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Sony Group Corp 6-K, filed Aug 4, 2021

Sony Group Corp (SONY)

6-K 2021-08-04 For: 2021-08-04
View Original
Added on July 04, 2026

About this 6-K

Sony Group Corp filed this 6-K on August 4, 2021.

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

For the month of AUGUST 2021

Commission File Number: 001-06439

SONY GROUP CORPORATION

(Translation of registrant's name into English)

1-7-1 KONAN, MINATO-KU, TOKYO, 108-0075, JAPAN

(Address of principal executive offices)

The registrant files annual reports under cover of Form 20-F.

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F,

Form 20-F  X Form 40-F __

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934, Yes No X

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-______

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SONY GROUP CORPORATION
(Registrant)
By:  /s/  Hiroki Totoki
(Signature)
Hiroki Totoki
Executive Deputy President and
Chief Financial Officer

Date: August 4, 2021

List of materials

Documents attached hereto:

i) Press release:  Quarterly Financial Statements for the First Quarter Ended June 30, 2021 And Outlook for the Fiscal Year Ending March 31, 2022.

Quarterly Financial Statements

for the First Quarter Ended June 30, 2021

And

Outlook for the Fiscal Year Ending March 31, 2022

August 4, 2021

Sony Group Corporation

Quarterly Financial Statements (Unaudited) F-1
Condensed Consolidated Statements of Financial Position F-1
Condensed Consolidated Statements of Income (Three months ended June 30) F-3
Condensed Consolidated Statements of Comprehensive Income (Three months ended June 30) F-4
Condensed Consolidated Statements of Changes in Stockholders’ Equity F-5
Condensed Consolidated Statements of Cash Flows (Three months ended June 30) F-6
Notes to Condensed Consolidated Financial Statements F-8
-      Business Segment Information F-8
-      Going Concern Assumption F-14
-      Accounting Policy and Other Information F-14
-      First-time Adoption F-15
Outlook for the Fiscal Year Ending March 31, 2022 1
Supplemental Information 4
Cautionary Statement 5

All financial information is presented on the basis of International Financial Reporting Standards (“IFRS”).

Sony Group Corporation and its consolidated subsidiaries are together referred to as “Sony” or “Sony Group”.

(Unaudited)

Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Financial Position

Yen in millions
April 1,<br><br> <br>2020 March 31,<br><br> <br>2021 June 30,<br><br> <br>2021 Change from<br><br> <br>March 31, 2021
ASSETS
Current assets:
Cash and cash equivalents 1,512,523 1,786,982 1,725,218 (61,764 )
Investments and advances in the Financial Services segment 327,092 411,982 390,918 (21,064 )
Trade and other receivables, and contract assets 1,194,334 1,365,493 1,441,588 76,095
Inventories 559,779 636,668 758,041 121,373
Other financial assets 135,482 117,682 98,906 (18,776 )
Other current assets 441,974 396,210 437,308 41,098
Total current assets 4,171,184 4,715,017 4,851,979 136,962
Non-current assets:
Investments accounted for using the equity method 204,291 225,086 227,001 1,915
Investments and advances in the Financial Services segment 16,352,285 17,296,546 17,680,447 383,901
Property, plant and equipment 917,198 990,541 1,052,944 62,403
Right-of-use assets 373,282 358,034 370,399 12,365
Goodwill 690,929 726,109 789,918 63,809
Content assets 992,644 1,062,547 1,098,676 36,129
Other intangible assets 377,500 391,055 392,368 1,313
Deferred insurance acquisition costs 187,904 623,986 636,679 12,693
Deferred tax assets 210,333 215,669 193,736 (21,933 )
Other financial assets 321,721 695,764 753,449 57,685
Other non-current assets 167,795 207,489 222,093 14,604
Total non-current assets 20,795,882 22,792,826 23,417,710 624,884
Total assets 24,967,066 27,507,843 28,269,689 761,846

(Continued on the following page.)

F-1

Condensed Consolidated Statements of Financial Position (Continued)

Yen in millions
April 1,<br><br> <br>2020 March 31,<br><br> <br>2021 June 30,<br><br> <br>2021 Change from<br><br> <br>March 31, 2021
LIABILITIES
Current liabilities:
Short-term borrowings 824,045 1,201,747 1,459,658 257,911
Current portion of long-term debt 98,923 205,406 207,180 1,774
Trade and other payables 1,310,536 1,596,563 1,682,260 85,697
Deposits from customers in the banking business 2,347,387 2,682,156 2,717,538 35,382
Income taxes payables 85,346 84,431 77,839 (6,592 )
Participation and residual liabilities in the Pictures segment 163,007 161,433 159,379 (2,054 )
Other financial liabilities 56,152 54,341 41,750 (12,591 )
Other current liabilities 1,263,944 1,367,527 1,257,852 (109,675 )
Total current liabilities 6,149,340 7,353,604 7,603,456 249,852
Non-current liabilities:
Long-term debt 939,030 1,053,636 1,044,969 (8,667 )
Defined benefit liabilities 329,621 267,222 261,444 (5,778 )
Deferred tax liabilities 1,041,156 816,587 853,135 36,548
Future insurance policy benefits and other 6,519,577 6,614,585 6,708,960 94,375
Policyholders’ account in the life insurance business 3,640,010 4,328,894 4,469,224 140,330
Participation and residual liabilities in the Pictures segment 119,702 116,537 121,791 5,254
Other financial liabilities 146,834 139,417 161,205 21,788
Other non-current liabilities 87,320 93,022 96,495 3,473
Total non-current liabilities 12,823,250 13,429,900 13,717,223 287,323
Total liabilities 18,972,590 20,783,504 21,320,679 537,175
EQUITY
Sony Group Corporation’s stockholders’ equity:
Common stock 880,214 880,214 880,214 –
Additional paid-in capital 1,297,554 1,489,597 1,475,112 (14,485 )
Retained earnings 1,949,697 2,914,503 3,087,094 172,591
Accumulated other comprehensive income 979,476 1,520,257 1,588,475 68,218
Treasury stock, at cost (232,503 ) (124,228 ) (127,699 ) (3,471 )
Equity attributable to Sony Group Corporation’s stockholders 4,874,438 6,680,343 6,903,196 222,853
Noncontrolling interests 1,120,038 43,996 45,814 1,818
Total equity 5,994,476 6,724,339 6,949,010 224,671
Total liabilities and equity 24,967,066 27,507,843 28,269,689 761,846

F-2

Condensed Consolidated Statements of Income

Yen in millions
Three months ended June 30
2020 2021 Change
Sales and financial services revenue:
Sales 1,524,960 1,844,713 319,753
Financial services revenue 437,989 412,130 (25,859 )
Total sales and financial services revenue 1,962,949 2,256,843 293,894
Costs and expenses:
Cost of sales 1,049,423 1,248,773 199,350
Selling, general and administrative 300,285 345,302 45,017
Financial services expenses 401,904 388,069 (13,835 )
Other operating (income) expense, net (10,690 ) (1,101 ) 9,589
Total costs and expenses 1,740,922 1,981,043 240,121
Share of profit (loss) of investments accounted for using the equity method (302 ) 4,268 4,570
Operating income 221,725 280,068 58,343
Financial income 56,676 11,685 (44,991 )
Financial expenses 9,839 8,543 (1,296 )
Income before income taxes 268,562 283,210 14,648
Income taxes 64,344 70,095 5,751
Net income 204,218 213,115 8,897
Net income attributable to
Sony Group Corporation’s stockholders 193,583 211,829 18,246
Noncontrolling interests 10,635 1,286 (9,349 )
Yen
--- --- --- --- --- --- ---
Three months ended June 30
2020 2021 Change
Per share data:
Net income attributable to Sony Group Corporation’s stockholders
- Basic 158.59 170.95 12.36
- Diluted 155.27 169.22 13.95

F-3

Condensed Consolidated Statements of Comprehensive Income

Yen in millions
Three months ended June 30
2020 2021 Change
Net income 204,218 213,115 8,897
Other comprehensive income, net of tax -
Items that will not be reclassified to profit or loss
Changes in equity instruments measured at fair value through other comprehensive income 40,098 26,370 (13,728 )
Remeasurement of defined benefit pension plans (39 ) (1,697 ) (1,658 )
Share of other comprehensive income of investments accounted for using the equity method 36 (14 ) (50 )
Items that may be reclassified subsequently to profit or loss
Changes in debt instruments measured at fair value through other<br><br> <br>comprehensive income (67,858 ) 34,994 102,852
Cash flow hedges (260 ) (198 ) 62
Insurance contract valuation adjustments (1,650 ) 285 1,935
Exchange differences on translating foreign operations 793 7,184 6,391
Share of other comprehensive income of investments accounted for using the equity method (67 ) (31 ) 36
Total other comprehensive income, net of tax (28,947 ) 66,893 95,840
Comprehensive income 175,271 280,008 104,737
Comprehensive income attributable to
Sony Group Corporation’s stockholders 190,143 278,349 88,206
Noncontrolling interests (14,872 ) 1,659 16,531

F-4

Condensed Consolidated Statements of Changes in Stockholders’ Equity

Yen in millions
Common<br><br> <br>stock Additional<br><br> <br>paid-in<br><br> <br>capital Retained<br><br> <br>earnings Accumulated<br><br> <br>other<br><br> <br>comprehensive<br><br> <br>income Treasury<br><br> <br>stock, at<br><br> <br>cost Sony Group<br><br> <br>Corporation’s<br><br> <br>stockholders’<br><br> <br>equity Noncontrolling<br><br> <br>interests Total equity
Balance at April 1, 2020 880,214 1,297,554 1,949,697 979,476 (232,503 ) 4,874,438 1,120,038 5,994,476
Comprehensive income:
Net income 193,583 193,583 10,635 204,218
Other comprehensive income, net of tax (3,440 ) (3,440 ) (25,507 ) (28,947 )
Total comprehensive income 193,583 (3,440 ) 190,143 (14,872 ) 175,271
Transfer to retained earnings 178 (178 ) - –
Transactions with stockholders and other:
Exercise of stock acquisition rights (0 ) (565 ) 4,822 4,257 4,257
Conversion of convertible bonds (143 ) (225 ) 2,423 2,055 2,055
Stock-based compensation (26 ) (26 ) (26 )
Dividends declared (30,504 ) (30,504 ) (12,467 ) (42,971 )
Purchase of treasury stock (29 ) (29 ) (29 )
Reissuance of treasury stock 0 0 0 0
Transactions with noncontrolling interests shareholders and other 1,907 1,907 (1,585 ) 322
Balance at June 30, 2020 880,214 1,299,292 2,112,164 975,858 (225,287 ) 5,042,241 1,091,114 6,133,355
Yen in millions
--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Common<br><br> <br>stock Additional<br><br> <br>paid-in<br><br> <br>capital Retained<br><br> <br>earnings Accumulated<br><br> <br>other<br><br> <br>comprehensive<br><br> <br>income Treasury<br><br> <br>stock, at<br><br> <br>cost Sony Group<br><br> <br>Corporation’s<br><br> <br>stockholders’<br><br> <br>equity Noncontrolling<br><br> <br>interests Total equity
Balance at April 1, 2021 880,214 1,489,597 2,914,503 1,520,257 (124,228 ) 6,680,343 43,996 6,724,339
Comprehensive income:
Net income 211,829 211,829 1,286 213,115
Other comprehensive income, net of tax 66,520 66,520 373 66,893
Total comprehensive income 211,829 66,520 278,349 1,659 280,008
Transfer to retained earnings (1,698 ) 1,698 - –
Transactions with stockholders and other:
Exercise of stock acquisition rights (1 ) (70 ) 1,450 1,379 1,379
Conversion of convertible bonds (109 ) (293 ) 2,626 2,224 2,224
Stock-based compensation 1,447 1,447 1,447
Dividends declared (37,177 ) (37,177 ) (2,029 ) (39,206 )
Purchase of treasury stock (7,548 ) (7,548 ) (7,548 )
Reissuance of treasury stock 1 1 2 2
Transactions with noncontrolling interests shareholders and other (15,823 ) (15,823 ) 2,188 (13,635 )
Balance at June 30, 2021 880,214 1,475,112 3,087,094 1,588,475 (127,699 ) 6,903,196 45,814 6,949,010

F-5

Condensed Consolidated Statements of Cash Flows

Yen in millions
Three months ended June 30
2020 2021
Cash flows from operating activities:
Income before income taxes 268,562 283,210
Adjustments to reconcile income before income taxes to net cash provided by operating activities:
Depreciation and amortization, including amortization of contract costs 161,513 177,922
Amortization of deferred insurance acquisition costs 5,434 15,042
Other operating (income) expense, net (10,690 ) (1,101 )
Gain on securities, net (other than Financial Services segment) (52,650 ) (742 )
Share of loss of investments accounted for using the equity method, net of dividends 3,546 2,250
Change in future insurance policy benefits and other 83,810 95,162
Change in policyholders’ account in the life insurance business, less cash impact 171,276 104,840
Net cash impact of policyholders’ account in the life insurance business 29,789 35,427
Changes in assets and liabilities:
(Increase) decrease in trade receivables and contract assets 26 (74,204 )
Increase in inventories (25,996 ) (120,542 )
Increase in investments and advances in the Financial Services segment (539,219 ) (320,192 )
Increase in content assets (30,011 ) (132,147 )
Increase in deferred insurance acquisition costs (21,300 ) (26,203 )
Increase in trade payables 163 55,195
Increase in deposits from customers in the banking business 116,592 38,039
Increase in borrowings in the life insurance business and the banking business 195,116 241,847
(Increase) decrease in other financial assets and other current assets (4,598 ) 8,252
Decrease in other financial liabilities and other current liabilities (138,362 ) (134,060 )
Income taxes paid (61,193 ) (65,753 )
Other 10,957 16,492
Net cash provided by operating activities 162,765 198,734

(Continued on the following page.)

