assistance.
Our Artists
• Music Health Alliance: Through our ongoing partnership with the Music
Health Alliance, we helped over 500 artists and songwriters secure life-changing
medical care and save over $5 million in healthcare and insurance costs.
• Artist Advocacy: We amplified artist advocacy efforts, such as supporting
Billie Eilish’s ongoing commitment to environmental action as well as Imagine
Dragons’ frontman Dan Reynolds’ commitment to advancing the rights, safety
and well-being of the LGBTQ+ community.
SOCIAL
KEY ACTIONS
IN 2023
SUSTAINABILITYSUSTAINABILITY
MUSIC IS UNIVERSAL Annual Report 2023 | 36
Our Communities
• Corporate Philanthropy:
UMG contributed to more than 500 community
organizations and supported over 1.2 million meals for individuals in need.
• Public Health Scholarships: Our Task Force for Meaningful Change (TFMC)
provided more than 50 students with scholarships across Medical Schools of
accredited Historically Black Colleges and Universities (HBCU) in an effort to
expand the number of Black medical practitioners.
• Power of Music Campaign: We teamed up with Music for Dementia and
UK Music to develop the Power of Music Report and launch the £1 million Power
of Music Fund, which seeks to use music to improve community health,
particularly for those living with dementia.
For details on our Social progress and initiatives, please see the Social section
of this report.
UNIVERSAL MUSIC GROUP
SUSTAINABILITYSUSTAINABILITY
MUSIC IS UNIVERSAL Annual Report 2023 | 37
THE BOARD’S ROLE IN OUR RISK MANAGEMENT
FRAMEWORK INVOLVES REVIEWS AND DIALOGUE WITH
MANAGEMENT REGARDING MATERIAL RISK FACTORS FOR
THE COMPANY INCLUDING ENTERPRISE, STRATEGIC,
OPERATIONAL, FINANCIAL, AND LEGAL RISK.
GOVERNANCE
KEY ACTIONS
IN 2023
SUSTAINABILITYSUSTAINABILITY
Board Oversight and Governance Structure
UMG’s Board is responsible for sustainable long-term value creation, including
the oversight of our sustainability program, as well as the integrity of UMG’s
non-financial reporting. The Audit Committee supports the Board in relation to
these responsibilities and considers ESG topics as part of its work.
UMG’s Annual General Meeting of Shareholders was held on May 11, 2023.
In an endorsement of his strategic vision and leadership, the Shareholders
adopted the re-appointment of UMG’s Chairman and Chief Executive Officer,
Sir Lucian Grainge as Executive Director for an additional five-year term. This
reappointment demonstrates the trust and confidence the Shareholders have
in his abilities to steer the company toward continued success and growth.
Additionally, we began to stagger Non-Executive Director retirements as a
best practice and in alignment with the Dutch Corporate Governance Code. To
this end, the Board proposed, and Shareholders adopted Non-Executive two-
year re-appointments including Sherry Lansing, Chairman of the Board and
Independent Non-Executive Director and, Luc Van Os, Non-Executive Director
and Audit Committee Chair.
In 2023, the Board adopted the following policies:
• STAKEHOLDER ENGAGEMENT: Our Stakeholder Engagement policy lays
out our approach to considering stakeholders' interests as part of sustainable
long-term value creation.
• DIVERSITY & INCLUSION: Our D&I policy reinforces our commitment
to building an inclusive culture that values and promotes diversity and
equal opportunity.
As we look ahead to 2024, we will remain steadfast in our mission to amplify
the issues that matter most to our stakeholders – while advancing our non-
financial reporting processes to meet evolving public disclosure requirements.
In 2023, we began our transition from the EU Non-Financial Reporting Directive
(NFRD) to the new EU Corporate Sustainability Reporting Directive (CSRD) and we
are now in our third year of reporting in compliance with the EU Taxonomy.
With the oversight of an executive steering committee, we are working towards
full CSRD compliance in 2024, including the execution of a double materiality
assessment. We will continue to center music and artistry in all that we do,
reinforcing its inherent ability to power positive change.
For details on our Governance progress and initiatives, please see the
Governance section of this report.
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INTRODUCTIONINTRODUCTION
BUSINESS PROFILE
A WORLD LEADER IN MUSIC-
BASED ENTERTAINMENT
UNIVERSAL MUSIC GROUP (UMG) is a world leader in music-based
entertainment with a broad array of businesses engaged in recorded music,
music publishing, music-based merchandise and audiovisual content. UMG
has the broadest global reach of any music company with a local presence
in more than 60 territories covering nearly 200 markets. Everything we do
revolves around supporting artists, promoting innovation, entrepreneurship,
sustainability, and bringing fans the world’s most loved music. Our three core
business segments work seamlessly 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, a diverse range of labels and a catalog
of more than threemillion recordings, 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. UMPG works closely with their songwriters at all
stages in their careers from early development to the stage where their songs
are played formillions. As one of the world’s largest and fastest-growing music
publishing companies, UMPG has a catalog with nearly four and a halfmillion-
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 and products for fans and superfans worldwide.
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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 copyrights to the audio and audiovisual
recordings created by recording artists signed to UMG’s iconic labels. We
generate revenue through the physical sales of this content in formats 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 formats, including social
media, health and wellness, theatrical films, home entertainment, television
productions, and video games.
HOME TO A DIVERSE SET OF LABELS, BRANDS AND CONTENT
UMG is a leading recorded music company. We’re home to both the world’s
premier record labels and groups, and iconic studio facilities. Our roster 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 musical genres and generations and include
many of the greatest recording artists of all time. UMG’s iconic label brands
include Capitol Music Group, Def Jam Recordings, EMI Records, Interscope
Geffen A&M, Island Records, Motown Records, Polydor, Republic Records,
Universal Music Group Nashville and Universal Music Latin Entertainment. 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 continue to launch new labels in certain key markets where we
believe there to be significant untapped opportunity, such as the launch of EMI-
North in Leeds, United Kingdom, in early 2023. We are also home to the world’s
premier recording studios, including the legendary Abbey Road in London and
Capitol Studios in Los Angeles.
Through Virgin Music Group, we offer a diverse range of premium and
flexible independent label and artist services to entrepreneurs and artists.
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 flexibility offered enables
us to foster long-term partnerships, and forges paths to global success for
entrepreneurs, independent labels and artists.
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In addition to recorded music content, UMG develops a wide spectrum of
audiovisual content for distribution across the globe. Our 5,000 hours of
audiovisual 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 operations: Mercury Studios, a multi-faceted content studio and
distributor, and Polygram Entertainment, a premium production company.
Beyond these, we also have content operations within our individual labels
and other business units. Some of our key film projects in 2023 included
Love to Love You, Donna Summer
(Polygram/HBO),
Mixtape
(Mercury Studios/
Paramount+) and
American Symphony
featuring Jon Batiste (Mercury Studios/
Higher Ground/Netflix).
All corners of the globe
Our recorded music business is both artistically and geographically diverse.
We have offices in more than 60 territories, covering nearly 200 markets.
This means we operate in more territories and markets than any other
recorded music company. Our wide geographical presence enables us to create
diversified revenue streams. In 2023, North America accounted for 51% of
our recorded music revenue, while Europe, Asia, Latin America and the rest
of the world represented 28%, 13%, 4% and 4% of the revenue, respectively.
Our extraordinarily diverse roster of artists in turn means that our business’
success is not reliant on one artist or even a small number of artists. The top 50
artists only accounted for 24% of UMG’s recorded music revenue in 2023.
Multi-label structure enables entrepreneurs and encourages
artistic diversity
UMG is home to many of the world’s most iconic record labels. We believe that
operating multiple major frontline labels in markets around the world yields
significant benefits. This is why we continue to develop, revitalize and invest
in our label brands. Our multi-label structure empowers entrepreneurialism,
artistry, and diversity.
UMG encompasses a collection of iconic and world-class labels, spanning
all genres of music, created and led by visionary entrepreneurs. Our shared
passion for discovering recording artists with the talent and potential to break
through an increasingly competitive environment for audience attention is at
the core of who we are and what we do. Each one of these dynamic labels has
a common belief: that an artist they discover and develop will change and drive
culture around the world.
This approach produces many benefits. Our collection of dynamic enterprises
enables us to effectively cover the music market across all genres and styles,
with each label having its own unique culture and history. Decentralized talent-
spotting across UMG, employing each label’s distinctive identity and creative
vision, means we can attract the widest variety of top talent.
Our multiple label structure creates a degree of competition even between and
among UMG labels. This healthy competition drives innovation and creativity
and keeps our labels continuously evolving to stay at the forefront of industry
trends. This structure also alleviates short-term performance pressure on any
individual label. The fact that the different UMG labels will collectively have a
continuous flow of new content means each individual label can take a more
long-term approach to artist development.
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Leveraging UMG’s scale and expertise
While our multi-label structure gives each label the freedom to create and
innovate, our labels still benefit from the scale and expertise that comes with
being part of UMG. This is because at UMG, we negotiate with platform partners,
aggregate data and analytics, share best practices, and centralize many back-
office functions at a company-wide level. This lets us benefit from our scale and
drive efficiency, while maintaining the spirit of a quick-moving, innovative and
entrepreneurial company.
Expanding touchpoints with artists and entrepreneurs
through distribution
UMG enjoys longstanding relationships with leading distribution partners,
including, for example, Concord, HYBE and Disney, to give our partners’ artists
global reach and best-in-class services. In 2023, we announced an alliance with
BMG under which the companies will explore a range of collaborative initiatives
to further expand opportunities for BMG-signed artists around the world. The
first project under this alliance will be moving the distribution of physical
formats of BMG’s music – including vinyl and CD for thousands of BMG-signed
artists – to UMG’s Commercial Services division, commencing in 2024. Further
collaborations between BMG and UMG are already under discussion from
exploring shared positions on industry matters to joining forces in adjacent
business lines.
Diversified revenue streams
Our recorded music business has diversified revenue streams derived from
three main sources, including:
DIGITAL: 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, Tidal, Tencent Music Entertainment and NetEase, among an increasingly
important number of other partners. Our music is streamed on an ad-supported
and paid subscription basis through these streaming services. Fans are also
able to purchase downloads of our music by album or individual tracks through
download services.
We also generate subscription and streaming revenues from social media
platform partners ranging from Meta and YouTube to digital fitness partners
such as Peloton and Apple Fitness+ and beyond. Our music content is also
consumed through short-form video and gaming platforms, among other
emerging digital platforms, all of which we are working to monetize further. We
partner with both established and emerging digital music services to provide
ever-greater access to fans, who are engaging with our music in multiple ways.
PHYSICAL: Our physical recorded music products, including vinyl records, CDs,
cassette tapes, and DVDs, are sold through retailers and wholesalers both in-
store and online. We also sell our products directly to customers via our UMG
websites and artist channels. These direct-to-consumer channels have shown
strong growth and are an increasingly important area of focus for UMG.
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
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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 distribution.
Continued growth across all major recorded music revenue streams
in 2023
In 2023, UMG achieved growth across all of its major recorded music revenue
streams. Recorded music revenue in 2023 was €8,461million, up 6.6% year-on-
year compared to 2022, or 10.2% in constant currency.
We have played a prominent role in driving the recorded music industry’s
transition to recurring and more predictable paid subscription and advertising-
supported streaming models from a model based solely on physical and digital
purchases. Streaming and subscription revenue grew 7.1% year-on-year, or
10.4% in constant currency, and accounted for 67% of UMG’s 2023 recorded
music revenues. Subscription revenue saw strong growth of 9.6% year-over
year, or 12.8% in constant currency, driven by continued strong industry
subscriber growth in both developed and emerging music markets, as well as
price increases across certain subscription platforms. Ad-supported streaming
revenues grew 0.4% year-on-year or 3.6% in constant currency, with the growth
somewhat limited in 2023 due to continued, macroeconomic-driven pressure in
the broader advertising market. Engagement with our content on ad-supported
platforms continued to grow meaningfully, and we are focused on driving
improved monetization in this space.
In addition to the growth in streaming and subscription, Physical revenue grew
by 14.3% year-on-year, or 19.4% in constant currency, driven by strong new
releases and growth in direct-to-consumer sales. License and other revenue
improved 9.5% year-on-year, or 13.6% in constant currency, as a result of
improved live, brand sponsorship, neigbouring rights and synchronization
income, as well as the timing related benefit of a new licensing deal.
Culture-defining global, regional and domestic superstars
Our recorded music business operates in more territories and markets than any
other recorded music company. The breadth and depth of our artist roster is
unrivaled. We’re the destination of choice for the world’s most successful stars
and a clear choice for up-and-coming artists. With a roster featuring legends,
global hitmakers, regional stars and breakthrough artists, our artists span
generations, genres, languages, continents and cultures. UMG’s best-selling
artists include global superstars such as J Balvin, Justin Bieber, Luke Bryan,
Lewis Capaldi, J. Cole, Daddy Yankee, Drake, Billie Eilish, Eminem, Selena Gomez,
Ariana Grande, Imagine Dragons, Lady Gaga, Kendrick Lamar, Lang Lang, Lil Baby,
Post Malone, Shawn Mendes, Nicki Minaj, Katy Perry, Olivia Rodrigo, Sam Smith,
Chris Stapleton, Taylor Swift, Shania Twain, Morgan Wallen and The Weeknd. Our
roster of artists also includes hugely successful local artists such as Dave and
Glass Animals in the UK, Angèle and SDM in France, Helene Fischer and Herbert
Grönemeyer in Germany, King & Prince and Ado in Japan, Eason Chan in China
and Feid, Karol G and Sebastián Yatra in Latin America. In addition, in 2023,
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we welcomed global icons Anitta and Jay Chou, among many others, to the
UMG family.
Our recorded music artists once again topped the global charts in 2023.
• According to IFPI, UMG had nine of the Top 10 global artists including Taylor
Swift at No. 1, as well as SEVENTEEN, Stray Kids, Drake, The Weeknd, Morgan
Wallen, TOMORROW x TOGETHER, NewJeans, and Lana Del Rey.
On Spotify, UMG had six of the Top 10 global artists including Taylor Swift at
No. 1, as well as The Weeknd, Drake, Feid, Karol G and Lana Del Rey.
• On Apple Music, UMG had thirteen of the Top 20 global songs, with Morgan
Wallen’s “Last Night” at No. 1.
•
On YouTube, UMG had three of the top five songs, including Toosii’s
Favorite
Song
at No. 1.
•
On Vevo, Karol G was the ‘Most Watched Artist’ for the third consecutive year.
In the U.S., the world’s largest music market, UMG had:
•
All of the top four most streamed artists on Spotify with Taylor Swift, Drake,
Morgan Wallen and The Weeknd.
•
Five of the top seven songs on Apple Music (No. 1 Morgan Wallen “Last
Night”, Drake & 21 Savage “Rich Flex”, Drake & 21 Savage “Spin Bout U”, Lil
Baby “Freestyle” and Morgan Wallen “You Proof”).
• Six of the Top 10 albums on the Billboard 200 (No. 1 Morgan Wallen
One thing
At A Time
, No. 2 Taylor Swift
Midnights
, Drake, 21 Savage
Her Loss
, Metro
Boomin
Heroes & Villains,
Morgan Wallen
Dangerous: The Double Album
and
Taylor Swift
Lover
).
• Republic Records was named Billboard’s top label for the third
consecutive year.
Around the world:
• According to the Official Charts Company, UMG had seven of the Top 10
artists in the UK, including Taylor Swift at No. 1, Drake and the Weeknd in
the top five. Also in the UK, UMG had all of the three nominees for the
prestigious 2024 BRITs Rising Star award, with Island’s The Last Dinner Party
taking the award, marking the third consecutive year a UMG artist has won.
• In Germany, UMG finished the year with six of the Top 10 albums according
to GFK, including The Rolling Stones’
Hackney Diamonds
at No. 1 followed
by albums from Metallica, Taylor Swift (two entries), Herbert Grönemeyer and
Kontra K. Deutsche Grammophon had seven of the Top 10 albums on the
German classical chart, including the top three.
• In Japan, UMG had five of the Top 10 albums according to Billboard Japan,
including King & Prince at No. 1. In addition, Ado’s single “Show” held the top
spot on Billboard Japan's weekly streaming chart for 14 consecutive weeks
to finish the year.
• In France, UMG had five of the Top 10 tracks overall, and three of the Top 5
tracks on Apple Music.
• In Australia, UMG had the No. 1 album for 34 weeks this year, with albums
from Taylor Swift, Sam Smith, Morgan Wallen, Lana Del Rey, Metallica, Peach
PRC, Lewis Capaldi, Niall Horan, G Flip, Powderfinger, Olivia Rodrigo, Drake,
Troye Sivan and The Rolling Stones.
• In Canada, UMG had eight of the Top 10 albums, including albums from
Morgan Wallen (No. 1), Taylor Swift, Metro Boomin, and The Weeknd, and held
the No. 1 album for 33 weeks this year.
• UMG Sweden's Loreen won the Eurovision Song Contest with her single
"Tattoo” and UMG had five of the Top 10 artists on Spotify.
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• At the Latin Grammy’s, Karol G swept three major awards including Album
Of the Year and Juanes won Best Pop/Rock Album marking his 25th Latin
Grammy award. Feid continued his massive rise in 2023, as the third most
streamed Latin artist on Spotify, while Sebastián Yatra was recognized as
“Artist of the Year” at the 2023 RIAA Honors.
• In China, Wu Qingfeng’s
Mallarme’s Tuesday
won “Album of the Year” at the
Golden Melody Awards.
• In Indonesia, "Tak Segampang Itu" by Anggi Marito was the top song of the
year on Spotify.
• Juan Karlos became the first artist from the Philippines to enter the Top 100
Global Spotify Charts with his song “Ere”, which was No. 1 in the Philippines
for 10 weeks.
Industry-leading catalog of timeless recordings
Our track record in identifying and partnering with the world’s best artists has
given us the industry-leading catalog of recordings and songs. These include
timeless performers such as ABBA, Aerosmith, Louis Armstrong, The Beatles, The
Beach Boys, The Bee Gees, Andrea Bocelli, Bon Jovi, James Brown, Nat King Cole,
Neil Diamond, Marvin Gaye, Guns N’ Roses, Elton John, KISS, Bob Marley, Paul
McCartney, Nirvana, Luciano Pavarotti, Queen, Lionel Richie, The Rolling Stones,
Frank Sinatra, Sting, U2, The Who, Amy Winehouse and Stevie Wonder. This
diverse catalog gives UMG strong and reliable revenue from sales of prior years’
releases. Catalog sales (defined as content older than three years) accounted
for 62% of recorded music digital and physical revenue in 2023, while frontline
product (content less than three years old) accounted for 38% of recorded music
digital and physical revenue.
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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 globally. Our core activities involve: discovering, identifying, and
developing some of the best songwriters in the world; publishing and acquiring
rights to musical compositions; and licensing them for use in different formats.
With a global roster of talent spanning genres and geographies, UMPG’s team
works closely alongside our artists to amplify their careers and build worldwide
success. We license musical compositions for use in sound recordings, films,
television shows, advertisements, video games, concerts, and other public
performances and for use in printed sheet music and song folios. Our
vast catalog of original music and arrangements has incredible breadth 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 best-in-class service for both global and local songwriters
Songwriters are at the heart of everything we do at UMPG. We are dedicated
to giving them best-in-class service and maximizing their royalty streams. To
achieve this, we deploy both the hands-on expertise of the industry’s best
people and cutting-edge technology to maximize opportunity and value for our
songwriters both commercially and creatively. We combine global reach and
a local presence, with 850 employees operating at 48 offices in 40 countries.
These teams focus on discovering, signing and developing talent and creating
unique opportunities for success on a local, regional or global scale. This
physical presence is vital in maintaining relationships with collection societies
worldwide to ensure all generated income is accounted for and collected on
behalf of songwriters and copyright holders. As part of the world’s largest
music company, we are uniquely positioned to develop collaborative strategies
between publishing and recorded music. All with one aim: to bring value to
our songwriters.
Embracing technology to build trust with songwriters
We deploy cutting-edge technology and expert administration services to
benefit our songwriters. Through our highly advanced technology platform,
UMPG Window, we provide our songwriters and clients with real-time
information on earnings, royalty and copyright data. This advanced system
reflects UMPG’s longstanding commitment to transparency, integrity 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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Partnering with top film and TV content studios
We’re a leading publisher in the film and television business. UMPG partners
with most major film and TV content studios ranging from Warner Bros.,
NBCUniversal, Disney and HBO to Amazon, MGM, Banijay, Paramount, Lionsgate
and Univision, among others. In 2023, we renewed our deals with NBCUniversal,
Paramount, Lionsgate, MGM, and Amazon, among others. This leading position
means we represent some of the world’s most iconic film and TV theme songs.
Multiple revenue streams
Our music publishing operations derive revenue from five main
sources, including:
PERFORMANCE: The rightsholder receives revenues when the 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.
OTHER: The rightsholder receives revenues for use of the musical composition
in sheet music and other uses.
Music publishing is a recurring growth business
Music Publishing revenue amounted to €1,956million in 2023, up 8.7% year-on-
year, or 12.3% in constant currency. The continued growth of subscription and
streaming revenue, along with increases in synchronization and performance
revenue, were the primary drivers of the overall strong performance in
Music Publishing.
Another chart-topping year
Our songwriters continued to top the charts around the world in 2023.
• On Spotify, UMPG had interest in nine of the Top 10 global albums, including
all of the top five:
Un Verano Sin Ti
by Bad Bunny,
Midnights
by Taylor Swift,
SOS
by SZA,
Starboy
by The Weeknd and
MAÑANA SERÁ BONITO
by KAROL G.
• UMPG also had interest in six of the Top 10 global songs on Spotify (“Kill Bill”
by SZA, “As It Was” by Harry Styles, “Seven (feat. Latto)” by Jung Kook, “Cruel
Summer” by Taylor Swift, “Calm Down (with Selena Gomez)” by Rema and
Selena Gomez and “Anti-Hero” by Taylor Swift).
• In the U.S., UMPG had three of the top five Billboard Hot 100 Songwriters with
Taylor Swift, Jack Antonoff and SZA.
• UMPG had interest in seven of the Top 10 most streamed songs in the U.S. on
Apple Music.
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Unparalleled collection of songs in every genre
UMG is home to the greatest songwriters in history. We have a global catalog
containing nearly four-and-a-halfmillion owned and administered copyrights.
Our unrivaled catalog is a rich mosaic of songs spanning myriad eras,
generations, genres and languages. We take a portfolio approach to growing and
managing our catalog. As a result, we have a mix of songwriters from around the
world, with works in our catalog inclusive of every genre – from country to Latin
to pop to urban to K-pop and J-pop. Our catalog is filled with evergreen songs
spanning generations from “Like a Rolling Stone” to “Every Breath You Take” and
from “All I Want for Christmas” to “Stayin' 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, Jack Antonoff, ATL
Jacob, Bad Bunny, J Balvin, Beach Boys, Beastie Boys, Bee Gees, Louis Bell,
Irving Berlin, Leonard Bernstein, Jeff Bhasker, Justin Bieber, Benny Blanco,
Nicholas Britell, Chris Brown, Tommy Brown, Mariah Carey, Brandi Carlile, Sabrina
Carpenter, Michael Chabon, Nija Charles, Kenny Chesney, Desmond Child, Cirkut,
The Clash, Dave Cobb, Coldplay, Luke Combs, Alexandre Desplat, Neil Diamond,
Disclosure, Drake, Dua Lipa, Bob Dylan, Billie Eilish, Danny Elfman, Eminem,
Gloria and Emilio Estefan, Omer Fedi, Feid, Florence + the Machine, Fred again..,
Future, Martin Garrix, Selena Gomez, Ariana Grande, Al Green, Josh Groban, Kid
Harpoon, Emile Haynie, Jimi Hendrix, Don Henley, H.E.R., Hit-Boy, Sam Hunt, Ice
Spice, Carly Rae Jepsen, Rodney Jerkins, Tobias Jesso Jr., Billy Joel, Elton John/
Bernie Taupin, Joe Jonas, Alicia Keys, David Kushner, Carin León, Steve Lacy,
Kendrick Lamar, Lana Del Rey, Lil Baby, Lil Yachty, Linkin Park, Logic, Lorde, Demi
Lovato, the Mamas & the Papas, Steve Mac, Maroon 5, Dave Matthews, Megan
Thee Stallion, Shawn Mendes, Metallica, Metro Boomin, Julia Michaels, Miguel,
Maren Morris, Mumford & Sons, Nas, Randy Newman, New Order, Pearl Jam, Post
Malone, Elvis Presley, Prince, Quavo, Otis Redding, R.E.M., Red Hot Chili Peppers,
Rex Orange County, Lionel Richie, Maggie Rogers, Rosalía, Carole Bayer Sager,
Gustavo Santaolalla, Schoolboy Q, Carly Simon, Blake Slatkin, Britney Spears, Stax
(East Memphis Music), Sting, Harry Styles, Swedish House Mafia, Taylor Swift,
SZA, Take a Daytrip, Justin Timberlake, Shania Twain, U2, Keith Urban, Michael
Uzowuru, The Weeknd, Jack White, Yahritza, Frank Zappa and Zedd.
Key signings in 2023 included Ice Spice, Lana Del Rey, Lorde, Jack Antonoff,
Fred again.., Lucy Dacus (boygenius), Andrea Bocelli, Maggie Rogers, Sabrina
Carpenter, Brandy Clark, Danny Harle, Stephen Schwartz, Niall Horan, David
Kushner, Stephen Sanchez, Tia Ray, Band Loula, Carin León, Iván Cornejo, Mónica
Vélez, Yahritza, Abel Pintos, Grupo Firme, Jenni Rivera estate, DnB All Stars, Dan
Wilson, Angelica Negron, Kevin Puts and SYCO.
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INTRODUCTIONINTRODUCTION
MERCHANDISING
MERCHANDISING
Developing innovative cultural and retail experiences for fans
Bravado is UMG’s global, full-service merchandise business. With a portfolio
spanning over 220 artists, we hold the leading position in music merchandise
worldwide. Through Bravado, we develop high-quality licensed consumer
products that reflect and reinforce an artist’s brand and identity and present
them to a worldwide audience. Our artists and brands have access to a 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.
Bravado seeks to advance climate action across the industry and drive progress
toward UMG’s Science-Based Targets. We have created, produced and hosted
UMG x Bravado Sustainability Summits, the first music industry sustainability
summits in LA, London, and New York. The summit series brought together
industry leaders and innovators in sustainable solutions to share ideas and
drive change.In addition, Bravado is committed to its ongoing partnerships with
Products of Change and Three Squares, renowned experts dedicated to guiding
and empowering companies to achieve their sustainability objectives through
education and support.
Sparking connections with fans
With a focus on building connections between artists and their fans, our
in-house creative development team at Bravado works closely with new and
established artist-clients to create innovative products carefully tailored to the
brand or artist. Our creative team operates at the intersection of art, music
and fashion – identifying key trends in all three areas and creating compelling
products and experiences that are in tune with today’s culture. As part of 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.
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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.
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.
Compelling fan experiences
Through pop-ups and unique experiential events, Bravado connects artists
with fans around the world, creating unforgettable moments that maximize fan
engagement. In 2023, Bravado engineered numerous compelling fan experience
which included the Elton John Corner Shop at Selfridges (timed to coincide
with the O2 London leg of the Farewell Yellow Brick Road Tour); BLACKPINK’s
Born Pink London, New York, Los Angeles and Seoul pop-up experiences (in
collaboration with Japanese graphic artist, VERDY); Beastie Boys pop-up in New
York, celebrating the iconic location renaming to Beastie Boys Square; Hip Hop
50th celebration timed NYC pop-up with Run DMC, supported by Barriers and
Adidas; Olivia Rodrigo’s New York and Los Angeles pop-ups to support the
release of her second album; Billie Eilish’s London pop-up (marking historic
headline slots at Reading and Leeds Festivals); The Rolling Stones x Kid Super
Hackney Diamond collection (available exclusively at RS No. 9 Carnaby Flagship
store and RS No. 9 pop-ups in New York, Los Angeles and Tokyo); and the
NYC takeover for KISS, celebrating the last two nights of their farewell tour
with activations throughout the city including a pop-up store, Penn Station
Metro Card and digital screens takeover, Taxi Cab wraps, Empire State Building
lighting ceremony, New York Post wraps, Rangers Hockey collaboration, and the
declaration of KISS Day by NYC Mayor Eric Adams, along with so much more.
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Multiple revenue streams
Our merchandising revenues are derived from four main sources:
TOURING INCOME: Sales of physical merchandise products directly to
consumers at venues during tours. This also includes concession income,
which is the sale of physical merchandise products directly to consumers 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 merchandise 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.
Strong growth in 2023
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 2023, Merchandising and other revenue grew to €706million, up
14.2% year-on-year, or 17.9% in constant currency, driven largely by the growth
in direct-to-consumer sales.
Roster of clients with the greatest names in music
Our merchandising roster of clients includes some of the biggest names
in music. We provide merchandising services for leading artists including
Aerosmith, Ariana Grande, Billie Eilish, Blackpink, Bob Marley, Elton John, Guns
N’ Roses, Justin Bieber, KISS, Lady Gaga, Queen, Selena Gomez, Taylor Swift, The
Rolling Stones, Shawn Mendes, The Weeknd and The Who. A number of Bravado
artists are also signed across other UMG businesses, allowing for synergies and
increased opportunities for artists.
In 2023, Bravado continued to broaden its roster, renewing its relationship with
Taylor Swift, welcoming back Post Malone and signings new deals with artists
including 21 Savage, Anitta, Kali Uchis and Olivia Rodrigo.
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CREATIVITY,
INNOVATION, ENTREPRENEURSHIP
As the world leader in music, we are guided by our key principles of creativity,
innovation and entrepreneurship, and are driven by a commitment to help
artists and fan communities thrive all over the globe.
As part of our industry leadership, we are focused on: helping to maintain
a thriving and sustainable global music ecosystem; redefining the streaming
model to one that creates greater value for artists, fans, music companies
and platforms; and protecting and reinforcing the value of human artistry
and creativity.
UMG’s creative and commercial foundation has a proven track record of
building sustainable long-term value for our stakeholders and is built on a set
of key focal points, most notably:
•
Continuing our mission of breaking new artists and songwriters, and
supporting them at every stage of their career to help them achieve their
greatest creative and commercial potential.
• Maximizing and protecting the value of our extraordinary catalog, both now
and into the future.
• Driving growth in subscription and ad-supported streaming revenue around
the world.
• Building winning partnerships with tech innovators to explore how
technology can be used to drive engagement and discovery, as well as
creating new commercial opportunities for artists.
• Advancing data and insights, to help fuel that discovery and inform our
ability to connect our artists with their fans anywhere in the world.
• Enhancing our capabilities to comprehensively serve and maximize the
value of superfans through D2C/eCommerce/product development and
increasing monetization.
With each of these areas creating expansive opportunities, our artists and
songwriters remain the cornerstone for our labels, businesses, and brands. In
addition, we are committed to sustainability in our business and across our
industry, protecting the planet and creating an equitable future for generations
to come.
Recognizing music’s ability to inspire people and bring them together, we
work with our employees, artists, and fans to drive meaningful change in
our communities. We measure our environmental impacts and set targets
to address them while we collaborate with our peers to address sector-wide
environmental challenges. We deploy inclusive programs that expand career
pathways for women and underrepresented groups in the industry, and tap our
futureminded workforce, frontline talent, and powerful network of community
partners to advocate for social justice. Our ambitions and key accomplishments
across our Environment, Social, and Governance (ESG) strategic framework are
detailed in the Non-Financial Information section of this report.
Throughout 2023, UMG has led the way in redefining the model for streaming,
built winning partnerships with tech innovators, seized upon the opportunities
of new technologies like AI, boosted our presence and capabilities in regional,
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high-growth markets, discovered new ways to build audience from first-party
data, leveraged our unprecedented catalog even further, and leaned into
consumer, commerce and superfan monetization. And, of course, we broke new
artists, time and again, in all categories and in markets around the world. We are
proud of the breadth and success of these strategic initiatives and investments.
Driving music's evolution
Music as an industry is constantly evolving. We strongly believe we have the
right formula to stay in front of that evolution. During the course of 2023, UMG
once again distinguished itself with our thought leadership, including:
• Pioneering the “Artist-Centric approach” to streaming model innovation,
introduced as a concept by UMG’s Chairman and CEO, Sir Lucian Grainge
in January 2023, and now being embraced and adopted in various forms by
digital service providers (DSPs) as well as other music companies.
•
Further advancing our global diversification plans, and the expansion of our
best-in-class partnerships.
•
Exploring new creative and commercial avenues for monetizing music well
into the future.
•
Taking industry-leading steps to define and establish Responsible AI for the
benefit of artists, both in utilizing AI technology to enhance creativity and
its monetization, as well as in protecting against its dangers, and ultimately
ensuring that artists are at the center of the discussion.
• Expanding our core capabilities to facilitate the connection between artists
and fans.
Streaming’s new phase starts with artist-centric & superfans
The Artist-Centric concept spearheaded by the company saw significant
progress in 2023. Its focus is:
• Ensuring that real artists with real fan bases are better recognized and
rewarded for the platform engagement they drive and value they create.
• Protecting an artist’s music and royalties from systematic fraud
and manipulation.
• Better differentiating music from the flood of noise that has accelerated
in recent years and will continue to do so in the years ahead, all of
which undermines the user experience, diminishing discovery and diluting
authentic fan engagement.
Among those collaborating to update the streaming model using Artist-Centric
principles are French streaming service Deezer, which launched its updated
royalty payment model in France in the fourth quarter of 2023, and Spotify, the
world’s largest music streaming platform, which announced in November 2023
that it will adopt a new streaming royalty model beginning in the first quarter of
2024. Other platforms that have committed to exploring Artist-Centric principles
include Tidal and SoundCloud, as each platform looks to better reward real
engagement by creating a bespoke model that better reflects its own fan-driven
consumption and listening experience.
The big picture: The economics of streaming is a vastly more complex subject
than it was at the infancy of the format nearly two decades ago. As a result some
aspects of the traditional streaming model have become in need of revision.
An updated approach is needed to create better equity for the artists who drive
business for digital service providers, and in 2023, the Artist-Centric approach
has gained momentum as the driver for that change.
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Why it matters: The work and value of artists is being diluted on digital service
provider platforms by an oversupply of content, much of it merely noise and
increasingly more of it associated with fraud. A situation that will only become
more pronounced as generative AI becomes more widespread. This has served
to drown out the real music that fans actually want to hear. The principles of an
Artist-Centric approach to streaming were conceived to better reward musical
artists and songwriters that inspire audiences and drive the most engagement,
not the bots and white noise diluting that experience.
Unlocking the power of the superfan has been at the heart of UMG’s growth
strategy for many years, utilizing UMG’s best-in-class data to expand our
direct fan audiences and better understand fan behavior. This has allowed us
to innovate and better leverage our iconic catalog to continue to introduce
our artists to new audiences and markets. Consider also that
superfans, a
growing and influential category of music enthusiasts, spend 80% more each
month on music than the average listener, based on Luminate data. These
fans drive increased activity both on platforms, but also through UMG’s rapidly
growing direct-to-consumer, ecommerce and merchandising businesses, which
represent a significant opportunity for UMG to grow authentic engagement
between fans and the artists they love.
The details: While there’s a significant degree of consensus about core
objectives and guiding principles, the platforms will decide how they implement
their version of the Artist-Centric model. Some examples of how platforms
are approaching this include: rewarding songs or artists that reach a certain
threshold of listeners or streams; rewarding streams that reflect more active
fan engagement; limiting the impact of non-artist noise content on platforms;
improving fraud detection; and removing incentives for bad actors. Artists
at every stage of their career will benefit from these moves, since they
are prioritizing authentic artist-fan engagement and the value it creates for
the platforms.
What’s ahead: We are determined to work with every digital service provider
to embrace an Artist-Centric approach. It will support all artists regardless
of the scale at which they are operating and regardless of the stage of their
careers. It will enhance artist discovery and it will also significantly benefit
the streaming services themselves by returning them to their core mission
of bringing great music to fans. As part of that process, it will promote
subscriber acquisition and retention while reducing operating costs associated
with valueless content volume.
Global reach — faster & further
UMG continues to expand its repertoire, reach and capabilities in some of the
world’s most exciting, rapidly growing, and dynamic global music markets.
We are committed to expanding our presence and accelerating our growth in
far-reaching regions to discover exciting new music and artists globally, expand
our catalog and repertoire, create opportunities to connect with local music fans
and increase market share.
In 2023, UMG focused on strengthening our existing operations and leadership,
signing a series of high-profile artists, partnering with local labels and acquiring
best-in-class local labels and distribution businesses that strengthen our
global catalog and enhance our local and regional capabilities, and create new
opportunities for our global roster.
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Why it matters: Our diverse and long track record of worldwide successes helps
us continually attract new talent to our roster. New talent is indispensable
for our future success. The more those artists reflect the local culture for the
consumers and communities we serve, the more those fans will connect to their
music, including in high growth-potential markets like India, the Middle East,
West and Sub-Saharan Africa, or across Greater China.
Expansion strategy: UMG is expanding our global reach by investing in local
markets. We are doing that in three ways: local artist investment; local label
partnerships; and acquisitions.
Local artist investment: Sign and develop local artists, while building a roster
of the best talent each region has to offer, just as we do in more developed
music markets.
Partnerships: Partner strategically with leading local labels, artist managers and
entrepreneurial companies to support and boost them with global promotion,
distribution and a full suite of artist services.
In India, UMG strengthened its position domestically with an exclusive
partnership with leading management company Represent and continued to
build on local success with existing partners including Desi Melodies and TM
Ventures. This year, UM India also partnered with Coca-Cola for Coke Studio
Bharat Season 1, which led to one of the biggest Hits of the year, Khalasi
by Aditya Gadhvi & Achint, topping India’s chartswith more than 12billion
combined views and culminated in Prime Minister Narendra Modi highlighting
the song as an example of introducing Indian culture to the world.
One of the biggest global breakthroughs of the year was for Nigerian Afrobeats
sensation Rema, whose track "Calm Down" featuring Selena Gomez became the
biggest Afrobeats song of all time, the first African artist-led track to surpass
onebillion Spotify streams and the most viewed video of all time by an African
artist on YouTube. The track, released in Africa through Mavin Records, was
distributed globally through Virgin Music Group.
Acquisitions: Through M&A, acquire local labels, catalog and artist
services businesses.
In Thailand, a key music Market in Southeast Asia, UMG further expanded its
repertoire in 2023 by acquiring RS Group, a leading Thai music distributor and
management company that represents Thailand’s second largest music catalog,
over 10,000 master recordings, 6,000 copyright ownerships, publishing rights,
and licenses spanning four decades.
UMG acquired Chabaka Music, a leading MENA-based company with
unparalleled regional expertise, representing more than 150 independent artists
and local labels that has now been incorporated into Virgin Music Group’s global
distribution network, accelerating UMG’s capabilities and resources in this fast-
growing region.
Of note: We've accelerated our activity in China in recent months through
executive hires, new strategic partnerships, and local artist signings.
In September, UMG announced the appointment of Timothy Xu as Chairman and
CEO for Universal Music Greater China. A respected industry executive with an
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unprecedented track record of success in breaking Chinese artists and talents
across the region, Tim’s arrival brought a renewed focus on A&R and domestic
growth, including a new long-term deal with Eason Chan, and the global signing
of music icon Jay Chou and his JVR Music label. Chou was named IFPI’s No. 1
global album seller for 2022.
Universal Music Publishing China also announced global publishing deals
to represent RYCE Entertainment’s expansive catalog, which also includes
rights to several regional K-pop hits, on top of their domestic repertoire and
popular singer-songwriter Tia Ray. It also hosted writing camps for its domestic
songwriters to collaborate with other UMPG signed songwriters from around the
world, creating new opportunities for collaboration.
Explore new monetization opportunities
Music’s powerful new role in Health and Wellness
Building upon our success in creating a robust commercial category in
fitness, UMG is now leading the industry in exploring creative and commercial
opportunities for music to play an even greater role in health and wellness,
having licensed its catalog of music to more than 40+ companies across
the field.
The big picture: Today UMG’s music is not only being used to soundtrack
mental well-being, relaxation, meditation and fitness, but UMG is also helping
to pioneer a new category that we call “prescription music,” an evidence-based
health technique built on scientific and medical research, harnessed to be used
alongside treatment for a broad array of serious and chronic medical conditions
including Stroke and Traumatic Brain Injury recovery, Alzheimer’s, Dementia,
Parkinson’s, Anxiety, sleep and mental health conditions, among others.
Why it matters: This year, Health and Wellness partner MedRhythms, who
exclusively licenses their music from UMG, received an FDA license for their
InTandem device created to help patients learn to walk again after debilitating
strokes, becoming the world's first prescription digital therapeutic product that
uses music, with prescriptions rolling out in the U.S. from Fall 2023.
The details: In September, UMG Chairman and CEO, Sir Lucian Grainge and
Arianna Huffington, CEO of Thrive Global, hosted the first MUSIC + HEALTH
summit in Los Angeles in association with Havas Health, focusing on the
direct relationships between music and health, discussing recent research
documenting music’s therapeutic and medical benefits, showcasing innovative
companies that are integrating music into fitness and wellness products
and services, and introducing new applications for music in the space. The
event brought together UMG artists with health entrepreneurs and leading
neuroscientists to advance conversation around this innovative new category.
What’s ahead: During the event, UMG announced new partnerships with Arianna
Huffington’s Thrive Global for UMG to be the exclusive music partner for their
Thrive Reset stress management tool, alongside a licensing agreement with
innovative digital therapeutic company soundBrilliance, providing selections
from UMG’s catalog for use in closed clinical trials for music and health
research. These trials will use music, psychology, and measurement techniques
to create tools and exercises which empower people to better self-manage
the fundamentals of health: emotional balance, fitness, quality sleep and pain
control. UMG also previewed Sollos, its forthcoming music-centric wellness app
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that uses cognitive science and proprietary audio technology to support focus,
relaxation and sleep.
In 2023, UMG also announced a first of its kind, strategic relationship with
AI sound wellness company Endel to enable artists and labels to create
soundscapes for daily activities like sleep, relaxation, and focus by harnessing
the power of AI. While it’s a field still in its infancy, this area has the potential
to become an increasingly important component of our strategy in 2024
and beyond.
Bringing our artists and music to gaming
The big picture:
UMG has a strong track record of pioneering collaborations that
establish an onramp for artists into the opportunities of the metaverse, gaming
and interactive fan experiences.
UMG has worked with leading partners and platforms to bring first of their kind
experiences in the space to platforms including Roblox, Epic Games (Fortnite)
and Second Life.
The details: In December 2023, UMG announced the launch of Beat Galaxy, an
innovative new music hub on Roblox. Building on several successful activations
on Roblox by UMG artists and labels, Beat Galaxy is a next-generation social
experience centered around music discovery, featuring a fully interactive
community space where fans and newcomers can meet, discover, and share
their favorite artists and music. From towering amplifiers to a 24/7 virtual
club and themed UMG artist takeovers, every aspect of the immersive space
encourages discovery. The Beat Galaxy experience on Roblox is architected
to become the virtual epicenter for a wide range of UMG labels and artist
integrations, and launched with Interscope Records artist YUNGBLUD.
Early in 2023, UMG’s Republic Records and JYP launched the Twice Square
experience for fans of K-Pop group Twice on Roblox. The experience currently
ranks as the #1 music experience on the platform and at #9 in the most visited
Roblox experiences of all-time, with more than 73million visitors to date. Other
artist activations on Roblox have included Nicki Minaj, Olivia Rodrigo, Glass
Animals and Baby Queen.
What’s ahead: In the coming year, UMG plans to launch a series of platform
tools and experiences that will further enhance the commercial opportunities
for UMG artists within the Roblox platform and expand accessibility to licensed
music from UMG’s catalog within the platform, as well as pursuing meaningful
opportunities with other partners.
Embracing AI for the good
History has taught us that the emergence of new technologies comes with
both transformative opportunities and inherent risks to traditional business
models. Generative artificial intelligence is no exception. In order to address
and harness the rapid acceleration of developments in AI, UMG has developed
a strategy that carefully choreographs offense and defense while placing artists’
interests at the center of the conversation.
Fighting infringing AI-generated content, unlicensed training on our catalog of
copyright-protected artist content, and fraud to protect the rights and integrity
of artists, both now and in the future, is imperative. At the same time, AI can
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be used to enhance human creativity in music, enriching aspects of what we
do for our artists and their fans. For that reason, UMG has been exploring
the opportunities emerging from this technology for many years, applying AI
for advances in data analytics, marketing tools, enhanced studio and audio
production, while working to protect the long-term value of artistic content.
Indeed, UMG holds a number of AI patents itself.
Why it matters: Placed in a context where artists rights and interests are
embraced and advanced, AI will amplify human imagination and enrich musical
creativity in extraordinary new ways — and we'll need to strike the balance. We
see great potential in Generative AI to inspire and empower a new generation
of talent.
Smart collaboration is the start: A groundbreaking example of this approach is
our collaboration with YouTube, the world’s leading video platform, to create
a set of principles and best practices around the use of AI in the creation
of music. Announced in August, together we launched a Music AI Incubator,
bringing together a working group of leading UMG artists, songwriters and
producers across multiple genres to help inform how generative AI technology
could potentially be employed in a responsible and ethical manner. Central to
this collective vision is building a safe, responsible and profitable ecosystem for
music and video as technology advances — one where artists and songwriters
can maintain their creative integrity and be compensated fairly.
We have also forged an alliance with BandLab, the world's largest social music
creation platform. The alliance will help advance our shared commitment to
the ethical use of AI and the protection of artists and songwriters across the
creative ecosystem.
As our AI strategy progresses, you'll see more companies committed to
responsible AI development, working with us on solutions that respect artists’
right and interests, unlock creativity, explore new commercial opportunities for
us, and compensate artists appropriately.
Of note: In October, with help from pioneering AI source separation technology,
“Now And Then” the lastsong from The Beatles– written and sung by John
Lennon, developed and worked on by Paul McCartney, George Harrison and
Ringo Starr, and now finally finished by Paul and Ringo over four decades later –
was released to global acclaim. This was one of many examples of artist-driven
innovation with AI technology to emerge in 2023.
In April, UMG released a new track with our partners at HYBE from their
artist MIDNATT. Using HYBE's proprietary AI voice technology and with the
artist's collaboration and consent, the track was simultaneously released in six
languages: Korean, English, Japanese, Chinese, Spanish and Vietnamese with
the goal of offering music fans the opportunity to hear the K-Pop track in their
own local language. It was a fascinating example of how AI can be used to help
music reach global audiences and used in exciting ways.
Our strategic relationship with Endel, an AI sound wellness company, is another
example of how the responsible use of AI can support and enhance the
creativity of our artists, labels and songwriters. Under our agreement, UMG
artists partnering with Endel and utilizing their proprietary AI technology can
create soundscapes based on the artist's existing recordings to create new
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versions that promote listeners' health and wellbeing, opening new commercial
opportunities for our existing and growing catalog.
Guarding against AI’s risks: Rapid technological advancements have enabled
digital manipulation, appropriation and misattribution of an artist’s name,
image, likeness, voice and style – the very characteristics that differentiate
them as performers with unique vision and expression. Our challenge and
opportunity as an industry is to establish effective tools, incentives and rewards
— as well as rules of the road — that enable us to limit AI’s potential downside
while promoting its promising upside.
UMG has led the industry in articulating the importance of establishing the
perimeters of copyright, to ensure that artists’ creative output continues to be
respected for generations to come. UMG supports the Human Artistry Campaign
(‘HAC’) and its principles – the HAC is a global initiative formed in early 2023
to protect creators’ rights in the age of AI, with more than 170 supporting
organizations from 40+ countries.
In addition to responsible and ethical AI industry collaborations and thought
leadership, UMG is pursuing the establishment of legislative and regulatory
“guardrails” for AI, including backing legislation that would establish a federal
right of publicity in the United States protecting all Americans’ image, likeness
and voice – and helping to prevent deepfakes. We are vigorously advocating for
public policies furthering Responsible AI with governments around the globe,
including through multi-stakeholder coalitions and trade bodies, as well as on
our own.
In addition, we are protecting creators’ rights in the AI environment through
litigation. For example, UMPG, alongside two other music publishers, filed a
copyright infringement lawsuit against Anthropic for its large-scale, wholesale
copying of copyrighted lyrics.
The bottom line: AI will never replace human creativity because it will
always lack the essential spark that drives the most talented artists to do
their best work. From Mozart to the Beatles to Taylor Swift, genius is never
random. Yet, forging a path with the music community will enable us to
empower this breathtaking technology responsibly to the benefit of the entire
creative ecosystem.
Expand our core capabilities through innovation and R&D
Innovation is a key element of how we continue to lead at UMG. We are not
only maximizing existing commercial opportunities for our labels and artists,
but also evolving our broad range of businesses to identify future opportunities,
fan behaviors and consumption trends.
Our unmatched commitment to lead in collaborative development of new
services, platforms and business models for the delivery of music and
related content empowers innovators and promotes new commercial and
artistic opportunities.
We harness technological innovation to drive market growth. Through our
expansive alliances and groundbreaking partnerships across the industry, we
enable our artists to monetize their work and build deeper engagement with
their fans. We view innovation as central to our approach to bring more music to
more people around the world. Some of these areas of focus include:
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ADVANCE DATA AND INSIGHTS
UMG is advancing our capabilities in data and insights to help fuel discovery
and inform our ability to connect our artists with their fans anywhere in
the world.
A crucial aspect of our focus on innovation is the high priority we place on
operationalizing data and analytics at an industry-leading scale to promote
the interests of our artists. We have made ongoing strategic investments in
data and analytics over the past several years, including building a world-class
analytics infrastructure based on cloud technology.
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 can quickly detect viral moments, including those driven by social
platforms. We can then tailor our marketing initiatives to the target audience,
which maximizes reach and conversion. Our data scientists have developed 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.
GO DIRECT TO FANS
UMG is committed to exploring ways to strengthen and better serve the artist-
fan relationship through superfan experiences and products. In recent years,
UMG has advanced the company’s direct-to-consumer strategy and capabilities,
leaning further into e-commerce and focusing efforts towards building an
enhanced and holistic fan-centric ecosystem for UMG artists, providing them
with a robust network of tools and services to build comprehensive global
campaigns that will help them reach fans around the world.
The launch of UMG’s own global eCommerce platform has enabled its D2C,
digital goods, merchandise and e-commerce divisions to accelerate and amplify
artists’ ability to create experiential, commerce and content offerings for their
fans. The platform is already supporting hundreds of artist stores globally, with
many more to launch in 2024.
UMG is actively increasing its global audience and customer footprint,
connecting with music fans and superfans around the world in order to retain
and deliver subscribers and fans access to the experiences and products they
want the most.
Embrace entrepreneurs to accelerate the next wave of transformation
With a view to our industry’s future, UMG continues to advance our role 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 broadly deployed Accelerator Engagement Network.
Since 2017, UMG’s multifaceted Digital Innovation programs — which include 11
active accelerator partners based in entrepreneurial centers around the world —
have nurtured and mentored 170 music start-ups, enabling them to raise over
$220million in funding.
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Annual Report 2023 | 62
STRATEGYSTRATEGY
UMG’s core music DNA — conveyed through incubation, connectivity,
mentorship and the strategic partner network that we can provide startups
and entrepreneurs — is the greatest asset we can provide early-stage
companies. Some examples of companies backed by UMG and its accelerator
program include music and health innovators like MedRhythms, Music Health,
soundBrilliance and MediMusic among others.
MUSIC IS UNIVERSAL Annual Report 2023 | 63
ORGANIZATIONAL AND REPORTING STRUCTUREORGANIZATIONAL AND REPORTING STRUCTURE
ORGANIZATIONAL AND
REPORTING STRUCTURE
The following structure chart illustrates the simplified structure of the Group as
at December 31st, 2023
UNIVERSAL INTERNATIONAL MUSIC B.V.
The Netherlands
Corporate Executives
The Group is managed by corporate executives (the Corporate Executives).
The current Corporate Executives consists of nine key members, each of whom
oversees a specific aspect of the business. The persons set forth below are the
current members of the Corporate Executives.
Name
Age Position
Sir Lucian Grainge 64 Chairman & Chief Executive Officer
Philippe Flageul 59 Executive Vice President, Controller
Jody Gerson 63 Chairman & CEO for Universal Music Publishing Group
Jeffrey Harleston 63 General Counsel and Executive Vice President of
Business & Legal Affairs
Eric Hutcherson 54 Executive Vice President, Chief People and
Inclusion Officer
Boyd Muir 64 Executive Vice President, Chief Financial Officer and
President of Operations
Michael Nash 67 Executive Vice President, Chief Digital Officer
Will Tanous 53 Executive Vice President, Chief Administrative Officer
Vincent Vallejo 63 Deputy Chief Executive Officer, Corporate
MUSIC IS UNIVERSAL Annual Report 2023 | 65
ORGANIZATIONAL AND REPORTING STRUCTUREORGANIZATIONAL 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 STRUCTUREORGANIZATIONAL 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
others. She has signed and works with the world’s biggest superstars including
Elton John, Taylor Swift, Harry Styles, Kendrick Lamar, Bad Bunny, Adele, The
Weeknd,Billie Eilish, SZA, Rosalia, Drake, Steve Lacy, Alicia Keys,Lana Del Rey.
Coldplay, Justin Bieber, Post Malone, Ariana Grande, H.E.R., Maren Morris, the
Bee Gees, Prince, and more. Additionally, Gerson jointly oversees Polygram
Entertainment, a film and television development and production division of
UMG which has produced award-winning projects including The Bee Gees: How
to Mend a Broken Heart (HBO), Dear Mama (FX) and HBO’s Music Box series.
Gerson cofounded nonprofit She Is The Music and serves on 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.
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ORGANIZATIONAL AND REPORTING STRUCTUREORGANIZATIONAL AND REPORTING STRUCTURE
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.