F-6

Condensed Consolidated Statements of Cash Flows (Continued)

Yen in millions
Three months ended June 30
2020 2021
Cash flows from investing activities:
Payments for property, plant and equipment and other intangible assets (128,100 ) (93,521 )
Proceeds from sales of property, plant and equipment and other intangible assets 3,861 1,356
Payments for investments and advances (other than Financial Services segment) (48,072 ) (32,045 )
Proceeds from sales or return of investments and collections of advances (other than Financial Services segment) 13,330 9,328
Payments for purchase of businesses (1,865 ) (76,155 )
Proceeds from sales of businesses 1,313 6,012
Other 7,168 (6,212 )
Net cash used in investing activities (152,365 ) (191,237 )
Cash flows from financing activities:
Decrease in short-term borrowings, net (9,313 ) (4,415 )
Proceeds from issuance of long-term debt 4,178 6,102
Payments of long-term debt (22,771 ) (23,703 )
Dividends paid (30,094 ) (36,849 )
Payments for purchase of treasury stock (29 ) (7,548 )
Other (9,489 ) (1,029 )
Net cash used in financing activities (67,518 ) (67,442 )
Effect of exchange rate changes on cash and cash equivalents (6,496 ) (1,819 )
Net decrease in cash and cash equivalents (63,614 ) (61,764 )
Cash and cash equivalents at beginning of the fiscal year 1,512,523 1,786,982
Cash and cash equivalents at end of the period 1,448,909 1,725,218

F-7

Notes to Condensed Consolidated Financial Statements

Business Segment Information

(Business Segments)

Segment sales and financial services revenue

Yen in millions
Three months ended June 30
2020 2021 Change
Sales and financial services revenue:
Game & Network Services -
Customers 599,049 602,158 3,109
Intersegment 7,060 13,652 6,592
Total 606,109 615,810 9,701
Music -
Customers 173,735 252,222 78,487
Intersegment 3,380 2,651 (729 )
Total 177,115 254,873 77,758
Pictures -
Customers 174,441 204,378 29,937
Intersegment 648 358 (290 )
Total 175,089 204,736 29,647
Electronics Products & Solutions -
Customers 354,012 566,519 212,507
Intersegment 7,365 9,749 2,384
Total 361,377 576,268 214,891
Imaging & Sensing Solutions -
Customers 198,371 197,885 (486 )
Intersegment 7,815 20,172 12,357
Total 206,186 218,057 11,871
Financial Services -
Customers 437,989 412,130 (25,859 )
Intersegment 2,255 2,255 –
Total 440,244 414,385 (25,859 )
All Other -
Customers 20,445 18,217 (2,228 )
Intersegment 4,855 3,769 (1,086 )
Total 25,300 21,986 (3,314 )
Corporate and elimination (28,471 ) (49,272 ) (20,801 )
Consolidated total 1,962,949 2,256,843 293,894

Game & Network Services (“G&NS”) intersegment amounts primarily consist of transactions with Electronics Products & Solutions (“EP&S”).  EP&S intersegment amounts primarily consist of transactions with the G&NS segment.  Imaging & Sensing Solutions (“I&SS”)  intersegment amounts primarily consist of transactions with the G&NS segment and the EP&S segment.  Corporate and elimination includes certain brand and patent royalty income.

F-8

Segment profit (loss)

Yen in millions
Three months ended June 30
2020 2021 Change
Operating income (loss):
Game & Network Services 123,900 83,259 (40,641 )
Music 35,637 55,380 19,743
Pictures 27,044 25,354 (1,690 )
Electronics Products & Solutions (8,857 ) 71,751 80,608
Imaging & Sensing Solutions 26,209 30,479 4,270
Financial Services 35,989 24,013 (11,976 )
All Other 3,520 4,154 634
Total 243,442 294,390 50,948
Corporate and elimination (21,717 ) (14,322 ) 7,395
Consolidated operating income 221,725 280,068 58,343

Operating income (loss) is sales and financial services revenue less costs and expenses, and includes the share of profit (loss) of investments accounted for using the equity method.

The sales and financial services revenue and operating income (loss) for three months ended June 30, 2020 shown in the table above are presented to reflect the change in the organizational structure for the fiscal year ending March 31, 2022, which is discussed on page F-14.

F-9

(Sales to Customers by Product Category)

The following table is a breakdown of sales and financial services revenue to external customers by product category for each segment.  Sony management views each segment as a single operating segment.

Yen in millions
Three months ended June 30
Sales and financial services revenue: 2020 2021 Change
Game & Network Services
Digital Software and Add-on Content 394,637 320,436 (74,201 )
Network Services 93,295 101,986 8,691
Hardware and Others 111,117 179,736 68,619
Total 599,049 602,158 3,109
Music
Recorded Music - Streaming 68,900 109,109 40,209
Recorded Music - Others 29,186 42,780 13,594
Music Publishing 31,096 47,132 16,036
Visual Media and Platform 44,553 53,201 8,648
Total 173,735 252,222 78,487
Pictures
Motion Pictures 65,077 79,503 14,426
Television Productions 64,303 61,288 (3,015 )
Media Networks 45,061 63,587 18,526
Total 174,441 204,378 29,937
Electronics Products & Solutions
Televisions 106,568 221,021 114,453
Audio and Video 47,081 73,089 26,008
Still and Video Cameras 46,405 116,410 70,005
Mobile Communications 94,229 81,413 (12,816 )
Other 59,729 74,586 14,857
Total 354,012 566,519 212,507
Imaging & Sensing Solutions 198,371 197,885 (486 )
Financial Services 437,989 412,130 (25,859 )
All Other 20,445 18,217 (2,228 )
Corporate 4,907 3,334 (1,573 )
Consolidated total 1,962,949 2,256,843 293,894

In the G&NS segment, Digital Software and Add-on Content includes distribution of software titles and add-on content through network by Sony Interactive Entertainment; Network Services includes network services relating to game, video and music content; Hardware and Others includes home gaming consoles, packaged software, peripheral devices and first-party software for third-party platforms.  In the Music segment, Recorded Music - Streaming includes the distribution of digital recorded music by streaming; Recorded Music - Others includes the distribution of recorded music by physical media and digital download as well as revenue derived from artists’ live performances; Music Publishing includes the management and licensing of the words and music of songs; Visual Media and Platform includes the production and distribution of animation titles, including game applications based on the animation titles, and various service offerings for music and visual products.  In the Pictures segment, Motion Pictures includes the worldwide production, acquisition and distribution of live-action and animated motion pictures; Television Productions includes the production, acquisition and distribution of television programming; Media Networks includes the operation of television and digital networks worldwide.  In the EP&S segment, Televisions includes LCD and OLED televisions; Audio and Video includes Blu-ray disc players and recorders, home audio, headphones and memory-based portable audio devices; Still and Video Cameras includes interchangeable lens cameras, compact digital cameras, consumer video cameras and video cameras for broadcast; Mobile Communications includes smartphones and an internet-related service business; Other includes display products such as projectors and medical equipment.

F-10

(Condensed Financial Services Financial Statements)

The following schedules show unaudited condensed financial statements for the Financial Services segment and all other segments excluding Financial Services.  These presentations are not in accordance with IFRS, which is used by Sony to prepare its condensed consolidated financial statements.  However, because the Financial Services segment is different in nature from Sony’s other segments, Sony believes that a comparative presentation may be useful in understanding and analyzing Sony’s condensed consolidated financial statements.  Both financial statements include transactions between the Financial Services segment and Sony without the Financial Services segment (including noncontrolling interests). The figures shown in the respective presentations for the Financial Services segment and Sony without the Financial Services segment are prior to the elimination and/or offset of such transactions and deferred tax assets and deferred tax liabilities of each.  The condensed consolidated financial statements column is presented net of the elimination and/or offset of such intercompany balances and deferred tax assets and liabilities.