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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Annual Report 2023 | 68
FINANCIAL REVIEWFINANCIAL REVIEW
EARNINGS ANALYSIS: GROUP AND
BUSINESS SEGMENTS
Consolidated Statement of Profit or Loss
Year ended
December 31,
(millions of euros) 2023 2022
Revenues 11,108 10,340
Cost of revenues (6,208) (5,753)
Selling, general and administrative expenses (3,213) (2,702)
Amortisation and impairment losses on intangible assets (269) (285)
Operating profit 1,418 1,600
Financial income 454 37
Financial expenses (151) (735)
303 (698)
Income/(loss) from equity affiliates - (2)
Profit before income taxes 1,721 900
Income taxes (458) (115)
Net profit 1,263 785
Of which:
Net profit attributable to equity holders of the parent 1,259 782
Net profit attributable to non-controlling interests 4 3
Earnings per share (in euros)
Earnings for the period attributable to equity holders of the
parent - basic
0.69 0.43
Earnings for the period attributable to equity holders of the
parent - diluted
0.68 0.43
Adjusted net profit 1,595 1,454
Adjusted net profit per share (in euros) - basic
1
0.88 0.80
Adjusted net profit per share (in euros) - diluted
1
0.87 0.80
1 Non-IFRS measures as defined in the Appendix to the Annual Report
MUSIC IS UNIVERSAL Annual Report 2023 | 70
FINANCIAL REVIEWFINANCIAL REVIEW
Reconciliation of Operating Profit to EBITDA and Adjusted EBITDA
Year ended
December 31,
(millions of euros) 2023 2022
Operating Profit 1,418 1,600
Adjustments
Amortization and depreciation expense 382 377
Restructuring expenses 41 32
(Gain)/loss on sale of assets (26) 2
Impairment (reversal)/charge on intangible assets (7) 17
EBITDA
1
1,808 2,028
Non-cash share-based compensation expense 561 107
Adjusted EBITDA
1
2,369 2,135
1 As defined in the Appendix to the annual report
Analysis of the Consolidated Statement of Profit or Loss
Revenues
In 2023, UMG’s revenues of €11,108million were up 7.4% compared to 2022
and up 11.1% at constant currency. This increase was driven by improvements
across all divisions. Recorded Music grew 6.6% year-over-year and 10.2% at
constant currency compared to 2022, Music Publishing was up 8.7% or 12.3% in
constant currency and Merchandising and Other grew by 14.2% year-over-year
or 17.9% in constant currency.
For a detailed analysis of revenues by business segment, please refer to the
Analysis of revenues and operating results by business segment section below
and to Note 3 to the Consolidated Financial Statements for the year ended
December 31, 2023.
Operating results
Analysis of cost of revenues
Year ended December 31,
(millions of euros) 2023 2022
Artist costs 5,152 4,704
Product costs 1,056 1,049
Cost of Revenues 6,208 5,753
Cost of Revenues grew by €455million to €6,208million in 2023 from
€5,753million in 2022, reflecting the increase in revenues. Cost of revenues as a
percentage of revenues increased to 55.9% from 55.6% driven by higher relative
artist costs and despite lower relative product costs.
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Annual Report 2023 | 71
FINANCIAL REVIEWFINANCIAL REVIEW
Artist costs increased by €448million to €5,152million in 2023 from
€4,704million in 2022 driven by the increase in sales. As a percentage of
revenues, artists costs increased to 46.4% in 2023 from 45.5% in 2022 as a result
of a higher proportion of Music Publishing revenues that have higher relative
artist costs and from Recorded Music repertoire mix.
Product costs increased by €7million to €1,056million in 2023 from
€1,049million in 2022 reflecting the growth in revenues. Product costs as a
percentage of revenues decreased to 9.5% from 10.1% due to revenue mix.
Selling, general and administrative expenses increased by €511million to
€3,213million in 2023 from €2,702million in 2022 and increased as a percentage
of revenues to 28.9% in 2023 from 26.1% in 2022 due largely to higher non-cash
share-based compensation expenses. Non-cash share-based compensation
expenses increased to €561million in 2023 from €107million in 2022, up by
€454m following the rollout of the UMG Global Equity Plan beginning in Q4 2022.
Non-cash share-based compensation expense in both years was impacted by
one-time transition awards and the front loading of expense recognition. Cash
compensation savings of €76million associated with this rollout were reflected
in 2023.
Operating profit was €1,418million in 2023, compared to €1,600million for 2022,
a decrease of €182million, -11.4% or -8.3% at constant currency, driven by
the higher non-cash share based compensation expenses (discussed above)
partly compensated by the increase in revenues. As a percentage of revenues,
operating profit declined to 12.8% in 2023 from 15.5% in 2022.
EBITDA decreased by €220million, -10.8% or -7.8% at constant currency to
€1,808million in 2023 compared to €2,028million in 2022 driven by the increase
in non-cash share based compensation expenses (discussed above) partly
compensated by the increase in revenues. EBITDA margin decreased by 3.3pp
to 16.3% in 2023 compared to 19.6% in 2022.
Adjusted EBITDA was €2,369million in 2023 up €234million, 11.0% or 14.6% at
constant currency compared to €2,135million in 2022. Adjusted EBITDA margin
increased by 0.7pp to 21.3% in 2023 from 20.6% in 2022.
For a detailed analysis of EBITDA and Adjusted EBITDA by business segment,
please refer to the Analysis of revenues and operating results by business
segment section below.
Financial results
Financial income and Financial expenses were a net income of €303million in
2023, compared to a net expense of €698million for 2022, an improvement of
€1,001million. For 2023, the revaluation of the investments in listed companies
including Spotify and Tencent Music Entertainment was a net income amount
of €425million, compared to a net expense of €617million for 2022, an
improvement of €1,042million.
Income taxes
For 2023, income taxes were a net expense of €458million, compared to a net
expense of €115million for 2022. This increase notably reflected the increase in
the deferred tax charge relating to the revaluation of the investments in listed
companies including Spotify and Tencent Music Entertainment (-€111million
MUSIC IS UNIVERSAL
Annual Report 2023 | 72
FINANCIAL REVIEWFINANCIAL REVIEW
expense in 2023, compared to +€166million benefit in 2022) and the favourable
settlement of tax litigations in 2022 (€90million income in 2022).
Non-controlling interests
For 2023, earnings attributable to non-controlling interests were €4million,
slightly higher than the €3million for 2022.
Net profit attributable to equity holders of the parent
For 2023, net profit attributable to equity holders of the parent amounted to a
profit of €1,259million (or €0.69 per share - basic), compared to €782million
for 2022 (or €0.43 per share - basic), an increase of €477million. Net profit
attributable to equity holders of the parent increased by €477million, reflecting:
•
the variance in financial results (+€1,001million) driven by the revaluation
of the investments in Spotify, Tencent Music Entertainment and other listed
investments (+€1,042million);
partially offset by:
•
the decline in operating profit (-€182million) due to the increase in non-
cash share based compensation (discussed above); and
•
the increase in income taxes reported to net income (-€343million), mainly
due to the increase in the deferred tax charge relating to the revaluation
of the investments in Spotify, Tencent Music Entertainment and other listed
investments and the favourable settlement of tax litigations in 2022.
Adjusted net profit
Adjusted net profit in 2023 amounted to a profit of €1,595million (or €0.88 per
share - basic), compared to €1,454million for 2022 (or €0.80 per share - basic), an
increase of €141million. Adjusted net profit increased by €141million, including:
• the growth in Adjusted EBITDA (+€234million); partially offset by
• the increase in income taxes reported to adjusted net profit (-€75million).
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Annual Report 2023 | 73
FINANCIAL REVIEWFINANCIAL REVIEW
Analysis of revenues and operating results by business segment
Year ended
December 31,
(millions of euros) 2023 2022 % Change
% Change at
constant
currency
Revenues
Recorded Music 8,461 7,937 6.6% 10.2%
Music Publishing 1,956 1,799 8.7% 12.3%
Merchandising & Other 706 618 14.2% 17.9%
Corporate Centre - - 0.0% 0.0%
Elimination of inter-
segment transactions
(15) (14)
Total UMG 11,108 10,340 7.4% 11.1%
EBITDA
1
Recorded Music 1,618 1,827 (11.4%) (8.5%)
Music Publishing 420 395 6.3% 9.4%
Merchandising & Other 43 36 19.4% 26.5%
Corporate Centre (273) (230) (18.7%) (21.3%)
Total UMG 1,808 2,028 (10.8%) (7.8%)
1 As defined in the Appendix to the Annual Report
MUSIC IS UNIVERSAL Annual Report 2023 | 74
FINANCIAL REVIEWFINANCIAL REVIEW
Recorded Music
Year ended
December 31,
(millions of euros) 2023 2022 % Change
% Change at
constant
currency
Subscriptions and
streaming revenue
5,700 5,321 7.1% 10.4%
of which streaming 1,425 1,420 0.4% 3.6%
of which subscription 4,275 3,901 9.6% 12.8%
Downloads and other
digital revenue
207 337 (38.6%) (35.7%)
Physical revenue 1,380 1,207 14.3% 19.4%
License and other revenue 1,174 1,072 9.5% 13.6%
Recorded Music Revenues 8,461 7,937 6.6% 10.2%
EBITDA
1
1,618 1,827
(11.4%) (8.5%)
EBITDA margin
1
19.1% 23.0% (3.9pp)
Adjusted EBITDA
1
2,042 1,900
7.5% 11.0%
Adjusted EBITDA margin
1
24.1% 23.9% 0.2pp
Recorded music revenues by
geographic area
North America 4,316 4,077 5.9% 9.2%
Europe 2,392 2,191 9.2% 10.9%
Asia 1,118 1,007 11.0% 20.6%
Latin America 358 302 18.5% 19.3%
Rest of the world 277 360 (23.1%) (18.0%)
Recorded Music Revenues 8,461 7,937 6.6% 10.2%
1 As defined in the Appendix to the Annual Report
In 2023, Recorded Music revenues were €8,461million, up 6.6% compared
to 2022, and up 10.2% in constant currency. Subscription revenues grew by
9.6% or 12.8% in constant currency driven by the growth in global subscribers
as well as impact of price increases at certain platforms. Streaming revenue
grew 0.4%, or 3.6% in constant currency as the broader advertising industry
continued to slowly recover. Physical revenue grew 14.3%, or 19.4% in constant
currency, driven by strong new releases and growth in direct-to-consumer
sales. Downloads and other digital revenue declined by 38.6%, and 35.7% in
constant currency, on last year that included the €71million benefit from the
settlement of a copyright infringement lawsuit with an internet service provider
also due to the continued decline in download sales. License and other revenue
improved 9.5% or 13.6% in constant currency, as a result of improved live, brand
sponsorship, neigbouring rights and synchronization income, as well as the
timing related benefit of a new licensing deal. Top sellers for the year included
Taylor Swift, King & Prince, Morgan Wallen, Karol G and The Weeknd. Top sellers in
the prior-year included Taylor Swift, BTS, the Encanto soundtrack, Olivia Rodrigo
and Morgan Wallen.
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Annual Report 2023 | 75
FINANCIAL REVIEWFINANCIAL REVIEW
Recorded Music EBITDA in 2023 of €1,618million was down €209million
from €1,827million in 2022 due to the increase in non-cash share based
compensation partly offset by the growth in revenues. In 2023, EBITDA included
€424million of non-cash share based compensation compared to €73million of
non-cash share-based compensation expense in 2022.
Adjusted EBITDA for Recorded Music increased by €142million to €2,042million
in 2023 from €1,900million in 2022 as a result of the revenue growth. Adjusted
EBITDA margin increased by 0.2pp to 24.1% of revenues from 23.9% of revenues
in 2022.
Music Publishing
Year ended
December 31,
(millions of euros) 2023 2022 % Change
% Change at
constant
currency
Performance revenue 416 371 12.1% 15.9%
Synchronisation revenue 254 236 7.6% 10.0%
Digital revenue 1,128 1,040 8.5% 12.5%
Mechanical revenue 108 97 11.3% 14.9%
Other revenue 50 55 (9.1%) (7.4%)
Music Publishing Revenues 1,956 1,799 8.7% 12.3%
EBITDA
1
420 395
6.3% 9.4%
EBITDA margin
1
21.5% 22.0% (0.5pp)
Adjusted EBITDA
1
470 410
14.6% 17.8%
Adjusted EBITDA margin
1
24.0% 22.8% 1.2pp
1 As defined in the Appendix to the Annual Report
Music Publishing revenue amounted to €1,956million in 2023, up 8.7%
year-over-year, or 12.3% in constant currency. Revenues benefited from the
continued growth in subscription and streaming and an improvement in both
performance and synchronization income. Revenues in 2023 also benefited
from the €53million accrual for a catch-up payment from certain digital
service providers related to the Copyright Royalty Board Phonorecords III ruling.
Revenues in Q2 of 2022, included the receipt of €98million 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.
Music Publishing EBITDA in 2023 of €420million was up €25million from
€395million in 2022 driven by the growth in revenues. EBITDA was impacted by
€50million of share based compensation expense in 2023 (€15million in 2022).
Music Publishing Adjusted EBITDA increased by €60million to €470million
in 2023 compared to €410million in 2022 as a result of the revenue growth.
Adjusted EBITDA margin increased by 1.2pp to 24.0% from 22.8% of revenues
in 2022.
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FINANCIAL REVIEWFINANCIAL REVIEW
Merchandising & Other
Year ended
December 31,
(millions of euros) 2023 2022 % Change
% Change at
constant
currency
Merchandising and
Other Revenues
706 618 14.2% 17.9%
EBITDA
1
43 36
19.4% 26.5%
EBITDA margin
1
6.1% 5.8% 0.3pp
Adjusted EBITDA
1
47 36
30.6% 38.2%
Adjusted EBITDA margin
1
6.7% 5.8% 0.9pp
1 As defined in the Appendix to the Annual Report
Merchandising and Other revenue grew to €706million, up 14.2%, or 17.9% in
constant currency driven by the strong growth in direct-to-consumer sales.
Merchandising and Other EBITDA in 2023 of €43million was up €7million from
€36million in 2022 due to the improved revenues. EBITDA was impacted by
€4million of share based compensation expense in 2023 (€0million in 2022).
Merchandising and Other Adjusted EBITDA increased by €11million to
€47million in 2023 compared to €36million in 2022. Adjusted EBITDA margins
increased by 0.9pp to 6.7% of revenues from 5.8% of revenues in 2022 due to
lower relative product costs resulting from the shift in revenue mix towards
higher margin direct-to-consumer sales.
Corporate
Year ended
December 31,
(millions of euros) 2023 2022 % Change
% Change at
constant
currency
EBITDA
1
(273) (230) 18.7% 21.3%
EBITDA margin
1
- -
Adjusted EBITDA
1
(190) (211) (10.0%) (7.8%)
Adjusted EBITDA margin
1
- -
1 As defined in the Appendix to the Annual Report
Corporate EBITDA was a net expense of €273million, compared to a net expense
of €230million for 2022, a €43million increase in expense. EBITDA in 2023
included €83million of non-cash share-based compensation related expenses
(€19million in 2022).
Corporate Adjusted EBITDA was a net expense of €190million in 2023, a
€21million decrease in expense from the Adjusted EBITDA expense in 2022 of
€211million.
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FINANCIAL REVIEWFINANCIAL REVIEW
LIQUIDITY AND
CAPITAL RESOURCES
Financial Net Debt
Year ended
December 31,
(millions of euros) 2023 2022
Cash and cash equivalents 413 439
Derivative financial assets 2 1
Drawn revolving credit facilities - (125)
Bank overdrafts (26) (1)
Bonds (1,808) (1,004)
Commercial papers (197) (929)
Other (73) (191)
Borrowings at amortized cost (2,104) (2,250)
Financial Net Debt
1
(1,689) (1,810)
1 As defined in the Appendix to the Annual Report
Changes in the Financial Net Debt
As of December 31, 2023, UMG’s Financial Net Debt amounted to -€1,689million
compared to Financial Net Debt of -€1,810million as of December 31 ,2022, i.e.,
a decrease in net debt of €121million. This change was mainly attributable to
the following:
• Net cash provided by operating activities of €1,885million;
partially offset by:
• in June and July 2023, UMG paid the final dividend with respect to fiscal year
2022 of €492million;
• in October and November 2023, UMG paid an interim dividend with respect
to fiscal year 2023 of €437million;
• Net cash used for investing activities of -€622million primarily due to
the €330million net purchase of consolidated companies, equity affiliates
and financial assets relating to several strategic investments in the
year, €178million investment in Music Publishing and Recorded Music
catalogues and €121million investment in other intangible and capital
expenditure; and
• repayment of €94million in relation to lease liabilities and related interest
and €87million in other interest and financing related payments.
UMG believes that the cash flow generated by its operating activities, its cash
surpluses, net of amounts used to reduce UMG’s debt, as well as funds available
through undrawn bank credit facilities and additional funding opportunities will
be sufficient to cover expenses and investments necessary for its operations, its
debt service, the payment of income taxes, the distribution of dividends, as well
as its investment projects, if any, for the next 12 months.
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FINANCIAL REVIEWFINANCIAL REVIEW
Equity portfolio
As of December 31, 2023, UMG held a portfolio of listed non-controlling equity
interests (including Spotify) with an aggregate market value of approximately
€1,227million (before taxes), compared to €597million as of December 31,
2022. The increase in market value during 2023 was due to the fluctuation in
share price of our listed investments most notably of Spotify. As at February
29, the aggregate market value of these listed investments had increased to
approximately €1,671million (before taxes).
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FINANCIAL REVIEWFINANCIAL REVIEW
Cash flow analysis
Year ended December 31,
(millions of euros) 2023 2022
1
Operating activities
Operating profit 1,418 1,600
Adjustments 796 568
Royalty advances payments, net of recoupments (100) (148)
Gross cash provided by/(used for) operating activities before income tax paid 2,114 2,020
Other changes in net working capital 164 (33)
Net cash provided by/(used for) operating activities before income tax paid 2,278 1,987
Income tax paid (393) (255)
Net cash provided by/(used for) operating activities 1,885 1,732
Investing activities
Catalogue investments (178) (359)
Other intangible assets investments (74) (60)
Capital expenditures (47) (33)
Purchases of consolidated companies, after acquired cash (97) (22)
Investments in equity affiliates (81) (22)
Purchase of financial assets (154) (36)
Investments (631) (532)
Proceeds from sales of consolidated companies, after divested cash 1 -
Proceeds from sale of financial assets 1 9
Divestitures 2 9
Dividends received from equity affiliates 4 2
Dividends received from investments 3 1
Net cash provided by/(used for) investing activities (622) (520)
Financing activities
Distributions to shareowners (929) (798)
Dividends paid by consolidated companies to their non-controlling interests (2) (2)
Transactions with shareowners (931) (800)
Proceeds from borrowings 6,647 5,938
Repayments of borrowings (6,815) (6,359)
Interest, net (77) (30)
Other cash items related to financing activities (10) 4
Transactions on borrowings and other financial liabilities (255) (447)
Repayment of lease liabilities (80) (86)
Payment of interest of lease liabilities (14) (14)
Net cash provided by/(used for) financing activities (1,280) (1,347)
Net change in cash and cash equivalents (17) (135)
Foreign currency translation adjustments (34) 1
Change in cash and cash equivalents (51) (134)
Cash and cash equivalents
At beginning of the period 438 572
At end of the period 387 438
1 Reclassified amounts are presented in Note 2.3 of the Annual Consolidated Financial Statements
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FINANCIAL REVIEWFINANCIAL REVIEW
Reconciliation of cash provided by operating activities to Free
Cash Flow
Year ended
December 31,
(millions of euros) 2023 2022
Net cash provided by/(used for) operating activities 1,885 1,732
Net cash provided by/(used for) investing activities (622) (520)
Repayment of lease liabilities and related interest expenses (94) (100)
Interest, net (77) (30)
Other cash items related to financing activities (10) 4
Free Cash Flow
1
1,082 1,086
1 As defined in the Appendix to the Annual Report
Net cash provided by operating activities before income tax
For 2023, Net cash provided by operating activities before income tax amounted
to an inflow of €2,278million compared to an inflow of €1,987million for 2022,
an improvement of €291million. This increase was mainly attributable to the
following items:
• the increase in Adjustments (+€228million) including the offset of the non-
cash share based compensation expense reflected in Operating profit net of
the employee tax withheld (see breakdown of Adjustments in the Appendix);
• the reduction in Royalty advances payments net of recoupments
(+€48million) due to the timing of major artist renewals and higher
recoupments; and
• the favourable variance in Other changes in net working capital
(+€197million) including timing of digital advance receipts;
partially offset by
• the decrease in Operating profit (-€182million).
Net cash provided by operating activities
Net cash provided by operating activities in 2023 amounted to an inflow of
€1,885million compared to an inflow €1,732million for 2022, an improvement
of €153million. Net cash provided by operating activities before income tax in
2023 was €291million higher than in 2022 but income tax paid in 2023 was
€138million greater than in 2022 in part due to the €62million in refunds from
litigation received in 2022.
Net cash used for investing activities
Net cash used for investing activities in 2023 was a €622million net outflow
compared to a €520million net outflow for 2022, an increased outflow of
€102million. The net purchase of consolidated companies, equity affiliates and
financial assets was €259million higher than in 2022 and represented various
strategic investments entered into during the year. Catalogue investments in
2023 were lower than in 2022 (+€181million) due to the timing of deals but
investment in other intangible assets and capital expenditure was higher
(-€28million).
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Net cash used for financing activities
Net cash used for financing activities in 2023 was a €1,280million net outflow
compared to a €1,347million net outflow for 2022, a decreased outflow of
€67million. This was mainly attributable to the following items:
• a net repayment of borrowing in 2023 of €168million compared to
€421million in 2022 (+€253million);
• higher dividend payments in 2023 (-€131million); and
• higher interest payments, repayment of lease liabilities and other cash
items related to financing activities of €181million in 2023 compared to
€126million in 2022 (-€55million).
Free Cash Flow
Free Cash Flow in 2023 was a €1,082million net inflow compared to a
€1,086million net inflow for 2022, a decrease of €4million. Net cash provided
by operating activities improved by €153million compared to 2022 but this was
offset by greater net cash used for investing activities (-€102million) and higher
interest payments, repayment of lease liabilities and other cash items related to
financing activities (-€55million) in 2023 compared to 2022.
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CORPORATE GOVERNANCECORPORATE 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 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 20, 2022 (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 under ‘Compliance with the
Code--Deviations’ in accordance with the Code’s ‘comply or explain’ principle.
Substantial changes in the Company’s corporate governance structure and in
the Company’s compliance with the Code, if any, will be dealt with at the annual
General Meeting (as defined under ‘The Board’) as a separate item.
The annual report also includes the information that the Company is required
to disclose pursuant to the Dutch Decree on Article 10 of the Takeover Directive
(
Besluit artikel 10 overnamerichtlijn
) and the Dutch Decree on the Content of the
Board Report (
Besluit inhoud bestuursverslag
).
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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
sustainable long-term value creation by the Company and formulating a
strategy as well as specific objectives 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 and ensuring
that such assessment is performed by an independent third party at least every
five years, approving the internal audit plan, giving account of 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, approving and
signing the (semi-annual) financial statements and Board report and approving
the annual budget and major capital expenditures in excess thereof.
The Board may perform all acts necessary or useful for achieving the Company’s
objectives, with the exception of those acts that are prohibited pursuant to
the law or the Articles. Pursuant to the Articles, the Board may allocate its
duties and powers among the Directors pursuant to the Board Regulations (as
defined under ‘The Board––Board Regulations’) or otherwise in writing, provided
that the following duties and powers may not be allocated to the Executive
Directors: (i) supervising the performance of the Executive Directors, (ii) making
a nomination for the appointment of Directors, (iii) determining an Executive
Director’s remuneration and (iv) instructing the external auditor(s) to audit
the financial statements. Regardless of an allocation of duties and powers,
all Directors remain collectively responsible for the proper management 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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Composition
The Articles provide that the Board shall consist of one or more Executive
Directors and one or more Non-Executive Directors. The number of Executive
Directors and the number of Non-Executive Directors shall be determined by
the Board. The Board currently comprises of two Executive Directors and eleven
Non-Executive Directors, one of whom, being Haim Saban, was appointed to the
Board by the General Meeting on May 11, 2023:
Name Function
Sir Lucian Grainge Executive Director, Chairman and Chief Executive Officer
Vincent Vallejo Executive Director, Deputy Chief Executive
Officer, Corporate
Sherry Lansing Non-Executive Director, 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
Haim Saban 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
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, reappointments and retirements of Non-Executive
Directors occurring all at the same time so as to ensure continued experience
on the Board. Currently, the terms of office of eight (out of eleven) Non-Executive
Directors lapse at the close of the annual General Meeting to be held in 2024,
and it is the intention that the use of the retirement schedule will result in a
more staggered replacement of the Non-Executive Directors over time.
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CORPORATE GOVERNANCECORPORATE GOVERNANCE
The appointment dates of the Non-Executive Directors and the end of their
current terms are as follows:
Name Initial appointment date Reappointment date Term End of current term
Sherry Lansing May 12, 2022 May 11, 2023 Second term Until annual General Meeting
to be held in 2025
Antoine Fiévet September 20, 2021 First term Until annual General Meeting
to be held in 2024
Bill Ackman May 12, 2022 First term Until annual General Meeting
to be held in 2024
Cathia Lawson-Hall September 20, 2021 First term Until annual General Meeting
to be held in 2024
Cyrille Bolloré May 12, 2022 First term Until annual General Meeting
to be held in 2024
Haim Saban May 11, 2023 First term Until annual General Meeting
to be held in 2025
James Mitchell September 20, 2021 First term Until annual General Meeting
to be held in 2024
Luc van Os September 20, 2021 May 11, 2023 Second term Until annual General Meeting
to be held in 2025
Manning Doherty September 20, 2021 First term Until annual General Meeting
to be held in 2024
Margaret Frerejean-
Taittinger
September 20, 2021 First term Until annual General Meeting
to be held in 2024
Nicole Avant May 12, 2022 First term 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 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 aggregate less than 50% of the Threshold
Stake, the Tencent-led consortium shall procure that both of the Non-Executive
Directors appointed at the designation of the Tencent-led consortium resign.
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CORPORATE GOVERNANCECORPORATE GOVERNANCE
James Mitchell and Manning Doherty have been appointed at the
designation of the Tencent-led consortium such in accordance with the
Relationship Agreement.
Suspension and dismissal
The General Meeting may at all times suspend or dismiss any Director. The
Board may at all times suspend an Executive Director. A suspension may be
extended one or more times but may not last longer than three months 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 or his or her spouse, registered partner or life companion,
(foster) child or relative by blood or marriage up to the second degree:
•
has been an employee of the Company or Executive Director or an employee
or member of the management (or executive) board of an associated issuing
institution in the five years prior to his or her appointment;
•
receives personal financial compensation from the Company or an
associated company, other than the compensation received for the work
performed as a Non-Executive Director and in so far as this is not in 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 (or executive) board of a company in which
an Executive Director is a supervisory (or non-executive) board member;
• has temporarily performed management (or executive) duties during 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; or
• is a member of the management (or executive) board or supervisory (or
non-executive) board – or is a representative in some other way – of a legal
entity which holds at least 10% of the issued share capital of the Company,
unless the legal entity is a subsidiary.
The independency of Non-Executive Directors is assessed prior to 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) of another large Dutch company or foundation counts twice. Executive
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. Such position may not conflict with the Company's
interests. Other important positions held by a Director shall be notified to
the Board.
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Diversity and inclusion
For the workforce as a whole, diversity and inclusion is dealt with in the
Code of Conduct, which encourages an inclusive environment that promotes
individual expression, creativity, innovation and achievement and emphasizes
that within UMG diverse backgrounds and skills are valued as well as individual
differences in race, ethnicity, gender or gender identity, sexual orientation,
disability, religious affiliation, age, experience and thought.
For the Board and senior management, the Company has also adopted a
separate diversity and inclusion policy (the D&I Policy) as per articles 2:142b
and 2:166 of the Dutch Civil Code and best practice provision 2.1.5 of the Code,
laying down the elements of a diverse and inclusive composition of the Board
and senior management.
As set out in the D&I Policy, the Company acknowledges the benefits of
greater diversity, including with regards to gender or gender identity, age,
nationality, ethnicity and cultural or other background, and remains committed
to ensuring that the Directors and senior management bring a wide range of
expertise, experience, competencies, other personal qualities and perspectives.
All nominations for appointments to the Board and senior management will be
made based on merit against objective criteria, in the context of the overall
balance of expertise, experience, competencies, other personal qualities and
perspectives that are needed for the Company to remain effective.
The Board
With respect to the Board, the Company is committed to promoting diversity
and inclusion in the boardroom and to ensuring that all Directors are able to
contribute to Board discussions and has the aspiration:
• to improve or safeguard gender diversity among the Non-Executive
Directors, such that at least one third of the Non-Executive Directors is
female and at least one third of the Non-Executive Directors is male,
thereby at all times taking into account the Dutch statutory gender diversity
requirements with regards to non-executive directors.
• to improve gender diversity among the Executive Directors, such that at
least one Executive Director is female and at least one Executive Director is
male in the event that there are three (or more) Executive Directors.
• to improve or safeguard diversity with regards to age, nationality, ethnicity
and cultural or other background as well as to create and maintain a
variation in expertise, experience, competencies, other personal qualities
and perspectives within the Board.
The Company is further committed to considering candidates for Non-Executive
Director positions from a wide pool, including candidates with no prior publicly
listed company board level experience.
The Nomination Committee (as defined under ‘The Board––Committees’) is
responsible for supporting the Board in applying the D&I Policy with respect
to the composition of the Board by annually assessing the Board’s size
and composition and, as part thereof, for considering (i) with respect to the
Directors in general, the level of diversity with regards to expertise, experience,
competencies, other personal qualities, perspectives, gender or gender identity,
age, nationality, ethnicity and cultural or other background, and (ii) with respect
to the Non-Executive Directors in particular, the level of independence, ahead of
making recommendations to the Board for any proposed changes. In addition,
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CORPORATE GOVERNANCECORPORATE GOVERNANCE
the Nomination Committee is required to consider the benefits of all aspects
of diversity, without compromises as to the caliber of the candidate Directors,
when identifying candidate Directors to be nominated for appointment to
the Board.
The senior management
With respect to the senior management, the Company is committed to
promoting diversity and inclusion among the senior managers and has
the aspiration:
• to improve gender diversity among the senior managers, such that by
December 31, 2026, at least 20% of the senior managers is female, which
would reflect a 2.5% increase compared to December 31, 2023, and at least
20% of the senior managers is male; and
•
to improve or safeguard diversity with regards to age, nationality, ethnicity
and cultural or other background as well as to create and maintain a
variation in expertise, experience, competencies, other personal qualities
and perspectives within the senior management.
For purposes of the D&I Policy and the aspirations laid down therein, the senior
management is currently comprised of 63 senior managers.
Overview
The following table provides an overview of the composition of the Executive
Directors, Non-Executive Directors and senior managers by gender:
Executive Directors
Non-Executive Directors Senior Managers
Female 0 Female 4 Female 11
Male 2 Male 7 Male 52
Total female and male 2 Total female and male 11 Total female and male 63
% female 0 % female 36 % female 17
% male 100 % male 64 % male 83
The current composition of the Board is considered to be diverse with regards
to age, nationality, ethnicity and cultural or other background as well as to
have a variation in expertise, experience, competencies, other personal qualities
and perspectives. With the appointment of Haim Saban to the Board, the
diversity has further increased, including with regards to age and nationality
but also with regards to expertise and experience. Even though the female
representation on the Board decreased because of Anna Jones' resignation from
the Board, with women representing 36% of all Non-Executive Directors, the
current composition of the Non-Executive Directors is considered to be in line
with the gender diversity requirements included in the D&I Policy and Dutch law.
While the current composition of the senior management is also considered
to be diverse, the Company acknowledges that there is room for improvement,
especially with regards to gender diversity. Although such improvement cannot
happen overnight, especially since the senior managers are typically committed
to the Company for the long term, the Company has the aspiration that by
December 31, 2026, at least 20% of the senior managers is female, which would
reflect a 2.5% increase compared to December 31, 2023.
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Actions to improve diversity and inclusion
The Company believes that the best way to foster an environment where
original ideas are generated and creativity can flourish is to build an inclusive
workplace that attracts and promotes talent from diverse backgrounds and
cultures. Key actions from the Company’s plan to foster, and further enhance,
such an environment are set out in the Non-Financial Information section
under ‘Our commitments--Social’ and include:
Embracing cultural differences and raising awareness
• The Company recognizes many cultural milestones and historically
significant events.
•
The Company’s employee resource groups (ERGs) provide a platform for
underrepresented employees to network, share experiences and help
shape employee programming, and play a crucial role in supporting the
Company’s commitment to fostering inclusion and belonging.
Attracting and retaining talent
•
To attract the next generation of talent, the Company hosts internship
programs, allowing students, including from certain minority-serving
institutions, to take part in such programs.
• The Company provides inclusive interviewing training to further support
its goal of championing inclusion and belonging throughout the
employee lifecycle.
• The Company is putting in place a workforce data insights initiative, which
includes the implementation of a global job architecture and a quarterly
review of workforce changes, including turnover, to allow it to improve and
prioritize its talent attraction and retention programs.
Enhancing employee experience and development
• To obtain feedback on the employee experience, the Company uses
a series of employee lifecycle surveys as well as exit surveys. The
insights so obtained are turned into actions to further enhance the
employee experience.
• To cultivate leadership, the Company offers multiple programs specifically
developed to drive leadership preparedness, including among certain
underrepresented groups.
• While the Company already offers a broad range of employee development
opportunities, it plans to further expand the number of initiatives, including
to programs centered on career conversations and personal development,
plans for future workforce needs and plans to link personal development to
specific skills with career paths.
Ensuring equitable pay practices
•
The Company supports equitable pay practices through the implementation
of a global job architecture, in which individual pay reflects experience,
skillset, performance against goals and scope of responsibilities but does
not differentiate on the basis of protected characteristics.
Supporting employee wellbeing
• As the Company is committed to enhancing its appeal as an employer and
creating a positive and healthy workplace, it provides programming and
support for a Company-wide culture of physical health, mental health and
overall wellbeing. The Company has in place regionally-specific employee
assistance programs, which, among others, include counseling sessions,
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in-the-moment support for emotional wellness, self-guided mindfulness,
cognitive behavioral therapy programs and work-life assistance.
Mitigating measures
• As the Company promotes a respectful workplace, where harassment and
discrimination have no place, the Company offers multiple options for
employees to seek guidance and report potential instances of misconduct,
including concerns related to harassment and discrimination, without fear
for retaliation.
Conflicts of interest and related party transactions
A Director may not take part in the discussion and/or decision-making process
of the Board where it concerns (i) a transaction in respect of which he or she
has a direct or indirect personal conflict of interest with the Company or one of
its subsidiaries (a conflict of interest) or (ii) a related party transaction in which
he or she is involved. If the Board is unable to take a decision as a result of all
Directors being unable to take part in the discussion and/or decision-making
process of the Board due to a conflict of interest or due to all Directors being
involved in a related party transaction, the decision shall nevertheless be taken
by the Board.
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. In accordance with the RPT Policy, (i) any
transaction in respect of which a Director has a (potential) conflict of interest
that is of material significance to the Company and/or the Director concerned
(a Code RPT) or (ii) any material related party transaction in which a Director is
involved and that is not entered into in the ordinary course of business and
under normal market conditions (a DCC RPT, and together with a Code RPT, a
Related Party Transaction) must be approved by the Board.
In accordance with the RPT Policy, a Director shall promptly notify any (potential)
Related Party Transaction to the Chairman of the Board; the Chairman of the
Board shall promptly notify any (potential) Related Party Transaction to the
Vice-Chairman of the Board. In so notifying the Chairman of the Board or the
Vice-Chairman of the Board, the Director concerned must provide all relevant
information, including information relevant to the situation concerning any
close family member.
In accordance with best practice provisions 2.7.3 and 2.7.4 of the Code, any Code
RPT must be approved by the Board, entered into on terms which are customary
in the market, and published in the Board report together with a statement of
the conflict of interest and a declaration that best practice provisions 2.7.3 and
2.7.4 of the Code have been complied with.
In accordance with best practice provision 2.7.5 of the Code, any transaction
between the Company and a natural or legal person who or which holds at least
10% of the issued share capital of the Company that is of material significance
to the Company and/or the natural or legal person concerned must be approved
by the Board, entered into on terms which are customary in the market and
published in the Board report together with a declaration that best practice
provision 2.7.5 of the Code has been complied with.
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In 2023, neither any Code RPTs nor any transactions 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 was of material significance to the Company and/or
the natural or legal person concerned have been entered into.
In Note 24 ‘Related parties’ to the consolidated financial statements, details of
all related party transactions (including DCC RPTs, if any) are set out.
Resolutions subject to approval of the Board
In addition to Related Party Transactions, which require the approval of the
Board as set out under ‘The Board––Conflicts of interest and related party
transactions’, 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
The remuneration of the Executive Directors and Non-Executive Directors
shall be determined by the Board with due observance of the remuneration
policies for the Executive Directors and Non-Executive Directors, respectively.
The Executive Directors shall not participate in the discussion and/or decision-
making process regarding the determination of the remuneration of the
Executive Directors. The remuneration policies as well as the main elements of
the agreements with Sir Lucian Grainge and Vincent Vallejo are available on 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
Under his employment agreement, Sir Lucian Grainge is entitled to severance
payments as set out in the Remuneration report under ‘Severance payments
and termination provisions--Sir Lucian Grainge’ in the event of (i) termination
of his employment agreement by Universal Music Group, Inc. (i.e., the
formal employer of Sir Lucian Grainge) without cause, (ii) non-renewal of his
employment agreement by Universal Music Group, Inc. or (iii) termination of his
employment agreement by Sir Lucian Grainge for good reason, which includes
a change in control (as defined in the Remuneration report under 'Severance
payments and termination provisions--Sir Lucian Grainge’).
Under his management services agreement, Vincent Vallejo is not entitled
to any severance payments in the event of termination or non-renewal of
his management services agreement; he is, however, entitled to severance
payments in accordance with Dutch law.
Directors’ and officers’ liability insurance policy and indemnity
The Executive Directors and Non-Executive Directors as well as certain officers
are insured under a directors’ and officers’ liability insurance policy taken out
by the Company against damages resulting from their conduct when acting 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
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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.
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 shall
advise the Board in relation to its responsibilities, shall undertake preparatory
work for the Board’s decision-making regarding the supervision of the integrity
and quality of the Company’s financial and sustainability reporting and the
effectiveness of the Company’s internal risk management and control systems
and shall prepare resolutions of the Board in relation thereto.
In addition to the foregoing, the Audit Committee’s main responsibilities
include: (i) supervising and monitoring, and discussing with and advising the
Board on, the effectiveness of the design and operation of the internal risk
management and control systems, including supervising the enforcement of
all applicable laws and regulations and supervising the effect of the Code
of Conduct, (ii) supervising the preparation and submission of financial and
sustainability information by the Company, (iii) supervising the compliance
with recommendations, comments and observations of the internal auditor,
the external auditor(s) and any other external party involved in the auditing
of the sustainability reporting, (iv) instructing the external auditor(s) and the
internal audit function to inform the Executive Directors and the chair of the
Audit Committee without delay if it or they discover(s) or suspect(s) an instance
of misconduct or irregularity, (v) supervising the functioning of the internal
audit function, (vi) ensuring that the way in which the internal audit function
fulfills its responsibility is assessed by an independent third party at least
every five years, (vii) supervising the policy of the Company on tax planning,
(viii) supervising the financing of the Company, (ix) supervising the applications
of information and communication technology, including risks relating to
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cybersecurity and data protection and risks relating to new technologies, (x)
maintaining frequent contact and supervising the relationship with the internal
auditor, the external auditor(s) and any other external party involved in the
auditing of the sustainability reporting, (xi) implementing the procedure for the
selection of the external auditor(s) and submitting a recommendation to the
Non-Executive Directors for the (re)appointment or dismissal of the external
auditor(s) by the General Meeting, (xii) informing the Board of the outcome of
the statutory audit and explaining how the statutory audit contributed to the
integrity of the financial reporting and what the role of the Audit Committee
was in that process, (xiii) monitoring the financial reporting and submitting
recommendations or proposals to ensure its integrity, (xiv) determining whether,
and if so, how the external auditor(s) shall be involved in the content and
publication of financial reports other than the financial statements, (xv) issuing
a recommendation on the appointment and dismissal of the senior internal
auditor, (xvi) submitting a proposal to the Board for the engagement of the
external auditor(s) to audit the financial statements, and (xvii) considering
and, where appropriate, approving for recommendation to the Board 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 of the Audit
Committee 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
meeting shall be a majority of the members of the Audit Committee. The Audit
Committee shall meet with the external auditor(s) as often as it considers
necessary, but at least once a year, outside the presence of the Executive
Directors. The Chief Financial Officer, the internal auditor and the external
auditor(s) shall in principle attend the meetings of the Audit Committee, 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 shall advise the Board in relation to its responsibilities, shall
undertake 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 shall
prepare resolutions of the Board in relation thereto.
In addition to the foregoing, the Remuneration Committee’s main
responsibilities include: (i) at least every four years submitting a proposal to the
Board for the remuneration policies to be pursued with regard to the Executive
Directors and Non-Executive Directors, to be tabled at the annual General
Meeting for adoption and (ii) annually preparing the remuneration report, to be
tabled at the annual General Meeting for a non-binding advisory vote.
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The Remuneration Committee shall consist of at least three members appointed
by the Board from among its Non-Executive Directors. More than half 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 shall advise the Board in relation to its responsibilities, shall
undertake preparatory work for the Board’s decision-making and shall prepare
resolutions of the Board in relation thereto.
In addition to the foregoing, the Nomination Committee’s main responsibilities
include: (i) drawing up selection criteria and appointment procedures for the
Directors, (ii) annually assessing the size and composition of the Board, and
making a proposal for the profile for Non-Executive Directors, (iii) annually
evaluating the functioning of the Board as a whole, the individual Directors
and the various committees, ensuring that such evaluation periodically takes
place under the supervision of an external expert and reporting on this to
the Board, (iv) formulating succession plans and drawing up a retirement
schedule, (v) making recommendations for the (re)appointment of Directors and
(vi) supervising the policy of the Board on the selection criteria and appointment
procedures for senior management.
The Nomination Committee shall consist of at least three members appointed
by the Board from among its Non-Executive Directors. More than half of
the members of the Nomination Committee shall be independent within the
meaning of best practice provision 2.1.8 of the Code.
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 (the 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 whenever necessary to fulfill its
responsibilities and meetings can be called by and at the request of any
of the members of the Market Disclosure Committee. The Market Disclosure
Committee is not a committee of the Board although its members are appointed
by the Board.
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THE GENERAL MEETING
Annual and extraordinary General Meetings
The Shareholders exercise their rights through annual and extraordinary
General Meetings.
Annual General Meetings
The annual General Meeting shall be held within six months after the end of
the financial year. The agenda of the annual General Meeting typically includes
the following (discussion or voting) items: (i) the discussion of the annual
report, (ii) the consideration of the remuneration report, (iii) the adoption of 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 (re)appointment of Directors, (vii) the adoption of the
remuneration policies for the Executive Directors and Non-Executive Directors
insofar as any adjustments to the remuneration policies so require or four years
after their former adoption, (viii) the appointment of the external auditor(s), and
(ix) any other items brought forward by the Board.
Extraordinary General Meetings
Extraordinary General Meetings shall be held as often as the Board deems
necessary. In addition, one or more of the Shareholders representing
individually or jointly at least 10% of the issued share capital of the Company
are entitled to request the Board in writing that a General Meeting is convened,
the request setting out in detail the items to be discussed. If the Board has 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 paid-up 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 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 auditor(s) is or are
also authorized to attend the General Meeting.
Participation
Each Shareholder is entitled, in person or represented by a proxy authorized 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 (re)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 auditor(s)
• the distribution of dividends
• the amendment of the Articles
•
the dissolution of the Company
No resolutions may be adopted on items other than those that have been
included on the agenda of the General Meeting (unless the resolution would be
adopted unanimously during a General Meeting where the entire issued 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 number
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.
On May 12, 2022, the General Meeting approved the 2022 UMG Global Equity
Plan (as defined in the Shareholder information section under ‘2022 UMG Global
Equity Plan’) as well as the issuance of Shares or the granting of rights to
subscribe for Shares in order to give effect to awards granted under the 2022
UMG Global Equity Plan to employees of the Company and its subsidiaries and to
Executive Directors up to a total amount of 5% of the issued share capital of the
Company as at May 12, 2022 and, to the 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).
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 paid-up 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.
In calculating the amount of any dividend distribution on the Shares, Shares
held by the Company shall be disregarded, unless such Shares are encumbered
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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 11, 2023, the General Meeting resolved to grant the Board the authority
to cause the Company to acquire Shares up to a maximum number of Shares
representing 10% of the issued share capital of the Company as at May 11, 2023,
through purchases effected on a stock exchange or otherwise, for a period 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 auditor(s)
The General Meeting appoints the external auditor(s) to audit the financial
statements. The Non-Executive Directors submit a nomination for the
appointment of the external auditor(s) 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 organized an
auditor selection procedure in the second half of 2022 which was led by a
selection committee designated by the Audit Committee for such purpose.
Having completed the auditor selection procedure in the first quarter of 2023,
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the Non-Executive Directors, at the recommendation of the Audit Committee,
consequently nominated Ernst & Young Accountants LLP for appointment by the
General Meeting as the Company's external auditor for the financial years 2023
up to and including 2025, and on May 11, 2023, the General Meeting appointed
Ernst & Young Accountants LLP accordingly.
Amendment of the Articles
At the proposal of the Board, the General Meeting may resolve to amend the
Articles. If a proposal to amend the Articles is to be submitted to the General
Meeting, the convocation notice must state so and a copy of the proposal,
including the verbatim text thereof, must be made available at the Company’s
office for inspection by, and must be made available free of charge to, 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 cause the Company to acquire
Shares), any material agreement to which the Company is a party and which
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.
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 4, 2020 and February 26, 2021, respectively)
prior to being appointed as Non-Executive Directors by the General Meeting,
effective September 20, 2021, the Company does not comply with best practice
provision 2.1.7 item (i) of the Code, which recommends that at most one Non-
Executive Director is a former Executive Director. However, the Company deems
that this deviation does not negatively impact the ability of these Non-Executive
Directors to perform their duties critically and independently given the short
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CORPORATE GOVERNANCECORPORATE GOVERNANCE
period during which they were involved in the 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.
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).
Best practice provision 2.2.1 of the Code
The Company does not comply with (the second sentence of) best practice
provision 2.2.1 of the Code, which recommends that a management board
member may be reappointed for a term of not more than four years at a
time, now that the General Meeting, on May 11, 2023, reappointed Sir Lucian
Grainge as an Executive Director for a period ending on May 1, 2028. At
the recommendation of the Nomination Committee, the Board made its (non-
binding) nomination for the reappointment of Sir Lucian Grainge for such an
extended period in order to align the term of his appointment as an Executive
Director with the term of his employment agreement.
Best practice provision 2.2.2 of the Code
The Company does not comply with (the first sentence of) best practice provision
2.2.2 of the Code, which recommends that a supervisory board member is
appointed for a period of four years and may then be reappointed once for
another four-year period, now that all Non-Executive Directors have been
appointed or reappointed by the General Meeting for a period of two years in
order to comply with the base scenario under the Articles.
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. 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 Anna Jones' resignation from the Board on September 30, 2023, and
the consequent termination of her 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 Audit
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CORPORATE GOVERNANCECORPORATE GOVERNANCE
Committee members, being Cathia Lawson-Hall and Luc van Os, are considered
non-independent within the meaning of best practice provision 2.1.8 of the Code
and two out of four 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 is intended to be of a
temporary nature only as the Board intends to appoint another independent
Non-Executive Director to the Audit Committee and Remuneration Committee in
the course of the financial year 2024.
Best practice provision 2.3.6 item (ii) of the Code
Because of Anna Jones' resignation from the Board on September 30, 2023,
and the consequent termination of her vice-chairmanship of the Board, the
Company no longer complies with best practice provision 2.3.6 item (ii) of the
Code, which recommends that a vice-chairman is elected. This deviation is
intended to be of a temporary nature only as the Board intends to appoint
another Non-Executive Director as Vice-Chairman of the Board in the course
of the financial year 2024.
Best practice provision 3.1.2 item (vi) of the Code
The Company does not comply with best practice provision 3.1.2 item (vi) of
the Code, which recommends that if shares are being granted, they should be
held for at least five years after the grant date. Although the awards granted
to the Executive Directors under the 2022 UMG Global Equity Plan are (and
will be) subject to (multiple-year) time-based and/or performance-based 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. Considering that the Company operates in a
highly competitive environment, requiring the Executive Directors to hold the
Shares for at least five years after the grant date could meaningfully reduce the
perceived value of the awards for motivational and retention purposes, without
reducing the cost to the Shareholders in terms of dilution, while the vesting
requirements attached to the awards are already efficacious at aligning the
Executive Directors’ and Shareholders’ interests.
Best practice provision 3.1.2 item (vii) of the Code
The Company does not comply with best practice provision 3.1.2 item (vii) of
the Code, which recommends that if share options are being granted, they
should not be exercisable during the first three years after they are granted.
Although the performance stock options (the PSOs) granted under the 2022
UMG Global Equity Plan to Sir Lucian Grainge are subject to (multiple-year)
time-based and performance-based vesting requirements, half of them could
become exercisable within the first three years after they are granted. On each
of the first four anniversaries of the grant date, one fourth of the PSOs will vest;
in addition, one third of the PSOs will become eligible for exercise if the first
share price hurdle of €26.50 is met, one third of the PSOs will become eligible
for exercise if the second share price hurdle of €30.00 is met, and one third
of the PSOs will become eligible for exercise if the third share price hurdle of
€38.00 is met. Only those PSOs that have vested due to the passage of time and
have become eligible for exercise due to a share price hurdle having been met
become exercisable.
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CORPORATE GOVERNANCECORPORATE GOVERNANCE
Best practice provision 3.2.3 of the Code
Sir Lucian Grainge is entitled to severance payments as set out in the
Remuneration report under ‘Severance payments and termination provisions’
in the event of (i) termination of his employment agreement by Universal Music
Group, Inc. (i.e., the formal employer of Sir Lucian Grainge) without cause, (ii)
non-renewal of his employment agreement by Universal Music Group, Inc. or
(iii) termination of his employment agreement by Sir Lucian Grainge for good
reason, which severance payments are in excess of (the fixed remuneration
component of) one year's salary. Accordingly, the Company does not comply
with best practice provision 3.2.3 of the Code, which recommends that any
severance payments in the event of dismissal should not exceed (the fixed
remuneration component of) one year’s salary or be awarded in the event that
the employment agreement is terminated by the management board member.
However, as the recommended severance payments are inconsistent with
industry practices in the primary fields in which the Company competes for
talent, i.e., the fields of United States media, entertainment and tech, complying
with best practice provision 3.2.3 of the Code could be detrimental to Executive
Director recruitment and retention. Accordingly, at the time of renewal of Sir
Lucian Grainge's employment agreement, it was decided to agree to a severance
arrangement, which is in deviation of best practice provision 3.2.3 of the Code.
Corporate governance statement
Pursuant to the Dutch Decree on the Content of the Board Report, the Company
is required to publish a statement concerning its approach to corporate
governance and compliance with the Code. The information required to be
included in this statement can be found in the following sections of the
annual report:
• The information concerning compliance with the Code is set out under
‘Compliance with the Code’.
• The information concerning the Company’s internal risk management 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 under ‘The General Meeting’.
• The information concerning the composition and functioning of the Board
and its committees is set out under ‘The Board’ and in the Report of the
Non-Executive Directors under ‘Composition’ and ‘Committees’.
• The information concerning the D&I Policy is set out under ‘The Board––
Diversity and inclusion’ and in the Report of the Non-Executive Directors
under ‘Diversity and inclusion’.
• The information concerning the inclusion of the information required by the
Dutch Decree on Article 10 of the Takeover Directive is set out under ‘Dutch
Decree on Article 10 of the Takeover Directive’.
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CORPORATE GOVERNANCECORPORATE 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 2023:
• the Board report provides sufficient insight into any failings in the
effectiveness of the internal risk management and control systems with
regard to the risks associated with the strategy and activities of the
Company and its affiliated enterprise, which in any case include strategic,
operational, compliance and reporting risks.
•
the internal risk management and control systems provide reasonable
assurance that the financial reporting does not contain any
material inaccuracies.
•
based on the current state of affairs, it is justified that the financial
reporting is prepared on a going concern basis.
•
the Board report states those material risks associated with the strategy and
activities of the Company and its affiliated enterprise and uncertainties 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 2023 give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company and the
undertakings included in the consolidation as a whole for the financial
year 2023.
• the Board report provides a true and fair view of the position as at December
31, 2023 and of the performance of the business during the financial year
2023 of the Company and the undertakings, details of which have been
included in the financial statements 2023.
• the Board report includes a description of the principal risks that the
Company faces.
The Board, Hilversum, March 28, 2024
Sir Lucian Grainge
Vincent Vallejo
Sherry Lansing
Antoine Fiévet
Bill Ackman
Cathia Lawson-Hall
Cyrille Bolloré
Haim Saban
James Mitchell
Luc van Os
Manning Doherty
Margaret Frerejean-Taittinger
Nicole Avant
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SHAREHOLDER INFORMATIONSHAREHOLDER INFORMATION
SHARE CAPITAL
The authorized share capital of the Company amounts to €27,000million 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, 2023, the issued share capital of the Company amounted
to €18,216,654,410 and was divided into 1,821,665,441 Shares, the Company held
214,235 Shares in treasury and no depositary receipts for Shares were issued
with the cooperation of the Company.
All Shares rank
pari passu
with each other. There are no restrictions on 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 INFORMATIONSHAREHOLDER INFORMATION
According to the AFM register, the following Shareholders have notified the AFM
of their capital interest in the Company as at December 31, 2023:
Shareholder Notification date Capital interest
W.A. Ackman October 31, 2023 10.25
1
FMR LLC July 25, 2023 3.00%
Concerto Partners LLC
2
June 30, 2023 19.92%
3
Vivendi SE
2
June 30, 2023 9.98%
V. Bolloré
2
September 22, 2021 18.01%
4
1 Held via PS VII Master L.P. (This percentage is based on notifications reflected in the AFM’s Executive and
Non-Executive Directors register rather than in the AFM’s Substantial Shareholdings register.)
2 Each of V. Bolloré, Vivendi SE and Concerto Partners LLC has notified a percentage of voting rights in the
Company of ~48% based on a voting agreement included in the Relationship Agreement.
3 Held via Scherzo Investment B.V. and Concerto Investment B.V.
4 Held via Bolloré Participations SE, Omnium Bolloré, Financière V, Sofibol, Compagnie de l’Odet, Bolloré SE and
Compagnie de Cornouaille.
It is possible that the stated percentages of capital interest differ from the actual
percentages of capital interest as the Shareholders may only be required to
notify the AFM in the event that their percentage of capital interest reaches,
exceeds or falls below one of the thresholds.
In the Relationship Agreement, the parties have agreed to, among others,
consult with one another prior to each General Meeting in order to form 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 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 €2billion revolving credit facility agreement and the Company’s
€500million bilateral revolving credit facility agreement each (potentially) entitle
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 relevant revolving credit facility agreement).
In addition, the final terms of the €750million 4.00% senior notes due June 13,
2031, the final terms of the €500million 3.00% senior notes due June 30, 2027
and the final terms of the €500million 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).
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SHAREHOLDER INFORMATIONSHAREHOLDER INFORMATION
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
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 paid-up 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, and subject to all applicable
laws, 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
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SHAREHOLDER INFORMATIONSHAREHOLDER INFORMATION
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.
On June 6, 2023, the Company paid a final dividend of €0.27 per Share, bringing
the total dividend for the financial year 2022 to €0.51 per Share.
On October 27, 2023, the Company paid an interim dividend of €0.24 per Share,
and the Board now proposes that on June 11, 2024, the Company pays a final
dividend of €0.27 per Share, such proposal to be approved at the annual General
Meeting to be held on May 16, 2024. If approved, this would bring the total
dividend for the financial year 2023 to €0.51 per Share.
Capital events
Credit ratings
On May 31, 2022, the Company announced that it had been assigned a Baa1
long-term credit rating and a Prime-2 short-term credit rating with stable
outlook by Moody's, as well as a BBB long-term credit rating and an A-2 short-
term credit rating with stable outlook by S&P.
Euro Medium Term Note program
On June 13, 2023, the Company issued €750million of 4.00% senior notes due
June 13, 2031, and 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 16, 2023, the Company extended its €1billion Negotiable European
Commercial Paper program. The Company uses this financing for general
corporate purposes.
Investor Relations
UMG is committed to maintaining an open and constructive dialogue with
Shareholders (including potential Shareholders and other investors) and aims
to keep Shareholders updated by informing them clearly, accurately and 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 2023, the share price was €25.81 and the
market capitalization was €47.0billion. The average daily trading volume in 2023
was €34.4million or 1.5million Shares.
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SHAREHOLDER INFORMATIONSHAREHOLDER INFORMATION
Share price information 2023
Market capitalization at year-end (€billion) 47.0
Lowest closing price (May 31, 2023, €) 18.50
Highest closing price (December 18, 2023, €) 26.29
Closing price year-end (€) 25.81
Total shareholder return 17.5%
Average daily trading volume on Euronext (shares) 1.5million
January 2023 April
July
December
30
25
20
15
10
5
0
Per share data 2023
Dividend (€): 0.24 interim + 0.27 proposed final 0.51
EPS - basic (€) 0.69
EPS - diluted (€) 0.68
Adjusted EPS - basic (€) 0.88
Adjusted EPS - diluted (€) 0.87
Contact
Further information on UMG is available from the Investor Relations
department, which can be reached by telephone: +31 35 799 4200 or
by email: investorrelations@umusic.com. Further shareholder information
is available on the investor relations part of the UMG website:
https://investors.universalmusic.com.
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RISK AND RISK MANAGEMENTRISK 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.
Averse
Very lowRisk appetite
Behavior towards risk
Low Medium High Very high
Prudent Balanced Considerable Seeking
Strategic
e.g. Competition, Streaming & Subscription
adoption. Reliance on DSP’s, Piracy
Operational
e.g. Attract & retain talent, Cybersecurity,
Geopolitical instability & economic downturn
Financial
e.g. Access to financing, Change in Tax Laws
Compliance (Laws & Regulations)
e.g. Intellectual Property, Data Protection,
Government regulations, Changes in laws &
regulations
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RISK AND RISK MANAGEMENTRISK AND RISK MANAGEMENT
Governance, Risk and Compliance
The Company has an Internal Control Framework (ICF) modelled upon the COSO
(Committee of Sponsoring of the Treadway Commission) 2013 framework. The
ICF incorporates risk assessment, control activities and monitoring into 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 managed. To enhance and coordinate risk assurance across the company,
a Governance, Risk and Compliance working group has been established in 2022
that has continued to meet on a periodic basis in 2023 to review and monitor
UMG's risk and control environment.
Monitoring and Assurance
A key element of our ICF is monitoring and assurance. The Company uses 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 MANAGEMENTRISK AND RISK MANAGEMENT
The ICF is being monitored by the second line of defense Controls Assurance
function through controls testing and other monitoring activities. Internal Audit
undertakes regular risk-based audits in accordance with the audit plan as
approved by the UMG Audit Committee.
Continuous ICF Improvements
Management continues to invest in the further improvement of the risk and
internal control systems in the Company. Through upgrading its systems
(including computer hardware infrastructure), adding additional financial and
management controls as well as enhancing reporting systems and procedures.
Management will continue to make further improvements in 2024, which will be
aimed at, amongst other things:
•
Implementing company wide third party governance, risk and
compliance software.
•
Optimizing the level of monitoring of the risk and control systems.
•
Optimizing enterprise risk management and a coordinated risk
assurance process.
•
Continue improving the quality and in particular the level of documentation
of key controls across primary business processes.
Compliance and Integrity
As the world’s leading music company, UMG recognizes that we have a
responsibility to lead by example and ensure that all of our actions 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
Code of Conduct annually and must certify compliance with the Code of Conduct
on an annual basis. The Code of Conduct is available in the investor relations
section of UMG’s public website.
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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.
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 2023, no reports were received related to bribery or
corruption and there were no known instances of bribery or corruption.
Fraud Risk
The Company maintains a global fraud risk register that summarizes risks
and compensating measures. The global fraud risk assessment is an annual
process and was performed in the latter half of 2023.
The Company’s stance with regard to integrity is clearly outlined in its
Code of Conduct, as also explained in this Risk Management chapter. Any
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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 2023, there
were no substantiated reports of significant financial reporting, accounting,
fraud or ethical (including human rights) violations.
Additionally, the Compliance Department maintains and monitors email boxes
dedicated to reporting potential conflicts of interest.
Prohibition Against Retaliation
In order to encourage reporting of potential breaches of the Code of Conduct
or other company policies, we prohibit retaliation of any kind against anyone
who makes a complaint or report of a potential violation of law or policy in 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 UMG’s business and industry, and that, alone or in
combination with other events or circumstances, could have a material adverse
effect on UMG’s business, results and financial position.
In making this selection, UMG has considered circumstances such as 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.
While UMG believes that the risks and uncertainties described below are the key
material risks and uncertainties concerning its business and industry, they are
not the only risks and uncertainties relating to UMG.
Other risks, events, facts or circumstances not presently known to UMG, or that
the UMG currently deems to be immaterial could, individually or cumulatively,
prove to be important and may have a significant negative impact on its
business, results and financial position. The risk factors below have been
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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
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 Moderate High
For each of the risks set out below, UMG 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 UMG'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.
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.
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UMG faces competition from traditional music industry players as well as new
entrants, including investment funds whose investment thesis includes making
acquisitions of collections of musical compositions, or “catalog acquisitions”.
UMG is also dependent on signing and retaining songwriters who are capable 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,
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.
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Risk response
With regard to the development of recording artists and songwriters, UMG
believes that traditional, high-touch, full-service label deals with its 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 to UMG because they
offset declines in downloads and physical sales and represent a growing area
of UMG’s recorded music business. In 2023, UMG generated €5,700million of
revenue from subscription music services and ad- supported streaming, as
compared to €5,321million in 2022.
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 CD sales, and subsequently downloads. Technological developments, and
other factors, may in the future negatively impact streaming or otherwise
disrupt, the music industry.
Vast quantities of low-quality content delivered daily to digital platforms
(including via the use of generative AI) increase the challenges for marketing
music to fans and policing infringements. Additionally, technology around
streaming manipulation, fraud and hacking is becoming increasingly refined
and subscription streaming services are vulnerable which could undermine
consumer confidence and cause revenue loss.
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If UMG’s subscription or streaming revenue fails to grow, grows less rapidly 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 also spearheaded the re-imagining of the subscription streaming model,
encouraging digital partners to tackle streaming manipulation and fraud, and
to evolve the revenue model to reward real artists that drive engagement and
retention on streaming platforms. 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, as well as
in developing and growing new categories for exploitation of digital music,
including fitness and wellness. UMG has agreements with several hundred
global and local digital service providers around the world, establishing legal
consumption of music in markets with high levels of piracy that previously
didn’t have legitimate commercial outlets, including the high-growth countries
Brazil, India, China, Latin America, Africa, the Middle East, Eastern Europe 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 2023, the top 50 music services accounted for 98%
of UMG’s recorded music digital revenue, as compared to 96% in 2022. In 2023,
70% of UMG’s recorded music revenue was derived from digital channels, as
compared to 71% in 2022.
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 and
retention 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 partner for platforms. The introduction of
new products, services and revenue streams across segments spanning voice,
fitness, wellness, social media, gaming, live streaming, brand partnerships,
start-ups and other categories helps to further mitigate the reliance on a limited
number of digital service providers.
Competition in evolving markets
UMG may be unable to compete successfully in the evolving markets in which it
operates or unable to execute its business strategy.
UMG expects to increase revenues and cash flow through a business strategy
which requires, among other things, continuing to maximize the long-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, welness, social media gaming, live streaming, brand partnerships,
start-ups and other categories.
As discussed above, UMG also spearheaded the re-imagining of the subscription
streaming model.
Inability to timely adapt to trends and developments in the markets in which
UMG operates
UMG operates in many jurisdictions around the world and therefore is subject
to a variety of trends, developments and limitations in those jurisdictions, which
could affect it adversely.
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UMG has offices engaged in recorded music, music publishing, 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 2023, we strengthened our global presence through new activities,
acquisitions, label launches and key partnerships in United Arab Emirates and
Thailand. 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 UMG currently conducts, or may in the future conduct,
its businesses, UMG’s operations, growth strategy and development may be
negatively impacted as a result of less developed digital, internet and mobile
network infrastructure. UMG’s success, particularly streaming revenues, 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, UMG’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 2023, 62% of UMG’s physical & digital
recorded music revenues came from local repertoires in their own countries, as
compared to 62% in 2022. Prior to entering a new market, UMG teams carefully
identify areas of risk and develop a business case and strategic plan.
Piracy and content protection
Piracy continues to adversely impact UMG’s business and content protection 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
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negative impact on music revenues. If UMG is not successful in its content
protection efforts as discussed below, its business, results of operations,
financial condition and prospects may suffer.
In addition, while UMG embraces responsible and innovative artificial
intelligence and is optimistic about the potential benefits and opportunities
brought by AI, technology to create AI-generated music and images has
introduced new challenges for the protection of intellectual property and
artist rights. These include intellectual property infringement through the
unauthorised reproduction of copyrighted works to train AI technology, which
in turn enables the creation of AI generated works that infringe intellectual
property rights and embody unauthorised renditions of artist voices, images
and likenesses.
Risk response
UMG invests significant resources in combatting the many forms of piracy
of its music including through litigation, lobbying and interdiction. UMG also
encourages its digital partners to support UMG’s content protection efforts by
taking direct action against unauthorized activity on their platforms.
In addition, we are protecting creators’ rights in the AI environment through
litigation. For example, UMPG, alongside two other music publishers, filed a
copyright infringement lawsuit against Anthropic for its large-scale, wholesale
copying of copyrighted lyrics. See also risk factor ‘Loss of intellectual
property rights’.
Operational risks
Challenge to attract and retain internal talent
UMG’s ability to operate effectively could be impaired if it fails to attract 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 UMG’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 UMG were to unexpectedly lose a member of its 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 attract and retain talent.
UMG has added more offerings geared towards equitable professional
development across UMG’s diverse employee community. These include
tailored programming and resources, such as renowned guest instructors, 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.
In addition, in 2022, UMG established an Equity Plan to provide long-term
incentives to senior employees which are linked to value creation and designed
to attract, retain and motivate the best possible workforce.
Cybersecurity
Cybersecurity presents ongoing risks that could adversely impact UMG’s global
data and operations.While no such attack has had a material adverse effect on
its business in the past, UMG’s systems may be vulnerable to damage from
such attacks in the future.
UMG processes personal data related to customers, employees, business
partners, artists, and vendors. UMG also maintains sensitive confidential
business information of itself and, in some cases, counterparties, as well as
intellectual property including rights in music recordings and compositions that
in some cases are not yet released. UMG relies on both its computer systems
and those of its service providers for day-to-day operations and to manage
these kinds of critical business data. No computer system is immune 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 data, confidential information, or intellectual property could
lead to operational disruptions and significant expenditures to address the
incident. Such a compromise could lead to the loss of competitively sensitive
information, theft of funds, reputational harm, litigation and investigations,
legal expenses, liability, penalties, or the imposition of ongoing monitoring or
audit requirements which may create operational disruptions and/or significant
expenditures. Any of the foregoing may adversely impact UMG’s business,
results of operations, financial position, and prospects.
Risk response
UMG employs multiple layers of cybersecurity defenses to protect assets,
systems, and employees from cyberattacks. These controls include broad
deployment of advanced authentication controls including multi-factor
authentication, deprecation of privileged service accounts, active network and
system monitoring, centralized logging, and incident response and business
continuity planning.
UMG has further implemented controls to enhance remote access security,
augment visibility to network behavior, and improve cybersecurity control
governance. It has implemented a cross-functional process to identify and
improve incident response procedures and increase testing for evolving attack
vectors such as social engineering.
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.
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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 pandemics, including the COVID-19 pandemic
,
are all factors that can influence the prevailing macroeconomic conditions
and affect UMG’s business. Economic growth and consumer confidence are
important for UMG’s growth and strategy.
Continuing in 2023, a number of countries, including most major economies in
Europe and North America, have reported high inflation. Concurrently, central
banks in such countries have raised or discussed the possibility of further
increases of interest rates in the future. Such increases in interest rates
may reduce growth or result in a global or regional recession. Further market
volatility may occur as inflation continues to rise and markets respond to the
interest rate increases and the cessation of quantitative easing programmes
by major central banks. Increased inflation may impact the disposable income
and shopping habits of our customers which may in turn affect the demand
for our products and services and our ability to maintain our revenues in line
with targets and expectations. Each of these events may negatively impact
discretionary funds available to consumers for leisure activities, and as a result
may negatively impact UMG’s revenues.
Risk response
UMG benefits from a diverse set of growth drivers, such as DSP penetration
growth, social media platforms, health/fitness applications, gaming, and Audio
Video, which makes UMG less dependent on one particular growth driver.
Furthermore, music consumption is relatively inexpensive compared to other
forms of media entertainment, and DSP providers generally make all content
available, thus not requiring multiple subscriptions. In the past music
consumption proved to be resilient in macro-economic downturns and so far 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 affected by geopolitical instability. Unfavourable conditions can
depress revenues in any given market and prompt actions that adversely affect
our business and/or financial performance.
Sanctions and other measures imposed in response to the Russia-Ukraine
conflict have increased global economic and political uncertainty. In addition,
on October 7, 2023, Hamas led attacks against Israel. In response to the attacks,
Israel formally declared war on Hamas and the armed conflict in Israel and Gaza
is ongoing.
While neither our operations in Russia nor Israel constitute a material
part of our business, the significant escalation or expansion of these
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conflicts, including but not limited to the imposition of economic sanctions
or devaluation of local currencies, could increase economic instability and
disruption both inside those countries and across their regions. The extent
and duration of the military action, sanctions and resulting market disruptions
could be significant and could potentially have substantial impact on the global
economy for an unknown period of time. As a result of UMG’s revenue profile
being very geographically diverse, any such downturn in the global economy
that reduces the disposal income of UMG’s customers may in turn have a
negative impact on UMG’s revenues.
Risk response
Since our announcement on
8 March 2022, UMG's operation in Russia continued
to be suspended. Although revenues and EBITDA in Russia and Ukraine in 2022
and 2023 were not material and therefore this suspension only had a minor
impact on the Company, UMG has no way to predict the progress or outcome of
such conflict.
UMG monitors political and general societal changes and, where necessary,
develops response strategies to such events. Furthermore, music consumption
has proven to be resilient in macro-economic downturns in the past and so
far UMG has not experienced any material impact arising from the effect of
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, or failure in, UMG’s IT system could adversely
impact UMG’s operations.
The integrity, reliability and operational performance of UMG’s information
technology (IT) infrastructure and technology network are critical to its
operations. UMG relies upon the capacity, reliability, and security of its IT
hardware and software infrastructure and its ability to expand and update 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 UMG’s business and include (but are not limited to)
storage, data processing and network.
The availability of UMG’s IT platforms and other services may be interrupted by
damage or disruption to the UMG’s or UMG’s third-party service providers’ IT
systems, which may be caused by, for example hardware or software defects,
human error, unauthorized access, fire, power loss, natural hazards, the impact
of war and terrorism, disasters or similarly disruptive events, as well as planned
upgrades and improvements which may be subject to developmental delay or
fail to be effective.
While UMG has in place business continuity procedures, there can be 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 UMG
outsources its business continuity or disaster recovery operations, it is at risk
of the vendor’s unresponsiveness in the event of breakdowns in UMG’s systems,
which could cause delays in recovering service.
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Furthermore, performance issues, system interruptions or other failures in the
UMG’s IT systems could expose UMG to potential liability to pay damages 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 UMG’s business, financial condition and results
of operations.
Risk response
UMG continues to invest in the maintenance, upgrading and testing of its IT
infrastructure and technology network, in addition to maturation of failover and
overall Tech recovery plans to minimize the risk impact of disruption.UMG also
maintains what it considers to be an appropriate level of insurance against
some of these risks. UMG’s insurance coverage may not cover all of the costs
and liabilities it incurs as the result of any such interruptions or failures of its
IT systems, and if its business continuity and/or disaster recovery plans do 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 UMG’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 UMG’s financial requirements and
is used as back up for a €1billion NEU commercial paper program. The RCF
was extended from April 2026 to April 2028. In June and July 2023, UMG issued
successfully a €750million bond with an 8- year maturity and a JPY 7billion
private placement with a 15- year maturity, respectively.
UMG's average debt maturity is 5 years, its liquidity remains above €2billion
and the fixed-rate debt ratio remains above 85%.
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
fluctuations could cause expenses to increase as a percentage of net sales,
affecting profitability and cash flows.
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Risk response
From time to time, UMG enters into foreign exchange contracts to hedge the 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 UMG’s tax position could adversely affect
UMG’s results of operations and financial condition.
Given the international footprint of the UMG’s operations globally, UMG is
subject to tax laws and regulations in more than 60 countries where it operates.
Adverse developments in applicable tax laws or regulations, or any change
in the position by the relevant tax authorities or tax courts regarding the
application, administration or interpretation of any applicable tax laws or
regulations, could subject UMG to additional or increased tax payments, and in
turn have a material adverse effect on UMG’s business, financial condition and
results of operations. If UMG’s tax positions are challenged by tax authorities,
the potential imposition of additional or increased taxes could require UMG to
pay taxes that UMG currently does not collect or pay or increase the costs of
UMG's services to track and collect such taxes, which could in turn increase
UMG’s costs of operations or the UMG’s effective tax rate and have a negative
effect on UMG’s business, financial condition and results of operations.
Moreover, any change in the tax law, such as an increase of tax rate or a change
in determination of tax basis, could have a material adverse impact. Given the
international nature of UMG’s operations, UMG 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 positions taken either for transactions, compliance and accounting purposes
are conservative any change in tax rates or tax basis might be mitigated.
Therefore, UMG’s tax procedures follow this governance and there is a process
in place to implement and monitor compliance with them. These procedures
comply with tax rules in countries where UMG operates as well as with
requirements enacted by supra-national organizations, such as OECD and the
European Union. These procedures take into account the spirit of the laws and
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 indirect taxes (e.g., corporate income tax, transfer
pricing, VAT, wage tax and tax accounting).
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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 such rights
depend on the laws and regulations of the many jurisdictions in which it
conducts business, which are not consistent across jurisdictions. An inability
to obtain, maintain, protect or enforce its intellectual property rights could harm
UMG’s brand or brand recognition and adversely affect its business, prospects,
financial condition and results of operations.
In addition, if UMG is alleged to have infringed, misappropriated or otherwise
violated the intellectual property rights of a third party (even where such claims
are without merit), any litigation to defend the claim could be costly and would
divert the time and resources of management, regardless of the merits of 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.
Furthermore, notwithstanding any potential benefit of AI, new challenges
for protecting our intellectual property and other rights of our artists and
songwriters may also arise from AI generated music. The resulting new form
of intellectual property infringement is caused by unauthorised reproduction
of copyrighted works, names, images, likeness and voices of UMG’s artists and
songwriters to “train” AI applications to create unauthorised derivative works.
Any of the foregoing may cause UMG to suffer economic loss and reputational
damage, which would adversely affect UMG’s business, results of operations,
financial condition and prospects.
Risk response
In order to obtain, maintain, protect and enforce its intellectual property
rights, UMG takes a variety of measures, including maintaining a staff
of senior intellectual property and litigation lawyers, engaging lawyers in
different jurisdictions covering different fields of law and if necessary,
conducting litigation or proceedings before courts, governmental authorities
or administrative bodies. UMG also works through lobbying (both directly and
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through trade associations) to influence any changes so that they do not
negatively affect the business or broader music industry and its stakeholders.
For example, UMG supports the Human Artistry Campaign (‘HAC’) and its
principles – the HAC is a global initiative formed in early 2023 to protect creators’
rights in the age of AI, with more than 170 supporting organizations from
40+ countries.
In addition to responsible and ethical AI industry collaborations and thought
leadership, UMG is pursuing the establishment of legislative and regulatory
“guardrails” for AI, including backing legislation that would establish a federal
right of publicity in the United States protecting all Americans’ image, likeness
and voice – and helping to prevent deepfakes. We are vigorously advocating for
public policies furthering Responsible AI with governments around the globe,
including through multi-stakeholder coalitions and trade bodies, as well as on
our own.
In addition, we are protecting creators’ rights in the AI environment through
litigation. For example, UMPG, alongside two other music publishers, filed a
copyright infringement lawsuit against Anthropic for its large-scale, wholesale
copying of copyrighted lyrics.
Data protection compliance
UMG’s business is subject to an increasing number of global laws, regulations,
rules, and other obligations governing data protection in addition to contractual
obligations to business partners.
These restrictions and obligations govern the collection, use, retention,
disclosure, transfer, and security of data by UMG and its subsidiaries.
Operations impacted by these laws include consumer-facing operations such
as eCommerce, online advertising, direct marketing, website operation, and
social media activities, as well as internal operations such as human resources
activities, management of royalties and artist relations, IT activities, and
transfers of data among UMG’s subsidiaries.
Regulatory, media, and political scrutiny of data protection compliance
continues to grow. This attention is further intensified by the emergence of
powerful artificial intelligence tools that create legal, ethical, and societal risk.
The legal landscape is also becoming more complex, with an ever-evolving
landscape of laws and regulations. Major new legislation by US states,
the European Union, and China among others has further increased the
complexity and risk of data protection laws. These laws, and the ways in which
authorities interpret and enforce them, may be inconsistent from jurisdiction
to jurisdiction. Complying with changing requirements may cause UMG to incur
substantial costs, change its business practices, modify its product and service
offerings, and forego business opportunities.
In particular, the United States has seen a significant emergence of state-level
privacy laws as well as increased enforcement by federal agencies such as the
Federal Trade Commission. California, where UMG’s operational headquarters
are located, continues to implement the strictest privacy requirements in the
United States, including recent passage of the DELETE Act. Eleven other states
have passed privacy laws that are either in effect or will be in the near future.
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These state laws are similar but not identical, creating additional sources of
complexity and potential costs to UMG.
Any perceived or actual failure by UMG, including its third-party service
providers, to protect confidential data or any material noncompliance with data
protection laws could reduce UMG’s ability to attract and retain customers,
artists, and other business relationships and counterparties and result in
litigation or other actions being brought against UMG. Lastly, if third parties
that UMG works with, such as UMG’s suppliers, violate applicable laws or UMG’s
policies, such violations may also put UMG data at risk and could in 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 regulators or
private actors to institute investigations into or proceedings against UMG. These
investigations or proceedings may entail legal costs and reputational harm for
UMG, and if defense of such proceedings is unsuccessful even in part, UMG may
face significant penalties, liability, or ongoing monitoring or audit requirements.
Risk response
UMG maintains a global data protection compliance program including
personnel dedicated to managing data protection risk. UMG’s data protection
team partners with personnel throughout the organization to identify and
mitigate data protection risks.
Recent initiatives include updates or improvements to privacy disclosures,
governance and data management processes, data subject rights processes,
employee training, cross-border data transfer agreements, supplier contract
terms, internal audit procedures, and incident response processes.
UMG’s data protection compliance program prioritizes streamlined global rules
and processes to manage increasingly complex requirements. This improves
the efficiency of compliance efforts and reflects the interconnected nature of
UMG’s artists, fans, and business operations.
Governmental and regulatory challenges
A significant portion of UMG’s revenues are subject to regulation either by
government entities or by local third-party collecting societies throughout
the world and rates on other income streams may be set by governmental
proceedings or be subject to legislative intervention, which may limit
its profitability.
Mechanical royalties and performance royalties (on both physical and digital
sales) are two of the main sources of income for UMG’s music publishing
business, accounting for14% of UMG’s revenue in 2023 (2022: 14%), and
mechanical royalties are an expense for its recorded music business (except in
instances when digital service providers pay such mechanical royalties directly
to publishers), representing0.8% of UMG’s revenue in 2023 (2022: 0.7%). In the
United States, compulsory mechanical royalty rates are set every five years
pursuant to an administrative process under the U.S. Copyright Act, unless
rates are determined through industry negotiations, and performance royalty
rates are most commonly, but not exclusively, 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), the
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Society of European Stage Authors and Composers (SESAC), and Global Music
Rights, LLC (GMR). ASCAP and BMI are subject to a consent decree rate-setting
process if negotiations are unsuccessful.
The Antitrust Division of the U.S. Department of Justice (the DOJ) has previously
reviewed its consent decrees with ASCAP and BMI and, while in January
2021, the DOJ announced that it would take no further action to modify or
terminate such decrees, there is no guarantee that the DOJ will not choose
to review such decrees in the future. Changes to the mechanical royalty rate,
the performance royalty rates or consent decrees governing the U.S. performing
rights organizations could potentially impact the profitability of UMG’s music
publishing business.
Outside of the United States, mechanical rates are typically negotiated on 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 typically 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
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
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(effective 2023-2027), and resulted in the highest rates to songwriters in the
history of the CRB.
Changes in laws and regulations
Changes in laws and regulations, including those relating to intellectual
property rights, and legal proceedings that UMG is, or which it could become
party to, may have an adverse effect on UMG’s business.
UMG’s business is subject to a variety of laws and regulations in jurisdictions
around the world, including those relating to intellectual property, content
regulation, user privacy, data and consumer protection, antitrust 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 UK Parliamentary Select Committee on Digital, Culture, Media and
Sport issued its advisory report on July 15, 2021, as part of an inquiry
to examine “what economic impact music streaming is having on artists,
record labels and the sustainability of the wider music industry”. The
report recommended to the UK government a number of actions to regulate
music companies, including on issues related to artist and songwriter
compensation, which could hinder or add cost to the companies’ operations.
• The European Union (EU) adopted the Directive on Copyright in the Digital
Single Market (the Copyright Directive) in 2019 to modernize EU 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 new laws and regulations, by the
threat that additional laws or regulations may be forthcoming and by changes
in existing laws or changes in interpretation of existing laws by courts and
regulators. For example, legislation was introduced in California that would
amend California Labor Code Section 2855 such that UMG’s ability to recover
damages from certain artists that fail to deliver on their contractually promised
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recordings after more than seven years may be hindered. While that proposed
legislation did not become law, similar measures could be introduced in the
future. Similarly changes in the area of copyright law, in particular, could directly
or indirectly affect UMG’s operations, the ownership of UMG’s content assets or
UMG’s ability to maintain, protect or enforce its intellectual property rights.
In addition, UMG is currently involved in and could become involved in a
number of lawsuits, disputes or investigations initiated by consumers, business
partners, competitors, artists, governmental entities, tax authorities and third
parties. Such lawsuits, disputes or investigations may relate to, inter alia,
copyright infringement, contractual disputes, employment disputes, antitrust
and tax disputes. For example, on May 13, 2021, individual and putative 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 related to
certain royalty calculations.
Litigation and proceedings before courts or governmental authorities, whether
or not UMG is involved in such proceedings, may serve as precedents that could
adversely affect UMG’s operations, ownership of content assets or intellectual
property rights. UMG could incur substantial costs to comply with new or
modified laws and regulations or substantial penalties or other liabilities
if it fails to comply. UMG could also be required by such laws to change
or limit certain of its business practices, which could impact its ability 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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OUR COMMITMENTS
UMG IS COMMITTED TO
ADVANCING CLIMATE
ACTION ACROSS THE
MUSIC INDUSTRY.
ENVIRONMENT
OUR COMMITMENTS
Material Topic:
GHG Emissions.
See Material Topics in the Governance section for more information.
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
Our efforts to reduce our environmental footprint start with rigorous
measurement and reporting systems, which in turn allow us to set targets,
measure progress, and ensure continuous improvement of environmental
performance across our value chain.
In addition to measuring and mitigating our environmental impact, we 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 our environmental impacts.
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
MANAGING OUR FOOTPRINT
Measurement & Analysis
Deeply committed to understanding our impact, UMG’s GHG inventory is the
most comprehensive of any major music company. Our GHG footprint is
calculated in line with the GHG Protocol Corporate Accounting and Reporting
Standard and includes an analysis of our most relevant scope 1, scope
2 (location-based and market-based), and scope 3 emissions sources. We
continue to enhance our methodology while also taking a leading role in
developing standardized definitions and approaches where they may be lacking
within our industry.
FY23 Greenhouse Gas Emissions
Scope 1 <1%
Scope 2 (market based) 1%
Scope 3 98%
Purchased goods and services 60%
Capital goods 4%
Fuel- and energy-related activities 1%
Upstream transportation and distribution 11%
Waste generated in operations <1%
Business travel 11%
Employee commuting 1%
Downstream transportation and distribution <1%
End-of-life treatment of sold products 1%
Franchises 2%
Investments 7%
UMG’s
GHG emissions
477,160
tons of CO
2
e
Science-Based Targets Progress
Our GHG Management Plan provides the framework from which we’ve set
targets to measure the performance of our climate-related initiatives. UMG’s
near-term emissions reduction targets were approved by the Science-Based
Targets initiative (SBTi) in October and we deployed actionable roadmaps across
key business functions by which we will achieve our goals. Our science-based
targets cover scope 1 & 2 (market-based) emissions and the following scope
3 emissions categories: purchased goods and services, capital goods, fuel-
and energy-related activities, upstream transportation and distribution, waste
generated in operations, business travel, and employee commuting.
Science-Based Target FY19 FY23
Reduction
FY19-FY23
Reduction
Target by 2032
Scope 1 & 2 (market-based)
(absolute tCO
2
e)
11,454 7,572 -34%
-58%
Scope 3
(tCO
2
e per million EUR
value added)
200 109 -46%
-62%
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
SCIENCE-BASED TARGETS APPROVED BY SBTI
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 is committed to achieving ambitious GHG emissions targets across
all scopes and has outlined a pathway to:
•
Reduce absolute scope 1 and 2 GHG emissions58%by 2032 from a
2019 base year
1
, in line with a 1.5°C pathway; and
•
Reduce scope 3 GHG emissions from purchased goods & services,
capital goods, fuel- and energy-related activities, upstream
transportation and distribution, waste generated in operations,
business travel, and employee commuting by62%per EURvalue
added
2
within the same timeframe.
1
SBTi allows flexibility in base year selection to consider circumstances that may make a given
year's emissions unrepresentative (e.g., the COVID-19 pandemic). At the time of our assessment, UMG
considered 2019 its most representative year of normal operations prior to the effects of the pandemic.
2 “Value added" is defined by the SBTi as earnings before interest and depreciation (EBITDA) + all
personnel costs. See page 24 of the SBTi Corporate Manual.
In 2024, we will publish our carbon transition plan for climate change mitigation
in line with CSRD requirements. Additionally, we will develop GHG reduction
initiatives for key business units to build accountability and engagement across
the company. We will continue to prioritize environmental data collection and
quality assurance efforts to achieve and report progress against our targets and
GHG initiatives.
We will also continue to evaluate and manage our climate-related risks based
on the Task Force on Climate-related Financial Disclosures (TCFD) guidance.
TCFD was created by the Financial Stability Board (FSB), an international body
that monitors and makes recommendations about the global financial system,
to develop recommendations on the types of information that companies
should disclose to support investors, lenders, and insurance underwriters in
appropriately assessing and pricing risks related to climate change.
In 2022, we conducted our first TCFD adoption and scenario analysis to provide a
qualitative review of potential climate-related risks, inform strategic planning,
and enhance transparency with respect to climate risk disclosures. Due to
the nature of our business, the study concluded 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). We plan to
conduct our next TCFD review no later than 2025.
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
Scope 1 & 2 GHG Emissions
EMISSIONS REDUCTION ROADMAP
Our scope 1 & 2 emissions reduction roadmap is driven by:
Renewable Energy Green Buildings Fleet Electrification
Prioritizing the
procurement of
renewable energy
for our offices
and facilities.
Evaluating and
investing in
opportunities for
environmental
certifications and
standards that
seek to optimize
energy efficiency.
Transitioning to
hybrid or
electric vehicles.
In 2023, our achievements include:
•
Our scope 1 & 2 (market-based) emissions decreased by 12%
from 2022
1
due to reductions in natural gas, steam/imported heat,
electricity, diesel, domestic fuel oil, and refrigerant consumption.
•
We transitioned nine new properties to renewable electricity and
47% of our direct operations (by m
2
area) are now powered by
electricity from renewable sources.
•
Four new properties obtained environmental certifications.
•
We increased the number of electric vehicles from six to 14.
1
FY22 emissions were adjusted in accordance with our internal policy to include data enhancements and
corrections for improved accuracy. Adjustments illustrate year over year progress across our key non-
financial indicators. For more information, please see the Non-Financial Reporting Methodology section.
UMG’s Global Procurement team supported the transition of electricity contracts
powering UMG's offices, studios and other facilities to renewable energy in
line with our science-based target. We conducted a global assessment of our
energy demand and developed a roadmap to accelerate renewable electricity
procurement in 2024.
THIS YEAR, ABBEY ROAD STUDIOS INITIATED
A CONTRACT FOR 100% GREEN GAS
1
AND THE RS NO 9
CARNABY STORE TRANSITIONED TO 100% RENEWABLE
ENERGY GUARANTEES OF ORIGIN (REGO)
2
.
1
100% green gas is created via a process called Anaerobic Digestion where bacteria breaks down
organic matter in the absence of oxygen (Source: 100Green).
2
The REGO scheme provides transparency to consumers about the proportion of electricity that
suppliers source from renewable electricity (Source: Office of Gas and Electricity Markets).
MUSIC IS UNIVERSAL Annual Report 2023 | 142
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
Our commitment to clean energy and green building practices is already
reflected within our new builds and regional hubs. In 2023, our Santa Monica
headquarters and studios, our London headquarters, and Abbey Road Studios
continued to source 100% renewable electricity.
To support energy reduction, our London headquarters switched off energy
during the weekends and powered down all meeting room equipment over a
two-month period, resulting in a 20% decrease in electricity consumption and a
59% decrease in steam/imported heat consumption from 2022 to 2023.
Looking ahead, we will accelerate these efforts through innovative technology
integration. As part of the world-famous Capitol Tower building renovation,
the mechanical systems are being upgraded to the latest technology that will
reduce energy demand. UMG is installing energy-efficient HVAC systems and
boilers, new LED lighting and controls, and new elevator drive motors and
control systems. Additionally, variable speed water pumps and low-flow toilets
and sinks will be installed to reduce water consumption.
Scope 3 GHG Emissions
EMISSIONS REDUCTION ROADMAP
Our scope 3 emissions reduction roadmap is driven by:
Supplier Engagement Transportation
& Logistics
Sustainable
Product Innovation
Urging key suppliers
to adopt renewable
energy sources,
establish science-
based targets for their
operations, and
support data
enhancements that
we use in our scope 3
emissions
calculations.
Developing
initiatives to reduce
emissions from
the transportation
and distribution of
our products and
business travel.
Understanding the
full lifecycle impacts
of our products
and packaging
and pursuing
material and
design innovations
that enhance
their circularity
and sustainability.
This year, our Global Technology team continued its efforts to migrate to cloud-
based operations, aligning with cloud partners who have committed to 100%
renewable energy procurement by 2025. We also deepened our engagement with
physical audio and merchandise suppliers – strengthening the environmental
criteria expected of these partners and expanding our GHG data collection
program to better understand and mitigate our physical product footprint.
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
IN 2023, WE ENGAGED WITH OUR SUPPLIERS IN VARIOUS
WAYS, INCLUDING THROUGH GHG REPORTING,
SUSTAINABILITY SURVEYS, AND OUR SUSTAINABILITY
SUMMITS.
We continued to work with our global network of transportation and distribution
partners to optimize our logistics operations. Examples of relevant strategic
initiatives include:
•
Establishing regional distribution hubs to minimize shipping distances;
•
Consolidating shipments to reduce frequency of transportation;
•
Enabling the selection of lower emissions transportation modes over air
freight via advanced procurement and calendarized milestones; and
•
Supporting carbon neutral shipping programs and ground transport
fleet electrification.
WE REDUCED OUR UPSTREAM LOGISTICS EMISSIONS BY
10% FROM 2022-2023 BY SHIFTING TO MORE
SUSTAINABLE TRANSPORTATION MODES.
See "Supply Chain Management" in the Governance section for more
information on our responsible supply chain program and our roadmap to
deeper supplier engagement in 2024 and beyond.
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BUSINESS SPOTLIGHT:
UMG BUSINESSES AROUND THE
GLOBE ARE DOING THEIR PART TO
REDUCE THE GHG FOOTPRINT OF
COMPANY OPERATIONS.
Since its launch in 2021, UMG’s Mercury Studios has demonstrated a steadfast
commitment to decarbonization, with its industry-leading sustainability
program shortlisted for this year’s Screen International “Sustainability
Initiative” Award. Key strategies include:
LEADERSHIP COMMITMENT The organization pledged to make 100% of its productions sustainable,
and its business-specific Environmental Policy sets out a clear plan for
decarbonization.
STAKEHOLDER EDUCATION All Mercury Studios team members complete sustainability training – and talent,
management, and labels are engaged in sustainable production practices.
GHG REDUCTION MEASURES A 1% optional contribution on all production budgets allows for more
sustainable production choices, and 100% of productions have elected to
participate since program activation. GHG reduction activities include the
hiring of local crews to reduce travel emissions, selecting low- or zero-carbon
vehicles, partnering with hotels that use renewable energy, going paperless,
and providing reusable cups and water bottles to avoid the use of single-use
plastic bottles on set.
INDUSTRY COLLABORATION Mercury Studios is a member of the BAFTA ‘albert’ consortium, which seeks to
reduce the environmental impact of productions and amplify content that
supports a sustainable future. Albert-certified productions include:
If These
Walls Could Sing, My Life as a Rolling Stone,
and
Lang Lang Plays Disney
.
SUPPLIER ENGAGEMENT A sustainability survey has been developed to measure environmental practices
and metrics across the Mercury Studios supply chain, inform procurement
decisions, and surface opportunities for deeper engagement.
MERCURY
STUDIOS
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
REIMAGINING OUR PRODUCTS
& PACKAGING
UMG is committed to understanding the full lifecycle impacts of our
products and packaging, and identifying ways to reduce our physical product
footprint through innovation, sustainable choices, waste reduction, and
supplier engagement.
We leverage internal ESG Working Groups to drive progress across these areas.
The Universal Music Manufacturing & Logistics (UML) Working Group focuses
on physical audio products – which range from vinyl to CDs and DVDs – and
the Bravado Working Group focuses on merchandise for artists and fans. For
more information on UMG's ESG Working Groups, see "ESG Integration" in the
Governance section.
Physical Audio
UMG continues to pursue design innovations and integrate sustainability
considerations into our physical audio decision-making, ranging from materials
selection to product weight.
We are exploring solutions for greener vinyl production – from innovative
manufacturing to improved recycling initiatives and new materials sourcing. In
2023, we engaged key partners in testing alternatives to PVC (polyvinyl chloride,
the plastic used in vinyl production) and non-traditional manufacturing
processes. We also strengthened our product end-of-life initiatives – reducing
cycle times, minimizing obsolete inventory, and expanding our reuse and
recycling partnerships for vinyl and optical discs.
OUR VINYL MANUFACTURED DISCS ARE COMPOSED OF AN AVERAGE 20%
REGRIND MATERIAL – A PROCESS WHEREBY PRODUCTION WASTE MATERIAL
AND/OR DEFECTIVE RECORDS ARE INTERNALLY RECYCLED AND MIXED WITH
NEW PVC FOR PRESSING.
WE’VE COMMITTED TO DIVERT 100% OF PHYSICAL MUSIC SCRAP FROM THE
LANDFILL THROUGH REUSE AND RECYCLING PARTNERSHIPS FOR VINYL AND
OPTICAL DISCS.
Our physical audio teams continue to engage our labels and supply chain
partners in the adoption of more sustainable audio packaging – including
board-based CD packages and plastic alternatives. In France, the optical disc
Greenpack is now the standard format for UMG France frontline local releases
with a single disc. UMG France’s Greenpack is made of a Forest Stewardship
Council (FSC) certified digisleeve with bio-sourced cellophane and vegetable-
based ink.
To accelerate these efforts, this year’s Bravado Sustainability Summit in London
included a panel presentation around physical audio products and packaging.
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
Featuring UMG’s key vinyl suppliers, the discussion signaled demand for
sustainable innovation and demonstrated our commitment to enhanced data
transparency around the environmental impacts of our products – and to
exploring new approaches in vinyl manufacturing.
Merchandise
Bravado, UMG’s merchandising arm, is a key driver in our sustainable product
efforts. This year, Bravado developed an innovative apparel catalog for artist
campaigns in partnership with upcycling organizations. Featuring clothing
made with recycled materials, organic cotton certified through the Global
Organic Textile Standard (GOTS) and direct-to-garment printing, the catalog
empowers artists to align their merchandise with eco-friendly options.
Bravado also offers sustainable merchandise across its retail footprint. Its
London flagship store, RS No 9 Carnaby, incorporates recycled and organic
fibers into 80% of all new products. Bravado’s eco-packaging program supports
UMG’s commitment to sustainable material selection, serving to eliminate
fourmillion plastic bags from the marketplace every year. In lieu of plastic,
direct-to-consumer products are packaged using compostable bags, cartons
made from recyclable paper, and 100% recycled-content mailers.
In tandem with its sustainable material initiatives, Bravado implements circular
processes and manufacturing innovations to reduce the lifecycle impacts of its
merchandise. Textile recycling organizations across the globe are key partners
in this effort, serving to transform apparel into recycling components that can
be reused for different products across a variety of industries. Bravado also
has incorporated photo approvals for its product sampling, reducing physical
waste from the manufacturing process as well as the emissions associated
with sample transportation. The integration of Print-On-Demand (POD) systems,
through which products are printed as they are ordered, also serves to mitigate
Bravado’s manufacturing waste.
IN 2023, LORDE’S MERCHANDISE FEATURED 100% RECYCLED COTTON,
BILLIE EILISH’S EUROPEAN TOUR COLLECTION FEATURED A CUSTOM
60% RECYCLED AND 40% ORGANIC COTTON BLEND, AND THE ROLLING
STONES’ CORE COLLECTION FEATURED 50% RECYCLED COTTON AND 50%
ORGANIC COTTON.
WE HAVE DIVERTED NEARLY 500,000 LBS. OF PRODUCT FROM THE LANDFILL
VIA FIBER RECLAMATION AND MATERIAL-SPECIFIC RECYCLING SINCE 2019.
IN THE UK, WE HAVE REDUCED PHYSICAL RETAIL SAMPLES BY 65% SINCE
2021 BY UTILIZING PHOTO APPROVALS.
Bravado continues to leverage a robust community donation program. Since
2017, Bravado has partnered with Delivering Good to donate and distribute over
500,000 articles of merchandise though a network of agency partners. Delivering
Good unites retailers, manufacturers, foundations, and individuals to support
individuals impacted by poverty and tragedy.
MUSIC IS UNIVERSAL
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
DRIVING INDUSTRY
TRANSFORMATION
Industry Leadership
UMG is the first major music company to receive SBTi validation for our
science-based GHG emission reduction targets. This milestone reinforces our
determination to continue delivering pacesetting change on one of the most
important public health issues of this era.
UMG’s commitment to combat the climate crisis is anchored by strong
external partnerships and peer collaboration. This year, we co-founded the
new Music Industry Climate Collective (MICC), joining forces with Sony Music
Entertainment and Warner Music Inc. to develop guidance for scope 3 GHG
calculations, aiming to establish a uniform approach to measuring GHG
emissions across the industry. To date, MICC has completed the first draft of
the guidance and initiated calls for wider industry participation through an
advisory council composed of independent record labels, value chain partners,
and climate experts.
MICC will further develop the guidance through an inclusive multi-stakeholder
process in 2024. The American Association of Independent Music (A2IM), the
not-for-profit trade organization representing a diverse community of more
than 600 independently owned record labels operating within the United States,
will serve as a MICC advisor,providing recommendations on how best to include
small-to-medium-sized businesses in the initiative.
Our collaboration with MICC is an extension of our continued support of
the Music Climate Pact, an industry collaborative aiming to transform the
global recorded music sector by reducing emissions across our value chains,
empowering employees to create meaningful change from within, supporting
artists in speaking up about climate issues, and communicating openly and
honestly with music lovers around the world about our environmental impacts.
UMG was also a founding signatory of the Music Climate Pact in 2021.
Artist Advocacy
We support our artists as they advocate for environmental causes and promote
awareness of the climate crisis to their fans. This year, to shine a light
on artist efforts, we teamed up with REVERB to create the annual Universal
Music Group x REVERB Amplifier Award – which recognizes the artist best
exemplifying the commitment to, and achievement of, measurable steps to
reduce their environmental footprint and support nonprofit causes through
direct fan engagement.
The inaugural award was presented to Billie Eilish at Sir Lucian Grainge’s 2023
Artist Showcase held over Grammy weekend in Los Angeles. Selected for her
trailblazing advocacy for sustainability and the environmental movement, Eilish
utilizes her platform to magnify and bring attention to the work of nonprofit
organizations, while engaging her fans and the music industry in meaningful
climate action.
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BUSINESS SPOTLIGHT:
IN 2023, WE LAUNCHED THE UMG X
BRAVADO SUSTAINABILITY SUMMIT
SERIES, THE FIRST OF ITS KIND IN
OUR INDUSTRY.
UMG X
BRAVADO
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
Taking place in Los Angeles, London, and New York, the series convened
decision-makers and sustainability leaders from Bravado, physical product
teams, leadership, artist teams, industry groups, and value chain partners
to explore how UMG can use its influence at the crossroads of music and
merchandise to advance the global climate action movement.
The program facilitated a meaningful dialogue around Bravado and UMG’s
shared sustainability vision, as well as industry advancements in the physical
product and merchandise arenas. The diverse speaker lineup, including Maggie
Baird of Team Billie Eilish and Support & Feed, highlighted innovative strategies
to maximize impact and amplify engagement with partners, artists, and fans.
Also this year, to coincide with the European Sustainable Development Week,
UMG France launched the
Métamorphoses
program, a monthly series aiming
to inspire our business in a focused and constructive way. The series engaged
employees via a roundtable masterclass structure and featured internal and
external speakers. This year’s program included:
• October: Cross-functional sessions covering environmentally friendly
changes already implemented as well as objectives and prospects across
IT, manufacturing, distribution, merchandising, live and brands.
• November: Discussions around the definition of ecology and how it impacts
the business landscape.
• December: Programming focused on the role of artists and new narratives
for a positive ecology that engages and creates agency.
Métamorphoses
is set to run each month throughout 2024.
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Annual Report 2023 | 149
UMG’S PURPOSE IS TO SHAPE CULTURE
THROUGH THE POWER OF ARTISTRY.
Through our shared passion for music, we make connections, build
relationships, and support a broad variety of content creation. Our global
employees, our artists and songwriters, their fans, and the diverse communities
we reach are critical to our success.
We are committed to investing in our workplace and embracing diversity
and inclusion in our operations. We will continue to support the health and
wellbeing of our employees and artists, while leveraging our global platform
to drive positive impact across our communities.
SOCIAL
OUR COMMITMENTS
MANAGING THROUGH OUR VALUES
UMG’s six core values shape how our employees make great things.
Our values engage employees in a shared mission supporting our
commitments to each other and our artists.
CREATIVITY Thinking differently about how we lead.
CONNECTION Understanding ourselves and others.
AUTHENTICITY Unlocking the potential of our people.
BOLDNESS Raising the bar on our conversations.
DRIVE Fueling initiative through aspiration.
INSIGHT Aligning efforts to achieve better outcomes.
Material Topics:
Attraction and Retention of Artists | Attraction and Retention of Employees | Diversity, Equity, and Inclusion.
See Material Topics in the Governance section for more information.
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
MUSIC IS UNIVERSAL Annual Report 2023 | 150
1
UMG initiated a global job architecture project in 2023 to harmonize career leveling and remuneration, contributing to the year-over-year
manager variance.
2
For purposes of UMG’s D&I Policy, senior management is comprised of: (i) the executive directors of the Board (the Executive Directors),
including the Chairman and Chief Executive Officer (the Chairman and CEO), (ii) the Chairman and CEO’s direct reports who lead a label or
business or with a primary function, (iii) for other key labels or businesses, their leaders and in some instances, certain of their direct reports,
and (iv) key large function leaders. This is UMG’s first year reporting these figures.
3
Race and ethnicity reporting is based on U.S. data only, as laws on collecting race and ethnicity data differ outside of the U.S. The 2023
numbers account for 3,670 employees in the U.S.
Diversity, Equity & Inclusion
We believe that the best way to foster an environment where original ideas are
generated and creativity can flourish is to build an inclusive workplace that
attracts and promotes people from diverse backgrounds and cultures – one that
reflects and supports the incredible diversity of our artist roster and audiences.
In 2023, we formalized a new Diversity & Inclusion policy, reinforcing our
commitment to building an inclusive culture that values and promotes diversity
and equal opportunity.
VOLUNTARY TURNOVER
2023 2022
7.03% 9.55%
GLOBAL TURNOVER
2023 2022
11.53% 13.95%
TOTAL STAFF
2023 2022
10,290 9,992
Men 5,044 4,913
Women 5,246 5,079
49% 51%
MANAGERS
1
2023 2022
3,369 3,456
Men 1,939 1,980
Women 1,430 1,476
58% 42%
2023 2022
63 -
Men 52 -
Women 11 -
SENIOR MANAGEMENT
2
83% 17%
U.S. RACE / ETHNICITY
3
American Indian or Alaska Native
Asian
Black or African American
Latinx
Multiracial
Native Hawaiian or Pacific Islander
White
TOTAL
0.5%
11%
12%
14%
4%
0.5%
58%
TOTAL U.S. WORKFORCE
INVESTING IN OUR WORKPLACE
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
MUSIC IS UNIVERSAL Annual Report 2023 | 151
BUSINESS SPOTLIGHT:
IN 2023, WE LAUNCHED THE UMG X
BRAVADO SUSTAINABILITY SUMMIT
SERIES, THE FIRST OF ITS KIND IN
OUR INDUSTRY.
UMG X
BRAVADO
Taking place in Los Angeles, London, and New York, the series convened
decision-makers and sustainability leaders from Bravado, physical product
teams, leadership, artist teams, industry groups, and value chain partners
to explore how UMG can use its influence at the crossroads of music
and merchandise to advance the global climate action movement. The
program facilitated a meaningful dialogue around Bravado and UMG’s shared
sustainability vision, as well as industry advancements in the physical product
and merchandise arenas. The diverse speaker lineup, including Maggie Baird
of Team Billie Eilish and Support & Feed, highlighted innovative strategies to
maximize impact and amplify engagement with partners, artists, and fans.
Also this year, in the midst of European Sustainable Development Week, UMG
France launched the
Métamorphoses
program, a monthly series dedicated
inspire our business in a focused and constructive way galvanizing a positive
and engaging dynamic. The series format is a roundtable masterclass style for
employees hosted at Universal Music France with internal and external
speakers. This year’s program included:
October:
cross-functional shares on environmentally friendly changes already
implemented as well as objectives and prospects across IT, manufacturing,
distribution, merchandising, live and brands.