Condensed Statements of Financial Position

Yen in millions
Financial Services Sony without<br><br> <br>Financial Services Consolidated
April 1,<br><br> <br>2020 March 31,<br><br> <br>2021 June 30,<br><br> <br>2021 April 1,<br><br> <br>2020 March 31,<br><br> <br>2021 June 30,<br><br> <br>2021 April 1,<br><br> <br>2020 March 31,<br><br> <br>2021 June 30,<br><br> <br>2021
ASSETS
Current assets:
Cash and cash equivalents ¥ 550,039 ¥ 497,218 ¥ 661,590 ¥ 962,484 ¥ 1,289,764 ¥ 1,063,628 ¥ 1,512,523 ¥ 1,786,982 ¥ 1,725,218
Investments and advances in the Financial Services segment 327,092 411,982 390,918 – – – 327,092 411,982 390,918
Trade and other receivables, and contract assets 115,592 119,791 127,365 1,086,457 1,261,321 1,327,671 1,194,334 1,365,493 1,441,588
Inventories – – – 559,779 636,668 758,041 559,779 636,668 758,041
Other financial assets 79,721 73,349 47,735 55,762 44,498 51,337 135,482 117,682 98,906
Other current assets 51,765 51,147 61,979 390,915 357,582 414,206 441,974 396,210 437,308
Total current assets 1,124,209 1,153,487 1,289,587 3,055,397 3,589,833 3,614,883 4,171,184 4,715,017 4,851,979
Non-current assets:
Investments accounted for using the equity method – – – 204,291 225,086 227,001 204,291 225,086 227,001
Investments and advances in the Financial Services segment 16,352,285 17,296,546 17,680,447 – – – 16,352,285 17,296,546 17,680,447
Investments in Financial Services, at cost – – – 153,968 550,483 550,483 – – –
Property, plant and equipment 18,256 19,260 19,067 899,185 971,336 1,033,928 917,198 990,541 1,052,944
Right-of-use assets 57,892 65,775 67,459 315,431 292,262 302,943 373,282 358,034 370,399
Goodwill and intangible assets, including content assets 62,660 66,133 65,710 1,998,413 2,113,578 2,215,252 2,061,073 2,179,711 2,280,962
Deferred insurance acquisition costs 187,904 623,986 636,679 – – – 187,904 623,986 636,679
Deferred tax assets 8,129 – – 202,217 309,341 254,311 210,333 215,669 193,736
Other financial assets 34,319 28,043 23,903 291,373 671,683 733,508 321,721 695,764 753,449
Other non-current assets 87,933 86,287 86,048 155,643 195,713 210,285 167,795 207,489 222,093
Total non-current assets 16,809,378 18,186,030 18,579,313 4,220,521 5,329,482 5,527,711 20,795,882 22,792,826 23,417,710
Total assets ¥ 17,933,587 ¥ 19,339,517 ¥ 19,868,900 ¥ 7,275,918 ¥ 8,919,315 ¥ 9,142,594 ¥ 24,967,066 ¥ 27,507,843 ¥ 28,269,689
LIABILITIES AND EQUITY
Current liabilities:
Short-term borrowings ¥ 768,100 ¥ 1,160,896 ¥ 1,422,745 ¥ 154,884 ¥ 246,257 ¥ 244,095 ¥ 922,968 ¥ 1,407,153 ¥ 1,666,838
Trade and other payables 43,975 80,189 50,468 1,273,946 1,531,502 1,645,105 1,310,536 1,596,563 1,682,260
Deposits from customers in the banking business 2,347,387 2,682,156 2,717,538 – – – 2,347,387 2,682,156 2,717,538
Income taxes payables 22,509 5,407 3,237 62,837 79,024 74,602 85,346 84,431 77,839
Participation and residual liabilities in the Pictures segment – – – 163,007 161,433 159,379 163,007 161,433 159,379
Other financial liabilities 44,668 29,106 28,597 11,484 25,235 13,153 56,152 54,341 41,750
Other current liabilities 179,652 192,728 224,490 1,085,330 1,187,975 1,072,543 1,263,944 1,367,527 1,257,852
Total current liabilities 3,406,291 4,150,482 4,447,075 2,751,488 3,231,426 3,208,877 6,149,340 7,353,604 7,603,456
Non-current liabilities:
Long-term debt 276,409 361,106 342,744 662,644 692,531 702,224 939,030 1,053,636 1,044,969
Defined benefit liabilities 34,856 35,293 35,553 294,765 231,929 225,891 329,621 267,222 261,444
Deferred tax liabilities 879,683 802,830 802,837 176,839 122,489 125,932 1,041,156 816,587 853,135
Future insurance policy benefits and other 6,519,577 6,614,585 6,708,960 – – – 6,519,577 6,614,585 6,708,960
Policyholders’ account in the life insurance business 3,640,010 4,328,894 4,469,224 – – – 3,640,010 4,328,894 4,469,224
Participation and residual liabilities in the Pictures segment – – – 119,702 116,537 121,791 119,702 116,537 121,791
Other financial liabilities 115,949 109,537 109,375 33,399 32,446 54,412 146,834 139,417 161,205
Other non-current liabilities 4,217 5,309 5,360 106,693 109,808 112,938 87,320 93,022 96,495
Total non-current liabilities 11,470,701 12,257,554 12,474,053 1,394,042 1,305,740 1,343,188 12,823,250 13,429,900 13,717,223
Total liabilities 14,876,992 16,408,036 16,921,128 4,145,530 4,537,166 4,552,065 18,972,590 20,783,504 21,320,679
Equity:
Stockholders’ equity of Financial Services 3,054,361 2,928,525 2,944,694 – – – – – –
Stockholders’ equity of Sony without Financial Services – – – 3,084,820 4,341,109 4,547,793 – – –
Sony Group Corporation’s stockholders’ equity – – – – – – 4,874,438 6,680,343 6,903,196
Noncontrolling interests 2,234 2,956 3,078 45,568 41,040 42,736 1,120,038 43,996 45,814
Total equity 3,056,595 2,931,481 2,947,772 3,130,388 4,382,149 4,590,529 5,994,476 6,724,339 6,949,010
Total liabilities and equity ¥ 17,933,587 ¥ 19,339,517 ¥ 19,868,900 ¥ 7,275,918 ¥ 8,919,315 ¥ 9,142,594 ¥ 24,967,066 ¥ 27,507,843 ¥ 28,269,689

F-11

Condensed Statements of Income

Yen in millions
Three months ended June 30
Financial Services Sony without<br><br> <br>Financial Services Consolidated
2020 2021 2020 2021 2020 2021
Sales ¥ – ¥ – ¥ 1,526,437 ¥ 1,845,785 ¥ 1,524,960 ¥ 1,844,713
Financial services revenue 440,244 414,385 – – 437,989 412,130
Total sales and financial services revenue 440,244 414,385 1,526,437 1,845,785 1,962,949 2,256,843
Cost of sales – – 1,052,065 1,251,199 1,049,423 1,248,773
Selling, general and administrative – – 299,126 343,948 300,285 345,302
Financial services expenses 404,159 390,324 – – 401,904 388,069
Other operating (income) expense, net 96 48 (10,786 ) (1,149 ) (10,690 ) (1,101 )
Total costs and expenses 404,255 390,372 1,340,405 1,593,998 1,740,922 1,981,043
Share of profit (loss) of investments accounted for using the equity method – – (302 ) 4,268 (302 ) 4,268
Operating income 35,989 24,013 185,730 256,055 221,725 280,068
Financial income (expenses), net – – 66,651 42,300 46,837 3,142
Income before income taxes 35,989 24,013 252,381 298,355 268,562 283,210
Income taxes 9,841 3,740 54,507 66,354 64,344 70,095
Net income 26,148 20,273 197,874 232,001 204,218 213,115
Net income of Financial Services ¥ 26,073 ¥ 20,152 ¥ – ¥ – ¥ – ¥ –
Net income of Sony without Financial Services ¥ – ¥ – ¥ 196,424 ¥ 230,836 ¥ – ¥ –
Net income attributable to Sony Group Corporation’s stockholders ¥ – ¥ – ¥ – ¥ – ¥ 193,583 ¥ 211,829
Net income attributable to noncontrolling interests ¥ 75 ¥ 121 ¥ 1,450 ¥ 1,165 ¥ 10,635 ¥ 1,286

F-12

Condensed Statements of Cash Flows

Yen in millions
Three months ended June 30
Financial Services Sony without<br><br> <br>Financial Services Consolidated
2020 2021 2020 2021 2020 2021
Cash flows from operating activities:
Income (loss) before income taxes ¥ 35,989 ¥ 24,013 ¥ 252,381 ¥ 298,355 ¥ 268,562 ¥ 283,210
Adjustments to reconcile income (loss) before income taxes to net cash provided by (used in) operating activities:
Depreciation and amortization, including amortization of contract costs 5,757 6,243 155,756 171,679 161,513 177,922
Amortization of deferred insurance acquisition costs 5,434 15,042 – – 5,434 15,042
Other operating (income) expense, net 96 48 (10,786 ) (1,149 ) (10,690 ) (1,101 )
(Gain) loss on securities, net (other than Financial Services segment) – – (52,650 ) (742 ) (52,650 ) (742 )
Change in future insurance policy benefits and other 83,810 95,162 – – 83,810 95,162
Change in policyholders’ account in the life insurance business, less cash impact 171,276 104,840 – – 171,276 104,840
Net cash impact of policyholders’ account in the life insurance business 29,789 35,427 – – 29,789 35,427
Changes in assets and liabilities: – – – –
(Increase) decrease in trade receivables and contract assets (20,294 ) (11,256 ) 14,469 (60,778 ) 26 (74,204 )
(Increase) decrease in inventories – – (25,996 ) (120,542 ) (25,996 ) (120,542 )
(Increase) decrease in investments and advances in the financial services business (539,219 ) (320,192 ) – – (539,219 ) (320,192 )
(Increase) decrease in content assets – – (30,011 ) (132,147 ) (30,011 ) (132,147 )
(Increase) decrease in deferred insurance acquisition costs (21,300 ) (26,203 ) - – (21,300 ) (26,203 )
Increase (decrease) in trade payables (1,149 ) (27,252 ) 1,312 80,632 163 55,195
Increase (decrease) in deposits from customers in the banking business 116,592 38,039 – 116,592 38,039
Increase (decrease) in borrowings in the life insurance business and the banking business 195,116 241,847 – – 195,116 241,847
Other (13,960 ) 36,128 (169,371 ) (209,134 ) (189,650 ) (172,819 )
Net cash provided by (used in) operating activities 47,937 211,886 135,104 26,174 162,765 198,734
Cash flows from investing activities:
Payments for property, plant and equipment and other intangible assets (5,674 ) (5,580 ) (122,491 ) (87,941 ) (128,100 ) (93,521 )
Payments for investments and advances (other than Financial Services segment) – – (48,072 ) (32,045 ) (48,072 ) (32,045 )
Proceeds from sales or return of investments and collections of advances (other than Financial Services segment) – – 13,330 9,328 13,330 9,328
Other 108 – 9,979 (74,999 ) 10,477 (74,999 )
Net cash provided by (used in) investing activities (5,566 ) (5,580 ) (147,254 ) (185,657 ) (152,365 ) (191,237 )
Cash flows from financing activities:
Increase (decrease) in borrowings, net (2,296 ) (2,605 ) (25,618 ) (19,412 ) (27,906 ) (22,016 )
Dividends paid (30,453 ) (39,159 ) (30,095 ) (36,849 ) (30,094 ) (36,849 )
Other 109 (170 ) 1,014 (8,573 ) (9,518 ) (8,577 )
Net cash provided by (used in) financing activities (32,640 ) (41,934 ) (54,699 ) (64,834 ) (67,518 ) (67,442 )
Effect of exchange rate changes on cash and cash equivalents – – (6,496 ) (1,819 ) (6,496 ) (1,819 )
Net increase (decrease) in cash and cash equivalents 9,731 164,372 (73,345 ) (226,136 ) (63,614 ) (61,764 )
Cash and cash equivalents at beginning of the fiscal year 550,039 497,218 962,484 1,289,764 1,512,523 1,786,982
Cash and cash equivalents at end of the period ¥ 559,770 ¥ 661,590 ¥ 889,139 ¥ 1,063,628 ¥ 1,448,909 ¥ 1,725,218

F-13

Going Concern Assumption

Not Applicable

Accounting Policy and Other Information

(Net Income Attributable to Sony Group Corporation’s Stockholders and Weighted-average Number of Outstanding Shares Used for the Computation of EPS of Common Stock)

Yen in millions
Three months ended June 30
2020 2021
Net income attributable to Sony Group Corporation’s stockholders 193,583 211,829
Adjustment amount to net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation
Zero coupon convertible bonds 149 51
Net income attributable to Sony Group Corporation’s stockholders for diluted EPS computation 193,732 211,880
Thousands of shares
Weighted-average shares outstanding for basic EPS computation 1,220,629 1,239,162
Effect of dilutive securities:
Stock acquisition rights 3,269 4,914
Zero coupon convertible bonds 23,820 8,046
Weighted-average shares for diluted EPS computation 1,247,718 1,252,122

(Segmentation)

Due to organizational changes as of April 1, 2021, from the first quarter of the fiscal year ending March 31, 2022, Sony transferred some of the businesses and functions previously included within All Other and Corporate and elimination to the EP&S segment.  In connection with these organizational changes, sales and financial services revenue and operating income (loss) of each segment for the fiscal year ended March 31, 2021 are presented to conform to the organizational structure for the fiscal year ending March 31, 2022.

The G&NS segment includes network services businesses, the manufacture and sales of home gaming products and the production and sales of software.  The Music segment includes the Recorded Music, Music Publishing and Visual Media and Platform businesses.  The Pictures segment includes the Motion Pictures, Television Productions and Media Networks businesses.  The EP&S segment includes the Televisions business, the Audio and Video business, the Still and Video Cameras business, the smartphone business and internet-related service business.  The I&SS segment includes the image sensors business.  The Financial Services segment primarily represents individual life insurance and non-life insurance businesses in the Japanese market and the banking business in Japan.  All Other consists of various operating activities, including the disc manufacturing and recording media businesses.  Sony’s products and services are generally unique to a single operating segment.

F-14

First-Time Adoption

Sony has disclosed its condensed consolidated financial statements under IFRS from the first quarter of the fiscal year ending March 31, 2022.  The latest consolidated financial statements under generally accepted accounting principles in the United States (“U.S. GAAP”) were prepared for the fiscal year ended March 31, 2021, and the date of transition to IFRS was April 1, 2020.

(1)  Exemption under IFRS 1 “First-Time Adoption of International Financial Reporting Standards” (“IFRS 1”)

IFRS 1 requires that a company adopting IFRS for the first-time (“first-time adopters”) shall apply IFRS retrospectively.  However, IFRS 1 provides certain exemptions that allow first-time adopters to choose not to apply certain standards retrospectively.  Sony has adopted the following exemptions:

Business combinations

First-time adopters may choose not to apply IFRS 3 “Business Combinations” (“IFRS 3”) retrospectively to business combinations that occurred before the date of transition to IFRS.  Sony has applied this exemption and chosen not to apply IFRS 3 retrospectively to business combinations that occurred before the date of transition to IFRS.  Therefore, the carrying amounts of goodwill generated in business combinations that occurred prior to the date of transition to IFRS were based on the carrying amounts determined under U.S. GAAP at the date of transition to IFRS.

Sony performed an impairment test on goodwill at the date of transition to IFRS regardless of whether there were any indications that the goodwill may be impaired.

Exchange differences on translating foreign operations

First-time adopters may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS.  Sony has chosen to apply this exemption and deemed all cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS.

Designation of financial instruments recognized before the date of transition to IFRS

First-time adopters may designate an investment in an equity instrument as an investment recognized at fair value through other comprehensive income in accordance with IFRS 9 “Financial Instruments” based on the facts and circumstances that existed at the date of transition to IFRS.  Sony has applied this exemption and designated some equity instruments at fair value in other comprehensive income at the date of transition to IFRS.

Recognition of right-of-use assets and lease liabilities

When first-time adopters recognize right-of-use assets and lease liabilities as a lessee, they are permitted to measure right-of-use assets and lease liabilities at the date of transition to IFRS.  Sony measured all lease liabilities at the date of transition to IFRS at the present value of the remaining lease payments, discounted using Sony’s incremental borrowing rate at the date of transition to IFRS.  Sony recognized right-of-use assets equal to the amount of lease liabilities at the date of transition to IFRS.

(2)  Mandatory exception under IFRS 1

IFRS 1 prohibits the retrospective application of IFRS concerning “estimates”, “non-controlling interests”, “classification and measurement of financial instruments” and other items.  Sony applied these items prospectively from the date of transition to IFRS.

(3)  Reconciliation

The reconciliations required to be disclosed in the first IFRS financial statements are described in the reconciliations as below.  “Reclassification” includes items that do not affect retained earnings and comprehensive income, while “Recognition and measurement differences” includes items that affect retained earnings and comprehensive income.

F-15

Reconciliation of equity at the date of transition to IFRS (April 1, 2020)

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP* Reclassification Recognition<br><br> <br>and<br><br> <br>measurement<br><br> <br>differences IFRS Note Accounts under IFRS
ASSETS ASSETS
Current assets: Current assets:
Cash and cash equivalents 1,512,357 – 166 1,512,523 Cash and cash equivalents
Marketable securities 1,847,772 (1,847,772 ) – – a
– 327,092 – 327,092 a,f Investments and advances in the Financial Services segment
Notes and accounts receivable, trade and contract assets 1,028,793 (1,028,793 ) – – b
– 1,195,228 (894 ) 1,194,334 b,c Trade and other receivables, and contract assets
Allowance for credit losses (26,153 ) 26,153 – – b
Inventories 558,452 - 1,327 559,779 Inventories
Other receivables 188,076 (188,076 ) – – c
– 135,265 217 135,482 d Other financial assets
Prepaid expenses and other current assets 594,009 (153,473 ) 1,438 441,974 d Other current assets
Total current assets 5,703,306 (1,534,376 ) 2,254 4,171,184 Total current assets
Non-current assets:
Film costs 458,853 (458,853 ) – – e
Investments and advances:
Affiliated companies 207,922 (608 ) (3,023 ) 204,291 Investments accounted for using the equity method
Securities investments and other 12,526,990 (12,526,990 ) – – f
Allowance for credit losses (6,341 ) 6,341 – –
– 13,906,535 2,445,750 16,352,285 a,f,D Investments and advances in the Financial Services segment
Property, plant and equipment:
Land 81,482 (81,482 ) – –
Buildings 659,556 (659,556 ) – –
Machinery and equipment 1,725,720 (1,725,720 ) – –
Construction in progress 76,391 (76,391 ) – –
Less - Accumulated depreciation 1,634,505 (1,634,505 ) – –
– 921,513 (4,315 ) 917,198 Property, plant and equipment
Other assets:
Operating lease right-of-use assets 359,510 (359,510 ) – – g
Finance lease right-of-use assets 33,100 (33,100 ) – – g
– 376,998 (3,716 ) 373,282 g Right-of-use assets
Intangibles, net 906,310 (906,310 ) – – e
Goodwill 783,888 – (92,959 ) 690,929 C Goodwill
– 991,611 1,033 992,644 e Content assets
– 373,552 3,948 377,500 e Other intangible assets
Deferred insurance acquisition costs 600,901 – (412,997 ) 187,904 E Deferred insurance acquisition costs
Deferred income taxes 210,417 87 (171 ) 210,333 Deferred tax assets
– 298,469 23,252 321,721 f,h,D Other financial assets
Other 339,284 (154,853 ) (16,636 ) 167,795 h,B Other non-current assets
17,329,478 1,526,238 1,940,166 20,795,882 Total non-current assets
Total assets 23,032,784 (8,138 ) 1,942,420 24,967,066 Total assets

F-16

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP* Reclassification Recognition<br><br> <br>and<br><br> <br>measurement differences IFRS Note Accounts under IFRS
LIABILITIES LIABILITIES
Current liabilities: Current liabilities:
Short-term borrowings 810,176 13,869 – 824,045 Short-term borrowings
Current portion of long-term debt 29,807 69,116 – 98,923 i Current portion of long-term debt
Current portion of long-term operating lease liabilities 68,942 (68,942 ) – – i
Notes and accounts payable, trade 380,810 (380,810 ) – – j
– 1,340,573 (30,037 ) 1,310,536 j,k,m Trade and other payables
Accounts payable, other and accrued expenses 1,630,197 (1,630,197 ) – – k
Deposits from customers in the banking business 2,440,783 (93,396 ) – 2,347,387 l Deposits from customers in the banking business
Accrued income and other taxes 145,996 (60,650 ) – 85,346 Income taxes payables
– 163,007 – 163,007 k Participation and residual liabilities in the Pictures segment
– 56,152 – 56,152 k,m Other financial liabilities
Other 733,732 527,859 2,353 1,263,944 k,m Other current liabilities
Total current liabilities 6,240,443 (63,419 ) (27,684 ) 6,149,340 Total current liabilities
Non-current liabilities:
Long-term debt 634,966 305,871 (1,807 ) 939,030 i Long-term debt
Long-term operating lease liabilities 314,836 (314,836 ) – – i
Accrued pension and severance costs 324,655 4,355 611 329,621 B Defined benefit liabilities
Deferred income taxes 548,034 87 493,035 1,041,156 F Deferred tax liabilities
Future insurance policy benefits and other 6,246,047 – 273,530 6,519,577 E Future insurance policy benefits and other
Policyholders’ account in the life insurance business 3,642,271 – (2,261 ) 3,640,010 E Policyholders’ account in the life insurance business
– 122,706 (3,004 ) 119,702 n Participation and residual liabilities in the Pictures segment
– 146,834 - 146,834 l,n,o Other financial liabilities
Other 289,285 (201,969 ) 4 87,320 n Other non-current liabilities
12,000,094 63,048 760,108 12,823,250 Total non-current liabilities
Total liabilities 18,240,537 (371 ) 732,424 18,972,590 Total liabilities
Redeemable noncontrolling interest 7,767 (7,767 ) – – o
EQUITY EQUITY
Sony Group Corporation’s stockholders’ equity: Sony Group Corporation’s stockholders’ equity:
Common stock 880,214 – – 880,214 Common stock
Additional paid-in capital 1,289,719 – 7,835 1,297,554 Additional paid-in capital
Retained earnings 2,765,187 – (815,490 ) 1,949,697 G Retained earnings
Accumulated other comprehensive income (580,980 ) – 1,560,456 979,476 A,B,D,E,F Accumulated other comprehensive income
Treasury stock, at cost (232,503 ) - – (232,503 ) Treasury stock, at cost
4,121,637 – 752,801 4,874,438 Equity attributable to Sony Group Corporation’s stockholders
Noncontrolling interests 662,843 – 457,195 1,120,038 F Noncontrolling interests
Total equity 4,784,480 – 1,209,996 5,994,476 Total equity
Total liabilities and equity 23,032,784 (8,138 ) 1,942,420 24,967,066 Total liabilities and equity

* “U.S. GAAP” represents the consolidated financial statements under U.S. GAAP for the year ended March 31, 2020, adjusted for the adoption of the Accounting Standards Updates issued by the Financial Accounting Standards Board effective as of April 1, 2020.

F-17

Reconciliation of equity as of June 30, 2020

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP Reclassification Recognition<br><br> <br>and<br><br> <br>measurement differences IFRS Note Accounts under IFRS
ASSETS ASSETS
Current assets: Current assets:
Cash and cash equivalents 1,448,614 – 295 1,448,909 Cash and cash equivalents
Marketable securities 2,105,977 (2,105,977 ) – – a
– 378,857 7 378,864 a,f Investments and advances in the Financial Services segment
Notes and accounts receivable, trade and contract assets 1,005,429 (1,005,429 ) – – b
– 1,194,949 (1,081 ) 1,193,868 b,c Trade and other receivables, and contract assets
Allowance for credit losses (26,060 ) 26,060 – – b
Inventories 588,797 – (273 ) 588,524 Inventories
Other receivables 179,568 (179,568 ) – - c
– 106,594 217 106,811 d Other financial assets
Prepaid expenses and other current assets 608,271 (153,041 ) (5,244 ) 449,986 d Other current assets
Total current assets 5,910,596 (1,737,555 ) (6,079 ) 4,166,962 Total current assets
Non-current assets:
Film costs 417,646 (417,646 ) – – e
Investments and advances:
Affiliated companies 210,800 (666 ) (2,727 ) 207,407 Investments accounted for using the equity method
Securities investments and other 12,937,934 (12,937,934 ) – – f
Allowance for credit losses (7,677 ) 7,677 – –
– 14,357,344 2,099,941 16,457,285 a,f,D Investments and advances in the Financial Services segment
Property, plant and equipment:
Land 79,860 (79,860 ) – –
Buildings 658,911 (658,911 ) – –
Machinery and equipment 1,792,832 (1,792,832 ) – –
Construction in progress 71,599 (71,599 ) – –
Less - Accumulated depreciation 1,677,282 (1,677,282 ) – –
– 937,845 (4,290 ) 933,555 Property, plant and equipment
Other assets:
Operating lease right-of-use assets 351,828 (351,828 ) – – g
Finance lease right-of-use assets 31,778 (31,778 ) – – g
– 369,443 (4,598 ) 364,845 g Right-of-use assets
Intangibles, net 902,575 (902,575 ) – – e
Goodwill 783,453 – (92,732 ) 690,721 C Goodwill
– 947,891 2,209 950,100 e Content assets
– 372,330 3,406 375,736 e Other intangible assets
Deferred insurance acquisition costs 617,899 – (396,690 ) 221,209 E Deferred insurance acquisition costs
Deferred income taxes 202,880 (496 ) (7,086 ) 195,298 Deferred tax assets
– 458,685 30,013 488,698 f,h,D Other financial assets
Other 340,724 (147,807 ) (11,252 ) 181,665 h,B Other non-current assets
17,715,760 1,734,565 1,616,194 21,066,519 Total non-current assets
Total assets 23,626,356 (2,990 ) 1,610,115 25,233,481 Total assets