November:
What is ecology and what does the business landscape look like in this space?
December:
The role of artists and new narratives for a positive ecology that engages and
creates agency.
Métamorphoses
is set to run each month throughout 2024.
Annual Report 2023
| 11
BUSINESS SPOTLIGHT:
IN 2023, OVER 1,000 UMG
EMPLOYEES ATTENDED EVENTS
HOSTED BY OUR ERGS TO DRIVE
AWARENESS AND CREATE
CULTURAL IMPACT.
EMPLOYEE
RESOURCE
GROUPS
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
As a company, we celebrate cultural milestones across the globe and highlight
historically significant events by offering educational programs that support
anti-hate in all its forms. In 2023, we recognized milestones and events
including Holocaust Remembrance, Black History Month, International Women’s
Day, the 50th Anniversary of Hip Hop, the launch of uDiscover Music’s
Spanish Editorial site, and PRIDE, with celebrations featuring artists across the
UMG roster.
Internally, Employee Resource Groups (ERGs) play a crucial role in supporting
our commitment to representation and fostering inclusion and belonging
across the company. Our ERGs provide a platform for underrepresented
employees to network, share experiences, influence employee programming,
and advocate for diversity and inclusion efforts. All employees are encouraged
to become members or allies and participate in events that celebrate a variety of
cultures and traditions.
UMG has 23 ERG chapters globally, including:
• BLACK LABEL: Fosters community and cultivates leaders at UMG, while
celebrating Black culture across the music industry.
• CULTURA: Celebrates the diversity and unity of Latinx and Hispanic
people by promoting cultural awareness, supporting Latinx communities, and
empowering current and future Latinx and Hispanic leaders at UMG.
• PRISM: Cultivates a space to build community and celebrate LGBTQ+
identifying individuals and allies within UMG and across the music industry.
• UTOPIAA: Provides a community and platform for employees that identify as
Asian American & Pacific Islander (AAPI) and their allies.
• WOMEN’S NETWORK: Serves to advance the position of women in the
industry by providing a support system that allows members to express
themselves and realize their goals – both professional and personal.
In November, the Board of Directors from Black Label, Cultura, PRISM, UTOPIAA
and Women’s Network convened for a targeted ERG Summit. The Summit
celebrated ERG achievements and focused on formalizing future-driven ERG
charters and mission statements to enhance their reach and influence among
employees in 2024 and beyond.
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Annual Report 2023 | 152
• Legends & Legacy: In recognition of Black History Month, Rock & Roll Hall
of Fame inductee, James ‘Jimmy Jam’ Harris III, joined Black Label for an
inspiring conversation on his legacy, longevity, and life.
• For The Culture: Black Label hosted a social mixer celebrating Juneteenth,
the 50
th
Anniversary of Hip Hop, and Black Music Month. The event served to
honor the genre that shapes and shifts culture – highlighting the incredible
influence Black music has had on the world.
• National Hispanic Heritage Month: Cultura kicked off National Hispanic
Heritage Month at our Santa Monica office with food, music, and prizes.
U.S. Representative Veronica Escobar (D-TX) joined us for a discussion on the
origins of Hispanic Heritage Month and the impact of the Latin and Hispanic
communities on modern societies.
• VIVA LA MÚSICA: In partnership with uDiscover Música, Cultura hosted an
event with cocktails, food, live salsa lessons, and giveaways to celebrate Latin
Heritage Month and the launch of uDiscover Music’s Spanish Editorial Site.
• Loud & Proud Showcase: PRISM and Black Label joined together with
3point5/॰1824 to sponsor a Pride and Black Music Month celebration
featuring artists across the UMG roster. The Loud & Proud Showcase featured
performances by G Flip, Kidd Kenn, and Allison Ponthier.
• My Friend’s Place Volunteer Opportunity: PRISM and UMG’s Corporate
Communications team came together with Support and Feed to volunteer at
My Friend’s Place in Hollywood – preparing meals and donations for the
center’s homeless youth.
• NY Music Industry Social Mixer: Our first New York event launched our
UTOPIAA NY Chapter and showcased the evolution of the ERG, demonstrating
how UMG continues to foster growth and diversity for the AAPI community.
• Executive Panel & Performance: UTOPIAA spotlighted key AAPI
executives and talent across UMG while showcasing AAPI-owned brands with
free product tastings.
• Women’s History Month Panel: Women’s Network joined forces with the
People, Inclusion & Culture team, ॰1824, and UMShe to host a panel centered
around “Embracing Equity Through Advocacy.”
• Black Women In Music Panel: In June, Women’s Network observed Black
Music Month with the annual Black Women in Music Panel. Professionals and
artists discussed their journeys and shared stories of triumph and success.
Key 2023 programs included:
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
Talent Attraction and Retention
UMG's commitment to inclusion and belonging is reflected in our search for the
best, most passionate talent.
This year, we rolled out new programs and strengthened existing initiatives
to attract and foster interest among the next generation of music industry
employees, including the expansion of our UMG Internship Program, which
hosted over 240 summer interns from more than 110 universities. Additional
initiatives included:
• Historically Black Colleges and Universities (HBCU) Support: UMG’s Task
Force for Meaningful Change (TFMC) continued to provide job training
opportunities and early career development support to students from
Historically Black Colleges and Universities (HBCU) through various
organizations. The HBCU Legacy Fellowship hosted over 90 students through
training and development opportunities and “experienceships.”
•
Technology Pathways: Seeking to expand music careers beyond the
traditional, we introduced Technology Pathways, a nine-month on-the-job
training program with dedicated mentors for college students interested in
data science, business intelligence, and data engineering.
• °1824 Creative Pathways: UMG’s °1824 creative solutions team continued to
connect artists and brands with today’s youth culture, while also providing
part-time roles to university students, including skilled work in content
creation, creator partnerships, publicity, A&R, and strategic partnerships.
°1824 has placed 200 of their student employees into full-time roles, with
100+ retained at UMG and partner companies since the program's inception.
Across our operations, we expanded inclusive interviewing training to further
support our goal of championing inclusion and belonging throughout our
company's culture, and in the UK, we offered specialized training for new and
existing employees with neurodiverse talents.
Employee Experience and Development
At UMG, we seek excellence in everything we do – our artistry, our product, and
our workplace. To help us succeed, we’ve created an employee culture focused
on continual advancement so we can better serve our communities and build
our business.
While more employees returned to the office in 2023, UMG continues to support
hybrid and remote work environments, providing home office setups and
reimbursements to ensure each employee has the ability to work effectively.
Employee listening is how we "pass the mic". We issue a series of employee
surveys and broader audience pulse surveys to help us capture the individual
employee voice, effectively assess critical areas of the employee experience,
and efficiently turn insights into action. 2023 saw over 1,000 responses to
these surveys, and based on employee feedback, we are planning to roll out
additional, targeted programs that are centered on career conversations and
personal development.
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As a company, we encourage dialogue between our managers and employees
to drive clarity, transparency, and performance. This year, we expanded a
pilot program from the U.S. into several global territories to support ongoing
manager and employee conversations. For example, UMG Australia’s version
of this program, the Tempo initiative, facilitates regular check-ins and talent
reviews between managers and employees to reflect on expected outcomes,
development opportunities, and key achievements.
In addition to our focus on productive dialogue, we offer a broad range
of digital and in-person learning opportunities to retain our top talent and
foster career growth within the company. This year, we scaled our Learning
Management Software (LMS) across the majority of global territories. The global
software application hosts centralized upskilling and reskilling opportunities
and provides a platform for territories to upload their regional-specific
learning content.
IN 2023, UMG DELIVERED OVER 100,000 HOURS
OF TRAINING AND OFFERED MORE THAN 500 COURSES
TO EMPLOYEES.
Cultivating leadership is a foundational element of UMG’s workforce
development approach, and many of our programs are specifically
developed to drive leadership preparedness, including targeted programs for
underrepresented groups. This commitment helps foster a culture of belonging
and boosts the capacity for the innovation. Key programs include:
• UMShe: Our 9-month women’s executive leadership program is designed
for rising senior leaders who are looking to advance to the next step in
their careers. The program features monthly interactive workshops, 1:1
executive mentorship, a peer support network, and the opportunity to
pitch innovative business solutions to senior executives. This year, 46% of
program participants were promoted within six months of completing the
program, illustrating our commitment to retaining our talent while providing
career opportunities through skill development and executive exposure.
• Women in A&R: The Women in A&R initiative encourages women to pivot
into A&R departments at labels. It provides first-hand experience on how to
nurture talent and guide the record making process, offering A&R mentor
support, 1:1 executive coaching, and bespoke workshops. This year, seven
UMG employees participated in the program and four have transitioned into
A&R roles at UK frontline labels.
• ASCEND | The Power of Choice: Our 9-month ASCEND executive leadership
and acceleration program engages employees representing Employee
Resource Group (ERG) communities. Selected participants who are currently
in director or senior director roles receive mentoring, professional
development, and senior leadership exposure through collaborative
workshops, coaching, and executive sponsorship.
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• MixHer: Introduced in 2023, MixHer is a one-of-a-kind Dolby Atmos training
and certification program for female-identifying mixers and engineers
powered by She Is The Music, Bose Corporation, Dolby Laboratories, The
Recording Academy, ENGINEEARS & the legendary East Iris Studios.
• Emerging Leader Program: Offered to all employees, the Emerging
Leader Program supports career growth by providing resources around
communicating ideas, decision-making, giving feedback, and preparing to
lead a team.
• 6 Strings of Management: Our flagship leadership program is designed
to equip people managers with frameworks to effectively engage their
teams and successfully manage performance and people. The cohort groups
engage in a series of topics over three months, including introduction to
manager practices, communication styles, setting goals and delegations,
bringing out the best in their team, performance feedback, and career
conversations.Over 160 people managers have completed this program.
•
6 Accelerator: Introduced in 2023, 6 Accelerator is an executive leadership
cohort program focused on amplifying core skills central to the role of
senior leaders. The program provides frameworks to deepen self-discovery,
align team effort with business vision, and execute on business strategy.
UMSHE LEADS SUMMIT: A PATH TO INCLUSION AND GROWTH
The UMShe Leads initiative held its inaugural summit this year, an
annual multi-day event dedicated to uplifting a cohort of 30 women from
across the company.
The program included a networking lunch with Republic Records co-
founders and executives to share the historic label’s legacy, and a
comprehensive design thinking course covering topics such as tackling
complex challenges creatively, strength in decision making, and the
power of leveraging your authentic voice to devise innovative solutions.
The course emphasized the value of diversity in design teams, illustrating
how different perspectives can lead to groundbreaking ideas. Additionally,
the Summit featured remarks from UMG’s Global E-Commerce and
Bravado executives to introduce the UMShe Leads cohort’s capstone
project. Following the Summit,
100% of participants indicated that they
felt more connected and would recommend the program to a colleague.
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SUPPORTING EMPLOYEE AND
ARTIST WELLBEING
Compensation & Benefits
UMG’s compensation structure provides a framework that supports our
efforts to attract and retain highly qualified employees while incentivizing
and rewarding long-term, sustainable growth within the company. Our
compensation structure is guided by three principles:
1. Focus on company performance by including at-risk pay for executives and
linkage of performance objectives with UMG’s strategy.
2. Maintain competitiveness with relevant markets to support UMG’s ability to
attract, retain, and motivate high-caliber talent.
3. Support our employees’ career progression and ensure internally equitable
pay practices through a new global job architecture, in which individual
pay levels may differ by employee to reflect experience, skillset,
performance against goals, and scope of responsibilities but not by
ethnicity, race, gender, religion, disability, sexual orientation, or other
intersectionality points.
Our incentive programs allow employees to participate in the success that
they help create. We offer a global short-term incentive plan for most exempt
and/or senior employees, an Annual Incentive Program (AIP), and an annual
discretionary bonus program for individuals who are not in the AIP. Additionally,
all eligible UMG employees received UMG shares (or the cash equivalent) in
October as part of their one-time Restricted Stock Unit equity award.
Globally, our company benefits are suited for the diverse needs of
our employees and support a companywide culture of physical health,
mental health awareness, and overall wellbeing. In addition to competitive
compensation structures, our total rewards program is central to our
strategy for enhancing our appeal as an employer and creating a positive,
healthy workplace.
In the United States, UMG’s medical plans provide unlimited access to
mental health services at no cost when using network providers. We offer
comprehensive family support programs and prioritize women’s health through
targeted benefits. UMG provides 12 weeks of paid family leave time as well
as benefits that cover travel for employees and eligible dependents for fertility-
related medical care. Other family care benefits include family planning, egg
freezing and fertility support, adoption and surrogacy, maternity support, breast
milk shopping for working mothers, and menopause support. Unexpected
circumstances arise and we have benefits to help minimize family disruptions,
including backup childcare when schools close. Additionally, virtual tutoring
and college coaching help parents and their children navigate individual
learning assistance or college-related tasks.
Employees and their immediate family members also receive an annual
Wellbeing Allowance to fund a wide array of additional services, including
fitness equipment, gym memberships, massages, financial software, and travel.
Additionally, we’ve tailored our medical plans to provide focused support for
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chronic conditions such as diabetes and high blood pressure, and even those
who suffer from musculoskeletal pain.
To balance work and personal time, several UMG territories reinstated “Summer
Fridays.” During the Summer months, participating employees were able to
limit Friday meetings, and unless facing a pressing business requirement,
step away from their laptops in the early afternoons. Several territories also
offered a Wellbeing Day to encourage employees to care for their physical and
mental health.
We believe there is a connection between individual wellbeing, caring for
others, and serving and supporting our communities. Annually, in the U.S.,
employees may take two days off to volunteer for the charitable cause of their
choice. To support our focus on wellbeing, this year also saw UMG continue
to expand access to regionally-specific Employee Assistance Programs (EAPs).
Among other offerings, these programs facilitated counseling sessions, in-the-
moment support for emotional wellness, self-guided mindfulness and cognitive
behavioral therapy programs, and 24/7 work-life assistance.
THE WHOLE YOU
In the U.S., our experiential wellbeing program “The Whole You” provides
UMG employees with access to quality-of-life tools around UMG’s
foundational pillars of health. 2023 highlights included:
•
Mental Health: We launched the “Wellbeing Within Reach” campaign
for Mental Health Awareness Month, featuring a robust calendar of
activations, events, and resources like mental health hotlines and
programs tailored for diverse communities.
•
Physical Health: We continued to provide employees with access
to virtual fitness classes via partnerships with local instructors as
well as mindfulness and meditation platforms, which have seen
significant engagement rates.
•
Family: We continue to support employees and their time with family
through initiatives like Summer Fridays, Wellbeing Day, and our
December Winter Break.
UNIVERSAL MUSIC GERMANY WAS AWARDED TOP
EMPLOYER 2023 IN TERMS OF FAMILY-FRIENDLINESS BY
FREUNDIN X KUNUNU AND MOST WANTED EMPLOYER BY
ZEIT X KUNUNU.
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Elevating Artists
Artist-Centric Culture
Artists and songwriters are at the heart of everything we do, and our
primary mission is to help them achieve their greatest creative and
commercial potential.
Our first imperative is to discover and break new artists – and then to
sustain their careers by promoting a healthy, sustainable, and exciting music
ecosystem in which they can thrive for decades to come. To support this
commitment, we are constantly pursuing unexplored avenues of creative
and commercial possibilities – leveraging our ingenuity to create new
revenue streams and help artists reach their greatest potential in an ever-
changing industry.
In the current digital marketplace, streaming platforms are adding some
120,000 tracks per day. With such a vast number of tracks flooding the
platforms, the critical contributions of many artists are becoming undervalued,
as consumers are increasingly being guided by algorithms to lower-quality
functional content. This leads to a less fulfilling experience for the consumer,
diminished compensation flowing to artists who are driving the business
models of the platforms, and fewer cultural moments that fans can collectively
share. Ultimately, there is a growing disconnect between the devotion of fans
to the artists whom they value and the subscription structures applied by
streaming platforms.
To address this imbalance, we are actively exploring artist-centric solutions
with platforms including Deezer, Spotify, Tidal, and SoundCloud. Through our
collaborative efforts, we seek to:
• Reward Real Artists: Find ways to better reward artists whose content drives
value to platforms.
• Clean Up Clutter: Take steps to limit non-artist noise content, including
sounds, functional music, and thirty-second AI tracks that are designed to
profit inappropriately from the artist royalty pool.
• Enhance Anti-Fraud Efforts: More aggressively identify and inhibit
fraudulent behavior, as fraudulent streams divert royalties away from artists
at a significant scale.
The overarching theme of UMG’s advocacy is that all creators deserve fair
compensation, regardless of the platform on which fans enjoy their art. As we
look ahead to 2024, we will continue to innovate and collaborate with others
across the music ecosystem to drive long-term growth and create value for
music fans, the artists they love, and our platform partners.
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Artist Wellbeing & Support
At UMG, our commitment to artists extends beyond supporting and amplifying
their creative visions.
Our over three-year relationship with the nonprofit, Music Health Alliance
(MHA), has proven to be a strong partnership. More than 500 UMG and UMPG
artists, songwriters and their families have received life-changing medical care
and saved more than $5million 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 2023, MHA
grew their mental health focus due to a significant increase of mental health
care support needed within the artist and songwriter community, providing $60K
in Mental Health Fund grants, and helping to coordinate more than 700 artist
counseling sessions.
2023 also saw UMG continue to support artists through partnerships with
the American Federation of Musicians (AFM) and the Screen Actors Guild-
Association of Featured Theatrical and Recording Artists (SAG-AFTRA). Our
support enables the music industry’s largest contributions to the organizations’
respective health and pension funds, which provide studio musicians and
background vocalists access to sustained health insurance and retirement
benefits that might otherwise be unattainable.
Our commitment to artist welfare and support is further bolstered by our
ongoing collaboration with Help Musicians, a UK philanthropic organization
serving musicians at all stages of their career through business advice as well
as physical, mental, and financial health services.
In 2022, Universal Music UK (UMUK) joined forces with Help Musicians to launch
the “Co-Pilot” program, a ground-breaking musicians’ mentoring network. In
contrast with professions that require specific study paths, musicians do not
have a clear blueprint for careersuccess, and while digital platforms provide
more options for music creators, deciphering and using them to maximum
effect can be overwhelming. In 2023, the Co-Pilot initiative supported 118
mentoring partnerships to help musicians navigate the ever-changing music
industry. A total of 32 UMG employees served as mentors and an additional 40
have committed to join the program in 2024.
LOVELOUD'S DAY ON THE HILL
UMG supports our artists as they stand up for equality.
On October 18, Imagine Dragons’ frontman Dan Reynolds, along with a
group of supporting artists, visited U.S. Members of Congress to share
the story of Reynolds’ LOVELOUD Foundation and advocate on behalf of
the LGBTQ+ community. Throughout the day, the LOVELOUD advocates
met with several U.S. policymakers – including various U.S. Senators
and representatives and the White House Office of Public Engagement’s
Director – on ways to advance the rights, safety, and wellbeing of
the community, while improving access to mental health care for
LGBTQ+ youth.
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Diverse & Inclusive Content
At UMG, our commitment to diversity, inclusion, and belonging extends from
our operations to our content. We use our global platform to shine a light on
diverse stories and local repertoires, leveraging the power of artistry to build
more equitable and open societies. Examples of 2023 initiatives include:
• Sounds of the Future: In honor of Black Music Month, the UMG Task Force
for Meaningful Change (TFMC) launched the community-centered Sounds
of the Future campaign to celebrate the powerful creative legacies of Black
music, artists, and executives. As part of the campaign, the TFMC supported
over 30 organizations working to cultivate and preserve Black music for
future generations.
•
Black Story: Launched by Universal Music Recordings (UMR) in 2022, Black
Story continued to pay tribute to trailblazing Black UK artists. This year the
campaign featured 10 vinyl releases, 20 digital releases, and four animated
short form music videos. Dedicated social channels were launched in
October to align with the UK’s Black History Month.
•
100% Her: UMG continued to support 100% Her, an initiative launched in
2019 to provide long-term career development opportunities for women and
non-binary individuals working in production music – shining a light on
their voice, talent and works.
• Irruk Birruk: UMG Australia continued to support “Irruk Birruk” (“Yesterday”
in the language of the Yorta Yorta people), a global distribution solution for
otherwise unavailable legacy recordings from Australian Indigenous and
Torres Strait Islander artists. The initiative successfully delivered over 100
global tracks in 2023.
• Afrikaans Concerts: UMG South Africa supported a series of concerts across
the country to promote the Afrikaans language and music – a small genre
facing a dwindling number of showcases. The effort, designed to foster
inclusivity, included four major shows that were collectively attended by
more than 130,0000 people.
• Waiata Anthems: UMG New Zealand continued to take a leading role in
the Waiata Anthems movement, a pan-industry campaign to incorporate
the local indigenous language “te reo Māori” in contemporary music. This
year saw the program hire a cohort of Māori interns, and in 2024 the
initiative will hire a team of Māori executives to run the new emerging artist
excellence initiative.
• Universal Music Recordings (UMR) Retail Campaigns: In the UK, UMR
continued to include a diverse balance of artists and genres in its retail
campaigns, as demonstrated by April’s UMR Record Store Day list, in which
nearly 60% of releases were by female, Black, or LGBTQ+ artists.
UMG’s creative strategy and intelligence teams directly interface with our
audiences and communities on an ongoing basis 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.
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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 and environmental issues and create positive,
systemic change.
In the U.S., the Universal Music All Together Now Foundation (UMATNF) works
to advance systemic change through investment in education, health and
wellness, and racial equity and justice. Integral UMATNF programs include
the UMG Unhoused Coalition, the UMG Green Team, and the Task Force
for Meaningful Change (TFMC). This year, each program continued to roll
out innovative initiatives and support UMG’s growing network of community
partners to address widespread social and environmental challenges.
IN 2023, UMG CONTRIBUTED TO MORE THAN 500
COMMUNITY ORGANIZATIONS AND SUPPORTED OVER
1.2 MILLION MEALS FOR INDIVIDUALS IN NEED.
UMG Unhoused Coalition
The UMG Unhoused Coalition mission is to intersect policy and philanthropy to
better serve the needs of those unhoused in our communities. The Coalition
works to strengthen education and advocacy as well as deliver resources and
local support, including the following 2023 initiatives:
• Community Collection Boxes: Permanent collection boxes were placed in
UMG offices in New York, Nashville, Los Angeles, and Miami to collect a
variety of seasonally appropriate items and were delivered to charities on a
monthly basis.
• Back(pack) to Basics Campaign: The Coalition activated a companywide
campaign seeking to meet the needs of underserved students by supplying
new school supplies, providing meals to fight food insecurity, and urging
UMG employees to shop purpose-driven brands that give back to students
in need. Backpacks and school supplies were distributed across the U.S.
• Covenant House Partnership: The Coalition strengthened its partnership
with Covenant House, a nonprofit dedicated to helping youth overcome
homelessness and human trafficking. Members of Republic Records created
and launched artist development workshops for Covenant House youth.
These workshops included hands on experiences, resume building and
career advice. In addition, UMG sponsored and participated in Covenant
House’s 2023 Sleep Out in Times Square, and our executives and artists
participated in their Night of Covenant Stars events.
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UMG Green Team
The UMG Green Team plays an important role in driving environmental
awareness, supporting artist advocacy, and implementing internal and external
initiatives to promote climate action in our workplace and in our communities.
Some highlights include:
• Go Green Challenge: The Green Team organized its second annual Earth
Month Go Green Challenge in April. UMG employees and business units
were encouraged to adopt a series of actions to reduce their daily carbon
footprints, and impacts were tracked via an online leaderboard. For every
action completed, UMG purchased a one-tonne carbon offset from a verified
project of the employee’s choice. In collaboration with partner Captain
Planet, a community garden at Brooklyn Urban Garden Charter School is
being developed in the name of this year’s challenge winner, Verve Records.
•
UMG x Dreamville Community Garden: The Green Team launched the UMG
x Dreamville garden in Atlanta, expanding UMG’s network of community
gardens across the U.S., UK, France, Australia, and New Zealand. Additionally,
Green Team members collaborated with the Mental Health Coalition to
deliver a coordinated social media campaign around the mental health
benefits of gardening.
• Green Team x PRISM Venice Beach Cleanup: The Green Team joined forces
with environmental nonprofit Heal the Bay and UMG’s PRISM ERG for a beach
cleanup in Los Angeles at Venice Beach.
• Tree Planting Series: In partnership with TreePeople and Trees NY, the Green
Team hosted two urban tree planting events in Los Angeles and New York
City. The group also partnered with TreePeople to host a Lunch & Learn on
urban heat and climate resilience strategies.
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CORPORATE PHILANTHROPY ACROSS UMG'S GLOBAL NETWORK
UMG territories outside the U.S. have developed independent
philanthropic initiatives to support both global and regional causes.
In the UK, the Universal Music UK Sound Foundation (UMUKSF) focuses
on lifting up the next generation of talent across the region. Since its
inception, UMUKSF has donated more than €9million towards music
education, including funding for over 10,000 young people and schools
to buy musical instruments. UMUKSF has bursaries at 11 music colleges
throughout the UK and Ireland – and supports the music departments of
23 secondary schools.
UMUK also continues to expand its partnership with East London Arts
& Music (ELAM), which began in 2014, to support the next generation of
talent. ELAM is a free school for 16-19-year-olds founded by Will Kennard,
one half of EMI recording artists Chase & Status. In addition to offering
masterclasses, mentorship, curriculum guidance, and work experience
to many of the school’s pupils, valuable relationships form between the
school and UMG’s A&R teams. This year, ELAM alumni who are signed to
UMUK labels earned numerous recognitions. Stella Quaresma and Renée
Downer, members of FLO (Island), won the prestigious BRIT Rising Star
Award 2023, and Tendai (0207 Def Jam) was nominated for Rising Star at
this year’s Ivor Novello awards.
In addition to expanding its youth programming, this year UMUK teamed
up with Music for Dementia and UK Music to develop the Power of
Music Report, which seeks to use music to improve community health,
particularly for those living with dementia. To further support this aim,
in 2023 UMUK launched the Power of Music Fund, a £1million fund
for community groups, as well as the dynamic Music Can platform, an
information hub about music and dementia that highlights local support,
training, and resources.
In South Africa, UMG supported four non-governmental organizations
(NGOs), ranging from a public interest law center driving social justice
to an organization providing toy libraries to marginalized communities.
Universal Music New Zealand continued to support Music Helps, the New
Zealand music industry charity that uses the power of music to help
people in need.
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FOR
MEANINGFUL
CHANGE
The Task Force for Meaningful Change (TFMC) – a voluntary group of music
executives and employees from UMG’s corporate center, labels, and global
companies - was launched in 2020 to support Black and other marginalized
communities worldwide.
Established in the wake of global uprisings against systemic racism, criminal
justice reform is an ongoing priority of TFMC in addition to advancing equity
in the music industry. Every year TFMC deepens its work in the criminal
justice space – leveraging UMG’s position in the industry to uplift, amplify,
and support community organizations, policies, and initiatives working to
protect and contribute to long-term change.
TFMC also supports other issue areas that disproportionally impact Black
communities. In 2021, the Task Force named its first “super priority” as
education with a focus on classrooms. Although education has been one of
the few pathways for Black people to overcome systemic racism, many of
America’s public school systems still fail to prioritize and meet the challenges,
realities, needs, and aspirations of Black children. TFMC invests in classrooms,
programs, nonprofits, institutions, and projects aimed at decreasing the
opportunity and achievement gaps between Black students and their
counterparts. Additionally, the Task Force cultivates spaces to support music
executives and emerging Black creatives in expanding their knowledge and
skill sets.
2023 saw TFMC deepen its criminal justice reform and education-focused
work, while also strengthening community partnerships and contributing
emergency aid around the world.
Among other initiatives, TFMC’s 2023 efforts included:
• TFMC provided support for over 50 scholarships across the four accredited
HBCU Medical Schools – Howard University College of Medicine, Morehouse
School of Medicine, Meharry Medical College, and Charles R. Drew University
of Medicine and Science – seeking to expand the number of Black medical
practitioners.
• To support criminal justice reform, the Task Force partnered with
organizations working in the community violence intervention and
meaningful re-entry work space to provide wraparound services,
mentorship, and mental health support.
TASK
FORCE
PUBLIC HEALTH
SCHOLARSHIPS
UNIVERSAL MUSIC GROUP
PARTNERSHIPS FOR SYSTEM
IMPACTED INDIVIDUALS
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
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FOR
MEANINGFUL
CHANGE
TASK
FORCE
• Addressing food insecurity across the globe was one of TFMC’s three giving
strategies this year. The Task Force prioritized support for organizations
providing vulnerable communities with access to year-round, zero-cost,
and nutrient-dense foods – including Feeding America, Harlem Grown,
and Hashtag Lunchbag.
• TFMC hosted a music career session in Long Beach, California, in partnership
with the Boys and Girls Club Long Beach and Long Beach City College. With
over 100 underserved youth in attendance, the organization partnered with
Interscope Records and No Name Recordings to bring hometown artist,
singer, songwriter Shady Blu to share her story and career journey to inspire
the next generation of young people in music.
• The Task Force partnered with the King Center, the nonviolent social change
organization founded by Coretta Scott King, for its Be Love Day – a powerful
day of global activism that aims to disrupt hate with compassion, courage,
and community through virtual conversations and workshops that equip
individuals to confront racism with action. UMG supported the Be Love Day
playlist and donated over 1,500 care packages for the unhoused in Atlanta.
• The Task Force continued its second year of partnership with Dreamwakers,
an organization working with 4th to 12th graders in rural and systematically
under-resourced schools. Several TFMC members across our record labels
and business units led “flashchats” - virtual classroom music industry
career sessions. This year, more than 83% of students who participated in
flashchats attended under-resourced schools in areas of low socioeconomic
status, and over 84% of impacted classrooms were composed primarily of
students from one or more historically excluded ethnic and/or racial
backgrounds.
• TFMC supported education and empowerment camps for Black and Brown
youth across the country – using the power of music to connect young
people with future opportunities.
• The Task Force responded to thousands of people around the world impacted
by tragedies. UMG donated to multiple organizations around the world for
emergency support.
PARTNERSHIPS FOR
FOOD SECURITY
MUSIC MAKERS OF
TOMORROW SESSION
KING CENTER SUPPORT
DREAMWAKERS SUPPORT
KNOW YOUR RIGHTS
CAMP SUPPORT
EMERGENCY AID RELIEF
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
MUSIC IS UNIVERSAL Annual Report 2023 | 166
FOR
MEANINGFUL
CHANGE
TASK
FORCE
• 2023 Higginbotham Corporate Leadership Award,
Lawyers’ Committee on Civil Rights Under the Law
• 2023 Social Impact Award, Black Music Action Coalition
• 2023 Black Star Award, African Communities Together
Some organizations that TFMC supported include:
Music Industry
Criminal Justice
Reform Zero Hunger Spotlight Giving
• Atlanta
Music Project
• Blues
Foundation
• Brooklyn Acade-
my of Music
• East of River
Boys and Girls
Steelband, Inc.
• Memphis Music
Initiative
• Soulsville
Foundation
• Sphinx Museum
• Buried Alive
Project
• Community
Connections
for Youth, Inc.
• Life After Justice
• Releasing
Aging People
in Prison
• ScholarCHIPS, Inc.
• Vera Institute of
Justice
• W. Haywood
Burns Institute
• BGCA of
Greater Dallas
• Blessings in
a Backpack
• Harlem Grown
• Hunger Task
Force
• Kids
Gardening
• Partnership
for a Health
America
• WE CHARITY
• August Wilson
African American
Cultural Center
• Black Genius
Foundation
• Blacks in
Technology
Foundation
• GirlTrek
Incorporated
• Roots Wounds
Words
• Studio Museum
in Harlem
Additionally, outside of the U.S., our global giving program supported
organizations that focus on education, music, and zero hunger.
United Kingdom Canada Latin America
• Appeal
• Music Masters
• Magic Breakfast
• Haven on
Queensway
• North York
Harvest Food Bank
• Productions
Rever en Coulers
• Asociación Mexicana de Bancos
de Alimentos, A.C. (RED BAMX)
• Fundación Educación y
Cooperación, Educo
• Re-food 4 Good – Associação
de Solidariedade Social
TFMC SUPPORT BY PILLAR
TFMC GLOBAL GIVING
CORPORATE LEADERSHIP
AWARDS
TFMC’s work earned national recognition in the U.S., with honors including:
NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
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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 actively participate in
our philanthropic endeavors, serving to 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 100% match throughout the year, and a 150%
super-match contribution for all qualifying donations made by employees
on #GivingTuesday. In 2023, U.S. employee donations supported hundreds of
organizations on #GivingTuesday, including World Central Kitchen, St. Jude
Children’s Research Hospital, the LA Regional Food Bank, City of Hope.
UMG DONATED TO OVER 400 ORGANIZATIONS ON
#GIVINGTUESDAY.
Across our global network, UMG territories also engage in coordinated employee
giving initiatives. After a devastating earthquake hit Turkey and Syria in
February, Universal Music Germany launched an employee-driven fundraising
campaign to collect donations for the UNICEF “Emergency Aid for Children in
the Syrian-Turkish Border Area” project. Every employee donation was doubled
by UMG.
We also encourage and create space for staff volunteering. The U.S. Volunteer
Time Off (VTO) Policy provides employees with up to 16 hours paid time off
to volunteer with accredited nonprofits. The VTO Policy aims to make our
communities stronger by providing our people with the opportunity to help
those in need.
U.S. EMPLOYEES VOLUNTEERED NEARLY 1,500 HOURS
OF THEIR TIME IN 2023.
Sharing this ambition, UMUK’s Staff Charity Committee promotes participation in
its annual Give A Day initiative, which encourages staff to take a day off of work
to volunteer for a registered charity.
MUSICIANS MAKING A DIFFERENCE
Now in its 9
th
year, Universal Music Australia’s alliance with the
Musicians Making a Difference (MMAD) organization continues to engage
employees through skilled volunteering and activity-based volunteering
opportunities. Our support has enabled MMAD to reduce youth
homelessness, poverty, and addiction, break negative cycles, address
mental health, and increase employment and education pathways.
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AT UMG, OUR COMMITMENT TO
RESPONSIBLE GOVERNANCE SERVES AS
THE FOUNDATION OF OUR BUSINESS.
At UMG, we fundamentally view our ESG efforts not as separate from, but as
a central component of our business strategy. Responsible governance is
essential to serving our key stakeholders, and we are committed to upholding
the principles of accountability, transparency, fairness, responsibility and risk
management in all that we do.
Putting our commitment into practice, we carry out our business activities in
compliance with applicable regulations and base our business conduct and
relations with external parties on ethical standards. These standards guide
business development, maintain stakeholder trust, prevent and manage risks,
and support our global performance.
GOVERNANCE
OUR COMMITMENTS
SHAREHOLDER RIGHTS SUMMARY
01 One Share One Vote
02 Voting Standard
We have a simple majority voting standard unless Dutch law requires a
qualified majority
03 Director Elections
We have tiered Board elections with most Board members serving two-year
terms and standing for elections at every other year
04 Proxy Access
One or more Shareholders representing individually or jointly at least 3%
of the issued share capital of the Company may propose relevant items on
the agenda of the General Meeting
05 Rights to Call a Meeting
One more Shareholders representing individually or jointly at least 10% of
the issued share capital of the Company are entitled to request the Board
in writing that a General Meeting is convened
Material Topics:
Privacy and Cybersecurity | Privacy and Content Protection | Supply Chain Management.
See Material Topics in this section for more information.
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OPERATING WITH INTEGRITY
ESG Integration
UMG’s Board is responsible for sustainable long-term value creation, including
the oversight of our sustainability program, as well as the integrity of
UMG’s non-financial reporting. The Audit Committee supports the Board
in relation to these responsibilities and covers ESG topics on its agenda.
UMG’s Global ESG department is responsible for developing and updating
our sustainability strategy, measuring performance, driving compliance with
sustainability-related regulations, and briefing the Board on these activities.
Global ESG integrates sustainable business practices across the company
by executing a comprehensive ESG management system. We mobilize cross-
functional ESG Working Groups to operationalize sustainability commitments
within each group’s sphere of influence – through KPI monitoring, target
setting, and program implementation. This year, the ESG Working Group Charter
formalized these responsibilities and set the foundation for deeper engagement
in 2024 and beyond.
Key ESG Working Groups include:
•
Bravado
•
Global Travel
•
People, Inclusion and Culture (PIC)
•
Universal Music, Manufacturing & Logistics (UML)
Material Topics
We strive to communicate openly and honestly about our sustainability
performance. Our reporting efforts comply with the EU Non-Financial Reporting
Directive (NFRD) and the Dutch Corporate Governance Code and align with
leading international standards, including the Global Reporting Initiative (GRI),
the Sustainability Accounting Standards Board (SASB), the Carbon Disclosure
Project (CDP), and the United Nations Sustainable Development Goals
1
(UN SDGs).
Our non-financial reporting approach – and the strategic framework that it
stems from – is anchored in data integrity and transparency with a focus on
the issues of material importance to our stakeholders.
In 2022, we conducted a materiality assessment to identify the ESG topics
most material to UMG. Topics were evaluated based on their importance to
business as well as their importance to stakeholders, and the 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. Our coordinated
non-financial reporting system, managed by the Global ESG department and
powered by contributors representing the territories in which we operate,
serves to measure the impacts of and evaluate UMG’s approach to managing
these topics.
1
The United Nations' 2030 Agenda for Sustainable Development was adopted by all Member States
in 2015 and provides a shared blueprint for peace and prosperity for people and the planet, now
and into the future. At its heart are the 17 Sustainable Development Goals (SDGs). Learn more
about them here: https://sdgs.un.org/goals.
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Material Topics 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.
MATERIALITY MATRIX
IMPORTANCE TO BUSINESS
MEDIUM PRIORITY
HIGH PRIORITY
Attraction and
retention of
employees
Attraction and
retention of artists
Privacy and
cybersecurity
Supply chain
management
Piracy and
content protection
Diversity, equity
and inclusion
VERY HIGH PRIORITY
IMPORTANCE TO STAKEHOLDERS
ENVIRONMENT
SOCIAL
GOVERNANCE
Greenhouse gas
(GHG) emissions
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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. 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 advance-
ment 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 commu-
nities 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 discrimi-
nation, 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.
Material Topics Description
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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 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.
Material Topics Description
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Business Ethics & Compliance
While our ESG management system and non-financial reporting framework
serve to drive and monitor sustainability performance, our commitment to
responsible governance is anchored by UMG’s Code of Conduct.
Based on applicable regulations, the principles and best practices of the Dutch
Corporate Governance Code, UMG’s Code of Conduct operationalizes our core
values and sets out the foundational principles that inform how we do business,
including our commitment to respecting human rights in every aspect of our
work. 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.
Our Code of Conduct governs all businesses, divisions, and departments within
UMG’s global presence. Every person conducting business for UMG must follow
the Code of Conduct, including employees, members of the Board, and third
parties, such as consultants, independent contractors, and company advisors
or representatives.
UMG’S CODE OF CONDUCT IS AVAILABLE IN 22
LANGUAGES AND EMPLOYEES WORLDWIDE CERTIFY
THEIR COMPLIANCE WITH THE CODE OF CONDUCT EVERY
YEAR.
We educate our employees on company policies and expectations via a suite
of courses, which are deployed globally and regionally. In 2023, topics included
the Code of Conduct, Anti-bribery, Antitrust, ESG, Fraud Awareness, Information
Security, Preventing Harassment, Radio Promotion Compliance, and Health
and Safety.
We comply with the EU Taxonomy disclosures related to Minimum Social
Safeguards (see the EU Taxonomy section) and we are committed to
continuing to strengthen our compliance protocols and compulsory trainings
as regulations continue to evolve. UMG’s Whistleblowing Policy explains the
appropriate reporting procedures as well as the process by which we investigate
reports of misconduct and, when appropriate, take corrective actions.
Privacy & Cybersecurity
UMG maintains the trust of our artists and partners through the ethical
and compliant collection, use, and sharing of data. Technology, security, and
compliance teams work to continuously improve processes and technologies to
minimize risk and optimize UMG’s use of data and technology.
As a global company, we are subject to a growing number of privacy and
cybersecurity laws. Non-compliance might have significant legal, financial, and
reputational effects on UMG. To uphold stakeholder trust and comply with
privacy and cybersecurity regulations, we have developed and implemented a
program designed to identify and mitigate regulatory risks. Key elements of this
program include training, policies, and procedures for handling data, reviews
of supplier engagements, processes and tools for responding to privacy rights
requests, processes for compliant international transfers of data, and response
plans for legal compliance related to security incidents.
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We employ a layered approach to protecting our assets, systems, and employees
from malicious cyberattacks and bad actors. Our Global Security Office (GSO)
Governance group is responsible for companywide cybersecurity policies 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
vulnerability management, centralized log collection, use of a 24x7 managed
security service provider, a robust security incident response process, regular
penetration testing, and extensive use of threat management and threat
hunting teams.
GSO’s primary focus areas include:
•
Enhanced Remote Access Support: UMG is enhancing remote access
security to limit access to UMG resources and systems to registered devices.
This supplements the company's existing two-factor authentication and
access controls by protecting against social engineering attacks that target
login processes.
•
Augmented Visibility: Augmented visibility continues to be a critical
component of UMG’s cybersecurity protections, by ensuring that unusual
activity and anomalous behavior by internal systems and users will be
detected and investigated as quickly as possible. This includes more robust
24x7 monitoring, alerting, and escalation of potential incidents.
• Governance and Cyber Controls: UMG is formally establishing a cross
functional cyber controls program, by creating, documenting, and educating
employees regarding company cyber standards, control requirements, and
cyber control testing and auditing. Strategic partners in this effort include
GSO, Global Technology, PIC, Legal, Privacy, Internal Audit, and key members
of the businesses.
To maintain program effectiveness, UMG leverages a combination of a robust
security incident response team (SIRT), regular penetration testing focusing on
both technical and social engineering vulnerabilities, and regular testing of key
cyber controls.GSO Governance continues to apply a rigorous exception process
to allow UMG businesses to surface practices and systems that cannot comply
with official policy for tracking and mitigation.
As the risks to data security continue to increase, UMG will further adapt,
improve, and strengthen our privacy and cybersecurity governance, processes,
and procedures.
Piracy & Content Protection
At UMG, we are fully dedicated to protecting the creative works of our artists
and songwriters. Beginning in 2002, we were the first major music company to
create a Content Protection department, which serves to identify threats and
create strategies and workflows to stop them. In collaboration with global trade
organizations, our content protection initiatives span several areas:
• Label Support: Content Protection is the primary point of contact for labels
who require content to be removed from DSPs and aggregators, including
copyright infringement, unauthorized remixes, mis-labelled uploads, and
non-UMG tracks that have been tagged with a UMG artist. This work ensures
that only authorized tracks exist on DSPs and are correctly attributed.
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• Pre-Release Protection: Releases face the highest level of risk during the
pre-release phase, when producers and sound engineers collaborate ahead
of production. Ever since 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 spot and remove leaked
content to minimize risks of further unauthorized distribution.
• Post-Release Protection: Once content has been released, infringing uploads
and posts frequently occur on sites without a license. By identifying 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.
• Merchandising: Due to its popularity and affiliation with UMG artists,
Bravado merchandise is often counterfeited or impersonated. Content
protection works closely with Bravado to remove infringing products from
major online marketplaces and retailers. In addition to our merchandise
protection, we also protect our brands and artist likenesses from being used
without authorization within digital environments.
• UMPG: Content Protection supports UMPG by removing unauthorized covers,
masters, and live recordings - as well as infringing uses of our publishing
rights. Supporting UMPG directly ensures that we can remove unauthorized
content quickly and avoid duplication.
Steered by our Content Protection team, we engage with internal and external
stakeholders to help identify and analyze risks to UMG content, brands,
labels, and artists. We also work closely with our Digital Business team 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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Supply Chain Management
In addition to embedding ESG initiatives across our operations, UMG engages
our supply chain in company efforts. We work with suppliers to measure and
reduce the environmental footprint of our value chain, and we expect 100% of
our partners to share our commitment to protecting human rights.
We continue to incorporate the UMG Supplier Social Responsibility Policy into
manufacturing agreements. The Policy is anchored in internationally recognized
standards including the UN Guiding Principles on Business and Human Rights,
the OECD Guidelines for Multinational Enterprises, the UNESCO Convention on
the Protection and Promotion of the Diversity of Cultural Expressions, 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 – our global merchandising arm - mandates that all critical
manufacturing suppliers are current with social compliance audits and are
timely in resolving any corrective actions and certification renewals.
THE UMG SUPPLIER SOCIAL RESPONSIBILITY POLICY IS
INCORPORATED INTO OVER 100 CONTRACTS GLOBALLY -
INCLUDING E-COMMERCE, FAME HOUSE, UML, AND
BRAVADO AGREEMENTS.
This year, we laid the groundwork for deeper engagement across our diverse
network of suppliers. We assembled employees, artist managers, and value
chain partners to support industry advancements through our UMG x Bravado
Sustainability Summit series, taking place in Los Angeles, London, and New York
(see "Merchandise" in the Environment section).
We also updated the environmental, social, and ethical criteria expected
of our partners and developed a roadmap for the implementation of a
new environmental exhibit – to be incorporated into manufacturing partner
agreements – accompanied by formalized reporting requirements, including a
supplier survey whereby environmental management systems and future plans
within key impact areas will be disclosed. Fame House, UMG’s artist-centric
digital marketing service, has already rolled out the survey to its supply base
– leveraging results to refine its responsible sourcing processes and identify
opportunities to scale sustainable initiatives and technologies.
IN 2023, FAME HOUSE CONVENED ITS KEY SUPPLIERS
IN CONVERSATION AROUND SUSTAINABILITY AND 62%
RESPONDED TO THE UMG SUSTAINABILITY SURVEY.
In the coming year, UMG will continue to strengthen our responsible sourcing
program and prioritize supply chain engagement across all facets of the
company. Suppliers are integral to our business, and we are dedicated to
working alongside our partners at every level of the value chain to collectively
advance sustainability.
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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 component 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', UMG is obligated to disclose the
Taxonomy-eligible, Taxonomy non-eligible, and Taxonomy-aligned turnover,
capital expenditures, and operating expenditures for economic activities
relating to the Taxonomy's six environmental objectives.
EU Taxonomy Objectives and Scope
The EU Taxonomy Regulation serves as a standardized and 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 EU Taxonomy regulation identifies six (6) environmental objectives:
1. Climate change mitigation (CCM)
2. Climate change adaption (CCA)
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 EU 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.
New regulations came into force in 2023 that added new economic activities
to be considered for the Taxonomy and amended previous regulations and
economic activities.
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EU Taxonomy disclosure requirements for 2023 reporting are:
• The proportion of Taxonomy-eligible and Taxonomy non-eligible economic
activities in Key Performance Indicators (as identified in Delegate Regulation
(EU) 2021/2139, Delegated Regulation (EU) 2022/1214, Delegated Regulation
(EU) 2023/2485, and Delegated Regulation (EU) 2023/2486)
• The proportion of Taxonomy-aligned activities in KPIs for CCA and CCM as
defined in Delegate Act (EU) 2021/2139, amended by Delegated Regulation
(EU) 2023/2485
•
Qualitative information relevant for disclosures, including accounting
policy, assessment of compliance with Regulation (EU) 2020/852, and
contextual information about KPIs (Disclosures Delegate Act (EU) 2021/2178,
Article 10)
Accounting Policies
The table below provides the basis for the numerator and denominator of EU
Taxonomy-eligibility and alignment for Turnover, CapEx, and OpEx as defined in
the Delegated Regulation (EU) 2021/2178 (Annex I, Section 1.1).
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 related to a capital plan or purchase of output from taxonomy-aligned economic activities such as individual
measures enabling target activities to become low-carbon, activities leading to greenhouse gas emissions reductions, or individual renovation measures planned to
be implemented and operational within eighteen (18) months.
The financial information for calculating the metrics was gathered from
UMG’s financial reporting system, excluding intercompany transactions. Eligible
economic activities identified are currently only under the CCM, CCA, and
circular economy objectives. Where 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 2023, UMG did not issue sustainability-linked bonds or debt securities to
finance Taxonomy-aligned activities.
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Assessment of Compliance with Regulation (EU) 2020/852
For 2023, UMG assessed eligibility and alignment under each KPI and concludes
as follows, with subsequent explanations for each KPI.
• Turnover: No revenue activities are eligible or assessed for alignment
• CapEx: Taxonomy-eligible CapEx is calculated at 17% and does not
meet the substantial contribution criteria, therefore eligible CapEx is not
considered aligned
• OpEx: Taxonomy-eligible OpEx is calculated at less than 1% and is not
considered material
Turnover KPI
The basis of the turnover KPI covers UMG business activities as of December
31, 2023. The turnover denominator is reconciled with the revenue 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 the conclusion of not eligible
reached in 2022 continues to apply.
The percentage for Taxonomy-eligible turnover amounts to zero. There are no
revenue activities eligible or assessed for alignment.
Nevertheless, UMG is committed to contributing to sustainable business
conduct, including measuring and managing climate-related risk, supporting
and showcasing artists' climate advocacy efforts, and engaging in and
advocating for sustainable business solutions throughout the value chain.
CapEx KPI
Under the EU Taxonomy Regulation, the total CapEx covers additions to tangible
and intangible assets during the financial year considered before depreciation,
amortization, and any re-measurements recognized by UMG according to IAS16,
IFRS16, and IAS38, including those resulting from revaluations and impairments
for the relevant financial year and excluding fair value changes. Total CapEx
(denominator) can be reconciled with the sum of the lines ’Additions’ disclosed
in Note 9 Changes in content assets and other intangibles (excluding royalty
advances), Note 10 Property, Plant and Equipment (PPE), and Note 11 Leases
within the consolidated financial statements.
For UMG, most of the CapEx relates to additions to catalogs and other
intangibles, which are not eligible. The eligible CapEx comes from the capitalized
cost of renovations and leased assets (EU Taxonomy activities under the
CCM and CCA (7.2 Renovation of existing buildings, 7.7 Acquisition and
ownership of buildings), and circular economy (3.2 Renovation of existing
buildings) objectives.
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The breakdown by type of CapEx is as follows:
FY23 FY23 FY22 FY22
(inmillions of euros) Activity 3.2
and 7.2
Activity 7.7 Activity 7.2 Activity 7.7
Additions to PPE, leases, and intangible assets 40 46 22 2
Acquisitions through business combinations - - - -
Expenses incurred for Taxonomy-aligned activities and as
part of CapEx plan
- - - -
Total Taxonomy-eligible CapEx 40 46 22 2
Alignment Assessment
3.2 Renovation of existing buildings
For 2023, alignment will only be reported for CCM and CCA (excluding any new
activities added to regulations in 2023).
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 meet
the substantial contribution criteria for climate change mitigation or climate
change adaptation under Activity 7.2.
7.7 Acquisition and ownership of buildings
For 2023, twelve (12) leased locations were identified as eligible under the
EU Taxonomy criteria. While UMG developed a validation approach using
internationally recognized energy certificates and primary energy demand (PED)
measures, there was insufficient national and regional data for the twelve
(12) locations to determine energy performance. Therefore, the new leases did
not meet the energy performance requirements under substantial contribution
criteria for climate change mitigation or substantial contribution for climate
change adaptation 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 2023, 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 Annex I, Section
1.1.3.2 and discloses the numerator as equal to zero.
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NON-FINANCIAL INFORMATIONNON-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.
Turnover
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering
year 2023
Financial year 2023 Year
Substantial Contribution
Criteria
Economic Activities (1) Code (2) Turnover (3)
Proportion
of Turnover,
year 2023 (4)
Climate Change Mitigation (5)
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular economy (9)
Biodiversity (10)
Text
millions
of euros
%
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
No activities N/A €0 0% N/A N/A N/A N/A N/A N/A
Turnover of environmentally sustainable activities
(Taxonomy-aligned) (A.1)
€0 0% 0% 0% 0% 0% 0% 0%
Of which enabling €0 0% 0% 0% 0% 0% 0% 0%
Of which transitional €0 0% 0%
A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
No activities N/A €0 0% N/A N/A N/A N/A N/A N/A
Turnover of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities) (A.2)
€0 0% 0% 0% 0% 0% 0% 0%
A. Turnover of Taxonomy eligible
activities (A.1 + A.2)
€0 0% 0% 0% 0% 0% 0% 0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-
non-eligible activities
€11,108 100%
TOTAL €11,108 100%
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
Turnover
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities – disclosure covering
year 2023
Financial year 2023
DNSH criteria (“Does Not
Significantly Harm”)
Economic Activities (1)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
Proportion of
Taxonomy
aligned (A.1.)
or -eligible
(A.2.)
turnover, year
2022
(18)
Category
enabling
activity
(19)
Category
transitional
activity
(20)
Text
Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
No activities N/A N/A N/A N/A N/A N/A N/A 0% N/A N/A
Turnover of environmentally sustainable
activities (Taxonomy-aligned) (A.1)
N/A N/A N/A N/A N/A N/A N/A 0%
Of which enabling N/A N/A N/A N/A N/A N/A N/A 0% E
Of which transitional N/A N/A N/A N/A N/A N/A N/A 0% T
A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL; N/EL
(
f
)
No activities 0%
Turnover of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
0%
A. Turnover of Taxonomy eligible
activities (A.1 + A.2)
0%
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
CapEx
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering
year 2023
Financial year 2023 Year
Substantial Contribution
Criteria
Economic Activities (1) Code (2) CapEx (3)
Proportion
of CapEx, year
2023 (4)
Climate Change Mitigation (5)
Climate Change Adaptation (6)
Water (7)
Pollution (8)
Circular economy (9)
Biodiversity (10)
Text
millions
of euros
%
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
Y; N;
N/EL
(
b
) (
c
)
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
No activities N/A €0 0% N/A N/A N/A N/A N/A N/A
CapEx of environmentally sustainable activities
(Taxonomy-aligned) (A.1)
€0 0% 0% 0% 0% 0% 0% 0%
Of which enabling €0 0% 0% 0% 0% 0% 0% 0%
Of which transitional €0 0% 0%
A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
Renovation of existing buildings CCM 7.2 €40 8% EL N/EL N/EL N/EL N/EL N/EL
Acquisition and ownership of buildings CCM 7.7 €46 9% EL N/EL N/EL N/EL N/EL N/EL
CapEx of Taxonomy-eligible but not environmentally
sustainable activities (not Taxonomy-aligned
activities) (A.2)
€86 17% 100% 0% 0% 0% 0% 0%
A. CapEx of Taxonomy eligible
activities (A.1 + A.2)
€86 17% 100% 0% 0% 0% 0% 0%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-
non-eligible activities
€406 83%
TOTAL €492 100%
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
CapEx
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities – disclosure covering
year 2023
Financial year 2023
DNSH criteria (“Does Not
Significantly Harm”)
Economic Activities (1)
Climate Change Mitigation (11)
Climate Change Adaptation (12)
Water (13)
Pollution (14)
Circular Economy (15)
Biodiversity (16)
Minimum Safeguards (17)
Proportion of
Taxonomy
aligned (A.1.)
or -eligible
(A.2.)
CapEx, year
2022
(18)
Category
enabling
activity
(19)
Category
transitional
activity
(20)
Text
Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
No activities N/A N/A N/A N/A N/A N/A N/A 0% N/A N/A
CapEx of environmentally sustainable
activities (Taxonomy-aligned) (A.1)
N/A N/A N/A N/A N/A N/A N/A 0%
Of which enabling N/A N/A N/A N/A N/A N/A N/A 0% E
Of which transitional N/A N/A N/A N/A N/A N/A N/A 0% T
A.2. Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL;
N/EL
(
f
)
EL; N/EL
(
f
)
Renovation of existing buildings 9%
Acquisition and ownership of buildings 1%
CapEx of Taxonomy-eligible but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (A.2)
10%
A. CapEx of Taxonomy eligible
activities (A.1 + A.2)
10%
Prospects
Not all sustainability efforts are recognized yet under the EU Taxonomy
Regulation. For more information about UMG’s sustainability initiatives,
including our commitment to support industry transformation and the
validation of our science-based targets, please see the Environment section of
this report.
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, in 2022 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.
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.
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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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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
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 EU’s Non-Financial Reporting Directive
(NFRD) and its successor, the Corporate Sustainability Reporting
Directive (CSRD), as well as the EU Taxonomy and the United
States Securities and Exchange Commission (SEC) — mandated
emissions reductions requirements, and/or mandatory carbon
pricing in regions where UMG operates, may result in increased
operational costs of data collection or resources required 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 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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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
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 in 2023. 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 has set near-term science-based targets. Inability to act
or lack of progress toward this or other voluntary or mandated
sustainability goals, including making misleading claims (e.g.,
greenwashing or green labeling), may impact shareholder 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 products and services and may erode
shareholder value.
Low Low Moderate
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
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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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
Table 3 - Transition Opportunities & Time Horizons
Opportunity Category Opportunity Time Horizon
Resource Efficiency Decreased operational costs from resource efficiency.
Investing in updated assets and technology may result in reduced
operational costs, improved energy efficiency of facilities, decreased
energy usage, and reduced emissions for UMG. Across our global portfolio,
47% 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
ENERGY STAR. In 2023, 28% of UMG’s direct operations (by m
2
area) have
received environmental certifications.
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 2023 electricity costs in North America
revealed the average price for electricity differed by only €0.08 per kilowatt
hour between standard and renewable electricity.
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 2023, we became the first major standalone music company to announce
science-based targets approved by the Science-Based Targets initiative (SBTi).
We committed to reduce:
• Absolute scope 1 and 2 greenhouse gas (GHG) emissions 58% by 2032 from a
2019 base year, an ambition which is in line with a 1.5°C trajectory.
• Scope 3 GHG emissions from purchased goods & services, capital
goods, fuel- and energy-related activities, upstream transportation and
distribution, waste generated in operations, business travel, and employee
commuting by 62% per EURvalue added
1
within the same timeframe.
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.
This year we also updated our comprehensive GHG Inventory and Management
Plan and improved the configuration of our data collection system. Our
GHG Management Plan provides a framework by which we will measure the
performance and effectiveness of our climate-related risk management efforts
in the near and long-terms.
1
“Value added" is defined by the SBTi as earnings before interest and depreciation (EBITDA) + all
personnel costs. See page 24 of the SBTi Corporate Manual.
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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.
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.
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
INFORMATION TABLES
Environmental Indicators
Unit 2023 2022
1
Energy Consumption
Electricity from standard sources MWh 14,723 15,467
Electricity from renewable sources MWh 11,098 11,307
On-site generated renewable energy MWh 79 68
Natural gas MWh GCV 5,155 6,061
Domestic fuel oil liters 4,896 5,319
Steam/imported heat used for space heating MWh 3,980 5,414
Diesel used by the fleet of vehicles liters 111,614 157,381
Gasoline used by the fleet of vehicles liters 332,334 274,327
Total energy consumption GJ 126,126 152,686
Waste
Professional WEEE produced metric tonnes 26 26
Professional WEEE recycled or recovered metric tonnes 22 24
Non-hazardous waste produced metric tonnes 1,828 1,659
Non-hazardous waste recycled or recovered metric tonnes 813 756
Merchandise scrap waste produced metric tonnes 53 67
Merchandise scrap waste recycled or recovered metric tonnes 50 59
Hazardous waste (excluding WEEE) produced metric tonnes 1 1
1 FY22 environmental indicators were adjusted in accordance with our internal policy to include data enhancements and corrections for improved accuracy. Adjustments
illustrate year over year progress across our key non-financial indicators. For more information, please see the Non-Financial Reporting Methodology section in
this report.
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Greenhouse Gas Emissions
Unit 2023 2022
1
Scope 1 greenhouse gas emissions
2
tCO
2
e 1,945 2,398
Mobile sources tCO
2
e 977 996
Stationary sources tCO
2
e 967 1,402
Of which refrigerants tCO
2
e 12 283
Of which domestic fuel oil tCO
2
e 12 13
Of which natural gas tCO
2
e 943 1,106
Scope 2 greenhouse gas emissions (location-based)
3
tCO
2
e 8,272 8,247
Of which electricity (including electricity from renewable sources) tCO
2
e 7,557 7,323
Of which steam/imported heat tCO
2
e 715 924
Scope 2 greenhouse gas emissions (market-based)
4
tCO
2
e 5,627 6,192
Of which electricity (including electricity from renewable sources) tCO
2
e 4,912 5,268
Of which steam/imported heat tCO
2
e 715 924
Scope 3 greenhouse gas emissions
5
tCO
2
e 469,588 448,319
Category 1: Purchased goods and services tCO
2
e 287,537 290,622
Category 2: Capital goods tCO
2
e 19,948 12,468
Category 3: Fuel- and energy-related activities tCO
2
e 3,443 3,595
Category 4: Upstream transportation and distribution tCO
2
e 51,419 57,006
Category 5: Waste generated in operations tCO
2
e 493 440
Category 6: Business travel tCO
2
e 53,718 34,109
Category 7: Employee commuting tCO
2
e 6,036 6,042
Category 9: Downstream transportation and distribution tCO
2
e 1,910 1,652
Category 12: End-of-life treatment of sold products tCO
2
e 4,454 3,568
Category 14: Franchises tCO
2
e 8,218 8,399
Category 15: Investments
6
tCO
2
e 32,412 30,418
1 FY22 emissions were adjusted in accordance with our internal policy to include the addition of new categories resulting from our SBTi validation exercise (Category
9: Downstream transportation and distribution, Category 14: Franchises, and Category 15: Investments), as well as data enhancements and corrections for improved
accuracy. Adjustments illustrate year over year progress across our key non-financial indicators. For more information, please see the Non-Financial Reporting
Methodology section in this report.
2 Scope 1 represents greenhouse gas emissions from operations directly controlled by UMG, including those associated with the consumption of natural gas and domestic
fuel oil and the leakage of refrigerants during normal air-conditioning operation. The emissions related to transport from consumption from mobile sources, including
directly owned vehicles and vehicles on long-term leases over which UMG has operational control.
3 Scope 2 includes indirectly emitted greenhouse gas emissions resulting from the use of purchased electricity, steam/imported heat, and cooling. Scope 2 location-based
reflects the average emissions intensity of grids on which energy consumption occurs.
4 Scope 2 market-based considers the tariffs and energy mix of UMG’s sites which UMG has specifically chosen, taking into consideration the confirmed use of electricity
from renewable sources including wind, solar, geothermal, biomass, and hydro through onsite generation and certified renewable electricity through a supplier tariff.
5 Scope 3 includes external indirect greenhouse gas emissions from non-owned sources within UMG’s value chain. Scope 3 categories were calculated based on 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.
6 Emissions are calculated using the data available as at Q3 2023 for Investments in equity affiliates to allow time for data validation, consolidation, and reporting.
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Social Indicators
2023 % of Total
Headcount
2022 % of Total
Headcount
Total Headcount 10,290 100% 9,992 100%
Managers 3,369 33% 3,456 35%
Men 5,044 49% 4,913 49%
Of which managers 1,939 19% 1,980 20%
Women 5,246 51% 5,079 51%
Of which managers 1,430 14% 1,476 15%
Permanent employees 9,627 94% 9,286 93%
Temporary employees 663 6% 706 7%
By Geographic Region
Africa 108 1% 117 1%
North America 4,051 39% 3,951 39%
South and Central America 280 3% 265 3%
Asia-Pacific 1,540 15% 1,498 15%
Europe 4,311 42% 4,161 42%
Arrivals and Departures
Total hires/new arrivals 1,736 17% 2,133 21%
Of which permanent contracts 1,296 13% 1,626 16%
Total departures 1,460 14% 1,614 16%
Of which permanent contracts 1,110 11% 1,295 13%
Of which resignation 677 7% 887 9%
Of which termination 208 2% 212 2%
Of which redundancy 123 1% 99 1%
Of which retirement 34 0% 35 0%
Of which other 68 1% 62 1%
Of which temporary contracts 350 3% 319 3%
Career Development
Number of temporary contracts transformed into permanent contracts 144 1% 174 2%
Training
Number of staff trained on compliance topics
1
9,897 96% 8,992 90%
Number of staff trained in soft skills 4,759 46% 3,892 39%
Number of staff trained in hard skills/technical skills 2,522 25% 3,721 37%
Number of staff trained in languages 327 3% 287 3%
Number of staff trained in management 1,455 14% 1,471 15%
Number of staff who have received other types of training 948 9% 1,420 14%
Training hours 101,660 - 74,456 -
1 Compliance training topics included Code of Conduct, Anti-bribery, Antitrust, ESG, Fraud Awareness, Information Security, Preventing Harassment, Radio Promotion
Compliance, and Health and Safety. Training timetables and topics offered are region and/or function specific where needed.
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2023 % of Total
Headcount
2022 % of Total
Headcount
Absenteeism
Number of employees with at least one day absent 3,049 30% 2,748 28%
Days absent – total 54,568 - 46,793 -
Of which for illness 23,806 - 19,740 -
Of which for maternity, paternity and adoption leave 24,269 - 24,257 -
Health and Safety
Number of workplace accidents resulting in lost work time 11 - 10 -
Number of days lost due to workplace accidents 42 - 351 -
Number of fatal accidents 0 - 0 -
Frequency rate
1
0.62 - 0.58 -
Severity rate
2
0.00237 - 0.02034 -
Employee Relations and Collective Bargaining Agreements (France)
Collective bargaining agreements signed or renewed 3 - 4 -
Of which relating to compensation and employee savings plans 1 - 0 -
Of which relating to working conditions 1 - 0 -
Of which related to other formal agreements 0 - 0 -
Of which related to saving schemes 1 - 4 -
Organization of Working Time
Full-time employees 9,972 97% 9,709 97%
Part-time employees 318 3% 283 3%
Turnover
Global Turnover rate – Permanent Headcount
3
11.53% - 13.95% -
Voluntary Turnover rate – Resignations 7.03% - 9.55% -
Involuntary Turnover rate – Permanent Headcount
4
4.50% - 4.39% -
Global Turnover rate - Permanent Headcount, Women
5
12.43% - 14.13% -
Voluntary Turnover rate - Resignations, Women
5
7.94% - 11.06% -
Involuntary Turnover rate - Permanent Headcount, Women
5
4.49% - 3.07% -
1 The frequency rate is calculated as follows: (Number of workplace accidents resulting in lost work time × 1,000,000) / (Average annual headcount x annual hours actually
worked). The frequency rate of workplace accidents is based on the GRI formula for the rate of recordable work-related injuries (GRI 403-9). UMG’s formula only measures
workplace accidents resulting in lost work time, whereas GRI includes other metrics in the rate, such as death and significant injury or ill health diagnosed by a physician
or other licensed healthcare professional. UMG uses a rate based on 1,000,000 hours worked because it is more suitable for larger organizations according to the guidance
in GRI 403: Occupational Health and Safety 2018.
2 The severity rate is calculated as follows: (Number of days lost due to workplace accidents x 1,000) / (Average annual headcount x annual hours actually worked). The
severity rate formula is based on the definition for lost day rate in GRI 403: Occupational Health and Safety. The severity rate represents the number of days lost due to
workplace accidents for 1,000 worked hours.
3 UMG updated its turnover rate formulas in 2022 to align with guidance from the Corporate Sustainability Reporting Directive (CSRD). The global turnover rate is calculated
as follows: (Number of departures of employees on permanent contracts in year Y / Total number of employees on permanent contracts as of December 31 in year Y).
4 This indicator was added in 2022 to allow UMG to evaluate the turnover rates by involuntary departures such as dismissal, retirement, and death.
5 These indicators were added in 2022 to allow UMG to evaluate the turnover rates by gender.
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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 reviewed and updated annually to ensure the consistent application of
definitions and rules for data gathering, validation, and consolidation.
Reporting Scope Overview
Unless otherwise indicated, the data is consolidated as of December 31, 2023.
The limited assurance engagement pertains to the select consolidated data for
2023 and does not cover prior year restatements.
The reporting scope was established in accordance with EU Directive 2014/95/EU.
Changes in reporting scope are the result of acquisitions and/or disposals
of consolidated business units or site level changes between January 1 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.
Social Reporting Scope
The social reporting scope for workforce demographics indicators covers
all UMG employees, unless otherwise indicated. Scope for qualitative non-
workforce demographic indicators applies to the following territories, unless
otherwise indicated: Australia, France, Germany, Japan, Latin America, South
Africa, the United Kingdom and the United States.
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
GRI is the independent, international organization that helps businesses and other organizations
take responsibility for their impacts, by providing them with the global common language to
communicate those impacts. (www.globalreporting.org).
4
SASB Standards help companies disclose relevant sustainability information to their investors
(https://sasb.ifrs.org).
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Environmental Reporting Scope
Scope 1 and 2 emissions are calculated for all sites within UMG’s operational
control. The environmental reporting scope is primarily driven by the status of
UMG’s owned and leased properties. In 2023, the reporting scope applied to 56
countries and 160 properties, which represents 97% of our property portfolio
and covers all of our employee base geographically. Properties in scope for
environmental reporting include UMG offices/facilities and studios with active
leases in 2023. Properties are considered out of scope if they meet one of the
following criteria: the property closed prior to 2023 and UMG does not have an
active lease; the property is under construction; or the property is land.
Scope 3 emissions are consolidated using the operational control approach.
Scope 3 categories were calculated based on the GHG Protocol Corporate
Standard, their relevance to UMG, materiality, and data availability. UMG’s
approach is to collect global data for scope 3 emissions, where available. In
cases where global data is not easily obtained, UMG reduces its scope to cover
its top five territories (United States, United Kingdom, Japan, Germany, and
France), which represent material revenue for UMG’s operating companies (see
Note 3. Segment data). UMG’s boundary is 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.
Scope 3 Inventory
Scope 3 Category
1
2023 2022
Category 1 – Purchased Goods and Services Included Included
Category 2 - Capital Goods Included Included
Category 3 - Fuel- and Energy-related Activities Included Included
Category 4 - Upstream Transportation and Distribution Included Included
Category 5 - Waste Generated in Operations Included Included
Category 6 - Business Travel Included Included
Category 7 - Employee Commuting Included Included
Category 9 – Downstream Transportation and Distribution Included Not Included
Category 12 - End-of-Life Treatment of Sold Products Included Included
Category 14 – Franchises
2
Included Not Included
Category 15 – Investments Included Not Included
1 Our scope 3 science-based target boundary includes the following categories: purchased goods and services; capital goods; fuel and energy-related activities; upstream
transportation and distribution; waste generated in operations; business travel; and employee commuting.
2 Category 14 - Franchises was previously disclosed as “not relevant” in the 2022 annual report. Based on instruction from the Science-based Targets Initiative (SBTi),
UMG added this category in 2023 to include emissions associated with the licensing of intellectual property for use in physical products manufactured and sold by
third parties, particularly related to emissions for licensed merchandise. Category 14 emissions are also included in the adjusted GHG emissions figures for prior
year reporting.
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Scope 3 Exclusions
Scope 3 Category Relevance to UMG
Category 8 - Upstream Leased Assets Not Relevant - emissions from leased assets are reported in scope 1 and scope 2
Category 10 - Processing of Sold Products Not Relevant - UMG does not sell intermediate products
Category 11 - Use of Sold Products Not Relevant - UMG does not sell products with direct use-phase emissions
Category 13 - Downstream Leased Assets Not Relevant - UMG does not lease assets to other entities
The table above contains the scope 3 categories that are currently excluded
from UMG's GHG inventory. While UMG recognizes the impact of digital streaming
and the live sector within the music ecosystem, these emissions are 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.
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.
Social Indicators (Workforce Demographics)
Headcount
Headcount-related indicators are expressed in number of employees at
December 31, 2023.
Global turnover rate
Under the CSRD guidance, the global turnover rate numerator is the aggregate of
the number of employees on permanent contracts who leave voluntarily or due
to dismissal, retirement, or death in service. The denominator of the rate is 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.
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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.
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/imported heat, and cooling. As per the GHG Protocol,
UMG considers both location-based and market-based scope 2 emissions.
Scope 2 location-based reflects the average emissions intensity of grids
on which energy consumption occurs. Scope 2 market-based considers
the tariffs and energy mix of UMG’s sites which UMG has 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, downstream
transportation and distribution, end-of-life treatment of sold products,
franchises, and investments.
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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
•
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.
Data is requested for Q1-Q3 and estimates are applied for Q4 to allow time 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 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 2023 to estimate for Q4.
2. Current Year Average: estimates Q4 activity volume using the average
(mean) quarterly activity volume for Q1-Q3 in 2023.
The Historical Average method is preferred because it considers seasonal
differences in business activity. However, this methodology is only feasible
if activity data is available at quarterly granularity (at a minimum) in
previous years.
If the Historical Average methodology is feasible, the calculated average ratio
should consider data from as many previous years as possible, with the average
ratio weighted by total activity per year. For emissions sources where previous
year data is not available at quarterly granularity, a Current Year Average
is applied.
1
Department for Business, Energy & Industrial Strategy (BEIS) Conversion Factors
2
IEA Emission Factors
3
United States Environmental Protection Agency (EPA) eGrid Factors
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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Reporting Tools, Consolidation, and Controls
UMG utilizes a 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.
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Limited Assurance Report of the Independent Auditor on
Selected Indicators
To: The Shareholders and Non-Executive Directors of Universal Music Group N.V.
Our Conclusion
We have performed a limited assurance engagement on selected indicators in
the accompanying annual report for the year 2023 of Universal Music Group N.V.
at Hilversum.
Based on our procedures performed and the assurance information obtained,
nothing has come to our attention that causes us to believe that the selected
indicators are not prepared, in all material respects, in accordance with the
applicable criteria as included in the section “Criteria”.
The selected indicators are disclosed in the Information Tables section of the
annual report and consist of:
•
Global Turnover rate – Permanent Headcount
• Voluntary Turnover rate – Resignations
• Greenhouse gas emissions
◦ Scope 1 emissions
◦ Scope 2 emissions (location-based and market-based)
◦ Scope 3 emissions (Categories 1, 2, 3, 4, 5, 6, 7, 9, 12, 14 and 15)
Basis for our Conclusion
We have performed our limited assurance engagement on the 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 in this regard
are further described in the section ‘Our responsibilities for the assurance
engagement on the selected indicators’ of our report.
We are independent of Universal Music Group N.V. in accordance with the
“Verordening inzake de onafhankelijkheid van accountants bij 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 for
Professional Accountants).
We believe that the assurance evidence we have obtained is sufficient and
appropriate to provide a basis for our conclusion.
Criteria
The criteria applied for the preparation of the selected indicators are the criteria
developed by Universal Music Group N.V. and are disclosed in the Non-Financial
Reporting Methodology section of the annual report.
The comparability of selected indicators between entities and over time may
be affected by the absence of a uniform practice on which to draw, to evaluate
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
and measure this information. This allows for the application of different, but
acceptable, measurement techniques.
Consequently, the selected indicators need to be read and understood together
with the criteria applied.
Corresponding Information Not Assured
The selected indicators “Scope 1 emissions”, “Scope 2 emissions (location-
based and market-based)” and “Scope 3 emissions (Categories 1, 2, 3, 4, 5, 6, 7, 9,
12, 14 and 15)” for the baseline year 2019, “Scope 3 emissions (Categories 9, 14
and 15)” prior to 2023, and any restatements of 2022 data have not been part of
an assurance engagement. Consequently, the corresponding selected indicators
and thereto related disclosures for “Scope 1 emissions”, “Scope 2 emissions
(location-based and market-based)” and “Scope 3 emissions (Categories 1, 2,
3, 4, 5, 6, 7, 9, 12, 14 and 15)” for the baseline year 2019, “Scope 3 emissions
(Categories 9, 14 and 15)” prior to 2023, and any restatements of 2022 data are
not assured. Our conclusion is not modified in respect of this matter.
Limitations to the Scope of our Assurance Engagement
Our assurance engagement is restricted to the selected indicators. We have not
performed assurance procedures on any other information as included in the
annual report in light of this engagement.
In the selected indicators, the calculations to determine “Scope 3 emissions
(Categories 1, 2, 3, 4, 5, 6, 7, 9, 12, 14 and 15)” include assumptions and sources
from third parties. The assumptions and sources used are disclosed in the Non-
Financial Reporting Methodology section of the annual report. We have assessed
that these assumptions and external sources are plausible and appropriate, but
we have not performed procedures on the content of these assumptions and
external sources.
The references to external sources or websites are not part of our assurance
engagement on the selected indicators. We therefore do not provide assurance
on this information.
Our conclusion is not modified in respect of these matters.
Responsibilities of the Board of Directors for the Selected Indicators
The Executive Directors of the Board of Directors are responsible for the
preparation of the selected indicators in accordance with the criteria as
included in the section “Criteria”. The Executive Directors are also responsible
for selecting and applying the criteria and for determining that these criteria are
suitable for the legitimate information needs of the intended users, considering
applicable law and regulations related to reporting. The choices made by the
Executive Directors regarding the scope of the selected indicators and the
reporting policy are summarized in the Non-Financial Reporting Methodology
section of the annual report.
Furthermore, the Executive Directors are responsible for such internal control as
they determine is necessary to enable the preparation of the selected indicators
that are free from material misstatement, whether due to fraud or error.
The Non-Executive Directors of the Board of Directors are responsible for
overseeing the reporting process of the selected indicators of Universal Music
Group N.V.
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Our Responsibilities for the Assurance Engagement on the Selected Indicators
Our responsibility is to plan and perform the assurance engagement in a
manner that allows us to obtain sufficient and appropriate assurance evidence
for our conclusion.
Our assurance engagement is aimed to obtain a limited level of assurance
to determine the plausibility of the selected indicators. The procedures 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 that is obtained
when a reasonable assurance engagement is performed.
We apply the ’Nadere voorschriften kwaliteitssystemen’ (NVKS, regulations for
quality management systems) and accordingly maintain a comprehensive
system of quality management including documented policies and procedures
regarding compliance with ethical requirements, professional standards and
other relevant legal and regulatory requirements.
Our assurance engagement included amongst others:
• Performing an analysis of the external environment and obtaining an
understanding of the sector, insight into relevant sustainability themes and
issues and the characteristics of the company as far as relevant to the
selected indicators
• Evaluating the appropriateness of the criteria applied, their consistent
application and related disclosures on the selected indicators. This
includes the evaluation of the reasonableness of estimates made by the
Executive Directors
• Obtaining through inquiries a general understanding of the internal
control environment, the reporting processes, the information systems and
the entity’s risk assessment process relevant to the preparation of the
selected indicators, without obtaining assurance information about the
implementation or testing the operating effectiveness of controls
• Identifying areas of the selected indicators where misleading or unbalanced
information or a material misstatement, whether due to fraud or error,
is likely to arise. Designing and performing further assurance procedures
aimed at determining the plausibility of the selected indicators responsive
to this risk analysis. These procedures consisted amongst others of:
◦ Making inquiries of management and relevant staff at corporate and
business level responsible for the sustainability strategy, policy and
results relating to the selected indicators
◦ Interviewing relevant staff responsible for providing the information
for, carrying out controls on, and consolidating the data in the
selected indicators
◦ Assessing the suitability and plausibility of assumptions and sources
from third parties used for the calculation underlying “Scope 3
emissions (Categories 1, 2, 3, 4, 5, 6, 7, 9, 12, 14 and 15)” as included
in the Information Tables section of the annual report and further
explained in the Non-Financial Reporting Methodology section of the
annual report.
◦ Obtaining assurance evidence that the selected indicators reconcile
with underlying records of Universal Music Group N.V.
◦ Reviewing, on a limited sample basis, relevant internal and
external documentation
◦ Considering the data and trends
MUSIC IS UNIVERSAL
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
• Reading the information in the annual report that is not included in the
scope of our assurance engagement to identify material inconsistencies, if
any, with the selected indicators
• Considering whether the selected indicators are presented and disclosed
free from material misstatement in accordance with the criteria applied
Amsterdam, 28 March 2024
Ernst & Young Accountants LLP
R.T.H. Wortelboer
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
ESG INDEXES
GRI Index
This report was prepared in accordance with the GRI 2021 Sustainability
Reporting Standards. Responses are omitted where data may be unavailable or
due to confidentiality constraints.
Disclosure Reference
GRI 2: General Disclosures 2021
2-1 Organizational details
See the The Governance Structure section and the UMG Organization website.
2-2 Entities included
in the organization’s
sustainability reporting
See "Reporting Scope Overview" in the Non-Financial Reporting Methodology section and
Note 26. List of consolidated entitites. The entities included in UMG's non-financial reporting
align with the entities included in UMG's financial reporting.
2-3 Reporting period, frequency
and contact point
This report covers sustainability activities from January 1, 2023 to December 31, 2023.
The non-financial reporting schedule is repeated annually and aligns with the financial
reporting schedule. Contact investorrelations@umusic.com for questions.
2-4 Restatements of information
See the Information Tables section. The restatements of 2022 figures illustrate UMG's year-
over-year progress across key non-financial indicators.
2-5 External assurance
See the Limited Assurance Report of the Independent Auditor on Selected
Indicators section.
2-6 Activities, value chain and
other business relationships
See the About UMG section.
2-7 Employees
See the Social Indicators section and "Social Indicators (Workforce Demographics)" in the
Non-Financial Reporting Methodology section. Reporting on the breakdown of employee
categories by region and gender is omitted based on information availability.
2-9 Governance structure
and composition
See the Our Approach, The Governance Structure, The Board, and Bios Board of Directors
sections. Additionally, please see the Board of Directors and Committees pages on the UMG
Investor Relations website.
2-10 Nomination and selection of
the highest governance body
See The Board section, Nomination Committee Regulations (pp.1-4), and Board Diversity
Policy (p.1).
2-11 Chair of the highest
governance body
See "Corporate Executives" in the Organizational and Reporting Structure section and Board
Regulations (pp. 6-10; 16-18).
2-12 Role of the highest
governance body in overseeing
the management of impacts
See "ESG Integration" in the Governance section and "Responsibilities of the Board of
Directors for the Selected Indicators" in the Limited Assurance Report of the Independent
Auditor on Selected Indicators section.
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
Disclosure Reference
GRI 2: General Disclosures 2021
2-13 Delegation of responsibility for
managing impacts
See "ESG Integration" in the Governance section.
2-14 Role of the highest governance
body in sustainability reporting
See "ESG Integration" and "Material Topics" in the Governance section and
"Responsibilities of the Board of Directors for the Selected Indicators" in the Limited
Assurance Report of the Independent Auditor on Selected Indicators section.
2-15 Conflicts of interest
See "Conflicts of Interest and Related Party Transactions" in The Board section and
Board Regulations (pp. 16-18).
2-16 Communication of
critical concerns
See the Risk and Risk Management section and Whistleblowing Policy. Reporting on the
number and nature of critical concerns communicated to the Board is omitted based
on confidentiality constraints.
2-17 Collective knowledge of the
highest governance body
See "ESG Integration" in the Governance section and Board Regulations (p. 13).
2-18 Evaluation of the performance of
the highest governance body
See the Limited Assurance Report of the Independent Auditor on Selected
Indicators section.
2-19 Remuneration policies See the Remuneration Report section, Note 23. Share-based compensation plans, and
"Compensation & Benefits" in the Social section. Additionally, please see Executive
Directors Remuneration Policy and Non-Executive Directors Remuneration Policy.
2-20 Process to
determine remuneration
See the Remuneration Report section, Note 23. Share-based compensation plans, and
"Compensation & Benefits" in the Social section. Additionally, please see Executive
Directors Remuneration Policy and Non-Executive Directors Remuneration Policy.
2-21 Annual total compensation ratio
See "Remuneration and Company Performance Development" in the Remuneration
Report section.
2-22 Statement on sustainable
development strategy
See the We are Universal section.
2-23 Policy commitments See "Key Actions in 2023" in the Sustainability section, the Our Commitments section,
and "Operating with Integrity" in the Governance section.
2-24 Embedding policy commitments See the Our Commitments section and "Operating with Integrity" in the
Governance section.
2-25 Processes to remediate
negative impacts
See the Our Commitments section, Risk and Risk Management section, and
Whisteblowing Policy.
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Disclosure Reference
GRI 2: General Disclosures 2021
2-26 Mechanisms for seeking
advice and raising concerns
See the Risk and Risk Management section and Whisteblowing Policy.
2-28 Membership associations
UMG is a member of several membership and industry associations, including
environmentally-focused coalitions (such as the Music Climate Pact and the Music
Industry Climate Collective (MICC)), global trade bodies (such as the International
Federation of the Phonographic Industry (IFPI) and the International Confederation of Music
Publishers (ICMP)), national groups (like the Recording Industry Association of America
(RIAA) and the National Music Publishers Association (NMPA) in the U.S.), and many others
in the countries where we operate.
2-29 Approach to
stakeholder engagement
See the Stakeholder Analysis section.
2-30 Collective
bargaining agreements
See the Social Indicators section. Reporting on the global percentage of employees covered
by collective bargaining agreements is omitted based on information availability.
GRI 3: Material Topics 2021
3-1 Process to determine
material topics
See "Material Topics" in the Governance section. Material topics were defined by subject
matter experts and UMG employees representing a cross-section of business operations,
including: Bravado; Business & Legal Affairs; Corporate Executives; Digital Operations;
Global Communications; Global Compliance; Global Ecommerce & Business Development;
Global Finance; Global Information Security; Global Royalties Revenue Optimization; Global
Technology; Internal Audit; People, Inclusion & Culture; Privacy; Public Policy & Government
Affairs; Studios; Universal Music Logistics; and Universal Music Publishing Group.
3-2 List of material topics
See "Material Topics" in the Governance section.
3-3 Management of
material topics
See "Material Topics" in the Governance section and Our Commitments section.
GRI 302: Energy 2016
302-1 Energy consumption within
the organization
See the Environmental Indicators and Non-Financial Reporting Methodology sections.
302-4 Reduction of
energy consumption
See the Environmental Indicators and Non-Financial Reporting Methodology sections.
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Disclosure Reference
GRI 305: Emissions 2016
305-1 Direct (Scope 1) GHG emissions See the Greenhouse Gas Emissions and Non-Financial Reporting Methodology sections.
Reporting on gases included in the calculation is omitted based on data availability. UMG
does not generate any CO2 emissions from bioenergy use/production and/or biomass
feedstock production for bioenergy.
305-2 Energy indirect (Scope 2)
GHG emissions
See the Greenhouse Gas Emissions and Non-Financial Reporting Methodology sections.
Reporting on gases included in the calculation is omitted based on data availability.
305-3 Other indirect (Scope 3)
GHG emissions
See the Greenhouse Gas Emissions and Non-Financial Reporting Methodology sections.
Reporting on gases included in the calculation is omitted based on data availability.
For scope 3 value chain emissions, UMG currently does not have any agreements with
suppliers to use bio-based sources of fuel in the production of our purchased goods
and services.
305-4 GHG emissions intensity See the Non-financial Key Figures 2023 section. Reporting on gases included in the
calculation is omitted based on data availability.
305-5 Reduction of GHG emissions See the Greenhouse Gas Emissions section and "Managing Our Footprint" in the
Environment section.
GRI 308: Supplier Environmental Assessment 2016
308-1 New suppliers that
were screened using
environmental criteria
See "Supply Chain Management" in the Governance section. The percentage of new
suppliers that were screened using environmental criteria is omitted due to information
availability, but we plan to work towards collecting and reporting this information in
the future.
308-2 Negative environmental
impacts in the supply chain and
actions taken
See "Supply Chain Management" in the Governance section. Reporting on number of
suppliers assessed, number of impacts identified, and percentage of suppliers identified
as having negative impacts omitted based on confidentiality constraints.
GRI 401: Employment 2016
401-1 New employee hires and
employee turnover
See the Social Indicators section. Reporting on the breakdown of hiring by age, gender,
and region is omitted based on information availability. Reporting on the breakdown of
turnover by age group and region is omitted based on information availability.
401-2 Benefits provided to full-time
employees that are not provided to
temporary or part-time employees
See "Compensation & Benefits" in the Social section and UMG Careers website.
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Disclosure Reference
GRI 404: Training and Education 2016
404-1 Average hours of training per year
per employee
See the Social Indicators section. Reporting on the breakdown of training hours by
gender and employee category is omitted based on information availability.
404-2 Programs for upgrading employee
skills and transition assistance programs
See "Employee Experience and Development" in the Social section.
GRI 405: Diversity and Equal Opportunity 2016
405-1 Diversity of governance bodies
and employees
See the Social Indicators section and "Diversity, Equity & Inclusion" in the Social
section. Reporting on the breakdown of governance bodies and employees by age
group is omitted based on information availability.
GRI 414: Supplier Social Assessment 2016
414-1 New suppliers that were screened
using social criteria
See "Supply Chain Management" in the Governance section. The percentage
of new suppliers that were screened using social criteria is omitted due to
information availability, but we plan to work towards collecting and reporting this
information in the future.
414-2 Negative social impacts in the supply
chain and actions taken
See "Supply Chain Management" in the Governance section. Reporting on
number of suppliers assessed, number of impacts identified, and percentage
of suppliers identified as having negative impacts omitted based on
confidentiality constraints.
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SASB Index
This index was prepared in accordance with the SASB Media & Entertainment
and Internet Media & Services Standards. Responses are omitted where data
may be unavailable or due to confidentiality constraints.
Disclosure Reference
Media Pluralism
SV-ME-260a.1 Percentage of gender and racial/ethnic
group representation for (1) management, (2)
professionals, and (3) all other employees
See "Diversity, Equity & Inclusion" in the Social section and
the Social Indicators section. Reporting on the breakdown
of management by racial/ethnic group is omitted based on
information availability.
SV-ME-260a.2 Description of policies and procedures to
ensuring pluralism in news media content
See "Diverse & Inclusive Content" in the Social section.
Intellectual Property Protection & Media Piracy
SV-ME-520a.1 Description of approach to ensuring
intellectual property (IP) protection
See "Laws and Regulations" in the Risk and Risk Management
section, "Operating with Integrity" and "Piracy & Content Protection"
in the Governance section, and Code of Conduct (pp. 22-24).
Activity Metrics
SV-ME-000.BTotal number of media productions and
publications produced
See the Profile section.
Environmental Footprint of Hardware Infrastructure
TC-IM-130a.1 (1) Total energy consumed, (2) percentage
grid electricity, and (3) percentage renewable
See the Environmental Indicators section, "Managing Our Footprint"
in the Environment section, and the Non-Financial Reporting
Methodology section.
Data Privacy, Advertising Standards & Freedom of Expression
TC-IM-220a.1 Description of policies and practices relating
to behavioural advertising and user privacy
See "Laws and Regulations" in the Risk and Risk Management
section, "Operating with Integrity" and "Privacy & Cybersecurity"
in the Governance section, Code of Conduct (pp. 25, 32), and
Privacy Policy.
Data Security
TC-IM-230a.2 Description of approach to identifying and
addressing data security risks, including use of third-
party cybersecurity standards
See "Laws and Regulations" in the Risk and Risk Management
section and "Operating with Integrity" and "Privacy & Cybersecurity"
in the Governance section.
Employee Recruitment, Inclusion & Performance
TC-IM-330a.3 Percentage of gender and racial/ethnic
group representation for (1) management, (2) technical
staff, and (3) all other employees
See "Diversity, Equity & Inclusion" in the Social section and
the Social Indicators section. Reporting on the breakdown
of management by racial/ethnic group is omitted based on
information availability.
Activity Metrics
TC-IM-000.A Entity-defined measure of user activity See the Music Engagement Mix section.
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NON-FINANCIAL INFORMATIONNON-FINANCIAL INFORMATION
UN SDG Index
The United Nations’ 2030 Agenda for Sustainable Development was adopted
by all Member States in 2015 and provides a shared blueprint for peace and
prosperity for people and the planet, now and into the future. At its heart are
the 17 Sustainable Development Goals (SDGs), which are an urgent call for action
by all countries - developed and developing - in a global partnership. They
recognize that ending poverty and other deprivations must go hand-in-hand
with strategies that improve health and education, reduce inequality, and spur
economic growth – all while tackling climate change and working to preserve
our oceans and forests.
Our Commitments align with the United Nations Sustainable Development Goals
(UN SDGs), as demonstrated in the table below.
Section
UN SDG Mapping
Environment
Managing Our Footprint
•
Goal 7: Affordable and Clean Energy
•
Goal 12: Responsible Consumption and Production
•
Goal 13: Climate Action
Reimagining Our Products & Packaging
•
Goal 12: Responsible Consumption and Production
•
Goal 13: Climate Action
Driving Industry Transformation
•
Goal 12: Responsible Consumption and Production
•
Goal 13: Climate Action
Social
Investing In Our Workplace
•
Goal 4: Quality Education
•
Goal 5: Gender Equality
•
Goal 8: Decent Work and Economic Growth
•
Goal 9: Industry, Innovation and Infrastructure
•
Goal 10: Reduced Inequalities
Supporting Employee and Artist Wellbeing
•
Goal 3: Good Health and Well-being
•
Goal 5: Gender Equality
•
Goal 8: Decent Work and Economic Growth
•
Goal 9: Industry, Innovation and Infrastructure
•
Goal 10: Reduced Inequalities
Supporting Our Communities
•
Goal 3: Good Health and Well-being
•
Goal 4: Quality Education
•
Goal 5: Gender Equality
•
Goal 8: Decent Work and Economic Growth
•
Goal 9: Industry, Innovation and Infrastructure
•
Goal 10: Reduced Inequalities
Governance
Operating With Integrity
•
Goal 16: Peace, Justice and Strong Institutions
•
Goal 17: Partnerships for the Goals
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NON-EXECUTIVE DIRECTORS REPORTNON-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, one of whom, being Haim Saban,
was appointed to the Board by the General Meeting on May 11, 2023:
Name
Function
Sir Lucian Grainge Executive Director, Chairman and Chief
Executive Officer
Vincent Vallejo Executive Director, Deputy Chief Executive
Officer, Corporate
Sherry Lansing Non-Executive Director, 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
Haim Saban 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
Effective September 30, 2023, Anna Jones, former Non-Executive Director,
resigned from the Board to focus on new professional commitments.
Diversity and inclusion
The elements of a diverse and inclusive composition of the Board are laid down
in the D&I Policy as per articles 2:142b and 2:166 of the Dutch Civil Code and
best practice provision 2.1.5 of the Code. In accordance with the D&I Policy, the
Non-Executive Directors are committed to promoting diversity and inclusion
in the boardroom and to ensuring that all Non-Executive Directors are able to
contribute to Board discussions.
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NON-EXECUTIVE DIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORT
They furthermore have the aspiration:
• to improve or safeguard gender diversity among the Non-Executive
Directors, such that at least one third of the Non-Executive Directors is
female and at least one third of the Non-Executive Directors is male,
thereby at all times taking into account the Dutch statutory gender diversity
requirements with regards to non-executive directors.
• to improve or safeguard diversity with regards to age, nationality, ethnicity
and cultural or other background as well as to create and maintain a
variation in expertise, experience, competencies, other personal qualities
and perspectives among the Non-Executive Directors.
The Non-Executive Directors are further committed to considering candidates
for Non-Executive Director positions from a wide pool, including candidates with
no prior publicly listed company board level experience.
The elements as laid down in the D&I Policy with respect to the composition of
the Board are all important drivers in the selection procedure and will all be
considered when identifying a candidate for a Non-Executive Director position.
However, when identifying a candidate, the qualifications of such candidate
and the requirements for the Non-Executive Director position shall in principle
always prevail.
The Non-Executive Directors consider that their current composition is diverse
with regards to age, nationality, ethnicity and cultural or other background and
has a variation in expertise, experience, competencies, other personal qualities
and perspectives, and with women representing 36% of all Non-Executive
Directors, also in line with the gender diversity requirements included in the
D&I Policy and Dutch law. Among the Non-Executive Directors, there are seven
nationalities (American, British, Canadian, Dutch, French, Israeli and Togolese)
and age ranges between 38 and 79.
Independence
The Non-Executive Directors endorse the principle that their composition 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 shareholder base of the Company, the Non-Executive Directors are
of the opinion that, in the context of preserving the continuity of UMG and
ensuring a focus on sustainable long-term value creation, it is in the Company’s
corporate interests and in the interests of the Company’s stakeholders 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, approximately 10% or more 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 approximately 10% of the issued share capital of the Company.
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• 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 approximately 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.
•
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 2023, the Board held seven meetings, four 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 corporate and other senior executives, as appropriate.
Among the items discussed were the annual report, the semi-annual financial
report, the quarterly results, the accompanying press releases, the external
auditor’s findings and audit report, the auditor selection procedure and the
nomination for appointment of Ernst & Young Accountants LLP as the external
auditor for the financial years 2023 up to and including 2025, the external
auditor’s engagement, the (final and interim) dividend proposals, the annual
budget and business plan, the implementation of the 2022 UMG Global Equity
Plan, the remuneration of the Executive Directors, including the selection
of appropriate performance metrics and targets, and of the Non-Executive
Directors, the extension and amendment of Sir Lucian Grainge’s employment
agreement and Sir Lucian Grainge’s nomination for reappointment as Executive
Director for a period of five years ending on May 1, 2028, the nomination for
appointment of Haim Saban as (a new) Non-Executive Director, the nomination
for (early) reappointment of Sherry Lansing, Anna Jones and Luc van Os as Non-
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Executive Directors, strategy and business updates, including on the Company's
artist-centric approach and initiatives, its response to the opportunities and
risks of (generative) artificial intelligence and its expansion strategy, investor
relations updates, committee updates, the financing of the Company, including
the new issuance under the Euro Medium Term Note program, and any
significant or related party transactions.
Sustainable long-term value creation
The Board, who is responsible for developing a view on sustainable long-term
value creation by the Company and for formulating a strategy as well as specific
objectives in line with this view, has on numerous occasions spent considerable
time discussing the Company’s strategy, in particular the Company’s artist-
centric approach and initiatives, its response to the opportunities and risks of
(generative) artificial intelligence and its expansion strategy, at its meetings. In
addition, the Board is responsible for approving the annual budget as well as
any transaction with a value in excess of €300,000,000.
Education
Shortly following his appointment to the Board by the General Meeting on May
11, 2023, Haim Saban attended an educational session on his responsibilities
as a non-executive director of a public limited liability company incorporated
under the laws of the Netherlands, which shares are admitted to listing on
Euronext Amsterdam, the regulated market of Euronext Amsterdam N.V.
Evaluation
In the second half of 2023, the Board, under the direction of the Nomination
Committee, conducted a self-assessment to evaluate its own functioning as well
as the functioning of the various committees and the individual Directors. As
part of the assessment, each Director completed an evaluation form, covering
topics such as information provision, frequency and quality of meetings,
Board and committee compositions, functioning of the Board, the various
committees and the individual Directors and access to the Company secretariat,
and was interviewed by an external expert. The results and feedback of the
assessment were first discussed among the Chairman of the Board, the chair
of the Nomination Committee and the external expert, following which they
were shared with the Nomination Committee members during an executive
session of the Nomination Committee at the end of 2023 (which session was
also attended by the external expert), and consequently with the full Board
during one of its meetings in the first quarter of 2024. Where 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 functioning.
With the results and feedback, the Board identified opportunities for growth
and improvement as well as specific educational and information needs. The
main conclusion was that since its installation at the time of the Listing,
the Board has matured, which has resulted in an improved functioning of
the Board, the various committees and the individual Directors, both in and
outside of meetings. As a result, meetings have become more productive and
the communication among the Directors as well as with the Company has
improved. One point of attention that emerged as part of the assessment was
the composition of the committees, which has since become and will remain a
recurring item on the agenda of the Nomination Committee and Board until it
has been appropriately addressed.
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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, 2023:
Shareholder Notification date Shares RSUs PSUs PSOs Voting rights
Sir Lucian Grainge November 22, 2023 11,499.00 2,928,540.19 471,013.86 8,624,917.00 11,499.00
Vincent Vallejo November 30, 2023 97,150.00 7,684.58 - - 97,150.00
Bill Ackman
1
October 31, 2023 186,811,111.00 - - - 186,811,111.00
Cathia Lawson-Hall September 23, 2021 2,356.00 - - - 2,356.00
Cyrille Bolloré May 12, 2022 24,000.00 - - - 24,000.00
Luc van Os September 23, 2021 105.00 - - - 105.00
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:
Audit
Committee
Remuneration
Committee
Nomination
Committee
Sherry Lansing Member Member
Antoine Fiévet Member Chair
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
The Audit Committee
The Audit Committee shall advise the Board in relation to its responsibilities,
shall undertake preparatory work for the Board’s decision-making regarding
the supervision of the integrity and quality of the Company’s financial and
sustainability reporting and the effectiveness of the Company’s internal risk
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management and control systems and shall prepare resolutions of the Board in
relation thereto.
In addition to the foregoing, the Audit Committee’s main responsibilities
include: (i) supervising and monitoring, and discussing with and advising the
Board on, the effectiveness of the design and operation of the internal risk
management and control systems, including supervising the enforcement of
all applicable laws and regulations and supervising the effect of the Code
of Conduct, (ii) supervising the preparation and submission of financial and
sustainability information by the Company, (iii) supervising the compliance
with recommendations, comments and observations of the internal auditor,
the external auditor(s) and any other external party involved in the auditing
of the sustainability reporting, (iv) instructing the external auditor(s) and the
internal audit function to inform the Executive Directors and the chair of the
Audit Committee without delay if it or they discover(s) or suspect(s) an instance
of misconduct or irregularity, (v) supervising the functioning of the internal
audit function, (vi) ensuring that the way in which the internal audit function
fulfills its responsibility is assessed by an independent third party at least every
five years, (vii) supervising the policy of the Company on tax planning, (viii)
supervising the financing of the Company, (vix) supervising the applications
of information and communication technology, including risks relating to
cybersecurity and data protection and risks relating to new technologies, (x)
maintaining frequent contact and supervising the relationship with the internal
auditor, the external auditor(s) and any other external party involved in the
auditing of the sustainability reporting, (xi) implementing the procedure for the
selection of the external auditor(s) and submitting a recommendation to the
Non-Executive Directors for the (re)appointment or dismissal of the external
auditor(s) by the General Meeting, (xii) informing the Board of the outcome of
the statutory audit and explaining how the statutory audit contributed to the
integrity of the financial reporting and what the role of the Audit Committee
was in that process, (xiii) monitoring the financial reporting and submitting
recommendations or proposals to ensure its integrity, (xiv) determining whether,
and if so, how the external auditor(s) shall be involved in the content and
publication of financial reports other than the financial statements, (xv) issuing
a recommendation on the appointment and dismissal of the senior internal
auditor, (xvi) submitting a proposal to the Board for the engagement of the
external auditor(s) to audit the financial statements, and (xvii) considering
and, where appropriate, approving for recommendation to the Board the (semi-
annual) financial statements, the annual budget and major capital expenditures
of the Company.
In 2023, the Audit Committee held five meetings, three of which were in-person
meetings and two of which took place via video calls. The meetings were
attended by the Audit Committee members as well as by the Chief Financial
Officer, the Controller, the Head of Internal Audit, the external auditor(s) and
other corporate and senior executives, as appropriate.
Among the items discussed were the annual report, the semi-annual financial
report, the quarterly results, the accompanying press releases, the external
auditor’s findings and audit report, the auditor selection procedure and the
nomination for appointment of Ernst & Young Accountants LLP as the external
auditor for the financial years 2023 up to and including 2025, the external
auditor’s engagement, the external audit plan, the (final and interim) dividend
proposals, the annual budget and business plan, the financing of the Company,
including the new issuance under the Euro Medium Term Note program, the
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Company’s tax planning policy, compliance, the Internal Audit and Controls
Assurance departments, the internal audit plan and the annual risk and fraud
risk assessments.
In the first two months of 2023, the Audit Committee also regularly discussed,
outside of its official meetings, the auditor selection procedure which was
organized by the Company, under the responsibility of the Audit Committee, 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 senior executives, as appropriate, and the external auditor(s).
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 shall advise the Board in relation to its
responsibilities, shall undertake 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 shall prepare resolutions of the Board in relation thereto.
In addition to the foregoing, the Remuneration Committee’s main
responsibilities include: (i) at least every four years submitting a proposal to the
Board for the remuneration policies to be pursued with regard to the Executive
Directors and Non-Executive Directors, to be tabled at the annual General
Meeting for adoption and (ii) annually preparing the remuneration report, to be
tabled at the annual General Meeting for a non-binding advisory vote.
In 2023, the Remuneration Committee held three meetings, two of which were
in-person meetings and one of which took place via video call. The meetings
were attended by the Remuneration Committee members as well as by the
Chief People and Inclusion Officer and other corporate and senior executives,
as appropriate.
Among the items discussed were the remuneration report, the remuneration
of the Executive Directors, including the selection of appropriate performance
metrics and targets, and of the Non-Executive Directors and the extension and
amendment of Sir Lucian Grainge’s employment agreement.
In addition, the chair(s) of the Remuneration Committee had regular update
meetings with the Chief People and Inclusion Officer and other corporate and
senior executives, as appropriate.
The Nomination Committee
The Nomination Committee shall advise the Board in relation to its
responsibilities, shall undertake preparatory work for the Board’s decision-
making and shall prepare resolutions of the Board in relation thereto.
In addition to the foregoing, the Nomination Committee’s main responsibilities
include: (i) drawing up selection criteria and appointment procedures for the
Directors, (ii) annually assessing the size and composition of the Board, and
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making a proposal for the profile for Non-Executive Directors, (iii) annually
evaluating the functioning of the Board as a whole, the individual Directors and
the various committees, ensuring that such evaluation periodically takes place
under the supervision of an external expert and reporting on this to the Board,
(iv) formulating succession plans for Directors and drawing up a retirement
schedule, (v) making recommendations for the (re)appointment of Directors and
(vi) supervising the policy of the Board on the selection criteria and appointment
procedures for senior management.
In 2023, the Nomination Committee held six meetings, two of which were in-
person meetings and four 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 senior executives, as appropriate.
Among the items discussed were the nomination for appointment of
Haim Saban as (a new) Non-Executive Director, the nomination for (early)
reappointment of Sherry Lansing, Anna Jones and Luc van Os as Non-Executive
Directors, the composition of the committees, (the results and feedback of the
assessment of) the functioning of the Board, the various committees and the
individual Directors, the search for new candidates for Non-Executive Director
positions and the succession planning and retirement schedule.
Attendance and availability
The following table provides an overview of the attendance rate of the individual
Non-Executive Directors at the Board and committee meetings. Attendance is
expressed as a number of meetings attended out of the number of meetings
held during 2023.
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Sherry Lansing 7 - 7 3 - 3 5 - 5
Antoine Fiévet 7 - 7 5 - 5 1 - 1
Bill Ackman 7 - 7 6 - 6
Cathia Lawson-Hall 7 - 7 5 - 5
Cyrille Bolloré 7 - 7 3 - 3
Haim Saban 2 - 2
James Mitchell 7 - 7 3 - 3
Luc van Os 7 - 7 5 - 5
Manning Doherty 6 - 7 6 - 6
Margaret Frerejean-Taittinger 7 - 7 5 - 5 6 - 6
Nicole Avant 6 - 7 5 - 6
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.
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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 2023.
The Non-Executive Directors
Sherry Lansing
Antoine Fiévet
Bill Ackman
Cathia Lawson-Hall
Cyrille Bolloré
Haim Saban
James Mitchell
Luc van Os
Manning Doherty
Margaret Frerejean-Taittinger
Nicole Avant
Hilversum, March 28, 2024
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REMUNERATION REPORT
This remuneration report offers insight into the remuneration provided to the
Executive Directors and Non-Executive Directors during 2023.