F-18

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP Reclassification Recognition<br><br> <br>and<br><br> <br>measurement differences IFRS Note Accounts under IFRS
LIABILITIES LIABILITIES
Current liabilities: Current liabilities:
Short-term borrowings 977,414 13,908 – 991,322 Short-term borrowings
Current portion of long-term debt 28,516 72,450 – 100,966 i Current portion of long-term debt
Current portion of long-term operating lease liabilities 72,275 (72,275 ) – – i
Notes and accounts payable, trade 391,223 (391,223 ) – – j
– 1,278,571 (308 ) 1,278,263 j,k,m Trade and other payables
Accounts payable, other and accrued expenses 1,461,252 (1,461,252 ) – – k
Deposits from customers in the banking business 2,558,346 (87,579 ) – 2,470,767 l Deposits from customers in the banking business
Accrued income and other taxes 148,208 (73,992 ) (6,244 ) 67,972 Income taxes payables
– 158,429 (1,935 ) 156,494 k Participation and residual liabilities in the Pictures segment
– 50,281 – 50,281 k,m,o Other financial liabilities
Other 692,863 460,792 (5,886 ) 1,147,769 k,m Other current liabilities
Total current liabilities 6,330,097 (51,890 ) (14,373 ) 6,263,834 Total current liabilities
Non-current liabilities:
Long-term debt 654,145 295,868 (1,641 ) 948,372 i Long-term debt
Long-term operating lease liabilities 304,647 (304,647 ) – – i
Accrued pension and severance costs 320,439 3,837 3,009 327,285 B Defined benefit liabilities
Deferred income taxes 556,206 (496 ) 482,120 1,037,830 F Deferred tax liabilities
Future insurance policy benefits and other 6,331,757 - 3,727 6,335,484 E Future insurance policy benefits and other
Policyholders’ account in the life insurance business 3,843,393 - (2,318 ) 3,841,075 E Policyholders’ account in the life insurance business
- 124,463 (2,998 ) 121,465 n Participation and residual liabilities in the Pictures segment
- 134,532 - 134,532 l,n,o Other financial liabilities
Other 283,852 (194,741 ) 1,138 90,249 n Other non-current liabilities
12,294,439 58,816 483,037 12,836,292 Total non-current liabilities
Total liabilities 18,624,536 6,926 468,664 19,100,126 Total liabilities
Redeemable noncontrolling interest 9,916 (9,916 ) – – o
EQUITY EQUITY
Sony Group Corporation’s stockholders’ equity: Sony Group Corporation’s stockholders’ equity:
Common stock 880,214 – – 880,214 Common stock
Additional paid-in capital 1,290,992 – 8,300 1,299,292 Additional paid-in capital
Retained earnings 2,997,579 – (885,415 ) 2,112,164 G Retained earnings
Accumulated other comprehensive income (612,648 ) – 1,588,506 975,858 A,B,C,D,E,F Accumulated other comprehensive income
Treasury stock, at cost (225,287 ) – – (225,287 ) Treasury stock, at cost
4,330,850 – 711,391 5,042,241 Equity attributable to Sony Group Corporation’s stockholders
Noncontrolling interests 661,054 – 430,060 1,091,114 F Noncontrolling interests
Total equity 4,991,904 – 1,141,451 6,133,355 Total equity
Total liabilities and equity 23,626,356 (2,990 ) 1,610,115 25,233,481 Total liabilities and equity

F-19

Reconciliation of equity as of March 31, 2021

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP Reclassification Recognition<br><br> <br>and<br><br> <br>measurement<br><br> <br>differences IFRS Note Accounts under IFRS
ASSETS ASSETS
Current assets: Current assets:
Cash and cash equivalents 1,786,982 – – 1,786,982 Cash and cash equivalents
Marketable securities 2,902,438 (2,902,438 ) – – a,p
– 412,016 (34 ) 411,982 a,f Investments and advances in the Financial Services segment
Notes and accounts receivable, trade and contract assets 1,099,300 (1,099,300 ) – – b
– 1,366,991 (1,498 ) 1,365,493 b,c Trade and other receivables, and contract assets
Allowance for credit losses (29,406 ) 29,406 – – b
Inventories 637,391 – (723 ) 636,668 Inventories
Other receivables 283,499 (283,499 ) – – c
– 117,522 160 117,682 d Other financial assets
Prepaid expenses and other current assets 538,540 (141,517 ) (813 ) 396,210 d Other current assets
Total current assets 7,218,744 (2,500,819 ) (2,908 ) 4,715,017 Total current assets
Non-current assets:
Film costs 459,426 (459,426 ) – – e
Investments and advances:
Affiliated companies 226,218 (1,132 ) – 225,086 Investments accounted for using the equity method
Securities investments and other 14,046,196 (14,046,196 ) – – f
Allowance for credit losses (8,419 ) 8,419 – –
– 15,639,456 1,657,090 17,296,546 a,f,D Investments and advances in the Financial Services segment
Property, plant and equipment:
Land 79,557 (79,557 ) – –
Buildings 683,249 (683,249 ) – –
Machinery and equipment 1,748,961 (1,748,961 ) – –
Construction in progress 100,728 (100,728 ) - –
Less - Accumulated depreciation 1,627,061 (1,627,061 ) – –
– 994,676 (4,135 ) 990,541 Property, plant and equipment
Other assets:
Operating lease right-of-use assets 337,322 (337,322 ) – – g
Finance lease right-of-use assets 39,772 (39,772 ) – – g
– 365,641 (7,607 ) 358,034 g Right-of-use assets
Intangibles, net 996,305 (996,305 ) – – e
Goodwill 827,149 (398 ) (100,642 ) 726,109 C Goodwill
– 1,062,865 (318 ) 1,062,547 e Content assets
– 392,862 (1,807 ) 391,055 e Other intangible assets
Deferred insurance acquisition costs 657,420 – (33,434 ) 623,986 E Deferred insurance acquisition costs
Deferred income taxes 207,470 (2,649 ) 10,848 215,669 Deferred tax assets
– 663,105 32,659 695,764 f,h,D Other financial assets
Other 361,803 (137,916 ) (16,398 ) 207,489 h,B Other non-current assets
19,136,096 2,120,474 1,536,256 22,792,826 Total non-current assets
Total assets 26,354,840 (380,345 ) 1,533,348 27,507,843 Total assets

F-20

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP Reclassification Recognition<br><br> <br>and<br><br> <br>measurement<br><br> <br>differences IFRS Note Accounts under IFRS
LIABILITIES LIABILITIES
Current liabilities: Current liabilities:
Short-term borrowings 1,187,868 13,879 – 1,201,747 Short-term borrowings
Current portion of long-term debt 131,699 73,582 125 205,406 i Current portion of long-term debt
Current portion of long-term operating lease liabilities 73,362 (73,362 ) – – i
Notes and accounts payable, trade 599,569 (599,569 ) – – j
– 1,632,952 (36,389 ) 1,596,563 j,k,m Trade and other payables
Accounts payable, other and accrued expenses 1,756,833 (1,756,833 ) – – k
Deposits from customers in the banking business 2,773,885 (91,729 ) – 2,682,156 l Deposits from customers in the banking business
Accrued income and other taxes 165,406 (82,594 ) 1,619 84,431 Income taxes payables
– 164,005 (2,572 ) 161,433 k Participation and residual liabilities in the Pictures segment
– 54,341 – 54,341 k,m,o Other financial liabilities
Other 1,126,802 234,441 6,284 1,367,527 k,m,p Other current liabilities
Total current liabilities 7,815,424 (430,887 ) (30,933 ) 7,353,604 Total current liabilities
Non-current liabilities:
Long-term debt 773,294 281,086 (744 ) 1,053,636 i Long-term debt
Long-term operating lease liabilities 290,259 (290,259 ) - – i
Accrued pension and severance costs 254,103 12,364 755 267,222 B Defined benefit liabilities
Deferred income taxes 366,761 (2,649 ) 452,475 816,587 F Deferred tax liabilities
Future insurance policy benefits and other 6,599,977 – 14,608 6,614,585 E Future insurance policy benefits and other
Policyholders’ account in the life insurance business 4,331,065 – (2,171 ) 4,328,894 E Policyholders’ account in the life insurance business
– 120,712 (4,175 ) 116,537 n Participation and residual liabilities in the Pictures segment
– 139,417 – 139,417 l,n,o Other financial liabilities
Other 294,302 (201,551 ) 271 93,022 n Other non-current liabilities
12,909,761 59,120 461,019 13,429,900 Total non-current liabilities
Total liabilities 20,725,185 (371,767 ) 430,086 20,783,504 Total liabilities
Redeemable noncontrolling interest 8,179 (8,179 ) – – o
EQUITY EQUITY
Sony Group Corporation’s stockholders’ equity: Sony Group Corporation’s stockholders’ equity:
Common stock 880,214 – – 880,214 Common stock
Additional paid-in capital 1,486,721 – 2,876 1,489,597 Additional paid-in capital
Retained earnings 3,857,152 – (942,649 ) 2,914,503 G Retained earnings
Accumulated other comprehensive income (524,020 ) – 2,044,277 1,520,257 A,B,C,D,E,F Accumulated other comprehensive income
Treasury stock, at cost (124,228 ) – – (124,228 ) Treasury stock, at cost
5,575,839 – 1,104,504 6,680,343 Equity attributable to Sony Group Corporation’s stockholders
Noncontrolling interests 45,637 (399 ) (1,242 ) 43,996 Noncontrolling interests
Total equity 5,621,476 (399 ) 1,103,262 6,724,339 Total equity
Total liabilities and equity 26,354,840 (380,345 ) 1,533,348 27,507,843 Total liabilities and equity

F-21

Reconciliation of profit or loss for three months ended June 30, 2020

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP Reclassification Recognition<br><br> <br>and<br><br> <br>measurement<br><br> <br>differences IFRS Note Accounts under IFRS
Sales and operating revenue: Sales and financial services revenue:
Net sales 1,504,870 19,132 958 1,524,960 q Sales
Financial services revenue 444,916 3,448 (10,375 ) 437,989 r,D Financial services revenue
Other operating revenue 19,133 (19,133 ) – – q
1,968,919 3,447 (9,417 ) 1,962,949 Total sales and financial services revenue
Costs and expenses: Costs and expenses:
Cost of sales 1,052,673 (8 ) (3,242 ) 1,049,423 Cost of sales
Selling, general and administrative 301,166 158 (1,039 ) 300,285 B Selling, general and administrative
Financial services expenses 397,659 3,461 784 401,904 r Financial services expenses
Other operating income, net (11,248 ) – 558 (10,690 ) Other operating (income) expense, net
1,740,250 3,611 (2,939 ) 1,740,922 Total costs and expenses
Equity in net loss of affiliated companies (274 ) – (28 ) (302 ) D Share of profit (loss) of investments accounted for using the equity method
Operating income 228,395 (164 ) (6,506 ) 221,725 Operating income
Other income:
Interest and dividends 2,836 (2,836 ) – –
Gain on equity securities, net 96,900 (96,900 ) – –
Other 1,273 (1,273 ) – –
– 100,688 (44,012 ) 56,676 s,D Financial income
Other expenses:
Interest expenses 1,805 (1,805 ) – –
Foreign exchange loss, net 5,054 (5,054 ) – –
Other 2,626 (2,626 ) – –
– 9,000 839 9,839 s,B Financial expenses
Income before income taxes 319,919 – (51,357 ) 268,562 H Income before income taxes
Income taxes 72,878 – (8,534 ) 64,344 I Income taxes
Net income 247,041 – (42,823 ) 204,218 Net income
Net income attributable to
Net income attributable to Sony Group Corporation’s stockholders 233,251 – (39,668 ) 193,583 Sony Group Corporation’s stockholders
Net income attributable to noncontrolling interests 13,790 – (3,155 ) 10,635 Noncontrolling interests

F-22

Reconciliation of comprehensive income for three months ended June 30, 2020

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP Reclassification Recognition and measurement differences IFRS Note Accounts under IFRS
Net income 247,041 – (42,823 ) 204,218 Net income
Other comprehensive income, net of tax - Other comprehensive income, net of tax -
Items that will not be reclassified to profit or loss
– – 40,098 40,098 D Changes in equity instruments measured at fair value through other comprehensive income
Pension liability adjustment 566 – (605 ) (39 ) Remeasurement of defined benefit pension plans
– – 36 36 Share of other comprehensive income of investments accounted for using the equity method
Items that may be reclassified subsequently to profit or loss
Unrealized losses on securities (32,111 ) – (35,747 ) (67,858 ) D,E,F Changes in debt instruments measured at fair value through other comprehensive income
Unrealized losses on derivative instruments (260 ) – – (260 ) Cash flow hedges
Debt valuation adjustments (1,650 ) – – (1,650 ) Insurance contract valuation adjustments
Foreign currency translation adjustments (11,483 ) 67 12,209 793 Exchange differences on translating foreign operations
- (67 ) – (67 ) Share of other comprehensive income of investments accounted for using the equity method
(44,938 ) – 15,991 (28,947 ) Total other comprehensive income, net of tax
Total comprehensive income 202,103 – (26,832 ) 175,271 Comprehensive income
Comprehensive income attributable to
Comprehensive income attributable to Sony Group Corporation’s stockholders 201,583 – (11,440 ) 190,143 Sony Group Corporation’s stockholders
Comprehensive income attributable to noncontrolling interests 520 – (15,392 ) (14,872 ) Noncontrolling interests

F-23

Reconciliation of profit or loss for the fiscal year ended March 31, 2021

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP Reclassification Recognition<br><br> <br>and<br><br> <br>measurement differences IFRS Note Accounts under IFRS
Sales and operating revenue: Sales and financial services revenue:
Net sales 7,252,766 79,293 1,611 7,333,670 q Sales
Financial services revenue 1,661,520 13,512 (10,041 ) 1,664,991 r,D Financial services revenue
Other operating revenue 85,074 (85,074 ) – – q
8,999,360 7,731 (8,430 ) 8,998,661 Total sales and financial services revenue
Costs and expenses: Costs and expenses:
Cost of sales 5,072,596 (3,850 ) (2,867 ) 5,065,879 B Cost of sales
Selling, general and administrative 1,469,955 61 3,138 1,473,154 B Selling, general and administrative
Financial services expenses 1,488,963 12,503 208 1,501,674 r,D Financial services expenses
Other operating expense, net 7,468 (720 ) 7,502 14,250 C Other operating (income) expense, net
8,038,982 7,994 7,981 8,054,957 Total costs and expenses
Equity in net income of affiliated companies 11,487 – 64 11,551 D Share of profit (loss) of investments accounted for using the equity method
Operating income 971,865 (263 ) (16,347 ) 955,255 Operating income
Other income:
Interest and dividends 10,457 (10,457 ) – –
Gain on equity securities, net 247,026 (247,026 ) – –
Other 6,752 (6,752 ) – –
– 264,692 (180,900 ) 83,792 s,D Financial income
Other expenses:
Interest expenses 12,185 (12,185 ) – –
Foreign exchange loss, net 16,056 (16,056 ) – –
Net periodic benefit costs other than service cost 8,811 (8,811 ) – –
Other 6,678 (6,678 ) – –
– 43,924 (2,842 ) 41,082 s,B Financial expenses
Income before income taxes 1,192,370 – (194,405 ) 997,965 H Income before income taxes
Income taxes 995 – (46,926 ) (45,931 ) I Income taxes
Net income 1,191,375 – (147,479 ) 1,043,896 Net income
Net income attributable to
Net income attributable to Sony Group Corporation’s stockholders 1,171,776 – (142,166 ) 1,029,610 Sony Group Corporation’s stockholders
Net income attributable to noncontrolling interests 19,599 – (5,313 ) 14,286 Noncontrolling interests

F-24

Reconciliation of comprehensive income for the fiscal year ended March 31, 2021

Yen in millions
Accounts under U.S.<br><br> <br>GAAP U.S. GAAP Reclassification Recognition and measurement differences IFRS Note Accounts under IFRS
Net income 1,191,375 – (147,479 ) 1,043,896 Net income
Other comprehensive income, net of tax - Other comprehensive income, net of tax -
Items that will not be reclassified to profit or loss
– – 144,740 144,740 D Changes in equity instruments measured at fair value through other comprehensive income
Pension liability adjustment 12,965 – (1,410 ) 11,555 Remeasurement of defined benefit pension plans
– – 87 87 Share of other comprehensive income of investments accounted for using the equity method
Items that may be reclassified subsequently to profit or loss
Unrealized losses on securities (102,492 ) – (103,057 ) (205,549 ) D,E,F Changes in debt instruments measured at fair value through other comprehensive income
Unrealized losses on derivative instruments 1,513 – (1,462 ) 51 Cash flow hedges
Debt valuation adjustments (3,120 ) – - (3,120 ) Insurance contract valuation adjustments
Foreign currency translation adjustments 106,826 (798 ) 9,293 115,321 Exchange differences on translating foreign operations
– 798 - 798 Share of other comprehensive income of  investments accounted for using the equity method
15,692 – 48,191 63,883 Total other comprehensive income, net of tax
Total comprehensive income 1,207,067 – (99,288 ) 1,107,779 Comprehensive income
Comprehensive income attributable to
Comprehensive income attributable to Sony Group Corporation’s stockholders 1,198,836 – (80,208 ) 1,118,628 Sony Group Corporation’s stockholders
Comprehensive income attributable to noncontrolling interests 8,231 – (19,080 ) (10,849 ) Noncontrolling interests

F-25

(4)  Notes to reconciliation

Reclassifications
a. “Marketable securities”, which were separately presented under U.S. GAAP, have been reclassified into “Investments and<br> advances in the Financial Services segment” as current assets under IFRS.  Investments held for variable annuities and variable life insurance contracts in the life insurance business, which<br> were included in “Marketable securities” under U.S. GAAP, have been reclassified into “Investments and advances in the Financial Services segment” as current assets or non-current assets under<br> IFRS, after considering the current/non-current distinction based on the purpose of the investments related to the insurance liabilities in accordance with paragraph 66 of IAS 1 “Presentation of<br> Financial Statements” (“IAS 1”).
b. “Notes and accounts receivable, trade and contract assets” and “Allowance for credit losses”, which were separately presented under U.S. GAAP, have been<br> reclassified into “Trade and other receivables, and contract assets” under IFRS.
c. “Other receivables”, which were separately presented under U.S. GAAP, have been reclassified into “Trade and other receivables, and contract assets” under IFRS.
d. “Other financial assets”, which were included in “Prepaid expenses and other current assets” under U.S. GAAP, are separately presented under IFRS.
e. “Film costs”, which were presented separately, and music catalogs, artist contracts, music distribution rights and other content assets, which were included in<br> “Intangibles, net” under U.S. GAAP are collectively reclassified and presented as “Content assets” under IFRS.  “Intangibles, net” other than those reclassified and presented as “Content assets”<br> have been reclassified into “Other intangible assets” under IFRS.
f. “Securities investments and other”, which were separately presented under U.S. GAAP, have been reclassified into “Investments and advances in the Financial Services<br> segment” as non-current assets for the amounts related to the Financial Services segment and “Other financial assets” as non-current assets for the amounts related to all segments excluding the<br> Financial Services segment under IFRS.  Housing loans in the banking business, which were included in “Securities investments and other” under U.S. GAAP, have been reclassified into “Investments<br> and advances in the Financial Services segment” as current assets or non-current assets under IFRS after considering the current/non-current distinction based on the terms of the contract in<br> accordance with paragraph 66 of IAS 1.
g. “Operating lease right-of-use assets” and “Finance lease right-of-use assets”, which were separately presented under U.S. GAAP, have been reclassified into<br> “Right-of-use assets” under IFRS.
h. “Other financial assets”, which were included in “Other” in other assets under U.S. GAAP, are separately presented under IFRS.
i. “Current portion of long-term operating lease liabilities” and “Long-term operating lease liabilities”, which were separately presented under U.S. GAAP, have been<br> reclassified into “Current portion of long-term debt” and “Long-term debt”, respectively under IFRS.
j. “Notes and accounts payable, trade”, which were separately presented under U.S. GAAP, have been reclassified into “Trade and other payables” under IFRS.
k. “Accounts payable, other and accrued expenses”, which were separately presented under U.S. GAAP, have been reclassified into either “Trade and other payables”,<br> “Participation and residual liabilities in the Pictures segment”, “Other financial liabilities” or “Other current liabilities” under IFRS.
l. “Deposits from customers in the banking business”, which were separately presented under U.S. GAAP, have been reclassified into “Other financial liabilities” of non-current liabilities under<br> IFRS, after considering the current/non-current distinction based on the terms of the contract in accordance with paragraph 69 of IAS 1.
m. “Trade and other payables” and “Other financial liabilities”, which were included in current liabilities “Other” under U.S. GAAP, are separately presented under<br> IFRS.
n. “Participation and residual liabilities in the Pictures segment” and “Other financial liabilities”, which were included in “Other” in other than current liabilities<br> under U.S. GAAP, are separately presented under IFRS.
o. “Redeemable noncontrolling interest”, which was separately presented under U.S. GAAP, has been reclassified into “Other financial liabilities” under IFRS.
p. Under U.S. GAAP, securities received as collateral other than cash in lending transactions are accounted for as “Marketable securities” and also as “Other current<br> liabilities” representing Sony’s obligation to return the collateral, which was 373,274 million yen as of March 31, 2021.  Under IFRS, the securities received as collateral other than cash shall<br> be recognized in the consolidated statements of financial position if they are sold or the transferor defaults.  None of the securities was recognized in the consolidated statements of financial<br> position as of March 31, 2021.
q. “Other operating revenue”, which was separately presented under U.S. GAAP, has been reclassified into “Sales” under IFRS.
r. Under IFRS, “Financial services revenue” and “Financial services expenses” have increased by the same amount due to the gross up of revenue and expenses related to<br> service transactions, based on the presentation requirements.
s. Under IFRS, “Financial income” and “Financial expenses” have been presented separately, based on the presentation requirements.

F-26

Recognition and measurement differences

A.  Exchange differences on translating foreign operations

Under IFRS 1, first-time adopters may choose to deem the cumulative exchange differences on translating foreign operations as zero at the date of transition to IFRS.  Sony has chosen to apply this exemption and transferred all cumulative exchange differences on translating foreign operations into retained earnings at the date of transition to IFRS.

The impact of this change is as follows:

Yen in millions
April 1, 2020 June 30, 2020 March 31, 2021
(Consolidated Statements of Financial Position)
Accumulated other comprehensive income (509,872 ) (509,539 ) (510,091 )
Adjustment to retained earnings (509,872 ) (509,539 ) (510,091 )

B.  Post-employment benefits

Under U.S. GAAP, past service costs and actuarial gains and losses are deferred in accumulated other comprehensive income, and subsequently reclassified to profit or loss over a certain period of time in the future.

Under IFRS, past service costs are expensed as incurred.  Adjustments due to remeasurements of the net defined benefit liabilities or assets, such as actuarial gains and losses, are recognized in other comprehensive income when incurred and immediately transferred to retained earnings and are not reclassified to profit or loss in a subsequent period.

In addition, if the fair value of plan assets is in excess of the present value of defined benefit obligations, the amount of any asset to be recognized is limited to the present value of any economic benefits available in the form of refunds from the plan or reductions in the future contributions to the plan.

The impact of this change before considering the tax effect is as follows:

Yen in millions
April 1, 2020 June 30, 2020 March 31, 2021
(Consolidated Statements of Financial Position)
Other non-current assets (16,829 ) (11,826 ) (17,083 )
Defined benefit liabilities 30 (2,355 ) (62 )
Accumulated other comprehensive income (300,385 ) (301,131 ) (277,379 )
Adjustment to retained earnings (317,184 ) (315,312 ) (294,524 )
Yen in millions
--- --- --- --- --- --- ---
Three months<br><br> <br>ended<br><br> <br>June 30, 2020 Fiscal year<br><br> <br>ended<br><br> <br>March 31, 2021
(Consolidated Statements of Income)
Cost of sales – (2,193 )
Selling, general and administrative (397 ) (244 )
Financial expenses 2,288 9,476
Increase (decrease) in adjustment to pre-tax income 1,891 7,039

F-27

C.  Impairment of goodwill

The level at which goodwill is tested for impairment differs between U.S. GAAP and IFRS.  Under U.S. GAAP, goodwill is tested for impairment at the reporting unit level.  Reporting units are Sony’s operating segments or one level below the operating segments.  The identification of reporting units is dependent on the level at which discrete financial information is available and regularly reviewed by the segment manager.  Under IFRS, goodwill is tested for impairment at the level of the cash-generating unit (“CGU”) or group of CGUs, which represent the lowest level at which goodwill is monitored for internal management purposes, which may be a lower level of grouping than a reporting unit under U.S. GAAP.  A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets.

Upon the transition to IFRS, Sony assessed its reporting units to determine if such reporting units should be further divided into several CGUs under IFRS.  As a result, Sony determined that certain CGUs should be grouped at a lower level than a reporting unit under U.S. GAAP.  In addition, Sony performed an impairment test for goodwill at the date of transition to IFRS regardless of whether there were any indications that the goodwill may be impaired based on conditions at the date of transition to IFRS.  In performing the impairment test, Sony used the goodwill balance under U.S. GAAP attributed to each CGU or group of CGUs based on the history of acquisitions of the businesses.  Under U.S. GAAP, when a business within a reporting unit was disposed of (including when classified as held for sale), goodwill was allocated to the remaining business and the disposed business based on relative fair value, and only the goodwill allocated to the disposed business was written off.  Under IFRS, since certain disposed businesses represented individual CGUs or a group of CGUs, at the time of disposition, all the goodwill that was recognized for such businesses would have been written off.  The assessment resulted in impairments related to CGUs or groups of CGUs of the businesses that Sony disposed of prior to the date of transition to IFRS.  In addition, the assessment resulted in impairments related to CGUs or groups of CGUs of the businesses that existed at the date of transition to IFRS where the recoverable amount was lower than the carrying amount.

As a result, at the date of transition to IFRS (April 1, 2020), goodwill decreased by 96,817 million yen, and retained earnings decreased by the same amount.  The impact of this change was primarily in the I&SS and Pictures segments and is discussed below.