The General Meeting on September 20, 2021 adopted the remuneration policies
for the Executive Directors (the Executive Directors' Remuneration Policy) 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. In addition, as discussed
further below, the General Meeting on May 11, 2023 approved a supplement to
the Executive Directors’ Remuneration Policy in respect of Sir Lucian Grainge's
remuneration package. The supplement applies to Sir Lucian Grainge only and
does not affect the remuneration of any other Executive Director.
Unless the context provides otherwise, references in this remuneration
report to the Executive Directors’ Remuneration Policy refer to the policy
as supplemented on May 11, 2023. Where legacy arrangements were in
place for the Executive Directors prior to their appointment to the Board, the
Executive Directors’ Remuneration Policy allows such legacy arrangements to
be respected. The current Remuneration Committee and the Board had no input
on such legacy arrangements.
This remuneration report has been prepared in accordance with article 2:135b
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 16, 2024.
Executive Directors’ Remuneration Policy
The objective of the Executive Directors’ Remuneration Policy is to provide
a compensation framework that allows UMG to attract, motivate and retain
highly qualified Executive Directors and to incentivize and reward long-term,
sustainable growth of UMG. In order to ensure that the Executive Directors'
Remuneration Policy is aligned with UMG’s identity, mission and core values,
it is built on the following principles:
• Focus on Company performance by including at-risk pay for the
Executive Directors
• Linkage of performance objectives with UMG’s strategy
• Alignment of Shareholders’ interests with Executive Directors’
compensation design
• Ensure competitiveness with relevant markets to support UMG’s ability to
attract, retain, and motivate high caliber talent
• Support a simple and transparent framework
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Summary Overview of the Key Remuneration Elements and
Approach to the Remuneration for 2023
In 2023, the Executive Directors were as follows:
Executive Director Position
Sir Lucian Grainge Chairman and Chief Executive Officer (CEO)
Vincent Vallejo Deputy Chief Executive Officer, Corporate
On March 30, 2023, Sir Lucian Grainge entered into an extension of his prior
employment agreement (the Legacy Agreement). The amended and extended
employment agreement (the Current Agreement) runs until May 1, 2028.
Sir Lucian Grainge’s Legacy Agreement, effective for 2023 from January 1,
2023 through March 30, 2023, and Vincent Vallejo’s remuneration for 2023
continued to be subject to legacy arrangements contractually agreed prior to
their appointment to the Board.
The table below sets out the key elements of the remuneration provided in the
Executive Directors’ Remuneration Policy versus the remuneration approach in
2023 for Sir Lucian Grainge under both the Legacy Agreement (until effectiveness
of the Current Agreement) and the Current Agreement, and for Vincent Vallejo
under his management services agreement. Sir Lucian Grainge’s compensation
is denominated in US dollars and is reflected throughout this Remuneration
Report remuneration report in both euros and US dollars based on the average
monthly US dollar to euro exchange rate in 2023 of 0.924.
Element
Key remuneration elements per Executive Directors’
Remuneration Policy
Remuneration approach for 2023
Base salary Fixed cash compensation, aligned with the Executive
Directors’ experience and scope of responsibilities and
intended to attract and retain Executive Directors
necessary to execute the Company's strategy (as set out
above under ‘Strategy’).
Chairman and CEO:
Legacy Agreement Current Agreement
Annualized
€16,186,369 €4,620,343
Deputy CEO:
€960,000
Short-term
incentive (STI)
1
Variable compensation payable annually in cash, shares,
or a combination thereof, subject to the achievement of
annually pre-established objectives to ensure Executive
Director alignment with, and motivate the achievement of,
the annual business priorities for the relevant year.
On-target STI of up to 300% of annual base salary;
maximum STI payout of no more than 200% of target
bonus amount for overachievement of targets.
Chairman and CEO:
Legacy Agreement Current Agreement
EBITA Bonus:
Annual cash bonus equal to
1% of UMG’s EBITA for the
relevant
(eliminated entirely for
2023 under the Current Agreement)
Contingent Bonus:
Annual contingent cash bonus
equal to €10,790,913 subject to
UMG meeting specific financial and
non-financial targets
(paid pro rata
Target bonus:
Annual cash bonus with a target
payout of €9,240,685, a minimum
payout of €0 and a maximum
payout of €13,861,028 (300% of
base salary), subject to the
achievement of specific financial
targets detailed below.
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NON-EXECUTIVE DIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORT
Element Key remuneration elements per Executive Directors’
Remuneration Policy
Remuneration approach for 2023
for 2023 for the period that the
Legacy Agreement was in effect, i.e.,
from January 1, 2023 through March
31, 2023)
.
Deputy CEO:
Annual cash bonus with a target payout of €480,000 (50% of base salary), a minimum
payout of €0 and a maximum payout of €960,000 (100% of base salary), subject to the
achievement of specific financial targets.
Long-term
incentive (LTI)
1
Variable compensation payable annually in cash, shares,
or a combination thereof, subject to the achievement
of annually pre-established objectives and/or continued
services to retain Executive Directors necessary to
execute the Company’s strategy, to align the interests of
Executive Directors with those of Shareholders and other
stakeholders, and to reward delivery of long-term value
creation linked to the Company’s strategy and strengthen
alignment with the interests of Shareholders.
LTI grant value is capped at 500% of annual base salary.
Chairman and CEO:
Legacy Agreement Current Agreement
None Annual Award:
€18,481,370 in a combination
of restricted stock units (RSUs)
and performance stock units
(PSUs), subject to the achievement
of specific financial targets
detailed below.
One-Time Transition Award:
€92,406,852, 50% in the form
of RSUs which vest in equal
installments over 5 years and 50%
in performance stock options (PSOs)
which vests in equal installments
over 4 years and are exercisable
only when the share price meets
levels detailed below.
Deputy CEO
:
No annual LTI grant
Retirement and
other post-
employment
benefits
Customary retirement income and severance benefits
to provide future income security, aligned with relevant
market levels.
Chairman and CEO:
Agreement
2
unchanged: Pension allowance equals 20% of annual base salary, capped
at €1,478,510 per year, for a total potential maximum pension allowance of €295,702
per year.
Deputy CEO:
Agreement unchanged: Participates in the local UMG pension plan.
Other benefits Customary and market competitive arrangements to
compensate for any reasonable costs incurred or perks
required for the performance of their duties.
Chairman and CEO:
Agreement unchanged: Covers, among other things, health and welfare, housing
allowance, automobile, tax equalization, security, and home leave.
Deputy CEO:
Agreement unchanged: Covers health and welfare, housing allowance, automobile, tax
consultation and life insurance.
1 When establishing the Threshold, Target and Maximum goals for the Short-Term and Long-Term Incentive goals, scenario analysis was conducted whereby the potential
achievement of these various goals and their alignment to our strategic financial goals assisted in determining that the final goals were appropriate.
2 Additional severance detail under the Severance Payments and Termination Provisions section below
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NON-EXECUTIVE DIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORT
The Remuneration for the Executive Directors in 2023
CEO Employment Agreement
As discussed in the 2022 remuneration report, the Legacy Agreement reflected
the arrangements contractually agreed with Sir Lucian Grainge prior to his
appointment to the Board. Such legacy arrangements did not always align
with the Executive Directors’ Remuneration Policy but were allowed as the
Executive Directors’ Remuneration Policy permits deviations in respect of
legacy arrangements.
The aim of the Current Agreement is to better align Sir Lucian Grainge’s
remuneration package with the Executive Directors’ Remuneration Policy, and
with Shareholders’ interests, including a change to a more performance-based
and share-based remuneration package. When determining the remuneration
package to be offered to Sir Lucian Grainge under the Current Agreement, the
Board took into consideration its belief that retaining, securing and incentivizing
Sir Lucian Grainge, who has a unique position of leadership in the music
industry and has a longstanding relationship with, and knowledge of, UMG
and its business, would be in the best interests of the Company and its
stakeholders. The Board also took into consideration Sir Lucian Grainge’s
remuneration and other benefits under the Legacy Agreement, including what
was payable if the Legacy Agreement was not renewed. Furthermore, the
Board considered that the remuneration offered to Sir Lucian Grainge should
be competitive compared to CEOs of other companies in the fields of media,
entertainment and tech, which are largely headquartered in the U.S. and
therefore examined the compensation practices of the following companies as
part of its due diligence:
Activision Blizzard, Inc.
Altice USA, Inc. Discovery, Inc.
DISH Network Corporation Electronic Arts Inc. Fox Corporation
Live Nation Entertainment, Inc. Netflix, Inc. News Corporation
Sirius XM Holdings Inc. Warner Music Group Corp.
These considerations, along with discussions with Sir Lucian Grainge, led
to the Current Agreement with a remuneration package as set out in
this remuneration report. As certain elements of the Current Agreement
relating to termination and severance benefits continued to deviate from the
then applicable Executive Directors’ Remuneration Policy, the Board, at the
recommendation of the Remuneration Committee, proposed that Shareholders
be given an opportunity to approve a supplement to the Executive Directors’
Remuneration Policy. The supplement, upon approval, would ensure that the
Current Agreement would fall within the scope of the Executive Directors’
Remuneration Policy. The General Meeting on May 11, 2023 approved the
supplement to the Executive Directors’ Remuneration Policy in respect of Sir
Lucian Grainge.
As discussed above and in further detail below, the Current Agreement results
in Sir Lucian Grainge having a significant portion of his remuneration be
performance-based (i.e., subject to the achievement of annually pre-established
objectives) and share-based (i.e., aligned with Shareholders’ interests generally)
as follows:
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RSU
28.5%
Salary
14%
Target
Annual Bonus
29%
Performance-Based
Compensation
57.5%
Target PSU
28.5%
Stock-Based
Compensation
57%
CEO ANNUAL TARGET PAY
Deputy CEO Employment Agreement
The remuneration of Vincent Vallejo for 2023 continues to reflect the legacy
arrangements contractually agreed with him prior to his appointment to the
Board under his management services agreement.
Key Remuneration Elements and Approach to Remuneration
for 2023
The following is a discussion of the key remuneration elements of2023 for each
of the Executive Directors.
Base Salary
Base salary provides competitive fixed cash compensation reflective of the
Executive Director’s skills, experience, scope of responsibilities and the external
market. The following sets out the 2023 base salary for each Executive Director,
as well as the relative changes to the 2022 base salary:
Executive Director
Actual 2022 Actual 2023
1
% Change
Sir Lucian Grainge €15,412,990 €7,511,849 -51.3%
Vincent Vallejo €960,000 €960,000 0.0%
1 Reflects Sir Lucian Grainge base salary under the Legacy Agreement for the first three months of 2023 and his
new base salary under the Current Agreement effective as of April 1, 2023
The decrease in the 2023 base salary for Sir Lucian Grainge reflects his
transition from an all-cash remuneration package to an updated remuneration
package with equity where a significant portion of his total remuneration
package is performance-based and share-based.
Short-Term Incentive
In order to motivate the Executive Directors to achieve the annual business
priorities for the relevant year and tie a portion of their annual remuneration
to Company performance, each Executive Director is eligible for an annual
short-term incentive bonus under their employment or management services
agreements based on the achievement of certain financial growth objectives.
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For 2023, the annual short-term incentive bonus target for each Executive
Director was as follows:
Executive Director Target Percentage of Base Salary Target Amount
Sir Lucian Grainge 200.0% €9,240,685
Vincent Vallejo 50.0% €480,000
For 2023, Sir Lucian Grainge was measured on the following performance
metrics and performance results:
Performance Metric
Weighting Target
(100% Payout
1
)
Maximum
(150% Payout
1
)
Actual Earned %
Revenue Growth 50% 7.2% 10.4% 13.3% 150.0%
Adjusted EBITDA Growth 50% 16.6% 22.4% 18.9% 119.9%
Total 134.9%
1 Payout percentage of target bonus amount
The target for each performance metric aligns with the Company’s annual
budget, as approved by the Board. The Board determined, as provided under
Sir Lucian Grainge’s Current Agreement, the threshold level of achievement
required for any payout of the annual short-term incentive bonus at 90%
of target, where achievement of the threshold level would result in a 50%
payout. Achievement of less than the threshold level would result in a 0%
payout. In addition, the Board determined the level of achievement required for
maximum payout of the annual short-term incentive bonus. In accordance with
Sir Lucian Grainge’s Current Agreement, the maximum payout is €13,861,028,
or 150% of target. Payout results for performance between threshold/target and
target/maximum are linearly interpolated.
For 2023, Vincent Vallejo was measured on the following performance metrics
and performance results:
Performance Metric
Weighting Target
(100% Payout
1
)
Maximum
(200% Payout
1
)
Actual Earned %
Revenue Growth 50% 7.2% 10.4% 13.3% 200.0%
Adjusted EBITDA Growth 50% 16.6% 22.4% 18.9% 139.6%
Total 169.8%
1 Payout percentage of target bonus amount
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Sir Lucian Grainge's Legacy Agreement
For 2023, under the terms of the Legacy Agreement, Sir Lucian Grainge was
entitled to receive an annual cash bonus in an amount equal to 1% of UMG’s
2023 EBITA (the EBITA Bonus), which was eliminated under the terms of the
Current Agreement. In addition, Sir Lucian Grainge was also entitled to an
annual contingent cash bonus in an amount equal to €10,790,913, subject to
UMG meeting specific financial and non-financial performance measures (the
Contingent Bonus). The Contingent Bonus was subject to meeting one of the
following performance measures: UMG’s year-over-year EBITA, market share of
the U.S. recorded music market and success of UMG’s exclusively signed artists
on the Billboard 100 or 200 chart. Under the terms of the Current Agreement, the
amount of the Contingent Bonus was €2,697,728.
Long-Term Incentive
As discussed in further detail below, in 2023, Sir Lucian Grainge received an
Annual Award, a One-Time Transition Award, and a one-time RSU award for the
lost value of Vivendi equity awards in connection with the Listing (a Special
One-Time Award). In 2023, Vincent Vallejo received a Special One-Time Award.
Annual Award
Under the terms of the Current Agreement, Sir Lucian Grainge is entitled to an
annual grant of RSUs and PSUs with an aggregate equity value of €18,481,370,
with no more than 50% of the grant being in the form of PSUs. The RSUs are
time-based and vest ratably over 3 years. The PSUs are performance-based
where payout depends on the level of achievement of performance metrics
that are determined by the Board. The target for each performance metric will
be no less favorable than the Company’s annual budget, as approved by the
Board. The maximum payout of the PSUs is 200% of target and the minimum
payout for the threshold level of achievement will be no less favorable than 50%
payout for 90% achievement of the target performance levels. Performance at
less than 90% of target will result in a 0% payout under the PSUs.
In 2023, Sir Lucian received the following:
Type
Grant size Performance metrics and vesting requirements
RSU €9,240,685 Requires continued services; vests ratably over 3 years
PSU €9,240,685
1
Requires continued services; vests 100% after 3 years
Metrics
● 50.0% to vest based on 3-year Adjusted EBITDA CAGR target
● 25.0% to vest based on 3-year Revenue CAGR target
● 25.0% to vest based on 3-year Relative TSR (Total Shareholder
Return) target
1 Reflects the economic value of the underlying award as opposed to the accounting value under IFRS2
With respect to the PSUs, the Board selected these performance metrics, which
represent key performance indicators used by the Company, to provide a
foundation for long-term growth and promote long-term value creation.
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The targets for Revenue CAGR and Adjusted EBITDA CAGR are not disclosed as
doing so could create competitive harm. The Relative TSR targets measure the
Company’s share price performance against the S&P 500 Media & Entertainment
Index and are as follows:
Metric Threshold (50% payout) Target (100% payout) Maximum (200% payout)
Relative TSR 25th percentile 50th percentile 75th percentile
One-Time Transition Award
Under the terms of the Current Agreement, in order to transition Sir Lucian
Grainge from an all-cash remuneration package to a combination of cash
and equity, with a significant portion of such equity performance-based, Sir
Lucian Grainge is entitled to a one-time €92,406,852 equity grant (the One-Time
Transition Award), as follows:
Type
Grant size Performance metrics and vesting requirements
RSU €46,203,426 Requires continued services; vests ratably
over 5 years
PSO €46,203,426 Requires continued services; vests ratably
over 4 years and become exercisable
1
if
the Company achieves the following share
price hurdles:
● 1/3rd of vested PSOs at €26.50
2
● 1/3rd of vested PSOs at €30.00
2
● 1/3rd of vested PSOs at €38.00
2
1 Strike price is as of the closing stock price on April 30, 2023
2 Based on a 30-day average closing share price and must be achieved within the term of the Current Agreement
ending May 1, 2028
Special One-Time Awards
Prior to the Listing, Vivendi granted Sir Lucian Grainge and Vincent Vallejo equity
awards in the form of performance shares payable in Vivendi stock. These
Vivendi equity awards were not adjusted to offset the impact of the spin-off
in connection with the Listing, and the value of these Vivendi equity awards
significantly decreased as a result. To make Sir Lucian Grainge and Vincent
Vallejo whole and compensate them for the loss of value of these Vivendi
equity awards, upon recommendation of the Remuneration Committee, the
Board granted the following to each Executive Director:
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Executive Director Number of RSUs Vesting requirements
Sir Lucian Grainge 30,000
Requires continued services; vests in 1
year from grant
30,000
40,000
Vincent Vallejo 7,500 Requires continued services; vests in 1
year from grant
Malus and Claw-back
In 2023, no application of claw-back was applied on any kind of variable
payments for the Executive Directors.
Severance Payments and Termination Provisions
In 2023, no severance payments were made to the Executive Directors.
Sir Lucian Grainge
Sir Lucian Grainge is entitled to the following severance benefits under his
Current Agreement in case Universal Music Group, Inc. (
UMG, Inc.) terminates
Sir Lucian Grainge’s employment without ‘Cause’, Sir Lucian Grainge terminates
his employment for ‘Good Reason’, or in case of ‘Non-Renewal’ of Sir Lucian
Grainge’s Current Agreement (as defined below):
1. a lump-sum cash amount equal to Sir Lucian Grainge’s unpaid base salary
earned up to the date of his termination of employment plus an amount
equal to two years of base salary.
2. a lump-sum cash amount equal to the unpaid portion of any earned
bonuses with respect to the last fiscal year ended prior to the date of
Sir Lucian Grainge’s termination of employment plus the €9,240,685 target
annual bonus for the year in which Sir Lucian Grainge’s termination of
employment occurs plus two years of the €9,240,685 target annual bonus.
3. a lump-sum cash amount equal to the amount that UMG, Inc. would
have paid during the 2 years following Sir Lucian Grainge’s termination
of employment (based on rates in effect at the time of termination of
employment) to provide Sir Lucian Grainge with the benefits he would have
been entitled to receive under the additional pension allowance and the
broad base of benefit plans in which Sir Lucian Grainge may participate,
provided that such amount will not include any vacation benefits.
4. each equity award outstanding at the termination of Sir Lucian Grainge’s
employment, with each such equity award vesting on a pro rata basis in
accordance with the terms of the applicable equity award agreement, except
that Sir Lucian Grainge will be deemed to be continuously employed for a
period of 2 years from the date of termination for ’Good Reason’, ’without
Cause’ or following a ’Non-Renewal’, with any performance-based equity
awards continuing to vest for a period of 2 years from the date of
termination and such vested portion of applicable performance-based
equity awards to be settled at target.
‘Good Reason’ includes:
1. removal of Sir Lucian Grainge from his position as an Executive Director or
as Chairman and CEO of UMG, Inc. or the Company resulting in a material
diminution in Sir Lucian Grainge’s authority, duties or responsibilities, or in
the budget over which Sir Lucian Grainge retains authority.
MUSIC IS UNIVERSAL
Annual Report 2023 | 234
NON-EXECUTIVE DIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORT
2. the requirement for Sir Lucian Grainge to report to anyone with materially
less authority, duties or responsibilities;
3. a material decrease in Sir Lucian Grainge’s authority, duties or
responsibilities, including, but not limited to, a material adverse change
to Sir Lucian Grainge’s authority, duties or responsibilities as they relate
to managing Sir Lucian Grainge’s direct reports or Sir Lucian Grainge’s
involvement in setting UMG’s annual budget or UMG’s strategy.
4. a reduction in Sir Lucian Grainge’s base salary or target bonus or annual
equity award constituting a material diminution in Sir Lucian Grainge’s base
compensation as determined for purposes of Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations and guidance
promulgated thereunder.
5. the requirement that Sir Lucian Grainge’s principal place of employment
be located other than at the principal offices of UMG, Inc. located in Los
Angeles, California, provided that such change in location is a material
change in the geographic location at which Sir Lucian Grainge must provide
his services as determined for purposes of Section 409A of the Internal
Revenue Code of 1986, as amended, and the regulations and guidance
promulgated thereunder.
6. a material breach by UMG, Inc. of the Current Agreement (whether or not
otherwise set forth in clauses (1) — (5) above).
7. a ‘Change in Control’.
A ’Change in control’ is defined as a change in the ownership of the Company,
which occurs on the date that any one person would be entitled to, directly or
indirectly, exercise at least 30% of the votes in a General Meeting (Predominant
Control) (which would pursuant to Dutch law trigger a mandatory public takeover
offer for all of the outstanding Shares); provided, however that no change in
control will be considered to exist (i) if the voting power of any one person,
or more than one person acting in concert, who at the date of the Current
Agreement was already entitled to exercise 30% or more of the votes in a
General Meeting increases, and (ii) if the person who acquired Predominant
Control loses such Predominant Control within 30 days of acquiring it, unless
the Person who acquired Predominant Control has exercised its voting rights in
that 30-day period.
‘Cause’ has a commonly used meaning.
‘Non-Renewal’ means the expiration of the Current Agreement, with UMG, Inc.
not having made an offer of employment on terms at least as favorable as the
terms set forth in the Current Agreement at least 90 days before the expiration
date of the Current Agreement.
In addition, Sir Lucian Grainge cannot compete against UMG for 24 months
following any termination of employment (whether by UMG or by Sir Lucian
Grainge) and following expiration of the term of his Current Agreement. In
cases where Sir Lucian Grainge is entitled thereto, the severance payment is
also considered consideration for the non-competition.
Vincent Vallejo
Vincent Vallejo’s management services agreement converted into an indefinite-
term agreement on October 1, 2023. His management services agreement does
not provide for a severance payment, but he is eligible for severance under
Dutch law.
MUSIC IS UNIVERSAL
Annual Report 2023 | 235
NON-EXECUTIVE DIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORT
Total Remuneration
1
Total remuneration of the Executive Directors is presented in the table
below. For Sir Lucian Grainge, the increase in remuneration year-over-year
is primarily driven by the transition to a more performance-based and share-
based remuneration package. The equity remuneration in the table below
reflects the grant value of awards.
Name
Reported
year
Fixed
remune-
ration
Variable remuneration Benefits and one-off amounts
Total
remuneration
1
Proportion
fixed –
variable
remuneration
Base Salary
Short-Term
Incentive
Long-Term
Incentive
One-Time
Transition
Award
Retire-
ment
Benefits
Other
Benefits
Other
Payments
Sir Lucian
Grainge,
Chairman
and CEO
2,3
2023 €7,511,849 €15,163,413 €18,481,370
4
€92,406,852
4,5
€295,702 €2,973,670 €1,981,000
6
€138,813,856 8% / 92%
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
7
€2,994,992 €0 €40,861,707 40% / 60%
Vincent
Vallejo,
Deputy
CEO
2023 €960,000 €815,040 €0 €41,053 €57,596 €948,575
8
€2,822,264 38% / 62%
2022 €960,000 €570,929 €0 €41,053 €83,739 €968,750
8
€2,624,471 41% / 59%
2021 €720,000 €602,859 €0 €0
7
€62,838
9
€800,000
8
€2,185,698 36% / 64%
1 Sir Lucian Grainge and Vincent Vallejo participated in Vivendi share schemes prior to the Listing that are not included. Reference is made to pages 131 to 133 of 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 For 2023, Sir Lucian Grainge’s remuneration has been converted from US dollars into euros using a monthly average FX rate of 0.924.
3 In addition, other payments were made by Vivendi to Sir Lucian Grainge in 2021 in connection with but not limited to the Listing. Reference is made to pages 129 and 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.
4 Sir Lucian Grainge’s Long-Term Incentive and One-Time Transition Award reflect the grant value as of the grant date (April 30, 2023 at a grant price of €19.81). As of
December 31, 2023, Sir Lucian Grainge has not versted any of his awards.
5 The One-Time Transition Award will not be applicable in subsequent years. As of December 31, 2023, Sir Lucian Grainge has not vested any of his awards and has not
achieved any of the stock price hurdles associated with his PSOs.
6 Special One-Time Award amount reflects the number of units granted on April 30, 2023 at €19.81 per share.
7 For 2021, Retirement Benefits were included as part of Other Benefits. For 2022 and 2023, Retirement Benefits were separated into their own column. For 2021, Sir Lucian
Grainge’s Retirement Benefits amount was €268,686, included in the 2021 Other Benefits amount of €2,994,992. For 2021, Vincent Vallejo’s Retirement Benefits amount was
€25,243, of which €9,900 was included in the 2021 Other Benefits amount of €62,838 and €15,343 of 2021 Retirement Benefits was excluded.
8 Amounts reflect the recognition awards paid in 2021 and 2022 in connection with the Listing and a cash retention payment paid in 2023. In addition, for 2022, amounts
reflect the value of the Special One-Time Award which was granted on November 30, 2022 at €22.50 per share and for 2023, the value of the Special One-Time Award which
was granted on April 30, 2023 at €19.81 per share.
9 For 2021, Other Benefits excluded €6,750 for company car related expenses.
1
The Remuneration Table includes information and figures that are audited as part of Note 24 of
the Annual Consolidated Financial Statements and Note 11 of the Company Financial Statements
MUSIC IS UNIVERSAL Annual Report 2023 | 236
NON-EXECUTIVE DIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORT
Share-Based Remuneration
Total share-based remuneration of the Executive Directors in 2023 is presented
in the table below:
The main conditions of share award plans Information regarding reported financial year
Opening
balance During the year Closing Balance
Name of Director, position
Specification of plan
Award type
Performance period
Award date
Vesting date
End of holding period
1
Expire Date
StrikePrice
Units awarded at the beginning of the year
Units awarded
Dividend
Equivalents
Added
Units vested
Units subject to a performance condition
Units awarded and unvested as of year end
Units subject to a holding period
Sir
Lucian
Grainge,
Chairman
and
CEO
2022
UMG
Global
Equity
Plan
RSU N/A 4/30/2023 4/30/2024
2
N/A N/A N/A 0 30,000 738 0 0 30,738 N/A
RSU N/A 4/30/2023 4/30/2024
2
N/A N/A N/A 0 30,000 738 0 0 30,738 N/A
RSU N/A 4/30/2023 4/30/2024
2
N/A N/A N/A 0 40,000 984 0 0 40,984 N/A
RSU N/A 4/30/2023 4/30/2026
3
N/A N/A N/A 0 459,700 11,314 0 0 471,014 N/A
PSU
1/1/2023 -
12/31/2025
4/30/2023 4/30/2026
4
N/A N/A N/A 0 459,700 11,314 0 471,014 471,014 N/A
RSU N/A 4/30/2023 4/30/2028
5
N/A N/A N/A 0 2,298,496 56,569 0 0 2,355,065 N/A
PSO N/A 4/30/2023 4/30/2027
6
N/A 4/30/2033 €19.81 0 8,624,917 0 0 8,624,917 8,624,917 N/A
Vincent
Vallejo,
Deputy
CEO
2022
UMG
Global
Equity
Plan
RSU N/A 11/30/2022 11/30/2023
2
N/A N/A N/A 7,500 0 185 7,685 0 0 N/A
RSU N/A 4/30/2023 4/30/2024
2
N/A N/A N/A 0 7,500 185 0 0 7,685 N/A
1 As noted in the Corporate Governance section under ‘Compliance with the Code’, Shares, once vested, are not subject to a holding period.
2 Special One-Time Award
3 RSUs awarded as part of Sir Lucian Grainge's 2023 Annual Award, vesting 1/3 annually
4 PSUs awarded as part of Sir Lucian Grainge's 2023 Annual Award which vest 100% after 3 years if performance metrics are met
5 50% of the One-Time Transition Award, which vests 1/5 annually
6 50% of the One-Time Transition Award, which vests 1/4 annually and are only exercisable if the following share price hurdles are met: 1/3 at €26.50, 1/3 at €30.00, and 1/3
at €38.00
MUSIC IS UNIVERSAL Annual Report 2023 | 237
NON-EXECUTIVE DIRECTORS REPORTNON-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 as of
the Listing in 2021. For Sir Lucian Grainge, the year-over year increase in
total remuneration from 2022 to 2023 was primarily driven by the One-Time
Transition Award. As noted above, the One-Time Transition Award consists of
€46,203,426 of RSUs, which vest ratably over 5 years and €46,203,426 of PSOs,
which vest ratably over 4 years and which become exercisable only after the
passage of time and achieving the aforementioned share price hurdles.
Element 2021 2022 2023
1
Remuneration
Chairman and CEO €40,861,707 €47,291,068 €64,274,250
Annual change Not applicable 16%
36%
Deputy CEO
2
€2,630,851 €2,624,471 €2,686,990
Annual Change
Not applicable 0
%
2%
Company performance
Adjusted EBITDA (inmillions
of euros)
€1,788 €2,135 €2,369
Annual Change
Not applicable 19
%
11%
Average annual remuneration
on an FTE basis of employees
Average annual
3
€131,961 €142,039 €180,684
Annual Change
Not applicable 8
%
27%
Internal Pay Ratio 310 333 356
Annual Change
8% 7%
1 Equity remuneration is based on the annual total remuneration as reported in the Consolidated Financial Statements included in the Annual Report in accordance with
IFRS. In contrast, the Total Remuneration Table reflects 2023 equity awards at grant value.
2 In the table above, the Deputy CEO was employed by UMG effective April 2021. Accordingly, the remuneration for 2021 has been updated and annualized from €2,185,698 to
€2,630,851 for year-over-year comparison purposes.
3 Reflects the total personnel costs reported in Note 4, adjusted to be aptly comparable with the remuneration of Executive Directors disclosed above.
MUSIC IS UNIVERSAL Annual Report 2023 | 238
NON-EXECUTIVE DIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORT
The Remuneration for the Non-Executive Directors in 2023
The remuneration structure for Non-Executive Directors has been designed to
ensure that UMG attracts, motivates and retains highly qualified Non-Executive
Directors, while aligning with the Non-Executive Directors Remuneration Policy.
In order to ensure that the Remuneration Policy is aligned with the Company’s
identity, mission and core values, it is built on the following principles:
• The program is simple and transparent.
• Non-Executive Directors should be compensated competitively against
market, considering the level of work required for a company that is similar
in size, scope, and complexity to UMG.
• Non-Executive Directors’ remuneration is differentiated, as appropriate, for
differing Board committee responsibilities and time commitments.
•
In order to ensure independent supervision, remuneration of Non-Executive
Directors is fixed and not dependent on the Company’s financial results.
In 2023, the Non-Executive Directors’ remuneration for serving on the Board 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 Chair of the Board
•
€20,000 per annum for performing their role as a member of a
Board committee
• €10,000 per annum for performing the role of chair of a Board committee
Total Remuneration
Total remuneration of the Non-Executive Directors paid in 2023 is presented in
the table below:
Commencement Date
Board
1
Audit
Committee
1
Remuneration
Committee
1
Nomination
Committee
1
2023 Remuneration
(in euros)
A.R.J.C. Fiévet 9/20/2021 Member Member Chair 115,589
A.K. Jones
2
9/20/2021 105,000
C.F.L. Lawson-Hall 9/20/2021 Member Member 110,000
C.M.C. Bolloré 5/12/2022 Member Member 110,000
H. Saban 5/11/2023 Member 62,691
J.G. Mitchell
3
9/20/2021 Member Member 0
J.S.J. Craymer
4
9/20/2021 4,500
L.A.J. Van Os 9/20/2021 Member Chair 120,000
M. Frerejean-Taittinger 9/20/2021 Member Member Chair 140,000
M.L. Doherty
3
9/20/2021 Member Member 0
N.A. Avant 5/12/2022 Member Member 110,000
S.L. Lansing 5/12/2022 Chair Member Member 175,417
W.A. Ackman
3
5/12/2022 Member Member 0
1 Composition of the Board and Board committees as of December 31, 2023.
2 Anna Jones resigned from the Board effective September 30, 2023.
3 Voluntarily elected to not receive any Non-Executive Director remuneration in 2023.
4 Judy Cramer resigned from the Board effective January 10, 2023
MUSIC IS UNIVERSAL Annual Report 2023 | 239
NON-EXECUTIVE DIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORT
Remuneration Development 2023/2022
1
2022 vs. 2021
1
A.R.J.C. Fiévet 5% 0%
A.K. Jones
2
-25% 0%
C.F.L. Lawson-Hall -8% 0%
C.M.C. Bolloré 0% N/A
H. Saban N/A N/A
J.G. Mitchell
3
N/A N/A
J.S.J. Craymer
4
-98% 0%
L.A.J. Van Os -8% 0%
M. Frerejean-Taittinger 0% 0%
M.L. Doherty
3
N/A 0%
N.A. Avant 0% N/A
S.L. Lansing 59% N/A
W.A. Ackman
3
N/A N/A
1 2022 and 2021 remuneration amounts have been annualized for purposes of calculating the year-over-
year change
2 Anna Jones resigned from the Board effective September 30, 2023.
3 Voluntarily elected to not receive any Non-Executive Director remuneration in 2023
4 Judy Cramer resigned from the Board effective January 10, 2023
The Non-Executive Directors’ remuneration is fixed and not dependent on
the Company’s financial results. Non-Executive Directors are also entitled
to reimbursement of reasonable expenses incurred in connection with the
performance of their duties for the Company. The Non-Executive Directors are
not entitled to receive any compensation on termination of their appointment
and are not entitled to participate in the Company’s bonus or pension schemes.
Other items
2022 Remuneration Report and Supplement to Remuneration Policy
Shareholders’ Voting Results
Last year, 58.96% of the Shareholders supported the 2022 remuneration report
and 59.03% approved the supplement to the Company’s existing Executive
Directors Remuneration Policy in respect of Sir Lucian Grainge. After the annual
General Meeting held on May 11, 2023, UMG engaged with Shareholders to
understand their perspective on the 2022 remuneration report and solicit overall
feedback about the Executive Director pay design and practices. Feedback was
gathered and reviewed within the context that there were legacy arrangements
with each Executive Director in place from prior to their appointment to the
Board. Shareholders expressed their desire to see Sir Lucian Grainge signed to
a new long-term agreement, and to better align Sir Lucian Grainge’s financial
interests with that of Shareholders by including equity as a meaningful
component of the new agreement. Shareholders also requested that more
information be provided on the peer group used to structure the Current
Agreement, as well as increased disclosure on the performance metrics used
to award both short-term and long-term incentives. UMG believes the Current
Agreement reached with Sir Lucian Grainge, as well as this remuneration report,
reflect the feedback received from Shareholders.
MUSIC IS UNIVERSAL
Annual Report 2023 | 240
NON-EXECUTIVE DIRECTORS REPORTNON-EXECUTIVE DIRECTORS REPORT
Deviation from Executive Directors' Remuneration Policy
In 2023, the Board temporarily deviated from the Executive Directors’
Remuneration Policy to enter into Sir Lucian Grainge's Current Agreement
which contained certain elements that were outside the scope of the then
applicable Executive Directors’ Remuneration Policy. The temporary deviations
from the Executive Directors’ Remuneration Policy related to Sir Lucian Grainge's
termination and severance benefits under the Current Agreement, which are
also described in this remuneration report. Entering into the Current Agreement
and thus deviating from the Executive Directors’ Remuneration Policy allowed
UMG to retain and secure Sir Lucian Grainge as UMG's Chairman and CEO.
The Board considered retaining and securing Sir Lucian Grange as UMG's
Chairman and CEO to be in the best interest of UMG and its stakeholders, as
also explained in the explanatory notes to the agenda for the annual General
Meeting held on May 11, 2023.
1
For these reasons, retaining and securing Sir Lucian Grainge as UMG’s Chairman
and CEO was deemed such an exceptional circumstance that deviating from the
Executive Directors’ Remuneration Policy was deemed necessary to serve UMG's
long-term interests and sustainability.
As deviations from the Executive Directors’ Remuneration Policy may only be
temporary in nature, the Board, at the recommendation of the Remuneration
Committee, proposed to seek approval from the General Meeting for a
supplement to the Executive Directors’ Remuneration Policy at the annual
General Meeting held on May 11, 2023. As described in detail in the explanatory
notes to the agenda for the annual General Meeting held on May 11, 2023,
the supplement to the Executive Directors’ Remuneration Policy includes those
elements of the Current Agreement that deviated from the Executive Directors’
Remuneration Policy so that the remuneration and benefits awarded to Sir
Lucian Grainge under the Current Agreement would fall within the scope of the
Executive Directors’ Remuneration Policy upon approval of the supplement by
the General Meeting. The supplement to the Executive Directors’ Remuneration
Policy was adopted at the annual General Meeting held on May 11, 2023.
1
1
UMGNV_2023_AGM_Agenda
MUSIC IS UNIVERSAL Annual Report 2023 | 241
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS
CONTENTS OF CONSOLIDATED STATEMENTS
Consolidated Statement of Profit or Loss 244
Consolidated Statement of Comprehensive Income 245
Consolidated Statement of Financial Position 246
Consolidated Statement of Cash Flows 247
Consolidated Statement of Changes in Equity 248
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 249
Note
1. General information
249
Note
2. Basis of preparation
250
Note
3. Segment data
265
Note
4. Cost of revenues and selling, general and
administrative expenses 269
Note
5. Financial income and expenses
270
Note
6. Income taxes
271
Note
7. Earnings per share
274
Note
8. Goodwill
275
Note
9. Content assets (catalogues and royalty advances) and
other intangibles 276
Note
10. Property, plant and equipment
278
Note
11. Leases
279
Note
12. Investments in equity affiliates
280
Note
13. Capital and financial risk management
280
Note
14. Trade and other receivables
284
Note
15. Trade and other accounts payable
285
Note
16. Cash position and borrowings
285
Note
17. Contractual obligations and other commitments
287
Note
18. Financial assets and liabilities
288
Note
19. Equity
290
Note
20. Expenses and income directly recognized in other
comprehensive income 291
Note
21. Provisions
291
Note
22. Post-retirement employee benefits
292
Note
23. Share-based compensation plans
294
Note
24. Related parties
298
Note
25. Litigation
300
Note
26. List of consolidated entities
300
Note
27. Statutory auditors fees
301
Note
28. Audit exemptions
301
Note
29. Subsequent events
302
MUSIC IS UNIVERSAL Annual Report 2023 | 243
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS FOR THE
YEAR ENDED DECEMBER 31, 2023
Consolidated Statement of Profit or Loss
Year ended December 31,
(millions of euros) Note 2023 | 2022 | ||
Revenues | 3 | ||
Cost of revenues | 4 | ( | ( |
Selling, general and administrative expenses | 4 | ( | ( |
Amortisation and impairment losses on intangible assets | 8,9 | ( | ( |
Operating profit | 3 | ||
Financial income | 5 | ||
Financial expenses | 5 | ( | ( |
( | |||
Income/(loss) from equity affiliates | 12 | ( | |
Profit before income taxes | |||
Income taxes | 6 | ( | ( |
Net profit | |||
| Of which: | |||
Net profit attributable to equity holders of the parent | |||
Net profit attributable to non-controlling interests | |||
| Earnings per share (in euros) | |||
Earnings for the period attributable to equity holders of the parent - basic | 7 | ||
Earnings for the period attributable to equity holders of the parent - diluted | 7 |
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
MUSIC IS UNIVERSAL Annual Report 2023 | 244
FINANCIAL STATEMENTS
Consolidated Statement of
Comprehensive Income
Year ended December 31,
(millions of euros) Note 2023 | 2022 | ||
Net profit | |||
Actuarial gains/(losses) related to employee defined benefit plans, net of tax | ( | ||
Financial assets at fair value through other comprehensive income, net of tax | ( | ||
Items not subsequently reclassified to profit or loss, net of tax | ( | ||
Foreign currency translation adjustments | ( | ||
Other comprehensive income/(loss) from equity affiliates, net of tax | ( | ||
Net gain/(loss) on hedge of net investment | |||
Items to be subsequently reclassified to profit or loss, net of tax | ( | ||
Other comprehensive income/(loss), net of tax | 20 | ( | |
Total comprehensive income, net of tax | |||
Of which Total comprehensive income attributable to equity holders of the parent | |||
| Total comprehensive income attributable to non-controlling interests |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
MUSIC IS UNIVERSAL Annual Report 2023 | 245
FINANCIAL STATEMENTS
Consolidated Statement of Financial
Position
Year ended December 31,
(millions of euros) Note 2023 | 2022 | ||
Goodwill | 8 | ||
Non-current royalty advances | 3, 9 | ||
Catalogues | 3, 9 | ||
Other intangible assets | 3, 9 | ||
Property, plant and equipment | 10 | ||
Right of use assets | 11 | ||
Investments in equity affiliates | 12 | ||
Non-current financial assets | 18 | ||
Deferred income tax assets | 6 | ||
Other non-current assets | |||
Non-current assets | |||
Inventories | |||
Current tax receivables | |||
Current royalty advances | 3, 9 | ||
Other current financial assets | 18 | ||
Trade and other receivables | 13, 14 | ||
Cash and cash equivalents | 16 | ||
Current assets | |||
TOTAL ASSETS | |||
Shareowners equity | 19 | ||
Non-controlling interests | |||
Total equity | |||
Non-current provisions | 21 | ||
Long-term borrowings and other financial liabilities | 16 | ||
Deferred tax liabilities | 6 | ||
Long-term lease liabilities | 11 | ||
Other non-current liabilities | 18 | ||
Non-current liabilities | |||
Current provisions | 21 | ||
Short-term borrowings and other financial liabilities | 16 | ||
Trade and other payables | 13, 15 | ||
Short-term lease liabilities | 11 | ||
Current tax payables | |||
Current liabilities | |||
Total liabilities | |||
TOTAL EQUITY AND LIABILITIES |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
MUSIC IS UNIVERSAL Annual Report 2023 | 246
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
Year ended December 31,
(millions of euros) Note 2023 | 2022 | |||
| Operating activities | ||||
Operating profit | 3 | |||
Adjustments | 13 | |||
Royalty advances payments, net of recoupments | ( | ( | ||
Gross cash provided by/(used for) operating activities before income tax paid | ||||
Other changes in net working capital | 13 | ( | ||
Net cash provided by/(used for) operating activities before income tax paid | ||||
Income tax paid | 6 | ( | ( | |
Net cash provided by/(used for) operating activities | ||||
| Investing activities | ||||
Catalogue investments | ( | ( | ||
Other intangible assets investments | ( | ( | ||
Capital expenditures | 10 | ( | ( | |
Purchases of consolidated companies, after acquired cash | ( | ( | ||
Investments in equity affiliates | ( | ( | ||
Purchase of financial assets | ( | ( | ||
Investments | ( | ( | ||
Proceeds from sales of consolidated companies, after divested cash | ||||
Proceeds from sale of financial assets | ||||
Divestitures | ||||
Dividends received from equity affiliates | 12 | |||
Dividends received from investments | ||||
Net cash provided by/(used for) investing activities | ( | ( | ||
| Financing activities | ||||
Distributions to shareowners | 19 | ( | ( | |
Dividends paid by consolidated companies to their non-controlling interests | ( | ( | ||
Transactions with shareowners | ( | ( | ||
Proceeds from borrowings | ||||
Repayments of borrowings | ( | ( | ||
Interest, net | ( | ( | ||
Other cash items related to financing activities | ( | |||
Transactions on borrowings and other financial liabilities | ( | ( | ||
Repayment of lease liabilities | 11 | ( | ( | |
Payment of interest of lease liabilities | 11 | ( | ( | |
Net cash provided by/(used for) financing activities | ( | ( | ||
Net change in cash and cash equivalents | ( | ( | ||
Foreign currency translation adjustments | ( | |||
Change in cash and cash equivalents | 16 | ( | ( | |
| Cash and cash equivalents | ||||
At beginning of the period | 16 | |||
At end of the period | 16 | |||
1 | Reclassified amounts are presented in Note 2.3. |
1
CONSOLIDATED STATEMENT OF CASH FLOWS
MUSIC IS UNIVERSAL Annual Report 2023 | 247
FINANCIAL STATEMENTS
Consolidated Statement of Changes in
Equity
Year ended December 31, 2023
(millions of euros)
Note
| Number | Share | Additional | Treasury | Retained | Shareowners | Non- | Total | ||
| of shares | capital | paid- | shares | earnings | equity | Controlling | equity | ||
| (in thousands) | in capital | interest | |||||||
BALANCE AS OF DECEMBER 31, 2022 | 1,813,513 | ( | ( | ||||||
Net profit | - | ||||||||
Income and expenses directly recognized in other comprehensive income, net of tax | 20 | - | ( | ( | ( | ||||
TOTAL COMPREHENSIVE INCOME | - | ||||||||
| Dividends paid and payable by UMG N.V. | 19 | - | ( | ( | ( | ( | |||
| Share-based compensation plans | 23 | 8,152 | |||||||
| NCI on acquired catalogue | - | ||||||||
| Recognition of put option liability on NCI | - | ( | ( | ( | |||||
TOTAL CHANGES OVER THE PERIOD | 8,152 | ( | ( | ( | |||||
BALANCE AS OF DECEMBER 31, 2023 | 1,821,665 | ( | ( |
Year ended December 31, 2022
(millions of euros)
Note
| Number | Share | Additional | Treasury | Retained | Shareowners | Non- | Total | |||
| of shares | capital | paid- | shares | earnings | equity | Controlling | equity | |||
| (in thousands) | in capital | interest | ||||||||
BALANCE AS OF DECEMBER 31, 2021 | 1,813,376 | ( | ( | |||||||
Net profit | - | |||||||||
| Income and expenses directly recognized | 20 | - | ||||||||
| in other comprehensive income, net of tax | ||||||||||
TOTAL COMPREHENSIVE INCOME | - | |||||||||
| Dividends paid and payable by UMG | 19 | - | ( | ( | ( | ( | ||||
| Share-based compensation plans | 23 | 137 | ( | |||||||
TOTAL CHANGES OVER THE PERIOD | 137 | ( | ( | ( | ( | ( | ||||
BALANCE AS OF DECEMBER 31, 2022 | 1,813,513 | ( | ( |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
MUSIC IS UNIVERSAL Annual Report 2023 | 248
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements
Note 1. General information
and listed on Euronext Amsterdam under the symbol ‘UMG.AS’. As used herein, the term UMG ("The Group") is used for
Universal Music Group N.V. (‘the Company’) and its subsidiaries within the meaning of Section 2:24b of the Dutch Civil
Code. UMG’s statutory seat is located in Amsterdam and its principal office is located at:
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 249
FINANCIAL STATEMENTS
Note 2. Basis of preparation
2.1. Statement of compliance
The Consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB), IFRS as endorsed by the European
Union (EU) and comply with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code. IFRS as endorsed by the EU
differs in some respects from IFRS as issued by the IASB. The differences have no impact on the Consolidated financial
statements for the years presented.
The Consolidated financial statements are prepared by the Board of Management of UMG and authorized for issue on
March 28, 2024 and will be submitted for adoption to the Annual General Meeting of Shareholders on May 16, 2024.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 250
FINANCIAL STATEMENTS
Significant events in the period and accounting estimates and judgements
Impact of global events
Global economic conditions continue to show a high degree of uncertainty because of several factors, including recent
geopolitical events and conflicts. Inflation rates and interest rates globally remain high, with associated impacts on
commodity prices, foreign exchange rates and other macroeconomic factors. Nevertheless, UMG’s operations continue to
demonstrate resilience in the face of these economic headwinds. UMG will continue to monitor economic developments
and impact on the Group’s operations and financial position.
Climate change
UMG considered the impact of climate related risks on the financial reporting judgements, estimates or assumptions
used in preparing the Consolidated financial statements with no material impact identified for the year ending
31 December 2023.
UMG identified and assessed climate related risks in terms of exposure level and severity in our TCFD report. UMG
assessed transition risks (including: potential increased operation costs due to compliance or indirect effects of
regulations; risks from failure to comply with regulations or goals/targets; risks on operational efficiencies due to
regulations; potential increased costs to more sustainable materials & technologies) and physical risks (including:
business interruption and increased CapEx due to damaged facilities and production shutdowns; impact on operations
due to supply chain disruptions; operational costs from cooling load). The analysis of UMG’s risks identified only Low
and Moderate-level impacts. There were no risks resulting in High or Critical impact to UMG’s operations and therefore
UMG does not expect that climate change-related risks will have significant impact on the Group and would qualitatively
influence management's decisions.
In 2023 UMG’s near-term science-based targets (designed to measure the performance of our climate-related reduction
initiatives) were approved by the SBTi. UMG has assessed the short term financial impact of achieving the near-term
emissions targets and these would not have a material impact on the financial statements.
Note for details on UMG’s near term emissions targets and climate-related risks refer to the Non-Financial Information
section in this Annual Report.
| Area | Significant judgement | Note |
| Significant judgement is required to identify performance obligations under | ||
| Revenue | contracts with customers, whether these performance obligations are satisfied | 2.4.5. Revenues and |
| at a point of time or over time, and probability that collectability is assured | associated costs | |
| and significant reversal will not occur. | ||
| Uncertain tax | Judgement in assessing the uncertainty of whether it is probable that a | |
| positions and | taxation authority will accept or revise the uncertain tax treatment and, future | 2.4.20. Income taxes |
| deferred taxes | results enabling realisation of deferred taxes. | |
| Lease liabilities and | Judgement in determining the lease term of contracts with renewal and | 2.4.10. Leases |
| right-of-use assets | termination options at the commencement date of each lease contract. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 251
FINANCIAL STATEMENTS
Area | Significant estimate | Note |
| Revenue | Estimation on the timing of the consequent usage and the amounts that are | 2.4.5. Revenues and |
| probable to be collected. | associated costs | |
| Intangible assets, | Assumptions relating to impairment tests performed on each of the Group’s | 2.4.7. Goodwill and 2.4.8. |
| including goodwill | cash-generating units (CGUs) or intangible assets, future cash flows and | Content assets and |
| and content assets | discount rates are updated annually. Estimation of (remaining) useful life for | other intangibles |
| intangible assets, other than goodwill. | ||
| Provisions | Estimating the likelihood and timing of potential cash flows relating to royalty | 2.4.18. Provisions |
| claims and litigation. | ||
| Artist | Estimates of the future performance of artists and repertoire owners who | 2.4.8. Content assets |
| royalty advances | are paid advances that are recognized in the Consolidated Statement of | and other intangibles |
| Financial Position. | ||
| Share- | Estimation of the grant date fair value and number of equity instruments. | 2.4.21. Share- |
| based payments | based payments | |
| Pension liability | Assumptions for discount rates, inflation, future pension increases and life | 2.4.19. Employee |
| expectancy to calculate the defined benefit obligation. | benefit plans |
2.3.
Financial statement presentation changes
During 2023 UMG made a prior year presentation change and updated, compared to the 2022 Consolidated financial
statements, the presentation of the Consolidated Statement of Cash Flows to further improve transparency and
readability of these statements.