In the I&SS segment, at the date of transition to IFRS, Sony recognized 43,376 million yen of impairment losses in retained earnings, which includes the impairment loss related to the goodwill allocated to CGUs or groups of CGUs of the businesses that Sony disposed of prior to the date of transition to IFRS as well as the Internet of Things (“IoT”)-related business which existed at the date of transition to IFRS.  The recoverable amount of the IoT-related business was determined by the value in use and a pre-tax discount rate of 9.8% was used in the measurement.

In the Pictures segment, at the date of transition to IFRS, Sony recognized 48,749 million yen of impairment losses in retained earnings, which includes the impairment loss related to the goodwill allocated to CGUs or groups of CGUs of the businesses that Sony disposed of prior to the date of transition to IFRS as well as the United States television network CGU which existed at the date of transition to IFRS.  The recoverable amount of the United States television network CGU was determined by the value in use and a pre-tax discount rate of 15.9% was used in the measurement.

The impact of this change is as follows:

Yen in millions
April 1, 2020 June 30, 2020 March 31, 2021
(Consolidated Statements of Financial Position)
Goodwill (96,817 ) (96,368 ) (100,727 )
Accumulated other comprehensive income – (449 ) 2,942
Adjustment to retained earnings (96,817 ) (96,817 ) (97,785 )
Yen in millions
--- --- --- --- --- ---
Three months<br><br> <br>ended<br><br> <br>June 30, 2020 Fiscal year<br><br> <br>ended<br><br> <br>March 31, 2021
(Consolidated Statements of Income)
Other operating (income) expense, net – (968 )
Increase (decrease) in adjustment to pre-tax income – (968 )

F-28

The carrying amount of goodwill by segment is as follows:

Yen in millions
April 1, 2020 March 31, 2021
Game & Network Services *1 170,974 172,360
Music *2 391,325 408,424
Pictures *3 103,626 120,083
Electronics Products & Solutions 11,354 11,533
Imaging & Sensing Solutions 2,816 2,875
Financial Services 10,834 10,834
Total 690,929 726,109

*1 Game & Network Services (“G&NS”)

All of the goodwill shown in the G&NS line of the table above relates to the PlayStation® business.  Goodwill related to the CGU has a carrying amount of 170,974 million yen and 172,360 million yen, as of April 1, 2020 and March 31, 2021, respectively.  Intangible assets with indefinite useful lives related to the PlayStation® business have a carrying amount of 57,397 million yen and 57,449 million yen, as of April 1, 2020 and March 31, 2021, respectively, which are included in “Other intangible assets”.  Intangible assets with indefinite useful lives include the trademark for PlayStation®, which is assessed to have an indefinite useful life as the trademark for PlayStation® is utilized as the core trademark for Sony’s products and services throughout the G&NS segment and Sony expects to continue using the trademark in the future as well.  The recoverable amount of the CGU is determined by the value in use.  The value in use is calculated by discounting the estimated future cash flows including a terminal value.  The estimated future cash flows are prepared based on a three-year forecasted period derived from the mid-range plan (“MRP”).  A perpetual growth rate is utilized to determine a terminal cash flow value and is set after the final year of the forecasted period.  The growth rate and the pre-tax discount rate are 1.5% and 9.8% as of April 1, 2020 and 1.5% and 8.7% as of March 31, 2021, respectively.

*2 Music

Goodwill shown in the Music line of the table above is primarily allocated to the worldwide recorded music and music publishing CGUs excluding operations in Japan.

Goodwill related to the worldwide recorded music CGU has a carrying amount of 128,918 million yen and 136,572 million yen, as of April 1, 2020 and March 31, 2021, respectively.  The recoverable amount of the CGU is determined by the value in use.  The value in use is calculated by discounting the estimated future cash flows including a terminal value.  The estimated future cash flows are prepared based on a three-year forecasted period derived from the MRP.  A perpetual growth rate is utilized to determine a terminal cash flow value and is set after the final year of the forecasted period.  The growth rate and the pre-tax discount rate are 1.0% and 9.2% as of April 1, 2020 and 1.0% and 9.3% as of March 31, 2021, respectively.

Goodwill related to the music publishing CGU has a carrying amount of 238,684 million yen and 248,130 million yen, as of April 1, 2020 and March 31, 2021, respectively.  The recoverable amount of the CGU is determined by the value in use.  The value in use is calculated by discounting the estimated future cash flows including a terminal value.  The estimated future cash flows are prepared based on a three-year forecasted period derived from the MRP.  A perpetual growth rate is utilized to determine a terminal cash flow value and is set after the final year of the forecasted period.  The growth rate and the pre-tax discount rate are 2.5% and 8.4% as of April 1, 2020 and 2.5% and 8.2% as of March 31, 2021, respectively.

*3 Pictures

Goodwill shown in the Pictures line of the table above is primarily allocated to the United States television network CGU.  Goodwill related to the CGU is recognized with the carrying amounts of 54,156 million yen and 55,092 million yen, as of April 1, 2020 and March 31, 2021, respectively.  The recoverable amount of the CGU is determined by the value in use.  The value in use is calculated by discounting the estimated future cash flows including a terminal value.  The estimated future cash flows are prepared based on a three-year forecasted period derived from the MRP.  The terminal value is based on an earnings multiple applied to the final year of the forecasted earnings.  The growth rate beyond the MRP period and the pre-tax discount rate are 1.0% and 15.9% as of April 1, 2020 and 1.0% and 14.7% as of March 31, 2021, respectively.

F-29

The value in use calculation uses key assumptions such as the pre-tax discount rate, perpetual growth rate, competitive and regulatory environment, and technology trends.  For each assumption, historical experience, external information, competitors and industry trends are taken into account.  Sony does not expect the recoverable amounts to be lower than the carrying amounts even when the growth rate and pre-tax discount rate that are used in the evaluation of the recoverable amounts change within a reasonably predictable range.

D.  Equity instruments and debt instruments

Under U.S. GAAP, equity securities are recognized at fair value and subsequent changes in fair value are recognized in profit or loss.  Equity securities that do not have readily determinable fair values are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer.

Additionally, under U.S. GAAP, debt securities that are held-to-maturity, primarily in the life insurance business, are carried at amortized cost.

Under IFRS, equity instruments are recognized at fair value and subsequent changes in fair value are recognized in profit or loss.  However, for investments in equity instruments which are not held for trading, Sony may make an irrevocable election at initial recognition to present subsequent changes in fair value of the investments in other comprehensive income.  Such financial assets are measured at fair value and subsequent changes in the fair value are recognized in other comprehensive income.

Additionally, under IFRS, debt instruments, which are primarily in the life insurance business, are classified as financial assets measured at fair value through other comprehensive income if the debt instruments are held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.  Changes in the fair value of the financial assets after initial recognition, except for impairment gains or losses and foreign exchange gains or losses, are recognized in other comprehensive income.

The impact of this change before considering the tax effect is as follows:

Yen in millions
April 1, 2020 June 30, 2020 March 31, 2021
(Consolidated Statements of Financial Position)
Other financial assets (non-current) 22,110 30,233 31,627
Investments and advances in the Financial Services segment　 (non-current) 2,439,946 2,093,082 1,649,660
Accumulated other comprehensive income (2,424,510 ) (2,142,662 ) (1,840,980 )
Adjustment to retained earnings 37,546 (19,347 ) (159,693 )
Yen in millions
--- --- --- --- --- --- ---
Three months<br><br> <br>ended<br><br> <br>June 30, 2020 Fiscal year<br><br> <br>ended<br><br> <br>March 31, 2021
(Consolidated Statements of Income)
Financial services revenue (13,558 ) (12,547 )
Financial services expenses - (854 )
Share of profit (loss) of investments accounted for using the equity method 3 (30 )
Financial income (43,578 ) (178,677 )
Increase (decrease) in adjustment to pre-tax income (57,133 ) (192,108 )

F-30

E.  Insurance-related accounts

In accordance with Sony’s first-time adoption of IFRS 4 “Insurance Contracts” at the date of transition to IFRS, insurance contracts are recognized and measured based on the same accounting principles previously applied under U.S. GAAP.  Under IFRS, the amount of insurance-related accounts was affected by shadow accounting in the life insurance business as a result of the increase in financial instruments to be measured at fair value through other comprehensive income.  This change is mainly because the shadow liability adequacy test indicated that the insurance liabilities were not recorded at a sufficient level at the date of transition to IFRS and as of June 30, 2020.

The impact of this change before considering the tax effect is as follows:

Yen in millions
April 1, 2020 June 30, 2020 March 31, 2021
(Consolidated Statements of Financial Position)
Deferred insurance acquisition costs (412,997 ) (396,690 ) (33,434 )
Future insurance policy benefits and other (273,530 ) (3,728 ) (14,609 )
Policyholders’ account in the life insurance business 2,261 2,318 2,170
Accumulated other comprehensive income 684,266 398,100 45,873

F.  Impact of changes in the measurement method of debt instruments in the life insurance business on deferred tax liabilities and noncontrolling interests

In connection with “D. Equity instruments and debt instruments” and “E. Insurance-related accounts”, accumulated other comprehensive income is affected due to the change in the measurement method of debt instruments in the life insurance business and the change in the amount of insurance-related accounts as a result of the application of shadow accounting.

The impact of this change on deferred tax liabilities and noncontrolling interests is as follows:

Yen in millions
April 1, 2020 June 30, 2020 March 31, 2021
(Consolidated Statements of Financial Position)
Deferred tax liabilities (489,839 ) (475,603 ) (452,189 )
Noncontrolling interests (440,099 ) (427,309 ) –
Accumulated other comprehensive income 929,938 902,912 452,189

G.  Retained earnings

Main items of the differences on retained earnings are as follows:

Yen in millions
April 1, 2020 June 30, 2020 March 31, 2021
Retained earnings under U.S. GAAP 2,765,187 2,997,579 3,857,152
1  Exchange differences on translating foreign operations *A (509,872 ) (509,539 ) (510,091 )
2  Post-employment benefits *B (317,184 ) (315,312 ) (294,524 )
3  Impairment of goodwill *C (96,817 ) (96,817 ) (97,785 )
4  Equity instruments and debt instruments*D 37,546 (19,347 ) (159,693 )
5  Other 6,616 (18,446 ) 13,249
Tax effect of adjustments 64,221 74,046 106,195
Total (815,490 ) (885,415 ) (942,649 )
Retained earnings under IFRS 1,949,697 2,112,164 2,914,503

F-31

H.  Income before income taxes

Main items of the differences on income before income taxes are as follows:

Yen in millions
Three months ended<br><br> <br>June 30, 2020 Fiscal year ended<br><br> <br>March 31, 2021
Income before income taxes under U.S. GAAP 319,919 1,192,370
1  Post-employment benefits *B 1,891 7,039
2  Impairment of goodwill *C – (968 )
3  Equity instruments and debt instruments *D (57,133 ) (192,108 )
4  Other 3,885 (8,368 )
Total (51,357 ) (194,405 )
Income before income taxes under IFRS 268,562 997,965

I.  Income taxes

Due to the adoption of IFRS, income taxes have been adjusted by recording the tax effects on various IFRS adjustments recognized and measured, and other IFRS tax effects.