The update to the Consolidated Statement of Cash Flows relates to a reclassificiation of the prior year non-cash share-
based compensation expense from other changes in working capital line to the adjustments line. Details on the impact
on 2022 comparatives for the year ended December 31, 2022 is presented in the table below.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 252
FINANCIAL STATEMENTS
| Year ended December 31, 2022 | |||
| Presentation | |||
| Before Changes | After Changes | ||
| Changes | |||
| Operating activities | |||
Operating profit | 1,600 | - | 1,600 |
Adjustments | 461 | 107 | 568 |
Royalty advances payments, net of recoupments | (148) | - | (148) |
Gross cash provided by/(used for) operating activities before income tax paid | 1,913 | 107 | 2,020 |
Other changes in net working capital | 74 | (107) | (33) |
Net cash provided by/(used for) operating activities before income tax paid | 1,987 | - | 1,987 |
Income tax paid | (255) | - | (255) |
Net cash provided by/(used for) operating activities | 1,732 | - | 1,732 |
Net cash provided by/(used for) investing activities | (520) | - | (520) |
Net cash provided by/(used for) financing activities | (1,347) | - | (1,347) |
Net change in cash and cash equivalents | (135) | - | (135) |
Foreign currency translation adjustments | 1 | - | 1 |
Change in cash and cash equivalents | (134) | - | (134) |
| Cash and cash equivalents | |||
At beginning of the period | 572 | - | 572 |
At end of the period | 438 | - | 438 |
2.4. Material accounting policy information
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 253
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 254
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 255
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 256
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 257
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 258
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 259
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 260
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 261
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 262
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 263
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 264
FINANCIAL STATEMENTS
| Recorded | Music | Merchandising | Corporate | Elimination of | |||
| Note | Music | Publishing | and other | centre | intersegment | Total | |
| (millions of euros) | transactions | ||||||
| Year ended December 31, 2023 | |||||||
External revenue | 8,461 | 1,943 | 704 | - | - | 11,108 | |
Intercompany revenue | - | 13 | 2 | - | (15) | - | |
Revenues | 8,461 | 1,956 | 706 | - | (15) | 11,108 | |
Adjusted EBITDA | 2,042 | 470 | 47 | (190) | - | 2,369 | |
| Non-cash share-based | 23 | (424) | (50) | (4) | (83) | - | (561) |
| compensation expense | |||||||
EBITDA | 1,618 | 420 | 43 | (273) | - | 1,808 | |
Amortisation and depreciation expense | (217) | (156) | (2) | (7) | - | (382) | |
Restructuring expenses | (34) | (2) | - | (5) | - | (41) | |
Gain/(loss) on sale of assets | 26 | - | - | - | - | 26 | |
| Impairment reversal/(charge) | - | 7 | - | - | - | 7 | |
| on intangible assets | |||||||
Operating profit | 1,393 | 269 | 41 | (285) | - | 1,418 | |
Financial income | 454 | ||||||
Financial expenses | (151) | ||||||
Income/(loss) from equity affiliates | - | ||||||
Profit before income taxes | 1,721 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 265
FINANCIAL STATEMENTS
| Recorded | Music | Merchandising | Corporate | Elimination of | |||
| Note | Music | Publishing | and other | centre | intersegment | Total | |
| (millions of euros) | transactions | ||||||
| Year ended December 31, 2022 | |||||||
External revenue | 7,937 | 1,787 | 616 | - | - | 10,340 | |
Intercompany revenue | - | 12 | 2 | - | (14) | - | |
| Revenues | 7,937 | 1,799 | 618 | - | (14) | 10,340 | |
Adjusted EBITDA | 1,900 | 410 | 36 | (211) | - | 2,135 | |
| Non-cash share-based | 23 | (73) | (15) | - | (19) | - | (107) |
| compensation expense | |||||||
EBITDA | 1,827 | 395 | 36 | (230) | - | 2,028 | |
Amortisation and depreciation expense | (204) | (162) | (2) | (9) | - | (377) | |
Restructuring expenses | (29) | - | (2) | (1) | - | (32) | |
Gain/(loss) on sale of assets | (1) | (1) | - | - | - | (2) | |
| Impairment reversal/(charge) | - | (17) | - | - | - | (17) | |
| on intangible assets | |||||||
Operating profit | 1,593 | 215 | 32 | (240) | - | 1,600 | |
Financial income | 37 | ||||||
Financial expenses | (735) | ||||||
Income/(loss) from equity affiliates | (2) | ||||||
Profit before income taxes | 900 |
| Year ended December 31, | Year ended December 31, | |||
(millions of euros) | 2023 | 2022 | ||
U.S. | 5,579 | 50% | 5,163 | 50% |
UK | 941 | 9% | 936 | 9% |
Japan | 768 | 7% | 699 | 7% |
Germany | 576 | 5% | 499 | 5% |
France | 444 | 4% | 399 | 4% |
| Rest of the world | 2,800 | 25% | 2,644 | 25% |
Total revenues | 11,108 | 100% | 10,340 | 100% |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 266
FINANCIAL STATEMENTS
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Streaming revenue | 1,425 | 1,420 |
Subscription revenue | 4,275 | 3,901 |
| Downloads and other digital revenue | 207 | 337 |
Physical revenue | 1,380 | 1,207 |
License and other revenue | 1,174 | 1,072 |
Recorded Music revenue | 8,461 | 7,937 |
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Performance revenue | 416 | 371 |
Synchronisation revenue | 254 | 236 |
Digital revenue | 1,128 | 1,040 |
Mechanical revenue | 108 | 97 |
Other revenue | 50 | 55 |
Music Publishing revenue | 1,956 | 1,799 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 267
FINANCIAL STATEMENTS
Segment assets
Segment assets by Segment
Segment assets that are reported to the executive board include items that are directly attributable to a segment as
well as those that can be allocated on a reasonable basis. Unallocated assets mainly comprise of cash and deferred tax
assets which are managed at the Group level.
| Note | Recorded | Music | Merchandising | Corporate | Total | ||
| (millions of euros) | Music | Publishing | and other | centre | |||
| Year ended December 31, 2023 | |||||||
Goodwill | 8 | 779 | 745 | 100 | - | 1,624 | |
Royalty advances, non- current | 9 | 862 | 508 | 204 | - | 1,574 | |
Catalogues | 9 | 1,335 | 1,685 | - | - | 3,020 | |
Property, plant & equipment | 10 | 165 | 4 | - | 8 | 177 | |
Other intangible assets | 9 | 50 | 31 | - | 99 | 180 | |
| Right of use relating | 11 | 310 | 4 | - | 2 | 316 | |
| to leases | |||||||
Royalty advances, current | 9 | 520 | 481 | 59 | - | 1,060 | |
Other assets | 3,171 | 753 | 54 | 234 | 4,212 | ||
| Total segment assets | 7,192 | 4,211 | 417 | 343 | 12,163 | ||
Unallocated assets | 928 | ||||||
Total assets | 13,091 | ||||||
| Year ended December 31, 2022 | |||||||
Goodwill | 8 | 709 | 769 | 100 | - | 1,578 | |
Royalty advances, non- current | 9 | 938 | 441 | 214 | - | 1,593 | |
Catalogues | 9 | 1,247 | 1,811 | - | - | 3,058 | |
Property, plant & equipment | 10 | 152 | 5 | - | 10 | 167 | |
Other intangible assets | 9 | 23 | 23 | - | 73 | 119 | |
| Right of use relating | 11 | 311 | 4 | 1 | 2 | 318 | |
| to leases | |||||||
Royalty advances, current | 9 | 464 | 476 | 44 | - | 984 | |
Other assets | 2,140 | 616 | 48 | 227 | 3,031 | ||
| Total segment assets | 5,984 | 4,145 | 407 | 312 | 10,848 | ||
Unallocated assets | 791 | ||||||
Total assets | 11,639 |
1
1
1 Total segment assets in the Netherlands was €1,607 million in 2023 (€931 million in 2022).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 268
FINANCIAL STATEMENTS
Content assets by segment
| December 31, 2023 | ||||||
| Note | Recorded | Music | Merchandising | Total | ||
| (millions of euros) | Music | Publishing | and other | |||
Catalogues (of music and publishing rights) | 1,335 | 1,685 | - | 3,020 | ||
Royalty advances (to artists and repertoire owners) | 1,382 | 989 | 263 | 2,634 | ||
| Of which: | ||||||
| Non-current | 862 | 508 | 204 | 1,574 | ||
| Current | 520 | 481 | 59 | 1,060 | ||
Content assets, net | 9 | 2,717 | 2,674 | 263 | 5,654 | |
Current content assets | 520 | 481 | 59 | 1,060 | ||
Non-current content assets | 2,197 | 2,193 | 204 | 4,594 |
| December 31, 2022 | ||||||
| Note | Recorded | Music | Merchandising | Total | ||
| (millions of euros) | Music | Publishing | and other | |||
Catalogues (of music and publishing rights) | 1,247 | 1,811 | - | 3,058 | ||
Royalty advances (to artists and repertoire owners) | 1,402 | 917 | 258 | 2,577 | ||
| Of which: | ||||||
| Non-current | 938 | 441 | 214 | 1,593 | ||
| Current | 464 | 476 | 44 | 984 | ||
Content assets, net | 9 | 2,649 | 2,728 | 258 | 5,635 | |
Current content assets | 464 | 476 | 44 | 984 | ||
Non-current content assets | 2,185 | 2,252 | 214 | 4,651 |
| Year ended December 31, | |||
(millions of euros) | Note | 2023 | 2022 |
| Included in cost of revenues: | |||
Artist costs | 5,152 | 4,704 | |
Product costs | 1,056 | 1,049 | |
| Of which: | |||
Personnel costs | 33 | 30 | |
| Included in selling, general and administrative expenses: | |||
Depreciation of tangible assets | 10 | 34 | 35 |
Depreciation of right of use assets | 11 | 72 | 74 |
Personnel costs | 2,048 | 1,537 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 269
FINANCIAL STATEMENTS
| Year ended December 31, | |||
(millions of euros) | Note | 2023 | 2022 |
Salaries | 1,196 | 1,202 | |
Social security and other employment expenses | 209 | 167 | |
Wages and expenses | 1,405 | 1,369 | |
Share-based compensation plans | 23 | 600 | 128 |
Employee defined contribution plans | 52 | 48 | |
Employee defined benefit plans | 22 | 2 | 3 |
Other | 22 | 19 | |
Personnel costs | 2,081 | 1,567 | |
Annual average number of full-time equivalent employees (in thousands) | 10.0 | 9.5 |
| Year ended December 31, | |||
(millions of euros) | Note | 2023 | 2022 |
Interest income from cash, cash equivalents and other | 14 | 20 | |
Change in fair value of financial instruments through profit or loss | 431 | - | |
Expected return on plan assets related to employee benefit plans | 22 | 1 | 3 |
| Gain on derivative instruments at fair value through profit or loss | 5 | 13 | |
Income from investments | 3 | 1 | |
Financial income | 454 | 37 | |
Interest expense on borrowings | (91) | (47) | |
Change in fair value of financial instruments through profit or loss | (14) | (654) | |
Unwinding of interest component | (1) | (1) | |
Interest cost related to employee benefit plans | 22 | (7) | (6) |
Interest expenses on lease liabilities | 11 | (14) | (14) |
Foreign exchange loss | (11) | (1) | |
Cost of finance | (7) | (9) | |
Other | (6) | (3) | |
Financial expenses | (151) | (735) | |
Net total financial income and (expenses) | 303 | (698) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 270
FINANCIAL STATEMENTS
Note 6. Income taxes
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
| (Expense)/income | ||
| Current | ||
U.S. | (224) | (185) |
UK | (30) | (24) |
Rest of Europe | (117) | (127) |
Rest of the world | (105) | (11) |
(476) | (347) | |
| Deferred | ||
U.S. | 89 | 9 |
UK | 12 | (1) |
Rest of Europe | (105) | 189 |
Rest of the world | 22 | 35 |
18 | 232 | |
Income taxes | (458) | (115) |
Income tax paid
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
U.S. | (208) | (187) |
UK | (30) | (22) |
Rest of Europe | (57) | (36) |
| Rest of the world | (98) | (10) |
Income tax (paid)/collected | (393) | (255) |
1
1 The 2022 amount includes €62 million in refunds from litigations before court.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 271
FINANCIAL STATEMENTS
Effective tax rate
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Net profit /(loss) from continuing operations | 1,263 | 785 |
(Income)/loss from equity affiliates | - | 2 |
Income taxes | 458 | 115 |
Profit before income taxes excluding (income)/loss from equity affiliates | 1,721 | 902 |
Dutch statutory tax rate | 25.8% | 25.8% |
Theoretical provision for income taxes based on Dutch statutory tax rate | (444) | (233) |
| Reconciliation of the theoretical and effective provision for income taxes | ||
Corporate tax rate differences | 7 | 33 |
Impacts of the changes in tax rates | (3) | 1 |
| Use or recognition of tax attributes | 16 | 19 |
Adjustments to tax expense from previous years | 6 | 21 |
| Settled tax litigations | - | 90 |
Non-deductible expenses | (19) | (8) |
Withholding taxes (net of Corporate Income tax benefit) | (58) | (56) |
| United States tax components | ||
Foreign Derived Intangible Income (FDII) deduction | 37 | 31 |
Other | - | (13) |
Provision for income taxes | (458) | (115) |
Effective tax rate | 26.6% | 12.7% |
1
2
1 Tax attributes includes tax losses and tax credits, both for the use of previously unrecognized attributes as for prior years attributes recognised this year for expected
utilisation in future years.
2 This represents the beneficial impact of two litigations finalised before tax courts in 2022.
Excluding previous years’ adjustments and the impacts of the tax litigations to income tax expense, the effective tax rate
would have been 27.9% in 2023 and 27.3% in 2022.
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Opening balance of deferred tax assets/(liabilities) | (232) | (446) |
Income taxes | 18 | 231 |
Expenses and income directly recorded in equity and other comprehensive income | 25 | (14) |
Changes in foreign currency translation adjustments and other | (8) | (3) |
Closing balance of deferred tax assets/(liabilities), net | (197) | (232) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 272
FINANCIAL STATEMENTS
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
| Deferred tax assets | ||
| Recognizable deferred taxes | ||
| Tax attributes | 89 | 98 |
Of which Universal Music US and its subsidiaries | 7 | 8 |
Universal Music UK and its subsidiaries | 45 | 51 |
Universal Music and its subsidiaries in the rest of Europe | 19 | 19 |
Universal Music and its subsidiaries in the rest of the world | 18 | 20 |
Other Of which | 610 | 448 |
non-deductible provisions | 87 | 61 |
employee benefits | 120 | 37 |
working capital | 148 | 149 |
Other | 255 | 201 |
Set-off deferred tax | (137) | (90) |
Total gross deferred tax assets | 562 | 456 |
| Deferred taxes, unrecognized | ||
| Tax attributes | (64) | (82) |
Of which Universal Music US and its subsidiaries | (6) | (6) |
Universal Music UK and its subsidiaries | (23) | (38) |
Universal Music and its subsidiaries in the rest of Europe | (17) | (18) |
Universal Music and its subsidiaries in the rest of the world | (18) | (20) |
Other | (19) | (26) |
Total deferred tax assets, unrecognized | (83) | (108) |
Recorded deferred tax assets | 479 | 348 |
| Deferred tax liabilities | ||
| Asset revaluations | (172) | (198) |
Working capital | (172) | (163) |
| Financial instruments | (286) | (124) |
Other | (183) | (185) |
Set-off deferred tax | 137 | 90 |
| Recorded deferred tax liabilities | (676) | (580) |
| Deferred tax assets/(liabilities), net | (197) | (232) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 273
FINANCIAL STATEMENTS
Pillar Two
UMG has carried out a study on the financial impact of the Pillar Two rules on future years. Based on the currently
available information UMG estimates that this impact is not material. UMG will closely monitor the legislative
developments and guidance issued to assess potential changes in the impact on the Pillar Two rules.
Tax litigation
In the normal course of their business, UMG is subject to tax audits by the relevant tax authorities in the countries
in which it conducts or has conducted business. Various tax authorities have proposed ordinary adjustments to the
financial results reported by UMG in prior years, under statutes of limitation applicable to UMG. In litigation situations,
UMG's policy is to pay the taxes it intends to contest, and to seek a refund through appropriate legal proceedings.
Regarding ongoing tax audits, no provision is recorded where the impact that could result from an unfavourable outcome
cannot be reliably assessed. To date, UMG believes that these tax audits are unlikely to have a material impact on the
Group's financial position or liquidity.
Note 7. Earnings per share
| Year ended December 31, | ||
(millions of euros and shares, except per share data) | 2023 | 2022 |
Net profit attributable to equity holders of the parent | 1,259 | 782 |
Weighted average number of shares outstanding (after deduction of treasury shares) during the year | 1,819 | 1,813 |
Potential dilutive effects related to share-based compensation | 23 | 3 |
Diluted weighted average number of shares | 1,842 | 1,816 |
Earnings per share (in euros) | ||
Basic earnings per share | 0.69 | 0.43 |
Diluted earnings per share | 0.68 | 0.43 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 274
FINANCIAL STATEMENTS
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
| Balance as at January 1 | ||
Goodwill, gross | 1,678 | 1,567 |
Accumulated impairment losses | (100) | (87) |
Goodwill, net | 1,578 | 1,480 |
| Changes in book value: | ||
Acquisitions | 93 | 19 |
Impairment losses | - | (7) |
Foreign currency translation adjustments | (47) | 86 |
Total changes | 46 | 98 |
| Balance as at December 31 | ||
Goodwill, gross | 1,720 | 1,678 |
Accumulated impairment losses | (96) | (100) |
Goodwill, net | 1,624 | 1,578 |
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Recorded Music | 779 | 709 |
Music Publishing | 745 | 769 |
Merchandising & Other | 100 | 100 |
Closing balance | 1,624 | 1,578 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 275
FINANCIAL STATEMENTS
2023 | 2022 | |||||
| Compound | Extrapolation | Compound | Extrapolation | |||
| In % per year | Annual Revenue | revenue growth | Pre-tax | Annual Revenue | revenue growth | Pre-tax |
| Growth | rate after 2028 | discount rates | Growth | rate after 2027 | discount rates | |
| 2024-2028 | 2023-2027 | |||||
Recorded Music | 6.6% | 3.3% | 10.0% | 5.0% | 3.4% | 9.8% |
Music Publishing | 5.9% | 3.3% | 10.0% | 3.9% | 3.4% | 9.8% |
Merchandising | 9.1% | 2.1% | 10.0% | 10.8% | 2.0% | 9.8% |
| December 31, 2023 | |||
| Accumulated | |||
| Asset value, gross | amortisation and | Net book value | |
| (millions of euros) | impairment losses | ||
Catalogues (of music and publishing rights) | 5,845 | (2,825) | 3,020 |
Royalty advances (to artists and repertoire owners) | 2,634 | - | 2,634 |
Content assets | 8,479 | (2,825) | 5,654 |
Other intangible assets | 585 | (405) | 180 |
| December 31, 2022 | |||
| Accumulated | |||
| Asset value, gross | amortisation and | Net book value | |
| (millions of euros) | impairment losses | ||
Catalogues (of music and publishing rights) | 5,732 | (2,674) | 3,058 |
Royalty advances (to artists and repertoire owners) | 2,577 | - | 2,577 |
Content assets | 8,309 | (2,674) | 5,635 |
Other intangible assets | 489 | (370) | 119 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 276
FINANCIAL STATEMENTS
| Catalogues (of | Royalty | |||
| music and | advances (to | Other | Total intangible | |
| publishing | artists and | intangibles | assets | |
| rights) | repertoire | & advances | ||
| (millions of euros) | owners) | |||
Balance December 31, 2021 | 2,982 | 2,380 | 96 | 5,458 |
Amortisation | (233) | - | (35) | (268) |
Impairment | (10) | - | - | (10) |
Additions | 137 | 1,187 | 54 | 1,378 |
Disposals | (3) | - | - | (3) |
Recoupments | - | (1,122) | - | (1,122) |
Business combinations | 6 | - | 1 | 7 |
| Changes in foreign currency translation adjustments | 179 | 132 | 3 | 314 |
and other Balance December 31, 2022 | 3,058 | 2,577 | 119 | 5,754 |
Amortisation | (236) | - | (40) | (276) |
Impairment | 7 | - | - | 7 |
Additions | 264 | 1,319 | 103 | 1,686 |
Disposals | (1) | - | - | (1) |
Recoupments | - | (1,201) | - | (1,201) |
Business combinations | 19 | - | - | 19 |
| Changes in foreign currency translation adjustments | (91) | (61) | (2) | (154) |
and other Balance December 31, 2023 | 3,020 | 2,634 | 180 | 5,834 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 277
FINANCIAL STATEMENTS
Note 10. Property, plant and equipment
| Land | Equipment | Other | Assets under | Total | |
| (millions of euros) | and buildings | and machinery | fixed assets | construction | |
| Cost | |||||
Balance as at January 1, 2023 | 241 | 119 | 78 | 20 | 458 |
Additions | 3 | 3 | 3 | 38 | 47 |
Transfers and reclassifications | 17 | 16 | 1 | (34) | - |
Disposals | (16) | (15) | (6) | - | (37) |
| Changes in foreign currency translation | (3) | (1) | (2) | - | (6) |
adjustments and other Balance as at December 31, 2023 | 242 | 122 | 74 | 24 | 462 |
| Depreciation and impairment losses | |||||
Balance as at January 1, 2023 | (135) | (99) | (57) | - | (291) |
Depreciation during the year | (18) | (9) | (7) | - | (34) |
Disposals | 15 | 15 | 6 | - | 36 |
| Changes in foreign currency translation | 2 | 1 | 1 | - | 4 |
adjustments and other Balance as at December 31, 2023 | (136) | (92) | (57) | - | (285) |
| Carrying amount | |||||
As at January 1 | 106 | 20 | 21 | 20 | 167 |
As at December 31 | 106 | 30 | 17 | 24 | 177 |
| Land | Equipment | Other | Assets under | Total | |
| (millions of euros) | and buildings | and machinery | fixed assets | construction | |
| Cost | |||||
Balance as at January 1, 2022 | 234 | 111 | 74 | 9 | 428 |
Additions | 4 | 4 | 1 | 24 | 33 |
Transfers and reclassifications | 5 | 5 | 3 | (13) | - |
Disposals | (5) | (4) | (2) | (1) | (12) |
| Changes in foreign currency translation | 3 | 3 | 2 | 1 | 9 |
adjustments and other Balance as at December 31, 2022 | 241 | 119 | 78 | 20 | 458 |
| Depreciation and impairment losses | |||||
Balance as at January 1, 2022 | (120) | (90) | (51) | - | (261) |
Depreciation during the year | (18) | (10) | (7) | - | (35) |
Disposals | 5 | 3 | 3 | - | 11 |
| Changes in foreign currency translation | (2) | (2) | (2) | - | (6) |
adjustments and other Balance as at December 31, 2022 | (135) | (99) | (57) | - | (291) |
| Carrying amount | |||||
As at January 1 | 114 | 21 | 23 | 9 | 167 |
As at December 31 | 106 | 20 | 21 | 20 | 167 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 278
FINANCIAL STATEMENTS
Note 11. Leases
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Opening balance | 318 | 388 |
Depreciation | (72) | (74) |
Additions | 78 | 25 |
Disposals | (1) | (26) |
Foreign currency translations and other | (7) | 5 |
Closing balance | 316 | 318 |
Lease liabilities
| Year ended December 31, | |||
(millions of euros) | Note | 2023 | 2022 |
Opening balance | 423 | 501 | |
Additions | 77 | 26 | |
Disposals | (1) | (26) | |
Accretion of interest | 5 | 14 | 14 |
Payments | (94) | (100) | |
Of which interest | (14) | (14) | |
Of which principal | (80) | (86) | |
Foreign currency translations and other | (9) | 8 | |
Closing balance | 410 | 423 |
Maturity of lease liabilities
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
| Maturity | ||
< 1 year | 86 | 77 |
Between 1 and 5 years | 217 | 228 |
> 5 years | 107 | 118 |
Lease liabilities | 410 | 423 |
Cash outflow for leases and lease-related expenses
Total cash outflow and expenses for the leases of real-estate with maturity shorter than 12 months and expense relating
to low-value assets recorded in the Statement of Profit or Loss amounted to €19 million for the year ended December 31,
2023 (compared to €18 million for the year ended December 31, 2022).
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 279
FINANCIAL STATEMENTS
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Opening balance | 156 | 109 |
Acquisitions | 74 | 47 |
Write-downs | - | (2) |
Income/(loss) from equity affiliates | - | (2) |
Change in other comprehensive income | (4) | 6 |
Dividends | (4) | (2) |
Translation difference | - | - |
Closing balance | 222 | 156 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 280
FINANCIAL STATEMENTS
Free cash flow
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Operating profit | 1,418 | 1,600 |
Amortisation and depreciation expense | 382 | 377 |
Non-cash share-based compensation expense, net of employees tax withheld | 429 | 107 |
Impairment (reversal)/charge on intangible assets | (7) | 17 |
Changes in provision, net | 18 | 65 |
(Gain)/loss on sale of assets | (26) | 2 |
Adjustments | 796 | 568 |
Royalty advance payments, net of recoupments | (100) | (148) |
Other changes in net working capital | 164 | (33) |
Net cash provided by/(used for) operating activities before income tax paid | 2,278 | 1,987 |
Income tax paid | (393) | (255) |
Net cash provided by/(used for) operating activities | 1,885 | 1,732 |
Net cash provided by/(used for) investing activities | (622) | (520) |
Repayment of lease liabilities and related interest expenses | (94) | (100) |
Interest, net | (77) | (30) |
Other cash items related to financing activities | (10) | 4 |
Free cash flow | 1,082 | 1,086 |
| Changes | ||||||
| December | Changes in | Business | in foreign | December | ||
| 31, 2022 | operating | combinations | currency | Other | 31, 2023 | |
| working capital | translation | |||||
| (millions of euros) | adjustments | |||||
| Inventories | 163 | 52 | - | (5) | - | 210 |
| Trade accounts receivable | 2,014 | 309 | 3 | (41) | (39) | 2,246 |
and other Of which: | ||||||
Trade accounts receivable | 580 | 102 | 3 | (16) | (23) | 646 |
Expected credit losses | (62) | 13 | (1) | 2 | (1) | (49) |
Working capital assets | 2,177 | 361 | 3 | (46) | (39) | 2,456 |
| Trade accounts payable | (5,150) | (527) | (9) | 134 | (159) | (5,711) |
and other Other non- current liabilities | (437) | 2 | (40) | 5 | (245) | (715) |
Working capital liabilities | (5,587) | (525) | (49) | 139 | (404) | (6,426) |
Net working capital | (3,410) | (164) | (46) | 93 | (443) | (3,970) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 281
FINANCIAL STATEMENTS
| Changes | ||||||
| December | Changes in | Business | in foreign | December | ||
| 31, 2021 | operating | combinations | currency | Other | 31, 2022 | |
| working capital | translation | |||||
| (millions of euros) | adjustments | |||||
| Inventories | 99 | 62 | - | 2 | - | 163 |
| Trade accounts receivable | 1,803 | 203 | 1 | 11 | (4) | 2,014 |
and other Of which: | ||||||
Trade accounts receivable | 550 | 22 | 1 | 4 | 3 | 580 |
Expected credit losses | (46) | (14) | - | - | (2) | (62) |
Working capital assets | 1,902 | 265 | 1 | 13 | (4) | 2,177 |
| Trade accounts payable | (4,875) | (226) | (2) | (113) | 66 | (5,150) |
and other Other non- current liabilities | (769) | (6) | (3) | (14) | 355 | (437) |
Working capital liabilities | (5,644) | (232) | (5) | (127) | 421 | (5,587) |
Net working capital | (3,742) | 33 | (4) | (114) | 417 | (3,410) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 282
FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 283
FINANCIAL STATEMENTS
| (millions of euros) | USD | GBP | JPY | Other | Total |
Nominal value of Balance sheet exposure | 535 | 475 | 106 | 412 | 1,528 |
Foreign exchange rate derivatives | (535) | (475) | (106) | (412) | (1,528) |
Net exposure | - | - | - | - | - |
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Trade receivables | 1,986 | 1,765 |
Other receivables | 260 | 249 |
Trade receivables, net of value allowance | 2,246 | 2,014 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 284
FINANCIAL STATEMENTS
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Current | 1,895 | 1,698 |
Overdue 0-30 days | 58 | 46 |
Overdue 31-150 days | 25 | 21 |
Overdue >150 days | 8 | - |
Trade receivables, net of value allowance | 1,986 | 1,765 |
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Trade accounts payable | 118 | 138 |
Music royalties to artists and repertoire owners | 3,944 | 3,523 |
Accrued expenses | 389 | 401 |
Other payables | 852 | 711 |
Trade and other accounts payable | 5,303 | 4,773 |
Current contract liabilities | 408 | 377 |
Trade accounts payable and other | 5,711 | 5,150 |
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Cash and cash equivalents | 413 | 439 |
Bank overdrafts | (26) | (1) |
Cash and cash equivalents in the statement of cash flows | 387 | 438 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 285
FINANCIAL STATEMENTS
December 31, 2023 | December 31, 2022 | |||||
(millions of euros) | Total | Long-term | Short-term | Total | Long-term | Short-term |
Bonds | 1,808 | 1,774 | 34 | 1,004 | 987 | 17 |
| Drawn revolving | - | - | - | 125 | 125 | - |
| credit facilities | ||||||
Commercial papers | 197 | - | 197 | 929 | - | 929 |
Bank overdrafts | 26 | - | 26 | 1 | - | 1 |
Other | 73 | 52 | 21 | 191 | 1 | 190 |
Borrowings at amortized cost | 2,104 | 1,826 | 278 | 2,250 | 1,113 | 1,137 |
Cash and cash equivalents | (413) | - | (413) | (439) | - | (439) |
Derivative financial assets | (2) | - | (2) | (1) | - | (1) |
Net debt | 1,689 | 1,810 |
| Drawn | |||||||
| Term facility | revolving | Bonds | Bank | Commercial | Other debt | Total | |
| credit | overdrafts | papers | |||||
| (millions of euros) | facilities | ||||||
Balance December 31, 2021 | 998 | 1,447 | - | 13 | - | 137 | 2,595 |
New borrowings | 8 | 1,722 | 1,004 | 1 | 3,117 | 87 | 5,939 |
Repayments | (1,006) | (3,126) | - | (13) | (2,188) | (34) | (6,367) |
Translation differences and other movements | - | 82 | - | - | - | 1 | 83 |
Balance December 31, 2022 | - | 125 | 1,004 | 1 | 929 | 191 | 2,250 |
New borrowings | - | 1,075 | 794 | 26 | 4,738 | 34 | 6,667 |
Repayments | - | (1,200) | - | (1) | (5,469) | (145) | (6,815) |
Translation differences and other movements | - | - | 10 | - | (1) | (7) | 2 |
Balance December 31, 2023 | - | - | 1,808 | 26 | 197 | 73 | 2,104 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 286
FINANCIAL STATEMENTS
| Total minimum future | ||||||
| Minimum future payments as of December 31, 2023 | payments as of | |||||
| Payments due in | ||||||
(millions of euros) | Total | 1 year | 2-5 years | After 5 years | December 31, 2022 | |
Borrowings and other financial liabilities | 2,449 | 274 | 735 | 1,440 | 2,506 | |
Lease liabilities | 463 | 94 | 251 | 118 | 472 | |
Music royalties to artists and repertoire owners | 3,957 | 3,944 | 13 | - | 3,542 | |
| Creative talent and employment | 603 | 362 | 240 | 1 | 470 | |
| agreements and others | ||||||
Other payables | 1,411 | 949 | 55 | 407 | 1,156 | |
Consolidated statement of financial position items | 8,883 | 5,623 | 1,294 | 1,966 | 8,146 | |
| Contractual | 1,595 | 815 | 737 | 43 | 1,562 | |
| content commitments | ||||||
Other commitments | 287 | 82 | 135 | 70 | 244 | |
| Total off-balance | 1,882 | 897 | 872 | 113 | 1,806 | |
| sheet commitments | ||||||
Total | 10,765 | 6,520 | 2,166 | 2,079 | 9,952 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 287
FINANCIAL STATEMENTS
| December 31, 2023 | ||||
| Fair value | ||||
| Carrying | Level 1 | Level 2 | Level 3 | |
| (millions of euros) | amount | |||
| Financial assets at fair value through profit and loss | ||||
Listed equity securities | 1,227 | 1,227 | - | - |
Other financial assets | 75 | - | 55 | 20 |
Trade and other receivables | - | - | - | - |
Financial assets at fair value through other comprehensive income | ||||
Listed equity securities through OCI | - | - | - | - |
Unlisted equity securities | 20 | - | - | 20 |
| Financial assets at amortised cost | ||||
Trade and other receivables | 2,246 | - | - | - |
Other financial assets | 205 | - | - | - |
Total financial assets | 3,773 | 1,227 | 55 | 40 |
| Financial liabilities at fair value through profit and loss | ||||
Trade and other payables | (4) | (4) | - | - |
Other non-current liabilities | (35) | (5) | - | (30) |
| Financial liabilities at amortised cost | ||||
Trade and other payables | (5,707) | - | - | - |
Bonds | (1,808) | (1,808) | - | - |
Borrowings, excluding bank overdrafts and bonds | (270) | - | - | - |
Other non-current liabilities | (680) | - | - | - |
Total financial liabilities | (8,504) | (1,817) | - | (30) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 288
FINANCIAL STATEMENTS
| December 31, 2022 | ||||
| Fair value | ||||
| Carrying | Level 1 | Level 2 | Level 3 | |
| (millions of euros) | amount | |||
| Financial assets at fair value through profit and loss | ||||
Listed equity securities | 597 | 597 | - | - |
Other financial assets | 51 | - | 31 | 20 |
Trade and other receivables | 1 | - | 1 | - |
Financial assets at fair value through other comprehensive income | ||||
Listed equity securities through OCI | 1 | 1 | - | - |
Unlisted equity securities | 19 | - | - | 19 |
| Financial assets at amortised cost | ||||
Trade and other receivables | 2,013 | - | - | - |
Other financial assets | 22 | - | - | - |
Total financial assets | 2,704 | 598 | 32 | 39 |
| Financial liabilities at fair value through profit and loss | ||||
Trade and other payables | - | - | - | - |
Other non-current liabilities | - | - | - | - |
| Financial liabilities at amortised cost | ||||
Trade and other payables | (5,150) | - | - | - |
Bonds | (1,004) | (987) | - | - |
Borrowings, excluding bank overdrafts and bonds | (1,245) | - | - | - |
Other non-current liabilities | (437) | - | - | - |
Total financial liabilities | (7,836) | (987) | - | - |
| December 31, 2023 | ||||||||
| Number | Average | Stock | Change | Cumulative | ||||
| of shares | Ownership | purchase | market | Carrying | in value | unrealized | Sensitivity | |
| held | interest | price | price | value | over | captial | at +/- 10 pts | |
| the period | gain/(loss) | |||||||
(thousands) (€/share) | (millions of euros) | |||||||
Spotify | 6,487 | 3.27% | 6.58 | 171.36 | 1,112 | 629 | 1,069 | +111/-111 |
| Tencent | 12,246 | 0.78% | na | 8.22 | 101 | 5 | 101 | +10/-10 |
| Music Entertainment | ||||||||
Other | 14 | (4) | 14 | |||||
Total | 1,227 | 630 | 1,184 | |||||
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 289
FINANCIAL STATEMENTS
| December 31, 2022 | ||||||||
| Number | Average | Stock | Change | Cumulative | ||||
| of shares | Ownership | purchase | market | Carrying | in value | unrealized | Sensitivity | |
| held | interest | price | price | value | over | captial | at +/- 10 pts | |
| the period | gain/(loss) | |||||||
(thousands) (€/share) | (millions of euros) | |||||||
Spotify | 6,487 | 3.30% | 6.58 | 74.41 | 483 | (856) | 440 | +48/-48 |
| Tencent | 12,246 | 0.76% | na | 7.80 | 96 | 22 | 96 | +10/-10 |
| Music Entertainment | ||||||||
Other | 18 | 18 | 18 | |||||
Total | 597 | (816) | 554 | |||||
Note 19. Equity
Retained Earnings
Dividend Distribution
On May 11, 2023 the shareholders approved a dividend distribution of €0.27 per ordinary share, corresponding to a total
distribution of €492 million, payable in June 2023.
On July 26, 2023 the directors approved an interim dividend distribution of €0.24 per ordinary share, corresponding to a
total distribution of €437 million payable in October 2023.
UMG plans to annually declare and pay dividends to all holders of the Shares on a pro-rata basis in two semi-annual
instalments, in the aggregate amount of no less than 50% of UMG's net profits realized during the relevant financial year,
subject to agreed non-cash items. UMG intends to pay an interim dividend in the fourth quarter of each financial year,
after the publication of the half-year figures of the Group, and a final dividend in the second quarter of the following
financial year, to be paid following approval of the UMG's financial statements at its Annual General Meeting.
A proposal will be submitted to the 2024 Annual General Meeting of Shareholders to pay a dividend of €0.27 per ordinary
share corresponding to a total distribution of €492 million, in cash, from the 2023 retained earnings, payable in Q2 2024.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 290
FINANCIAL STATEMENTS
Note 20. Expenses and income directly recognized in other
comprehensive income
Details of changes in equity related to other comprehensive income
| Items not subsequently reclassified | Items to be subsequently reclassified to profit & loss | |||||||
| to profit & loss | ||||||||
| Financial | ||||||||
| Actuarial gains/ | assets at | Foreign | Other | |||||
| (losses) related | fair value | Net gain/(losses) | currency | comprehensive | Other | |||
| to employee | through | translation | income from | on hedge of | comprehensive | |||
| defined | other | net investment | adjustments | equity affiliates, | income | |||
| benefit plans | comprenhensive | net | ||||||
| (millions of euros) | income | |||||||
| Balance as of December | (47) | (13) | - | (200) | (3) | (263) | ||
| 31, 2021 | ||||||||
Expenses and income directly | 49 | 8 | - | 184 | 6 | 247 | ||
recognized in other comprehensive income | ||||||||
Tax effect | (13) | - | - | - | - | (13) | ||
| Balance as of December | (11) | (5) | - | (16) | 3 | (29) | ||
| 31, 2022 | ||||||||
Expenses and income directly | (5) | (1) | 8 | (150) | (4) | (152) | ||
recognized in other comprehensive income | ||||||||
Tax effect | 2 | - | - | - | - | 2 | ||
| Balance as of December | (14) | (6) | 8 | (166) | (1) | (179) | ||
| 31, 2023 | ||||||||
| Year ended December 31, | |||
(millions of euros) | Note | 2023 | 2022 |
Post-retirement employee benefits | 22 | 166 | 166 |
Royalty audit claims | 129 | 126 | |
Deferred employee compensation | 31 | 31 | |
Restructuring costs | 19 | 16 | |
Litigations | 21 | 5 | |
Other | 56 | 50 | |
Provisions | 422 | 394 | |
Deduction of current provisions | (122) | (103) | |
Non-current provisions | 300 | 291 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 291
FINANCIAL STATEMENTS
(millions of euros) | Restructuring | Litigation | Royalty audit claims | Other | Total |
Balance as at January 1, 2023 | 16 | 5 | 126 | 50 | 197 |
Additions | 27 | 16 | 43 | 16 | 102 |
Utilizations | (24) | - | (20) | (14) | (58) |
Releases | - | - | (17) | (6) | (23) |
| Changes in foreign currency | - | - | (3) | 10 | 7 |
| translation adjustments | |||||
Balance as at December 31, 2023 | 19 | 21 | 129 | 56 | 225 |
Current | 19 | 16 | 59 | 9 | 103 |
Non-current | - | 5 | 70 | 47 | 122 |
| 2023 | 2022 | |||||
| Obligation | Fair value of | Net obligation/ | Obligation | Fair value of | Net obligation/ | |
| (millions of euros) | plan assets | (asset) | plan assets | (asset) | ||
Germany | 136 | (1) | 135 | 134 | (2) | 132 |
U.S. | 18 | - | 18 | 19 | - | 19 |
Other | 38 | (35) | 3 | 41 | (39) | 2 |
Total | 192 | (36) | 156 | 194 | (41) | 153 |
of which assets related to employee | ||||||
| benefit plans | (10) | (13) | ||||
| liabilities for employee | ||||||
| benefit plans | 166 | 166 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 292
FINANCIAL STATEMENTS
| 2023 | 2022 | ||||||
| Fair value | Net | Fair value | Net | ||||
Note | Obligation | of plan | obligation/ | Obligation | of plan | obligation/ | |
| (millions of euros) | assets | (asset) | assets | (asset) | |||
Opening balance | 194 | (41) | 153 | 427 | (219) | 208 | |
Current service cost | 4 | 2 | - | 2 | 3 | - | 3 |
(Gain)/loss on settlements | - | - | - | - | - | - | |
Other | - | - | - | - | - | - | |
| Impact on selling & | 2 | - | 2 | 3 | - | 3 | |
| administrative expenses | |||||||
Interest cost | 5 | 7 | - | 7 | 6 | - | 6 |
Expected return on plan assets | 5 | - | (1) | (1) | - | (3) | (3) |
Impact on other financial income | 7 | (1) | 6 | 6 | (3) | 3 | |
| Included in the statement of profit | 9 | (1) | 8 | 9 | (3) | 6 | |
| or loss | |||||||
| Actuarial losses/(gains) related to: | |||||||
Experience adjustments | (3) | - | (3) | 10 | 51 | 61 | |
Financial assumptions | 9 | - | 9 | (111) | - | (111) | |
Demographic assumptions | (1) | - | (1) | 1 | - | 1 | |
Included in other comprehensive income | 20 | 5 | - | 5 | (100) | 51 | (49) |
Contributions by employers | - | (12) | (12) | - | (12) | (12) | |
Benefits paid by the fund | (2) | 2 | - | (121) | 121 | - | |
Benefits paid by the employer | (12) | 12 | - | (12) | 12 | - | |
Foreign currency and other | (2) | 4 | 2 | (9) | 9 | - | |
Closing balance | 192 | (36) | 156 | 194 | (41) | 153 | |
of which wholly or partly funded benefits | 33 | 38 | |||||
wholly unfunded benefits 1 | 159 | 156 | |||||
| assets related to employee | (10) | (13) | |||||
| benefit plans | |||||||
liabilities for employee benefit plans | 166 | 166 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 293
FINANCIAL STATEMENTS
Germany | U.S. | Weighted average of all plans | |||||
2023 | 2022 | 2023 | 2022 | 2023 | 2022 | ||
Discount rate | 3.50% | 3.75% | 5.28% | 5.00% | 3.51% | 3.58% | |
Inflation rate | 2.00% | 2.00% | na | na | 2.00% | 2.00% | |
Rate of compensation increase | 2.50% | 2.50% | na | na | 2.39% | 1.93% | |
| Duration of the benefit obligation | 9.6 | 10.4 | |||||
| (in years) |
| Year ended December 31, | ||
(millions of euros) | 2023 | 2022 |
Insurance contracts | 54% | 55% |
Equity securities | 21% | 20% |
Debt securities | 15% | 14% |
Diversified funds | 0% | 0% |
Cash and other | 10% | 11% |
Total | 100% | 100% |
Note 23. Share-based compensation plans
In 2022, UMG received formal approval from its shareholders to implement an equity plan, the UMG Global Equity Plan.
Under the plan, Restricted Stock Units (RSUs) and Performance Stock Units (PSUs) are granted to senior executives to align
the interests of the employees of UMG with its shareholders’ interests by providing them with an additional incentive to
improve UMG's performance and increase its share price on a long-term basis. In addition, the Annual Incentive Plan
(AIP) for these senior executives was modified such that all or a portion of the payment under the plan may be settled in
equity at the discretion of UMG. In 2023, the equity plan was extended to additional executives and a number of senior
management personnel, resulting in the issuance of additional RSUs, PSUs and also Performance Stock Options (PSOs).
UMG Restricted Stock Units (RSUs)
Starting in the last quarter of 2022, and continuing for each year of service under the term of their contracts, certain
senior executives and senior management are granted RSUs, being a right to receive shares upon vesting. The awards
have vesting periods of 2.5 to 8 years and will vest in 3 equal instalments if the service condition is fulfilled. The total
number of RSUs granted as at December 31, 2023 was 17.06 million and the grant date weighted-average UMG N.V. share
market price was €21.50.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 294
FINANCIAL STATEMENTS
In addition, a one-off RSU award was granted to certain senior executives and senior management with an average 15
months vesting period in 2 equal instalments. The total number of these RSUs granted was 9.66 million and the grant
date weighted-average UMG N.V. share market price was €21.18.
There was a number of RSUs granted with slightly different service conditions. The grant date weighted-average UMG
share market price was €22.67 per share corresponding to the total fair value of €51 million of such awards.
The share rights are dividend-bearing during the service period. The total expense for these awards recognised in 2023
was €469 million (2022: €74 million) and the total equity reserve at December 31, 2023 was €308 million (2022: €78 million).
UMG Performance Stock Units (PSUs)
Starting in the last quarter of 2022, and continuing for each year of service under the term of their contracts, certain
senior executives and senior management are granted PSUs, being a right to receive shares upon vesting. The vesting of
these rights is subject to service, market and non-market performance conditions.
For these PSUs, the total number of shares delivered will range from 0% to 200% of the number of PSUs granted based
on certain performance conditions tailored to each participant. These include non-market performance conditions: target
compound annual growth rate for revenues (Revenue CAGR) and Adjusted EBITDA (Adjusted EBITDA CAGR) and a market
performance condition: relative total shareholder return (TSR). In addition, the employee must remain in continued
service for a three-year period. The share rights are dividend-bearing during the performance period.
The total number of PSUs granted as at December 31, 2023 is 5.09 million and the weighted average grant date fair value
per award was €25.45. The grant date fair value was estimated taking into account the market performance condition.
There was a small number of PSU awards with slightly different service and performance conditions. The estimated grant
date UMG share market price of €25.81 per share corresponding to the total fair value of €18 million of such awards.
The total expense for these awards recognised in 2023 was €47 million (2022: €5 million) and the total equity reserve at
December 31, 2023 was €52 million (2022: €5 million).
Annual Incentive Program (AIP)
In 2022, the AIP for senior executives, which was previously settled only in cash and accrued throughout the year, was
modified to allow UMG the choice of whether to settle in cash, shares, or a combination of the two. Such modification
did not change the fair value of the award compared to the previously accrued AIP payable. UMG expects to settle 50%
of the AIP in cash and 50% in shares. UMG has a constructive obligation to settle 50% of the award in cash. The total AIP
expense for the full calendar year starting January 1, 2023, being the start of the service period for the 2023 award, was
€47 million (2022: €42 million) with the cash-settled AIP accrual amounting to 50% of the total expense.
The vesting conditions of the AIP awards are a one-year service period and certain internally measured performance
conditions including Adjusted EBITDA, revenue and cash flow from operations (CFFO). The amount received can vary
between 0% and 200% of the on-target amount based on the actual performance against these performance criteria.
The number of shares granted is based on the total value of the award and UMG’s share price on 15 March. The total fair
value of the equity-settled portion of the total AIP is €25 million (2022: €21 million).
UMG Performance Stock Options (PSOs)
During the first half of 2023, PSOs were granted to a senior executive.
The PSOs are subject to a service condition and a market condition. Under the service condition, the options will vest
annually in four substantially equal instalments on each of the first four anniversaries of the grant date, subject to
the senior executive’s continued employment by UMG on those dates. The market condition requires that certain stock
price hurdles be met before the PSOs become exercisable. The stock price hurdles are met as follows: one-third of the
PSOs each becomes exercisable at hurdle prices of €26.50, €30.00 and €38.00, respectively, based on the preceding 30-day
average closing price of UMG N.V. shares. The senior executive must be employed by UMG on the occurrence of the stock
price hurdles. As a result, the PSOs vest at the later of completion of service condition or the stock price hurdle. Awards
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 295
FINANCIAL STATEMENTS
will forfeit if the relevant stock price hurdle is not met in the five-year period following the grant date. The PSOs will
be equity-settled.
The PSOs were granted on March 30, 2023 at a total fair value of €45.9 million ($50 million), the grant date fair value
used for recognising the expense on these awards. In accordance with the PSO terms, the number of options issued was
determined at a later valuation date, April 30, 2023. As of this valuation date, a Monte Carlo simulation was performed to
determine the number of options to be issued so that the per unit fair values summed in total to the grant date fair value.
The valuation exercise simulated the stock price of UMG over the contractual term, taking into account the terms and
conditions on which the options were granted, expected dividend distributions and the historical volatility of UMG. UMG’s
historical volatility was also benchmarked against the long-term volatility of other listed groups considered comparable
to UMG.
The number and weighted average exercise price (WAEP) of, and movements in, share options during 2023 were
as follows:
| 2023 | ||
Number (thousands) | WAEP | |
Outstanding at 1 January | - | na |
Granted during the year | 8,625 | € 19.81 |
Forfeited during the year | - | na |
Exercised during the year | - | na |
Expired during the year | - | na |
Outstanding at 31 December | 8,625 | € 19.81 |
Exercisable at 31 December | - | na |
The weighted average remaining contractual life for the share options outstanding as at December 31, 2023 was
4.34 years.
The weighted average fair value of options granted during the year was €5.3.
The range of exercise prices for options outstanding at the end of the year was €19.81.
The following table lists additional inputs to the Monte Carlo model used for the PSOs for the 2023 awards granted:
| 2023 | |
Dividend yield (%) | 2.00 |
Expected volatility (%) | 34.60 |
Risk free interest rate (%) | 2.64 |
Weighted average share price at valuation date (€) | 19.81 |
The dividend distribution during the lifetime of the option has been estimated based on historical and forecasted data
and is not necessarily indicative of yield patterns that may occur. The expected volatility reflects the assumption that
the historical volatility over a period similar to the life of the options is indicative of future trends, which also may not
necessarily be the actual outcome.
The total expense for these awards recognised in 2023 was €10 million and the total equity reserve at year end was
€10 million.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 296
FINANCIAL STATEMENTS
Estimated future tax obligation
An estimate of the amount that UMG expects to transfer to tax authorities to settle the employees’ tax obligations in
relation to all RSU, PSU, PSO and AIP is €439 million (2022: €51 million).
All Employee Award
In October 2022, each eligible employee of UMG was granted 100 shares to be vested at the end of one-year service
period. The grant date share price was €17.25 per share. A total of 0.75 million shares was granted with the majority
vesting in October 2023.
The total expense for these awards recognised in 2023 was €9 million (2022: €4 million) and the total equity reserve at
year end was €0 million (2022: €4 million).
UMG shares granted upon separation from Vivendi and direct listing on the Euronext Amsterdam
A total of 762,095 UMG shares, constituting a recognition award, were granted and vested to the Executive Vice President,
Chief Financial Officer and President of Operations, Boyd Muir immediately after the UMG’s listing date. These shares
will settle over three years, from which one third was settled in 2021, a further third was settled in 2022 on the first
anniversary of UMG listing and the final third settled in 2023 on the second anniversary of the UMG listing. The grant
date fair value of these shares was estimated at UMG’ share market price as of that date and was €25.25 per share. UMG
recognised an expense of €19 million in profit and loss for the year ended December 31, 2021. The awards were fully
vested in 2021 and hence there was no further cost of this award in 2023. The final tranche was settled in 2023. There is a
total equity reserve of €0 million as at year end 2023 (2022: €11 million).
Vivendi Share Awards
In 2023, UMG recognised €0 million expense (2022: €1 million) relating to legacy Vivendi share based payment plans for
awards granted prior to UMG’s separation from Vivendi. No additional awards will be granted from these plans.
UMG-Vivendi Performance Awards
In 2021, to compensate for any effect of the UMG separation on the Vivendi share price, UMG announced that it will
issue its own shares for every Vivendi share earned by the UMG participants of Vivendi’s performance share plans,
which were granted in 2017 – 2020 while UMG was part of Vivendi. The amount of Vivendi shares (and accordingly UMG
shares in 1-to-1 ratio) estimated to be vested for the 2020 ongoing plan will be further adjusted at the end of the original
performance period of Vivendi’s performance share plans. In relation to this award a total expense of €0 million was
recognised in 2023 (2022: €2 million) and total equity reserve of €2 million (2022: €15 million) as at year end 2023.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 297
FINANCIAL STATEMENTS
| Year ended December 31, 2023 | ||||
| Other Corporate | Executive | Corporate | ||
| (millions of euros) | Executives | Directors | Executives | |
Short-term employee benefits | 18 | 29 | 47 | |
Post-employment benefits | - | - | - | |
Other long-term benefits | 2 | - | 2 | |
Termination benefits | - | - | - | |
Share-based payments | 70 | 38 | 108 | |
Corporate Executives | 90 | 67 | 157 |
| Year ended December 31, 2022 | ||||
| Other Corporate | Executive | Corporate | ||
| (millions of euros) | Executives | Directors | Executives | |
Short-term employee benefits | 18 | 50 | 68 | |
Post-employment benefits | - | - | - | |
Other long-term benefits | - | - | - | |
Termination benefits | - | - | - | |
Share-based payments | 33 | - | 33 | |
Corporate Executives | 51 | 50 | 101 |
Other related-party transactions
Other related parties include:
• companies fully consolidated by UMG. The transactions between these companies have been eliminated for the
preparation of UMG’s Annual Financial Statements;
• companies over which UMG exercises a significant influence or has joint control;
• all companies that are controlled or jointly controlled by Corporate Executives or their close relatives;
• minority shareholders exercising a significant influence over UMG’s subsidiaries; and
• all companies that have a significant influence over UMG.
As of December 31, 2023, transactions with Vivendi are still qualified as transactions with related parties under IAS 24.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 298
FINANCIAL STATEMENTS
UMG distributes its cash surpluses to shareowners through dividends and share capital reductions (please refer to
Note 19 ). Vivendi and UMG had previously entered into a transition and services agreement in connection with the
separation, the terms of which Vivendi and its subsidiaries will provide to UMG, and UMG will provide to Vivendi and its
subsidiaries, on an interim, various transitional basis services as applicable, including but not limited to: (i) a limited
selection of treasury related services and applications; (ii) a limited selection of accounting services and accounting
software related services and applications; (iii) taxation related services; and (iv) certain employee related principles in
connection with the direct listing on the Euronext Amsterdam. This transaction and services agreement ceased in the
first half of 2023.
The balances and transactions with the parties described above are summarised in the table below:
| December 31, 2023 | |||||
(millions of euros) | Associates | Shareholders | Other | Total | |
| Statement of Financial Position | |||||
| Assets | |||||
Trade accounts receivable | 52 | 4 | 1 | 57 | |
Non-current financial assets | 105 | - | - | 105 | |
Royalty advances | - | - | - | - | |
| Liabilities | |||||
Trade accounts payable | - | - | - | - | |
| Statement of Profit or Loss | |||||
Revenue | 268 | 8 | 2 | 278 | |
Cost of revenues | - | - | - | - | |
Selling, general and administrative expenses | (2) | (2) | - | (4) | |
| Services billed by Shareholders included in profit and loss | |||||
Share-based compensation plans | - | - | - | - |
| December 31, 2022 | |||||
(millions of euros) | Associates | Shareholders | Other | Total | |
| Statement of Financial Position | |||||
| Assets | |||||
Trade accounts receivable | 49 | 6 | - | 55 | |
Non-current financial assets | 17 | - | - | 17 | |
Royalty advances | - | - | 25 | 25 | |
| Liabilities | |||||
Trade accounts payable | - | 1 | - | 1 | |
| Statement of Profit or Loss | |||||
Revenue | 275 | 13 | - | 288 | |
Cost of revenues | - | (4) | - | (4) | |
Selling, general and administrative expenses | (2) | (3) | (5) | ||
| Services billed by Shareholders included in profit and loss | |||||
Share-based compensation plans | - | (1) | - | (1) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 299
FINANCIAL STATEMENTS
| Legal entity name | Principal country of business |
Universal Music Group N.V. | Netherlands |
Universal Music Group, Inc. | United States |
Universal Music Group Holdings, Inc. | United States |
UMG Recordings, Inc. | United States |
Universal International Music B.V. | Netherlands |
Universal Music Entertainment GmbH | Germany |
Universal Music LLC | Japan |
Universal Music Holdings Ltd. | United Kingdom |
Universal Music Group Treasury S.A.S. | France |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 300
FINANCIAL STATEMENTS
Note 27. Statutory auditors fees
Fees for audit services include the audit of the financial statements of the UMG and its subsidiaries. Fees for other audit
services include review of interim financial statements, sustainability, and other audits. Fees for tax services include tax
compliance and tax advice. Fees for other non-audit services include agreed-upon procedures and advisory services.