(5)  Reconciliation of consolidated statements of cash flows

Main items of the differences on consolidated statements of cash flows are as follows:

Yen in millions
Three months ended June 30, 2020
Cash flows from<br><br> <br>operating activities Cash flows from<br><br> <br>investing activities Cash flows from<br><br> <br>financing activities
Consolidated statements of cash flows under U.S. GAAP 126,185 (475,273 ) 290,252
1.  Principal payments for operating lease liabilities^*1^ 17,326 – (17,326 )
2.  Additions and disposals of content assets^*2^ (4,816 ) 4,816 –
3.  Changes in assets and liabilities in the Financial Services segment^*3^
(1)  Investments and advances in the Financial Services segment (317,027 ) 317,027 –
(2)  Deposits from customers in the banking business 116,676 – (116,676 )
(3)  Borrowings in the life insurance business and the banking business 194,222 – (194,222 )
(4)  Future insurance policy benefits and other and policyholders’ account in the life insurance business 29,789 – (29,789 )
4.  Other 410 1,065 243
Total 36,580 322,908 (357,770 )
Consolidated statements of cash flows under IFRS 162,765 (152,365 ) (67,518 )

F-32

Yen in millions
Fiscal year ended March 31, 2021
Cash flows from<br><br> <br>operating activities Cash flows from<br><br> <br>investing activities Cash flows from<br><br> <br>financing activities
Consolidated statements of cash flows under U.S. GAAP 1,350,150 (1,781,516 ) 666,967
1.  Principal payments for operating lease liabilities^*1^ 72,098 – (72,098 )
2.  Additions and disposals of content assets^*2^ (34,751 ) 34,751 –
3.  Changes in assets and liabilities in the Financial Services segment^*3^
(1)  Investments and advances in the Financial Services segment (1,181,744 ) 1,181,744 –
(2)  Deposits from customers in the banking business 332,987 – (332,987 )
(3)  Borrowings in the life insurance business and the banking business 463,783 – (463,783 )
(4)  Future insurance policy benefits and other and policyholders’ account in the life insurance business 134,299 – (134,299 )
4.  Other 3,395 1,111 (2,333 )
Total (209,933 ) 1,217,606 (1,005,500 )
Consolidated statements of cash flows under IFRS 1,140,217 (563,910 ) (338,533 )

*1 The principal payments for operating lease liabilities

Under U.S. GAAP, lessees classify leases as either operating leases or finance leases, and the principal payments for the operating lease liabilities are classified as cash flows from operating activities in the consolidated statements of cash flows.  Under IFRS, the distinction between operating leases and finance leases no longer exists for lessees, and all of the principal payments for lease liabilities are classified as cash flows from financing activities in the consolidated statements of cash flows.

*2 The additions and disposals of content assets

Under U.S. GAAP, Sony classified the cash flows from the additions and disposals of film costs as cash flows from operating activities, and classified the cash flows from the additions and disposals of music catalogs, artist contracts, music distribution rights and other content assets as cash flows from investing activities in the consolidated statements of cash flows based on the nature of such transactions as additions and disposals of intangible assets.  Under IFRS, Sony defines these intangible assets as content assets, and classifies the cash flows from the additions and disposals of content assets as cash flows from operating activities in the consolidated statements of cash flows except for additions and disposals of content assets from business combinations or business divestitures, because the additions and disposals of content assets are derived from the principal revenue-producing activities of Sony.

*3 Changes in assets and liabilities in the Financial Services segment

Under U.S. GAAP, Sony classified cash flows from changes in investments and advances in the Financial Services segment and repurchase agreements in the Financial Services segment, deposits from customers in the banking business and policyholders’ account in the life insurance business according to the nature of these transactions in the consolidated statements of cash flows.  Under IFRS, Sony classifies cash flows from these transactions as cash flows from operating activities in the consolidated statements of cash flows as these transactions are viewed as integral to the principal revenue-producing activities of Sony.

F-33

Outlook for the Fiscal Year Ending March 31, 2022

The forecast for consolidated results for the fiscal year ending March 31, 2022, as announced on April 28, 2021, has been revised as follows:

(Billions of yen)
March 31, 2021<br><br> <br>Results April<br><br> <br>Forecast August<br><br> <br>Forecast Change from<br> April Forecast
Sales *^1^ ¥ 8,998.7 ¥ 9,700 ¥ 9,700 – –
Operating income 955.3 930 980 + 50 bil + 5.4 %
Income before income taxes 998.0 905 955 + 50 bil + 5.6 %
Net income attributable to Sony Group Corporation’s stockholders 1,029.6 660 700 + 40 bil + 6.1 %
For all segments excluding the Financial Services segment *^2^ March 31, 2021<br><br> <br>Results April<br><br> <br>Forecast August<br><br> Forecast Change from<br> April Forecast
Net cash provided by operating activities ¥ 1,150.3 ¥ 910 ¥ 890 - 20 bil - 2.2 %

All values are in Japanese Yen.

*^1^ “Sales and Financial Services revenue” are shown as “Sales” (the same applies below).

*^2^ Cash flow for all segments excluding the Financial Services segment is not a measure in accordance with IFRS.  However, Sony believes that this disclosure may be useful information to investors.  Please refer to page F-11 for details about the preparation of the Condensed Statements of Cash Flows.

Assumed foreign exchange rates are the following:

Assumed foreign currency<br><br> <br>exchange rates for the nine<br><br> <br>months ending March 31, 2022 (For your reference)<br><br> <br>Assumed foreign currency exchange rates for the fiscal year<br><br> <br>ending March 31, 2022 at the time of the April forecast
1 U.S. dollar approximately 110 yen 107 yen
1 Euro approximately 131 yen 126 yen

Sales remain unchanged from the April forecast due to higher-than-expected sales in the Electronics Products & Solutions (“EP&S”) and Music segments, substantially offset by lower-than-expected sales in the Imaging & Sensing Solutions and Pictures segments.

Operating income is expected to be higher than the April forecast due to expected increases in operating income in the Music, EP&S and Pictures segments, as well as an expected decrease in operating loss in All Other, Corporate and elimination.

Income before income taxes is expected to be 955 billion yen, which is higher than the April forecast.  This expected increase is primarily due to the above-mentioned expected increase in operating income.

Net income attributable to Sony Group Corporation’s stockholders is expected to be higher than the April forecast mainly due to the above-mentioned expected increase in income before income taxes.

1

The forecast for each business segment for the fiscal year ending March 31, 2022 has been revised as follows:

(Billions of yen)
March 31, 2021<br><br> <br>Results April<br><br> <br>Forecast August<br><br> <br>Forecast
Game & Network Services (G&NS)
Sales ¥ 2,656.3 ¥ 2,900 ¥ 2,900
Operating income 341.7 325 325
Music
Sales 939.9 990 1,040
Operating income 184.8 162 190
Pictures
Sales 753.0 1,140 1,120
Operating income 79.9 83 90
Electronics Products & Solutions (EP&S) *
Sales 2,068.1 2,260 2,320
Operating income 127.9 148 170
Imaging & Sensing Solutions (I&SS)
Sales 1,012.5 1,130 1,100
Operating income 145.9 140 140
Financial Services
Financial services revenue 1,674.0 1,400 1,400
Operating income 154.8 170 153
All Other, Corporate and elimination *
Operating loss (79.6 ) (98 ) (88 )
Consolidated
Sales 8,998.7 9,700 9,700
Operating income 955.3 930 980

* Due to organizational changes as of April 1, 2021, from the first quarter of the fiscal year ending March 31, 2022, Sony transferred some of the businesses and functions previously included within All Other and Corporate and elimination to the EP&S segment.  Sales and operating income (loss) of each segment for the fiscal year ended March 31, 2021 in the above chart are presented to conform to the organizational structure for the fiscal year ending March 31, 2022.

Game & Network Services (G&NS)

Sales and operating income are expected to remain unchanged from the April forecast.

Music

Sales are expected to be higher than the April forecast primarily due to stronger-than-expected sales from streaming services in Recorded Music and the impact of foreign exchange rates.  Operating income is expected to be higher than the April forecast primarily due to the impact of the above-mentioned expected increase in sales.

Pictures

Sales are expected to be lower than the April forecast primarily due to delays in some theatrical releases and deliveries of television episodes due in part to the impact of COVID-19.  Operating income is expected to be higher than the April forecast despite the aforementioned decrease in sales, primarily due to higher-than-expected television licensing sales from new film titles and catalog titles in Motion Pictures and catalog titles in Television Productions.

Electronics Products & Solutions (EP&S)

Sales are expected to be higher than the April forecast due to the impact of foreign exchange rates as well as higher-than-expected sales of digital cameras due to higher unit sales, partially offset by lower-than-expected sales of televisions due to lower unit sales.  Operating income is expected to be higher than the April forecast due to an increase in unit sales and an improvement in the product mix of digital cameras as well as the positive impact of foreign exchange rates, partially offset by the above-mentioned lower unit sales of televisions.

2

Imaging & Sensing Solutions (I&SS)

Sales are expected to be lower than the April forecast due to an expected decrease in unit sales of image sensors for mobile products, partially offset by the impact of foreign exchange rates.  Operating income is expected to remain unchanged from the April forecast mainly due to the positive impact of foreign exchange rates, substantially offset by the above-mentioned decrease in sales of image sensors for mobile products.

Financial Services

Financial services revenue is expected to remain unchanged from the April forecast.  Operating income is expected to be lower than the April forecast primarily due to the recording of a one-time loss at a subsidiary of Sony Life Insurance Co., Ltd. (“Sony Life”).

The effects of future gains and losses on investments held by the Financial Services segment due to market fluctuations have not been incorporated within the above forecast as it is difficult for Sony to predict market trends in the future.  Accordingly, future market fluctuations could further impact the above forecast.

The above forecast is based on management’s current expectations and is subject to uncertainties and changes in circumstances.  Actual results may differ materially from those included in this forecast due to a variety of factors.  See “Cautionary Statement” below.

Notes about Financial Performance of the Music, Pictures and Financial Services segments

The Music segment results include the yen-based results of Sony Music Entertainment (Japan) Inc. and the yen-translated results of Sony Music Entertainment and Sony Music Publishing LLC, which aggregate the results of their worldwide subsidiaries on a U.S. dollar basis.

The Pictures segment results are the yen-translated results of Sony Pictures Entertainment Inc., which aggregates the results of its worldwide subsidiaries on a U.S. dollar basis.

The Financial Services segment results include Sony Financial Holdings Inc. (“SFH”) and SFH’s consolidated subsidiaries such as Sony Life, Sony Assurance Inc. and Sony Bank Inc. The results discussed in the Financial Services segment differ from the results that SFH discloses separately on a Japanese statutory basis.

3

Supplemental Information

The primary factors causing the differences between the sales and operating income (loss) recorded in accordance with U.S. GAAP and the sales and operating income (loss) recorded in accordance with IFRS for each business segment in the fiscal year ended March 31, 2021 are as follows:

4

Cautionary Statement

Statements made in this release with respect to Sony’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore investors should not place undue reliance on them. Please note that Sony has disclosed the consolidated financial statements and its forecast for consolidated results for the fiscal year ending March 31, 2022 based on International Financial Reporting Standards (IFRS). Investors also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to:

(i) Sony’s ability to maintain product quality and customer satisfaction with its products and services;
(ii) Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and<br> network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions,<br> rapid development in technology and subjective and changing customer preferences;
--- ---
(iii) Sony’s ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new<br> technologies and distribution platforms;
--- ---
(iv) the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures, investments, capital expenditures,<br> restructurings and other strategic initiatives;
--- ---
(v) changes in laws, regulations and government policies in the markets in which Sony and its third-party suppliers, service providers and business partners operate, including those related<br> to taxation, as well as growing consumer focus on corporate social responsibility;
--- ---
(vi) Sony’s continued ability to identify the products, services and market trends with significant growth potential, to devote sufficient resources to research and development, to prioritize<br> investments and capital expenditures correctly and to recoup its investments and capital expenditures, including those required for technology development and product capacity;
--- ---
(vii) Sony’s reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing,<br> marketing and distribution of its products, and its other business operations;
--- ---
(viii) the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending;
--- ---
(ix) Sony’s ability to meet operational and liquidity needs as a result of significant volatility and disruption in the global financial markets or a ratings downgrade;
--- ---
(x) Sony’s ability to forecast demands, manage timely procurement and control inventories;
--- ---
(xi) foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in<br> which Sony’s assets, liabilities and operating results are denominated;
--- ---
(xii) Sony’s ability to recruit, retain and maintain productive relations with highly skilled personnel;
--- ---
(xiii) Sony’s ability to prevent unauthorized use or theft of intellectual property rights, to obtain or renew licenses relating to intellectual property rights and to defend itself<br> against claims that its products or services infringe the intellectual property rights owned by others;
--- ---
(xiv) the impact of changes in interest rates and unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue<br> and operating income of the Financial Services segment;
--- ---
(xv) shifts in customer demand for financial services such as life insurance and Sony’s ability to conduct successful asset liability management in the Financial Services segment;
--- ---
(xvi) risks related to catastrophic disasters, pandemic disease or similar events;
--- ---
(xvii) the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s<br> business information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and
--- ---
(xviii) the outcome of pending and/or future legal and/or regulatory proceedings.
--- ---

Risks and uncertainties also include the impact of any future events with material adverse impact.  The continued impact of COVID-19

could heighten many of the risks and uncertainties noted above.  Important information regarding risks and uncertainties is also set forth in Sony’s most recent Form 20-F, which is on file with the U.S. Securities and Exchange Commission.

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