Fees for tax and other non-audit services are related to the network outside the Netherlands and are in accordance with
local independence regulation.
| Year ended December 31, | |||
(millions of euros) | 2023 | 2022 | |
| Ernst & Young | Deloitte | Ernst & Young | |
| Accountants LLP | Accountants B.V. | Accountants LLP | |
Audit of UMG and its subsidiaries | 8 | 4 | 6 |
Other statutory services | - | - | - |
Tax services | - | - | - |
Other non-audit services | - | - | - |
| Total | 8 | 4 | 6 |
1
1 At the 2023 AGM, Ernst & Young Accountants LLP was appointed as the sole external auditor of UMG from 2023 to 2025. Total fees charged by the Dutch organization of
Ernst & Young was €4 million (2022: €2 million). Total fees charged by the Dutch organization of Deloitte in 2022 was €2 million.
| Company | |
| Name | 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 |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 301
FINANCIAL STATEMENTS
| Company | |
| Name | Number |
Arabella Musikverlag GmbH | HRB 110271 |
Centre Stage Artist Management GmbH | HRB 66733 |
Deutsche Grammophon Gesellschaft mbH | HRB 138012 |
Dreiklang-Dreimasken, Bühnen- und Musikverlag Gesellschaft mit beschränkter Haftung | HRB 110736 |
G. RICORDI & Co. Bühnen- und Musikverlag GmbH | HRB 153334 |
Musik Edition Discoton, Gesellschaft mit beschränkter Haftung | HRB 110249 |
Rob. Forberg Musikverlag GmbH | HRB 153343 |
Rondor Musikverlag G.m.b.H. | HRB 89705 |
Sheffield Music GmbH | HRB 221164 |
UNIVERSAL / MCA Music Publishing GmbH | HRB 85574 |
Universal Music Entertainment GmbH | HRB 86559 |
Universal Music GmbH | HRB 158632 |
Universal Music Publishing GmbH | HRB 87411 |
Universal Production Music GmbH | HRB 113037 |
Note 29. Subsequent events
In February 2024, UMG announced agreements to invest in Chord Music Partners (“Chord”), NTWRK and Mavin Global
(“Mavin”). Total cash consideration for these investments will be approximately €450 million. UMG expects to account for
its investments in Chord and NTWRK as associates using the equity method. UMG expects to account for its investment in
Mavin as a business combination. The NTWRK and Chord transactions closed in March 2024 while the Mavin transaction
remains subject to regulatory approval and is expected to close later in 2024.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 302
COMPANY STATEMENTS
FINANCIAL STATEMENTS
COMPANY STATEMENTS
CONTENTS OF COMPANY STATEMENTS
Company Statement of Profit or Loss and Other Comprehensive Income 305
Company Statement of Financial Position 306
Company Statement of Cash Flows 307
Company Statement of Changes in Equity 308
NOTES TO THE COMPANY FINANCIAL STATEMENTS 309
Note
1. General information
309
Note
2. Basis of preparation
309
Note
3. General and administrative expenses
314
Note
4. Financial income and expenses
314
Note
5. Investments in subsidiaries
315
Note
6. Current and non-current financial assets
316
Note
7. Cash position and borrowings
317
Note
8. Contractual obligations and other commitments
319
Note
9. Equity
320
Note
10. Related parties
323
Note
11. Statutory audit fees
323
Note
12. Subsequent events
324
MUSIC IS UNIVERSAL Annual Report 2023 | 304
FINANCIAL STATEMENTS
Company Statement of Profit or Loss and
Other Comprehensive Income
Year ended December 31,
(millions of euros) Note 2023 2022
General and administrative expenses 3 (7) (4)
Operating profit (7) (4)
Financial income 4 43 36
Financial expenses 4 (142) (45)
Profit/(loss) before income taxes (106) (13)
Income taxes 27 (3)
Profit/(loss) after income taxes (79) (16)
Net loss attributable to equity holders of the Company (79) (16)
Total comprehensive loss attributable to equity holders of the Company (79) (16)
COMPANY STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
MUSIC IS UNIVERSAL Annual Report 2023 | 305
FINANCIAL STATEMENTS
Company Statement of Financial Position
Year ended December 31,
(millions of euros) Note 2023 2022
Right of use assets 1 1
Investments in subsidiaries 5 35,930 33,000
Non-current financial assets 6 6 1,976
Deferred tax assets 30 -
Non-current assets 35,967 34,977
Current financial assets 6 66 333
Cash and cash equivalents 7 1 10
Current assets 67 343
TOTAL ASSETS 36,034 35,320
Share capital 18,217 18,135
Additional paid-in capital 14,994 14,935
Treasury Shares (5) (5)
Retained earnings (1,442) (721)
Total equity 9 31,764 32,344
Long-term borrowings 7 1,774 1,112
Long-term lease liabilities 1 1
Non-current liabilities 1,775 1,113
Short-term borrowings 7 2,490 1,856
Trade and other payables 5 7
Current liabilities 2,495 1,863
Total liabilities 4,270 2,976
TOTAL EQUITY AND LIABILITIES 36,034 35,320
COMPANY STATEMENT OF FINANCIAL POSITION
MUSIC IS UNIVERSAL Annual Report 2023 | 306
FINANCIAL STATEMENTS
Company Statement of Cash Flows
Year ended December 31,
(millions of euros) Note 2023 2022
Operating activities
Operating profit (7) (4)
Changes in net working capital (7) -
Adjustments for accrued interest - (3)
Net cash used for operating activities before income tax paid
(14)
(7)
Income tax paid (4) (3)
Net cash provided by/(used for) operating activities (18) (10)
Investing activities
Increase in financial assets 6 - (5)
Proceeds from financial assets 6 - 200
Interest received 43 34
Proceeds from subsidiaries on issuance of Share Based Payments awards 495 -
Net cash provided by/(used for) investing activities 538 229
Financing activities
Distributions to equity holders 9 (929) (798)
Transactions with shareowners
(929) (798)
Proceeds from borrowings 7 7,198 5,573
Repayments of borrowings 7 (6,669) (5,018)
Interest paid (127) (19)
Other cash items related to financial activities (6) -
Net cash provided by/(used for) financing activities (533) (262)
Change in cash and cash equivalents (13) (43)
Cash and cash equivalents
At beginning of the period 7 10 53
At end of the period 7 (3) 10
COMPANY STATEMENT OF CASH FLOWS
MUSIC IS UNIVERSAL Annual Report 2023 | 307
FINANCIAL STATEMENTS
Company Statement of Changes in Equity
Year ended December 31, 2023
(millions of euros) Note
Number
of shares
(thousands)
Share Capital
Additional
paid-
in capital
Treasury
shares
Retained
Earnings Total equity
BALANCE AS OF DECEMBER 31, 2022 1,813,513 18,135 14,935 (5) (721) 32,344
Net loss - - - - (79) (79)
TOTAL COMPREHENSIVE INCOME - - - - (79) (79)
Dividends paid
9 - - - - (929) (929)
Share-based compensation plans
9 8,152 82 59 - 287 428
TOTAL CHANGES OVER THE PERIOD 8,152 82 59 - (642) (501)
BALANCE AS OF DECEMBER 31, 2023 1,821,665 18,217 14,994 (5) (1,442) 31,764
Year ended December 31, 2022
(millions of euros) Note
Number
of shares
(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
9 - - - - (798) (798)
Share-based compensation plans
9 137 1 (6) 7 101 103
TOTAL CHANGES OVER THE PERIOD 137 1 (6) 7 (713) (711)
BALANCE AS OF DECEMBER 31, 2022 1,813,513 18,135 14,935 (5) (721) 32,344
COMPANY STATEMENT OF CHANGES IN EQUITY
MUSIC IS UNIVERSAL Annual Report 2023 | 308
FINANCIAL STATEMENTS
Notes to the Company
Financial Statements
Note 1.General information
Universal Music Group N.V. (“the Company”) is a public company with limited liability incorporated under the laws of 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.
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, 2023, 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 28, 2024 and will be submitted for adoption to the Annual General Meeting of Shareholders on May 16, 2024.
2.2 Basis of measurement
The Company financial statements were prepared using the same accounting policies as set out in the notes to
the consolidated financial statements at December 31, 2023 (the “Consolidated financial statements”), except for the
measurement of the investments as presented under Note 2.4 in the Company financial statements. The accounting
policies were consistently applied to all periods presented.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 309
FINANCIAL STATEMENTS
2.3 Foreign currency translation
The Company financial statements are presented 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 2023 accounting policy changes originated from the IFRS amendments, which became effective as at 1 January 2023,
however, the impact from their adoption on the Company financial statements of UMG N.V. was not material.
Accounting policy changes originating from the IFRS amendments
The Company has amended its accounting policies for new or amended IFRS standards and interpretations that became
effective as of 1 January 2023. None of these new or amended standards and interpretations had a material impact on
adoption. These are:
•
IFRS 17 Insurance Contracts
•
Definition of Accounting Estimates – Amendments to IAS 8
•
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to IAS 12
• International Tax Reform - Pillar Two Model Rules – Amendments to IAS 12
The Company has not early adopted any standards, interpretations or amendments that have been issued but are not
yet effective.
In March 2022, the Organisation for Economic Co-operation and Development (OECD) released technical guidance on its
15% global minimum tax agreed as the Pillar Two. The Company has significant operations in several jurisdictions where
the Pillar Two rules will firstly become in effect as of financial years starting in 2024. On May 23, 2023, the IASB issued
International Tax Reform—Pillar Two Model Rules – Amendments to IAS 12. These amendments introduced a mandatory
temporary exception to IAS 12 recognition and disclosure requirements resulting from tax laws enacted or substantively
enacted to implement the (OECD) Pillar Two tax reform.
Impact of standards issued but not yet effective
The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of
Company's financial statements are disclosed below. The Company intends to adopt these new and amended standards
and interpretations, if applicable, when they become effective.
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures, effective
1 January 2024
• Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback, effective 1 January 2024
• Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current
and Non-current Liabilities with Covenants, effective 1 January 2024
• Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability, effective
1 January 2025
Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures
The amendments, effective for the Company beginning on January 1, 2024, require an entity to provide certain
information about the impact of supplier finance arrangements on liabilities and cash flows. The Company does not
expect that adoption of this standard will have a material impact on the financial statements.
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback
The amendments, effective for the Company beginning on January 1, 2024, specify how a seller-lessee measures the
lease liability arising in a sale and leaseback transaction so that it does not recognise any amount of the gain or loss
that relates to the right of use retained. The Company does not expect that adoption of this standard will have a material
impact on its financial statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 310
FINANCIAL STATEMENTS
Amendments to IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current or Non-current and
Non-current Liabilities with Covenants
The amendments, effective for the Company beginning on January 1, 2024, clarify the criteria for determining whether
to classify a liability as current or non-current. The amendments also include additional disclosure requirements for
liabilities classified as non-current where an entity's right to defer settlement depends on future compliance with a loan
covenant within a 12-month period. The Company does not expect that adoption of this standard will have a material
impact on the Consolidated financial statements.
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rate: Lack of Exchangeability
The amendments, effective for the Company on January 1, 2025, specify how an entity should assess whether a
currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking. The
amendments also require disclosure of information that enables users of financial statements to understand the impact
of a currency not being exchangeable. The Company is currently assessing the impact the amendments will have on its
financial statements.
2.5 Significant judgements and estimates
The preparation of Company financial statements in compliance with IFRS requires management to make certain
judgements and estimates that they consider reasonable and realistic. Although these judgements and estimates are
regularly reviewed by management, based, in particular, on past or anticipated achievements, facts and circumstances
may lead to changes in these judgements and estimates which could have an impact on the reported amount of 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
Investments in subsidiaries are stated at cost, less impairment.
Dividend income from the Company's subsidiaries is recognized in the statement of profit or loss when the right 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
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 311
FINANCIAL STATEMENTS
amount that would have been determined if no impairment loss had been recognized for the asset in prior periods. 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 and subsequently measured at amortized cost and measured using the effective interest rate method.
Transaction costs relating to financial liabilities
Non-recurring costs incurred at inception of financial 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 an integral
part of the effective interest.
These costs are to be capitalised and recognised going forward as an adjustment to the effective interest rate for
the bonds.
2.12 Related parties
A related party is a person or an entity that is related to the Company. These include both people and entities that have,
or are subject to, the influence or control of the Company (e.g. key management personnel). Transactions with 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 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.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 312
FINANCIAL STATEMENTS
2.14 Financial guarantees
Financial guarantee is a contract that requires the issuer to make specified payments to reimburse the holder for a loss
it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.
Issued financial guarantees are initially recognised at fair value and are subject to the expected credit loss model, and 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 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 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
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 or a change in the in-substance fixed lease payments.
The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by
an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate
the lease, if it is reasonably certain not to be exercised. When determining the lease term, the Company considers all
relevant facts and circumstances that create an economic incentive to exercise an extension option, or not to exercise a
termination option.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 313
FINANCIAL STATEMENTS
Note 3.General and administrative expenses
General and administrative costs consisted of the following:
Year ended December 31,
(millions of euros) 2023 2022
Salaries 10 9
Pension - -
Social security and other employment expenses 1 1
Wages and expenses 11 10
Legal and professional fees
1
10 7
Audit fees 4 4
Other
2
(18) (17)
Total 7 4
Annual average number of full-time equivalent employees, of which none worked from
outside of the Netherlands. 39 35
1 Legal and professional fees mainly relate to legal, financial and consulting services.
2 Other consists of employee and service costs charged to and from subsidiaries.
Note 4.Financial income and expenses
Financial income and expenses consisted of the following:
Year ended December 31,
(millions of euros) 2023 2022
Interest income from intercompany loans 43 36
Financial income 43 36
Interest expense on borrowings (134) (36)
Cost of finance (8) (9)
Financial expenses (142) (45)
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 314
FINANCIAL STATEMENTS
Note 5.Investments in subsidiaries
Investments in subsidiaries consist of the following investments:
Net carrying value
Year ended December 31,
(millions of euros) Voting % interest 2023 2022
Universal International Music B.V.; Hilversum; The Netherlands 100 21,080 18,150
Universal Music Group, Inc.; Santa Monica; USA 100 14,850 14,850
35,930 33,000
On June 1, 2023, the Company made non-stipulated share premium contributions of €2,175million and €755million to
Universal International Music B.V. Refer to Note 6 and 7.
Net result and equity as per the most recent adopted financial statements:
Net Result
Shareholders' Equity
Year ended December 31, Year ended December 31,
2022 2021 2022 2021
Universal International Music B.V.
1
(480) (68) 6,018 6,498
Universal Music Group, Inc.
2
714 931 3,925 3,358
1 Millions of euros
2 Millions of US dollars
For a list of indirect subsidiaries and other group entities, refer to Note 26 of the Consolidated Financial Statements.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 315
FINANCIAL STATEMENTS
Note 6.Current and non-current financial assets
At December 31, 2022, current and non-current financial assets consisted primarily of loans receivable of €2,174million
from Universal International Music B.V. (“UIM”). These loans were issued primarily for the purpose of refinancing of debt
granted by Vivendi SE to UIM. Loans receivable are denominated in Euro.
The first loan bore interest at a rate of EURIBOR 3 months plus margin. Margin for 2023 was set at 1.03% (2022: 1.03%).
On June 1,2023, the Company contributed the full receivable, including accrued interest, with a total book value of
€805million, to UIM as a non-stipilated share premium contribution, without the issue of shares in the capital of UIM.
The second loan bore interest at a rate of EURIBOR 1 month plus margin. Margin for 2023 was set at 1.13% (2022: 1.13%).
On June 1,2023, the Company contributed the full receivable, including accrued interest, with a total book value of
€1,370million, to UIM as a non-stipilated share premium contribution, without the issue of shares in the capital of UIM.
Other non-current financial assets consist of capitalized bank fees of €6million paid to banks as part of obtaining the
credit facility as disclosed in Note 7, less amortization over the term of the facility.
Other current financial assets consisted of the following:
Year ended December 31,
(millions of euros) 2023 2022
Current intercompany receivables 19 18
Other intercompany receivables related to share-based compensation 47 108
66 126
Current intercompany receivables primarily consist of a short-term receivable from Universal Music Group, Inc for
expenses paid on behalf of Universal Music Group, Inc.
Refer to Note 23 of the Consolidated Financial Statements for more details on share-based compensation.
The Company is exposed to credit risk embedded in these loans receivable and being the credit risk of UIM. The
Company assessed potential credit losses on the loans receivable based on the expected credit loss model (“ECL”),
which is designed to be forward-looking. The ECL estimates were unbiased and included reasonable and supportable
information about past events, current conditions, and forecasts of future economic conditions. UMG Treasury 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.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 316
FINANCIAL STATEMENTS
Note 7.Cash position and borrowings
Cash position
Year ended December 31,
(millions of euros) 2023 2022
Cash and cash equivalents 1 10
Bank overdrafts (4) -
Cash and cash equivalents in the statement of cash flows (3) 10
Borrowings
December 31, 2023 December 31, 2022
(millions of euros) Total Long-term Short-term Total Long-term Short-term
Bonds 1,808 1,774 34 1,004 987 17
Drawn revolving
credit facilities - - - 125 125 -
Commercial papers 197 - 197 929 - 929
Intercompany payable 2,255 - 2,255 910 - 910
Bank overdrafts 4 - 4 - - -
4,264 1,774 2,490 2,968 1,112 1,856
New borrowings
In July 2023, the Company issued ¥7billion (€45million) of senior notes due on July 5, 2038 with a coupon of 1.61%.
In June 2023, the Company issued €750million of senior unsecured notes due on June 13, 2031 with a coupon of 4.00%.
In March 2023, the Company entered into a short-term bilateral floating rate €500million revolving credit facility. The
facility matures 12 months from the signing date.
In February 2023, the Company extended the original maturity of the syndicated floating rate €2billion revolving credit
facility. The maturity date was extended for two years up to April 26, 2028. All other conditions remained unchanged
The committed multi-currency RCF bears interest at a variable rate based on the relevant EURIBOR and LIBOR respectively
with zero-floor plus a margin and the EURcommercial paper program bears variable interest rates of EURIBOR plus
margin. The margin was 0.24% as of December 31, 2023 (2022: 0.36%) and is subject to adjustment based on the level of
Net Debt to EBITDA ratio as at every financial year-end.
The intercompany payable consist of a short-term payable to Universal Music Group Treasury S.A.S. under a Cash
Management Agreement.
Financial covenants
During 2023, the Company maintained its Baa1/BBB Long Term Credit Ratings from Moody's and S&P. The syndicated RCF
financial covenant requires that UMG maintain Baa2/BBB long term ratings with Moody’s and S&P.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 317
FINANCIAL STATEMENTS
Movements of borrowings
The movements in borrowings were as follows:
(millions of euros)
Term
Facility
Drawn
Revolving
Credit
Facility
Bonds
Bank
Overdrafts
Commercial
Papers
Inter-
company
payable
Total
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
New borrowings - 1,075 794 4 4,738 591 7,202
Repayments - (1,200) - - (5,469) - (6,669)
Non-stipulated share
premium contribution - - - - - 755 755
Translation differences and
other movements - - 10 - (1) - 9
Balance December 31, 2023 - - 1,808 4 197 2,256 4,265
Interest rate risk is the risk of the fair value or future cash flows of a financial instrument fluctuating because of changes
in the market interest rates. Financial instruments included in the borrowings create an inherent interest rate risk.
The Company seeks to limit the period over which interest rates on debt are exposed. The preferred method of hedging
interest rate risk is issuing long term fixed-rate bonds. The use of interest-rate plain vanilla derivatives is also
authorized. The list of authorized instruments includes Interest rate swaps, FRAs, caps, and floors.
As of December 31, 2023, the Company had a ratio of fixed-rate debt to total outstanding net debt of approximately 87%,
including lease liabilities. A sensitivity analysis conducted in January 2024 on the gross debt portfolio shows that if short
term EURIBOR were to increase instantaneously by 0.5% from their level of December 31, 2023, with all other variables
held constant, the additional annualized interest expense would be €1million.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 318
FINANCIAL STATEMENTS
Note 8.Contractual obligations and other commitments
The table below analyzes the Company's material financial liabilities into relevant maturity groupings based on 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, 2023
Total minimum future
payments as of
Payments due in
December 31, 2022
(millions of euros) Total 1 year 2-5 years After 5 years
Drawn revolving credit facility - - - - 128
Term Loan - - - - -
Bonds 2,239 64 735 1,440 1,263
Commercial Papers 201 201 - - 934
Lease liabilities - - - - -
2,440 265 735 1,440 2,325
Liquidity risk
The Company is exposed to the liquidity risk. Liquidity risk management ensures the ability to meet financial obligations
as they fall due.
The primary objective of liquidity management is providing for sufficient cash and cash equivalents to enable 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 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, 2023, the Company provided guarantees over certain debt of the following subsidiaries: Universal Music
Group Treasury S.A.S. €190million; Universal Music Ltda. (Brazil) €86million; 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, Germany and the Netherlands.
The Company has provided guarantees to the following Universal Music Group subsidiaries, incorporated in the
Netherlands, under the registered number indicated, under section 403 of Book 2 of the Dutch Civil Code.
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 319
FINANCIAL STATEMENTS
Name Company Number
Universal International Music B.V. 31018439
Universal Music Publishing International B.V. 31037866
Universal Music Publishing B.V. 32101966
CMHL B.V. 32140273
Universal Production Music B.V. 85798479
The Company is head of the fiscal unity of Universal Music Group in the Netherlands. As a result, the Company is liable
for the tax liability of the fiscal unity in the Netherlands.
In addition UMG has provided guarantees to the following subsidiaries, incorporated in Germany, under the registered
number indicated, under section 264 paragraph 3 of the German Commercial Code.
Name
Company Number
Arabella Musikverlag GmbH HRB 110271
Centre Stage Artist Management GmbH HRB 66733
Deutsche Grammophon Gesellschaft mbH HRB 138012
Dreiklang-Dreimasken, Bühnen- und Musikverlag Gesellschaft mit beschränkter Haftung HRB 110736
G. RICORDI & Co. Bühnen- und Musikverlag GmbH HRB 153334
Musik Edition Discoton, Gesellschaft mit beschränkter Haftung HRB 110249
Rob. Forberg Musikverlag GmbH HRB 153343
Rondor Musikverlag G.m.b.H. HRB 89705
Sheffield Music GmbH HRB 221164
UNIVERSAL / MCA Music Publishing GmbH HRB 85574
Universal Music Entertainment GmbH HRB 86559
Universal Music GmbH HRB 158632
Universal Music Publishing GmbH HRB 87411
Universal Production Music GmbH HRB 113037
Note 9.Equity
Share capital
The Company has an authorized share capital of €27,000million, divided into 2,700,000,000 ordinary shares with a
nominal value of €10 per share. On December 31, 2023, the issued and fully paid share capital consisted of 1,821,665,441
ordinary shares with a nominal value of €10 per share (2022: 1,813,512,742 ordinary shares with a nominal value of €10
per share).
The following table summarizes the changes in the number of issued and fully paid up shares of the Company for the
year ended December 31, 2023:
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 320
FINANCIAL STATEMENTS
Ordinary Shares
Issued and fully paid up shares as at December 31, 2022 1,813,512,742
Shares issued
1
8,152,699
Issued and fully paid up shares as at December 31. 2023 1,821,665,441
1 In 2023, the Company issued 8,152,699 shares for the purpose of delivering on the share-based executive incentive plan, refer to Note 23 of the Consolidated Financial
Statements for more details.
Additional paid-in capital
Additional paid-in capital represents the premium paid in excess of the par value of shares at the time of the 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, 2023 the Company held 214,235 shares (2022: 214,235) as Treasury shares.
Dividend distribution
On May 11, 2023 the shareholders approved a dividend distribution of €0.27 per ordinary share, corresponding to a total
distribution of €492million, payable in June 2023.
On July 26, 2023 the directors approved an interim dividend distribution of €0.24 per ordinary share, corresponding to a
total distribution of €437million payable in October 2023.
The Company plans to annually declare and pay dividends to all holders of the Shares on a pro rata basis in two
semi-annual instalments, in the aggregate amount of no less than 50% of the Company's net profits realized during 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.
A proposal will be submitted to the 2024 Annual General Meeting of Shareholders to pay a dividend of €0.27 per ordinary
share corresponding to a total distribution of €492million, in cash, from the 2023 retained earnings of the Company,
payable in Q2 2024.
Pursuant to Dutch law, limitations exist relating to the distribution of shareholders’ equity up to at least the total amount
of the share capital, the legal reserve, as well as other reserves mandated per the Company Articles of Association.
At December 31, 2023, the legal and non-distributable reserves of the Company amounted to €18,217million (2022:
€18,135million).
NOTES TO THE COMPANY FINANCIAL STATEMENTS
MUSIC IS UNIVERSAL Annual Report 2023 | 321
FINANCIAL STATEMENTS
Reconciliation of equity and net (loss)/profit
Year ended
December 31,
(millions of euros) 2023
Equity attributable to Universal Music Group equity holders in the Consolidated financial statements as at
December 31, 2023
2,962
Combined equity pre-incorporation (1,634)
Intra-group restructuring upon incorporation 33,000
Cumulative dividend income received 785
Cumulative results of subsidiaries in the Consolidated financial statements (3,042)
Cumulative charges and income directly recognized in equity in the Consolidated financial statements (307)
Equity in the Company financial statements as at December 31, 2023 31,764
The reconciliation of equity and net (loss)/profit as per the Consolidated financial statements to equity and net (loss)/
profit as per the Company financial statements is provided below:
Year ended
December 31,
(millions of euros) 2023
Net (loss)/profit attributable to equity holders of the parent in the Consolidated financial statements 1,259
Results of subsidiaries in the Consolidated financial statements (1,338)
Net (loss)/profit in the Company financial statements as at December 31, 2023 (79)
Year ended
December 31,
(millions of euros) 2022
Equity attributable to Universal Music Group equity holders in the Consolidated financial statements as at
December 31, 2022
2,351
Combined equity pre-incorporation (1,634)
Intra-group restructuring upon incorporation 33,000
Cumulative dividend income received 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
Year ended
December 31,
(millions of euros) 2022
Net (loss)/profit attributable to equity holders of the parent in the Consolidated financial statements 782
Results of subsidiaries in the Consolidated financial statements (798)
Net (loss)/profit in the Company financial statements as at December 31, 2022 (16)
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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FINANCIAL STATEMENTS
Note 10.Related parties
Detailed information on the remuneration of the Board of Directors and senior management is included in the “Corporate
Governance” and “Remuneration of Directors” sections to the Annual Report. Also refer to Note 24 Related Parties of the
Consolidated financial statements.
Executive management compensation
As of December 31, 2023 there were 2 (2022: 2) Executive Directors on the UMG N.V board. Their aggregate compensation is
presented in the table below.
Year ended December 31,
(millions of euros) 2023 2022
Short-term employee benefits 3 3
3 3
The Chairman and CEO is directly remunerated by another group company and this remuneration is not recharged to
the Company.
Non-executive board compensation
As of December 31, 2023, UMG's non-executive board received director fees of €1million (2022: €1million).
Other related-party transactions
Other related parties include:
• Overhead costs recharged from and to Universal International Music B.V. to a net income amount of €25million.
Disclosed under “Other” in Note 3;
• Investments in subsidiaries (Note 5);
• Long term receivables from Universal International Music B.V. (Note 6);
• Financial income on loans granted (Note 4);
• Intercompany payables (Note 7);
• Financial Guarantees provided to subsidiaries (Note 8);
• Guarantee fees received on guarantees provided to subsidiaries (Note 8);
Note
11.Statutory audit fees
The fees for services provided by the Company’s independent auditors, Ernst & Young Accountants LLP and its member
firms and/or affiliates, consisted of the following:
2023
2022
(millions of euros)
Ernst & Young
Accountants LLP
Deloitte
Accountants B.V.
Ernst & Young
Accountants LLP
Audit of the Company 4 2 2
Total 4 2 2
NOTES TO THE COMPANY FINANCIAL STATEMENTS
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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 paid-up 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 paid-up 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.
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INDEPENDENT AUDITOR'S REPORT
To: the shareholders and non-executive directors of Universal Music Group N.V.
Report on the audit of the financial statements 2023 included in the
annual report
Our opinion
We have audited the financial statements for the financial year ended December
31, 2023 of Universal Music Group N.V. based in Amsterdam, the Netherlands.
In our opinion the accompanying financial statements give a true and fair view
of the financial position of Universal Music Group N.V. as at December 31, 2023
and of its result and its cash flows for 2023 in accordance with International
Financial Reporting Standards (IFRSs) as issued by the International Accounting
Standards Board (IASB), IFRSs as adopted in the European Union (EU-IFRSs) 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, 2023
• The following statements for 2023: the consolidated and company the
statements of profit or loss, comprehensive income, changes in equity and
cash flows
• The notes comprising material accounting policy information 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. (the company) 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.
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.
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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
Materiality
€90million (2022: €75million)
Benchmark
applied
5% of profit before income taxes normalized for the changes in fair
value financial instruments
Explanation
We determined materiality based on our understanding of the
Company’s business and our perception of the financial information
needs of users of the financial statements. We considered profit
before income taxes normalized for the changes in fair value of
financial instruments as an important metric for users of the
financial statements. The benchmark applied and the percentage
used are in line with our 2022 audit.
We have also taken into account misstatements and/or possible misstatements
that in our opinion are material for the users of the financial statements for
qualitative reasons.
We agreed with non-executive directors that misstatements in excess of
€4.5million, which are identified during the audit, would be reported to them,
as well as smaller misstatements that in our view must be reported on
qualitative grounds.
Scope of the group audit
Universal Music Group N.V. is at the head of a group of entities. The financial
information of this group is included in the consolidated financial statements.
Because we are ultimately responsible for the opinion, we are also 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. We have:
• Performed audit procedures ourselves 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, equity
investments and taxes.
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• Used the work of other auditors when auditing the in-scope entities located
in the United States, the United Kingdom, Japan, France and Germany.
Our ISA 600 procedures included a combination of physical and remote
working paper reviews for the entities above, including meetings with
the component auditors and component management. We also reviewed
component audit team deliverables for the entities listed above to gain a
sufficient understanding of the work performed based on our instructions.
• Performed review procedures or specific audit procedures at other
group entities.
In total these procedures represent 95% of the group’s total assets, 100% of
profit before income taxes and 94% of gross revenues.
By performing the procedures mentioned above at components of the group,
together with additional procedures at group level, we have been able 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, forensics, sustainability, share based
payments, income tax, valuations and employee benefits.
Our focus on climate-related risks and the energy transition
Climate change and the energy transition are high on the public agenda.
Issues such as CO2 reduction impact financial reporting, as these issues entail
risks for the business operation, the valuation of assets and provisions or
the sustainability of the business model and access to financial markets of
companies with a larger CO2 footprint.
The board of directors summarized the 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 and (constructive) obligations, 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 Introduction,
Strategy, Organizational and Reporting Structure, Financial Review, Corporate
Governance, Shareholders Information, Risk and Risk Management, Non-
Financial Information and the financial statements.
Based on the audit procedures performed, we do not deem climate-related risks
to have a material impact on the financial reporting judgements, estimates or
significant assumptions as at December 31, 2023.
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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 section Risk and Risk management of the board report for
board’s (fraud) risk assessment and the Audit Committee section of the non-
executive directors’ report in which non-executive directors reflect on this
(fraud) risk assessment.
We evaluated the design and relevant aspects of the system of internal
control and in particular the fraud risk assessment, as well as the code of
conduct, whistle blower procedures and incident registration. We evaluated 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.
We addressed the risks related to management override of controls, as this
risk is present in all companies. For these risks we have performed procedures
among other things 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.
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The following fraud risk identified required significant attention during
our audit.
Presumed risk of fraud in revenue recognition
Fraud risk
We presumed that there are risks of fraud in revenue recognition.
We evaluated that the contractual agreements and conditions of
streaming and subscription revenue in particular give rise to
such risks.
Our audit
approach
We describe the audit procedures responsive to the presumed risk
of fraud in revenue recognition in the description of our audit
approach for the key audit matter Revenue recognition for streaming
and subscriptions.
We considered available information and made enquiries of relevant executives,
directors, internal audit, legal, compliance, human resources and regional
directors and the non-executive directors.
The fraud risks we identified, enquiries and other available information did not
lead to specific indications for fraud or suspected fraud potentially materially
impacting the view of the financial statements.
Our audit response related to risks of non-compliance with laws and regulations
We performed appropriate audit procedures regarding compliance with 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 from our general industry experience, through
discussions with the board of directors and key management personnel, reading
minutes, inspection of internal audit and compliance reports, and performing
substantive tests of details of classes of transactions, account balances 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 of director’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
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that may cast significant doubt on the company’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion.
Based on our procedures performed, we did not identify material uncertainties
about going concern. Our conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future events or conditions may
cause a company to cease to continue as a going concern.
Our key audit matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the financial statements. We have
communicated the key audit matters to the non-executive directors. The key
audit matters are not a comprehensive reflection of all matters discussed.
In comparison with previous year, two new key audit matters, revenue
recognition of streaming and subscription revenue and the valuation of the
music catalogues, have been defined as included below.
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Revenue recognition for streaming and subscriptions
Risk
The streaming and subscription revenues of the Company are driven
through global digital contracts. The total amount of streaming and
subscription revenue recognized for the year ended December 31,
2023 amount to EUR5.7billion (2022: EUR5.3billion).
As described in note 2.4.5 and note 3, revenues from contracts with
customers are recognized when performance obligations included in
the contract are satisfied, and for an amount for which it is highly
probable that a significant reversal in the amount of cumulative
revenue recognized will not occur.
There is a risk of management influencing revenue recognition
through override of streaming and subscription revenue controls for
these contracts.
As described in note 2.2, significant judgement is required to
identify performance obligations under contracts with customers and
to determine whether these performance obligations are satisfied,
among other factors.
We consider this to be a key audit matter due to the complexity of
the contractual terms and conditions and the significant judgements
applied by management in its revenue recognition.
Our audit
approach
Our audit procedures included, among others, evaluating the
appropriateness of the Company's revenue recognition policies for
streaming and subscription revenue in accordance with IFRS 15
'Revenue from Contracts with Customers' and whether the policies
have been applied consistently or whether changes, if any, are
appropriate in the circumstances.
We performed the following procedures, among others:
•
We gained insight in the process for identifying and accounting
for specific revenue terms and conditions included in contracts
with digital sales partners.
•
We evaluated the design and implementation of controls that
address the identified risk.
•
We performed contract reviews on significant contracts with
digital sales partners in order to verify if these are recognized
in accordance with IFRS 15.
•
We evaluated management’s judgement on revenue recognition
for specific contractual terms, based on the relevant digital
revenue contracts and reconciled this to revenue recorded in the
financial administration.
•
We also evaluated the adequacy of the disclosures provided by
the Company in Notes 2.2, 2.4.5 and 3.
Key
observations
We did not identify any material misstatements in the revenue
recorded in the year, either due to fraud or error.
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Valuation of royalty advances to artists and repertoire owners
Risk
The Company provides royalty advances to artists in order to support
the artist in future performances. As of December 31, 2023, the
total amount of royalty advances amounted to EUR2.6billion (2022:
EUR2.6billion).
As described in note 2.4.8 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 a 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 applied by management, in estimating 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 applied by management in determining the estimated
royalty advances.
Our audit
approach
As part of our audit procedures, we obtained an understanding
of the estimation process and management's application of the
related accounting policies. Specifically, we evaluated the Company's
accounting policy over recognition and measurement of royalty
advances in accordance with IAS 38 'Intangible assets'. Furthermore
we performed, among others, the following audit procedures:
•
We obtained an understanding of the process and estimation
models for determining the future projections relating to
artist advances.
•
We evaluated the contracts and payments relating to material
royalty advances during the year.
•
We tested the recoupment of new and existing royalty advances
capitalized with material net exposure as at December 31, 2023.
•
We evaluated the recoverability of exposed advances and related
future contractual commitments by performing sensitivity
analyses on historical recoupment run-rates to assess the
assumptions made by management in its artists' advance
recoverability analysis.
•
We assessed the classification of advances between Non-current
royalty advances and Current royalty advances recorded on the
Company’s statement of financial position.
•
We assessed the adequacy of the disclosures in notes 2.2, 2.4.8
and note 9.
Key
observations
Applying the aforementioned materiality, we did not identify any
reportable findings in the board of director’s assessment of the
royalty advances.
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Valuation of music catalogues
Risk
The Company has presented music catalogues on the balance
sheet as of December 31, 2023 amounting to EUR3.0billion (2022:
EUR3.1billion).
As described in note 2.4.8, music catalogues are recognized at cost,
and music catalogues acquired in a business combination are
recorded at their fair value at the acquisition date. Amortisation
expense is charged on a straight-line basis over the estimated useful
life. Annually, impairment tests are performed to compare the future
cash flows of each music catalogue against the carrying amount.
As described in note 2.2, the Company identifies a significant
estimate relating to the assumptions in the impairment tests
performed as well as the determination of the (remaining) useful life
for the music catalogues.
As the related amounts of the music catalogues presented
are significant and the estimation involved includes significant
judgement applied by management, we consider this a key
audit matter.
Our audit
approach
As part of our audit procedures, we obtained an understanding
of the estimation process to determine the valuation of the
music catalogues and the Company's application of the related
accounting policies. We evaluated the Conmpany's accounting
policies over recognition and measurement of music catalogues for
compliance with IAS 36 'Impairment of assets' and IAS 38 ' Intangible
assets'. Additionally, we performed, among others, the following
audit procedures:
•
We obtained an understanding of management's process to
determine the qualitative and quantitative factors supporting the
catalogues' useful life, such as the asset's expected pattern of
future earnings and the period of the contractual arrangements.
•
We assessed the historical revenues associated with those
catalogues, along with forecasted revenues, in order to assess
the appropriateness of the catalogues’ (remaining) useful life
•
We evaluated management’s impairment indicator assessment
over catalogues, if any impairment indicators identified by
management we evaluated the impairment assessment to
determine whether any impairment should be recorded during
the year ended December 31, 2023.
•
We assessed the adequacy of the disclosures in notes 2.2, 2.4.8
and note 9 to the financial statements.
Key
observations
Applying the aforementioned materiality, we did not identify any
reportable findings in the board of director’s impairment assessment
and valuation of music catalogues.
Report on other information included in the annual report
The annual report contains other information in addition to the financial
statements and our auditor’s report thereon.
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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 management 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 management report in accordance with Part 9 of Book
2 of the Dutch Civil Code and other information required by Part 9 of Book 2 of
the Dutch Civil Code. The board of directors and the non-executive directors
are responsible for ensuring that the remuneration report is drawn up 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 Reporting Format (ESEF)
Universal Music Group N.V. has prepared the annual report in ESEF. The
requirements for this are set out in the Delegated Regulation (EU) 2019/815
with regard to regulatory technical standards on the specification of a single
electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion the annual report prepared in the XHTML format, including
the (partially) marked-up consolidated financial statements as included in
the reporting package by Universal Music Group N.V., complies in all material
respects with the RTS on ESEF.
The board of directors is responsible for preparing the annual report, including
the financial statements, in accordance with the RTS on ESEF, whereby the 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.
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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 IFRSs as issued by the IASB,
EU-IFRSs 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.
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
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OTHER INFORMATIONOTHER INFORMATION
statements. The materiality affects the nature, timing and extent of our audit
procedures and the evaluation of the effect of identified misstatements on
our opinion.
We have exercised professional judgment and have maintained professional
skepticism throughout the audit, in accordance with Dutch Standards
on Auditing, ethical requirements and independence requirements. The
Information in support of our opinion section above includes an informative
summary of our responsibilities and the work performed as the basis for our
opinion. Our audit further included among others:
• Performing audit procedures responsive to the risks identified, 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.
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 these matters 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 28, 2024
Ernst & Young Accountants LLP
Signed by F.J. Blenderman
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APPENDIXAPPENDIX
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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APPENDIXAPPENDIX
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
others. She has signed and works with the world’s biggest superstars including
Elton John, Taylor Swift, Harry Styles, Kendrick Lamar, Bad Bunny, Adele, The
Weeknd,Billie Eilish, SZA, Rosalia, Drake, Steve Lacy, Alicia Keys,Lana Del Rey.
Coldplay, Justin Bieber, Post Malone, Ariana Grande, H.E.R., Maren Morris, the
Bee Gees, Prince, and more. Additionally, Gerson jointly oversees Polygram
Entertainment, a film and television development and production division of
UMG which has produced award-winning projects including The Bee Gees: How
to Mend a Broken Heart (HBO), Dear Mama (FX) and HBO’s Music Box series.
Gerson cofounded nonprofit She Is The Music and serves on 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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APPENDIXAPPENDIX
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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APPENDIXAPPENDIX
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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APPENDIXAPPENDIX
BIOS BOARD OF DIRECTORS
Sir Lucian Grainge
Male, Age: 64, Nationality: British
CHAIRMAN AND CHIEF EXECUTIVE OFFICER AND EXECUTIVE DIRECTOR
Sir Lucian Grainge has spent his entire career in the music industry and has
signed and worked with many worldwide stars, including ABBA, Jay Z, Elton
John, Katy Perry, Queen, Rihanna, The Rolling Stones, Sam Smith, U2 and Amy
Winehouse, among many others.During the span of four decades, he not only
pioneered new approaches to the signing and development of the world’s 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: 63, Nationality: French
DEPUTY CHIEF EXECUTIVE OFFICER, CORPORATE AND EXECUTIVE DIRECTOR
Vincent Vallejo is Deputy Chief Executive Officer, Corporate for Universal Music
Group. Based at the Company’s corporate headquarters in Hilversum, 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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APPENDIXAPPENDIX
Sherry Lansing
Female, Age: 79, Nationality: American
CHAIRMAN OF THE BOARD AND INDEPENDENT NON-EXECUTIVE DIRECTOR
Sherry Lansing is the founder and CEO of The Sherry Lansing Foundation,
an organization dedicated to funding and raising awareness for cancer
research, health, public education, and encore career opportunities. Lansing has
extensive knowledge regarding the creative industries, including but not limited
to audio/visual content. During a nearly 30-year career in the motion 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.
Antoine Fiévet
Male, Age 60, Nationality: French
INDEPENDENT NON-EXECUTIVE DIRECTOR
Antoine Fiévet is the Chairman and CEO of the Bel Group, a world leader 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, and as Chairman since 2009. Under Fiévet’s leadership, Bel Group adopted
concrete actions to address sustainable agriculture, healthy food, responsible
packaging, the fight against climate change and product accessibility. Fiévet
received a graduate degree from Université Paris II Panthéon Assas and an
undergraduate degree from Institut Supérieur de Gestion.
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APPENDIXAPPENDIX
Bill Ackman
Male, Age: 57, Nationality: American
NON-EXECUTIVE DIRECTOR
Bill Ackman is the CEO of Pershing Square Capital Management, L.P., an
investment firm he founded in 2003. Ackman is Chairman of Howard Hughes
Holdings Inc. (NYSE:HHH), and Chairman and CEO of Pershing Square SPARC
Holdings, Ltd., a special purpose acquisition rights company. He serves 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: 52, Nationality: French and Togolese
NON-EXECUTIVE DIRECTOR
Cathia Lawson-Hall has over 25 years' experience in the financial sector. She
was Head of Coverage and Investment Banking for Africa at Société Générale,
in charge of the overall relationship and strategic advisory with governments,
large corporates and financial institutions in Africa. Previously, she served as
Managing Director, Co-Head of Debt Capital Markets for corporates in France,
Belgium and Luxembourg. Lawson-Hall is also a member of the Board of
Directors of two listed companies, Vivendi SE and Endeavour Mining Plc. She
is also an independent director of Agence Française de Développement (AFD)
and sits on the board of directors of 'Amis du Centre Pompidou', the first
patrons of the museum who contribute to the enrichment of the collections
of the institution. Lawson-Hall was one of six recipients, alongside the Mayor
of London, Sadiq Khan, of a Diversity Award in 2017 awarded by the think tank
"Club XXIe-Siècle" in the "Career path" category. In 2015, Lawson-Hall was voted
Manager of the Year at the sixth edition of La Tribune Women's Awards. Lawson-
Hall holds a Master’s degree and a postgraduate degree in Finance from Paris
Dauphine University.
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APPENDIXAPPENDIX
Cyrille Bolloré
Male, Age: 38, 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 the
Board of Directors of Bolloré Energy, 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, 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.
Haim Saban
Male, Age 79, Nationality: American and Israeli
INDEPENDENT NON-EXECUTIVE DIRECTOR
Haim Saban is an entrepreneur with more than four decades of experience
building successful media and telecommunication businesses. He is the
Chairman and CEO of Saban Capital LLC, a private Los Angeles-based investment
firm that spans operations in real estate, venture capital, film and music.
In partnership with News Corp. and Rupert Murdoch, Saban co-founded Fox
Family Worldwide in 1996, creating a global television, broadcasting, production,
distribution and merchandising company. In 2001, Walt Disney Co. acquired Fox
Family for an enterprise value of USD 5.3billion. Saban founded Saban Capital
Group (SCG) and led an investor group in 2003 to buy a controlling stake in
ProSiebenSat.1 Media, Germany’s largest broadcaster. He served as Chairman
of its Supervisory Board and in 2007 oversaw the sale of the controlling stake
to KKR and Permira at a USD 7.5billion valuation, representing five times the
initial investment. In 2005, SCG and Apax Partners acquired a controlling stake
in Bezeq, Israel’s largest telecom company, which they sold to Eurocom Group
at a valuation of more than four-and-a-half times the initial investment five
years later. SCG led the acquisition in 2007 of Univision Communications, the
leading Spanish-language media company in the U.S. for which Saban served
as Chairman. SCG continues to make minority and controlling investments in
early stage private and public companies, including Epic Games, Keshet, Kite
Pharma and Roblox, among others; feature film projects through Saban Films;
and private equity investments in companies, including Celestial Tiger. In 2019,
SCG launched Saban Music Group, a global independent recorded music and
publishing company, which partnered in 2020 with UMG for distribution.
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APPENDIXAPPENDIX
James Mitchell
Male, Age: 50, 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 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)
and Tencent Music Entertainment Group (NYSE:TME, HKEX:1698), and of various
unlisted companies. Prior to joining Tencent, Mitchell was a Managing Director
at Goldman Sachs. Mitchell received a Bachelor of Arts degree from Oxford
University and holds a Chartered Financial Analyst certification.
Luc Van Os
Male, Age: 57, Nationality: Dutch
NON-EXECUTIVE DIRECTOR
Luc van Os is co-owner of Misset Uitgeverij, a B2B publisher of multi-media
brands for the agricultural sector, and of Rendement Uitgeverij, a B2B 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.
Manning Doherty
Male, Age: 51, Nationality: Canadian
NON-EXECUTIVE DIRECTOR
Manning Doherty is a Managing Director of GIC Pte Ltd., a Singaporean sovereign
wealth fund. He is the Head of the Infrastructure Group (North America),
investing across the capital structure in infrastructure and related industries.
Doherty's career spans senior roles in equity research, private equity and
special situation investing in Asia and the U.S. Prior to GIC, he served as
Managing Director of Mount Kellett Capital and as Managing Director of Oaktree
Capital Management. As an active investor, Doherty assists companies with
strategic reviews to develop adjacent business lines, improve KPI monitoring
and decision making, and supplement the evaluation of strategic M&A and
corporate finance actions. He holds an MBA from The Wharton School and
a Master’s degree in International Studies from the Lauder Institute at the
University of Pennsylvania. He also holds a Bachelor of Arts degree from Queen’s
University in Kingston, Ontario.
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APPENDIXAPPENDIX
Margaret Frerejean-Taittinger
Female, Age: 38, Nationality: American
INDEPENDENT NON-EXECUTIVE DIRECTOR
Margaret Frerejean-Taittinger is the co-founder of French Bloom, a company
that specializes in organic alcohol-free sparkling wines. Serving as Chief
Marketing Officer, Frerejean-Taittinger has successfully positioned French
Bloom as the market leader of the super-premium 0.0% category with presence
in more than 30 markets. Previously, she served as International Development
Manager for the Michelin Guide, the renowned restaurant rating system 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.
Nicole Avant
Female, Age: 56, Nationality: American
INDEPENDENT NON-EXECUTIVE DIRECTOR
Nicole Avant is the best selling author of “Think You’ll Be Happy - Moving
Through Grief with Grit, Grace and Gratitude”. She served as the 13th U.S.
Ambassador to The Bahamas after being nominated by President Barack Obama
and unanimously confirmed by the U.S. Senate, becoming the youngest as
well as the first African American woman to hold the position. In addition to
her international diplomatic work, Ambassador Avant brings deep commercial
insight and knowledge of the media and entertainment industries having
worked in the music business for over 25 years and serving as Vice President of
Interior Music Publishing, founded by her father, entertainment mogul, Clarence
Avant. Ambassador Avant currently focuses her efforts in film and television
production and has produced the critically acclaimed and award winning films
“The Black Godfather” and “Trees of Peace”. Ambassador Avant also serves
on the Board of Soho House & Co, Inc. Throughout her career, Ambassador
Avant has also pursued an array of business and philanthropic ventures.
Ambassador Avant graduated with a Bachelor of Arts degree in Communications
from California State University, Northridge.
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APPENDIXAPPENDIX
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 indicators) 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 companies may have
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 its operating performance and the performance of its
operating segments as reported in the segment data. It enables UMG to compare
the operating performance of operating segments regardless of whether their
performance is driven by the operating segment’s organic growth or by
acquisitions. It excludes restructuring expenses, which may impact period-to-
period comparability. EBITDA margin is EBITDA divided by revenue.
To calculate EBITDA, the accounting impact of the following items is excluded
from Operating Profit:
i. amortization of intangible assets;
ii. impairment on goodwill and other intangibles;
iii. depreciation of tangible assets including right of use assets;
iv. (gains)/losses on the sale of tangible assets, included right of use assets and
intangible assets; and
v. restructuring expenses.
Adjusted EBITDA and Adjusted EBITDA margin
The difference between EBITDA and Adjusted EBITDA consists of non-cash
share-based compensation expenses and certain one-time items that are
deemed by management to be significant and incidental to normal 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
activities excluding items that may be incidental to normal business activity
and excluding non-cash share based compensation which may impact period-
to-period comparability.
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APPENDIXAPPENDIX
Adjusted Net Profit/Adjusted Net Profit per share
UMG's use of Adjusted net profit is appropriate as UMG uses it as the basis for
the Adjusted net profit per share (in EUR) – diluted, both of which are non-IFRS
measures. Adjusted net profit may be subject to limitations as an analytical
tool for investors, as it excludes certain items and therefore does not reflect
the expense associated with such items, which may be significant and have 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 of goodwill and intangible assets;
iii. financial income and expenses, excluding interest and income
from investments;
iv. earnings from discontinued operations;
v. non-cash share-based compensation expense;
vi. certain one-time items that are deemed by management to be
significant and incidental to normal business activity;
vii. income tax impact on the above adjustments;
viii. non-recurring tax items; and
ix. adjustments attributable to non-controlling interests.
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 paid, net and other cash items related
to financing activities. UMG considers Free Cash Flow, a non-IFRS measure, to be
a relevant indicator of its cash flow 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 to similarly
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Annual Report 2023 | 351
APPENDIXAPPENDIX
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
(millions of euros) 2023 2022
Net profit attributable to equity holders of the parent
1
1,259 782
Financial income and expenses, excluding interest and
income from investments
(377) 671
Non-cash share-based compensation expense 561 107
Certain one time items
2
- (11)
Impairment (reversal)/charge of intangible assets (7) 17
Amortization of catalogues 236 233
Income tax on adjustments (77) (255)
Non-recurring tax items - (90)
Adjusted Net Profit 1,595 1,454
1 As reported in the Consolidated Statement of Profit or Loss
2 Certain one time items in 2022 includes interest income in relation to the one-time non-recurring tax item.
Adjusted net profit per share
Year ended December 31,
(millions of euros) 2023 2022
basic diluted basic diluted
Adjusted net profit 1,595 1,595 1,454 1,454
Number of shares
1
Weighted average number of
shares outstanding
1,819 1,819 1,813 1,813
Potential dilutive effects related to
sharebased compensation
- 23 - 3
Adjusted weighted average number
of shares
1,819 1,842 1,813 1,816
Adjusted net profit per share (in euros) 0.88 0.87 0.80 0.80
1 As reported in Note 7 of the Consolidated Financial Statements.
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APPENDIXAPPENDIX
Net cash provided by operating activities - Adjustments
Operating profit includes certain non-cash items that are adjusted to get to the
Net cash provided by operating activities as follows:
Year ended,
December 31
(millions of euros) 2023 2022
Amortization and depreciation expense 382 377
Non-cash share-based compensation expense, net of
employees tax withheld
429 107
Impairment (reversal)/charge of intangible assets (7) 17
Changes in provisions, net 18 65
(Gain)/loss on sale of assets (26) 2
Adjustments 796 568
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APPENDIXAPPENDIX
CAUTIONARY NOTICE
Forward-looking statements
The annual report may contain statements that constitute forward-looking
statements with respect to UMG’s financial condition, results of operations,
business, strategy and plans. Such forward-looking statements may be
identified by the use of words such as ‘profit forecast’, ‘expect’, ‘estimate’,
‘project’, ‘anticipate’, ‘should’, ‘intend’, ‘plan’, ‘probability’, ‘risk’, ‘target’, ‘goal’,
‘objective’, ‘will’, ‘endeavour’, ‘optimistic’, ‘prospects’ and similar expressions
or variations on such expressions. Although UMG believes that such forward-
looking 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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Annual Report 2023 | 354
